The latest International Monetary Fund report on the UAE forecasts a 60 per cent rise in GDP from $185 to $294bn from 2007 to 2012.
This study is already outdated and understated, since it assumes that oil prices will remain in the mid-$60 per barrel range for the forecast period. Oil is currently hovering above the $90 per barrel level, and shows little sign of falling.
More significantly, non-hydrocarbon revenues are set to double to $49bn, since domestic investment as a percentage of GDP will continue at the very high level of 21-26 per cent in order to promote economic diversification. Total investment in Abu Dhabi over the decade will be a whopping $161bn (driven by huge oil revenue), $63bn in Dubai and $2bn in Ras Al Khaimah.
Interestingly, there has also been a regional spillover effect from the growth in the UAE economy, with nations such as Pakistan and Egypt benefiting from UAE direct investment, as well as Jordan, Syria, Morocco and Tunisia.
The report comes with a warning. With an economy that is growing so quickly, a key challenge is to contain inflation, driven by housing rental price increases and strong demand growth. Going back to the old dollar-peg issue that I’ve spoken about in previous posts, the IMF says the authorities remain committed to the US dollar peg to the dirham. Most exports and imports are US dollar denominated and that a large proportion of foreign assets are invested in US dollar instruments.
Tuesday, 18 December 2007
Saturday, 15 December 2007
Burj Dubai - Tallest Buildings
Living in Dubai, I’m used to seeing amazing architectural structures every day. Even so, some of the designs featured in this great little review of skyscrapers are breathtaking (http://www.slate.com/id/2139722/). There is a great image of the 45-story residential tower proposed for Dubai by Ali Rahim and Hina Jamelle., an example of “Digital architecture.
Burj Dubai is conspicuous in its absence, although it seems to be all over the internet at the moment:
(Source: http://www.flickr.com/photos/pete_the_painter/1517577107/)
A number of blogs and websites are carrying stories about the building breaking the record for the world’s tallest freestanding structure. The tower is now more than 555 metres (1,831.5 feet) tall and has surpassed the 553-metre (1,824.9-feet) CN Tower in Toronto, Canada, which has held the record for the world's tallest free-standing structure since 1976. More than 320,800 cubic metres of reinforced concrete and 63,300 tonnes of reinforcing steel have been used in the tower's construction so far, and developers Emaar Properties has opted not to disclose the tower's final projected height. Apparently, they have the ability to add on more floors at a later date to ensure that the tower retains its record-braking status!
Everyone seems to be forgetting the Petronius Platform, a deepwater oil platform in the Gulf of Mexico. It’s a massive 609.9 meters (2,001 feet) high. Some people would say that this is the tallest free-standing structure in the world, although only 75 meters of the platform are above water!
(Source: http://www.flickr.com/photos/ccgd/50315379/)
I know where I’d rather live!
Burj Dubai is conspicuous in its absence, although it seems to be all over the internet at the moment:
(Source: http://www.flickr.com/photos/pete_the_painter/1517577107/)
A number of blogs and websites are carrying stories about the building breaking the record for the world’s tallest freestanding structure. The tower is now more than 555 metres (1,831.5 feet) tall and has surpassed the 553-metre (1,824.9-feet) CN Tower in Toronto, Canada, which has held the record for the world's tallest free-standing structure since 1976. More than 320,800 cubic metres of reinforced concrete and 63,300 tonnes of reinforcing steel have been used in the tower's construction so far, and developers Emaar Properties has opted not to disclose the tower's final projected height. Apparently, they have the ability to add on more floors at a later date to ensure that the tower retains its record-braking status!
Everyone seems to be forgetting the Petronius Platform, a deepwater oil platform in the Gulf of Mexico. It’s a massive 609.9 meters (2,001 feet) high. Some people would say that this is the tallest free-standing structure in the world, although only 75 meters of the platform are above water!
(Source: http://www.flickr.com/photos/ccgd/50315379/)
I know where I’d rather live!
Wednesday, 12 December 2007
Islamic Finance
Islamic Finance is now a multi-billion dollar global industry, with over 270 institutions operating in 48 countries and holding more than US$300 billion in assets. As Sharia’a compliant products become more sophisticated they are growing in popularity. ‘Non-traditional’ Islamic funds have grown from just 12 in 2001 to over 100, and there are currently over 120 Islamic equity funds in existence globally totalling US$16bn in assets under management. Western majors are joining the fray by launching similar Islamic equity products.
For those of you who are still in the dark, here is a bite-size guide to the fundamentals of Islamic financing:
Basic Tenets
Islamic banking refers to a system of banking or banking activity that is consistent with Fiqh al-Muamalat (Islamic rules on transactions).
Islamic law prohibits riba, the collection and payment of interest. It also prohibits investing in businesses that are considered unlawful, or haraam (such as businesses that sell alcohol or pork, or businesses that produce media such as pornography). There is an emphasis on ethical investment. While Islamic law prohibits the collection of interest, it does allow a seller to resell an item at a higher price than it was bought for, as long as there are clearly two transactions.
Amongst the common Islamic concepts used in Islamic banking are profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijarah).
Fixed-income, interest-bearing bonds are not permissible in Islam. Sukuk are securities that comply with the Islamic law. Total global issues of sukuk – Sharia’a compliant asset-backed securities - are expected to reach US$27 billion this year.
It is generally accepted by Muslim jurists that the operation of conventional insurance does not conform to the rules and requirements of Shariah. They argue that it involves the elements of uncertainty (Al-gharar) in the contract of insurance, gambling (Al-maisir) as the consequences of the presence of uncertainty and interest (Al-riba). Takaful - Sharia’a compliant insurance – is currently growing by approximately 20% per year. Takaful is based on the idea that what is uncertain with respect to an individual may cease to be uncertain with respect to a very large number of similar individuals. Insurance by combining the risks of many people enables each individual to enjoy the advantage provided by the law of large numbers.
Participatory arrangements between capital and labor reflect the Islamic view that
the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.
Islamic banks employ advisory consultants to ensure that the operations and activities of the bank comply with Sharia’a principles.
How it works
For example, in an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the fact that it is profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid).
Objections
Many Muslims and non Muslims have opposed Islamic finance, claiming that it deals in interest but conceals it through legal innovations. Islamic finance bears a striking resemblance to “contractum trinius”, a method devised by European bankers and merchants during the Middle Ages designed to circumvent the Church’s prohibition of fixed interest payments. A set of three separate contracts were presented to someone seeking a loan: an investment, a sale of profit and an insurance contract. Each of these contracts were permissible under Church law, but together replicated the effect of an interest-bearing loan. In early sixteenth century Europe, it was realized that the complete prohibition of lending for profit impeded economic development. This was especially true for the merchants, traders, and industrialists who needed extra capital to expand their commercial enterprises. In the end, Henry the VIII – amongst other things – overturned the ban on interest-bearing loans. "The Act Against Usury" was passed by the English Parliament in 1545, providing for an interest rate ceiling of up to "ten in the hundredth" (ten percent). This became the foundation of English usury law.
For those of you who are still in the dark, here is a bite-size guide to the fundamentals of Islamic financing:
Basic Tenets
Islamic banking refers to a system of banking or banking activity that is consistent with Fiqh al-Muamalat (Islamic rules on transactions).
Islamic law prohibits riba, the collection and payment of interest. It also prohibits investing in businesses that are considered unlawful, or haraam (such as businesses that sell alcohol or pork, or businesses that produce media such as pornography). There is an emphasis on ethical investment. While Islamic law prohibits the collection of interest, it does allow a seller to resell an item at a higher price than it was bought for, as long as there are clearly two transactions.
Amongst the common Islamic concepts used in Islamic banking are profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijarah).
Fixed-income, interest-bearing bonds are not permissible in Islam. Sukuk are securities that comply with the Islamic law. Total global issues of sukuk – Sharia’a compliant asset-backed securities - are expected to reach US$27 billion this year.
It is generally accepted by Muslim jurists that the operation of conventional insurance does not conform to the rules and requirements of Shariah. They argue that it involves the elements of uncertainty (Al-gharar) in the contract of insurance, gambling (Al-maisir) as the consequences of the presence of uncertainty and interest (Al-riba). Takaful - Sharia’a compliant insurance – is currently growing by approximately 20% per year. Takaful is based on the idea that what is uncertain with respect to an individual may cease to be uncertain with respect to a very large number of similar individuals. Insurance by combining the risks of many people enables each individual to enjoy the advantage provided by the law of large numbers.
Participatory arrangements between capital and labor reflect the Islamic view that
the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.
Islamic banks employ advisory consultants to ensure that the operations and activities of the bank comply with Sharia’a principles.
How it works
For example, in an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the fact that it is profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid).
Objections
Many Muslims and non Muslims have opposed Islamic finance, claiming that it deals in interest but conceals it through legal innovations. Islamic finance bears a striking resemblance to “contractum trinius”, a method devised by European bankers and merchants during the Middle Ages designed to circumvent the Church’s prohibition of fixed interest payments. A set of three separate contracts were presented to someone seeking a loan: an investment, a sale of profit and an insurance contract. Each of these contracts were permissible under Church law, but together replicated the effect of an interest-bearing loan. In early sixteenth century Europe, it was realized that the complete prohibition of lending for profit impeded economic development. This was especially true for the merchants, traders, and industrialists who needed extra capital to expand their commercial enterprises. In the end, Henry the VIII – amongst other things – overturned the ban on interest-bearing loans. "The Act Against Usury" was passed by the English Parliament in 1545, providing for an interest rate ceiling of up to "ten in the hundredth" (ten percent). This became the foundation of English usury law.
Sunday, 9 December 2007
Dubai Film Festival
The Dubai International Film Festival is due to take place this year from December 9-16. Last year the festival showcased a wide selection of features, shorts and documentaries from 47 countries around the world. Algerian filmmaker Jamila Sahrawi took home the grand prize of USD 50,000 and the gold statue for her winning feature, ‘Barakat’.
DIFF, as the organisers affectionately call it, says it has received a huge amount of submissions for its second annual Muhr Awards for Excellence in Arab Cinema. Unsurprisingly, Muhr awards boast some of the most generous cash prizes among international film festivals. The festival also received numerous entries from the UAE. Masoud Amralla al Ali, DIFF’s Artistic Director and the Coordinator General of the Muhr Awards competition, said, “Our long-term goal for the Muhr Awards is to showcase excellence in Arab cinema, which epitomizes the talent and passion that is coming from this region.”
The festival is turning into an effective platform for promoting Arab films. In total, it has received over 300 films that centre on the issues, dreams, and stories of the Arab world. The official website says that “the competition received a higher amount of documentaries than features or shorts, reflecting an interest in the Arab world in cinema verite and news reporting on the many issues facing the region.” The majority of this year’s entries are from the Maghreb and Egypt, followed by Syria, Palestine, Lebanon, and the United States. A broad range of European countries also sent entries, including Norway, Holland, Luxembourg, Greece and Italy.
DIFF, as the organisers affectionately call it, says it has received a huge amount of submissions for its second annual Muhr Awards for Excellence in Arab Cinema. Unsurprisingly, Muhr awards boast some of the most generous cash prizes among international film festivals. The festival also received numerous entries from the UAE. Masoud Amralla al Ali, DIFF’s Artistic Director and the Coordinator General of the Muhr Awards competition, said, “Our long-term goal for the Muhr Awards is to showcase excellence in Arab cinema, which epitomizes the talent and passion that is coming from this region.”
The festival is turning into an effective platform for promoting Arab films. In total, it has received over 300 films that centre on the issues, dreams, and stories of the Arab world. The official website says that “the competition received a higher amount of documentaries than features or shorts, reflecting an interest in the Arab world in cinema verite and news reporting on the many issues facing the region.” The majority of this year’s entries are from the Maghreb and Egypt, followed by Syria, Palestine, Lebanon, and the United States. A broad range of European countries also sent entries, including Norway, Holland, Luxembourg, Greece and Italy.
Tuesday, 4 December 2007
Speaking the Same Language
Gulf News has a feature on a linguistics professor at the American University of Sharjah who thinks that the top five languages used throughout the UAE are English, Arabic, Urdu, Malayalam and Hindi (http://archive.gulfnews.com/articles/07/02/20/10105942.html). Dr Fatima Badri, English and Linguistics professor at the American University of Sharjah, says that the empahais on learning English could endanger "mother languages".
The most striking part of her thesis is that, while there is waning interest in Arabic in the Arab world, there are increasing numbers of non-Arabic speakers learning the language. Pointing to Arabic’s decline, the 2003 UN Arab Human Development Report said that only 10,000 books were translated into Arabic in the last millennium - equivalent to the number translated into Spanish every year.
In the “2015 Dubai Strategic Plan” HH Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, stressed the importance of the language in the preservation of the UAE's national identity.
Unesco reckons that over 50 per cent of the world's 6,000 languages are endangered. 96 per cent of the world's 6,000 languages are spoken by 4 per cent of the world's population, and 90 per cent of the world's languages are not represented on the internet. Most shockingly, one language disappears every two weeks.
The most striking part of her thesis is that, while there is waning interest in Arabic in the Arab world, there are increasing numbers of non-Arabic speakers learning the language. Pointing to Arabic’s decline, the 2003 UN Arab Human Development Report said that only 10,000 books were translated into Arabic in the last millennium - equivalent to the number translated into Spanish every year.
In the “2015 Dubai Strategic Plan” HH Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, stressed the importance of the language in the preservation of the UAE's national identity.
Unesco reckons that over 50 per cent of the world's 6,000 languages are endangered. 96 per cent of the world's 6,000 languages are spoken by 4 per cent of the world's population, and 90 per cent of the world's languages are not represented on the internet. Most shockingly, one language disappears every two weeks.
Saturday, 1 December 2007
Book Review - Oil & Development
Rosemarie Said Zahlan. ‘The Impact of the Early Oil Concessions in the Gulf States’, in Richard Lawless (ed.), The Gulf in the Early 20th Century: Foreign Institutions and Local Responses
Zahlan begins by asserting that the economic, political and social effects of early oil concessions in the Gulf states “are well known and need no elaboration”. She chooses to focus upon the “sequence of phases” which transformed the Arabian Peninsula (almost) beyond recognition. Zahlan notes the strategic importance of the Gulf states in facilitating imperial communications between Britain and India, realised in the various “air agreements” signed between local rulers and the British government. She argues convincingly that British negotiations concerning oil concessions were informed by strategic, rather than economic objectives. It’s worth drawing attention to the conflation of public and private interests which guided such negotiations; the fiercely guarded imperial relationship between local ruler and British representative was expanded to include British oil companies. This was in fact the inauspicious beginnings of a sustained (and arguably on-going) period of oil diplomacy, which in the following decades, would come to colour Anglo-American relations.
Where Zahlan’s analysis really stands out, is in its treatment of shaikhly authority; the transformative effect of early oil concessions upon the nature of rulership in the Gulf states. Oil concessions meant a recalibration of the relationship between Gulf rulers and British imperial power; the profit-potential of exclusive oil concessions empowered rulers to negotiate generous economic terms by forcing oil companies to outbid each other. The benefits of oil were not simply commercial, they were also political. Recognising the umbilical link between British commercial and strategic interests, Shaikh Abdallah bin Qasim, the ruler of Qatar, granted an exclusive oil agreement to a British company in exchange for a guarantee of British military protection against possible attack from the Wahhabi-Saudi state. On a domestic level, the huge revenues generated by oil concessions disrupted the relationship between the shaikh and his people. Oil income reduced the ruler’s dependence upon the shaikhdom’s mercantile community and thus limited the political agency of that community within the internal affairs of the shaikhdom. Zahlan states that “the ruler’s income from the agreements was personal to him and not to society at large”; financial independence considerably reduced the ruler’s accountability to the populous. Zahlan cites Bahrain as an example of how the distance between the shaikh and his subjects widened with the advent of administrative reform. The traditional majlis, which promoted dialogue between the ruler and his people, was undermined by the creation of a “modern” system of government, divided into a serious of departments. It is fair to argue that this bureaucratic division of labour has permanently altered the political landscape of the entire Gulf, ceremonialising (and in the process, trivialising) the tradition of direct contact between the ruler and his people.
Zahlan’s argument concerning the effect of early oil concessions upon the delineation of territorial boundaries in the Gulf is of particular interest. She argues that the commercial imperative to distinguish between disparate concessionary zones was diametrically opposed to the tribalism prevalent in the Arabian Peninsula. This resulted in a number of territorial disputes, “amply illustrated in the esoteric patchwork map which makes up the United Arab Emirates (UAE) today”. Zahlan conducts her analysis of the early oil concessions within three distinct frames; the international, the regional, and the local. This method serves to visually clarify her argument and emphasise the wide range of factors which must be considered in order to fully understand the subject. However, it also serves to oversimplify the subject by failing to stress the overlap between international, regional and local forces in the Gulf states. Having acknowledged this shortcoming, it must be said that Zahlan undoubtedly succeeds in conveying the overall effect of early oil concessions, their profound effect upon social, political economic conditions in the oil-producing Gulf states.
Zahlan begins by asserting that the economic, political and social effects of early oil concessions in the Gulf states “are well known and need no elaboration”. She chooses to focus upon the “sequence of phases” which transformed the Arabian Peninsula (almost) beyond recognition. Zahlan notes the strategic importance of the Gulf states in facilitating imperial communications between Britain and India, realised in the various “air agreements” signed between local rulers and the British government. She argues convincingly that British negotiations concerning oil concessions were informed by strategic, rather than economic objectives. It’s worth drawing attention to the conflation of public and private interests which guided such negotiations; the fiercely guarded imperial relationship between local ruler and British representative was expanded to include British oil companies. This was in fact the inauspicious beginnings of a sustained (and arguably on-going) period of oil diplomacy, which in the following decades, would come to colour Anglo-American relations.
Where Zahlan’s analysis really stands out, is in its treatment of shaikhly authority; the transformative effect of early oil concessions upon the nature of rulership in the Gulf states. Oil concessions meant a recalibration of the relationship between Gulf rulers and British imperial power; the profit-potential of exclusive oil concessions empowered rulers to negotiate generous economic terms by forcing oil companies to outbid each other. The benefits of oil were not simply commercial, they were also political. Recognising the umbilical link between British commercial and strategic interests, Shaikh Abdallah bin Qasim, the ruler of Qatar, granted an exclusive oil agreement to a British company in exchange for a guarantee of British military protection against possible attack from the Wahhabi-Saudi state. On a domestic level, the huge revenues generated by oil concessions disrupted the relationship between the shaikh and his people. Oil income reduced the ruler’s dependence upon the shaikhdom’s mercantile community and thus limited the political agency of that community within the internal affairs of the shaikhdom. Zahlan states that “the ruler’s income from the agreements was personal to him and not to society at large”; financial independence considerably reduced the ruler’s accountability to the populous. Zahlan cites Bahrain as an example of how the distance between the shaikh and his subjects widened with the advent of administrative reform. The traditional majlis, which promoted dialogue between the ruler and his people, was undermined by the creation of a “modern” system of government, divided into a serious of departments. It is fair to argue that this bureaucratic division of labour has permanently altered the political landscape of the entire Gulf, ceremonialising (and in the process, trivialising) the tradition of direct contact between the ruler and his people.
Zahlan’s argument concerning the effect of early oil concessions upon the delineation of territorial boundaries in the Gulf is of particular interest. She argues that the commercial imperative to distinguish between disparate concessionary zones was diametrically opposed to the tribalism prevalent in the Arabian Peninsula. This resulted in a number of territorial disputes, “amply illustrated in the esoteric patchwork map which makes up the United Arab Emirates (UAE) today”. Zahlan conducts her analysis of the early oil concessions within three distinct frames; the international, the regional, and the local. This method serves to visually clarify her argument and emphasise the wide range of factors which must be considered in order to fully understand the subject. However, it also serves to oversimplify the subject by failing to stress the overlap between international, regional and local forces in the Gulf states. Having acknowledged this shortcoming, it must be said that Zahlan undoubtedly succeeds in conveying the overall effect of early oil concessions, their profound effect upon social, political economic conditions in the oil-producing Gulf states.
Subscribe to:
Posts (Atom)