Category Archives: Economics

On Iran, Egypt, Arab Revolutions, and Military Power……….

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Iran’s Foreign Minister Ali Akbar Salehi told the media that restoring relations between his country and Egypt has been going slow because Iran “understands” the immense pressures being put on Egypt. He said Egyptians seem to need more time because of those external pressures. Relations were expected to resume quickly but seem to have been delayed after an intense campaign both private and public by Saudi (and UAE) authorities on Egypt. It is possible that the U.S administration also has had a hand through its close ties with Egypt’s ruling military junta. Egypt has been trying to walk a fine line between a desire to resume relations with Tehran and a natural inclination of its military rulers to maintain close ties with the Saudis. Saudi Arabia announced a US$ 4 billion aid package for Egypt a few weeks ago, and the country aspires to attract much investment from the Gulf GCC states.
Clearly Egyptian authorities are worried about the economy as tourism took a hit during the early stages of the revolution. The revolution itself may not be over in Egypt, depending on how much power the military junta decides to keep. It is wise for the young and others who flocked to Tahrir Square to remain alert: a revolution needs its owners to speak up and assert control of it, otherwise others, like the fundamentalist Islamists or the military or a combination of the two, will take over. In the case of Iran (1979) the mullahs were clever enough to liquidate the Shah’s military officer corps before turning their attention to their political rivals. They paid a price for liquidating the Shah’s military during the first year of the Iraqi invasion.
In the Middle East, especially in Arab states, the military has traditionally been aggressive in usurping political power during pre-revolutionary times. Even the bloodthirsty Ba’athists came to power on top of tanks in both Iraq (1963, 1968) and Syria (1963). Even though the Communist Party of Iraq traditionally had much more support, the Ba’ath managed to take power because it had so many Ba’athists from Takrit and points west in the military. Actually, the Shi’a Hawza in Iraq inadvertently helped the Ba’ath gain power through attacks on the communists whom it saw as the real threat in Iraq. As it turned out, the real threat were the Ba’athists who clung to power for 35 years, provoked two major wars, and were dislodged by American (and British) forces in 2003.
Cheers
mhg




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UAE Rejoins the Third World: Petrol Shortages, Gas Lines…………

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Across the northern half of the country, particularly in the emirate of Sharjah, long queues have formed, while scores of petrol stations have closed altogether. Many more drivers have headed south to fill up in Dubai, where there are still supplies but residents are looking nervously at “immigrants” driving in from neighbouring cities to fill up. The issue is now taking on political dimensions, as Sharjah’s government has issued instructions to petrol companies to solve the problem. Critical newspaper reports – rare in the UAE – and online comments have spread as what was originally thought to be a technical hiccup turns into an unexplained, lengthy conundrum. The companies, particularly the Dubai government-owned Emirates National Oil Company (ENOC), have claimed the closed petrol stations were being “refurbished”. But there appears to be little evidence. …….

As I noted in an earlier posting weeks ago, I can see the Iranians and Iraqis and other developing countries having these types of shortages. But the UnitedEffingArabEmirates? What the hell will they do if they ever came under sanctions and boycotts?
Cheers
mhg




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On the Gulf : Robbers of Land, Thieves of Freedom…………

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Built by Gulf Finance House, a listed investment company run by Bahraini businessman Esam Janahi, the towers have also come to embody the ruling al-Khalifa family’s fight to preserve its power and protect the vast wealth of the country’s economic elite. Land in the Gulf Arab region is largely controlled by a small number of ruling families who use it as a kind of currency, doling out plots to favored families and developers to forge political relationships and make money. For it to work, the system depends on businessmen like Janahi, merchants who ostensibly operate independently from the state but whose success rests, at least in part, on political connections………. Documents obtained by Reuters show that GFH, which has teetered on the brink of collapse for several months, also sometimes shifted investor money from one project to plug holes in another…….. In Bahrain, where the ruling family has been involved in several property developments over the past decade, it’s become a symbol to ordinary people — especially the poor Shiite majority — angry about a system that shuts them out and widens already gaping inequalities….…..”

Bahrain is just one example: it is the same story all along the shores of my Gulf. They steal the land, especially the choice beachfront property and convert it from public to their own private property. The ruling clans and their retainers and minions. The al-Saud do it, as do the Emirati rulers, and others, in the GCC. They add insult to injury by selling public tracts of land back to the public sector, then they add more insult by establishing new townships named after the robber princes. Even the streets are named after them. It is like the rest of the people are just tenants on the land, with the potentates being the landlords.
If I were rude and crude, I would re-interpret the GCC as the Gulf C——–n Council. But I am neither rude or crude, so I won’t say it.
Cheers
mhg




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The Power of Boycott: Business Facing a Dark Future in Bahrain ………

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Economic boycotts are becoming part of the Bahrain revolutionary scene. This is how they started:


  • Some regime
    partisans in Bahrain pushed many Sunnis to start the boycott frenzy by advertizing a boycott of some prominent Shi’a businesses that supported the protests (e.g. Jawad Enterprises). Naturally Sunnis have much more buying power per person, but their numbers are small. They may get others to join, like Pakistanis, Saudis, Syrians, Jordanians (basically some of the imported mercenaries). Some of the targeted businesses were also trashed. Yet that was a big mistake as my next paragraph explains.




  • Shi’as, taking a page form their Sunni neighbors, started thinking of boycotts. They have suddenly realized the true power they have: just like American blacks in Alabama did in the 1950s, and others did in India so long ago. They are now advertizing to boycott businesses that support the repression (usually Sunni or some foreign businesses). Many of these businesses went along with the regime and fired many of their Shi’a employees (there are reports that they are hiring in the Indian Subcontinent to replace the fired natives). The firings have added the effect of reduced purchasing power to the anger the Shi’as already felt toward them. Shi’as are a big majority in Bahrain: al-Wefaq, the main Shi’a opposition group won about 64% of the popular vote in the last election. That is not counting other parties and those who boycotted (like al-Haq). They can really harm some major businesses if they boycott them. It looks like they will. Many businesses and shopping malls are owned by al-Khalifa clan members, partnerships, and their retainers and henchmen.




  • Bahrain businesses, through the chamber of commerce, have now frozen relations with businesses organizations in, and now talk of boycotting: Iran, Iraq, and Lebanon (all three states have a majority or plurality of Shi’as, like Bahrain). Typical of the al-Khalifa clan to try to extend their own domestic policy of sectarian Apartheid and ethnic cleansing to the region in order to get out of the mess they created. They want everyone to join in their sectarian game, but that will not solve the serious problem many Bahraini businesses will now face because most of the people will boycott them.


The business outlook in Bahrain looks bleak, much bleaker than the al-Khalifa clan had anticipated.
Cheers
mhg




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Hariri Family Affairs: of Saudi Masters and Money Troubles………

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Al-akhbar daily (Lebanese secular and liberal) reports that the management of the Arab Bank have refused to confirm or deny reports that outgoing PM Sa’ad Hariri is selling part of his share in the bank to former PM, and Hariri aide, Fouad Saniora. The newspaper cites knowledgeable banking sources that this is true. It notes that Mr. Hariri, a billionaire, is facing liquidity problems after suffering heavy business losses, to the extent that he is facing some difficulty making loan payments in Saudi Arabia and elsewhere. Al-akhbar reports that his liquidity problems are affecting his relationships with “influential Saudis”, usually a code word for al-Saud princes.
It reports that his difficulties extend to his own family relationships and that it came to light after his sister Hind could not deposit three checks issued by him for US$ 150 million as payment of part of her share from their father’s estate. There were apparently insufficient funds to cash them. The reports claims his huge firm, Saudi Oger has suffered US$ 3 billion in losses and that many “influential Saudis” are angry at him.
Mr. Hariri got into serious trouble with the family of the de facto Saudi ruler, Prince Nayed the Interior Minister, Deputy Prime Minister, etc etc, after calling prince Mohammed, his son and deputy, a “bloodthirsty butcher”. He seems to have lost some of his magic to the Saudis, whose nationality he holds.
Cheers
mhg




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Slumdogs of Dubai: Not Your Father’s Dubai………….

     
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Dubai: A man masturbating on a public street; a woman waking up to an intruder in her bedroom; a peeping Tom spying through women’s bathroom windows… life in Mirdif isn’t what it used to be. The once-sleepy suburb of families has attracted residents of various moralities, due to the downward spiral in rents………”On weekends I’ve seen mid-teens sitting on the steps with bottles of vodka in their hands,” says a 21-year-old Sudanese. XPRESS has also witnessed teenagers making out on the steps of the back entrance, as well as groups of underage boys leering at women. A drive around the area reveals an increasing number of obscene graffiti on walls and teenagers sitting on street corners smoking. “Mirdif was never like this,” says 34 year-old Rainn Walker. “Now, everyone who’s of the wrong kind is in Mirdif. Two months ago, a boy who looked to be no older than 13 grabbed my behind as he walked past me on street 37. Last week I read about a woman who was kidnapped and held in Mirdif. Who knows what I’ll hear next. I’m having second thoughts about living here, ” she says……..

It ain’t your father’s, or your mother’s, Dubai these days. It ain’t my father’s Dubai either (he made sorties there in the old pre-oil days, along with many others). These symptoms have always existed in the backstreets of Dubai, as they have in Abu Dhabi and Riyadh and, dare I say it, Mecca. There was so much going on in Dubai for the media in the boom years that these things were overlooked: nobody wanted to cover the slums with open sewers and Kabul-quality electricity and water services. Just like nobody ever covers the truly seamy side of Las Vegas. Now with the bust and the departure of many European and Gulf investors, the owners of these formerly exclusive developments have had to lower their sights. And their rents. The slums of Dubai have begun to move into the formerly exclusive parts of Dubai. The slumdogs of Dubai are moving in.
Cheers
mhg

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The Economics of Saudi Housewives and Princes………

     
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Household Economics 101: referring to my last post. The reason Saudi families need so many housemaids is not necessarily that they are lazy. The wife often works, mostly teaching in girls schools, in order to make ends meet. They also need someone to drive the wife to work and back because women are not allowed drive in Saudi Arabia, even women who threaten to breastfeed their Asian drivers (actually those in the news were upper middle class ones). They can’t take public taxis driven by strange men, besides it probably is not safe in the kingdom of many frustrations. They don’t all live in the style of the al-Saud and their retainers. Most middle class families have to borrow even in order to travel for a vacation, most don’t own homes. There are people who are dirt poor under that ocean of petroleum and not far from those princely palaces: that is how the thousands of princes can afford to amass billions.
A report in Arab News today confirms what I and others have written: that overall unemployment is in double digits and that it is about 40% for young adults (20-24). That is a (pre)revolutionary rate of unemployment for young people. Fortyfucking percent unemployment! And only Khaled al-Johani showed up to protest in Riyadh last month and nobody knows what happened to him! Enough to drive anyone from the Arabia Peninsula, whose last name is not al-Saud, to despair.
I shall have more on this point in a coming posting soon: you have been forewarned.
Cheers
mhg




m.h.ghuloum@gmail.com

Revolutionary Housemaids of Arabia…………

     
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There are many reports of housemaids being abused or beaten, and occasionally even murdered. However, there is another side to the story. The large number of housemaids running away from their employers is causing untold problems, including social embarrassments and additional financial burdens for many Saudi families. “It costs a lot to recruit a housemaid, with fees that go up to SR15,000. This includes recruitment fees, plane ticket and visa,” said Abu Faisal, a recruitment office manager in Jeddah. “If the maid runs away, the employer loses all the money he spent hiring her.” Maids run away for several reasons, but they are mostly greedy and search for jobs in other households to make more money, according to Abu Faisal. “Many maids run away from their sponsors as soon as they land in the Kingdom, knowing that they will find a job no matter what, for people are always looking for maids,” he said……..”

Maybe the housemaids will start protesting in Riyadh; there probably are as many of them as Saudis. That will be the Saudi revolution, since the natives are either too afraid or too brainwashed by the shaikhs or too worried about clan or tribe feelings. After all, how can you protest against the ruling family if some neighbor of your best friend’s brother in law has a distant niece who is married to one of the al-Saud drivers? Makes it tough, don’t it? The best hope for a revolution is with the Asian and African housemaids, and God knows they probably have good reasons to protest. The other alternative is for people to lose so many of their housemaids that they rise in revolution out of despair. Despair is what drove Tunisians and Egyptians and Libyans and Bahrainis and Syrians to revolution. In India the rising price of onions can lead to political protests and change elections, maybe in Saudi Arabia the rising ‘price’ of housemaids will do the job.
Cheers
mhg




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Wael Ghonim to IMF & World Bank: J’accuse…………

     
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WASHINGTON — The Google executive who became the hero of the Egyptian revolution cropped up at the pinnacle of international finance Friday, chiding the elites for supporting strongman Hosni Mubarak. “I actually feel like Joe the Plumber,” said Wael Ghonim, drawing laughs after his introduction on a panel at the International Monetary Fund headquarters….. Dressed in faded Levis, an open-necked striped shirt and casual loafers, Ghonim, 30, filled his billing as “Internet activist” in the roundtable discussion notably featuring IMF chief Dominique Strauss-Kahn. Ghonim, Google’s head of marketing for the Middle East and North Africa, became an Internet star after administering a Facebook page that helped spark the uprising that toppled Mubarak’s regime. “To me what was happening was a crime, not a mistake,” he said. He branded the international institutions and the “elites” of the world “partners in crime” in supporting Mubarak’s regime. “A lot of people knew that things were going wrong,” he added. Wearing a wristband with the date January 25, 2011, the first day of protests that swept Mubarak from power, Ghonim said: “We wanted our dignity back.” “Egypt has cancer” and what is needed is investment and entrepreneurship, and jobs that pay a decent wage, he said. Acknowledging a “radical view,” Ghonim welcomed outside expertise and support from the international community but rejected the idea of outsiders telling Egypt how to rebuild its society………..

Wael Ghomin was absolutely right. In fact he was a little too polite. The international bureaucrats all knew what was happening in Egypt and elsewhere. They accommodate the corrupt regimes of some countries too often. The designer-clad IBRD and IMF bureaucrats often listen to functionaries of the state, I know that firsthand, then they tailor a policy program that often is based on the input of the functionaries. They paper over flagrant corruption and policies that distort the economy and keep it stagnant. That is usually the case for countries with clout. Egypt was a country of ‘indirect’ clout because Mubarak had support on the IMF Executive Board from at least three representatives: his own (also the Gulf’s) member, the Saudi member, and often the American member. Not to mention the support of some other Executive Board members on the principle of “mutual back scratching”. Ditto for the World Bank (IBRD). They should just let the Egyptian people sort out their own problems as he said.
I recall traveling to Cairo some years ago with a potentate who told me during the flight that Egypt had changed, that I would be amazed by the ‘progress’. Needless to say, potentates don’t walk the streets of cities like Cairo the way I do. In Cairo, I saw that it had changed alright, but it had become shabbier, a much worse place than under either Nasser or Sadat. I saw many homeless people around the banks of the Nile, something that used to be rare in most of the city during my pre-Mubarak visits. The progress they were talking about was not that of the Egyptian people, but of the elite with whom the Arab potentates and the international financial organizations associated. The international bureaucrats, as I know firsthand, deal with numbers, data, not with human beings. IMF and IBRD functionaries should be made to go into town, walk the streets, see the millions living in old graveyards, without regime minders. And skip the incessant official wining and dining.
Cheers
mhg

m.h.ghuloum@gmail.com