Month: April 2011
While many are worried about the violence and instability in the Middle East, one area seems to be booming – the art auction world. A recent auction in Dubai proves the region’s increased interest in all things art. The latest auction by Christie’s actually broke 42 world auction records.
Interest Through Christie’s
As Michael Jeha, managing director of Christie’s Middle East explained, “The solid results for both the art and the jewelry sales are an indication that the art market in the Middle East continues to mature and attract an increasingly international and local following.”
Bonhams’ 7th Auction
Bonhams, which just had its seventh auction in the area, also saw very strong results. As Jonathan Horwich, the Global Director of the Picture Department at Bonhams said, “We saw good results and increased levels of competitive bidding across the estimate range. With the addition of online live bidding this year we saw even wider participation from international collectors than we have previously experienced.”
Both Bonhams and Christie’s entered the Middle East market relatively recently. Christie’s first came to the area in 2005 and Bonhams made its start in 2007. In 2010, Dubai actually became Christie’s fastest growing sales centre with a 153% increase over what they had seen in 2009.
Transformations in the Art Market
As Michael Jeha explained, “The regional art market has rapidly transformed before our eyes. You only have to look at the catalogue for our Middle Eastern art sale on April 19 and compare it with our first sale catalogue in 2006 to appreciate how the quality of the works has developed with each sale season. The pool of collectors interested in bidding in the sales has expanded too and in 2010, bidders in Christie’s Dubai sales came from 25 countries.”
Last Thursday, President Obama met with the Emir of Qatar, Hamad bin Khalifa al-Thani, expressing his appreciation for the Emir’s leadership about democracy in the Middle East and the work that they have done to try to promote a peaceful transition in Libya.
Obama’s Words at the Meeting
As Obama said at the meeting, “Qatar is not only supportive diplomatically but is also supportive militarily, and we are very appreciative of the outstanding work of that the Qataris have done side by side with the other international coalition members. In addition to our efforts in Libya, we have a strong relationship between our two countries. It is an economic relationship. It is a military relationship. It is a cultural relationship.”
Obama also congratulated the Emir for having the World Cup coming to Qatar in 2022.
Obama’s Off-the-Record Words
Thursday evening, during a political donors event in Chicago, Obama has other words to say about the meeting. While meeting with the donors at the q-and-a session, Obama didn’t realize that he was speaking on an open mike.
As Mark Knoller of CBS News recorded, Obama said, that evening that, Emir Hamad bin Khalifa al-Thani was a “Pretty influential guy…”He is a big booster, big promoter of democracy all throughout the Middle East. Reform, reform, reform — you’re seeing it on Al Jazeera.”
Obama went on to put his foot in his mouth when he said, “Now, he himself is not reforming significantly. There’s no big move towards democracy in Qatar. But you know part of the reason is that the per capita income of Qatar is $145,000 a year. That will dampen a lot of conflict.”
Saudi Arabia, the top oil exporter in the Middle East wants to reassure everyone. They have recently explained that they are ready to supply Asia with more oil. Oil Minister Ali Al Naimi explained in his remarks that were carried by the state news agency that their spare output capacity allows them to counter any issues with supply or demand.
As the Oil Minister explained, they are ready to help South Korea, Asia and other countries with “volumes needed as it has huge spare capacity to meet any rise in global oil demand or a decline in supplies.” They did not offer any solid figures about their spare capacity or about exactly how much oil the kingdom has. But they did explain that they have raised their output to about nine million barrels per day to help to compensate from the shortfalls in Libya.
Taking Over the Shortfall
With the unrest in Libya, Saudi Arabia is stepping in to take over the shortfall. It has already sold approximately 2 million barrels to European buyers.
Oil prices have recently surged, with the highest prices so far that they’ve had in the last few weeks. Brent jumped $4 a barrel, creating a 32 month high.
Naimi explained that the oil prices were not actually driven by a lack of oil, but by speculation and fear about supply and demand due to the upheaval in the Middle East.
As if the Middle East didn’t have enough to deal with already – rising food prices are now threatening to cripple many already strapped people. QNB Capital reported that the rising food prices in the area are a result of many factors including rising income levels in countries like China, unseasonal weather and fule price spikes.
Food prices rose a record amount in 2010, with a 25% increase. As reported by QNB Capital, the index of global food prices maintained by the UN Food and Agricultural Organization rose by 25% in 2010, surpassing previous records set in June of 2008. This number has increased even further in 2011, increasing by another 9.9% so far this year.
Hitting the Poor
The World Bank reports that these figures are hitting the poorest in society the hardest and bringing the world, as they report, near a “breaking point.” The World Bank’s food price index is at record levels as well, having increased 15% between October 2010 and January 2011. The Economist Intelligence Unit (EIU) has also projected a 19% rise in food prices for this year.
Food Price Impact
The impact that these food price increases have on the area depends on the share of household food expenditures in each location. For instance, in Egypt, food represents 39,9% of the Consumer Price Index compared to Qatar where it’s only 13.2%. In addition, the current food price increases are mostly for basic foods, rather than for more expensive or processed food items. This impacts poor populations more than it does the wealthy, since poorer people tend to buy more basic foods such as rice.
As QNB Capital reported, “As the Middle East relies mainly on food imports, the region is particularly vulnerable to food security concerns. If this trend of rising food prices continues, Arab countries will likely be forced to increase their strategic food reserves and develop technologies to boost domestic production to meet growing food demand.”