The Syrian economy has lost USD 100 billion in the past two years alone - roughly two years’ worth of GDP - as a bloody civil war ravages the country. CONTINUE READING

james_gordon_losangeles / Foter / CC BY-NC

By Rushdi Siddiqui, Global Head of Islamic Finance at Thomson Reuters

President Barack “Peace” — as no new wars in last four years — Obama may be less beholding to special interests during the second term. He will now want to leave a legacy behind, both domestically and on foreign policy. However, his legacy will now be held hostage to the court of public opinion.

The re-election of Obama, both on popular (50 per cent to 48 per cent) and electoral (303 to 206) votes, is a message sent by the American people to work smarter (not only harder), longer, faster, and with partners, to “fix” what is broken, “mend” what needs fixing, “push” forward what is working and a “probation” to try new initiatives.

The post-election comments for the peaceful president from world leaders, from secular to spiritual, have been positive, glowing, and extending an open hand to assist in the hard work ahead as all of us are in the same “boat” called humanity wanting dignity.

In the second term, Obama needs to focus on Asia, generally, before China’s once-in-decade political make-over starts execution (no pun intended), and possibly, a leading Muslim country, specifically, as an example a country which closely represents US ethnic, religious, and cultural diversification and “tolerance.”

Maybe it’s time for the president and the US to find and get behind an “Egypt of Asia”, as the oil and (perceived) regional influence of certain countries of recent past did not pan out as expected.

Omnipotence?

Will there be peace and stability in the Middle East within the next four years? It may be easier to have an Olympic gold medal winner in badminton from Malaysia than find the elusive peace in a region of piecemeal countries united and, yes, divided by tribalism.

The omnipotence of the US as the voice of reason and calming stability backed by her economic and military might has been downgraded (let’s leave S&P out of the equation) by the misadventures of George “Bring it on” Bush and the systemic risk to global economy by the sub-prime fiasco (also under George Bush), and the corresponding rise of the BRICS: Brazil, Russia, India, China and newcomer South Africa. Clearly, the power has shifted away from the US. Where it has shifted to is another issue, as it’s not debt battered and financially bleeding Europe.

Hotspot

The Arab Spring flushed out the regional diminishing US influence, including the unflinching support of entrenched poster child ally, Hosni Mubarak/Egypt, a benevolent dictator.

However, the Middle East remains important mainly because of black gold, oil, and the havoc a price escalation can play on industries and capital markets in an already weakened global economy.

The Middle East also remains a region of “unknown knowns”, composed of a complicated jigsaw puzzle of Egypt (controlled chaos), Libya (chaos), Lebanon (proxy chaos), Palestinian/Israel (two-state solution), Syria (civil war), Yemen (drones), Iran (nuclear), Al-Qaeda (stateless terrorism) and so on.

Although not mentioned on any geographical or topical defining map, Pakistan and Afghanistan are an extension of the region for the United States’ earlier intervention and on-going challenges. To put it differently, “they broke it, and have to buy it,” and with no return policy.

Thus, it will take more than four years of precision focus, shuttling negations, wisdom patience, printing press of money and, possibly, divine intervention to have an acceptable “normality” i.e. absence of conflict, not necessarily peace.

Expanding attention

The primary focus will continue on the Middle East, but, much like five-year business plans looking for new business opportunities in different geographies, the US needs to remove the “horse blinders” and see the Muslim world not as one, but as many countries with rich histories, cultures and influences. Thus, oil/gas reserves, military bases and large domestic population will continue to be important, but possibly not outcome determinative.

To make Obama’s second term more interesting on foreign policy, vis-à-vis the 57-country Muslim world, selected Muslim countries need to “pitch” themselves as representative of democratic and religious principles (is this possible?). There are three Muslim countries in the G-20, Turkey, Indonesia and Saudi Arabia, and these are only a starting point.

Other countries worthy of consideration, based upon metrics-like population, GDP growth and 2020/2030 vision, capital markets, democratic principles, OIC influence, etc include Egypt, Pakistan, Nigeria and Malaysia. As mentioned above, the court of public opinion will also matter for Obama, hence, from the above-mentioned destinations, the American public has a “challenging” opinion about these countries, except one.

The Malaysian elections are around the corner next year, and the incumbent and opposition can expand their platform to pitch about Malaysia to both the White House and Congress.

Winning the Nobel Peace Prize early in his first term is a tough benchmark act to follow for the second term for any democratically elected leader. His second term may be an extension of hope that transforms to trust that brings change, hence, actually earning the Prize that he accepted in the first term.

* The views expressed here are the personal opinion of the columnist.

<dt >

freestylee / Foter

With the Syrian political situation extremely fluid with more than 20,000 people killed in the civil war, predictably the economy also lays in ruins. CONTINUE READING

The attack on key figures of the Syrian regime has turned the mood in Damascus. Will the conflict get bloodier before it ends? CONTINUE READING

With a civil war raging in Syria and other flare-ups and tensions elsewhere in the region, Jordan’s economic prospects look challenging. READ MORE HERE

By Rushdi Siddiqui, Global Head of Islamic Finance at Thomson Reuters

We already know about displaced commercial risk, credit, liquidity, operational, Shariah non-compliant, and markets risks in Islamic finance. What about ‘key-person’ risk in Islamic finance?

What does a former Minister of Economy of France (Christine Lagarde), former Prime Minister of United Kingdom (Gordon Brown) and former under Secretary for International Affairs, US Treasury (John Taylor) have in common? They were all high profile public sector personalities pushing Islamic finance in their respective jurisdictions, and, upon leaving office, the movement’s momentum has been meandering or has stop ‘cold’ in the tracks.
Read More

The Guardian claims to have 3,000 emails from Syrian President Bashar Al-Assad and his inner circle, which show the regime in a state of denial even as it indulged in online shopping sprees. But it’s the least of the Syrian regime’s troubles. READ MORE HERE

By Rushdi Siddiqui, Global Head of Islamic Finance, Thomson Reuters

There are only two ways to conquer and enslave a nation, one is by sword, the other is by debt,” said John Adams, the second president of the United States.

If we expand the quote, it could include debt without collateral asset, trading of such debt, and enhancing it with leverage. There are consequences as there are market cycles.

Can Occupy Wall Street (OWS), public good and Islamic finance converge? Yes, through the lofty principals of economic justice.

The essence of Islamic finance is about “risk sharing over risk transfer”, as it implies a financial and economic system of checks and balances. It implies an “ethical” financial intermediation linked to the real economy for “moral” value-added output. It implies modalities of contracts whose foundations are based on transparency, where asymmetric information is minimised to prevent abuses against the weaker counter-party.

Furthermore, Islamic finance is about financial inclusion paving the path for distributive wealth and income, and ensuing economic opportunities. Finally, it’s all about business and not religion, and it about profits but against profiteering.

OWS

According to commonly used information website Wikipedia, Occupy Wall Street is a protest movement which began last September 17… against social and economic inequality, high unemployment, greed, as well as corruption, and the undue influence of corporations — particularly from the financial services sector — on government. The protesters’ slogan ‘We are the 99 per cent’ refers to the growing income and wealth inequality in the US between the wealthiest 1 per cent and the rest of the population.

It would seem many of the concerns raised by the OWS movement were similar to its predecessor spark, the Arab Spring phenomenon, except replacing “corporations” with “corrupt and repressive governments”. As of now, the Arab Spring has had more impressive results than OWS after helping bring new governments in Tunisia, Egypt, and Libya, new governments in the “wait” in Yemen and Syria, and “new governance” in other regional countries.

The question becomes, how would the OWS movement react to Islamic finance? During a London demonstration along the OWS lines in 2011, a protester held up a sign, “Let’s bank the Muslim way”. Obviously, the reference is to Islamic banking, but the jury is still out if the industry will receive OWS’ endorsement as many of the financial institutions, such as HSBC and Citi, protested against have a presence in Islamic finance.

Public good

In March last year, the Securities Commission Malaysia (SC) and the Oxford Centre for Islamic Studies (OCIS) held a two-day closed roundtable on Islamic Finance and the Public Good.

Dr Raja Nazrin Shah, Crown Prince of Perak and Financial Ambassador to the Malaysia International Islamic Financial Centre (MIFC), who officiated the roundtable, said, “public good is one concept that is common to both conventional and Islamic finance.

The values advocated by Sharia are not only confined to the detailed technical aspects of transactions, but also in the extent to which the objectives of Sharia are achieved. If every aspect of Islamic finance were to be subject to a public good test, arguably no negative repercussion could ever arise.

Likewise, if all conventional financial products were subjected to a public good test, the catastrophic effects of the recent crisis could have been avoided; and finance would serve its rightful purpose — as an engine that drives and supports the real economy.”

At the same roundtable, the Chairman of SC, Tan Sri Zarinah Anwar, said, “… the virtues of Islamic fin-ance need to be unlocked further. Public good, ethics, shared values, governance, and real and tangible contributions to the economy hold the key to innovation and growth. Profits involving a higher social purpose and objective represent values that will create not just economic returns, but also comply with universal ethical standards. Putting all these in place will strengthen the universality and acceptability of Islamic finance, enabling it to offer a distinctive value proposition.”

Thus, Islamic finance is not about privatisation of profits and socialisation of losses by the financial sector. It’s about accountability rate of returns, via due diligence, as pre-determined rates of returns do not exist in Islamic finance.

Conclusion

When Islamic financial institutions, such as banks and takaful operators, are allowed to reach the point of presenting a systemic risk to the industry, that is, being too large to fail, then we have become conventionally inefficient. If bailouts and bankruptcies, combined with capital protected bonuses, become a common place in Islamic finance, then we will have our own Occupy Salaam Street (OSS) movement in the Islamic finance hubs.

However, today the aspirations and inspiration of OWS — the principals of economic justice — are aligned to the objectives of Islamic finance. It is about building a dynamic financial eco-system based on humanitarian beliefs, avoiding unjust enrichment and profiteering, and allowing for financial inclusion of the 99 per cent to achieve a basic necessity: human dignity.

The writer is Global Head, Islamic Finance and OIC Countries at Thomson Reuters. Opinions expressed here are the writer’s own

Human Rights Watch reports, by their very nature, never present a rosy outlook as they are given to highlighting the atrocities of governments and the lack of dignity and freedom they present to millions of their hapless citizens across the world.

And so its 2012 World Report is no exception. Paying special emphasis to Arab Spring, the report grimly notes that while the revolutions that broke out across the region euphoric, there is nothing inevitable about transitions to democracy. READ MORE HERE

In the context of the region, the UAE and especially Abu Dhabi, was the proverbial safe haven along with Qatar.

While it was not a great year by any stretch of the imagination, the UAE looked good simply because others such as Egypt, Bahrain, Libya and Syria were imploding. READ MORE HERE

The year 2011 has been extraordinary not just for the tectonic shift in the region’s political structures, but also the extraordinary pressures and opportunities faced by many regional economies.

With four dictators ousted - including one dead - many others were shaken to the core - the after shocks have reverberated throughout the region in 2011 and will no doubt be felt in 2012.

We identify 50 amazing statistics that highlight the remarkable year: READ MORE HERE

By Alon Ben-Meir

Due to a host of common denominators in the Arab world including the lack of traditional liberalism, the tribes’ power, the elites’ control of business, the hold on power by ethnic minorities, the military that cling to power, and the religious divide and Islamic extremism, the Arab Spring could sadly turn into a long and cruel winter. These factors are making the transformation into a more reformist governance, slow, filled with hurdles and punctuated with intense bloodshed. At the same time, each Arab country differs characteristically from one another on other dimensions including: history and culture, demographic composition, the role of the military, resources, and geostrategic situations. This combination of commonality and uniqueness has had, and will continue to have, significant impacts on how the uprising in each Arab country evolves and what kind of political order might eventually emerge.

Read More

openDemocracy /Foter

By Alon Ben-Meir

In the wake of the Arab Spring and Prime Minister Erdogan’s championing of political reforms throughout the Arab world, it has now become more urgent than ever before to find an equitable solution to the Turkish-Kurdish conflict. Short of finding an immediate resolution to this debilitating struggle will not only severely compromise Turkey’s suggested model of successfully combining Islam and democracy, but it will additionally bankrupt its moral standing as it willfully continues to discriminate against 15 million Kurds who represent one-fifth of its population.
Read More

Alarm bells are ringing in Damascus as western and Arab governments are looking to put pressure on the Assad regime.

New sanctions and a new report by the United Nations Human Rights Council (UNHCR) is a damning indictment of how Syrian President Bashar Al Assad the domestic crisis that has engulfed his country - by sheer brute violence. READ MORE HERE

By Alon Ben-Meir

The Arab Spring is changing the political and strategic map of the Middle East as we know it in ways that will persist for decades to come. Notwithstanding the domestic developments in each country, the Arab Spring is uprooting long-standing authoritarian regimes, antagonists and protagonists to the West alike, and is creating a vacuum that regional powers will quickly attempt to fill. Each of the regional powers in the Middle East - Egypt, Saudi Arabia, Turkey, Iran, and Israel - are poised to exploit the uprising to their advantage. New regional alliances could emerge, as could a new “cold war” and the potential of violence between the competing powers. What is certain now, however, is that the Syrian upheaval thrusts Turkey and Iran into a collision course because they have opposing geostrategic interests that neither of them can afford to ignore.

Read More

By George Friedman

In a week when the European crisis continued building, the White House chose publicly to focus on announcements about the end of wars. The death of Moammar Gadhafi was said to mark the end of the war in Libya, and excitement about a new democratic Libya abounded. Regarding Iraq, the White House transformed the refusal of the Iraqi government to permit U.S. troops to remain into a decision by Washington instead of an Iraqi rebuff.
Read More

With Libya’s civil war over for all practical purposes after the death of Colonel Muammr Gaddafi - at least for now.. all eyes have turned back to Syria.

The country is in the grip of severe unrest with President Bashar Al Assad using his entire force to quash dissent. But despite his most brutal efforts, the protests continue to be a daily occurence.

Read More

The Arab Spring not only cost at least three dictators their jobs but also $56-billlion in lost GDP for the worst affected countries, according to a statistical study by a consulting firm. READ MORE HERE

While the U.S. oil sanctions on Syria are welcome, the world can inflict a much bigger blow to Bashar Al-Assad’s regime if its biggest customer — the European Union — shunned its crude exports too.

It has become a grim but almost familiar sight on TV: unarmed Syrian protesting against the government on the streets, only to flee at the sound of gunfire from Syrian forces - a few minutes later lay bodies on the streets. READ MORE HERE

It was an unlikely public display of affection. Close to 2,000 Syrian expatriates gathered on the streets of Jeddah, carrying Saudi flags and pictures of the Saudi King to thank him for criticising Syrian President Bashar Al Assad and demanding an end to his wretched violence against his own people.

In an unusually frank criticism, the King demanded that Al-Assad end the violence against his own people, breaking the silence in the Arab World over one of the biggest atrocities being committed within the region.

But, “as a number of Saudi youths started joining the gathering [of Syrian expatriates], police intervened and dispersed the people peacefully,” reported Arab News. READ MORE HERE

Middle East’s oil-importing countries such as Egypt, Yemen, Tunisia and Syria could fall into recession this year, according to the International Institute of Finance (IIF), a group of 430 major international banks and financial institutions. Read More Here

[youtube=http://www.youtube.com/watch?v=SSpeHVFPd8g&feature=player_embedded]