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Banking & Finance

Financial quotes of the month

by Maya Sioufi October 13, 2012
written by Maya Sioufi

Lebanon’s Transportation and Public Works Minister Ghazi Aridi after the Cabinet extended Middle East Airlines’ exclusivity deal for another 12 years:“We did not extend exclusivity to a normal company, but we extended it for a company of endless successes”

“We’re the definition of an idiot by Einstein – repeating the same experiment [and expecting different results]. That’s what central banks have reduced themselves to. We’ll never know what will happen if they stop because they continue to print, print and print.”

Steen Jakobsen, chief economist at Saxo Bank

“In the mobile telecom sector you need to anticipate growth and expand before the demand picks up. In Lebanon it has been quite the opposite.”

Claude Bassil, chief executive of Lebanon’s mobile operator Touch

“An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid as a result of the whistleblower information.”

Following the largest-ever whistleblower payout by the American Internal Revenue Service to a former UBS banker now serving time, Senator Charles Grassley, who co-wrote the 2006 law allowing for such payments

“And not even a call from the queen herself would have stopped me.”

Alfonso Signorini, publisher of Italy’s Chi magazine, owned by former Italian Prime Minister Silvio Berlusconi’s media conglomerate, Mondadori, following the controversial publication of topless pictures of Kate Middleton, the duchess of Cambridge

“Sales of iPhone 5 could boost [the US’s] annualized GDP growth by $3.2 billion, or $12.8 billion at an annual rate.”

Michael Feroli, JP Morgan’s chief economist

“Everybody is aware that beach tourism constitutes 70 percent of the traffic coming to Egypt. It will continue to do so.”

Egypt’s Tourism Minister Hisham Zaazou as concerns arise on the future of the industry following the victory of the Muslim Brotherhood

“I call for a federation of nation states. Not a super-state. A democratic federation of nation states that can tackle our common problems, through the sharing of sovereignty in a way that each country and its citizens are better equipped to control their own destiny.”

Jose Manuel Barroso, European Commission president

“The new virus is definitely not stupid but nevertheless Lebanese banks have the means to counter such a virus.”

Ali Nahleh, head of the IT department at Lebanon’s central bank, talking about the recently discovered computer virus, Gauss, targeting customers using online banking in Lebanon

A London-based property consultant on the 45-bedroom residence of Rafik Hariri, the late Prime Minister of Lebanon, being put on the market for £300 million ($486 million):“You are going to have to wait a long, long time for something like this to come on the market again.”

October 13, 2012 0 comments
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Banking & Finance

For your information

by Executive Editors October 13, 2012
written by Executive Editors

Deposit outflow for the banking sector

The banking sector in Lebanon registered an outflow in deposits of $110 million in July after growing by an average of $700 million each month from January to June. The last three times Lebanon registered an outflow in deposits were in January 2011 after the collapse of the Lebanese government, the summer of 2006 due to the war with Israel and in February 2005 following the assassination of former Prime Minister Rafiq Hariri. Total deposits of the banking sector grew by 3.5 percent in the first seven months of the year to stand at $122 billion, accounting for 84 percent of the sector’s $145 billion in assets. Private sector loans grew by 5.4 percent in the first seven months of the year to stand at $42 billion; those to the public sector grew by just 1.5 percent over the same period to stand at $30 billion.

Anti-money laundering to anti-virus systems

Central Bank Governor Riad Salameh announced last month the implementation of amendments to tighten existing anti-money laundering and terrorism-funding laws. “These [amendments] are designed to buttress the monitoring of terrorism funding in accordance with the Lebanese laws and to organize the cross-border currency movement,” he said. The amendments follow the visit to Beirut of United States Treasury Deputy Secretary Neal Wolin as part of his Middle East tour. He warned the Lebanese banking sector against dealing with Iran and Syria and allowing the US-sanctioned countries from using Lebanon’s banking system to evade the sanctions. Lebanese banks also upgraded their software systems last month, according to the central bank. The upgrade follows the discovery by Moscow-based Kaspersky Lab, a leading computer security firm, of the cyber virus dubbed “Gauss”, capable of stealing browser passwords and online bank account details. The virus was detected on more than 2,500 computers in the Middle East, of which approximately 1,600 were in Lebanon and nearly 500 in Israel.

Lebanon’s first 10-year local currency debt

With a gross public debt standing at $54 billion —  128 percent of gross domestic product — Lebanon issued its first 10-year debt in local currency, at an attractive interest rate of 8.24 percent versus the current 10-year Eurobond coupon rate of 6.1 percent; the previous maximum maturity was seven years for local currency debt. As the finance ministry battles with how to fund the increase in public sector wages, it plans to sell another 10-year dollar denominated debt issue by the end of the year, according to Central Bank Governor Riad Salameh. It also plans on swapping another $1 billion in local currency debt held by the central bank into dollar denominated Eurobonds after $2 billion were swapped earlier in May. In April, Lebanon issued $950 million worth of Eurobonds, of which $600 million have a five-year maturity and offer a 5 percent yield and $350 million with a 14-year maturity and 6.4 percent yield.

Dubai’s Al Habtoor to go public

Dubai-based Al Habtoor Group, a family-owned conglomerate, said it plans to raise $1.6 billion by issuing 25 percent additional shares, which it would list on the Nasdaq Dubai bourse next year. It is also considering listing on exchanges in London and Saudi Arabia and plans to use the proceeds to expand its businesses and add to its property portfolio. Al Habtoor is currently looking into five-star hotels in London and Paris as well as agricultural land in Central and Eastern Europe and private hospitals in the United Arab Emirates and abroad. Al Habtoor’s activities span several sectors including hospitality, construction, education and automobiles. It also owns a 27.5 percent stake in a joint-venture (JV) construction firm with Australia’s Leighton Group, but the JV will not take part in the initial public offering. Grant Thornton has been appointed as the financial adviser. The listing might help volumes on Dubai securities markets, which have still not recovered to their 2008 levels, despite the Dubai Financial Market index increasing by 16 percent year to date.

Egyptian stock market second best performer worldwide

The main Egyptian stock index is up 60 percent year-to-date and is the second best stock market performer this year after Venezuela’s index, up 160 percent year-to-date. This performance comes on the back of a sharp drop in stock prices in 2011 when the Egyptian index ended the year in the red, down 50 percent, following the toppling of former President Hosni Mubarak and its aftermath of upheaval and instability. Egyptian stocks still remain 20 percent below their pre-revolution levels. Volumes on the Egyptian market are also on the rise, crossing $161 million last month, the highest level since mid-2011. Investors seem encouraged by the recent talks between Egypt and the International Monetary Fund. Egypt has requested a loan of $4.8 billion from the IMF to assist the country in dealing with its faltering economy. Not all investors are keen on Egypt though. Société Générale plans on selling its 77 percent stake in Egypt’s National Société Générale Bank with a $2.3 billion market value and is in talks with Qatar National Bank. According to research by Egypt-based investment bank EFG Hermes, an agreement would lead to a full takeover worth $2.5 billion to $2.9 billion.  

M.I.T. Enterprise Forum selects five Arab entrepreneurs

Five innovators from the Middle East were awarded the TR35, a Massachusetts Institute of Technology award that recognizes the most outstanding innovators who are under 35 years old across a wide array of sectors. Three of the five innovators selected were from Lebanon: Habib Haddad, chief executive of Wamda, a platform for entrepreneurs in the MENA region, and founder of the Arabic search engine Yamli for which Yahoo acquired a license; Elie Khoury, founder of the web analytics service Woopra; and Hind Hobeika, creator of ButterflEye, goggles that change color to monitor heart rates under water. The other two innovators are Palestinian Sami Khoreibi, founder of Enviromena, a developer of solar projects in the MENA region and Saudi Arabian Abdulrahman Tarabzouni, co-founder of Syphir, behind the development MailRank, which is a system that addresses email productivity problems. The winners will participate in the EmTech MIT Conference from October 24 to 26, 2012, held on MIT’s campuses in Cambridge and focused on emerging technologies, allowing the winners to promote their innovations to a wider audience.

Qatar investing in more Lebanese nuts

Qatar First Investment Bank (QFIB), an independent Qatari Islamic bank, has upped its stake in Al Rifai International Holding, a leading Lebanese nuts and kernels manufacturer, to 35 percent from the 15 percent it had acquired back in December for an undisclosed amount. According to Emad Mansour, chief executive officer of QFIB, “since acquiring a 15 percent stake in Al Rifai late December of last year, the company has shown positive growth prospects. We strongly believe that Al Rifai has the right setup to venture into new markets and diversify its product range.” Since the beginning of the year, Al Rifai has opened five new outlets in Lebanon and now has a total of 50 points of sales. In the first half of the year, the nuts manufacturer’s wholesale performance grew by 63 percent year-on-year and its export-sales by 66 percent year-on-year. Al Rifai plans on opening a new factory in Lebanon in the second quarter of 2013 in order to raise its production capacity in the country to 10,000 tons, in line with its manufacturing facility in Sweden established in 2008. In 2010, Al Rifai Holding raised its capital by $15 million through a private placement led by MedSecurities Investment, a wholly owned subsidiary of BankMed.

October 13, 2012 0 comments
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The Buzz

Morning briefing: 12 Oct 2012

by Executive Staff October 12, 2012
written by Executive Staff

The world could see a gradual easing of oil prices over the next five years due to sluggish economic growth and increasing energy efficiency as production rises steeply in Iraq and north America, the West's energy watchdog said on Friday.

The International Energy Agency, which advises industrialised nations on energy policy, cut its global oil demand growth projection for 2011-2016 by 500,000 barrels per day (bpd) compared to its previous report in December 2011.

As a result, the pressure on OPEC to produce more oil will ease dramatically and the cartel will have to produce no more than 31 million bpd until 2017 to balance global demand – less than it produces at the moment.

More from Arabian Business

 

The volatile situation in the region will ironically help Lebanon’s maritime transport sector to grow even further, the public works and transportation minister said on Thursday at the fourth annual conference of the Shipping Brokers Association.

“The regrettable situation in the region continues to present an opportunity that Lebanon can benefit from,” Ghazi Aridi said in opening remarks.

“We are keeping all communications channels open on all levels and are taking precautionary measures to protect [the maritime transportation sector],” he added.

More from The Daily Star

 

Iraq is considering replacing ExxonMobil with Russian companies at the supergiant West Qurna-1 oilfield, after the U.S. major angered Baghdad by venturing into Kurdistan, according to a media report citing industry sources.

The northern Kurdish region has riled Baghdad by signing deals with foreign oil majors, such as Exxon, Total and Chevron, contracts the central government rejects as illegal.

Nefte Compass, a weekly energy newsletter about the FSU and Eastern Europe, said on Thursday that Iraq is weighing whether to replace Exxon with Russia's LUKOIL and Gazprom Neft – both already involved in the country.

More from The Daily Star

 

Record sales for BMW and Mini have been achieved across the Middle East for the first nine months of the year with a total of 15,805 vehicles sold in 14 markets, up 15 percent.

The German car maker said it also saw its best quarter ever (July-September) and achieved its highest sales volume in a single month, with 1,981 vehicles delivered across the Middle East in August.

It said it witnessed gains in almost all GCC markets with most importers recording double digit growth.

More from Arabian Business

October 12, 2012 0 comments
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The Buzz

Morning briefing: 11 Oct 2012

by Executive Staff October 11, 2012
written by Executive Staff

Politics

Turkey scrambled fighters and briefly detained a Syrian passenger plane on Wednesday, suspecting it of carrying military equipment from Moscow, while Turkey's military chief warned of a more forceful response if shelling continued to spill over the border.

Military jets escorted the Damascus-bound Airbus A-320, carrying around 30 passengers, into the airport in Ankara hours after Turkey's chief of staff said his troops would respond with greater force if bombardments from Syria kept hitting Turkish territory, Turkish state-run television said.

"We are determined to control weapons transfers to a regime that carries out such brutal massacres against civilians. It is unacceptable that such a transfer is made using our airspace," Foreign Minister Ahmet Davutoglu said.

More from Reuters

 

Jordan's King Abdullah appointed reformist politician Abdullah Ensour as Prime Minister on Wednesday to prepare for the country's first post-Arab Spring parliamentary election, due by early next year, a palace statement said.

The monarch had dissolved Jordan's tribally dominated parliament last week, half-way through its four-year term, paving the way for the election that should be held within four months under constitutional reforms enacted last year.

US- and French-educated Ensour, who replaces Fayez al-Tarawneh, another veteran politician, has a long career as a lawmaker and has held senior government posts in successive administrations.

More from Arabian Business

 

Economics

Straddling one of the world's great sea routes, the Suez Canal corridor is set to become a bridge connecting Africa with Asia if a grand plan by Egypt's new government comes to fruition.

President Mohamed Morsi's administration is reviving and expanding a series of projects initiated in the late 1990s under former President Hosni Mubarak to turn the banks of the Suez Canal into a world trading and industrial centre, hoping it will earn billions of dollars and address a growing unemployment crisis.

The plan aims to transform the corridor along the 100-mile length of the canal from an area of mostly flat, empty desert into a major world economic zone.

More from The Daily Star

 

Sudan and South Sudan have pledged to work together to rebuild their shattered economies and not to return to war in a joint plea for foreign investment, weeks after signing a critical trade and border agreement.

In their first high-profile appearance together since signing the deals, ministers from the two countries told an investment conference in Vienna they would work to make peace.

"I assure you … we are committed, both countries, not to go back to war. We are committed to talk and talk and talk," Sudanese Foreign Minister Ali Ahmed Karti said.

More from The Daily Star

 

Morocco has delayed its maiden dollar bond sale to end-November pending market stability, the budget minister said in published remarks on Wednesday, but banks have already been mandated for an issue that may exceed the initial $1 billion mark.

The delay's announcement, carried by L'Economiste newspaper, comes amid speculation King Mohammed would soon make a rare official tour of the Gulf Arab region from where Rabat hopes to raise a substantial share of the issue.

Initially estimated at $700 million-$1 billion, the cash-strapped country now says it may go for more.


More from The Daily Star

 

Iraq awarded CH2M Hill a $170 million consultancy contract for a plan to inject water into southern oil fields to help further boost crude production, according to South Oil Co. Director General Dhia Jaafar.

Iraq’s crude production will rise to as much as 6 million barrels a day in 2015 and 10 million barrels a day by 2020, Deputy Prime Minister Hussain al-Shahristani said in a news conference in Baghdad today. That’s a more optimistic outlook than the International Energy Agency which said yesterday that Iraq may produce as much as 6.1 million barrels a day by 2020 and 8.3 million barrels a day by 2035.

More from Business Week

 

And finally…

Smokers of the hubble-bubble water pipe have until Saturday to indulge their fondness for sweet flavoured tobacco in Jeddah's cafes as the Saudi city prepares to enforce a public ban on the habit.

A law against smoking the pipes, known in Arabic as shisha, in public places has been in place for years in some other Saudi cities, but it is only now being implemented in Jeddah, which is known as more socially liberal than the capital Riyadh.

"It's a big problem for our cafe. More than 80 percent of our customers come to smoke shisha. Now they complain as soon as they walk through the door when we say we won't have shisha," said Ghassan Mohammed Mansour, the manager of Jeddah's upscale Caffe Aroma in a phone interview.

More from Arabian Business

October 11, 2012 0 comments
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The Buzz

Morning briefing: 10 Oct 2012

by Executive Staff October 10, 2012
written by Executive Staff

Economy

Saudi Arabia's Aramco, the world's largest energy company, has discovered a new gas field in the Red Sea, 26km north-west of the port of Daba, the Saudi Press Agency reported on Tuesday quoting the oil minister.

Gas flowed at the rate of 10m cubic feet a day at a test well at the depth of 17,700 ft, Ali al-Naimi was quoted as saying.

Naimi said more wells would be drilled in order to evaluate the size of the field.

More from Arabian Business

 

Thousands of Lebanese school teachers and civil servants have begun a one-day strike to press the government and Cabinet to implement a long-awaited salary scale.

Most private and public schools in the country will close as a result of the strikes waged by teachers, demonstration organizers and the Union Coordination Committee said.

“The general strike would be observed in all public and private schools, high schools, institutes and public administrations,” a statement issued by the UCC said.

More from The Daily Star

 

Brent crude slipped below $114 on Wednesday after a 2 percent jump the previous day, with a cloudy economic outlook offsetting fears about disruptions to Middle East oil supply as a conflict between Turkey and Syria escalated.

A stronger US dollar, as investors shied away from risk on concerns about a slowdown in global growth, also weighed on oil prices, making the commodity more costly for holders of other currencies.

Brent crude had slipped 67 cents to $113.83 a barrel by 0245 GMT, after a 2.4 percent rise on Tuesday to its highest since Sept. 18.

More from Arabian Business

 

Cyprus is close to short-listing companies bidding for offshore oil and gas contracts in the energy-rich east Mediterranean, officials said Tuesday.

The island has received 15 bids from companies or consortiums for nine offshore blocks rimming the south of the island in an area where a significant natural gas discovery was reported in December 2011.

Israel, Cyprus and Lebanon have reported significant natural gas discoveries in the eastern Mediterranean region, known as the Levant basin.

More from The Daily Star

 

Iraq could more than double its current daily oil production by 2020, vastly boosting its economy and helping to bring stability to global energy markets, the International Energy Agency has forecast.

The country's crude oil output could grow to 6.1 million barrels per day (mbpd) in eight years' time from about 3.0 mbpd currently, the IEA said as it unveiled its Iraq Energy Outlook report in London.

The Paris-based IEA added that Iraq stood to gain almost $5.0 trillion (3.85 trillion euros) in revenue from exporting oil up to 2035, as long as the country invested more than $530 billion on raising its energy output.

More from AFP

 

Emirates Aluminium, a joint venture of Abu Dhabi's Mubadala MUDEV.UL and Dubai Aluminium, has mandated three banks for a bond issue of up to $1 billion, two banking sources familiar with the matter said on Tuesday.

In a separate statement on Tuesday, an Emal spokesman denied the company had named banks for the bond issue.

"EMAL and its shareholders, Dubai Aluminium and Mubadala, have not selected nor mandated any banks for any potential bond," the spokesman said in a text message but declined to be identified.

More from Reuters

 

Egypt hopes to agree a $4.8 billion IMF loan within two weeks of talks set for the end of October, ministers said Tuesday, after long delays caused by political turmoil in the Arab world’s biggest nation.

Egypt urgently needs support to prop up state coffers weakened by a turbulent transition since the popular uprising last year that toppled President Hosni Mubarak.

The IMF, which has said a loan agreement could be reached by the end of 2012, wants Egypt to put a program in place to narrow a budget deficit that has mushroomed to 11 percent of gross domestic product since the uprising.

More from The Daily Star

October 10, 2012 0 comments
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Comment

Lebanon’s latest strike misses the point

by Sami Halabi October 10, 2012
written by Sami Halabi

It is dubious whether any good will come of the strikes today by various public sector unions, called in response to the Lebanese cabinet’s intransigence and delay tactics in passing the new salary scale law.

On the one hand, if the unions get what they are asking for, the government will be even more broke, and in all likelihood, inflation will rise and threaten our already weak economy with recession and deeper unemployment. On the other hand, with the country’s rising prices and falling real wages, the unions have a point. It is also against the basic principle of equity in government that those employed in the private sector should get a pay adjustment earlier this year (even if some are still waiting for it), while those in the public sector are put at a disadvantage.

More photos from the strike

For far too long successive governments have gotten away with the socioeconomic equivalent of kicking the can down the road. Every time there has been a reasonable demand to improve workers’ purchasing power, government has skipped investment and reform initiatives that would create sustainable economic growth for the only shortsighted policy instrument it seems to know how to use: raising wages. Then the unions proclaim victory, only to repeat the cycle a few years later. The road en route to financial ruin is running out, however.

Prime Minister Mikati (who we should not forget is a businessman first and a politician second) knows full well that government cannot fund the increase, estimated to cost as much as $2 billion a year, according to the Economic Committees, the largest umbrella association of private sector committees. This would add significantly to the public stock of debt at a time when government needs increase flexibility to halt a slide into recession.

As is habit, the government will look for financing from Lebanon’s commercial banks, whose profit growth of late has been falling and deposits shrinking, leaving them with little appetite for new public lending. The banks, however, know all too well that their main obligator, the sovereign, has few options for who to turn to.

In this environment, for the banks to accept to lend government more they will likely need the increased incentive of higher interest rates (though the central bank does tend to step in and make bond purchases when the market rate becomes exorbitant). All this entails, again, kicking the can down the road with a foot that grows ever more sore.

This is likely why Mikati is proposing to pay the increases in installments, something that theoretically could stem some immediate inflation. That strategy could also lower the interest rates charged on the first tranche and does constitute a well-thought out stall tactic. But anyone who has done business in Lebanon knows that once the first check is paid, the next one has strings attached, or just simply never arrives. That is why the unions and those behind them are wary of Mikati’s plan.

If we are to speed ourselves ever faster toward the financial cliff, however, we might as well get something out of it — instead of simply attempting to placate public sector workers through piecemeal pay raises, the government should also demand better performance from its institutions.

To start with, instead of shutting the doors at 2pm (and 11am on Fridays), the public sector offices need to finally make the transition to regular business hours to fulfill their mandate of providing the public with accessible services. And while vacancies are rife within the public sector, those contract workers who insist on becoming permanent employees should only be able to do so once new, more efficient, organizational structures are implemented. That would make more sense than paying contractors to fill jobs that were intended to serve a public administration in the 1960s.

While it is undeniable that living or supporting a family on the current salary of the average public sector worker is an incredible challenge, the government is only shooting the country’s future in the foot in its policy of short-term appeasement of the union’s demands. Thoughtful, long-term policy initiatives and investments in infrastructure and institutional reform are the only way to avoid this same situation replaying itself in several years, when we are deeper in the debt hole and the prospect of digging ourselves out has grown even more distant.

Sami Halabi is a Masters of Public Policy candidate at the University of Edinburgh and former managing editor of Executive

October 10, 2012 0 comments
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The Buzz

Morning briefing: 9 Oct 2012

by Executive Staff October 9, 2012
written by Executive Staff

Economics

The Lebanese Public Sector Employees Association has confirmed it will participate in a strike and demonstrations scheduled for Wednesday.

“The Cabinet should drop its policy of procrastination and forward the [bolstered public sector] salary scale [draft law] to Parliament immediately,” it said in a statement.

It added that the draft law represents a compromise “that we accepted despite flaws and injustices.” The statement reiterated that the new salary scale was vital to reform Lebanon’s ailing public sector and raise its productivity.

More from The Daily Star

 

The World Bank's financial arm International Finance Corp (IFC) plans to increase its investments in Yemen, Iraq and North Africa next year to help support development and job creation, a senior IFC executive said.

"MENA needs to create 50-70 million jobs in the next decade. Recent events in the MENA region have created the urgency to address the fundamental conditions required to revive growth and support human development," Dimitris Tsitsiragos, the IFC's vice president for Europe, Middle East and North Africa, said in an interview on Monday.

The IFC, which invests in developing the private sector in emerging economies with a special focus on small to medium-sized enterprises (SMEs), sees opportunities in infrastructure, energy, education and healthcare in the Middle East and North Africa (MENA).

More from The Daily Star

 

Kuwaiti telecoms operator Viva, part-owned by Saudi Telecom Co (STC), has approached banks for a $400 million loan aimed at expanding its existing capabilities, two banking sources familiar with the matter said.

Viva, which launched services in 2008 and is also known as Kuwait Telecom Company, is yet to mandate any banks for the syndicated loan facility but has approached several lenders to gauge interest, one banking source said, speaking on condition of anonymity.

“They (Viva) have shown considerable progress since inception which is admirable for a regional telecoms player. Banks who commit the maximum balance sheet are most likely to be called in,” the source said.

More from Gulf Business

 

Bahrain's government has agreed in principle to supply additional funds to ailing national carrier Gulf Air so it can pay off debts.

A joint meeting between the government and the National Assembly reviewed the financial and administrative situation of the airline and agreed to continue to support it.

According to Bahrain News Agency, the meeting discussed "available alternatives to stop continuous losses incurred by the company".

More from Arabian Business

 

Politics

Gulf Arab countries should work together to stop Islamist group the Muslim Brotherhood plotting to undermine governments in the region, the United Arab Emirates’ foreign minister said on Monday.

The UAE, a major oil exporter and business hub, has arrested around 60 local Islamists this year, accusing them of belonging to the Muslim Brotherhood – which is banned in the country – and conspiring to overthrow the government.

Thanks to cradle-to-grave welfare systems, the UAE and other Gulf Arab monarchies have largely avoided Arab Spring unrest that has unseated rulers elsewhere.

More from Gulf Business

 

Egypt's President, Mohammed Morsi, has pardoned all those arrested since the beginning of last year's popular uprising that ousted Hosni Mubarak.

A post on the president's official Facebook page announced an amnesty for crimes and misdemeanours committed "in support of the revolution".

The decree could lead to the release of several thousand people.

More from the BBC

 

Republican presidential candidate Mitt Romney has called for a "change of course" in the Middle East, criticising US President Obama on foreign policy.

Speaking in Virginia, he lambasted the White House over an attack in Libya that killed the US ambassador.

He said he would put Iran "on notice" over its nuclear plans, and called for arms to go to Syrian rebels.

More from the BBC

October 9, 2012 0 comments
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The Buzz

Morning briefing: 8 Oct 2012

by Executive Staff October 8, 2012
written by Executive Staff

Economics

Gold lost half a percent on Monday, on course for its sharpest one-day loss in three weeks as a surprisingly upbeat US job market report dented the precious metal's appeal as a hedge against inflation.

The US unemployment rate unexpectedly dropped to a near four-year low of 7.8 percent in September, raising some doubts on whether the stimulus measures put in place by the Federal Reserve to boost the labour market would last as long as initially thought.

Rampant cash printing as a result of easy monetary policy drives investors to bullion to hedge risks arising from an increased inflation outlook. Gold jumped nearly 5 percent last month, during which the Fed and European Central Bank each announced aggressive easing measures.

More from Arabian Business

 

Brent crude slipped below $112 per barrel on Monday, dropping for a second straight session on concerns a fragile global economy could curb oil demand, but supply worries stemming from tensions in the Middle East may help check losses.

The World Bank cut on Monday its economic growth forecasts for the East Asia and Pacific region, home to two of the world's largest oil consumers, and said there was a risk the slowdown in China could get worse and last longer than expected.

Concerns about Europe persisted with the region's largest economy Germany posting a drop in industrial orders in August, while a firm dollar after a surprise drop in the US jobless rate also curbed oil prices. A stronger dollar makes commodities priced in the greenback more expensive for holders of other currencies.

More from Arabian Business

 

Iran has arrested the decline in its oil exports, boosting sales recently to countries including South Korea and Turkey just as US and European sanctions show signs of inflicting economic damage to Tehran.

Iranian oil exports hit a low in July of less than 1m barrels a day, but they increased slightly in August and more significantly in September, hitting 1.2m barrels per day, according to traders who monitor the sales.

“We have seen the low point of Iranian oil exports,” a Gulf-based senior oil official said. “Asian countries are buying again."

More from the Financial Times

 

Egyptian President Mohammad Morsi sought to reassure conservatives at home that a request for a loan of nearly $5 billion in aid from the IMF would be compatible with Islamic banking principles.

Egypt asked for a $4.8 billion loan in August from the International Monetary Fund, which in turn urged economic reforms.

“This does not constitute Riba” the Egyptian president said, in reference to abusive interest rates as defined by Islamic jurisprudence.

More from the Daily Star

 

International Monetary Fund forecasts that Saudi Arabia’s budget surpluses will gradually decline before dropping into deficit by 2016 are a “doomsday scenario”, the Kingdom’s Finance Minister Ibrahim Alassaf has said.

The world’s top oil exporter has run large budget surpluses since 2009 but the IMF said in a report last month that falling energy prices would hurt the Kingdom’s fiscal position.

“They have been working on scenarios assuming, I would say, a doomsday scenario which I don’t agree with. But we appreciate they are raising these issues in order to be ready,” he told reporters after a meeting with IMF managing director Christine Lagarde in Riyadh.

More from Gulf Business

 

Kuwait transferred $250 million to the Central Bank of Jordan, the state-run Petra news agency reported, citing Finance Minister Suleiman Hafez.

The funds are Kuwait’s contribution to a $5 billion grant for Jordan that was endorsed by the Gulf Cooperation Council (GCC) last year.

At a GCC summit in December 2011, Saudi Arabia, the United Arab Emirates, Kuwait and Qatar agreed to extend $5bn over a five-year period to support development projects in Jordan, with each state contributing $1.25bn.

More from Arabian Business

 

Politics

Iran has warned against consequences of Iraq's inspecting its airplanes bound for Syria, saying it will retaliate if it happens again.

"What Iraq did about inspection of airplanes bound for Syria is not proportional to the diplomatic ties of the two sides and is contradictory to security agreements and air transportation treaty of the two countries," said Iran's ambassador to Baghdad, Hassan Danaiefar.

More from ISNA

October 8, 2012 0 comments
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Feature

Death from above

by Sam Tarling October 7, 2012
written by Sam Tarling

Everywhere we go there is fighting and shelling. where can we go?… the street is not safe, the house is not safe. nowhere is safe.” a refugee from homes, now in aleppo, finds herself back in danger as government forces hit back at rebel advances into the city, pounding neighborhoods with artillery, rockets, planes and helicopters. circling above the city with impunity, the air force is unleashing some of the most devastating firepower seen so far in Syria’s increasingly bloody civil war.

Insert: A man surveys the result of an airstrike in the neighborhood of Tariq Al Bab

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  1. On a bad day, the sheer volume of casualties causes hospitals to run out of space for the dead. Here, the body of a civilian who was killed by a sniper is left on the floor as doctors treat the wounded patients at the Dar Al Shifa hospital in the Tariq Al Bab neighborhood of Aleppo
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2. Residents load the body of a woman killed in an airstrike into a van as a government warplane circles overhead. In the background Free Syrian Army fighters fire futilely at the aircraft

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3. The body of a child is carried from the rubble of a destroyed building after an aerial bombardment in Aleppo’s Hayderieh neighborhood

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4. A man reacts after returning to the site where his aunt, his uncle and five nieces and nephews died when six houses were destroyed by an airstrike

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5. Smoke rises asa a rocket explodes on the eastern outskirts of Aleppo

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6. Bakeries, which attract large crowds of customers due to a shortage of bread, have been targeted by air strikes numerous times

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7. A Syrian air force jet drops a bomb on Aleppo. Moving with impunity, the jets can strike the city, at any time, with devastating effects

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8. Vegetables are still for sale but cost four to five times more than last season’s prices

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9. A boy walks among the rubble of six ruined houses after a single bomb, possibly a barrel packed full of explosives, was dropped on the neighborhood of Tariq al Bab. Eleven were killed, seven were from the same family

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10. Men search through the rubble on the fourth floor of a five-storey apartment building that was hit by an airstrike in the neighborhood of Tariq Al Bab

October 7, 2012 0 comments
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Feature

Syria’s workhorse dies with ALEPPO

by Zak Brophy October 7, 2012
written by Zak Brophy

A dozen men stand in silence watching as others brick up the shattered storefront of an industrial hardware shop. A mortar strike blew apart its façade only hours ago in this northeastern section of Aleppo, and three hundred meters down the street fighting continues to rage between government forces and opposition fighters of the Free Syrian Army. No words are shared between the disgruntled merchants and a pair of rebel fighters standing nearby — there is clearly little love lost.

The wrecked shop is in a district called Aaqoora, in the middle of what used to be one of the city’s thriving industrial quarters. Now the hundreds, if not thousands, of small and medium sized factories here are empty. “Not a single one of the businesses in this area is working now… none,” snaps one of the bystanders.

Further down the block, a door swings ajar on a textiles factory. Thread still lies taut across the looms and reels of cloth are stacked in the corner of the abandoned room, now strewn with broken glass and smashed plaster. The factory feels suspended in time until a thunderous explosion bellows out nearby — another small part of Aleppo laid to waste.

Until the holy month of Ramadan began in late July, Aleppo and its more than 2 million inhabitants had, for the most part, been insulated from the violence wracking the country elsewhere. However, when the battle shifted mid-summer from the surrounding countryside into the heart of the city, which is Syria’s industrial and economic workhorse, it unleashed a torrent of destruction that continues unabated.

A plethora of combat units fighting under the banner of the opposition Free Syrian Army (FSA) have taken control of more than half of the urban area, but the virtually unchallenged air and artillery power of the government’s forces allows them to launch attacks into every corner of Aleppo and the surrounding countryside. The bombardments from above are often indiscriminate and devastating. Whole districts lie abandoned with thousands of shops, businesses and homes shuttered, their owners and residents having fled.

Flight from havoc

“People are taking their whole operations to other countries,” says Syrian businessman Abdul Karim-Sayyed. “We can say there is an industrial migration going on now from Syria to Iraq or Egypt or Turkey or elsewhere. The majority are going to Egypt.”

Sitting in his office in Bourj Hammoud on the outskirts of Beirut, the Lebanese capital, he laments the demise of his home. Aleppo used to employ as much as 40 percent of Syria’s industrial workforce, with manufacturing alone accounting for 150,000 jobs; the city produced 35 percent of all the country’s non-oil exports, and in sub sectors such as textiles and pharmaceuticals, this share rose to some 70 percent, according to Madinatuna, (the municipal program also know as the Aleppo City Development Strategy). All this has now ground to a violent halt.

Karim-Sayyed is from the generation of businessmen who successfully emerged from Syria’s first round of economic liberalization under former President Hafez al-Assad, which began in the early 1990s, when the government started to encourage private investment and the export of Syrian products by private enterprises. Karim-Sayyed’s portfolio of companies was involved in such things as clothing, textiles and furniture exports, haulage and a private bus company in Aleppo. In recent months, however, along with most of Aleppo’s industrialists, he has extricated what capital he can from the violent quagmire.

In the past, the Syrian regime kept a lid on the levels of capital individuals and businesses could transfer outside the nation. While there have always been circuitous routes around these restrictions, Karim-Sayyed argues that in the current state of lawlessness whatever barriers there were simply no longer apply.

“There are many ways to get your money out of Syria,” he says. “The border with Turkey is wide open — you take your money there without anyone asking any questions. There are no laws anymore.” 

Ransom as financing

Back in Aleppo, the absence of law pervading the city has given rise to widespread kidnapping, extortion and theft targeting Aleppo’s middle and upper classes and their businesses, spurring many to flee to safer climates. While fighters and leaders within the FSA concede this occurs, they often contend that it is beyond their control.

Abdul Fader is a soft-spoken and well-educated man with an affable and polite disposition. He used to work as an Islamic scholar for Aleppo’s Department of Islamic Jurisdiction but now commands some 150 rebel fighters in the city. Fader’s transition from religious scholar to military leader started in August 2011, through leading operations to assassinate shabiha — a term used to describe the paramilitary supporters of the regime. “Our weapon of choice was the silencer,” he calmly reveals. 

When elements of the opposition started preparing to move the armed conflict from the Aleppo countryside into the city, Fader says the shabiha were increasingly targeted for ransom kidnappings to fund the procurement of weapons and vehicles. Though the price tag varied due to the “economic condition” of the hostage, the standard rate was anywhere between $5,000 and $20,000. “I believe that in the early days around 50 percent of the funding for the armed uprising came from kidnapping those mercenaries,” says Fader. He claims his men would covertly gather evidence on every potential target for him to review, and that he called off operations against roughly half the cases brought before him on the basis that he could not justify the action under Islamic law.

Other armed groups are less concerned with determining whether potential kidnapping victims are shabiha or not. The title ‘FSA’ suggests one united fighting force, but the reality is the opposition is comprised of a wide variety of different outfits, including armed criminal gangs who are indulging in kidnapping and extortion for blatant monetary gain.

Industrial amputation

Perched on the northeastern high ground overlooking Aleppo is the Sheikh Najjar Industrial Park. As of early 2011, the Syrian Arab News Agency was reporting that the park had accumulated $3.4 billion worth of investments, housed 75 foreign companies and provided employment for some 35,500 people. Only months ago a flourishing hub for Syrian textiles, chemicals, pharmaceuticals and agro-foods, it is now a 44-square-kilometer ghost town. There is no traffic, and it seems the only people around are the guards at the gates of the factories, on the lookout for potential looters or refugees looking for a safe place to squat.

One of the few plants operating, although at a significantly reduced capacity, is the Sultan Carpet Company. A floor manager at the plant, who refuses to give his name, says less than 10 percent of the industrial city is still in operation. Within minutes of beginning to speak, however, a car full of stern-faced men in suits arrives and makes it clear that neither the questions, nor Executive’s escort of two armed guides in battle fatigues, are welcome. The gates to the factory close and the workers are ushered back inside.

While many of Aleppo’s businessmen and industrialists have either fled the country or kept a cold and hostile distance to the armed uprising, some have thrown their lot in with the revolution. Mustapha Chebaan is a large and portly man who wears an army waistcoat over his brown jalibiyeh while hosting guests at the barracks where he leads a brigade of around 200 FSA fighters. The camouflage attire and newly adopted military role veil his previous identity as a major business figure in Aleppo and a member of the city’s chamber of commerce; founded in 1885 it is one of the oldest chambers of commerce in the Middle East and Arab world. 

“When they started to attack the peaceful demonstrations we left the chamber of commerce and our businesses to join the ranks of the FSA to support our people in Deraa and Homs and now in Aleppo,” he says. Chebaan made his money by building a contracting company and importing household appliances from China, and he talks of how regime loyalists and shabiha targeted him and other like-minded businessmen with sabotage, kidnappings of family members and sometimes assassinations for empathizing with the anti-regime protestors. Once Chebaan closed his business, his attention and money was turned toward the financing and arming of the rebels.

His brigade’s barracks is replete with examples of the involuntary redistribution of wealth occurring in Aleppo; the building itself used to house military officers Chebaan accuses of leading the sabotage against him and other businessmen. While it is not possible for his fighters to buy new SIM cards for their mobile phones — as they need to be officially registered — rebels still attain them from kidnapped or killed regime loyalists and soldiers. Even some of the cars Chebaan’s fighters use have been “liberated” from their foes.

Fuel’s dirty business

Running those cars however, has become an expensive and cumbersome ordeal. There are no functioning petrol stations in the parts of Aleppo that the rebels hold or in any of the countryside to the north under their control. “The distribution at petrol stations stopped around a year ago now,” says petrol dealer Abu Farouq. “The owners were kidnapped and held to ransom. They paid up, were released and after that they left.”

Now street vendors sell fuel full of impurities from 120 liter barrels, and the unsteady supply causes prices to fluctuate between $2 to $4 per liter; it used to be less than $1. The dirty petrol also wreaks havoc on car engines, causing frequent stalling and forcing drivers to limit their speed, which can be of critical importance to fighters in the heat of battle. “Damn this car,” curses an FSA fighter en route to the front line as his vehicle jolts to a stop once again. “I’d be better off trying to escape on a donkey.”

Ali Aleto, a 26-year-old FSA fighter, was among the many men from his village to the north of Aleppo who joined the armed opposition in the city. Shrapnel has shredded his back and the wounds are still raw. Aleto’s injuries are a direct result of the fight for fuel that the rebels are waging. In an audacious FSA operation in early August, rebel fighters attacked a convoy of 17 government trucks near the Aleppo International Airport, each carrying up to 40,000 liters of diesel. Aleto was in the cab of one of the stolen tankers when it was struck by a rocket. “It was a close shave for sure, but we made off with six trucks in the end,” he says.

The Bedouin tribes from the east of Syria ensure a regular flow of fuel into the areas under FSA control. “Neither the government nor the FSA controls the clans. They are more Iraqi than they are Syrian,” explains Abou Farouq. The Bedouin buy the fuel from areas under government control, such as Al Raqqa in central Syria, and then transport it to Sfeera, east of Aleppo, from where it is distributed to Aleppo and the FSA-controlled countryside. 

“Everyone involved benefits from this trade. Everyone gets around five Syrian pounds per liter, which amounts to around $6 per barrel,” explains Abou Farouq before adding with an ironic smirk, “Even the regime wants to sell it so they can earn money to buy weapons to use against us. It is business after all.”

A withering harvest

The fluctuating availability of fuel and its poor quality are felt heavily in the agricultural districts of Aleppo’s countryside to the north. Standing in his 10-hectare farmstead, Abu Beraa shakes his head as he holds out several small and shriveled potatoes. “I can’t sell these. They should be five times bigger. They will go to waste along with so much more of this crop,” he complains.

The reason for Abu Beraa’s failing crop is his inability to pay for the inflated fuel, fertilizer and labor costs. Fertilizer has risen approximately five-fold over the past two years, fuel has at least doubled this past year and the day rate of laborers is more than twice as much as it was last season. Pointing to one of the men pulling emaciated potatoes from the ground, Abu Beraa says, “One of these workers will work a month now just to be able to bring a canister of gas to his house. They now cost 5,000 Syrian pounds (SYP), and they used to be 410 SYP. That is an increase of more than tenfold.”

Abu Beraa is not alone with his grievances. “I am scared of a real food crisis in the country this coming winter,” frets agricultural engineer Abu Abdullah, speaking in the Aleppo countryside. The spiraling costs are paralyzing agricultural production, which is compounded by the dangers involved in transporting the goods to market. “There used to be a large trade between us and our neighbors such as Turkey and Iraq, and considerable integration of the markets within Syria but this has all but been cut because of the dangers and costs of transportation,” explains Abu Abdullah. Dry credit markets are further hobbling agricultural producers. Normally, they would take out a loan at the beginning of each season to cover expenses, and pay off this debt after they sold their harvest. This year, however, with the chronic lack of security and a dearth of confidence in the Syrian pound, lenders are sitting tight on their money. “There is fear of a collapse so no one will lend anymore,” explains Abu Abdullah. “Now people only work in hard cash.”  The woes of the countryside are being passed down the supply chain to fruit and vegetable vendors on the streets of Aleppo — among the few traders still in business besides the corner stalls selling cigarettes and fuel dealers with their roadside barrels.

“Hardly any vegetables are entering into the city,” says a vegetable seller whose shop sits only yards from a recent rocket strike that leveled a family home. “Tomatoes have reached 25 SYP; they used to be 10 SYP, even 5 SYP. The same with potatoes, they used to be seven and now they too are around 25 SYP. People can’t afford these prices.”

Shortages and empty shelves

In the neighboring district of Tariq El Bab, dozens of people stand in a queue at the local bakery for bread that is three to four times more expensive than before the uprising came to Aleppo. No one looks comfortable and eyes regularly flicker to the sky.

“We come and stand here every day for our bread but we are scared of the planes,” says an elderly man as he waits in line. “They have targeted the bread queues before and only the other day 11 people were killed in such a strike.”

Many other essentials are also running short. In a small village several kilometers north of Aleppo a pharmacist leans on the counter with the shelves behind him all but empty, spare a few packets of the most basic of medicines. A customer walks in asking for tablets for diarrhea and even before he finishes his sentence the pharmacist awkwardly grimaces and apologizes. “The whole trade has pretty much disappeared,” he says. “We see shortages for a number of reasons; the factories have stopped producing, the warehouses have run dry, pharmacies have been hit and transportation is very dangerous.”

Not only has the stock dried up but the government support for medication for the poor has also evaporated. In the summer months diarrhea and nausea are the most common ailments but treatments are running thin. “There used to be support for people in need or the poor from the government, so we could give medications for free to people who really needed it,” says the pharmacist. “Unfortunately now there is no support so we can’t help people who are poor and destitute. They have to go without. Now it is the opposite. It is me that needs the support.”

A dying city

Streets that were once bustling arteries for commerce — trade that sustained the livelihood and wellbeing of hundreds of thousands of Syrian families — are now emptied by fear or choked in rubble. Aleppo’s main tourist attraction, the citadel in the center of the old city, is a sniper’s den for regime forces. The boom of artillery has replaced the banter of marketplaces. The city shakes from the warplanes’ rain of death.

In place of normal life there is war, which reaches far behind the front lines and impacts most painfully the noncombatants — those who have fired no bullets and yet pay for this innocence with the torn fabric of their lives.

October 7, 2012 0 comments
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