Comment

Walid the weathervane

by Nicholas Blanford
written by Nicholas Blanford

At a Washington Institute for Near East Policy conference in October 2007, Walid Jumblatt was asked by Dennis Ross, now Barack Obama’s point man on Iran, what Washington could do for Lebanon. Jumblatt, with a twinkle in his eye, replied: “If you could send some car bombs to Damascus, why not?”

The audience, few of them sympathetic to the Syrian regime, greeted Jumblatt’s comment with delighted laughter and prolonged applause.
Jumblatt, understanding his audience well, continued: Hezbollah is a “brigade or division of the Iranian Revolutionary Guards that occupy half of Lebanon, paralyzing the economy and facilitating Syrian efforts to kill us.”
It was vintage Jumblatt. Well, 2007 vintage anyway.


Among the leaders of March 14, Jumblatt, the “weathervane,” has typically been first to react to the changing climate: in the past 12 months, he has forged a rapprochement with his traditional Druze rival Talal Arslan in the wake of the May 2008 fighting, toned down his anti-Syrian rhetoric and more recently spoke of Hezbollah’s weapons in the context of a national defense policy.
It culminated in mid-June with a long-awaited meeting with Sayyed Hassan Nasrallah, Hezbollah’s secretary-general, in which the two discussed the need for a comprehensive reconciliation in the country.
The spirit of goodwill settling on Lebanon in the aftermath of the June 7 election largely derives from the rapprochement between Saudi Arabia and Syria in recent months, as both back rival political camps in Lebanon.
Vituperative rhetoric has been scaled down in the Syrian and Saudi media and there have been several low-profile diplomatic exchanges between Damascus and Riyadh.
If the Saudi-Syrian detente holds, it could spell a period of political calm in Lebanon, allowing for a relatively smooth transition from Fouad Siniora’s outgoing government to the new one, likely headed by Saad Hariri. The opposition could well forego their demand for a one-third veto-wielding share in the next government in exchange for guarantees by Hariri on key issues, chiefly Hezbollah’s arms. Hariri has said the fate of Hezbollah’s arms should be left to the national dialogue sessions, where the subject doubtless will be buried.


All this comes at the end of an eight-month wait-and-see period during which several elections, parliamentary and presidential, have been conducted. But the results of those elections have been something of a mixed bag.


The first was the election of Barack Obama as the new United States president. Obama, facing the immediate challenges of a global financial crisis and two wars, initially was not expected to focus much effort on the Middle East. But he has confounded expectations by emphasizing the importance of the Israeli-Palestinian peace process. In his recent address to the Arab world in Cairo he spoke at length on the Israeli-Palestinian conflict. However, he did not mention Syria once, indicating where his preference for progress lies. Indeed, the appointment of Jeffrey Feltman, who was US ambassador to Beirut during the Lebanese-Syrian crisis in 2005, as his main interlocutor with the Syrians was a signal in itself. Yes, Obama is willing to explore dialogue with Syria, but the administration is under no illusions about its success.


But Obama also has to contend with a right-wing government in Israel under the premiership of Benjamin Netanyahu, who took office in March. Netanyahu’s fragile coalition is dependent on the support of hardliners, such as his foreign minister Avigdor Lieberman. The initial test of Obama’s resolve, to many Arabs, lies in his ability to freeze Israeli settlement building on occupied Palestinian territory, and not to allow Netanyahu to fudge the issue with excuses about “natural growth.”


The third key election was in Lebanon, where the continuation of the status quo was confirmed by the March 14 coalition’s victory. Developments in Lebanon tend to be corollaries of developments elsewhere in the region, which is why the outcome of the Iranian presidential election, the last of the big four, is so important.
If Mir Hussein Moussavi had been elected president, it is unlikely that there would have been any significant changes to Iranian foreign policy, especially regarding the Arab world, support for anti-Israel groups and pursuing the nuclear program. The differences between the incumbent, Mahmoud Ahmadinejad, and his reformist challenger were over domestic policies. The importance of the result was one of perception rather than substance.


The US would have preferred to seek engagement with an Iranian government led by a reformist president, rather than someone distinctly lacking in diplomatic tact and widely vilified as a “Holocaust denier.” Ahmadinejad’s re-election will do little to ease the phobias of the Arab Gulf states toward their powerful Iranian neighbor.
So, a US administration committed to an Israeli-Palestinian breakthrough; a right-wing Israeli government squirming to maintain US goodwill while making no meaningful concessions to its Arab neighbors; no change in a Lebanon that is hoping for a period of stability; and an Iran, troubled by internal dissent, but still led by a president who relishes his image of defiance and obduracy.
How will this play out? Perhaps, we should keep an eye on Jumblatt for early hints.

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

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Money Matters

IPO Watch – The Saudi vanguard

by Executive Staff
written by Executive Staff

The initial public offering market in June witnessed a continued pickup in activity following an apparent restoration of risk appetite on the part of investors, but IPO announcements were mostly dominated by Saudi companies. The Saudi Capital Market Authority appears to be resigning to IPO pipeline pressure, driven in part by the success of recent offerings such as Weqaya Takaful Insurance and Reinsurance Company’s IPO, which was three times covered.

Weqaya’s shares, which debuted on the Saudi exchange on June 20, soared 288% with heavy volume to $10.36, from an offering price of $2.67.
The largest IPO announcement of the month came from Saudi Steel Pipe, which plans to sell 16 million shares or 31.4% of the company in an IPO scheduled between June 27 and July 3. With shares offered at a price of $6.68 per share, Saudi Steel Pipe expects to raise $107 million, valuing the company at $340 million. GIB Financial Services is the share sale’s lead manager and will have the option to allocate up to 50% of the shares to individual investors, leaving the rest to the institutional buy-side.

Three local insurance companies also received approval from the Capital Market Authority to raise a combined $51.2 million through share offerings. The three insurers — General Cooperative Insurance, Global Cooperative Insurance and Buruj Cooperative Insurance — will offer 40%, 30% and 40% of their shares respectively for $2.67 each. IPO activity in the Saudi kingdom included the approval of Saudi Petrochem’s planned offering of 50% of its shares, and Al Khuraif Group’s announcement that it plans to offer some of its shares, or those of one of its units, to the public.

Saudi Al Mouwasat Medical Services said it plans to sell 7.5 million shares or 30% of the company in an IPO from August 15 to August 21, while healthcare and pharmaceutical company Banaja Holdings will also launch an IPO as it proceeds with its restructuring plans. Furthermore, the Aramco-Total $9.6 billion joint venture in Saudi Arabia, named Satorp, said it plans to sell off 25% of its shares in the refinery in the fourth quarter of 2010.

Still, IPO buzz was not limited to Saudi Arabia. Albaraka, Bahrain’s largest Islamic Bank, announced plans to list its shares on the Damascus Stock Exchange (DSE) by August, comforted by the 15% increase in the Syrian International Islamic Bank’s (SIIB) shares on their first trading day on June 4. Bank of Alexandria, a unit of Intesa Sanpaolo SpA, said it was holding talks with the Egyptian government to sell the state’s 20% stake in an initial public offering worth more than $300 million. The Qatari government also said it expects to take the Qatar Exchange public in the near future, while Dubai-based Noor Islamic Bank said it may offer part of the company to the public within three to four years.

Despite improving market sentiment, several public offerings were delayed until the effects of the global economic crisis have waned. Scotland-based oil and gas engineering firm Proclad Group said it has postponed the planned offering of 30% of the company on the Dubai Financial Market by almost two years to 2013. Burooj Properties, which is fully owned by Abu Dhabi Islamic Bank, also pushed its IPO date from 2010 to 2011 or later, citing the financial crisis as the reason behind the decision. Improving market conditions will also set the date for an IPO by Emirates Steel Industries, a unit of Abu Dhabi Basic Industries, which tied its public offering to the presence of suitable market conditions within one to two years.

In summary, the IPO pipeline remains flooded with delayed offerings pending clearer signs of a fundamental and sustainable recovery in credit flows and economic growth. Still, with Saudi Arabia leading the way in the number and size of public offerings, it is very likely that a cohesion effect could take hold and drive near-term IPO activity. In a new era of lower leverage and limited bank financing, acquisitions and expansion plans will rely in part on capital raised from share offerings. Therefore, IPOs will continue to take advantage of the relative stability in equity markets seen in the last few months, as well as strong investor demand for newly-listed shares. 

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A government under the gun

by Thanassis Cambanis
written by Thanassis Cambanis

March 14 can claim a major — and unexpected — victory at the polls, but they’ll have to pay close attention to Lebanon’s real balance of power if they want to avoid miscalculation and overreach. The pathology of sectarianism and Hezbollah’s entrenched military power place far more serious constraints on the prospect for changing Lebanon than electoral politics do.

The results of the June 7 ballot are just one of many factors that determine what Saad Hariri’s coalition can and cannot achieve — maybe even one of the smaller factors. The biggest, on the contrary, is the old rule of force: Hezbollah’s militia.


If the Party of God perceives a threat to the autonomy of its militia, it will do anything, including a military takeover of Beirut, to neutralize the perceived threat. Hezbollah did so in May 2008, and has made clear it would do so again, regardless of the political fallout or cost to the resistance’s legitimacy among Lebanese. It’s also worth keeping in mind that about 850,000 Lebanese voted for Hezbollah and its allies, significantly more than the 720,000 who voted for March 14. Only sectarian gerrymandering translates that popular vote into a parliamentary majority for Saad Hariri’s coalition.


Votes do matter, but brute power matters more. Hezbollah won’t shirk from a confrontation, and it doesn’t have to worry about losing popularity and legitimacy so long as it commands the nearly undivided loyalty of the Lebanese Shiites in the Bekaa Valley, southern Lebanon and Beirut’s southern suburbs. The principle factor that could reduce Hezbollah’s power is Iran. For decades, the Islamic Republic has given Hezbollah a generous operating budget and a steady flow of military training and material, allowing the Party of God to build its own state and act independently of the normal constraints on a Lebanese political party. If Iran cut a grand bargain with the United States (or if Syria, which controls the flow of weapons to Hezbollah, makes a deal with Israel), Hezbollah could suddenly find itself defanged, or at the very least, boxed in.


By a similar token, Hariri and his allies draw considerable power from their links to outside powers — in particular the United States and Saudi Arabia. Neither of March 14’s patrons has demonstrated anything like Iran’s staying power and commitment to its client, in terms of military aid or consistent political cover. In Washington’s case, the sponsorship is particularly shaky; most Lebanese are convinced that anytime Lebanon’s interests conflict with Israel’s, there’s no question that Washington will side with Tel Aviv.


Whatever government emerges from the elections, it’s hard to imagine any substantial effort to disarm Hezbollah, although calls to do so will come from some quarters. The cries for “change and reform” notwithstanding, Lebanon’s political classes of all stripes have far too much vested in a system of patronage and corruption, and it will likely survive unscathed. Finally, it’s nearly impossible to imagine Lebanon’s arcane political system being revamped, with its guarantees of certain powers for certain sects regardless of their actual share of Lebanon’s population. Hence a shrinking Christian minority will wield more government power than a Muslim population twice its size, and the Shiites — Lebanon’s largest group by far — will still be relegated, at least in name, to the most marginal government posts.


The March 14 forces can claim a victory at the polls but they’d be hard pressed to claim a mandate. They won the support of the Sunni, the Druze and around half of the Christians, largely by convincing voters that the other side was worse — not by mobilizing support for a set of political goals. That lack of momentum makes it hard for March 14 to do more than govern in the middle, in pursuit of incremental change, as it has since 2005. Any attempt to radically reshape Lebanese politics, for example by disarming Hezbollah and seeking a peace treaty with Israel, would meet an intransigent and powerful Hezbollah, which at least in the short term will retain the power to bring the Lebanese state to its knees by force, if it so chooses.


When the dust settles, everyone will talk about a “new phase.” Hezbollah politicians already were speaking quietly, before the elections, about a conciliatory approach. Ali Fayyad, just elected to parliament after 14 years at the helm of Hezbollah’s think tank, said his party now had to hunker down and work out the details of its political platform, eschewing confrontation.
“Politics has its own logic,” he said sitting on the porch of his home in Taibe. “When we were a small militant resistance group, we had other issues. We are now the biggest political party and player, with strategic effects in half the region. We will never achieve political reform by civil war or by hegemony.”
Rest assured though that until something radical and unexpected shifts in the regional dynamic, Lebanon will see small changes rather than big ones, and as usual, they’ll be decided by a small group of men sitting around a table — and not at the ballot box.

Thanassis Cambanis is a journalist writing a book about Hezbollah

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Iran‘s inclement election

by Gareth Smith
written by Gareth Smith

The re-election of President Mahmoud Ahmadinejad and the subsequent violence in Tehran deepens the challenges facing American President Barack Obama in his desire for engagement with Iran.


Ahmadinejad does not control Iranian foreign policy, but he will probably have a stronger voice in a leadership group where Ayatollah Ali Khamenei, the supreme leader, is pre-eminent.


The stiff reaction from the authorities to the demonstrations reflects a real fear among Iranian conservatives, especially in the Revolutionary Guards, that the “green wave” offered by Mir Hussein Moussavi, Ahmadinejad’s main challenger, was an attempt to repeat the “orange revolution” of 2004 in Ukraine.


While Ayatollah Khamenei in March held out the possibility of talks with the United States, he stressed the need for the US to “change its behavior.” Iran is in a strong position, say state newspapers and state officials, and the US is stuck in a quagmire.


“The Americans have made lots of mistakes [and]… they need Iran to save them,” opined Kayhan, the leading conservative daily, in April. “They have tried and examined all possible ways and eventually found no solutions. That is why, now, they have no other choice but to turn to Iran.”


In private, some Iranian politicians acknowledge that the US’ formidable military power means things are not quite that simple. Hence, while Iran’s political class — including Moussavi and Ahmadinejad — share a commitment to the country’s nuclear program and its “right” to be treated as an international power, there are important differences over talks with the US.


In the recent election campaign, Ahmadinejad slammed his predecessors for the 2003-2005 talks with the European Union under which Iran suspended uranium enrichment as a “goodwill gesture,” even though the move was endorsed by Ayatollah Khamenei. Kayhan editor Hossein Shariatmadari has consistently argued against talking to the US, even though the supreme leader has accepted the possibility.
In any case, the fractures in the political class do not suggest the Iranians will readily focus on negotiations. Iran is not China, where uniformity can be readily imposed.


The wide coalition against Ahmadinejad has taken shape since about 2006. It has included both Moussavi and Mehdi Karrubi, the former speaker also defeated in the presidential election. But it has also involved the former reformist president, Mohammad Khatami, and Akbar Hashemi Rafsanjani, who heads two important state bodies, the Experts Assembly and the Expediency Council.


This “coalition of the concerned” came together through fear that President Ahmadinejad’s bellicose rhetoric was damaging Iran’s international position, no matter how popular it was across the Islamic world. Tougher sanctions, the president’s critics have argued, compound the damage done by Ahmadinejad’s reflationary economics.


The coalition helped shape the political agenda, to the extent that conservatives like Ali Larijani, the parliamentary speaker, and Mohsen Rezaei, the former Revolutionary Guards commander, called for a national unity government.


Moussavi ran for president with a skillful pitch for the middle ground, a “third way” promising adherence to principles (the conservatives call themselves “principle-ists”) as well as judicious reform. But the resulting melee has done anything but consolidate the middle ground.


Unfortunately for engagement prospects, many of Iran’s natural diplomats occupy the middle ground. Some are professionals, and others more or less allied to Rafsanjani, long seen as an advocate of talks with the US. Many have already been swatted by the Ahmadinejad government, beginning with his early purge of ambassadors and including spying charges in 2007 against Hossein Moussavian, the former negotiator with the European Union.


Rafsanjani remains a central target for Ahmadinejad, who came to office in 2005 attacking a man he alleges has enriched himself at the people’s expense. Ahmadinejad has consistently attacked the “oil mafia,” and, in the recent televised election debate with Moussavi, tried to link him to Rafsanjani in the hope this would weaken his support.


In seeking an interlocutor in Tehran, the US has long known it must talk to Ayatollah Khamenei, but president Obama can hardly relish dealing with an Iranian leader facing an internal crisis and possible power struggle.
And if that weren’t enough, opponents of engaging Iran in Israel and the West now have fresh wind in their sails.


US neo-conservatives have rushed to back “democracy protests” in Iran — which they say are a post hoc vindication of the George W. Bush strategy of spreading democracy — and to demand further ostracizing of Iran.
In Israel, the Netanyahu government is stepping up its argument that Iran is such an urgent military threat and that tackling it dwarfs such minor matters as Jewish settlements and blockaded Gazans.


John Bolton, the former US ambassador to the United Nations,  now at the right-wing American Enterprise Institute, has gone further, arguing that an Israeli strike on Iran “could well turn Iran’s diverse population against an oppressive regime.”


No wonder the neo-cons are cock-a-hoop. Events in Tehran not only make it harder for Obama to win the argument for engagement. They make it harder for engagement to succeed.

Gareth Smyth is the former Financial Times correspondent in Tehran

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Iraq’s vertigo

by Ranj Alaaldin
written by Ranj Alaaldin

Amidst the ongoing tumultuous events in the Middle East, Iraq has recently attracted little coverage within the international news media and, save for some macabre event like a mass casualty suicide bomber attack or the capture and murder of foreign hostages, rarely features on our television screens.

Yet, a recent surge in terrorist attacks manifestly suggests that taking Iraq off the radar may turn out to be a reckless and complacent endeavor. The bomb in Baghdad’s Sadr City at the end of June which killed more than 70 people exemplifies the threat. Therefore, a number of key areas must therefore be re-visited and assessed to determine where Iraq’s future lies.


The so far intermittent, but increasingly frequent attacks, should serve to provide a stark warning that leaving Iraq’s still nascent security and democratic institutions to fend for themselves in the drawdown of foreign troops could prove to have unexpected consequences. A surge in attacks could prolong the presence of foreign troops, preserving a status quo of violence and uncertainty, with serious ramifications for foreign powers with vested stakes in the country, and in an increasingly volatile region as well.


But the drawdown of British and American troops suggests Iraqis are capable of governing independently. Despite the aforementioned security threats, Iraqi security forces have proved their merits on previous occasions and, critically, have the respect of the population. Operation Charge of Knights in 2008 rid resource-rich Basra of Shia militias operating under the direction of radical cleric Moqtada al-Sadr, while elections went ahead in January without disruption and, more importantly, under the supervision of the Iraqi army, rather than American forces. Moreover, civilian casualties are down in Iraq by more than 70 percent in comparison with previous years.


Improving security becomes futile, however, in the absence of political reconciliation between Iraq’s myriad of ethnic and sectarian groups.
Of pressing concern are relations between the Kurds in the north and the federal government in Baghdad. Both continue to stand eyeball to eyeball over unresolved matters that have left the country in a state of paralysis. Iraq has yet to pass the hydrocarbons law as a result of disputes between the Kurdistan Regional Government (KRG) and Baghdad over who has the right to control and manage the country’s array of resources. As a result, huge reserves of gas and oil — Iraq has a 119 billion-barrel oil reserve, making it the third largest in the world — remain unexploited and deprived of the foreign investment needed to repair and upgrade a decaying oil infrastructure.


In addition, observers are concerned about a looming power struggle. For example, along with the Kurds, the Sunni political parties are becoming increasingly wary of a more powerful Shia-dominated Baghdad government, which they fear will serve to their disadvantage should American troops leave the country completely. Prime Minister Maliki recently added to such worries when he suggested that political consensus should be sacrificed for majority rule.


While disputes have for the best part been restricted to political exchanges, uncertainty and tension are being markedly transformed into violent confrontation. The disputed territories of Mosul and Diyala, for example, still exist as terrorist hot-spots, where the last remnants of Al Qaeda in Iraq and the Iraqi insurgencies, both Sunni and Shia, remain concentrated. Continued turmoil in these provinces is already forcing American commanders to reconsider the forthcoming troop pullout from Iraq’s cities, towns and villages by June 30 to their bases, and the complete withdrawal of troops from the country by December 31, 2011.


In Kirkuk, the oil rich disputed territory, Article 140 of the Iraqi constitution, which determines the status of the province — that is, whether it should be administered by the KRG or Baghdad — is yet to be implemented. The United Nations recently submitted a yet-to-be-made-public proposal to Baghdad and the KRG which outlined suggestions for remedying the problem. But continued intransigence is costing Iraqi lives, as portrayed by a recent attack which killed 73 civilians in Kirkuk.


Economic realities may, however, inject some hope. Iraq suffers from a budget deficit, and low oil prices have required the Iraqi government to slash its budget three times this year already — Iraq also depends on oil revenues to fund 90 percent of its reconstruction. Partly in response to this, the Baghdad government recently allowed Kurdish oil exports from fields administered by the KRG, suggesting that pragmatism can dictate policy more than ideology, and help pave the way toward reconciliation.


Where does Iraq stand? And where next for this country of painful paradoxes? The unavoidable reality is that the three pillars of a stable and prosperous Iraq are security, political reconciliation and the economy; still yet to be appreciated, however, is that these cannot operate independently of each other and unless equally respected and addressed, the US will find its presence prolonged and Iraq will head back to its previous state of bloody and costly degeneration.

Ranj Alaaldin is a Ph.D. candidate at the London School of Economics focusing on post-invasion Iraq

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Peace at a crossroads

by Claude Salhani
written by Claude Salhani

Propelled by United States President Barack Obama, the Middle East peace process is at an important and decisive crossroad. The next few months could see the greatest advances in the Arab-Israeli dispute since the conflict began 61 years ago. If successful, the outcome of Obama’s initiative could lead to a peaceful and permanent resolution of the Middle East crisis with the Palestinians finally having a homeland. The four thorny dossiers that have been holding up the process — the issue of final borders, the question of the Palestinian refugees’ right of return, the status of Jerusalem as capital of Israel and a future Palestinian state, as well as the security of Israel — could all be solved. That is the optimistic view.

Pulling in favor of the optimists is the gargantuan public relations campaign that was Obama’s speech to the Arab and Muslim world delivered in Cairo last month. The one important point to underscore is the announcement by the American president that solving the Middle East dispute is first and foremost in the national interest of the US. Also pulling for the optimists’ camp is George Mitchell, the US special envoy to the Middle East, who stopped in Lebanon and Syria on his recent tour of the region, where he is quietly working to move the peace process ahead. Also trying to push things forward is John Kerry who visited Syria once more.

And depending on where you stand, Jimmy Carter calling for Hamas to be recognized as a legitimate political party and removed from the State Department’s list of terror organizations, could be seen as either good or bad.
The reverse side of the coin, the pessimistic view, is that if this round of talks fails, then it could go the other way. If history is anything to go by, then there is little doubt that the next round of violence could be more explosive and more extreme. A brief scan through the history books of the last 60 odd years will back up that statement. What began as a dispute over real estate has now turned into a war of religion and some believe into a clash of civilizations. And what initially was a regional conflict has now spilled over the borders of the Middle East and onto the streets of America and Europe.

Fodder for pessimists is Israeli Prime Minister Benjamin Netanyahu’s reaction to Obama’s speech, and Netanyahu’s support for policies that advocate expansion of the settlements in the West Bank, which is a non-starter for resumption of the peace process.

In between the optimists and the pessimists lies much uncertainty. Yet what is clear is that the future of the Middle East is in the hands of the region’s leaders now more than it has ever been. History will remember the legacy these leaders leave behind and it will not be kind to those who miss this opportunity. The Palestinian cause has for much too long been used and abused to justify the continued status quo in parts of the Middle East, with the aim of keeping the current regimes in power. History, however, will reserve a special place for those who will ultimately bring peace and prosperity and democracy to the people of the Middle East.

It is time for the leadership in the region to realize the precariousness in which the region finds itself today, not only when it comes to the question of war and peace, but in regards to where the region stands in education, cultural development, scientific advances, social welfare and the rights of individuals.
President Obama understands the urgency of the situation and the importance of bringing peace to the Middle East. But the task is not going to be an easy one with all sides strongly entrenched in their respective positions. The fundamental reason for the difficulty in moving ahead is due to a lack of trust that permeates both sides of the conflict. Building that trust will prove to be one of the hardest steps in bringing peace to the region. Sixty-one years of hatred will require time and effort to overcome.

Arabs and Israelis are destined to live as neighbors on the same small piece of real estate. And as neighbors they have to coexist or risk perpetuating more violence in the Levant, and guaranteeing a turbulent future for their children and grandchildren. Is that the legacy by which they want to be remembered?
The two sides have no choice but to continue to live, if not with each other, at least next to each other. One does not necessarily have to love his neighbor, but one has to learn to live with his neighbor. One important caveat: all the pushing and prodding, arm-twisting and threatening, cajoling and guarantees of the United States to bring about a settlement in the region will be impossible to achieve unless there is a strong desire amongst those concerned to solve the crisis.

Claude Salhani is the editor of the Middle East Times in Washington, DC

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Slavery to emancipation

by Paul Cochrane
written by Paul Cochrane

Expatriate labor rights and living conditions in the Gulf have become hot, contentious topics once again. The BBC was the latest media player to throw mud at the Gulf’s glitzy image when a reporter snuck into a labor camp in Dubai and secretly filmed living conditions, exposing the gritty, sewage swamped underbelly.

Dubai took badly to the coverage, as it has been prone to do whenever the international media sticks its nose in places it’s told not to, and the company involved has been at pains to show it was an unusual case. But what has driven the issue further into international prominence was Bahrain’s decision in early May to end the sponsorship system, the first Gulf Cooperation Council country to do so.


Manama decided to annul the longstanding requirement that all expatriate workers have to be sponsored by a Bahraini citizen. To be put into effect August 1, the government will be responsible for issuing work permits, which can be renewed every two years and will allow expat workers to change jobs without having to seek a sponsor’s permission. This is a significant step, ending a system known as “kafala” that effectively shackled workers to their employer, whether a construction worker or a general manager. For example, in Saudi Arabia, foreign workers cannot travel from one city to another without stamped official authorization from an employer, let alone hop on an airplane.
Bahrain’s bold move has garnered praise from human rights groups and international labor organizations around the world. The word now is that other GCC countries should do the same. Momentum is certainly picking up, with Qatar saying it is studying Bahrain’s move and wants to adopt the same policies, while the United Arab Emirates has signed an agreement with India and the Philippines to launch a project to improve contract workers’ conditions.


But as always with radical shifts in policy, Bahrain’s move is causing a great deal of controversy, foremost in its own parliament and among the local business community. One party, Al Wefaq, came under fire for failing to use its influence — it has 17 of the 40 seats in the lower house — to block a clause in the law that would require foreigners to have a minimum one-year contract. Businessmen say the ruling will be detrimental to the economy by putting the country at a competitive disadvantage, while businesses will be left to foot the bill for implementation costs.


That will clearly be the case, and Bahrain would stand to lose somewhat unless other Gulf countries do the same. On the other hand, Bahrain will become a more attractive place to work for expats, and the government won’t have to worry about embarrassing stories that scream of slavery and abuse; or face worker strikes, like the two that happened within the space of a week in Bahrain in early June. A headache in the short term is better than a migraine in the long term.


The GCC is of course easily singled out globally, given its exposure to the West and its estimated 13-15 million foreign workers, predominantly from Asia. But while the West chastises the GCC on labor rights, millions of Asians, South Americans and Africans continue to toil away in sweat shops to make cheap consumer goods for the West. Millions of migrant laborers also work illegally and often in poor conditions in the West itself.


But where the GCC is strikingly different is in the sponsorship law, and that it was foreign labor that physically built and manned the transformation of the Gulf we see today, constructing the tallest tower, one of the largest malls, artificial islands and seemingly endless real estate projects. The Gulf’s ‘unsung heroes’ have long been under-respected and underappreciated. It is also worth recalling the region’s own indentured past.


In Oman earlier this year I was reading the late British explorer Wilfred Thesiger’s book “Arabian Sands,” about crossing the Empty Quarter in 1950. He arrives at an oil prospecting camp outside of ‘Dibai’ with his two Bedouin guides, but while Thesiger is allowed to bunk down in the ‘European lines,’ his companions have to sleep in the ‘native lines.’ This disparity was further emphasized in Abdul Rahman Munif’s trilogy “Cities of Salt,” where the local Gulf Arab laborers that built the oil infrastructure slept under hot tin roofs and earned a pittance, while the Americans chilled out in air-conditioned compounds.


That period is still in living memory, as is Saudi Arabia only ending slavery in 1962. While that might be a difficult past to talk about, so is the present sponsorship system. The move by Bahrain to end it, and the discussion it has provoked in Qatar and the UAE, shows that workers rights do matter. It should also prove economically advantageous in the long run, given that old adage of “happy workers make productive workers.”

PAUL COCHRANE is the Middle East correspondent for International News Services

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Pirated intellect bedevils WTO

by Riad Al-Khouri
written by Riad Al-Khouri

Lebanon first applied to join the World Trade Organization in 1999, but now, a decade later, the country’s accession is still not a done deal — a time lag far longer than with most other past or current applicants.

At WTO meetings on Lebanon’s accession, an often raised issue is the state of intellectual property rights (IPR) in the country. Respect for IPR is a key condition of WTO accession.


The United States Trade Representative (USTR) placed Lebanon on a “watch list” in 1999 and then downgraded Beirut to the critical “Priority Watch List” in 2001 where it remained until 2007. It then upgraded Lebanon back to the watch list in 2008, and in its 2009 annual review, the USTR maintained Lebanon on the watch list.


Other Arab countries on the 2009 watch list include Egypt, Kuwait and Saudi Arabia. Though piracy-related losses incurred in Lebanon by copyright-based industries are estimated to have risen last year, Beirut nevertheless made progress in 2008. For example, concerning the problem of cable piracy, about 80 percent of the approximately 700 pirate operators last year signed up to become legitimate providers.


Yet, as a cursory look around Beirut and the rest of the country will show, there is rampant piracy of books, music, films and software in Lebanon, as well as a growing problem of counterfeit pharmaceutical products on the local market. Though Lebanon was one of the first countries in the region to have IPR laws, many of which have also been updated and improved over the past decade, a main obstacle is that such measures are not properly enforced. Lebanon is a signatory to several international agreements relating to IPR, but is unable to properly implement basic anti-piracy measures.


In 2000, the Lebanese government issued a customs law that prohibits the export, import, and stocking of goods infringing copyright. Punishment imposed by the country’s IPR law includes confiscation of illegal products and closure of stores in violation, but such measures are not taken often enough. Even when they are taken, they do not exact an appropriately tough punishment. For example, it is illogical to impose a $700 penalty on a shop owner who has been caught stocking thousands of illegal copies of dvds worth many times such a derisory amount. This leniency does not deter pirates.


Lebanon’s reputation as a haven for piracy is also partly due to a lack of awareness. The state has a role to play in enforcing intellectual property rights by creating awareness among the Lebanese people on the importance of such measures. It is insufficient to simply enforce the law; people should also be informed about the issues involved. Experts (mainly from Western countries and companies) come to Beirut to address businesses, the general public, the media and information technology companies on the need to respect IPR. Promoting the benefits of using legal software and other IPR goods focuses on awareness and education more than on enforcement; yet, the going is tough in an atmosphere of economic difficulty and lack of respect for authority.


Respecting IPR is a basic condition for joining the WTO. Lebanon acquired observer status at the WTO shortly after passage of the 1999 Copyright Law, but even if WTO admission was not on the table, IPR enforcement in the country would be a boon to the country’s many artists and other innovators. Sectors dependent on intellectual innovation are crucial to the Lebanese economy. Lebanon is among the top Arab countries when it comes to intellectual innovation. Copyright industries in Lebanon account for 4.5 percent of the country’s employment, generating more than half a billion dollars annually from sectors including publishing, music, theater, video, radio, television and software. A proper IPR culture would be good for all of these — as well as help in getting Lebanon admitted to the WTO.

Riad Al Khouri is senior associate consultant at the William Davidson Institute of the University of Michigan in Ann Arbor

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Hezbollah killed JFK

by Peter Speetjens
written by Peter Speetjens

Most people will be familiar with Joseph Goebbels’ famous line: “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” Yet what they may not know is how the late Nazi Minister of Propaganda advised to deliver the message: “Think of the press as a great keyboard on which the government can play.”

Propaganda is as old as war itself and the media play an essential role in the battle for ‘hearts and minds.’ One way to prepare the public for a justifiable future war is to create an image of evil through a constant flow of negative information. Ever since the days of bows and arrows, enemy troops have been accused of killing women and children, a strategy that still proved effective in the run-up to the 1990 Gulf War.


Then, nearly all American media ran the story that Iraqi troops had stolen incubators from a Kuwaiti hospital, while leaving the babies for dead. Only after the war ended did it become clear that the story was false and had been scripted by Hill and Knowlton, a public relations firm hired by the Kuwaiti government to help prepare America for a “just” war.


Seeing this and other examples, not in the least the US invasion of Iraq, the media should be aware of the fact that the powers-that-be have an interest in playing them “like a keyboard.” Yet in their eternal race for scoops and ratings, the media are often all too willing to swallow the sensational.


Take for example the flurry of articles regarding Hezbollah that have appeared over the past year. If we are to believe every single report, Lebanon’s Party of God smuggled missiles to Gaza, plotted to bomb Egypt, established terror cells in Venezuela and is part of the Columbian cocaine mafia.


Among more recent reports was a May 24 article in Germany’s Der Spiegel which claimed — based on anonymous investigative sources — that Hezbollah was involved in the killing of Lebanon’s former Prime Minister Rafiq Hariri. The news was trumpeted by media opposed to Hezbollah, even though the international criminal court denied having talked to any journalists and the same accusation had already been published by Le Figaro in 2006.


The article’s author, Erich Follath, who in 1983 wrote a book on the Mossad, even had Hezbollah’s fiercest opponents laughing when he claimed that the motive for the murder was the fact that “the billionaire [Hariri] began to outstrip the revolutionary leader [Nasrallah] in terms of popularity.”
In March, the media reported that Israeli jets and drones had, in January, bombed a convoy in Sudan which was allegedly smuggling rockets and missiles into Gaza. Anonymous Israeli security sources accused Iran and Hezbollah of being the masterminds. Israel did bomb Sudan, not once but three times, yet so far no proof has been given that Hezbollah or Iran were indeed involved.


This news had hardly gone quiet when the Egyptian government on April 10 announced it had arrested 49 members of a “Hezbollah cell,” including three Lebanese nationals, that planned to attack the Suez Canal, the Gaza border and tourist resorts in the Sinai. One Egyptian newspaper reported that two Palestinians amid the 49 detainees had confessed to being members of Hezbollah. Yet what are these confessions worth, seeing Egypt’s proud reputation in the use of ‘enhanced interrogation techniques’?


If we are to believe the media, Hezbollah is not just a regional threat. The Los Angeles Times on August 27, 2008, quoted anonymous American defense sources who claimed that Hezbollah was one among many “anti-western organizations” that had moved “people and things” into Venezuela. According to the source, the development was closely linked to the partnership between Hugo Chavez’s Venezuela and Iran.


The same newspaper was at it again on October 22, 2008 when it reported that Columbian authorities had arrested members of a drug cartel, including the Lebanese “kingpin” and “world class money launderer” Chekry Harb. He allegedly had close links to Hezbollah, yet called himself “Taliban.”


The Hezbollah-into-cocaine story returned in April 2009, when an English language website in Holland reported that Dutch authorities had arrested 17 suspects from a cocaine gang. The report rather vaguely claimed that the gang maintained contacts with “other criminal networks, which in the Middle East support Hezbollah financially.” It also said that the suspects, mainly South Americans, invested their profits in property around the world. No further details regarding Hezbollah or properties being bought were given.


Hezbollah is certainly a force to reckon with, but it is hard to believe that Lebanon’s Party of God is a global threat. Most stories seem to have been spoon-fed by governments and security agencies interested in blacklisting Hezbollah. Meanwhile, the media forgot to ask questions — happily played as a keyboard — and instead complained that people do not read newspapers anymore.

Peter speetjens is a Beirut-based journalist

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The Dubai delusion

by Norbert Schiller
written by Norbert Schiller

Sheikh Mohammed bin Rashid al Maktoum, ruler of Dubai and vice president of the United Arab Emirates, likes nothing better than foreign media reports depicting his emirate as the “economic miracle of the desert.” However, since this economic crisis hit, the foreign media has had a field day reporting everything that has gone wrong with Dubai. Headlines such as, ‘Dubai Property Scandal Claim Emerges Amid Media Blackout’ or ‘The Dark Side of Dubai,’ are just some of the stories that have made the headlines lately. In comparison, reporting within Dubai has been relatively tame and, if you didn’t know any better, the local press would have you believe that the economic situation was under control and life was as idyllic as ever. And that’s what the people at the helm want us all to think.

A few days ago, I received an email from a retired friend who until recently was an executive for a multinational based in Dubai:
“I guess Sheikh Mohammed and his marketing and PR [public relations] machine were more than happy to use the press and the [foreign] media to spread the message of the ‘economic miracle in the desert,’ but they should have realized that trying to use the media is a double-edged sword. Journalists love nothing better than a good story and what better story than the broken dream and the broken lives in the desert.”


Regardless of what the government wants you to believe, it’s no secret what is happening. There is no expatriate living in the Emirates who does not know at least one person whose “dream” has been shattered. In fact, most people could probably name a dozen friends and co-workers who were forced to pack up and leave.


For years before the financial crisis, Dubai was awash with money and the mere thought of it suddenly evaporating one day hardly crossed anyone’s mind. Dubai became a phenomenon all by itself, a place where everyone aspired to go to make more money. From the migrant laborer in India to the marketing wiz in the United Kingdom, everyone had their eyes on Dubai. For many laborers, their first brush with reality was having to repay their debt to the agency that brought them here, almost immediately upon arrival. For the well-to-do urban professionals, the first trap was spending money way beyond their means on everything from fancy cars to property. It seemed like everyone was over their heads in debt, punch drunk on the illusion that this was one of the last frontiers left in the world.


My friend was always skeptical about this line of thought and, like many others, viewed Dubai’s rapid growth as a bubble waiting to burst. I can’t recall how many times he endlessly argued at dinner parties, or while out sailing with friends. Often those who boasted about the “Dubai success story” acted as if they themselves were at the top of the food chain. In the same email he goes on: “All along, most of us knew that the Dubai miracle was nothing but an empty mirage. I really pity the suckers who got caught up in the massive real estate scam, which is what this whole mirage in the desert was really all about.”


It’s also no secret that Sheikh Mohammed surrounded himself with people who believed in his dream of transforming the desert into an oasis at any cost. The initial money was there, so too were the investors and the hand-picked team to carry out mission impossible. The list of “miracles” the ruler preformed is abundant and well documented: doubling Dubai’s coastline, building the world’s tallest tower and one of the largest shopping malls and making a ski slope in the desert. But then again, there was no one in the sheikh’s inner circle that was in a position to contradict him if they felt he had gone too far. A few years ago, the CBS program “60 Minutes” profiled Sheikh Mohammed, using interviews with him and his close advisors. Sultan Ahmed bin Sulayem, the chairman of Dubai World, had this to say about his boss: “He’s always asking the impossible, not what you are able to do, but what you cannot do!”


The sad fact is that nobody can really afford to see Dubai disintegrate; too many livelihoods are at stake. Dubai, like the rest of the Gulf states, is a necessity for millions of laborers and workers who come here carrying hopes and dreams of improving their lot. I can only hope that when this crisis passes the leadership of Dubai will come to their senses and create a place that does not only sing its own praises, but looks after those whose sweat and toil have made this emirate what it is today.

Norbert Schiller is a Dubai-based photo-journalist and writer

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