Embracing the new Washington consensus
21 June 2023
Commentary
Edmund O'Sullivan
Former editor of MEED
Speaking at a Brookings Institute conference in Washington DC in May, US national security adviser Jake Sullivan set out America’s international economic priorities under President Joe Biden.
Deep trade liberalisation had failed, as had prioritising growth over its form. The merits of global economic integration had been overstated. Regressive tax cuts, lower public investment, corporate concentration and weaker unions had failed America’s middle class — and the world.
Sullivan declared that Biden had restored “an economic mentality that champions building …and a foreign policy for the middle class”.
His new industrial policy will mobilise public and private investment worth $3.5tn over the next decade.
The consequences will be significant. The Congressional Budget Office forecast in February that the US budget deficit in the 10 years starting this July will total $20tn.That is an average of more than 6 per cent of GDP for the period as a whole, and twice the level once deemed to be the sustainable maximum.
The Washington Consensus – neoliberal ideas that for 40 years prioritised fiscal discipline, privatisation and international trade liberalisation – is officially dead. And Biden’s new one rejects everything that the old one championed.
The IMF now offers a toolkit for Middle East nations to manage fiscal risk
For most Middle East nations, this has not come a moment too soon. A report by the Washington-based IMF published in June painted a grim picture of the economic prospects that low-income Middle East nations face.
They experience large macroeconomic shocks that cause debt to increase by an average of 12 per cent of GDP every eight years. The region is more vulnerable than other parts of the world to commodity price, exchange rate and interest rate fluctuations. Governments are exposed to risks incurred by state-owned enterprises, troubled banks, public-private partnerships and power purchasing agreements that underpin electricity sector privatisations.
These problems are compounded by natural and climate disasters and health crises such as the Covid-19 pandemic.
Risk management
Echoing the new Washington Consensus, the IMF no longer issues calls for tough fiscal action and threats of financial punishment if it is not forthcoming. Instead, it now offers a toolkit for Middle East nations to measure and manage fiscal risk.
The majority of the countries in the region – and at least half its population, who live in or near poverty – will be relieved that economic shock doctrines are a thing of the past.
Sullivan said the new approach was needed to counter China’s growing influence, particularly in the global south. He is right, but it will take more than words to make that happen.
Connect with Edmund O’Sullivan on Twitter
More from Edmund O’Sullivan:
> Trump, Turkiye and the trouble ahead
> A century of errors for the Middle East
> The pros and cons of the biometrics boom
> Learn from history or be doomed to repeat it
> In memory of Abdullah Jonathan Wallace
> Energy challenges cloud 2023 outlook
> Wobbling technology teaches digital caution
> Gulf stands to benefit from global turmoil
> Europe’s plans will change world energy
> Geopolitics takes over oil agenda
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The scope includes infrastructure to collect and transmit treated sewage effluent in southern Kuwait. This covers pipelines, pumping stations, storage reservoirs and distribution infrastructure, as well as associated mechanical, electrical, instrumentation and control systems.
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MPW issued a similar tender in March covering the construction of a treated water system in northern Kuwait. Bids for this tender were also submitted on 26 July.
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The agreements cover the joint development of two solar projects with a combined capacity of 150MW.
The companies have also signed a framework agreement to explore the development of more than 400MW of pumped hydro energy storage projects.
The projects will be the first to be progressed through a 50:50 joint venture planned by Masdar and EPCG.
The two companies signed a joint venture agreement in April as part of a wider 2GW renewable energy partnership in Montenegro.
The latest agreements were signed in the presence of Sultan Al-Jaber, UAE minister of industry and advanced technology and chairman of Masdar, and Admir Sahmanovic, Montenegro’s minister of energy and mining.
Masdar has an existing presence in Montenegro through its investment in the 72MW Krnovo wind farm.
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The deal valued the portfolio at €849m ($982m).
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Geopolitics tests Dubai property with hotels hardest hit
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Dubai’s residential market cooled sharply in the second quarter of 2026, and the hospitality sector recorded its steepest downturn in years, according to US-based real estate research firm CBRE’s latest UAE market review. Office and industrial real estate, however, continued to defy a weaker macroeconomic backdrop, the report said.
The figures, published on 28 July, mark a turning point for a residential sector that has driven much of Dubai’s post-pandemic growth story.
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Total transaction values dropped even further, to AED88bn ($24bn) from close to AED154bn ($42bn) in the second quarter of 2025.
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About 18,000 new units were completed in the first half of the year, adding to supply just as demand and transaction activity were softening.
The contrast with Abu Dhabi is stark. The capital’s residential values rose 21.6% year-on-year, powered by 24.4% growth in apartment prices, while rents climbed a further 3.6%.
Sales values reached AED32bn ($8.7bn), up 150% on the same quarter last year, with transaction volumes up around 80%.
Off-plan sales accounted for roughly 83% of deals and 85% of value, underscoring investor appetite for new launches even as Dubai’s own off-plan pipeline slows.
Hospitality bears the brunt
The hospitality sector recorded the most pronounced downturn of any asset class tracked in the review. Regional geopolitical disruption weighed heavily on international travel demand and airline operations through the first half of the year, with UAE-wide hotel occupancy down 27.7 percentage points year-on-year to June and revenue per available room (RevPAR) down 31.8%, according to CoStar data cited in the report.
Dubai absorbed the sharpest declines, reflecting its greater reliance on international visitor flows, while Abu Dhabi held up comparatively better on the strength of domestic demand and events-led tourism.
Operators have responded with staycation packages, domestic tourism campaigns and refurbishment programmes aimed at protecting market positioning ahead of an anticipated recovery in international arrivals.
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Away from housing and hotels, the picture is markedly different. Dubai office rents rose 13% year-on-year, with prime rents up 16% and occupancy at about 94%, as demand concentrated in DIFC, Tecom and DMCC continues to outpace the delivery of new Grade A stock.
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READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDFStress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.
Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
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Ashghal tenders northern Smaisma infrastructure consultancy
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Qatar’s Public Works Authority (Ashghal) has issued a tender for consultancy services related to infrastructure development in the northern Smaisma area.
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