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ElBaradei’s boycott gamble

by Josh Wood November 3, 2010
written by Josh Wood

In Cairo’s Garbage City — as with many other places in Egypt — there is little optimism about the upcoming parliamentary and presidential elections. “We don’t know anybody. We only know Mubarak,” says Hani Shanouda, a 26 year-old member of Cairo’s 60,000-strong Coptic Christian garbage collecting community, the Zabbaleen. Like many others in this slum, Shanouda will most likely not be voting on either ballot.

In Egypt’s current situation it is increasingly difficult to discern between those who did not vote as a political statement and those who stayed away from the polls for other reasons. In 2005’s parliamentary elections, less than nine million Egyptians voted — representing almost a third of registered voters but only about 11 percent of Egypt’s population of 77.5 million at the time. The presidential elections that year saw only seven million go to the polls.

There are a number of reasons why Egyptians don’t vote. A lifetime of rigged elections and quasi-dictatorship makes voting seem inconsequential — Egypt’s young population means that, like Shanouda, the majority of Egyptians have never experienced a regime other than Mubarak’s and his National Democratic Party, which have ruled since 1981. Also, with 40 percent of the country living on less than $2 per day, simply putting food on the table often trumps political concerns.

A boycott of November 28th’s parliamentary polls  has been urged by Nobel Prize winner and former International Atomic Energy Agency chief Mohamed ElBaradei. He returned to Egypt with political ambitions earlier this year and says a poor show at the polls will expose the fraudulent nature of the country’s elections and spur democratic reform.

However, ElBaradei has been accused of being out of touch with Egypt’s masses. Calls for a boycott could give these accusations credence, showing that ElBaradei’s brand of opposition is more akin to the flash-in-the-pan, internet-based, intellectual-driven opposition groups composed of the upper and middle classes, such as the ‘April 6 Movement’ that caused a small stir in 2008.  While Western observers may applaud ElBaradei’s calls for a boycott as a brave step toward democracy, it could prove entirely detrimental to his movement and leave him on the outskirts of Egypt’s political arena.

Attempts by ElBaradei’s National Coalition for Change to get the country’s numerous opposition groups onto the same page have been hindered by the Muslim Brotherhood, who will field their own candidates in November’s elections. With the group still officially banned by the Egyptian government, Brotherhood candidates have run as independents in the past and currently hold 88 out of 454 seats in parliament, making the Islamist party the strongest officially-represented opposition movement in the country.

Unlike ElBaradei, the Brotherhood is more in touch with ordinary Egyptians and has built much of its support base through providing community services to those ignored by the state. While remaining cautious in the political realm the Brotherhood has still managed to make significant political gains, as evidenced by the number of seats it occupies in parliament.

For any opposition groups though, the election cycle — which starts this month — will be an uphill battle. The Egyptian government has already begun cracking down on dissenters, arresting many Brotherhood members in recent weeks. In October, the government announced that companies that send out mass text messages would require a license — a blow to the opposition, which relied heavily on SMS to mobilize supporters in a country where 60 million people have mobile phones. Despite calls for election monitors from Egyptian civil society actors, the United States and other international entities, it looks unlikely that any such measures will be taken.

Whatever the media hype, anti-Mubarak protests this year have been small and tame compared to the tens of thousands of demonstrators that ground Cairo to a standstill in years past. In this atmosphere, prospects for opposition gains remain slim, and thus it is unlikely that any real change will happen in Egypt soon.

Still, with next year’s presidential elections likely to be a wash (in 2005, Mubarak won a whopping 88.6 percent of a vote widely regarded as rigged), this month’s parliamentary elections are the best shot opposition groups have at making any real gains in the near future.

JOSH WOOD is a freelance journalist based in Beirut

November 3, 2010 0 comments
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Tea Party topography

by Michael Young November 3, 2010
written by Michael Young

This month’s mid-term elections in the United States will show us the direction the country will head in the coming two years and indicate the future shape of American foreign policy, particularly in the Middle East.

One factor determining electoral outcomes will be the fate of the disparate Tea Party movement, which has disturbed the Republican Party hierarchy and liberal-left America alike. And yet shorn of its more troublesome qualities, including its embrace of the opportunistic, demagogical former Republican vice presidential candidate Sarah Palin, the shift toward the religious right and its increasingly nativist reflexes, the Tea Party is somehow a healthy initiative. Many American voters are understandably worried about the potential tax burden imposed by the rescue package for the financial crisis of 2008, as well as the high cost of Obama’s healthcare policy.  

The Tea Party — a loose gathering of groups sharing a dissatisfaction with government as it is being run today — was named for the Boston Tea Party of 1773, when American colonists protested being taxed by a British parliament in which they were not represented. The mantra “no taxation without representation” has entered the American political lexicon and is at the heart of the democratic capitalist social contract. Congressional elections will show whether President Barack Obama passes that test.  

But where the Tea Party will be tested, and where it must pass its own test, is in the particulars of a capitalist culture. Will the movement be able to avoid the pull of its extremes and defend free minds and free markets? And what will this mean for the United States in the world?  

Populist and progressive movements have a venerable legacy in the US. The notion of reform, like the implicit mistrust of state power, is a recurring theme in American history, particularly in the late 19th and early 20th centuries, when the US was transformed from an agrarian society into an industrial-capitalist one. As Richard Hofstadter observed in ‘The Age of Reform,’ many of the demands of the American reform movement ended up being implemented even if the political parties that gave rise to such demands disappeared without a trace.

But there was always a nativist quality to these movements standing against what Americans have regarded as part of their national character: domestic inclusiveness and an urge to spread liberal values and freedom abroad. Likewise, the Tea Party movements have tended to look inwards. They have supported limiting immigration into the US; their fear of government over-expenditure has made them increasingly wary of costly foreign adventures, not least the wars in the broader Middle East; some polls suggest they are mistrustful of Obama’s engagement of Muslim countries; and on social issues Tea Party groups lean toward the conservative.  

The significant role played among Tea Party groups by Palin and other right-wing spokespersons, like the organizational power of the religious groups, means the movement is not likely to veer greatly from this path. However, to reduce everything to right-wing, left-wing terms is to over simplify. The Republican establishment has also been a target of the Tea Party. In that sense, the movement doubles as an anti-elite phenomenon.

America is unlikely to be overcome by the Tea Party, and the movement’s haphazard structure may ultimately prove to be its downfall, unless it can be reorganized behind a presidential campaign. This seems to be Palin’s aim. However, even if the movement were to concentrate on advancing legitimate demands for greater fiscal discipline, the outcome would be a more modest America abroad, both militarily and in the spread of liberal values.

 Oddly enough Hofstadter’s observations about American reform movements of the past may apply once again. Though the Tea Party is hostile to Barack Obama, the president appears to have largely accepted the fiscal restraint argument to justify cutting American foreign expenses, especially in Iraq and even Afghanistan, where he has sought mightily to avoid an open-ended conflict that would dramatically drain American resources. The US is changing, and not surprisingly, the Middle East is changing as a consequence.  

November 3, 2010 0 comments
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Cityscape’s sinking feeling

by Angela Giuffrida November 3, 2010
written by Angela Giuffrida

The man playing the gold-plated piano on the Meydan stand at this year’s Cityscape exhibition in Dubai was reminiscent of a scene in the blockbuster film Titanic: as the famous ship sunk, the band played on.

The pianist was the only reminder of the exuberance that used to define this property show. Once upon a time, crowds came from near and far to get a glimpse of the ambitions of Dubai’s property developers.

Enticed by glitzy displays of model cities, they queued for hours at stands, eager to put down a deposit on a property that was yet to be built and which they probably couldn’t afford. Developers spent millions of dirhams pulling out all the stops to ensure their wares received the attention they needed. As competition intensified towards the middle of 2008 in the run-up to that year’s extravaganza, the chief executive of one newly created developer even alluded to the possibility of the singer Madonna gracing his stand with her presence at the event that October. While celebrities including the actor Antonio Banderas and racing driver Michael Schumacher were actually seen doing the rounds of the exhibition halls that year, there was no sign of the material girl. However, even as new, flashy projects were announced, signs of nervousness among investors began to creep through the showcases of Cityscape Dubai 2008. Just a few weeks after the show, which has now been rebranded Cityscape Global, property prices in some areas of Dubai fell by as much as 40 percent.

The global financial crisis had caught up with the emirate. By the end of that year, hundreds of projects worth hundreds of billions of dollars were cancelled or put on hold while thousands of jobs were cut across the property and affiliated construction sectors. The same developer who claimed a close connection with Madonna suddenly went out of business.

Developers who had once enjoyed easy credit had to wake up to the new reality, and quickly. Rather than rushing to the bank to cash deposit checks, they were instead summoned to deal with disputes raised by unhappy property buyers, who were coming to terms with the reality that they had plowed money into buildings that would never be built.

Strapped for cash, developers have also struggled to make payments to their construction suppliers, with many taking legal action.

Still, it hasn’t all been bad news. A lot has happened over the past two years to clean up the property sector. Dubai’s Real Estate Regulatory Authority has been swift to implement new regulations, while developers keen to protect their reputation have helped property buyers consolidate their investments.

Projects are also starting to be revived, and Nakheel, the Dubai World-owned developer that is responsible for a large share of the emirate’s property development, said at the end of September it would complete its debt restructuring by the end of the year. Tamweel, one of the country’s largest mortgage providers, will also soon resume lending after Dubai Islamic Bank increased its stake in the firm.

There are still challenges ahead, with a potential oversupply of property one of the biggest threats to recovery. The most startling information to emerge from this year’s Cityscape was that another 9,000 homes would flood the market by the end of this year, while a further 35,000 homes will come on stream next year, according to figures from property consultant Jones Lang LaSalle.

But probably the greatest hurdle is reviving confidence among property investors. Thousands of people have been stung, with many now using events like Cityscape to vent their frustration on hard-to-reach developers or find fellow investors in the same predicament. Buyers will only re-enter the market when they believe the issues have truly been resolved.

The collapse of Dubai’s property sector can hardly be compared to the catastrophe of the Titanic tragedy in terms of loss of life, but it’s going to take a lot more than soothing music to lift the spirits of those who have had their fortunes sunk.

ANGELA GIUFFRIDA is a property correspondent in Dubai

 

November 3, 2010 0 comments
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Greeks bearing gifts

by Peter Grimsditch November 3, 2010
written by Peter Grimsditch

 

The fallout from Ankara’s continuing and widening estrangement from Israel has seen some unaccustomed diplomatic bedfellows cozying up together in recent weeks. Close military ties between the two states were ruptured when Turkish Prime Minister Recep Tayyip Erdogan ordered a ban on joint military exercises. He also insisted on searching for sources other than Israel for unmanned aircraft used in assaults on Kurdish guerrillas based in northern Iraq.

The rift originated from Turkish protests against the Israeli attacks on Gaza in the winter of 2008-2009 in which 1,400 Palestinians were killed. It reached a crescendo in May of this year when Israeli commandos stormed a Turkish-led aid flotilla heading for Gaza, killing nine Turks (including a dual United States-Turkish citizen) and seriously wounding around 50 others.

Bereft of its usual war games partners, the Turkish Air Force teamed up with the Chinese People’s Liberation Army last month for exercises at Konya in Central Anatolia. The pairing was bizarre in that it appears to be the first time that a member of North Atlantic Treaty Organization (NATO) has engaged in military exercises with the Chinese. According to the United States Defense Department, any worries that Turkey might reveal military secrets were carefully avoided by their use of F4 Phantom warplanes instead of the much more modern F15. Since the F4 was first manufactured in 1958, this seems to have been a prudent course. Not that the Turks were likely to learn too much either. For a latter-day replay of an aerial Agincourt, the Chinese used Su-27 Flankers, which are of a slightly newer 1982 generation of fighters.

The exercises coincided with a visit to Turkey by Chinese Premier Wen Jiabao, at the head of a delegation seeking to triple two-way trade to $50 billion a year by 2015.

Meanwhile, Israel accepted the opportunity to partner for aerial combat practice with Turkey’s erstwhile nemesis, Greece. As the two air forces conducted a joint drill over southern Greece, politicians on the ground signed the first Greek-Israeli bilateral pact for 60 years. This is a turnaround for Athens, which has traditionally been noted for its Arab sympathies more than its leanings toward Tel Aviv. This may well have been why two of the ships in the eight-strong Gaza aid flotilla in May were crewed by Greeks and one, Eleftheri Mesogios, was even Greek-flagged. The ships were carrying humanitarian aid and trying to break the military blockade imposed on Gaza by the Israeli military.

Although all the flotilla deaths were on the Turkish vessel Mavi Marmara, the Greeks on board the Sfendoni and the Eleftheri Mesogios were also given a rough welcome. According to a report commissioned by the UN Human Rights Council and published at the end of September, passengers and crew on both vessels had taken a decision to offer only passive resistance to their Israeli boarders, for example standing with linked arms around the bridge. Despite this, says the report, many were beaten. One woman who refused to hand over her passport was punched in the stomach, a man had his leg broken and the captain of the Sfendoni was kicked in the back, punched in the face and burned with an electroshock weapon.

The report, labeled by Aaron Leshno Yaar, Israel’s permanent representative to the UN Mission in Geneva, as “superfluous… unnecessary and unproductive” before it was published, goes on to catalogue a range of ill-treatment received by flotilla members once on

Israeli soil. These incidents include handcuffing seriously injured patients to hospital beds, confinement for hours on end without access to toilet facilities, physical and verbal abuse as well as the confiscation of personal items, including money intended for distribution among the Palestinians. The report also claims that much of the money has not been returned — nor indeed have cameras, recording equipment and other personal belongings been given back. This would make Israeli civil and military security personnel common thieves as well as any other charges that could be brought against them.

Yet, none of this seemed to interfere in the development of the closest contacts Israeli and Greek politicians have had in six decades. Perhaps it depends on what kind of Greeks are bearing what kind of gifts, and to whom.

PETER GRIMSDITCH is Executive’s

Istanbul correspondent

 

November 3, 2010 0 comments
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The Lebanese art of distraction

by Sami Halabi November 3, 2010
written by Sami Halabi

 

For several excruciating months the Lebanese press has been subjecting us all to a whirlwind of speculation over the prospect that the Special Tribunal for Lebanon (STL) will issue an indictment accusing, in one way or another, Hezbollah of being involved in the 2005 killing of former Prime Minister Rafiq al-Hariri and many others. It is now all too clear that the “informed sources” quoted in various media outlets who told us with such certainty that an indictment would be issued by mid-October were wrong. This deadline passed without incident and yet the media conjecture continues, fueling the perpetual fear of sectarian civil strife.

The debate has reached fever pitch, with everyone from the American Secretary of State Hilary Clinton to Iranian President Mahmoud Ahmadinejad throwing in their two cents, and politicians from both sides of Lebanon’s political divide holding endless press conferences. But as the STL has descended into farce, Lebanon’s real problems have — as usual — taken a backseat.  

As we wait for Damascus, Riyadh, Tehran and Washington to decide on our “post-indictment” fate and our supposed leaders bicker over “false witnesses,” we should pause to ponder why we have allowed the STL to take progressive policy reform hostage. Scratch beneath the surface and what has everyone so hot under the collar reveals itself as little more than political posturing, hyperbole and the dark arts of distraction and deception.

Firstly, it is nothing less than comical to talk about witnesses before an indictment is issued, as no one yet knows whose testimony will be considered. The prosecutor has not announced who will be used as a witness or who will be accused; the furor is supposition.

What’s more, calls to try the ‘false witnesses’ in the Judicial Council — a permanent tribunal of five senior judges and no jury that adjudicates threats to national security based on a cabinet decision and therefore violates international judicial norms — is a testament to how far we are from real judicial reform or being able to ever realize “the truth.”

Even more illogical is the dichotomy at the heart of Hezbollah’s position: On the one hand the party has called for those who tried to contaminate the STL with false testimony be held accountable, but on the other it has accused the tribunal of being illegitimate and called for it to be scrapped. Hezbollah emphasizing the importance of the veracity of witness testimony automatically confers some degree of legitimacy to the proceedings and, ultimately, the outcome they lead to. They can’t have it both ways. 

On the other side of the fence, the so-called Hariri camp recently admitted politics motivated it to wrongly accuse Syria of involvement in the 2005 assassinations, while rumors abound of a collusion between the March 14 movement and the original prosecutor. Now, incredibly, they insist that the institution’s credibility has not been damaged.

Given the absurdity of these and other acts in the STL tragicomedy, the fact that both political camps continue to propagate the idea that at any moment the tribunal could cause the government to crumble, taking the country with it, is telling of how far they will go to avoid doing their jobs.

By contriving conflict with talk of violence in the streets and the collapse of the state, Lebanon’s politicians have conveniently drawn people’s attention away from the fact that their water tanks are empty, their food is rotting in the fridge as electricity cuts for hours in the heat and their cars are stalled in choking traffic.

It’s no coincidence that when these issues began to boil this summer, the STL card was played; nor will anyone be surprised when it’s promptly shuffled back into the deck. Everyone already knows that Lebanon’s bilad al kubra, the ‘countries of influence’; do not find sectarian conflict in their interests at this juncture and that no one, even if they wanted to, can fight Hezbollah.

By that time, our politicians will likely have found another excuse to keep us scared into submission and their pockets lined with our money. At some point the joke will get old. But until then, it looks as though we will all have to be content with being laughed at.

SAMI?HALABI is

deputy editor of Executive Magazine

 

November 3, 2010 0 comments
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When peace is the target

by Nicholas Blanford November 3, 2010
written by Nicholas Blanford

Two separate editorials on the same day in the Israeli press last month underlined the confusion that informs analysis on Syria’s intentions regarding the resumption of peace negotiations with Israel.

The right-wing Jerusalem Post castigated Syria for its “derisive” response to attempts by the Obama administration to engage with Damascus after the years of isolation under George W. Bush. A day after George Mitchell, the United States Middle East envoy, met with President Bashar al-Assad in Damascus to further hopes of a resumption of Israeli-Syrian accord, Russia confirmed it would honor its agreement to supply Syria with P-800 Yakhont anti-ship missiles. The Jerusalem Post surmised that the missiles would probably end up in Hezbollah’s hands, enabling it to fulfill General Secretary Hassan Nasrallah’s vow in May to target shipping along Israel’s entire coastline.

In fact, Hezbollah probably already has acquired anti-ship missiles larger than the Iranian Noor/C-802 system it used in 2006 to disable an Israeli warship off the Beirut coast. Iran produces a longer-range version of the Noor called the Raad, which could theoretically hit Israeli shipping off the coast of southern Israel from launch sites as far north of the border as Beirut.

The Jerusalem Post also noted that Assad “made it clear with whom his loyalties lie” when he met with Mahmoud Ahmadinejad as the Iranian president stopped briefly in Damascus a day after Mitchell’s visit.

“It has become abundantly clear that the Obama administration’s attempt to ‘engage’ Syria… has been a resounding failure,” the Post said. In contrast, the liberal Haaretz newspaper interpreted Ahmadinejad’s visit to Damascus as showing his “fear that Syria will weaken its strategic relationship with the Iranians.”

Haaretz blamed Israeli Prime Minister Benjamin Netanyahu for the lack of progress on the Syria-Israeli track and urged him to heed the advice of the Israeli military establishment, including Defense Minister Ehud Barak, and accept Assad’s offer to resume talks. The conflicting viewpoints of these two Israeli newspapers may have earned a smile of satisfaction in Damascus. The Syrian regime is a master at fence-straddling, turning what normally would be a tactical ploy into a permanent strategy. Playing all sides at once ensures a degree of relevance and a steady queue of regional and international envoys knocking on Assad’s door. Critics of Syria insist that the regime’s ambiguity disguises an insincerity over its commitment to a peace deal with Israel. Peace would alter the geo-strategic environment of the region and compel Syria to make some hard decisions, such as reconfiguring its relationship with Iran and, therefore, also with Hezbollah.

There may or may not be some truth in such analyses, but we will not know because successive Israeli governments in the past decade have shown almost no interest in forcing Damascus to make those hard choices by pursuing peace. The last meaningful negotiations between Syria and Israel were in early 2000. Even then, Barak, the prime minister at the time, who enjoyed a broad mandate to pursue peace and the active support of the Clinton administration, got cold feet and could not bring himself to offer what he knew Hafez al-Assad wanted — the return of the Israeli-occupied Golan Heights to Syria — fearing it would not be accepted in Israel. No successive Israeli prime minister has shown any genuine interest in resuming talks with Damascus. Why would they? The border with Syria has been quiet since 1973.

The US is incapable of compelling Israel to talk to the Syrians if the Israelis are not interested. Given Israel’s succession of frail government coalitions, no prime minister is willing to risk his job for the sake of peace with Syria. Israeli leaders already have to contend with an increasingly militaristic and violent settler movement in the West Bank, so why antagonize the settlers in the Golan Heights as well?

I was once told an anecdote that well illustrates Israel’s reluctance to change the status quo with Syria. During a meeting of the Israeli cabinet in 2004, then Foreign Minister Silvan Shalom recommended attacking Syria and changing the regime. Ariel Sharon, the then prime minister, shook his head and said that that was a very bad idea.

“If we did that one of two things would happen,” he said. “Either we get the Muslim Brotherhood running Damascus or we get a democracy, and then we would have to make peace with it.”

November 3, 2010 0 comments
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The Delhi belly games

by Paul Cochrane November 3, 2010
written by Paul Cochrane

 

Hosting a global sporting event can do wonders for a country’s image, proving it’s a sophisticated, advanced nation able to meet demanding international standards and put on a good show. Think of China hosting the 2008 Beijing Olympics or the World Cup in South Africa this year.

But if the organizers are floundering just weeks before an event starts and negative publicity starts kicking in, a country’s reputation can be dragged through the gutter. India’s mismanagement of the Commonwealth Games (CWG) in New Delhi last month is such a case.

Qatar, which is bidding for the 2020 Olympics and the 2022 World Cup, would do well to learn from India’s mistakes if it is not to fall into the same trap.

Whether a country likes it or not, dirty laundry will be aired as every minute detail of the event falls under the microscope of the global media.

India spent some $9 billion on the CWG. Stories abound in the press about corruption, the working conditions of the 100,000 construction workers, the estimated 1,000 work-related deaths, and the 400,000 Indians that had their homes demolished to make space for the venues.

Some of India’s largest construction companies have also had their names tarnished for flouting numerous work-related laws, among them the United Arab Emirates-India joint venture Emaar MGF. At the end of October India ordered the confiscation of the companies’ $41.3 million bank guarantee and brought legal action after “irregularities” and deficiencies were found in the CWG village.

Many Indians are embarrassed by the way the CWG has been handled, and rightfully so. A country cannot just paste over the cracks and hope no one notices. Ironically, India knows this only too well as it struggles to promote itself as an attractive investment and tourist destination. After all, India has spent millions of dollars on the very professionally done “Incredible India” ad campaign, but your potential tourist is invariably put off by the stereotype image of poverty and bad hygiene. It is perhaps no surprise then that India only receives a paltry 5 million foreign tourists a year; Egypt by comparison gets 13 million.

Indeed, security and hygiene were major concerns for CWG athletes, with several stars pulling out early and more threatening to do so in the week up to the event with facilities unfinished, a footbridge collapsing and a cobra found in an athlete’s room.  

Things did not go much better once the event started. On the second day there was a bomb scare hoax and then the infamous Delhi belly started setting in, particularly among swimmers, attributed to pools’ dubious water quality. English sprinter Mark Lewis-Francis chose not to bite on his (silver) medal on the podium, as is customary. “I don’t really want to bite it because I don’t want to get Delhi belly,” he told reporters.

India has not exactly helped itself either when trying to justify the sub-standard facilities at the Athletes’ Village, with an off-the-cuff remark by Organizing Committee General Secretary Lalit Bhanot causing much mirth: “Everyone has a different standard of hygiene. The rooms of the Games Village may be clean according to you and me, but they [the West] have some different standard of cleanliness.”

If Qatar gets either bid for the world’s biggest sporting events, it will be a colossal undertaking for Doha. Qatar certainly has oodles of cash to play with and could pull off a great show if the planning is right. Despite early doubts, the Gulf state pulled off the Doha Asian Games in 2006.

The Asian Games were very much a trial run for something bigger, and Qatar has embarked on an ambitious marketing campaign to convince the world it has what it takes. The Middle East has never hosted an event of such global proportions, which lends weight to Qatar’s bid. Where else in the region could pull this off, particularly taking into account security concerns? Only the UAE springs to mind; Bahrain has enough on its plate with Formula 1. If it learns from India’s mistakes, Qatar may just have a sporting chance.

PAUL COCHRANE is the Middle East

correspondent for International News Services

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Last Word

Empire in austerity

by Executive Contributor October 24, 2010
written by Executive Contributor

In an article earlier this year for Foreign Affairs magazine, the British historian Niall Ferguson discussed how quickly empires collapse. He noted that while many observers have tended to assume long cycles of imperial decline, a breakdown could come suddenly, “like a thief in the night.”

Ferguson has argued that the American empire is more likely to disintegrate for reasons related to the domestic economy than foreign policy. In his book ‘Colossus: The Price of America’s Empire,’ he argued that imperial America faced a ballooning fiscal crisis brought on by a propensity to consume much and save little, as well as an impending social security crisis caused by Americans living longer and overburdening the fiscal system.

In the Foreign Affairs article, Ferguson focused on the vital matter of perceptions of decline. Even if fiscal shortcomings were not enough to erode American strength, he pointed out, “they can work to weaken a long-assumed faith in the United States’ ability to weather any crisis.” Just look at the relatively minor sub-prime defaults that spread through the global financial system by “blowing huge holes in the business models of thousands of highly leveraged financial institutions.”

 Another scholar, Michael Mandelbaum, recently examined the implications of the financial crisis on American foreign policy in his ‘The Frugal Superpower: America’s Global Leadership in a Cash-Strapped Era.’ He argued that America’s debt obligations following the 2008 financial crisis, as well as its fiscal structure and entitlement programs such as social security and Medicare, prevented the country from continuing to play the leading international role it has for decades. 

 “[T]he public will no longer feel able to afford, and so will not support, operations to rescue people oppressed by their own governments and to build the structures of governance where none exist,” Mandelbaum wrote. “Interventions of this kind, which the United States has undertaken in the last two decades in Somalia, Haiti, Bosnia, Afghanistan, and Iraq, will not be repeated. The American defense budget will come under pressure, and so, too, therefore, will the missions that the defense budget supports.”

 All this raises an interesting question. If, as Mandelbaum affirms, the United States becomes more frugal abroad, will that not undermine America’s long-assumed faith in its ability to weather any crisis, as Ferguson pointed out? In other words: too much realism about American limitations may actually accelerate America’s waning.

Certainly that is true in the Middle East, where, under President Barack Obama, the US has visibly downgraded its commitments. Obama has withdrawn American combat forces from Iraq. He has overseen a significant tightening of sanctions on Iran, in part to better avoid being sucked into an expensive, hazardous war with the country over its nuclear program. Obama’s support for Palestinian-Israeli peace, while it fulfills a campaign promise, may be viewed as an effort to stabilize a region that might cost the US dearly in the event of new conflicts.  Even in Afghanistan, where Obama has deployed 30,000 additional soldiers, information recently published by the journalist Bob Woodward indicates that at the heart of Obama’s thinking were a clear-cut exit strategy and financial worries. “I’m not doing 10 years. I’m not doing long-term nation-building. I am not spending a trillion dollars,” the president told Secretary of State Hillary Clinton in October 2009.

That is sensible. However, America’s view of itself has always pushed in a contrary direction. It was John F. Kennedy who stated in his inaugural address that America would “pay any price, bear any burden, [and] meet any hardship… to assure the survival and the success of liberty.” For Obama to challenge that premise on financial grounds effectively denies Americans the self-assurance — some would say the egotism — a higher sense of purpose invariably brings with it. This in turn could hasten the demise of the American empire that Ferguson discusses.  Balancing national values with national accounts will remain a major difficulty for American leaders. But the process of change may be quicker than some imagine, as Ferguson believes. America may not be able to afford high ambition, nor might it long outlast excessive modesty. 

October 24, 2010 0 comments
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Companies & Strategies

Buying back the Love

by Executive Editors October 24, 2010
written by Executive Editors

A journalist from Executive magazine and 200 others from around the globe were flown to San Francisco last month on a junket that included airfare, two nights at the Hilton Hotel, gourmet cuisine and a perpetually open bar.

Clearly, hosts Microsoft had something they wanted to say, or more accurately, wanted the assembled hacks to say. While some events make news, others are made news, and the later was certainly the case with the launch of Internet Explorer 9 (IE9) beta.

But why such expense for the trial version of a ninth edition web browser? As Sebastian Anthony, an editor at the AOL-owned technology blog Download Squad said, it’s been a good few years since Microsoft has been able to generate decent media coverage, while at the same time “Apple sneezes and people write a story about it.” Thus, perhaps, the reason for the public relations bonanza.   

Internet Explorer (IE), at one point the default browser of nearly 95 percent of web surfers, has seen its market share slip through the noughties to just over 60 percent today, as competitors such as Mozilla’s Firefox, Google’s Chrome and Apple’s Safari have gnawed away at IE’s slice of the pie. Still, that’s 60 percent of the almost 2 billion Internet users worldwide.

“It’s a fun story to tell sometimes how IE has declined, but it is still very strong,” said Brian Hall, general manager of Windows Live and Internet Explorer. Microsoft officials promised, and in many ways demonstrated, at the September 15 launch in San Francisco that IE9 heralds the next generation of web browsing.

While developers and enthusiasts might ogle over its “hardware acceleration” and the evolution of HTML5 coding, the layman attraction is that web browsing with IE9’s minimalist interface feels cleaner, and is a whole lot faster than competitors when it comes to loading large websites. (IE9 requires Windows Vista or Windows 7, however, so those using Windows XP or older operating systems will have to fork out for something newer).

Weeks before the beta launch, Microsoft gave many of the world’s most popular websites advance access to the new code and offered support to help optimize the sites for EI9, thus securing customer usage and adoption even before the release.

Then it was time for the charm offensive in San Francisco for the beta launch, which Microsoft will use to gather feedback from users and developers before launching IE9’s final version, at an as yet undisclosed date.

Regional strategy

Asked whether Microsoft had a specific strategy to promote IE9 in the Arab world, Hall noted that the company operates in most countries around the globe and while there are some unique local Internet intricacies regarding bandwidth and latency in developing markets, generally, “the market dynamics are quite consistent, which is: enthusiasts set the tone, sites drive the real adoption, distribution helps with adoption.”

He said Microsoft will now work at “encouraging” PC manufacturers to ship IE9 with their products, and Microsoft has more than 1,000 staff who will seek out local partners to work with. “Even in Lebanon, we will have people who are meeting with companies that build the top sites in Lebanon, and we’ll want them to do work for Internet Explorer 9.”

What profit?

This all sounds very expensive, leaving one glaring omission: how will Microsoft make money off IE9?

“We don’t,” said Dominic Carr, director of Windows Communication. “Our business model is ‘happy Windows customers.’”

As Hall explained: “We have a little tiny business called Windows,” an operating system with more than one billion customers. “Especially for home users, the number one thing people do on their PC is browse the Internet… our job is to give the best web experience to Windows customers that we can, and that is the purpose of the browser.”

So will this strategy work? Will IE9 help Microsoft regain browser market share and put smiles on the faces of Windows users?

“No one thought they would succeed with the X-Box, but they threw enough money at it until it succeeded, and now it’s huge,” said Download Squad’s Anthony. “I think [IE9] will succeed — they will throw money at it until it is a very big success.”

“It comes down to how much they value their free browser app, and whether they just want to beat Google — that might be the pure intention: they want to smash Google to pieces.”

October 24, 2010 0 comments
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Finance

Regional equity markets

by Executive Editors October 24, 2010
written by Executive Editors

Beirut SE  

Current year high: 1,200.49    Current year low: 953.88

>  Review period: Closed Sept 23 at 969.34 points               Period change: 1.4%

Despite a minor improvement in the MSCI Lebanon index, Lebanese stocks are in the mode of attractive pricing; the Beirut market is the biggest loser so far in 2010. Political concerns were unabated in September as market participants marveled at fractious interactions between local, regional and international power brokers. Citigroup analysts confirmed that they continue to regard real estate scrip Solidere as having price potential far above the sub-$20 range it has been traded at lately. Bank of Beirut saw some selling after disclosing plans for a $159 million preferred shares issue.

Amman SE  

Current year high: 2,693.91                Current year low: 2,223.30

> Review period: Closed Sept 23 at 2,309.21 points             Period change: 2.68%

Although gainers outnumbered losers on the Amman Stock Exchange in the review period, the ASE index has a ways to climb to alleviate concerns over the Jordanian bourse’s poor performance and lack of stamina in 2010. One has to wonder if the mid- September announcement of a prime ministerial committee tasked with examining the reasons for the ASE downtrend qualifies as reassurance for investors. On the bright side, the industrial sub-index was the best gainer on the ASE in the review period. Arab Potash gained 11.8% while market cap leader Arab Bank advanced 4%.  

Abu Dhabi SM  

Current year high: 3,239.74                Current year low: 2,467.04

> Review period: Closed Sept 23 at 2,639.33 points             Period change: 5.64%

With a price return that was less than half of what was seen in Dubai, the Abu Dhabi Stock Exchange on Sept 23 nonetheless closed still ahead of the DFM in terms of to year-to-date performance:  3.8% in the red versus Dubai’s 6.3%. But the more important matter is that all GCC bourses recorded a period of gains as the region celebrated the end of Ramadan. Real estate, which was weak in August, was the outperformer among sector indices on the ADX, followed by banking. The consumer index underperformed. Abu Dhabi Commercial Bank gained 26.5%. 

Dubai FM  

Current year high: 2,373.37                Current year low: 1,461.80

> Review period: Closed Sept 23 at 1689.45 points                                 Period change: 13.87%

It seems that perhaps Ramadan prayers and spiritual discipline are as good for the books as they are for the soul, as the Dubai Financial Market had its most bullish moments for some time in September. As the DFM index reduced its loss for the year to date to 6.3% by Sept 23 market close, the telecoms sub-index led all active sectors in double-digit gains. Whether that growth is sustainable remains to be seen. Logistics firm Aramex leapt almost 28% higher; market cap leader Emaar gained 15.6%.

Kuwait SE  

Current year high: 7,882.60                Current year low: 6,319.70

> Review period: Closed Sept 23 at 6840.10 points              Period change: 2.27%

The upward trend across GCC markets allowed KSE investors to breathe easily as the bourse’s benchmark index loss for the year to date narrowed to 2.4%. Industry and insurance were the best performing sectors on the KSE, making September a real “in” month on the Gulf’s northernmost exchange. Share prices of market cap leaders Zain and NBK advanced 8.3% and 7.3%, respectively. Losers in the review period included First Takaful Insurance, down 15.6%, Kuwait National Airways, down 7.7%.

Saudi Arabia SE  

Current year high: 6,929.40                Current year low: 5,760.33

> Review period: Closed Sept 21 at 6,434.90 points             Period change: 5.38%

While the Saudi Stock Market still didn’t return to its former glory after regressing a month earlier, the solid gain in the TASI benchmark index indicated a return to greener pastures for the year-to-date performance, in step with the monthly growth. Petrochemical and agro sectors outperformed the market while retail underperformed. Gains were broad based across sectors and with few exceptions, stocks advanced. Holy and national holidays meant fewer trading sessions than peer markets. 

Muscat SM  

Current year high: 6,933.75                Current year low: 5,968.36

> Review period: Closed Sept 23 at 6,339.29 points             Period change: 3.15%

With a middling performance as compared to its GCC peers, the Muscat Securities Market benchmark index returned to a positive reading for the year to date but remained a bit too close to the drop zone to break out in full cheers. Led by the services sector, the MSM sub-indices for services, banking, and industry all performed modestly above the general index in the review period. The most exciting thing for the Omani market after the holidays was the opening of subscriptions for the Nawras IPO.

Bahrain SE  

Current year high: 1,605.98                Current year low: 1,361.19

> Review period: Closed Sept 23 at 1,445.75 points             Period change: 1.91%

Continued recovery brought the Bahrain Stock Exchange benchmark index back within one percentage point of its value at the start of 2010. With its price to earnings ratio of 11.49x, the BSE ended the review period less pricey than the average 13.69 P/E ratio for GCC bourses. Banking and investments led the market’s gains, while movements in the insurance as well as the hotels and tourism sub-indices pointed in the opposite direction. Gulf Finance House emerged on the losing side with a drop of 13.8%. Market cap leader Ahli United Bank gained 4.3%.

Doha SM  

Current year high: 7,801.33                Current year low: 6,502.93

> Review period: Closed Sept 23 at 7,661.67 points             Period change: 6.03%

The first market trend in the GCC this year that conveys real rally flair is the rise of the Qatar Stock Exchange along a 12-week upward path since early July. By its close on Sept 23, the benchmark index in Doha had worked its way into the gains range of 10% versus the start of 2010. Financial values outperformed the general index on the QSE in September while the sub-index for services lagged behind. Among market heavies, Qatar National Bank and Industries Qatar benefited from the upwind, while market cap leader Ezdan Real Estate was flat.    

Tunis SE  

Current year high: 5,599.28                Current year low: 4,021.14

> Review period: Closed Sept 23 at 5,531.97 points             Period change: 4.07%

From the uninvolved observer’s perspective, the 2010 Tunisian Stock Exchange performance borders on boring, but it must be different from the local investor’s point of view. The Tunindex extended its gains further and by Sept 23 was up 28.9% for the year-to-date. Directly after the Fitr holidays, the index shot up 200 points to yet another record but at least there was some profit-taking in the last two sessions of the review period. Newcomers Carthage Cement and Ennakl Automobiles were among the best gainers, up by 8.6% and 4.7% respectively.

Casablanca SE  

Current year high: 12,457.59              Current year low: 9,997.56\

> Review period: Closed Sept 23 at 11,722.95 points                              Period change: -0.11%

The Casablanca Stock Exchange’s MASI was the only non-gainer in the September review period, and though its performance was a bit choppy the market does not deserve to be labeled as “weakening”. Market cap leaders Maroc Telekom and Attijariwafa Bank were in a good mood, gaining 2.4% and 3.6%, respectively. For Morocco’s top listed banking scrip, the share price at the end of the review period was almost back at its 12-month peak from June 10 of this year.

Egypt CASE  

Current year high: 7,603.04                Current year low: 5,850.00

> Review period: Closed Sept 23 at 6720.00 points              Period change: 4.87%

While volatility on the Egyptian Stock Exchange was more pronounced than North Africa’s other bourses, the EGX 30 continued to move nicely in a northerly direction. The vast majority of stocks showed gains in the review period, led by Arab Cotton Ginning which announced its highest dividend ever on Sept 13. The Orascom corporate values advanced modestly at 2.1% for OTH and 1.7% for OCI. Developer TMG fluctuated heavily after another set of headlines from a business-related court ruling.

October 24, 2010 0 comments
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