Executive Magazine

Morning briefing: 18 Oct 2012

by Executive Staff October 18, 2012

written by Executive Staff

Economics

Kuwait Oil Company set fire to an oil well in the north of the OPEC member state on Wednesday to get rid of gas leaking from the site, state news agency KUNA said.

The state-owned company said levels of the hydrogen sulphide gas from a well at the Rawdatain oil field close to the Iraqi border were "far below danger levels", KUNA said in an SMS alert.

The company said earlier on Wednesday that there had been an oil and gas leak at the well during drilling operations and that no one had been injured.

More from Arabian Business

Brent futures held above $113 on Thursday, buoyed by hopes for steady growth in demand after China, the world's second-biggest oil consumer, posted growth that met expectations, and simmering tension in the Middle East provided additional support.

China's economy expanded 7.4 percent in the quarter to September from a year earlier. That was its slowest pace since the first quarter of 2009, but was in line with a Reuters forecast, with stronger retail sales and industrial output numbers propping up investor sentiment further.

Brent gained 19 cents to $113.41 a barrel by 0233 GMT, after settling 78 cents lower at $113.22. U.S. oil gained 1 cent to $92.13, after ending 3 cents higher.

More from Arabian Business

ExxonMobil has signed contracts to drill in Iraq's semi-autonomous Kurdistan region by the end of this year, despite claims by Baghdad officials that the company has vowed to "freeze" its controversial contracts.

Exxon has spent or allocated a quarter-billion dollars for exploration, drilling and other work and supplies in Iraq's Kurdistan region, according to an official with knowledge of Exxon and the Kurdistan Regional Government (KRG).

More from The Daily Star

A Lebanese teachers’ union on Wednesday declared a nationwide general strike Thursday to protest the government’s failure to send the salary scale draft to Parliament despite a preliminary Cabinet decision to raise certain taxes to fund the wage increase for civil servants and public school teachers.

The Union Coordination Committee called on all public and private schools and government agencies to abide by the strike and threatened to escalate the situation if Cabinet refrained from sending the higher wages bill to the Parliament immediately.

“We call on all public and private school teachers to observe the strike and not be intimidated by the threats of the private school administrations to fire the insubordinate teachers,” the statement said.

More from The Daily Star

Iran has denied accusations that its revolutionary armed forces (IRGC) are planning an environmental disaster in the Strait of Hormuz and use it to have international sanctions against it lifted, local media reported on Wednesday.

The German newsmagazine Der Spiegel reported on Sunday it had evidence of a plan by IRGC commander Mohammad Ali Jafari to cause an oil spill to block crude exports through the Strait crucial to the global economy.

More from Arabian Business

Saudi Arabia will allow females to practice law in a courtroom setting for the first time from next month, it was reported.

According to English language daily Arab News, women will be permitted to approach the Ministry of Justice to obtain the necessary license to practice law in the kingdom as part of broader regulatory changes to how legal professionals operate.

The change comes following the submission by the ministry of new statutes governing female involvement in the legal profession to Saudi’s Council of Ministers, which oversees the implementation of new legislation.

More from Arabian Business

October 18, 2012 0 comments

The Buzz

Morning briefing: 17 Oct 2012

by Executive Staff October 17, 2012

written by Executive Staff

Economics

Iraq's cabinet named an interim central bank chief on Tuesday after the bank's well-respected governor, who was on an overseas trip, was suspended amid a currency manipulation probe.

The move followed the announcement of an inquiry into allegations that officials at the Central Bank of Iraq (CBI) had intentionally weakened the value of the Iraqi dinar against the US dollar.

"The cabinet decided to authorise Abdelbassit Turki, the head of the Board of Supreme Audit, to run the central bank indefinitely," Prime Minister Nuri al-Maliki's spokesman Ali Mussawi said, adding that Sinan al-Shabibi had been suspended from his post by the anti-corruption watchdog.

Mussawi said the investigation had been launched because of "what happened with the dinar exchange rate with the dollar" and that a parliamentary report had blamed "the chief of the bank and several other people."

More from Arabian Business

Leading international oil firms will get first-hand information about the initial findings of Lebanon’s massive gas wealth under the sea during a meeting in London on Wednesday.

Multinational oil companies such as Exxon, Shell and Mobil will take part in the meeting. It will also be attended by Lebanese officials and senior executives from the British-based company Spectrum, which has been surveying 3,000 kilometers of Lebanon’s territorial waters.

David Rowlands, the CEO of Spectrum and one of the key speakers at the briefing, told The Daily Star over the telephone that 65 representatives of companies will attend the meeting.

More from The Daily Star

Brent futures held steady near $114 on Tuesday as expectations Europe's financial crisis is on the mend renewed hopes of a revival in oil demand growth, while simmering tension in the Middle East provided additional support.

Asian shares, the euro, base metals and gold all rose after Moody's Investors Service affirmed its investment grade rating on Spain, helping ease investor worries of a worsening crisis in the region. Oil was also supported by supply concerns as the European Union slapped fresh sanctions on Iran.

Brent slipped 12 cents to $113.88 a barrel by 0432 GMT. The November contract, which expired on Tuesday, went off the board 73 cents lower at $115.07, while the December one settled 40 cents lower at $114.00. U.S. oil gained 18 cents to $92.27.

More from Arabian Business

Politics

At least five protesters were arrested and several injured in Kuwait as police tried to break up an opposition protest late on Monday, witnesses said.

Authorities had asked opposition lawmakers to call off the demonstration over political reforms, but at least 5,000 people gathered in a square near parliament that has been the site of several anti-government protests since last year.

Although major oil producer Kuwait has not experienced the mass Arab Spring protests seen elsewhere across the region, tensions have escalated between an elected parliament and a cabinet chosen by the prime minister, who is appointed by the emir, Sheikh Sabah al-Ahmad al-Sabah.

More from Arabian Business

US President Barack Obama has hit out at Republican Mitt Romney during a feisty 90-minute encounter in the second of three pre-election debates.

Mr Obama – widely perceived to have lost their first encounter – came out swinging in New York on the economy, tax and foreign policy.

But the former Massachusetts governor accused Mr Obama of broken promises and a record of failure.

More from the BBC

And finally…

The number of Arab millionaires investing in Britain in exchange for permanent residency has increased in the wake of the Arab Spring as investors look to flee political turmoil in their home country, financial advisors have told Arabian Business.

Rich Arabs are increasing making use of investor visas that allow wealthy foreigners to live in the UK in return for buying at least £1m (US$1.6m) of gilts or shares and bonds in British companies.

“We have seen a rapid growth of Middle Eastern clients investing in the UK and taking advantage of the UK immigration opportunities available under the Investor and Entrepreneur visa categories,” said Carl Thomas of Visalogic.

More from Arabian Business

October 17, 2012 0 comments

The Buzz

Whose Homeland is that?

by Joe Dyke October 17, 2012

written by Joe Dyke

Two cars of men carrying AK-47s pull into a tight alleyway, jump out and threaten hijab-cladded women. Another car arrives and out steps a shady Hezbollah leader, the cue for special agents of the Central Intelligence Agency to spring their ambush.

All this takes place on Beirut’s ‘Hamra Street’ in the latest episode of the multiple award-winning American TV series ‘Homeland.’ This episode of the show aired over the weekend in the West and portrayed the Lebanese capital as a hotbed of terrorists and random attacks on foreigners.

Reality anyone?

For those unacquainted with Beirut, the real Hamra Street is a bustling cosmopolitan artery where days spent shopping and chatting in cafes give way to a nightlife of drinking and cavorting in local bars. A hub of modern city life, it is Beirut’s much smaller version of London’s Tottenham Court Road or New York’s Fifth Avenue.

Unsurprisingly, the misrepresentation has sparked more than a little ire in the Lebanese government. Speaking exclusively to EXECUTIVE, Lebanese Tourism Minister Fady Abboud has promised to take legal action over the “lies” in the show.

“This kind of film damages the image of Lebanon — it is not fair to us and it’s not true, it is not portraying reality,” he said. “We want to take action, we want to write to the filmmakers and producers and demand an apology. And we are planning to raise a lawsuit against the director and the producer.”

Abboud stressed that he was studying potential legal routes the government could take, but added that he would be willing to take action personally if necessary.

The first series of Homeland, which aired last year, was both a critical and a ratings success, with high viewing figures followed by recognition at almost every major television awards event. The shows stars Claire Danes and Damien Lewis, who won the best actor and actress Emmys, respectively, while the show also took home the coveted Outstanding Drama Series award.

It focuses around a female CIA agent (Danes) who believes that a United States soldier who was captured in Iraq and returned home a war hero has been turned into an informant by Al Qaeda. During the episode in Beirut, Danes is seeking to kill a senior figure in Hezbollah allied with Al Qaeda (despite the fact that, in reality, there is likely more animosity between these two groups than there is between either of them and America).

Minister Abboud said the reach of the show made the misrepresentation even more problematic. “This series has a lot of viewers and if you are promoting Lebanon as a non-secure zone it will affect tourism. It will mean a lot of foreigners stay away if they are convinced by what they see,” he said. “Beirut is one of the most secure capitals in the world, more secure than London or New York.”

The show was not filmed in Lebanon at all, but was shot instead in the Israeli city of Haifa. For Abboud the fact that it was filmed in a state with which Lebanon is technically at war was an added insult. “We would like to welcome the crews here to film in this city — we were offended by the fact that they filmed the thing in Israel and said it was Beirut,” he said.

Misrepresentation’s long history

Lebanese have long complained about the misrepresentation of their country in the Western media. Jad Melki, director of the Media Studies Program at the American University of Beirut, said the portrayal was disappointing but not surprising.

“We have been dealing with this for over a century, the portrayal of Arabs in the US is that we are all Islamists living in the desert, evil and angry all the time,” he said. “If you look at US media, racist stereotypes of African Americans have all but disappeared but it is still acceptable to stereotype Arabs.”

Melki said that because the civil war made Lebanon, and particularly Beirut, synonymous with violence, trying to convince Westerners that the city is a prosperous, diverse place is much more difficult than playing on people’s preconceptions. Even the title of the episode, “Beirut is Back”, appears to be a reference to the city’s troubled years in the 1980s, when car bombings and kidnappings were rampant.

“The civil war version of Beirut is still portrayed,” said Melki. “There is a frame of mind and a stereotype of a certain group of people or place and it doesn’t make sense if we break away from that as the audience won’t understand. So we look for the version we know.”

British Ambassador Tom Fletcher, who has campaigned for Westerners to reassess their perception of the country, admitted to being a big fan of the show but said it was a misleading portrayal.

“Homeland is one of life's joys, but Lebanon tends to get a rough time from filmmakers — I'd encourage people to see the real Beirut,” he told EXECUTIVE.

Everything sticks

Beyond legal action the Lebanese government’s options for responding to the show are relatively few. Abboud said his office was considering a counter-video in which footage from the show would be inter-spliced with daily images from Hamra Street.

“We also have a campaign to promote Lebanon on CNN which is starting next month,” he said. “It features all the tourism sectors in Lebanon, what Lebanon has and a real picture about Lebanon.”

Melki suggested that if the country were serious about countering Western perceptions then they should spend money on hosting a major American film in the country. In the most recent Mission Impossible film Tom Cruise scales the world’s tallest building — the Burj Khalifa in Dubai — in the kind of advertising deal which costs millions of dollars but can help change perceptions in the West.

“It would be expensive but effective,” said Melki. “Currently the Ministry of Tourism produces videos about Lebanon with lots of shots of the mountains – its not storytelling, its not entertaining. A movie does that, a TV show does that.”

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October 17, 2012 0 comments

The Buzz

Morning briefing: 16 Oct 2012

by Executive Staff October 16, 2012

written by Executive Staff

Politics

US Secretary of State Hillary Clinton says she takes responsibility for the failure in security at the US consulate in Benghazi, where the US ambassador to Libya was killed last month.

Mrs Clinton said ensuring the safety of US diplomatic staff overseas was her job, not that of the White House.

It comes ahead of the second campaign debate between President Barack Obama and Republican candidate Mitt Romney.

More from the BBC

More than 100 inmates have escaped from the al-Judaida prison in the Libyan capital, Tripoli.

The prisoners are said to be of various nationalities and officials say about 60 have so far been recaptured. It is not clear how the breakout happened.

Al-Judaida is one of Tripoli's largest jails. Human rights groups accuse officials of abusing inmates.

More from the BBC

Economy

Saudi Aramco plans to invest $35 billion over the next five years in projects to protect an oil production capacity cushion the world still relies on despite a shale oil boom and weak demand, the head of the world’s biggest oil producer said.

“Preserving our spare oil production capacity is crucial to maintaining oil market stability because it plays a pivotal role in protecting the world’s economic health,” Khalid al-Falih told an Oxford University seminar on Sept. 20 in a speech posted on Aramco’s website on Monday.

“So we are continuing to strengthen our oil business to meet the rising call on our oil production; in fact, we plan to invest $35 billion over the next five years in crude oil exploration and development alone to keep our oil production portfolio robust.”

More from The Daily Star

EU member states have announced a new package of sanctions against Iran over its controversial nuclear program.

Foreign ministers meeting in Luxembourg "significantly broadened EU restrictive measures", focusing on Iranian banks, trade and gas exports, officials said.

The ministers reiterated their "serious and deepening concerns" over Iran's nuclear activities and their commitment to "work for a diplomatic solution".

More from the BBC

The UAE booked a consolidated state budget surplus of AED36.2bn (US$9.9bn) in 2011, the country's finance ministry said on Monday, publicly releasing such data for the first time.

The ministry said the figure included the federal budget as well as the fiscal balances of all seven desert emirates which form the UAE.

Saeed al-Yateem, executive director of revenue and budget at the ministry, told a news conference that the data would now be released every quarter starting next year.

More from Arabian Business

Global oil prices should stay stable or fall just under their current levels over the next five years as Asian consumption makes up for a potential drop in European and US demand, Kuwait's oil minister said on Monday.

Asia is the Gulf state's biggest oil customer, receiving 65 percent of its exports, Hani Hussein told state news agency KUNA on the sidelines of an Asian summit in Kuwait.

He said oil prices will remain "stable or just under the current level," over the next five years thanks to "active and increasing" consumption in Asia, KUNA reported.

More from Arabian Business

And finally…

Internet users in Saudi Arabia receive more email spam than any other country in the GCC, according to the findings of a new report.

Online security firm Kaspersky Lab found that in the third quarter of 2012, Saudi Arabian inboxes were home to 0.96 percent of all spam globally. The UAE came second in the GCC with 0.19 percent of spam, followed by Kuwait. As a whole the region accounted for 1.29 percent of all worldwide spam.

On a global basis, Kaspersky Lab found that the US was the most spammed country with 26.71 percent of all spam traffic, followed by China with 25.52 percent.

More from Arabian Business

October 16, 2012 0 comments

Economics & Policy

Between Islam and the free market

by Hassan Aly October 15, 2012

written by Hassan Aly

The current Egyptian government led by Prime Minister Hesham Kandil — as well as the other transitional governments in Cairo following the 25^th of January revolution — have been heavily criticized for not having a different economic philosophy to the one that prevailed before President Hosni Mubarak’s ousting.

The old regime's economic philosophy that was based on the ‘free, non-restricted market’ has led to economic and social deterioration, and was among the main causes of the revolution. For the average Egyptian, it is unacceptable and undesirable that old policies remain the same.

The current government was expected to reveal its philosophy in simple and clear terms. But as these economic policies (monetary and fiscal) have not diverged from existing economic models, the average man in the street hasn’t seen any significant change. Thus people are quickly making comparisons between the old business elite — such as steel magnate Ahmed Ezz and former minister Rachid Mohamed Rachid — and emerging businessmen such as the Muslim Brotherhood’s Hassan Malek and Khairat al-Shater.

However, and to be fair, the current government is in a dilemma which is shared by many developing countries. When trying to develop an economic strategy there are currently almost no viable alternative philosophies to the free market. Communism would once have been a realistic rival but, after the fall of the Berlin Wall and the transformation of the Russian economy and all the Eastern bloc economies, including China, to various forms of market economies, it is impossible to make the case for it.

And given that the unrestricted free market system has failed advanced economies as much as developing ones — especially after the global financial crisis of 2008-2009 — the choices the Egyptian government faces are tough.

Clearly, the government is attempting to consider the religious dimensions and is tempted to offer ‘Islamic economics’ as an alternative. However, the global and local sensitivity towards emerging Islamic forces are preventing this. More importantly, ‘Islamic economics’ has yet to be fully developed beyond a couple of key policies. While both Islamic banking, as an alternative to commercial banking, and Islamic Sukuk, as an alternative or a complement to conventional bonds, are realistic, there is still a lot of ambiguity concerning the nature of Islamic economics and whether it follows free market or socialist principles.

Therefore to avoid these issues the current government should not pay much attention to the name of its economic philosophy, and should instead work on developing a policy that stems from the reality of the Egyptian economy. In this regard, I propose the following as examples:

1 – The economic policies of export promotion similar to the ones used in the growth models of East Asia have, in Egypt, resulted in the concentration of wealth with a small class of beneficiaries. A good example of the failure of the country’s export policies is the marble industry, where China imports raw materials from Egypt and re-exports it back as a finished product for a much greater price.

We must, therefore, work on import substitution, encouraging the local manufacturing of products that are imported from abroad, especially when the raw materials and basic inputs are available. This may require importing advanced technology and workforce training in economically cooperating countries such as China and Turkey. Entering into a joint-venture or a cooperative partnership with these countries to bring such industries home is vitally important.

2 – Investment policies should adopt the principle of ‘inclusive growth’ or equitable geographical distribution. The establishment of new industries and new facilities should favor areas of higher unemployment and higher poverty rates.

3 – The state should adopt the principle of ‘balanced growth.’ This means giving the same attention and importance to productive economic sectors, such as agriculture, as to the mining and industrial sectors. It is important to note here that the support given to encourage agricultural and rural investment may need to be more extensive than that given to other sectors in order to compensate for the periods of utter neglect.

4 – Economic policies of the country should aim to reduce dependence on the ‘rentier economy’ compared to the ‘productive economy.’ The term 'rentier economy' in this context refers to revenues collected from exporting oil, gas, and other minerals as well as revenues from foreign aid, worker remittances, international tourism, and fees for the use of water, land and air space. Collectively they constitute more than 60 percent of the revenue collected by the government but leave the people dependent on the government rather than vice versa.

These are only examples of some of the policies that, if followed, could help avoid the problems of pure unrestricted capitalism. Thus, we should not worry about how big or small the state’s role in economic activities is or the name of the economic philosophy. What is important now is the rapid and effective treatment before the spread of the country’s economic woes.

HASSAN ALY is a Professor of Economics at Ohio State University and an economic advisor to the Ministry of Planning in Egypt. A version of this article was published in Arabic in the Al Ahram newspaper on October 13, 2012

October 15, 2012 0 comments

The Buzz

Morning briefing: 15 Oct 2012

by Executive Staff October 15, 2012

written by Executive Staff

Economics

Turkey has banned all Syrian aircraft from its air space as it takes an increasingly firm stance against President Bashar al-Assad, while Syrian rebels said on Sunday they had made more gains in a key province near the Turkish border.

Human Rights Watch said Syrian government forces had dropped Russian-made cluster bombs over civilian areas in the past week as they battled to reverse rebel advances, an act which rights groups say can constitute a war crime.

NATO-member Turkey has increasingly taken on a leadership role in the international coalition ranked against Assad.

More from the BBC

Economics

Uncertainty over the euro zone debt crisis is now showing signs of restraining business and household spending in the Middle East, a top IMF official said on Sunday after weekend meetings of the International Monetary Fund and World Bank.

The IMF’s director for the Middle East and North Africa, Masood Ahmed, told Reuters the uncertainty was adding to already existing concerns over political transitions in Arab Spring nations, and a heavy election and legislative calendar in 2013 in the region.

He said the message from the region’s finance leaders during the IMF meetings in Tokyo was that Europe’s debt crisis was seeping into businesses and household spending plans.

More from Arabian Business

Abu Dhabi’s economy grew 6.8 percent in inflation-adjusted terms in 2011, the fastest rate since 2004 and more than double the pace of the previous year, thanks to stronger activity in both oil and non-oil sectors, government data showed on Sunday.

“Growth in GDP at constant prices during 2011 surpassed all the forecasts and estimates made by local and international parties,” the Statistics Centre Abu Dhabi said. The real gross domestic product of Abu Dhabi, one of seven United Arab Emirates, rose 3.0 percent in 2010.

Abu Dhabi, which accounts for most of the UAE’s crude oil output and about 65 percent of the GDP of the second largest Arab economy, released detailed inflation-adjusted GDP data for the first time on Sunday. In the past, the statistics centre only published nominal GDP data.

More from Arabian Business

Egypt’s government plans to cut energy subsidies by setting a universal limit on how much cheap fuel and cooking gas every household can buy, Petroleum Minister Osama Kamal told a newspaper Sunday.

The Islamist-led administration that took office in July has vowed to push through reform of the subsidies, which consume as much as a quarter of the state budget, to lower an unmanageable deficit and shift funds to health and education.

Economists say the IMF will not release a $4.8 billion loan until Egypt shows how it will cut a deficit that ballooned after a popular uprising tipped the economy into crisis last year.

More from The Daily Star

The head of Dubai developer Limitless said that the indebted firm’s creditors were “squeezing us for everything” following the restructuring of a US$1.2bn loan announced last week.

Chairman Ali Rashid Lootah said Limitless, which was battered by the emirate’s 2009 property crash, expected to have fully paid up everything it owes by 2016.

“We’re generating [revenue], we’re paying all of our interest on time – you can check with the lenders – they’re squeezing us for everything,” said Lootah, who is also boss of Nakheel, another indebted property developer in Dubai.

More from Arabian Business

The gas flow in a pipeline carrying Iranian natural gas to Turkey resumed on Sunday, almost a week after it was halted by an explosion in eastern Turkey, Turkey’s energy minister said.

“The Turkey to Iran natural gas pipeline just started to pump this morning,” Energy Minister Taner Yildiz told Reuters.

“Turkey is currently getting natural gas from Russia, Iran and Azerbaijan and we did not have any supply problems,” he said.

More from The Daily Star

Sudan expects to double its oil production in the next two years, to 300,000 barrels per day, as it steps up oil exploration, the country’s petroleum minister said on Monday.

The country has awarded nine exploration blocks to consortiums formed by companies from Canada, Brazil and the Middle East, Awad Ahmed El-Jazz told Reuters on the sidelines of the Petrotech energy conference in the Indian capital.

“We offered last month 9 blocks and had around 72 companies competing for them,” he said.

More from The Daily Star

October 15, 2012 0 comments

Feature

Tragedy returns to Beirut

by Executive Staff October 13, 2012

written by Executive Staff

Just before 3 p.m. On Friday, October 19, a bomb exploded near Sassine Square in the heart of Beirut’s Ashrafieh district, tearing apart a residential neighborhood and the lives, homes and businesses of hundreds of people who had simply been going about their normal day. Later it emerged that among the dead was Brigadier General Wissam al-Hassan, and the pall of political assassination fell over this horrific event. On Sunday, after incendiary, partisan speeches at Hassan’s funeral ceremony in Downtown Beirut, security forces fended off a group of angry protesters who attempted to storm the Grand Serail government building.

October 13, 2012 0 comments

Last Word

Little cause for optimism

by Thomas Schellen October 13, 2012

written by Thomas Schellen

American politicians have long been unpopular in the Middle East. Even before the release of a trailer for what became a hugely offensive anti-Islamic film and Republican presidential candidate Mitt Romney’s unfortunate promise to kick the Palestinian issue “down the field”, people in North Africa and the Levant were disenchanted with the world’s only superpower.

A new poll released by Gallup – using data taken in the first half of 2012 – shows support for American leadership this year lower than at any point under United States President Barack Obama. Only one in five people in the Middle East approve of US leadership but almost three times that number disapprove, the poll finds.

The drop in average approval ratings was both continuous and quite steep, with the positive image of the first two Obama years (reflected in approval rates of 25 percent in 2009 and 2010) falling to just 20 percent in 2012.

The only country among 12 Middle Eastern nations where a majority voiced a positive view of the US leadership in the spring of 2012 was Libya. There is, therefore, more than a hint of irony that it was in the country’s second city Benghazi where the anti-film protests were most vociferous – with US Ambassador Christopher Stevens being atrociously killed as the embassy was stormed.

The Iranians were least appreciative of America in their stated opinions, with just an 8 percent approval rate. Palestinians were the most outspoken in their opposition – while 18 percent said they approved of the US leadership, roughly three in four Palestinians disapproved. In Egypt, where President Obama tried to open a new chapter on Arab-American relations with his June 2009 “New Beginning” speech, two out of three respondents disapproved of his leadership.

Approval ratings of American leaders in the Middle East are lower than those in Asia, Europe and Africa and in 2011 came out 24 percentage points below global medians in Gallup research. The low intensity of trade between the US and the region (no Gulf countries were shown in the poll) and the friend-of-my-enemy problem in the Palestinian issue go some way toward explaining why the US struggles for support in the region.

But, as we approach the end of Obama’s first term, it is worth comparing Arab views on the US today with previous administrations. The George W. Bush presidency, its fiasco in Iraq and its parallel inability to deal with the Palestinian plight meant Obama had an easy act to follow. It is little surprise that the year 2008 was a low point in Arab approval rates of US leadership, with just 15 percent support.

So Obama’s relative rise in popularity is hardly to be celebrated, and may simply be because opinions could hardly have become worse. They spiked in 2008 because Obama had spelled change and promise to people worldwide.

How much the fluctuations in Arab perceptions of the US between 2010-12 were correlated to the developments that erupted into the ‘Arab Spring’ from January 2011 is a question that is hard to answer, given that the uprisings surprised its many fathers and partisans as much it did the world. No reliable polling research into the exact opinions and attitudes expressed in the ‘Arab Spring’ could have been conducted freely prior to the uprisings.

The current negative outlook for Arab-US relations and a possible worsening of communication is reinforced by the slide in approval rates since that expectation-driven high in 2008. But it appears from the significant fluctuations in views of Arab populations that the disapproval of Arab populations toward American leadership is more related to divergent interests than an expression of a conflict of identities and clash of civilizations.

Unlike in 2008, when Obama came to power amid a storm of international good will, this year’s expectations for a post-election improvement in Arab-American relationships will probably be best kept very modest for the incumbent and even more so for the challenger.

THOMAS SCHELLEN is Executive’s MENA business editor

October 13, 2012 0 comments

Economics & Policy

For your information

by Executive Editors October 13, 2012

written by Executive Editors

Help for first-time job seekers

The government launched a $2.2 million program to improve the employment prospects of first-time job seekers in the country. The New Entrants to Work (NEW) program will be managed by the National Employment Office under the supervision of the Ministry of Labor, with technical and financial assistance from the World Bank. The NEW program offers first-time job seekers 12 months of on-the-job training in a private firm, along with life skills training, counselling and placement services. Also, employers who hire first-time job seekers will be fully reimbursed for the 12 months of social security contributions that they would have paid to the National Social Security Fund. The program’s stated objectives include breaking initial barriers in the transition from school to work, improving the skills of 1,600 first-time job seekers in a 75-hour comprehensive training program geared to develop job searching and soft skills, and linking the training content with the requirements of the private sector.

Cypriot-Israeli gas deal

Cyprus is looking to alleviate its electricity-pricing problem by securing an agreement to import natural gas from Israel. The Cypriots hope to use the gas to power their electrical generators until their own gas reserves are developed. In talks in early September the two nations also discussed the potential to develop a joint terminal for exporting natural gas. The talks came less than a week after a government committee chaired by Shaul Zemach, director general of Israel’s Energy and Water Ministry, recommended that Israel designate most of its estimated 950 billion cubic meters in anticipated natural gas reserves for export. Cyprus is looking for the delivery of 0.6 to 0.7 billion cubic meters annually, beginning in 2015 and running until 2018 or 2020, depending on when Cyprus can begin to exploit its own recent natural gas discovery. Cyprus currently has the highest electricity charges among European Union member states as it relies entirely upon heavy fuel oil and diesel for power generation. The controversial decision has yet to receive final approval. Talk of a joint terminal builds upon an approach in January 2011 by the Israeli Delek Group to the Cypriot government with a proposal to build a Liquefied Natural Gas plant on the island’s southern coast for the purpose of exporting Israeli and Cypriot natural gas to international markets.

Smoking ban in effect

The law prohibiting smoking in indoor and outdoor public areas such as restaurants, pubs, cafés, offices, schools and hospitals was enacted last month. The Tobacco Control Law 174 also bans all forms of tobacco advertisements such as TV, billboard and magazine advertisements; as well as tobacco firms’ sponsorship of concerts and other events. It also requires larger graphic warnings on cigarette packs. The law was passed in Parliament in August 2011 and came into effect on September 3 this year. Owners of establishments such as restaurants, pubs and hotels had a period of one year to comply before enforcement began. The ban had already gone into effect at indoor public areas such as hospitals, schools and public transportation. Lebanon is the third Arab country, along with the United Arab Emirates and Syria, to ban smoking in public places. The law also bans smoking in the workplace at both public and private institutions, as well as at airports and places of worship. Further, the law imposes penalties ranging between LL1 million ($666) and LL3 million ($2,000) on owners and managers of public establishments if their clients are caught smoking inside, and a fine of LL135,000 ($90)on individuals caught smoking in public spaces. Lebanon has one of the highest adult cigarette consumption rates in the world at 12.4 packs per person per month, compared to 3.7 packs per month in France, 3.5 packs in Jordan and 1.7 packs in Singapore. A study conducted by academics at the American University of Beirut conservatively estimated the direct and indirect cost of smoking on the Lebanese economy at $326.7 million annually.

Tourism spending dips

Total tourist spending in Lebanon dropped by 20 percent during the second quarter of 2012 compared to the first quarter of the year, according to Global Blue, the VAT refund operator for international shoppers [see story page 114]. By a more positive comparison the same statistics show tourist spending increased by 5 percent from the same quarter last year. Deep-pocketed visitors from Saudi Arabia accounted for 17 percent of total tourist spending in the second quarter, followed by visitors from the United Arab Emirates with 12 percent, Kuwait with 9 percent, Syria with 8 percent and Egypt with 7 percent. When broken down by region, Beirut attracted 86 percent of total spending in the second quarter of 2012, followed by the Metn area with 11 percent and the Keserwan region and Baabda with a mere 1 percent each. Fashion and clothing accounted for 75 percent of total spending, followed by watches and jewelry with 10 percent, home and garden products with 4 percent, department stores and souvenirs and gifts with 3 percent each and consumer electronics and household appliances with 1 percent.

Investment law shake-up

The Cabinet has received a set of amendments to the investment law, which target certain sub sectors and are intended to increase foreign direct investment. A ministerial committee submitted the amendments to the 10-year-old investment law No. 360, which stipulates a set of criteria that projects must meet in order to benefit from investment incentives and exemptions provided by the Investment Development Authority of Lebanon. The criteria include the size of the investment, the sector and sub-sector of the project, the project’s location, the impact of the project on the environment and on natural resources and the project’s economic and social impact in terms of number of jobs created. The targeted sectors in the law include agriculture, agro-industry, tourism, manufacturing, general technology, information technology, telecommunications and the media. Projects that intend to benefit from the incentives and exemptions must have a minimum investment size, which depends on the location.

Cabinet passes salary raise

The Cabinet approved a draft law for public sector salary increases bringing an end to the months-long dispute that led to strikes by civil servants. Also approved were a series of taxes that would be used to finance the public sector’s pay increase, which is estimated to cost the government more than $1.6 billion annually. Three ministers loyal to President Michel Sleiman opted out of the vote, raising reservations over the methods proposed to finance the raise. The measures adopted include imposing fines on coastal properties that have been illegally developed, a tax on interest rates for bank deposits, a tax on real estate renovation and fees in exchange for construction permits, according to Acting Information Minister Wael Abu Faour. Nearly 200,000 civil servants, Army and security personnel as well as retired government employees are entitled to the salary increases. Ministers are yet to reveal the mechanisms of how to levy the taxes, fines and fees. The draft law received broadsides from both the private sector and civil servants with the former warning of the repercussions on Lebanon’s struggling economy and the latter criticizing the decision to implement the raise in installments over five years.

October 13, 2012 0 comments

Real estate

For your information

by Executive Editors October 13, 2012

written by Executive Editors

Hariri Mansion in Knightsbridge for sale

A 60,000 square-foot (5,574 square meter) ultra-luxurious home in London’s Knightsbridge is on sale with an asking price of GBP 300 million ($488 million). Owned by former Prime Minister Rafiq Hariri from 1982 until his assassination in 2005, after Hariri’s death the mansion was bestowed as a gift to Saudi Crown Prince Sultan Bin Abdulaziz, as reported The Financial Times. Prince Sultan passed away in October 2011 and the property was put up for sale without any public announcement of the offer, said the FT citing industry insiders. Comprising seven floors and 45 bedrooms, many with a view of Hyde Park, plus luxury amenities, the home is expected to satisfy the requirements of even the most discerning family. If the asking price is met, the transaction will set a new record for the most expensive home sale in the United Kingdom, some 115 percent above the previous record for the priciest private home and about 775 times the value of the average London property transaction, which the FT cited at GBP 388,000 ($630,000).

REAL transformation in the works

The Real Estate Association of Lebanon (REAL) has been granted the first ministerial signature required for transformation into a syndicate last month and is in an advanced stage of being recognized as a professional syndicate, according to the secretary of its board, Walid Moussa. REAL, which held its inaugural assembly as a voluntary association for real estate brokers in October 2010, has made it its aim to increase the professionalism of intermediaries in the Lebanese real estate sector, where the broking of sales and rental agreements between landlords and buyers or tenants is historically a largely informal business. The process of becoming a syndicate put the organization on course to being a legal partner with Lebanese government entities in proposing laws and regulations for real estate broking as well as in training and certifying brokers and setting best practices for the industry. “We are entering a new era of real estate business in Lebanon where the real estate community will be represented by professionals who have been well educated and who have experience. From now on, we can be referred to,” Moussa told Executive. He added that the organization has also started collaboration on a brokerage training program with a Lebanese university and aims to increase its membership from around 80 to 200 brokers over the next two years. As Executive went to print, the process of accreditation as syndicate was expected to be complete within weeks.

New Emaar ‘Address’

United Arab Emirates-based developer Emaar Properties is building another hospitality-themed tower in the Downtown Dubai area dominated by Emaar’s Burj Khalifa, the world’s tallest building. The new 63-floor project will be the second highest in the area and stand 340 meters tall. It will be marketed under the Emaar hotel brand, The Address, and represent a mixed-use concept of 15 five-star hotel floors with 200 rooms, combined with serviced apartments on the other floors. The developer did not disclose the value or the financing of the project. When Emaar started offering what it called “a significant volume” of the 542 serviced apartments to buyers on September 22, the developer said the units got a sell-out response within the first day. According to a report in Abu Dhabi’s The National, property agents had contracted day laborers to stand in line from as early as September 20 to secure spots in the queue for filing purchase applications. The project thus not only marks Emaar’s first new project of this scale in the area and a precursor of new development activity there that will include the Dubai Modern Art Museum and Opera House District; the project also underscores the return of trust in off-plan investment opportunities in the Dubai real estate sector. Emaar in July reported 45 percent higher net profit at $332 million for the first half in 2012 in year-on-year comparison, driven in a significant part by increased apartment sales. The company said it recorded sales valued at $486 million in Dubai in first half 2012, approximately five times the amount recorded in first half 2011.

High housing hopes in the kingdom

Speculation that the new Saudi mortgage law could come into force this month has fueled expectations that the kingdom’s home construction and housing finance sectors are about to enter a boom period. The Saudi Council of Ministers, the country’s cabinet, adopted the mortgage law in early July and officials and members of the business community said they expected the law to come into force three months after. A minimum 90-day period is mandated for the Saudi Arabian Monetary Agency, the kingdom’s central bank, to fine tune the new law’s details and application rules. However, the law’s details were not disclosed at the time when its adoption by cabinet was announced and the Saudi authorities are known for applying new laws with careful consideration rather than rushed implementation. Mainly because of concerns over the need for foreclosure mechanisms, the mortgage law was debated back and forth for years and cabinet votes on it were deferred in 2010 and 2011. While the phasing in of the law will require time and initiatives to educate the population, Saudi finance experts and real estate market players are in consensus that mortgages will invigorate the country’s real estate sector. Reuters cited the chief financial officer of Saudi British Bank (SABB), Rehan Khan, as saying right after the law’s adoption that he expects the bank’s low mortgage lending activity “to change quite a lot over the next five years.” The mortgage system and expected drops in land prices will create a boom in Saudi construction activities, with low and middle income earners poised to use long-awaited chances to acquire homes, said a report by Al Shorfa, a website associated with the United States Defense Department’s Central Command.

Abu Dhabi rents move in tenants’ favor

The market for apartment rentals in the emirate of Abu Dhabi moved in favor of tenants in the third quarter of 2012, according to a report by United Arab Emirates-based real estate services firm Asteco. Data compiled by the company showed rental rates for prime buildings across the market softening by up to 3 percent quarter-on-quarter. Villa rental rates in some areas were stable but drops of up to 4 percent were reported from other areas. Older apartments in areas such as central Abu Dhabi and low quality buildings throughout the emirate saw prices fall more profoundly, with quarter-on-quarter drops of 4 to 8 percent. The result was a widening gap between prime developments and the rest of the market, the company’s chief executive, Elaine Jones, said in a statement. According to Asteco, more than 9,000 units have been added as supply in Abu Dhabi’s residential market since beginning 2012 and 7,400 of the new units were apartments. Sales prices for quality apartments dropped 2 percent on average from the previous quarter and in villa sales, where little transaction activity was observed, prices did not move. Per square meter, prices for apartments in Abu Dhabi cited by Asteco ranged between AED 5,916 and AED 11,724 ($1,610 to $3,192). Leasing activity for office spaces continued to improve at generally stable prices but tenants were price-sensitive and had a strong preference for fitted space, Asteco said.

Dubai residential tower tops the top

Princess Tower, the tallest residential structure on Earth at 414 meters height, was delivered last month by United Arab Emirates-based developers Tameer Holding. Located in the Dubai Marina district of the Dubai emirate, the AED1.5 billion ($408 million) structure with 100 floors above ground comprises 763 units. Princess Tower and another Tameer residential high rise, the 381-meter Elite Residence that was delivered a month earlier, were conceived in 2004 and 2006 and construction began before the emirate’s real estate bubble burst in 2008. Floor prices in Princess Tower ranged from approximately AED 1,200 to AED 2,500 per square foot ($3,528 – $7,350 per square meter), The National newspaper quoted Tameer President Frederico Tauber as saying. While both structures were completed with crisis-induced delays, they did not falter like many other residential projects in Dubai. However, another project by the developer, the Tameer Towers in Abu Dhabi, is still paralyzed and awaiting resumption of construction. The company last said in February 2012 that the Tameer Towers project is 21 percent complete and added that it remained committed to the project. Meanwhile, according to Tauber, the first units in the nearly sold-out Princess Tower have been handed over to buyers who can now tell their friends that their building is in the Guinness Book of World Records.

October 13, 2012 0 comments