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Outlook darkens for the Gulf’s competing powers

In early 2016, the Middle East’s two largest countries looked set to become the world’s most vibrant frontier markets. Two years on, many bankers doubt that either Iran or Saudi Arabia can live up to these expectations.


In emerging market banking, occupancy rates at the most expensive hotels often tell an important story. An increase in business typically suggests renewed interest in the local economy from international financiers; a fall, that the perception of the country has turned sour.

Olivier Guitta, a former private banker who now advises banks on geopolitical risk at GlobalStrat, has been following developments in Saudi Arabia and Iran for over a decade. He is sure that, in both countries, the hotels favoured by bankers are emptying.

Bankers, he continues, have become acutely aware of the renewed risk of dealing with these two markets. “The outlook is a lot darker,” he says. “Western firms are far more circumspect now. In Riyadh, not one hotel room was free a year ago,” he says. “These past few months, there have been far fewer visitors. Likewise, everyone is leaving Iran very, very quickly.”

Just over two years ago, matters looked very different. Both Iran and Saudi Arabia had long been largely closed off to international investors and bankers – Saudi Arabia because it felt that it could handle its affairs in isolation, relying on its vast oil wealth; Iran because it faced heavy international sanctions.

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