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Tag Archives | Dubai

In Pragati: The den in Yemen

In this month’s Pragati, I discuss the rising threat of al-Qaeda in the Arabian Peninsula (AQAP) in the context of the failed attempts to blow up cargo planes bound for the U.S. via London and the Middle East:

Al Qaeda, of course, has had a historical presence in the tribal provinces of Yemen. Osama bin Laden, though born in Riyadh, belongs to a branch of the Kidnah tribe of the Hadhramaut region in eastern Yemen, from where Mr bin Laden’s father emigrated. Yemen stands out from the other countries in the Peninsula as the least developed economically, with a high unemployment rate (35 per cent, 2009) and a per capita income roughly one-tenth that of Saudi Arabia’s. Its post-colonial history is marred in conflict — inter-tribal confrontations, a coup d’etat, support to a rebellion in neighboring Oman, and two civil wars.

In many ways, Yemen mirrors Pakistan’s Khyber-Pakhtunkhwa province, with its rugged, mountainous terrain, general security vacuum, and low levels of economic development. Rather unsurprisingly therefore, Yemen provided conditions ideal for al-Qaeda to promulgate its regional campaign for jihad. It served as al-Qaeda’s base for the first attack on Western targets in 1992; a bombing of a hotel used by US troops in Aden, which resulted in two civilian deaths. Its next attack in 2000, off the coast of Aden, killed 17 US sailors aboard the USS Cole. [Pragati]

Read the article in its entirety in this month’s Pragati (html) ( pdf)

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Faisal Shahzad and the many like him

Washington should be concerned about the changing profile of the terrorist in the U.S.

As you read this, a hozing down operation is underway somewhere in Pakistan to eliminate any possibility of Faisal Shahzad — the Times Square Talib – being traced back to  the Military Jihadi Complex (MJC) in the fatherland. Mr. Shahzad was arrested by authorities at JFK while attempting to flee the U.S. after the events of May 3rd.

Some folks have chosen to see the lighter side of the matter — Flashpoint Partners’s Evan Kohlmann mocked the amateurishness of the “so-called bomb,” further adding that clocks setting off fireworks to ignite gas did not “exist outside of Tom and Jerry cartoons.” I trust the entertainment isn’t spoiled by this piece by Steve Coll:

At best, the jihadi groups might conclude that a particular U.S.-originated individual’s case is uncertain. They might then encourage the person to go home and carry out an attack—without giving him any training or access to higher-up specialists that might compromise their local operations. They would see such a U.S.-based volunteer as a “freebie,” the former officer said—if he returns home to attack, great, but if he merely goes off to report back to his C.I.A. case officer, no harm done. [Think Tank]

Another, perhaps related aspect to this, of course, is the idea that “unaffiliated” Pakistani- or Arab-American citizens could carry out attacks in the U.S., either acting individually or in tandem.  This offers significant challenges to intelligence and counter-terrorism officials — monitoring communication channels may not be very useful in preventing such an attack.  If Mr. Coll is accurate about the handful of Pakistani-Americans having traveled to Pakistan for training, this should be of significant concern to authorities.  The potentiality for terror of the approximately 200,000 Pakistani-Americans (who have thus far largely avoided confrontations with the state) should worry Washington.

If terror inspired from Pakistan hits the homeland, how will the U.S. respond?

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End of Story, Morning Glory?

The United Arab Emirates (UAE) is experiencing the antithesis of the “Dubai Chalo” mantra of the ’60s and ’70s.  Dubai is likely the shed 10% of its population over the next two years, as a result of unmanageable debt, failing businesses and shrinkage of property values.   This is only to be expected —  unsound economics have driven Dubai’s growth in recent years.  Unlike other states in the Arabian Peninsula, Dubai has no oil of its own.  Indeed, from the emirati pearl merchants of the early 1900s to the establishment of the Jebel Ali Port in the 1970s, its historic strength has been trade.

However, the single minded pursuit of turning this free-trade town into a megacity rivaling New York or Los Angeles is as bad an idea today as it was when it was conceived.  And now, conservative but oil-rich Abu Dhabi, who many said was slow off the mark in this maddening real estate circus, is having the last laugh.  The Maktoums of Dubai have had to had to swallow their pride and approach Abu Dhabi to bail them out.  But even Abu Dhabi’s bailout of Dubai comes with strings attached:

[T]he rapid deceleration had given rise to speculation that Abu Dhabi, the richest member of the UAE, might have to bail out its flashier neighbour. Rumours spread that Abu Dhabi would only stump up the cash if Dubai ceded control of its successful airline, Emirates.

Federal support has come through folding Dubai’s troubled mortgage companies into well-capitalised Abu Dhabi banks. There have been other direct discussions between Dubai and Abu Dhabi state companies, although none has reached agreement.

Sheikh Mohammed’s Dubai International Capital fund, whose assets have shrunk sharply, briefly courted investment from Mubadala, the Abu Dhabi investment arm. No substantive discussions ensued, people close to the matter say, but the incident fuelled rumours of a bail-out. Well before the credit crisis raised questions about Dubai’s solvency, Mubadala and Dubai Aluminium had been discussing equity restructuring of their joint venture, Emirates Aluminium, a vast smelter on the Abu Dhabi/Dubai border.

What Dubai needs to do now is to rightsize.  New York City was not built overnight.  Even if NYC’s economy relies heavily on financial markets, these markets trade against tangible products — from the pharmaceuticals of New Jersey, to the automobiles of Detroit.  Dubai’s financial markets trade in recycled financial instruments, which have a tendency to flourish during the good times, and falter during the bad.  This blogger also feels that Dubai (and the UAE as a whole) needs to address debt insolvency.  Given that foreigners and foreign owned entities form the majority of Dubai’s demographic and economic footprint, a credit history check system such as the one in the United States would be ineffective.  Yet, there is an urgent need to address the frequency with which expatriates and foreign-owned companies run up substantial debt and abscond from the country.  The current economic crisis in Dubai is as much a result of a nonexistent debt reconciliation system, as it is due to building artificial islands, skyscrapers and magical kingdoms that no one could afford.

The one benefit of an Abu Dhabi bailout might be that the UAE would start functioning more like a federation with a visible nucleus (Abu Dhabi) than the disagreegated collection of city-states that it now is.

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US – UAE Nuclear Deal

Very quietly, the United States and the United Arab Emirates have signed a deal that will allow the UAE to develop nuclear reactors and obtain nuclear fuel from the US, under the 123 Agreement framework. Under the agreement, the UAE, which is already a signatory to the Nuclear Non-Proliferation Treaty (NPT) and the Comprehensive Test Ban Treaty (CTBT), will be subjected to nuclear safeguards inspection from the International Atomic Energy Agency (IAEA), and will forgo the right to enrich/reprocess spent Uranium fuel. The whole nuclear program of the UAE will apparently be under US management, pending IAEA approval.

Since its birth in December 1971, the UAE has experienced massive economic growth on account of its petroleum reserves. This initial economic growth gave rise to two main economic power centers in this federation of seven emirates — Abu Dhabi, the capital of the UAE and largest emirate by area, whose revenues are driven by oil, and Dubai, the most populous emirate, whose revenues are driven by trade and financial services.

Economic growth lead to investments in infrastructure and construction, resulting in the arrival of hoards of blue – and white collar workers, primarily from the Indian subcontinent, to fill the employment vacuum. This sustained population growth, particularly in Dubai, has forced the UAE to consider alternative sources of energy. By some estimates, UAE’s demand for electricity is likely to rise to 40,000 megawatts (MW) by 2020. However, UAE’s energy sector is projected to be capable of meeting only about 50% of this demand.

The 123 Agreement is yet to be ratified by Congress, and will still need to be approved by the President of a new US administration. Barack Obama has not publicly stated his views on the issue. The deal has already met with vociferous disapproval from members of Congress. Rep. Brad Sherman, the chairman of the House Foreign Affairs Terrorism, Nonproliferation, and Trade subcommittee, said:

“Any (nuclear cooperation) agreement between the United States and the UAE should not be submitted to Congress until, at a minimum, the UAE has addressed the critical issue of transshipments and diversion of sensitive technologies to Iran.”

If that’s the Congressman’s line of thought, then this is yet another classic example of the kind of cluelessness that has come to typify the thinking of successive US administrations on matters concerning the Middle East. Indeed, Iran is the one country that can be counted on to get irked by the proposed deal.  Relations between “Shi’a” Iran and “Sunni-Arab” UAE have always been icy.

A major bone of contention between the UAE and Iran is with regard to the Abu Musa and Lesser Tunb islands, unilaterally occupied by Iran, but claimed by the UAE. The Abu Musa archipelago lies within the strategic Straits of Hormuz corridor, an area vital to the petroleum driven economies of the Arabian Peninsula. In addition, as Anthony Cordesman points out, there are two specific areas of concern for Abu Dhabi — (a) the presence of a significant Iranian immigrant (potential “fifth column”) population in the UAE, and (b) the strategic proximity of Dubai and Sharjah to the old Iranian port-town of Bandar Abbas. The vulnerability of the northern emirates’ shipping channels to Iran’s airbase in Bandar Abbas is a source of worry for UAE’s rulers.

For its part, Iran can’t be too pleased with the cosiness exhibited smaller Arabian Peninsular countries like the UAE and Qatar towards the United States. US military bases in the UAE, like those in Jebel Ali and Al Dhafra, and UAE’s ambivalence towards the US invasion of Iraq can’t have helped matters much either.

This nuclear deal is a bad idea — not because of an alleged UAE-Iran nexus, but because the UAE will be susceptible to an Iranian military assault either if Iran-UAE relations deteriorate, or if Iran has its back to the wall in any future US-Iran military confrontation. The UAE can ill afford be in a military conflict with Iran — the repercussions will be felt far beyond the region, given that expatriates make up about 80% of the total population of the UAE.

Allowing the accumulation of nuclear material in a politically and militarily weak country situated in the most unstable region on earth, and in the proximity and cross-hairs of Iran, is foolish. To think that this will impress upon Iran the virtues of towing Washington’s line with regard to nuclear technology is an exercise in naiveté. Far from making the UAE politically and strategically more secure, the deal will prove to be an albatross around Abu Dhabi’s neck.

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