Category Archives: Economics

Demographics, Economics, GCC

GCC Population Restructuring Calls: Mostly Illusory, or Dishonest, or Both…………

      

 Follow ArabiaDeserta on Twitter      

“Abu Dhabi is not the only place in the region to be pushing more locals into the job market. Kuwait announced earlier this year that it would reduce by a million the number of foreign workers in the country over the next ten years. More drastically, it has begun to deport foreigners for traffic violations, though it has denied that that is part of a policy to reduce their number. Saudi Arabia has also long pursued “Saudi-isation”, whereby firms are made to replace foreigners with Saudi workers. Under the current law, known as nitaqat (“categories”), companies are classified by green, yellow and red labels that denote the extent to which they have complied with employment quotas. All firms, even those with fewer than ten employees, are supposed to hire at least one Saudi citizen. The three other members of the Gulf Co-operation Council—Bahrain, Oman and Qatar—have their own variations on the theme of making their citizens work. Across the region, a further cull of jobs for foreigners looks likely……………”

Also sprach The Economist.
All this talk in the Gulf GCC countries over the past decades of changing the demographic structure is either illusory or insincere, most likely both. Talk of Saudi-ization, Emirati-zation, Kuwaiti-ization is basically wishful thinking or propaganda beyond the public sector. Here is why the potentates and those that control economic power are not sincere about this goal even as they repeat it:


  • A serious move to reduce the population of expatriate labor would wreak havoc with commercial real estate. Many thousands of apartment buildings and rental property have been built specifically with a certain level of demand in mind. They are mostly owned by influential potentates and merchant families and they are mainly rented to expatriates. Imagine commercial property prices from Dubai all the way to Kuwait, imagine what would happen to them with a few million less expatriates. Imagine the population of, say, the UAE cut back by 40% (assuming about half the foreigners remain).

  • The same applies to trade, the import business. Goods are imported and ports and airports are designed to meet a level of demand that includes millions of foreign workers. Reducing the level of foreign labor would cause demand for goods and services and airline traffic to crash. Merchant families, close partners of the ruling families would not, cannot, allow that to happen.

  • Other businesses, especially services like restaurants, have been established to serve a certain population. Reducing the population would cause a severe recession, nay depression, in these sectors. On the other hand, these sectors employ mostly cheap foreign workers, and would suffer increased costs.

  • Public policy of the GCC states encourages native population growth through subsidizing births. This has led to even more demand for foreign labor. Every new citizen born will require the services of some foreign labor, from nurses to housemaids to cooks, etc. The policy has caused the share of foreigners in the total population to grow.

  • This is seen as more a cultural issue than an economic one. Most GCC countries have more foreigners than citizens. In the UAE and Qatar foreigners form about 90% (more than 80% are non-Arab), and the ratio for Kuwait is more than 60%. Even Bahrain has seen an explosion of foreign residents mainly because the rulers are importing foreign mercenaries and security agents instead of giving jobs to their own Shi’a citizens. Even Saudi Arabia has somewhere between 7-8 million foreigners among its people.

  • Import of foreign labor to the Gulf serves to create a balance within the Middle East, where some states now have labor shortages and others have high unemployment. Ironically, some Gulf states with labor shortages also have very high native unemployment (Saudi Arabia, UAE). Any major policy shift would impact other regional economies and probably impact GCC foreign relations as well.

A tough problem with solutions that are either not feasible or not desirable or both. I expect we will be still reading promises (or threats) about it twenty years from now…………

Cheers
mhg

[email protected]

Arab Revolutions, Economics, Finance, Jihadis, Kuwait, Syria

The Economics of Jihad in Syria: Kuwaiti Opposition Estimates……..

      

 Follow ArabiaDeserta on Twitter      

There is a theory, a plausible one that the Syrian uprising of 2011 started as a non-sectarian non-violent call for reform. Until the Wahhabis of Saudi Arabia and the Gulf got hold of it and inundated Syria with money, the ideology of hate, and Salafi Jihadis. I wrote two days ago of Kuwaiti politics and the dominance of tribal Islamists of the political opposition movement.
Local Kuwait media report that the tribal Islamist opposition has called for a mobilization for war in Syria (they called it for Jihad in Syria). A bunch of former opposition tribal Islamist MP’s held a sort of tribal charity ball but stag, a large gathering of men to start a campaign to raise money to equip and arm 12 thousand ghazis (ghazi is Arabic for invader, raider, meaning here Jihadi) for Syria. They have called for every family (that listens to them) to equip and arm one Mujahid to go to Syria to fight. One of them suggested that 700 Dinars (about US $2400) would prepare and send a Jihadis to battle in Syria. (No idea if this amount covers one or multiple multiple wives). That of course does not cover the current cost of operations: food, bullets, shelter, bribes, booze, etc. All that minus current revenues: whatever can be looted as war booty or obtained as ransom for hostages the FSA and Jihadist militias like to take (they are avid hostage-takers and are still holding two Christian bishops and two other priests hostage, in addition to many Alawis and Shi’as).

Some of the well-heeled tribal Islamists at the gathering contributed new non-Islamist cars. One gave a new heathen-made Chevrolet Suburban, another donated a new infidel-made Mercedes-Benz. One former member of parliament got a family to pay for the arming and equipping 28 ghazis (raiders or Jihadis) for Syria. Another former member deposited funds to cover three Jihadis.
None of these worthies volunteered either themselves or their sons or any members of their families or tribes for the “struggle”. They can get other Wahhabi youth to do the bloody deed, and if that fails, they figure they can get the infidel heathen Westerners to do it. There is always senators McCain and Graham (Joe Lieberman has hung up his Syrian Jihadist helmet).

Cheers
mhg

[email protected]

Blockade of Iran, Economics, Iran, Pakistan, US Foreign Policy

Iran and Pakistan and Clinton: Controversial Pipeline? What Controversial Pipeline?…….

         

 Follow ArabiaDeserta on Twitter      

“President Mahmoud Ahmadinejad launched the project with his Pakistani counterpart Asif Ali Zardari at a ceremony on the border, hailing a blow to US-led sanctions targeting his country’s oil and gas sector. The two leaders unveiled a plaque before shaking hands and offering prayers for the successful conclusion of the project, which involves the laying of a 485 mile section of the pipeline on the Pakistani side, expected to cost some $1.5 billion. “The completion of the pipeline is in the interests of peace, security and progress of the two countries … It will also consolidate the economic, political and security ties of the two nations,” they said in a joint statement……………….”

This agreement on the gas pipeline was one of Hillary Clinton’s biggest foreign policy failures. She and her State Department worked hard to derail it. It did not threaten the security of the United States; it did not even threaten the more important security of Israel. Yet she tried all kinds of extremely expensive alternatives that would bypass Iranian gas fields. Every alternative was very uneconomical: Iran probably sits on the world’s second largest reserves of natural gas (possibly the largest). No doubt the Iranians also paid a price for the pleasure of thumbing their noses at the West.
Controversial? Only in the United States media since it is not against any United Nations sanctions.

Cheers
mhg

[email protected]

Demographics, Economics, Finance, GCC, Iran, Middle East

Iranian and Arab Population Policies: It is the Quality, Stupid! It is the Economics, Stupid!………

         

 Follow ArabiaDeserta on Twitter      

“Mohammadi represents a worrisome trend to the Iranian government: More young couples are wary of having babies in the climate of economic instability caused by international sanctions. The disenchantment comes as the ruling Islamist clergy, alarmed by Iran’s meager population growth rate — estimated at 1% in 2011 by the United Nations — has mounted a campaign for families to have more children. Iran’s leaders fear the prospect of an aging population that would burden the welfare system and severely diminish productivity. Without a change, Iran’s median age is expected to rise from 27 to 40 by 2030…………The desire to migrate has also played a significant role in the lack of interest among young Iranians to have children — along with a turn away by women from conservative religious values as they seek equal footing with men…..………”

I posted on this topic before regrading Iran, and also about the Gulf GCC population policies. I still suspect that the main reason for this policy reversal is economic and financial. The mullahs couch it in religious and nationalist terms because that is what their base, their political supporters, understands best. It is the same story in other places, especially Europe and Japan: as the population ages, there is more demand on retirement age-related resources and less money going in. They need to get creative and find ways of replenishing these resources and making them more productive. A huge population explosion now a la Egypt or India would only postpone the problem and have it pop up later on a larger scale.
Now there is an idea in our region that more people means strength. The rulers, especially on the Gulf, encourage population growth. It is probably a tribal-ethnic-sectarian thing. In the old days, and even now in some places, the larger the tribe the more powerful it is. Yet this is erroneous. Look at Israel with a population of around 6 million: she defeated all Arab regime armies in whatever combination one could think of, several times. Six million defeated more than 200 million. Look at Hezbollah: representing less than 50% of Lebanon, barely two and maybe a half million people, yet it defeated the mighty Israeli IDF, twice (in 2000 and 2006)! I have no doubt that they can also defeat any Arab army now (that includes the Bahrain and Abu Dhabi and Qatari and Saudi Wehrmacht combined).
It is not the quantity, stupid. It is the quality, stupid!

Cheers
mhg

[email protected]

Economics, U.S. Politics

Foreign Politics: How the Average American Can Become Smarter Twice……….

   

    Follow ArabiaDeserta on Twitter                          
                                Neck of the woods

There is a lot of talk about extremist groups, kooks, and fundamentalists collecting petitions for some states to secede from the American Union, i.e. the United States. Anyway, that is how most of the ‘mainstream’ media is labeling them, directly or indirectly.
One of my sources in a famous secession-prone Red State told me something strange. He swore to me that this secession, if it ever occurs, will be good for both ‘sides’: for the average American and for the seceding former citizens. He swore to me that it would make the average American noticeably smarter, practically overnight. He also swore to me that it would make the citizens of the seceding state(s) feel much smarter than before. I am still trying to figure it out, although I don’t even live over there. On the face of it, it seems to be good for everybody!

But I was also told that the seceding former citizens will sorely miss all the socialistic federal spending; may even negotiate keeping some of it as part of their secession deal. Sort of a deal sweetener, my source told me without explaining who will taste the sweetener.
Anyway, I plan to see “Lincoln” soon.
Cheers
mhg
[email protected]


Arab Politics, Economics, North Africa, Salafi, Tunisia

Fundamentalists of North Africa on the Rise………….

    

    Follow ArabiaDeserta on Twitter   
 



“Yesterday, the Islamist party Ennahda declared on national evening television that it would keep intact Article 1 of the 1959 Tunisian Constitution. Article 1 of Tunisia’s first constitution explicitly states that Tunisia is a free, sovereign, and independent state, whose “religion is Islam, language is Arabic, and regime is republic.”………. This decision came in a very delicate political context, as an ongoing debate over the place of religion in post-revolutionary Tunisian society and government continues to evolve. The past two weeks alone have seen several demonstrations, some calling for the implementation of Shariaa, law based on the Koran and other Muslim holy writings, in the constitution, and others calling for a civil state……………”

The more ‘moderate’ Tunisian Islamists of Ennahda have decided to keep their promise and not try and transform the country into a theocracy. Not yet. Media reports indicate that a few thousand, no doubt mostly Salafis, have demonstrated for a full application of the Shari’a. That would have transformed Tunisia into a Saudi-style Salafi regime. In that case, Tunisia would be transformed into the Democratic People’s Salafi Republic of Tunisia, just as the Arabian Peninsula is now the Democratic People’s Salafi Kingdom of Arabia. That would have been a disaster for the country, given the strong secular streak among many of its people, and given the heavy economic reliance on tourism, and given the proximity to Europe.
 
Even some of the Gulf GCC countries that apply strict Islamic rules at home would not want that to happen in Tunisia, for two reasons: (1) They have invested heavily in the Tunisian tourist industry (hotels, resorts, etc), and (2) Where else would the potentates go for their long peaceful (and I might add ‘fun-filled’) holidays? You never read about any Saudi princes and other Gulf potentate vacationing in Afghanistan, do you? Not even during the rule of the Taliban. Come to think of it, you never read of any of these potentates ever vacationing in Saudi Arabia either. Maybe it has to do with the ambiance, or maybe it is that “whatever happens in Tunisia and Morocco stays in Tunisia and Morocco’. Most of it, from what I hear.
Cheers
mhg


[email protected]

Economics, Iran, Iraq, OPEC, Sanctions, Saudi Arabia, Venezuela

Petroleum Chat: from Tehran through Baghdad to Riyadh and Caracas…………

 

    Follow ArabiaDeserta on Twitter    BFF   

“The National Iranian Oil Company (NIOC) has announced the discovery of a huge oil field with considerable crude reserves in southern Iran. NIOC’s Director for Exploration Seyyed Mahmoud Mohaddes said Saturday that an exploratory oil well has already been drilled in the area. “The newly-discovered oil field must be considered among the biggest fields ever discovered in Iran,” he said. The Iranian official also added that initial tests have indicated the high quality of the oil in the new field. Mohaddes went on to say that the details about two or three more oil fields will be announced in the near future. A total of 18 heavy and extra heavy oilfields have so far been discovered in Iran, including Ferdowsi oil field in the Persian Gulf, which is one of the country’s biggest heavy oil fields with proven reserves of more than 31 billion barrels. Iran’s total in-place oil reserves have been estimated at more than 560 billion barrels with about 140 billion barrels of extractable oil……….”

According to the CIA
 (2011) Iranian reserves were pushed back to the 4th largest in the world, behind Saudi Arabia, Venezuela, and Canada. Last year, Venezuelan reserves jumped with some OPEC estimates putting them ahead of both Iran and Saudi Arabia. Iranian and Iraqi ‘proven’ reserves have been hampered over the past 30 years by wars, sanctions, and Western economic blockades. It is possible, nay very likely, that one or both of these countries has more reserves than the current leaders. The Iranians note their “in-place” reserves are 560 billion barrels, but that is only ‘potentially’ recoverable oil. As more explorations and studies are done, as well as more investments in technology and machinery, some of this ‘in-place’ oil becomes extractable.
Both Iran and Iraq suffered from lack of serious exploration and investment in new oil fields over the past three decades, and their reserves can only shoot up noticeably in the next few years. On the other hands there are reports that Saudi production capacity is declining as the country has been producing large amounts as a ‘swing’ producer. But Saudi Arabia has a huge land mass: there may be more oil reserves hidden under the sands, and not necessarily in the Eastern Province.

Of course, the expanded reserves do not help the Iranian people in the short term as the Western powers, under Israeli and ‘princely’ pressure, tighten their squeeze on the economy.
Cheers
mhg


[email protected]

Corruption, Economics, GCC, Saudi Arabia

Extreme Poverty in a Democratic People’s Kingdom of Arabia…………..

 

    Follow ArabiaDeserta on Twitter    BFF   


Woman begging in Riyadh (Source: Deutsche Welle)


“In spite of the image of prosperity in which Saudi residents are supposed to live, the past tow decades have seen high inflation in prices by about 400% while the average income increased by only 66%. Ahmad Doud works as a security guards for a company and he used to make $533 a month until King Abdullah ordered that minimum wages be established and that he now makes about $800. His salary is not enough to cover the rent and living expenses of his family and he has taken a second job, although he refuses to say what it is. Saeed is another victim of the poverty in Saudi Arabia whose painful details are lost among the bright image of luxury and prosperity in the kingdom. He secretly makes alcoholic drinks secretly and sells them to make money to cover his family expenses. When asked about a job with the oil and petro-chemical companies that are within tens of miles of his place, he says that he has to be satisfied with inhaling the poisons they emit.
Latest data indicate that the average annual per capita income in Saudi Arabia exceeds $ 20,000, while the average monthly wage of a Saudi citizen in the private sector is about $927….. A short film produced by Badr al-Humood is titled “The Graveyard” and tells about a family of 11 persons that lives in a Riyadh graveyard……… “ Duetsche Welle Arabic

Now compare this to my earlier posting here about the lifestyles of the Saudi princes.
(The lousy translation from Arabic is my own).
Cheers
mhg


[email protected]

Economics, Iran, Sanctions, Terrorism, Turkey, U.S. Politics, US Foreign Policy, War on Iran

Oh No, another Iranian-Hezbollah-Turkish-Kurdish Embassy Plot Uncovered……..

   Rattlesnake Ridge   Follow ArabiaDeserta on Twitter   

 
         BFF   

“Intelligence units have warned that the Quds Force, a special unit of Iran’s Revolutionary Guard, plans to send a group to Turkey to carry out a series of demonstrations that may include a bomb attack on the Embassy or Consulate General of the United States. The Turkish Security General Directorate (EGM) has warned police departments in all 81 Turkish provinces that they must be vigilant and remain alert to the existence of such a threat. The intelligence pertaining to the possibility of such an attack was delivered in a secret letter to the information department at Turkey’s General Directorate of Security. The written statement indicates that a team linked to Iran’s Revolutionary Guard will be sent to Turkey and that it may be planning to bomb the US embassy or consulate general in the country. The Quds Force is infamous for its role in attempting to export Iran’s revolution to other countries through the instigation of chaos and by acting as the overseas branch of the Iranian Revolutionary Guard Corp.……….”

Haaretz (Israel) has also pulled a rabbit out of its hat by adding Hezbollah to the mix, claiming that Iran’s Lebanese ally was to take part in the plot. The Turkish newspaper Zaman report makes no mention of Hezbollah, but maybe some federal district judge in New York or Washington DC will implicate them, as usual. They may throw in al-Qaeda as co-conspirators for good measure (Saddam Hussein is dead). No mention of a Mexican drug cartel connection, nor anything about Mr. Adel al-Jubair or a Venezuelan hand.

Clearly Republican 2012 candidates for POTUS don’t read the Turkish press, not even Rick Perry or Newt Gingrich. Otherwise the GOP would have called for an immediate declaration of war on all Muslims, including Mr. Perry’s pals in the terrorist Turkish government.
Secretary of State Hillary Clinton, no doubt, will take the opportunity to declare herself ‘disturbed’ by this ‘disturbing’ report.

An attack on an embassy is a serious act, nearly as much an act of war as blockading a country and preventing its exports and imports, surrounding it with warships and fleets and military bases. And threatening to bomb it. That is why it is highly unlikely that this story is true: the Iranians are not that stupid, or are they?
Cheers
mhg


[email protected]

Economics, Iran, Iraq, Israel, NATO, Sanctions, U.S. Congress, U.S. Politics, US Foreign Policy, War on Iran

Blockades from Cuba to Iraq to Iran, Netanyahu as King of NATO and the Confederacy ……………

   Rattlesnake Ridge   Follow ArabiaDeserta on Twitter   

 
      BFF   

“But will an oil embargo work? Not as far as oil analyst Paul Stevens of London-based Chatham House is concerned. “If you look at history, oil embargoes have never, ever worked and never, ever been effective…so it’s not going to work,” he said. “It’s just going to cause a great deal of disruption.” Stevens says EU countries that depend on Iranian oil can find new suppliers – like the Gulf states. But Iran may also find new buyers for its oil in Asia. Iranian officials have downplayed the impact of Western measures – including new U.S. sanctions that could reduce Iran’s ability to sell oil and other exports. But Tehran also has threatened to close the critically important Strait of Hormuz, the entrance to the Persian Gulf………… For his part, Stevens of Chatham House doubts Iran will go through with its threat to close the Strait of Hormuz – in part because it relies on the waterway for its own oil exports. But he believes the deepening standoff between Tehran and Washington, in particular, is creating a dangerously unstable situation. “By trying to limit Iran’s oil exports, it [Washington] is essentially escalating the situation into what could very rapidly become a crisis,“………”

Every time Mr. Netanyahu threatens to wage his own war, Western powers (mainly the Obama administration) panic and tighten their sanctions, really a blockade, against Iran. It is Mr. Netanyahu, a supreme hustler if there ever was one, who calls the shots for the West over many things Middle Eastern, from Palestine to Iran. He exercises his veto power over the two branches of the American government. He has a direct route (hotline) to the leadership of the Congress, which is willing to kiss his posterior in a way he would never dream the Israeli Knesset ever would. He would never get a standing ovation in the original Knesset in Jerusalem. He is fawned upon so much by the American right (and some on the left) it is a wonder he doesn’t immigrate back to the USA and run for office in Georgia or Alabama or Tara.

Boycotts and sanctions rarely work, they never worked against Cuba (been over fifty years) or Iraq (led to an invasion). They do hurt the people. The Cuban boycott caused economic hardships, and the misery it caused only pushed many thousands of Cubans to leave their homeland and cross to Miami. It gave many U.S. administrations the alibi to blame Cuban misery completely on the Castro regime (the Castro regime was partly responsible for erecting inflexible out-dated Soviet-style institutions and stifling dissent). The Cuban boycott has no justification anymore. It has been sustained for decades only by one political pressure group in the United States and can be summarized by a seven-letter word: FLORIDA.
 
The Iranian boycott is even tougher than the Cuban one, it is nearly a blockade by all Western powers that could lead to a war. Yet it is also unlikely to work against Iran: the theocratic regime in Tehran is as confident of being on the right, as committed to not buckle in the face of foreign threats, as Castro was for so many decades. They are as ideologically stubborn, albeit at a stiff economic cost to their people. Besides, they have something the communist Castro has never had since at least July of 1956: they believe divinity (G-O-D) is with them, although I am not sure about h-i-s-t-o-r-y.

Then there are the petroleum and the gas fields. They possibly have the world’s second largest petroleum reserves and possibly the world’s largest gas reserves. Meaning they feel they can outwit and out-wait the West and its blockade. Besides, the way the petroleum markets work makes it hard to distinguish Iranian or Angolan petroleum: there will always be demand for Iranian crude and gas, probably at discounted prices. Both have been mainly sellers’ markets for some time, as countries try to secure sources of supply.
Cheers
mhg


[email protected]