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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

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. �


By Jonathan Howell-Jones Dubai

THE GCC

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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. �


By Nathalie Bontems Beirut

LEBANON

NIGHT OF THE GENERALS

Get

ty/G

allo

Im

ages

TRENDS-Tribunal.qxd 6/3/09 2:27 PM

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. �


By Ian Munroe Dubai

SOMALIA

LOST AT SEA

TRENDS-PIRACY.qxd 6/3/09 2:29 PM

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. �



SYRIAN-LEBANESE RELATIONS

FOR OR AGAINST

Corb

is\A

FP

TRENDS-Syria-Lebanon.qxd 6/10/09 12:21 PM

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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


T

Focus: Yemen

Focus-Yemen 6/3/09 4:49 PM


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.


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.


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.


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


‘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


3 0 0 , 0 0 0

Average number ofbarrels of oil


Mag

num


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


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


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

Get

ty/G

allo

Im

ages


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.


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


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


‘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


“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


Prisoners were tortured with electric shocks andwhips, then forced to sign confessions


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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


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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Corb

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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.



‘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. �



‘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

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


Business Briefs 6/8/09 2:29 PM Page 42

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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

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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. �



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

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Manufacturing

Manufacturing2.qxd 6/3/09 2:35 PM Page 50


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


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


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


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


Manufacturing

Under gloomy economic circumstances, the Gulf’sheavy industry seems to be holding up well


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.” �


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.


Employment

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Bahrain.qxd 6/3/09 4:45 PM Page 58


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


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


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.


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


Employment

arab

ianE

ye.

com

One option the Ministry of Labour is consideringis the government sponsoring foreign workers


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." �


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


Private Equity

Private Equity.qxd 6/8/09 2:53 PM Page 66


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


$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


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


during 2007.

5 0 D E A L S


during 2008.

Get

ty/G

allo

Im

ages


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


Private Equity

PE firms used to make a lot of money from theincrease in general market valuations. Not any more.


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


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.


“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.” �


Private Equity

‘Private equity thrives when economies are thriving,when people are looking to expand, to invest more’


Education

Get

ty/G

allo

Im

ages

Libya.qxd 6/8/09 12:48 PM Page 74


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


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.


Education

With 40 nationalities represented, the school represents Libya’s emergence from global isolation

Reu

ters


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.


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

is


“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.” �


Education

‘We no longer live in homogenous ethnic states,we’re entering again the era of empires’


YOU SAY YOU WANT TO REACH OUT...

WE SAY HOW FAR?

Rotana Media Services (RMS) offers vehicles that span across the whole region, covering millions of Arab consumers. Whether you need to communicate on TV or Radio, Print or Online, Outdoor or Mobile, or even face to face, RMS can reach and make your message meet its relevant target audience.

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Cover Story: Tourism

Cover Story.qxd 6/7/09 12:18 PM Page 82


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


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



arab

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ye.

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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



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.’


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

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com


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



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


$ 1 4 0 B I L L I O N

Value of the new hotel facilities currently



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.” �



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


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’


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.


TRENDS / June-August 2009

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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

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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’

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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


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


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.

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A survey of 765 Saudi firms shows that businessconfidence has been dropping since early 2008


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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-


Economy

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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.


I just lost my Ferrari

I just got his Ferrari

more to think about

www.thenational.ae

The making of one man could mean the breaking of another.In business there are winners and there are losers. Double or bust, it’s keeping ahead that matters; it’s being able to capitalise on opportunities that may seem futile pursuits to others. Our business experts bring you a critical insight into the financial markets, so you can plan your next big venture or plan your retirement.

Just think, because you’re different.

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. �


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

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104 TRENDS / June 2009

Interview: Paul Krugman

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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


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


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.



‘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.

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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.



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‘A lot of people will starve as a result of this crisis.Not many of those people will be in the West.’


With MEA, you are just a few clicks away from enjoying your flight.Book and purchase e-tickets through the Internet at any time and place with your credit card. Visit us at www.mea.com.lb

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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



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


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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.



‘I think it’s probably just going to be a calmer sort ofworld – less wheeling and dealing, less adventurous’


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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. �



Reu

ters

‘I worry about Ukraine – that it might seek to join with Russia and reconstitute the Soviet Union’


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Literature

Corb

is

Beirut Book World.qxd 6/3/09 5:24 PM Page 116


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.


BOOKMARKING BEIRUT


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


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


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


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


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LID-Trends-2.indd 1 6/15/09 4:27:36 PM

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.” �


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


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



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


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


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27358mme Trends 270x440 13/5/09 12:06 Page 1

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. �


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

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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


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

LETTER OF THE MONTH

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ART CONTRIBUTOR: Alvin Cha

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Goudsouzian, Dominic Ellis, F. Brinley Bruton, Zeinab Charafeddine

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Washington: Afshin Molavi

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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


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. �

Last Word.qxd 6/3/09 3:06 PM Page 138

trends | june 2009 | trouble in tourism

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