The Middle East escaped the brunt of the September 15 global meltdown; the subprime securitization lesson is one that should be well heeded. The US and the UK paid big for giving credit where credit wasn’t due and will be picking up the pieces for some time to come. The Gulf should not face this problem. The banking sector can control local credit, which, unlike the US, is still awarded on a strict merit basis, while outside investment, say from Russia or the Far East should, by and large, not present that much of local problem should a major default occur. The risk, should there be one, lies in the uncovering of any creative financing instruments — the ones that are tied to a financial hair-trigger — that we still don’t know about and which might, like a nasty jack-in-the-box, pop up and surprise us on an idle Tuesday afternoon.
