Egypt and Algeria have never been the best or closest of friends. When their paths have crossed, most notably in the heyday of Arab nationalism and non-alignment, it was as rivals rather than collaborators, though post-revolutionary Egypt did support the Algerian struggle for independence and Algeria sent token contingents to help Egypt in its wars with Israel. For the young Egyptian and Algerian soccer fans that were out on the streets waving their national flags on and off for a week in mid-November, and sometimes attacking each other with sticks and stones, all that is ancient history. What mattered to them were the insults to pride that filled the airwaves and the Internet across North Africa before, during and after the two fiercely contested soccer matches for a slot in the World Cup tournament, to be held in South Africa in 2010.

Alaa Mubarak, the son of Egyptian President Hosni Mubarak, said the Algerians who turned up in the Sudanese capital Khartoum for the decisive match on November 18 were “mercenary terrorists” and “thugs and bums” armed with knives and other weapons. The Algerian government had sent them on military planes to intimidate the Egyptian supporters, he added.

Egyptians called up Cairo radio stations to complain that Algerian fans had arrived two days early, plastered Khartoum with Algerian flags, hired Sudanese to pose as Algerian supporters and then attacked the Egyptians when they came out of the stadium. The number of injured was somewhere between 20 and 200, depending on who was counting.

Algerians, naturally enough, dismissed the Egyptian complaints as sour grapes (Algeria won 1-0 in Khartoum, eliminating Egypt) and noted correctly that Egyptian fans started the violence when they attacked the Algerian team’s bus on arrival in Cairo for the first match. Nonetheless, a frenzy of chauvinism swept the Egyptian government off its feet and by the week’s end it had recalled its ambassador from Algiers for consultations on the Algerian government’s failure to restrain Algerian supporters and protect Egyptian businesses from vandals.

After a string of setbacks on the international stage, the Egyptian government was especially anxious for a football victory. It is still smarting from its disastrous attempt to persuade the Federation Internationale de Football Association (FIFA) to hold the 2010 World Cup championship in Egypt rather than South Africa.

The government and the independent Egyptian media had in fact set themselves up for disappointment by giving the impression of Egyptian invincibility. On the eve of the first match, Dream TV staged what a casual viewer might easily have mistaken for a victory celebration.   

In a pattern that has become common in the Arab world’s fledgling dynastic “republics,” Mubarak’s younger son Gamal, widely seen as the most likely successor to the 81 year old president, has shown himself to be a prominent football fan, appearing in the Khartoum stadium wearing the colors of the national team.

Commentators on both sides of the North African divide speculate that he is hoping to win street credibility with some soccer mojo.

“The regime would have used [a victory] as a weird validation of Gamal Mubarak,” wrote political analyst and blogger As’ad Abukhalil. “Gamal Mubarak…went to Sudan to attend the match and presumably to reap the rewards of victory that never came.”

Promoting sports as an alternative to serious politics and as an outlet for youthful exuberance is hardly a novel strategy, and it did not escape notice that the crowds protesting with impunity outside the Algerian embassy in Cairo this week were larger than those at any of the recent opposition rallies, some of which were met with batons and tear gas.

Happily, adult voices have not been silent in this sorry affair. Some Egyptian radio commentators have responded to complaints about Algerian fans by saying some of their conduct seemed fair game, and some editorialists have deplored the chauvinist excesses on both sides.

Zehira Houfani, writing in Le Quotidien d’Algérie, noted that “a storm of delirium over a mere football match” had swept Egypt and Algeria.

“The excesses of the acts committed, on one side and the other, and the escalation of hateful remarks by certain parties and opinion leaders are beyond all comprehension and border on irresponsibility,” she wrote. The independent Egyptian daily Al Masry Al Youm irreverently noted that Egypt and Algeria were at least even in Transparency International’s annual index of corruption, placed 111th out of the 180 countries and territories listed.

Egyptian businesses, especially those dominated by the Sawiris family, also have reason to counsel prudence. Sawiris’s Orascom Telecom, which owns the Algerian mobile phone operator Djezzy, suffered a double whammy. It had its offices in Algiers ransacked, with damage worth $5 million, and then the Algerian tax authorities told the company they wanted $596.6 million in outstanding taxes and penalties.

Jonathan Wright is the managing editor of Arab Media and Society

For business journalists, writing about the Gulf from 2004 to 2008 was often a repetitive process. Regardless of the sector being covered, the opening paragraph would invariably have a growth figure in the double digits, and the projection for the next year would also be a very healthy one. Every year was a record year, or so it seemed.

The global financial crisis in the autumn of 2008 dimmed the Gulf Cooperation Council’s business fortunes, flipping that opening paragraph to negative double digits or growth in the low single digits, depending on the sector. This change was welcomed by many business journalists, if only to spice up their writing, but of course not by the business community.

The reasons behind strong growth can be easily explained, but a downturn and a serious contraction in revenues requires a different explanation, and it was time for journalists to start asking hard questions — at least it should have been time to play hardball.

However, just as the crisis was beginning to bite, the government of the United Arab Emirates introduced a draft media law in January to update the archaic 1980 law. Media outlets quickly understood the ramifications of the proposed rules, which include article 32, whereby journalists can be fined up to $1.3 million for “disparaging” government officials, members of the royal family or Islam, and article 33, which fines journalists up to $136,000 for harming the nation’s image and reporting “misleading” information on the economy.

Given such fines, way beyond the financial means of most journalists and media outlets, how could hacks ask hard questions? And how could journalists report on companies and firms that were in trouble but directly linked to royal families? It is a clear Catch-22 situation: journalists want to do their job, and the public and investors have the right to know about financial shenanigans, but to do so could come with a hefty price tag, and if you can’t cough it up, it’s a stint behind bars in the debtors’ jail.

The whole notion of transparency became a mockery, and the depth of the financial crisis’ impact was barely debated in the media, at least not in the UAE and the other GCC countries, where media laws are similarly draconian.

How ingrained such self-censorship is among Gulf journalists was evident in the headlines and articles in the aftermath of the bomb Dubai World dropped on global markets by announcing a standstill in billions of dollars of debt repayments. The Gulf News gushed across its front page: “Government intervention to ensure commercial success,” the Abu Dhabi-owned The National downplayed the impact with the headline: “A silver lining in Dubai World,” and the Khaleej Times espoused optimism with: “Restructuring ‘A Sensible Business Decision.’” Elsewhere, papers’ headlines were of “castles in the sand,” “Dubai in turmoil,” and “Bombshell decision has severely damaged Dubai’s reputation.”

But while papers outside the region can tell it as it is, reporting on what has already been reported can even be a risky business in the rest of the Middle East.

In one case, a UAE-based journalist wrote an article on the new media law for the American University of Cairo’s (AUC) Arab Media & Society (AMS) website. In it, she referred to a case in May where British daily The Independent ran a story about a case of fraud in which a Dubai developer showed investors photographs of buildings under construction, but were in fact photos of another project. The investors demanded a refund, but until now they have not been reimbursed.

The developer is the Al Fajer Group, run by Sheikh Maktoum bin Hasher Al Maktoum, who is the nephew of Dubai’s ruler. For citing — not breaking — this story, the Maktoum’s threatened to sue AUC.

What this case highlights is the lengths to which the UAE will go to try and rein in negative media coverage. Furthermore, the case has warded off necessary reporting on dubious tactics by developers, which damage the reputation of the real estate sector at the very time when the sector is suffering, with real estate prices down 50 percent in Dubai from their 2008 peak, and investment bank Union de Banques Suisses projecting in November that it could take up to 10 years for the sector to bounce back.

The last thing the sector should want in such a tenuous climate is jittery investors. As an Al Fajer investor told The Independent, “This is going to define my faith in the country. If I’m dealt with correctly, great. But at the moment, it’s not going that way. We’re in the witching hour now.”

That witching hour extends to media coverage, transparency in economic data and whether firms connected to the royal family are being unfairly assisted and bailed out at the expense of ‘ordinary’ companies trying to compete in a supposedly free market. As for us business journalists, reporting on the Gulf is certainly keeping us on our toes as we cover, or indeed cover up, the Gulf’s (mis)fortunes, and try to avoid getting fined a lifetime’s salary in the process.

PAUL COCHRANE is the Middle East correspondent for the International News Service

Lebanon’s relationship with debt closely resembles an addiction to alcohol. For starters, it’s quite evident that the country wasn’t thinking straight when it took out loans with interest rates of more than 35 percent to fund its post-war reconstruction. Then, instead of accepting the inevitable fiscal hangover and reforming its institutions, the country continued to borrow money (mostly from its own banks) and spend it on those same institutions that never shaped-up. In order to remedy this situation, it may be wise to refer to the American Psychological Association’s summary of the ‘12 Step Program’, which has helped many overcome alcoholism. The first step states that recovery requires one to “admit that one cannot control one’s addiction or compulsion.”

Lebanon has yet to truly admit that it has a problem. At nearly $50 billion and 154 percent of Lebanon’s gross domestic product, the debt is mounting and the only policy the Lebanese government has enacted is to swap the short-term debt for long-term debt, in an attempt to keep its head above water just that little bit longer.

Now that Lebanon has a new government, a line is again being drawn in the sand between those who believe reducing the debt is the single largest economic problem the government must deal with, and those who consider it to be “perfectly sustainable,” as does Lebanon’s Central Bank Governor, Riad Salameh.

The “sustainable” theory goes that, given the high liquidity levels in Lebanese banks, they have the cash on hand to continue lending to the government to fund its spending; given Lebanon’s high GDP growth rate, government revenues in the form of taxes will grow, bringing down the yearly deficit and, given that the American dollar is forecast to drop in value and most of Lebanon’s debt is priced in dollars, the value of the debt will fall all by itself anyway. If Lebanon is attracting billions of dollars of investment inflows and registering record growth numbers, then why rock the boat? In time, the debt will reach a manageable ratio relative to GDP and the problem will solve itself.

That’s the rosy version, and a line put forward by prominent members of Lebanon’s banking sector, though such optimism may be easier when they hold around $110 billion in assets and are profiting from much of the debt anyway. The rest of Lebanon, however, hasn’t the luxury to be so cheerful while the country runs a deficit of 10.5 percent of GDP and has spent 20 percent more in the first three quarters of 2009 than it did in 2008. Even though these figures may be within global norms today, one must remember that elsewhere in the world government expenditures have skyrocketed to bailout their economies.

There are only two countries in the world that are in a worse state than Lebanon in terms of their burden of debt — one of them is Zimbabwe, where the local currency value has all but evaporated, and the other is Japan, the world’s second largest economy.

Japan already has some of the best infrastructure in the world; Lebanon doesn’t.

With the debt looming overhead, not only is the Lebanese government less able to provide or upgrade their antiquated public services, they also have less ability to fledge many sectors that people depend on such as agriculture or industry, not to mention protect their strategic and military interests. Lest we also forget that another conflict with Israel would completely wipe out Lebanon’s new-found investor confidence, or the fact that our politicians can hardly be trusted not to start another political debacle, putting us back in a situation of low, no or negative growth.

Those who believe Lebanon’s debt is sustainable because of the country’s economic growth tend to gloss over the fact that growth has not been uniform across all sectors, and that this is resulting in an economy that lacks diversification — the Lebanese are placing all their eggs in just a few very large baskets. To make matters worse, other untapped potential markets for development — such as water resources, refining and hydrocarbon development — are still taboo for Lebanon’s economic policy makers.

Basic economic theory, and history for that matter, dictates that for every boom there is a corresponding trough, which means that at some point in the near future the debt will not seem as manageable as some view it during this current growth cycle. Hence, as one European Commission economist stated last October, Lebanon’s fiscal situation is, and will likely remain, “unsustainable.”

Even the likely privatization of telecoms and electricity, from which the proceeds will go to reducing the principal on the debt, will not prove to be a panacea. At present valuations, Lebanon will not get much in return for these national industries due to their dismal state.

A focus on growth should always be a priority for an economy, but the kind of growth currently on the table boxes the economy in and tries to shield it from the inevitable reality of having to deal with the debt. An economy’s sustainability comes from its versitility and ability to grow on many levels — not just its ability to pay the interest on the debt it hopes will go away.

Sami Halabi is a deputy editor at Executive Magazine

Speculation on another war between Hezbollah and Israel has been bubbling away since the end of the last encounter in 2006, but it has intensified of late with many predicting a renewed conflict could be in the offing this winter or early spring.

Israel’s recent interception of the Francop cargo vessel in the Mediterranean and the discovery of 500 tons of Iran-supplied weapons and ammunition on board, allegedly destined for Hezbollah, underlines the intensity of military preparations on both sides and possibly provides Israel with the “smoking gun” to execute a swift and destructive campaign.

The good news is that neither side appears to want another round at the present time. Hezbollah’s leadership does not hide the fact that the group is re-arming. But the leadership is aware that its Shiite constituents, not to mention the rest of the country, are in no mood for more military adventures. Israel, too, has been making preparations for another war, which includes retraining its ground forces, the introduction of new weapons and defense systems and devising a new strategy for dealing with Hezbollah. The new strategy, however, is intended principally as a means of deterrence, to prevent a war breaking out in the first place. It is based on the concept of punishing, rather than defeating, the enemy. Israeli strategists have accepted that Hezbollah cannot be defeated on the battlefield and that less ambitious goals need to be set. A year ago, General Gadi Eisenkot, the head of the Israeli army’s Northern Command, coined the phrase “Dahieh doctrine” to describe the use of “disproportionate force” upon any village from which rockets are fired into Israel — in other words to inflict the same level of destruction as experienced by Beirut’s southern suburbs (“the Dahieh”) in 2006.

The doctrine has been further refined since then, most notably by Giora Eiland, a former national security advisor when Ariel Sharon was prime minister. Eiland advocates treating Lebanon, rather than just Hezbollah, as the enemy, turning the next war into a state vs. state affair rather than state vs. non-state actor. The justification articulated by Eiland and others is that, first, the Lebanese government includes members of Hezbollah and second, it is complicit in Hezbollah’s military build-up because it has not prevented armaments from being smuggled into Lebanon. The advantage to Israel would be a far broader range of targets in the event of a war. The intention would be to launch a swift and devastating offensive, mainly waged using air power, while deploying ground forces on select missions to suppress Hezbollah’s cross-border rocket fire. There would be no mass invasion with armored columns racing up the coastal highway and into the Bekaa Valley. Instead, it would be more streamlined and focused.

Israel’s political and military echelons are reportedly in agreement on the need to define Lebanon as the enemy, suggesting a stronger degree of coordination and strategic unanimity between the two than was demonstrated in 2006.

The strength of Israel’s new strategy toward Hezbollah rests in its deterrence factor. The threat of massive punishment will have the effect of dismaying the Lebanese and jangling the nerves of the government, while dampening Hezbollah’s enthusiasm for recreating the finely-calibrated war of attrition that existed along the Blue Line between 2000 and 2006. Hezbollah has been engrossed in a debilitating political struggle since the end of the 2006 war, which, along with the necessity of building up its military assets, has ensured that the Lebanon-Israel border has witnessed its longest period of calm in four decades.

However, Israel’s strategy of punishment could unravel very quickly if circumstances were to arise that lead to another war. It takes two to fight a war and no one can say that Hezbollah will stop fighting just because Israel considers that it has accomplished its goal of punishment. Hezbollah’s rockets are likely to strike deeper into Israel than in 2006, possibly hitting Tel Aviv. Sayyed Hassan Nasrallah has already articulated a Dahieh-for-Tel Aviv strategy in which Israel’s largest city will be struck if the southern suburbs are bombed again. That means that a larger tract of territory in Israel will be paralyzed than in 2006, placing additional domestic pressure on the Israeli government to conclude the war as quickly as possible. Furthermore, it is widely believed that Hezbollah will take the war into Israel next time, dispatching commando units across the frontier to cause havoc in border settlements, mining roads, blowing up bridges and attacking military bases.

The last thing Israel wants is to become bogged down in a prolonged conflict with Hezbollah, as was the case in 2006. International tolerance for Israel’s military adventures is wearing thin, even if many Western nations feel there was some justification for Israel’s attacks on Lebanon in 2006 and Gaza in 2008. The Goldstone report on the Gaza war has set an ominous precedent for Israel. Israel’s “Dahieh doctrine,” if implemented and prolonged because of Hezbollah’s refusal to yield, will beg another Goldstone style investigation, further eroding the Jewish State’s international standing. Thus, the only way Israel can be assured of winning the next war is if its doctrine of punishment prevails and prevents another war from starting in the first place.

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