trends | june 2009 | trouble in tourism
DESCRIPTION
TRENDS takes an in-depth look at the challenges facing the hospitality and travel sector, and presents an exclusive interview with the CEO of Rotana hotels.TRANSCRIPT
C l a s s i q u e C o l l e c t i o n - D a t e , P h a s e s o f t h e M o o n a n d P o w e r R e s e r v e - 7 1 3 7 B A
Napoleon Bonaparte, from 1798, a client of Breguet.
M o n t r e s B r e g u e t S A , Va l l é e d e J o u x , S w i t z e r l a n d , + 4 1 2 1 8 4 1 9 0 9 0
M o r e i n f o r m a t i o n a v a i l a b l e a t B r e g u e t M i d d l e - E a s t , E m i r a t e s To w e r s , D u b a i , U A E , + 9 7 1 ( 4 ) 3 3 0 0 4 5 5
w w w. b r e g u e t .c o m
IT’S TIME TO SHAPE THE FUTURE. WELCOME TO FORWARD LIVING.
• 3.5 liter, 275 HP V6 engine & 6-speed auto transmission • Remote touch system • 10 Airbags • Pre-crash safety system • Head-up display • Active cruise control• Navigation system • Rear entertainment system • Panoramic roof
There will always be leaders. People who embrace the future. And as you sit in the luxurious New Lexus RX350 you’ll be surrounded by ground-breaking technology. From the head-up display, to the remote touch central controller, for simple and intuitive control of the car’s features. Naturally it is all as beautifulin design as it is futuristic. Only when you embrace the future, can you shape it.
www.lexusuae.com
Al-Futtaim Motors is the exclusive distributor for Lexus in the UAE.Dubai: Dubai Festival City (04) 206 6600 Sheikh Zayed Road (04) 310 6666 Abu Dhabi (02) 419 9888 Al Ain (03) 721 0888 Sharjah (06) 503 0555 Fujairah (09) 222 4157RAK (07) 235 1542 Ajman (06) 711 3333 www.alfuttaimmotors.com
REVISED TRENDS G F OUTER COVER JUNE 09 SPINE 6.5 MM C M Y K_OPPS1_11_06_09
Jacques ChiracOn Palestine, YasserArafat’s last words andGeorge W. Bush
Labor MobilityBahrain’s radical newsponsorship laws cause a regional rethink
Yemen’s
wave of c
rises i
mpacts
the GCC
Terror i
n the G
ulf
Canada . . . . . . . . . C$ 7.50France . . . . . . . . . . . . € 4.57Germany . . . . . . . . . € 6.14
Egypt . . . . . . . . . . . . . . . E£ 10Italy . . . . . . . . . . . . . . . € 5.17Jordan . . . . . . . . . . . . . . . JD 4
Kuwait . . . . . . . . . . . KD 1.2Lebanon. . . . . . . L£ 5,000Morocco . . . . . . . . . DH 22
Oman . . . . . . . . . . . . OR 1.5Qatar . . . . . . . . . . . . . QR 15Saudi Arabia . . . . . . SR 15
Switzerland . . . . . . . SFR 8Syria . . . . . . . . . . . . . . S£ 100Tunisia . . . . . . . . . . . TD 2.5
UAE . . . . . . . . . . . . AED 15UK . . . . . . . . . . . . . . . . . . . . . £ 2USA . . . . . . . . . . . . . . . . . . . $ 5
A MediaquestCorp Publication
LIBYAAn old school creates anew school of thought
EGYPTCairo’s café culture isfalling out of fashion
June-A
ugu
st2009 / N
° 132
Rough economic conditions meana longer off-peak season forthe region’s hospitality sector
Trouble in TourismTrouble in Tourism
REV_CVR GF_ 11_06 OPPS1.indd 1REV_CVR GF_ 11_06 OPPS1.indd 1 6/11/09 9:30:11 PM6/11/09 9:30:11 PM
C l a s s i q u e C o l l e c t i o n - D a t e , P h a s e s o f t h e M o o n a n d P o w e r R e s e r v e - 7 1 3 7 B A
Napoleon Bonaparte, from 1798, a client of Breguet.
M o n t r e s B r e g u e t S A , Va l l é e d e J o u x , S w i t z e r l a n d , + 4 1 2 1 8 4 1 9 0 9 0
M o r e i n f o r m a t i o n a v a i l a b l e a t B r e g u e t M i d d l e - E a s t , E m i r a t e s To w e r s , D u b a i , U A E , + 9 7 1 ( 4 ) 3 3 0 0 4 5 5
w w w. b r e g u e t .c o m
IT’S TIME TO SHAPE THE FUTURE. WELCOME TO FORWARD LIVING.
• 3.5 liter, 275 HP V6 engine & 6-speed auto transmission • Remote touch system • 10 Airbags • Pre-crash safety system • Head-up display • Active cruise control• Navigation system • Rear entertainment system • Panoramic roof
There will always be leaders. People who embrace the future. And as you sit in the luxurious New Lexus RX350 you’ll be surrounded by ground-breaking technology. From the head-up display, to the remote touch central controller, for simple and intuitive control of the car’s features. Naturally it is all as beautifulin design as it is futuristic. Only when you embrace the future, can you shape it.
www.lexusuae.com
Al-Futtaim Motors is the exclusive distributor for Lexus in the UAE.Dubai: Dubai Festival City (04) 206 6600 Sheikh Zayed Road (04) 310 6666 Abu Dhabi (02) 419 9888 Al Ain (03) 721 0888 Sharjah (06) 503 0555 Fujairah (09) 222 4157RAK (07) 235 1542 Ajman (06) 711 3333 www.alfuttaimmotors.com
REVISED TRENDS G F OUTER COVER JUNE 09 SPINE 6.5 MM C M Y K_OPPS1_11_06_09
Jacques ChiracOn Palestine, YasserArafat’s last words andGeorge W. Bush
Labor MobilityBahrain’s radical newsponsorship laws cause a regional rethink
Yemen’s
wave of c
rises i
mpacts
the GCC
Terror i
n the G
ulf
Canada . . . . . . . . . C$ 7.50France . . . . . . . . . . . . € 4.57Germany . . . . . . . . . € 6.14
Egypt . . . . . . . . . . . . . . . E£ 10Italy . . . . . . . . . . . . . . . € 5.17Jordan . . . . . . . . . . . . . . . JD 4
Kuwait . . . . . . . . . . . KD 1.2Lebanon. . . . . . . L£ 5,000Morocco . . . . . . . . . DH 22
Oman . . . . . . . . . . . . OR 1.5Qatar . . . . . . . . . . . . . QR 15Saudi Arabia . . . . . . SR 15
Switzerland . . . . . . . SFR 8Syria . . . . . . . . . . . . . . S£ 100Tunisia . . . . . . . . . . . TD 2.5
UAE . . . . . . . . . . . . AED 15UK . . . . . . . . . . . . . . . . . . . . . £ 2USA . . . . . . . . . . . . . . . . . . . $ 5
A MediaquestCorp Publication
LIBYAAn old school creates anew school of thought
EGYPTCairo’s café culture isfalling out of fashion
June-A
ugu
st2009 / N
° 132
Rough economic conditions meana longer off-peak season forthe region’s hospitality sector
Trouble in TourismTrouble in Tourism
REV_CVR GF_ 11_06 OPPS1.indd 1REV_CVR GF_ 11_06 OPPS1.indd 1 6/11/09 9:30:11 PM6/11/09 9:30:11 PM
JUNE-AUGUST 2009 • ISSUE 132 • WWW.TRENDSMAGAZINE.NET
TRAVEL AND TOURISMTRENDS takes an in-depth look at thechallenges facing the hospitality and travelsector, and presents an exclusive interviewwith the CEO of Rotana hotels.
COVER STORY
S.C.C Arabies, 18 rue de Varize, 75016 Paris, FranceTel: +(33) 1 476 64600 • Fax: +(33) 1 438 07362
E-mail: [email protected]
82
June-August 2009 / TRENDS 3
TRENDSThe GCC’s single-currency dream proves elusive.“The Beirut Four” go free, but for how long?The fight against Somali piracy turns diplomatic.Lebanon votes on its relationship with Syria.8
YEMENA CALL TO ARMSThe Middle East’s poorest country is struggling tohold itself together, and its neighbors on the Gulf are becoming worried.20
IRAQGET OUT OF JAIL KURDThe political prisoners of Kurdistan are free of Saddam’s regime, but still fighting forcompensation over their lingering scars.28
INTERVIEWJACQUES CHIRACThe former French premier talks to TRENDSabout Palestine and Israel, the war in Iraq andYasser Arafat’s final words.35
MANUFACTURINGHEAVY LIFTINGThe global recession is forcing GCC countries to focus on the unglamorous world of heavyindustry. But do they have enough resources?50
JOB MOBILITYBAHRAIN LEGALThe tiny island kingdom has begun to changethe way Gulf states look at employing expatriates,by allowing foreign employees more mobility.58
Contents.qxd 6/8/09 12:57 PM Page 3
4 TRENDS / June-August 2009
JUNE-AUGUST 2009 • ISSUE 132 • WWW.TRENDSMAGAZINE.NET
THE SAUDI ECONOMYTRENDS investigates whether the kingdomwill be able to handle challenges created bythe global economic crisis.
SPECIAL REPORT
S.C.C Arabies, 18 rue de Varize, 75016 Paris, FranceTel: +(33) 1 476 64600 • Fax: +(33) 1 438 07362
E-mail: [email protected]
96
PRIVATE EQUITYTHE TURNAROUNDGloomier economic conditions call for differentstrategies, as private equity players move fundsinto new investments.66
LIBYASCHOOL OF THOUGHTAs it emerges from isolation, the North Africanpetrostate is looking to its Greek community to internationalize local education.74
INTERVIEWERIC VON HIPPELThe Sloan School of Management professor andinnovation guru says the digital age is challengingtraditional wisdom about intellectual property.94
INTERVIEWPAUL KRUGMANThe Nobel Prize-winning economist tells TRENDSwhere the financial crisis came from and whereit’s headed.
CULTUREGOOD BOOKSDespite its political turbulence, Beirut is beingrecognized by the United Nations for somethingelse – its bookishness.116
PERSPECTIVESBYE BYE BELLY DANCINGCairo’s famous nightlife is losing out, not toconservative thinking but to Western partying.124
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On May 20, the UAE pulled out of the
proposed monetary union (single cur-
rency) for the GCC. The news came a few
days after WAM reported that UAE Vice
President Sheikh Mohammed had
expressed “reservation” about the deci-
sion to headquarter the central bank to
manage this currency in Riyadh, noting
that, from the outset, the UAE was intent
on basing the operation within its borders.
Saudi Arabia’s King Abdullah res-
ponded almost a week later in an inter-
view with Kuwait Arabic newspaper al-Seyyasah in a conciliatory manner.
Considering the politeness that came with
the UAE’s withdrawal, the king believes
this step is not intractable. “The atmos-
phere for reviewing the monetary union
agreement is open and the UAE has an
alert leadership ... We do not doubt they
are keen to maintain a strong Gulf (Coop-
eration) Council.”
“The coming review before the imple-
mentation would resolve what had been
disputed,” he said.
The decision to pull out reflects the
fact that centralizing and unifying ele-
ments of the GCC will be fraught with
such problems in the future. Much of this
stems from creating an equitable frame-
work for each nation, a hard-to-balance
task. The single currency is seen by
observers and politicians as a means of
creating greater interdependence among
the GCC states – the basis for improving
political unity.
It also mirrors the formation of the EU
single currency, when Germany and
France wished to foment greater unity and
mutual reliance. Nevertheless, while mon-
etary union is an economic objective, it is
also an optional tickbox on the political
checklist of goals designed to form greater
unity within the GCC, says Marios Ma-
ratheftis, chief economist of Standard
Chartered Middle East. “No matter what
happens to the common currency, we’re
still part of the GCC and we’re willing to
cooperate with our GCC neighbors – and
that’s the right way to go,” he says. “Polit-
ical cooperation is essential, and monetary
union is not necessary to achieve that.”
There is also the issue that most of the
GCC states have parity with each other on
exchange rates anyway, as all (except
Kuwait) are pegged to the greenback.
Kuwait removed the dinar from the dollar
peg in favor of a basket of currencies in
2007, creating further wobbles over mon-
etary union at the time. Yet this is a tactic
other Arab nations would do well to
adopt, argues Paul Krugman, professor of
economics at Princeton University and
Nobel laureate in economics.
The real problem is therefore political,
not economic, explains Giyas Gokkent,
chief economist at National Bank of Abu
Dhabi. As all sides try to come together,
each must relinquish some elements of
power to contribute to greater unity. “It
involves some degree of sovereignty loss,
because you abdicate policymaking from
a national level to a super-national level,”
he says. “I think there is a fear amongst
some members that the GCC institutions
may be dominated by one country or a
group of countries.”
While Saudi Arabia has the largest
economy in the region, with a GDP of
1,308 billion Saudi riyals ($349 billion),
the UAE is the second largest, with a
GDP of 476 billion dirhams ($130 bil-
lion), and the larger financial sector to
boot. But, while a diplomatic solution is
feasible (one option is the formation of a
commission to launch the central currency
in Riyadh followed by the central bank’s
establishment in the UAE), the credibility
of the proposed integration of the GCC is
reduced. “The question people will keep
asking themselves is, ‘what will happen
the next time the GCC has to face difficult
decisions?’” says Maratheftis. “And there
will be many more difficult decisions to
be made in the very near future.”
Two major problems underpin this
loss of credibility. First, this problem
was aired in public before it could be
resolved – breaking the local tradition of
solving problems behind closed doors.
Second, the smaller economies in the
GCC will not be so likely to succeed
with such tactics in the future. The
prospect of GCC institutions locating in
Manama, Muscat or Kuwait City seems
rather unlikely, at best. �
8 TRENDS / June-August 2009
By Jonathan Howell-Jones Dubai
THE GCC
THE VALUE OF UNITY
Mic
hae
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oro
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TRENDS-Monitory Union.qxd 6/3/09 2:25 PM Page 8
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Just a few weeks away from parlia-
mentary elections on June 7 that will
pit the current parliamentary majority
led by Saad Hariri against the Hezbol-
lah-led opposition, even minor events
could tip the balance in favor of one
side or the other.
In this context, the release on Apr.
29 of the four top security and intelli-
gence generals Mustafa Hamdan, Jamil
Sayyed, Ali Hajj and Raymond Azar, is
an earth-shattering development.
The four had been arrested in 2005
in connection with former Prime Min-
ister Rafik Hariri’s murder, and at the
recommendation of the UN’s Interna-
tional Independent Investigation Com-
mission (IIIC) they had been jailed for
three years and seven months without
being charged.
By mid-April, Lebanese judge Sakr
Sakr had already lifted arrest warrants
against the four, but had ordered they
remain in jail pending a decision on
their fate by the Hague-based Special
Tribunal for Lebanon (STL), which
had been handed authority on the case
by Lebanon in early April. This deci-
sion by pre-trial judge Daniel Fransen
at the recommendation of prosecutor
Daniel Bellemare, came two weeks
later with immediate effect, sparking
much media and public fanfare.
Although, as Bellemare wrote in his
submission to Fransen, they could still
be indicted later on if evidence impli-
cated them, the pretrial judge declared
that at this stage, the generals “cannot be
considered as either suspects or accused
persons. … The evidence collected thus
far is not sufficiently credible to main-
tain the detention,” said Fransen.
Since then, the four – who always
claimed their innocence – have been
hailed as heroes.
The night of the generals’ release,
Hezbollah released a statement wel-
coming Fransen’s decision, after the
“arbitrary detention imposed by the
[majority] and which took place by
politicizing the judicial system.” The
apparatchik described the generals’
arrest as a “charade and a big scandal.”
More importantly, Hezbollah said that
this “ important event” would allow for
a “decisive revision of the nation.”
Upon his release, Sayyed – who
rumors say could be asked to step up as
a minister if the opposition were to win
the polls – denounced a “conspiracy.”
To contain the wave of condemna-
tion and prove its own credibility, the
Higher Judicial Council expressed “its
willingness to bear its responsibility in
facing any deficiency committed dur-
ing judicial practices.”
But as election day looms closer,
this release may have a serious impact
on how the Lebanese will vote. “Our
detention was politically motivated and
was exploited for four years by the
majority [the pro-Western ruling par-
liamentary coalition]. So it is perfectly
normal that the tables are turned now,”
said Sayyed. No wonder political rec-
onciliation is at a nadir.
For his part, majority leader Hariri
declared that this decision was “a step
toward achieving justice” and that “this
is a response to those who said that the
tribunal was politicized,” referring to
accusations from the opposition that the
STL was a pawn in the hands of the
United States.
Lebanese Forces l eader Samir
Geagea said that the release of the four
generals scored a point for the majority
and not the opposition, because the
opposition “has been marketing for
years that the tribunal was politicized.”
However, without the STL as a cen-
tral point of its electoral platform, and
faced with virulent accusations of hav-
ing misled the Lebanese public, the
majority coalition now more than ever
needs arguments to rally swing voters
and reassure its own troops. Hezbollah,
on the other hand, which repeatedly
asked for the release of the generals,
can further mobilize its constituencies
because of this victory.
Amid electoral fever, few realize
the STL is back to square one, without
suspects or any prospect of identifying
any. It seems justice for the victims
will not take place anytime soon. �
10 TRENDS / June-August 2009
By Nathalie Bontems Beirut
LEBANON
NIGHT OF THE GENERALS
Get
ty/G
allo
Im
ages
TRENDS-Tribunal.qxd 6/3/09 2:27 PM Page 10
It seems like an easy problem to fix.
Somali bandits are fishing for ransom
money at sea by hijacking slow-moving
ships between the Horn of Africa and the
Arabian peninsula.
To stop them, navies from around the
world have sent warships to police the
area – but the pirates have redoubled
their efforts instead of giving up. There
have already been more attempted hijack-
ings so far in 2009 than in all of last year,
despite the military flotilla that has been
collecting in Somalia’s backyard.
European legal experts are even
warning that the military approach could
backfire. In one instance, the Danish
navy caught five Somalis in January after
they allegedly attacked a Dutch-flagged
ship. Now the accused pirates are await-
ing trial in the Netherlands, and several
of them have said they’ll seek asylum in
the liberal European state rather than
return to beleaguered Somalia.
A prominent Dutch legal expert has
warned his government to treat the case
carefully because it could encourage
Somalis to use capture as a way to
migrate to rich Western countries. “These
trials may trigger other pirates to let
themselves be arrested on purpose,”
lawyer Geert-Jan Knoops told Volkskrantnewspaper. “The Dutch justice depart-
ment must be cautious.”
The same advice could apply to the
German government, which is being
sued by lawyers representing a Somali
national recently captured by the German
navy. The man was sent to Kenya for
trial on piracy-related charges (as have
more than 50 other Somalis this year).
But because of Kenya’s spotty human
rights record, the civil case stipulates that
Germany is obliged to try its former cap-
tive at home.
On top of legal problems, the roots of
Somali piracy make it even harder to
fight. Somalia has been plagued by civil
war since 1991, and fishing boats from
Europe to South-East Asia took advan-
tage of that conflict for years by fishing
the African state’s territorial waters ille-
gally. The UN envoy for Somalia has
said foreign companies also dumped
large quantit ies of toxic, including
nuclear waste off the Somali coast (when
the 2004 tsunami hit, rusting barrels of
the stuff actually washed on its beaches).
With no coast guard or navy to lean
on, local fishermen armed themselves to
chase off the perpetrators. Those armed
patrols have since evolved into a lucra-
tive way for organized gangs to make
money in a deeply impoverished, chaotic
country. Somali pirates have been paid
an estimated $80 million in ransom so far
in 2009, and a microeconomy has sprung
up around their exploits.
A recent UN report from the northern
Somali city of Eyl, a pirate haven, sheds
some light on how exactly those pro-
ceeds are divvied up. Sea-borne militia
get a third of the money and they share it
equally among themselves (although the
first pirate to board a besieged vessel gets
a double share, or a new vehicle). Who-
ever handles the money gets a fifth of it.
The “sponsor” receives a third. Guards
who patrol the pirates’ turf on land get 10
percent, as do local community leaders.
If a pirate is killed during the operation,
his family is even paid compensation.
Those involved with the hijackings
can earn thousands, even tens of thou-
sands of dollars in a country that had a
per capita GDP of only $281 in 2007.
There are few indications of the extent of
poverty in Somalia, due to the lack of
government. But UNICEF estimates that
at least 15 percent of those living in cen-
tral and southern parts of the country suf-
fer from acute malnutrition.
The roots of Somali piracy and the
depressed local economy are no excuse
for capturing and threatening to kill inno-
cent people at sea. But they do suggest
that stamping out the problem will be
hard, maybe impossible, without helping
the country to get back on its feet.
The Italian government has said it
will host a meeting of Somalia’s govern-
ing and opposition parties in mid-June,
to search for ways of abolishing piracy
by stabilizing the African country. With
any luck, that meeting will mark a turn-
ing point towards lasting solutions and
away from gunboat diplomacy. �
14 TRENDS / June-August 2009
By Ian Munroe Dubai
SOMALIA
LOST AT SEA
TRENDS-PIRACY.qxd 6/3/09 2:29 PM Page 14
On June 7, Lebanon elected a new
parliament in what are shaping up to
be crucial elections. The Western and
Saudi-backed current majority, labeled
“March 14” (for the date mass protests
on the street called for Syria’s with-
drawal), won the elections, beating the
Hezbollah-led opposition, “March 8” (for
the earlier and smaller protest supporting
Syria). These elections aligned Lebanon
to the West instead of opposing it on the
trail of Iran and Syria, despite heavy
political mobilization by Hezbollah.
But what also depends on these elec-
tions is the kind of relationship Lebanon
will have with Syria, often dubbed its
“big sister.” The enmity between the two
countries’ governments has been strong
since the assassination of billionaire and
former Prime Minister Rafik Hariri in
February 2005, openly blamed by March
14 on Syria, then Lebanon’s power bro-
ker for 15 years. Although Syrian troops
withdrew from its small neighbor follow-
ing the murder, Syria remains very influ-
ential in Lebanon, not only through its
staunch allies, among whom Hezbollah
stands strong, but also by way of a series
of agreements that were mostly signed
during Syria’s reign over Lebanon.
One example of this is the Fraternity,
Cooperation and Coordination Treaty
(FCCT) signed in 1991, that codifies
cooperation between Lebanon and Syria
in all fields from media policy to defense
strategy. Another is the Syrian-Lebanese
Higher Council, established in 1991
under the FCCT, whose purpose is to “set
up the general policy of coordination and
cooperation between the two states.”
Their validity and legitimacy could
be questioned once embassies are for-
mally up and running between Syria and
Lebanon. Or, on the contrary, they could
prevail, stripping the embassies of all
meaning. Although Nasri Khoury, secre-
tary general of the Syrian Lebanese
Higher Council, declared that “the FCCT
and the agreements it produced are estab-
lished truths,” Syrian President Bashar
al-Assad declared that “Syria is ready to
annul the Higher Council if the Lebanese
demand it.”
While March 14 may well demand
just that, these agreements are not only
binding at a political level, they also have
a vast economic dimension, and give
Syria a strong hold over Lebanon. One
example is the sharing of the Assi river
waters, giving a maximum 80 million
cubic meters (MCM) to Lebanon out of
its total of 400 MCM. Depending on who
leads Lebanon, agreements on trade, cus-
toms, and telecoms between the two
countries will be tackled or left alone.
Maybe more importantly, other deci-
sive aspects of these relations lie in cru-
cial issues that are still left pending: what
position will the new parliamentary
majority adopt regarding the Special Tri-
bunal for Lebanon (STL), established by
the UN to try the killers of Hariri? The
Lebanese Parliament hasn’t yet ratified
the Memorandum of Understanding that
will define the capacity of the STL, and
the opposition is still reviewing the
power it would give the international
community over Lebanese institutions
and indicted individuals. If anything,
March 8 will continue to pugnaciously
oppose the legitimacy of the STL.
Yet with the release of the four gener-
als (page 10), Syria (which consistently
denied any involvement) seems off the
hook. Neverthelesss, any attempt to put it
back under suspicion, via Hezbollah for
example as a recent report by German
paper Der Spiegel suggests, will be seen
as a way of reigniting sectarian strife.
Similarly, the two countries still have
to agree upon a clear definition of their
common borders in order to ascertain
Lebanon’s sovereignty. The smuggling
of goods and weapons is yet to be
addressed, but the clear definition of
borders would also allow Lebanon to
settle the issue of the Shebaa Farms,
which are still occupied by Israel (on the
grounds that it hasn’t yet been proven
that these territories are Lebanese). As
long as Syria refuses to provide Lebanon
with proof of its sovereignty over She-
baa, the farms will offer the perfect justi-
fication for Hezbollah’s arsenal, and
continue to bolster Syria’s indirect influ-
ence on a new West-aligned Lebanon. �
16 TRENDS / June-August 2009
By Nathalie Bontems Beirut
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he remote, mountainous stretch of
desert between Yemen and Saudi
Arabia seems an unlikely place for a
political tug-of-war. But for years
now, the Saudi government has been try-
ing, in fits and starts, to fortify the 1,300
kilometers of barren land where the two
countries meet.
In 2003, Riyadh began building a 10-
foot high security barrier there, as part
of a drive to crack down on terrorist
attacks at home (after Saudi authorities
traced explosives from recent attacks
back to its southern neighbor).
But Yemeni President Ali Abdullah
Saleh argued the fence violated a three-
year-old border agreement, so construc-
tion stopped. When building resumed
briefly in 2008, it reportedly sparked a
standoff between Yemeni border guards
and Saudi troops.
The border-security issue is still far
from settled. Last month, Riyadh was
said to be in talks with the German-
based aerospace and defense company
EADS about a multibillion-dollar plan to
make its southern boundary less porous.
Details of the plan remain scarce – but
Saudi Arabia has clearly become very
worried about security threats arising
from the tip of the Arabian peninsula.
“Border security on the Yemeni fron-
tier is one of the kingdom’s greatest con-
cerns,” says Christopher Boucek, an
associate at the Carnegie Endowment for
International Peace in Washington.
He believes that Yemen has become
infamous in the region, “as a pathway
for bad things; if it’s guns, if it’s drugs,
if it’s illegal migration, if it’s cash or
bombs – everything.”
In stark contrast to neighboring Gulf
states – which have been busy setting up
new home industries and buying up
overseas investments, experts say that
Yemen is in palpable danger of becom-
ing t rapped in a downward spiral .
As that real izat ion dawns on GCC
states, it’s changing the way they engage
with the Arabian peninsula’s most trou-
bled country.
Yemen is under threat from a wave of crises, forcing affluent Gulf states to consider how best to help a neighbor in need.
By Ian Munroe Dubai
The GreatDivide
20 TRENDS / June-August 2009
T
Focus: Yemen
Focus-Yemen 6/3/09 4:49 PM Page 20
June-August 2009 / TRENDS 21
Culminating crises. Since north and
south Yemen united in 1990, the govern-
ment in Sana’a has become accustomed
to defusing crises. When Saddam Hus-
sein invaded Kuwait in 1990, Yemen
voted against the United Nations using
force to repel Iraqi troops, and promptly
had much of its foreign aid cut off. In
1994, a civil war broke out in the south
that killed thousands of people. And in
2000, al-Qaeda bombed the USS Cole
while it was docked at the port of Aden,
killing 17 American sailors and curtail-
ing Yemen’s tourism industry – a key
economic driver.
But in 2009, Sana’a is facing what
many fear is an overwhelming conver-
gence of problems. “Yemenis will say,
‘we’ve been through bad things before
and we’ll deal with this.’ But they haven’t
had a series of crises culminating at the
same point,” Boucek says. “Now two or
three or four are all going to culminate at
the same time. That’s what makes the
current situation so devastating.”
Poverty is a familiar affliction for the
country’s 22 million people, 60 percent
of whom live on less than $2 a day. The
UN Food and Agriculture Organization
has dubbed Yemen the Middle East’s
most ‘food insecure’ territory. Yet the
population is expected to double before
2030, and major cities like Sana’a are
running out of water.
To make matters worse, the economy
is fending off collapse. Oil, which funds
70 percent of the national budget, is
expected to run dry within a decade.
Tourism, a second crucial industry, is
shrinking as political instability and iso-
lated terrorist attacks keep foreigners
from visit ing the country’s ancient
walled cities, medieval mountain forts
and famous mud skyscrapers.
President Saleh’s government is also
wrestling with three big political prob-
lems. A Shi’a Zaidi sect in the north –
that Sana’a has accused of conspiring to
replace local elected councils with an
Islamic imamate government – has been
clashing with state-backed forces.
Focus-Yemen 6/10/09 2:22 PM Page 21
Hundreds of people have been killed
there since 2004, and thousands more
have been displaced.
In the southern governorates, an
increasingly vocal – and violent – seces-
sionist movement has created a national
crisis over the past few months. In the
largest show of unrest since 2006, sev-
eral hundred thousand people held
protests there in March to commemorate
the outbreak of civil war in 1994. Many
southerners say the central government
has marginalized them economically and
politically, and one of President Saleh’s
former allies, an influential southern
sheikh, recently declared his support for
the southern-secessionist cause.
Sana’a is taking the situation seri-
ously enough that it recently sent troops
and tanks to southern towns. In May, the
Ministry of Information also closed
down eight Yemeni newspapers that had
been covering the sometimes violent ral-
lies, sparking criticism from press free-
dom groups. President Saleh has also
promised new government reforms to
allay southern protesters.
“Yemen, Allah forbid, will not divide
into two partitions, south and north, but
into villages and small states,” Saleh
warned at a ra l ly on Apr. 27, in an
attempt to diffuse the crisis. “People will
be fighting with each other from door to
door and from window to window.”
Last but not least , a l -Qaeda an-
nounced in January that it’s consolidat-
ing regional operations on Yemeni soil.
Thanks to Riyadh’s success at banishing
al-Qaeda from the kingdom, and stoked
by extremist fighters returning from
Iraq, Yemen is “becoming terror central
on the Arabian peninsula,” says Kamran
Bokhari, director of Middle East analy-
sis at Stratfor, a US-based global intelli-
gence firm.
22 TRENDS / June-August 2009
Focus: Yemen
In the southern governorates, an increasingly violent secessionist movement has created a national crisis
1 9 9 2
First al-Qaeda attackon Americans when
US troops are bombed in an Aden hotel.
2 0 0 0
Blast kills 17 USsailors as al-Qaedaattacks USS Cole,moored in Aden.
2 0 0 7
Eight Spanish touristsdie in al-Qaeda suicidebombing at Queen of
Sheba temple in Yemen.
Focus-Yemen 6/3/09 4:49 PM Page 22
Over the past few months, the group
has carried out headline-grabbing attacks
on foreign tourists. In May, its leader,
Naser Abdel Karim al-Wahishi, broad-
cast a message stating that he supports
the country’s southern separatists, and
demanding that Yemenis join forces to
topple the government in Sana’a.
New relations. Next door, GCC coun-
tries worry that Yemen’s converging
problems will bleed across its borders.
“They’re very concerned,” says Nicole
Stracke, a researcher in the Security and
Terrorism Department at the Gulf
Research Center, a Dubai-based think
tank. “The problem in Yemen is the gov-
ernment basically fights three conflicts –
the south, the north and terrorism – and
the resources they have are limited,” she
adds. “Now with the oil price going
down and the recession, their resources
are going to be even more stretched.”
Yemen’s resource gap means Presi-
dent Saleh, who has governed the coun-
try since 1978, is unable to crack down
on many of the criminals who use the
country’s ungoverned areas for nefarious
ends. Yet al-Qaeda’s local leadership has
not just threatened the government in
Sana’a, but Saudi Arabia and the other
Gulf states. “Yemen’s lack of capacity
makes it the problem of the next country
down the road. In this case, the GCC,”
Boucek says. “The concern is, ‘how do
we absorb what’s happening there?’”
One way is by throwing money at
Yemen’s problems. At a donors’ confer-
ence held three years ago in London, the
Gulf states pledged $2.5 billion to help
bolster Saleh’s government (with Saudi
Arabia making the largest donation
promise by far). But Sana’a has only
received a $12 million of the promised
cash, according to the World Bank,
mainly because of rampant corruption.
Focus: Yemen
24 TRENDS / June-August 2009
‘The problem in Yemen is the government fightsthree conflicts – the south, the north and terrorism’
4 1 0 , 0 0 0
Average number of barrels of oil
produced per day in Yemen in 2004.
3 2 0 , 0 0 0
Average number ofbarrels of oil
produced per day in Yemen in 2007.
3 0 0 , 0 0 0
Average number ofbarrels of oil
produced per day in Yemen in 2008.
Mag
num
Focus-Yemen 6/3/09 4:49 PM Page 24
Yemen ranked 141 out of 180 countries
on Transparency International’s latest
corruption index. So once the money
leaves donors’ hands there are no guar-
antees as to how it will actually be spent.
Regional integrat ion is another
approach. But ties between the Gulf
countries and their south-Arabian cousin
haven’t always been strong. In the case
of Saudi Arabia, for example, “there is a
history of complicated relations” with
Yemen, says Letta Tayler, a researcher on
terrorism and counterterrorism with
Human Rights Watch. “We hope that
doesn’t block genuine efforts at coopera-
tion on what is clearly a regional prob-
lem and needs regional solutions.”
Relations seem to be improving
though. In August 2008, Qatar helped
broker a peace deal between Sana’a and
Yemen’s restive northern Shi’a Zaidi
sect. When a local terrorist group attacked
the US embassy in Sana’a last Septem-
ber, killing 17 people, Saudi King Abdul-
lah invited Yemen’s president to Mecca
and reportedly promised him support to
combat al-Qaeda-linked groups. More
recently, Saudi leaders have said they’re
with Sana’a “all the way,” and “without
reservation.” In May, Oman also revoked
the citizenship of a former Yemeni leader
for supporting recent protests and calling
for an independent southern state.
Arabian countries are taking baby
steps to bring Yemen into the GCC, too.
In spite of such efforts though, Stracke
says it won’t be Yemen’s resource-rich
neighbors that decide how its problems
play out, but Yemenis themselves. “It’s
whether there’s enough capacity within
Sana’a,” she says, “not whether the Arab
neighbors are doing enough.”
“At the end of the day, you can only
pour so much resources into something
that has capacity. Can Yemen hold itself
together and use external help from
neighboring Arab countries to turn things
around? That’s the question.” �
Focus: Yemen
26 TRENDS / June-August 2009
King Abdullah has reportedly promised Yemen’spresident support in combatting al-Qaeda
5 . 5 P O I N T S
Oman’s score out of 10 on TransparencyInternational’s 2008
corruption index.
3 . 5 P O I N T S
Saudi Arabia’s score on Transparency
International’s 2008corruption index.
2 . 3 P O I N T S
Yemen’s score out of 10 on TransparencyInternational’s 2008
corruption index.
Reu
ters
Focus-Yemen 6/10/09 2:22 PM Page 26
arefoot children play boisterously
on the narrow dusty roads along the
way to a gated edifice in the sub-
urbs of Erbi l . For the men and
women who frequent this building, the
children’s laughter may provide some
comfort, a sense that the sacrifice of
their own innocence might not have
gone in vain.
The Political Prisoners Generation of
Kurdistan was established in February
2007 to help rehabilitate individuals who
spent years in Ba’athist prisons during
the heady days of the Kurdish resistance
against the Iraqi regime.
Ahmed Mam Rasool, deputy head of
the organization, looks far older than his
36 years. He was detained in September
1989 when Ba’athist security agents dis-
covered he was involved in clandestine
activities in support of the Kurdish resis-
tance. It was the kind of thing one might
have dismissed as student activism –
distributing leaflets, and providing medi-
cine and foodstuff to rebels hiding out in
the mountains.
Rasool , a man of s l ight s ta ture ,
recalls the beatings he endured and the
brutal interrogation tactics used to
extract information from him about Kur-
dish guerrillas. He claims he told them
nothing, and was thrown into a tiny cell
in which he could not even stretch out
his legs. He spent one month and six
days in this cell, and was released inter-
mittently for torture sessions.
“They would hang me up from my
legs, with my hands tied behind my
back, and give me electric shocks on my
nipples and genital area,” he recounts.
Though released a little over a year later
in 1990, Rasool’s body still carries the
scars of the ordeal – but the residual
psychological scars cannot be show-
cased so easily.
The Political Prisoners Generation of
Kurdistan has a two-fold mandate: to
archive Kurdish history through the oral
testimonies of former prisoners, and to
safeguard their legal rights. Rasool says
they have nearly 12,000 members now,
and the number is rising.
According to Rasool, the Political
Prisoners Generation of Kurdistan
offers counseling for those former
inmates who underwent grueling psy-
chological physical torture. They have
B
28 TRENDS / May 2009
Kurds languished for years in prison under Saddam Hussein’s regime.Today, they seek compensation for their wasted lives and irreversible injuries.
By Tanya Goudsouzian Sulaimaniyah
Focus: Iraq
PrisonersOf Conscience
Focus-Erbil 6/3/09 5:37 PM Page 28
Get
ty/G
allo
Im
ages
Focus-Erbil 6/3/09 5:37 PM Page 29
centers in Erbil, Sulaimaniyah, Dohuk,
Kirkuk and Mosul.
Suleiman Khalid Ashgayi, president
of the organization, is working to garner
more support from human rights groups
operating in Iraq. “We have so many
handicapped and mentally disturbed
people because of the abuse they suf-
fered in prison. We hope those organiza-
tions will help us solve these problems,”
he says. “Our organization was set up
before our counterparts in Baghdad, but
as they are affiliated with the govern-
ment, they receive a great deal more
assistance. Ours is a private grouping
made up of volunteers.”
Ashgayi also points out that a law
passed in February 2008 entitles all for-
mer political prisoners to 800,000 Iraqi
dinars ($700) with an additional 100,000
Iraqi dinars for each year spent in prison.
But this has yet to apply to the members
of the Political Prisoners Generation of
Kurdistan in Erbil. According to Ash-
gayi, 12 percent of the organization’s
members are women, some of whom
were only released in 2003.
“Former prisoners in 15 areas of
Iraq are benefiting from this stipend,
but not those in the Kurdistan Region,”
he laments. Ashgayi, 55, was captured
in 1987 and detained for a little over a
year at the Balda Security Office in
Erbil, due to his father’s activities in
the Kurdish resistance.
“When a man went to take up arms
in the mountains they would come to
take his wife or children. Sometimes,
even if your in-laws were Peshmergas
(Kurdish fighters), they would still take
you,” he said.
A grisly past. The Balda Security Office
in Erbil has now been converted into a
base for the Kurdish security apparatus,
Asaish. But for those who suffered
unspeakable pain within those walls, the
makeover does not eliminate the build-
ing’s grisly past.
30 TRENDS / June-August 2009
Focus: Iraq
There are many handicapped and mentally disturbedpeople, traumatised by their abuse
1 9 8 8
Saddam Hussein useschemical weapons
against the Kurds innorthern Iraq.
1 9 9 1
Iraqi Kurdistan is desig-nated a UN safe havenafter the campaign to
liberate Kuwait.
2 0 0 9
Kurdistan denies allega-tions from Amnesty
International that it hassecret prisons.
Corb
is
Focus-Erbil 6/3/09 5:37 PM Page 30
In the same vein, the grand reopen-
ing in February of the scandal-ridden
Abu Ghraib prison, now renamed the
Baghdad Central Prison, has been met
with skepticism. Iraqi authorities have
promised that the Baghdad Central
Prison will offer “decent conditions for
inmates – including a gym, computer
chatroom and hair salon.”
The Baghdad Central Prison now
houses 3,500 inmates, with plans to
increase capacity to hold 15,000 prison-
ers by the end of 2009. But despite this
attempt to draw a line under the past,
average Iraqis – and many in the rest of
the world – feel that a fresh coat of paint
cannot erase the memories of those
graphic images of the sinister incidents
which took place in 2004 at the hands of
a small group of US soldiers, who may
or may not have been acting on orders
from above.
Rasool says that the mere mention of
prison sends shivers up his spine. “No
matter what the case of the prisoners,
when you mention any prison, I shiver.
It hurts all over,” he says. “I hope that
the community will act so as to prevent
the mistreatment of political prisoners in
the future.”
“I have sympathy for those who get
caught because of their political beliefs.
If they have a different way of thinking,
they should be dealt with through dia-
logue – not torture,” said Ashgayi.
Human chattel. Back in the 1980s,
when Saddam Hussein reigned supreme,
uppity Kurds were rounded up like chat-
tel by Ba’athist intelligence servicemen,
to stand trial at the Revolutionary Court
of Iraq.
The Mukhabarat (Iraq’s former state
security agency) captured Azez Sabir
Abdulla, 40, in September 1985 while at
his home in Erbil. It came as no surprise
to him, or anybody who knew him, as he
had been a Peshmerga whose activities
were closely monitored for some time.
Focus: Iraq
32 TRENDS / June-August 2009
‘I have sympathy for those who get caught becauseof their political beliefs’
T A L E B A N I
A Kurd and founder ofthe PUK party, Jalal
Talebani became IraqiPresident in 2005.
H U S S E I N
The former president’srequest for a table
tennis table in his cellwas turned down.
G R A N E R
US soldier CharlesGraner was given a 10-year sentence for hisconduct at Abu Ghraib.
Corb
is
Focus-Erbil 6/3/09 5:37 PM Page 32
“They took me to Dieray Amin
(Security Administration) in Erbil at
midnight and tortured me with electric
shocks and whipping,” he says. “There
were rooms, each crammed with 25
detainees, and still more in the corridor.
Each time they brought out someone
who had been tortured, we would see his
body covered with blood.”
“For many of the detainees, it would
be six or seven months before they were
given a chance to bathe. But one day
they took us into a hall and ordered us to
take off our clothes to prepare for a col-
lective bath. They gave us ordinary laun-
dry detergent, but when we began to
wash ourselves with it, they beat us with
cables so that we all developed a painful
skin allergy,” says Abdulla.
He adds: “They would force us to
sign confessions for crimes we didn’t
commit and they would make us name
any name. After someone signed such a
document, they would be shot dead.”
Abdulla remembers his hearing at
the Revolutionary Court in Baghdad,
with Chief Judge Awad Hamed al-Ban-
dar presiding. “The court hall had two
doors. If you passed through one of
these doors, you would spend many,
many years in prison, but if you passed
through the other, you would never be
heard from again,” he says.
“Before my group entered the hall,
several people had already passed through
the door of death and I heard somebody
from the prosecution say: ‘We’ve done
enough shooting for the day and these
guys are too young.’ So that’s how we
were spared execution, but each were
given very long prison sentences.”
Abdulla, who was released a year
later in the general amnesty of 1986,
staunchly opposes the use of torture tac-
tics against detainees – whatever the cir-
cumstances surrounding their arrest.
“I think everything can and must be
done in a peaceful way. I don’t even
believe extremist Islamist f ighters
should be tortured,” he says.
Jihangeer Hamad Ahmed, 49, was
captured in 1985 in Shaqlawa for his
involvement in rebel sleeper cells, and
was released three years later in a gen-
eral amnesty. He did not wish to discuss
his time in prison, which pains him to
this day.
“Torture should not be condoned
under any circumstances, whatever the
nature of the crime, but especially if a
man has been taken in for his ideas and
beliefs,” he says. “To this day I suffer
from the aftershocks of the torture I
endured in prison.”
Beyond the nightmares and mental
anguish, members of the Political Pris-
oners Generation of Kurdistan share
another grievance. “Nobody has done
anything for us, except for the Kurdish
regional government that pays the rent
of our building,” says Abdulla.
Ahmed concurs: “in the center and
south of Iraq, former political prisoners
receive monthly pensions, and they are
given the opportunity to reclaim all that
they lost, whether their jobs or their
studies. They are also compensated for
physical handicaps they suffer as a result
... They are given mortgage loans of up
to 30 million Iraqi dinars ($0.03 mil-
lion), or provided flats to live in. But
when it comes to our rights, the govern-
ment is always dilly-dallying.” �
Focus: Iraq
34 TRENDS / June-August 2009
Prisoners were tortured with electric shocks andwhips, then forced to sign confessions
Focus-Erbil 6/3/09 5:37 PM Page 34
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Jacques Chirac, the former president of France, tells Christian Malarabout his experiences dealing with the Middle East, the consequencesof September 11 and his views on the Gulf war.
The FrenchConnector
June-August 2009 / TRENDS 35
t has been 61 years since the forma-tion of Israel . Is peace possiblebetween Palestine and Israel in theMiddle East today?
War and clashes bring about only hard-
ships and no solutions. Officials should
begin to understand that reality.
It progresses, it pervades slowly and
today we ought to persuade them even
more. There will be no solution for the
Middle East without mutual respect for
one another.
It is obvious that Israel has the right
to claim territory. It is also obvious that
the Palest inians have the r ight to a
homeland and thus we must relentlessly
push for such a solution.
You knew Yasser Arafat well. Do youthink he missed the opportunity tobring peace to the region?It is very easy to rewrite history. What I
know is that Yasser Arafat‘s thinking
evolved and that he very gradually became
a man of peace. I believe in his final days,
he started to share my perspective.
Can you recall a notable moment youshared with Yasser Arafat?I had many notable moments with Yasser
Arafat. I can talk about worst and best
moments with him. We did not always
approve of his views and I can even say
that we clashed very often. However,
things evolved, and in his final years,
our lines of thoughts concurred. It is
with great emotion that I held his hand
when he was dying.
What were his last words?They were words of peace.
Do you think the September 11 attackstriggered a clash of civilizations?First, it was a shock for everyone when
it happened. I was on a trip to Rennes
and I immediately returned to Paris. I
realized right away it was a major event.
It was traumatic for the whole world, a
new dimension of terror. That is why we
had to grasp its true meaning and draw
conclusions from it.
I
Focus-J Chirac copy 6/11/09 3:28 PM Page 35
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Focus: Jacques Chirac
Corb
is
INSERT.indd 2INSERT.indd 2 6/12/09 5:12:35 AM6/12/09 5:12:35 AM
What are those conclusions, in youropinion?First, that we must not and should not be
tempted to talk about a clash between
the West and the Muslim world. It is a
major error we were able to avoid.
Those who fel l into that t rap were
quickly denounced. There was no oppo-
sition between the West and the Muslim
world. This was simply an act of terror
planned by a terrorist group, with signif-
icant consequences, both psychological
and material.
When George W. Bush talked aboutthe ‘Axis of Evil’ that included theMuslim World how did you react to it?I understand the reactions of George
Bush but there was no ‘Axis of Evil.’
There were bearers of evil, groups acting
in an evil manner, that had to be tracked,
sanctioned and eliminated with all nec-
essary means. But this should not be
seen as representatives of one world fac-
ing another.
In 2003, you spearheaded interna-t ional opposit ion to war in Iraqlaunched by the US under the Bushadministration. Do you still considerthis a mistake? And more importantly,do you see any peaceful future forIraq today?
There are two points to make here. I
believe this war was a mistake and had
no justifications. It was an error since it
bore major negative psychological con-
sequences in the Arab world. It was not
justified since the cited motives were
obviously unfounded.
I mean the existence of harmful
weaponry, dangerous arms in this part of
the world. It was a false pretense, and an
ill intentioned one. That is why that war
was useless and harmful for me.
36 TRENDS / June-August 2009
Focus: Jacques Chirac
‘I understand the reactions of George W. Bush butthere was no ‘Axis of Evil.’ There were bearers of evil.’
Reu
ters
B I R T H D A Y
Jacques Chirac is bornon Nov. 29 1932 toFrançois and Marie-
Louise Chirac.
E L E C T I O N D A Y
Chirac is electedPresident of France onMay 7 1995 and re-elected May 5 2002.
D O G D A Y
Chirac’s clinically-depressed poodle maulsChirac on Jan. 21 and
hospitalizes him.
Focus-J Chirac 6/8/09 1:12 PM Page 36
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The US launched the war against Iraqwithout taking UN into consideration.In that sense, is there any use for theUN system anymore?One must not overlook the positive con-
sequences of the UN activities in many
regions and in solving numerous con-
flicts. So it does play a positive role.
However, in any such activity you will
definitely note difficulties and even fail-
ures. Yet, the UN, with all the impedi-
ments it faces, remains as a whole an
essential element of peace and stability
in today's world.
Back then, did you have tense conver-sations with George W. Bush on Iraq?No, there weren't any tense discussions.
Our views did not always converge but
when I disagreed I would state my point
of view. And he would, or would not,
take that into account.
Do you perceive that George H.W.Bush had a greater understanding ofpolitics than his son?I am in no position to judge foreign
heads of state. I have known George H.
W. Bush, whom I profoundly respected
and appreciated, for he was a man of
culture and intelligence. I knew his son
less, and therefore I will not judge him.
Was the 2003 war the closing chapterof a unipolar world dominated by theUS after the breakdown of the SovietUnion? And is the election of Presi-dent Barack Obama the first steptowards a multipolar world with theG20 being proof of this?Yes, it is certain that the world is moving
towards less American domination.
However, this does not mean that the US
economic and political clout will weaken.
The development we see today in the
Eastern part of the world, in China and
India, shifts the decision-making power
to these regions. This goes hand in hand
with a historic reality. Here lie the most
ancient civilizations, the oldest human-
friendly cultures. It is thus legitimate for
them to retrieve their old positions.
Do you look at nations like Pakistan,Afghanistan, and Iran as issues ofmajor concern today?History is known for seeing threats
against peace wherever they are least
expected. So, I cannot tell you where
tension will rise and risks will ripen all
of a sudden. What is obvious is that
there are problems today with Iran, but
we hope they will subside.
You stepped down as president ofFrance on May 16, 2007. How can onerebuild a normal life after leaving theElysee Palace?Simply by conserving the same set of
ambitions and values and by living
them differently. �
Focus: Jacques Chirac
38 TRENDS / June-August 2009
‘What is obvious is that there are problems todaywith Iran, but we hope they will subside’
Reu
ters
Focus-J Chirac 6/8/09 1:12 PM Page 38
ABU DHABI COMMERICAL BANK LAUNCH
“LONG LIVE AMBITION” CAMPAIGN
bu Dhabi, 19 May 2009: Abu Dhabi Commercial Bank,
one of the United Arab Emirates’ largest full-service retail
and commercial banks today unveils its new corporate
campaign under the tag line ‘Long Live Ambition’. The
campaign, which was developed by Minneapolis agency
Fallon, aligns the bank with the Ambition of the UAE. It is
targeted to a broad group of UAE Nationals and Expatriates,
and establishes a platform of creativity using the new
positioning statement.”
“Banks, traditionally considered a low involvement
category, have in recent months been thrust into the limelight
with the onset of the global recession, with everyone paying
attention to our category” said Abu Dhabi Commercial Bank
Chief Executive Officer, Ala’a Eraiqat. “But in this economic
downturn there is considerable opportunity for a financial
services brand to project a resonant voice, particularly in
the UAE, which has such a unique demographic make up
and attitude, combined with an economy that is stronger
than in the rest of the world”. He continued “Market cycles
are inevitable, but our ‘Long Live Ambition’ campaign
recognizes the fundamental and timeless spirit of the UAE
population - regardless of market cycle”.
In the campaign’s launch print advertisement, a red
flag is planted in a UAE desert landscape. The flag design
features the campaign’s tagline, “Long Live Ambition”
written in Arabic. An accompanying manifesto celebrates
the power of human ambition and lays the foundation of
the campaign. The flag and its design are recurring graphic
elements throughout the campaign.
“Conventional wisdom suggests a brand in a recessionary
economy should keep its head down,” said Abu Dhabi
Commercial Bank Head of Marketing Services, Senior Vice
President, Martin Scott “However, conventional wisdom
often leads to missed opportunities, as it has been proven
that companies who maintain advertising budgets during
a recession significantly outperform their competition in
the following years. But there is opportunity beyond the
numbers, as in a pessimistic environment, an optimistic
voice asserts leadership and earns respect at a time when
people are looking for a voice of hope and inspiration that
resonates positively with their values”.
The work, shot by renowned French photographer
Jean-François Campos, celebrates the spirit of the UAE,
and the intangible quality that so effectively unifies
its diverse population of Nationals and Expatriates:
Ambition. The campaign will transform ADCB into a
brand that stands for Ambition and champions the spirit
of ambitious people through its advertising and its actions
as a brand.
“Through significant market research and testing, we
recognized that the people of the UAE, both expatriates
and nationals, are unified by ambition. Daily, they engage
in shaping the country’s culture and coastlines – from
Saadiyat Island to The Palm Islands. And in that respect,
they are unique from consumers in other major economic
and cultural centers, where place typically has the upper
hand in shaping the individual,” said Fallon Group Account
Director Michael Craig. “In the UAE, it’s the other
way around.”
The fully integrated campaign comprises Print, Online,
Out-of-home, In-branch, and Brand Engagement and will
run throughout 2009. Print is the dominant medium and
provides the cornerstone of the communications. A heavy
outdoor rotation is also included to drive awareness and
give the campaign a ubiquitous presence. The highlight is a
domination of billboards along the 120 km highway between
Abu Dhabi and Dubai. Campaign executions will appear in
both English and Arabic.
High resolution images from the campaign along with
screen savers and desktop background can be downloaded
from: www.adcb.com
ADCB is a full-service commercial bank which offers a wide range of products and services such as retail banking, wealth management, private banking, corporate banking, commercial banking, cash management, investment banking, corporate finance, foreign exchange, interest rate, currency, derivative and Islamic products, project finance, property management and strategic investments.
ADCB is owned 64.8 percent by the Abu Dhabi Government through Abu Dhabi Investment Council. Its shares are traded on the Abu Dhabi Securities Market in Abu Dhabi.
ADCB was recently named “Bank of the Year 2008” by Banker Middle East Magazine. For more information, please visit us on www.adcb.com.
A
Advertorial Advertorial
ADCB 21.5x28cm FinalTRENDS.indd 2-3 6/9/09 4:40 PM
ABU DHABI COMMERICAL BANK LAUNCH
“LONG LIVE AMBITION” CAMPAIGN
bu Dhabi, 19 May 2009: Abu Dhabi Commercial Bank,
one of the United Arab Emirates’ largest full-service retail
and commercial banks today unveils its new corporate
campaign under the tag line ‘Long Live Ambition’. The
campaign, which was developed by Minneapolis agency
Fallon, aligns the bank with the Ambition of the UAE. It is
targeted to a broad group of UAE Nationals and Expatriates,
and establishes a platform of creativity using the new
positioning statement.”
“Banks, traditionally considered a low involvement
category, have in recent months been thrust into the limelight
with the onset of the global recession, with everyone paying
attention to our category” said Abu Dhabi Commercial Bank
Chief Executive Officer, Ala’a Eraiqat. “But in this economic
downturn there is considerable opportunity for a financial
services brand to project a resonant voice, particularly in
the UAE, which has such a unique demographic make up
and attitude, combined with an economy that is stronger
than in the rest of the world”. He continued “Market cycles
are inevitable, but our ‘Long Live Ambition’ campaign
recognizes the fundamental and timeless spirit of the UAE
population - regardless of market cycle”.
In the campaign’s launch print advertisement, a red
flag is planted in a UAE desert landscape. The flag design
features the campaign’s tagline, “Long Live Ambition”
written in Arabic. An accompanying manifesto celebrates
the power of human ambition and lays the foundation of
the campaign. The flag and its design are recurring graphic
elements throughout the campaign.
“Conventional wisdom suggests a brand in a recessionary
economy should keep its head down,” said Abu Dhabi
Commercial Bank Head of Marketing Services, Senior Vice
President, Martin Scott “However, conventional wisdom
often leads to missed opportunities, as it has been proven
that companies who maintain advertising budgets during
a recession significantly outperform their competition in
the following years. But there is opportunity beyond the
numbers, as in a pessimistic environment, an optimistic
voice asserts leadership and earns respect at a time when
people are looking for a voice of hope and inspiration that
resonates positively with their values”.
The work, shot by renowned French photographer
Jean-François Campos, celebrates the spirit of the UAE,
and the intangible quality that so effectively unifies
its diverse population of Nationals and Expatriates:
Ambition. The campaign will transform ADCB into a
brand that stands for Ambition and champions the spirit
of ambitious people through its advertising and its actions
as a brand.
“Through significant market research and testing, we
recognized that the people of the UAE, both expatriates
and nationals, are unified by ambition. Daily, they engage
in shaping the country’s culture and coastlines – from
Saadiyat Island to The Palm Islands. And in that respect,
they are unique from consumers in other major economic
and cultural centers, where place typically has the upper
hand in shaping the individual,” said Fallon Group Account
Director Michael Craig. “In the UAE, it’s the other
way around.”
The fully integrated campaign comprises Print, Online,
Out-of-home, In-branch, and Brand Engagement and will
run throughout 2009. Print is the dominant medium and
provides the cornerstone of the communications. A heavy
outdoor rotation is also included to drive awareness and
give the campaign a ubiquitous presence. The highlight is a
domination of billboards along the 120 km highway between
Abu Dhabi and Dubai. Campaign executions will appear in
both English and Arabic.
High resolution images from the campaign along with
screen savers and desktop background can be downloaded
from: www.adcb.com
ADCB is a full-service commercial bank which offers a wide range of products and services such as retail banking, wealth management, private banking, corporate banking, commercial banking, cash management, investment banking, corporate finance, foreign exchange, interest rate, currency, derivative and Islamic products, project finance, property management and strategic investments.
ADCB is owned 64.8 percent by the Abu Dhabi Government through Abu Dhabi Investment Council. Its shares are traded on the Abu Dhabi Securities Market in Abu Dhabi.
ADCB was recently named “Bank of the Year 2008” by Banker Middle East Magazine. For more information, please visit us on www.adcb.com.
A
Advertorial Advertorial
ADCB 21.5x28cm FinalTRENDS.indd 2-3 6/9/09 4:40 PM
TECHNOLOGYAmadeus launches itsYemen operationSANA’A – Amadeus, a technology and dis-
tribution solutions provider for the travel
and tourism sector, has expanded its reach
in the Middle East with the launch of its
local operations in Yemen.
Amadeus Yemen is a joint partnership
with Yemenia Airways, the national carrier,
which accounts for 55 percent of reserva-
tions made by travel agencies in Yemen.
The new company commenced operations
at the beginning of this year.
“Amadeus Yemen will be investing
heavily in the market in the coming years
with the objective of enhancing the services
that travel agents receive today by compet-
ing GDS (Global Disitribution Services),”
Abdulfatah Altwait, the general manager of
Amadeus Yemen, said.
“We have a sound organization ... to
deliver ‘best in class’ on-site support to
travel agents. The technology backbone of
Amadeus is by far the best in the industry
and hence agencies opting for Amadeus
would have a better advantage through
technology to become more competitive,
efficient and productive in the market,” Alt-
wait added.
Amadeus says that having the national
carrier as a partner will benefit the travel
agencies by allowing them to access pre-
ferred airline content and the latest function-
al i t ies available. Amadeus’ customers
include travel providers, travel agencies and
travel buyers.
AIRPORTSAbu Dhabi registers 12pcrise in passenger trafficABU DHABI – April 2009 traffic figures for
Abu Dhabi International Airport show a 12
percent increase in passengers travelling to,
from, and through the airport compared to
the same month in the previous year, the
Abu Dhabi Airports Company (ADAC) said.
Aircraft movements also increased by 5 per-
cent. Conferences and exhibitions held in
Abu Dhabi dur ing the month , such as
Cityscape Abu Dhabi, were attributed as
some of the main contributing factors to the
passenger traffic increase. Other factors
included the arrival of new Sudanese airline,
Sun Air, with three weekly flights between
Abu Dhabi and Khartoum, and Etihad Air-
ways commencing daily flights to Mel-
bourne, Australia. London remained in the
top position as Abu Dhabi’s busiest route,
with Bangkok in second position. Doha was
the third-busiest destination, followed by
Bahrain in fourth place, making Jeddah the
airport’s fifth-busiest destination for the
month. According to figures, origin destina-
tion passengers increased by 13.7 percent
during the month of April. The Indian sub-
continent continued to see strong growth
with competitive pricing and high volume
workforce traffic. Traffic to and from India
increased by 29.2 percent, while UK traffic
increased by 15.1 percent. Pakistan was Abu
Dhabi’s third-largest market for the month
of April, with an overall increase in traffic of
13.9 percent. Australia continued to see
strong growth, becoming the airport’s ninth
largest market after a traffic increase of an
amazing 35.4 percent as a result of Etihad’s
new daily route into Melbourne.
MERGERS AND ACQUISITIONSM&A activity in MENA region slumps 66pc in Q1, says E&Y DUBAI – Mergers and acquisitions deals in
the Middle East and North Africa decreased
by 66 percent in the first quarter of 2009
compared to the same period last year,
Ernst & Young’s quarterly Middle East
update on mergers and acquisitions has
revealed. The report, which compiles pub-
licly available deals and values across the
region, said that merger and acquisition
activity had fallen both in terms of number
of deals and disclosed values.
A total of 140 deals were announced in
the first quarter of 2008 against 47 in the
first quarter of 2009. Within these, out-
bound deals fell from 48 deals in Q1 2008
to 11 deals in Q1 of 2009, a drop of 77 per-
cent, and the number of inbound deals also
fell from 20 in Q1 of last year to 5 in Q1
2009, ref lec t ing a drop of 75 percent .
Domestic (MENA) deals fell 57 percent,
from 72 to 31 in Q1 2008 and Q1 2009
respectively. “The drop in the number and
value of deals in the Middle East is reflec-
tive of the global economic recession and
follows the trend in worldwide M&A activ-
ity. Deals within the MENA region have
fallen by 57 percent,” said Azhar Zafar, the
head of mergers & acquisitions at Ernst &
Young Middle East. However, inbound and
outbound deals into and from MENA have
fallen in excess of 70 percent, showing that
investors are looking inwards and are more
cautious with cross-border deals.
arab
ianE
ye.
com
42 TRENDS / June-August 2009
Business Briefs 6/8/09 2:29 PM Page 42
BEING A LEADING EUROPEAN PROVIDER OF NATURAL GAS MEANS WE CAN PROMISE YOU GREATER SECURITY OF SUPPLY.Natural gas is a key development priority at GDF SUEZ. To make sure we transport it as effi ciently as possible, we use
a technology that allows us to reduce the volume of natural gas by up to 600 times. This level of performance enables us to diversify our sources of supply and provide you with energy that emits little carbon, is more competitive and always available.
Let’s rediscover energy. Energy that’s more reliable, more respectful and better consumed. www.gdfsuez.com
© S
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is -
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INST INTER 220x270 Meth UK 1INST INTER 220x270 Meth UK 1 20/05/09 15:22:0220/05/09 15:22:02
AVIATIONFlydubai unveils aircraft prior to launchDUBAI – Budget carrier flydubai unveiled its
new liveried fleet of Boeing 737-800 aircraft
at Dubai International Airport on May 18 in
preparation for starting operations on June 1.
The carrier will initially fly to Beirut, Amman,
Damascus and Alexandria in the first month
of its operations. The flydubai aircraft will
have 189 seats available per aircraft with 10kg
allowances for hand luggage, but passengers
will have to pay for checked-in luggage of up
to 32kg, seat selection and in-flight cuisine.
I ts chief executive off icer, Ghaith
al-Ghaith expects the new airline to improve
opportunities for passengers to fly more eas-
ily within the region. “We are very confident
flydubai will bring a fresh approach to the
budget airline sector and change the way peo-
ple travel. By keeping things simple we will
be able to provide an easier and more afford-
able travel experience. This will mean more
people can get together with family and
friends more often,” he said. The airline will
operate out of Terminal 2 at Dubai Interna-
tional Airport. Flydubai will operate with a
fleet of 54 Boeing 737-800 aircraft, worth
about $4 billion, which it ordered at the Farn-
borough Airshow in July 2008.
PROPERTYDubai is second-worst performing property marketDUBAI – Prices in Dubai’s property market
slumped by 32 percent between March 2008
and March 2009, according to a report by
UK property broker Knight Frank. The emi-
rate “is in a mess,” said Nick Barnes, head
of international research at Knight Frank to
Web s i te The Kipp Report . “A lot wi l l
depend on developers and how long they
can hold on before getting into fire-sale ter-
ritory.” Furthermore, analysts predict that
Dubai’s prices will continue to fall in 2009.
A recent report by Swiss finance house UBS
said it expects a 57 percent to 70 percent
drop in prices from the market’s peak, from
1,850 dirhams per square foot to 500-800
dirhams per square foot.
Dubai’s market slump is second only to
Latvia’s, which saw a 36 percent drop in
prices, and is followed by Singapore’s at
23.8 percent. The United States and Britain
are in fourth and fifth place, having suffered
declines of 16.9 percent and 16.5 percent
respectively. At the other end of the spec-
trum, Israel’s property market posted the
highest increase globally, 10.9 percent, fol-
lowed by the Czech Republic at 9.9 percent.
According to the report, the world’s best-
performing markets during the global eco-
nomic crisis are small and have “fewer
structural imbalances.”
LOGISTICSDubai World Centralset to go live in 2010DUBAI – The Dubai Government’s single-
largest urban land development project,
Dubai World Central (DWC) – the 140
square-kilometer urban aviation city under
construction in southwest Dubai – will go
live in its first phase of operation when
DWC-Al Maktoum International Airport
opens in June 2010, Sheikh Ahmed bin
Saeed Al Maktoum, the chairman of Dubai
Aviation City Corporation said.
“Our vision for Dubai is to be an unpar-
alleled global commercial, trade and trans-
portation hub with a unique integrated multi-
modal logistics platform in DWC which will
change all known air, land and sea trans-
portation parameters.”
At the core of this airport city will be the
world’s largest airport, DWC-Al Maktoum
International, which, once operational next
year, will not only draw business and trade to
it but also create huge residential and com-
mercial opportunities. “While we have
extended the opening date of the project to
accommodate all related construction, licens-
ing and regulatory standards, we have not
lost sight of the long-term vision of Dubai’s
most strategically important infrastructure
development, which is designed to support
Dubai’s aviation, tourism, commercial and
logis t ics requirements unt i l 2050 and
beyond,” he said.
Meanwhile, Dubai Logistics City (DLC),
a core component of DWC’s multi-modal
proposition, has begun licensing completed
warehouses and logistics offices and handing
over facilities to tenants to commence opera-
tions on site.
TELECOMSVodafone Qatar hailssuccess of Mega-IPODOHA – Vodafone Qatar announced that its
Initial Public Offering (IPO) on April 12-26
raised $1 billion and, at the time of the clo-
sure of the subscription period, it is the
Mic
hae
l C
oro
nel
44 TRENDS / June-August 2009
Business Briefs 6/8/09 2:29 PM Page 44
largest in the world in 2009 so far. Globally,
there have been 11 IPOs of more than $50
million per offering in 2009, that raised $2.1
billion in total. Vodafone’s IPO in Qatar
raised around $1 billion or almost half of all
of these other IPOs put together.
“The result is amazing. Qatar has demon-
strated again that it is the leading global
economy with this very strong and successful
result,” said Grahame Maher, the chief exec-
utive officer of Vodafone Qatar. Eighty-two
thousand Qatari national individuals sub-
scribed for 65 percent of the shares, and 35
percent of the shares were taken up by 273
institutional investors, resulting in a 100 per-
cent subscribed IPO.
A signi f icant number of the Qatar i
national population are now shareholders in
Vodafone Qatar, which is now 77 percent
Qatari owned. Vodafone Qatar’s shareholders
will play a significant part in helping Voda-
fone “make a world of difference for the peo-
ple in Qatar.” Vodafone Qatar is the holder of
the second public mobile telecommunica-
tions networks and services license in the
State of Qatar, granted on June 29, 2008.
ENERGYDong Energy, Masdar to build630MW offshore wind farmLONDON – UK’s power and gas company
Dong Energy and Abu Dhabi-based Masdar,
a wholly owned subsidiary of the Mubadala
Development Company, have announced that
they will invest 2.2 billion euros in building
the first 630MW phase of the London Array
offshore wind farm in the Thames Estuary.
Once complete , the scheme wil l be the
world’s largest (and the first 1GW) offshore
wind farm, a joint statement said. The project
will supply enough power for around 750,000
homes – or a quarter of Greater London
homes – and displace the emission of 1.9
million tons of carbon dioxide every year.
The announcement comes after the UK Gov-
ernment’s recent proposal to increase its sup-
port for offshore wind power. The partners
are satisfied that the project is now finan-
cially viable and are keen to push ahead with
construction and to produce the first renew-
able power in 2012. “The decision to build
the London Array offshore wind farm is a
very s igni f icant corners tone in Dong
Energy’s strategy to increase the proportion
of electricity generated from renewable
energy sources,” said Anders Eldrup, the
chief executive officer of Dong Energy.
Dong Energy has built approximately
half of all offshore wind farms in operation
in the world today. Entering into the world’s
largest offshore wind farm project further
strengthens the company’s leading position
in this field.
TRADEMiddle East intra-regionaltrade up 28 percent: DIFCDUBAI – Intra-regional trade in the Middle
East has grown 28 percent between 2000 and
2007 and now represents 19.3 percent of all
trade in the region, an economic note released
by the Economics Unit of the Dubai Interna-
tional Financial Centre (DIFC) has said. The
report, analyzing World Trade Organization
trade data recently released covering the
years through 2007, also revealed that Mid-
dle East trade was increasingly shifting
toward Asia and away from the United States
and was showing increased diversification
toward non-oil products such as chemicals,
travel and tourism.
Intra-Middle East trade increased from
15.1 percent of total external trade in 2000 to
19.3 percent in 2007, but is still significantly
below intra-regional trade levels in other
regions such as the European Union (71.2
percent) and Asia (57.4 percent).
This increase in intra-regional trade in
the Middle East was led by a doubling in
trade of agricultural products, an almost five-
fold increase in the trade of fuel and mining
products, and a four-fold jump in manufac-
tured goods. Given the shift in trade towards
Asia, the report also said it is increasingly
important for regional economies to negoti-
a te f ree- t rade agreements (FTAs) wi th
emerging markets such as China and India,
rather than focus their efforts on bilateral
FTAs with developed countries. �
Business Briefs 6/8/09 2:29 PM Page 45
46 TRENDS / June-August 2009
CNN Reme al-Saiegh CNN has promoted Reme al-Saiegh to sales
director for the Middle East and Africa region,
based out of CNN’s international headquarters
in London. As part of her new role she will be
responsible for overseeing CNN’s sales teams
across the Middle East, Africa and the UK as
well as a network of representatives through-
out the region. Al-Saiegh, who has been at
CNN International for more than five years,
started as a sales executive, then was pro-
moted to account manager and account direc-
tor before being appointed to her new role.
She is one of the key players in CNN 's Abu
Dhabi project; in her new role she will be
responsible for hiring and managing CNN’s
future Abu Dhabi-based sales team, with the
aim of strengthening CNN’s Middle East busi-
ness. The team will be working alongside
Media International Services, CNN's long-
term representatives in the Middle East.
EFG-HERMES Philip H. SouthwellInvestment bank EFG-Hermes has appointed
Philip H. Southwell as chief executive officer
for the firm’s operations in the GCC countries,
excluding Saudi Arabia. Given the importance
of the GCC to EFG-Hermes’ expansion plans,
Southwell will also be part of the executive
management of the Holding Company. The
appointment comes as EFG-Hermes looks to
leverage the full investment banking platform
across the Gulf region in the wake of its
acquisitions in key markets last year. South-
well last held the position of head of global
banking for Central and Eastern Europe,
Turkey, the Middle East and Africa at Deutsche
Bank based in London. He joined Deutsche
Bank’s Equity Capital Markets division in
1997, moving among the bank’s offices in
London, Hong Kong, Sydney and Tokyo.
Southwell set up and ran the Asia-Pacific
business during his tenure with the division.
“Philip has an impressive track record that
we are pleased to welcome to our team. He
will be a great asset to the firm’s growing
operations in the Gulf,” said CEO Hassan
Heikal. EFG-Hermes now has a direct pres-
ence in five of the six GCC nations – Kuwait,
Oman, Qatar, Saudi Arabia and the UAE.
Established in 1984, EFG-Hermes is the
Arab world’s leading investment bank. The
firm specializes in Investment Banking,
Asset Management, Private Equity, Securi-
ties Brokerage and Research.
IOMEGA INTERNATIONAL Cizar Abughazaleh
Iomega International has appointed Cizar
Nazeeh Abughazaleh as regional sales man-
ager, Middle East, Africa and Turkey. Abug-
hazaleh has over 10 years of experience in
retail and sales, most recently as retail
regional director of Aptec Mobile, where he
was in full charge of sales and marketing
activities for the Middle East. Prior to joining
Aptec Mobile, from 2003 to 2006, he was
retail account manager at Hewlett-Packard.
Previously, from 2000 to 2003, he worked at
Al-Futtaim Electronics.
BARCLAYS John Vitalo Barclays has appointed John Vitalo as the
chief executive officer of Investment Bank-
ing and Investment Management (IBIM) for
the Middle East. This new post will be in
addition to his existing roles in Johannesburg
as CEO of Absa Capital, and his local respon-
sibility in South Africa for Absa Wealth. In
his new IBIM role, Vitalo will be responsible
for building IBIM’s three businesses (Bar-
clays Capital, Barclays Wealth and Barclays
Global Investors) in the region, and will
report to Roger Jenkins, executive chairman
of Barclays Investment Banking and Invest-
ment Management, Middle East. The Middle
East region offers substantial business oppor-
tunities for Barclays. Many of the largest
sovereign funds are based in the region, as
well as high-net-worth individuals and lead-
ing world-class companies. All these clients
are looking for investment management,
wealth creation, risk management and financ-
ing solutions and advice, which Barclays is
in a unique position to provide. “John has a
proven track record of building businesses
and deepening client relationships. His
appointment will continue the growth of Bar-
clays’ successful businesses in the Middle
East for the benefit of our clients,” said
Roger Jenkins, the executive chairman of
Barclays IBIM, Middle East. For his Africa
(including South Africa) investment banking
responsibilities as CEO of Absa Capital,
Vitalo wil l continue to report to Maria
Ramos, CEO, Absa Group and Benoit de
Vitry, head of global markets-trading, Europe
and head of commodities and emerging mar-
kets at Barclays Capital.
TANMIYAT GROUP Marwan Alahmadi
Developer and investment company Tan-
miyat Group has appointed Marwan Ibrahim
Alahmadi as the new chief executive officer
of the group, effective from the beginning
of April 2009. The former CEO of KSA-
based Zain, and the top executive responsi-
ble for heading the teams that launched its
operations, Alahmadi is a leading business
and technical expert in the telecommunica-
tions sector. A Saudi national, he was for-
merly MTC Group's chief strategy officer
Managers.qxd 6/8/09 2:33 PM Page 46
with responsibility for spearheading strategy
development, corporate governance and
business operations. After joining MTC in
2004, Alahmadi led group initiatives on
strategic business planning and participated
in transforming the organization from a
regional entity into an international telecom-
municat ions company. “Dr. Al Ahmadi
brings a wealth of experience to us from his
years spent in the region’s leading organiza-
tions, where he held a portfolio of senior
executive responsibilities, and we look for-
ward to his bringing that expertise to Tan-
miyat,” said chairman of Tanmiyat Group,
Sheikh Sulyman Bin Abdulaziz al-Majed.
Besides working for Cisco, Alahmadi held
the posi t ion of CEO at MTC-Vodafone
Bahrain until February 2007. He also worked
for Toyota Abdul Lateef Jameel (ALJ) Group
where he was director of the IT division. He
holds an MSc and Ph.D. in Computer Sci-
ence from the Georgia Institute of Technol-
ogy (Atlanta) and a BSc in Systems Engi-
neer ing f rom King Fahd Univers i ty of
Petroleum & Minerals.
MCLAREN AUTOMOTIVE Ian Gorsuch McLaren Automotive has appointed Ian Gor-
such as regional director of Middle East and
Africa in preparation for the world launch in
2011 of the first in the company’s new range
of high-tech sports cars. Gorsuch’s first task
will be to begin appointing retail partners to
market the exclusive British high-perfor-
mance cars while assembling a sales and
market ing team a t the company’s new
regional base. The location for the Middle
East and Africa headquarters is yet to be
determined, as are potential retail partners,
but Gorsuch is aiming to reflect McLaren
Automotive’s quality and performance goals
through the company’s marketing and cus-
tomer service in the region. Gorsuch said of
the appointment, “This is a terrific opportu-
nity to launch a new range of high-tech
sports cars in a territory that will be a major
market for McLaren Automotive.” Gorsuch
will report to Rob Lindley, McLaren Auto-
motive’s sales and marketing director, who is
based at the company’s global headquarters,
the McLaren Technology Centre, in Woking,
UK. “With his experience in the region in
both premium automotive and leisure busi-
nesses, he is ideally suited to our plans for
McLaren Automotive,” Lindley said. After
serving as an army officer, Gorsuch lived in
Brazil, Australia, Korea, and Hong Kong
while working with the Vestey Group. He
joined Bentley in 1998, working initially at
the factory in Crewe and then becoming
regional director, Middle East, Africa &
India, based in Dubai.
TOSHIBA Anil Warang
Computer manufac turer Toshiba has
appointed Anil Warang as business planning
and product category manager. Warang will
be responsible for product forecasting, mar-
ket analysis, supply-chain management and
gathering of channel feedback on products.
At the same time, he will oversee the man-
agement of the just-in-time (JIT) inventory
and advance profitability across the entire
supply chain. “Toshiba continuously looks at
growing its business across the region. The
appointment of Anil Warang represents the
unwavering commitment of Toshiba to pro-
vide excellent business practices and unpar-
alleled support to our partners and our cus-
tomers,” said Santosh Varghese, regional
general manager, Toshiba Gulf Computer
Systems Division.
DUBAI ISLAMIC BANK Saad Zaman Dubai Islamic Bank (DIB) announced today
the appointment of Saad Zaman as the chief
executive officer of DIB Capital, DIB’s full-
service investment bank. Saad Zaman, who
has been a senior in the GCC investment
banking industry for a decade, joined DIB in
2004. He was appointed deputy CEO of DIB
Capital Ltd. (formerly known as Millennium
Capital Ltd.) in 2007. Prior to joining DIB,
Saad was the managing director of Citi-
group’s global Islamic banking subsidiary,
in addition to heading Citi’s investment
banking business for the Middle East, Lev-
ant and Pakistan. �
047_MIX.indd 1047_MIX.indd 1 6/12/09 4:56:34 AM6/12/09 4:56:34 AM
CATEGORIES
BANKING/FINANCE Financial services & products including: banking, insurance, loans, mortgages, mutual funds, money transfers and credit, charge, debit cards.
REAL ESTATE Developers: residential, mixed use, commercial and retail.
FOOD & BEVERAGE FMCG Food and beverages across all product categories including packaged, fresh, chilled and frozen.
NON-FOOD FMCG Personal care & beauty, household cleaning products, health & wellness.
TRAVEL, TOURISM & HOSPITALITY Aviation including airlines and airports, cruise ships, amusement & recreation (including malls), country brand campaigns.
AUTOMOTIVE Vehicles, auto rental, accessories & services, forecourt retailers, distributors.
MEDIA/INTERNET/CONTENT/PROVIDER Broadcasters, magazines, newspapers, web sites, consumer or trade media, radio and TV stations (inc. networks), out of home.
Effie® and “E Logo” are registered trademarks of Effie Worldwide, Inc. and are used under license by MediaquestCorp. All rights reserved.
2009
mena
gemas
TELECOMMUNICATIONS/MOBILES Network & service providers, mobile communications devices & accessories including PDAs.
COSMETICS & FRAGRANCES Controlled distribution premium regional and global brands.
ELECTRONICS/COMPUTERS AV devices including: TV, radio, DVD players, cameras, home theatre systems, electronic multimedia devices and PCs including Notebooks and laptops.
BEST NEW PRODUCT LAUNCH Open to any client or agency which can conclusively demonstrate commercial success from the introduction of a completely new branded product or service.
BEST USE OF CSR Submissions must clearly substantiate quantifiable, sustainable benefit for the recipients of the activity, as well as demonstrate an appropriate link with the core brand or corporate values.
BEST YOUTH MARKETING CAMPAIGN This broad-based category recognises youth targeted campaigns aimed at 8-21 year olds embracing tweens, teens and college -age sub segments. Submiss ions must demonstrate st rong emotional connection with target audiences through robust
consumer insight and research, innovative and relevant strategies, and communication. Judges will look for clear evidence through increased awareness and sales. GRAND PRIX This award cannot be entered. The award will be presented to the activity judged as the finest example of marketing effectiveness from among the category winners.
GEMAS MARKETER OF THE YEAR Companies are invited to nominate an individual who has made an outstanding contribution to the marketing function and raised the standard of marketing within their organisation. The person is someone who, through innovation, strategy and communication excellence, has made a positive impact on the market place, evidenced through clearly quantifiable post-campaign evaluation. It is someone who, in the opinion of the judges, has made a significant contribution to raising the standard of marketing in the Middle East.
DEADLINE FOR ENTRY: 5 PM, 1 OCT 2009
Twice as effectiveFor entries, contact: JP Nair, marketing manager, [email protected] For sponsorship opportunities, contact: Girish Pillai, senior business development manager, [email protected] MediaquestCorp, Dubai Media City, Al Thuraya Tower 2, Office 1901/1902, DubaiTel: (971) 4 391 0760 - Fax: (971) 4 390 8737
5th November 2009 - Madinat Jumeirah, Dubai, UAE
SP
ON
SO
RS
SUP
PO
RTE
D B
Y
Manufacturing
Manufacturing2.qxd 6/3/09 2:35 PM Page 50
June-August 2009 / TRENDS 51
n June, Abu Dhabi Polymers Park
should begin in earnest to churn out the
constituent materials from which plas-
tic goods are made. Armed with a mis-
sion to create skilled jobs and attract
investment, the 4.5-square-kilometer pro-
ject, 20 minutes by car from the UAE’s
capital city, hopes to attract 60 companies
and enough capacity to make a million
tons of pliable polymers annually.
Compared to the Gulf’s once boom-
ing service sectors like finance and
tourism, making money by turning oil
into plastic is by no stretch the region’s
most glamorous economic project. But if
local governments have their way, ven-
tures like the multibillion-dollar poly-
mers complex could arguably play an
even more important role in the Gulf’s
diversification drive.
Regional plastics production will
double to more than 30 million tons per
year by 2012, according to the park’s
senior vice president – part of a broad
push to boost manufacturing along the
Gulf. Aside from petrochemicals (like
plastics), which are the region’s second-
largest export behind oil and gas, local
steel and aluminum industries are also
heating up.
“We’ve had an explosion in domestic
manufacturing in the region,” says Raja
Kiwan, energy analyst at consulting firm
PFC Energy. “Industrialization forms a
huge part of their economic develop-
ment strategies,” he adds, citing govern-
ments in Saudi Arabia, Bahrain, Kuwait
and the UAE.
King Abdullah Economic City
(KAEC), an expansive $80 billion indus-
trial hub being built on Saudi Arabia’s
west coast, is the most ambitious among
a host of heavy-industry projects that
Riyadh is pursuing. Bahrain, home to
the Gulf’s most diversified economy, is
trying to expand one of the world’s
largest aluminum smelters. And UAE-
based Emirates Steel Industries recently
announced plans to triple production
within five years, through an investment
of some $7.2 billion.
The list goes on, and experts say
such plans make perfect economic sense.
But a handful of persisting strategic
I
Governments from Riyadh to Abu Dhabi are stepping up efforts to become heavy-industry titans. But do they have the wherewithal to succeed?
By Ian Munroe Dubai
CAPITALS OF INDUSTRY
Manufacturing2.qxd 6/3/09 2:35 PM Page 51
problems have them asking whether the
region’s industrial-strength ambitions
are achievable.
What financial crisis? Across the
globe, 2009 is shaping up to be a dismal
year for industrialists. Twenty percent of
the world’s crackers (petrochemical
plants that turn light hydrocarbons into
chemical raw materials) have shut down
because of sagging demand, according
to the Middle East Economic Digest.
But none have closed in the Gulf,
mainly because local petrochemicals
firms have access to cheap energy, at
stable prices. In countries like Saudi
Arabia and the UAE, gas used to feed
energy-intensive industries like petro-
chemicals sells via “what is effectively a
government-administered price cap,”
Kiwan says. Prices are fixed at a rate
several times below what global supply
and demand dictate, even in a slow year.
“That’s why they have a huge competi-
tive advantage,” Kiwan says, adding that
despite the financial crisis, it still “seems
to be business as usual” for the Gulf’s
existing heavy industry.
Keen to exploit that cost advantage,
Manama, Abu Dhabi, Riyadh and other
regional capitals are hoping that embrac-
ing industrialization will make their
economies bigger and more robust.
“You’ve got to look at what are the moti-
vations of Gulf states,” says Jane Kinnin-
mont, an expert on Bahrain and Saudi
Arabia with the Economist Intelligence
Unit. “One of them is macroeconomic …
when the price of oil goes down your
economy suffers, so you want to protect
yourself against those shocks.”
“The other impetus is more a social
and political one. The oil industry’s not
very labor intensive and all Gulf govern-
ments face a domestic unemployment
problem, which they want to do some-
thing about,” adds Kinninmont, who
authored a recent study on the Gulf
Cooperation Council’s (GCC) economic
52 TRENDS / June-August 2009
Manufacturing
Gas prices are fixed at a rate several times belowwhat global supply and demand dictate
6 1 . 8 P E R C E N T
Portion of the UAE’sGDP drawn from
industry in 2008, saysCIA Factbook.
4 4 . 3 P E R C E N T
Portion of Iran’s GDP derived fromindustry in 2008,
says CIA Factbook.
6 1 . 6 P E R C E N T
Portion of SaudiArabia’s GDP derived
from industry in 2008,says CIA Factbook.
Corb
is
Manufacturing2.qxd 6/3/09 2:35 PM Page 52
outlook to 2020. “The hope is that this
will be the kind of high-wage job that
will absorb their graduates.”
Instead of exporting unprocessed pri-
mary resources like crude oil, as many
poorer countries tend to, supplying
petroleum to manufacturers is a straight-
forward way to boost the value of goods
that Gulf firms ship to foreign markets.
More jobs also mean knock-on effects,
drumming up business for local real
estate markets and shopping malls. In
other words, it holds the promise of
much better returns on investment.
Better yet, industrializing could
boost economic growth by making Gulf
workers more productive. According to
a study released last year by the Gulf
Investment Corporation and the Confer-
ence Board, a non-profit research orga-
nization, in 2007, Gulf workers pro-
duced only slightly more goods and ser-
vices per hour of work than they did in
2000. Productivity in the region rose by
a miniscule 1 percent annually when, by
comparison, it jumped 10.5 percent a
year in China over that period.
Technology-based industries like
manufacturing could help close that gap.
“If you look at the kind of GDP growth
that China is enjoying today, that could
be the Gulf tomorrow,” says Ken Gold-
stein, a labor economist with the US-
based Conference Board. “By building
up physical infrastructure, absorbing
human capital, there could be a huge
burst of productivity,” he adds. “If it’s
all done right.”
Labor of love. As with many of the
Gulf’s development blueprints, however,
the devil is in the details. The financial
crisis isn’t likely to derail industrializa-
tion. “What’s going on right now puts a
speed bump – not a solid brick wall – in
front of the strategic plan” to bolster
manufacturing, as Goldstein puts it. But
some government-led projects have been
forced to regroup.
Saudi Arabia’s plans to build the
world’s largest aluminum smelter have
been scaled back as the project’s foreign
partner, Rio Tinto, cut its capital invest-
ment budget. Dubai Aluminum Co. has
also reported a 30 percent drop in sales in
the first quarter of 2009, but says it won’t
cut production this year.
Under gloomy economic circum-
stances, the Gulf ’s heavy industry
seems to be holding up well compared
to other parts of the world. Local gov-
ernments boosted spending to counter-
act declining foreign investment (the
UAE has said i t wil l increase state
spending by 21 percent this year), and
there are sizeable government reserves
to lean on ($432 billion, in the case of
Saudi Arabia).
More serious problems loom on the
horizon though. Kinninmont wonders
whether labor problems will discourage
54 TRENDS / June-August 2009
Manufacturing
Under gloomy economic circumstances, the Gulf’sheavy industry seems to be holding up well
Manufacturing2.qxd 6/3/09 2:35 PM Page 54
manufacturers from choosing to locate
in the Gulf, in spite of the low tax rates
and cheap energy on offer here. “There
can be difficulties getting visas for
enough staff, and shortages of skilled
local staff,” she says. “There are still
impediments to doing business.” Owner-
ship restrictions, opaque government
regulations and other bureaucratic
headaches persist, and could limit indus-
trial growth.
Above all, there’s an open question
about how the region’s growing alu-
minum smelters, petrochemical crackers
and steel plants will be powered. Qatar’s
moratorium on new gas deals stands
until at least 2010. The UAE is trying to
develop sour gas reserves (a sulfur-rich
variety of natural gas) to help fuel
industrial expansion.
But sour gas extraction and process-
ing is more technically challenging, and
it’s unclear when ConocoPhillips, the
company heading up development, will
be able to begin production. Saudi Ara-
bia is also searching for additional gas
deposi ts offshore , which are more
expensive to exploit. But recent explo-
ration results there have been less than
encouraging.
“The problem is not a theoretical
one – it’s very much a real concern,”
Kiwan says. “Last year, Alcoa was
going to move forward with a project
but they decided not to because there
wasn’t enough available gas. Dubai and
Bahrain have been having black outs
and brown outs.”
If Gulf states (aside from gas-rich
Qatar) can’t secure enough industrial
energy supplies, it may hamper efforts
to draw in manufacturers, slowing the
growth of places like Abu Dhabi’s new
polymers park. “The supply-demand
balance remains tight,” Kiwan cautions.
“If they can’t bring new supplies on past
2011-2012, things are going to become a
lot tighter.”
“Governments have started to real-
ize the problem, but they have to pit
economic growth and nation-building
versus energy efficiency. And in the
short term, I think economic growth
trumps all.” �
56 TRENDS / June-August 2009
Manufacturing
‘In the Gulf there can be difficulties getting visas forstaff, together with shortages of skilled local staff’
7 . 3 P E R C E N T
The average annualgrowth of the UAE’sreal GDP, between 1996 and 2006.
5 . 5 P E R C E N T
The average annualgrowth of Iran’s
real GDP, between1996 and 2006.
3 . 9 P E R C E N T
The average annualgrowth of Saudi Arabia’s
real GDP, between1996 and 2006.
Manufacturing2.qxd 6/3/09 2:35 PM Page 56
Employment
Get
ty/G
allo
Im
ages
Bahrain.qxd 6/3/09 4:45 PM Page 58
June-August 2009 / TRENDS 59
ahrain doesn’t often make the head-
lines. Sandwiched between Saudi
Arabia and Iran, the tiny kingdom
makes more headlines for the con-
gestion on the King Fahd Causeway
than for its economic might.
That all changed at the start of May,
thanks to Decree 79 of 2009. The new
law, announced by Bahrain’s Minister of
Labour Majeed al-Alawai, is aimed at
doing away with a sponsorship system
for foreign workers that many have
claimed is antiquated and open to abuse
by the employer.
The sponsorship system common
across the Gulf, known by its Arabic
name, kafala, is the legal basis for resi-
dency and employment. Migrant work-
ers receive an entry visa and a residence
permit only if a GCC citizen or a GCC
institution employs them. In turn, spon-
sors exercise full economic and legal
responsibility for their employees. The
sponsorship system, in use for over
three decades, has long been subject to
allegations of employee exploitation
and abuse.
Bahrain’s new labor law, which will
come into effect in August, will allow
foreign workers to switch jobs without
the consent of their employer. Accord-
ing to al-Alawai, the law will stop the
practice of Bahrainis sponsoring sev-
eral, sometimes hundreds of foreigners,
and charging them a ‘visa fee’ to work
with another employer. In effect, the
sponsorship system would no longer be
open to abuse.
“The end of the sponsor system is the
most important aspect of this law, because
in my opinion that phenomena does not
differ much from the system of slavery
and it is not something suitable for a
modern country like Bahrain,” said al-
Alawai. “That system will be broken and
eradicated under the new law, because it
will end the absolute power which the
employer had over the foreign worker.”
The reforms put Bahrain at the lead-
ing edge of reform. They will also help
slow the flow of foreign workers into
Bahrain and increase the percentage of
Bahrainis working in the private sector,
according to the country’s government.
B
Bahrain’s decision to reform the visa system is likely to have far-reaching consequences for employment across the GCC.
By Alex Malouf Riyadh
LABOR’S LAWS LOST
Bahrain.qxd 6/3/09 4:45 PM Page 59
Archaic system. Bahrain’s decision to
scrap its archaic sponsorship system,
likened by the US State Department in
its 2007 “Trafficking in Persons Report”
to “modern-day slavery,” will also have
the benefit of making Bahrain a more
attractive place in which to work – an
important means by which to attract
much-needed foreign direct investment,
particularly with the financial crisis.
“The change in regulation is positive
for the investment environment and
labor mobility,” says Monica Malik, an
economist at EFG-Hermes. “It will help
to reduce the cost and time linked with
labor issues.”
Simon Williams, of HSBC, agrees.
“The more easily people can move
between posts, the more likely it is you’ll
have the right person in the right job.”
According to al-Alawai, the new
labor laws will prove to be a spur to the
country’s economy. He claims that busi-
nesses that oppose the reforms will soon
change their minds.
“There is strong opposition from
employers, but we think it is good for
the market. It will end the black market
for illegal visas and will raise salaries,
because workers will have an option to
go to employers who will treat and pay
them better. It will also help us raise the
standard of wages amongst Bahrainis,”
he says.
“Practically, it will end the sponsor-
ship system and illegal visa system,
because those contractors will not be
successful. If the sponsor is holding you,
holding your passport and not paying
your salary, then you can easily just
move onto another employer,” he says.
For one recruitment expert based in
Bahrain, the reforms may not make
much difference in certain sectors or at
the top end of the market. “People have
60 TRENDS / June-August 2009
Employment
arab
ianE
ye.
com
‘The more easily people can move posts, the morelikely it is you’ll have the right person in the right job’
M A Y 6 2 0 0 5
5,000 citizens jamroads to call for
constitutional reformsin Bahrain.
J U L . 3 0 2 0 0 6
16 Indian nationals diein a fire at the sleeping
quarters provided bytheir employers.
A P R . 1 6
Decree 79 of 2009 ispassed, giving greater
labor mobility for expa-triates in Bahrain.
Bahrain.qxd 6/3/09 4:45 PM Page 60
always moved freely between banking
roles in Bahrain,” says Rory Adamson,
director of Bahrain-based executive
search firm Azrek.
“For other industries in the private
sector, this move should make a differ-
ence, but banks have always operated
this policy,” he says.
The question many are now posing is
what will replace the existing sponsor-
ship system, which will lapse in August.
Initially, the Labour Market Regulatory
Authority – also headed up by al-Alawai
– wil l review workers’ requests to
change jobs. However, longer term, one
option the Ministry of Labour is consid-
ering is the possibility of the govern-
ment sponsoring foreign workers.
Nevertheless, employees are a long
way from living in a utopian society.
Following demands from the Bahrain
Chamber of Commerce and Industry, an
employer will be able to terminate a
member of staff’s contract and deport
him or her with a month’s notice.
The Bahraini government is also
considering a cap on the number of for-
eigners who enter the country. A deci-
sion on the proposed cap is expected by
the end of the year. This is because the
top priorities for Bahrain’s authorities
are nationals and employment.
The Minister of Labour rebuffed
accusations that the reform of Bahrain’s
sponsorship system was forced on the
country because of pressure from for-
eign governments.
Instead, he argued i t’s al l about
ensuring Bahrainis are in work and earn-
ing a decent wage. This will not, how-
ever, lead to the introduction of a mini-
mum wage.
“We don’t want a minimum wage
because our businesses, industries and
services are linked to the GCC economy.
Unless a minimum wage is introduced to
the whole region it would be a huge dis-
advantage to our companies.
We are instead encouraging market
forces to increase the rates, but there
will be no legal minimum wage. There
will be no minimum wage in our life-
time. If you apply a minimum wage,
then by international law we have to pay
expatriates and Bahrainis the same and
that will cause a big problem for many
companies,” says al-Alawai.
“The problem of unemployment is
not caused by the lack of job opportuni-
ties available here. We don’t have real
unemployment, so having a [minimum
wage] will allow us to address the issue
of low wages, which is the main prob-
lem,” he says.
Regional rethink. Bahrain’s decision
may have implications not just for its
own citizens and expatriates, but also
62 TRENDS / June-August 2009
Employment
arab
ianE
ye.
com
One option the Ministry of Labour is consideringis the government sponsoring foreign workers
Bahrain.qxd 6/3/09 4:45 PM Page 62
for the rest of the Gulf. Qatar has set up
a committee to look into scrapping the
sponsorship system. Saudi Arabia, a
country that hosts over eight million for-
eign workers, is doing the same. So there
are major implications for business.
Results of a report conducted by the
Riyadh Economic Forum into the state
of the kingdom’s economy, claim that
the sponsorship system for expatriate
workers curtails competitiveness and
hampers human resource development.
The report, which was submitted to
King Abdallah, added that Saudi Ara-
bia’s immigrat ion regulat ions and
recruitment policies were not attracting
outstanding and competent workers;
instead, the sponsorship system pro-
moted the employment of low-produc-
tivity job seekers.
In effect, the study concluded that the
sponsorship system requires radical
reform. Already, Saudi business leaders
have begun to discuss the subject in pub-
lic and many are urging the Saudi gov-
ernment not to follow Bahrain’s lead.
“[Labor reform] is a very serious
issue and the media should not stir up the
labor market by attacking and criticizing
businessmen and entrepreneurs who have
the right to protect their business inter-
ests,” says Abdul Mohsen Al-Moushegah,
chairman of the Al-Moushegah Group of
Companies, a Saudi construction and
engineering conglomerate.
“Many of us have invested huge
amounts of money in hiring and training
foreign workers. We pay them well, and
treat them as equals. We cannot just allow
them to jump from one job to another,”
he says.
Nevertheless, Bahrain-based recruiter
Rory Adamson believes that reform
would bring about a measure of com-
mon sense to a system that many believe
is out of date: “I recently recruited an
expat worker – who was already in
Saudi – into another bank in the king-
dom. In order to sidestep the visa policy,
he's been forced to live in Bahrain for a
year and commute to Saudi Arabia." �
64 TRENDS / June-August 2009
Employment
$ 1 . 8 B I L L I O N
Foreign direct invest-ment in Bahrain during2007, according to the
United Nations.
$ 1 . 9 B I L L I O N
Foreign direct invest-ment in Jordan during2007, according to the
United Nations.
$ 2 . 5 B I L L I O N
Foreign direct invest-ment in Lebanon during2007, according to the
United Nations.
Debate around the sponsorship system has beensimmering for some time in Saudi Arabia
Corb
is
Bahrain.qxd 6/10/09 12:10 PM Page 64
Private Equity
Private Equity.qxd 6/8/09 2:53 PM Page 66
June-August 2009 / TRENDS 67
hen the marketplace goes awry,
turn to academics. Yet private
equity (PE) players seem to have
ignored their advice, or at least
the wisdom Stewart Hamilton, professor
of finance and accounting at Swiss busi-
ness school IMD, has been offering on
the subject. For years, Hamilton has been
talking about the “substantial nervous-
ness surrounding the performance of pri-
vate equity funds,” lecturing for his uni-
versity’s MBA and open-enrollment pro-
grams. He also forewarned of today’s
scenario in his 2006 book “Greed and
Corporate Failure.” The downturn hap-
pened nevertheless.
Asked how his understanding of the
subject applies to the Middle East and
what are the lessons to be learned,
Hamilton offers more than just one
hypothesis. He says many of the private
equity players are recognizing too late
that they significantly overpaid for some
of the deals. “The smarter ones got out
and sat on the sidelines because they
were unwilling to pay some of the crazy
prices. Some of them are having the
learning forced on them,” he says. On
what the future holds for them, he is
even more severe. “The funds will disap-
pear and the monies will be returned to
the original investors. They will have dif-
ficulty re-entering the market in the fore-
seeable future,” he says.
That may be PE’s worst kept secret
out in the open, but not everyone is call-
ing it doom and gloom despite the change
that the financial meltdown has brought
about. From more money chasing fewer
deals a few quarters ago, to fundraising
difficulties and underachieving invest-
ments, the landscape has certainly
changed for PE in the region. With the
days of quick-flipping over, there is a
need to exercise greater prudence in
acquisitions and create value post acqui-
sition, things that were not always on the
priority list. While year 2008 saw a sig-
nificant accumulation of “dry powder,”
industry insiders now admit no fantastic
deals have happened in recent months.
According to the “Gulf Venture Capi-
tal Association (GVCA) Annual Report
2008,” private equity companies have
W
The global financial downturn has fundamentally changed the world of private equity in the region, hopefully for the better.
By Ehtesham Shahid Dubai
THE EQUITABLE OUTCOME
Private Equity.qxd 6/8/09 2:53 PM Page 67
$11 billion ready for investment. But
deals are hard to come by, exit routes are
scarce and smaller players are finding it
difficult to raise funds. In contrast, fund
managers last year collected $6.4 billion,
10 percent more than the previous year.
The situation is forcing companies to
wait for recovery. Whenever that hap-
pens, it’s unclear whether investors will
continue to channel their money to the
same players or wait for consolidation.
According to one estimate, the number of
reported deals executed by PE funds in
the GCC plunged over 60 percent in re-
cent months. The plunge in GCC stock
markets has dried up exit opportunities
and damaged the attractiveness of IPOs
as well. This situation is drastically dif-
ferent from the one not too long ago
when liquidity was abundant and there
was pressure to do transactions irrespec-
tive of valuations. This, according to
some, led to questionable deals that took
place in areas where PE players had little
expertise. “They invested in high valua-
tions and bad assets, and, more impor-
tantly, had little or no post-acquisition
experience to make such investments
work,” says one insider, on condition of
anonymity. “In my view the number of
private equity players in the region is
likely to shrink even if assets under man-
agement or aggregate stay as is.” As per
GVCA figures, the number of PE invest-
ments dropped by 22 percent between
2007 and 2008, while the volume of
investments declined 31 percent.
Most still assert that all is not lost
and, according to a KPMG report, large
players with established track records are
set to bounce back. “Since historically
the best PE returns have been from
investments made during an economic
downturn, strong funds will survive,
while those without track records will
disappear,” says its report, “Key Trends
in MENA Private Equity in 2008.” “After
a period of little activity and after the
68 TRENDS / June-August 2009
Private Equity
The number of deals executed by GCC PE firms hasreportedly plunged 60 percent in recent months
4 8 D E A L S
The number of privateequity transactionsrecorded by GVCA
during 2006.
6 4 D E A L S
The number of privateequity transactionsrecorded by GVCA
during 2007.
5 0 D E A L S
The number of privateequity transactionsrecorded by GVCA
during 2008.
Get
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allo
Im
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Private Equity.qxd 6/8/09 2:53 PM Page 68
market settles, there will be decreasing
emphasis on minority stakes and more
focus on majority control transactions.”
Seifallah Zoghbi, vice president at the
Investor Coverage Team of Abraaj Capital
(a shareholder in the parent company of
TRENDS), says the nature of the private
equity and its strength in the Middle East
largely remains uncompromised despite
the crisis. “Private equity is all about cre-
ating value in partner companies and there
isn’t going to be any fundamental differ-
ence in that approach,” he says. “How-
ever, the playing field has changed over
the last nine months and managers need to
have an increased focus on portfolio man-
agement during these turbulent times.”
Fundamental change. Tamer Bazzari,
the deputy CEO of Rasmala Invest-
ments, says recent market conditions
have made investing in PE more chal-
lenging and have brought about a change
in habits. According to him, before you
could put a bit of money into PE and do
extremely well in a short period of time
from the increase in general market val-
uations. The nature of PE in the region,
he says, was also more of financial engi-
neering. “So you buy a good company
with good cash flows, add a bit of lever-
age, and as i t goes up in value with
increased market valuations you make a
lot of money. That’s not going to be the
case going forward,” says Bazzari,
whose company announced the first
closing of Rasmala MENA Private
Equity Fund 2 in January, with $120
million in commitments received.
With the rules of the engagement
altered, operational improvements are the
need of the hour. This means understand-
ing the business you are investing in,
improving operations, enhancing corpo-
rate governance, expanding geographi-
cally and getting involved more actively.
“It has to be more than just attending
board meetings four times a year. A lot
more integration, strategy and hand-hold-
ing is now going to be required to add
value,” Bazzari says. The same trends are
surfacing abroad, particularly due to the
lack of leverage and scarce liquidity
available from banks.
Industry players are in agreement
over the new reality. They say there has
been a lot of uncertainty since the last
quarter of 2008, which trickled into the
first quarter of this year. “There has been
unwillingness to make new investments
and a lot of focus on restructuring and
cutting costs,” says the leading execu-
tive of a major PE firm in the region.
“We are looking at transactions and we
are reactivating the dossier put on hold
in the last few quarters. So there are
more announcements globally and more
transactions are start ing to happen
70 TRENDS / June-August 2009
Private Equity
PE firms used to make a lot of money from theincrease in general market valuations. Not any more.
Private Equity.qxd 6/8/09 2:54 PM Page 70
again.” Focus has shifted to reestablish-
ing platforms of existing businesses
instead of going out and seizing new
opportunities. That means time to think,
reanalyze and discuss the setup of busi-
nesses will be crucial to the next phase
growth for PE portfolios.
Ground beneath. Irrespective of whether
lessons have been learned or not, there
has been no lack of activity on the ground
– albeit of a different kind. The entry of
Kohlberg Kravis Roberts (KKR), a
global alternative asset manager, is a case
in point. On May 11, KKR MENA ob-
tained a license to operate from the
Dubai International Financial Centre
(DIFC). Abdulla al-Awar, the managing
director of the DIFC Authority, had an
interesting welcome note. “Our region is
witnessing a deepening of the financial
markets,” he said, “and private equity is
not only abundant here, but is fairly
active.” KKR says it sees a wide variety
of attractive opportunities in these mar-
kets and “looks forward to capitalizing
on its global resources to build an excep-
tional franchise.”
Within days of this announcement,
KKR appointed Ford M. Fraker, the for-
mer US ambassador to Saudi Arabia and
former chairman of private investment
banking firm Trinity Group, as a senior
adviser to the firm. There have been sev-
eral other significant developments.
Kuwait’s KIPCO said that if market con-
ditions are suitable, it may launch a PE
fund targeting the MENA in 2009. Istith-
mar World Investment Management
(Dubai) has also been granted a license to
provide investment management services
focusing on private equity and alternative
investments from the DIFC.
At the same time, stakeholders are
brainstorming to revive the fortunes of
their industry . The Dubai Financial Ser-
vices Authority (DFSA) said in March
that it wants the DIFC to consider estab-
lishing the Gulf’s first PE secondary mar-
ket where holders of non-listed equity
can sell or transfer their investments.
DFSA chief executive Paul Koster said
there is an opportunity to create a “trad-
ing facility,” by which PE fund managers
June-August 2009 / TRENDS 71
H E A L T H C A R E
This sector received 16percent of regional pri-vate equity investmentsin 2008, says GVCA.
T R A N S P O R T
This industry received15 percent of regionalprivate equity invest-
ments in 2008.
P O W E R S U P P L Y
This industry received15 percent of regionalprivate equity invest-
ments in 2008.
Private Equity.qxd 6/8/09 2:54 PM Page 71
“can partially sell an investment” from
their portfolios. This would provide the
fund manager fresh capital and the new
investor an alternative exit strategy to
join an investment run by a professional
fund manager. “The objective of this pro-
posal is to explore how the DIFC could
facilitate non-listed entities in raising
capital in a manner where those parties
who subscribe into such a capital raising
are then subsequently able to reduce
and/or exit their investment by way of
such a trading facility,” Koster said. Such
a move will be significant, considering
the UAE accounts for 26 percent of the
MENA region’s PE transactions.
Double-edged sword. Bold moves apart,
insiders say the biggest challenge for PE
firms going forward will be raising debt.
It works both ways though, because com-
panies that need to grow and cannot bor-
row from the banks might seriously look
at PE. What’s missing from the equation,
however, is an escape route. Even weaker
players – who may want to exit deals to
grab more liquidity – will find few buy-
ers. Whether they like it or not, they are
left with no option but to do value addi-
tions so as to make their companies
saleable. Some say that reinforces the
theory that the markets in the region are
maturing and investors are realizing that
PE is not a financial gimmick, it is also
about growth and expansion.
The message has begun to sink in on
that front. Salman Malik, a senior invest-
ment manager at Swicorp, says over the
last few quarters private equity players in
the Middle East have already shifted their
focus from “deal origination and execu-
tion to post-acquisition management.”
He adds that “companies with access to
capital today are well positioned to pick
up assets at very attractive valuations.”
Riyadh-headquartered Swicorp is a cor-
porate finance advisory, private equity
and principal investment firm, with $1.5
billion funds under management.
The trouble is, a lot of funds may
still be standing on a weak footing in
terms of shareholding, debt, understand-
ing of businesses and their managers’
ability to execute these deals. This isn't
necessarily bad news. “It will help in a
way because it might remove the weaker
elements [players] and reinforce the
stronger ones,” says one insider. “How-
ever, if the market conditions worsen,
the weak ones might not survive but the
next phase will probably be better for
the industry.”
The global financial crisis has indeed
educated investors. Now they’re bound
to do more due diligence before commit-
ting money. Easy money can no longer
be made quickly, as it could in the past.
Yet for those still left with stacks of cash,
Stewart Hamilton of IMD University
isn’t necessarily a scarecrow. He sees the
bigger picture. “Private equity thrives
when the economies are thriving – when
people are looking to expand, invest
more and when they can see opportu-
nity,” he says. “As long as opportunities
exist in the Middle East, there will be
people who want to be part of it.” �
72 TRENDS / June-August 2009
Private Equity
‘Private equity thrives when economies are thriving,when people are looking to expand, to invest more’
Private Equity.qxd 6/8/09 2:54 PM Page 72
Education
Get
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allo
Im
ages
Libya.qxd 6/8/09 12:48 PM Page 74
June-August 2009 / TRENDS 75
cross the Middle East, from Cairo
and Is tanbul to Damascus and
Tehran, abandoned churches,
schools and social clubs, wrought in
the neoclassical style that was in vogue
during the 19th century, lie abandoned.
Few efforts are made to revive them
by the surviving octogenarian patri-
archies. Instead, fossilized boards of
directors meet once or twice a year
inside these crumbling buildings, for
extended procrastination sessions. They
are surrounded by thick walls, their plas-
ter peeling off. The dim roar of 21st cen-
tury traffic peters through as a reminder
of besieging modernity.
For Benghazi, a dusty Mediterranean
city just 200 kilometers south of the
Greek island of Crete, its Greek commu-
nity reached the point of extinction in
the 1980s, as an international embargo
was slapped on Gadhafi’s Libya for its
alleged role in the bombing of a Pan Am
flight over Scotland.
F locks of Greek bus inessmen
departed as opportunities dried up.
After a century of commercial back and
forth that mirrored millennia of trade in
this corner of the Mediterranean, social-
ist policies and a crippling bar on trade
with the outs ide world dwindled a
once-thriving community to a few fam-
ilies. 2004 was the last year the Greek
community school functioned. That
year, six teachers taught the two remain-
ing students.
“In the name of maintaining Greek-
ness we led ourselves into seclusion,
even though Greece is in the European
Union and most Greeks no longer live in
homogenous ethnic states,” said Kanakis
Mandolios, who is the president of
Benghazi’s Greek community. “So we
decided to create here in Libya a multi-
cultural community of the type the EU is
striving to replicate.”
Frustrated at the network of empty
Greek schools no longer serving the
Middle East’s depleted Greek communi-
ties, Mandolios offered Benghazi’s
school building to Benghazi European
School (BES). In one stroke, the Greek
school was converted into an interna-
tional educational establishment.
A
In one of the Arab world’s most isolated countries, a Greek community school has been transformed into a social experiment in educating global citizens.
By Iason Athanasiadis Benghazi
HELLENIZING LIBYA
Libya.qxd 6/8/09 12:48 PM Page 75
Today, it boasts first-world facilities
and equipment, tennis, basketball courts
and spacious classrooms.
“When you walk into here, you for-
get you’re in Libya,” said Gisela
Vejmelek, an Austrian expat engineer
who sent her children to BES. For BES,
its present surroundings mark a long
journey from a humble start in 1999,
when a $70,000 grant by a Cretan trustee
and six pupils taught inside two prefab-
ricated living containers set out on an
ambitious experiment.
The timing was propitious. Less than
four years after the school opened,
Libyan President Muammar Gadhafi
announced in an address to the world
that his country would accept the terms
for lifting the international embargo that
had kept it isolated for nine years and
arrested its growth.
At the moment, 65 students from 40
nationalities (speaking 12 languages)
attend the school. By 2011, the school
will have 100 pupils, taught by a mix-
ture of Libyan university professors, for-
eign full-time staff, and expat wives
moonlighting as occasional teachers.
Staff members admit the result has
been as positive as it could be “in a
loose environment regarding discipline
and homework.” Many of the students
go on to study in British or Canadian
universities, or Tripoli’s elite but ram-
shackle Fatih University.
Libya is no longer the cosmopolitan
entrepot of the 1940s. Its Jewish com-
munity emigrated to Israel, the Chris-
tians left, and public entertainment in
this observant Muslim society is limited
to the odd restaurant and a thriving Sufi
music scene. With mixed-sex interaction
occurring mostly inside houses, lovers
meet in dusky parks or frantic hospitals.
Alcohol is banned even in interna-
tional hotels, but Benghazi’s Western
and Westernized youth can still dance,
drink and have their f irst romantic
encounters in furtive social gatherings at
home, or – once the weather warms – on
isolated beaches far from peering locals
along Libya’s sprawling coastline.
76 TRENDS / June-August 2009
Education
With 40 nationalities represented, the school represents Libya’s emergence from global isolation
Reu
ters
Libya.qxd 6/8/09 12:48 PM Page 76
Trends 22x27cm E Raja-Empost.indd 2 5/18/09 5:46:29 PM
But more important than academic
achievement, Mandolios says the school
is a petri dish for building the next gen-
eration of multicultural, multilingual
Libyans, as comfortable in English and
French and mingling with Christians,
Jews and agnostics as they might be
around fellow Muslims or talking in
their native Arabic.
“What they gain is a multicultural
community which is a necessary weapon
in the international society we live in,”
said Mandolios. “They get in a conserv-
ative Arab environment the gift of a for-
eign culture.”
To this end, an ethnic quota system
was instituted, which strikes a very
conscious balance between interna-
tional students, full Libyans, and half
Libyans from mixed marriages. In this
game of balances, the idea of a domi-
nant culture emerging is avoided in
favor of pluralism – a symphony of lan-
guages and colors.
Still, cultural harmony is not always
possible, whether in the school or the
wider community. At the height of world-
wide rioting over the Danish newspaper
cartoons in 2006, 10 people perished
when a mob rampaged through Benghazi,
burning down the Italian consulate.
The school remained open and untar-
geted in what, Mandolios says, is testa-
ment to its strong Greek community
roots. “This is a community school, it’s
not an embassy construct,” said the mem-
ber of the Board of Trustees whose con-
struction company gave a Greek temple-
like facade to the school’s new premises.
“It’s about harmonious coexistence.”
Aside from imparting knowledge,
teachers must mix the children and
encourage them to see their commonal-
ities rather than fixating on cultural dif-
ferences. In what is a deeply conserva-
tive and almost exclusively Sunni Mus-
lim country, the school is a rare multi-
cultural lake.
78 TRENDS / June-August 2009
Education
BES is a a petri dish for building the next genera-tion of multicultural, multilingual Libyans
S C O T L A N D
In 2003 Libya acceptedculpability for the deathsof 270 people killed inthe Lockerbie bombing.
S A U D I A R A B I A
Gadhafi attempted toreconcile with King
Abdullah at the MarchArab League summit.
U S A
In 2008 Gadhafi met USSecretary of State
Condoleezza Rice, in abid to ease relations.
Corb
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Libya.qxd 6/8/09 12:48 PM Page 78
“Religious education is not offered
in the school, except that religious mat-
ters will come up in the normal course
of the History curriculum,” said Anthony
McQuiggan, the headmaster.
What cannot be achieved in the class-
room is often resolved with extra-curricu-
lar activities that reinforce in the pupils’
minds the shared Mediterranean culture
of the country they inhabit. There are
school trips to Libya’s splendid Roman
sites of Leptis Magna and Ptolemais, and
an excursion to the Greek island of Crete.
On a recent trip to the desert, the sole
European pupil among 11 students on
the trip (aged between 14 and 18) wor-
ried he would be shunned by his Arabic-
speaking classmates. When the English-
speaking child was assigned the same
tent as another pupil with whom he
fought in school, teachers feared the
worst. But the desert transformed their
relationship positively.
“Each nationality is different from
others and sometimes it’s hard,” said
Walid Kombari , a Beirut-educated
Palestinian teacher at the school. “But he
got on with the kids better than we had
expected – the desert achieved what the
city could not.”
For Mandolios, the Greek commu-
nity president, building this school with
his own hands is payoff for not having
abandoned Libya through the hard years
of the embargo, unlike the majority of
Greeks who jumped ship.
“We created a microcosm in the
school in which people could l ive
well,” he says. “The outside circum-
stances were not good, which is why
no-one remained or bothered to invest
in their surroundings.”
A fluent Arabic speaker originally
born in Egypt, Mandolios represents a
generation of the Middle East’s cos-
mopolitan multilingual Greeks now
rapidly rushing towards extinction.
These Greeks were romantically cap-
tured in works of l i terature such as
Olivia Manning’s “The Cairo Trilogy”
and Lawrence Durrell’s “The Alexandria
Quartet.” But their multicultural breed-
ing grounds were drained by the storms
of pan-Arabism and Islamist exclusion-
ism that swept the Middle East in the
post-colonial period.
Mandolios inserts a lit cigarette in
the mouth of his long, cultured face, and
parks the packet on the table against a
no-frills Nokia turned to silent.
In forging this school, he seeks to
leapfrog the damage inflicted on his her-
itage by a century of nationalism.
“We no longer live in homogenous
ethnic states, we’re entering again the
era of empires,” he says. “The trick now
is to learn to get along.” �
80 TRENDS / June-August 2009
Education
‘We no longer live in homogenous ethnic states,we’re entering again the era of empires’
Libya.qxd 6/8/09 12:48 PM Page 80
YOU SAY YOU WANT TO REACH OUT...
WE SAY HOW FAR?
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Cover Story: Tourism
Cover Story.qxd 6/7/09 12:18 PM Page 82
June-August 2009 / TRENDS 83
ourists are no strangers to the shores
of Arabia, but never in history have
they been so critical to the future of
the region. Alongside the second oil
windfall, the region identified the sector
and worked upon it as a key component
of economic diversification. Since then
the Middle East has already spent mil-
lions on building infrastructure and
grooming destinations to keep the num-
bers flowing in. But with the financial
downturn throwing a spanner in the
works and projections going haywire,
the ensuing months are certain to be a
test of the region’s ability to stay the
course and meet its long-term tourism
objectives. With a high dependency on
intra-regional travel of over 40 percent
and growing, the region cannot afford to
roll up its welcome carpet.
Fortunately, with a lot of momentum
gathered in recent years, the tourism sec-
tor enters this phase of uncertainty from
a position of strength. An Alpen Capital
report, citing the International Monetary
Fund (IMF), says international tourist
arrivals in the Middle East more than
doubled from 24.4 million in 2000 to
52.9 million in 2008. With a compound
annual growth rate of 11.7 percent, that
is more than double the world interna-
tional tourist arrivals (4.4 percent) over
the same period. The WTO data says
international tourism receipts in the
region grew by 25.5 percent, from $27.3
billion in 2005 to $34.2 billion in 2007,
and are expected to reach $38 billion in
2008. According to a Euromonitor Inter-
national report – “Future Trends for
Travel in the Middle East” – a total of
67 million arrivals to MENA brought
$50 billion worth of incoming receipts
during 2008. Clearly there is a lot at
stake, and the region can ill-afford to
lose ground at a time of crisis.
Refreshingly, sector stakeholders are
displaying more realism than they have
been known for. They are willing to make
short-term adjustments to achieve broader
objectives. Hoteliers are openly admitting
a drop in occupancy, authorities are cut-
ting tourist projections, and airlines are
launching budget brands. Hotel owners
and management companies are being
T
Caught in the midst of infrastructure overdrive and global slowdown, the region’stourism sector will be forced to find new revenue streams to survive the lean times.
By Ehtesham Shahid Dubai
THE OFF-PEAK YEAR
Cover Story.qxd 6/7/09 12:18 PM Page 83
advised to assist each other in promoting
destination tourism and not just rely on
government marketing. The focus is
therefore shifting towards maximizing
revenue streams and greater efficiency at
lower costs, even though key drivers are
very much part of the equation. The rea-
son is simple. Around 68 percent of the
population of the GCC are aged under 35,
and there is still a positive regional GDP
growth compared to other parts of the
world. The liquid assets in the form of oil
reserves that provide a cash buffer during
boom times are now proving a valuable
resource for the region in the current cri-
sis. More importantly, government invest-
ment in infrastructure is set to keep the
momentum going.
Correction time. The sector is still ner-
vous, though – awaiting good news
with bated breath even as short-term
projections spread further gloom. Inde-
pendent observers are revising tourist
target numbers in places such as Dubai.
“The 10 million visitors by 2010 [in
Dubai] is not achievable in the current
climate. However, it will be by 2013
once the global economy recovers and
developed countries’ growth stabilizes,
leading to improved consumer confi-
dence,” says Caroline Bremner, the
global travel and tourism manager at
Euromonitor International. The source
of tourism dollars is sti l l not being
properly tapped. The United Kingdom
will continue to be the region’s leading
source market, whereas key alternative
source markets with emerging middle
classes remain negl igible , even as
China, Brazil, Eastern Europe and Latin
America offer long-term potential,
according to Euromonitor.
Government support notwithstand-
ing, hotel occupancy rates have been
falling significantly in Dubai – to 73
percent in the first quarter of 2009 from
almost 90 percent last year (according to
one estimate). To tide over this situation,
different players are trying different pre-
scriptions. “First we launched a 20 mil-
lion savings campaign in our net profit
line,” says Marko Hytonen, the area vice
president for the Middle East and Egypt
at Rezidor, the multi-brand hotel man-
agement company. His company then
followed up with another initiative to
save 10 million more so as to stay in line
with the drop in revenues. “It has been a
bit of a corporate diet. We still keep the
muscle but we trim the extra fats,” Hyto-
nen says candidly.
Rezidor ’s biggest drop has come
about in Dubai. “During the first quarter
we have lost 36 percent in revenue per
available room in Dubai,” he says, and
the average house rates have also defi-
nitely decreased in the city. “It definitely
84 TRENDS / June-August 2009
Cover Story: Tourism
arab
ianE
ye.
com
Tourism dollars are being missed in markets withlong-term potential like China and Latin America
Cover Story.qxd 6/7/09 12:18 PM Page 84
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is correction time, there is no question
about it.” Rezidor currently operates in
20 countries, has 5,000 hotel rooms in
operation and is in the process of adding
another 5,000 rooms and 18 hotels over
the next five years.
The Dubai Department of Tourism
and Commerce Marketing (DTCM) has
a different story to tell, however. Accord-
ing to the department, hotels in Dubai
saw a five percent increase in the num-
ber of guests in the first quarter of this
year. “A total of 1.99 million guests
stayed in Dubai hotels in the first quarter
of 2009, five percent more than the cor-
responding period in 2008,” a DTCM
statement said. According to them, the
number of operating hotels and hotel
apartments rose to 519 in the first quar-
ter of 2009, up from 475 during the cor-
responding period in 2008, while the
revenue of hotel establishments during
the January-March 2009 period was 4.26
billion dirhams ($1.2 billion).
Like many others in his sector, Hyto-
nen of Rezidor is unsure about how long
this si tuation is l ikely to continue.
“There has been discussion that 2010
would be a more destabilizing year and
[the economy] will pick up 2011 first
half. I think it is going to get worse
before it gets better, this is at least the
feeling. I think the market is not going to
get bigger, so we have to fight harder to
get our piece of the cake,” says Hytonen.
There is a lso a disconnect with
regard to the supply-demand equation in
the hospitality sector. Hytonen notes
there are around 45,000 hotel rooms in
Dubai today, another 13,000 are esti-
mated to come online next year, and
10,000 more by 2011. He says a lot of
these estimates are based on what was in
the books last year. “I do not believe
operators have adjusted and consoli-
dated the situation yet. We will get a bet-
ter and more accurate picture by the end
of the year,” he adds.
The numbers aren’t dipping every-
where, though, because there are seg-
ments within the sector making hay
86 TRENDS / June-August 2009
Cover Story: Tourism
1 1 . 6 m i l l i o n
Number of visitorsarriving in Saudi Arabia
in 2008 accordingto Euromonitor.
8 . 8 m i l l i o n
Number of visitorsarriving in the UAEin 2008 according
to Euromonitor.
2 . 3 m i l l i o n
Number of visitorsarriving in Oman
in 2008 accordingto Euromonitor.
‘I think it is going to get worse before it gets better.We have to fight harder to get our piece of the cake.’
Cover Story.qxd 6/10/09 12:06 PM Page 86
despite the gloom. The food and beverage
segment remains largely intact, while online
travel booking is actually looking up. Tom
Rowntree, the vice president commercial at
InterContinental Hotels Group, argues drops
in numbers can be offset by other more
vibrant segments. “The MICE (Meetings,
Incentives, Conventions and Exhibitions)
sector continues to be strong, and if you look
across the region there will continue to be a
market despite global economic downturn.
Moreover, we are in the market on a long
term,” he says.
During an economic downturn, he sug-
gests, there is a short term or a tactical
approach and a more long-term strategy
positioning. “The more tactical focus neces-
sitates looking at promotions and campaigns
to stimulate the market and activate the
opportunities that exist,” says Rowntree.
The growth in online demand is a far
more interesting story. Diego Lo Fuedo, the
director of Hotels.com, says there has defi-
nitely been a slowdown in general, but it is
different for the online segment. “In times
of crisis, people tend to go digital, which is
not just a faster way to communicate but
also gets you a variety of offers,” he says.
So if tourism is expected to grow by 4 per-
cent to 7 percent, the online shift is growing
at around 15 percent to 20 percent, depend-
ing on the geography. Lo Fuedo also rules
out lack of Internet penetration as a prob-
lem. “There is always a learning curve,” he
says. “The Internet levels increased in the
West only in the last 10 years. The shift in
information channel to transactional channel
is only recent,” he says.
Beyond Dubai. On the ground there are
different sets of realities confronting differ-
ent countries. Some are far too out of the
loop to really get hit by the downturn.
Qatar, for instance, currently receives only
0.9 million international visitors, out of
which 90 percent are for business purposes.
From these figures, there is clearly a large
amount of work to do to build Qatar, and
Doha, as a leisure destination.
Caroline Bremner, of Euromonitor
International, says investing in Doha’s
tourism offers is a good start. “These steps
are critical to building its credentials as a
leisure destination and will help underpin
10 percent arrivals growth per year, so that
arab
ianE
ye.
com
Cover Story.qxd 6/7/09 12:18 PM Page 87
the country welcomes 1.7 million visi-
tors by 2013,” she says. Tourist arrivals
are indeed important, not only for the
hotel sector, but also the broader service
and retail sector.
Besides those blips on the tourist
radar, Doha seems to have chosen to
take the retail route to attracting tourists.
A Jones Lang LaSalle report says about
500,000 square meters of retail space is
expected to come online by 2011, which
will double the retail stock within the
city. That is not necessarily good news
under the circumstances confirmed by
the report i tself . “Faced with this
increased supply and declining global
tourism, rentals in the Doha retail mar-
ket are expected to decline in the short
term,” the report reads. Although the
level of leisure travel for sporting and
other events is likely to increase in
Doha, the business and convention sec-
tor will remain the major driving force
of Qatar’s tourism mix.
Abu Dhabi has chosen to focus on
family and cultural tourism, which
observers say should hold the emirate in
good stead. But, since it doesn’t overly
rely on tourism, little sleep is lost.
Places like Oman are happy holding
on to their ground as regional leisure
destinations, and wouldn’t want to
experiment at this time. However, con-
struction activity isn’t drastically slow-
ing down across the region.
According to Proleads research, Gulf
countries have more than $140 billion
worth of hotel projects under construction
and 19 percent of the projects are being
suspended or canceled as the sector faces
a global slowdown. Of 893 hotel projects
surveyed in the Gulf, 5 percent had been
canceled, 14 percent put on hold, and 42
percent were underway.
Road to recovery. The same yardstick
cannot apply to the entire region, but
Dubai and its exploits in recent years
have certainly raised the bar on tourism
88 TRENDS / June-August 2009
Cover Story: Tourism
Gulf countries have more than $140 billion worthof hotel projects under construction
3 0 6
The number of newhotels currently
under constructionin the Gulf region.
1 0 8 , 6 0 0
The number of newhotel rooms currently
under constructionin the Gulf region.
$ 1 4 0 B I L L I O N
Value of the new hotel facilities currently
under constructionin the Gulf region.
Cover Story.qxd 6/10/09 12:07 PM Page 88
potential. As one would expect, Dubai has
suffered the most in the face of the down-
turn. Euromonitor considers Dubai’s popu-
lation decline of 17 percent a major con-
cern. Then there is the real-estate bust, over
half of the city’s development projects are
on hold or delayed, and there are cases of
expatriate migration and rising job losses.
According to an Economic Intelligence
Unit report, the rapid population growth
witnessed in 2006-08 in the UAE has now
gone into reverse as expatriate jobs are cut
in the construction, real estate, tourism and
financial services sectors. “This will affect
private consumption in both the short and
medium term,” it says. But Graham Cooke,
the founder and managing director of the
World Travel Awards, says it is all part of a
growth curve and the region is no different.
“Whenever a new destination is discov-
ered, tourist numbers rise drastically and
then level off. What Dubai did for the Mid-
dle East's tourism sector was fantastic – it
put them on the map and brought every-
one's focus to this region. Now the region’s
tourism destinations should think how they
can build from that,” he says. The trouble
is, three of Dubai’s key tourist markets –
the UK, the euro zone and Russia – are in
recession, with depressed consumer confi-
dence and rising unemployment.
Cooke admits the number of tourists
and business travelers will decline given
the global financial situation, but that’s not
the end of the road. “As long as these des-
tinations continue to remain competitive,
their airlines continue to offer world-class
service, and their tourism experience con-
tinues to diversify, tourists will keep com-
ing,” he says. “I don’t think it will be as
catastrophic as people make it to be. If the
projected number of tourists don’t show up
in the Gulf countries there will still be a
tourism sector.”
Nevertheless, despite those encouraging
words, the sector is not investor grade in the
near future. The Jones Lang LaSalle “Hotel
Investment Outlook 2009” report bluntly
sums up the future with a simple chronol-
ogy: “2009 will be the year of correction,
2010 will bring market stability ahead of
general recovery in 2011.” �
Cover Story.qxd 6/7/09 12:18 PM Page 89
90 TRENDS / June-August 2009
Interview: Selim el-Zyr
BACK TO BASICSSelim el-Zyr, the president and chief executive officer of Rotana Hotels, tells Ehtesham Shahid about the hospitality sector and how it can duck the downturn.
ou recently bagged severalawards at the World TravelAwards event. How does it feelto receive an award in these
difficult times?Every company, every individual,
needs recognition for whatever he
does. An award is one way the mar-
ket, customers, or specialized institu-
tions recognize your efforts in reach-
ing a certain level of professionalism.
How do you view the difficultiesfacing your business in 2009?
It has been challenging, but in every
depressed market there is an opportu-
nity. It is an opportunity for us now to
go back to the basics, to go back to
normality. Everything went berserk at
once – prices, rates, salaries, costs.
Everything was hitting the roof and
for no reason.
But even before that set in you hadstarted moving into Abu Dhabi,which is comparatively better off.Was that anticipation or calculationon your part?
We actually didn’t move, we started in
Abu Dhabi. But obviously the demand
three to four years ago was mainly in
Dubai; Abu Dhabi was somehow stag-
nant. Around four to five years ago,
Abu Dhabi started picking up. So we
didn’t shift gear and go to Abu Dhabi,
we were in Abu Dhabi, but we opened
our eyes to the opportunities that
existed – the low-hanging fruit was in
Abu Dhabi.
Where has the focus been in theregion outside of the UAE?
Y
Q&A Selim El Zyr Rotana.qxd 6/3/09 5:17 PM Page 90
June-August 2009 / TRENDS 91
We are all over the Middle East and
are now moving into the Saudi market
and North Africa. The Saudi market has
got tremendous potential; we had many,
many opportunities before, but we did
not want to go with one property or
two or three. We want to go to Saudi
Arabia and within a period of time to
cover the whole kingdom, which is a
massive country. Saudi Arabia is two
million square kilometers in size. The
travel time between Jeddah and Riyadh
is around one and a half hours by
plane, so to go and open a 250 to 300-
room hotel wasn’t going to be viable
[as people won’t stay overnight].
But there is also a categorization ofhotels happening, andlots of movement in thebudget sector of themarket. How are youplaced to tackle that?Rotana started talking
about budget hotels in
the middle of the expan-
sion period. Three years
ago, when we talked about budget
hotels, everybody thought we were
crazy. Budget hotels are needed at all
times, and particularly in difficult
times. A budget hotel doesn’t mean it
is cheap – it means better value for
money, that it caters to essential needs.
You’re not going to book into a
hotel that has got a 40 to 45 square-
meter room when you’re only going
to spend seven or eight hours sleep-
ing. If you come to an exhibition,
many people would look for accom-
modation where there’s just a com-
fortable bed, it’s clean, safe and
trendy, and that’s it. But this doesn’t
mean that people won’t go to five-
star hotels anymore.
In every market there’s got to be
enough diversification of the product to
satisfy everyone; there’s the chairman
of a company who wants to pay $3,000
a room, and also the guy who fixes the
stands and wants to pay $100.
It’s being said that places like Dubaiwill have to cut down on hotel ratesto stay in business, because people
will tend to go to Oman and otherneighboring cit ies , and also toSoutheast Asia.Dubai is not more expensive than any
other city in the region, but it has got
superior hotels. The Burj Al Arab is,
of course, very expensive, but where
is there another Burj Al Arab in the
Middle East, or a Madinat Jumeirah?
The standard of services and lux-
ury that exists in Dubai does not exist
elsewhere. But if you take the same
product in Cairo, in Beirut, in Muscat,
or in Abu Dhabi, Dubai is at the same
level. Now with regards to rates, obvi-
ously when there is less demand, rates
are going to come down.
How much are yourplans dependent on theprojected tourist num-bers? Are you consider-ing a backup plan for asituation in which thosenumbers don’t turn up?We are adjust ing our
plans. When we did the
projections for 2009, we did them in
July and August 2008. At that time
there was no crisis. So we based our
projections on numbers that we had
from 2007 and 2008. But once the cri-
sis started we adjusted our numbers,
and now every month we are adjusting
our projections.
Do those adjustments happen quar-ter to quarter or is there a morelong-term view?We are doing it monthly now, because
the changes are unexpected. This is a
crisis [the like of which] we have
never seen before. Nobody has got
experience in crisis management of
this magnitude and nature. We all
went through periods of slowdown,
boom, slowdown and so on, but it was
never so bad.
But is the message sinking in? Is theindustry prepared to face the crisis?The industry is not prepared today, but
it will be prepared within the next few
months. And whoever is not prepared
is going to go out of business. So we
SELIM EL-ZYR is president andCEO of Rotana, which he co-foundedin 1992 as the first Middle Easternhotel management company. Rotanacurrently manages 67 locations acrossthe region.
‘A budget hotelisn’t cheap – itmeans better
value for money,that it caters toessential needs’
Q&A Selim El Zyr Rotana.qxd 6/3/09 5:17 PM Page 91
are all on a learning curve. The faster
you react and find solutions, the better
placed you will be. It is a race and we
are all going to reach the end, but who
is going to be first?
A lot of players in the industry haveshed excess fat to stay in business.You have chosen to keep your work-force. What makes you think youcan sustain them?We haven’t shed jobs due to our expan-
sion plans. We have 12 hotels that are
opening between now and the end of
the year and we need 3,000 people – so
we didn’t have to [make people redun-
dant]. But I understand and sympathize
with organizations that had to tell peo-
ple “sorry, you do not have a job.”
Many companies are cutt ingemployee numbers quite drasticallyas a way of reducing costs. But howcan Rotana cut costs if you keepyour people? What happens if hotelocccupancy drops?
If we have a hotel in Dubai and the
occupancy dropped 10 percent, we
may need to cut around 50 people, but
we have jobs for them due to our
expansion plans. Every year we are
opening hotels; this year 12, next year
13 or 14 hotels, so almost every
month we need 300 to 400 people.
So the excess from one area is
being absorbed. We do not have
enough excess so we are hiring new
people. But, of course, companies that
have no growth have to tell people
they no longer have jobs.
As someone who has spent decadesin the industry, what is your viewof the road to recovery? Do youexpect to get better news in thenext six months?I hope so, we are very optimistic. By
nature, I am optimistic. I look forward
to the growth – I do not know if we
are at the bottom or not yet, but there
will definitely be a boom and I hope
to be alive to see that boom. Whether
it’s going to be six months or six
years, who knows? �
92
Interview: Selim el-Zyr
‘Every year we are opening hotels; so almost everymonth we need 300 to 400 people’
1 9 9 2
Nasser al-Nowais and Selim el-Zyr co-found Rotana
hotel corporation.
2 0 0 0
The rapidly expandingchain offers 15
locations throughoutthe region.
2 0 0 9
Rotana currently operates 67
properties acrossthe Middle East.
Q&A Selim El Zyr Rotana.qxd 6/3/09 5:17 PM Page 92
TRENDS / June-August 2009
C
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Y
CM
MY
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CMY
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Titan Trends FP.ai 1 4/16/09 5:31 PMTitan Trends FP.ai 1 4/16/09 5:31 PM
94 TRENDS / June-August 2009
Interview: Eric von Hippel
RETHINKING IPEric von Hippel, an innovation expert at MIT’s Sloan School of Management, tells Ian Munroe why intellectual property laws are out of sync with the digital age.
ow have the sources of innova-tion changed at a global levelover the past 20 years?The world is in a big shift now
from manufacturer-centered innovation,
which has been the paradigm since the
industrial revolution, to user-centered
innovation. Business models have to
adapt to this, and the policies of gov-
ernments have to adapt to it, too.
You have these manufacturers fol-
lowing the traditional ‘find a need and
fill it’ model, the idea that the manu-
facturer’s job is to go out and look for
user needs, come back and develop the
products for the users. Market
researchers go out to find needs, and
then the internal R&D department
develops the solution. They spend
money doing that, and out of it comes
the need for intellectual property. This
is because the only way a company
can benefit from spending R&D and
market research money is by selling
whatever they develop at a profit. User
innovators are different. When innova-
tion switches to users, users actually
benefit from an innovation by using it.
Can you give an example of userinnovation to illustrate this?Take the heart-lung machine that was
developed by a surgeon. He benefited
because he used it. He built it for his
practice. The inventors of the moun-
tain bike were also users, and so
were windsurfers . The guy who
builds an innovative mountain bike
gets to ride it.
On the other hand, a manufacturer
doesn’t get any profit from innovation
unless he sells it. So if a medical
equipment company built the heart-lung
Get
ty/G
allo
Im
ages
H
Q&A Eric von Hippel.qxd 6/3/09 2:50 PM Page 94
June-August 2009 / TRENDS 95
machine, they wouldn’t benefit until
they sold it. The user has in-house use,
and the user can be an organization like
a hospital, a company making equip-
ment for itself to use, or it can be an
individual, somebody who’s building a
bit of sports or cooking equipment for
their own needs. They build it to solve
their own problem.
What’s driving this change in theway designs develop? Is it that peo-ple have access to more technology?Users are more connected on the Inter-
net. They have design tools that are
digitally-based, so what’s happening is
that the cost of user innovation is
going down. Also, the cost of collabo-
ration among groups of
users is going down.
When that happens, users
start to collaborate, they
start to innovate together,
to share without IP – like
open-source software.
And the result is that in
many areas , they’re
showing they can actually drive manu-
facturers out of design – they can do
so much better than manufacturers at
designing. The user is the center of
the story here; he innovates in collab-
oration with others.
Does this happen in developing mar-kets like Dubai, as well as in devel-oped ones?The key point for Dubai is that there
are policies involved that can make
this possible, such as making Internet
access really cheap and creating easy
collaboration tools, making it easy to
work together. It’s important to make
collaboration among users in the
design area cheap.
What does that mean for intellectualproperty policies?A lot of things governments do when
they support the manufacture-centered
innovation model – which is now
dying – are against the user-centered
model. When you have things like
really strong intellectual property
rights, when you really push patenting
… this policy of supporting the IP
regime impedes the common interest.
Each institutional regime tends to
build around itself the infrastructure it
needs to thrive.
Manufacturers are not direct users
because they don’t directly profit, so
they need strong IP. Governments have
come along and progressively made it
stronger, and built up other policies
like R&D subsidies and so on. With
this user-centered innovation coming
along, where users collaborate openly,
we need a change in policy.
What role does education play inthis process?Education is built around the way
things traditionally work
– so business schools are
designed around the tradi-
tional manufacture-cen-
tered model, and that has
to change, too.
The Gulf states tend toscore high in terms of
adopting new communication tech-nologies, but they fall short in otherareas like education. What are theimplications of this?If you don’t have a population of
innovators, then there’s no one partici-
pating in this collaborative net. It’s
wonderful that you built the collabora-
tive net, but you certainly need the
technology-enabled users who can
exploit it. The Internet is like the
roads of the modern age. So if you
think about in the old days, i.e. why
people built roads to markets, initially
roads were private.
One town would build roads for
itself, and nobody would support the
inter-town connections. Then govern-
ment came along and said this is
important to make markets work.
Farmers had to get their crops to mar-
ket – so there had to be farmers in
order for there to be roads. The same
is the case here: you’re building the
roads but you have to have people
able to do the technology designing –
the information freight that goes on
those roads. �
ERIC VON HIPPEL is a professorand head of the Innovation and Entre-preneurship Group at the MIT SloanSchool of Management. He is also theauthor of the book "DemocratizingInnovation."
‘Business schoolsare designed
around the manu-facture-centeredmodel, and thathas to change’
Q&A Eric von Hippel.qxd 6/3/09 2:50 PM Page 95
Economy
Corb
is/G
raphea
st
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June-August 2009 / TRENDS 97
he official line in the kingdom is
that everything is going well. As
early as last October, two months
before the release of the govern-
ment’s 2009 budget, the Saudi Arabian
Monetary Agency (SAMA) and other
governmental entities were busy doing
press conferences and interviews in the
hope of getting the word out that Saudi
Arabia’s economy hadn’t slipped into
recession, despite the onset of the global
financial crisis.
But those statements also acknowl-
edged that the country isn’t immune from
the crisis, either. “Saudi Arabia’s econ-
omy and financial institutions will not be
greatly affected by the global financial
crisis as they have not been exposed to
the international financial institutions that
faced problems in recent t imes,”
Mohammed al-Jasser, then deputy gover-
nor and current governor of SAMA told
the Saudi Press Agency (SPA).
Al-Jasser added that the Saudi econ-
omy has never witnessed l iquidi ty
problems, and refuted international
reports that SAMA had pumped $2 bil-
lion to $3 billion in deposits into the
kingdom’s banking system in order to
ease liquidity pressures.
In January at the World Economic
Forum, Saudi Arabia’s banking chief
Hamad Saud al-Sayyari reiterated that
the country is not in recession, and said
the 2009 budget had been drawn up to
counteract the decrease in oil prices.
A month later, King Abdullah bin
Abdulaziz, Saudi Arabia’s monarch,
reshuffled his cabinet and made al-Jasser
SAMA’s governor, removing his long-
standing predecessor, which caused
speculation about whether or not the
Saudi economy would take a new tack
or remain on its present course.
“I can affirm to you that the wise
policy followed by SAMA in the past
will continue, including its strong and
direct supervision of the banking sec-
tor,” Ibrahim al-Assaf, the minister of
finance, said on the occasion of the cabi-
net reshuffle. “Therefore, we expect
more stability in monetary policy.”
Despite all the publicity and efforts
to reassure the public, however, the
T
Saudi Arabia isn’t immune from the global downturn, and is making changes to manage its future growth.
By Sarah Abdullah Riyadh
BIGGER IS BETTER
Saudi Economy.qxd 6/3/09 2:53 PM Page 97
numbers show that the economic crisis
is taking a toll on Saudi Arabia. Accord-
ing to a 2009 Q1 survey carried out by
Saudi British Bank, the country’s econ-
omy has been affected by the global eco-
nomic downturn.
John Sfakianakis, chief economist at
SABB, believes that Saudi businesses
will feel the pinch because people there
are unsure of what to expect. “I think it
is a combination of uncertainty, coupled
with a slowdown in the kingdom, region,
and international community,” he says.
The survey of 765 Saudi companies
shows that business confidence has
weakened from 96.4 index points to 89.2
points, in keeping with a steady decline
since the start of 2008. Only 42 percent
of respondents expected to see an
increase in business growth, down from
54 percent the previous year. Saudi busi-
nesses are also wary of the near future,
with two-thirds of companies surveyed
admitting that they expect to institute
hiring freezes in the second and third
quarters of 2009.
Saudi consumers have also experi-
enced a loss in confidence when i t
comes to the strength of the kingdom’s
economy, according to findings from a
recent monthly report by YouGovSiraj.
Of those surveyed, 30 percent reported
that their close friends or family members
had lost jobs recently, and 47 percent said
they were nervous about the security of
their own jobs. The report also said 63
percent of Saudi consumers are choosing
to stay away from easy credit solutions to
avoid taking on future debt, and are
instead opting to spend more cautiously.
“The kingdom has felt the chilly
winds of the global credit crunch and
98 TRENDS / June-August 2009
Economy
1 1 . 1 P E R C E N T
The annual rate of inflation in
Saudi Arabia as of July 2008.
7 . 9 P E R C E N T
The annual rateof inflation in
Saudi Arabia as of January 2009.
6 . 9 P E R C E N T
The annual rate of inflation in
Saudi Arabia as of February 2009.
Corb
is\A
FP
A survey of 765 Saudi firms shows that businessconfidence has been dropping since early 2008
Saudi Economy.qxd 6/3/09 2:53 PM Page 98
TURANZA Arabies ENG 27x22 F.ai 5/20/09 4:40:56 PMTURANZA Arabies ENG 27x22 F.ai 5/20/09 4:40:56 PM
the deepening recessionary forces at
work around the world,” says Howard
Handy, chief economist at SAMBA.
“The former are weighing heavily on
financing conditions for Saudi projects,
while rapidly declining oil prices have
further undermined domestic sentiment.
He says the key is to reinflate the
price of oil to maintain Saudi Arabia’s
economic performance: “in its efforts to
support oil prices I expect the kingdom
to cut crude production sharply this year,
and this will naturally have a significant
impact on overall economic growth.”
Over the past few months, the price of
oil has been hovering between $41 and
$57 a barrel. However, King Abdallah has
reportedly said he feels that the current
price is undervalued – his view being that
a fair amount to aim for is $75 a barrel.
Handy adds that as confidence has
weakened and financing has become
scarce, the pace of investment and con-
sumption in the non-oi l sector has
slowed sharply – a trend that’s likely to
continue in the coming months.
“The government has adopted an
appropriate expansionary fiscal stance,
and this will keep investment trickling
over,” he continues. “However, this is
unlikely to fully offset the impact of
softening private activity and with the
oil sector’s contraction weighing heav-
i ly, we are expect ing a 1.5 percent
reduction in real GDP this year.”
Handy also confirms that Saudi Ara-
bia has had to reappraise projects that he
says have been delayed as credit flows
in the kingdom have tightened. Some
developers have decided to hold out for
better financing terms next year.
“The economic cities are not immune
from this, and the pace of construction
has cer ta inly s lowed,” he says.
“Nonetheless, those projects that are bet-
100 TRENDS / June-August 2009
Economy
Corb
is\A
FP
The kingdom has had to reappraise projects that have been delayed as credit flows have tightened
2 0 0 8
Saudi Arabia’s economygrew by 4.2 percentlast year, according
to the E IU.
2 0 0 9
That growth rate will drop to 0.4
percent this year, says the E IU.
2 0 1 0
The Saudi economy isexpected to rebound in 2010, expanding
by 3.3 percent.
Saudi Economy.qxd 6/3/09 2:53 PM Page 100
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ter advanced – such as the King Abdul-
lah Economic City [KAEC], should con-
tinue to make progress, particularly as
the private sector regains confidence and
momentum next year.”
“One of the most important factors
for any economy is the ability of busi-
nesses to access credit,” says Shady Sha-
her, an economist at Standard Chartered
Middle East and North Africa.
“Thus, as credit conditions tighten,
both businesses and consumers will
undoubtedly be affected, which in turn
will result in slower economic activity. In
this case, government spending plays a
greater role, with getting liquidity and
credit flowing being the first step in
building confidence for both businesses
and consumers.”
The main challenge for the Saudi
economy is to navigate through the
worst of the crisis, he adds. “We also
agree that the government has adopted
the necessary fiscal and monetary poli-
cies, and has announced a massive bud-
get for 2009, which is expected to fall
into deficit . Even if we see a larger
deficit on the back of more government
spending, we think it should actually
pose no problems for Saudi Arabia, as
the country has the resources to cover
any shortfalls.”
Shaher suggests that the worsening
climate provides the kingdom with an
opportunity to move ahead with its
plans for economic diversification. “We
expect 2009 to be a year of g lobal
recession. In 2010 we will see stagna-
tion in the west and recovery in the
east,” he says.
He notes infrastructure spending will
increase in 2009, citing the critical
importance of this sector to Saudi com-
petitiveness and its key role in attracting
foreign investment. Huge financial
reserves and conservative economic
policies have, he argues, led to the
expectat ion that the kingdom wil l
weather the global downturn.
But Saudi citizens and businesses are
clearly feeling the pinch of the recession.
A large injection of government spending
will certainly provide a fillip, but busi-
ness and consumer confidence will be
noticeably absent for the long term. �
102 TRENDS / June-August 2009
Economy
GROSS DOMESTIC PRODUCT, CURRENT PRICES
PERFORMANCE OF SABB BUSINESS CONFIDENCE INDEX
20062007200820092010201120122013
110
106
102
98
94
90
86
100 200 300 400 500 600 700 800 900
Q4 ‘07 Q1 ‘08 Q2 ‘08 Q3 ‘08 Q4 ‘08 Q1 ‘09
106.2105.4
96.4
100.2
89.2
Source: International Monetary Fund Scale: US dollars, billions Note: Figures for 2009-2013 are forecasts
Source: Saudi British Bank (SABB) Index taken from Q4 ‘07
100.0
Corb
is/G
raphea
st
Saudi Economy.qxd 6/3/09 2:53 PM Page 102
C
M
Y
CM
MY
CY
CMY
K
Trends_UAE_w220xh270mm_E.pdf 5/21/09 4:07:10 PM
Retail
104 TRENDS / June 2009
Interview: Paul Krugman
Corb
is\A
FP
Q&A Paul Krugman.qxd 6/3/09 5:20 PM Page 104
aul Krugman, recipient of the 2008Nobel Prize for Economics, is aprofessor at Princeton University.He writes opinion pieces for New
York Times twice weekly and hasauthored several books including, mostrecently, “The Great Unraveling.”
There were a lot of indications that acrisis was coming, but decision-mak-ers seemed to ignore them until thingsgot really bad. Why was that?The first thing is that when people are
making money, telling them that it’s not
based on well-grounded fundamentals is
not a popular position. Nobody wants to
hear it. This is always true when you
have a bubble and too many people are
profiting from the bubble to want to lis-
ten. I think there was also a deeper prob-
lem among policymakers and many
economists, which was an excessive
belief that markets are efficient. We saw
this proliferation of financial markets, of
various kinds of financial derivatives – a
rapid increase in the sheer scale of the
finance sector. And the assumption was
that this all had to make sense, despite
substantial evidence that it did not. So
most people just didn’t look, even
though there were quite obvious clues in
the data that something was very wrong.
Most people simply chose to ignore that.
What caused the financial crisis?One reason was simply a prolonged
period without a major crisis. The roughly
25 years between the second oil shock
and the coming of this crisis bred a lot of
complacency. Nothing really bad hap-
pened to the global economy and so peo-
ple took more risks. They forgot that bad
things can in fact happen. There were too
many risks, too much leverage and too
much debt.
The second thing that happened was
the change in the nature of the financial
system. Twenty-five years ago we had a
system that was centered on conventional
banks, which were quite tightly regulated;
there was limited ability to take risks.
Since then we had the growth of a much
more complex, much harder to pin down
financial sector, with conventional banks
making up less than half the total sources
of credit. This new system was unregu-
lated, it lacked a safety net and there was
no explicit insurance. So we found our-
selves exposed to a banking crisis in a
way that hadn’t happened since the 1930s.
P
June-August 2009 / TRENDS 105
Nobel laureate Paul Krugman tells Ian Munroe about the origins of the financial crisis, and how its fallout will change the global economy.
CAUSE AND EFFECT
Q&A Paul Krugman.qxd 6/3/09 5:20 PM Page 105
So it was a willingness to take risks onthe one hand, and a failure of regula-tion on the other?Yes – people were taking too many risks
and regulators hadn’t kept up with the
changing financial system, so we had a
financial system that was largely without
any form of support. There were no
airbags on it, you might say.
We’ve witnessed some astonishingfinancial losses. In everyday terms,where did the money go?
Mostly, the money was never there.
People had large sums in their accounts,
but it was a mirage. It was only there
until someone tried to spend it, and then
it was no longer there. But on top of
that, there is a lot of real destruction
going on.
The world economy is probably now
operating 4 or 5 percent below its capac-
ity, which means we’re losing several
trillion dollars each year of output that
we could have produced but haven’t.
That’s a real impoverishment of the
world. If it goes on for any length of
time it will end up eliminating a substan-
tial fraction of the world’s wealth.
Have we seen the bottom yet, or do wehave further to fall?We certainly still have further to fall.
Everybody talks about green shoots,
favorable signs. But the only thing we
have is some evidence that the pace of
the decline is slowing, that things are
getting worse more slowly. When we
actually reach the point where things
level off, nobody knows.
I wouldn’t be surprised if measures
like industrial production do in fact level
off later this year. But that’s not enough,
that’s still leaving output failing to grow
– it’s almost certainly going to mean
unemployment in the major economies
continuing to rise.
So we may hi t a kind of plateau
beyond which we don’t fall very much.
But actual recovery, actual return to any-
thing like full employment, full capacity
utilization, I think is years away – two,
three years if we’re lucky, quite possibly
much longer than that.
106 TRENDS / June-August 2009
Interview: Paul Krugman
‘People had large sums in their accounts, but it wasa mirage, only there until someone tried to spend it’
3 . 8 P E R C E N T
The predicted GDP drop in advanced
economies in 2009,according to the IMF.
1 . 3 P E R C E N T
The predicted dropin the global
economy’s GDP in2009, says the IMF.
1 . 3 P E R C E N T
The predicted GDPrise in Middle East and Central Asian
economies in 2009.
Get
ty\G
allo
Im
ages
Q&A Paul Krugman.qxd 6/3/09 5:20 PM Page 106
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Is everyone hurting equally? Who’sfeeling the brunt of the slowdown?There are two kinds of losses here.
There are the financial losses, which fall
more heavily on the wealthy than they
do on the rest because they have more
financial assets. But even there, substan-
tial losses are also occurring in pension
funds, things that affect people around
the world. Then there’s the economic
disruption, which I’m sorry to say, as
always, falls most heavily on the weak-
est and the poorest.
If we’re looking at Western coun-
tries, unemployment is rising most
sharply among the least-skilled, the
lowest-paid . And i f we’re looking
worldwide, although the GDP numbers
may be falling most in particularly trou-
bled, advanced countries, the sheer
human misery is concentrated in the
poorest countries.
A lot of people will starve as a result
of this crisis. Not many of those people
will be in the West. They will be in less-
developed parts of the world.
Will the developing world feel thoseeffects later on?It’s already happening now. If you look
at the sharp fall in world trade and the
disruption in world trade credit, you can
see there are already extremely negative
effects happening in parts of Africa.
World trade has declined faster than it
did during the Great Depression. For
many poor countries, trade is literally
what they need to survive. Hit with a
decline in their ability to export – which
is necessary to buy the essentials of life
– they’re in terrible trouble.
How well has Barack Obama dealtwith the crisis so far?I’m giving him a ‘B.’ The fiscal policy
has been fast. It looks like it’s going to
be reasonably effective, but it’s not big
enough. And the bank policy has been
cautious – I think the word might be
‘diffident.’ They’ve shied away from
taking any really strong measures to
clean up the system.
So I support the general direction of
the policies, but I’m disappointed in the
lack of boldness.
And how well has the internationalcommunity responded?Some things have been good. The expan-
sion of IMF funding is a good sign. In
general, I think the IMF has done a good
job compared with during the Asian cri-
sis, for example. There have been some
major disappointments, though. The
inability of the European Union coun-
tries to settle on any cooperative eco-
nomic policy, and in particular the fail-
ure to a id emerging Europe on a
sufficient scale in this crisis has been a
real disappointment.
There’s not a lot of international
cooperation going on aside from the
IMF funding , and tha t ’s a shame
because this really is a global crisis and
there’s a lot to be said for cooperating
in the response.
108 TRENDS / June-August 2009
Interview: Paul Krugman
Corb
is
‘A lot of people will starve as a result of this crisis.Not many of those people will be in the West.’
Q&A Paul Krugman.qxd 6/3/09 5:20 PM Page 108
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What should the Gulf states do tocope with the financial crisis?They don’t have a lot of freedom of
action. They need to engage in some
aus te r i ty. They need to r ide th i s
through. Al though oi l pr ices have
fallen a lot from those very high peaks
in early 2008, they’re actually holding
up surprisingly well in real terms.
The price of oi l is substantial ly
higher than it was early in this decade,
despite the fact that the world economy
is so deeply depressed right now. …
This is not 1986; this is still a world of
surprisingly robust demand for oil.
Credit rating agencies have taken acredibility hit. How do we make thembetter at what they do, especiallywhen it comes to assessing financialinstitutions in the future?Who knows, is the short answer. This is
very difficult. We have a problem that
doesn’t seem to have an easy solution.
The rating agencies are paid essentially by
the people they rate. And while crude cor-
ruption may be reduced, may be avoided,
there’s clearly a built-in tendency not to
recognize the realities. Try and think of an
alternative model and it’s not so easily
done. Have them taxpayer financed? How
do we avoid politicization? Try to get
some other model for their payment? It’s
not clear exactly how you do this. It does
require some thought, and it is a real prob-
lem because, like it or not, the rating
agencies have an enormous impact. Insti-
tutional investors almost have to base
their decisions on those ratings. But I
don’t know what the answer is.
Beyond that, the major changes are
going to be a return to a world of more
balance, you might say. It’s unlikely that
we can have a full world recovery while
these very large surpluses for some rea-
son persist [in some countries], and there
are large deficits in others. So we’re
probably going to be in a world in which
China is one way or another pushed
more to rely on domestic demand, and in
which the United States is pushed to rely
more on its domestic saving capacity. It’s
a little bit hard to figure out how the Gulf
region fits into this, because it will have
110 TRENDS / June-August 2009
Interview: Paul Krugman
Reu
ters
‘We’re probably going to be in a world in whichChina is pushed to rely on domestic demand’
1 9 P E R C E N T
Amount that the Case-Shiller Index, which
measures US housingprices, fell by in March.
7 7 P E R C E N T
Amount that the BalticDry Index, a key tradeindicator, has risen by since February.
3 . 8 P E R C E N T
Amount that Germany’sGDP declined by in Q1of 2009, its steepest
drop on record.
Corb
is
Q&A Paul Krugman.qxd 6/3/09 5:20 PM Page 110
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mena
gemas
a high income – I think oil prices will at
least partially recover – but limited
absorptive capacity [to increase further].
So you don’t think they’ll become anyless influential?Well the trouble is, no matter how much
people say “I don’t really trust the rating
agencies,” it is nonetheless very difficult
for institutional investors to ignore what
they say. If the rating agencies put a
downgrade on your country’s debt, then
your sovereign debt spreads will rise
because there are so many players who
are more or less mechanically forced to
divest themselves of holdings of your
debt because of that action.
How do you see the crisis changing theglobal economy?I think we’re going to see substantially
bigger financial regulations, and with
that, substantially reduced financial glob-
alization. A lot of the international pene-
tration of markets was part and parcel of
the growth of this unregulated banking
sector, and I think that’s going to be
reigned in. A lot of things we’re seeing
countries do as part of their rescue are
also pushing finance towards a home
focus. So in a way, the world is going to
get bigger again. International finance
will be less of a factor than it was.
Will developed and developing coun-tries be pushed further apart?We may actually have some of the decou-
pling that people thought would happen
in this crisis and didn’t. Now for what
it’s worth, we had a perverse situation in
these past 10 years where many of these
developing countries were actually
exporting to a lot of the advanced coun-
tries. I don’t think anyone foresees that
coming to an end. I don’t think we’re
going to have a lot of global protection-
ism or that trade is going to be cut back
very much. There is obviously some
pressure there, but I don’t think it’s going
to be at the center of the story. It’s going
to be a little hard to see how this plays
out, but I think it’s probably just going to
be a calmer sort of world – less wheeling
and dealing, less adventurous finance.
How wil l people and companiesbehave differently?Eventually we hope that there will be a
revival in business investment. One of
my big concerns is what it will take to
get that going. But in the end I think it
will happen. In terms of the debt posi-
tion, non-financial corporations haven’t
behaved in a particularly over-the-top
way. They’ve actually behaved relatively
responsibly, so I don’t think there will be
major changes there. Households in the
United States, and to some extent in sev-
eral European countries, are probably
going to have much higher savings rates
for a sustained period. They were lever-
aging themselves off, taking on a lot of
debt, and relying on capital gains to pro-
vide for retirement. That’s not going to
happen, so there’s going to be a serious
change in consumer behavior.
112 TRENDS / June-August 2009
Interview: Paul Krugman
‘I think it’s probably just going to be a calmer sort ofworld – less wheeling and dealing, less adventurous’
Q&A Paul Krugman.qxd 6/3/09 5:20 PM Page 112
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Will the global services sector growlarger than it was before the crisis, orwill it shrink?Ultimately the reason we shifted to a
service-based economy is a combination
of saturation in the demand for goods …
and higher productivity growth of the
goods-producing sector, that pushes us
towards services. One of the reasons we
have so few farmers is that the farmers
we do have are so productive. I don’t
think that’s going to change. The only
big thing is, I don’t think that financial
services is going to come back. We went
from financial services bringing in 4
percent of GDP to 8 percent of GDP and
it’s not clear there was any social gain
from that extra 4 percent of GDP, so that
sector’s going to shrink.
But in terms of other sectors, health-
care shows no signs of ceasing to grow. I
don’t think we’re going to go back to
becoming a manufacturing-centered econ-
omy, basically because the manufacturing
sector we now have worldwide is big
enough to supply the goods people want.
A lot of historians blame the stockmarket crash in 1929 for the rise ofradical movements. Could somethingsimilar emerge now?It’s hard to come up with anything on
that scale. Fascism as a movement
existed before the crash, so there was a
kind of ready-made template for the
anger to fasten onto. There’s nothing
comparable to that in today’s world.
None of the great powers, economically
or militarily, is unstable in that way. So I
don’t think you can envisage something
like the rise of Nazism coming back.
But we could have a lot of nasty stuff.
I worry, for example, about Ukraine – that
it might seek to join with Russia and
reconstitute the Soviet Union. This is still
not a likely event, but the scale of the eco-
nomic crisis there makes it more likely.
I’m doing my best not to think about Pak-
istan, but when I do I get very scared, and
the economic crisis doesn’t help.
How are human rights and fredom ofspeech being affected?So far, we’re not seeing states engage in
crackdowns or reductions of civil liber-
ties in response – aside from a couple of
places where governments have
attempted to prosecute bloggers who
said negative things. But they tend to
encounter a lot of anger and ridicule
when they do. So if there’s something
out there, I don’t see it.
Is there anything we can do to mini-mize these cyclical economic swings?Remember, this isn’t a run-away, out-of-
control financial system. If we regulate
it we won’t have this kind of crisis
again. My read of this is that there have
been three major global economic crises
since the Great Depression. The first two
were about oil. This is the third, and it’s
about finance. If we can get finance
under control, then we can probably go
another generation before we have any-
thing comparable to this. �
114 TRENDS / June-August 2009
Interview: Paul Krugman
Reu
ters
‘I worry about Ukraine – that it might seek to join with Russia and reconstitute the Soviet Union’
Q&A Paul Krugman.qxd 6/3/09 5:20 PM Page 114
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Literature
Corb
is
Beirut Book World.qxd 6/3/09 5:24 PM Page 116
June-August 2009 / TRENDS 117
hen talking about Beirut, images
of violence, riots and bombings
are usually what comes to mind.
Or, at the other extreme, one may
think of a nightlife that’s unparalleled in
the region – of dazzlingly beautiful young
women dancing on tables while drinks
are flowing and speakers are pumping
loud music.
The Lebanese capital is described as
the beating heart of culture in the region
to rarely. But it’s a place that hosts more
than 600 publishing houses, myriad
libraries, bookshops and cultural centers.
It’s also a haven of freedom for the media
and for Arab intellectuals.
So it somehow makes sense that in
2007, Beirut was designated World Book
Capital for 2009 by UNESCO, the Inter-
national Publishers Association (IPA), the
International Booksellers Federation
(IBF) and the International Federation of
Library Associations and Institutions
(IFLA). Since 2001, the festival has been
organized annually in one major city.
Beirut is the ninth to be crowned as such,
in the footsteps of Madrid (2001), Alexan-
dria (2002), New Delhi (2003), Antwerp
(2004), Montreal (2005), Turin (2006),
Bogotá (2007) and Amsterdam (2008).
Strings attached. Beirut now sits at the
heart of an impressive number of events
promoting books and reading to the
widest possible audience – all in a coun-
try where, unfortunately, reading is
becoming less and less of a habit.
Ambitious plans are underway: 250
projects have already been approved, and
this number is expected to reach a stag-
gering 300 in the coming days – or almost
one event a day throughout a whole year.
“We’ve kept the project submission form
open on our Web site in order to keep the
dynamic alive,” says general coordinator
Leila Barakat. “Anyone can submit a pro-
posal, from individuals to publishing
houses, embassies, writers and so on.”
“Since the official launch of the festi-
val on April 23, and due to its increasing
visibility in the media, we are receiving
more and more proposals,” adds cultural
adviser Abdallah Machnouk. Out of the
250 confirmed events, 150 are co-
financed by the Lebanese Ministry of
W
Beirut is UNESCO’s 2009 World Book Capital, a prestigious title that the city intends to live up to.
By Nathalie Bontems Beirut
BOOKMARKING BEIRUT
Beirut Book World.qxd 6/3/09 5:24 PM Page 117
Culture and the Beirut Municipality,
which together came up with a $4.3 mil-
lion budget, in partnership with other
sponsors such as cultural centers, individ-
uals, publishing houses and NGOs. “Our
strategy is to involve the private sector as
much as we can through partnerships and
co-financings,” says Machnouk, “because
after Apr. 22, 2010, we [the event orga-
nizing team under the Ministry of Cul-
ture] won’t be there anymore. But we
want the dynamic we have initiated to
keep going. If we manage to show that
books can be profitable, that culture is
something worth investing in, the private
sector will keep supporting it.”
Indeed, the festival’s purpose isn’t
limited to short-term celebrations. On the
contrary, such a nomination comes with
strings attached. “Usually, a city is
declared World Book Capital because of
its previous achievements, its support to a
thriving book industry and against a
promise to do more in that regard,” says
Machnouk. “It’s a big responsibility with-
out any financial compensation, since
UNESCO doesn’t pay for anything.”
In order to honor its engagement, the
team in charge of the festival delineated a
program according to three main, long-
term objectives: to bolster Lebanon’s
book industry (with a special focus on
youth literature), to promote reading and
a love of reading – mostly by focusing on
schools, and to adopt a diverse approach
to reading through cooperation with
embassies.
Borderless books. The wide array of
events is a testimony to the enthusiasm
the festival has generated. Public read-
ings, writing workshops in a number of
schools, book fairs, sponsorship of young
authors, writing contests, round-table
debates, meetings with authors flown in
from all around the world, exhibitions of
118 TRENDS / June-August 2009
Literature
‘It’s a big responsibility without any compensation,since UNESCO doesn’t pay for anything’
A M S T E R D A M
The capital of theNetherlands wasUNESCO’s 2008
Book Capital.
B E I R U T
The capital of Lebanon is
UNESCO’s 2009 Book Capital.
L J U B L J A N A
The capital of Slovenia will beUNESCO’s 2010
Book Capital.
Corb
is
Beirut Book World.qxd 6/3/09 5:24 PM Page 118
Untitled-13.indd 1 5/19/09 11:59 AM
medieval documents, presentation of
plays, films and music pieces revolving
around books … all these are just a sam-
ple of a program that not only runs for an
entire year, but also across the whole of
the country.
“We approached regional institutions
because we want to create a national
dynamic,” says Barakat. “Our objective is
to have people outside of Beirut reading
too: to make sure they can go to libraries
and to keep bookshops from being turned
into mere stationers.”
On top of the 150 state-sponsored
events, Lebanon’s private sector has orga-
nized and financed an additional 100
events. Sponsors include banks, schools,
cultural centers, publishing houses and
NGOs. All in all, according to Barakat,
the whole festival has an estimated total
budget of $8 million. More importantly,
this mix of state-initiated and privately
designed efforts gives the festival an
unusual and interesting feel, with public
and private players, for once, working
hand in hand towards a common goal.
The international dimension of the
festival is another critical aspect of Beirut
World Book Capital . According to
Barakat, more than half the events pro-
mote works exclusively in Arabic, with
strong participation from booksellers and
authors traveling from Egypt, Algeria,
Morocco, Tunisia, Syria and the UAE
(among other countries). However, many
Western countries have also been heavily
involved in events, focused either on their
own languages or in association with
Arabic, giving meaning to the global
aspect of the festival.
France, obviously a traditional player
in the Lebanese cultural field, has been
keen to participate, but so have Italy,
Spain, Germany, Mexico, Switzerland,
and others. “International involvement
120 TRENDS / June-August 2009
Literature
More than half the events promote works exclusivelyin Arabic, yet Western states are still heavily involved
2 1 8
The number of days Beirut’s
libraries were open during 2007.
2 5 , 5 0 0
The number of visitors to
Beirut’s libraries during 2007.
3 6 , 9 0 7
The number of titles (in six languages)
distributed to Beirutlibraries in 2007.
Dal
ati
& N
ohra
Beirut Book World.qxd 6/3/09 5:24 PM Page 120
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has been strong, mainly at the creation
and instigation level,” says Barakat.
“And the Lebanese community abroad
has been participating, too, such as the
Lebanese businessman who is financing
a $50,000 prize.”
Culture vultures. Ten leading projects
(either local or international) are under
the spotlight, including a month-long
exhibition of 450 books with creative
design published in Spain. There is also
the “Writing Letters to Beirut” project
run by the French embassy, where any-
one (living in Beirut or not) can express
their feelings about the city in the lan-
guage of their choice, with sentiments
published on a special blog. The “Beirut
39” contest, in cooperation with Scot-
land’s famous Hay Fest ival – and
launched in March at the International
Book Fair of Abu Dhabi – will select and
celebrate 39 of the best Arab writers
under 40 years of age. Another project
involves the reprinting of 130 books
from the Bibliotheca Islamica, which
were destroyed during the fighting that
broke out in Lebanon in 2006.
Of course, in light of what has been
happening for the past four years in
Lebanon, it may seem a bit surprising that
Beirut was selected for “its focus on cul-
tural diversity, dialogue and tolerance,”
but then again, as the international com-
mittee’s statement says, “The city of
Beirut, which is facing great challenges
in terms of peace and peaceful coexis-
tence, is recognized for its commitment
to dialogue, which is necessary more than
ever in the region, and … the book is able
to contribute actively towards this goal.”
In fact, showing the world another
image of Lebanon in general, and Beirut
in particular, is crucial for the event’s
organizers. “This is one of the reasons
why we are so motivated,” says Barakat.
“We always hear about Beirut when
there’s a political crisis, but we want the
cultural image of Beirut to prevail.” �
122 TRENDS / June-August 2009
Literature
‘Beirut is recognized for its commitment to dialogue,which is necessary more than ever in the region’
1 6 1
The total number of subscribers to
libraries in Beirut in 2002.
9 6 8
The total numberof subscribers to
libraries inBeirut in 2005.
1 , 7 4 9
The total numberof subscribers to
libraries inBeirut in 2008.
Ghad
i S
mat
/Gra
nd-E
cart
Beirut Book World.qxd 6/3/09 5:24 PM Page 122
123_Jeeran.indd 1123_Jeeran.indd 1 6/11/09 2:04:16 PM6/11/09 2:04:16 PM
Save the Last DancePERSPECTIVES
Traditional nightlife in Cairo is under threat from new Western entertainment and increasingly conservative attitudes.By Rebecca Collard Cairo
Perspective-Egypt.qxd 6/3/09 3:47 PM Page 124
Acarabee Alley, just off 26 of July Street in bustling
downtown Cairo, opens onto a small courtyard sur-
rounded by bars. Up the stairs at the end of the court-
yard a belly dancer shakes her hips and smiles at the
mostly empty tables in Club Miami. She turns and sways in
her bright yellow costume in front of a five-piece band belt-
ing out Arabic songs. At 11 pm on Thursday night the place is
quiet, with the exception of a few middle-aged men sipping
beer at a table near the bar.While belly dancing has become
popular abroad, and for foreign visitors to Egypt, many here
have feared its demise as a result of the increasing observance
of conservative Islam. Over the last several decades, traditional-
ist ideals have been gaining ground in the country once known
for its cosmopolitan ways. In the 1990s, when violent Islamist
groups weresmost active in Egypt, the haram (forbidden) com-
bination of alcohol and shaking, skimpily dressed women made
belly-dancing cabarets a target.
Nabil Abdel Fattah, head of the sociological research
unit at Al-Ahram Center for Political and Strategic Studies
and editor-in-chief of the center’s “State of Religion
Get
ty/G
allo
Im
ages
Perspective-Egypt.qxd 6/3/09 3:47 PM Page 125
126 TRENDS / June-August 2009
Perspectives
Report,” says businesses like bars and
belly-dancing clubs have suffered
because of the Islamization of both
the public and private spheres in
Egypt. “Belly dancing is outside of
Islamic values,” says Fattah, adding
that increasing conservatism in Egypt
has led to reforms in the role and
dress of women and fewer customers
for establishments that serve alcohol.
However, in the last few years the
country has undergone a soft revolu-
tion, where a surge in conservatism for
many has coincided with an increasing
movement toward Western lifestyles
and liberal practices for others.
“There is a new soft revolution in
Egyptian society. You can see this
trend of new magazines and shops and
people returning to belly dancing.
There is also a Westernization of the
way of life, of the new upper-middle
class and businessmen,” says Fattah,
who maintains this has happened in
tandem with increasing observance of
conservative Islam.
Looking back. Belly dancing is the
English name given to the art of raqssharqi (oriental dance) or raqs baladi(country dance). The practice spread
throughout the Middle East but took a
greater hold in Egypt than the rest of
the Arab world, finding its place in
wedding celebrations, private and pub-
lic performances and, most recently, in
tourist establishments.
Around midnight, customers begin
to take seats near the stage at Club
Miami. The clientele remains the same,
mostly middle-aged Egyptian men. The
band continues to play as the second
dancer, Suhayla, takes the stage under
a small disco ball . Tamer, Club
Miami’s manager, who asked that his
real name not be used, says in the win-
ter the club attracts foreigners and in
the summer it fills with Gulf Arabs.
But most of their clientele is Egyptian.
“We get the rich and the less fortu-
nate,” says Tamer. “Thursday is the
busiest day of the week. We start the
night at 11pm, but it doesn’t get full
before 12 or 1am.” He’s been working
in the industry for 10 years and says
he’s seen a decline in the number of
visitors in the last decade. Despite the
influx from Gulf tourists, places like
Club Miami are not seeing an increase
in customers.
“There are new bars for the mid-
dle class everywhere, in Mohan-
deseen, in the city center and also in
hotels,” says Fattah. “This is a new
variable and I think it’s related to the
economic policy of the state. There is
a tolerance now ... because [these are]
private companies and this is very
important economically.”
The next evening, a few kilometers
south on 26 of July Street, Ahmed
The clientele remains mostly middle-aged Egyptianmen. New bars now offer serious competition.
Reu
ters
Perspective-Egypt.qxd 6/10/09 12:13 PM Page 126
Dessouki leans against a polished wood
bar sipping whisky over ice at the
Cairo Jazz Club. The 28-year-old archi-
tect says he goes out four nights per
week, but doesn’t venture to belly-
dancing joints or baladi-style bars. “I
mostly go to Zamalek bars,” says
Dessouki referring to Cairo’s expen-
sive, more Western neighborhood. “I’m
not interested in this kind of art.”
The Cairo Jazz Club could easily
be in any major American city, with a
DJ spinning records in the corner,
high-back booth seating and multi-col-
ored track lighting. By midnight there
is little room to move as young Egypt-
ian men hold the waists of their girl-
friends and mix with foreigners on the
tiny dance floor.
“It’s the mentality of the people.
We don’t have a big gap between the
mentality of Europe and the [United]
States,” says Dessouki.
“Almost everybody has a girlfriend.
We like to come to this kind of club to
spend a nice night with our girlfriends
– nothing more.” Dessouki says some
nights he and his friends rack up bills
of several thousand Egyptian pounds
(or several hundred US dollars).
In the 1990s, Western-style bars
became popular among some Egyp-
tians and today, in Cairo, Alexandria
and in tourist towns like Sharm El-
Sheikh, there is no shortage of Euro-
pean – or American-style establish-
ments. The influx of Western-style
nightclubs is drawing customers away
from the baladi nightspots.
A soft revolution here won’t nec-
essarily restore belly-dancing cabarets
to their former glory if young, afflu-
ent Egyptians prefer to drop a 200
Egyptian pound minimum charge
($35) to dance to house beats, R ‘n’
B and top-40 music, rather than watch
jeweled women shake their hips in an
age-old tradition.
“We’ve been affec ted by las t
year’s economic slump. Some of our
best customers come once a week
now instead of every day,” Tamer
says. While he notes most of his cus-
tomers are Egyptian, Suhayla, who
has been performing as a belly dancer
for years, argues this isn’t the case in
other establishments. “It depends. You
get Egyptians, foreigners and Arabs,”
Suhayla says. “You can find more for-
eigners in El-Haram.”
Tourists have long filled the seats
of higher-end belly-dancing establish-
ments. In tourist cities like Sharm El-
Sheikh, dancers perform to almost
entirely foreign crowds.
The Egyptian Ministry of Tourism
said last month that hotel occupancy
rates had dropped to between 66 and
70 percent and some analysts have
predicted that the global financial cri-
sis, combined with the recent bombing
in Cairo’s Khan El-Khalili market,
could result in occupancy rates falling
further, even to 50 percent.
The opening of Egyptian society
may not be enough to salvage an art
form that has had a place in Egyptian
society for centuries.
“Most of the people I know who
are interested in belly dancing are for-
eigners and they just go once,” says
Dessouki over thumping electronic
beats. “Most of my friends are inter-
ested in this kind of music – house
and trance.” �
128 TRENDS/ June-August 2009
Perspectives
The Cairo Jazz Club could be in any major US city,with little room to move after midnight
Corb
is
Perspective-Egypt.qxd 6/3/09 3:47 PM Page 128
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On setting out to drive the DB9 for
the first time, a businessman called
me about an article I wrote recently. He
asked where I was and, rather than
reveal my location, I said that I was in
an Aston Martin.
“I don’t believe you,” he responded.
I replied with a stab on the accelerator.
Two seconds later, “I believe you,”
was the audibly envious retort.
When it comes to sights and sounds,
Aston Martin is producing some of the
most beautiful cars on the road. They
have character and a sense of heritage,
which stands out against some of the
other high-performance roadsters on the
market today, barring possibly those
from the Italian racing stables.
The V8 Vantage and the DB9 are a
case in point . The former is for the
devil-may-care lover of life, the latter
for the more urbane dilettante who is
ready to experience the road and all that
it can offer.
Both these cars are very similar to
the Lockheed Martin Blackbird, the
supersonic plane that had an eye-catch-
ing shape in the sky. It looked as if it
was born for high speed and high alti-
tude – but if you ever saw one on the
ground it was rather ungainly. The Aston
Martin Vantage and DB9 are definitely
in their element at triple-digit speeds
( in ki lometers per hour) . Even the
speedometer seems to treat anything in
the double-digit range as paltry.
This does leave a little to be desired,
especially with the Vantage, when it
comes to taxiing before getting ready
for a metaphorical takeoff. The clutch-
based gearbox is a little clunkier at low
speeds and provides a noticeable jarring
in acce lera t ion tha t g ives you the
impression the gearbox is really work-
ing for you.
The slightly shorter Vantage makes
up for this by giving a drive that would
thrill a contender at Le Mans. With the
noticeable gear change, an acceleration
that can be heard in the next city and the
accelerat ion lag expected of a tur-
bocharged engine, you do arrive with a
sense of exhilaration and exhaustion.
The fact that “Comfort” is an alternate
option on the dashboard says it all.
By contrast, the DB9’s “Sports”
option shows the more sophisticated
drive to hand. The absence of the clutch
means a smooth acceleration, while the
handling would help any secret agent
work their way out of a tight situation.
Perhaps, however, its good looks
would make anyone in that line of work
stand out a little too much. That being
said, the cars don’t receive the same
treatment from valets in Dubai’s hotels
that, say, Bentleys or Audi R8s do. So
perhaps there is something in it after all.
Both cars have the button system for
gear changes. With many cars going for
unique methods of changing gears (for
example, BMW’s X6 has a jetfighter
joystick), you have a choice of buttons
for your drive. Dashboard-mounted, you
could almost imagine that when you
press “Drive” you might also be firing a
guided missile at the baddies. The hand-
brake takes some getting used to, but
once you’ve mastered the fine art, it
shouldn’t be a problem anymore.
A tip of the hat goes to Aston Martin
for its nod to the iPod. Both models fea-
ture a dedicated docking station from
which sweet music can be played. The
menu for music displays nicely in both
cars, but is noticeably more user-friendly
in the DB9 than the Vantage.
Given the performance and handling,
there’s no denying these are great cars to
drive. It should also be noted that they
would not be comfortable for people of a
larger than average build, but over long
distances the miles fly by and I found
myself enjoying the drive, even without
cruise control.
Just one note of caution: concentra-
tion is a necessity to avoid speeding
fines with these cars – otherwise driving
will bring out hidden costs you haven’t
dreamed of. �
132 TRENDS / June-August 2009
THE ART OF SPEED
On the Road
True to their heritage, the Vantage and DB9 display the famous Aston Martin verve when they hit top gear.
P O W E R
The Vantage hasa top speed of
290 km/h and a4.7-litre engine
P E R K S
Both cars haveiPod docking systems and
fingertip controls
ON THE ROAD.qxd 6/10/09 12:28 PM Page 132
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TRAIN TO NOWHERE
Arail network for the Middle
East? (“On Track,” May 2009).
It’s funny to see such an ambi-
tious idea being floated in seem-
ingly desperate times. If rich
Gulf states want such a thing,
I’ve no doubt they can build it.
But would people use it enough
to keep the trains running? As
far as I know, most travelers in
the region come from elsewhere,
such as countries in Europe or
Asia. Would there be enough
passengers that travel from coun-
try to country in this part of the
world to warrant a multibillion
dol lar ra i l sys tem? And why
wouldn’t travelers fly rather than
staying on the ground, especially
when local budget carriers are
taking to the air? I t ’s a well-
meaning idea that looks great on
paper, but in practice may be
another pipe dream.
Abdul-Rahman Kouri
Amman, Jordan
SEEKING PERSPECTIVE
Ican’t help thinking that there
was something missing from
your super-sized cover story last
t ime around (“Choos ing the
Right Path,” May 2009). You
groups are doing to better the
world. That’s something that we
seem to hear very little about.
How are they funded, and where
does that money flow to? Are
they worth donating to? I don’t
know, but it seems like a sector
this part of the world is just now
becoming acquainted with.
Charlie Bridgestone
Tunis, Tunisia
REALITY DOSE
I cannot understand why so many
are saying that the market will
recover here in the region and we
can look forward to better times
by the end of this year. Dubai is
the regional hub for business,
fueled by the support and invest-
ment from multinational players,
who are all affected on the world
stage. In the last few years it has
been behaving irresponsibly,
assuming that there will always
be a boom and that markets never
falter. There has been a property
bubble bursting here and, quite
frankly, most businesses are still
losing money and failing to trim
their operational performance, in
the vain hope that business will
come along again. And so we
cannot honestly say that things
are going well. I’d like to feel
much more optimistic. But I can’t.
David Blair
Dubai, UAE
136 TRENDS / June-August 2009
Letters to the editor must include the writer’s name and address, and should be sent to:
The Editor, TRENDS, S.C.C Arabies 18 rue de Varize, 75016 Paris, Franceor faxed to: +(33) 1 4380 7362, or e-mailed to: [email protected]
told us a lot about how the Gulf
s ta tes have responded to the
financial crisis, but not much
otherwise. How have less fortu-
nate Middle East countries fared
in 2009? On that question I’m
still at a loss. And how does the
Gulf’s reaction compare to what
other regions of the world have
been doing? This par t of the
world is under-reported, so it’s
great to see in-depth stories about
how things are changing here –
from a local perspective. Too
often, Middle East media treat
their stomping ground as if it
exists in a vacuum. Just a thought
to bear in mind for future issues.
Tawfiq Sleiman
Basra, Iraq
THE BACK PAGE
I’ve noticed a spike in the num-
ber of spokespeople your maga-
zine has been interviewing for its
back page (“Last Word,” April
and May 2009). I don’t want to
put down the important work that
groups like Oxfam and the UN
Food Programme do, but perhaps
it would be good to mix things
up a l i t t le b i t . I f you want to
cover charities, I’d like to know
more about what local non-profit
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WHAT HAPPENS NEXT?
It was nice to see a story about what the Gulf’s post-oil economy may look like (“Spark Plugged,”
May 2009), but is it really fair to compare the GCC states with developing Asian giants like China
and India? It seems to me like apples and oranges. With such small populations, the Gulf can only
hope to find niche markets to serve if it does eventually become a high-tech producer. It may be a
wealthy part of the world, but even then, it will be impossible to produce anywhere near the same
numbers of technology workers as any of the larger countries. So the question I’m left wondering is
whether decision-makers in this part of the world are working with a focused niche strategy as they
spend billions on high-tech investment, or are they putting up the money now and figuring out
where they’re headed later?
Fakhri Nahas
Damascus, Syria
LETTER.qxd 6/7/09 10:39 AM Page 136
Untitled-2 1Untitled-2 1 6/11/09 2:08:59 PM6/11/09 2:08:59 PM
138 TRENDS / June-August 2009
THE LAST WORD JOAQUIN F. BLAYA
Governor Joaquin F. Blaya is a memberof the Broadcasting Board of Governors
(BBG), a US Federal Agency charged withall non-military international broadcastingservices to promote democracy worldwide.He talked to Jonathan Howell-Jones about
the new direction BBG’s Arabic-language television stationAlhurra is taking.
What sort of new channels are youmoving into, especially here in theMiddle East?Well, to be honest, the one that has seen
an explosion here is television. The whole
region has basically moved from, in a
decade, from one, maybe two channels,
state-owned and operated, to this diversity
of 300 channels today. And in that respect,
it’s a pretty free region. … There are
many societies on earth where you cannot
own a satellite dish. Iran comes to mind,
certainly China.
So who do you see as your competition?We have two operations for the region.
One is radio Sawa, and the other one is
the Alhurra TV channel. Who do you
compete with when you are in the mass
media business? Everybody. Who is
specifically in your category? It’s obvi-
ously Al Jazeera, Al Arabiya, and now
there are many others joining the parade.
You know, BBC has an Arabic service,
France has announced its own, Russia has
announced its own.
So you see these other national broad-casters as your direct competition?No, I don’t see the other broadcasters as
our competition. No. I was just describing
the landscape of the people that are in the
business of news and information, and that
includes Al Jazeera and Al Arabia. And in
that respect, you could say that the main
competitors, if you were to define it in
commercial terms, which you can’t, would
be Al Jazeera and Al Arabia. But we think
we have a niche and we have a role to
play that is different to what they do.
How are you reestablishing your credi-bility in the wake of the Bush adminis-tration’s ‘Hearts and Minds’ policies?Where we’re going as a channel – and
that’s through making news and informa-
tion in a balanced way for the region
through creating a platform where citi-
zens can participate in a dialogue. …
Basically, citizens from the region in par-
ticular [can engage] about commonality
of ideas and concepts and issues, whether
from women’s rights to human rights to …
food and passion, to all that . We are
establishing a unique proposition that was
not available in the region, and that might
leave you with people with better infor-
mation and more education.
What is the budget, roughly, that youcurrently enjoy for your operations?The budget of all international broadcast-
ing is about $769 million.
Would you say then that public sectorspending on news organizations isreally one of the few ways that interna-tional journalism can survive?Right now, yes. Absolutely. … Thank
God for it. I’m a product of commercial
broadcasting ... I’m the son of a radio
operator and a TV operator and it was my
livelihood. I was always driven by ratings
and selling spots, but it’s obvious – it
doesn’t take a very brilliant person to fig-
ure out that a government subsidy today
has become essential for supporting free
expression and journalism. �
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