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Women voting: Kuwait

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Kuwait’s 9-11

Kuwait’s 9-11

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Ghost Wars

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The Gulf’s credit crunch survivors

The Guardian

By Raymond Barrett

Two years after the demise of Lehman Brothers and the subsequent deepening of the global credit crisis, the petro-sheikhdoms of the Gulf have shown a degree of economic fortitude that finance minsters in the western world could only dream of.

If ever proof was needed to highlight the current disparity between east and west, one need look no further than Saudi Arabia’s $60bn arms deal currently winding its way through the US Congress. As Riyadh stuffs its Christmas stocking with an assortment of F-15 aircraft and Apache helicopters, the venerable British RAF has come under pressure to justify both its budget and (in some quarters) its existence.

Undoubtedly, oil is the lubricant that has protected such countries as Saudi Arabia, Kuwait and the United Arab Emirates from the more abrasive side-effects of the recession. Together, these three possess more than a third of the world’s known oil reserves while accounting for less than 1% of its population. The emirate of Abu Dhabi produces nearly 3m barrels of oil per day alone.

Thus, even though crude prices are now trading around 50% down from their 2007 peak of $147 a barrel, there is still plenty of cash to spread around, be it for high-end military equipment or pricey footballers.

With wealth comes power and, through their sovereign wealth funds, the various Gulf states have also become major players on global capital markets. Whereas much of the oil revenue generated during the boom times of the 1970s was exhausted on a combination of necessary infrastructure projects and somewhat dubious investment schemes, the wealth generated over the last decade has been better managed.

Kuwait directs 10% of its oil revenue to a “future generations fund” to provide for a post-petroleum economy. Ascertaining the exact size of these funds has always involved a large amount of guesswork but, in recent years, Abu Dhabi’s overseas investments have been valued at $300bn-$600bn.

Of course, if you play with the big boys you have to be able to take the inevitable knocks. Both the Kuwait Investment Authority and the Abu Dhabi Investment Authority took large (and, at the time, apparently sensible) positions in global financial institutions such as Citigroup in 2008, only for the bottom to fall out of the market over the following year.

The most immediate impact from the decrease in oil and equity prices has been the postponement of some major infrastructure projects, primarily in the private sector. Yet the delays surrounding many large-scale public projects in Kuwait have as much to do with political squabbles over cost and accusations of irregularities in the tendering process.

The poster child for post-crunch penury in the region is Dubai, whose diversified and debt-fuelled service economy was the very antithesis of the economic models outlined above – one dependent on continual inward investment and a market convinced that prices only ever went in one direction.

That said, the “Dubai dream” was always dependent on attracting outside capital, so in the current climate Dubai will continue to serve its traditional regional function as a business and leisure hub, while its “global vision” will have to take a back seat until the world economy picks up again.

While the fiscal effects of these new realities can be readily quantified, their long-term political reverberations demand a more qualitative analysis. The fragility so embarrassingly demonstrated by Dubai should strengthen the status quo across the region when it comes to politics – hereditary rulers who enjoy absolute power with little or no interest in real democracy – as the ruling families from Riyadh to Doha can now point to the pain suffered by those who tried “western” models of development.

Despite Dubai’s epic profligacy, the tiny local population is well taken care of, thus minimising the possibility of political unrest. The main political blowback of Dubai’s debt crisis is more likely to be a reshuffling of the pecking order within the ruling Maktoum family (particularly those tainted by the crash), rather than some great upheaval.

It is no coincidence that Bahrain – the one country in the region that has a genuine indigenous economic (and religious) underclass – is also the most politically charged. While the current ruler, Sheikh Hamad bin Isa al-Khalifa, has been praised by the west for its attempt to appease dissidents and bring them into the political fold, this is a policy that appears to have unravelled of late.

For the foreseeable future, as long as the Gulf rulers continue using these abundant oil reserves as “rivers to their people”, providing a cradle-to-grave, gold-plated welfare state, their tribal autocracies will prevail. And even if the local people of Abu Dhabi have to suffer the indignity of downgrading their Porsches for BMWs some day in the future, it’s probably not going to send them racing to the barricades.

Tea Party declares war on military spending

12 February 2011
The Guardian

By Raymond Barrett

The conservative movement in the United States is at war – with itself. The battle is over government spending, and for the first time in a generation, the knives are being sharpened for that most sacred cow of the Republican party: the $700bn – and rising – defence budget.

What had been a relatively low-grade domestic dispute between the Republican party establishment and the libertarian-minded Tea Party movement boiled over into the public arena during this week’s CPAC conference in Washington – an annual gathering of conservative political groups. Supporters of the newly-elected US Senator Rand Paul – a Tea Party favourite and son of the erstwhile libertarian and prospective 2012 Republican presidential candidate Ron Paul – jeered and booed the former defence secretary, Donald Rumsfeld, as he was presented with a “defender of the constitution” award by former Vice-President Dick Cheney. Amid shouts of “Where’s Bin Laden?” Paul’s supporters staged a walkout during Rumsfeld’s acceptance speech for a prize that, for Republicans, is akin to the lifetime achievement award handed out each year at the Oscars.

And the reason for all this vitriol? It is not only leftwing liberals who see the 2003 invasion of Iraq as an illegal act: Rumsfeld – as a key proponent and architect of the war – is seen by some Tea Party supporters as a flagrant violator (rather than a defender) of their beloved constitution. Furthermore, the supporters of both Pauls, junior and senior, are avowedly non-interventionist in matters of foreign policy and decry the ubiquitous presence of US troops overseas, which Rumsfeld championed during his two terms as secretary of defence.

In his speech to the conference on Friday, Paul the elder was the only speaker to address the current crisis in Egypt and criticised successive US administrations for “propping up a puppet dictator”, citing 30 years of uncritical support for Hosni Mubarak. Traditionally, Ron Paul’s supporters (and the libertarian philosophy they espouse) have been dismissed as merely boisterous gadflies fluttering around the real heavyweight horsetrading for political power within the Republican party. The issues they champion range from the practical (passing a balanced budget amendment), to the fanciful (abolishing the Federal Reserve and reintroducing the gold standard); thus they have never been taken seriously by the Republican establishment.

But the rise of the Tea Party movement has changed the rules of the game, and given a more public forum to topics that were previously seen as off-limits to conservatives – such as drastically reducing the size of the US military and the propensity of successive White House administrations to deploy it overseas. While critics are quick to dismiss the Tea Party as merely the rabid right of the Republican party, many of its members reside to “the north” of the traditional “left-right” ideological divide; as such, this makes the race for the Republican party’s 2012 presidential nomination extremely difficult to predict.

The CPAC conference is traditionally the venue where prospective Republican presidents attempt to woo the party faithful, and this year saw appearances from heavyweights such as Newt Gingrich (his theme tune, “Eye of the Tiger”, greeted his appearance on stage) and a more sedate Mitt Romney, along with a somewhat bizarre cameo by Donald Trump.

These and other would-be commander-in-chiefs flexed their political muscles in front of their admirers by bashing a host of conservative bugbears including China, Europe, Iran, abortion, energy policy, Islamic fundamentalism, organic gardening and President Obama’s healthcare programme. Yet few of the Republican party’s leading lights offered serious solutions to addressing the looming $14tn national debt that is the overriding obsession of the Tea Party movement.

The Tea Party alone may not be big enough to unseat President Obama in 2012, but if its concerns are not addressed – including even the shibboleth of the defence budget – by the current crop of Republican presidential hopefuls, it is certainly capable of tripping up any GOP hopefuls making a dash for the Oval Office.

Obama plays down rift with Karzai

Sunday Business Post
by Raymond Barrett

US president Barack Obama welcomed his Afghan counterpart Hamid Karzai to Washington last week, as the two leaders sought to rebuild a relationship that had faltered amid allegations of corruption, electoral fraud and recurring civilian casualties.

During a joint address in the White House, Obama downplayed reports of a serious rift between their respective administrations.

‘‘With respect to perceived tensions between the US government and the Afghan government, let me begin by saying a lot of them were simply overstated,” he said.

Obama then outlined his goals in Afghanistan, the most immediate being an upcoming offensive against the Taliban in its traditional stronghold around the southern city of Kandahar.

The success of this operation is likely to affect another key policy objective – to begin withdrawing troops from the country by July 2011.

Despite the niceties, there is no denying that the ‘nation building’ project in Afghanistan is in serious difficulty.

While the country faces many challenges, corruption (allegations reach as high as Karzai’s own brother) is an oft-cited concern.

Vanda Falbab-Brown, a security specialist at the Brookings Institute and the author of Shooting Up: Counterinsurgency and the War on Drugs, told The Sunday Business Post that the Afghan National Police regularly extorted money from the civilian population, forcing them to hand over bribes simply to use the roads.

Describing the practice as the ‘‘Achilles’ heel of the Afghan project’’, she added that ‘‘it feeds the Taliban and resentment against the government’’.

Yet there are even more disturbing accusations. Reports have surfaced that the US is indirectly funding the Taliban and other insurgents through its use of Afghan subcontractors, who provide logistical support to US troops.

In order to use certain roads, such as the one that runs from Kabul to Kandahar, these subcontractors pay suspected militants ‘‘protection money’’ so their truck convoys can reach their destinations safely. In such a scenario, the long term implications for Washington are sobering.

With such large profits available to local contractors, some of whom are related to senior government figures, why would such officials ever want the Americans to leave?

By focusing on issues such as good governance, the Obama administration has attempted to charter a somewhat different course from that of its predecessor.

Felbab-Brown criticised the previous policies employed by the US, whereby money was thrown at various regional leaders and warlords, and development aid was sometimes horse-traded with villagers for often dubious intelligence on the Taliban.

‘‘We have to get away from the idea of buying or renting the Afghans,” she said.

While the prognosis for the country is poor, there was one noticeable change in the diplomatic nomenclature that raised the possibility of convalescence.

Post September 11, Afghan insurgents have generally been defined in Washington as enemies to be unambiguously defeated. Yet the current US ambassador to Afghanistan spoke last week about ‘‘reconciliation’’ and the possible ‘‘reintegration’’ of the Taliban – a geopolitical sea change that may prove more effective (and less costly) for all concerned.