Friday, December 18, 2009

Thorns of a burst bubble

Commentary - Executive magazine

For business journalists, writing about the Gulf from 2004 to 2008 was often a repetitive process. Regardless of the sector being covered, the opening paragraph would invariably have a growth figure in the double digits, and the projection for the next year would also be a very healthy one. Every year was a record year, or so it seemed.
The global financial crisis in the autumn of 2008 dimmed the Gulf Cooperation Council’s business fortunes, flipping that opening paragraph to negative double digit growth or, for some sectors, growth in the low single digits. This change was welcomed by many business journalists, if only to spice up their writing, but of course not by the business community.
The reasons behind strong growth can be easily explained, but a downturn and a serious contraction in
revenues requires a different explanation, and it was time for journalists to start asking hard questions – at least it should have been time to play hardball.
However, just as the crisis was beginning to bite, the government of the United Arab Emirates introduced a draft media law in January to update the archaic 1980 law. Media outlets quickly understood the ramifications of the proposed rules, which include article 32, whereby journalists can be fined up to $1.3 million for “disparaging” government officials, members of the royal family or Islam, and article 33, which fines journalists up to $136,000 for harming the nation’s image and reporting “misleading” information on the economy.
Given such fines, way beyond the financial means of most journalists and media outlets, how could hacks ask hard questions? And how could journalists report on companies and firms that were in trouble but directly linked to royal families? It is a clear Catch-22 situation: journalists want to do their job, and the public and investors have the right to know about financial shenanigans, but to do so could come with a hefty price tag, and if you can’t cough it up, it’s a stint behind bars in the debtors’ jail.
The whole notion of transparency thus became a mockery, and how deep the impact of the crisis had run became a topic that was barely debated in print or on television, at least not in the UAE and the other GCC countries, which have similarly draconian media laws.
How ingrained such self-censorship is among Gulf journalists was evident in the headlines and articles in the aftermath of the bomb dropped on the global markets by state-owned Dubai World's announcement of a six-month standstill in payments of $59.3 billion in liabilities. The Gulf News gushed “Government intervention to ensure commercial success,” the Abu Dhabi-owned The National downplayed the impact, stating “A silver lining in Dubai World” and the Khaleej Times espoused optimism, “Restructuring ‘A Sensible Business Decision.’” Elsewhere, papers headlines were of “castles in the sand,” “Dubai in turmoil,” and “Bombshell decision has severely damaged Dubai's reputation.”
But while papers outside the region can tell it as it is, reporting in other parts of the Middle East on what has already been reported can be a risky business.
In one case, a UAE-based journalist wrote an article on the new media law for the American University of Cairo’s (AUC) Arab Media & Society (AMS) website. In it, she referred to a case in May where British daily The Independent ran a story about a case of fraud in which a Dubai developer showed investors photographs of buildings under construction, but they were in fact photos of another project. The investors demanded a refund, but until now they have not been reimbursed.
The developer is the Al Fajer Group run by Sheikh Maktoum bin Hasher Al Maktoum, who is none other than the nephew of Dubai’s ruler. For citing – not breaking – this story, the Maktoums threatened to sue AUC.
What this case highlights is the lengths to which the UAE will go to try and rein in negative media coverage. Furthermore, such cases ward off necessary reporting on dubious tactics by developers, which damage the reputation of the real estate sector at the very time when the sector is suffering, with real estate prices down 50 percent in Dubai from their 2008 peak, and investment bank UBS projecting in November that it could take up to 10 years for the sector to bounce back. The last thing the sector should want in such a tenuous climate is jittery investors. As an Al Fajer investor told The Independent, “This is going to define my faith in the country. If I’m dealt with correctly, great. But at the moment, it’s not going that way. We’re in the witching hour now.”
That witching hour extends to media coverage, transparency in economic data and whether firms connected to the royal family are being unfairly assisted and bailed out at the expense of ‘ordinary’
companies trying to compete in a supposedly free market. As for us business journalists, reporting on the Gulf is certainly keeping us on our toes as we cover, or indeed cover up, the Gulf’s (mis)fortunes, and avoid getting fined a lifetime’s salary in the process.

PAUL COCHRANE is the Middle East correspondent for International News Services

No comments: