Doing Business in the Middle East

Introduction

For Western business the Middle East is a region of many disappointments, a graveyard for many business initiatives.

The main reason for this is the failure to understand the huge cultural differences between the West and the Middle East, the failure to realise that they do things differently there.

It is not my purpose to give a checklist of how to do business in this difficult region; doing business in the Middle East cannot sensibly be reduced to “five golden rules” or “ten simple steps”. What is necessary is to put aside our Western viewpoint and instead to see business through Middle Eastern eyes. To succeed in this region, you need to see as they see.

Principally I shall be talking about the Gulf region and the Gulf Arabs – the area with which I am most familiar. But a word of caution is needed: although some of our conclusions may be applicable throughout the wider Arab world and the Middle East, there are significant cultural (and other) differences, even between the seven Gulf states. Generalisations are inevitable, but need to be judicious. I shall try to be precise as to when we are talking about a particular country, the Gulf States in general, or the wider Middle East.

Cultural Differences

On many matters attitudes in the Gulf are very different from ours, in fact almost the opposite of attitudes in the West. Let us set the scene by looking at some of these cultural differences.

Family

What family you were from used to be very much more important in the West than it is now. In England a century ago, it would have been unthinkable for a person from the “wrong class” to become a priest, politician, army officer or lawyer. In the West family used to define status; in the Gulf it still does.

The family still features in Western business with small family run enterprises and with some large business dynasties. Apart from that, what family a person comes from is of no business significance at all. What matters is qualifications and experience, whether a person is good at what he does.

But in the Middle East, the family remains a central feature of business. In the Gulf in particular, what family an individual belongs to is an important question – almost the first that will be asked. We shall have a lot more to say about families.

Age

In the West we live with the cult of youth. We prize youth and vigour and are less impressed by age and experience. But in the Middle East, age commands respect. Respect is due to your elders, if for no other reason, because they are older than you.

When you are dealing with an Arab of roughly your own age, you may find that he is keen to find out whether he is older or younger than you, especially if the difference is only a few days. If you are coy about it, he may even ask you directly (and by Western standards rudely) how old you are. To him, this is a significant question because it determines which way the deference due to age will be due.

Gender

Women’s emancipation is a recent arrival in some of the Gulf states. Women were given the vote in Kuwait by decree of the Amir in June 1999 – though this proposal was voted down by the (male) Parliament in December 1999. Kuwaiti women were give the vote by order of the Amir, and without Parliamentary approval, in 2004. In most of the Gulf women still do not have a vote.

But Western style gender correctness? Forget it! In the Middle East you will be dealing with men. You are most unlikely to find women in business except in a secretarial capacity. The men you are dealing with will not introduce you to any female in their family until they start to think of you as one of the family – in fact it is a sign of a good and trusting relationship if this happens.

This does not of course mean that your own team should not include women. This will not shock or surprise the Arabs, who understand Western culture a lot better than the West understands theirs. The gender of the people you send is far less important than their personality.

Religion

The Middle East is of course the cradle and heartland of Islam, while the West is (at least notionally) Christian. This difference of religion does not itself present a barrier to business in the Middle East. It helps that these two religions are closely allied – indeed the Koran states that the Bible is a holy book and that Jesus was a prophet.

It is not Christianity that is the problem, but rather the tacit atheism that is so common with Western business types. At an industry lawyers function a couple of years ago I opined that it was more difficult for an atheist to do business in the Middle East. A well known figure in the industry replied that I was “certifiably insane”.

But the Arabs take their religion seriously. Their belief colours their attitudes and all that they do. It can be a problem for them to deal with an individual who disbelieves in God and has no expectation of an afterlife or a judgement. How can a devout man trust someone who thinks that?

Jim, an American in-house lawyer with one of the oil business majors, is assigned to work in the Middle East. He flies to Abu Dhabi to meet his boss, the local asset manager. They are sitting having (American) coffee when an amplified wailing starts from a minaret close by. It is the Islamic call to prayer, which any visitor to the Islamic world will hear five times a day. Jim leaps to his feet: “Jesus Christ, what the hell is that goddamned racket!”

A few years ago I had to draft an agreement between an independent oil company and the Syrian Petroleum Company, the National Oil Company of Syria. The client’s general counsel had no problem with the text of the draft, but took great exception to the wording right at the top of the draft: “In the name of God, the merciful, the compassionate” (the first verse of the Koran). His comment was: “this has no place in a commercial agreement”. Unfortunately all SPC’s agreements start like that; they are most unlikely to sign any agreement that does not. I suggested that he go to Damascus personally and explain to SPC why these words were inappropriate in a commercial agreement. I am glad to say that at that point his courage failed him, so the words stayed in. In Saudi Arabia it is actually a legal requirement that all public documents and contracts start with these words.

Politeness and hospitality

In general the Arabs are hospitable and polite. Strict rules of hospitality apply when they have guests: they are responsible for their guests’ safety and comfort. An Arab will not be rude to his guest (which includes a visiting Western businessman), no matter how rude the guest may be to him.

The Arabs hate to say no to their friends and business connections: in fact many just will not say it. So you have to gauge the reply to your question by the quality of the“yes” you receive. It may indeed mean yes, but equally it may mean “yes, but not at this time”, “yes, but not at that price”, “yes, but not with you” or even “no”, “hell no” or “over my dead body”.

This politeness is often misread by Western businessmen, and this fact is (as we shall see) a prime tool of the shady middleman. The Westerners contrive to see a Minister, Sheikh or some other important local figure, who hears their commercial pitch attentively and says politely “how interesting”. The Westerners joyfully report to head office that the Minister was “very interested in our proposal” – which may approximate to what he said but is not at all what he meant.

Conoco was a victim of a more subtle variation of this play in 1999, in connection with the expected opening of the Kuwaiti Northern Fields to foreign investment. Their local representatives arranged a meeting for Conoco’s chairman with the Amir. There were the usual polite exchanges, and some conversation in Arabic between the Amir and Conoco’s local representatives. After the meeting Conoco was told that the Amir had said that they were the favoured company for the project. Conoco’s delighted chairman announced the good news to the press. The Amir, who had said no such thing, was reportedly furious. He forbade any more oil company personnel to be introduced to him while the project was under discussion.

Time

The businessman or woman in the West has performance targets, deadlines to meet and (in some professions) timesheets to fill in. The clock always ticks round too fast for him, as he struggles to fulfil his commitments in the time allotted. He is always in a hurry, and for him time is an enemy.

For an Arab by contrast, time is a friend. He does not see business as a matter of forcing the pieces into place to meet an artificial deadline. He will watch and wait, collecting information and influencing the process when he can. He is confident that in the fullness of time, and if God wills it, the pieces will fall into place. He will only do business when he feels that the time is right, and he can be almost endlessly patient waiting for that moment.

Pride

We all have our pride, and it would be foolish to say that pride plays no part in Western business. But on the whole in the West we usually subordinate out pride rather than let it get in the way of business. As professionals it is not part of our function to bolster our egos at the expense of our client’s business.

The pride of an Arab in his family, status, good name, connections and wealth (all of which are interwoven) is often closer to the surface, more fragile, than ours. An Arab who feels he has been insulted will often devote his efforts to avenging that insult, or clearing his name, without regard for the commercial or financial consequences.

In the Gulf, feuds between individuals and between families can run for years and indeed for generations. It is important for Westerners to be aware of feuds involving the people he is dealing with, but it is vital not to get caught up in them. Belligerent Arabs have a habit of suddenly uniting and turning on someone anybody who comes between them.

Chauvinism

In the United Kingdom it often seems that we bend over backwards not to discriminate against foreigners. The law reflects this. British law prohibits racial discrimination against individuals in employment, and European Union free market rules prohibit public authorities and other large contractors from favouring British businesses over those from other member states.

There are no such prohibitions in the Gulf against discrimination against foreigners or foreign businesses. The attitude in the Gulf is that the country is for the nationals. Discrimination is endemic, and again the law reflects this. In most of the Gulf States, foreigners are not permitted to own land, and a company cannot be registered there unless it is majority owned by nationals; in Saudi Arabia the required Saudi ownership is 100%. Few foreigners are rash enough to sue a national in the local courts.

A foreign driver who is unfortunate enough to have an accident in which a national is killed, is in serious jeopardy. He will usually be held in prison until compensation (locally “blood money”) has been paid to the family of the victim.

Even more alarming stories come out of Saudi Arabia. A western businessman of my acquaintance was travelling in a taxi in Riyadh that was involved in an accident in which a Saudi was killed. The Indian taxi driver was of course arrested, but so was his passenger. When he protested and asked why he had been imprisoned, the Saudi police explained that, if he had not taken the taxi, the accident would not have happened – faultless Saudi logic. Interestingly a lady co-passenger was not arrested but escorted home. Fortunately this individual had powerful Saudi friends who secured his release by promising to be his surety.

In this region you need influential friends – and not just for business reasons.

Clash of Cultures

That should be enough to set the scene and to demonstrate that, to Western business eyes, the Middle East is a very strange landscape. Anyone unaware of these cultural differences can come quickly and spectacularly unstuck. Let us consider a real example, which took place in Kuwait City in the high summer of 1996.

Outside was like an oven, but inside more like a fridge. We Westerners who were not used to these temperatures were shivering in jackets. We were sitting with a Kuwaiti merchant, talking around business and swapping stories. There was a commotion outside. A delegation from a US multinational forced its way past the office manager and staff and burst into the room.

The delegation was headed by a retired US general who had been involved in the liberation of Kuwait five years before. The General was wearing shorts and a short- sleeved shirt. He was red-faced, apparently from anger rather than heat. Still wearing his ten gallon hat, showers of spit visible in the shafts of sunlight, he marched up to our host and slapped an agreement and a pen down on the desk: “We saved your ass in the war, boy, and it’s high time you started to show some gradd-i- tood!”

When I told this story before, someone asked at the end of the talk whether the merchant had signed or not. There was little need to ask when you consider how the General trampled over the sensitivities of East and West alike.

His manner of entry and attitude would not be considered polite anywhere. Shouting at someone and spitting over him are rude in both East and West. Keeping your head covered indoors is poor manners in the West, but not in the east. Bare arms and legs in public are highly inappropriate in the Middle East and, in some of the stricter parts, actually illegal – it is about as shocking as turning up to a Western business meeting in a pair of Y-fronts. References to “asses” is not acceptable business practice anywhere except in the US, but is especially rude in the Middle East. Calling an Arab “boy” who is ten years your senior is an outright insult. And, finally, reminding someone that he owes you is a mistake few Arabs would make: they know that, if it is true, it is more effective to leave it unsaid.

Welcome to the Arab way of thinking!