“Thirty-five years ago the hinge of global economic activity would be somewhere in the mid-Atlantic, and 10 years ago it would have run through central or eastern Europe,” he said. “Today that hinge runs right through the middle of Abu Dhabi.”

In fact, the whole Gulf region is enjoying sustained growth in a rather dull global economic outlook.

“Easy with all this oil!” I often hear, yet discovering oil in developing countries rarely means social and economic development but instead political instability, war, poverty and arrested social development.

Countless examples in Africa and South America show that oil is more often a curse than a blessing.

The Gulf, particularly the UAE, has avoided the pitfalls. The UAE, guided initially by the wisdom, vision and leadership of its founder, Sheikh Zayed Bin Sultan Al Nahyan, enjoys political stability, investment in infrastructure and social services, international

partnerships and economic diversification. Standards of living are high. So, has the curse of oil been lifted?

Maybe not. Inflation in the GCC region (IMF’s 2008 forecast is 7.1%) is hampering competitiveness and threatening plans for monetary union planned for 2010.

Higher commodity and food prices, the US dollar peg and housing shortages are valid factors, but some IMF economists found that a doubling in the oil price results in a 50% rise in the price of non-tradeable goods (such as housing) compared with tradeable goods.

High oil revenues trigger increased domestic spending and higher demand. When the domestic economy can’t meet demand, imports of tradeable goods, and soaring prices of non-tradeable goods, push up inflation. Housing in Dubai is up 30% since January. Not so easy after all, with all this oil.

Sébastien Delasnerie, a former journalist and director at the Invest in France agency, advises governments on branding and image in international markets.

E-mail: sdelasnerie@voila.fr