Ziad Daoud Explains How War with Iran Will Reshape the Gulf

SPEAKER_2 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:18)

Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:22)

And I'm Joe Weisenthal.

Tracy Alloway (0:23)

Joe, it is currently April 10th.

Joe Weisenthal (0:26)

That's right.

Tracy Alloway (0:26)

It's a Friday. It's a beautiful Friday outside. We always say when we're recording things nowadays because we never know what's gonna change in the next hour or day or week. But at the moment, there is some sort of ceasefire between the US and Iran. Israel is rather more uncertain at the moment, but it seems that whatever happens in the short term with this particular conflict, that the region, the Gulf region and the Middle East has already been vastly, vastly changed.

Joe Weisenthal (0:57)

Yeah, it seems almost certain of that in many different dimensions. I mean, look, first of all, there's just been the literal physical damage. You can have a ceasefire, but there's gonna be energy and time to get expended, etc. Then, of course, and we already have done an episode, for example, about Dubai real estate in particular or Dubai in particular, and the question of like, here is this country that was perceived really by people around the world as maybe one of the most stable places that you could live, and obviously, some of that is being called into question. But then, here is just a gigantic war and wars, even short ones potentially, have all kinds of ripple effects and scars and so forth, and it'll change obviously the course of the region.

Tracy Alloway (1:43)

Yeah. The way I think about it is the Gulf region was a center of, let's say, three things, so energy, oil and resulting petrochemicals, which we've talked a lot about, capital. There's a lot of money emanating from the region because of its oil wealth, and that flows into all sorts of things from US tech stocks to infrastructure investments and all of that. Then thirdly, well, I guess I could add trade. It's a purveyor of trade routes, for sure, but setting that aside, thirdly, it's also a capital of living standards and this idea of we're going to build a diversified Gulf city state where people can come and live. And we sort of talked about on the Dubai episode, but today we're going to be talking about maybe all three or four of those things and what this particular conflict actually means for them, for a region that has really built itself around this idea of energy, capital, living standards, and trade.

Joe Weisenthal (2:42)

And then the one thing I would just point out is that obviously the region has almost a reputation for being in some version of constant war or there is constant tension, etc., right? So at various times, do you disagree?

Tracy Alloway (2:56)

I mean, the Iran threat has always been there, but one of the key themes of the UAE, for instance, becoming this haven of stability was that it wasn't expected to erupt in this way.

Joe Weisenthal (3:06)

That is indisputable and that is part of why it's so shocking. But tensions in the Middle East, on some level, is almost like a cliché in the news, etc. And so over years, we're in multiple Gulf wars, etc. The war in Gaza that's been taking place over the last multiple years. I mean, there's just extraordinary, there's a long history of conflict.

Tracy Alloway (3:31)

Yes. So we are going to be talking about how the latest conflict is going to impact the region potentially forever. So we have the perfect guest. I'm very happy to say we are going to be speaking with the Chief Emerging Markets Economist over at Bloomberg Economics, Ziad Daoud. Someone we've spoken to before, I think our last episode with him was about Egypt, but someone I used to speak to a lot more when I was actually based in Abu Dhabi and he was based in Dubai. He's about to go back to Dubai after being in London for the past few weeks. So Ziad, thank you so much for coming back on Odd Lots.

Ziad Daoud (4:08)

Thank you for having me, Joe and Tracy.

Tracy Alloway (4:10)

So out of curiosity, what have the past few weeks been like for you as someone who is not just living and breathing Gulf economics, but also physically living in the region for the past few years?

Ziad Daoud (4:22)

It's been intense because although we've been expecting the war to take place, the intensity of it, the reaction and feeling it rather than expecting it, and living through it rather than expecting it has been unprecedented, I think, for the region. But yeah, it was expected, but it was still different when you feel it than when we just anticipate it.