Business Management Middle East

ME water sector needs major investment

Tue, 09 Mar 2010 16:51:00 +0000

Meeting the future water needs of the Middle East, one of the most water-deprived regions on the planet, will become increasingly difficult as population and infrastructure continue to boom as Gulf states emerge from recession.

A staggering US$200 billion is thought to be required by the year 2025 in both water infrastructure and waste water treatment systems if the region is stand any chance of meeting demand. Adaptation of integrated water resources management, public-private partnerships and placement of national policies - both in the short and long term - is of vital importance considering that the current situation is far from sustainable.

Water doesn't come cheap and this is now considered one of the most concerning issues, making water pricing a critical requirement. Thanks to a sharp rise in demand, regional governments can no longer afford to subsidize the high cost of water.

A sustainable approach to water management

Sheikh Abdul Aziz Al Nuaimi - Environmental Stewardship Expert - highlighted some of these key issues during a recent television interview:

"Water demand in the Middle East region is on the rise and (major) investment is needed. Considering we live in one of the world's driest areas, water represents a challenge to the development and sustainability of the region's economies.

"As for waste water, it can contribute to reduce the water deficit if utilized properly. Both water and waste water have a direct impact on the environment and human health in the region. A more sustainable approach to water management is needed through the adaptations of an integrated water resources management approach."

All the investment that flows into the Middle East from foreign lands to construct all the ambitious construction projects may have to be redirected to help replenish the supplies of water these very projects are helping to destroy.

The issue of meeting the Middle East's growing water demands will be addressed at this year's WaterTech 2010 regional water and waste summit in May. According to the web site, WaterTech will address "key water resource and water demand management issues in the Middle East, including an in-depth look at waste water treatment and reuse which is now a key priority for regional governments."

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Saudi Arabia: A Middle East green leader? | The global e-waste problem | SA reveal renewable energy ambitions

Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

Kuwait's Dar considering state rescue facility

Mon, 08 Mar 2010 15:33:00 +0000

Kuwait's Investment Dar, a Kuwaiti finance house that owns half of British car-maker Aston Martin, is set to use an untested "financial stability law" to protect itself from creditors who have declined to back its debt restructuring.

Along with creditors it is considering the use of a US$5.2 billion state rescue facility.

The Islamic investment group have said in a statement that the Kuwaiti government's aid fund would provide the legal framework for the restructuring process amid the current hostility surrounding the creditors and investors who have opposed its restructuring plan.

"Dar would not seek financial support in making its repayments, but a legal framework to implement its well supported plan," Adnan Al Musallam, Investment Dar's chairman and chief executive said.

Filing for legal protection

The Kuwaiti investment company hopes that, by filing for legal protection under Kuwait's financial stability law, it would compel the remaining creditors to agree to the plan. It would be the first time the law has been invoked since it was passed last year,a s reported by the Financial Times.

"Entry into the ... law will enable Investment Dar to implement the agreed restructuring plan by binding the small minority of dissenting investors," said Alm Musallam.

The world's fourth largest oil exporter approved the rescue package last year, which guarantees 50 percent of fresh loans banks provide to local firms as part of a plan to soften the impact of the global credit crunch.

Helping stressed lenders

The main objective of the financial stability law was to help stressed commercial lenders in Kuwait, but it also covers the vast number of Kuwaiti investment companies. This means that under the law Investment Dar are protected from "all judicial proceedings ... until the competent court circuit reaches a decision".

However, the law also states that an parties involved may file a case against the motion within 15 days of it being forwarded. Furthermore, running disputes over the level of the Gulf state's impaired investment provisions for 2008 has meant the Kuwait central bank has yet to approve the company's 2008 and 2009 financial statements. Until this is resolved the restructuring is unlikely to happen.

In September, Kuwait's central bank appointed a temporary supervisor to monitor debt restructuring and the compilation of financial results at Dar. According to Reuters, Dar had said it was seeking to borrow up to $1 billion to refinance its debt.

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Daniel Jones

Recall Road

Wed, 03 Mar 2010 11:53:00 +0000

The global auto industry has been rocked by the recent mass vehicle recalls involving some of the world's largest car manufacturer, but vehicle recalls are nothing new to the industry.

In 1978, after evidence showed that the design of the Ford Pinto's gas tank made it susceptible to explosion and fire even in the event of just a minor collision - and after allegations that the flawed design had led to at least three deaths - 1.5 million of the vehicles were recalled.

However, never before have recalls been witnessed on such a massive scale, with car giants Toyota, Nissan, Honda and now General Motors all taking the very difficult decision to take their cars off the road in admission of engineering faults.

Click image for a larger view

Toyota were the first to fall when they recalled eight million cars over concerns about accelerator pedals jamming, but then the US Transportation Department began investigations into braking problems with the 2010 Toyota Prius, leading to even more recalls.

The Middle East were not spared by the crisis; at the beginning of February, Toyota announced it would be recalling 2005-2010 model year Avalons and 2009-2010 Sequoia cars in the region to fix accelerator pedals that led to the recall of 4.4 million cars in North America, Europe and China.

Panic in the industry

The well publicised crisis at Toyota, seen as the market leader in car manufacturing across Asia and much of the world, was enough to create panic within the industry and sparked panic among its competitors that, "if Toyota can get it wrong, then so can we."

Soon after Toyota's recalls, Honda issued a recall for almost a million cars over an 'airbag problem', but then Nissan, Daihatsu and Suzuki have followed suite, recalling cars that may have potential problems.

The Middle East was affected by many of the recalls, in particular Nissan's. It has been reported just today that Nissan is to recall more than half a million vehicles worldwide for problems with loose brake pedal pins and faulty fuel gauges, Japan's third-largest automaker said Tuesday.

The recall includes pickups and minivans. Most of the cars were sold in the United States, but the recall would also heavily affect other countries and regions, including the Gulf region.

Reliability and durability

However, the Middle East region has been spared by the recent GM recall. The region will not be affected by the recall of 1.3 million compact cars by GM as a result of steering issues.

GM blamed the problem on a supplier that is partially owned by Toyota. A GM executive said the system received from the supplier didn't meet requirements for reliability and durability.

Toyota spent years building a solid reputation as a manufacturer of some of the world's safest cars, and it looked as if the recall crisis would take them to the brink of collapse. However, the company says it has enjoyed increased sales in February 2010 compared to the same month in 2009. A 65 percent increase in sales in the UK is reported for February 2010, with 2285 cars sold compared to 1381 in the same month in 2009. Toyota says the majority of the improved sales figures are due to private buyers, which has been helped by the Scrappage Scheme.

Toyota has topped the Middle East car sales chart for the last few years, and if sales in the UK are anything to go by this trend is likely to continue despite the recall crisis.

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Daniel Jones

S.Korea & UAE sign economic agreement

Tue, 02 Mar 2010 16:27:00 +0000

The United Arab Emirates has entered into an enhanced economic cooperation agreement with South Korea that will be signed to mark their 30-year relationship anniversary next year, whilst also signing over a huge oil refinery construction project to a major South Korean energy firm.

South Korea's GS Engineering and Construction will expand capacity of its oil refinery facilities at Ruwais in a deal worth US$3.6 billion. The order is the biggest-ever won by a single South Korean company for plant construction, and the company have confirmed that they have been ordered by the Abu Dhabi National Oil Co. to complete construction by February 2014.

The oil refinery deal is part of a larger plan to expand refinery facilities in Ruwais, about 250 km (156 miles) west of Abu Dhabi. It aims to raise capacity by 417,000 barrels per day.

Ensuring a secure energy future

Elsewhere, Samsung Engineering have announced it has signed a US$2.73 billion order in connection with the Ruwais project while SK Engineering and Construction announced a 2.1 billion dollar deal.

The enhanced economic cooperation agreement was signed alongside a memorandum of understanding (MOU) to cooperate in nuclear power and renewable energy sectors, a statement from the South Korean presidential Blue House said.

"To celebrating the 30-year relation anniversary, both countries have made efforts to expand the bilateral cooperation to overall economic areas and establish (a) long-term, companion cooperating relationship," South Korean President Lee Myung-bak said in a statement.

This latest activity are indicative of the UAE's ambitious energy plans to not only ensure a more secure energy future for its people, but also make the Gulf state a more formidable force in the global market as attention increasingly shifts to alternative energy.

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Daniel Jones

Dubai to slash state spending

Mon, 01 Mar 2010 16:53:00 +0000

The government of Dubai, the second largest sheikdom in the seven member federation of the UAE, has taken steps to save some much needed capital after a disastrous end to 2010 with the collapse of state-owned real estate giant Dubai World.

According to the finance department all factions of Dubai's government have been ordered to cut spending by 15 percent to save 3.7 billion UAE dirhams (USD$1 billion), with the aim of reducing the emirate's deficit of AED5.99 billion.

Property prices in the once booming city-state have been hit very hard with prices in some cases falling as much as 50 percent from their peak in late 2008. Dubai's oil-rich neighbour Abu Dhabi has been forced to bail out its economy on a number of occasions in the face of mounting debt.

Dubai is currently preparing a medium term budget plan for 2011-2013, a finance department spokeswoman said in an emailed statement. Government departments are looking to cut costs and expenses without affecting the quality of services, she added.

"This (spending cuts) is not a surprise and it is part of the de-leveraging Dubai is going through," said Saud Masud, head of Middle East research at UBS AG. "It is not a small amount, and we could see similar cuts taking place in the future."

Debt restructuring

Dubai World are currently undergoing some serious debt restructure, with the latest reports pointing towards a deal of 60 cents on the dollar, paid back after seven years, but backed by government guarantees. Lenders would receive no interest.

Zawya reports an alternative proposal involving creditors receiving full payment, including 40 percent of their Dubai World debt in the form of assets in Nakheel - the company's property unit - but with no government guarantee over the same seven-year period, the people familiar with the situation said.

The emirate's government said in January its 2010 budget revenue would total AED29.4 billion, down 12 percent from last year's estimate of AED33.5 billion.

Government expenditure is expected to be 6.1 percent lower than the figure envisaged for 2009 at AED35.4 billion.

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Daniel Jones

The global e-waste problem

Fri, 26 Feb 2010 08:38:00 +0000

The world is heading for a potentially devastating deluge of electronic waste as many nations struggle to keep the sheer volumes they are facing under control, a UN study report has warned.

In some countries, the amount of e-waste being produced - including mobile phones and computers - could rise by as much as 500 percent over the next decade, and growth on such a scale will create intractable problems for people's health and the environment as waste, much of it containing toxic material, decays.

The UN report titled, "Recycling - from E-Waste to Resources," used data from 11 representative developing countries to estimate current and future e-waste generation - which includes old and dilapidated desk and laptop computers, printers, mobile phones, pagers, digital photo and music devices, refrigerators, toys and televisions.

Developing countries in particular are in severe danger of facing a mountain of harmful e-waste because they have almost no processes in place whatsoever to dispose of it safely and efficiently.

"This problem is not going away"

Sales of cell phones, gadgets and appliances continue to rocket in places like China, India, Latin America and Africa and at the moment these places do not have proper e-waste collection and recycling plants that are crucial to not only protecting people's health but to also recover valuable materials and help develop a new green economy.

"This is a global question," said Guido Sonnemann, programme officer for Unep. "This problem is not going away, it's growing."

E-Waste

View more presentations from GDS International.

Many of the materials used in electronic equipment can be reused in new products, however the growth in demand for things like phones and computers is far out-pacing many nations' recycling capacity and now the problem is snowballing.

According to the report, China annually generates 500,000 tonnes of waste from refrigerators, 1.3 million tonnes from TVs and 300,000 from PCs. In comparison, India produces 275,000 tonnes from fridges, 275,000 from TVs and 56,300 from PCs.

America is the world leader, forecast to produce over three million tonnes of e-waste in 2010, but they have the necessary state-of-the art e-waste recycling plants.

"Illegal imports of e-waste"

Ruediger Kuehr, who oversees zero-emission initiatives at the United Nations University expressed his concerns: "It's definitely in the countries which have substantial increase in consumption - countries like China and India, which are still substantial targets for illegal imports of e-waste," he said. "The same applies for countries like Nigeria."

In the Middle East, although right now there is no comprehensive legislation or rules governing e-waste management, the region is waking up to the challenge and has started doing its bit to manage e-waste more effectively.

Habiba Al Marashi, Chairperson, Emirates Environmental Group (EEG), told Emirates Business: "The country is beginning to address the e-waste challenge by focusing on different types of e-waste such as cellular phones, used batteries and old computers.

"The private sector is taking a lead role in this regard by initiating take-back programmes for certain electronic devices as part of their corporate social responsibility. This has been the practice in other countries and the feasibility of adopting a similar system is being studied by different entities."

Scaling the e-waste hurdles

The hurdles that nations have to navigate in order to carry out proper e-wast management include, uncoordinated government regulation at both the national and regional level; varying compliance requirements from country to country and state to state adding unnecessary costs; consumers not being provided with effective incentives to reuse or recycle and commodities prices often declining below the price point for e-waste management companies to make a profit.

But there are things governments can do to ensure the problem is dealt with. Authorities can implement an international system to report, quantify, and control the movement and disposition of e-waste as well as utilising the framework of an existing international organisation to mandate the implementation of the minimum global requirements for e-waste management. Also, a greater effort can be made to cooperate, communicate, and enforce e-waste management requirements across political boundaries and geographical regions.

Check out the infographic here to see just how serious the e-waste problem as become and which nations are producing the most.

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Daniel Jones

Iraq get biggest ever IMF loan

Thu, 25 Feb 2010 16:41:00 +0000

War-torn Iraq is to receive a US$3.6 billion loan by the International Monetary Fund (IMF) - the biggest to the country so far.

The IMF executive board approved the two-year so-called Stand-By Arrangement for Iraq "to cover the country's balance of payments needs" after the economy was hit hard by falling oil prices in 2009, the Washington-based institution said.

The money will be used to rebuild Iraq's battered infrastructure and US$455 million will be made immediately available to deal with the most urgent issues. Iraq has received similar loans from the IMF in the past, with the condition of removing subsidies from manufacturers and farmers.

Brutal sectarian conflict

Declining oil prices last year left Iraq, dependent on oil for almost 90 percent of its revenue, with a public deficit of 20 percent of economic output, Ron van Rooden, IMF mission chief in Iraq, said in a conference call with reporters, and it faces a financing gap of close to US$5 billion until the end of 2011.

Since oil prices started picking up Iraq have fared slightly better and the nation's financial needs have been trimmed slightly.

Zawya reports that the financial shortfall in Iraq's budget comes at a difficult time as its 29 million people struggle to emerge from a brutal sectarian conflict triggered by the 2003 US-led invasion.

The new IMF loan follows a 15-month program supported by a Stand-By Arrangement at the time valued at 744 million dollars approved on December 20, 2007, which expired on March 18, 2009.

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Oil and public cash help to boost MENA | Al-Rajhi Capital and Arcapita launch $500m fund | Munich Re to pull out of Iran

Daniel Jones

Oil and public cash help to boost MENA

Tue, 23 Feb 2010 16:54:00 +0000

2010 looks like it could be a good year for the MENA region as the economy is likely to be given a welcome boost from higher oil prices, a stronger global economy and loose domestic policy conditions, according to a new report by the Economic Intelligence Unit (EIU).

OPEC continue to exercise restraint but this may not last long as oil production is expected to pick up throughout this year and grown even stronger in 2011, helped massively by the consistent government spending in major oil-producing countries.

"US$50-70 per barrel is good, prices above this are better. [However], triple digit prices would stifle global recovery. A low price would mean greater prioritisation/scrutiny of projects and adjustment in expenditure levels," Giyas Gokkent, Group Chief Economist of National Bank of Abu Dhabi (NBAD), told Emirates Business.

GCC member states in particular will benefit from the global uptick in credit market conditions last year, with ambitious infrastructure projects continuing to be churned out across the region.

"High levels of public spending"

"GCC governments will maintain relatively high levels of public spending and investment," an EIE analyst stated.

"This will, in turn, support non-oil-producing countries in Mena that benefit from regional oil-related liquidity in the form of inward investment, tourism demand and workers' remittances."

Saudi Arabia, the largest of the Arab markets, is forecast to enjoy the strongest growth across 2010-11, 3.4 percent.

For other countries in the region, Gokkent said Kuwait will likely see 3.1 per cent real GDP growth, Qatar 15.8 per cent, Oman 2.64 per cent and for Bahrain the expected real GDP should be 2.2 per cent.

The EIU concluded: "Having stagnated in 2009, regional economic growth is expected to rebound strongly to average 4.5 per cent in 2010-2011, although this is still lower than the 6.8 per cent average annual growth rate in 2005-2007."

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Al-Rajhi Capital and Arcapita launch $500m fund

Tue, 23 Feb 2010 16:54:00 +0000

Saudi Arabia-based investment bank Al-Rajhi Capital has teamed up with Bahrain's global investment bank, Arcapita Bank to launch a US$500 million fund that aims to makes progress in the Middle East real estate sector.

Zawaya reports that the entities will seed the fund with a joint investment of US$50 million and acquire investments for the fund in high-quality, income-generating real estate assets in Saudi Arabia and other GCC (Gulf Cooperation Council) nations. The focus will be on logistics warehouses, as well as health-care and education-related assets.

In terms of market capitalization Al Rajhi is the GCC's largest commercial bank as well as being the world's largest Islamic bank. The investment bank subsidiary has already announced its first acquisition, the largest logistic and distribution centre in Riyadh, which was acquired for US$79.7 million. Under the deal it will be leased back to Saudi Arabia's leading supermarket firm Azizia Panda United Company for 18 years.

Jorge Cantonnet, managing director and head of private equity at Al-Rajhi said, "As the economic downturn shows signs of bottoming out, we are beginning to see good opportunities for investors with available capital for investment.

"We believe that this fund is launching at a time that will allow us to deploy our financial resources to gather a portfolio of prime real estate assets at attractive valuations."

It is hoped the partnership between Arcapita and Al-Rajhi will create a power force among GCC members region with enough leverage to execute many big investment deals.

"We have worked closely with investors in developing the fund mandate," said Hisham Al-Raee, executive director of investment placement at Arcapita.

"Investors are exhibiting good appetite for high-quality yielding investments within the GCC, particularly in Saudi Arabia, where economic growth has remained strong and positive throughout the economic downturn."

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Munich Re to pull out of Iran

Fri, 19 Feb 2010 16:55:00 +0000

The current political situation in Iran could prove to be hugely damaging to the nation's future economic development as foreign investors become more concerned by the increasingly unstable environment in the Islamic republic.

Munich Re, the world's largest re-insurer, has become the latest German company to withdraw from Iran as pressure mounts for new sanctions to be imposed on the country over its nuclear development programme.

The company have insisted they will not renew any existing contracts when they expire or write any new business whilst the political situation remains hostile. Whereas to a firm generating close to US$54 billion in premiums each year, the loss of an estimated US$13.5 million is small, the move is politically significant.

Cutting ties with Iran

The announcement followed a similar move by German engineering giant Siemens last month, and came amid pressure from Germany's partners to cut its business ties with Iran. Germany, which recently lost its crown to China as the world's top exporter, exported almost four billion euros worth of goods to Iran in 2008, mainly machine tools and industrial equipment, a rise of nearly nine percent.

Germany are in the process of phasing out Iran from the overseas business portfolio as the German government is applying pressure on chambers of commerce not to organise seminars on Iran or business trips there.

President Ahmadinejad is putting his country's future economic and social development at great risk by continuing to go against UN requests to wind up its nuclear programme for fears that Iran's intentions are not wholly peaceful.

On Wednesday the top US military officer, Admiral Mike Mullen, warned that Iran was "becoming a nuclear weapons capable country and that is very dangerous." He did say however that Washington's priority was to initiate "dialogue and engagement" with Iran, but it looks like Germany have gone past that point.

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Dubai Holding downgraded by Fitch Ratings

Thu, 18 Feb 2010 16:14:00 +0000

New York-based international credit rating agency Fitch Ratings as downgraded Dubai Holding Commercial Operations Group's (DHCOG) ratings because of increasing doubts about the Dubai government's ability to support the group.

DHCOG's long-term issuer default rating and senior unsecured rating were both lowered from BB to B+ and remained on "Rating Watch Negative," Fitch said in a statement.

Middle East Online reported that the action reflects Fitch's changed approach to DHCOG, effectively 97.4 percent owned by Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum, which it now rates on a standalone basis rather than on a top-down parent and subsidiary basis

Key infrastrucutre projects

The group remains one of the major government-related masterplan developers in Dubai and has received huge incentives and encouragment from Dubais government to develop key infrastrucutre and property projects in the emirate, and has even been given gifted land by the government.

"This is due to a continuing lack of substantive information on the government's ability to support the group in case of need," Fitch said, adding the negative rating "reflected concerns that the deterioration in market conditions has weakened DHCOG's operational performance."

"DHCOG is exposed to cyclical industries, principally Dubai's real estate and hospitality markets which could potentially experience increased vacancy rates and a higher risk of buyer and tenant defaults," Fitch said.

"Weakness in these markets is expected to continue through 2010 and 2011 at least."

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Saudi to double tech spending after Moody's upgrade

Tue, 16 Feb 2010 16:54:00 +0000

Rating agency Moody's on Monday upgraded Saudi Arabia to its second-highest level as oil earnings and a recovering economy push the government's budget back into the black this year. In the light of this news Saudi Arabia's King Abdulaziz City for Science and Technology will double spending on technology research over the next five years to SR16 billion (US$4.27 billion), a senior official at KACST said, according to a Bloomberg newswire report on Tuesday.

Moody's Investors Service hiked Saudi government foreign and local currency debt to A3 from the previous rating of A1 even as Riyadh powers ahead with its massive state spending programme on schools, infrastructure and the military.

"Small deficit in 2009"

"The upgrade was prompted by the continued strong state of government finances, which have largely withstood oil price volatility and the global economic crisis," Moody's said in a statement.

"A return in the budget to a moderate surplus - from an estimated small deficit in 2009 - will restore the Kingdom's debt trajectory back on its former improving trend, even with continued large-scale infrastructure spending."

After such a strong economic performance so soon after the global economic crisis, the Kingdom has just highlighted 11 areas of technology including oil and gas, water, and nanotechnology as part of its strategic plan, Prince Turki Bin Saud Bin Mohammed Al Saud, vice president for research institutes at KACST, the national science agency, told a conference in Jeddah, Saudi Arabia.

Saudi Arabia have already started construction of a solar-powered water desalination plant, the first step in a three-part program to introduce solar energy into the Kingdom with a view to eventually become a member of the International Renewable Energy Agency, otherwise known as IRENA.

Additional heavy spending

There are also some rather far out plans to construct a sustainable petroleum research centre.

The Kingdom's solar desalination programme, launched by KACST aims to help stabilise future power and water supplies inside Saudi Arabia through the creation of solar-powered desalination facilities.

Saudi Arabia is also spending around US$400 billion dollars over the 2008-2013 period to massively expand educational and health facilities, build new infrastructure like trains, and expand its oil and petrochemical industry.

Additional heavy spending is also going into the military sector.

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Daniel Jones

Saudi Arabia: A middle east green leader?

Wed, 10 Feb 2010 14:08:00 +0000

If there are two things the Middle East has plenty of it's sunlight and oil. The region's exploitation of the latter is well known and is the reason why it has so much economic promise and is turning out some of the world's most expensive and outrageous infrastructure projects.

But as pressure mounts on the world's largest oil producers and exporters to diversify away from the dwindling fossil fuel, nations like Saudi Arabia must start to shift their energy focus in order to stay among the big players in the globe's economic future.

Saudi Arabia is perhaps one of the Gulf states taking the biggest steps in sustainable, green policies after looking to enter the world of solar energy with the launch of the first of a three-stage solar power initiative.

Sun in place of oil

The Saudi authorities have also vowed to use the sun instead of oil to desalinize water. Up to now, the more than 28 desalination plants scattered around the Kingdom have had to rely of fossil fuel, most notably fuel oil, to provide power to run the equipment used to extract salt and other minerals from sea water.

At the start of February the UAE Top News media site reported that the Kingdom is now planning to build solar-based desalination plants in order to save on energy costs, as well as be in tune with new environmental polices.

The move could be perceived as a ploy to secure membership in the International Renewable Energy Agency, otherwise known as IRENA.

Plans for a high-speed rail network to carry pilgrims to and from the annual Hajj pilgrimage in the Holy Cities of Mecca and Medina also signify the Kingdom's willingness to become more environmentally friendly.

Eco-friendly petrol centre

But, rather ironically, even the petroleum industry in Saudi Arabia looks set to get a green makeover.

The King Abudullah Petroleum Studies and Research Center (KAPSARC) (pictured above) designed by Zaha Hadid, is aiming for LEED Platinum. To be built in Riyadh, Saudi Arabia, the state of the art campus will house research and development facilities on energy and environmental exploration and analysis.

KAPSARC's main building is a crystalline structure composed of modular six-sided cells with many connections between them, as well as a series of shaded outdoor spaces, gardens, and underground tunnels. Nearby, a modern library and conference center will aid in the center's quest to become a preeminent energy research center, as described by InHabitat.

The hot desert climate will be cooled by the use of natural shading and ventilation and natural light will be used for interior courtyards and indoor rooms. Solar power will once again be used to power the building and its extensive use of energy-efficient LED lights.

A place where people learn the best ways to find petroleum hardly sounds like somewhere you would find a environmentally-friendly building, but you have to admire the Kingdom's efforts.

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Dealing with the Afghan opium trade

Thu, 04 Feb 2010 16:26:00 +0000

It was during the Soviet invasion of the 1970s and 80s that the Afghan government started losing control of its provinces. Under a weakened regime, warlords flourished and with it opium production began increasing rapidly as the tyrants looked for ways to fund their military existence.

One must doubt that they expected the Afghanistan opium trade to, at one stage, provide well over 90 percent of the world's opium.

When Soviet and Western forces withdrew all together from Afghanistan at the end of the 1980s a power vacuum was created, within which many Mujaheddin factions started fighting. With no more support from the US or Soviet Union poppy cultivation exploded, with opium crops eventually reaching 4,500 metric tons by 1999.

However at the turn of the millennium under the rule of Taliban leader Mullah Mohammed Omar, poppy cultivation was declared un-Islamic and one of the world's most successful anti-drug campaigns was launched.

Implemented in 2000-2001, the Taliban's drug eradication program led to a 94 percent decline in poppy cultivation. In 2001, according to UN figures, opium production had fallen to 185 tons.

Opium funding the Taliban

Immediately following the October 2001 US-led invasion however, production increased dramatically and quickly regained its historical levels.

The US invaded on the grounds that Afghanistan was a hot bed for producing terrorists that posed an international threat and aimed to topple, what Washington believed to be, a tyrannical Taliban government. Since arriving in Afghanistan breaking up the poppy trade, which helps fund the Taliban, has become absolutely vital for the US.

To call it a "business" would be misguided due to the amount of suffering created as a result of its existence, but the economic benefit to the Taliban is unquestionable. Over the last four years the Taliban has made an estimated US$450-600 million from taxing opium cultivation and trade in the country.

But US forces have started making a difference in Afghanistan and a report last year found that opium poppy cultivation in Afghanistan was down 22 percent, opium production had been cut by 10 per cent, while prices were at a 10-year low. The number of opium poppy-free provinces has also increased from 18 to 20 out of a total number of 34, and more drugs are being seized as a result of more robust counter-narcotics operations by Afghan and NATO forces.

A trade in decline

Poppy cultivation was once one of the biggest employers of Afghan people with 9.8 percent of the population involved in opium production in 2008. This fell to 6.4 percent last year.

The trade is most certainly in decline, and Coalition forces' efforts to discourage poppy farming looks to have some economic factors on its side and the reasons for the decline are thought to be two-fold.

David Mansfield, a top expert on Afghan drugs policy and fellow at the Harvard University's Carr Center, claims that lower poppy prices are, due to previous overproduction in Helmand and uncertainty about the supply of wheat from war-torn Pakistan is, one reason for its fall in popularity. He also calculates that the poppy, with its high labor costs and falling prices, is becoming less profitable than wheat.

He believes in time people could make a permanent switch to wheat, but there are plenty of people who doubt this is the case. Farmers in opium growing villages such as Khan Neshin still believe they can make two to three times more money from growing opium instead of wheat.

What's more, the departure of the smugglers, farm hands, and processors tied to the trade has damaged activity in the bazaar, and the less labor-intensive wheat has left people idling without work, reports the New York Times.

Coalition forces are benefiting from external factors that have made poppy farming less popular but in the meantime are working to build up other parts of the economy. But the fact remains that with less opium production more people are without work.

Moving forward

This must be viewed as a transitional problem that is entirely necessary as Afghans move away from the drug-crop, but in the mean time Coalition forces must work together to help people cope with the change.

As reported by the United Nations Office of Drugs and Crime (UNODC) US marines and US and British aid agencies are providing money to the local government for make-work projects like building footbridges and walls and clearing irrigation ditches, as well as giving away wheat seeds.

However the need for further diversification away from wheat must also be recognised. Coalition policy must include increasing the share of land devoted to other crops and that means opening up new markets.

This has led to the establishment of "food zones" in places like Helmand where intensive efforts have been made to shift farmers on to new crops, and in these regions poppy production has slumped significantly.

As UNODC Executive Director Antonio Maria Costa puts it, "controlling drugs in Afghanistan will not solve all of the country's problems, but the country's problems cannot be solved without controlling drugs."

But in order for Afghanistan to even consider the prospect of a stable economic infrastructure, security must improve - and this presents a whole new problem all together.

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Iraq and Libya strike it rich

Tue, 02 Feb 2010 09:08:00 +0000

European oil giant Shell and Malaysia's state-run Petronas oil company finalised a contract on Sunday to develop Iraq's giant Majnoon oil field, while Russian energy giant Lukoil signed an agreement in Baghdad on the same day to develop Iraq's massive West Qurna-2 oil field.

Elsewhere Libya struck a massive deal to buy Russian arms worth almost US$2 billion, Russian news agencies quoted Prime Minister Vladimir Putin as saying on the weekend.

"Yesterday (Friday), a contract worth 1.3 billion euros (1.8 billion dollars) was signed. It does not only involve firearms", Russian Prime Minister Vladimir Putin was quoted as saying by Ria Novosti and Interfax.

Russian diplomatic source told Interfax Tuesday however that Libya wanted to acquire 20 fighter planes, at least two S-300 air defence systems, several dozen T-90C tanks and other arms.

Moscow and the North African state enjoyed close ties during the Cold War, and much of Libya's arsenal was purchased from the Soviet Union in its last years.

Shells's triumph in the oil field comes after beat a rival bid from France's Total and China's CNPC to develop the 12.6 billion barrel field in southern Iraq alongside Petronas in December. The field currently produces just 46,000 barrels per day (bpd). Shell and Petronas have pledged to increase that output to 1.8 million bpd.

Positive upturn for investment

Royal Dutch Shell owns 60 percent of the venture, with Petronas owning the remainder according to a report from by BBC. Their joint-venture, which includes a 20-year service contract, will see the firms receive a fee of US$1.39 a barrel of oil.

Along with Norway's StatoilHydro, Lukoil also signed an initial deal in December last year to develop the field, which is expected to dramatically increase the country's crude production to 12 million bpd within seven years.

The deals between Libya, Iraq and foreign investors are indicative of a positive upturn for investment in the MENA region. It is particularly encouraging for Iraq, desperate for foreign cash after having its economic and social infrastructure ripped to pieces by years of conflict. It now needs the expertise of foreign companies to reach that goal of reviving its oil industry.

Iraq's known reserves of conventional oil rank behind only Saudi Arabia and Iran, if only its social and political stability could be guaranteed so it could take full advantage of its plentiful resources.

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The future of FDI in the Middle East

Mon, 25 Jan 2010 17:01:00 +0000

Foreign Direct Investment (FDI) in the Middle East will remain low throughout 2010, but the long term future looks bright as opportunities can still be found, that's according to the 2010 AT Kearney Foreign Direct Investment Confidence Index, a regular assessment of senior executive sentiment at the world's largest companies.

In comparison to much of the world, the Middle East region fared pretty well during the global financial crisis and investor confidence is actually higher than in previous years. The top destination in the region, the United Arab Emirates, home to Dubai and Abu Dhabi, held up well in spite of a flurry of negative publicity during the survey period. However the impact of the fallout of Dubai World's collapse is not widely accounted for in the report.

The FDI index has been carried out regularly since 1998 and provides a unique look at the present and future prospects for international investment flows. Companies participating in the survey account for more than US$2 trillion in annual global revenue.

Strong emerging economies

Unsurprisingly it was an Asian country that remained the most attractive destination for foreign cash as the APAC region fared even better than MENA countries during the recession. China topped the list as it has done every year since 2002.

The United States regains second place from India, which had surpassed it in 2005. India, Brazil and Germany complete the top five favored investment destinations.

The emerging economies of China, Brazil and India continue to go from strength to strength and will continue to grow in spite of the economic crisis.

Largest consumer markets

AMEinfo.com reports that the highest degree of investor optimism in the outlook for these three countries, with nearly one-third seeing a more positive outlook for China (32 percent) and India (31 percent) compared to one year ago, and 22 percent saying Brazil's outlook had improved. In contrast, investor outlook for the United States was decidedly more negative, with 22 percent of executives having more negative outlook for the country than a year ago.

It was positive to see that the largest consumer markets in the Middle East have now entered into FDI index for the first time, but it remains unclear whether this is due to the sorry state of other nations or whether optimism over Middle East prospects are up in general.

Nonetheless the Middle East fared well in this year's index, where UAE, Saudi Arabia, Egypt and the Other Gulf States, feature among the top 25 FDI destinations. The survey ranks UAE 11th globally and as the preferred destination in the Middle East.

Kuwait establish stock market regulator

Thu, 21 Jan 2010 14:47:00 +0000

The Kuwaiti stock exchange will be getting a market regulator to ensure complete transparency to prevent insider trading and fraud.

Middle-East-Online reports that Kuwait's parliament gave initial approval on Wednesday to a bill that would mandate the formation of an independent regulator for the emirate's stock market.

The 165-article Capital Market Law was passed unanimously in the first reading by the 48 members present, but the second and final vote will not take place for another two weeks.

The bill calls for an independent five-member Capital Market Authority whose main duties would be to ensure complete transparency and to prevent insider trading and other forms of illegal trading and fraud.

Lack of protection for investors

In the 1970s, Kuwait became the Middle East region's first bourse and has since then been run by a government-appointed administration that MPs said lacks the powers to ensure transparency.

But recently some cabinet ministers have expressed concern over a lack of protection for small investors. "Small investors on the bourse have been massacred as they lost their money. This law will put an end to suspect trades and will promote transparency," independent MP Ali al-Deqbasi said during the debate.

Conservative MP Khaled al-Adwah said the "stock market has been suffering chaos. There have been attempts to illegally make huge fortunes in the absence of stiff regulations."

The move comes as Kuwaiti authorities look to make its stock markets as advanced as those in more economically developed countries and also signals the ambitions of the region as a whole as it looks to become a more prominent player in the global market place.

At present the Kuwaiti stock market has a capitalisation of around 102 billion dollars and lists more than 200 local and foreign companies.

Kuwait's recovery from the global financial crisis has so far been fluctuating quite fiercely, and in 2009 it was one of only two exchanges in the Gulf (the other being the very small Bahrain stock exchange) to post record losses.

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SA reveal renewable energy ambitions

Tue, 19 Jan 2010 09:24:00 +0000

The world's largest oil producer has announced it plans to join the International Renewable Energy Agency (IRENA).

Saudi Arabia follow fellow new members South Africa, the Kyrgyzstan and Saint Vincent and the Grenadines, as global awareness of climate change continues to rise. The UN climate change summit in Copenhagen did manage to convince a number of previously sceptical countries to commit to national climate change policy, if little else.

The announcement was made at the third preparatory session of IRENA, which adopted a budget of US$13.7 million for the agency for 2010.

Dr Sultan Ahmed Al Jaber, the CEO of Masdar said in comments at a press conference that the decision to join IRENA was indicative of the increasing support to the cause of renewable energy.

The pursuit of renewable energy

Helene Pelosse, IRENA's interim director general added that it was further evidence of the narrowing differences between the oil producers and consuming countries in the pursuit of renewable energy.

However the kingdom's traditional energy vision falls directly in conflict with their renewable energy plans. Saudi Arabia is predicted to account for about 21 percent of Middle East oil demand by 2013, while providing nearly 40 percent of supply, according to a report released at the beginning of January.

The report added that regional oil use is seen hitting more than 11 million barrels per day in 2009, rising to more than 12 million barrels per day (bpd) by 2013, the latest Saudi Arabia oil and gas study by Business Monitor International said.

Increase in Saudi oil production

Between 2008 and 2018, BMI said it was forecasting an increase in Saudi oil production of 18.2 percent, with volumes rising steadily to 12.8 million bpd by the end of the 10-year forecast period.

The BMI report added that Saudi Arabia's real gross domestic product growth was seen at 2.1 percent for 2009, following 4.2 percent growth in 2008, as reported by ArabianBusiness.com. BMI also said it was predicting 2.8 percent growth in 2010, 3.5 percent in 2011/12, followed by 4.2 percent in 2013.

"We expect oil demand to rise from an estimated 2.22 million bpd in 2008 to 2.49 million bpd in 2013, representing three percent annual growth," the report said.

Joining IRENA could open up a whole new world of investment opportunities in Saudi Arabia. Green investments are among the fastest growing in the world and the Middle East region is starting to come round to this fact and despite Saudi Arabia continuing to grow its oil production, new FDI could find its way into the kingdom as its starts its green revolution.

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France and Kuwait sign nuclear deal

Fri, 15 Jan 2010 16:28:00 +0000

The oil-rich state of Kuwait has taken steps to ensure a more secure energy and economic future in the face of dwindling reserves of the natural resource.

The Middle East state has signed a 20-year peaceful nuclear cooperation deal with France, one of the world's largest producers of nuclear power, officials said.

The deal is combined with Kuwait's previous announcement that it is to set up a civilian nuclear project mainly to produce power and also established a national committee for the peaceful use of nuclear energy.

Subject to international treaties the deal allows the "supply of nuclear material, equipment and facilities". It also envisions training, exchange of technology information and research.

"Experience in the nuclear field"

Head of France's Atomic Energy Commission, Bernard Bigot, told reporters during a visit to parliament, "This is the first step of cooperation and to share experience in the nuclear field."

"It is to help Kuwait (develop) nuclear energy ... and to assist it to decide for its future needs," Bigot added.

However the plans do not stipulate the building of a nuclear power plant any time in the near future, but Ahmad Bishara insisted that Kuwait do have the "will, resources and the need" to carry out the project.

Plans to build a nuclear power plant in Kuwait were first outlined last June when French Economy Minister Christine Lagarde held talks with Kuwaiti officials.

No military intentions

Lagarde said Kuwait's emir, crown prince and prime minister proposed to "pursue, deepen and accelerate" cooperation on the nuclear project. Kuwait's emir, Sheikh Sabah al-Ahmad al-Sabah, said in February that the nuclear project aims to produce electricity in a bid to save large quantities of fuel being consumed by power and water desalination plants, as reported by Middle-East-Online.com.

Kuwait have had to make it absolutely clear, both to France and the international community that they have no military intentions in the nuclear field and that its vision falls in line with international law.

The Gulf Cooperation Council (GCC) is planning joint nuclear power project for peaceful means on a relatively large scale as the region looks to develop atomic energy in the light of a continuing standoff between the West and Iran over its programme of uranium enrichment.

There is a concern among Gulf states that Iran's more sinister intentions when it comes to nuclear development may harm the opportunities of the rest of the Middle East.

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Property broker numbers fall even further

Tue, 12 Jan 2010 16:56:00 +0000

The UAE's property sector was one of the worst hit industries in the world after the financial crisis spread like the plague from its source in the greedy banks of Wall Street.

How long it will be until the sector returns to anything close to normality is unclear, but initial signs for 2010 are not good after a regional real estate consultancy announced the first half of the year will remain very tough.

As reported by Zawya, Laura Martorano, CEO of Leo Sterling, said: "We expect this number to further decrease within the coming year and reduced to a few dozen brokers as a result of the natural process of elimination."

Infrastructure projects cancelled

In Dubai alone there have been a huge number of infrastructure projects put on hold as the emirate struggles to deal with its US$60 billion debt. Last year, it was rumoured that the emirate would be cancelling up to 27 major projects as the property market slumped, but as the debt crisis intensified, this was increased to 25 percent of all construction projects.

This has had a knock on effect on the number of property brokers operating in the area. Citing recent statistics from the Real Estate Regulatory Authority, Leo Sterling said there are now around 2088 approved brokers in Dubai, which is already half of the total number in 2008.

Martorano said: "We believe that 2010, particularly the first half of the year, will be critical to industry players as the ongoing price corrections and the stabilising effect of the market shake-up will eliminate weak, run-of-the-mill brokers that have relied heavily on speculative investors and overpriced property offerings."

"Long-term value in property offerings"

"We have anticipated this situation, which is why we continue to emphasise on long-term value in our property offerings. As such, we have fortified our portfolio in the ready segment, which has remained relatively stable and attractive to genuine buyers and investors, who will be increasingly coming on board in the next few months."

"We need to focus on the actual picture to be able to determine genuine prospects that await us in the future. In real terms, there has been no significant growth at the height of the slow down," she added.

However, Martorano also added that with proactive government intervention, such as the move to allow 100 percent foreign ownership, brokers could now be empowered to provide bespoke offerings and services designed to reinforce investor confidence in the local property market.

Whether this will make a big enough impact to turn the fortunes of the sector around before the end of 2010 remains doubtful.

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