Egypt Approaches America for Aid and Investment Package

Ahram Online: Egypt’s Unemployment Rate Hits Record High in Second Quarter

CIA Factbook: Egypt

Forex: Historical Data

The Guardian: Egypt Closes in on $1bn US Debt Deal

New York Times: To Back Democracy, U.S. Prepares to Cut $1 Billion From Egypt’s Debt

Almost sixteen months after pledging to help Egypt’s faltering economy, the United States (U.S.) is nearing an agreement to forgive $1 billion dollars Egypt owes to the U.S., and to pledge $435 million for investment in Egypt. The Egyptian economy has been in decline since the ouster of long time President Hosni Mubarak in February 2012, and the new President, Mohamed Mursi is working to improve Egypt’s economic outlook by reducing government debt and increasing investment.

If the U.S. forgives $1 billion of the $3 billion Egypt currently owes the U.S., it will support the Egyptian economy in two ways. First, it will reduce the amount of cash that Egypt has to use to pay down government debt, and will allow Egypt to spend more money to stimulate its economy. Second, the Egyptian government is less likely to have to raise taxes on its population to pay down government debt, which leaves more money for taxpayers to spend in the economy. As of 2011, Egypt’s gross domestic product (GDP) per capita  (indicator of standard of living) was 136^th in the world, leaving each person with $6,600 to spend per year. The more money that citizens have, the more they are able to spend and stimulate the economy.

The United States has also offered $375 million in financing to American companies that invest in Egypt, and a $60 million investment fund for Egyptians to invest in new businesses. In an effort to entice American companies to utilize the $375 million fund, the U.S. Chamber of Commerce is bringing executives from almost fifty large American companies to Egypt . The United States and Egypt intend the $375 million foreign and $60 million domestic investment funds to help reduce Egypt’s 12.6% unemployment rate, create sources of income for Egyptian citizens, and increase the amount of taxes the government can collect because of the increase in business. Egypt needs an increase in investment to stabilize its economy.

Although the Egyptian stock market showed gains during the week of September 4^th, the country still has a long way to go to reach financial stability. The Egyptian stock index (EGX 30) hit a 15-month high on September 4^th, showing that the market may be responding to Mursi’s effort, but the EGX 30 still sits 30 percent below its high in 2010.The Egyptian government is mired in debt and lacking investment. With support from foreign governments and internal economic growth, Egypt has a good opportunity to grow a stable economy. America looks to be invested in the recovery process; American Deputy Secretary of State Thomas Nides said that the aid is “not just about assistance,” it is about “growth and business.”

Oil-Importing Countries in the Middle East and North Africa Face Continued Financial Challenges

Sources:
Arab News: IMF's economic outlook for MENAP shows growth despite historic transitions
The Daily Star (Lebanon): Experts call for joint action to assist Arab states in need
IMF: Arab Oil Importers Under Strain
IMF: Anchoring Stability to Sustain Higher and Better Growth
IMF: Middle East and North Africa: Historic Transitions under Strain
The Nation (Pakistan): IMF expects high oil prices in 2012

In the Middle East and North Africa (MENA), countries which import oil faced reduced growth last year and projected financial challenges in the future. According to the International Monetary Fund (IMF), growth in the oil-importing MENA countries fell from 4.3% of gross domestic product (GDP) in 2010 to 2.2% in 2011. GDP is the total value of goods and services produced in a country during a year.

The slowed growth came in the form of a reduction in tourism and private investment in local businesses, both of which are sources of employment and revenue. The main cause of reduced tourism was the political unrest in the region as many nations faced either regime changes or significant political changes. Political unrest creates safety concerns, which in turn reduces tourism. It also reduces private foreign investment because the political instability creates a situation in which it is uncertain whether investors will see a return, or profit, from their investment.

Another cause of the reduction of tourism and private investment is the European financial crisis. Europe is a major source of tourism and investment for many MENA countries because of its close proximity to the region. However, Europeans have less money to spend elsewhere on tourism and investments because of domestic financial problems resulting from the European sovereign debt crisis.

While many MENA countries are seeing a return to political stability, the IMF points to continued challenges to economic growth for these oil-importing countries. First, the IMF expects oil prices to continue to rise in 2012, which would increase the amount of money flowing out of the country, making it more expensive to cover the costs of continued oil consumption. Second, Syria is still facing significant political turmoil, affecting the regional economy through continued decreased in tourism and private investment mentioned previously.

To aid in recovery, the IMF asserts that ensuring adequate financing is key. The IMF estimates that oil-importing MENA countries will need $50 billion in 2012 to keep their economies functional during times of political unrest. While the IMF is providing some assistance, the IMF and other experts call for international and regional donors to participate as well. The IMF says that infusions of investment funds will aid in meeting short-term needs and establishing greater long-term stability in the form of job growth and modernizing infrastructure.

Thus, though oil-importing MENA countries are currently facing financial challenges resulting from political unrest in the region and financial instability in Europe, the IMF expects that increased investment assistance will encourage future economic growth.

Three Multilateral Financial Institutions Will Collaborate to Loan Money to Help Fund the First Private Wind Farm in Pakistan

Sources:
Associated Press of Pakistan: IFC Supports Landmark Wind Power Project in Pakistan
Bloomerg: Zorul Gets $111 Million Loan for Pakistan Wind-Power Project
Business Recorder: ADB Boosts Pakistan's Wind Power Capacity

The International Finance Corp (IFC), the Asian Development Bank (ADB), and the ECO Trade and Development Bank (ECO) are providing loans of $38.1 million, $36.8 million, and $20 million, respectively, to a company named Zorlu Enerji Electrik Uretim (Zorlu) to expand its wind power generation plant in the Sindh province of Pakistan, near the border with India. Zorlu will use the funding to install additional wind turbines and increase the facility’s electricity capacity from 6 megawatts (MW) to 56.4 MW. The Zorlu project will be the first internationally financed wind power facility in Pakistan and one of the first two wind power projects to operate commercially in Pakistan.

Zorlu’s total cost for the wind expansion project is $147 million. In addition to the amounts supplies by the ADB, ITC, and ECO, Zorlu will supply $35.9 million and Pakistani bank Habib will loan the remaining $16.2 million.

Increased wind power generation is important in Pakistan because the country’s demand for electricity has increased by 40% over the last five years while production has been unable to keep up. Pakistan’s lack of electricity has resulted in brownouts (the partial loss of electricity) in all major urban centers, electricity rationing, and early closing times for businesses, all of which undermine the country’s economy. To combat these problems, the Pakistani government is pushing to expand its energy resources, which includes increasing wind power generation.

The wind project will also help reduce Pakistan’s reliance on imported fossil fuel for the majority of its energy needs, which is very costly and leaves the country vulnerable to changes in global price. The ADB believes that Zorlu’s additional wind output will provide Pakistan with much needed electricity while also increasing the country’s energy security and lowering its reliance on fossil fuels. The IFC hopes that its investment in the Zorlu project will stimulate other international investors to invest in wind power within Pakistan which will stimulate and strengthen the Pakistani economy.

Wall Street Protests Part of Global Trend

Sources:

Economist: The Revolution Will Not Be Liberalized

Forbes: Occupying Wall Street from Liberty

NPR: Occupy Wall Street Gets Union Backing-Approval Rating Tops Congress

NYT: As Scorn for Vote Grows, Protests Surge Around Globe

Reuters: More Than 700 Arrested in Wall Street Protests

WSJ: Hundreds Arrested on Brooklyn Bridge

Across the globe citizens are taking to the streets in mass demonstrations with a wide spectrum of themes: from political and social repression, human rights, corruption, high unemployment, and discriminatory economic systems. The trend has resulted in significant governmental and political reform in Arab and African nations and now U.S. protesters have taken aim at the world of high finance—Wall Street. The Wall Street protests, organized by a group called “Occupy Wall Street,” point to the Tahrir Square protests in Egypt that recently toppled a decades-long dictatorship as their inspiration.

Members of Occupy Wall Street cite a host of gathering calls including income inequality, high unemployment, corporate greed, and suppression of the democratic process. On Wall Street in New York City, home to some of the world’s largest investment banks and financial firms, protestors are entering their third week of rallies, sleep-ins, and marches against the perceived corruption of Wall Street firms, corporate influence over the political system, and other social injustices. Despite the lack of a single cohesive message, the Occupy Wall Street movement has been spreading across the country to places like Boston, Seattle, Ohio, California, and Pennsylvania with rumors of more protests in other cities in the works.

Some observers are calling Occupy Wall Street a ‘national movement’ similar to those that have occurred in other parts of the world like Libya, India, Israel, Spain, and Greece. Libyan citizen movements resulted in the overthrow of an entire decades-old regime, Indian activists are exposing government corruption, and Israeli demonstrators continue to protest political and income disparities. In Spain, where the unemployment rate of 21% is the highest in the developed world, demonstrators are challenging the government to do more to ease economic suffering. In Greece, the harsh spending cuts the government has implemented to continue receiving bailout founds from the International Monetary Fund and European Union have resulted in violent riots, social unrest, and even an increase in suicides. The common theme among all these groups is a collective lack of confidence in their governments. Although the U.S protests may appear less cohesive—and some critics claim less compelling—than these global protests, they represent a resurgence of activism not seen in the U.S. since the Vietnam War.

The low costs of social networking sites, access to governmental information mapping applications, and web-based organizational tools that make mass communication fast and efficient have helped make the massive protests around the globe possible. People around the world can now hear rally cries from protestors in any country instantaneously. Although the causes for these grass-roots efforts vary widely, a common theme is apparent. Citizens feel their governments are ignoring their concerns, so they are taking to the streets in a desperate attempt to revive the democratic process. To date, the impact of global protests has been profound, but it remains to be seen if Occupy Wall Street will result in any substantive reform.

Europe's Embargo on Syrian Oil

Sources:
FT: Syria to Look East for Oil Markets  
NYT: Europe’s Oil Embargo Leaves Syria Urgently Seeking New Customers
Washington Post: Syria Seeks Cutback in Oil Production Because of E.U. Embargo

Syria, a country whose economy is largely based on the production and sale of oil, is now facing a European embargo on its oil exports in response to political turmoil within the country. European leaders began the embargo as Syrian President Bashar Al-Assad continues to violently repress pro-democracy demonstrations. The European reaction is only part of widespread international outrage as thousands of Syrians have died as a result of the government’s actions.

So far, only the United States and Europe have passed embargos on Syrian oil. While the United States embargo is mostly symbolic (it does not import much oil from Syria in the first place), the European embargo has hit the Syrian economy hard. Because Syria sends 90% of its oil exports to Europe, the country’s revenue has decreased by 25% since the embargo has been in effect. The United Nations Security Council is currently trying to levy sanctions against Syria to increase international pressure on the Syrian government. However, Russia has thus far used its veto power to prevent the Security Council from taking action because it is unhappy with how NATO used previous Security Council sanctions to justify its bombing campaign against Libya. Nevertheless, other Security Council members continue trying to sway the Russian vote in the hopes of enlarging the scope of the embargo.

The embargo and subsequent declines in exports have forced many foreign companies to shut down their Syrian operations, which will likely compound the embargo’s effect. However, experts believe Syria will eventually find buyers for its oil, either by finding non-European countries that need oil or companies willing to help Syria avoid the embargo by shipping to Europe via some third country from which Europe allows oil imports. The Syrian diplomat to the UN stated that buyers from the Eastern Bloc had already approached Syria about the possibility of buying its oil, but did not name any countries specifically. Experts also believe that more buyers will emerge in attempts to purchase Syrian oil at a discounted rate.

While the European and U.S. governments are using this embargo to encourage political change in Syria, it is possible they are doing the country more harm than good. Aside from its substantial loss in revenue, the country is now facing a major hindrance in its future economic development. If the political situation does not improve, foreign investors may hesitate to invest in Syria if they fear the government’s actions will spur more international sanctions, and, therefore, more losses for businesses. Even if the political instability is resolved soon, foreign investors may still be reluctant to invest in Syria for a long period of time after seeing how much money oil companies are currently losing. Without resolving the foreign investor problems arising, Syria's economic and political development will not be able to continue.

Middle Eastern Governments Plan to Spend Huge Oil Profits on the Poor

Sources:

The Daily Beast: High Oil Prices to Benefit Poor

FT: Sovereign Wealth: Spending Stays Close to Home

San Francisco Chronicle: OPEC’s $1 Trillion Cash Quiets Poor on Longest Ever $100 Oil

The University of Pennsylvania Wharton School: To Stave off Arab Spring Revolts, Saudi Arabia and Fellow Gulf Countries Spend $150 Billion

Many oil-rich countries in the Middle East will see unprecedented profits thanks to high oil prices and have pledged to invest much of these profits in programs designed to alleviate poverty. Countries like Saudi Arabia, United Arab Emirates, Kuwait, and Qatar plan to spend billions on food aid, increasing civil servant salaries, and, to a lesser extent, on infrastructure improvements.

Substantial domestic investment is a new trend in the region, likely spurred by uprisings. In the past, many middle-eastern countries preferred to invest oil profits overseas. The recent political unrest throughout the region, however, has forced governments to pay more attention to the basic needs of their population. Citizens in Libya, Egypt, Tunisia, Bahrain, Syria, and Yemen have started protests and even civil wars against their current governments in the past several months. Many of these incidents resulted from citizens who feel their governments are oppressing them and neglecting their basic needs. In some countries, the uprisings have ousted long-standing leaders– a result none of the region’s leaders want to see in their own country.

Some experts feel the governments’ new investments are not the solution to these region’s problems. Much of the relief, such as food and cash handouts, will only have a short term effect. The governments are spending very little on projects that will support economic development in the long-term. Therefore, when the relief is gone, the poor will be in the same position they were before the handouts. Despite observers’ opinions that the countries should spend money on long-term investments that will support economic activity for years to come, citizens seem satisfied.

Regardless of the motivation for- or longevity of- the relief, increased domestic investment is a positive step for the Middle East. Oil wealth has been the source of some of the most dramatic inequality in the world as dictators and oil barons have kept oil profits for themselves for decades. The vast majority of the population lives in poverty. Unfortunately, many feel the financial disparity between the rich and the poor of these countries is just one characteristic of an oppressive culture in which citizens have little say in their government. The governments’ new domestic spending is the first sign of hope for the poor in these countries and may lead to increased political voice for the underrepresented group.

MENA Political Watchdogs: Social Media and Al Jazeera

NPR: Clinton Lauds Virtues Of Al Jazeera: 'It's Real News'
NPR: Syrian Activist In Hiding Presses Mission From Abroad
American Journalism Review: The Al Jazeera Effect
Politico: Al Jazeera has fans in Obama W.H

It is undeniable that social networks have been instrumental in fueling the Jasmine Revolution in the Middle East and North Africa (MENA). In fact, the term, “Jasmine Revolution” was coined by a Tunisian political activist and blogger, Zied El Hani in January of this year.

Content on social media outlets galvanized protestors, leading to the toppling of decades-old regimes in the region and spurring others. In doing so, social media content has gained a new prevalence as a source of information for international audiences. Social media appears to be at the frontline of political and social discourse about the Middle East. Many of the blogs, video posts on You Tube, and Facebook pages have not only informed local citizens, but have educated the world of the atrocities committed by autocrats in the region.

On Friday, during what has already been termed as “Bloody Friday” by international medial, Syria’s government initiated a brutal attack on protesters, according to eyewitnesses. Indeed, many of the reports received by news media were received in the form of video recording on cell phones or as links from posts to YouTube. A Syrian political activist, Rami Nakhle, is on the run from Syrian officials in Beirut, Lebanon. He collects much of the eyewitness reports from protestors (which are illegal in Syria) and uploads them on various social media websites, including his own. Some of those images and videos have made it into Al Jazeera’s programming.

In fact, Al Jazeera has received considerable attention and praise for its coverage of the Middle East revolutions. With hundreds of reporters already in place, and, working closely with “cyber activists,” commentators have suggested that Al Jazeera has outperformed more established media channels in its coverage of the Middle East. In a speech on Thursday, Secretary of State Hillary Clinton praised the channel as a leader in “literally changing people's minds and attitude.”

While Al Jazeera has many skeptics, who allege that the channel has an anti-Semitic, anti-American bias, the channel has strongly asserted itself as a leading global news source. The wealth of information communicated by Al Jazeera to its audiences has greatly influenced global sentiments towards events in the Middle East. As social media sources and Al Jazeera gain greater confidence of international viewership, their role in shaping public opinion will continue to gain prevalence, serving as political watchdogs in the region.

Multilateral Organizations Will Move Forward on a Plan to Assist Economic Development in the Middle East and North Africa (MENA) Region

AFP: Multilateral Banks Join forces to Aid Arab Nations

FT: Mideast and North Africa Could Get New Funds

Arabian Business: Middle East Needs IMF, World Bank Intervention, Carnegie Says

FT: EBRD Could Start Lending to Egypt

In January 2011, Tunisia’s population overthrew its decades long leader, Ben Ali, because of frustration over economic disparity and political oppression. As the revolutionary wildfire spread to other parts of the North Africa, including Egypt—where demonstrations toppled leader Hosni Mubarak in February 2011—one thing was clear: demonstrators demanded a chance at economic prosperity.

On April 14^th, the United States and France announced that a large group of multilateral organizations have pledged assistance to Middle East and Northern African (MENA) countries, in order to foster inclusive economic growth. Multilateral organizations that have pledged support include the World Bank, the African Development Bank and the Islamic Development Bank. The World Bank has already agreed to provide a $500 million dollar loan to Tunisia to support its budgetary obligations. Furthermore, the Untied States has offered to provide generous replenishment to multilaterals, if the banks call for capital increases to facilitate development efforts.

Noteworthy is the prospect that the European Bank for Reconstruction and Development will provide assistance to Egypt, which is a shareholder of the Bank. EBRD was founded 20 years ago to assist Eastern European countries transition from command to market economies and its mandate is limited to those countries. However, with shareholder approval (which is anticipated to go through) EBRD will provide economic assistance to Egypt.

Although the full parameters of the multilateral banks’ assistance package will be announced in May, the plan will likely focus on budgetary assistance to MENA countries and the development of small- and medium-sized enterprises. Commentators warn that economic reforms will be essential in providing stability, as governments will be tempted to “buy peace” by increasing spending for social programs. Some commentators have noted that Washington-based lenders were already working in the region prior to political upheaval this year, and that it will be important to maintain course with respect to reducing those countries’ budgetary deficits, while stimulating the economies. Large budget deficits for countries in the region can create a significant problem by pushing away investors who might fear a government default or devaluation of their investments. Therefore, the multilateral banks’ economic stimulus plan will have to strike the right balance between competing economic and political goals.

World Bank Helps Establish Fund for Middle East Infrastructure Projects

Sources: WSJ: World Bank: New Arab Fund To Leverage Infrastructure Investment
Reuters: World Bank to Set Up Arab infrastructure Fund
ABC Live: World Bank Supports AFFI Infrastructure Development for Arab Region

With violence, unrest, and political uncertainty continuing to grip the Middle East, foreign investors have become increasingly reluctant to invest funds in the region. In an effort to fill this investment void, the World Bank, in conjunction with the Arab Development Bank, recently announced that it would seek to create a $1 billion fund to foster development in the region.

The goal of the fund, which is called the Arab Financing Facility for Infrastructure (AFFI), will be to invest in projects aimed at developing basic infrastructure, such as improving access to water and electricity. The fund will support both traditional financing and Sharia-compliant financing. Sharia (the name for Islamic law) places certain restrictions on the terms of financing.

The funding comes at a critical time for the region, where infrastructure has been long neglected by some countries in the regions, especially those countries governed by the leaders that have been, or are currently, the target of protests. To illustrate the extent of the neglect, it is estimated that half of the population in the region do not have ready access to water. However, the fund will provide only a small portion of funding to cover the estimated $75-100 billion annual funding requirement needed to meet the infrastructure needs of region. For example, because of its rapidly growing population, the region is expected to need approximately $30 billion a year to meet the corresponding increase in demand for electricity.

Saudi Arabia’s Second Public Spending Package Does More than Diffuse Political Pressure

FT: Saudi King Disappoints Reformists

Bloomberg: Abu Dhabi Shares Gain on Saudi Spending, Libya Intervention

Saudi News Today: Arab Stocks Volatile Ahead of First Quarter Results

On March 16^th, Saudi Arabia’s King Abdullah announced a substantial public spending package of approximately $130 billion. The public spending announcement came just weeks after the first $36 billion dollar public spending package was announced in late February 2011. With fears of instability growing in the region, and with an eye on the unraveling unrest in neighboring Bahrain, King Abdulla announced the second public spending package. The key initiative of the March package is building five hundred thousand additional homes with a total of $66.7 billion dollars. Other public spending programs under the second package include decreasing education costs, providing an additional two months stipend to students, creating 60,000 additional interior ministry jobs, and increasing minimum wage to $800 dollars a month, among other initiatives.

Commentators attribute the second, much more substantial public spending package to fears by the royal family of unrest spreading to Saudi Arabia. With a large unemployed youth population—approximately 25% of all Saudi youth is unemployed—the royal family has been under pressure to invest profits generated by high oil prices towards public projects. For an extended discussion on youth unemployment in the Middle East and North Africa region see Youth Unemployment Highest in the World for MENA. Saudi Arabia is an absolutist monarchy without a parliament, and much of the profits from the oil-rich country remain with the royal family. The recent capital infusion has successfully calmed political tension, although it hasn’t completely diffused the situation. Outside of mitigating political risks, the effect of public spending has been to increase the value of the regions’ stock markets.

While King Abdulla’s immediate goal appears to be calming the population in an effort to prevent protests like that in Yemen, Oman, and Bahrain, the public spending promise has had a positive effect on many Middle East stock markets. The large public spending package means more jobs, political stability, and that more capital will work its way through the money multiplier (meaning that that capital will multiply as it works its way through financial markets). The prospect of such stability and fiscal benefits often triggers the stock market to accumulate value given the likelihood of positive market developments. While other factors are also at play, the stock markets in Egypt, Kuwait, and Abu Dhabi have fared well in the last two weeks.

Youth Unemployment Highest in the World for MENA

The Nation: Jobless Youth Tell of Their FrustrationsCNBC: Bleak Jobs Picture in the Middle EastThe Nation: Davos Focus on Jobs for YouthGulf New: Middle East Joblessness World’s HighestDeloitte: Wanted: A National Labor Force

On January 25, 2011, the International Labor Organization (ILO) released the Global Employment Trends 2011 report, finding that the Middle East and North Africa (MENA) region has the highest unemployment rate in the world, at 10.3%. The unemployment situation is exacerbated for youths between the ages of 15–24 who also face the highest rate of unemployment in the world, at 23.7% in the Middle East and 23.8% in Northern Africa, according to a November 2010 study by Deloitte. Even those that are employed receive meager wages. According to an ILO study, 40% of the Middle East working population and 32% of the North African working population live on less than $2 a day. Furthermore, the unemployment numbers do not reflect the number of youths who are unemployed and have given up looking for work.

As highlighted at the World Economic Forum in Davos, lowering the alarming level of youth unemployment is essential for increasing social inclusion and future economic security in the region, given that youths comprise a staggering 60% of the regional population. While the issue of job creation is not new, recent political unrest in Tunisia and Egypt have drawn attention to the problem. Commentators like Monica Malik, Chief Economist at EFG-Hermes, have stated that youth unemployment is the “biggest challenge facing the region.”

There are inherent inadequacies in the growth and development of the labor market in MENA countries. While the region as a whole faces similar concerns, MENA can be divided into two groups: (1) countries that have an accumulation of wealth driven by oil revenues (including Bahrain, Kuwait, Oman, Saudi Arabia, Qatar and UAE) and (2) import countries that do not have the oil-revenue buffer (including Egypt, Jordan, Lebanon, Morocco, Syria, and Tunisia). In oil-exporting countries, job creation has grown at a constant rate of approximately 100,000 jobs annually, yet unemployment for nationals remains high because many of those jobs are filled by expatriates. While oil-exporting countries have the resources to invest into job creation, the existence of oil revenues does not necessarily translate into lower youth unemployment rates. For example, Saudi Arabia, a large exporter of oil, has a youth unemployment rate of 25.9%.

Another problem for both oil importing and exporting countries is that the skills required by private companies do not match those acquired through the vocational and higher education systems. With university graduates remaining unemployed for an average of three years after graduation, both governments and employees must make efforts to lower unemployment rates. Private companies should provide skills guidance while governments must make greater efforts to provide for educational opportunities that match employer needs.

Discussion Questions
1. Do companies operating in the region have a responsibility to create opportunities for employment to nationals or should the government of the respective country be largely responsible?

2. What government programs initiatives would be most effective in eradicating youth unemployment?

3. Should oil-exporting countries assist non-exporting countries in developing youth employment opportunities, to avoid regional disruption?

Food Security and Development

Sources:
The Ghanaian Journal: Ghana-Qatar Talks on Food Security Programme
Bloomberg Businessweek: Ghana, Qatar Plan to Start Joint Agriculture Project Next Year
Trade Arabia: Ghana, Qatar in Food JV Talks

Ghana and Qatar plan to create a joint venture company early next year to produce food for both countries. A pilot project will be created that will cover 50,000 hectares in Ghana. Both parties have agreed to expand the program if the pilot project is successful, which it is projected to be. The type of food that will be grown will be diverse, encompassing fruit, vegetables, cereal and rice.

Qatar is operating a food security program led by the Hassad Food Company to protect it from the same disaster that occurred during the 2008 food price crisis. Although the causes of the food crisis are still not totally clear, it is certain that the crisis was expensive to Qatar. Qatar imports almost all of its food, so Qatar was totally dependent on getting its food from the world market, where prices had greatly increased. Qatar wants to control its own secure source of food.

Ghana is also gaining in this deal. In May, 2010, the Ghana Investment Promotion Centre (GIPC), an agency under the Ghanaian President, said it was seeking investments from Qatar totaling around $700 million to develop the agriculture and natural resources of Ghana. Family farming is the current basis of the Ghanaian farming system, leaving room for modernization under Hassad Food. In addition to providing more demand and developing Ghanaian agriculture, the GIPC is also seeking Qatar’s aid in utilizing Ghana’s oil and metals.

Ghana has rich supplies of oil, gas, and bauxite, a type of aluminum ore. Qatar has expertise in the oil and gas industry and has a strong aluminum industry. Ghana is seen as a country ready to rapidly expand as its natural resources are still underdeveloped. In fact, Ghana seems to be in such a favorable position that the GIPC CEO quipped, “We need to build more five star hotels because we expect a boom.”

Despite the increase in production that will occur because of the project, many local farmers are against Hassad Food’s actions to modernize Ghanaian agriculture. Family farmers will either be co-opted by the incoming food conglomerate or have to face much tougher competition to sell their food on the market as modern, more efficient methods bring lower prices.

Discussion:
1. Ghana is a country rich in natural resources. What is the likelihood Ghana will become less democratic and more elitist (like Middle Eastern nations after discovering abundant natural resources)?
2. Qatar and China are both heavily investing in Africa. Is there a serious prospect of conflict, political or otherwise, between the two nations as a result of their competing interests?
3. Qatar is an Islamic nation. Will Qatar’s greater involvement in Ghana help spread Islam in Ghana and the region?

Fraying U.S. and Israeli ties lead to continued Palestinian poverty

Sources:

CNN: Biden highlights close U.S.-Israeli ties on Middle East trip

UN News Centre: UN-backed Middle East Quartet condemns Israeli plans to expand settlements

New York Times: Conflicting Demands Test Netanyahu

BBC: Ban Ki Moon calls Gaza conditions 'unacceptable'

UPI: Despite rift, Israel to get U.S. C-130s

Jordan Times: Seize the opportunity at hand now, King tells Israeli people

Workers World: Forget Biden’s ‘dignity’ — what about the Palestinians?

The rocky road of the Middle East peace process recently hit another bump when American Vice President Joe Biden visited Israel this month. In the middle of his trip, the Israeli Minister of the Interior made a surprise announcement that he would approve the construction of new houses in East Jerusalem. Many officials were caught off guard, including the Vice President, Secretary of State Clinton, and even Prime Minister Netanyahu. This has strained US-Israeli ties, and is seriously threatening to prevent any further movement on Israel-Palestine peace talks. This might seem like more of the same to many casual observers in the West. But, for people living in the Occupied Palestinian Territories it means continued unemployment and crushing poverty.

American Vice President Biden went to Israel with the intention of jump-starting the moribund peace talks. The trip itself was proceeding according to official protocol with Biden stressing the “close relationship” between the two countries. However, both the trip and the relationship was jarred by a sudden announcement that the Interior had approved a plan to build 1600 new homes in East Jerusalem. Not only did this harm the US – Israel relationship but many suggest that this undermines the entire peace process.

The source of this contention is itself a unique development problem. The ownership of East Jerusalem is disputed. Both Israel and Palestine claim the area as their capital, however it is under the control of Israel. Over time, Israel has taken over more and more Palestine land and homes and has moved in Israeli families. Generally, building new homes is considered a positive step in development, but in this case the new construction has instead served to endanger greater peace and development issues. While the legality of these settlements is disputed by IsraelPalestine, it is worth noting that the global community generally believes they violate international law, as evidenced by United Nations Secretary General Ban Ki-moon who recently called them illegal.

Secretary General Ban Ki-moon has also discussed the conditions in Palestine. He described conditions in Gaza as "unacceptable, unsustainable." Poverty is the norm, not the exception as a result of the conflict with Israel. Jordan’s King Abdullah has recently tied the continued building of settlements to the peace process and noted that failure could result in future violence. While this poverty continues, it is worth noting that United States aid to Israel continues at around $3 billion a year.

The strained relationship between the United States and Israel is a concern. Different administrations in both countries will have different opinions about how to proceed towards peace. However, until real progress is made, it appears that poverty will be the status quo in Palestine.

Discussion:

1) Should the United States stress development and human rights issues more in its relationship with Israel?

2) Considering that the road to peace appears long, what immediate steps can the United States take to help humanitarian development in the Palestinian Territories?

Middle East and Maghreb Countries Pitch in to help Haiti

Sources:

New York Times Online: Haitian Lawmakers Seek to Delay Elections

Los Angeles Times: Saudi Arabia: Unlike Qatar, Iran and Jordan, Kingdom Fails to Cough Up Haiti Cash

Asharq Alawsat: Haiti - Gaza

Haaretz: After two weeks, Israel team winds down Haiti mission

ThePeoplesVoice.Com: Focus on Israel, Harvesting Haitian Organs

The Jewish Week: The Story of Haiti is Gaza

The Examiner: The Haitian Earthquake and the Middle East

The Middle East is rarely in the news as a bastion of international philanthropic giving. A region of the world that often makes headlines in the West for violence and bombing, it might be forgiven for spending money on its own development. However, the January 12^th earthquake in Haiti has brought an outpouring of donations from around the world and the Middle East is no exception. From generous financial aid to on-the-ground medical assistance, these countries have impressed many around the world.

Many have said that the biggest gift has come from Israel. It quickly sent a large medical contingent on January 14^th that included “40 doctors, 25 nurses, paramedics, a pharmacy, a children's ward, a radiology department, an intensive care unit, an internal department and a maternity ward (able to) treat approximately 500 patients each day.” So impressive is this outpouring of medical expertise that CBS news called it the “Rolls-Royce” of rescue operations. The Israeli field hospital provided care for about 1,000 people, operated on 300, and delivered 16 babies. After two weeks of operations, they decided that the majority of their work was done and closed up the camp while leaving most of the supplies behind. So grateful was one mother who gave birth at the field hospital that she named her child “Israel.” The quick and thorough response drew praise from many around the world. However, not everyone has greeted this humanitarian gesture with enthusiasm. Many critics of Israel have drawn parallels between its concern for health and safety in Haiti and how this contrasts sharply with its policies in Gaza where many suffer daily. Other critics who populate the fringe suggest that Israel has nefarious purposes in harvesting organs from those it operates on. These detractors are loud in their own circles, but the refrain has not been taken up by most of the popular press.

The humanitarian response from other countries in the area has been overshadowed by the Israeli effort. Initial offerings from some countries were underwhelming. Early in the response Saudi Arabia sent only its condolences. After international attention was highly critical of this approach, the kingdom gave $50 million. Other countries also gave generously. Turkey, Morocco, and Bahrain each pledged $1 million. Iran, Jordan, Kuwait, Lebanon, Qatar and Syria have all sent planes full of relief supplies. While none of these countries have given as generously as the United States as net overall gift or as much as Canada as measured per capita, their contributions are all important and welcomed by the people of Haiti.

In the immediate aftermath of a tragedy, those people who are affected quickly need help. It is unlikely that those suffering are concerned with where aid or pledged aid to rebuild comes from. What is clear is that some countries feel a much stronger need, or ability, to give. While many have traditionally felt that Middle Eastern and Maghreb countries have not been generous, their response to the earthquake in Haiti has disproven this stereotype.

Discussion:

1) Some reports have suggested celebrities and countries are using the Haiti quake to “rescue” their reputations. How can they both take these humanitarian actions, and avoid this accusation?

2) How can humanitarian operations such as the one in Haiti help improve international relations?

Egypt Heightens Security Along Gaza Border

Sources

Al-Jazeera: Egypt Opens Gaza Border Crossing
Al-Jazeera: Activists Reject Egypt’s Gaza Offer

Al-Jazeera: Egypt Defends Gaza Wall

Asharq Alawsat: Work on Egypt-Gaza Steel Wall Moving Forward

In a move that has raised concerns by many human rights experts, Egypt has increased security along its border with Gaza. The Rafah crossing between Egypt and Gaza has long been a contentious area. It is a crucial location because it is the only Gaza border not controlled by Israel. Most tunnels used for the smuggling of goods run though this border with tacit acceptance by the Egyptian government. Above ground the crossing is often closed. In January two events refocused international attention on this border. First, two humanitarian aid convoys were launched on the anniversary of Israel’s Cast Lead offensive into the Gaza territory. Second, the existence of an underground wall being built by Egypt through the Rafah crossing was publically announced.

The Gaza Freedom March (GFM) is an international group whose mission is to bring attention to the plight of Palestinians living in the occupied territory. Over 1,300 people came together in Cairo for a series of protests. Despite initial concern that the Egyptian government would not allow demonstrations to happen, the GFM successfully held events outside the United Nations, Israeli, American, and French embassies. The group had initially planned to travel en masse to Gaza to deliver humanitarian supplies, but the Egyptian authorities cited the “security reasons and a ‘sensitive situation’” to prevent the entire group from completing the trip. Instead, they offered to allow 100 representatives to go though the crossing. The GFM initially rejected this agreement, but eventually went along with it. While the groups demands were not fully met, they still felt a sense of accomplishment. Even holding a single protest in police state like Egypt can be a major achievement. The group also signed and released the Cairo Declaration, which called for boycotts, divestment, and sanctions against Israel until it follows international law. These actions are similar to the ones the international community used against South Africa during the apartheid years.

At the same time as the GFM protests, another group of activists tried to reach Palestine by another route. The Viva Palestina group wanted to use the Jordanian port of Aqaba. However, officials persuaded the group to go though the Syrian port of Latakia to El Arish in Egypt then to Gaza via the Rafah crossing. This group had intended to bring 210 truckloads of humanitarian supplies to the people of Gaza. Although there was some conflict with Egyptian authorities during the trip, it was in the end successful.

The second major action was the discovery that Egypt is building a major wall along the Rafah crossing. This is not a wall in the typical meaning of the word, it is underground and meant to disrupt the tunnels that bring in supplies to Gaza. All types of items are brought into the territory from fresh produce, to automobiles, to people. According to the mayor of Rafah there are around 400 tunnels that employ about 15,000 people and bring in around 1 million dollars of goods per day. The wall will run a reported 10 or 11 kilometers long and extend up to 18 meters deep. It is made of thick steel and is reported to be impossible to burn though with conventional welding torches. While work on the wall is thought to have started in November, it was not until recently that the public was made aware of it.

In the short term, it seems unlikely that Egypt will open the Rafah crossing permanently, even in a limited fashion. At the same time, Israel has done nothing to suggest it will ease its restrictions on Gaza. For the people of Gaza, the international attention that these events bring is comforting, but does not bring them closer to a resolution for their problems.

Discussion Questions
1) How have international NGOs improved the plight of the people of Gaza? In what ways have they helped bring international attention to this situation?
2) In what ways is the wall Egypt is building like the one that Israel has constructed in the West Bank? How is it different?