Cosworth has something to offer the UAE – street smarts

It’s hard to keep count of the number of times that Hal Reisiger uses the word “smart” in an hour’s worth of conversation.

Smart technology, smart engines, smart cars, smart manufacturing, smart investment. The chief executive of the automotive technology group Cosworth is a man with a simple message: it is good to be smart.

“I’m a great believer in focus. I’d rather be excellent at a few things than mediocre at many,” he says, summing up the “smart” philosophy. He is applying that doctrine to Cosworth’s future strategy as it goes through a period of intense corporate transformation.

For anybody growing up in Britain in the 1980s, the name Cosworth was synonymous with high-performance car engines much admired by a certain youthful racy type, often based in the English county of Essex.

The company produced powerful engines for vehicles such as the Ford Sierra, capitalising on its record as one of the leading manufacturers of engines for winning Formula One race teams.

It was a British brand that typified technological excellence and power on the world motor sport stage, rivalling Ferrari as the leading engine manufacturer of F1 championship cars.

But, as Mr Reisiger explains, by the early 2000s there were changes happening in engine manufacture – what he calls the “power train” side of the motor industry – that were forcing a rethink of the image that had served Cosworth so well since it was founded in 1958.

“As F1 came to be dominated by the likes of Mercedes and Ferrari, we began to realise there was no future in motor sport manufacturing as an independent. They [the big global car companies] could use the sport to promote their brands and could invest hundreds of millions of euros into it. We had to make money,” he says.

The alliance with Ford came to an end in 2004, when two private equity billionaires – Kevin Kalkhoven and Gerry Forsyth – bought Cosworth and set about changing the strategy.

Mr Reisiger, a New Yorker now living in California and London, was in Abu Dhabi this week explaining that new direction to potential investors he hopes will accompany Cosworth on the next phase of its development.

Cosworth is still involved in the “power train” but these days half of its business comes from high-tech electronics and telemetric processes that are integrated into high-performance engines and car systems.

“Cosworth these days is a unique combination of experience and technology that allows us to provide a ‘one-stop-shop’ in motor electronics and engines. We can take the whole process from concept to production and very few companies can do that,” he says.

It has certainly changed since the days of the boy racers. Now, from plants in Northampton and Cambridge in the UK’s high-tech hub, to others in more traditional motor centres such as Indianapolis and (soon) Detroit, it uses state-of-the-art precision machining technology including the latest in robotics with a highly skilled workforce.

He reels off the customers attracted by the Cosworth offering. Aston Martin, General Motors, Nissan, Honda, Jaguar Land Rover and Lamborghini. The order book from GM alone – non-existent three years ago – is worth US$300 million. “We have a full order book until 2026 and we’re at full capacity, so we need to expand,” Mr Reisiger says.

One of the “smart” things Cosworth is doing is the latest advance on the motor car equivalent of an aviation “black box” – aliveDrive – which analyses car performance and records it in a data-retrieval system. It can be used in the event of an accident as a forensic tool, or more usually as an instrument to tell you when your next service is due – and how far you are away from a service agent. It will even automatically make the appointment for you when you are nearby. “That’s another smart thing about us,” he says.

The technology also has an eco-friendly aspect that strikes the right chords in an environmentally aware age. “Our technology can measure and control emissions and so help to reduce pollution,” he adds.

But such technology requires investment in research and development. A new plant, such as the one being built in Detroit, can cost up to $50m. The investors who bought the company from Ford have signalled that they want a new partner for the next phase. Hence Mr Reisiger’s trip to the UAE capital.

“Few countries can match the investment capability of the UAE and at the same time the country has a mandate to invest in new technologies in the diversification programme away from oil. The low oil price is only increasing the incentive to move towards advanced technology, ” he says.

He is looking to sell up to 40 per cent of the company for a multimillion dollar sum to fund the future, and has already had talks with two prominent investment entities in the capital that have a focus on technology. “I think they are interested. We want minority investors to help exploit growth opportunities and we have a good story to tell,” he says.

Potential investors will not just get a chunk of the equity. Cosworth is also offering to build manufacturing capability in the UAE to cater for the Asian market it currently has to service out of the UK and Taiwan. With this facility would go a branch of the Cosworth University, a high-tech research, design and manufacturing facility already set up in the UK. “We believe in the global training of the next generation of engineers, and we’ve been very impressed by the UAE’s commitment to technology training. We would like to launch the next phase of the university in a place that shares our commitment and passion for technology.

“We have problems in the UK getting the right people with Stem skills in science, technology, electronics and mathematics. About 10 per cent of our employees are apprentices,” he says.

There is also another carrot being waved at any potential UAE investor. Cosworth is planning an initial public offering in the next few years, when the current owners will seek to further reduce their controlling stakes, and Mr Reisiger would be very happy to see at least part of that share flotation go to a stock market in the UAE. “That would be a very smart thing to do,” he says.

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When the history books are written, Friday October 7, 2016 will be seen as the day the real battle of Brexit began.

From the first declaration of hostilities – June 23 when the UK voted to leave the European Union – until that Friday in October, there was a kind of phoney war in existence between Britain and Europe.

True, sterling had been on a steady, but gentle, downward path, and there was much muttering about the damage the UK economy would suffer if it lost access to the EU single market.

But there was not much that you could actually call warfare. Most of the big investment banks that have been forecasting dire consequences were easing their forecasts upwards, as was the perennially pessimistic IMF.

Britons, under the firm tiller hand of Theresa May, were beginning to think they might just get away with sneaking out of the EU with nobody much noticing.

But on October 7 came the first real action, from François Hollande, president of France. In a speech reported by the Financial Times, he was quoted as saying “there must be a threat” to the UK’s economy from its democratic decision to quit the EU. No guessing as to where that threat would come from: Paris, Brussels and Berlin being the main springboards for the assault on London.

When Mr Hollande’s words were reported in Asian markets just waking up to the forex trading day, they precipitated the “flash crash” that wiped a further 6 per cent off sterling. It will be a long, long time before the pound makes up that ground.

So now the UK faces two probabilities that were only possibilities before: a full-blown sterling crisis and being barred from the single market.

The pound’s plight is not all bad news. Lower sterling means British exports are cheaper and London property prices are more attractive to foreign investors. But longer-term weak sterling means importing inflation for a country that runs a chronic trade deficit.

The potential loss of the single market is more worrying, which is why the UK government is considering paying Brussels billions even after it leaves the EU to maintain the privileged access it currently enjoys.

On the British side, there is the beginning of a siege mentality. Suggestions that British companies will have to declare the names of foreign employees, threats of sanction against companies that campaign to remain in the EU and reports of division between the Bank of England, the Treasury and the prime minister all point to an escalation of hostility between the “economic” Brexiters (who just wanted out of the EU) and the EU xenophobes (who just hated Johnny Foreigner).

I hope it does not swing the latter’s way. When Liam Fox, international trade secretary and regarded as a hardline Brexiter, was in Dubai recently he was at pains to stress that Britain was not going to withdraw from Europe or the globalised world. He seemed to mean it.

If the xenophobe mentality takes over completely, it will demean Britain in the world and signal a retreat from international trade. If that happens, we will all be poorer – and it will not matter who started it.

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Kimberley Process chairman calls for UN body to oversee global diamond trade

The UAE, as the chair of the Kimberley Process (KP) organisation that regulates the global diamonds trade, has called for a permanent body under the auspices of the United Nations to oversee the multibillion dollar business.

Ahmed bin Sulayem, who heads up the UAE’s KP chairmanship for 2016, has written to all members of the Civil Soc­iety Coalition (CSC), the group of non-governmental bodies involved in the diamond trade, asking them to back the new proposal for a UN body as a “genuine effort to bring back peace into the KP family in the interest of all stakeholders”.

Some civil society members representatives have been critical of the UAE’s chairmanship of KP, citing concerns about dia­mond valuation in the Dubai Diamond Exchange and its regulation of diamond traders in the Dubai Multi-Commodities Centre free zone.

A spokesperson for Partnership Africa Canada, one of the most vocal of the UAE’s critics which has boycotted events help in Dubai, said: “The KP Civil Society Coalition is currently reviewing the letter it received from the KP Chair. However, the boycott for the plenary [meeting in Dubai next month] remains in place.”

The letter from Mr bin Sulayem is headed “proposal of remediation between the KP chair 2016 and the members of the Civil Soc­iety Coalition”.

It cites four areas of disagreement between civil society and the KP chair, as set out at the beginning of its chairmanship this year: the UAE’s valuation processes; its alleged lack of enforcement cooperation with trading partners; the absence of an enhanced vigilance system for diamonds coming from conflict zones like the Central African Republic; and “the need for a constructive and genuine engagement with the CSC”.

Mr bin Sulayem said in the letter that “especially on the issue of valuation and the CAR an enormous amount of work has been done”.

He has organised a series of workshops in Dubai and Europe on rough diamond valuation, in collaboration with the Organisation for Economic Cooperation and Development and the Antwerp World Diamond Centre, “which have made clear the issue is not as simple as sometimes it is claimed to be”.

He said that valuation should be done in all importing countries and not just the UAE, as some CSC members have requested.

On CAR, Mr bin Sulayem has visited the country and in April the UAE took over the lead of the team monitoring diamond production from some if its problematic areas. Some diamond-producing areas have been deemed KP-compliant and the country is taking action against illicit trading and smuggling.

He said the KP needs a “permanent secretariat under the wings of the UN” to take over work that is currently done by volunteers on an ad hoc basis. This body should be headed by an African expert in the diamond industry but funded by the rock diamond-importing countries of Europe, Asia, the Middle East, as well as the United States, Mr bin Sulayem suggested. “It is my strong conviction that the world needs to do better for Africa,” he said.

The letter invites all CSC members to the plenary meeting of KP to be held in Dubai next month and offers to pay travel and other costs at that meeting, and at the next big KP meeting to be held in Australia next year.

“We hope that the relationship between CSC and KP chair could be constructive in a mutual way and would not be an invitation for further criticism,” Mr bin Sul­ayem said.

The Kimberley Process began in 2000 when African diamond-producing countries met in Kimberley, South Africa, to discuss ways to stop the trade in conflict diamonds and its financing of violent rebel movements.

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SME profile: Old soldiers operate from the comfort of Al Maryah Island

What would you expect to hear when three old soldiers get together? The clunk of tankards? War stories of derring-do from yesteryear?

Probably less expected would be discussions of business strategies, financial spread sheets and the minutiae of office start-ups, but that’s what’s on the agenda for Simon Fordham, Howard Leedham and Ed Holland when they gather at their brand new offices at Abu Dhabi Global Market’s headquarters on the capital’s Al Maryah Island.

The three, who have a background in the British and Irish military, have come together to launch the first licensed security consultancy firm at ADGM, putting aside tales of battle to focus on the challenges of starting up and running a business with its main offices in London and Abu Dhabi – but with ambitions to go truly global.

“We’ll go wherever the client has a problem, within reason,” says Mr Leedham, who along with Mr Fordham forms the senior management team of Consilium, the latest security outfit to seek a significant presence in the UAE, but the first on ADGM.

The two are old comrades-in-arms from the British special forces and have seen action together in many of the world’s trouble spots. Mr Holland, a former major in the Irish special forces, will be their permanent man on the ground in Abu Dhabi.

The roots of the business lie in Mr Fordham’s links with two other security firms. After 25 years in the military, with the rank of colonel in 2009 he embarked on a commercial career with BGN Risk, the security arm of Begbies Traynor, a global corporate rescue and recovery company.

He already knew Tony Roman, the founder of Roman & Associates, a New York-based investigations company with extensive contacts in the American insurance industry and which operates throughout the US.


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“I always wanted to be part of an international corporate business and we got a good name for ourselves in the London insurance industry during the Somali piracy crisis in 2009,” says Mr Fordham.

He had all along kept in contact with former lieutenant commander Leedham, who by now was making a name for himself in the Dubai financial scene as the chief executive of Dalma Capital, one of the few hedge funds in the UAE, based in the Dubai International Financial Centre. But Mr Leedham was itching for something where his field skills could be put to better use.

“I was lured into the hedge fund business but I got trapped in it. I’d already made up my mind to move into a less permanent role at Dalma when I started talking seriously to Simon,” he says.

Mr Holland, too, had been giving thought to his career after 16 years in the Irish military. “I always had aspirations to move into business and security seemed the most appropriate,” he says.

Consilium aims to be an integrated, high-end provider of risk and security consulting services, across all business sectors in support of governments, corporates and individuals, with a focus on discretion and confidentiality.

“We are open to accepting novel and challenging assignments,” says Mr Fordham.

The company, from its British base, already had a stream of business via London and its New York links, as well as Nigeria – regarded as an important base for African operations and where it is in partnership with a local firm.

But that network still left great swaths of the world uncovered and they hit upon Abu Dhabi as the perfect hub from which to expand into the rest of the Middle East, eastwards into Central Asia and the Far East, as well as southwards into east Africa.

“The security set up in the UAE is second to none but the same cannot be said for the rest of the region. The UAE is an increasingly important force in regional affairs and we decided on Abu Dhabi in full awareness of the fact that the serious decision-making takes place there,” says Mr Leedham.

The other attraction of the capital was the newly opened free zone, ADGM. “If we’d decided on Dubai and DIFC, we’d have been one of thousands of other companies. ADGM is on a growth trajectory for the next decade and beyond and as the first security firm there we get first-mover advantage in that sector,” says Mr Leedham.

His colleagues agree: “ADGM is a new and fresh organisation, exactly like us. Being based there says a lot about us,” says Mr Fordham.

They found the online registration process that ADGM runs to be fast, efficient and trouble-free, and are impressed by the facilities on Al Maryah. They have leased serviced offices in one of the big tower blocks in ADGM Square as a branch of the London company and found it to be a relatively painless and cost-effective exercise. “We’ve avoided all the capital outlay of having a big office, but we are in the heart of an excellent and growing business district,” says Mr Leedham.

Mr Leedham said that the total capital outlay for registration and rent was less than US$50,000, excluding staff benefits and visas.

“This is slightly less than the equivalent would have been in DIFC, but for us pricing wasn’t a significant influence on the location decision,” he added.

Finance for the expansion and Abu Dhabi launch has come through a mixture of existing revenue, investment by the management, and outside equity partners.

They are mindful of the opportunities Dubai has to offer and are maintaining a presence there via the facilities of the Capital Club in the DIFC. “That gives us a base in Dubai and a place to meet clients. I’d like to think we are one of the first companies to exploit the synergies between Dubai and Abu Dhabi,” he says.

It is unlikely, however, that three such action men will be sitting for long in front of a laptop or around a boardroom table. “Consilium will often be operating in hostile commercial environments but given our background and training it’s unlikely at least one of us hasn’t been in that situation before. We will be very hands on practitioners,” says Mr Fordham.

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UAE to set up the world's first Sharia-compliant trade bank

The UAE is to establish the world’s first Sharia-compliant trade bank to bolster its ambition to be the centre of the Islamic economic world.

The Dubai Islamic Economy Development Centre (DIEDC), under the new chairmanship of Sultan bin Saeed Al Mansouri, the Minister of Economy, and the Department of Economic Development, are in “advanced discussions” with the Central Bank of the UAE to obtain approval for a wholesale Islamic banking licence for the new entity, to be called the Emirates Trade Bank.

The talks are being led by a six-man committee appointed by Sheikh Hamdan bin Mohammed bin Rashid, Crown Prince of Dubai and chairman of the Executive Council. The committee’s chairman is Mohammed Al Gergawi, Minister of Cabinet Affairs and The Future.

A statement from DIEDC said the new bank would specialise in international trade and commodity finance. “Emirates Trade Bank will be the first of its kind, a global Sharia-compliant bank exclusively offering integrated trade and international commodity financing solutions through leveraging and mobilising the infrastructure and logistics ecosystem of the UAE.

“The bank will fulfil Dubai’s strategic goal of supporting the Islamic financial sector and integrating investments from this domain towards doubling UAE trade flows, which stood at about Dh1.4 trillion in 2014, by 2020,” it added.

Sami Al Qamzi, the director general of Dubai Department of Economic Development and vice chairman of DIEDC, said: “The UAE in general and Dubai in particular are privileged to have a diversified, open and flexible economy capable of addressing international and regional challenges.

He added: “Emirates Trade Bank is set to reap synergies from the strategic positioning and advanced technical and logistics’ infrastructure of Dubai in its efforts to finance international trade and commodity flows, particularly through the UAE.”

Speaking on the sidelines of the Global Islamic Economy Summit in Dubai, Abdulla Al Awar, the DIEDC’s chief executive, said: “This is the first time such a bank – Sharia -compliant and focused on trade finance – has been envisaged. It can revolutionise trade in halal products and will complement the initiatives we have already launched on standardisation and harmonisation.

“It will enhance trade finance between countries in the Arabian Gulf region, in central Asia and in Africa. It will be a new source of liquidity for trading between Islamic countries.”

The value of the global Islamic economy last year was recently put at US$1.9 trillion by the international information group Thomson Reuters. Global trade in halal food alone is expected to approach $2tn by 2020, it was estimated.

Talks with the Central Bank are believed to be focused on how to capitalise the new bank. Equity participation from the private banking sector is one of the propositions being discussed.

The statement said: “DIEDC will continue to support initiatives aimed at transforming Dubai into the capital of the Islamic economy.

“The UAE and the emirate of Dubai have always been the leaders and pioneers in the Islamic finance industry, with the establishment of the first Islamic bank in the world in the 1970s.”

The other members of the committee are: Essa Kazim, the Governor of Dubai International Financial Centre and the secretary general of DIEDC; Hussain Al Qemzi, a board member of DIEDC and the chief executive of Noor Bank; Ahmed Al Janahi, the deputy chief executive of Noor Bank; and Saed Al Awadi, the chief executive of Dubai Export Development Corporation.

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UAE takes initiative on Islamic endowments

The UAE aims to lead the world in the market for awqaf – Islamic charitable endowments – by establishing the first global organisation for the administration and development of the multibillion dollar philanthropic business.

Mohammed Al Gergawi, the Minister of State for Cabinet Affairs and the outgoing chairman of the Dubai Islamic Economy Development Centre, announced the initiative at the opening ceremony of the Global Islamic Economy Development Summit.

The Awqaf International Organisation brings together Islamic endowments from 11 countries under a “unified umbrella” in Dubai.

Awqaf is a system in which the return on assets – typically real estate – is used for charitable purposes in Islamic countries. Although there is no global estimate of how much they are worth, some Islamic financial experts have criticised the ­current set-up for leaving assets under-exploited and under ­performing.

Abdulla Al Awar, the chief executive of the Dubai Islamic Economy Centre, said: “The Awqaf International Organisation articulates our efforts to integrate the pillars of the Islamic economy and reinforces the role of endowments and their contribution to social and economic development.

“With the establishment of the organisation, we expect to achieve a positive impact on the lives of communities across the globe – particularly in countries that suffer a weak economic infrastructure and low development indicators.”

Mr Al Gergawi said that Islamic financial assets were growing around the world and that they were a “force for stability”.

He highlighted the three-year record of Dubai since it announced its ambition to be the “capital of the global Islamic economy”. The value of sukuk (Islamic bonds) in Dubai had jumped from Dh26 billion to US$135bn [Dh496bn] in that time, he said, and that other indicators of the Islamic economy had also grown. “The Islamic economy builds happiness and serves communities,” he said.

Philanthropy was the dominant theme of the opening day of the GIES. Tayeb Al Rais, the secretary general of UAE’s Awqaf and Minors Affairs Foundation, told delegates that the concept of charitable giving is a foundation of Islam, but that certain practices were struggling for relevancy in the modern world.

Abdul Aziz Al Ghurair, the chairman of the UAE Banks Federation, said: “We have much to be optimistic about in the Muslim world. We have some of the fastest-growing economies. We have a growing population of dynamic and motivated young people. We have some of the world’s most charitable donors.”

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In October 2013, Sheikh Mohammed bin Rashid, Vice President and Prime Minister of the UAE and Ruler of Dubai, ­committed the emirate to a three-year timetable with the ultimate aim of making it the capital of the global Islamic economy.

The Global Islamic Economy Summit, which got under way yesterday, provided a useful opportunity to gauge Dubai’s progress towards the very challenging target set by the ruler.

It was an ambitious goal and a challenging deadline. There are an estimated 1.6 billion ­Muslims in the world, and about 50 countries that have a Muslim majority.

The global Islamic economic “spend” is estimated at US$1.9 trillion across sectors such as food, travel, fashion, pharmaceuticals, retail and leisure. The value of assets in Islamic financial institutions is calculated at about $2tn in the most recent analysis by information group Thomson Reuters.

It is apparent that dominating such a huge but disparate market would be a difficult job for any single country, even one with the can-do attitude and ambition of Dubai.

And there was competition. Malaysia was regarded back then as the leading Islamic economy in the world; London dominated in Islamic financial products; other Gulf states laid claim to pre-eminence in Sharia standard-setting, crucial for the development of a global industry.

On the sidelines of the summit, one of the leading architects of the strategy of the past three years – who did not wish to be identified in print – gave a candid assessment of Dubai’s progress over that period: “I’d say we are 80 per cent of the way towards becoming the dominant force in the world Islamic economy.”

We’ve made great progress in a short space of time, but I think there is still some work to be done before we can claim No 1 position.”

He thought that Dubai continued to lag behind in food manufacturing, despite progress towards setting up a standardised authentication and certification process.

The global halal food industry remains fragmented and the lack of a unified standard has dissuaded large multinationals from entering the sector.

This issue is peculiar to the food industry and will remain problematic as long as there are fundamental differences of taste.

Nonetheless, there are things the UAE can do to make it more of a global halal food hub.

A recent disagreement with a European beef supplier, which led to the closure of the ­European plant and suspension of imports to the UAE, is a case in point.

The other area where my source thought there was more work to be done is in finance. Make no mistake, there has been great progress in this area, the single most valuable sector in the global Islamic economy.

Dubai – via the Nasdaq Dubai market – has overtaken ­Malaysia and London as the world’s leading centre for trading in sukuk ­(Islamic bonds), and the UAE’s Islamic banks are the strongest in the Arabian Gulf region.

But there is much more that could be done. A constant complaint from Islamic financial practitioners recently is that there remain too many Sharia authorities in the Middle East but that, perversely, there are not enough Sharia scholars who understand the modern financial world.

The need is for a training academy that can meet the needs of the world of modern Islamic finance.

Again, Dubai has done a significant amount of work in this respect, setting up professional bodies in Islamic banking and finance in the emirate. But more needs to be done.

One senior expert who was prepared to go “on the record” in this respect was Tirad Al Mahmoud, the chief executive of Abu Dhabi Islamic Bank.

“We are late, we need to move much more quickly. This is a crucial issue for 2017,” he said.

The unified Sharia board announced by the UAE Central Bank is a good start and international bodies such as the IMF and World Bank are thought to be considering a push to further standardise Islamic finance.

The UAE has long wooed these institutions and stands to benefit from any such move.

If Dubai can sort out food and finance, that could quickly propel it the extra 20 per cent. It is already a regional leader in trade, travel and tourism, fashion, and retail and leisure.

The three-year plan was ­ambitious and perhaps unachievable in full.

But the strategy has given the UAE an unassailable lead in the race to lead the Islamic economy. Now for one last push.

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'Expo will be the biggest event in the region's history'

As the corks popped and the fireworks cracked nearly three years ago when Dubai won the right to stage Expo 2020, some killjoys could be heard wondering what all the fuss was about. After all, the event is only a business fair, isn’t it?

Simon Clegg, although not there at the time, would not have been among the cynics. “Expo will be the biggest event in the history of the Middle East and North Africa, in terms of the numbers attending,” he says, pointing out that the 25 million visitors expected is bigger than the crowds at the last two Olympics and World Cups combined.

Mr Clegg, who has been the chief operating officer of Expo since March, has made a career out of organising high-profile sports events as big as the 2012 London Olympics, and most recently the European Games in Baku, Azerbaijan.

But he feels the weight of history on his shoulders with Expo. “We’re carrying a burden for delivering something all Emiratis will be proud of. It’s a huge responsibility,” he says, looking out of the window of the Expo headquarters over a vast expanse of levelled sand.

He cites other great exhibitions in history that have seemed to sum up the spirit of the age. “In keeping with the times, Expo this time will be all about cutting-edge technology, along the lines of our motto “connecting minds, creating change”. We need global solutions to global problems, and Expo will help us to find them,” he says.

For the UAE, Expo is a chance to showcase itself to the world just before the 50th anniversary of the founding of the country and to mark the progress the country has achieved in such a comparatively short time. The expectation is enormous.

But Expo has also taken on a different significance in the current economic and financial climate. The IMF has said preparations for Expo will help Dubai escape the slower growth rates the rest of the oil-dependent region will endure, and will accelerate the urban growth of the emirate.

“There will be considerable economic impact. Somebody forecast that there was likely to be a Dh70 billion positive impact for the UAE and I could not disagree, it will be positive.

“Remember that 70 per cent of the 25 million visitors will come from the international community. Plus there will be a reputational profitability on a global level that you cannot put a dirham cost against.

“It is not just a case of ‘putting Dubai on the map’, because it is already there thanks to the long-term vision that has created this place. But there is a global reputation at stake,” Mr Clegg says.

When Dubai won the bid for Expo, oil stood at more than US$100 per barrel but he says there appears to be no second thoughts now with oil at $50. “I’ve only been here six months, but in that time I haven’t seen anything that suggests there has been a change of thinking by Dubai.”

Those six months have brought substantial progress to the project, but not all of it is immediately apparent from the windows of the majlis at Expo HQ. A vast expanse of flat white sand extends in three directions. That in itself is progress.

Before work began, there was scrubby undulating desert there, with a camel farm and some other buildings, which had to be levelled before work can begin on the main construction. About 4.7 million cubic metres has been shifted and will be recycled for the project.

There has also been progress in other respects. Two countries – Switzerland and Slovenia – have signed up to participate in the event.

Mr Clegg is expecting many others to take advantage of the assistance Dubai is providing poorer nations to be part of the Expo. The bigger countries are taking their time assessing plans and budgets for the bigger pavilions on the 438-hectare site.

Detailed financial analyses of the Expo are not in the public domain, although some were made public at the time of the bid in 2013. One early estimate, by Deutsche Bank, put the total cost of the Expo, plus the infrastructure and construction work to support it, at $43bn. That is roughly the annual GDP of Dubai.

“I don’t recognise the figure of $43bn. The budget for the project itself in the registration documents was in the region of Dh25bn. But it’s very difficult to single out general investment and actual investment in the Expo project itself,” says Mr Clegg.

He points out that the Expo site represents only 3 per cent of the gigantic urbanisation project called Dubai South, which itself is part of the strategic development of the city southwards around the hubs of Jebel Ali and the new Al Maktoum airport.

“Some 80 per cent of the project will be used in the legacy phase, which is all part of the growth plan for Dubai. You cannot really describe Expo as an incubator or a catalyst, because it would have happened anyway. Would Dubai South be here without Expo? Yes, certainly.”

The strategic nature of Expo is illustrated by the sponsors the project has so far pulled in, to the tune of “hundreds of millions of dollars”. DP World, Emirates airline and Etisalat are the first tier-one sponsors, but Mr Clegg and the rest of the Expo executive team are on the hunt for nine more top-level sponsors. Negotiations are continuing with several big companies, working exclusively within product categories. “Some may be the kind of companies that get involved in sport sponsorship, but Expo represents a different type of investment opportunity to an Olympic Games,” he says.

There will also be second and third-tier sponsors, but the main bulk of Expo revenues will come from ticket sales. “The market research is still being done. We have to get the price right to drive numbers through the doors. We’re selling this as an opportunity to get on to the Expo site and touch the world. I’ve been lucky in my career – I’ve been to about 50 countries in my time. But not everybody has been so lucky. Here there will be nearly 200 counties represented and visitors can get a taste of each one. We’ll be working on pricing for another year,” he says.

Expo is not the same proposition as the Olympics, he insists. “With the Games, the specifications are set by others, it is only for around 17 days, and with the biggest stadiums possible. There is no real interest paid by the organisers to ongoing use, to legacy.

“On the other hand, we will run for six months, we have a lot of leeway in the buildings and services on the site and we have paid a great deal of attention to legacy. We have a lot of potential here. What can you convert a canoe slalom course into?” he asks.

Once the crowds, and the 30,000 volunteer workers, have gone away in April 2021, the Expo site will become a business park with mixed-use residential and commercial facilities. It will be home to one of the largest conference and exhibitions sites in the region, with a mall built by Emaar and with the whole site hooked into the Dubai Metro system and connected to the new city of Dubai South.

“This is not just a business fair,” says Mr Clegg.

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Etihad looks to create leisure airline with Germany's TUI

Eithad Aviation Group, the Abu Dhabi carrier’s holding company, is aiming to create a new force in European tourism with the launch of a leisure airline in alliance with one of the biggest travel companies in the world.

The UAE company announced it is in talks with TUI, Germany’s biggest tour company, to set up a new airline focusing on flyers in the wealthy markets of Germany, Austria and Switzerland.

The core of the new airline will be the tourism business of airberlin, Etihad’s 29 per cent partner, which last week underwent a radical restructuring designed to stem years of financial losses.

Airberlin’s tourism operations will be injected into the new company, including 35 aircraft of which some are already operated for airberlin by TUIfly, the airline owned by TUI.

A joint statement from Etihad and TUI said: “This new airline group would serve a broad network of destinations from Germany, Austria and Switzerland.”

The leisure airline group will be supported by the expertise of Etihad Aviation Group, the fastest-growing aviation group in the world, and make use of TUI’s state-of-the-art distribution capacity.

“TUI, Etihad Aviation Group and airberlin intend to finalise an in-principle agreement in due course. Any agreement entered into will be subject to all necessary corporate and regulatory approvals,” the statement said.

The equity holding structure of the new company and financial terms are believed to be under discussion.

TUI, which took over the business of UK tourism groups Thomson Travel and First Choice, is regarded as one of the leading leisure companies in the world, with 75,000 employees and 30 million customers. It has a portfolio of more than 300 hotels, 14 cruise liners, six European airlines with about 140 aircraft and a wide-reaching distribution network of more than 1,800 travel agencies and online portals.

Airberlin is Germany’s second largest airline after Lufthansa. It will exit the tourism aviation business following its recent restructuring to concentrate instead on scheduled short and medium-haul operations in Europe, as well as an expansion of its long-haul business to include more transatlantic flights.

Although the details of the tourism strategy are still being finalised, the new venture could expect to exploit synergies with airberlin’s long-haul routes and Etihad’s existing global network, which includes stakes in six other international airlines.

Last week’s restructuring involves handing over aircraft to Lufthansa and a reduction of the 8,000-strong airberlin workforce by 1,200 to create a “leaner, stronger, fitter” airline.

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The knives are out in Washington, and bankers from London to the Arabian Gulf should beware of the new financial belligerence in the American capital. There’s no telling who might be next.

Full square in the firing line at the moment is Deutsche Bank, once the European banking champion but now – due to a combination of its own past mistakes and a new approach towards valuing financial assets – touted in some quarters as the next Lehman Brothers.

That is probably going too far, but there is no doubt the German giant faces big problems, especially with its international investment banking operations, which might be worth a good deal less than they are shown to be at in Deutsche’s balance sheet.

It was international operations too that got Deutsche into its most recent and serious trouble, in the shape of a US$14bn fine the US department of justice says it is considering for mis-selling of mortgage-backed securities (those again).

The scale of the intended fine shows the aggression that is running through DC. It’s hard to see, in comparison with other banks (Americans included) that have attracted the DoJ’s ire, what Deutsche has done to justify such a savage penalty, virtually equivalent to its market capitalisation.

Perhaps it’s a bit of tit-for-tat by the Americans for the Europeans’ treatment of Apple in Ireland, or perhaps it’s just an opening gambit by the DoJ to extract as high a final settlement as possible.

Whatever, the signs are that Deutsche is not going to roll over. There was talk last week that it might put up $5bn to settle, but from recent conversations I’ve had with Deutsche executives it now looks as though the German stance is hardening: $2.5bn, $3bn tops, is the suggestion.

Any eventual deal will be played out against the backdrop of the US presidential election, so the issue will remain in the public, and political, arena for some time to come.

But it is not just Deutsche in the Americans’ line of fire. Several other European banks are also in their sights. The DoJ is said to be looking at a mega-settlement from Barclays, Credit Suisse and Royal Bank of Scotland as the price for continuing participation in the dollar system.

Beyond Europe, there are also worrying signs that the Americans are looking to rake in cash virtually anywhere in the world.

This is not just the impression left by the Justice Against Sponsors of Terrorism Act (Jasta), passed so controversially by Congress last week, although this has sent shivers through the Middle East financial system, with the possibility of freezes on Saudi assets in America and restrictions on investment there.

Jasta does not specify Saudi Arabia as its target, so in theory any country deemed to have involvement in 9/11 could come under the act’s provisions.

Bankers in Dubai report new interest by the US financial authorities on the nature of corresponding banks, on anti-money-laundering arrangements and, especially, on possible violations of still-existing Iranian sanctions.

The US is on the financial offensive. It could be time to run for cover.

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