Who better to ask for a global business view through a Middle East prism than Joe Kaeser?
The chief executive of the German engineering company Siemens has 350,000 employees working in “virtually every country in the world”, according to the company’s website. Siemens has been doing business in the Middle East for 150 years, since it helped to lay the first telegraphic cables under the Red Sea.
Bavarian-born Mr Kaeser, a Siemens lifer, has visited the region many times, but this week was his first trip to the World Government Summit, and he was clearly impressed.
“This has the potential to be a Middle East Davos. Like Siemens, the UAE is big on innovation. It has become famous as a think tank for thought leadership in areas of interest to the world, and to Siemens,” he says.
At the summit, he was appearing on panels and catching up with local partners. While we talk amid the bustling ambience of the main conference hall, he stops to greet Abdullah Al Gurg, boss of the eponymous Dubai conglomerate. “We’re old friends,” Mr Kaeser explains.
Siemens has long-standing friends across the region, and those relationships will not be endangered by the new era of lower oil prices, he insists. Siemens is a world leader in energy engineering, and has invested massively in the research and development of new, more efficient energy technology. “Like the UAE, we have been thinking of the time after hydrocarbons for a very long time,” he says.
He gives a tour d’horizon of the world in the era of $35 crude.
“Of course, there are winners and losers, producers and consumers, from the lower oil price. For example, we’ve seen from the car sales figures in America and Germany that some consumers are spending money more freely, and some countries, like India for example, have been clear winners.”
But why has the global economy – edging towards the cusp of recession – not reacted more positively to a period of dramatically lower energy costs?
“I think it is more about sentiment than anything else.
“There has been a lot of doom and gloom, with oil companies cutting capital expenditure and so far the benefit of lower costs not coming through,” he says.
He does not believe cheap oil will stop producers like the UAE from seeking more energy efficiency. “If anything, for producers there is more incentive to use oil efficiently when the price is low,” he says.
So the oil price is not his main worry in the region. “The main task for the Middle East is geopolitical stability. The rest of the world has to help to get this region straight, and once that’s been achieved, the region has a great future.”
The region’s three biggest countries – Saudi Arabia, Egypt and Iran – present huge opportunities. In Saudi, where Siemens has been a “long-term friend in good times and bad”, he says the signs of reform are encouraging.
“Saudi is starting to deal with the low oil price. There has been some progress, and the subsidies could not go on forever. But it needs more reform. Saudi Aramco [being prepared as a partial privatisation candidate] is a great company, very innovative. I’d invest in Aramco straight away,” he says.
In Egypt, Siemens has won the biggest single order in its history – an €8 billion (Dh32.92bn) order for gas and wind power generation. “We are committed to helping the country develop its infrastructure, and train young Egyptians.
“But the world needs a stable Egypt, and president Sisi plays a stabilising role. Some people complain about a lack of democracy, but at this time stability and security is more important for Egypt. Democracy can come later,” Mr Kaeser adds.
Of Iran, he says: “We welcome them back to the international community. We were fully compliant of sanctions, but we’ve been there 100 years and we never left the country. Now we have begun a new dialogue with the government on infrastructure projects, energy transmission and technology. Iran is coming from a long way behind. There is still some political uncertainty, but it is always better to talk to somebody than talk about them.”
I ask him about the state of Germany. Siemens (founded 1847) has been a company longer than Germany (founded 1871) has been a country, so its view on its current condition carries some weight.
Germany is one of the leading economic powers in the world and the de facto leader of the European political bloc. But under the pressures of the global economic downturn and the migrant crisis, there have been increasing concerns about the country’s ability to continue to perform those roles.
There have even been suggestions that Angela Merkel, regarded as its most successful leader for generations, might be forced from the chancellorship.
Mr Kaeser thinks hard before answering.
“I have no real worries about the state of Germany. But we have seen the idea of Germany as a nation of global leadership being put to the test. The country benefited lots from globalisation, with its incredible exporting record since World War Two.
“But now globalisation strikes back. How do we deal with the fact that globalisation is not a one-way street?” he asks.
However, despite some criticism of the country’s recent policy towards migrants, he is still a firm supporter of Ms Merkel.
“It would be a disaster for Germany if she left. She is the voice of stability and development in the country.”
Then he is back to the UAE: Siemens’ work with Emirati partners on energy efficiency and renewables, its presence in Masdar City, its involvement in projects associated with the Expo 2020 showcase.
“Siemens is keen on all the same things the UAE is keen on,” he concludes.
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