Dubai: Winter is coming for the global economy, according to the founder of Emaar Properties, and “it’s going to be a long winter.”
This pessimistic outlook for the health of the world’s financial system, shared by Mohammad Al Abbar, founder and chairman of Emaar Properties, was echoed by Tom Barrack, the financier and CEO of Colony Capital.
In a panel discussion at the Milken Institute Mena Summit in Abu Dhabi on Tuesday, both Barrack and Al Abbar sketched a troubling outline of the key threats facing the world, including the collapse of the traditional international order, rising inequality, and high debt levels following the 2008 financial crisis.
$20trnormal debt in US, excluding the deficit
Globalisation, democracy and tolerance were prized following the Second World War, Barrack said, all of which have now been spurned.
“Populist buoyancy in America and elsewhere has started to raise its ugly head,” he said.
The trade war was not a good thing, he added.
“Now we’ve gone back to this rationality of anti-immigration and anti-trade in a very demonstrable way.”
Where is the wisdom? To run a nation, we need big minds, big hearts, and wise people. What has happened to these people? Where are they?
Leaders in most countries around the world had lost their mission, Barrack argued, and needed to reweave the cultural success of tolerance and adaptability tied in to a global outlook, instead of “a protectionist focus.”
Al Abbar, the Dubai-based billionaire businessman, also pointed to a lack of global leadership: “Where is the wisdom?” he asked.
“To run a nation, we need big minds, big hearts, and wise people. What has happened to these people? Where are they,” Al Abbar continued, receiving a round of applause from the audience.
The “chaos” that was occurring around the world was astounding, he added.
$1trsize of budget deficit run by the US
Al Abbar listed the fighting between France and Italy, the ongoing uncertainty around the UK’s departure from the European Union (EU), and the political tensions in Brazil, as examples of this chaos.
“God knows what will happen tomorrow morning in the White House.”
Or maybe, he said in a jab at US President Donald Trump, “we should just manage countries on Twitter?”
But, the businessman said, it was not trade wars that worried him the most.
“You know what I really believe is the biggest risk coming our way?”
Les gilet jaunes, or the Yellow Vest movement, in France, he said. “It really shook me.”
318%global debt-to-GDP ratio in 2018 third quarter
Public protests have rocked France since November 2018, as thousands of people have taken to the streets to revolt against what they perceive to be an out-of-touch political class.
Rising inequality around the world was an ever-greater threat than trade wars, Al Abbar said.
Gesturing around the room, he asked if governments globally were really preparing “to truly build societies that sustain themselves and sustain our business?”
On the Middle East, Al Abbar said that he was taking advantage of the geopolitical tensions.
“Thank God, the news in the Middle East is so bad that very few foreign investors want to come in here, so we take advantage of the situation, and we’re happy that way.”
Frank Luntz, a consultant for George W. Bush and political analyst who was also on the panel, put it bluntly: “I already have a headache.”