Gulf Finance & Politics, Rafsanjani's Last Tango, Dysfunctional Iraq

GCC Finance & Politics:
A report by the Dubai National Bank warns of a looming serious debt crisis for the middle classes in the Gulf oil states- that would be a serious problem of non-performing loans for the region’s banks. The Kuwaiti banking system went through two such crises, mostly related to stock market speculation and crashes, and the government had to step in and bail out the banks through bailing out the individual and corporate debtors. The Kuwait government had to bail out the banks during 1970s, and again during the 1980s when it ended up owning controlling shares of most of the companies in the country. It had to step in again after the Iraqi invasion in 1990-1991. In a phrase that is purely deja vue, the Dubai report warns that the quality of bank assets in the GCC, including the UAE, could deteriorate noticeably by 2007 or 2008. As asset prices have declined, many borrowers may be unable to pay off their loans, which would put severe pressure on the banks’ loan provisions.

The media in Kuwait is already talking about the specter of a new stock market crisis, as the losses of the local investment companies in the stock market have reached near one billion Kuwaiti Dinar this year (Alqabas: 10/28/06). The front page of Alwatan, whose owners may have their own axe to grind in personal disputes with a major merchant family that also operates the rival Alqabas newspaper, has compared the current situation to a new 'Manakh crisis'- that was when the market crashed in 1982 (Alwatan: October 28). This is part of an ongoing rivalry and political dispute between various political and financial heavy-weights in Kuwait. This dispute dates back to political disagreements and some major financial scandals extending from the early 1980s through the early 1990s, involving the ministries of Finance and Oil.

In Saudi Arabia, the stock exchange will start a new system of one-session trading every day. Under the old system there were two trading sessions each day: one in the morning and one in the evening. This is seen by some as one way to reduce the level of speculation and trading losses by inexperienced civil servants and students who spent their evenings trading (there are not many other known evening diversions in Saudi Arabia). One very likely result of the change would be for government civil servants to skip some work hours during the day and head for the market- this in itself might actually improve the performance of the state bureaucracy by keeping some of them away from their offices.

Meanwhile, the media war continues between Saudi Arabian outlets and little neighboring Qatar, but it is mostly a one-sided war, initiated by the Saudis against Qatar and her policies. Qatar has been the maverick of the Persian Gulf region for some years now, as well as a thorn in the side of the Saudi government. It is hard to classify the country other than a maverick because it has for years rejected the Saudi claim and obvious sense of entitlement to leadership of the GCC. It is home to the most popular and most controversial Arab TV station, Aljazeera, as well as home of the US Central Command regional HQ. It probably has the largest natural gas reserves among Arab countries. It also has the only Israeli 'trade' office in Doha, and Israeli foreign minister Tsipi Livni will make her first visit of the Gulf to Doha next week. Qatar is sort of like France was under General De Gaulle, independent but keeping one foot in the alliance. In fact it is like France is today under whoever occupies the Elysee Palace.

Iran Accused in Argentina:
Ayatollah Ali Akbar Hashemi Rafsanjani, former Iranian President and still an influential figure in the clerical regime, is in some trouble- or he can be if he ever leaves Iran to travel to the West. The degree of trouble he will be in varies directly with how close he gets to Argentina- if he ever sets foot in Buenos Aires he will be up the proverbial fecal creek. Two Argentine prosecutors have asked that Rafsanjani and other Iranian officials be arrested for a bombing of the Israeli embassy in Buenos Aires in 1994 that killed 85 people. At the time Rafsanjani was president of Iran. The prosecutors claim that the Iranians recruited Hizballah to do the job. Hizballah does not normally have a geographic interest beyond Lebanon and Israel. In any case, it looks like no more tangos for that ayatollah.

Iraq Dysfunctional:
Muqtada al-Sadr has warned against violence committed by some renegades among his followers, and said that the incidents that occurred between some of his followers and the government forces were the result of ‘disobedience of orders’.

In an interview with Reuters, P.M. al-Maliki of Iraq discounted reports that the US was considering replacing him, and said that would be against the stated American goal of allowing Iraqis the 'freedom of choice'. He also complained that: “As Prime Minister I am the Commander in Chief or the armed forces, but I cannot move a single brigade without getting approval from the Coalition (U.S) because of United Nations authorization (?)” He also said he approves of the attempt to arrest the Sadrist leader Abu Dir’a who was responsible for some sectarian killings, but he objected to the violent method used because it could lead to undoing a compromise reached with al-Sadr.

Northern Iraq should heat up within the next few months. Already the Sunni Fundies have declared it part of their Emirate (apparently they need some oil fields to make it look like a real Arab Emirate). The Kurds and others are bracing for a referendum in December 2007 on whether Kirkuk will join the Kurdish autonomous region- right now it looks like it will vote to join Kurdistan. The Fundies in al-Anbar are certain to escalate and shift some of their efforts north, since they will want to preserve their declared Emirate intact. The Kurds already have some problems with the central government over their oil contracts.
Cheers
Mohammed