SELL, SELL, SELL … “Bye-Bye” Reform Ceiling #Saudi

Greetings PITAconsumers… and best wishes to those of you observing the practice of abstaining from food, drink, and smoking 😉 from sunrise to sunset.  Fasting has begun on the first day of the Ramadan month!  But for those fasting and non-fasting, we can now all hear, “SELL, SELL, SELL” in Arabic/English/French on the Saudi Stock Exchange floor.  Hence, we can all celebrate how on June 16th, the last of the G-20 countries, Saudi Arabia, opened up its stock exchange to foreign companies.

Saudi’s stock exchange is ‘Tadawul’ and operates from Sunday though Thursday, while trading is allowed between 11am to 3:30pm.  There are only 165 companies, and here’s why according to BBC:

 

there are a multitude of rules to determine who can invest in the gradual opening-up of the Middle East’s biggest stock market.

They appear to be quite restrictive. Only institutions that manage $5bn (£3.2bn) of assets (or $3bn if the regulator makes an exception) with a five-year investment record will be given the green light for now.

No single investor can own more than 5% of a company and overall foreign ownership of that company cannot top 49%. Overall, only 10% of equity in the stock exchange, called the Tadawul, can be foreign-owned.

Saudi Arabia could be exercising caution for non-economic reasons.  With more openness to foreign investment, comes more opportunities to open debate to outside (and internal) discussions on social and political reforms. Foreign companies will have more say on the ongoing labor practices, many of which rely on quotas and exploiting foreign labor from its poorer neighbors: Yemen, Pakistan, Indonesia, Philippines, and India.

Given Saudi’s new king — but still old (age 79) and from the generation that first witnessed Saudi’s growth between World War I and World War II — H.E. Salman, cabinet reshuffle, and the recent transformation of its ‘Supreme Oil Council’ expanding into the ‘Supreme Economic Council’, the ruling powers acknowledge the demographic shift since the 1980s.  Let’s wait and see if all changes or “non-changes” are solely because of oil’s existence.

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Yemen Has Two Options

Once upon a time, there were seven brothers. Mother Earth blessed the first six with gold. Father time buried the youngest one’s treasures very deep beneath the sand. Mothers and fathers worry about sibling rivalries. Sheba took care of the youngest, who befriended others outside the home. The first six formed the GCC; the youngest was bombed. End of chapter 3. ~Mehrunisa Qayyum 5/18/15

This sentiment came up again at the Wilson Center, a DC-based think tank after civil society activist, Mohammad Al-Shami, presented his view: “Yemen has two options – living under a regime, whichever it may be or living in crisis.”

Al-Shami shared where Yemen’s society stands nine months since Yemen’s civil unrest erupted into a crisis resulting in what we see today: a multi-country, military campaign to eliminate rebel fighters, which is spearheaded by Saudi Arabia. He argued that civil society serves as “the strongest source of information right now”.  Yet, despite his argument that Yemeni civil society is a force, dead Yemeni civilians may disagree with that assertion.  In Yemen, 80 percent of the population are in need of immediate humanitarian aid.

Why is Yemen a crisis?

Reason #1: Thousands of Yemeni civilians have been killed in airstrikes that were supposed to target Houthi fighters–but didn’t.

Reason #2:  Outside Players Co-Opting Local Players

Four years after Yemen ousted its authoritarian leader, Saleh, he continued to play politics.  Al-Shami argues that the crisis took form because Yemen’s political players do not work with its local civil society because they can operationalize agendas with military force.

 

These political powers are more comfortable in conflict than in peace.

Political powers include Yemeni tribes, Houthis, exiled ex President Salah, GCC, Iran, Turkey, Al-Qaeda, and a myriad of groups who have taken up arms in the name of any of the above.  Oh yeah: ISIS has managed to insert itself in the name of taking down Houthis… while opposing everyoneelse too.

Reason #3: ACCESS PROBLEM

It is very difficult to access villages. There are many villages being deprived from lack of water and food.

Yemen’s humanitarian dilemma is compounded by Yemenis access problem.  There’s no food, no water… and many villages are deprived of this in Taiz and Habebah.

Reason #4: NO OPTIONS FOR YOUTH

Al-Shami traces Yemen’s unrest back to youth not having many options. Fighting is fueled by youth who do not have options.

[Yemen’s ]youth wanted to do town halls, they wanted to do work shops, they wanted to do art campaigns.  They either stay home or fight. – Al-Shami

The youth needed to see the other fight going on within civil society, according to Al-Shami… but we were hoping for some specific examples happening in Yemen.

Noting all these reasons, Al-Shami calls upon international NGOs to support Yemen’s local civil society.  He argues that the focus on Yemen cannot just be the immediate need to deliver humanitarian aid.  Short-term efforts like this are necessary, but will not stem the reasons for civil unrest to explode into what we see today: war.  Rather, NGO commitments to Yemen need to be viewed in 10 year horizons– 3 years at the very least, “We need to start realizing, specifically short-term, is helpful, but must focus on capacity building for long-term.””

Even $200 can make a huge difference on the local level in Yemen.

Examples of requested NGO support include Yemen civil society to educate each segment of society.  Though, we are confused about his request for educating the military.  Al Shami stated:

Restoration of military needs education for soldiers on human rights law.  Soldiers violate [human rights] not because they want to, but they might not know what [actions] makes up human right law.

Picking up from sentiment above, here’s how chapter four could start:

Suddenly, the youngest stood up and said, ‘Enough!  Although we are a desert without water, we have rivers…of blood…which now flood our towns.’  We have two options – living under a regime, whichever it may be or living in crisis.  One may suffocate, but the other has already suffocated our children.

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Leveraging Cultural Practices of Hospitality in the Hospitality #Biz

 

The three hubs of Dubai, Abu Dhabi, and Doha are blessed with fortunate commercial geography: They are a four-hour flight to one-third of the world’s population and an eight-hour flight to two-thirds.  Any self-respecting McKinsey study would have told these governments to build air hubs and national airlines to exploit their comparative geographic advantage. And they did.~Afshin Molavi

Source: Foreign Policy Magazine, May 4, 2015. Full article: http://foreignpolicy.com/2015/05/04/dubai-qatar-etihad-emirates-fair-skies-open-skies-american-delta-united/?wp_login_redirect=0

Flying any Gulf air carrier in the last three years has rekindled our love for flying.  After traveling on a United Flight, and being charged for blankets, food, and headsets, one could only expect to be charged a toll for using the toilet.  Indeed it is no surprise that the UAE, Saudi Arabia, Qatar…and Turkey have leveraged their cultural practices of hospitality IN the business of hospitality–namely in the airline industry.

Molavi’s article raised a range of points –that not only surprised us — and prompted the following questions:

  1. By 2027, Gulf carriers (Qatar Airways, Etihad Airways, Emirates Airlines, and Saudia Airlines) will add another 500 some aircrafts by purchasing from Boeing in America and Airbus. Will the Gulf countries be able the engineering and technical staff for maintenance and upkeep from local hires? Or will they go through the dejavu experience of the 1970s and 80s?
  2. If UAE’s Elitihad Airlines started with two airplanes leased by Pakistan, and SUCCEEDED by becoming the largest airline in the world, then how many other opportunities has Pakistan missed in the hospitality and tourism industries?
  3. How will top Arab airlines deal with its neighboring competitor, Turkish Airlines?  They’ve launched an aggressive campaign in the U.S. to compete for American travelers going to the Middle East as well.
  4. The UAE observes an “Open Skies” policy, where any commercial airline is free to land in the UAE.   Regarding airline industry policies and government relations: How fair or unfair is it for countries to subsidize the airline industry?  Governments compete for oil and gas interests on behalf of oil/gas conglomerates… should the same geopolitical rules of play apply to the airline/tourism sectors?

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First US-GCC Summit on Regional Security Tables Yemen on Agenda

Once upon a time, there were seven brothers. Mother Earth blessed the first six with gold. Father time buried the youngest one’s treasures very deep beneath the sand. Mothers and fathers worry about sibling rivalries. Sheba took care of the youngest, who befriended others outside the home. The first six formed the GCC; the youngest was bombed. End of chapter 3.

Yemen’s five-day humanitarian ceasefire finished Sunday, May 17th.  During this time, three days of talks were held between Houthi leaders (who are also aligned with military units pledging to ousted ex-President Salah) and current Yemeni president (who was exiled by Houthis in 2014 and returned) with Saudi support.  Consequently, the coalition to extricate the Houthi-led resistance in Yemen resumed.  The coalition is led by Saudi Arabia and includes the other five Arab gulf countries and Turkey, among others.  The most ironic part is that those countries participating in the airstrike campaign overlap with those countries trying to facilitate Yemen’s national dialogue while delivering humanitarian assistance to a country that has lost 1,400 in the month long air strikes–many of which are civilian.  Actually, no, the most ironic part is that the first U.S. Gulf Cooperation Council Summit on security does not result in a formal agreement at a time that another Arab Gulf country (yes, Yemen, the 7th brother who is also the least financially blessed…) is undergoing air raids and risks a ground invasion.

Political blogger, Karl Sharro, created a diagram that essentially captures the complicated relationship between the countries regarding the Yemen issue.   His diagram below has been copied by many, including news outlets…and inspired the short story–even though he was half-kidding.   (Even jokes speak to some level of truth!)

KarleRemarks Institute of Internet

KarleRemarks Institute of Internet

 

First U.S.-GCC Summit

Yemen’s ceasefire, which started on May 12th, overlapped with the first U.S.-Gulf Cooperation Council summit at Camp David.  However, the summit concluded on Thursday without any formal agreement on security  or training exercise issues as the six-nation regional body had hoped would occur. (Source: http://www.politico.com/story/2015/05/camp-david-arab-leaders-no-security-agreement-117980.html) Yet, how realistic was this outcome when most of their heads of state were absent from the first gathering?

Some will argue that Saudi Arabia’s new king was never going to attend because Saudi Arabia — and other Gulf nations — is upset over the U.S.’s ongoing talks with Iran, which are set for June 30th.  BBC, U.S. News & World Report, Politico, and other American news media reported that the leadership of Saudi Arabia, Bahrain, UAE, and Oman calculated a joint snub to the U.S. by appointing delegates to attend instead.

Let us entertain this possibility and see who wins and loses if GCC nations downplay this opportunity to formalize what UAE Ambassador to the U.S., H.E. Al-Otaiba, described as a “several gentlemen’s agreements between the U.S.” and Arab Gulf nations like his.  Speaking at the Atlantic Council with former Middle East Envoy, Martin Indyk, Al-Otaiba emphasized that the UAE has “fought in six wars with the U.S. and wants recognition” to be recognized in the U.S.-GCC Summit process and future relations.  He hopes that the U.S.-GCC summit will be a yearly exercise, but this is unlikely if a collective regional snub is perceived–orchestrated or not.

But without getting into the psychological drama of orchestrating a snub, there may be other explanations for some Arab Gulf countries’ leadership absence on May 13-14.  In the UAE, its top leader is old and sick.  Furthermore, as we have seen in Ambassador Al-Otaiba’s comments, there is a strong interest to discuss missile defense systems and solidify security arrangements.  Hence, they are sending their Crown Prince in his place.

Shakueup #1: Saudi House-Cleaning

The leading, supposed “snub” leader is Saudi Arabia.  However, Saudi Arabia just underwent two huge shakeups.  The first shakeup was political-economic re-organization– or about “process” in business speak:

  • Saudi Arabia’s state-controlled oil firm Aramco separated from Saudi’s oil ministry as part of restructuring.  Aramco is now under the Supreme Economic Council, which replaced the Supreme Petroleum Council, and is led by Prince Mohammed bind Salman, who is second in line to the Saudi family throne.  Officially, the broader economic health of Saudi Arabia is no longer just about petroleum.
  • Currently, no prince has overseen the oil ministry to avoid politicizing the ministry within the royal family.  This may change as business practices change.  Nepotism is also a business practice in the oil industry.

After this type of shakeup, would not a country want to reassert its power structure in an international summit?  Well, Saudi did by taking lead in the Yemen campaign and enlisting the U.S. support with intelligence on targeting Houthis and the Al Qaeda elements in Yemen.  So, honestly, there’s probably more harmony between the US and Saudi than being reported.

Sure, the GCC is uncomfortable with the U.S. talks on Iran.  But that is why the U.S.-GCC Summit was being convened in the first place: to discuss GCC regional security arrangements with the U.S.

Shakeup #2: Yemen Campaign

The second shakeup is that Saudi Arabia has been leading the military coalition in Yemen.   PITAPOLICY, LLC was interviewed by Shadyar Omrani of Irani news Radio Zamaneh regarding Yemen: http://www.radiozamaneh.com/219357.  In a nutshell, Yemen’s internal conflict has resulted in different internal groups becoming hijacked by bigger neighbors engaging in another proxy war– sprinkled with elements of what is believed to be Al Qaeda.

Here’s what Qayyum stated regarding the airstrikes on Yemen because of the Houthi uprising, which is believed to receive financial support from Iran:

  • Omrani: The first question is about the two sided coalition in Yemen confronting. How do you define the two sides and their interest in Yemen? Iran and the allies on one side, Saudi and the allies on the other side.

 

Qayyum: I don’t see it necessarily as hard and fast 2 sided disaster.  As long as there are disruptive elements, beyond the Houthis in Yemen, then external players will realign for short-term gains.  There’s enough disruption that is being co-opted by various entities that are “loosely allied w/each other”.  For example, the Al Qaeda element in Yemen is at least a decade old–festering since the USS Cole was bombed in the late 90s.  So, of course, the U.S. has kept its eye on Yemen, and is the reason for the U.S. agreeing to supply some intelligence to the Saudis to bomb Yemen.  Saudi tried to expand its alliance by pressuring Pakistan to engage with them in military operations, but Pakistan stayed out of this so-called coalition.

  • Omrani: About Houthis, do you see their role in Yemenis revolution as a result of Iran’s plan for expanding its power in Bab el-Mandeb or an uprising of a mass of the suppressed?

Qayyum: I don’t see Houthis’ role as a direct result of Iran’s expansion plans.  The Houthis leveraged an opportunity of discontent post elections.  Yes, Iran may wish Houthis well in their political objectives, and support them, but so has Saudi Arabia in its support of certain Yemeni tribes.  When unemployment rates are double digit in a country like Yemen, bigger countries like Saudi become more alarmed when neighboring migrants are looking for work elsewhere.

 

 

 

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Middle East’s Oil Industry Remains Strong Despite Turmoil

Middle East’s Oil Industry Remains Strong Despite Turmoil

By Kim Reynolds

In the world of investment, the prices of important commodities go up whenever there’s political turmoil that can strain the flow of trade. Oil’s value has always been volatile because the Middle East, a major producer of the precious black liquid, is no stranger to geopolitical issues. In light of recent events, however, it would seem that the region would have to adjust to a new setup as the U.S. now has an increased supply of oil for themselves.

Disturbance in oil production or shipments due to strife used to be the major reason why prices of precious commodities go up in the U.S. However, oil prices in the global market showed no signs of an upward movement in the past couple of months. Even with radical groups spreading violence all over the Middle East, oil prices and production remained steady, especially in the country of Iraq. As of this writing, oil is at $56.13 per barrel.

In Southern Iraq, oil exports remain steadfast and even reached new highs. Unaoil, one of the biggest oil companies that serve Iraq, opened a North Rumalian hub last year in order to support its growing operations in the country, and reports say that geopolitical concerns do not have a major effect on the firm’s ventures.

The U.S. used to rely heavily on the Middle East for shipments of oil but now, hundreds of private companies are involved in the oil production of the country. Despite its abundance of oil, however, Amos Hochsten, the U.S. Special Envoy for International Energy Affairs, said that the U.S. must still maintain and deepen its relationships with the countries in the Middle East. After all, there’s no guarantee when the U.S. will need support again from one of the major oil producers in the country.

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Kim is a freelance writer specializing in business news. She used to cover fashion shows in 2004 but her interests changed when she made her first investment. In her free time, she likes reading novels written by Sidney Sheldon.

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Rosseau Isn’t the First, nor Last, to Negotiate a ‘Social Contract’ #BreakTheCycle

“50% of Arab world citizens are dissatisfied with public services in their area,”

according to the World Bank survey — which prompted not one, but two sessions at the Annual World Bank/International Monetary Fund Spring 2015 Meeting. So it was no coincidence that the meme #BreaktheCycle emerged in another MENA panel, which also revisited the theme of the social contract in both oil-importing/exporting countries. In all honesty, it was easy to borrow some of the tweeted comments from the live webcast of “Trust, Voice, and Incentives: Learning from Local Successes in Service Delivery in the Middle East and North Africa” because the #BreaktheCycle meme applied to daily life struggles by MENA citizens receiving public services — assuming that they ultimately received service.

Many of the tweeted comments read like a customer service hotline for a company that made a series of errors. For example:

  • @ayadsalman 44% of students in the #Arabworld attend schools with severe shortages of instruction materials. #Breakthecycle
  • “public services ‘?’ what does that mean” #egypt respondent wrote on @WorldBankMENA survey #breakthecycle
  • @WorldBankMENA: Citizens in the #Arabworld pay ‘wasta’ but its negligible in some localities, to over 90% in other localities. #BreaktheCycle

Such comments further supported the call for a new ‘social contract’ throughout the MENA region.
The new social contract should cut down on oil subsidies, asserted the World Bank’s Chief Economist of MENA, Shanta Devaranjan and Dean of the Board of Executive Directors, Mirza Hussain Hasan; and World Bank Vice President, Middle East and North Africa, Hafez Ghanem.  However, when asked if Arab countries would share a uniform social contract, a key distinction surfaced: Hasan focused on oil-exporting countries’ need to review oil subsidies whereas Devaranjan stated that each MENA country will have renegotiate its own ‘social contract’, thereby implying that no uniformity should be expected.

Redefining social contracts sounds great in theory … and in practice.  ‘Social contract’, a phrase coined by Jean-Jacques Rousseau outlining the expectations the individual has of society and vice-versa. Somehow, government assumes the role of key intermediary. However, one cannot take Rosseau’s thinking too literally because his political philosophy held controversial implications, namely that “aristocracies tend to be the most stable”.

Given the Arab transitioning countries’ political shifts, none of their movements supported maintaining aristocracies (Tunisia, Egypt, Libya, and Yemen). In particular, Tunisia’s movement organized to rebuff the political aristocracy that also held significant financial clout. On this cautionary note, PITAPOLICY looked beyond the French political philosopher — surely, other cultures must have hinted at the concept of social contracts prior to the European Enlightenment.  A few examples come to mind: Abu Nasir Al-Farabi, and Hammurabi’s Code .

Al-Farabi alluded to the social contract between individuals and society in the 9th century, thus influencing Rosseau’s work, according to European philosophy historians (Source: Breaking With Athens: Alfarabi as Founder). Although Hammurabi’s Code originated in ancient Babylonia, it is a document that outlines what an individual may expect from a society, and vice-versa.

Whether one vehemently agrees, or disagrees, about who originated the term ‘social contract’, one can at least agree that political philosophies thrive or retreat based on civil societies’ reactions to the status quo.  Based on the comments from the participants, an overwhelming number of MENA parents want to break the cycle of teacher absenteeism.  Also 44 percent of students in the Arab world attend schools with severe shortages of instruction materials. (This would resonate with several parent teacher associations in schools just 10 miles away in Southeast Washington, DC.)

On that note, a Jordanian civil society organization representative argued later that political reform is needed to actualize a new social contract, which is why her organization is “lobbying to raise the quota for women in parliament”.

Political philosophies evolve, borrow, reorient, and reinterpret to better respond to societies pressing socio-economic issues.  Therefore, we remain eager to see how each Arab transitioning country entertains political debate on economic policies (taxes, subsidies, and NGO grants) in parliament.  It is only one arena — albeit the slow one — where each country’s respective social contract will be renegotiated. The second arena is the government agency responsible for delivering a service.  The third is civil society in its power to engage.

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Breeding Employees or Entrepreneurs in the Middle East & North Africa Region

Finally, after having this piece rejected twice, PITAPOLICY questions on strategies to address the employment gap are here–at least the first part: http://www.huffingtonpost.com/mehrunisa-qayyum/generating-employment-opp_b_7041812.html  As usual, PITAPOLICY remains wary of trends since the same ideas get recycled with newer catchphrases or dressed in rhetoric that is politically enticing.  The mantra of “breeding and creating entrepreneurs” sounds promising, but does this give Arab transitioning countries a realistic hope in employing its masses?

  • Strategy 1: Encourage everyone to believe that he or she should start a small business.  Hope that the business succeeds after the first year and amasses a profit.  Expect successful entrepreneur to expand and hire others.  How many of these successes can we expect over the span of 5 years?  How many unemployed will be converted to full-time employees of these sole-enterprises?
  • Strategy 2: Encourage foreign firms to establish in-country while establishing conditions for local hiring.  Local populations don’t possess the “skills” argues the foreign firm.  Offer incentives to foreign firms to train local hires.

Would it not be more sensible to retrain underemployed populations and rising graduates into sectors that would hire them?  For every entrepreneur, how many others will he or she really be able to employ once the new business has accrued enough of a profit to expand its operations to hire beyond the sole-entrepreneur?  We consider both strategies below and in the hyperlinked piece.

After the IMF-Worldbank Spring meeting concludes this week, PITAPOLICY will post the second part of the longer article.

Since the Arab Spring, the West has focused on individual entrepreneurship in MENA. Not surprisingly, both Arab transitioning countries (Tunisia and Egypt), and non transitioning (the UAE, Qatar, Jordan, Morocco and Saudi Arabia) are pursuing the industry-government coordination model to promote entrepreneurship by sponsoring large industry conferences. What’s the impact of these large industrial conferences on Arab world unemployment? Are we seeing local Arabs employed, or “diverted” on to the more romantic path of entrepreneurship? Encouraging entrepreneurship in the Middle East and North African region morphs into generating employment opportunities, when in fact, implementing this approach requires more time, skills and resources that compete with large industry forums catering to bigger (often foreign) firms. [Click here to continue.]

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Nuclear Energy Debate: Before and After #Jordan #Iran

Despite the continuing airstrikes in Yemen, led by Saudi coalition forces, there are some positive regional developments.  Specifically, on April 2nd, a framework for an Iran nuclear reached successful agreement between the U.S. and Iran.  The framework is set up for final agreement on June 30. Phase 2: The U.S. must get regional partners’ buy-in.  Partners include members of the Gulf Cooperation Council and Israel (ironically). Phase 3: Lift economic sanctions off Iran.  According to a Gallup study, many Iranians have felt standards of living slightly improve since certain Iranian assets were unfrozen as part of the preliminary measures in the nuclear talks process started two years ago.  Or as we like to refer to the sanctions, nuclear deterrent, diplomacy process: New version of Nuke,Stick, Carrot).

Jordan’s MPs Debate Energy Options

“Empower the woman, you empower the nation.”- Hon. Hind AlFayez receives public service award by the Arab American Anti-Discrimination Committee

On Tuesday in Washington, DC, Qayyum of PITAPOLICY heard Jordanian Minister of Parliament, Hind H. Al Fayez, speak about development projects in Jordan.  MP Al Fayez resembles the populist standce when it comes to energy and social justice issues.  In particular, she is against the joint Russian-Jordanian plan to build nuclear plants to meet Jordan’s rising electricity needs:

The last time Jordanian lawmakers voted on the proposal, back in 2012, they decisively shot it down. MPs such as Hind al-Fayez, who represents the Beni Sakher tribe that lives around the proposed Amra site, have noted that Jordan is yet to complete a thorough environmental assessment of the area or to identify a suitable location for depositing spent fuel rods. “They’ll build that plant over my dead body,” she has said.  Source: Al Jazeera America

 

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#Egypt: Investing in Infrastructure Isn’t a “Fool/Full Proof” Plan

From March 13th to 15th , Egypt hosted a two-day economic summit to present its business case as THE emerging economy in the Mediterranean and African region.  Meanwhile, the U.S. Government Accountability Office reported on the status of the U.S.-Egypt military assistance to the U.S. Congress: U.S. Government Should Examine Options for Using Unobligated Funds and Evaluating Security Assistance Programs (GAO-15-259). The U.S. watchdog agency made its February report on U.S. assistance to Egypt publicly available a day before Egypt’s March summit, which invited global multi-national companies, like General Electric and Siemens, among others.

Held at a luxurious Red Sea resort, current Egyptian President Abdel Fattah Al-Sisi wants the world to know that Egypt is not just a transitional nation since its 2011 ouster of its ex president, Hosni Mubarak (followed by its 2012 ouster of another ex-president, Mohammed Morsi) and other security and budgetary hiccups.

According to the Wall Street Journal:

Egypt signed investment deals worth more than $138 billion on the first two days of the conference, while its Arab Gulf neighbors—Saudi Arabia, Kuwait and the United Arab Emirates—pledged another $12 billion to help stabilize its economy. The total amount of investments it sealed at the conference is expected to rise after Sunday’s numbers are added, officials said.

Also, Egypt secured deals from dozens of European companies, like Siemens.

Investment Targets: Military or Non-Military

Which sectors will these investment funds target: military or housing or miscellaneous infrastructure (e.g. water)?  Infrastructure encompasses the military too… so it is not enough to say that investing in Egypt’s infrastructure is a “fool/full proof” plan.  On one end of the spectrum, political satirist, Karl Remarks, characterized Egypt’s economic summit with his sharp humor, tweeting that “[President] Sisi is crowd-sourcing funding for his military start-up.”  This sharp view is not without evidence given that Egypt’s military controls between 25 to 40 percent of Egypt’s economy — the second largest in Africa.

On the other end of the spectrum, non-military development plans for Egypt may benefit from this $12 billion pledge.  Already, Egypt’s housing ministry is expected to sign a deal with Dubai’s Arabtec company to build one million homes in Egypt. This infrastructure project requires investment of $40 billion, which is estimated to produce homes between 2017 to 2020.

Egypt’s housing crisis remains among Egypt’s top infrastructural problems — as difficult it may be to glean if focused on BBC and CNN headlines describing Egypt’s internal security issues, which Sisi emphatically refers to as “terrorism”.

Arab Investment Plus U.S. Assistance

Investment in Egypt will take time.  As Gulf Arab countries continue to invest based on conditions, so does the U.S. continue to provide heavy military assistance based on conditions.  Up until 2013, the U.S. assistance relationship with Egypt (a source of comfort and discomfort since the 1979 Camp David Accords) viewed Egypt’s assistance based on external, rather than internal, conditions: Egypt’s peace with Israel.  For example, some U.S. assistance halted in 2013 due to the Obama administration decision to suspend funds:

This included $260 million in prior year funding allocated for a cash transfer to Egypt that the administration announced in October 2013 that it would not carry out. According to U.S. officials, these funds have not been reprogrammed for other purposes.~GAO Report

GAO’s full report may be found here.  GAO made two recommendations to the U.S. Subcommittee on Middle East & North African Affairs, which is chaired by the Honorable Ileana Ros-Lehtinen.  Here are the recommendations:

GAO recommends that (1) State and USAID develop a plan for other uses for $260 million previously allocated for a cash transfer and (2) State establish specific time frames for completing a required evaluation of security assistance. State and USAID generally agreed with these recommendations.~GAO report

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How do you increase GDP by 20% in MENA region? #IWD2015

If, during the next 15 years, the participation of women in the workforce across the Middle East and North Africa simply reaches that of two-thirds of men—around 60 percent—it has the potential to spike regional GDP by 20 percent or more.- Saadia Zahidi, Senior Director for World Economic Forum in the McKinsey Report

How does the MENA region increase its GDP by 20 percent?  (Hint: One out of two people know–give or take a few million.)  Earlier this week on March 8th, the world celebrated — or simply noted– International Women’s Day in 2015.  We say noted because very few men write about the impact of women on society, politics, and economy.  This statement is not limited to the Middle East & North Africa.

In fact, no region has a monopoly on the oppression of women.

  • Socially and physically: Note thriving pornography industries in North America, South America, Japan, and Europe amounting to over . Pornography produced over $13.3 billion dollars for U.S. entrepreneurs and middlemen in 2006.  Meanwhile, women in Egypt are tackling the issue of sexual harassment: 17% of Egyptian women were harassed by security forces.
  • Politically: Note limits women’s ability to vote on their reproductive rights–worldwide),
  • Legally: Arabia isn’t even within basic standards of international law regarding human trafficking, according to data mapped from Women Stats database.
  • Economically: Worldwide women’s wage inequality in conjunction with low level workforce participation in Arab world, see below) or business-wise (note the disproportionate number of female CEOs).

With these observations, PITAPOLICY purposely waited for articles on women’s progress written by men in their fields because the conversation on progress requires all actors.  We already know women are a powerful resource, as documented by the thousands of well-articulated articles and studies led by women.  We are just waiting for their male counterparts to catch up in this documentation process.

Even for women who succeed socio-economically, obstacles pop up on the roads towards progress.  World famous Iraqi architect, Zaha Hadid, shared the business challenges she still faces as a woman in her interview with Alain Elkann, columnist for the Italian Daily:

There are other professions that are very difficult, but architecture is particularly difficult because your career is reliant on the people you work with, and that’s the first hurdle. The second hurdle is the people you work with as a client. You have no control over the developer or the economics.~Zaha Hadid [click here to continue.]

 

Economic research continues to support the case for empower women as gender equity promotes economic growth for Arab countries and their neighbors.  Case in point, read Hafed Alghwell’s summary:

Economic research has demonstrated conclusively over the past few decades that more economically empowered women, invest far more in the education and health of their children It is the single most important factor in reducing poverty in developing countries. Many studies have also shown serious GDP per capita losses that can be directly linked to gender-gaps in labor markets. In the UAE, for example, the GDP would increase by as much as 12 percent and in Egypt by as much as 34 percent, if women’s labor participation were to rise to the level of men.

From 1975, the ratio of females to males enrolled in tertiary education tripled to 112 percent in 2010. In fact, eight Middle East and North Africa countries have a “reverse gender gap” in education at the tertiary level; reverse gender gaps also show up in primary education.

So how shall we conclude this blogpost on International Women’s Day?  We won’t– because the above discussion needs to continue beyond March 2015 in parliament and at the dinner table.  Everywhere.  Not just in the MENA region.

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Filed under Analysis, PIDE (Policy, International Development & Economics)