Why Spain & the Arab World ?

History of Spain & the Arab world is much wealthier compared to the economic ties relating both worlds. The Arabs reach out other European countries such as UK, France, Germany, Italy for business & pleasure due to modern history while the Spanish reach out South America which is thousands of Kilometers away due to language and cultural proximity and forget that Algiers is 45 min away from Barcelona and Cairo is 3 hours away by plane.
The Arab world, rich in resources, with enormous oil and natural gas reserves but also with instability has flourishing sectors including industries, agriculture, communications, construction etc.. Within less than a decade, local companies such as Orascom and Etisalat have managed to successfully compete internationally as global power players.
The economic development in the Arab League exhibits a great diversity. There is a significant difference between, on the one hand, the rich oil states of the UAE, Qatar, Kuwait, and Saudi Arabia, and on the other hand, the poor countries like the Comoros, Mauritania and Djibouti. For instance, the GDP per capita of the wealthiest Arab Country and the wealthiest in the world, Qatar, is 73 times higher than that of Mauritania.

Private Arab investors primarily from countries like Saudi Arabia, Kuwait, the United Arab Emirates, Qatar and Bahrain hold a pool of about $150 billion. Yet these private investors are dwarfed by the huge, Arab government investment agencies from Saudi Arabia, Kuwait and the United Arab Emirates, which have huge investments in the West.

The Kuwait Investment Authority, for example, holds an estimated $80 billion to $100 billion in foreign investments. Sometimes, its investments have attracted public attention, like when it bought Santa Fe International in 1981 or when it built up a 22 percent stake in the British Petroleum Company two years ago, before Kuwait agreed with London to sell its dominant stake. Similarly, Saudi Arabia raised eyebrows when it bought half of Texaco Inc.’s distribution and marketing system in the East and Gulf Coast regions of the United States.

But for the most part, the government fund managers have put their money quietly and conservatively in investments like United States and Japanese government bonds.

The government fund managers of Saudi Arabia – like the Saudi central bank, SAMA; the Kuwait Investment Authority; the Abu Dhabi Investment Authority, and the Governments of Qatar, Oman, and Bahrain – hold an estimated $200 billion in overseas investments.

The pool of Arab money abroad is swelled by the addition of flight capital, much of it from poorer, non-oil-rich Arab nations. These savings go overseas because of a lack of investment opportunities at home and fear of nationalization or political instability. The flight of capital badly needed at home clearly hinders the development of economies of the poorer, debt-burdened countries.

For example, private individuals in Egypt have accumulated roughly $40 billion to $60 billion, much of it held in foreign banks. “That is equivalent to Egypt’s external debt”.

Frequently, flight capital represents savings squirreled away by Egyptians, Jordanians, Yemenites and Sudanese, who work as expatriate Arabs in oil-rich nations including Saudi Arabia, Kuwait, the United Arab Emriates, Iraq and Qatar. These expatriates build roads, teach in schools and work in hospitals.

Spain on the other hand has the thirteenth-largest economy by nominal GDP in the world, and fourteenth-largest by purchasing power parity. The Spanish economy is the fifth-largest in the European Union, and the fourth-largest in the Eurozone, based on nominal GDP statistics. In 2012, Spain was the eighteenth-largest exporter in the world and the sixteenth-largest importer.
Spain is regarded as the world’s 23rd most developed country and is listed among the countries of very high human development. However, since the GFC, the Spanish economy’s recent macroeconomic performance has been poor. Between 2008 and 2012, the economic boom of the 2000s was reversed, leaving over a quarter of Spain’s workforce unemployed by 2012. In 2012, the Spanish economy contracted by 1.4% and was in recession until Q3 of 2013.

Despite the poor recent performance of the Spanish economy generally, Spain’s international trade situation has improved. During the boom years, Spain had built up a trade deficit eventually reaching a record amounting to 10% of GDP (2007).[19] During the economic downturn, Spain has been significantly reducing imports, increasing exports and kept attracting growing numbers of tourists. As a result, in 2013 it achieved a trade surplus for the first time in three decades.

After a strong recovery from the global recession of the early 1990s, Spain experienced a property boom from 1997 to 2007. At its peak in 2007, construction had expanded to a massive 16% of the total gross domestic product (GDP) of the country and 12% of total employment.

According to calculations by the German newspaper Die Welt, Spain’s economy had been on course to overtake countries like Germany in per capita income by 2011. However, the downside of the real estate boom was a corresponding rise in the levels of personal debt; as prospective homeowners had struggled to meet asking prices, the average level of household debt tripled in less than a decade. This placed especially great pressure upon lower to middle income groups; by 2005 the median ratio of indebtedness to income had grown to 125%, due

primarily to expensive boom time mortgages that now often exceed the value of the property.The property bubble that had begun growing in 1997, fed by historically low interest rates and an immense surge in immigration, imploded in 2008, leading to a weakening economy and soaring unemployment.

All forecasts for the real estate market in spain in 2014 are mentioning stability in prices in big cities after 5 consecutive years of falling prices. 2015 is expected to be the year where prices will start appreciating due mainly to foreign purchases of real estate.

Spain is a member of the European Union, the Organization for Economic Co-operation and Development, and the World Trade Organization