Abu Dhabi & the Global Grid

[music] Well, 50 years ago, I don't think anyone would have predicted that Abu Dhabi would be either the capital of capital or the capital of a global connectivity revolution. But ever since ancient times, even imperial expansion, global connectivity actually has very local origins. So let's look for a minute at how we got to where we are today with Abu Dhabi's position as a central hub in global infrastructure and what we can learn, infer, and how we can position ourselves for that global connectivity revolution. Now for those who don't remember their history in the immediate postcolonial period as I said it was not fore ordained that this nation would come together from the crucial states that they were called into the federation of the United Arab Emirates that it is today. Many postcolonial countries, as was just mentioned in the previous panel, have underinvested massively in infrastructure and not made it and and therefore not experience those multiplier effects that infrastructure provides for national growth.

Not so here. You've started locally with investments in transportation systems that have brought together within the urban conerations and across them at the national scale. the new rail line that's opening. Some of you may have heard or seen from the uh Dubai Air Show a couple of weeks ago that there's going to be now the uh EV tall and helicopter service connecting the Emirates, a rail link of course and starting to pivot towards the regional picture. The largest capacity ports in the entire region are here as well.

This is just the last couple of decades and there's been more. Now let's go out from the local and national level to the regional level and focus not only on the infrastructure investments that this country has made outward that have been so stabilizing as we know in the news. everything from investments in the um in the traumatized countries that have suffered from civil war and conflict in the last couple of decades to the capital investments being made in very populous nearby countries such as Egypt and harnessing the demographic potential because at the same time that this country has risen and that the energy markets have provided such a huge f fiscal uh balance sheet uh for the country you've had a youth bulge across the Arab world and one of the interesting things is that for those of us who look at global urbanization patterns, right? The world population became more than 50% urban about 15 20 years ago and is very rapidly rising towards maybe 70 75% today. There'll be a time in our lifetimes when more or less the entire world population is going to live in a city of some uh uh some size.

But that has always been true in this particular region. The Arab world given the desert landscapes is actually uh the most urbanized region of the planet. Second uh place actually for those who want to have some trivia is Latin America because of the Amazon or South America because of the Amazon rainforest and the Andian mountains. So more or less the entire region here lives in cities. So if you think about the last thousands of years of history here and to the present, it is really about using infrastructure to link these urban oases together.

And that's where the picture um of the present starts to take shape. When you think about the infrastructures that have been built and need to be built, whether it is the highways and the railways and the seapports and airline corridors and obviously power and energy transmission to link together and create what I perhaps too optimistically called about a decade ago the pox Arabia. Not there yet, but if there's going to be a city that's going to bring about that transformation, it is most certainly this one. And now let's go to the inter regional level. We've talked about local, national, regional, interreional.

And this is where history really comes full circle. The world before western colonialism is known to scholars as the period of Afroureurasia. Before Christopher Columbus set sail, the known world was Africa, Europe, and Asia. And so sociologists call it Afroureurasia. It was the entire known world economy.

and the Silk Roads, whether terrestrial or maritime, stitched those regions uh together. Here again, 1,000 years later, we are in a world where the majority of the world economy and population is in fact represented by the Afrourasian system. And of course, bolting on a North American superpower and South America too gives you this full global picture. But in terms of the growth rates and the growing density of trade and infrastructure connectivity and investment flows, you're seeing this Afroureurasian system come back to life. And for everyone who spent more than 5 minutes in the UAE, you know that this is the country that happens to be the crossroads of Africa, Europe, and Asia.

What better time to be positioned as this central hub? But the most important thing you learn when you study power dynamics at the state level uh historically is that just being big, just having a lot of people, just having good geography doesn't mean that you're going to succeed. It doesn't mean you're going to be influential. You have to build connectivity. Connectivity is itself the pathway to power and influence.

There are plenty of large countries in the world that are ignored, that are bypassed. But small countries can punch way above their weight if they are drivers of connectivity investments. And so now let me pivot for a moment. We're transitioning towards a world in which if I ask you to close your eyes and envision a map of the world, two things will probably come to mind. The first is a map of natural geography just blue for the oceans and brown for the deserts and green for the forests or a political map in which you just a priori posit the world is naturally divided or that the division into political states is natural but the world we're really heading into the world we literally already live in today is not the world of just natural geography or just political geography it's the world of what is called functional geography the world that we have built the world that we are building all the time through this massive infrastructure uh investment and this map of functional geography is what we're going to explore today in a bit more detail.

So infrastructure breaks down into the categories that we are celebrating here in this uh in this pavilion and in this summit uh transportation, energy and communications. I genuinely liken liken them to the functions of the systems in our human physiology. Right? Transportation is the skeletal system. Energy is the vascular system and communication is the is the nervous system.

And in all these three categories of infrastructure, we are witnessing the kind of capex super cycle as we haven't uh seen in in history. But we are standing on the shoulders of historical giants in terms of eras. uh about a hundred plus years ago when um uh coming into and out of the first world war when the United States was the world's largest economy uh and piggybacking on the industrial re revolution and having expanded from coast to coast the US was the dominant player in building out infrastructure on its own continent. Then when you uh fast forward to World War II, military Keynesianism, the German virund, the need to resurrect uh continental European economies and then you had uh decades later in the in the cold war period, but with the expansion of global capitalism, the rise of the Asian tiger economies and after that of course modern China and now we're entering really a global phase of infrastructure buildout because legacy infrastructures in the uh in the geographies of the 20th century that drove global growth need to refurbish and revitalize their infrastructure and you have the infrastructure boom in sort of new economies. Now I want to raise a question because this uh gathering is clearly um a group of infrastructure maximalists and and I am too.

I probably never met an infrastructure project I didn't like. But there are certain questions we need to ask ourselves and I think this is the most important takeaway for for the investors in the room is what are the reasons why we should be maximalist versus potentially minimalist and I raise some of those uh questions here. Yes, we have 9 billion people on the planet rising close to 10 billion and half of those are young people who are urbanizing and require and demand global connectivity and infrastructure. On the other hand, something that no one in this room has ever experienced is a world population that is peaking and is going to decline very rapidly very soon. It's already happening in many countries.

So how much infrastructure do you need where in areas where the population is actually going to decline and you see this happening in with coupled with urbanization? young people all want to live in cities increasingly concentrated in the top 300 cities in the world that have about two million inhabitants each leaving other regions to be in effect uh vacated underutilized stranded and what's what is going to be the return on on investments in those geographies then there's economic uh uh uh questions that we need to raise industrial policies in the name of national or regional resilience and self-sufficiency are all the mode around the world um uh leading to a certain degree of abundance even again redundant capacity on the other hand all of this investment as we're seeing with AI and uh and the capex in in data centers and so forth is fueling u you know not only uh involution in some sectors but also um technological obsolescence and so you want to be sure that you're investing uh in the in the um in the the the portion of the stack that's going to have the highest returns and then there's climate which is not something we've considered in the past either in this in this infrastruure ffstruure super cycle. On the one hand, we absolutely need to launch Manhattan projects both for carbon emissions mitigation and for adapting to climate change. On the other hand, there are some places given how rapidly climate volatility is accelerating that are not necessarily going to be desirable locations for habitation or industry or otherwise. And so, should we be putting more capital in there?

So, cases for maximalism, cases for minimalism. I leave you to be the judge case by case by case and weigh all uh the factors. Now the other point I'll make is around old versus new infrastructure as well. In what areas do we want to be investing or doubling down or expanding capacity in legacy approaches uh to these three infrastructure categories energy, transport and communications. The oil and gas is still receiving investment.

Nuclear is experiencing a revival but we also have uh hydrogen power batteries and so forth. in transport, traditional automotive, albeit electric vehicles and now mag lev trains, hyperloops and so forth and communications infrastructure which is also experiencing a quantum leap in the type of asset, the type of technology. What's very important and maybe we take it for granted in this room is that whereas historically the public sector has been such a big driver of infrastructure investment now we see the private sector being a huge leader uh at the cutting edge and put laying out the capital in all of these categories and that's very exciting not only of course doing it alone but together um final couple of points as uh the clock runs down um is is migration I mentioned that there are uh we're reaching peak humanity, the maximum number of people who will ever live simultaneously in the world and they are migrating towards uh uh urban environments and cities and we face uh competitive economic dynamics as well as climate stress. All of that taken together the geopolitics, the economics, the climate um are driving the world population into a migratory phase the the scale of which we've never seen in world history. Now, if I didn't show you this slide and I said, "Let's talk about migration," everyone would say, "Well, it's a four-letter word, right?

Countries are putting up barriers, walls, um, and that xenophobia is the norm in many places." That may be true. At the same time, remember this slide. This is the u this is the net flow in the past 25 years of interreional uh migration around the world. And again, we have never seen anything like it in the world.

and whether whatever political cycle some countries are in right now is probably not going to be as powerful a force as the ultimate most powerful driver in history which is just supply and demand right the supply of young people willing to work in in economies that face labor shortages and the demand for them and I believe that migration is going to continue and therefore the best way to understand where you want to invest in infrastructure is actually to follow the people as they vote with their feet if I had to reduce the complexity of the world to maybe just one signal um uh that to determine which countries are going to succeed and fail in the future. I would say follow where young people are moving. That might just be a great place to end. It brings us full circle to this country. The fastest growing population of any state in the history of the world because when I began the story five decades ago, the population was about 200,000 people.

Today it's 12 million. No other place has grown 60x in uh in population. So in some I am I join you all in being an infrastructure maximalist. I actually believe this is um projection I made more than a decade ago said what if we were to invest much more perhaps double in in um in connection than we do in division. Right?

It would result in a picture where we devote that seven or eight trillion dollars a year. $1 trillion of infrastructure investment for every billion people in the world is the benchmark we should set for ourselves and if we do that this connectivity revolution is going to be positive uh for the entire world. Thank you very much.