One bomb raises the cost of doing business like messed up legislation. #Cost_of_Doing_Biz

Two weeks ago, REBEL ECONOMY blogged about how one bomb in the Sinai adversely affects the Egyptian economy.

President Sisi has his eye on a mega $8-billion expansion of the canal that aims to double daily traffic by 2023 and increase annual revenues to more than $13 billion by 2023, from just over $5 billion in 2014. Yet, none of this is meaningful if the government continues to resist structural reform which has left the economy floundering for years. It is also resisting the simple fact that there was likely a bomb on flight.

Given the above, Egypt’s President Sisi has gained even more ground to justify a security state and target militants because attracting foreign direct investment is his duty.  He argues that no one wants to invest in a country with violent attacks that target tourists.  Note: we would add — or raise the counterpoint — that no one wants to invest in a country with violent attacks that targets its own country’s citizens.

As Egyptian businessmen, economists, and security forces sort out the conditions on the ground to attract FDI, neighboring countries also compete for FDI.  A few indicators track such conditions that are highlighted in the World Bank’s Doing Business Report 2016.  In a nutshell, business reforms have picked up in the Middle East & North Africa, despite conflict.  Eleven countries in the MENA region introduced a total of 21 reforms that ease the costs of doing business — a record in the last 5 years.

Morocco and the UAE continue to lead the region in reform activity as both economies undertook four reforms each during the past year. Morocco made Starting a Business easier by eliminating the need to file a declaration of business incorporation with the Ministry of Labor. The UAE was the only economy in the region that reformed in the area of Enforcing Contracts. As a result, commercial disputes in the UAE are now resolved in 495 days, which is less than the average of 538 days in the high-income Organization for Economic Cooperation and Development (OECD) economies.

For some reason, Arab countries that are not in political transition, lead in passing business reforms.  Does that mean that we can expect to see more growth in small and medium businesses in the next five years for the “non Arab Spring” countries than their “Arab Spring” counterparts?  If so, this implies that heavy-handed–dare we say authoritarian– leadership will pounce on these business growth numbers to continue justifying its political power hold.

However, just like how a bomb raises the cost of doing business, so does messed up legislation.   The costs of starting a business remain astronomical for the average citizen across MENA countries.  Specifically, in some MENA countries, it costs almost one-THIRD of income per capita for local entrepreneurs to start their business, compared to less than one-THIRTIETH in the OECD.

Here is how the MENA countries ranked within the 189 countries surveyed in this year’s Ease of Doing Business Report.  Areas of improvement noted in parenthesis.

  • United Arab Emirates – (Dealing with Construction Permits; Getting Electricity; Protecting Minority Investors; Enforcing Contracts)
  • Turkey – 55 (Dealing with Construction Permits)
  • Bahrain – 65
  • Qatar – 68 (Trading Across Borders)
  • Oman – 70 (Getting Electricity; Trading Across Borders)
  • Tunisia – 74 (Paying Taxes; Trading Across Borders)
  • Saudi Arabia -82 (Registering Property)
  • Kuwait – 101 (Starting a Business)
  • Jordan – 113
  • Iran – 118
  • Lebanon – 123
  • West Bank & Gaza (Dealing with Construction Permits; Getting Credit)
  • Egypt – 131 (Protecting Minority Investors)
  • Pakistan – 138
  • Sudan – 159
  • Iraq – 161
  • Algeria – 163 (Dealing with Construction Permits; Starting a Business)
  • Morocco – 175 (Starting a Business; Getting Electricity; Registering Property; Paying Taxes)
  • Syria – 175
  • Yemen -177
  • Afghanistan – 177 (Getting Credit)
  • Libya – 188

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This Disease Needs to be Fought with Good Education & Economy

The total terrorism in the region is the fruit of terrorism by authoritarian regimes [across the Middle East & North African region]~Sheikh Rachid Ghannouchi

On October 28th, Sheikh Rachid Ghannouchi of Tunisia offered his perspective to the U.S. Institute for Peace in Washington, DC.   Ghannouhi, who was exiled during the Ben Ali regime, remains a vital voice in political, cultural, and religious circles throughout North Africa.  After Tunisians removed Ben Ali from power in 2011, Ghannouchi’s movement, Nahda, led the first post-revolution government.  The Nahda party formed and coalition to write the country’s new, more democratic, constitution. It is now a coalition partner in the secularist government led by President Beji Caid Essebsi. Sheikh Ghannouchi delivered remarks on the challenges facing his homeland and its region.

According to the U.S. Institute for Peace, Tunisia’s biggest challenges include the rise of extremism during its economic downturn, due to, in part, declining tourism.  Conversely, Tunisia’s declining tourism results from the violent extremist attacks.  Such violent attacks include the Bardo museum in 2014, the attack in Sousse earlier this year, and the three political assassinations since 2011.

However, one could argue that economic and socio-political unrest fomented during earlier authoritarian rule, and has finally come to a violent head.  As Sheikh Ghannouchi argued: political extremism in not just on the “right” but also on the “left”, and therefore, moderation tempered with “consensus” is the only way to govern inclusively.

We believe violence is a problem not a solution…Must focus on spread of dialogue and reconciliation.  Dialogue between secularists and Islamists is key to democracy in Middle Eas~Sheikh Rachid Ghannouchi

Nonetheless, U.S. interests remain keen on focusing on the national security elements in Tunisia.  In sum, the USIP stated:

Tunisia’s success or failure in building a peaceful democracy is central to U.S. and international interests in a stable North Africa, Middle East and Arab world—an importance recognized this month by the award of the 2015 Nobel Peace Prize to key mediators in the country’s political struggle. After two attacks by militant gunmen killed scores of people and crimped the country’s vital tourist economy this year, the government imposed a state of emergency—a step that raised fears among many Tunisians about a return to the country’s decades of authoritarian, police-enforced rule.

Ghannouchi explains high number of Tunisians joining Islamist politics in Iraq & Syria is result of years of oppression under Ben Ali. This mirrors the parallel trend of double digit unemployment that has persisted since 2000.   Tunisia “can’t fight terrorism without fighting the high level of unemployment,” says Sheikh Ghannouchi. 

  Sadly, Tunisia has inherited of the highest number of fighters who joined ISIS; 3000.

Disillusion among young Tunisians has made the country one of the biggest recruiting grounds for violent militant groups such as ISIS. As Tunisian youth circulate to battlefields in the Middle East—and as this nation of 11 million people hosts one million or more  refugees from the civil war in neighboring Libya—how can Tunisia manage its borders, improve its security, prevent violence, and also strengthen democratic politics?

Yet, in the most recent election, the lowest voter turnount was by the young with 30% unemployment.

A skeptic among the panel, Robin Wright, pushed back on Ghannouchi’s point that extremism increased in North Africa due to Tunisians political voice being suffocated in the Ben Ali ear.  She pointed out that it’s been 5 years since Tunisia’s revolution, so she finds it hard to believe that terrorism increased because of Ben Ali remnants & festering tension.  She specifically raises this contention in her new book “Rock the Casbah: Rage & Rebellion Across the Islamic World” and gives more weight narratives in Egypt & Tunisia (described as a weakness to frame context) and comments on the rise of ISIS from Tunisia to Iraq.  The lack of freedom, education, and under-development causes extremism, says Ghannouchi.  Also the political left’s denial of Islam as part of the social and cultural fabric contributes to internal unrest in Tunisa.  Ghannouchi brings up a relevant counterpoint, however, many could argue that the extremist elements within the political left have not, yet, resorted to violence.

Photo of Rachid Ghannouchi Presenting at U.S. Institute for Peace

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    Highlights from Ghannouchi Speech

    • Government cannot be ruled by simple majority of 51%…better to rule w/more consensus as seen with the Nida Tounis coalition formed in 2014.~Ghannouchi
    • Tunisia as a third way, beyond false binary between oppression (to get stability) or extremism (to get justice)

 Cooperation by way of moderate Islamists & moderate secularists is necessary for the success of democracy in our region.
    • We wanted democracy for all Tunisians, not just a majority.

    Ongoing Questions

  • Where are the redlines of the sacrifices made by ElNahda’s party when they join coalitions?
  • How can a “Marshall Plan” target sectors of development deemed as priority by Tunisians?

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Economic growth doesn’t translate as citizen growth. #GDP #Wellbeing

The World Bank’s Middle East & North Africa division released a report “Inequality, Uprisings, and Conflict in the Arab World” (included below along with the report link) that confirmed what many non-economists living in Tunisia, Syria, Yemen and Egypt suspected or could attest to personally.  Some Gallup polls related citizen’s dissatisfaction in many of these countries as well.  Despite consistently high growth rates in the Middle East & North Africa (pita-consuming) region, polling of populations “showed a precipitous decline in life satisfaction scores, especially for the middle class”.  In a nutshell, citizens living in Arab transition countries said “Enough/Bes” to the current social contract and the restrictions because they felt that — economy growth aside — THEY were not growing with the state.  Point taken as Qayyum @PITAPOLICY noted here on the World Bank’s Voices & Views site.

Key observations made in the report that SCREAMED at PITAPOLICY’s interest are the following:

  1. Economic inequality in Arab countries is relatively high — in particular in Egypt, where this contributed to the 2011 revolution.  [Note, economic inequality is pretty high in the United States too.]
  2. Poverty headcount is higher in the Arabworld than the overall MENA region. [Note that Yemen is the poorest country in the MENA region where 80 percent of Yemenis face a humanitarian and food crisis.]
  3.  The 20 or so largest companies in most Gulf States, Egypt, Lebanon, and Morocco are not listed on national or world stock exchanges. Instead, they are either firms privately owned by prominent families or state – owned firms. [See p. 29 of report.]
  4. The Iran nuclear deal raised its profile in its economic evaluation.  The final adoption and implementation of the JCPOA could lead to the lifting of sanctions on Iran by
    the first quarter of 2016 thereby improving Iran’s access to trade, technology and finance.


WASHINGTON, October 21, 2015 – A longtime reliance on economic indicators as a barometer of progress in Middle Eastern and North African countries masked the level of frustration and dissatisfaction in the region ahead of the ‘Arab Spring,’ according to a new World Bank report released today.

While many observers praised the region for its consistently high growth rates in the years leading to the Arab Spring, polling of populations at the same time showed a precipitous decline in life satisfaction scores, especially for the middle class, said the latest Middle East and North Africa Economic Monitor. The report attempts to resolve the apparent paradox presented by mass demonstrations in the face of improving economic conditions. In examining the causes of the Arab Spring, the report identifies sources of frustration that persist today, and run the risk of being aggravated by the current economic slowdown.

The latest MENA Economic Monitor finds that the Arab Spring revolutions were triggered by growing and broadly shared dissatisfaction with the quality of life. Ordinary people were frustrated by their deteriorating standards of living, reflected in a shortage of quality jobs in the formal sector, poor quality public services, and the lack of government accountability, the report said. The system of general subsidies could not compensate for these problems – subsidies mattered less for the wellbeing of the middle 40 percent of society than they did for the bottom 40 percent.

“On the eve of the Arab Spring, the Arab world was an unhappy place for a variety of reasons,” said Shanta Devarajan, World Bank Chief Economist of the Middle East and North Africa Region. “The old social contract of redistribution with limited voice had stopped working, especially for the middle class, prior to 2011. People wanted a say and real opportunities for economic advancement.”

According to the report, many countries in the region seemed primed to fall into disarray following the Arab Spring uprisings. Unless there are global efforts to end regional conflicts and help countries renew the social contract, a vicious circle of instability exacerbated by economic weakness could be the long term future for the MENA region.

Just a few weeks ago, the World Bank Group launched a new Middle East and North Africa strategy focused on addressing the causes of conflict to promote peace and stability. One of the primary goals of the new strategy is to rebuild the relationship between citizens and governments through improved service delivery and increased transparency and accountability.

“The situation has continued to deteriorate in the region as many of the factors that made people unhappy before the Arab Spring are still present today,” said Elena Ianchovichina, World Bank MENA Lead Economist and principal author of the report. “Though grievances alone do not lead to civil wars, grievance-motivated uprisings can grow into civil wars in societies polarized along ethnic or sectarian lines. High male youth unemployment rates and the abundance of natural resources increase the risk of conflict.”

The report also provides an economic outlook for the Middle East and North Africa, predicting that regional GDP growth will average 2.8 percent for 2015. Thanks to continued low oil prices, civil wars and conflicts, and a likely global economic slowdown, prospects for faster growth are slim.  Civil wars have severely harmed the economies of Libya, Yemen, Iraq and Syria, and have had spillover effects on the economies of Lebanon and Jordan.  MENA’s oil-importing countries have not grown rapidly in the wake of low oil prices because they have been hurt to different extents by terrorist attacks, spillovers from neighboring wars, slow growth in the Euro zone, and political uncertainty.

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Rightly, or Wrongly, Neighbors Are Compared #egypt #Tunisia

For many reasons, we are very excited  that the Tunisian National Dialogue Quartet WON the prestigious Nobel Peace Prize on October 8th –pleasantly surprised since Pope Francis and other names were well circulated on popular polls without any mention of different Tunisian civil society leaders.  The first reason is that it’s an overdue win for Tunisian civil society, the drivers for peace in any country.

The second reason is that a Tunisian win for peace means that progress is not about a sole hero, or heroine, but how many must participate in order to promote positive change.  This point holds especially true when obstacles emerge after the initial high of success, or revolution energy, wears off and people feel too drained to participate beyond elections.  Remember the compromise and dialogue Tunisian unions and party leaders undertook back in 2013 when Tunisia’s dominant party, Ennahda, stepped down after political assassinations?  Shortly after, this was followed by the resignation of premier Ali Larayedh–the first voluntary resignation in a North African or Arab country that holds elections for high office.  And by voluntary, we remain cognizant of how sensitive the term “soft-coup” is in neighboring countries.  Unlike Egypt, this was not at all the case in Tunisia.

Speaking of Egypt, this brings us to our third reason for being excited about Tunisia’s Nobel Peace Prize win: governments in transition cannot subject segments of their civil society to repressive measures in the name of protecting them.  Making civil society more “secure” by sidelining media institutions and organizing groups only makes civil society more insecure to move forward with the changes it seeks.  That is instability.

building a strong government for weak civil societies is a strategy for failure…~Sherif Mansour, MENA Director of Committee to Protect Journalists

Sherif Mansour, Middle East & North Africa Director for the Committee to Protect Journalists, provided several examples of how a state weakens civil society, thereby increasing instability in Egypt, in his latest report to the National Endowment for Democracy.

  • Mansour described the  raised awareness about police brutality.  They organized to shift protest from social media to the Egyptian streets.  Unfortunately, the Egyptian government sent thugs after the Liars Campaign activists.
  • used internet to critique Egypt’s “deep state” dilemma and opened up civil society’s space for more voices.  Unfortunately Youssef moved out of Egypt after shutting down his media program due to increasing harassment in the Mursi and El-Sisi regimes.
  • Because public television and many Egyptian media outlets are influenced, if not controlled by the Egyptian government, Egyptian citizens are constantly seeking alternative news sources.  Satellite TV operated from abroad, but owned by Egyptians, is a growing option.  Once state-owned media faces bankruptcy, they will face a reform opportunity.

As such, it is harder for opposition & different economic solutions to emerge in the press when there are media restrictions.  Without open discussion and a public forum to voice suggestions, there is no way to create feedback loop.  Who will dare critique the huge monetary decisions and outline the pros and cons of devaluing the Egyptian pound?  In fact, Egypt’s Central Bank lowered the Egyptian currency for the second time this month.

Please STOP Comparing Egypt With Tunisia & Vice-Versa

We know that there is an extremely vocal group of Tunisians who gets upset when comparisons/contrasts emerge between Tunisia, Libya, and Egypt — because they feel that their cases are unique, or exceptions to the rule.  Yes: both Tunisia and Egypt are Arab, middle-income countries faced with subsidy reform while dealing with political culture shock.  No: both Tunisia and Egypt do not have a similar spectrum of political parties; nor the same voter-turnout trends.  [As of this date, we see how over 50 percent turned out in Tunisia’s last big election in 2014 whereas, Egypt’s voter turnout of 2% for 2015 parliamentary elections– single digit!?!– STARKLY contrasts with Tunisia’s.]  True: Libya, Tunisia, and Egypt do not experience exactly the same economic woes–a part from double digit unemployment.  But overall, neighbors compare. Visitors to the neighborhood compare.  That’s what they do. Rightly, or wrongly, neighbors are compared.  The one upside to the neighborly comparison is that civil societies within those countries may decide if they are on the path that they want to be on, or if they see a different path that they think might suit their interests better.

However, identifying differences and similarities is part of the analytical process.  So please indulge some of these observations shared by Mansour when reviewing how civil society has been oppressed in Egypt.  Much of the compare/contrast actually puts Tunisia in a position of praise.

Internet wasn’t seen as an organizational tool in Egypt until Tunisia proved it could facilitate change~ Sherif Mansour

Repression against journalists…helped return to a system of authoritarian stagnation.~Sherif Mansour


While Tunisia’s media outlets and unions voiced their concerns about politics and rights, they managed to demand political change.  However, this is not the case for Egyptian journalists, activists, and union leaders: their positions to advocate are weakened by the state.  According to Mansour, “The Muslim Brotherhood used their time in office to go after their critics,” and argues this triggered a slippery slope for any ruling power to hold back opposition.  Consequently, El-Sisi will have to seek outside economic and military assistance because of a weakened society in Egypt.


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If We Don’t Compare MENA Countries’ Fiscal Fragility, Then How Will Gather Lessons Learned?



Breaking bread, hence sharing a meal with anyone, symbolizes the conscious and informal way of engaging in respectful conversation.  Moreover, if one can “break bread” with another, they have taken the first step towards engagement, and building more concretely upon that diplomacy.  Pita bread operates as the common denominator that links the various cultures in that region–from Morocco to Pakistan–in reflecting upon dynamics and anticipating trends in the region. ~ PITAPOLICY, LLC

Greetings Pitaconsumers!

This week includes a montage of political economy issues that PITAPOLICY observed for the Middle East & North Africa region because of the International Monetary Fund’s and the World Bank’s conference.  Overall, MENA GDP growth barely reaches 3% for the third year in a row, according to the World Bank’s Economic Outlook reports.  In addition, some MENA countries’ economic reforms are overshadowed by political developments.  Cases , like Tunisia and Iran, illustrate this below following the MENA Economic Outlook findings and comments.

The most pressing issue is: “Fragility in Middle Income Countries: New Ideas for Unique Challenges”, which includes many MENA countries facing debates on fiscal austerity while balancing social responsibility.  Countries representing these key challenges, Libya, Tunisia, Lebanon, Jordan, and Palestine participated in these discussions taking place in Lima, Peru from October 6th-10th.  While country ministers highlighted the budgetary challenges in the political and economic spheres, community service organization leaders relayed the social and economic factors resulting from growing refugee influx brought about by Assad regime’s human rights abuses in Syria.

Fragility Discussion Participants Weigh In with respect to Palestine, Jordan, Libya and Tunisia

Achieving development goals in middle-income countries requires spending.  Not surprisingly, Jordan’s Minister of Planning and International Cooperation pinpointed a key theme shared by many MENA countries–not just middle-income ones — questioning financial austerity measures when trying to address key challenges, like the influx of Syrian refugees.  He pushed back by saying, “do not penalize us for being a middle income country- we’re losing development gains because we are doing the right thing by refugees,” as he explained that the MENA region has dealt with waves of Palestinian, Iraqi and Syrian refugees displaced by occupation, ISIL, and chemical weapons attacks.

Alaa Tartir, Palestine

  • : I’m aware of donors don’t want to intervene in politics, but the politics of donors do have consequences

Minister of Planning and International Cooperation, Imad Fakhoury, Jordan:

  • measure for refugees are too little too late, has 20% of its population as refugees. The European Union should have taken in 10 million refugees.
  • It’s the time, window of opportunity for int. community to rethink sense of urgency & scale needed to deal w the Syrian crisis
  • In we have 700K people knocking on clinic doors, double shift in hospitals & schools, a nightmare each day in urgency

Ayat Mneina,

  • Libya is a unique case, its an upper middle income country however it suffers from weak institutions

Wala Kasmi, Civil Society Organization Representative, Tunisia

  • We can’t compare ‘s situation to & just because the democratic transition is going well there.

Ms. Kasmi resented being compared to Egypt and Libya, Arab countries that also underwent drastic government changes since 2011.  However, we beg to disagree, and offer this suggestion: Fine, but what about contrasting to identify lessons learned.  Firstly: Why not at least identify the similarities since each of these countries’ parliaments are stuck in debate regarding economic reform and combating corruption.  Secondly, Egypt, like Tunisia, has faced political assassinations in the wake of controversial laws or executive actions being debated, if not implemented.  For example in Egypt, Prosecutor General Hisham Barakat, who oversaw the cases against thousands of Muslim Brotherhood affiliates, was assassinated in late June this year after President Sissi and the judiciary took heavyhanded measures without due process.

“The judiciary is restricted by laws, and swift justice is also restricted by laws. We will not wait for that,” el-Sissi said.

Corruption Reform Bill

Similarly –and more on point with fiscal fragility discussed above — legal debates introducing heavy-handed action by Presidential heads have also faced violent repercussions in Tunisia.  Tunisia’s parliament muddles through legislation to fix its economic woes.

In September 2015, Tunisia’s leading party, Nidaa Tounes, introduced Corruption Law that would exonerate business leaders who worked with ousted Tunisian President Ben Ali.  If they reveal their stolen wealth to a parliamentary committee, they they avoid prosecution for corruption charges.  Tunisia’s current president, Beji Caid Essebsi, argues that the Tunisian Treasury would recoup 5 billion dollars, a crucial measure to boost Tunisia’s struggling economy.

This project will hurt transitional justice and the political transition.~Khaled Krichi, a member of a truth and dignity commission set up in 2013

Controversy has built because Tunisia’s Labor Union, and other parties, have disputed President Essebsi’s argument because 1) he is a former official of the Ben Ali regime, and is not impartial, and 2) such measures would disrupt the transitional justice process since Ben Ali’s ouster, and backtrack political gains for Tunisians.  As such, political assassinations remain a concern.  Perhaps controversial legislation debates act as cover for violent reprisals — we hope not.  But Tunisian lawmaker, Ridha Charfeddine of the Nidaa Tounes party, escaped an attempt at his life on October 8th, 2015.

Social Safety Nets

On the subject of social responsibility, Iran offers an example that relies on a singular authority — the Supreme Leader, Ayatollah Khamenei —  access the finances.  Although Iran was not vocal in the MENA forum discussions, like its neighbors, social safety net programs continue to comprise a cornerstone of its economic programs.  Yet, one in particular, “Setad Ejraiye Farmane Hazrate Emam” – Headquarters for Executing the Order of the Imam — targets Iran’s poor…but Setad’s source of funding raises questions about redistribution policies as the Irani government began to seize property since 1979.  Reuters investigates here:

The organization’s total worth is difficult to pinpoint because of the secrecy of its accounts. But Setad’s holdings of real estate, corporate stakes and other assets total about $95 billion, Reuters has calculated. That estimate is based on an analysis of statements by Setad officials, data from the Tehran Stock Exchange and company websites, and information from the U.S. Treasury Department.~Reuters


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United Nations General Assembly Speeches Underline #SyriaCrisis

The Annual United Nations General Assembly Summit is convening in New York.  The good news: the UN Secretary General –the highest office within the multilateral organization–Ban Ki Moon expressed support by looking forward to raising the Palestine flag like other nations.

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However, the UNGA also feels like a series of severely awkward moments where many world leaders use their speeches to deliver “truthbombs”, true statements that do not bear any semblance of diplomacy.  Here are some prime examples:

“We won’t forget the past but we do not want to live in the past.”~Iran’s President, Hassan Rouhani

“Bashar al-Assad is the source of the problem. He cannot be part of the solution,” Hollande says. “Just because a terrorist group also carries out massacres doesn’t mean that pardons or amnesties the regime which created this situation…You can’t make the victims and the executioner work together.”~French President, Francois Hollande

At the same time, other world leaders deliver what they believe to be “truth bombs”, but are in fact, devoid of historical accuracy.  Here’s a prime example:

“Ladies and gentlemen, check your enthusiasm at the door…It makes war more likely.​”~Prime Minister of a nuclear power that did not sign the Non-Proliferation Treaty and disapproves of recent nuclear deal (formally known as the Joint Comprehensive Plan of Action) with Iran– which did sign the NPT.

Getting back to severely awkward moments, the most striking would have to be between U.S. President Obama and Russian Premier, Vladimir Putin regarding the Syrian crisis.

“…we should acknowledge that no-one except for Assad and his militia is truly fighting Isis in Syria.”~Russian Premier Vladimir Putin

“In accordance with this logic (Putin’s), we should support tyrants like Bashar al-Assad who drops barrel bombs to massacre innocent civilians because the alternative is surely worse,” ~ U.S. President, Barack Obama

Putin may have co-opted to flex geopolitical muscle, but Assad co-opted to do his dirty work.  Why do we say this?  Bashar Assad called Vladimir Putin to request military assistance to deal with the Islamic State (IS, ISIS, ISIL).  Moscow’s airstrikes against the IS/ISIS/ISIL were not to protect Syrian civilians, but to protect Russia’s own airbase — which is based in Latakia — as well as target Assad opponents in .

Syria Crisis Background Pre-ISIS

In 2011, Homs emerged as a base of opposition to the Assad regime before the Syrian uprising accelerated into all out conflict.  In fact, Homs’ citizens –like the citizens of Aleppo, Douma and the Idlib district (northwest of Damascus)  — have experienced barrel bombing as early as August 12th, 2012 and as recently as August 8th, 2015.  It is no coincidence that the Assad regime also launched barrel bomb attacks on Deraa, the first town in Syria that called for “Down with the regime!” back in March 2011.

Moreover, before any discovery of “IS” elements, Assad’s military had carried out chemical attacks in the following areas based on United Nations Mission to Investigate Allegations of the Use of Chemical Weapons in the Syrian Arab Republic Report on December 13, 2013:

  • Khan Al Asal
  • Saraqueb
  • Salqin
  • Ghoutta
  • Bahhariya *biomedical samples tested negative
  • Jobar
  • Ashrafiyah Sahnaya

In 2012, chemical attacks served as the original “red line” that triggered the U.S., France, and the U.K. to call for Assad’s removal from power.  Three years later, this position remains the same with the additional point of approaching Iran, Syrian regime’s historical ally, to deal with Syria.  At the UNGA, the French president said that “the route to a solution does not go through Bashar al-Assad” but we will work with Iran.

Nonetheless, Assad’s rhetoric and actions to fight ISIL, by enlisting Russia came after his regime already carried out barrel bombing and chemical attacks on Syrian civilians–notwithstanding igniting the largest global refugee crisis since World War II.


Russia’s Interests

The Assad regime has served as a key customer of Russian arms as far back as the Hafez Assad era in the 1970s.  Russia’s state owned arms exporter, Rosoboronexport, has sold military vehicles and small arms where Syria paid a 100 million dollar advance in 2013.   As mentioned, Russia has a base in Syria, which it is keen to safeguard.  In addition, Russia leases a naval facility for military purposes in Syria’s coastal city of Tartous.

By the second week of September, Russia admitted that it was providing military assistance to Assad.  Now, at least seven attacks have hit Syria in the name of destroying ISIS/IS/Daesh.  However, none of the eastern side of Syria, which served as the entry point for ISIS to enter Iraq,  has been struck.  Note: the consequences of ISIS entering Iraq have resulted in 1) occupying Iraqi military bases, 2) displacing local governing authorities in Diyala, Mosul, Irbil, Fallujah, Mount Sinjar, and Qaim and 3) the ethnic cleansing of Yazidis and Kurds– not to mention compounding the existing refugee crisis.

Source: Map image from British Broadcasting Company News

Source: Map image from British Broadcasting Company News

Russia is using about 50 helicopters and planes for its Syria strikes, according to the Russian Defense Ministry.  By day two of the Russian air strikes, Russia’s military assistance went beyond protecting its airbase in Latakia and targeted Homs and Hama to destroy IS.  Yet, about 30 civilian deaths feed into the death toll of alleged Islamic State targets.  In a sense, one may echo what U.S. Defense Secretary Carter described Russian airstrikes:

Pouring gasoline on fire.

As famed comedian Azhar Usman noted, “fighting fire with fire is a ridiculous response because this just produces MORE FIRE.  In a related development, Iran has been reported to preparing a ground attack in Syria.  However, this report has been circulating for the last three years.

U.S. and Saudi Arabia Interests

“There are two options for a settlement in Syria. One option is a political process … where there would be a transitional council that would have executive authority … and that’s the preferred option.  The other option is a military option which also will end with the removal of Bashar Assad from power.” ~Saudi Foreign Minister, Adel Al-Jubeir

The U.S., French, and U.K. interests in seeing Assad removed from power overlap with the Middle East regional powers of Saudi Arabia and Turkey.  Each of these powers is on speaking terms with Iran, except for one major player…(Saudi Arabia who remains wary of the P5+1 Deal)… yet, Iran may be the more direct link toward getting Assad to stepping down, as highlighted in Saudi’s preferred option in ending the Syria Crisis.

Saudi Arabia (along with other Gulf States) have financially supported various opposition groups in and around Syria.  But not all opposition groups followed the same path.  For example, the Jabhat Al Nusra Front turned out to be more violent and disruptive as they raid Syrian towns.

In another example, the Free Syria Army operated distinctly and supposedly made up of more local Syrians who only target Assad’s armed forces.  Apparently, Russia distinguishes between the IS and other opposition groups.

“The Free Syrian Army is not a terror group,” stated the Russian Foreign Minister.

On one hand, he is implying that Russia is not targeting it since Russia claims that they are surgically carrying out strikes against IS.  In all fairness, a coalition comprised of the U.S., Bahrain, Saudi Arabia, Qatar, Jordan, and the UAE have carried out airstrikes against ISIS in Iraq since September of 2014 upon Iraq’s request.  Hence, Russia uses this campaign to argue that Russia is targeting ISIS too.  On the other hand, one may ask why the Russian airstrikes are targeting Homs and Hama–areas where the Free Syria Army had organized.

Two of Thursday’s sorties were against a rebel group trained by the CIA, ~Hassan Haj Ali, of the Liwa Suqour al-Jabal group.

The FSA received U.S. assistance as the moderate group selected to fight back against the Assad regime’s oppression.

“Russians are fighting alongside the Syrians, to destroy not just ISIS but all of the other rebel groups in Syria,” the Syrian Ambassador to Russia, Riad Haddad told an American news station.

At the end of the day, it is hard to believe statements when such statements do not match with actions.  Actions, not statements, continue to raise the Syrian death toll from 250,000… and counting

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UNCTAD says Gaza Could be Uninhabitable by 2020 #BDS

no human being who visits can remain untouched by the terrible devastation that one sees here in Gaza… the devastation of peoples’ livelihoods is 10 times more shocking~ United Nations Special Coordinator for the Middle East Peace Process, during a visit to Gaza in April 2015

We have not visited the subject of the Human Development Index under attack in occupied territories in quite some time.  Decreasing HDI trends in Syria, Yemen, Iraq, and of course, in Palestine.  But due to the misplaced energy caused by “faith-washing” — which is the practice of highjacking the interfaith exchange platform regarding the Holy Land– to “engage” on everything in the Holy Land, EXCEPT social justice issues, the time has come to revisit the socio-economic conditions in Gaza, the worst hit in bombing campaigns.  Such socio-economic conditions metastisize, like a cancer, in Occupied territories when social justice scholars and activists are sidelined, if not dismissed, by misinformed Muslim participants funded by the Shalom Hartman Institute.  In turn, peaceful efforts, like the Boycotts, Divestment and Sanctions campaign, are also sidelined and later dismissed as “non-engagement” tactics.  As Dr. Hatem Bazain noted, “BDS does not oppose people visiting, touring and discussing issues pertaining to conditions in Palestine,” as social activist may reflect from the earlier South Africa experience in combating apartheid through peaceful engagement.

The Gaza Strip “could become uninhabitable by 2020 if current economic trends persist” after 8 years of an economic blockade, declared The United Nations Conference on Trade and Development in its report last week.  Gaza has a population of 4.5 million.  In the event Gaza reaches this dismal juncture, how will Gaza’s 4.5 million access water to drink and grow food?

Unemployment stood at 44 percent, according to the reports findings.  It is no surprise considering that socio-economic conditions regarding access to water rights, healthcare, and schools, have been on the decline since 1967,

Basically, the report traced other effects of the Israeli occupation.  In particular, the occupation has disrupted donating agencies’ efforts to provide funds and services to Gazans: “the efficacy of donor support has been undermined by occupation, not by the inadequacy of Palestinian National Authority policies or poor donor coordination.”

Here are some other important factoids to share around the office cooler or bus station.

  1. The number of settlers has quadrupled between 1993 to 1995, despite the Oslo Accords.
  2. The economy of the Occupied Palestinian Territory shrank by 0.4 per cent in 2014, and will likely shrink again in 2015.
  3. The 2014 Gaza attacks by Israeli bombing resulted in 26 schools destroyed and 18 hospitals hit.
  4. Israel collects taxes on Palestinian imports on behalf of the Palestinian National Authority and
    then transfers them to the Authority after levying 3 per cent collection and processing fees.

So the next time a faith-washing activist or scholar purports to be engaging to establish common ground across faiths, kindly ask him or her: What kind of state collects taxes from people who are not considered its citizens — yet also has the power to withhold social services? What does his or her faith say about social justice and equitable treatment?

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Algeria Shows Symptoms of Resource Curse

“Oil settles below $39 a barrel for the first time since Feb. 2009″~MarketWatch

Given the dramatic decrease in oil prices, Saudi Arabia could cut investment spending, estimated to be about $102 billion dollars this year, by about 10 percent or more.  Although Arab Gulf countries face less oil revenues due to the drop in oil prices, they have not responded like Algeria did last week.  On August 17th, the Algerian dinar hit record low as its central bank tries to curb imports and deal with the less oil revenue coming in — which makes up over 90% of the government’s revenue.  Due to the fall in oil prices, Algeria’s oil revenues dropped by half. “Government officials expect them to bring in $34 billion this year, down from $68 billion in 2014,” according to Al-Arabiya News.

In response, Algeria devalued its currency — a drop of 105.48 Dinars to a dollar, from 79.6 Dinars to a dollar in 2014.  Consequently, the Algerian government is encouraging its citizens to “buy local”.  Yet, for the country of 40 million people, growing inflation will add to their cost of living woes: since April, inflation has climbed by almost .5%.

Less Oil Money, Less Spending?

But with all this concern about lower oil revenues and tighter government spending, military budgets in several “pita-consuming” countries remain high.  Check out The Economist’s map below charting the percent of each country’s GDP spent on its military — which they argue “only tells half the story”.  Absolute expenditures in US dollars would be more useful when considering that military operations should factor in arms purchases as well as research & development.  (The data points come from the International Institute of Strategic Studies.) Not surprisingly, oil exporting countries represent some of the largest in military spending as a percentage of their Gross Domestic Product:

  1. Oman- 11.9%
  2. Saudi Arabia – 10.4%
  3. Iraq – 8.1%
  4. Libya – 7.1%
  5. Algeria – 5.3%
Military Spending on Armed Forces by Selected Middle East & North African Countries

Military Spending on Armed Forces by Selected Middle East & North African Countries

Regarding Algeria’s currency crisis, it will be a challenge for them to maintain its large military apparatus–especially since it is a major employer of Algerians.

Comparing and contrasting with its other North African neighbors brings other questions to mind.  Specifically: HOW does spend the most of its GDP (7.1%) on military but has the lowest number of military personnel in North Africa (10,000 personnel)?  In contrast: How does Egypt, the most populous Arab country, remain at the bottom for military spending when it has the most in armed forces of all Arab countries?!  According to the graphic, Iran is Egypt’s only MENA rival regarding personnel.  Although Iraq and Saudi Arabia outspend Egypt regarding military personnel, it remains harder to believe that Egypt is allocating so little of its spending towards maintaining its military might — especially considering that all three receive some type of U.S. military assistance.


In other country purse strings news: Turkey’s bonds are trading “like junk“, which may prompt a ratings downgrade, according to the DC-based think tank, the Atlantic Council.
Saudi Arabia seeking advice on cutting the budget in wake of oil crash
Saudi Arabia is seeking advice on how to cut billions of dollars from its 2016 budget as a result of a global slump in crude oil prices. The government is working with advisers on a review of capital spending plans and may delay or shrink some infrastructure projects to save money. [Bloomberg, 8/25/2015]

Swiss advance bid to return $40 million stolen from Tunisia
A Swiss official says his country has made headway toward returning some $40 million that was stolen from Tunisia and has been sitting in Swiss banks since 2011. Valentin Zellweger, a legal adviser to the Swiss government, said Monday the federal prosecutor and highest court still have to take steps in the restitution case, but that the process has come a long way. Zellweger declined to specify who had deposited the money in Switzerland, but said it wasn’t former President Zine El Abidine Ben Ali. [AP, 8/24/2015]

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Economic Impact of Iran Sanctions, or “PersiaStroika”

“Our countries (United States and Iran) can reach a detente — or ‘Persia-Stroika’ if you will” ~ Jon, Stewart of The Daily Show  [Note: “Perestroika”, or “openness”, was a term coined by Soviet leader, Mikhail Gorbachev in 1986, to describe the warming of relations between the U.S. and the Soviets]

“Insofar as eased sanctions permit, billions of dollars will be needed to reverse production declines and re-establish production growth. How realistic are Iran’s aspirations to attract such investment, and what increased production and exports can be reasonably expected over the near to medium term?

In turn, what will be the impact of increased Iranian exports on its neighbors, notably Iraq and Saudi Arabia, and their desire to secure a larger share of the global market? How will the Saudis and other Gulf monarchies react to Iranian moves? What are the implications of changes in Saudi national and energy leadership and of Kurdish moves to produce and export separately from Baghdad? What is the effect of these regional changes on the global energy balance?”

-Woodrow Wilson Center

PITAPOLICY’s response to the Woodrow Wilson Center’s discussion of Iran’s nuclear deal and economic impact immediately follows.   Another version appeared on Huffington Post “Peaceful Civilian Nuclear Energy Means Monitoring & Money-Making” by Mehrunisa Qayyum.

The keypoints made by the Woodrow Wilson Center’s invited panelists are included at the bottom of this post. 

Iran believes that the nuclear framework agreement will bring about foreign investment in its oil and gas sector.  Iran is not alone in its optimism because the nuclear framework agreement spells out ending economic sanctions.  Ending economic sanctions means that even skeptical countries can profit legally.  UAE trade with Iran spells out 13 billion reasons for the UAE to reconsider its nuclear neighborhood.  (Unlike Israel, Iran is now party to the Treaty on Nonproliferation of Nuclear Weapons, or NPT.) Earlier this week, an IMF paper projected that the UAE may benefit in a 1 percent real GDP growth yearly, until 2018.

With or without a handshake between the U.S. and Iran, there is a “strategic advantage”, satirized The Daily Show in this clip entitled “Iran Man 2”. (Yes, the phrase “PersiaStroika” was used… and it’s not a joke.)  <div style=”background-color:#000000;width:520px;”><div style=”padding:4px;”><iframe src=”″ width=”512″ height=”288″ frameborder=”0″></iframe><p style=”text-align:left;background-color:#FFFFFF;padding:4px;margin-top:4px;margin-bottom:0px;font-family:Arial, Helvetica, sans-serif;font-size:12px;”><b><a href=””>The Daily Show</a></b><br /><a href=””>Daily Show Full Episodes</a>, <a href=””>More Daily Show Videos</a>, <a href=””>Comedy Central Full Episodes</a></p></div></div>

All physical activity will be monitored, stressed President Obama in his remarks following the Iran deal.  Why is Obama so confident about the monitoring clause?  The U.S. is resorting to the classic neighborhood watch approach via proxy: supporting a peaceful nuclear program in an Arab Gulf nation (the United Arab Emirates).  Since 2009, the UAE has received the U.S. greenlight to “own an ambitious nuclear power program with significant capacity being on line by 2020.”

In 2009, the U.S. established the 123 Agreement for Peaceful Civilian Nuclear Energy Cooperation agreement with the UAE.  Essentially, the “123 Agreement” allows the UAE to obtain US technical expertise, materials and equipment to pursue peaceful civilian nuclear energy use.  In exchange, the UAE agrees to forgo enriching uranium at home and reprocessing.  The UAE’s pursuit of alternative energy, under the watchful eye of the U.S. and International Atomic Energy Agency, may plug in its other Gulf Cooperation Council (GCC) members into the electricity grid.  With the “123 Agreement”, the U.S. has the physical capability for increasing its close range monitoring of Iran.

On that note GCC member, Saudi Arabia, is not too far behind with its own set of nuclear power plant plans: aiming for 16 sites by 2035.  Before Iran’s more hardline president, Ahmedinejad, there were constructive relations between Saudi Arabia and Iran.  Given this, it is possible to return to a more constructive relationship as the Islamic State threat becomes a shared common top interest.  “Interests trump ideologies,” asserted Jean-Francois Seznec, Non-Resident Senior Fellow, Atlantic Council at a Wilson Center Energy Series panel.

Plus, there is an opportunity for American and other foreign contractors to facilitate the billion dollar operation.  Specifically, the UAE accepted a $20 billion bid from a South Korean consortium to build four commercial nuclear power reactors at Barakah.

Despite the political discomfort many Arab countries may have with Iran’s nuclear framework, there is an element of economic discomfort among oil-rich, Arab countries because they will compete with the fourth largest oil reserve in the world.  Aside from market competition, not all oil-rich, Arab countries will suffer economically.  In fact, some welcome what the nuclear agreement means from a business standpoint: the easing of economic sanctions and opportunities for increased trade. UAE economists anticipate about $27 billion USD to be earned in trade between the Iran and the UAE–Iran’s biggest non-oil trading partner.


Panelists’ Key Talking Points

David L. Goldwyn, President, Goldwyn Global Strategies LLC

  • Three problems: symmetrical federalism of Iraq where you have three emirates
  • politics are unraveling the KRG-Baghdad deal: Baghdad hasn’t paid Kurdish region what it’s owed
  • Iran talks aggravate future of Iraq oil production
  • Rapprochement must be on security before economic issues. e.g. Yemen, Iraq & Hezbollah.

David Gordon, Senior Advisor, Eurasia Group Skeptical on Iran-GCC energy negotiations

  • Islamic State more assertive behavior than Russia “strategic surprise”: decline of post-Ottoman states.
  • traditional alliances are hedging: e.g. Saudi Arabia and Russia
  • Look at Libya because they put downward pressure on price in 2014
  • The two biggest issues looming are inspector access and the 11:59 Iran demand of lifting UN embargo.  The U.S. will never acquiesce on 11:59.

Julia Nanay, Principal, Energy Ventures LLC

  • Iran’s potential w/neighbor of Oman only on gas pipeline agreement–if they can get over their quibble on price. Iran is the 4th largest oil reserve. Even if no deal, South Fars field is far along enough. different story for oil.
  • Iran would like to return to 4 to 5 mb/d and be the second largest exporter
  • LNG markets have changed; don’t see price coming down.

Jean-Francois Seznec, Non-Resident Senior Fellow, Atlantic Council

  • Depending on International Oil Companies, but ultimately will focus on natural gas.
  • Saudis have another vision, through civil service lens, not family lens as they have built 3.3 mb/d capacity for energy products;Civil service in Saudi Arabia has tried to express that they should not rely on the production of crude oil and emphasize more downstream production and let Iraq follow “Third World” country path: produce raw materials.
  • Optimistic: Not too worried about Iranians coming back to market; will ultimately be okay on energy negotiations with Iran.
  • Before Ahmedinejad, there were constructive relations between Saudi and Iran.  Possible to return to this once IS threat becomes shared common top interest.  Interests trump ideologies.

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Terrorism Hijacks Local Economy

“We must…confront the fact that poverty is producing terrorism,”~Beji Cadi Essebsi, Party Leader of Nidaa Tounes

Tourism is what matters.  Terrorism is its anti-matter.  Tourism pretty much gives life to Tunisia’s economy (after agriculture) as it employs about 500,000 of Tunisia’s 9.1 million people.  Since 2014, tourism grew six percent in Tunisia. Terrorism increases security costs to the state and kills foreign direct investment.  So when Tunisia’s coalition party leader argues that poverty is the force behind terrorism, we have a problem.  This presumes that terrorists are baited into violence with promises of money for carrying out violent acts. Hmmmm, it would be helpful to look at Egypt, which also has a tourism-based economy that implements heavy security state measures to deal with its history of terrorist attacks on tourists.

Error Within Terrorism

Terrorism is more than just about poverty.  When we visited Tunisia in 2014, Tunisia’s tourism sector appeared to show signs of improvement after tourism actually took a vacation from Tunisia following the ouster of the Ben Ali regime.  However, unfortunately, the June 26th terror attack off the Tunisian coast of Sousse left over 35 dead, mostly foreign tourists.  Consequently, Tunisia’s terror attacks ultimately hurts local Tunisians more than the “foreigners” that affiliates of the Islamic State purport to be targeting for their violent, territorial purposes.

A fall in tourism revenue will not only slow the economy further, but also lead to smaller foreign-exchange reserves and a higher current-account deficit, which was 7.4 billion dinars ($4.4 billion) in 2014.~The Economist

It was like Luxor, Egypt 1997 — leaving 68 dead and devastating an entire nation’s economy — all over again.  The difference between Tunisia’s June attack and the Egypt attack is that Egypt’s attack was carried was funded by the Al-Qaeda network.  Tunisia’s attack was carried out by a single person and didn’t require heavy funding.  (Again, the attacks on tourists erupted in the post-Mubarak Egypt after a suicide bomber attempt on the Karnak Temple on June 10th.  No one was killed.)  Mind you, just a few months earlier, the terrorist attack of Tunisia’s Bardo Museum in March triggered a wave of frustration among security forces and civilians.

Tunisians’ perceptions reflect the fragile state of the country’s economy and highlight fears that the two attacks this year could have devastating repercussions. In fact, Essebsi, who declared a 30-day state of emergency this weekend, predicted another such attack would “cause the country to collapse.”

As we said earlier, even if non-Tunisians are targeted, Tunisians are the ones paying the price of terrorism.  According to a Gallup poll, 51 percent of Tunisians believed that Tunisia’s economy was ‘getting worse’ since the Bardo attacks.

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