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Fragmentation of Globalization: The New Era of Economic Blocs and Supply Chain Realignment

The intricate fabric of globalization, woven tightly over decades, is now unraveling at an accelerated pace. While globalization once promised interconnected markets, open trade, and reduced barriers, recent geopolitical shocks and economic realignments have given rise to distinct economic blocs, reshaped supply chains, and recalibrated financial flows. For Arab banking leaders, policymakers, and executives, understanding these dynamics is crucial to securing regional interests in a rapidly evolving global economy.

Understanding the Drivers Behind Fragmentation

The fragmentation we see today has roots in recent global disruptions, including the COVID-19 pandemic and the Russia-Ukraine conflict. These crises exposed deep vulnerabilities in global supply chains, prompting countries to reassess their reliance on distant markets. Additionally, rising strategic tensions, notably the U.S.-China rivalry, have exacerbated protectionist tendencies, reshaping global trade dynamics as nations seek greater economic security and autonomy.

This shift towards economic nationalism isn’t merely reactionary but reflects a strategic pivot where governments increasingly favor localized or regionalized supply chains to mitigate risk. Consequently, the global economy, once heavily reliant on long supply chains stretching across continents, is transitioning towards regional clusters characterized by shorter, more resilient links.

The New Economic Blocs: Strategic Alignments

Today’s world is increasingly segmented into distinct economic blocs, each defined by strategic interests, shared values, or pragmatic economic alignments. Prominent among these is the Western bloc led by the United States and the European Union. This alliance focuses on strategic self-sufficiency, technological leadership, and stringent controls over critical sectors such as semiconductors and pharmaceuticals.

In parallel, an Eastern bloc spearheaded by China and supported by Russia seeks alternative frameworks, notably through the BRICS+ grouping, which recently expanded its membership. The bloc promotes greater financial autonomy, including reducing dependency on the U.S. dollar through alternative trade settlement currencies, notably the yuan.

A third, increasingly influential category consists of nations adopting non-aligned or multi-aligned strategies. Notably, India, Saudi Arabia, and the UAE exemplify this approach, maximizing economic and diplomatic advantages without committing exclusively to one camp. The Arab region, particularly Gulf Cooperation Council (GCC) states, finds itself strategically positioned to leverage relationships across these emerging blocs.

The Economic Logic of Reshoring: Opportunities and Risks

Reshoring, or the return of manufacturing and supply chains closer to domestic markets, is one of the defining economic themes today. The primary incentives include enhanced security, shorter lead times, reduced geopolitical risks, and greater control over vital sectors. For instance, the semiconductor industry has witnessed massive investment inflows, especially in the U.S. and Europe, driven by policies like America’s CHIPS Act and the EU’s Green Deal Industrial Plan.

However, reshoring isn’t devoid of challenges. Increased local production costs, higher inflationary pressures, shortages of skilled labor, and elevated investment requirements pose significant economic considerations. These factors could substantially alter cost-benefit analyses, compelling firms and governments to balance economic efficiency with strategic necessity carefully.

Reshaped Supply Chains: A Structural Shift in Global Trade

The shift from globalization toward fragmented, regionalized supply chains marks a significant structural evolution in global trade. Companies are increasingly embracing nearshoring—a strategy of relocating supply chains closer to home markets but within economically efficient regions. For instance, North American firms have intensified investments in Mexico, while European corporations increasingly source components from Eastern European and North African partners.

This realignment also significantly impacts the Middle East and North Africa (MENA), which enjoys geographic proximity to Europe and Asia. Countries like Morocco, Egypt, and the UAE have already experienced increased FDI inflows as regional hubs for logistics and manufacturing, benefiting from the reshoring trend. Thus, Arab nations have tangible opportunities to integrate further into European and Asian supply chains, offering a strategic buffer for Western markets.

Impact on Global Financial and Trade Flows

Financial institutions and trade financiers are closely monitoring these developments. Fragmentation is reshaping patterns of Foreign Direct Investment (FDI), with a noticeable pivot away from traditional global centers toward regional manufacturing hubs. Trade volumes, previously driven by globally dispersed supply chains, are now concentrated within regional blocs. Consequently, Arab banks must adapt, positioning themselves strategically within new regional corridors and trade finance dynamics.

For financial institutions across the Arab world, understanding and adapting to these new realities is essential. Banks must enhance their expertise in financing reshored operations, establish strong regional partnerships, and actively participate in emerging regional trade corridors. Banks in countries such as Saudi Arabia, UAE, Egypt, and Morocco can leverage their strategic locations and existing economic infrastructure to capitalize on shifting global trade dynamics.

Strategic Implications and Recommendations for Arab Banks and Policymakers

As the global economy transitions to regionalized trade blocs and reshored supply chains, Arab banks and policymakers are uniquely positioned to exploit arising opportunities and mitigate inherent risks. It is essential that regional financial institutions remain proactive rather than reactive.

Firstly, banks should deepen their capabilities in regional trade financing, infrastructure investment, and logistics-related sectors. Enhancing sector-specific expertise in manufacturing, technology, and logistics will position Arab banks as vital partners in regional economic development.

Secondly, policymakers and banking leaders should foster stronger economic ties with strategically important markets within Europe, Asia, and Africa. Strengthening economic diplomacy, coupled with targeted trade agreements, can attract investments from companies realigning their supply chains.

Lastly, investments in technology-driven financial products, robust digital platforms, and advanced analytics will be paramount. This will not only improve the banks’ competitiveness but also address increased demands for transparency, efficiency, and security in regional financial transactions.

In conclusion, the fragmentation of globalization presents substantial economic opportunities and complex strategic considerations for the Arab banking sector. Financial institutions and policymakers must cultivate flexibility, strategic foresight, and robust regional alliances to thrive within this evolving economic landscape. Through thoughtful adaptation and proactive engagement, Arab banks can ensure their pivotal role in this emerging economic order, safeguarding regional interests while promoting sustained economic prosperity.

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De-dollarization: The Global Shift Towards Alternative Currencies

Introduction

For nearly eight decades, the U.S. dollar has served as the bedrock of international trade and finance, a position fortified by post-World War II economic structures and geopolitical alignments. Today, however, there is an accelerating shift away from dollar-centric transactions, driven by geopolitical realignments, economic considerations, and technological advancements. This phenomenon, known as de-dollarization, presents profound implications for global finance, including strategic challenges and opportunities for banks and central banks across the Arab region.

Historical Context: How Did the Dollar Achieve Dominance?

The supremacy of the dollar can be traced back to the Bretton Woods Conference of 1944, establishing the dollar as the world’s primary reserve currency linked directly to gold. When President Nixon severed the dollar’s convertibility to gold in 1971, the petrodollar system emerged, with Middle Eastern oil producers, led by Saudi Arabia, pricing oil exclusively in dollars. This reinforced global reliance on the U.S. currency, embedding it deeply into the infrastructure of international trade and finance.

Arab nations played a pivotal role in solidifying dollar dominance, especially through extensive oil exports denominated in dollars, providing enormous liquidity and demand for the currency globally. For decades, this alignment benefited the region, providing financial stability, liquidity management simplicity, and substantial investment opportunities.

The Current Wave of De-dollarization: Drivers and Motivations

The shift away from the dollar has intensified in recent years due to several converging factors. Geopolitical tensions, particularly the conflict between Russia and Ukraine and subsequent Western sanctions, highlighted the vulnerabilities of dependence on the U.S. dollar. Countries subject to sanctions, or fearing potential exposure, began actively seeking alternatives to insulate their economies from dollar-related risks.

Simultaneously, the economic influence of emerging blocs, notably the BRICS nations (Brazil, Russia, India, China, and South Africa), has sparked renewed debate about adopting alternative international reserve currencies. The recent expansion of BRICS to include Saudi Arabia and the UAE underscores this trend’s particular resonance within the Arab world. The prospect of using currencies like the Chinese yuan in oil trade between the Gulf Cooperation Council (GCC) nations and China has raised considerable interest.

Emerging Alternatives to the Dollar                   

Among the leading contenders challenging dollar dominance is the Chinese yuan. Beijing has actively promoted yuan-denominated trade, particularly through bilateral agreements with trading partners across Asia, Latin America, and increasingly the Arab region. Saudi Arabia and the UAE have already begun exploring yuan-based oil transactions, driven by strategic economic diversification policies and strengthened bilateral ties with China.

Additionally, BRICS nations are evaluating the possibility of a common currency designed explicitly to reduce dependence on the dollar. Although practical challenges around liquidity and governance remain substantial, the concept signals a significant symbolic shift in the global monetary landscape.

The proliferation of Central Bank Digital Currencies (CBDCs) is also significant. These digital currencies offer efficient, secure cross-border payments, facilitating easier transitions away from traditional dollar-centric mechanisms. The UAE and Saudi Arabia’s joint “Aber” project, alongside participation in the mBridge initiative, exemplifies regional leadership in exploring practical, technology-driven financial alternatives.

Implications of De-dollarization for the Arab World

The Arab banking sector finds itself at the center of global monetary shifts, facing both risks and opportunities. Gulf countries, historically intertwined with dollar-based financial systems, are re-evaluating their strategic economic alignments. Saudi Arabia and the UAE, as active participants in the evolving landscape, are diversifying their currency exposures through strategic foreign reserve management and bilateral trade agreements in non-dollar currencies, primarily the yuan.

For central banks in the region, this shift necessitates adjustments in monetary policy frameworks, reserve management strategies, and enhanced financial infrastructure to accommodate a more diversified currency environment. Sovereign wealth funds (SWFs) across the Gulf region, such as Saudi Arabia’s Public Investment Fund (PIF) and the UAE’s Mubadala and Abu Dhabi Investment Authority (ADIA), have increasingly sought diversification beyond traditional dollar-denominated assets, signaling broader strategic shifts.

Challenges and Constraints of De-dollarization

Despite momentum towards alternative currencies, significant barriers remain. The liquidity, convertibility, and deep capital markets that underpin the dollar’s dominance are unmatched by other currencies. The yuan, despite its growth, still faces restrictions on convertibility and global acceptance, limiting its immediate potential to fully replace the dollar.

For Arab banks and financial institutions, transitioning away from a predominantly dollar-based system introduces complexities around managing foreign exchange risks, payment settlement processes, and liquidity management. Additionally, confidence in alternative currencies, especially under conditions of economic stress or geopolitical uncertainty, remains tentative.

Case Studies: Lessons for Arab Banks and Economies

Russia’s recent experiences provide valuable insights. Following sanctions, Russia increased its yuan-based transactions, reducing exposure to Western financial systems. Similarly, India’s rupee-based transactions with Russia illustrate practical adaptations to geopolitical pressures.

Within the region, Saudi Arabia’s early exploration of yuan-denominated oil contracts offers preliminary lessons about managing foreign exchange risks and leveraging strategic alliances. Conversely, economies heavily dependent on external borrowing and dollar-based debt, such as Egypt, highlight vulnerabilities and underscore the urgency of economic diversification and currency risk management.

Strategic Recommendations for Arab Banks and Policymakers

Arab financial institutions and policymakers must approach de-dollarization proactively and strategically. Central banks should enhance their financial infrastructure to facilitate multi-currency transactions seamlessly. Strengthening bilateral financial agreements and building capabilities in handling alternative currencies, particularly the yuan, will be critical.

Diversifying foreign reserves through strategic allocations to multiple major currencies and digital assets, including CBDCs, is essential for maintaining financial stability and flexibility. Furthermore, Arab banks should cultivate expertise in currency risk management and invest in robust technological infrastructure to support digital currency initiatives and facilitate cross-border payments beyond the dollar.

Policymakers must foster regional collaboration among central banks, enabling coordinated responses to global monetary shifts. A collective regional strategy will enhance the Arab world’s negotiating power and resilience against currency volatility.

Conclusion

The global financial landscape is experiencing fundamental shifts as reliance on the U.S. dollar begins to wane under geopolitical, economic, and technological influences. For the Arab banking sector, this shift represents both a strategic challenge and an opportunity to assert greater financial autonomy and economic influence. Arab banks, central banks, and policymakers should embrace proactive measures, carefully weighing the benefits of currency diversification and innovation against the complexities of navigating unfamiliar financial waters.

Ultimately, adopting a measured and strategic approach to the shifting global monetary order will ensure Arab economies remain resilient and influential in an increasingly multipolar financial environment.

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The Debt Time Bomb: How Rising Global Debt Threatens Financial Stability

Introduction: The Growing Shadow of Debt

In 2024, the global economy faced unprecedented challenges as total global debt reaches an alarming $318 trillion, equating to roughly 333% of the world’s GDP. This dramatic increase, documented by the Institute of International Finance (IIF), reveals a troubling escalation that threatens economic stability worldwide. For policymakers, bankers, and financial experts in the Arab region, comprehending this phenomenon and its potential implications is crucial.

Global Debt at a Glance: The Numbers Speak

Recent data from the International Monetary Fund (IMF) indicates that global public debt alone stands at nearly $100 trillion, representing approximately 93% of global GDP. The escalation of public debt has been accelerated by extensive government stimulus during the COVID-19 pandemic, prolonged conflicts such as the war in Ukraine, and rising geopolitical tensions that have necessitated greater military and defense expenditure.

Corporate and private debt further compound the problem. Global corporate debt reached approximately $89 trillion in 2024, up significantly from previous years, driven largely by prolonged periods of low-interest rates and aggressive borrowing by multinational corporations. Households, too, have contributed to the rising debt levels, particularly in advanced economies where easy credit has inflated housing markets and consumer spending.

Key Drivers Behind the Debt Crisis

Several structural and cyclical factors underpin this dramatic increase in global indebtedness. Historically low-interest rates maintained by central banks worldwide post-2008 financial crisis encouraged extensive borrowing across all sectors. However, recent monetary tightening to combat persistent inflation has made servicing this debt significantly more expensive.

Moreover, governments’ expansive fiscal responses to mitigate economic disruptions from the COVID-19 pandemic have greatly inflated national debt levels. The IMF estimates that pandemic-related fiscal stimulus exceeded $17 trillion globally, significantly straining public budgets.

Geopolitical instability has also played a significant role. Conflicts and tensions worldwide, from Europe and Asia to the Middle East, have led to increased defense spending, refugee support, and disruptions in global trade, further exacerbating fiscal pressures.

The Risks of Rising Debt

High debt levels pose substantial risks to global economic stability. Increased debt servicing costs limit governments’ fiscal space, hindering their capacity to respond effectively to economic downturns or invest adequately in infrastructure, education, and innovation. According to the IMF, nearly 60% of low-income countries are already experiencing debt distress or are at high risk of it, highlighting a precarious global situation.

Moreover, excessive borrowing can crowd out private sector investments, stifling productivity growth and economic dynamism. Financial stability concerns also rise as heavily indebted economies become vulnerable to market shocks, credit downgrades, and capital flight. A crisis of confidence among investors in sovereign debt markets could precipitate widespread economic instability.

The Arab Region’s Debt Dilemma

The debt landscape across Arab nations is diverse. The Gulf Cooperation Council (GCC) countries generally maintain robust fiscal positions due to their substantial hydrocarbon reserves and sizeable sovereign wealth funds. For instance, Saudi Arabia’s public debt remains relatively modest at approximately 26.2% of GDP, reflecting prudent fiscal management and robust oil revenues. Similarly, Kuwait and Qatar maintain manageable debt levels at around 3% and 43% of GDP, respectively.

However, the situation in non-GCC countries is significantly more challenging. Egypt’s public debt has risen sharply to nearly 96% of GDP, driven by ambitious economic reforms, infrastructure spending, and the impacts of inflation and currency depreciation. Lebanon represents an even more dire scenario, with public debt surpassing 195% of GDP amid an ongoing economic collapse that has severely diminished living standards and financial stability.

Jordan and Tunisia also confront challenging debt dynamics, heavily reliant on international financial institutions for fiscal stabilization. These countries face difficult choices balancing austerity, growth, and public welfare amid constrained fiscal space.

Strategic Responses for Arab Countries

In response to rising debt threats, Arab economies must adopt comprehensive strategies to enhance fiscal sustainability and financial resilience. Strengthening domestic revenue collection mechanisms through better tax administration and expanding the tax base can reduce dependence on external financing and create fiscal breathing room.

Developing robust domestic capital markets offers another avenue to manage debt sustainably. By increasing local currency financing options, governments can mitigate the risks associated with foreign currency borrowing and reduce vulnerability to external market shocks. This approach requires investment in regulatory frameworks, market transparency, and financial literacy to build investor confidence.

Economic diversification remains critical, particularly for GCC countries heavily reliant on hydrocarbon revenues. Initiatives like Saudi Arabia’s Vision 2030, aimed at diversifying economic activities and reducing oil dependency, exemplify strategic foresight. Similar approaches, focused on renewable energy, technology, and infrastructure investment, can help buffer against external shocks and foster sustainable growth.

Opportunities Within the Crisis

Despite the challenges posed by rising global debt, there are opportunities for strategic economic advancement. Green and sustainability-linked financial instruments, including bonds and sukuk, present viable alternatives for financing critical investments in renewable energy and sustainable infrastructure. These innovative instruments align well with global trends toward environmental, social, and governance (ESG) investing, attracting international capital and promoting sustainable economic development.

Moreover, debt restructuring initiatives, such as debt-for-nature swaps or debt-for-reform agreements, can enable heavily indebted Arab countries to alleviate immediate fiscal pressures while committing to meaningful governance and economic reforms.

Regional cooperation is also essential. Enhanced collaboration through multilateral Arab financial institutions, such as the Arab Monetary Fund (AMF) and the Islamic Development Bank (IsDB), can provide targeted financial support, technical assistance, and coordinated economic policies. Such regional frameworks can effectively address shared economic challenges and leverage collective financial strength.

Conclusion: Charting a Sustainable Path Forward

The escalating global debt crisis presents profound risks but also strategic opportunities for the Arab region. Addressing this challenge requires decisive, coordinated action from policymakers, financial institutions, and economic leaders across the region. Arab banks must advocate strongly for fiscal discipline, transparency, and strategic investment priorities that align debt issuance with sustainable economic development.

By leveraging regional cooperation, embracing innovative financial instruments, and committing to structural reforms, Arab economies can strengthen their resilience against global financial shocks. The road ahead demands prudence, strategic foresight, and a commitment to sustainability, ensuring that debt serves as a catalyst for growth rather than a burden on future generations.

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MUBARAK AL-KABEER PORT – THE WIDER IMPACT ON GROWTH AND SUSTAINABILITY IN ARAB COUNTRIES

BY DR SOHA MAAD

INTRODUCTION

The Mubarak Al-Kabeer Port is a significant infrastructure project located on Bubiyan Island in Kuwait. It is part of Kuwait’s Vision 2035 and China’s Belt and Road Initiative. The port aims to enhance regional trade and transportation, contributing to Kuwait’s economic diversification by reducing its reliance on oil.

The port’s development is divided into phases, with the first phase completed in 2021. The entire project is expected to be operational by 2026. Once completed, it will play a pivotal role in boosting Kuwait’s Gross Domestic Product GDP and fostering economic growth in the region. We present a complete overview of this major infrastructure project covering its various benefits, wider impact, and future prospect.

EXPECTED ECONOMIC BENEFITS AND STRATEGIC IMPORTANCE

The Mubarak Al-Kabeer Port is expected to bring significant economic benefits to Kuwait. The port will reduce Kuwait’s reliance on oil by boosting trade and commerce, aligning with the country’s Vision 2035. It aims to position Kuwait as a key transit point for regional trade, enhancing its role in global commerce. The development and operation of the port will open numerous job opportunities, supporting local employment.

The Mubarak Al-Kabeer Port holds immense strategic importance for Kuwait and the region. Positioned on Bubiyan Island, the port aims to connect Central and East Asia, becoming a key link in the revival of the Silk Road. The project enhances Kuwait’s transportation and logistics capabilities, strengthening its role in global commerce. It is expected to attract significant foreign investments while maximizing local economic growth.

CONNECTION TO BELT AND ROAD INITIATIVE

The Mubarak Al-Kabeer Port is closely tied to China’s Belt and Road Initiative (BRI), reflecting a strategic partnership between Kuwait and China. The port is a key component of the BRI, serving as a vital link in the Silk Road’s maritime route. It facilitates trade between East and West, enhancing connectivity. Kuwait and China have signed agreements to align the port’s development with the BRI, fostering mutual economic growth and investment opportunities. Positioned on Bubiyan Island, the port strengthens China’s trade network in the Gulf region, making it a critical hub for regional and international commerce. The project includes advanced facilities and logistics, supporting the broader goals of the BRI to improve global trade infrastructure.

KUWAIT’S VISION 2035 AND ITS REGIONAL TRADE DYNAMICS

Kuwait’s Vision 2035, also known as “New Kuwait,” is a strategic development plan aimed at transforming Kuwait into a global financial and trade hub. It focuses on economic diversification, reducing reliance on oil, and fostering a competitive private sector. The plan includes major infrastructure projects like the Mubarak Al-Kabeer Port, which enhances Kuwait’s regional trade dynamics. Kuwait’s membership in the Gulf Cooperation Council (GCC) facilitates regional trade through agreements and a unified customs union. Kuwait has signed multiple bilateral and regional trade agreements, boosting its economic ties with countries like China, the European Union (EU), and the United States (US). The focus on non-oil sectors and infrastructure development strengthens Kuwait’s role in regional commerce.

BENEFITS TO INDUSTRIES

The Mubarak Al-Kabeer Port is set to significantly benefit various industries in Kuwait. The port’s advanced facilities will streamline cargo handling and improve supply chain efficiency, boosting the logistics sector. By becoming a regional trade hub, the port will enhance import and export activities, benefiting businesses across multiple sectors. The development of industrial zones around the port will support manufacturing and light industries, fostering economic growth. The integration of power plants and substations will support energy-intensive industries and infrastructure projects.

NEW JOBS FROM MUBARAK AL-KABEER PORT DEVELOPMENT

The development of the Mubarak Al-Kabeer Port is expected to open a wide range of job opportunities across various sectors:

  • Construction and Engineering: Jobs in infrastructure development, including civil engineering, project management, and skilled labor for construction.
  • Logistics and Transportation: Roles in cargo handling, shipping, warehousing, and supply chain management.
  • Port Operations: Positions such as dock workers, crane operators, and administrative staff for port management.
  • Industrial and Manufacturing: Employment in light industries and manufacturing zones planned around the port.
  • Tourism and Hospitality: Opportunities in tourism-related services as Bubiyan Island develops into a tourist destination.
  • Environmental Management: Roles focused on ensuring the port’s operations align with sustainability goals.

REGIONAL IMPORTANCE

The Mubarak Al-Kabeer Port stands out among regional ports due to its strategic location, advanced infrastructure, and ambitious goals. Mubarak Al-Kabeer Port boasts the deepest berths among Kuwait’s ports, surpassing Shuwaikh, Doha, and Shuiba. It is designed to handle larger vessels and higher cargo volumes, making it a key player in regional trade. Unlike many other ports, it is closely tied to China’s Belt and Road Initiative, enhancing its role in international trade networks. The port’s planned expansion to include industrial zones, free trade areas, and enhanced connectivity through the Gulf Railway project sets it apart as a comprehensive trade and logistics hub. Its proximity to Iraq’s Grand Faw Port and Iran’s ports fosters a competitive dynamic, influencing regional trade strategies.

BENEFITS TO VARIOUS COUNTRIES

Mubarak Al-Kabeer Port will bring benefits to various countries including:

  • Kuwait: As the host country, Kuwait benefits directly from the port’s economic and strategic advantages, aligning with its Vision 2035.
  • Iraq: The port’s proximity to Iraq’s Grand Faw Port has sparked competition, influencing Iraq’s trade and infrastructure strategies.
  • Iran: The port enhances regional trade routes, potentially affecting Iran’s maritime commerce.
  • China: As part of the Belt and Road Initiative, the port strengthens China’s trade network and its influence in the region.
  • Central Asian Countries: The port’s location makes it a key gateway for trade with Central Asia, boosting connectivity and commerce.

MUBARAK AL-KABEER PORT INFRASTRUCTURE

The Mubarak Al-Kabeer Port is a major infrastructure project located on Bubiyan Island, Kuwait. The port’s construction is divided into multiple phases. The first phase, completed in 2021, included the development of four berths. The entire project is expected to be operational by 2026. The port features state-of-the-art facilities for cargo handling, logistics, and transportation, making it a critical hub for regional and international trade. Bubiyan Island, where the port is located, includes power plants and substations to support the port’s operations. A 5,000-megawatt power plant has already been constructed in Subiya. The port is designed to be environmentally sustainable, aligning with modern infrastructure standards. The port is part of the Gulf Railway project, which aims to connect all six Gulf Cooperation Council (GCC) member states, enhancing regional connectivity.

FINANCE OF MUBARAK AL-KABEER PORT

The Mubarak Al-Kabeer Port is financed through a collaboration between Kuwait and China. The Kuwaiti government has allocated financial resources for the port’s development, emphasizing its strategic importance for the country’s economic diversification. China State Construction and Communications Corporation Limited (CSCC) is a key partner, providing expertise, design, and pre-implementation services. This partnership is supported by agreements between the governments of Kuwait and China. This collaboration highlights the mutual benefits for both nations, with Kuwait gaining advanced infrastructure and China expanding its trade network.

IMPACT ON REGIONAL GEOPOLITICS

The Mubarak Al-Kabeer Port has significant implications for regional geopolitics. Situated on Bubiyan Island, the port strengthens Kuwait’s position as a key player in the Gulf region, enhancing its influence in regional trade and transportation. By becoming a major trade hub, the port increases Kuwait’s economic leverage in the region, fostering stronger ties with neighboring countries and global partners. The port’s development aligns with Kuwait’s efforts to promote stability and cooperation within the Gulf Cooperation Council (GCC) and beyond. The port’s integration into this initiative highlights its global significance, connecting Kuwait to broader international trade networks.

FUTURE HORIZON OF MUBARAK AL-KABEER PORT

The future of the Mubarak Al-Kabeer Port is promising, with plans to significantly expand its capacity and influence. The port’s area is set to increase tenfold, reaching approximately 116 million square meters. This includes zones for maritime navigation, port services, free trade, light industries, and regional road and railway connections. The port is expected to be fully operational by the end of 2026, marking a major milestone in Kuwait’s Vision 2035. The expansion aims to attract local and foreign investments, diversify Kuwait’s economy, and create thousands of job opportunities.

The port is poised to become a cornerstone of regional trade, enhancing Kuwait’s role in global commerce.

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Access to credit: Challenges and opportunities for women entrepreneurs

by Nicola Ehlermann

International Sustainability and Gender Equality Advisor, former Head of the MENA-OECD Competitiveness Programme, Lecturer at Sciences Politiques – Paris 

Over the last 50 years, the average per capita income in the Middle East and North Africa (MENA) has been weak, increasing by only 62%. Numerous surveys mention the need to improve the regions business climate, including access to finance, to take advantage of the significant untapped potential and broaden economic diversification, boost innovation and sustain growth. This includes narrowing the gender gap. And although women’s education attainment has significantly increased and the representation in professional roles is evolving, the overall gaps between men and women remain significant in aspirations, opportunities, and outcomes.

The MENA region has also the second-lowest global share of firms with female participation in company ownership at less than 3 percent and has the highest gender gap in the world for entrepreneurship: 12 percent of women are entrepreneurs compared with 31 percent of men.

Women’ lagging in entrepreneurship is due to the specific challenges they face in establishing, managing or developing a business. Although from a legal standpoint, men and women face the same requirements for registering a business, in practice, they may encounter specific obstacles resulting from legal and socio-economic provisions embedded in the family or labor laws. For instance, work experience and business contacts are critical for business success, yet both are limited for many women in the region.

Access to finance, so essential to establish and grow a business, is equal in principle for men and women. However, a smaller share of women than men hold accounts at a financial institution or have credit cards in their own name. Furthermore, various factors – such as limits on women’s property rights and assets, unequal inheritance laws and banks requiring husbands to co-sign loans – contribute to women having less available collateral to secure external financing than men.

The lack of access to finance is seen by women entrepreneurs as a major and often primary obstacle to creating and developing businesses. Despite specific support programs adopted by some banks and microfinance institutions, bank financing remains a stumbling block. This is due to factors such as collateral requirements that cannot be met by young start-ups. More advanced systems granting funds to women entrepreneurs such as equity investment and profit-sharing appear to be lacking. Testimonies from women entrepreneurs in the region suggest that many projects struggle to secure the funding needed for their growth and operational effectiveness. Obtaining grants or investments tailored to small-scale projects, particularly in rural areas, remains difficult.

Women then generally turn to other options such as borrowing from family and friends or microcredit, all of which have limitations and inhibit women’s businesses to innovate, grow and scale up. There is a need for women owned and run micro, small and medium sized enterprises to move beyond microfinance as many women-owned businesses need more varied services and products, and larger loans than microfinance institutions can provide.

To reverse the trend, governments have stepped up initiatives. But building on testimonies, public schemes aiming at supporting women entrepreneurship seem to remain excessively cautious and bureaucratic in disbursing funds.

Banks are essential key financial players but seem still reluctant to fund small businesses and start-ups and ask for strong personal guarantees. Women mention a lack of interest from banking representatives to gender issues, even when specific projects or products are promoted by their bank. Female entrepreneurs furthermore report being asked questions that men would not be asked e.g. whether they intend to have a child that then impact their access to a loan.

To develop the 4th industrial revolution progress is necessary to increase the representation of women and it is key for financial institutions to understand the importance of women-owned businesses in their markets.

Banks in the Arab world could reflect how to support women’s economic engagement and for women’s entrepreneurship to become a pillar of the regional economy. Avenues of actions include strengthening Public-Private Partnerships and the pooling of resources. Developing trainings and a better understanding of the banking sector of women’s needs and their contribution to the economy. The development of digitized low-cost mobile applications to support access to finance for microentrepreneurs.

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Big Techs Policies and Threats Meta Alignment with Maga

By Dr. Soha Maad 

INTRODUCTION

The alignment of Meta Big Tech with MAGA, Donald Trump Make America Great Again policy, entails potentials and threats to the global Big Tech industry and the Arab world. Moreover, the Davos 2025 World Economic Forum raised concerns about risks from Big Techs.

This article considers the Big Tech policies and threats. Meta alignment with MAGA is analysed and its impact on the global tech industry is assessed. The article concludes with a brief overview of Big Techs horizon in the Arab world and a roadmap for Arab countries to support and develop Big Techs.

BIG TECH POLICIES 

Big Tech policies are regulations and guidelines designed to address the influence and operations of large technology companies. These policies aim to tackle issues such as competition, data privacy, content moderation, and market dominance. Big Tech policies include policies for promoting fair competition and preventing monopolistic practices, regulations to protect user data and ensure transparency in how data is collected, used, and shared, guidelines for managing harmful or misleading content on platforms to protect users and maintain a healthy digital environment, measures to promote innovation and competition, and policies to reduce risks to the broader economy.

Different regions, such as the European Union, the United States, and China, have developed their own regulatory initiatives to support and control Big Techs.

BIG TECH THREAT RAISED AT DAVOS 2025

At the World Economic Forum 2025 in Davos, the focus was on the transformative role of artificial intelligence (AI) and the growing complexities of cyberattacks. AI was hailed as a critical enabler of growth and efficiency, but also recognized as a double-edged sword due to its potential misuse. Leaders discussed the need for robust AI governance to prevent misuse. The discussions highlighted the increasing sophistication of cyberattacks, with AI being used to automate attacks and create deepfakes. Organizations were urged to prioritize proactive AI security strategies. The UN’s Global Digital Compact was mentioned as a framework for global governance of digital technology and AI. Overall, the discussions at Davos 2025 underscored the urgent need for collaboration and proactive measures to address the threats posed by Big Tech and AI.

META NEW POLICIES

Meta, the parent company of Facebook and Instagram, has recently made several significant policy changes. It has decided to discontinue its diversity, equity, and inclusion (DEI) programs, citing changes in the legal and policy landscape. This move has raised concerns about the potential impact on workplace culture and employee experiences. Meta has also ended its third-party fact-checking partnerships and relaxed content moderation policies around political discourse. This change has sparked worries about the spread of misinformation.

 Meta is implementing performance-based job cuts and has plans to use a community notes system similar to Elon Musk’s X (formerly Twitter) for content moderation. These changes have led to mixed reactions among employees and users, with some expressing concern about the company’s direction and its commitment to diversity and accurate content.

META ALIGNMENT WITH MAGA

MAGA “Make America Great Again” is the United States (US) President Donald Trump policy. It reflects a political movement advocating for policies aimed at restoring what supporters believe was the United States’ former greatness. This often includes calls for stricter immigration controls, economic protectionism, and a return to traditional American values. The MAGA movement has been associated with a strong sense of nationalism.

Meta, under the leadership of Mark Zuckerberg, has recently made several moves that align more closely with Donald Trump MAGA (Make America Great Again) policy. Meta has relaxed its content moderation policies, particularly around political discourse, aligning with MAGA’s emphasis on free speech over fact-checking. It has appointed prominent Republicans to key positions signaling a shift towards more conservative leadership. Meta has also taken public stands on issues important to the MAGA base, such as rolling back DEI programs and criticizing perceived censorship by the Biden administration.

Meta has strategically announced these changes through media outlets favoured by the MAGA base, including Fox News and Joe Rogan’s podcast. These changes have been met with mixed reactions, with some praising Meta for upholding free speech and others expressing concern about the potential spread of misinformation and the impact on workplace diversity.

META MAGA potential

Meta’s alignment with MAGA values can potentially bring several benefits to the company. By aligning with MAGA values, Meta has managed to improve its relationship with key political figures, including US President Donald Trump. This helps Meta navigate the political landscape more effectively. The relaxation of content moderation policies may lead to increased user engagement on Meta’s platforms, as users feel they have more freedom to express their opinions.

 By positioning itself as a champion of free speech, Meta has differentiated itself from other tech companies, potentially attracting users who feel their voices are being suppressed elsewhere. These benefits may potentially help Meta strengthen its position in the tech industry and maintain its relevance in the ever-evolving digital landscape.

META MAGA THREAT TO BIG TECH WORLDWIDE

Meta’s alignment with MAGA values has raised concerns about its potential impact on the broader tech industry and global digital landscape. Meta’s decision to relax content moderation policies and end fact-checking programs could lead to an increase in misinformation and harmful content on its platforms. This move might pressure other tech companies to follow suit, potentially undermining efforts to combat disinformation globally. Meta’s significant market power and user base mean that its policies can set trends for other companies. If Meta’s MAGA-aligned policies prove successful, other tech giants might adopt similar stances to remain competitive, further polarizing the digital space. Meta’s global reach means that its policies can influence digital norms and behaviours worldwide. This could lead to a shift in how information is shared and consumed, with potential implications for democracy and public discourse in various countries. Meta’s pivot might complicate regulatory efforts aimed at curbing Big Tech’s influence. Governments and regulatory bodies may find it harder to enforce rules and standards if major tech companies adopt divergent policies.

Meta’s MAGA alignment could have far-reaching consequences for the tech industry and digital ecosystems worldwide.

META MAGA ALIGNMENT IMPACT ON ARAB WORLD

Meta’s alignment with MAGA values has notable impact on the Arab world, particularly in terms of content moderation and freedom of expression. Meta has faced criticism for its censorship policies, particularly regarding content related to the Middle East. Meta’s policies have been accused of disproportionately affecting war news sources and influencers. The Oversight Board, which reviews Meta’s content policies, has urged the company to adopt a more nuanced approach to moderation. Meta’s policies sparked debates about the balance between free speech and content moderation, with concerns about the potential marginalization of certain groups.

The HORIZON OF BIG TECHs IN THE ARAB WORLD

The development of Big Tech in the Arab world is rapidly evolving, driven by significant investments and strategic initiatives.

Saudi Arabia is at the forefront of digital transformation, with ambitious plans to become one of the most technologically advanced nations. The country has committed to investing 2.5% of its GDP into research, development, and innovation by 2040. Projects like the Saudi Vision Cable and the establishment of the Center3 Company are pivotal to this vision. Saudi Arabia is leveraging technology to address its healthcare challenges. Initiatives include establishing national centers for medical technology assessment, health information systems, and virtual training for medical staff. Investments in telemedicine and AI are aimed at improving healthcare outcomes, especially for chronic conditions like diabetes.

Across the Arab region, digital transformation has seen a significant boost. The online population has grown from 28.8% in 2012 to 70.3% in 2022. Governments are recognizing the urgency of adopting digital technologies, leading to fundamental changes in societal dynamics and institutional frameworks.

Digital technologies in the Arab world are seen as crucial for achieving the Sustainable Development Goals (SDGs). The UNDP’s “Digital for Sustainable Development” initiative aims to drive policy reform, research and development, and promote digital literacy and inclusion.

Despite the progress in digital transformation in Arab countries, there are still challenges to overcome, such as the digital divide. About 30% of the population in the Arab region remains offline, highlighting the need for continued efforts to ensure digital inclusion.

The Arab world is making strides towards a high-tech future, with significant investments and strategic initiatives driving this transformation.

ROADMAP FOR ARAB COUNTRIES TO SUPPORT AND DEVELOP BIG TECHS 

Arab countries should support and develop their own Big Techs. The roadmap to achieve this involves a combination of strategic investments, fostering innovation, and ensuring a favourable regulatory environment.

  • Investing in Innovation: Encouraging and funding research and development to drive technological advancements. This includes investing in AI, machine learning, and other cutting-edge technologies.
  • Fostering a Culture of Innovation: Creating an environment that promotes creativity and experimentation. This involves establishing a culture where failure is seen as a learning opportunity.
  • Building Strategic Partnerships: Forming alliances with Big Tech companies, academic institutions, and research organizations to share knowledge, resources, and expertise.
  • Leveraging Data-Driven Decision-Making: Utilizing data analytics to inform business decisions, improve operational efficiency, and personalize customer experiences.
  • Adapting to Regulatory Changes: Complying with new laws and regulations and developing new laws governing Arab Big Techs.

By adopting these strategies, Arab Big Techs can grow, innovate, and maintain their competitive edge in the global market.

sun-power-supply-book-cityscape-focused

A New Era for Gulf Economies: The Emerging Post-Oil Growth Model

 

Gulf economies are seizing unprecedented growth opportunities.

New industries, trade shifts, and investments are rising.

Banks must adapt to lead this transformation.

The Gulf region stands at a pivotal moment. Saudi Arabia, the United Arab Emirates, and other Gulf economies are seizing new opportunities driven by evolving geopolitical and market dynamics. For decades, discussions about economic diversification beyond oil have been at the forefront of policy debates, yet tangible and sustainable results remained elusive. However, recent developments indicate that this time might be different. The region is leveraging its economic influence, strategic positioning, and growing state-driven industrial capabilities to carve out a prominent role in the global economic landscape.

The Role of State Capitalism in Gulf Economies

Saudi Arabia’s Public Investment Fund (PIF) has taken bold steps to attract leading multinational corporations to establish manufacturing bases in the Kingdom. Similarly, the UAE has become a key destination for high-profile investments, such as Microsoft’s $1.5 billion agreement with G42 and Fincantieri’s joint venture with the Emirati EDGE Group. These moves reflect an emerging industrial strategy that goes beyond traditional energy exports and aims to build self-sustaining industries in technology, defense, and manufacturing.

While sovereign wealth funds have played a critical role in these developments, the key challenge remains market discipline. A state-driven economic model provides financial firepower and strategic direction, but it also necessitates a sustainable and export-driven approach to avoid inefficiencies. Success will depend on how well Gulf economies balance state-led investment with private sector engagement and global market competitiveness.

Shifting Geopolitical Landscape and Gulf Leverage

The rise of new economic blocs such as BRICS and the increasing global fragmentation of trade and supply chains have placed the Gulf in an advantageous position. Historically reliant on Western markets and financial systems, the region is now diversifying its economic partnerships. Trade discussions with the European Union and the United Kingdom, alongside deepening economic ties with China, highlight the Gulf’s ability to assert itself in global value chains.

The talks surrounding a potential BRICS currency and de-dollarization of Gulf-China trade indicate a strategic realignment, even if such proposals remain in their early stages. More importantly, Gulf states are leveraging their geopolitical influence to broker deals that were once beyond their reach. Saudi Arabia’s recent hosting of preliminary negotiations between U.S. and Russian diplomats underscores the growing diplomatic and economic clout of the region.

Industrialization and the Energy Transition

The energy sector remains central to Gulf economies, but the focus is shifting toward renewable energy and industrial production. Saudi Arabia’s western coast has emerged as a hub for electric vehicle (EV) manufacturing, with investments from Foxconn, Hyundai, and Lucid. This shift is supported by the region’s abundant land, low-cost capital, and access to competitively priced green energy.

Similarly, the UAE is positioning itself as a digital infrastructure powerhouse, attracting substantial investments in green data centers. The combination of low-latency connectivity, solar-powered facilities, and strategic geographic placement makes the Gulf an attractive destination for technology-driven industries.

Renewable energy deployment has accelerated across the region. Saudi Arabia has secured partnerships with Chinese solar giants LONGi and JinkoSolar, ensuring local production capabilities. In parallel, the Gulf is investing heavily in green hydrogen, with the world’s largest facility set to launch in Saudi Arabia by 2026, complemented by similar projects in the UAE and Oman. These investments signal a shift toward an export-oriented energy strategy that aligns with global demand for sustainable solutions.

Economic and Trade Implications for the Financial Sector

For financial institutions in the Arab world, these developments present both opportunities and challenges. The expansion of Gulf industries requires robust financial backing, structured financing solutions, and innovative banking services tailored to new economic realities. Banks will need to adapt their lending strategies to accommodate the capital-intensive nature of emerging industries while ensuring risk mitigation.

The rise of new trade routes and economic partnerships also necessitates greater integration with global financial systems. The potential de-dollarization of certain Gulf-China transactions could lead to an increased role for regional banks in facilitating trade in alternative currencies. This shift underscores the need for financial institutions to stay ahead of evolving monetary policies and international banking regulations.

Additionally, the growing importance of technology and digital infrastructure in Gulf economies presents new avenues for financial services. Fintech solutions, digital banking, and blockchain-based transactions will likely become integral to supporting the next phase of economic expansion. Financial institutions must align their digital transformation strategies with the broader industrial evolution occurring in the region.

Strategic Recommendations for Arab Banks and Bankers

In light of these shifts, Arab banks and financial leaders must proactively position themselves to support and capitalize on this economic transition. Several strategic actions should be considered:

  • Develop Tailored Financing Models – Banks should design investment and lending mechanisms that cater to emerging industries such as green energy, digital infrastructure, and manufacturing.
  • Enhance Trade Finance Capabilities – With shifting trade routes and alternative currency discussions, financial institutions should strengthen their trade finance divisions to facilitate cross-border transactions and mitigate currency risk.
  • Strengthen Regional Collaboration – Arab banks should seek partnerships with international financial institutions and regional counterparts to support large-scale infrastructure and industrial projects.
  • Invest in Financial Technology – Digital banking, AI-driven credit assessment, and blockchain-based trade financing will become critical components in servicing the evolving needs of Gulf economies.
  • Adapt to Geopolitical Changes – Understanding and anticipating the impact of geopolitical realignments on financial markets is essential. Banks must stay ahead of regulatory changes, currency fluctuations, and global trade policies.
  • Support Sustainable Finance Initiatives – As Gulf economies prioritize renewable energy and green hydrogen, financial institutions should develop frameworks for sustainable financing and green bonds to support these initiatives.

The Gulf region is undergoing a profound economic shift, and the financial sector must evolve in tandem. Arab banks and bankers have a crucial role to play in shaping the next phase of growth by providing strategic financial support, fostering innovation, and ensuring long-term stability in an increasingly competitive global economy. The time to act is now, as the coming years may define the future trajectory of Gulf economies and their role on the world stage.

DR WISSAM

DeepSeek’s Rise: A Game-Changer in the AI Industry and Global Markets

By Dr. Wissam Fattouh

Secretary General, Union of Arab Banks and World Union of Arab Bankers

The emergence of the Chinese company DeepSeek has sent ripples across the artificial intelligence (AI) landscape, disrupting the dominance of tech giants in the sector and carrying profound geopolitical implications for global markets. By implementing best practices that have fueled its success, DeepSeek has positioned itself as a formidable player in the AI industry. Recognizing this model’s potential, the Union of Arab Banks urges the Arab world to draw lessons from DeepSeek’s journey to cultivate homegrown technology leaders.

DeepSeek: An Alternative Force in AI

DeepSeek, a Chinese AI company specializing in open-source large language models (LLMs), was founded in 2023 and is backed by the Chinese hedge fund High-Flyer. Designed as a cost-effective alternative to AI-driven chatbots like OpenAI’s ChatGPT, DeepSeek has rapidly gained traction despite concerns over data privacy, information control, data collection practices, and compliance with international regulatory frameworks.

Despite these challenges, DeepSeek has quickly emerged as a dominant force in the global tech market. Its free application has even surpassed ChatGPT in popularity, becoming the most downloaded app on Apple’s iOS App Store in the United States. Offering an array of advanced features, DeepSeek has distinguished itself as a powerful AI tool. The DeepSeek-R1 model is particularly notable for its ability to tackle complex queries, mathematical reasoning, and logical problem-solving.

DeepSeek’s applications span various fields, including content creation, data analysis, coding, and more. The platform is designed to be user-friendly, catering to both beginners and advanced users through its web interface and mobile application.

Transforming the Banking and Financial Sector

DeepSeek’s cutting-edge AI capabilities are poised to revolutionize the banking and financial industries, leveraging its ability to process large, complex datasets in real time. This enables financial institutions to extract valuable insights, identify trends, enhance forecasting, and optimize decision-making processes.

Some of the key ways DeepSeek is reshaping the financial sector include:

  • Risk Management & Fraud Detection: AI-driven analytics help identify potential risks and fraudulent activities with greater accuracy.
  • Customer Service Enhancement: DeepSeek provides instant, precise responses to customer inquiries, improving service efficiency and customer satisfaction.
  • Investment Strategy Optimization: By analyzing market data and predicting financial trends, DeepSeek aids in identifying profitable investment opportunities.
  • Personalized Financial Services: Through customer data analysis, DeepSeek tailors investment advice, loan offers, and financial planning solutions.
  • Operational Automation: DeepSeek automates key administrative tasks such as data entry, compliance verification, and transaction processing, reducing operational costs and improving efficiency.

By integrating DeepSeek’s AI-powered solutions, banks and financial institutions can enhance security, streamline operations, and provide customer-centric services, redefining industry standards.

A Global Shake-Up in the AI Market

DeepSeek has significantly disrupted the global AI sector, introducing cost-efficient, high-performance AI models that have reshaped market dynamics. The launch of DeepSeek-R1 in January 2025 triggered a substantial decline in AI value chain markets, marking a major turning point in the industry.

DeepSeek’s rapid ascent has established it as a key competitor in the AI space, achieving top rankings in 57 countries, including major markets like the United States, the United Kingdom, and Australia, as well as emerging markets such as India, Brazil, and Nigeria.

Remarkably, the development of DeepSeek’s third-generation model cost approximately $5.5 million—a fraction of the nearly $100 million investment required for OpenAI’s GPT-4. This cost efficiency has accelerated DeepSeek’s market penetration and adoption rates, posing a direct challenge to established AI firms.

The Future of DeepSeek: Opportunities and Challenges

DeepSeek’s groundbreaking AI models have disrupted the global AI market, reducing valuations for incumbent AI firms. Its rapid rise and innovative strategies have solidified its position as a major competitor in the industry. However, the company faces several regulatory and geopolitical challenges, particularly in the United States, where scrutiny over Chinese AI firms is intensifying.

Looking ahead, DeepSeek is well-positioned to continue enhancing AI capabilities and expanding its influence in global markets. Its commitment to providing cost-effective, high-performance AI models will fuel ongoing innovation and market transformation.

Beyond commercial success, DeepSeek’s growth has far-reaching geopolitical implications, influencing the global balance of power in AI development. However, the company’s trajectory will depend on its ability to navigate regulatory landscapes, maintain compliance, and address data security concerns in key markets.

Despite these challenges, DeepSeek’s disruptive innovations and competitive edge will undoubtedly continue to shape the future of the AI industry, redefining the technological and economic landscape worldwide.

Northvolt

Balancing Ambition and Operational Readiness: Northvolt’s Case and Its Implications for Financial Decision-Makers

  • Rapid expansion exposes hidden operational risks.

  • Integration mastery secures sustainable growth.

  • Bankers: manage complexity to ensure success.

In today’s dynamic business environment, even well-resourced companies can face unforeseen challenges that lead to dramatic failures. The recent collapse of Northvolt—a once-promising electric-vehicle battery manufacturer—serves as a powerful case study on the risks associated with unchecked ambition and aggressive expansion. Although Northvolt appeared to have all the ingredients for success, its downfall underscores a critical lesson: the importance of mastering operational complexities and bridging knowledge gaps before scaling up.

Northvolt entered the market at a time when electric vehicles were experiencing robust growth. With the sector buoyed by strong market fundamentals, the company secured an impressive $50 billion in sales orders and attracted $15 billion in startup funding from prominent investors such as Goldman Sachs and Volkswagen. The leadership team, comprising former Tesla executives Peter Carlsson and Paolo Cerruti, brought significant expertise in managing global supply chains. Moreover, strategic partnerships with top-tier suppliers from Japan, South Korea, and China further enhanced its technological prowess.

Sweden, with its rich tradition of high educational standards and robust labor policies, provided Northvolt with a diverse and highly skilled workforce. At its peak, the company employed nearly 7,000 professionals from over 100 countries, supported by access to abundant renewable hydropower and proximity to critical mining resources. These factors painted a picture of a company well-positioned to lead the charge in a rapidly growing industry.

Despite these advantages, Northvolt’s ambitious plans to expand quickly—including proposals to build new facilities in Canada and Germany—proved to be its undoing. A Financial Times investigation revealed a startling reality: Northvolt’s primary battery plant in Skellefteå was operating at less than 1% of its intended capacity. This underperformance created a cascade of challenges. Sales projections fell short, contracts were not fulfilled, and cash reserves dwindled at an alarming rate.

At the core of Northvolt’s struggles was its inability to integrate a complex network of suppliers. The company’s supply chain comprised world-leading firms from China, Japan, and South Korea—each a leader in its own right. However, these partners had little history of collaboration with one another, resulting in a disjointed operation. Differences in technology, manufacturing practices, and even language barriers created a formidable challenge that Northvolt was unprepared to overcome. The failure to synchronize these diverse elements illustrates a broader truth: capital and technical know-how are not sufficient on their own. Instead, success hinges on the tacit, hard-earned knowledge that enables teams to work seamlessly together.

This challenge can be likened to an orchestra attempting to perform without sufficient rehearsal. Even with a renowned conductor and top-quality instruments, the music will suffer if the ensemble has not spent adequate time perfecting its coordination. Northvolt’s experience reveals that scaling up operations without first mastering the integration of various components is a risky proposition—one that can lead to rapid and catastrophic failure.

For financial leaders, economists, and policymakers in the Arab world, Northvolt’s collapse offers several critical insights. First, the case underscores the necessity of pacing growth with an understanding of operational realities. Ambitious expansion must be supported by incremental learning and the systematic integration of diverse operational elements. In an era where financial and technological resources are abundant, the hidden challenge often lies in the effective management of intangible assets—such as team cohesion, process integration, and cross-cultural collaboration.

Second, the incident highlights the importance of a measured approach to innovation and expansion. While rapid growth can yield significant market share and investor confidence, it must be balanced with the practical realities of operational execution. The failure to do so can quickly transform early success into financial disaster, as seen with Northvolt.

Finally, Northvolt’s downfall serves as a cautionary tale for national industrial policies. The incident reinforces the need for comprehensive planning that goes beyond the mere availability of resources. Governments and corporate leaders alike must recognize the time and effort required to develop the tacit capabilities necessary for complex manufacturing and service operations. This involves a commitment to long-term learning, the fostering of collaborative relationships, and the creation of environments that support gradual, sustainable growth.

For bankers and financial decision-makers in the Arab world, these lessons are particularly relevant. The region is experiencing significant economic diversification and rapid growth in sectors such as renewable energy, technology, and advanced manufacturing. As banks and financial institutions look to fund and support these emerging industries, it is essential to understand that financial backing alone does not guarantee success. Due diligence must extend beyond balance sheets and market forecasts to include assessments of operational maturity and the readiness of management teams to handle complex integration challenges.

Recommendations for Arab Banks and Financial Leaders

In light of Northvolt’s experience, Arab banks and financial leaders should adopt a more nuanced approach when evaluating and supporting high-growth ventures. First, consider a staged investment strategy that emphasizes milestones tied to the development of operational capabilities. This approach allows for continuous assessment of a company’s ability to manage complex processes before committing to large-scale funding.

Second, it is vital to support initiatives that prioritize the development of tacit knowledge within organizations. Investment in training programs, strategic partnerships, and incremental scaling efforts can build the kind of operational resilience that is essential for long-term success. Encouraging firms to establish robust supplier networks and to foster collaborative environments will help mitigate the risks associated with rapid expansion.

Finally, maintain a vigilant focus on due diligence processes that encompass not only financial and technological assessments but also the integration and operational capabilities of the management team. In a landscape where strategic miscalculations can lead to swift collapse, understanding the underlying operational dynamics is critical. By adopting these measures, Arab banks and financial leaders can help ensure that investments drive sustainable growth and contribute to the long-term stability of the economic landscape in the region.

Northvolt’s story is not just a lesson in the pitfalls of rapid expansion; it is a call to action for all financial leaders. By carefully considering the importance of operational learning and integration, we can avoid the pitfalls of overambitious growth and lay the groundwork for enduring success.

DSC_9770

Dr. Emad Bukhamsin: A Visionary Leader among Kuwait’s Top Economic Figures in 2024

When industry insiders in Kuwait learned that Dr. Emad Bukhamsin had been chosen among the country’s top economic figures for 2024, few were surprised. His reputation for strategic foresight, tireless dedication, and genuine civic responsibility has long placed him at the forefront of the Gulf’s business landscape. Within the corridors of finance and commerce, his name resonates with a commitment to advancing Kuwait’s economic potential while upholding the traditions that have shaped his family’s legacy since the mid-twentieth century. From his leadership of Bukhamseen Group Holding Company to his philanthropic endeavors, Dr. Bukhamsin’s impact on Kuwait’s future is as profound as it is enduring.

Rooted in Tradition, Growing with Purpose

Well before daybreak, Dr. Bukhamsin often walks through an expansive orchard of 20,000 date palms—one of the largest in the country. For him, these trees are more than a business or an agricultural project. They are symbols of resilience, continuity, and shared prosperity. In many ways, they mirror his personal journey: grounded in Kuwaiti heritage and steadily branching out into diverse sectors of the national and regional economy. His approach is methodical yet visionary, an outlook he attributes partly to growing up under the guidance of his father, Jawad Ahmed Bukhamseen, who founded the Jawad Bukhamseen Commercial Corporation in 1957. This family heritage, rooted in diligence and service, paved the way for a younger generation that continues to redefine Kuwaiti enterprise.

A Pillar of Business Leadership

Today, Dr. Bukhamsin serves as Vice Chairman and Chief Executive Officer of the Bukhamseen Group Holding Company, a conglomerate acknowledged as one of the top five businesses in Kuwait. Under his direction, it has broadened its reach into finance, media, hospitality, real estate, and urban planning. Such diversification is not solely a strategic response to shifting markets; it exemplifies his broader vision of building an interconnected economy that supports sustainable development. His leadership extends further: he presides over Al Arabiya Real Estate Company, shapes the success of Gourmania International, and guides media platforms like Al Baraka Media Group and Annahar Daily Newspaper. Each of these ventures reflects Dr. Bukhamsin’s dedication to fostering innovation, forging new partnerships, and reinforcing Kuwait’s standing on the global economic stage.

Recognized among Kuwait’s Finest

The year 2024 has proven a milestone in Dr. Bukhamsin’s career. Being chosen among Kuwait’s top economic figures not only cements his standing as a major force in the region’s financial and commercial arenas but also highlights his forward-thinking approach during a period marked by economic transitions and expanding regional opportunities. His recognition is not a sudden triumph; rather, it is the culmination of decades of measured growth and strategic vision—a testament to his capacity to guide businesses through challenges while maintaining a firm commitment to the welfare of employees, partners, and stakeholders.

Shaping the Gulf’s Economic Outlook

Dr. Bukhamsin’s influence reaches well beyond corporate boardrooms. He has consistently underscored the Gulf Cooperation Council’s (GCC) ability to cope with global economic stress, citing the region’s robust infrastructure and long-range planning as pillars of stability. In various public forums, including interviews and leadership summits, he has pointed out how visionary governance across GCC states fosters an environment conducive to cross-border investments, shared development strategies, and broader economic cooperation. This perspective aligns with his conviction that leveraging common assets—be it oil wealth, strategic location, or specialized expertise—benefits the Gulf region as a whole.

Recent developments such as the planned unified tourist visa for Gulf states, set to begin in 2025, find enthusiastic support from leaders like Dr. Bukhamsin. He believes it will enhance the region’s profile as a global tourism hub, encourage private-sector collaboration, and create opportunities for infrastructure projects. By endorsing a collective economic identity for the GCC, Dr. Bukhamsin stands at the forefront of efforts that push beyond national boundaries to forge a stronger, more cohesive Gulf market.

Philanthropy and Community Advancement

Throughout his business ventures, Dr. Bukhamsin maintains a focus on giving back to the community. The belief that success is meaningful only if it fosters broader social development drives his philanthropic activities. Whether it is through educational scholarships, workforce training programs, or investments in sustainable community projects, he underlines that prosperity must be shared for it to endure. By championing causes that improve quality of life, he ensures his enterprises not only achieve financial gains but also contribute to Kuwait’s social and economic resilience.

Nurturing Global Partnerships

As the chief executive of Bukhamseen Group Holding Company, Dr. Bukhamsin has also been instrumental in welcoming international brands and forging alliances that enrich Kuwait’s standing in global markets. A recent example is his engagement with Fauchon, a storied French luxury brand. Through Gourmania International, which holds the Fauchon trademark locally, Dr. Bukhamsin and his team have enhanced Kuwait’s retail and hospitality offerings. These global partnerships reflect his commitment to raising service standards, introducing new consumer experiences, and fueling further economic activity. With every initiative, he aligns local opportunities with global best practices, ensuring that Kuwait remains open to new ideas, capital, and talent.

Balancing Tradition and Innovation

Despite his multifaceted roles, Dr. Bukhamsin’s worldview remains deeply grounded in Kuwaiti identity. He takes pride in an everyday life that also includes fatherhood, grandparenthood, and cultural pursuits such as caring for horses and collecting antiques. By cherishing family bonds and local heritage, he demonstrates that modern growth can flourish alongside respect for long-held traditions. It is a balancing act that speaks to the character of the man who walks among date palms at dawn—steadfast in commitment but keen to embrace the possibilities the future holds.

A Lasting Legacy

Earning a place among Kuwait’s top economic figures for 2024 underscores Dr. Bukhamsin’s broader contribution to the nation’s growth story. From expanding his family’s commercial foundation into one of the region’s most diversified conglomerates to championing causes that uplift communities, he has exemplified leadership that transcends short-term gains. Individuals across the business world—from veteran bankers to newly appointed chief executives—view his path as a testament to measured ambition, social consciousness, and principled leadership.

For Dr. Bukhamsin, accolades are not merely personal triumphs. They symbolize a collective success shared with teams, colleagues, and the people of Kuwait. Standing at the helm of one of the nation’s most influential business groups, he continues to shape strategies that will likely guide Kuwaiti commerce well into the future. His story serves as a strong reminder that sustainable prosperity requires both a deep sense of responsibility toward one’s heritage and an unwavering commitment to progress.

In a world where economic landscapes are rapidly evolving, Dr. Emad Bukhamsin’s balanced approach—rooted in tradition but always looking to the horizon—provides a model for visionary leadership. His recognition in 2024 as one of Kuwait’s top economic figures is more than an individual honor. It is an affirmation of the very principles he holds dear: that business success, community upliftment, and national pride can indeed go hand in hand.

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