The International Reporting (and Life) Adventures of Vivian Salama

Archive for the ‘Oil’ Category

Letter from Kampala: Museveni’s Oil Bet

Posted by vmsalama on February 20, 2014

Letter from Kampala

Foreign Affairs
FEBRUARY 20, 2014

Uganda’s President Yoweri Museveni in Addis Ababa, Ethiopia, January 30, 2014. (Tiksa Negeri / Courtesy Reuters)

Feeble and gaunt from the illness that has eaten away at his body, Fideli Donge wobbled onto the porch of his mud-and-straw home, which is hidden by short palm trees off an isolated, craterous dirt road used mostly by barefooted pedestrians and the occasional bodaboda, an East African motorbike taxi. He’s in his 60s, he thinks, but a lifetime of hard labor and poverty has left him looking closer to 90. A few months ago, as Donge lay bedridden, and as his children and grandchildren — he has 52 altogether — worked the 20-acre farm that his family has owned for nearly half a century, men from the local municipality in his western Uganda village knocked at his door. 

“They told me that all the residents here have to leave and that they will give me a house or money,” Donge said. He and his family will have to abandon the land that they rely on for their own food and livelihood; they make pennies from the sale of maize, sugar cane, and cassava, a staple crop across Africa. “We don’t know when we will go, or where,” he said. The municipality promised Donge a new home, one large enough to accommodate his family, with soil rich enough to farm, but he hasn’t heard anything since the officials came to his door. “Until now, we are just waiting.”

Since 2008, more than 7,100 residents in surrounding villages have been given similar offers as part of the Ugandan government’s grand scheme to build an 11-square-mile oil refinery in the Lake Albert basin, along the country’s disputed border with the Democratic Republic of Congo (DRC). The government hopes that the project will transform the downtrodden and war-torn nation, which just barely cracks the top 20 African economies by GDP, into the continent’s fifth-largest oil producer. The Ugandan government, in partnership with London-based Tullow Oil, discovered commercial reserves eight years ago, but production has been slowed by technical challenges and, especially, bureaucratic hang-ups. In early February, after years of protracted talks, the Ministry of Energy finally announced that it had signed deals with China’s CNOOC, France’s Total, and Tullow to build the estimated $15 billion worth of infrastructure needed to develop the oil fields. If successful, the government estimates reserves of up to 3.5 billion barrels of crude oil — enough to finally make this nation of 36 million people self-reliant for its energy needs.

The Lake Albert refinery is an ambitious venture, particularly for a government plagued by corruption allegations and with a history of empty promises. (Last year, the government’s auditor reported $100 million missing from the national budget.) But, perhaps, this time is different. The refinery is a pet project of President Yoweri Museveni, who has ruled the country for 28 years; he has repeatedly gone on record calling the reserves “my oil.” Uprooting Ugandan farmers to make way for a refinery might seem like a surprising move for Museveni, who spends so much time out of the capital of Kampala, at his own cattle ranch in southern Uganda, that he earned the nickname the Gentleman Farmer (it’s one of many). But the refinery plan is, ultimately, the perfect way to shore up a presidency for life. (click here to read more)


Posted in Africa, Arab Spring, Central African Republic, Constitution, corruption, Coup, Debt, Democratic Republic of Congo, Development, dictatorship, Domestic Abuse, Economy, Education, Elections, Employment, Foreign Policy, Freedom of Speech, Human Rights, Invisible Children, Kampala, Kenya, Kony, Labor, Lake Albert, Lake Victoria, Media, military, Museveni, North Africa, Oil, Politics, Poverty, Protests, Refugees, Somalia, South Sudan, Stop Kony, Sudan, Terrorism, Uganda | Leave a Comment »

Journey to Lake Albert Basin, Western Uganda

Posted by vmsalama on February 8, 2014

Ibrahim Kassita prepares for a 90 kilometer boda boda ride/Photo by Vivian Salama

Ibrahim Kassita prepares for a 90 kilometer boda boda ride/Photo by Vivian Salama

First paved rode many residents have ever seen/By Vivian Salama

First paved rode many residents have ever seen/By Vivian Salama










Following dust clouds to Lake Albert/Photo by Vivian Salama

I’m in Uganda as a fellow for the International Center for Journalists, learning about this incredible country and all of its successes and challenges. This week, along with my Ugandan colleague and New Vision journalist Ibrahim Kassita, embarked on a long and grueling journey to the Lake Albert Basin in Western Uganda to examine the plight of residents near a proposed oil refinery site. The paved road you see in picture two is brand new, paved especially to allow workers to access the refinery site. It is the first road many of the local residents have ever seen. When it was built, many residents who lived along the roads were offered either monetary compensation or a new house. We could not find any residents who had already received their new house, but we did find people who had received money.

We came across these women at a well station and decided to discuss the project with them. Not only did they share some interesting insights on how the compensation scheme stands to leave women and children out, since the men receive the money and often squander it. They also informed us that this well is the only clean water source within 10 kilometers. The women gather every few days, often bringing their children along, to fill several yellow containers full of water. They then have to lug them back on foot. Many of the wells in the area have stopped working and some are set to be destroyed once building begins on the refinery site.









After a few hours of travel, we met Fideli Donge and his family, who together total about 60 people. They have been promised a home as part of the compensation plan — they live within a kilometer of the refinery site. However, they are still waiting for word from the government and have been given no indication of when or where they will go. They have a 20 acre farm on the land Donge has lived on for 50 years. They will likely lose their crops — the sole source of income and food for his large family. He is extremely sick and frail, and told us that he wants to die knowing that his family has a roof over its head.

Fideli Donge and family/Photo by Vivian Salama

Fideli Donge and family/Photo by Vivian Salama

Posted in Africa, Development, Economy, Education, Employment, Environment, Oil, Poverty, Uganda | Leave a Comment »

Libya’s Economy to Shrink More Than 50% After Conflict, IMF Says

Posted by vmsalama on October 26, 2011

By Vivian Salama

Oct. 26, 2011

Bloomberg — Libya’s economy will contract more than 50 percent in 2011 as eight months of fighting paralyzed its oil industry, the International Monetary Fund said.

“The conflict has had a severe impact on economic activity heavily dependent on hydrocarbons,” which account for more than 70 percent of output and 95 percent of exports, the fund said today in its Regional Outlook for the Middle East and Central Asia. “International sanctions and consequent denial of access to foreign exchange have limited the ability to finance imports of goods and services, resulting in severe disruptions in the non-hydrocarbon sectors.”

The death last week of Muammar Qaddafi, Libya’s president of four decades, may end fighting between loyalists and the one- time rebels who now run the country after seizing the capital, Tripoli, in August. 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, interim Prime Minister Mahmoud Jibril said last week.

Qaddafi’s defeat follows uprisings in neighboring Tunisia and Egypt earlier this year that ousted long-time autocratic rulers. Tunisia’s economy will remain flat this year while Egypt’s will grow by 1.2 percent, the IMF forecasts.

Libya’s conflict has had “significant spillovers globally and into neighboring countries,” including a shortfall in oil exports and a decrease in remittances sent home by workers from Libya, especially to Tunisia and Egypt, the IMF said. The conflict also played a role in driving tourists and foreign investors away from the region, it said. (click here to read more…)

Posted in Arab Spring, Economy, Egypt, International Monetary Fund, Libya, Middle East, Oil, Qaddafi, Tunisia | Leave a Comment »

Saudi Arabia’s Crown Prince Sultan Dies

Posted by vmsalama on October 23, 2011

By Glen Carey and Vivian Salama

Oct. 23, 2011

Bloomberg – Saudi Arabia’s Crown Prince Sultan bin Abdulaziz Al Saud has died, setting in motion succession plans for the world’s largest oil exporter.

Prince Nayef, born in 1934, is the most likely candidate for the crown prince position. King Abdullah, who is 87, underwent surgery earlier this month to relieve back pain after traveling to the U.S. in November for three months of medical care.

Prince Sultan bin Abdulaziz Al Saud

The Saudis will want to convey a “message of continuity in terms of their economic policies, and reiterate their commitment to oil market stability at a time of global uncertainty and OPEC divisions,” Jarmo Kotilaine, chief economist at Jeddah-based National Commercial Bank, said in a telephone interview. “There are certain policies that they have agreed on over the last few years and months, and they won’t change this.”

Saudi Arabia increased oil supply to help meet rising demand after exports from Libya collapsed during the uprising against Muammar Qaddafi. The kingdom failed in June to reach an agreement with other members of the Organization of Petroleum Exporting Countries to boost production quotas. It also announced $130 billion in social and housing spending after popular movements toppled leaders in Tunisia, Egypt and Libya this year.

Koran Verses

Saudi state television announced the death of Sultan, who is also minister of defense and aviation, then began playing verses from the Koran, as is the custom. The prince was born in Riyadh in 1928, according to the Saudi Embassy in Washington, and was heir apparent to the throne. He will be buried in an unmarked grave, as stipulated by the Sunni Wahabbi version of Islam.

Sultan died “outside the kingdom after suffering an illness,” the Royal Court said in a statement posted on the official Saudi Press Agency website. “Prayer will be held at Imam Turki Bin Abdullah Mosque in Riyadh after Asr prayer on Tuesday.”  (Click here to read more…)

Posted in Oil, Saudi Arabia, Succession | Leave a Comment »

Libya’s Jibril to Resign Tomorrow After Liberation Is Declared

Posted by vmsalama on October 22, 2011

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…)

Posted in Arab, Arab Spring, Economy, Elections, Foreign Policy, Islam, Libya, Middle East, Oil, Qaddafi | Leave a Comment »

Oil-Rich Libyans Won’t Need Foreign Financial Backing in Post-Qaddafi Era

Posted by vmsalama on August 24, 2011

Alaa Shahine and Vivian Salama

click here to view original

(Bloomberg) — Libyan rebels needed NATO’S military might to bring Muammar Qaddafi’s rule to the brink of collapse. About $50 billion in cash abroad means they can do without foreign aid to rebuild the country after a six-month conflict.

Airstrikes and logistical support from North Atlantic Treaty Organization forces helped reverse the tide in Libya, stopping the advance of Qaddafi’s troops on rebel strongholds and allowing the opposition to score military victories that culminated in a sweep into Tripoli this week.

As the rebels hunt Qaddafi and his remaining followers in the capital, world leaders such as German Chancellor Angela Merkel are urging the release of frozen Libyan assets abroad to help in the transition to democracy. Those assets and Africa’s largest oil reserves set Libya apart from neighboring Tunisia and Egypt, which sought outside financial aid after popular revolts ousted their leaders this year.

“We don’t need loans,” former Libyan Central Bank Governor Farhat Bengdara, who broke with Qaddafi’s regime in February, said in an interview in Dubai. “Libya has huge financial resources and oil reserves. What it needs is the cooperation of the international community to lift the freeze on Libya’s assets aboard.”

The Libyan economy suffered as much as $15 billion in damage during the conflict, according to Bengdara’s estimates. An economic recovery and the release of frozen assets will depend on how fast the rebels can stabilize the country and establish a government, say analysts including Paul Sullivan, a professor at the National Defense University in Washington.

Bank Deposits

The central bank and the Libyan Investment Authority, the country’s sovereign-wealth fund, have about $168 billion in assets abroad. About $50 billion of that is in bank deposits in European countries including Germany, the U.K., France, Italy, Portugal, Spain, Sweden, Belgium and the Netherlands, Bengdara said. The two institutions also hold about $40 billion in U.S. and European government bonds, he added.

France is working on a United Nations Security Council resolution to release funds to the rebels’ National Transitional Council, a Foreign Ministry spokesman, Bernard Valero, told reporters in Paris today.

“For France, as for all our partners, the priority is to help Libyans to take back their destiny in their hands,” he said. “The Transitional Council must have access to the necessary financial resources.”

Frozen Assets

The U.S. government is working to release between $1 billion and $1.5 billion in frozen assets to the rebels for humanitarian purposes, State Department spokeswoman Victoria Nuland said yesterday. The rebels are in talks with the U.K. to release Libyan banknotes frozen since the crisis began, Aref Nayed, a spokesman for the NTC and envoy to the United Arab Emirates, told reporters in Dubai late yesterday.

The resources will offset the losses that the economy has incurred, according to Suliman Al Shahomy, chairman of the Libyan Stock Market, who broke with Qaddafi’s regime in February.

“The infrastructure hasn’t been destroyed,” he said in a telephone interview from Cairo.

Oil and equity investors rejoiced after the rebels entered Tripoli. The prospects of Qaddafi’s four-decade rule ending helped shares of Eni SpA, the biggest foreign investor in Libya, Ansaldo STS SpA and Total SA gain. Brent oil fell, narrowing its record premium to the main U.S. grade, on bets Libya’s output will recover.

No Debt

Libya doesn’t have outstanding debt. The conflict prompted Fitch Ratings to withdraw all of its credit ratings on Libya on April 13, citing “extreme political instability” and the loss of oil production.

Libya’s oil output, at about 1.58 million barrels a day before the revolt according to Bloomberg data, slumped to a trickle after fighting broke out, according to the International Energy Agency. Output may reach as much as 350,000 barrels a day within three months “if we’re lucky,” said Samuel Ciszuk, the London-based senior Middle East and North Africa energy analyst at IHS Global Insight.

“Until we see stability, it will be hard for the oil industry to recover,” Ciszuk said by telephone. “It’s all about bringing what is there back on stream as soon as possible. Some will be a bit hard to bring back on stream. There’s been some long-term damage to some of the older oil fields because they were shut down in a rushed and disorganized manner.”

‘Sudden Takeover’

Even so, oil production will recover more quickly than forecast after the “sudden takeover” of fields and export facilities by rebels, Goldman Sachs Group Inc. said in a report this week. Libya will probably boost supply to 585,000 barrels a day in the next 12 to 18 months, Goldman said.

Libyan rebels will restart the Zawiya refinery “in the coming weeks” because its infrastructure was preserved during fighting, Ahmed Jehani, chairman of the rebels’ stabilization team, said in an interview. Next, work will resume at the Tubruk refinery, followed by the facility at Ras Lanuf, Nayed said.

Qaddafi came to power in 1969 after he toppled Libya’s monarchy in a military coup. His attempts to export his self- styled revolution to other countries put Libya under U.S. and UN sanctions in the 1980s and 1990s. Qaddafi’s government was also accused of sponsoring terrorism, and a Libyan man, Abdel Basset Al-Megrahi, was convicted of the bombing of a Pan Am airliner over Lockerbie, Scotland in 1988.

After 2000, Qaddafi renounced terrorism and gave up a nuclear-weapons program. That led to international sanctions being lifted and boosted the economy, which expanded 4.2 percent in 2010, according to the International Monetary Fund.

Tourism Opportunities

Oil aside, the economy offers investment opportunities in industries including tourism, mining, agriculture financial services, according to Bengdara, 45.

International and Arab banks including HSBC Holdings Plc, Standard Chartered Plc, Unicredit SpA and Mashreqbank PSC had applied to set up units in the North African country. Unicredit, Italy’s biggest lender, said in August last year it had won a license.

“Libya can become the star of the region,” Bengdara said. “Libya’s economic output, which was about $80 billion before the revolution, can easily double in no longer than 10 years.”

Even so, lingering protests, labor strikes and political bickering in Tunisia and Egypt show that the transition toward democracy in Libya may not be easy, Raza Agha, a London-based economist at Royal Bank of Scotland Group Plc, said in a report on Aug. 22. In fact, Libya may have a harder time, according to Sullivan of the National Defense University.

‘Gutted the Government’

“Libya may have the toughest transition of all of them in North Africa,” Sullivan said by e-mail. “Qaddafi gutted the government and there really seems to be almost no understanding amongst many there about how to transition to a vibrant economy and democracy. Platitudes and hopes are not policies that can be implemented.”

Uncertainty about the nature of the post-Qaddafi government may also delay the release of frozen funds, Stuart Levey, a former U.S. Treasury undersecretary, told Bloomberg Television’s “In Business with Margaret Brennan.”

Having the assets still frozen can be used “as a point of leverage for the United States and its allies to ensure that they have a legitimate government they can trust in Libya they can give this money to,” Levey said.

Beltone Financial Holding (BTFH), an Egyptian investment bank that suspended its brokerage services in Libya after the fighting broke out, still regards the North African country as a lucrative business opportunity, Chief Executive Officer Aladdin Saba said today.

“The picture is not yet clear,” he said in a telephone interview from Cairo. “But of course Libya is on our map and we hope stability is achieved quickly so that we can contribute to the rebuilding of the country.”

Posted in Arab, Arab Spring, dictatorship, Economy, Libya, Oil, Qaddafi | Leave a Comment »

Yemen Shortages Worsen as Street Violence Leaves Locals Searching for Food

Posted by vmsalama on May 26, 2011

By Vivian Salama and Mohammed Hatem


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.”

Posted in Al-Qaeda, American, Arab, Arab League, dictatorship, Economy, Elections, Foreign Policy, Oil, Saudi Arabia, United States, Yemen | Leave a Comment »

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

Posted by vmsalama on April 14, 2011

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.”

Posted in Abu Dhabi, Arab, Arab League, Arab Spring, dictatorship, Dubai, Economy, Education, Egypt, Elections, Employment, Foreign Policy, Freedom of Speech, Hosni Mubarak, Human Rights, Iran, Iraq, Islam, Labor, Lebanon, Libya, Middle East, military, Mubarak, Oil, Palestinians, Politics, Qaddafi, Qatar, Religion, Saudi Arabia, Shi'ite, State of Emergency, Syria, Terrorism, Tunisia, United Arab Emirates, United States, Yemen | Leave a Comment »

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

Posted by vmsalama on January 14, 2009

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.



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.”

Posted in Gaza, Iran, Israel, Middle East, Oil, Pakistan, Palestinians | Leave a Comment »

Counting the rising cost

Posted by vmsalama on July 30, 2008

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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Posted in Grain, Middle East, Oil, Pakistan, Price Caps, Retail, Rice, Sudan, United Arab Emirates | Leave a Comment »