Cement in Oman

Arabian Business:

Oman said on Saturday [March 15] it was considering reducing import duty on building materials in an effort to put a cap on rising inflation in the construction sector.

"We are revising the import duty on building materials to help reduce the cost of cement, steel and wood," Chamber of Commerce and Industry Chairman Khalil Al-Khonji told reporters.
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Oman had restricted the import of cement two years ago to support the sale of local firms Oman Cement Company and Raysut Cement Company, but the move caused shortage in the market.

Said Al-Barwany, chairman of Al-Barwany Construction, told newswire Reuters Oman needed an extra 20,000 tonnes per day of cement to help reduce the shortage.
The price of cement has doubled in the past year, according to Baljit Singh, a building materials trader.

"A 50-kilogram bag of cement rose from 2.4 rials ($6.24) last Sunday to 3.6 rials today; it is too much. This time last year, it was only 1.3 rials per bag," Singh said.

Meanwhile, Oman Cement is in discussions with the government on plans to raise the price of cement to offset the soaring price of imported clinker, which is used to make cement, Chief Executive Jamal Al-Hooti told Reuters last week.

Muscaticonfidential points to evidence that this is a black market in cement. According to the Oman Tribune,

Two Asians were caught red-handed while selling cement at exorbitant price in the Wilayat of Ibri on Tuesday [March 24].

The two expatriates were selling cement at the rate of RO2.900 per bag.

The arrest was made as part of a campaign run by the Ministry of Commerce and Industry against people manipulating prices.
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In spite of the Ministry of Commerce and Industry’s continued inspections to check illegal trade practices and the arrests being made by the police, in addition to the authorities’ warning of stringent action against the violators, some traders and their aides have been ignoring the warnings and were selling cement at high prices.

Trade Arabia adds,

Oman Cement Company, the country's largest cement firm by market value, said it is in talks with its government owner about raising prices or possibly face a fall in profit this year.

'If we don't increase cement prices by 1 to 2 rials per tonne, profit might come down in 2008,' Oman Cement chief executive officer Jamal Al Hooti said in an interview in Muscat on Wednesday [March 12].

Black market opportunities for profit exist when buyers cannot fulfill their planned purchases at the official price. In other words, there is a shortage, a gap between the quantity buyers would like to purchase at the official price and the quantity sellers are willing to produce. Frustrated buyers are willing to buy (a smaller amount) at a price above the official price, sometimes much more. The "Asians" had a profit opportunity if they could acquire cement at the official price and resell it at a higher price.

A natural question is how the black marketers came into possession of the cement in the first place. The most innocent possibility is that they were able to purchase it without any favoritism from the original seller be it from a producer or an importer. Otherwise, there is some corruption involved beyond the violation of selling above the official price.

Import duties do not create shortages. They reduce imports, and drive up the domestic price. Shortages are created by price ceilings -- the official price above which it is illegal to sell. These prevent price from rising to bring the quantity demanded into balance with the quantity supplied.

The additional complication in the Omani cement market is that the major domestic producers are government owned. Yet the government-owned cement producers have to obtain permission from the government to raise the price. What they can do, as is evident from the fact of a shortage, is restrict quantity; they are not obligated to satisfy demand for cement at the official price. If their objective is to maximize profit, or to meet a target level of profit, then an increase in the price of an input (in this case clinker) will decrease the amount they are willing to produce at a given cement price.

Reducing the import duty would reduce the shortage. So would raising the official price for cement.

Speaking of cement, is this the headline you'd give this story?:

Growth in cement imports plummets

Growth in cement imports into Dubai slumped 60% last year, state-owned conglomerate Dubai World said on Sunday, without giving a reason for the drop.

Dubai World said cement imports shot up 73.6% to 2.960 million tonnes in 2007, but the growth fell well short of the 184% increase in imports seen in 2006.

My point is, 73.6% growth is enormous growth by any measure.

And finally, on the cement front, the UAE has eliminated the duty on cement and rebar to ease inflation.

Domestic violence

Gulf News

Dubai: The Chief of Dubai Police has said it seems that Sharla Musabeh, the owner of the City of Hope women's shelter, is suffering from psychological problems.

Women at the shelter had previously told Gulf News that she had profited from their misery and sold their stories to international media as well as treating them like servants. One woman even claimed that she sold her newborn.

"She is ignoring and neglecting UAE laws and justice. No one should give any attention to what she has said through the international media* which she is using to attack our country," Lieutenant General Dahi Khalfan Tamim said.

"We do not need to defend ourselves. I call what is published in international media about the UAE as unprofessional and a cheap shot at the UAE."

*Earlier this week the New York Times covered the story:

Emiratis do not often take kindly to rights advocates drawing attention to the dark side of their fast-growing city-state on the Persian Gulf, better known for its gleaming office towers and artificial islands.

Still, no one was quite prepared for the stories that started appearing in Dubai newspapers this month. Suddenly, unidentified female victims were coming forward to say that “Mama Sharla” herself had abused them, forced them to work as servants and sold their stories to foreign journalists for thousands of dollars, pocketing the proceeds. She even sold one woman’s baby, the articles said, hinting at criminal investigations.

To Ms. Musabih and her supporters, the accusations, which appear to be baseless, are the latest chapter in a long campaign of threats and defamation that began with angry husbands and has grown to include prominent clerics, and even the directors of a new government-financed women’s shelter, who, she says, would like to silence her.

The ferocity of the dispute is unusual for Dubai, and underscores a major challenge facing this proudly apolitical business capital. The city’s few rights advocates have always been quietly shunted aside. But as the conservative Muslim ethos of Dubai’s native Arab minority rubs against the varied perspectives of a much larger foreign population, debates about how to approach taboo subjects like domestic violence and the city’s prevalent prostitution are getting louder.

Ms. Musabih, 47, a boisterous American transplant who was born and raised on Bainbridge Island, Wash., argues that confrontation is essential in fighting the patriarchal Arab traditions that allow men to beat their wives with impunity. She and her supporters also say the Emirates have not acknowledged the severity of their problem with human trafficking, the brutal business in which foreign women are lured here with promises of jobs and then forced into prostitution or servitude. Last year the United States State Department placed the Emirates and 31 other countries on a watch list for failing to effectively combat the illegal trade.

“When a woman has three broken bones in her back, and the police don’t take it seriously, yes, I get angry,” Ms. Musabih said.

Others say Ms. Musabih’s aggressive approach — which includes appeals to foreign news media as well as tough, face-to-face lobbying — is inappropriate in the Arab world, and has needlessly fueled the backlash she now faces. That assertiveness may also have made it easier to dismiss her as an outsider. Although she has lived here for 24 years, converted to Islam, is an Emirati citizen, wears a veil and has raised six children here with her Emirati husband, Ms. Musabih is still unmistakably American, from her moralistic zeal to her habit of calling the women in her shelter “darlin’.”

“I have told her sometimes I think she is wrong, she goes too far,” said Lt. Gen. Dahi al-Khalfan, the chief of the Dubai Police, who has supported Ms. Musabih in the past but now tends to criticize her work as divisive. “There is a case between husband and wife; let the court decide! Leave it.”

Does WomenseNews have more? Just about anything is for sale in Dubai.

Earlier Al Jazeera reported on her work.

Gulf News has published numerous letters of support for Mrs. Musabeh, and critical of the way Gulf News has reported the story.

The price of subsidies

Voice of America

In Egypt, a shortage of subsidized bread has resulted in long lines and occasional clashes in which several people have been killed. The president has ordered the army to use its bakeries to try to end the bread crisis, but the roots of the problem are more than just simple supply and demand. Rising food prices and poverty have combined with corruption to create a bread problem that will not be easily solved. VOA Correspondent Challiss McDonough has more from Cairo.

About 30 people are crowding around two small windows at a Cairo bakery, shouting at each other and jostling for the best place in line. The heat is blistering already, and women in the crowd shade themselves from the sun with plastic bags.

A woman named Fatma says she waits here for two to three hours every day to buy bread for her family of five.

Gesturing toward the chaos at the bakery window, she says, "What can I say? You can see this bread problem for yourself. The prices of everything have gotten so high."

This bakery is selling round loaves of government-subsidized bread, known locally as "balady" or country bread. The price is fixed at five Egyptian piasters, or less than one U.S. cent a loaf.
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Economist Hanaa Kheir el-Din is executive director of the Egyptian Center for Economic Studies.

"All other food prices have risen. There are a lot of food prices which rose sizably - look at the oil price for instance, rice, sugar, everything is rising - but balady bread has been kept at five piasters a loaf, and the flour which goes into it is delivered at a much lower price while the baker can sell it on the black market at several times the price," said Kheir el-Din.

The corruption is not limited to selling subsidized wheat flour on the black market.

At the bakery, a heavy metal door swings open and then clangs shut quickly, and a man scurries away holding five round pieces of freshly baked bread.

Another man who gives his name only as Samir waves his hand angrily toward the door.

He says the bakery employees let some people inside to get bread quickly while he and the rest are waiting in line outside in the sun for hours.

This is an emotional issue. Bread is such a vital staple food here that Egyptians use a different word for it than other Arabic-speakers do - they call it "aish," which literally means "life."
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There is no shortage of bread for those willing and able to pay higher prices for it. Some people who buy the subsidized product resell it just down the street for twice the price. And unsubsidized bread is in plentiful supply at local markets, but that costs five times as much.
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The last time the Egyptian government tried to remove subsidies on bread, in 1977, riots broke out and more than 70 people were killed.

But food subsidies now take up a huge portion of Egypt's annual budget, one that is growing as global food prices rise.
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Back at the bakery, Fatma sighs as she stares at the raucous crowd pushing and shoving to get closer to the front. She shakes her head and moves into line, saying under her breath, "May God have mercy on the poor."

At the very least, Fatma surely values those two or three hours spent daily in line.

In the classic textbook analysis of subsidies there is no shortage. In this real life example there must be more going on. Either the government has limited the quantity it will subsidize, or it has it is not only subsidizing, but it is also controlling the price the bakers can charge. Otherwise, there would be no shortage, no favoratism, no reselling, no black market.

The same sort of policy mix is applied in Iraq in the petrol and diesel markets to sometimes deadly effect.

In Eypgt and in Iraq the governments needs to figure out how to remove these inefficient, distortionary and corrupting policies in a manner that is politically acceptable.

Divorce

It's said that 46% of marriages in the UAE end in divorce. I'm not confident in that number. Like many numbers thrown around in the UAE it's not clear what the statistical foundation is, or even what it is purporting to measure.

According to Justin Wolfers, for first marriages of US women married 1985 to 1989, 33.4% of these ended before the 15th anniversary. And some marriages end because of death not divorce.

More:

the divorce rate in the United States is currently at its lowest level in twenty-five years, and has fallen nearly every year since 1979. The number of divorces per thousand marriages has now fallen by 27 percent since the peak in 1979. The latest data suggest that the divorce rate for 2007 will be even lower still. And our own analysis of the stability of marriages suggests that those married in the 1990’s appear to be less likely to divorce than those married in the 1980’s, who in turn are less likely to divorce than those married in the 1970’s. As such, the divorce rate seems likely to continue to decline for some time yet.

Surprised that the divorce rate in the US is lower than the UAE? I don't doubt that the divorce rate in the UAE is high, but there's no way to determine whether is that high, short of having better data on the UAE. Poor data invites theoretical speculation. Is the divorce rate in the UAE high because it's affordable? Because the matching process is poor? Because families interfere?

One take away from this comparison is that the US isn't as morally inferior to the UAE as it might appear. But do note that falling divorce rates in the US are attributed to falling marriage rates, and marriage at a later age. Those most likely to divorce have become less likely to marry. And there are more couples enjoying the benefits of marriage before marriage - whether or not they ever marry.

Can you say elasticity of demand?

Redlight cameras are working so effectively in Dallas that infraction rate fines are not covering the fixed cost of operating the cameras. The quantity response was large than expected. You could lower the fine, or - to save costs - turn off some of the cameras at random and let the drivers know the odds.

See: demand elasticity and revenue.

OIL will make them the richest per capita in the world.

Israeli migrant labor policy

IRIN - UN Office for the Coordination of Humanitarian Affairs

We were told by Yilmazlar [a Turkish manpower agency that supplies construction workers to a number of companies in Israel] that we could make up to $1,400 a month and more with overtime if we worked in Israel," he told IRIN.

"Yilmazlar assured us we would be well treated and be housed in good accommodation. However, when I arrived, my dream turned into a nightmare."

Yelmaz was sharing a room with eight others - furnished with bunk beds - that was so small that there was no space for their suitcases. They were fed a monotonous diet of rice and lentils and there were only three toilets with no running water for 130 workers.

"The conditions of the toilets were so disgusting, they were not fit even for an animal," said Yelmaz.

"We were forbidden from using mobile phones on pain of confiscation and fines and were forced to work an average of 11 hours a day, without being paid overtime. And in our half-hour lunch break we were expected to go home, eat and return to the construction site.

"In addition to our passports being taken away [by the employer], we needed special permission to leave the premises after work and on our day off. If people left without permission, they were fined and threatened with deportation by the management."

The final straw came when Yelmaz found out that he and the other workers would only receive their first payment after three months. He and a friend, 41-year-old father-of-three Hikmat Tekin, decided to challenge their boss.

"We were told by the management that if we didn't like it, we would be deported without payment and barred from employment elsewhere in Israel,"
Tekin said.

As he began his battle against his employer, Yelmaz became aware of the strict Israeli visa regulations governing conditions for migrant workers.

"The issuance of these visas is subject to the workers staying with the same employer stated on the visa and if this condition is broken then the migrant worker is deemed illegal and liable for deportation,” said Sigal Rosen, spokeswoman for Israeli human rights organisation Hotline for Migrant Workers.

There are two ironies:

1) These government policies and business practices towards migrant workers are just like those used in Arab Gulf countries. Israel and Arab Gulf states behave the same way towards migrant workers.

2) In the Arab Gulf workers Yelmaz might not be welcome at all. Since Saddam's invasion of Kuwait - and the support Saddam received from migrant Arab Muslims working in the Gulf - Arab Gulf countries have switched to a greater reliance are workers less likely to make political trouble. More generally, there is the view that Asian Muslims are less politically troublesome than Arab Muslims. Yelmaz is Turkish - not Arab - but he might also not be welcome here for similar reasons.

80% of Islamic bonds declared unIslamic

Bloomberg (March 13)

New guidelines demand that investors become the legal owners of those assets rather than nominal holders, the Bahrain-based Accounting & Auditing Organization for Islamic Financial Institutions said on its Web site.

The rules from AAOIFI's board of 18 religious advisers led by Chairman Sheikh Muhammad Taqi Usmani will make it harder for companies to issue Islamic debt at a time when borrowing is already shrinking because of the global credit crisis.
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``This is a paradigm shift and will make life difficult for chief financial officers used to the existing structures,'' Moody's Investors Service analyst Khalid Howladar said in a phone interview from Dubai today.
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Borrowers and their bankers until now created a fixed income for investors by promising to buy back the assets underlying sukuk at their face value on maturity, irrespective of whether the assets made or lost money, Moody's Howladar said. These types of agreements are banned under the tougher rules because Shariah demands buyers and sellers share profits or losses from their transactions.

``Blemishes'' have crept in that the industry must now ``rid'' itself of, AAOIFI's board of scholars said last month. As much as 85 percent of sukuk sold to date may not comply with all the precepts of Shariah, the board said.

The new rules force issuers of sukuk to legally transfer the ownership of assets to bondholders. The assets must be tangible rather than a cash flow.

``What the scholars are trying to do is make sukuk asset- backed rather than just asset-based,'' said Arul Kandasamy, the Dubai-based head of Islamic finance for Barclays Capital.
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Jebel Ali Free Zone FZE, Dubai's state-run operator of a business park adjoining the Jebel Ali port, raised $2 billion in the biggest sale of sukuk from the Gulf in the past six months. Buyers of the bonds have no legal claim on the underlying assets and have an ``implicit guarantee'' the issuer would cover any payment shortfalls, S&P said in a report in January.
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``The likely impact of this is that either the sukuk market becomes more based on Islamic securitizations or it bifurcates, with some sales becoming truly asset-backed and other issuers choosing to continue with existing structures,'' Moody's Howladar said.

On Thursday, Marketplace, from American Public Radio, had a good report on the controversy. You can listen here (lasts about 4 minutes). Or read the transcript. An excerpt from the transcript:

MP: Humayan Dar teaches Islamic finance at the CASS Business School. He says the sukuk, or Islamic bond, cleverly circumvents this rule in a number of different ways.

Humayan Dar: For example, sukuk holders receive ownership of an asset which is then leased to the issuer which offers a rental.

MP: But critics say that's just interest by another name... that bond is un-Islamic. A leading muslim scholar, Sheik Muhammed Taqi Usmani, says 80 percent of these bonds break the fundamentals laws of Islam. Tarek El Diwany, author of The Problem with Interest, says the sheik is right: The banks have been hoodwinking Muslim investors.

Tarek El Diwany: They are engaging in legal trickery in order to produce a fixed financial rate of return from the outset of the transaction. Many of them are -- not all of them.

MP: Special boards of Muslims scholars certify all the sukuk as islamic. The trouble is, says El Diwany, the banks pay those scholars -- sometimes handsomely. Rather like an investment bank paying a rating agency, which then gives its conventional bonds a triple-A. Hardly an independent opinion...

El Diwany: At the end of the day, it's a little bit much to expect a big banking organization to pay a scholar who says the bank's products are not permitted under Islamic law. It's not going to happen, is it?

For criticism of how the announcement was handled by Sheik Muhammed Taqi Usmani see "Mishandling Crises Leads to Disasters" by Lahem al Nasser writing in Asharq Al-Awsat. He writes, in part:

When Sheikh Muhammad Taqi Usmani, Chairman of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) issued a statement to the media in which he said that 85 percent of sukuk (Islamic bonds) are non-Shariah compliant, it spread like wildfire causing disruption and confusion in the Islamic banking industry.
...
The Chairman of the AAOIFI, Sheikh Muhammad Taqi Usmani could have clarified the statement and revealed which type of sukuk was referred to, its non-Shariah compliant aspect and also disclosed what percentage of overall Islamic bonds they comprise, in addition to how this dispute affects present and future issues.

I figure the AAOIFI woke up to the fact that anything financial instrument that guarantees a fixed return is an interest-bearing instrument. A bond is a bond is a bond, no matter how it is designed. When it comes to what these instruments are it's that simple. I figure that unless on appearances matter, these bonds do not meet the restriction against interest. The real question is, all interest also usury?

Update: Tim Worstall points out Islamic bonds figured in the UK finance minister's budget plans.

UAE workers riot

As reported in the Wall Street Journal:

SHARJAH, United Arab Emirates -- Protests and violent skirmishes over rising prices are hitting parts of the Middle East, a region already beset by strife but otherwise enjoying an unprecedented, oil-fueled economic boom.

On Tuesday, hundreds of workers demanding higher wages to counter soaring food costs rioted at an industrial park tucked amid this Persian Gulf emirate's desert scrub. They burned and battered dozens of cars and buses at an American-owned contracting company, then ransacked and set ablaze parts of the company's offices.
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Saudi Arabia, Qatar and the United Arab Emirates have all been socked with soaring inflation. Because they peg their currencies to the U.S. dollar, those currencies have followed its sharp fall.
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The region is heavily dependent on expatriate labor, many from Southeast Asia, who send much of their earnings home. As the value of their remittances falls with the dollar, they are growing frustrated.

That anger is now increasingly turning into violence. On Tuesday, hundreds of workers for Drake & Scull, an electrical and mechanical engineering contractor owned by U.S.-based Emcor Group Inc., rioted. The government put the number of workers involved at 1,500, while a Drake spokeswoman in Dubai said the number was much lower.

Some other reporting:

- Sharjah workers' riot brought under control - Sify News, India:

The situation in the Al Sajaa district of Sharjah, where around 1,500 workers of a sewage and maintenance company went on the rampage demanding salary hikes, has been brought under control.

The workers burnt office documents, broke glass facades of the first floor of the labour accommodation building and burnt and damaged vehicles of the company on Tuesday, according to the WAM news agency.

Director General of Sharjah Police Brig. Humaid Mohammed Al Hudaidi, accompanied by the Assistant Undersecretary of the Ministry of Labour, Humaid bin Dimas, labour officials and directors of police departments and civil defence teams rushed to the riot scene.

The anti-riot team surrounded the labour accommodation while the civil defence team put out the fires that had engulfed offices and vehicles.
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[Al Hudaidi] called on the workers not to resort to violence and subversion, leading to destabilization in the United Arab Emirates.

- Police quell subversive acts by 1500 labourers in Sharjah -Khaleej Times, United Arab Emirates:

Al Hudaidi noted that some even attempted to attack police and the labour officials at the riot site. He said that 15 days ago the workers had selected their representatives to submit their salary hike demands to the labour office. Based on those demands, the labour officials discussed the demands with the officials of the company, which is owned by a nearby emirate to Sharjah. It set up a labour accommodation site in Al Sajaa district.

“Even before the workers received reply, a group of workers incited them to go on rampage and burnt vehicles and properties of the company,” Al Hudaidi said....

- Emirati Police Break Labor Strike -The Associated Press: "Police said that at least 500 workers carried out "subversive acts" at a work camp in the emirate, or state, of Sharjah, according to the official state news agency, WAM."

- Violent uprising - 7DAYS, United Arab Emirates - Mar 18, 2008By Fareed Rahman A labour protest turned violent in Sharjah yesterday, with 3000 angry workers setting light to vehicles and a storeroom at their camp.

New workers co-op formed

Strippers take off over:

When dancers at San Francisco's Lusty Lady turned the exotic club into an egalitarian co-op, they found it tough to reconcile their lofty ideals with the aesthetic realities of the sex trade.

One of the first things the dancers did was to toss out rules about maintaining the same body type as the day they were hired, and ones regarding height-weight proportion. A list of acceptable hair colors was scrapped, along with a policy regulating the quantity and location of tattoos.

Now, larger dancers and those who might not be stereotypically "pretty" are welcome on the Lusty stage, but this emphasis on inclusion has brought difficulties for the 60 or so dancer-owners.
...
But the theater's mission statement, which seeks to break down hierarchy, made the creation and enforcement of managerial policies difficult.

"It's hard, because we'd elect people to enforce our performance standards, but we hadn't yet decided on what those are," said former dancer Lili Marlene, who was involved in the transition. "Hygiene rules are easier."

Dancers learned how to take disciplinary action against each other via new policies such as peer-based performance reviews. Each week performers evaluate their onstage colleagues, considering general appearances, customer interaction, and levels of eye contact.

The first years of self-governance were the most difficult.

"On a good day, it's like Peter Pan," said Lili Marlene. "On a bad day, it was like Lord of the Flies. We can do whatever we want, and there's nobody to tell us what to do."

Bear Stearns: from $70 to $2 in a week

New York Times

Bear Stearns, pushed to the brink of bankruptcy by what amounted to a run on the bank, agreed late Sunday to sell itself to JPMorgan Chase for a mere $2 a share, narrowly averting a collapse that threatened to cascade through the financial system.
The price represents a startling 93 percent discount to Bear Stearns’ closing stock price on Friday on the New York Stock Exchange.
...
For JPMorgan, one of the few major banks to emerge relatively unscathed from the subprime mortgage crisis, the deal provides a major entry to prime brokerage, which provides financing to hedge funds, a source of enormous growth over the past decade, but a slowing business amid the market’s turndown.

Bear Stearns would also give JPMorgan a much bigger presence in the mortgage securities business, which the bank executives say they are committed in spite of them recent market downturn.

Graphic.

Bush: It's our money to begin with

U.S. President Bush gave a talk yesterday before the Economics Club of New York. Here's one portion of what he had to say:

A confident nation accepts capital from overseas. We can protect our people against investments that jeopardize our national security, but it makes no sense to deny capital, including sovereign wealth funds, from access to the U.S. markets. It's our money to begin with. (Laughter.) It seems like we ought to let it back. (Applause.)

It's a pretty funny line.

Yesterday was also the release date of Nothing to Fear but Fearmongers Themselves: A Look at the Sovereign Wealth Fund Debate by Daniel J. Ikenson, associate director for the Center for Trade Policy Studies at the Cato Institute. One paragraph:

Most anxiety about SWFs is attributable to their rapid increase in number and size. At nearly $3 trillion (the upper end of current estimates), SWFs are more than twice as large as all of the world’s hedge funds combined. But $3 trillion constitutes a tiny sliver of the $190 trillion stock of global financial assets or the $62 trillion managed by private institutional investors.14 Even with SWF assets projected to quadruple by 2015, global asset values are projected to grow as well, such that the percentages owned by SWFs should not change much. It is highly improbable that the investment decisions of SWFs will “move” U.S. markets.

Secret Dubai on Dubai and the media

Quote:

Part of the problem in Dubai is that far too many senior officials have no perspective when it comes to local press versus international coverage. They have a very "village green" attitude, and will obsess over a perceived impertinence in a local rag read predominantly by Jumeirah Janes and Tecom commuters while ignoring serious social and political problems that get picked up by global heavyweights such as the FT and the Economist.

Middle East infantry arrives in U.S. real estate markets

Wall Street Journal

Increasingly, government-controlled Middle Eastern funds and private Arab investors are becoming partners of convenience, if not choice, for real-estate developers grappling with tight credit and risk aversion among traditional investors such as pension funds.
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"There is no question this trend will continue," says Frank Liantonio, executive vice president for global capital markets at real-estate broker Cushman & Wakefield. "We're in an environment where capital structures are strained. Sovereign-wealth funds are perfect candidates for solutions to the problems we're encountering."
...
Indeed many are making the trek to the Middle East to look for money. Antares Investment Partners, a Greenwich, Conn.-based real-estate investment and development firm, is raising a $500 million fund from Middle Eastern investors and others to jointly buy commercial real estate in the New York metro area. "There is a real sense over here that the time to invest in the U.S. real estate market is now," said Joseph Beninati, Antares co-founder, while visiting Abu Dhabi, in the United Arab Emirates, to meet potential investors.

He says the fund will target well-situated and cash-generating properties with "broken capital structures," such as excessive leverage. Unlike U.S. pension funds, cash-rich Middle Eastern investors have longer time horizons and are rarely under pressure to liquidate, Mr. Beninati says. "They are never in a position where they have to liquidate in 36 months because a pension fund has to be paid."

Middle Eastern investors are looking not at the United States. As Forbes reports, "Late yesterday, Investment Corporation of Dubai (ICD) and Colonial said they have agreed a deal for the sale of a 50 pct stake in the troubled [Spanish] property firm to the investment group."

Most people couldn't find the richest city in the world on a map

Fortune:

"We move fast," Khaldoon says, his crisp, white headscarf whipping in the wind. "Think about it: How many places in the world can you say, 'I'm going to establish an airline,' and boom, two years later you have 21 planes and 37 destinations? How many places in the world can you say, 'I need 15,000 hotel rooms,' and boom, you have 100 new hotels in the works? How many places can you say, 'I want world-class hospitals, universities, and museums,' and boom, the Sorbonne, Cleveland Clinic, Guggenheim, and Louvre are on the way?"

Welcome to Abu Dhabi, the capital of the United Arab Emirates and the richest city in the world. The emirate's 420,000 citizens, who sit on one-tenth of the planet's oil and have almost $1 trillion invested abroad, are worth about $17 million apiece. (A million foreign workers don't share in the wealth.) Yet most people couldn't find Abu Dhabi on a map. Khaldoon's job is to change that. Tall, handsome, and politically savvy, he wants to make his hometown mentioned in the same breath as Singapore, Tokyo - and yes, Dubai.

But does the UAE, a federation of seven emirates strung out along the Persian Gulf, need another Dubai just a two-hour drive away? Does it need another long-haul airline, another financial center, another tourism destination, another billion-dollar hotel? "The short answer," says Khaldoon, "is yes. But I don't like to use comparisons with Dubai. We're not trying to be Dubai. What they've done is phenomenal, and we're very proud of it. But here we have a unique opportunity to get it right."

Read it all. Thanks to A Year in Exile for the link.

Does government give itself an advantage in private enterprise?

An anonymous commenter on an earlier post asks some tough questions:

Considering the red tape in Dubai for entrepreneurs and the almost impossible competitive laws, make it very difficult to establish and grow a sustainable organization. Now, with the launch of Dubai Government's own event management company, where does this leave us, seriously? When almost every profitable sector is dominated by semi-government companies including airlines, telecom, insurance, finance, banking, and now something as peculiar as event management too? Are we to be scared of the future business climate here? How much longer will it be until every industry has a semi-government entity in it, that can grow seamlessly without the hurdles that we go through, such as visas, permits, bank guarantees, etc.

Readers, what do you think?