John Gapper is associate editor and chief business commentator of the Financial Times. He has worked for the FT since 1987, covering labour relations, banking and the media. In 1991-92, he was a Harkness fellow of the Commonwealth Fund of New York, and studied US education and training at the Wharton School of the University of Pennsylvania. He is co-author, with Nicholas Denton, of All That Glitters, an account of the collapse of Barings in 1995.
Recently in two columns and three blog posts on the Financial Times, you have covered Gulf states activities and progress. What is the big deal about the Gulf states these days? Is it all about their money?
Essentially, yes. I think it is about money and the oil boom. If it were not for that founding phenomenon, there would be a lot less interest in the Gulf. The fact that they are now investing heavily overseas, including in US financial institutions has provoked a lot of attention. However, I think there is also a lot of interest in the ways that Gulf states such as Qatar, Dubai and Abu Dhabi are trying to diversify their economies and defying the cliche of Arab oil states.
You have recently been in Dubai and Abu Dhabi. How would you describe the places? Do you see a bubble?
I think they are both exciting and exhilarating places. I would also say that I found the culture clashes between new and old worlds in Dubai amusing - things such as the ski slope and the hotel and amusement park booms. I suppose there is always the possibility that the whole thing is a bubble when properties in the desert are selling for a lot of money. To that extent, it is reminiscent of Florida or Arizona. I am sure there is some excess and froth. However, on the whole, I am hopeful that Dubai can build an enduring enough economic base to weather a fall in the oil price without completing collapsing.
Freakonomics writer, Steven Levitt, was in Dubai at the same time as you. He is suggesting Dubai is following a path in which rule of law is important, but democracy is not. What would you see as the ideal form of governance in such places?
I am a believer in democracy and human rights and the Gulf states lack democracy and have a spotty human rights record. Still, I am also something of an optimist that economic development eventually brings demands for democratic involvement and more rights - for both men and women. So I hope that will be the evolution in the Gulf.
Dubai and Abu Dhabi funds are actively buying stakes in US real estates and companies - a similar trend as in the past oil booms and by Japanese investors. Is this new round any different?
I think it is somewhat different. I think the sovereign wealth funds of both Dubai and Abu Dhabi are more phisticated than the petrodollar investors of the 1970s and the Japanese bubble investors who mainly snapped up trophy assets abroad. I think Dubai and Abu Dhabi are both making smarter deals for long-term value and investing in enduring companies and franchises.
Giorgio Armani once suggested "Dubai is the new New York". Sitting at your office in New York City, what would you suggest Dubai do, or not do, if it wants a similar status as NYC?
Interesting question. New York is worried about London being the new New York as well. I think Dubai is doing a lot of things right to become the new New York - establishing a financial centre, trying to bring in culture and entertainment, providing places for outsiders to buy and live. But history counts for a lot. Even when New York went through its worst times in the 1970s, there was something about its spirit, opennes and freedom that kept people there. Those are the hardest things to replicate because they are spontaneous and cannot be decreed by government fiat.
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