Egypt’s Muslim Brotherhood Woos Washington

Look who’s visiting Washington!!

Egypt’s Muslim Brotherhood Woos Washington

By Vivian Salama

The Daily Beast

Click here for original story

There was once a time when U.S. officials shunned Arab Islamist parties, frowned on their election victories, and denied them U.S. visas. But times are changing.

Delegates from Egypt’s Freedom and Justice Party, a group affiliated to the Muslim Brotherhood, are in   Washington for their first official visit since Hosni Mubarak was toppled last year. Only days after announcing their party’s candidate in the first presidential election since the revolution, the visiting delegates have met with members of Congress and White House officials and held public discussions at Georgetown University and Carnegie Endowment for International Peace.

Outlawed under the Mubarak regime, members of the Muslim Brotherhood and more hard-line Salafist parties have emerged, not surprisingly, as a powerful force in the Egyptian elections, thwarting the secular groups that are believed to have been the drivers of last year’s revolution. As a group that founded itself on the principles of grassroots activism, the Muslim Brotherhood has long resonated with the people of Egypt, where at many as 30 percent of the population lives below the poverty line, according to the United Nations.

The delegates sent to Washington were all articulate English speakers, two of whom hold doctorates from U.S. institutions. They were non-evasive, answering impassioned questions from the Georgetown audience about religious persecution and Sharia law. The message was not specifically linked to Islam. They did not criticize—or even mention—Israel. They stressed that Egypt is open for business and encouraged free trade and foreign direct investment. (more…)

“The Protester”: A Photo Journal of the Egyptian Revolution

Thanks to TIME Magazine for recognizing the revolutionaries all over the world… I’ve been meaning to write this for quite some time but only finding the chance to do it now.

A year ago when Mohammed Bouazizi, a fruit vendor in Tunisia, burned himself out of frustration from a political system that neglected him, I was en route to Beirut ahead of the Christmas holiday and writing, mainly, about the credit crunch in the Arab Gulf states and mounting concerns that the banking system would not soon recover from the blow. Days after I returned from Beirut, my host, Rania Abouzeid, came to stay with me in Dubai in a desperate attempt to fly to Tunisia, where flights were almost entirely grounded amid an uprising across the country. It was hard to imagine then that the desperate act of this young man not only set in motion a revolution in his country, but around across the region.

Jan. 27, 2011: me and Rania Abouzeid heading to Cairo (at 3am -- ughhh!!!)

On January 14, 2011, following a month of violent protests against his rule, Zine El Abidine Ben Ali – Tunisia’s president since 1987 — was forced to flee to Saudi Arabia along with his wife and their three children.  A week later, Rania and I were on a flight to Cairo where calls for a revolution had begun to circulate on social media websites. They were days I will never forget, and with TIME Magazine’s 2011 Person of the Year issue being dedicated this year to The Protester, I want to share with you all a few memories and photos of the protesters I met in Cairo this year. (Click here to read some of my stories on the Arab Spring)

On January 27, two days after the protests officially begun, Internet and mobile phone service was completely cut off in Egypt and we were left guessing where crowds were gathering. After trying a few spots around town, Rania and I decided to go toward the Mohendiseen neighborhood near the Moustafa Mahmoud mosque. It was a good guess! About 500 protesters had gathered after Friday prayers where they came face to face with riot police chanting slogans like “The people want the end of the regime” and “Hosni Mubarak: illegitimate.”

We began to march, with the intention of going toward Tahrir Square. (Rania and I were quickly separated in the crowd and were each forced to continue reporting on our own). Weaving through side streets and alleys in the Cairo neighborhood, people watched us from balconies, throwing bottles of water, garlic and onions, and bottles of vinegar – all simply remedies for tear gas inhalation, because everyone knew what lie ahead.  The longer we marched, the more the crowd swelled, with protesters called on those people in their homes not to be afraid.

Cairo, January 27, 2011/Photo by Vivian Salama

Cairo, January 27, 2011/Photo by Vivian Salama

Jan 27: Protesters Near Moustafa Mahmoud Mosque/Photo by Vivian SalamaS

Sure enough, we were quickly confronted by tanks and soldiers firing tear gas at the crowd. I’ve never seen so much camaraderie in my life. Soldiers at a nearby military hospital threw medical masks at the protesters and pharmacists handed them out to the crowds. At one point I felt quite ill from the tear gas. A man approached from behind me and pressed a vinegar-covered mask against my mouth and nose. A nearby vendor (who probably struggles to feed his own family with the pennies he earns) emptied his refrigerator, handing out water bottles and cans of soda to the fatigued protesters.

Every where I looked, people were helping each other, helping strangers tie their masks, sharing water bottles, aiding those who were most affected by the gas.

There was one point, marching with the crowd from Mohendiseen, when we approached a major intersection and I heard roaring cheers. I jumped up on a car to see what had happened and was personally overcome by emotion. From three different directions, massive groups of protesters were approaching the intersection – the other groups coming from as far as Giza and the Nasr City. They did this without Internet or mobile phones.

Cairo, January 27, 2011/Photo by Vivian Salama

Groups of young men pushed to the front of the crowd and began to battle riot police, taking over their vehicles and chasing them away. Our group, now numbered in the hundreds of thousands, pushed slowly across the historic Qasr El Nil bridge in an attempt to move into Tahrir. There were moments when I worried that an attack by the military would trigger a stampede – we were stuffed tightly onto the bridge. But every time protesters began to push back, the young men in the crowd would grab the women in the crowd and push them against the bridge railing so to protect them from being knocked down.

Some were more prepared than others!! Cairo Jan. 27, 2011/Photo by Vivian Salama

It was a long night with protesters burning the ruling National Democratic Party headquarters and battling with soldiers in Tahrir. Riot police trucks were set on fire (and the Semiramis Hotel, where many journalists took refuge) was partially on fire for part of the evening. I was trapped in Tahrir for the night and forced to take a last minute room at the Semiramis. I woke up early the next morning to a different Cairo, where charred military tanks stood in the middle of Tahrir Square and smoke billowed from the NDP headquarters and, sadly, from the adjacent National Museum. It would take another two weeks (only!) to overthrow Hosni Mubarak but that first Friday was by far the most memorable. There is an Arabic expression that often refers to the Egyptian people as being “light blooded” (light hearted/good senses of humor). They definitely showed their spirit throughout the frustrating 19 days (and 30 years) it took to shake up their political system.

Tahrir Square, January 28, 2011/Photo by Vivian Salama

Tahrir Square, January 28, 2011/Photo by Vivian Salama

me in Tahrir (late January 2011)

I visited Bahrain in the weeks that followed and I spent a lot of time covering the uprisings in Yemen and, less so, the ongoing crisis in Syria. After years of battling misguided stereotypes of terrorism and violence, these protesters have showed the world that they desire freedom and a decent standard of living and they have the right to demand it just as those in Europe and the US demand of their governments.

The Tunisians, Egyptians and all the other citizens around the world fighting for democracy have a very long and bumpy road ahead.  The TIME Magazine Person of the Year issue questions whether there is a global tipping point for frustration. I believe what happened this year is, in large part, because of overpopulation and because of the global economic slowdown touched societies rich and poor – but toppled those that were already on the brink before markets crash. The world is smaller than ever thanks to the Internet and various technologies that allow us to share experiences with people on opposite corners of the world. As we continue to get closer, and the world, smaller, it will become impossible to distance ourselves from even the most seemingly remote events.

Cairo, January 27, 2011/Photo by Vivian Salama

The U.A.E.: 40 and Fabulous?

Abu Dhabi at 40 //Photo by Tala Al Ramahi (@journalist_tala)

 As some of you may know I just moved back to New York last week after living in the Middle East for much of the last 10 years, most recently in the United Arab Emirates, which is today celebrating its 40th anniversary. There is no doubt that the UAE has accomplished pretty spectacular things in 40 years, fueled greatly by the abundant oil wealth of Abu Dhabi, which holds more than 90 percent of the crude in the country, and about 7 percent of the world’s proven oil reserves, according to BP data.

Burj Khalifa // Photo by Vivian Salama

The country is home to the world’s tallest building, the Burj Khalifa in Dubai, one of the world’s biggest malls, the world’s largest dancing fountains (I must confess, the fountain is rather amazing), the only manmade island visible from space and one of two gold vending machines in the world!

Dubai dancing fountain // Photo by Vivian Salama

It is, undeniably, a remarkable accomplishment given that just 40 years ago the emirates, prior to unification and the discovery of oil, earned much of their income from pearl diving and exporting dates.

The pride of its citizens is something to be admired, and for weeks (even before I departed for the US), skycrapers were covered from top to bottom in lights of white, green, red and black, the colors of the UAE flag. Emiratis, the citizens of the UAE, wore scarves and jewelry with the colors of the flag, and cars were covered, literally, in photos of leaders past and present.

But a challenging road lies ahead for the UAE, particularly after this year’s events in the Middle East, where longtime dictators were forced out by popular uprisings. There is one clear advantage the UAE has over countries like Egypt, Syria, Libya and Yemen: it’s citizens are not poor. There are parts of the country that are in great need for updated infrastructure – roads, power lines, etc – but citizens are, at worst, comfortable thanks to lifetime handouts by the government. (Click here for my story Abu Dhabi’s Spending on Soccer and Skyscrapers Masks Slower Times at Home)

But citizens of the UAE are hungry for one thing: opportunities. Currently, foreigners make up about 85 percent of the country’s population – the majority hailing from countries on the Indian subcontinent. British/Western European, Canadian, Australian and South African expats hold many of the high paying white-collar positions, in SOME cases because they are better trained to do so, leaving few high profile jobs for the locals.

Emiratization, a policy now enforced by the government in many workplaces, seeks to boost Emirati employment whether by providing training and education for Emiratis, or setting quotas in certain sectors for Emirati employment. Ultimately the government is trying to prevent their own talented citizens from being lured to the West. But many critics believe that the UAE cannot afford to lose its foreign workers as they may have been the driving force for the country’s speedy success in the first place. In the meantime there is growing resentment among foreigners who, despite making up the majority of the population,  have few rights. There is no legal protection on property rights, and police, in practice, do not need a reason to stop, question or even detain people.

Another challenge is maintaining the “vision” set by the country’s founders some 40 years ago. Seldom was there a day in the UAE that I did not hear someone refer to the “vision.” Abu Dhabi and Dubai have set urban planning roadmaps for diversifying their economies away from oil and expanding certain sectors (services, real estate, alternative energy, etc). However, the global economic crisis dealt a massive blow to the once seemingly invincible UAE and its seemingly invincible real estate market. Slowly we’ve seen the country scale back, but its officials still maintain that the overall “vision” is intact and on track. We shall see.

Photo by Vivian Salama

Finally, a problem facing many of the Gulf sheikhdoms: succession. The country’s founder Sheikh Zayed bin Sultan Al Nahyan has been dead for 7 years now but his legacy undeniably lives on. The question is whether his sons, the current President Sheikh Khalifa and Abu Dhabi’s Crown Prince Sheikh Mohammed, can continue the vision he laid out for the country 40 years ago. Many experts I’ve spoken with believe that the vision of the two brothers has grown less cohesive, and the two have developed mini “kingdoms” – investing money in projects that are too different, both from each other and from that envisioned by their father.

The government is so private in nature (painfully so) that it’s always hard to know exactly what is going on behind the scenes. But given Dubai’s economic disaster and, more recently, Abu Dhabi’s problems, it raises a lot of questions as to who is calling the shots. The country enjoys making a splash, and it’s served them well, but if it genuinely wants to keep out of the spotlight during tougher times, it may want to adopt a more humbled approach over the next 40 years. (ie, no more $20 million hotel debut parties, ok?)

Dubai Atlantis Hotel Opening Show - December 2008

Good luck UAE. I am excited and eager to see what you have up your sleeve for the next 40 years!!

Libya’s Jibril to Resign Tomorrow After Liberation Is Declared

My colleagues and I interviewed Mahmoud Jibril in Jordan just two days after the death of Muammar Qaddafi. He had some very interesting things to say about the manner in which Qaddafi was killed, saying that there was no evidence of foul play nor was it excessively brutal. He also appeared quite frustrated with a delay in the transition of his post, saying that he submitted his resignation almost two months before our interview but it was delayed for several reasons. He emphasized his wish to see governance of Libya in the hands of the country’s youth. Here’s hoping, Dr. Jibril…

October 22, 2011

By Vivian Salama and Lara Setrakian

(Bloomberg) — Libya’s acting prime minister, Mahmoud Jibril, said he will resign tomorrow after the liberation of the North African country is declared following the death of Muammar Qaddafi.

The interim National Transitional Council “should keep running until a new government is formed,” he said in an interview today at the World Economic Forum in Jordan. “We cannot leave a vacuum.” Jibril said he had asked the acting minister of oil and finance, Ali Tarhouni, to run affairs until a new government is formed.

The NTC has been attempting to persuade as many as 50 foreign companies to return in the past two months and many had refused due to security concerns, Jibril said. Earlier at the forum, he told delegates that Libya has used up about 62 percent of its oil reserves and urgently needs to find alternative sources of income to rebuild its war-torn economy.

“We need a clear vision, the core of which is to replace oil with another source of national income,” he said at the meeting at the Dead Sea. “Our oil is depleting fast.” (click here to read more…)

Yemen Shortages Worsen as Street Violence Leaves Locals Searching for Food

By Vivian Salama and Mohammed Hatem

Bloomberg

Click here to see original

Safiah Hussein al-Raimi stood for hours outside a store in Yemen’s capital, Sana’a, for five straight days to buy a tank of cooking gas to prepare food for her husband and four children. She left empty handed each time.

“Life is becoming hell here and we can’t afford it,” al- Raimi, 43, said as she lined up during her fifth attempt. “We have no gas, no power, not enough food.”

As President Ali Abdullah Saleh clings to power and Yemen edges closer to civil war, the country has become paralyzed by shortages of fuel, bread, sugar and milk. Power cuts, which were the source of riots in the south last year, are now commonplace across the country, already the Arab world’s poorest and a base for al-Qaeda terrorist activity.

With the wave of popular uprisings in the Middle East in its fifth month, the issue of how long Saleh’s regime will last in Yemen is being compounded by the question of what would be left of the country should he be ousted.

“Yemen’s economy is already at a crisis point,” said Will Picard, director of the Yemen Peace Project, a U.S.-based group. “No one is earning money, save the gasoline sellers, arms dealers, and foreign journalists.”

More Violence

Gunmen from Yemen’s most influential tribe clashed on May 24 with security forces loyal to Saleh, 68, in Sana’a, a day after he refused to sign an accord to give up power.

Dozens were killed or wounded in an assault on the home of tribal chief Sheikh Sadeq al-Ahmar, said Sheikh Saleh al- Mihjani, a member of the tribe. The Interior Ministry said that 14 policemen were killed, 29 others wounded and two are missing.

Shortages of cooking gas and petrol are being reported across the country, and cars are often turned away as they try to refuel. The shelves at local supermarkets are increasingly barren, with basic food items marketed up amid low stock.

The price of a 50 kilogram (110 pound) sack of sugar jumped 22 percent to 11,000 rials ($51.50) at al-Raimi’s local grocery store since the protests escalated in February.

Yemen already faces a severe water shortage, with the World Bank forecasting that Sana’a will be the first capital city to run out of water by 2025. More than half the country’s population of 23 million is under 20 years old and about 40 percent of the people live on the equivalent of less than $2 a day, according to the United Nations.

Bad Shape

Oil accounts for 60 percent of government revenue and 90 percent of exports, the International Monetary Fund said in a report on April 8. Oil reserves are expected to be depleted within a decade, the Washington-based organization said.

Saleh said yesterday that the economy is “not in good shape.” Industry and Trade Minister Hisham Sharaf said the protests cost Yemen $4 billion and a growing budget deficit, now expected to reach $3 billion, threatens to destroy the country.

“The government is running out of money,” Abdul Ghani Aryani, an independent political analyst, said in a telephone interview from Sana’a. “The deficit is now close to half the national budget and as a consequence there isn’t enough foreign exchange to import food stuffs.”

The country postponed the sale of a 25 billion-rial Islamic bond indefinitely as a result of the political unrest, Kamal Al- Rabie, general manager of the central bank’s Islamic unit, said in an interview on May 17.

Black Markets

Black markets are burgeoning across Yemen as people look to profit from the shortages. Khalid Saleh, a supermarket owner in Sana’a, said he’s losing business by the day and revenue has fallen 30 percent since the uprisings began. Al-Raimi said she can’t afford the marked up prices.

“I bought a cooking machine that works on electricity but it’s impossible since power goes off four times a day, each time for three or four hours,” she said.

Yemenis struggled to make ends meet before anti-government protests seeking to topple Saleh deepened the economic crisis. Demonstrators, like their counterparts in Libya and Syria, are demanding an end to corruption, and more jobs and freedom.

The difference in Yemen is that Saleh’s opposition is fragmented along tribal lines, posing the biggest challenge to the country since north and south were unified in 1990. Saleh said yesterday that recent violent threatened civil war and accused al-Qaeda of inciting protests.

“Every day Saleh stays on the throne is another day that Yemen’s already non-existent wealth is divvied up among his allies-for-hire,” Picard said by e-mail on May 23. “Economic recovery of any kind would be impossible given that fact.”

Bin Laden

A U.S. ally and the ancestral home of Osama bin Laden, Saleh also struggled to quell the threat of terrorists. Al-Qaeda in the Arabian Peninsula, the Yemen-based branch of the group, said in a May 10 statement that it would avenge bin Laden’s death in a Pakistan raid on his hideout by U.S. forces.

This week, prospects for peace grew dimmer after the six- nation Gulf Cooperation Council abandoned efforts to broker an agreement between the country’s political parties that would pave the way for a transition of power in Yemen.

Saleh, who reiterated yesterday that he would be willing to sign the agreement, earlier called the deal a “coup on constitutional legitimacy.” Anti-government protesters maintain the only acceptable solution is for Saleh to leave immediately.

“Outside investors and foreign donors will not put a penny into this country if things continue to looks so unstable,” Mustafa Alani, director of security and terrorism research at the Gulf Research Center, said by telephone from Dubai. “These problems will not go away with a magic stick.”

Arab Grievances

The grievances of Yemenis are similar to those of young people across the Arab world, though regional and sectarian.

Separatists claim the government discriminates against southerners, claiming the north seizes the proceeds of Yemen’s southern oil reserves for its own purposes. Shiite Houthi rebels have also been battling the government, claiming discrimination.

Saudi Arabia sends about $1 billion a year to Yemen in an attempt to keep the country “contained” and buy tribal support, according to Alani. The U.S. gives Yemen $300 million a year mainly in military aid.

“The Yemeni government has been mismanaged for more than three decades so there is no shortage of things that have to be done and quite quickly,” Gregory Johnsen, a Yemen expert at Princeton University, said by telephone from Cairo. “One of the main things is job creation but that can’t be done over night.”

The IMF said on April 27 that aid talks with the government of Yemen are on hold until there is greater stability. While unemployment in Yemen stood at 15 percent in 2008, the rate for youths between 15 and 24 years old climbed to 52.9 percent that year, UN figures show.

In the line for cooking fuel in Sana’a, al-Raimi is itching to get back to her kids at home, though she is unsure what kind of meal she’ll be able to prepare.

“I’m not able to cook for them,” al-Raimi said. “We just need the basics to live and we are not able to get them.”

Gulf Rulers Welcoming Arab Democracy Anywhere But Home May Store Up Unrest

By Alaa Shahine and Vivian Salama

Bloomberg (click here to view original)

Persian Gulf rulers say they understand that this year’s wave of pro-democracy uprisings has changed the Middle East. So far, they haven’t allowed it to change their own countries.

(l to r) Bin Ali, Saleh, Qaddafi, Mubarak

None of the region’s monarchies has taken steps to broaden political participation that match the spending pledges they have offered since the start of the unrest that toppled Tunisia’s Zine El Abidine Ben Ali andEgypt’s Hosni Mubarak. Instead, the rhetoric about a new era in the Arab world, and the cash handouts for homes and social security, have been accompanied by police repression.Protests have already reached Bahrain, Oman, Kuwait and the eastern province of Saudi Arabia this year. The reluctance of the Gulf Arab leaders, who control about two-fifths of the world’s oil, to loosen their grip on power may leave more of them vulnerable to the wave of unrest that has already pushed crude prices up more than 20 percent.“What we have learned from the uprisings in general, and from Tunisia and Egypt in particular, is that it’s really a matter of when,” said Shadi Hamid, director of research at Brookings Institution’s Doha Center, in a telephone interview. “Autocracies don’t last forever.”Oman’s Foreign Minister Yusuf Bin Alawi Bin Abdullah told Arab counterparts in Cairo last month that regional leaders need “new thinking” to deal with the “Arab renaissance.” In Abu Dhabi, then-GCC Secretary-General Abdul Rahman Al-Attiyah said that “political participation has become a key demand for development.”

‘Hydrocarbon Dictatorships’

Qatar’s ruler, Sheikh Hamad Bin Khalifa Al Thani, said in February that change was coming to the region and that Europe shouldn’t support “hydrocarbon dictatorships” in return for economic benefits, according to Al Sharq newspaper. He didn’t say which countries fall into that category.Qatar, Oman, Saudi Arabia and the other three Gulf Cooperation Council members are listed as authoritarian regimes in the 2010 Democracy Index of the Economist Intelligence Unit.The region’s leaders must convert ideas about change into concrete steps that will “improve the relationship between the state and the people,” said Prince Turki Al-Faisal, former Saudi ambassador to the U.S. “We have to change words into actions, actions that are arduous,” he said in a lecture in Abu Dhabi March 21.Some countries have begun to act. Sultan Qaboos of Oman agreed last month to boost the powers of the nation’s consultative council; the United Arab Emirates announced Sept. 24 elections to the Federal National Council, an advisory body; Saudi Arabia said it will hold municipal elections in September, while backtracking from earlier signals that women would be allowed to vote.

Saudi ‘Counter-Revolution’

Those measures, though, don’t involve real transfers of power, Hamid said. Repression has been a more typical response, with Saudi Arabia as “the leader of the Arab counter- revolution,” he said. “They are fighting change tooth and nail.”Saudi Arabia’s Information Ministry declined to comment and no one was available to comment at the Saudi Foreign Ministry or the U.A.E.’s federal government or Federal National Council, in response to repeated phone calls over two days.The prospect of unrest spreading to the world’s biggest oil exporter drove the benchmark Saudi stock index into a 13-day losing streak through March 5, the longest since 1996. Crude for May delivery rose above $112 a barrel last week, the highest since September 2008.

‘Not Very Worried’

The political upheaval in the Middle East has left markets “pricing in an element of uncertainty,” said Arthur Hanna, an industry managing director at Accenture Plc.Saudi oil wealth will help it escape the wave of unrest even though unemployment is high and civil rights limited, said Kai Stukenbrock of Standard & Poor’s. “We are not very worried about that scenario,” Stukenbrock, S&P’s director of sovereign ratings for Europe, the Middle East and Africa, said March 7.Simon Henry, chief financial officer at Royal Dutch Shell Plc (RDSA), also backed the kingdom to navigate through the political tensions. “It has the resources, it has the established capability to handle some of the unrest it may face,” Henry said on March 8.One risk to Saudi stability is the succession to King Abdullah, who turns 87 this year, Henry said. Crown Prince Sultan is also in his 80s. Next in line is Prince Nayef, the septuagenarian interior minister who filled central Riyadh with police to block a planned demonstration March 11, after rallies by Shiite Muslims in the oil-producing eastern provinces.

Bahrain Crackdown

Saudi rulers offered asylum to Ben Ali, backed Mubarak before his ouster, and sent troops to Bahrain to support a crackdown by Sunni royals that has left more than 20 protesters dead, mostly from the country’s Shiite majority.The violence in Bahrain showed unrest can be expensive even when it doesn’t lead to regime change. It pushed borrowing costs more than 150 basis points higher and Bahrain’s credit rating at Standard & Poor’s three steps lower, and dented efforts to compete with Dubai as the region’s business hub.Qatar and the U.A.E. both sent troops to Bahrain to help the government quell protests. InLibya, they are on the opposition’s side, backing a U.S.-led military campaign to help the rebels fighting Muammar Qaddafi. Qatar will “look at” the possibility of providing defense equipment to the insurgents, Prime Minister Hamad bin Jasim Al-Thani said yesterday.

‘Digging In Heels’

Dubai police on April 8 arrested Ahmed Mansour, a human rights campaigner, promptingHuman Rights Watch to criticize the U.A.E. for “digging in its heels” against democratic reforms. Two more activists, including an economics professor at the Abu Dhabi branch of France’s Sorbonne university, were arrested in the next two days. In Oman, two people have been killed as police broke up protest rallies.Saudi Arabia has also led the spending spree. King Abdullah ordered $128 billion of measures, including $90 billion on house-building and home loans, that will help the economy grow 6.6 percent this year, Standard Chartered Plc estimates.“The enormity of the stimulus package will help the region overall,” as it’s too much for the Saudi economy to absorb alone, and reduce the risk of civil unrest, Said Hirsh at London-based Capital Economics said in a March 21 report.GCC spending is another reason to expect high oil prices, according to John Sfakianakis, chief economist at Bank Saudi Fransi. Saudi Arabia needs a price of at least $80 per barrel, higher than previous breakeven figures, to finance its budget, he calculated.

‘Money Lying Around’

The GCC has promised $10 billion apiece to Bahrain and Oman to help assuage protesters. The U.A.E. allocated $1.6 billion for water and infrastructure projects in northern emirates that lag behind Dubai and Abu Dhabi.Spending conceived as a way of avoiding political change may end up fuelling popular demands, said Christopher Davidson, author of “Power and Politics in the Persian Gulf Monarchies.”

“You have the people in Saudi Arabia, for example, now asking: ‘If all that money was lying around all this time, why wasn’t it used on us earlier?’,” Davidson said. “These rulers are just reacting to the events around them, and their citizens know it.”

Libya’s Military Spending Below Sweden’s Leaves Qaddafi Authority Deficit

Click here for original link

By Vivian Salama

March 2 (Bloomberg) — In a region with a history of rulers who strengthened their armies to keep a grip on power, Muammar Qaddafi has been doing the opposite.

Qaddafi spent an average 1.2 percent of gross domestic product on the military in the three years through 2008, the lowest in the Middle East and North Africa and also less than Sweden or Denmark, according to the Stockholm International Peace Research Institute or Sipri, which tracks defense spending. Before it was split by an uprising that started last month, Libya’s army had 50,000 men, half of them draftees, according to the International Institute for Strategic Studies.

The cap on army powers helped ensure Qaddafi, who gained power in a 1969 coup, didn’t lose it the same way. It also leaves Libya’s army lacking the capacity to contain civil strife and oversee a transition, as its counterparts in Egypt and Tunisia have done, or to secure production from Africa’s largest oil reserves. Military weakness also makes it harder for the U.S. and allies, who are backing the anti-Qaddafi rebels, to find interlocutors.

“Qaddafi tried to keep the military weak so they could not topple him, as he toppled King Idris,” said Paul Sullivan, a North Africa expert at the Washington-based National Defense University. The result is “a poorly trained military run by poorly trained leadership that are on the ropes, not exactly personally stable, and with a lot of extra weapons floating around.”

Rebel Control

Since anti-government protests escalated into violence two weeks ago, rebels have taken control of much of Libya and several army units defected. Crude prices have jumped more than 15 percent, hitting a 2 1/2-year high. Libyan production dropped more than half as companies such as Eni SpA and Total SA cut output, and the conflict threatened exports as workers fled.

In Benghazi, the second-biggest city, soldiers were directing traffic and stopping cars for armed Qaddafi supporters last week. On the opposition-held eastern coastal road, which passes by the tanker terminals of Ras Lanouf and el-Brega, troops flashed victory signs and passed out candies and juice.

Other units have stayed loyal, including air crews who have bombed ammunition stores to prevent weapons from getting into rebel hands.

‘Why the Splinters?’

“Why the splinters? Why the defections?” said Fawaz Gerges, a professor of Middle East politics at the London School of Economics. “It tells you that there is no cohesive institution.”

The lack of cohesion contrasts with the army’s role in Egypt and Tunisia. In both countries, the military acted as a catalyst for the removal of leaders, a key demand of opposition movements, while discouraging continued protests aimed at more far-reaching democratic change.

Egypt’s military took over from Hosni Mubarak on Feb. 11, promising elections and a new constitution. Tunisian army chief Rashid Ammar pledged to “protect the revolution.” The armies took over functions from police discredited by their links to former rulers, with soldiers guarding key buildings from ministries in Tunis to the state broadcaster in Cairo.

Libya’s military spending plunged as relations with the West improved in the past decade, according to data from Sipri and the U.S. State Department’s World Military Expenditures and Arms Transfers report.

Rapprochement With West

In 2008, spending was $833 million, according to the State Department. It was down from $2 billion in 1998 and $6.85 billion in 1986, the year Libya was bombed by the U.S. in retaliation for an attack in a Berlin disco. United Nations sanctions on Libya were lifted in 1999 and the rapprochement gathered speed after 2003, when Qaddafi said he renounced terrorism and nuclear technology.

Sipri estimates average defense outlays at 4.4 percent of GDP in the three years through 1999, dropping to 1.2 percent in the period through 2008. The latter figure compares with 2.5 percent in Egypt and 8.6 percent in Saudi Arabia.

U.S. diplomats said Libya’s “aging air force” was on “full display” when a plane crashed at the Libyan Aviation Exhibition in October 2009, according to a cable from the U.S. Embassy in Tripoli that month, released by Wikileaks.org. It said the incident showed the “weaknesses of Libya’s military air fleet.”

Tribes, Sons, Mercenaries

Tribal divisions within Libya’s army may have accelerated its fragmentation. Many soldiers come from tribes such as the Warfalla and Magariha whose loyalty to Qaddafi is questionable, while the air force, dominated by Qaddafi’s native Qadhafa tribe, remains more loyal, according to Sullivan.

Qaddafi focused resources on equipment and facilities, instead of personnel and training, the IISS said. Egypt has 1 million fighters and reservists, or about 12.5 people under arms per 1,000 of population compared with 7.8 in Libya, according to the IISS study.

Money withheld from the traditional military was put into special forces led by Qaddafi’s sons Saif al-Islam, Motassim and Khamees, said Mohammed El-Katiri, an analyst at the New York- based Eurasia Group, which measures political risk. Payoffs also went to mercenaries and tribes, though the lack of transparency makes it impossible to say how much was spent, he said.

The Libyan leader “doesn’t have confidence in his own army and police,” Nouri el-Mismari, Qaddafi’s former protocol chief, said at a press conference in Paris today. “That’s why he hired the mercenaries.”

Sarkozy Contracts

Between 2005 and 2008, Libya signed about $1 billion in arms transfer agreements with Western European countries, as well as $300 million with Russia, according to the Congressional Research Service, a division of the Library of Congress.

When Qaddafi visited Nicolas Sarkozy in Paris in December 2007, an aide to the French president said talks included potential arms sales worth 4.5 billion euros ($6.2 billion).

They included 14 Rafale fighter jets, which are built by Dassault Aviation SA, as well as helicopters, ships, combat vehicles and artillery, the official said.

Talks on the sale of Rafale fighter jets never resulted in a sale, said Mathieu Durand, a spokesman for Dassault. In 2009, Libya received 100 Milan anti-tank missiles, made by a unit of European Aeronautic, Defense & Space Co. and worth 168 million euros, according to Sipri.

Who to Help?

Secretary of State Hillary Clinton has held talks with European counterparts on imposing a no-fly zone over Libya, and said this week that the U.S. is willing to support anti-Qaddafi forces.

Rebels fighting against Qaddafi’s government are discussing whether to ask for United Nations airstrikes, the New York Times reported, citing unidentified people with knowledge of the deliberations. The rebel council isn’t seeking “foreign intervention,” the newspaper said.

The best option for countries seeking to oust Qaddafi may be to emulate his strategy of backing individuals not institutions, said Barak Seener, a research fellow at the Royal United Services Institute for Defense and Security Studies in London.

That would involve an effort “to engage with specific military and tribal leaders that are openly opposed to Qaddafi by offering them financial incentives, weapons and logistical support,” he said. “The same way that Qaddafi did to secure their support throughout the decades.”

To contact the reporters on this story: Vivian Salama at  vsalama@bloomberg.net;

Egyptians Return to Cairo’s Tahrir Square to Underline Protests

By Vivian Salama and Maram Mazen

Bloomberg (Click here for original story)

CAIRO – Tens of thousands of Egyptians gathered in central Cairo today to reassert demands for change, one week after street protests led to the overthrow of President Hosni Mubarak, fueling similar demonstrations throughout the Middle East.

Salesmen offered souvenir t-shirts commemorating the protests that started on Jan. 25 to the crowds who packed into Tahrir square. Some carried photographs of people killed during the unrest and others followed regular Friday religious ceremonies with prayers for the dead.

Photo by Vivian Salama

The Health Ministry said yesterday that 365 people were killed during the demonstrations. The Egyptian army on Feb. 13 dissolved parliament and suspended the constitution, meeting demands made by the opposition movement that forced Mubarak from office two days earlier, and said it will rule Egypt until elections are held.

“I’m sure our demands will be met, but it’s better that we all come together again to show them that we’re serious,” said Mahmoud el Hady, a 23-year-old commerce student at Benha University, north of Cairo, who was wrapped in a red, white and black Egyptian flag. “Some people need to go from the old regime. We need to dismantle the national security forces.”

Demonstrations continued today in Bahrain, where people called for democracy and the fall of the government during a funeral procession for two men killed by security forces.

The dissent in Bahrain, home to the U.S. Navy’s Fifth Fleet, follows the toppling of autocratic rulers by popular movements in Egypt and Tunisia and marks the spread of dissent into thePersian Gulf, where most of the Middle East’s oil is produced.

Libya, Yemen

The past week has also seen anti-government protests and clashes in Libya, Africa’s biggest holder of crude oil reserves, and Yemen, a producer of liquefied natural gas. Brent crude futures this week rose to the highest level since 2008.

The Egyptian Exchange has been closed since Jan. 27 after the biggest stock selloff in more than two years.

“We want the army to rule temporarily and then never to rule us again,” said Ali Bassam, 45, a physical education teacher. “We want anyone chosen by Hosni Mubarak to leave his position. This country has been a big prison for 30 years.”

U.S. Joins Egyptian Protesters in Criticizing Suleiman’s Offers

By Alaa Shahine, Vivian Salama and Maram Mazen

Feb. 9 (Bloomberg) — Egyptian Vice President Omar Suleiman said negotiations he has opened with opposition movements are the only alternative to the “chaos” of regime change, as the government’s limited concessions drew criticism from protesters and the Obama administration.

Omar Suleiman

“There will be no overthrow of the regime because this will lead to chaos, which will take the country into the unknown,” Suleiman told local media chiefs yesterday, the official Middle East News Agency reported. The talks that began this week, involving the Muslim Brotherhood and other groups, “are the first way to achieve stability in the country and to get out of the current crisis peacefully.”

In Washington, the Obama administration echoed the criticism of the protesters that Suleiman isn’t responding quickly enough. The Egyptian government has yet to reach the “minimum threshold” of accomodating demands of the country’s citizens, White House press secretary Robert Gibbs said. Egyptian authorities must make “immediate and irreversible progress” toward a transition of power and expand the scope of negotiations, Gibbs said at today’s briefing.

Tens of thousands filled Cairo’s Tahrir Square yesterday in what may have been the largest turnout in two weeks of protests. Today’s was smaller. Another major gathering is scheduled for Feb. 11, dubbed by protesters as a “Friday of Defiance.” (click here to read more….)

–With assistance from Mariam Fam in Cairo, Gregory Viscusi in Paris and Thomas Penny in London. Editors: Terry Atlas, Steven Komarow

Cairo Protesters Converge in Message Aimed at Defiant Mubarak

By Mariam Fam, Vivian Salama and Ahmed A Namatalla

Bloomberg (Click here for original story)

CAIRO – Egyptians converged on the presidential palace and Tahrir Square in Cairo vowing to topple President Hosni Mubarak after he yesterday defied calls for his resignation for the second time this month.

Military helicopters flew over the palace before dusk, in the suburb of Heliopolis, after state television said the presidency would issue an urgent message “soon.” Earlier, the army beefed up its deployment downtown as tens of thousands of demonstrators poured out of Friday prayers and into the square downtown, swelling the ranks of those who camped there overnight. State television said Mubarak had left the capital.

Photo by Vivian Salama

With the army today reiterating its support for Mubarak, attention is shifting to how far it will go as the protests gather momentum. The violence has already claimed more than 300 lives, Human Rights Watch says, and has sparked concern that further unrest will grip a region that holds more than 50 percent of the world’s known oil reserves. The protests were inspired by the revolt that ousted Tunisian President Zine El Abidine Ben Ali on Jan. 14.

“The nightmare of a coup is very bad for everybody, for the young people, for the economy, and that’s the scenario we would like to avoid,” Finance Minister Samir Radwan said on BBC Radio 4’s “Today” program. “The military is highly disciplined, they have taken a decision not to fire at the young people, but of course this stalemate cannot continue forever.”

Emergency Law

A group of demonstrators gathered near the presidential palace and protests were also under way in the cities of Suez and Alexandria. Mubarak and his family left Cairo and arrived in the resort town of Sharm El-Sheikh, Al Arabiya television reported today.

The Supreme Military Council said today it will guarantee the implementation of the measures announced late yesterday in Mubarak’s televised speech, including constitutional changes and an eventual end to an emergency law that has marked his 30-year rule. In a sign the government may offer further concessions, the head of the ruling National Democratic Party, Hossam Badrawi, said today in an interview that an early presidential election may be possible.

Mubarak, 82, reiterated his intention to stay in office until the vote in September, while handing day-to-day powers to Vice President Omar Suleiman in a bid to placate opponents. Protesters erupted in a roar of disapproval as they listened to Mubarak’s evening address in Tahrir Square.

“In Cairo alone today it will be millions,” demonstrator Abdel Rahman Sabry, a 24-year-old engineering student, said in an interview. “Yesterday’s speech has really angered people. We tell him to go, he tells us: ‘I won’t go, you love me.’ Either he is crazy or we are crazy.”

Photo by Vivian Salama

‘Not Worthy’

As Muslims gathered in a mosque near Tahrir Square, the imam leading today’s prayers told them over a loudspeaker, “You are bringing down a corrupt regime that is not worthy of ruling you.”

The Supreme Military Council gathered yesterday before Mubarak’s speech to “safeguard the interests” of the nation, sparking speculation that a military takeover was in progress. The panel is now in permanent session, the first since the October 1973 war with Israel.

Global stocks fell for a third day, U.S. index futures declined, and the dollar and oil rose, after Mubarak spoke. The cost of insuring Egyptian government debt soared 42 basis points to 379, the biggest increase in two weeks, according to CMA prices. Egypt’s 10-year bond yield jumped 29 basis points. The global depositary receipts of Commercial International Bank Egypt SAE, Egypt’s largest publicly traded lender, fell the most this month, dropping 7.2 percent to $5.65.

“We were all hoping that the statement by the president yesterday should calm things down, but obviously it hasn’t,” Radwan told the BBC. “That makes for a very difficult situation where things continue to deteriorate.”