Business, Private Archives
February 25, 2012
A MENA Econ Analysis to come back to
February 08, 2011
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.
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 17, 2010
Quixotic Arab Sat Plans
I am bemused by this report. I have a very hard time believing there is market space for yet another Arab Sat in the news space (although perhaps it might convince the USA to finally put to death the laughing stock fiasco of its state run news service, Al Hurra)
Sky News considers launch in Arabic | Media | guardian.co.uk
BSkyB is in talks about launching a Sky News-branded 24-hour Arabic language service in conjunction with an Abu Dhabi-based private investor.
It would compete with the Qatar-based al-Jazeera and other Arabic language news services in the Middle East and North Africa.
Sky said that the channel will launch within the next two years if the discussions are successful.
The new channel, which would be a 50/50 joint venture between the two parties, will be based in Abu Dhabi and have bureaux "in most major regional and international news centres".
It would be broadcast free-to-air across the Middle East and North Africa regions offering, according to Sky News, "independent and neutral coverage of the news agenda".
"The Middle East is undergoing rapid economic and social development and is becoming an increasingly attractive region for media investment," said John Ryley, head of Sky News. "This venture would build on our existing strengths as an international news provider and bring the Sky News brand to a new audience. Discussions are progressing well and we look forward to bringing a new approach to Arabic-language news."
Well, I suppose if some gullible Emirati is willing to plump for this....
July 15, 2010
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.
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 04, 2010
Eardrumsticks: Cairo Restaurant Run By Deaf
I remember going to this place to get a dose of hi-fat content, in Dokki, Cairo, Egypt. For a while afterwards I thought I'd imagined it as there never seemed to have been the inevitable self-serving promotion or press release notice by KFC of its chain having an outlet run entirely by the
deaf hearing-impaired nonhearing hearing disabled hearing-handicapped differently-abled hearers audially-challenged deaf. (There's a whole tug of PC war over the term and apparently most of the deaf prefer to be called "deaf". Or so I, um, hear.) Anyway, some nice news (not counting fat content issues) regarding a region often just focused upon for bad news.
March 19, 2010
Ah, a warm and fuzzy feel. : Blogs as sources of info on Gulf Finance
While in some ways sad that we (Aqoul) missed that boat - no matter I am far too busy to pretend to that any more, this warmed my heart: FT.com / Companies / Financial Services - Blogs air views on stifled Gulf finance
Great understatement though:
Blogs air views on stifled Gulf finance
By Robin Wigglesworth in Abu Dhabi
Published: March 3 2010 16:44 | Last updated: March 3 2010 16:44
Local media coverage of financial affairs can be anodyne in the Gulf, largely thanks to stifling press laws, corporate meddling and a culture of self-censorship. But financial blogs are starting to proliferate and can offer a valuable, alternative, take on events.
Many local newspapers, with a few exceptions, print newswire stories or press releases verbatim and often steer away from contentious, politically sensitive stories. Blogs, meanwhile, have given many locals and expatriates an outlet for venting their views on the stories of the day.
“Blogs are definitely useful in the region, but are only coming of age now,” says a senior analyst in Dubai. “I always look at blogs to get a sense of grassroot sentiment and hear the views of other people.”
Most regional financial and economic blogs and forums are in Arabic but several English-language sites have emerged. One of the first was Sharewadi, which is mainly devoted to financial talk and data in the United Arab Emirates, and is in many ways the prototype of similar websites that have sprung up across the region.
... “That guy at Sharewadi deserves a medal,” says Ken Monahan, a former senior banker in the Gulf. “There has been some really insightful stuff on there over the years.” ...
There is a need for more robust discussion of company financials in the region.”
On the highlighted, no bloody kidding.
Although one item that caught my attention is re Arabic language blogs on finance. Could anyone recommend those worth reading? I have yet to find one, but I must confess that I became turned off on the tripe usually written on economics in Arabic that I stopped looking seriously.
Citi, Citi: First the Algerians, now the Gulfies
Not perhaps deeply interesting, but someone in my business I was enterained:FT.com / Companies / Banks - Citi seeks to fix Gulf business
Citigroup has operated in the Arab world for almost 50 years and the Gulf came to the rescue of the embattled bank in the early stages of the credit crunch when the sovereign wealth funds of Abu Dhabi and Kuwait pumped billions into the US-based lender.
However, the relationships with two of the world’s largest institutional investors have since soured.
The Abu Dhabi Investment Authority has filed an arbitration claim against the US bank, alleging that it was the victim of “fraudulent misrepresentations” over its November 2007 investment.
Add to this the Algerian government and its mega fines against Citi (for trivialities) and this just does not seem like love.
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 28, 2009
Wehbe 2.0: A Whiter Shade of Palestinian?
(Apologies to Procul Harum (Haram?) for whom, unlike the Palestinians, 1967 was good year.) With a lot less denial than the late Michael Jackson, Palestinian women are reported to be aggressively consuming skin-whitening products. This, according to The Christian Science Monitor, which also cites and links to the recent lament about anti-dark skin sentiment among Arabs written by Nesrine Malik in the Guardian (UK) not long ago and also blogged about here at Aqoul. The pigment adjusting phenomenon appears partly inspired by such figures as the scintillating Lebanese chanteuse/statesperson Haifa Wehbe (ok, I made up parts of that description, just to irritate) and the Xena: Warrior Princess dark-hair/alabaster-skin aesthetic she can manifest, and which she shares with better example Nancy Ajram, the pendular-beaked former AUB Biophysical Engineering Department-Chair turned-singer (ok, made up some stuff there too). Anyway, jeez louise, the issues we humans can hinge our self-estimation on and make a mystique out of! But I do admit to getting seriously worked up if any blind fool even suggests that TIna Louise's Ginger was hotter than Dawn Wells' Mary Ann.
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 07, 2009
A quick reference to an interesting discussion The Algerian press & mass-market reach « Maghreb Politics Review
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
Morocco hosts wounded Guinean coup leader
A minor if interesting item, FT.com - Wounded Guinea leader flies to Morocco relative to Morocco and Africa.
Wounded Guinea leader flies to MoroccoWhat is if interest here is a small highlight of Morocco's West African connexions and ambitions, and from the business point of view, where actual current attention flows.
Guinea’s military ruler left the country for medical treatment on Friday after being shot and wounded by a member of his own presidential guard, officials said.
I frequently note, the "guys back east" in the Mashreq (using that to cover everyone from Egypt over) love to count in the Maghreb in their population and GDP pitches for "Arab World" investment, but the economic and cultural reality is that the exchanges are minimal, and little investment flows "West" to the Maghreb. Lack of genuine synergies. The real axis for the Maghreb is North to Europe and South to SS Africa,
especially West Africa where historical and religious ties combine with
a shared colonial heritage and better real economic synergies. (A word of caution then to those reading PPMs back east showing a grand geographic scope of investment...)
I do wonder if Morocco will get close to Camara (who desperately needs to be deposed as he's shown himself to be an ugly loon), or whether they will adopt a more neutral attitude.
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 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 22, 2009
Chickens, Dubai, roosting
As I am not a neutral observer, I can only pass this along with a raised eye brow FT.com - Dubai ousts financial chief over debt troubles
but that is mitigated by the fact that am spending much time fllying in my empire(sic) to shut down things.
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.
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]
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 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 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
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
Al Qaeda fil Maghreb & Generally: Oil facilties as a strategy.
A brief note on potential for Al Qaeda to target oil facilities: Al Qaeda & Oil Facilities in the Midst of the Global Economic Crisis
One item that caught the eye:
. Moreover, observers have noticed the increasing targeting of facilities and workers in the oil and gas sector in Algeria by the so-called “al-Qaeda in the Islamic Maghreb”.
I am not sure this is in fact all that much the case.
Otherwise, the conclusion:
As mentioned above, Bin Laden’ said in 2004 that oil prices should reach $150 per barrel. Legitimizing the targeting oil pipelines, refineries or workers rather than the wells themselves suggests that raising oil prices is a strategy Salafi-jihadists are adopting. In the shadow of bin Laden’s threat of "opening new fronts for the attrition of the economy of the West", it seems that such understanding is not limited to the Middle East only. The African continent is becoming an increasingly important for the diversification of oil production and transportation, as well as is the Caspian Sea region which is critical for diversification of oil resources to the West. However the risk of targeting oil interests, is not confined to certain geographical locations, as it’s associated with a strategy of opening “new fronts”.
According to this understanding, it seems that the targeting of oil facilities by al-Qaeda or affiliated Salafi-jihadists is designed to affect the flow of oil leading to higher fuel prices in the midst of a global economic cris
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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
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.
November 23, 2008
Paternalism & Global Crisis, MENA Boom and ... Bust & the Nanny States
FT's Roula Khalaf, has a fine article on Gulf region paternalism, using the Kuwaiti example, on the stresses of the Petrol States as oil pricing collapses with global demand, and their nanny state traditions catch up. In discussion directly, Kuwaitis asking for the Government to prop up the stock markets.
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?
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.
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.)
May 07, 2008
Bread & Riots
If you follow MENA news (and indeed news generally) rising food prices, coupled with rising petrol prices, have provoked for the first time in years serious concerns about food availability to the poorer segments of the population. And demos and riots. And when mass demos occur in the Middle East and North Africa, fear of regime stability gets in the air. Serious challenges for a region where the emerging free(er) markets are yet fragile. Nevertheless, the FT's arty today, Mideast reels as hunger outgrows oil earnings is bothersome.
Perhaps the lead is what is the most irritating:
For years, food policy in the Middle East and North Africa was very simple: hydrocarbon exports paid for carbohydrate imports.
A quote that then segues into issues of the non-oil exporters. My irritation is always raised when all MENA is written about as if it were the Gulf. This is not merely sloppy, it leads people, even Sr. persons, to dangerously misconstrue developments.
February 25, 2008
How can your business make money off the religious? The Lounsbury has already covered Islamic finance, so I'm not going to comment further about that. You could create an Islamic car. Turns out it is as simple as adding a compass (to point to Mecca) and ensuring the glove compartment is roomy (so that you can put in a Quran and headscarf). Other people are talking about setting up a Muslim airline. Features included halal food and gender-segregated seating.
February 17, 2008
Whither Arab Sats? The 'Arab' (authoritarian dinos) broadcasting code
The Financial Times worthy article on Al Jazeerah's response to the Mubarek led censorship drive is worthy of some reflexion.
The key portion of the so-called media code is:
“The commitment to freedom of expression is a main cornerstone of Arab media activity, provided that the practice of this freedom should be informed by a sense of awareness and responsibility in order to protect the higher interests of Arab states and of the Arab nation,”
Of course the Arab states "higher interests" (never mind the polite outdated fiction of the 'Arab Nation') really means the interests of the dictators to provide turgid non-news. Now, taking Morocco as an example, with a relatively free-ish media under a media code that is perhaps nearly as potentially cretinous, it is true that application is as important as a law (above all in circumstances as obtain in MENA were law is more an expression of potential intent than binding law). But effects?
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.
December 08, 2007
Citigroup: "Arab" Capital, Need and Fear
With the good apparent news that , as FT commentator Ferguson put it, World War IV is off as the warmongering Right Bolshies in America have had their arguments castrated, and a moment on the weekend, I think it useful to take an economy moment to reflex slightly on on Citigroup's rescue by the Abu Dhabi Investment Authority (ADIA) and the effective non-reaction of the usual suspects such as congenital cretin Mr Schumer. Now, the non-reaction somewhat wrong-foots my own commentary two months ago anticipating great hysteria, but perhaps the promise to be "silent" as an FT arty put it placated the professional cretin. Or perhaps rather his handlers in NY understood Citi's shaky state and shaped the reaction, so very different than either his reaction to the investment proposed in Nasdaq or last year (2006) with Dubai Ports World (also at the opening for more explicit Schumerism).
The contrast between in particular the round up of reaction in the Schumerism link and the non-reaction to Citigroup is interesting. Fear of banking collapse and grinding halt to the queer American use of houses as credit cards perhaps partial driving explanations on the political side, but my speciality is not American politics, which I care little about except where it has MENA blow back. Unfortunately given a near decade of utter cretinism on the Americans part in this respect, this is too frequent.
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.
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.
July 23, 2007
MENA Business, Liquidity, Speculation, Fatwas and Egyptian Belly Dancing
Being bored on the TGV, some time to catch up on comments. In this instance on various MENA economy items that caught my eye in the past month.
So, some quick reactions to the massive amount of liquidity flowing about the region now, and globally, and fatwas on IPOs. Sorry no actual Egyptian dancing as such, but the investment equivalent with Ministry of Finance blithering on.
(edited formatting 23/7/07 18h00 GMT+2)
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 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 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 24, 2007
What's the proper going rate, bribery and work in Morocco
Via our aggregator (which perhaps is only slightly less well-known than our book reviews section, I stumbled across this review of reaction to the Casa bombings and vaguely related commentary. An item that I particularly noted was the reaction to a US story on film production of some nonsense I haven't seen, in particular with respect to the ... ahem facilitation payments paid. (Although I am now vaguely curious to see the film in question - I am sure somewhere in es-Seef there must be a pirated DVD source.) What I found in particular irritating was the tut-tutting about various issues like pay scales and delayed work.
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.
March 13, 2007
Go East Old Man, Go East: Halliburton to Dubai
An interesting article, or rather an article on an interesting development that is difficult to assess. From the FT, entitled Risky Locations, on Halliburton's queer decision to move its CEO to Dubai.
I am, to be frank, puzzled. Comment below (crossposted from The Lounsbury).
February 27, 2007
Meet the New Bourse, Same As the Old Bourse?
Ignore the Oracular Yield Curve at your peril, children. You were warned right here almost exactly one year ago. US markets took a big dive today, even steadfast defensive Altria/ Phillip ("If it fun and goes in your mouth, and it kills you, we make it!") Morris took a dip. Does this mean that MENA markets are leading indicators/market predictors, having dipped a while back themselves? Probably not, though China seems to have been a 24 hour leading catalyst. And MENA markets look like they settled to saner places. US markets in terms of historical yield, and to some extent P/E, are still way overvalued, hence a "secular" (as opposed to theocratic?) bear market of sorts that slaps down the speculative impulses. Of course there will probably be a nice rebound in the short run but if this is simply rounding out a top on the far right of this curve, there are rough days ahead globally.
November 12, 2006
Dirty Little Secrets: Labour Exploitation in the UAE
To get away from US centered whanking on, and away from the depressing subjects of Iraq or Palestine, a quick reference to a very timely article in FT on labour exploitation in the UAE .
An open secret of course, if one can say a secret at all.
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.
October 01, 2006
TV in the Middle East: some notes
As some of you know, I've just started writing for Middle East Broadcasters' Journal, and consequently have spent the last couple weeks learning some of what there is to know about the broadcasting biz. I may come back to some of the stuff I've been working on once my actual paying employer has had a chance to publish it, but in the meantime, here's a sketch of the overall situation in the exciting world of TV. (Anyone wanting pretty charts and mostly-reliable statistics should check out this Booz-Allen-Hamilton report on the Middle Eastern TV market.)
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 15, 2006
Futile Bollocks and Banking
Although I remain rather too busy to contribute as I would like and should, the Generator is too embarassing to have as the lead item, so a comment on an important piece of idiocy by the Americans: their attempt to shut the Iranians out of the financial markets unilaterally: US threatens further action against Iranian banks.
I frankly find such interventions borderline retarded, as well as self-defeating, leaving aside the willy nilly confusion of Hezbullah with al Qaeda in such rhetoric. Incoherence.
August 27, 2006
Losing and Winning: Constituency Service
Roula Khalaf, who I may add is simply one of the must-read journos on Middle East has a fine profile in FT on Hezbullah's reconstruction efforts
I know from work I am engaged in right now that this will send France, US and others into a tizzy.
But there is no beating them. Quick roll out of Western institutional aid is simply not going to be competitive, because the networks are not there.
Where the damage is, the institutions are Hezbullah.
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
Bloody Hell, We Bollixed it All Up, Throw Money at It
I got a phone call today from an American financial consultacy I have from time to time worked with. It appears that US Gov is in a state of lathered panic about how fucked up their Lebanon policy is - and seeing Hezbullah providing first-on-scene reconstruction services - wish to launch some kind of micro-credit and entrepreneurial credit scheme branded under US Gov to help with reconstruction. Look to an announcement to this effect soon.
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 17, 2006
MENA Trade, Business Culture & Americans
While I confess this note is in part motivated by my desire to have an excuse to share this cartoon from the Moroccan business daily, l'Economiste from yesterday's - 16 Aug edition. This was emailed to me yesterday, and is worthy of a good laugh, I thought it also worthwhile to undertake some reflexions on both the subject matter and some generalisations about practical issues.
[Crossposted from The Lounsbury]
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 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 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.
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.
May 04, 2006
Morocco, Journos and Media bis, a reply
This is a bit tardy, but Issandr Bey of the Arabist had a comment on my somewhat ill-tempered take on the Moroccan journal, Le Journal Hebdo libel case judgment as well as more generally on the media there and some related developments.
As a distraction from working on a market proposal which I haven’t got the proper information on regardless, I thought I might expand on my comment on The Arabist reply.
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 10, 2006
DPW, Some Round Up Thoughts on the Blow Back
I shall make this briefish note as the DPW fiasco continues to steam ahead. In many ways this is good for me personally as I expect increased in-region / non-US flows for MENA money. But it is bad for investment in the US, bad for US MENA policy and reveals as clearly as clear can be the deep vein of anti-Arab bigotry hiding beneath the surface in the United States. A loss for moderation, a loss for state security interests and a loss for economic efficiency and investment in key assets. Yes, bravo to ignorant know-nothing racist jingoism. This blows back not only to commerce, but also to our pious middle conversation, make no mistake about it.
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 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 16, 2006
Propaganda, Iraq and Gaming - and Future Funds
Sadly I can not comment on this, other than to share the story and note that it confirms my observation months back that the Lincoln Group story was not a dark 'Neo Con' tale but one of dilletantes.
It is of course illustrative of the general problem with the Bush Administration's efforts in Iraq and MENA. Clumsy cronyism with amateurish dilletantes. A bit of cronyism here and there will happen. Human beings are human. The sins of the Bush Administration lie in their lack of competence in executing even cronyism, not as the simple minded Left would have it, in dark Right wing plots. A pity, I would enjoy a competent if unpleasant US government in world affaires. An incompetent, bumbling, often cretinously self-deluded US Government makes me life harder, and I don't enjoy that.
At least I can add that the Fund for the Future, that much vaunted initiative announced at the G8 meeting in Dubai is in fact a quietly dead letter for the moment. Ms Cheney got her panties all wet too soon. Perhaps the idea may get reworked to something vaguely rational.
January 29, 2006
France, Islam & Discrimination: Further to the idiocy of the "European Intifada"
Further to my ongoing comments of the situation in France, the riots that some ill-informed, bigotted or just plain stupid commentators blew up into a "Muslim intifada" in Europe, an interesting article on current French efforts on addressing rampant discrimination in France.
(A side set of reading by the way from 2003, note the prescient commentary, intifada my ass, I note there is a clear connexion with MENA directly, besides the issue of Muslim minorities in Europe and the potential echoes within the Islamic word, the parallels in terms of illiberal economies with severe labour rigidities leading to high unemployment and difficulties in findings jobs)
A few comments, then.
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.
November 23, 2005
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:
October 13, 2005
Radio Sawa - Morocco: The Legal Status Scandal (small addition)
Some news earlier this week reminded me of a small tiff that arose in the past few months between the Moroccan "Higher Broadcasting Authority" (known by its French acronym, HACA) and Radio Sawa and the US government by extension. Something for Aardvarks in general I should suppose.
The issue revolves (or revolved if the reports are right) around the status of HACA as the independent media regulator (this is relatively recent but nevertheless the case for a while now), and the requirement that broadcasters obtain regular licenses from HACA by August 2005.
As the sharp reader might have divined, Sawa did not.
In effect, the United States took the position that Sawa needed no license as it is in fact a governmental agency covered by a bilateral accord authorising the Voice of America.
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
September 29, 2005
Earlier comments here have drawn attention to the surplus of liquidity in the region, and the resulting stock market bubble. So what happens when there's an IPO for a UAE company and no way to apply for shares in Abu Dhabi?
[T]he Dana Gas IPO brought chaos to UAE banks with would-be subscribers falling over themselves to pick up application forms. All flights from Saudi Arabia to the UAE have been booked solid for days and 33,000 people crossed the border in the past four days, according to local officials.
Several banks had to close their doors to control the crowds and some banks reported scuffles as the crowds struggled to get to the counters. At least one incident was reported in which a security guard was roughed up.
New laws regulating IPOs will soon be ready in the UAE. But I believe a stock market crash is inevitable regardless.
September 27, 2005
For Future Pondering
I was recently in on some discussions regarding the creation of a pan-Arab private equity council.
My primary thought was: "Who wants to take a bet this is a dead letter"?
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.
Water, Business & Privatisation
A fine comment in The Financial Times today on water services privatisation that has no small meaning for the MENA region.
A subject of long interest to me, as some know, dating back to my time in Egypt where I was appaled at the sheer madness of Egypt's water policies.
Well, actually I spent much of my time appalled by everything in Egypt, but that is another matter.
It is an abiding shame that the idiot anti-globalisation fools opposed sensible privatisation of water services under emotive and illiterate cries of "human rights" and the like, while all too typically ignoring the fact of real costs of water services which get borne by the poor one way or another.
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.
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 04, 2005
Economic Growth, Media Modernisation and Competition in MENA
Given my abiding concern for seeing economic growth occur in this fine region – that is the MENA region – I thought I might return to some thoughts I have had following on prior comments on the business environment and the like.
First, a brief comment (or perhaps a rambling and extended comment) on mentalities, provoked by a conversation with one of the women who render my life complex (if interestingly corrupt and immoral) in regards to a local television effort to create a “star system” to promote local talent.
Rather like the Lebanese “Star Academy” it is an interesting way to bring up new talent and provide a public exposition of popular trends. As an added advantage, the local chicas who compete are quite hot with a distinct tendency to wear the latest inappropriate Leb Slut fashions, which is very hard to argue against.