Month: June 2010

By Sami Halabi

US pressure mars an ancient partnership in the Persian Gulf

When you have been in a relationship with someone for centuries, breaking up is hard to do. Sure, you may bicker over seemingly trivial problems in your marriage, but more often than not, your history with that special someone has you running back into their arms.

Take Dubai and Iran. The two were engaged in a trading love affair long before either nation even existed.

That relationship has been blossoming of late, with trade between the two increasing threefold between 2005 and 2009 to reach $12 billion, according to the Dubai Chamber of Commerce. But with the threat of new sanctions being imposed on Iran and the financial crisis stemming Dubai’s previously inflated financial ego, that could all be about to change.

No more smooth sailing

On the surface at least, recent international developments have only brought the old couple closer together, especially for Iran which, faced with economic sanctions imposed by the United Nations and the United States, has been able to use the ports of Dubai as a forwarding station to get around such impediments.

The UN has passed three sets of sanctions against Iran which encompass a wide range of materials it deems can be potentially employed in the enrichment of uranium, in addition to freezing the assets of persons it has identified as aiding Iran in its nuclear ambitions. The US has imposed its own set of more stringent sanctions and has forbidden its companies from engaging in financial and commercial transactions with the Islamic Republic.

Notwithstanding these restrictions on trade and financial activities, Iran seems to have come out relatively unscathed — so far. In April, The Wall Street Journal reported that only around $43 million in Iranian assets had been frozen in the US, which amounts to roughly a quarter of what the country makes in oil revenues in one day.

In recent years however, the US and their allies have taken a sharper aim at Iranian businesses or those that have dealings with Iran. In October 2007, Washington imposed sanctions on three large Iranian banks: Bank Melli, Bank Mellat and Bank Saderat. Since then, Iranian businesses in Dubai have been taking flak.

“The Iranian businessmen in Dubai are the ones being hammered badly by the sanctions,” says Morteza Masoumzadeh, a Dubai based-shipping agent and a vice president at the Iranian Business Council in Dubai. “The sanctions have had no effect at all on the Iranian government’s nuclear activities, as we can see, they are progressing every day.”

According to Masoumzadeh, some 400 Iranian businesses have closed since the downturn in Dubai. While he admits that some of these closures were caused by the emirate’s real estate bust, he says that “the majority of them have closed their businesses due to the restrictions on Iranian banks and the subsequent restrictions applied by the local banks.”

To make matters worse for Dubai, the past few months have seen a series of calls from Western nations — particularly America — for new and stronger UN sanctions. In March, US President Barack Obama called for sanctions to be imposed “in weeks.”

Since then, a wave of international companies have announced plans to scale back or cut ties with Iran, including international oil companies Eni, LUKOIL and Royal Dutch Shell, Indian refiner Reliance Industries, US construction and mining equipment maker Caterpillar and German carmaker Daimler, as well as KPMG, PricewaterhouseCoopers and Ernst & Young. But while these international pullouts may perhaps be a significant harbinger of things to come, it is businesses closer to home that stand to lose most.

“The [United Arab Emirates] is Iran’s most important trade partner, before Germany and China, so any sanctions would hurt both sides, especially Dubai,” says Eckart Woertz, the economics program manager at the Gulf Research Center.

The US State Department has also placed the UAE in the crosshairs, threatening in 2007 to classify the country as a “destination of diversion concern,” according to Bloomberg. The pressure seems to have worked to some degree, as last August the Emirates commandeered a boat from North Korea allegedly carrying weapons to Iran.

Arms smuggling, however, is not the concern of most traders, whose legitimate business between Dubai and Iran is threatened.

“We have tried to go through local banks here to get facilities, but we have reached the point where they prefer not to get involved with Iranian businesses,” says Masoumzadeh. His main complaint is that banks in the UAE have stopped issuing letters of credit (LC) to facilitate trade between the Emirates and their Persian neighbors.

“The UAE banks…won’t issue an LC to our overseas suppliers with the name of an Iranian port in it,” said Masoumzadeh.

The worst to come

Last month, some apparent progress was made on the international front concerning Iran’s controversial nuclear program, when the Islamic Republic inked a deal brokered by Brazil and Turkey to swap outside its borders low-grade nuclear material for enriched uranium to use in its power plants, something it had previously refused to do.

Nonetheless, the move seems to have been brushed off by the West; the next day US Secretary of State Hillary Clinton announced that she had agreed on “a strong draft” for UN sanctions “with the cooperation of both Russia and China.”

For the Emirates though, much will depend on what course of action Abu Dhabi decides to take when it comes to implementing a further round of sanctions, or imposing stricter controls on existing activities between Iran and Dubai.

“Abu Dhabi is less reliant on the Iranian trade and has traditionally played a leading role in the foreign policy formulation of the UAE since its unification in the 1970s. Dubai, on the other hand, has concentrated more on its economic role,” says Woertz.

Abu Dhabi has also been vocally hostile towards Iran lately over a long-standing dispute about oil-rich islands in the Persian Gulf that are currently controlled by Iran.

“Occupation of any Arab land is occupation… Israeli occupation of the Golan Heights, southern Lebanon, West Bank or Gaza is called occupation and no Arab land is dearer than another,” said Sheikh Abdullah bin Zayed al-Nahayan to the official UAE news agency, Wakalat Anba’a al-Emarat, in reference to the islands in late April.

The burgeoning capital has already put forward some $20 billion to save its little brother Dubai from defaulting on debt repayments, with estimates of Dubai’s total debt varying from a low of $80 billion to as high as $170 billion.

“The equation for Abu Dhabi and the UAE in particular is probably the toughest equation for any country in the world,” says Hady Amr, director of the Brookings Doha Center, referring to the decision to go along with tougher sanctions against Iran. “You can’t just lend your cousin money and then tell them to quit their job.”

According to the Iranian Business Council’s Masoumzadeh, 70 percent of his business has vanished due to existing restrictions on credit facilities. “If [the United Nations Security Council] comes up with a ban restricting shipping goods to Iran, for sure the other 30 percent of our business will also go.”

But, as the old adage goes, times of crisis always breed times of opportunity. The US trade ban on Iran currently does not apply to subsidiaries of US firms dealing with Iran if they do not have an operational relationship to the parent company. Even decisions by companies like Caterpillar, which ordered its subsidiaries not to sell goods to Iran, will not have a great effect on the supply of American goods to the country, given that the secondary market can hardly be controlled.

“As far as the Dubai customs are concerned, when a printer lands at the Dubai port, whether it is an HP, Samsung or Brother; its a printer, customs officials don’t care about the brand of the product as long it is not listed with the prohibited materials,” says Masoumzadeh, who added that the same applies at ports in Kuwait, Turkey, Indonesia and Malaysia. “The American administration can send out a circular to their producers saying ‘do not ship or sell American products to Iran’… but instead of buying HP products, end users in Iran buy Samsung. The Americans have, in reality, [just] eliminated their own producers from selling more goods.”

It is easy see that short-term profits are up for the taking: given that trade between Dubai and Iran has been increasing despite the sanctions, it seems increasingly likely that as international companies pack up and move out, regional companies can take advantage of the void left behind.

“You go in, you make a lot of money and then as the political pressure mounts you make a big fuss about why you are being asked to pull out,” says Brookings’ Amr. “If you are going to be asked to pay the price, you ought to be compensated. From the world that we are in, it seems that is a pretty successful way to do business.”

So, while the West may scold Dubai for its economic infidelity in its centuries old embrace of Iran, it is likely that the Persian allure will keep the emirate close — at least until a more attractive beau comes along.

First  published in Executive Magazine’s June 2010 issue.

By Sami Halabi

Patrick Seale produces a 700 page epic about Riad el-Solh and the wider Arab struggle

Albert Hourani, the late Lebanese-British historian once wrote: “All states are artificial… they have been formed by specific historical processes, by human acts within a given physical environment over a period of time.” It is precisely those processes and acts that are laid out in great detail by Middle Eastern historian Patrick Seale in his latest book on the region, “The Struggle for Arab Independence.”

This 730-page history book reads more like a gripping novel, with its protagonist carrying the tale from start to finish. In addition to plotting the course of how myriad Arab provinces came to become the rigid collection of states that we today call the Middle East, Seale also chronicles the life of Lebanon’s prodigal, yet perhaps most important, son: Riad el-Solh.

The life of Lebanon’s first prime minister is recounted from the days of his grandfather Ahmad to his untimely death in Amman in 1951.

Seale, who spent six years researching material for the book, describes a dark and tumultuous period of Arab history, jumping back and forth between the life of his protagonist and the broader events happening at the time, to offer one of the most comprehensive books in English on Arab struggles against Ottoman, Western and now Zionist occupiers.

The book cites countless sources from historical works, intelligence documents and personal accounts to paint what is, at times, a rose-tinted picture of Riad el-Solh’s political life and the role he played in shaping Lebanon and the wider Middle East. Seale portrays Solh as an internationalist, an Arabist, a working class sympathizer, an anti-colonialist, a journalist and a lawyer all in one.

The only criticism he seems to have of Solh — which by the end of the book seems to be a veiled compliment of sorts — is that he was no accountant, as he squandered a large portion of his family’s fortune on his political career and the fight to free the Arab world from its occupiers. But as any journalist, including Seale, knows, there are always at least two sides to every story, and indeed to every person.

Seale also goes to great lengths to give credit to others who fought for Arab “independence.” A laundry list of Arab notables, politicians, kings, imams, and thinkers are mentioned, leaving the reader with the impression that each of these men could have their own 700-page tome.

Meanwhile, Seale gives special attention to the calculations of the Zionists and their collusion with the British in such detail that it is perhaps only topped by Ilan Pappe’s “The Ethnic Cleansing of Palestine.”

Interestingly, he describes Solh’s repeated meetings with notable Zionists such as Chaim Weizmann, Israel’s first president; David Ben-Gurion, its first prime minster; and Moshe Sharett, Israel’s second prime minister, who he first met as a young boy when the latter’s father was employed as a smallholder at one of the Solh family friend’s estates in Jericho.

Solh naively offered these men a pact with the Arabs, a fact which Seale admits, but again paints it as a politically astute calculation during the 1920s and early 1930s, despite the disastrous affects of Israel’s creation.

However, it is details such as Solh’s childhood meetings with Sharett that makes the book stand out as a work of both exhaustive research and refined story-telling. It gives due credit to a man who is described in the first half of the book as a bastion of the wider Arab, and to a greater degree Syrian, struggle — a Greater Syria which included Le Grand Liban, which became the Lebanon we know today.

Midway through the book, Seale describes Solh’s most significant change of heart, when he started to believe in an independent Lebanon, something that set him apart from his fellow Arab nationalists. From that point onward, the reader follows Solh’s every political maneuver to become the first premier of the country, as he navigates his way past colonial French occupation, hostile Maronite opponents and even his own family members. The chapter describing how he and Bishara el-Khoury, the British-backed first president of Lebanon, battled with the French in the final throws of their colonial project, is separated into rounds — 14 of them, each a page or two long.

Finally, Seale describes how King Abdullah I of Jordan, the great grandfather of the current king, who sought to end the fight with the Zionists, tricked Solh into coming to Amman to mend ties that had deteriorated, only to be assassinated in what Seale suggests was an Israeli plot.

Seale may at times overstate the importance or relevance of Solh, but he does give him more of the genuine credit he is due than the Lebanese seem to today.

Tellingly, his book ends with the commissioning of Solh’s statue in the heart of downtown Beirut — today, the statue serves as little more than an adjunct to a construction site.   

First published in Executive Magazine’s June 2010 issue

By Sami Halabi

When things go wrong, progressive types normally try to fix them. But in Lebanon, this simple logic is rarely followed; more often than not we go along with the situation so as not to stir up tension, in the hopes that somewhere down the line things will fix themselves. But our problems don’t get fixed — they fester.

The Lebanese still adhere to an archaic and dysfunctional municipal system based on the dictates of an Ottoman sultan, with a dash of French colonialism thrown in for good measure. Looking at our current administrative process — in which it takes 67 signatures to fix a truck belonging to a municipality, according to economist Marwan Iskandar — it’s obvious that applying an old system to a new world just doesn’t work.

Change is painfully slow in this country, where political power is tied to sectarian affiliations and local loyalties, and people’s sense of disenfranchisement is so ingrained that it becomes self-fulfilling. Lebanon’s political leaders have a vested interest in maintaining the entrenched patronage systems in their sectarian fiefdoms, which ensure that no major decisions are taken without their consent.

Citizens suffer as a result; around $480 million stuck in the Beirut municipality’s coffers that could be used to develop the city has been tied up for months because the mayor, Abdelmounim Ariss, and the governor, Nassif Kaloosh, are from opposing parties and can’t agree to sign the same piece of paper.

The election process itself is no more democratic than the system of governance. A significant portion of last month’s municipal elections were over before they started, with 15 percent of the seats won uncontested — amounting to 56 council seats and 199 mayoralties. The polls were supposed to be a platform to continue the government’s piecemeal electoral reforms that were introduced in last year’s parliamentary elections. Proposals ranged from the introduction of pre-printed standardized ballots and campaign finance reforms that prevent vote buying, to proportional representation and quotas for women to make for a more balanced outcome.

The much needed reforms would have provided a more democratic and equitable outcome for Lebanon’s voters. However, seeing the status quo that so benefits them threatened, our politicians engaged in the time honored tradition of stalling the matter by reviving age-old excuses that reforms such as lowering the voting age (opposed by all the Maronite-led parties) and allowing non-residents to vote (opposed by non-Christian-led parties) would upset the sectarian “balance” of the country, even though there is scant evidence as to the sectarian impact of either. The constitutional deadline for the elections was duly ignored until it was too late and the reforms had to be abandoned.

With electoral reform dead in the water, lawmakers then went on to neuter the democratic process further with “consensual lists” that allowed the interior minister to announce the “results” of some contests before the actual ballots were cast. And where the Free Patriotic Movement and Hezbollah didn’t get their way with the lists, instead of running a campaign based on policy to defeat their opponents, they packed up and pulled out. The Future Movement and the Nasserites didn’t do much better; after they couldn’t come to agreement over how to divvy up the spoils, their supporters decided to have a punch-up in the polling stations.

But all the blame cannot be laid squarely at the feet of our politicians. After all, if they can get away with making a mockery of the democratic process and still get people to come out and vote for them, then why wouldn’t they take advantage of the situation?

With every year that passes of politics-as-usual, we complain that things aren’t getting any better. But if we genuinely want to see reform, there is no other option than to do what the politicians always tell us will tear the country apart: end confessionalism and change our political and administrative system.

We need to change our mindset and realize that what we let fester will never fix itself — or we should simply shut up and stop complaining.

First published in Executive Magazine’s June Issue.

By Sami Halabi and Assaad Thebian

The central Sergels Torg square in Stockholm is not the place you would normally expect to hear the words “stop the blockade,” or “boycott Israel,” or even “In our souls and with our blood we support you Palestine,” in Arabic no less.

But that is what happened as thousands of people descended on the square on 31 May in support of the Freedom Flotilla, the name given to the convoy of six passenger and aid ships attacked by the Israeli military in international waters early that morning.

Predominantly Palestinian and Turkish flags flew high above the square as thousands of Swedes of all backgrounds gathered to protest Israel’s actions.

“This is something that Israel has been doing for a long time and it’s obvious that this is contrary to international law no matter how you view the conflict,” said Magnus Alfonson, 25. The sense of anger amongst the crowd was evident in the somber manner that they gazed upon the speakers who stood atop a staircase surrounded by demonstrators many wearing traditional Palestinian kuffiyeh scarves.

Sweden has had rocky relations with Israel in the last year after a Swedish journalist alleged that Israel had stolen organs from Palestinians for use in transplants during the 1990s. Sweden, as did Turkey, Denmark and Greece and several other countries, also summoned the Israeli ambassador in Stockholm for questioning over the fate of some 11 Swedish citizens that were among the passengers of the flotilla which included one Swedish-owned and flagged vessel.

“We want a clarification over what has happened,” Swedish Foreign Minister Carl Bildt told Sveriges Radio. “We know that there are Swedes on some of the ships and we want to know what has happened to them. There appears no reason to question media reports that a Turkish vessel has been boarded, that a fire fight occurred and that people have been killed.”

One of those citizens is world best-selling Swedish author Henning Mankell. Another is Emile Sarsour, a dual Swedish-Palestinian citizen born in a refugee camp in Syria, according to his daughter Samaa Sarsour, a 26 year-old activist and organizer of the protest. While at the demonstration she stated she had just received a phone call from the Swedish foreign ministry telling her that the Swedish embassy in Israel had been denied access to her father and that he was at the Beersheva prison in Israel. She added the official on the phone said the Israeli authorities had said that “maybe” they would gain access to her father the following day.

“It’s obvious that no matter where you stand on the issue, this is a crime against a nonviolent organization,” said Daniel Free, a Jewish Swede also present at the protest.

“Israel must be brought to the international court of justice,” said Zaida Catalan, legal advisor for the local Green Party in the Swedish Parliament to resounding applause before the crowd dispersed.

As for the Swedes still being detained by Israel, their fate remains unclear. However, their resolve may be less ambiguous. “When I told my father I was scared before he left,” said Sarsour, “he said to me that if he as a Palestinian could not do this; who else would?”

First published on Electronic Intifada’s website on June 1, 2010

By Sami Halabi