Showing posts with label gulf countries. Show all posts
Showing posts with label gulf countries. Show all posts

Saturday, October 12, 2013

Arab Countries in Transition - Economic Outlook and Key Challenges - Deauville Partnership Ministerial Meeting

Arab Countries in Transition - Economic Outlook and Key Challenges - Deauville Partnership Ministerial Meeting
IMF Policy Paper, October 10, 2013

Summary: In an environment of heightened socio-economic tensions, regional insecurity, and strained public finances, the Arab Countries in Transition (ACTs) 1 face the difficult task of delivering on the expectations for jobs and growth. Despite patchy improvements in some countries, economic growth remains subdued, private investment is weak, and external and fiscal buffers are running low. Fostering social cohesion and avoiding a downward spiral of economic and political malaise calls for urgent implementation of economic reforms and coordinated support from the international community.

Regional economic outlook and key challenges (edited)
In an environment of heightened socio-economic tensions, regional insecurity, and strained public finances, the Arab Countries in Transition (ACTs, Egypt, Jordan, Libya, Morocco, Tunisia, and Yemen) face the difficult task of delivering on the expectations for jobs and growth. Despite patchy improvements in some countries, economic growth remains subdued, private investment is weak, and external and fiscal buffers are running low. Fostering social cohesion and avoiding a downward spiral of economic and political malaise calls for urgent implementation of economic reforms and coordinated support from the international community.

A. Background and recent developments
Three shocks undermine sentiment. The economic situation in the ACTs has become increasingly difficult amid a still weak external environment, rising regional tensions stemming largely from the civil war in Syria, and heightened domestic political uncertainty in many countries, at times accompanied by violence. As a result, private sector sentiment has worsened, private sector activity remains subdued, and private investment, particularly foreign direct investment, has slowed.

Growth is low and unemployment is rising. Average growth (excluding Libya) is expected to inch up to 3 percent in 2013 from 2½ percent in 2012, with the marginal pick-up reflecting a nascent recovery of tourism and exports, increased post-crisis capacity utilization, and a post-drought rebound of agriculture in Morocco. This moderate growth is not generating the jobs needed to stem the rise in the number of unemployed, which has increased by more than 1 million people since early 2010.

Progress with reforms has been uneven, further straining public finances. Budget deficits remain elevated, averaging 9 percent of GDP in 2012(excluding Libya) owing to weak revenue collection and weaker-than-expected fiscal consolidation efforts. In Egypt and Jordan, high levels of public debt (more than 80 percent of GDP) further limit fiscal space. Meanwhile, inflation pressures have begun to ease in most ACTs helped by lower food and energy prices and weak demand. Foreign exchange reserves have stabilized for now, reflecting a gradual narrowing of current account deficits and, notably in Egypt, external financial support. Nevertheless, reserve buffers remain low relative to the underlying vulnerabilities.

B. Short-term outlook
Private investment and growth are anemic. The current challenges faced by the ACTs are likely to persist over the near term. Revitalizing private sector activity will require political stability and strong policy efforts to improve the business climate. This will take time. Meanwhile, we expect only a gradual recovery in 2013–14, with average GDP growth at about 3 percent. Inflation is expected to stabilize in the upper single digits and the current account and fiscal deficits could begin to narrow gradually, but will remain elevated. Consequently, public debt and unemployment in most countries are likely to continue creeping up.

Significant downside risks. Risks to this already sobering outlook are significant, and mostly to the downside. The Syrian crisis, recent domestic political tensions, and incidences of increasing violence have the potential to intensify further and bring growth to a halt. This would have strongly negative consequences for labor markets in the region. First, an increased flow of refugees could overburden budgets of Syria’s neighboring countries, while damaging trade, confidence, and growth in the region more broadly. Equally damaging could be setbacks to the political transitions as well as an escalation of violence in Libya, Tunisia, Egypt, or Iraq, which would further delay economic reforms and deter investment. In some countries, new disruptions to energy supplies (for example, oil production in Libya or Jordan’s gas imports from Egypt) would take a toll on fiscal and external positions. Finally, and with somewhat lower probability, weaker global—notably European—growth could slow recovery of exports and foreign inflows.

Friday, March 29, 2013

America's Voluntary Standards System: A 'Best Practice' Model for Asian Innovation Policies? By Dieter Ernst

America's Voluntary Standards System: A 'Best Practice' Model for Asian Innovation Policies? By Dieter Ernst
East-West Center, Policy Studies, No. 66, March 2013
ISBN: 978-0-309-26204-5 (print); 978-0-86638-205-2 (electronic)
Pages: xvi, 66


Across Asia there is a keen interest in the potential advantages of America's market-led system of voluntary standards and its contribution to US innovation leadership in complex technologies.

For its proponents, the US tradition of bottom-up, decentralized, informal, market-led standardization is a "best practice" model for innovation policy. Observers in Asia are, however, concerned about possible drawbacks of a standards system largely driven by the private sector.

This study reviews the historical roots of the American system, examines its defining characteristics, and highlights its strengths and weaknesses. A tradition of decentralized local self-government has given voice to diverse stakeholders in innovation. However, a lack of effective coordination of multiple stakeholder strategies constrains effective and open standardization processes.

Asian countries seeking to improve their standards systems should study the strengths and weaknesses of the American system. Attempts to replicate the US standards system will face clear limitations--persistent differences in Asia's economic institutions, levels of development, and growth models are bound to limit convergence to a US-style market-led voluntary standards system.

Wednesday, October 26, 2011

IMF: Outlook for Mideast, with Oil-Importing Countries Facing Continued Economic Pressures

IMF Sees Varied Outlook for Mideast, with Oil-Importing Countries Facing Continued Economic Pressures
Press Release No. 11/378
October 26, 2011


The economic outlook for countries across the Middle East and North Africa region varies markedly, with the oil-exporters seeing a mild pickup in growth in 2011 on the back of higher oil prices, and the oil-importers experiencing a dramatic slowdown, the IMF says in its latest assessment of the region. The IMF’s Regional Economic Outlook for the Middle East and Central Asia, released today, projects growth in the Middle East and North Africa region, including Afghanistan and Pakistan, at 3.9 percent in 2011, down from 4.4 percent in 2010.

The region’s oil-exporting countries (excluding Libya)—Algeria, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, Sudan, the United Arab Emirates, and Yemen—are forecast to expand by 4.9 percent in 2011, thanks to higher oil prices and oil production. But growth among the region’s oil importers—Afghanistan, Djibouti, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Syria, and Tunisia—will register just under 2 percent (see table).

“Since the beginning of this year, a deterioration in the international economic outlook and the buildup of domestic social pressures have resulted in an economic slowdown in many of the region’s oil-importing countries. But we should not lose sight that the ongoing historical transformation holds the promise of improved living standards and a more prosperous future for the people in the region,” Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department, said at the launch conference of the report in Dubai today.

Higher oil prices benefiting oil exporters

Economic activity in the region’s oil-exporting countries has clearly improved, bolstered by continued high energy prices. This expansion is driven by the high level of activity in the countries of the Gulf Cooperation Council (GCC), where growth is projected at 7 percent in 2011, the report shows. Several countries—Saudi Arabia in particular—have stepped up oil production temporarily in response to higher oil prices and shortfalls in production from Libya. “The decision to increase oil production in the wake of disruptions in Libya was an essential contribution toward global energy market stability and enhanced activity,” Mr. Ahmed noted.

Increased oil revenues have created additional room for government spending in the GCC. Several countries announced spending programs early in the year, covering a wide spectrum of measures, such as subsidies, wages, and capital expenditure. At current projected oil prices and levels of production, revenue gains will more than offset the high levels of public spending. In 2011, the oil exporters’ combined external current account balance is expected to increase from $202 billion to $334 billion (excluding Libya), and from $163 billion to $279 billion for the GCC.

But fiscal vulnerability has also increased substantially, as break-even oil prices have risen steadily and are now approaching observed oil prices (see Chart 1). “Oil-exporting countries have understandably increased fiscal spending to address social needs. Looking forward, the widening of non-oil fiscal deficits makes many countries more vulnerable to swings in oil prices, at a time when the world economy is facing heightened risks,” Mr. Ahmed added.


Turning to the financial sector, the report sees a continued gradual recovery. GCC banks in particular, which showed considerable resilience during the global crisis, are now registering capital adequacy ratios in excess of 15 percent, with nonperforming loans below 10 percent. But private-sector credit growth remains cautious.

Looking ahead, the IMF’s assessment foresees a moderation in growth for the region’s oil exporters to about 4 percent in 2012, and notes that these countries also face some downside risks. The most immediate would be the impact of a sharp slowdown in Europe and the United States. Global oil demand could contract substantially, possibly leading to a sustained drop in oil prices. Other risks include further regional unrest and an economic downturn in key trading partners, such as India and China.

Meeting social needs, restoring confidence key priorities for oil importers
As for the region’s oil-importing countries, the political and economic transformations occurring in several of them are advancing slowly and are expected to extend well into 2012. Together with a worsening economic outlook in Europe and globally, the region is seeing a sharp drop in investment and tourism activity. As a result, the recovery in 2012 is expected to be weaker than anticipated, with growth projected at just over 3 percent, according to the IMF report.

“Undoubtedly, the year ahead will be challenging for many countries, with continued political uncertainty, a deteriorating global economic outlook, and higher financing costs impeding a quick economic recovery. Measures aimed at restoring confidence and fostering more inclusive growth will help countries enhance activity and ultimately address the needs of the population,” Mr. Ahmed said.

In response to growing social unrest, the economic downturn, and higher commodity prices, governments in the region have significantly expanded subsidies and transfers. The cost of this social spending remains high, exceeding 10 percent of GDP in Egypt and more than 5 percent of GDP in most other countries. As a result, oil importers’ fiscal deficits are widening by about 1.5 percent of GDP in 2010–11 (see Chart 2).


In the near term, such spending measures are appropriate to lessen the impact of the downturn. But from an efficiency and equity standpoint, it is better for governments to gradually replace universal subsidies with social safety nets that are targeted at the less well-off part of the population, the IMF report states. Resources can then be used for critical investments in infrastructure and education and for supporting much-needed reforms.

Meeting the rising demands of the population will not be easy, the report notes—particularly as most countries have already used their fiscal and international reserve buffers to respond to deteriorating economic conditions in the wake of the Arab Spring, and have less room left to respond to future shocks. Regional partners and the broader international community can facilitate this transition through financing and greater market access for exports.

Conflict has taken a massive human toll in addition to its enormous economic costs in Libya, Syria, and Yemen. The immediate priority for these countries is to avoid further humanitarian crisis and, post conflict, to pursue an agenda of reconstruction and reform.

See tables of selected economic indicators for Middle East, North Africa, Afghanistan, and Pakistan (MENAP) at

Saturday, May 14, 2011

Analysts say GCC inclusion of Jordan, Morocco will strengthen Arab integration

Analysts say GCC inclusion of Jordan, Morocco will strengthen Arab integration

May 14, 2011
BBC Monitoring Middle East

["Today's Harvest" news programme on GCC's invitation to Morocco to join the GCC, and Jordan's request to join the GCC; Saudi Consultative Council member, Jordanian government spokesman, and Moroccan Socialist Unified Party member interviewed - live.]

Doha Al-Jazeera Satellite Channel Television in Arabic at 2001 GMT on 10 May carries within its "Today's Harvest" news programme a 200-second report on the GCC consultative summit held in Riyadh on 10 May, an approximately six-minute interview with Zuhayr al-Harithi, member of the Saudi Arabia's Consultative (Shura) Council, in the Doha studio; followed by a four-minute interview with Tahir al-Adwan, Jordan's minister of state for media affairs and communication and official spokesman of the Jordanian government, via telephone from Amman; and a four-minute interview with Hassan Tarik, member of the Political Bureau of Morocco's Socialist Unified Party, SUP, via telephone from Rabat. The interviews are conducted from Doha by anchors Khadijah Bin-Qinnah and Muhammad al-Kurayshan.
Al-Jazeera reports on the consultative summit held by the heads of the six Gulf Cooperation Council [GCC] states - or their representatives - in Riyadh on 10 May during which they discussed the situation in Yemen and Bahrain and the tense relations with Iran.
Al-Jazeera reports that GCC Secretary General Abd-al-Latif al-Zayani said the GCC Supreme Council delegated its foreign ministers to initiate talks with Rabat on Morocco joining the GCC, while the GCC leaders "welcomed Jordan's request to join the GCC, and promised to study the request."
Al-Jazeera then carries a video report by an unidentified correspondent on the summit. Video shows scenes from the summit, beginning with the Saudi monarch walking with the help of a stick, surrounded by Saudi and other GCC dignitaries. The correspondent notes that the summit coincides with "a big deterioration in the GCC states' relations with Iran, in the wake of recent protests in Bahrain," adding that Iran was unhappy with Bahrain's request for the assistance of the Peninsula Shield Force to end the disturbances.
The correspondent adds that the GCC states are becoming increasingly worried by the continuing crisis in Yemen where huge demonstrations are held daily to demand President Salih's departure. Al-Jazeera's correspondent adds that the GCC summit sent a delegation to meet with Syrian President Al-Asad, and the director of the Gulf Research Centre in Dubai has revealed that the GCC will not mediate in the Syrian situation, but it may have proffered advice to Al-Asad and stressed to him that the "security solution is not the only solution, and reforms are essential."
Bin-Qinnah then asks Al-Harithi about the GCC's "surprise move" in welcoming Jordan's request to join the GCC and inviting Morocco to join, Al-Harithi says "the picture is not quite clear yet." He explains that the move stems from "the GCC's desire to establish a bloc that represents a political stand, and an economic bloc that gives momentum to the GCC. The political systems in all those countries are similar: they are monarchies, and their political stands are also similar." Asked if he is referring to stands towards Iran, Al-Harithi says Iran and other issues. He says it is a "good move, because we are talking about the globalization age, which requires the creation of blocs that achieve economic integration."
Asked whether his assertion about the political systems of the GCC, Jordan, and Morocco being similar explains why the GCC had rejected past requests to join the GCC, Al-Harithi disagrees and says Yemen has begun preparations to qualify, adding: "I think it will join soon."
Al-Harithi says the GCC states are facing regional and domestic challenges, and they have certain demands, and the GCC states are wise to take such a far-sighted stand that could be helpful in the future. He says some states "are trying to exploit the present weakness of the Arab states, for we have seen some interference and some changes in the Arab political map."
Al-Harithi says he believes that since four months ago "the GCC embarked on a new stage" with regard to joint action and security and defence policies. He says the GCC's achievements continue to fall short of the aspirations of the peoples of the GCC states, and the GCC has sensed the dangers of the present stage and wisely looked for ways out.
Told it is called a Gulf council, while Morocco is a long distance from the Gulf, Al-Harithi says if Morocco and Jordan join the GCC geographic location will no longer be so important, for the states' joint action, political stand, and economic integration will be more important. He says if the outcome of those two states joining the GCC is that Arab joint action will gain momentum that ultimately serves the Arab states.
Asked about Yemen's application to join the GCC, Al-Harithi says: "The problem is in the Yemeni court, where there is some stalling and procrastination on the part of the regime, while the opposition is being intransigent and is taking a hard-line operation." He urges the Yemenis to seize this opportunity for it is "a road map to find a solution.
Al-Harithi says the GCC initiative because it will spare the Yemeni people's blood, achieve their demands, and lead to respect for the options of the Yemeni people. He adds: "The GCC states are neither backing the Yemeni president, nor siding with the Yemeni opposition, but seek to consolidate Yemen's stability and security." Al-Harithi adds: Yemen's security is a strategic matter. It is linked to the security system of the GCC as a whole."
Al-Kurayshan then interviews Jordan's Tahir al-Adwan. Al-Kurayshan begins by asking him how Jordan received the decisions of the GCC consultative summit. Al-Adwan says: "The Jordanian government issued a statement lauding the GCC summit's statement that welcomed Jordan's request to join the GCC. It is a big and important step for joint Arab action, and achieves the interests of the Arab peoples in this region. Amy step towards strengthening Jordanian-GCC relations is welcomed in Jordan, not only at the official level but at various popular levels as well." He notes Jordan's strong and longstanding relations with the GCC states where, he says, many Jordanians are employed.
Asked what does Jordan hope to achieve by joining the GCC, Al-Adwan says: "Such a step serves the interests of Jordan and also serves joint Arab action. It strengthens Arab integration and cooperation in economic fields, and bolsters the ties and contacts between the peoples of the region."
Seeking a more specific answer, Al-Kurayshan says why does Jordan apply to join the GCC which had so far been a club exclusively for Gulf states, Al-Adwan says: "It has been a longstanding ambition of Jordan to join the GCC. You may recall that in recent weeks when the king went on a tour, and the prime minister also went on a tour of the Gulf states, there were reports on the possibility of Jordan joining the GCC. The report was well received by Jordanian public opinion. I believe Jordan has constantly aspired to join the GCC, which is a very big step for Jordan. It is a welcome move. Certainly, Jordanians will feel that new horizons have been opened to cooperation between Jordan and the peoples and states of the GCC. It is in Jordan's interest. As you know, Jordan faces difficult economic circumstances. The entire region is suffering from unrest and instability."
Al-Adwan adds: "Now any step towards bolstering joint Arab action on various levels represents a ray of hope for the peoples of the region."
Bin-Qinnah then interviews Hasan Tarik, of Morocco's SUP. Asked how did Morocco receive the GCC's invitation to join the GCC, Tarik says Moroccan public opinion was surprised by the invitation, both because Morocco is more oriented towards the Arab Maghreb and the West, and because the GCC is a closed club. Tariq notes that not all the facts are known, and the reports are conflicting, for there are those who say Morocco has officially applied to join the GCC, while there are those who say that Mo rocco was invited by the GCC to join it. He adds that there had been no previous public discussions on the issue. He says there will be questions regarding the effect of such a move on Morocco's relations with other Maghreb and Mediterranean states. [Video shows King Hamad of Bahrain sitting and listening to other GCC leaders]
Asked how would Morocco's relations with other Arab Maghreb states conflict with its relations with GCC states, Tarik says the political stands of Morocco and the GCC states have always been close, and there was clear economic support for Morocco. He adds: "However, for those relations to go as far as Morocco joining the GCC represents a shift in Morocco's foreign policy. The fear is that, in the light of the political transformations that have been occurring in the Arab region, the bid to join the GCC will be construed as a return to the policy of axes. There is also a fear that it will be viewed as the last nail in the coffin of the Arab Regional Order. There are numerous questions that are being asked by Moroccan public opinion, but there are not enough appropriate answers to those questions."
Tarik says decisions on foreign policy are the prerogative of the state and the royal establishment, and adds: "However, it is hoped there will be a public debate on the issue and the options. Are we getting involved in a pragmatic and economic process? Does it have political significance and consequences? What is the cost? Why now? Those are all matters that require clarification?"
Source: Al-Jazeera TV, Doha, in Arabic 2001 gmt May 10, 2011

Monday, May 18, 2009

Netanyahu and Obama Have a Shared Interest in Iran

Netanyahu and Obama Have a Shared Interest in Iran. By R M Gerecht
The success of both men depends on stopping the mullahs from getting the bomb.
WSJ, May 18, 2009

Can the United States and its European allies peacefully prevent Iran from developing nuclear weapons? And if not, would Israel try to do so militarily, even if doing so greatly angered President Barack Obama? Israeli Prime Minister Benjamin Netanyahu is in Washington today. These questions could well make or break his premiership and Mr. Obama's presidency.

With increasing vigor and resources, the clerical regime has advanced a massive -- and until 2002 clandestine -- program for producing fissile material. It's a good bet that the Europeans have never really believed that Iran could be deterred from developing a bomb by either engagement or sanctions acceptable to all of the EU's members. Nevertheless, the Europeans have tried, offering generous trade and credit terms while psychologically stroking the Islamic Republic.

Yet as Thérèse Delpech, a leading nonproliferation expert at France's Atomic Energy Commission, warned last October at a Brookings Institution lecture, "We [the Europeans] have negotiated during five years with the Iranians . . . and we came to the conclusion that they are not interested at all in negotiating, but . . . [only] in buying time for their military program." In those five years, she also noted, Tehran never implied that if only the Americans were at the table the clerical regime would be amenable to compromise.

We shouldn't be surprised if the Israelis reach a conclusion at odds with Washington's near-consensus against pre-emptive strikes on Iran's nuclear facilities. In 1981, Jerusalem certainly surmised that a raid against Iraq's Osirak nuclear reactor could make Saddam Hussein furious and that he possessed conventional and unconventional means of getting even. But they went ahead and destroyed the reactor.

The consensus in Israel is just as widespread about the correctness of last year's strike against the secret North Korean-designed reactor at Dir A-Zur in Syria -- a project that may well have had Iranian backing. Prime Minister Ehud Olmert ordered the attack although the Bush administration opposed it. And in 1967, Israelis believed that pre-emptive action saved their nation from an Arab-initiated, multifront offensive that could have proved lethal.

For the Israelis today, Iran has become an unrivalled threat. Although anti-Semitism has been widespread in the Middle East since the 1930s, the strain among Tehran's ruling elite is akin to what European Jews observed in Austria, Germany and Russia in the early 20th century.

Americans and Europeans don't like to dwell on the problem of anti-Semitism in the region, preferring to see it as tangential to geopolitics and economics and treatable by the creation of a Palestinian state. But Israelis are acutely conscious that unrelenting anti-Semitism and anti-Zionism are important factors in the Shiite Islamic Republic's increasing popularity among Arab Sunni fundamentalists -- especially in Egypt, where the Muslim Brotherhood would probably triumph in a free election. In Iran, the anti-Jewish passion among the revolutionary elite appears to have actually increased as ordinary Iranians have soured on theocracy and state-sanctioned ideology.

Never before have the Israelis had to confront a rabidly anti-Semitic enemy with nuclear weapons and a long track record of supporting deadly killers such as Hezbollah and Hamas. Americans and Europeans can seem to Israelis all-too-nonchalant about the challenge they face -- and Western counsel to calm down and get used to the idea of mullahs with nukes doesn't sit well with a people who have already lived through the unthinkable.

The Western advice may be sage: The threat of an Israeli retaliatory nuclear strike might be a sufficient threat to discourage Tehran's mullahs from using a nuclear weapon directly, or from leveraging its protective nuclear umbrella indirectly to more aggressively support anti-Israeli jihadists. But Iran's penchant for terrorism, its extensive ties to both radical Sunnis and Shiites, its vibrant anti-Semitism, and the likelihood that Tehran will become more aggressive (as has Pakistan in Kashmir) with an atom bomb in its arsenal doesn't reinforce the case for patience and perseverance.

Consider: If Saddam Hussein had had a nuke in 1990, would George H.W. Bush have risked war? Consider as well the near certainty that ultra-Sunni Saudi Arabia will go nuclear in response to a Shiite Persian bomb. The prospect of another virulently anti-Semitic Arab state -- deeply permeated with supporters of al Qaeda -- possessing an atomic weapon cannot comfort Jerusalem. A pre-emptive strike offers Israel a chance that this nuclear contagion can be stopped.

A tidal wave of Western sanctions might convince the Israelis that the Americans and Europeans are finally serious about countering Tehran. Sanctions against Iran's importation of gasoline -- the country lacks sufficient refining capacity -- could shock the regime. The bipartisan Iran Refined Petroleum Sanctions Act, recently introduced in Congress, gives the White House the authority to make foreign companies choose between doing business with the U.S. or exporting gasoline to Iran. A European effort to cripple Iran's production and transport of liquefied gas -- an enormous future financial reservoir for Iran given its reserves -- could cause a political earthquake in Tehran. The mullahs just might suspend uranium enrichment.

But the Obama administration appears deeply conflicted about using "sticks." Is it willing to coerce the Europeans into implementing economy-strangling energy sanctions if the Europeans prove unwilling to punish Iran severely? The administration appears to be entertaining a German- and British-backed idea of allowing Tehran to proceed with uranium enrichment -- in return for which sanctions against the regime would be cancelled -- if it is "monitored." Yet even if Iran would agree to intrusive monitoring, the Israelis -- and others in the region -- would surely view such a concession as one big step closer to an Iranian bomb.

Mr. Obama has repeatedly described Iran's nuclear ambitions as "unacceptable" and warned against the threat that a nuclear-armed clerical regime poses to the world. Yet the administration has tried to keep Iran, and its Iran point man Dennis Ross, out of the headlines. One suspects that this is not because the administration is devising an all-encompassing grand bargain, but because it cannot get the clerical regime to meaningfully engage.

One can sympathize with the reluctance of this administration, like its predecessor, to confront the mullahs. But whether the Israelis strike or not, another storm is gathering in the Middle East. It could prove far more tumultuous than the earlier ones in Iraq.

Mr. Gerecht, a former Central Intelligence Agency officer, is a senior fellow at the Foundation for Defense of Democracies.

Monday, May 4, 2009

As the U.S. Retreats, Iran Fills the Void

As the U.S. Retreats, Iran Fills the Void. By Amir Taheri
WSJ, May 04, 2009

Convinced that the Obama administration is preparing to retreat from the Middle East, Iran's Khomeinist regime is intensifying its goal of regional domination. It has targeted six close allies of the U.S.: Egypt, Lebanon, Bahrain, Morocco, Kuwait and Jordan, all of which are experiencing economic and/or political crises.

Iranian strategists believe that Egypt is heading for a major crisis once President Hosni Mubarak, 81, departs from the political scene. He has failed to impose his eldest son Gamal as successor, while the military-security establishment, which traditionally chooses the president, is divided. Iran's official Islamic News Agency has been conducting a campaign on that theme for months. This has triggered a counter-campaign against Iran by the Egyptian media.

Last month, Egypt announced it had crushed a major Iranian plot and arrested 68 people. According to Egyptian media, four are members of the Islamic Revolutionary Guards Corps (IRGC), Tehran's principal vehicle for exporting its revolution.

Seven were Palestinians linked to the radical Islamist movement Hamas; one was a Lebanese identified as "a political agent from Hezbollah" by the Egyptian Interior Ministry. Hassan Nasrallah, the leader of the Lebanese Hezbollah, claimed these men were shipping arms to Hamas in Gaza.

The arrests reportedly took place last December, during a crackdown against groups trying to convert Egyptians to Shiism. The Egyptian Interior Ministry claims this proselytizing has been going on for years. Thirty years ago, Egyptian Shiites numbered a few hundred. Various estimates put the number now at close to a million, but they are said to practice taqiyah (dissimulation), to hide their new faith.

But in its campaign for regional hegemony, Tehran expects Lebanon as its first prize. Iran is spending massive amounts of cash on June's general election. It supports a coalition led by Hezbollah, and including the Christian ex-general Michel Aoun. Lebanon, now in the column of pro-U.S. countries, would shift to the pro-Iran column.

In Bahrain, Tehran hopes to see its allies sweep to power through mass demonstrations and terrorist operations. Bahrain's ruling clan has arrested scores of pro-Iran militants but appears more vulnerable than ever. King Hamad bin Isa al-Khalifa has contacted Arab heads of states to appeal for "urgent support in the face of naked threats," according to the Bahraini media.

The threats became sensationally public in March. In a speech at Masshad, Iran's principal "holy city," Ali Akbar Nateq-Nuri, a senior aide to Supreme Leader Ayatollah Ali Khamenei, described Bahrain as "part of Iran." Morocco used the ensuing uproar as an excuse to severe diplomatic relations with Tehran. The rupture came after months of tension during which Moroccan security dismantled a network of pro-Iran militants allegedly plotting violent operations.

Iran-controlled groups have also been uncovered in Kuwait and Jordan. According to Kuwaiti media, more than 1,000 alleged Iranian agents were arrested and shipped back home last winter. According to the Tehran media, Kuwait is believed vulnerable because of chronic parliamentary disputes that have led to governmental paralysis.

As for Jordan, Iranian strategists believe the kingdom, where Palestinians are two-thirds of the population, is a colonial creation and should disappear from the map -- opening the way for a single state covering the whole of Palestine. Iranian Supreme Leader Khamenei and President Mahmoud Ahmadinejad have both described the division of Palestine as "a crime and a tragedy."

Arab states are especially concerned because Tehran has succeeded in transcending sectarian and ideological divides to create a coalition that includes Sunni movements such as Hamas, the Islamic Jihad, sections of the Muslim Brotherhood, and even Marxist-Leninist and other leftist outfits that share Iran's anti-Americanism.

Information published by Egyptian and other Arab intelligence services, and reported in the Egyptian and other Arab media, reveal a sophisticated Iranian strategy operating at various levels. The outer circle consists of a number of commercial companies, banks and businesses active in various fields and employing thousands of locals in each targeted country. In Egypt, for example, police have uncovered more than 30 such Iranian "front" companies, according to the pan-Arab daily newspaper Asharq Alawsat. In Syria and Lebanon, the numbers reportedly run into hundreds.

In the next circle, Iranian-financed charities offer a range of social and medical services and scholarships that governments often fail to provide. Another circle consists of "cultural" centers often called Ahl e Beit (People of the House) supervised by the offices of the supreme leader. These centers offer language classes in Persian, English and Arabic, Islamic theology, Koranic commentaries, and traditional philosophy -- alongside courses in information technology, media studies, photography and filmmaking.

Wherever possible, the fourth circle is represented by branches of Hezbollah operating openly. Where that's not possible, clandestine organizations do the job, either alone or in conjunction with Sunni radical groups.

The Khomeinist public diplomacy network includes a half-dozen satellite television and radio networks in several languages, more than 100 newspapers and magazines, a dozen publishing houses, and thousands of Web sites and blogs controlled by the Islamic Revolutionary Guard Corps. The network controls thousands of mosques throughout the region where preachers from Iran, or trained by Iranians, disseminate the Khomeinist revolutionary message.

Tehran has also created a vast network of non-Shiite fellow travelers within the region's political and cultural elites. These politicians and intellectuals may be hostile to Khomeinism on ideological grounds -- but they regard it as a powerful ally in a common struggle against the American "Great Satan."

Khomeinist propaganda is trying to portray Iran as a rising "superpower" in the making while the United States is presented as the "sunset" power. The message is simple: The Americans are going, and we are coming.

Tehran plays a patient game. Wherever possible, it is determined to pursue its goals through open political means, including elections. With pro-American and other democratic groups disheartened by the perceived weakness of the Obama administration, Tehran hopes its allies will win all the elections planned for this year in Afghanistan, Iraq, Lebanon and the Palestinian territories.

"There is this perception that the new U.S. administration is not interested in the democratization strategy," a senior Lebanese political leader told me. That perception only grows as President Obama calls for an "exit strategy" from Afghanistan and Iraq. Power abhors a vacuum, which the Islamic Republic of Iran is only too happy to fill.

Amir Taheri's new book, "The Persian Night: Iran Under the Khomeinist Revolution," is published by Encounter Books.

Monday, March 23, 2009

Iran Has Started an Arms Race in the Mideast and Beyond

Iran Has Started a Mideast Arms Race. By Amir Taheri
States throughout the region are looking to establish nuclear programs.
WSJ, Mar 23, 2009

In the capitals of Western nations, Abdul Qadeer Khan, the man regarded as the father of the Pakistani atom bomb, is regarded as a maverick with a criminal past. In addition to his well-documented role in developing a nuclear device for Pakistan, he helped Iran and North Korea with their nuclear programs.

But since his release from house arrest a month ago, Mr. Khan has entertained a string of official visitors from across the Middle East. All come with messages of sympathy; and some governments in that region are looking to him for the knowledge and advice they need to fast track their own illicit nuclear projects.

Make no mistake: The Middle East may be on the verge of a nuclear arms race triggered by the inability of the West to stop Iran's quest for a bomb. Since Tehran's nuclear ambitions hit the headlines five years ago, 25 countries -- 10 of them in the greater Middle East -- have announced plans to build nuclear power plants for the first time.

The six-nation Gulf Cooperation Council (Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates [UAE] and Oman) set up a nuclear exploratory commission in 2007 to prepare a "strategic report" for submission to the alliance's summit later this year. But Saudi Arabia is not waiting for the report. It opened negotiations with the U.S. in 2008 to obtain "a nuclear capacity," ostensibly for "peaceful purposes."

Egypt also signed a nuclear cooperation agreement, with France, last year. Egyptian leaders make no secret of the fact that the decision to invest in a costly nuclear industry was prompted by fears of Iran. "A nuclear armed Iran with hegemonic ambitions is the greatest threat to Arab nations today," President Hosni Mubarak told the Arab summit in Riyadh, Saudi Arabia two weeks ago.

Last November, France concluded a similar nuclear cooperation accord with the UAE, promising to offer these oil-rich lands "a complete nuclear industry." According to the foreign ministry in Paris, the French are building a military base close to Abu Dhabi ostensibly to protect the nuclear installations against "hostile action," including the possibility of "sensitive material" being stolen by terrorist groups or smuggled to Iran.

The UAE, to be sure, has signed a cooperation agreement with the U.S. forswearing the right to enrich uranium or produce plutonium in exchange for American nuclear technology and fuel. The problem is that the UAE's commercial hub, the sheikhdom of Dubai, has been the nerve center of illicit trade with Iran for decades, according to Western and Arab intelligence. Through Dubai, stolen U.S. technology and spent fuel needed for producing raw material for nuclear weapons could be smuggled to Iran.

Qatar, the smallest GCC member by population, is also toying with the idea of creating a nuclear capability. According to the Qatari media, it is shopping around in the U.S., France, Germany and China.

Newly liberated Iraq has not been spared by the new nuclear fever. Recall the history. With help from France, Iraq developed a nuclear capacity in the late 1970s to counterbalance its demographic inferiority vis-à-vis Iran. In 1980, Israel destroyed Osirak, the French-built nuclear center close to Baghdad, but Saddam Hussein restored part of that capacity between 1988 and 1991. What he rebuilt was dismantled by the United Nations' inspectors between 1992 and 2003. But with Saddam dead and buried, some Iraqis are calling for a revival of the nation's nuclear program as a means of deterring "bullying and blackmail from the mullahs in Tehran," as parliamentarian Saleh al-Mutlaq has put it.

"A single tactical nuclear attack on Basra and Baghdad could wipe out a third of our population," a senior Iraqi official told me, on condition of anonymity. Since almost 90% of Iraqis live within 90 miles of the Iranian border, the "fear is felt in every town and village," he says.

Tehran, meanwhile, is playing an active part in proliferation. So far, Syria and Sudan have shown interest in its nuclear technology, setting up joint scientific committees with Iran, according to the official Islamic Republic News Agency. Iranian media reports say Tehran is also setting up joint programs with a number of anti-U.S. regimes in Latin America, notably Venezuela, Bolivia, Nicaragua and Ecuador, bringing proliferation to America's backyard.

According to official reports in Tehran, in 2006 and 2007 the Islamic Republic also initialed agreements with China to build 20 nuclear-power stations in Iran. The first of these stations is already under construction at Dar-Khuwayn, in the oil-rich province of Khuzestan close to the Iraqi border.

There is no doubt that the current nuclear race in the Middle East is largely prompted by the fear of a revolutionary Iran using an arsenal as a means of establishing hegemony in the region. Iran's rivals for regional leadership, especially Turkey, Egypt and Saudi Arabia, are aware of the propaganda appeal of the Islamic Republic's claim of being " the first Muslim superpower" capable of defying the West and rivaling it in scientific and technological fields. In that context, Tehran's development of long-range missiles and the Muslim world's first space satellite are considered political coups.

Mohamed al Quwaihis, a member of Saudi Arabia's appointed parliament, the Shura Council, warns of Iran's growing influence. Addressing the Shura Council earlier this month, he described Iranian interferences in Arab affairs as "overt," and claimed that Iran is "endeavoring to seduce the Gulf States, and recruit some of the citizens of these countries to work for its interests."

The Shura devoted a recent session to "the Iranian threat," insisting that unless Tehran abandoned its nuclear program, Saudi Arabia should lead the Arabs in developing their own "nuclear response." The debate came just days after the foreign ministry in Riyadh issued a report identifying the Islamic Republic's nuclear program as the "principal security threat to Arab nations."

A four-nation Arab summit held in the Saudi capital on March 11 endorsed that analysis, giving the green light for a pan-Arab quest for "a complete nuclear industry." Such a project would draw support from Pakistan, whose nuclear industry was built with Arab money. Mr. Khan and his colleagues have an opportunity to repay that debt by helping Arabs step on a ladder that could lead them to the coveted "threshold" to becoming nuclear powers in a few years' time.

Earlier this month, Mohamed ElBaradei, the retiring head of the International Atomic Energy Agency, warned that the Nuclear Nonproliferation Treaty has become a blunt instrument in preventing a nuclear arms race. Meanwhile, the U.S., France, Russia and China are competing for nuclear contracts without developing safeguards to ensure that projects which start as peaceful undertakings are not used as cover for clandestine military activities.

The Obama administration should take the growing threat of nuclear proliferation seriously. It should try to provide leadership in forging a united response by the major powers to what could become the world's No. 1 security concern within the next few years.

Mr. Taheri's new book, "The Persian Night: Iran Under The Khomeinist Revolution," is published by Encounter Books.

Tuesday, March 10, 2009

Obama's National Intelligence Crackpot - What does the Jewish lobby have to do with China's dissidents

Obama's National Intelligence Crackpot, by Bret Stephens
What does the Jewish lobby have to do with China's dissidents
WSJ, Mar 10, 2009

On Thursday, The Wall Street Journal published a letter from 17 U.S. ambassadors defending the appointment of Charles Freeman to chair the National Intelligence Council. The same day, the leaders of the 1989 protests that led to the massacre at Beijing's Tiananmen Square wrote Barack Obama "to convey our intense dismay at your selection" of Mr. Freeman.

If moral weight could be measured on a zero to 100 scale, the signatories of the latter letter, some of whom spent years in Chinese jails, would probably find themselves in the upper 90s. Where Mr. Freeman and his defenders stand on this scale is something readers can decide for themselves.

So what do Chinese democracy activists have against Mr. Freeman, a former U.S. ambassador to Saudi Arabia? As it turns out, they are all, apparently, part-and-parcel of the Israel Lobby.

In a recent article about Mr. Freeman's nomination in the Huffington Post, M.J. Rosenberg of the left-wing Israel Policy Forum writes that "Everyone involved in the anti-Freeman effort are staunch allies of the lobby." Of course: Only the most fervid Likudnik mandarins could object to Mr. Freeman's 2006 characterization of Mao Zedong as a man who, for all his flaws, had a "brilliance of . . . personality [that] illuminated the farthest corners of his country and inspired many would-be revolutionaries and romantics beyond it." It also takes a Shanghai Zionist to demur from Mr. Freeman's characterization of the Chinese leadership's response to the "mob scene" at Tiananmen as "a monument to overly cautious behavior on the part of the leadership."

Mr. Freeman knows China well: He served as a translator during Richard Nixon's historic 1972 visit to Beijing. More recently, Mr. Freeman served on the advisory board of CNOOC, the Chinese state-owned oil giant. Is this also a qualification to lead the NIC?
But the Far East is by no means Mr. Freeman's only area of expertise. For many years he has led the Middle East Policy Council, generously funded by Saudi money. It's a generosity Mr. Freeman has amply repaid.

Thus, recalling Mr. Freeman's special pleading on behalf of Riyadh during his stint as ambassador in the early '90s, former Secretary of State James Baker called it "a classic case of clientitis from one of our best diplomats." Mr. Freeman has also been quoted as saying "It is widely charged in the United States that Saudi Arabian education teaches hateful and evil things. I do not think this is the case." Yet according to a 2006 report in the Washington Post, an eighth grade Saudi textbook contains the line, "They are the Jews, whom God has cursed and with whom He is so angry that He will never again be satisfied." Maybe Mr. Freeman was unaware of this. Or maybe he doesn't consider it particularly evil and hateful.

Whatever the case, Mr. Freeman has been among the Kingdom's most devoted fans, going so far as to suggest that King Abdullah "is very rapidly becoming Abdullah the Great." No sycophancy there.

Not surprisingly, Mr. Freeman was a ferocious critic of the war on terror. Not surprising, either, was his opinion about what started it: "We have paid heavily and often in treasure in the past for our unflinching support and unstinting subsidies of Israel's approach to managing its relations with the Arabs," he said in 2006. "Five years ago we began to pay with the blood of our citizens here at home."

This is not a particularly original argument, although in Mr. Freeman's case it becomes a kind of monomania, in which Israel is always the warmonger, always slapping away Arab hands extended in peace. Say what you will about this depiction of reality, there's also a peculiar psychology at work.

Then again, as Middle East scholar Martin Kramer points out, Mr. Freeman's recent views on the causes of 9/11 contradict his view from 1998, when he insisted that al Qaeda's "campaign of violence against the United States has nothing to do with Israel." What changed? Mr. Kramer thinks Mr. Freeman was merely following the lead of his benefactor, Citibank shareholder Prince Al-Waleed, who opined that 9/11 was all about U.S. support for Israel, not what the Kingdom teaches about the infidels.

Is Mr. Freeman merely a shill? That seems unfair, even if it's hard to square his remorseless "realism" in matters Chinese with the touching solicitude he feels for Israel's victims (who, by his count, must be numbered in the tens of millions). James Fallows of the Atlantic has argued that Mr. Freeman's "contrarian inclination" would serve him well in the NIC post. But the line between contrarian and crackpot is a thin one, and knowing the difference between the two is a main task of intelligence.

Adm. Dennis Blair, the Director of National Intelligence who asked Mr. Freeman to serve, is testifying today in Congress. Somebody should ask him if any of Mr. Freeman's views quoted above meet the definition of "crackpot," and, if not, why?

Wednesday, March 4, 2009

Iran threatens two neighbors?

Sideshow or Preview?, by Christian Whiton
Iran threatens two neighbors.
The Weekly Standard, Mar 04, 2009 12:00:00 AM

This year could go down is history as the one in which Iran either got the bomb or got close enough for government work. A report in early February by the International Institute for Strategic Studies concluded that during 2009 Iran will probably reach the point at which it has produced enough low-enriched uranium to make a bomb if it took the simple step of further enrichment. CIA Director Leon Panetta recently said there is "no question" Iran is seeking a nuclear weapons capability. This refuted with finality a laughable 2007 National Intelligence Estimate that concluded the opposite in a chapter of Bush administration history that might be titled "Bureaucrats Gone Wild."

It is hard to overstate the negative consequences of a nuclear Iran. Doomsday scenarios like a nuclear assault on Israel or one of the other countries within range of Iran's delivery systems and terrorist networks come to mind. While this should be of immense concern, there are more probable consequences in store for the medium term that ought not to escape attention. Iranian aggression of a much more conventional nature is likely, and Tehran has been giving a telling preview of this in recent months.

Last week, the former speaker of Iran's parliament, who is close to the supreme leader, opined that Bahrain was once the 14th province of Iran. Connoisseurs of Saddam Hussein's threats will recall his assertion that Kuwait was Iraq's 19th province presaged his invasion of that country in 1990. In the Middle East, such historical claims are often threats--veiled thinly, if at all. Even if an invasion is unlikely given the presence of the U.S. Fifth Fleet in Bahrain, the threat serves to cow would-be allies of the United States and embolden local Islamists and fellow travelers.

The threat to Bahrain comes on the heels of a similar one levied against the United Arab Emirates, another strong U.S. ally and a driver of economic reform in the region. Iran's ongoing occupation of three Emirati islands in the Gulf's strategic Strait of Hormuz makes Tehran's threats seem real enough. On January 26, a member of the Iranian parliament reasserted Iran's claim to these islands, which is dubious for many reasons, including that historically they were used and overseen primarily by Arabs, not Persians. More alarmingly, the parliamentarian went a step further, saying all of the UAE belonged to Iran. The same week, a different parliamentarian warned that for the UAE even to assert its rights to the islands could lead to war. On February 3, an Iranian paper threatened the UAE's leaders with defeat, likening them to Saddam's surrendering troops.

This aggression fits a pattern of what repressive revolutionary countries tend to do, especially when unrest at home creates an impetus for a foreign distraction. Authoritarians have a penchant for inventing foreign enemies as a method of justifying their own rule and excusing their shortcomings. This incentive has grown for the Iranian ruling class as last year's high oil revenues are but a faint memory amid increasing economic malaise that includes inflation and unemployment running at about 25 percent each.

It is true that there are a number of reasons Iran might never actually strike Bahrain or the UAE due to nearby U.S. military assets and the economic drawbacks of disrupting its own trade. It also has other greener pastures in which to employ violence. But these same factors were in play in 1990 when Saddam nonetheless proceeded with an invasion of Kuwait. In addition, Iran is in a more powerful position than Saddam ever was. With a pending nuclear capability, Tehran believes it is on the verge of an insurance policy against any real military reckoning with the free world.

Absent an intervening event, a nuclear Tehran would have an even freer hand to expand its existing terror enterprises. As was the case in Iraq, Iranian made Explosively Formed Penetrators are one of the highest causes of mortality for U.S. troops in Afghanistan. Meanwhile, Tehran's clients have achieved great strides in Lebanon and Gaza in recent years, among other locales. Iran is also in the ideology export business--by violence when necessary. June elections in Iran are unlikely to change this, even if the "moderates" win, judging by their track record. Realistically, all of these activities will accelerate in immediate aftermath of an Iranian nuclear capability.

These activities can of course be countered, as they have in past instances, by an aggressive conventional military presence, a determination to undermine the enemy ideologically, and crack intelligence services that can put the subversives on the defense.

Unfortunately, of these three necessities, the United States possesses only the first at present.

President Obama was dealt a poor hand by his predecessor in the White House. Bush was known to promise concerned visitors that Iran would not be allowed to go nuclear, implying a military strike if other options failed. The basic components of his administration's efforts against Iran were smarter economic sanctions and other measures that may have delayed an Iranian bomb, but will not prevent its occurrence. Without a tough plan to check Iran on all fronts, the Obama administration may find itself dealing with an Iran that is not only nuclear, but on the march throughout the region.

Christian Whiton was a State Department official in the George W. Bush administration.

Tuesday, March 3, 2009

Yemen Parliamentary Elections Postponement

Yemen Parliamentary Elections Postponement, by Gordon Duguid, Acting Deputy Department Spokesman, Office of the Spokesman, US State Dept, Bureau of Public Affairs
Washington, DC, March 3, 2009

The United States views with deep concern and disappointment the decision by Yemen’s ruling and opposition parties to postpone the April 2009 Parliamentary elections for two years. It is difficult to see how a delay of this duration serves the interests of the Yemeni people or the cause of Yemeni democracy. We sincerely hope that the political leadership of Yemen uses this period to cooperate in earnest to reach a consensus on the procedures for the elections that are consistent with the recommendations made by international elections observers in 2006. All parties share the responsibility to ensure that the people of Yemen have the opportunity to choose their representatives in a timely and transparent manner. The United States stands ready to assist in this process.

PRN: 184

Thursday, January 15, 2009

U.S.-UAE Agreement for Peaceful Nuclear Cooperation (123 Agreement)

U.S.-UAE Agreement for Peaceful Nuclear Cooperation (123 Agreement)
Media Note
US State Dept, Office of the Spokesman
Washington, DC, January 15, 2009

Secretary of State Condoleezza Rice and United Arab Emirates (UAE) Foreign Minister Abdullah bin Zayed today signed an Agreement for Cooperation Between the Government of the United States of America and the Government of the United Arab Emirates Concerning Peaceful Uses of Nuclear Energy. Once it enters into force, the Agreement (also called a 123 Agreement after the relevant section of the U.S. Atomic Energy Act) will establish the legal framework for the United States to engage in civil nuclear cooperation with the UAE under agreed nonproliferation conditions and controls.

The Agreement will not only establish a firm foundation for mutually beneficial cooperation in civil nuclear energy, but also has the potential to usher in an era of responsible nuclear energy development throughout the Middle East. The UAE’s approach to development of civil nuclear energy stands in direct contrast to Iran’s pursuit of nuclear capabilities incompatible with IAEA and UN Security Council resolutions. The United States is pleased that this Agreement reflects the UAE’s renunciation of any intention to develop domestic enrichment and reprocessing capabilities in favor of long-term commitments to obtain supply of nuclear fuel from reliable and responsible international suppliers. In light of the importance to the United States of the UAE’s commitment not to engage in enrichment or reprocessing within its borders, activities contrary to that commitment will be grounds for the United States to terminate the Agreement. This Agreement can serve as a model for other countries in the region in pursuing responsible civil nuclear energy development undertaken in full conformity with nonproliferation commitments and obligations.

The UAE is an active partner in a range of nonproliferation initiatives, including the Proliferation Security Initiative, the Global Initiative to Combat Nuclear Terrorism and DOE’s Megaports Initiative. The United States also welcomes the support the UAE has provided to establishing an International Atomic Energy Agency international fuel bank through its contribution of $10 million and urges other States to make similar commitments. By signing this Agreement today, the United States and the UAE have taken an important step in building a long and fruitful partnership to enhance nonproliferation and energy security in the region. For more information on the U.S.-UAE 123 Agreement, please visit the State Department’s website: