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 23rd, 2010
03:10 PM GMT
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New York (CNN) – What does it take to get a conservative politician, liberal economist and billionaire businessman to agree? A crisis - and that is exactly what David Stockman, Jeffrey Sachs and Mort Zuckerman worry the U.S. will face as a result of the $858 billion tax package just passed by Congress.

"It is a racket what is going on in Washington. Here we had a deficit commission, we discussed these issues for months and all of the sudden the President and the Republicans get together and there’s another trillion dollars given away over 2 years. It’s really shocking stuff actually," says Sachs, a Columbia professor and special adviser to the United Nations.

"These debts essentially are a dagger pointed at the heart of the economy and sooner or later that dagger is going to strike so we now sort of justify this (tax package) in the short run because nobody thinks in the long run," adds real estate magnate Zuckerman.

We invited these three men to Time Warner Center to participate in a year-end discussion on the challenges facing the U.S. economy and, perhaps more importantly, the remedies that should be put in place.


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Filed under: BusinessUnited States

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 2nd, 2010
04:39 PM GMT
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Anyone who’s ever visited the Emerald Isle will confirm that humor always lies just beneath the surface.  Even in these tough times, with the “Celtic Tiger” reduced to the status of a bemused kitten trying hard to look cute beside a begging-bowl, the Irish can fall back on their love of irony and their taste for gallows humour.

So it’s hardly surprising that the following droll story is now hurtling round the email circuit at breakneck speed.  It’s actually quite hard to find the original source, but this particular yarn does seem to have been spinning around for at least a few weeks – before the Irish government was forced into a painful climb-down in the shape of a bailout deal with the EU and IMF.  In fact, I suspect it’s an older story which has been dug out, brushed off and tweaked to make it fit the current circumstances.

Whatever the source, the events of the past few days have sent this tale zooming round cyberspace all the faster, so much so that I received it from two quite separate sources on the same afternoon:

“It is a slow day in a damp little Irish town.  The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit.

“On this particular day a rich German tourist is driving through the town, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

“The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer.

“The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the pub. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him ‘services’ on credit.

“The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel proprietor then places the €100 note back on the counter so the rich traveller will not suspect anything.

“At that moment the traveller comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

“No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the future with a lot more optimism.

“And that, Ladies and Gentlemen, is how the bailout package works.”

It’s a neat little story, but I have two problems with it.

First, nobody in it is actually in debt – not net debt, anyway. Their net balance sheet is zero. Take the butcher. He owes the pig farmer €100, but is owed the same amount by the hotel owner. And so on for all the Irish characters.

Second, I am not sure how appropriate it is to dwell on the underlying message of the story.  What does the story really tell us? For one thing, it reveals the way a bit of liquidity (the German's ready cash) oils the wheels of the economy.

That is a perfectly sensible thing to point out - normally.  But you don’t have to be a Ph.D. in economics to realise that pumping in too much cash will overheat the economy.  Too much liquidity will jack up demand and ultimately create a bubble.

Sound familiar?  Well, of course that is what happened in Ireland in the boom years: the housing sector floated high on oceans of liquidity, and then when someone pulled the plug the result was a bust, and a bunch of crippled banks.  The rest is Irish history.

So moral of the story, if you will, is actually a dangerous one – and certainly not the one the story-teller had in mind.  Mind you, if the rich German had had the presence of mind to demand an interest rate based on the average of 5.83 percent the Irish will have to pay for their bailout, the conclusions might be different.

But it’s still a good story – so why let dreary old economics spoil it?

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Filed under: BusinessRecession

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 2nd, 2010
03:19 PM GMT
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California produces about a quarter of America’s farm production with immigrants from south of the border doing the back-breaking work in the fields of the Salinas Valley, which was made famous by John Steinbeck. But the most visible “crops” sprouting up these days are For Lease or foreclosure signs in the real estate market.

Prior to a recent visit to what would be the world’s eighth largest economy on its own, I was wondering why there are concerns about a second dip into recession. Now I understand those concerns. During a two-week visit from San Diego to San Francisco, you can see what prolonged tough times look like and hear first-hand what business people are experiencing.

La Jolla, a picturesque seaside city of some 44,000 people, has basked in the light of being a bio-technology research hub with the University of California of San Diego providing a steady flow of government and private sector research and development funds.

What a wake up call as we drove through the village to see no fewer than one in four retail shops or office blocks shuttered with foreclosure or lease signs plastered across the empty spaces.

I had no problem driving up to any of La Jolla’s hotels and asking for a room without a reservation - this during peak season - or finding a prime-time dinner table at one of its fashionable open-air restaurants. It was a similar story 90 minutes up the coast in Newport Beach, where one retired industrialist who has lived in the area for nearly a half century said he has never seen anything like it.

It is difficult to ignore the numbers that paint a less-than-glowing picture for what has long been officially designated the “Golden State.” California had three of the top five metro-area slots in terms of real estate price gains nationwide as measured by S&P in the second quarter. Homebuyers rushed to close transactions before a federal tax credit expired. Prices then plummeted nearly 22 percent in July. Another alarming caveat tucked in the reports - more than a third of the sales have been generated from foreclosures, which means there is a great deal of pain being felt in the system.

Most alarming, perhaps, is the fact that unemployment at 12.3 percent is stubbornly high, and nearly three percentage points above the national average. As we finished our journey, we drove on Highway 280 through the heart of Silicon Valley to San Francisco and I realized, yet again, it would be difficult to find a more diversified economy on earth.

The state is home to hubs of high technology, bio-technology, defence and entertainment with leading universities providing the spark for entrepreneurs to pick up the ball and run. At this stage however, fewer and fewer are finding the means to jump into the game. State money is scarce, bank lending tight and signs of prolonged pain in abundance.

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Filed under: Business

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.

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