Saturday, October 11, 2008

No longer shielded by oil money, Arab investors take severe beating

Oil
By Alistair Lyon ReutersPublished: October 8, 2008

BEIRUT: Like anyone invested in global financial markets, Arab sovereign funds, investment banks and rich individuals are taking a severe beating.

Also getting queasy are those who have poured money into real estate ventures in boomtowns like Dubai or Doha, Qatar, or housing markets like Amman, Damascus and Beirut that have been fueled by remittances and investments from the Gulf.

But they have few other outlets for their wealth in a region where corruption, political instability and sluggish economic change have handicapped growth and development for decades.


"People who have money in the Middle East are deeply plugged into the global financial system," said Rami Khouri, a Middle East commentator based in Beirut. "They have nowhere else to go."

Kouri added, "We are getting a double whammy: the direct impact of the global financial crisis and the cumulative backlash of our own mediocre public policies in the last 40 years."

Middle East stock markets, at first shielded by the region's vast oil money inflows, experienced panic selling this week while there were fears that a five-year Gulf property boom was over and developers would have to merge as financing conditions worsened.

Kuwait on Wednesday lowered its benchmark discount rate by one and one-quarter percentage points to 4.5 percent to shore up its economy, putting pressure on other Gulf banks to follow suit.

A plunge in world oil prices to less than $90 a barrel from a record $147.27 in July has provided another sharp reminder of the vulnerability of many Arab economies to global shocks, even those where free-market policies have made only slow inroads.

"The Arab region is not yet fully globalized," said Louis Hobeika, an economics professor at Notre Dame University in Lebanon. "It represents no more than 2.5 percent of the world economy, from which it is still disconnected, except for oil."

That disconnect might provide some protection from global upheaval, he added.


"However, during a period of recovery, we lose a lot because we don't grow with the rest of the world," Hobeika said.

Anti-Western Islamists and advocates of Arab socialism may also claim that the crisis vindicates their criticism of the evils of globalization and the West. But such critics do not define policies in most Arab states, where political elites have adopted mantras of economic reform, even if its realization and openness have often lagged.

In Egypt, the world crisis should make free-market measures like privatization all the more urgent, said Angus Blair, head of research at Beltone Financial, an investment bank in Cairo.

For example, he said, the government had lost out by deciding in July to cancel the sale of Banque Du Caire, a major Egyptian bank, saying the bids were too low.

"In hindsight, the lack of sale of Banque Du Caire looks misplaced because they could have received a price they will not now be able to receive for many years," Blair said.

"In terms of reform for Egypt and the region, if authorities have any sense, and I think they do in Egypt, they will use this as an opportunity to reform further. Because that is exactly what we need. There is no alternative."

Egypt, like many populous Arab countries outside wealthy Gulf countries, is struggling with poverty and unemployment, partly a legacy of the state-dominated policies of the past.

"You do have people trying to slow down economic reform, but they aren't going to win the day," Khouri, the commentator said. "The reality in all these regimes is that if they don't create jobs and raise people's incomes, they will have massive problems of political stress and unrest. Very few Arab countries have been able to do that in a sustainable way."

Khouri said that some had managed growth rates of 6 percent or 7 percent but that these were often based on oil revenue or investment in real estate, housing or tourism, not new productive activity.

Arab governments might need to rethink their economic strategy, but reform-minded advocates will have to convince skeptical publics that new policies will do more than serve entrenched interests.

What's more, in the short term they are unlikely to listen to any economic sermons from the United States, whose own government's actions in the crisis have run counter to free-market dogma.

"The United States now has zero diplomatic credibility, very little military credibility after Iraq and Afghanistan, and now nearly zero economic credibility," Khouri said. "It's a ghost of its old self, although this is obviously a temporary situation because it is still very powerful

Source: International Herald Tribune/Reuters

Submission

Blog Archive


FEEDJIT Live Traffic Feed

Followers

Copyright Muslims Against Sharia 2008. All rights reserved. E-mail: info AT ReformIslam.org
Stop Honorcide!



Latest Recipients of
The Dhimmi Award
Dr. Phil
George Casey


The Dhimmi Award


Previous Recipients of
The Dhimmi Award




Latest Recipient of the
World-Class Hypocrite Award
Mainstream Media


World-Class Hypocrite Award


Previous Recipients of the
World-Class Hypocrite Award




Latest Recipient of the
MASH Award
Dr. Arash Hejazi


MASH Award


Previous Recipients of the
MASH Award




Latest Recipient of the
Yellow Rag Award
CNN


Yellow Rag Award


Previous Recipients of the
Yellow Rag Award




Latest Recipient of
The Face of Evil Award
Nidal Malik Hasan


The Face of Evil Award


Previous Recipients of
The Face of Evil Award




Latest Recipients of the
Distinguished Islamofascist Award
ADC, CAIR, MAS


Distinguished Islamofascist Award


Previous Recipients of the
Distinguished Islamofascist Award




Latest Recipient of the
Goebbels-Warner Award
ISNA


Goebbels-Warner Award


Previous Recipients of the
Goebbels-Warner Award




Muslm Mafia



Latest Recipient of the
Evil Dumbass Award
Somali Pirates


Evil Dumbass Award


Previous Recipients of the
Evil Dumbass Award




Insane P.I. Bill Warner
Learn about
Anti-MASH
Defamation Campaign

by Internet Thugs




Latest Recipient of the
Retarded Rabbi Award
Shmuley Boteach


Retarded Rabbi Award


Previous Recipients of the
Retarded Rabbi Award




Latest Recipient of the
Mad Mullah Award
Omar Bakri Muhammed


Mad Mullah Award


Previous Recipients of the
Mad Mullah Award




Stop Sharia Now!
ACT! For America




Latest Recipient of the
Demented Priest Award
Desmond Tutu


Demented Priest Award


Previous Recipients of the
Demented Priest Award




Egyptian Gaza Initiative

Egyptian Gaza




Note: majority of users who have posting privileges on MASH blog are not MASH members. Comments are slightly moderated. MASH does not necessarily endorse every opinion posted on this blog.



HONORARY MEMBERS
of

Muslims Against Sharia
Salah Uddin Shoaib Choudhury
Hasan Mahmud

ANTI-FASCISTS of ISLAM
Prominent.Moderate.Muslims
Tewfik Allal
Ali Alyami & Center for Democracy and Human Rights in Saudi Arabia
Zeyno Baran
Brigitte Bardet
Dr. Suliman Bashear
British Muslims
for Secular Democracy

Center for Islamic Pluralism
Tarek Fatah
Farid Ghadry &
Reform Party of Syria

Dr. Tawfik Hamid
Jamal Hasan
Tarek Heggy
Dr. M. Zuhdi Jasser &
American Islamic
Forum for Democracy

Sheikh Muhammed Hisham
Kabbani & Islamic
Supreme Council of America

Sayed Parwiz Kambakhsh
Nibras Kazimi
Naser Khader &
The Association
of Democratic Muslims

Mufti Muhammedgali Khuzin
Shiraz Maher
Irshad Manji
Salim Mansur
Maajid Nawaz
Sheikh Prof. Abdul Hadi Palazzi
& Cultural Institute of the
Italian Islamic Community and
the Italian Muslim Assembly

Arifur Rahman
Raheel Raza
Imad Sa'ad
Secular Islam Summit
Mohamed Sifaoui
Mahmoud Mohamed Taha
Amir Taheri
Ghows Zalmay
Supna Zaidi &
Islamist Watch /
Muslim World Today /
Council For Democracy And Tolerance
Prominent ex-Muslims
Ayaan Hirsi Ali
Magdi Allam
Zachariah Anani
Nonie Darwish
Abul Kasem
Hossain Salahuddin
Kamal Saleem
Walid Shoebat
Ali Sina & Faith Freedom
Dr. Wafa Sultan
Ibn Warraq

Defend Freedom of Speech

ISLAMIC FASCISTS
Islamists claiming to be Moderates
American Islamic Group
American Muslim Alliance
American Muslim Council
Al Hedayah Islamic Center (TX)
BestMuslimSites.com
Canadian Islamic Congress
Canadian Muslim Union
Council on American-Islamic Relations
Dar Elsalam Islamic Center (TX)
DFW Islamic Educational Center, Inc. (TX)
Holy Land Foundation for Relief and Development (Closed)
Ed Husain & Quilliam Foundation
Islamic Association for Palestine (Closed)
Islamic Association of Tarrant County (TX)
Islamic Center of Charlotte (NC) & Jibril Hough
Islamic Center of Irving (TX)
Islamic Circle of North America
Islamic Cultural Workshop
Islamic Society of Arlington (TX)
Islamic Society of North America
Masjid At-Taqwa
Muqtedar Khan
Muslim American Society
Muslim American Society of Dallas (TX)
Muslim Arab Youth Association (Closed)
Muslim Council of Britain
Muslims for Progressive Values
Muslim Public Affairs Council
Muslim Public Affairs Council (UK)
Muslim Students Association
National Association of Muslim Women
Yusuf al Qaradawi
Wikio - Top Blogs