Iran’s Ignoble Act

The semantics over whether the Iranian authorities actually did “confiscate” Shirin Ebadi’s 2003 Nobel Peace Prize medal as has been alleged by Norway, or merely “removed” it from her bank’s safe deposit box (together with other personal items) in connection with a ‘tax evasion’ case as is being claimed by the Iranians, is neither 
here nor there.

What is more relevant, considering that both the blocking of the bank account and the confiscation of the award is illegal under Iranian law, is whether the move has been motivated by petty politics. At least that is what Mohammad Ali Dadkhah, a spokesman for Ebadi’s human rights group, says is what has happened.

And given that Ebadi is an outspoken critic of the government and human rights violations, that indeed sounds more plausible. Also, the fact that the Nobel laureate has been strongly critical of the June presidential polls must have prompted a regime known for its intolerance of any degree of political dissent to carry out this ignoble act. Therein lies the most obvious motive. And the minutiae of any counter-argument or ‘technical’ justification can only make a disgraceful act 
more despicable.

Not surprisingly, the Norwegian Nobel Committee’s permanent secretary, Geir Lundestad, has said categorically that the move was “unheard of” and “unacceptable.” Surely, Teheran too is well aware of its plummeting reputation and credibility in the international community — primarily as a consequence of such singular acts of 
political vindictiveness.

Of course, President Mahmoud Ahmadinejad did secure enough votes in the controversial June 12 polls to remain in power. But it must be remembered, his re-election also sparked the largest street protests in the country since the 1979 Islamic revolution. Ahmadinejad has a lot to answer and the Iranian civil society knows it better than anyone else.

The persecution of Ebadi (including her husband or family or friends) on any pretext can only further discredit an already discredited government. Ebadi herself, who had left Iran shortly before the June polls, continues to receive all kinds of vicious threats.

She has announced that she would “return whenever it is useful for my country.” But before she returns, it would be best if the Iranian authorities reverse their decision and return Ebadi her prized Nobel medallion with full honours and, if it’s not too much to ask, with some good grace as well for good measure.Not to do so is 
not an option.

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America Can No Longer Afford its Wars

Congressman David Obey, a Wisconsin Democrat who is chairman of the powerful House Appropriations Committee, has come up with a novel idea: American should pay for the 
wars they are waging.

Obey’s proposal, which is backed by ten other congressmen, sounds startling — until one realises that both the Bush and Obama administrations have never properly financed their foreign wars by forcing Americans to pay for them through higher taxes.

Instead, Washington has deferred the $1 trillion to date costs of the Afghanistan and Iraq wars by simply adding them to the national debt, and paying interest on the balance owing.

So very few Americans feel the real financial costs of these wars. Future generations will get stuck with the bill.

But this kind of deceptive national accounting is becoming increasingly difficult in the face of President Barack Obama’s $1.4 trillion deficit this year, and his impending decision to send 30,000 to 40,000 more US troops to Afghanistan. Each American soldier in Afghanistan costs $1 million per annum, according to the US Congress Research Service. Thirty or forty thousand more US troops will thus cost $30 to $40 billion in additional war costs on top of the $200 billion annual cost of garrisoning Iraq and Afghanistan. Much of this money will have to be borrowed from China and Japan.

Obey and his allies want to impose a graduated surtax on Americans of 1-5 per cent, depending on their income level, to fund the actual costs of what are now Obama’s wars. Otherwise, warns Obey, the huge cost of keeping up to 100,000 US troops in Afghanistan will ‘destroy the other things we are trying to do in our economy.’ Chief among which is health care.

In a clear choice between guns or butter, Obey estimates ten years of war in Afghanistan will cost the same $900 million as providing a comprehensive health plan for all Americans. Unfortunately, chances of a war surtax passing Congress are nil. While the Afghan and Iraq wars are increasingly unpopular among Americans, a tax increase at a time of over 10 per cent unemployment will ignite the same kind of furious reaction that met President Obama’s proposed national health plan, and endanger Democrats facing 
midterm elections. As the Obama administration appears set to plunge deeper into the Afghan morass, the real costs of Afghanistan and Iraq are still being concealed from the public and Congress. The $200 billion annual cost for both wars is only a part of the growing expenses faced by Washington.

The annual bill for US intelligence, which employs over 200,000 people, has doubled to $75 billion, in large part to support foreign wars and operations against anti-US Muslim groups. Costs of occupying Afghanistan rose to $300 billion this year, and will increase sharply next year. Operations in Iraq will cost $684 billion in 2009.

Washington spends $25 billion funding foreign armies, the bulk of which goes to the Mideast, Afghanistan, Iraq and Pakistan. Aid to Islamabad will rise to $15 billion over the next five years, including secret ‘black’ payments.

The US supports 168,000 ‘contractors’ in Iraq, many of them gunmen. CIA runs 74,000 mercenaries in Afghanistan. The new fortified, 50 hectare US Embassy in Baghdad will cost $700 million; the new embassy in Islamabad, $800 billion. Islamic militants call them ‘crusader castles.’

Add to these costs the expense of maintaining fleets in the Gulf and Indian Ocean, and military bases in the Gulf and Diego Garcia to support operations in Iraq and Afghanistan; hugely expensive military airlift; $100 per liter fuel delivered to US forces in Afghanistan; and, of course, financial inducements to many smaller nations to send handfuls of troops to Afghanistan and Iraq.

Thus the real cost of Afghanistan and Iraq is much higher than $200 billion annually. Yet President Obama, heedless of such costs, appears determined to expand the Afghan War. It seems clear that ‘peace candidate’ Obama has fallen increasingly under the influence of America’s powerful military-industrial-financial complex and neoconservative ideologues. In short, the same calculus of forces that guided the Bush administration!

Even America’s mighty economy cannot for long support waging wars across the Muslim world. Unaffordable wars have been the ruin of many an empire, and the American Raj seems headed in the same direction.

Eric Margolis is a veteran US journalist who reported from the Middle East and Asia for nearly two decades

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UAE Offers Additional Funds to Banks

The UAE Central Bank said that local banks and branches of foreign banks can borrow funds, if needed, from a new funding facility it has set up to support the banking system.

“(The) Central Bank of the UAE ….stands behind UAE banks and branches of foreign banks operating in the UAE,” said a central bank statement. The bank said that it has issued a notice to all banks in the country about the new “special additional liquidity facility”, which it said would be linked to their current accounts at the central bank, at the rate of 50 basis points above the three-month Emirates Interbank Offered Rates or EIBOR.

The statement came days after the government of Dubai announced its intention to seek a six-month delay in debt payments for its flagship Dubai World conglomerate, saying the restructuring plan was aimed at ensuring the group’s long-term success.

The new facility would be in addition to emergency funding facilities the central bank and the federal finance ministry had announced late last year to help fend off the impact of the global credit crisis. The central bank had set up a $13.6 billion emergency bank lending facility in November 2008, followed by the finance ministry, which injected two tranches of $6.8 billion each into bank deposits from a $19 billion rescue facility.

The central bank said on Sunday that the country’s retail commercial banking system has a strong and stable deposit base and has weathered the global financial crisis better than any other.

“The UAE banking system is more sound and liquid than a year ago, with foreign interbank deposits and Medium Terms Notes, or MTNs, and Euro Commercial Papers or ECPs, issued by UAE banks stand reduced by 25 per cent,” the statement said in an apparent attempt to boost confidence in the country’s financial industry.

“From the consolidated balance-sheet of banks, interbank deposits of the UAE banking system constitute 10.3 per cent of the liabilities side, with foreign interbank deposits constituting five per cent per cent only,” it said.

A senior banker said the move appears to be a “wise precautionary measure”, which would give a strong signal to the market that the central bank stands behind the banking system. “The banking system at present is quite strong with substantial liquidity circulating in the system”, he said.

“Since the central bank is bank’s last resort, its policy announcement that it stands behind UAE banks and branches of foreign banks is a very strong message to the businesses, at a time when they really need reassurance,” said Dr Qaiser Anis, a chartered accountant 
based in Abu Dhabi.

The move is not only calculated but very timely as well, he said. Government had also guaranteed bank deposits for three years, starting from September last year, so there is nothing to worry about the financial system, the chartered 
accountant said.

Bankers said the central bank wants to ensure that late last week’s volatility in the global markets do not spill over into the UAE.

“This will support the liquidity and soundness of the banking system in the UAE and especially in Dubai. The central bank is sending a strong message to everyone that they are providing ample liquidity and the guarantee to banks in the UAE,” said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh.

Stock markets in Asia fell for a second day on Friday as investors dumped shares in banks and construction firms seen as exposed to Dubai. However, European shares, which fell in early trading on Friday, regained their poise later in the day.

Shares on Wall Street, which was closed on Thursday for the US Thanksgiving holiday, opened lower but firmed up early in Friday’s trading session. The New York Stock Exchange fell initially by 2.7 per cent from Wednesday’s close, while the Nasdaq was down by 2.3per cent.

Credit-rating agency Standard & Poor’s placed four Dubai-based banks on its “credit watch” list late on Thursday, shortly after cutting the debt ratings for several Dubai government-owned and related companies. S&P said it was concerned about the banks’ high exposure to Dubai World.

Markets recoiled after the Department of Finance announced on Wednesday that Dubai World would be seeking to postpone its debt payments until May 30, 2010. Dubai World owes $59 billion in debts.

Its property subsidiary Nakheel is due to repay a $3.52 billion Islamic bond in December. Bank of America-Merrill Lynch estimated that Dubai entities will owe total debt payments of $3.8 billion this year, $12.3 billion in 2010, $19.0 billion in 2011 and $18.0 billion in 2012.

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Growing number of US homeowners are at risk of losing their property

Data from the Mortgage Bankers Association shows almost one in eleven US homeowners face repossession

Almost one in eleven Americans is at imminent risk of losing their home, as the housing crash continues to claim thousands of victims, more than three years after prices began to fall.

Data from the Mortgage Bankers Association show that almost 5% of all American homeowners are already in the process of having their properties repossessed, while another 4.5% are at least 90 days in arrears with their mortgage repayments. In total, that means more than 9% – almost one in eleven – are on the brink of being forced to hand back their keys, on top of the many hundreds of thousands who have had their homes repossessed since the crisis began.

"The underlying dynamic in the housing market is just dreadful," said Graham Turner, of consultancy GFC Economics.

Treasury Secretary Tim Geithner recently persuaded Congress to extend the homebuyers' tax credit – part of President Obama's $800bn (£485bn) stimulus package – until next April.

The scheme offers $8,000 to first-time buyers, but mortgage applications dropped off sharply in November, when it was due to expire. The White House, alarmed at the prospect of a renewed slump in the market, extended the credit, and opened it up to existing homeowners.

The US economy expanded at a healthy annual rate of 3.5% in the third quarter – though that may be revised down when new official figures are released this week. But Turner warned that without an end to the housing slump, any recovery will be short-lived, and the Obama White House will come under intense pressure.

"We're going to have a political crisis. Obama realises that you can't keep spending money when it's not even having much effect. It will come to a head when the current tax credit expires in April – then people will say, enough is enough."

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Britain poised to lose jobs as £10bn nuclear power plant contract goes to US

Nuclear firm Westinghouse expected to appoint Shaw Group to lead its construction programme

Thousands of jobs that were to have been created in Britain to build the next generation of nuclear power plants could be heading overseas instead, after Westinghouse, the nuclear company sold by the government three years ago to Toshiba, chose one of its largest shareholders as the lead contractor to build reactors.

Westinghouse is expected to confirm this week that it has appointed US-based Shaw Group to head up its £10bn nuclear programme, passing over the favourite for the contract, rival engineering group Fluor.

Industry sources said that Shaw is likely to source far more reactor components from overseas than Fluor, which has close relationships with British manufacturers. The Unite union claimed that 10,000 new jobs in the UK would not be created as a result of Shaw being selected.

Shaw was one of the main contractors to build Total's controversial Lindsey refinery and made 51 workers there redundant this year, which sparked a series of wildcat walk-outs around the country over the use of foreign labour.

British-based manufacturers such as BAE Systems and Rolls Royce are also understood to be concerned that lucrative contracts to make reactor modules could be lost to Shaw's manufacturing bases in the US and Belgium. A spokesman for Westinghouse in the US confirmed that Shaw had been appointed but claimed that "up to 80%" of the components would be sourced from the UK. He admitted that this was not finalised as none of the supplier contracts had been signed.

He added that Shaw had teamed up with British construction firm Laing O'Rourke for the bid, but the firm will not be involved in providing any of the high specification reactor components.

Japanese firm Toshiba owns 77% of Westinghouse, with 20% owned by Shaw Group. Westinghouse is hoping to secure contracts to build at least four of its AP1000 reactors with E.ON and RWE npower, who have formed a nuclear joint venture in the UK, soon after Christmas.

Dougie Rooney, Unite's national energy officer, said: "The implications are massive. With Fluor, there is a far greater opportunity to get UK companies involved. Shaw has no allegiance to the UK and it's wrong that a company with an equity share should be involved in the competition."

It was also claimed by several industry sources that Westinghouse had initially recommended to Toshiba that Fluor be appointed, but that the parent company insisted that Shaw be chosen instead. A Westinghouse spokesman in the US said that Shaw and Westinghouse already had a partnership to build reactors in the Middle East and the US. "It was a decision made in conjunction with a number of parties, including our parent company Toshiba," he said. "It's our intention to use British labour as much as possible."

Rival French reactor firm Areva is building the rest of the UK's reactors, on behalf of EDF Energy, and has only promised to allow British firms to bid for up to 70% of the supply contracts.

Business secretary Lord Mandelson has drawn up a "low-carbon industrial strategy" to enable British manufacturers and workers to benefit from the country's huge construction programme of less polluting power plants such as wind farms and nuclear reactors. Mandelson has also repeatedly spoken of the need for the government to demonstrate "industrial activism", or a willingness to intervene on behalf of key sectors of the economy.

But British manufacturers in the power sector have so far yet to benefit. The closure of the Vestas wind turbine plant in the Isle of Wight became totemic of the UK's inability to develop its own renewables industry. Unions are now anxious that manufacturers could similarly miss out on the opportunities from plans to build at least 10 new reactors in the UK.

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Ahmed Humaid al Tayer Appointed Head of the DIFC

The newly appointed governor of the Dubai International Financial Centre (DIFC) has pledged to build on its success in promoting Dubai as a vital hub for capital and investment.

Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, on Saturday issued a decree naming Ahmed Humaid al Tayer to replace Omar bin Sulaiman, who had led the DIFC since its creation in late 2004.

“We are here to establish an international financial centre for the UAE, to serve the region and to co-operate with other centres from Hong Kong to Frankfurt and London,” said Mr al Tayer, who is also the chairman of Emirates NBD, the largest UAE bank by assets.

His appointment followed an announcement last week that Sheikh Mohammed had named himself and two family members to replace three of Dubai’s most prominent officials on the board of the Investment Corporation of Dubai (ICD), the main government asset-management vehicle.

Bankers and analysts downplayed suggestions in international reports that the appointments represented demotions or signified a political schism.

While the crisis has raised criticisms about the borrowing used to slingshot Dubai’s growth earlier this decade, they said the transfers were part of a broader financial restructuring to help refinance the roughly US$10 billion (Dh36.73bn) in debts that Dubai needs to repay next year. That sum is part of an estimated $85bn in total debts owed by the Dubai Government and the companies it controls.

Mr bin Sulaiman will remain the deputy chairman of the Central Bank, a spokesman for the regulator confirmed. The Central Bank has lent Dubai $10bn for the Dubai Financial Support Fund, which is overseeing efforts to restructure the emirate’s debts.

The three remaining officials also retained key positions. Mohammed al Gergawi, who was removed from the ICD board, also serves as the chairman of Dubai Holding, which manages the personal wealth of Sheikh Mohammed. He is also the Minister of Cabinet Affairs.

A second ICD board member replaced last week, Mohammed Alabbar, remained the chairman of Emaar Properties, the government-controlled developer, as well as the chairman of the Dubai Economic Advisory Council.

The third former ICD board member, Sultan Ahmed bin Sulayem, remained the chairman of Dubai World, the government-owned holding company that controls DP World and owns another key Dubai developer, Nakheel Development.

“Every board member who is leaving and coming, their contribution is highly appreciated,” Mr al Tayer said yesterday. “We are always soldiers to this country, to serve our country.”

The DIFC is in many ways an emblem of Dubai’s achievements. Established in 2002, the organisation is one of Dubai’s Government-owned free zones, designed specifically to position the emirate as a hub for financial services and investment.

In addition to not having taxes on income or profits, the DIFC offers 100 per cent foreign ownership, while the UAE as a whole still requires that companies be at least 51 per cent Emirati owned.

“The fact that Dubai is established as one of the major financial centres of the world is testament to the vision of the local authorities and the investment made in physical infrastructure and people skills,” said Peter Gotke, a vice president at The Bank of New York Mellon, which like many major banks has its offices in the DIFC.

“Whilst the DIFC lives that vision, the regulators and authorities have continued to evolve laws and access to make the region accessible and liquid.”

The DIFC, like many Dubai Government-controlled entities, became highly leveraged in the course of its expansion. As a real estate development, however, DIFC is doing relatively well, analysts say.

Despite financial difficulties faced by many tenants, there is still a waiting list of at least 400 wanting to take up space, said a report last month by the ratings agency Standard and Poor’s.

DIFC racked up further debts when it paid $630 million in early 2006 for a 3.5 per cent stake in the European stock-exchange operator Euronext, which gave it a 2 per cent stake in NASDAQ Dubai. DIFC also owns one-fifth of Borse Dubai, the holding company for both NASDAQ Dubai and the city’s larger stock exchange, the Dubai Financial Market.

DIFC bought a 2.2 per cent stake in Deutsche Bank in early 2007 and also owns stakes in Dubai Aerospace and in the private equity firm Abraaj Capital. DIFC typically financed these investments with private equity-style leverage, Standard and Poor’s said, paying for about a fifth of the investment in cash and borrowing the remainder.

That strategy left it vulnerable when the financial crisis started and credit for refinancing dried up. Standard and Poor’s said the DIFC had a debt-to-capital ratio of 76 per cent. The DIFC received a $1bn lifeline from the Dubai Department of Finance last year, which it used to repay $500m in loans.

The company is also due to repay a $350m loan this week. It has $1.25bn in debt due in mid-2012.

By: Wayne Arnold and Uta Harnischfeger - The National

uharnischfeger@thenational.ae

warnold@thenational.ae

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Goldman Sachs’ (GS) Small Business Initiative of $500 Million

Goldman Sachs Group Inc (NYSE: GS) initiates a program to help small businesses get access to credit. This comes at a time when the company has been facing criticism over bonus payouts to its employees.

Goldman's 10,000 Businesses initiative will commit $300 million to help small businesses get capital and commit $200 million for business and management education programs. The total amount committed is just a fraction of the $10.6 billion the company is expected to report in net income this year.

Investors like Chief Executive Lloyd Blankfein, Warren Buffett and Michael Porter of Harvard Business School will be included in the advisory council for the initiative.

One often-referenced program is Goldman's 10,000 Women initiative, which is designed to provide business and management education for women in underserved parts of the world.

This image building initiative comes after the Obama administration unveiled a plan to boost small business lending. But the company will pass the test only if it continues this in the long run.