Business

Forget all the doom and gloom, the United Arab Emirates are going up, up, up! At least, that's what Rupert Murdoch, the conservative media baron and owner of News Corporation believes.

From the National>:

Fox International Channels, a subsidiary of News Corp, is making Abu Dhabi its regional hub for online advertising sales, documentary production and satellite television broadcast.

Murdoch and Fox are betting that the booming wealth of the Gulf states, combined with the enormous Middle Eastern youth population that consume media products produced in the Gulf, will spell big profits for online advertising in the region.

Another sign the Iranian government doesn't really expect Russia to ever finalize the S-300 surface-to-air missile sale: The Iranian government has ordered all Russian pilots working in Iran to leave the country within two months.

Iran says it's a safety measure, because several Russian-made planes -- with Russian pilots -- have crashed in the country in recent years. That's not untrue: A Taban Air Tupolev 154 crashed in January, killing more than 45 people; a Caspian Airlines Tupolev 154 crashed in July, killing 168 people; and at least two other Tu-154 planes have crashed in the last decade.

The Jordanian government on Thursday arrested two former executives of the only petroleum refinery in the country -- one of them a former finance minister -- as well as a current economic adviser to the prime minister and a wealthy businessman, levying bribery and abuse of public office charges against the four men.

Adel Qudah, the ex-finance minister and former chairman of the Jordan Petroleum Refinery Company, is the first former minister to face corruption charges in Jordan's history. The arrests represent the first real push by new Prime Minister Samir Rifai, who promised after being appointed in December that he would tackle corruption, wrote Naseem Tarawnah of the Black Iris of Jordan blog.

According to the New York Times, the U.S. government has awarded more than $107 billion in contracts over the last decade to companies with significant business interests in Iran.

The article's basic thesis -- sanctions aren't foolproof! -- should be neither surprising nor controversial. They're difficult to enforce in a world of multinational corporations: The Clinton administration decided in 1998 not to punish European companies that did business in Iran, and they went on to sign billions of dollars in contracts.

Somalia's Shabab rebel group says it will no longer allow the World Food Programme to operate in Somalia -- and will retaliate against any local contractors who work with the WFP.

"The contractors working with WFP must avoid collaborating ... anyone working with the agency will be seen serving the interest of WFP," the group said in a statement.

Shabab says the WFP delivered food that made people sick (probably not true); that WFP aid causes market distortions (probably true, but also unavoidable); and that the group's work in Somalia is "political."

Egypt's Supreme Administrative Court ruled today that the privately-owned East Mediterranean Gas (EMG) company can, in fact, sell natural gas to Israel.

EMG started selling gas to Israel in May of 2008; it has a contract to provide 1.7 billion cubic meters of gas annually for the next 20 years. A court ruled in November 2008 that the contract was illegal. The government has largely ignored that ruling -- natural gas sales to Israel continued -- but today's vote officially overrules the previous decision.

Cooking gas riots -- or, as Al-Masry Al-Youm has dubbed them (عربي), "the butane war" -- have killed at least one person in Egypt and sent the mayor of Tanta to prison.

Cylinders of butane gas are ubiquitous in Egypt: they're used in homes, in restaurants, and by street vendors hawking fuul and roasted nuts. But the country is going through a severe butane shortage right now, brought on by last month's deadly flooding, which disrupted supply lines from major ports on the Mediterranean coast. (Government officials say illegal businesses are also contributing to the shortage by using large amounts of subsidized butane.)

BAE Systems, a multibillion-dollar defense contractor based in England, announced on Friday that it would settle a long-running corruption investigation brought by the U.S. Department of Justice, which had been looking into allegations of corruption and bribery connected to several arms deals, including the roughly $67 billion "Al-Yamamah" contracts with Saudi Arabia initiated during the mid-1980s.

BAE will pay a $400 million fine to the DOJ and around $46.8 million to the British Serious Fraud Office, which was the first to investigate the deals but controversially dropped the case in 2006, after Saudi Arabia reportedly used its intelligence on Al-Qaida as leverage to force a halt.

The Golden Arches are a little less golden, at least in the United Arab Emirates: McDonalds sales grew by just 4 percent in the UAE last year, compared to 14 percent in 2008. Growth is expected to pick up a bit in 2010.

The McArabia is better than anything you'll find in a stateside McDonalds, by the way.

This is a bugbear of mine: Egypt's trade minister, Rashid Mohamed Rashid, warned yesterday (عربي) that 2010 will be a "difficult year" for the Egyptian economy.

Rashid was in Davos for the World Economic Forum, and he told the BBC the financial crisis will continue to hurt Egypt: tourism revenues, Suez Canal revenues, foreign investment, exports -- all of them are down, and likely to stay down for the rest of the year. He's right: Egypt's three main sources of foreign currency are tourism revenues, remittances from abroad, and the Suez Canal, and all three are particularly vulnerable to economic downturns.

U.K. Prime Minister Gordon Brown told Parliament on Wednesday that his government will attempt to revamp air travel security in the coming days by, among other efforts, suspending direct flights between Britain and Yemen.

The United Kingdom will create a new no-fly list and expand its "watch list," which already contains more than 1 million names, Brown said, according to AP reporter David Stringer. Brown also said that full-body scanning machines -- controversial in the United States for their intrusion on privacy -- will begin appearing at U.K. airports next week.

The suspension of U.K.-Yemen flights appears to be the result of a disagreement between British officials and Yemenia, Yemen's airline. Yemenia had been operating two flights a week.

World leaders and clean energy enthusiasts are in Abu Dhabi for the World Future Energy Summit -- but oil ministers from the Gulf say they don't want to move into the future too quickly.

Abdullah al-Attiyah, Qatar's minister of energy, criticized the world for "scapegoating" fossil fuel producers.

"Why did Copenhagen fail? It's because when you go there you feel that someone is trying to create a scapegoat," he said, referring to last month's climate talks in the Danish capital. "You try to blame oil and gas producers."

The UAE's energy minister, Mohammed al-Hamli, made similar comments, telling the audience fossil fuels would "complement" renewable energy.

The Iranian parliament finally approved a controversial subsidy reform bill, which would sharply slash subsidies on food, fuel and other staples.

The bill was approved after months of debate between legislators and Iranian president Mahmoud Ahmadinejad. Much of the discussion focused on one question: what to do with the money saved through subsidy reform. Ahmadinejad wanted free rein to spend it as he saw fit; parliament wanted the savings rolled back into the Iranian budget.

Apparently when somebody asked Saudi Prince Alwaleed bin Talal bin Abdulaziz al Saud whether it might be too soon and too risky to finance and build a 1.1 km-tall tower in the desert, Saud shook his keffiyeh'd head and said, "لا."

Saud's business conglomerate, Kingdom Holdings, is planning to build the monstrosity known as Kingdom Tower and make it the centerpiece of the as-yet-nonexistent Kingdom City, "one of the largest and most ambitious projects" in Saudi Arabia, designed to house some 80,000 people, according the National.

The 828-meter tall Burj Dubai finally opened Monday in the Gulf emirate of the same name, only to be promptly renamed the Burj Khalifa in honor of the ruler of neighboring Abu Dhabi, who was kind enough (or self-interested enough) to loan Dubai $10 billion to bail out troubled, government-owned investment authorities and their real estate arms.

We didn't write a word about the Copenhagen climate change summit, mostly because we had zero expectation that 192 nations could get together and hammer out a meaningful agreement on anything, be it a grand bargain on carbon emissions or a lunch menu.

The summit also received relatively little attention in the Arabic-language press. Lebanese newspapers reported on Saad Hariri's trip to the summit, but most other regional newspapers ignored Copenhagen, or relegated it to short below-the-fold briefs.

The Arab Labor Organization (ALO) has a new report out on youth unemployment in Arab countries. I can't find it on their not-very-good Web site -- maybe they could employ a few Arab youths to redesign it? -- but al-Jazeera summed up the key findings (عربي).

Basically, the situation is dire. The Middle East and North Africa have an average youth unemployment rate of 26 percent, the highest in the world. The situation is worst in Algeria, which stands at 46 percent; the United Arab Emirates has the lowest rate, just 6.3 percent. (The other Gulf states are not so successful. Bahrain is 27 percent; Saudi Arabia, 26 percent.)

Young people represent nearly half of the unemployed workers in Arab countries.

Middle East watchers were buzzing this morning about an Iranian incursion into southeastern Iraq. Headlines made the maneuver seem ominous: "Iranian forces take over Iraq oil well," AFP said. Some news reports had trouble pinning down the exact location of the incident, adding to the confusion.

Turns out this kind of thing happens fairly often, according to an American brigade commander based nearby.

"What happens is, periodically, about every three or four months, the oil ministry guys from Iraq will go ... to fix something or do some maintenance. They'll paint it in Iraqi colors and throw an Iraqi flag up," said Colonel Peter Newell, commander of the 4th Brigade Combat Team, 1st Armored Division. "They'll hang out there for a while, until they get tired, and as soon as they go away, the Iranians come down the hill and paint it Iranian colors and raise an Iranian flag. It happened about three months ago and it will probably happen again."

I was browsing Al-Gomhuria's Web site earlier after posting about the Gaza wall, and I stumbled across this story (عربي) about a condemned shipment of Russian wheat. The shipment was full of "impurities and parasites," but corrupt port officials released 30,000 tons of it to the black market. The rest is being returned to Russia.

Wheat imports are hardly the sexiest blog topic -- but they're critically important for Egypt, a country that imports millions of tons of grain each year. (This is where I make the cliche observation that the Egyptian word for "bread," عيش, means "life" or "subsistence.")

As Gregg noted earlier today, the cash-strapped Dubai investment authority known as Dubai World has received a $10 billion indirect bailout from Abu Dhabi, a fellow emirate of Dubai's and the capital of the United Arab Emirates. The Abu Dhabi bailout will go to the general Dubai Financial Support Fund, which aids struggling emirate companies, but Dubai World will receive a large chunk.

The announcement sparked a rally in shares of bonds issued by Nakheel, a real estate arm of Dubai World, which owed a $3.52 billion Islamic bond today and had seemed unable to pay the full amount as of days ago. Such a dramatic turn has market watchers chattering: the Financial Times' Alphaville blog notes that anyone who bought shares of the once-depressed Nakheel 2009 bond (or its sister bond due in 2011) has "made several large sacks of money."

Back in November, Abu Dhabi participated in a bond sale to help Dubai raise debt, but only for $5 billion, of which only $1 billion was remitted immediately. So what changed since then, and who stood to gain?

Abu Dhabi announced a $10 billion bailout today for its cash-strapped neighbor; the last-minute capital infusion allows Dubai World to pay a $3.5 billion Islamic bond that came due today.

The money will first be transferred to the Dubai Financial Support Fund, which supports struggling companies in the emirate, according to a statement released by the Dubai government. The first $3.5 billion will pay off the bond issue.

The remaining funds would also provide for interest expenses and company working capital through April 30, 2010 - conditioned on the company being successful in negotiating a standstill as previously announced.

The $10 billion will also be used to pay Dubai World's contractors, many of whom have long complained that they haven't been paid for their services.