Dubai skyline graphically illustrates a culture in transition. The ultra-modern Burj Al Arab hotel rises up behind more traditional buildings.
Back in the summer of 2006 I co-authored an article in Multilingual magazine's Middle East Guide entitled "Hospitality, Friendship, Success—Developing Business Relationship." The article gave advice on Middle Eastern customs—"the [probable] expectations, behaviors, and attitudes of potential business partners" in the region.
At that time, the region was in the midst of an economic boom driven by government spending on infrastructure. This investment led in turn to greater demand for financial and educational services and to higher demand for consumer products as incomes increased.
But then, along with the rest of the world, the Middle East and North Africa (MENA) suffered from the global economic crisis of 2008-09. Nevertheless, throughout this period economic opportunities have existed in the region. In 2014, the economy of the region as a whole resumed growing and the countries of the Gulf Cooperation Council (GCC)—Bahrain, Saudi Arabia, Oman, Kuwait, Qatar, and the United Arab Emirates—started a new construction boom. In other words, economic opportunities in the Middle East, which have always existed, are increasing.
In this context, it seemed like a good time to reiterate the tips that I gave in that 2006 article.
World views and business conduct
While Westerners focus on guilt and innocence, right and wrong, Middle Eastern business people are more likely to focus on honor and shame. Business success, like other ways of gaining power and prestige, is a measure of honor. Therefore, business failure is perceived as shameful, humiliating both the individual and his or her family. This means that Middle Easterners are more likely to be risk averse, because the impact of failure is more than a temporary setback.
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A Middle Easterner may be hesitant to embark on a new business or enter into a business translation unless they can be fairly certain of success. Success is most likely where the businessperson is already successful or has otherwise established relationships with personal contacts who can assure success. Personal relationships play a much larger role in business relationships than they do in the West.
Public sector influence
While Westerners may look down on "government bureaucrats," positions in the public sector are much in demand in the MENA countries. Salaries, benefits and vacation schedules are often better and job security is high—all the factors to provide prestige and reflect well on the honor of the individual and family. In monarchies, public sector jobs can be seen as service to the royal family. What we might see as favoritism and nepotism are expected uses of one's personal position to increase the honor of their family and friends.
By the same logic, the role of government is to create jobs for its citizens. Attitudes are changing, but, as we said in 2006, "a successful transaction in the Middle East may still require involvement of a ministry, department or official that one may not otherwise anticipate as being necessarily connected to the business at hand."
Patience in relationship building
Since personal relationships may be as important, if not more important, than price in business transactions in the Middle East, you should be prepared to spend some time developing relationships with potential business partners. There are three stages (three cups) in building the relationship.
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The first cup: hospitality
Hospitality is central to Muslim and Middle Eastern tradition, so sharing meals and socializing with business partners is expected and necessary to build a relationship. It is honorable to be hospitable so it is best to accept what is offered instead of taking a chance on deeply offending your host.
For example, when drinking coffee, it is wise to accept two cups in anticipation of being offered the third. Traditionally, the first cup of coffee represents an offer of peace, or salam. The second cup represents friendship, or sadiq. The third represents loyalty and protection, or saif, meaning the sword. With the third cup, your host shows acceptance of your honor and loyalty to him.
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The second cup: friendship
Friendship is crucial to building a business relationship in the Middle East and it can take a long time to develop as trust must be built up. In practice, this means that Middle Easterners may also spend a lot of time discussing personal and family matters at "business" meetings. Getting through an agenda does not have the importance it often does in the West. Family is very important and you will be expected to take an interest in their family matters and to share information on your own.
Work ethic and meeting deadlines are not usually valued as highly as in the West.
[I]n the Middle East, a friend will ask many favors, but will not blame you if nothing is done. The friend wants to know that one has at least tried. Thus, in the Middle East, custom remains that one never says, "I cannot do it." Instead one states, "I will try, insha'Allah." To openly refuse to do something for a friend, or acknowledge that one cannot do it, or even worse, that one does not have the time to do it, this is most dishonorable.
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The third cup: sustained success
Even after friendship and trust is established, commitment to a particular business transaction may not be automatic. Patience in pursuing your business agenda will still be needed.
It is important not only to cultivate contacts but also to understand where they fit into the hierarchy of the organization you are dealing with and what power they actually have. For example, the concept of wasta, vaguely translated as "clout," is critical to the Saudi Arabian business environment.
Building and rebuilding relationships and the region
There is no denying that developing business relations with the MENA countries is a challenge for U.S. businesses for more reasons than the difference in culture. In the wake of the Arab Spring, there were calls for greater U.S. economic ties with the region to encourage democracy, and President Obama announced the MENA Trade and Investment Partnership Initiative to encourage ties. Subsequent developments in Libya, Iraq and Syria have cast doubt on the prospects for democracy in the Middle East and again increased the perception of risk for businesses involved there.
Nevertheless, economic ties with the region as a whole continue to grow, proving that the region is not all the same in terms of economic opportunity. U.S. merchandise exports to the Arab countries broke a record in 2013, increasing to $70.85 billion, an increase of 7.51 percent over 2012. Meanwhile, total U.S. exports went up by only 2.09 percent. The top sectors were transportation equipment, non-electrical machinery, computer and electronic products, chemicals, and food products.
The president and CEO of the U.S.-Arab Chamber of Commerce attributed much of the increase to "unprecedented infrastructure development throughout the Middle East and North Africa (MENA) region, especially in the Gulf Cooperation Council nations." The GCC countries accounted for well over half of U.S. merchandise exports to Arab countries.
In addition, the U.S. has had a free trade agreement with Jordan since 2001 and added Bahrain, Morocco and Oman in 2006.
To sum up, the conclusion of our 2006 article still stands:
The challenges of creating functioning, free-market economies in a traditional society should not be underestimated. Middle Eastern governments and societies are changing, but at a cautious pace. Leaders and governments want to allow a natural balance between long-standing tribal values and modern ideas to emerge. Middle Eastern countries want to modernize without necessarily westernizing. Understanding and respecting this, as well as learning a little Arabic, will certainly help you reach that third cup of coffee.
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