January 14th, 2011
12:05 PM GMT
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Let’s simply say this is not the way in which the leaders of Tunisia and Algeria wanted to start 2011. Both had experienced varying degrees of protests, violence and killings. In Tunisia, it was a lack of opportunity. In Algeria, trouble brewed around not getting access to food at a reasonable price.

It is not a pretty picture, but what is framing the debates in these countries and the need in Tunisia and Algeria for protesters to take to the streets?

The answer, not surprisingly in the Middle East, is both complex and simple at the same time. The countries don’t have a track record of political openness, which at the end of the day eventually comes back to haunt those in power.

“The challenge is, if we don’t have the global governance systems that can come to the party in terms of dealing with that level of interconnectedness, we could see small trigger events of local crises turn into regional or global crises and that is the real fear our report expresses,” says Nick Davis, co-author of the Global Risks 2011 from the World Economic Forum.


December 16th, 2010
03:47 PM GMT
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While the football world and all its fans were rightly focussed on Qatar 2022, a story kept on the boil by FIFA President Sepp Blatter, the tiny Gulf state announced a big milestone for the natural resource that made it famous - natural gas.

Seventy-seven million metric tons may not trigger alarm bells of excitement in the general public, but it certainly does within energy circles.

Qatar is two years ahead of schedule in hitting this annual target for liquefied natural gas, and is the largest exporter of LNG ahead of Southeast Asian stalwarts Malaysia and Indonesia.

It has a fleet of 54 super tankers hauling its products East and West. Qatar’s veteran energy minister, Abdullah bin Hamad al-Attiyah said that the fleet provides him with the ability to stay on top of a rapidly changing customer base. “We can today - because of our flexibility of products and transportation - reach any new customer, even the next day.”

Qatar has been a game changer in the market for this product and made a huge bet on the new technology to compress natural gas into liquid form when the Emir Sheikh Hamad Bin Khalifa Al-Thani took the reigns of power.

The milestone marked at the Qatari industrial city of Ras Laffan -– in the company of chief executives from Exxon Mobil, Royal Dutch Shell and ConocoPhillips –- comes during the same week that the Qatar Foundation announced the biggest sponsorship package in football history, signing on with Barcelona for a five year, $225 million deal.

It was the Emir’s roll of the dice on LNG technology, helped along in both technology and capital by the energy majors in Qatar, which allows for such high-profile investments.

How have times changed: The country was nearly bankrupt in the early 1990s when oil prices plummeted and Qatar was not a big enough player in the crude market to carry sway. It still ranks near the bottom, just above Ecuador in terms of OPEC rankings, but is third in natural gas reserves behind Russia and Iran. Iran may have problems securing investors for its South Pars field due to economic sanctions, but Qatar continues to produce at a record clip on its side of the same field. Minister Al-Attiyah said that he hopes to expand capacity by as much as 10 million tons in the near future.

To put this into perspective, the Persian Gulf state is producing the gas equivalent of five million barrels a day of crude. That is a handsome sum with a population of just 1.6 million people, 70 percent of them expats.

The minister tries to keep his feet on the ground despite all the fanfare surrounding the milestone. He is expressing concerns for example that oil prices are closer to $90 a barrel rather than $80 and that may dampen demand in 2011.

“I need a very strong consumer. If my consumer becomes weak, I will become weak too,” says Al Attiyah. Indeed higher prices may dent demand, but certainly not the new 77-million-ton giant.

December 10th, 2010
04:25 PM GMT
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It is rare in the world of BlackBerries, iPads, mobile phones and airport lounges that one can pause long enough to think differently about the shape of the world, in particular the Middle East.

Doha is a city that welcomes a slower pace - despite its breakneck pace of development - and it is where I sat down with the Aga Khan, the Imam of the largest branch of the Ismaili followers, for an exclusive interview. The window of time was limited - 10 minutes to be precise - but precious in its outcome.

The Aga Khan was in Qatar to present a handful of awards for architectural excellence - major projects touching the Islamic world that make a difference to the lives of nearly 1.5 billion people. His Highness is a man who backs his words with action. His network is focussed on what he calls “the construction of civil society” since he believes it is the “greatest guarantor of positive change.”

The network facilitates economic, housing and tourism development in more than 30 countries and encourages investment to foster employment and advance education. But here is the caveat: change must be calibrated.

“I think the issue is not only quality of life. There are many other criteria and one of the ones we are most exposed to as a network of institutions is, 'What is a healthy speed of change?' Because you can move too fast.”

According to the International Monetary fund, Qatar will grow 16% this year and as much as 20%  in 2011. In a world of 2% growth in Europe and the United States, the tiny Middle Eastern state could see 10 times the pace of expansion next year.

His Highness was cautious not to point fingers at any countries in particular: For example, I asked him if Saudi Arabia and Egypt can play catch up on the education and poverty reduction fronts. He chose two positive stalwarts in Southeast Asia with majority Muslim populations, Malaysia and Indonesia.

“One cannot generalise when it comes to the Islamic world. If you look at countries like Malaysia or Indonesia they have invested heavily on education and they have seen the benefits of that investment.”

Malaysia is a good case study. It has methodically worked on moving from a resource based economy up the value chain to add high technology and financial services to the mix. It has aspirations of joining the ranks of industrialised nations by 2020.

But the moves Dr. Mahathir Mohamad and the prime ministers who have followed him in Malaysia have been methodical and required patience to maintain a balance within in society.

However, in the Middle East, a lack of patience with the process of playing catch up, says the Aga Khan, could tear at the fabric of society.

“It is not only addressing a form a paralysis of development and extricating yourself from that frozen situation, it is also that societies don’t change that quickly and if you force them to change that quickly you are going to run into another set of problems.”

One of the key problems facing regional leaders is the rapid birth rate and its knock-on effect in the problem of double-digit youth unemployment. Policymakers are in agreement that 100 million jobs need to be created by the end of the decade for the jobless rate to stand still. It is a tall order, but adds the Aga Khan, educating the workforce will, over time, lead to a drop in birth rates, while development will do the same for the unemployment rate.

In the meantime, the Aga Khan wants to keep rural development on the radar of leaders throughout the Islamic world, in part to slow down the massive migration to city centers in search of work.

He said: “It has to be a priority, after all 70% of the Muslim population around the world lives from the land or on the land.”

December 8th, 2010
07:41 PM GMT
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November 19th, 2010
07:19 PM GMT
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There was plenty of grist for the rumour mill this past week, as the Irish government sheepishly admitted that a bailout for its banks may be a wiser option after all.

A side-car victim of the Ireland’s lending crisis is the hotel and leisure group Maybourne, which is saddled with $1 billion of debt about a fifth of which needs to be paid off near-term.  The name Maybourne probably does not ring a bell for most, but its hotel properties certainly will.  The 5-star luxury hotels Claridge’s, the Berkeley and the Connaught are all about a mile apart from each other in prime London locations, but behind the opulent appearances is a small mountain of debt.

Enter the Qataris - more specifically the two powerful Sheikh Hamads - one the Emir, the other his cousin the Prime Minister.  They are the tacticians of a handful of Qatari investment vehicles that have a penchant for Britain.  Advisors behind the throne are indicating interest and their track record once leaks appear are pretty accurate.

It has been a busy year even by Qatari standards.  This time last year the U.S. Embassy was snatched up for an undisclosed sum.  Once the United States vacates the premises, there are plans to turn the Grosvenor Square property into a luxury hotel or flats or both.  Back in May, the Egyptian owner of Harrods could not decline the premium being offered for the Knightsbridge institution.  Those trophy properties followed stakes in J Sainsbury, the London Stock Exchange, Barclays Bank and Chelsea Barracks.

The rapid pace of deal making initially raised some eyebrows in the City of London, but now each acquisition seems almost commonplace.  Britain left Doha nearly four decades ago during the handover, but Qatar won’t be leaving London anytime soon.  The Emir also spent a cool $150 million for a luxury flat in Knightsbridge.  It all makes sense. He wanted the luxury store in the same neighbourhood as his part-time residence.

As a banker familiar with the Qatari Royal family noted, they like to make purchases at a discount (Barclays) or to buy trophy assets (Harrods).  In the case of Maybourne’s portfolio it may be able to do both.

This may sound a bit odd for those of us making a decent living in that wide swath of the middle class, but Qatar cannot keep pace with the funds flowing into government coffers.  There are just over a million people living in Qatar - a third of whom are Qatari nationals.  The tiny state - which is playing a huge geo-political game - is producing the equivalent of nearly five million barrels a day in liquefied natural gas.  It has the third largest proven natural gas reserves and is right near the top in the per-capita income league at nearly $90,000 and growing by the day.   That is a lot of energy production for 300,000 people.

There is a certain irony in all this.  When oil prices collapsed during the late 1980s and early '90s, Qatar nearly went bankrupt.  The Emir - after nudging his father from power - took a huge gamble, invested heavily in gas to liquids (GTL) technologies and now has a fleet of 54 tankers servicing markets from Asia to Latin America.  His pay-day has come.

While the two Sheikh Hamads make headlines with their high-profile moves in Europe (let’s not forget Porsche and Credit Suisse) they are busy pursuing deals in emerging markets as well.  While I was covering the World Islamic Economic Forum in Kuala Lumpur last spring, the Prime Minister inked a $5 billion agreement to invest in property and energy projects in Malaysia.  He signed a $1 billion MOU in Indonesia and the Qataris are frequent visitors to Brazil and Russia - two members of BRIC, key players on the energy security front and highly populated markets with growing influence.

Qatar, as they say in boxing parlance, is punching above its weight and this match is just getting started.

November 12th, 2010
12:25 PM GMT
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The good news is that the G20 represents 85 percent of global output.  The bad news is that it is functioning more like the G2 with the current superpower (the U.S.) and the future superpower (China) dominating the agenda.

U.S. President Barack Obama is facing intense political heat at home and as a result was forced to go to Seoul wanting to tick a number of boxes linked to a domestic agenda:  a lower currency to help boost U.S. exports and therefore jobs and to lower the trade and current account surpluses of China, Japan and Germany.

Those three countries are export-led economies, which in reality is what they rely on for growth.  Yes more should be done to spur domestic demand - especially in Japan which remains stuck in stagflation cycle. 

But this depends more on confidence and culture.  Consumers in all three of these countries are high savers and less risk adverse than Americans.  So this has less to do with monetary policy than it appeared in Seoul around the bargaining table.


October 29th, 2010
10:58 AM GMT
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If vibrant colors, sights and sounds were rated as indicators to attract business and foreign direct investment, Marrakech and Morocco in general would win that competition hands down.  Entering the giant market square Jemaa El Fna a half hour before sunset takes one to a bygone era. Traders, craftsmen and the odd purveyor of black magic potions are all too willing to do a deal.

Thirty minutes outside the central square, we all gathered for the World Economic Forum regional meeting on the Middle East.  The distance from the Gulf - a full nine hours from Dubai before a transfer from Casablanca - served as a deterrent for many.  In fact, not one political leader decided to make the journey to a place where caravans would spend weeks crossing the Sahara to sell their goods.  

Even the King of the host country, Mohammed VI decided to leave this global event to others, which many attending saw as a sizable mistake.


September 14th, 2010
03:40 PM GMT
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At Schloss Elmau, Germany, one of the most picturesque corners of Europe a discreet but high level group of global executives expressed concern about the state of play in the West, but offered their relentless enthusiasm for the expansion in the East from the Middle East to Far East Asia.

Schloss Elmau is a castle, transformed into a luxury resort in a Bavarian village near the border of Austria. Austria’s former Chancellor Wolfgang Schussel urged 125 mainly European business executives “not to panic.” “Look at the real figures. We should be rational about a post-crisis environment,” Schussel said. German industry can leverage its famed engineering prowess to expand market share in green technologies and high-end manufacturing.

While not an outright panic, executives did express ongoing concerns for the medium term. In a poll conducted at the Stern Stewart Institute annual gathering, they predicted growth of only 1.9 percent in Europe and the U.S. for the next five years. The world they all agreed would be propped up by the East, with China sustaining baseline growth of 7.5 percent in the same time frame.

The former chief executive of German retailing giant Metro, Hans-Joachim Korber said we all need to recognise the shift of both economic and political power to the East. He made his first move into China two decades ago spending two full weeks on a tour from the top to the bottom of the vast land.

The demographics support Korber's position, one that is echoed by scores of others. Mumtaz Khan, chief executive of a Singapore-based investment group talked of “fundamental change” driven by population growth and the desire by governments, companies and citizens to boost the wealth of their nations and per-capita incomes. They shared figures indicating that China, India and Indonesia will be home to more than 3.3 billion people by 2050 from roughly 2.6 billion today.

The Middle East region is in the mix of countries with fast growing populations and intense spending plans by governments to build out infrastructure. Saudi Arabia and Abu Dhabi have earmarked $700 billion over the next five years for such activity. This by the way matches efforts by China, which has a current population of 1.2 billion - four times the size of the entire Middle East.

Marios Maratheftis the Dubai-based economist for Standard Chartered Bank told the gathering that governments in the Gulf States are quickly re-directing their spending away from real-estate projects after the 2008-09 crises. “Human capital tends to be neglected,” said Maratheftis pointing to the property sector in the UAE, which made up 70 percent of all activity in the pre-crash environment. Leaders in the region have recognised the need to speed up job creation and per-capita income for a wider swath of their populations. Recent unrest in Bahrain by the Shiite majority only served to underscore his points.

Beyond their concerns about sluggish domestic growth, they listed the threat of conflict in Iran as the number one risk to global security and the global economy, with surging energy prices due to high demand in the East straining supplies over the medium term.

During a plenary session on the link between economic and military power, the highly respected former ambassador for Germany in the U.S. and UK, Wolfgang Ischinger, did not hold out a great deal of hope for the latest round of Middle East peace talks. He  and said we should look for innovations beyond the current framework. He said this strategy should be built around a regional security pact initiated by Washington and supported by others.

Such a pact would remove the long-standing risk premium put on the region by investors and give these executives yet one more reason to be bullish on the East.

August 10th, 2010
07:38 PM GMT
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I’ve often wondered about this topic – and right now, at the start of Ramadan, it seems more pertinent than ever. How does faith inspire business? Is there a place for religion in the workplace? And how can one’s beliefs be translated into the world of finance – if at all?

As part of CNN’s “Muslim in 2010” coverage, we’re gathering voices and opinions from Muslims around the world on their faith and the status of Islam today.

So I’d like to hear your thoughts.

I’m interested in hearing from you what it’s like to be a Muslim working in business today.

What are your hopes for the Middle East’s economy and what opportunities do you see for Muslims’ wider role in the world of finance?

I’d also like to know what you think are the challenges, both for the Middle East and for Muslims worldwide.

How does your faith inspire you? How do you balance your faith with life in a global economy? And can religion offer solutions to the tumultuous world of business?

Please do share your thoughts and opinions – I’m interested to hear them.

July 30th, 2010
05:18 PM GMT
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The noise and commotion from one Gulf is drowning out activities in the other Gulf - the latter being the Persian Gulf.

A new chief executive has been appointed at BP, which is becoming more American by association with Bob Dudley now at the helm.

While clean up in the Gulf of Mexico and long-term solutions to cap the well dominate the agenda, there has been a tanker incident in the Straits of Hormuz, which raised some concerned eyebrows temporarily.

Maybe the "green light," which has been giving tankers unfettered passage of late, should be raised to amber as a sign of cautionary times ahead.

The tanker, "M. Star," owned and operated by Mitsui O.S.K. Lines of Japan had set sail off Das Island, Abu Dhabi and was headed to Japan with 270,000 tons of oil.

There was an explosion on board, the cause of which there are at least two explanations for. A crew member described seeing a flash before the explosion, leading a spokesperson for the company to say it could have been an attack.

A captain at the Port of Fujairah in the UAE said the tanker was exposed to a high wave attack as a result of an earthquake in Southern Iran over the previous weekend. After further inspection, port officials edged away from that cause.

The U.S. 5th Fleet is investigating the incident, and I am sure U.S. Central Command in Qatar will also be on higher alert, even if this was a false alarm.

I spent some time during the first Gulf War covering this main artery of energy transport. From up in the air, there are times when the Straits appear like a crowded highway for tankers.

Fifteen tankers a day, on average, pass through the Straits, handling about 17 million barrels - or 20 percent of the world’s daily crude demand. Japan is particularly dependent on the artery, with 75 percent of its supplies coming from the Gulf.

Since more than 40 percent of the proven reserves sit in countries that border the Persian Gulf: Saudi Arabia, Iran, Iraq, the UAE and Oman, the International Energy Agency believes the oil passing through the Straits will double by 2020.

This plays right into the hands of the current leader in Iran, Mahmoud Ahmadinejad, who has threatened to wreak havoc if economic sanctions hold back his ability to develop the energy sector.

The country’s Revolutionary Guard conducted naval exercises at the end of April to underscore the point. Iran sits atop the third largest proven oil and gas reserves and the majority of a huge natural gas field, which is shared with Qatar. It is fair to note that Qatar cannot produce energy at its state of the art LNG facility fast enough, while Iran suffers from a lack of investment and technical expertise on its side of the field.

All this discussion triggers memories of the so-called “tanker attacks” in the mid-1980s when Iran and Iraq planted sea mines to not only attack each other during their eight-year war, but to keep the energy passage on tenterhooks. Similar security challenges persisted during the Gulf War, creating wild gyrations in energy markets.

Not to be alarmist, but those I have recently spoken with in the business are not taking anything for granted. They remain concerned about the rhetoric coming out of Iran and the fact it was raised to a new level after the vote for European Union sanctions, which includes actions to target Iran’s energy sector.

At this stage, the incident of the M. Star may be an act of Mother Nature and the tanker can move on its merry way after minor repairs. That would be a simple ending to this story. But the Straits of Hormuz and the Persian Gulf are too complex for that.

Bring in Turkey’s Prime Minister Recep Tayyip Erdogan to add an interesting plot twist. While hosting his British counterpart David Cameron in Ankara, Erdogan kept to the line that he prefers a diplomatic solution to Iran’s nuclear plans.

Turkey cast a vote against U.N. sanctions and is not of course a supporter of stricter measures from Brussels. Let’s not forget two crucial elements that may influence his decision: the exhaustive debate over Turkey’s application to the E.U. and the country’s larger than life role in oil and natural gas distribution for Europe.

I invite you to call up a few of the maps that include oil and gas pipelines. Those arteries of energy seem to outnumber the major truck routes in the country.

Turkey’s emboldened stance comes after a few years of active diplomacy by the leader whose country straddles East and West. He has decided to take his chips to the East, where the role of one of the region’s most populated countries is more appreciated.

Against this backdrop there remain tensions in Gaza, re-emerging frictions in Lebanon and yes, Iran’s nuclear ambitions.

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