Kerala braces for return migration from the Gulf

The Indian state of Kerala is bracing for return migration due to the global slowdown that has hit the Gulf economies. So reports Free Exchange:

THE lush state of Kerala in the south of India generates most of its foreign exchange either by exporting people or importing them. It earned almost 20 billion rupees ($500m) from foreign tourists in 2006 (the latest year for which figures are available) and about 245 billion (in the same year) in remittances from Keralites working abroad, 89% of whom go to the Gulf.

The state has an astonishing 24.5 emigrants per 100 households. Kerala’s per capita output is one of the lowest in India, but its per capita expenditure is one of the highest. (Gopinath Pillai, a Singaporean diplomat of Keralite descent, describes the situation like this: one poor fellow works three shifts in Dubai, saving every penny to send home, where there will be eight guys reading two newspapers a day and discussing politics.)
...
But the Gulf economies where most of these NRKs work are slowing. Some construction projects are on hold. As a result, Kerala may have to brace itself for a wave of reverse migration. At the recent Indian diaspora conference in Chennai, several speakers called on the government to set up a department for returnees.

If any place is a sweatshop, the Gulf is one. You'll notice the irony. Kerala loses when there are fewer opportunities in the sweatshop.

Carpe Diem has a recent roundup, "In Praise of Sweatshops." Don't forget this golden oldie also titled In Praise of Sweatshops. This, too.

Good and bad ideas for Indian agriculture

India may ban food futures trading - Financial Times

India’s finance minister said on Monday he was considering a blanket ban on trading in food futures, underlying growing concerns in Asia over the role of hedge funds and financial market traders in the recent surge in commodities prices.

If India imposes a ban, it would come only five years after the country introduced such futures trading as part of a broader push to develop India as a leading financial centre.

Speaking on the sidelines of the Asian Development Bank annual meeting in Madrid, P. Chidambaram said his worries over market speculation were shared by governments across the region and that India was “facing a very grave crisis on the food front”.

Right. Make it all the more difficult for farmers to know what they will get for their crop, and see what that does for agricultural output.

UPDATE, May 6: Financial Times reports,

Mr Chidambaram's re-marks drew a strong rebuke from two senior, Indian-born officials of the ADB [Asian Development Bank], highlighting concerns among international institutions that costlier food is leading to trade protectionism and new market distortions.

Rajat Nag, ADB managing director-general, told the Financial Times that trading restrictions "send the wrong signal and are just not -productive".

Ifzal Ali, ADB chief economist, described banning futures trading as "a political gimmick" intended to pander to voters.

Weighing into the debate, Jean-Claude Trichet, president of the European Central Bank, said yesterday speculation was not responsible for food price rises. "At the source . . . was a supply phenomenon and a demand phenomenon, which was explaining most of what we have," he said.

___________________________

But there are success stories in agriculture coming out of India. For example,

Middle-class Indians are eating more and better food. Yet its population of 1.1bn is growing at about 1.4 per cent and food grain production increased just 0.9 per cent last year, according to ministry of agriculture statistics.

Agricultural growth has steadily decelerated because of years of under-investment as attention has focused on high-growth manufacturing and service industries.

But big strides can be made with relatively simple measures. In Kurthia, which is 40 km from the bustling holy city of Varanasi, the e-choupal consists of a computer in a modest house rigged with a small satellite dish. Farmers pose questions that are e-mailed to ITC -agricultural scientists and experts at agricultural -institutes. [ITC is the Indian agribusiness-to-hotels conglomerate]

Yogesh Bhrigulanshi, a farmer and the ITC local manager in nearby Bisuari village, says rice yields have risen 70 per cent, to 3,900kg per acre, since the arrival of the e-choupal. "We used to use fertiliser without any knowledge," says Mr Bhrigulanshi. "We used to use pesticides for any disease on plants. Now we know which pesticide to use and if it needs to be used."

ITC plans to invest $1bn on e-choupals in the period to 2015 to connect farmers to information, products and services. The hope is that as rural incomes rise, farmers will buy more products and services, ranging from seeds and fertilisers to insurance and healthcare.

Rural standards of living have improved.

But this is the most pertinent to the banning futures story: "Knowing the fair market value of crops allows farmers to fetch better prices and circumvent local traders who used to dictate terms. Farmers can also sell wheat and other crops to ITC." Thanks to Marginal Revolution for ITC story.

There is something that Mr. Chidambaram and I agree on:

Mr Chidambaram said on Monday that “food being converted into biofuels is the single biggest reason why we are facing this crisis.” He added: “To put mildly, [the conversion of land for biofuels] is foolish, to put it strongly it is a crime against humanity.”

Meanwhile, US farm lobby defends biofuel while Suspend biofuel rules, say British MPs.

Export bans

When governments ban exports it has the temporary effect -- sometimes vanishingly temporary -- of leaving more on the domestic market and thereby reducing the domestic price. But the long run effect is undercut the incentive of producers to invest in that market, and -- more broadly -- and, because bans harm the government's reputation not to behave opportunistically, to undercut incentives to invest throughout the economy.

Yet governments still do it, and things like it, in an effort to control prices.

Lastest cases in point:

1. India's rice ban. (The story also details the UAE's price ceiling on rice -- another attempt to violate economic laws akin to the law of gravity. For more about UAE concerns see the Gulf News.)

2. Argentina's tax on agricultural exports. (More recent story here.)

India is led by an economist who had been doing a great good job of instituting market-based reforms. Indeed, one of the reasons the price of rice is up is that domestic demand has grown as the Indian economy has expanded. (Likewise, China's economy.) Another reason is that the cost of transporting rice is up due to fuel costs -- which can be traced back to growing demand for oil in reformed economies.

Is India's leader now following the lead of another leader with an economics degree? I'm referring to Robert Mugabe. One of the many things he's done to destroy Zimbawe's economy is to try to control prices.

Indian-looking white girls

Back in Sunday's Washington Post

The presence of Caucasian models in Indian advertisements has grown in the past three years, industry analysts say. The trend reflects deep cultural preferences for fair skin in this predominantly brown-skinned nation of more than 1 billion people. But analysts say the fondness for "fair" is also fueled by a globalized economy that has drawn ever more models from Europe to cities such as Mumbai, India's cultural capital.

"Indians have a longing for that pure, beautiful white skin. It is too deep-rooted in our psyche," said Enakshi Chakraborty, who heads Eskimo India, a modeling agency that brings East European models here. "Advertisers for international as well as Indian brands call me and say, 'We are looking for a gori [Hindi for white] model with dark hair.' Some ask, 'Do you have white girls who are Indian-looking?' They want white girls who suit the Indian palate."
...
"The Indian mind-set prefers light skin. My pictures are routinely Photoshopped to make me look a bit lighter -- a lot lighter, actually," Riya Ray, 23, a dark-skinned Indian model, said with a laugh. "But when I work in Britain and France, my color is praised as exotic. It is a two-way trend: Indian models are going abroad, and foreign models are coming here."

White models, who usually visit India on three-month work visas, earn $500 to $1,500 for a single shoot, a rate that is relatively low, largely because the models tend to come from developing European countries and are new to the international scene.

News flash: Supply of Indian IT workers is not perfectly elastic

IT wages are rising in India. Why? India may have a large population, but its schools have a limited capacity to produce qualified graduates. Cafe Hayek has the story.

The New Silk Road :: WaPo

Quote:

The new Silk Road is largely the result of the confluence of China's and India's economic growth and high oil prices. China and the six oil-rich members of the Gulf Cooperation Council (GCC) -- Saudi Arabia, Bahrain, Oman, Kuwait, Qatar and the United Arab Emirates -- are flush with cash. What's more, Chinese and Indian energy needs will ensure that the GCC region -- the equivalent of the world's 16th-largest economy -- continues to grow. By 2025, forecasts show, China will import three times as much oil from the Persian Gulf as the United States.

Key "caravan posts" on the new Silk Road are regional economic "winners" or rising stars: Dubai, Beijing, Mumbai, Chennai, Tokyo, Doha, Kuala Lumpur, Singapore, Hong Kong, Riyadh, Shanghai, Abu Dhabi. The old Silk Road civilization centers such as Persia (Iran), the Levant (Lebanon, Syria, Jordan) and Mesopotamia (Iraq) lag behind. Dubai, it might be argued, is the unofficial Middle East capital of the new Silk Road -- a gathering place of capital, ideas and traders fueling the growth -- and Iran, once a central force, is the sick man, albeit with enormous potential.

Investors from the GCC have been pouring money into real estate, banking and infrastructure across Asia. The Kuwait Investment Authority, the largest foreign investor in the Industrial and Commercial Bank of China, has doubled its Asia investments in the past two years. A Dubai official said last month that some GCC states are contemplating buying the yuan to diversify their reserves. Meanwhile, Chinese, Korean, Indian and Japanese companies are active in Middle East real estate, consumer products and industrial investments. China and Egypt -- another Silk Road laggard, just now sputtering to life -- have pledged to double trade in the next few years.

Thanks to Scott of Hybla for the pointer.

Here's something about the original Silk Road.

The growing embryo market :: The Times

Extracts from The Times:

Wendy Duncan and her husband Brian are white. Nineteen months ago, the Lincolnshire housewife gave birth to a beautiful, healthy, Indian daughter.

Freya, brown-skinned and dark-eyed, is not a medical miracle after a long and fruitless quest through IVF and adoption, but the product of a booming industry in India that is offering embryos for adoption.

India is fast cornering what is forecast as a £3 billion-a-year market in “reproductive tourism”. It has highly trained, English-speaking doctors and medical procedures that cost a third of the price charged in Europe
...
Being white and already having a mixed-race child (from Mrs Duncan’s previous relationship) meant that they failed the criteria for a normal adoption.

IVF was unsuccessful and expensive for a family relying on Mr Duncan’s income as a lorry driver. The older Mrs Duncan got, the less the chance there was of any fertility treatment working.

Their options were running out until they stumbled upon a website for the Bombay clinic. It was an easy choice.

“Last time, I knew I was pregnant within three days. It was quick - just like having a smear,” she said. “Couples wait years in the UK for egg donation . . . So when we heard about this, we thought ‘Why not?’ If the standards were the same [as British ones], then we didn’t have a problem. And they were. In fact, we were able to get a lot more information. We weren’t just a number.”

The Duncans had no qualms about bearing a child of a different race. They are Freya’s natural birth parents and legal guardians in British law.

“To us colour is not an issue. I already have a mixed-race daughter, whose father is Arab, from a previous relationship,” Mrs Duncan said.

Wow. Better quality, lower price and faster service. And no barriers - in reference to the rules against mixed-race adoption.

Putting my on my normative hat, I have to say what is wrong with mixed race adoption? Indeed, wouldn't it be better if Mrs Duncan had been allowed to exercise her preference to adopt a mixed-race child in the UK, rather buying an embryo in India?

Gapminder @ google: Carbon emissions

Google's got a nifty new tool. Follow this link for a chart showing income and carbon emissions. Be sure to click play to see how things have changed over time. I've highlighted India, China, the UAE and the US. The UAE has battled the US for first place in per capita emissions for some time.

For economists Gapminder is better than HDTV.

Economist Intelligence Unit on rent caps in Dubai

Thanks to The EclectEcon for the tip to this Economist story. I don't buy the EIU's analysis of rent caps in Dubai for two reasons: (1) I anticipate that enforcement will be ineffectual (more bluntly, it's window dressing), and (2) (more speculatively) I think the number of units coming on line is beyond the needs of the market already.

Many of those coming to the Emirates Economist are searching for information on inflation in the UAE. Here's what the article says about UAE inflation:

Inflation in Dubai last year was anywhere between 8% and 20% depending on who you ask (the UAE Central Bank, the IMF, commercial banks and, last but not least, the Economist Intelligence Unit). The consensus was around the mid-teens--too high for comfort--and this was beginning to hurt Dubai's competitiveness.

Firms were forced to hike salaries to keep staff, and then pass those costs on to customers. GEMS, a leading operator of private schools in Dubai, announced an increase in fees of up to 70% for 2007, blaming higher teacher salaries and rents. Privately, some managers of multinational companies said that they had shelved plans to expand their regional headquarters in Dubai, because it was too expensive compared with alternatives such as India, Eastern Europe or Ireland. They also dislike the uncertainty that inflation brings.

That's about right. But do notice, much of the inflation has come about because Dubai, and the UAE in general, is growing and attracting investment.

Related: Lastest on imported inflation and the UAE's dollar peg.

Later: The Economist, also, notes that "China is choking on its own success".

Troop surge and oil prices :: WSJ blog

Link:

A “troop surge” in Iraq could trigger a surge in oil prices, too, says Joseph Quinlan of Bank of America.
. . .
Quinlan raised the specter of greater anti-American sentiment overseas, and a backlash against the dollar, “with petro-states like the United Arab Emirates, which just announced its intention to diversity out of the U.S. dollar, leading the way.”

The UAE is not an anti-American state, nor is it filled with a populace that is anti-American. Just to be clear, it has diversified its portfolio for purely economic reasons.

Quinlan also is quoted as saying such an oil price surge could knock the wind out of the global economy. I'd say most of the increase in oil prices that we have seen throughout the war has been demand driven - growing demand in India and China - and not due to troop levels. Why should that change now?

Emirates building boom depends on abused work force, Human Rights Watch says :: AP

This Associated Press report has been picked up by local papers across America. An extract:

The Emirates, the watchdog said, "has abdicated almost entirely from its responsibility to protect workers' rights."

The men earn as little as $135 (€105) per month in a country where the average wage is $2,100 (€1,600), Human Rights Watch says. The workers often toil for two or three years to pay off debts to unscrupulous labor recruiters, said the report, titled Building Towers, Cheating Workers.

"There's no reason for a global economic powerhouse like the U.A.E. to tolerate abusive and exploitative labor practices," said Human Rights Watch researcher Hadi Ghaemi. "None of this construction would be possible without these imported workers."

Labor Minister Ali Al Kaabi said the Emirates is beefing up its enforcement of already strict laws on labor rights and human trafficking. Al Kaabi acknowledged there are just 80 labor inspectors — too few to keep companies in line.

"Our laws are tougher than anyone else's in the Mideast," Al Kaabi said. "But the lack of inspectors means sometimes we don't see these problems."

The human rights report, released Sunday in a press conference at a Dubai hotel, comes days after Dubai leader Sheik Mohammed bin Rashid Al Maktoum issued a sweeping program of labor reform that appeared timed to undercut the watchdog group's findings.

And on Saturday the country's ruler, Sheik Khalifa bin Zayed Al Nahyan, announced tough penalties, up to life imprisonment, against trafficking in humans, which has illegally brought domestic servants, prostitutes and even child camel race jockeys into the country.

Now, Sheik Mohammed has ordered the creation of an inspection directorate and a system of labor courts. He also requires companies to provide health insurance for all foreign workers and allow them to change jobs more easily.

Sometime next year, Al Kaabi said a new force of 2,000 inspectors will police this country's building sites and desert labor camps, home to hundreds of thousands of migrant workmen from South Asia.

"We're in the spotlight because of Dubai's development," Al Kaabi said. "Success means you get a lot of criticism."

The Emirates, like other Gulf countries, relies on foreign labor for private sector jobs. Labor conditions are similar in nearby Kuwait and Qatar; worse in Saudi Arabia and slightly better in Oman and Bahrain, Ghaemi said.

While the reforms may cut abuses, they won't do anything to raise salaries, which Al Kaabi said were set by "the market" in India, Bangladesh and Pakistan where wages are a tiny fraction of those in the wealthy Gulf.

Gulf developers use a clever tactic of "in-sourcing" laborers on three-year contracts, hiring men in South Asia on salaries that appear reasonable in their home countries. In many cases, the men go into debt to pay their own airfare and visa costs, even though Emirates law says companies must pay these fees. Workers wind up toiling a year or two just to pay off their loans, the rights group found.

At present there are at least 156 papers worldwide that have used this AP story on the HRW report. But perhaps someone thinks that we soon forget what we read in newspapers.

The UAE authorities made the same promise in January of this year to increase the number of inspectors from 80.

And in 2003 Gulf News quoted Dr Khalid Al Khazraji, Undersecretary of the Ministry of Labour:

To draw a clear picture of our labour inspection capabilities in the country, I would like to mention here that the ministry has nearly 80 inspectors to monitor more than 2.5 million labourers working in nearly 230,000 companies and business organisations operating in the emirates. With such a small number of inspectors we cannot play a proactive role in the market.

In 2002, the ministry recruited 60 inspectors. This year we are in the process of hiring 30 inspectors. Our target for the coming three years is to reach 480 labour inspectors.

I didn't go back further in the google wayback machine.

Bklyn in Dubai gets a visit from the UAE CID

Quote:

The questioning was mostly a time pass. Bad cop started filling out a massive dossier form, which for the next nine hours both would write in Arabic details about my family’s migration history, my educational history from pre-KG to the PhD level, details about my work history, etc. Every now and then they would interject with the real questions: why did you come to Dubai? Who is funding you? Why are you asking so many questions? Why are you doing interviews? Why are you asking so many questions about locals? Who said you can come? Why did you come to Dubai?

Bklyn in Dubai (aka Dubai Notes) is here.

His opening blog entry from July is here. An extract:

I am a sociologist from Brooklyn, NY here in Dubai doing interviews for a book on people born/brought up in Dubai who stick around or come back to work. I'm interested in how people deal with the idea and the reality of a home that at any time can say go back to your place you came from. Which for these people is, well, this is my home. How do you "go back" to, say, India (if that's your passport) when you've never lived there?

The point of this blog is two-fold. First, to keep friends and fam back in the US and elsewhere up-to-date on what I'm doing. Second, by putting up my Dubai notes, I invite people in Dubai, and people from Dubai living elsewhere to engage me in dialog -- challenge my ideas, correct me where I'm wrong, tell me I'm an ass, or say right on.

The third fold is this is a way for me to keep a running tally of things, people (names changed to protect the innocent), etc that will go in the book.

UAE among those with lowest Total Tax Rate :: World Bank

BBC:

The [World Bank] Project's calculation of Total Tax Rate (TTR) looks beyond normal percentages of tax to include the cost incurred in dealing with the local tax regime.
...
Middle Eastern states such as the United Arab Emirates and Asian locations like Hong Kong come in the top five of easy tax locations.

Latin America and Africa impose the highest costs on complying with regulations and score poorly. The place on earth with the most difficult tax regime is the former Soviet republic of Belarus.
...
Excessive red tape can create a TTR that seems astronomical. Gambia scores worst of all, with a TTR of 291.4%.
...
The report holds up Egypt as an example of how to eliminate complexity. Inspired by the example of flat-tax adherents such as Estonia, it went for radical change. In 2005, Egypt introduced a 20% flat rate corporate income tax, abolishing 32% or 40% sector-specific rates. A total of 3,000 detailed tax rules relating to certain activities and services were slashed. And all businesses could file electronically. The result of tax reform in Egypt was startling. The number of businesses paying tax jumped to two million in 2005, double the 2004 total.

Here's a link to the Paying Taxes section of the World Bank's "Doing Business." Paying taxes is just a part of the ease of doing business. Here's the Bank's overall ranking of country economies. The UAE has slipped 9 places on the aggregate ranking on the ease of doing business .

UPDATE: India pays hijras (eunuchs) a commission to collect from those behind in their tax payments.

The mobile phone reshapes India's fishing and farming :: WaPo

Quote:

At the beginning of 2000, India had 1.6 million cellphone subscribers; today there are 125 million -- three times the number of land lines in the country. With 6 million new cellphone subscribers each month, industry analysts predict that in four years nearly half of India's 1.1 billion people will be connected by cellphone.

That explosive growth has meant greater access to markets, more information about prices and new customers for tens of millions of Indian farmers and fishermen.

A convenience taken for granted in wealthy nations, the cellphone is putting cash in the pockets of people for whom a dollar is a good day's wage. And it has made market-savvy entrepreneurs out of sheepherders, rickshaw drivers and even the acrobatic men who shinny up palm trees to harvest coconuts here in Kerala state.

"This has changed the entire dynamics of communications and how they organize their lives," said C.K. Prahalad, an India-born business professor at the University of Michigan who has written extensively about how commerce -- and cellphones -- are used to combat poverty.

The article has received considerable attention among bloggers.

Oil refining capacity :: Guardian

India has moved

... from being a net importer to an exporter of refined petroleum products.
. . .
In the dizzy days of the 90s internet boom, distilling crude into diesel, gasoline, home-heating oil and aviation fuel was considered a dinosaur business, with low margins and large outlays. Oil refining was yesterday's business, not tomorrow's.

But Reliance says it gambled on a "paradigm shift" in the economics of the refinery business. The company, which began as a textile trader but moved into producing polyester, had noticed that India was importing millions of tonnes of refined hydrocarbons a year. Its managers projected prices creeping upwards largely due to three global oil trends.

First the oil being produced from the world's hydrocarbon reservoirs was increasingly "sour", or heavy, full of sulphur and other impurities that older refineries could not cope with.

Second was that no new capacity was being built around the world. Environmental concerns and the rising costs of infrastructure projects discouraged the oil majors from putting up refineries in Europe and America. No new oil refinery has been built in the US since the 1980s as environmental legislation has tightened.

Third was Reliance's belief that Asian economies would become dynamos of world growth - inevitably increasing demand for petro-products.
. . .
The products from the Jamnagar complex are for foreign consumption. When complete, the facility will be able to refine 1.24m barrels of crude a day. Two-fifths of this gasoline will be sent 9,000 miles (15,000km) by sea to America.

Youssef Ibrahim: Royal dreamers build castles in the sand

Bio of Mr. Ibrahim: "Served for 18 years as senior regional Middle East correspondent for the New York Times and for 6 years as Energy Editor for the Wall Street Journal. . . Mr. Ibrahim writes weekly and bi-weekly columns in Gulf News and the Daily Star."

Here's what he wrote in the New York Sun this week:

DUBAI, United Arab Emirates - Drive by Media City and into Internet City here and be dazzled at the giant signs above the buildings. There's CNN and MSNBC, and there's Microsoft, Oracle, and Acer.

Not too far away is Financial City, with Merrill Lynch, Goldman Sachs, and more investment-banking muscle. All the elegant signs shimmer under the scorching sun, which bakes the super-modern air-conditioned buildings these international powerhouses inhabit. But wait a minute - are they really there? Is anyone inside?

Nope, this is a bit of trompe l'oeil decor meant to suggest a far greater presence, indeed a headquartering, that is simply not the case.

Once inside, the visitor will quickly discover a few representatives, or perhaps a service person. That's it.

He concludes:

But it's clear the emperor has no clothes. Real estate has stagnated; prices are heading down. The same goes for stock markets in the Arab Gulf region, which last year and this year have dropped by more than 60%. It is, and was, all about speculation on very little. Industry is not the hallmark of the Middle East's desert lands, nor is agriculture, software, or hardware. When investors make nothing, they can only speculate so much before the crash.

"What you see is not what you get" might be a better description of the big oil boom in the Middle East. Meanwhile, the smart sheiks who sold the desert are moving their money out into the real world.

Take Sheik Mohammad Bin Rashed Al Maktoum, the guy from the Dubai Ports episode - as well as the emir of Dubai and the prime minister of the United Arab Emirates. Before and after the Dubai Ports acquisition - itself a $7 billion investment essentially in Britain - Sheik Bin Rashed bought the Tussauds Group for $1.5 billion, the Essex Hotel in New York and other American real estate properties for $1.5 billion, and a group of hotels in Europe and Asia for another $2 billion. In other words, the sheik invested his profits from selling Disneyland desert fantasies in enduring assets outside the Gulf.

It's hard to feel any affection these days for the "Lawrence of Arabia"-style reporters writing about the world's largest artificial ski resorts, tallest buildings, biggest marinas, and hugest shopping malls. They all suggest that a magnificent civilization is rising on the shores of the Persian Gulf. My advice is to look deeper.

Dubai continues to invest in "enduring assets outside the Gulf":

A Dubai government fund has announced the purchase of a landmark building in the heart of New York City for 1.2 billion dollars as the Gulf Arab state blazed ahead with its Big Apple investment binge.

The 32-storey building on 280 Park Avenue in midtown Manhattan, one of the world’s most expensive property locations, was bought by Istithmar from Boston Properties, a publicly listed real estate investment trust.

“We are delighted to work with Istithmar on this transaction and we look forward to a long relationship with them”, Boston Properties chairman Mortimer Zuckerman said in a statement issued by Istithmar.

“Park Avenue is the hub of global operations. Two-Eighty Park Avenue is a particularly attractive corporate location”, said David Jackson, Istithmar chief investment officer. “Within the real estate sector, Istithmar targets projects that are positioned to experience long-term, substantial capital appreciation”.

The 1.2-million-square-foot building, which has a ziggurat type structure reminiscent of ancient Assyrian and Babylonian temples in Iraq, was built in the early 1960s to house the offices of Bankers’ Trust Co.

This is the third New York property deal to be announced by Istithmar since November and a source close to the fund, who spoke on condition of anonymity, said several similar deals have been finalized or were in the process of completion.

The source also said the fund is under the direct supervision and control of the office of Dubai’s ruler, Sheikh Mohammad bin Rashed Al Maktoum, who is also vice president and prime minister of the United Arab Emirates (UAE), a federation of seven emirates including Dubai.

The fund had announced earlier that it paid 300 million dollars for a prime Beaux Arts-style building in Manhattan’s Times Square dating from the 1920s that was once the site of the Knickerbocker Hotel.

In May the fund bought Loehmann’s, a 60-store US chain specializing in designer women’s and men’s apparel at discount prices, for 300 million dollars. It also said it bought another building on 230 Park Avenue without disclosing the price.

According to the Emporis Buildings property database, Istithmar paid 705 million dollars for this building and bought a building on 450 Lexington Avenue for 600 million dollars.

The total real estate investments of Istithmar in New York would be 2.8 billion dollars, according to Emporis.

Economic nonsense

OPEC may override call for production cut :: Business Week:

Chavez played a key role in getting OPEC members to abide by production quotas that have helped reverse prices from roughly US$10 (euro8) a barrel when he took office in 1999, which subsequently quadrupled Venezuela's oil export revenues.

Chavez may well have been key in getting OPEC members to abide by quotas in 1999. Today, however, quotas are irrelevant as crude oil production and refining is running close to 100%. And that is because of the success of the liberalization of markets in India and China due to the defeat of Chavez-like thinking in those countries.

It's disturbing that the Business Week article does not cite the key role of the economic success of India and China in explaining the current high price of crude. Instead, the article cites SG Securities analyst Frederic Lassere in Paris:

Maintaining or boosting output does little to address the factors behind the current run-up, which include a lack of refining capacity, a larger global run on commodities, and geopolitical tensions, Lassere said.

No mention of India and China's surging demand for oil. (And, the run up of what? The lack of refining capacity would not explain a run up of crude prices.)

I wonder what Iran's Gulf neighbors think about this:

Kamal Daneshyar, chairman of the Iranian Parliament's Energy Committee, told Dow Jones Newswires on Monday that Tehran could retaliate for any sanctions by closing the Strait of Hormuz, a major oil shipping route, which he said could drive prices as high as US$250 (euro195) a barrel.

What I'm reading today - May 27, 2006

Saudi Arabia's Mass Weddings Leading to Unhappy Endings :: Asharq Al-Awsat - Maybe. But there's numeracy issues in this report. You report that "thirty-nine percent of couples who tie the knot in mass weddings in Saudi Arabia later divorce" (and you later quote an official as saying it is 39% in the first year of marriage amongst those married in mass weddings in Jeddah last year). But you give no percent for couples who did not marry in mass weddings. So what can we conclude about mass weddings? Later you state that 1,052,000 women of marriagable age are single. But you do not put that number in perspective. For example, as a percentage how does this compare to the amount in recent decades?

Mid-day break for workers during summer indispensable :: S.S. Lootah Contracting Company press release - "The announcement came during S.S. Lootah Contracting HSE policy review meeting held in Dubai last week. Health and safety policy refinement, unconventional operational methods and behavioral based safety management were among the issues discussed during the meeting. 'It is challenging to achieve safety excellence in the construction industry'. Lootah noted. 'We are communicating and implementing HSE principles at all operational levels, but our values that promote respect, care and appreciation for all workers is the key in achieving our goals' he added. . . . The discussion concluded that it is becoming increasingly important to have one official body overseeing health and safety policy making and implementation in the construction industry."

Note that Lootah would like its standards imposed on the rest of the construction industry. It is probable that this means that Lootah is not being compensated by its customers for its higher safety standards. When we blame construction companies for treatment of workers let's remember that it is the customers of the construction companies who are not willing to pay for improved safety. Nor, evidently, are the workers, otherwise a construction company could cut labor costs by exchanging better safety for lower wages. Workers who complain about working in deadly heat are asking to change the terms under which they were hired. Are they willing to take a wage cut in return for not having to work in the hottest hours of the day? Reader, if you object please note that I am also willing to accept the possibility that the construction company is the one that is changing the terms and did not provide workers with full information about working conditions before they were hired.

Getting rid of old cars in Dubai will help the economy? :: Gulf News - Actually, thereare simply not that many old cars on the roads in Dubai. But there are a lot of old trucks. I wonder who owns all those old trucks and why they are still allowed to ply the highways? My guess is that they are the major source of pollution in the vehicle fleet. Besides that, these older trucks are slow and unsafe, contributing to traffic jams and hazardous conditions for others. So, yes, tightening up on the regulation of old cars and trucks would be a net benefit for society.

But reasoning like this is simply a display of economic ignorance on a grand scale: "Ayir N., 36, a manager from India, said preventing very old cars from plying the roads 'is an excellent idea that will push up the economy by allowing more sales of new cars.' . . . Reem Hashim, 29, a flight attendant from Syria, said removing vehicles over 15 years old is a great move. 'It will help decrease the pollution and will refresh the economy by allowing people to buy new cars,' she said." While we at it let's destroy some of the older housing in Dubai to "allow" Ayir and Reem to rent new apartments.

Doing the labor limbo in Dubai - the long national nightmare continues

The labourers were working for a UAE national who runs a construction company. They were dismissed in 2004.
. . . .
The workers, left penniless, unemployed and without their passports, are from India and Bangladesh.

"The sponsor did not pay any of the labourers' earnings, end-of-service benefits, return tickets, compensation for unlawful dismissals and many other dues," the labourers' legal consultant, Karunagappaly Shamsudeen of Al Kabban Advocates and Legal Consultants, told Gulf News yesterday.

"He left the claimants penniless, homeless and unemployed and he is still retaining their passports without any legal grounds," he added.

GM doesn't make 'em like this anymore. And we'd likely not know that except for the unintended consequences of the economic boycott of Cuba.

Why would a young American take a job in India? To buy experience of course.

What is it with cats and computers?

Usually these kinds of mistakes send the caller to a sex hotline. I wonder if they get compensated too? Favorite line: "it wasn't clear what the other $10 was for."