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From boom to almost bust, Gulf equity markets have stumbled to dramatic effect. The socio-political consequences could be as signicant as the economic impacts, in emerging markets like Saudi Arabia.

Neither home-based Islamist reformers nor liberals seem able to identify a strategy to encourage King Abdullah to live up to reformist hopes.

With its evolving role in Iraqi politics and strong oil and financial market positioning, Iran has more cards in its hand than western governments may care to admit. So far the United States and its allies are refusing to blink in the nuclear standoff, but as markets take stock of the latest Iranian crisis, Tehran may just have enough muscle to tough it out, hurting major trade finance markets in the process.

The accession of Dubai’s new ruler to the federal premiership has produced one of the most important government reshuffles in 35 years. It is a clear declaration of intent, a pointer to the evolution of national development strategy but also a completion of the leadership change effectively inaugurated with the November 2004 death of iconic founding president Sheikh Zayed.  

The Jaber/Salem alternating succession has apparently been consigned to history by the new head of state, but GSN’s soundings of informed opinion in Kuwait suggest it is Sheikh Sabah’s choice of prime minister, sticking with an older generation, that is provoking the most criticism.

Kuwait’s succession crisis has been an exhausting affair, but the constitution has proved its worth and long-term inheritance issues should now be clarified. For the first time ever, elected representatives have decided the legitimacy of an Arabian ruler.

Pressure to overhaul the Peninsula Shield defence arrangement signals GCC governments’ new focus on the practical implementation of regional partnerships as well as bilateral differences. Gulf states have different views on how best to go forward but there are signs that 2006 could emerge as the year when new common institutions and a more flexible concept of ‘linkage’ move regional geopolitics and economics ahead.

Saudi Arabia in 2006 presents a complex society shaped by tradition but consumed by change. At the end of a year when King Abdullah Bin Abdelaziz finally ascended the throne, Jihadist opponents were in apparent retreat and the economy was awash with levels of liquidity not seen since the 1970s, the Kingdom is feeling far more comfortable in itself than seemed possible only one year ago. In this special issue, GSN takes the temperature of the Kingdom’s politics and economics. To open, Jon Marks and Paul Melly examine the leadership of a country where governance and debate must respond to rapid population growth, internet culture, global terrorism and the market economy, but where triba structures and conservative religious beliefs retain huge importance

Dubai is working to consolidate its business and employment base to ensure that long-term growth survives the near inevitable price correction coming to its booming property sector and stock market.

The next 12 months will show whether the creation of a radical new opposition force fractures Shiite Islamist support or broadens the range of pressures on Bahrain’s government.

Anxious to avoid the sort of humanitarian disaster and corruption now associated with sanctions against Saddam Hussein’s Iraq, the ‘international community’ must find alternative ways of stepping up the pressure on Tehran and Damascus. But no one is rushing to early action.

Although Iraqis have voted to approve the new constitutional framework, Sunni objections mean further changes to the document cannot be ruled out. But the Kurdish minority is not letting such considerations stand in the way of its own ambition to carve out an economically viable homeland, with a key slice of national oil resources.

Iraq is the anvil on which a new generation of Saudi jihadists is being forged. There are signs that blowback may be just around the corner in Saudi Arabia, but this time,the Kingdom is preparing for the impact from a new generation of jihadists.

President Bush has left ‘all options open’ in the standoff over Iran’s nuclear ambitions, and European governments are venting their frustration over Tehran’s approach – but a long period of attrition, rather than any hot war, beckons. Sanctions may eventually beckon, but first more “messy, dirty, slug-it-out diplomacy” beckons.

Tracy Edwards is a great yachtswoman but a poor organiser. Her sorry tale is relevant to the Gulf for what it says about young states’ organisational capacity and the problems expatriate hopefuls face when things go wrong in jurisdictions like Qatar.