By Arab News
By Frank Kane*
When America sneezes, the rest of the world catches cold, goes the old adage. But it’s equally true that if California is feeling poorly, the rest of the US will also be under the weather.
The economy of the Golden State is so big that it is a decisive force in determining the economic wellbeing of the other 49 states. If California were a country, it would rank as the fifth biggest in the world, worth more than India, France or the UK. What happens in California really matters to the rest of us.
It matters especially to Saudi Arabia and the rest of the Middle East because California is a huge customer in the global oil and gas markets, as well as a destination for investment by the region’s big sovereign wealth funds and wealthy private investors in sectors ranging from hi-tech to real estate.
A recent visit to its biggest conurbation — Los Angeles and its huge metropolitan sprawl — found the state in relatively good health but with a few worrying symptoms that are giving some pause for thought.
On the face of it, California is virtually over the lockdowns brought on by the coronavirus disease (COVID-19) pandemic. The international airport was packed with arrivals from all over the world, as well as from “staycation” visitors from other parts of the US.
The freeways were busy and subject to annoying tailbacks, which seemed purely down to the volume of traffic. Downtown was hectic, and the big tourist attractions, like the Hollywood Walk of Fame and the Universal Studios theme park, were doing a roaring trade in LA glitz and glam.
California’s Governor Gavin Newsom declared the state open for business as usual in mid-June, after a long regime of social distancing and backed by a rapid roll-out of COVID-19 vaccines. Like President Joe Biden, Newsom appeared to be declaring victory over the virus that caused more deaths in the US than any other country. LA was ready to party again.
But that re-opening has resulted in a big recent spike in COVID-19 infections that has forced the state authorities to re-impose some restrictions, in particular again recommending (though not mandating) the wearing of masks in public places and in big crowds.
“No mask, no entry” is a common sign in shops and restaurants. Fortunately, the southern Californian climate allows many social activities to take place in the relative safety of the outdoors.
How long the restrictions will remain in place depends on the progress of the delta variant, as well as another new strain, the lambda variant, that has also surfaced in the American west.
The new caution Newsom has been forced to embrace comes at a worrying time for the state’s Democratic governor, who is facing a “recall” vote in mid-September that could see him replaced by a Republican. One of the reasons for the discontent among Californian voters, ironically, was Newsom’s attendance at a birthday dinner party in breach of pandemic rules.
Adding to this mix of uncertainty are the environmental and energy challenges southern California faces. The region is bone dry in summer, and destructive wildfires are commonplace.
I watched in shocked fascination one sunny afternoon as a hillside not more than two miles away caught fire, with palm trees going up in flames, as planes water bombed the area just a short drive from Downtown.
California is a massive consumer of water and energy and has recently come alive to the benefits of desalination to produce the water consumers’ and industry needs. The bigger problem for the state is the irregularity of electricity supplies in peak times, causing some experts to call for a halt in the renewable projects blamed for causing the shortages.
As a hub of the US oil industry, California is acutely aware of the challenges faced in the transition to cleaner forms of energy.
None of this seemed to matter to the guests crowding around the pool at the swanky Beverly Hills Hotel in the west of Los Angeles, which included a significant number of Middle East visitors and their families.
Regardless of pandemic, political or environmental problems, California will continue to be a magnet for business investment in the US, as well as a laid-back playground for the rest of the world.
• Frank Kane is an award- winning business journalist based in Dubai. Twitter: @frankkanedubai