Sunday, May 28, 2006

Gulf Markets in Rehab, Naked Witches of Arabia, and Algerian Democracy

Middle East Notes

Algeria has a new Prime Minister. Mr. Bel-Khadim has replaced Mr. O’Yehya (no, he ain’t Irish). A report in al-Hayat from Algeria indicates that the new Prime Minister has a new agenda: so far so good, a new PM should have a new agenda. The main items on this new agenda, according to press reports, are to allow the president of the country to run for three terms instead of two, and to extend each term to 7 years instead of the current 5 years. That makes sense: that way Algeria’s president has a better chance of dying in office, which puts him at par with all other Arab leaders (perhaps with the exception of Iraq). Sounds almost like an attempt at regional coordination of dictatorial terms, of the kind that in the past might have been proposed by the Arab Foreign Ministers Council. In any case, the Algerian move is one strand in an emerging trend of the expected backtracking by Arab regimes on promises of democracy. This proves that a hog with a lot of make-up (macquillage?) is still a hog.

Al-Arabiya TV reports that Saudi religious sheikhs are upset, really pissed, about news that a professor from Nottingham University in Britain has proved that the egg came before the chicken. Other UK professors have expressed support. This is purported to support the theory of evolution, and to deny the existence of the creator deity. However, an official from the Saudi Ministry of Justice, to his credit, said that this does not necessarily deny the existence of a deity. Is everyone else as confused about this, or is it just I?
Since we are in the neighborhood: a major Saudi daily newspaper (Okaz) reported that a group of the special Islamic Morality Police (Muttawa'een) raided a “nest of witchcraft and magic in Medinah”, only to be startled when confronted with a completely naked African witch. They claimed that she disappeared as suddenly, and that their search for her was not successful. A neighbor claimed that a naked African witch crashed into his apartment through the roof, prompting him and his family to escape. She was eventually arrested, still naked. Twenty other women were apprehended, and manuals and videotapes on witchcraft were confiscated. There are no reports whether the latter included copies of Witchcraft for Dummies. At least one person will lose her head: the practice of witchcraft is punishable by beheading. Most likely she will be fully clothed on the fateful day.

Many Saudi men now resort to mass weddings to reduce the soaring cost of.....weddings. The economies of scale, you know. This is especially important because of the losses incurred by many middle class Saudis in the recent stock market crash in the Kingdom. That still leaves the issue of the biggest part of the cost: the dowry that the groom must pay. The network reports that one recent wedding in Ahsaa’ province included 1400 couples. That is one party that would be easy to crash, but would you want to?
The Saudi market crash has apparently led to a lot of soul searching- so far no news of any jumps off high buildings- and this in itself indicates that the effects of the crash are deeply felt within the Saudi society, perhaps well beyond the realm of finance and economics. There have been several conferences, seminars and symposiums about the issue- as well as polls and media surveys. No reports yet whether psychotherapy and rehabilitation activities have picked up.

Stock markets in Arab region have remained stagnant. In the Persian Gulf, movements of the main indices have been uninspiring, although both markets in the United Arab Emirates recorded modest increases. In Kuwait press reports say that the Kuwait Investment Authority will dump more money in the market- a figure of another KD 100 million was mentioned. One newspaper reported that the KIA will be equitable and just when it purchases shares. Perhaps it is not too much to hope that it will also be sensible and professional in placing public funds. But then again, equitable is not a normal criterion for placing investments. More like Prozac than therapy, but will it affect the market?
Speaking of public money and spending: The snap Kuwait election for the assembly is set for the end of June, and there are many rumors and stories in the local press. I wonder if votes are still as actively bought and sold in some districts, and how much they are now. The authorities might want to look into securetization of traded votes- that might diversify the market and allow better risk management. The daily al-Qabas reports that several disgruntled members of one branch of the ruling family are considering a run. Go for it.


Friday, May 26, 2006

Why Some Western Leftists Idolize Arab Fascists and Islamic Fundamentalists


I recently came across an interesting article by Tariq Ali titled “Mid-Point in The Middle East?" originally published in the New Left Review.
As is his usual style, it deals broadly with various corners of the Middle East. It makes for interesting, and often educational, reading. But I have a few issues with some aspects of the article, especially regarding Iraq.
The 'resistance' in Iraq is not a national liberation movement a la the 1960s. It is actually more a 'Sunni Sectarian' movement which seeks a return to the authoritarian minority system that was set up by the British in 1921, whereby at first the Turkish-groomed grandees of the Baghdad area then, after 1958, the military juntas of the Tikrit-Samarra-Falluja region ruled the country.
I know, I can hear Tariq Ali saying: so what, the Fidelistas were a small minority in the mid-1950s, as were the Bolsheviks throughout 1917. The difference is that those two movements did not represent narrow and chauvenistic ethnic and sectarian interests- they could expand to encompass a majority. Whether they did is debatable, because I have seen no voting data about that.

The British, in my view, were obliged to enter the fray in 2003 once it was clear that the die was cast. After all they had to go in to finish the job they had botched earlier when they imported and installed Faisal I on the throne and, according to Gertrude Bell (from the horse's mouth) favored the minority Sunnis of the central region to rule over the Shi'as and the Kurds. Perhaps they felt, being British and proper, that it was worthwhile to take a shot at making another mistake in order to correct an earlier one.

Still, one must notice that this recent intervention, or adventure, in iraq has in fact changed the situation in the Middle East- it has mixed and reshuffled the cards, something that was needed in that stagnant region. After all, there are riots in Cairo now!! And the Egyptian people are normally among the most complacent and most patient sufferers in the world. Even the hereditary oil potentates of the Persian Gulf and their oligarchies are mouthing phrases about elections and reform. True, the few open elections in the Middle East have resulted in a 'rightward' move toward Islamic fundamentalism that is unfortunate. But then again, perhaps that has been the only realistic alternative to a corrupt 'center'. That corrupt center- and I use center here cautiously only to distinguish it from the religious or fundamentalist 'right'- includes the Arab regimes.

True, as Tariq Ali claims, the mainstream Shi'as in Iraq threw in their lot, at least tacitly, with the occupation, in the sense that hey did not resist it. Not that they had much of a choice: you could not expect them to actually fight for Saddam and his Ba’ath regime now did you? That would be almost like expecting German or Polish Jews to fight the advancing American or Soviet armies in 1945, and complain if they declined the honor. We must also remember that the Shi'as did rebel and resist that earlier occupation of Iraq after World War I while the others collaborated with the occupiers- those others were handed the power and the Shi'as paid a heavy political price for it over many decades.

For many years, those who are now leading the insurgency/terrorism in Iraq were quite happy to throw in their lot openly with the West, and with the absolute monarchies of the region, when they faced the human wave assaults and the fall of the Fao Peninsula during the Iran-Iraq of the 1980s, when their own power was threatened. It is foolish for some European dreamers to equate these Ba’athists and Salafi bombers to the Viet Cong of the 1960s. The Ba’ath is a fascist party that was inspired by the Nazis and Fascists of Europe, and it later adopted some of the slogans of the European Left even while it was slaughtering the Communists in Iraq. To claim that “The Anglo-American armies need to be driven out of the country, bag and baggage, for Iraq to have any future” is to turn a blind eye to the sectarian disaster that could erupt if that withdrawal is precipitous and immediate.

The rule of thumb, as far as judging various regimes around the world goes, should be simple: do I, my lucky free self, moi, want to live under such a regime? Otherwise I should not promote it for others- they might deserve better even if they are Third-World types who might have known no better.

These retro-dreamers in Europe and the United States should remember that the Viet Cong never had a known policy of systematically blowing up their own civilian populations, not even in the name of national liberation.


Thursday, May 25, 2006

Siege of Jordan, Persian Gulf Markets, Egypt’s Gamal Comes to Washington

Middle East Analysis

Interesting things are happening in Jordan. Apparently Jordan’s government is embarked on a media blitz these days, with accusations of plots flying around. The suspects are the usual ones: Hamas, Syria, Iran. Some witty Arab Internet comments now expect that Venezuela, Cuba and North Korea might be added to the list of Jordanian suspects soon.
Now the Speaker of Jordan’s parliament Mr. al-Majali, he is also a former head of Jordanian Security Services, has accused the Iranian regime of aiming to destabilize Jordan. He said that Iran is a threat to Jordan. Most Arab Internet comments seem to say that if Iran is a threat to some countries, it probably has larger fish to fry than Jordan. Some see the Jordanian stance as part of a concerted Western effort against the Iranian regime.

It is possible that Jordan is legitimately worried about some sort of encirclement by proxy by the Iranian theocrats- with Iran-friendly Iraq, Iran-friendly Syria, and now an Iran-friendly Palestinian government all around it. Things look that way although it is hardly aimed directly at Jordan, which has no significant strategic importance.

Speaking of the Speaker, Jordanian security services have been notorious in the past because of rumors that they were exporting mercenary interrogators under the guise of ‘security trainers’ to some of the smaller Persian Gulf states in the 1980s and 1990s. Apparently it is hard in a small tribal society to ask a native interrogator to interrogate his neighbor severely. It is easier for inquisitors imported from outside to engage in certain activities in a small society- things like pulling out fingernails or inserting electrodes in extremely sensitive parts of the body. It is not clear now if Jordanian security experts are still being engaged to perform these interesting activities in the Gulf.

In Bahrain, the main political groupings are grumbling about the honesty and transparency of delayed municipal and legislative elections. The complaints are mainly about not setting firm dates for the promised elections and suspicions about proposed electronic voting, presumably because the government can manipulate the results, whenever these elections are held. Half of the Bahrain legislature is non-elected but appointed by the King.

Gulf stock markets seem to be moving within a narrow range. Some traders are happy that the serious slide has apparently stopped for now. Officials certainly have done their best to talk up shares prices, with promises of new plans that would implicitly shore up demand. In some cases, the UAE, restrictions were imposed on establishing new public share-holding companies.
In Qatar, the cabinet amended existing laws to allow listed companies to buy back their shares. The Qatari market has lost about 44% of market capitalization since peaking earlier this year. Investor comments were skeptic whether many companies will actually buy back their own shares. Company profits in the Gulf have suffered noticeably during the first quarter of the year as well, because a large number of listed companies are either in the financial sector or depend on investment (non-operational) income for part of their earnings.

In Iraq, one of the country’s Vice Presidents, the Sunni Arab one, extolled the virtues of ‘legitimate’ resistance against the US forces and against the government of which he is a part. His statement was an excruciating example of the old Ba’athist and pan-Arabist double speak of the past decades. He did, however, exclude al-Qaida in Iraq from his blessings. It would be interesting to see how the new government can trust this man and others like him with its security plans and its strategy for combating terrorism. The good new is, the presidency in Iraq does not make policies or implement them.

The Jerusalem Post reports that the Israeli government decided, in accordance to defense establishment recommendations, to allow the transfer of weapons and ammunition from Israel to supporters of Palestinian Authority President Mahmoud Abbas. The paper said this transfer was limited, and came out of concern for Abbas' life and position at the head of the PA, security officials said. Interesting that the Arab media did not report this.
Sources in the Likud were quick to condemn the decision. This was the first time that Israel took an active role in the clashes between Hamas members and Palestinian security forces started a week ago.

Palestinian President Abbas said he will call a national referendum on a future Palestinian state if no agreement is reached with Hamas within 10 days.
Abbas said he would call a referendum on a proposal to accept Palestinian statehood in the West Bank, Gaza and east Jerusalem.

Gamal Mubarak, son of Egypt’s president and his possible heir, paid a visit to Washington. Egypt has not had a vice president since Mr. Mubarak came to power 26 years ago. That should create a nice crisis after Mubarak passes away- unless he does not plan on passing away.
Meanwhile, Ayman Nour of the opposition was recently sentenced to five years in prison by an Egyptian state court. The charges against him…...does it really matter what the charges were??


Tuesday, May 23, 2006

Iraq's Politics, Kuwait's Women, Saddam's Wisdom

Middle East Analysis

In Iraq, the new cabinet is in place, and the Prime Minister al-Maliki has given priority to security issues. Almost immediately, problems are arising. According to NPR Radio, one cabinet member, from the (Sunni) Iraqi Islamic Party, rose in parliament to praise what he called ‘the heroic resistance’. He said in a language reminiscent of Ba’athist slogans that all Iraqis should support this ‘brave resistance’, but he did not elaborate if he meant that all Iraqis should join in blowing up people who, like himself, are members of the new Parliament and the Cabinet. I forgot, logic is not our forte in the Arab World, even though we have a whole field of knowledge called 'Elm al-Mantaq. Perhaps this member will have the courage of his convictions, strap explosives in his underwear and blow himself up along with a few more civilians? Most likely, though, he was buying life insurance for his participation in the political process.

Looks like a mini-civil war is starting in the Palestinian Territories. The Palestinians are stuck between a rock and a hard place- between the complacent corruption and kleptocracy of the PLO, and the trap of no recognition and no peace that Hamas set for itself. Looks like a financial crisis is gripping the territories. Perhaps all former ministers under Mr. Arafat would like to help by turning over some of their foreign bank accounts to the new government (Mrs. Arafat in Gay Paris might consider doing the same). Jordan is somehow inserting itself again into this inter-Palestinian conflict- still not clear what their role is in all this. It seems Jordan is nowadays uncovering plots and catching top terrorists faster than you can say al-Zarqawiiii!

Persian Gulf markets resumed their slide. Firing the Saudi head of market, former SAMA official Jmmaz al-Suhaimi, did not help for long after all. I knew it- a friend who worked for the postal service once hopefully told me: shooting the postman does not improve the quality of your mail content. There are steps being taken, though, for the governments to enter and bail out the markets directly. They are thinly veiled under King Abdullah’s proposed fund for people with limited income. The idea is to help low income families invest, but in the process, as a by-product it will help push share prices up. What a coincidence!!!
In Kuwait, the Kuwait Investment Authority is threatening to enter the local market again and purchase ‘profitable shares’. It did not elaborate on the definition of ‘profitable’ and to whom it would be profitable.

In Kuwait also: the Emir dissloved the National Assembly, pending new elections at the end of June. This is a genteel way of scheduling snap elections: all the potentates will still have time to rush out to their vacation spots in Europe at the end of June. For the first time several women will run for office, but not a single one will win a seat at this time. It is not likely that introducing women voters will change the political outcome, not yet. Female voters will vote along the same patterns as their male relatives, mainly along tribal, sectarian, or family interests. That could change with time.

Women in Kuwait are generally brighter (and harder working) than men: Kuwait University has always had lower admissions requirements for male applicants than for female applicants, especially for professional fields like Medicine and Engineering. A male applicant needs a much lower high school grade (GPA) than a female to be admitted. In other words: males are accommodated automatically, their handicaps recognized, otherwise even more top graduates of professional colleges would be females. Ergo, intellectually, the women of Kuwait are superior to their countrymen (of course there are a few exceptions). Goes to Show you: a whiter ghutra and bigger agal around it does not indicate what is underneath- as they say in Texas it could be ‘all hat and no cattle’. There are lots of empty crisp dishdashas on shores of the Gulf.

Saddam Hussein (remember him?) came out yesterday and said that Iran will have nuclear weapons, and that it will close the straits of Hormuz if attacked. He said the West will not be able to defeat it by military force. Words of wisdom from the great Arab Napoleon. I just hope they don’t sentence this Bonaparte to exile as king of some Gulf island like Bubiyan or Failaka. If that happens, then we will soon have to fight a new Waterloo somewhere west of Baghdad.


Wednesday, May 17, 2006

Kurdish Delight in Iraq, Kuwait’s Delicate Turmoil, Saudi Conjugal Issues

Middle East Analysis

Some pan-Arabists and Ba’athist sympathizers in exile (mostly in London) have been grumbling about the rise of Kurdish power and influence in Iraq (they also complain about the rise of Shi’a influence, but the Kurds are not Arabs). Recent statements by Kurdish leaders about the Kirkuk region have not been helpful in this matter. A column by the editor of Asharq alawsat , a level-headed man, refutes these complaints, noting that Iraqi Arabs selected a Kurd, Mr. Talibani, as president in a democratic process that is unfamiliar to most other Arabs.

An famous Egyptian Islamic activist and intellectual, Fahmi Howeidi, notes the deterioration of the level of faking evidence and fingering scapegoats in the Arab World. He cites the bizarre Jordanian charges against the Palestinian Hamas about plotting and smuggling arms and missiles into Jordan as a good example. I don’t care for the fundamentalist agenda nor do I agree with Mr. Howeidi on most issues, but I have to agree on this issue: this Jordanian charge not only smells- it reeks of familiar political opportunism.

In Kuwait, political tensions have risen this year, to a level perhaps unseen since the country’s independence in 1961. Here is a summary of recent events:

Early this year the old Emir Shaikh Jaber passed away, and his cousin the Crown Prince was declared the new Emir. He is from a rival branch of the al-Sabah ruling family, and has been in bad health for some years.
The Prime Minister at the time, a former Foreign Minister, brother of the late Sheikh Jaber, wanted the job of Emir for himself, perhaps because the new Emir, Sheikh Saad was ill. The new Emir refused to abdicate, and the PM, who has been running the country for some time, got the cabinet (appointed by him) and the National Assembly to depose Sheikh Saad and declare himself (the erstwhile prime minister) as Emir- I know, it is confusing for many of you: if it sounds so Byzantine and oriental…that is because it is.
It was essentially a palace coup with a veneer of legitimacy, because the constitution does now allow for abdication or removal of the ruler (not many monarchies have an arrangement for replacing the monarch, you would think for obvious reasons). The new Emir appointed his brother as the new Crown Prince, and his nephew as Prime MInister.
Now the National Assembly, having for the first time appointed the new Emir, or so it thinks, feels its power, and perhaps feels lucky. In a dispute over electoral districts, which is really a debate over political reform, a large block of the assembly, composed of the remnants of the old liberals and some of the other members are threatening a vote of no confidence in the new prime minister. There are hints of dissolving the assembly and calling new elections. No great changes or shifts are expected to result from all this political turmoil. The job of Assembly Speaker may change hands though, perhaps going back to the man who held the job before. The new Prime Minister might lose his job, though. Rumors claim that some non-royal members of the wealthy merchant oligarchy are waiting in the wings, already competing for a possible shift toward selecting a Prime Minister from outside the ruling family, i.e. one of them.
The current speaker of parliament, a former finance minister during the unforgettably corrupt 1980s, is said to be subtly campaigning for this eventuality (but not too subtly for us to notice).

al-Arabiya TV reports that about 177 Saudi women are currently suing their husbands for their refusal to perform their spousal duties in the conjugal bed. Like most women in the Middle East, they are more outspoken than you think. Sheikh Zara’a, a religious man apparently in charge of solving these problems, claims that the Saudi women need to be educated in the ‘culture of the bedroom’, so that they can attract their men. Now I wonder: what alternative do these men have over there. I have been there, and playing the field is hard, it is probably do-able, that is human nature, but hard and dangerous.
The responses to the story were varied. One woman complained on the al-Arabiya web site that the men pop up too much Viagra and their women get tired. In general, as expected, this item got the most response I have ever seen for an Arab web site, it was even more than the response to the stock market crash. Just to show you that all is not serious and grim in Saudi Arabia as stereotyped on the outside, a lot is going on under cover, or maybe for some not enough is going on under cover.

In Bahrain a column in a daily newspaper complains about interference from the U.S embassy in the country’s internal affairs, especially in political matters. Perhaps the local branch of Amnesty International or Middle East Watch can handle these matters- but they must be allowed in.
Also in Bahrain, Michael Jackson has gone underground, literally. Rumors say that Snedden might be considering vacationing there this summer


Friday, May 12, 2006

GCC Markets, FOMC in Fallujah, Protests in Egypt

Middle East Analysis

Saudi king has fired the Chairman of the Saudi Financial Market Authority. The new man said the weak market performance does not reflect the strength of the Saudi economy or the soundness of their policies…..yadda, yadda, yadda. Presumably he means that the market should move exactly with oil prices. But then these are not shares in the Saudi oil revenues that are being traded. Oil prices have not changed all that much since last year, they have fluctuated around $70.
Most comments from the public were supportive of the move. Now the Saudi authorities have blamed the head of the market supervisory authority for the decline- but the announcement did not clarify how he can be responsible for liquidity moving out of domestic stocks. Besides, now the government has implicitly promised investors that the market will get better, that prices will rebound. Over last week Saudi shares declined by 21%, while Dubai shares declined by 15.3%. Other Persian Gulf markets also declined by smaller percentages. The Saudi market has lost about 51% of its market value over the past three months.

In view of this recent kingly decision, the other Gulf rulers may feel that they have to do something similar to keep up with the Saudi Joneses. All have come under political pressure and are considering changes in market rules as well, some of which will restrict the ability of day trades to sell within the same day in order to take profits. However, such a measure may have the opposite effect, because they will also reduce daily trading activity in these small markets and reduce demand for local shares. In any case, we should soon see a slew of other kingly, princely and sheikhly edicts, recycling top officials, replacing several tweedledums with new tweedledees.

Clearly, the notion that making guaranteed profits in the stock market is an entitlement that is now deeply rooted in the Gulf States.(Actually Gulf markets started to rise on the day after the hapless Saudi director was fired- imagine if all Gulf states fired their stock market chiefs, how much the markets would appreciate. Or better yet, imagine if whole cabinets are fired and sent packing to their London mansions:))

Speaking of which, perhaps Ben Bernanke and his sidekicks, now that they have raised rates 16 times, will let old Alan Greenspan’s ghost R.I.P and quit raising rates and messing up the economy and the markets. Maybe the whole FOMC should be sent over to the Persian Gulf. They can hold their meetings in exciting downtown Riyadh or on board an aircraft carrier- maybe they can accommodate them around the old swimming pool at camp Doha, nestled at the foothills of Mutlaa Ridge, but I’d stay away from that beach, the water is as toxic as the smell warns you that it is. (Fallujah is not safe enough yet for the FOMC, but perhaps after one more rate raise it would acquire new charms. I hear that Tel Afar is getting better).

Tensions are rising in Egypt, as the government tries hard to turn the clock back and end open dissent. But it looks like the opposition, whoever they be, are smelling figurative blood now, and perhaps it is true- you really cannot push the toothpaste back into the tube.

New twist: according to al-Arabiya TV, Sudan- yes, you read right- has sent an envoy to Beirut to mediate between Lebanese factions. On a different note, the station also reported that a Saudi groom beat his bride on their wedding night so severely that she has been kept in intensive care. The man said his mother had told him that is how he will guarantee a lifetime of respect and obedience from his new wife.


Thursday, May 11, 2006

Persian Gulf Financial Markets, Iraq Cabinet Moves, and al-Qaida in Gaza

Gulf Markets:
It looks like the substantial correction this year in Persian Gulf financial markets has not run its course yet. Clearly, some easing of tensions between Iran and the US did not help the markets. The indices declined again Werdnesday as follows:
Saudi Arabia 4.94%- Kuwait: 1.2%- Dubai: 4.83%- Abu Dhabi: 3.36%- Qatar: 3.17%- Bahrain: 2.15%

There have been complaints about the management of the exchanges and about the indices used to measure market movement. These complaints may have some validity, but in some way they are like shooting the messenger for a bad message. The main problem with these markets, what makes any correction so precipitous, is the notorious lack of transparency as defined by the standards of major international markets. Some markets now require quarterly data, but useless quarterly data are no better than useless annual data. There is also a notorious lack of professional, and perhaps ethical, standards for appointing many companies' top management. This tends to reduce the credibility of any comapny outlook reports disseminated by the management.
In addition, the age of the internet and online trading has affected the domestic Gulf markets in some ways. Middle Class local investors now can trade in international markets online without needing huge portfolios and overseas investment managers. In other words anybody, and not just oil potentates, can open a foreign online account and trade.

In Kuwait, a local consultancy firm has again referred to an alleged top-secret report of the national oil company that claims the country's oil reserves are only about 25 billion barrels (25% of the official figure). This doubtful report, if proven true, would have serious consequences not only for the country's future economic course, but it would also impact world oil markets. It raises the question of whether figures for oil reserves are being manipulated in the Middle East and their impact on postponing needed reforms.

Gulf reports indicate that the new Iraqi cabinet will be announced this weekend at the latest, perhaps with one or both of the portfolios of Interior and Defense left open for now. Likely candidates for Interior is Abdel-K al-Taher or Dr. Ahmad Chalabi. As I reported earlier, Hoshyar Zibari will remain Foreign Minister, and Education will remain with the dominant coalition (the E'eatilaf) bloc, most likely with the Da'awa Party. Dr. Hussein al-Shahristani looks like the next Oil Minister- he is a nuclear scientist who once refused to cooperate in Saddam's projects and was jailed. This according to various reports in al-Sabaah and other Middle East media.

al-Qaida in Gaza (but not Eyeless):
Arab reports mentioned a branch of al-Qaida has been set up in the Palestinian territories. This would introduce a new element into the security and political situation. Hamas, which runs the government, is in reality an offshoot of the Moslem Brotherhood, an organization originally started around 1928 by Hassan el-Banna in Egypt. It is considered a moderate Islamic organization, perhaps not by Western or even Arab standards, but certainly by al-Qaida and Salafist standards.

Jordan continues to accuse Hamas of plotting terrorist activities in the country. Now Jordan has introduced a new element, claiming that Iranian missiles were being smuggled by Hamas into Jordan. Hamas denies all charges, while Iran apparently thinks the charges, and perhaps their source, beneath a response. It is not clear whether the alleged missiles were Iranian-made, Iranian-supplied, Iranian-financed, or Iranian-approved (as in k-o-s-h-e-r). Maybe, it is possible, but Jordanian intelligence is like most Arab security services, it is pervasive in the country, but it is also used as a political tool.


Tuesday, May 09, 2006

Arab Opinion of Regimes, Poll on Iran, Algeria Again

Middle East Analysis

The Arab satellite news television station aljazeira has published results of an interesting ongoing poll of its viewers on the web. The poll is about whether Iran’s nuclear program represents a threat to neighboring countries. The results, so far, indicate that only 27.5% answered with (yes), while 72.5% answered with (no). Probably the results indicate the huge population imbalance between Arab countries on the Persian Gulf, and the rest of the Arab World. Most likely, those in the Gulf region, especially Saudi Arabia, would vote yes, with the probable exception of Iraqis. Those farther away would vote overwhelmingly (no), which is reflected in the high percentage of that vote. Arabs farther away look at the issue without the baggage of regional worries and inter-Gulf ethnic and sectarian tensions. They see it in terms of parity with a nuclear Israel, their perception of US foreign policy stance, and their inclusion of Iran as part of an ‘us vs. them’ struggle.

There is probably a deep disappointment among many people when comparing their own governments with Iran- a point of greater importance than the state-controlled or censured media would convey. They perceive the regime, and the country, as much more independent than their own regimes from Western control and coercion. Mr. AhmadiNejad’s defiant stance against the United States (and the World community as represented by the industrial countries) is admired by many when compared with their own leaders. In that sense, the Iranian leader’s recent rhetoric was addressed as much to the Arab, and wider Moslem, audience, as to it was the Iranians and Americans.

However, admiration for his stance on the nuclear and broader Middle East issues does not mean support for an Iranian-style theocracy. There are some in the Arab World who would like some form of religious regime, especially the Salafis who yearn for a return to their own vision of what the Islamic world was supposedly like 14 centuries ago. In reality, the Moslem World was nothing like what they envision. It was more tolerant than the Salafi doctrine, even though its history was one of continuous warfare and bloodshed.

Looks like some form of armed conflict is imminent between Hamas and the Fatah cadres in the Palestinian Territories. The pie is under threat, but they are still fighting for its slices.

The Algerian president is making an issue of his demand that France apologize for its many years of colonialism. I wish Mr. Bouteflika himself would have the courage to apologize to his people for the mismanagement and corruption of his own Party, the FLN, in the years since independence. Come to think of it, I wish all Arab regimes would apologize to their peoples, and then at their next summit, they can all hold hands- Kings, Emirs, Potentates, and Dictators- and sing Kumbaya.


Monday, May 08, 2006

Final Stretch in Baghdad, Reeling Gulf Markets, Mini-Scandal

Middle East Analysis

The London-based daily Asharq alawsat reports that former Iranian President Khatami has strongly criticized the man who replaced him, Mr. AhmadiNejad for his fiery statements. He has also criticized the extreme fundamentalists. The paper also reports that the new president of the unified Iraqi Kurdistan, Mr. Barzani, has claimed that he will work toward annexing regions that he claimed had undergone ‘forced Arabization’ under Saddam Hussein. This sounds ominous for peace in the Kirkuk and perhaps the Mosul areas.
Looks like the last issues of contention for the new Iraqi cabinet are the Ministries of Defense and Interior, which I expect the Shi'a Arabs and the Sunni Arabs to split, leaving the Kurds in control of the Foerign Ministry. I wonder if they use Game Theory in Iraq...perhaps unconsciously.

Persian Gulf Finance:
Oil prices declined again today, partly a result of the Iranian President sending a 'conciliatory' message to President Bush. Probably some of the recent political risk premium is being reduced as fears of imminent military confrontation seem to recede, for now.

Arab Stock Markets continued their decline at the start of the current week (5/06/06), led mainly by Gulf Stock Exchanges. At one point on Saturday the Saudi market registered a decline of 9.6%, although it recouped most of it before closing. However, that may have contributed to the decline of markets across the region. Local media estimate that the Saudi market has lost US$ 380 billion worth of capitalization since last February. The Dubai market is estimated to have lost about US$ 25 billion in market value during the same period. The Cairo Exchange also lost, and some market observers attribute the decline to a ‘domino effect’ of the decline in Persian Gulf exchanges. Some of these markets have allowed resident foreigners to deal in the market, under the assumption that more demand would keep prices high, but that has not helped offset legitimate market forces and keep markets buoyant.

In Kuwait, the market also continued its decline, and many traders, including frustrated Investment Bankers, have been looking for scapegoats. There has been blame for everybody within sight of angry speculators, from the Exchange management, to the Investment (Mutual) funds, to the Kuwait Investment Authority (KIA). The KIA, which was supposed to invest the country’s foreign exchange surplus in sound international markets, is now an integral part of the speculative game. It has been dragged over the past decade into the domestic stock market by political pressures. Clearly that has been a mistake, for the original goal of the KIA was to diversify the sources of income away from the oil-based domestic economy. Now the KIA is involved in the domestic economy in the worst possible way: many look at it as a rich source that would keep the stock market liquid and keep shares artificially high. What was supposed to be a professional organization is now a pawn in domestic politics.

A 'Peanuts' Scandal:
In a new twist in a new brewing financial scandal, the Bank of Algeria has blamed the Kuwaiti side in a Kuwait-Algerian Investment Fund for the ability of the Algerian Chief Executive to abscond with almost US$ 20 million (peanuts as far as the average size of financial scandals in the Gulf region go). The Kuwaiti side would be the Kuwait Government in this case. The daily al-Qabas reports that the Algerian Bank has complained that the Kuwaiti side owns 75% of the Fund, and it was responsible for nominating and appointing the Algerian CEO. Now, in the likely event that this man has other prominent partners-in-crime in either of the two countries, Kuwait (where he was apparently selected) and Algeria, there is no way that he will be extradited to either country. Not if the past is any guide. The Fund in question was established in 1998 as a partnership between the Kuwait Investment Authority (KIA) and the Algerian Ministry of Finance. The man himself originally came from a Luxembourg subsidiary of Kuwait Investment Company, which might mean that the Algerian claim of some Kuwaiti complicity is probably correct. This Mr. Ibrahimi is now enjoying his gains in Paris.
This is definitely not in the same league as the huge Kuwait Investment and Oil scandals of the 1980s and early 1990s, all of whose big fish are still completely free to enjoy their gains. Still, small rotten fish smell just as bad as big rotten fish.
On that doubtful culinary note, I bid you…..cheers

Friday, May 05, 2006

Failed Arab States, The Iraqi Pie, Fundies and Outed CIA Agents

Middle East Analysis

The reactions to recent proposals to establish autonomous regions within Iraq (e.g. Biden-Gelb) have been negative on the Arab level. That is to be expected in view of the Arab proclivity for the traditional strong centralized authoritarian rule. In the Arab World, a domineering central government is mistaken for a strong state. As long as the capital, with its ruling elites and its environs, is considered livable and manageable, so is the rest of the country. Unfortunately, the opposite is often true. (Would it make a difference if DC were to float away into the Atlantic? While Congress is in recess, of course.)
Speaking of which, the recent report by Foreign Policy (King’s College, London) ( and the Fund For Peace( on Failed States is loaded with Arab, Moslem, and African states. Five of the worst ten are Moslem countries. Three of these are members of the Arab League. 17 of the worst twenty are either African or Moslem. Egypt, the largest Arab country, is one of the worst 40 states. Looks like Latin America has improved noticeably.
The emphasis in the Arab media has shifted now to Iranian influence in Iraq. Some Iraqi Sunni commentators in the offshore Arab media, those based in London, are now, in true Ba’athist fashion that clearly is still in fashion among them, disputing the Iraqi national credentials of some of the new leaders. Ironically, the ancestors of many of these current leaders were the ones who opposed the long Turkish occupation, and fought the British invasion- see about the Siege of Najaf (1919), and the Great Iraqi Rebellion (1920)- and they were the ones who forced the creation of the Iraqi state.

Now for the haggling in Iraq: It looks like the Kurds will insist on keeping the Foreign Ministry, so all the Arab League meetings will have to accept a Kurd as an equal. Sunni Arab attempts at establishing a new ministry for inter-Arab affairs to deal with the Arab League are not likely to succeed. It aims at keeping a direct line between Iraq’s Sunni minority and the (mostly Sunni) Arab World that is clearly hostile to the democratic experiment in Iraq. In other words, its aim is to have the Sunni Arabs basically run Iraq’s relations with other Arab countries, which in itself is unconstitutional, flagrantly sectarian and encroaches on the country’s sovereignty.

It also looks certain, as predicted, that a Shi’a will keep the Interior Ministry, which is responsible for the security services. The Sunnis now want the Ministries of Education and Defense, among others. They will probably get Defense, but Education is a touchy subject and they are not likely to get it, especially in view of the recent drive at cleansing the curriculum from its chauvinistic and heavily fascist-inspired slant that was imposed by the Ba'ath Party.

The past week or two have been a strange period of time, perhaps a watershed. During the period, Osama Bin Laden, Al-Zawahiri, and al-Zarqawi all did their bit to compete with the likes of Oprah, Springer, O’Reilly, and perhaps anybody else who has a new book coming out in the United States, including several former sworn-to-secrecy CIA operatives and agents (of both the outed and non-outed varieties). Add to them a new twist, the reappearance, also on videotape, of Hikmatyar, a nasty and opportunistic Afghan warlord who was part of the Moujahideen fight against the Soviet occupation in the 1980’s but then went on to almost single-handedly destroy Kabul after it had thrived during the war years. Now he claims his loyalty to al-Qaida. I am not sure it makes a difference to anyone, but it is odd, all this competition by the shaggy Salafi fundamentalists for the cameras.
The Al-Jazeera was gushing all over the recent al-Zarqawi tape, trying to discern and divine a new approach by the Jordanian leader of al-Qaida in Iraq, but that was before the US military released the longer Keystone-Cops version of it yesterday.

Wednesday, May 03, 2006

Iraq Coup Rumor, Arab Confusion, Echoes of Saigon '63 and Tehran '53

Middle East Analysis

The London based Al-quds Al-arabi (a.k.a Arab Jerusalem) claims (5/2/06) that the United States is planning a military coup in Iraq to be followed by the formation of a Junta composed of a gaggle of Sunni generals and some Shi’as. The Sunni generals, it claims will be mostly from the Saddam era, some of whom had high-tailed it to London (in anticipation of just such a moment) as the Ba’athist ship was sinking. It claims that the Kurds have given their blessing to this plan. The newspaper has been a strong opponent of the US invasion of Iraq and the overthrow of Saddam Hussein.
Echoes of South Vietnam circa 1963 here, including the sectarian angle- the Diem brothers, and especially Madame Nhu, were Catholics. That coup, of course, was a harbinger, the first inkling that the South Vietnamese could not manage to run the country.
Clearly these rumors are a creation of the Arab mind-set, for we who grew up in the Middle East have been conditioned to wait for a 'Brown Knight' riding an imported tank at dawn. When the political process gets to be frustrating, we are supposed to wait for the men with the guns to end the whole political process.

There has been more talk of Mr Ayad Allawi and his quest for a government of national salvation (or is it political salvation?). Allawi is being touted as a moderate, which he is, who can bring all factions together. There is one problem with Mr. Allawi, he does not have the people behind him, as the past elections have shown. But then again, nor do the generals presumably lurking in the shadows.(Echoes of Tehran, Operation Ajax, circa 1953, here?).

The same newspaper also talks (5/3/06) about the torture and death in prison a former Iraqi Ba’athist Prime Minister. It claims that public opinion in the US is outraged about this new scandal. Odd- I have seen nothing about it in the US media. Not even the New York Times seems to know, or is outraged, about it. Perhaps it is too early.

Al-Ja’afari is out, now Al-Malki is the focus of attacks in the Arab media. And they don’t even have an election this year, if ever.

In Egypt, it looks like the terror bombings were a godsend to embattled President Husni Mubarak, who eagerly extended the State of Emergency in place since the assassination of Anwar Sadat in 1981. Imagine, 25 years of emergency rule- a whole generation growing up knowing nothing but emergency.

On a lighter note, perhaps, Asharq Alawsat (5/3/06), more conservative and also more balanced but also London-based, claims that a buried ancient city has been discovered in Saudi Arabia. They are working to unearth it. Great, then they can go right back and bulldoze it over, if the past is any guide in monument-phobic Saudi Arabia.


Monday, May 01, 2006

Biden and Gelb: Outlines of A Reasonable Plan for Iraq

Middle East Analysis

Finally a good alternative plan for Iraq has come out of Washington, a plan that is sensible and is the most viable. The Biden-Gelb plan (New York Times: May 1, 2006) is a clear departure from Sen. Joseph Biden’s past insistence that reasonable concessions to the Sunni Arabs can bring about success for a strong centralized government. Reasonable concessions have brought neither a more imminent peace nor acceptance of the inevitable inescapable fact: that the new Iraq does not have much to do with the old one that the British patched together by a combination of force and diplomacy and the Sunni elites held together by force and terror. Those reasonable concessions were unreasonable in that they kept feeding the false hope to some that the terrorism/insurgency would eventually bear fruit and return that country to its pre-2003 course, thus validating and continuimg the minority Sunni sense of entitlement to rule. Nor is Mr. Allawi, good and non-sectarian as he is, the solution- the terror campaign gathered steam and grew even while he was the Interim Prime Minister. Those who vilified Mr. Allawi at that time inside Iraq, in the Arab World, and even within the Democratic Party cannot now be serious about his chances.

Sectarian and ethnic emotions in Iraq, suppressed for the decades since the anti-British Great Revolt (1920-1921) that was led by the Shi’a Hawza from Najaf, are as charged now as they were then, and as they were (and still are) in Bosnia.

In a situation like Iraq, or for that matter like Sudan, when temporary ethnic peace could be bought only with the price of domination of one group of the others, then it is time for at least a semi-breakup. This proposal will not lead to an American style federalism, with mobility and opportunity increasingly for everyone. It will be something much less pleasant, with perhaps intrusive regional border security (it will be nothing as pleasant as the California agricultural inspectors at the state lines). It will be a new shock, and a much-needed one, to a stagnant regional Arab system that only understands centralized power and the damage it can inflict and the oppression it can impose. But it is clear now that the alternative is a continuation of a Sunni and Salafi terror and insurgency campaign financed with unlimited resources from the gushing oil fields outside the country, and soldiered by both Sunni Iraqis and imported terrorists from other Arab countries. And the increasing tendency of others toward retaliation. And continuing Iraqi and American casualties.

The financial resources available for such an insurgency are unlimited from across Iraq’s borders, and oil prices don’t look like they will be going back to the $30/barrel any time soon. Continuing to pretend that Iraq is one single centralized country is like a replay of the old Stalin-era films that showed Uzbeks, Latvians, Turkmen, Azerbaijanis, and Armenians all singing and dancing joyously under the benevolent centralized rule of Joseph Stalin.

World powers, perhaps even an emboldened UN, could join the United States in guaranteeing the integrity of the regions and of the federal borders.

The Biden and Gelb plan is already coming under some attack in the blogs, and in some Arab media. There are some are screams of “Biden wants to dismember Iraq". But this time, I believe the Senator may be unto something.
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