Arabian Business August 03, 2008
It's nothing if not ambitious. According to its backers, the $25bn ‘Bridge of the Century' will be the world's longest suspension bridge, crossing the Red Sea at an 29-km wide strait known as the Bab al-Mandep, or ‘Gate of Tears', and connecting the southern tip of Yemen with the Horn of Africa in Djibouti.
The entire scheme, which also entails the creation of special economic cities at each end of the crossing, will demand a total investment of over $200bn in the two impoverished nations.
In Yemen the government has granted the developers over 1295 sq km of land without charge, while across the water Djibouti’s prime minister has said that the scheme came from the sky.
"‘Easy' is not a word associated with this project," admits Dean Kershaw of management services firm L3, which is acting as the project manager. "However, it's not rocket science and it is eminently doable."
The Al Noor project is the vision of Sheikh Tarek Mohammed bin Laden, half-brother of the world's most wanted terrorist, Osama bin Laden. Sheikh Tarek has said that the project could create as many as 500,000 construction jobs over its 15-year construction period, and that work should begin as early as next year.
His Dubai-based firm, Middle East Development Company, has been the main driver behind the scheme, which includes the building of the first of 100 proposed Al Noor cities across the world.
Yet when the project was first announced, some sceptics suggested that the developers had been chewing too much khat, the leafy narcotic plant that is consumed daily by an estimated 80% of Yemeni men, and known to trigger excitement and euphoria.
"With a project of this size, if half of it works out then that's a success," says John Sfakianakis, group chief economist at Saudi British Bank (SABB). "Given the difficult economic state of these two countries, there is a need for something dramatic to happen, but this may be too ambitious for the time being."
Plans show a 3.2km viaduct from the Yemeni coast to the island of Perim, where it passes for another 3.2km before a final 21km stretch to Ras Siyyan in Djibouti. The crossing would have as its centrepiece a 12.8km suspension bridge towering above the sea, which is about 1000ft deep at its lowest point.
With the help of a six-lane motorway and a four-track railway, up to 100,000 cars and 50,000 train passengers a day would be able to cross one of the world's busiest shipping lanes, which acts as a strategic link between the Indian Ocean and the Mediterranean Sea, via the Red Sea and the Suez Canal. In 2006, an estimated 3.3 million barrels of oil passed through the strait per day, and with this in mind the bridge's centre span would be big enough to let oil tankers pass underneath.
And yet the ‘Bridge of the Horns' is just one element of the Noor City project, with huge free zones and expanded ports planned for either side of the crossing. On the Yemeni coast, at 1500 sq km, Madinat al Noor (‘City of Light') would be six times larger than Paris. On the Djibouti shoreline, over two million people would live in their own 1000 sq km metropolis.
"It is not easy to reform a whole country, but getting a smaller piece of land and working on the development of a special economic zone is much more feasible," Reem Alaloui, vice president of US-based AECOM International Development, tells Arabian Business.
"Governments, the World Bank, international donors and the US Agency of International Development are all moving towards establishing special economic zones around the world," she continues. "It's an easier way of achieving the goals of generating job opportunities, boosting FDI in a country, and increasing exports from a country."
Yemen is the poorest country in the Arab world, and promoters of the project say it will transform the region's economy by opening a fixed rail and highway route between Africa and the Middle East. Djibouti too is heavily dependent on foreign assistance to help support its balance of payments and to finance development projects, while an unemployment rate of 40 to 50 percent continues to be a major problem.
Both governments recognise the potential of the Al Noor project to boost their nations' economies significantly, and the development has received backing and pledges of land from the leaders of both countries.
"We will not affect the sovereign powers of any state - there will be the delegation of authority, but not the government giving up authority for good," says Alaloui at AECOM, which has been tasked with developing the free zone frameworks for each city. "We will work hard with legislative experts in creating a regime that is conducive to doing business and will attract people to the cities."
In Yemen the government has granted the developers over 1295 sq km of land without charge, while across the water Djibouti's prime minister Dileita Mohamed Dileita has said that the scheme came to the African nation "from the sky".
"The most important thing is to determine the framework agreements with the host nations, because they will define the rights in which we operate," says Kershaw at L3, the multidisciplinary firm, which recorded revenues of $14bn last year.
"We have every expectation that the two countries want this project to succeed and so we are very confident on the framework agreements," he continues. "You have to be in a position to establish taxation and legal rights - people won't invest there if they're worried about their property being taken off them, for example."
Kershaw adds that negotiations over the framework agreements will begin "within weeks" and should be completed before the end of the year. Six months on from their conclusion, construction should begin.
"We should be turning dirt within the first half of next year," he says. "In about two years we'll begin actually building residential houses."
In order to ‘turn dirt', Al Noor will first have to turn to investors willing to back the project. The developer has indicated that with the initial phase of planning completed, it has already been given the go-ahead to commence investment discussions with institutional investors, private investors, corporations and governments.
"The idea is to finance the project in progressive phases and to implement it step by step as specific milestones are achieved," says Ross Connelly, managing director of Akkadian Private Ventures, a Washington-based project financing firm that is acting as an advisor on the development.
Over the next six years, the project proposes an investment of $31bn in Yemen and $20bn in Djibouti, some by Al Noor, some by private investors. In 15 years' time, should all go to plan, $200bn will have been invested in the development - $105bn in Yemen, $70bn in Djibouti, and $25bn on the bridge linking the two.
"Our view is that financing is really a self-fulfilling prophecy - if a project isn't well conceived or structured it isn't going to be financed," Connelly continues. "A project that is well integrated, has its risk managed and has good economic prospects, will be financed. So in the long term I'm not concerned - success begets success."
The challenge, then, is in the short term. Connelly and his team hope to raise $1bn over the next three years, to fund initial infrastructure such as the telecommunications network and a landing strip for small aircraft.
The project has attracted interest from a host of international companies, and already counts US giants Honeywell, Avaya and AIG Investments among its partners. However, some analysts doubt whether now is the time to count on foreign investment from the West.
"There is a question mark whether the project is economically viable," argues Sfakianakis at SABB. "The cost of such a project could change too, depending on the costs of construction."
With the credit crunch biting hard, and already reeling from losses on real estate investments, lenders in the US and Europe are tightening their belts and are therefore less likely to put money forward for large-scale projects such as Al Noor.
"The current economic climate might make things difficult," says Sfakianakis. "Maybe the credit crunch might change the intention or the type of project that we see there, so we might see a different angle being taken in that particular project - maybe instead of a bridge they might decide to do something else."
Regardless, Connelly expects there to be "great appetite" among Gulf firms for the build-own-operate contracts that will constitute the majority of developments within the Al Noor masterplan - although security concerns are one issue that must be resolved if the financing is to flow freely.
Violent clashes left 12 Djiboutian and an undisclosed number of Eritrean soldiers dead in June, tensions having escalated after Eritrean military units began building fortifications on what Djibouti considers to be its side of the boundary between the two nations. Across the water, Al Qaeda in Yemen last week took responsibility for a suicide bomb attack on a police station east of the capital Sanaa, which left two dead and eight injured.
The straits are infested with Somali pirates, and additionally both the US and France have military bases in Djibouti. There are fears that as well as itself representing a tempting target for terrorists, the bridge might offer an easy route for Islamic extremists looking to leave Arabia for East Africa - or vice versa.
"It's a risk - you're not going to see projects financed until it is addressed, but then I am very confident that it will be worked out," Connelly insists. "However, my judgment is that trade will win out over terrorism."
Both supporters and sceptics are agreed that Yemen and Djibouti are in urgent need of economic reform, and a development model that offers a path forwards for two of the world's poorest nations. And while the Al Noor project is undoubtedly ambitious, its partners argue that at least some attention is now being paid to the fragile states.
"Don't be sceptical because there's a bold vision 20 years down the line," urges Connelly at Akkadian. "Just look at what we're trying to do.