The headlines from the Middle East understandably focus on the war in Iraq, the nuclear ambitions of Iran, and the Palestinian peace process. But 50 years from now, historians may say that one of the region's most important stories was a profound economic shift: the development of strong ties between Asia and the Middle East.
The flow of goods, capital, and people between the oil-rich Gulf States and the fast-developing nations of Asia experienced a marked rise at the beginning of this century and may go on to reshape the world economy. We first explored this prospect last summer;1 since then, traffic along what we called "the new Silk Road"—the reincarnation of what had been the world's dominant trade route during the Middle Ages—has increased dramatically.
The volume of trade between the six members of the Gulf Cooperation Council (GCC)—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)—and east Asia roughly quadrupled between 1995 and 2005. Bilateral trade between those regions' two largest nations—China and Saudi Arabia—increased 30 percent between 2005 and 2006 alone. Total cross-border capital flows between the council and the rest of Asia may climb from an annual $15 billion today to $300...