shadowy figure, The

Global Finance, Dec 1997/Jan 1998 by Lanchner, David

BEHIND A NEW FINANCIAL CENTER

Early in 1998 Nomura Securities International intends to manage a $1 billion issue of global depositary receipts on behalf of Sa`diyat Free Zone, a $3 billion project to build a commodities exchange and financial center on Sa`diyat Island, six kilometers northeast of Abu Dhabi City on the Persian Gulf. It is a truly visionary effort to diversify the emirate's dependence on oil revenues and turn Abu Dhabi-the leader of the seven-country federation known as the United Arab Emirates-into the region's most vibrant center for finance, commerce, and even manufacturing.

The brain behind the Sa`diyat project is Sheikh Hazaa bin Zayed alNahyan, who heads the country's internal security and is thus a somewhat shadowy figure: Facts about him are state secrets, and he generally leaves the project's public side to Sa`diyat general manager Mohamed Ali al-Hosani, a treasury expert involved until last year in managing the government's $200 billion-plus in liquid assets. Even top trade and political delegations often don't know that Hazaa, who is officially chairman of Sa`diyat Free Zone Authority, is the project's driving force.

One of 14 sons of Abu Dhabi ruler Sheikh Zayed bin Sultan, Hazaa began to gain influence following a 1991 government shake-up after the collapse of the Bank for Credit & Commerce International touched off a brief but frightening run on Abu Dhabi's financial system and cost the ruling family roughly $4.8 billion in losses. Acquaintances say Hazaa is about 33 years old and that he studied in the United States and Britain (just where is another state secret). He is a son of Fatima, best known of Sheikh Zayed's wives, who is a noted campaigner for women's rights as well as mother of the foreign affairs minister, the army's chief of staff, and three other sons in lesser positions-though not of the oldest of Sheikh Zayed's sons, Khalifa bin Zayed al-Nahyan, 50, who is crown prince. Nevertheless, the Fatima faction is a powerful bloc within the ruling family, which has provided Hazaa with much leverage in internal policy debates. And he has won great respect for avoiding the heavy-handed secret police methods practiced in many gulf states (there are no political prisoners in the UAE) and for not stirring up tensions with Muslim fundamentalists or with political extremist groups.

While Oman is diversifying into natural gas and Dubai is pushing its reexport center for retail goods, Hazaa's aim is far more ambitious. In the Sa`diyat plan, 67 commodities, from gold to grain, are scheduled to begin trading three years hence in a time zone neatly tucked between Chicago, London, and Rotterdam to the west and Singapore to the east. Moreover, the free zone will include major storage and transport facilities, insurance services, a futures exchange, a stock exchange, brokerage houses, clearing houses, a deep seaport, and an airport that will take the largest cargo planes.

In short, the project will provide a platform for a much broader financial and commercial center. Given Abu Dhabi's extraordinary wealth (it's the richest country in the region), the $1 billion GDR is no doubt intended more for publicity than financing. It will be the first gulf issue completely open to foreigners. And though initially listed in London or Luxembourg, it will probably wind up eventually on the new Sa`diyat exchange as well.

-David Lanchner