AMERICAN FUTURE

Well, sort of. From the AP, via CNN:

A Romanian oil rig off the coast of Iran operated by the Grup Servicii Petroliere (GSP) came under fire from an Iranian warship and was later occupied by Iranian troops. GSP is a private Romanian company established in 2004, which operates six offshore rigs that it bought from Romania’s largest oil company, Petrom.

Here’s the interesting part:

Two of GSP’s rigs are operating near the Iranian coast in the Persian Gulf as part of a deal signed between Petrom, GSP and Dubai-based Oriental Oil Co.

This will undoubtedly place added strain on relations between Sunni Dubai and Shi’a Iran.

According to Abdul Rahman Al-Rashed, general manager of Al-Arabiya television, it’s the Gulf States. From the London-based, Saudi-owned Asharq Alawsat:

Most of the Arabs outside of the Gulf region believe that Iran’s possession of a nuclear weapon is a positive development that achieves a balance of power with Israel. The Gulf Arabs, however, believe that the power of Iranian nuclear deterrence represents the biggest danger of a military threat. The conflict with Iran, although it is calm for now, could erupt at any moment. This is in addition to the fact that even without the nuclear escalation, there is a real fear of Iranian expansion in southern Iraq, which is adjacent to the Saudi-Kuwaiti borders.

Iran would not bomb Syria or target Jordan or Egypt, despite [sic] that it would be exposed to nuclear fallout if Iran bombs Israel. It is completely farfetched that Iran would bomb Israel, taking into consideration that the latter has a deterrent missile force, huge firing capabilities, and an arsenal of nuclear weapons that are strong enough to wipe out all of Iran’s cities. In addition, any bombing of Israel could lead to the immediate devastation of Palestinians over a vast area. Consequently, it is unlikely, if not impossible, that Iran would think of aiming its future nuclear bombs towards Israel or other Arab countries (in that region). This means that the only possible target, in case the destructive weapon is used, would be the Arab Gulf. [emphases added]

Here, regrettably, the Arabs would be divided into two camps, similar to what happened during the occupation of Kuwait. One Arab camp does not care for the Gulf through its political calculations, which always supports any verbal threats to the United States and Israel regardless of the real victim, such as the case was in Kuwait. In fact, this camp is now defending Iran’s nuclear ambitions. The Hamas government has hastened to adopt a loyal position towards nuclear Iran. This position is hostile towards the Gulf regardless of the verbal political content of its phrases, which justified the Iranian “rights” to nuclear energy.

The second Arab camp is represented by the Gulf countries, which, during the crisis of any conflict, always adopt two contradictory positions. The first position supports the Arab rights and the other, fears for their wellbeing. Saddam’s occupation of Kuwait awakened the Gulf countries and destroyed the trust that once existed within inter-Arab relations. The Gulf politicians have no doubt that Iranian uranium enrichment represents the ability to build a nuclear weapon, particularly after it had developed missiles and reinforced its military capabilities.[emphasis added]

[ . . . ] Iran’s conduct in the Gulf has been viewed negatively despite its expressions of Islamic solidarity and cordial relations. When the Gulf was preoccupied with the liberation of Kuwait, Iran had suddenly occupied the remaining part of the Abu Musa Island, which belongs to the United Arab Emirates. It was also engaged in military clashes with all the Gulf countries except the Sultanate of Oman. Therefore, the fear is justified, particularly after Iran’s new escalation through the development of its forces, weapons, and purchases, as well as the enrichment of uranium. Fear will push the region towards competing for buying weapons, which do not serve anyone in our region and which would only benefit the sellers of these weapons in the West, namely, Russia.

Yesterday, CNN’s Wolf Blitzer aired an interview with the United Arab Emirate’s economic minister, Sheikha Lubna al-Qasimi. The following are excerpts from the transcript.

US-UAE Relations

BLITZER: . . . how much damage, if any, do you believe has resulted from the collapse of the Dubai Ports deal in terms of the overall U.S. relationship with the United Arab Emirates?

AL-QASIMI: . . . I want to confirm to the audience that it’s absolutely a very solid relationship. UAE has always been a great ally to the U.S. on different levels, and assure everybody that for us this was a business case that got politicized, but it doesn’t have an impact on the relationship between the two governments.

BLITZER: So there’s been no negative impact.

AL-QASIMI: Not at all.

[ . . . ]

BLITZER: . . . Will Dubai, the United Arab Emirates, which has a lot of money, take their investments and potential jobs here in the United States outside of the United States and stop investing, basically, in the United States where a lot of jobs are at stake?

AL-QASIMI: No. Because let’s first pretty much explain the trade position of the UAE. UAE’s the third largest trade partner of the U.S. in the Middle East after Saudi Arabia and Israel. And this has evolved and developed over the years, so it’s not something new.

[ . . . ]

BLITZER: Will the U.S./UAE military strategic relationship be damaged at all? As you know, the U.S. Navy uses the ports in Dubai more than any other ports outside the United States. There are U.S. air bases that are in the United Arab Emirates. Is there going to be any impact on this military to military relationship?

AL-QASIMI: No. Not at all. I think it’s very important to understand, on both sides, we need each other. Therefore, you can’t jeopardize a relationship over decades because of an incident. The environment in the Middle East is a challenging one and a trying one, and there is need on both sides, on the U.S. and UAE, to continue this relationship on the military aspect.

BLITZER: Let’s…

AL-QASIMI: There are 600 calls per year on the U.S. Navy of the Emirates. And this is the most frequent foreign port of call outside the USA.

[ . . . ]

Money Laundering

BLITZER: Here’s what the 9-11 Commission report said, and I want to clarify where you stand today on this matter: “The United Arab Emirates, the financial center for the Gulf area, also had a reputation for being wide open with few regulations on the control of money and a woefully inadequate anti-money laundering program. The vast majority of the money funding the September 11 attacks flowed through the UAE.”

AL-QASIMI: Yeah. I’m hopeful also they mentioned that money laundering had gone through 96 countries, because we are…

BLITZER: But they said the vast majority went through your country.

AL-QASIMI: This is because of the structure of hawala (ph), the personal transfers. And as we stand today, UAE stands as a good benchmark, actually, in the acts against money laundering, with a lot of work and development between the constituencies, the organization within the U.S. and the UAE.

Aid to Terrorist Groups

BLITZER: Are you funneling charitable contributions to Hamas, Hezbollah, groups the State Department deems to be terrorist organizations?

AL-QASIMI: First, let’s clarify one thing. There is no cash handover in any form or shape within the Emirates going anywhere else. Usually in support of people. For example, the Palestinians, and this is in tune of the policy of the U.S. government itself. We have projects, usually we develop hospitals, roads, accommodations for people, but any money that goes through for any particular reason, actually, for example, in Palestine, gets scrutinized through the Israeli authorities because that’s part of the system.

BLITZER: Because the argument is, just as Saddam Hussein gave $25,000 to families of so-called Palestinian martyrs, suicide bombers, the argument is the UAE may be doing the same thing, in effect giving money to families of what they call martyrs.

AL-QASIMI: UAE actually frowns and stands against suicide bombers and doesn’t give a single dollar to, or a penny to any of these families because it’s against the policy—not only the policy, but the philosophy of the UAE itself. So there’s no money that goes through. We work through NGOs like the Red Crescent.

Please excuse the lag between posts; I’ve been a bit busy lately. Thanks to everyone who has sent in e-mails and links to articles, I am still working through them all. A lot has happened in the international arena since my last post, and Marc has done his usual admirable job of covering current geo-political events (I sometimes wonder if he ever sleeps.) For this post I am going to flash back a little bit to the Dubai ports deal and the current Dubai issue (see Dubai, Again) and offer my thoughts on what these situations might mean for the future.

Let me start by saying that I think the Dubai ports issue was poorly handled from the get go. Port security is, of course, a key element of our overall national security—but this deal was never about port security. It was about port management, and no private firm has port security as part of its portfolio; that responsibility rests with the U.S. government (Homeland Security, Coast Guard). In addition the vast majority of our ports, up to 80% of them, are managed by international firms. Our leadership and the media failed us when it comes to the facts and potential import of this deal on both our security at home and our efforts abroad.

The idea that any other foreign interest should not be involved in managing our infrastructure is probably the correct one (setting aside the fact that we currently lack the ability to manage our own ports). Our handling of this issue, however, was childish and dangerous. We singled out Dubai from among the many nations managing our ports because it is an Arab nation, plain and simple. What message do you think the average citizen on the “Arab street” took away from this? The fact that no rational voice arose from either side of the political aisle calling for a calm appraisal of the situation does not bode well for the future relationship between the United States and the Arab world. While I am well aware that Dubai is not a model of democracy or freedom, it is far and away one of the most liberal countries in the region, and our military presence in the Middle East depends in large part on our relationship with the government of the emirate.

The frenzied reaction the Dubai port deal was reminiscent of the protests we see whenever the WTO or other global finance organization meets—albeit a little bit better dressed and more polite. Both the street protests over globalization in general and the political wave making over this deal are based on emotional response- we mock the rock hurlers who oppose McDonalds but think nothing of hurling thoughtless sound bites. In this “globalized” age we will be hard pressed to draw the line at where foreign involvement in the business of America ceases to be appropriate. In doing so we must apply rational thought and not emotion—while at the same time realizing that this is an emotional issue at home and abroad. This is no easy task; it will require strong leaders and commitment.

Our leaders and media must ensure that we are presented with information over emotion and that when a decision is reached to exclude foreign interests from markets critical to our national security that such decisions are clearly explained to all parties involved. Our national security rests as much on the goodwill, or at least lack of enmity, of the rest of the world as it does on our policy. I have said repeatedly that we are losing the battle of public perception in the Middle East, and this latest go around is yet another shot in the foot for our public diplomacy efforts in the region. The port deal collapsed under its own weight, but there has been no resolution of the issue—the Doncasters deal mentioned at the top of this post is likely to become round two in our struggle to define where free markets end and security interests begin. Unfortunately the only message that most of the world will has taken away from this “debate” so far is that reason holds no sway in our decision making.

The time has come for both political parties to grow up and to cease their efforts to out “security conscience” the other and for them to get to work defining how our true security concerns come into play where foreign investment is concerned. Once the line is drawn we must then quickly move forward with explaining to the world how that decision was reached and what it means, for both our allies and our enemies.

One can always dream, I suppose.

From the Financial Times:

Arab and US officials are growing nervous at the prospect of a second congressional uprising against the acquisition of American assets by a Middle Eastern-controlled company in the wake of the Dubai Ports World debacle.

A person familiar with the thinking of both the US and United Arab Emirates said officials were concerned that the pending investigation of Dubai International Capital’s £700m ($1.2m) purchase of Doncasters, a privately-held British aerospace manufacturer that works on sensitive US weapons programmes, including the Joint Strike Fighter, could provoke a similar backlash and further damage the relationship between the two countries.

Although the proposed transaction has not yet drawn much attention in Congress, the first signs of unease emerged on Tuesday when John Barrow, a Democratic lawmaker, released a letter demanding a tour of Doncasters’ Georgia facility.

It is reported that your facility produces turbine engine parts critical to tanks and military aircraft…one must assume [it] plays a necessary and substantial role in the nation’s ongoing military efforts in Iraq and Afghanistan.

Background

Established in 2004, Dubai International Capital is an international investment company that primarily focuses on private equity. It is a wholly owned subsidiary of Dubai Holding. Dubai Holding has investments in a wide range of industries, including communications, finance, education, energy, healthcare, hospitality, techhnology, entertainment and leisure, industrial manufacturing, real estate, and biotechnology. Its Executive Chairman is Mohammed Al Gergawi, who is also the Secretary General of the Executive Council in Dubai .

Did you know this?

Muhammed has been depicted on the Supreme Court building in the US with a sword in one hand and the Koran in the other since the 1930′a as part of a friese about historic lawgivers. Within the last 10 years, [a] big Islamic organisation in the US [has] demanded that the relief be removed several times, with no succes so far. They see it as offending and it is likely to be removed if the OIC [Organization of the Islamic Conference] is succesful with their resolution against defamation of religions.

The “big Islamic organisation” is the Council on American-Islamic Relations (CAIR). From its 2004 Annual Report:

In 1997, CAIR continued to rely on the strength of its numbers to challenge inappropriate portrayals of Islam. In March, many American Muslims asked the U.S. Supreme Court to remove a carved stone depiction of a sword-wielding Muhammad (p.b.u.h.), Islam’s revered prophet, from its courtroom wall. While appreciating the fact that Muhammad (p.b.u.h.) was included in the court’s pantheon of 18 prominent lawgivers of history, CAIR noted that Islam discouraged its followers from portray ing any prophet in paintings, sculptures or other artistic representations. Moreover, the Prophet (p.b.u.h.) was shown with the Quran, Islam’s Holy Book, in one hand and a sword in the other, reinforcing long-held stereotypes of Muslims as intolerant conquerors . . .

Fortunately, Chief Rehnquist refused:

In a letter, Chief Justice William Rehnquist told CAIR that the image could not be erased or altered. The larger-than-life image was part of a marble frieze surrounding the upper part of the courtroom and depicted other lawgivers – Moses, Justinian and Confucius. Rehnquist added that swords were also used throughout the court’s architecture as symbols of justice.

Altering the depiction of Muhammad would impair the artistic integrity of the whole. Additionally, it is unlawful (under the U. S. Code) to remove or in any way injure an architectural feature in the Supreme Court.

From an editorial (“Insidious harm”) in the Jordan Times:

America, and here is not meant Washington, has presented itself as unacceptably prejudiced against all things Arab. The debate, as it unfolded in Congress and the US media, was absolutely demeaning to Arabs. The question of integrity, the suggestion that Arabs cannot be trusted and the implication that Arabs are terrorist and/or terrorist sympathisers is ugly and unworthy of a country built on immigration, free trade and the principle of equal rights for all.

From an editorial (“Anti-Arab”) in Saudi Arabia’s Arab News:

The US clearly has different classes of friends. First-class, second-class or maybe even third, fourth and fifth class, who cannot be fully trusted. Which one Arabs fit we do not quite know, but we know we are in the untrusted section. Congress clearly regards Arabs as untrustworthy — there to fight terrorism, keep the oil flowing, buy American goods and services and generally jump to Washington’s beck and call. Congress in no way regards Arabs as partners and equals. It is neocolonialism and there has to be an Arab response. The implications of the move are extensive. The fact that the Bush administration is opposed to Congress’ craven pandering to anti-Arab public prejudice is no comfort. It is evident from the scale of Wednesday’s vote that this blatantly racist bill will be endorsed by the whole House of Representatives and sail through the Senate. It would be very surprising if President Bush can veto it. The most obvious response has to be in kind. If the US does not trust an Arab company to run something like a port, should we trust American companies to do similar things here? Can we? If the Americans mistrust us as they do, in whose interests will their companies be operating?

From an editorial (“Washington and the Ports of Paranoia”) in the London-based Arabic daily Asharq Alawsat:

. . . by using the pretense of protecting America’s security, some members of congress have sent an important message to the Arab world. They have provided a service to those who look for ways to attack the west in general and particularly America . . . I consider the decision made by Congress against the deal as a victory for terrorism because spreading fear is the essential goal of terrorists . . . The withdrawal of the plan to manage the U.S ports has sent a negative message to the Arabs representing Americans now only in military attire. They will no longer be perceived as businessmen, physicians or teachers. They will only be seen as soldiers, furthermore, as irresponsible soldiers . . . We have discovered that many of those within our regimes and cabinets who we have condemned are actually more rational then some “patriots” of the American Congress. In fact, the promoters of false confrontational opinions in Arab media have gained much more legitimacy than their counterparts in American media . . . For the rationalists on both sides, of whom there are few, their positions of paranoia can only lead to a cultural split. It seems that the future generations will have no choice but to dance to the rhythm of extremism and obscurity. The Americans can justify their position towards the ports issue as much as they want, but the problem that remains is that the message that they have sent to the Arab world is worse than they imagine.

Youssef Ibrahim, the former New York Times and Wall Street Journal reporter now living in Dubai, is one of the three individuals mentioned in my post on Arab Investments in the U.S. Yesterday, he had some interesting things to say about the UAE in an interview at the Council on Foreign Relations:

The UAE’s demographics:

. . . the entire United Arab Emirates, which has a population of five and a half million, but only one million of those are native UAE citizens. The other four and a half [million] are foreigners.

UAE investments and trade:

. . . this is the first time Dubai has stepped onto the global economy in a big way. It’s very easy to buy the Essex Hotel [in New York] and Madame Tussaud’s [group] and [investments in] Mercedes-Chrysler, as they did last year. Last year, in 2005, Dubai invested overseas to the tune of five or five-and-a-half billion dollars . . . Emirates Airlines, which has its hub here, is one of the world’s fastest-growing airlines. Last year, they bought fifty Airbus 385s, the giant new airplane, and about forty Boeing 777s . . . it’s one of the largest re-export ports. In other words, a lot of cars would come from Europe, get stored there, and then get reloaded on smaller ships and sent to Lebanon or to Iraq . . . [Sheikh Mohammed bin Rashid Al-Muktum has] created a string of tax-free areas. There is Media City, there is Financial City, there is Medical City, there is Internet City, and all of these have attracted thousands of businesses. You know, Microsoft is here, CNN, AP, you name it, everybody who’s a big name in the business has taken an outpost in those tax-free areas[emphasis added]

The UAE’s ties to Iran:

Dubai has an immense trade with Iran, not to mention a substantial Iranian community. Of the 1.6 million people presumed to live in Dubai, ninety percent are expatriates, and perhaps as many as 100,000 of those are Iranians, either permanent residents or citizens who got their citizenship just a few years ago . . . The Iranians are the biggest protectors of Dubai, because it is in their interest. [emphasis added]

Regarding the fact that two of the 9/11 hijackers were from the UAE:

. . . the fact that they are from the U.A.E. is the result of the kind of laissez-faire attitude that exists here towards Islamic groups, including militant Islamic groups. They are not allowed to operate here, but if you go and listen to the Friday mosques you will hear some pretty militant stuff, occasionally. [emphasis added]

Money-laundering is still prevalent:

. . . are there influences here that could be in any way detrimental to the United States in terms of acquiring intelligence, information, access to logistical information? I think that merits the forty-five days, at least, of inquiry. You have to talk about money-laundering, which is prevalent here. You need to talk about the banking system—is it really transparent or not? You need to talk about labor laws, which are non-existent. People have no rights whatsoever here. And you need to talk also about whether you can have a rich banana republic as part of an international system . . . It is time for the world to demand that Dubai joins the big-boys club and comes clean on the issues I’ve just mentioned to you.. [emphasis added]

Re-exporter to Lebanon and Iraq. Close ties to Iran. Laissez-faire attitude towards Islamic groups. Money laundering. Hmm.

Yesterday’s Washington Post had an article on Arab investments in the U.S., with a focus on the United Arab Emirates (UAE).

Three individuals from the UAE were cited in the article:

• His Highness Sheikh Mohammed bin Rashid Al-Muktum—According to his website, he became the Ruler of Dubai on January 4, 2006, following the death of Sheikh Maktoum bin Rashid Al Maktoum. The next day, the members of the UAE’s Supreme Council elected him the UAE Vice President. Subsequently, UAE President His Highness Sheikh Khalifa bin Zayed Al Nahyan nominated Sheikh Mohammed for UAE Prime Minister, and the Council approved this nomination.

• Sheika Lubna Khalid Al-Qassimi—In addition to her position as the UAE Economy Minister, her resume states that Al-Qassimi is the Chief Executive Officer of Tejari, a UAE firm that allows companies to buy and sell goods and services online; a board member of the Dubai Chamber of Commerce & Industry; and a member of the UAE Council of Ministers.

• Youssef M. Ibrahim—Ibrahim is currently the Managing Director of the Dubai-based Strategic Energy Investment Group (SEIG). He formed SEIG in 2003 to advise companies on issues ranging from political risks to business opportunities. Previously, Ibrahim was a senior Middle East correspondent for the New York Times and energy editor for the Wall Street Journal.

____________________

U.S. businesses owned by Arab investors include: (1) Caribou Coffee Co. (a rival to Starbuck’s), (2) Church’s Chicken (a fast-food chain), (3) Loehmann’s (a specialty retailer), (4) TLC Health Care Services (a provider of home nursing and hospice care), and (5) the American Banker and several other financial publications.

According to U.S. Commerce Department data, investors from Arab countries held $4 billion in direct U.S. investments at the end of 2004. For comparison purposes, British investors held $252 billion, Japanese $177 billion, Dutch $167 billion, and German $163 billion.