Keith Lieberthal
Awash in petrodollars, personal wealth in the Middle East is expected to rise to $2.2 trillion by 2011 from $1.4 trillion in 2006, according to a recent Merrill Lynch and Capgemini Group report. Although accurate statistics about wealth distribution are impossible to come by because of opaque ownership, proxy controls and political interference in reporting, it is clear that most wealth is concentrated in a small political-economic elite.
While their appetites for Bentleys and Balenciaga remain healthy, elites are increasingly investing in huge infrastructure projects -- literally building cities in the sand and islands in the sea. The Washington Post reported that the current Middle East construction boom has created over a trillion dollars in investments. These resources and ambitions create a need for sophisticated investment and personal banking services. Beyond the political and religious appeal of utilizing Islamic financial services, indigenous Islamic banks provide safety. Elites are concerned about increasingly aggressive U.S. and European oversight of Middle Eastern financing as part of counterterrorism efforts. Islamic banks' freedom from debt markets and interbank lending gives them a measure of independence while their native understanding may make them more sympathetic to customers' sensitivities. However, this opportunity is qualified. The resources and sophistication that make the elite more-lucrative customers also tend to make them less religious than their countrymen. For decades, they have utilized conventional banking with little religious qualm, and there is no indication that they have grown suddenly more observant. While the idea of Islamic banking may hold abstract appeal, doctrinal niceties might give way to superior returns and stability offered by secular full-service banks.
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