Sri Lankan Cricket team attacked in Lahore

I woke up to the news today that there was a commando-style attack in Liberty Chawk just around the corner from Gadaffi stadium.  The target was the convoy carrying Sri Lanka’s national cricket team to the stadium. The Samaa and CNBC studios are located right there in the square so they managed to get a bit of footage.  The images were eerily similar to the little footage released from the seige on Mumbai last November and Pakistani officials are already saying that there may be links between the two. India blamed the Mumbai attacks on Lashkar-e-Taiba, a banned Pakistani extremist organization and so there will inevitably be some repercussions in the days to come. Meanwhile, Lahore is on lockdown as police scramble to find the dozen or so suspects responsible for killing 6 policemen and one of the convoy’s drivers. 

Here are a few reports I did throughout the day:

Mortal Blow to a Nation’s Passion

Vivian Salama, The National

March 4, 2009

LAHORE // By midday, the Abdul Qadir International Cricket Academy is usually bustling with young boys sprinting around the field, demonstrating their sportsmanship and mimicking the game’s stars.

Yesterday, there was not a player in sight.

Fields across the city of Lahore remained deserted following an assault on the Sri Lankan national cricket team that left six police officers and one civilian dead and several players wounded. Boys who would normally stay out late into the evening playing with their friends opted to stay home, many of them devastated by news of the attacks. 

“[This] incident will definitely be damaging to the game of cricket,” said Abdul Qadir, a former captain of the Pakistani national cricket team, and owner of the Abdul Qadir International Cricket Academy, located a few steps from the Gadaffi Stadium, scene of yesterday’s attack.  (click here to read more….)

TELEVISION:

CBC (Canada)

http://www.cbc.ca/clips/mov/salama-lahore090303.mov 

France24 – the Debate

PART I - http://www.france24 .com/en/20090304 -the-debate- who-s-targeting- pakistan- 1

PART 2 - http://www.france24 .com/en/20090304 -the-debate- who-s-targeting- pakistan- 2

Will Good Times Ever Return to the Swat Valley?

My latest story in TIME about the deterioration of the Swat Valley. It is a sad story and one that many fear may become the norm for this region in Pakistan.

By VIVIAN SALAMA / ISLAMABAD Wednesday, Feb. 25, 2009

One of the most vivid memories Yasir Nisar has of his 2005 honeymoon is of the “Western” clothes his new bride Cayyada wore as she bundled up in Pakistan’s frigid mountain temperatures. For more than a week, the young newlyweds escaped their hectic city lives for a quiet getaway at Malam Jabba, a ski resort located in the heart of the Swat Valley. They shopped for local craftwork, skied at the resort’s modest but picturesque slopes and ate various traditional Swati dishes, at times holding hands bashfully. Road closures and blockades were routine — but always due to snowfall.

The Swat Valley in northwestern Pakistan is now the domain of Taliban militants. Bombings have become commonplace in many towns, as have hostage-takings and public hangings. The craftwork is gone. Local music stations have been replaced with extremist radio propaganda. Women have been banned from walking the streets in many locations, and at least a dozen of the valley’s once bustling resorts have been forced to close, including Malam Jabba, which militants torched last year. “I have many nice memories there, so I am very sad about it,” says Nisar, a photographer from Lahore. Even as cross-border tensions flare between India and Pakistan over the recent Mumbai attacks, many, like Nadeem Sheikh, a businessman in Lahore, feel the crisis in Swat is a much more significant symbol of the country’s problems. “This is not the Pakistan I know,” says Sheikh, who lives not far from the militarized border with India. (See pictures from Pakistan’s tense border with Afghanistan.)

Now, a controversial truce between the Taliban and the government is giving Nisar and many other Pakistanis hope that they may yet return to a vacation land that once held so many pleasant memories. On Tuesday, the Taliban indefinitely extended a fragile 10-day cease-fire with the Pakistani military, granting more time for peace talks to end more than a year of fighting. Last week’s agreement to impose a form of Islamic law in Swat has many feeling encouraged that this turbulent region will finally see a return to calm. “The fighting with the military is what made it dangerous,” Nisar says. “The tribal people used to have Shari’a law in this part of Pakistan and it was so peaceful, so I think this will make things better.”

The implementation of Shari’a law is not bad news to many who believe it will be adopted in its moderate form. Karachi native Jamal Panhwal used to work in Pakistan’s now shrinking tourism industry and until 2007, guided hundreds of walking tours through Swat. Says he: “I am quite confident the people causing trouble are not from Swat. The natives of this community are the most progressive Pathans. If law is in the control of the local people of Swat, then everything will be fine.”

That remains to be seen. Ahmed Rashid, a journalist and author of a best-selling book about the Taliban, says the recent cease-fire is merely the calm before the storm. “The Taliban do not stop at one demand,” explains Rashid. “All this points to a collapse of will of both the army and the government to deal with this in a more logical manner.”

Pakistan and China: A Fraying Friendship?

Thursday, Feb. 19, 2009

TIME.com

By Vivian Salama / Islamabad

 

There is an old Chinese proverb that says to attract good fortune, spend a new penny on an old friend. On Friday, an old friend is due to come calling in China. Pakistan’s President Asif Zardari will make his second visit to China in four months for meetings with senior political and business leaders. A key ally in the U.S.-led “War on Terror,” Pakistan — desperate for money and in need of a good friend — has recently found itself beckoning China for rescue. But is China willing to invest its pennies in Pakistan, much less play superhero for an old but now problematic ally?

Once an “all-weather friend,” China stood with Pakistan during its old confrontations with India. Ties between the two countries date back to 1950 after Pakistan joined a small handful of nations in recognizing the communist People’s Republic of China. In 1962, war broke out between China and India over the disputed Himalayan border region, further aligning China and Pakistan in the name of a common enmity toward India. Since then, Beijing has often offered its support to Islamabad in the way of economic assistance, but also with no-strings-attached military aid and support to Pakistan’s nuclear program.

Although China has not signed an official nuclear agreement similar to the civilian nuclear pact between the U.S. and India, it has invested heavily in the construction of several nuclear power plants in Pakistan. Unlike its relationship with the U.S, Pakistan’s agreements with China seldom came with conditions. “The U.S. hasn’t offered to support nuclear projects with Pakistan, so we go to China where we know we are always very warmly welcomed,” says Muhammad Saleem Mazhar, director of the Center for South Asian Studies at the University of Punjab in Lahore. Various Chinese-funded projects are also currently underway to boost Pakistan’s infrastructure, including the development of a port on the Strait of Hormuz at Gwadar.

However, with Pakistan’s security situation growing increasingly volatile and economic conditions turning dire, there may be a turn in tide between these once intimate friends. “The situation is much different now than once upon a time,” says William Kirby, T. M. Chang Professor of China Studies at Harvard University. “India has emerged as a much more powerful force in the region and Pakistan has not succeeded in the way that hopeful and loyal supporters had once imagined. It is now one of the great security risks in the region.”

Instead of increasing assistance to its old ally, Beijing has apparently been keeping a distance from Islamabad. During Zardari’s visit in October, the Chinese snubbed the Pakistani President’s request for a full-blown economic bailout. While Beijing did grant Islamabad a soft loan last year worth $500 million, it was nowhere near the estimated $14 billion experts say is needed to get Pakistan back on its feet. “The cooperation we saw during the Musharraf era just isn’t there anymore,” says Sayem Ali, an economist with Standard Chartered Bank in Karachi. “China would rather develop better relations with India and the U.S., which is not great news for Pakistan because it has always relied on China’s help.”

The recent instability along Pakistan’s Western border with Afghanistan, as well as a series of abductions of Chinese nationals, could lead China to look elsewhere for more reliable friends in the region — allies who can at least guarantee some sort of stability for China to pursue its strategic and economic interests. “Pakistan today needs China more than China needs Pakistan — that is why there is more enthusiasm in Pakistan about its relations with China than vice-versa,” says Shabbir Cheema, director of the Asia-Pacific Governance and Democracy Initiative.

China, however, cannot afford to turn a blind eye to a nuclear-powered Pakistan that seems to be constantly teetering on chaos. For one, Uighur separatists in China’s Xinjiang province often find inspiration and support in the turmoil in Afghanistan, a conflict entangled in the politics of Pakistan’s tumultuous North-Western Frontier Province. “We are now looking at a situation where China and India are on their way to becoming global powers and Pakistan is really in a position of endemic crisis,” says Kirby. “China can longer afford to make any unconditional guarantees — particularly where Pakistan is concerned.”

Chinese nationals in Pakistan are in as much danger as other foreigners. In the aftermath of a tentative cease-fire between Pakistan and Taliban radicals in the beleaguered Swat Valley, militants there released Long Xiaowei, a Chinese engineer abducted six months ago — an incident that drew unusually forceful language from Beijing.

Pakistan’s troubles, however, are likely to keep China involved in keeping its old ally afloat. Ahmed Ejaz, an expert on Asian security at the University of Punjab, believes that for China, the stakes are far too great for it to turn its back on Pakistan. “An unstable Pakistan will lead to an unstable China,” says Ejaz. “They know this so they will never leave us alone.”

Taliban hold upper hand in Swat Valley

Vivian Salama, Correspondent

The National

LAHORE // Nearly 30 Pakistani police officers captured during a long day of fierce battles between Taliban militants and Pakistani security forces have been released unharmed.

Officials with the Northwest Frontier Province (NWFP) government confirmed that Taliban insurgents had abducted the officers on Wednesday when they seized control of the Shamozai police checkpoint in the volatile Swat Valley. They were released less than 24 hours later.

“They did not harm us,” policeman Abdul Haq told Reuters. “The Taliban have given us a new lease of life.”

Since late 2007, militants have infiltrated the valley from Taliban and al Qa’eda strongholds just across the border in Afghanistan, implementing austere Islamist rule.
A statement released by the Pakistani army earlier this week said that about 16 militants had been killed in the latest military operation in Swat. However, efforts to maintain law and order have been complicated in recent weeks with a growing number of Swat police forces deserting duties or dying in clashes.

“We cannot leave our people at the mercy of terrorists,” said Pakistan’s minister of information Sherry Rehman. “It is important to pursue a strategy that incorporates political and social measures to build the architecture of sustainable peace in Swat, and in the Tribal Areas.”

Despite the police and military action, local media reports reveal that control over the Swat Valley has essentially fallen into the hands of the insurgency.

News of the takeover recently sparked an international outcry after militants closed girls’ schools across the valley, later torching and bombing many. 

Women have been forbidden from walking in the streets and at least 50,000 girls have been banned from attending school. Militants have also utilised an illegal FM radio frequency to broadcast their authoritarian teachings.

“We are extremely concerned because the civilian population in Swat is caught in crossfire between militants and security forces,” said I A Rehman, the secretary general of the Human Rights Commission of Pakistan, which has a significant presence across the NWFP.

Officials estimate that about 1,200 civilians have been killed and about 2,000 wounded in Swat since 2007.

The escalating violence has triggered a mass exodus, with hundreds of thousands of civilians reportedly fleeing the valley, a popular holiday and honeymoon destination, described as “Switzerland of the East” by the popular travel guide Lonely Planet. Government estimates reveal that as much as one-third of Swat’s 1.5 million residents may have fled the valley since fighting began more than one year ago.

“The death toll is rising every day and we are extremely concerned about the people who have been dislocated,” Mr Rehman said. 

Concerns are mounting that the insurgency may seep into the heart of Pakistan. Located a mere 160km from Islamabad, the Talibanisation of this picturesque region has hit close to home for many. 

“People here just can’t believe it,” said Nadeem Sheikh, a businessman based in Lahore. “Swat is such a popular tourism destination for people from Lahore, Karachi and Rawalpindi and now it is becoming fundamentalist – this is not the Pakistan we know.”

US President Barack Obama has said he intends to take a firmer stance with Pakistan to ensure Afghan militants do not slip through the cracks, using the country’s semi-autonomous tribal border region as a sanctuary. 

Pakistan has been a key partner and staging ground for the Bush administration’s military operations in Afghanistan, as well as the broader “war on terrorism”. Some analysts believe that US cross-border military operations will only exacerbate Pakistan’s security woes.

“The terrain and local resources and political problems are extremely complex in the region and something the Pakistani military is dealing with a lot better than the US can,” said Rasul Bakhsh Rais, a professor of politics at the Lahore University of Management and Economic Research.

For Mr Sheikh and many like him, this popular holiday spot may be gone forever. “The way things are in Swat now, it seems it will never be the same.”

Auto Racing Roars out of Elitist Niche

Vivian Salama, Correspondent

The National

LAHORE // As far as the eye could see, leather jackets flaunting such names as Ferrari, Honda and Corvette coloured the crowd. Cars roared past, their engines sending vibrations through the ground. Young men cheered and high-fived with every passing car.

This is not Nascar or the new Grand Prix track in Abu Dhabi. This is Pakistan and these are a new generation of South Asian men looking to break free from old sporting traditions. 

Thousands crowded alongside the runway of Lahore’s old Walton Airport on Sunday for Pakistan’s first official drag-racing competition. Nearly 60 men tested their engines down the quarter-mile runway-turned-racetrack.

Car racing is not new to the streets of Pakistan, well known for cricket and field hockey. For years, young men, stemming mostly from the country’s elite, have gathered on Sundays in Lahore and Karachi to showcase their vehicles and put their speed to the test. 

Until recently, drag races were discouraged by the government and local communities because of to the dangerous nature of the sport. However, persistent nudging from the country’s racing aficionados persuaded the government to sponsor the event.

From Corollas and Datsuns to the Nissan R35s and Mazda RX-8s, cars were allowed two runs each in an effort to clock the fastest time. 

“Our main objective is to show that race car drivers here in Pakistan are just as good as those in the West and across the Middle East and we want to keep pace with them,” said Mian Waheed ud Din, the managing director of the Tourism Development Corporation of Punjab (TDCP), which organised the event.

“We are promoting it and giving a forum to our youngsters to showcase their skills, as well as to allow the public to come out and take part in this unique event.”

Dressed in everything from jeans and biker jackets to the traditional salwar kameez, men, young and old – and a few women too – jostled around cars, snapping photos with their mobile phones and quizzing drivers about paint jobs and engine tune-ups.

“I work on my car myself so it is basically my hobby,” said Asem Rana, 25, a computer engineering student who raced his Nissan 350Z. “An event like this will bring more exposure to the public.”

A far cry from the rickshaws and decorated buses cramming the streets of Pakistan, these cars, from their sleek finishes to their roaring engines, offered a portal into a world inaccessible to many.

“These people have been lacking this kind of sport for a very long time,” said Syed Raza Ali Gillani, a Pakistani MP and drag race contestant who wooed the crowd with his fire-red Corvette C6.

In recent years international automakers such as Porsche and Mazda have entered the Pakistan market, giving those who can afford it access to a world of high-speed, high-end racing beyond their borders. As for the vast majority of Pakistanis who do not have the money to indulge in the costly sport of car racing, Mr ud Din said events such as this give them the rare opportunity to play a part. 

“If the sport gets organised, then sporting clubs will come up and events come up and, in many ways, those who cannot afford their own car will still benefit,” he said.

Beyond the promotion of motor sport in Pakistan, officials said image control is in high gear. The recent wave of violence in the Swat valley and scattered terrorist attacks across the country have dealt a blow to the country’s tourism industry. According to the ministry of tourism, revenues in 2008 stood at 14 billion rupees [Dh651 million], down from Rs16bn in 2007. 

However, officials said plans are in the works to build Pakistan’s first racetrack in Lahore with the hope of drawing attention from fans worldwide.

“The concept in the world today is that going to Pakistan is dangerous, especially places where there are a lot of people,” said Malik Nadeem Kamran, the Punjab minister of tourism. “We want to change this concept in the minds of people around the world.”

Pakistan’s GITMO Prisoners Pose Problem

Will Former Detainees Be Welcome Back Home?

by VIVIAN SALAMA

ABC NEWS.com

ISLAMABAD, Pakistan, Jan 29, 2009— Mohammed Saad Iqbal never imagined that his 26th birthday would be the first of many spent behind the concrete walls and barbed-wire fences of Guantanamo Bay, Cuba.

Over nearly eight years, the Pakistani preacher was transferred through four detention facilities, starting from the scene of his arrest in Jakarta, Indonesia in late 2001. After that, it was on to Cairo, Egypt, Islamabad, Pakistan and the Bagram Collection Point (now called the Bagram Detention Center) near Kabul, Afghanistan before finally making it to Guantanamo Bay in early 2003.

There was no trial. No legal counsel. No phone call home.

American and Egyptian interrogators accused him of mingling with the likes of Osama bin Laden and shoe bomber Richard Reid, making him a terrorist by association, he says.

Iqbal maintains his innocence. “I’d never been to Afghanistan; I’ve never met Osama bin Laden; I’ve never picked up a weapon nor have I had any training; even I never curse,” he said.

His voice grows shaky and his eyes timid as he recalls the endless cycles of torture and psychological abuse he says he endured throughout his years in captivity. He claims it was so bad he tried to kill himself twice and went on numerous hunger strikes to protest his mistreatment.

Today, less than five months after his release, he is safe within the confines of his modest Lahore home, surrounded by family and friends, and free to savor a glimpse of sunlight or a breath of fresh air.

Photo by Matthew Tabaccos

Still, the painful memories of his years in Guantanamo Bay linger as he suffers from physical disabilities that hinder his efforts to find a job and reintegrate into society. He recently retired his walker in favor of a cane, which he still needs due to knee injuries he alleges to have suffered from electric shocks to his legs.

Like many Pakistanis, Iqbal welcomes news of the executive order signed by President Barack Obama to shut down the prison within a year, but he says his physical and emotional scars will not heal by a stroke of the pen.

“In Iraq we recently saw a journalist throw at President Bush his shoes,” Iqbal says.

“I hoped that he got one hit and feels pain for two seconds then compare this pain with the pain I felt in Guantanamo for almost seven years.”

For many in this region, the move to close down the Cuba-based U.S. prison is something of a relief. Since the attacks of Sept. 11, little more has emerged from the detention facility beyond horrific stories of alleged torture, ranging from electric shock to sexual abuse, and numerous claims of desecration of the Quran, Islam’s sacred book.

According to Amnesty International, nearly 800 detainees have been officially held at the camp, although hundreds of other “ghost prisoners” may have been detained unofficially. Iqbal says the number of unregistered detainees topped 2,000.

Most were subjected to conditions that violate the international prohibition against cruel, inhuman and degrading treatment, including solitary confinement, according to Amnesty International.

However, with the newfound relief comes a realization that the closure of Guantanamo Bay ultimately means that some prisoners not transferred to U.S.-based prisons, might be coming home, and placed in the hands of local authorities.

Here in Pakistan, many are asking whether their authorities are ready. Fighting rages on along the country’s Western border with Afghanistan  a region that remains virtually lawless, creating a hotbed for al Qaeda and Taliban forces.

Pakistan has not developed a system of reintegration for these young men, most of whom have lived in solitary confinement for years, all the while growing increasingly disgruntled with their Western captors.

While many Guantanamo detainees have no proven ties to extremists groups, some do. “A lot of the Pashtuns who have been released go right back and rejoin the Taliban because they have been released, held here by the ISI [Pakistani intelligence] and then released back into society without any re-education, or retaining or re-explanation of Islam,” explained Ahmed Rashid, a Pakistani journalist and author of several books about militant Islam in Pakistan and Afghanistan.

As for the dark legacy that is Guantanamo Bay, Pakistanis may not be in the clear — only the danger lies much closer to home. The Human Rights Commission of Pakistan (HRCP) warns of some 250 cases of detainees who have “disappeared” — taken away by intelligence and law enforcement agencies and never heard from again.

Those prisoners who do resurface bear stories eerily similar to the horrific accounts by Guantanamo Bay captives. Testimonials released by HRCP include repeated incidents of beatings and waterboarding but also of authorities urinating and defecating in the mouths of prisoners.

“Pakistan is signatory to the U.N. Convention Against Torture and yet despite that, our security and police and armed forces deploy those methods,” said Hossain Naky, head of mission for HRCP.

While Iqbal yearns for any assistance from his government, he thanks Allah that he is home again and able to spread Islam’s message of peace. He remains hopeful that the closure of Guantanamo Bay is more than merely political rhetoric  rather, the start of a new era.

“Ask a child to do something and you can get what you need. If you force him, he will never accept. If we have more talking, we will have less wars.”

Vivian Salama is a freelance correspondent working in Pakistan.

Pakistan ushers in new political era with caution

Vivian Salama

LAHORE – There is little fanfare amongst many Pakistanis this week as they watch America prepare to usher in a new era of professed hope and change. 

On Lahore’s main platform for political expression, known here as the Mall, dozens of banners were erected this week reading “America and Israel: dogs of hell.” Protestors marched through Pakistan’s cultural capital yesterday calling on Barack Obama to put an end to policies that stifle the Muslim world.

“Israelis are killing us in Gaza, and Americans killing us in Iraq and Afghanistan and Indians are killing us in Kashmir so we have the right to explain our part,” shouted Fayez Khuraz, an Islamic preacher who joined hundreds of others in protest.  “If Barack Obama is an human being, he will bring an end to these policies that make the Muslim people suffer.”

Many in Pakistan say there is great cause for concern as the Washington transition period nears its end.  Since the early days of the US election campaign, the now-President Barack Obama said that he would not sit quietly and allow Pakistan to serve as a sanctuary for Al-Qaeda and Taliban militants fleeing US forces in Afghanistan. 

Since August 2008, the tribal border between Pakistan and Afghanistan has been the target of repeated air strikes as US forces look to weed out radical Islamists from the lawless mountain region. Pakistani officials have insisted that the attacks are not only unwarranted, but can compromise its domestic security. 

“I think [the Americans] in Afghanistan have made the situation worse for Pakistan,” said Rasul Bakhsh Rais, head of the Department of Social Sciences at the Lahore University of Management and Economic Research.

In recent weeks, one of Pakistan’s most scenic tourist cities, the Swat Valley in the Eastern region, has been the scene of a deadly Taliban take over.  Last week, Taliban insurgents forced the closure of all girls’ schools in Swat, forcing at least 50,000 young girls to stay home.  Pakistan’s military has staged an attack on the militants, causing many civilians casualties and a heightened state of alert across the country.

Many US officials maintain that Pakistan’s Inter-services Intelligence (ISI) continues to aid Taliban forces in Afghanistan and the US must therefore have more direct involvement in the fight against extremism on both sides of the border.  However, analysts in Pakistan believe that no one can deal with Pakistan’s militancy problems better than Pakistan.

“We have that capability we can handle the situation on the borders but when you continue pushing these militants inland, it harms our country,” added Rais. “Pakistan’s future security is very much linked to the war in Afghanistan and the larger issue of peace and stability in the region, so we think Obama will be a better president if he rethinks the two wars and pulls troops out.”

Pakistanis are equally concerned that lawmakers chosen to be part of Barack Obama’s administration have closer ties with India and may, as a result, fail at brokering any neutral diplomacy.  Relations between the formerly-united South Asian nations have been particularly icy in recent weeks after assailants in the deadly siege on Mumbai last November were suspected of having links to Pakistan.

Earlier this month, India’s foreign secretary, Shiv Shankar Menon, said that investigators had found evidence that ties the gunmen who carried out the attacks to “elements in Pakistan” and added that Islamabad was obliged to extradite those responsible.    Washington has urged Islamabad for full cooperation.

“There are two powers that run Pakistan – the army and America, so whatever happens in America affects Pakistan indirectly,” explained Danish Altaf Mufti, a student at the Lahore School of Economics.  “America would definitely want good relations with India but it should try to keep it in check if it wants balance of power in the region.”

Beyond tensions on the country’s Eastern and Western borders, many Pakistanis say they are eager to see a general upheaval of American foreign policy as it relates to the Muslim world.  From Karachi to Rawalpindi, Pakistanis have been voicing their distress over the violence unfolding in Gaza and calling upon the West to take drastic measures to bring an end to the fighting.

“A very important thing is how he handles the Palestine conflict because every Muslim has been hurt by this,” said Mufti. “I know it is transition phase and he has to be careful with his words, but if he is afraid of the Israel lobby then we will not see the real change that people are talking about.”

Oil Exporters Ignore Iran’s Call for Embargo Over Gaza War

Hello from Lahore, Pakistan!  I just arrived today and plan to base here for at least the next six months.  There is so much going on here at the moment that I feel very fortunate to have a front row seat.  I am extremely eager to hear about new and interesting story ideas here in the country so I invite you all to submit some suggestions.  

In the meantime, I wrote the story below in Dubai last week regarding calls for an oil embargo against supporters of Israel over the Gaza crisis.  As of today, about 1,000 Palestinians have been killed as the result of Israel’s attack on Gaza, most of them civilians.  Please consider ways in which you can help the poor people of Gaza rebuild after this destructive conflict with Israel.

by VIVIAN SALAMA

MIDDLE EAST TIMES

DUBAI, United Arab Emirates – Cozy economic ties with the West and cool heads have led the Arab Gulf’s leading oil exporters to ignore calls by Iran for an oil embargo against supporters of Israel over the Jewish state’s military offensive in Gaza. 

Mirfaysal Bagherzadeh, brigadier-general of Iran’s hard-line Revolutionary Guard, has urged Muslim countries to cut oil exports to Israel’s allies as punishment for their inaction against the its “unequal war” on the Palestinian territory.

Saudi Arabia’s foreign minister, Prince Saud al-Faisal, responded this week saying that the use of oil as a weapon in the Arab-Israeli conflict is not a solution.

“The oil producers who need their income … are not going to do that,” he said at a news conference in Riyadh. “The use of oil, especially at this time, is an idea that is at least past its worth.”

The comments from Tehran echoed sentiments by members of Bahrain’s lower house of parliament earlier in the week that “all retaliation options” should be considered by Arab governments against the Israeli aggression.

While the tiny Gulf kingdom is not a major oil exporter, it is home to the U.S. Navy’s 5th Fleet.

“Bahraini and Kuwaiti parliaments are quite renowned for nationalistic and even Islamist voices that do not necessarily reflect the position of their particular governments,” said Neil Partrick, assistant professor of international studies at the American University of Sharjah.

The renewed Israeli attacks in Gaza have claimed nearly 1,000 lives since they started on Dec. 27.

French President Nicolas Sarkozy and a delegation of European Union foreign ministers have been meeting with Arab heads-of-state in an attempt to broker a cease-fire and bring both parties back to the negotiating table.

Israel’s government has been accused of heavy-handed tactics resulting in huge destruction of infrastructure and high civilian casualties.

Protesters have come out in large numbers in cities across the region demanding that their governments take action to stop Israel and make it take responsibility for the heavy losses.

A statement released this week by the Saudi cabinet accused “the policy of war, violence, murder and torture practiced by Israel against the Gaza Strip and throughout Palestine” as demonstrative of the “extremist political parties in Israel and abroad aiming at [the] restructuring of the region of the Middle East according to their terms.”

The Saudi government also criticized American nepotism toward Israel. Speaking at this week’s U.S.-Gulf Forum, the Saudi deputy foreign minister said that the United States has “adopted policies full of flaws against the Gulf nations and the Middle East while it has been extending all-out support to Israel.”

For countries in the Gulf, their oil wealth has historically proven to be a mighty weapon in times of turmoil. Flash back to the now infamous oil embargo by Arab producers during the 1973 Yom Kippur War between Israel and the armies of Egypt and Syria. The boycott sent shock waves around the world – the market price for oil soaring almost immediately from $3 a barrel to $12.

Arab oil producers would subsequently take a hit, however, as consumption dropped by 5 percent over the following two years. The crisis served as a wake-up call for countries in the West to seek alternative sources of energy and ultimately, reduce dependency on oil imports.

Today, Saudi Arabia is the only major Middle East oil supplier to the United States. The United Arab Emirates, Oman and Iran sell mostly to Asia, while Kuwait divides its exports among countries in Asia and Europe, while sending only a small amount to the United States.

“So the phrase ‘we need to reduce our dependence on Middle Eastern oil’ is actually a misnomer,” said Raja Kiwan, an energy analyst with PFC Energy, a Bahrain-based consultancy. “Most of [Iran's] oil is sold to Asia, so the comments by the Revolutionary Guard should be seen as political rhetoric.”

Like other oil producers in the region, Iran depends on oil revenue for as much as 90 percent of its foreign income – and is currently suffering as the result of plummeting oil prices. An export ban is therefore believed by analysts to be in no one’s interest – most of all, the oil producers.

“The GCC [Gulf Cooperation Council] has no appetite for an oil embargo because the embargo of the 1970’s was quite damaging economically for the Gulf countries,” noted Partrick.

Martin Lovegrove, vice chairman of oil and gas for Standard Chartered Bank in London said that oil producers must consider the implications an oil embargo could have on their domestic economies.

“Some, if not the majority, of these countries would certainly have to tighten their belts should they have an embargo, and not just for the short-term,” he said.

“An embargo could increase prices again at a time of true economic sensitivity in the world financial, business and personal economic markets [and] this could delay any real term recovery in prices.”

Counting the rising cost

Vivian Salama

The National: July 29. 2008

The world’s insatiable appetite for oil has hit UAE shoppers in their stomachs as well as their wallets with spiralling food costs. And the problem appears to be growing.

Consumers are paying more for everything from a bag of rice to a carton of eggs, simply because it takes oil to run farm machines, power the processing and packaging factories and fuel all modes of transport. 

“Food prices are directly correlated to oil prices,” explains Marios Maratheftis, the head of research for Standard Chartered Bank. “We can’t sell US$140 barrels of oil then expect food prices to go lower.”

In recent months higher oil prices have manifested themselves locally in the form of higher commodities prices, the pain of which is passed on to consumers. 

As the most demanded staple food, rice has soared to unprecedented levels, with global prices up from $650 (Dh2,386) per tonne to a 25-year high of $1,000 in just the first three months of this year. A decision by India’s government to halt exports of non-basmati rice – in an effort to curb prices and avoid domestic shortages – has exacerbated the situation here, driving prices even higher. India’s move has been widely criticised by UAE retailers whose businesses thrive on sales of the grain.

“We have a lot of Indian people here who want to eat their rice, even if the price of basmati rice keeps getting more expensive,” says Burham Turkmani, the general manager of Al Rabiah Trading in Dubai. 

Khaled Zanul Abid, the manager of Talal Supermarket in Jebel Ali, agrees. “I am Indian, so I know how my customers feel. They like to eat certain kinds of rice from India. But they have to eat, even if the price gets very high,” he says. “Everything is becoming so expensive for the people now.”

Food inflation is foremost among concerns of the federal government, which reported a 11.1 per cent jump in inflation last year. Although inflation has largely been driven upwards by rents, food, beverages and tobacco accounted for 11 per cent of the rise and are believed to contribute as much as 30 per cent to overall GCC inflationary pressures. According to the Emirates Consumer Protection Society, domestic food inflation could rise as high as 40 per cent this year.

Experts say cheap ingredients are being passed off as 

“Inflation will not go away,” warns Andy Barnett, a professor of economics at the American University of Sharjah (AUS). 

“Problems will continue indefinitely until people give up and let the underlying adjustment that’s taking place take hold.”

Various measures – some more controversial than others – have been taken to ensure that the situation does not spiral out of control. The initial response was price caps. Earlier this year the Government signed agreements with various domestic retailers including Baniyas Co-operative Society, Carrefour, Union Co-operative Society and LuLu hypermarkets for implementing price caps on items such as chicken, rice, flour and eggs in an effort to combat rising prices set by suppliers. In April, the Government announced it was stockpiling more than a dozen “essential” food items to reduce the likelihood of food shortages, often a backlash after price caps. One month later, officials with the Economy Ministry announced that 15 items – including dry and condensed milk, frozen and canned vegetables, baby food, chicken, edible oil, rice, flour, fish, meat and tea – were to be placed on a free import list in a bid to contain inflation.

“Price caps should be on the suppliers, not the retailers,” says David Berrick, the retail general manager of Abela Supermarkets, which has a domestic headquarters in Abu Dhabi. “They’re implementing these policies on just 16 or 20 commodities. What about the other 20,000 products in our supermarket? We can lower our prices and use the marketing tool of ‘everyday low prices’, but if supplier costs go up, we have no choice but to raise prices.”

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UAE may buy Pakistan farms

 

by Sarmad Khan and Vivian Salama

The National

ABU DHABI // Inflation and the spectre of long-term food shortages have prompted the Government to consider a new strategic investment – the purchase of large-scale farms in Pakistan and other countries.

The aim is to protect the country from the turmoil of soaring wheat and rice prices and export bans by producing countries that could lead to food shortages.

The Government is holding exploratory talks with Pakistan on the proposal, according to a senior Pakistan government official and the Emirates Society of Consumer Protection, a division of the Economy Ministry.

The Government was looking to acquire large land holdings and import food at 20 to 25 per cent less cost, a senior Pakistani government official said. 

There are six parties in the chain between the farmer and the time the product reaches retailers including the farmer, broker, exporter, importer here, wholesaler and retailer. 

According to a Pakistani official each party retains a 5 per cent margin on each transaction, and by eliminating several steps the government can bring the cost of food down by 20 to 25 cent, according to a senior Pakistani government official.

“The talks have been going on between Pakistan’s government and the UAE’s Ministry of Economy for some four months, however no concrete decision is made yet,” he said. The ministry was seeking support and guarantees from Pakistani counterparts before getting into large-scale corporate farming, he added.

Rising inflation is one of the driving forces behind the Economy Ministry’s decision to consider alternative food sources that would secure supplies for the country while cutting costs.

“We believe that, if we get products directly from the farms, it will encourage market competition,” an official at the Emirates Society of Consumer Protection said, adding that the government was studying similar options in other countries.

Pakistani officials say their government will facilitate negotiations between farmers and UAE representatives but it is not involved in growing food and cannot help the UAE set up government-supported farms.

Last week Pakistan announced the introduction of tax exemptions, duty free import of equipment and 100 per cent land ownership in specialised free zones in its agriculture, livestock and dairy sectors to lure potential investors.

It is expected to announce more concessions to entice investments.

“Agricultural free zones will be set up within the next four to five months, which will open up doors for the nations to own sources of food supply,” the Pakistani official said. “It is a good opportunity, especially for GCC countries which are dependent on food imports.”

GCC countries rely heavily on imported food and the UAE imports nearly 85 per cent of its supplies for an estimated Dh11 billion (US$3bn) annually.

The GCC is the largest importer of food from Pakistan, according to Pakistani officials. A number of GCC-based companies have already turned to Pakistan for alternative resources. Qatar Livestock Company is to invest $1bn in corporate farms in Pakistan, according to Huma Fakhar, an adviser to the Bahraini government. Some Saudi Arabian groups, particularly Al Rabie Group, a dairy company, have expressed interest in buying land in Pakistan.

“There is a global crisis right now,” said Miss Fakhar. “If you do not prepare these reserves now, then three to four years down the line it will turn extremely critical.”

Several UAE-based retailers including Baniyas Co-operative Society, Carrefour, Union Co-operative Society and Lulu hypermarkets have agreed to help the government to curtail inflation by putting price caps on basic commodities.

Last week the Economy Ministry urged retailers to start stockpiling basic food items to prevent shortages resulting from export bans by countries like India, Egypt and Brazil.

The UAE government has also urged retailers to consider eliminating middlemen when importing commodities to cut costs. While executives like José Luis Durán, the chief executive of Carrefour, encourages supermarkets to work directly with farms, others are concerned that this carries a hidden catch.

“If you want to make money as a farmer, go to a place where the farmers are making money, not a place where the land is cheap,” said Jannie Holtzhausen, chief executive of Spinneys in Dubai. “What has now suddenly changed in the world that the economic model drives governments to become farmers?”

Concerned about what the initiative means to their businesses, local importers are speaking out against it.

“Eliminating traders from this process would be a mistake,” said Burhan Turkmani, the general manager of Dubai-based Al Rabiah Trading Company.

“Farmers are not exporters and governments are not importers,” added Riaz Hussein Bhojani, the general manager of Rashwell Company, another trading company