The Great Warm North

Competition for boreal real estate is heating up

When 7,000 airline passengers were grounded for a week in Newfoundland, Canada, because of 9-11, something amazing happened, reports the Wall Street Journal on August 8, 2007 . Many enjoyed their unplay stay so much, they kept coming back. They discovered a scenic coast line complete with icebergs and humpback whales, and an average temperature that has risen 4 degrees in the last 20 years. Seaside cottages cost only about as much as an SUV, reports the newspaper, and some areas are becoming tourist, and real estate, hot spots, such as Twillingate.

Canada, it seems, stands to see its overall prospects brighten as global temperatures climb. In fact, there are already hints of geopolitical tensions on the rise up in the Artic circle, as a result of changing climate. The Northwest passage, which allows ships to sail from the Pacific to the Atlantic along a northerly route, which is shorter (2,480 miles less) than using the Panama Canal, is staying passable longer because of reduced ice. Canada is increasing its military presence in the area, reports Fox News, to assert its control of this emerging international shipping lane. The U.S., however, asserts it is international waters, and during the Cold War had long sent submarines and navy vessels through the strait .

There is also the promise of untapped oil resources, which is causing friction between northern countries. The AP reports that Russia is working to create a legal case for their claim to millions of square kilometers of territory under the Arctic Ocean. International law says that a country can claim rights to seabed within 200 miles of its continental shelf. And new research is showing that Russia's territory may extend farther beneath the sea than previously thought. In early August, Russia even went so far as to recreate an inner space version of the Moon landing by sending a sub to the bottom of the Arctic to drop a titanium Russian flag, symbolically claiming the territory. The prize is a possible 10 billion tons of oil and gas deposits. GEO

Middle Eastern Boom

Economic expansion taking place in former "economic backwaters"

Although explosions are what one thinks in terms of the Middle East and North Africa (MENA), the region is seeing an economic expansion that is giving new vitality to the region, The Wall Street Journal reported on July 19.

Inflows of foreign direction investment in MENA has quadrupled over the past six years from less than $5 billion to nearly $20 billion. That number doubles when including Turkey, a Muslim country that straddles the divide between Middle East and Europe. (Isreal is counted separately, but it too is experiencing rapid growth.)

Overall the economies in that region are growing at more than 5% a year, which beats most developed countries (though not as fast as China's 8% growth). Although oil is still the big story, oil-producing countries brought in $1.5 trillion in revenue between 2002 and 2006, those economies are looking to outside investors to diversify. Leading the charge are places like Dubai and Abu Dhabi.

The paper notes: "The real test of the Middle East's unprecedented investment boom will be whether it creates jobs--and with them the sort of budding middle class that is driving the dynamism of China and India."

Demographically speaking, half the 300 million people in the region are under 20 years old, and employing them will be essential not only to economic prosperity but also security, because poverty and violence go hand-in-hand. So much remains to be seen if this growth can continue, and what ultimate effect it may have. GEO

Building a Middle

Africa looks to increase its bourgeois factor

The function of a city, it has been said, is to create a middle class. Cities in sub-Saharan Africa are trying to do just that, reports The Wall Street Journal on July 17, by using U.S. style mortgages in a process that would make Hernando de Soto proud. The mortgages will enable the middle class to do something they've rarely been able to before--build and own a home.

In Lusaka, Zambia, for instance, a developer is building a 3,700-house community to test the market. Some investment groups are creating dedicated funds to solely invest in Africa, where it is believed there is pent-up demand by a hidden middle class.

The WSJ articles cites World Bank estimates that the number of of middle class will rise from 12.8 million (in 2000) to 43 million (in 2030). Most will be in South Africa, but many will be in Zambia, Nigeria, Kenya, and Ghana.

Normal mortgage needs to be adjusted to the local environment. In Zambia, where AIDS has reduced average life span to 38, mortgages must be paid off before a person reaches 55. GEO