Saudi soldiers march during a military drill in Hafar al-Batin, near the border with Kuwait, in 2014.
Photograph by Faisal Al Nasser—Reuters/Corbis
By Erika Fry and Vivienne Walt
February 19, 2015

In mid-march—Friday the 13th, in fact—corporate VIPs from around the globe will descend upon Sharm el-Sheikh, a resort town on the Red Sea renowned for otherworldly scuba diving and soft, sandy beaches. By sheer demographics, the agenda would seem to have ready appeal: how to invest in an emerging market with some 90 million people. The weekend summit, billed “Egypt the Future,” will be attended by the likes of General Electric CEO Jeffrey Immelt, World Bank president Jim Yong Kim, and British ad tycoon Sir Martin Sorrell. It’s likely to be a hopeful, well-choreographed affair—the Egyptian government has said it will present 30 new projects, worth $20 billion—that aims to leave no doubt that after a rough few years the world’s most populous Arab nation is back and safe for business.

For years the Middle East, flush with petrodollars and home to a fast-growing class of youthful consumers, has been among the most promising markets for foreign investors—but recent turmoil has prompted many to ask whether the risks outweigh the potential profit. Nowhere is this calculus more muddled than in Egypt—where the government is fighting an increasingly violent Islamist insurgency on the Sinai Peninsula, a couple of hundred miles north of Sharm el-Sheikh.

A Starbucks in Kuwait’s largest shopping mall.

A Starbucks in Kuwait’s largest shopping mall.Photograph by Peter Dench — Reportage by Getty Images for Fortune

Egypt’s commercial center, Cairo, continues to suffer spasms of violence four years after the Arab Spring: Clashes at a soccer match in the capital recently killed more than 20. In January, on the four-year anniversary of the protests at Tahrir Square, a poet was shot dead by police on a busy, central street while laying flowers. And Egypt is one of the region’s bright spots.

It’s no secret that after a spectacularly bad 2014, the broader Middle East is reeling at all corners. Ongoing civil wars in Syria, Iraq, and Libya have been fueled by the swift rise and brutal terror of extremist groups such as ISIS. Yemen’s government fell to rebels earlier this year, and Jordan, a small state burdened with refugees from Syria, Iraq, and elsewhere, has been dragged into an existential regional conflict. The Amman government stepped up attacks on ISIS in February after the group immolated a Jordanian pilot. Even the relatively stable Gulf states, long steadied by oil wealth and aged rulers, have been rocked by the plummeting price of crude and the death of Saudi King Abdullah bin Abdulaziz.

The flow of petroleum riches—used by many of the region’s governments to raise salaries, pay subsidies, and otherwise keep people content—has slowed considerably (see our feature package in this issue).

The conditions haven’t been easy on foreign business in the region. Oil companies have found themselves taking on more risk for less financial reward. In December, for instance, al Qaeda said it would target French energy firm Total, which has operations in Yemen and is one of the few multinationals to do business there. Meanwhile, in Libya, where production has dropped from 1.8 million barrels a day in 2010 to 350,000 today, the situation has gotten only worse. “Oil facilities until last year were not in the line of danger,” says Geoff Porter, president of North African Risk Consulting. “But that is beginning to change.”

Danger notwithstanding, it’s hard to find businesses that are writing off the region. The swelling ranks of young people—the population between ages 15 and 30 is 100 million strong—makes the Middle East and North Africa especially attractive to consumer companies like Sony

and Coca-Cola

, which both name the region among their fastest-growing markets. (Coke is actually adding manufacturing capacity in Iraq and Gaza, among other locales.) Infrastructure projects are another draw: Bechtel has a $10 billion contract to build two metro lines in Riyadh. Many also consider the Middle East the new hub for global aviation and one of the hottest destinations for drugmakers.

“The Gulf market is the centerpiece of our activities in the area,” says David Welch, president of Bechtel’s Europe, Africa, and Middle East region. “We are a project company. We will go where projects can be done and where there is the wherewithal to do them.”

And in many parts of the Middle East there remains plenty of wherewithal. Egypt, for one, has embarked on a $4 billion expansion of the Suez Canal, a three-year project the government is hustling to get done in one year because of “deteriorating security.”

Of course, even with such determined optimism, the new era of heightened volatility is forcing some nations to think differently when it comes to making their citizens (and foreign investors) feel safer. Take Saudi Arabia, which is employing a centuries-old tactic to this aim: building an airtight wall along its northern and southern borders. Easy, you say? The wall on the Iraq frontier will be 600 miles long.

This story is from the March 1, 2015 issue of Fortune.


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