Renewable energy: What does it mean for oil-dominated Middle East?

MENA countries that are reliant on oil revenues face uncertainty as solar and wind power gain ground

                 

 Masdar, Abu Dhabi 2012 (Paul Cochrane)

 

Middle East Eye: The theory of peak oil, whereby the cost of extraction would exceed how much consumers were willing to pay while demand outstripped supply, was first floated more than 60 years ago. Oil production, geologist M King Hubbert predicted, would peak by the turn of the millennium.

That didn’t happen - but the spectre of peak oil raised its head again in the mid-2000s, in part pushed by Matthew Simmons’ book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

Simmons argued that Saudi Arabia had inflated its colossal oil reserves - a point that has some credence, as further highlighted in Wikileaks US diplomatic cables from 2011 - with some 90 percent of Saudi’s oil coming from seven giant oil fields, of which three are more than 50 years old.

With the level of reserves questionable, particularly from one of the world’s top producers, and demand constantly rising, oil prices would rise ever higher.

Prices did indeed surge, reaching more than $140 a barrel in 2008. Peak oil theories played a part in the speculation that drove up prices. That same year, some observers were forecasting oil at $200, even $500, a barrel. Several even predicted the subsequent implosion of civilisation and World War Three.

But high oil prices and pressure to move away from an over-reliance on oil propelled a global move towards renewable energies. More than a decade later, the oil price is around $40 a barrel - and there is plenty still under the ground, largely due to enhanced oil recovery technologies, particularly for shale oil in the US.

 

                

 

To read the rest go to: https://www.middleeasteye.net/news/renewable-energy-oil-middle-east

 

 

Saudi Arabia's economic crisis, explained in 10 graphics

The kingdom has been hit hard by the coronavirus pandemic and falling oil prices among other challenges

Middle East Eye: Saudi Arabia has been trying to diversify its economy for decades, as emphasised in Vision 2030, launched by Crown Prince Mohammad Bin Salman.

But the the dual shocks of coronavirus and tumbling energy prices have hurt its plans, particularly in the non-oil sector, which is forecast to contract by 14 percent this year. 

For your average citizen in Saudi Arabia, that means only one thing - more belt tightening. These are the key threats.

1. Saudi Arabia can no longer rely on oil

Oil revenues account for around two-thirds of the kingdom’s exports. But while Saudi Arabia was once responsible for nearly 30 percent of global oil exports, that figure has now dropped to just 12 percent, according to Capital Economics.

Riyadh started a price war in March in an apparent bid to damage rival producers, even as global demand was sinking due to Covid-19. It flooded the market, but in doing so saw its crude export revenues dropped by 65 percent compared to April 2019. “The sharp decline in oil prices, exacerbated by demand loss from the pandemic, has hit Saudi Arabia particularly hard,” said Boris Ivanov, founder and managing director of consultancy GPB Global Resources.

Prices have recovered since to about $44 a barrel – but that is still well below the $77.6 a barrel that the kingdom needs to balance its budget. Nor is there any sign that it will return to those levels.

Nor is the global outlook positive: demand is projected to fall “by 8.1 million barrels a day, the largest in history” because of Covid, according to the International Energy Agency (IEA). Looking forward, the organisation predicts that demand will peak by 2030 due to the rise in renewable energy.

To read the rest (and check out the great graphics) go to: https://www.middleeasteye.net/news/saudi-arabia-economic-crisis-oil-coronavirus-debt-vision-2030

 

Beirut explosion: How the port blast will hit Lebanon's economy

 Disaster spells catastrophe for country's much-needed imports and will likely hit the already flagging currency, experts tell MEE

Middle East Eye: The huge explosion at Beirut’s port is a crippling blow to a country that had been reeling from a political and financial crisis, a depreciating currency and the Covid-19 pandemic. Economic damage from the blast is being estimated in the billions of dollars.

“It’s hard to imagine the financial cost of this disaster, it is in the billions. The port is completely destroyed, and much of the city is damaged. Who will pay for the reconstruction of Beirut?” said Laury Haytayan, a Beirut-based expert at the National Resource Institute.

Beirut port, which was the epicentre of the explosion, is the country’s main logistics hub and its deepest sea port. 

“It was the beating heart of the country as it provided around 80 percent of imported goods, which kept the economy moving,” said Sami Halabi, director of knowledge and co-founder of Triangle Consulting in Beirut.

The closure of the port threatens food security in the country, which is import reliant for an estimated 65-85 percent of food needs, according to a Triangle report. Some 15,000 tonnes of wheat had been stored at the port’s silos.

“The disaster will have a dramatic impact on food security. Bread prices were already up, spiking food prices will go up further, and 50 percent of Lebanese are under the poverty line. This is the perfect storm over the next several months,” said Martin Keulertz, assistant professor in the food security programme at the American University of Beirut.

The country’s second port, in Tripoli 80km north of the capital, is significantly smaller than Beirut’s and will struggle to handle additional cargo volumes.

“Tripoli is not really fitted out to deal with the amount of food imports needed. There is an absolute urgency to import, and the government doesn’t have the foreign currency to do that,” said Halabi.

A third shock

The disaster is the third shock to hit the country since protests erupted in October 2019, and the economic impact of the coronavirus pandemic.

Despite banks imposing informal capital controls to limit cash withdrawals, over $25bn has flowed out of the country over the past year, while the Lebanese lira has depreciated by around 80 percent to the US dollar. Public debt has also skyrocketed to $92bn, equivalent to over 170 percent of GDP.

With foreign currency having dried up, importers had been struggling to pay for goods, reflected in imports dropping by 50 percent this year, according to Lebanese Customs authority data.

The impact of the explosion on the economy could cause further falls in the lira, which has dropped from LL1,507 to the dollar to over LL8,000, which would make imports even more expensive.

“Once the markets open the lira will take a hit, but the extent of that is as yet unknown. Whatever local demand there was for lira, it is going to be dampened by people having even less economic prospects than before,” said Halabi.

The ongoing ramifications of the financial crisis will impede the economy’s ability to rebound from the explosion.

“How will businesses start up again when there are capital controls that don’t let people take money out of banks? And with a fluctuating black market rate for currency? It’s a complete disaster,” said Haytayan.

Across the board, the Lebanese economy has been on the decline, with construction permits down 60 percent, car sales down 70 percent and tourism down by half this year on 2019.

“Everything is at a standstill, and putting it all back together again will be difficult as many people had not taken out insurance to cover for this type of disaster, and the insurance companies are tied to the banking sector, which was in the doldrums due to the financial crisis,” said Halabi.

 “Many businesses will not recover.”

 This article is available in French on Middle East Eye French edition.

 

 

 

Supertanker state: How Qatar is gambling its future on global gas dominance

 Doha sets course to become 'Saudi Arabia of gas' with $21bn order for new shipping fleet. But with demand and prices sinking, is the emirate heading for the rocks?

 Middle East Eye:  When Saudi Arabia caused oil prices to tumble in March the impact on oil producers’ revenues was immediate. But in neighbouring Qatar, which is a leading producer of liquefied natural gas (LNG), the situation is more complicated.

Last year, LNG accounted for $45.3bn (62 percent) of Qatar’s $73.1bn in export revenues. LNG prices are linked to oil and have also plummeted since March, though with one crucial difference.

Qatar exports 77 million tonnes (MT) of LNG a year, but it sells just 6 MT of that on the spot markets for immediate delivery. Most of Qatar’s LNG revenues are tied up in medium and long-term contracts, with a time lag before any drop in oil price is felt by both sellers and buyers.

“Around about 85 percent of Qatar’s gas contracts are linked to oil, with a six-month delay, so in terms of fiscal impact it will only be felt in September. This is a problem, and there’s a debate as to what extent LNG volumes will be impacted,” said a senior member of a state-linked Qatari financial firm speaking on condition of anonymity.

“Saudi Arabia saw the impact [of the oil price drop] immediately, here we’re behind the curve.”

 To read more: https://www.middleeasteye.net/news/qatar-gas-lng-market-oil-prices-dominance

Mohammed bin Salman's Vision 2030: Can Saudi Arabia afford it?

MBS's multi-trillion-dollar project was supposed to be a catalyst for social and economic reform. But Covid-19 and an oil price crash have thrown its future into doubt

Middle East Eye: “All success stories start with a vision” was blazoned across huge posters of Saudi Arabia’s crown prince in Seoul last year when Mohammed bin Salman made his first state visit to South Korea.

The slogan appears to have been directly lifted from a Saudi media consultant “applauding” the announcement of Vision 2030 by Mohammed bin Salman in 2016 to the Arab News, “to lead us to a bright future”.

But as the Vision plan starts its fifth year - and with a decade to go - the kingdom is reeling from the dual shocks of low oil prices and the economic fallout from the Covid-19 pandemic. Is there light at the end of the tunnel for Vision 2030?

When the Vision was announced to much fanfare by the then-deputy crown prince, figures were thrown around of $1tn to be invested in mega projects, and another $1tn to be attracted in foreign investment. The Public Investment Fund’s (PIF) assets would reach $2tn by 2030, it was predicted.

To read more: www.middleeasteye.net/news/saudi-arabia-vision-2030-mbs-neom-coronavirus

COVID-19 impact ‘will take years to process’: Mental health challenges surge for British Muslims

COVID-19 lockdown restrictions start easing in England from today, with primary schools re-opening and gatherings of up to six people allowed. Throughout the pandemic, the UK, with the highest number of COVID-19 related deaths in Europe, has seen a rise in calls from young British Muslims seeking mental help support during Ramadan.

---

(Image courtesy of MYH)

Salaam Gateway: The Muslim Youth Helpline has had a busy few months. Just before the UK implemented COVID-19 related restrictions in March, there was a spike in calls from young people wanting to talk, particularly about anxiety. As the lockdown took hold, calls increased by 313% and the small team of volunteers at MYH struggled to handle them.

“It has been relentless. Our statistics for April show we dealt with 700 inquiries – that is the most we’ve had in 19 years,” MYH’s director, Zohra Khaku, told Salaam Gateway.

Several weeks into the pandemic, anxiety is still one of the biggest issues the helpline deals with. “If you had anxiety disorder before, it is worse, if you didn’t, now maybe you do,” she said.

As the lockdown continued and Ramadan started, more serious cases started to emerge. In early May, Khaku tweeted: “Last night about half of our calls at Muslim Youth Helpline were about suicidal feelings.”

But it was not just that night, she said.


To read the rest click here

Saudi Arabia and SoftBank: How MBS's $35bn gamble on future tech backfired

SoftBank’s Vision Fund was to be the vehicle for the kingdom's economic transformation. With billions wiped off its value, has Riyadh sunk its money into a hole in the desert?

 

Middle East Eye: When Saudi Arabia’s Public Investment Fund was brought under the direct control of Crown Prince Mohammed bin Salman in 2015, and the fund’s programme was announced in 2017, it was under a mandate to invest at home and abroad to be a financial enabler of the kingdom's economic diversification efforts. 

 

One of its earliest and biggest splashes was in Tokyo-based SoftBank’s $100bn Vision Fund, which invested in high-profile technology companies and, in keeping with its name, aimed to bankroll futuristic developments in artificial intelligence, robotics and gene-sequencing.

Saudi Arabia, along with Abu Dhabi’s sovereign wealth fund, Mubadala, contributed almost two-thirds of the fund’s capital, with PIF investing some $35bn.

The investment with the Japanese conglomerate seemed a perfect match for the kingdom’s Vision 2030, outlined in 2016, with SoftBank making a commitment to enable diversification efforts through involvement in technology, renewable energy and in MBS’s $500bn Neom mega-city project on the Red Sea coast.
SoftBank’s links to Saudi and MBS, by then the kingdom’s crown prince, came under scrutiny in October 2018 following the murder of journalist Jamal Khashoggi, but it largely managed to ride out the negative publicity.

Just a year ago, the media gushed about SoftBank being a major disruptor on the start-up and venture capital tech scene, while a second Vision Fund was announced. Riyadh was initially keen on getting involved but backed away last year as problems emerged with the first fund, according to Rory Fyfe, managing director of Mena Advisors, a regional research and consultancy company in London.

In late 2019, financial issues started to surface at US workspace company WeWork, in which SoftBank had invested $18.5bn, as well as other investments. The year ended for SoftBank with a $13bn loss.

Then in 2020, problems started to mount across its portfolio as the economic fallout of the Covid-19 pandemic spread. Companies in which it had invested, such as in Uber, where it had put in $9.3bn, saw their share prices drop, along with scores of other firms, wiping out a further $18bn for the Vision Fund in the first three months of the year.

To read the rest go to Middle East Eye

Coronavirus: Turkey and Egypt garment manufacturers squeezed by global brands

As the world went into lockdown mode, manufacturers found major global brands and retailers had gone 'incommunicado'

 

 

 

 'Made in Egypt' - brands have left manufacturers in the lurch after cancelling orders (Paul Cochrane)

 

 

 

Middle East Eye: The Turkish and Egyptian garment manufacturing sectors employ millions of people, but big brands have left them in the lurch with cancelled orders and millions of completed items not dispatched in the wake of the coronavirus pandemic.

Towards the end of 2019, the Egyptian government and export associations hosted a sourcing event in Cairo, called Destination Africa, to bring together buyers from the West and manufacturers in Egypt and from around the continent.

Such trade events are held around the world at convention centres or high-end hotels, featuring gala dinners and spectacles to woo buyers, and seminars that discuss sustainability, modernising the supply chain and the future of the $2.7tn fashion industry.

After several rough years in the wake of the 2011 uprising, Egyptian manufacturers were keen to drum up business, increase the $3bn in garment and textile exports in 2019 and double the number of employees in the industry to two million by 2025.

Over in Turkey, the world’s fifth largest garment and textile exporter had hosted similar events throughout the year to tout its manufacturing prowess and increase its $26bn in exports.

Such outlays were paying off, with solid order books for 2020 and exports on the rise in the first few months of the year.

Turkey and Egypt were also riding high on buyers increasingly diversifying their sourcing from China due to the US-China trade war and wanting closer proximity to the European market.

Cancelled until further notice

 

Up until March, some one million Egyptian and 1.5 million Turkish workers were busy spinning, dying, cutting and sewing garments for the summer season, which accounts for around half of annual sales.

Then Covid-19 started to sweep across Europe and North America which, along with Japan, account for around 80 percent of global fashion consumption.
Countries went into lockdown mode, and to the manufacturers’ surprise, major brands and retailers went “incommunicado”, said a Turkish manufacturer who wanted anonymity over concerns about future business relationships with leading brands.

“At first there was no communication at all from corporate buyers," he told Middle East Eye by phone from Istanbul.

"They were not saying, we will pay you late, or we’ll take the goods at some point. There was complete silence, even about goods delivered weeks or months before.”

While 80 percent of Turkish factories closed in the first several weeks of the lockdown - around 60 percent are open today - the sector was left with over $2.5bn in ordered inventory and a further $1bn in orders in production, or already produced, that were cancelled until further notice, said Hadi Karasu, President of the Turkish Clothing Manufacturers’ Association (TGSD).

“Factories were forced to cover the fabric and accessories they bought from brand-designated raw material suppliers," Karasu told MEE.

"These manufacturers operate at single-digit margins while they are being asked to keep the materials for an unforeseeable future.

"Around 50 to 60 percent of a product’s cost is raw material.”

To read the rest click here
 

'Dangerous crossroads': Gulf rulers in peril as economic shocks continue

Drop in oil prices and hit from coronavirus are exposing unwise policies and raising fears of a plunge into violence

Middle East Eye: Nearly two months ago, before the global spread of the coronavirus, Riyadh made a bold gambit to slash oil prices.

The Saudis knew it was going to hit their bottom line – their break-even oil price to balance the budget – but they did not foresee such a dramatic slump in demand as the global economy ground to a halt.

Economists described the impact on Middle Eastern economies as a “dual shock”.

Last week, West Texas Intermediate (WTI) oil, the US benchmark for the commodity, entered negative price territory for the first time in history, economically impacting Gulf oil producers yet again, albeit in a lesser, but third shock.

“When it became clear how bad the pandemic was, they [the Saudis] expected it to go from bad to worse, but it went from worse to terrible as they didn’t see last week’s move,” Mike Lynch, from US consultancy Seer Energy, told Middle East Eye.

To read the rest go to:  https://www.middleeasteye.net/news/dangerous-crossroads-gulf-rulers-peril-economic-shocks-continue

Brands have "wrecked" Turkey garment making sector

Waiting for a home: $3 billion in orders on hold (Paul Cochrane)

Just Style: The president of the Turkish Clothing Manufacturers’ Association (TGSD) has complained about the treatment his members have experienced at the hand of international brands during the Covid-19 crisis. 

By cancelling current and future orders, extending payment terms and demanding discounts, brands have devastated the Turkish garment manufacturing sector, with 80% of factories stopping production, and leaving them with an estimated USD3 billion in inventory on hold, he says.

“Unfortunately we were caught at beginning of the season, so high inventory, which are their [buyers’] products, with their own labels, and fabrics and accessories that had been nominated,” Hadi Karasu, president of the TGSD, told just-style.

 He told just-style: “But most of them said, freeze production, go home, and we will let you know what will happen. They have not informed us yet, from the beginning of March to the end of April, about their decision on inventory.” 

To read the rest go to: www.just-style.com/news/brands-have-wrecked-turkey-garment-making-sector_id138611.aspx

Staggered progress – AI adoption

Money Laundering Bulletin

 (Paul Cochrane)

Artificial Intelligence and machine learning are touted as game-changers in the detection of financial crime but, despite some promising results, Paul Cochrane finds obstacles to roll-out, not least around regulators’ ability to green-light new technologies as well as effectively utilise the data they produce.

Drivers for change

Major financial institutions are investing in next generation technology driven, partly, by a need reduce the costs of complying with AML/CFT regulations, estimated at USD$23.5 billion a year in the USA, and in Europe close to USD$20 bn. (1) A further motivator is the exceedingly high rate of false positives derived from suspicious activity reports (SARs) under existing systems – running more than 90% of filings in the USA. (2)   

“We have seen a rise in… technology vendors trying to address the cost base of AML compliance and to minimise false positives through employing AI and supervised machine learning techniques. This technology is typically employed as a second filter to try to improve effectiveness,” said Michael Shearer, Global Head of Product Management, Financial Crime and Threat Mitigation at HSBC in London.

Vendors such as US-based Ayasdi and FICO, and UK-based Quantexa, are developing such software, often in partnership with large financial institutions like HSBC, which have the capital to invest in such technology as well as harness big data sets for testing new systems. 

Tireless precision

Transaction monitoring systems (TMS) are the main focus, with AI segmenting clients according to their financial profile and behaviour based on past transactions. “AI solutions can be more surgical about the way financial crime is detected,” said Shearer. The industry standard approach can be blunt, but machine learning can build a complex set of rules based on behaviour which a human simply couldn’t write and apply them routinely across the whole customer book.”

The advantages of using such new technology are the automation of manual search and data entry processes, reducing duplicative work. A Celent report claims that adopting AI technology can lead to investigation times being sped up by 50% or more, while escalation rates can be improved by up to 30%. (3)

Dr Sebastian Hetzler, Vice President Product Management at FICO, an analytics company, told MLB that AI and machine learning can improve the quality and precision of SARs. “We have seen the number of SARs increase by 20 percent, and investigation process gains from efficiencies of up to 30%, so AI solves issues in both directions,” he said.

The education piece

Yet despite such filing improvements only a handful of regulators, in the US, the UK, Russia, Singapore and Hong Kong, are encouraging the development of machine learning to improve transaction monitoring systems. Few banks, outside of the major international players, are investing in AI systems. And in part, said Matthew Redhead, associate fellow, RUSI Centre for Financial Crime and Security Studies in London, this is due to uncertainty as to how AI will be received by regulators.

Model validation is a particularly thorny issue as financial institutions have to be able to explain the analyis and output to regulators. “It is nightmarish, and massively difficult to resolve,” said Redhead.

Indicative of the difficulty is anomalies that pop up live. “The beauty of using some different machine learning is the identity of the anomaly, as it appears in real time. But if you don’t understand why the parameters are moving, you will not get the benefit,” said Redhead. The model validation problem for TMS is down to the fluidity of the data and the mutability of the algorithms as they seek to identify patterns in transactions - “because the content the algorithm is learning from (the transactional data set) is changing all the time, so what looks odd and anomalous is also likely to change over time,” said Redhead.

“This is incredibly valuable when trying to identify changes in potential criminal behaviour. But the sheer dynamism of such machine learning can be impossible to explain and repeat for a regulator” and so meet their traditional demands for explicability and repeatability.”

Banks and vendors are confident, however, that they can effectively demonstrate how a system works and the derived benefits -  citing the use of real-time financial crime technologies already in use to detect fraud and the processing of payments. “We are learning from our experience fighting fraud and applying that to AML,” said Shearer. “There are significant similarities in the technology to understand the customer and detect behaviour of concern over time.”

Twin-track

To Hetzler, explainable AI is a “potential game changer.” While he agreed that there is “fear of AI as a black box while in a world of rules, everything is explainable and transparent.” AI offers many opportunities for banks without getting into conflict with regulators who still demand a rules based approach, he said.

With regulators not requiring the adoption of AI, financial institutions using AI are adopting a dual approach, keeping current rules-based systems in place supported by a supervised AI model. “In a rules-based world, I see AI as augmenting systems not replacing them. It is an evolution not a revolution,” said Hetzler.

The bigger picture

For AI to be effective and be a real ‘game changer’, regulators and financial intelligence units (FIUs) will need to be able to handle the data passed to them, said Hetzler who noted such discussions were already underway in some quarters. “We are talking with them about AI and cognitive analytics to improve their work, and connect different SARs and so on,” he said.

The ideal solution, which Redhead said sounds a “bit utopian”, looks toward a sectoral or even national approach that collates all the data generated, rather than individual institutions applying their own versions of AI for screening and transactions. This would require enhanced cooperation between the public and private sectors, in addition to amending data privacy laws, such as the European Union’s General Data Protection Regulation (GDPR) so that such data remains legal. “The problem I see is a real reticence on the part of regulators and law enforcement to even consider this as an option,” said Redhead.

Tom Neylan, Senior Policy Analyst – AML/CFT at the Financial Action Task Force (FATF), said SAR confidentiality requirements could enable such cooperation, with FATF “encouraging a more permissive approach to sharing information by national regulators.”

However, there are doubts as to how effectively regulators and enforcement agencies will be able to handle the new technology. “At government agencies technical skills are at a premium, and the gap compared to the private sector is massive. There is a war for talent in this area,” said Redhead. 

The surge in SAR filings that AI could bring is a further issue, even in the USA despite the US Treasury backing the financial sector’s adoption of AI. “I’m not optimistic that governments and law enforcement will respond well to the explosion of financial intelligence data and the adoption of AI. In the USA, we cannot keep up with the approximately 19 million pieces of Banking Secrecy Act (BSA) financial intelligence we have now,” said John Cassara, a former US Treasury special agent.
“Innovative management and personnel practices are effectively discouraged. Treasury’s Financial Crimes Enforcement Network (FinCEN) does not have a good track record with analytic systems of all sorts. An early version of AI at FinCEN was allowed to atrophy and eventually abandoned. Government IT expertise in financial intelligence is woefully behind the times.”

Global roll out of AI will depend on regulators backing such initiatives and inevitably, guidance from  FATF on the adoption, and impact, of such innovation would help. There is no current official FATF policy on AI although it has been discussed by the body as part of a wider programme into how technology is changing AML and CFT.

The Chinese presidency of FATF this year has a particular focus on AML supervision, announced last November (2019). “One theme was technology, not just how supervisors can use it, but also how they need to adjust their approach to technology used by companies. This is a new challenge,” Neylan noted.

Another potential risk is that larger financial institutions push ahead with AI to the detriment of smaller banks that cannot invest in AI technology, in advanced as well as less advanced jurisdictions. Currently there is interest from banks in the US, Europe, Asia-Pacific, and in certain African countries such as South Africa, said Hetzler, who said this was “a big challenge… to smaller tier three and tier four banks, as they can’t afford or invest in the same way as larger banks.” He said: “We are working on a consortium approach to give smaller banks access to the technologies -  banks sends anonymised data, and we pool data and feed back models to banks, so AI is a service in a way.”

If some of the obstacles to implementing are overcome, the adoption of AML AI may indeed take off in the next few years.


Notes

1) https://www.weforum.org/agenda/2019/01/how-ai-can-knock-the-starch-out-of-money-laundering/
2) https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=400967#Wbcast03222017
3) https://www.celent.com/insights/925785903

COVID-19 and Ramadan ‘super prime time’ opportunity for the Middle East’s mobile game developers

Baloot Quest 2 (Courtesy: Cryptd)

Salaam Gateway: Middle Eastern app games developers have been rushing to launch new titles as millions are stuck at home due to COVID-19 movement restrictions and the holy month of Ramadan.

“Due to the situation developers have a once-in-a-lifetime chance to produce something, put it out there and make a splash,” Vincent Ghassoub, Co-founder and CEO of Falafel Games, a developer based in Beirut, told Salaam Gateway.
There are only a handful of mobile games developers and publishers in the Middle East and North Africa (MENA) that are either developing their own games, or re-working international ones for the regional market by translating content into Arabic and in certain cases, localizing the content for cultural specificities.

“The games market globally is bigger than Hollywood and TV, but in the MENA there’s just five or six developers and publishers, so tiny compared to the overall games ecosystem. We command a very small part of games spending in the MENA,” said Ghassoub referring to mobile apps and comparing them to other app games, internet games and games consoles.

While Ramadan has always been a major launch period for games in the region, just like the lead up to Christmas is a crucial sales time in Europe and North America, the COVID-19 lockdowns around most of the Middle East since March have prompted developers to speed up launch dates.

“We had not planned to be out for Ramadan, as developing a game takes a team of 15 people and around 15 months to get done. But as much of the Gulf has been living a Ramadan lifestyle - staying up at night - for over a month due to the lockdowns, we’re trying to be out before the end of Ramadan,” said Ghassoub of a new strategy game.

To read the rest go to: www.salaamgateway.com/story/covid-19-and-ramadan-super-prime-time-opportunity-for-the-middle-easts-mobile-game-developers

Coronavirus: Egypt, Lebanon, Jordan suffer economic pain amid falling remittances

As Covid-19 and plummeting oil prices batter the region, experts warn drop in money sent home will hit poor households the worst

Near Sukkara, Egypt (Paul Cochrane)

Middle East Eye: Middle East and North African economies have been hit by dual shocks during the past two months, notably the coronavirus pandemic and lower oil prices. For some, like Lebanon, it comes amid a financial crisis that was already underway.

But as the global impact of the crises bites, so another financial shock is looming - a drop in remittances from overseas workers. And it is likely to hit the region's most vulnerable economies, including Egypt, Jordan and Lebanon.

In mid-March, as cases of Covid-19 started to be detected, researchers at the World Bank estimated losses across the Middle East and North Africa (MENA) region  of 2.1 percent of gross domestic product (GDP) during 2020.

But only weeks later, at the beginning of April, they had to revise their estimates still further, as more countries went into lockdown, predicting economic losses of 3.7 percent of GDP - or the equivalent of more than $100bn.
Daniel Lederman, World Bank deputy chief economist, in a video conference with journalists, said: “In two weeks our estimates almost doubled as global economic conditions worsened, and government responses became clearer.
"One cannot overstate how fluid these figures are."

Rabah Arezki, World Bank chief economist for the Middle East and North Africa region, said: “Economies have been brought to a standstill... this dual shock has resulted in an expected growth rate of minus 1.1 percent for 2020, and 2.1 percent for 2021."

To read the rest go to: https://www.middleeasteye.net/news/coronavirus-egypt-lebanon-jordan-remittance-economy

Oil price turmoil: How Saudi Arabia's $100bn gambit could backfire

Middle East Eye

 

Saudi Arabia's move to slash prices, prompted by a row with Russia, could devastate its own revenues, derail its Vision 2030 plans and antagonise its allies. So why did Riyadh do it?

 

 

In 1985, US vice president George HW Bush visited Saudi Arabia to pressure the kingdom to flood the global market with cheap oil and squeeze the energy revenues of the Soviet Union.

The move pushed oil below $10 a barrel, reasserted Saudi Arabia's dominance as the world's top oil player, and dealt what some consider a crippling below to the ailing Cold War superpower.

Fast forward to March 2020, and an oil price war is being played once again, with consequences for Washington, Moscow and the entire global economy.
Recent production cuts agreed between Opec+ members, the global oil cartel, fell apart as Saudi Arabia clashed with Russia over prices and Riyadh raised production to 13 million barrels per day (bpd). The oil price dropped by 25 percent to $36 a barrel on Monday.

The move is considered a gambit by both Saudi Arabia and Russia, which did not want as deep a price cut as Riyadh, to counter the growing market share of the US shale industry.

"From the Russian point of view they are seeking a redistribution of market share, which is the same thing the Saudis want," said Theodore Karasik, a senior advisor to Gulf State Analytics, a Washington-based consultancy.

"This dance between the two is like a relationship between a separated couple; they are arguing over relationship dynamics and will soon recognise the market has adjusted to where they can sit down and clink glasses."

To read the rest go to: https://www.middleeasteye.net/news/oil-prices-how-saudi-arabia-gambit-russia-could-backfire-vision-2030



 

Want an all-expenses paid hajj? New Nigerian game show may be the ticket

Salaam Gateway

 Photo: Contestants playing Hajj Quest in a test pilot in 2019. Photo supplied by HalTV

Nigeria’s Islamic-themed lifestyle channel HalTV hopes to launch a new game show for Ramadan called Hajj Quest, with successful participants winning an all-expenses paid trip for the pilgrimage.

“It is a one-of-its-kind show, as there’s not a lot of content people consume that is spiritual but also entertaining. People want to go on hajj after Ramadan, so every night after finishing fasting they can watch someone play to win for hajj,” Sheriff Bakare, Founder and CEO of HalTV Africa told Salaam Gateway.
The game show is modeled on “Who Wants to Be a Millionaire?”, but instead of the general knowledge questions of the British show that went global in the late 1990s and early 2000s, participants have to answer Islam-themed questions. “There are questions related to Ramadan and general Islamic knowledge,” said Bakare.

Last year, HalTV ran a pilot project of the game show. “Two people got to go to hajj, a winner and a runner-up. This year we’re expanding it and hope to give people at least one hajj winner per night, God willing,” he said. Questions will also be asked on air for the TV audience to submit answers to win a trip for umrah or to Dubai.

To read the rest go to:  https://www.salaamgateway.com/story/want-an-all-expenses-paid-hajj-new-nigerian-game-show-may-be-the-ticket

Seeking accountability and transparency: Is it time for global oversight of halal certification bodies?

Salaam Gateway

Halal certification is big business. According to the Dubai-based International Halal Accreditation Forum (IHAF), the cost of certifying halal products is set to reach $1 billion by 2025. With demand for certification on the rise as the Islamic economy expands its offerings, from halal food to pharmaceuticals, cosmetics, and tourism, there is a need for halal certification bodies (HCBs) to be enablers of such an expanding market.

However, critics say the dominant HCB model is hindering rather than advancing the halal ecosystem, being driven by profit rather than consumer well-being and Islamic ethics, while in certain countries there are certification monopolies that are driving out competition in the sector.
Scandals have also emerged of certifiers and regulators refusing or delaying certification unless back-handers are paid.

“The majority of HCBs globally are for-profit and privately limited entities. That is a problem because there isn’t any accountability and transparency, unlike with, say, a publicly-listed company,” Moulana Navlakhi, Theological Director of the South African National Halaal Authority (SANHA), told Salaam Gateway.

To read the rest go to: https://www.salaamgateway.com/story/seeking-accountability-and-transparency-is-it-time-for-global-oversight-of-halal-certification-bodie

Impossible seeks halal status for plant-derived pork but certification may not be forthcoming

Salaam Gateway


Impossible Pork, a plant-derived product, is seeking halal certification, according to the manufacturer, but it is not clear if certification will be forthcoming.

California-based Impossible Foods released its pork substitute at the beginning of the year. The company’s earlier product, the Impossible Burger, was at the end of 2018 halal-certified by the Islamic Food and Nutrition Council of America (IFANCA) under regulations set by Malaysia’s Department of Islamic Development (JAKIM).

“We will seek halal and kosher certification as we did with the burger,” an Impossible company spokesperson told Salaam Gateway in an email.
IFANCA would not reveal whether it will certify Impossible Pork.

“We do not comment on pending applications for halal certification, but we can confirm if a product is certified or not. We are certifying the Impossible™ Burger,” said IFANCA in an email to Salaam Gateway.

“We have not certified Impossible Pork,” added IFANCA.

Halal certification for plant-based pork is controversial.

While pork is haram (not permissible) under Islamic law, plant-based alternatives to pork may not contain any haram ingredients.

However, under JAKIM's rules, which are widely regarded as a benchmark for the global halal certification industry, halal certification will not be awarded to a product that starts off from a haram standpoint, such as zero percent alcohol beer.

It is an opinion echoed by other certification bodies.

The UK’s Halal Trust, a certifying body, said it would not grant halal certification to a plant-based pork substitute like Impossible Pork.
“I would never certify it even if it is technically halal, because the word “pork” could create problems and confusion,” Shoeeb Riaz, operations director at the Halal Trust, told Salaam Gateway.

“Would most Muslim consumers’ reaction be positive or negative? And once the genie is out of the bottle, where would you stop?” he added.

IFANCA clarified its policy: "In general, we do not certify products whose names contain certain words that are normally associated with haram products, such as pork."

Impossible Foods did not state whether it was seeking halal certification for Impossible Pork with IFANCA or another halal certification body.

Riaz said it would be a controversial move for IFANCA to certify Impossible Pork.

“Why would IFANCA want to certify a product which has the word pork in it? It would delegitimize themselves amongst Muslim consumers,” he said.

Phuture Meat, a Malaysian food start-up that launched a plant-based pork last year, was the subject of media scrutiny following reports claiming the product was halal.

The company denied it was seeking halal certification. “We are currently 100 percent focusing on the Chinese market,” Phuture’s co-founder, Jack Yap, told Salaam Gateway in August.

Syria's economy goes from very bad to worse as Lebanon's crisis hits

Middle East Eye

Lebanon's financial woes have further hit the flow of dollars in Syrian markets, as Damascus deals with a crumbling economy

Syrians shop in the Hamidiya bazaar in the old city of Syria's capital Damascus in 2007 (Paul Cochrane)

When the United States, the European Union and the United Nations imposed sanctions on Syria in the first year of its civil war in 2011, they were intended to financially squeeze the government of Bashar al-Assad.

But Lebanon was also caught in the crosshairs, pressured to curb Syria's access to the global financial system given the longstanding banking ties between the two states.

When Syria nationalised its banks in the 1960s, it was to Lebanon that private capital fled. Banks were established there by Syrian investors, such as BLOM Bank, the country’s third largest, which is still managed by the Azhari family.
"It's pretty historical in terms of the relations between the Syrians and the Lebanese banking sector," said Jihad Yazigi, editor of the Syria Report, an economics news bulletin.

Throughout the Lebanese Civil War (1975-1990) and the Syrian occupation until 2005, it was Lebanon that acted as a foreign exchange hub for Damascus. Syria had been a closed economy, and it had been illegal to trade dollars outside of state-owned banks.

After the Syrian withdrawal following massive demonstrations in Beirut in the spring of 2005, and the liberalisation of the Syrian economy, Lebanese banks opened five affiliates in Syria.

"The dependency on Lebanon decreased as international transfers were allowed [in Syria], although Lebanon was considered safer, and had banking secrecy," said Yazigi.

Indeed, leaked US embassy cables from 2008 stated that individuals close to the Assad elite had accounts under different names in Lebanon, including sanctioned billionaire businessman and cousin of Assad, Rami Makhlouf.

To read the rest go to Middle East Eye

How Unofficial Capital Controls Stopped a Run on the Banks in Lebanon

Counterpunch

Lebanon’s banks were closed for two weeks due to the mass protests throughout the country. The banks opened last Friday (1 November). There was the expectation of a run on the banks and massive capital flight as Lebanese, expatriate Lebanese and foreigners withdrew their cash. It didn’t happen, but it doesn’t mean that all is well despite the repeated assurances of the banks, the Central Bank, and the Association of Banks in Lebanon. The banks are playing fast and loose with the realities on the ground.

Bank Audi, the largest bank in the country, tried to reassure investors in its weekly report: “Lebanese banks succeeded on Friday the stress test, as they ensured their customers’ needs firmly and promptly. This is also attributed to people’s awareness and sense of responsibility in addition to the high level of cooperation between banks’ employees and clients. This has helped sweep away all fears and rumors that reigned over markets shortly before banks re-opened their doors. In fact, banks’ clients became more aware about Lebanon’s capability to face challenges.”

There was minimal “awareness” or “responsibility” by the banks’ clients. Clients were not allowed to withdraw all their money, palmed off with being able to walk out of the bank with $2,000 to $3,000 a day. Neither were clients allowed to transfer significant amounts of money abroad. In fact, bank sources told me that if clients requested transfers, the bank would look more closely at a client’s accounts to see whether funds were being withdrawn abroad, and could put a stop to such activity (international transfers are not possible online). You can’t have a run on the bank if you can’t withdraw the money.

In fact, bank account holders outside of Lebanon are in a better position than those in Lebanon to withdraw funds in foreign currency, able to take out the maximum daily allowed ($500 to $1000 plus – although paying a transaction fee at the ATM and to the Lebanese bank).

Few, if any, Lebanese banks are allowing ATM withdrawals in US dollars, just in Lebanese Lira (Lebanon is one of the few countries in the world that allows withdrawals in greenbacks as well as the local currency). Lebanese want dollars as while officially the Lira is pegged to the US dollar at LL1,507, on the street the exchange rate is LL1,580, and hit LL1,850 in late October. Without dollars, you can’t import goods. That was a reason why the banks opened again as the protests simmered down. The country was reportedly days away from running out of wheat, fuel and other imported essentials.

The situation is unprecedented. Even during Lebanon’s 16 year civil war (1975-1990), the banks never closed for more than four or five days – militias had to be paid, after all. The joke was that Lebanese banks had survived everything except a nuclear bomb.

During the July 2006 war between Israel and Hizbullah, dollar withdrawals stopped, but the Lira peg stayed the same, in large part due to Saudi Arabia and Kuwait depositing $1.5 billion into the Central Bank to keep Lebanon afloat. Fast forward 13 years, and the Gulf countries have not been so ready to step in, although the UAE is hinting it might. Nonetheless, the situation today is very different.

The debt has spiraled out of control, at 151% to GDP (although some suggest this has been tinkered with as the statistics are produced by private banks, with the debt to GDP ratio much higher, having been 183% in 2006) with the banks holding the majority of the debt, and the economy flat-lining.

The country is between a rock and a hard place: the much needed $11.6 billion loan from the Cedre donor conference (see my Counterpunch article) is up in the air, in part because the conditionalities that come with the loans are austerity measures, the very ones the government tried to introduce that led to two weeks of protests and the resignation of the prime minister. Lebanese are being squeezed left, right and centre, with the cost of living rising while public amenities are floundering: powercuts, water shortages, and creaking infrastructure.

Corruption and elite capture siphoned off billions of dollars over the past few decades – “the top 1% richest adults receives approximately a quarter of the total national income placing Lebanon among the most unequal countries in the world,” according to researcher Lydia Assouad – while leaving the country a wreck. This is what has driven the protests, but the inability of the government to rectify the situation means the country is fiscally on a slippery downward slope, and the banking sector being hit is another nail in the coffin.

It was clear the situation was untenable before the protests occurred. In October 2019, banks started putting unofficial restrictions on foreign transfers. Earlier in the year, the banks also tried to prevent clients from transferring Lira deposits into US dollars, as since mid-2018 there there had been talk of the Lira being unpegged to the dollar and the debt being unsustainable, with the situation so serious that banks were offering 7.5% to 15% interest on the Lira, depending on how much was deposited. Interest on the dollar was 5% plus. Of course, you don’t get such high interest for nothing, it is due to instability. The problem in Lebanon was, as one ex-minister put it to me, “we keep approaching the edge of the cliff, but the cliff’s edge keeps moving.” Every time there was a scare the situation soon reverted back to seemingly normal. As a result, there was no major outflows of cash or Lebanese stuffing mattresses full of dollars and hoarding gold (although there has always been a fair amount of that; in less stable countries it is always wise to have a sizable stash of physical capital, a lesson I learned in July 2006).

The question now is whether the situation will return to normal, and if the banks will allow transfers and have plenty of dollars again. The banks are certainly doing their best to prevent outflows of cash, as the fundamentals indicate it will not be ‘business as usual’ any time soon. As Capital Economics noted in late October: “In the absence of an IMF deal, the uncertainty over the economic outlook would lead to a bout of capital flight. And the central bank has limited resources with which to mount a defence of the dollar peg. A messy devaluation and default could follow. The IMF estimates that the pound is overvalued by around 50% and that investors in Lebanese bonds could face losses of up to 75%. This would be enough to wipe out banks’ capital and result in severe strains in the financial system. Past experience shows that economies which have suffered debt, currency and banking crises simultaneously have, on average, contracted by 8% from peak to trough.” That is a pretty dire forecast, certainly dire enough to consider getting your cash out of Lebanon ASAP – if you can; Lebanon has also reportedly put restrictions on taking cash and bullion out of the country.

In the meantime, Lebanese bank account holders continue to go to ATMs to withdraw cash, and max out credit cards through spending as well as transferring abroad to digital bank accounts (gold dealers in Lebanon are only accepting dollars).

Yet if the situation does stabilize, and clients can actually withdraw funds, where do they transfer their cash? The financial system is very much skewered in favor of the wealthy countries. Digital bank Transferwise for instance, in line with US regulations, only allows dollar transfers from 15 countries into its US account: Europe, Australia and the UAE; Lebanon is not on the list. The same applies to Euros. Lebanese can also not easily open accounts abroad without residency or other legal requirements.

Yet Lebanese and Lebanese bank account holders need not worry if one is to believe the upbeat tone of the final paragraph of Bank Audi’s weekly report: “Lebanese banks have always proved their ability to overcome difficulties and meet customers’ needs firmly, while monetary authorities continued to defend the currency peg. On Friday, Lebanese banks have once again proved their readiness to meet customers’ needs, mainly due to the availability of FC [foreign currency] primary liquidity. This has helped the first working day to go smoothly, and spotted light on banks’ credibility and transparency in addition to their role in safeguarding depositors’ interests.”

Halal, health and healing: Will halalopathy bring hope to patients?

 Middle East Eye

The Healing Simurgh: A Symbol of Holistic Medicine (Wikicommons)

Two years ago, Palestinian scientist Jawad Alzeer was puzzled. Based in Switzerland for 25 years, he had found success as a lecturer and senior researcher at Zurich University, as well as the lead auditor for a Swiss halal certification body.

Throughout his career, Alzeer had worked closely within two growing markets: the $1.1 trillion  pharmaceutical industry; and the certification of halal products.
But he sensed something was missing. First, there was modern medicine’s rejection of integrative healthcare, which includes conventional treatment, self-care and complementary and alternative medicine (CAM).

Then there was a lack of understanding by many in the food industry as to why some ingredients needed to be halal certified for Muslims, something he found himself explaining time and again.

“I was questioning why so many approved pharmaceutical drugs have no added therapeutic value,” he says, “and I’d also written a research paper on halal-certified food and nutraceuticals in the Arab world.”

Then Alzeer had a eureka moment: what if he combined the two industries into one concept that gave some Muslims the extra religious assurances they needed about their medical treatments?

“The combination of bringing together modern medicine, halal food, spirituality and homeopathy crystallised in my mind as halalopathy,” he says.
An idea had been born.

To read more go to: https://middleeasteye.net/discover/halal-health-and-healing-can-halalopathy-appeal-bring-hope-muslims