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Dealing With the Backyard Bully Caryle Murphy

Chapters Left to Write

Interview with Prof. Fred Halliday on the future of Islamism in the Middle East

Reviving the Decoupling Debate Mohammed Al Sulaiman

Who Rules

Pakistan?

By Anatol Lieven

Issue 1531, 06 November 2009

Editorial Cover

Established in 1987 by Prince Ahmad Bin Salman Bin Abdel Aziz

Dear Readers,

Established by Hisham and Mohamad Ali Hafez

Editor- in- Chief ADEL Al TORAIFI

Managing Director TARIK ALGAIN

Published by

W

elcome to The Majalla Digital, this week our issue brings to you an analysis of Pakistan, and more specifically, addresses the complex question of which political actors are in control of the country.

We have invited Professor Anatol Lieven of the War Studies Department at Kings College and author of an upcoming book on Pakistan to evaluate the country’s governance. Professor Lieven notes that what should be taken away from an analysis of Pakistan is not who rules Pakistan, but instead that those who claim to rule it are weak, while Pakistani society, in its many forms, is immensely strong and it is this dynamic that shapes Pakistani governance.

To complement Professor Lieven’s feature, we have invited three intellectuals with expertise on Pakistan to address the question of governance in Pakistan. Abu Bakr Sedik Abdul Ghaffar, the Secretary General of the Arab-Pakistani Economic Forum, Mohamed Fayez Farahat, researcher at the Al-Ahram Center for Political and Strategic Studies, and Dr. Abdullah Al Madan, lecturer on Asian Affairs in Bahrain each provide an insightful analysis on Pakistan’s governance.

We invite you to read this article and much more on our website at Majalla.com/en. As always, we welcome and value our reader’s feedback and we invite you to take the opportunity to leave your comments or contact us if you are interested in writing for our publication.

The Majalla Magazine HH Saudi Research & Marketing (UK) Limited Arab Press House 182-184 High Holborn, LONDON WC1V 7AP DDI: +44 (0)20 7539 2335/2337 Tel.: +44 (0)20 7821 8181, Fax: +(0)20 7831 2310

Sincerely,

Adel Al Toraifi Editor-in-Chief

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Issue 1531

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Contents 08 Geopolitics Dealing With the Backyard Bully

11 In Brief Around The World Quotes Of The Week Magazine Round Up Letters

18 Features Who Rules Pakistan?

27 Debate The country between the Hammer and the Anvil

32 Ideas Nuclear Neighbours THE MAJALLA EDITORIAL TEAM London Bureau Chief Manuel Almeida Cairo Bureau Chief Ahmed Ayoub Editors Stephen Glain Paula Mejia Dina Wahba Wesam Sherif Editorial Secretary Jan Singfield Webmaster Mohamed Saleh Translation Sherif Okasha 06 November, 2009

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37 People Profile

The Mysterious Doctor Interview

Issue 1531, 06 November 2009

The Chapters Left to Write Submissions

43 Economics

To submit articles or opinion, please email: editorial@majalla.com Note: all articles should not exceed 800 words

International Economics

The Bottom of the Barrel Interntional Investor

Reviving the Decoupling Debate

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Markets

51 Reviews Books

The Lion of Jordan Readings Reports

Keeping the Faith in COP15

56 The Political Essay This Story Sounds Familiar Saudi Arabia Office Address: HH Saudi Research & Marketing El-Takhasosy Street Crossing Mekkah Rd Conference Area p.o. Box 478 Riyadh 1141 Tel: 0096614417749 E-Mail: editorial@majalla.com

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Geopolitics

Dealing With the Backyard Bully The GCC Countries and Iran's Nuclear Ambitions

Iran’s most recent nuclear faux-pas has called for an assessment on its impact on its relation with other countries in the region. Despite a general concern of the possibility of a nuclear armed Iran, Gulf states have been unable to produce a coordinated diplomatic policy. Rather, diplomacy with Iran depends on bilateral relations that reflect the individual interest of the state involved.

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or Gulf Arabs, the entry of their centuries-old Persian rival into the elite club of nuclear-armed states would be a strategic development of ruinous proportions. It would exacerbate Sunni-Shiite tensions, challenge notions of Sunni superiority, fuel fears of more Iranian “meddling” in Arab affairs, and seal the Persian state as the region’s dominant power.

As Gerd Nonneman, Al Qasimi Professor of Arab Gulf Studies at Exeter University and Gulf expert at Chatham House, put it: “Their main concern is not direct military attack, but simply the sense that Iran, the big boy, will start to become more of a bully than it sometimes tries to be - It’s a more generic fear of Iran throwing its weight around.”

Iran’s recent willingness to talk about its nuclear program with U.S. and European officials has not lessened Gulf Arabs’ anxiety, mainly because they do not believe Iran will ever give up its nuclear ambitions.

Although a U.S. or Israeli military strike on Iran’s nuclear facilities is emotionally appealing, most policymakers oppose this option because of the deadly blowback Gulf states believe they would suffer from Iranian retaliation.

Beyond that, they have not come up with a unified response to their difficult neighbour, reflecting their long-standing inability to cooperate on major policies. The reality is that they have few good options and limited leverage to influence Iran.

More alarmingly, however, the first outlines of a nuclear arms race in the Gulf are emerging as Gulf states set up, or ponder setting up, civilian nuclear programs. To varying degrees, the Gulf states all seek to keep bilateral relations with Iran on an even keel in the hope that through engagement they can mitigate Tehran’s more bellicose tendencies.

The friendliest are Oman, which has long history of good relations with Tehran, and Qatar, which wants to 06 November, 2009

purchases to keep its conventional forces updated.

Caryle Murphy

stay on Iran’s good side because they share a huge natural gas field.

The most skittish are Kuwait and Bahrain, which is particularly sensitive to the potential for Iranian subversion among its Shiite majority. Off-hand comments from Iranian officials that Bahrain is really Iranian territory only adds to its jitters.

The United Arab Emirates has perhaps the most complicated relationship to Iran. The two countries have a bitter, decadeslong dispute over three tiny islands claimed by both -- and now occupied

by Iran. At the same time, UAE’s Dubai is a major trading hub and investment depot for Iran, which benefits both sides.

Of course, it is Saudi Arabia’s response to Iran’s nuclear designs that matters most.

Riyadh maintains correct if not cordial relations with Tehran.

Aiming to deprive Iran of rhetorical ammunition against it, Saudi Arabia has avoided commenting on Iran’s recent domestic troubles, including June’s post-election street protests and leadership divisions, as well as the recent suicide bombing that left six Revolutionary Guards dead in southeast Iran.

Some Saudi officials privately say they believe that these political woes, plus Iran’s troubled economy, will cause the country to implode before it can fully realize its nuclear ambitions. The Saudis, however, are not waiting around for this to happen.

Like its Gulf neighbours, Saudi Arabia is concluding major arms

The kingdom also signed a memorandum of understanding on nuclear cooperation with Washington last year and will sign another one with France during President Nicolas Sarkozy’s visit here in November. If the Saudis move forward and indeed launch a civilian nuclear program, they will be following the UAE, the first Gulf state to do so. Earlier this year, the UAE signed agreements with the United States that allow it to buy U.S. nuclear power technology and fuel.

Both states say these civilian programs are to meet future domestic energy needs. Foreign observers see a second motive as well. The Iranian nuclear threat is the reason why the GCC [states] are moving - toward acquiring nuclear technology,” wrote Kristian Ulrichsen, Kuwait Research Fellow at the London School of Economics. These moves are “a statement of intent to possess the option of going for a nuclear weapon at some point in the future, however unrealistic this may be...

Certainly I don' t think the reason is for power generation.”

The Gulf states “will follow the American lead up to the point where Iran is going to get a nuclear weapon and then they will have to make hard decisions,” says Greg Gause, a Gulf expert at the University of Vermont.

Lacking the indigenous technical infrastructure and scientific knowledge to start a crash weapons program, some observers suggest that some GCC Countries might buy a rudimentary bomb from a friendly state like Pakistan. It’s a frightening scenario, but Iran’s perceived determination to become a nuclear power is making for a scary future in the Gulf.

Pulitzer Prize Winner in Journalism in 1991, is an independent journalist based in Riyadh. She is the author of “Passion for Islam” 08

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06 November, 2009

In Brief Around The World

Quotes Of The Week

Magazine Round Up

Letters

Fire at the Mountain of Smoke The Saudi-Yemeni border witnessed severa successive developments over the past two days. On Tuesday, 32009/11/, a group of Houthi insurgents sneaked across the border between Saudi Arabia and Northern Yemen, where they opened fire on the Saudi border guard patrol, killing a Saudi soldier and wounding 11 others. At dawn of the next day the cycle of violence

by Yemeni Houthi rebels continued.

They took the area of Jebel Dukhan (The Mountain of Smoke) near the Saudi-Yemeni border as their military base for launching an attack on Saudi security forces. 15 of the Saudi security forces were injured during Wednesday's attack. Saudi security forces had launched an intensive assault on the insurgents since nine in the morning.

Consequently, there has been an increased presence of Saudi security Issue 1531

forces and border guards in the region in order to counter any further infiltration attempts by the rebels. A security cordon has been set up extending to "Alkhaweya" province. Security forces in the areas adjacent to the border with Yemen have received orders to head immediately to the site of the clashes.

Prince Mohammed bin Nasser bin Abdul Aziz, prince of Jizan, asserted in a statement that he "can not allow the seizure of an inch of land of Saudi Arabia". He added that all security measures are aimed at protecting "the homeland and the citizens." Prince Mohammed bin Nasser bin Abdul Aziz concluded his brief statement by affirming that the Kingdom will not tolerate such an incident. He hoped that this incident will not be repeated. In the same regard, Salem El-Salmy, the official spokesman for the leadership of

the Saudi Border Guard, indicated that the southern entrances were safe and that Saudi Arabia border guard patrols are doing their job. On the other hand, the Saudi authorities ordered the citizens of border provinces to evacuate their homes, in addition to the evacuation of 11 border schools, for the sake of guaranteeing the safety of citizens.

Many observers of recent developments see that the recurrence of violations was the result of the tendency of Saudi Arabia to calm the situation. Such tendency was exploited by the rebels.

The Houthis justified their attacks on Saudi security forces by claiming that Saudi authorities have allowed the Yemeni army to attack their positions in northern Yemen. The Saudi army denied such claims.

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In Brief - Around The World

Around The World 1 Afganistan Dr. Abdullah Abdullah, the Afghan presidential election candidate, announced his withdrawal from the second round of elections, which was scheduled to be held on the seventh of November. Abdullah announced that his withdrawal was "a protest against government misconduct and that of the Independent Electoral Commission".

Abdullah had demanded the removal of "Azizullah Ludin", the Chief Electoral Officer, from his official position, as Ludin had been appointed

by Karzai. Nevertheless, Abdullah's request was rejected. Accordingly, Abdullah in a statement declared that there will be no integrity in the upcoming run off as long as "Ludin" is in charge, and further added that "The Afghan people deserve better than the upcoming elections".

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3 Ramallah Hillary Clinton, US Secretary of State, said during her meeting with Palestinian officials that Palestinians should return to negotiations without preconditions. She described Israeli Prime Minister Benjamin Netanyahu's steps toward limiting settlement growth as "unprecedented."

2 Egypt Mustafa Othman Ismail, Sudanese President Advisor, said after a meeting with Egyptian foreign minister Ahmed Abul Gheit, that the border dispute with Egypt could be resolved via dialogue.

He explained that Sudan's proposal submitted to the Egyptian side stated that Halayeb and all cities on the Egyptian-Sudanese borders should be transformed into cities for integration between the two countries.

06 November, 2009

4 Turkey Recep Tayyip Erdogan, Turkish Prime Minister said Turkey is still anchored to the West and closer ties with neighbouring Iran do not indicate a change of course in foreign policy.

Erdogan tried to brush aside criticism of his recent trip to the Islamic Republic during which he defended Tehran's controversial nuclear program

5 North Korea Kim Ki-Nam, Secretary of North Korea's ruling communist party accused the United States of stepping up production and deployment of "bunker-buster" bombs to mount a preemptive attack on North Korea's nuclear sites. Kim Ki-Nam said that the United States is deploying the bombs to attack underground military targets and nuclear facilities in the North.

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Ali Asghar Soltanieh, Iran's ambassador to the International Atomic Energy Agency (IAEA), submitted in Vienna his country's initial response to a planned nuclear fuel deal proposed by the IAEA director-general and endorsed by world powers. Soltanieh said his country had a positive approach to this deal but he asked for important technical and economic amendments to the plan.

The proposal stated that Iran should send three-quarters of its low-enriched uranium to Russia and France for conversion into nuclear fuel. The IAEA said that its Director General is engaged in consultations with the government of Iran as well as all relevant parties, in the hope that agreement on his proposal can be reached soon.

Soltanieh said that Tehran was considering the plan as one of three options in producing fuel for a research reactor. The two others would be to buy the fuel from abroad or enrich the uranium domestically. Soltanieh's comments were described as the most concrete statement yet by a government official over Iran’s demands regarding the arrangement.

9 France French President Nicolas Sarkozy is sending a special mission to Pyongyang next week to bring new ideas to a stale standoff in the North Korean nuclear program. Sarkozy's envoy Jack Lang said in an interview that it is possible to send European aid to North Korea in exchange for nuclear guarantees.

6 Taiwan Annette Lu, former Taiwan vice president accused China of blocking her visit to Egypt for an international forum. Lu was scheduled to attend the 56th congress of the Liberal International in Cairo, but because of China's intervention, she was forced to cancel her trip. This Chinese move proved that Beijing would never stop squeezing Taiwan's international space.

Issue 1531

7 Czech Republic Vaclav Klaus, Czech President signed the Lisbon Treaty soon after the country's constitutional court ruled that it is in line with the constitution.

The court's decision has removed the last legal hurdle for the treaty and intensifies pressure on Klaus to sign the document.

10 Russia On a long –awaited visit to Russia, British Foreign Secretary David Miliband has said that his country and Russia would not "paper over our differences" but these would not block co-operation between them. Miliband said that greater cultural and business links between both countries reflected increased "common ground".

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In Brief - Quotes Of The Week

Magazine Round Up

Quotes Of The Week

"We can not allow the seizure of an inch of land of Saudi Arabia" Prince Mohammed Bin Nasser Bin Abdul Aziz, Prince of Jizan declaring his country's firm stance against Houthi rebels

«If there is no freeze on settlements, there is no wisdom.»

AMR MUSSA, secretary-general of the Arab League, after U.S. Sec. of State Hillary Clinton urged Isracel-Palestine talks to restart, despite Palestinian insistence that Israel stop all West Bank settlement activity first

«We are ready to cooperate» Ahmadinejad, on sending Iran’s uranium abroad

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Magazine Round Up 1 The New Yorker

Captives: What really happened during the Israeli attacks?

«I will not participate in the elections; it was not an easy decision» Abdullah Abdullah the Afghani presidential candidate who decided to pull out of the elections due to concerns over fraud and abuse of power by the government 06 November, 2009

Lawrence Wright tries to explain what really happened during the Israeli attacks.

He goes back to 2006 when Hamas won Palestinian›s parliamentary elections and addresses the consequences of this election. He tells the story of the Gaza strip, and comments on the Goldstone report. His examination of the socioeconomic conditions of the isolated strip and provides an enlightening insight on the impact it has on the people affected by the conflict.

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3 Newsweek Boom and Gloom

2 2 New Statesman The Forgotten War Samira Shackle describes Iraq as a forgotten hotspot that has been considerably ignored by western media. Ever since the US handed control of cities to local authorities 3 months ago, Iraq has taken a smaller portion of international attention in spite of its numerous problems. The explosion of 25 October could be considered a wake up call to all those who fail to notice the importance of the upcoming general elections. The elections which are scheduled for January 16 are likely to face security problems in addition to the tension created by conflicts between parties and ethnic groups.

In This week›s cover story Rana Foroohar is experiencing a déjà vu as investors have been acting like its 1999. Although the atmosphere then and now is different, stocks took off in complete disregard of reality just as it happened back in 1999.

Home prices are going up again even as employment is going down in most parts of the world and wage growth is nonexistent.

Foroohar believes we are experiencing a new bubble which is what economists call an «echo bubble».

4 4 Foreign Affairs In the Quicksands of Somalia Bronwyn Bruton argues that sometimes doing less helps more. According to this article Washington›s attempts to bring peace to Somalia has backfired.

Instead of pursuing a policy of political intervention, this article advises the US to encourage local development. The United States› efforts since 9/11to prevent Somalia from becoming a safe haven for terrorism have actually alienated large parts of the Somali population and polarized the country. The U.S. government needs to change its Somalia policy and fast.

3 Cover Of The Week

Cover of the Week Business Week The GDP Mirage

, This week s Business Week top story discusses how the current rise in GDP could be misapprehended as the end of the global financial crisis. Instead, Michael Mandel argues that there are cutbacks in «intangible investments» that are not picked up by official statistics. Cuts in fields such as research and development, product design and worker training can overestimate the GDP productivity growth by up to one percentage point or even more.

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In Brief - Letters

Letters Last Issus

How Did China Get Away it?

The State of Hamas

Very interesting article. Certain similarities come to mind regarding IRA-Sinn Fein in Ireland who were able to transform themselves from the militant to political grouping. I do agree that the economics may be the deal-breaker for Hamas but it seems that the Quartet and Israel are also banking on that. Would be good to see a follow up to this article Anvikshaki

It is a very enlightening article for those who want to learn a useful lesson from China. How did china emerged from the financial crisis successfully? The writer answers this questions and many others highlighting the government's investment measures which enabled the country to be one of the early risers of the recession.

Othman Khalifa, Yemen

Tunnel Economics

The Powerful Man

It is an interesting article. Ahmed Al-Jabari is one of the most important targets for Israel.

Many consider him as a "thorn in the throat" of Israel. He is a real mystery. Israel always failed in assassinating this man. Today, Tel Aviv accuses him with captivating Israeli soldiers in order to exchange them with Palestinian captives.

The author here gives us new insights about this powerful man in an easy-to-understand language.

Anvikshaki 06 November, 2009

Stephen Glain conducted this interview with David Craig World Bank Director for the West Bank and Gaza very effectively.

He revealed through this interview the reality of the situation in Gaza and how this strip has been suffering economically, politically and socially as well. He also pointed out the vital role that donors play in reconstructing Gaza after the brutal Israeli war against the Strip.

Ahmed Adnan, Qatar

What Goes Up Come Down?

This article shows us how oil might become a curse both politically and economicallty. Fluctuations of oil prices may cause some countries confusion and instability. But it seems that many countries learned the lesson the hard way. That's why those countries could respond more successfully realizing that oil has long term value.

Tareq Al-Sheikh, Jordan 16

In Brief - Magazine Round Up

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Features

06 November, 2009

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Who Rules

Pakistan?

By Anatol Lieven

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Features

Who Rules Pakistan?

Weak state, strong society Anatol Lieven

From the point of view of the administration and development of the state as a whole, it really doesn’t matter whether Pakistan is under a civilian or a military government; for a fundamental political fact about Pakistan is that the state, whoever claims to lead it, is weak, and society in its various forms is immensely strong.

President Pervez Musharraf speaks after taking the oath for a five-year term as a civilian president November 29, 2007 at the presidential palace in Islamabad, Pakistan Š Getty Images 06 November, 2009

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iscussion of Pakistan’s ability to fight the Taliban successfully has centred on the question of military or civilian government, and which is better for this purpose. But from the point of view of the administration and development of the state as a whole, it really doesn’t matter whether Pakistan is under a civilian or a military government; for a fundamental political fact about Pakistan is that the state, whoever claims to lead it, is weak, and society in its various forms is immensely strong.

Anyone or any group with the slightest power in society uses it to plunder the state for patronage and favours, to avoid paying taxes, and to turn to their advantage the workings of the law and the bureaucracy. Hence the astonishing fact that barely one per cent of the population pays income tax, and that the wealthiest landowners in the country pay no direct taxes at all.

As a state auditor in Peshawar said to me with a demoralised giggle, “If anyone took taxes seriously, I’d have the most difficult job in the world, but as it is I have the easiest.” The inability of the state to raise enough taxes, together with the wastage of what it does collect through corruption, undermined every aspect of government, infrastructure development, state services, and the justice system.

From this stems in turn a large part of the instinctive sympathy of parts of society for the Taliban and other rebels against the state.

Society is strong above all in the form of the kinship networks which are by far the most important foci of most people’s loyalty.

A sense of collective honour is reflected most dramatically in preventing or punishing any illicit sexual behaviour by the kinship group’s women, but also in working to advance the political Issue 1531

and economic power and public status of the group.

Defence of the honour and the interests of the kinship group usually outweighs loyalty to a party, to the state, or to any code of professional ethics not only for ordinary Pakistanis, but for most politicians and officials. Just as in the rest of South Asia, a majority of Pakistan’s political parties are dynastic. The PPP is the party of the Bhutto family; the PMLN is that of the Sharif family; and the Awami National Party (ANP) in the Frontier is the party of the Wali Khan family. None of them hold elections for their senior positions, which are appointed by whoever is head of the dynasty and party.

Hence the phenomenon of a woman like Benazir Bhutto rising to the top of the political system in an extremely conservative male-dominated society, thanks to inheritance from her father.

Ms Bhutto’s widower, the present President Asif Zardari, in turn became leader of the PPP and later President by inheritance from his murdered wife – without previously ever having won a single election to as much as a municipal council seat.

This weakness of the state compared to traditional society has helped to frustrate repeated attempts at radical reform and economic development. In the course of Pakistan’s sixty year history, there have been several different attempts radically to change Pakistan, by three military and one civilian regime. And they all failed. Every single one of them found their regimes ingested by the elites they had hoped to displace, and engaged in the same patronage politics as the regimes that they had overthrown.

The military governments which took power promising to sweep away the political elites and their corruption also found themselves

governing through them, partly because no military regime has been strong enough to govern for long without parliament – and parliament is drawn from the same old political elites, and reflects the society which the military regimes wish in principle to change.

The Army, the politicians and the judges Nonetheless, the only institution which has succeeded to some extent in resisting kinship loyalties in the name of state loyalty and professional meritocracy is the Army – and you could say that it has managed this in part only through turning itself into a kind of giant biradiri, serving its members’ collective interests at the expense of the state and society.

Because the Army is Pakistan’s only effective modern institution, because of the repeated failures of Pakistan’s civilian governments, because of the security threats that Pakistan faces, and because of the ambitions of the generals, the Army is repeatedly drawn into the business of running other parts of the state. Even when the Army is not actually running the state as a whole, it is often involved in matters far beyond its constitutional mandate of defending the country.

In the late 1990s, the government of Nawaz Sharif improved the provision of key services to the population by bringing in the army to help run everything from education to the distribution of water and power. So even before the coup of 1999 in which General Pervez Musharraf overthrew Nawaz Sharif, the Army had taken over large parts of the state by invitation.

Since Musharraf stepped down in August 2008, the high command of the Army under General Ashfaq Kayani (Chief 21

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of the Army Staff) has repeatedly stated its desire to keep out of politics and government. For the moment at least, this desire is entirely sincere. After both previous periods of military rule (those of generals Ayub Khan and and Yahya Khan from 1958 to 1971 and General Zia-ul-Haq from 1977 to 1988) the generals wanted to stay out of government for a long time so as to rebuild the public image of the Army as defenders of the country against outside (ie Indian) threats.

The generals have also been well aware how a long period in government makes any ruler in Pakistan unpopular, because for the reasons set out above, no government, civilian or military, can ever give the population most of what it wants or needs.

Finally, at the moment being in central government is such an unpopular business that the generals and even leading members of the opposition have told me that they do not want to overthrow President Asif Ali Zardari, because then they would have to take responsibility for a severe economic downturn, a widely unpopular military campaign against the Taliban, and an alliance with America that most of the Pakistani population detests.

Nonetheless, the Army has remained involved in two key areas of domestic affairs. The first obviously is the struggle with the Pakistani Taliban. But not merely is the Army conducting the actual fighting against the Taliban in Swat and the tribal areas along the Afghan frontier, it is also responsible for co-ordinating (and in effect administering) the relief and reconstruction aid flowing to these areas, and since the start of fighting with the Taliban in 2004, it has also been the key force in designing political strategies in the struggle.

The other key area is in mediating 06 November, 2009

and managing disputes among the politicians – who very often themselves call on the Army for help. If in opposition, the politicians intrigue with the Army to overthrow the government in power and to replace it with themselves. If in government, the politicians repeatedly have to call on the army to fight local rebellions and control local unrest – for it should be remembered that quite apart from fighting the Taliban and guarding against India to the east, the army and army-controlled paramilitaries are engaged in fighting an ethnic rebellion in Baluchistan and in keeping a watchful eye on simmering ethnic tension in Karachi.

The weakness of the state compared to traditional society has helped to frustrate repeated attempts at radical reform and economic development The inevitable embroilment of the Army in politics was shown in March of this year, when in an effort to preempt growing threats to his rule, President Zardari decided to strike against the main political opposition, that of Nawaz Sharif and his Pakistan Muslim League (N) party. This party forms the government of Pakistan’s biggest province, Punjab, under Mr Sharif’s brother, chief minister Shahbaz Sharif. President Zardari therefore procured a judgment from the Supreme Court (then in his pocket) that the Sharifs’ election had been invalid, and immediately used this to dismiss the government of Punjab and impose central rule.

The Sharifs in response launched a mass protest movement against

the Zardari administration, demanding the restoration both of the Punjab government and of the original Supreme Court which President Musharraf had sacked illegally in 2007, and which President Zardari (despite repeated promises) had failed to restore. In the face of these protests, the Punjab police collapsed, and President Zardari (so I have been told by very senior sources in both military and politics) had to ask General Kayani if the army could be used to suppress the protests. When General Kayani refused, all that was left to a humiliated president was to restore the Supreme Court and Punjab government, albeit with certain militarynegotiated conditions to protect the President’s position. The restoration of the Supreme Court had been the key demand of the lawyers’ Movement which helped bring down President Musharraf and which has continued a lowerlevel agitation against President Zardari.

However, those who believe that the Lawyers’ Movement represents the growth of a new civil society and law-abiding middle class consciousness in Pakistan need to take a closer look at how Pakistan’s judicial system actually operates, and also at the behaviour of some of the lawyers since they emerged as a powerful political force. As one informed description of the state legal system has it, “Below the level of the High Courts all is corruption.

Neither the facts nor the law in the case have real bearing on the outcome. It all depends on who you know, who has influence and where you put your money.”

It is in fact the appallingly slow, corrupt and unjust nature of the Pakistani justice system which has driven so many Pakistanis to prefer Shariah law, and therefore to have sympathy for the Taliban when they offer it as an alternative. Taliban justice may be 22

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rough, but it is quick, transparent, relatively honest and conducted in peoples’ own villages in their own language – not in English in a district court many miles away.

Quite apart from corruption, the lawyers’ attitude to law in general can leave something to be desired. When I was in Lahore this summer, defence lawyers of the district court beat up a policeman who had challenged their client’s case – and did so in front of the court. When this was shown on television, the next day they beat up the TV team which had taken the film. As a Lahore journalist friend said cynically, “Well, the Army wears uniforms and beats up people, and so do the police. So why shouldn’t the lawyers? It’s what you do if you have power in this country.” In other words, most of the judiciary is no more immune than anyone else to the political culture of Pakistan as a whole.

Fighting the Taliban Does the rottenness of the state system mean that there is a real risk of the Taliban prevailing in Pakistan? Not really, because the kinship networks and ruling class structures which help prevent economic and social progress also help prevent revolution – which would be very contrary to the interests of the Pakistani ruling classes.

It is above all thanks to these locally dominant urban and rural bosses and their kinship groups that over the years, beneath the froth and spray of Pakistani politics, the underlying currents of Pakistani political life have until recently been so remarkably stable. Civilian governments have come and gone with bewildering rapidity, whether overthrown by military coups or stranded by the constantly shifting allegiances of their political supporters. Yet the same people have gone on running these parties, and leading Issue 1531

the same people or kinds of people at local level. The same has been true under military governments.

So far, Taliban insurgency has been restricted to some of the Pashtun areas, which are linked ethnically to Afghanistan and which have a history of religiousinspired revolt going back a century and a half to repeated jihads against the British in the region. So far, there is no evidence of this kind of insurgency being able to spread from the Pashtun areas to other parts of the country – and the Pashtuns make up only some 12 per cent of the population of Pakistan, and those areas affected by rebellion much less than that. To carry out a successful revolution in Pakistan as a whole, the Taliban would have to start a rebellion in Pakistan’s heartland, Punjab.

Terrorism can kill people and damage the economy, but it cannot destroy the state and may even strengthen it

people are likely to lose their qualified sympathy for the Taliban and support tougher measures against them.

This shift in public opinion has already been visible since April of this year, when after signing a peace agreement with the government which provided for the introduction of Shariah law in Swat, the local Taliban used the resulting ceasefire to move into the neighbouring district of Buner.

Together with Taliban atrocities against ordinary people (as opposed to politicians, soldiers and policemen, who do not necessarily receive much sympathy from ordinary Pakistanis) this led for the first time to a measure of real mass support for an offensive against the Taliban.

The military carried this out successfully in Swat, where many Taliban and their commanders have been killed or captured; and they are now trying to do the same in Waziristan. For the first time, the military also had the full support of most of the politicians in doing this – whereas previously, the soldiers and the politicians had spent much of their time trying to shuffle responsibility for tough actions off onto each other.

It is of course true that as tragic events in recent weeks have shown, the Taliban do have enough support to carry out terrorist attacks across much of Pakistan. But terrorist attacks and insurgencies are not the same thing. Only rebellion, and the actual seizure of power in large and important areas (as the Taliban managed for a while in Swat and the tribal areas but nowhere else) can overthrow the state.

As a result of the Taliban’s seizure of Buner and growing terrorism deep in Pakistan, a majority of both politicians and generals finally realised that if this was allowed to continue, then the blow to the state’s prestige would be such that state failure might even be possible. The Pakistani ruling classes – in or out of uniform – have the strongest possible collective interest in preventing this, and I believe that they will do so. Whether they will be able to reform the Pakistani state and reduce the underlying reasons for Taliban support is much more doubtful.

Terrorism can kill people and damage the economy, but it cannot destroy the state and may even strengthen it. Apart from anything else, as Taliban attacks become more savage and indiscriminate, so more ordinary

Anatol Lieven - Professor in the War Studies Department at Kings College London and author of “America Right or Wrong: An Anatomy of American Nationalism”. Currently writing a book on Pakistan to be published 2010.

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06 November, 2009

Debate Pakistan's Dream of Stability

The country between the Hammer and the Anvil

In the midst of numerous consecutive international events, the Pakistani dilemma clearly stands out due to many variables that make its political stability a long shot. Pakistan find's itself between the hammer of insecurity and the anvil of heated political conflict. On the one hand, the government has waged war against the Taliban in the Southern Waziristan region, while on the other, the country still suffers from the rupture between its civil and military elites, which is rooted in the state's institutions. Pakistan's grave regional situation and the international community's failure in introducing stability in the country have made matters worse.

Despite the aforementioned, is hope still alive for a stable Pakistan?

Pakistani soldiers arrive to secure the site as a lifter removes a damaged car after a suicide bomb blast in A bomb blast outside a bank and hotel in the garrison city Rawalpindi .2009 ,2 Rawalpindi on November 2 people on November 34 killed

Š Getty Images

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Debate

Pakistan is Not on the Road to Civil War A state of instability to the disadvantage of regional and international players

The situation in Pakistan seems to be on the verge of erupting at any moment. This is a result of widespread government corruption and the inability of the government to provide the basic needs of citizens. Economic problems generate political, social, and security problems. However there is still some hope that the country will not be drawn into the vortex of war unless political will is united with that of the military.

Abu Bakr Sedek Abdel Ghaffar

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akistan's tribal region and major cities witnessed a violent series of bloody events last October. These events coincided with the announcement that the Pakistani army is to begin extensive military operations in South Waziristan (a stronghold of Taliban-Pakistan). But despite the difficulty of the mission, the military has every intention to rapidly end the fighting. The army is completely prepared, for combat and it benefits from a wide array of support. These conditions were absent in previous military operations conducted in this area.

The successful implementation of this mission will help the government restore security and relative stability in Pakistan.

However, it will not put an end to blood shedding unless the motives that have helped the armed movements spread are eliminated. The continuous bombings

by U.S. unmanned aircrafts, and the presence of foreign forces in Afghan territory adjacent to Pakistan's tribal region, have helped armed movements in Pakistan justify their acts of violence.

Such issues require decision-makers to contemplate a more realistic strategy in dealing with such movements, so that they can devote themselves to exposing the conspiracies against Pakistan through regional competitors and international players who are not willing to accept the existence of a nuclear, progressive, stable, and prosperous Pakistan.

On the political level, tensions are also on the verge of erupting at any moment.

This is due to widespread government corruption, and the inability of the government to meet its citizens’ basic needs. It is also due to the emergence of differences in the positions of the military and political powers, and the mismatch between the two main political rivals: the Muslim League, and The Pakistan People's Party. The formal political harmony expressed through satellite TV channels, is nothing more than an attempt to satisfy the United States and the Westas they prefer a democratic system to a dictatorial regime. The West aims to 06 November, 2009

place the military and security forces under civilian authority, to make them ineffective as other civil institutions, something which, so far, have been unacceptable to the military leadership.

There is no doubt that economic problems generate political, social, and security problems. Such problems can only be addressed through a prescription of economic growth and social justice.

But Pakistan is moving in the opposite direction because of the inability of the political leadership to grant the average citizen the opportunity to enjoy such blessings. Economic growth and social justice help divert the people from harbouring negative thoughts and committing acts of sabotage. Such thoughts start spreading in a community as a result of economic recession.

Economic prosperity, on the other hand, helps restore life in communities and creates a positive environment for competition between the members of society. Justice urges citizens to maintain law and not to resort to illegal means. But any hope of a possible improvement has started to fade due to the country's economic problems.

As a result of these problems, the government was forced to accept loans from foreign lenders. This, in turn, has mortgaged the government's economic and political conditions to the outside world, as shown by the terms of the U.S. aid, which raised public concerns and public rejection. In addition, there was public criticism of the Pakistani army.

Pakistan is not only suffering from internal problems, but is also experiencing a difficult situation, even with the surrounding countries, with the exception of China, which cooperates with Pakistan under all circumstances.

India, Pakistan's traditional enemy, is not willing to cooperate with Pakistan until the Pakistanis, who were accused

by India of planning the Mumbai bombings, are punished. Afghanistan is still governed by political leaders who hold Pakistan responsible for what is happening in Afghanistan today. Iran had

been content with the election of Asif Ali Zardari as president, but the aggressive tone of its leaders has intensified following a suicide attack in the Iranian province of Sistan-Baluchestan, which led to the death of more than 40 people, including seven top leaders of the Iranian Revolutionary Guard. This has led the Iranian leadership to point accusing fingers at Pakistan, Britain, and the United States for being involved in supporting the movement of Goundu Allah (God's Soldiers), which claimed responsibility for this suicide attack.

On the international level, discussions of conspiracy in the region and the idea of moving the real battle from Afghani territory to Pakistani territory has become a known fact. The fertile soil of Pakistan is an invitation for powers willing to rob Pakistan of its riches.

Pakistani leadership must be aware of the seriousness of the current course of events, and they must try to find a way of solving the countries political economic, social, and security problems.

I am optimistic that the security situation will definitely not develop into a civil war, or divide the country into small states. But despite my optimism, crises in Pakistan are continuously multiplying.

They can easily be overcome only if the political and military leaderships united their will and cooperated with the people to change the course of events.

The international community is also responsible for solving the Kashmir issue and restoring stability to Afghanistan, so that Pakistan might overcome its current two main problems. Analysts agree that the lack of stability of Pakistan is not in the interest of any regional or international party. Pakistan possesses nuclear weapons, and Pakistani armed groups have a wide range of combat experience in Afghanistan and Kashmir.

Secretary General of the ArabPakistani Cooperation Forum.

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Debate

Who’s in Charge Here?

The History of Governance in Pakistan

History of governance in Pakistan is the history of the conflict between the military and the civilian elites. The army has never been absent from political life at any time. During some stages of this history, when the civil elite were in power, the army was even called to do some civil service jobs. This was a clear recognition by the civil elite of the difficulty of excluding the army from the political equation, as it can not be easily ignored. A notable example in this context; the regime of Nawaz Sharif has relied on the army in managing many of the files of the civil administration.

I

ndeed, there is a third party which had not been able to take control of the central authority in Pakistan.

But this third party remains an important component of the political elite through its control of some parliaments and local governments, and through its alliance with the ruling elite at certain periods. This third party includes the religious forces that have entered into an important alliance with the ruling elite, especially the military one. This relationship can be traced back to the early stages of establishing the state of Pakistan, and it remains strong in the following years. This strong relationship with the army has always been a part of the good relations that have been established between the army and the Islamic forces. At the same time, it is a natural evolution of the Pakistani state, which was founded on a religious basis.

Thus, one fact that can be extracted from the composition of the ruling elite in Pakistan is the involvement of the army in political life, either directly or indirectly, and the inability of the civilian elite to completely exclude the army from the political equation.

Another fact that can be extracted from this composition is the important role played by the religious forces.

From what's stated above, what is going on now in Pakistan is a kind of shift in the content and substance of these constant powers which have ruled Pakistan for decades.

The first manifestation of this shift is the reformulation of the relationship between the state and the religious forces; a process initiated reluctantly by the former president Pervez Musharraf. But clarity and political commitment were not part of this process. Musharraf introduced fundamental changes in Pakistan's foreign policy (the abandonment of the Taliban-Afghanistan regime, the integration into the American war against terrorism, and the re-drafting of the Pakistani discourse about the conflict over Kashmir). But these changes were not accompanied by similar clear and substantial changes at the domestic level.

Despite the important actions taken by Musharraf against a number of Islamist militant groups, these actions did not affect the structural characteristics of the Issue 1531

Mohammed Fayez Farahat ruling regime. This confrontation was only directed against violent Islamist organizations, which constituted a threat to the regime. Also, this confrontation was partly due to the influence of external pressures, not as a result of an initiative made by the regime. The six major Islamist parties, represented in the "Consolidated Action Council," which has become a key partner of the regime after the 2002 elections, were intact.

The second manifestation is the relative curtailment of the political role of the army; a project sponsored by the United States. This project was based on the revival and promotion of secular political parties, supporting them in their struggle to assume power, as part of a package of developments. It began with forcing President Pervez Musharraf to step down as army chief, and ended with the successful attempt by the civil political forces to compel him to resign, and the People's Party's assumption of power.

Since the civil authority came into power, Pakistan has witnessed a state of harmony between the civil and military wings of the regime, which was reflected in the ongoing military operations carried out by the army against the Taliban-Pakistan movement. However, this political agreement has been achieved through the common interests that both wings now share. On one hand, based on the Obama administration's review of the U.S. policy toward the South Asian region, it was natural that for Washington to re-evaluate its approach towards the regime of Asif Ali Zardari. The United States had already begun to show some signs that it is willing to open a communication channel with Nawaz Sharif. Such signs had an important impact on Zardari, who is aware, more than anyone else, of the risks that American pragmatism represents for his political future. Thus, it was natural for Zardari to change his conciliatory approach towards Taliban, which he had begun by signing an agreement that allows for the application of Islamic Sharia in the Swat Valley, and embarking on a massive use of military force against this movement.

This change of position by Zardari came after the U.S. administration expressed its rejection of his conciliatory policy.

Carrying out such massive military

operations required Zardari to totally rely on the army, which gained him several advantages: Firstly, it allowed him to send a strong message to the American administration about the important role which the civil wing of the regime can play in the war on terrorism. Secondly: it gave him the opportunity to involve the army in this open confrontation with Taliban, consequently removing the army from political life, and neutralizing it, even if only temporarily. And, thirdly: This confrontation served as an occasion to emphasize that the military wing of the regime is submissive to the political decision of the regime's civil wing.

The army also had its own personal interests, which mainly included maintaining a good relationship with the United States, as a key to ensuring the flow of military aid. Also, carrying out those military operations by the army would assure the U.S. that army - not the civil wing – is the stronger party in Pakistan. The army can be relied upon in the conflict against Taliban and other militant religious forces, and it is still the real partner of the United States and not the civil wing.

However, this compatibility relations between the two wings began to relatively decline due to the differences between them regarding the terms of the proposed U.S. economic aid to Pakistan, which is estimated at $ 1.5 billion annually for five years. This indicates that, despite the importance of the previous shifts in the composition of the ruling elite in Pakistan, the stability of the civil wing's control of power, and the minimization of the political role of the army, ultimately depends on many factors. These factors include making structural reforms in the security services; reducing the role of the religious forces; continuing the political project concerning the revival of civil-secular political forces, and their success in expanding at the expense of religious forces; filling the political vacuum created by Musharraf's policies and reforming the education system and the religious schools.

A researcher at Al-Ahram Center for Political and Strategic Studies specialized in Pakistani affairs.

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Debate

A Country on the verge of collapse

Dreams of Pakistan's Founder: History

Throughout its history, Pakistan has never enjoyed full peace and stability. It always lived in an aura full of conspiracies, coups and unrest. In such troubled waters, the army has always been the key player, even though its image has been recently tarnished. Contrary to Pakistan's founder Mohamed Ali Jinnah's dreams of establishing a solid democracy in the country, the military has reigned supreme.

Dr. Abdullah Al-Madani

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n major western research institutions, many of those who track the situation in Pakistan believe that this country is doomed to fall sooner or later. Naturally, the evidence they present is extensive, complex and can not be underestimated.

Since Pakistan was separated from British India in response to the political and personal aspirations of Mohammed Ali Jinnah, it has never enjoyed security and stability. In other words, since 1947, Pakistan's history has been overshadowed by images of conflict, unrest, coups and conspiracies along with the poverty, ignorance, backwardness and extremism.

When reading the history of Pakistan, we will only find civilians conspiring against each other, conservatives trying to exclude secularists, Sindhs competing with Punjabis for public office, and illiterate tribal people expanding at the expense of the educated townspeople.

However, the biggest player in all cases has always been the army, in particular the Pakistan's Inter-Services Intelligence, known as: ISI. The institution's different branches hold the reins of power, even when civilians are said to be in control. The army has the final word in domestic and foreign policies which determine the name of the country's president, his prime minister, and possibly members of the government as well. Therefore, it is not strange that the best eras in the history of modern Pakistan in terms of stability and development were those periods during which the army generals directly took reins of government.

Exceptions include the short era of General Yahya Khan that witnessed the war of Bengal and the separation of what was then Eastern Pakistan, and the era of General Zia ul-Haq, which came in a time of the special regional developments of the situation in neighboring Afghanistan after the Soviet invasion of the latter in 1978. For example, the administrations of General Iskandar Mirza and General Muhammad Ayub Khan, and to some extent under General Pervez Musharraf's rule, were generally times of relative prosperity and security.

Pakistan has been able through a strategic alliance with the West and through presenting itself as a necessary ally during the Cold War and the War on Terror, 06 November, 2009

to gain significant military support and development aid from the United States and the West. This provided Pakistan with a temporary guarantee against economic bankruptcy and public treasury deficits.

The Pakistani army, was afflicted with much shame due to its humiliating defeat in the Bengal war in 1971, and the subsequent chaos which tarnished the image of its cadres and elements and distorted the high profile of the army as one of the most efficient and most disciplined armies in the Middle East. It had this reputation thanks to the British colonization of the Indian Subcontinent. In fact, the Pakistani army became one of the most influential regional armies in terms of intelligence capabilities thanks to the West, which provided the Pakistani army during the Cold War with advanced systems and aid and training programs. The deterioration which the army witnessed resulted from the former dictator President Zia ul-Haq's domestic initiatives- as he tried to Islamize all aspects of life in the country including the army, during the "black" years of his rule.

The period of President Zia ul-Haq’s rule also witnessed the spread of what is known as a culture of "Kalashnikov" in Pakistani society; a result of the Jihadist war in Afghanistan. This culture had serious repercussions on the overall situation of the military whose systems were penetrated by extremist elements. The image of the army gradually deteriorated from an army whose elements were keen on discipline, obedience, loyalty, hygiene, ethics and appearance, to an army mainly composed of bearded, illiterate, rural and tribal people. Images of brilliant faces, polished shoes and belts, and endless ambitions of self-improvement disappeared.

Despite all of this deterioration and the unprecedented aggressive strikes received by the General Headquarters of the Army in Rowalbandi on 11th October 2009, launched by elements of Taliban/ Pakistan militias and even by Talibani elements who came over from the province of Punjab, traditionally known to have provided the army with half of its soldiers and officers, the army is still the absolute master in the country. Politicians and civilian lawmakers cannot violate or disobey the army's orders.

Otherwise, the military tanks are ready

to at dawn and seize power using this or that excuse. In fact, this has occurred more than four times with the pretext of protecting Pakistan from corrupt civilian politicians or of safeguarding the country against the aspirations of the enemy (India). Of course, this army is now taking on Western fears about the prospects for the fall of the Pakistani nuclear arsenal in the hands of extremist elements and groups as a way to reinforce its position internally and gain aid externally. This is considered the only hope for maintaining and protecting Pakistan's nuclear force, which, if it falls into the hands of Taliban and their supporters from al-Qaeda terrorist organization, will mark the beginning of a black dark era in the history of mankind.

From the very beginning, the process of establishing the Pakistani image has taken the wrong path in the sense that it overlooked the process of establishing the principle of military subordination to civilians, and not vice versa (like what Jawaharlal Nehru and his fellow leaders of independence did in neighbouring India).

Since then, doubts were instilled in many, whether or not it was the way intended

by Mohammed Ali Jinnah, the country's founder. When Jinnah died, there were a growing number of complications, only one year after the establishment of the country. Power was assumed by successors who lacked experience, charisma, political savvy and historical legitimacy.

An additional factor that paved the way for the fall of Pakistan under the heat of disagreement. It also hindered an established democratic experience supported by secular foundations in a way that was hoped for by the founding leader Mohammed This factor was the transfer of extremist Islamic groups, forces and parties, represented by symbols of Diubandi schools and supporters of Abu Al-Aala Al-Maudoudi (the theorist of the Muslim Brotherhood) from India to Pakistan accompanied by Jinnah. After the death of the latter, they played a destructive role against the concept of the modern civil State, founded on the principles of democracy, secularization and federal unity.

Researcher and academic lecturer in Asian Affairs from Bahrain.

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Ideas

06 November, 2009

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Nuclear Neighbours

Ramon Pacheco Pardo

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Ideas

Nuclear Neighbours Pakistan, India And The Challenge To The NPT Regime Ramon Pacheco Pardo Pakistan and India may be neighbours geographically, but in the nuclear world they are anything but neighbourly. Historical enmity and mistrust play a major part in their decisions not to join the NPT – neither party will sign up to it unless the other also agrees to do so, adding to the international community’s growing concern over the monitoring of Pakistan’s nuclear arsenal.

Pakistani President Asif Ali Zardari (L) and Indian Prime Minister Manmohan Singh (R) take part is a group photo shoot in Yekaterinburg on June 16, 2009 during the Shanghai Cooperation Organization (SCO) summit © Getty Images

06 November, 2009

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Ideas

T

he deteriorating situation in Pakistan has become one of the major worries for the international community over the past years. The presence of Taliban insurgents and al Qaeda combatants, escalating unrest along the border with Afghanistan, and entrenched border disputes with India are three of the main problems facing the government of Prime Minister Yousuf Raza Gilani. However, one other issue has increasingly become one of the top concerns for the international community: Pakistan’s nuclear arsenal. Or, more specifically, the difficulty in monitoring the arsenal and the military’s lack of control over it. In the eyes of many experts on nuclear counterproliferation the risks of nuclear technology finding its way to non-state actors is greater in Pakistan than anywhere else.

Pakistan, along with India, is the only openly recognized nuclear weapons power that has not joined the NPT. Since their nuclear weapons tests of 1998, both countries have been urged to join the non-proliferation regime on several occasions. Nevertheless, the prospects of any of the two agreeing to do so are very small. Islamabad will not sign the NPT unless Delhi does, and vice versa.

Historical enmity and recent developments have moved the possibility of Pakistan and India joining the NPT further away.

Islamabad has lived with the fear of losing northwest Kashmir to India since the Indo-Pakistani War of 1947.

Pakistan and India have fought two more wars, and smaller skirmishes have occurred several times. But violence between both countries has diminished dramatically since the 1998 nuclear tests. For Islamabad, this is proof of the deterrent effect of its nuclear arsenal.

This deterrent effect was further demonstrated in November of last year, when ten gunmen killed at least 173 people and wounded over 300 in Mumbai. Indian police forces identified the attackers as Pakistani nationals and there were suggestions that the ISI, Pakistan’s intelligence services, were linked to the attacks.

Tensions between both governments escalated until Pakistan recognized in February of this year that the attacks had been at least partly planned on its soil. The Pakistani police also detained several people accused of being connected to the attack. In May, Dr Issue 1531

Samar Mubarakmand, a well-known Pakistani nuclear scientist, said that his country’s nuclear capability had saved it from being attacked by India following the terrorist act in Mumbai.

This shows the mistrust of many Pakistanis towards their Southern neighbour.

problems over Kashmir mentioned before, underpin Indian concerns.

However, a more recent development significantly raised Delhi’s concerns over Islamabad’s nuclear programme.

This was the discovery of A.Q. Khan’s clandestine nuclear proliferation network.

Historical enmity and recent developments have moved the possibility of Pakistan and India joining the NPT further away

In January 2004, Khan confessed to having been involved in the supply of nuclear technology to Iran, Libya and North Korea. Even though he later retracted his confession, Iran and Libya have confirmed that they received nuclear components from Khan’s network. Earlier this year, when a Pakistani court freed Khan from house arrest for his involvement in the network, Indian Secretary of External Affairs Anand Sharma accused Pakistan of deceiving his country. This shows India’s sensitivity towards the proliferation activities of Khan’s network and the lingering tensions that result from it. Coupled with the worrisome political and security situation in Pakistan, India has a real fear that Islamabad might be incapable of controlling its nuclear arsenal.

This mistrust also grew in October 2008, when US Congress gave final approval to a civilian nuclear deal with India. The agreement was first introduced by President Bush and Prime Minister Manmohan Singh in July 2005, and lifts an American moratorium on nuclear technology assistance and exports to India dating back more than three decades. In return for this assistance Indian civilian nuclear facilities will be monitored by IAEA inspectors. However, military nuclear facilities are not covered by the agreement, even though India is now eligible to buy dual-use nuclear technology and equipment to enrich uranium or reprocess plutonium, all of which can be used to manufacture nuclear weapons.

Critics of the deal argue that it discriminates against Pakistan, who might decide to turn to China to obtain a similar agreement. Since both Islamabad and Beijing believe that the agreement between Delhi and Washington is pointed towards them, it seems clear that the deal will only serve to strengthen their nuclear ties and reduce Pakistan’s appetite for joining the NPT. Indeed, when President Asif Ali Zardari visited China shortly after US Congress approved the agreement Beijing announced that it would assist Pakistan in the construction of two nuclear reactors.

Pakistan’s mistrust of India is reciprocated by the latter. Historical problems, most notably the

Even in the event of a significant improvement of relations between Pakistan and India regional issues make it unlikely that they would join the NPT. India has long-standing border problems with nucleararmed China. Pakistan limits to its West with Iran, whose government seems determined to obtain a nuclear programme and, according to some Western countries, nuclear weapons.

Pakistani and Indian nuclear capabilities allow both countries to balance their powerful neighbours but complicate strategic equations, making possession or acquisition of nuclear weapons desirable for all powers in the region.

Indo-Pakistani enmity means that it is unlikely that any of them will join the NPT any time soon.

Therefore, efforts to minimize the risk of proliferation in South India should therefore concentrate on stabilizing Pakistan and improving military control over its nuclear arsenal.

Researcher in counter-proliferation and East Asian politics.

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06 November, 2009

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People

The

Mysterious

Doctor

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People - Profile

The Mysterious Doctor

Abdullah Abdullah – The Tajiki with Presidential aspirations The figure of Dr. Abdullah Abdullah, Afghanistan's presidential candidate, is surrounded by uncertainties and question marks vis-à-vis several issues, ranging from his refusal to divulge his real name except after he has won the elections, to the ongoing argument about his history with the Mujahideen and the tribe to which he belongs.

Afghan doctor, politician and independent candidate, Abdullah Abdullah, the top challenger to Presdeint Karzai in the controversial elections, listens to speeches during a gathering of all of his supporters nationwide on September 27, 2009 in Kabul, Afghanistan

© Getty Images

V

agueness and political shrewdness are the qualities that characterize best Dr. Abdullah Abdullah, Afghanistan's presidential candidate. He has so far concealed his real name, refusing to divulge it before he wins the election.

Many questions also remain regarding his past. These range from issues surrounding his years as an ophthalmologist, up to when he became one of the two candidates vying for the presidential seat at the Golestan Palace.

Any keen observer of Afghanistan’s internal affairs would know that Dr Abdullah, a former Secretary of State, has always been part of the Tajik alliances in Afghanistan. He has always introduced himself as a Tajik from Panjshir (the province of Ahmad Shah Massoud – a military commander of the Northern Alliance). His presidential aspirations, however, have since led Dr. Abdullah to change 40

06 November, 2009

his storyline. Through his website, he has been striving to portray a more unifying image about himself, notably by presenting his father as a Pashtun from Kandahar, and his mother as a Tajik from the Panjshir.

Given the shortage of specialists in Afghani affairs and the difficulty of communicating within Afghanistan, the Internet became a major channel to diffuse information about the elections. As a result, a large number of journalists and Arab foreign media have widely used the information published on Dr. Abdullah’s website.

Albeit at first not many people noticed the contradictions in his past, increased scrutiny eventually revealed important inconsistencies.

Most Pakistanis know about his links to the Islamic Society Party – headed by Dr. Rabbani. The Islamic Society Party was an organization under which Tajik Afghans gathered

during the eighties in their exile. It provided them with aid while also actively helping in the fight against the Soviets. Kandaharians, on the other hand, were often part of Pashtun blocs such as the Hekmatyar's Islamic party, Sayyaf's Dawa Party, the organizations of Sibghatullah Mojadidi, or the movement of Mr Jilani leader of the Jilani Sufism.

Further underlying these inconsistencies are old photos dating back to the eighties displaying Dr. Abdullah wearing a "Bakool," a wool hat used by the Tajiks from the northeast of Afganistan and for which Shah Masood was famous. While for outsiders, the fact that the Kandahari people wear a completely different hat or even turbans may not mean much, in Afghanistan the head cover is of great importance. It is in fact rare for anyone to use a head cover different from the one prevalent in his home region.

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People - Profile Dr. Abdullah's contradictions have become even more evident when he broke the Afghani tradition of choosing deputies from different ethnic groups. This strategy has been proven crucial in Afgani politics in helping to mobilize voters from different ethnicities around three unifying figures. For example, the Pashtun Karzai chose the Tajik Marshal Fahim as his first vicepresident and Karim Khalili, a Hazara Shiite, as his second vice-president.

Dr. Abdullah chose as first deputy Humayun Shah Asefi, who comes from a well known Pashtun tribe and is a relative of the former King Mohammed Zahir Shah. This choice was overwhelmingly based on his dire need for Pashtun votes. As a relative of the King, Asefi is very respected in the Pashtun tribal community. If Dr. Abdullah had indeed descended from a Pashto Kandahari father, all he would have needed to do to easily lock-in the support of Pashtun tribes was to announce his name and tribe.

The poor prospects of the Pashtun accepting his claim of being a Kandahari forced him to choose a vice-president from a well-known Pashtun family.

Dr. Abdul Shakoor Rashad, the most famous Afghani historian, highlights a further reason for these inconsistencies.

Accoring to him, Dr. Abdullah descends from Tajik parents from the Panjshir Valley and his father worked for the Ministry of Works in the Kandahar province. He died three years after the birth of Abdullah. After Abdullah's father’s death, his mother remarried a Pashtun Kandahari man.

Evidence shows that Abdullah has exploited this incident to falsely trace his origin back to his mother's husband instead of his father, believing that the vast majority would never learn the exact details of his family’s history.

was clear: to grab half of the Pashtun votes in Kandahar, where more than 300,000 people voted for Mr. Karzai in the 2004 presidential elections.

Any keen observer of Afghanistan’s internal affairs would know that Dr Abdullah, a former Secretary of State, has always been part of the Tajik alliances in Afghanistan Other aspects of Dr. Abdullah’s past contribute to his discredit. It is known that the Afghan resistance fighters considered anyone who remained inside Afghanistan after the Soviet invasion in 1980 as a traitor and a Communist, especially if this person was studying in educational institutions controlled by the Communists, or was working with the Communist government.

His presence in the capital Kabul until 1985 has therefore not contributed to his credibility. After graduating from the Faculty of Medicine at Kabul University in 1983, Dr. Abduallah went on to join the Nour Optical Hospital in Kabul, where he worked for two years. He then moved to Peshawar to work as an optician in Sayed Jamal al-Din hospital, and only joined the Afghan resistance fighters as an optician in 1986. It was only then that he integrated the Islamic Association Party and befriended Ahmad Shah Masood.

Given the importance of these elections to his political future, Abdullah has worked very shrewdly in his campaign. One of his most important strategic moves was to attach his pictures next to the ones of Mirwais Hotk, one of the founders of modern Afganistan and a revered cleric in the Pashtun areas.

Furthermore, Hotk descends from the Pashtun branch Glzai, the largest branch that rivals the Poplzai branch, the ancestral home of Hamid Karzai.

If Abdullah had been just an ordinary person, he might have been executed by the different groups of Mujahideen in Peshawar right on his arrival in Pakistan on charges of treason.

Nevertheless, his extraordinarily political talents allowed him not only to escape trial, but also to rise quickly through the ranks, ending up the spokesman for the Islamic Association and for Ahmad Shah Masood.

Although Dr. Abdullah did not actively combat the Soviets and did not participate in Jihad, he eventually became a foreign minister.

Dr. Abdullah knows quite well that the Glzai Pashtuns are outraged by Karzai’s move to banish them from all political positions in their regions, replacing them with members of the Poplzai branch. The objective here

Despite being raised in a family that he himself describes as religious, in 2004 he denied having had any affiliation to the Islamic Association in any period of his life. But this denial was only a means to escape any

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involvement in any trial. This happened in the context of the then looming collaboration between the Karzai government and the United nations to open the files of war crimes committed by the warring Afghan parties during the civil war. Although many people were angered by his denial and criticized this behavior, Abdullah explained it as a pragmatic action required in order to establish his name in politics.

By adopting U.S. President Barak Obama’s campaign slogan “Change and Hope”, Dr. Abdullah aimed at setting a modern tone to his campaign.

This was not to count with the lack of electrical infrastructure in Afganistan, which rendered the use of such tools as Facebook and the internet redundant. There were only 1770 people who registered themselves as supporters of Abdullah Abdullah, after his Facebook account showed him sitting on a chair and sipping a glass of wine with a U.S. official.

Although Dr. Abdullah used all his political skills and merits in his presidential battle, analysts and experts see him as a fan of equestrian marathons, table tennis, and basketball. The presidential contender asserts that he grew up in a religious family, was nurtured in the love of Persian poetry and any interviewer of the presidential candidate would realize his cultural background.

But the veteran diplomat risked two decades worth of personal political history. Although the Pashtuns did not vote overwhelmingly for Karzai in the first round of elections, the possibility of Dr. Abdullah winning the presidency could have mobilized Pashtun tribal and ethnic areas, which constitute the majority in Afghanistan.

This could have pushed them to overcome the psychological barrier and go out on election day to polling stations in an attempt to support Karzai despite their discontent with him.

Since its establishment, the modern Afghanistan state has always been governed by someone from a Pashtun descent. Despite the fact that the Tajik Habib Allah Kalkani assumed power after a coup in January 1929 against the reformist King Amanullah Khan, Pashtun tribes cooperated with Mohammed Nader, cousin of Amanullah Khan, and succeded in deposing Kalkani.

Had Dr. Abdullah won the presidency, Taliban support would have skyrocketed. This, however, can still happen if Dr. Abdullah and Karzai do not reach a deal on power-sharing.

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People - Interview

The Chapters Left to Write

Interview with Professor Fred Halliday on the future of Islamism in the Middle East Professor Fred Halliday is a widely respected veteran academic, writer and commentator on the Middle East. Currently ICREA research professor at the Barcelona Institute for International Studies, Professor Halliday was formerly Professor of International Relations at the London School of Economics. He is fluent in twelve languages and author of over twenty titles including Islam and the Myth of Confrontation, The Middle East in International Relations: Power, Politics and Ideology, and 100 Myths about the Middle East. His latest book, Shocked and Awed, Dictionary of Words and Phrases Occasioned by 9|11, is to be published by I.B.Tauris later in 2009. Here he discusses with the Majalla recent developments in Iran and Yemen and the future of Islamist movements in the region.

Majalla - After the June elections in Iran, was there any real chance of the Islamic republic ending in a wave of democratic protest, or was this simply the wishful thinking of the western press?

The protest movement that broke out in June was of immense importance, and, thirty years after the Islamic Revolution, indicates a nation-wide rejection of the policies of Khamanei and Ahmadinejad. It represents the culmination of many different currents of protest, many of them wanting Iran to become a more ‘normal’, and open, country.

The people want freedom. In some respects, it is similar to the popular movement that broke out in Eastern Europe against the communist regimes during the 1980s. However, as long as the main institutions of the state, and in particular the armed 06 November, 2009

forces, the Revolutionary Guards, and the intelligence services, remain more or less united, the opposition will not be able to prevail. In the 1980s, with Gorbachev, the Soviet and Eastern European communist leaderships lost the will to remain in power, and, in particular, abandoned the use of force to stay in power.

This has not yet happened in Iran.

Q:How will this internal disruption affect Iran’s foreign policy, especially regarding the pursuit of a nuclear program?

There is much less disagreement between the different factions on international than on domestic policy. And all agree on Iran having a nuclear programme. What is striking is that the rise of a large democratic movement inside Iran has not aroused more interest

and sympathy in the Arab world.

Whatever happens in Tehran, Iran will retain a strong influence in the region Q:What is Iran’s role in Iraq, Bahrain, and Yemen? How does it compare to the other regional powers involved?

Iran’s roles in Iraq and Bahrain are very different. In Iraq, Iran has enormous influence and, while maintaining links to various parts of the opposition, is in effect supporting the government in Baghdad. In many ways, its goals – a stable, united, prosperous Iraq – coincide with those of the USA, with the obvious difference that it wants any future Iraqi government to be friendly to Iran. In Bahrain, Iran has long abandoned the irresponsible, insurrectionary, policies of the 40

People - Interview immediate years after the Islamic Revolution. The tensions in Bahrain have less to do with external interference, more with domestic Bahraini politics. As for Yemen, Iran’s role is greatly exaggerated.

The causes of the internal problems, including the revolts in the northern and southern parts of the country, are a result of popular rejection of the Yemeni state. The only country with significant influence in Yemen is Saudi Arabia and this influence it has found hard to use in past decades.

Q: Nineteen years after unification, Yemen is still very unstable. Are the problems the country faces endemic?

Yemen is becoming more unstable, and the main reasons for this are two: first, the historical reality that for most of Yemen, with the exception of the parts of former South Yemen controlled by the former socialist government, the power of the state in Yemen was always very limited – tribes always had a large measure of political, economic and military autonomy and this has become greater; secondly, the state system created by President Ali Abdullah Salih since he came to power in 1978 and extended, in the 1990s, to the former South, is based on corruption, clientilism and the pursuit of shortterm gains by the ruling elite, political and military. The problems are indeed ‘endemic’ and not the result of external interference.

Q: Would regional intervention have any chance of success in Yemen?

There is usually very little external influence can do, except when all the parties involved sincerely want it. As for intervention, in the strong sense of despatching troops, it will only produce a counter-reaction – look at the examples of Lebanon, Iraq and Afghanistan in recent decades. The outside world can monitor events, and can give advice, but until the Yemenis find a solution to their own problems, there is little the rest of the world can do.

Q:Considering what is occurring in Iran, Yemen, and with Hamas in Gaza, where do you think political Islamic movements are heading?

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The one generalisation that can be made with some confidence is that Islamism, as a political movement and political ideology, will remain important throughout the region for many years to come. The emergence of particular political, or armed, groups is only part of a much broader process of social and cultural change which is continuing to spread in the region, and which will provide the context for political action for many years to come. One has only to look at society in, for example, Syria, Iraq, Egypt or Morocco to see this.

The one generalisation that can be made with some confidence is that Islamism, as a political movement and political ideology, will remain important throughout the region for many years to come Beyond this observation, the picture is a very varied one. It is nearly always a mistake to generalise about Islamist movements, or indeed any kind of political change in different countries. Of course, what happens in one country does affect another, but each movement has primarily national roots, and its future must be assessed in terms of what is happening in that country: it makes little sense to compare Afghanistan with Lebanon or Somalia. And this is all the more so, as these movements, while they do have contacts with each other and do inspire and provide models for each other, do not act in a highly co-ordinated manner, as did the former communist movement.

In overall terms, one can distinguish between at least four categories of Islamist movements. First, there are those states where armed Islamist movements of the 1980s, 1990s, and 2000s have tried, and failed, to take power and where they are, for the moment, in retreat: Algeria, Libya,

Egypt, Syria, Saudi Arabia. Iraq may also be an example of this, insofar as the main opposition forces militarily active now are those of national, or regional, opposition, not those based on religious ideology, Sunni or Shii: this would, of course, change if the Jaish Mahdi of Muqtada al Sadr decided to re-launch armed opposition, or if, following an American withdrawal, the country became plunged into a serious ShiiSunni civil war. Secondly, there are states where radical Islamism has been in power and where there is now growing opposition to its control: Iran and Sudan are the two examples of this, although in both the Islamist regimes retains power and, very importantly, the will to keep power. Thirdly, there are countries where Islamist movements, having tried to challenge the state overall, have accepted, at least for the time being, a place within the political process: we should not forget the main example of this, Turkey, where Islamists are in power since 2002, and other examples would include Morocco, Jordan, the Muslim Brotherhood in Egypt and, of course, Hizbullah in Lebanon. Whether these groups will increase their influence through political means, or will at some point in the future break with the political system and return to revolt, is an open question.

Finally, there are those countries where Islamist groups are in open, armed, conflict with the state: these include Somalia, Yemen, Palestine, Afghanistan, Pakistan. In Somalia and part of Palestine (Gaza) armed Islamists have taken power, and in the others they are continuing to wage military opposition to their states. In none of these do I see the prospect of rapid victory for these armed groups, nor do I see the prospect of political settlements in the proximate future. There are many chapters still to be written in the history of Islamist movements.

Interview conducted by Chris Phillips - An Associate of The Foreign Policy Centre and a columnist on Middle Eastern politics for The Guardian Online.

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06 November, 2009

Economics International Economics

International Investor

Markets

The Bottom Of The Barrel Arthur Neeteson Issue 1531

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Economics - International Economics

The Bottom of the Barrel Why a new $100 per Barrel Era is Looming Arthur Neeteson Last year’s spike in oil prices caused an incredible amount of concern by both consumers and public officials alike, with suggestions that oil price might have even contined to increase throughout 2009. Was the oil price scare an exaggerated reaction? Oil prices have recovered since, but insight into previous price increases indicates that the era of high prices in oil is not necessarily gone for good.

Traders work in the crude oil options pit at the New York Mercantile Exchange October 19, 2009 in New York City. .Crude oil prices slid slightly after topping $79 per barrel, the highest since October 15, 2008

© Getty Images

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ast year’s $100+ per barrel oil prices were widely believed to be the harbingers of an era of sustained high prices. Many influential commentators – then- OPEC president Chakib Khelil and Goldman Sachs analysts among them – even suggested that prices might go as high as $200 in 2009. Instead, the oil price plummeted as the global financial crisis spread to the real economy. Five months after the July 2008 record price of $147, oil had lost over three quarters of its value.

The oil price has recovered since then.

A barrel of the benchmark West Texas Intermediate crude is currently trading around $70. But today’s prices are a far cry from the hefty predictions of 2008.

Was the oil price scare exaggerated?

With the worldwide economy still in a slump, prices are unlikely to reach $100 06 November, 2009

this year. However, all the main factors that drove last year’s price hike are still in place, or just around the corner. Supply remains constrained, demand will pick up when economic growth returns, and it is unlikely that speculators will behave differently during the next period of shortage. A barrel of oil will again cost $100 before we know it.

Insufficient Supply Last year’s price spike – like the ones before – occurred because supply was only just able to meet demand. The normal situation in the oil market is for producers to keep spare capacity to be able to cope with unexpected events. When supply is tight, the smallest disturbance in the market can cause prices to skyrocket.

Between the 2002 and the summer

of 2008, global spare capacity had approximately halved. How this affects prices became clear when the hurricane Katrina hit the Gulf of Mexico in 2005, destroying 1.4 million barrels a day (mbd) worth of production capacity, and even more in refining. Because of the demand surge of the years before, other suppliers were unable to crank up supply by more than 0.5 mbd. International Energy Agency was forced to release its emergency stocks on the market to prevent an oil drought.

Prices increased by 7% within two days of trade.

Investment in new production capacity is the only obvious way to increase supply on the long run. Despite much investment in recent years, producers have been unable to crank up supply to a level that meets future demand. Since the price highs of last year, the credit crunch and the drop in

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Economics - International Economics oil prices have deteriorated the investment climate, although equipment prices have come down as well. Nevertheless, major producers and the international oil companies stress that they maintain their investment levels in spite of the financial turmoil. Saudi Arabia, for example, has just started production in the giant Khurais field. However, smaller players with less access to capital have halted supply expansion. The conventional supply situation looks worrisome. According to Merrill Lynch economist Francisco Blanch, ‘the world now needs to replace an amount of oil production equivalent to Saudi Arabia’s production every two years.’ This is unlikely to happen.

Apart from traditional sources of oil, a crucial factor in new supply is the extent to which unconventional, less accessible sources of oil will be developed. The deep seabed and oil sands still contain vast largely untapped quantities of oil, but production is risky and expensive.

Estimates vary, but it is clear that today’s prices are too low to allow for profitable exploitation of the bulk of these fields.

If the recession keeps the oil price at moderate levels for a protracted period of time, and financing hard to obtain, these projects will be delayed. By the time they come online, it may be too late to prevent a new price spike.

Demand will Rise Again Like during earlier price rallies, the balance between supply and demand became increasingly tight since 2004.

However unlike before, the main factor was a sharp rise in demand, not a fall in supply. Sudden supply reductions are what caused the price hikes of the 1970s and the one following the Gulf War of 1990.

Oil demand depends more on general economic performance than on the price of oil. The recent movements in oil demand are a case in point. The sharp increase in demand since 2004 accompanied the economic boom in emerging Asia and the Middle East. The global downturn explains why oil demand dropped over the last 14 months.

When looking ahead, there is little doubt that the global economy will recover, and with it the demand for oil. According to McKinsey, a consultancy firm, 92% of the demand increase of the coming years takes place outside the Western world, mainly in Korea and Japan. This results from the fact that economic growth is more energy intensive in emerging markets whose growth rates are higher than that of other countries.

Interestingly, the Middle East will be the second most important region from which this demand originates, after China, but before every other region on earth including India. Within the Middle East, 46% of new demand is caused by (heavy) industries, who often benefit from close access to energy sources. A boom in car use contributes 13% of the total increase.

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Percentage-wise, the Middle East will experience the world’s quickest growth in energy consumption.

prime crisis in the financial markets. He believes that traders fled into oil after many financial assets had collapsed.

Economic performance is the most important factor in explaining oil demand, but the level of the oil price also plays a role. When prices increase, buyers start looking for ways to reduce their consumption of oil. Last year’s high oil prices formed an important contribution to the sharp rise in public transport use and sales of fuel efficient cars in the US. However, when demand reacts to changes in the oil price, it does so slowly and incompletely. Today’s low demand is still partly caused by last year’s high prices; it takes a little while before consumers change their driving behaviour or buy a new car.

Others, among them the IEA analysts, the US Commodity Futures Trading Commission, and political economist Coby van den Linde, do not see speculation as a cause for the price increases. In their view, traders merely jumped the bandwagon of a price hike provoked by an exceptionally strong demand.

This sensitivity to price, or price elasticity, has decreased over the last decades as research by UC San Diego economist James Hamilton has shown.

This is mainly the result of an increasing share of the transport sector in oil demand – planes, lorries and cars have very few alternatives to using oil. This has consequences for the volatility of the oil price. If high prices leave demand largely intact, price movements become more extreme. This could mean that the next period of shortage sees prices shooting upward in an even wilder way.

Speculation: The more it changes, the more it stays the same The third factor commonly quoted as having contributed to the oil price in recent years is financial speculation. There is a wide debate in academic and political circles about the role that speculation played in driving up prices. OPEC, the French President Sarkozy and several US politicians hold speculators responsible for much of the price increase of 2008.

They are supported by several academics.

One of them, MIT economist Ricardo Caballero, sees the sudden increase in the oil price as a direct result of the sub-

While there is a debate about the extent and nature of the speculation, there is no doubt that speculation took place. The sudden price drop of September 2008 cannot be explained by changes in ‘real’ supply and demand. In fact, the presence of speculators became painfully clear when some of them reportedly held on to their futures contracts for so long – hoping that prices would go back up – that they nearly got barrels of physical oil delivered to the doorsteps of their banks.

However, to predict future price developments, it is not at all that relevant to know how much of the price increase exactly was caused by speculation. When the next period of shortage occurs, traders are just as likely to take positions on the oil price as they are today. American and European efforts to limit speculation of this kind, if effective at all, cannot prevent trade taking place on the bourses of Dubai and Singapore. If traders want to speculate, they will find a way.

The Only Way is Up Constrained supply, rising demand and not much changing in the way of speculation: the oil price can only go up from here. This is also the view taken by OPEC, the International Energy Agency, and the US Energy Information Agency.

Yet, it is almost impossible to predict when exactly prices will start rising. Perhaps a cause for speculation?

Economic Consultant with expertise in Oil and Gas.

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Economics - International Investor

Reviving the Decoupling Debate Explaining the Quick Recovery of Emerging Markets

Decoupling, the theory that argues that emerging markets were growing independent of more established economies, underwent significant criticism at the onset of the financial crisis, as the American market seemed to infect the rest of the world with its instability. Yet, trends in recovery appear to suggest that decoupling theory may hold some truth to it, as emerging markets have taken the lead.

Prior to the global financial crisis, there was a virulent debate over the concept of decoupling, the idea that the performance of some sectors of the global economy are not correlated with that of others.

The main paradigm of decoupling was around a group known as the BRICs - Brazil, Russia, India and China.

These economies, it was argued, would continue to grow even if the established global economies – the United States and Europe – faced declining economic growth or even recession.

The main thrust of the argument regarding why these economies were becoming independent of the US was that domestic aggregate demand was becoming relatively more important to their economic growth than foreign trade and investment. Another reason was that trade and investment flows between these countries as well as other emerging economies was rising, meaning that demand for goods and services in the US and Europe were becoming less important.

The BRICs economies shared important features, including large populations, high real rates of economic growth, and rapidly developing infrastructure.

However, these economies have major differences. Brazil and Russia are major exporters of natural resources, while China and India are importers. Moreover, these countries have varied trade and investment partners.

At the onset of the global financial crisis, many analysts viewed the crisis itself as proof that the decoupling theory was patently false. The crisis began in the US, spreading to Europe, and then to the entire world. How could one argue that there was such thing as decoupling given these events? However, almost a year after the crisis began, clear evidence is emerging that certain parts of the world are recovering faster than others, in large part because these economies seem to be less affected by events in the United States and Europe.

The best proxy for short run economic performance is stock market indices.

The efficient markets hypothesis can be generally accurate in the sense that stock market performance reflects investor expectations about future economic 06 November, 2009

willing to hold dollars without question.

In a decoupled world, this may no longer be the case.

Mohammed Al-Sulaiman performance, even if it does not reflect actual future economic performance.

Looking at global equities markets during 2009, we see that all of the ten best performing equity markets in 2009 are emerging markets. All four of the BRICs nations are represented in the top 10, and Asia and Latin America dominate the top 10, with only one of the ten not being from one of these two regions. None are from Europe or North America.

Clearly, if judged by the performance of their equity markets this year, Asian and Latin American economies have shone this year, and the traditional powers of Western Europe, the United States and Japan have all performed very poorly.

If one accepts this data as an indication that decoupling has indeed occurred, what does it mean for global investors?

First, it could signal the beginning of a shift in what is considered a safehaven investment. Under a scenario of correlated global economic performance, the United States is the clear safe-haven, because it is the most advanced economy in world, and all returns are correlated with its returns. In a decoupled world, an investor’s safest play is to diversify – that is, to invest in the traditional economies, and to invest in the BRICs and other emerging economies whose performance may not be correlated with that of the United States and Europe. Evidence that this diversification is taking place is already emerging.

If global investment flows come to reflect this “decoupled” analysis, it will mean the US’ dominant global economic position will begin to recede. Ever since Bretton Woods, the United States has been able to run consistent budget and trade deficits because the world was

Second, a decoupled world will mean the end of the dominance of the dollar.

If holding US assets is no longer the default investment decision, then holding dollars is no longer the default currency position. A basket of diversified safe haven investments will require a similarly weighted currency position in order to manage currency risk exposure.

Finally, a decoupled world will lead to more difficulty in reaching global consensus on trade and investment rules.

If the performance of all economies depends on the performance of all others, then cooperation is an appealing strategy.

If, however, some countries come to see their own performance is independent of, or negatively correlated with that of others, then consensus on global rules and standards will become much more difficult.

Evidence of this problem has already emerged during the Doha round of WTO discussions, and more recent changes in the structure of global economic meetings is a further indication that new interest groups are forming. Most importantly, the meeting of the BRICs heads of state, marks a critical moment.

It signals that these leaders view their interests as tied to one another’s in a manner that is independent of their ties with other large economies.

In summary, the stark divergence in the economic performance of Asian and Latin American economies, compared with that of the traditional powers in Europe and the United States since the beginning of 2009 indicates that the world may be entering a new economic era in which globalization is tempered by starkly divergent regional interests.

An economist who is currently Senior Manager for Private Equity and Real Estate at the National Investment Funds Company and a Board Member of the Young Arab Leaders, UAE Chapter.

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Coming soon

iPhone

Issue 1531

06 November, 2009

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Economics - Markets

Economic Recovery Signs in the Middle East Although the global financial crisis’s impact continues to be felt in Middle East economies, there are clear signs of resurgent interest by investors in the region. State intervention, rising oil prices and the improved prospects of Dubai repaying its US$ 6 billion debt this year have positively contributed to confidence in the region’s economies and financial centres. Nevertheless, the crash of the commercial property sector in Dubai (which fell to 50% of the pre-crisis value) and the exodus of expatriates means that there much needs to happen before the region recovers its pre-crisis dynamism.

Opec to boost production

Opec is to boost oil production if prices rise too high. The news comes as the organization’s oil ministers underlined that crude oil prices traded at a one–year high and that if the trend continues it could harm the prospects of global economic recovery. Opec President and Mr. Jose Botelho de Vasconcelos confirmed the group would increase output at its next meeting were the oil price to hit US$100.

Improved Prospects for ALGOSAIBI The debt situation of Saudi firms Algosaibi and Saad Group have been negatively impinging on market confidence throughout the region.

This could soon change with the recent news that Algosaibi is to meet creditors claims within a few weeks.

The group is said to have reached a global settlement with creditors of approximately US$ 10 billion. The total costs of both groups’ writeoffs could be as high as US$ 22 billion and affect over 120 banks throughout the world.

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06 November, 2009

Reviews Books

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Readings

Reports

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Reviews - Books

The Lion of Jordan

Lion of Jordan: The Life of King Hussein in War and Peace Avi Shlaim Penguin November 2008

Avi Shlaim’s book is an account of the military and personal life of King Hussein of Jordan, who throughout his long reign was a dominant figure in Middle East politics and a proponent of peace with Israel.

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n Lion of Jordan, the Iraqi-born historian Avi Shlaim tracks the life of King Hussein through three perspectives: the traits, strategies and political vision of King Hussein.

Throughout the book he makes these three categories interconnected so as to create an archetype of King Hussein.

In describing the late king's traits, Shlaim adopts a developmental approach.

Documenting the King’s life beginning from his early childhood allows the writer to evaluate how the King’s early childhood would impact his subsequent behaviour. Born to a closely-connected royal family consisting of a caring father, King Talal Ibn Abdullah, a legendary mother, Queen Zain and three caring siblings, Hussein acquired his pacifying nature in this warm familial atmosphere.

The author refers to his devotion to his grandfather, king Abdullah, founder of Jordan and his great grandfather, Hussein Ibn Ali, spiritual father of Arab Nationalism. He often associated himself with the latter and considered himself the true inheritor of this Arab revolutionary.

Hussein’s family ties are presented in conjunction with his early education in a multicultural milieu in Egypt's prestigious Victoria College and then in London. This, according to Shlaim, made him tolerant of others' opinions.

Hussein's vision, was to preserve the rule of the cherished Hashemite family 06 November, 2009

by any means. Much of Shlaim’s book focuses on the extraordinary bilateral relationship between the king and successive Israeli governments. If the King was never quite Israel’s friend he was “the best of enemies.” Here was the earnest of Hussein’s obsession with preserving his own regime. To do this, he was willing to trade with Israel, even while its governments clung doggedly to Jerusalem and the West Bank. His own people were far more hostile to their Jewish neighbours than he was himself. Hussein›s tolerant nature also had a role to play in stabilizing internal politics. Those who staged a royal coup in 1957 were all given amnesty by the king and later became his loyal servants.

The author adopts a historicist approach so that all the so-called betrayals of the Arab cause for which Hussein was notorious are presented by Shlaim as driven by circumstances beyond Hussein›s control.

For example, his alignment with the West and Israel in the period leading up to October War is interpreted by the author as a result of an excessive fear to repeat the grave mistake of aligning with Nasser and the Arabs in 1967.

This mistake cost him the loss of East Jerusalem and his grip over West bank.

Indeed it is here that the book seems like an apologetic about king Hussein rather than an objective biographical account.

The book, however, has certain historical inaccuracies. It refers to the 1956 War

between Egypt and Israel as a defeat for Egypt, despite the full deterrence of the Tripartite Aggression by the Egyptian forces. Nonetheless, the author almost convinces us of Hussein's weight as a true peace-maker when the king of Jordan secured a solemn promise from Saddam to withdraw from Kuwait on the second day of the invasion, on the condition that Arabs would not issue a formal condemnation of the invasion. This arrangement was already agreed upon in a meeting between Mubarak and Hussein before the latter's meeting with Sadam.

Hussein returned from Baghdad only to discover that the Egyptian president «changed his mind» and condemned the invasion on August 3, 1990. What the author seems not to be aware of is that Egypt did so when the intensive contacts with the Iraqi side in this short span of time proved to be utterly futile.

Perhaps unwittingly, the book reveals serious contradictions in Hussein's attitudes. While King Hussein boasted his origin as a natural extension of the architect of Arab revolt against the turks, Hussein junior›s revolt lacked orientation. For the Turks are no longer on the scene, and Israelis are, more or less, the best of enemies. Besides Hussein junior, the author says, had an infectious antipathy to Arab nationalists.

Despite all the above criticisms the book is an important documentation of the life and reign of King Hussein and the events that accompanied them.

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Reviews - Readings

Readings Books

Nelson Mandela

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Elleke Boehmer Sterling Publishing January 2010

This book recalls the life and work of a one of the world’s longest detained political prisoners (196490-), Nelson Mandela. Mandela has become an exemplary figure of antiracist struggle and democracy, a moral giant. This biographical study paints a complex portrait of Mandela that goes beyond hagiography: it examines his quality of character, his theatrical flair, his ability to absorb transnational influences, his survival skills and his ethical legacy.

World of Trouble: The Whilte House and the Middle East- From the Cold War to the War on Terror

Cover

Patrick Tyler Frrar, Straus and Giroux February 2010 The Middle East is the alpha and the omega of American foreign policy. However, as Patrick Tyler indicates in his book, this was not always the case. Tyler catalogues America’s adventures and misadventures in the region since the Cold War. He draws on recently opened archives, and demonstrates when and how American presidents made the most momentous decisions - from the Suez Crisis to the Iraq War.

Reports Abdullah’s Withdrawal from the Runoff Election in Afghanistan Michael E. O’Hanlon Director of Research and Senior Fellow The Brookings Institution October 31, 2009 O’Hanlon discusses Abdullah Abdullah’s withdrawal from Afghanistan’s presidential election runoff that was rescheduled for November 7. O’Hanlon argues that while Afghan President Karzai can now be viewed as legitimate, although tainted he is hardly out of power.

Podcast

Defenders in Danger Rights Watch No. 19 Human Rights Watch November 2, 2009-11-03

Human Rights Watch documents the danger posed to journalists in Russia. It focuses on journalist Elena Milashina, a 22 year old who has been working at Novaya Gazetta, a newspaper, that she argues is the only publication in Russia where anyone can practice investigative journalism. She continues to document abuses at the hands of the Russian government even though several of her colleagues have been killed for their work.

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Reviews - Reports

Keeping the Faith in COP15 Challenges and Opportunities for U.S. – China Cooperation on Climate Change William Chandler Carnegie Endowment for International Peace June 4, 2009 Can a deal be Reached at Copenhagen?

Margot Wallstrom, Eileen Claussen, Mohamed El-Ashry, Jessica Tuchman Mathews Carnegie Endowment for International Peace October 14, 2009 The Darkest Hour Michael Grubb Chatham House October 1, 2009

Speculation over the approaching Climate Change Conference in Copenhagen this December ranges from sceptical to cynical. There are numerous obstacles in place for a world wide effort to commit fully to the process. The Carnegie Endowment and Chatham house explain these obstacles and where they can suggest possible mechanisms to put in place so the conference successfully replaces the 1997 Kyoto Protocol.

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he Climate Change Conference has created an aura of anticipation with many betting against its success and others holding on to the hope that this round might advance a concerted commitment to the climate change process. This tension has inspired two Think Tanks, the Carnegie Endowment for International Peace and Chatham House, to address the prospects for the success of the conference, as well as the obstacles that it will need to overcome. In a report entitled The Darkest Hour, Chatham house is able to highlight the issues that have created problems for agreement in the past, 06 November, 2009

and which might rise up again in the December conference. Most importantly, this report echoes the work of the Carnegie Foundation, which also highlights the importance of a US-China initiative, as well as the necessary incentives that are demanded by developing countries for which reform is more economically challenging.

The Copenhagen summit caps two years of negotiations on a global climate change treaty to replace the UN’s1997 Kyoto protocol on carbon dioxide emissions. Two of the most important players in climate change advancement are the U.S.

and China, and much speculation has come about with respect to their willingness to commit to levels that other countries would find reassuring.

Interestingly, both Think Tanks recognize that the new American administration, which is overwhelmed with domestic challenges, is being expected to devise a very difficult deal that, without significant Chinese commitments, will not be accepted by the Senate. This perspective highlights the tautological nature of the tension between China and the US in the context of this conference, 54

Reviews - Reports as the commitment of one country depends on the commitment of the other.

According to the Carnegie Endowment, for these two countries to become leaders in the conference, specific tactics need to be implemented in the negotiations.

For one, the organization has highlighted the necessity of dividing the talks into phases that set a basic structure, which would give both countries both more time to settle disagreements.

A second problematic subject amongst the different “interests groups” involved in the conference is the role the north-south divide plays in the negotiations. The importance of an American commitment to help finance the involvement of developing countries is addressed by both reports. However, they also note that the degree to which the northsouth divide impact the negotiations is more extensive. Developing countries say industrialized nations should carry most of the burden, because they argue, limits on their emissions would hamper their economic growth. In the context of an economic downturn, these beliefs may carry more weight than they have in the past.

Similar tensions between developed and developing countries have not been addressed until now. This conflict is centred on the division of responsibilities.

According to both Think Tanks, while industrialized countries are willing to help developing nations, their willingness to compensate for their status as a developed country ends there. “They believe developing countries stand to lose the most from failure and know the problem cannot be solved with out more action by them.”

It has been suggested that a possible solution for the differences between industrialized nations and developing ones, is a side agreement that would allow different countries to take varied degrees of action.

Such an agreement would delineate options that would correspond Issue 1531

to the level of development of the country, and would include a financial clause.

This suggestion is an important possibility to consider if it is to represent the difference between commitment and abandonment on the part of developing states.

However, neither report addresses the details that such a commitment would entail. Understandably, it is difficult to estimate how such a plan would be put into place.

However, suggestions such as these highlight that there is a tendency towards contradiction amongst the organizations that recommend tactics for the conference. As the idea of a side agreement with detailed expectations for specific countries contradicts the aim of allowing the Copenhagen conference to be the framework for details that are to be filled in at a later date.

However, not all aspects of the Conference appear problematic.

There is significant agreement on cap, trade and offset mechanisms.

This mechanism has already allowed countries to meet binding limits by trading allowances or investing in projects elsewhere that reduce emissions. The project, pioneered by the US in the 60s, is the basis of the EU policy that has created a surge of investment in emission reduction projects around the world.

This mechanism is popular as it engages developing countries and promotes private finance to achieve the goals of climate change , including decarbonisation and sustainable development.

This specific mechanisms, along with other recent positive signals from the new governments of the US and Japan, could go a long way in advancing the aims of the conference.

For the compete reports see: http://www.carnegieendowment. org/ http://www.chathamhouse.org.uk/ 55

The Political Essay

This Story Sounds Familiar

Somalia’s al-Shaabab

The rise of the Shaabab in Somalia shares concerning similarities with the history of the Taliban in Afghanistan. US involvement in both scenarios is naturally dissimilar, and for this reason the Shaabab case will be revealing of whether huge security and state-building operations in failed states are a sensible and justifiable strategy for global counter terrorism.

L

ast September US special forces conducted a raid against a convoy in the south of Somalia. The target was Saleh Ali Nabhan, a Somali of Kenyan origin and a top al-Qaeda operative in East Africa, who experts believe was involved in a 2002 attack in a hotel in the southern Kenyan port of Mombasa, and even in the bombings of US embassies in Kenya and Tanzania. He was killed with several members of al-Shaabab, of whom Nabhan was also a member.

It is believed he was the link between this group and al-Qaeda leadership in Pakistan. This operation demonstrates that while fighting a war of counterinsurgency in Afghanistan, the United States is not losing sight of what goes on in Somalia. The clear pattern between the history of the Taliban in Afghanistan and the Shaabab in Somalia is an important reason to do so.

Afghanistan and Somalia are, of course, different countries altogether.

One of the central differences is Afghanistan’s numerous ethnic groups, which contrasts with the homogeneity of Somalia’s population in terms of culture, language and religion. The possibility of making good use of such homogeneity was shattered in 1969, when Siad Barre took power in Somalia.

His brutal regime was able to alienate all clans and sub-clans other than his own. As a result, the aggressive rivalry between clans remains present today.

In general, Somalia and Afghanistan share both a history of state weakness and endemic conflict, and in particular the two countries share concerning similarities between the rise and muscle of the Taliban and that of the Shabaab.

In 2006 and 2007, backed by the United States and Ethiopia, the Somali government defeated the Islamic Courts Union. The Shaabab, a dissident group of the Islamic Courts Union, found its first mission in expelling the Ethiopian troops from Somalia, as the Taliban did with the Soviets in Afghanistan.

Suffering increasing pressure from the Shaabab and other militant groups, the Ethiopian troops soon withdrew.

06 November, 2009

Manuel Almeida With no US forces in the ground, and supported only by a weak African Union mission (AMISOM), the Somali government quickly became an easy target of the militants. Toppling the government and seizing power became the next goal for the Shaabab, in light of what the Taliban did in Afghanistan.

Based in Mogadishu and surrounding areas, the Shaabab operates from the capital and controls most of the south of Somalia all the way to its southern border with Kenya. In contrast with the traditionally tolerant form of Islam in the country, the Shaabab seeks to impose its own extreme form of Islam, much like the Taliban did in Afghanistan. Public amputations and executions, assassinations of human rights workers and journalists have become widespread.

The presence of a number of foreign jihadists in Shaabab’s ranks raises another important parallel with the Taliban. Though its main operative and spiritual leaders are Somali, these foreigners occupy important positions within the organization. And the ambitions of the group are apparently not restricted to Somalia. The several suicide bombings in Somalia, Somaliland, Putland, Ethiopia, and Kenya, mostly conducted by foreigners, are an evidence of this. The Shaabab also recently threatened the governments of Uganda and Burundi, the two nationalities that compose the African Union’s mission in Mogadishu.

In 2008, BBC’s Rob Walker, one of

the few western reporters still daring to go to Somalia, interviewed a commander of one of Shaabab’s cells.

When asked about the obvious links between the group and al-Qaeda, the commander unconvincingly denied those links, and added “we are all brothers…our common objective is to have Sharia law as the law of our country. Al-Qaeda wants that and we want that». The Shaabab seems to be at least sympathetic with a global jihad ideology. The worldwide recruitment efforts by the group on the internet, the payment of salaries to foreigners who join its ranks, and especially, the links to failed suicide attacks in Australia and the United Kingdom are illustrative enough.

The present case of Somalia does indeed carry worrying parallels with Afghanistan. As in Afghanistan in 1996, President Sharif Ahmed’s government seems weak and helpless, with a high possibility of being toppled by an extremist group supported and inspired by al Qaeda. In spite of this, the US is involved in Somalia to a much lesser degree than it is in Afghanistan. There are a few reasons for this. The obvious one, of course, is 911/. There is also the memory of the disastrous episode of 1993’s Battle of Mogadishu. Moreover, there is a notion that resources are limited, and thus the US has for a long time adopted a limited strategy of raids into Somali territory from Kenya, Ethiopia or naval bases.

With more pressing concerns in its foreign policy agenda, the United States will not be much engaged in Somalia.

Precisely for this reason, the rise of the Shaabab constitutes a very important case that can reveal whether huge security and state-building operations in failed states (or even collapsed in Somalia’s case) are a sensible strategy for global counter terrorism. In case the spill-over effects and global reach of the Shaabab are confirmed, a clearer pattern will arise between state failure and the threat of international terrorism. If not, the United States and its potential allies should not even think about the possibility of setting foot in Somalia.

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