Executive Magazine

Economics & Policy

Rendez-vous with the rebellion

by Sam Tarling May 26, 2011

written by Sam Tarling

A Free Syrian Army fighter rests in a hill-top hideout near the Syrian city of Idlib [Photo: Executive/Sam Tarling]

The men are short of rocket propelled grenades, a key weapon in the FSA's arsenal [Photo: Executive/Sam Tarling]

FSA soldiers observe heavy fighting on a neighboring hilltop [Photo: Executive/Sam Tarling]

A member of the Free Syrian Army looks on as heavy fighting erupts on a hillside during an attack by his unit in the mountains of Idlib [Photo: Executive/Sam Tarling]

An FSA lieutenant assembles a remote trigger which will detonate the improvised explosive devices seen here [Photo: Executive/Sam Tarling]

An FSA fighter collects his weapons before heading out on an attack [Photo: Executive/Sam Tarling]

High demand and short supply has pushed prices for ammunition and weapons sky-high [Photo: Executive/Sam Tarling]

FSA soldiers go to great lengths to re-supply their base without being spotted by the Syrian Army [Photo: Executive/Sam Tarling]

An FSA fighter surveys his home in the town of Chatouriea [Photo: Executive/Sam Tarling]

An FSA soldier rests at a base near the Turkish border. Turkey, along with America, has recently pledged 'non-lethal' support for the Syrian opposition [Photo: Executive/Sam Tarling]

From the northern Syrian province of Idlib, a moment in the uprising

May 26, 2011 0 comments

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Syria’s crumbling wall of fear

by Ellen Hastings May 3, 2011

written by Ellen Hastings

After a week filled with promises — about lifting the hatedstate of emergency, granting the right for peaceful protests, abolishing kangaroo state security courts — the Syrian regime brutally shot down its own credibility along with hundreds of its citizens late last month.

As Executive went to press, the crackdown was continuing relentlessly, with the military increasingly involved alongside security forces and irregular troops loyal to the regime in closing off cities, raiding homes and shooting protesters.

Fridays in Damascus are now filled with fear. On each day of prayer, groups of armed men take up position all over the capital, near mosques, ministries, court houses, intersections and entry roads. They are literally everywhere, brandishing their often-identical clubs, ready and eager, it seems, to beat anybody who dares utter the slightest expression of dissent. The weapons are not there for show. Since the protests started in early March after a group of children were arrested for spraying anti-government graffiti in Daraa, more than 300 people have been killed. Most are gunshot victims, many others were beaten to death by clubs, and some had their skulls cracked open by the rifle butts of Syrian President Bashar al-Assad’s security forces.

But the “wall of fear,” which has been the main obstacle to this wave of unrest, now seems to be crumbling, along with Syrians’ faith in their government’s explanation for the killings. The protests have been unrelenting, and when word of the massacres of the so-called “Great Friday”protests on April 22 started to reach everyday Syrians, more and more people in Damascus were openly tuning in to Al Jazeera’s coverage of the slaughter. State television was no longer automatically switched on as customers entered the stores, though discussing the images remained sensitive.

One shopkeeper on the outskirts of Damascus waited until a ‘customer’ in a telltale leather jacket left the store before nodding towards the television set on the ceiling and angrily pulling an imaginary trigger. “They’re killing Syrians,” he said. “This is not good. I don’t agree withthis.”

The Syrian government, meanwhile, insists that they are not responsible for the killing, but by banning nearly all foreign journalists from the country and chasing after the rest, they pull the rug out from under their own credibility. Thus, while most of the horrific videos posted to the Internet from inside Syria still carry the disclaimer “unconfirmed” when broadcast on major news stations, there is little doubt, if any, regarding the veracity of what they show: the Syrian regime is murdering its citizens, and it is not about to stop.

The regime’s initially erratic response to the uprisings, alternating between still unfulfilled promises of reform and brutal violence, seemed to indicate dissent at the top on how to handle the unrest. But the killing of more than one hundred people in one day on April 22 must be seen as clear evidence that those who see any concession as a sign of weakness have won the argument.

Syria is no Egypt. Where the Egyptian president was sacrificed by his military in a last ditch attempt to hold onto power, the Syrian president — according to many observers — is firmly in power and the Egyptian solution, where a near-senile figurehead was ousted to protect the political-economic elite, is simply not feasible. This is Assad’s Syria. Moreover, the international community — notably the United States, the European Union, Russia and China — are refraining from putting real pressure on the regime to stop the violence for varying reasons. Israel itself seems to have lent tacit support to their arch enemy Assad. “You want to work with the devil you know,” seems to be the message from Jerusalem.

This leaves the demonstrators on their own, against a brutal regime that has nowhere to go and is fighting for its own survival. As it has shown in the past — when it bombed the city of Hama in 1982 and killed at least 10,000 of its own citizens to quell a revolt — the Syrian regime’s willingness to shed blood knows few limits. As one resident of Damascus recently put it: “They will kill millions to hold on to power. Millions. This is not Egypt.”

Ellen Hastings is the pseudonym of a journalist in Damascus

May 3, 2011 0 comments

Economics & Policy

Misrata under siege

by Sarah Lynch May 3, 2011

written by Sarah Lynch

Packed with humanitarian aid, food, weapons, ammunition and rebels soon to be on the front line, a small Libyan fishing vessel sailed away from the eastern port of Benghazi last month, making its way west.

“Qadhafi’s destroying buildings and shooting innocent people like women and children,” said 28-year-old Walid al-Fitouri as he sat in the captain’s wheelhouse. Like dozens of others on board, he was going to help his comrades in Misrata, Libya’s third largest city, which has been under siege by Colonel Muammar Qadhafi’s troops for two months. Caught in a crossfire and faced with heavy bombing and economic devastation, the city’s residents are facing countless struggles as rebels battle regime forces to keep hold of their western bastion; Executive was in Misrata to document the siege.

Indiscriminate targeting

For weeks, rocket propelled grenades and bullets have whizzed down the city’s central frontline of Tripoli Street, which runs from the center of town west toward the nation’s capital.

But this isn’t the only place where violence abounds; Qadhafi’s forces have surrounded the city. On a rooftop not far from Misrata’s port, a woman who asked to be referred to as “Mrs. Mustapha” rocked her six-month-old granddaughter, Aisha. Just two days earlier a rocket hit the family’s home and put a hole in the baby’s bedroom ceiling. “What’s wrong with them? These are children. Innocent children,” said Mustapha. It was 6:30 a.m. when four rockets hit the family’s home, causing part of Aisha’s bedroom ceiling to crumble. Now displaced from their home, the family lives in a makeshift apartment, where 30 people share two bedrooms and one bathroom. Aisha and her grandmother are a few ofthe lucky ones; no one was injured in the surprise attack. Like so many others, they have been pushed from their homes after weeks of heavy bombardment of civilian areas.

One local elementary school is home to at least 25 families, some with more than 30 members each. “We’re homeless,” said the elderly Hania Abdallah, who sleeps in one of the school’s classrooms, “[Qadhafi] is bombing our children and he’s taking us as prisoners.”

After two months of Qadhafi’s troops pounding Misrata, some estimates placed the city’s death toll by mid-April at more than 1,000 people. At one of Misrata’s hospitals, head doctor Fathi Mohammad said he was seeing eight to 10 deaths on average each day and had counted more than 1,500 injuries. Many of the victims are unarmed civilians.

Abdel Basat Ibrahim never thought he’d be confined to a hospital bed when he went out to buy his family groceries. On an afternoon last month he was with his neighbor when the two men were hit by a sniper. Doctors say many patients have also been wounded in their homes; too often they see injured, or dead, children.

Logistics of living under siege

As Executive went to print, mobile networks in the city had been down for about a month, and water and electricity had also been cut. Before the uprising began in mid-February, water entered Misrata via The Great Man-Made River — the network of pipes Qadhafi’s government built in the early 1980s. The flow of water has since been electronically switched off meaning that many residents were forced todraw water from coastal wells. But the wells could become contaminated by infected runoff because the city’s sewage system has been blocked.

“This is criminal,” said Nassar Sahli, a Libyan water quality consultant and professor. “Water and electricity shouldn’t be stopped for any human.”

Residents said electricity is out in areas of intense fighting, and that it was being rationed in residential areas. Roads leading to nearby farms and factories on all sides of the city were blocked, and the city’s dairy factory had been recently bombed. The only way goods could enter the city is via the port, which, too, has been continuously shelled by Qadhafi’s troops. On the same cold night that the rebel-packed Libyan fishing boat pulled into Misrata, the road leading from the sea into the city was lined with shipping containers in flames. The day before, rockets and cluster bombs hit the port.

“Nowhere is safe in Misrata — not one single place,” said the port’s radio controller Said al-Fitouri, adding that access to the sea let the city’s residents survive. “The port is like the mouth of the human. If you close the port, that means you will die.” The occasional shipment of vegetables came in by boat, but the small imports were not sufficient to meet the need. Grocery store shelves were sparsely stocked, some completely empty. The shortage of food — particularly fresh produce — had prompted the price of vegetables to increase tenfold. As an example, Shoukri Mohammad, a father of five, said that on a rare day last month when tomatoes were available he bought a one kilogram bag for 5 Libyan dinars [$4.16], up from 50 dirhams [$.41] before the siege.

“It’s difficult to live on bread and water alone,” said 50-year-old Mohammad. “But for change, we’ll go through anything.”

On sidewalks and side streets across the city, men young and old waited in bread lines for hours each day. Ahmed Rouad, 65, sat with his head in his hands; his skin is burnt from the coastal sun. “I’ve been waiting in line for bread since seven o’clock this morning,” he said. By then he’d been waiting four hours. Bread factory owner Ali Abdel Karim said there was a shortage of flour and it was difficult for his business to operate with little electricity. “We open from 10 to three o’clock everyday, but people wait in line from dawn,” hesaid.

At a nearby fuel station, the situation was not any better. On a typical day, more than 200 cars piled up. “I spend half my day waiting in line for bread, and the other half waiting for fuel,” said Abdel Hakim. With unpredictable attacks and snipers poised on roofs, many people were afraid to go to work. Countless numbers of shops and businesses had closed, and residents said only two fuel stations in the city remained open.

Strong family ties seemed to have kept Misrata functioning financially, even when every bank in the city had closed: many of those who did not have cash borrowed money from others.

“Many people in Misrata are businessmen and traders, so they keep money at home,” said Misrata resident Yahia Hamsa. “But people aren’t buying and selling a lot.”

Roads weaving through the city were secured by rebel forces at checkpoints, with roadblocks made of piled sandbags and metal pipes. Local groups had issued rebel fighters identification cards that they had to carry with them at all times. On one long road in particular, drivers tended to speed up. “There’s a sniper up there,” said Said al-Fitouri, pointing to the top of a white building.

Sailing away

Rain pelted the small fishing vessel as it pulled away from Misrata’s port. This time it carried more than 100 refugees who were lucky enough to be able to escape.

“Life in Misrata is unbearable,” said Mohammad Nour, huddled in a group to hide from the wind. “They’re striking all the time – night, dawn and morning.” And so dozens like Nour had boarded the rickety ship to make the 36-hour journey to safety. As the boat pulled close to the port in rebel-held Benghazi, the passengers cheered, “Free Libya!” and “God is great!” One man slowly stepped off the boat. His son greeted him with a hug as tears ran down his cheeks.

May 3, 2011 0 comments

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Hezbollah’s quiet discontent

by Nicholas Blanford May 3, 2011

written by Nicholas Blanford

Hezbollah’s silence on the unprecedented developments in neighboring Syria betrays a growing unease over the outcome of the uprising and the strategic ramifications of a collapse of the Assad regime.

If Syrian President Bashar al-Assad is toppled it could fundamentally reshape the strategic balance of the Middle East and present stark challenges to the Lebanese group and its Iranian patron.

At the end of April it appeared evident that Damascus was pinning its hopes on maintaining the status quo through force against the protestors rather than ushering in meaningful reforms. It has long been axiomatic among some analysts that reforming the system in Syria would weaken the regime’s grip on the country and spell the demise of the Assad family’s rule.

Syria plays a key role in the so-called ‘Jabhatal-Muqawama’, or ‘Resistance Front’, which groups countries and militant organizations opposed to Israel and the American policy in the Middle East. It is the crucial lynchpin that connects Hezbollah and Iran, serving as a conduit for the transfer of weapons into Lebanon, providing strategic depth (and in the past, political cover) for Hezbollah and granting Iran a toehold on Israel’s northern border.

A colleague recently recalled a conversation she had with a mid-level Hezbollah official during which she asked whether the party had drawn up a contingency plan for the possibility of a collapse of the Syrian regime. Hezbollah’s constant refrain is that it is “ready for all eventualities” and it is well known that the party does compile meticulous contingency plans to cover all potential developments. But the official told my friend that no plans had been made because a collapse of the Assad regime was considered something of a taboo subject amongst the leadership. I’m not sure that is strictly true.

The notion of Syria departing from the Resistance Front is not a new concept. Hezbollah long ago internalized the possibility that Syria might one day leave the alliance. It was generally assumed, however, that Syria’s departure would occur as a result of a breakthrough on the Israeli-Syrian track of the Middle East peace process rather than an internal upheaval. That moment almost occurred 11 years ago when the two countries seemed on the verge of signing a peace deal. At the time Hezbollah refused to reveal its planned course of action if peace had been reached, but it was evident that Syria, the dominant actor in Lebanon at the time, would have required the party to dismantle its military wing as a component of its settlement with Israel.

Hezbollah has grown more powerful since then, especially after Syria politically disengaged from Lebanon in 2005 following the assassination of former Lebanese Prime Minister, Rafiq Hariri. Iran entered the vacuum left by the Syrians and will probably seek to consolidate its influence in Lebanon through Hezbollah if the Assad regime falls or Syria collapses into chaos. As for the longer-term impact on Hezbollah and Iran, it depends very much on what new order emerges in Syria. For example, if a Sunni-dominated regime reaches power in Damascus, it could ally itself with Saudi Arabia at the expense of the three-decade alliance with Iran. A Saudi-friendly Sunni regime may prefer to cooperate more closely with Sunni elements in Lebanon and seek to roll back some of Hezbollah’s power.

Another possibility being aired is a continuation of the present system in Syria but under a new leadership, possibly drawn from the military or security establishment replacing the Assad clan. Such a regime may prefer to maintain the alliance with Iran and the confrontational stance against Israel.

For now, Hezbollah officials and cadres are closely watching developments in Syria, hoping that Assad will prevail and that there will be no fundamental change to the Resistance Front. But the Arab world is passing through a major upheaval where previous maxims no longer apply. The Arab-Israeli conflict paradigm has been superseded by the new reality of the people against the state. Iran, Syria and Hezbollah traditionally derive much of their legitimacy from their anti-Israel positions and it must be disheartening for them to see the struggle become relegated to the second tier of regional interests.

Nicholas Blanford is the Beirut-based correspondent for The Christian Science Monitor and The Times of London

May 3, 2011 0 comments

Real Estate

Bankrolling the builders

by Rayya Salem May 3, 2011

written by Rayya Salem

Though Lebanese real estate has always carried its weight as a prime investment tool and a win-win sector for both suppliers and end-users —even during the uncertainty of the civil war years — the cracks are finally beginning to show as both internal and external factors are affecting (former) market strongholds.

Banks, the middle-men who keep the property market in swing, are now in an unfamiliar situation and may be left with little option but to rein-in loan offerings to the real estate sector; its profit harvest has diminished compared to healthier years and its expected contribution to gross domestic product has weakened. The trickle-down effects of the financial crisis on Arab wallets (residential salesto foreigners plunged 31 percent this quarter), combined with sticky top-dollar prices that stem from the high cost of (limited) land, have come into play simultaneously, with the result a whopping 21 percent fall in transaction volume in the first quarter, compared to this period last year.

According to Hani Haddad, managing director at A&H Construction and Development, although the debt-to-equity ratio “has definitely decreased due to banks being more conservative given the weak performance of the real estate sector in the past year,” tightness of lending is expected to only have an effect on the financing of new projects. However, this likely won’t hit end-users, as banks are remaining aggressive in providing home loans to households.

At the end of 2010, loans to the sector reached $13.6 billion when taking into consideration loans to contractors and developers to build projects, to businesses to rent real estate and to individuals for home loans. Thus, lending to the sector made up nearly 35 percent of total lending, but the percentage is closer to 16 percent ($6.3 billion) if one only considers loans for construction, according to data from Banque du Liban (BDL), Lebanon’s central bank.

Though the number reflects a steady, mutually beneficial relationship between banks and real estate professionals (following a period of growth whereby loans to real estate increased 59 percent from the beginning of 2008 to February 2010), it can be attributed to what many say was the culmination of a real estate high note that saw an unprecedented wave of mega-launchings such as District S, the Landmark, Beirut Terraces and Damac Tower in Beirut’s central district last year.

Freeze over funds

According to Samer Kahil, vice president of finance and administration at MENA Capital, “definitely more than three” alpha banks have already frozen funding to developers in the last three to four months. “It could [last] a year, it could be a couple of months… it depends on their risk management department, their allocation of funds to real estate and the developer’s track record and location” of their upcoming projects.

“If you are talking about lending to projects, we have less than 10 percent [relative to total] lending,” said Saad Azhari, chairman and general manager of BLOM Bank. “We have about another 8 or 9 percent for housing loans for those with domiciled salaries. So in total… it comes out to 16 or 17 percent [of total loans that go towards the real estate sector].”

But Kahil said that banks were still funding nearly 50 percent of the equity in MENA Capital’s developments, due to the company’s strong reputation in the market. The company is expecting approval on financing for an upcoming residential tower. “They are providing more than $20 million, out of $45 million of total equity for the project [because] we had a good feasibility study, prime Ashrafieh location and they have the allocation,” said Kahil, though he declined to name which alpha bank.

Indeed, Hani Haddad of A&H affirmed that, “Banks are more concerned about who to lend to rather than which project to lend to,” placing a magnifying glass over developers’ financial statements.

Of course, banks are also betting on builders outside the country. With the unprecedented public infrastructure spending in Saudi Arabia, and the slew of projects lined up to build Qatar into a world-class destination fit for hosting the FIFA 2022 World Cup, the strategy makes for a strong game plan. Walid Raphael, general manager of Banque Libano-Francaise (BLF), added that financing contractors, even outside of Lebanon, remains a large part of the business. “We have three large markets [for contracting]: Saudi Arabia, Qatar and Algeria. And then wealso have the Emirates.”

We the people

Unless you’re one of the big players, it seems the tide has receded and bank loans to developers have reached a steady drift that mirrors the current sales volume in Lebanon.

“I don’t think that we are going to see real estate lending increasing but I see that housing loans [to individuals] are still healthy… and are going to increase,” said BLOM Bank’s Azhari.

“Banks still seem to have a big appetite for home loans,” added Haddad, as evidenced by an increase in housing loans from $2.8 billion in December 2009 to $4.5 billion in December 2010, according to the Central Bank. And since banks and developers had to get creative in order for individual households to afford homes when prices leapt in the last two years, providing home loans to residences still under construction created a new definition of risk. When a physical home cannot be secured as collateral, banks secure a simultaneous agreement with a project’s developer (or contractor) and end-user to diminish risk.

“So we know whether the funding is available to finish the house… In a way you are guaranteeing [its completion] because you are financing the building,” said Azhari. It is only to be expected that banks ask for additional security and hold the land as a mortgage, with all sales proceeds funneled to their accounts first in order to pay off the principal and interest.

“When you are financing the promoter, you’re already taking the risk of the project and you’re going to make sure that the project will be achieved and delivered, so you have less risk,” said BLF’s Raphael. However, many banks have buckled under pressure and frozen subsidized loans to individuals, according to MENA Capital’s Kahil, a move that acutely impacts developers building mid-range residential projects.

But the real risk hovering over our rooftops needs to be viewed from a regional perspective — not only does uncertainty plague the MENA region but Lebanon remains without a government and thus contributes to a wait-and-see stance from buyers.

May 3, 2011 0 comments

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Arab spring warms a Kurdish winter

by Gareth Smith May 3, 2011

written by Gareth Smith

Iran’s Supreme Leader Ayatollah Ali Khamenei was quicker towel come the ‘Arab Spring’ than United States President Barack Obama. While publicly comparing the unrest to its own “Islamic Revolution,” Tehran was weighing how the demise of two friends of the US in Egypt and Tunisia, and unrest in Yemen and Bahrain, might affect its struggle for influence with the US and its allies. The Iranian authorities meanwhile nipped in the bud February’s attempt by the opposition Green Movement to return to the streets, while the economy was buoyed by rising oil prices that passed $100 a barrel for the first time since 2008, due to the events in Libya and fears of unrest in Saudi Arabia.

Iran’s fiscal outlook suddenly looked rosier, easing apprehension over contentious plans to phase out $100-billion in annual subsidies of everyday items, such as gasoline. Then came unrest in Syria, a challenge to both Tehran and Washington. The US had tried for two years to entice Damascus into a “peace process” with Israel, and to weaken its alliance with Iran, buying into the Syrian regime’s argument that it acts as a bulwark against militant Sunnism and al-Qaeda. For Iran, Syria is far more strategic, its sole long-standing ally in the Arab world whose loss would mark a major setback. Of course Tehran would miss its most practical link to Hezbollah in Lebanon; additionally, Syrian unrest, along with protests in northern Iraq, has brought the ‘Arab spring’ dangerously close to home.

The concern here for Tehran lies in Kurdistan. Iran’s seven million Kurds have never shown love for the Islamic Republic. A military onslaught was deemed necessary after the 1979 Revolution to bring them into line, and while the main Kurdish party, the Kurdistan Democratic Party of Iran, ended its armed presence in Iran in 1997, it has been outflanked by the Party for a Free Life in Iranian Kurdistan, an active and militant group linked to the Turkey-based Kurdistan Workers Party. The 1997 presidential ballot was also the last time Kurds engaged in any meaningful way with the national electoral process, turning out in massive numbers for Mohammad Khatami.

A little more than six years ago, Nawsherwan Mustapha, who has subsequently led Goran (‘change’), the main opposition group in Kurdish northern Iraq, told me that future opposition in Iranian Kurdistan would not be armed struggle but non-violent street protests. His words may prove to be prescient. In Kurdish Syria, Bashar al-Assad’s decision to grant citizenship to tens of thousands of Syrian Kurds — originally from Turkey — has not stemmed unrest in the northeast. Many Kurds have been inspired by the autonomy carved out by the Kurds in Iraq, rousing in them the idea that, sooner or later, they will be able to assert their own rights.

In Iran’s Kurdish region, Tehran has a large security presence and military posts dot the borders with Iraq and Turkey, but even so many Iranian Kurds travel back and forth to Iraq. This is more often to smuggle goods than attend political meetings, but it still spreads contagion. Opinions differ on the fragility of the Iranian body politic. John Bolton, former United Nations ambassador for the United States and a colorful expounder of influential views in US foreign policy, recently presented an op-ed to the Wall Street Journal depicting Iran as a regional hegemon bending the region to its will. This caricature suits many political interests — including those of the Israelis, of the Saudis in denying domestic unrest in Bahrain or Saudi Arabia itself, and of certain factions in Lebanon — but it flies in the face of the military disparity in the Persian Gulf. Even excluding Israel or the formidable Bahrain-based US fifth fleet, the Gulf Cooperation Council countries spent 16 times as much on arms as Iran did between 1988 and 2007, and Saudi Arabia alone has more combat planes and tanks.

True, President Mahmoud Ahmadinejad and some cohorts, still enthused by their surprise election victory in 2005, often portray Iran as a superpower. But wise counsel within the leadership knows well that Iran is hugely outgunned, that the Shia are greatly outnumbered in the Islamic world, and that the Islamic Republic has therefore a greater interest in stability than in conflict.

Hence the Iranian leadership’s muted response to the March 14 intervention of Saudi-led troops in Bahrain to quell Shia-led protests; hence its nerves over Syrian unrest. As summer approaches, the ‘Arab Spring’ blows an increasingly uncertain wind toward Tehran.

Gareth Smyth is a former correspondent for the Financial Times in Iran

May 3, 2011 0 comments

Economics & Policy

Executive Insight – The GCC expands

by Fabio Scacciavillani May 3, 2011

written by Fabio Scacciavillani

The ‘Arab Spring’ is yielding some unexpected and exotic political fruits. The proposal to accept Jordan and Morocco into the Gulf Cooperation Council is certainly among the most intriguing, and it was followed almost immediately by Palestine’s request to join.

GCC Secretary General Abdul Latif al-Zayani announced that the current six members (Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Bahrain and Oman) would welcome Jordan and Morocco into the bloc, saying that meetings “to complete procedures” are to be initiated soon.

Given the swift response by an institution not known for the timeliness of its decision-making process, it is likely that there were earlier discussions on this matter at the highest level (although Kuwait, Oman and Qatar reportedly expressed reservations about the move, preferring a limited membership, like that of Iraq and Yemen, confined to cultural and sporting events).

Previously, Jordan had shown interest in joining the bloc, but its requests had been politely turned down. Yemen’s request for membership has stalled for years but the country, though currently embroiled in political unrest, hopes to join by 2016. On the other side of the region, Morocco has apparently been invited to join.

This development could mark the coming of age of an international forum with ambitions to be a sort of Arabian version of the European Union, but which has been marred by a weak institutional framework and erratic procedures. Created in 1981 as a bulwark against a perceived threat from Iran, the GCC’s original agreement was ambitious in scope and covered vital areas with the potential to reshape and modernize the economies of the Gulf, while fostering a common foreign and security policy in a region endemically at risk of destabilizing crises. These included:

Harmonizing regulations in economy, finance, trade, customs, tourism, legislation and administration
Promoting scientific and technical progress in industry, mining, agriculture, water and livestock
Establishing scientific research centers
Setting up joint ventures
Establishing a unified military presence (the Peninsula Shield Force)
Encouraging cooperation of the private sector
Strengthening ties between populations
Establishing a common currency by 2010

Within the GCC framework the six countries have undoubtedly made some progress, for example in creating a Customs Union, in freeing the movement of citizens (but not of foreign residents), in establishing a joint military force (which was deployed recently in Bahrain), in cross-border investments and capital movements and in a number of other minor fields.

However, there are two fundamental differences between the GCC and the European Union. First and foremost, the members of the EU have transferred national powers to EU institutions. The most visible, influential and famous of these is the European Central Bank, which exercises its monetary authority in full independence from any political interference, as enshrined in the Amsterdam Treaty.

In several additional key areas member states have devolvedtheir functions to the EU Commission or other supranational bodies:international trade, antitrust legislation, agriculture policy and visaregulation. The EU Commission issues directives through a common legal charter, which can span virtuallyany field, to which all national legislation must adhere.

In case of controversy or lack of compliance with adirective, the European Court of Justice can rule to force national governments to conform to EU legal provisions. Often pieces of national legislation are struck down by the EU Courts, which in some cases can even overturn the verdicts of national Tribunals.

Furthermore, one of the main achievements of the EU, the single market, allows for goods and other services to be traded freely across the EU and removes customs and passport controls between most member countries. One can travel from the Arctic to the Mediterranean without encountering a single frontier post. In essence the EU is a super-state with institutions that exercise powers even against the will of national governments, an elected Parliament and a body of laws and principles (the so called acquis communautaire), which is valid for all citizens and all the 27 countries. More recently the EU has adopted a Constitutional Treaty that establishes the fundamental principles guiding its actions and the decision-making rules.

By contrast, so far the GCC has been mostly a permanent structure of regional diplomacy, facilitating the exchange of views at the highest level. The implementation of decisions made by the GCC is the responsibility of national governments, not of common, independent institutions. The only (limited) exception is the Monetary Council, which is the precursor of the Gulf Central Bank to be established when, or if, the GCC issues a common currency. This will be the first genuinely independent supranational institution in the Arab world. But the plans for the monetary union, which was supposed to go intoeffect at the beginning of 2010, are proceeding slowly, with two countries (Oman and the UAE) out of six having declared their intention not to join.

The accession of the Jordanian and Moroccan monarchies to the GCC could help inject new life into the integration project and would mark a historic step forward, so long as it is conducive to an institutional framework modeled on the EU, with a devolution of powers at GCC level.

A major goal could be the establishment of a true single market, styled on the EU, with completely free movement of capital, goods and labor, plus an antitrust authority with pervasive powers.

At present, border controls, trade barriers and protectionist measures among GCC members are still very much in place (even to transfer a used vehicle between two countries requires a dose of patience and money which could be put to better use). This hampers the development of industries and economic activity that could create the several million jobs needed to absorb an increasing youth population, which, as recent events clearly show, is ever more restless and impatient.

On the other hand, the proposed enlargement might turn out to be just a political card played on an increasingly shaky table. It could very well be that the GCC’s newfound hospitality is intended to raise the six nations’ profile in the region and is more of an internal security pact by which member states would intervene in the case of internal unrest. If this is the case, the GCC would merely gain a front row seat to events unfolding in Algeria and Syria (as it already has in Yemen).

But for the GCC to limit itself to merely preserving the political status quo of its member states would be a missed opportunity: United States President Obama delivered a major policy speech on the Middle East last month, which foreshadows an unprecedented involvement in the region outside the security arena, and a clear indication — underlined by the explicit mention of the pre-1967 borders between Israel and Palestine as a natural negotiation platform — that the wind has dramatically changed.

The enlargement of the GCC could either constitute a myopic move for preserving the status quo (and another form of diplomatic jostling) or the means to address the roots of the economic malaise in the region by following a cooperative approach along the lines of the EU. The next few months will tell.

Fabio Scancciavillani is chief economist at the Oman Investment Fund

May 3, 2011 0 comments

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Press persevere in Yemen

by William Dubbs May 3, 2011

written by William Dubbs

Tens of thousands of protestors throughout Yemen continued to demand the fall of President Ali Abdullah Saleh last month. This is a testament to the fact that the president and his ruling clique seem to have decisively failed in their draconian clampdown on the media, a clear bid to “monopolize the message.”

Throughout the last bloody three months, which have seen more than 120 peaceful protestors slaughtered by security forces and their gun-slinging loyalists, journalism has also been a major victim. Dozens of incidents of beating, kidnapping and censoring local and foreign media have run in parallel to the regime’s erratic bloodletting. The youth protest movement has been quick to notice that their cause desperately depends on conveying the behavior of President Saleh in its full horror, and have made obvious common cause with international outlets.

“Al Jazeera,” painted in bright white and broad calligraphic strokes, is emblazoned on the pavement of Yemen’s “Change Square” outside Sanaa University. Meanwhile, the government’s partisans have taken a full account of their detractors in the media, and predictably, they are not content to disagree civilly.

“We caught an Al Jazeera camera crew try to sneak up to ourprotest,” Saleh-supporter Nabeel Majid, said casually. Then, with a proud, deep laugh he proclaimed: “We beat them and sent them running!” A particularly memorable placard at the same gathering consisted of the Israeli flag, with the Star of David beside the Al Jazeera logo, a complement to the president’s assertion that unrest in his country was engineered in “the control room in TelAviv.”

After nearly 33 years of divide-and-rule politics and endemic corruption, Saleh’s power-hold is now in doubt; the regime is utterly incapable of countenancing the truth and will stop at no lengths to keep it away from a people gaining a new consciousness. First, the government deported Al Jazeera journalists, then plain-clothes thugs broke into the station’s downtown Sanaa offices and looted its camera equipment. Baffled by how the network kept managing to spirit correspondents into the country despite an official ban, security forces finally super-glued the door of their officeshut.

But the powers that be in Yemen will need more than super-glue to put their broken government back together again. A massacre on March 18th of more than 50 demonstrators, many of them just young boys, shocked the nation and led to a wave of official resignations from which the President is still reeling. Perhaps not a coincidence, the deportation of six foreign journalists, working for major outlets such as The Wall Street Journal and Time magazine, predated the atrocity by a matter of only a few days.

Poor Yemen, known in happier times as “Arabia Felix,” has never been a media darling. Even in these heady days, the most revolutionary and hopeful in its millennia-old history of civilization, other current events in the Arab Spring, notably Libya and Syria, are stealing the headlines. And that’s just the way the president likes it. The media is something to be courted and coaxed, not welcomed and let free to do its work. Journalist visas, now non-existent, were granted with gusto by the government when Al Qaeda was the scoop and panicked western audiences promised dividends in military aid and development assistance.

The staff of CBS news documentary “60 Minutes” was even granted exclusive access to the president’s nephew, General Yahya Saleh, to discuss the much-exaggerated threat of terrorism. Now that the Central Security Forces, which Yahya commands, are busy shooting and tear-gassing protestors throughout Yemen, the General has suddenly become camera shy. Meanwhile, the many government news outlets are engaged in a race to the bottom. “Al Yemen” TV describes the perpetrators of March’s massacre as merely annoyed neighbors. “Nabanews” trumpets pictures of young men and veiled women together at protests as “proof” of shameful and impious “mixing” of the sexes.

A small group of international journalists, many of them poorly paid young freelancers, remain to document the struggle for the future of 24-million Yemenis to the outside world. But most promisingly, a whole generation has finally been inspired to unleash their creative potential and, for once, seize the means of defining their own identity. Countless young Yemenis now dedicate themselves to citizen journalism, blogging, and “facebooking” the progress of their movement, confident that the day the government can no longer dictate their lives is near.

William Dubbs is the pseudonym of a journalist based in Sanaa

May 3, 2011 0 comments

Economics & Policy

Transparency: lost in revolt

by Sarah Lynch May 3, 2011

written by Sarah Lynch

More than one million barrels of rebel-controlled crude oilleft the Libyan city of Tobruk on a tanker headed to Asia in early April. Libya’s National Transitional Council (NTC), the Libyan rebel’s interim government, received $129 million for the sale, according to the newly appointed head of Libya’s National Oil Corporation (LNOC), Wahid Bugaighis.

This was the council’s first, and at the time of writing, only sale of oil as the nation’s civil war drags on. The deal reached between the rebel government and Qatar stipulates that Qatar will market rebel-controlled oil abroad; the first shipment was bought by the Swiss company Vitol, one of the world’s largest independent energy traders.

But weeks after the shipment left from the rebel-held city, home to the only functioning export terminal in the oppositions’ hands, only afew knew where, how and when the money was (or will be) spent. The lack of transparency surrounding the $129 million deal leaves room for exactly the sort of corruption endemic within Libyan leader Colonel Muammar Qadhafi’s regime that the rebels seek to overthrow.

Roughly three weeks after the start of the Libyan uprising, the Arabian Gulf Oil Company, or Agoco, owned entirely by Libya’s National Oil Company, announced its support for the rebels. Under the umbrella of the NTC, the company is supplying oil to the interim government so as to carry out its deal with Qatar.

“For me, as of now, there is no transparency,” says Abdeljalil Mayouf, who manages the information department at Agoco. “Normally we have a big financing department, and there are many sections within this finance department that deal with our money, our budget. But as of now, I don’t have any information about this money.”

At an April 10 meeting in the de facto rebel capital of Benghazi, Ali Tarhouni, the opposition government’s finance minister, told Executive that the millions of dollars had not yet been allocated.

“But most of it is going to be for food and medicine and fuel — benzene, diesel, derivatives to fuel the power stations, fuel for automobiles,” he said.

Tarhouni then said a bank account had been set up in Qatar to hold the cash, but when asked about who has access to the account, Tarhouni walked out of the interview, citing that he was too busy to talk. He refused multiple subsequent requests for a follow-up interview and provided no additional reasoning for his refusal to comment.

LNOC’s Bugaighis says the money received in exchange for the oil shipment has already been spent. For weeks previous Qatar had already been shipping gasoline and supplies to rebel-controlled Libya, with the NTC claiming that payments for such items were deferred until a later date. Others suggest, however, that rebel’s $129 million in oil revenue went to cover some of the cost of these shipments. “It was spent in two days,” said Bugaighis. “Take a cargo of gasoline – 25,000 metric tons; that’s $75 million, so the money doesn’t last long.” He did not provide specific details about the allocation, however.

A right to information

Peter Bouckaert of Human Rights Watch (HRW) attributes one of the reasons for the lack of transparency to the council’s fear that Qadhafi will pressure foreign countries and companies not to deal with the transitional government. It’s an assessment reflected by Bugaighis. “We don’t need transparency,” Bugaighis said. “We don’t need to tell Qadhafi what we are doing everyday. And if the world knows or not — it really doesn’t change much.”

But many people argue that transparency is vital; authorities and civilians alike are aware of the potential for corruption. “We are afraid of transparency all the time,” Agoco’s Mayouf said. “In the third world, there is none.”

For more than four decades, hydrocarbon revenues have fallendeep into the pockets of Qadhafi and his inner circle. Many Libyans feelembittered that their country’s natural wealth has not been invested in itspeople, says analyst Shadi Hamid of the Brookings Institute in Doha. He notesthat this gap between the people and the government was one of the factors thatinitially contributed to the uprising.

“Libya’s people have a right to information about a majornational resource,” HRW said in an April 5 report. The organization insiststhat transparency is crucial now, and should not be postponed for the future.

“The vast sums of revenue involved, if misappropriated,could lead to the entrenchment of a new, corrupt elite with the funds availableto put in place a new era of repression,” said Bouckaert. The human rights watchdog urges countries and companies entering into agreements with the temporary government to insist on public transparency, independent auditing and accounting for funds.

Some people in, or close to, the council are not concerned about the lack of transparency, saying that systems to prevent corruption are put in place. “We know the money is going in and out,” Bugaighis said.“Everything is accounted for in terms of invoices. Everything is documented.” He claimed that no more than 10 people are involved in overseeing the transactions, and that multiple signatures are needed on any transaction made. When Qadhafi is ousted, these documents will be presented to the authorities in Libya and to those in Qatar, he said.

But the NTC vows that when, or if, a temporary government is created the council itself will dissolve. If the current authorities in eastern Libya are not in power following Qadhafi’s ouster, it is unclear how these authorities will be held accountable for any transactions made under their temporary supervision.

Vulnerable to abuse

“It is exactly at this moment of institutional weakness that the danger of ‘capture’ of oil revenues by ruthless elements bent on self-enrichment is greatest,” HRW’s Bouckaert says.

Some argue that “institutional weakness” goes well beyond the lack of transparency. Before NTC members were thrust to the forefront of national and international politics, they were professors, judges, doctors and lawyers. As there has been a lack of participatory state institutions and independent civil society in Libya for more than four decades, some are concerned that the lack of experience among the new governing members could be a threat in the years to come.

Still, amongst Libyans in rebel-liberated areas, there generally seems to be faith in the National Council and its ability to handle transactions responsibly; Bouckaert says the council has committed itself to ensuring that oil sales will be transparent in the future and that the oil revenues would be for the general benefit of Libyans. LNOC’s Bugaighis and Mayouf of Agoco said that, at the time of writing, no oil was being produced in Eastern Libya due to attacks on oil fields by Qadhafi forces. One field, called Messla, was bombarded in attacks on April 4, Mayouf said, and electricity to the nearby field of Sarir was cut off. But according to energy analyst and petroleum engineer Sherif el-Helwa, 20,000 barrels could be extracted daily as a result of natural flow from oil wells.

“I’m optimistic that [the National Council] will be honest, but I don’t know,” said Agoco’s Mayouf. “I have confidence in the young people. They are paying with their lives to liberate Libya. And it wouldn’t be fair if people who are opportunistic take advantage of the situation. This is the future of Libya.”

May 3, 2011 0 comments

Comment

The army and the people

by Jonathan Wright May 3, 2011

written by Jonathan Wright

The shotgun marriage between the Egyptian people and the ruling military council has not been an easy ride. After many decades on the sidelines of traditional politics, the army has had trouble adapting to the demands of an open, modern government. It has acted slowly, mysteriously and at times in ways reminiscent of Mubarak’s brutal police force. Its public discourse has been aloof, cryptic and often illiberal.

Flying in the face of the political realities of the new Egypt it has issued decrees asserting a right to control all information published about the armed forces, and on April 10 a military court jailed a blogger for the first time, on charges of insulting the military establishment and spreading false information. Maikel Nabil Sanad, 25, whose gripe with the military predates the uprising against Mubarak, now faces a three-year prison sentence. Human rights organizations are also unhappy, citing the use of military courts for civilians and the abuse of detainees by military police, including compulsory physical inspections or ‘virginity tests’ for young female protesters.

The people, on the other hand, have behaved like the obedient but demanding bride who discovers that marriage to a powerful man is not always a bed of roses. “The people and the army, hand in hand” was one of the defining slogans of the Egyptian revolution. But many of them knew they were allying themselves with a great unknown whose agenda was opaque. Their only recourse has been to come back to Tahrir Square in central Cairo and bellow their demands loud enough for the army command in the distant suburb of Heliopolis to hear them. For the moment the trick seems to have worked.

Since a mass rally on April 8, the largest since Mubarak lost power and retired to the Red Sea resort of Sharm el-Sheikh, the authorities have taken to heart many of the revolution’s demands. Mubarak was interrogated and will be detained when he is well enough to leave the hospital. His sons, Alaa and Gamal, have joined the group of disgraced ministers holed up in Toura prison awaiting further questioning and possible trial, either for inciting the murder of protesters or for a variety of crimes of financial corruption, such as selling off state land to their friends and cronies at rock-bottom prices. Three other key officials of the Mubarak era — Shoura Council President Safwat el-Sherif, parliamentary speaker Fathi Sorour and presidential chief of staff Zakaria Azmi — have finally joined the detainees in recent weeks. A Cairo court gave the people a bonus prize on April 16 when it dissolved Mubarak’s National Democratic Party — the dominant political force since the late 1970s — and assigned all the party’s assets to the state.

The army’s performance since Mubarak’s ouster has been a curious mixture — hypersensitivity about criticism and a conservative ‘law and order’ mindset, coupled with belated political pragmatism and constant reassurances that the generals do not want to stay in power any longer than is necessary. When the time comes for presidential elections, the armed forces will not nominate their own candidate or support anyone else for the top post, the military council says. So far the signs are that the generals are sincere and that their greatest desire is to go back to their comfortable and detached lifestyle as honored defenders of a country that has not fought a serious war in 38 years. Some accounts of the army’s sideline in lucrative economic and industrial enterprises have been ludicrously exaggerated, with wild estimates that it controls up to 40 percent of the national economy, for example. But army officers under Mubarak were definitely a privileged elite with access to well-equipped hospitals, sports clubs and subsidized holiday villas on the sea. Retired officers, as in many countries, could look forward to lucrative sinecures in state companies or in private firms that valued their contacts. They also received shiny new weapons regularly, thanks to the $1.3 billion a year in military aid from the United States.

A question mark hangs over the future of that aid when the new Egypt starts to formulate a foreign policy and takes decisions on how to treat Israel and Gaza. If the people can reassure the army on those two points, by the choices they make in parliamentary elections scheduled for September, the army and the people — at least those that didn’t suffer detention and molestation by the military — might be able to arrange an amicable divorce and go their respective ways with fond memories of their eight-month romance.

Jonathan Wright is managing editor of Arab Media and Society

May 3, 2011 0 comments