Live from Qatar: What Does Trump Mean for the Middle East?
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Ready to bring your visions to life? Learn how at amazonbusiness.com. Bloomberg Audio Studios, podcasts, radio, news. I'm Stephanie Flanders. I'm head of government economics at Bloomberg. Welcome to Trumponomics, the podcast that looks at the economic world of Donald Trump.

how he's already shaped the global economy, and what on earth is going to happen next. This week, we're recording Trumponomics in front of an audience from the Qatar Economic Forum in Doha, and we're asking the simple question: What does Trumponomics mean for the Middle East?

It's the fifth Qatar Economic Forum, and the sessions theoretically have covered a very wide range of topics, not just economics and finance, but the business of sport, culture, and the arts. But you couldn't help feeling, with the event happening just a few days after President Donald Trump's tour of this region, nearly all of the sessions, and certainly many of the conversations here, have also been about Donald Trump.

what his policies mean for the region and the world. We're recording this a few days into the forum on Wednesday, May 21st, and I'm keen to take stock of some of those discussions we've been having in the corridors and on the main stage, but also think more broadly about not just Donald Trump's visit, but longer term, what the shift in the global landscape is

he's engineering is going to mean for this part of the world. My guests have been part of the conversations here at the Forum, and they've also, I think, been doing some reflecting on their own. John Micklethwaite, Bloomberg's Editor-in-Chief, and from our Bloomberg Economics team, Ziad Daoud, Chief Emerging Markets Economist, and Dina Esfandri, who's joined us quite recently as the Middle East's

lead geoeconomics analyst, and you were previously, Dina, with the International Crisis Group. So thanks very much, all of you, for joining me. Zia, I'm going to start with you. We will get into the visit in a minute, but I just wanted to take a snapshot from you of how the global economy looks today if you're sitting here in Qatar, or for that matter, Dubai, where you're based.

I think you can summarize what's happened to the global economy in two numbers, four and two. The region gives the world four things, four inputs, and it gets from the world two things. The region exports to the world energy. It's a major energy producer. The region exports capital to the world. The region is a major trade route for the world.

You talk about the Strait of Hormuz, you talk about the Strait of Bab-el-Mandab, you talk about the Suez Canal, and the region provides also labour to the world. It currently provides about 7% of the working-age population to the world.

Because the region is young, because it's growing, and because other parts of the world are ageing, that ratio is going to go up all the way to 11% by the end of the century. So that's what it gives to the world. What it gets from the world as input to the economies here is two things. One, the most important thing is oil prices. Higher oil prices are good for the region, and oil prices have gone down. And the second thing that the region gets from the world is interest rates.

determines monetary policy here, it determines borrowing costs, and it determines capital flows. And this year, interest rates, at least if you look at the Fed funds rates, are on their way down, maybe slower rate than we previously thought. But that's good for the region. That's different from 2022, when the U.S. was raising interest rates rapidly, and some countries in the region were exposed by that rapid increase in monetary policy in the U.S.

It's good to have that sort of basic framework. And I like the idea of the inputs and outputs. Dina, you're thinking more about the geopolitical inputs and outputs. We've had Donald Trump's visit. We saw from a distance some of the headlines, some of the enthusiasm around his trip, also some of the stories that he would have been less happy with. How important was it for the region? I think this trip was absolutely key for the region. The Gulf Arab states went through a period of

difficulty politically vis-à-vis the US. And so Trump's trip last week was kind of a re-emergence of the Gulf Arab states, as it were, for the countries here. Everybody walked away from the trip a winner.

Trump got what he wanted, which was some of the economic deals that he was gunning for. And the Gulf Arab states in return were able to showcase that they were open for business, that they were here, that they were active, that their economies were growing, that politically they were havens of stability in a region of instability, and all of that was very important. And I think they also used this as an opportunity to set perhaps some red lines or at least some asks

on the political side, things like, you know, asking for the sanction, lifting of sanctions on Syria, setting some red lines in terms of what they would be willing to accept in a U.S.-Iran potential nuclear deal. So really just using it as an opportunity to outline to the Trump administration what was important for them politically and showcase this reinvigorated relationship with the U.S.,

And we did have some very big numbers coming out. Every day was a new country and a new very large number of billions and occasionally the odd trillion thrown in. We know Donald Trump has a quite relaxed attitude to these things. Do these governments take seriously those commitments?

They take them seriously, yes. But I think what they take more seriously is the ability to capture those headlines with these huge figures, which is exactly what they did. Some of these pledges aren't immediate. They're over the course of 10 years. Who knows what will happen between now and 10 years' time? And who knows what you could include? I mean, Zia, do you have been just a bit of a reality check on some of the past pledges

even Trump's first administration, some of the promises that were made then? Yeah, so there's a qualitative element to it, but there's a quantitative side to it. So the reason why I'm sceptical whether these investments will be delivered is multifold. I think one is the fact that if you look at the track record of what happened during Trump's first term, he claimed that there was, for example, from Saudi Arabia, $450 billion of purchases and investments.

I didn't do the numbers, but the former IMF mission chief to Saudi did. And his conclusion was if you look at trade and if you look at investments, if you add them all up, it's less than $300 billion in the first term. Now, since then, the region has been spending more domestically. And if you're spending more domestically, there is less to go abroad. So the likelihood that they will be able to deliver even a larger number is smaller.

And the third thing is the biggest economy in the region, Saudi Arabia, has turned. It's no longer an exporter of capital, it's an importer of capital. Saudi Arabia last year, when oil was at $80 per barrel, was a net borrower from the world. Today, when oil is at $65, it's more likely to be a borrower from the world. So if it wants to invest $600 billion to the US, as the White House says there were commitments of that size, or even $1 trillion that Donald Trump is chasing,

Saudi Arabia needs to borrow first. That makes it unlikely that they would actually deliver on these big numbers. All right. Well, that is a kind of a bombshell that I guess we'll also maybe come back to in terms of the Saudi Arabia's changing standing. But John McAvoy, you know, like me, you're visiting the region for the forum. We saw the coverage of the Trump visit. Probably you had your own thoughts on how it had gone, its importance. But, you know, what surprised you actually being here the last few days and what

how the Donald Trump show is playing in this region? I think a couple of very obvious things. The first is if you come here, again, if you come back here, or we come back every year for the conference, you see the way in which this region works.

continues to add power, both in a kind of long-term way. I'm old enough to remember when you thought about the Middle East and power, you thought about countries like Egypt, yes, in a place like Saudi Arabia were important for oil, but geopolitically, Egypt seemed more important. Now it's very much the Gulf, and you can feel that both in terms of the people coming here for money, basically, because I think that is a big element. People are coming here, many of the people in this room perhaps,

in order to get capital that is incredibly important. And that is having a real impact. And there is a slight difference, I think, between the UAE and Qatar and Saudi Arabia, because as you say, Saudi Arabia no longer has as much to push out. So there's an interesting dynamic in the people coming looking for money. The second thing is just, you know, the extraordinary personal thing of Donald Trump.

The fact that people queue up to say they met him or that they talked to him for one second and where his car was parked and all this stuff. And it is much more, in a weird way, like going back to a previous era of royalty visiting a place. It's much more along that line and a variety of somewhat spectacular promises, I think, probably...

People from countries that were colonized might remember this in a different era about places like Britain, but where promises are made, but you're very unsure what they mean. It's just much more exciting that the king emperor has arrived. And that's very much the sort of spirit of it at the moment. But he has obviously had a very big effect, as you said, everyone won. The interesting question somewhere at the back of that is Israel-Gaza, where it's harder to see where the red line is there.

Now, I want to get into some of those, the deal-making on the geopolitical side that he, I guess, has been somewhat less successful so far, at least in some areas. But just on the sort of broader point, John, it was quite fashionable before the election, the US election last year, to say that this region would be relatively relaxed, even on balance, happier with a Trump victory because of his quote-unquote transactional approach to foreign policy, which we've obviously seen play out.

But I get the sense, and certainly from talking privately to some of the policymakers here at this event and elsewhere, there's a nervousness actually about the instability and also people hankering a bit, realizing the value of the rule-based system. Even if they complained about it, they didn't like American politicians, American presidents lecturing them about human rights and other things.

The idea that everything is now thrown up into the air is making the leaders here nervous. I think that's very true. I think if you talk to people behind the scenes, yes, there is an enormous amount of, well, Trump did this, Trump did that. But there is also a worry, I think, which is along the lines of people in this region have moved from a

relationship-based thing with America to slightly more transaction-based. And I think that is very scary because the

and I just come back from Asia, where you see exactly the same thing with places like Japan and South Korea. If you look at Liberation Day, what happened with tariffs, what happened with Zelensky in the White House, if you are one of the people who rely on America to support you, and I think in this place, this region, you can talk about that not just in terms of countries, but in terms of families. If you rely on America to be your ally,

you can't have an ally who's there 80% of the time. You're either 100% or it doesn't really count. And I think what scared people about what happened in the first bit of the Trump presidency was the idea that that was all up for negotiation.

And I do think there is that. So it's a mixture between this whole welcome the king stuff on the one hand, but then this slight nervousness that he could change his mind dramatically about things. And that, I think, here, particularly from the point of view of the families who control...

a lot of the power in this region, they really do rely on that. And so that's where the nervousness comes from. It's a reality check because, of course, it's something we've also heard from countries more broadly, what you might call from the global south. You know, there have been people privately saying, oh, it's a relief to have the US be just as transactional, you know, and not pretending to be anything that it isn't, just a self-interested country like the rest of us. And we can all sort of, we can be...

we have a rest from the lectures, but there is a sting in the tail. I mean, Tina, do you agree with what John has said? Yeah, broadly, yes, absolutely. I think from the perspective of the countries here, though, this trend began even before Trump. Arguably, right after the Arab Spring, it already appeared as though the US wasn't as committed to the region. So they've had a long time to adjust

to what they perceive to be a US pivoting away from the Middle East. America never famously saved Mubarak, did it? Exactly. That's exactly right. And so I think on the one hand, they're used to it and they almost appreciate, like you said, this transactional approach that the Trump administration now has,

But on the other hand, they're afraid because he's unpredictable. He's unreliable. On the one hand, he might listen to them and they might have his ear immediately after a visit where everything goes well. And 10 minutes later, things will change. And just as we should also sort of tick off some of the big things that happened. And I think, you know, geopolitically,

A very significant thing that happened during the visit was the normalisation of relations with Syria. I mean, Dina, what's the impact of that and the importance of that for the region? It's absolutely huge. The new Syrian government would have had no hope of any growth, any development, any stability, had it not been for the sanctions relief. But the announcement of sanctions relief is not quite the same thing as the implementation of sanctions relief.

And sanctions on Syria are multilayered, incredibly complicated, and their removal requires many different people in the U.S. to be on board with it, many different institutions in the U.S. to okay it, and it will require real commitment on the part of the Trump administration. So it remains to be seen just how committed this administration will be to actually lifting all the sanctions in the next few months.

Ziad, what's the economic impact of normalisation in Syria and who are the sort of winners economically in the region from it? In terms of general economic impact, it's probably limited. Syria's economy is not very large and it doesn't have much spillover to the rest of the region, but there are winners. So if you think about, for example, Turkey. Turkey has political influence in Syria under the new government.

You'd think that Turkish construction companies would be involved in the reconstruction of Syria, which is probably going to, the bill could be in billions of dollars. And it may benefit from this. I think with respect to Syria, when it comes to Syria and what happened in Syria, it just tells you something also about what's happening in the broader region. Because I think when people look at the region today and they read the history of the region today or write the history of the region today,

They're not going to say, look, there were a bunch of protests in the Arab world in 2011. And there was another wave of protests in 2019 in Lebanon and Iraq and Algeria and Sudan. And every Arab republic had popular protests since 2011, leading to toppling of governments in some places. And then we had COVID. And then we had the war in 2023 and 2024 and up to today. They'll think there's a whole period of instability. There's something in the region that's

that is politically probably just simmering. You had the popular protests which signalled dissatisfaction. Economically, if you look at many countries in the region, their GDP per capita today is lower than 2013. So it's almost a lost decade of economic growth. You see that in Egypt, you see that in Iraq, you see that in places like Jordan, Tunisia, Iran. And then you see what happened in Syria, where there's a sudden change out of nowhere.

And then obviously the war, and there is the whole level of anger in the region that's not expressing itself. We have this political instability risk in the region, which hasn't quite manifested itself. We saw an element of that in Syria, with what happened in Syria in December, but we haven't seen it in the rest of the region. Dina, I feel like it's sort of crazy to be going through these things so rapidly, but we don't have a huge amount of time. And something that the president has talked up a lot is a nuclear deal with Iran.

but not much sign of progress. And actually, as we're recording this, there is also the sort of leaks out of the US about potential greater tension and potential attacks between Israel and Iran. So how do you see that? So I think it's already good news that they've had several rounds of negotiations, some almost direct, kind of direct, and some involving Omani mediators and now increasingly Qatari mediators.

I think the momentum is there, also good news, but there does seem to be a lot of public positioning on both sides in the media, and all of that is pretty standard for this type of negotiation. I do think this is a unique opportunity where both the Trump administration and the administration in Iran want a deal, and that hasn't always matched in the past.

And we are faced with a US president who is capable of bulldozing through and getting a deal, which perhaps in the past we had, but the implementation of the deal was somewhat shaky. And of course, the same president left the previous nuclear deal as well. There's also a lot of effort on the part of the Iranians and the Americans to brief the

regional players, players like Russia and China, to get them on board, to make sure everybody is on the same page. And again, that really does count for something. So everybody feels involved in these talks. The real question, though, is what does the US ask

And what does the US ask on enrichment? And this is where we've seen a little bit of flip-flopping on the American side between asking for complete dismantlement of Iran's program or accepting a certain amount of enrichment, but obviously in a limited capacity.

Complete dismantlement is just off the table for Iran. They won't agree to it. If the Americans are able to accept some kind of enrichment, then I do think the likelihood of a deal is actually quite high, because both sides want it and both sides need the win. Just to follow up on that, I mean, one of the things, one of the reasons it matters, if you're just thinking in kind of optical terms for the administration, is it's the difference between having a deal that's quite different from the Obama deal

and having a deal that's actually very similar. Do you think that's going to be fundamental? I do think that President Trump just wants the win. And coming back with a deal is a win, no matter what's in it. So I don't think, despite the fact that they did make a big deal out of the previous deal and not wanting this one to be the same, I don't think that this administration is dead set on making sure this is very different.

They are just dead set on achieving this agreement with Iran. There are two things, though, in the deal that sound like they are going to be somewhat different to the previous one. The first is this idea that there may not be any sunset clauses, so an end date to the agreement. It appears that there's been discussion about this and it appears that there's been at least some agreement on it. And that's very different to the Obama administration's nuclear deal.

The second thing is, there appears to be an Iranian willingness to talk about its regional presence.

I myself was taken aback when I heard the Supreme Leader say this, because it seems like Iran was only going to focus on a nuclear deal. But if there is willingness on the Iranian part to talk about its regional presence, then that fundamentally changes this agreement. Do you think that makes a difference to instability? Because I thought while Fyad was talking, if you were looking at the outputs for this region in a slightly more geopolitical way, you would say one of the great outputs over the past decade

however long you want to take, has been instability, which has ricocheted around the world in various ways of extremism and protests and also just difficulties. In the moment that you could argue massively generalizing, but there are kind of two things slightly in the middle of it, there's Israel and Gaza and there's Iran. Is there a chance, because of all these machinations, however

you put them, that actually you end up with a more stable regime. And that element of the Middle East is changed. The issue is that

Iran's relationship with its proxies in the region and the network of partnerships that it's built in the region really is its crown jewels. It's its single most successful foreign policy endeavour as the Islamic Republic. So it's very important to it. Now, it has suffered a blow, for sure. It is weakened, although I would argue it's not weak, because it's a temporary thing, not a permanent thing.

But this is significant to Iran, and it would have to gain a lot of security in order to give that up. Would such a deal give it that security? I think a deal with Trump's America would give it legitimacy, for sure.

And what happens after the deal, I think, is what's critical to determining how much Iran is willing to give up some of these partnerships. If Iran really does see the benefits of the deal, if, for example, you could foresee a potential Islamic Republic that is more integrated economically in the region, an ideal that a lot of the Gulf Arab states are trying to sell to Iran, if it can be reintegrated, if it's no longer isolated, then it means the regime has an interest in

in staying integrated and perhaps giving up some of those relationships. I don't think it'll be easy, and it certainly won't be the first thing that happens, but I do think it's...

a potential scenario. John, you mentioned at the start something that we should, you know, people listening, although it's called Trumponomics, obviously we're listening to this show in the same week that international pressure is mounting on Israel and the UK government has taken some steps and there's been an alliance of other countries who've also attempted to put more pressure on Israel regarding the situation in Gaza.

That's the other wrinkle, surely, in your story about having greater prospects for stability here. Yes, that's what I was asking about as well. Most people would say those two things, the Israeli-Palestinian dispute and the Iranian, those have been at the bottom of most of the elements about what has made this a difficult region for outside countries.

powers to deal with, you might argue, interfere with and cause things. But those are the two things. And without a solution on those, and I think neither Iran weirdly seems a little bit closer to some kind of deal than what seems possible in Israel-Palestine. But with all this talk of deals, again, it does seem like there's sort of parallel tracks. We've had several weeks of talking about big numbers and emerging great relationships between the US and the Middle East and the Gulf nations.

at the same time as this continued drama is playing out and even deepening in some ways around the situation in Gaza.

And the mistake, some would say, of the first Trump administration was this idea that you could have the Abraham Accords, that you could be moving towards a more peaceful place, just hoping that that dispute would go away. And on October 7th, everyone said, well, we mustn't make that mistake again. The problem is now still front and centre. But, Dina Ziad, it feels like we're still talking around it in forums like this and in more geopolitical settings.

Absolutely. The problem is the Israel-Palestinian problem is such an endemic issue to the Middle East. It's so complicated, it's longstanding, and it's just years and years and years of animosity, and now several years of devastating conflict. It's difficult to pick that apart, but you're absolutely right to say that

there will be no stability in the region long term if you don't resolve this conflict. This will always form the context and the backdrop to any attempt at stability. And the problem is, in the last few years that this conflict has raged on, it has engulfed the entire region. So we're no longer talking about a limited conflict that covers just Israel

Israel and the Palestinian territories. We're now talking about something that has drawn in Lebanon, it's drawn in Iran, it's drawn in the Gulf Arab states because they're trying to mediate it. So there is no prospect for stability without resolving the Gaza conflict. And right now, there doesn't seem to be a lot of hope for resolving the conflict. At the broadest level, the conflict, it's not just many years, it's now entering its second century, which is worth

reflecting on. Because we're Trumponomics, we're going to do a quick turn back into economics before we end, which means I'm looking at you, Ziad. I can't help being struck. You mentioned it at the start. You know, there's one big change, which is that Saudi Arabia is now a capital importer, is now borrowing from the rest of the world to fund all its domestic investments. It's not necessarily going to be able to have this big checkbook, even though there was lots of talk of money last week.

I would say for the outside observer, for many people in the world, Saudi Arabia actually feels bigger. It has a greater sort of geopolitical standing now, and John mentioned it in passing as well. But you would say as an economist, that's happening, that greater place on the world stage is happening as its economics is actually becoming weaker and weaker. Is that fair? Yeah.

Weaker and weaker in the sense of providing less capital to the world. But let's just take a step back. This region, the Gulf countries, are incredibly rich. Just perspective, if you look at Qatar, where we are today, Qatar has about $800 billion of assets abroad, of external assets. If it decides to liquidate them tomorrow and distribute to the citizens equally, there's fewer than 400,000 Qataris here, each Qatari citizen could wake up next morning with $2 million, a millionaire.

You do the same calculations for the UAE, again, almost the same number, $2 million again for every citizen. Saudi, because it's significant harder carbon wealth, but the population is much larger, it's 20 million Saudis. So we're talking about $60,000 per citizens. It's a significant amount of money. But the region is not into that business of liquidating and distributing. They use that wealth.

to try and generate economic return. They use that wealth for economic diplomacy, and they use that wealth to generate soft power. But in the context of a very rich region, something is changing. And that something is changing, the amount they're topping up every year to that wealth continues to be positive in Kuwait, in the UAE, and in Qatar, but it's negative now in Saudi. That changed last year, as I said, when oil was at 80%, which is surprising.

That is set to continue when oil is lower. And if you look at the IMF projections, they expect that to continue all the way out to 2030. And it just means Saudi has a choice. It has a choice to spend less at home and try and save more abroad. That's one choice. The other one is to borrow more from abroad to fund all the spending. And the third thing is to withdraw on this wealth that it has accumulated and that could give each citizen $60,000. And I think this is the...

a choice that Saudi policymakers need to face in the coming years, and probably need to make a decision on that. And if you think about the world we have, you know, a world in which the dollar's lower, but the oil price is lower, but also people are potentially looking to move money out of the US or orient or sort of hedge their bets against either the US or China, you know, wanting to be in the sort of, you know, play both sides.

This region benefits from that? Are there particular countries that benefit from that? It could potentially benefit from this. Despite working as an economist, we have to make projections about the future. I look at the past and extrapolate. So far, foreign direct investment in the region has not been significant. Will things change? Possibly. I'm not smart enough to make that forecast two years out.

But right now, and if you look at Saudi, for example, foreign direct investment into Saudi has been falling since 2021. So yes, things could change. I was away on sabbatical last year because you approved it and John approved it.

And the point I'm trying to make is 20% of my office hours were people coming to me asking how they could get jobs in the Gulf from the US. And they should say, your Harvard students were saying that. But the interesting thing about that, if you want a kind of dinner party version of having been to a variety of meals here, the number of people who were thinking of sending their children to US universities who are now reconsidering

You could argue that that is one of the biggest sort of changes in terms of what Liberation Day may have done to people's views of America, with a slightly ancillary thing about people being slightly more reluctant to go to London for tax reasons. That kind of thing actually does have a long-term impact. I mean, Dina, I think...

certainly if you listen to some of the things that we've been saying and particularly what John was saying about America's different stance with respect to the rest of the world and how people are reacting to it probably the world as a whole is a loser from having America sort of step back from its previous role and be much more transactional but understanding that there will still be relative winners and losers from this new global order or disorder and

Do you feel that in your gut that sort of Middle East will be, or the Gulf region at least, will be a relative winner? I was just about to say it depends what part of the Middle East you're talking about. I do think that the Gulf is well positioned to be a winner, certainly with this administration. They are and they represent and they present themselves to be everything that the Trump administration likes.

the glitz, the glamour, the money, all of these things are very attractive to this administration. And it works. And so I do think that they're in a position to win.

But they can only win, as we said earlier, if there is greater stability in the whole Middle East region. And it really can only go one of two ways. The Trump administration can either bulldoze through some of the things that we've seen in the last few years, get to agreements, fast agreements, but agreements that are implemented if they are committed to achieving some of their foreign policy objectives, in which case we may actually see greater stability in the Middle East,

or it will make these great statements and not implement them afterwards. And if that happens, then the region will just be as unstable as it is now. It's a very superficial response, but from what you were saying did make me think a little bit. The surface glitz, these amazing hotels, but every conversation I've had with people this week has been about different elements of their very swanky hotel room that didn't quite work. And I can't help thinking you need the glitz

But you also need the showers that work. And I guess in your context, you need the underlying social and human infrastructure to be in place as well. Well, I think that's an excellent place on which to end. But John, Dina and Ziad, thank you very much.

So we're going to get... John, did you want to get the last word? You were looking at me meaningfully. No, I'm very happy. I should always check if the boss wants to get the last word. I think now, when we ended on the showers, I have no more to add. MUSIC PLAYS

Thanks for listening to Trumpconomics from Bloomberg. It was hosted by me, Stephanie Flanders, and I was joined by John Micklethwaite, Ziad Daoud, and Dina Esfandri, with special thanks to the team at the Qatar Economic Forum.

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