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January 31, 2005
More Upbeat
Bad day today, but it ends on a positive note. Just got a call from a group putting together a Fund and a bid on some big money. They want me to be part of the RFP. Here's to success.
Posted by The Lounsbury at 06:47 PM
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Jan-July 2005
And on Media: al Jazeerah
Qatar Advances Plans To Privatize Al-Jazeera
U.S. Has Criticized Arab TV Network
By Shankar Vedantam
Washington Post Staff Writer
Monday, January 31, 2005; Page A16
http://www.washingtonpost.com/wp-dyn/articles/A49759-2005Jan30.html
Just in time for my comments.
Let me focus on the following:
Still, in late 2003, Qatar announced it would begin exploring ways to privatize the network. Pressure from the U.S. government, the journalist said, was the final straw -- but ironic, given the Bush administration's stated desire to support democracy and free media in the Middle East.
Indeed ironic. However, it would appear free media is meant as "free pro American media."
"The same administration that is spending millions of dollars to have independent or free media in the region is participating in the potential silencing of media in the process," said the journalist, who requested anonymity because all public comments from the network are supposed to come from Ballout.
....
Although U.S. officials have appeared occasionally on the network to reach its vast audience, they have long complained that al-Jazeera's coverage is politically inflammatory and, at times, factually flawed.
So US absence from the number one or number two news source in the region is .... petulance?
I would say yes.
Powell publicly complained about al-Jazeera to the government of Qatar in April. As The Washington Post reported, after Powell had "very intense" discussions about the network with the Qatari foreign minister, Hamad Bin Jasim Thani, the minister said: "I heard with great attention what the U.S. administration had to say about it. I am not directly involved, but I will certainly deliver it to the right people in Qatar."
Ballout said that the criticism of the network by senior U.S. officials was "unprecedented" and that, far from being biased, al-Jazeera had explored taboo topics and provided an independent platform for diverse views that had been missing from the Arab media.
"The vast majority of the criticism of al-Jazeera has been politically motivated," he said.
I have to agree.
Posted by The Lounsbury at 11:30 AM
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Jan-July 2005
Life in MENA: Various Follow ons (edit: cleaned out XML crap)
Media II: American Media Availability
An interesting item to note. MBC, the big Middle East media group that is behind al-Arabiyah and several other ArabSat channels is launching a channel (“4” - per the adverts) focused on rebroadcasting American news magazines/newscasts.
I hope that this is a sign of cleverness on the part of the United States, and that they’re going to pull the plug on that ridiculous waste of resources that is al-Hurra and focus on exploiting channels that already have legitimacy. I have some thoughts on how “4” is being done, and I hope they’re correct.
Sexual mores in MENA
Well, this is a question that I am not sure I can answer. Certainly I am not going to give personal observations of the type I believe are being requested. I can answer on what I have observed, but with the caveat that the degree of generalizability is perhaps suspect.
On the other hand, my own first hand observations match some works that looked at sociological trends, so they are perhaps not entirely off base.
I suppose my short answer is, my sensation is that urban morals are very 1950s American Ozzy and Harriet era; quite a lot of hanky panky goes on, but on the sly, and virginity has to be maintained. I can’t speak to the countryside.
The key point to retain is age of marriage – largely due to economic constraints attached to relatively unchanged standards regarding what a young couple has to have in terms of marriage ceremony (expensive) and housing (apartment, etc.) – is rapidly rising in the Arab world, especially in urban areas. In North Africa this is in the 30-35 range for me and the 25-30 range for women.
That is easily a full decade more than the traditional ages of marriage. People being people, a decade to two decades after puberty is a long time to wait… so while the “urfi” marriage may or may not be used everywhere, I would say my sense is there are socially accepted – so long as appearances are maintained – means of getting around the issue.
Alcohol consumption in the MENA - how does it vary in the region given the Islamic prohibition
Very hard to generalize on that.
Let me say that my impression is that ex-KSA, quite a lot of tippling goes on, even down to the popular/working class level. Certainly the liquor shops in the region carry brands that I have a very hard time imagining either expats or well-heeled ‘liberal’ locals drinking, and there are not enough Xian Arabs in the pop to support such widespread distribution of piss poor mass market headache making alcohol.
Obviously clear data is not available. The best I can say on an impressionistic basis is that among Arab Muslim men an important percentage (but probably not exceeding 30 percent) engage in the odd drink, and that merely having the odd drink is not considered that big a deal except among the “Holy Roller” set. On the other hand, ordinarily one should not be known as a regular drinker, that is more clearly considered a “bad thing” outside of upper class circles. Or another way to put it, something like pot use in North America – an occasional puff in one’s youth or perhaps at a party slides without huge reaction, but one should not be seen as a regular user. Highly inexact analogy but hopefully illustrates my sense of what I see. Now, nota bene, I obviously interact much more with middle class and upper middle class – and in fact the ultra rich here – than with the lower middle class to poor. At upper middle class and above levels, morals tend to be very Euro oriented, although they will not necessarily cop to that in wider public situs.
Finally, in the context of a 1950s America style morality, women drinking is seen as much, much more sinful than men. Typical Mediterranean basin macho double standards, not unique to the Arabo-Islamic world, although the degree is a bit worse.
I would note that there is plenty of textual evidence that drinking was hardly unknown in the classical period, although I would suspect that the pattern of elite and marginal consumption is one of long historical depth.
Popular music. What do people listen to in the Arabic world?
Depends. This is quite regional. Young urban listeners in the Mashreq (Egypt and east) seem to prefer Lebanese and Egyptian Arab pop music, as well as the latest top 50 type Western music. It’s catchy at times but not that interesting, at least to my tastes. Diana Haddad, Amr Diab, Sultan are a few names that come to mind, although they are not the latest. Nancy Arjam is newer. There’s quite a lot of variability in what I call “Leb-Egypto Pop” for short. Anything from poppy pseudo rap in Arabic to very 1980s poppy groups, to somewhat more traditional sounding pop. Of course regionally or by a country basis there are country level stars – e.g. the Gulf, Gulfie pop is popular (mixed in with Leb-Egypto Pop and Western pop), and a few of their stars break out into the wider Arab music scene. Same with Sudan, although it seems to me the Sudanese pop is off in its own world and doesn’t get much pan Arab play. Too African I guess. I can’t ever recall hearing Yemani or Omani pop, but I presume there are a few groups out there.
I’d say that outside of the big urban centers, tastes move to the traditional, so you’ll hear more cassettes of (local/national/regional) neo-traditional groups, plus generic Leb-Egypto pop, far less often Western music. I suppose this is not unlike any place in the world, the break between urban and non-urban tastes.
As for the percentages, hard to say, probably most music stations play something like 60 Arab 40 Western or misc., such as Hindi pop which sometimes marks a few big hits (and is well known to the population from Bollywood films). Varies of course.
What is odd to note is the Mashreq hardly ever listens to North African music, at all, although to my ears, North African music kicks Mashreqi tunes up and down the street. As in news, the
As for the
The urban radio component is more or less like in the Mashreq, except sub in Rai for Leb-Egypto pop, and maybe up the dosage of local-Euro fusion coming from the Mahgrebine diaspora in
I should note that in each region, Mashreq and
There you go, that’s the overview. I am afraid I am most unlearned in music, so I can’t do much better than this.
A MENA ETF (bis): Or Portfolio Investing in the Region
Let me reinterpret the MENA Exchange Traded Funds question to a more general observation.
Among the key issues for the portfolio investor in the region is the thin liquidity available in public companies. That means that even if you engage, say me, to construct a portfolio, it’s hard to do so because frankly the amount of paper actually circulating (never mind the number of public companies is also thin) is pretty minimal. Even if you can take a position large enough to be interesting, getting out is a serious problem. I should reflect more on this later.
Posted by The Lounsbury at 10:05 AM
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Jan-July 2005
ArabSats Iraqi Election Coverage: Al-Jazeerah and al-Arabiyah [edit to update]
Al-Jazeerah and al-Arabiyah election coverage.
Sadly I have not been able to closely follow this, too busy, but some random comments on what I did catch yesterday (following text written at the time, too lazy to edit for time refs):
Interesting story on al-Jazeerah on Iraqi Jews in Israel wishing to vote in the Iraqi elections are going to Jordan to vote. They interviewed a good number, quite interesting and varied point of views. With one or two exceptions all interviews were in very good Arabic. A lot of emphasis on Iraqi nationalism among Iraqi Jews and a desire to return when it’s possible. Among the interesting points from the interviews – and we may have selection bias here, was the expressed view that the Americans have to leave Iraq. Very interesting – no doubt some play to the expected audience and perhaps a view to future relations, but on the other hand the affirmation of nationalist feeling by the largely older men struck me as being… well it sounded very Iraqi.
The discussion on afterwards was quite mixed. Several commentators saw it as an “Israeli interference” while several others saw it as an affirmation of the “Iraqiness” of “their former Jews” and a good thing. Interesting coverage, although trivial issue insofar as the numbers involved were so small. However, I do believe it is a point of reflection on al-Jazeerah. Certainly one can see how their point of view –their bias– is not as some idiot Western commentators have it “jihadi” but rather old school Arab nationalist.
Another item to note, it looks like advertising is picking up on the ArabSats-it may be that there has been a perverse feedback from negative US commentary on al-Jazeerah….
Otherwise, a lot of coverage of the injuries and killed kids from insurgent attacks on the voting centers: rather better for the political situation than the coverage of Americans killing people. What is needed clearly is not more Fallujahs but moving US reaction off the front pages / leads, and refocus on the insurgents. That is not going to happen, by the way, by whinging on about the bias of the ArabSats or other special pleading (which may be translated as “don’t do your job, be our agitprop organ”), but by making reaction better, smarter and more Iraqi. And not using sledgehammers (C-130 gunships) when screwdrivers (Spec forces) are needed.
Of course this has been true for a long time. The hard part is the Iraqi part.
By the way, in terms of communications, I would be remiss not to note that I have been pretty impressed with the quality of the Iraqi election promotion advert campaign. It’s been pretty good, although maybe just a bit too slick. If anything might be mistaken, I think it may be the slickness. Nice appeals to Iraqi nationalism however, and no hesitancy in using Islamic symbols (women in hijabs, etc).
I also would note that the interviews that both al-Jazeerah and al-Arabiyah have been running have been very hopeful and positive in re belief in the elections. I have been impressed. It appears that Iraqis themselves have been impressed with the way the elections came off. That’s an initial impression and it will be spun – I also warn that the feel good feeling that is pretty evident in the areas where things could come off will not last, and could turn very negative if “their” (whomever their is) party/group or whatever doesn’t do as well as expected (in their view). That is, elections are not something automatically conveying legitimacy here in the region: think to the bitterness and questions on the part of the Democrats post 2000 and even this round (noting that I grant the Democrats that they had good reason in 2000 to be upset and question the results). For the disappointed, I doubt there will be any hesitation to call into question the results, and the general population will not approach the idea of elections with the reservoir of trust that we find in the West. Rather their reservoir, their institincts, their gut as it were, is distrust, given 40 odd years of highly suspect and faked elections.
Still, I have to say I am taking away a bit of hope. There is a potential of potential to turn things around here – if first of all the Americans resist the temptation (I am not holding my breath) to clumsily and obviously screw around with the results, and similarly clumsily impose policies on the government. I refer back to the Allaouie government’s initial move to pardon almost all the resistance including those who had killed Americans if they would lay down their arms, something rather clumsily and stupidly reversed under clear American pressure.
Another item to retain in re the interviews, almost 100 percent contained some mention of getting the Americans out. This round, if it works, is not going to produce support for American troops or American oversight of the government, quite the contrary, it is pretty clear that the Iraqi street is seeing this as an opportunity to get the occupiers out.
A point of potential early conflict, the popular desire to see the trigger happy Americans off their streets and the inability of the Iraqi government to field replacements. Hard to see how this is going to be resolved. Certainly any government that does not make some kind of request / demand for the Americans to leave is going to be seen automatically as nothing more than façade number two.
Trivial note, I note that the old style flag seems to have two versions now – one with a Kufic style calligraphy and another with a kind of generic calligraphy for the Allah Akbar.
Do we all recall the idiotic fiasco with the CPA backed “new flag?” Trivial on one level but profoundly reflective of how CPA and its underlings focused on idiotic trivial political imagery, and even there got it all wrong.
Another trivial note: the al-Arabiyah announcer this afternoon had one of the strangest outfits I have seen. Essentially in the place of a blouse, she was wearing a see through lace body stocking type deal, with a sexy turtleneck style neck, underneath a right tight herringbone jacket.
Rather like office wear in my office. And people think women only dress in hijabs….. I’m not sure however that the above is a good thing (although the chick looked right good….).
[Edited]
I forgot to mention that across the talk during the day, the Shia reps had a fine little dance around the issue of the Kurds and autonomy. It sounded promising in the sense that they sounded willing to give the Kurds a bit of rope, but not too much.
Posted by The Lounsbury at 09:57 AM
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Jan-July 2005
On Cover
My Embassy man really should have better cover. Now, I know the pose is as Econ Officer and supposedly has a Wall Street background, but his acquiantance with finance is so transparently thin I often ask myself, "Am I the only one who notices?"
Of course, recently when we were out driving and I did a bit of a .... I was driving like an expat asshole in a black german sedan to be frank, he started waxing nostalgic about his driver training course, where they learned how to do all kinds of neat things. Anti Terror of course. Oddly, it sounded exactly like the driver course my amigos on the other side of the river described.
Luckily he shows great interest in my introducing him to the hotter of the banker chics I know. Not that there is a future in that, but I derive some baraka I think, although the last one did not work out. Why he came clean as to being still hung up on his last chica I have no idea. When I observered I was remarkably free of such scruples and second thoughts he said "Yeah, I know." .... I was a bit put off by this. Either I am terribly transparent or ... well what? Hmmm, it may be transparency. Not that his cover is any better.
Still, I like the guy, but he better not burn too many chicas. Hate to get a bad rep.
Posted by The Lounsbury at 12:31 AM
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Jan-July 2005
More issue on banking
Personal it is, more problems with wire transfers, this time on a US-overseas wire.
The issue was destination, got flagged. US terror crap.
I am really beginning to question if having US accounts is in any way worth the enormous headaches The US of Piss in My Pants is imposing on me. Whinging motherfuckers.
Posted by The Lounsbury at 12:27 AM
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Jan-July 2005
January 29, 2005
The Media Question
If I may, my response to the media question in the Open Q&A:
Media:
“Do Arabs currently have a free choice between FOX, CNN, Al-Jazeera and Al-Jazeera clones? If not, do you think the vast majority of them would stick to AlJ and ALJ-clones?”
I am not sure what is meant here. Free choice in what sense? Access? Ability to understand?
First, it strikes me that except in the very poorest households in the countryside, most people have satellite TV – even in shanty towns. Egypt is a bit of an exception, but to what extent depends on where you are. Situation may have changed since I last lived there.
Second, as a general matter most people watch the Arabsats, but Western channels are in general available – on ArabSat, which gives the best regional reception, there are several, EuroSat and Hotbird both carry a full panalopy of largely un-scrambled.channels, and pirated decoding is widespread.
In short, for most of the region, access to Western channels, including news channels is perfectly possible, although excepting CNN International I don’t know American ones are carried on the Sats.
Now the next the question is, can people understand them. Certainly in North Africa French is widespread enough on at least on oral basis that channels such as Euronews are fairly widely watched. The same can’t be said for the Middle East proper, but certainly the offering of English language news is there for those who have at least a modicum of oral English.
Now, if the question is are there Arabic language clones of Western channels, or American points of view, that’s entirely different. Perhaps the only free market Arabic language channel with a vaguely Western point of view is CNBC Al Arabiyah, but this is a business focused channel, a bit different.
I am not sure what is meant by “al-Jazeera clones” but what I can say is that al-Jazeera’s coverage is very much market driven and reflects local tastes. Al Arabiyah, it’s most popular competitor (it may have a better viewership numbers than al-Jazeera) certainly gets accused by USG as being anti American often enough. I frankly think this a gross misunderstanding but there it is.
The answer in short is that the ArabSat channels reflect local tastes.
This also tells you the way most Americans talk about and analyze the media issue in the Arab world (as if it was Eastern Europe 1980) is utterly wrong-headed. Thus the idiotic "Radio Sawa" and "al Hurra" - they both utterly misconstrue the problem.
“If they had democracy ( that is, the demos elects people who then vote laws ), do you think that would be better or worse for women's status?”
It depends on what you mean by women’s status.
In the short term, I would expect that formal legal status for women in areas sensitive to local mores to respond more clearly to local mores rather than elite Western desires.
“Do you think religion and politics would be more of less interwined then they are?”
No, why would one think so? Has religion disappeared from politics in the USA? After a period of time the relationship might get healthier, however.
" Would states be more or less hostile ( actively so ) than they are right now?"
Hostile to whom?
“I realise that results may vary from one country to another. If so, please indicate the general trend and the exceptions.”
Well, that goes a bit beyond the time I have available at the moment, hopefully above gave a decent view.
Posted by The Lounsbury at 03:48 PM
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Jan-July 2005
January 28, 2005
Hedge Funds, the entertaining side
See http://news.ft.com/cms/s/a2e879b6-708f-11d9-b572-00000e2511c8.html
Includes such gems as: Hedge funds have nothing to do with hedges.
You'd be forgiven for thinking otherwise as newspaper articles on the subject are invariably illustrated with pictures of garden hedges. and Hedge fund managers spend about 80 per cent of their day staring at computer screens.
The rest of their time is spent meeting companies that are looking for investors, barking instructions to dealers and having phone conversations that go like this: "Yup. Yup. Yup. Yup. The second half looks good. Yup. Yup. Yup. Yup." and "• Hedge fund managers have many more words and phrases for losing money than for making money.
My notebook reveals that Rob and Gervais had tens of different ways to describe losses ("we got burnt on that", "we got carted", "we got pissed all over") but only really one way of describing gains ("we made a fuckload of money on that"). (ain't that true...)
I love the FT for allowing whimsy to enter its reporting.
Posted by The Lounsbury at 06:12 PM
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Jan-July 2005
Reprise of "New Happy Talk"
Thinking back to this: http://www.livejournal.com/users/collounsbury/269854.html
I refer you to this Sullivan comment:
http://andrewsullivan.com/index.php?dish_inc=archives/2005_01_23_dish_archive.html#110688929366577681
And my comment
IRAQ'S LIBERALS: "In Iraq, the very centerpiece of the U.S. campaign to export democracy, 'democratic movements and institutions' are dying, the result of illiberalism, U.S. neglect, and, above all, sheer physical insecurity. As it grinds into its third year, the war for a liberal Iraq is destroying the dream of a liberal Iraq." That's Lawrence Kaplan's grim verdict from Baghdad. No doubt he will now be derided as a squishy left-liberal defeatist - but, in fact, Lawrence was one of the most stalwart supporters of the war against Saddam, co-authored a passionate pro-war book with Bill Kristol, and is a card-carrying neoconservative. (He's also a friend). But he's not blind; and he's not dishonest.
This last part is what I was getting at.
However this comment is just plain looney:
The failure is in part a failure to get the U.S. bureaucracy to support liberal institutions and groups; but it is also simply a failure of order and security.
I have to say that I can not figure out where the bloody fuck Sullivan is getting that from. Failure to support liberal institutions?
That makes no sense whatsoever. Rather putting namby pamby frilly building democracy idiocy before delivering saftey and basic services.
Democracy was always going to be hard in Iraq. But democracy amod chaos and violence is close to impossible. And we never sent enough troops or conducted a smart enough post-victory occupation plan to maintain order and defeat a fledgling insurgency while we still could. So we are now left to ask ordinary Iraqis to risk their lives in order to leave their homes and vote. Here's the most heart-breaking passage - an interview with the liberal deputy defense minister, Mashal Sarraf, who cannot even leave his own house, because of the chaos:
"We have to admit the terrorists have won," he says. "People cannot engage in civil society; the war has stopped progress; liberalism is over for now." Asked what, if anything, can be done to revive the liberal project, Sarraf replies, "We need an emergency government that does nothing but security. When there is stability, then liberalism will begin to emerge, but only when there is stability."
I know Paul Wolfowitz has read Hobbes. Did he forget it? CPA adviser Larry Diamond hasn't: "You can't have a democratic state unless you have a state, and the fundamental, irreducible condition of a state is that it has a monopoly on the means of violence." As John Burns has written - again no sympathizer for Saddam or cynic - that simply isn't the case in Iraq. Our predicament is that you cannot have democracy without order and you cannot have a new order without democracy. Do I want the elections to succeed? Of course I do. Only those blinded by partisanship or cynicism wouldn't. Maybe a democratic miracle can occur. But at this point it would be exactly that: a miracle. So pray, will you?
Bingo kiddies.
I personally don't believe in miracles.
Posted by The Lounsbury at 05:53 PM
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Jan-July 2005
On Living in MENA - Open Q & A
At the suggestion of someone in comments (I forget who, but no matter), and because I am rather too engaged to finish off my second commentary on doing business in MENA, here is an open Q&A session on "Living in MENA."
Ask any questions you want. I will not promise to answer all, only those that either annoy or entertain me, but what can I say.
Posted by The Lounsbury at 02:32 PM
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Jan-July 2005
Last Straws: edit update
Okay, I think I have truly had it with this bunch of baboons - pity because last night we had a home run, slammed dunk a deal. First time, and despite fucking home office almost fucking us on it. They'll find a way to fuck it up.
However, more to the point, I am boiling. Some motherfucker in the home office is trying to set me up with a forged document. Stupid fuck doesn't know that I keep meticulous records and have documentary proof the document version being presented is not my final, but a crude post facto edit.
This dumb bloody fucking game is worthy of some little goddamned fucking firm here, not a US operation. What the fuck are they fucking thinking?
After slamming this down, I really need to exit. This is amateur hour. Motherfucker is going to learn not to fuck with me.
[edit]
Escalated up to the top and nailed to the wall.
I am sick of these idiots.
Posted by The Lounsbury at 01:29 PM
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Jan-July 2005
January 26, 2005
On Psy Ops
Cole has an interesting note:
http://www.juancole.com/2005/01/israeli-arab-news-cycle-i-found-this.html
"So the Israeli Army has a psy-ops unit that used to be very active but has been less so recently, and is now being revived. This psy-ops unit plants articles in the Arab press about groups like Lebanon's Hizbullah, painting them as vicious terrorists. Then it comes to Israeli newspaper like Haaretz with translations, and urges that the pieces be written up for Israeli and Western audiences. .......
So is MEMRI, which translates articles from the Arabic press into English for thousands of US subscribers, in any way involved in all this? Its director formerly served in . . . Israeli military intelligence. How much of what we "know" from "Arab sources" about "Hizbullah terrorism" was simply made up by this fantasy factory in Tel Aviv?"
In the context of an earlier comment by me, I think you know my opinion of what is happening. As for MEMRI, I have long held that it is clearly an Israeli agitprop op, but this raises wierd circularity issues.
However, at the same time, one can be more or less sure that the materials were not utter khayali crap, but rather probably had relationship with reality, for versimiltude.
Posted by The Lounsbury at 07:39 PM
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Jan-July 2005
On Sex and The Middle East
I draw your attention to this amusing article.
Doesn't surprise me in the least. Again, the space for play is not as narrow as one might think, it's just when things go wrong, the downside is rather more severe.
Paternity Suit Against TV Star Scandalizes Egyptians
By NEIL MacFARQUHAR
Published: January 26, 2005
http://www.nytimes.com/2005/01/26/international/middleeast/26paternity.html?8hpib=&oref=login&pagewanted=all&position=
Posted by The Lounsbury at 06:33 PM
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Jan-July 2005
Morons. Really morons
The idiotic petty cash accounting saga goes on. For all that our fucking petty cash is insignificant, motherfucking ForEx movements are far larger than any petty cash spending, but these idiot motherfucking accountants with SO or I don't know what fucking excuse are requesting we do "surprise petty cash counts" and submit a signed "audit".....
They have to be smoking crack. Might better spend their time hedging us against the dollar's plummet than worrying about USD 40 in petty cash.
Posted by The Lounsbury at 04:46 PM
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Jan-July 2005
Dollar position, FT: Is Sullivan on crack?
I have to say I read the following on the Sullivan site and I was.... bemused I think is the best word:
http://andrewsullivan.com/index.php?dish_inc=archives/2005_01_23_dish_archive.html#110660871036790694
"A DOLLAR CRASH? Dan Drezner parses a recent Financial Times headline. Check his comments section too. I have to say the FT is now such an Anti-American paper, I'm beginning to wonder if its financial reporting isn't part of the bias."
What the fuck?
First, the FT is an "anti American paper"? It's certainly not a Bush Admin cheerleader (ex Amity Shlaes' Wall Street Journal impressions) but that makes it "anti American"? Is Sullivan on crack?
Second, the idea that the article in question is "biased" is silly:
Central banks shift reserves away from US
By Chris Giles
Published: January 24 2005 00:03 | Last updated: January 24 2005 00:03
http://www.ft.com/cms/s/9ef63678-6d7d-11d9-9b69-00000e2511c8.html
The title could be clearer, but bloody hell, it's a title in a newspaper.
The report is unambig.: a survey of CBs willing to respond anon found a move to reducing dollar asset exposure as intended/planned/desired.
Now sure, if one is not a sophisticated reader one can misread the arty or draw too drastic conclusions, but that's not FT's fault. Where anti American comes into this utterly escapes me - I suppose an example of Right economic illiteracy and substituting politics for economic analysis in operation.
Posted by The Lounsbury at 01:39 PM
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Jan-July 2005
January 25, 2005
What would one do?
So, got a message from one of my agency type peeps. A mutual acquaintance of ours is on TV nowadays in the US of A as an Islamic terrorism expert. The funny or odd part is we both know he's somebody's asset. Well, I presume my man knows, whereas I just "know." It makes his spin on his islamic terror .... unamusing at some level. Irritating, but what can one do?
Posted by The Lounsbury at 09:15 AM
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Jan-July 2005
January 20, 2005
FT: Peel, his commentary, Iraq
Quentin Peel: Bush has full agenda but no ideas
By Quentin Peel
Published: January 19 2005 21:42 | Last updated: January 19 2005 21:42
http://news.ft.com/cms/s/0731ae5a-6a60-11d9-858c-00000e2511c8.html
Let us start with Iraq. The only policy is a desperate hope that the elections at the end of the month will produce an Iraqi administration capable of ending the insurgency and allowing US troops to go home. The reality is that Iraq is teetering on the brink of civil war, and the country has become the biggest terrorist recruiting ground in the world. It is a disastrous policy failure, without a Plan B.
On neighbouring Iran, another member of Mr Bush's infamous "axis of evil", the administration is split and bereft of ideas. The hardliners want to intervene militarily to overthrow the mullahs, while the doves know that would be insane. The result is that Mr Bush has allowed, through gritted teeth, Britain, France and Germany to negotiate a diplomatic deal.
Washington does not believe in it. The report by Seymour Hersh in the New Yorker magazine that US special forces are on the ground in Iran seeking to identify nuclear sites as potential targets has a ring of truth, not least because the Pentagon and Iran have joined forces to dismiss it. But in reality, the US needs Iran as a stabilising force, in Iraq and Afghanistan, not as another target for "regime change".
A bit unfair the overall commentary.... well not that unfair.
Posted by The Lounsbury at 06:41 PM
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Jan-July 2005
Learning Arabic for spying
From my favoriate little Leb English daily....
Spies are us: interest in Arabic soars
Primary motivation for American students of the language is to land a job with a government security agency
By Benjamin Sutherland
Special to The Daily Star
Wednesday, January 19, 2005
http://dailystar.com.lb/article.asp?edition_id=10&categ_id=4&article_id=11923
Well it is clear at least where the annoying accusations arise from.
A few comments on this.
PARIS: In little more than three years since the attacks that shattered the World Trade Center in New York, Arabic has imposed itself as the fastest-growing foreign language studied in the United States. It took just four months after the towers collapsed for the number of American students of Arabic to double, according to the U.S.-based Modern Language Association.
In Europe, too, more people are studying Arabic than ever before. Sergio Gazeau, a publisher in Barcelona, Spain, of Assimil language-learning manuals, says sales of their Arabic handbooks have "risen spectacularly." The company, headquartered near Paris, reports that sales of their Arabic learning series now rival sales of their German manuals.
Doubled. Hah.
Well, that is impressive, although from such a low base, it is hard to say where it is really going. That and of course my sense is most people drop out after about two years, leaving them at a still useless (but perhaps good enough for government work) level. Afterall, the piss poor French US diplos speak seems to suggest that standards in US diplo service are low.
Some Middle Easterners are taking the West's sudden interest for insult. The feeling is that European and American students are studying Arabic to get jobs spying on what they consider to be a dangerous Arab world. That perception is accurate, says the Middle East Language Resource Center, based in Provo, Utah. An extensive survey recently conducted by the center found that the number one motivation of American students of Arabic is to land a job with a government security agency. Only a small minority is chasing business opportunities.
Well, I guess I'm a real minority.
Maurice Botbol, a French expert on Western espionage agencies and editor of the Paris-based Intelligence Newsletter, says Middle Easterners are well aware that many students of Arabic are budding spooks. "It's not USAID that's hiring, it's the CIA; this is for spying and I don't see how Arab public opinion could be flattered by this sudden interest," he says. A CIA official in Langley, Virginia, told The Daily Star that the agency has stepped up hiring by 80 percent, "focusing on recruiting officers with critical language skills related to supporting the 'war on terror.'"
Ouch.
Ouch.
Ouch.
Well dammit USAID, get into the bloody act.
Intelligence agencies in Europe are scrambling to beef up their Arabist sections, too. At the time of the attacks on Sept. 11, 2001, Italy's civil and military intelligence agencies, respectively SISDE and SISMI, employed only five Arabic-speaking agents. Government agencies on both sides of the Atlantic are still having a hard time filling job openings. Private security firms are competing for the same scarce candidates (these companies, beneficiaries of coalition outsourcing, have more personnel in Iraq than Britain's military contingent). Witness Titan Corp, a San Diego-based contractor that provides Arabic interpreters to militaries. Salaries hover around $100,000 a year, but the firm still can't meet the demand for qualified Arabists: coalition soldiers have criticized Titan for sending them unprepared immigrant cabbies and shopkeepers.
Well, besides that, interpretation is a real art.
CACI, a U.S. company that hires interrogators fluent in Arabic, recently reduced requirements from seven years of interrogation experience, to five years, then to two. Academics say the rush to learn Arabic follows a historical pattern in the West. During World War II, students of German eager to get jobs fighting Hitler poured out of American universities. During the ensuing cold war, Sovietologists learning Russian filled universities in NATO-member countries. Carol Saivetz, director of the American Association for the Advancement of Slavic Studies at Harvard, says: "Once it became clear that the new Russia was no longer our enemy there was a decline [in interest] from the government on down." In France, the ranks of Russian students have dwindled to half their cold war number, according to the Association Francaise des Russisants.
Wonder what the productivity of the education is?
Hopefully money will be poured into developing decent teaching materials for Arabic. In my day they were so piss poor I sometimes was at a loss to understand how the writers could have thought the methodology was in any way rational or reasonable.
Russians, in stark contrast to many Arabs, tend to see the West's indifference as a sad sign of their decline from a great, feared power. The most serious Western students of Arabic - often those that aspire to work in national security - are pouring into language immersion programs in Arab countries. According to Worldwide Classroom, a directory of schools worldwide based in Milwaukee, Wisconsin, the number of study-abroad students has jumped by 70 percent since Sept. 11. Traditionally, the bulk of European and American students have chosen schools in North Africa and Lebanon, but that's changing as increasingly resolute learners shun a region with many French - and English-speakers. Many of the new students are filling language schools in countries such as Yemen and Syria, often in spite of parents apprehensive about bombings and frosty relations between Damascus and Washington.
Hmmmmmmmmmmmmmmmmmmmmmmmmmmmmm.
Business opportunity. But Syria is so fucking hard to deal with. And never mind Yemen. Oman. Oman.
A surprising number of private-language schools are popping up in the region, but educators still can't meet the demand. Mike Wittig, director of Worldwide Classroom, says that the figure of 70 percent more Americans studying abroad would be higher if the region's instructor and classroom capacity were greater. Arabic instructors in host countries often advise their students to remain discreet. Barbara Hassib, managing director of Cairo's now thriving International Language Institute, says that foreigners coveting security jobs "better learn early not to tell anybody." Phillip Rugg, a teacher at the Gulf Arabic Program in Al-Ain, U.A.E., says it appears that students at his school have gotten the message: All applicants are asked why they want to study Arabic, but not a single one has said he or she is preparing for a job in intelligence or national security. Rugg says locals regularly ask him why his foreign students are studying Arabic. A minority, Rugg says, seem "downright suspicious."
Emphasis added
I've met enough of these indiscrete little idjits. Even when they don't say it outright, it's usually painfully obvious. I suppose they'll work for DoD in the end - DoD seems to specialize in the painfully obvious brand of intel folks.
Kirk Belnap, director of the Middle East Language Resource Center, confirms that many Arabs are "nervous" about the new attention. But he believes the Arab world should be pleased. He recounts an anecdote: At a recent conference on the study of languages for defense, a U.S. military officer argued that instructors shouldn't teach recruits Arabic culture along with the language lest they become sympathetic. Belnap thinks the officer is fighting a lost battle. It's impossible to separate language from culture and "you can't learn that much about a culture and not come to have some sympathy for that culture," he says. "So all these spies and soldiers we are training are an investment in peace."
Emphasis added
See my DoD comment supra.
I do recall the most entertaining DoD Arabist/Spy I ever met. I won't share detials on him, would blow his cool (presuming it is not already blown, which is likely as he had so very little of it), but he managed near perfection in MSA, but loathed Arabs. Absolutely despised Arab culture, food, literature. Kept up his literature skills by reading translated Western novels. Refused to learn the "gutter" languages that are dialect.
As you might expect, he was fabulously clueless - might was well have been on another planet, certainly none of his analysis seemed to me to be anything but dressed up bigotry.
Sympathy is of course a relative term. But Military officers rarely understand things in those terms.
Posted by The Lounsbury at 04:45 PM
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January 19, 2005
A new happy talk push? [Edited ith a comment on comments]
I am suddenly seeing the idiot fringe of the conservative internet-commentary sphere pushing "things are really better than reported / Iraq doing better, reporting biased etc etc." spin again, with a bunch of (oddly simiar) cites to US Mil. types complaining about how progress is going unreported.
This is painful. Self deception is not a useful thing to indulge in when one's policy has gone off a cliff and one it tumbling down to disaster.
Iraq is not going well, that is clear. Repainting a school and indulging in ignorant prattle about how "most" of Iraq is safe (most of Iraq is also almost uninhabited.... and there's a fine correlation between population density and current problems - anyone want to draw conclusions) is NOT how things are going to get better.
This is pollyannish idiocy, enabling incompetence and further idiotic own goal efforts.
[Edit]
A note to my conservative readers, newcomers.
First, let's get this straight. My pessemism and disdain for current Iraq policy is not Left nor Liberal. Anyone who sticks around me finds I am a Financial Times kinda guy, and if you think FT is Left, well.... you need new benchmarks.
Now, I want to make a point here: I feel little desire to "prove" to people who think Iraq is going well that it is not. It's simply not worth my time, I see no net benefit insofar as the proof is what you deny. You either are a "true believer" who desperately wants Iraq to be what ideology says it should, or one is a rational analyst. One or the other.
If one is a rational analyst, it's clear that Iraq is spinning out of control. Major contractors walk away from contracts for security concerns, security eating up upwards of 35-50 percent of recon budgets, direct investors abstaining. This is not "liberal media spin" or whatever self deception you want to impose on yourself. Money talks, money walks.
I would personally be estatic if Iraq was turning around - USD 15 million estatic. However, it isn't. The proper response is not self deception, searching for some goddamned silver lining. The proper response - one that is not simply enabling incompetence and engaging in ideological excuse making - is to pressure for policy changes and resource allocation that might, just might save Iraq from being a once in a century level foreign policy disaster.
Leftist defeatism, the sort of "we're always wrong" and "war profiteering" - attack that, but engaging in self-deception is what enabled the current shitty motherfucking circumstances. Nor do you need be as pessimistic as me, maybe I'm too close, but blaming bad conditions on "liberal media bias is childish, pollyanish nonsense and part of what got things so bad to begin with, for if so called "conservatives" (who in my mind are fast becoming in the United States nothing more than Right Wing Bolsheviks (in the sense of putting ideology before reason and rationality)) had put pressure for more troops, etc., etc. etc. a year ago, instead of shooting at the messangers of reality and touting khayali wishful thinking, then we would be in a better spot (and I personally would be much richer, which is obviously the most important part of the equation.).
Yours truly
Me
Posted by The Lounsbury at 06:22 PM
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Jan-July 2005
Portfolio Construction
A request if I may. Need to write something on portfolio management and portfolio construction for funds (i.e. publicly traded securities focused portfolios). From the institutional POV. Anyone have some online references on the issue to rev my juices?
Posted by The Lounsbury at 01:51 PM
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January 18, 2005
Princess? (updated)
I seem to have been invited to some princesses birthday party. How the bloody hell did that happen? I certainly never met her. Likely an error, but if not... then I might have to go to avoid problems. Very odd. Must be an error though.
Edit / Update
Yes it was an error.
BTW, the Princesses, the king's sisters, are nothing to get excited over.
Further, I am moderately put off that my long discourse on business issues in MENA gets pro forma notes, but the mere possibility I may have been accidentally invited to a Royal Event (in error, as it happened), incites .... well something.
Market schlock.
Posted by The Lounsbury at 07:49 PM
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Jan-July 2005
Poor Burberry - odd directions of consumption.
Hilarious article to draw to your attention from FT
Richard Tomkins: The wrong kind of customers
By Richard Tomkins
Published: January 17 2005 18:31 | Last updated: January 17 2005 18:31
If you are going to read this column, you first need to know what is meant by the word "chav". In Britain, it is the buzzword for a certain type of young, white, feckless low-life prone to the ostentatious display of cheap gold jewellery and logo-festooned designer clothing. The favourite pastimes of the male chav, we are told, are drinking, football, watching television and customising his clapped-out car. The female, regarded as sexually aberrant if she is not pushing a pram by the age of 15, is known for scraping her hair back into an ultra-tight, skin-tautening ponytail dubbed the Croydon facelift in honour of the desolate south London wasteland of office blocks and shopping malls that serves as chavdom's capital.
Croydon facelift. Priceless.
.....
But that is beside the point. The thing that interests me about chavs, at least for the purposes of this column, is the way in which they have adopted the distinctive Burberry check as their unofficial clan tartan (typically, a baseball cap for the males and miniskirt for the females). Last year, two pubs in the Midlands city of Leicester banned people wearing Burberry from entering their premises on the grounds that it had become the uniform of football hooligans and louts - improbably redefining not only the brand but my mother, with her matching Burberry scarf and umbrella.
The article was worth simple that line actually.
I give you this as well, though:
One possible response by brand owners to such unexpected popularity is to exploit it to the full. That is what Tommy Hilfiger did in the 1990s. Originally, the company's classic, preppy clothing was aimed at the well-heeled country club set. But when rappers adopted the brand, it did an about-turn and adopted the hip-hop look, churning out baggy clothes with huge logos at lower prices. Business boomed - only to slump when fans tired of the Tommy Hilfiger name and moved on. Now a new chief executive is trying to rescue the brand from its identity crisis.
So should brand-owners go to the opposite extreme? That appears to be Burberry's preferred strategy, and you can understand why. Hip-hop culture, after all, at least has the virtue of being cool, while chavvery is about as crass as it gets. Burberry stopped making its baseball cap in an effort to drive away its unwanted customers - though the move had little effect because most of the Burberry worn by chavs is counterfeit.
Fortunately, I have a better idea for solving Burberry's problem. First, Burberry should invite all chavs to take advantage of a special offer. To establish their eligibility, they would be asked to take a short test ("Do you use your fingers to add up? Do you know at least three schoolgirls with daughters named Chardonnay? Have you ever ordered a family bucket from KFC?"). Then, those who passed would be offered an unlimited sum to spend on Prada on condition that they they never wore the Burberry check, real or fake, again.
How much can one really do about Counterfiet Chic?
Otherwise, however, there is something appealing about the Prada solution.
Posted by The Lounsbury at 05:02 PM
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January 17, 2005
On business in MENA, a short comment (Edited Tues 18 Jan to add thoughts on decision making cycles)
I've owed this comment for a while, and meant to make it as part of another more ambitious item I have been working on, but time is precious so let me take this moment to fill in....
Regardless, some thoughts provoked by some recent meetings and the like that I was invited to, reflecting on the business climate here, etc. The United States is launching an enormous push on economic development for the region, and the Embassy folks are reaching out trying to get their heads around how to put into effect the new marching orders - I've shared my limited wisdom as I know the Economic sections hither and thither quite well (useful for getting things done sometime).
Let me preface these comments with two preliminary items - nothing I note here is a huge revelation, or shouldn't be, and second, no single phenomena is unique to the Arab-Islamic Med Basin, and many things I mention are indeed identifiable in the West. However, it is a matter of degree and form - we are all human and despite the idiot racialists pretensions, one race and species of lying scum with intermittent redeeming characteristics for the sheer novelty value of it.
Dominance of the Oral over the Written or Renegotiability
Among the first things one has to come to understand in doing business in the region is that the dominance of oral over written and the aversion to direct contradiction make coming to and sustaining agreements rather more work than in the developed world. This is really made so by weak and often corrupt court systems. This is a trivial observation that everyone knows, but what is harder to convey is the degree to which this is true (certainly it varies from place to place as well) and the real drags are (a) the degree to which even ordinary agreements can not be assumed to be readily enforceable - but worse (b) the degree to which ad hoc oral renegotiation on need is not only accepted by felt to be a good thing. Why feel? Why not thought? Because I am thinking of the gut feel of the businessman that creates the "ether" - the unsaid fabric of what everyone unconsciously "feels" to be "right." This regardless of what they may analytically think, because under pressure I find gut feel usually triumphs over intellectual analysis - although it might be better not. Let me illustrate with myself as an example. I know, understand very well how these things are worked out here in the region, in general. It's no shock when a supplier or service provider comes back on deadline and asks for an extension or even wants to renegotiate the price (despite there being a fixed price contract) because he or she "needs" more time and money. However, my gut feel is "bzzzzt, you're out" - I speak to situations where there are not real extenuating circumstances - I don't believe in breaking service providers knuckles if there is a genuine issue. My gut feel colors at the very least my sensation of dealing with the person - the supplier is "wrong" in my book (as well as by contract). However, in his book -oddly it is usually his book and not her book, controlling for percentages- he likely feels "right" for in the local "balance book of right and wrong" it is "right" that the wealthy party cut the poor party a break, it is right the supplier stretch out at need, the payer stretch out at need. The formalities of written documentation are not rules, they are rough guidelines that should bend in the wind of need.
One can make the argument, and it feels convincing if one has not seen the aggregate inefficiencies raised, that the personal over the impersonal is more humane, more flexible, kinder to the little guy. On a one on one basis, this is often true. The problem is that the accumulated kindnesses (if we can be a bit abusive and call them that, delays in payment, daisy chains of delays in payment) result in some very clear deadweight losses. Too much capital ends up tied up in working capital to cover payment delays, to cover contracts being informally changed. A wider margin of error has to be withheld from being put to work, for everyone's ultimate benefit, because of small kindnesses. Nevermind it is the smallest operators who also suffer the most by having the most problem with free cash, with liquidity.
My sole quasi-original observation, however, here is that despite the fine words one hears from locals who intellectually understand the problem, their gut feeling - when push comes to shove - sends most into sympathy "for the little guy" - and this same sympathy often plays (when not trumped by connections) in court, regardless of facts. Play in court of course can have a broad meaning including ultimate judgment against the "victim" but only after sympathetic hearing to the most ridiculous delaying maneuvers.
Mentality, difficult to change even after intellectually the change is well understood to be necessary.
An added thought on this; one reads from people like Naomi Klein of multinationals buying laws and courts. I will not deny this occurs, although as usual Klein and her kin focus on the "evil" multinationals as if they were the source of such practices, rather than simply playing ball like the locals. I will assert that pure cases of corruption are rare (the gains versus the downside for a multinational being unbalanced) and that no one on the international side is happy about such things - even if you can buy your way out of an issue, the uncertainty involved is quite unwelcome. Other cases, pressure such as Microsoft's for passing modern intellectual laws often strike me as Quixotic, given that the laws frequently are essentially unenforceable (at least on a consistent basis) given local law enforcement capacity (and this for ordinary crime, let alone esoteric crimes "only foreigners care about.") Potemkin village laws I like to call them.
Of course, one should not pretend that in situ it's only the locals who begin to acquire dodgey practices - I had lunch recently with an IT manager at a major bank here - a major bank which has one of the world's largest banks as a 50 percent equity partner. He amusingly told me of his recent to do when he found out some key software in the bank was in fact pirated and that the major partner, which controls their budget for these things had refused to make it right. Stupid decision, I have to say, because an operational audit will eventually uncover this and... boom, nasty liability.
Regardless, the general unpredictability of relations that should be more predictable, more rule based - clearly rule based rather vague and negotiably rule based - is a real drag on getting things done here in the region. As cited above, it means you have to hold cash back in reserve "just in case" that you might not otherwise. Of course this is not unique to MENA - one has similar challenges throughout the developing world. Certainly, however, one can say that all things being equal, MENA has probably among the most severe challenges outside of sub-Saharan Africa (and with less excuse).
Now, perhaps the most vexing part of this is the feeling part evoked above, for you holding someone's feet to the fire on delivery terms or whatever rapidly become "the bad guy" - for all that most parties will admit in the abstract late payments, late deliveries, non-respect of contractual terms on delivery and product quality ... but Abu Mohammed, my cousin is a different matter.... that is when push come to shove, gut trumps intellectual appreciation.
I would be remiss in not noting that this kind of uncertainty raises the general cost of doing business and financing (although foreign actors perversely can often access better rates and terms because... well we pay on time as a general matter, it's harder for us to escape judgments through shenanigans and generally the reputational risk is greater - again a case of where the 'flexibility' of local habits actually penalizes the locals more than it gains for them, although this penalty is rarely understood and perceived as such). Clearly, for example, on bank credits, you have to get massive extra collateral as regardless of the law, you know it will be a bitch to get a hold of it, and it will take so long that only collateral that holds its value is worth calling collateral. Sadly, local businessmen and women do not seem to grasp this - above all the issue of the time value of money aspect of the value of collateral, since one has to build in the expectation of a significant delay in seizing collateral even in the case where one wants to do that. The implicit costs there are clear, I think.
When one asks why a developing country is... well not developing, one should frequently look to the degree to which these practices are acting as a deadweight drag on the economy, locking up value. That, and of course, the empty seeking of rents, but more on that in a moment.
A last comment in this section, one of the things that makes it very difficult to work out these issues noted supra in a timely manner is the aversion to direct confrontation, coupled with an aversion to taking responsibility, that strongly marks Arab culture. I emphasize this is not unique to Arab culture, and to varying degrees it is very human. However, I do maintain that the degree to which aversion to direct confrontation (i.e. contradicting anything directly) combined with an aversion to clearly taking responsibility for 'bad' things - or something than could bring dishonor in a wide sense - is strong enough in the region to be a marked input into the "problems of doing business" in comparison with other regions. Not unique but certainly problematic.
I ask you simply to reflect on Arafat - not from a moral perspective but as an objective leader. His entire leadership of the Palestinian cause was a string of defeats, bad decisions, poor analysis. But he never admitted an error, and never showed signs of grappling with it (I note that Ibn Bush shows signs of the same mediocre leadership qualities). I personally find Arafat to be too quintessentially old school Arab for words. A stereotype almost, but nicely illustrative of a general cultural challenge. One should not exaggerate, I should add, but he is an illustration of a tendency I see across the board, although it does strike me as more a Mashreqi tribal Arab sort of thing than say North Africans, who are really in another world in many respects.
However, I'll reemphasize: among the problems of the Arab world is the weaknesses you see in Arafat style political leadership are equally evident in its business leadership. I rather suspect that this "school" of decision making, while certainly rooted in deep cultural roots, also emerged out of the combined caldron of the tail end of Turkish rule and European colonial rule. Neither of which were particularly conducive (for all my deep sympathy for the Turks and sense the Arabs continue to blame the Europeans and Turks for sins which neither created in the Arabs) to developing healthy decision making habits in the Arab elite. But here I get speculative and historical. Perhaps Tamerlane will correct me.
Tijari Culture versus Modern Entrepreneurial Culture
I dislike the abusive use of modern to mean good and even more abusively to mean "whatever are current faddish practices are" (although its even worse when dressed up as 'international best practices' when 'international faddish business crap thinking and empty minded faddish conventional thinking without real solid analytical weight' is actually meant).
Nevertheless, let me use the term modern here.
One of the items I think I have evoked here in the past, is my dismay at the incomprehension on the part of the American officials making economic policy in re MENA in regards to the underlying economic habits in the region. I frequently hear from them (largely Americans I add, even the most well traveled and educated Americans being too frequently deeply afflicted with a messianic sense of optimism and sense that inside everyone there is an American - although this comes in somewhat more and less positive forms, but may still be better than my cynicism) that Arabs / People of the MENA region, etc. are naturally entrepreneurial and economic go getters. This is in support of a naive belief that if the US can herd the MENA region into its latest project, the Middle East North Africa Free Trade Zone, that some great economic flowering will ipso facto take off.
Let me first say that I am great believer in free enterprise and free trade, and fully support the basic concept of encouraging the region to open up to more trade (although the how and the like are interesting questions, but I shall try to touch on that separately).
However, I am rather against the superstitious belief that some magical dynamism exists that will naturally make any given free market (or rather freed market) flourish. I am painfully aware that underlying habits and expectations on the part of market actors may very well, in the short and medium term, engender market failures and even collapse that can very easily discredit the idea of free markets and trade. There are many levels to the challenge evoked here, some of which are deeper rooted than others.
First, in my experience, entrepreneurial culture does not largely exist in the region, in the sense Americans and even most Europeans would mean it. There are many reasons for this, but let me plunge into what I mean precisely. At the heart of the region, and even in very large economic units, I do not believe that the concept of longer term risk taking has developed. The economic dynamism is a trader dynamism, the Tijari or Bazaari, as my old mentor who did his time in Iran before the Shah went down would put it. The trader who does not hold an open position over a period of years (not in his mind) but opens and closes his economic exposure on a transaction basis. Now, it is true that Arab Socialism never managed to destroy the Tijari (or Bazaari) instinct, which one must admit does admit commercial and free market risk taking. However, it is equally true in the region that it did limit it, and further, that because of the mode of "longer term" development (almost exclusively either in colonial and thus completely foreign at the responsible level or in the hands of the state, even in conservative countries), longer views on risk taking did not emerge. Or emerged weakly.
Now, let me add that what I am calling Tijari culture exists everywhere in the world. The Arabs and others of the MENA region are not alien freaks (although we sometimes write about 'them' as if they were - for all that my feeling after so long is that the superficial and attention grabbing differences are among the least important in terms of 'getting along'). However, what I am speaking to is the dominance of a particular approach. The six month to one year cash horizon, shall we say? A culture (even if physically transformed into a modern office or store) of the stall in the Bazaar or Souq, the Doukkan, with its wares and the aggresivity in sales limited to the prospects readily in view, with a fairly limited and conservative sense of what products to push into the market, and a more gut than not based sense of selling. I may be exaggerating but I rather think this touches the true vein of economic activity in the region.
I wish to add that there are good historical roots for these very deep seated behaviours; in a highly uncertain world without good safety nets and systems to allow one to rebound from a risky venture, it makes a great deal of sense to adopt a Tijaari outlook on risk. It is something easy for "us" in the developed world to forget - that economic behaviour "we" view as irrational or backward usually has some very solid and rational roots, even if it may have (well) outlived its usefulness. If.
The issue of launching risky ventures - I mean venture here in a semi-technical sense of the longer term business prospect with a good degree of risk attached, as in venture capital - is a complex one and it is easy to be too judgmental about this, in a negative manner, in an unhelpful manner. It's easy to say 'they' should do X. It is harder to justify rolling the dice oneself when one's own nest egg is in the same situ.
But what comes to mind is the assertion, again heard multiple times from USG officials (and ones I like I may add) that "the Arabs" (or the Iraqis or ....) are natural entrepreneurs .... and they stop at that. In some ways I agree - the degree of sheer trading experience and energy locked up in the Tijaari, the Bazaari culture in the region is amazing. I have often thought that had I a large chunk of change to risk, that I might take a group of Tujaar from say an Moroccan souq and train them in ForEx or the like, and then let the little bastids loose. Their trading instincts are killer - if they master the data and the market, knowing a short term position to take and what kind of risk they want to take on it. The issue is that is not the same set of economic habits that are necessary to make longer term value added venturing work. In fact, I would argue many of them are exactly contrary to what is needed for making a venture work.
Now, the importance here, in terms of "Western" action in economic reform to achieve "our" economic and political goals, is that the reactions anticipated are not necessarily there. I can cite a few examples. Of course there is Iraq, but it is not precisely a fair example as to be frank Iraq so rapidly went off the cliff that the difference between venture investing and Tijaari investing never had time to emerge. It would have, but it did not have time. However, what was dangerous in initial economic policy assumptions was that the Iraqis would, because of their entrepreneurial instincts, take advantage of the free market opportunities magically opening up. I expressed at the time my contempt for the simplistic misreading - although I do at the same time hold that given time to develop the right instincts that would have developed, but only over time.
If I may share an somewhat off track anecdote, to illustrate short term thinking (and my apologies in advance as I will not be very clear on details for reasons): I was working on selling a local industrialist on a financing package some time back, for a new project involving decorative stone tile production. Nice project actually, good combo of tech and labor, fit with resources available. However it needed a serious up front investment, and despite the somewhat khayali numbers, a 3-5 year glide path to clear profitability. Of course their numbers showed 1 year. I was arguing for a certain facility with a ten year tenor or term, denominated in dollars, but not an issue as sales were in Euros and Dollars. I recall the headaches I had on this, because the local entrepreneur kept insisting the rate was too high. Now as I recall the 10 year tenor was something like prime plus 6 to 8, fixed. And this emerging market. Maybe a few hundred bp in either direction, but no matter, a good deal I thought given it had an insurance wrapper etc. But no, my man kept insisting that he could do this at prime plus 1 to 2 percent, meaning he was claiming to be able to raise debt for a speculative industrial development at say 3-5 percent. We had the most ridiculous back and forth, until I switched over to his language and asked point blank, how many years. ..... 1 year. He say zero difference between financing a speculative project with essentially a revolver on the local market, and locking in a fixed term ten year with an insurance wrapper. All he saw was the sticker, and no sense of long term versus immediate horizon, or issues attached to short term financing against a project with long term capital needs, esp. in a volatile environment. There is of course more to this, but I wanted to illustrate a real issue.
Rather more on point are the two free trade agreements the United States has executed in the region, one of which is active and the other is yet to be ratified but on the table - Jordan and Morocco respectively. In both instances the American economic officials have been surprised by the lack of "entrepreneurial" response to the accords -whether in effect or in preparation. They should not have been. Had they understood that what they are calling - in no small part for marketing / agitprop purposes - entrepreneurial behaviour is simply Tijaari activity - short term, largely focused on keeping risk exposure to a transaction by transaction level, never prospecting too far beyond the known..... In Jordan historically one can see a quire extraordinary pattern of Jordanians following foreigners (who prove the model) into activities or keeping themselves to rent seeking aspects of the value chain (playing the landlord to Chinese and Pakistani textile factories exploiting the no tariff and no quote loophole - why the Muhajirine of Pakiland are such the dope risk takers I have no idea, but they are. I suppose having rolled the dice....). In the case of Morocco, although the country has been given a political gift of an FTA - which the US has ratified but the Moroccans are very typically foot dragging over (with completely idiotic and misplaced political opposition - including bizarrely stupid fears US investors are going to "take over" Morocco - a comically stupid idea), local actors have done zero prep, although the FTA would kick in almost immediately once the Moroccans (finally) get their act together, and the opportunities would be in exports to the US, not US exports to a market barely the size of the New York Metro area with a buying power of Bed Stuy (a poor fucking area in Brooklyn my peeps).
Now, as to the issue as it happens this past weekend my old mentor, who happens to be an old Citi hand in the region (Iran, Lebanon as they went to hell..., great stories although he only tells them to people like me), but then moved on to private equity with substantial experience in emerging markets, was in town. I set up a meet between him, me and Embassy since they love this kind of thing, and we all rapped. One of the items we, he and I, brought up with Embassy was they were mistaking Tijaari - or as he put it Bazaari - activity for American style venturing / entrepreneurial behaviour. The local entrepreneur/tijaar who exports to Europe can follow a lot of his old fashioned instincts. There are some ethnic circuits to follow in setting up his exports. He can do the truckload or small shipment across the Med, and although he's not truly competitive, there is enough price slack in the Euro market, and enough trans Med transport that his ad hoc export strategy, which remains a trader strategy at its heart, can work. It is not going to be brilliant, and it's progressively getting squeezed by the Eastern Europeans - who perhaps are not so different, but face an easier cost and transport structure than he does given his highly atomized and ad hoc approach - but it still works. And so long as he is getting by, he's okay in his mind, since he sees his business in terms of a per trade net result basis. Long run his game is losing the margin, but that's not directly clear from his trade by trade view where the natural noise of fluctuations obscures the trend. He feels the pain but blames it on either the moment or the "evils" of globalization. Nevermind he is not investing back in the business - retained earnings are not enough, and the size is too small to leverage effectively.
However, the other key point is the degree of atomization of the economic fabric. My first point gets to some of the reasons why, but also the Tijaari loves being his own boss, but hates the idea of formalizing this, or outsourcing any decision making. He also has a relatively limited vision of the return he wants - again the Tijaari vision is a trade by trade (deal by deal) vision. That puts real limits on what one is willing to prospect and the amount of capital that is going to be seen as acceptable to tie up.
A side comment: why the atomization? I can't answer that well. It doubtless runs deep in the sense of "at least in my affairs I am free" in societies that in living memory have been oppressive modernizers. It also doubtless has much to do with familial prejudices and as well the poorly organized legal structures available (in effect - on paper with few exceptions most of the region provides fairly adequate legal coverage).
Another issue to consider, although this is far more variable from country to country is the degree to which Big Daddy, the State is expected to hold hands. Arab Socialism, but not just Arab Socialism, also some older ideas of what the State should do for the Believers. Nevertheless, even in countries where economic activity remained largely in private hands, the idea of state guidance and assistance remains strong.
Now despite my predilection for free markets, let me say that while I am in general an opponent of 'industrial policy' I do feel that for small countries a free market oriented 'industrial policy' can have some place if well done. If.
Regardless, there is no small degree of passivity - connected to the Tijaari culture as I argued supra - in developing new activities and markets. In many ways this is rational risk aversion in an environment were property rights are fluid (not just because of state action, but also powerful private actors squeezing people out - something we can often forget in our classic liberal circles, that government is but one mode of expression of rent seeking and expropriation), but is not well adapted to seizing the moment as it were. I recently (some weeks or more ago) sat in on an investment promotion conference where local businessmen kept asking the American delegation (US Gov) what USG was doing to sell local production in their country. They sincerely and very literally expected "The Government" (USG or their own) to be opening markets for them, in a very literal sense. The fairly well spoken (and yet political appointee) American ambassador was rightly categorical -it's up to "you" - the locals - to sell yourselves. An atomized economic fabric that hates cooperating but expects its central government to hold its hand. Bloody impossible challenge in most respects, for all that some degree of governmental accompaniment is indeed necessary.
Well, given this short comment has gone on a while and I doubt there will be much commentary given the esoteric nature, I will close by suggesting that the Bush Administration has it right in focusing, as the USG people tell me, on economic development over the frilly political and social development aspects - maundering on about women's rights and political liberties - but they need to grapple with the real potential and fabric, rather than the somewhat imaginary fabric they think they are working with.
They also need to grapple with what will really bring foreign money as well as leverage local capital (which unlike sub Saharan Africa is truly substantial) into more productive investments.
I hope to get up the gumption to finish my commentary on my vision for private equity as a development lever shortly, but my closing suggestion for the region is that if the US and the Europeans want to make significant progress in reforms, it is best to put their money into public-private investment funds managed with a view to returns and good investment management to set the proper standards as well as to bring financing to 'innovative' projects. I refer readers to Drucker re the concept of innovation - I am not referring to California VC type activities.
However, there also needs to be specific action to help develop real entrepreneurial action. That is not easy. Equity funds are not enough. Entrepreneurship incubators are likely necessary. They should try to be commercial, but with a subsidized return. More on this later. Inchallah.
[Edit: Addition]
I noted I forgot to add the following section last night:
Decision Cycles: Centralization and Risk Aversion
Among the other items one notes doing business in the region is the slow decision cycle, maddeningly slow in fact. Siezing opportunities occurs where they are familiar, but in my experience, drops off markedly once the situation becomes too different or is entirely novel. Nothing surprising there, given what I noted in regards to risk aversion, and as well an economic fabric where new relationships are riskier than need be due to fluidity in enforcement of understandings. Of course, one should recognize that all new business / commercial relationships and new undertakings are risky inherently. Riskier than need be is the key phrase here. As in everything I speak to in this note, we are looking at matters of degrees and accumulated frictions that when viewed in isolation do not always seem "that" different from developed countries - however when taken in aggregate, all together, the accumulated frictions become significant.
I've touched on this before when commenting on an article some months back on the poor performance of Arab armies, an article that echoed the same things I heard from some milintel types training Arab strat staff: information hoarding, tendancy for key decisions to always ride all the way up to the highest level, for the highest level decision makers to not refer to their supporting analytical staff, but consult amongs themselves (CEOs, Generals), for the decision to be taken in private and handed down as if from Moses. Not unique to the Arab world, to be sure, but again, it is matter of degree and the accumulation of issues.
The slow decision making cycle, even relative to say my (limited, impressionistic) exposure to say Asia, is a real drag, and I think derives from the risk aversion, coupled with the extreme centralization of information and power at the top. Add to this the atomized attitude towards economic activity - the degree to which information is hoarded rather than shared (information hoarding occurs everywhere, in all cultures, so let me stress again, the degree and manner is the key here) - and you get a decision process that is slow, poorly utilizes the business' (often impoverished) analytical structures (analystis, accountants, etc) and will frequently jump over to informal networks to the exclusion of the formal networks. Now, let me note that informal networks are very important, and excessive informational ridigity from formalism is as much as error as utter ad hocness.
A point of illustration from my old fund. One of the companies in the portfolio - one with some serious investors I may add, even Citi - was in a financial death spiral. Everything was clearly broken and my research on the business model showed that the original proposition had just failed to pan out anywhere. Very clearly a case of either write off or radical remake if one believed in the management enough. Problem was, looking at what management had been doing (overspending, flitting from one "strategy" to another, having recourse to ad hoc revenue streams...., lying to me about where issues were) said, no management really had not even done that brilliant of a job with a broken business model, and had not seriously grappled with the brokenness. In my analysis, it was a clear case of pull the plug and walk away. Others in the Fund differed. Several big players, not Citi of course - I am sure they ran the same analysis I did, wanted back in, and with our drag along rights, we had an option to grab a chunk of the firm for near nothing. Of course that was an implicit 90 percent write down and really begged the question of why did we want (x% plus of what was likely zero value). The other portion of the context was I was there at the Fund because the state side investors felt the Fund was fucking up (it was as long time readers know) and needed to be made right (or pull the plug); this was an important decision point to prove rational business analysis was being imposed in the Fund. Now, the top decision makers in the Fund were really old school Arab types (the main American partner had been yanked, barely avoided getting sued I am led to understand). Theoretically the investment process required an analytical memo, and then an investment committee decision, then negotiations through an investment officer based on the decision (which might be an interim one, such as see what deal was avail).
I kept finding that the formal decision process was meaningless. Write whatever memos I wanted, the real process was the Big Cheese would then go and have personal convos with the CEO of the portfolio firm whose oral representations were put on the same level as my analyses. Oral over written, relationship over analysis. However, not 100 percent, rather the Big Cheese tried to negotiate parallel to the formal process - and in his view this was 100 percent correct. Result, no clear view emerged on what to do, contradictory information flowed or not, and the management of the portfolio company played me off against the Big Cheese, feeling (correctly) he would want to go in on his gut, regardless of how shitty the real deal was. However, at the same time, the old man also liked to keep the options open, pointlessly so. He liked to have the sense of holding court, and keeping the potentially valid options open. Like a Tujaar sitting in his corner shop, always expressing a bit of interest in the carpet provider's hints at new stock, but never taking a clear decision until the break point.
[Edit II: I wish to highlight something noted in comments - the issues I raise here are general ones and not confined to a particular social class or economic category]
[Edit III: I probably should pursue this topic further, but I will wait to see what the audience is interested in]
Posted by The Lounsbury at 11:01 PM
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Jan-July 2005
Food for Oil
It may be my boundless cyncism, but I remain utterly unmoved by this faux "crisis."
Yes, of course there was corruption - given what goes on in this region I find it amusing any little virgins out there are surprised and apalled by that. Yes, Sadaam engaged in all kind of scheming. Yes, it looks like the (complex, but delberately so) process resulted in oversight gaps.
So what? I remain completely in the camp of "manufactured outrage coming from a bunch of short sighted American axe grinders who have a bizarre, ideologically driven obsession with the United Nations and equally bizarre obsession with some virginal idealized view of the posible...."
It irritates me these morons are driving this entire fiasco.
Posted by The Lounsbury at