Executive Magazine

Putting the ‘I‘ and ‘T‘ of the region‘s ICT development

by Hana Habayeb November 3, 2008

written by Hana Habayeb

Over the past several years, countries in the Middle East and North Africa (MENA) region have come a long way towards developing their telecommunications sectors. The region’s telecommunications players have seen unprecedented growth, which had scarcely been predicted by analysts even as late as 2002. While the region has seen significant success in improving access to and use of communications technologies, there remain difficulties in encouraging the use of communication tools for the purposes of knowledge exchange. Use of the Internet remains limited, with limited development and uptake of locally-relevant information technology applications.

The region has made great strides in developing ICT infrastructure. Driven by the forward-looking policies of regulatory authorities and policy makers, broadband infrastructure is widely available in most countries and most mobile licensees provide coverage to over 95% of their countries’ populations. Liberalization of telecommunications sectors has driven the success of regional players, allowing their expansion to neighboring countries. The market capitalizations of the top three regional players range between $18 and $34 billion. The ensuing competition has promoted the adoption of communications technologies with mobile penetration exceeding 100% in a number of countries.
Within the broader framework of ICT development, and paying particular attention to information technology, the region’s policy-makers have tried to address concerns of affordability and unequal access to the Internet. Projects such as PC for every home initiatives, IT clubhouses, and Internet community centers have strived to make the Internet affordable to large portions of the population. They have been supported by the recent wave of e- applications development — from e-government to e-learning initiatives — there is not a country in the MENA region that is not implementing such initiatives.
In the area of education, a number of public private partnerships and capability building projects have been developed to promote computer skills, curriculum development, and to improve children’s frequency of Internet access. In the realm of higher education the GCC region, lead by Qatar and the UAE, has begun to host a number of International universities. Saudi Arabia is launching its own King Abdullah University for Science and Technology with a multi-billion dollar endowment and strengths in graduate-level scientific research.
However, there remains a concerning communications information gap. While regulations and policies have seen the launch of a number of initiatives to promote ICT development and Internet adoption, the region’s appetite for Internet has not yet matched that for basic communications services.
A number of reasons explain the gap between interest in communications technologies and their use for knowledge exchange and information technology development. While affordability is often posited as an explanation, there are deeper reasons for the slow development of information societies in the region that policy makers need to address.
While countries in the region have made significant progress in the areas of training and curriculum development, a serious skills gap between what the region’s educational institutions are providing and what industry demands remains. In a survey of Arab executives, 30% sited the lack of qualified personnel as the most important challenge to successful innovation. The knowledge gap is furthered by the limited investment in research and development: by investing 0.2% of GDP in research, development and innovation, the Arab region falls far behind the world average of 1.7%.
The lack of Arabic content is another hindrance to the development of information societies in the region. Common to over 360 million people, the language has seen few successful efforts to develop content for this market. Major examples of Arabic online content and portals exist (including news sites and portals such as Jeeran.com, Maktoob.com, and Nassej.com), but they have a very small impact in terms of the amount of content an active online community requires. Arabic content is currently estimated at 0.5% of global online content. The Internet is its content; without sufficiently attractive, engaging, and informative Arabic content and applications, it will be difficult to effectively promote its use and adoption.
The lack of applications and content is partially driven by a regional investment bias towards traditional investment. For instance, of the private equity and venture capital funds in the region, those that focus on real estate have a combined size of more than $2.3 billion. Those that focus on technology, communications, and media are of a combined size of a little more than $1.6 billion. Within the ICT sector, investment in IT is much less popular than investment in telecommunications, as evident by the tremendous appetite at the most recent IPOs of telecommunications companies.
Given its experience, achievements, and remaining challenges, the MENA region must now carefully consider its trajectory. Strategies to improve access to communications services have been largely successful; however, the region must reexamine its efforts to include the I and T in ICT.
Success does not stop at connecting communities and schools to the Internet — this is a simple matter of infrastructure. Success comes in ensuring that this infrastructure is leveraged as a means to access and create greater knowledge and information. Success is not simply in the introduction of new e-curricula and training programs — success is in aligning educational institutions supply with industry’s demands, it is in the deepening of students’ intellectual curiosities. Success is not only in governments and NGOs pushing ICT applications — success is in the bottom-up, organic development of these applications on a larger scale.
A number of efforts can be undertaken to support a shift towards a more sustainable information society. To encourage information content and applications development on a large scale, we must start looking to the region’s small and medium enterprises, and support them in the areas of finance, administration and innovation.
Much financing in the region is skewed towards more traditional and ‘stable’ investments such as real estate. With that in mind, the region should encourage ICT innovation funding. It should consider providing soft loans for startups, creating innovation funds and competitions that encourage SMEs to produce, rather than governments to provide applications. The UAE has started down this path by launching an ICT Development Fund to provide grants, scholarships and advisory services to support ICT innovation.
The region must also look towards reducing and eliminating red tape barriers to innovation. Regionally, starting a business requires an average of 32 days; in Australia, it requires two. The region must take immediate action to modernize legislation and streamline registration processes in order to reduce this startup time and encourage entrepreneurs to continue innovating.
Public-private partnerships are an excellent medium by which governments have supported local SMEs. Jordan’s Education Initiative is a success-story of such an initiative. Bringing together over 35 international and local partners to develop infrastructure and curricula, Jordan encouraged the development of world-class applications, the injection of capital, the transfer of technology, and the sharing of ideas.
As a result of considered government involvement and regulatory perseverance, the region has come a very long way in a remarkably short period of time. While these actions have spurred the growth of communications technology, information technology is developing at a slower pace. The region’s next moves must further the goal of leaping from communications to information. Evidenced by its success on the communications front, the region has tremendous potential and there is no telling what it can achieve once it has attained the goal of becoming a sustainable information society.

Hana Habayeb is an associate at Booz & Company.

November 3, 2008 0 comments

By Invitation

Women in politics and the media double standard

by Zeina Loutfi & Ramsay G. Najjar November 3, 2008

written by Zeina Loutfi & Ramsay G. Najjar

From Hilary Clinton to the Sarah Palin media frenzy, the topic of “women in politics” has never been hotter. It has even gone way beyond being the subject du jour to being a staple of the entertainment world, dominating political parody shows across the spectrum. At the other end of the globe, with Lebanese parliamentary elections looming ahead and social and political reform being lauded across the region, this is also a campaignable subject in the Arab world, with a host of regional conferences and local talk shows dedicated to it.
The topic has never been more powerfully thrust into the limelight, with the media playing a significant role in bringing it to the forefront, but not always favorably. Although the intended message is to seemingly increase awareness and highlight how women are now, more than ever, poised to play an increasingly important role in the world of politics, the actual discourse and outcome are alas only serving to pull women back.
To start with, coining the topic as “women in politics” is actually a testament to the persistent problem. The proliferation of media segments, articles, and conferences in both the Middle East and the West tackling the subject of “women in politics” can only imply that that there is a need to discuss and debate such an anomaly — almost as if we are debating something as bizarre as “man in outer space.”
This indicates that the core challenge lies in the positioning of the issue itself. This cannot be truer when it comes to women and their never-ending quest to reclaim their rights. For example, for as long as this topic has been debated, the fight has always been about equality with men. Does this mean that men are perfect and complete, and that women are only slowly striving to reach that perfection? Shouldn’t it rather be that a woman should be demanding the rights that are equal to her role in society? Women represent 50% of society and therefore should claim the rights that are commensurate with their role and position. The real positioning therefore should be a struggle for women to be equal to themselves and their potential, rather than wasting energy on fighting with men.
Moving from positioning the issue to communicating it, one needs to look at how the media has been covering the women candidates in the run up to the US elections. Analyses point to the media attacking female candidates based on their gender, focusing more on personal criticism and putting them down more for their appearance, family life or other personal matters. Examples abound from criticizing Sarah Palin that by running for Vice President she is either potentially jeopardizing her children’s upbringing or the position itself, as she cannot both raise five children and run the country, or mocking her as a former beauty queen who wears red lipstick (too feminine) while at the same time she is being made fun of for hunting moose. To belie any possible media partisanship, let’s not forget Hilary Clinton being derided as too cold or tough, whereas a man may never be described this way for the same attitude or actions. All of this only points to the media’s role in promoting the perception that expectations of women politicians are different than what is expected of male politicians. But aren’t they supposed to be equal?
Regarding the role of media in building the political image of women in our part of the world, if what is said is true about the media being a mirror of society, one would really think that all women care about is fashion, makeup, tabloids, video clips, and cooking. Men also have their fair share of publications dedicated to their horses, watches, and sports, yet these are easily balanced if not outnumbered by the many that focus on “the real issues.”
At the same time, regional coverage of female candidates sometimes borders on marveling at an unnatural phenomenon, while seeming to uphold the conception that there is a “woman way to govern.” Whether this is characterized by empathy, and an emotional, more peaceful or even motherly approach, this only reinforces the misperception that women politicians are a different “breed,” which in fact only sets the cause back.
Many would argue that there is only so much the Arab media can do, in the face of the social and religious barriers that women politicians face, overcoming one obstacle only to stumble across another. From female suffrage to the right to stand for election, women now face the challenge of social norms and purposeful religious misinterpretations that hinder their being elected to office.
Despite this, what the media can do is highlight that there is only one way to govern regardless of gender, and that is to agree on one system of values and then hold candidates accountable to that. The real role that media should play is to increase political maturity by highlighting candidates’ political programs and allowing the public to elect the winning politicians and hold them accountable for their performance and certainly not their gender.
In effect, positioning the cause properly and communicating the right messages that can raise awareness and shift social norms will go a long way, yet there is only one factor that can overhaul this cause and catalyze this endless evolutionary journey towards claiming women’s confiscated rights, and that is that women finally shake off their inaction, stop waiting for others’ conscience to kick in and actually make their voices heard, loud and clear.

Zeina Loutfi & Ramsay G. Najjar, S2C

November 3, 2008 0 comments

Capitalist Culture

USA – A storied campaign

by Michael Young November 3, 2008

written by Michael Young

By the time you read these lines, John McCain or Barack Obama will have been elected president of the United States. If it’s Obama, we can assume that the decisive turning point in the election campaign came when the American financial system began melting in September on a mountain of bad debt. For some reason, few of them convincing, the Democratic candidate was perceived as “being better on the economy.” In fact, neither McCain nor Obama by the end seemed to really know what was going on.

And who could blame them, when the greatest minds in the world financial markets were not themselves quite clear on how rotten the credit crisis was? But that mattered little. Election campaigns, like politics in general in the US, have increasingly become a question of presenting a compelling narrative — a rousing story that candidates can offer up to voters that makes it more likely they will be elected. This strategy provokes a reflex among voters not so very different than the one felt when they consume a product. With narratives so central to American politics, candidates have effectively defined their identity in the way they feel they can make headway, regardless of where the truth lies.
So, if the economy was responsible for bringing John McCain down, then that was partly because his narrative left not enough room for a public perception of his financial expertise. A war hero who endured great suffering in Vietnam, McCain’s image was nevertheless never viewed by voters as adequate for someone who could lead an economic revival. As a Republican, he was also perhaps tarred by the brush of the Bush administration’s financial errors (though the Democrats were just as responsible for the credit mess). Finally, a wealthy man, McCain must have lost ground in the eyes of those who felt he would be unable to understand what economically vulnerable Americans were going through.
And if Obama happened to lose, then that’s because the narrative he managed to create was somehow undermined by McCain in the month after the financial crisis hit. McCain had managed to score points against his rival when the discussion was about national security experience. But Obama may have nipped that in the bud with the appointment of Joseph Biden as his vice presidential candidate. And even in key battleground states, for example Michigan, McCain was showing signs of surrender in early October, as he shifted his strategy to discrediting Obama personally.
The politics of narratives are interesting, and disturbing, because the candidate who wins is not the one who necessarily has expertise in what it takes to be president; he or she wins by managing to create an impression of such expertise through the shaping of the personal narrative, then hoping to compensate by learning on the job. For example, what made Obama a more credible “economic” candidate than McCain? The Democrat had no particular qualities as an economist, nor did he play a key role in preparing Senate finance legislation. By the same token, McCain displayed great toughness as a prisoner during the Vietnam War, but the candidate never looked like he had an especially strong grasp of foreign affairs and security policy because of that experience.
Narrative politics are not new, whether in the US or other countries. The essence of politics since the era of modern media, and even at times before, has been the ability to fashion political programs to mobilize the masses. In authoritarian systems, especially those based on populist leaderships, the narrative tends to be centered around enmity and a sense of victimhood, with violence lingering never far away. In democratic systems, however, the latitude for personal choice is far more pronounced, so that candidates have a need to persuade, therefore more room to reinvent themselves. And like all products on the market, considerable imagination is allowed in the marketing.
The months ahead will allow the purchasers — sorry, the American voters — to see if they bought the right thing. It will also allow the rest of the world to determine if they backed the right candidate with respect to their own interests. But an irony stands out: as the capitalist system takes a major hit, one that has prompted states to intervene in the market from the US to Western Europe, one place where the free market remains alive and well appears to be in the realm of narrative politics. Every politician has a story to sell and the nonsense debt just keeps growing. It may all be sub-prime, but consumers are demanding more and the markets are not soon about to collapse. Where can we buy some shares?

Michael Young

November 3, 2008 0 comments

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Measuring business‘ burden

by Riad Al-Khouri November 3, 2008

written by Riad Al-Khouri

Economic indices have become even more popular over the past few years with, for example, the numbers churned out by the World Bank and International Finance Corporation’s annual Ease of Doing Business (EDB) survey being among the most widely anticipated and cited. The function of the EDB index, which tracks the time and cost of key aspects of doing business, is to tell a country how it is doing and so help it identify weaknesses to be addressed and strengths that could attract investment. The latter, however, were unfortunately not prominent for many of the region’s economies in the latest EDB, published in September, which, among other laggards, reported Lebanon in 99th place (down from 98 last year) among 181 countries globally and Palestine (listed as “West Bank and Gaza”) 131st, modestly up from 132.

Yet the picture is more complicated as the EDB index is actually a composite of ten sub-indices that can vary widely, as they do in the cases of Lebanon and Palestine. One of the worst components of the overall index for both is the ‘Enforcing Contracts’ sub-index, in which Lebanon was 118th worldwide, up one notch from the previous year, and Palestine 123rd, although it also improved slightly from last year’s 122. The Enforcing Contracts index is determined by following a payment dispute and tracking the time, cost, and number of procedures involved from the moment a plaintiff files the lawsuit until actual payment. A firm in Lebanon requires 37 procedures and 721 days to enforce commercial contracts, compared to an average of about 44 procedures and 689 days regionally and 31 procedures and 463 days in the more advanced countries of the Organization of Economic Co-operation and Development (OECD). Further, enforcing a contract in Lebanon costs almost 31% of the claim compared to about 24% regionally and 19% in OECD markets. To enforce a contract, Palestinian procedures are 44 in number, taking a total of 700 days and costing 21% of the claim.
On the positive side, the Lebanese and Palestinian components measuring the ease of paying taxes are among the best in the world, Palestine ranking 25th (though with a slippage from 23 last year) and Lebanon placing 45th worldwide, but down nine places from the previous year. The ‘Paying Taxes’ sub-index shows what a medium-size company must pay or withhold in a given year, as well the administrative burden in paying. These measures include the number of payments an entrepreneur must make (27 in the case of Palestine); the number of hours spent preparing, filing, and paying (154); and the share of their profits they must pay in taxes (about 16%). Generally, components of this measure are positive, though the number of payments compares badly with the region (23), let alone the OECD (13).
Somewhat like the Palestinians, the only component of the EDB index where the Lebanese seem to shine is the Paying Taxes sub-index, in which on the global level, Lebanon ranked ahead of the US but regionally placed behind Iraq. A medium-size firm in Lebanon has to make 19 tax payments annually, less than the regional average but more than the OECD. It takes a firm 180 hours to prepare, file and pay its taxes in Lebanon, significantly less than the MENA average of about 216 and the OECD’s 211. Also, companies in Lebanon pay 12% of profits in tax, less than the regional average of close to 13% and the OECD average of about 18%. However, that is not the whole picture and the bad news is that a company in Lebanon pays just over 24% of its profits in labor tax and contributions compared to around 16% for the region and about 24% in OECD economies; so overall, companies in Lebanon pay 36% of profits in tax compared to just over 33% regionally and about 45% in OECD countries.
In conclusion, though Lebanon and Palestine’s performances in the EDB are generally mediocre, when the overall index is dissected into its components, a mixture of good and bad emerges. The 10 components of the general indicator are varied and are themselves divided into different elements; so the lesson from this is that indices should be dissected and not just taken at face value. A second point is that comparisons within regions and globally are valuable: a seemingly low score by a middle-income country like Lebanon or an emerging economy such as Palestine could actually be very healthy if compared to neighboring economies. Finally, look for a temporal comparison: an index might seem bad but its improvement over the past few years could itself be a good sign — will that be the case for the Lebanese and the Palestinians in the next EDB?

Riad al Khouri, co-founder and principal of KryosAdvisors, is senior fellow of the William Davidson Institute at the University of Michigan

November 3, 2008 0 comments

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India‘s fusion with US power

by Paul Cochrane November 3, 2008

written by Paul Cochrane

Over the last 1,000 days India has been trying to get its nuclear status green-lighted by the United States despite not being a signatory to the Non-Proliferation Treaty (NPT) or the Comprehensive Nuclear Test Ban Treaty.

The US Senate’s ratification in October of what is known in India as the ‘123 Agreement’ — in reference to Section 123 of the US Atomic Energy Act — will cause a profound shift in geo-politics for Asia, the Middle East and the West. For behind the deal is big power politics involving the two giants of Asia, China and India, the region’s basket cases, Afghanistan and Pakistan, and Washington’s perennial thorn-in-its-side, Iran. There is also the US- led ‘war on terror’ to consider.
In inking the 123 Agreement, India now has access to nuclear reactors, fuel and technologies from the US — 34 years after New Delhi first conducted a nuclear test in the Rajastani desert. The deal has also put the US top of the list to supply the nuclear technology, valued at $100 billion over the next 20 years and will enable India to develop 200 nuclear warheads as well as indigenously designed nuclear submarines. Sizeable arms deals and economic cooperation agreements have also been inked, with the US expected to get the proposed $10 billion Multi Role Combat Aircraft deal and replace Russia as India’s biggest weapons supplier.
But in the bigger picture, what the bilateral agreement has achieved for Washington is a new ally in Asia that can pressure Iran, with whom India has energy agreements yet still little desire to see Tehran become another nuclear power in the neighborhood. India can also act as a bulwark against the emerging dragon, China. Just over the border from India, in the Tibetan Autonomous Region, are an estimated 500,000 troops of the People’s Liberation Army (PLA), as well as Intercontinental Ballistic Missile (ICBM) bases. It has long been a trigger point and could be again, with numerous skirmishes occurring between the PLA and Indian troops over disputed border areas high in the Himalayas.
By bringing India — the world’s largest democracy at some 1.2 billion people and counting — onboard the US has a country that borders other states of concern whose democratic credentials are dubious at best: Pakistan, Myanmar, and Bangladesh.
The agreement may also well be the Bush administration’s last positive foreign policy achievement. It certainly put a smile on the face of American president when Indian Prime Minister Manmohan Singh told Bush that “India loved him.” But while the agreement is advantageous for Washington, it yet again sends signals of hypocrisy and double standards to the world. There are only four countries that are non-participants in the NPT: Israel, India, Pakistan and North Korea; but with the exception of Pyongyang, whose nuclear arsenal is still in an embryonic stage, the US has strong relations with the first three. Iran on the other hand, which is cooperating with the IAEA, is continuously under pressure to rein in its nuclear program.
The thawing of relations between New Delhi and Washington have, however, come at a time of heightened terrorist attacks within India by Islamists. Although homegrown, the attacks have links to Pakistan.
Islamabad was, after all, fingered as a perpetrator of the terrorist attack on the Indian embassy in Kabul in July, and there are allegations of financial support for Indian jihadists coming from Pakistan and Bangladesh. The deluge of fake Indian Rupees, which are a contributor to inflationary pressures, have also been traced to state-of- the-art printing presses in Pakistan. Furthermore, during meetings at the White House Bush and Singh reportedly discussed the prospect of Pakistan imploding and its notorious Inter-Services Intelligence (ISI) becoming “a state within a state.”
New Delhi is now mulling a beefed up anti-terrorist law and its National Security Agency has been briefed by the US Department of Homeland Security on how to set up a similar body to better integrate its intelligence services which, according to one analyst I spoke to in New Delhi, are still operating with a World War II mindset. Additionally, the Indian press has reported growing pressure on New Delhi to send troops to Afghanistan.
In the global ‘war on terror’, India clambering onboard the US train can been seen as a boon, but for the more skeptical, India has sold out in this new alliance and Washington DC has once again shown its Janus face when it comes to nuclear issues. Iran and China are the biggest losers in this, while the world has become an even more uni-polar place.

PAUL COCHRANE is a freelance journalist based in Beirut

November 3, 2008 0 comments

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President Palin? God help us

by Claude Salhani November 3, 2008

written by Claude Salhani

The gossip around Washington these days compares Republican vice presidential candidate Sarah Palin to a ‘post turtle’. Not familiar with the term? Don’t worry, most urban folks aren’t.

Say you’re driving in the countryside and you see a turtle sitting on a post. First, you know it didn’t get there by itself. Second, you know it doesn’t belong up there. Third, it doesn’t know what to do while it’s up there. And fourth, you wonder what kind of dumb-ass put it up there to begin with.
The frightening reality is that this ‘post turtle’ could end up being the next vice president of the United States of America. Even more worrying is that she could also be president.
Republicans, or at least the ones who placed Palin on the post, believe she is highly qualified for the job. The reason is that she is so politically hollow inside that she can easily be molded by the neocons. Think Bush II, but far easier to influence and control. In defending Palin many Republicans have said she is qualified for the vice presidency (and therefore possibly the presidency, especially when the president is 72 years old and has a history of heart problems) because “she lives next door to Russia.”
Republican Party big shots and their supporters have gone on record with that statement, as unbelievable as it might sound; Fox News was the first to announce that Sarah Palin was knowledgeable in foreign affairs because “she is right up there in Alaska right next door to Russia.”
Frank Gaffney, a syndicated columnist, said that Palin has picked up foreign policy “by osmosis” as a result of Alaska’s geographic location.
The governor’s office in Alaska’s capital Juneau, where Palin works, is about 1,230 miles from the closest point in Russia. My office for the good part of the last 15 years was only 0.19 miles from the White House. Does that qualify me for the presidency? At least I could actually see the White House from my office.
Still, McCain’s wife, Cindy, told ABC News’ George Stephanopoulos that “Alaska is the closest part of our continent to Russia. It’s not as if she doesn’t understand what’s at stake here.” Appearing on ABC’s Charlie Gibson, being questioned about Palin’s lack of foreign policy experience, McCain was asked if in all honesty he could feel confident having on board someone who is as green in international affairs (about the only time anyone is likely to call Palin “green”) as his running mate. Until a year ago Palin had never applied for a passport or travelled outside the United States.
McCain replied that one of the key elements to America’s national security requirements are energy and that Palin “understands the energy issues better than anybody I know in Washington, D.C., and she understands Alaska is right next to Russia. She understands that.”
Hmmm.
Well, glad she got the geography part right, ‘cause she sure flunked in economics. When asked by CBS anchorwoman Katie Couric how the $700 billion economic bailout package the Bush administration and Congress negotiated would help taxpayers, this is how she replied: “What the bailout does is help those who are concerned about the health care reform that is needed, to help shore up our economy, helping… oh, it’s got to be all about job creation too, shoring up our economy and putting it back on the right track, so health care reform and reducing taxes and reining in spending has got to accompany tax reduction and tax relief for Americans and trade, we have to see trade as opportunity not as competitive, scary thing, but one in five jobs being created in the trade sector today, we’ve got to look at that as more opportunity, all those things under the umbrella of job creation, this bail out is a part of that.”
Wow! Yes, she sure is ready.
Kathleen Parker, a well-respected conservative columnist had this to say in the National Review website after watching the interview: “A candidate who is clearly out of her league,” adding that “If BS were currency, Palin could bail out Wall Street by herself.”
Just how clueless Palin is and how controlled she is by her Republican minders was made all the more obvious in the vice presidential debate where it was more than obvious that the governor of Alaska was getting immediate feedback and directives on her portable telephone via text messaging.
I wonder if the fact that Governor Palin “lives next door to Russia” will facilitate any dealing she may have with the Machiavellis of foreign politics? How would she stand up to negotiators with such as Russian Prime Minister Vladimir Putin, a former KGB officer?
The Palin saga has of course has provided late night talk shows with a gold mine of ammunition. Jon Stewart of the Daily Show cut to the chase, describing a Fox News commentator who supported the “living close to Russia” thesis as a “moron.”
Steve Benan, writing in the Washington Monthly described it as “the dumbest argument I’ve ever heard.”
“Palin and McCain are a good pair,” said the Tonight Show’s Jay Leno. “She’s pro-life and he’s clinging to life.”

Claude Salhani is editor of the Middle East Times and a political analyst in Washington.

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November 3, 2008 0 comments

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Dire straits for food & finance

by Peter Speetjens November 3, 2008

written by Peter Speetjens

As world leaders have their eyes fixed on the global financial crisis, which has seen western governments spend trillions of dollars to keep banks and financial institutions afloat, British aid organization Oxfam on October 16 issued Doubled Edged Prices, an alarming report about the ongoing global food crisis.

According to Oxfam, average prices of staple foods such as rice and cereals have risen up to 300% in some countries, which have pushed an extra 200 million people to the edge of starvation, bringing the worldwide total to nearly one billion. Key drivers of the crisis are increased demand, which includes increased demand for bio- fuels and meat; reduced supply due to an increase in extreme weather conditions; the hike in energy prices and financial speculation in commodity markets.
Hardest-hit are poor urban dwellers who spend up to 80% of their daily income on food and mainly live in food- importing countries in Africa, Asia and Latin America. The Middle East has not escaped the ordeal. According to the Arab NGO Network for Development (ANND), the price of corn and rice in Egypt has risen by more than 70% between 2007 and 2008, while in Sudan the price of wheat increased by 90%. In Lebanon, the average price of imported food has increased by 145%. Experts warned that an estimated 30% of Lebanese live under the poverty line, which could increase to 40%.
Massive bread riots in Egypt earlier this year showed what the political consequences of an empty stomach can be. The Egyptian government is currently paying billions of dollars to subsidize cheap bread production. Following years of drought and bad harvests, the Syrian government may soon be forced to start importing wheat. Meanwhile, Oxfam observed, the crisis is not a setback for everyone, as large agricultural corporations and supermarket chains have recorded soaring profits.
Interestingly, a BBC survey last summer found that 60% of respondents in 26 countries said higher food and energy prices had affected them “a great deal.” Dissatisfaction with their government in terms of tackling the crisis was greatest in Egypt, where 88% of respondents said to be unhappy with their leaders, followed by the Philippines (86%) and Lebanon (85%).
At first sight, the world’s financial and food crises could not be more different. While the first has so far mainly been felt by Wall Street bankers, boardroom directors and shareholders, the second predominantly hurts the poorest of the poor, who break their backs for a few dollars a day and for whom a 30% price increase on a loaf of bread is quite literally a matter of life and death. International aid organizations have warned that the crisis is most acute in Ethiopia where six million people survive through emergency food hand-outs, up from two million last April.
However, the crises have at least one thing in common: far-reaching deregulation and market liberalization appear have aggravated the suffering. Lack of overview and transparency in the US allowed banks to build an elaborate financial pyramid on what were essentially bad mortgage loans. In terms of food and agriculture, countries that have followed the wishes and international guidelines set by donor countries and global financial watchdogs have been hit harder than countries such as India and Brazil, which have stuck to a more protective agricultural policy.
“The trend in agriculture, as in international finance, has been towards deregulation and a reduced role for the State,” said Oxfam director Barbara Stocking. “This has had devastating effects and innocent lives have been blighted by exposure to market volatility. In countries where governments have invested in agriculture and put policies in place to target vulnerable or marginalized groups, the impacts of food price inflation have been less severe. In contrast, where there has been unmanaged trade liberalization, underinvestment in agriculture and little support from government, the effects have been devastating.”
For decades, financial organizations like the World Bank and IMF have pushed for free trade, open markets and deregulation, despite the fact that the US and Europe themselves have proved unwilling to stop paying billions of dollars in agricultural subsidies to domestic farmers. It was these same subsidies that caused the latest round of Doha free trade talks to collapse.
Haiti is an often-cited example of how open markets and free trade may in fact help create poverty. In 2007, some five million Haitians lived on less than a dollar a day, while almost half the population was undernourished — a situation only aggravated by recent price hikes and bad weather. Ironically, Haiti once was a significant rice producer, yet urged on by free trade ideologists the country opened its markets to allow for cheap imports to arrive, which caused a decline in local production and job creation. Later on, global food prices increased and thus became unaffordable for the increasingly impoverished population.
One thing is certain: less than two decades after the collapse of the Soviet Union, which prompted some conservative enthusiasts to hail the end of history, the world’s food and financial crises have painfully shown the shortcomings and limitations of the free market ideology.

Peter Speetjens is a Beirut-based journalist

November 3, 2008 0 comments

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Georgia on my mind

by Norbert Schiller October 27, 2008

written by Norbert Schiller

Shortly after the collapse of the Soviet Union I joined a small group of Cairo-based journalists on a tour of the former Soviet republics of Azerbaijan, Armenia and Georgia. When we arrived in the Georgian capital of Tbilisi, one of the first things we wanted to do was interview the newly elected President, Eduard Shevardnadze. Shevardnadze had held numerous political posts during Soviet times, the last being minister of foreign affairs under the leadership of Mikhail Gorbachev.

Our initial queries proved fruitless until someone at the Ministry of Information suggested we contact a particular young member of parliament who was supposedly very close to Shevardnadze. After agreeing to meet us, the young MP said that he would try his best and see what he could do to arrange an interview. With nothing else to do but wait for an answer from the president, we sat in the MP’s office while he gave us a little background into his own personal life. He said that he had received a graduate fellowship from the US State Department and during his time in America he got a masters of law degree from Columbia University in New York. He also mentioned that he was married to a Dutch woman whom he met while attending a course on human right in France in 1993.

As the small talk with the MP continued, one of my colleagues, a Dutch journalist, turned to me and asked if I would be interested in illustrating a story about the MP and his wife for a Dutch magazine. “The story of a young woman from Holland falling in love and marrying a Georgian MP would be interesting for our readers,” he said.

After we were assured an audience with Shevardnadze the following day, our group decided to leave and spend the rest of the day site seeing around Tbilisi. My Dutch colleague and I stayed behind with the young MP and he proceeded to show us around parliament and then took us over to his home to meet his wife and young son. She in turn took us out (since the focus of the story was on her) and showed us where she worked as a volunteer with the Red Cross. Later that evening we returned to their home and enjoyed drinks, Georgian and Dutch folk songs and a bite to eat. The whole time I photographed their every move, trying to get a good portrait of the family so Dutch readers could get a feel for how one of their compatriots was living her life away from her homeland in a newly independent country.

Back in Cairo I developed films and put together a nice series of photos that were eventually published in the Dutch monthly magazine along with my colleague’s story. After that, I didn’t give the Georgian-Dutch couple much thought until recently.

About six months ago, I was going through a drawer stuffed full of papers and I noticed an envelope full of large photographic prints. I emptied the contents and found numerous pictures I had made of the Georgian MP and his family along with a copy of the article that was published. At the time I must have indented to send the envelope to them, but never got around to it. All of a sudden I felt a bit guilty and began thinking whether I should go ahead and send it now, 13 years later. After a moment’s pause, I thought again, and decided against it because who knows whether they were still living in the same place or for that matter if they were still married. Not wanting to deal with it, I put everything back in the envelope and stuffed it back into the drawer.

A few weeks ago, at the height of the Russian-Georgian crisis, I turned on CNN at the top of the hour to watch the news headlines and saw footage showing the Georgian president on a visit to the town of Gori, just south of the breakaway region of South Ossetia. The president was seen close up answering questions to reporters both in Georgian and English when suddenly a Russian plane passed overhead and the president said, “Let’s leave, let’s move away.” Then there was a lot of commotion as the president, his bodyguards and the media accompanying him started running for cover and jumping into vehicles. After the video clip ended and the CNN anchor switched gears to another story elsewhere, I sat back, stared at the ceiling and tried to recall where I had seen the Georgian president’s face before. It was not like I had been following events in Georgia very closely so he was not a television acquaintance. There was something more personal about it.

I got up and went over to the drawer stuffed full of papers, pulled out the envelope once again and stared at the photographs of the young Georgian MP I took 13 years before and tried to make the connection. Then I went my computer, typed in his name on Google, and read his biography. It mentioned his masters from Colombia Law School and, more importantly, his marriage to wife Sandra E. Roelofs, a Dutch citizen.

Bingo! I was staring at none other than Georgian President Mikheil Saakashvili, the former MP who I once had the privilege of spending a day with. Maybe now I should think seriously about sending those photographs with the article so he can at least remember back to happier times when he was working in the shadows of Shevardnadze, rather than ducking for cover across television screens at the top of the hour.

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

October 27, 2008 0 comments

Feature

Heating wars

by Peter Grimsditch October 16, 2008

written by Peter Grimsditch

Having lost the cold war in a spending battle that almost bankrupted Moscow, the Russians seem determined to come out on top in the heating war. This July, energy companies from Turkey, Bulgaria, Romania, Hungary and Austria agreed to build the Nabucco gas pipeline, designed to funnel non-Russian energy into Europe through Turkey. Moscow stands accused of bullying its former satellite Ukraine by turning the gas taps on and off at will, in the process also disrupting supplies to Europe fed by the Ukrainian pipeline.

The Russians counter-attacked on at least three fronts. The first was to gather support for a rival pipeline, called South Stream, which would equally avoid Ukraine by forging a link with Turkey under the Black Sea. Anxious to flex its geographic muscles, Turkey signed up for this rival venture too. For Ankara it was an opportunity for a double whammy. It showed the European Union that treating its application for membership with near contempt risked a counter attack where it hurts — on energy supplies. Simultaneously, it demonstrated to Russia, Turkey’s biggest trading partner, that it has buried its past as NATO’s poodle. For good measure, it also provided a chance for Turkey to try to negotiate a better deal on the nuclear power station tender that was “won” last year by a Russian-led consortium in a one-horse race.

If you can’t beat them, buy them

In a heads-you-win and tails-you-can’t-lose move, Moscow opened a second front by taking shares in companies on which Nabucco would rely. Russian company Surgutneftegas acquired a decisive stake in the Hungarian energy firm MOL at nearly twice market value, according to a report in Foreign Policy magazine. Although little is known about Surgutneftegas, one Budapest newspaper shed light on the obscurity under the headline: “Mr. Putin, Declare Yourself.”

The story is similar in Austria, where both Nabucco and South Stream would end. Gazprom already owns 30 percent of Austria’s Baumgarten storage facilities and an obscure Russian company, Centrex Europe Energy & Gas, is seeking to buy a further 20 percent in partnership with Gazprom. Controlling commercial stakes in the key European partners for Nabucco gives Moscow at least two options — starve the venture of funds and thus try to prevent it from being built, or sit back and take the profits from transit fees and sales if the pipeline is constructed.

Politicians have been trying to quell newspaper headlines about a gas war

The third line of attack came in a finely targeted bid to deny gas to Nabucco. Since Azerbaijan’s resources are key to the project, Russian President Dmitry Medvedev signed an agreement giving Moscow the option to buy up to 500 million cubic feet of gas at well over market rate. In the North African theater of the heating wars, Gazprom is committing itself to infiltration of the Algerian market, a major supplier of gas to Europe with new transit pipelines planned to Sicily via Tunisia.

Since the non-Nabucco Europeans are split on the rival projects through Turkey, Ankara can fairly claim that it is entitled to back both sides. The Italian energy giant ENI is involved in South Stream and Prime Minister Silvio Berlusconi was in Ankara when his Turkish and Russian counterparts signed a series of deals in August. The French are almost disinterested observers because their energy mix does not include a heavy dependency on Russian gas and the Germans, despite massive vulnerability to energy supply interruptions, appear reluctant to antagonize Russia by openly backing the other side.

However, Nabucco’s committed supporters have not been idle. The European Commission announced last month it had opened negotiations with Turkey about becoming a full member of the Energy Community Treaty to enable it to align its energy rules with those of the 27 EU countries. Europe was also courting Azerbaijan before the Medvedev deal was signed and, in some respects, offered a better deal. While the Russian agreement made no specific commitment to buy any gas at all, the EU made an all-out commitment to building energy and trade links.

As a display of its even-handed approach, Germany’s former Foreign Minister Joschka Fischer has joined Nabucco while former Chancellor Gerhard Schröder threw his lot in with Gazprom four years ago. Both were private, not state appointments.

Meanwhile, Turkey offers encouragement to both sides and, some maintain, stands to win no matter which of the pipelines gets built. Politicians from various countries have been trying to quell newspaper headlines about a gas war by disingenuously claiming the two schemes through Turkey are not rivals but complementary.

The whole affair risks becoming a soap opera.

Peter Grimsditch is Executive’s correspondent in Istanbul

October 16, 2008 0 comments

Financial Indicators

Global economic data

by Executive Staff October 7, 2008

written by Executive Staff

Inflation: GDP deflator

Average annual growth in percentage

During the period 1993-2006, inflation in the OECD area fell to a record low of 1.2% in 1999. It then gradually increased to 2.5% in 2006. The average annual rate of inflation over the last three years was below 5% for all OECD countries, except Norway, Mexico and Turkey. The volatility in the Norwegian GDP deflator is mostly due to variations in the export prices of petroleum, and these grew very strongly over the last few years. The strong growth in the GDP deflator for Mexico and Turkey effectively reflects general domestic inflation occuring in their economies. These latter two countries have, however, drastically reduced their inflation rates over the period 1993-2006. At the other extreme, Finland, Germany, Korea, Japan, Sweden and Switzerland recorded average annual rates of inflation over the last three years of below 1%. Several countries (Canada, Czech Republic, Finland, Germany, Luxembourg, Norway and Switzerland) recorded deflation over the period 1993-2006 for one or more years, but Japan is the only country where this has been sustained over a number of years.

Household: Net saving rates

As a percentage of household disposable income

Household saving rates are very variable between countries. This is partly due to institutional differences between countries such as the extent to which old-age pensions are funded by government rather than through personal saving and the extent to which governments provide insurance against sickness and unemployment. The age composition of the population is also relevant because the elderly tend to run down financial assets acquired during their working life, so that a country with a high share of retired persons will usually have a low saving rate. Over the period covered in the table, saving rates have been stable or rising in Austria, France, Italy, Norway and Portugal but have been falling in the other countries. Particularly sharp declines occurred in Australia, Canada, Japan, the United Kingdom and the United States. Negative saving — which means that consumption expenditures by households exceeded their income — was recorded in some countries, in particular in Australia, Denmark, Greece and New Zealand.

Law, order and defense expenditure

As a percentage of GDP

Within the total, the shares of the two components — law and order and defense — vary considerably between countries with high shares for defense expenditures in the United States, Korea, Norway, Denmark, France and Sweden and high shares for law and order in Iceland, Luxembourg, Ireland, Spain and Belgium. On average, the share of expenditures on law and order has generally been growing faster than defense and now accounts for more than half of the total for the countries shown in the table. In 2005 — the latest year for which most countries can supply data — expenditure was highest in the United States and the United Kingdom, and lowest in Luxembourg, Iceland and Ireland. In the majority of countries the shares of expenditures on defense, law and order in GDP have been falling since 1995 with particularly large falls in Norway, Sweden, Ireland and France.

Prison population

Number per 100,000 inhabitants, 2004

Over the last fifteen years, most OECD countries have experienced a continuous rise in their prison population rates. On average, across the 30 OECD countries, this rate has increased from a level of 100 persons per 100,000 unit of the total population in the early 1990s to around 130 persons in 2004. The prison population rate is highest in the United States, where more than 700 per 100,000 population were in prison in 2004: such level is three to four times higher than the second highest OECD country (Poland), and has increased rapidly. This increase extends to most other OECD countries. Since 1992, the prison population rate has more than doubled in the Netherlands, Mexico, Japan, the Czech Republic, Luxembourg, Spain and the United Kingdom, while it appears to have declined only in Canada, Iceland and Korea. There are large differences across countries in the make-up of the prison population. On average, one in four prisoners is a pre-trial detainee or a remand prisoner, but these two categories account for a much higher share of the prison population in Turkey, Mexico and Luxembourg. Women and youths (aged below 18) account, on average, for 5% and 2% of the prison population respectively. A much larger share of prisoners is accounted for by foreigners (close to 20% of all prisoners, on average), with this share exceeding 40% of the total in Luxembourg, Switzerland, as well as Australia, Austria, Belgium and Greece. In several countries, the rapid rise in the prison population has stretched beyond the receptive capacity of existing institutions; occupancy levels are above 100% in more than half of OECD countries, and above 125% in Greece, Hungary, Italy, Spain and Mexico.

October 7, 2008 0 comments