Arab Spring Raises Hope for Era of Cleaner Business

November 10, 2011 by · Leave a Comment 

By Suleiman Al-Khalidi

2011-11-09T143612Z_1011185299_GM1E7B91KBQ01_RTRMADP_3_ABUDHABI-STRATEGY

Visitors look at models of the Saadiyat Island project during the Cityscape Abu Dhabi Exhibition in Abu Dhabi, in this April 18, 2010 file photo. When Abu Dhabi announced that it would delay establishing local branches of the Louvre and Guggenheim museums, it was an important signal of the emirate’s economic strategy as well as its cultural priorities.The company gave no new dates for opening the museums, which were originally scheduled to start operating between 2013 and 2014 as part of a $27 billion art and culture development on Abu Dhabi’s Saadiyat Island. But the message was clear: getting the projects right and ensuring public demand for them would be given precedence over rushing them out quickly to gain prestige.

AMMAN, Nov 9 (Reuters) – Gulf investor Omar Ayesh flew to Tripoli to meet Saif al-Islam Gaddafi when the son of Libya’s now-deposed strongman wanted to talk business, only to be caught in a web of bribery and crony capitalism.

A deal for a beachfront resort project on Tripoli’s seafront was signed with Muammar Gaddafi’s government and excavation work began, but it stopped after people linked to Gaddafi began asking for payoffs, the 43-year-old businessman says. Now, Ayesh is trying to revive the project.

“I didn’t expect influential figures within the regime would take over the project because it was lucrative. I just hope the new Libya will not repeat the mistakes of the past,” says Ayesh, chairman of United Arab Emirates-based Nobles Investments.

Across the Middle East and North Africa, the Arab Spring uprisings have hurt many businessmen. Economies have slowed sharply as political uncertainty deters investment, new governments focus on trying to restore social stability instead of reforming economic policy, and labor unrest disrupts production and drives up costs.

But Ayesh is one of a substantial number of businessmen who say the economic climate is already improving in an important way: it is becoming easier to do business without the involvement of corrupt politicians and officials.

“Corruption was a major hurdle before the revolution and now it’s much less. This has improved the business environment in Egypt. We are much more optimistic,” said Issam Hijazi, chairman of Hijazi and Ghosheh, a Jordanian meat processing firm with millions of dollars of investments in Egypt and the region.

Patronage

Many businessmen are not as positive as Hijazi. In Egypt, for example, some small company owners still report struggles with corrupt officials and parasitical government bureaucracies that only their larger, wealthier competitors have the money to overcome.

But to some extent, the ousting of president Hosni Mubarak has loosened the grip of a clique of politicians, officials and their businesses cronies on commercial opportunities and the licences and financing needed to exploit them.

Companies linked to the former regime face legal challenges over past deals and must operate under greater public scrutiny; this levels the playing field and allows a wider group of businessmen to compete. Egyptian trade with Sudan, for example, is no longer dominated by businessmen linked to the Mubarak regime; it has become more open and diversified, said a business consultant in Egypt, who declined to be named because of the political sensitivity of the issue.

Cases such as that of former Egyptian housing minister Ahmed al-Maghrabi have sent a chilling signal to officials and businessmen involved in improper deals. Maghrabi was sentenced to five years in jail in May over an illegal land deal in the Mubarak era; he and a businessman involved were ordered to return a total of 72 million Egyptian pounds ($12.6 million) to the state and were together fined a further 72 million pounds.

Much the same is happening in Tunisia, where members of the family of deposed president Zine al-Abidine Ben Ali once owned or controlled many of the country’s biggest companies, with interests in media, banking and telecommunications.

“The political support and access to funds that some of the leaders of private sector in the Arab world had has been lost,” said Walid Nassan, head of the Jordan operation of Egyptian investment firm EFG Hermes.

“They now need to present themselves on their own credentials and many are tarnished. Those who exploited the system can no longer do that so openly and blatantly.”

At a meeting in Istanbul last week between executives of international oil firms and Libyan officials, who discussed Libya’s plans to buy nearly $3 billion of gasoline, oil traders were struck by the change in how the Libyans operated. The newly appointed managers of Libya’s National Oil Corp refused invitations to lunch or dinner and kept to a tight schedule.

“Before, everything was done under the table and with bribes. Now I haven’t heard anything about bribes, and tenders are being used to buy and sell,” one trader said.

In countries that have not seen their governments overthrown, the change in the business climate has been less dramatic. But here too, the Arab Spring appears to be increasing popular pressure for more transparency and an end to political patronage of business — pressure that governments cannot entirely ignore.

In Morocco, King Mohammed has ordered that the antitrust authority be given more powers to enforce transparency and good corporate governance. The authority’s head said it would be even-handed in dealing with firms owned by the monarchy, the biggest private stakeholder in the economy — although it may have to wait until late 2012 to obtain the power to intervene.

Usama Fayyad, executive chairman of Oasis 500, a Jordan-based investment firm which finances start-up firms in the region’s information technology sector, said governments had become more careful about appearing even-handed towards companies, even in countries that have been relatively untouched by the Arab Spring.

“Abuse of authority by government entities has definitely decreased. I see it applying even to countries that don’t have protests,” he said.

“It doesn’t mean it’s disappeared, but it means that they are more careful and this holds true in Lebanon, Iraq and in the Gulf in Saudi Arabia, where people are more afraid of exercising undue influence because scrutiny is coming. They know there will be more scrutiny, definitely more than before and that creates more diversified economic opportunities.”

He said big companies as well as governments had become “afraid of exercising their old methods of intimidation, influence peddling and corruption. This is helping local companies that previously were marginalized.”

Omar Bitar, head of Middle East emerging markets at consultants PricewaterhouseCoopers, said bidding processes for government contracts in the region were becoming more stringent and transparent, to the point that the award of some contracts was slowing down.

It is not clear how lasting these changes in the region’s business environment will be. New networks of corruption and economic patronage may form as post-uprising governments become more stable; public indignation over crony capitalism may fade as governments around the region buy off the public with subsidies and increased welfare spending.

Some businessmen suggest that in the short term at least, the cleaner commercial environment is actually hurting economies by making it more difficult for deals to get done.

“Legitimate business is being hurt by the perception of impropriety and few people dare to exercise their authority for fear of a witchhunt, and this is paralysing business,” said one Middle Eastern banker, who requested anonymity.

“Graft has an economic value as you measure the cost of corruption — monetary versus facilitation of business…Although companies now don’t have to buy the deal from some guy, it takes longer to secure the deal, plus the political risks have shot up.

“Business in Tunisia and in Egypt, at least on the surface, is not as tidy. You used to know someone who would facilitate business. Now it’s a big muddle.”

In the long term, though, a cleaner, fairer business environment could, even more than other economic reforms such as deregulation and fiscal policy changes, help to solve one of the Arab world’s biggest problems: job creation.

A more level playing field could spur the growth of small and medium-sized firms, which according to a World Bank study contribute only 20 percent of the region’s gross domestic product but employ 70 to 80 percent of its work force.

These firms could in turn create the tens of millions of new jobs that the Middle East and North Africa, with 65 percent of their 355 million people currently below the age of 25, will need in the next decade to avoid social disaster.

“There is no chance that the jobs needed in the years to come are going to come from government or from large businesses, because they don’t generally generate jobs. So it all has to come from entrepreneurs and new companies,” said Darin Rovere, president of Amman-based Sustainability Excellence, a management consultancy.

He said there were already signs that the Arab Spring was encouraging the growth of a new group of young, entrepreneurial businessmen.

“I think it’s exploding around us. These are all kids, young kids. It’s tech-related and you look at their ideas…and so many people just did not feel empowered or a sense of active citizenship. They are feeling different and feel an opportunity now,” said Rovere.

Fayyad at Oasis 500 agreed: “The desire to launch businesses is stronger than before and as far as start-ups and new companies go, private sector entrepreneurs are seeing more opportunities. More closed systems are now open.” (Additional reporting by Jessica Donati in Istanbul; Editing by Andrew Torchia)

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Saudi Hails Hajj Success

November 10, 2011 by · Leave a Comment 

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Tens of thousands of Muslim pilgrims move around the Kaaba, seen at center, inside the Grand Mosque, in Mecca, Saudi Arabia, on November 3, 2011.

(AP Photo/Hassan Ammar)

MECCA, Saudi Arabia — Saudi Crown Prince Nayef bin Abdel Aziz hailed the “success” of this year’s hajj despite fears of “chaos” in the wake of the Arab Spring, as remaining pilgrims continued final rites on Wednesday.

“We thank God for the success of this year’s hajj, which was the best pilgrimage season to ever pass,” Nayef told the commanders of hajj security forces late on Tuesday.

“Some (pilgrims) were expected to exploit the international and regional changes taking place to cause chaos. But thank God this did not happen,” SPA quoted Nayef, who also holds the interior portfolio, as saying.

The hajj — the world’s largest annual gathering — this year coincided with the Arab Spring democracy protests that have swept many nations in the region and led so far to the unseating of three autocratic leaders, in Tunisia, Egypt and Libya, as protests continue in Yemen and Syria.

“What’s going on in Syria is painful,” Syrian pilgrim Abu Imad told AFP. “I’m coming here for perform pilgrimage and to pray for myself and my children.”

According to the United Nations, more than 3,500 people have been killed, most of them civilians, in Syria’s uprising that began in March.

Saudi Arabia itself had been slightly touched by the unrest as Shiites held sporadic protests in its Eastern Province a few times over the past months.

But their movement was quickly contained by authorities in the conservative Sunni kingdom.

“We thank all the pilgrims for proving that they are Muslims who respect this (hajj) rite and for being cooperative,” the prince said.

Indonesian pilgrim Hamid Eddine also believes that “pilgrims must follow instructions to gain the rewards of hajj and to smoothly perform their pilgrimage.”

Saudi security forces have several times in the past confronted Iranian pilgrims holding anti-US and anti-Israeli protests.

In 1987, Saudi police efforts to stifle such a demonstration sparked clashes in which 402 people died, including 275 Iranians.

But no incidents were reported this year as Iranian pilgrims, put at around 97,000 — the maximum allowed for Iran under a Saudi system apportioning pilgrim quotas among the world’s biggest Muslim countries — held their protests inside their own camps on Saturday.

Already strained ties between Iran and Saudi Arabia became taut last month when the United States accused Iranian officials of having a hand in a thwarted plot to kill the Saudi ambassador to Washington.

Iran has strongly denied involvement and emphasized “good relations” with its Arab neighbor across the Gulf.

Most of this year’s three million Muslim pilgrims had left the holy city of Mecca after after a farewell circumambulation of the Kaaba, a cube-shaped structure in the Grand Mosque into which is set the Black Stone, Islam’s most sacred relic.

Others completed stoning of the devil on Wednesday — a ritual, which is carried out over three days in which pilgrims must stone the three pillars said to symbolize the devil.

In previous years, hundreds of people have been trampled to death in stampedes triggered by crowds trying to get close to the pillars to take their vengeance on the devil.

But this year, the stoning, like all other rituals, passed with no major incidents.

The ritual is an emulation of Ibrahim’s stoning of the devil at the three spots where he is said to have appeared trying to dissuade the biblical patriarch from obeying God’s order to sacrifice his son, Ishmael.

Saudi authorities have installed a multi-level walkway through the stone-throwing site in a bid to avoid the trampling that caused the deaths of 364 people in 2006, 251 in 2004 and 1,426 in 1990.

The hajj is one of the five pillars of Islam and must be performed at least once in a lifetime by all those who are able to.

AFP

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Palestine/Gaza & the “Arab Spring”

September 19, 2011 by · Leave a Comment 

By Geoffrey Cook, TMO

Tri-City Area (California)–San Francisco Bay Area–This is a continuation of my coverage of Lauren Booth and the AMP (American Muslims for Palestine’s) dinner.  Your journalist sees this as a part of his examination of the geo-political situation as Ramallah prepares herself for self-agency by marching forward to the UN in New York this month demanding statehood.

I have already presented a short report on Libya printed here on these pages with a good deal of my own research.  Except for Paul Laudree (below), your reporter has refrained from using names to protect any relations who may still be left behind in their native lands, but because Paul is well known for his opposition to Israeli policy against Palestine – and especially toward Gaza – and the Israelis have already threatened him with dire consequences if he is ever caught in the Occupied Territories again, I have decided to name him.

Your reporter has written on Paul twice before.  Definitely, he is one of your writer’s heroes, and, he is a brave man, too, and we suffer through the same maladies of aging!  Paul is one of the co-founders of the Free Gaza Movement, the American contingent of the greater international humanitarian movement to relieve Gaza by sea.
Dr. Laudree is the son of American and Iranian parents.  He was born in Iran during the first year of the “baby boomers”.  His career was spent at the American University in Beirut.  Therefore, he is wll aquainted with the Middle East and speaks Arabic fluently and probably Farsi, too.

Paul came close to losing his life after his capture during the last running through Tel Aviv’ Navy’s blockade into the Gaza Strip.   Fortunately, he did survive a severe beating, and was deported to Turkey with a warning never to enter the (Occupied) Territories again — or else!

In the most recent attempt to relieve Gaza, most of the boats were from the Mediterranean littoral, but yet your scribe does not fully subscribe to Paul’s analyst that it was Israel’s big brother, the United States, who held the majority of their ships in Athens’s harbor.  Boat and land convoys have pierced the isolated Palestinian nation on the coastal Strip in the past.  Your correspondent suspects it had more to do with the recent European Union (EU’s) financial bailout of the Hellenes.

When Paul Laudree had stopped by Greece’s capital, Athens, two years ago, her current Prime Minister, then out of power, and while Israel then was anathema over the Hellenic landscape and the same George Papandreou of the Panhellenic Socialist Party wished, at that time, to have photo ops with our orator.  The Prime Minister still rules-over a basically anti-Israeli/America populace; thus, your author believes that it may have been more the EU who influenced their domestically unpopular foreign policy behavior.  

(Emeritus) Professor Paul Laudree muses, for the present we have been forced to desist, but we still have plenty of vessels to deploy. 

The planning for the million-person march to Jerusalem has commenced!  He is involved in a global movement of over a thousand souls trek to the Abrahamic Holy City.  There will, also, even be a contingent from the U.S. 

“Look at the bordering republics, yet none will help her.”  Ultimately, from “Where is the defenders of our [their] rights,” coming?

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Lurking Dangers to the Arab Spring

August 25, 2011 by · Leave a Comment 

By Ramzy Baroud, Gulf News

Arab revolutions are currently facing real dangers, which vacillate between lack of prioritisation, stagnation and foreign intervention.

In Egypt, there have been deliberate attempts to divide the objectives of the revolution into blurred ideological classifications. A chasm is already growing between ‘liberal’ and Islamic forces regarding the identity of the state. Endless debates have ensued regarding the best course of action pertaining to elections, the constitution and more.

The trial of former president Hosni Mubarak has been marketed as a major victory for the revolution. Undoubtedly this is a historic event with great psychological impact. Many in Egypt were suspicious that the military was trying to co-opt the revolution, and some believed that Mubarak was continuing to run the country from his Sharm Al Shaikh mansion. With the world having now seen Mubarak in prison garb, some of these rumours are being quelled.

Still, it must not be forgotten that Egypt’s problems are multi-faceted, running deep into the very fabric of its political and social structures. Its already threadbare economy was also further devastated by recent events.

Presenting Mubarak on a stretcher for ‘conspiring to kill protesters’, and then falling into the trap of disputes around political semantics will not resolve the country’s many problems.
The Yemeni people persist between clear objectives and unclear strategy. Yemen was already teetering on the brink of ‘failed state’ status before the February revolt. The opposition is clearly failing to unify the revolutionary efforts of the people. The aim has been to create a meaningful political platform capable of translating the just demands of millions into a clear roadmap.
This has no room for Ali Abdullah Saleh and his discredited government. A delay of nearly six months has allowed regional and international forces to impede the popular process aimed at democratic reforms. Frustrated by the ineptness of the opposition, and worried about the devious role played by outsiders, the ‘youth of the revolution’ moved to establish their own transitional political body.
This move seemed to create more confusion rather than actually address the challenge of political centrality. Saleh and his ruling party are feeling emboldened once again and are bargaining politically with a nearly-starved population. As for Libya, it has turned into a battlefield. Although the people’s original demands for democracy are as genuine as ever, linking the heart of the revolution to Nato’s central command has more than tainted the uprising.

It has also raised the spectre of western intervention in Libya. The billions of dollars spent to ‘liberate’ Libya will be recovered through political and economic leverages later on. This will prove very costly for any new Libyan government.

Three Principles

The Syrian revolution has been most inspiring. Despite the extremely violent behaviour of the army in its attempts to subdue the uprising, the people remain committed to three major principles: the rightful demands of their revolution, the non-violent nature of their efforts, and non-interventionism. That said, foreign intervention does not seek people’s permission; it seeks opportunities.
It is guided by a straightforward cost-benefit analysis. As for violence, even noble revolutions with noble demands have limits. How long will the Syrian people endure before resorting to arms, at least to defend themselves against the government’s thugs?

There are other Arab countries that are also experiencing their own upheavals. These are divided between betrayed revolutions (for example, Bahrain), revolutions in the making, and bashful reform movements (Jordan, Morocco, Algeria, and others).

True, each revolutionary experience remains unique. The socio-economic specificities of a wealthy Gulf country are different from those of a poverty-stricken country like Morocco. Still, Arab countries have much in common. Aside from shared histories, religions, language and a collective sense of belonging, they also share experiences of oppression, alienation, injustice and inequality.
The third UN Arab Development Report, published in 2005, surmised that in a modern Arab state, “the executive apparatus resembles a black hole which converts its surrounding social environment into a setting in which nothing moves and from which nothing escapes.”

Things didn’t fare much better for Arab states in 2009, when the fifth volume in the series claimed: “While the state is expected to guarantee human security, it has been, in several Arab countries, a source of threat undermining both international charters and national constitutional provisions.”

It is this shared fate that makes an Egyptian woman protest the violence carried out by the Syrian regime, and which drives a Tunisian man to celebrate the trial of Mubarak.

Coupled with a joint understanding of their history — which includes the struggle against colonialism and continued oppression in the neo-colonialist era — the Arab sense of solidarity is almost innate.

There is no question that in a post-revolutionary Arab world, a new collective sense of identity will emerge, this time without the manipulation of a single charismatic leader.

Revolution is a process, a progression of realisations borne out of experience. It seeks real and lasting change. It spans in its outreach from the realm of politics into the specificity of identity and self-perception. Because Arab revolutions are real, they also represent a real danger to foreign powers and their local alliances.

The self-seeking concoctions will use all their power to impede the process of change and reforms in the Arab world. This helps to explain the shedding of doubts on the authenticity of the youth movement in Egypt; the collective punishment of Yemenis; the brutalising of revolting masses in Syria.

Arab revolutionaries must be wary of all of these challenges. They must prepare for all grim possibilities. With unity being their greatest weapon, the revolutionaries need to remember that a victory in Egypt or Tunisia is an important step in the quest for freedom in Yemen, Syria — and everywhere else.

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Democracy Within Islam

July 14, 2011 by · Leave a Comment 

By Geoffrey Cook, TMO

Tunis / Tunisia–About one and one half months ago, I was allowed to sit through the comments of a Professor Alfred Stefan here in Tunis via the miracle of cyber transmission.  He has held Professorships in the United States, the United Kingdom and the Continent.  Amongst many other remarkable accomplishments, he was the founder (in 2006) and currently is the Director of the Center for the Study of Democracy, Tolerance and Religion housed at New York City’s Columbia University.  He has authored or co-authored many books.  Of the most interest to our audience is Democracy, Islam and Secularism: Turkey in Comparative Perspective (Columbia University Press, forthcoming in 2012)which he co-edited and his manuscript which he, also, co-edited — that is under consideration at the same academic press — Indonesia, Islam, and Democracy: Comparative Perspectives.

Stefan, was invited to Tunis  by the Washington “think tank” the Center for the Study of Democracy and Islam whose founder / Director, Radwan Masoudi, is a natal son of Tunisia, chaired the event.
Now, the Tunisians were not only the first nation that overthrew their North African ancien regime, but have been the most successful of the emerging democracies within the Arab “Spring.” 
As Egypt, Algeria, Syria, Libya and Iraq went through a period of Arab-palatable socialism during the post-revolutionary period from the (former) Colonial powers which helped these nations lunge developmentally forward from their independence.  These regimes, however, became more autocratic as time progressed with their increased wealth, but to hold on to power the succeeding elites increased repression and corruption against their own citizens.  Yet their populations desired evermore a greater share of the wealth.   

With the overthrow of the (comparatively) liberal monarchy in (non-Arabic but Islamic) Afghanistan during the 1970s, and the invasion subsequent invasion of the Hindu Kush Mountains by Moscow at the end of that decade to bolster the Communist-controlled system there from increasing resistance to the Afghan Communist Party-controlled system by civil society there.  Consequently, a War of resistance ensued in which a large number of Arab “mercenaries” entered the mountainous battle theater – many of those from the very oppressive nations that they were previously battling that fell or may fall to this Arab “Spring.”

As civil society in Islam now believes Socialism to be “godless,” and that and the traditional monarchies to be corrupt, bourgeois democracy (there has always been an Islamic “capitalism”) now has its appeals as offering a better way to achieve the hopes and aspirations of Muslims in the region.  Yet, what truly is the Islamic path to such a future political ascendancy?

Alfred Stefan began his proposals by questioning the acceptance for the democratic within the Arabic-speaking world.  If the Tunisians can become successful, it will make an impression upon the North American peoples of a sea-change over much of the North African / Middle Eastern world.  Further, it would disprove the Israeli propaganda that Arabs are incapable of democratic governance.   
The truth is that 483 million Muslims are under democratic administrations already.

As your author has been heard to say on these pages previously, Stefan, also, whose English-language books have been translated into Arabic, and, whose ideas are known amongst the intelligentsia within the Punic space stated that there cannot be a singularity of democracy or even of modernity itself.  That is, as your reporter and he , further, holds Westminster or Jeffersonian democracy are not the only molds that can enfold equality, but there are other possible forms for the diverse Islamic peoples, too — not limited to the Arabic but to every ethnic sub-grouping within that religious classification.  In fact Stefan and your journalist, also, have determined that this prerequisite for the success of democracy to take root under any particular soil is the opening for such a diversity of possibility.  Democracy is unique to any time or place or the uniqueness of its religious environment.  Although it is not necessary for “Church” and State to be  synonymous, but rather the religious aspirations of the populace are vital to the form of its flowering.    Muslim Indonesia is the largest Islamic country in world, and the most emancipated within ASEAN (the Association of Southeast Asian Nations).  Succinctly, Stefan declares “There is nothing that can keep countries from having a democracy… Militaristic Turkey is the most secular country within Dar al Islam, but the present government’s dominating party is reversing much of Ataturk’s policies.  Under the traditional modern State’s regulation there, a parliamentarian cannot repeat the word ‘hajib’ while in the legislature, yet 50% of Turkish women wear one!  Still, students with religious training’s application to any of Ankara’s universities will be rejected.”  There are many incorrect assumptions about Islam’s relationship with democracy within the Occident.

Most Islamic nations respect other religions.  There are up to 90 paid religious holidays per annum, depending upon the nation-state within Europe, but not one public holidays is for a non-European religious observance while Indonesia has public religious celebrations for its varied belief fabric.  There is a co-celebration between faith communities on the Archipelago, too. 

A 100% of Christian-majority European countries support Christian religious schools. These institutions are at least partially subsidized by the State.

“In your nation [Tunisia], you have a history… of toleration.”  Tunisia’s modern structure has come from France, and speaks in terms of Parisian democratic forms in the same breath with the nation’s similarities with Sub-Saharan Senegal.

“Any country that develops democracy has to develop toleration!..Democracy has to cultivate a high-level mutual toleration…If Tunis develops democracy, she will realize the possible,” and America will learn about the Maghreb (finally).  “Tunisia has the best chance democratizing than anywhere else within the Arab ‘Spring.’”

On the other hand, “Syria is a difficult [case].”  Ethnic rules, and the fears they engender [has generated] slaughter.  Egypt’s success so far was based on their military to fire on their own countrymen;  thus, they should inherit Mubarak’s régime.  Lebanon is so overshadowed by its battle for the Levant with Israel; therefore, fair elections [there] will be complex.

Whether democracy will envelop or not over the expanse, “things will never be the same.”

Authoritarianism has gone and won’t come back.  Hundreds of millions of persons watched the Tunisian and Egyptian “revolutions” while several decades ago we turned our backs on the then Algerian elections wherein the Islamists won leading up to an unbelievably brutal Civil War.  Yet, the recent two civil insurrections over Northern Africa have changed U.S. impressions.

Democracies are created through elections.  “Parties must trust each other.  If not, there is only a minute possibility for democracy…They will find themselves in non-democratic situations.  The democratic means that a party will hold power only temporarily.  After the initial period, voters will re-evaluate, and the power structure may shift.”

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Analysis: Arab Spring Likely to Leave Oil Firms Unscathed

June 23, 2011 by · Leave a Comment 

By Tom Bergin

2011-06-15T172504Z_01_BTRE75E1CDW00_RTROPTP_3_INTERNATIONAL-US-TUNISIA-TOURISM

A Tunisian artisan makes tributes to the “Arab Spring” revolution by etching flags on bronze plates in the medina, the old city of Tunis, June 14, 2011.

REUTERS/Zoubeir Souissi

LONDON (Reuters) – Western oil firms are unlikely to face widespread asset seizures or contract revisions as a result of Arab uprisings, thanks to deft diplomacy, legal protections and efforts to depict themselves as partners of the local citizenry.

In the past, big political shifts in the Middle East have often been followed by the eviction of foreign oil producers — Muammar Gaddafi in Libya, Saddam Hussein in Iraq and Ayatollah Khomeini in Iran to cite a few examples.

This time around, upheaval has hit Libya, Egypt, Yemen, Tunisia and Syria — not the biggest oil producers in the Arab world but among the most open to foreign investment. Companies including BP Plc, Exxon Mobil and Royal Dutch Shell have spent billions there.

“I wouldn’t describe us as worried. We’re being vigilant,” said Bob Dudley, chief executive of BP, echoing comments from other companies.

The new governments that have emerged, or may emerge, are expected by and large to remain supportive of foreign investment, because they will wish to maintain output and government revenues.
“I don’t see there being a large nationalistic wave,” said Richard Quin, Middle East analyst at Wood Mackenzie.

In the past popular anger toward a regime has spilled over to the companies that supported it, but oil companies say that over the past two decades, they have positioned themselves on the side of communities, rather than as agents of government.

“Companies now are not so closely aligned with governments,” said Mahdi Sajjad, president of Syria-focused Gulfsands Petroleum, whose shares have been hit by investor fears about the unrest.
In part this has been achieved by investing in community engagement projects. Oil contracts that are more transparent and more favorable toward host nations also play a big role.

Contract Changes

Up to the 1970s, oil contracts were opaque and seen as beneficial to companies and the region’s frequently corrupt governments — at the expense of citizens. Now contracts usually follow internationally accepted models.

This will help oil executives argue they are giving host nations the best deal that a new leadership could hope to get and, therefore, that existing contracts should be respected.
“We look at it (investment) from a perspective of the fundamental stakeholders, the population of the country .. rather than through the lens of the current incumbent government,” said Frank Chapman, chief executive of British Gas producer BG Group.

“What we are doing in Tunisia and Egypt is sustainable,” he added.

Oil companies have beaten a path to new leaders in Egypt and Tunisia, and, an Italian ministerial source told Reuters last month, even to Libyan rebel leaders. Companies say the signals received so far do not point to widespread asset seizures.

If new governments do seek to expropriate oil fields or to rewrite contracts, companies will find they have greater legal protection than they did when the last wave of nationalization swept through the Arab world in the 1970s.

Modern contracts bar governments from taking unilateral action to seize assets and can limit their ability to hike taxes. And if there is a dispute over whether the government has overstepped its authority, companies don’t have to worry about arguing their cases in front of potentially biased local courts.

“Contracts usually provide for arbitration in a neutral venue,” Anthony Sinclair, a partner with law firm Allen & Overy said.

Potential for Loss Still

In addition, many countries have signed bilateral investment treaties, known as BITs, which commit them to protect foreign investments in their territories.
“There are close to 3,000 of these treaties in existence,” Sinclair said.

These will help deter unilateral moves against companies, but they will not protect companies against all losses. International litigation can drag on for decades, during which opportunities are lost, said Harry Clark, partner at Dewey & LeBoeuf. This suggests companies might agree to unfavorable contract changes that would not be upheld in court.

Also oil companies can face a big financial hit if instability delays production.

“The oil industry values everything in net present value terms … (and) because you are pushing things out, on a discounted cash flow basis, that will erode value,” said Quin.
BP and other companies have suspended operations in Libya, while French oil major Total said it lost production at one field in Yemen due to the conflict there.
Sajjad said Gulfsands’ operations in Syria were unaffected, but the conflict could create difficulties in importing equipment there and in other countries — especially if new sanctions are imposed against governments fighting revolts.

There is little companies can do to limit such losses.

Yet some executives say the problems thrown up by the Arab Spring simply reflect the intrinsic nature of the oil business.

“It is always like that in exploration, you can always face different kinds of issues .. This is part of life for an oil and gas company,” said Total head of strategy Jean-Jacques Mosconi.

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The Quiet Corner of the Mideast (Surprise)

June 16, 2011 by · Leave a Comment 

By Helene Cooper

Washington — In the Arab democracy movement, there is a dog that has not yet barked. And whether or not it does — and how loudly — is causing a lot of heartburn among American policy makers.

Egyptians, Tunisians, Libyans and Syrians gathered in their respective city squares and neighborhood streets to demand democratic rights, and the Western world cheered, if with varying degrees of diplomatic or military support. But by and large, so far, the Palestinians in the West Bank, who see Israel as the source of their grievances, have not.

Yet.

In part, this is because the Palestinians’ own leaders — elected, but weak — have another timetable in place, for a diplomatic campaign against Israel in the fall that turmoil on the ground could complicate. But some other prominent Palestinians are beginning to say that the moment of the Arab Spring offers a more urgent opportunity to join fellow Arabs in the streets. And that worries policy makers and experts here, as well as the political leaders in Hamas and Fatah, whose own authority could be undermined.

“If you’re looking for a game-changer, that would be it,” says Robert Malley, the program director for the Middle East and North Africa at the International Crisis Group. “At a time when the entire world, including President Obama, is applauding nonviolent popular protests from Cairo to Tehran, it would put Israel in an acute dilemma about how to react if tens of thousands of Palestinians started organizing protests in the West Bank, or marching on Israeli settlements or on Jerusalem demanding an end to the Israeli military occupation.”

Even more significantly, Mr. Malley said, “it would put the United States in an equally acute dilemma about how to react to Israel’s reaction.”

And it would box President Obama into a corner, penned in by his own words: on one side, that the democratic aspirations of people in the region must be heeded and that Palestinians deserve their own state, and on the other side, 44 years of American national policy that strongly sides with Israel on issues involving its security.

The biggest worry for Mr. Obama is that Israel would react with violence toward nonviolent Palestinian protesters in the West Bank. Last Sunday, Israeli forces fired at pro-Palestinian protesters on the Syrian frontier as they tried to breach the border for the second time in three weeks. The Syrian news agency SANA reported that 22 protesters were killed and more than 350 wounded; Israeli officials said that they had no information on casualties, but suggested that the Syrian figures were exaggerated.

Israeli and American officials both said those protests were instigated by Syria, in a move to draw attention away from the violent crackdown on its own democracy movement. By and large, there was not a huge outcry over Israel’s decision to fire on the protests, in part because of the role that Syria is believed to have played, and partly because the march on the border was viewed as a hostile and provocative action on a sovereign country with which Syria is still legally at war.But the West Bank is a whole different ballgame. This is the disputed territory captured in 1967, the land occupied by Israel after its three southern and eastern Arab neighbors united to fight it 44 years ago. It is the land that Israeli settlement blocks have since sprouted throughout, in an ever-growing reminder that the longer a peace deal remains elusive, the more the facts change on the ground. And now, Palestinians there have started to draw a direct line between the Arab Spring movement and their own push for an end to the Israeli occupation.

“You will see waves,” Mustafa Barghouti, a former Palestinian Authority presidential candidate and independent member of Parliament who has been critical in the past of the Fatah leadership, said in a telephone interview. “It’s already happening. We, the Palestinians, have inspired Arabs many times in the past, and now we’re getting inspired by them.”

On Sunday, a few hundred Palestinians in the West Bank tried to organize marches around the territory, but were stymied by the forces of both the Palestinian Authority and Hamas, neither of which are eager to see widespread Palestinian democracy protests. That is in part because leaders of both Hamas, the militant Islamist organization that controls Gaza, and Fatah, the party that controls the Palestinian Authority, fear that a popular Palestinian uprising could upend their own authority in the West Bank and Gaza.

“We have been talking to the youth movement in Tunisia,” said a Palestinian activist in Ramallah who asked to be identified only by his initials, F. A., because he said he has been threatened by both the Palestinian Authority and by Israeli officials. “They are telling us how they did it, and when we tell them our situation, they say, ‘Wow, your situation is much more complicated.” ’ He said his house, in Ramallah, had had no running water this month, but he could see Israeli settlers in a nearby settlement enjoying the summer in their swimming pool. Because of such daily indignities, he said: “We will do this. Our time will come.”

In Israel, the political discourse in the past two weeks has centered on the increased fear that the Palestinians in the West Bank will join the Arab Spring movement. On Sunday, Aluf Benn, the influential Israeli editor at large for Haaretz wrote: “The nightmare scenario Israel has feared since its inception became real — that Palestinian refugees would simply start walking from their camps toward the border and would try to exercise their ‘right of return.’ ” Mr. Benn was referring to the Syrian border episodes, but many Middle East experts say that a West Bank uprising would actually be more seismic, for both Israel and the United States.

In Washington, Obama administration officials have been fretting about how the United States would respond. In many ways, Mr. Obama’s decision to come out in favor of Palestinian statehood based on Israel’s pre-1967 lines, with land swaps, stemmed from a desire at the White House to give both Palestinians and the world at large a place to park their grievances. That, they felt, might help forestall both a United Nations resolution in September recognizing a state of Palestine within the 1967 boundaries, and a popular uprising among Palestinians in the West Bank.

That such an uprising hasn’t happened yet, Mr. Barghouti and other Palestinians say, goes beyond the simple Hamas-and-Fatah-won’t-allow-it reasons. Palestinians in different West Bank cities are disconnected from each other, separated by Israeli checkpoints that don’t allow freedom of movement even within the territory. Israel’s security fence also inhibits movement among Palestinians.
Beyond that, Palestinians may be exhausted from the two intifadas — the second one, in the last decade, extremely violent — that ended with the Israeli construction of the security fence and the imposition of increasingly strict restrictions on movement throughout the West Bank.

But exhaustion from the violence may feed more nonviolent uprisings. “There is now a growing belief,” Mr. Barghouti said, “that nonviolence is the only form of struggle we should use. Or, at least, that it is the most effective form of struggle we should use.”

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Peter Bergen on Pakistan and Afghanistan After the Death of Osama bin-Laden

May 26, 2011 by · Leave a Comment 

By Geoffrey Cook, TMO

New York City–May 5th–Although your columnist regards the subject of his article herein to be worn out, (he had contemplated placing it next to his Op-Ed of last week on the death of Osama when the event was au courant,) but instead your essayist has decided to concluded his material on this important incident by this report he has garnered during his recent wanderings.

The Asia Society chapter in (N.Y.C.‘s borough of) Manhattan, the very City of 9-11 presented Peter Bergen, the author of the popular Holy War, Inc. and the equally acclaimed The Osama bin Laden I Know with the authoritative the  Longest War: The Enduring Conflict between America and Al-Qaeda which has only recently been released.  That journalist relayed his subject honestly with great insight that night.

His discourse there concerned itself on how the death of the commander of Al-Qaeda, the infamous Osama bin-Laden, might change the strategy of global terrorism and the counter-insurgency that it generates — especially within Afghanistan and the chief worldwide counterterrorist, the United States’ relationship with its second most dependable ally since the Second World War (after Great Britain, of course), Pakistan. There is a sense here in the West that their Pakistani ally’s bilateral commitment to the United States has become problematic with bin-Laden’s discovery by U.S. intelligence living comfortably and openly within the Islamic Republic.  American commandos (the U.S.’ Navy’s Seals), then, moved in for the “kill.”  (The American public has always shown a prejudice against Islamabad due to Indian propaganda while the regime(s) in Washington has (have) strongly relied upon this Islamic country to defend their mutual interests.  Osama’s domicile in the Punjab Province was due to rogue elements [possibly with connections to that Government whose seat is only down the road from Osama‘s home], but it was not the South Asian nation’s Administration’s policy [or knowledge] to have him there as a “guest!”)

Bergen’s background includes the Directorship of the National Security Studies Program at the New American Foundation.  He is, also, CNN’s (the Cable News Network‘s) national security analyst and a fellow at New York University’s Center on Law & Security, too.

Peter Bergen has reported extensively on al-Qaeda, Afghanistan, Pakistan, and counterterrorism in the past.  In fact, he was of the few news commentators to have actually have interviewed bin-Laden himself.

As your author here has written on these pages in the past, and now Bergen has confirmed to this impressive and imposing assemblage that “Al-Qaeda’s ideology had already [started] to be slashed by the blossoming Arab ‘Spring.”

The Arab “Spring” has become a problem for Al-Qaeda in that it has invalidated their violent techniques to most of their “fellow-travelers,” and their “True Believers” that the “Base’s” methodology is redundant; and, therefore, its support has dwindled as Arab democracy has asserted itself!

Egypt had always been troublesome and hostile to the (violent) Jihads.  Now, with the reforms, hopefully, democratic change, if it is a finely-tuned, will discourage, the necessity for violently overthrowing the State.  So far, the Arab “Spring” — in the areas of its success — has largely chased gratuitous aggression from those  regions of the Middle East.  

Al-Qaeda was formed at a meeting during September of 1988.  A sub-national (not even that, but an organization that advocated bloodshed to those who did not believe as they — in essence, Takfrs.  Their odium  was strongly against the majority of Muslims whom they considered heretics while the majority of Islam considers their movement as heterodox.)  “bin-Laden was the commander of the violent Jihadi cluster”.  Bergen concludes that there is no one to replace him.  Something that your reporter is not so sure, but Peter Bergen, who had conversed with Osama before his death, conjectures that currently “After the commander‘s demise…[Al-Qaeda will] never [be able] to unite as a popular resistance!” 

Further, “bin-Laden orders and strategy [for post-his-extinction] are well-known.”  Al-Qaeda is immigrating towards the African country of Somalia.  Bergen felt, alas, his death would be “…a positive [change in the chance] for Israel’s survival…The longest War just got shorter!”

United States intelligence from Quetta and Karachi expose a robust anti-Americanism a over the expanse of the Pakistani State, but “The Obama Administration has handled the state of affairs well.”  His indictment of the Bush Regime was as an appalling aberration.  “They refused to look at dispute as it actually was.”  W.’s” Bush assertion of WMDs within Iraq was based on his willful imagination.  “The District of Columbia became a self-correction agency [i.e., state]!  Obama, now, is trying to make changes in foreign policy.  Peter Bergen deems that he has Afghanistan and Libya correct since, as he believes that “Khadafy is the worse mass  murderer in the Middle East!”

In the Hindu Kush where the Taliban thinks more in national terms whereas Qaeda looks into an international vista, it is a rural, therefore a more effective, insurgency where the fighting season is demarked between the end of the poppy and the beginning of the marijuana harvest.

The Afghan (National) Army is a reconfiguration of the old Northern Alliance.  Military service has become more economically attractive, and, thus, a more credible fighting service.

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