Issue 1537, 21 December 2009

Putting the House in Order

Elsy Melkonian

Everyone’s Crisis

Christopher Boucek

Syria’s State of PlayAaron David Miller, scholar, author and

policy adviser

By Stephen Glain

AssadPhase II

elcome to The Majalla Digital, this week our issue brings to you an

assessment of Al-Assad’s government since he was first elected. In this article Stephen Glain explores the emerging character of Syria’s President, especially his ability to restore Syria as an essential Middle East player. To complement this article we have invited the foremost intellectuals to debate Assad’s recent policies.

We invite you to read these articles and much more on our website at Majalla.com/en. As always, we welcome and value our reader’s feedback and we invite you to take the opportunity to leave your comments or contact us if you are interested in writing for our publication.

Dear Readers,

Adel Al Toraifi

Sincerely,

Editor-in-Chief

W

Editorial

Issue 1537, 21 December 2009

Putting the House in Order

Elsy Melkonian

Everyone’s Crisis

Christopher Boucek

Syria’s State of PlayAaron David Miller, scholar, author and

policy adviser

By Stephen Glain

AssadPhase II

Cover

The Majalla MagazineHH Saudi Research & Marketing (UK) Limited Arab Press House

182-184 High Holborn, LONDON WC1V 7APDDI: +44 (0)20 7539 2335/2337

Tel.: +44 (0)20 7821 8181, Fax: +(0)20 7831 2310

Established byHisham and Mohamad Ali Hafez

Editor-in-ChiefADEL Al TORAIFI

Managing DirectorTARIK ALGAIN

Established in 1987 byPrince Ahmad Bin Salman Bin Abdel Aziz

Published by

05Issue 1537

Cartoon

Contents

Ideas30Tough Love

06

Geopolitics08

Features18Assad Phase II

In Brief18

Everyone’s Crisis

Debate25

Will Al-Assad follow inthe footsteps of Sadat?

THE MAJALLA EDITORIAL TEAMLondon Bureau ChiefManuel Almeida

Cairo Bureau ChiefAhmed Ayoub

EditorsStephen GlainPaula MejiaDina WahbaWessam SherifDaniel Capparelli

Editorial SecretaryJan Singfield

WebmasterMohamed Saleh

Around The World

Letters

Quotes Of The WeekMagazine Round Up

21 December, 2009

07

People35Interview

Aaron David MillerScholar, author and policy adviser

Profile

Mohammed Al-Motawa,The new GCC Secretary General

The Political Essay58Erratic Diplomacy

Economics41Economics

Putting the House in Order International Investor

Testing the Waters

Markets

Reviews51Books

Money Does Matter

Readings

Reports

A Question of Survival

Issue 1537, 21 December 2009

Submissions

Advertising

To submit articles or opinion, please email:editorial@majalla.com

For advertisement, sponsorship and digital edition, please contact

SubscriptionsTo subscribe to the digital edition, please

contact: subscriptions@majalla.com

To subscribe for kindle edition:kindle@majalla.com

DisclaimerThe views expressed in this magazine are those of the authors alone and do not necessarily reflect the opinion or views of The Majalla and its editorial team.

The Majalla © 2009 HH Saudi Research and Marketing (UK) Limited. All rights reserved. Niether this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical photocopying, recording or otherwise, without prior permission of HH Saudi Research and Marketing (UK) Limited. Published weekly, except for two issues combined periodically into one and occasional extra, expanded or premium issues. For digital subscription inquiries please visit www.majalla.com/subscriptions.

Mr. Wael Al Fayezw.alfayez@alkhaleejiah.com

Tel.: 0096614411444F.: 0096614400996

P.O.BOX 22304Riyadh 11495, Saudi Arabia

Note: all articles should not exceed 800 words

Saudi Arabia Office Address:HH Saudi Research & Marketing El-Takhasosy Street CrossingMekkah Rd Conference AreaP.O. Box 478 Riyadh 1141Tel: 0096614417749E-Mail: editorial@majalla.com Cairo Office Address:14 El-Hegaz St. Mohandessien - Giza. EgyptTel.: +2 02 333 88 654, Fax: +2 02 333 88 654E-Mail: editorial@majalla.com

London Office Address:HH Saudi Research & Marketing (UK) Limited Arab Press House 182-184 High Holborn, LONDON WC1V 7AP DDI: +44 (0)20 7539 2335/2337, Tel.: +44 (0)20 7821 8181, Fax: +(0)20 7831 2310E-Mail: editorial@majalla.com

Issue 1537

30

38

s the Gulf Cooperation Council met for its 30th summit in Kuwait this week, the organization

discussed a number of issues of mutual concern. Iranian nuclear ambitions, a unified currency, and the ongoing global financial situation were all expected to be on the agenda. Regardless of all these legitimate concerns, the most critical issue facing the GCC is the future of Yemen.

Yemen’s stability and security situation is rapidly deteriorating, and its potential implosion will have a dramatic impact on neighboring states. The country faces an astonishing confluence of unprecedented challenges – violent extremism, economic collapse, a looming water shortage, and a growing secessionist movement. If any one of these challenges comes to a head, it could overwhelm the Yemeni government. Unless appropriate steps are taken, Yemen risks becoming a failed state and a training ground for Islamist extremism, in which case its problems will quickly envelop the entire region. Owing to the central government’s historically weak control, Yemen has often stood on the brink of chaos. The country has survived several individual crises in the past, but today, multiple interconnected challenges are poised to converge at the same time. At the heart of the country’s problems is a looming economic crisis. Yemen’s petroleum reserves are fast running out, and it has few viable options for creating a sustainable post-oil economy. Moreover, the country is consuming its limited water resources much faster than it can now replenish them. A rapidly expanding and increasingly poor population places unbearable pressure on the government’s ability to provide basic services. Islamist terrorism, magnified by a resurgent al-Qaeda organization, an armed insurrection in the North, and an increasingly active secessionist movement in the South, all endanger domestic security.

Historically, the central government has faced stuff resistance in expanding its authority, as the Yemeni people associate it with corruption, cronyism, nepotism, and thwarted economic and social opportunities. Yemeni officials are considering a policy of decentralization, granting more autonomy to local

authorities, thereby institutionalizing the informal patronage systems that operate in lieu of an effective national government.

Corruption remains a major challenge for the government, amid allegations that almost 30 percent of government revenue is never deposited in government accounts. To address the serious and continuing problem of government graft, the country will need to institute sweeping judicial reforms, establishing fair and transparent prosecutions.

The situation is further complicated by a pending political transition. President Ali Abdullah Saleh has ruled the Republic of Yemen since its unification in 1990, and the next presidential election is scheduled for 2013. It is unclear whether Saleh will be constitutionally eligible to stand for reelection for what would be a third term, and he has no obvious successor in place.

Meanwhile, since 2004, the Yemeni government has been fighting a sporadic civil war against Zaidi Shi’a revivalists in the northern province of Sa'ada known as the Houthis. This conflict again erupted into open fighting in August when the government launched Operation “Scorched Earth”. Over the course of the conflict, fighting has been both fierce and indiscriminate, punctuated by periods of relative calm. The toll has been severe in Saada itself, resulting in extensive damage to infrastructure and an estimated 175,000 internally displaced people.

The conflict stems from a complex combination of competing sectarian identities, regional underdevelopment, perceived socioeconomic injustices, and historical grievances. Over time, the antagonism has increased, and the rebels want little to do with the regime.

The conflict has strained the Yemeni army, leading to questions about its ability to simultaneously engage in other missions, including counterterrorism operations. Moreover, the government’s failure to put down the rebellion has prompted concerns that other domestic challengers may perceive the regime as vulnerable, and possibly move against the central government. Islamist militants or other disaffected groups could mount attacks on other fronts while the government is distracted by the war in Saada. Ultimately – and perhaps most ominously – the war is worsening the economic crisis in Yemen. A large budget deficit is forecast for next year and the government is spending its foreign currency reserves at an alarming rate.

In November 2009, the conflict has expanded, drawing in Saudi Arabia. After an incursion by Zaidi rebels into Saudi territory, Riyadh reportedly allowed Yemeni forces to transit through its territory in order to attack Houthi positions. Saudi aircraft later were reported to have hit Houthi positions inside Yemen. This marks a major deterioration in the situation, and provides yet another example of how instability in Yemen threatens the entire region.

Though the region has much to lose in Yemen’s ongoing meltdown, it has much to gain by coordinating an international approach to improve stability there. The international community should encourage the Gulf states to offer Yemen membership in (or at least a ‘special relationship’ with) the Gulf Cooperation Council in exchange for tough steps, including progress on security concerns, curbing government subsidies, and addressing corruption. Ultimately, there is no Yemeni or American solution for Yemen’s problems. They cannot be solved without the help of Yemen’s neighbors and international partners. The consequences of inaction could be too severe to contemplate, especially as the country’s demographic and economic woes exacerbate its worsening security situation.

Associate in the Middle East Program at the Carnegie Endowment for International Peace.

Geopolitics

Everyone’s Crisis:Yemen’s quagmire and the need for regional involvement

08

A

Yemen’s stability and security situation is rapidly deteriorating, and its potential implosion will have a dramatic impact on the region. Ultimately, there is no Yemeni or American solution for Yemen’s problems. They cannot be solved without the help of Yemen’s neighbors and international partners.

Christopher Boucek

21 December, 2009

The 30th GCC Supreme Council Summit in Kuwait concluded its activities with renewing solidarity with Saudi Arabia against threats, mainly that of the Houthi rebels and supporting Saudi actions against Houthi infiltrators. The GCC leaders stressed that any violation of security and stability of the Kingdom will be seen as a violation of the GCC countries' security and stability. The six nations' leaders agreed to form a deployment force to deal with any security threats that would face any of the member countries like the threat of Houthis.

The leaders approved a defense strategy of the GCC countries and stressed the importance of developing capabilities of the Joint Jazirah Shield and shared military projects. They stressed the cooperation between their countries in confronting arm smuggling to the GCC countries. The Gulf leaders renewed their unified stance on confronting terrorism and fighting its financing sources and the extremist intellect leading to it. They also called for collective and international efforts to confront terrorism, exchange information and not use or let the land of their countries be used for preparing,

planning or fostering terrorist activities.

The Summit came at a time in which Iran tested an optimized version of the solid-fuel Sejjil-2 deterrent missile. The international community considers this missile a very bad sign that Iran is making significant advances in its missile programme. The missile that Iran tested is capable of reaching the Gulf states. This may escalate the already severe tensions between the Iranian leadership and the Gulf countries. Many experts stress that Iran's ballistic programme is just a military arm of its nuclear programme.

In BriefAround The World LettersQuotes Of The Week Magazine Round Up

11

GCC Summit agrees joint military force to deal with security threats

Issue 1537

Around The World

12

5 PalestineHamas leader, Khaled Meshaal has announced in a news confer-ence that "all Islamist militant groups will form a united front with Iran against Israel if it at-tacks Iran". The statement comes in response to Israel's declaration that it will take all necessary mea-sures to halt the progress of Iran's nuclear program.

Hamid Karazai the Afghani Presi-dent announced that it will not take less than 15 years for his country to be able to pay for the costs of its own security forces. Following talks with the American defense secre-tary, Karazai called on the interna-tional community to continue fund-ing Afghanistan.

2 Afghanistan 4 PhilippinesPhilippine authorities have evacu-ated 50,000 people living around the country's most active volcano last Tuesday. The fleeing residents are being temporarily housed in school buildings and public gym-nasiums; furthermore, flood and relief centers have been established by the government.

The attack on Italian Prime Minis-ter Silvio Berlusconi last Sunday was described as a premeditated ac-tion. Roberto Maroni, Italy's interior Minister that the suspect had been mustering rage against the Prime Minister for some time. Berlusconi suffered injuries to his face, and was accordingly advised by his physician to refrain from any political activities for the upcoming 2 weeks. The attack was considered a result of the rising Italian disdain towards the controver-sial Italian Prime Minister.

3 Italy

1 DenmarkTalks have been resumed in Co-penhagen following the temporary suspension on points raised by the African group. To make up for lost time, sessions were held during the night. The UN Secretary Gen-eral Ban Ki Moon is due to attend the final high-level segment of the summit. Before heading towards Copenaghen, Ban said that "If ev-erything is left to leaders to resolve at the last minute, we risk having a weak deal or no deal at all".

21 December, 2009

In Brief - Around The World

1

7

13

Shiite rebels have accused the U.S. of launching an attack on them in northern rebel, killing 120 people. The rebels that the American at-tacks have shown that "real face of the U.S. government". On the other hand, Human Rights Watch has accused the Yemeni security forces of breaching human rights in southern Yemen, contributing to the already worsening humanitar-ian situation. Joe Stork, the deputy general of Human Rights Watch in the Middle East has issued a state-ment in which he endorsed the Southern Yemenis' right to protest peacefully, denouncing the gov-ernment's actions.

10 Yemen

The country is witnessing the toughest govern-ment internet censorship thus far. The Chinese government has banned individuals from regis-tering internet domain names and launched a re-view of millions of existing personal websites. The state administration of radio and television has also closed down a number of video sharing websites as part of the government's campaign to control and internet and media content.

9 China

6 IranDiplomatic sources have stated that a secret document has been released which shows that Iran was working on a nuclear weapon in 2007. The international atomic energy agency is said to have a copy of the document. IAEA offi-cials have stated that they are in-vestigating the document, but have not yet asked the Iranian side for more information. David Albright the President of the Institute for Science and International Secu-rity pointed out those documents shows that Iran is either is develop-ing the capability to build nuclear weapons or it is moving to imple-ment a nuclear program.

President Robert Mugabe has declared that "elec-tions are not far off; the inclusive government was given a short life". Power sharing in Zimbabwe has been brittle and Mugabe has made his inten-tions of regaining reclaiming power through elec-tions. Mugabe's comments come amidst renewed tension between him and the country's prime minister with whom he had formed a power shar-ing deal after the last controversial elections.

8 Zimbabwe

7 GermanyThe German government has been accused of covering up the Nato air strike that was carried out last September on two fuel tankers hi-jacked by Taliban. Accordingly an inquiry will be opened into the events surrounding the air strike in Kunduz in which 142 people were killed including Afghani civilians. Consequently, defense minister Karl-Theodur zu Guttenberg is facing public opinion pressure that calls for his resignation.

Issue 1537

In Brief - Around The World

5

9

4

3

10

6 2

8

In Brief - Quotes Of The Week

14

Magazine Round Up

QuotesOf The Week

"Many religious leaders still interfere in Yemen's affairs and they are involved in

igniting the Sada uprising".

Hassan Al-Lawzi, Yemen's Minister of Information and spokesman of the Yemeni

Government

"Some people created riots and encouraged people to stand against the system... paving the way for our hopeless enemies to undermine the

Islamic revolution."Supreme leader Ayatollah Khamenei,

urging the opposition to return to the "right path".

"These movements of hope and history, they have ‘us’ on their side."

U.S. President Barack Obama, after receiving the Nobel Peace Prize, declared

that the world is bearing witness to the struggle for rights and justice in

countries such as Iran

"In the 22 years since it's founding, Hamas has been able to realize a large part of its goals and to overcome every obstacle it has faced, from prison, exile,

assassinations and elections"Senior Hamas leader Mahmud Zahar.

1

Magazine Round Up

Richard Stengel: A Window on Momentous Events

1 Time

"Photojournalism is the window on the most momentous events of our time" embracing this notion, Time magazine documents 2009 in pictures. From behind-the-scenes pictures of President Obama to exclusive pictures of a military base in Iraq this photojournalism issue of Time is an original and interesting way of recalling the most momentous events of 2009.

21 December, 2009

15

Cover Of The Week

3 NewstatesmanJesus: the Muslim prophet

This article presents a profound controversial review of a contentious book called "The Muslim Jesus" written by the former Cambridge professor of Arabic and Islamic studies, Tarif Khalidi. The book discusses the role of Jesus in Islam and acknowledges that Isa, as he is called in Arabic, is deemed by Islam to be a Muslim. The article as a whole tries to use Islam's version of Christ as a way to build bridges between the two faiths. This controversial article presents an original idea that is worth reading.

Iran’s Worst EnemyNewsweekCover of the Week

This article investigates Israel's obsession with Iran’s nuclear ambitions. It weighs the political implications of the threat of an Israeli military attack on Iran. The writer admits that as much as this threat gives political leverage to the US in its negotiations it also hinders the negotiations significantly.

4 Foreign policy Al Qaeda's Dissident

4

Sayyid Imam al-Sharif is a 59-year-old Egyptian inmate, one of Al Qaeda's founders. This article claims that his prison writings have the power to expose Al-Qaeda, as they renounce violence and attack the organization on Islamic theological grounds.

3

2 The New YorkerPeace and War

The obvious contradiction in Obama's decision to send more troops to Afghanistan while at the same time receiving the Nobel peace prize has been noted by politicians and non-politicians alike. This article analyzes the fine line between peace and war that Obama has been cautiously walking since the beginning of his presidency.

2

Issue 1537

In Brief - Letters

16

Letters

Well, I think the financial crisis really has changed many economic concepts and proved the falseness of several economic theories. Economists should review the principles that they have maintained for a long time. We need to rethink our current international financial architecture. This includes international cooperation in regulatory reform of financial and capital markets, accounting standards and treatment of international financial transactions.

Don’t Judge a Book by its Cover

Diaa Qandil

Our age has witnessed information revolution which revolutionized our lives. The Internet has become helpful in managing knowledge at a time when the amount of information is expanding exponentially. I think free flow of information is very important for businesses and companies. These information resources should be available for free, if we aspire to spread knowledge and enhance awareness.

No Free Lunch

Ziad AbdulKhalek

LAST ISSUE

The emerging new Saudi Arabia is surely a boon to its people and to all going there for various purposes, by extension. Economically its poised for greater heights and that’s a great thing.Islamically it must take its mainstream scholars into confidence rather than pander to the fleeting needs of the west. The scholars see trials and tribulation long before they set in. That’s why they are scholars.

Nishthar Idroos

What Lies Beneath I wonder about the reality of the Iranian role in the Arab region. Is it a deliberate exaggeration intended by the Arab regimes which try to protect themselves from Iranian interference in their countries. Time will tell the truth, anyway.

Meshari Al-Adeli

21 December, 2009

15

In Brief - Magazine Round Up

Issue 1537

1818

Features

21 December, 2009

1919

BySTEphEn Glain

Assad Phase IIIssue 1537

A new power balance in the Middle East

To understand the new power balance in the Middle East, consider how the leaders of Egypt responded to the 9/11 terror attacks on America. Egyptian President Hosni Mubarak, while watching footage of the burning World Trade Center Towers, is said to have turned to an aide and muttered, “My job just got easier.” The remark implies a feral instinct for how Washington, singed by the temper of radical Islam, would give him a free pass to crack down on his own Islamist rivals as part of a ham-fisted American backlash.

There is no such account, apocryphal or otherwise, of how Syrian leader Bashar Al Assad reacted on that fateful day, but the idea that his job just got harder may not have been far from his mind. He was just fifteen months into his presidency, and given Damascus’s association with radical Islamic groups, he had every reason to assume his name was on a short list of people the White House would seek to eliminate.

As is turned out, America’s war on terror was good to both men – albeit in different ways and for different reasons – and each now occupies divergent coordinates on the geopolitical map.

The 80-year-old Mubarak is all but irrelevant, apparently marking time for his son to succeed him and serving as a perfunctory mediator in an equally perfunctory U.S.-led “peace process” between Israel and the Palestinians. The 44-year-old Al Assad, meanwhile, is widely regarded as one of the most important Arab leaders today – more influential in some ways than his father, Hafez Al Assad, who passed the presidential mantel to his son before his death in June 2000.

Once an international outcast for its alleged role in the 2005 assassination of Lebanese Prime

Features

Assad Phase IIThe new emerging character of Syria’s President

20

Shaking off the enormous pressure put upon him by the West when he first took office, Bashar Al Assad is now virtually unchallenged, and Syria is being courted by the Americans, the Europeans and the Arabs. This redemption – and the restoration of Syria as an indispensable Middle East player – owes much to the power of unintended consequences.

Stephen Glain

Years after confrontation, Bashar managed to assume power and no side seems to dispute him.

21 December, 2009

© GETTY IMAGES

Minister Rafik Hariri, Syria is now a key power-broker and potential spoiler for its alliance with Iran – an existential threat for Arab regimes as well as Israel – and its relationship with hardline Islamist movements Hamas and Hezbollah. Its influence over Lebanon, its historic fiefdom, remains potent despite the humiliating withdrawal of its military forces there under international pressure following Hariri’s death. Syria is also enjoying an economic renaissance that has not only earned Al Assad a measure of legitimacy in a region where such political coin is rare, but has also liberated Damascus from any urgent need to cut a peace deal with Israel for the sake of the American patronage that would follow.

Al Assad has also succeeded, it appears, in easing out his father’s generation of advisers in favor of his own hand-picked men. Even the Syrian Muslim Brotherhood, which the elder Al Assad drove from the country during a bloody civil war in the early 1980s, has recently signaled an interest in rapprochement with the regime after breaking with Abdul Halim Khaddam, the ex-vice president of Syria who in 2006 formed a political party in exile after turning against the Al Assad clan.

“It is fairly remarkable when you consider that Bashar Al Assad came to power as a young man and quickly came under enormous pressure from the West over Iraq, pressure even his father did not have to bare,” says Murhaf Jouejati, professor of Middle East Studies at the Washington-based Near East South Asia Center for Strategic Studies. “Now he is unchallenged, and Syria is being courted by the Americans, the Europeans and the Arabs.”

A different Bashar or the power of unintended consequences?

The redemption of Bashar Al Assad – and the restoration of Syria as an indispensable Middle East player –

owes much to the power of unintended consequences. Al Assad opposed the U.S. invasion of Iraq in 2003, an act of defiance that, in the intoxicating aftermath of Baghdad’s collapse, inspired prominent neoconservatives to push for the sacking of Damascus. For a while, it seemed the deck was indeed stacked against him; after working closely and constructively with U.S. Treasury agents to account for terrorist financing, according to Syrian officials, those same agents would testify menacingly in Congress about Damascene obstructionism.

By late summer, however, when the Iraqi insurgency turned the nation into a snake pit that consumed U.S. troops as well as Iraqis, it was Syria that held the whip hand. Jihadis eager to join the fight would smuggle themselves across the long and largely unsecured Syrian-Iraqi border, which Damascus did not openly support but did little to discourage. The election in 2005 of the radical Mahmoud Ahmadinejad as president of Iran, a close Syrian ally for the last quarter century, cast Al Assad as the relatively restrained, secular partner to a radical regime that by many accounts is close to going nuclear. In February 2006, Hamas won national elections in Palestine, elevating its importance as a factor in the Arab-Israeli conflict and Syria’s influence along with it. That August, Hezbollah emerged victorious, symbolically at least, from a brutal month-long war with Israel.

Within a year after Hariri’s killing, Al Assad had established himself as the master of events beyond the control of Israel, its Western allies, and Western-leaning Arab regimes. Alarmed at Hamas’ growing power and clout, and despite public disapproval from then-U.S. president George W. Bush, Israel in 2007 engaged in Turkey-mediated talks with Syria. As the sectarian strife in Iraq intensified and as Ahmadinejad stepped up the decibel level of his anti-Israel rants, Western pressure on Syria to cooperate with a United Nations investigation into the Hariri murder subsided. European leaders

began beating a path to the door of Al Assad’s presidential palace, hoping to woo Damascus away from Tehran even as Al Assad proclaimed the Syrian-Iran alliance to be inviolate.

Since last year’s election of U.S. president Barack Obama, who has emphasized diplomatic, rather than military solutions to challenges abroad, Syria’s rehabilitation has been nearly complete. Having recalled its ambassador from Damascus in protest of the Hariri murder, Washington recently informed Syria it would appoint a replacement. George Mitchell, Obama’s special envoy to the Middle East, has made Damascus a regular stop on his diplomatic circuit and there has been talk of exchanges between the U.S. and Syrian militaries. In March, King Abdullah, who was outraged over Hariri’s assassination, hosted Al Assad along with the leaders of Egypt and Kuwait in a high-profile appeal for reconciliation.

A welcomed partner

Through judicious calculation and dumb luck, Syria has established itself as the all-purpose key to a complex of issues bedeviling the U.S. and its Middle East allies, particularly what to do about Iran and how to bring about a comprehensive Middle East peace. The old adage about Egypt and Syria – there can be no war without the former and no peace without the latter – is once again in vogue.

“The positive case for engaging Syria is that it is not just pursuing peace for the sake of peace between it and Israel,” says Aaron David Miller, public policy scholar at the Woodrow Wilson International Center for Scholars and a veteran adviser on Arab-Israeli negotiations in both Republican and Democratic administrations. “Iran figures centrally in the Syria track because Iran sits at the nexus of everything that the U.S. cares about – Iraq, Afghanistan, nuclear proliferation, Lebanon, even Palestine. So the logic here is you get more from an Israel-Syria peace treaty

Features

21

Years after confrontation, Bashar managed to assume power and no side seems to dispute him.

Issue 1537

than you ever could.”

Like most Middle East experts, Miller sees little chance of an Arab-Israeli peace deal any time soon, as he explained in his recent interview with The Majalla. The Israeli-Syrian channel was shut down after the Jewish state’s siege of the Gaza Strip a year ago and neither side appears ready to revive it. Unlike Egypt and Jordan, which made peace with Israel because a perpetual war footing had become prohibitively expensive, Syria is as strong economically as it’s been in decades. From 2004 to 2008, according to the International Monetary Fund, the non-oil sectors of the Syrian economy grew by 42 per cent, while oil-related sales have declined steadily. Economists credit the government with an ambitious diversification drive that has combined currency liberalization with tariff reduction and tax reform. Once an exclusively cash economy, Syria today is brimming with foreign-owned and invested banks that are effectively re-introducing private lending to an economy that had been all but extinguished by decades of Ba’ath Party socialism.

While no one person can take credit for Syria’s geopolitical revival – except perhaps George W. Bush – the country’s economic awakening was very much Al Assad’s inspiration. (Here too, however, the Bush administration played an important role. In 2007, it imposed restrictions on Syrian accounts held abroad, impelling account-holders to remit their funds back home. The result was a liquidity-driven boom in asset prices.) Soon after this instalment as president, Al Assad made a point of touring Damascus’s once-sleepy trade expositions, where he made stirring references to Syria’s golden age as the grain and technology belt of the ancient Arab empires. At first, local merchants as well as foreign investors dismissed such talk as idle chatter. Within a few years, however, the government had phased out price supports on imported goods, lifted capital controls, and passed sweeping

banking laws. Export revenues are up, as is foreign investment. In March, the Damascus Securities Exchange opened for business and the country is poised to sign a landmark trade agreement with the European Union.

“The economic reform drive is irreversible,” says Jouejati. “Bashar has acknowledged his father nearly ruined the country and he wanted this modernization to happen. But there is still resistance, first from the bureaucracy and now from the industrialists, who know they cannot compete with the Europeans. This is why he has been forced to maintain his father’s political culture. He is a modernizer, not a reformer.”

It is in the political realm where the young Al Assad so closely resembles his autocratic father, to say nothing of Hafez’s surviving contemporaries like Mubarak. A brief episode of official tolerance following Al Assad’s confirmation as president raised hopes that the new leader would release political prisoners, end martial law and encourage a free press. Hardline Ba’athists pushed back, however, and the so-called Damascene Spring was summarily dispatched.

Political liberalization is as much forbidden fruit in Syria as it is throughout the Middle East. From Marrakesh to Dubai, Arab leaders have with some success adopted the way of self-preservation – free enterprise at the expense of free expression – pioneered by Asian autocracies decades ago. Syria is enjoying something of an artistic renaissance; its arts community is flourishing and warrens of Old Damascus and Aleppo are being converted into boutique hotels, cafes and shops. But the country’s political culture is more redolent of The Sopranos than Maqama. Even before Hafez’s death, the knives were out for the heir to his dynasty.

In October 1999, troops commanded by Bashar raided the villa of his paternal uncle Rifat in the Syrian port town of Latakia. Though Rifat

was in London, where he had been exiled after launching a failed coup against his brother, rumours persisted he would exploit any power vacuum that might follow the president’s death. The raid in Latakia, according to diplomats at the time, left 30 people dead and signalled to potential rivals that the president-designate had sufficient instinct for the jugular.

After nearly a decade in power, Al Assad has surrounded himself with a coterie of young and ambitious advisers. Among Al Assad’s more high-profile aides are fellow trench-fighters for economic reform – and not-so-friendly rivals – Abdullah Dardari, the deputy prime minister for economic affairs, and finance minister Mohammed Hussein. Dardari, who unlike Hussein is not a Ba’ath Party member and thus lacks his own power base, has stoked considerable resentment from hidebound bureaucrats and oligarchs; his staying power is a marker of the president’s commitment to free-market reforms despite powerful opposition. In a move interpreted by Syria watchers as proof that Syria’s leadership transition was completed, Al Assad in July promoted Assef Shawqat, his brother-in-law, military strong-man, and a close ally of Hafez, to a defense ministry position of only symbolic importance.

After nearly a decade of geopolitical manoeuvring and parochial political intrigue, Bashar Al Assad clearly feels secure in his authority and confident in his administration. In the Middle East, however, security is a relative thing. Given the increasingly dynastic nature of Arab politics – in secular Syria and Egypt as well as its monarchies and emirates – Bashar Al Assad no doubt expects to reign indefinitely. That means continued opportunities to bend the future to his will as well as more challenges to his rule. It is a reality suited to a region where, for now at least, the long game is the only one in town.

Stephen Glain

22

Features

21 December, 2009

Now Follow

25

DebateWill Al-Assad follow inthe footsteps of Sadat?Will Syrian president Bashar Al-Assad follow in the footsteps of late Egyptian President Anwar Al-Sadat and join in alliance with the West even if this might cost him too much at the Arab level? This is not just a question. It is instead one of the two options available for Bashar. This debate contains both the argument that it is unlikely that Bashar will follow Sadat's example and that for him to assume such a role is no longer out of the question, since he is now a more mature leader with the necessary experience.

© GETTY IMAGES

Issue 1537

Debate

26

It is unlikely that Bashar Al Assad follows a similar path to that of Anwar Sadat and becomes what the West would very much appreciate he would. This is not only due to his insecure temperament, but to the shaky foundations of his power, which render the Syrian regime unstable.

Self Doubt

he United States would wel-come a transformation of its relations with Syria, as it de-

sires good relations with all other countries, but it is doubtful that the Syrian government would dare to make such a shift. Can Bashar Al Assad be the next Anwar Sadat? It is very unlikely since Sadat was a man of supreme self-confidence and Assad seems to be the opposite.

This may have something to do with temperament, but above all it is because the Syrian regime is in-herently unstable. It does not rest on the will of the people but rather on an ideological base and an ethnic base.

The ideological base is Ba’athism, a strange amalgam of the two worst ideas produced by the West, namely, fascism and communism, and one idea produced by the East which has proved an utter failure, namely, pan-Arabism. It is, in short, a com-pletely bankrupt, even idiotic idea, and it is improbable that anyone still believes in it, but the Ba’ath Party endures as a kind of gang or ruling clique.

The other base is ethnic, namely the common Alawite heritage of the Assad family and the most powerful figures in Syrian security forces and regime. Since Alawites constitute only a small minority of Syrians, it is reasonable to assume that many other citizens resent their monopoly of power and that the rulers fear a backlash if they loosen their grip.

According to the authoritative an-nual survey by Freedom House, Syria is one of the 17 most repres-sive states out of the world’s 193

independent countries. Apparently, this is because its rulers are fright-ened of their own citizens. (For the same reason, I suppose, the Syr-ian government refuses to give me a visa to visit that country so that I might hold conversations with other writers and academics.)

The Syrian regime seems to feel most secure casting itself as a mem-ber of the bloc of resistance—against Israel, America, and the West. This bloc includes Iran, Hamas, Hez-bollah, and various other jihadist groups. Needless to say, this alli-ance only underscores the absurdity of Ba’athism which is supposed to be secular. The regime also nur-tures imperial fantasies, namely that Syria will consolidate control over Lebanon and perhaps even in the long run over “Southern Syria,” that is, Palestine.

None of this serves the interests of the Syrian people. The price they pay, in addition to living under a cruel and repressive regime, is iso-lation from the modern world and low economic growth due to scarce foreign investment, inefficient state enterprises, and wasteful spending on military and security forces.

Syrians would be much better off if they lived in a normal country, at peace with its neighbors, not only Israel but also Iraq and Lebanon; integrated into the global economy; and leaving behind all the phony heroic hoopla of “revolution” and “resistance” and “greater Syria.” In such a country they would be free to focus on their jobs and business-es, their faiths and interests, and to

make comfortable lives for them-selves and better lives for their chil-dren whom they might send to the world’s best universities.

The only losers in such a scenario (apart from the militant groups who today enjoy Syrian patronage and the rulers in Tehran who enjoy hav-ing Syria as a satellite), might be the present rulers. Without this narra-tive of fighting the various outsid-ers, how could they justify their con-tinued fierce repression, the closing of salons, and the imprisonment of intellectuals, lawyers and peaceful human rights advocates?

To return to the comparison with Anwar Sadat, he of course was no democrat, but he turned Egypt away from Nasser’s totalitarianism, free-ing its economy and other aspects of public and political life. Bashar Assad shows no signs of such vision and courage.

Unfortunately for him, however, time is not on his side. He is still young and no doubt wants to rule a long time. But the world is grow-ing more free, democratic, and inte-grated. The Middle East has lagged in this respect, but even here the whiff of freedom is in the air, blow-ing now from the streets of Tehran. Imagine how lonely Bashar will be when the Khamenei/Ahmadinejad dictatorship falls. He would be wise to make his peace with the outside world now. But first he must make peace with his own people.

T Dr. Joshua Muravchik

Assad’s regime's shaky foundations

Fellow at the Johns Hopkins University School of Advanced International Studies and author of “The Next Founders: Voices of Democracy in the Middle East”.

21 December, 2009

Debate

27

A Token of Friendship

here is no doubt that Syria has ex-celled in managing its (persistent) conflict with the West and particular-

ly the United States, which placed it among the axis of evil, and enacted a law called "Syria's Accountability Act".

Syria's relations with France under Jacques Chirac reached an impasse after trust between the two countries was demolished because of different visions on Lebanon. U.S. President George W. Bush did not hesitate to refer in an interview with French newspaper Le Figaro at the time that UN Security Council resolu-tion 1009 was issued, and necessitates the departure of the Syrian army from Lebanon, was purely a French proposal. Bush added that President Jacques Chirac talked with over the phone for an hour and almost dic-tated the terms of this resolution.

It seemed clear that Syria found itself in a real impasse after the major powers exercised pressure that led to its isolation to a large ex-tent. When Nicolas Sarkozy came to power, it became obvious that he inherited hostil-ity to Syria. Chirac's last meeting before he left the Élysée Palace was with Saad Hariri, along with Sarkozy. At the time, French polit-ical circles said that Chirac reconciled Hariri and Sarkozy and made them vow on the need for continued pressure on Syria.

This was a necessary prelude to assert that Syria did not find an easy way for rebuild-ing confidence again with the West. The latter seemed to reject engagement with Damascus despite an advice from a number of American reports. The most important of them was the Baker-Hamilton report which estimated that it was unwise to isolate Syria or to exclude it deliberately from the proposed solutions in the Middle East.

It is also fair to say that Syria has found Iran the only friend, given the complexity of its relations with several Arab countries includ-ing Egypt, where the atmosphere is not very good. Thus, the two neighbours drew closer together and their relationship became more intimate because of the strong ties between the two leaderships. In addition, Syria and Iran felt that they were trapped in the same hole according to Western (U.S.) orders. The

two countries being listed as two leading members of the axis of evil was the biggest proof of that. It is important to emphasize that when Syrian-Western relations turn weaker, Syrian-Iranian relations became stronger.

In all cases, and perhaps due to the skill of Syrian diplomacy, Syria has not lost hope in rethinking the ongoing tense events in the region and the world. It managed to do that to forge a new relationship with the U.S. and France in practical terms. This relationship is based on two principles: common inter-ests and mutual respect. Thus it was unusual to hear French Foreign Minister Bernard Kouchner praising Syria and its leadership. As for President Sarkozy, he became calm and peaceful in his relationship with Syria and with President Bashar al-Assad.

This is attributed to Syrian diplomacy which was able to end the hostility and bring France back as a key supporter of the Syrian posi-tion. It is no secret today that Syrian-French relations have advanced immensely in bi-lateral coordination, which was revealed by mutual visits between Syrian and French leaders in the recent past.

Following the same example, the Syrian di-plomacy achieved another success with the United States, especially after the arrival of Barack Obama. Syria has taken advantage of Obama's declaration to follow a policy dif-ferent from his predecessor, and his confir-mation of his will to start a new chapter, not where his predecessor ended. It is not an ex-aggeration to say that Washington and Paris knew that security and stability in Lebanon or Iraq could only be achieved through Damas-cus in addition to Syria's ability to influence the resistance forces such as Hezbollah and Hamas. This is what actually happened, and perhaps it was a token of a new friendship between the three capitals (Damascus, Wash-ington and Paris).

It is true that the U.S. and France planned that the new normalization scheme with Syria would be at the expense of the good rela-tions between Damascus and Tehran. But the Syrian diplomacy is credited for not missing

that factor. Therefore, it seized several op-portunities to confirm that its closeness to the West would not come on the ruins of the Syrian-Iranian relations. Moreover, the Syr-ians maintained that Bashar al-Assad would not follow the example of President Anwar Sadat, whom they consider has sell his re-gional and Arabic ties in favour of the U.S. mirage - as the Syrians put it.

Perhaps this Syrian attitude is due to the per-ception of the Syrian leadership that Syrian-U.S. relations can not be 100% pure as long as Israel ex-isted. But more importantly, Syria has real-ized that the U.S. and France need it more than Syria needs them. And the other thing is that Syria can not sacrifice its relations with Iran, which was one of the very few countries which supported it at the height of the U.S. embargo, and the fierce "Syria's Accountabil-ity Act".

We must also note that at the time when re-lations between Syria and the United States and France were good and clear, Damascus completed the remaining items of the joint defence agreement with Iran, particularly after the International Atomic Energy Agen-cy raised the problem of the alleged Syrian nuclear reactor. This issue assured to the Syr-ian political thinking that the Western policy towards Syria is still (rife) with the legacy of aggression that may need more time to disap-pear. Moreover, the Western hostile percep-tion to Damascus and Tehran was a motive to bring the two countries closer together. Leaders or ministers of the two countries ex-change visits almost every month.

In short: All these factors prove that it is hard to believe that the Syrian leadership will fol-low the example of Sadat, especially that it has crossed the critical stage in its Arab and regional relations without losing Iran or sacri-ficing it to the United States and Europe. This is due to its unique ability – as Le Monde newspaper mentioned – to draw parallel lines in its regional and international policies.

Expert in international political relations Al-Ahram Foundation, Egypt

T

Syrian diplomacy and the art of parallel linesIt is hard to believe that the Syrian leadership will follow the example of Sadat, especially that it has crossed the critical stage in its Arab and regional relations without losing Iran or sacrificing it to the United States and Europe. This is due to its unique ability – as Le Monde newspaper mentioned – to draw parallel lines in its regional and international policies.

Saeed Al-Lawendi

Issue 1537

28

Debate

Bashar’s diversification of alliancesChanging Course

ith the end of the July 2006 war between Israel and Hezbollah, and after disproportionate war-

fare capabilities materialized in creating a balance to deter aggression, the Syrian for-eign policy moved to the tactic of calming the situation, and curbing the adventure ten-dencies of the Bush administration. In addi-tion, the Syrian diplomacy created a host of axes to regain the initiative after the other side showed complete confusion and its in-ability to produce new policies that would lift it from its regional predicament. There-fore, initiatives were launched from media-tors who wished to calm the situation and curb the serial collapse of the Bush admin-istration. Thus, Syria launched an initiative along with a number of Arab States, France and Turkey, to revive the peace process, lift Lebanon out of its regional impasse, and help the Iraqi people to liberate their land and rebuild their nation.

As the Bush policy gradually lost supporters at home and abroad, Syria felt more com-fortable. It began gradually to mend the rift in Arab coordination, even at the minimum level. In these circumstances, and despite the accumulated difficulties that clouded the Arab atmosphere and negative specula-tions, the Arab economic summit in Kuwait represented an important occasion to lay the foundation to restore the previous momen-tum of the Saudi-Syrian relations. This came in the light of the historic position taken by King Abdullah during the Kuwait summit, when he threatened to withdraw the Arab initiative. King Abdullah’s attitude asserted an important fact that gives way to re-es-tablish a new stage of Arab relations in the post-Bush era.

Consequently, it was inevitable for Syria to note the rise of new regional powers in the region which base their rise on the current regional vacuum. After the previous system in the region sustained a critical damage through the Arabs' difference and their na-tional security on the concept of resistance and the U.S. role after the September 11 events, rising powers in the Middle East consolidated their positions by benefiting from several factors. The most notable ones

were the inability of the United States to continue its policies of direct involvement in the region and its practical transition to naval operations after it clearly emerged that the unbalanced war was successful in deter-ring the aggression and showed the limits of the actual strength of the United States.

It was clear since unveiling the Baker-Ham-ilton report that the United States would tend in the post-Bush era to use a smart power which is based on delegating some of its rising regional allies to settle the re-gion's affairs and manage their common political goals. In addition, the U.S. policy lost control over regional and international crises and its ability to determine the con-sequences of their policies declined. More-over, the world shifted to the multi-polar system, especially after the outbreak of the global economic crisis.

Given these developments, and with the focus of the international conflict shifting to the Middle East and especially the Gulf, where major international crises are inter-twined, Syria realized that there was a new transition in the view of the Western pow-ers to the Arab-Israeli conflict, which has become a burden on its policies that aimed at building a regional system of security and peace centred on the Western military presence in the Gulf and the closure of the Gulf region in the face of rising international powers.

Thus, the regional contradiction became ap-parent. Although the region has become the focus of international conflicts, the Western powers have become less able to manage conflict there. Moreover, they became even compelled to reach a regional consensus strategy to achieve their interests. This at-titude allowed the emerging regional coun-tries such as Turkey to take the initiative and seek to consolidate its regional influence and role and consolidate alliances with other emerging powers in an attempt to fill the vacuum caused by the American strategic retreat and dispersion of Arab coordination. Within this complex scene, Syria found it-

self compelled to adopt a multi-side policy that takes into account the possibility of the area turning towards a regional conflict on the one hand, and the need to search for op-portunities for peace and to continue with previous policies to boost and strengthen the gains achieved on the other hand.

Syria bases its moves on a central idea that deems all conflicts in the region are not genuine (except for the Arab-Israeli conflict as a colonial project of a special type). They are rather remnants of the colonial era or the direct result of persistent interventions by these powers to achieve their interests. Thereby, Syria acted to totally eliminate its regional differences through diplomatic and political work. This logic allows Syria to redefine its regional, strategic, political and economic role, both in regard to the recon-struction of Iraq and building it as a national Arab state. Syria cannot tolerate another weak sectarian state on its eastern border, or what relates to its regional role as a bridge, a depot and a transport means for energy and water in the region and towards Europe. The Golan Heights, national and regional development are the main concerns for Syria's foreign policy. Therefore, it kept the effort to prove that the Arab-Israeli conflict can not be closed unless on the basis of a just and comprehensive solution. Everyone working in this direction should be sup-ported. On the other hand, Syria's second concern is pushing the development process by opening the prospects for regional alli-ances. This process would extend its eco-nomic scope from the southern Volga (given the reconciliation process between Armenia, Turkey and Azerbaijan) to the Arab Gulf, as well as the borders of Pakistan and Eu-rope. Of course Syria is not looking forward to achieve this vital field individually, but through a series of alliances with emerging powers, stretching its hand to Arabs neigh-bours and surrounding Islamic countries. It is a multi-polar and multi-layered policy, which tries to balance between the risks of war imposed on Syria and development pri-orities and opportunities.

Syrian Political Analyst

W

The Golan Heights, national and regional development are the main concerns for Syria's foreign policy. Syria's second concern is pushing the development process by opening the prospects for regional alliances. Of course Syria is not looking forward to achieve this vital field individually, but through a series of alliances with emerging powers, stretching its hand to Arabs neighbours and surrounding Islamic countries.

Samir Al-Taqi

21 December, 2009

30

Ideas

21 December, 2009

31 Issue 1537

Chris phillips

ToughLOVE

raqi Prime Minister Nour Al-Maliki’s response to the 8th December Baghdad

bombings that left more than 110 dead, carried with it a sense of déjà vu. As with a similar bloody attack on 19th August, Maliki claimed militant former Ba’athists based in Syria were behind the attack and

accused Damascus of harbouring Baghdad’s enemies. These accusations are symptomatic of a recent decline in Syrian-Iraqi relations which has seen both sides exchanging insults that echo the days of hostility seen under Saddam Hussein and Hafez Assad. However, despite this recent

increase in aggressive rhetoric between the regimes involving both ambassadors being recalled in the summer, instances of economic and cultural cooperation between the neighbours is at its highest level in years. Are Maliki’s accusations mere short-term politicking, rather than a return to

I

Chris phillips

21 December, 2009

Ideas

Tough LoveThe Paradox of Syrian-Iraqi Interdependence

32

Despite this recent increase in aggressive rhetoric between the Iraqi and Syrian regimes, instances of economic and cultural cooperation between the neighbours is at its highest level in years. Is this tension then just short-term politicking, or is it a return to the dark years of enmity?

© GETTY IMAGES

Ideas

33

the dark years of enmity?

Hostility between Damascus and Baghdad is nothing new. Though both adopted Ba’athist governments in the 1960s, Iraq and Syria were ruled by different wings of the party following an ideological schism. Once Hafez Assad and Saddam Hussein assumed power in each state this theoretical opposition was transplanted by a deep personal disdain. This contributed to Damascus breaking Arab ranks and supporting Tehran in the 1980-88 Iran-Iraq War, and then sending troops to Kuwait in alliance with the US in the 1990-91 Gulf Crisis.

However, the fall of Saddam in 2003 and subsequent insurgency made Syrian-Iraqi relations far more complex. On the one hand, Damascus feared the success of the US neo-conservative project in Iraq and President Bashar Al-Assad, like most Arab leaders, publicly opposed the US invasion. Syria was accused of promoting instability by the Bush administration claiming Damascus was facilitating the insurgency by allowing Iraqi militants to use its territory as a base. On the other hand, Assad moved to mend relations with the new Iraq regime. Damascus recognised Maliki’s government by fully restoring ties in 2006, and the US reported a notable decrease in militant activity originating in Syria.

Central to Damascus’ seeming ambivalence to the success or failure of the US-led transformation of Iraq have been economic and political concerns. The early years of the insurgency, where Damascus at the minimum turned a blind eye to militants crossing its borders, coincided with a huge wave of at least 1.2 million Iraqi refugees fleeing to Syria. Whilst some brought needed skills and

capital, the majority were poor Sunnis fleeing sectarianism who overwhelmed Syria’s already over-populated cities and over-stretched services. Moreover, it was in these early years that Assad’s regime appeared most threatened by the Bush neo-conservatives, with many in Washington arguing for US forces to continue on to Damascus after Baghdad. Chaos in Iraq was therefore of greater value to Syria than prosperity.

However, the picture has changed in recent years. The threat of US-imposed regime change has diminished as prolonged conflicts in Iraq and Afghanistan dissuaded American policy makers from seeking to repeat the model in Syria or elsewhere. Moreover, the improved stability in Iraq has fed economic growth in Syria, with GDP up to 6.5%. In 2008 Iraq was Syria’s largest export partner, with 30% of Syrian exports heading East, and Syria was Iraq’s greatest import partner, with 26% of Iraq’s imports originating from its immediate West. More importantly, last year work began to restore the crucial Kirkuk- Banyas oil pipeline, from which Syria is expected to earn up to $1.5 billion a year in transit fees.

Yet the advantages are not one-sided, and Iraq benefits enormously from its renewed ties to Syria. The new pipeline with Banyas, like the existing Kirkuk-Ceyhan route through Turkey is essential to both maintain economic autonomy for Iraq’s northern provinces and also to guard the whole oil economy against any future disruption to routes via the straits of Hormuz. Additionally, Baghdad recently agreed to link its electricity grid to Syria alongside Iran and Turkey. Iraq also relies on Syrian good will to maintain the flow of the Euphrates river – an issue of vital importance given Iraq’s recent

droughts. A further factor for Baghdad to consider is the millions of refugees still living in Syria. A recent report by Al-Arabiya illustrated how a worsening of ties between Baghdad and Damascus might lead to their expulsion – thrusting an unwelcome influx of people onto the fragile Iraqi state.

Maliki’s blaming of Damascus after the bomb attacks therefore appears unwise given the increased level of interdependency between the two states. His motives for doing so are likely political and short term. Iraqis soon go to the polls and Maliki will be seeking re-election on a platform of security and unity – something questioned by the devastation of such bomb attacks. Blaming an outside power is a convenient scapegoat and Syria, given its history with the insurgents and its comparative weakness compared to other influential neighbours like Saudi Arabia, Iran and Turkey, fits the bill best.

For now Syria is too dependent on Iraq for continued economic growth to register its frustration in a manner more substantial than rhetoric and back-biting. Moreover, Damascus may chose to stay its hand until after the Iraq elections when it may well be facing a new Premier in Baghdad. Yet Syria’s reaction to these accusations will be swayed by the paradox of its relationship with Iraq. Both sides need each other and are becoming more and more interdependent through economic and cultural ties every year. However, on a political level hostility does have its shot term advantages.

An Associate of The Foreign Policy Centre and a columnist on Middle Eastern politics for The Guardian Online

Issue 1537

People

35

Aaron David MillerSyria’s State of Play

Issue 1537

aron David Miller is a public policy scholar at the Woodrow Wilson International Center for

Scholars. He is also a former adviser on Arab-Israeli negotiations for both Republican and Democratic United States Secretaries of State. Having worked in the State Department for twenty years, he was involved in US attempts to broker consensus between Syria, Israel, Jordan, and the Palestinians. Miller’s last published book (his forth one) is titled The Much Too Promised Land: America’s Elusive Search for Arab-Israeli Peace (2008). At present, Miller is working on another book, due for publication by Bantam Books in 2012, about whether the world can ever expect another great American president. He spoke with The Majalla about Syria’s growing clout in the Middle East, the state

of play between Israel and the Arab states – Syria in particular – and the prospects for a revival of the peace process.

The Majalla: Why, in your opinion, has the U.S. been so slow to appoint a new ambassador to Damascus?

I never looked at that as a consequential symbol or statement of significance. It’s more an instrument of diplomacy. It’s an issue of process, not of substance, and I don’t believe there are major policies issues standing in the way of this administration’s decision to do so or put it another way, should be.

Q: You’ve argued for the U.S. and other interested parties in the Middle East to pursue an Israeli-Syrian peace agreement as a more viable prospect

than the Israeli-Palestinian track for now. How do you see that shaping up?

Obviously, it’s hard to know what the diplomatic tick-tock has been, both with respect to Turkish-mediated or Turkish-facilitated negotiations or how they relate to whatever Israel and Syria are doing on their own. I continue to think it’s easier to negotiate an Israeli-Syrian agreement than it would be an Israeli Palestinian one, at least on paper. It involves four core issues – withdrawal, normalization, security, water, and of course a fifth issue, the sequence of normalization and withdrawal and how it would be set up. None of these issues in my judgment on paper are deal breakers. They are much easer to deal with than Jerusalem, refuges borders or even security when it comes to the Israeli-Palestinian track.

36

Syria’s State of PlayAaron David Miller, scholar, author and policy adviserAaron David Miller, scholar, author, and policy adviser, spoke with The Majalla about Syria’s growing clout in the Middle East, the state of play between Israel and the Arab states – Syria in particular – and the prospects for a revival of the peace process.

People - Interview

A

21 December, 2009

© GETTY IMAGES

What has happened in negotiations is complicated by the fact that the merits of the case – land for peace – is no longer a sufficient trade off. The Israelis will demand and the U.S. will support off-the-table issues as well, that is to say clearly some kind of Syrian effort to deal with Hezbollah in Lebanon and Hamas in Palestine. Iran, the Syria-Iran equation, will also be factored in. That makes the process towards an agreement much more difficult. The Israelis will want a certain distancing of Syria from its activist security relations with Hamas and Hezbollah, and from Iran. So gone are the days when it would have been good enough to secure an agreement for bilateral reasons. It is now fundamentally tied up with broader issues and broader threats and to a large degree the Israelis will find real support in Washington for this broader approach.

Q: Are the two sides willing to negotiate?

The way things look now to me, I don’t see much of an Israeli incentive or motive in engaging with the Syrians unless it’s as part of a broader, complex equation to wean them away from Iranians and that will be very difficult to do. The Syria-Iranian relationship has outlasted any Arab alliance in modern Middle East history. It is driven by real needs and interests. They are not ideological competitors like the Egyptian-Syrian alliance, which suggests this relationship is important to both sides. Syria is reluctant to abandon it and will not abandon it. These are hard, fast issues and hard, fast interests and they’ll keep this relationship intact for some time to come.

Q: Plus, there is little urgency on either side of the Syrian-Israeli divide to cut a deal.

Urgency is one of the motivating factors for why negotiations get launched and succeed and there is no urgency now. There is no prospect of pain, no prospect of gain. It would take an Israeli or a Syrian, someone who decides to inject a sense of urgency, to discreetly and quietly negotiate – and bilaterally, without a third party. I can’t see much of a prospect for this.

Q: It doesn’t help that the U.S. and Israel appear to be at loggerheads over President Obama’s earlier demand for a freeze on new settlements in the West Bank.

The administration set itself up for that. It articulated an objective it could never be achieved, a comprehensive freeze including natural growth. What it did get would have been viewed as far below what it asked for, which is never good. As year one ticks down on the Obama administration’s first year, it has three “no’s”: No from Israel on the settlement freeze, No from the Arab states on partial normalization, and No from the Palestinians for a return to negotiations.

Q: Does the paralysis on the Palestinian-Israeli front inhibit movement on the Israeli-Syrian track?

That’s a matter of opinion. Many people say the Syrians cannot negotiate with Israel while the Israel-Palestinian track is in crisis, that Damascus is confined by its own image, or for the sake of its “street cred [credibility]” it cannot be seen cutting a deal the way the Egyptians did. I think that’s by and large probably right. I don’t see much chance of an Israeli-Syrian agreement unless it is fundamentally tied to improvement with the U.S. relationship, which is what they want in addition to the Golan Heights, as a compensation package. Presumably they will move away from Iran, so they’ll need billions of dollars in return, plus the presence of American forces on the Golan. They’ll have to adopt a new relationship with Hamas and Hezbollah. What will be needed is the borrowing of a page from the Egyptians and the Jordanians and even the Palestinians to understand their relationship with Washington fundamentally changes once you’ve made an agreement with Israel. You want things to change because you need America as a serious patron and a donor. The question is, and here is where I bump into a brick wall: Syria is not like the other Arab regimes and states that cut deals with Israel. It is not homogenous. It did not have a history as the Jordanians did with Britain and then with the U.S. It is not as dependent on the U.S. as the Palestinians have become. It’s a state with a profound sense of entitlement, driven by ideology and dynasty, and a profound sense of insecurity and that makes the U.S.-Syria relationship very complicated and it’s hard for me to see a transition for Damascus to an agreement that would be

similar to those states that went before it. I can’t get my mind around how this may happen. There are so many anomalies and entanglements.

Q: What about Lebanon?

Bashar Al Assad is clearly dealing from a position of great strength and confidence right now. Syrian influence in Lebanon, even though its forces have been withdrawn, is higher than it has been in the last several years. I don’t see people beating the drum on the investigation [into Prime Minister Hariri’s murder]. Despite the outcome of the recent elections, the competing political movements seem to have checked each other, and it seems Hezbollah and [Christian Phalange leader Michel Aoun] to a large degree have benefited. Bashar Al Assad is quite comfortable.

Q: Has he succeeded in phasing out elements of his father’s regime?

Reading Syria’s internal politics is difficult, but confidence seems to be flowing from a greater sense of security and authority and maybe of legitimacy.

Q: This all sounds perfectly dreadful.

Yeah, I’m pretty forlorn on the prospects for a breakthrough on the Israel-Syria track. Would I be surprised if I were to open the Washington Post next week and read that Israel and Syria have been holding secret talks and there’s been great progress? No. On paper it has always been easier, as it does not involve the emotional, ideological, and religious complexity of U.S.-Palestinian track. Nor is there the raw proximity of the Israel-Palestinian track. You have two states which clearly have the capacity to control the forces of violence in their society. Damascus controls all the guns. That’s one of the luxuries of authoritarianism, a high degree of centralized control. But I’m not terribly upbeat. In government, we approached everyone from three angles: Option number one was Armageddon. Option number two was peace breaking out. Option number three was muddling through. It seems we will be in for option number three for some time in the future.

37

People - Interview

Interview conducted by Stephen Glain

Issue 1537

Mohammed Al-Motawa, the new GCC Secretary General

o sooner had the leaders of the Gulf Cooperation Council endorsed the appointment of

Mohamed Ibraheem Al-Motawa as Secretary General of the Council, starting in March 2011, than the information was spreading across news wires and online forums like wildfire. This wide interest can be attributed to two factors. Firstly, 63 year old Al-Motawa is the first Bahraini to assume this position and secondly, Qatar and Oman had reservations concerning his appointment. These reservations prevented him from winning the consensus of the Council's six nations. Undoubtedly, Al-Motawa will resume his duties, undertaking to make reconciliations between the GCC countries after the disagreement that arose from his election by only four GCC nations, namely: UAE, Bahrain, Saudi Arabia and Kuwait. The appointment of Al-Motawa will be associated with the 2011 Summit that will be held in Bahrain after the UAE's next Summit, according to the alphabetical order of the six nations. Al-Motawa is the first Secretary General of the Council who assumed the ministry of information (for seven years). He has been a cultural affairs adviser to the Bahraini premier since 2005. This of course will lend a broader media dimension to the General Secretariat that started to fulfill great expectations and ambitions of the Gulf region. The GCC General Secretariat managed to endorse regional projects including power linkage project and agreement on mechanisms required to reinvigorate the unified currency project.

Al-Motawa was born in September 1947 and graduated from Alexandria University (Egypt). He obtained a bachelor of Arts in Philosophy, Psychology and Sociology. Al-Motawa has a unique personality. He is modest and quiet. The people who knew him all agree that he is very accurate in his work and pays attention to every small detail.

Interestingly, Al-Motawa will be the first Secretary General of the GCC who will undertake his duties in a suit, not the traditional formal uniform worn by the four former GCC general secretaries.

In 1972, Al-Motawa started his career life in Bahrain by assuming responsibility for the youthful and national activities in the Ministry of

Labor and Social Affairs. He was then appointed as Director of the Cabinet Affairs in 1974. Three years later, he was nominated as the General Director of the Premier's Office and then the State Minister of the Cabinet Affairs in 1993. In 1995, he was appointed as the State Minister of the Cabinet and the Ministry of Information. In 2001, he became the Minister of the Premier's Affairs. The

Last June, Kingdom of Bahrain submitted a nomination application to GCC to put up Mohammed Al-Motawa as a candidate for the position of Secretary General of GCC. Undoubtedly, Al-Motawa will resume his duties, undertaking to make reconciliations between the GCC countries after the disagreement that arose from his being elected by only GCC four nations, including UAE, Bahrain, Saudi Arabia and Kuwait.

The Ideal Man For The Job

N

38

People - Profile

21 December, 2009

39

year after, he took his last official ministerial work as the Minister of the Cabinet Affairs until 2006. He then became a special advisor to Monarch of Bahrain. Since, 2005, he has been appointed as the Cultural Affairs Advisor of the Premier. Due to his position, he obtained the membership of the ministerial committee of the Affairs of the Shura Council and the Nuwab Assembly of Bahrain. He also had memberships in ministerial Bahraini committees competent with legal affairs, financial and economic affairs, social services and family. Furthermore, he was also member in the Higher Council for Youth and Sport and the Supreme Council for Oil.

Last June, Kingdom of Bahrain submitted a nomination application to GCC to put up Mohammed Al-Motawa as a candidate for the position of Secretary General of GCC. Bahraini Monarch Hamad Ben Issa sent letters to the leaders of the GCC six nations in order to reinforce diplomatic support and provide necessary backing to Bahrain's candidate. All countries expressed their approval except Qatar and Oman. Qatar asked Bahrain to renounce its right in favor of the Qatari candidate. Amidst the arrangements of the Kuwait Summit, it became clear that there was a countermovement specifically against Mohammed Al-Motawa. When the GCC leaders discussed this point on their agenda, Qatar and Oman objected to the appointment of Al-Motawa. Voting has settled this matter.

Many people did not perceive that the Qatari-Bahraini dispute reflected on the summit's agenda, although the Secretary General of the Qatari Cooperation Council (GCC) Abdul Rahman al-Attiyah noted in his press conference at the end of the summit that his successor will be the candidate of the Kingdom of Bahrain. However, he did not mention Muhamed Al-Mutawa by name. As interpreted, this declaration was in harmony with the Qatari stance that welcomes the Bahraini candidate, and not necessarily Mohammed Al-Mutawa. Meanwhile, Bahrain announced through its media that its candidate, Mohammed Al-Mutawa, will be the next Secretary-General.

The Qatari attitude towards Al-Mutawa is attributed to the attack launched on Doha by Bahraini media institutions when Al-Mutawa was then Minister of Information. This period coincided with the Qatari dispute with Bahrain on the latter's rights to Hewar Islands, located between the two countries. In a later period,

the International Court of Justice awarded the islands to Bahrain.

On the other side, Al-Mutawa is seen as a member of a generation who witnessed Arab setbacks, and then he experienced the rise of the Gulf Cooperation Council. Moreover, when he assumes his new post he will end the state of dispute, and open a new chapter among member states, being one of the key players during the period of the Qatari-Bahraini dispute. This will make him realize to what extent any dispute that would arise among member states of the Council will be serious. In addition, during his term as Secretary-General, all members of the GCC are expected to join the Gulf Monetary Union. He is also expected to witness the last phase of

the electric linkage project, which has come into force recently.

Under the charter of the Gulf Cooperation Council, the post of Secretary-General is alternating between member states, provided the occupant is a citizen of GCC countries. The term in office extends for three years, and it is renewable for one time only. An exception can be made only with the consent of the Supreme Council, which consists of leaders of the six countries. The Secretary-General nominates his aides, and appoints members of the secretariat from citizens of member states. He is not entitled to make exceptions without obtaining the approval of the Ministerial Council which is composed of foreign ministers of member states.

People - ProfilePeople - Profile

Issue 1537

© GETTY IMAGES

© GETTY IMAGES

41

EconomicsEconomics International Investor Markets

Elsy Melkonian

Putting the House

in OrderIssue 1537

42

Economics - Economics

Putting the House in OrderThe Syrian Economy: A Promising future?Elsy Melkonian

F

21 December, 2009

43

Although there has been encouraging progress in Syria’s economic reform, much still needs to be done. Public sector privatization, economic deregulation and more transparency in the policymaking process still constitute important obstacles for speeding economic development and growth. Given the current international economic context, the solution may be found in regional and bilateral integration.

lashing lights and booming music set the scene that attracted many Syrians to the opening of the Spanish clothing store, Zara, last week. The store is one of many foreign names that have appeared in shopping malls all over the country, leading many to prophesize a new wave of business creation and dynamism in Syria. In light of the growing abundance of imported goods in the Syrian market, citizens are ever more eager to take advantage of the greater variety of goods and services resulting from the economic liberalization the country is currently witnessing.

At a quick glance, one can readily sense the winds of change sweeping through the Syrian economy. 2004 marked the beginning of a new phase in the economic history of Syria, where privatization appears as the main engine of change. Prominent among these changes are the appearance in the Syrian market of foreign educational institutions and the establishment of 15 private universities where English and French are the primary medium of instruction; the emergence of private and foreign insurance companies; and the arrival of private banks – mostly Lebanese and Sharia-compliant Islamic banks.

Issue 1537

44

Underpinning these changes is the quasi-unique political stability that Syria enjoys when compared to many of its immediate neighbours. Unlike Lebanon, the harmonious sectarian make-up of the Syrian society has never been characterized by rivalry. Unlike Palestine, there are no violent feuds between political parties. Unlike Iraq, the Syrian administration has never been torn apart to comply with the mindset of the new comers.

This political stability has attracted foreign businessmen seeking the potential of a place with untapped economic opportunities. Foreign capital inflows accelerated after legislative decree No. 8 was ratified by the Syrian government. Since then, real estate has flourished and remarkable construction projects have seen the light.

Facing the crisis

A common view in the economic and financial community is that, despite substantial progress with reforms, Syria’s exposure to the international economy is still very limited. As such, while this limited exposure implies that Syria cannot fully benefit from international economic upswings, it also means that the Syrian economy is not severely hurt by international economic downturns such as the global economic and financial. As underlined

by the Syrian Minister of Finance, Mohammad AlHeusein, at the 2009 International Conference of Finance and : "Syria was the least negatively affected due to the limited economic exposure of capital money in western markets".

The way forward, however, is perhaps at odds with this type of statement. In particular, the case of the BRICs (Brazil, Russia, India and China) economies could be edifying for Syria. Each of these countries has huge internal problems, but isolation would never benefit any of them. A country with a notorious history of economic structural problems, Brazil has only emerged out of decades of economic stagnation after the implementation of serious economy reforms. State owned companies in particular only flourished after partial or full privatization distanced them from government control. Similarly, the overall economy only got on tracks after the grating of autonomy to the Central Bank made it increasingly difficult for the state to use the monetary system to support its profligacy. Given these reforms, according to Goldman Sachs Report, the Brazil, but also the BRICs, are predicted to surpass the G6 by 2050.

As things stand, however, Syria's state-owned institutions are not allowed to operate at arm's length from the government.

Although Syria's Central Bank follows a conservative policy in synergy with global markets, the same policies that allowed the protected Syria from suffering great losses during the crisis also constrain the growth and development of the Syrian economy in the medium and long run.

Slow reform and international cooperation

Unfortunately, the reform drive has progressed much slower than hoped for. According to WEF's Arab World Competitiveness Report, Syria ranks 12th among the 48 economies at the lowest stage of development. Neighboring Jordan, for example, ranks 13th among the 40 countries in the middle stage of development, due to transparent public institutions and business-friendly regulations that are easy to comply with. Unlike Jordan, Syria inherited non-sensible economic policies from its past and such policies still impede progress.

Amidst internal constraints, bureaucracy is one of the paramount challenges hindering development. Regulatory reform started with the establishment of the one window system in industrial cities like Damascus, Aleppo, and Homs. Such a system puts all services in one place, allowing every office to be more efficient. Applying these practices to the whole public sector would greatly improve the bureaucratic

Economics - Economics

21 December, 2009

45

process. The government's attempt to integrate the Syrian economy to global markets also reached a grinding halt when the Syrian production capability was severely questioned. The first trial was the free trade agreement signed with Turkey in 2004 aiming to market local goods to Turkish consumers. Syrian made products, however, proved uncompetitive in Turkish markets, given their low quality. At the root of the problem is the lack of quality control procedures in Syria, which is supposed to monitor both the process of production and the quality of the output. More importantly, however, is the lack of competitiveness among Syrian companies themselves, which foment lethargic development and implementation of business strategies as well as reduced incentives to invest in R&D.

In an attempt to solve its problems, compensate for the growing budget deficit, and its inadequate human resources, Syria has had to lean on foreign assistance. UNDP, for instance, has contributed USD 970 thousand for capacity building in government bureaucracies. Non-negligeble assistance also came from its northern neighbor Turkey. The last meeting of Prime Ministers in October 2009 oversaw the signing of over 40 deals and agreements covering economic and environmental issues, thus considerably reinforcing bilateral economic relations

between the two countries. The volume of the Turkish investment has reached US$ 400 million in 2009, creating momentum for further cooperation. A second important international partner is Germany, who is currently helping Syria to develop its water distribution sector. At present, around 50 German experts work as supervisors or consultants in different economic projects. Apart from funding, numerous scholarships are offered to foster student exchange programs. These grants are offered to a significant number of Syrians every year, making Germany stand out as the most influential European country in Syria. This is a considerable advance given the prior absence of German interest in the Syrian economy, due notably to Syria’s the former chronic galloping public debt.

New horizons?

If attempting to analyze a foreign partner’s motive to support the Syrian economy, one should readily conclude that nothing is done out of kindness. Undeniably Turkey’s ambition to join the European Union drives its long-run overall economic strategy, and pushes it to further its economic integration with its neighbors (Caucasus, Balkans, and the Middle East).

For Germans, who boast

one of the most prosperous economies in the EU, a strong and vibrant private sector in search of increased profits is certainly behind the push for international economic integration. Germany influence goes beyond economic and financial matters though. It also vies for the promotion of its culture and language through, notably through its Goethe Cultural Centres.

In light of current obstacles, Syria's future economic liberalization is likely to face challenges yet to come. The great losses that severely hit the Dubai Stock Markets last month may dry-up the inflow capital originating from of gulf countries. This would be a considerable drawback, given that these flows reached USD 750 million in 2007.

The IMF has forecasted a 3% real GDP growth for 2009, which is considerably lower that the nearly 6% of 2008. This drop is mainly accounted by the drop in oil prices below the budgeted level. In spite of its domestic problems and the difficult international economic conditions, the only way forward for Syria right now might lie in a partnership agreement with EU. Such an agreement could prove crucial to fomenting further economic and social reform.

Elsy Melkonian - Syria based journalist

Economics - Economics

Issue 1537

ast month’s announcement from Bahrain’s largest Islamic lender about the oversubscription to

the initial public offering (IPO) of its Syrian unit comes, at first glance, as a glimmer of optimism on a hitherto stygian IPO landscape across the Middle East. If recent history is any indicator, though, analysts and investors will likely proceed with caution following this rush of activity from the Al Baraka investment bank. As has been demonstrated throughout the region’s financial systems, a sudden spurt like this can often be a deceptive Potemkin village, fueling false optimism and insidious herding behavior on the part of investors. Regardless of how this particular case fares in the long term, though, it serves, at the very least, to highlight the great dearth of IPO development in the region as a whole—a paucity that could prove to be a significant hurdle to long-term and large scale economic growth.

IPOs are, in essence, a company’s way of testing the waters of a public exchange, and a principal means by which they can procure extra capital. By issuing common stock, available to individual consumers and investors, a company basically sends a message to the market that it’s ready to expand and looking to grow—a message that, if resonant with savvy investors, can be met with substantial inflows of private capital. At the same time, though, going public normally requires a company to disclose proprietary information, without which people would not be able to make educated investment decisions. This indeed may be a sacrifice in comparative advantage (especially in extremely innovation-dependent, competitive sectors, like technology); ultimately, however, such disclosure remains a benefit for market players and investors as a whole. If there exists a well-governed and enforced level of

uniform transparency across a public exchange, capital flows more freely and surely—and a formerly cloistered economy can more easily liberalize and open its doors.

As recently as the last fiscal quarter, though, growth in the Middle East IPO market has dropped off, as a report released by Ernst & Young shows. According to the company’s Middle East IPO Update for the third quarter of 2009, just four companies listed in the Middle East raised a total of $871.79 million in the last quarter, down from the $1.021 billion raised by five companies in the previous quarter. By comparison, in the third quarter of 2008 alone, 14 IPOs raked in $3.74 billion. Through the first three quarters of 2008, a cumulative total of $12.44 billion was raised. This year? Just $1.97 billion.

Ernst & Young Managing Partner Phil Gandler speculates that the decline in activity may be due to hesitancy on the part of investors and companies who may not be entirely convinced of regional recovery following the global financial crisis. He went on to say, though, that “once there is evidence of a sustained recovery in the region, there is likely to be an increase of fund-raising on the regional stock markets, and the 152 announced, delayed or rumored IPOs would be anxious to list.”

Rapid IPO subscription itself, however, does not necessarily imply a healthy market. In 1997 and 1998, for example,

the UAE saw a precipitous rise in IPO activity and investment, only to be followed by a proportionally steep decline. The initial burst was spurred by a single IPO listing, from Dubai Investments, which reinvigorated an IPO market that had been comatose for decades. On the heels of this initial successful foray into the public exchange, several other companies followed suit, and, as in the Al Baraka case, they experienced exorbitant oversubscription rates. The problem was, though, that many of these IPOs were not actual, in fact, tangible companies, but oftentimes assets or projects—mere “paper.” With this kind of historical precedent, the biggest regional obstacle may, in fact be trust—the trust of investors in freshly public companies, as well as the reasoned faith of hesitant companies that a venture into the open market will indeed be met with open ears (and wallets) in the public.

It’s too early to tell whether Al Baraka’s IPO overload is a harbinger of future trends, or whether it’s just another Trojan horse blip on the radar screen. With the global economy gradually on the mend, though, and with oil prices steadily rising, investors should soon have more free capital. And if the region wants to capitalize on this rebound, and steer their financial systems on the path to salubrious and sustainable growth, a mature and thriving IPO market is crucial. Getting there safely, though, will require harnessing raw investor sentiment and channeling it through a sieve of due diligence, caution, and, most crucially, collective trust.

Despite encouraging recent developments, the Initial Public Offering (IPO) markets in the middle east remain largely underdeveloped. Fixing this shortcoming could be very beneficial for the region.

Testing the WatersThe IPO landscape in the Middle East.

Economics - International Investor

Amar Toor

L

Consultant in the Trade and Agriculture Department of the Organization for Economic Cooperation and Development (OECD)

4621 December, 2009

Coming soon on

iPhone

إنترنت طلقة

معاك في كل مكان

www.go.com.sa 800 116 1666يسري هذا العرض في ا�ماكن والمدن المغطاه من شبكة لمدة محدودة خاضع للشروط وا�حكام

لمعلومات إضافية عن اماكن مراكز البيع الرجاء زيارة موقعنا:

C

M

Y

CM

MY

CY

CMY

K

Igo 22x28.5cm.pdf 10/11/09 4:44:52 PM

Great Britain and France announced last week the creation of a one-off 50% levy on bank bonuses. Critics have pointed out that although the measure is likely to marginally help to tackle the creeping public deficit, the main reason behind it is the political strategy behind the upcoming elections. Furthermore, the European Central bank Governing Council member, Axel Weber has pointed out that a windfall tax on bankers’ bonuses is likely to have no substantial impact in encouraging risky behavior.

Economics - Markets

49

Sheikh Mohamend bin Rashed al Maktoum announced this week that Abu Dhabi had confirmed a US$ 10 billion bailout to Dubai World. He further confirmed that nearly 40% of it would be used to pay Nakheel’s US$ 4.1 billion sukuk if credtrs approved Dubai World’s standstill request.

Banker’s Bonuses

Dubai’s Troubles

Issue 1537

51Issue 1537

ReviewsBooks ReportsReadings

52

Reviews - Books

Money Does MatterThe Ascent of Money: A Financial History of the WorldNiall FergusonPenguin, 2008

iall Ferguson has time and again been criticized

for adopting an imperialistic approach in his writing, yet as a historian his academic and scholarly capabilities are undisputed. The Ascent of Money provides the historical development of money from the Babylonian credit systems to the current financial predicament. The book brilliantly recounts the rise of banking systems and more importantly, the induction of the concept of money in early societies.

Ferguson persuasively argues that money is in fact, "trust inscribed" on paper or metal and that this trust keeps societies from poverty. The book uses many case studies to portray how

the concept of money evolved through time. For example, the book shows how loan tycoons in Italy became the first bankers, and how the idea of financial markets became materialized with the rise of Amsterdam as the world's financial capital. Ferguson uses remarkable storytelling skills to show how an outlaw murderer was one of the reasons for the destruction of the French financial system, hence triggering the French revolution and how Nathan Rothschild's role as a gold smuggler participated in the fall of Napoleon.

The book argues that financial institutions have grown to become the backbone of modern-day communities,

exemplified by the ripple-effect of the current financial crisis that affected different sectors of the economy. Interestingly, however, Ferguson's research for the book was done prior to the financial crisis, which adds credibility to the material he demonstrated. Ferguson notes that the financial sector has been growing with steady momentum for the past decades regardless of economic and financial mishaps. Ferguson's analogies have been supported by the current economic downfall, where he links past incidents to current financial events.

The author draws a crucial resemblance between international investment during the late 19th century, when globalization was

N

A chronological journey of the evolution of money, told by a leading historian on modern literature.

21 December, 2009

a fiery phenomenon, and current international investment patterns. This however brings up what Ferguson calls "Chimerica": since the 19th century; investment was between developed nations, but today, international capital flow involves China, which is considered a developing nation. The author sees "Chimerica"' as a "wonderful dual country ... which accounts for just over a 10th of the world's land surface, a quarter of its population, a third of its economic output and more than half of global economic growth in the past eight years".

On one hand, the First World War was considered the ending point of 19th century globalization, while on the other Ferguson sees the US-Chinese relationship as a

potential ending to modern day globalization. Ferguson bases his assumptions on his expectations of a trade war that might take place between the two economic powers.

This idea refutes the arguments by scholars, dating back to Kant, who claim that economic interdependence is considered a safeguard against a worldwide disaster. Despite its maverick conclusion, the book can be criticized for not putting much analysis on the role of international organizations in handling financial dilemmas and economic risk management. To Ferguson, the IMF was blameless in its reaction towards the Asian financial crisis during the 1990s. An additional flaw

of the book has been voiced by those who believe that The Ascent of Money should have included a more historical infrastructure.

Ferguson concludes by saying that markets "are like the mirror of mankind, revealing every hour of every working day the way we value ourselves and the resources of the world around us. It is not the fault of the mirror if it reflects our blemishes as clearly as our beauty". This specific sentence triggers several questions, especially coming from a person who holds imperialism in such high regard. Yet it does beg the question of what are the blemishes that ruin the current financial system? And more importantly, how can they be removed?

53Issue 1537

Reviews - Books

An unprecedented publishing event: to mark the centenary of its foundation, the British Security Service, MI5, has for the first time opened its archives to an independent historian. The book reveals the precise role of the Security Service in twentieth-century British history, from its foundation by Captain Kell of the British Army in October 1909, through two world wars, up to and including its present roles in counterespionage and counterterrorism. The book describes how MI5 has been managed, what its relationship has been with government, where it has triumphed, and where it has failed. In all of this no restriction has been placed on the judgments made by the author.

Readings

Christopher AndrewKnopfNovember 3, 2009

Geoffrey HughesWiley-BlackwellNovember 23, 2009

Books

Reports

This report investigates the human rights violations in Yemen in the light of the recent conflict between the Yemeni government and supporters of the Southern movement. Human Rights Watch examines the way Yemeni authorities have been dealing with the media, covering the conflict through more than 80 interviews of witnesses in Southern Yemen.

Political Correctness is now an everyday phrase and part of the modern mindset. Everyone thinks they know what it means, but its own meaning constantly shifts. Its surprising origins have led to it becoming integrated into contemporary culture in ways that are both idealistic and ridiculous. Exploring the origins, progress, content, and style of PC, Hughes’ journey leads us through authors as diverse as Chaucer, Shakespeare and Swift; Philip Larkin, David Mamet, and J.M. Coetzee; from nursery rhymes to Spike Lee films.

Political Correctness: A History of Semantics and Culture

The Defence of the Realm: The Authorized History of MI5

Human Rights WatchDecember 15, 2009

In the Name of Unity

Interview

The Council on Foreign Relations interviewed Sam Parker, the Iraq program officer for the United States institute of Peace. He comments on the United States' withdrawal from Iraq and whether or not it will go as planned. Parker talks about the recent bombings in Baghdad and the role of Al-Qaeda in the increasing dependence of the Iraqi regime on US support.

Council on Foreign RelationsDecember 14, 2009

Security and politics collide in Iraq

Cover

Cover

5421 December, 2009

56

Reviews - Reports

A Question of SurvivalMiddle East Democracy Promotion Is Not a One-way StreetCarnegie Endowment for International PeacePolicy BriefMarina OttawayNovember 2009

Momentum toward political reform has stalled in most of the Middle East. Democracy, the report argues, has become increasingly essential to the region and the US should do more to encourage its growth. In particular, the Obama administration needs to provide the Middle East with the necessary incentives to commit to democratic reform.

f the few statistically sig-nificant results in politi-cal science is the assertion

that democratic countries are more peaceful and stable than non-democratic ones. While there are caveats to the Democratic Peace Theory, this maxim remains large-ly accepted amongst the academ-ics and advisors that shape the foreign policy agendas of Western countries, particularly the US. The Carnegie Endowment for Interna-tional Peace reflects this idea by evaluating the efficiency of the measures the US has put in place

to spread democracy in the Middle East.

Marina Ottaway, author of Mid-dle East Democracy: Promotion Is Not a One-way Street, begins with the premise that the Obama admin-istration is under great pressure to revive democracy promoting ef-forts in the Middle East. She notes, and rightly so, that the state of de-mocracy in the Middle East has worsened over the last few years. “Momentum toward political re-form has stalled in most of the re-gion. Opposition parties are at low

ebb, and governments are more firmly in control than ever. While new forms of activism, such as la-bour protests and growing volume of blogging critical of government and opposition parties have be-come widespread, they have yet to prove effective as means of in-fluencing leaders to change long-standing policies”.

However, she astutely observes that the failure of democracy pro-motion has not been solely on the part of Middle Eastern countries, but that it is a result of the inter-

O

21 December, 2009

national community’s failure to engage with what they at many points considered the less-favour-able candidates. Instead of man-aging to incorporate what they understood as dangerous political figures into the democratic system, they have alienated many pushing them away from democratic poli-tics.

In this sense, she argues, the US, including the Obama administra-tion, has been lacking in any se-rious efforts to promote political reform in the Middle East. Draw-ing lessons from history, the Carn-egie Report demonstrates that for reluctant interlocutors to become convinced that democratic princi-ples should underpin their govern-ments, the United States needs to be prepared to discuss the univer-sal principles that should underpin its own Middle East policies.

Further, the report critiques that a year into his administration, Obama has only been addressing politics in the Middle East accord-ing to necessity: Iran’s nuclear ambitions, the war in Afghanistan and the Israeli-Palestinian conflict. The limited degree of engagement the US has employed towards democratic growth should thus be re-evaluated. However, the report ascertains, the political conditions in the Middle East are not sustain-able in terms of American interest and this will redirect the adminis-tration’s approach to the region’s governance.

How exactly then should the US proceed in its relationship with the Middle East? Exact answers in the case of politics are rare to come by, and this assessment is no excep-tion. Instead of explaining what the Obama administration should do, the report reiterates what it

should not do, and that is follow the steps of the Bush adminis-tration’s approach to democracy building – not only because these were ineffective, but more so be-cause the situation on the ground is drastically different today than it was in the early 2000’s.

After providing an in-depth as-sessment of the various forces at play in determining the level of democracy in the Middle East, the report then moves on to explain the issues that the Obama administra-tion should be focusing on. While a thematic approach has undoubt-ed advantages, especially in that it takes into account the particulari-ties of the region that might affect governance, there is one deficiency that should be addressed.

An unfortunate element of the historic relationship between the West and the Middle East is the civilizing aim that has provided western powers with the pretext of maintaining a presence in the re-gion. Although originally associat-ed to a religious tactic, slowly this has evolved to take on a political guise – that of spreading democ-racy. While assessing the virtues of democracy is not the aim of the reports presented by the Carnegie Foundation, their evaluation of the US’s democratizing aims in the Middle East warrant the question of whether it is just for the US to establish that spreading democracy is a major responsibility of its for-eign policy agenda.

In this sense, an interesting as-pect of the report is in what it does not mention. Would the Middle East’s democratic principles be better-off if the US were not as in-volved as it has been in the past? Did past efforts by the Bush ad-ministration in particular not create

a degree of backlash that in many ways hindered the development of democracy in the region?

Implicit in the report is the an-swer that if done well, and ap-proached fairly, the US can have an important and positive impact on the stability of the region by promoting democracy. Moreover, the report does manage to provide convincing evidence that increased democracy and stability— al-though not necessarily by way of the US— would be beneficial if not imperative for the region. “It is not just the lack of democracy or neglect of human rights that makes many Arab political systems prob-lematic, although these are serious concerns. It is the apparent inca-pacity of many governments to respond to looming crises. In the most extreme cases, particularly in Yemen, poetical reform may be linked to survival”.

The understanding on the part of the Carnegie Endowment of the status of democracy in the Middle East empowers its report with the necessary humility for lack of a better word in its own recommen-dations for the Obama administra-tion. Recognizing that previous tools for political reform are no longer viable, yet acknowledging that efforts in promoting reform are still necessary leads them to conclude that there is no clear way in which the US should approach the situation of democracy in the Middle East. What is clear on the other hand, is the necessity that democracy poses for the region, and the ability of the US to provide them with the right incentives to promote democracy.

57

For the full report, refer to: http://www.carnegieendowment.org

Issue 1537

Reviews - Reports

ast week in Bahrain I listened to a very interesting speech, interesting for all the wrong

reasons. It started with underlining the significance of ‘the establishment of a democratic and independent government in Iraq, and of supporting ‘political diversity’ there. It went on about the importance of the Human Rights Council and the UN General Assembly. It argued for ‘the support for the independence, development, and security of Yemen’, about how the international community ‘should be united on these principles’, and it warned, regarding the situation in Northwest Yemen, that ‘these conflicts are not going to be of interest for Yemen’ in particular and for the Middle East more generally. In Lebanon’, this speech argued, ‘the participation of all political groups paves the way for national solidarity, and we play a leading role in that respect’. The concluding remarks focused on the inconveniences of weakening the Non-Proliferation Treaty, the need to promote security and stability, and the centrality of the relationship between economic development and security.

At first sight, this is was a rather thoughtful speech. However, knowing its author completely changes one’s perception. Indeed, these apparently well intentioned words described above were not uttered by the UN Secretary General, but by Iran’s Foreign Minister Manouchehr Mottaki. What to make of this speech seemed to be in the minds of a wide-ranging audience of politicians, diplomats, military commanders, and journalists, from all across the wider Middle East, the United States, and Europe. Though quite unique in the broad range of issues it covered, Mottaki’s words certainly do not represent a new development. The intervention of Mottaki is well in line with the

behaviour and the type of rhetoric the Iranian government adopted since August 2005, when Ahmadinejad was first elected.

Going over most of the issues addressed by Mottaki, and analysing Iran’s recent policy towards each one of them, it almost seems that the Iranian foreign minister meant exactly the opposite of all he was saying. Let’s see. In Iraq, Iran is doing everything within its reach to establish a pro-Iranian government in Baghdad. These efforts even included the support of armed groups that made much harder the effort of stabilizing Iraq. Talking about human rights and the Human Rights Council, a look at the repression, violence, and torture episodes that followed the fraudulent elections in Iran is enough to be said. And how can Iran claim to support Abdullah Saleh’s government and the stability of Yemen when it clearly backs, at least ideologically – or logistically as claimed by the Yemeni government – the Houthi rebellion. Asserting that Iran has played a leading role in encouraging the participation of all political groups and national solidarity in Lebanon is something close to a joke when one considers that Iran is the godfather of Hezbollah. And finally, how can one promote stability and security when Iran defies all international rules to pursue a nuclear power programme of which the real intentions are very doubtful.

It is when considering Iran’s nuclear ambitions in particular that this kind of diplomacy – if it deserves that name – becomes a serious cause for concern. Of course, there is no room in international politics for naivety, and most if not all politicians hide and conceal facts, and are led to portray reality differently, i.e. the way they want others to see it. However, the absolute lack of concern from Ahdmadinejad, Mottaki, and other Iranian officials, for showing consistency between words and actions is itself revealing of the feeling the current Iranian regime has that it is untouchable. While armed force as tool to press the Iranian government to concede on its nuclear programme is the worst of all options, diplomacy and dialogue attempts were useless until this day. This is why in this very particular case, while the option of dialogue should be always opened, further sanctions is the right way to go. Sanctions show resolve, but not an overtly aggressive one.

Many attempts to engage the current Iranian government in order to negotiate the nuclear dossier have promised some kind of breakthrough, and all of them achieved nothing. The explanation, or the excuse, that the problem was the Bush administration is no longer valid. With a new American administration willing to talk, the progress is again non-existent. The Iranian tactic of buying time until it actually achieves nuclear weapons capability is working just fine. Mottaki’s disdain, arrogance, and the way the Iranian Foreign Minister told the audience that Iran is the most benign regional power reminded me of what someone said of a diplomat – ‘a person who can tell you to go to hell in such a way that you actually look forward to the trip’.

The Political Essay

Erratic Diplomacy

L

Worthless words and the feeling of being untouchable

Manuel almeida

Last week in Bahrain I listened to a very interesting speech, interesting for all the wrong reasons. At first sight, it was a rather thoughtful speech. However, knowing its author completely changes one’s perception. What to make of it seemed to be in the minds of a wide-ranging audience of politicians, diplomats, military commanders, and journalists, from all across the wider Middle East, the United States, and Europe.

5821 December, 2009