Issue 1553 • June 2010

vs AIPAC
A geopolitical war
is on for the soul of
Jewish America, and
it is asymmetrical,
writes Stephen Glain

06

9 771319 087105
The Majalla Issue 1553

The Art of War On Politics Candid Coversations

Since 2008, it been suggested that Obama and Arab-Israeli Peace: A new The Majalla talks to Othman Al-Omeir
Al-Qaeda was on the decline, but what muscular posture? Fawaz Gerges – a Saudi journalist and publisher, who
is the real state of the group and its evaluates the US’s stance on the has revolutionized the role of media in
affiliates? Rashmi Singh investigates Arab-Israeli peace process the Middle East

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TM1553_02-03_Ad.indd 2 7/6/10 07:19:36
TM1553_02-03_Ad.indd 3 7/6/10 07:19:42
 • EDITORIAL

Established in 1987 by
Prince Ahmad Bin Salman Bin Abdel Aziz

Al-Majalla Established by
Hisham and Ali Hafez
Editor-in-Chief
Adel Al Toraifi
Senior Editor
Manuel Almeida
Editors
Paula Mejia
Wessam Sherif
Jacqueline Shoen
Editorial Secretary
Jan Singfield
New Media Development Officer
Markus Milligan

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Disclaimer
The 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 role of the US in the Middle East is a widely debated issue.
Al Majalla © 2009 HH Saudi Research and Marketing (UK) Limited. This is especially true for the Jewish community in the US,
All rights reserved. Niether this publication nor any part of it may be who for the past decades has been represented by the AIPAC,
reproduced, stored in a retrieval system, or transmitted in any form or by
any means, electronic, mechanical photocopying, recording or otherwise, or the American-Israel Political Affairs committee. However,
without prior permission of HH Saudi Research and AIPAC is not the only Jewish lobby in town any more. J Street,
Marketing (UK) Limited. For digital subscription inquiries please visit
the moderate alternative, has grown since its inception as a
www.majalla.com/subscriptions
force to be reckoned with in American politics. In this issue
Steven Glain discusses how the differences between these two
lobbies, and their respective influence on politics, might impact
the US’s foreign policy in the Middle East.
This issue also brings to you an interview with Saudi liberal
and media mogul, Othman Al-Omeir. A controversial, albeit
deeply influential figure in the region, Al-Omeir answers some
of the most pressing questions concerning his career and the
role of the media in the Middle East more generally.
London Office Address
HH Saudi Research & Marketing (UK) Limited In addition to these articles, The Majalla has invited Fawaz
Arab Press House 182-184 High Holborn, Gerges, author of America and Political Islam: Clash of
LONDON WC1V 7AP DDI: +44 (0)20 7539
2335/2337, Tel.: +44 (0)20 7821 8181,
Cultures Or Clash of Interests, to evaluate the US’s stance
Fax: +(0)20 7831 2310 on the Arab-Israeli peace process. In Obama and Arab-
E-Mail: editorial@majalla.com Israeli Peace: A new muscular posture?, Gerges explains the
Advertising reasons behind the current status quo.
For advertisement, sponsorship and digital edition, please contact: We invite you to read these articles and much more on
Mr. Wael Al Fayez
our website at Majalla.com/en. As always, we welcome and
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Cover image logos © J Street & AIPAC Adel Al Toraifi,

Editor-in-Chief

TM1553_04-05_Editorial.indd 4 7/6/10 07:20:14

 Contributors
Stephen Glain
Stephen Glain is a freelance journalist
and author based in Washington DC.
In 1991, he joined the Wall Street
Journal, which assigned him to cover
South Korea. He remained as a foreign
correspondent for WST for the next
decade, covering Asia and the Middle
East. Glain is also a former Middle East
correspondent for Newsweek. He is
the author of the book Dreaming of Damascus: Arab Voices
in a Region of Turmoil (John Murray, UK) and its updated,
US edition, published under the title Mullahs, Merchants
and Militants: The Economic Collapse of the Arab World (St.
Martin’s Press), was named the best book of 2004 by online
magazine The Globalist. His articles on US foreign policy, East
Asia, and the Arab world have appeared in The New Republic,
The Atlantic Monthly, The Nation, the Financial Times, Gourmet
Magazine, Smithsonian Magazine, Institutional Investor, The
Globalist, and Survival. Glain is currently writing a book about
the militarization of US Foreign Policy.

Christoph Meyer
Chrisoph Meyer is senior lecturer in
European studies at King’s College,
London. His research focuses mainly
on European integration, EU security
and defense policy; and early warning
and conflict prevention. He has
provided advice to the European
Parliament and the European
Commission and leads the research
group Foresight: Early Warning and Conflict Prevention.
Meyer holds a MPhil and a PhD from Cambridge University.

Rashmi Singh
Rashmi Singh is a lecturer in terrorism
studies at the Centre for the Study
of Terrorism and Political Violence,
University of St. Andrews, Scotland.
Her research focuses on terrorism,
suicide bombing, ethics of war and
political violence. Singh holds a History
degree from New Delhi University, and
a PhD from the Department of International Relations of the
London School of Economics and Political Science.

Edward Bowles
Edward Bowles is Head of Public Affairs
for Europe at Standard Chartered Bank.
He joined Standard Chartered Bank in
2007, after 5 years at the UK Ministry
of Justice, where he was Chief of Staff
to two Government Ministers and the
Permanent Secretary. He qualified as a
Barrister in 1993 and also holds an MBA
from Imperial College, London.

Issue 1553 • June 2010 5

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 • CONTENTS

50

28
32

10
6

TM1553_06-07_Contents.indd 6 7/6/10 08:17:42

 Contents
Quotes of the Month 8
The Art of War 10
• The Real State of Play:
Al-Qaeda and its Affiliates
• An Inconsistent Message
• Divide and Conquer: Sectarian Violence in Egypt

On Politics 18
• Obama and Arab-Israeli Peace:
A new muscular posture?
• Just What the Doctor Ordered:
Iyad Allawi's Remedy
• More Outward, but Less Southward-Looking:
The EU’s Neighborhood Policy and the
Maghreb countries

J Street vs AIPAC 28
In the two years since its launch, J Street has
created an air pocket where liberal Jews can
express themselves in the otherwise stultified
debate about Israel and America’s support of it

The Wealth of Nations 32

• Stay the Course: Financial Reform
in Saudi Arabia
• Trouble in Euroland
• Banking in the Future
18 • Trading with Iran: A Closer Look
at the Economics Behind the Politics
• News Behind the Graph

The Human Condition 44

• One with Nature
• Playing the Identity Card

A Thousand Words 48
Candid Conversations 50
• Baiting Khamenei
• The Murdoch of the Middle East

Country Brief 56
The Critics 58
The Final Word 62

TM1553_06-07_Contents.indd 7 7/6/10 08:17:47

 • QUOTES OF THE MONTH

Quotes of the Month Images © Getty Images

“We are reaffirming “While this is a major burden

our shared goal to on me, and indeed the entire
disrupt, dismantle nation, we must - in the midst
and defeat Al of such great adversity -
Qaeda and its continue to gain our collective
extremist allies” efforts towards upholding the
President Obama during values which our departed
Hamid Karzai’s visit to
Washington
leader represented”
Nigeria’s new President Goodluck Jonathan after the
passing of President Yar’Adua
“This is the largest, most
comprehensive spill response “We will not allow the
mounted in the history of the United country to fall into
States or the oil and gas industry by bankruptcy We
probably two orders of magnitude” will not fail to
Tony Hayward, the CEO of BP
live up to our
“It's a new kind of responsibilities
government, a radical, because of
reforming government political cost”
Greek Prime Minister
where it needs to Papandreou told parliament
be and a source of ahead of the vote to pass an
austerity package
reassurance and
stability at a time of
great uncertainty in our “It is clear that this was a terrorist
country too” plot aimed at murdering Americans
Lib Dem leader Nick Clegg regarding the first in one of the busiest
Conservative Lib Dem power-sharing coalition in the UK places in the
country”
“People are arrested for all sorts of US Attorney General
Eric Holder after
reasons. We don't feel these new
the arrest of the
statements provide any safety blanket” Pakistani-American
argued activist Soha Abdelait, regarding the responsible for
Egyptian government’s decision to extend the the failed car bomb
emergency law that has been in place since 1981 attempt in
for another two years Times Square

TM1553_08_Quotes of the Month.indd 8 7/6/10 07:22:36

TM1553_09_Ad.indd 9 7/6/10 07:23:36
 • THE ART OF WAR

The Real
State of Play
Al-Qaeda and its Affiliates

Since mid-2008 various intelligence and security

analysts have suggested that Al-Qaeda was on
the decline. While such arguments have been
compelling, the attacks in December 2009
suggest that the organization’s operational
capability and aspirations remain intact. This, of
course, begs the question: What is the real state
of Al Qaeda and its affiliates?

Rashmi Singh

O
n the 2nd of January 2010 US President Barack
Obama made a statement that sounded eerily
like George W. Bush’s in both tone and content.
Obama, in his weekly address from the White
House, outlined the steps his administration had taken to pro-
tect the safety and security of the American people, empha-
sizing his unwavering commitment to “disrupt, dismantle and
defeat Al-Qaeda and its extremist allies.” President Obama’s
statement was a response to two bombings that occurred less
than a week apart in December 2009. The first was the at-
tempted bombing of the Detroit-bound Northwest Airlines
Image © Getty Images

Flight 253 by the Nigerian, Umar Farouk Abdulmutallab. The

second was the successful suicide attack by Khalil Abu Mulal
Al-Balawi, a Jordanian doctor, in Khost, Afghanistan. Embar-
rassingly, Al-Balawi, who was sent by the CIA to Pakistan in or-
der to infiltrate Al-Qaeda’s top leadership, killed seven Ameri-
cans and a Jordanian intelligence officer along with himself
and is now believed to have been working as a triple-agent for
the ISI, CIA and Al-Qaeda.
These two attacks have once again raised questions about
the state of Al-Qaeda and its allies, both thought to be in de-
cline since early to mid-2008. In 2009 for instance, U.S. officials
consistently emphasized the group’s unprecedented losses of
mid-level to senior commanders as a direct result of concerted
drone attacks in Pakistan’s Federally Administered Tribal Areas
(FETA). Analysts believed that the decimation of this leader-
ship, which included leaders like Biatullah Mehsud who were
evidently instrumental in providing Al-Qaeda a safe haven in
the region, had seriously damaged the organization and ham-
pered its ability to effectively target the West.
However, Osama bin Laden’s recent audio tape, “From Osa-
ma to Obama,” aired in late January on Al-Jazeera, not only
hailed Abdulmutallab as a hero but also claimed that Al-Qaeda
was responsible for the attempted Christmas bombing. Given
that Al-Qaeda in the Arabian Peninsula (AQAP) had already
claimed responsibility for both orchestrating the attack and
training Abdulmutallab, some US intelligence officials believe
that this statement is a poor attempt by Bin Laden, who has
been relegated to a mere figurehead, to prove that he directly
commands the organization’s many off-shoots.
The accuracy of this claim is questionable, considering these are
the same analysts who had announced Al-Qaeda’s sharp decline.
Is Al-Qaeda really on the wane or does it still possess the ability to
threaten and target the West and its interests? Any attempts to an-
swer such questions must begin with an understanding of the true
nature of what is a resilient and adaptable organization.
Steve Coll, in a testimony before the US House Armed Ser-
vices Committee on 27 January 2010, categorized Al-Qaeda
as being “an organization, a network, a movement or ide-
ology, and a global brand.” Indeed, it is this very elasticity
that makes Al-Qaeda as virulent and dangerous as it is to-
day. The Al-Qaeda core has been characterized by a rigor-
ous consistency in its function and goals. From its conception,
over 21 years ago to date, the Al-Qaeda core has held true
to its bylaws, committee structures and rules for succession.
Its foundational leaders, bin Laden and Ayman Al-Zawahiri,
have consistently lead the organization in its original efforts to
inspire a wider global jihad by bringing together like-minded

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At the turn of this century for
instance, Al-Qaeda’s critical power
center was located in Southeast
Asia, while in 2005 it held great
sway in North Africa and Iraq
individuals in a joint struggle against Western dominance and
apostate regimes. While the nature of this deliberately con-
structed network has varied over time, the original aim of
igniting a global jihad has remained at the heart of both the
organization’s ideology and its methodology.
The Al-Qaeda network too has changed both in its shape
and its geographical area of influence as the “core” has cun-
ningly exploited emerging security vacuums but also as the for-
tunes of its many affiliated groups have waxed and waned. At
the turn of this century for instance, Al-Qaeda’s critical power
center was located in Southeast Asia, while in 2005 it held great
sway in North Africa and Iraq. Today, it is strongest in Yemen,
Issue 1553 • June 2010
TM1553_10-16_The Art of War.indd 11
Somalia and Pakistan. While the core’s relationship with each
regional group varies considerably it is amply clear that these
groups are either core-related or core-inspired.
“Core-related” groups are those that have taken a bayat (an
oath of allegiance) to bin Laden that has been acknowledged by
the higher echelons of the leadership, as in the case of Al-Qaeda
in Iraq (AQI), Al-Qaeda in the Islamic Maghreb (AQIM), or in-
deed Al-Qaeda in the Arabian Peninsula (AQAP). Then there
are those groups that may be related but have not taken a bayat,
such as Al-Shabab in Somalia, as well as those that may have
historical connections to Al-Qaeda, such as the Pakistan-based
Laskhar-e-Taiba. Theses groups not only shared training camps
with Al-Qaeda in Afghanistan, but also sent its fighters to as-
sist Al-Qaeda in Iraq. On the whole, core-related groups tend
to have had some form of contact with the core, either through
training-camps, funding or sometimes even joint operations.
“Core-inspired” groups, on the other hand, tend to lack this
contact and are often self-taught and self-radicalized. This is in
itself a testament to the power of Al-Qaeda’s ideology, which has
emerged as a global brand primarily due to the organization’s sys-
tematic propaganda campaign. In an intercepted letter from Al-
Zawahiri to Abu Musab Al-Zarqawi in 2005 the former declared:
“More than half the battle is taking place on the battlefield of the
media. We are in a media race for hearts and minds.”
Indeed, Al-Qaeda has successfully distributed its ideology
to a global audience through the Internet. As a result, while
individual recruits may never meet any core leaders, they are
actively inspired, radicalized and recruited in any number of
settings. It is precisely this media savvyness that makes Al-Qae-
da so resilient as it allows the organization’s ideology of trans-
national violence to be effectively communicated to multiple
disaffected audiences around the globe.
This all brings us back to the key question: Given these multi-
ple manifestations what really is the state of Al-Qaeda? Perhaps
most crucially, does it or any of its arms retain the capacity to
inflict serious damage upon their perceived enemies? It is clear
that Al-Qaeda and Al-Qaeda-related groups remain commit-
ted to striking the Western world and targeting what they see as
apostate regimes. But it is also clear that there has been a sharp
decline in political and ideological support for Al-Qaeda and
its ideology in the Muslim world.
A great part of this drop is rooted in the organization’s in-
discriminate use of violence against Muslims and non-Muslims
alike. Yet, despite this declining support, and irrespective of the
many multi-faceted, multi-pronged counter-terrorism strategies
being adopted by various countries across the Middle East and
the West, as long as Al-Qaeda’s ideology holds sway with even
the smallest fraction of individuals that it can successfully recruit
and train, it will retain the potential to inflict serious damage to
life and property. This suggests that, as in the past, while there
may be shifts in regional focus, and ebbs and flows in operational
ability, as long as recruits are willing to travel to safe havens and
security vacuums across the world, Al-Qaeda will endure. Per-
haps then it is time we took Zawahiri’s words more seriously and
made concerted efforts to win some hearts and minds.
Rashmi Singh - Lecturer in Terrorism Studies at the Centre for the Study of
Terrorism and Political Violence, University of St. Andrews.
This article was first published in The Majalla 22 April 2010
11
7/6/10 07:27:49
 • THE ART OF WAR

There are good reasons to be skeptical about the

START II signed by the US and Russia. The message
it sends to Iran that the international community is
moving towards disarmament and non-proliferation
is deeply flawed. While non-proliferation rules are
seen as instrumental to pull off other strategic goals,
and not as an important end in themselves, nuclear
security will be much harder to achieve.

Manuel Almeida

O
n 8 April, the US and Russia signed the Strategic
Arms Reduction Treaty (START II) by which both
countries committed to curb their nuclear arsenals
by about a third. Although widely praised, there
are good reasons to be skeptical about the treaty. First and fore-
most, because “it leaves enough nuclear warheads for the US
and Russia to annihilate each other about one hundred times,”
as the BBC reporter covering the event bluntly put it. As it be-
came obvious, the main purpose was to send Iran a message that
the world is moving towards non-proliferation, while Iran (and
North Korea) are heading in the opposite direction. Unfortu-
nately for world security, this message is deeply inconsistent.
Historical contingencies have determined today’s institu-
tionalized system whereby the five permanent members of the
United Nations Security Council are the world’s official nucle-
ar- armed states. Other countries in the past have pursued this
objective, only to be dissuaded one way or another from doing
so, like South Africa and Libya. In the cases of India, Pakistan
and Israel, they achieved the unofficial status of nuclear-armed
powers and have all declined to sign the Non-Proliferation
Treaty (NPT). North Korea, who signed the NPT in 1985, gave
notice of withdrawal from the treaty in 2003.
It is highly unlikely that the historical nuclear-armed countries
will cease to be so in the near- or mid-term future, and the current
system of international rules about nuclear proliferation expresses
this notion. Both IAEA policies and the NPT are consistent with
the acknowledgement that, once a nuclear power, forever a nu-
clear power. And so, the logic goes, the best way to deal with the
issue is by trusting the nuclear powers and at the same time having
clear rules to supervise their nuclear activities. The problems come
when exceptions are made, because they imply that there are good
exceptions and bad exceptions to the rule.
The pursuit of other strategic goals often places concerns
with nuclear proliferation on the back burner. This was the case
with the nuclear deal signed between India and the US in 2006,
which was approved by the US Congress in 2008. This deal lift-
ed an American moratorium on nuclear technology assistance
and exports to India, which dated back more than three decades.
Although part of the agreement requires that India is monitored
by inspectors from the IAEA, it does not cover military nuclear
facilities. As an article published recently in The Majalla noted,
“India is now eligible to buy dual-use nuclear technology and
Image © Getty Images

equipment to enrich uranium or reprocess plutonium, all of

which can be used to manufacture nuclear weapons.”
A myriad of goals were behind the US’s decision to sign this
deal with India. Most important was the desire to boost its stra-
tegic partnership with India – a counterbalance to China’s rise

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 An
in Asia. It was also considered a significant step to meet India’s
rising energy demands, and thus ease the global quest for oil and
gas. And this policy cannot be attributed to the recklessness of
the Bush Administration. In the origin of the US-India deal was

Inconsistent
the Hyde Act, which modified the requirements of Section 123
of the US Atomic Energy Act to permit nuclear cooperation
with India. The Act had clear bipartisan support and was passed

Message
in both the House of Representatives and in the Senate with an
overwhelming number of votes in favor. Less often noted than
the other goals behind the Hyde Act is that one of the conditions
of the deal was India’s alignment with the US positions on Iran.
The exceptions do not end with the deal the US signed with
India. Israel’s Prime Minister Benjamin Netanyahu did not par-
ticipate in the nuclear security summit held in Washington. With
the recent tensions in the US-Israel bilateral relationship, ana-
lysts rushed to remind us that whenever America turns left and
Israel turns right, relations go sour between the two countries.
Yet, Netanyahu’s absence had nothing to do with these tensions.
Never in history has an Israeli prime minister participated in an
international summit about nuclear issues. And there was no
reason why things should be different this time, especially when
there were clear signs that a few countries, such as Egypt and
Turkey, were planning to pressure Israel to sign the NPT.

The pursuit of other strategic

goals often places concerns with
nuclear proliferation on the back
burner. This was the case with the
nuclear deal signed between India
and the US in 2006
What is sold as sound strategic thinking by US policy-mak-
ers is in fact lack of vision in disguise, which disregards, for
example, the ambitions of jihadi militancy to obtain nuclear
materials. One of the central issues of debate in the Washing-
ton summit on nuclear security was precisely the threat of ter-
rorist groups obtaining nuclear materials. Yet, the instrumental
stance adopted in Washington towards the issue of prolifera-
tion is highly counter-productive when it comes to what should
be the utmost priority – curbing nuclear proliferation.
The message that this highly selective policy of determining
who is allowed to be in breach of non-proliferation rules and
who is not is an invitation for Iran and Pakistan to pursue their
nuclear ambitions. The result is an Iran ever closer to achieving
nuclear-armed capacity. Pakistan, who feels India is its biggest
threat, is developing a second generation of nuclear weapons
with China’s assistance and in response to Washington’s carte
blanche given to India. Why shouldn’t they pursue their nu-
clear ambitions? India is allowed to choose when and which
of its reactors are inspected, and it is making new weapons-
grade plutonium. Israel is allowed to have a few dozen nuclear
warheads free from international scrutiny. Applying one rule
for friends and another rule for foes does not work. This is not
about something harmless like a game of hide-and-seek; this is
about nuclear weapons.

This article was first published in The Majalla 26 April 2010

Issue 1553 • June 2010 13

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 • THE ART OF WAR

Divide and Conquer

Sectarian Violence in Egypt

Sectarian tension in Egypt has been on the rise, creating an internal challenge to the peace and security
of Egyptian society. Not only does it present an internal obstacle, however, it also stands to be exploited
by radical forces in the region, particularly Iran, vying to elevate their status.

Elizabeth Iskander and Minas Monir

T
he dramatic shooting that took place outside a
church in Nag Hammadi, a village in rural Upper
Egypt, on 6 January briefly shone a spotlight on
Egypt’s problem with communal violence. This was
not an isolated incident. In fact, sectarianism represents a deep-
seated crisis, threatening Egyptian national unity from within.
Regardless of the causes of these tensions, sectarian inci-
dents have become more than simply an internal challenge
to the peace and security of Egyptian society. Sectarian-
ism is a weakness that can be exploited – indeed, perhaps
already is – by radical forces in the region as part of the
struggle to rebalance power in the Middle East and reorient
its ideological direction.
The potential of outside forces to exacerbate sectarian
tensions was clearly illustrated in Iraq after 2003. Iran has
Image © Getty Images
been one of the main protagonists in the sectarian violence
in Iraq and the Iranian government has made no secret of
its ambition to achieve regional hegemony. Gaining sway in
Shia-majority Iraq, which, under Saddam Hussein, was Iran’s
main enemy in the region, has removed an essential check on
Iranian ambitions.
Iran has exploited the shifting geopolitical climate in the
Middle East through a strategy of managed destabilization.
This enables Iran to increase its relative strength and influence
in the region. Unstable states are not able to compete in the
rebalancing of regional power relations. This prompted Abdul-
lah Kamal, the editor of the Egyptian newspaper Roz Al-Yusef
and prominent member of the ruling National Democratic
Party (NDP), to claim in early 2009 that Iran represents a big-
ger threat to Egyptian national security than Israel.

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 Undermining the Egyptian Government
Until now, Iran has focused on building its influence in Af-
ghanistan and Iraq and constructing alliances with Turkey and
Syria. Through its proxies Tehran stretches its hand towards
Lebanon and Palestine. However, beyond this, Tehran’s ambi-
tions come up against Saudi Arabia and Egypt.
We are already witnessing what many analysts describe as a
proxy war between Saudi Arabia and Iran in Yemen. Iran is
allegedly using the Houthis, a Yemeni minority group, to stir
up internal conflict. Similarly, those who would exploit tensions
between Muslims and Christians in Egypt are not necessarily
targeting the Copts as such, but are using sectarian conflict to
undermine the social order and the government that relies on
it to remain in power.
Although Egypt’s position on the international stage is not
as obviously pivotal as in the past, Egypt is strategically cru-
cial to regional geopolitics and so retains considerable stature.
Egypt is also an important player in the peace process and
maintains good relations with America. Consequently, Egypt
continues to act as one of the principal theatres for Middle
East politics and is therefore an obstacle to the extension of
Iran’s aspirations for military and political dominance in the
Middle East.
This clashes with Iran’s sense of its own stature in the region.
Iran would like to play a key role as mediator in the Arab-
Israeli conflict so it can market itself as the champion of the
Palestinian people. This would give Tehran credibility domesti-
cally and in the Arab world. It would also force the West to take
Iran seriously as a diplomatic power on the world stage.
The External Dynamic
In April 2009, the so-called Hezbollah cell was discovered in
the Sinai. Nasrallah himself admitted that the cell was estab-
lished to provide logistical support to Hamas, but not to un-
dertake attacks in the area. It was later alleged that there were
links between the Hezbollah cell and a group referred to as
El-Zeitoun Organization that is thought to have carried out a
number of attacks on Christians in El-Zeitoun area of Cairo,
including a bomb attack on a the Church of the Virgin Mary
on 11 May 2009.
During the trial, the investigations of the public prosecutor
revealed that the organization’s leader was a Hamas member
named Tamer Moses who had received a group of 25 men
at training camps in Gaza. The group is also thought to have
been financed by Hamas supporter, Mohammed Abdel-Ati,
from within Egypt.
It was further reported that the design and materials of the
improvised explosive device used in the attack on the church
were the same as those seized in raids carried out on members
of the Hezbollah cell. This suggests that there may be coop-
eration between Hamas and Hezbollah, Iran’s key proxies, to
target Egyptian social stability.
Iran and the Muslim Brotherhood
Proxies infiltrating Egypt from outside are dangerous but
they cannot have the impact of a home-grown group aligned
with Iran. Iran’s clear support for Hamas demonstrates that
the Sunni-Shia divide is not a barrier to cooperation when it
is expedient for undermining a secular government. Likewise,

The Muslim Brotherhood

The Muslim Brotherhood, or the Al-Ikwhan Al-
Muslimun, is a transnational Sunni movement with
a political approach to Islam. It is also a significant
opposition organization in various Arab countries,
especially Egypt where it controls one fifth of the
seats in parliament. The Brotherhood has branches in
approximately 70 countries.
The Muslim Brotherhood was founded in 1928 after
the fall of the Ottoman Empire by Hassan Al-Banna,
an Egyptian schoolteacher. Since its founding, the
organization’s motto has been “Allah is our objective.
The Prophet is our leader. Qur'an is our law. Jihad
is our way. Dying in the way of Allah is our highest
hope.” This motto explains the organization’s pan-
Islamic objective to make the Koran the sole reference
for order in the Muslim family, community and state
eventually leading to the creation of a unified caliphate.
The organization was created in response to
Islam’s loss of social dominance, which Al-Banna
believed was a result of Western influence. The
Muslim Brotherhood began as a youth organization
aimed at moral and social reform in Egypt, but later
expanded its political involvement as the Party of the
Image © Getty Images

Muslim Brotherhood, Hizb Al-Ikhwan Al-Muslimoon.

The Muslim Brotherhood, however, has since been
banned in Egypt.

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 • THE ART OF WAR
80 Years of Politics
1928 Founded by Hassan Al-Banna as a youth
organization.
1936 The Muslim Brotherhood takes a pro-Arab position
following Anglo-Egyptian treaty and the start of the
Palestinian uprising against Zion settlements in Palestine
1948 Brothers join the Palestinian side in the war
against the Zionists of Palestine. In December of that
year the Muslim Brotherhood is banned by Egyptian
authorities.
1949 Hassan Al-Banna is killed in Cairo.
1950 The Brotherhood is legalized as a religious body.
1951 Hassan Islam Al-Hudaibi, a moderate, is elected
leader of the Brotherhood.
1952 Due to their cooperation with revolutionaries,
the Brotherhood is permitted to operate following the
coup by the Revolutionary Command Council (RCC).
1954 As a result of differences concerning the role
of Sharia versus secular law, the Brotherhood is
banned again. Following the ban, a member of
the Brotherhood, Abdul Munim Abdul Rauf tries to
assassinate Nasser. The failed assassination attempt
leads to the execution of six members along with
the arrest of 4,000. Many remaining members flee to
Syria, Jordan, Saudi Arabia and Lebanon.
1964 A general amnesty is granted to imprisoned
members. Nasser wants them to join the newly
formed government party, the Arab Socialist Union,
to ward off the threat of communism. The conditional
cooperation policy does not succeed, and Nasser is
exposed to three more assassination attempts.
1966 The top leaders of the Brotherhood are
executed, and many other members imprisoned.
1970 After Nasser’s death, Anwar Al-Sadat releases
imprisoned members.
1976 The Muslim Brotherhood is not allowed to
participate in the general elections, leading many brothers
to run as independent candidates or as members of the
ruling Arab Socialist Party, gaining 15 seats.
1979 The Brotherhood opposes the peace agreement
between Egypt and Israel.
1990 The Brotherhood boycotts the elections,
protesting government controls at the polls.
2005 The Muslim Brotherhood is prevented from
running in parliamentary elections as a political party.
But their candidates, running as independents, win 88
seats, making them the largest opposition group.
16
TM1553_10-16_The Art of War.indd 16
there is no barrier to an Iran-Brotherhood alliance. In fact,
according to Yusef Nada, the Brotherhood’s spokesman, the
close relationship between the Brotherhood and Iran was dem-
onstrated when the group acted as interlocutor between Saudi
Arabia and Iran in 1993.
This link is important because the Brotherhood challeng-
es the political status quo as well as good relations between
Egypt’s religious communities. Egyptian Christians fear that a
Brotherhood-led government would return their official status
to that of dhimmi.
Both Iran and the Muslim Brotherhood have a long history
of confrontation with the Egyptian state. The will and testa-
ment of Ayatollah Ruhollah Khomeini specifically referred to
President Hosni Mubarak as a criminal and an enemy. The
Iran-Brotherhood relationship thus operates on the basis that
the enemy of an enemy has become an ally. Consequently,
when the Hezbollah cell was uncovered it was Islamist lawyers
connected with the Brotherhood, such as Montaser Al-Zayat,
who defended those accused.
Addressing Egypt’s Vulnerability
To oppose such challenges to stability and security, Egypt needs
to undertake vigorous and comprehensive counter-measures.
At the domestic level, Egypt should begin to honestly and pub-
licly address the causes of sectarian tensions. An open debate
is essential so the problem cannot be exploited at the expense
of national security. A culture of equal citizenship must be en-
shrined at the top and developed simultaneously at the grass
roots through the implementation of a comprehensive legal,
media and educational package of measures.
At the international level there are several steps that could be
taken. Firstly, Egypt should use to its advantage that sense of
political weight that the country still has. Egypt should stand up
and take a leading role in the affairs of the region by establish-
ing itself as a key line of defense against Iranian expansionism.
By promoting itself in this role, Egypt could garner the sup-
port of the international community and the Arab States. One
mechanism would be to establish a regional security forum that
would create an Arab bloc to cooperate with the West in ad-
dressing the challenge of Iran and to prevent nuclear prolifera-
tion in the region.
Particular efforts should be mounted to improve relations
with Syria and thus undermine Iran’s “Northern Alliance.”
Such cooperation is essential as the international community
struggles to find a united stance on the Iranian nuclear file and
the proliferation of its proxies. Together, these steps could en-
able Egypt to address both the internal and external aspects of
this challenge to its national security.
Elizabeth Iskander – Director of the Next Century Foundation's research
programme. A Middle East analyst and writer based in London, she has
published in both the English and Arabic-language media and has a par-
ticular interest in the politics, law and society of Egypt and Iran. She is
also currently a Ph.D. candidate in Politics and International Studies at
the University of Cambridge.
Minas Monir – Cairo-based journalist, translator and writer. He works on the
politics, culture and religion of the Middle East. The author of several books,
his main areas of expertise are Egyptian affairs and political theology.
This article was first published in The Majalla 8 May 2010
7/6/10 07:27:58
TM1553_17_Ad.indd 17 7/6/10 07:28:21
 • ON POLITICS

Obama and Arab-Israeli Peace

A new muscular posture?

Entering his second year in office, there were no indications that Arab-Israeli peace would be on the top
of the Obama administration’s priorities. If there wasn’t much hope that Joe Biden’s visit to Israel could
change the status quo, the announcement of the construction of more settlements in East Jerusalem
on the same day of the vice president’s arrival delivered a further blow to the hopes for a breakthrough.
With Obama’s hands half-tied due to the position of the US Congress, Netanyahu has been playing the
nationalist card at home to justify an intransigent position.

Images © Graphic News Fawaz Gerges

P
resident Barack Obama’s second year in office began
with no indication that Arab-Israeli peace would
figure prominently on his foreign policy agenda.
Declining approval numbers, coupled with the
burden of passing a health care bill, meant that Obama
lacked the political capital necessary to take substantive
steps on the peace process.
By March, Obama’s sole achievement had been an
agreement for US-mediated “indirect talks” between Is-
rael and the PLO, in addition to an Israeli commitment
to “temporarily” suspend settlement building in the West
Bank. Undermining the US administration’s diplomatic
initiative, Israeli Prime Minister Benjamin Netanyahu in-
sisted that “substantive” issues concerning security and ter-
ritorial status should not be part of the talks. Without
an alternative, Obama reluctantly agreed.

Joe Biden’s visit to Israel: a new momentum

In March, Vice President Joseph Biden’s visit to Israel
was expected to symbolize the administration’s growing
support for the new round of indirect peace talks. Biden
was also expected to allay Israeli fears about Iran’s nuclear
program. The Obama foreign policy team did not expect a
major breakthrough to result from Biden’s visit.
On the first day of Biden’s visit, the Israeli Interior Ministry
announced the construction of 1,600 additional housing units
in occupied East Jerusalem, a highly contentious issue in the
peace process. Shocked by the announcement, Biden and the
White House swiftly condemned the Israeli move as an impedi-
ment to peace. Although Netanyahu apologized for the poor
timing and claimed that it was accidental, his words fell on deaf
ears in the White House, especially after he declared that con-
struction of settlements would continue as planned.
In a direct and lengthy phone call with Netanyahu, Secre-
tary of State Hillary Clinton expressed the administration’s
deep concern and displeasure with Israel’s announcement. Ac-
cording to State Department spokesperson, P.J. Crowley, the
secretary made it “clear that the United States considered the
announcement to be a deeply negative signal about Israel's ap-
proach to the bilateral relationship and counter to the spirit
of the Vice President’s trip.” That same day, the Quartet re-
leased a statement condemning Israel’s move as undermin-
ing the peace process.

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TM1553_18-26_On Politics.indd 18 7/6/10 07:42:46

 The administration kept the heat on Netanyahu with Obama’s by Israel. In Congress we speak with one voice on the subject
most senior advisor, David Axelrod, firing a powerful salvo. “This of Israel – a rare example of congressional bipartisanship in
[the settlement announcement in East Jerusalem] was an affront, stark contrast to the White House stance.
it was an insult but most importantly it undermined this very
fragile effort to bring peace to that region,” said Axelrod. While in Washington, Obama
Speaking at AIPAC, the pro-Israeli powerhouse in Washing-
ton, Netanyahu was defiant: “The Jewish people were building held a meeting with Netanyahu
Jerusalem 3,000 years ago and the Jewish people are building
Jerusalem today.”
at the White House to try to find
common ground and to improve
Obama turns up the heat on Netanyahu
While in Washington, Obama held a meeting with Netanyahu US-Israeli relations after a tense
at the White House to try to find common ground and to im-
prove US-Israeli relations after a tense few weeks. The meet- few weeks. The meeting was
ing was brief and futile, with Obama supposedly still angry
about the ill-timed announcement of new Israeli settlements
brief and futile
during Biden’s visit. The president reportedly outlined a series Nita Lowey, a Congresswoman overseeing foreign aid appro-
of benchmarks that Israel would need to restart the peace talks. priations to Israel (about 3 billion dollars a year) reassured the Is-
These included the extension of the West Bank suspension of raeli leadership that the 10-year memorandum of understanding
settlements, the cessation of construction in East Jerusalem and (30 billion dollars) is solid. “There is strong bipartisan support for
the withdrawal of Israeli forces from the occupied Palestinian Israel in the Congress that will not falter,” stressed Lowey. Sid-
territories. Furthermore, Obama sought Netanyahu’s approval ing with Netanyahu against her own president, she sarcastically
for the indirect talks to focus on “substantive issues,” such as asked, “How can he go to the end stage of any discussion and
security and territorial status questions. give away the store in the middle of a negotiation?”
Netanyahu refused all of Obama’s demands, choosing in- Pelosi and Lowey’s pronouncements show clearly the complex-
stead to argue that his hands were tied. Unsatisfied with ity of the US political system and the domestic
Netanyahu’s intransigence, Obama left Netanyahu challenges facing Obama in his effort
in order to have dinner with his family. The to advance peace in the Middle
typical formalities extended to visiting heads East. When it comes to US for-
of state were absent, as Netanyahu left eign policy in the Arab-Israeli
without even a photo op with Obama. arena, Congress fetters the
After returning to Israel, Netanyahu met president’s hands and limits
with his senior ministers for five hours to dis- his options. The presidency is
cuss Obama’s demands. There was no pub- a very powerful institution but
lic announcement afterwards. Netanyahu’s the Congress yields consider-
office released a short statement that read: able power and influence,
"The Prime Minister's position is that particularly on the Arab-
there is no change in Israeli policy on Je- Israeli conflict, because it
rusalem.” Netanyahu is still unyielding. speaks with “one voice,” as
The inconclusive nature of US-Israeli Pelosi bluntly put it.
bargaining raises several questions on the In the case of Obama,
future of relations between the Obama some of his closest allies,
administration and the Netanyahu-led like Pelosi, would desert him
government. What does the new US pos- if he decides to exert real pres-
ture mean? Does it signal a more muscu- sure on Netanyahu and threatens
lar and aggressive approach toward Israel? to withhold the billions of dol-
Has Obama concluded that he cannot work lars in US military and
with Israel’s right-wing coalition? financial aid to Israel.
Although in the final
The Congress versus the presidency analysis Obama
In glaring contrast to Obama’s icy de- would be able
meanor toward Netanyahu, the US to carry such a
Congress warmly embraced the Israeli policy through,
prime minister. In a press-filled event that would be
attended by the leadership of the Re- too politically
publican and Democrat parties after costly, and he
Netanyahu’s meeting with Obama, would sacri-
Speaker of the House Nancy Pelosi, fice other im-
a Democrat and an Obama ally, told portant policy
Netanyahu, ‘We in Congress stand priorities.

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 • ON POLITICS
Obama’s next move?
Instead of a frontal assault on Netanyahu, Obama is more
likely to wage an encirclement manoeuvre and raise the stakes
for him at home. It is a slow, gradual and unpredictable cam-
paign whose outcome is unknown. Netanyahu is playing the
nationalist card at home and might escape unscathed. In fact,
his position inside Israel has been strengthened because he has
portrayed himself as standing up to a “stranger” Obama who
makes “illogical and unreasonable,” demands of Israel.
Obama’s recent political pressure on Netanyahu has pro-
duced a domino effect internationally. In response to Netanya-
hu’s pronouncement on Jerusalem, UN Secretary General Ban
Ki Moon stressed that Israel should respect the significance of
Jerusalem and that that the city “should emerge from nego-
tiations as the capital of two states.” Significantly, this marks
the first time that the United Nations has publicly expressed its
views regarding the status of Jerusalem as the capital not only
of a Jewish state but also a Palestinian state.
December 2000
Clinton Parameters
In late December 2000, US President Bill Clinton
made one last effort to facilitate peacemaking
between the Israelis and Palestinians. The Clinton
Parameters, the plan was called, set out proposals
for dealing with the three most difficult issues—
settlements, Jerusalem and refugees. The Council on
Foreign Relations summarizes the plan below.
The plan offered the Palestinians:
• Control over a sovereign, contiguous, viable state
recognized by the international community.
• Sovereignty over Al-Haram Al-Sharif in Jerusalem.
• Control over the Arab sections of Jerusalem, which
would serve as the capital of a Palestinian state.
• A comprehensive settlement plan for refugees that
offered them several options: return to the new state of
Palestine; return to the state of Israel (with restrictions);
resettlement in a third country; and/or compensation.
The plan offered Israelis:
• The right for 80 percent of the West Bank settlers,
most of whom live near the 1967 borders, to stay put.
• Security guarantees.
• Control over the Jewish sections of Jerusalem,
which would be internationally recognized as the
capital of Israel.
• Control over and access to Jewish holy sites in
Jerusalem, including sections of the Temple Mount.
Both sides tentatively accepted the deal with
reservations; some experts say Arafat later added
so many conditions that the agreement fell apart.
Clinton left office, and talks continued in January at an
Egyptian resort in Taba.
(Source: Council on Foreign Relations)
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TM1553_18-26_On Politics.indd 20
Obama has forced Netanyahu to clarify his government’s
position on settlements and exposed his unwillingness to
abide by international consensus. What he has done is to
produce a moment of clarity. The international commu-
nity knows that the right-wing governing coalition in Israel,
not the Palestinian Authority (PA), is blocking the start
of peace negotiations. Israel is on the defensive and faces
international scrutiny.
It remains to be seen if the Obama foreign policy team will
offer its own proposed parameters for an eventual Palestinian
state. The perception among Arabs and Muslims is that Amer-
ica’s biases towards Israel have been further reinforced.
In the early days of the second year of his presidency, Obama
has already further dashed the expectations and high hopes of
the Arab world. In an interview with TIME magazine, Obama
surprised his interviewer when pressed on the Israeli-Palestin-
ian issue: “This is just really hard... and if we had anticipated
some of these political problems on both sides earlier, we might
not have raised expectations as high.”
The future of the relationship between the US and the Is-
lamic world seems uncertain. One hopes that Obama’s recog-
nition of the complexities of the region will lead to a wiser
policy, and that the Arabs and Muslims should not solely rely
on Obama’s goodwill to deliver on his promises. They must
take concrete steps to influence US foreign policy if they wish
to bring about lasting change in the region, such as laying out
what a comprehensive settlement entails.
The international community
knows that the right-wing
governing coalition in Israel,
not the Palestinian Authority
(PA), is blocking the start
of peace negotiations. Israel
is on the defensive and faces
international scrutiny
Obama’s next steps will be crucial in potentially resolving
this stalemate. A more honest and frank US relationship with
Israel, as well as a more transparent relationship with the Arab
world based on common and mutual interests, not political
expediency, would be a powerful legacy for the new African-
American president.
Yet, if Obama shies away from directly confronting this
challenge, he risks permanently rupturing America’s relation-
ship with the Arab and Muslim world. His actions will have
a far more lasting impact than any words he spoke in Cairo
last June.
Fawaz A. Gerges – Professor of Middle Eastern Politics and Interna-
tional Relations at the London School of Economics and Political Science,
London University. He is author of “America and Political Islam: Clash
of Cultures Or Clash of Interests?” (Cambridge University Press).
This article was first published in The Majalla 17 May 2010
7/6/10 07:42:50
TM1553_21_Ad.indd 21 7/6/10 07:43:29
 • ON POLITICS
Just What the Doctor Ordered
Iyad Allawi's Remedy
Iyad Allawi, Iraq’s former interim prime minister and a current contender for the position, has been a
prominent figure in most of the turning points in Iraq’s recent political history. Although his position as
interim prime minster earned this secular Shia the stamp of American puppet, Allawi has managed to
secure a political come-back in the recent elections
I
yad Allawi, Iraq’s former interim prime minister and a cur-
rent contender for the position, has been a prominent figure
in most of the turning points in Iraq’s recent political history.
Although his position as interim prime minster earned this
secular Shia the stamp of American puppet, Allawi has managed
to secure a political comeback in the recent elections.
The British-trained neurosurgeon has once again found him-
self in the limelight after his alliance, Iraqiya, won a narrow vic-
tory in the March parliamentary elections, with 91 seats over the
89 held by his challenger, Nouri Al-Maliki. Although Maliki still
has a chance to retain his position as prime minister, Allawi’s ex-
pertise in political maneuvering will serve him well if he’s given
the opportunity to create a coalition government of his own.
While very little appears to be certain in Iraq’s future po-
litical leadership – with neither contender having the 163 seats
necessary for a leading majority – what is certain is that Allawi
has learned from the past. After having watched Iraq plunge
into sectarian violence, he has made sure that his bloc bridged
the sectarian divisions that creep up every so often.
In promising that Iraqiya “will open its heart to all political
forces and all those who want to build Iraq,” he managed to
draw Tariq Al-Hashimi, the Sunni vice president, and Saleh
Al-Mutlaq, also a Sunni, who was barred from the March elec-
tions. As a result, Allawi brought to the polls many Sunnis who
had boycotted the last election, adding credibility to the devel-
opment of Iraq’s burgeoning democratic system. In addition
to his success in Sunni-dominated areas, he also performed
strongly in Kirkuk, an area contested by Arabs and Kurds.
However, not all see Allawi as the solution to sectarian divi-
sion, nor as the ideal leader of the country. Many Shiites have
interpreted Sunni-support of the politician as a “disguised sup-
port for the old government,” reported The New York Times.
Mr. Allawi has also faced criticism for his leadership as the
interim prime minster of Iraq. Although he had been chosen for
his strong credentials as an opposition to Saddam Hussein by the
US, he was deeply resented by Iraqis for having lived in exile and
for the strong hand he used to fight insecurity while in power.
Before his appointment as prime minster, he had been in
charge of reforming the army, police and intelligence services.
Although he opposed the purging of former Baath Party mem-
bers from government positions, he was considered a hardliner
when it came to security, a fact which earned him the nickname
“Saddam without a mustache.”
Among his controversial decisions was his support for the US of-
fensive in Fallujah and Najaf against Muqtada Al-Sadr’s Mahdi
22
TM1553_18-26_On Politics.indd 22
army. There were also rumors that he summarily executed two sus-
pected insurgents in 2004. These controversies, in addition to the
failure of his government to undermine sectarian violence, did little
for him in the 2005 parliamentary elections. His secular Iraqi Na-
tional List alliance came in third to the Shia United Iraqi Alliance.
From the beginning, Allawi’s life seems to have turned around
the event’s shaping Iraq. He was born into a prominent merchant
family with a political legacy. His grandfather had helped negoti-
ate Iraq's independence from Britain, and his father was a mem-
ber of parliament. He too would soon become involved in politics
by joining the Youth branch of the now banned Baath Party, and
organizing against the government of Abdul Karim Qassim.
Allawi’s ties to the Baath Party, however, were severed early
on. Due to his differences with the politics of the party, and in
order to continue his medical education, he moved to London
in 1971. He eventually resigned from the Baath Party in 1975,
causing him to fall greatly out of Saddam’s favor. After resisting
Saddam’s pressure to re-join the party, he was told by friends
that his name was on one of Hussein’s infamous purging lists.
Distance, it seemed, was not an obstacle that Saddam consid-
ered sufficient to deter him from killing his enemies. Allawi was
severely injured in an assassination attempt while living in Kings-
ton-upon-Thames in 1978. His would-be assassins attacked him
in his bedroom with an axe, almost cutting of his right leg and
inflicting a severed wound in his chest. Although his attackers left
him for dead, he is said to have yelled, “You tell Saddam I am
going to survive this, and I'll take your eyeballs out.”
And survive he did. Allawi spent almost a year in a hospi-
tal recovering from his injuries. With ample time to consider
his options he decided to organize Baathists in exile, founding
the Iraqi National Accord, an organization whose popularity
would grow exponentially after the 1990 Kuwait invasion.
In 1996, with the backing of the CIA and MI6, the group
tried to initiate a coup in Iraq by employing Baathist allies in
the military and government. However the attempt failed when
Saddam’s security agents infiltrated the network, causing the
arrest and execution of many of the plotters.
Indeed, Allawi’s involvement in politics have made him no
stranger to danger or controversy, leading many to speculate over
how he will deal with the current electoral stalemate. Even under
the current conditions, however, he has proved adept in managing
challenges. Perhaps what Iraq needs to cure the long-lasting illness
of sectarian division is to give this doctor a second chance.
This article was first published in The Majalla 18 May 2010
7/6/10 07:42:50
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 • ON POLITICS
More Outward, but Less
Southward-Looking?
The EU’s Neighborhood Policy and the Maghreb countries
The EU’s focus in the Maghreb has been on economic and security interests to the detriment of political
reform and human rights. The coming into force of the Lisbon Treaty raises questions about how it will
affect the Southern dimension of the EU’s neighborhood policy. Will the new provisions in the Lisbon
Treaty make any difference to the coherence and focus of EU policy?
T
he coming into force of the Lisbon Treaty in De-
cember last year was heralded by many as an end
to European navel gazing. But will the EU really re-
engage with the rapidly changing world with a re-
formed foreign policy machinery and a new cross-institutional
foreign minister, Catherine Ashton? Among other things, this
question relates to whether the treaty will affect the Southern
dimension of the EU’s neighborhood policy. Will it continue to
focus on economic and security interests relating to migration,
terrorism and access to energy to the detriment of political re-
form and human rights?
EU Business in Africa
The EU is the largest trading partner and largest
export market for almost every country in Africa.
• Africa accounts for almost 9 percent of EU imports.
Half of these imports are energy products. Twenty-
three percent are manufactured goods and 11
percent are food and agricultural products.
• Africa absorbs 8.3 percent of EU exports.
Machinery, chemicals and manufactured goods make
up more than 78 percent of EU exports to Africa.
• Europe's largest trading partner (imports + exports)
in Africa is South Africa.
• Algeria and Libya are the biggest African exporters
to the EU. In 2006, they exported €24 billion and €26
billion worth of goods respectively, almost entirely
energy products.
• Through the Euromed process, which aims to
create a free trade area of the Mediterranean by
2010, the EU has built close trading relationships
with the countries of North Africa. EU-Morocco trade
was worth €17.5 billion in 2006, based largely on
Moroccan textiles and agricultural products, and
European Machinery and industrial products. EU-
Egypt trade was worth €16.3 billion, based largely on
Egyptian energy goods and textiles, and European
machinery and chemicals.
24
TM1553_18-26_On Politics.indd 24
Christoph Meyer
The EU launched its so-called European neighborhood
policy (ENP) in 2004 to replicate the success of Eastern En-
largement, but without being able to offer full membership
to 19 countries East and South. This applies to all Maghreb
countries, given that Morocco’s application for membership
in 1987 was turned down by the Council of Ministers, as it
was not considered “European.” The ENP offers a package
of alternative incentives, including financial aid, cultural ex-
changes and political dialogue. What is on offer is “everything
but institutions,” meaning that countries who meet the condi-
tions set out in their Association Agreements could benefit
The EU launched its so-called
European neighborhood policy
(ENP) in 2004 to replicate the
success of Eastern Enlargement,
but without being able to offer
full membership to 19 countries
East and South
from free access to all the benefits of the single market in
the same way as Norway, Iceland or Lichtenstein. They could
have observer status in many areas of EU policymaking, a
voice, but no vote.
Before the launch of the ENP, the emphasis of EU policy
vis-à-vis North Africa was firmly on promoting economic re-
form and some micro-assistance for civil society as a means of
reducing labor migration. Given fears of instability by South-
ern European states, the EU has shied away from any sig-
nificant negative sanctions for violating democratic principles
and any meaningful attempts to promote opposition parties,
in particular, those associated with Political Islam. The terror-
ist attacks of 9/11 have further strengthened the status-quo
bias of the EU and its willingness to cooperate with authori-
tarian regimes feeling threatened by Political Islam. Neither
has the EU invested serious political capital in resolving long-
standing disputes such as those over Western Sahara between
Morocco and the Polisario Front (backed by Algeria). The
7/6/10 07:42:53
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 • ON POLITICS

EU’s status has not been helped by increasing attempts by

individual member states to pursue their own agendas on ter- The Africa-EU Partnership
rorism, migration and, increasingly also, energy.
Nevertheless, the EU has made some progress in building At the beginning of the new millennium, the EU
up close contractual relations with its favorite neighbors. Mo- launched a new dialogue with Africa to build a strategic
rocco, for instance, was offered a privileged partnership last partnership with the entire continent which would
year given its cooperative attitudes on a range of issues, in- strengthen existing measures. The first summit between
cluding migration and energy. Even the EU’s more awkward the EU and Africa was held in Cairo in April 2000.
neighbors, such as Algeria, were drawn into contractual link- A Plan of Action was adopted at the summit,
ages given their most sought after oil and gas reserves and highlighting these general areas:
despite their resistance to political conditionality. As competi-
tion for these resources with Russia, China and other coun- • Economic issues
tries is intensifying, the EU has placed pragmatic self-interest • Deepen the link between trade and development at
and long-term transformation before norm promotion. international level in order to ensure that trade
Will the new provisions in the Lisbon Treaty make any dif- liberalisation contributes to poverty reduction
ference to the coherence and focus of EU policy? Given the • Respect for and protection of human rights,
current troubles of the Eurozone, it is already clear that the democratic principles and institutions, the rule of law
EU will not have much money for positive conditionality and and good governance
will have to ruthlessly prioritize on where to spend its money. • Peace-building and conflict prevention,
But this makes political engagement even more important. management and resolution in Africa
We can at least expect more manpower in the combined dip- • Development measures to combat poverty
lomatic service to analyze in more depth and more objectively • Conflict prevention and resolution (including the
future opportunities and threats related to the Mediterranean problem of anti-personnel landmines)
region. These include increased competition for energy re- • Regional cooperation and integration, integrating
sources, the multi-facetted impact of climate change, and the Africa into the world economy and trade
future of Political Islam. • The environment, including the fight against drought
and desertification
Given the current troubles of the • HIV/AIDS and communicable diseases
Eurozone, it is already clear that • Food security
• Human rights and democracy
the EU will not have much money • The return of cultural items that have been stolen or
exported illegally
for positive conditionality and will • Africa's external debt
have to ruthlessly prioritize on (Source: EU website)
where to spend its money
But will this translate into new political initiatives? Ahston’s
first announcements since being appointed in December last
year do not bode well for those hoping that the EU could help
solve the region’s many problems. She has expressed inter-
est in the Middle East peace process, but de-facto delegated
responsibility for the ENP to her Czech Commissioner col-
league Stefan Füle. Given that he is also responsible for EU
enlargement, one cannot expect the Maghreb countries to
rise on the Brussels agenda.
This is lamentable as EU influence is on the wane as China
and other emerging economies are vying for access to hydrocar-
bons and minerals with no questions asked about political cor-
ruption, human rights abuses, and suppression of free speech and
democracy. In the last three years Africa's trade with China has
doubled, reaching $106.7 billion in 2008. The more authoritar-
ian regimes in the region, will not mind concentrating on seem-
ingly technical rather than political issues. In the meanwhile, the
EU is wasting an opportunity to help resolve festering conflicts
before they become virulent, and generate lasting good will with
Image © iStockphoto

the currently excluded civil societies in the region.

Christoph Meyer – Senior Lecturer in European Studies at King’s College London.

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TM1553_27_Ad.indd 27 7/6/10 07:43:49
 • J STREET VS AIPAC

J Street vs AIPAC
The asymmetrical war for the
soul of Jewish America

A geopolitical war is on for the soul of Jewish

America, and it is asymmetrical. For decades,
conservative groups, led by the American-Israel
Political Affairs Committee, or AIPAC, have insisted
that they alone spoke for a monolith known as the
American Jewish community. For the first time,
that claim is being seriously challenged. In the two
years since its launch, J Street has created an air
pocket where liberal Jews can express themselves
in the otherwise stultified debate about Israel and
America’s support of it. At stake, according to
friends of J Street, is whether Israel can survive as
a Jewish state in co-existence with its neighbors,
or hunkered down and segregated in a ghetto of
its own making.

Stephen Glain

I
n March, when the Israeli government defied US Presi-
dent Barack Obama’s peace efforts by announcing it
would build Jewish housing blocks in Arab East Jerusalem
– with Joe Biden, Obama’s Vice President, in Israel on
a good-will mission, no less – even Israel’s close supporters in
America condemned it as an intolerable snub.
Israeli resistance against US pressure for a settlement freeze
is nothing new, of course. This time, however, Americans had
a place to park their outrage. Within hours after news of the
slight broke, J Street, a pro-Israel, pro-peace lobbying group,
received 18,000 signatures on its website from citizens express-
ing support for Mr. Obama’s Middle East policies. “There is a
vast majority of American Jews who form a moderate center
and who want Israel to survive,” says J Street media coordina-
tor Amy Spitalnik. “We’re creating space for them.”
A geopolitical war is on for the soul of Jewish America, and
it is asymmetrical. For decades, conservative groups, led by the
American-Israel Political Affairs Committee, known as AIPAC,
have insisted with impunity that they alone spoke for a monolith
known as the American Jewish community. For the first time,
that claim is being seriously challenged. In the two years since
its launch, J Street has created an air pocket where liberal Jews
can express themselves in the otherwise stultified debate about
Israel and America’s support of it. At stake, according to friends
of J Street, is whether Israel can survive as a Jewish state in co-
existence with its neighbors, or hunkered down and segregated
Image © iStockphoto

in a ghetto of its own making. “J Street has to succeed,” says a

pro-peace veteran of the Israel-lobby wars who has found her-
self on the losing end of many a battle with AIPAC. “It cannot
fail. Otherwise, the entire left will go down with it.”

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 Issue 1553 • June 2010 29

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 • J STREET VS AIPAC

Others discount the influence J Street or any other lobby- J Street Polls Jewish Community in US
ing group might have over the making of US Middle East The following polls demonstrate the Jewish-American
policy. For them, “creating space” for liberal Jews in America community's reaction to recent developments in American-
is less important than facing “facts on the ground” in Palestine. Israeli relations. They are indicative of this demographic's stance
on what the US's position should be in the Middle East.
“I’m under no illusion that a single organization will create
that much change,” says Aaron David Miller, a scholar at the
Woodrow Wilson International Center who served for years as
a State Department advisor on Middle Eastern affairs. “The
chances for peace will be driven not by domestic politics but the
prospect of success for a deal between Arabs and Israelis.”
Liberal pro-Israeli organizations are not new to Washington,
where J Street is based. (Though its name is a sly commentary on
how muted is the pro-peace camp: there is no J Street in Washing-
ton’s alphabetized urban grid). There is Americans for Peace Now
and the New Israel Fund, for example, which as non-profits must
confine their activities to educating legislators and opinion makers
about Israeli affairs. J Street, on the other hand, is registered as
a political action committee, which allows it to contribute to po-
litical campaigns and endorse candidates. This year, according to
Spitalnick, the group expects to raise $1 million in support of 60
candidates for mid-term elections. It has an operating budget of
$3 million and it has more than a dozen full-time staff members
on its payroll. It boasts 110,000 online supporters, 7,000 of whom
contribute regularly to the group’s campaign war chest.
If that sounds impressive, consider J Street’s opposition.
AIPAC, long regarded as one of the most effective lobbying
groups in Washington, has a $60 million budget and 300 em-
ployees. Its ability to cajole and coerce Congress to its will is
legendary. AIPAC lobbyists have been known to draft resolu-
tions on behalf of the Israeli right and get them passed into law
by wide margins. Its annual convention is attended by at least
half the members of Congress and it has a powerful ally in the
Christian-Zionist movement in America, including Christians
United for Israel, a San Antonio, Texas-based group with a
congregation of 19,000 worshipers.
Needless to say, if there is an AIPAC-J Street fight going on, unwise for anyone,” he said, “to take disagreements as to how to
it is less Clash of the Titans than it is Tom and Jerry. By lever- accomplish our common goals and purpose, which is to achieve
aging the internet and its small but agile web of field offices peace and security – and to misrepresent those differences as
nationwide, J Street has managed to level the playing field for questioning support and concern for the state of Israel itself.”
dissenting views on Israel’s hard line policies. During Israel’s Delahunt’s rebuke was resonant of J Street’s most subversive
December 2008 siege of Gaza, for example, legislator Donna message: that the conservative establishment does not repre-
Edwards of Maryland was one of a handful of lawmakers who sent the sympathies of American Jews any more than occupa-
refused to vote for a resolution supporting the Jewish state’s tion serves Israel’s long-term interests. Through aggressive use
right to defend itself, in part because of its disproportionate of polling data, the group has established how Obama’s ap-
response to Palestinian provocation. Angered at Edwards’ po- proval ratings among American Jews is 15 percent higher than
sition – she and twenty-one similarly conflicted Congressmen the national average; that a majority of Jews oppose further
had voted “present” on the motion – some local Jewish leaders settlement building and support a strong US role in the Arab-
suggested they might whip up a primary challenge against her Israeli peace process, which AIPAC and its allies implicitly op-
re-election bid this year. Enter J Street, which rallied to Ed- pose; and that most Jews approve of President Obama’s public
wards’ defense with $30,000 in fresh campaign funds within 48 criticism of the Israeli government when it obstructs the peace
hours. Talk of a primary fight quickly dissipated. process. (The poll also revealed that Israel is not a major Jew-
J Street has also organized Congressional tours of Israel that ish preoccupation; the country rated eighth among the average
counter the narrative Israeli authorities routinely spoon-feed vis- respondent’s lists of concerns.)
iting lawmakers. In February, a group of Democrats made head- “People are tired of being told you are either with us or against
lines during their J Street-sponsored visit to Israel when Deputy us,” J Street founder Jeremy Ben-Ami told The New York Times
Foreign Minister Danny Ayalon refused to see them. William in May. “The majority of American Jews support the president,
Delahunt, the Massachusetts representative who led the delega- support the two-state solution and do not feel that they have been
tion, called the decision “a real surprise and disappointment” well represented by organizations that demand obedience to ev-
and he implicitly scolded Ayalon, who publicly suggested that J ery wish of the Israeli government.” His remarks were published
Street is anti-Israel, for impugning the delegation’s motives. “It is in a story that focused on an evolving constituency of Israel sup-

30

TM1553_28-31_Cover Story.indd 30 7/6/10 07:45:05

 porters who reject “the old-school reflexive support of the coun- given the estrangement of Middle Eastern reality – on one side,
try’s policies, suggesting that one does not have to be slavish to a Palestine divided from within and Balkanized from without; on
Israeli policies to love Israel.” For a fledgling influence-peddler in the other, Israel’s dysfunctional and increasingly rightist politi-
a rough market like J Street, this was a real coup. cal culture – from the totemic “peace process” as it is revered in
In creating space for dissent, J Street is in many ways mining op- Washington. As Palestinian journalist Ali Abunimah told the lib-
portunities created by conservative overreach, both in the US and eral magazine The Nation last November, “J Street is supposed
in Israel. Over the last few years, groups like AIPAC, often work- to represent a tectonic shift, but it operates within the peace pro-
ing quietly or through proxies, have adopted tactics against Israel’s cess paradigm and doesn’t challenge it at all.”
critics of an increasingly thuggish cast. Legislators have complained After eight years of Bush administration indulgence of the
– entirely off the record, of course – of a growing AIPAC imperi- Israeli right, the only kind of presidential peace initiative that
ousness in their demands for votes and other displays of support. In might succeed is one Israel is unlikely to accept, regardless of
2006, when scholars John Mearsheimer and Stephen Walt wrote which Beltway lobbying group has the whip hand. The debate
a provocative article that alleged a pernicious Jewish lobby was in Washington over J Street’s influence may be a lively one, but
manipulating US foreign policy, the attacks set a new standard for it has little to do with the region that informs it.
biliousness. (The Anti-Defamation League, a major conservative Only occasionally does a shaft of Middle East reality penetrate
group called it a “classic conspiratorial anti-Semitic analysis invok- the Washington biosphere. On April 21, journalist Eyal Press
ing the canards of Jewish power and Jewish control.”) They were discussed at the centrist New America Foundation a story he had
followed by a campaign against historian Tony Judt, who has called written about the growing religiosity within the Israeli Defense
for a bi-national Palestine, and an assault on the character of Chas Force. According to the article, published in the April 29 edition
Freeman, a career State Department Arabist and open critic of Is- of the New York Review of Books, religious nationalists in the
rael, after he was offered a key national security post in the Obama IDF are now so numerous and their influence so great within the
administration. The offer was ultimately withdrawn. officer class that an order to evacuate West Bank Jewish settlers
Meanwhile, Netanyahu has tested the limits of the US-Israeli “could spark mass mutiny.” Neither Press’ article nor his presen-
relationship like few Israeli leaders before him. In addition to tation rated significant mention in the mainstream media.
his mishandling of the Biden visit, he reportedly called White
House aides David Axelrod and Rahm Emanuel “self-hating Stephen Glain – A former correspondent for Newsweek and covered Asia
Jews.” His inclusion of the openly anti-Arab, some say fascistic, and the Middle East for the Wall Street Journal for a decade. Now based
Avigdor Lieberman into his ruling coalition, and his refusal to in Washington as a freelance journalist and author he is currently working
endorse an independent Palestine have alienated some of the on his forthcoming book about the militarization of US foreign policy.
most committed of America’s Jewish Zionists.
Inevitably, J Street has made several missteps and it has dis-
appointed liberals with policy recommendations that do not
stray significantly from AIPACism. Last summer, it equivocated
lamely over whether or not it would urge senators to sign an
AIPAC-backed letter that called on Arab leaders to normalize
ties with Israel without a reference to Israeli settlement activity.
It has expressed support for an Iran sanctions bill in Congress
that the White House opposes as overly restrictive and it con-
demned as “one-sided and biased” a United Nations human
rights report that concluded both Israelis and Palestinians com-
mitted atrocities during Israel’s invasion of Gaza.
It would be churlish to applaud J Street’s independence while
scolding it for not unswervingly towing the liberal line. There
may be less to the group’s initial success than meets the eye,
however, for reasons that say more about the political ecology
of Washington than they do about J Street’s commitment to
peace. J Street has distinguished itself by emphatically endors-
ing an independent Palestine, contoured roughly along its pre-
1967 borders and with east Jerusalem as its capital. Seen from
the Middle East, however, that merely places the group within
a stale orthodoxy that has come to mean nothing inside Pales-
tine itself. Demands for a settlement “freeze,” for example, are
regarded in the West Bank as a hollow gesture that resonates
more in America’s capital than it does in Palestine, where na-
tional survival is predicated on settlement removal.
Invariably, given Washington’s habit of domesticating overseas
issues, media coverage of J Street has focused largely on the po-
litical implications of its challenge to the conservative order, with
abundant references to J Street’s “David” versus AIPAC’s “Go-
liath.” Unexamined is the growing irrelevancy of either group

Issue 1553 • June 2010 31

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 • THE WEALTH OF NATIONS

Stay the Course

Financial Reform in Saudi Arabia

As the Western world debates about how to drive back financial liberalization, Saudi Arabia wonders
whither its ongoing financial reforms should head. The Kingdom should, however, stay the course with
its reforms as these are likely to bring significant improvements to its economy. The fact that these
economic policies seem to go against the current tide of Western reforms should be no reason for Saudi
leaders to follow in their stead.

Emma Carswell-Engle

A
conspicuous if not shocking feature of today’s world and restrictions on currency convertibility, and removing bar-
is its unambiguously upside-down state. While various riers to market access and discriminatory treatment between
industrialized countries find themselves on the verge of foreign and domestic suppliers. In fact, financial liberalization
sovereign default, emerging markets have come to rep- encourages better, not less regulation.
resent the engine of growth and dynamism for the global econo-
my. A noticeable consequence of this new economic environment
is the rise of anxiety in Western economic debate, and, in some Saudi Economy
cases, a general neglect of sound economic principles as various
GDP (purchasing power parity):
countries undertake a process of financial regulatory reform. If
$585.8 (†474.9) billion (2009 est.)
anything, the impending regulatory onslaught has considerably Country comparison to the world: 23
heightened the need to reassess both the merits of financial liber- $584.7 (†475.2) billion (2008 est.)
alization and the lessons to be drawn from the crisis. $560 (†454.8) billion (2007 est.)
Although the crisis has not affected the world equally, it
seems to have raised similar doubts everywhere. A case in point GDP (official exchange rate):
is Saudi Arabia. Notwithstanding its relatively good economic $384 (†315) billion (2009 est.)
performance during the financial storm, some opinion leaders
have come to question the desirability of pushing ahead with GDP (real growth rate):
the Kingdom’s financial liberalization process. After all, some 0.2% (2009 est.)
ask, didn’t countries with heavily controlled financial systems Country comparison to the world: 109
such as China and India fair better than the notoriously open 4.4% (2008 est.)
UK and US during the crisis? 3.3% (2007 est.)

GDP (per capita):

The Conceptual Mush
$20,400 (†16,736) (2009 est.)
Opponents of free markets have been (too) quick to herald the Country comparison to the world: 60
incompatibility of financial liberalization with a stable econo- $20,800 (†17,067) (2008 est.)
my. By rashly equating liberalization with deregulation, these $20,300 (†16,657) (2007 est.)
critics have used the unruly nature of unregulated financial
markets as a justification for their questionable policy propos- GDP (composition by sector):
als. Their success is such that, nowadays, attempting to high- agriculture: 3.2%
light this intellectual incoherence only seems to draw criticism industry: 60.4%
as a free market extremist services: 36.4% (2009 est.)
Be that as it may, the failure on the part of critics to see the
contradictions in their position does not make reality any less Labor force:
real. After all, shooting yourself in the foot will not make you 6.922 million
feel good, no matter how much you want to believe it. As econ- Country comparison to the world: 62
note: about 80% of the labor force is non-national (2009 est.)
omists (should) know, correlation is not causation; Canada and
Australia were also left relatively unscathed by the financial tur- Investment (gross fixed)
moil, and this despite their fairly open financial systems. 24.2% of GDP (2009 est.)
In fact, much of this speculative incoherence is due to ma- Country comparison to the world: 49
jor misconceptions about the definition of financial liber-
alization as well as the origins of the global financial crisis. Budget:
Contrary to what many critics assert, financial liberalization revenues: $167.7 (†137.6) billion
does not mean deregulation. Rather, it means giving more expenditures: $164.3 (†134.8) billion (2009 est.)
rein to market forces by, inter alia, reducing capital controls

32

TM1553_32-42_The Wealth of Nations.indd 32 7/6/10 07:47:56

 Although there is little doubt, as many opponents to the
liberalization process have asserted, that the rash finan-
cial deregulation of the 1990s contributed to triggering the
crisis, these critics seem to have slyly glossed over one of
the much more powerful triggers: the global “savings glut.”
According to this theory, for the past decade or so the US—
acting as a sort of massive hedge/investment fund – has
absorbed much of the extra-capital (i.e. the difference be-
tween domestic savings and domestic investment) from East
Asia and the Middle East. This global financial imbalance
fuelled massive current account deficits in the US, where
real interest rates were kept very low. The resulting low
cost of money led to massive overinvestment – what Hayek
calls mal-investment – in low return assets (real-estate),
creating a boom and, eventually, a bust. In this much more
compelling and economically sound interpretation of the
crisis, the role of haphazard deregulation is circumscribed
to systematizing the crisis rather than causing it. Even so,
blame should be placed on imprudent deregulation rather
than financial liberalization.
Public debt:
20.3% of GDP (2009 est.)
Country comparison to the world: 100
18.9% of GDP (2008 est.)
Inflation rate (consumer prices):
5% (2009 est.)
Country comparison to the world: 141
9.9% (2008 est.)
Market value of publicly traded shares:
$246.3 (†202.1) billion (31 December 2008)
Country comparison to the world: 20
$515.1 (†422.7) billion (31 December 2007)
$326.9 (†268.3) billion (31 December 2006)
Agriculture products:
Wheat, barley, tomatoes, melons, dates, citrus; mutton,
chickens, eggs, milk
Industries:
Crude oil production, petroleum refining, basic
petrochemicals, ammonia, industrial gases, sodium
hydroxide (caustic soda), cement, fertilizer, plastics,
metals, commercial ship repair, commercial aircraft
repair, construction
Industrial production growth rate:
7.2% (2009 est.)
Country comparison to the world: 125
Exports:
$180.5 (†148.1) billion (2009 est.)
Country comparison to the world: 20
$313.4 (†257.2) billion (2008 est.)
Exports – commodities:
petroleum and petroleum products 90%
Issue 1553 • June 2010
TM1553_32-42_The Wealth of Nations.indd 33
Liberalization In the Kingdom
Truth be told, financial liberalization is no panacea; it is even
less so if carried out arbitrarily. Nevertheless, a properly se-
quenced liberalization process accompanied by sound regula-
tion and effective regulatory oversight could not only help solve
the Saudi economic diversification conundrum, but could also
help address politically sensitive issues such as unemployment.
From this standpoint, the creation of the Tadawul, two regu-
latory oversight agencies (e.g. SAMA) and the King Abdullah
Financial District are all positive, even if small, steps forward.
While the stock market and Saudi corporate structure slowly
mature, however, it is crucial that the private sector be able
to meet its capital needs. To ensure this, policymakers should
continue the process of eliminating market access barriers and
discriminatory treatment to foreign suppliers. By increasing
competition, these policies would reduce profitability and over-
all costs, and encourage an increase in both quality and range
of service. This would facilitate firm entry in other sectors, thus
improving economic diversification and the competitiveness of
markets throughout the economy.
Exports – partners:
US 17.2%, Japan 15.3%, South Korea 10.2%, China
9.4%, India 5.9%, Taiwan 4.6%, Singapore 4.4% (2008)
Imports:
$86.61 (†71.08) billion (2009 est.)
Country comparison to the world: 31
$108.3 (†88.8) billion (2008 est.)
Imports – commodities:
machinery and equipment, foodstuffs, chemicals, motor
vehicles, textiles
Imports – partners:
US 12%, China 10.4%, Japan 7.6%, Germany 7.3%,
South Korea 5.1%, Italy 4.7%, India 4.5%, UK 4% (2008)
Reserves of foreign exchange and gold:
$39.98 (†32.8) billion (31 December 2009 est.)
Country comparison to the world: 26
$30.59 (†25.1) billion (31 December 2008 est.)
Debt – external:
$72.45 (†59.45) billion (31 December 2009 est.)
Country comparison to the world: 40
$82.13 (†67.39) billion (31 December 2008 est.)
Stock of direct foreign investment at home:
$149.3 (†122.4) billion (31 December 2009 est.)
Country comparison to the world: 27
$108.5 (†89) billion (31 December 2008 est.)
Stock of direct foreign investment abroad:
$20.57 (†16.8) billion (31 December 2009 est.)
Country comparison to the world: 38
Image © iStockphoto
$18.07 (†14.83) billion (31 December 2008 est.)
(Source CIA World Factbook)
33
7/6/10 07:47:58
 • THE WEALTH OF NATIONS
Finally, no matter how politically sensitive the issue, capital
controls need to be eased if the government is serious about pro-
moting economic diversification and tackling unemployment.
The undervaluation of the riyal encourages Saudi oil exports
and supports an inherently inefficient industrial sector. This ar-
tificial competitiveness of the industrial sector, in turn, attracts
capital and labor that would have otherwise been allocated else-
where. In “economics speak,” an undervalued peg is therefore a
redistribution of income, a “subsidy” if you will, which benefits
the tradable sector at the expense of the untradeable sector.
This situation results in two problems. First, the undervalu-
ation of the riyal benefits a sector (industrial goods) that will
never be able to compete with Asian industrial sectors with-
out government intervention (the oil sector is inherently com-
petitive and hence does not need this “subsidy”). Second, as a
2008 Chatham House report makes clear, the tradable sectors
benefiting from these policies employ less labor than a vibrant
untradeable sector (services sector in general) would.
Easing capital controls and restrictions on currency convert-
ibility (floating or at least revaluating the riyal) would there-
fore contribute to reducing the structural distortions of the
Saudi economy. It would siphon capital and labor back into
the untradeable sector and encourage the diversification of the
economy. This would be an efficient way of increasing the con-
tribution of the non-oil sector to Saudi GDP (which already
doubled between 2002 and 2007) and could considerably re-
duce unemployment since the Saudi untradeable sector is no-
toriously more labor intensive than the oil sector.
Yet, there is one principal requirement for all this to work. The
liberalization process must be properly phased and structured
within a sound regulatory framework. Government and corporate
transparency is also a key ingredient for a stable and efficient finan-
cial system. Moreover, liberalization of the Saudi financial sector
could help rebalance global finance by reducing the Kingdom’s
chronic capital account surplus and, therefore, the financing of the
American current account deficit. But this is a whole other story.
Emma Carswell-Engle - Manager of Trade and Regulation at Interna-
tional Financial Services in London.
Government and Oil
Saudi Arabia is an oil-based economy, with 80 percent of
its budget revenues, 45 percent of its GDP and 90 percent
of export earnings coming from petroleum. It possesses
approximately 20 percent of the world’s proven petroleum
reserves and is rated as the largest petroleum exporter in
the world. In an effort to diversify, the Saudi government
has committed more resources to the private sector in the
areas of power generation, telecommunications, natural
gas exploration and petrochemicals.
Following its accession to the World Trade Organization
(WTO) in late 2005, the Saudi government began to
implement its plan to establish six “economic cities” in
different regions in order to attract foreign investment.
Though its comfortable financial position helped to cushion
the impact of the global economic crisis, tight international
credit and falling oil prices forced the government to
postpone some of its development projects.
34
TM1553_32-42_The Wealth of Nations.indd 34
Trouble in
Euroland
The soundness of the euro
and the dollar as investment
opportunities
How can one decide between investing in a
depreciating dollar and a euro burdened by the
Greek debt crisis? Will the €110 billion loan package
agreed by European leaders and the IMF on 2 May
to save Greece from default be enough to demise
any doubts about the future of the European
currency? Much will depend on the unfolding of
events. At the end of the day, what really matters
is what European leaders do to fix the institutional
shortcomings of the European Monetary Union.
Daniel Capparelli
T
he Balkan region produces more history than it
can consume.” Even though one may find Winston
Churchill’s famous observation unpalatable by to-
day’s code of political correctness, one can only be
struck by its witty perspicacity. Albeit not comparable to trig-
gering a world war, the region – through Greece’s economic
predicaments – could once more be about to undermine (eco-
nomic) stability in Europe. Indeed, how the EU deals with
Greece’s debt crisis may end up defining more than the mere
near future of the Greek economy; the future of the European
Monetary Union (EMU) could also be at stake.
In all fairness, Greece’s problems alone are very unlikely to
be fatal to the union. Nevertheless, the unfolding of events and
contagion could end up sapping the credibility of the euro. For
if EU members are unable to efficiently respond in a coordi-
nated fashion to the Greek problem, one could ask, how can
they provide an efficient and coordinated response to a simi-
lar situation involving one of the big EU economies such as
France, Italy or Spain?
Paraphrasing Deepak Lal from UCLA, this lack of credibil-
ity is inherently related to the way the euro was created: by
putting the cart of monetary integration before the horse of
political union. This deficit in political integration, however,
would not be so critical were the EMU to fulfill the conditions
of an “optimum currency area.”
Within a currency area, dealing with high unemployment
caused by asymmetric external shocks – and the resulting
political pressures – requires one of two things: flexible pric-
es and wages, or easy migration within the union. Neither
exists within the EMU: Wages are highly inflexible, and lan-
guage and customs are mighty barriers to migratory flows
(except, of course, in the top echelons of society). Further-
7/6/10 07:47:58

The debt crisis that has forced the European Union and the International
Monetary Fund to orchestrate a €110 billion bailout for Greece risks
spreading to Portugal and Spain. Combined foreign-bank exposures
to the three eurozone nations currently stands at over €1.2 trillion
Foreign banks’ lending to governments, banks and private
sectors of Greece, Portugal and Spain: €1.27 trillion (Q4 2009)
Switzerland Rest of world €216bn Germany
€56bn €226bn
United States
€52bn
PORTUGAL
GREECE
SPAIN
Image © Graphic News
France
Britain €210bn
€107bn Spain
Sources: Bank for International
€60bn
Netherlands
Settlements, The Economist
© GRAPHIC NEWS Other eurozone €326bn €17bn
more, the stability-pact precludes dealing with unemploy-
ment via exchange rates or (expansionary) fiscal policies,
and fiscal transfers – bailouts in plain speak – between mem-
ber states in case of crisis.
These inadequate institutions lead to situations such as
Greece’s. When faced with rapid capital outflows, stiff labor
markets make price adjustments between the tradable and
non-tradable sectors slow, if not impossible, leading thus to
unemployment, recessionary pressures and political instability.
This, in turn, has a negative impact on fiscal revenues, which
undermines the ability or willingness of governments to service
their debts.
Today in Europe, stressing these institutional shortcomings
may readily earn one the tag of Euro-skeptic. Be that as it may,
facts are facts. To quote Churchill again, “Men occasionally
stumble over the truth, but most of them pick themselves up
and hurry off as if nothing had happened.”
Take, for instance, the volatility of the euro during the Greek
crisis and compare it to the stability and even appreciation of
the dollar – at the epicenter of the global financial meltdown
– during the worse of the global financial crisis. Much of this
is explained by the much stronger credibility of the dollar face
to the euro.
Many, however, argue – or hope – the euro is growing to
become an alternative or even a substitute for the dollar as the
main global currency. To support these views, their proponents
stress the steady rise of the euro in sovereign foreign reserves
and the future weakening of the dollar as a result of the spike
in public expenditures during the crisis. The loose monetary
policy, the liquidity measures, the asset purchase and bailouts
used to avoid deflation are, truth be told, very likely to lead to
inflationary pressures. As these pressures grow in the US, they
Issue 1553 • June 2010
TM1553_32-42_The Wealth of Nations.indd 35
argue, the dollar is bound to lose value, which in turn would
end up eroding its status of safe heaven.
Conspicuously absent from their discourse remains the fact
that although the euro has indeed grown to constitute more
than one third of foreign reserves in the past decade, this has
mainly been achieved at the expense of the yen and the pound
sterling. During the same period, the dollar actually rose from
half to nearly 60 percent of sovereign foreign reserves, the
highest mark in over 30 years.
This trend might seem at odds with the dynamics of the
American burgeoning public deficits and debt. As it happens,
however, by considering a simple equation of costs and benefits
one realizes that there are systemic incentives supporting the
dollar that are absent in the case of the euro. In reality, the
market seems to question the probability of a collapse in the
value of the dollar by acting as if foreign governments would
readily step up to support the dollar if private financing were
to prove insufficient.
This market belief is not far-fetched. Take the instance
where speculation would lead to a run on the dollar. In this
case scenario, the American current account deficit would be-
come untenable, leading to a depreciating dollar, rising interest
rates and collapse of asset prices. The systemic reverberations
of such events alone are scary enough.
The story, however, runs deeper than that. The American
current account deficit is part, many believe, of what has been
called the global “savings glut – referring to the massive cur-
rent account surpluses ran by Asia, the Middle East and, to a
lesser extent, Western Europe. For reasons extraneous to our
story, these regions save more than they invest domestically and
therefore need a profitable and dynamic “investment fund” for
their “extra capital.” This is exactly what the US is in the eyes
of observers such as Martin Wolf – a massive, safe and dynamic
hedge/investment fund, a “borrower of last resort” if you will.
If this fund goes bankrupt – or is unable to sustain its current
account deficit – a world recession would very likely ensue.
This is not to say that the euro is an unviable currency. The
euroland has a priceless opportunity to reform its institutions in
order to create the necessary conditions for a credible euro. In
the absence of similar business cycles, fiscal transfers or bailouts
are fundamental. The substance of the €110 billion agreed by
European leaders and the International Monetary Fund is a
positive step forward if Europe is serious about keeping the euro
around in the medium and long run. This system needs still to
be honed and institutionalized with a mechanism to minimize
moral hazard. These costs are nothing more than payments for
the failure to put such a system together at the inception of the
EMU and for admitting countries with such a dismal history of
public finances management as Greece in the eurozone.
As wagers are being raised on whom the next victim will be
– mainly pointing at other Mediterranean countries such as
Portugal and Spain – the dream of a strong euro superseding
the dollar as a safe heaven for investors is ludicrous. Although
the dollar is likely to fall in the short run, in the long run, when
30 year bonds mature no one believes the dollar will have dis-
appeared. At this stage, no one can be sure the euro will even
be around in 30 years. Although stronger, investing in the euro
requires caution.
This article was first published in The Majalla 5 May 2010
35
7/6/10 07:47:59
 • THE WEALTH OF NATIONS

Banking in the Future

“Return on Capital” and Basel 3

As the consultation period for the international banking regulatory reform ended on 16 April 2010,
the private sector now awaits the decision on new banking rules by the Basel Committee on Banking
Supervision, the international club of regulators. Although no one can be sure of how these will affect
international banks and investors, many rumors do not bode well for the future.

Edward Bowles

R
eturn on Equity (RoE) is one of the most well used capital, and the elimination of Tier 3 as a recognized form of
metrics employed by listed companies and investors capital for regulatory purposes. These are all broadly sensible,
as a method of communicating whether there is a so long as there is appropriate grandfathering of existing capital
“reasonable rate of return” on funds invested. The instruments. The exclusion of tax deductibility as a criterion for
financial services industry is no exception in this respect. Nev- recognition as regulatory capital is also welcome.
ertheless, there has been a recent backlash from European and One of the consequences of the distinction between “going”
international regulators to the use of not only the term itself, and “gone” concern capital is the proposal to write down the
but the very reliance placed on the concept. The regulatory principal amount of non-Core Tier 1 instrument – or its con-
community is now challenging the assertion that RoE targets version to Core Tier 1, if a trigger is breached. A temporary
are an appropriate aim for the financial sector, and a relevant write-down would seem sensible, but a permanent write-down
consideration in assessing the impact of the sweeping set of would put the holders of those instruments at a disadvantage
new international banking rules proposed by the Basel Com- compared to pure equity investors, whether in the event of liq-
mittee on Banking Supervision (BCBS). uidation or recovery. Furthermore, as discussed in my article in
As all readers will readily agree, a reasonable rate of return the March issue, the use of hard-wired triggers in a contingent
is one of the principal pillars of a market-based economy. Al- convertible (CoCo) instrument could lead to a rapid downward
though banking is only one of many possible sectors where spiral of market confidence in the institution as investors rush
investors can place their funds, it is the principal channel for
maturity transformation and credit supply; through leverage,
a dollar invested in banks can be transformed into $20 or $30
made available to the wider economy. There is concern that the
cumulative and individual impact of the proposed new rules –
referred to as Basel 3 – is not only going to have unintended
consequences for investors and the economy at large, but will
also adversely impinge on emerging markets.
It is also important to bear in mind the delicate timing of these
proposals. First, the USA and a number of emerging markets
have not even fully implemented Basel 2 yet. Second, where
Basel 2 has been implemented, e.g. in Europe, it has been done
so differently. A notable example, several large continental Eu-
ropean countries opt out of supervising institutions at Solo, and
only look at the Consolidated level. This implies that some in-
stitutions are able to issue guarantees to their subsidiaries when
these do not hold high enough levels of capital, whereas the
Solo-supervised entities have to hold adequate capital.
The proposed rules were subject to a consultation that ended
on 16 April 2010. The BCBS is now reflecting on the many
responses submitted, with a view to issuing the final rules by
the end of the year.

Assessing Key Issues

In regards to the definition of capital, the rules propose the clear
distinction between Common Equity as “going concern” capi-
tal for Core Tier 1, and “gone-concern” capital in non-Core
Tier 1, such as hybrid instruments. The proposals also entail the
elimination of the distinction between Upper and Lower Tier 2

36

TM1553_32-42_The Wealth of Nations.indd 36 7/6/10 07:48:01

 to exit their positions and counterparties cut the lines to the
institution. There is every risk that this would be likely to out-
weigh any loss-absorbing feature of the instrument.
There is a political drive to implement leverage ratios across
the industry, despite the fact that these were in place in some
jurisdictions where institutions were central to the crisis and
subsequent downturn. The question, therefore, is not whether
there will be a ratio, but what purpose it would serve, and what
assets are included in the definition.
It would seem sensible for there to be a “backstop” leverage
ratio, which would serve as an additional indicator for super-
visors. For this reason, the industry is broadly supportive of
including such a ratio in the reporting and monitoring require-
ments under Pillar 2 of Basel. However, there is pressure in
some quarters of the regulatory community to include it under
Pillar 1, which would hardwire it into an institution’s capital
structure, rather than leave it to regulatory discretion. The key
to addressing the different positions might be by ensuring that
a) derivatives are included, after netting and credit risk mitiga-
tion and b) it is applied universally, including to US firms. It
would also seem sensible to use “going concern” Core Tier 1
capital as the measure in any definition of leverage.
As regards counterparty risks, regulators are concerned about
the ability of institutions to adequately assess their exposure to
The regulatory community is now
challenging the assertion that RoE
targets are an appropriate aim for
the financial sector
Image © iStockphoto
Issue 1553 • June 2010
TM1553_32-42_The Wealth of Nations.indd 37
any individual risk, and therefore have proposed a crude capital
add-on, derived using a bond-equivalent as a proxy for Credit
Valuation Adjustment (CVA) risk. There are a number of seri-
ous objections to this; first, on a ready calculation, the add-on
seems to be considerably in excess of the underlying risk; second,
banks that do not use market-implied adjustments, but historic
Probability of Default movements, are not exposed to volatility
in CVA, and the bond-equivalent would not address the risk ap-
propriately for these banks. Of most concern, however, is the fact
that many counterparties, especially in the “emerging” markets
are not traded, and would leave banks having to use proxies such
as credit indices. This would not only add basis risk to the bank’s
exposure, but also result in an increased correlation of risk, as all
banks would have to use the same indices.
A second proposal would entail an indiscriminate multiplier
for large financial institutions, and in relation to an increased
scope of exposures, including those inherently low risk facilities
that support trade finance. The result would be to dispropor-
tionately impact the better-rated counterparties, which could
see business driven to smaller and less well-rated institutions,
as well as reducing the incentives of banks to engage in trade
finance. Both these proposals will also effectively move risk out-
side the regulated system, which was part of the reason why
this crisis came about.
There seems to be little doubt that, despite the range and
depth of concerns expressed about some of the proposals, not
only by the financial services industry itself, but also by many
other interested parties, political pressure will ensure that the
BCBS pushes through even some of the more obviously unwise
elements. The reason is simple: They fear that if they do not
do it now, the impetus for change will fade. What that will do to
RoE remains to be seen.
Edward Bowles is the Head of Public Affairs, Europe, at Standard Char-
tered Bank. The views expressed here are the writer’s own and do not neces-
sarily represent the views of Standard Chartered Bank.
This article was first published in The Majalla 26 May 2010
International Cooperation in
Banking Supervision
Created in 1974 by the central bank Governors of the
Group of Ten (Belgium, Canada, France, Germany,
Italy, Japan, the Netherlands, Sweden, Switzerland,
the UK and the UK), the Basel Committee on Banking
Supervision (BCBS) formulates guidelines and standards
of best practice in banking supervision. So far, two
regulatory frameworks have been published: Basel I and
Basel II. Although countries are not forced to implement
these guidelines, the majority of them choose to do it
since implementation reduces the perceived risk inherent
of their banking systems. The latest framework in place,
Basel II, is composed of three pillars:
• Pillar I - Minimum capital requirements (addressing risk)
• Pillar II - Supervisory review
• Pillar III - Market discipline
37
7/6/10 07:48:02
 • THE WEALTH OF NATIONS

Trading With Iran:

A Closer Look at the Economics
Behind the Politics
An analysis of Iran’s trade regime, and its economic
ties to key global players

As the West continues to consider imposing tighter, more restrictive economic sanctions against Iran,
it’s worth examining the trade-related foundations underpinning the political rhetoric. In particular, Iran’s
economic ties with Russia and China further complicate an already complex international debate.

Amar Toor

A
s Iran continues to move forward with its nuclear
program, and as attempts at diplomacy have given
way to more aggressive rhetoric, the spectre of eco-
nomic sanctions has once again stepped out on to
the international theatre’s main stage. Unlike previous sanc-
tions, though, the current US proposal being circulated among
UN Security Council members would reportedly call for an
outright ban on specific transactions between UN countries
and the Islamic Republic, in an attempt to more precisely tar-
get the banking, insurance and shipping sectors under the con-
trol of the Islamic Revolutionary Guard Corps (IRCG).
The debate rages on, however, over how effective a new slate
of sanctions would be in halting or even deterring Iran’s urani-
um enrichment efforts. While most Western powers have come
out in favor of the proposed sanctions, support from Russia
and China remains critical. Not coincidentally, both hesitant,
veto-wielding countries also have significant economic interests
within Iran’s borders.
The debate may be shrouded in political discourse, but it’s
unquestionably driven by economics. And while experts and
policymakers may continue to disagree over the capacity of
sanctions to bring about real political change, the only way to
undertake a cost-benefit analysis of prospective economic sanc-
tions is from the bottom, with a more detailed excavation of the
Iranian trade climate and the trade relations governing it.

Iran’s Trade Landscape

With a full 10% of the world’s known oil reserves within its vast
borders, Iran’s economy revolves, not surprisingly, around en-
ergy. In 2007, the Iranian state pulled in $57 billion in oil export
revenue, comprising about half of all governmental revenue.
Oil currently comprises about 80% of all Iranian exports.
Under the administration of President Mahmoud Ah-
madinejad, though, the country’s domestic economy has stag-
gered under the weight of enormous government subsidies, ris-
ing unemployment, and double-digit inflation levels. Without
proper infrastructure to refine its massive supply of crude oil,
the country has been forced to import gasoline. According to

38

TM1553_32-42_The Wealth of Nations.indd 38 7/6/10 07:48:03

 a recent Reuters report, Iran imported 23% more gasoline in
February of 2010 than it did during the same month last year.
While many agree that sanctions targeting the IRCG would
exert some deleterious effect upon the Iranian economy, others
believe that sanctions could actually benefit specific partners.
Dr. Arang Keshavarzian, associate professor at the Department
of Middle Eastern and Islamic Studies at New York Univer-
sity, claims that “the tightening of sanctions will benefit three
groups – traders based in free trade zones in the Gulf (espe-
cially in Dubai), business interests in countries able to resist
or skirt sanctions 9especially in East and Southeast Asia), and
large parastatal organizations in Iran.”
Since 1996, when the US government unilaterally passed
the Iran and Libya Sanctions Act (ISLA), Iran has greatly ex-
panded its trade relations with specific partners. Although the
EU and the People’s Republic of China lead the list of Iran’s
top trade partners, recent years have seen a surge in Iranian
trade with other developing countries, such as Syria, Venezu-
ela, Cuba, and India.
With the prospect of multilateral economic sanctions once
again looming over Iran, two of the Islamic Republic’s trade
Issue 1553 • June 2010
TM1553_32-42_The Wealth of Nations.indd 39
partners – Russia and China – have each stepped in to par-
ticularly pivotal political roles, warranting a closer look at their
economic ties to Tehran.
Russian Uncertainty
Russian-Iranian trade stems primarily from a similar abun-
dance in natural gas. The two countries possess the two largest
reserves of natural gas in the world, and have developed strong
economic relations in an effort to capitalize on their endow-
ment. In October 2008, Russia, Iran and Qatar, together com-
prising a full 40% of the world’s natural gas reserves, entered
into a formal agreement to strengthen their energy related eco-
nomic bonds. In addition to their energy related endeavours,
Russia and Iran have, since 2008, expanded trade in agricul-
ture, telecommunications, and aviation.
Although the Russian government officially supported each
of the three previous rounds of UN Security Council sanctions
against Iran, it has openly helped the Islamic Republic develop
its nuclear facilities in Bushehr, which will reportedly be com-
pleted in 2011. After vehemently arguing against bringing eco-
nomic sanctions up for Security Council deliberation in 2005,
Image © iStockphoto
39
7/6/10 07:48:04
 • THE WEALTH OF NATIONS
Russia promptly voted in favour of the measures in 2006. Once
again, Russian diplomats have expressed discontent over cur-
rent proposals, while acknowledging the danger that a nuclear
Iran could present.
The most contentious issue surrounding Russo-Iranian re-
lations remains the impending delivery of air defense missile
systems to Iran, which were guaranteed under a 2005 contract
signed between Tehran and Russia’s state owned Rosoboronex-
port agency. The deal has been met with derision from Western
leaders, who argue that Russia is merely giving Iran the safety
net incentive it needs to pursue uranium enrichment.
There has also been considerable concern expressed over
Russia and Iran’s comparatively blatant exchange of scien-
tific knowledge. For years, Iran has been allowing Russian
and Ukrainian scientists free entry into the country via what
policy experts call an “underground tunnel” of suspicious
visa policies. Unlike other commodities traded across Russian
and Iranian borders, it’s virtually impossible to gauge the true
value of this knowledge exchange, although a 2009 CIA re-
port firmly claims that the assistance of Russian experts has
“helped Iran move toward self-sufficiency in the production
of ballistic missiles.”
The Chinese Enigma
While the EU has long been Iran’s largest trading partner, ac-
counting for over $35 billion of total trade in 2008, China ap-
pears poised to overtake the Europeans – if it hasn’t already.
According to a February article in the Financial Times, China
may have officially accounted for only $29 billion of Iran’s
2008 trade, but the actual figure is probably much higher, since
a substantial portion of Iranian-Chinese trade flows are fun-
nelled through the UAE. When these transhipments are taken
into account, experts estimate the grand total value of trade
flows to be at least $36.5 billion.
The Politics of Pistachios
Iran is the world’s biggest pistachio producer and
exporter, followed closely by the United States. In
2009, Iran’s export earnings from pistachios reached
$1.2 billion, representing more than 10 percent of
Iran’s non-oil exports.
Curiously, one of the world’s biggest pistachio
consumers is Israel. Despite the opinions that the
Israeli and Iranian governments have of each other,
Iranian pistachios have reached Israel for years,
mainly through EU markets. In 1996, the US alerted
the relevant Israeli authorities that Israel’s inspection
procedures were being inefficient by failing to
determine the Iranian origin of the pistachios reaching
Israel through the EU. This was not only affecting the
US exports of pistachios, it also constituted a violation
of Israeli national law, which prohibits the importation
of goods and services from Iran. Israel acted
accordingly, and made the changes to its import
inspection procedures. Current estimates indicate
that, by 2011, the US will replace Iran as the world’s
leading pistachio exporter.
40
TM1553_32-42_The Wealth of Nations.indd 40
Much of Iran’s imports from China consist of consumer
goods and machinery, while Iran, in turn, provides roughly
12% of China’s energy needs, as evidenced by the 23 million
tons of crude oil it exported to the People’s Republic in 2009.
According to recent projections from the China National Pe-
troleum Corporation, Chinese imports of Iranian oil could rise
by as much as 9.1 percent in the coming year.
Iran, crippled by its inadequate refinery infrastructure, has be-
gun importing greater amounts of refined fuel from China. Ac-
cording to a September report from the Financial Times, some-
where between 30,000 and 40,000 barrels of Chinese petrol arrive
in Iran on a daily basis, usually via third party intermediaries.
Much like Russia, China’s outward approach to Iran has
often been orthogonal to their economic and commercial ac-
tions. Although China has supported the three previous sets of
sanctions, in recent years, it has only stepped up economic co-
operation with Tehran. Several Chinese firms have assisted in
developing Iran’s energy capacities, including last year’s $1.76
billion contract to development of the North Azadegan oil
field, and a $3.39 billion deal to produce liquefied natural gas
in the South Pars field, agreed to in March 2009.
Most critical to diplomatic negotiations, though, are ru-
moured Chinese sales of missile technology to the Islamic Re-
public. China, like Russia, has a long history of arms trade with
Iran, dating back to the 1979 Islamic Revolution. The ability
of Chinese scientists to reverse engineer military technology
has allowed them to reproduce old Soviet missile technology,
and funnel the end products to Iran.
Just last year, an investigative report by the AP bureau in Taipei
revealed that Chinese merchants had successfully delivered over
100 pressure transducers to Iran, via an elaborate chain of de-
livery that masked the end destination of the devices. According
to nuclear experts, the only logical explanation for a country pur-
chasing that many transducers at one time would be for uranium
enrichment activities. The Chinese government maintains it knew
nothing of the clandestine trade, but many have read their defense
as a veiled, diplomatic attempt to avoid ruffling Iran’s feathers.
For the moment, then, the fate of a new round of economic
sanctions remains, rather ironically, dependent upon support
from two of Iran’s most prominent trade partners. Further-
more, while the set of sanctions currently under consideration
would not directly affect Iran’s energy sector, it’s clear that the
complexity of its political economy goes far beyond oil. In a
diplomatic climate in which words are invalidated by actions,
and in which economic figures, on their own, only tell part of
the story, separating political from profit-seeking behavior has
become a nearly impossible task.
It’s too early to say whether politics or economics will ultimately
decide the course of action the international community takes
with Iran. But judging from the deeply entrenched trade relations
the Islamic Republic enjoys with two enormously important world
powers, arriving at a global consensus may only be part of the
equation. At the end of the day, holding Iran’s trade partners ac-
countable to their words may prove even more difficult.
Amar Toor - Paris-based freelance writer and consultant at the OECD.
The views expressed in this article are those of the author, and do not reflect
the policy or views of the OECD.
This article was first published in The Majalla 6 April 2010
7/6/10 07:48:05
TM1553_41_Ad.indd 41 7/6/10 07:48:30
 • THE WEALTH OF NATIONS

News Behind the Graph

External Finance in Emerging Markets 32 percent drop in cross-border bank finance, while lending
Despite their freefall in the past three years, external fi- to China decreased by 15 percent before partially recovering
nance remains a fundamental element in the development of by the end of the year. The UK banking sector is the biggest
emerging markets. Indeed, foreign direct investment (FDI), source of lending to emerging markets, taking up 16 percent of
international bank lending and portfolio investment stand as the total international lending at $622bn in Q4 2009. The UK
the main sources of external finance for developing countries. is followed by the US, Germany and France, with 14 percent,
Their fall has been without precedent in the past decades, 10 percent and 9 percent, respectively.
however. Private inflows of external finance, for instance,
have plummeted from over $1,500bn in 2007 to a mere Foreign Direct Investment
$372bn in 2009. Despite falling from over $728bn in 2008,
in 2009, FDI constituted the primary source of external fi-
nance with net investment reaching $430bn. Bank withdraw-
als from international markets reached $72bn inflow lending
in 2008, while repayments attained $57bn in 2009. In 2008,
the BRICS countries and Hungary amounted to the largest
share of external finance: China topped the list with $124bn
followed by Hungary ($68bn), Brazil ($42bn), Russia ($41bn)
and India ($36bn).

Foreign Direct Investment

Estimates by IMF and UNCTAD indicate that the FDI in
emerging markets has increased by 6 percent to $728bn in
2008 only to decrease by 43 percent to $430bn in 2009. Source: IMF Balance of Payments Statistics Yearbook
Nevertheless, FDI is expected to recover in the upcoming
years as a result of sustained economic growth in emerging Portfolio Investment
markets. FDI flows to Asia and Central and Eastern Europe
have reached $281bn in 2008. China has been the biggest
source of attraction of FDI since 2001, taking up 61 per-
cent of the total flows to Asia at $148bn in 2008. FDI in
Latin America has increased $127bn, half of which is go-
ing to Brazil and Mexico. On the other hand, FDI flows to
the Middle East and Africa have been significantly lower, at
$78bn and $41bn, respectively.

Portfolio Investment
Following a peak of $225bn in 2007, portfolio investment has
experienced an $80bn net disinvestment in 2008 by foreign in-
vestors, followed by an estimated inflow of $50 billion in 2009.
China attracted the biggest share of portfolio investment in- Source: IMF Coordinated Portfolio Investment survey
flows ($10 billion) followed by Mexico and Chile. Russia and
Malaysia experienced disinvestments of over $20bn. International Bank Lending
Investors in the US, UK and Luxemburg are considered
the main sources of portfolio investment, holding 30 percent,
11 percent and 9 percent of the assets, respectively. Investors
from the three countries hold about $679bn of the assets in
20 emerging markets, followed by Singapore and Hong Kong.
Brazil, Mexico, Russia and India are considered the biggest re-
ceivers of US investment, while investments from the UK and
Luxemburg tend to be spread around the world.

International Bank Lending

Being considerably more volatile than FDI and portfolio in-
vestment, lending has experienced a sharp decline in 2008 to
$72bn following a peak of $612bn in 2007. In 2009, outflows
reached only $57bn. In the same year, Russia experienced a Source: BIS Quarterly Review of Banking & Financial Market Developments

42

TM1553_32-42_The Wealth of Nations.indd 42 7/6/10 07:48:06

TM1553_43_Ad.indd 43 7/6/10 07:48:50
 • THE HUMAN CONDITION

The Arab world has a rich biodiversity, yet it

does not come to mind as being in need of
nature conservation. Jordan, however, has been
an innovator in environmental conservation by
One With Nature
merging pragmatism and principle. It does not Jordan’s Environmental
prioritize environmental wellbeing over human
welfare. Instead, it successfully integrates the two.
Conservation Program
The progressive, balanced and culturally sensitive
way in which Jordan pursues environmental
conservation is a model from which other Arab
countries can draw important lessons.

Noam Schimmel

E
nvironmental conservation efforts to protect natural
habitat tend to receive the greatest attention when
they relate to natural habitats that have immense bio-
diversity and that the average person associates with
teeming life, such as tropical rain forests. Because so much of
the Arab world consists of desert, the Middle East does not typ-
ically come to mind as being in need of nature conservation.
Indeed, the World Wildlife Fund has prioritized 19 eco-sys-
tems around the world in urgent need of preservation. They
range from the Amazon, to Sumatra and Borneo in Malaysia
and Indonesia, to coastal Africa and the Congo Basin. No Mid-
dle Eastern eco-system features on this list, with the exception
of the Somali coast.
But the Arab world does have its share of rich biodiversity –
from the Mediterranean climate of countries such as Tunisia,
which fosters unique and biologically diverse and dense flora and
fauna, to the marshes and wetlands of Iraq. The great desert ex-
panses of countries like Egypt, Jordan, Oman and others also host Until 2007 the Arabian Oryx
an array of animal and plant life, much of which is threatened due
to human encroachment, pollution and overdevelopment.
Sanctuary in Oman had been
During the past several decades Jordan has been an innova- listed as a UNESCO World
tor in environmental conservation. Relying on indigenous re-
sources, government policies and civil society, different interest Heritage Site, but it was removed
groups have been working in concert to advance the protection
of land, wildlife and plant life. Other Arab countries have fol-
when the Omani government
lowed suit, making efforts to create legally enforceable conser- reduced the site by 90 percent
vation programs and to rehabilitate endangered wildlife, such
as the Arabian Oryx. Although, few have programs as exten- The Royal Society for the Conservation of Nature (RSCN)
sive and rigorously managed as Jordan’s. in Jordan focuses on nature conservation, research and envi-
Until 2007 the Arabian Oryx Sanctuary in Oman had been ronmental education. The RSCN has a long history, dating
listed as a UNESCO World Heritage Site, but it was removed back to 1966 when it was first established. It manages protected
when the Omani government reduced the site by 90 percent areas and also runs captive breeding programs to help preserve
and pursued oil prospecting on much of the land that was endangered species, such as the Arabian Oryx, gazelle and
originally part of the sanctuary. This is but one example of the ibex. However, like other environmental organizations globally,
acute vulnerability of the natural environment to degradation in recent years the RSCN has shifted its focus from conserva-
caused by humans. Conservation, typically, is a low-priority tion efforts targeting particular animal species to habitat con-
area for governments, and fragile eco-systems are undermined servation, which maximizes overall biodiversity. It also strives to
as a result. In 1996 when the Omani Sanctuary was still at its integrate the needs of local communities in its efforts, incorpo-
full size and protected as a UNESCO heritage site there was a rating a simultaneous commitment to community development
population of 450 Arabian Oryx living there. That number has and poverty reduction.
now drastically dropped to 65, with only four breeding pairs. Some current projects of the RSCN include improved water
Consequently, the sanctuary may not be viable in the future. resource management in the Mujib Nature Reserve with the
Poaching and habitat degradation are cited by UNESCO as support of the Canadian International Development Agency;
being the main causes for this drop in the population. conservation of herbal and medicinal plant with the support of

44

TM1553_44-47_The Human Condition.indd 44 7/6/10 07:55:37


Image © Getty Images
the World Bank; eco-tourism development with the support of
the United States Agency for International Development; for-
est conservation promotion in the Ajloun Nature Reserve area
funded by the European Union; and an extensive eco-system
management program for the Jordan Rift Valley sponsored by
the World Bank. The RSCN has also reached out to neighbor-
ing countries, providing training in environmental management
and preservation to seven Middle Eastern countries addressing
water management, land use planning, law enforcement and
institutional capacity building.
Sites of great environmental significance that are protected
as nature reserves in Jordan include, for example, the Ajloun
Nature Reserve in northern Jordan with its forests of oak, pine,
pistachio, carob and wild strawberries; and a captive breeding
program for deer endemic to that area, which began in 1988
and has helped restore their population.
The RSCN manages seven protected areas: Dana, Wadi Mu-
jib, Azraq, Shaumari, Dibeen, Ajloun and Wadi Rum. These
cover 1,200 square kilometers. The organization is considering
the establishment of four new reserves in the next six years.
Recognizing that long-term environmental conservation de-
pends on the conviction of the public to demand respect for the
environment and hold the government accountable for doing so
in its policies, the RSCN promotes public education about the
importance of conservation. It has also developed educational
curricula for grade school students in Jordan, relating environ-
mental topics to subjects such as geography and science, enabling
students to appreciate the value of environmental conservation.
Issue 1553 • June 2010
TM1553_44-47_The Human Condition.indd 45
Why is Biodiversity Important?
The Links Between Biodiversity
and Human Wellbeing
(Source United Nations Environment Programme)
Food Security: The availability of biodiversity is often
a “safety net” that increases food security and the
adaptability of some local communities to external
economic and ecological disturbances. Farming
practices that maintain and make use of agricultural
biodiversity can also improve food security.
Vulnerability: Many communities have experienced
more natural disasters over the past several decades.
A common finding from the various sub-global
assessments was that many people living in rural
areas promote ecosystem variability and diversity as a
risk management strategy against shocks.
Health: A balanced diet depends on the availability of
a wide variety of foods, which in turn depends on the
conservation of biodiversity. Moreover, greater wildlife
diversity may decrease the spread of many wildlife
pathogens to humans.
Energy Security: Wood fuel provides more than half
the energy used in developing countries. Shortage
of wood fuel occurs in areas with high population
density without access to alternative and affordable
energy sources. In such areas, people are vulnerable
to illness and malnutrition because of the lack of
resources to heat homes, cook food and boil water.
Clean Water: The continued loss of forests and the
destruction of watersheds reduce the quality and
availability of water supplied to household use and
agriculture. In the case of New York City, protecting
the ecosystem to ensure continued provision of
clean drinking water was far more cost-effective than
building and operating a water filtration plant.
Social Relations: Many cultures attach spiritual,
aesthetic, recreational and religious values to the
ecosystem. The loss or damage to these components
can harm social relations, both by reducing the
bonding value of shared experience as well as by
causing resentment toward groups that profit from
their damage.
One of the unique aspects of RSCN is its merging of pragma-
tism and principle. It does not prioritize environmental wellbeing
over human welfare. Instead, it tries to integrate the two. Wild
Jordan is the business side of RSCN, which incorporates socio-
economic programs within the nature reserves that increase rev-
enue for local communities, encourage the development of their
skills to produce marketable products, and enable them to ben-
45
7/6/10 07:55:38
 • THE HUMAN CONDITION

efit from the natural environment while simultaneously protect-

ing it and ensuring its long-term viability. Small businesses that
Wild Jordan has developed include jewelry, organic jams, fruit
Playing the
leathers, olive oils and products made of goat leather.
According to the RSCN, “All of these initiatives are tied to a
strong promotional concept that uses ‘the reserve address’ and the
Identity Card
conservation philosophy as the main selling points.” Some of the
most successful of these projects focus on tourism and hospitality,
Jordan and its Palestinians
and were first initiated in the Dana Biosphere Reserve near Petra.
Working with local Bedouin communities the RSCN devel-
oped a campsite, guesthouse and eco lodge, as well as other Jordan has been the subject of criticism for its
income-generating activities such as handicrafts, which are sold decision to withdraw citizenship from several
to tourists. According to the RSCN, “Such ventures continue thousand of its citizens of Palestinian origin.
to make nature conservation important to the lives of Dana Although the decision has been defended by
residents and create a constituency of local support for the Re- Jordan as a means to counter Israeli plans to
serve, which, in the past, was often a source of conflict with transfer the Palestinian population of the West
local people. Dana today is firmly on the ‘tourism map of Jor- Bank to Jordan, there is more at play in the
dan,’ attracting over 30,000 visitors a year; and it has won four situation. Palestinians in Jordan are predisposed
international awards for sustainable development.”
to economic and political disenfranchisement,
Because this has been a very successful approach to both en-
vironmental conservation and community development, Wild and the decision to withdraw their citizenship is
Jordan has begun to develop such tourist lodging sites and ac- an unrealistic solution to this problem.
companying handicrafts programs in reserves throughout the
country. It has also opened a center in Amman to reach tourists Chris Phillips
who are staying in the city who may wish to learn more about
Jordan’s natural environment and to buy handicrafts.
By its own admission, “Getting the balance right between
the interests of conservation and the interests of local people
is not easy. After years of experience, RSCN and Wild Jordan
have developed a well-thought-out approach to resolving po-
tential conflicts, but it is clear that there is no magic formula for
any given situation. We are always trying to apply the lessons
learned from our experience and improve our ability to put
both nature and people first.”
As someone who has had the opportunity to experience the
intense otherworldly beauty of Wadi Rum with its giant rocky
outcroppings, trickling streams and the extraordinary vistas, I

Image © Getty Images

can confirm that the progressive, balanced and culturally sensi-
tive way in which the RSCN pursues environmental conser-
vation is a model from which other Arab countries can draw

important lessons from. Beyond the numbers proving the bio-
diversity of a particular reserve area, the detailed management
plans and endless meetings between administrators and local
communities, there is a feeling of expansiveness and humility
in each and every one of Jordan’s nature reserves.
In the Azraq wetlands it may be the sight of a bird’s wing
flapping as it takes flight; in Wadi Rum, the redness of the
setting sun against the sand dunes and the clarity of the stars
in the night sky; in Wadi Mujib, the freedom of clambering
through streams and down waterfalls; and in the Ajloun Nature
Reserve, the green density of pines and oaks and the startling
redness of a wild strawberry.
After four trips to Jordan I still find myself coming back be-
cause of these sights. Of the knowledge and experience of their
continuity, their wholeness and integrity, one never tires.
Noam Schimmel is a London-based researcher and human rights practitio-
ner with extensive development experience in the field.
This article was first published in The Majalla 18 May 2010
F
or a country that takes great care to promote a posi-
tive image abroad, Jordan has recently been sub-
jected to unusually harsh criticism from Western
NGOs. In February, Human Rights Watch accused
Amman of arbitrarily withdrawing citizenship from sever-
al thousand of its citizens of Palestinian origin, “denying
them basic citizenship rights such as access to education and
health care.” Similarly, the previous month Freedom House,
the Washington-based democracy watchdog, relegated the
Hashemite Kingdom from the tiny list of ‘partly free’ Arab
governments to the ever-increasing collection of ‘not free’
states in the Middle East.
The two complaints are not unrelated. The failure of Jor-
danian democratizing initiatives has much to do with govern-
ment fears that genuine freedom will allow its Palestinian-
originating majority to dominate over the East Bank elite
who have ruled in Amman since independence. The practice
of withdrawing citizenship from a select few stems from the
same concerns. Though over half of Jordan’s population are

46

TM1553_44-47_The Human Condition.indd 46 7/6/10 07:55:40

 of Palestinian origin, many are economically and politically
disenfranchised and social divisions remain acute. Despite
sixty years of attempted integration, the Hashemite monar-
chy has still not come to terms with its ‘Palestinian problem’.
The Hashemites’ fear of its Palestinian population has deep
roots. Forty years after Jordan lost the West Bank to Israel,
and sixty years since the first Arab-Israeli war, descendents of
refugees from both conflicts remain in breeze block refugee
camps scattered around Jordan, alongside a further 300,000
that were expelled from Kuwait during the 1990-91 Gulf Cri-
sis. According to the United Nations Relief and Works Agen-
cy (UNRWA) that operate these camps, in 2003 1.7 million of
Jordan’s 6.3 million population were registered refugees.
It was from these camps that Yasser Arafat’s PLO drew
support in the late 1960s until they were crushed by King
Hussein’s forces in the 1970 Black September civil war
amidst fears that Arafat sought to replace the Hashemite
monarchy with a revolutionary Palestinian state. Though
Arafat was exiled to Lebanon, the idea of a Palestinian gov-
ernment in Jordan was revived by the unlikely source of
Israel’s Likud Party in the 1980s and 90s which sought to
legitimize their annexation of the West Bank with the slo-
gan, “Jordan is Palestine.” Despite Hussein signing a peace
with Tel Aviv in 1994 and renouncing his own claim to the
West Bank in 1988 – thereby giving his support to the idea
of a separate Palestinian homeland outside of Jordan – the
election of Benjamin Netanyahu last year has revived Am-
man’s paranoia. Indeed, as Human Rights Watch reported,
Jordanian officials defended the practice of withdrawing cit-
izenship from Palestinians as a means to counter any future
Israeli plans to transfer the Palestinian population of the
West Bank to Jordan.
Yet withdrawing citizenship from every Jordanian Pales-
tinian to guard against right-wing Israeli rhetoric would be
impossible and such recent actions must be seen more as a
method by disgruntled citizens rather than a tool to actually
redress Jordan’s demographic balance. This is in line with a
wider practice of official and unofficial discrimination with-
in the kingdom. On the one hand, unlike refugees in Leba-
non and Syria, Jordanian Palestinians enjoy full citizenship
rights entitling them to live where they like, be educated and
to vote. At the same time, many Palestinians face a glass ceil-
ing whereby the vast majority of positions in the army, civil
service and government are filled by the East Bank Jordanian
minority. Moreover, political discrimination is widespread.
Carnegie’s Arab Reform bulletin highlights that in Jordan’s
parliamentary elections, urban areas with large Palestinian
populations receive the same number of MPs as rural areas
with a population up to seven times smaller to ensure the
dominance of East Bank Jordanians.
Magnifying these divisions is Jordan’s economy. Whilst
western allies have praised King Abdullah II’s market re-
forms since inheriting the throne in 1999, their effects have
been lopsided. Fueled by foreign investment, central Am-
man is currently awash with cranes building new skyscrap-
ers, banks, luxury hotels and malls – including the new $300
million Jordan Gate complex and the $370 million Abdali
Central Marketplace. Yet any benefit is largely restricted
to a small elite, and the United Nations Development Pro-
gramme warned recently that poverty and unemployment,
Issue 1553 • June 2010
TM1553_44-47_The Human Condition.indd 47
both currently at 13%, is likely to increase. Jordanians al-
ready speak of two Ammans: the wealthy West and the poor
East. Not surprisingly, most of the inhabitants of East Am-
man are originally Palestinian.
The division though is by no means black and white, and
many among the West Amman elite are themselves of Pal-
estinian origin. At the same time, many of the thousands
of Jordanians living below the poverty line have no familial
ties to Palestine. Even so, the Jordanian government is well
aware of the problem of its mass of urban poor Palestinians,
who resent both their economic and political disenfranchise-
ment. This situation is only exacerbated by frustration at
Jordan’s policy towards Israel and the Palestinian territories.
Despite a decade and a half of peace with Tel Aviv, Jordan’s
Palestinians have seen neither material benefits at home nor
relief for their relatives in Palestine. Whilst paying lip ser-
vice to the Palestinian cause, Abdullah II’s apparent compli-
ance with the US and Israel on issues such as the Iraq war,
the boycott of Hamas and his comparative silence during
the Gaza War only serve to heighten a perceived distance
from the government.
Forty years after Jordan lost the
West Bank to Israel, and sixty
years since the first Arab-Israeli
war, descendents of refugees
from both conflicts remain in
breeze block refugee camps
scattered around Jordan
Whilst Abdullah is clearly torn between the pro-Palestin-
ian sentiment of his population and the need to toe the line
of his western allies to secure aid and investment, the con-
tinued revocation of citizenship from Palestinians suggests
that the latter will always outweigh the former. On the one
hand, Abdullah appears keen to address the divisions in his
society. Since assuming power, the King has launched three
widespread campaigns to promote national unity. ‘Jordan
First,’ ‘We are all Jordan,’ and ‘The National Agenda,’ were
all designed to integrate the disparate elements of Jordan’s
population, particularly the Palestinians, behind the state
and monarchy. Yet these were not accompanied by any real
effort to end political discrimination or economic imbal-
ance, so it is not surprising that they had little impact on
lessening dissent.
Slogans cannot paper over the cracks of decades of divi-
sion. Irrespective of developments in the West Bank, until
the real problem of economic and political disenfranchise-
ment at home is addressed, Amman is likely to continue to
rely on intimidation tactics like revoking citizenship and de-
creasing freedoms to deal with its disgruntled Palestinians.
Chris Phillips – An Associate of The Foreign Policy Centre and a colum-
nist on Middle Eastern politics for The Guardian Online
This article was first published in the Majalla 6 April 2010
47
7/6/10 07:55:40
 • A THOUSAND WORDS

Relatives embrace over the coffin of one of the

victims of Israel's deadly raid on aid ships
bound for Gaza on June 3, 2010

48

TM1553_48-49_A Thousand Words.indd 48 7/6/10 07:58:07

 Image © Getty Images

Issue 1553 • June 2010 49

TM1553_48-49_A Thousand Words.indd 49 7/6/10 07:58:09

 • CANDID CONVERSATIONS

Baiting Khamenei
Interview with US Ambassador John Limbert

US Ambassador John Limbert is the only serving US official to have met face-to-face Ayatollah Ali
Khamenei, now the Supreme Leader of the Islamic Republic of Iran. His meeting with Khamenei in 1981
was held under very particular circumstances, as Limbert was one of the US diplomats held for 444 days
in Tehran. Limbert spoke with The Majalla about the future of US-Iranian relations.

Iason Athanasiadis

A
merica’s top expert on Iran is the only serving US
official to have had a face-to-face meeting with the
Supreme Leader of the Islamic Republic of Iran,
the famously aloof Ayatollah Ali Khamenei. Al-
though he rarely meets with politicians, Khamenei sometimes
makes exceptions for Iranian allies such as Russian President
Vladimir Putin and Turkish Prime Minister Tayyip Erdogan.
Ambassador John Limbert inhabits a very exclusive club: He
travels the globe in his capacity as a senior State Department
diplomat seeking to build an international coalition against Iran.
However, his 1981 meeting with Khamenei was conducted in sur-
roundings entirely divorced from the niceties of diplomatic proto-
col. Then, Limbert was a prisoner and Khamenei, a captor.

We should see that the Afghan

government has actually failed

Image © Eric Bridiers

to carry out any truth and 10 February 2010: John Limbert visited Geneva in advance of the
reconciliation process since 2001 Human Rights Council's first Universal Periodic Review of Iran

Limbert was one of the US diplomats held for 444 days by the
revolutionary Iranian regime. In January 1981 Khamenei swept
into the US Embassy compound where the Americans were be-
ing held for a televised visit. Dressed in his clerical robes, black
turban, and chunky reading glasses, Khamenei faced Limbert,
whose fluent Persian was difficult to ignore. Having learned Per-
sian during the four years he spent in Iran, the young US diplo-
mat had a few choice words for the future Supreme Leader.
In typical Persian fashion, Limbert ditches brash American
confrontationalism for honeyed, double-edged pleasantries.
Bidding the then-deputy defense minister to sit down in a bare
room but for posters of Ruhollah Khomeini and a map of the
region, Limbert apologizes for being unable to offer traditional January 1981: John Limbert talking with Ayatollah Khamenei inside
Persian hospitality. “The lads haven’t brought any sweets to- the Embassy compound in Tehran during the hostage crisis
day,” he points out, referring to his captors.
Khamenei stares at him with a glassy smile while Limbert intended to showcase the consideration with which the new re-
launches into a monologue praising Iranian hospitality. Ira- gime looks after its American prisoners, despite being burdened by
nians are so hospitable, he dumbly enthuses, that “they don’t the hardships brought on by the Revolution and Iraq’s invasion.
want to allow their guests to leave.” “Quite the opposite. Both the lads here and the Iranian peo-
So infuriating is Limbert’s verbal onslaught, it prompts ple don’t want you to stay… they want you to leave the soonest
Khamenei to commit the cardinal sin of any Iranian argu- possible,” he says.
ment, however heated: brutal honesty. Thirty years after leaving Iran, Limbert’s Persian is still in
“Actually, no one wants you to stay here,” Khamenei snaps back, working order; his Iranian wife sees to that. His current appoint-
fully aware he is being toyed with on a televised propaganda piece ment is a sign that US President Barack Obama recognizes the

50

TM1553_50-55_Candid Conversations.indd 50 7/6/10 07:59:02

 value of regional specialization as part of his staff ’s experience
and education. It is the kind of preference that went out of fash-
ion with the extinction of State Department Arabists such as the
legendary Hume Horan, incidentally himself of Iranian origin.
As the US seeks to convince the UN Security Council’s non-
permanent members – Brazil, Lebanon and Turkey – to sup-
port added sanctions on Iran, Limbert answered The Majalla’s
questions about the future of the US-Iranian relationship.
The Iranian line on the change in regime in Washington
– Obama following Bush – is that there’s been a change
in tone though not substance. How would you respond
to this charge? In what way has US policy changed vis-
à-vis Iran compared to the Bush years?
I think they’re missing it if that’s what they really believe. And
I’m not sure that’s what they really believe or find it convenient
to believe as a delaying tactic.
What are the significant changes then?
Well it’s very clear. Obama said it as early as the campaign that
he was going to change this relationship. We’ve had 30 years
of estrangement. Sometimes you’ve had a few signs of process
going here and there but it hasn’t gone anywhere.
He said it in the campaign, he said it implicitly in his inter-
view with Al-Arabiyya; he said it explicitly with his Nawruz
(Iranian new year celebration) message; he said it in Cairo; he
said it again at Oslo in his (Nobel Peace Prize) speech. It’s hard
for me to see how they could claim there’s been no change. Of
course, they can go out and find statements by this or that of-
ficial and perhaps there’s something in them that they don’t like
but to me that’s bahanegiri, making excuses.
So some of the proposals on the table that are dif-
ferent from those of the Bush administration include
this new deal that effectively accepts Iran’s uranium
enrichment program on its territory, to some degree,
and the alleged withdrawal of funding for the democ-
racy promotion program. Have there been any other
substantive changes or offers?
Well, depends by what you mean as substantive. The thing that
I would point to – because we deal in the realm of symbols –
would be something Obama said in the Nawruz message that
he addressed to, not just the people of Iran, but also to the
government of Iran. This was deliberate change. The Bush ad-
ministration had never done that. Even the Clinton administra-
tion had a hard time doing that. And this was deliberate.
He came back to that in his Oslo speech when he talked about
engagement with governments that don’t have a very good human
rights record. I think that’s a change. The other change is who he
is. It’s very difficult to demonize a Barrack Hussein Obama.
But Iranians argue that this is just fancy window
dressing. He has a Muslim name but he is ultimately
pushing through the same policies such as the drone
strikes in Pakistan and …
If that’s what they want to see, they’re going to see it, but I
think in doing so they’re ignoring the reality.
There were young Iranians with Obama screen sav-
ers on their iPhones this summer in Tehran and ev-
Issue 1553 • June 2010
TM1553_50-55_Candid Conversations.indd 51
eryone was talking about the Obama effect in terms
of the campaign that Mousavi had run.
The word I’ve used to describe Obama for the Iranians is not
doshman but havoo. It’s a co-wife – a second wife, which is
much more dangerous than an enemy because she’s younger,
more attractive … between doshman and havoo.
So when you’re faced with this havoo, in a way he has stolen
the enemy from them. It’s difficult to deal with it. So one of the
things they’ve done is to take refuge in “well, it’s just the same
thing with new window dressing.” So that’s a hard case to make.
You bring to the job an understanding of Iranian cul-
ture, fluency in Farsi alongside such people as Vali Nasr
and formerly Ray Takeyh (ethnic Iranians appointed
by the Obama administration as Iran experts). Is this
a noticeable change in substance compared to the pre-
vious administration’s policy on Iran?
I think that this administration has made its desire very clear
on what it wants to do. If I didn’t think that this was sincere I
wouldn’t have accepted the job. The last time we corresponded
I was very happy as a private citizen, but this was a chance to
do something.
The other issue is that we’ve lost our cadre of Iranian exper-
tise. I’m one of a species sometimes called an Iranosaurus.
You and the Arabists?
And the Arabists. We have new people who are doing great
work, but between that, there’s nothing in the middle; and
there are very few, maybe one or two people, still on active duty
in the foreign service who actually have served in Iran.
In terms of Iranian Americans, they’re a source of information,
a source of wisdom. We haven’t frankly been very good at making
use of their skills but we would probably need to do better.
That is one of the charges leveled against the current
cadres, that none have been in Iran since, in some
cases, before the 1979 Revolution.
You can certainly make that charge against me. I haven’t been
there since 1981. I’d like to go back. What I’m told is that a lot
of things have changed but a lot of things remain the same.
Has there been a realization now that simply speak-
ing nicely to Iran is not going to be a game changer as
we move towards sanctions?
I don’t think it was ever that way. I hope we weren’t so naive as
to think that if we’re nice to them they’ll be nice to us. I wish
the world worked that way, but certainly in the case of our rela-
tions with Iran it hasn’t worked that way for a very long time.
Because when one side says they want to be nice to the other,
the other side suspects a trick, because otherwise, why would
they want to be nice to us?
So why the insistence, under the terms of the urani-
um-swap deal, that all 1,200kg of the uranium go out
of Iran? This seems to be the sticking point for the
Iranians who think that the deal is a conspiracy to, in
one fell swoop, deprive them of their entire stock of
enriched uranium.
This really is out of my area. There are a lot of theories about
that, conspiracy theories for me.
51
7/6/10 07:59:03
 • CANDID CONVERSATIONS
How about sanctions? How effective can they be if
they are not going to target the Iranian people them-
selves but the IRGC (Islamic Revolutionary Guard
Corps)? To what extent can they be a game changer in
bringing Iran to the table for concessions?
On the one side they will be defiant and claim they don’t care.
On the other side they don’t like being singled out as miscre-
ants in the international community. It puts them in a category
they don’t like to be, down with the Libyans and the Sudanese.
And I don’t have to tell you what the Iranian view of their Arab
friends is (smiles).
That’s psychological, but I think it matters. The other piece
is whom they will affect. The intention is not to harm the great
majority of the Iranian people. They’ve suffered a lot as it is and
had to put up with a lot, and it’s not our intention to increase
that. The intention is to get to the people or institutions that are
beating them up, throwing them in prison, shooting at them, gas-
sing them. And if you can do that, and visibly, at least according
to what I hear, those kind of sanctions would get support.
Sometimes isn’t there an element of cultural relativism
in the US approach to Iran and the greater region? That
somehow “they are the baddies who need to be punished
and then there are the goodies who are on our side.”
I don’t think anyone’s claiming that these sanctions will bring
democracy to Iran. A question I get many times from Iranian
friends is “we’re suffering under a difficult government. Can you
help us? What can you do for us?” We can make statements; we
can bear witness. But is there something else one can do?
So what was your impression of Khamenei when you
met him? How did he come across?
Well, we were all 30 years younger at the time. I was bait-
ing him. You’ve seen the video [http://niacblog.wordpress.
com/2009/11/04/hostage-john-limbert-speaking-with-
khamenei/]. At first I think he wanted to elicit some kind of
statement from me but when he realized what was going on—
because I think he’s a pretty smart person—he realized what
was going on and then he played along.
Did you feel at that point that you were speaking with
someone who was going to be the top guy in a few
years’ time?
I had no idea. I had no idea. Obviously he was very much part
of the inner circle. At the time he was Friday prayer leader of
Tehran and also a member of the Supreme Defense Council.
This was a period when there really wasn’t any government as
such. The provisional government had fallen—there was no
parliament; there was a kind of temporary arrangement. But
Friday prayer leader of Tehran, even then, was a very impor-
tant post. The Friday prayer leaders in the key cities were defi-
nitely members of the inner circle.
And so if you met him again, what would you talk about?
I’d be happy to meet him again. We could reminisce about
meeting 30 years ago.
Do you think that personal touch is something key
in diplomacy?
It should be. It is, but… I don’t have an invitation to go there.
52
TM1553_50-55_Candid Conversations.indd 52
4 November 1979
BBC News reports
Militants storm US embassy in Tehran
Militant Islamic students in Iran have stormed the US
embassy in the Iranian capital, Tehran, and taken
more than 90 people hostage. The students have
demanded that the Shah of Iran, who fled the country
in January, be extradited from the US, where he is
currently receiving medical treatment for cancer, to
stand trial in Iran.
It is reported that revolutionary guards and police did
nothing to stop the take-over and Iranian television has
indicated its support for the action by broadcasting live
pictures of the siege. Ayatollah Ruhollah Khomeini, who
assumed control of Iran in February, has also voiced his
support for the occupation.
‘Show of strength’
It is not clear at this stage how many of the hostages
are American although it is estimated that the figure
is approximately 65. One of the hostage-takers,
speaking to reporters by telephone from inside
the embassy, gave assurances that there was no
immediate danger to the hostages, that they were
safe and were being fed. He said the action was a
show of strength and the hostages could be released
in the next two or three days.
Supporters of the siege, many of them children,
have gathered outside the embassy. Some have set
fire to American flags and have posted anti-American
messages around the building. As yet there has been
no official reaction to the siege from America.
The storming of the embassy follows months of
political and religious tension in Iran. Violent protests
against Shah Reza Pahlavi's regime culminated in a
revolution coordinated by Ayatollah Khomeini from
exile in France.
In January the Shah and his family fled Iran and are
currently in the US. Within weeks, Ayatollah Khomeini,
who had been expelled from Iran by the Shah in
1964, returned to Iran and was greeted by more
than five million devotees lining the streets of Tehran.
The Ayatollah immediately dismissed Prime Minister
Shapur Bahktiar and installed Mehdi Bzargan as his
replacement. He declared an Islamic Republic of Iran in
April and since then he has presided over a brutal and
repressive regime. Thousands of westerners living in
Iran have already fled the country in fear of their lives.
Interview conducted by Iason Athanasiadis – journalist based in Istanbul,
covers Turkey, the Middle East and Central Asia. Since 1999, he has lived
in Cairo, Damascus, Doha, Sana’a and Tehran.
This article was first published in The Majalla 10 April 2010
7/6/10 07:59:03
 The Murdoch of the Middle East
Othman Al-Omeir, Saudi journalist and publisher

Othman Al-Omeir is a Saudi journalist and publisher, who has revolutionized the role of media in the
Middle East. This media mogul is not only known for his professional accomplishments, he is also a
vocal liberal in an otherwise conservative region.

Paula Mejia

O
thman Al-Omeir has revolutionized the role of
media in the Middle East. This media mogul is
not only known for his professional accomplish-
ments, he is also a vocal liberal in an otherwise
conservative country.
Born in 1950 in Riyadh, Al-Omeir pursued his education at
the University of Medina. He later began his career in journal-
ism as a junior sports correspondent for a Saudi newspaper. He
quickly established a name for himself and became managing
editor and London correspondent for Al-Jazeera newspaper
in Riyadh. Among his many accomplishments, Al-Omeir has
been editor in chief of Al-Yawm newspaper, editor in chief of
Al-Majalla, and a member of the board of directors for Al-
Jazeera newspaper in Saudi Arabia.
During his long career in journalism he interviewed many
world leaders exclusively including President George Bush Se-
nior, Prime Minister Margaret Thatcher, Prime Minister John
Major, Chancellor Helmot Kohl, President Jacque Chirak,
King Fahad, President Husni Mubarak, King Hassan II, Presi-
dent Zainulabideen Bin Ali, President Rafsanjani, President
Gorbachev and many more.
Al-Omeir’s business savvy has allowed him to undertake vari-
ous publishing ventures. He set up a UK-based media compa-
ny, OR Media Limited, in partnership with Abdulrahman Al-
Rashed to produce TV programs for Middle East, British and
American stations. He also launched Elaph Publishing Limited
in the UK and its associated company in Saudi Arabia, which
quickly became the leading Arabic news portal. Mr. Omeir is At that time there were few serious programs on television,
currently undertaking plans to publish Elaph online as a print- and there was no Internet. Magazines were one of the big re-
ed newspaper throughout the world. In addition, Mr. Omeir sources people relied on for information. We had many intel-
acquired the Maroc Soir publishing house, the leading news- lectual and distinguished writers, like Tayeb Saleh, Buland Al-
paper publisher in Casablanca Morocco, which publishes Le Haidari, among others.
Matin, a daily newspaper in French, Al-Sahara Al-Maghribia, I was very serious about my position as editor in chief and
a daily newspaper in Arabic, moroccotimes.com, an English was passionate about my job. I think this is partly why the mag-
language news web site, and La Manana, a weekly Spanish lan- azine was successful.
guage newspaper.
Al-Omeir’s many accomplishments have been recognized You are well known in Arab media, but you are a di-
extensively. He is currently a member of the Royal Academy in visive figure. Some have described you as more in-
Morocco, and in 2006 he was awarded Media Man of the Year clined towards PR than journalism. How do you see
by the Arab Media Forum in Dubai. your role in the media?
I don’t see anything wrong with having good public relations
As the former editor in chief of The Majalla, how do skills and being a “good media man.” The only time this be-
you remember the magazine? How has it evolved? comes a problem is when the public relations becomes more
It was a golden time for me because Al-Majalla was one of the important than the journalism. Otherwise, I believe that if you
main Arab magazines. It was a golden age for the Arab media, have good tactics and good luck you will be successful; the press
for the newspapers. will come behind you.

Issue 1553 • June 2010 53

TM1553_50-55_Candid Conversations.indd 53 7/6/10 07:59:05

 • CANDID CONVERSATIONS
People who accuse me of focusing more on public relations
don’t know how to do public relations themselves. There are
many decent and bright people who have failed because they
did not have good public relation skills.
Although Alsharq Alwasat enjoyed great success un-
der your leadership, others like, Nizamuddin and
Jihad el-Khazen, Claim to be responsible for its suc-
cess. How would you respond to this?
Asharq Alawsat was founded by two brothers: Hisham and
Mohammad Hafez. They directed and managed the paper for
a very long time. The first editor in chief was Jihad El-Khazen.
Nizamuddin was the third editor in chief, and when he left the
paper, the publication was only 12 pages long.
Is it true that you had a difficult relationship with the
former publishers of Asharq Alawsat and Al-Majal-
la—Hisham and Mohammed Hafez?
In any job you have to expect some things to run smoothly and
others to run with more difficulties. The Hafez brothers are
very good journalists, no one can deny this, but they come from
different schools, different backgrounds. This is probably why I
had a difficult time working with them, but I enjoyed it.
Elaph’s website has been banned in Saudi Arabia.
Why do you believe this has occurred?
We are, I believe, a liberal newspaper, open to a wide range of
ideas. It is banned in Saudi Arabia now but the ban could be re-
moved in the future. I don’t know because I don’t belong to the
Saudi Arabian government. The banning of the newspaper was
because some elements in Saudi Arabia were not happy with
Elaph’s content, and they worked to harm Elaph but they failed.
You once declared that printed press had died, and
that the future of journalism was online. But many
are still printing, and you invested in a printed news-
paper in Morocco. Can you explain your theory?
Well, Morocco needs that newspaper. In America you wouldn’t
need it. It depends on the public’s demand.
Do you think that charging for online content is a trend
that will become more popular? Will it be successful?
We have to wait and see. The problem is that now the free con-
tent is everywhere. Success will depend on what you invent that
will interest people and “move their pockets.” I think it’s very
difficult to say in advance that it will definitely be successful, but
I hope it will be.
Ahmed Muleifi accused you of receiving 18 million
pounds from the Kuwaiti prime minister to publish
an article supporting the government and delegiti-
mizing the opposition. Is this true?
First of all, the man who accused me recanted his accusa-
tion. But it’s funny because you can’t really transfer 18 million
pounds and you can’t transport it either. So I just wonder, if it’s
still in Kuwait I would like to take it (laughs).
Iraqis also accused you of receiving money from
Saddam Hussein. Can you explain your relationship
with Saddam?
54
TM1553_50-55_Candid Conversations.indd 54
No, on the contrary, I am the one who has told people to
return money that Saddam Hussein has given to them. The
fact is, I went to see Saddam Hussein, and I met him. He did
normally give people who interviewed him $100,000 as a gift.
When I went there, they had to have a meeting about what
to do with my gift since they knew I wouldn’t accept it. They
called Saddam Hussein himself, and he said OK just give him
pictures of us together.
King Hassan II asked you to write the introduction
to his biography. How did a Saudi journalist become
friendly with the king of Morocco?
Because the king loved him (laughs). I enjoyed his company and
he enjoyed my company. At the time I was younger, and he be-
lieved in encouraging young journalists. He was a wise man, not
an ordinary one. We had a very fruitful relationship. He chose
me because I was one of the journalists who knew him first, and
he knew that I loved Morocco, and Morocco’s culture.
Is that part of the reason why you have such a close
relationship with Morocco?
I spent time in Morocco before I met him, and then I started
to get to know Moroccan society and its decision makers. It is
really a fantastic country, and it has a bright future.
What do the following names mean to you?
Turki Al-Sudari, editor in chief of Riyadh newspaper I worked
with him in my youth; he is a very good journalist. I like him;
he’s a fighter.
Khaled El-Malik, editor of Al-Jazeera newspaper I also
worked with him for many years. He is very determined and
always works very hard.
Ghazi Al-Gosaibi, Saudi Arabia’s Minister of Labor He is a
great man – the only great man in Saudi Arabia.
Abdul Rahman Rashid, managing director of Al-Arabiya
He is a friend and a colleague. I think he is an accomplished
writer, one of the best in the Arab world. And he is very suc-
cessful in his job as the managing director of Al-Arabiya.
What do you love in life and what do you hate in life?
I hate death; I love everything of life. Life is beautiful, and there
are many elements that you can fill your life with. I don’t like
hateful people, or people with gloomy ideas. Otherwise, I like
everything. Life is beautiful as long as we can live with it.
Your father was a Qutab teacher for a mosque in Azulfi,
what led you to become a modern secular editor?
This is very common, it happens to everyone. You can come
from a family and be very different from them. You cannot re-
ally decide who you want to be, and your family cannot decide
for you. I was very lucky because I came from an educated fam-
ily, I worked very hard, and I was in a very good environment
to learn more and change my ideas at any time.
Can we speak of the Saudi brand of liberalism? You
have been described in Saudi Arabia as a secular lib-
eral. Do you see yourself that way?
Well, it is very difficult to say to an Arab that they are liberal
and secular. Liberalism has to have a specific meaning. I don’t
believe we have many liberals in the Arab world. When you
7/6/10 07:59:06
 are describing a liberal they have to be very open minded
about religion, culture; and I don’t think most Arab intellec-
tuals are clean of racism. When you hate Jews you are not
liberal. When you hate the West and you believe they are your
enemy you are not liberal.
I am trying to be a liberal. Five years ago calling yourself
a liberal might have had a negative connotation, but more
people are accepting that label. However, I don’t think that
liberalism exists in Saudi Arabia. How can you call yourself a
liberal if you don’t support someone in your family changing
their religion, or you don’t want someone in your family to
marry a foreigner? That is not liberalism. Liberalism is a book
and you have to follow it.
How do you assess the intellectual and political de-
bate in Saudi Arabia?
I think it is very promising. I would be very happy to continue
seeing it evolve. Importantly, the debate is always peaceful and
it always comes to some solution. This is a very healthy way of
debating in any society.
To what extent has the media participated in that debate?
The media has played a very good role on the side of what you
call liberal. They try to bring up all of the issues and follow many
cases. I have always believed that you cannot change societies by
force, maybe you could in the 17th and 18th centuries, but not in
the 21st century. The only factor that can do this now is the flow
of information: media, the Internet, Google, to name a few. This
is my hope, that nations, the Saudi nation and others, open their
mind to this information, because it will change them.
Has anything been done to change regulations on the
press in Saudi Arabia, especially censorship?
Now the regulation in Saudi Arabia has changed; it is not bad.
They are opening the air space for radio, and we hope they will
grant licenses to more newspapers and publications.
What do you make of the Saudi Association of Journalists?
I don’t believe in any associations. I am not really good with
any party, unless this organization is going to concentrate on
their own business and the affairs of its members, like health or
their members’ future.
What are your memories of Prince Ahmed Bin Salman?
He was a very outstanding person; he had great ideas, and was
supportive of editorials and journalists. He looks tough, but
in reality he was very accepting of others. We have also Faisal
now, who is doing a very good job with the company as well. I
think they match each other.
Geographical Breakdown of Elaph Content 2006
Issue 1553 • June 2010
TM1553_50-55_Candid Conversations.indd 55
What does King Abdullah mean to you?
I think he’s a very good reformer. He surprised everybody. He
changed the history of the region. I believe he did very well in
the last five years.
Because of his ideas, he changed the attitude of the govern-
ment toward the media, and other ideas. He tried to change
women’s position. He has opened the door in Saudi Arabia,
and it is not an easy door to open.
This article was first published in The Majalla 20 May 2010
Elaph
Elaph is one of the first Arabic language electronic
magazines. Based in London, it commands one of
the biggest audiences of any Arabic language news
site. In celebrating its 10th anniversary, Elaph can
look back on many accomplishments, including an
international readership that makes it one of the most
influential websites in the Arab world.
The website is owned by Elaph Holdings in the
United Kingdom and Elaph Publishing House in Saudi
Arabia, in cooperation with Int2sol.
Elaph‘s CEO and editor in chief, Othman Al-Omeir,
insists that his site is impartial and does not have any
political or partisan affiliation. He sees Elaph as “a
window or a bridge connecting the Arab people with
the world.”
The publication’s coverage is extensive with sections
including politics, economics, health, culture, sport
and music. Elaph has published extensively on human
rights, including violence against women.
Elaph Coverage 2006
55
7/6/10 07:59:08
 • COUNTRY BRIEF
The Republic
of Lebanon
Timeline
1943 France agrees to officially transfer power to the
Lebanese government from 1 January 1944, officially
granting independence.
1967 Lebanon plays no active role in the Arab-Israeli
war but is affected in the aftermath due to Palestinian-
use of the country as a base for activities against Israel.
1975 April – Phalangist gunmen ambush a bus in
Beirut, killing mainly Palestinian passengers. These
clashes are regarded as the start of the civil war.
1976 Syrian troops enter Lebanon to restore peace.
1976 October – Following Arab summit meetings
in Riyadh and Cairo, a ceasefire is arranged and a
predominantly Syrian Arab Deterrent Force (ADF) is
established to maintain it.
1978 In reprisal for a Palestinian attack into its territory,
Israel launches a major invasion of Lebanon and occupies
land in the south. Israel later hands over territory in
southern Lebanon not to UNIFIL but to its proxy mainly
Christian Lebanese militia under Major Saad Haddad.
1982 President-elect, Bachir Gemayel, is assassinated.
The following day, Israeli forces occupy West Beirut. His
brother, Amine Gemayal, is elected president.
1983 Israel and Lebanon sign an agreement on Israeli
withdrawal, ending hostilities and establishing a security
region in southern Lebanon.
1988 Outgoing President Amine Gemayel appoints a
six-member interim military government, composed of
three Christians and three Muslims, though the latter
refuse to serve. Lebanon now has two governments –
one mainly Muslim in West Beirut, headed by El-Hoss,
the other, Christian, in East Beirut, led by the Maronite
Commander-in-Chief of the Army, Gen Michel Aoun.
1989 Aoun declares a “war of liberation” against the
Syrian presence in Lebanon.
1990 The Syrian air force attacks the Presidential
Palace at Baabda and Aoun takes refuge in the French
embassy. This is regarded as the end of the civil war.
1990 Omar Karami heads a government of
national reconciliation.
56
TM1553_56-57_Country Brief.indd 56
Image © iStockphoto
1992 Rafik Hariri, a rich businessman of Saudi Arabian
nationality, becomes prime minister.
1993 Israel attempts to end the threat from Hezbollah
and the Popular Front for the Liberation of Palestine-
General Command (PFLP-GC) in southern Lebanon
by launching “Operation Accountability,” the heaviest
attack since 1982.
2000 After the rapid advance of Hezbollah forces, Israel
withdraws its troops from southern Lebanon, more than
six weeks before its stated deadline.
2005 February - Rafik Hariri is killed by a car bomb in
Beirut.
2005 Syria says its forces have left Lebanon, as
demanded by the UN. Anti-Syrian alliance led by Saad
Hariri wins control of parliament following elections.
New parliament chooses Hariri ally, Fouad Siniora, as
prime minister.
2006 Israel launches attacks on targets in Lebanon
after Lebanon's militant Hezbollah group seizes two
Israeli soldiers. Civilian casualties are high and the
damage to civilian infrastructure wide-ranging.
2006 Truce between Israel and Hezbollah comes into
effect on 14 August after 34 days of fighting and the
deaths of around 1,000 Lebanese—mostly civilians—
and 159 Israelis, mainly soldiers. A UN peacekeeping
force, expected to consist of 15,000 foreign troops,
begins to deploy along the southern border.
2008 October – Lebanon establishes diplomatic
relations with Syria for first time since both countries
gained independence in 1940s.
2009 The pro-Western March 14 alliance wins 71 of
128 seats in parliamentary elections, while the rival
March 8 alliance led by Hezbollah secures 57. Saad
Hariri is nominated as prime minister.
7/6/10 08:00:40
 Lebanon at a Glance
Lebanon’s history has been interlinked with events driving
world history. Having been the home of the Phoenicians from
3000-539 BC, later pertaining to the Ottoman Empire, and
finally to the Vichy French government before obtaining inde-
pendence, Lebanon’s culture and politics show the influence of
world events.
Lebanon is thus a country of rich history, and diversity rep-
resenting Marnoite Catholics, a druze community, as well as
a dominant Muslim demography. This diversity, however, has
come with problems, with conflict and civil war leaving its im-
print on the country’s identity.
A civil war lasted over a decade between Lebanon’s different
religious groups, and only outside intervention by Syria was
able to stabilize the country. That stability has been short lived,
and periods of peace are often interrupted by longer periods
of uncertainty and violence. Such ruptures in stability were
marked first by the assassination of Rafik Harriri, and later by
the 2006 invasion by Israel.
Since the invasion, Hezbollah, the country's powerful Shiite
militia, has sought to increase its power and political influence.
This has done little to downplay the tension that exists between
the country’s different ethnic groups as was evidenced by the
2009 parliamentary elections. The results, which have been ques-
tioned because of the corrupt way in which the electoral process
played out, left the March 14 coalition with the majority in the
128-seat parliament. The alliance won 71 seats in comparison to
the Hezbollah-led coalition, which only won 57 seats.
The March 14 coalition is a predominantly Sunni, Christian
and Druze alliance, led by the Sunni Muslim Future Move-
ment of Saad Hariri. Saad, whose father, Prime Minister Rafik
Hariri was assassinated, was chosen by the president as the
country’s prime minister. His appointment has been interpret-
ed as the beginning of a new period of stability for Lebanon,
although tension is always possible.
In a recently published article by The Majalla, Georgetown
Professor Steven Heydemann, evaluates exactly what prospects
for stability and normality a country like Lebanon could hope
to achieve under Hariri’s leadership. He explains that after
Prime Minister Hariri was finally able to cobble together a
fragile coalition government, there is now some promise of a
future closer to normal than anything the country has
experienced since before the civil war. Normality
in Lebanon, however, means something very
specific. It is a modest normality. The coun-
try’s “political conflicts have become routin-
ized, channeled within existing institutions,
and less likely to drive the country into
violence.” While in the political sphere this
view might be overtly optimistic, there is evi-
dence of an emerging confidence regarding
Lebanon’s future.
Hezbollah
Hezbollah – or Party of God – emerged in Lebanon in
the early 1980s and became the region's leading radical Islamic
movement, determined to drive Israeli troops from the country.
In May 2000, due to the party's military arm, it achieved one
of its main objectives. Israel's army was forced to end its two-
decade occupation of the south.
Issue 1553 • June 2010
TM1553_56-57_Country Brief.indd 57
Key Facts
Image © iStockphoto
Capital: Beirut
Independence: 1943,
from French rule
President: Michel Suleiman
Prime Minister: Saad Hariri
Geography
Area: 10. 452 sq km
Location: bordering the Mediterranean Sea and
between Israel and Syria
People
Population: 4.2 million
Ethnic Groups: Arab 95%, Armenian 4%, other 1%
Religions: Muslim 59.7%, Christian 39%, other 1.3%
Languages: Arabic, French, English, Armenian
Economy
GDP (ppp): 13,100 billion
GDP composition by sector: agriculture: 5.1%,
Industry: 18.7%services, 76.2%
Unemployment rate: 9.2%
Population below Poverty Line: 28%
Refugees (country of origin): 405,425 (Palestinian);
50,000-60,000 (Iraqi)
IDPs: 17,000 (1975-90 civil war, Israeli invasions);
200,000 (July-August 2006 war)
Hezbollah has won considerable support within Lebanon in
recent years. It has been particularly successful in implement-
ing social service programs for the country’s Shia community.
Not to mention the organization’s successes in the war with
Israel have also accounted for much of the support it receives.
Hezbollah’s popularity was affirmed in the country’s 1992
elections when it led a successful campaign and managed to
win eight seats in parliament. However, not all of Lebanon’s
ethnic groups support the organization. Christians, for exam-
ple, have accused it of trying to destabilize the country.
Despite their defeat in the 2009 Parliamentary
elections, to the March 14 coalition Hezbollah’s
power in Lebanon remains in fact very much
unchanged, and virtually unchallenged. Hez-
bollah still retains its quasi-hegemonic posi-
tion among the Shiite population, which
turned out en masse to vote for Hezbollah
candidates, including in electoral districts
where the Party of God ran virtually unop-
posed. In addition to being bolstered by the
unyielding support of the Shiite community,
Hezbollah can also count on its Amal allies, led
by Parliament Speaker Nabih Berry, who has recently
been re-elected for a further term in office. Berri’s reelection,
particularly, is a clear signal that the March 14 coalition has
had to make a number of political concessions to the opposi-
tion. Hezbollah remains a powerful political force that has to
be reckoned with in Lebanon.
Image © Getty Images
57
7/6/10 08:00:41
 • THE CRITICS
Give Me Liberty
or Give Me Death
A review of Between Two Worlds: My Life in
Captivity in Iran by Roxana Saberi.
Published by Harper Collins 2010
Roxana Saberi, the American-Iranian journalist that was
imprisoned in Iran on allegations of espionage, has just released
a book recounting her ordeal. In Between Two Worlds Saberi
eloquently explores the reasons for her arrest, the emotional
struggle that one encounters when losing their freedom, and the
difficult quest of finding empowerment behind bars. A moving
and informative read, Between Two Worlds is Saberi’s ode to the
liberties that many of her compatriots left in Iran live without.
Roxana Saberi captured the world’s atten-
tion when just before the Iranian elections
of 2009, the American-Iranian journalist
was arrested and taken to Iran’s infamous
Evin prison. The stories of torture and
rape that have made Evin prison a feared
destination for Iranian activists was never
a place Saberi expected to go to. Her lat-
est book Between Two Worlds: My Life in
Captivity in Iran explains how this unex-
pected turn in her life came to be.
Now that the nightmare is over and her body has healed from
the two-week hunger strike she began in her demand for a fair tri-
al, the journalist takes on this book to deal with the emotional and
psychological scars that her imprisonment left her. Having been
arrested and imprisoned without knowing the charges against her,
undergoing solitary confinement, confessing to crimes she didn’t
commit, and living through the uncertainty that comes with a
corrupt judiciary (that even intimidated her lawyer), gives Saberi
ample material to write a compelling book about something many
people know nothing about: loosing their freedom.
Saberi’s background in journalism shines as the author is
able to create the suspense that one would associate to a thriller.
From her arrest through to her interrogation and trial, Saberi
emotes the anxiety, denial, anger and sadness that anyone in
her situation would have undergone. More importantly per-
haps, is Saberi’s ability to present her story without sensational-
izing what she went through, or glorifying her own strengths.
Despite the incredible situation she finds herself in, the reader
is always made aware of how real her ordeal was.
Impressive in its presentation, what stands out most from this
book are the ontological and ethical questions that Saberi raises.
One particularly important question is the value of life and free-
dom, if it comes at the cost of lying. Saberi is honest about the
fact that when taken to prison, she admitted to spying for the CIA,
using a book she was writing about Iran as her cover for inter-
viewing broad ranges of Iranian society. However, after meeting
her inmates in the 209 section of Evin, reserved for prisoners of
conscience, she realizes the importance of telling the truth even
though it almost cost her freedom and even worse, her life. In this
way, what begins as a story of the struggle for freedom becomes an
account of the relationship between freedom, dignity and inner-
58
TM1553_58-60_The Critics.indd 58
strength. It also pushes her readers to confront these questions,
and ask themselves what they would have done in her place.
One particular success of Between Two Worlds is Saberi’s
ability to demonstrate the sheer challenge that staying sane in
her situation must have been. As a result of Saberi’s accom-
plished account, her audience becomes increasingly aware of
the inherent weakness in humanity, especially their own. This is
also highlighted in Saberi’s portrayal and relationship with her
interrogators and the guards in prison.
The idea of loving your enemies is not new, but it acquires a
new dimension in Evin prison. Saberi asks her inmates, two Bahai
women who forgive their captors so as to avoid becoming like them,
how they managed to forgive those who took their freedom? Their
advice to forgive comes as Saberi struggles with her own feelings of
animosity towards her captors, who promise her freedom one day,
and deny it to her the next. Most shockingly perhaps, is the story of
her interrogator who admits to her that he knew her confession was
a lie, but imprisons her anyway.
Saberi notes throughout her book that the intense paranoia felt
by the regime was one important reason behind her arrest. She
also explains that as far as the guards went, they came from the
lower class (comprised of individuals who are more likely to follow
the government’s extremist lead) and were probably just content
with having a regular job. Whether in her eyes this excuses their
role in her incarceration is never fully explained. Nonetheless, Sa-
beri doesn’t let their humanity get too much of her soft side.
Her most interesting moments as the book’s protagonist come
when she learns to defy the suggestions of her captors. When
they tell her parents not to give interviews, she encourages them
to do the opposite. When they tell her hunger strikes won’t help
her, she goes ahead and does it anyway. Her empowerment un-
der these conditions appears as the main way in which she dealt
with her animosity towards her captors and her situation.
Many have speculated that Saberi’s imprisonment came at a
very particular time in Iran’s political history. At a moment when
President Mahmoud Ahmedinejad’s government was about to
face an electoral showdown, not to mention American pressure
to respond to a rapprochement, it appears that the equation was
just right for an arrest to take place which would serve the gov-
ernment’s propaganda machine. Whether or not this is the true
reason behind Saberi’s incarceration, she does not pretend to
know for certain. Nonetheless, the story of her ordeal is layered
over a political analysis of Iran’s government, and the legacy of
the Islamic Revolution’s impact on civil rights.
In highlighting the weakness of the government, Ahmedi-
nejad’s lack of popularity, even her trial’s lack of evidence, she
demonstrates what a state the Iranian government is really in.
This is truly her ultimate revenge, for the underlying message of
the book is that her importance, as far as her career in journalism
went, were so minimal that only the weakest government would
try to use her as their salvation.
Layered over details of Iranian society and its characteristics,
Between Two Worlds is more than an account of Saberi’s in-
carceration. Rather, it is a study of humanity, from the relation-
ship between body and soul, to the true meaning of strength.
Saberi’s latest book teaches you more than her story or Iran’s
political situation, it demands that you reassess your apprecia-
tion of freedom, and most importantly, how you define it.
This article was first published in the Majalla 7 May 2010
7/6/10 08:01:18
 Between Torture
and Democracy
Iraq Detainees Describe Torture in Secret Jail
Human Rights Watch, 27 April 2010
Human Rights Watch released a report disclosing the existence
of a secret prison where over 400 Iraqis had been systematically
tortured and held without charges since September 2009. The
detention of predominantly Sunnis could have a negative impact
on Iraq’s sectarian tensions.
Following the US inva-
sion of Iraq in 2003 the
sectarian animosity that
had been building up as
a result of Saddam Hus-
sein’s brutal suppression
of Shias erupted, leaving
the country marred by civ-
il war. This year, as Iraqis
anticipate the long-await-
ed results of the March
elections, sectarian tension
and violence in general are simmering once again.
In this context, Human Rights Watch (HRW) released a report
disclosing the existence of a secret prison where over 400 Iraq-
is had been systematically tortured and held without charges
since September 2009. The organization has called for thor-
ough investigations and prosecutions of government and se-
curity officials responsible for the prison, which falls under the
jurisdiction of Prime Minister Al-Maliki’s military office.
Having interviewed 42 of the 430 men held at the Muthanna
detention facility, HRW found that their perpetrators had used
a variety of torture techniques, such as hanging the detainees
upside-down, depriving them of air, kicking, whipping and beat-
ing them, giving them electric shocks and raping them. Inter-
rogation sessions usually lasted three or four hours and recurred
every three or four days. HRW was also told by the detainees
that when they refused to confess after torture their interrogators
threatened to rape their wives, mothers, sisters or daughters.
As one detainee explained, “The interrogators would tie my
arms behind my back and blindfold me before they would hang
me upside down and beat me. They would suffocate me with
a bag until I passed out and would wake me with an electric
shock to my genitals. Even after they forced me to confess that
I killed 10 people, the torture never stopped. Ten days before
I was transferred out on April 8, I endured a horrific beating
for speaking to an inspection team from the Human Rights
Ministry. After they left, the prison staff beat me so badly that
I urinated blood.”
In addition to the torture they sustained, none of the prisoners
were given access to legal counsel, nor were their families informed
about their detention. Detainees were also deprived of official
documents, including case numbers, and “investigative judges”
were said to hear cases down the hall from torture chambers.
Most of the 300 men that had been transferred to other de-
tention centers from Muthanna displayed fresh scars and inju-
Issue 1553 • June 2010
TM1553_58-60_The Critics.indd 59
ries that were consistent with their account of the systematic
use of torture. Given this evidence, the HRW report is convinc-
ing in its declaration that Muthanna was a secret prison, and
that grave breaches of human rights took place there.
While Human Rights Watch does not explicitly state so in
their report, the detention of these individuals came prior to
the elections and could be interpreted as the type of sectarian
discrimination that has characterized much of Iraq’s tumultu-
ous political history.
According to the report, the men interviewed had been de-
tained “by the Iraqi army between September and December
in 2009, after sweeps in and around Mosul, a stronghold of
Sunni Arab militants, including Al Qaeda in Mesopotamia.”
This suggests that the legacy of sectarian tension in Iraq could
have been the motivation behind their arrests.
Or at least it could be interpreted as such by other Iraqis, as
suggested by a recent article in The New York Times. “The
revelations could further polarize Iraqis, still coming to grips
with the scars of the sectarian conflict between 2005 and 2007.
All those held at the secret prison before it was shut down were
brought to Baghdad from Sunni Arab areas in Nineveh where
Mr. Maliki, a Shiite, is largely perceived as a sectarian leader
with a personal vendetta against anyone associated with the
former Sunni-led government of Saddam Hussein.”
In an interview between Sheikh Abdullah Humedi, a tribal
leader from Nineveh, and The New York Times, Humedi
warned that these revelations could further inflame sectarian
tensions and lead to more violence. “In our country a man
who is raped will commit suicide, and how do you think he
will do it?”
The implications that the revelation of torture and secret
prisons in the country might have on groups that consider
themselves repressed are clear. However, Al-Maliki has not ad-
equately responded to the allegations. Instead, he has delivered
inconsistent messages regarding the existence of the prison and
of the presence of torture within Iraq’s legal system.
Maliki has claimed that there are no secret prisons in Iraq,
and that the existence of torture at Muthanna was fabricated
by the media and sustained by his political rivals who “instruct-
ed the prisoners to make false charges and to give themselves
scars by “rubbing matches on some of their body parts.” Yet
Maliki also referred to abuses at Abu Ghraib, implying that
those were justifiable, because if the US took tough measures,
then they could do the same in the name of security.
Al-Maliki’s assertions that no torture occurred, however, con-
tradict not only the HRW report, but also Wijdan Salim, Iraq’s
minister of human rights. To make matters worse, the investi-
gative team that Al-Maliki sent to the prison to look into the
allegations, have been implicated in the torture as well.
That Al-Maliki has had a heavy hand over Iraq’s judiciary
makes HRW’s suggestion that an in-depth and impartial inqui-
ry be held to investigate torture at Muthanna highly unlikely.
This, however, does not render them any less necessary.
As Joe Stork, deputy director of Human Rights Watch,
explained, “What happened at Muthanna is an example of
the horrendous abuse Iraqi leaders say they want to leave be-
hind… Everyone responsible, from the top on down, needs to
be held accountable.”
This article was first published in the Majalla 7 May 2010
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 • THE CRITICS
From Oppression
to Opportunity
A review of Half the Sky: Turning Oppression into
opportunity for Women World Wide
by Nicholas Kristof and Sheryl WuDunn.
Published by Alfred Knopf 2010
In Kristof and WuDunn’s most recent book, Half the Sky, the
author’s explore the different types of oppression that affect
women around the world. What might at first appear to be a
discouraging account of discrimination, however, is actually a
book about opportunity. For these authors, empowering women
is not only a solution to their own oppression; it also stands to do
much for global challenges like poverty and security.
Twice weekly, in Nicholas Kristoff ’s
habitually moving column for The
New York Times he does something
most journalists tend not to do. In-
stead of discussing the complex,
highbrow subjects of international
relations, he brings to his readers’
attention the oft-ignored issues that
affect the world’s most vulnerable. In
his latest book Half the Sky, Kristof
and Sheryl WuDunn go a step fur-
ther, not only advocating for the
rights of women, but arguing that in
their empowerment lie the solutions to the world’s most press-
ing problems. From poverty to security, Kristof and WuDunn
make more than a compelling case for engendering our analysis
of politics. They manage to recruit most of their readers to what
they describe as an incipient but promising movement to eman-
cipate women “and fight global poverty by unlocking women’s
power as economic catalysts.”
In what they describe as a social responsibility equivalent to
the abolition of slavery, Kristof and WuDunn effectively ar-
gue that like other emancipatory struggles of the past, the new
women’s movement faces challenges. One of the most difficult
to overcome is not apathy, but rather the feeling by the more
privileged that women’s oppression is the result of history, cul-
ture, and is therefore a legacy that is difficult to overcome.
Yet with their powerful accounts of female oppression and
empowerment, Kristof and WuDunn manage not only to make
their readers aware of the extent of the oppression women face.
More importantly, they also provide good news. Accounts of suc-
cessful empowerment demonstrate that the battle against sexual
trafficking, slavery, maternal mortality and poverty have solutions.
Half the Sky is perhaps best described in the words of the authors
themselves, it is a “story of transformation... of change that is al-
ready taking place and change that can be accelerated.”
One especially important issue addressed in their book is the
prevalence of rape, especially in war. Rape has been present in
war in the past, but as of late, women have been increasingly
used as a weapon of war. In the case of the Congo and Rwan-
da, for example, the rape of woman has been used to ostracize
the victim, dishonor their family, instill fear in the community
60
TM1553_58-60_The Critics.indd 60
and effectively disintegrate the social fabric that keeps commu-
nities together. Even though in almost every conflict mortal-
ity is disproportionately male, women also face a huge burden
both during and after wars, usually as a result of rape.
In Darfur for example, the Sudanese-sponsored Janjaweed
militias were “seeking out and gang-raping women of three Af-
rican tribes, then cutting off their ears or otherwise mutilating
them to mark them forever as rape victims.” To make matters
worse, so as to prevent the outside world from shaming Sudan
into protecting their women, the government punished those
who reported rape or sought medical treatment.
However, Kristof and WuDunn make it clear that while
these problems are indeed a reality, they can be addressed at
the grass-roots level, and that means that ordinary people can
help. Half the Sky parallels the stories of difficulty with those
of achievement, and in the case of rape the authors chose to
highlight the role of a hospital in the Congo that treats rape
victims, and one of their special volunteers.
Harper, a 23-year-old American, went to volunteer at the
HEAL hospital in the Congo. During her time there she has
started a school for children awaiting medical treatment, since
it can take several months for them to receive care. She also be-
gan a skills training program for women awaiting surgery. The
authors explain that her efforts have given victims of sexual
violence the opportunity to earn a living and transform their
lives. Although financial independence cannot undo what rape
victims went through, it can help them create a promising fu-
ture for themselves and their families.
Other issues addressed in the book include the problem of
maternal health. Maternal death is described by Kristof and
WuDunn as a cruelty of indifference. Lack of attention to
maternal healthcare, for example, leaves more than 3 million
women and girls incontinent as a result of fistulas—a condition
unfamiliar in the developing world. A fistula is a hole in the
tissue of the bladder and the rectum; it is painful and causes
urine and feces to trickle constantly through a women’s vagina
and down her leg. These injuries, which can result from labor
complications or injuries from sexual violence, have become
a handicap since women suffering from them are socially re-
jected because of the smell that accompanies their injury. “The
fistula patient is the modern day leper,” but despite its devastat-
ing effect, fistulas are very easily cured.
Why is it then that fistula injuries are so prevalent and of-
ten ignored? The authors explain that fistulas, like other issues
relating to maternal health face three obstacles: They are the
problem of poor, rural women. Women, they argue, are con-
sidered an expendable commodity in the developing world.
These are the sorts of injustices that the accounts in Half
the Sky aim to end. By inspiring those with resources, be they
time or money, Kristof and WuDunn hope to bring to people’s
attention the plight of those who are regularly unheard. Their
book is moving for its encouragement, and its accounts of op-
pression are reason enough to read it. In profiling the types
of organizations that elicit real change, the authors also do an
important part in supporting their measures and likely improve
their success rate. What is most commendable, however, is that
not only do the author’s give a voice to the marginalized, they
also offer tentative solutions to serious problems.
This article was first published in The Majalla18 May 2010
7/6/10 08:01:19
 Rachid Koraïchi
Ecstatic Flow 11th June - 10th July 2010

Rachid Koraïchi Ibn El Arabi, 2009 (detail). Lithograph, 61 x 40 cm, ed. 70 + 5AP
AN EXHIBITION OF NEW WORKS CELEBRATING THE LIVES AND TEACHINGS OF SUFI MASTERS

Saturday 12th June at 3pm.

GALLERY TALK: Rachid Koraïchi will talk about his art at October Gallery. Admission Free.

October Gallery, 24 Old Gloucester Street, London WC1N 3AL

art@octobergallery.co.uk Tel: + 44 (0)20 7242 7367
Tues - Sat 12.30-5.30 or by appointment
October Gallery Trust Registered Charity No. 327032 www.octobergallery.co.uk
TM1553_61_Ad.indd
PDF_add.indd 1 61 7/6/10 08:01:38
25/05/2010 15:47
 • THE FINAL WORD
A Public Truce
Yet, Karzai’s visit does not erase longstanding disagreements
Despite the harmonious display in Washington during President Karzai’s visit, tensions persist over how
rapidly Afghan military and civilian institutions should assume leadership of the war effort. There are also
disagreements on the terms that should govern any peace settlement between the Karzai government
and the Taliban insurgents.
H
amid Karzai, accompanied by a number of senior
Afghan officials, recently completed his first visit
to Washington since his controversial re-election
as president last year. Over the course of four
days, Karzai met with US President Barack Obama and other
American policy makers. He also participated in several me-
dia events. The trip was notable for its public displays of har-
mony between the Afghan and American governments, which
concealed continuing bilateral tensions as well as unease about
prospects of transforming the war into an Afghan-led effort.
Karzai’s arrival coincided with heightened American alarm
about Islamist militancy in Afghanistan and Pakistan. Last
month’s failed car bomb attempt in New York City surprised
analysts, who doubted that the Pakistani Taliban had the ca-
pability to try to conduct a terrorist attack in the US home-
land. Although Washington policy makers recognize that the
relationship between the Afghan and Pakistani Taliban is com-
plex, they had considered both movements primarily a regional
threat lacking the global operational reach of Al-Qaeda.
Before Karzai’s arrival in Washington, the White House in-
structed US officials to cease making public criticisms of the Afghan
president, which the Obama national security team had been doing
since taking office last January. Both strategic and tactical consid-
erations led to the change in public policy. Despite widespread al-
legations that his reelection was fraudulent, and Karzai’s continuing
difficulties with the Afghan parliament, he has consolidated power
in Kabul, depriving Washington of the option of supporting an al-
ternative Afghan political leader of national stature.
In their joint media appearance following their 12 May White
House meeting, President Obama described public perceptions of
US-Afghan tensions as “overstated.” He characterized bilateral ties
as a strategic partnership based on mutual respect and shared in-
terests that would endure even after he and Karzai left office. As
testimony to the latter, Obama stressed how American forces were
following his injunction to minimize Afghan civilian casualties, an is-
sue of acute tension between the two countries in recent years, even
at the risk of suffering higher US military casualties as a result.
Karzai praised the US military for constraining its military op-
erations to reduce threats to civilians. He also thanked the Obama
administration for increasing the flow of US military and civilian
resources to Afghanistan, which he pledged would not be misused.
Karzai subsequently underscored the importance of the American
commitment to transfer the US-led detention centers in Afghani-
stan, which some human rights groups argue employ torture, to
Afghan government control by the beginning of next year.
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TM1553_62_The Final Word.indd 62
Richard Weitz
Obama claimed that the US and Afghan war strategies were ef-
fectively meeting many of the performance benchmarks established
last year. He cited recent coalition military victories, improvements
in Afghan government capacity and enhanced support from Euro-
pean countries as well as Pakistan. Obama said that this progress,
especially in developing Afghan military forces and civilian agen-
cies, was creating the conditions needed to transfer leadership of the
counterinsurgency from NATO to Kabul beginning next year.
In this regard, Obama restated his controversial position that
he aimed to begin withdrawing some American combat troops
from Afghanistan in July 2011, though he acknowledged that
only about half of the new American “surge” troops had yet
to arrive on the ground, leaving the US force total considerably
short of the 98,000 military personnel cap. A more serious prob-
lem is the persistent misalignment of the US and Afghan time-
tables. In Washington, Karzai said that, even with the pledges of
continuing American financial and other assistance after 2011,
it would take until 2014 before Afghan government institutions
could establish an effective presence throughout their country.
The issue of Karzai’s proposed peace plan attracted much in-
terest at his joint public appearance with US Secretary of State
Hillary Clinton. The Afghan president had postponed conven-
ing the planned National Consultative Peace Jirga, which was
to endorse his peace plan, until 29 May, allowing Karzai time
to assess Washington’s response. Like Obama, Clinton offered
conditional US backing for Karzai’s controversial proposal to
reconcile with defecting Taliban leaders as well as rank-and-file
fighters prepared to desert the Taliban movement. Although ac-
knowledging the need for some kind of political tract to end the
fighting, Clinton insisted that the candidates for either the rec-
onciliation or the reintegration process must renounce violence,
break with Al-Qaeda, and accept the laws of the current Afghan
constitution, especially those promoting women’s rights.
Despite Karzai’s well-managed visit, a major gap exists between
the optimistic talk of politicians in Washington and what the US
and British military report seeing in Afghanistan. These field com-
manders discern little enduring progress in eliminating the Taliban’s
presence in key provinces or in developing the stronger Afghan mili-
tary and political forces needed to sustain the Afghan government
after the coalition completes its planned military withdrawal.
Richard Weitz – Senior Fellow and Director, Center for Political-Military
Analysis at the Hudson Institute, Washington DC.
This article was first published in The Majalla 18 May 2010
7/6/10 08:01:57
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