My Global Strategy class had the pleasure of hearing from the Managing Director at Harbour Group, Richard Mintz, on February 19th. He has held a number of global public affairs positions, including with the Bill Clinton administration. Thanks to his experience, Richard Mintz was able to give us a broad overview of the state of globalization. Through a Q&A, we dug deeper into the development of some of those international markets. While we touched on various topics, what I found most interesting was the way that business was done in Saudi Arabia and the United Arab Emirates. I will also discuss a domestic issue that was brought up during the talk, that has international consequences.
More specifically, we discussed the fact that Saudi Arabia is attempting to diversify. Given the dropping oil prices, Saudi Arabia can no longer rely solely on the international market for oil. As a result, Saudi Arabian companies are investing in nuclear energy. I found this move very counter-intuitive given the obvious danger of nuclear plants. Notably, Chernobyl (Ukraine) experienced a nuclear meltdown in 1986 and more recently Fukoshima (Japan) experienced a nuclear meltdown in 2012. Clearly, humans have not mastered the technology to be able to contain nuclear processes and energy. More than that, when the nuclear waste is buried underground to decompose, those containers have a large possibility of leaking, thus posing a significant threat to future life on this planet. Nonetheless, nuclear energy does provide for efficient energy production, which is probably why Saudi Arabia is investing in the industry. If nuclear energy is more efficient than oil drilling, it may be more profitable for the Saudis.
On the societal side, the scene is also changing. Prince Mohammed is attempting to increase innovation by increasing the freedoms of the Saudi citizens. For example, the Saudi Prince put on the first concert in forty years for his people. Believing that all Saudis followed the country’s music ban, he assumed that there were no bands in the country. As a result, the Prince invited international bands to play at the first concert. After that, the Saudis came out with their underground bands and requested to play at the next concert. One danger with this is that if the government goes back on its liberalization plans, those bands will be monitored very closely by the government and will likely never be able to play again. Nevertheless, social liberalization is very beneficial for a country trying to spark creative ideas and innovations. According to Richard Mintz, it was very impressive and empowering to witness women in burkas swaying to the music and tending to the concession stands.
Nearby in the United Arab Emirates, the government is also encouraging energy production diversification. However, the government is not attempting to liberalize the country as in Saudi Arabia. In the UAE, solar production now makes up seven percent of energy production. While this may not seem like a large amount, because middle eastern countries produce a lot of energy, seven percent is a rather large number in absolute terms. This solar production can further be increased by improving the efficiency of the solar panels. Because there is a lot of dust in the middle eastern deserts and because the solar panels attract those dust particles, the solar receptors are not as efficient as they could be. As the technology improves, though, solar power is going to have a very large potential. Thus, the UAE can greatly benefit from technological innovations. Unfortunately, the penalty for bankruptcy in the UAE is jail time. This reduces the willingness of businessmen to innovate and take risks and may delay the development of the UAE economy.
Finally, we talked a little about current domestic policies. Richard Mintz voiced his worry over the repeal of DACA. Given the four percent unemployment rate, the United States is at full employment. Thus, once illegal immigrants are deported, it is likely that there will be a shortage of workers, especially in the agriculture, carpet and tech companies. In addition, the US population is not growing fast enough to satisfy those needs. This will likely lead many US companies to export their production capabilities to location where there is enough labor, which is very likely to harm the US economy.
Overall, it was very interesting to be able to discuss the impact that government policies can have on the success and the decisions of businesses with Richard Mintz, Managing Director of Harbour Group.