A Good Neighborly Idea
The Institutionalization of Reform
Investing in Foreign Land
Andrés Cala
Dr Rob Sobhani, author of
Valentin Zahrnt
“King Abdullah of Saudi Arabia: A Leader of Consequence”
Enter
Issue 1550, 22 March 2010
the Dragon By Daniel Freifeld
Editorial
Cover
Established in 1987 by Prince Ahmad Bin Salman Bin Abdel Aziz
Established by Hisham and Mohamad Ali Hafez
Editor-in-Chief
ADEL Al TORAIFI
Managing Director TARIK ALGAIN
Published by
Dear Readers, to The Majalla Digital, this week Daniel W elcome Freifeld’s feature article Enter The Dragon looks at the
situation where Iran’s nuclear plans and its economic dependency on oil exports have made China emerge as a key player in the region’s security. The oil-for-cooperation proposals attest to this emergence, and independently of whether or not they are accepted, these proposals mark a turning point in China’s rise over the past two decades. Freifeld posits the question now is: will China be a responsible player or will it continue to narrowly focus on its energy interests? In addition to this feature, regular contributor to The Majalla, Andres Cala, shares his thoughts on The Union of the Mediterranean, the first summit of which is scheduled for next June. We invite you to read these articles and much more on our website at Majalla.com/en. As always, we welcome and value our readers’ 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.
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Sincerely, Adel Al Toraifi Editor-in-Chief 04
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Issue 1550
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Contents 08 Geopolitics A Good Neighborly Idea
11 In Brief Around The World Quotes Of The Week Magazine Round Up Letters
18 Features Enter the Dragon
25 News Analysis House of Representatives Passes Health Care Reform Bill
28 Ideas Sanctioning Iranian Narcissism
THE MAJALLA EDITORIAL TEAM London Bureau Chief Manuel Almeida Cairo Bureau Chief Ahmed Ayoub Editors Paula Mejia Wessam Sherif Daniel Capparelli Editorial Secretary Jan Singfield Webmaster Mohamed Saleh
22 March, 2010
06
33
33 People Profile Yemen’s Little Giant
Interview
Issue 1550, 22 March 2010
The Institutionalization of Reform Submissions
41 Economics International Economics Investing in Foreign Land International Investor Fear the Boom and Bust… and Bust
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07
Geopolitics
A Good Neighborly Idea
The Union of the Mediterranean
When the first summit of The Union of the Mediterranean takes place next June, Israel’s Benjamin Netanyahu, Syria’s Bashar al-Assad, Palestine’s Mahmoud Abbas, Turkey’s Tayyip Erdogan, Greece’s George Papandreou, to name a few, will be taking a family picture together. The very fact this union exists is nothing short of miraculous, although most of the 800 million people it represents don’t even know about it.
I
magine yourself in 1945 looking into the future. Who would have bet that Germany, Italy, and Japan would eventually forge a military, economic, and social alliance with France, the U.K. and the U.S? That’s what comes to mind when I think of The Union of the Mediterranean, the heterogeneous community of 43 countries that includes Syria, Lebanon, Palestine and Israel, Turkey and Cyprus, the Balkans, and Algeria and Morocco, just to name a few hatchets waiting to be buried. I don’t mean to draw simplistic parallels. This is not 1945 and the context is completely different, from the starting point, to historic bonds, economic structures, and political systems. So how could this union— which will finally start functioning in April—conceivably be more than another useless, bureaucratic, excuse for political leaders to take fieldtrips? Europe has very little in common with its Southern, Arab or Turkish neighbors, from political systems, culture, to economic models. Indeed, the last time the Mediterranean even remotely acted in unison was during the Roman Empire, almost 2000 years ago (when by the way none of the prevalent religions today were mainstream). But that is precisely what makes this reverie a good idea. Diplomacy works only when you intertwine destinies. What allowed post-Second World War enemies to eventually work as allies was the myriad of venues they created to exchange commonalities, instead of succumbing to differences, such as the OECD, NATO, the European Union, the World Bank, and the International Energy Agency. I’m not optimistic that I will see 43 European and Mediterranean countries acting as allies any time soon. But I will put money on that many years from now the Union of Mediterranean will be remembered as a bold, visionary idea that put the ball rolling. 22 March, 2010
Turkey and Greece, and that the Arab League will be represented along with the European Union. These are by no means the only divisions that have to be overcome in the region, but they are certainly the deal-breakers.
Andrés Cala Here’s why. The very fact this union exists is nothing short of miraculous, although most of the 800 million people it represents don’t even know about it. It was conceived 15 years ago in a completely different form. Then President Nicolas Sarkozy of France came along and tried to make it his in 2008, but Germany’s Angela Merkel stopped him short and demanded that the rest of the EU be included. As could only be expected, it took an additional year and a half for its members to agree on a headquarters and top posts. But it actually happened against all odds. Diplomats finally brokered a deal to sit all apparently irreconcilable sides. It’s headquartered in Barcelona, Spain; its secretary general is Arab (Ahmad Masa’deh of Jordan); the Arab League gets full representation, and both Israel and Palestinian each get one of six deputy secretary posts. The other four will be Italy, Greece, Malta, and Turkey. The names of the six secretaries will be announced by the end of March, although some of the names have already been filtered. With the names in hand, each of the six deputies will steer one of the six common policy areas: cleaning the Mediterranean, land and sea highways, civil protection, renewable energy, university and research exchanges, and business promotion. And Libya still needs to be convinced to join. But all those so-called policies are just the excuse. The accomplishment is simply that Israelis and Palestinians will share leadership roles, along with
The first test will come in June when the first summit is scheduled. Imagine Israel’s Benjamin Netanyahu, Syria’s Bashar al-Assad, Palestine’s Mahmoud Abbas, Turkey’s Tayyip Erdogan, Greece’s George Papandreou, to name a few, taking a family picture together. Indeed, it is likely Arab countries will boycott the nascent summit if Israel continues undermining the Palestinian Authority. On top of that, France and Greece have no intention of allowing Turkey into the EU, and Algeria and Morocco refuse to settle on the Saharawi issue, not to mention the broader Arab-Israeli conflict, the Syrian and Israeli bellicose talk, ongoing Syrian intervention in Lebanon, and more. But even if this summit fails, the secretariat and its six mélange of deputies will continue to exist, however off the radar they remain. That’s how diplomacy works. In order for there to be peace, a channel needs to exist. Even if war lies ahead, there needs to be a vision. This is what is remarkable and promising about the Union of the Mediterranean. However useless the bureaucracy will be for years, enemies will share objectives and intertwine their futures. After all, it doesn’t matter how long the feud lasts or even if shouting evolves into punches. At some point, disputes are inevitably resolved. History has shown us that. And there’s nothing like a neighborhood association to catalyze an agreement.
Madrid based freelance journalist
08
Issue 1550
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In Brief Around The World
Quotes Of The Week
Magazine Round Up
Letters
Lasting truce in Yemen Yemen’s government fought six wars with the Houthis, the most recent of which having come to a halt after a cease-fire and a truce agreement between the government and the rebels. Many signs confirm that the truce will not be temporary. According to Yemen’s President Ali Abdullah Saleh, the truce will be the prelude to a final end to the war. He noted that the Houthis have cooperated with the government after the recent conflict more than ever before, releasing 175 war prisoners, clearing mines, opening roads and the handing over of administrative buildings to local authorities. Issue 1550
Analysts however, believe that the truce will not bridge the gap between the rebels and the government that has been ongoing since 2004. The Yemeni government on the other hand, believes that the armistice will continue. Meanwhile, Yemen’s Foreign Minister Abu Bakr al-Qurbi has revealed that there is a US initiative to reconcile the country’s ruling General People’s Congress with opposition parties in a gathering to be held in Beirut. He noted that the initiative was being examined by Yemen’s ruling party.
In response to the US initiative, militant Yemeni Islamic preacher Anwar Al - Awlaqi has called upon Yemenis and Muslims in general to launch Jihad against the US. Yemen’s President, meanwhile, said that the number of Americans in Yemen did not exceed 40 personnel conducting training operations. Yemen, however, is not facing the Houthis alone. There are also the separatists in south of the country, which has led the Yemeni President to emphasize that he only supports dialogue with Yemeni parties that do not endanger the country’s unity. 11
In Brief - Around The World
Around The World
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3 Afghanistan 1 Palestine The UN chief has said Israel's blockade of Gaza is causing "unacceptable suffering," during a Middle East visit to reinvigorate the peace process. Ban Ki-moon told Gazans that "we stand with you" as he visited an area damaged by Israel's offensive 14 months ago. His visit to the region comes amid tension over Israel's plans to build more settlements in East Jerusalem.
2 Germany German Chancellor Angela Merkel said that Greece does not need any financial support and European Union leaders should not make the question of aid for the indebted country a focus of their summit this week in Brussels, In an interview with Deutschlandfunk radio, Merkel said she feared causing turbulence in financial markets by raising "false expectations" about aid. She reiterated Greece has to sort out its own debt problems for the good of the euro single currency. 22 March, 2010
Afghan officials say a suicide bomber has killed ten people and wounded seven in Helmand province in southern Afghanistan. Local authorities say the bomber may have been targeting an army vehicle, but set off his explosives in an area where civlians were attending Nowruz gatherings to celebrate the new year. Separately, two people were killed and at least two other were injured in an explosion in Khost province in southeastern Afghanistan.
4 USA U.S. President Barack Obama has told the Iranian people the United States is committed to a more hopeful future for them, despite differences with their government. Mr. Obama directly addressed Iranians in an Internet video message to mark the Persian New Year, or Nowruz. President Obama said the United States would like to increase opportunities for educational exchanges and help ensure uncensored Internet access in Iran.
5 Israel Israeli Prime Minister Benjamin Netanyahu said he would not restrict construction in east Jerusalem, a step requested by the U.S., but would upgrade upcoming indirect talks with the Palestinians to include the main issues dividing them. Netanyahu originally had wanted to put off a discussion of issues like the status of contested east Jerusalem, final borders and the fate of Palestinian refugees until direct talks are launched. 12
In Brief - Around The World
8 Iceland A volcano erupted beneath a glacier in south Iceland, forcing the evacuation of hundreds of people. It was the first time since 1821 -- almost 200 years ago -- that the volcano under the Eyjafjallajokull glacier has erupted. The country's civil protection agency did not immediately record any injuries or damage. But the heat from the volcano could melt the glacier and cause floods in the surrounding area.
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9 Somalia
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A senior commander of the Somali Islamist group, al-Shabab, has been shot dead at close range as he left a mosque in the city of Kismayo. Unidentified gunmen shot Sheikh Daud Ali Hasan several times, inside an area of Somalia held by his own forces. Sheikh Hasan was in charge of front-line operations in the town of Dhobley, near the Kenyan border.
7 China 6 Vatican Pope Benedict apologized to victims of child sex abuse by clergy in Ireland and ordered an official inquiry there to try to stem a scandal gripping the Catholic Church which has swept across Europe. The pope's pronouncement on abuse at Irish dioceses and seminaries was the most concrete step taken since a wave of cases hit Ireland, Germany, Austria and the Netherlands. Issue 1550
China's commerce minister warned the United States against imposing trade sanctions over Beijing's currency controls, and said his country was likely to report a trade deficit in March. Washington and other trading partners are pressing China to ease controls that have kept its yuan currency steady against the dollar for 18 months to help its companies compete amid weak global demand. Some U.S. lawmakers have demanded to have China declared a currency manipulator in a U.S. Treasury Department report due out next month, which could precede possible trade sanctions.
10 Iraq Iyad Allawi, the narrow leader in the race to become Iraq's next prime minister says poll results are taking too long to declare. Allawi, who headed the country from 2004 to 2005, told the BBC full results from the 7 March election should have been released days ago. Mr Allawi has a slim lead over current Prime Minister Nouri Maliki. With more than 90% of the votes counted, Mr Allawi's Iraqiya political bloc is ahead by nearly 8,000 votes. 13
Magazine Round Up
In Brief - Quotes Of The Week
Quotes Of The Week
"The US wants brighter future for you "
President Barack Obama addressing Iranians in an online video message
Magazine Round Up
"Israel won't change its policies" Prime Minister Binyamin Netanyahu
"The most important thing is to forget the past and open a new page" Walid Jumblatt, leader of Lebanon's Druse sect, addressing Syria's Al-Watan Newspaper on SyrianLebanese relations.
“We will make it, provided that our country can borrow on reasonable terms” Prime Minister George Papandreou of Greece, addressing his cabinet on s eeking financial aid. 22 March, 2010
1 1 Newsweek Slow-motion Merkel With cracks starting to show within the EU’s economic and political stability, Brussels is looking for someone to take the helm. Their prime candidate is Germany’s Chancellor Angela Merkel. But Merkel seems hesitant to take up the offer, more concerned with domestic policy than getting involved in the EU’s mess, especially when it comes to providing financial aid to Greece. Yet Germany has invested interests in EU stability, its own economy significantly bolstered since the introduction of the euro currency. It is time for Germany to get out of the back seat and pull some weight in the EU as Europe’s most prosperous nation.
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2 Foreign Affairs After Iran gets the bomb
2
The authors argue that Iranian nuclear capability could have a domino effect throughout the region as nations scramble to defend themselves. There would be a political backlash against America for not having taken a stronger stance against Iranian leadership. But this is pure speculation, none of these consequences are set in stone and America still holds the political and economic clout to dissuade Tehran from going nuclear.
3 New Statesman Falklands II Islas Malvinas or the Falklands? These sparsely populated, often sub-zero islands off the coast of Argentina are again the centre of a row between British and Argentine interests. This time it’s about oil. Britain is busy developing oil rigs off the Falklands coast while current Argentine President Kirchner is preparing for some international arm twisting. There will be no oil coming out of the ground under Britain and Argentina finally find a solution to this outdated dispute.
3
Cover of the week Cover Of The Week
Time 10 Ideas for the Next 10 years In a quirky list of predictions Time looks at America’s potential evolution in the coming decade. Proclaiming a message of hope to drown out defeatist voices lamenting US decline, the article forecasts a distinctly ‘American century’. The ideas explore American appetite for bandwidth exceeding supply, immigration, the younger generation following an alternative career path to their predecessors and a more grassroots approach to well-established institutions. Concerning the wider world, predictions promote the power of television to transform the lives of those in the developing world. One author suggests the need to re-draw national boundaries by developing transportation networks across borders as a solution to ending conflict in many of the world’s warring regions. But just when you think you’ve mapped out the world for the next ten years, prediction number 10 vetoes all the previous premonitions by stating that this decade will be a stagnant one, marked by no change whatsoever. This one will certainly get you thinking.
Issue 1550
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In Brief - Letters
Letters
LAST ISSUE
Everything But A Game Child poverty in Egypt is far deeper; urbanization in addition to the general economic dismay both contribute to the current situation. The rural housings that are built illegally are by far the biggest threat to children.
Hatem el Harairy
22 March, 2010
Dr. Ahmadinejad: How I stopped Worrying And Learned to Love The Bomb Ahmadinejad is taking his international policies a step too far, blatant defiance to the international community is giving the world an impression that he is more of an eccentric person rather than a supposed state leader and politician. Mathew Wilkinson
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In Brief - Magazine Round Up
Issue 1550
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Features
Š getty images
22 March, 2010
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Enter
the Dragon By Daniel Freifeld Issue 1550
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Features
Enter The Dragon
Gulf Security and Chinese-Iranian Petrodiplomacy Daniel Freifeld
Recent proposals to guarantee oil supplies to China in exchange for its cooperation in confronting Iran’s suspected nuclear weapons program betray the emergence of China as a central issue in Gulf Security. Regardless of whether these proposals are adopted, they mark a turning point in China’s rise. The question now is: will Beijing become a constructive player in Gulf security or will it only pursue its narrow energy interests?
US Secretary of State W hen Hillary Clinton traveled
to the Persian Gulf in February, high on her list of priorities was gaining support for a new round of sanctions against Iran’s nuclear program, which Washington and others suspect is geared towards weapon development. Clinton focused much of her attention on the Iranian Revolutionary Guard Corps, the paramilitary organization with extensive political, military, and economic power in Iran and the region. Warning that that Guard’s rising influence was moving Iran “towards a 22 March, 2010
military dictatorship,” Clinton called for expanded sanctions against individuals, banks, and companies doing business with the Iran. Less noticed was a subtle message she delivered to an audience sitting more than 6,500 kilometers away in China. In more than four hours of private talks at King Abdullah’s desert camp outside of Riyadh, Clinton is reported to have nudged Saudi Arabia to use its growing influence with China to help persuade it to back new sanctions against Iran. Key to that message would be
assurances that Saudi Arabia would make up for lost oil supplies if China were to see a disruption in the more than 500 thousand barrels a day it receives from Iran. This effort to pry China out of its burgeoning relationship with Iran comes on the heels of similar offers made by the United Arab Emirates and Kuwait. The oil-for-cooperation proposals revealed not only the centrality of energy to China’s foreign policy, but the degree to which China has emerged as a key issue in the region. 20
Features Regardless of whether the oilsupply guarantees are accepted, these proposals signify a turning point in China’s steady rise over the past two decades. China is now a player in Gulf security. The question is: will China be a responsible player or will it continue to narrowly focus on its energy interests? An Old Relationship with New Dimensions China is of course not new to the Gulf. Long predating oil’s emergence as a geopolitical issue, China and the region have enjoyed a long trading relationship. As far back as 3,000 years, merchants, missionaries, and pilgrims traversed the ancient Silk Road routes between the Gulf and China. Over the centuries, deep commercial, cultural, and technological linkages were formed as goods were traded and knowledge and ideas were spread. Almost 1,500 years ago, the Chinese Eastern Han Dynasty established maritime linkages with the region and the Persian Sassanid Empire (which ruled much of what we refer to today as the Middle East and South Asia). The Sassanids exported carpets and other goods to China and even stationed a permanent trade mission there. Trade between these two regions is no less important today. In 2008, trade between China and Gulf Cooperation Council (GCC) countries and Iran stood at over $100 billion, growing at an extraordinary average of 20% per annum over the past few years. While Chinese exports to the Gulf—ranging from chemicals and plastics to textiles Issue 1550
and electronics to aviation and military equipment—have not been negligible, the mainstay of trade between the two regions has been energy exports from the Gulf, particularly oil. Three of China’s top suppliers—Saudi Arabia, Iran, and Oman—are located in the Gulf. In 2009, nearly half of Chinese oil imports came from the Gulf, with more than one-third coming from Saudi Arabia and Iran alone.
Beijing’s deepening energy relationship with Iran is driven in large part by skyrocketing demand at home This growing relationship has not gone unnoticed. King Abdullah chose China as his first state visit after assuming the throne. Chinese President Hu Jintao has since reciprocated with two visits to Saudi Arabia, most recently in February of last year. In fact, Clinton’s trip was preceded by a visit from Chinese Foreign Minister Yang Jiechi in January. In addition to frequent Chinese visits to the region, the United Arab Emirates, Kuwait, Oman, Bahrain, Qatar, and Iraq have all sent high-level delegations to Beijing. Trade and investment between Iran and China, in particular, has grown at a breathtaking pace over the past few years. In 2009, investment between the two countries reached an estimated $36.5 billion, up 35% from 2008 levels.
But no part of that relationship is as strategically significant as the energy-sector. According to the US Energy Information Administration, Iranian oil exports to China shot up from 425,000 barrels per day in 2008 to 544,000 in 2009, an increase of nearly 30%. Imports from Saudi Arabia, although still larger in volume, rose by only 2% over the same period, indicating that Iran is fast gaining ground. And no other Gulf country has received more Chinese energy-related investment than Iran—Chinese companies are estimated to have committed close to $120 billion to Iranian gas and oil projects, although many of these deals will take years to work out. A Relationship Anchored in Self-Interest? Beijing’s deepening energy relationship with Iran is driven in large part by skyrocketing demand at home. According to Platts, a leading source of energy market reporting, Chinese oil demand grew by an astonishing 6.6% from 2008 to 2009. In fact, China’s oil imports hit a historic high in December 2009, as it imported more than 5 million barrels per day. With demand expected to double by 2030, China desperately must find sufficient sources of oil to keep its economy going. For Beijing, this is very much viewed as a national security issue. If it cannot sustain annual economic growth rates of 7-8%, the government fears its inability to address income inequality, poverty, and emerging social issues will be met with popular upheaval. 21
Features To satisfy this steep increase in demand, China has engaged in a worldwide shopping spree, drawing from its estimated $2 trillion in currency reserves to buy oil and gas supplies from around the world, often trading loans or infrastructure projects in return for guaranteed energy shipments. For example, since last summer, China has concluded a $25 billion loan to cash strapped Russia in return for 300,000 barrels of oil a day over the next two decades, a $10 billion loan to Brazil in return for 200,000 barrels of oil a day over the next 10 years, and a large joint-venture in Venezuela’s Orinoco Oil Belt. Since 1992, China has in fact made an astounding 208 oil investments overseas, 40 of which were in the Middle East. All Eyes on the Gulf The Persian Gulf is a particularly attractive source of energy for China. Not only are the shipping distances back home shorter than Latin America and Africa, much of the world’s remaining reserves of oil and gas are in the Gulf: over half of the world’s remaining conventional oil lies in only five Persian Gulf countries—with Saudi Arabia, Iraq, and Iran alone holding 43% of all remaining supplies. The natural gas picture is not very different. Three of the top-five reserve holders are in the Gulf, with Iran and Qatar holding the world’s second and third largest reserves, respectively. The energy reserves in the Middle East are also not as 22 March, 2010
technically challenging as some other parts of the world. Chinese national oil companies do not yet possess the advanced technology required to unlock reserves in the Arctic Ocean or offshore stakes in West Africa. Iran offers China both an opportunity to gain valuable experience, and, because many international oil companies have either boycotted or been sanctioned out of investing there, a less competitive environment.
The Persian Gulf is a particularly attractive source of energy for China In Whose Interest? Tehran also views its mushrooming relationship with China in strategic terms and is eager to see China invest in its decaying petroleum sector. Years of sanctions, Iran’s confusing and unstable business climate, and a failure to reinvest profits back into the industry have resulted in steadily falling production levels. While Iran may be exporting more oil to China each year, it is actually producing less of it, potentially 10-12% less per year. The domestic refinery sector has not fared well either. Iran, after failing to expand refinery capacity when state revenues
were soaring on the back of rising prices leading up to 2008, is forced to rely on imports to meet 40% of domestic demand. This dependency is quite costly on the Iranian treasury, as the state must absorb the difference between the market price it pays for the gasoline and the heavily subsidized rate it charges consumers. Even the reliability of these imports is tenuous, now that the U.S. has stepped up a campaign to sanction gasoline suppliers. In recent months, Royal Dutch Shell, Kuwait’s IPG, and Switzerland’s Glencore halted shipments to Iran, privately citing that it was not worth jeopardizing their US business interests. Only five companies continue to sell to Iran, among them Malaysia’s Petronas and Russia’s Lukoil. Keen to find an international partner willing to invest in its petroleum sector, Iran looks to China. Iranian officials have made no secret of this desire. “We would like to give preference to exports to China,” declared former Iranian Oil Minister Bijan Zanganeh in 2004. Ali Akbar Salehi, Iran’s former representative to the International Atomic Energy Agency, speaking about China, supported this view: “We mutually complement each other. They have industry and we have energy resources.” But in Tehran’s eyes, the strategic value of the relationship goes far beyond the mutually beneficial 22
Features development of energy, and perhaps even beyond that which China contemplates. If Iran can make itself attractive enough as an energy source for China, which wields a UN Security Council veto, it will have recruited a powerful supporter in the confrontation over its nuclear program with the US and many of its neighbors in the Gulf. If China became so heavily dependent on Iran’s petroleum sector, the thinking goes, it would be reluctant to jeopardize supplies with new sanctions, even if Iran should construct a nuclear weapon. Iranian President Mahmoud Ahmadinejad betrayed Tehran’s desire to rope China into its geopolitical battles: “The common enemies of the two nations are against [the] progress and development of both Tehran and Beijing.” Friend or Freeloader? Others are starting to take Beijing and Tehran’s deepening relationship seriously. Not only do the United States and many in Europe now view China’s involvement in the Iranian energy sector as an impediment to resolving the nuclear issue, officials in the United States have gone so far as to offer evidence that Chinese companies have been evading the UN ban on selling dual-use military technology and materials to Iran. The UAE has also come forward to report that it had intercepted two shipments from China bound for Iran containing aluminum and titanium sheets, Issue 1550
which can be used in missile production.
Others are starting to take Beijing and Tehran’s deepening relationship seriously And by linking China’s energy interests in Iran with progress on the nuclear program, Secretary Clinton is attempting to put the onus on Beijing to make the next move in the Gulf. Will it recognize, as she said, “the destabilizing impact that a nuclear-armed Iran would have in the Gulf, from which they receive a significant percentage of their oil” or will it continue to myopically chase after Iran’s energy riches without abandon? If it chooses the latter, it will ironically have the effect of jeopardizing its own energy security. An Iranian nuclear weapon would undoubtedly increase tensions in the Gulf as other countries move to counterbalance Iran’s newly acquired weapons capability. This would directly affect China, as roughly half of China’s imports—and 40% of the world’s seaborne traded oil—pass right through the Strait of Hormuz daily. Wedged between Iran and Oman and only 34 kilometers wide at its narrowest point, shipments
from the oil producing regions of Saudi Arabia, Iran, and the United Arab Emirates, along with major producers Kuwait and Iraq, must pass through this maritime chokepoint. Iran has already threatened to shut down the strait in response to an attack on its territory, which unfortunately becomes more likely as tensions rise over its clandestine nuclear program. With Power Responsibility
Comes
While it is clear that China has arrived as a player in the Gulf, it is not clear how Beijing will see its responsibility to contribute to Gulf security. Will Beijing choose to trust that its GCC partners will ensure that its oil demand is met or will it embrace Iran, a partner that appears to have aspirations for a relationship far beyond what Beijing has in mind? The GCC should also use this as an opportunity to evaluate its relationship with China. If Beijing accepts the supply assurances, it will signal that China is serious about becoming a partner in Gulf security. If it chooses to plow ahead with its narrow interests in Iran— even if doing so ultimately compromises its own energy security—the GCC should consider whether China is little more than a mercantilist fixated on the region’s oil. Daniel Freifeld - director of international programs at New York University’s Center on Law and Security. 23
22 March, 2010
News Analysis House of Representatives Passes Health Care Reform Bill
Issue 1550
25
News Analysis
House of Representatives Passes Health Care Reform Bill Democrats win the health care round Wessam Sherif
T
he American health care reform chronicles have finally come to the concluding chapter with the passing of an astounding $940 billion health care reform bill. The new bill should stretch health insurance to reach 32 million uninsured Americans and allow people with preexisting medical conditions to be covered by insurance companies. Moreover, the bill is expected to cut federal deficit by $138 billion over the next ten years. The bill stands as the biggest social legislation passed since the 1960's that marked the Great Society Programs. The final count of the votes has shown that the bill received 219 approval votes, none of which republican, while 212 representatives voted against the reform agenda. The passing of the bill however was not always guaranteed. A number of conservative democrats have expressed their fear that the bill would allow the holding of abortions, only to be reassured 22 March, 2010
by Obama who promised issuing an executive order "to ensure that federal funds are not used for abortion services". Much light has been shed on the health care reform issue during Obama's first year of presidency resulting in a heated debate between Democrats and Republicans. On one hand the Democrats view the reform initiative as more than just a civil right but a moral issue, bearing in mind that the concept of health care reform has been very elusive to many presidents preceding Obama. On the other hand, the Republicans view the bill as an intrusion by the federal government into health care which would slash Medicare and increase taxes by an estimated $1trillion. Republican Congressman David Dreier, who was against the Democrats' policies, said "the greatest outrage has always been for the bill itself". Despite critique, Medicare cuts should force hospitals to work more efficiently in
order to stay in business, in addition, the bill takes credit for the penalties it should impose on businesses that don't provide coverage to their workers. The senate, having signed a similar health care bill last December, shall sign off a package of House-approved changes to its December bill which needs a simple majority to pass. Consequently, Obama is expected to sign off the final bill early on this week. Obama, having come to office with the prospect of change, has expressed pride in what democrats consider as an overdue achievement, "this is what change looks like, we proved that this government, a government of the people and by the people, still works for the people." The bill is considered by many optimists a step in the right direction. Nevertheless, skepticism still looms about its implementation and its in-house political consequences. 26
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Ideas
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Sanctioning
Iranian
Narcissism
By Gregorio Bettiza
Issue 1550
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Ideas
Sanctioning Iranian Narcissism Or Why Iran is Not A Rogue State Gregorio Bettiza Iran is not a rogue state. It is concerned, more than one gives it credit, with its position in the international community, and by how it is perceived by great powers. This is one of the fundamental motivations behind its nuclear program, and as such an important one to take into consideration when debating the possible efficiency of sanctions against Iran. As such, a fourth round of sanctions against Iran is likely o succeed if they are able to target this nerve.
Members of the United Nations Security Council vote to slap UN sanctions on Iran
to conventional C ontrary wisdom, Iran is not a rogue
state. It cares deeply about its standing in the world and daily seeks to legitimize its government in the eyes of the international community. In many ways, Iran is more like Soviet Russia or Maoist China than it is a pariah state, such as Communist North Korea, militarized Burma or post-1991 Iraq. Indeed its nuclear program is driven not 22 March, 2010
solely by calculations of security or regime survival, but is in great part motivated by the desire to achieve international status and prestige. This is worth keeping in mind, as the world debates how to go about solving the nuclear impasse. In fact, if a fourth round of sanctions is slapped on Iran in the coming months, these are likely to succeed only if they touch on this sensitive
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nerve. While Teheran’s desire for international recognition seems to be one of the driving forces behind its intention to go nuclear, it may also be its weakest spot. The argument that Iran is not a pariah state may appear counterintuitive, yet much in Iran’s behavior on the nuclear issue suggests that it does care about what other countries think of it. Three issues particularly stand out. 30
Ideas First, Iran constantly seeks to legitimize its nuclear program within the Non Proliferation Treaty (NPT) framework, rather than rejecting the treaty altogether—as other countries have done in the past. India, Pakistan and Israel are all non-signatories to the treaty and have gone nuclear. North Korea pulled out of the NPT in 2003 when it decided to press ahead with nuclearization. Iran could do the same. Yet, whether sincerely or not, Teheran continues to claim that its nuclear program is for legitimate peaceful means and hence within the legal boundaries of the NPT. While the cynic may argue that this buys Teheran time, it also appears to buy Iranians the international support which they desperately crave for. Secretary of State Hillary Clinton recently visited Brazil, which currently holds a non-permanent seat in the UN Security Council (UNSC), seeking to build consensus for sanctions against Iran. Her efforts were rebuffed by President Lula who argued Brazil would back Iran’s nuclear program, particularly as long as it remained for peaceful purposes.
it has also invested time and resources in Nigeria and Uganda, for example, both of which are current UNSC nonpermanent members. In his visit to Latin America last November 2009, Ahmadinejad reinforced ties with Bolivia, Nicaragua and Venezuela by exploiting the fertile ground of anti-American sentiment. His visit to Brazil, in the same period, seems to be yielding the desired diplomatic fruits at the moment. Teheran has also lured in China in the past years by giving it access to considerable oil resources. According to CNN figures, China relies on Iran for 15% of its oil imports. No wonder Beijing has become the most reluctant UNSC member to slap sanctions on Teheran. Iranian leaders are regularly seen at the most important international summits. Its Foreign Minister, Manouchehr Mottaki, recently mingled with the rest of the globalized elite in Davos during the World Economic Forum this January 2010. So did Ahmadinejad gleefully accept to give a talk at Columbia University in New York when invited in 2007.
Second, unlike rogue regimes, Teheran deeply fears international isolation. In fact, through strategic diplomatic moves, Iran frantically searches for allies not only within the region, but world-wide. Ahmadinejad has been particularly active in visiting African and Latin American countries with the dual intention of opening up alternative economic channels (which can shield Iran from Western unilateral sanctions) while also gathering diplomatic support for its nuclear ambitions.
Third, when concrete and sustained multilateral pressure is enforced— through sanctions and UN resolutions—Iran has shown that it is willing to enter into agreements that limit its capacity to proliferate. Under growing international pressure last October, Teheran agreed to ship parts of its known uranium stockpile to Russia for conversion into peaceful nuclear fuel. Similarly, Teheran has, on multiple occasions, been sensitive to the International Atomic Energy Agency’s (IAEA) calls for inspections. In 2003 Iran appears to have also halted its nuclear program for an uncertain period of time.
In the last year, according to The Economist, Iran conducted at least 20 ministerial or higher level visits to Africa. While it has sought to strengthen economic and diplomatic ties with predominantly Muslim countries such as Sudan and Senegal,
A 2007 U.S. National Intelligence Estimate report—a document representing the consensus view of all 16 American intelligence agencies—argued that Iran had suspended its enrichment program at the time “primarily in response
Issue 1550
to increasing international scrutiny and pressure.” A key conclusion of the report was that, rather than being a rogue and irrational actor, “Tehran’s decisions are guided by a cost-benefit approach rather than a rush to a weapon irrespective of the political, economic, and military costs.” Washington DC, Beijing, Tel Aviv, Moscow and Teheran itself, all know that the military option is unpalatable and without any guarantees of success. This does not mean that the international community should accept a nuclear Iran at the heart of one of the most volatile regions in the world. A possible alternative seems to emerge when looking closely at Iranian behavior throughout the years. Teheran’s reluctance in pulling out from the NPT, its relentless effort at reaching out to countries across the world, and its susceptibility to changing course when under intense international pressure, are revealing of Iran’s desperate fear of diplomatic isolation. Unilateral Western sanctions, no matter how targeted they are, will not have enough muscle to pressure Iran, which could ultimately survive so long as its economic and diplomatic ties to the East and the South are intact. A fourth round of sanctions may have a better chance of succeeding if they are able to cement a great-power anti-proliferation coalition among the U.S., EU, China and Russia that places genuine multilateral political and economic pressure on Teheran. It would send the message that nuclear technology would give Iran no privileged status among the international community, but lead down the path of further isolation and harsher punishments. A costly price Iranians may not be willing to pay.
London-based researcher.
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22 March, 2010
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People
Yemen’s Little Giant
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People - Profile
Yemen’s Little Giant Nujood Ali Nujood Ali is a published author, a divorcee, and only ten years old. The story of her life, her marriage and her divorce, provide great insight into the development challenges that Yemen faces. More importantly, her story attests to the negative impact that the continued oppression of women’s rights have on the prospects for stability in Yemen.
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overage of Yemen tends to focus on the country’s ongoing conflicts—from the separatist movement in the South, to the civil war in the North. Good news is difficult to find in a country ravaged by war, yet one woman in Yemen, a little girl rather, has made international headlines for her bravery. Nujood Ali, recently became Yemen’s first child bride to legally divorce her husband. Nujood’s courageous actions have not only allowed her to save herself, they have set the precedent for other child brides to defend their rights in Yemen. At 10 years old, Nujood has also written an international best seller. I am Nujood age 10 and Divorced has been published in 18 languages, including her native Arabic, and its international 22 March, 2010
success has allowed her to become her family’s main breadwinner. Nujood’s accomplishments, needless to say, are great. Hilary Clinton even described her as “one of the greatest women she had ever seen.” Yet, Nujood’s story is about more than just one child bride and her accomplishments. Rather, her story provides great insight into the practices that shape Yemen and hinder its development. The problem of child brides and the repression of women more broadly is more than a cultural difference that Yemen has with say Western countries. It is a problem of its underdevelopment, and a problem that is largely responsible for the many types of insecurity that Yemeni’s have grown accustomed to.
Although, Nujood’s story has a happy ending, her childhood is a sad reminder of the harsh reality that many girls in Yemen live to this day. Nujood is remarkable for having given a rampant problem in the country a voice, but she is also remarkable for how commonplace her situation as a child bride is, and that is why her life story is worth recounting. The nightmare for most girls in Yemen begins in very much the same way as it did for Nujood. When she turned nine, her family told her that she would marry a deliveryman in his 30’s. She had previously made her father promise her that he would not force her to marry and drop out of school for she was especially interested in Math and the Koran. Although Nujood was at first impressed by the gifts she 34
People - Profile received for the marriage—dresses, a perfume, two hijabs, a hair brush and a ring—she was very unhappy at the idea of marrying and leaving school. But the arranged marriage took place, despite her incessant pleading. Nujood’s father had agreed with her husband that although the marriage would take place, he was not to touch her until she was “ready”, as the vague Yemeni legal system stipulates with regards to child brides. However, as in most other cases, Nujood’s former husband did not comply with these demands, raping her daily and beating her when she tried to escape him. The extent of Nujood’s fear and unhappiness grew unbearable, and two months after her wedding Nujood ran away to Yemen’s capital, Sanaa. On her own, the little girl took a bus and a taxi to the main court of the city where she remained until a judge granted her a divorce. Although the judge did grant her the divorce, Nujood was ordered to pay her former husband $200 USD, an incredible amount in Yemen where the majority of the population lives under the poverty line. In fact, poverty stands to explain much in Nujood’s story, although it excuses none of the injustice women like her suffer regularly. At first glance, it is easy to take Nujood’s story and categorize her male relatives, her husband and her father particularly, as first rate antagonists. But the problem of gender inequality in Yemen, and the exploitation of young girls like Nujood, is more complex and more expansive than the two men that defined this story might lead one to believe. Nujood’s father, Ali Mohammed Ahdal, is a former street sweeper. He has 16 children, two wives and is unemployed. Ahdal found marrying his 9 year old solved two of his problems: insecurity and poverty. Ahdal had immigrated to Sanaa with his family to look for work but instead found himself poorer than before. Unable to provide for his family, the prospect of a dowry and of one less mouth to feed made marrying his daughter a Issue 1550
partial solution to this problem in his eyes. Perhaps what convinced him was that one of Nujood’s sisters had already been kidnapped and another raped. Marrying Nujood, might save her from being dishonored, kidnapped and raped like the other girls.
The nightmare for most girls in Yemen begins in very much the same way as it did for Nujood. When she turned nine, her family told her that she would marry a deliveryman in his 30’s In these conditions, some Yemenis might interpret child marriage as a solution to the types of insecurities they regularly face. But as Nujood showed the world, the insecurity that girls face as a result of early marriage only continue to grow. More strikingly, because her story has a happy ending, it does not show how negatively these practices affect this underdeveloped and conflicted country if children stay married. As Nicholas Kristof of The New York Times explains, “it is no coincidence that Yemen abounds both in child brides and in terrorists. Societies that repress women tend to be prone to violence.” Although it might appear as an all-encompassing explanation for a complex problem, various human rights NGOs and international organizations support his view. The reason countries with child brides can be unstable, they argue, is because these conditions result in unusually high birth rates, which cause a youth
bulge in the population. The high proportion of young men aged 15-24 increases the likelihood of violence. This tendency increases even further in countries like Yemen where there are very few economic opportunities. In fact, 70 percent of men in this age group in Yemen are unemployed. To make matters worse, because polygamy and child marriage are practiced in Yemen, and these two factors correlate with a higher death rate in women, more men are likely to be single than married. This is another factor that has proved to increase the tendency of men to participate in conflict, as “frustrated bachelors” are more easily recruited by extremists. (In fact, Saudi Arabia’s counterterrorist strategy supports this view, as many of their demobilized combatants are encouraged to start families to prevent them from rejoining militant groups). Rachel Cooke of the guardian wrote that Yemen is the worst place in the world to be a woman. Citing the the Human Development Index, she shows that 71 percent of Women in Yemen are illiterate, as opposed to 31 percent of men, and 35 percent of women in most other Middle Eastern countries. Women in Yemen also have a 1 in 39 chance of dying in pregnancy or childbirth throughout their lifetime. Because the law in Yemen does not have a minimum marrying age, there is also larger proportion of younger girls who are especially vulnerable to maternal mortality and health complications. As Nujood’s lawyer, said “Yemeni women have few rights, and they don’t know those they do have.” Although calls to raise the legal age of consent in Yemen to 18 have failed, Nujood has inspired other young girls to seek divorce. Women like Nujood and her lawyer, Nasser, have undertaken a gargantuan task, and they are successfully opening doors for gender equality in Yemen as a result. Their case is raising awareness of the problems that child marriage and the oppression of women lead to, not only for women but for Yemen’s future as a whole. 35
People - Interview
The Institutionalization of Reform Dr Rob Sobhani, author of “King Abdullah of Saudi Arabia: A Leader of Consequence” In this interview with The Majalla, Dr Rob Sobhani talks about his recently launched book “King Abdullah of Saudi Arabia: A Leader of Consequence”. Sobhani explains the reason why he decided to embark on this project, and why he thinks this is a crucial book for the Western audience to better understand King Abdullah and his country Saudi Arabia.
Rob Sobhani is a business Drconsultant who specializes in
corporate and government relations, and is the President and founder of Caspian Energy Consulting, a firm that deals with projects in the Middle East. Dr Sobhani is also an academic, and was Adjunct Professor at Georgetown University, Washington DC. Dr Sobhani spoke with The Majalla about his recently launched book “King Abdullah of Saudi Arabia: A Leader of Consequence”. Sobhani explains the reason why he decided to embark on this project, and why he thinks this is a crucial book for the Western audience to better understand King Abdullah 22 March, 2010
and his country Saudi Arabia. He spoke about several of the crucial issues that concern Saudi Arabia today—education reform, Saudi nationalism, Iran’s nuclear projects, China’s presence in the Gulf, and Saudi-US relations in the post-Bush era. The Majalla: Why a book about King Abdullah? Because I believe, number one, that the American public needs to know who the ruler of Saudi Arabia is, because the ruler of Saudi Arabia today is a leader of consequence, much the same as the President of the United States, the President
of Russia, and the President of China. King Abdullah is equal to all these leaders because what King Abdullah does matters to the people of Saudi Arabia, but it also matters to the region, and it also matters to the world. So I wrote this book because I wanted the American public, but also people in the Western world beyond the American public, to know there is a man called King Abdullah, and if the world wants to solve its problems, it has to work with King Abdullah. Q: Do you believe your book can help to confront some 36
People - Interview misconceptions in the US about Saudi Arabia? I believe in my heart that the American people who are also very generous, and very kind people, if they get this book, if every American receives a copy of this book, it will change their heart, it will change their mind, it will have a significant impact on the way Americans see Saudi Arabia, because they will see the ambassador which is King Abdullah, they will see the representative of Saudi Arabia who is an honest man, they will see Saudi Arabia through the lens of a religious person, of a person that is fighting extremism, of a person who is a peacemaker. This is what the American people will see. So I am convinced, with all my heart, if every American has a copy of this book, it will change their heart, it will change their mind. Q: How deeply was the US-Saudi relationship affected during the Bush era? The Bush era obviously was a very tense era. The Bush era was an era where we had the war in Afghanistan, we had the war in Iraq, and we had a war against extremists, and I think this created much misunderstanding, it created a lot of tension, and I believe some of these tensions may still exist. But, in the end, we are responsible, as children of God, to solve problems and King Abdullah, as the custodian of the two holy mosques, and the president of the United States, whether its Clinton, Bush, or Obama, have an obligation to honestly solve problems. And therefore, if we look at it from the perspective where we have a leader like King Abdullah, who will honestly shake your hand and honestly solve a problem, then this is a once in a life time opportunity for America to address some of
the key issues in the Middle East, and also some of the broader issues like climate change, like global warming, or homelessness overseas.
of wisdom, going back to the age of construction, going back to the age of a Jihad to build and not a Jihad to destroy, and I think this is what King Abdullah wants to achieve to Saudi Arabia.
King Abdullah wants to move Saudi Arabia forward with dialogue, with dignity, with the basics of Islam, true Islam
Q: You use the following quote “Saudi Arabia is probably the only country in the world where the government is pushing for reforms and the people are pulling back”. How has King Abdullah dealt with this?
Q: Traditionally, the idea of Saudi nationalism has been greatly absent. Why is King Abdullah trying to alter this tendency? Because I believe that the narrative of Saudi Arabia has always been tied to Islam, which is true, which is the fundamental foundation, but I believe in the West, as the narrative has shifted from a more traditional point of view, to a more patriotic— instead of religious—a more patriotic theme, it has changed the image of Saudi Arabia, and I believe that it is absolutely correct that King Abdullah is emphasizing the patriotism, the nationalism, of Saudi because, first and foremost, we are all the children of God, Saudis as children of God, Americans are children of God, but then we live within borders, and within the borders of Saudi Arabia live the people of Saudi Arabia. And I think King Abdullah, because he loves the Saudi people so much, because he loves the history of Arab culture, because he loves the history that was at one point the envy of the West, that he sees Arab nationalism as going back to the age
King Abdullah is facing tremendous obstacles, but he also has the people of Saudi Arabia with him. When I was in Riyadh, and the announcement that Noura AlFayez was the Deputy Minister of Education, the joy in the eyes of the women I saw was, for me, unbelievable. And this is only because of King Abdullah. So we have narrow-minded people, not just in Saudi Arabia but in the United States, in the Middle East, everywhere in the world we have narrow minded people, and narrow minded people sometimes they use guns, sometimes they use violence. King Abdullah wants to move Saudi Arabia forward with dialogue, with dignity, with the basics of Islam, true Islam, and that is why he is being opposed by these narrow minded people, because King Abdullah is using the true Islam, the Islam of the prophet, to move Saudi Arabia forward, but his opponents are miss-using and keeping Islam as a hostage, because they do not want to give up power, because for them it is important to keep all their power, and King Abdullah is trying to change that. Q: There is a deep conservative line amongst Saudi clergy. Do you think they can pose an obstacle towards the reforms King Abdullah wants to implement? 37
People - Interview you still have people who will find the next cure for cancer, the solution for a solar energy world, the solution to address key issues that many other countries don’t. The fact that King Abdullah has the vision to send Saudi students to America, to learn from what America has to offer, the good things that America has to offer, and take it back to Saudi Arabia so that they can build Saudi Arabia shows the long-term vision of Saudi Arabia. But I would also like to point out that these students will also be the ambassadors, they will also be each one of them, the bridge between my country and Saudi Arabia. Saudi King Abdullah bin Abdul Aziz
They will try, the conservative element will always try, the conservative element in Saudi Arabia, the conservative element in Iran, the conservative element in the United States, they will always try to stop progress, they will always try to stop modernity. But I go back to my earlier point—King Abdullah’s vision of Arab modernity and Arab nationalism, where the past of Islam and the Arab world is a glorious past, as a past to now in the 21st century to be repeated. So King Abdullah wants a Jihad in building airplanes, not to take airplanes hostage, King Abdullah wants a Jihad to build universities, not to destroy universities, he wants to have a Jihad where every Saudi citizen plays a part in building Saudi Arabia. The conservatives will try to oppose him but I think the people of Saudi Arabia are behind their king. Q: What makes King Abdullah’s University for Science and Technology such a unique project? Because it has the blessing of King 22 March, 2010
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Abdullah, because as he himself said, it is the house of wisdom, the wisdom to be shared by everyone, but also because it is backed by real financial support, number one. And number two, because it is being ruled by professionals who have built the MITs of the world, the Harvard’s of the world, they have built the Oxfords and the Cambridges of the world, they have built the Georgetown universities of the world, so it is being run by people who truly are interested in modern thinking, in science and in technology. That is why this institution will be the MIT of the region and if not the whole Middle East Q: Saudi students in the US went from roughly 3,000 to 20,000 in just a few years thanks to King Abdullah’s fellowship programme. How will this change Saudi Arabia? I believe that the United States still is the greatest economy, it’s one of the greatest countries, and it’s one of the greatest countries because, in America, you still have innovation,
Q: In your book, you characterize King Abdullah’s speech in the December 2005 Summit of the Organization of Islamic Conference as “his most groundbreaking speech”. Why is that? Because for the first time a king in the region stood up and said honestly what the problem is, and how to solve the problem. Very few leaders in the world are as honest as King Abdullah. King Abdullah stated that Jihad has been taken hostage, but that this is not the true Islam. And that it is important for the true Muslim to stand up, and the only reason why King Abdullah can stand up to the deviant is because he himself is a religious person, he himself is a pious person, and when you are a pious person, when you believe in God, you can stand up to the deviant. And that is why the deviants are afraid of King Abdullah, because he is one ruler who can stand up to the deviants and say “you are wrong, you have to correct yourself, or else”, and no other leader can do that. Q: In your book you look at King Abdullah’s empowerment of women. How do Saudi women in 38
People - Interview general perceive King Abdullah’s reforms? I think that every woman who will want to have a share in the building of Saudi Arabia is excited about King Abdullah, the issue isn’t all boiling down to women’s rising, for my conversations with Saudi women, for my conversations with members of King Abdullah’s family, the women in his family, I got the impression that there is really a full desire on the part of Saudi women to be a partner, an equal partner, in building Saudi Arabia, and that is why they were so happy when they appointed a woman as a Deputy Minister, they were so happy to see Prince Faisal be appointed as the Education Minister, because these are reform-minded people, and it shows that King Abdullah cares about the women of Saudi Arabia, wants the women of Saudi Arabia to be partners in building a better Saudi Arabia for everyone, because I believe firmly that King Abdullah also thinks that an educated mother is the most important gift you can give to society. Q: King Abdullah has stated that Iran should by no means be attacked. How do you think Saudi Arabia is handling the Iranian nuclear threat? I believe that the issue of Iran’s nuclear ambitions is an issue that the whole world should be concerned about. When you have a regime in Tehran that uses Islam to kill people, uses Islam to rape and torture its own people, then nuclear weapons in the hands of such a government is a very dangerous thing, not just for Saudi Arabia but for the world. And I believe that it is important for the world to stand by the people of Iran, and by standing by the people of Iran, they will give more courage to the people of Iran to take matters into their own hands, Issue 1550
because I believe that the Iranian people are very capable of building their own country, they will be able to create an environment in the Middle East where Iran truly is a friend of Saudi Arabia. And I think that is why King Abdullah wisely as always left the door open for talks, he has wisely talked about the dangers of nuclear arms in the Middle East. Because I believe, from my perspective, from what I gathered from King Abdullah, the King is very concerned about doing the right thing, and a nuclear Iran isn’t good for the region. Iran is a great country with a great civilization, and I believe that the King wants to see this civilization, this people, be positive and have its positive impact on their country and the region.
King Abdullah stated that Jihad has been taken hostage, but that this is not the true Islam Q: Saudi oil exports to the US are at an all-time low. How is this related with China’s increasing profile in the region? I believe that the United States of America will remain the strongest economy in the world. The US economy is a 14 trillion dollars economy versus 4 trillion of the Chinese economy. I believe that China is a rising power, King Abdullah, rightly, correctly, sees China as a strategic partner, as a country that is going to be a
consumer of energy, and I believe we should also not read too much into the fact that the United States now is not importing so much oil from Saudi Arabia. US-Saudi relations are not only about energy, the relation between Saudi Arabia and America has grown deeper, it’s a relationship between two people, it’s a relationship that goes back to King Abdul Aziz and President Roosevelt, it is built on economic, cultural, diplomatic, military, and now it is built on solving pressing issues like the Arab-Israeli conflict, like addressing the issue of global warming, and so I believe that whatever focus is on China, there is so much that America and Saudi Arabia are going forward resolving, that the relationship with the United States will still remain a key component of Saudi foreign policy. Q: Next August will mark the 5th anniversary of King Abdullah’s rule. How would you describe his legacy during these five years? King Abdullah and his legacy will be remembered by the institutionalization of reform, the institutionalization of reform through the national dialogue forum, through the building of houses of wisdom, through appointing Ministers who are visionary, through giving the private sector in Saudi Arabia more transparency, allowing the Saudi economy to grow at a fast click, and to give every Saudi citizen the chance to be a participant in the building of a better Saudi Arabia, that is the legacy of King Abdullah in my opinion. Interview Conducted by Manuel Almeida 39
22 March, 2010
Economics International Economics
International Investor
Markets
Investing
in Foreign Land ByValentin Zahrnt
Issue 1550
41
Economics - International Economics
Investing in Foreign Land
A food-security calculus or sound commercial logic Valentin Zahrnt
The food crisis of 2007 has raised awareness of the potential consequences that a more potent sequel might have. However, instead of waiting for governments to break promises regarding investment in food supplies, developing countries stand to profit much more from opening to private investment. FDI transfers not only bring money to the receiving country but also technology and knowledge, and productivity improvements often spill over to local production. Investment in food supplies should therefore be handled like other investments by independent companies looking at economic fundamentals and not by state-owned funds and companies driven by a strategic food-security calculus.
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Delegates attend the opening session of a World Summit on Food Security organized by the Food and Agriculture Organization (FAO)
the world food S uddenly, markets spilled out of control.
Within a year, prices for wheat doubled, those for soybean and sugar even tripled. The drivers behind this surge were stock decreases during the preceding years, a disappointing harvest due to bad weather in several countries and growing demand for feedstuff. Once prices soared, governments of exporting nations curbed the outflow of food, thus exacerbating the crisis. Merely two years later, prices had come down roughly to previous levels—the affliction had ended. This is not the account of the infamous 2007/2008 price spikes; it is the half-forgotten story of the early 70s. At least for developed 22 March, 2010
countries, this earlier crisis was worse than the recent one. Real food prices—corrected for inflation—climbed higher, and food expenditures absorbed a much greater share of households’ income, so that any increase was felt more harshly. This episode nonetheless takes a backseat in our collective memory because OPEC limited oil production soon after the food prices had started to rise. Higher oil prices proved to be the more lasting and pernicious impediment to global growth. So there is a historical precedent of a food price surge that did not destabilize the world economy. Instead, it was eventually followed by a quarter of a century of low
food prices beginning in 1980. But the 2007/08 episode was not perceived from this bird’s-eye perspective. Even in emerging and industrialized countries, much less affected than the poorer nations, the crisis has changed the thinking of the powerful. The fear was born that the next food crisis may be waiting for us, one that will dwarf anything the world has seen before. The world might cast off its multilateral, liberal veil in the merciless scramble for food. Under this lens, the purchase or long-term lease of fertile farmland abroad appears to be a hard-nosed move of Realpolitik without humanitarian disguise. Non-governmental organizations 42
Economics - International Economics attack the neo-colonial land grab of Arab and Chinese investors that uproots local communities and undermines the self-sufficiency of poor nations. It’s smart but contemptible, so the common judgment goes—which may be wrong on both counts. The receiving countries may actually win. Investment in developing countries’ agriculture is direly needed: the Food and Agriculture Organization (FAO) estimates that an annual US $ 30 billion of additional funds will be required over the next 10 years. This is hardly a sum governments will muster. Often the significant pledges made by donor countries during the crisis are just that, pledges. Making a promise is not the same thing as signing a check. Private investment is necessary to fill the gap. Foreign direct investment (FDI) has long been considered as the most desirable form of capital inflow. It transfers not only money but also technology and knowledge to the receiving country, and productivity improvements often spill over to local production. Furthermore, FDI involves heavy transaction costs for the investor—in this case, selecting suitable land, negotiating agreements, setting up production and organizing transportation. Direct investment is therefore much more stable than the billions of speculative money that may trigger a bonanza today and dry up tomorrow. The very idea of farm land contracts for food security is long-term reliability. What about the food security gains of the investing country? What happened if world food prices skyrocketed? Pressures in many producing countries would be tremendous to scale back or stop exports. Certainly, investments are generally protected by investment treaties that guarantee the right to export and prohibit expropriation without compensation (which would be difficult for developing countries to pay, especially with Issue 1550
high food prices that increase the value of the investment). Cynics say treaties are made to be broken, and they are likely to be right when it comes to food security. If it is either do or die, one government will inevitably cede to popular demands, others will find it convenient to follow suit and the entire system will unravel. Arab and Asian governments that pour billions of dollars into farmland FDI—whether through Sovereign Wealth Funds of stateowned enterprises—must be aware of the fragility of these contracts. The market outlook may nevertheless justify these investments on commercial grounds. The world population will continue to rise during the next decades and income growth per capita in developing countries will further add to the demand for food. Also, non-food uses of agricultural produce are expected to expand, especially for bioenergy. The supply equation is more complicated. Since the end of the Second World War, world food supply has grown even more rapidly than the population—which underwent a growth spurt unseen in human history. Increasing investments into agricultural research and development suggest further productivity increases down the road. More important than new hightech solutions are the gains to be had from ending the disastrous inefficiency rampant in many developing countries. The first challenge here is to improve the input, credit, land, and output markets on which farmers rely. It is plain to see that a farmer who lacks clearly established and enforced property rights will undertake only minimal effort to maintain or improve soil fertility and irrigation systems. The other challenge is to enhance farmers’ knowledge of production techniques. Quite tellingly, the application of organic farming often raises farm output in
developing countries even in the short run, though this technique is by no means geared at quickly maximizing yields. Still, it performs better than the outdated piecemeal approaches currently found in many places of Africa, Asia and Latin America. Taken together, inefficient markets and lacking knowledge go a long way to explain why Africa produces only 7% of world cereal supplies on 22% of the world’s agricultural area. A tremendous potential thus lies untapped. Food production will also benefit from further trade liberalization as agriculture is the most protected sector of the world economy. While the Doha negotiations of the World Trade Organization are deadlocked and its ambition is watered down, more and more countries unilaterally lower tariffs and remove their heavily distorting subsidies. This facilitates greater specialization of production: less sugar from the EU and more from Brazil. Climate change is the wildcard in this market forecast. The threats include heat stress and droughts, soil erosion and salinization, the spread of pests and diseases and more frequent extreme weather events. This will be partly offset by greater productivity of agriculture in colder climate zones and higher CO2 concentration in the air, spurring plant growth. Most likely, we will see a reversal of the decade-long trend of lower food prices but no dramatic shortages in world food supplies. Buying farmland and ramping up production may simply be a good investment given this market outlook. In this case, it should be handled like any investment: by independent companies looking at economic fundamentals and not by state-owned funds and companies driven by a strategic food-security calculus. Research Associate at the European Centre for International Political Economy (ECIPE) and Editor of www.reformthecap.eu 43
Economics - International Investor
Fear the Boom and Bust… and Bust The global economy in the medium and long run As economies slowly emerge from recession questions arise about the economic and financial prospects in the medium and long run. Public deficits and high inflation are bound to affect economic performance in the next 5 to ten years. This, however, is only the good case scenario.
T
he past couple of months have seen the emergence of a surprising new internet music hit. The hit in question is a rap entitled Fear the Boom and Bust and is sung by the impersonation of two enigmatic and yet celebrated economists: John Maynard Keynes, and Friedrich Augustus von Hayek. As far as rap goes, the composers John Papola and Russ Roberts’s choice of topic was also uncommon. Instead of singing about voluptuous women or drive-by shootings, Keynes and Hayek rap about the mechanics behind the interaction of economic cycles with counter-cyclical policies. Interestingly, Fear the Boom and Bust does something that many economic pundits have failed to achieve so far. It efficiently identifies the next phase of the crisis, a phase surely less theatrical than failing investment banks and insurance companies, but potentially as damaging: a decade-long sluggish economic performance created by burgeoning public deficits and inflationary pressures. In the US, the budget deficit reached 9.9% of GDP and is expected to reach 10.6% in 2010, the highest figures since WWII. The IMF puts the fiscal deficit at 13.6% of GDP in 2009, 9.7% in 2010 and 4.7% in 2014. The Congressional Budget Office has estimated that, in the next decade, the fiscal deficit will amount to US$ 7.14 trillion. Public debt will likely rise from 54% of the GDP in 2009 to 68% in 2019. Close inspection of the American budget forecast, however, shows that little real effort has been put in reigning in the rapidly growing public deficit and debt. Some European countries such as Spain, Britain, and Greece are in no better shape with budget gaps of 11.4%, 14.2% and 12.7% of GDP in 2009 respectively. Although already in a slight upward trend, spending only skyrocketed in 2008 as governments saw themselves forced to bailout troubled financial institutions. As the financial crisis spread to the real economy, production fell and unemployment rose. This was the opportunity for New-Keynesianism to test their theoretical developments of the last 20 years. The gist, however, has remained basically the same from the 1930s—boost aggregate demand. At the time, without the benefit of hindsight, the prospects of falling dominos in the financial system was certainly scary enough 22 March, 2010
incentives for creditors not to let this happen. This is unfortunately not the case of Portugal, Italy, Greece and Spain—revealingly known in the public debt market by the acronym PIGS. Such defaults—which include substantial debt rescheduling and restructuring—would prove devastating for the EU and the global economy. But this is not the end of the story.
Daniel Capparelli to tone down any ideological bickering. This regardless of their analytical validity. As Ben Bernanke, Chairman of the Federal Reserve wisely put it: “there are no atheists in fox holes and no ideologues in financial crises.” Much like in the Great Depression, however, the outcome of these policies has been a rapid expansion of public debt. Trillions of dollars were added to public debt by the implicit government guarantees to mortgage lenders, the off-balance sheet transactions carried by the Fed and central banks throughout the world, and the lax fiscal policies included in most stimulus packages. Furthermore, in contrast to the situation observed in most GCC countries, spending has been financed overwhelmingly by deficits and debt in most western and emerging economies. Given that debt levels were already high, this trend may prove extremely costly in the future for the world economy. The main problem with debt financed stimulus programs is that a debt level that is manageable for a given market interest rate, tax revenue, and economic growth projections may not remain manageable in the event of an external shock. In order to take advantage of lower interest rates, governments often opt for shortterm debt issuance. When these debts come to maturity, lenders roll over the principal into another short-term contract. This mechanism works smoothly up to the point where it no longer does. If market confidence erodes too much, lenders may decide not to roll over government debt, precipitating a crisis. Even though Credit Default Swaps (CDS) spreads have increased considerably in the aftermath of the crisis, considering a possible massive government default by the US and the major members of the European Union may be ludicrous given the extremely high
Historically, countries have used subterfuges in order to avoid overtly defaulting on their public obligations. Since the advent of fiat currencies, governments have often resorted to a sadly efficient way of facilitating the repayment of their obligations: inflation. Keynesian economic policy already almost invariably leads to higher inflation since higher government expenditures increase demand and, therefore, prices. As the economist Robert Barro famously concluded in 1974, however, these policies only work if economic actors are unable to anticipate future inflation rates. Using the Ricardian Equivalence, Barro explains that consumers do not spend the additional posttaxes income created by lax fiscal policies because they realize that higher taxes in the future are required to pay the debts created by the fiscal stimulus. The main problem with Keynesian policies is that since the inflationary policies of the 1970s, economic actors have been well trained to predict future inflation rates created by government expenditures. This considerably reduces the short-term efficiency of these policies. What economic actors have been less well trained for, however, is to predict inflation rates stimulated by burgeoning government debts. Given the striking lack of transparency in public debt levels, this is not all that surprising. In this context, the prospect of medium run economic performance in western countries is rather lacklustre. Inflation causes distortions in the economy and particularly so in the banking system and financial sector. It is safe to say that governments will not pursue aggressive inflationary policies, notably, because of the aforementioned costs. It is also safe to say, however, that the artificially lowly held interest rates are bound to create over investment in low return capital assets. When interest rates go back to their equilibrium levels another bubble is likely to burst.
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Economics - Behind the Graph
Sovereign Wealth Funds Sovereign Wealth Funds (SWFs) have been and are likely to remain important players in financial markets, according to a recent study from International Financial Services London (IFSL). Given recent and likely developments of market conditions—such as inflows from trade surpluses and high commodity prices—SWFs’ role is likely to increase significantly in the next decades. Although there seems to be a wide divergence in estimates, IFSL projects
that SWFs’ assets will increase by $5.5 trillion by the end of 2012. Reaching accurate market projections, however, remain highly problematic for two main reasons: first, SWFs (particularly Middle Eastern ones) are highly opaque institutions know for their limited disclosure of information. Second, estimates vary greatly due to a lack of standard definition of what constitutes a SWF. In this article, SWF
are defined as entities created by the central government for special purposes, such as development, stabilization, public pension reserve, and saving. SWF, thus, invest in national and foreign assets in accordance with a previously establish strategy to achieve a special purpose. By the end of 2009, SWFs managed $ 3.8 trillion, far behind pension funds ($29.5 trillion), mutual funds ($23 trillion) and insurance funds (20.0 trillion).
Current Accounts and Financing
Source: IMF, IFSL estimates
The establishment of SWFs is usually financed by the receipts of privatizations, fiscal surpluses and the proceeds of commodities exports. As such, given France’s trade deficit, the tentative ideas floated by the French President Nicolas Sarkozy are by definition a non-starter. This is clearly not the case of China and oil and gas exporter countries, however. The fall of commodities prices, the collapse in world trade and the consequent contraction of Balance of Payment surpluses in the wake of the global financial crisis have undermined this financing mechanism to some extent. SWFs were also adversely affected by the fall in commodity and real-state prices—the latter constituting a significant share of investment of Middle-Eastern SWFs. As a consequence, in 2009, assets under management of SWF dropped by 3.8%, reaching $3.8 trillion.
SWFs Investment Share
Asian and Middle Eastern SWFs account for almost 80% of all SWF assets, with Europe accounting for the rest. Although China has the largest country share, Middle Eastern countries account for a very large share of the assets managed by SWFs. The three largest SWFs are the Abu Dhabi Investment Authority, managing over $627 billion, Norway’s Government Pension Fund ($445 billion), and Saudi Arabia’s SAMA Foreign Holding ($431 billion), all sourced by commodities related revenues. China’s SAFE Investment Company and China Investment Corporation only arrive in fourth and fifth, respectively. These estimates however, remain speculative given the lack of transparency inherent in these institution management. Source: SWF Institute, IFSL estimates
SWFs Investment Trends
From 2004 through 2008, the activities of SWFs increased rapidly. The number of deals pursued by such institutions jumped from 60 in 2003, to over 170 by 2008. This just is only dwarfed by the growth of value of these deals. While the 60 deals from 2003 did not reach $10 billion in value, the deals from 2008 surpassed $120 billion. This trend was fuelled by the increase in liquidity of these institutions following the sharp increase in commodity prices. According to McKinsey & Company, oil exporting countries assets in SWFs jumped from just under $1 trillion in 2003 to over $2.5 trillion in 2007.
Source: Monitor Group; IFSL estimate 22 March, 2010
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Reviews Books
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Readings
Reports
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Reviews - Books
KingAbdullah of Saudi Arabia S. Rob Sobhani
Prologue: An Outstretched Hand King Abudllah of Saudi Arabia: A Leader of Consequence Washington D.C. October 2009 Printed in U.S. Publisher: Caspian Publishing, Inc.© Caspian Publishing 2008Design: Xanthus Design, Washington D.C. All rights reserved
Author S. Rob Sobhani has published the prologue to his most recent book King Abudllah of Saudi Arabia: A Leader of Consequence in this week’s issue. His intriguing book not only provides great insight on the accomplishments of King Abdullah, it also provides the important historical contexts that have shaped his reign.
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uring the October 2007 Organization of Petroleum Exporting Countries (OPEC) heads of state summit held in Riyadh, I watched from the audience in an ornate exhibition hall as King Abdullah of Saudi Arabia stood on stage to hand out awards to prominent researchers and scholars whose work has contributed to the petroleum industry. One by one, they approached the stage, accepted their awards and shook hands with the King of Saudi Arabia. One award-winner, the respected and aging publisher Walid Khadduri, however, had trouble reaching the stage. Walking gingerly with the help of a cane, he limped toward the stairs leading to the stage. King Abdullah, noticing Khadurri struggle, promptly took action. 22 March, 2010
The King stepped away from the podium, walked down the stairs, and offered his outstretched hand to the aging publisher. Gently, the King took his arm and guided him toward the stage. The audience of gathered delegates from around the world, from Ecuador to Indonesia, erupted in spontaneous applause at the King’s touching gesture of humanity, a trait that has become familiar to long-time observers of King Abdullah. A few days later, a column in the Saudi newspaper, Al-Watan, suggested that the King’s move was symbolic of his efforts throughout the Arab and Muslim world, the King’s outstretched hand attempting to lift others upward. From the Palestinian territories to Lebanon, from Somalia to Iraq,
King Abdullah has offered his hand to quell conflicts and find solutions to problems across the region. In the Muslim world, the King continues to spearhead Saudi Arabia’s extensive aid efforts around the globe (The Kingdom offers an average of 5% of its GDP in aid, one of the highest in the world) and has robustly challenged the “deviancy” of extremism, reclaiming what he calls the “moderate and tolerant and peaceful” soul of Islam. Meanwhile, he has also offered an outstretched hand to other faiths, engaging in a historic meeting with the Pope in November 2007 at the Vatican and calling for a dialogue of faiths centered on his fundamental belief in peaceful coexistence. King Abdullah’s 52
Reviews - Books meeting with the Pope was the first such visit for a Saudi monarch. The World Conference on Dialogue, sponsored by King Abdullah and hosted by King Juan Carlos of Spain in the summer of 2008, brought together hundreds of faith leaders from the Muslim, Christian, Jewish, Hindu, Buddhist, and other faiths together in a historic gathering that broke barriers and promoted greater understanding. King Abdullah literally offered an outstretched hand to all of the five hundred or so delegates, shaking hands and listening to their views in a sunfilled Spanish government palace for hours. In a speech to the Madrid delegates, King Abdullah said: “I come to you from the place dearest to the hearts of all Muslims, the land of the Two Holy Mosques, bearing with me a message from the Islamic world representing its scholars and thinkers who recently met in the confines of the House of God. This message declares that Islam is a religion of moderation and tolerance; a message that calls for constructive dialogue among followers of religions; a message that promises to open a new page for humanity in which – God willing – concord will replace conflict. King Abdullah went on to denounce extremism and violence as anathema to all religions, called for a vigorous effort to reach common ground, and urged conference attendees to “let our dialogue be a triumph of belief over disbelief, of virtue over vice, of justice over iniquity, of peace over conflicts and wars, and of human brotherhood over racism.” Issue 1550
A few months later, in November 2008, King Abdullah co-hosted a dialogue of faiths at the New York headquarters of the United Nations that was attended by heads of state, religious leaders, and civil society activists. Officially titled the “Culure of Peace” conference, former British Prime Minister Tony Blair called the King’s decision to spearhead the dialogue at the UN “bold, courageous and potentially farreaching.” In an article published in the International Herald Tribune on November 12, 2008, entitled “King Abdullah and the Skeptics”, Blair argued forcefully that the King’s dialogue initiative has the enormous potential to undermine the appeal of extremists who only seek confrontation. He described King Abdullah’s efforts as “a major step forward in the long march to a relationship between Islam and other faiths that is not one of confrontation or distrust but of peaceful co-existence.”
In February 2009, the King initiated the most significant cabinet shake-up since assuming the throne At the United Nations, King Abdullah reiterated his denunciations of extremism and his urgent pleas for tolerance and dialogue. “In front of the whole world, we state with a unified voice that religions through which
Almighty God sought to bring happiness to mankind should not be turned into instruments to cause misery,” he said. “Human beings were created as equals and partners on this planet; either they live together in peace and harmony, or they will inevitably be consumed by the flames of misunderstanding, malice and hatred.” King Abdullah later met privately for two hours with a small group of American religious leaders, ranging from Baptist preachers to Jewish rabbis, Muslim imams and heads of Sikh Indian communities, to Greek Orthodox clerics and Catholic priests. As one attendee put it: “I never thought I would see this in my lifetime: the Custodian of the Two Holy Mosques here, meeting all of us, listening, and searching for common ground.” Emotions filled the room, as King Abdullah told the attendees: “we are all brothers and sisters in humanity. Let us join hands to fight the ‘deviants’ who cause violence and sow hatred in the name of our peaceful religions.” In fact, it should also be noted that King Abdullah’s outstretched hand is also relevant at home as he embarks on a series of reform initiatives that have the potential to transform the Kingdom and dramatically lift up millions of Saudis. In February 2009, the King initiated the most significant cabinet shake-up since assuming the throne. He installed reformminded figures in key religious, judicial, communications and education positions, appointing a new Head of Judiciary, Minister of Education, Minister of Information, and leader of the “religious police,” known as the Committee to Promote Virtue and Prevent Vice. These appointments 53
Reviews - Books underscored the reformist vision that King Abdullah has displayed in his rule, and were hailed by some of the Kingdom’s leading intellectuals and modernizing voices. The move also won praise from many Western commentators and long-time observers of Saudi Arabia. Pulitzer-prize winning journalist and former Wall Street Journal publisher Karen Elliot House wrote on February 23, 2009: “in a country where the norm has been one tentative step forward and two back, this time the King has reversed that pattern to take at least several serious steps in the direction of real reform.” Meanwhile, veteran Newsweek Middle East correspondent Christopher Dickey, in an article on March 30, 2009 about King Abdullah entitled “The Monarch Who Declared His Own Revolution,” described the cabinet shake-up and the King’s reform initiatives as part of a broader vision to transform and modernize Saudi Arabia. In a hugely symbolic gesture, King Abdullah also appointed the first female Deputy Minister, Noura Al-Fayez, to the Education ministry. In the Saudi context, amid a deeply conservative and patriarchal society, this proved to be a stunning appointment that captured world headlines and earned the praise of Saudi women’s rights activists. Though Saudi society still has a long way to go before women’s rights are fully enshrined, the King’s move brought hope to millions of Saudi women equally searching for opportunities to serve their country. In a sign of tangible progress, more Saudi women have been granted government 22 March, 2010
scholarships for graduate studies abroad than men, at approximately a 60-40 percentage ratio, and King Abdullah has made women’s education at home a top priority. Several new women’s universities have been launched and King Abdullah’s most ambitious education project – the multi-billion dollar King Abdullah University of Science and Technology launched in September 2009 and expected to become the MIT of the Middle East – is open to both women and men and the campus will be co-educational.
In a hugely symbolic gesture, King Abdullah also appointed the first female Deputy Minister, Noura Al-Fayez King Abdullah also displayed his outstretched hand to the world in May 2008 when he announced a $500 million grant to the World Food Program of the United Nations to help the world’s poor cope with rising food costs, helping the more than 130 million people who had been pushed into hunger and the some two billion people affected by the crisis. United Nations Secretary General Ban Ki Moon said “This contribution of an unprecedented size and generosity comes not a moment too soon, given the needs of millions of people dependent on food rations.” The World Food Program Chairperson Josette Shearan said
that the “extraordinary” Saudi donation helped it reach its goal of $755 million and “will keep many people from dying, others from slipping into malnutrition and disease, and will even help to stave off civil unrest.” Shearan added that the Saudi donation would allow the WFP “to continue to provide food for millions of children enrolled in school and therapeutic feeding programs in Kenya, Yemen, Ethiopia, and Somalia and in many other critical hunger zones.” She described it as an extraordinary act that links the King to “humanitarians around the world.” In February 2009, at the prestigious World Economic Forum conference in Davos, Switzerland, the WFP awarded King Abdullah its most prestigious prize: Champion in the Battle Against Hunger. Josette Shearan told the Davos crowd that witnessed the award ceremony that “King Abdullah’s generosity has not only moved the world but has saved many lives in this year of challenge. For this reason he is recognised, not only by us, but by many others.” Minister of Industry and Commerce Abdullah Zainal Ali Reza accepted the award on King Abdullah’s behalf. During the ceremony, World Food Program officials noted that King Abdullah’s generous donation in response to the crisis of rising food prices has had an impact beyond that moment of trouble. King Abdullah’s donation has aided an additional 23 million beneficiaries in 24 countries in programmes which include: extending school feeding to 2.6 million children in six countries: Haiti, Liberia, Pakistan, Senegal, 54
Reviews - Books Sierra Leone and Tajikistan; providing supplementary rations of nutritious food to malnourished children and women – 130,000 malnourished children in seven countries: Djibouti, Ghana, Guinea, Haiti, Liberia, Senegal and Tajikistan, with another 11 countries about to start implementation; and accelerating cash and voucher programmes to enable people to access food through markets in countries from Malawi to Nepal. King Abdullah’s sense of responsibility and outstretched hand to the poor has been wellknown throughout the Kingdom. A well-known episode recalls a time when King Abdullah heard about a particular area in Riyadh, the Saudi capital,that was home to several dozen families who barely had enough food to eat. According to many Saudi insiders with knowledge of that day, King Abdullah grew angry and demanded that he proceed immediately with his driver to the designated areas. His security detail had to scramble to keep up with him as the King and the driver left the palace. Upon arrival, King Abdullah listened to their stories and provided them with some temporary relief, but he knew that he needed a long-term solution. Shortly thereafter, the King announced a new organization: The King Abdullah Housing Foundation. This organization would provide low-cost housing to all Saudis who could not afford their rents or a home. Saudis also often describe encounters with King Abdullah that reflect on his humility and genuine interest in his people. Once, while on a visit to a shopping mall, King Abdullah caused a stir when he sat down in a food court near a McDonalds and chatted with all Issue 1550
who were nearby. As the crowds gathered, King Abdullah engaged in conversation with a group of young Saudis, a few older women, a janitor, and anyone else who happened to be sitting in his direct vicinity. Once again, his security detail scrambled to ensure that the King was safe, but King Abdullah was clearly relishing this moment of spontaneous interaction with ordinary Saudis, reaching out his hand to his people as they reached back.
Saudis also often describe encounters with King Abdullah that reflect on his humility and genuine interest in his people King Abdullah’s oil policy also represents an outstretched hand to the world. With 25% of the world’s oil reserves and the only meaningful excess capacity among major oil producers, Saudi Arabia is, by far, the most powerful state influencer of oil prices in the world. While a myriad number of factors influence the price oil from rising demand in Asia to speculators in New York and London to weather patterns and civil conflict in Africa, and individual states matter less in this equation, a country like Saudi Arabia still plays a vital role in stabilizing oil prices. King Abdullah’s policy has been clear: Saudi Arabia seeks a stable, fair, moderate price that allows consuming countries to
purchase oil, does not bankrupt poor countries, and yet still allows producers enough of a cash surplus to re-invest in their oil industry for future sales. In fact, in a July 2009 report, the International Monetary Fund praised Saudi Arabia for its wise policies that promoted oil market price stability and moderation. Often, Saudi Arabia pushes back against OPEC price hawks who seek to dramatically spike prices. Perhaps even more importantly, Saudi Arrabia under King Abdullah has engaged in an ambitious production expansion program, which will bring more crude oil on line to world markets, thus satisfying growing demand and tempering prices. As I reflect on King Abdullah’s rule, it occurs to me that his outstretched hand may, in the end, become an important symbol. From reaching out to the poor to shaking hands in peace-making diplomacy to lifting up Saudis with wide-ranging education and economic initiatives to bringing together moderate voices of Islam and reaching out to other faiths to ensuring stable and moderate oil prices to actively participating in G-20 discussions on the future of the global economy, King Abdullah bin Abdulaziz is changing his country and the world. The key question faced by other world leaders and even other senior Saudi officials will be this: will they, too, offer an outstretched hand to meet the King halfway to resolve some of our common global challenges? The reign of King Abdullah offers the world a unique opportunity. The world’s foremost oil producer, the home of the two holiest sites in Islam, and the Arab world’s diplomatic heavyweight is ruled today by a man with a strikingly forward-looking, global and 55
Reviews - Books inclusive vision for the future. In King Abdullah, the world has a reliable, powerful partner to help tackle some of the planet’s most pressing challenges from global warming to nuclear proliferation, from transnational terrorism to chronic underdevelopment and poverty. Too often, the world sees the King of Saudi Arabia as only a regional player, but King Abdullah has the means and vision to be a consequential global actor with positive influence for the world. In many ways, he has already lived up to that promise, with global peace-making diplomacy, bridge-building dialogue, stable oil policies, and wide-ranging humanitarian assistance. Reflecting on Saudi Arabia and the rule of King Abdullah is not merely an academic exercise. In so many senses of the word, Saudi Arabia matters, and matters deeply. As home to Islam’s two holiest sites, in Mecca and Medina, the Kingdom often serves as a bell-weather for the Muslim world, a world that faces severe turmoil and major challenges. As the holder of the world’s largest proven petroleum reserves, Saudi Arabia’s oil policy - one that has consistently favored price moderation - affects the lives of billions on our planet. Given its enormous influence in Arab affairs (and under King Abdullah the leading regional power by far), Saudi Arabia will play a vital role in shaping the future of a troubled but potential-filled region. At a time when regimes like that in Iran actively promote instability and crisis in the region, the role of King Abdullah’s vision in creating an “arc of stability” becomes ever more vital. That is why the world needs to pay close attention to what happens in Saudi Arabia and needs to understand the thinking, vision, and policies 22 March, 2010
of King Abdullah. Saudi monarchs are, by their nature, influential leaders, but some have been more influential than others. The Kingdom’s oil reserves, custodianship of the two holiest sites in Islam, and its strategic alliances with influential states from China to the United States, make the work of any Saudi king both challenging and vital to world peace and prosperity. With King Abdullah, however, the role of the Saudi King on the world stage has been enhanced to its highest level ever in history, partly due to changing global dynamics but more importantly, due to the personality and vision of King Abdullah himself. His international stature as a man of integrity and a peacemaker has positioned him to play a key role in global affairs and his domestic stature as a popular King and “man of the people” has positioned him to lay out domestic policy initiatives that are transforming Saudi Arabia and unleashing the latent potential of its people.
When King Abdullah was officially announced the monarch of Saudi Arabia in August, 2005, he pledged “to uphold the truth” and “to ensure that justice takes root,” Saudi Arabia today is widely seen as the pivotal state in the Arab and Muslim world. Former Lebanese Prime Minister Fouad Siniora
called King Abdullah “the savior of the situation in the Arab world,” Newsweek magazine called him “a regional elder statesman” and “wise man of Arab politics,” United Press International referred to him as “the Arabian peacemaker,” and a commentator for the Dallas Morning News commented that the King has ushered in a “Saudi renaissance.” King Abdullah has been a vigorous promoter of Arab unity and initiated and nurtured the historic Arab Peace Initiative, a comprehensive peace offer with Israel, first offered in 2002. In the often fractious world of Arab politics, the King has served as an anchor of unity to achieve this historic initiative. Meanwhile, world leaders from President Hu Jintao of China to US President Barack Obama to United Nations Secretary General Ban Ki Moon offer high praise for the Saudi monarch. In fact, President Obama visited with King Abdullah in Riyadh for consultations before he delivered his landmark address to the Muslim world in Cairo on June 5, 2009. While they discussed pressing regional issues such as the Palestinian-Israeli conflict, Afghanistan and Pakistan, US troop withdrawals in Iraq, and Iran’s nuclear program, Obama listened attentively, according to aides, as the King spoke about his vision for a moderate Islam that stretches back to the roots and spirit of the faith. Indeed, in the entire speech delivered in Cairo, President Obama only mentioned one leader from the Muslim world: King Abdullah. He said: “faith should bring us together. That is why we are forging service projects in America that bring together Christians, Muslims, and Jews. That is why we welcome efforts like Saudi Arabian King Abdullah's 56
Reviews - Books Interfaith dialogue.” When King Abdullah was officially announced the monarch of Saudi Arabia in August, 2005, he pledged “to uphold the truth” and “to ensure that justice takes root,” while managing a government that “serves all citizens without discrimination.” Subsequently, he went on a tour of all regions across Saudi Arabia to reach out to people, listen to their concerns, and engage in dialogue. During one of his visits to the city of Asir, he said: “Building a nation does not stop at the completion of one stage. Our past and present are the strong foundations for our future, but a nation must not content itself with pride at daily accomplishments, but rather must look forward to the future.” In a few other regions, the King spoke honestly, noting that the Kingdom’s rapid development had been uneven and some regions had been neglected, and he pledged to change that (several underserved regions have been the recipient of government largesse in the past few years since he made those tours, with new universities, better infrastructure, and more incentives for private business). A few months later, in a historic speech in Mecca before fifty-seven Muslim leaders at an Organization of Islamic Conference (OIC) meeting, King Abdullah delivered a similar message to his fellow Muslim leaders: honest, visionary, heartfelt, critical, and forwardlooking. While praising Islam’s Golden era that spawned “singular achievements in jurisprudence, intellectual endeavors, the sciences, and literature and provided the decisive catalyst in bringing enlightenment to the dark ages,” he offered an honest assessment of the ills affecting Muslim states today, and called for his fellow leaders to look toward a Issue 1550
better future, a Muslim renaissance that is prosperous, educationally advanced, and moderate.
This book seeks to reflect on the nature of King Abdullah’s rule and its effects on Saudi Arabia, its fellow Muslim states, and the wider world as a whole It was an extraordinary speech, one of dozens of such speeches the King has delivered on a domestic and international scale that have laid out an inspiring vision of the future, provided an honest and unflinching lament of the ills of the world, and called for practical steps to achieve peace and development. Most importantly, King Abdullah has backed his words with wideranging actions from peace summits to development aid to robust diplomacy toward solving conflicts. Within Saudi Arabia, he has launched ambitious economic modernization initiatives, overseen a cultural renaissance, taken substantive steps to transform the education and the judiciary sectors, pushed back successfully against Islamic extremists whom he refers to as “deviants” whose exploitation of the “peaceful and moderate nature of Islam” puts them at war with Islam itself, and generally launched the Kingdom into a new direction that embraces modernization without threatening authentic traditions and culture. As a result of all of this activity, he
has been an extraordinarily busy man. From foreign visits to tens of countries, to receiving hundreds of envoys and heads of state who want to consult with the King to regular tours of new industrial, commercial, educational, and cultural centers spawned by his rule across Saudi Arabia, King Abdullah has presumably had little time to stop and reflect on the extraordinary nature of his rule as he continues to make history. This book seeks to reflect on the nature of King Abdullah’s rule and its effects on Saudi Arabia, its fellow Muslim states, and the wider world as a whole. This book contends that King Abdullah is one of the four most important world leaders today and the most important and transformative Saudi head of state since his father, King Abdulaziz al-Saud. This book is not a detailed account of the life of the King, but rather an attempt to understand King Abdullah’s thinking and policies and put them in a global, regional, and domestic context. To achieve this goal, I visited Saudi Arabia five times in the last two years and spoke with a wide variety of government officials, academics, journalists, intimates of the King and other Saudi citizens. I also sought to draw extensively upon King Abdullah’s own words, in private and from his speeches and interviews. It will be clear from these pages that King Abdullah is truly a leader of consequence, and, historians will look back on him as one of the most important leaders of the late twentieth and early twenty first centuries. Saudi historians might see King Abdullah as the King that most closely resembled King Abdulaziz, the founder of modern Saudi Arabia and one of the most visionary leaders of his era. 57
Reviews - Readings
Readings Books War Games: The Story of Aid and War in Modern Times Linda Polman
As a follow up to a compelling account of UN failings in Rwanda, Somalia and Haiti; ‘We Did Nothing’ introduces the reader to the follies of the key players in the world of humanitarian aid. Linda Polman, the author of this controversial and at times darkly humorous work of reportage, is widely regarded as one of the most intrepid journalists of recent times. Accordingly, she is able to draw upon her decades of first hand experience
in war torn countries around the world to bring us this work. She illustrates how the media, aid workers and even the war mongers are locked in a twisted cycle of mutual support which impinges on the support the needy receive. The recent earthquake in Haiti has become notorious for the slowness with which aid reached the victims. This book is thus a timely reminder of the inherent flaws in the system of aid.
The Weight of a Mustard Seed: The Intimate Story of an Iraqi General and His Family during Thirty Years of Tyranny
Wendell Steavenson
In the ever increasing pile of books on Iraq, Wendell Stevenson’s stands out as one of the few which goes back to the time before the U.S invasion. This is not only a gripping account of one man’s rise and fall but is a vivid portrayal of the Iraqis behind the headlines. General Kamel Sachet was a favourite of the Ba’athist regime and Stevenson looks at
his participation in the terror regime and the choices he made. Her journey to uncover the motivations of those who were loyal to the regime took five years as she sought to accumulate opinions and facts from those closets to Sachet. This book tells the reader much about the tensions of living close to power in Saddam’s dictatorship.
The Media Relations Department of Hizbollah Wishes You a Happy Birthday: Unexpected Encounters in the Changing Middle East
Neil MacFarquhar Neil MacFarquhar is a rare find in jounralism, a Middle East correspondent who not only speaks Arabic but has also spent most of his life in the region. His childhood in Libya and his position as the Cairo bureau chief for the New York Times means he is well placed to share the extensive knowledge gleamed from his travels. His book is an intelligent and entertaining overview of the region which maintains that the portrayal of seemingly
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constant, bloody upheaval which captures most attention in the West has become a barrier to understanding to the Middle East. Accordingly the author eschews the predictable obsession with violence which has characterised many Western writings on the region. Most of all, though, the author succeeds in illustrating the multiple facets of the Middle East and gives an accurate impression that there many more stories left untold than told.
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Reviews - Readings
Reports Khomeini's Ghost: The Iranian Revolution and the Rise of Militant Islam
Con Coughlin
From the bestselling author of ‘Saddam’ comes an authoritative biography of Ayatollah Khomeini. Khomeini's Ghost is the account of how an impoverished young student from a remote area of southern Iran became the leader of one of the most dramatic revolutions of modern times. Con Coughlin looks at how his fundamentalist legacy has shaped the course of Iran’s relationship with the West. As one of Britain's leading journalists and a world-
renowned expert on the Middle East Coughlin is well placed to draw on a wide variety of Iranian sources; including religious figures that knew and worked with Khomeini both in exile and in power. The author provides abundant evidence that the Ayatollah’s agenda has always been radical but doesn’t always provide in-depth information as to why his ideology struck such a chord for so many Iranians.
The Threat from Jamaat-ul Mujahideen Bangladesh Asia Report N°187 International Crisis Group has produced a report which calls for an increased focus on the possibility that Jamaat-ul Mujahideen Bangladesh (JMB), a terrorist organisation, to wreck more destruction in Pakistan. The report shows that despite the state’s counterterrorist efforts, which have been quite successful in tacking
Islamist extremism, recent events have demonstrated that JMB is currently able to regroup, recruit and raise funds. The arrest of 95 JMB operatives since October 2008 and the uncovering of huge stores of explosives are testament to the concern displayed by the ICG. The report cites internal wrangling and a lack of co-ordination between
Reforming Pakistan's Civil Service Asia Report 185 The presence of terrorists organizations and their ability to thrive is better understood following a reading of this report on the civil service of Pakistan. The report argues that the decades of mismanagement and corruption which has long plagued government and public services has undermined the ability Issue 1550
of government to do its job. There is a widespread perception that this dysfunctionism has allowed extremism to grow in influence. The report presents guidelines as to how the international community can better assist in helping to improve governance as it seems that previously international developments funds
security agencies and government as contributing factors which undermined efforts to dismantle the organisation. Accordingly the concluding remarks of the report highlight the need for Pakistan’s government to better focus on the potential dangers posed by the JMB and similar organisations.
have been directly channelled to inefficient institutions and have actually undermined efforts to improve accountability and function. With hundreds of millions of international aid money committed to Pakistan’s development an appraisal of how this money could be best spent is timely and worth-while.
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Reviews - Reports
Neither Angels nor Demons Turkey: Regime in Crisis Henri Barkey Carnegie Endowment for International Peace March 3, 2010
What implications do the arrests of senior military officials over an attempted coup have on Turkish democracy? The Carnegie Endowment report evaluates why the military, long-time defender of democracy and secularism, has found itself discredited and increasingly excluded from politics. Interestingly, their exclusion from politics might do more than one imagines to undermine the government’s stability. Barkey suggests that abandoning the military-imposed constitution is one way to avoid disaster.
F
ollowing the scandal over the attempted military coup in Turkey, The Carnegie Endowment for International Peace has analyzed the impact that this crisis will have on the future of Turkish democracy. That the Turkish military, a historically powerful political group in the country, apparently no longer operates under impunity ironically brings into question the future of the democracy for Turkey. “The arrests of forty-nine high-ranking former 22 March, 2010
Turkish military officers, including former service chiefs of the navy and air force, as well as a deputy chief of staff, heralds the latest and perhaps final stage in a confrontation between Turkey’s powerful military establishment and society” says Henri Barkey in his article Turkey: Regime in Crisis. The extent of the damage, for the military’s public image at least, is severe. By arresting high ranking
officials, the government made sure to humiliate the army. A tactic, no doubt, used to demonstrate that their influence in politics—with a penchant for opposing the AKP and its policies—is no longer acceptable. A discussion mediated by the Carnegie Endowment between Barkey and Zeyno Baran, the director for Center for Eurasian Policy at the Hudson Institute, added that in addition to exhibiting unprecedented behaviour, the arrests have also 60
Reviews - Reports fostered a concern as to whether tension between the government and the military will increase. However, to understand the weight of the events taking place, the Carnegie Endowment does well by providing its readers with important background information on the detailed way in which the military influenced politics in the past. In the article Barkey notes that, alongside the judiciary, the Turkish military protected Turkish democracy by any means necessary, amounting to four coups and imposing on the government its current constitution. They prided themselves on defending the secular foundation of the government. Since the AKP’s rise to power, they have grown increasingly disturbed by the influence of Islamism in Turkey— going as far as saying that President Gul should not have been elected because his wife wore a burka. Yet, Turkish society, the report argues, has been undergoing significant changes. These changes have allowed Turks to increase their resistance to the military apparatus’ vision of Turkish politics. Nevertheless, the military is not the only group to blame. The AKP has not yet fully come to represent the values of democracy. Rather, many of the party’s practices replicate the ills of past Turkish parties “including one-man domination, the use of government power to squelch the opposition, and the lack of a comprehensive vision that transcends the immediate concerns of its own pious core constituency.” Given these conditions, the attempted coup and the consequent arrests imply instability for the country’s democracy. Why, though, have tensions risen to this point? Baker explains that the emergence of the conservative business elite managed to buttress the AKP party. While secularists—the military included—have interpreted Issue 1550
the AKP’s majority as a significant political threat. The problem that arises, however, is that the military has not accepted the social change that has occurred in Turkey. Their values no longer represent the majority of Turkish voters who are supportive of the AKP. Whether Barkey is correct, that the military’s fears of Erdogan’s government are exaggerated, is in a sense a moot point as it is their perception of this threat that is leading them down a road of confrontational political tactics that might undermine Turkish stability.
Carnegie Endowment raises timeless issues about the difficult relationships younger democracies have between civilian governments and the military apparatus What then, could we expect from this potentially volatile situation? The Carnegie Endowment’s report argues that unless Turkey manages to devise a new constitution to replace the one imposed by the military, the instability already present will likely increase. These conditions will cause a schizophrenic foreign policy development for the country, as the two political poles tend to direct the country in different directions on the international arena. More specifically, they explain that as a result “… a new Turkish constitution remains both a distant dream and an absolute necessity. Turkey needs to overhaul its
archaic political institutions that have prevented the evolution of dynamic and responsive politics. The resulting paralysis has always been an invitation to greater military involvement.” These recommendations, although undoubtedly true, are difficult to accept as given. That is, the report itself acknowledges that despite necessity there is an important disconnect between what Turkey can do and what it should do to protect its democracy. While a new constitution would be ideal, its unlikely to be implemented under the current constraints. A more practical, or at least a further outlined recommendation, on what Turkey’s options are would have proved useful in this context. Nevertheless, the insight provided on the military’s historical link to democracy in Turkey is fundamental for contextualizing the crisis the arrests signify. Although beyond the scope of this report, the Carnegie Endowment raises timeless issues about the difficult relationships younger democracies have between civilian governments and the military apparatus that is meant to protect them. The case of Turkey actually suggests that instead of wondering why coups occur in the first place, one should ask why they don’t occur more often given the military’s resources and their clear discontent with the government in place. While this is not to imply that the Turkish government is safe from all political threats, it does suggest that while the situation is precarious, that all is not lost. After all, the coup did not take place, and so one can gather that the Turkish government has at least the power to maintain democratic institutions in place even if the secular nature of Turkey’s democracy has lost headway. For the full report please refer to:
www.carnegieendowment.org
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The Political Essay
An EU Like Solution Negotiations for Yemen to join the GCC started several years ago, but there is a feeling that, after 2008, this process slowed down. The problem is Yemen can hardly afford to wait a minimum of six years to join the GCC. Yemen should be offered a conditional and phase-by-phase integration into the GCC, much in the light of what the EU has done with its most problematic candidates.
O
ver the last year, Yemen caught the attention of Gulf countries and Western countries alike. In the debate around why the situation in the southern Gulf country has deteriorated to this point, two things seem consensual. First, the root of the problem is Yemen’s poor economic situation. Even the so-called “three rebellions”—the Houthis in the north, the separatist movement in the south, and the eastern tribes that currently harbour the Al-Qaeda members that have been returning to Yemen—are closely related with the failure of the government in Sanaa to provide socioeconomic welfare. Secondly, it is widely accepted, even by the Yemeni government, that the country will not get out of this quagmire without external support. Gulf countries in general and Saudi Arabia in particular have long understood the need to face Yemen’s economic collapse, as demonstrated by the millions of dollars in aid to Abdullah Saleh’s government. Most importantly, negotiations for Yemen to join the GCC were initiated several years ago. Yemen’s accession to various GCC bodies/institutions has already been approved. Yet, there is a feeling that, since 2008, the process suffered a delay, to which the deteriorating security scenario in Yemen certainly contributed. And now the central issue about Yemen’s accession is likely to become timing. Yemen might not be able to afford waiting until 2016 or 2017—the date that has been put forward—to join the GCC. Not to argue that Yemen should be integrated into the GCC in the short 22 March, 2010
functioning market economy. What is more, the stability and prosperity of most of the European continent and not only of EU members lies in the crucial role the EU has played not only through integrating new members, but in the stabilization of the so-called EU neighbourhood, particularly in the Balkans.
Manuel Almeida
term as an equal member. GCC members naturally fear Yemen’s big—roughly 23 million—young and poor population, and there might also be some reservations regarding Yemen’s different political system. As Dr Joseph A. Kechichian, an expert on Gulf affairs explains, “the question that faces the alliance [GCC] is whether such participation can be channelled to serve all member-states, or whether it will drag the region down.” In very crude terms, one might ask what has poor and conflict ridden Yemen to offer to rich and stable Gulf countries? Yet, the real issue is how threatening a potential collapse of order in Yemen can be to the GCC countries. Take the EU case. It first integrated both politically and economically stable countries such as Czech Republic, Slovakia or Malta. And today, recently conflictridden countries like Croatia and Bosnia Herzegovina are official candidates. The EU strategy is the adoption of a conditionality policy, the “Copenhagen Criteria” that candidates have to meet before joining. It includes being a stable democracy, the respect for human rights and the rule of law, and a
Parallels aside, there are obviously huge differences between Yemen’s potential accession to the GCC and the EU case. One of these differences lies in the fact that Yemen can hardly afford a long dragging Turkey-like process and take a decade or more to join the GCC—its oil reserves will likely run out before that. There is, however, a mid-way between not joining and being a full member of the GCC. Going back to the EU case, the new member states do not join the Schengen space or the Euro currency zone immediately if they are not prepared to do so. In the same way, Yemen could be offered a conditional and phase-by-phase integration into the GCC. What should then be the priority of GCC countries in Yemen: stabilize the security situation first, or place the efforts on economic reconstruction? The most sensible answer is plenty of both. Security in Yemen will not make any significant progress until the real sources of instability—particularly poverty and unemployment—are met. At the same time, a more stable climate is needed to address Yemen’s economic collapse, for which the truce agreed early this year between the Houthis and the Yemeni government is an important start. 62
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