Issue 1546, 22 February 2010

Rajeev Sibal

A Slippery-Slope

No Quick Fixes

Dr Jon Alterman

Protecting Marianne

Paula Mejia

A tale

Broken Promises&

By Daniel Capparelli

of survival

elcome to The Majalla Digital, this week our issue brings to you an analysis of the economic crisis in Dubai, and

an assessment of the impact, or lack thereof, that this crisis will have on the world economy. In “A Tale of Survival and Broken Promises”, Majalla Economics Editor Daniel Capparelli argues that the crisis will significantly affect the political and economic position of the sheikhdom within the UAE federation. In addition to this feature, Jon Alterman, Director and Senior Fellow of the Middle East Program at the Center for Strategic and International Studies, Washington DC, discusses the importance of a US sought, GCC based solution for the security crisis in Yemen. We invite you to read these articles and much more on our website at Majalla.com/en. As always, we welcome and value our readers’ feedback and we invite you to take the opportunity to leave your comments or contact us if you are interested in writing for our publication.

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Dear Readers,

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Sincerely,

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Editorial

Cover

04

05

Cartoon

Issue 1546

Contents

Ideas30Protecting Marianne

06

Features18A Tale of Survival and Broken Promises

News Analysis27Tension mounts between U.K. and Israel over the killing of Al-Mabhouh

In Brief11Around The World

Letters

Quotes Of The WeekMagazine Round Up

THE MAJALLA EDITORIAL TEAM

London Bureau ChiefManuel Almeida

Cairo Bureau ChiefAhmed Ayoub

EditorsPaula MejiaStephen GlainWessam SherifDaniel Capparelli

Editorial SecretaryJan Singfield

WebmasterMohamed Saleh

Geopolitics08No Quick Fixes

22 February, 2010

07

People35

InterviewLessons From The Past

ProfileBorn for Kurdistan

The Political Essay56Getting To Grips With The Quetta Shura

Economics43International InvestorA Slippery-Slope

MarketsMiddle East in the International Economy

Reviews49BooksAn Inside JobReadingsReportsStep Up

Issue 1546, 22 February 2010

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Issue 1546

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There is a tendency in Washington to assume that there is a Washington answer for everything. Americans’

wealth, creativity and accomplishment burnish the idea that every problem has an American solution. The explosion of information in the last two decades has promoted the idea that people in Washington should have a view on all of those solutions. In many ways, the problem starts with Congress. When is the last time someone asked a congressman his or her view on an issue, and the answer was “That isn’t something I care about” or “I have no idea”? The presumption is that everyone in Washington needs to have an idea, and if they can’t come up with one of their own, they should borrow one from someone else. For six weeks, Washington has been abuzz with talk about what the US government should do about Yemen. Should the US give Ye men more military aid? Should it begin a large-scale economic assistance pro gram? Should it help Yemen establish a governmental reform program, help implement a de-radicalization program, or boost special forces training? Yemen is a weak and poor nation, and the US is a strong and wealthy one. With the right package of assistance, most assume, we can work together on shared goals. The reality is that the overlap between US and Yemeni goals is narrower than is often supposed. For Yemen’s long-serving president, Ali Abdullah Saleh, al-Qaeda in the Ara bian Peninsula is less troubling to him than boiling insurgencies in the North and South of the country, swiftly dwindling oil rev enues, a plummeting water table, and massive unemployment. In fact, to some in the leadership, al-Qaeda’s 200-300 followers in the country must seem far less a threat than an opportunity. An increased US military commitment to Ye men pumps weapons and training into the country that can be employed against a wide range of threats that have nothing to do with al-Qaeda. Yemen has a whole host of problems, and while none of them are insoluble, virtually all of them are insoluble in the short term. US allies—and especially Arab allies from the Gulf Cooperation Council—will have to do much of the lifting here, because the US instinct in this and other conflicts is to make a difference quickly and move on. There are

too many troubled nations, and too many emerging challenges, for the US single-mindedly to devote decades to development in any country in the post-Cold War world. The US’s GCC allies are far better positioned to work Yemeni politics skillfully than the US. These countries understand tribal politics rather than recoil from them, and they are equally comfortable coercing and co-opting recalcitrant participants. The GCC countries also have deep pockets. In December 2009 the United Arab Emirates announced a $650 million aid package to Yemen, and Saudi Arabia has poured untold millions into the country. Neither country’s ex penditures thus far begins to approach their limits, and it may prove far easier to pry money from their coffers than from a US Congress facing annual deficits in excess of $1 trillion. Also, the GCC states have legitimacy that the US lacks. Few in Ye men will accuse them of being Western interlopers or infidels; they are regional actors. Even more, several ruling families in the Emirates trace their tribal ori gins to Yemen, creating an intimacy that goes back centuries. Finally, and most importantly, the GCC states have a truly enduring shared interest in Yemen, and Yemen has a shared interest in them. In the 1980s, more than a million Yemenis worked in Saudi Arabia, doing grueling work in the oil fields and operating small groceries. Saudi Arabia expelled them when the Ye meni government took a benign view of Saddam Hussein’s invasion of Kuwait, and the Yemeni economy has never recovered from the influx of unemployed workers and the massive loss of wages. For years, the GCC states have toyed with the idea of either admitting Yemen to the GCC or giving preference to Ye meni migrant laborers, and this represents

a tremendous and enduring incentive for Yemeni action. Should Yemen implode, the GCC states will bear the brunt of the impact. The US is pouring resources into Yemeni special forces, the coast guard and the border police. In Washington, money is a sign of attention, and after the failed Christmas Day attack, no one in Washington can give the impression they are not paying attention to Yemen. But Washington’s most important task is a relatively cheap one: to help shape and coordinate the actions of the GCC. There is no single GCC state that can lead this charge successfully. Saudi Arabia, which has massive wealth and shares an extensive border with Yemen, is a necessary partner but a troublesome one from a Yemeni perspective. The Saudi government has a long history of intervention in Yemen, from supporting armed anti-government insurgents in the 1960s and 1990s to paying a steady stream of subsidies to allies on the Yemeni side. Suspicions run deep on both sides. The UAE has neither the expertise nor the manpower to sustain operations in a country with more than twenty-five times its native population. Qatar has demonstrated a persistent interest in negotiating truces in Yemen and elsewhere, but the small country does not have the wherewithal to make those agreements stick. Oman is the poorest of the GCC states, but it shares a border with Yemen and worries openly about Yemen’s problems spilling over. An effective US role would be a quiet one that helps stoke Arab leadership on this issue, frames problems and responses, facilitates coordination and monitors compliance. Agendas will need to be negotiated and de-conflicted, and the US can play a useful role here too. Quiet US meetings with GCC leaders, all of whom have close relationships with the US, can do a world of good. The GCC-sponsored meeting in Riyadh later this month is a tremendous opportunity to continue to move along the right path. The US needs to apply its muscles, not leave its fingerprints on the efforts.

Director and Senior Fellow of the Middle East Program at the Center for Strategic and International Studies, Washington DC

Geopolitics

No Quick Fixes

08

T

In the face of a deteriorating situation in Yemen, Washington has been abuzz with talk about what should be done by the US government. A traditional package of assistance from the US, whether it is training Yemeni special forces or large-scale economic assistance will achieve nothing in the short-term. Washington’s investment should be in shaping and coordinating the actions of the GCC to assist Yemen.

Dr Jon Alterman

Why the US should seek a regional solution for Yemen

22 February, 2010

09Issue 1546

The US has nominated Robert Ford, Deputy Chief of Mission in Baghdad, as ambassador to Syria. This is said to be within a US drive to restore bilateral warm relations. Though such nomination is yet to be endorsed by US Congress, it is regarded as a start of US-Syrian rapprochement. The US nomination of an ambassador—after five years of not having one in Damascus—has coincided with improvement in relations. It had been preceded with visits by senior US officials to Damascus, the last of which was by Assistant Secretary of State,

William Burns, who met with Syrian President Bashar Al-Assad. Assad-Burns talks have showed a "forthcoming warming" in relations. This was clear in Burns saying: "My meeting with President Assad leaves me hopeful that we can make progress together in the interest of both our countries". Although the Syrian-American relations have improved since Barack Obama assumed power, he extended sanctions against the country last May, accusing Syria of supporting terrorism, seeking to acquire

weapons of mass destruction, and of destabilizing Iraq. Washington currently hopes to pull Syria away from Iran and seeks the former's assistance in stabilizing Iraq. Washington also wants a vital Syrian role in efforts to push the Israeli-Palestinian peace forward. The nomination, which was not rejected by Damascus, puts an end to a period of isolation of Syria. Such a period witnessed tensions in relations between the two countries. However, visits of US officials to Syria have increased over the past year.

In BriefAround The World LettersQuotes Of The Week Magazine Round Up

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Warmer US-Syrian relations expected

Issue 1546

Around The World

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5 YemenThe Defense Ministry has declared that Yemeni arms dealers are continuing to illegally sell a range of automatic and other weapons to private clients. Officials have said that Yemeni authorities have been unable to stop the illegal arms trade. They added that more than 300 arms dealers were operating in Yemen. The arms trade leads to the killing of some 1,200 Yemenis a year.

Pakistani military have announced victory in South Waziristan and said that the militants had been “wiped out". Pakistan began the attack in October 2009. Taliban leadership disappeared shortly after the offensive began, moving into nearby areas.

1 Pakistan

4 ChinaChina plans to invest billions of dollars in North Korea in an apparent effort to prod the impoverished country into rejoining international nuclear disarmament talks. Sources familiar with North Korean issues have said that: "A couple of Chinese banks and several international companies have practically clinched investment deals with Daepung International Investment Group," a company that seeks to attract foreign investors to North Korea.

Rep. Brian Baird, a Democrat from Washington State, has urged President Barack Obama's Mideast envoy to visit Gaza to get a firsthand look at the destruction caused by Israeli's military offensive last year. During the visit, Baird told Gaza students that "The United States should break Israel's blockade of Gaza and deliver badly needed supplies by sea".

3 Palestine

2 IsraelSources have revealed that two Israeli missile ships have passed recently through the Suez Canal en route to the Red Sea. The ships were on their way to the Persian Gulf. According to the sources, Cairo enforced tight security measures to ensure the safe passage of the Israeli ships through the canal. The waterway, which had not previously been used by Israeli vessels for intelligence reasons, was traversed for the first time in June 2009 when a Dolphin-class submarine reportedly sailed from the Mediterranean to take part in military exercises in the Red Sea.

In Brief - Around The World

22 February, 2010

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Ukraine's parliament has slated February 25 for the inauguration of Viktor Yanukovich as president, even as rival Yulia Tymoshenko prepared to challenge his election in court. Supporters of Tymoshenko, who lost the vote by a narrow margin of 3.5 percent, according to official results, began their appeal in a Kiev high court.

9 Ukraine

A transport sector development agreement between Uganda and the World Bank will see the country becoming a significant player in the Southern Sudan market. Part of the $189 million will be used to build major roads such as the northeastern corridor, which links Southern Sudan and northeastern Congo, World Bank country manager Kundhavi Kadiresan has said, emphasizing that quality is key to the project.

8 Uganda

A Haitian judge has said he would deepen his inquiry into 10 American missionaries accused of kidnapping children, following media reports that a legal adviser working with them was under investigation in El Salvador for suspected human trafficking. The questions surrounding Jorge Puello, a Dominican Republic national who was acting as adviser to the missionaries after their arrest last month following Haiti's January 12 earthquake, appeared to be complicating the case against the Americans, despite initial indications they would be freed.

6 Haiti

Saudi Foreign Minister Prince Saud al-Faisal has said that imposing more sanctions on Iran over its nuclear program is unlikely to yield quick results. "Sanctions are a long-term solution. They may work, we can't judge," Prince Faisal said.

10 Saudi Arabia

7 LibyaThe European Commission has condemned Libya's decision to stop issuing visas to many Europeans whose countries are in the Schengen border-free zone. The commission says it "deplores the unilateral and disproportionate" Libyan decision and the nations affected will consider an "appropriate reaction". Libya's move came after Switzerland allegedly blacklisted 188 high-ranking Libyans, denying them entry permits

In Brief - Around The World

Issue 1546

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In Brief - Quotes Of The Week

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Magazine Round Up

QuotesOf The Week

US Secretary of State Hillary Clinton

"The United States believes Iran's Revolutionary Guards are driving the country toward military dictatorship and should be targeted in any new

UN sanctions"

"We are sorry for Mrs. Clinton...for trying to divert public opinion in the region toward unreal and untruthful

matters, for they themselves are involved in a sort of military

dictatorship"Iran Foreign Minister Manouchehr Mottaki

Prince Saud al-Faisal, Saudi Arabia's Foreign Minister, expressing doubt about the

usefulness of more sanctions on Iran

"Sanctions are a long-term solution; we need an immediate resolution rather than a gradual

one"

Israeli Prime Minister Benyamin Netanyahu

"Israel believes that strong pressure must be imposed on Tehran"

1

Magazine Round Up

The Islamic Republic system could collapse

1 Mukhtarat Iraniya

This issue of Mukhtarat Iraniya magazine, published by Al Ahram Press Foundation in Egypt, focuses on the fate of initiatives to solve Iran's crisis, which has turned from a crisis of governance to a crisis of the system of the Islamic Republic, given the escalation in the political confrontations between the reformist opposition and authorities backed by conservative hard-liners. The increase in such initiatives and attempts to resolve the crisis has proved necessary after the murder of professor of nuclear physics at the University of Tehran, Massoud Ali Mohammadi, in a crime said by the Iranian regime to be fomented by the US. According to Mukhtarat Iraniya, the escalations in Iran reveals a more violent confrontation that could lead to the possible fall of the system of Islamic Republic, given the recent celebrations marking the anniversary of the Islamic Revolution have failed to restore national unity.

22 February, 2010

15

Arab Week magazine addresses the Lebanese "March 14 Movement" discussing the possibility of its return to the political scene. The movement has succeeded in reasserting its presence on February 14 when it commemorated the fifth anniversary of the assassination of former Prime Minister Rafik al-Hariri in a festival in Beirut that exceeded all expectations and strengthened the image of the Cedar Revolution. The event challenged those who have claimed that the movement has been politically dismantled. The magazine also pointed out the importance of the diversified but united Lebanese political discourse, involving all parties and communities, which is due to bring about a new phase in Lebanon's history—a phase involving putting an end to crises.

February 14 marks the reassertion of "March 14 Movement"Arab WeekCover of the Week

3

3 Arab Journal of Political SciencePriorities of Political IslamThe latest issue of the Arab Journal of Political Science focuses on the need to introduce new Islamic concepts in terms of modernity, economic production, urbanization, development, social services, and politics. The article explains that state building in the Arab world depends majorly on the Sharia (Islamic law). In response, the article argues that the theological form of state, however, has nothing to do with reality since no state is sacred and the idea of a holy ruler is not plausible. In addition, opposition to rulers' policies has always been people's right since the time of Islamic caliphs. Accordingly this issue calls upon political movements to abandon their radical isolation and embrace the humanity of Islam and the religion's universal values.

Cover Of The Week

2 Al-Watan Al-ArabiAl-Watan Al-ArabiIn the latest issue of Al-Watan Al-Arabi, Khaled Abu-Dhar explains that Israeli-Palestinian negotiations have been suspended due to Israel's refusal to stop building settlements. Abu-Dhar ruled out that Israel would, at any point in time, halt the building process, hence prolonging negotiations. He also referred to the Iranian nuclear programme and Tehran's opposition to suspending uranium enrichment, explaining that Arab countries have remained motionless while Israelis and Iranians proceed with their expansionist polices. He underlined the importance of breaking this passive approach and introducing an effective strategy, using Egypt's success in retrieving Sinai through waging war on Israel as example.

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Issue 1546

In Brief - Letters

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I completely agree with the author of the article and see that despite the fact that China has emerged from the economic crisis, but that does not provide guarantees against economic setbacks that might occur in the future. Over-optimism is often misleading.

Bubble Troubles?

Suhail Barrada

Tawfiq Al-Mashad

If officials in Lebanon do not move quickly to reunite its ranks, the country will return to a cycle of internal unrest, which would make it an easy prey for opposing forces in the region.

Next to Normal

LAST ISSUELetters

22 February, 2010

In Brief - Magazine Round Up

15Issue 1546

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Features

© GETTY IMAGES

22 February, 2010

1919

A tale

Broken Promises&

By Daniel Capparelli

of survival

Issue 1546

t was the best of times, it was the worst of times, it was the

age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of disbelief, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair (…).’ Much like Dickens’ description of late 18th century Europe, 2010 can be regarded as the stage for the contrasting opportunities and destinies of two frenemies: Dubai and Abu Dhabi. Reminiscent of 18th century United Kingdom

and France, today these emirates represent two distinct ways of thinking, two views of the world that are, in more ways than one, pitted against each other.

The events surrounding Dubai World’s (DW) financial troubles are bound to be costly for Dubai. Economically, its position as the economic and political centre of the UAE has been severely undermined. Politically, Dubai has much to loose both domestically and internationally, as Abu Dhabi’s financial support will

not be free of charge. Contrary to the message conveyed by many Western media outlets, the bursting of the Dubai real estate bubble is a crisis for Dubai; for the world, it barely constitutes a hiccup. This contained episode will only affect the regional and international economic systems indirectly, if at all. Ultimately, this is a tale of crisis and broken promises, but one that could end well nonetheless. The Rise of the Phoenix

Dubai has come a long way since

Features

A Tale of Survival and Broken PromisesDubai’s economic and political predicament

20

The Dubai crisis is not a world crisis but a crisis for the UAE federation. The crisis will considerably affect the economic and political position of the sheikhdom within the federation by unsettling the balance of power between Dubai and Abu Dhabi. The crisis is also a blow to those devising post-oil developmental strategies for Middle Eastern countries.

I

Daniel Capparelli

© GETTY IMAGES

22 February, 2010

its years as the hub of the “Indian gold smuggling trade”. Wittily described by the International Herald Tribune as a “centrally planned free market economy”, the sheikhdom abandoned its oil-backed economic plan in the 1990s in favour of a services-driven economy. Shrewdly foreseeing the inviability of an oil-financed development path—notably in the context of rapidly dwindling reserves—then Sheikh Maktoum bin Rasheed Al Maktoum decided to invest Dubai’s oil revenue in the development of “first world” economic infrastructure. This strategy proved fundamental in enabling Dubai’s transition into a knowledge-based economy.

Amidst the market euphoria of the 2000s, its galloping economy and prosperous services sector, Dubai rose as a phoenix. Skyscrapers sprouted in the desert as if they were mushrooms in a forest. Any conversation with investment bankers and brokers would invariably bring up Dubai as the place to be. The Sheikh’s strategy seemed to have paid off—at least at first glance. Truth be told, as a result of Sheikh Maktoum, and later on, of Sheikh Mohamed bin Rasheed’s policies Dubai has turned into an important tourist destination, one of the most important ports for western manufacture—it has the largest man-made port in the world—and until the outset of the crisis, a vivacious and promising global financial, IT, and media centre. All this came to an abrupt halt on 25 November 2009. The Genesis of an Arabian Rhapsody

Like Franz Liszt’s Hungarian Rhapsodies, the Dubai crisis is a

one-movement incorporation of many local and foreign themes which, although integrated, flow more or less freely within a flexible overarching structure. In this Arabian rhapsody, three main themes feed on one another: the global financial crisis, the geopolitics of oil, and the UAE’s internal balance of power. These themes in turn intermingle rather flexibly within a dazed and traumatized international economic system.

The movement opens in 2007 with the American subprime mortgages crisis. The ensuing credit crunch affects the whole world, Dubai first and foremost. In February 2009 the crisis spread to the real economy eventually forces Dubai to sell US$10 billion worth of bonds to the UAE federal government in order to ease its liquidity needs. Given its dwindling oil reserves, the government had come to rely heavily on the services sector and, in particular, the financial services sector to replenish its coffers.

As the year advanced, financial activities continued to decline,

bringing with them Dubai’s fiscal revenue. This dynamic obliged Dubai to resort to another bond issuance, this time targeting international debt markets. In order to render its US$2 billion worth of sukuks more palatable to increasingly suspicious international investors, in October 2009 the government signalled that it was distancing itself from the liabilities acquired by state-owned corporations. International markets interpreted this as a de facto end to the government’s implicit guarantee of these companies’ debts. Although this solved the government’s immediate cash problem, it also left state-owned companies vulnerable. As a consequence, credit rating agencies, such as Moody’s, downgraded most of the six Dubai government-linked corporations.

State-owned companies had been amassing debt since the late 1990s when oil revenues shrunk. As a result, the government and its enterprises had to resort to credit markets to finance their infrastructure projects. At the time, national and international investors were only too happy to indulge these companies’ credit needs under the assumption that the Dubai government stood by as a guarantor. As the credit crunch crunched forward, however, it hit Dubai’s booming real estate sector head-on. This put real estate developers, such as DW’s subsidiary Nakheel, in a very difficult position; Nakheel’s financial situation had already been delicate for over a year when the Government decided to withdraw its implicit backing. On 25 November 2009, the situation became untenable.

Features

21

Given its dwindling oil reserves, the government had

come to rely heavily on the services sector and, in particular, the

financial services sector to replenish

its coffers

Issue 1546

- The Performance Day On the eve of Eid al-Adha, which in 2009 coincided with the eve of American Thanksgiving, the Dubai government announced that DW and Nakheel would demand that their creditors grant a six-month deferral on US$26 billion of its debt. Even though the government received US$5 billion that day from a bond program put in place by the federal government, not only was this sum far short of the US$10 billion expected but the money was also required for other pressing government liquidity needs.

Following the announcement, the Dow Jones lost 1.5% (155 points) in a shortened day of trading. Oil prices plunged by as much as 7%, even if they partially recuperated later in the day. European markets took a hit on 26 November—falling over 3%—and Asian Markets followed on 27 November.

On 30 November in a public statement on Al-Jazeera television, Dubai’s Finance Department Director-General Abdul Rahman al Saleh further distanced the government from DW by reiterating that its debts were “not guaranteed by the government”. He explained that this position reflected the legal statute of DW, since there were no contractual obligations between lenders and the government regarding the conglomerate’s debts. This rattled markets even more. On the same day, shares dropped by a further 7.3% in Dubai and 8.3% in Abu Dhabi.

On 1 December, with the intention of calming investors, DW issued

a statement saying that it had hired Moelis & Company (led by a former UBS banker and trusted figure of the finance world) and the powerful Rothschild House to oversee restructuring and renegotiation of US$26 billion worth of obligations held by Nakheel.

On 14 December, the maturity day of US$4.1 billion worth of Nakheel’s Islamic Bonds, the Government announced a US$10 billion aid from Abu Dhabi to help ease the pressure on DW. The Dubai Government further highlighted that the remaining US$5.9 billion could support DW until April 2010. Fitch Ratings affirmed that Abu Dhabi’s support was most likely “a tactical step to permit an orderly restructuring of obligations within Dubai …”. According to John Sfakianakis of Banque Saudi Fransi-Credit Agricole, Abu Dhabi’s gesture was key in calming markets since until then the neighbouring sheikhdom had distanced itself from the events in Dubai.

That same day, Sheikh Ahmed bin Saeed al-Maktoum,

chairman of Dubai’s Supreme Fiscal Committee, declared that the government was committed to “act[ing] at all times in accordance with market principles and internationally accepted business practices”. Sheikh Ahmed also announced the implementation of new bankruptcy laws which, according to him, would “be available should DW and its subsidiaries be unable to achieve acceptable restructuring of its obligations”.

At the time of writing, DW has yet to formally request a debt standstill. This month the conglomerate is expected to ask more than 90 creditors to delay bond repayments while it puts together a debt-restructuring plan which, according to Reuters News Agency, should be done by the end of April.

Crime and Punishment

Although the Dubai crisis remains a limited episode for the world economy, it could prove path-breaking in the realm of ideas. As a paragon for post-oil developmental strategies, many specialists saw Dubai as the state embodiment of the one-eyed king in the land of the blind. Until the outbreak of the credit-crunch, it had seemingly succeeded in transitioning from an oil-based economy into a vibrant services and knowledge-based economy. Politically, Dubai also represented one of the last defenders of local government in an increasingly centralized United Arab Emirates. Much of this will now change, however, and Dubai has only its policies to blame.

22

Features

Although the Dubai crisis

remains a limited episode for the

world economy, it could prove path-

breaking in the realm of ideas

22 February, 2010

- Crime

Dubai is doubly responsible for its troubles: it faulted in both substance and process. First, although Dubai succeeded in creating a relatively sound post-oil development strategy, the government based it on unreliable economic institutions. Second, although no direct responsibility for the crisis can be ascribed to any specific member government—or Sheikh Mohamed for that matter some officials showed little professionalism in dealing with the crisis. These failures undermined whatever confidence was left in the market.

Notwithstanding its strong capitalist credentials, the relation between the government and the economy can best be described as cronyism. Indeed, some analysts go as far as likening the government to a hub for a network of corporations linked by varying degrees of friendship and family ties. Contrary to the view held by what David Henderson calls “new-millennium collectivists”, more often than not close involvement between the government and the private sector breeds opaqueness and populism, not transparency and accountability.

As a case in point, even today not much is known about the government and state-owned corporations’ consolidated debt. According to Eckart Woertz from the Gulf Research Centre, private estimates put consolidated debt at between US$80-100 billion. If one adds to this bilateral bank loans, estimates climb as high as US$120-150 billion. Debt, therefore, could represent between 100 and 200% of GDP. The lower

end of these estimates corresponds to nine times Dubai’s 2008 fiscal revenues.

According to Woertz, there are two worrisome factors regarding Dubai’s debt load. First, US$50 billion is due over the next three years. Despite Abu Dhabi’s help, in the best case scenario Dubai will face much higher refinancing costs in light of recent events; in the worse case, Dubai might find it impossible to secure any refinancing at all. Second, according to Moody’s, there is a non-negligible amount of debt (around US$25 billion) that is no longer backed by viable assets or a sound business model. This raises questions of who will foot the bill.

The magnitude of these figures is a good illustration of the calamitous results that poor corporate governance standards nurture. Cronyism and a lack of data availability forced credit rating agencies to treat state-owned corporations (such as DW) or other privately owned (Dubai Holding) as quasi-sovereign entities. Given the low levels of government debt, these ratings

were steadily favourable and thus badly misleading for investors. When the implicit government backing disappeared, investors were left holding the bag.

The behaviour the government exhibited during the crisis also stands at odds with the behaviour one would expect from a city aspiring to become an international financial centre. Two faux pas readily illustrate this amateurism.

First, although the choice of announcing DW’s debt standstill demands before a major holiday may not be uncommon—since it gives market players time to absorb the information before reacting—the timing of this announcement was misleading at best. It was made only two hours after two Abu Dhabi banks with strong government ties announced the release of US$5 billion for the Dubai Economic Support Fund. Investors were shocked to see their subsequent vote of confidence in Nakheel bonds translated into a 30% loss in only two hours by the standstill announced by the Government.

Moreover, the announcement of the 14 December Abu Dhabi bail out turned out to be disingenuous. Later that month the government corrected itself, highlighting that half of the US$10 billion referred to an older debt deal. Analysts interpreted these events in two ways: first, that this was symptomatic of the Emirate’s poor market communication skills and lack of transparency; second, that it indicated that Abu Dhabi demanded more evidence of Dubai’s fiscal health. Whatever market trust there was left in the Dubai government was gone

23

Features

Notwithstanding its strong capitalist

credentials, the relation between the government

and the economy can best be

described as cronyism

Issue 1546

within barely three weeks of the crisis.

This type of recurrent mixed signalling from the Dubai government, according to the head of Middle East government ratings at Standard and Poor, Farouk Soussa, only heightens uncertainties surrounding the coherence of the sheikhdom’s policymaking process.

- Punishment

One of the differences between concertos and rhapsodies is that rhapsodies are one-movement pieces while concertos are composed of several movements. Unlike the media, markets soon realized that these events were the making of a one-movement piece; they were not part of a world bang but rather part of a world whimper. As Woertz points out, contrary to Lehman Brothers or AIG, “Dubai

World was not a counter party for deals in trillions of dollars of OTC derivatives”. As such, markets soon confined their reactions to the events in Dubai and the UAE.

The fear of contagion following the November and December events had more to do with the delicate conditions of world financial markets than the potential for contagion. The global financial crisis was partly born out of derivatives trading, a tool devised to minimize risks. This turned out to be a colossal failure. As such, markets became exceedingly jumpy at any sign of unanticipated risk. Given the lack of corporate transparency in Dubai, this is just what the end of the government backing of DW debts meant.

Foreign investors still have significant stakes in Dubai, however. According to a

November 2009 equity research study by JP Morgan, HSBC (US$17 billion), Standard Chartered (US$7.8 billion), Barclays (US$3.6 billion), RBS/ABN Amro (US$2.24 billion) and BNP Paribas (US$1.7 billion) are the most exposed foreign investors. Their large stakes in Abu Dhabi, however, may have restrained their willingness to press Dubai for quick reimbursements—given that such actions could undermine the economy of the whole UAE. Investors from the Middle East also face significant exposure, but the fiscal health and low debt of these Middle Eastern countries put them in a much better position to absorb the shock.

Nevertheless some good news has surfaced since December.

According to Reuters, as of 24 January estimates put DW’s property assets—which include the Queen Many II and a significant share of the Cirque du Soleil—at around US$120 billion. Given that the company’s obligations (which include not only consolidated debt, but also payment to contractors) are around US$59 billion, the risk of insolvency is reduced. This considerably diminishes the risk of contagion.

- He Who Pays the Piper Calls the Tune

Dubai will soon realize that if one pays peanuts, one gets monkeys. Indeed, by failing to pay the internal political costs of building efficient economic institutions, it not only created a perverse corporate and economic system but also jeopardized its stakes in

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22 February, 2010

the broader context of the UAE internal balance of power.

Since the end of the British Protectorate of the Trucial States in 1968, Dubai and Abu Dhabi have been at odds as to the direction and shape a future United Arab Emirates should take. These brotherly spats have gone so far as taking the two sheikhdoms to war in 1947 with the resulting border disputes only solved in 1979—eight years after the creation of the UAE—with the help of the UK.

In the compromise, Dubai also decided to enter into federal politics: its ruler would be the UAE prime minister and preside over the council of ministers. Under this system, oil-rich Abu Dhabi’s preference for a more centralized federal government clashed with the more confederate tastes of Dubai. Dubai’s independence in the federation was so solid that it was able to maintain an independent military force until 1996.

The Dubai crisis’ result of limited access to international capital markets is bound to make Dubai increasingly dependent on its oil-rich neighbour. Aware of the change in the UAE’s internal balance of power, Abu Dhabi has made sure to convey the message that its support of Dubai will be limited and conditional. Indeed there are widespread rumours about the existence of a secret buy-out agreement in which the Dubai government agreed to a greater degree of centralization in federal politics. Rumours also include the federalization of Dubai’s customs. This would prove a substantial gain for Abu Dhabi as it would

help it to enforce trade sanctions against Iran—an issue toward which Dubai has been ambivalent at best.

Ahead Lies the Unknown

In Charles Dicken’s Tale of Two Cities, the reader is left in the dark as to what future lies ahead for Great Britain and France. The same is true in this tale about Dubai’s predicaments and broken promises. What is certain is that much will change for the UAE’s economy and politics.

The Sheikhdom of Dubai is not likely to become irrelevant, however. Unlike the idea conveyed by the first Western media reports, expatriates have not fled en masse and the city has not become a ghost town. But much remains to be done to address the sheikhdom’s battered real estate market before it can

be viewed as safely out of the woods. What is clear, however, is that the UAE needs to improve its corporate governance and transparency policies. Notably, as stressed by James Hammond III, Executive Vice-President of Marketing and Product Development at ISI Emerging Markets, it needs to make economic statistics more readily available in order to foster a dynamic and accountable economic environment. More unified and centralized control of the judicial system could contribute to the improvement of such economic legislation. Yet too much centralization and interventionism could end up backfiring. As the newly reinforced political centre of the Federation, Abu Dhabi must fight against its tendency toward government dirigisme of the economy.

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Issue 1546

22 February, 2010

News Analysis

Tension mounts between U.K. and Israel over the killing of Al-Mabhouh

27Issue 1546

The murder case of Hamas' pillar, Mahmoud Al Mabhouh, apparently still carries a number of twists and turns amidst its folds. The death of Al Mabhouh has left a trail of speculation behind, as to whether Israeli intelligence was involved. The statements of Dubai’s Police Chief Dahi Khalfan Tamim have come to enforce speculation. Khalfan declared that he was 99% sure that the Israeli Mossad has had a role in the planning of Al Mabhouh's murder. Dubai police had previously released images of eleven suspects, nine of which carried British passports. Consequently, the UK foreign office has contacted the British suspects to follow up on the incident and ensure the welfare of its nationals. In addition, an investigation was initiated by Britain's Serious Organized Crime Agency. The agency announced that the photographs and signatures on the passports used in Dubai do not match those on passports issued by the UK. As a result, U.K's foreign secretary David Milliband called the Israeli ambassador to discuss the usage of British passports in the murder case.

“Any interference with British passports is an outrage", confirmed Milliband before announcing that he is due to hold talks with Israeli Foreign Minister Avigdor Lieberman in Brussels on February 22nd. Nonetheless, Milliband refused to comment on whether or not his country believes that Israeli Mossad was involved. Milliband has however criticized the policy of "targeted assassinations" in spite of his belief that Israel has the right to defend itself. Following the meeting, both Milliband and the Israeli ambassador refused to elaborate on what was discussed, but Milliband confirmed that his government is still

pursuing concrete evidence of Israeli involvement. On the other hand, Israeli Foreign Minister Avigdor Lieberman said in an interview to Israeli Radio that "there is no reason to think that it was the Israeli Mossad and not a different security organization or security service from a different country that was involved". Lieberman said that it was best to wait and see what the evidence will reveal, adding that countries have always had an interest in letting things blow over. According to David Jeremy Bowen, BBC's Middle East correspondent, if any evidence that Israel has used British passports "for some nefarious uses of its Mossad service" was found, the relations between the U.K. and Israel would sour direly. Bowen took previous incidents where Mossad misused Canadian and New Zealander passports as example. Mahmoud Al Mabhouh arrived in Dubai on January 19th and was found dead on the next day, triggering a heated exchange of accusations between Israel and Hamas, and drawing international parties into the process.

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Tension mounts between U.K. and Israel over the killing of Al-Mabhouh

News Analysis

AWessam Sherif

If any evidence that Israel has used

British passports "for some nefarious uses of its Mossad

service" was found, the relations between the U.K. and Israel would

sour direly

22 February, 2010

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Ideas

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31Issue 1546

MarianneBy

Paula Mejia

Protecting

arly in February, French Prime Minister Francois Fillion announced

that he was denying a Morroccan man citizenship because he forced his French wife to wear a burqa. Coinciding with a renewed debate over the place of the burqa and the niqab in France, Fillion’s decision to deny the man citizenship highlights an underlying issue in the country’s new initiative against face coverings.

Although the government has argued that face coverings have no place in France because they contest the fundamental values

of the French state (liberty, equality and most of all secularism), there is a degree of contradiction in the argument they present. True, gender equity is inextricable from equality and according to western standards the anonymity of a woman wearing a veil would be an affront to that equality. Yet should not people be at liberty to dress as they like? Is not respecting the social mores of other religions also a fundamental aspect of equality? In other words, by aiming to protect the secular nature of the French state, could the government not, in the end, subjugate the religious rights of women?

Such questions have not been lost on the French public, with both sides arguing eloquently that they are defending what is most fair, and what is most French.

However, the debate over the public banning of the burqa is more than a philosophical catch-22. There is more here than conflicting definitions between the value of equality and the value of liberty. This debate is instead representative of the real or perceived threat that French identity faces. A crisis which manifests itself in a debate over whose—the French or the

Paula Mejia

Protecting MarianneOr why the ban is about French identity and not the rights of Women

The ban on the full veil in France has been defended as a means to protect the rights of women, but foremost to protect the definition of what is French. However, if the government intends to defend the quintessential values of the French state—liberty, equality and fraternity—they should take a second look at the partiality behind their definitions of what constitutes liberty and what constitutes equality. Rather than focusing on the ban, the government would benefit from revaluating the way it aims to integrate immigrants into French society.

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Muslim Immigrants’—definition of liberty and equality should be the norm.

This is not the first time that a law over the wearing of veils takes over French public thought. In the early 2000s France saw a rise in the number of Muslim students wearing veils in state schools. The refusal of some of these students to remove their veils at their teachers’ behest led the French authorities to introduce legislation prohibiting the display of any symbols denoting religious or political affiliation, including but not limited to the veil. The law was passed in March 2004 by a significant majority of the French National Assembly.

The ban being proposed today would build upon that law, prohibiting burqas in hospitals, schools, government offices and public transport. Women who continue to wear the full veil would be denied public services in these locations. If this law were passed, the government would be sending out the message that those whose religious practices fall outside a designated parameter of what is French, cannot benefit from French institutions. This would constitute a rather unwelcoming message, and one that could lead to a backlash from the Muslim community.

France has an estimated 5 million Muslims, the largest Muslim population in Western Europe. Despite leading in this figure, the French Interior Ministry notes that approximately 1,900 women in France wear the full veil—that is less than 0.1% of France’s Muslim population. So why is the government igniting a divisive debate, when the number of people affected by the ban is negligible considering over 65 million people live in the French Republic?

Again the figures support the notion that behind this law is not the rights of women, but rather the urgency with which the state would like to define what constitutes being French. This becomes especially clear in the government’s blindness to the similarities between forcing women to wear a veil and forcing them not to wear a veil. In other words, rather then liberating women, the government is appropriating their rights to create a more limited definition of what is French.

The argument has been made that a ban on the full veil, would liberate women from oppressive families who force them into anonymity. While there are cases of husbands that force women to wear the veil, as Prime Minister Fillion indicated,

the government is presumptuous in its characterization of the veil as categorically involuntary behaviour. However, as New York Times contributor Sandeep Gopalan pointed out, if these families are forcing women to wear the full veil, what is to stop them from keeping them indoors full stop if the full veil is not an option—surely denying them access to public services is not going to promote their empowerment.

Why, some might ask, would the French state choose to define what is French by limiting what women can or cannot wear? Women have historically played, and continue to play an important role in the construction of French identity and perhaps no figure better than Marianne explains why the French are fixated on how the values of liberty and equality are represented by women’s behaviour.

Marianne, famously depicted by Eugene Delacroix’s work Liberty Guiding the People, can provide us in this case with great insight on the quintessential image of the French citizen. She is portrayed wearing a Phrygian cap, to symbolize liberty, with a musket in one hand and the French flag on the other. She is bare breasted, and falling in line with the anti-catholic establishment that defined much of the French Revolution, nothing about her can be associated to religion. Marianne, the consummate French citizen, is a militarized female defender of French secularism. However, the value of Marianne in this discussion is not limited to her role as the symbol of French secularism, or laicité. She also ubiquitously represents the French state; embodied in statues, on stamps, and on government letterhead (to the point that Marianne is not only synonymous of French values but also of French taxes). Marianne is thus at the same time the French state, and the definition of the citizen, and she appears to have nothing left in common with the 1,900 women left in France who willingly wear a burqa.

The ban on the full veil, is the French government’s reactionary response to protecting Marianne. The French government has interpreted the rise of its Muslim immigrant population, and perhaps more significantly the second generation’s affinity for overtly conservative religious practices, as a threat to the ideal-type citizen; a symbol of the failure of the integration model expected by the French state of its immigrants.

However, France is not alone in the

challenges it faces to integrate its Muslim population. The Danish cartoon incident is one example among many of a prevalent intercultural-miscommunication between Westerners and Muslims. Beyond miscommunication, however, the Council of Foreign Relations, a Washington based think tank, points out that there is a far graver problem when it comes to integrating Muslim immigrants in Europe. Muslims in Europe are more likely than the general population to be poor and live in segregated, crime prone neighborhoods, and France is no exception. As a result of this segregation, they note, “Muslims that are not especially religious have been drawn to projecting strong Islamic identity.”

In other words, initiatives like the ban of the burqa could do more harm to the government’s intentions of integrating Muslim immigrants. They do not address the causes behind the crisis of French citizenship. Rather, they completely ignore the failure of the integration model in place. Adding insult to injury, the ban of the burqa would, because of the number of people affected, barely constitute a response to the symptoms behind the failure of the French model of integration.

The difficulty of the question is of course that the government cannot know for certain how many women wear the veil because they want to, how many do because they are made to, and how many wear the veil because its tradition. As the Council on Foreign Relation indicated, it is not unheard of that immigrant communities cling to conservative Muslim practices as a means of identifying themselves in contrast to the French ideal. The use of the veil could very well become a means of Muslim female empowerment. While this might not sit as easily with the French government, prohibiting the ban has the potential of inciting more, not less, conservative behaviour amongst the Muslim population.

Instead of defining French identity with fashion—the irony of which has not been missed—and appropriating the rights of women in order to do so, the French government would do better by focusing on why integration has proved so difficult. It should take serious measures to reduce the conditions that lead to structural inequality of which Muslim immigrants are especially susceptible, and avoid the slippery slope against the liberties that a ban on the full veil might lead to.

Issue 1546

22 February, 2010 36

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For KurdistanBorn

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Masoud Barzani, President of Iraqi Kurdistan and Leader of the Kurdistan Democratic Party

s coincidental as it may seem, Masoud Barzani the

President of Iraqi Kurdistan, was born on 16 August 1946, the day the Kurdistan Democratic Party was founded. He is often quoted as saying: “I was born in the shadow of the Kurdistan flag in Mahabad (Iran) and I am ready to serve and die for that same flag.” In 1979, he succeeded his father, Mustafa Barzani as the leader of the KDP and was instrumental in spearheading the Kurdish struggle during the Iran-Iraq War.

The late Mustafa Barzani, Masoud’s father, was head of the military of the former Kurdish Republic of Mahabad, and led

several armed struggles in the name of his people. At an early age, Masoud was motivated by his father’s courage and determination, aspiring to follow in his footsteps. When he was 16, he decided to sacrifice his education to join the Peshmerga forces.

In 1970, Masoud became a member of the Kurdish delegation that held talks with the Baath government in Baghdad. On 11 March that year, an agreement was signed in which the federal government promised to grant autonomy to parts of the Iraqi region of Kurdistan. When it quickly became evident, however,

that the Iraqi government would not fulfill this promise, the region’s armed struggle resumed. Again, Masoud and Mustafa Barzani fought side-by-side. Sadaam Hussein’s defeat in the first Gulf War permitted the Kurds to regain much of the territory they had previously lost. The US government established the area as a safe, no-fly zone within Iraq. Shortly thereafter, the Kurdistan region of Iraq was granted the status of an autonomous safe haven and the central Iraqi government withdrew its administration from the region. It was placed under the jurisdiction of two political parties the KDP, led by Barzani, and the PUK, led by Jalal Talabani. The

Masoud Barzani’s life has been marked by the political struggles of Iraqi Kurdistan. Having grown up in a family that was active in the struggle, Barzani’s life reads as if he was destined to lead the KDP. Despite his involvement in the military conflicts that have taken place in the country, Barzani is more than a fighter, he is a diplomat.

Born for Kurdistan

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region was divided into two the KDP occupied the Northwest and the PUK controlled the Southeast.

In the ensuing years, constant feuds took place between the two factions. In August 1998, the United States, led by Madeleine Albright, sponsored bi-party negotiations. At the talks, both leaders agreed to sign a peace accord. The agreement was reinforced on 4 October 2002, when both Barzani and Talabani made a public apology to the families of the victims who had suffered the effects of their internal conflict.

After the 2003 invasion of Iraq, Barzani became a member of the Iraqi Governing Council. He was later elected President of the Council in April 2004. In June 2005, Barzani was elected President of the Iraqi region of Kurdistan. In July 2009, Barzani was re-elected in the first direct regional presidential election receiving more than 68% of the votes. He has also been very active in international diplomacy. Over the past five years, he has visited several important figures including former US President George Bush, former British Prime Minister Tony Blair, and King Abdullah of Saudi Arabia. Most recently, on January 25, 2010, Barzani met with US President Barack Obama in the White House.

In a 27 January 2010 interview at the Brookings Institute Saban Center for Middle Eastern Policy Barzani discussed in detail what he foresaw as the most important issues facing both the region and the Iraqi nation. Barzani highlighted the importance of fair, free, and transparent March elections marked by high voter turnout and the absence

of violence (i.e., terrorism and mingling from Iraq’s neighbours). Furthermore, he fully supported the participation in the elections of former Baath party members with a clean record. Barzani also expressed his support for the possibility of forming power-sharing agreements to govern the country following the election.

At a national level, Barzani believes that, within a Federal Democratic Iraq, the Kurdish region can act as a “bridge from Iraq to Europe”, a gateway for stable foreign investment. In order to improve existing relations with the central Iraqi government, he expressed his desire to resolve several key outstanding issues, most notably Kirkuk. Although the UN has proposed several plans to attempt to resolve this issue, Barzani believes that the true solution lies in Article 140 of the Iraqi constitution.

He also expressed as a priority revenue sharing of the hydrocarbon law. Although the Kurdish government of Iraq agreed to a 17% share, he believes that those revenues should be

distributed, under a supervised system, directly to his region. Otherwise, according to Barzani, the central government can use this as a political card to make unfair demands on the people of Kurdistan.

He also emphasized an important military issue. Under the Iraqi constitution, the Peshmerga forces are considered regional guards and are part of the national defense system, therefore he believes that they should be funded at a federal level. Even more significantly, only 8% of the Iraqi army is made up of Kurds compared to 48% Shiites and 44% Sunnis. According to Barzani, “we do not see any justice in that. It needs to be adjusted” so that we are “a true representation of the Iraqi society.”

In his 30 plus years of service to the people of Kurdistan in Iraq, Barzani has seen genocide, chemical warfare, and even the destruction of 90% of the region’s villages. The former Baath regime killed three of his brothers and 32 members of his family. His ancestral village of Barzan was destroyed 16 times by Iraqi regimes. Barzani, has shown tremendous resilience, determination, and perseverance. Despite all of the challenges facing the region, he represents the hope of what Iraq could eventually become: a symbol of success and stability. Furthermore, his knowledge of Kurdish, Arabic, Persian and English makes him an important diplomat in helping Iraq forge better ties both at a national level and with the rest of the Middle East region. This will play a key role in preventing Iraq from falling back into ethno-sectarian violence as American troops withdraw from the country.

People - Profile

In his 30 plus years of service to the people of

Kurdistan in Iraq, Barzani has seen

genocide, chemical warfare, and even

the destruction of 90% of the

region’s villages

Issue 1546

Professor Eugene Rogan is a University Lecturer in the modern history of the Middle

East and a fellow at St. Antony’s College at Oxford, where he is the director of the Middle East Centre. He recently published a critically acclaimed book on the modern history of the Arab world entitled The Arabs. His previous book, Frontiers of the State in the Late Ottoman Empire, was judged by the Middle East Studies Association to be the best work on the Middle East in 2000 and awarded the Albert Hourani Prize. With the insight only a historian can bring to the table, Professor Rogan discusses in an interview with The Majalla some of the pressing issues the Arab world faces today.

The Majalla: In your most recent book you claim that in ‘any free and fair election in the Arab world today, [the] Islamist elements would win hands down.’ Could you expand on that?

I think that for a lot of Western advocates of democracy they see Islam and democracy as being two ends of the political spectrum. They hope to promote democracy in the region thinking it is going to bring liberal secular people into power. I think the experience of recent history has shown that where there have been free elections in the region, the parties that get the strongest response from voters are those that speak an Islamic rhetoric.

It’s funny that you ask that question, a lot of people have. To me it seems absolutely obvious and it’s not a question of what the future holds, its looking at the recent past. In 1989 when the Jordanians had their freest and fairest elections, the Islamic Action Front swept. The Egyptian authorities have done everything they can to contain the electoral appeal of the Muslim Brotherhood. They force them to run as independents and when they do the win practically every seat they contest. More recently, there are the examples of Hamas’ victory in the Palestinian elections, and the success that Hezbollah has drawn in the polls in Lebanon.

There are many examples to reinforce

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Lessons From The PastProfessor Eugene Rogan, Head of the Middle East Centre, Oxford UniversityHow can we learn from the history of the Arab world? In his interview with The Majalla, Professor Rogan, of the Middle East Centre at Oxford University, assesses the current political trends of the region within their historical context. From colonialism to Arab nationalism, Rogan discusses a variety of topics that help us to better understand the current state of Arab politics as a result of past events.

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the idea that the parties that have the strongest appeal to voters are the Islamist parties both because of the religious values they uphold, but also because without exception, they condemn outside domination. That message resonates very well with Arab voters.

Q: How do you believe this will play a role in the upcoming Iraqi elections?

Iraq is already a case of outwardly Islamic parties winning key posts through elections. The real issue in Iraq today is the exclusion of those with association to the Baath party, and how this is alienating a certain segment of Sunni voters. What that really is about is secular nationalist versus Islamist parties, as much as it is about cleansing Iraq of its Baathist past. My own sense is that the secular strand is still strong in Iraq, but I think it will be provoked into a violent response if it is excluded by Islamist forces.

Q: How do you see Arab nationalism today in the Middle East?

I think Arab nationalism has been beat down for so long now, that it is really finally beginning to lose its appeal. Sometimes its trivial things that reveal the death of a great idea, I was really shocked by the Algeria-Egypt football match. If you are to look over the history of the 20th century, Egypt and Algeria always stood shoulder to shoulder on so many key political issues: standing up against imperialism and upholding Arab interests and common purposes. They were the first ones to say it: arab nationalism is dead. I take them at their word.

Arab nationalism has been so worked upon, divided, shattered, fragmented that even its most ardent supporters find it difficult to make a real political agenda out of a common Arab purpose. Again in recent history, the Iraqi invasion of Kuwait totally shattered Arab unity. Not just because Iraq had invaded a fellow Arab state

but by the way the different Arab states responded to that event. By the way an American-led coalition really split Arab states into an allied force with the US that included such strange bedfellows as Egypt, Syria, Saudi Arabia and the Kuwaitis. Forcing the Iraqis, the Jordanians, the Yemenis towards an opposition against other Arab states. This was absolutely shattering of Arab nationalism.

Q: Do you see any other cohesive force in the region that encourages Arab unity?

I think Islam will always play on the sympathies of Muslims. I think Muslims will always be concerned for the welfare of Muslims so when you see Muslims suffering in Palestine, then Muslims in Saudi Arabia or in Oman are going to be upset. I think the same still holds for Arabs to be honest. I don’t think that people in one part of the Arab world are comfortable with another people in the Arab world being victimized or colonized. But what’s really happened since the 1940’s—since the independence movements led the Arab world out of imperialism and into their existence as sovereign states—has been to turn the Middle East into a system of independent states, each with their own interest. Increasingly, in the second half of the 20th century, their interests have come to be more important than their common ties. Now, it is probably more honest to look at the Arab world as a community of nation states that

share a language and a certain culture, but not necessarily a larger political agenda. I think that is what the 21st century holds for the Arab world.

Q: What responsibility do former colonizers in the Arab world have to their former colonies?

The European powers show in their policies that they have a historic awareness of responsibility for the Arab states of the Eastern Mediterranean. There remain special ties between France and their former colonies, to a lesser degree between Britain and its former colonies. It would be very easy for Britain and France today to say that the faults of French and British governments of 40-70 years ago are no longer their responsibility. But I don’t see them doing that. Perhaps they would like to play more of a role than their limited geo-strategic importance allows them to do. Perhaps Britain and France would like to counter-balance American policies that don’t agree with European policies, but feel themselves constrained when faced with the last real superpower. They don’t have the influence to try to shape American policies. So in that way, I think that both Britain and France tend to be more deferential to American policies, This immediately puts a barrier between them and effective engagement with Arab states. But I am constantly struck by how often France or Britain will intervene on behalf of their former colonies, so I think it still has some resonance for European powers.

Q: Prime Minister Erdogan’s foreign policy has been looking increasingly towards the Middle East. Is Turkey destined to have an influence in the region?

Turkey is crucial as a crossroads between Europe and Asia. In that sense, it is Turkey that lies between the Arab world and the EU. I think that it plays a very important role in the region, and its policies towards the region are undergoing some very significant changes. Turkey has

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People - Interview

Turkey is crucial as a crossroads between Europe and Asia. In that sense, it is Turkey that lies between

the Arab world and the EU

always enjoyed very cordial relations with Israel, but that’s changing. They aren’t breaking relations but they are redefining relations in ways that suggest that Turkey is trying to put more emphasis on building its ties in the Arab world and with Iran, interestingly enough. It is putting Israel on notice that things that Israel does that threaten the interests of say Syria and or Iran are a cause of tension in Israel’s relations with Turkey.

That said, I think that language, culture, and history put a real barrier between strong ties between Turkey and the Arab world. They are really left to play on the one card of common Islamic interests and that will shape relations with Iran within certain limits, because Turkey represents a Sunni power, and Iran’s Shii culture is quite different. There is a limit to how far Turkey and Iran will make common cause on Islamic matters, and for many of the Arab countries, though Islamist parties hold a lot of appeal to the public, their governments remain very secular. So the Syrians will not want to be too Islamist in their own politics either. They are looking for more geo-strategic reasons to build ties with Turkey. Clearly, there are

important changes in Turkey’s role in the region and it’s certainly a story worth following.

Q: How have President Obama’s overtures towards the Arab world impacted the challenges that the US faces in engaging the region?

Obama made important strides in the beginning of his presidency in changing American policies towards the region away from the War on Terror which so shaped Bush’s engagement towards the region. This was huge, it is very important to say that everything America was doing was heightening tensions in the Arab world. By his pledges to work to close Guantanamo, to engage in a new relationship with the region on the basis of mutual respect, to open dialogue or discussion with countries that America refused to deal with in the past, he was making meaningful steps towards deescalating tensions between the US and the Arab world.

By the time he got to Cairo he had already been making important overtures to the Arab and Muslim public opinion, and I think his Cairo speech raised expectations

to unprecedented heights, that America was returning to an “honest broker role” that many of the Arab world hadn’t heard of since the time of Woodrow Wilson. Since then, Obama has been a great disappointment to the region because his enticing rhetoric has not been matched by actions on the ground, and I fear it won’t be in the foreseeable future.

Obama has lost three elections since winning his own. The first was the Israeli election. There is no doubt that the White House was hoping to have a centre party such as the Kadima party, led by Livni, form the next government in Israel. They had already made progress in engaging with Mahmoud Abass’ administration to try and come up with parameters to restart land for peace negotiations for a final settlement to the peace negotiations.

The Obama administration saw in a Livni government the possibility of real progress between Palestinians and Israelis. Instead they got Netanyahu who had to build a coalition with very conservative Israeli forces, including ardent supporters of the settlement movement, which meant that the one red line Obama put down to establish America’s credibility with the Arab world and to entice the Arabs into positive engagement with Israel he couldn’t deliver on. This has put a road block before his Arab-Israeli policies.

The second election he lost was in Iran. I have no doubt the Obama administration believed that one of the reformist candidates would come to power. We had grown used to seeing Iranians making surprising choices at the polls—electing reformists against the opposition of hardliners. Iranians are very bad at falsifying election results, and they were very clumsy in falsifying this one. What this has meant is that not only has Ahmadinejad returned as president, but he has come in as a discredited president. The only thing he can really do to generate popular support in Iran is to stand up against

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Egyptian opposition party Muslim Brotherhood deputies wearing black sashes reading in Arabic'No to Emergency' voice their objection to the renewal of the country's state of emergency

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22 February, 2010

outside pressure against the nuclear question. Every time he raises the nuclear flag he makes the prospect of bringing Iran into compliance with the non-proliferation treaty more remote which also undermines America’s position with Israel in trying to persuade them to come to the negotiating table. Israel’s top priority continues to be security vis-à-vis Iran.

He also lost a third election, and that one was lost in Massachusetts. When Brown took the Senate seat for the Republicans it meant that Obama would be unable to deliver on health care in the US, the single most important domestic issue he has. This totally changed the plans for the Obama administration’s second year in power. He now has between January and November to persuade the American electorate that democrats, both on the hill and in the White house, can deliver benefits to the American people on the economy. If he can make some gains on health care he might, my sense is he is just going to let it rest and its going to be all jobs and the economy. This means there will be very little time and effort invested in foreign affairs, including the Middle East.

Since raising expectations in the Middle East with the Cairo speech, the architecture in the Middle East he hoped he could work with has not materialized, and now he has suffered a major set back domestically. We’re not going to see him back in the Middle East in any significant way through American initiative. When you raise expectations and then disappoint them you set change in motion, often destructive change. My fear is that this disappointment will in ways heighten tensions between the Arab world and the US when we have the president who is most likely to serve as a bridge between these two estranged parts of the world. That’s the problem, that’s the pity.

The Majalla: How do you assess the Iraq Inquiry?

This inquiry is very different from the ones before it. The power that Chilcot has enjoyed in calling up documents that have not been available to the public is unlike any before it. The scope of people being interviewed is also unprecedented. There is an opportunity here to bring a degree of closure that has bedevilled Britain’s foreign relations, and been a very divisive domestic issue.

It has been criticized for not having been more aggressive in pursuing the decision makers, and forcing concessions of mistakes form them, I will reserve judgement until I see the report. If they decide to use the writing of the report to make critical assessments of the way the decision to go to war was pursued than they can succeed in bringing closure to this.

Q: The Arab world’s history almost reads as a history of conflict. How can the Arab world promote stability when there never seems to be enough time to move beyond the last conflict?

There are a lot of foundations on

which to build a stable Middle East, and I think its really important that we put those forward with as much emphasis as we put forward the sources of instability. The cultural life of the Arab world is a huge foundation for people to address traumas, to discuss taboos, to find closure with their divisions, and it is going on. There are very courageous authors out there, not many of them are known outside the Arab reading world, but I think we can do more there. The same is true if we look at the plastic arts. There is amazing cultural diversity in this context, and not just in the traditional sites of Arab culture. In Iraq, at the height of the sanctions, you could still see samples of Iraqi art in places like Jordan. It was, to me, such a revelation to go to galleries in Amman and see what artists in Iraq were doing that captured that moment in their history. They were painting the anguish of sanctions with an eloquence that you couldn’t find in print anywhere.

People - Interview

Interview conducted by Paula Mejia

41

Islamist women gather to listen to Islamic Action Front Party's candidate Taysir© GETTY IMAGES

Issue 1546

22 February, 2010

43

EconomicsInternational Investor Markets

By Rajeev Sibal

A SlipperySlope

Issue 1546

The Dubai World debt rescheduling certainly provided dramatic effect

for newspapers and media outlets around the world. The economist titled its article about the Abu Dhabi bailout “Dubai’s debt cliffhanger: A Second Life.” More recently, a Guardian article about the opening of the Burj Dubai skyscraper was titled “Bailed out and broke, Dubai opens the world’s tallest building” – not exactly generating the excitement that the developers had hoped for. These headlines can only spell bad news for the regional economy. Such news, despite being limited to Dubai, can scare investors away from the region. It reminds investors of market uncertainties that may be present in other economies. The experience of Argentina leading up to and after sovereign default in 2002 provides interesting parallels to the situation in Dubai. The U.A.E. and the Gulf Cooperation Council, more generally, will face similar challenges in protecting the investment environment in domestic economies.

Argentina had undergone a number of reforms in the 1990s after successive financial crises. Leading into the crisis that preceded the default, the Argentine economy was structured around a currency peg to help control inflation. Fiscal responsibility became centrally important from an economic standpoint. Politically, a lack of monetary policy flexibility proved problematic as high levels of Argentine unemployment catalyzed unrest. These factors fostered an unsustainable investment environment.

After a political and economic roller coaster in 2001, Argentina defaulted in 2002. The ensuing negotiations amongst investors proved to be troublesome and long winded. A settlement was not reached until 2005, during which time Argentina was unable to borrow international capital. One of the major challenges was a lack of legal precedent that could provide

guidance for negotiating a sovereign default.

Another challenge that flowed from the Argentine default was the impact it had on investment in Brazil. In 2002 Brazil had to negotiate a loan from the IMF when the threat of financial crisis became too great. Certainly domestic challenges were at the root of the problem, but the Argentine default brought increased attention to the shortcomings in the Brazilian economy and exacerbated the financial pressure on the domestic economy.

The Dubai World debt rescheduling and Abu Dhabi intervention proved true what many investors had believed anyways: that key investments were state driven and, in effect, ultimately collateralized by state coffers. It was a difficult decision for the Abu Dhabi government to provide financial backing to Dubai World, but it was a decision that had to be made, much like state interventions in Western banking systems. The future of the investment climate and the stability of the domestic economy depended on the rescue.

Stronger ties between the state and the market blur the boundaries and reach of fiscal policies. Investors begin to directly tie state income and policy to the creditworthiness of their investments. This is a slippery slope for economic planners who are hoping to diversify their

economies.

From a legal standpoint, a lack of precedent cases in regional economies provides cause for concern. Just as a sovereign default proved problematic in the Argentine crisis, a corporate default would create a noticeable amount of investor panic in the Gulf region. Investors would closely follow such an event to understand how their assets will be handled. The Dubai World restructuring was the closest thing to a major bankruptcy that foreign investors had witnessed; the event brought new found scrutiny on legal protections in the region.

While other economies in the region may not suffer from the same challenges as those in Dubai, recent events are bringing increased scrutiny to capital market structures and transparency. Just like Brazil saw its problems accelerate in the wake of the Argentine crisis, other regional economies that have internal weaknesses will find themselves more vulnerable because of the increased scrutiny.

So far the events in Dubai have been calmed thanks to the Abu Dhabi intervention and active dialogue between investors and Dubai World. This event, though, is an opportunity for regional economic planners to internalize some of the problems experienced in other emerging market default events. In the wake of recent news, investors will begin to place greater emphasis on transparency and legal protections. Furthermore, the Dubai World intervention sets a precedent that investors are likely to expect in other regional economies. The lack of clear separation between key local firms and the state will impede long term economic development.

The Dubai World debt drama created a short term shock for the Gulf economies but will certainly have lasting effects. Even though the scare emanated from Dubai, the entire region will now see greater scrutiny of transparency and legal protections; this increases the likelihood of contagion. The region has done well in recent years to not repeat the mistakes of other emerging markets, but a reminder of events in Argentina will help economic organizers recognize key concerns for foreign investors.

44

A Slippery-Slope The Consequences of the Dubai Affair

Economics - International Investor

T

Rajeev Sibal

London based economist and a Global Governance 2020 Fellow

22 February, 2010

Issue 1546Now you can follow the majalla anywhere anytime on your

46

The diversity in the Middle East is such that it is sometimes hard to present the region as a single economic block. A case in point, comparing the domestic economic pros-pects of Qatar (GDP per capital $93,204) with Egypt (GDP per capita of $2,162), is not only methodologically dubious, but also intuitively irrelevant. As such, when looking at domestic economic conditions, Standard Chartered Bank, for instance, divide the region into tree blocks: the oil

producer countries of the GCC, the Levant countries (Jordan and Lebanon) and Egypt, and the Maghreb countries (Tunisia, Alge-ria and Morocco).

As explained in a Standard Chartered study, the Global Financial Crisis affected these subgroups of countries in different ways. In the GCC countries, tight liquidity, the burst-ing of the (real estate) speculative bubbles, and declining hydrocarbon markets con-

tributed significantly to the poor economic performance of Kuwait the UAE and Saudi Arabia. With their successful implementa-tion of counter-cyclical policies, Levant countries present in 2009 positive growth rates. Reducing their burgeoning fiscal deficits presents the next challenge for these three countries. Finally, the Maghreb countries, and in particular Algeria and Mo-rocco, were able to sustain positive growth thanks for exception harvests.

Middle East in the International Economy

Export of Merchandise by DestinationContrary to what may be commonly assumed in Western Countries, Asia is the Middle East’s main trade partner. The rise of China as a world economic power has significantly increased the continents need of oil and other hydrocarbon products. Indeed, the region’s hydrocarbon products exports to Asia are more than twice exports to North America and Europe combined. As concerns manufacturing exports, it is clear that they are mainly intraregional exports. One of the main underlying reasons for this is the lack of competitiveness that the region’s manu-factures have in world markets: on the one hand, they are not cheap enough to compete with Chinese of Vietnamese labour intensive goods, and not; on the other hand, Middle East goods are of relatively low quality and therefore not fit to competing in global high-tech markets.

Source: WTO, International Trade Statistics 2009.

Growth of Export in Commercial ServicesOne of the fastest growing sectors in international trade is the services sector. Since the information revolution made possible the transmission of information in real time, trade in commercial services grew exponen-tially. Internet, in particular transformed financial markets into literal glo-bal markets, where information about events in one part is transmitted globally and real time. When one assess growth of commercial services exports, the region fares better than North America and even Europe. One of the reasons is that North America and Europe are also the biggest markets for commercial services. Unlike the Middle East their internal demand for commercial services is such that producers in North America and Europe are less export dependent than in the Middle Eastern. This would partially explain why growth in exports is somewhat dispropor-tionate to production in the Middle East. Source: WTO, International Trade Statistics 2009.

Source: WTO, International Trade Statistics 2009.

Export of Commercial ServicesDespite its good performance and growing exports in commercial services, in absolute terms, the region’s exports are still signifi-cantly lower than other leading economic powers. Indeed, because the Middle East started from almost nothing, one should see much higher growth rates than currently seen (the catching up effect). Since this is not the case, despite the growth of financial and relat-ed professional services in the UAE and Saudi Arabia, the region still performs rather poorly when compared to other trading pow-ers. The financial crisis in Dubai and the bursting of the real estate sector will certainly hinder production of commercial services, and therefore exports.

Economics - Behind the Graph

22 February, 2010

Issue 1546

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Economics - MarketsEconomics - Index Page

Latest 12 months % of GDP 2009 latest Year ago 3 month latest10 years Govt Bonds latest

United States -518.4 Nov -465.3 Q3 -3.0 - - -10.0 0.14 3.66United Kingdom -126.0 Nov -28.2 Q3 -1.9 0.61 0.73 -14.2 0.66 4.10France -56.1 Nov -56.7 Nov -2.0 0.71 0.78 -8.4 0.72 3.47Germany +187.7 Nov +158.0 Nov +4.2 0.71 0.78 -3.2 0.72 6.17Euro Area +25.3 Nov -109.6 Oct -0.7 0.71 0.78 -6.9 0.67 3.23Japan +34.4 Nov +133.4 nov +2.7 91.2 87.6 -7.4 0.32 1.33UAE +63.2 2008 +22.3 Dec +8.5 3.67 3.67 na 2.2 naBarhain +6.3 2008 +70.6 Dec +44.6 0.37 0.37 +3.3 6.82 naOman +14.8 2008 +5.4 Dec +9.1 0.38 0.38 0 7.21 naQatar 37.0 2008 +28.6 Dec +27.9 3.64 3.64 +8.8 7.12 naKuwait +62.5 2008 +70.5 Dec +44.7 0.29 0.29 +7.8 5.66 naSaudi Arabia +212.0 2008 +134.0 2008 +28.5 3.75 3.75 +0.7 0.77 naEgypt -25.4 Q3 -4.9 Q3 -1.7 5.44 5.55 -6.9 9.98 1.76Brazil +24.6 Dec -24.3 Dec -1.0 1.79 2.36 -3.2 8.65 6.16Russia +104.1 Nov +47.5 Q4 +3.8 29.7 32.8 _7.2 8.75 7.40India -74.5 Nov _31.5 Q3 -0.7 45.9 49.1 -8.0 3.80 7.71China +196.1 Dec +364.4 Q2 +6.3 6.83 8.84 -3.8 1.88 3.79Hong Kong -26.1 Nov +26.2 Q3 13.7 7.77 7.76 -2.4 0.13 2.63Singapore +24.1 Dec +20.9 Q3 +12.7 1.40 1.51 -1.1 0.50 2.44

Interest RateTrade

Balance lastest 12

months $bn

Budget Balance as a

% of GDP 2008

Current Account Balance Currency Units, per$

Latest qtr 2009 2010 Latest Year Ago 2009

United States -2.6 Q3 +2.2 -2.5 +2.8 -2.0 Dec +2.7 Dec 0.1 -0.3 10.0 DecUnited Kingdom -5.1 Q3 -1.2 -4.7 +1.5 -6.0 Oct +2.9 Dec +3.1 +2.1 7.8 NovFrance -2.3 Q3 +1.0 -2.2 +1.6 -3.8 Nov +0.9 Dec +1.0 +0.1 10.0 NovGermany -4.8 Q3 +2.9 -4.7 +1.9 -8.0 Nov +0.9 Dec +1.1 +0.3 8.1 DecEuro Area -4.1 Q3 +1.5 -3.9 +1.4 -7.9 Nov +0.9 Dec +1.6 +0.3 10.0 NovJapan -5.1 Q3 +1.3 -5.3 +1.5 -4.2 Nov -1.9 Nov +1.0 -1.3 5.2 NovUAE +7.4 2008 na -0.2 +2.4 na +0.7 Nov +7.2 +2.5 naBarhain +6.1 2008 na +3.0 +3.7 na +1.6 Dec +5.1 +3.0 naOman +7.9 2008 na +4.0 +3.8 na +0.8 Nov +12.7 3.3 naQatar +16.4 2008 na +11.5 +18.5 na -9.9 Dec 13.2 0 0.3 DecKuwait +2.5 2008 na +4.7 +4.4 na na 6.8 +4.7 naSaudi Arabia +4.8 2008 na -1.0 +3.2 na +4.0 Nov +9.5 +4.3 naEgypt +4.3 Q3 na +4.7 +5.4 +6.7 Q3 +13.3 Dec +18.3 +11.8 9.3 Q3Brazil -1.2 Q3 +5.1 -0.3 +4.4 +5.1 Nov +4.3 Dec +5.9 +4.9 7.4 NovRussia -8.9 Q3 na -8.0 +3.0 +1.5 Nov +8.8 Dec +13.3 +11.7 8.1 NovIndia +7.9 Q3 na +6.5 +7.1 +11.7 +13.3 Nov +10.6 +10.5 10.7 2009China +10.7 Q4 na +8.3 +9.3 +18.5 Dec +1.9 Dec +1.2 -0.8 10.2 2009Hong Kong -2.4 Q3 +1.6 -3.2 +4.6 -8.6 Q3 1.3 Dec +2.1 +0.5 4.9 DecSingapore +3.4 Q4 -6.8 -2.1 +4.8 -8.2 Nov -0.2 Nov +5.5 +0.3 3.4 Q3

Output Industrail Production

Latest

Prices Unemployment rate latest

Financial Markets

Index Feb 11 Since feb 3 Since Dec 31New York (Dow) 3493.51 2.2 -2.1New York (Nasdaq) 2241.71 3.0 -1.2London (FTSE 100) 5325.09 3.2 -1.6Paris (CAC40) 3747.83 3.6 -4.8Frankfurt (DAX) 5680.41 3.2 -4.6Singapore (STI) 2769.19 0.6 -4.4Hong Kong (Hang Seng) 20422.15 0.6 -6.6Barhain (BSE) 1506.33 -0.5 3.3Dubai (DFM) 1625.99 -3.0 -9.8Oman (ASE) 6795.17 3.1 6.7Qatar (DSM) 6916.6 -0.2 -0.6Kuwait (KSE) 7396.5 5.2 5.6Riyadh 6411.44 3.0 4.7Cairo (Case 30) 1615.07 1.4 15.3Japan (Nikkei) 1200.32 0.7 2.0Mumbai (BSE) 8714.22 1.1 -5.1

% Change

22 February, 2010

Issue 1546

22 February, 2010

THE MAJALLA 31

Think-Tank

51Issue 1546

ReviewsBooks ReportsReadings

An Inside JobMy Life with the Taliban Abdul Salam ZaeefColumbia University Press 2010

ook into your nearest bookshop window and you will probably see an array of

titles covering “the War on Terror”, soldiers’ memoirs and histories on Afghanistan’s troubled past. There is a myriad of literature written on the subject of the Taliban as Western authors jump onto the bandwagon of terrorism, Islamaphobia and explosions in faraway countries. Not to render these works superfluous, but where is the inside perspective? Where is the evidence of personal experience? Right here in this book.

My Life with the Taliban is the first book if its kind; a book about the Taliban written by one of its former senior members. It is the autobiography of Abdul Salam Zaeef, a member of the Taliban since they first formed in the early eighties. Zaeef is also a native to Kandahar, the province that gave birth to the movement. Born in 1968, his life spans some of the most formative events

in Afghanistan’s history: from the Soviet invasion of 1979 to the exodus of Afghani refugees into Pakistan, as well as the factional fighting that resulted in the Taliban’s control of the government and the US invasion that followed.

Zaeef’s first exploits with the Taliban began at the age of fifteen with guerrilla warfare against the Soviets; he then rose within the organisation and went on to serve as the Afghani ambassador to Pakistan. His memoirs also provide accounts of his suffering of abuse and degradation inside the prison walls of Guantanamo Bay. The book reads not just as a personal memoir but as a historical witness to the events that have ravished Afghanistan up to the present day.

Zaeef’s story spans two continents and three countries: Afghanistan, Pakistan and the United States, the three nations that are perhaps most embroiled in the current conflict. The scene opens in Kandahar, Zaeef’s old stomping ground and the Taliban’s home turf. The book goes a long way in explaining the culture and identity of the Pashtun people, their tribal codes and power structure and in many cases their solidarity with the Taliban cause. Valuable lessons can be

L

My Life with the Taliban is the first book of its kind, a book about the Taliban written by one of its former senior members. It is an autobiography about Abdul Salam Zaeef, a former senior member of the group. It reads not just as a personal memoir but as a historical witness to the events that have ravished Afghanistan up to the present day. As such, My Life with the Taliban presents an alternative narrative to the orthodox viewpoint on who the Taliban really are.

On 11 June 2006 news reached

me about three prisoners in

Guantánamo who were martyred. It

is heartbreaking to hear of events like this. Every day I still pray for my

brothers who I had to leave behind

22 February, 2010 52

Reviews - Books

learned from Zaeef’s retelling of combat during the Soviet invasion and the people’s response to it. Zaeef mentions again and again how the Taliban still uses the same strategies as they did then to fight the coalition forces today. What is most astonishing to the reader is the moral tone in which the book is written. Zaeef is a religious man; educated in the Islamic schools, madrassas, and the son of a religious teacher. He claims that his objectives in writing this book are primarily to make people understand that ‘Life is a gift that nobody can take from another, not at any price’. These words coming from the mouth of Zaeef appear entirely incongruous with the Taliban’s mentality. Zaeef may be religious but he has

also taken many lives in his early years as a Talib fighter. It becomes clear that the meaning of jihad for Zaeef is really a holy war, fought to remove the godless coalition forces that threaten Islamic principles.

The book peeks behind closed doors into the murky world of superpower hypocrisy and Taliban leadership. The most enlightening perspective is revealed from

within Zaeef’s embassy office in Islamabad. The behind-the-scenes diplomatic manoeuvring between Western powers and Afghanistan divulge many of the fatal errors made in the lead up to 9/11.The chapter on ‘The Osama Issue’ shows the failure of the US and Afghanistan to compromise and ultimately ensure the trial and imprisonment of Osama bin Laden before the attack on the twin towers.

Credit must go to the editors, Alex Strick van Linschoten and Felix Kuehn for their selection and compilation of material, in creating an accurate chronology that makes sense to the reader. A character list, regional maps and a chronology of Zaeef’s life running parallel to historical events are provided to untangle a seemingly endless mess of personalities, colloquial terms and geography. The work has been translated into English from Zaeef’s own memoirs in Pashto with fluidity and sensitivity to meaning. To avoid what many will see as a work of Taliban propaganda, the editors spent four years scrutinising Zaeef’s memoirs to ensure it was supported by hard evidence.

However it is disappointing that the book fails to address the cruelty and corruption of the Taliban. Zaeef omits any reference to the horrific human rights abuses carried out by the organisation. Although not personally the perpetrator of these crimes, Zaeef was part of the movement’s machinery. Having read the book, it is important not to be sucked in by its reverence of the Taliban regime and to remember the atrocities committed under their leadership.

My Life with the Taliban presents an alternative narrative to the orthodox viewpoint on who the

Taliban really are. The Taliban are no longer a group of nameless, faceless gun totting men, but people who have been corrupted and disillusioned by their tumultuous history. Zaeef’s experiences are fundamental in understanding the psyche of today’s Taliban and other insurgent fighters. We should not sympathise but at least acknowledge that they come from a generation that has lived in a constant state of conflict, consequently experiencing the humiliation of living as refugees whilst helplessly watching the ruin of their homeland.

Politicians, military commanders and the general public could learn a great deal from Zaeef’s memoirs as a window into the Afghani mind. The book provides a privileged insight into the world of the Taliban both to those who are amateurs in the subject and to those who have been searching for answers for years. As Zaeef says himself ‘As a foreigner, you can never truly understand what it means to be an Afghan’ but this book has gone a long way in closing the gap.

Afghanistan never was and never

will be a captive: it has always been

a free country throughout its history. The

Afghan nation has stood against all invaders in unity

They claim that the prisoners killed themselves. I, for

one, cannot trust a single thing coming

out of the mouth of America. It is a

lesson I learnt while I was in their hands for over four years

Issue 1546

Reviews - Books

53

54

Reviews - Readings

ReadingsBooks

James HiderJanuary 2010

The Spiders of Allah

This authoritative account of the frontlines of conflict in the Middle East is required reading for anyone wishing to understand the machinations of the ‘War on Terror.’ An insight into what the author calls the ‘crack cocaine of fanatical fundamentalism’ is gleamed as Hider travels around the Middle East. The work is rich in the detail that only first hand experience can allow and is often blackly humorous

in its account of meetings with vilified terrorists. He meets the perpetrators and victims of the world’s holy wars, casting an enquiring eye on the most violent crimes committed in the name of religion. This book, written with great authority by the Times’ former Iraq Correspondent James Hider, asks controversial yet necessary questions as to the beliefs behind violence in the Middle East.

January 2010The global economic crisis has greatly weakened the West’s financial supremacy and has accelerated China’s rise. Giles Chance examines the role China is to play in the recovery from this current crisis and discusses how the post crisis landscape may look. This is the first book to discuss in such detail the much more significant role

that China has come to assume. China and the Credit Crisis shows how China is seeking to define itself with respect to other world powers, particularly the United States. The author’s experience and immense knowledge of China means that he is uniquely placed to understand the true impact of China’s rise in the world economy.

China and the Credit Crisis: The Emergence of a New World OrderGiles Chance

Cover Thomas E RicksFebruary 2010 (hardcover)The Washington Post’s senior military correspondent has produced an explosive account of the US military strategy in Iraq under General Petraeus. This is a story of two insurgencies: the first is the story of the Iraqis and Islamists who rose up after the invasion, the other is the dissident US officers led by General Petraeus who launched

a guerrilla campaign to force the Bush administration to adopt an effective counter-insurgency strategy in Iraq. Ricks argues that this strategy, known as ‘The Surge’, rescued the American Coalition from grave defeat. Whilst likely to be highly contentious, this is the definitive account of one of the greatest military gambles in contemporary history.

The Gamble

22 February, 2010

Reviews - Readings

Reports

Human Rights WatchFebruary 2010

The Islamic Republic at 31; Post-election Abuses Show Serious Human Rights Crisis

Human Rights Watch marks the thirty-first anniversary of the revolution in Iran with a report that is highly critical of the incumbent government. The report marries eye witness testimonies and interviews with individuals including protestors and political figures. The findings indicate a widespread campaign of government led repression which has included mass detentions and public trials in

the period following the elections of last year. The government’s continued refusal to acknowledge these human rights violations and HRW calls upon the Iranian government to establish an independent commission to identity responsibility for these violations. This recommendation is perhaps a little over optimistic and unlikelihood of this happening is not acknowledged by the author.

Bruce RiedelBrookings Institution Febuary 2010Bruce Riedel’s report responds to the recently reported death of Hakimullah Mehsud, the leader of the Pakistani Taliban and discusses what effect his demise could have upon the Pakistani Taliban. Apart from brief confusion within the network as to who will assume leadership, Riedel sees Mehsud’s death as no more than a hiccup in the network’s expansion. From its birth just a few years

ago, the Pakistani Taliban’ has matured rapidly into a terror network reaching across the country. The network’s influence is great and their immediate goal is to destabilize the country’s largest port, Karachi, by provoking violence between the city’s sectarian communities. As this report concludes, ‘there are a hundred more Mehsud’s waiting in the shadows’ and the war against terror is far from over.

The Taliban in Pakistan: Down, But Not Out

Anthony H. CordesmanCenter for Strategic Studies & International Studies.January 21st 2010In his latest report Cordesman argues that Iran is a serious and growing threat to regional and international security as it seeks to expand its status through the acquisition of nuclear weapons. The recommendations of this report calls for ‘graduated military action’ to contain and de-escalate this evolving threat, as it is

unlikely that the behavior of Iran’s current regime will change as a result of diplomacy. Instead, Iran will continue to seek to establish itself as the dominant power in the region. Cordesman argues that this ambition is counter productive to regional security and thus should be contained through a prolonged strategic competition.

Iran’s evolving Threat

Bruce Riedel

Issue 1546 55

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Reviews - Reports

Step UpIn Pursuit of Democracy and Security in the Greater Middle EastDaniel BrumbergUnited States Institute of Peace 2010

The USIP report argues that in order to promote the US’s security interests, the US must commit more than just aid to the region. The nature of the semi-autocratic regimes that dominate the region—where political reform is controlled by the state to avoid true democracy—requires that the US provide rhetorical support in favour of democratic transformation, not just development aid. Otherwise, these clientelist regimes might survive, but the types of conflicts that a patronage system encourages, which threaten American security, are more likely to thrive.

f the various ways that Obama has managed to break from his

predecessor’s policies, his approach to the Middle East has stood out significantly. The speech that Obama gave in Cairo earlier in his term was welcomed by Arab leaders as the type of engagement they had been hoping to build with the United States for quite some time. Since then, however, Obama’s goals in the Middle East have faced a growing number of obstacles. His promises, once welcomed, are

now increasingly being thought of as the beginning of yet another disappointing effort of American engagement with the Middle East.

Whilst the glass-half-empty-camp of critics, both in the US and abroad, has legitimate arguments for criticizing the administration’s efforts in the region thus far, it is not too late for the US to deliver on its promises. In this light, the United States Institute of Peace (USIP) has released a report aiming

to address the areas where American foreign policy needs to “step-up.”

The principle author of the report, Daniel Brumberg, makes it clear from the beginning that American interests will not be sufficiently protected if the US limits its policy to focusing on aid alone. The report thus offers both general and country specific recommendations that would allow the Obama administration to tackle security challenges while ‘sustaining

O

22 February, 2010

57

diplomatic, institutional and economic support for democracy and human rights in the Greater Middle East.’

The success of the report lies mainly in its ability to both define American interests, and highlight how the foreign policy of the country has been coming short in promoting these interests. Most importantly perhaps, is the ability of the report to demonstrate how some efforts the United States has pursued could do more harm than good if they are not complemented by more comprehensive and consistent policies to the region. As such, the report’s foremost recommendation is the continued and enhanced commitment of the US in both “words and deeds” to strengthening democratic transformation.

Political liberalization is presented as a crucial means of protecting America’s security interest in the region as well as a necessary condition for advancing Obama’s relationship between the US and Muslim majority states. The cases of Yemen, Egypt, Jordan and Lebanon are used to demonstrate convincingly that long term political stability in the region requires American commitment to democracy. How you define democracy, or rather, how much liberalization is necessary, is another important point highlighted by the USIP.

Beyond explaining the costs of limited American support for democracy, In Pursuit of Democracy and Security in the Greater Middle East also provides great insight into the current dynamics of political regimes in the Arab world. The report explains that the current status of political liberalization in the region is state managed. That is, liberalization is strictly in the hands of those in power. The regime liberalizes at moments when it is politically convenient, but they always keep liberalization under government control so that complete democratization is avoided. Should this continue, liberalization will remain limited in scope—far more limited than America’s security interests require.

As the USIP report explains, while this liberalization may appear as though ‘semi-autocracy provides for internal stability, in the long term it fosters a debilitating cycle of political liberalization and de-liberalization. These bouts of political opening and closing rob regimes of what little legitimacy they once had.’ The effect of this limited liberalization is that it renders semi-autocratic regimes resilient, yet it makes the incredibly vulnerable to the types of conflicts that foster insecurity in the region.

For the United States this valuable finding implies that the government should be weary of counting its “politically liberalized” chickens before they’ve hatched. In other words, more efforts on promoting democracy are required, not less. As a result, the report recommends a two-fold process of political liberalization and democratic transformation, which depend on American assistance. This assistance should include both private and high-level public diplomacy to encourage ruling elites to replace the short term liberalization trends with a serious commitment to democratization. At the same time, efforts on the part of the US should be careful not to push too hard too fast, giving regimes the excuse to block the reform process entirely.

Perhaps the recommendation that

stands out the most from the report is the importance of rhetorical support for democratic reform on the part of the US. This is a particularly uncommon recommendation for a politician as the world of politics is known for being a place where the weight of words is limited. In fact, Obama’s greatest critics have scrutinized his words as being empty promises.

Yet, according to the USIP, increased aid is unlikely to provide sufficient incentives for encouraging liberalization. However, by consistently and openly supporting a transition to democracy, the US may be able to provide the necessary pressure needed to secure a commitment for liberalization from these semi-autocratic regimes. This approach would also demonstrate to the region that the US’s commitment’s there are sincere and consistent. The risks of failing to meet the rhetorical needs of advocating for liberalization, argues Brumberg, is ‘that the already wide political, social and ideological gap between states and societies will further expand, thus making regimes, and even entire states vulnerable to internal and external shocks.’

In American baseball, the phrase step up to the plate is used to refer to the player that is up to bat. So popular is this sport that the expression has filtered into colloquial speech to mean taking responsibility for one’s actions. It is also a call to face the challenges that lie ahead. In more ways then one, the recent report by the USIP is a call for the US government to “step up to the plate,” to build on the opportunity that Obama’s engagement with the Middle East created, despite the challenges that the administration will face. Although Obama’s sport of preference has reportedly been basketball, the USIP report’s ability to highlight the issues at stake in the region, leads one to hope that the US’s Point Guard in Chief will not fail to step up to the plate in the Middle East.

Beyond explaining the costs of limited American support for democracy, In

Pursuit of Democracy and Security in the

Greater Middle East also provides great

insight into the current dynamics of political regimes in the Arab

world

www.usip.orgFor the full report please refer to:

Issue 1546

Reviews - Reports

aking a quick look at a map of Pakistan one can easily grasp that the Balochistan province, one of

the four that constitute Pakistan, is almost half of the country’s territory. In spite of its size, this scarcely populated province doesn’t usually make headlines in the West. This is somewhat intriguing given that its capital Quetta is well-known in the West for being the home of the Afghan Taliban leadership, the Quetta Shura, for almost 9 years now. This fact was never a big secret in the region and beyond, which raises the question of why the fight against the Taliban insurgency was not extended to Balochistan. The region of Balochistan is comprised by parts of territory of Iran, Afghanistan, and Pakistan. Sentiments of separatism have long been present, both in the Iranian and Pakistani parts of Balochistan. Indeed, revolt against the central authority of Islamabad has been in place since Pakistan’s independence in 1947. Today, there are several separatist/nationalist groups that fight against the Pakistani government. The Balochs’ sources of resentment towards the successive governments in Islamabad are complex. On the one hand, some tribal leaders do not want any government interference, even if this interference comes in the form of development projects. On the other hand, many Baloch nationalists criticize the neglect—political and financial—of Islamabad. One of the most sensitive issues is the distribution of wealth from Balochistan’s gas fields that hardly reaches the local population. During the military government of President Musharraf, the repression over Baloch nationalists was severe. There was some promise of a breakthrough under the current civilian government of Zardari, which was able to reach an agreement for a cease-fire. This cease-fire didn’t last long enough to make room for constructive talks. Ahmed Rashid, famous author and former guerrilla member in Balochistan wrote in The New York Review of Books that “Much has been made of Pakistan as a potential failed state on the verge of breakup, yet if there is even a remote chance of that happening

it will not be because of the Taliban, but because of an underlying crisis that has been largely ignored by the West—the separatist movement in Balochistan.” Together with his warnings regarding the neglect of the situation in Balochistan, Rashid has traditionally been a strong voice in criticizing the Pakistani government for not tackling the militant Taliban threat also in Balochistan. Several non-mutually exclusive explanations can be advanced for the passivity of Pakistan’s authorities regarding the presence of Afghan Taliban in Balochistan. First, there is the old but still present idea among Pakistan military leadership that the Taliban can be used as an asset against India, and to exert some influence in the future of Afghanistan. Another possibility is the fear that, by tackling the Taliban in Quetta, an unlikely explosive alliance between nationalist Baloch groups and the Pashtun militants could form. The Afghan Taliban leadership does not take actions within Pakistan’s territory or against the Pakistani government, and thus the government in Islamabad does not see them as a threat. For Islamabad, the threat lies with the aggressive Taliban groups in FATA, which also have the company of al-Qaeda. The Pakistani government only acknowledged officially the existence of the Quetta Shura in 2009. Defense Minister Ahmad Mukhtar said in December last year to Dawn News that Pakistan’s security forces have engaged the Quetta Shura “and damaged it to such an extent that it no longer poses any threat.” The real effects of this supposed intervention are still to be seen.

The US leadership has long recognized that Quetta is the base from where Mullah Omar and his commanders plan and make most of the decisions regarding the Taliban’s strategy in Afghanistan. This was well evident in General McChrystal’s report last year. However, and until this moment, the US involvement in Balochistan has been limited to using bases in the region for logistical purposes regarding its operations in Afghanistan. After 9 years of war in Afghanistan during which Quetta was the Taliban leadership’s safe haven, the US seems to be shifting its attention to Balochistan’s capital. As The Washington Post recently reported, in the words of US Ambassador to Pakistan Anne W. Patterson, “In the past, we focused on al-Qaeda because they were a threat to us. The Quetta Shura mattered less to us because we had no troops in the region. Now our troops are there on the other side of the border, and the Quetta Shura is high on Washington’s list.” Another evidence of this new focus on Quetta is the debate among US officials about whether or not to extend the drone attacks from the FATA to Balochistan. It is obviously in the interest of the US to address the presence of the Taliban leadership in Quetta, and this goal appears only too late. Yet, Balochistan is Pakistan’s sovereign territory—although Pakistan has some problems in exerting its sovereignty there. A direct US intervention would only do more harm than good, be it either with troops or with drone attacks. This is true regarding the potentially damaging effects for the already weakened US image in Pakistan, as it is true for the Pakistani government itself, which could face a deeper revolt in Balochistan as a reaction to an American intervention. The US should let Pakistan deal with this issue, while exerting some pressure through the right diplomatic channels so as to ensure that Pakistan actually chases Mullah Omar and his peers. Finally, and in case Pakistan does that, the US should make a clear promise to Pakistan that, although it will one day depart from Afghanistan, it will not abandon the region as it did in the past.

The Political Essay

Getting To Grips With The Quetta Shura

T

Manuel Almeida

And why it should be a mission for PakistanThough it was never a secret that the Afghan Taliban leadership uses Quetta as its base, from where it makes its strategic planning, only recently has the US placed it on the top of its agenda. Yet, an American intervention in Quetta can become costly, for both the US and Pakistan. The US should let Pakistan deal with Mullah Omar and his peers.

5822 February, 2010

53Issue 1546

22 February, 2010 THE MAJALLA 13