Street smart in Gemmazieh

Commentary - Executive magazine

If you believed Lebanon's ad campaign, you'd think the country is a paradise of pristine nature, beautiful shorelines and night time cavorting. On touring the country you wouldn't see the Saida rubbish dump that regularly collapses into the sea, the smoggy haze over Beirut at sunset, or the belching fumes as you sit in yet another traffic jam. Neither would you experience the raging torrent of traffic heading north from Beirut, or the long line of cars crawling along nightlife hotspot Rue Gouraud in Gemmazieh. Such images would not be good for Lebanon's brand identity.

This is quite understandable, no country would highlight such downsides. But with tourism to contribute directly and indirectly an estimated $7.78 billion to the Lebanese economy this year - equivalent to 28.1 percent of GDP - such images should be embarrassing to the sector. Resolving Lebanon's environmental woes requires macro efforts and capital to invest in infrastructure improvements. Yet there are initiatives that can be taken on a more local level.

Take Gemmazieh street (the official name is Rue Gouraud). To drive the one kilometer long, one way street that runs from the edge of Martyrs' Square to the Electricite du Liban building, it can take anywhere from 20 minutes to an hour as people search for a parking space or hand over keys to a valet. For an essentially straight and flat street, close to areas with parking space, like downtown and Charles Helou Station, such a log jam would seem a major urban planning oversight.

But in Gemmazieh's case, an area of 'traditional character' as the sign posts tell us, the street turned into a nightlife hub haphazardly, bar by bar, restaurant by restaurant. The one kilometer long traffic jam is also not solely down to a lack of planning. A big contributer is the Lebanese penchant for valet car parking, a combination of unwillingness to walk and, two, to show off.

What if Rue Gouraud were to follow the example of cities as far apart as Shanghai, Cape Town, York, Copenhagen, Montreal and Curtiba, Brazil? What all these cities have done is pedestrianize streets or whole blocks, whether for retail, nightlife or areas of historic interest. Neither extreme temperatures, rain, sunshine or humidity have made these areas less popular.

But Gemmazieh would not need to look abroad to see how pedestrianization was implemented – half a kilometer away is pedestrian friendly downtown Beirut. With the upcoming opening of the Beirut Souks, the pedestrian area will be extended even further, and it could spread eastwards if Rue Gouraud followed suit.

How this could work would be for Rue Gouraud to have rising bollards at either end, making the street pedestrian but also accessible at specific times for delivery trucks and residents with parking permits.

Parking space could be found in Martyrs' Square, and if Charles Helou was given a lick of paint, fumigated, and linked via a bridge, several hundred more vehicles could be parked. For those unwilling to walk, a fleet of golf carts could be added to the current half a dozen that ply downtown to transport people. Pedestrianized, bars and restaurants could spill onto Rue Gouraud, and there could be live music, buskers, dancers, and street artists. People would mix and mingle, no-one would be aggravated from a traffic jam or altercation with a valet, and air pollution would undoubtedly be reduced.

While this sounds desirable there are always obstacles to contend with, particularly ones unique to Lebanon. In other cities, when pedestrianization has taken place, gentrification has also occurred, changing demographics. Lebanon's 'old rent' laws, where rents were frozen at a particular monthly rate prior to the civil war, has prevented this from happening. It has also meant demand by more elderly residents for vehicle access. Noise pollution is another potential issue, although if the demographics changed would be less of a problem, with those moving in aware of the neighborhood's lively night time atmosphere. The valet car parking mafia, which attempts to control the parking spaces that line Gouraud and surrounding streets, could also oppose such a move to pedestrianization.

Then the night-goers themselves may very well resist such an idea, too used to valet parking and reluctant to give up a perceived convenience – although it may take 40 minutes to get to the valet, as opposed to a 10 minute walk from parking lots on the easter edge of downtown, or if it was renovated, Charles Helou.

But that are indications some nightlife patrons are willing to forgo their valet. A bar owner, not overly in favor of pedestrianization, admitted that out of the 150 cars usually valet parked every Friday, on one particular night there were only 15 as people shunned their cars to walk. While anecdotal, this does suggest that people are willing to forgo the valet to save time.

For access to Gouraud to improve – whether by improving parking or opting for pedestrianization – this would require a united front by residents and business owners to surmount the biggest obstacle, bureaucracy and vested political interests.

PAUL COCHRANE is the Beirut-based Middle East correspondent for International News Services

Sanctions busting – an Iranian imperative

Money Laundering Bulletin - August 2009

Iran is an international outcast for its nuclear ambitions but ranks as high in the geographical risk league over its long-standing refusal to cooperate in the fight against money laundering (let alone terrorist financing). There may though be signs, albeit mixed, of movement in Tehran, writes Paul Cochrane.

Iran has been under international scrutiny since the Islamic revolution 30 years ago, with sanctions by the United States tightened under the Clinton administration through the Iran-Libya Sanctions Act.

Since Iran's decision to embark on a nuclear programme, US sanctions have intensified, but in the face of such restrictions Iranian banks and individuals are increasingly using joint venture banks in the Middle East and South America to bypass scrutiny. At the very same time, the Central Bank of Iran denies that money laundering exists in the country, even while implementing a new Anti Money Laundering law.

Iran has been at the hard end of recent Financial Action Task Force (FATF) statements, warning in October, 2007 that “Iran’s lack of a comprehensive anti-money laundering/counterterrorist finance regime represents a significant vulnerability within the international financial system.” Since then the FATF has issued three additional statements, the last, in October, 2008, reiterating the risk of terrorist financing (TF) and urging all jurisdictions to “strengthen preventive measures to protect their financial sectors.”

The FATF statements appear to have been taken seriously by Iran, which has applied for membership of the Paris-based body. “At the same time that the Ahmadinejad government was dismissive of US and UN sanctions, it was concerned about FATF, sending a lobby group to Paris to stop a second warning,” said Michael Jacobson, Senior Fellow at the Washington Institute for Near East Policy.

Last year, the Iranian parliament passed an Anti-Money Laundering (AML) law and sent it to the Guardian Council for final ratification. Enacted in April, 2009, the law creates a High Council on Anti-Money Laundering chaired by the Minister of Economic Affairs and Finance, with members including the governor of the Central Bank of Iran (CBI). However, a Financial Intelligence Unit (FIU), which is a requirement of the FATF, has yet to be established.

Jay Jhaveri, Head of Asia at World-Check, a British company that maintains a database on high and heightened risk individuals and entities, said the AML legislation is “pretty standard, the key buzzwords are there. It's almost a standard cut and paste from FATF guidelines.” But lacking a FIU, he said Iranian “banks and financial institutions don't have anyone to report suspicious activity to.”

A further area where legislation is falling short is in addressing terrorist financing (TF), a particularly charged area given the political animosity between the United States and Iran. The US State Department designated Iran as a international sponsor of terrorism in 1984, accusing Iran of funding Palestinian organization Hamas, the Lebanese militant group Hizbullah and since 2003, militias in Iraq such as Asa'ib Ahl al-Haq and Kata'ib Hizbullah. The US has directly linked Iran's Islamic Revolutionary Guard Corps Quds Force (IRGC-QF) – a paramilitary wing of the government that is also heavily involved in business in Iran – to financing, arming and training such groups. The IRGC-QF has been designated by the U.S. Department of the Treasury under Executive Order 13224 for providing material support to terrorists, stating that the IRGC is funneling money to Hamas, and between US$100-US$200 million a year to Hizbullah through Iranian banks, notably state-owned Bank Saderat and Bank Melli.

Confirmation of funding to Hamas was given by Khaled Meshal, the leader of the Hamas political bureau in Syria, on a visit to Tehran in 2007, when he stated that Iran had been providing financial support since Hamas was voted into office in the Palestinians territories in 2006. Meshal did not state any figures, but added that funding would continue.

Unlike in Lebanon where Iranian banks operate freely, Israel strictly monitors Palestinian financial transactions, meaning funding from Iran has to enter the Palestinian territories through other channels. “A lot of the money is bulk cashing smuggling, particularly into Gaza through tunnels, with people travelling from Iran and bringing huge amounts, some in the millions of dollars,” said Jacobson.

Given Iran's support for such groups – all listed on the Office of Foreign Assets Control (OFAC) list and deemed terrorist groups by the US government – Tehran does not consider the likes of Hamas and Hizbullah as terrorist organizations.

“There is an element of politicization in the OFAC list, with a few years ago Libya the bad boy, and since removed from the OFAC list. There is always a gray area between terrorist and freedom fighters; Hamas was elected, so what do you say?” said Jhaveri.

But Tehran's inability to tackle TF remains a concern of FATF and its 40 Recommendations Plus 9 on TF. “The plus 9 has largely been ignored in Iran, which probably comes down to the definition of terrorism,” added Jhaveri. “I believe FATF will address that in their next report, that legislation doesn't address the plus 9 properly.”

Iran's definition of ML is a further area where Tehran and the international community are not seeing eye-to-eye, with the Central Bank primarily focused on criminal proceeds and the narcotics trade. “Like a lot of countries in the beginning [of implementing legislation], ML is considered proceeds of narcotics. So in a lot of reports, when Iran talks of ML, the predicate crime behind that is narcotics related,” said Jhaveri.

According to the United Nations Office on Drugs and Crime, approximately 60 percent of Afghanistan’s opium is trafficked across Iran’s border, supplying an estimated three million Iranian drug addicts as well as being transported on to Turkey and Europe. According to a study carried out by Dr Bijan Bidabad, an Economic Consultant in Tehran, “revenues from drug sales and transportation in some years is equal to Iran's oil revenue.” Iran's oil and gas revenues were US$80 billion in 2007-2008, according to the CBI.

The World Bank meanwhile has reported that an estimated 19 percent of Iran’s GDP stems from unofficial economic activities, while according to the US State Department, “a prominent Iranian banking official has estimated that money laundering encompasses an estimated 20 percent of Iran’s economy. Other reports have found that approximately US$12 billion is laundered annually via smuggling commodities in Iran and another US$6 billion laundered by international criminal networks.”

Money is typically laundered through non-official banks, said Bidabad, known as Qarzol Hassaneh Funds, which “belong to pressure groups and the Ministry of Defense and Armed Forces Logistics (MODAFL).” State run banks and businesses are further areas of concern, but Jhaveri said as they are state controlled, enforcement of AML regulations was unlikely as it would directly hurt the government. Iran ranked 141 out of 180 countries listed in Transparency International 's 2008 Corruption Perception Index.

Real estate is a further area where funds are laundered, according to the State Department, with settlements and payments often made out overseas. Dubai in the United Arab Emirates has been singled out as a major hub for Iranians to launder money, acquire real estate and re-export Iranian-made goods. “A lot of bypassing of Iranian semi-governmental agencies is done via Dubai, while a lot of private activity is also carried out there,” said Bidabad.

The Central Bank, however, came out in April to say that US claims regarding money laundering are baseless. “(Iran's) banking laws and regulations do not allow that kind of illegal activities,” the CBI governor, Mahmoud Bahmani, was quoted as saying in the Iranian press. “The money laundering law approved by the Guardian Council is now being enforced in the banks throughout the country,” he added.

Side stepping international regulations

The Iran Sanctions Act (ISA), originally called the Iran-Libya Sanctions Act (ILSA), was issued in 1995 under Executive Order 12959 in response to Iran's nuclear programme and support for Palestinian and Lebanese terrorist organizations. The ISA banned US trade and investment in Iran, while in July, 2006 the United Nations Security Council passed five resolutions related to nuclear proliferation, with three calling for financial restrictions on Iran.

In the years since, the US Treasury Department has designated four Iranian banks – Bank Sepah, Melli, Mellat and the Export Development Bank of Iran – for proliferation under Executive Order 13382, while Bank Saderat was designated under a separate order for funding Hizbullah and Hamas. The international clamp down on Iran was heightened last year when the European Union (in June, 2008) imposed sanctions on Iran's largest bank, Bank Melli, freezing assets and preventing the bank from doing business in the EU.

The effect of such sanctions on Iran has been mixed. “Are they having an economic impact and raising the cost of business? Yes. But curtailing the nuclear programme? No,” said Jacobson.

Indeed, international banks took notice of the stepped up US sanctions and executive orders, with Treasury officials in 2007, saying that over 40 international banks and financial institutions had either cut off or stepped back from business with Iran. But the seriousness with which Washington takes such sanctions was only highlighted in January, 2009, in a landmark case by the Manhattan District Attorney and the Justice Department against LloydsTSB. The British bank was fined US$350 million for falsifying outgoing US wire transfers from Sudan and Iran, with over US$300 million transferred up to 2004 for Iranian banks Melli, Sepah and Saderat. A further nine EU banks are currently being investigated.

“There is now a fear factor of a heavy or perhaps even crippling fine,” said Jhaveri. “But as long as banks are trading in non-USD curries like Euros, they seem to believe that they are ok.”

Jhaveri added that Asian banks, particularly in Malaysia and India, “deal with Iran with kid gloves.” He said banks have separate units that deal with Iran, making sure transactions are not carried out in US dollars or via a US institution. “There is a fear that if money comes via the US, and Iran is mentioned, the money will be frozen. So they have specialists to make sure no mistakes take place,” he said.

While such policies are required for banks and businesses dealing with Iran, the state-owned banks that are blacklisted by OFAC are resorting to other means to get around restrictions.

In April this year, OFAC listed state banks the Commercial Bank of Syria (CBS) and Bank Saderat formed a joint venture in Damascus to create “Banki”, ostensibly to act as a conduit for bilateral trade. However, a source close to the deal said that the motivation was “wholly political,” with CBS pushed into the deal by the Iranian and Syrian governments. Iranian banks Melli and Saderat had carried out a similar policy in 2004, joining to form a private bank, Future Bank, in Bahrain. It was able to operate outside of the OFAC list until March last year. A senior source at a Middle Eastern Central Bank said it would be logical for Banki to be put under the same US sanctions as the parent institutions.

It is a similar story in Venezuela, said Douglas Farah, senior fellow for the International Assessment and Strategy Center in Washington D.C. “Wholly owned Iranian banks have been established that are supposedly joint ventures, with Venezuela saying they put in half of the money, but it is usually Iran. The clearest case is Banco Internationale Desarrollo CSA, founded as part of the Saderat group in 2007. Everyone on the board is Iranian, and it is a 100 percent Saderat subsidiary,” said Farah.

“It is an area of concern because it is constituted in Venezuela and acting out of Venezuela, so not facing sanctions like Saderat, which allows them to evade sanctions with relative ease,” he added. A second bank of concern is Banesco, the second largest commercial bank in Venezuela. “They have some suspicious characters on the board and have opened a large office in Panama, handling a great deal of Iranian money that comes from Saderat via branches in Dubai,” said Farah. And while these banks may face scrutiny from international regulators and the US Treasury, “it doesn't get the same scrutiny as Iranian banks. It's the same in Europe, so a nice way to get a free flow of money,” he added.

Copyright Informa Group

Euro-Arab Gas Pipeline

The Euro-Arab Mashreq gas pipeline is approaching completion

Paul Cochrane reports from Damascus

Petroleum Review August 2009

THE EURO-MASHREQ gas pipeline that runs 1,200 kilometers from Egypt through Jordan and Syria to Turkey has taken 20 years to come to fruition. The end is in sight however, with the project awaiting a final tender for the last leg through northern Syria. But while the pipeline is already pumping gas from Egypt to its eastern neighbours, there are currently doubts over Egypt's ability to meet burgeoning demand, while secure distribution contracts still have to be inked.

The pipeline (its acronym is EAM) is set to be fully finished and operational by 2011-2012 - later than expected. The reason for the delay is the re-tendering of the 62 kilometre leg between Syria's second largest city Aleppo, in the north of the country, with the Turkey border town Kilis.

In October, 2008, a US$71 million contract was awarded to Russia's Stroytransgaz, but annulled earlier this year. “The Aleppo-Kilis phase is being re-tendered due to the fall in energy prices and Syria hoping to get a better deal through a competitive tender,” said Richard Kupisz, team leader of the Euro-Arab Mashreq Gas Co-operation Centre (EAMGCC) in Damascus.

The bidding process is currently under technical evaluation and expected to be signed in the later half of the year. Once underway, the pipeline will take an estimated 18 months to complete. “The route is not very difficult, a smooth terrain. In the past we laid one kilometre or more of pipe a day, so once in operation, goes quite quickly,” said Naeem Danhash, Project Director of the EAMGCC. “The only issue is the big values.”

From Kilis, a 15-kilometre, 12-inch pipeline is needed to connect into the Turkish grid, where it could potentially tie into the proposed Nabucco pipeline. Danhash said the reason the Aleppo-Kilis route is to be completed before the 180-kilometre Furglus (east of Hama in central Syria) to Aleppo link in the pipeline, is that it is the fastest way to link to Turkey. He said the gap will be offset by the current Syrian grid, with the current Furglus-Aleppo pipeline to be expanded from 24-inches to 36-inches to boost capacity. “Syria is keen to import gas via Turkey, so the government is funding most of that [development] along with the Arab Fund for Economic and Social Development,” said Danhash.

The final stage, to secure contracts between producers and consumers, has yet to be completed, raising concerns over the financing of the EAM. “What is important for financiers is sales contracts from governments - it could be between Egypt and Bulgaria, or Lebanon and Iraq - but we don't have that,” said Danhash.

The pipeline’s route to Lebanon, which splits from the Homs to Banias route (on the Syrian coastline), and runs 32 kilometers to Tripoli in northern Lebanon, has been completed for about five years. Kupisz said that the Lebanese government has drawn up a draft agreement with Egypt for 600 million cubic metres (mcm) of gas per year for delivery this August. But the EAM is still awaiting certification from Beirut, attributed to continuing political animosity between the Lebanese and Syrian governments. With a new Lebanese parliament elected in June, there is high expectation that Beirut will green-light the flow of gas via a swap arrangement, with Syria using Egyptian gas and then pumping Syrian gas to Lebanon.

In Syria, domestic consumption of gas transported from Egypt will be primarily purchased by the Syrian Gas Company. Onward arrangements to Lebanon, Turkey and Europe have not been arranged yet, with Kupisz saying it was still too early to do so.

“In Turkey, at least 70 licences have been issued for private gas distribution, so more likely to be a private company that will get the distribution licence [for the EAM in Turkey],” said Kupisz.

Supply issues

Looking at supply issues, the two main gas suppliers in the EAM are Egypt and Syria, with Egypt the crucial provider.

At present, Egypt exports 2.5 mcm/d through the EAM, with 2mcm/d earmarked for Jordan and 0.5mcm/d to Syria. “Officially this should be increased to 6mcm/d and afterwards to 9mcm/d, but nobody knows [if this will happen],” said Kupisz.

Syria produces 21-22mcm/d of gas, with some 4-5mcm/d used for gas injection into fields or as burn off, leaving around 16mcm/d for electricity generation and industrial use, said Ziad Ayoub Arbahe, an energy consultant in Damascus. At present this is sufficient, but with power plants to come online in the next few years and electricity demand growing by 10 percent a year, Syria will need to offset the supply gap.

Such uncertainties have clouded the viability of the project to deliver adequate gas requirements, one of the issues that has plagued the neighbouring Nabucco project, which would pipe gas from central Asia via Turkey to Europe.

“Neither the Mashreq pipeline or the Nabucco pipeline are in a position to be realised, and neither has received enough financial backing,” said Graham Coop, general council at the Energy Charter Secretariat in Brussels.

The success of the EAM hinges on Egypt being able to ramp up gas output to meet rising demand for a ballooning population (currently estimated at 79.4 million but projected to reach 100 million by 2021), meet other export commitments, and develop future projects, such as the possible expansion of the Spanish Egyptian Gas Company (SEGAS) LNG complex in Damietta, and the framework agreement with Italy's ENI to build a second liquefaction train.

“There is enough gas [for Egypt] to meet current commitments, but for the major projects, these need to be underpinned by further discoveries,” said Craig McMahon, a North Africa analyst at energy consultants Wood MacKenzie.

It is currently a matter of what Cairo considers a priority: using energy as a political tool within the Levant, or exporting gas to Europe according to fluctuating seasonal demand and for higher prices.

“For Egypt the pipeline is one option, but it could equally expand LNG infrastructure, so there are a number of competing actors,” said McMahon. Cost preferential agreements have been signed between Egypt and Jordan, Syria and Israel. But with Cairo keen to access hard currency, such markets might not be always economically preferential. Adding to this is the geological complexity and depth of Egypt's gas fields, seriously boosting the cost of extraction. “If Egypt has the potential to sell gas through LNG and at international gas prices, why not do it?” said McMahon.

While the guaranteed success of the EAM is still in doubt, developments could secure gas volumes if the countries involved become full members of the Energy Charter Secretariat. The Energy Charter treaty promotes four main areas: trade on World Trade Organisation principles, freedom of transit, energy efficiency and investment protection. If countries violate the treaty, sanctions can be imposed. Asked whether current observers Jordan and Egypt signed up as full members this would benefit the EAM, Coop said: “It would certainly add security to the project and for the European Union.”

While analysts question Egypt's ability to extract enough gas, McMahon is actually optimistic Egypt will provide. “There is every reason to be optimistic, although we need further exploration success and to see those wells drilled,” he said. “But it is hard to imagine increases from Egypt in the shorter term.”

All is not lost

All is not lost however if Egypt is neither legally required to pump gas via the EAM or able to meet demand. An estimated 40% of Syria has not been prospected for gas. “Potentially we could find huge reserves,” said Arbahe.

Piping gas from Qatar and Iraq to Syria, and from Iran via the Nabucco network are other options. “If a pipeline comes from Iraq or Qatar there would be a principle pipeline, and a viable network,” said Arbahe.

Iraq is considered the most viable option, with the Akass field in the west of the country only 50 kilometres from the Syrian network. “They have spare capacity, and the Akass region is not a big market, so it is logical to go to Syria,” said Kupisz. A contract has been signed for 1.5mcm/d to be processed in Syria for domestic or export use, but is currently under a new licensing round in Iraq.

Longer term, gas from central Iraq could be connected to the EAM pipeline, potentially able to provide 30mcm/d over time.

“International oil companies are looking at it, and attracting great interest, although Iraq's infrastructure is not developed,” said Danhash. “But the medium to long term prospects for Syria to become a gas hub are excellent.”

"The Iraqi supply could ultimately be the answer," concluded McMahon.

Photo courtesy of the EAMGCC

Middle east elections shake up region's peace diplomacy

International News Services

By Paul Cochrane in Beirut

June has been a month of elections in the Middle East. As happens every now and again in a region pretty thin on democracy and heavy on dynastic rule, there are elections that matter. The outcome of the Lebanese and Iranian elections fall in this rather rare category, with the Lebanese result retaining a status quo the West is happy with, while the Iranian 'result' is further souring relations with the US and Europe.

For despite being on either side of the Middle East, with Beirut and Tehran being as geographically far apart as London and Rome, the results play into the region's fractious politics. The common ground is Israel and the Iranian-backed Hizbullah. The Lebanese Shiite political party is deemed a terrorist organization by the West for its resistance stance against Israel, with the Islamic Republic a financier and ideological inspiration for Hizbullah. The largely unexpected defeat of the Hizbullah-led coalition was therefore welcomed by the international community, with the US having threatened to cut off military aid to Lebanon if the March 8, Hizbullah-led coalition had won. By Lebanese voting in by a narrow margin the more pro-Western March 14 coalition – certainly pro free market and the capitalist business model – the country has been rewarded with continued US military aid and relative stability that will help get Lebanon back on its feet after the political and economic roller coaster ride of the last four years.

Indeed, projections indicate that Lebanon will have its best summer season ever, with over two million tourists expected to descend on this Mediterranean country by the year end. Currently, not a hotel room is available, and retailers have stocked up for what they hope is a bumper season. If Lebanon gets through the summer without any incident, the country will be well on track to having positive growth in 2009, an anomaly for much of the region as well as the rest of the world, largely due to the strength of the country's banking system.

A few years ago when global financial institutions were easing access to credit and banks were lending way beyond their means, Lebanon's Central Bank governor opted for the conservative approach, requiring banks to have 30% of their deposits in cash. While some disapproved at the time, in the long run conservatism has paid off, with Lebanon's banking sector attracting deposits from the crisis hit Gulf and Lebanese expatriates concerned about the security of Western financial institutions. The election results are an added boon for Lebanon's financial as well as hospitality sectors.

But while the outcome is positive for business, there will be no rapprochement with Israel, given the opposition's sizable presence in parliament and Hizbullah still holding on to its weapons. Lebanon's big brother, Syria, has come out and said it is against any peace talks, while Iran under a second term of Ahmedinejad is likely to be even more vitriolic towards Israel than before. That will mean strong support for Hizbullah as well as Palestine's Hamas.

And although the US State Department saying it will send an ambassador to Damascus after a four year hiatus is a step in the right direction towards renewed engagement, Iran and Syria are strengthening ties. Economically, bilateral trade is minimal at $200 million a year, but Tehran and Damascus are necessary friends in a region where all other countries' political leaders are considered 'moderate' by Washington DC.

Damascus now has to decide how close it wants that relationship to be as the country tries to come in from the cold. Any offer Israel could propose to Damascus in return for peace would require major incentives, way beyond even the return of the Golan Heights, which Israel has occupied since 1967.

In Iran, the protests against the 'rigged' results have tailed off, but international relations are deteriorating to even worse levels than they were prior to the election. With Iran booting out two British ambassadors, and London responding in kind, European relations are getting strained. The US has also come out to criticize the outcome of the election. There is now a strong possibility that further sanctions will be imposed on the Islamic Republic. This will not help the high unemployment levels the country has, or the rampant inflation. It could also make it harder for Iran to get hold of the technology it needs to extract gas and oil from non-conventional fields. Ultimately, while Iran promises to be an attractive emerging market, the lack of engagement between Tehran and the West suggests the country will remain essentially cut off for more years to come. This presents security concerns from Palestine to Afghanistan.

Israel is still whipping up the threat Iran's nuclear aspirations pose for regional stability, one of the few cases where the Sunni majority Gulf countries see eye-to-eye with Israel, wary of the rise of a powerful Shiite Iran. If Iran becomes further isolated, Tehran will play fully on its opposition stance towards Israel and 'meddling imperialists' Britain and the US. With Tehran saying that foreign hands have been at work in the post-election protests, animosity and suspicion will only deepen. For the West this is a major set back, coming at a time when the West could do with tapping into Iran's abundant energy supplies, and better coordination and support from Tehran to deal with the challenges NATO faces in Afghanistan and in Iraq. Indeed, in the 30 years since the Islamic Republic was founded, Iran has been one of the missing pieces in the puzzle towards stability in Central Asia as well as the Middle East.

http://www.internationalnewsservices.com/articles/1-latest-news/11974-middle-east-elections-shake-up-regions-peace-diplomacy

Slavery to emancipation

Commentary - Executive magazine

Expatriate labor rights and living conditions in the Gulf have become hot, contentious topics once again. The BBC was the latest media player to cause concern for the Gulf's glitzy image when a reporter sneaked into a labor camp in Dubai and secretly filmed living conditions, exposing the gritty – and in this case, sewage swamped – underbelly.

Dubai took badly to the coverage, as it has been prone to do whenever the international media sticks its nose in places it shouldn't, and the company involved has been at pains to show it was an unusual case. But what has driven the issue further into international prominence was Bahrain's decision in early May to end the sponsorship system, the first Gulf Cooperation Council (GCC) country to do so.

Manama decided to annul the longstanding requirement that all expatriate workers have to be sponsored by a Bahraini citizen. To be put into effect August 1, the government will be responsible for issuing work permits, which can be renewed over two years and will allow expat workers to change jobs without having to seek a sponsor's permission. This is a significant step, ending a system - known as “kafala” - that effectively shackled workers to their employer, whether a construction worker or a general manager. Indeed, in the likes of Saudi Arabia, foreign workers cannot travel from one city to another without stamped official authorization from an employer, let alone hop on an airplane.

Bahrain's bold move has resultantly garnered praise from human rights groups and international labor organizations around the world. The word now is that other GCC countries should do the same.

There is certainly momentum picking up, with Qatar saying it is studying Bahrain's move and wants to adopt the same policies, while the United Arab Emirates has signed an agreement with India and the Philippines to launch a project to improve contract workers conditions.

But as always with radical shifts in policy, Bahrain's move is causing a great deal of controversy, foremost in its own parliament and among the local business community. One party, Al Wefaq, came under fire for failing to use its influence – it has 17 of the 40 seats in the lower house - to block a clause in the law that would require foreigners to have a minimum one-year contract. Businessmen say the ruling will be detrimental to the economy by putting the country at a competitive disadvantage, while businesses will be left to foot the bill of implementation costs.

That will clearly be the case, and Bahrain would stand to lose somewhat unless other Gulf countries do the same. On the other hand, Bahrain will become a more attractive place to work for expats, and the government won't have to worry about embarrassing stories that scream of 'slavery' and 'abuse'. Or face worker strikes, like the two that happened within the space of a week in Bahrain early June. A headache in the short term is better than a migraine in the long term.

The GCC is of course easily singled out globally, given its exposure to the West and its estimated 13-15 million foreign workers, predominantly from Asia. But while the West chastises the GCC on labor rights, millions of Asians, South Americans and Africans continue to toil away in sweat shops to make cheap consumer goods for the West. Millions of migrant laborers also work illegally and often in poor conditions in the West itself.

But where the GCC is strikingly different is in the sponsorship law, and that it was foreign labor that physically built and manned the transformation of the Gulf we see today – the tallest tower, the largest mall, the artificial islands, and the endless real estate projects. These 'unsung heroes' have long been under respected and appreciated. It is also worth recalling the region's own indentured past.

In Oman earlier this year I was reading the late British explorer Wilfred Thesiger's account of crossing the Empty Quarter in 1950, Arabian Sands. He arrives at an oil prospecting camp outside of 'Dibai' with his two Bedu guides, but while Thesiger is allowed to bunk down in the 'European lines', his companions have to sleep in the 'native lines.' This disparity was further emphasized in Abdul Rahman Munif's superlative trilogy Cities of Salt, where the local Gulf Arab laborers that built the oil infrastructure slept under hot tin roofs and earned a pittance while the Americans chilled out in air conditioned compounds.

That period is still in living memory, as is Saudi Arabia only ending slavery in 1962. While that might be a difficult past to talk about, so is the present sponsorship system. The move by Bahrain to end it, and the discussion it has provoked in Qatar and the UAE, shows that workers rights do matter. It should also prove economically advantageous in the long run, given that old adage of “happy workers make productive workers.”

Lebanon Elections 2009: Lebanese vote for the status quo

By Paul Cochrane in Zgharta, Tripoli and Beirut
Op-Ed Worldpress.com - June 11, 2009

In Lebanon's hotly contested elections on June 7, the Lebanese overwhelmingly voted to retain the status quo, ostensibly rubber-stamping the continuation of sectarianism, corruption, cronyism and dynastic rule.

Since the withdraw of Syria from Lebanon in 2005, the country has been divided into two camps. The March 14 coalition—a mixture of Sunni Muslim, Christian and Druze parties—which has largely dominated politics since the end of the civil war, won a majority in Sunday's parliamentary elections, securing 71 of a possible 128 seats. The remaining seats—save two that went to independents—went to the opposition March 8 coalition, led by Shiite parties Hezbollah and Amal, and Christian parties Muarada and the Free Patriotic Movement (F.P.M.) of General Michel Aoun.

But while the outcome of the election was a marginal victory for the so-called "pro-Western" March 14 coalition and a defeat for the pro-Iran and pro-Syria Hezbollah and its allies, the election reinforced the political processes that have dogged the country since independence.

Under the National Covenant, the presidency is allocated to a Maronite Christian, the prime minister a Sunni, and the speaker of the house a Shiite, while the parliament, following the Taif Accord in 1989 that ended the civil war, is split 64:64 between Christians and Muslims. As a result, all the major political parties are sectarian and the majority former civil war militias: Shiite parties Amal and Hezbollah, Christian parties the Lebanese Forces, Phalange, F.P.M. and Muarada, and the Druze Progressive Socialist Party (P.S.P.). The leading Sunni party, Future, is an exception, only formed post civil war.

As a combination of fear, self-interest and tribalism, all left over from the civil war, the 54.8% of Lebanese that turned out to vote did so overwhelmingly along sectarian lines and client allegiances—allegiances that purport to safeguard that sectarian identity and, through the party and leadership, pull strings, find employment, dole out cash, and so forth.

Neighborhoods, towns and villages are invariably mono-religious, noticeably marked by the political posters, symbols and flags of their respecitve parties. Political leaders have iconic status, with posters of the living and dead adorning walls of houses and shops, the rear windows of cars, and even screensavers of phones and computers. People's allegiances are open and clear, amply demonstrated in the lead up to the elections, and ramping up to a festive display on the eve of the elections.

A Muarada supporter waves a Hizbullah flag in Zgharta on the eve of the elections

Supporters took to the streets in towns and cities throughout the country to drive up and down the main strip in cars adorned with posters and waving flags on June 6. Political music blasted from speakers. Many were dressed in the color of their party: orange for F.P.M., yellow for Hezbollah, luminous green for Muarada, and blue for Future. It was the same on the day of the elections until the army, out in force over the past few weeks, banned supporters from flag waving or beeping political tunes on their car horns.

The dynastic side of Lebanon was also evident. In the Muarada town of Zgharta in Northern Lebanon, the posters were of the party's leader, Suleiman Franjieh—the son of an assassinated politician—along with his 22-year-old son, Tony Franjieh, being groomed to succeed his father. Other posters were of Michel Mouawad, son of assassinated President Rene Mouawad.

My choice: Muarada leader Suleiman Franjieh (right) with sons. Tony, in the middle, is being groomed to take over

In Beirut, voters were offered 26-year-old candidate Nayla Tueni, daughter of assassinated politician and editor of An Nahar newspaper Gibran Tueni; Nadim Gemayal, the son of assassinated politician Bachir Gemayal; and Saad Hariri, the billionaire son of assassinated former Prime Minister Rafiq Hariri. Up in the Druze area of the Chouf mountains, P.S.P. leader Walid Jumblatt dominated, the son of Kamal Jumblatt, who was assassinated in 1977, while in Mount Lebanon Sami Gemayal, the 29-year-old brother of assassinated politician Pierre Gemayal and son of former President Amin Gemayal, won a seat.

A Phalange supporter, when asked why he was voting for Nadim Gemayal, replied, "Because he is the son of Sheikh Bashir," referring to Bashir Gemayal, who was assassinated in 1982.

All of the above was enforced through Lebanese media, with the major parties partly or outright owning six television channels, newspapers and radio stations to put forward their messages. These messages, unfortunately, spoke little of improving health care, education, infrastructure, tax reform, or the environment. Some of the biggest problems facing Lebanon barely got a mention.

The country is chronically in debt, to the tune of $47 billion and equivalent to 170 percent of gross domestic product. Power shortages are a daily occurrence, infrastructure is crumbling, and Lebanon ranked 102 out of 180 countries worldwide in Transparency International's 2008 corruption perception survey. Out of a score of five on people's perception of corruption, five being extremely corrupt, Lebanon ranked 4.1, and 65% of respondents said the government was ineffective in the fight against corruption. In Foreign Policy magazine's Failed States Index 2008, Lebanon ranked 18 out of 60 countries, on par with Nigeria and just ahead of Ethiopia.

Instead of these crucial issues—which would typically be the main talking points of political candidates in other countries—political rivalries, sectarian animosity, foreign relations, and the Arab-Israeli conflict dominated debate.

In the lead up to the elections, U.S. Vice President Joseph Biden visited Beirut for three hours to reassure support for March 14 and warn that military aid would be cut if March 8 got to power, while Israel threatened to not hand back a village in Southern Lebanon occupied since the July 2006 war if March 8 won. Reinforcing Hezbollah's position as the country's first line of defense against Israel—the "Resistance"—was a string of arrests of Lebanese caught spying for Israel, while Israel carried out war game maneuvers the weekend before the election.

But the election results were not a clear indication of one bloc being pro-Western and the other pro Syria and Iran and resisting Israel. While March 14 is clearly favored by the West, largely because Hezbollah is deemed a terrorist group by the U.S., the Future movement is heavily backed and funded by Saudi Arabia. Politicians who ran on the Future list, such as Khalid Daher in Northern Lebanon, allegedly recruited for Al Qaeda leader Abu Musab al-Zarqawi and his ilk to fight the Americans in Iraq.

The March 8 bloc is equally difficult to label, with the Christian supporters who are wary of the other parties and not overly pro Iran and Syria. While the F.P.M.'s platform spoke against corruption, there is traction amongst political analysts that the crucial Christian vote that divided the community between the March 14 and March 8 coalitions was swung by the actions of F.P.M. leader Michel Aoun and Hezbollah. Just months before the election, Aoun paid visits to Tehran and Damascus, a dangerous political move that seems to have backfired, given Syria's past in Lebanon and the growing role of Iran in the region.

In May 2008, Hezbollah went against its word, turning its guns away from Israel and pointed them inwards, using armed forces to seize parts of Beirut and Lebanon over a four-day conflict. The move, which shut down the country, made people wary of the party's motives and appears to have prompted Christian voters to side with March 14 against Hezbollah. The March 14 Christian parties campaigned on this heavily, in rhetoric and on political billboards.

While the elections were not rigged or tampered with, the election was not above board. The Supervisory Commission on the Election Campaign's (S.C.E.C.) first report in early May identified 293 media violations of just one article of the electoral law committed over a fourteen-day period. The report included libel, slander, defamation and broadcasting that sparked sectarian tensions.

Campaign spending is a further area that parties flouted under Lebanon's new electoral law, surpassing the limit of $100,000 per candidate and $2.66 per registered voter in a district. There were also numerous stories of people being flown in to vote, from as far as Sao Paolo and Sydney, all courtesy of political parties. If anecdotal stories are to be believed, vote buying was also rife among the political parties. But while violations can be tallied and campaign finances audited, the body that has just been set up to rule on electoral misdemeanors, the Constitutional Council, can take up to five months to investigate and process violations. And violations can be submitted only by the top losing candidate in a district, not by any others. While the law is there, it effectively lacks any bite.

All in all, considering that transparency was never a strong electoral platform of any party, the 54.8% of Lebanese that voted got what they voted for: the same leaders, parties and families that have dominated politics in the country for the past thirty tumultuous years. As the French saying goes, plus ca change, plus c'est la meme chose—the more things change, the more they stay the same.

All photos copyright George Haddad

The Funding Methods of Bangladeshi Terrorist Groups

Combating Terrorism Center at West Point, CTC Sentinel

May 2009

Bangladesh receives minimal attention in counterterrorism circles, the international media, or academia, despite the large amount of Islamist violence in the country. Occasionally, however, it enters the spotlight when major incidents occur, such as the mutiny by the Bangladesh Rifles (BDR) in February 2009.¹ August 17, 2005 was another day that grabbed international attention: 459 bombs were detonated in 63 out of 64 district towns within seven minutes. It was an extraordinary act of terrorism that was logistically impressive, disciplined and deadly.

The incident triggered a marked shift in the Bangladeshi government's stance on terrorism. After initially blaming external forces for the attacks, including Israel’s Mossad and India's Research and Analysis Wing (RAW), the administration of Prime Minister Khaleda Zia admitted, for the first time, the presence of Islamist militants in the country, declaring Jama'atul Mujaheedin Bangladesh (JMB)² responsible for the blasts.³ Some 743 suspects were apprehended, and the leadership of the JMB and its affiliated party Jagrata Muslim Janata Bangladesh (JMJB) were arrested and executed.⁴

Today, Bangladesh faces threats from not only JMB, but an estimated 29-33 Islamist terrorist groups.⁵ These organizations are resurgent—internally and externally—with financing coming from numerous sources, most notably non-governmental organizations. While legislation exists, curbing funding faces numerous obstacles. This article will outline the various Islamist militant groups in Bangladesh, and then address the known and suspected financing methods of such groups and the obstacles faced in countering terrorist financing.

Bangladeshi Terrorist Groups

Nearly four years since the August 2005 bombings, JMB has resurfaced under new leadership. Raids by the armed forces in Dhaka and elsewhere have regularly uncovered JMB arms caches, ammunition, and literature.⁶ Not only is JMB active in Bangladesh, but various sources claim that between 29 to 33 Islamist terrorist groups are active.⁷ Only four of those, however, are officially banned: JMB, Harkat-ul-Jihad-al-Islami Bangladesh (HUJI), JMJB, and Shahadat-e al Hikma.⁸ More than 100 Islamic political parties and organizations exist.⁹

The Indian government, on the other hand, claims that there are 50 Islamic militant groups operating in Bangladesh, and has accused Dhaka of harboring 148 arms training centers.¹⁰ “The level of operational terrorism is as active as a few years back, we've had extensive levels of terrorism,” explained Major General (Rtd.) Muniruzzaman, the president of the Bangladeshi Institute of Peace and Strategic Studies (BIPSS) in Dhaka. “People who say we don't have a problem are in a state of denial.”¹¹

While militant groups have carried out terrorist attacks within Bangladesh—although none on the scale of 2005—there has been increased activity in India in recent years, as well as links to Indian groups.¹² HUJI, which has ties to al-Qa`ida,¹³ is allegedly carrying out contract activities in India to garner international recognition and obtain funds, explosives and munitions.¹⁴ Reports in the Indian press have also indicated Bangladeshi links to terrorist attacks in Bangalore and New Delhi,¹⁵ as well as the Mumbai attack on November 26, 2008.¹⁶

Yet while the Bangladeshi and Indian authorities have continued to crack down on militant organizations operating inside and outside of Bangladesh, this has been largely confined to the more immediate: raids, arrests and intelligence gathering. Going after the financiers and income generating techniques of Bangladesh-based terrorist organizations remains as great a challenge, with Bangladesh lacking the infrastructure as well as the political will to curb terrorist financing.

Funding Methods

Funding for fundamentalist and terrorist groups comes from the usual variety of sources. More than $1 billion in taxable goods is smuggled into the country from India, and analysts believe that some of this ends up in the hands of terrorist groups. This is also the case with small arms sales, drugs and counterfeit U.S. dollars that enter Bangladesh from neighboring Myanmar and the Golden Triangle. Money laundering is also a prime way of generating funds, estimated to account for 12-13% of the country’s GDP at $3.4 billion.¹⁷ Some 90% of revenue from smuggling is laundered; 30% of bribes, 60% of the retail sector, 35% of import-export, and 25% in tax evasion.¹⁸

Remittances from expatriate Bangladeshis working in the Middle East, the United Kingdom and elsewhere are a further area of concern. Currently estimated at $7 billion a year through banks, remittances surged from only $2 billion in 2006 as a result of financial institutions improving their delivery time and including value-added services.¹⁹ A further $7 billion, however, is estimated to illegally enter Bangladesh through the hundi system,²⁰ an illegal alternative remittance system similar to the hawala system that operates in the Middle East.²¹ Sources at the Bangladesh Bank (BB), the country's central bank, said the government was loathe to legalize hundi—which would increase oversight—as it would divert this capital away from the official banking sector and the financial system. ²²

While there is a broad consensus that such aforementioned techniques are used by militant organizations, the levels of funding generated are mere speculation. Several raids on JMB safe houses in Dhaka have revealed the properties were rented by expatriate workers in Saudi Arabia.²³ In the case of remittances, research by the BIPSS has indicated that large volumes of money are sent from members of the Bangladeshi community in London,²⁴ and that there are increasing signals of the diaspora link to incidents in Bangladesh. One of the most significant links to funding from the diaspora was unearthed in March 2009 when a madrasa in Bhola in southern Bangladesh was raided by an anti-terrorist division, turning up 10 firearms, 2,500 rounds of ammunition and radical Islamic literature.²⁵

Investigations revealed that the madrasa was funded by British-registered charity Green Crescent, and that the founder, British citizen Dr. Faisal Mostafa, had close links to the JMB and its current leader, Saidur Rahman..²⁶

The Green Crescent case highlights the lack of oversight by the authorities in regulating charities and NGOs—in Britain as well as in Bangladesh—and indicates what analysts have long suspected: NGOs are a major source of funding for militant groups. There are some 2,500 officially registered NGOs operating in Bangladesh, but potentially as many as 100,000, with smaller initiatives registered locally.²⁷ “No one has an exact number,” said Iftehkar Zaman, executive director of Transparency International Bangladesh. The Saudi Arabia-based Al Haramain Islamic Foundation, banned internationally by United Nations Security Council Committee 1267, has come under suspicion, along with other charities from the Middle East, for financing terrorism in Bangladesh. NGOs and charities have also been linked to the rise of Islamic extremism in the country, with the Kuwait-based Revival of Islamic Heritage Society (RIHS)²⁸ and the Saudi Arabian organization Hayatul Igachha (HI) connected to funding for some 650 mosques that have been used by terrorist organizations such as Ahle Hadith Andolan Bangladesh (AHAB)²⁹ and the JMJB.³⁰

An “Economy within an Economy”

Financing for legitimate Islamic political groups such as the country’s largest, the Jamaat Islami Bangladesh (JIB) and others such as the Islami Oikya Jote,³¹ are believed to stem from what has been called an “economy within an economy.”

Abdul Barkat,³² a professor of economics at Dhaka University, states that Islamic political parties have invested in 13 different economic sectors, including finance, insurance, retail, education, real estate, communications, media, health care and pharmaceuticals. “They earn to the tune of $300 million a year in net profits, and invest 10-20% for political purposes, anywhere from $30-$60 million, including paying salaries to up to one million full timers,” he said.³³ Muniruzzaman of the BIPSS thinks the amount is much higher than Barkat indicates. “They probably run a parallel economy.” Yet while front companies are undoubtedly linked to Islamic organizations, not all are militant, although the rise of an alternative economy does present further opportunities for militant groups to generate funds.

The JIB is a case in point. The largest Islamic political organization in the country, the JIB was a member of the Bangladesh Nationalist Party-led government alliance from 2001-2006. Yet while the JIB claim they have no links to militant groups, not everyone is convinced. Both JMB leaders who were executed in 2007, Abdur Rahman and Bangla Bhai, were active members of the JIB's student wing, the Islamic Chhatra Shibir.³⁴ Moreover, the JMB drew its ideology and political support from JIB.³⁵ There are also allegations that support for the JMB and Jagrata Muslim Janata Bangladesh (JMJB)extended to the higher echelons of the BNP government and the JIB.³⁶ These links are attributed to the government's half-hearted response to Islamic extremism and violence, and initial refusal to blame the JMB for the August 2005 bomb blasts.

These questions over the JIB and its plans for the future have Bangladeshi analysts concerned about the growth of the Islamist economy, believing it is a means to build up economic power as a way of gaining political power over time. “The Jamaat [JIB] works with long term plans unlike [the major two political parties] the BNP and Awami League,” said Iftehkar Zaman, of Transparency International Bangladesh. “They have infiltrated the administration, bureaucracy, the army, media and increasingly, even NGOs.”³⁷ The JIB also controls the largest bank, the Islamic Bank of Bangladesh, six universities throughout the country, and a think tank in Dhaka. Moreover, with the fundamentalist economy registering higher annual growth, of 7.5% to 9%, than the mainstream economy (of 4.5% to 5%), “it means that if it grows higher, there might be a time in 15 years where their economy will be difficult to fight in a monetary sense,” said Barkat.

Enforcement and Reality

In the immediate months after a military-led emergency government seized power in January 2007, a Financial Intelligence Unit was established, the Money Laundering Prevention Act was re-enacted in April 2008, and an Anti-Terrorism Ordinance was passed in June 2008.³⁸ Yet continuous political undermining of the legal process,³⁹ in addition to coercion, bribery and corruption, has meant that the country’s anti-money laundering (AML) and counterterrorist financing (CTF) measures “are confined to regulations we have printed.”⁴⁰ Furthermore, the government lacks effective knowledge and training to curb AML and CTF. “At a recent workshop of 50 people from the financial sector, law enforcement and key ministries, the people most related to CTF and AML said, frankly, that they didn’t have a clue on this sector and are comparatively weak in knowledge and implementation,” said Muniruzzaman.

The Bangladesh Bank (BB) is also struggling to implement regulations, lacking the manpower and finances to investigate the foreign and domestic transactions going through the financial system. Sources at the BB have admitted as much, conceding that some of the country’s six Islamic banks are “not properly run.” The country equally lacks reporting agencies such as on car dealerships and precious stones, raising concerns that such businesses could be used to launder money and finance terrorism.

The NGO bureau is of more concern, given the thousands of NGOs and charities in the country, and a total lack of transparency by the sector in the usage of funds.⁴¹ Sources at the BB said the bureau has insufficient human resources to regulate the whole sector, further highlighted by the Green Crescent case in March. A thorough investigation of charities and NGOs has also been suggested by the Bangladeshi media, pointing out that the bureau was run by the Ministry of Social Welfare, which was held by Jamaat Islami from 2001-2006.⁴² Given the claims that JIB has links to the JMB, there is speculation that some of the 473 local and 25 foreign NGOs licensed during this period were not properly regulated.

Conclusion

The reining in of financing for Bangladeshi terrorist groups is a significant challenge to the authorities. Given groups such as HUJI's growing reach in South Asia, and links to expatriates as far away as the United Kingdom, the issue is increasingly of international concern. Tackling terrorist financing is but one of the multipronged techniques needed on the ground. Yet with a weak state it is problematic unless substantial financial and professional assistance is given to the central bank to implement a more proactive AML and CTF regime and better regulate the financial sector.

The mutiny by the BDR suggests that the democratically-elected government of Sheikh Hasina faces an uphill struggle in holding on to power. The mutiny has shaken the military establishment, and left the country's borders porous and vulnerable. Claims that leaders of the mutiny were members of JMB are also of concern.

While the JIB did not garner as many seats in the December elections as in previous governments, the percentage of JIB voters actually increased, indicating a shift in society toward more radical Islam.⁴³ The rapid growth of the Islamist “economy within an economy” is equally an area of concern for the country's political future. Furthermore, corruption is on the rise once again in Bangladesh, with the new civilian government criticizing the Anti Corruption Commission (ACC) established by the emergency government in 2007, and the chairman resigning in protest.⁴⁴

Bangladesh clearly faces a tortuous road ahead. Given the weakness of the state, high poverty levels, widespread corruption, and the bipartisan nature of politics, the situation in Bangladesh warrants more attention from the international community.⁴⁵

Paul Cochrane is a freelance journalist based in Beirut, where he has lived since 2002. He covers the Middle East and Central Asia for specialized publications, business magazines and newspapers. Mr. Cochrane's work has been featured in The Independent on Sunday, the Frankfurter Allgemeine Zeitung, Money Laundering Bulletin and Fraud Intelligence. He has written on money laundering, terrorist financing, corruption and alternative remittance systems in Lebanon, Saudi Arabia, Afghanistan, the United Arab Emirates, Egypt, Syria and the Indian subcontinent. Educated in Britain, Mr. Cochrane earned a master’s degree in Middle Eastern Studies at the American University of Beirut.

Footnotes

1 The BDR is responsible for Bangladesh's 4,427 kilometer long border with India and Myanmar. On February 25, 2009, more than 1,000 BDR soldiers mutinied in Dhaka, killing 56 officers. For 36 hours, as the revolt spread to 12 other towns and cities, the BDR fought the regular army before surrendering. The findings of an official investigation have yet to released.

2 Jama'atul Mujaheedin Bangladesh (JMB) was created in 1998 by Sheikh Maulana Abdur Rahman, with the aim of capturing power through arms and implementing Islamic law. The Jagrata Muslim Janata Bangladesh (JMJB) is an offshoot of the JMB, founded in 2003 following clashes with the police. Both organizations overlap in structure and personnel, with JMB activists often JMJB members.

3 Haroon Habib, “17 August 2005: Milestone of Terror” in Jaideep Saika, Bangladesh: Treading the Taliban Trail (New Delhi: Vision Books, 2006), p. 252. The JMB left leaflets at the blast sites, declaring: “We’re the soldiers of Allah. We’ve taken up arms for the implementation of Allah’s law the way the Prophet, Sahabis and heroic Mujahideen have done for centuries…it is time to implement Islamic law in Bangladesh.”

4 The six leaders were hung on April 30, 200. See the Bangladesh Assessment 2008 at the South Asia Terrorism Portal, located at www.satp.org. For information on the arrested suspects, see “Intelligence focused only on accused JMB men,” Bangladesh News, October 28, 2008.

5 “Lack of policy affecting fight against militancy in Bangladesh,” The Indian, October 26, 2008. A detailed list of the organizations can be found i Bangladesh Awami League Newsletter 4:4(2005), located at www.albd.org/newsletter/2005/vol4_no4_2005.htm.

6 According to The Daily Star, 35 out of the 50 most-wanted JMB cadres are still active in four northern districts.

7 “Lack of policy affecting fight against militancy in Bangladesh,” The Indian, October 26, 2008. A detailed list of the organizations can be found in Bangladesh Awami League Newsletter 4:4 (2005), located at www.albd.org/newsletter/2005/vol4_no4_2005.htm.

8 Harkat-ul-Jihad-al-Islami Bangladesh (HUJI), a Deobandi group, is affiliated to the Pakistan-based HUJI, and was formed by 17 Bangladeshi mujahidin that returned from Afghanistan, allegedly with financial help from al-Qa`ida. The group is one of the six signatories to the fatwa for Jihad Against Jews and Crusaders on 23/2/98. Shahadat-e al Hikma (SAH) announced in 2003 that it planned to launch an armed struggle to turn Bangladesh into an Islamic state. It was promptly banned. Its chief, Sayed Kawsar Hussain Siddiki Raja, stated at the time that SAH had 10,000 “commandos” and 25,000 fighters. SAH has since gone underground.

9 Shakhawat Liton, “Islamic parties boom after 1976 ban lifting,” The Daily Star, August 29, 2006. A constitutional ban on religious parties was repealed in 1976. Liton notes that there are no exact figures on the number of parties with either the government or the Election Commission.

10Personal interview, Colonel Satinder Saini (Rtd.), Institute of Defence Studies and Analyses in New Delhi, September 24, 2008.

11Personal interview, Major General (Rtd.) Muniruzzaman, Dhaka, November 24, 2008 and April 22, 2009.

12 India's Union Home Ministry in its 2007-2008 Annual Report stated: "The hand of Pakistan-based terrorist organizations—Lakshar-e-Toiba (LeT) and Jaish-e-Mohammed (JeM)—and, increasingly of the Bangladesh-based HuJI, known to have close links with the Inter Services Intelligence, has been observed in most cases" of terrorist attacks in India. New Delhi has also accused HUJI of providing grenades to LeT in India and coordinated attacks in India with the Students' Islamic Movement of India (SIMI), the LeT and JeM.

13 Rohan Gunaratna, Inside Al Qaeda: Global Network of Terror (New Delhi: Roli Books, 2003), p. 219; Bruce Vaugh, “Islamist Extremism in Bangladesh,” Congressional Service Report, January 17, 2007.

14Personal interview, Major General (Rtd.) Muniruzzaman, Dhaka, November 24, 2008 and April 22, 2009.

15“Delhi Police launches drive to deport illegal immigrants,” Press Trust of India, July 13, 2008.

16 Interview with the author, 22 April, 2009. According to one report, the Thuraya satellite phone recovered from the fishing trawler the terrorists used to reach Mumbai contained records of a conversation between Lakshar-e-Toiba chief Yusuf Muzammil in Muzafarabad, Kashmir, and 'Yahya', a point man for LeT and HUJI in Bangladesh. Pakistan's Federal Investigation committee report also has a reference to HUJI's involvement, and there are indications that mobile SIM cards were purchased in Kolkata by Bangladeshis on behalf of the perpetrators.

17According to research carried out by Abul Barkat, Professor of Economics at Dhaka University – ‘The Economics of Fundamentalism and the Growth of Political Islam in Bangladesh’ in Dhaka University’s Social Science Review journal

18Ibid.

19Figures provided by members of the Bangladesh Bank in Dhaka, November 25, 2008.

20Hundi, or Hawala, is an alternative remittance system (AMS) widely used in the Middle East and South Asia, particularly by expatriate workers, to send money via official or unofficial brokers with minimal (or no) paperwork involved. Many countries are trying to better regulate AMS.

21Ibid.

22Personal interviews, meeting with members of Bangladesh Bank, Dhaka, November 25, 2008.

23Personal interview, Major General (Rtd.) Muniruzzaman, Dhaka, November 24, 2008 and April 22, 2009.

24There are an estimated 500,000 British citizens of Bangladeshi origin.

25 James Brandon, “UK Charity Funding Arms and Training for Bangladeshi Terrorists,” Terrorism Monitor 7:9 (2009).

26'Faisal now admits ownership of arms,' The Daily Star, 16 April 2009 – http://www.thedailystar.net/story.php?nid=84247 Faisal was arrested in Bangladesh on April 6, 2009

27Interview with Iftekhar Zaman, Executive Director of Transparency International Bangladesh, Dhaka, 26 November, 2008.

28The RIHS registration was canceled in 2007, but is still operating. The head of a local wing of the RIHS, a Sudanese national, was arrested in March 2009 for using the charity to train militants.

29Ahle Hadith Andolan Bangladesh (AHAB) is a similar party to the JMB and JMJB, often working closely together, and has been linked to the Jamaat Islami Bangladesh (JIB).

30See Hiranmay Karlekar, Bangladesh: The Next Afghanistan? (New Delhi: Sage Publications, 2005).

31 Islamic political party Islami Oikya Jote was part of the Bangladesh National Party four-party ruling coalition from 2001-2006.

32Interview with Abul Barkat, Professor of Economics, Dhaka University, 27 November, 2008

33 Following the publication of ‘The Economics of Fundamentalism and the Growth of Political Islam in Bangladesh’ in Dhaka University’s Social Science Review journal, Barkat told the author he received some 70 death threats. In JIB newspaper Shagram, Barkat was subjected to character assassination but the economic statistics and findings were not refuted.

34The Islamic Chhatra Shibir is the JIB's student wing, operating in most universities (but banned at Dhaka University). The ICS has been involved in violence and has connections to the banned Students' Islamic Movement of India (SIMI).

35 Wilson John, “The Bengali Taliban: Jamaat-ul-Mujahideen Bangladesh,” Terrorism Monitor 6:10 (2008).

36For a detailed account, see Hiranmay Karlekar, Bangladesh: The Next Afghanistan? (New Delhi: Sage Publications, 2005).

37Iftekhar Zaman, Executive Director of Transparency International Bangladesh, Dhaka, 26 November, 2008.

38See Bangladesh Bank's Anti Terrorism Ordinance, 2008, No. 28 and Money Laundering Prevention Ordinance, 2008, No.12.

39Politicians have continuously undermined the judiciary through bribery and applying pressure on the judiciary to drop cases linked to political parties and prominent businessmen.

40Personal interview, Major General (Rtd.) Muniruzzaman, Dhaka, November 24, 2008 and April 22, 2009.

41Zaman.

42“Terror-financing NGOs remain unscathed,” The Daily Star, November 26, 2005.

43Personal interview, Major General (Rtd.) Muniruzzaman, Dhaka, November 24, 2008 and April 22, 2009.

44The creation of the ACC led to the arrest of 200 officials and businessmen, and the seizure of $30 million. Two former prime ministers—Khaleda Zia of the BNP and Sheikh Hasina Wajed of the Awami League—both had charges brought against them but were dropped as part of a political compromise in the lead up to the elections. Bangladesh ranked 147 out of 180 countries in Transparency International's Corruption Index in 2008.

45 Recent proposals to establish Joint Working Groups on Counter Terrorism with the British, American, Australian and Russian governments are a move in the right direction.

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