View of part of the Fujairah Corniche and the Hajar Mountains in the Background

Tuesday, November 4, 2008

Gordon Brown Stays in Palace and Asks Emiratis for Millions

One Night in Abu Dhabi
Frugal Scot, Gordon Brown will be glad Sheikh Mohamed bin Zayed Al Nahyan, Crown prince of Abu Dhabi, picked up the £9,000 (51,000 AED) a night tab at the seven-star Emirates Palace.

With rooms starting at £650-night, the Emirates Palace is considered the equal of the famous Burj Al Arab in neighbouring Dubai – where the Prime Minister travels on Tuesday (4 November 2008)– the only other seven star hotel in the world.

On its website, the Emirates Palace is described as: “An enchanting landmark that's a wonder to behold for all who venture through its magnificent gates. Fairytales come to life as your senses are treated to an extraordinary and unforgettable experience. Breathe the air of luxury that fills every corner of this serene paradise.

“Feel the promise of a majestic experience fit for a king and deserving of an emperor.”

The Prime Minister's luxury suite is described as a “private palace within a palace,” with a domed living room, three bedrooms and bathroom with a "rain shower".

It is served by a private lift, and has a butler on call 24-hours a day.

Prime Minister’s Speech in Abu Dhabi:
Can I say first of all that I am delighted to be here in Abu Dhabi. I am very grateful to join you today at this important conference - the first that has been held in this great building at what I believe is the biggest oil and gas conference in the world.

Abu Dhabi and the United Kingdom have always enjoyed the warmest bilateral relationship. At a business event such as this it is right that we focus on the business relationship. But this is also a relationship between our people. Many Abu Dhabians come to the United Kingdom for their education and traditionally you have looked to our Armed Forces for training and for support. Outside NATO, no country has a closer relationship than you do with our Armed Forces.

I believe there is no more appropriate a place for the world’s largest oil and gas conference than Abu Dhabi, the capital of one of the world’s most important hydrocarbon industries. I am proud that since you discovered oil 50 years ago, British oil companies have been working closely with their Abu Dhabi counterparts. I look forward to them contributing their knowledge and expertise for many decades to come.

Britain is proud of its close and historic relationships with Abu Dhabi and with the whole of the Gulf. Trade was the initial spur of our relationship, but as our knowledge of the region has deepened our partnership has become stronger. Our ties have become more numerous and our commitment, I would say our mutual commitment, to each other has become more profound.

Trade this year, even in this most difficult of years, is up over 20%. Last year it exceeded £5 billion. The numbers of Britons working and living in the Gulf is now over 150,000. So I am very pleased to continue the tradition of British leaders who take a close interest in improving relationships with the Gulf. All the challenges we face today, we face together. By close collaboration and cooperation we give ourselves the best chance of success.

This conference comes at a defining moment for the global economy. The decisions that we will take over the coming weeks and months will shake our world for a generation. At stake is not just the success and legitimacy of our global economy, but ultimately the security and prosperity of nations and communities in every corner of the world.

We have been witnessing over this last year a problem that began in sub-prime mortgage markets in America. Began with irresponsible and often undisclosed lending. In less than a year it has wiped $25 trillion off global share values. This financial shock has been combined with extraordinary commodity price shocks in commodities, in oil and food. These have been happening at a time when global climate change has also been recognised to be a global challenge - all bringing home to us more dramatically than ever before the true nature of our global interdependence. We know that when a problem starts in one country, it can affect not just many countries, but all continents.

Yet at the same time I think we are all aware of the other side of globalisation. Not the insecurity our interdependence generates today, but rather the promise that globalisation holds for tomorrow. So while the transition to this new global age will be tough, we know that the global age brings with it not just new risks but unparalleled opportunities.

Whatever happens in the next few months, in just the next two decades the world economy will certainly double in size. That means twice as many opportunities for good businesses. As this happens I believe new consumer markets will develop in every part of the world. Businesses who have the products and services that people want to buy will sell to the whole world. Workers who have the skills will benefit from great opportunities for new jobs to service these growing economies. Those countries that invest in the future, invest in their resources, invest in high value added products - these countries will benefit and be the greatest beneficiaries of the next stage of the global economy.

So I am optimistic as to what can be achieved in the next few years. But if we are to secure for our peoples the benefits of all these changes that give us these unparalleled opportunities, we must first deal with what have become the two crises of the global age: the first financial crisis of the global age and the first resources crisis. We have to understand when looking at the financial system that we not only understand the current instability, but we have the capacity and the commitment globally to address the problems.

In our financial markets the rules of the game have simply not kept up with the speed of globalisation. Some markets such as credit derivatives have been left totally unsupervised. In other areas, national and indeed continental efforts to regulate international and global and financial institutions have simply been inadequate. Macro-economic coordination around the world has also been inadequate given the increasing significance of the emerging markets in determining global demand conditions.

The old 1945 institutions we have for such coordination either exclude key emerging economies, or in cases like the International Monetary Fund: our institutions simply do not have the levers, or the resources, or the mandate to secure the cooperation that is necessary.

So my conclusion from recent events is not that we need less globalisation, but we need better globalisation with institutions and rules that are fit for this global age. Nothing less than the boldest of global cooperation will suffice.

In these difficult times the leadership America has shown has been vital to the coordinated interest rates cuts and the international cooperation we have seen which will lead to the leaders international meeting on November 15th. I know that that leadership by America will and must continue.

The next stage of globalisation will require even more international cooperation, with American leadership central to its success. In the coming weeks and months the whole world will want to work closely with America on a shared common agenda to bring growth and jobs back to our economies. To give greater stability to our financial system. To defeat protectionism in favour of free trade. And of course to work for a more secure world, and here in the Middle East to work for peace.

Every nation of course must have a stake in this future, and I believe in particular, that the Gulf states have a crucial role to play. That is why at the weekend I was delighted to meet King Abdullah in Saudi Arabia and meet the Emir of Qatar. I look forward to similarly constructive talks with Their Highnesses, the President and the Crown Prince of Abu Dhabi later today, and with the Prime Minister and Ruler of Dubai tomorrow.

Recent weeks have shown the power of international action with the coordinated multi-billion dollar recapitalisation of our banking system. We must now urgently build on this as we head towards the leaders meeting in Washington. We must act to establish a global consensus for a new and decisive approach to strengthening the global economy.

And I believe, if I may summarise, that this approach should be built on five stages.

First, strong banks are essential to financial stability. So having helped to strengthen the global banking system, governments must ensure that the money is used to enable a resumption of lending to families and businesses.

Second, we need better coordination of international monetary and fiscal policy, and it is right at this time that fiscal policy support monetary policy.

Third, to stop the spread of contagion to middle income countries we must build agreement for a new facility for the International Monetary Fund. I very much hope that the Gulf States will feel able to contribute to these efforts. It is in all our interests to stop the contagion that is happening and to rebuild confidence in the global financial system. I very much accept the argument that countries which contribute in this way should have a greater say in future in the governance of the International Monetary Fund. This is part of our ambitions for reform.

Fourth, we must avoid the return to protectionism, accepting our collective responsibility to break the deadlock in the Doha trade round, and taking multilateral action to extend credit lines to companies to support their trade finance. Avoid at all costs a return to beggar thy neighbour policies that have been a feature of past crises and can transform a financial crisis into unfortunately a deep recession. There is already evidence of global trade slowing by more than expected amounts. Without effective trade, none of us will benefit from the huge opportunities of a global world.

Then we must restore confidence by addressing the root causes of instability. We will seek in Washington to begin the reform of the global financial system around the core principles of transparency, integrity, responsibility, sound banking practice and international governance.

We will look for early decisions from our international partners about the reform of the international financial system: including, the creation of an early warning system for the global economy, globally accepted standards of supervision applied equally and consistently in all countries, effective cross-border supervision of global firms which firms themselves want to see happen, and cross-border cooperation and concerted action whenever there are crises to meet.

We must reshape the rules of the international financial system to ensure that the current financial crisis is not repeated. We must take the events of the last year in commodity markets, in oil markets and in food markets as an impetus to bring greater stability to those markets as well for the medium and long term.

Among other things in recent months, long term demand for oil did exceed its supply. Clearly we need a way forward for energy policy that moves beyond the traditional zero sum game that assumes it is a question of oil and commodity producers versus oil and commodity consumers. That approach has too often left producers unable to plan with confidence or to invest with confidence for the future. Consumers are then subject to volatile prices, our planet damaged by the absence of a stable path to a low carbon emissions future, and sometimes the conflict between producers and consumers misses out what is a crucial and unforgettable element of the energy equation, that the world will need more gas and oil supplies in the years to come.

Let me thank all of those in this region who are showing such vision in seeking a new kind of collaborative response to the global energy challenges we face. I was grateful to the King of Saudi Arabia for hosting a summit of producers and consumers in Jeddah a few months ago. That conference in Jeddah took the first steps towards an unprecedented dialogue between producers and consumers, industrialised countries like the UK and America, emerging economies like China, oil producing countries in this region. All agreeing that the volatility in oil markets is damaging to all in the world economy and that it harms not only consumer interests but the long term interests of producer countries too.

So just as with the international financial system, a new framework for energy based on responsibility and our mutual interdependence is needed.

Together in Jeddah we called for greater transparency about supply and demand so that we could provide greater stability that is necessary for investment in future energy supply. We asked for stronger efforts on the part of consumer countries to increase the efficiency in their use of energy. We said there should be reduced barriers to investment in the future of energy supply and we should help poor countries most adversely affected by high prices. Then we recognised most of all our common interest in more stability in prices.

We agreed to meet in London, as we will do before the end of the year, to take stock of progress and maintain the momentum generated in Jeddah. Producer and consumer countries not only should, but must, cooperate in establishing the framework for the transition to a lower emissions economy over the longer term. Indeed it is in the interest of all of us and we need to work together to build that framework.

I hope the London meeting in December will help to take this agenda forward. Because we together must build a new global energy economy, new jobs and new investment to reduce some of the dependence on traditional fossil fuels in a fair and sustainable way that supports both producer and consumer economies alike.

This will mean making more efficient use of our existing reserves of fossil fuels, more supply in the short term, more investment to deliver it. A massive and coordinated effort to increase the efficiency with which we use energy in all its forms - including the worldwide adoption of targets to cut car emissions and investment in nuclear power. That is why Britain and the United Arab Emirates are now working closely together on opportunities in civil nuclear energy.

Because we recognise that fossil fuels will always continue to be the important part of the global energy supply for years to come, we must also support the development and deployment of carbon capture and storage. I am delighted that British Petroleum’s joint venture with Rio Tinto and Masda is giving an exciting lead in Abu Dhabi, building a 2 billion low carbon industrial scale hydrogen-based electricity generation plant. This itself will strip out 1.7 million tonnes of carbon dioxide which instead of being released into the atmosphere, will be pumped back underground to enhance oil recovery.

All of us therefore have a shared interest in the diversity of energy sources as we prepare for a lower carbon future with significantly more opportunities to recycle increased oil revenues into alternative energy investments. This gives oil producers of course the chance to hedge their future production by investing in the alternative energy sources that will be central to future low carbon emission economies.

In turn, oil consuming countries should, as we in Britain are doing, offer openness and partnership for investment in our countries. Here in the Gulf yesterday we announced a new £250 million UK-Qatar Clean Technology Investment Fund as part of our new partnership on low carbon technology. I am delighted that Shell and the Abu Dhabi National Oil Company have today signed a Memorandum of Understanding. I am delighted to see Shell represented here to evaluate potential joint exploration, development and production of offshore deep gas field projects in Abu Dhabi.

And today we will sign a Memorandum of Understanding with the Abu Dhabi future energy company, Masda, to work in partnership to deploy and develop low carbon technologies. For example in offshore and onshore wind power, carbon capture, solar and marine generation, electricity networks and their advocation in the development of sustainable cities.

I pay tribute to Their Highnesses, the President of the UAE and the Crown Prince of Abu Dhabi for their vision in building one of the most remarkable and respected sustainable energy investment companies in the world. We look forward to working with them as they pursue this innovative collaboration.

For only through this innovative international approach can we ensure that globalisation will work, not just for some but for all throughout our world. For hard pressed families, for businesses in all our communities and nations.

No country, no matter how big, can solve the challenges the world faces alone. People in every country want to know that every possible course of action is being pursued to guide families and business through this difficult time.

So let us carry forward the determination to build a global consensus around a radical renewal of our international financial system. Let us maintain the courage to continue and deepen the dialogue we have begun here in the Gulf for stability in energy, oil and gas and energy markets generally for the future.

Let us make this time, a time of financial crisis also a time of visionary international cooperation. Let us together build great companies, governments working with business, people who know about the future of energy working together. Let us together build the global solutions on which the sustainability and prosperity of our global economy depends.

Thank you very much.

Source: Speech in Abu Dhabi,, The Official Site of the PM’s Office, 3 November 2008.

Dr Geoff Pound

Image: British Prime Minister Gordon Brown addresses business leaders at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) in Abu Dhabi.