Economic Development Archives
March 13, 2013
Stop me, I might bite off my finger.
Although given US influence in IMF and US paranoia about Egypt, this is not entirely ridiculous, it should be: Egypt rules out IMF emergency finance - FT.com
Egypt rules out IMF emergency finance
By Heba Saleh in Cairo
In an apparent attempt to exert pressure on the International Monetary Fund, Egypt has ruled out seeking emergency finance from the fund and said it still wants to secure a $4.8bn loan agreement.
Egypt is in free fall, has rather little hard currency oxygen left.
Balance of payment support has become urgent in recent weeks as the country, which imports a large proportion of its food and fuel, has depleted two-thirds of its foreign reserves. Those now stand at $13.5bn, slightly less than the critical level of three months’ import cover.
Well, if the Ikhouan want free money, they should ask Qatar.
February 25, 2012
A MENA Econ Analysis to come back to
February 19, 2012
Problematic but re Egypt and over reaction
Judith Miller is a gullible git, but this arty in her new ghetto (newsmax, well deserved) Egypt on the Brink: An Exclusive Look at the Hunted Men Who Brought Growth and Reform does touch on some legit issues (between channeling indirect Mubarek regim apologia) re the liberal reformers. Perhaps not what she meant but it reflects on who liberal (economic) reform was contaminated by cronyism and thus deeply compromised. She does not grapple with that honestly, sadly.
For amusement value
I am not going to go through this column to rebut anything. I highlight it for its sheer insanity and amusement value. Slaes, who FT fired, apparently now writes for Bloomberg, giving her economically illiterate self a platform for spouting bizarre free association ideas: If U.S. Troops Pull Out, Economic Growth May Slow: Amity Shlaes - Bloomberg
She actually makes the argument that American military bases build other nations and claims that somehow the French economic problems of the 1970s have some connection to their booting American troops out a decade earlier. This is the land of sheer insanity. I can't quite decide if the stupid git actually believes this, or is just an utter whore for the most lunatic fringe of the Imperialist wing of the American NeoCon movement. that dreams of real empire.
This all an argument that the US should continue to have troops in Iraq, Afghanistan, etc. (and bizarrely claims African countries have foregone growth for lack of American bases...).
February 08, 2012
Egypt-US relations further downhill: military delegation cancels Washington visit.
As this has interesting regional implications, some thoughts on the FT arty Egypt-US meetings cancelled amid trial row and on the recent Gallup polling on Egypt and US assistance
An Egyptian army delegation visiting Washington abruptly cancelled meetings with senior American lawmakers on Monday as US government officials warned the country’s $1.5bn aid package was in jeopardy.
Senators Carl Levin and John McCain, the Democratic chairman and ranking Republican on the US Senate armed services committee, were among a number of congressional leaders scheduled to meet the Egyptian military representatives in the coming week.
But the delegation was recalled home after 19 US citizens, including Sam LaHood, the son of the US transportation secretary, were referred by the Egyptian authorities for criminal trial on charges of operating civil society groups without permission and receiving unauthorised foreign funding.
I'm actually fairly surprised that Egypt has decided to play hard ball on this. They seem to truly feel that USA won't dare suspend aide, however, I don't know the US administration will be able to hold back the political backlash:
Cairo’s decision to try US citizens has put in doubt $1.5bn of US aid after a warning from Hillary Clinton, secretary of state, at the weekend. “We will have to closely review these matters as it comes [to the] time for us to certify whether or not any of these funds from our government can be made available under these circumstances,” she said.
The Obama administration repeated its warning on Monday. “We have underscored how serious a problem these actions are. We have said clearly that these actions could have consequences for our relationship, including regarding our assistance programs,” said Jay Carney, White House spokesman.
It's worth noting the amounts, Econ aide at USD 250 mln is enormous. Serious American allies don't receive such levels. A questionable one....
Under the budget approved by Congress for this year, Egypt is to receive $1.3bn in military aid and $250m in economic aid. However, allocation of the military aid requires the secretary of state to certify that Egypt is supporting the transition to a civilian government, including holding fair elections and ensuring freedom of speech.
And for the political climate in USA, this looks quite problematic to support:
Opposition to aid for Egypt continues to grow. On Friday, Patrick Leahy, the Democratic senator who chairs the subcommittee on foreign aid, said: “We want to send a clear message to the Egyptian military that the days of blank cheques are over.”
More than 40 members of Congress signed a letter sent to both the Obama administration and the Egyptian military council warning that it would be difficult to maintain aid in “the absence of a quick and satisfactory resolution to this issue”.
On this last observation below, (which I suppose suggests that just before aide is cut the trials will be suspended (but not dismissed) or some similar bit of theatre, the Gallup polling rather suggest that they are playing to a willing audience. Of course, it does raise substantial questions about the US-Egyptian relationship, given a political system that has positively nurtured paranoia re outsiders, including supposed allies.
Rabab al-Mahdi, an Egyptian political analyst, said the ruling generals appeared to be involved in a game of brinkmanship with the US but that it was unlikely they would allow the aid to be cut. She said that for the moment they seemed to be playing to nationalist sentiments in a country deeply suspicious of US intentions in the region. ...“I think what we are seeing is part of a populist campaign on the part of the Supreme Council of the Armed Forces in which they take extreme positions against the US and foreign powers. It feeds into the propaganda [they have been spreading] about foreign plots to destroy Egypt.”
The IHT / NYT arty on this subject In Egypt, a History of Distrust of U.S.-Aided Groups - NYTimes.com
A useful reminder that the process was launched under the deposed President, again highlighting the very problematic fundamentals of that regime, happy to accept a nearly USD 2 bln bribe, but at the same time played a double game.
Two groups were targets of an Egyptian investigation into their role in supporting opposition to President Hosni Mubarak before he fell from power last February. “Data was collected about the activities of the American Embassy through the National Democratic Institute and the International Republican Institute,” Mr. Mubarak’s former intelligence chief, Omar Suleiman, said in a deposition....
That being said, I do agree with these observations:
But Paul J. Sullivan, a Middle East expert at Georgetown University who has long studied the Egyptian military, cautioned against interpreting the criminal charges as a result merely of high-level machinations. He said Egyptians of all affiliations are wary of undue influence from the United States, which they view as having propped up the Mubarak regime for many years.
“I understand the purpose of the N.D.I. and I.R.I.,” Dr. Sullivan said of the Democratic and Republican institutes. “But this is a newly freed state and a very brittle and emotional environment. It’s not the best environment for them to work. How would we react if a foreign country came here to teach us how to conduct elections?”
Many Egyptians appear to share the military-led government’s suspicions of American motives. “Eighty percent of the people think this is America’s work,” said Sherif Mohamed, 33, surveying metal fragments, garbage fires and dusty tear gas residue left on his block from five days of battles between protesters and security forces in Cairo.
“America does not like Islam,” he said, echoing a common sentiment here.
In recent days, several members of the newly elected Egyptian Parliament have said they look forward to the results of the investigation, asserting that it was wrong for the United States to violate Egyptian laws barring foreign financing of nonprofits.
Emphasis added. Given USA mainstreet popular paranioa about all things foreign (and the lunatic conspiracy theories that seem to have wide credit in the populist right like NAFTA highway, etc), one can hardly disagree.
However, turning to the Gallup note re Most Egyptians Oppose U.S. Economic Aid beyond the headline that ~70% of Egyptians oppose US assistance to Egypt, economic or political, the non-headline result that there is openness to international assistance via WB or IMF rather suggests a specific problematic relationship that the US would be better served from stepping back from:
LOS ANGELES -- About 7 in 10 Egyptians surveyed by Gallup in December 2011 oppose U.S. economic aid to Egypt, and a similar percentage opposes the U.S. sending direct aid to civil society groups. This rebuke of U.S. financial support may be a challenge for Egypt's newly elected parliament and its future president as the government attempts to bolster the nation's financial stability.
Egyptians are much more willing to receive aid from international institutions, with 50% favoring this type of help. Egypt's military and political leaders initally rejected an offer of support from the International Monetary Fund (IMF) but later changed their minds. Last month, Masood Ahmed, Director for the Middle East and Central Asia Department for the IMF, was in Egypt to discuss a potential $3.2 billion IMF loan to Egypt. Egyptian leaders' ability to attract foreign aid and investment will be important to collecting the capital needed to move the nation's economy forward.Well, Gulf state promises should always be subject to an enormous discount rate. Like 50% plus. Even on their private investment front, they have an El Dorado image, but actual investments in real terms lags badly.
Egytians are nearly as likely to favor aid from Arab governments as they are to oppose help from the U.S. Almost 7 in 10 favor aid from Arab governments.This may in part reflect high-profile announcements by several of the country's Arab neighbors about their involvement in projects to help rebuild Egypt's economy.
However, some Egyptian politicians have begun to voice concerns about collecting on their neighbors' promises. Fayza Abouelnaga, Minister of Planning and International Cooperation in Egypt, recently noted that her country had received only $500 million of the $3.7 billion promised by Saudi Arabia and $500 million of the $1.5 billion pledged by Qatar. Further, she said the United Arab Emirates has paid none of its promised $3 billion. Abouelnaga estimated in December that Egypt's foreign debt reached $34.4 billion, representing 15% of its gross domestic product (GDP).
February 06, 2012
End American (and other) Aid to Egypt
Noted this via the Arabist, frankly Steve Cook is spot on: From the Potomac to the Euphrates » Egypt and the United States: It’s Not You, It’s Me
I say we oblige Aboul Naga and wind down the aid program—including military assistance—as soon as practical. It’s hard to run against the “foreign hand” if there is no foreign hand. In addition to undermining Aboul Naga’s claims (and hopefully weakening her) bringing an end to the aid program and shutting down the USAID mission has multiple political benfits. First, Washington will no longer be in the unseemly position of providing taxpayer largesse—however small in the grand scheme of things—to a government that resents the United States and clearly does not share its values. Second, it will provide an opportunity for a much-needed change in military-to-military relations in which the United States merely pays for the services it needs like expedited transit through the Suez Canal. Third, it is consistent with this moment of empowerment and dignity for Egyptians many of whom do not want U.S. assistance either because they believe it actually stands in the way of a democratic transition or accept Aboul Naga’s argument along with those who couldn’t care less about U.S. assistance because it doesn’t touch their lives. Finally, it will free up funds for the United States to help others who actually might want Washington’s help, perhaps the Tunisians, Moroccans, or some sub-Saharan African countries would be grateful for development assistance.This goes for others aide as well (UK, Germany).
Assistance spent on Tunisia, Morocco, the Sahel, would make rather more sense. Egypt, well, would do well to go through a "cure."
February 04, 2012
A NYT arty I have been meaning to come back to, on entrepreneurship in the Arab
First, a good observation from an otherwise not terribly interesting op-ed in the Wall Street Journal by an Under Secretary of State.
Private entrepreneurship is a vital antidote to this mix, but deep skepticism of markets persists in North Africa. A 2010 poll in Tunisia revealed that well over half the population preferred government jobs over any type of private-sector employment. And no wonder: In their experience, a market economy stands for crony capitalism that benefits only the well-connected. It's important to correct this perception.The interesting observation here is relative to the distrust of private employment, and the US official connecting this with their experience of market economies as crony economies "only benefiting the well-connected." That it should be noted, is not purely corruption it is also the economic expression of social mores and lack of trust in society. That's an important thing to keep in mind. While note the sole driver, it is an important one.
Turning to this IHT / NYT arty which is worth a few notes, Entrepreneurial Spirit Awaits Its Moment in the Middle East in particular in keeping in mind the above.
“Ideas are cheap, but it is about whether you can find an entrepreneur who is passionate about the idea,” Mr. Ito said. “You need passion, some experience and good investors, but also you need the ability to have structure. Corporate structure is tricky and bankruptcy structure is tricky. Those tend to inhibit entrepreneurs that might otherwise be taking the risk.”In addition to the cultural issues, I also agree that poor, outdate corporate law and structures are significant barriers in the region. The cultural barriers cry for adopting innovations from North America in particular to help better deal with the risk.
While the legal system differs from one Arab country to another, limits on foreign ownership and the need to have a local sponsor in the Gulf region in particular will limit the extent to which entrepreneurs can flourish. Bankruptcy laws also remain opaque and the interpretation of investor rights is often arbitrary. Censorship of Web sites and the banning in some countries of alternative phone providers like Skype also pose hurdles.Eh, the Gulf is the major area where ownership restrictions are barriers, much worse are opaque and slow resolution makes it even worse.
“Most of the companies I invested in, in Singapore, were transplanted with entrepreneurs coming from other places,” Mr. Ito said. “Singapore, Hong Kong, Japan and other non-U.S. hubs have fairly easy corporate structures that started to mimic the U.S. Here, if you change the structure a little bit, you attract a lot of entrepreneurs, and then they would create jobs locally.”
Besides helping introduce investors abroad to opportunities in the region, Mr. Ito is eager to transport the M.I.T. Media Lab culture to the Middle East by hosting meetings in the region and encouraging Arab companies to join.Last observations are interesting to reflect on.
“Arab companies in the past wanted to do big things; they like big names and big projects,” Mr. Ito said. “I think the way the Media Lab innovates, which is undirected free thinking, is a little bit different than the culture here, which is to plan things and do five- to ten-year projects.”
April 25, 2011
As the Arab Spring Rolls, China Invades Carthage
China's deputy Commerce Minister Fu Ziying visits Tunisia, talking tourism and appliance manufacture investment.
April 20, 2011
Carnegie + W Bank on NA and EU: True, False, Nuanced, Well-known?
Soliciting the experts regardng these summary statements via Carnegie and World Bank, below. Basic fact, nuanced, fundamentally off? I go with #1, but just confirming.
March 04, 2011
Egypt & Sectarian Violence: The Deep Security State
First, Kudos to Reason for picking this up, since it is otherwise being ignored. The Muslim extremist narrative is a fun and simple one. It gets nastier, however. Knowing Egypt, I give much credence to the accusations that - vaguely similar to apparently well-founded accusations in Algeria that a portion [not all, a portion, 25%? More? Less No one will ever know] of 'religious' violence is linked to manipulation of the security state:
Was the Mubarak Regime Complicit in Egypt's Sectarian Violence? - Hit & Run : Reason Magazine
The last year of the Hosni Mubarak regime was, according to The New York Times, "the bloodiest year in four decades of sectarian tensions in Egypt." Bookended by two attacks on Coptic churches in a country with a sizeable Christian minority, the year of bloodshed reinforced the idea that only a strongman could prevent Islamic fundamentalism from overrunning the Arab world's largest country.Emphasis added.
But shortly before the Egyptian military moved against the Mubarak regime, Al Arabiya television reported allegations that the Egyptian government, not content with fighting actual Islamists, may have invented some of its own enemies. An official government probe is looking into reports that the New Year's Eve church bombing in Alexandria, initially blamed on Al-Qaeda, might actually have been perpetrated by the Egyptian government, with the intention of gaining sympathy and support from the West. The Saudi-backed TV station—founded as a moderate alternative to Al Jazeera, and host to Barack Obama's first formal interview as president in January 2009—also reported that British diplomats believe Egyptian Interior Minister Habib el-Adly had a whole department dedicated to these sorts of operations:
First, on the Italics emphasis: Founded as a moderate alternative!!?!? Reason write lapped up propaganda here. Rather founded out of Saudi annoyance at Jazeera criticism of themselves.
Second, the Interior Ministry accusation I can credit - of course that does not mean that all religious violence, discrimination against Copts and the like is due to Interior. Rather it suggests Interior probably exploited a real problem for its own agenda. I have long viewed, however, such violence and tension in Egypt as a symptom rather than a fundamental. Diminishing space, economic opportunity and a critical sense of desperation and fighitng over crumbs are the fundamental drivers.
February 25, 2011
Tunisia, Don't forget Tunisia.
Don't Forget Tunisia
25 Feb 2011 05:19 pm
J. Scott Carpenter says it is "going to need help from the international community - and a lot of it":
If Tunisia doesn't succeed, no other country in the region can. Tunisia's 10 million inhabitants do not suffer the ethnic and sectarian divisions that bedevil many of their neighbors. Tunisians are well educated and largely middle class -- 80 percent own their own homes. Nearly all Tunisians practice the same form of moderate Islam. The populace looks to Europe for its economic and political inspiration. The cry Tunisians made famous around the world during their revolution, "Dégage!" (Get out!), is tellingly in French, not Arabic.
The underlying article is good, but the emphasized parts are annoying. Just because someone speaks French or English well doesn't mean moderation. Tedious condensation that (doubtless the writer, a former State person, was a francophone). Same re "moderate Islam" - I understand why it has to be said in these articles but really it gets tiresome.
Let me suggest an alternative, "the ordinary, non-extremist Islam of most of the Islamic world..." - excepting the seriously retarded places, (AfPak, Gulf).
MENA Unrest: Moroccan Fruits
Taking our eyes off of the carnage in Libya and what I believe to be the beginnings of a civil war there, a quick note on Morocco. The local press reported this a.m. rumours that the current prime minister and his government are likely to be booted. There are rumours flying around about what will happen. I heard from a very good friend of mine with Palace connections, direct ones, that the decision is already made, the Abbas El Fassi government is toast. The only question is who in the ministries are getting replaced and who are not.
February 17, 2011
Bahrain Protests Crushed: This perhaps isn't going to help with the financial centre aspirations
Bahrain is one of the countries in the region I have very little direct experience with, so I shall limit myself
BBC News - Bahrain protests banned as military tightens grip
There were columns of tanks and armoured personnel carriers moving through the city this morning. The area around Pearl Square, which was the home of the protesters up until 12 to 15 hours ago, is now ringfenced by the security forces.
Barbed wire has been erected; there are vehicle checkpoints and roadblocks around the city, traffic is being controlled, and the authorities have said all protests have been banned.
It was a very different scene at the hospital: one of passion, chaos, mourning - and anger. Hundreds of people were gathered outside as the ambulances turned up. Crowds rushed forward; doctors were angry because they said ambulances had been prevented from attending to those people who had been injured when the police attacked them.
This kind of crack down is likely to see ongoing violence and... well I bet the Khalifas just chose dynasty over national aspirations as a financial centre.
It does rather suggest that this really is the Arab 1848. I had my doubts.
February 08, 2011
Tunisia Appeal for Aid
A smart appeal, although I suspect the US, instead of investing in the country where it has the greatest liklihood of effect (and where it chose the side of Angels), will continue to pour billions down the Egyptian rat hole.
FT.com / Middle East & North Africa - Tunisia appeals for aid to protect democracy
Tunisia’s interim prime minister, Mohammed Ghannouchi, has appealed for international funding to “protect the Tunisian experiment”, insisting that the cost “would be really very modest compared with what is at stake”.
He told The Financial Times in an interview there was no guarantee that the transition to democracy after the toppling of Zein al-Abidine Ben Ali as president last month would go smoothly. The popular uprising inspired protest campaigns across the Arab world, most notably in Egypt.
“There are forces that would like to take it back to square one,” he said. “All the people who have things they can reproach themselves for, who profited from the old system, are going to do all they can to hinder this democratic process.”
Tunisia, the profile of faux econ liberalism
Now, the arty below I strongly suggest taking Gulfies complains about bureaucracy with a large grain of salt. Maghreb bureaucracies do follow the finest French traditions of inflexibility, but on the flip side my experience with Gulfies is that they expect all rules etc to be open to personal negotiation (e.g. adding on floors at a whim on approved building plans, etc.). There is a happy medium that neither side has achieved. In many respects I prefer the Maghreb side as at least there are genuine institutions, rather than generalised personal fiat.
FT.com / Middle East & North Africa - Tunisia left with an investment mirage
Tunisia was always heralded, by itself and others, as a magnet for Gulf investment. But just as the political unrest of the past month has given the lie to its political stability, another mirage is the country’s image as a prime investment destination, Gulf investors say.
They complain of a combination of grinding bureaucracy, corrupt demands and interference from the family of the former president Zein al-Abidine Ben Ali. The impact of the global financial crisis added a further burden to many landmark foreign investments.
“Gulf businessmen found out that corruption in Tunisia wasn’t the corruption they were used to,” says one Tunisian banker. “You pay to get in, but you don’t get a service in return.”
Statistics suggest that the UAE is the largest investor in Tunisia, with more than $30bn of foreign direct investment.
Yet Gulf businesses may have promised grandiose plans but in reality have only mobilised a much smaller amount of capital. While Tunis Sports City is the most advanced UAE project in the country, Bukhatir is still only believed to have invested a tiny fraction of the $5bn cost.
“Bukhatir has been deeply committed to the development and remains focused towards Tunisia’s long-term growth prospects,” the company said in a statement.
Gulf investors say most deals, even those that went through government agencies and ministries, eventually ended up with some sort of financial demands from the broader family of Ben Ali, from bribes to finalise the transfer of land to fully fledged joint ventures.
The item re The Family is important. By all accounts I have from professional partners in Tunisia, the Trabelsis (mostly but not only) got quite rapacious in the past decade and it only escalated in the past 5 years as a sense of impunity grew. Raises questions I may add, parenthetically, about Transparency Int'l indices.
The other item here is the Vapour Ware effect of Gulfie investments, particularly Dubai / UAE investors who have not given up on their 'minimal direct capital, maximum effort to flip on speculation' - the speculation and flipping strategy being why they're so keen on the big announcements effect. A leveraged strategy they're still trying even now. That's in contrast with the Kuwaitis who tend to eschew that, and actually put in the hard capital and get something done before crowing about it.
February 07, 2011
Neither Free Market nor Lbieral, Egypt
An Item I must return to as it is my speciality
Resentment Finds a Target In Ahmed Ezz - NYTimes.com
On paper, the changes transformed an almost entirely state-controlled economic system to a predominantly free-market one. In practice, though, a form of crony capitalism emerged, according to Egyptian and foreign experts. State-controlled banks acted as kingmakers, extending loans to families who supported the government but denying credit to viable businesspeople who lacked the right political pedigree.
This is in effect part of the problem of that kind of regime. The usual Left academic critique is that " IMF diktat" (a phrase that one can only use if one has actually no experience with IMF and their limp-wristed ways with such regimes) forces 'neo-liberal' economics down the throats of countries like Egypt. Quite the contrary, Egypt came to these reforms on the bankruptcy of their state-driven model, with all the crony-ism and gross and massive inefficiencies that State models everywhere have shown. They adopted part of the IMF & WB advice re privatisation for greater efficiency, but only part. They did not adopt free market reforms as such. Unfortunately, privatisations were merely transfers from nominal state ownership with monopoly control to regime-cronies with monopoly control (as well as Military related control). More efficient than the state, yes, but not overall better for the population. Pseudo free market without a reasonably free press to critique regime and cronies, and without a reasonably free financial system (the Egyptian system remains massively state dominated, which as this note correctly indicates, doesn't mean more ' social' direction, it means more ability for rent extraction), you get this Frankenstein system.
Of course people hate this system, it combines the worst features of both systems.
July 29, 2010
Turkey & the old empire (Turkey and MENA)
Slyly referring in the title to some of the crazed political commentary coming out of hard right Israel circles, but I genuinely find this interesting. The Turkish business engagement with MENA has been building since before our AKP fellow, a natural development.
As Turkey Inches Eastward, Syrians Feel the Love - NYTimes.com
GAZIANTEP, Turkey — Well-heeled Syrians had already been coming to this ancient industrial city, drawn here by Louis Vuitton purses and storefront signs in Arabic. But local shop owners say Israel’s deadly raid on a Turkish-led flotilla to Gaza in May has solidified an already blossoming friendship between Syria and Turkey, the new hero of the Muslim world.Emphasis added. Quite so. I recall again a recent conversation with American diplomats that I ran into that were in high dungeon after snubs to some Israeli delegation that they - the Americans - were pimping in the region. Leaving aside the queerness of why the Americans were so very solicitous of an Israeli delegation's meetings (they do seem to forget it is a foreign country, and one never sees quite this solicitousness for other allies), their view that Turkey was 'turning against them' was just boggling. As was their apparently genuine surprise at the reaction to the Gazan flotilla event (as if one of their own citizens had not been killed, well one of the wrong religion and ethnicity it would appear); entire and myopic misread of the Turkish relationship and influences.
“People in Syria love Turkey because the country supports the Arab world, and they are fellow Muslims,” Zakria Shavek, 37, a driver for a Syrian transport company based in Gaziantep, said as he deposited a family of newly arrived shoppers from Aleppo, which competes with Damascus for the title of Syria’s largest city and is about a two-hour drive from here. “Our enemy in the world is Israel, so we also like Turkey because our enemy’s enemy is our friend.”
The monthly pilgrimages of tens of thousands of Syrians to this southeastern Turkish city — which intensified after the two countries removed visa requirements last September — are just the latest manifestation of the growing ties between Turkey and Syria, part of the Turkish government’s efforts to reach out to its neighbors by using economic and cultural links to help it become a regional leader.
Turkey’s shift toward the Muslim world — from the recent clash with Israel to Prime Minister Recep Tayyip Erdogan’s description of Iran’s nuclear program as peaceful — has prompted concerns in the United States and Europe that Turkey, an important NATO ally, is turning its back on the West.
But in Turkey, where 70 percent of all exports go to Europe, businesspeople insist that the government’s policy of cultivating friendly ties with all neighbors reflects a canny and very Western capitalist impulse to offset dependence on stagnating European markets while cementing Turkey’s position as a vital economic and political bridge between east and west.
Indeed, most Arab states, including Syria, enthusiastically support Turkey’s bid to join the European Union, viewing Turkey as a vital intermediary to Western markets that might otherwise be off limits. At the political level, Turkey’s influence in the Middle East is also deeply enhanced by its strong Western ties — a fact recognized by Syria’s president, Bashar al-Assad, who shocked many in the Turkish capital this month by warning that the latest crisis between Israel and Turkey could undermine Ankara’s role as a mediator in the region.I also believe this is largely true.
While it is a bit of journalistic .... shiny new objectism to point to this as entirely new after the Gaza debacle, there is certainly a real development. Shall try to return to further comment on the article, unfortunately on a plane the next two days.
July 22, 2010
Small Cap & Dubai Getting its Groove Back
One thing Dubai continues to do well is move fast - of course moving fast in the real estate bubble got them in major trouble, but if the efforts are not at cross purposes with their various markets, this has some interesting potential.
FT.com / FT Trading Room - Dubai prepares to launch second-tier market
The tax-free DIFC financial zone, which has its own laws modelled on western regulations, would find it easier to set up a new bourse than other jurisdictions, said Mr Saidi.
“But we don’t want it to be restricted to the DIFC, we think all countries in the region would benefit from such a market,” he said.
A second-tier market would remove some of the financial and regulatory barriers to listing that put off some smaller companies from initial public offerings on local markets, where companies have to float 55 per cent of their shares at a price dictated by the authorities, rather than via a book-building process.
Mr Saidi said there are many companies based in the “free zones” of Dubai – government-run business parks that allow foreigners to hold 100 per cent stakes in their businesses – that would want to use the new exchange to engineer a financial exit from their businesses.
Many of these foreign-owned businesses, spanning sectors such as logistics, technology and media, have also faced challenges in raising capital in the downturn as bank credit has tightened up.
Amid Dubai’s economic downturn, the government is focusing on developing small- and medium-sized enterprises. Dubai is mulling the introduction of special visas for entrepreneurs and new regulations to make it easier for small businesses to be set up. The UAE is also working on insolvency laws to allow more orderly winding up of companies.
The plan for a new sub-market comes amid broader exchanges consolidation in Dubai and the United Arab Emirates.
DIFC-based NasdaqDubai and Dubai Financial Market, the government-controlled domestic bourse, have linked their trading platforms in a bid to encourage DFM retail investors to inject liquidity into NasdaqDubai, the listing home to global ports operator DP World.
Officials are also working on a merger between the stock exchanges of Dubai and Abu Dhabi to create a deeper, pan-UAE market, which would likely become more attractive to foreign funds.
Emphasis added. This sounds like Dubai Gov is starting to get back to the bread and butter, after wasting vast capital and effort over the past few years playing real estate speculation. Now if they can suck up the RE pain, maybe they can jaw the developers into making those ridiculous towers affordable.
July 20, 2010
Leb Land & Gas
No not from badly cooked falafel but off-shore natural gas. It is hard to know what to make of this, but one does rather think this will eventually become the excuse of another Leb-Israel showdown (taking the idiocy of the autistic Israeli government as a given for the next few years).
FT.com / Middle East - Gas field threatens fresh Lebanon-Israel dispute
Gas field threatens fresh Lebanon-Israel dispute
By Ferry Biedermann in Beirut
Trouble is brewing in the waters off the coast of Lebanon and Israel about the future of one of the largest discoveries of natural gas in the eastern Mediterranean.
A field known as Leviathan might contain 16 trillion cubic feet of gas – enough to serve Israel’s domestic needs and make the country a substantial exporter.
However, on the Leb side, even if a deal were worked out, given Lebanese public governance (if that is not an oxymoron), one does rather suspect that the benefits would mostly accrue to the Plastic Surgery Crowd (for all that a disciplined pay-down of their public debt would be wiser).
July 15, 2010
Tunisia, a paragon of ... backsliding
The Ben Ali regime is clever, I have to give them that. Dressing up regime-self-protection as economic security is interesting.
FT.com / Middle East - Tunisia accused of harassing its critics
The law opens to punishment any Tunisian who contacts foreign parties with the aim of harming the country’s “economic security”. It seems aimed particularly at local human rights activists who lobby for more pressure on their government from the European Union, Tunisia’s foremost trade and investment partner
Ah the poor Ben Alis, one would hardly want to crimp the lifestyle.
Are they Bloody Daft?: US Department of State: Maghreb Entrepreneurship Conference September 29-30, 2010 in Algiers
I mean really. Algeria? Is the American government bloody daft? Algeria is doing everything possible to make life hell for entrepreneurs and foreign investors. I guess Petrol talks, but bloody hell this may be one of the stupidest site hostings (and Algiers... well people can enjoy the State-run splendour of El Aurassi, that fine monument to the brilliance of state hotels - and museum to the 1970s glory days).
US Department of State: Maghreb Entrepreneurship Conference September 29-30, 2010 in Algiers Builds on Presidential Summit on Entrepreneurship
July 14, 2010
North Africa / Maghreb & Desertec (mega solar & wind plans)
I confess I was rather dismissive of Desertec when it was announced but am becoming less so. The mega plan I don't see happening (if only because the idea of Algeria and Morocco on one hand and Libya and Egypt on the other being able to come together on this kind of integration is at present somewhat comedic). However, for certain countries the potential to be the "points" or leads on a semi-stand alone basis in the near to medium future... Well that is looking better. Morocco and Tunisia, maybe Egypt (Egypt being problematic if only for distance and interconnections, whereas Morocco and Tunisia have less issues here).
Gregor Czisch on the super-grid | FT Energy Source | FT.com
The idea of a wholly renewable electricity supply, using a system that spans Europe and North Africa, is gaining ground.
There is scepticism, of course, about the variability of wind and solar power, and the cost of deploying the infrastructure. But several studies in the past year have shown how a good geographic blend of sources might make this possible, and perhaps even cost-neutral – and replicable around the world. Big energy equipment vendors are forming consortiums around both the Europe-African super-grid and ‘Desertec’, the idea of a massive solar project in the Sahara desert.
Is there the needed capital? Dunno, but people are becoming more interested.
July 11, 2010
WB new report to chew on: FDI restrictions in MENA (& global)
Just noticed this alert. I shall have to sit down and chew on this. Although there are limitations to such efforts, necessary to have a standardized comparison across the globe, I am finding these new private business environment orientated databases WB is developing to be quite interesting and useful (whatever their flaws, they help bring some greater objectivity than is available from many bespoke private efforts that often are quite... marketing oriented).
FDI restrictions stifle start ups: World Bank report - International Business Times
-- In Sub-Saharan Africa and the Middle East and North Africa, completion of procedures by foreign companies consumes twice the time required by domestic companies.
No kidding. Never-mind the shitty little functionaries that see the foreigners as walking pocketbooks.
July 10, 2010
Egypt & The Arab Socialists: Failures in Liberalisation
An interesting article from FT on the ongoing failure of liberalization in Egypt (despite the cheer-leading press on this over the years, Egypt benefiting from the Pyramid Halo Effect) A general observation is how much the hard-core Arab socialist countries ended up resembling each other in terms of their dysfunctionalities. Egypt, Algeria, Syria - all three show really impressive similarities in terms of economic dysfunction despite a fair degree of diversity between themselves otherwise.
FT.com Unrest adds to Egypt’s labour travails (emphasis added in bold)
Almost unheard of a few years ago, labour protests are now so frequent in Egypt that barely a week goes by without a sit-in or strike by workers calling for higher wages or better conditions. .... Earlier this year, successive waves of workers camped out for weeks at a time on a narrow strip of pavement in front of parliament to call attention to their grievances. The protesters have included public and private-sector employees. Egyptians protesting in support of political demands can usually expect a harsh response from the security services. More tolerance, however, has been shown towards workers and in most cases the government has made concessions. The reason, analysts argue, is that the authorities fear that suppressing agitation in favour of specific economic demands could give rise to wider political unrest. There is also a recognition that high inflation has severely eroded the purchasing power of low salaries. ....
“There is no country in the world which does not set a minimum wage,” says Kamal Abbas, a labour activist who runs the independent Centre for Trade Union and Workers Services. “This has to reflect a basic basket of goods, and it should be open to renegotiation [when prices rise].” [Lounsbury: Absolute rubbish, but the usual posturing that one hears from labour activists] He and others say Egypt has no functioning mechanism for agreeing wages. Trade unions are under the control of the government, undermining their ability to reflect the interests of their members. [Lounsbury: Well, yes,really the worst of both worlds although I hardly care much for the radical leftism of the labour groups in MENA]
High unemployment, officially at 9.4 per cent but unofficially much higher, means workers are often prepared to accept low salaries and illegal or unsafe working practices. ... Relative costs are a concern. Employers in Egypt complain that the productivity of local workers is low, their work ethic poor, and they are ever-ready to abandon their jobs for slightly higher wage offers. [Lounsbury: I can't get behind the criticism of always being ready to switch to better pay, never understood that as a critique] “There is a mismatch between the capabilities of the unemployed and the qualifications wanted by companies,” says Ahmed Abdel Wahab, the head of the Engineering Industries Export Council. “Ironically we have unemployment, but it is not because there are no jobs.”
The problem is at its most acute in the textile industry, a labour-intensive sector that employs some 30 per cent of the manufacturing workforce. “The global crisis has offered us here in Egypt opportunities, but we are unable to benefit because we cannot grow fast enough because we have a people problem,” says Magdy Tolba, a garments manufacturer and exporter who employs 4,000 workers. Mr Tolba always needs an extra 700 to 800 workers “in all departments”. He blames the problem on the poor quality of state-funded vocational education and the emergence of generations of graduates who shun industry in favour of easy jobs in the civil service, where the day ends at 2pm. [Lounsbury: "Emergence?]
The average salary in his factory, he says, is $133 a month and could reach $180 with overtime. “If salaries go any higher we would be unable to compete,” he says. “Bangladesh, Sri Lanka and Vietnam have lower labour costs.” Mr Tolba says he has had to import workers from Bangladesh in order to meet his export commitments. They cost him up to 25 per cent more than Egyptian workers, but their productivity, he says, is 40 per cent higher.
The government is aware of the need to improve vocational training and there are several schemes under way to address the issue, some funded by foreign donors. But experts say a more comprehensive strategy is needed. Mr Radwan, the former ILO economist, says that a “formula which worked from Brazil to Singapore” is the establishment of a training fund in which the private sector contributes 1 per cent of its labour costs. “The fund would be run by government, labour and business, but the private sector would have the upper hand,” he says.
Poor competitiveness due to poor labour culture and general productivity are real handicaps for the MENA region as they are not super low cost relative to direct labour cost. The sheer and utter cretinism of the state supported training programs is hard to capture. The Private Sector type run training fund is a good idea, if implemented correctly. One rather suspects given Egyptian Pharaonism that will never be the case.
July 05, 2010
Education, Arabic. Even the Gulf
Sadly a long-run problem in the Arab world, the archaism of Arabic language instruction.
FT.com Bilingual classes at heart of shake-up
Back in the Emirates Palace, teachers say the problems persist in the Arabic curriculum. Children are introduced to letters of the alphabet one letter at a time simply by drawing the shape or by colouring it in. Classes are uninspiring and result in the children disliking learning in general and Arabic in particular.
April 06, 2010
Class Demographics Explain Better MENA/Muslim Integration in USA?
The Washington Times, not normally a spurting fountain of Muslim-friendly coverage, praises the relatively successful integration of Muslim immigrants in America when compared to that of Europe. (The newsstory mostly concentrates on inter-faith dialogue, but the broader implication of better relative integration (e.g. “melting pot”) in America comes through loud and clear.) While I do enjoy a nice dose of American exceptionalism, and I do think it may apply here in some ways, let me nevertheless throw out a less nationalistic hypothesis on relative integration levels. I am too lazy and busy to find and crunch the appropriate numbers and surveys to confirm or refute it, but here it is: Could some of the relatively better Muslim/MENA integration in America be simply due to the fact that Muslim immigrants there have tended towards the educated professional and middle class, rather than being a large class of laborers as may be the case in lots of Europe?
April 03, 2010
Algeria, stick in the eye, Orascom
Doubtless this will improve the free fall in FDI for Algeria, US$ 600 million fine upheld over the Gov's just oincidentally timed tax jihad against the Egyptian Co (the sin being selling other asset's without President CombOver's okay / cut)
Egypt's Orascom" loses Algeria tax appeal - BusinessWeek
Egyptian telecommunications giant Orascom Telecom says its Algerian subsidiary Djezzy has lost its final appeal over a tax reassessment of almost $600 million.
Orascom, which operates Mobinil, Egypt's largest mobile phone service provider by number of subscribers, said in a statement Thursday it "intends to challenge this rejection" by the Algerian tax authority in the country's administrative courts.
March 31, 2010
Dubai Financial Job Bloodletting
Reading this I am have a slight frission - chill - schadenfreunde having turned down Khalij opportunities as I did not believe in the fundamentals. Doubtless I missed out on making stupid money, but personally I get rather more satisfaction from working on things I consider real (even if risky)
FT.com / Alarm raised over Gulf financial job losses
Somewhat selective quoting, but this seems entirely predictable on some level, if one was not a complete PR Release sucker.
It has been a torrid 12 months for white-collar employment in the Gulf – and for the agencies who act as intermediaries in hiring senior executives.
In February, GulfTalent, a recruitment agency, said that Dubai lost 17 per cent of its professional workforce last year and reported that western foreign nationals had been hit the hardest.
The picture in financial services is more mixed [than property developers]. Headhunters say that the international institutions are used to slumps in business, and made their reductions in the immediate wake of the collapse of Lehmann Brothers in late 2008. By contrast local institutions, with a few notable exceptions, have not made large-scale redundancies.
March 24, 2010
Dubai: DIFC head detained.
Well this is quite intriguing.
FT.com / In depth - Dubai detains former finance centre chief
Morocco breaks into the investment leagues
Interesting item as for the past seven years Morocco has been trying to get its sovereign rating from S&P, Moody's and Fitch up. They finally got S&P to budge:
S&P raises Morocco's rating on low debt | Reuters
S&P raises Morocco's rating on low debt
Tue Mar 23, 2010 2:45pm GMT
March 14, 2010
MENA M&A Cross Border Deals and State Structure
Toying around with financial data, a summary table about intra MENA deals since 1992 (it doesn't necessarily include the purely private deals).
A very quick glance reveals an interesting trend: the states which have the least cross border acquirers are Algeria (2), Iraq (0), Libya (4), Syria (1), Sudan (0), Tunisia (1) and Yemen (0). A notable fact also is, the only cross border deal a Tunisian company made was backed by Saudi private equity.
January 26, 2010
Gulf Labor Markets
Bahrain and the UAE have adopted different approaches while addressing the lack of citizens in their private sectors. Most Gulf states have tried to create quotas for their nationals in private enterprises. Businesses have resisted, fearing less productive workers, and these policies have accomplished little. Oman has been a partial exception, mostly because its relatively poor government cannot really afford to support all its citizens, leave alone employ everyone who wants a job.
December 29, 2009
Yemen: fingers in the dyke.
Reading articles like this from FT.com, on Yemen "Social pressures weigh on poorest Arab state" frankly are depressing even for a MENA optimist. The "good news" is Yemen is building a LNG facility. Wonderful. It will give the state the money to buy more weapons to pretend to assert control over the pseudo state. That does not change the deadly death cycle of Yemani society, with rapidly declining water yields (from non-renewable water resources), the dead weight of the Qat production (itself water intensive), and a birth rate that is of Sub Saharan African levels.
Social pressures weigh on poorest Arab state
Just over a month ago, Ali Abdullah Saleh, Yemen’s president, joined international oil executives to inaugurate his impoverished country’s biggest industrial venture – a liquefied natural gas project.
For a veteran leader of the Arab world’s poorest nation, the launch of the plant could not have come soon enough. The $4.5bn (£2.8bn, €3.3bn) project is expected to generate between $30bn and $50bn in income for the government over the plant’s 25-year lifespan.
To be honest, it is really very hard to have hope for Yemen - even harder than say Egypt.
December 27, 2009
Further to Dubai and Gulf Analysis
There is not much to add to this, other than the perhaps uncharitable observation that after one has had a nice laissez les bons temps rouler (to use the Acadien) it is not productive (or rather useful to pretend the hangover is the fault of the bartenders: Suq Al Mal
There's a commentary in The National on the relative negotiating positions of the banks and Dubai Inc which is to put it mildly a bit unbalanced. It seems much of this is based on comments from the borrower.
It's unclear if this article is meant as propaganda to raise morale on the home front. Or it reflects the thinking of decision makers at Dubai Inc - that they really believe they are in the driver's seat. If it does, a very dangerous delusion.
Certainly, Dubai Inc is not without leverage. The sheer quantum of debt and the government connection give Dubai a good deal of negotiating power. But that power is not unlimited. It cannot serve up whatever dish it wants.
Indeed, but after a 15 year bender, the hangover is hard to accept.
FT on Gulf Censorship in business, reflexions of censorship inducing economic failure. (useful review)
Despite my delay an article well worth reviewing, as it highlights the nexus of needs for developing private sector and civil culture: Dubai crisis throws the spotlight on analysts.
As a pre commentary, the article highlights a key problem in the MENA region and in particular the Gulf with its pet press and ostentatious obsession with Praise remains: lack of critical thinking or at least public critical thinking.
It is worthwhile noting that globally, business press and business reporting - even in the USA - is not particularly literate or well informed, let alone critical. One only gets critical reporting in business issues on Big Items from Big Papers (most literately - in my order of preference - from Financial Times and from Wall Street Journal). Regional / local equivalents exists of various quality, but sadly well-informed business reporting available to the public is rare (quality subscriptions are available of course).
All this aside, the FT article is spot on (if a bit narrow in its focus on the Gulf - sadly although understandably - most MENA conversation in Anglophone media really is about the Gulf and Indoafpak lands). Some comments on the article:
First on transparency:
Abu Dhabi’s recent Dubai bail-out may have removed some of the immediate risks of default in the emirate but the saga has left a bitter taste in the mouths of many investors – and led to calls for greater transparency in the United Arab Emirates.
Dubai has admitted that it owes about $80bn, but the restructuring of the Dubai World conglomerate announced earlier this month has revealed a mass of undisclosed loans. Some analysts estimate that the emirate could owe as much as $150bn in total.
Primo, everyone suspected this. Second, the approach of dribbling out (at metaphorical gunpoint) clarifications only worsens the doubts of investors and renders the Emirates (I used that deliberately) image. Rather better to get all the known bad news out now, price it all in, and move forward.
But not if:
(i) One is in reality treating this as a "domestic affaire" and foreign (non Emirate perhaps non Gulf) creditors are secondary considerations (conracts be fucked)
(ii) One is deeply underwater relative to obligations, and believes that in short term nothing is clear.
Anyway, this is almost obvious. Stating that
The disparity highlights the fact that the official statistics and forecasts that are available are often either lacking or misleading, say bankers.verges on the banal.
If anyone believed Emirati official projections since say 2005 (and clearly some people really did - although post fact denials muddy the water) they were morons... or corrupt dupes.
This has meant that during the past year and more, the research teams of international and regional banks have proved vital sources of information and analysis.
Well that would not be my call (I would say the fucking cunts were Johnny fucking come lately useless fuckers).
Public and Private analysis that I have seen have been post facto ass covering. I will admit that a few high cost services I will not cite as I am not in the business of pimping non-public sourcing and fucking blogs (e.g. Suq Al Mal and some others would have given better insight than the faux numbers coming out of Dubai.
In any case the observation that [the] "series of negative reports produced in the wake of the financial crisis has not been welcomed by local executives and officials – who in the preceding years were accustomed to a muzzled local press and uniformly glowing reports is no surprise.
We can skip over the details of the article, although it deserves a close analysis, to a core and key observation: a relatively free and critical business press (however illiterate) is useful to have as a reality check.
No matter how stupid or illiterate they are, an actively critical press is useful in to help reign in the worst idiocies. I will try to expand on this later, but a major lesson I have taken away from my experience in investing or operating in emerging markets is that even a "yellow press" -if it is reasonably free and competitive - is useful.
December 23, 2009
The Algerian State's Ongoing Score Settling: The Orascom Tax (or how dare you sell your assets on the free market-Whitax, you dumb Egyptian bastards)
While without having direct access to the Orascom dossier, this charming news item amuses me Orascom Telecom suspendu à la décision du fisc algérien sur sa filiale algérienne OTA - Economie et Business - Tout sur l'Algérie (Orascom Telecom in suspended animation waiting for the tax decision on its Algerian affiliate)
Generally speaking it seems clear that the Algerian Gov't (to the extent there is a coherent policy), has gone into a fine 1970s "soaks the foreigners" and favour political economic actors (1970s again, ah the youth of Boutef...), Marchés publics : le gouvernement veut réduire la part des groupes étrangers - Economie et Business - Tout sur l'Algérie (Public Markets, the Government wishes to reduce the market share of foreign groups). The article charmingly notes that the Government is looking to revise the rules on tendering so as to give priority to "National Firms" (not defined but without doubt favouring state firms who can't otherwise compete...) - and without doubt exceptions to "strategic partners" such as the Chinese firms that import most of their labour.... What's disturbing here is that the Algerian government is attacking the most effective investors in the economy, the investors who have produced real value, and remaining silent and complacent regarding the Chinese that frankly are rather less employment generative in their contracting and investments. It's sad (and counter productive) that the Algerian state remains trapped in a reactionary cycle with France,
December 15, 2009
Can't Haq It: Saudi-Israeli Collaboration To Stop Invader Bots
CAPTCHA, those squiggly letters on website and various user-i.d. portals you have to figure out and type in order to access something cybernetic and which ensures you are not a "bot" made out of silicon yourself, has been hacked. To the rescue now is a team so diverse, some have to kill each other if called into belligerent military service. But using 3-D animation and soon presenting in the land of anime, they may yet save us from the diminishing security of having to puzzle out a green angel-hair pasta version of "quetzlcoatl" and then type it in when we forget a password on gmail.
[R]esearchers at Tel Aviv University - part of an international team - have developed a "synthesis technique" to overcome the "bots" by generating images of animated 3-D objects that are detectable by humans but difficult for an automatic algorithm to recognize. The team . . . included colleagues at King Abdullah University in Saudi Arabia, The University of Delhi in India and researchers in Taiwan.... Their findings are being presented this week ... in Yokohama, Japan
December 14, 2009
More Emirate Suprises: Abu Dhabi
Well, pain has effects: Abu Dhabi Gives Dubai $10 Billion for Use on Debt - NYTimes.com
Monday’s bailout came as a shock to many investors. But a growing sense within the region that other indebted companies, in particular Dubai Holdings, the conglomerate owned by Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum, would also have trouble meeting their obligations seems to have pressed Abu Dhabi to take immediate action.
Abu Dhabi may also have been influenced by the aggressive pose taken by Nakheel’s creditors, many of them foreign hedge funds who, instead of negotiating, aimed to force Dubai World into default as a means of securing some its valuable assets, like its highly strategic port operations.
While there have always been tensions between the expansionist ambitions of Dubai and more conservative Abu Dhabi, the prospect of foreign investors laying claim to some of the United Arab Emirates’ most valuable properties seems to have brought the two emirates together — for the time being at least.
Abu Dhabi was also taken aback by the harsh reaction by global investors after Dubai World asked for the delay on the debt repayments. Credit rating agencies downgraded most institutions in Dubai and Abu Dhabi, making it extremely difficult for these companies to raise funds abroad.
December 07, 2009
A quick reference to an interesting discussion The Algerian press & mass-market reach « Maghreb Politics Review
Algeria: Complementary Finance Law 09 & Cutting off the nose to spite the face
I remain fascinated by the ongoing saga of the reaction to Algeria's "Complementary Finances Law 2009" that came out this summer, and imposed a number of post-facto restrictions on foreign investment in the country. The Algerian reaction has largely been queerly spiteful, and indeed the motivations for the restrictions largely driven by a rather Command & Control understanding of the economy that itself is largely spiteful (foreigners not investing enough [due to unattractive conditions], why we must force them! And punish them for investing in Tunisia and Morocco!), rather than seeking an understanding of what would encourage more investment and more activity by foreign firms inside Algeria.
This article is fairly typical, LFC 2009 : à Alger, les délégations étrangères continuent d’afficher publiquement leur désaccord avec le gouvernement (Comp. Finance Law 2009, in Algiers, foreign delegations continue to publicly express their disagreement with the Government)
De tels propos montrent bien que malgré les apparences, les étrangers continuent leur campagne de mobilisation pour faire comprendre à l'Algérie que ce nouveau climat économique n'est pas le plus propice au développement des investissements étrangers dans le pays.
Une initiative qui a l'air de ne pas tellement déranger Alger qui reçoit au plus haut niveau ces « visiteurs », non sans avoir ces derniers mois tapé du point sur la table pour rappeler sa souveraineté. Il faut dire que cette mobilisation des acteurs économiques étrangers paraît assez exceptionnelle. Est-elle aussi importante dans le cas d'autres pays, qui ont des réglementations autant si ce n'est plus contraignantes pour les investisseurs. On peut citer par exemple le cas de l'Arabie Saoudite où toute implantation étrangère ne peut se faire qu'avec un associé local et où existent des quotas d'embauches d'employés locaux.Ah charming, one really is on the wrong end of development if Saudi Arabia is your example. Unsurprisingly the Journalist however has his facts wrong. The Kingdom actually revised its investment law in 2000, i.e. a decade ago, to allow 100% foreign ownership (although it does advantage - carrot, not stick - JVs in certain tax areas) in most areas. Of course the other item this rather impoverished piece of commentary journalism misses is that most countries with these restrictions have not recently imposed them, indeed the general trend globally is to lift such restrictions. The Saudisation law re employment is a rather silly thing to argue with, as it is generally considered a flop (lots of fake jobs for unproductive Saudi employees).
Such propositions demonstrate that despite appearances, the foreigners are continuing their campaign to make Algeria understand that this new economic climate isn't the most propitious for the development of foreign investment in the country.
An initiative that does not have the appearance of particularly disturbing Algiers, which has been receiving at the highest level these "visitors" but not without tapping on the table to draw attention to its sovereignty these past months. It must be noted that this mobilisation of the foreign economic actors appears to be quite exceptional. Is it as significant in the case of other countries which have regulations as constrained if not more so? One can cite the example of Saudi Arabia where all foreign investment has to be done with a local associate and where local employee quotes exist.
Algeria & Egypt: ongoing divorce
After the absurd Football Crisis (see these posts at Global Voices for bloggy round ups), but the short of it is that World Cup qualifiers last month between Egypt and Algeria degenerated into mob violence in both countries (and neither government covered itself in intra-Arab relationship glory...), the knives in Algeria have really been out for Orascom. The football nationalism was simply the last excuse the Algerian state needed for pushing Orascom out, as part of Le Pouvoir (the army factions)'s reassertion of their main-morte control over the economy. The appeal of Soviet style command and control is rather large for the corrupt generals and their affiliates that run Algeria.
So we find now, as per this arty Après Vivendi et Cevital, Sonatrach s’intéresse au dossier : la vente de Djezzy se précise (After Vivendi and Cevital, Sonatrach expresses interest in the dossier, Djezzy [Orascom mobile operator in Algeria] sale begins to be defined) that the Petrol State is going to take a piece of the action (well, is likely to, not yet really a done deal, but given Algeria, Sawiris will be wise to get out, else he faces years of destructive behaviour on the part of Algeria).
Et le scénario qui se dessine devrait être le suivant : une alliance entre le français Vivendi, le groupe privé Cevital et la Sonatrach. Le groupe français aura 49% de la future structure ; Sonatrach et Cevital se partageront les 51% restants. Cette configuration va permettre le respect de la nouvelle loi algérienne en matière d’investissements étrangers qui oblige le partenaire étranger à céder au moins 51% du capital à des Algériens. Le management devrait être assuré par Vivendi, un opérateur qui possède une longue expérience dans la téléphonie mobile.
La présence de Sonatrach dans le projet constitue une bénédiction de l’Etat algérien pour ce rachat. Mais pas seulement. Elle a une portée économique et stratégique pour l’Algérie.
The scenario being defined is likely to be the following: an alliance between the French firm Vivendi, the private [Algerian] group Cevital and Sonatrach [the state-within-a-state petrol monopoly]. The French group would have 49% of the future structure, Sonatrach and Cevital sharing the 51% remaining. This configuration will permit compliance with the new Algerian law with respect to foreign investment which obliges foreign partners to give up at least 51% of capital to the Algerians. The management of the company would be in the hands of Vivendi, an operator that posses a long experience in mobile telephone operations.
The presence of Sonatrach in the project represents the benediction of the Algerian state pour this acquisition. But not only that, it has an economic and strategic aspect for Algeria.
In many ways I find this amusingly revelatory of the direction the Algerian government is going and as well on the queer role of Sonatrach. It certainly is far from obvious what business a petrol firm has in mobile telecoms buyouts, other than representing a nice cash box for the Generals to dip into in their ongoing re-Mamloukisation of the economy. Vivendi must be rather confident of its ties to go for this, although as a major strategic buyer, they may be able to suck up the next few years of cretinous policy.
December 06, 2009
Kuwait sale of Citi
I am intrigued by this, FT.com - Kuwait fund sells $4bn Citi stake. The timing is interesting. It's quiet (not high profile) and rather clearly says that holding on longer from their view is not ... the best use of their capital.
November 29, 2009
Dubai, oh My IV: support, non-support and haircuts
First as noted on Suq Al Mal the UAE Central Bank stepped up with some panic stopping emergency facilities. Although I am now en route back home and away from the centre of the storm, I am certain the expat chatter and potential for panic driven bank runs was (is) there. Also from NY Times U.A.E. Will Support Banks in Dubai Credit Crisis some further detail also at FT. As Abu Arqala noted, issuance of a public statement during the Eid holiday is not ordinary, indeed rather extraordinary.
Second, I have been chewing on the question of bailing out Nakheel or letting it die. On one hand, abstracting away from fears of setting off a crisis, I fully believe the idiots that financed Nakheel fully deserve a nice splash of ice cold water in the face. Balanced against that, however, is my fear that the more sober emerging markets in my zone of MENA will be semi-innocent collateral damage, largely due to the rather clumsy and stupid way that Dubai has handled this (highlighting the fact that behind the facade of modern marketing, the regime has not genuinely modernised its attitudes towards communication, it's all Medh all the time). Prepping the grounds better for the bad news, rather than an unprepared statement before a long set of international market holidays probably should have seen the Nakheel event go somewhat more smoothly (or at least not have the immediate panic).
November 28, 2009
Dubia, oh My III: Ongoing thoughts.
First, from comments, the author of this post : Suq Al Mal: Dubai US$5 Billion Debt Sales - Less Than Meets the Eye and An Explanation for the Restructuring at Dubai World helpfully draws attention to some very key details that deserve wider attention (as i have not seen them raised elsewhere).
In particular this:
It seems that the US$5 billion sale was actually US$2 billion in cash now with the promise to buy the remaining US$3 billion over the next year.I rather find this and other details confirming that the easy "Abu Dhabi will ride into the rescue of Dubai" commentary is far too superficial. (As this Reuters story on "aid to Dubai [from Abu Dhabi] 'case by case'" ; "... a senior Abu Dhabi official said on Saturday [that] "We will look at Dubai's commitments and approach them on a case-by-case basis. It does not mean that Abu Dhabi will underwrite all of their debts," ...."Some of Dubai's entities are commercial, semi-government ones. Abu Dhabi will pick and choose when and where to assist," he said.")The Cousins in Abu Dhabi will want their pound of flesh from the Al Maktoum. I'd suggest that commentators looking at this in a purely theoretical framework of sovereigns etc are going to miss important parts of the intra-family dynamics that will definitely complicate things (and note, more of the Al Maqtoum have been moved into Dubai positions of late, technocrats losing power). Too many bank analysts in Dubai have the critical analytical sophistication of high schoolers, merely asserting their hope of unbounded Abu Dhabi largesse as the analytical anchor (of course merely asserting absurdly optimistic base case scenarios was long par for the course in Dubai).
Otherwise, this post in FT's Alphaville quoting a rather sharper analyst in Dubai posing the question of whether the real depth of the debt hole is known is worth a read. It also raises the contagion risk that I touched on. I'm a lot less sanguine about that risk than the analysis there, as this as a calculated manoeuvre as Dubai's position may not resolve well - given all the ingredients of the intra-Emirati family fight over control and power, family struggles tending easier to ugly fights. Note, for example, from FT.com / Middle East - How the Dubai crisis unfolded
November 26(emphasis added).
Global markets slump on fears that any Dubai default could trigger contagion in other emerging markets. There is still no comment from the department of finance, except to insist that DP World is ring-fenced. Bondholders, led by a New York hedge fund, start to organise themselves to appoint legal advisers to communicate with Dubai World and mull legal action to recover assets.
Then, at about 11pm local time, Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai’s supreme fiscal committee, breaks the emirate’s silence with a curt statement saying that he understands the concerns of the markets but is determined to take decisive action on Dubai World’s debt.
“The government is spearheading the restructuring of this commercial operation in the full knowledge of how the markets would react,” he says.
Otherwise, some other comments of interest, from FT.com - Dubai gambles with its financial reputation relative to financial investors who've taken a narrow analysis:
The emirate’s inability to repay also casts a shadow on the Maktoum family’s vital relations with its cousins who rule Abu Dhabi, the al-Nahyans, who seem to be letting their poorer kin sweat it out in public. One wondered what price Abu Dhabi might demand for a full bail-out. One plausible option was a tighter union among the seven UAE states, with maverick Dubai forced to trim its embarrassing ties with Iran and Israel. Dubai might also have been asked to merge its independent customs service into the federal bureaucracy. Sheikh Mohammed may be calculating that Dubai’s foreign policy freedom is more valuable than its financial reputation.(emphasis added)
There is logic in this. The bankers in London and New York have been important in nurturing Dubai’s growth. But the emirate’s ties with the region – Karachi, Mumbai, Riyadh and Tehran – are those that will make or break this city.
Of course the Al Maktoum just made the lives of their Gulf cousins and neighbours rather more 'interesting" which is certainly going to make this process more complex than someone sitting at a monitor in London might think. Also relative to the process, this observation from FT.com Editorial - A breathtaking blunder in Dubai:
... Instead of these Ivy League-educated whiz kids, he [the Emir] has fallen back on his family, the court and the traditional merchant class. .... Although, like everything else in Dubai, it was unexplained, it was interpreted as recognition that the emirate had over-borrowed and over-reached. Yet, it is not obvious that the way to re-establish credibility with the markets is to follow this up with a runic message on deferring debt repayments – and then disappear on a four-day public holiday.Indeed, but it is easier to understand as an internal Emirati "settling of accounts."
Also worth quoting, from the same,
Why Dubai World felt the need to defer repayment of a $3.5bn Islamic bond of its Nakheel property subsidiary is also a puzzle.The answers are doubtless found not on the capital markets, bond traders in London and New York are oft useful dupes...
Abu Dhabi stumped up $10bn in February; two of its banks bought $5bn in Dubai paper on Wednesday [NB: see quote above]; a $1.9bn bond issue was three times subscribed three weeks ago; and Dubai is planning to return to the market next month for a further $1.25bn. It has the money to meet its obligations – unless its debts are significantly greater than stated. Until now, moreover, there has never been any doubt that Abu Dhabi – senior partner and censorious older brother in the federal United Arab Emirates, owner of the largest sovereign wealth fund in the world (worth perhaps $900bn), and sitting on one tenth of the world’s oil deposits – would stand behind Dubai. Dubai World’s biggest creditors, furthermore, are down the road in Abu Dhabi.
Yet, the Abu Dhabi authorities appear to have had no inkling Dubai was going to spring this surprise, which is already having devastating results. The cost of protecting Dubai’s paper against default has quadrupled – putting the emirate in the same league as Iceland – and the credit ratings of its leading companies have been downgraded. Yet the fallout in raising the cost of insuring sovereign debt has spread not only across the Gulf but throughout emerging markets. This is a mess.
Something here does not add up. Why would Dubai risk such damage to its reputation when the recovery of its still viable entrepôt model depends on the confidence of the capital markets?
There is also an interesting set of questions about the Islamic finance angle to this, and a rather misplaced bit of confidence in those instruments.
November 27, 2009
Dubai oh my, Bis Default & Logic
Obviously in financial and economic circles the debates are raging like nobody's business on
(i) The technical default (or effectively asking for it, even as an optional choice, it is a "credit event"), why
(ii) Timing and thinking
So far, I think everyone feels that it must be driven by some serious dissension between the Dubai and Abu Dhabi families, and Al Maktoum decided to go nuclear (probably rather than pay a serious pound of flesh in lost assets to Abu Dhabi). A "My pain is your pain" calculation. Also they seem to have bizarrely thought that this news could be "buried" over the holidays - very bad miscalculation. Trying to bury it (maybe buying time) after spending the past few weeks talking happy talk (rather than managing down expectations) just made it far worst, as the rumours flying now are really catastrophic.
Of course, a deeper problem may be that Emirates in whole may be more liquidity constrained than they have let on, and as such Abu Dhabi despite its massive pools of capital, feels obliged to bargain hard for its constrained liquidity to begin with. Nevertheless, I favour the Family Argument thesis (between Dubai and Abu Dhabi) that got bitter, thus provoking a stunningly ill-considered decision that was also just stunningly poorly framed and timed.... and presented. Impressive actually the extent of bad actually.
As for Dubai, even if they walk back, Dubai has inexplicably taken a shotgun and fired at its own foot. Best case, they lose some of their own toes, worst case.... worst case they blew off their foot and ours too as this has all the ability to set off Financial Crisis 2008 Part II, at the very least for emerging markets that are heavily exposed to international flows.
This is a nasty event with wider implications, but underlines what I have been saying for years, too much of the Emirates - Dubai story has been of dubious transparency.
Dubai, my my. Defaults and MENA
I've been silent for a while, consumed with the rather unpleasant task of wrapping up an office (whose staff is mystefied by the exit, as they did better than forecast numbers, but that's another story), however Dubai's staggeringly stupid decision to suggest defaulting on debt
has too much juice to miss, in particular as I am in Dubai right at this very moment (although flying out very shortly). It's really quite a stunned place, and I think except the boot-lickers who'll justify anything, there is much befuddlement. Adding more later.
November 13, 2009
East & West Side Story: Is Beirut Really Back?
Hype, snipe, or just type, o informed ones, about this Levanity fare. What say you to the Beirut toot in Guardian , UK?
It's beautiful, Beirut, beautiful and ugly and pock-marked and damaged and glamorous and unstable and exciting and just a bit mentally unhinged. It's the Elizabeth Taylor of the Mediterranean. Or it would be if you replaced the words "alcohol" with "Israel" and "a string of unsuitable marriages" with "15 years of civil war". . . . Beirut is back.
November 05, 2009
Dubai labour exploitation (FT: Hidden victims)
An interesting and sad arty from FT on Dubai's seamy underside: FT.com - Dubai’s hidden victims of recession, of which the truly unpleasant part is the ongoing practise - which should never be permitted in any modern country - of taking workers passports (by the employer). A slaving mentality Dubai has never quite gotten over.
October 27, 2009
Algeria, still pining for those 1970s glory days (State Industrial Policy, Mass Unemployment, Riots, etc)
Writing from Algiers, which has been of late some public disorder (not to the original post which I can't access for some reason), and amusingly (if one is a person like myself) explored in background by our Moor Next Door in a post deliciously entitled “The State is an ostrich” « The Moor Next Door I shall prudently not tackle the fine expressions of public discontent with the Ostrich State and President Comb Over, which have been somewhat discernible from my hotel... (although did solve the traffic problem for a day or two). (Also this article)
Rather, I shall be ostentatiously apolitical, and amuse myself with the Ostrich State's new effort to "revitalise" its moribund state enterprises to build a bright new future (for contrabandiers to be sure), Algeria plans aid to debt-swamped state-owned firms (Magharebia.com) (oooh, and with foreign parternships too!!):
Saudis complain of American legacy in transport
I found this sourly amusing, from FT.com / Transport - Saudis stuck in a jam over public transport
Many Americans blame Saudis for the price of petrol needed to fill their SUVs and motor homes. But Saudis have their own complaint: they hold American contractors who helped build their road networks responsible for the traffic congestion and lack of efficient public transport.
“American builders of Riyadh modelled it after Los Angeles, with highways and big roads, but with no plan for public transportation,” says Salwa, a businesswoman in Riyadh. “The government just woke up to the importance of trains for linking cities after thousands of Saudis and pilgrims have been killed on those highways. But they are doing nothing about easing traffic in Riyadh or other cities.” ... The need for public transport has become urgent. With hundreds of thousands of cars and taxis, a 15-minute trip to downtown Riyadh can take more than 45 minutes during rush-hour. When people go shopping and dining in the evening, cars on the main roads slow to a standstill. .... Experts say low petrol prices, low-wage drivers, and Saudi and expatriate preferences for buying large cars create disincentives for building public transport. Almost 1m new vehicles are imported to Saudi Arabia each year, half of which are private cars, says John Sfakianakis, chief economist at Banque Saudi Fransi.Emphasis added. American sprawl legacy, actually Saudi complaints in this area are probably rather more founded than American complaints about petrol prices, although the Saudis could have opted for proper urban planning, but America was seductive in the 1960s.
September 18, 2009
Cairo: Faded Glory.... Quixotic quests for restoration
FT's profile on Cairo, and reviving it's downtown, at FT.com Investors seek to revive faded glory of Cairo (and as well the video commentary here
FT.com / Video & Audio / Audio slideshows - Resurrecting the Paris of the Orient (ahem, I believe that was Beirut, but...)) is interesting for a reflexion on the damage bad governance has done to Arab economies and civic areas. When I lived in Cairo I tried doing downtown as I adore art deco, but the hell of the constant din made it unlivable. Refurbishing buildings is not enough, mastering the insanity that is Cairo traffic, reducing traffic pressure is an absolute must. Of course, like Algeria, Cairo is a living testament to what the incoherence of "Arab Socialism" can do to an economy and its socio-economic fabric.
But as to the renovation plans, frankly I think it is tilting at windmills unless the orderliness is restored, and that seems impossible given the incompetence of the Egyptian regime. Sheer bad governance (and yes, the Egyptian regime is good at keeping itself in power, but that is not good governance) and general economic incompetence (although recent reforms, since 2001 or so are slowly starting to convince me that there is an exit from the Arab Socialism thinking, at least Egypt shows now more signs of clearer thinking and planning than the cretins running Algeria).
BTW, I did not know the American Uni had shut its downtown campus. Pity that. Such things are historical anchors.
(An aside, In Lounsbury some recent economics related rants re Algeria: on speaking Truth to Le Pouvoir; and on conducting jihad against rational economic policyl.
FT after the break:
September 12, 2009
Algerian Autarky, Bis: Bad Economic Policy & General Govt Incoherence
I have been meaning to return to the fine issue of the Algerian Government's turn toward an incoherent revival of old 1970s style socialist economic nationalism, and the Moor Next Door gave me a new excuse in Some Algeria stuff , to rip a paragraph out:
Hanoune’s “opposition” since April has been in the form of, as La Tribune puts it, “applauding recent government actions,” and then stating depressing facts about the country’s economic conditions. This has become so much the case even the official El Moudjahid was so moved by her remarks on the recent supplementary budget law that it felt it necessary to publish an entire article on her, quoting her, in effect thanking her, for supporting the government’s undertaking. Indeed, El Moudjahid’s favorite bits from Hanoune’s recent comments were her description of the law as “a large, bold victory for the national economy” and that she “questioned the reactions of some” to the new law, e.g. other quarters of the opposition and business classes.Louisa Hanoune is a hard Left opposition figure in Algeria, btw, as linked to Wiki (rather poor article). Of course the interim law is anything but a victory. Hurried and incoherent, it merely adds to the growing impression that the Algerian government is entirely at sea as to where it is going. Worth reference as well, Jeuneafrique.com: Algérie : une rentrée et des questions which gives the context of clumsy panic over its declining margins of petrol and gas profits over import costs, insofar as a decade of policy incoherence has produced what one might expect, that is the hydrocarbons rentier economy chugs along while the state strangles the private sector. But the context:
[NB: edited for formatting and some spelling 14 Sep 09]
September 03, 2009
Algeria: No Poor People
A delicious item to note as I work on a follow up on my Algeria Autarky post (and related incoherent economic policy), from Maghreb Politics Review
the fine declaration that there are “No poor people in Algeria” as our friend Alle notes
Here’s a whopper: Algeria’s Religious Affairs Minister Bouabdellah Ghoulamallah has claimed on state radio that “there are no poor people in Algeria”. Referring to how some 1,5 m Algerians vacation in Tunisia every year, and hundreds of thousands of others go to Hajj or Omra in Saudi Arabi, he said that the talk of poverty is just a “media invention”. Needless to say, this will be news to the legions of unemployed and desperately poor Algerians who struggle to make ends meet, and it is an excellent example of the “hogra”, high-handed neglect and spite from the authorities, which the Algerians resent so much.Mind you, this is not a one off delusion. I have had on more than one occasion in the past decade had to listen to Algerian officials ranting on to similar effect, as in their thinking while there are some small things to iron out relative to their fine petro-socialism, the common Algeria has obviously benefited. Except for those haraga wreckers but they deserve it, scum that they are.
For the record, Algeria last year ranked 104th on the UNDP’s Human Development Index, below the Arab average, and just slightly above the Occupied Palestinian Territories — this, after several years of a record-breaking oil bonanza.
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August 24, 2009
Maghreb, MENA: What standards' for progress & development
Following on an interesting discussion in comments in reaction to this 'Aqoul post: Some old controversies: Morocco & Models, and Bloggy overreaction and preciousness I thought I would bring forward some of the questions posed for further discussion.
The essentials rest on how to assess progress in the Maghreb (and MENA of late).
As noted in the discussion (copied at end of post, below the jump), reform has certainly slacked of late in Morocco, but against what benchmark should we judge this?
Some other questions, items for consideration:
- Quality of Governance
- Tension between Technocratic Reform led by business leaders, and capture of government reform by oligarchs (who happen as well to be good technocrats)
- Economic Reforms & Untouched Oligopolies
- The State of Educational Reform
- Pushing out / deepening progress to reach the Great Inland areas
- Affordability of life in the transition
- Next steps in consolidating growth
August 19, 2009
Algeria Woos Tourism Investment.... I can only await the successes.
I do so love the Algeria government, it's magnificent incoherence. After bizarrely and abruptly banning consumer credit, now we come out with a tax advantage for investment in tourism (what tourism - I exclude overseas returnees from Tourism proper, they don't generally use much in the way of proper tourism facilities: Algeria woos investors to unlock tourism potential
Where to start on the fabulous, magnificent fuzzy thinking?
Algeria announced on Monday it was slashing taxes on tourism projects to persuade investors that the country, emerging from years of violence, could become a hot new holiday destination.
Indeed. Hot new holiday destination. Sunny & Bomby Algeria. Experience the thrills of Old American West Ambushes on your convoy. Possible extended side visits to the Sahara for brief 'kidnapping' interludes with jocular desert tribes....
August 17, 2009
XRef: Egypt as Multilingual Outsourcing Destination
A quick cross reference for thos interested in MENA Business specifics: Lounsbury: Egypt as Multilinual Outsourcing Destination, Well I'll be bugered As I note, the FT.com arty Egypt invests in outsourcing industry raised me eyebrows. Wonders of capitalist development, even socialist basket-case education systems can be leveraged now and again: a pool of otherwise unemployable university graduates with useless degrees, but reasonable language skills to draw on if one is willing to train them up
August 15, 2009
Algeria & Chinese in Algeria: the riot & fallout (summ from Lounsbury)
A cross post to note : Readers may be interested in a Lounsbury blog note on the Algeria & the Chinese incident (see here for original Aqoul note) and a longer commentary on The Moor Next Door.
I'd note my as well, regarding the incident and Moor Kal's eval: he is quite right that this comes in the context of a country on a low boil.
This is to say nothing of the numerous fits of car and tire burning that go on quite often elsewhere in Algeria. This is part of the setting of Bouteflika’s Algeria, and it is the failure of the socio-economic order he has setup, that addresses only macro-level economic and social problems, but fails to address the basic tensions in Algerian society in an effective way.While agreeing with the failure of the socio-economic order, actually, I would say that Boutefliqa's Algeria doesn't address in any coherent way macro-economic problems. Quite the contrary, in fact the incoherent mish-mash of foot-dragging liberalisation (which reeks of 'we're only doing because our hands are forced') and then backtracking to failed 1970s era quasi autarkic import substitution regimes seems to be merely muddling forward by a group of elderly fools who can't admit that their revolution failed.
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August 13, 2009
Algeria: little steps to autarky?
Now that the Algerian govenrment has taken such very clever moves as banning consumer credit and rendering imports stunningly difficult by imposing highly unfavourable credit / financing terms on importers (except some privledged exceptions) perhaps this little deal will work: Abu Dhabi fund plans Algeria auto plants
August 05, 2009
Algiers, Chinese, Algerians riot
I confess to being somewhat startled to read this news brief of a riot between Algerians and Chinese in a working class district Shanaoua, however it is not in the end surprising given the underlying resentment around the mass import of Chinese labour for the government's various infrastructure programmes. The report indicates as many as 50 Chinese got into "bloody" fight with Algerians.
Al Arab Online العرب اونلاين
قالت صحف جزائرية إن مواجهات وصفتها بـ"الدامية" وقعت الإثنين بين أكثر من 50 صينيا مقيمين بحي "الشناوة" "تعبير دارج يعني الصينيين" بباب الزوار بالعاصمة الجزائرية والسكان قاطني الحي بسبب مناوشة وقعت بين تاجر جزائري وآخر صيني، وأسفرت عن بعض الجرحى وخسائر في الممتلكات.More shortly.
Well, BBC now has this: http://www.bbc.co.uk/arabic/middleeast/2009/08/090805_mr_algeria_china_tc2.shtml and FT too! http://www.ft.com/cms/s/0/a74efac2-8177-11de-92e7-00144feabdc0.html
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August 02, 2009
Algeria: Expropriations & Import Substitution, Just Because it worked so well in the 1970s
A cross post to a longer note in Lounsbury: Prompted by the advert next to the article cited (which was is an advert for the sale of a small import-export operation), a small reflexion on Algerian economic politics and policy, insofar as Algeria - no doubt thanks to The Lead Comb-Over, is bizarrely unearthing the import substitution and nationalisation measures of the 1970s as its lead economic policy reaction to ongoing problems.
The "Why" of course is mixed. Absolute incomprehension of market economics and operations is certainly a major factor, as is the regime's paranoia in general another, and specific national paranoia regarding foreigners after the French experience - which remains terribly damaging, in particular for the generations over ~45 years old.
This article, from the Francophone Africa focused business weekly, Les Afriques (Eng. Trans: Algeria: Changing the Rules of the Foreign Investment Game - The question on everyone’s lips this summer illustrates. The article cites (and my own connections would suggest the article is right in part, a reaction to "non approved" operations, such as Orascom selling its cement stake to Lafarge (as part of a global deal, not Algeria specific actually). Now, in most places in the world this would be a matter of a bored shrug.
The Algerian government, however, freaked (why?...), and phrases such as this that the journalist used are very much from the Algerian officialdom's own public and private view of markets: "the Algerian president seems to have realised that the rules of globalised capitalism left the door ajar for an international group to sneak in and, without the State’s consent, claim a share in the national market and economy. ... The Algerian president discovered only too late the predatory characteristics of foreign investment and gave economists and entrepreneurs the last laugh when they warned that it was illusory to expect to boost the economy using direct foreign investment (DFI) [sic]." That is very much the language and thinking of a paranoid, quasi Soviet regime, lacking in confidence. The remainder of the article is pure Algerian regime thinking, including the focus on foreigners bleeding the country dry (with billions in public FX reserves, even the state can't find a way to intelligently invest capital given opportunities, of course dividends are being repatriated...).
It is worth noting the argument of "Algerian entrepreneurs" is the argument of the old Rentier Regime owners - hardly people meriting the term entrepreneur in any real sense of the term. These are firm owners from the first round of "Algerianisation" and then the subsequent emergence of a private sector that was (with some exceptions of course) nothing more than an appendage to a dysfunctional state sector.
Returning to the concrete, notable recent policy decisions in this area are Presidential Decrees from December 08 which have moved to implementation by year end 09:
(i) forcing all foreign firms involved in import operations to retroactively cede 30% of assets to an Algerian partner (on what basis the percentage is valued, what happens in case of capital raising, and how to reconcile this retro-active measure with the Investment Law and Algeria's engagements with respect to FDI remains charmingly unclear - indeed brushed aside by the Algerian government which continues to show a rather impoverished understanding of economics and private markets),
(ii) Obliging all future foreign investment (ahem for the time being, future, it is not unimaginable for it to become retroactive like the exporters measure) to be 51% Algerian in capital ownership.
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July 31, 2009
Subtle Items to Follow re Gulf Long Term Development.
The following article seems quite tedious. In fact it is a step in an interesting denouement, and should be real signals as to whether the Gulf is really developing or is merely a oil and gas financed mirage:
FT.com Bahrain central bank intervenes
Bahrain's central bank said yesterday it had taken control of two Bahrain-based banks owned by two prominent Saudi companies that are locked in a dispute as they struggle with financial difficulties
Oddly five years ago I had rather more faith in Dubai and Bahrain. It's queer, the oil boom that fuelled the past few years of development significant damaged my expectations almost in line with the degree to which they captured Global Market attention. Let me first say that if you are Hot Money investor (i.e. a trader) and are clued in enough to be right on top of regional developments (clued in meaning not that you're clever with your maths and are a Zawya subscriber, etc, but that you have the right personal connections etc to have a sense of what is behind the published infos - short term [i.e. less than 5 yr holding period] trading in MENA on published information is a loser's game).
I rather think that there is no long term win in the Gulf, no real diversification. Dubai can not be Singapore because its back-region is too weak (although if Iran does not shape up, Dubai as Iran's Hong Kong can work - but Dubai as Saudi Arabia / Emirates / Kuwait Singapore is a failure: no matter what the gulf does, it is unsustainable post-oil, nothing relative to climate trends nor own native competences nor other factors suggests they can overcome). And generally if you are looking at a longish term, I think reforming 'real' countries like Syria or farther along reformers in the Maghreb, or Turkey or potentials like Iran are far, far better bets. As would be a country like Oman, insofar as if Oman, even at this late date, decided to create (and do right) a mini Dubai, it would easily capture the Dubai Asia traffic and be a better geographical partner for Iran and the Asian traffic. Pity really, Oman is leaving mega money on the table as they are perfectly placed to do Dubai, but better insofar as Dubai has proved the model can work - I do not mean here the flashy towers, but the trade and finance logistics. The flashy towers and the last 4 years of frenzy were a gross mistake for Dubai, one that they will pay dearly for in the long term.
July 30, 2009
And in honour of Morocco's throne day, ten year retrospectives
Ten years, M6 in power as leading Maghrebi jetski king (okay, only Maghrebi Jetski-ing king), as well as not too terrible economic reformer. In fact, I have quite the soft spot for him and the country, relative to King Dad. Well, and The Neighbour. And I have to give him a nod over Ben Ali if for no other reason than he gets to wear the super Makhzani costume, which is in fact much cooler than Italian suits, however well tailored.
So besides the mega pardons that are always up on Throne Day, and doubtless major this time round for the Big Ten, what can we say. As I am lazy, let's just link.
AFP: Morocco's king pledges more reforms after first decade (eh fairly boring)
Les dix ans de règne de Mohamed VI fêtés par un Maroc en chantier - VIE POLITIQUE POLITIQUE ECONOMIQUE POLITIQUE SOCIALE (better, but French.... but that's always the case on the Maghreb)
Okay, my quick word then in honour of M6's tenth anniversary. Taking realistic expectations as the benchmark, and having a fairly sour view of "democratisation" potential without a solid middle class, M6 has been a solid B student in terms of boring but useful economic reforms and infrastructure development, in a region where the average ruler grade is in the C- to D range. Hopefully economic growth will continue there, and the Big Skier will not fall into a second decade doldrums.
The Gulf, Looking for more marks in Real Estate
In some ways I adore the chutzpah of mortgage lenders in Dubai, the Emirates somewhat more broadly. In the face of what is really an obvious bubble crash, journos can still get old school quotes: FT.com: Gulf Mortgage lenders await upturn
“Until recently, the real estate markets were a one-way street where prices always went up,” says Ventakesh Srikantan, head of assets and liabilities at HSBC Middle East. “But now we are witnessing a serious property downturn and credit stresses are emerging in many portfolios.”
Property analysts are partially blaming a lack of finance for the subdued real estate market. Bankers, counter that credit is available for the right buyers, but say they have few takers in the face of uncertain economic prospects and declining real estate values.
However, bankers and analysts agree that the mortgage market still represents a vital growth segment for financial institutions in the Gulf, particularly in Saudi Arabia, where most people do not own their own homes.
There is some truth to the Saudi angle on buying homes, but how much they are willing to go for.... And as for encouraging more RE investment:
Most governments are updating their regulatory architecture, keen to encourage investment in their real estate sectors and boost home ownership among less affluent locals.
There needs to be LESS real estate investment, not more, although if (and I do not think for a moment it really does) said investment were aimed at affordable housing, well that could make some sense.
April 27, 2009
Googley Moogely Arabic
Okay a stupid title, I should let Hogan do the puns and pun related humour. However, some items on this FT arty
FT.com Google aims for bigger Arab audience
Internet usage has jumped 1,000 per cent over the past seven years in the Middle East, yet it still lags well behind other regions. Overall internet penetration has reached 10 to 12 per cent, although with the region’s large number of shared connections, up to 50 per cent of the population is estimated to have access to the net.
Google, the internet company, hopes to provide the tools that will help users to increase the amount of Arabic content online.
Leaving aside the numbers, which may or may not be dodgey, it is interesting that a heavy weight like google is coming to Arabic.
Some further comments:
April 25, 2009
Economic Crisis & Stability: Maghreb and MENA Frings, the end of the Emigration Boom
Two articles not immediately evidently related, but speaking to similar issues. That is the impact of the global financial crisis on the emigrant populations from the MENA and MENA Fringe to either wealthy regions or Europe. The article on the Spanish situation suggests there could be a significant reflux back, but Europe differs from the Gulf example - the FT arty on the Pakis - in that the immigrant communities are older, many have permanent residency that is not employment connected (Gulfie style disguised indentured servitude).
That changed in the decade-long expansion that began in the late 1990s. In Spain, where the growth has been the most explosive, the foreign population rose to 5.2 million last year out of a total of 45 million people from 750,000 in 1999, according to the National Statistics Institute. Ireland’s population, now 4.1 million, was also transformed, with the percentage of foreign-born residents rising to 11 percent in 2006 from 7 percent in 2002.
“In the U.S., it took generations to build up a foreign-born population of that size,” said Demetrios Papademetriou, head of the Migration Policy Institute, a research group in Washington. “These countries have done it at an unprecedented rate, but the society and institutions haven’t even begun to have a chance to catch up.”
The downturn in the Middle East is forcing large numbers of Pakistani expatriate workers to return home, exchanging lives of comfort for unemployment in a country experiencing political turmoil, growing insecurity and a deteriorating economy.
Those coming back from the oil-rich region range from senior and mid-career staff in banks, consumer goods companies and multinationals, to blue-collar workers such as drivers, labourers and domestic servants.
The financial crisis is reversing a trend of large-scale migration from Asia to the Middle East, especially from countries such as India, the Philippines, China and Thailand.
April 24, 2009
Orientalist Art Boom: Will this get Aqoul design a cash bid?
From Saudi Aramcoworld comes this report of how middle easterners learned to stop worrying and finally loved the balm of Orientalist art:
In July 2008, Orientalism brought £21.4 million to Christie’s in London, “the highest total ever achieved for this category,” says Alexandra McMorrow, director of 19th-century European art for the prestigious auction house. This included world record prices for seven artists; “bidders from North Africa, the Middle East, India, Europe and America competed fiercely,” she adds. . . .These shifts are part of a larger, gradual, mostly sympathetic reevaluation that has been taking place over the past few decades of much 19th-century European art.
April 20, 2009
Algeria: Mr. Comb Over & The Mee Too Container Terminal - Basic Reforms, Rents & Opportunities.
I should be less unkind, but frankly the awful hell that is required of one on every bloody business trip to Algiers (and having just returned from one), makes me disinclined.
Nevertheless, Algeria's copycat (okay not entirely copy cat) development of its port, following what appears to be a successful Moroccan operation at Tangamed has positive potential. FT's arty on DPW "vow[ing] to remodel Algiers port might even be a ray of hope in the otherwise bleak Algerian business landscape.
Might, of course being a powerfully operative word, as I have developed a highly jaundiced view over the years of promises of reform in Algeria. Some key details. [Ahem fixed the title]
April 14, 2009
MENA Futures, investing in good infrastructure (Morocco)
From the FT, two articles touching on probably the single most important item for turning around the Maghreb. Investment in good, solid infrastructure run by private firms. FT.com / Global Economy - Spanish port faces threat from Tangier
Mr Kjeldsen is using the threat to challenge the complacency in Algeciras that stems from more than 20 years with a monopoly of handling containers in the Gibraltar Strait. APM Terminals, its trade unions and the public sector port authority that owns the port land must work together to improve efficiency, he says. “Otherwise it’s going to be very difficult to be competitive with Morocco.”
APM Terminals declines to discuss how much it pays workers on either side of the strait, but average wages in Morocco are about $4,000 (€3,018, £2,688) a year. Those in Spain are about $14,500.
And the companion arty: FT.com Tangier hopes rest on customs ‘freezone’
It is a long way in every sense from the green hillside location of Tangier’s container terminals to the patch of desert that has become Dubai’s huge Jebel Ali port. But the developers of the Tangier-Med port complex have taken much of their inspiration from the Gulf facility.
Their hopes of emulating the success of Jebel Ali, which last year was the world’s sixth-busiest container port, rest on an area behind the terminals set aside for manufacturing and distribution developments.
Getting things right is boring (and not as much fun as declaring that foreign investors are parasites robbing the nation as the new Pasha for Life, Sidi Comb Over likes to do....), but it is the way to go.
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April 13, 2009
The Wonderful Magic of War Zone Microfinance - Iraq
Following my short note in Lounsbury 'next door' a longer comment on the' FT arty "Small US loans are catalyst for Iraqi business"
First, on the item that most irritated on reading
“I have increased my earnings and improved my family’s quality of life,” says Hamza Abid Ali, a grape-grower from Balad who has quintupled his income since taking out a $2,400 (€2,200, £2,000) loan from the Al-Baydaa Centre, a US-backed microcredit scheme. “I was earning only 500,000 dinars [$432, €322, £292] from each donam [unit of land] on my vineyard,” says Mr Ali, a 33-year-old father of three.“But with my loan, I bought a water pump and some netting to go over the top of the grapes, and now I am making 4m dinars per donam.”Emphasis added: Having read my share of Donor AgitProp, this sort of repetitiously canned donor-lang. gets under my skin. It is positively formulaic.
In particular as the one-off examples say fuck-all about eventual longer financing stability or economic impact (although of course the examples are intended for audiences that would not understand the same).
In any event, micro-credit is so bloody fashionable that it is hard to sort out real results from fashionable spin. I do confess, however, there is some impact, although I personally tend to find it to be more along the lines of "poverty maintenance" rather than the sort of investment and financing that can create long-term and real sustained wealth growth. Not that poverty maintenance does not have its place, in particular in corrupt systems where the longer run growth investment prospects are .... constrained shall we say? There poverty maintenance may be simply the best choice available.
Regardless, the background
April 12, 2009
Mohammed bin Kharbash is to be sent to trial after an investigation into events at Deyaar, the real estate unit of Dubai Islamic Bank. .... Mr bin Kharbash, the former chairman of Deyaar, had allegedly helped Zach Shahin, the developer’s former chief executive, to seize company money. Mr Shahin, a US national detained by Dubai’s authorities last year, will also face charges of alleged bribe-taking. Trials have already started against other executives at Dubai Islamic Bank, in which the government holds a 30 per cent stake, as well as developers such as Sama Dubai, part of the Dubai Holding conglomerate.
Sama Dubai btw has some non trivial issues.
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April 08, 2009
But to be fair to Dubai land, Roula Khalaf
Don’t rule out Dubai comeback
The best obs here then:
Despite the misguided focus of recent years upon real estate, the economy has solid foundations. Dubai, after all, is the region’s main trading hub, with ports and airports unmatched in the Gulf. Tourism, too, will recover, and the emirate will probably remain the favourite finance base for the Middle East.
As one eminent businessman expresses it: “By [forming] a service economy, Dubai has become a clearing house for this part of the world, where suppliers of goods and services meet buyers.” The city-state will endure two bad years, he forecasts. But he concludes by insisting: “[Even as] a scaled-down version, it will still work.”
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April 07, 2009
Just giving the Algerian people another shot at expressing their gratitude to Mr Comb Over
A fine arty in Middle East Report Online Introducing Algeria’s President-for-Life by Ahmed Aghrout and Yahia H. Zoubir - focused on the upcoming... "elections."
I personally like Bouteflika's declaration "I propose nothing new, but I promise a strong and peaceful Algeria (Jeune Afrique 5-11 avril) for its charming bluntness and honesty.... well except maybe the strong and peaceful part. But certainly nothing new!
The economy remains dependent on hydrocarbon revenues -- exports outside this sector represent a paltry 2 percent of the total. The official rate of unemployment is close to 15 percent, which explains why candidate Bouteflika has promised the creation of 3 million jobs within five years if he is reelected. He claims to have brought unemployment down from more than 30 percent in 1999 to 12 percent in 2008, but no one outside the regime considers this figure credible, and true unemployment is certainly much more widespread than the state says. Domestic and foreign investment faces tall hurdles, while the banking sector remains quasi-archaic. Most of the infrastructure projects of which Bouteflika boasts have been plagued by delays as well as waste.
Tall hurdles indeed, for FDI. You'd have to be bloody retarded to invest in Algeria now given Comb Over thinks Presidential decrees forbidding foreigners from owning more than 49% of firms and blocking previously agreed on dividend repatriation. And those charming speeches about foreigners robbing Algeria... Mmmm, indeed its the foreigners robbing.
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April 06, 2009
Just gratitious Dubai bashing, but amusing (if one ignores the idiotic parts).
Leaving aside the dopey comments about bad driving and car accidents (really the author must be terribly sheltered to find driving in Dubai all that bad) an Dubai: How not to build a city. The arty architect snobbery of course is also tiresome, although if any city deserved it, it is Dubai.
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The charming vapidness of Gulf journalism.
Many expatriate workers across the Middle East see no reason to leave their country of residence during this present economic crisis, said a survey conducted by Bayt.com, a leading job site in the region
Bayt of course is pimping its services (and given its cost structure, whistling in the wind).
I really love Gulf journalism - in English or Arabic, it manages to be pure PR driven vapidness.
Which makes me think of FT's note Dubai turns to PR to revive its image
Dubai has appointed London public relations group Finsbury to handle its financial communications strategy as the city state seeks to head off negative media coverage of its troubled economy.
Ah yes. Head off negative media coverage. Insolvency is merely an item to be spun.
Well, supposing, Dubai's restructuring of its debt bloated corporations goes well, it might just somewhat work. However, one can observe that much of the Dubai linked work (much, but not all) in North Africa has ground to a halt with hidden insolvencies ... technical delays seem to be the favoured excuse.
As an aside, this is mildly amusing as an indicator of its own black-box nature biting it in the ass:
Set up in 2006, the holding company grew in importance as officials realised that the various wings of Dubai Inc – including Dubai World, Dubai Holding and the government – had been raising debt unilaterally, leaving them in the dark about the true extent of the emirate’s liabilities.
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April 05, 2009
Islamic Finance & Global Crises
The FT has a good comment on Islamic Finance:Islamic finance must resolve inner tensions. Notably the facile fashion of it being a solution to the current financial crisis.
A small idea is developing into a big hope in the Middle East. It is that the answer to the global financial crisis lies in Islamic finance.
Proponents of the $800bn industry argue that the prohibition on dealing in interest has saved Islamic institutions, preventing them from investing in all the dubious structures that have brought down high-flying international institutions.
One cheerleader for Islamic finance is Humayon Dar, chief executive officer of BMB Islamic, a subsidiary of The BMB Group, the global alternative asset management company. He says he was starting to worry about his job at the end of last year because of the changing economic climate.
March 30, 2009
A Chechen in Every Potshot? Dubai Assassination
Stretching out our Dubai trilogy to 4, Chechen on-again off-again military leader, Sulim Yamadayev, who was apparently against the Russians before he was recently for them, was just shot to death while staying in the UAE. (There appears to be a pattern of exiled adversaries of current pro-Russian Chechen leader Ramzan Kadyrov dying in a veritable Fodor's list of the world's more glamorous cities.) It appears Dubai's gendarmes have made an arrest. In all the unhappy news about Dubai, let's not hope for "free fire zone" to replace a currently economically bumpy "free trade zone." Importing Russian affairs has typically hitherto had only a recreationally carnal implication.
In the end, though, this is probably more a Chechnya-Russia story here than a Gulf one.
March 29, 2009
Is Tunis the New Dubai on the Mediterranean?
However, not so far away, the Tunisian economy is telling a different story. Both the end of 2008 and the beginning of 2009 have bought good news for Tunisia's business climate; all the sectors that have previously been synonymous with investment in Dubai are now being referenced to this small North African country: tourism, manufacturing, services, etc.
The answer is no. Horrible, lazy and dumb journo "Is X the next Y"....
Now, leaving aside the idiotic comparison with Dubai - profoundly idiotic on many levels - there is a bit of a story in the beneifical competition on the World Bank ranking for ease of Doing Business. This has proven a great tool, insofar as the ranking motivates the egos of the Ben Alis.
What I find most queer about the article as it sees as 'good' the worst comparative points - that is real estate hype - with Dubai. When one sees that kind of hype, one knows its utter tripe.
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March 23, 2009
Dubai, Bye Bye?: Guardian Lumps Gulf City's Fate with Detroit
Simon Jenkins at The Guardian declares prognosis negative on the ultimate fate of Dubai, which he has slated to be the Detroit of the Middle East, only worse, and largely on an architectural basis. My gut and a brief impression there in real time tend to disagree. But folks with real data and experience are out there. (UPDATE: One of our Aqoul circle opines differently from Jenkins here (disclaimer, author didn't write the overenthusiastic tite). And now, for the Dubai-curious. a bit of Jenkins below the break.
February 18, 2009
And in the realm of unsurprising, in a downturn, Emiratis can't be fired...
This I find simply amusing, in a vague sort of way:UAE to safeguard jobs of nationals
The United Arab Emirates labour ministry on Wednesday said it would regulate the dismissal of nationals working in the private sector, raising another level of protection around the local workforce as the ravages of the financial crisis cut deep into the Gulf state. ... Property and financial companies, especially in Dubai, have been shedding staff since the credit crunch triggered a real estate crash in the emirates. The gloom has spread to other previously vibrant sectors, such as tourism, .... private companies will only be able to dismiss UAE nationals for serious misconduct, including absenteeism, theft or drunkenness. The economic downturn will not be reason enough to make Emirati staff redundant. .... One human resources officer, who declined to be identified because of the sensitivity of the issue, said the move could affect the flexibility of employers and hurt Dubai’s competitiveness.
Ah well, the great subsidized Real Estate Scheme pretending to be shopping tourism wasn't really competitive regardless. Dubai is fucked into a cocked hat.
Nevertheless, they haven't gotten to the Algerian level of plain idiocy yet. More on that tomorrow.
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February 12, 2009
Dubai: Hype does not in fact immunise
Having taken a rather sceptical view of Dubai for a while, and been disgusted with, e.g. the FT allowing itself to print arties re Dubai & Gulf insulated from the global storms, I have taken some sour pleasure in this: Laid-Off Foreigners Flee as Dubai Spirals Down as well as the earlier Times arty on the same phenomena. Worth a ponder as to impact, I rather suspect that the Dubai black box shall have to be substantially unwound.
January 12, 2009
Not Gaza: The Dubai Hangover
First, this post is not about Gaza. Gaza sucks, it will continue to suck with or without the Israelis blowing the fuck out of school children & generally demonstrating that formerly oppressed peoples are absolutely brilliant at using their suffering to justify replicating the same dehumanisation of their enemies du jour (of course MENA & SSAfrica provides less media friendly examples as well) and unless the US decides to stop being the dog wagged by the tail, nothing will change. I remain favourable to expelling everyone and resettling the entire "Holy Land" with Turks, who at least can properly plan religious holidays.
Rather more interesting, the slow motion, semi-disguised implosion of Dubai and its real estate bubble. The FT's recent(ish) article on emerging Dubai Real Estate Scam/Scandals gave me a fine tickle of schadenfreude [let me confess that despite having studied in Berlin, I have to recheck the spelling every time as it never looks right...]. Although this merits further comment (that you may or may not get depending on the state of my business ventures and level of paranoia), it is worth noting that the Great Credit Unwinding, although it initially generated schadenfreude among the Gulf Arabs, is now exposing the fine little house of cards that was Dubai Real Estate. In many ways I rather regret this, as in the end I fear that Dubai's quasi liberalism could be discredited, but they brought this on themselves by losing sight of the core value proposition that made Dubai of 1995-2005 (pls note, I just pulled those dates out of my addled impressionistic memory, they are not serious, one could vary 2-3 years on the end date, start date, eh, I dunno) a real value proposition and standard setter for the Mashriq region with fairly liberal values, ease of business, and not too insane speculation. Then Hubris set in. I think it was somewhere between 2003 and 2005.
Regardless, the potential collapse of Dubai as well as the real damage done to the US and the UK represents serious damage to the Liberal economic model in the MENA region. While the US clearly went off on a bender (and Dubai on a vaguely similar one - my view, hate Real Estate, it appears solid when it is not) the MENA region desperately needs more Liberalism, not less, given the schlerotic regimes and 'regulation' that largely serves as rent extraction.
January 09, 2009
Gaza: A Modest Proposal
At risk of delving into the Israel/Palestine issue, where people too often yell, scream throw things, and put words into my mouth, I'd like to see what the denizens of Aqoul think of this idea for a cease-fire in Gaza, and where to go afterward, which is part of a larger plan to eliminate conflict by addressing socioeconomic inequalities, and which would also address other conflicts in the Middle East and elsewhere.
October 29, 2008
Seeders of Lebanon? Local Banking System Stability Noted
This NY Times article (may need to register) reports that Lebanon has remarkably stable and well-capitalized banks. In the midst of global turmoil in finance, they have eschewed speculative investments in favor of storing high levels of deposits. This stability has begun to attract hedge funds from outside. But to the untutored observer here, the article leaves open a simpler question -- how do the Lebanese banks make money (i.e. where do they lend for profit)? It appears that the banks are looking to branch out to several neighboring places (e.g.Bank Audi in other Arab lands), but there is little in the article to indicate they do much more than serve as safe places for deposit and as transfer agents for expatriate and diaspora inbound remittances (not that there's anything wrong with that, it's safe and presumably safely profitable via use fees, if any etc.). Otherwise the banks service some of the national debt of $45 billion. Are they simply giant vaults or seeders of a better future? Or might it be both?
September 30, 2008
Marshall Plan vs Iraq War: Costs
Another trivia about costs: Several sources indicate the war in Iraq has cost about $550 billion so far. Comparatively, the Marshall Plan which helped repel communism in Western Europe by bringing prosperity and stability there, cost $13 billion, which in today’s money is equivalent to anywhere between $100 and $750 billion. Applicability of such a plan in MENA today vs. post war Europe?
September 13, 2008
MENA & World Food Crisis, A topic to consider?
The "global food crisis" (or perhaps, food commodity price shock, crisis being a bit anticipatory), should be fairly well known to all, although this FT background (index page) is very useful, and of course stories like on the wealthier MENA countries, that is of course the Gulf, buying up land elsewhere to assure food prod have prompted bleating about Neo Colonialism and related inanities.
The item here for an open thread is pondering how Aqoul might ponder..... As I am openly bored of the usual topics, what is to say, has been said in gross modo, barring new developments, while certain interesting things I can't touch as it begins to impinge on actual real interests, as it were.
September 02, 2008
MENA Economic Futures, & Nitrogen
In honour of Ramadan and food (well not really Ramadan, but I just ate), an interesting FT arty to ponder: Middle East & North Africa - Economy: The food sector’s other growing need which discusses the importance of fertilizers in the global food production matrix and dealing with the relative shortfall of food production growth (or rather food reaching market growth), and ... MENA.
(a rather different angle than this)
There is, though, an additional dependence, as HSBC pointed out in a recent note. Many Middle Eastern countries, short of food and water, are large-scale exporters of a material that could enable those poor countries to grow crops to feed everyone – fertilisers.
And here companies in the region find themselves in a sweet spot. Those with access to gas – an essential input for nitrogen-based fertilisers – are likely to do particularly well because they have negotiated long-term and generous supply contracts, the bank says.
An interesting item for pondering, although phosphates, I have been reading have some relative shortfalls in new discoveries, similar to petrol.
September 01, 2008
Let us praise Libyan craftiness and all the lessons learned from Italy
I confess no small degree of admiration for the Desert Hookah Smoker, my early childhood guide, Si Mouamar Gaddafi. this little bit is an act of piracy worthy of .... Rome I think
It's delicious, extorting equity:
In a tent outside Benghazi on Saturday, Silvio Berlusconi, Italy's centre-right prime minister, returned a headless statue of Venus carted away by Italians decades ago and signed a friendship pact with Muammer Gaddafi, the Libyan leader.
The agreement, in which Italy pledges to pay $5bn (€3.4bn, £2.75bn) over 25 years in reparations through various projects - including a highway across Libya from Egypt to Tunisia - follows a decade of difficult negotiations under a succession of Italian governments.
Of course any pledge over 25 years by an Italian government should be discounted to present value using a discount rate appropriate to Italian finances, perhaps Medieval ones. Still, a win win - B Boy and the Guide get to bask in the PR of Large Numbers, and the Guide gets to pocket a decent amount of current exchange.
Almost as intriguing is is The Guide's "Extol[ing] virtues of capitalist reforms" as the FT arty puts it.
Well not quite:
August 24, 2008
MENA Development and Investment: How 'bout just makin' stuff?
Moving back MENA-ward, I add a rant inspired by long-time discussions here and elsewhere regarding investment in Middle East and North African (MENA) countries. My amateur self keeps reading about Gulf or other money chasing things like real estate or hub port facilities, or digging out more of that Texas tea. Now, I hope I don't use too technical economic terms here, but here goes the rant: shouldn't the bulk of this fund dough, including money from superrich nations, be going towards activities where, you know, MENA regular folks will, like, MAKE NEW STUFF and then SELL THAT NEWLY-MADE STUFF TO OTHER PEOPLE for, um, HARD MONEY. That may sound a bit hi-falutin grad-school airy-fairy idealistic, development economics-y, but it needs to be said.
August 11, 2008
The (Un)Surprising Failure of the Iraqi Private Sector
An utterly unsurprising report from The New York Times on the failure of the Iraqi private sector to take off after many preictions and the US pissing away billions on quixotic efforts in this regard.
The irony of these events is, as in the case of the Iraqi state, the Americans will leave behind not a vibrant liberal democracy showing fine examples of the benefits of free market economics. Instead they will leave behind a quasi democracy dominated by parties tending to vilayet-i-fiqh thinking and a massive state run sector.
And that is all that can be reasonably expected insofar as until the bombs stop and there is real security (not "security" as trumpeted by the Right Bolsheviks in the US of A, but security that makes real private capital feel secure).
August 07, 2008
Nouakchott in the Dark: Mauretania Coup
Semi-Aqoulite alle on his blog provides background and details on Mauretania going coup coup. In comments by alle elsewhere on this site, he notes that "there goes the Arab world's most interesting experiment in democracy-by-coup."
July 13, 2008
Ya Rayah...Ch7al nedmou lebad l-ghafline qblek: Southern Med & Socio Economics
With proper reference to Taha's Ya Rayah* which seems more than appropriate given the subject matter, and prompted by The Economist’s recent profile on investment in the Mediterranean as well as a series of articles on the Maghreb and southern Med region (let me call this MedSud from now on, as MEDA sounds idiotic), including a previously noted Lounsbury article from NY Times piece on Algerian Youth, an interesting FT series on labour markets, education and youth in MENA (and in particular on entrepreneurship, or rather not being a lazy bureaucrat), in addition to the rather cretinous article from Abu Dhabi on Maghreb investment that Hogan already cited.
Update: also in similar vein see Comments on Khaleej Times whinging on Islamic Finance
Update II - 15 Jul: quick clarification on my remarks and in particular my MedSud usage. While the underlying article and research by ANIMA covers a wider range - the MEDA zone as they define it including Israel and Turkey, my remarks do not. I personally consider both too different to look at analytically in grouping with the Maghreb or the Arab Machreq. Obviously discussable, but the remarks below should be understood as excluding entirely Turkey and Israel.
July 08, 2008
Maghreb-ward, Ho! Gulf investment heads into the sunset
Rudely poaching on turf far better handled by other contributors, I call attention to this article in The National of Abu Dhabi(?) which relates risk/reward considerations of Gulf investment in North Africa, particularly in real estate. Do the observations jibe with reality? Too little fear, too little greed, or too much. Or just right. A good intro for the beginner or just a superficial story? Excerpts below the fold.
June 27, 2008
Bubble, Bubble, Oil and Trouble
This Washington Post story nurtures the question: are the recent bubble-like oil price spikes driven by speculative runs on oil or are they driven by a fundamental growth in demand? The supply side, aka Saudi Arabia, claims the first choice and the demand side, aka America and industrialized states, claims the second. My semi-educated wild hunch is that the supply siders' 'explanation (high speculation) is closer to the truth. (UPDATE: Commenter Klaus notes a more recent Krugman column on the same subject arguing that economic fundamentals are primarily driving the price increase.)
June 23, 2008
Syria, how we might learn to love profit (or issues in getting away from Leftist rentier exploitation)
The Financial Times has a fine article on Syria Syria see[ing the] benefits of liberalisation that is worthy of some reflexion.
A couple of quick obs up front, given that Syria is moving from an utterly basket case socialist economy (with all the usual emerging markets double talk about 'social justice' that really means protecting the ruling elite and labour elite Soviet style to the detriment of the overall economy and post-revolution or new job entrants), their challenges are major.
Giving the article a quick read, it struck me that this pseudo-liberalisation (or maybe "shopping and not entreprenurial" liberalisation) is probably the very worst form insofar as it will definitely not deliver proper growth, will boost the corrupt rentier elites (I have nothing against entrepreneurial wealth, and related forms, but rent extractors I detest - whether in the most pernicious form as governmentally enabled or via private cartels [that US libertarians tend to forget as a serious issue]).
June 22, 2008
Islamic Finance Bubble
A quick note, prompted by a very decent set of audio-visual summaries at FT on Islamic Finance, and a note within the presentation that the Islamic Finance industry has not been effected to date by the global credit crunch (although noting exposure to Gulf Real Estate).
It strikes me that as impressive as the growth has been in the past seven years, it corresponds rather precisely with the big Gulf boom driven by hydrocarbon prices. There is much loose talk of huge new Muslim markets, counting up the global number of Muslims - African, Asian, etc. - as potential market numbers (see the articles here). This, like your average "MENA" but really Gulf Fund, playing with regional numbers to inflate potential is utter bollocks. Much boosterism comes from the Gulf, and more from City bankers with a thin understanding of the variations in the Islamic world and the extent to which poorer markets with more liberal approaches to Islam are going to be genuinely willing to pay a premium for services (or be exposed to more risk - although that is more likely to be disguised). Perhaps worth a further discussion, but it strikes me that Islamic finance growth right now is intimiately and almost uniquely driven by asset inflation in the Gulf, that makes everything look attractive.
June 19, 2008
KSA Gives Up Dream of Making the Desert Green
Here’s a very interesting article on the waste that the Saudi adventure of growing its own wheat has been. A few quotes:
“Within 12 years, between 1980 and 1992, wheat production grew 29-fold--from 142,000 tons in 1980 to 4.1 million tons in 1992 --making the Saudi desert the world's sixth-largest wheat exporting country.” “Between 1981 and 1993, Saudi Arabia spent a total of $225 billion out of US$420 billion in total oil revenues on defense and security. (…) Maintaining the ruling family is estimated to have cost $4 billion per annum during the 1980s, and more in later years as the family grew”
“For the sixteen years between 1984 and 2000, it may be estimated that the assessable cost of Saudi agricultural development could be put at about $85 billion, representing 18 percent of the country's $485 billion in revenues from oil exports during the period. This huge investment produced wheat at an average cost of more than US$500 per ton. During the same period, the international market price for wheat averaged about $120 per ton. When the waste resulting from abandoning the newly reclaimed and irrigated lands plus four unquantified government subsidies are added, the cost might more than double.”
June 11, 2008
Al-Sharq, babe, has such teeth, dear: Lebanese Big Shots Interviewed
(Apologies to Bobby Darrin and the Three-Penny Opera.) On what seems like the ultimate Summer Vacation for MENA nerds, a student provides extremely useful and interesting account of meetings with the pezzonovantes of the Lebanon. Via Col. Pat Lang, via commenter duaneg. Below, some choice excerpts....
June 08, 2008
Rebuilding Lake Tritonis
... City development is a natural process, and oftentimes the problem is not to get it going but to remove obstacles to it.
In many ways we would simply waste less time and money on what doesn't work:
• Cities and countries wouldn't bother trying to attract transplanted factories (the focus of most current international development). At best this would be seen as a stopgap measure, one step short of charity.
This quote sums up the spirit of an important part of Jacob's article. It made me think of all those efforts to develop the Sahara and the Arabian Desert. One particular instance that came to mind is an idea put on the table by the Tunisian government in the 1980s to create an interior sea using the chotts. The idea was never implemented for petty political reasons, so petty politics might have positive side benefits it seems. It was actually born in the head of a French military scientist in 1864’s Algeria.
June 07, 2008
The ability of Dubai to pimp itself is boundless, although of course sheer greed is useful to get boundless buy in, although if one is smart it would be good to question the fundamental health of the frenzy.
March 26, 2008
Fear & Food: MENA Inflation (Open Commentary)
I have (as our site authors can verify) a draft on the issues of dating a month - an indictment of my writing time - on this issue (generally), but sadly this has to wait for more free time. At the same time this is a hot and frankly useful topic. Thus, while I haven't done up my proper commentary, an open note on this issue I think useful.
March 02, 2008
Explosions and MENA - never mind the political bollocks
A rather overlooked article, if I am not mistaken, and certainly complementary to my last post from The New York Times on basic cost of living inflation in MENA.
While it is easy to be critical of some simplistic details in the article, never mind background economics, the reality is clear and this anecdotal article conveys it. Basic cost of living in both oil and non-oil states is escalating at rapid rates, agiven global commodity prices in food and basic goods (and, yes, energy), and that is hitting an emerging lower and proper middle class hard.
Worse, this is coming off of barely realised gains in the past 5 years (for the 'new' professional or semi-professional middle or quasi middle classes).
I don't care much for the whanking on about party political manoeuvres in any given country - but if readers want to worry, bloody well worry less about momentary ebb and flow of political liberalisation (damned bollocks if you ask me, cart before the bloody horse). Rather worry about basic cost of living inflation hitting an emerging class of people that could, with a bit of time, actually support and drive economic and secondarily political reform knocking back the rent seeking elites. This is, to be blunt, fundamentally dangerous. Micro-cosmically, a domestic driven development like this in Egypt in the 80s helped driven a minority of Egyptian 'up coming almost middle classes' into radicalism. Flat line poverty and stagnation is less dangerous, ceterius paribus, than almost comfortable people being pushed suddently into stagnation and declinging fortunes. Sadly the American Administration seems incapable of intelligently and pro-actively managing its own (self generated) economic problems, let alone global risks.
Leave aside whanking on about the Awakenings, and other Iraq rubbish - dig into the background on cost of living pressures in MENA - not optimism driving.
February 25, 2008
Economic Development, Foreign Investment and the War on Terror
Oddly via one of my investment robots, I ran across this Op Ed from Zenpundit favourite Thomas P.M. Barnett - a Strat Studies type - on the necessity to focus on promoting growth in MENA, and imp. of FDI. More important than making things go boom.
I shall leave this open to comment. I have some own reactions, which may really resolve to quibbles, to details in the Op Ed, but it is interesting to see this argument.
February 24, 2008
Bahrain: Reform and Liberalism
Worthy of reflexion on larger tensions between economic and political reform in MENA, Bahrain seems to be going through an awkward spot in terms of political and economic reform although it is Bush ibn Bush's Khaliji wunderkind for democratisation. Nothing surprising in this, other than perhaps the qualified support of the opposition (and even that is not terribly astounding as such, given the way publicly expressed opposition generally occurs in Monarchies).
December 29, 2007
Happy Holidays, Your Flats Flattened, Off Plan Of Course
While the headline news for "the Broader Middle East" if one accepts including Pakistan in that is certain to attract much learned and unlearned comment (1), some fundamentals of real estate market development, or lack thereof, attract my attention. Flats flattened, off plan, if I may indulge in grim humour as the death toll from a Christmas Eve apartment collapse continues to rise nearly a week after. This hearkens back to a "classic" as eerie signs it: Cairo's Collapsing Buildings. Again, a story of a collapsing block of flats, and doubtless gross underlying corruption.
However, gross corruption is not all, as without any question the heritage of Egyptian State Socialism is as much behind the sad, indeed grossly depressing tale of Egyptian economic and social development since Nasser. Under such circumstances, where secularism was historically effectively synoymous with the ded hand of the vampire state, it is no surprise American efforts at backing faux democracy trickled away into the sand in the face of the Muslim Brotherhood.
December 11, 2007
Releasing Built-Up Labor Tension
The floodgates have opened. It is the beginning of the end for serious labor repression in the UAE, and the rest of the Gulf is likely to follow. Dubai's employers have been forced to negotiate with (illegally) organized labor and come out second-best.
Organized labor has never had it good in the Gulf. The armies of foreign construction workers - there are 700,000 in the UAE alone - live in overcrowded and unhygienic quarters, work in unsafe conditions, have no political rights, and are banned from collective bargaining. They can't even switch jobs when their employers fail to pay them, as happens all too often. Over the past couple of years, a depreciation in the value of local currencies pegged to the dollar has meant they have been able to send less money home than ever before, rendering many unable to support families they were forced to leave behind, even as high inflation has eaten into their purchasing power in the Gulf. Meanwhile, demand for workers has surged with a building boom brought about by high oil prices.
November 18, 2007
Development Idiocies & Developing Business in MENA
A short note, a rant, a bit of despair on the sheer idiocy of "economic development programs" and the combined worst of private and public sectors.
The following of course is not family friendly but does represent the frustration of one man trying to finance useful things in MENA. However, I do believe it important to discuss in a fairly brutal manner my observations (and ill-informed thoughts) on promoting investment and growth in MENA.
October 18, 2007
Iraq: Lessons in Risk & Investment
I was amused to read this New York Times arty on US military "concern" over Iranian and Chinese contracting and investment in Iraq.
Aside from providing a certain amusing lesson in economic interest, there are two key lessons here:
(i) That in high risk environments, private capital is cowardly (and rightly so),
(ii) that the US has and still is trying to "do" Iraq on the cheap and without real effort - not national mobilisation despite the Good & Evil rhetoric and calls to Second World War Hollywood imagery. No, drip, drip in billions of just enough for the moment to give the semblance of serious effort to the domestic audiences.
It makes the failure in Iraq sadder, but also more amusing to have the Chinese giving lessons in risk. It also makes more ridiculous the various ill conceived and half baked "economic initiatives" the Americans have launched in MENA, and Iraq - driven more by ideological wishful and magical thinking about magic entrepreneurship and private initiative springing full-formed out of Zeus's head than real effort to drive change, their "key word" parroted constantly and tiresomely in every bloody conference they bloody show up at.
October 09, 2007
Melting Gold and Other Financial Transactions
Having had enough of my ridiculously over-regulated stiflingly bureaucratic and extortionately expensive UK bank account, I decided to take the advice of a relative and use a highly suspect and loosely regulated local ‘hawaala’ system in order to send my monies abroad. Somewhat embarrassingly, I had never visited a hawaala branch despite at some point completing a post graduate thesis on informal money transfer systems. And here, when I say ‘branch’, I actually mean some incarnation of tertiary industry on a street corner where you can procure slightly suspect fruit and veg, go online for a pound and grab some milk at an ungodly hour when all the decent market chains had shut down.
October 02, 2007
Victory of Image and Capital: Emirates & Hollywood
Quite frankly while not entirely surprising, the Time Warner - Abu Dhabi Entertainment Hub (or city in Dubai parlance) does not strike me as a match made in heaven.
On one hand the Emirates are sucking in a certain kind of talent, but I have a hard time believing that the cost issues in the Emirates plus the lack of a vibrant real culture, a salon and artists culture as it were, can make this anything but "a 6,000 acre theme park" rather than a space "to produce Arabic-language film, TV and video games" (well maybe video games, although I still imagine doing video game Arabization is likely cheaper to do in say Cairo or even better Amman, although maybe one puts HQ in Abu Dhabi for money raising purposes).
But that the idea is being floated speaks to the problems of getting investment off the ground and also, ahem, doing business in much of the region.
September 29, 2007
Regarding Maghreb & Bread
Riots that is, an interesting exchange on recent disturbances in Morocco over basic staples rising prices (in French, sorry monolinguals and non-Francophones, go bloody use a substandard online translator).
Real reform, not make up...a good comment made by EcoMaroc (the blog). Important.
Meanwhile, online I read that Abbas el Fassi, mediocrity en chef is talking about ditching the Jettou government's budgetary rectitude for "investment" (i.e. likely senseless wasting of the ratepayer's money on corrupt schemes, and raising more funds domestically, crowding out of course productive investment).
WB: Doing Business - Egypt tops reform
Well, I am most surprised: as Egypt, despite the Shrimp Eater tops the easing business race as measured by World Bank, which is to say that it's undertaken more operational reforms to make your average small business set up and running moderately less of a nightmare. I note also that there is a short and useful profile of MENA regional reforms available on this page as well as other regions.
Egypt, well given the coverage of this initial data release I have to congratulate WB with coming up with the benchmarking idea. Very useful, cross comparative (as in "what, Egypt is doing better than us" is useful. Above all as much signs of backsliding on liberalisation in the Maghreb stomping grounds (and Libya, who the bloody hell knows...)).
September 22, 2007
America's Crusade to Drive Away Arabo-Muslim Investment
Senator Schumer, ignoramus and fear-mongerer at large whose understanding of Dubai, whore entrepot of the Gulf, is that it's Al Qaeda central: "Dubai has been cited as a nexus for terrorist financing and money laundering and a 'potential crossroads' for shipping and trading linked to Iran's drive to obtain nuclear materials and technology"
Evidently despite representing New York, his literacy in matters financial is also terribly limited (or he merely is one of those Phobics post 11 Sep who are smart enough to dress up their fear of all things Islamic in other clothes), for Dubai taking a stake in NASDAQ really means fuck all (other than they're likely to be soaked just like the Japanese were in their Rockefeller Centre / NY buying spree...).
September 04, 2007
Incentives and Accountability in Gulf Labor Markets
If the penalty for shooting someone was a $12 fine, and a warning that repeat offenders might lose access to firearms, what would happen? The murder rate would shoot up. We rely on incentives and disincentives to promote or dissuade against all sorts of things, from charitable giving to compliance with the law.
September 02, 2007
Remittances & MENA, a brief reflexion on money flows
My favourite newspaper, as a running dog of an anglo saxon ultra liberale as the francophones like to style me (well except the running dog part, it not being in the idioma) The Financial Times has a fine series on Remittances, or in more ordinary language, money sent home by 3rd Worlders working outside of home country.
Funny these terms. Leaving this aside, remittances is quite a hot topic in the financial world, both in policy and in the money making parts, because the volumes are huge and our grubby little minds always think there must be ways to do interesting things with cash flows. More prosaically, the development people are all atwitter that:
In many developing countries today, more money comes from remittances than from foreign aid, foreign investment or even traditional exports. In Central America, remittances have long eclipsed traditional agricultural mainstays such as coffee and bananas. Migrants send more money to Morocco than tourists spend there. In some small countries – Lebanon, Serbia, Haiti, Tonga, Albania and Jamaica are all examples – remittances generate more revenues than all merchandise exports put together. The latest World Bank figures list 14 countries where migrants’ earnings account for 15 per cent or more of economic output, ranging from Moldova with 38 per cent to Jamaica with 16.4 per cent.
So there must be ways to make this money work better than merely supporting consumption, they say!
On the other side, and this is particularly true for marginally financially literate American government officials, there is this huge obsession with hawala (their mot phare, having just learned it, and thinking it applicable everywhere in - what do they call it, the silly little American provincials, BMENA or GMENA (Broader / Greater MENA), (1) and transfers (informal or otherwise) as terror financing. Apparently insensible to the data indicating nothing much in the way of money laundering as such has been involved in al Qaeda acts despite much fevered talk.
August 27, 2007
Economic Development, Risk Taking & Culture (or excessive attention to culture)
Taking cue from from my own Lounsbury comment, a slightly modified and updated set of thoughts on this IHT article: Egypt searches for a balance that rewards risk-takers while valuing the past, although as I said on The Lounsbury, to be fair it is an AP article.
While it has aspects of breathless gullibility, it's not without a discussion of evolving business culture...or aspirations of evolving business culture. But in advance of my comments, a few thoughts.
August 25, 2007
Syria's Consideration: A Realistic Travelogue in A Surprising Place
I must say something nice about the Washington Times, which normally has MENA-related fare along the lines of FoxNews and this type of swill. I saw this story a short time back of a travel-writer's visit to Syria in the dead-wood version, but not online. Now I see it is online. Amazingly, the writer actually seems to have taken note of the place and reported it and experienced what normal travelers there would notice, although one might find it too saccharine for its non-comments on the ubiquitous Leader & Family photos, or the pervasive poverty. Still, entitled sincerely and without guile The Kindness of Syrians, it is well done and refreshingly rooted in relevant reality; excerpts for you link-avoiders below the break. (Elsewhere on deeper questions of wealth and poverty, AbuFares has this to say; more on that at another time. Now back to the W. Times.)
August 15, 2007
MENA, Credit Crunches, Sovereign Funds & Fear Mongering: Expanded Thought
Expanding on an earlier Lounsbury post or three, that is the preceding on Lounsbury on Credit Crashes & MENA as well as a brief note on what I expect to be a source of fear mongering (although I may be wrong), a few thoughts on the credit melt-down and MENA. Brief and semi-stale.
July 25, 2007
Islamist Election & Moving MENA Forward: Stability and Investment
Some time back a good friend of mine in the Maghrebine banking community asked me my thoughts on what would happen if The Parti la Justice et le Développement (Justice & Development Party), the moderate Islamist party in Morocco won the upcoming elections - as they would clearly do in any free election, from an investment flow point of view. Or more succinctly - would people like me take money out of the market, re-balance to Tunisia, etc.
My answer was "depends" - although Moroccan politics is not something I follow terribly closely, PJD actually in the economic sphere has always struck me as being fairly economically liberal (given the francophone and Arab world benchmarks that is) - and I opined that us Anglo Saxon investors would actually like to see a government with better roots and thus probably better ability to move economic liberalisation forward. I was worried, though, that this answer might be too me. I submit, then, the results of the Turkish elections and London's reactioin as partial indication my gut read is on target.
(See also Abu Aardvark's thoughts on Arab world reaction to the elections and in particular re the pseudo-secularist "Moderates")
July 22, 2007
Dubai's New Erection Penetrates Foe China Entry's Position
Why are you looking at me like that? Stop it. The internal structure of the new under-construction Burj Dubai tower has just passed the height of the rival entry in the world's tallest building competition, Taiwan-Republic of China's Taipei 101 tower. The Burj is now 1,667 feet (sorry, I don't do metric). The question: is there any value or significance to such structures? It looks horrible at this stage; is the final version decent? And no. The caption wrote itself. Grow up. (Update: Taipei 101 - I think it's ugly too.)
May 23, 2007
The never ending list of new bans in Islamic finance
Before I mention this amusing theoretical case of a usurious zero interest rate, a few comments about today’s FT Alphaville’s entry on Islamic finance:
Islamic finance - based on a strict interpretation of the Koran that bans the use of interest in transactions
Usury. The Quran bans usury. What the Quran explicitly bans isn’t the topic of the Islamic finance debate. It’s whether any amount of interest constitutes usury.
Concepts such as derivatives and hedge funds, for example, are considered particularly controversial, given the Koran’s ban on gharar (speculation).
Ben Smith, the author of this entry really needs to get his info outside Tora Bora, because there’s no such ban whatsoever in the Quran. The discussion about gharar comes from some hardly known jurisprudence, and it's not even a prohibition. Even the obscure ramblings of those yawn provoking troglodytes have a more nuanced (well, confused) view on it than the one presented above.
May 07, 2007
Sarkozy: The Mediterranean Union
Sarkozy’s proposal of a Mediterranean Union have been discussed a lot by French media, but with little substance. The fact is, there aren’t many details in the proposal anyway. From his party’s website:
Je favoriserai le développement des pays pauvres, en cessant d’aider les gouvernements corrompus, en mettant en place une Union méditerranéenne avec les pays du Sud
I will favor the development of poor countries, by stopping aid to corrupt governments, by creating a Mediterranean Union with southern countries
Since most countries of the South happen to be Arab and corrupt regimes, I wonder how his pro-colonial, pro-Israeli, “anti-corrupt” attitude is going to help him cooperate in building any kind of union with them.
May 05, 2007
The Forex Wall
I’ve hit it again. The Lounsbury and I have had a brief exchange about this some time ago, and I just discussed it with a Moroccan acquaintance. The guy’s an accountant. Morocco or Tunisia, to quote only those examples among many other Arab countries, impose trade restrictions when it comes to foreign currencies.
The argument I’m given in support for those restrictions is invariably the same: everyone will rush to buy foreign currencies, and the country will have a shortage of it. That such an argument comes from an accountant is puzzling. It totally ignores the fact that markets would automatically balance that demand. If some little buddy is ready to sell his house for a couple of euros, then he must be a moron of epic proportions. And if one’s worried about the resulting exchange rate, then there definitely are ways to control them through market mechanisms.
April 28, 2007
France reflections: elections, Beurs, MENA, economy
As per The Lounsbury's suggestion, and following Ibn Kafka's extensive coverage of French elections, here are my two cents about them, Beurs, France and the MENA region and related economic bits.
Sunday's [May 6th] second round will most probably bring Sarkozy to French presidency. I have to say I'm very mixed up about this election. This round's vote is a matter of either gambling on Sarkozy, and risking what happened with Arab Americans, who happen to have voted George Bush in 2000, or choosing an economically destructive but marginally more risk averse community-wise choice with Segolene.
April 26, 2007
Finance 101 for Muslims
It is sad to say this, but finance is to today’s Muslims what medicine or astronomy was to medieval Europeans. I’m so sick of coming across people condemning themselves to poverty because they decided to follow the widespread confusion promoted by ulemas who are criminally ignorant about finance and even about traditional Islamic jurisprudence itself. So here, I decided to write this intro to finance in the hope that it will enlighten at least some of the Muslims who are hesitant when it comes to dealing with interests.
I’ll try to make it as simple as possible and will avoid circus monkeys jargon, sometimes even overly simplifying for clarity’s sake. It’s for lay people, so finance geeks look away, or your eyes are going to hurt. This is very long, so here are the sections:
I The law of gravity: supply and demand
II Money’s just an asset
III The time value of money
V Putting it together: interest rates
VI You do want that loan: why borrowing is necessary
VII The fallacies behind Islamic finance
VIII Islamic jurisprudence and the case of the last Caliphate
IX Pass it on
April 05, 2007
Well, Golly: Egyptian Finance Comes to Town
Youssef Boutros Ghali, Egypt's Minister of Finance, will be giving his take -- perhaps a bad choice of words -- on the economy of Nile-dom right here in Potomac River City, aka Washington D.C., on Thursday, April 12 (reserve at the CATO Institute by 11 April). Full details are below the break, and here, the most important of which is "Cato Forums and luncheons are free of charge." D.C area Aqoulites are required to go, if they are below 32 and in any kind of University. Meanwhile, informed comments from all on the subject, including from our own regional finance hyperinformed but Masrophobic resident Id, are welcome.
February 03, 2007
Khaleejization: Background Information
The Arab Gulf countries have long relied on foreign labor to keep their economies running. Nationals largely work in cushy government jobs that pay above-market wages and require relatively few hours. This was part of the bargain the royal families struck with their populations- no representation, no taxation. By contrast, private sectors in the Gulf are dominated by expatriates. With the partial exception of certain kinds of managers, the latter are compensated poorly and work long hours.
Abu Dhabi Strikes Back
For generations, the rulers of the Arabian peninsula have been rivals. In the past, they vied for the loyalties of the nomadic tribes of the region. Today, their competition centers around their economies. Flush with oil revenues, they have striven to outdo one another in building businesses and cities.
December 30, 2006
Eid Mubarek and Economics
On the occasion of wishing, to the extent I am capable of such, readers Happy Holidays, Eid Mubarek and similar canned sentiments, a quick suggestion.
For the Islamic world, the Eid is a great time to reflect on the current inefficiencies in the markets, on why one can't do haouli forward contracts for an Eid delivery on a sheep, and generally on how consumption spikes in MENA reveal failures in the subsidies systems.
You might take time to reflect if an Islamic MBA would help introduce such ideas into conservatives venues, or ask what private investment may actually be doing. Regardless, the region is tipping on the edge of catastrophe due to the Americans' incompetence, but I remain hopefull that other trends, like massive amounts of capital and investment will tide things over.
December 01, 2006
Tipping the Wrong Way: MENA & US Policy
The slow motion disaster that is Iraq has come to bore me, now that I have written off personal interests there (although as an aside, now one doesn't cease to get offers to take part in US reconstruction - sorry boys, too late. In '03 I would have done it. Now you're 3 years down the road to utter catastrophe, not a bloody chance).
However, as part of the larger wreckage of US policy, that remains sadly a major but largely negative driver in the region (not due to overall intentions, but realism of how and on what schedule said intentions can be implemented - which is to say due to the utterly magical fairy-dust approach they insist on taking) one has to be interested in Iraq and US MENA policy which surrounds it and is in part driven by the fiasco.
November 24, 2006
Labor Rights in the UAE: An Update
In the UAE, a new agreement means middlemen are to be cut out of the labor supply chain bringing workers to the country from four countries that serve as major sources of manpower.
If the agreement works, it will go a long way towards bridging the gap between what workers expect when they leave their home countries, and what they actually receive. However, this is a big 'if,' especially given the the number of regulations regarding workers that already exist but remain unenforced. Nevertheless, the agreement would serve the interests of both workers themselves and the companies that hire them. Workers are often cheated by unscrupulous agents into illegally paying large sums of money to secure jobs, and these funds are often secured by pawning the family jewelry or through loansharks charging exorbitant interest rates. When the workers in question find out how much they will actually be paid, they are not happy. All too often, low morale- also caused by poor working conditions- has led to work disruptions, as workers have put down their tools in protest.
November 11, 2006
Arab Media: Al Jazeera Newspaper
Likely lost in the American elections noise and the Israeli Gaza invasion, an interesting item reported in the FT among other sources on Al Jazeera planning a competitor to the hoary old pan-Arab dailies, Al Hayat (my personal favourite), Asharq Al Awsat (All Saudi views, all the time...) and of course Al Quds Al Arabi (old school Arab nationalism, I found them shrill and boring when I bothered to read it).
A worthy concept, but I am afraid the very physicalness of newspapers make them too easy to ban (by the way, I remain puzzled why Hayat hasn't been found in Maghreb for decades) or pressure.
October 22, 2006
Memo from Dubai
It seems worthwhile to draw attention to an interesting article in NYT on Dubai and culture clashes, one which I think despite some superficialities is actually quite interesting. Stemming from a recent local Expat paper's admonishment to respect local culture a bit, it appears to have set off some reaction. I frankly agree with the admonition.
I also found the illustrating image amusing as the inappropriate couple behind the Emirati clique is so very clearly Leb.
October 06, 2006
Dubai, the Attraction
A quick note to draw attention to a recent arty by Roula Khalaf of FT on Dubai and the why behind its success to date: Dubai cultivates oasis of calm where Arab business life can flourish.
The main thrust of the article is to highlight some of the why behind Dubai's success to date, beyond just stupid amounts of capital. Although that is a clear major condition, it is not a sufficient one as the other petro-giants of the region never managed to achieve Dubai's success (even if we mitigate our appreciation of the success by noting a definately unsustainable aspect doped by too much liquidity chasing too few quality assets).
Despite my own critical attitude towards Dubai - much is clearly illusion and can not survive, there are also clear lessons with respect to the ability of the Arab/MENA region entreprenurial classes actually being able to flourish when a moderately liberal (quite liberal for the off-shore aspects) business environment is established. I do note that some of - indeed in some ways much of Dubai's liberalism is rather Potemkin liberalism insofar as it is all of a very temporary, Enlightened Despot Suffrage quality. That being said, if one takes Dubai with a grain of salt, it does illustrate via its off-shore business services sector the degree to which Arabo-Muslim entrepreneurship is seeking a place to flourish away from the dead hand of the state, and the degree to which even in the temporary, Prince-dependent liberalism of Dubai seems vastly attractive in a world where the West is growing stupidly more hostile to Arabo-Islamic money.
September 27, 2006
Solidarity, Reg: Maghreb, Outsourcing and Reaction
One of the issues that the United States has gotten right in MENA is its sometime concentration (when the gross fabulists that are political leadership of the Bush Administration are not dreaming up imaginary and magical transformations of a New Middle East, in time to render themselves ridculous and fools, e.g. Lebanon) on economic liberalisation as means to grow the region and provide new opportunity. It would do better to focus more on seeing real liberalisation see the day, and let its completely magical thinking about democratisation fall by the wayside.
The political support for such liberalisation contrasts favourably with the absurd double talk Europe engages in with respect to economic policy, above all France (which of course is no worse and in many ways better informed than the self-decieving fabulism the Americans are engaging in on the political 'democratisation' front). The Financial Times has an important article, although one not likely to be noticed by many, on the clash between Axa unions in France and the company over its plans to outsource to the Maghreb.
September 25, 2006
Leb Land & Recon, Back to Networks
Returning to a hint I made a month ago, I find on the newswires confirmation of the scheming re buying some street cred in Lebanon after the disastrous backing of 'transformation via Israeli shells' did such a lovely job of fucking American reputation into a cocked hat.
The USD 250 million of course is better than zero, but I am having a hard time seeing effectiveness given zero on the ground networks.
Hezbullah won, and even the backstopping effort isn't very good.
[Updated with links to actual entries supra, just to prove The Lounsbury is ahead of the curve]
September 10, 2006
They'll Estonia When You Try to Trade Some Goods: Transition Model?
Estonia, the Model? (Title apologies to Bob Dylan.) It seems everybody must get Estonia'd. In this excerpt of a behind-the-firewall op-ed by John Tierney in the New York Times, we learn of the transtion from an economically totalitarian society to a free market one in the ex-Soviet state of Estonia. Assuming -- and tragically some you don't, I know -- that a free market-based state and economy is a generally good thing, does Estonia provide an example for MENA (Mideast North Africa) states, and if so which ones? Alas, our main economics contributor in the region is currently bailing out sinking enterprises so the expert answer may be harder to come by. Meanwhile, I suspect Estonia fails as a model.
August 27, 2006
Published: World Bank Report on MENA - 2006
Perhaps I will make this a tradition, but let me draw your attention to the semi-newly published (June, hey I didn't notice) World Bank report on MENA economic prospects, for 2006.
Last year's got me all inspired to rant on a bit and otherwise criticise a noble if somewhat flawed effort. It also inspired some parties to suggest I write "Development Porn" - I suppose writing the following engendered this:
August 24, 2006
Giddiness: MENA Private Sector & New America Foundation
In reading the first paragraphs of a Washington Post Op Ed by a fellow at the New America Foundation, entitled The Real 'New Middle East' I thought I was going to be pleased, sadly though the author took real observations and mixed them in with simple-minded swallowing of corporate and governmental PR spin to produce absurd tripe typical of the wide-eyed neophyte or the paid propagandist.
A pity as the author's main thesis in a less over-done and gullible form has merit.
Cross posted from The Lounsbury
August 22, 2006
Rigidities & Employment: Small Details, Large Effects
In my small note last week, on MENA Trade, Business Culture & Americans our colleague Shaheen rightly raised the issue of negative effects of apparently small issues as well as the negative impact of what I might call "sand in the wheels" - such as heavy visa regulations that can kill time sensitive deals - an increasingly common issue in a world of accelerating decision cycles.
Aside from the conversation in comments on the challenges of visas for the entrepreneur looking to build exports (as I note, supposedly a key policy concern for the US), my own suggestion with respect to visa services was rightly critiqued for the remaining bureaucratic braking effect.
August 09, 2006
Frothy: Fund Developments, Private Equity & MENA
A queer indicator of the amount of froth that characterises the MENA capital markets at present, my very own self got a call from an American firm looking to enter the MENA market for the first time and raise a private equity fund. Looking for a "face."
Quite frankly, they need someone grey-haired and I told them that right out, for the kind of investment they're thinking of; but on the other hand, I would be a decent face to give an image of.... "best practices" given me rep as Mr Clean.
This being said, this is not really about me, but the froth. With oil at nearly USD 80 and likely to remain well above USD 70, the amount of money flowing into the Gulf - and to a lesser extent places like Algeria and Libya - is astounding and looking like a replay of the 1970s. [Crossposted from The Lounsbury]
July 31, 2006
The Economic Side of the Lebanon War
A bit back on my sub-blog I shared some musings on the economic impact of the conflict, which perhaps should be highlighted as the dogs of war are clearly out of the control of their master, and as dogs are wont to do, rather running amok against their own interests.
Some thoughts then on the impact of war regionally, from an economic perspective, and related thoughts on where the various markets may head. Very much seat of the pants by the way, and not profound.
July 04, 2006
Google Expansion & MENA - Market Interest in MENA
A rather quick note to draw attention to what may be a somewhat under noticed story, from FT: Google looks to expand in Middle East.
I noticed this when my usual robot searches brought up this on both the career angle and the news site searches. An interesting development.
June 01, 2006
Rambling Thoughts on Public Space, Community, and Culture in Dubai
Dubai has long been the commercial capital of the Gulf. But much as it would like to pretend otherwise, most of what little culture it contains has been imported, and anything that looks historical only does so by virtue of a good façade. The rulers have always focused first and foremost on attracting business, and have been rather successful at this; most of the city's population has moved there from somewhere else for money. It thus differs in many ways from its next door neighbor Sharjah, whose ruler has put far more of an emphasis on retaining traditional and Islamic values, and where there is a 'decency code' and a prohibition on all alcohol.
May 23, 2006
Dubai Glitter - Union troubles
While not having much substantive to add, I thought that before this aged too much, that some attention should be brought to a recent FT article on on unions, entitled "Union troubles start to emerge from Dubai's glittering facades' published 19 May.
The article covers material that we here at Aqoul have touched upon, effectively the signs that the impoverished sub Con workers who make up the spine of the vast construction site that is Dubai are finally starting to crack under the pressure of low wages, rising costs, and just plain near slavery conditions.
The article bears a quick reading, as well as pondering whether UAE aspirations (to US FTA, to other goodies) will force change. I would bet that the government takes a bail out angle. After all, among the drivers of the last few weeks of unrest has been that labourers have been crushed between escalating housing and general living costs, and low wages.
An obvious Dubai type solution is to have the Emirate provide mass worker housing somewhere, allowing companies to externalise housing costs (or continue to do so to be more accurate).
Part of the usual indirect and obscure subsidy approach the Emirates have grown to love. Might even be an efficient solution.
May 20, 2006
Islamic Finance - Scholar Shortages
Some weeks ago one of your fine 'Aqoul authors raised the issue of Islamic finance, and its present situation.
While perhaps less sexy than the faux-reports of Iranian Nazi-esque clothing restrictions on minorities, understanding a bit about economic developments in the region is more useful to readers wanting to actually have a sense of MENA developments (as opposed to merely whanking on in general ignorance about the horrors of the Arab world, etc), and The Financial Times has been running quite a number of interesting articles on the region - well actually about the Gulf, but the confusion of Gulf with all of MENA/Arab world is so general I almost cannot complain.
May 16, 2006
Maghrebine Media II
Now that we have had our little side trip on Somali-Dutch immigration politics (fulfilling all desire on my part to touch on the same, although at Reason.com one can pursue one’s desire to comment on the irrational reactions) , I thought I might return to something rather more profound, that being media in the Maghreb and the recent Moroccan steps to liberalisation.
Census and Sensitivities: UAE & Its Minorities
Towards the end of last year, the UAE carried out its first census in 10 years. Given both the rapid demographic changes here and the promises to share the (usually classified) general data collected with the public, things sounded promising- the information gathered would be invaluable to any number of people. As my colleague SecretDubai has documented, things didn't turn out exactly as planned, not least because those being counted feared the enumerators might report them for any number of offenses ranging from cohabitation to various kinds of illegal occupancy, despite government promises to the contrary.
It's a Magical Kingdom - the No-Loss Stock Fund
The Saudi king, in a shrewd political move, although one that does nothing to address the actual issues, has announced a risk free stock fund for Saudi citizens of modest means or maybe not so modest means. Actually it sounds like I win You lose trading scheme as described.
May 15, 2006
Maghrebine Media Makeovers: Morocco Issues Radio & TV Licenses - Liberalising or Potemkin Media
Following up on some prior exchanges with Issandr Bey of The Arabist, I thought I might take a moment to give a summary of the results of an item we touched on, liberalisation of the Moroccan broadcast market. Let me also try to do some value added original commentary as well, if only for the novelty value – I have terribly neglected such in my long-whinging on about tumours and the like.
The Conseil supérieur de la communication audiovisuelle (CSCA) issued the first approvals for private broadcast licenses (excepting some limited prior efforts), one television via satellite by the Médi 1 group, Médi1 Sat, and 11 radio projects.
April 26, 2006
Islamic Banking/Finance - Questions & Discussion
Not to depart too much from the important topical stuff, particularly discussion of the recent horrors in Egypt, but I want to solicit our brains trust to introduce me and other readers to a more general MENA-relevant concept I hear quite a bit about but know little of.
April 24, 2006
The Future is Female: Simple-minded Journalism, Economics & Progress in MENA
An article from The Observer caught my eye for having a bit too much of the rather too typical simple-mindedness with respect to the 'great inclusion' of women in the MENA work forces.
I should, I would think, preface my comments by emphasising that there are a lot of genuine positives about women entering the MENA workforce. However, this article rather cartoonishly confuses elite women entering the workforce with broader developments, or women's participation with other structural issues which are barriers to employment growth in the region.
April 11, 2006
Morocco: Pimping Pleasure or Stalling Out? (Economist)
The present Economist contains an intriguing article covering part of my brief, and a somewhat neglected corner of the MENA world, Morocco. Morocco attracts rather little attention in the "Anglo Saxon" world, despite having racked up some interesting political and economic wins in the past year, so perhaps a quick commentary then on the article, and the state of things in this rather strategically located country.
Baghdad Market: Canaries, Whores and Pimps
There remains something intriguing about the Baghdad exchange. At least for me, having worked through multiple incompleted deals whose ultimate consumation would take place on the Baghdad. An overview of the Exchange 3 years on, when (were it not for the festering and criminal incompetence of the US Administration in all its empty, idiotic posturing) we should have been reading of some contented Iraqis.
April 06, 2006
Labour Rights in the Gulf
For decades now, the Gulf countries have built themselves up using a combination of abundant capital and cheap labour. Owing to their relatively small population bases and large oil revenues, importing workers from poor neighboring countries has been easy. Since the 1960s, each decade has seen a large rise in the numbers of expatriates in the Gulf. Proportions vary between the various countries, but the numbers are highest in the UAE, where non-citizens account for some 85% of the population and over 90% of the workforce (including 98% of the private sector).
March 20, 2006
Florence Eid on Development
So what CAN be done to help the Middle East in a more liberal, prosperous, etc direction? One person who's been approaching it from an entiredly different direction from the political reformers is Florence Eid, who as a professor at the American University of Beirut pushed hard on the idea of entrepreneurship education.
In her major paper on the subject, which is available in a couple different forms on the net (this one is a straight PDF download; this one has been somewhat revised but requires a free registration to access), she argues that what the region needs right now is NOT more financing - liquidity (as has been noted elsewhere on this blog) is very high in the region (though a bit lower now than it was three weeks ago, thanks to the Gulf markets' "corrections"). Instead, what is needed is
to create the "institutional complementarities" necessary for the financial sector to leverage [entrepreneurial] talent... if financial institutions are not "complemented" with the right skills and know-how, they cannot create private sector activity; vice versa, if finance and skills are not "complemented" with regulatory institutions that serve their needs, they cannot create businesses that make profit, and drive the economy forward.
March 09, 2006
Score One Own Goal for US Know-Nothing Nativist Bigotry & General Islamophobia
Well, the irrational forces of bigotted know-nothing nativism and bigotted Islamophobia won out, DPW has finally said fuck it, keep poorly run ports, we'll take the profitable parts of P&O , or as the statement went,
“Because of the strong relationship between the United Arab Emirates and the US, and to preserve that relationship...DP World will transfer fully the US operation of P&O Ports North America Inc to a United States entity,” Edward Bilkey, the company’s chief operating officer, said in a statement.
Only yesterday the head, Mr Sharaf,
acknowledged ... that the US facilities were a small part of the deal and less profitable than other P&O container terminals. His remarks came as the White House appeared to soften its support for the deal and the House of Representatives pressed ahead with plans to block the transaction.
It is also of note that private equity groups, smelling blood in the water,
have approached DP World about buying the US operations, people familiar with the matter said. Industry observers said logical candidates included Blackstone and Macquarie, the Australian bank.
Well, mark one of up for the forces of blind bigotry and irrational anti-Arab xenophobia with all the dark hand waving about "connexions" and "associations" and the utter inability to distinguish between Saudiyah and the rest of the Arab world.
March 05, 2006
Bedfellows & Commerce: Israel's Zim Lines Supports DPW (Updated)
Sadly my work is distracting me from the fun of the ongoing Bigotted Know Nothing Nativist Ignoramus Mob Madness surrounding DPW's takeover of UK's P&O and the incidental acquisition of the operating leases for port operations at six major US ports (although in the UK and globally sanity has prevailed*), I wanted to augment my dear friend and colleague, Secret Dubai's post on Israeli support for Dubai and DPW with specific reference to the Israeli shipping line Zim's statement of support; I should say it comes as no surprise to anyone with experience in the region that some Israelis would step forward on this, even in a politically delicate situation - not so oddly it is the moderates on all sides trying to do business that know each other.
February 25, 2006
Right Punditocracy Defends UAE Port Deal
Not to sully Aqoul too much with USA domestic blustery, but it appears some of the heavy weight right punditocracy is weighing in against knee-jerk opposition to the Dubai Ports World indirect purchase of US ports operations via its purchase of a British company's interests.
Bill O'Reilly: "For now, the cold truth is that the U.S.A. will not win the war on terror without the help of nations like the United Arab Emirates. We simply cannot afford to fire that nation. If we lose these people, we'll lose the war."
Lawrence Kudlow: "This whole brouhaha surrounding the Bush administration’s green-light to a United Arab Emirates company slated to manage six major U.S. ports has nothing to do with protecting homeland security. Allow me to give it its proper name: Islamophobia."
February 19, 2006
Ports, Prejudice & Cartoons: On Hypocrisy, Xenophobia and Danger
The emerging US controversy over Dubai Port World (an atrocious name I may add, even DP World is bad - hereafter at 'Aqoul, DPW) buying out historic UK port operator P&O - which incidentally includes a portfolio of US assets.
That unfortunate fact - a portfolio of US assets, which is to say management interests in six US ports on the United States Eastern Sea Board - has occasioned the exposure of a vein of ugly sentiment and public commentary, as well as typical for the "blogosphere" blind and ill-informed reaction. Another confirmation that Right and Left blog authors’ sneering with respect to the real media is badly misplaced.
(I note in the interim that the fine American habit of turning everything into a lawsuit has emerged already as Maimi "Firm Sues to Block Foreign Port Takeover" per the WP, which pimps the security fallacy.)
On Morocco, Investment & Islamist Promotion
Without further comment In Morocco, a Gray Area for Growth, by Hoagland, a not bad op-ed (if superficial factually) that at least poses challenges to some of the more simple minded phobia with respect to Islamism.
February 01, 2006
Foreign Workers and Labour Rights in the Gulf
Last year I attended a Sunni-Shia wedding for an old friend of mine (this is an entry on its own, but for another time). It was a truly international affair with guests from North America, Europe, the Mideast, Africa and Asia. One of bride’s relatives flew in from the UAE with her husband, two young children and two nannies in tow. One nanny for each child of course: a young south Indian man for the boy and a Filipino woman for the girl. Both children were absolutely insufferable and threw tantrums constantly, only to be whisked out of sight or amused in a desperate fashion by their respective nannies until they settled down. After a time I began to suspect the boy was developmentally delayed (this is not simply because he was supremely irritating, there were clearly speech issues), but it seemed as though neither parent had noticed. His nanny, barely literate and sweet-natured, was tasked mainly with keeping the child happy, clean and well-fed. He clearly did not have the authority to discipline, a fact that the boy realized and used to his advantage. The girl was somewhat quieter, but the dynamic with her nanny was largely the same. Both nannies were subjected to verbal and physical abuse by their tiny and tyrannical charges, but they bore it gamely, if at times wearily. The parents, while not overtly classist/racist, were still very condescending when interacting with "the help". Naturally, their children noticed and imitated this behaviour.
January 25, 2006
Maghreb & Islamic Liberalism: Superficialities & Hope for a Liberalising State, Islamic Feminism, etc
Returning to commentary, although forewarning this is post chemo and may lack a certain clarity:
Via Daniel Drezner's post on That's some interesting Islam in Morocco, I found this article from Der Spiegel on Morocco - one of my favourite countries in the MENA region - discussing Mohammed VI's efforts to modernise the socio-political culture:
Compare, by the way, to this article from almost six years ago:
An interesting, but rather flawed article I would say.
January 11, 2006
On Media, Influence and Means: Agitprop, Iraq,
Via our dear friend, Father of Aardvarks 'a comment on Gerecht on Iraqi payola', found 'Hearts and Minds' in Iraq: As History Shows, Ideas Matter More Than Who Pays to Promote Them leads me to make a comment on influence and media from a business standpoint.
December 30, 2005
$500,000 Prize for Advancing Freedom
The winner gets $500,000 cash within the next 6 months.
Well, that got your attention. Nominations are being accepted for the Milton Friedman Prize for Advancing Liberty. Previous winners include Hernando de Soto and Peter Bauer. It goes to "an individual who has made a significant contribution to the advancement of human freedom."
MENA-oriented folks like our readership may come up with some deserving person others will not immediately think of. Warning to progressives: the prize-givers take economic liberty in free markets as a vital component of broader liberty. So a successful nominee will probably have made an impact in that area.
December 03, 2005
A Most Elusive Fish: Poached Sturgeon in the Caspian
The nations of the Caspian Sea basin share a scarce resource other than petroleum: sturgeon. However, the Iranians, Azerbaijanis, and Turkmen are faring possibly worse at protecting their beluga supply than they are even at divvying up shares of the usual type of black gold under discussion.
November 23, 2005
On Trade: Wolf & The Illiterate Mumbling of the Anti Globos
Martin Wolf has an excellent commentary on the idiocies of the anti-trade anti-globo Left and its ridiculous mumbo jumbo. Were I not half way to la la land, I might comment, but I do wish to draw attention:
Martin Wolf: Trade justice fighters are misguided
By Martin Wolf
Published: November 22 2005 20:34
Sharia Products: Market grows for Muslim investors
Laying in bed mildly delusional from anti-haemorrhagatic drugs and other items, I thought I might indulge myself in a reflexion on an interesting arty from The Financial Times on Islamic Finance and products.
The arty in question Market grows for Muslim investors covers some interesting territory even if it is a bit general.
As I can not think of a better time to indulge in commentary on sharia products than when slightly delusional from from anti-haemorrhagatic drugs, what follows are some comments on the text itself:
November 08, 2005
US Gov and Private Equity: Project is public [Upated with Arty Text] [Update 11 Nov]
The item I have refered to in the past is now public:
A Ludicrously Bad Idea
The key item here is this:
"The U.S. wants to see some success before further expansion. It envisions attracting board members with the clout -- names being bandied about include Jack Welch and Robert Rubin -- to get Egyptian leader Hosni Mubarak on the phone to complain, for example, that he needs to free up pharmaceutical prices if a private drug industry is to flourish in Egypt."
Fucking stupid ass concept. Getting your fund involved in these kind of politics is a disastrous way to invest.
UPDATE: Arty text below with extended commentary.
October 24, 2005
On regional economies and competitive advantages: McKinsey & A Comment on the Maghreb (plus a perso reference)
McKinsey has published a short note in its Quarterly based off of its recent (and still secret) report to the Moroccan government on what it should do to stop being such a medoicre performer, entitled:
Morocco's Off-Shoring Advantage
More comments later, link is to the abstract, full content requires membership.
As an aside, I may be looking to hire a translator, see the Lounsbury blog for details.
October 18, 2005
Transparency and Corruption. Gut Feelings on the report
Were I more skilled in html (and more patient) I might do the chart on today's Transparency International 2005 rankings.
As I am neither terribly skilled nor terribly patient, I shall confine myself to citing to the source document and citing a few numbers of interest:
The document covers the Middle East, North Africa and sub-Saharan Africa (MENASA), however I extracted only the MENA countries.
A few comments below, if I may (and of course I may...)
October 12, 2005
Migration, Economics & MENA-African pileups
While I may be banging away at an issue of little general interest, I was encouraged to find something of relevance to the rising issue of Euro-African migration and the Maghreb in the last issue of the Economist.
Be my guest
The economic case for temporary migration is compelling; the historical record less so
Oct 6th 2005
(Yes subscription, don't like it? Fuck off then and read some free twaddle.)
For those puzzled, my reference is to the recent problem emerging in the Maghreb and especially Morocco with its land border with the Spanish enclaves Ceuta and Mellila, which I mentioned in my typically light weight Illegal Immigration - Borders & Madness and The Maghreb-African Immigration Problem
October 03, 2005
Morocco: Rulership & Development (Edited - Updated)
Daniel Drezner noted an interesting if somewhat weak article in The New York Times on Morocco in the context of asking how MENA states can transition to real rule of law
I call the article weak as it failed to properly differentiate the Moroccan royal context from the rest of the region - a context I would call relatively unique given the fairly deep historical depth of the monarchy, its combined historical political (pre and post colonial) and religious (Alaouites are shurfa) legitimacy in most circles and the recent role of M6 (Mohammed the Sixth's popular nickname in Morocco) in liberalisation.
This is a far cry away from the made up Kings of Jordan, the President-Kings of the rest of the region.
Of course that does not make the Royals of Morocco invulnerable nor infallible. However, their roots of political power and legitimacy run far deeper than most MENA governments.
[Edit to note an addition re a comment on Drezner's blog: see end of entry]
September 30, 2005
Illegal Immigration - Borders & Madness: Mass Attempts at the Spanish-Moroccan border
Recently The Father of Aardvarks made a comment on some recent apparent censorship in Morocco with regards to press comments about illegal immigrants in Morocco attempting to reach Europe. Or as the Father of Aardvarks put it:
Here's a story of an Arab government clamping down on the media with an unusual twist. Al-Jazeera reports that the Moroccan government confiscated the press run of a local newspaper because it ran a "racist" and "inflammatory" article about African immigrants "invading northern Morocco."
While I understand the Father of Aardvarks is a media critic by interest and trade, my first thought was to the underlying crisis (the second being it would be nice to know which paper; there are some in Morocco I am familiar with which I have no problem suspecting of racist and inflammatory yellow journalism).
This past week saw rather dramatic events underlining precisely the level of bubbling tension on all sides that might well justifiably provoke action by the government: a series of mass assualts by "thousands" of African would be immigrants to Europe on the frontier fences of the Spanish enclaves of Ceuta and Mellila.
The crisis effectively is a rather large accumulation of sub-Saharan Africans building up in the Moroccan north - in the region called the Rif - along the border areas with the Spanish enclaves. This has been fairly little mentioned in the local press, although one does see time and and again in some areas clots of what are clearly sub-Saharan migrants begging and travelling north. Something most people do not trouble themselves about as Moroccans try to emmigrate in much the same way.
However, in the last few years, Morocco has been under intense pressure from the EU to "do more" with regards to stopping the flow of illegal immigrants to Spain and onwards and has taken stepped up measures to block transits via the Mediterranean and the enclaves.
September 26, 2005
Gulf & the MENA Region Finance, Booms & Inefficiencies
Our friend and sometime contributor Waterboy draws attention to something obvious to all involved, and yet an item that remains out of control: overliquidity in the Gulf region and the consquent mad asset price boom in the Gulf. His observation is spot on, that there is
there's too much cash chasing too few investment opportunities in the region; too little oversight, regulation or transparency; too much exuberance - bear in mind, as Japanese bank Nomura pointed out, that Saudi Telecom's market capitalisation of US$74bn is worth more than BT (US$35bn), AT&T
(US$15bn), SK Telecom (US$15bn), and Telekom SA (US$9bn) combined - and far too many unsophisticated investors who think that having the names of a couple of ruling family members in the IPO prospectus is a valid alternative to a business plan - or, for that matter, an existing business.
No doubt about this at all. Some conversations I had over the past week painfully illustrated that. This aside, a key point of disequilibrium is the degree to which despite the asset valuations in the Gulf being absolutely looney to the point of surreal, the money is not flowing within the region to a reasonable degree.
(cross posted from Lounsbury - 'Aqoul)
September 12, 2005
Underdevelopment as Dilettantisme: Why MENA Does Not Attract Capital, Reason No. 5
While sadly behind on my ability to comment substantively, I thought a bit of a comment on dilettanstisme would be worth a quick intervention (and it being all I have time for, it's what one gets).
The comment is provoked by a series of convos over the past few days in regards to a certain MENA country (which for various sensitivity reasons shall remain unnamed) and its hosting of a MENA region investment conference. Let's say that our certain MENA country is not exactly a star performer in the realm of attracted FDI, per capita or in gross. Of course neither is the region.
There are multitudes of reasons for this. The one to be discussed today, dilettantisme.
August 26, 2005
Structuring Private Equity in MENA for Development (bis)
Added Thoughts on Private Equity for Devleopment MENA
I neglected to touch on a few key points in my original note, below are further thoughts on private equity and economic development for the MENA region.
August 25, 2005
Structuring Private Equity in MENA for Development
Structuring Private Equity in MENA for Development
A few weeks ago I raised the subject of emerging markets private equity in particular in the context of US Gov efforts to utilize the vehicle to further its political / development goals in the Middle East – North Africa region. One of our online world colleagues if you will posed a question to me as to what the “The Lounsbury” approach would be, in the context of my expressed skepticism in regards to the investment vehicle / definition chosen by The Overseas Private Equity Corporation.
Ironically (well not really) at present I am working on materials closely related to just this question, although not really in regards to development – but as much of the private equity activity in region has been international development institution driven there is a clearly overlap. Now, having sent drafts of my materials off for comment I can take a moment to sketch out some preliminary thoughts on the issue that will be the basis for future comment.
First, my assumptions, based on personal experience in the region and in the “sector” if we can call it that. Again, these are my a priori assumptions and principes.
August 16, 2005
Pimping Equity or Pissing it Away?: Private Equity & US Gov Efforts, some quick notes
A somewhat quick note building off of a comment by the esteemed Nadezhda in regards to my rapid note on a new US Gov private equity fund (also with more rough perso comments at Lounsbury ) backed by the Overseas Private Investment Corporation, a US parastatal investment insurance and financing house whose main line of business is political risk insurance on US direct investments in risky locales.
I have been intending - and still intend to - write some commentary on this specific issue of private equity (or in general equity finance) in the MENA region, but I thought some quick notes on this OPIC backed private equity fund for the MENA region are in order, and in response to some notes by Nadezhda - whose name I have learned to spell now.
August 11, 2005
Market Madness or Brilliance? US Gov Private Equity for MENA Announced
At the risk of descending into flackery or something approaching it, I thought a brief comment here might be fun.
Certainly this plays into my personal interests.
[Updated with correction below]
[Update with a question: Is there a debate to be had here regarding using such tools for acheiving a policy goal?]
August 09, 2005
Iraq - Reconstruction - Knowing when to get out of the way
This article from The Washington Post (Op Ed actually) struck me as if not important a useful point of reflection for a moment:
Less Is More in Iraq
By Michael Rubin
Tuesday, August 9, 2005; Page A17
Let us leave aside Rubin's sketchy history in regards to Iraq as part of what one might properly and non-abusively call a "Neo Conservative" circle in Washington re Iraq (and his direct and personal contribution to the fiasco via his work with CPA-Iraq). Let us leave aside as well the question of whether a US draw down of troops is a good or bad thing (I might argue either way on any given day). Rather, merely look at the question of the US contractor presence.
August 05, 2005
King Abdullah takes the throne
King Fahd, as most will doubtless know by now, has died. The playboy-turned-diplomat-turned- moderniser-turned-COTTHP1-turned-invalid has finally shuffled off this mortal coil, ten years after his last attempt and somewhat more conclusively this time.
I'm not about to praise Fahd for his reign; nor do I feel the need to blame him for the world's ills. He was a man like any other, with a man's strengths and frailties – though perhaps, like many of us, with more of the latter than the former. His incredible wealth exaggerated those traits beyond imagining.
I'm far more curious about what happens next.
There's a tendency on the part of us hacks to look for drama in a situation. It makes it more interesting to read, for sure. But in the case of a subject as complex and as opaque as the House of Saud, it doesn't really help our analyses. I will try to bear that in mind as I run through my thinking on what we're looking at in the Kingdom.
August 02, 2005
Tsar Mubarek & Reforms for the Neo Mamlouks
An article that merits close reading and attention; in fact I believe it is deeply indicative of the real challenges in Egypt, and in some ways the wider Arab world in regards to transition costs - if in general with moderately less severity.
In Egypt's Countryside, Farmers' Anger Seen As 'Silent Time Bomb'
Recent Revolt Over Rents and Evictions Draws Support of Mubarak Opponents
By Daniel Williams
Washington Post Foreign Service
Sunday, July 17, 2005; A16
I would cite this as something highly indicative of the real position of the Mubarek government as well as the liberal urban classes, what I might call the "kefaya" chattering classes in one of my less charitable moods (although one supposes one can validly ask if I have charitable moods). I mean by that, the generaly comfortable proper liberal opposition who rather uncomfortabley ressemble a similar opposition in the fading years of the tsarist empire in old Russia.
July 27, 2005
On IMF, Populism, Yemen & Jordan: Populism as Self Defeat, or why subsidy riots are not wins
A small note in response to a note by our friend, the Father of Aardvark(s) (hmmmm, I believe that I should create an Arabised plural, and for the sheer fun of it, a broken one, so from now on, Abu Aardvark to me is Abu Araadvaraak (abusing grammar and presuming Ardvark is a compound word), or in Maghrebine form Bou Aradvrak). on the 'victory' of the Yemani street in reversing the revision of subsidised petrol prices.
July 26, 2005
Creating Opportunities - Liberalisation & MENA, The Micro Level
A small piece of news that I shall try to expand on, but after some little work on a Fund proposition. In the meantime, for comment and reflection.
The Moroccan business press reported an item that I would think most readers would pass over in boredom, but I find highly relevant to understanding why unemployment is so high throughout the MENA region and why liberalisation - domestic liberalisation even more so than to the global market, is so important for giving real opportunities to the populations here. And by doing so, providing alternatives to the ever more attractive nihilism of Salafist Takfiri ideology.
July 07, 2005
An extended comment on IMF, Jordan discussion
As this is rather long for comments, a small entry on the IMF, Jordan and Liberalism discussion based on our esteemed co-author, ridemycamel, who again hopefully will pardon my poor manners, sharp tongue and the like.
I also note that due to popular outcry, I am introducing block quoting. I dislike it, but have to maintain some pretension to customer service or our financier will dump me. (Although it was such a pain to add I can't promise consistancy here)
July 06, 2005
Media, Reform, US Gov and Business
On US Gov and Media Reform, an email
I reproduce here an email from a friend of mine in private equity and media in the Middle East, located out there. And an Arab too, not some whinging expat (ahem).
It is lightly edited to scrub certain references and the like, but I share it for its interest. I note that some US Gov types wanted to meet with media actors, including from the business side. I made the introduction. Here is my amigo's note afterward.
July 03, 2005
Financial Aid, the IMF, and Historical Structures: The Case of the Bread Riots in Jordan
Some of the most fascinating aspects of financial aid-- in my opinion-- are the often implicit regulations that come along with it, and how it re-shapes and re-forms the societal structure of a developing country. This can be viewed particularly well in the majority of resource-poor MENA countries. By examining the history of financial aid in Jordan during the 1990s, for example, you can clearly see how the flow of financial aid was based as much on the political decisions of the Jordanian monarchy as it was on the country’s needs. What is even more intriguing is how this aid has changed the historical structure of Jordanian society and removed the bargaining power from the hands of the subaltern groups in the Kingdom and into the hands of the capitalist powerbrokers in Amman and Washington.
This change is best viewed through the two bread riots that erupted in Southern Jordan in 1989 and 1996. Both riots were almost identical in nature, yet the monarchy’s response to each crisis was unique. The changes in the response of the monarchy towards the bread riots are best explained by how different social forces are incorporated or excluded in the global neo-liberal historic bloc, and the way historical structures are shaped, satisfied or frustrated in the process of this hegemonic formation.