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Qatar 2022 teeters towards disaster 6, June 2014

Posted by thegulfblog.com in Qatar.
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The following article can be found at the New America Foundation.


For some time now, Qatar’s successful bid to host the 2022 football World Cup has looked to be far more trouble than its worth. Stinging media attacks have been relentlessly pillorying the state and its bid process, putting the country under a magnifying glass like never before. Human rights concerns and corruption issues have been the focus of much of the coverage and many are now questioning whether Qatar will – after all this trouble and difficulty – host the World Cup at all.

Indeed, the 2022 World Cup saga continues with a huge leak of emails to the Sunday Times in the UK, which the paper accompanied with 12,000 words of analysis castigating and criticizing the bid process. The emails printed by the Times do not necessarily reveal anything new in type, just volumes more damaging examples of people involved with the Qatari bid  – mostly Mohammed Bin Hammam, the Qatari former FIFA executive member – acting in…[consults lawyer]…unorthodox ways. Bin Hammam stands accused of, to put it charitably, being exceedingly overly generous to important delegates and other officials throughout the world with financial gifts and expenses. Much of this appears to flout FIFA rules.

The British media-led scrum to attack Qatar is at times neither accurate, with at the very least key names being repeatedly confused, nor edifying; but then again, that’s not what they are there for. They are there to sell copy and Qatar is thoroughly in their crosshairs of late. Indeed, the 2022 World Cup story combines a variety of tempting targets for the British press, tabloid and broadsheet alike: indignant rage, football, rich foreigners, human rights wailing, and glitzy corruption.

There is, as ever, a certain amount of hypocrisy surrounding this whole situation. The British press were, unsurprisingly, hardly as vociferous in their criticism when England shamelessly courted votes for the World Cup vote by playing friendly matches or wheeling out David Beckham, the former England captain, or Prime Minister David Cameron to woo specific voters. Equally, though, they did not engage in the kinds of mass expenditures that Qatar did to persuade key voters around the world.

Indeed, look at the Qatari bid. A key plinth of the bid was the promise to package up and ship off some of its stadiums to countries in need of stadia post-World Cup. Who decided the recipients of each stadium – and how – is unknown, but what is for sure is that if you are looking for a stadium, only with a successful Qatari bid do you stand a chance of receiving one.

Those in Qatar may well look to the rough ride they are getting and compare that to Russia who won the right to host the 2018 World Cup at the same ceremony as Qatar. Against a backdrop of increasing homophobia, rampant corruption, and energy extortion, Russia nigh-on invaded a sovereign state, annexed a section of that state using – to put it mildly – questionable means, yet in terms of football at least, Russia remains mostly ignored by the press. And, strangely, no one seems to be asking whether their bid was squeaky clean?

Yet understandably suffused with a concentration on Russia’s military shenanigans, the press has leapt over its bid and gone straight to the more salacious story in Qatar. Human rights have been front and center. Report afterreport has battered Qatar’s reputation and with often good reason. The standards for workers’ rights are simply not good enough. Ironically, this is the positive impact of the World Cup: it is fundamentally an agent of change in the country.In recent weeks the Qatari authorities announced changes and improvements to the scriptures that most trouble workers’ rights in the state. No, these changes are not enough, and their implementation remains to be seen. But this is unequivocally a step forward, and it is purely thanks to the pressure of the World Cup and its negative coverage.

Given a magic wand, I suspect that the new administration in Qatar that took over in summer 2013 would happily swap hosting the 2022 World Cup for an easier life. It has prompted tens of billions of dollars of spending, some of which is necessary (roads and a subway system) but much of which is seen as wasteful (stadiums and foreign consultants). While from the Western perspective, the incremental changes expected in the labor laws in Qatar are a good move, they are seen flatly as a pain and undesirable from the Qatari perspective: they want to retain control. Moreover, the 2022 World Cup is a touchstone issue that encapsulates the direction of travel in Qatar: that of a quasi-westernizing orientation with increasing openness to foreigners and their wanton ways; the perennial refrain being how will Qatar cope with drunk English football fans singing and swaying down the Corniche, the sea-side waterfront?

In lieu of a magic wand, Qatar’s elite will simply have to hunker down and lawyer-up. Whether the 2022 World Cup actually goes ahead is a question for legal professionals and FIFA insiders, not Gulf experts or Qatar’s elite. Qatar’s central concern at the moment is that one of their champions, Sepp Blatter, FIFA’s seemingly perennial President, has cooled his support recently, even calling Qatar’s hosting of the tournament a ‘mistake’. The moment that Blatter, who is running again for President (after he said he was not seeking re-election), sees more mileage in throwing Qatar under the bus to further his ambitions, Qatar has a big problem to add to its ever-growing list of 2022 issues.

Corruption in Kuwait 22, September 2011

Posted by thegulfblog.com in Kuwait.
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Seven of Kuwait’s MPs are currently under investigation for corruption. This most recent round of accusation and counter accusation began when the National Bank of Kuwait and Kuwait Finance House reported suspicious transfers amounting to $92million between two members of Parliament.

There has been precious little reaction from Kuwait’s elite on this matter, which has fueled public anger which, it seems, is simply filling in the missing details with lurid suppositions of mass-corruption and graft in the Parliament.

Not that such assumptions are necessarily wrong. Kuwait has a long and illustrious history of corruption in the elite. Over the years, this issue has come up again and again to the point where many Kuwaitis (I’d even say ‘most’) seem to be of the opinion that the elite/government are implacably and irreducibly corrupt.

Through demonstrations and the voting in of populist MPs whose sole mandate, it can appear, is to fight this corruption, three highly damaging corollaries then occur:

1) MPs block crucial pieces of legislation from passing Parliament for fear that by granting, say, $5billion worth of investment in a real estate project, they are effectively allowing if not aiding and abetting corruption to occur. Kuwait is in desperate need of investment and it was only recently that a multiyear, $104billion plan was pushed through Parliament: the first in decades.

2) MPs also do their best to block similarly necessary pieces of privatization. Kuwait’s public sector, like many in the region, is hopelessly inefficient, expensive, over-staffed and bloated in general. Around 77% of Kuwaitis work in the public sector and a chilling, psychotic and whopping 84% of oil revenue is spent on public sector salaries, according to the World Bank in 2010 .

Necessary privatization bills are frequently derided as the ‘sale of Kuwait’ or ‘the legalized robbery of Kuwait’ and other such sensationalist tripe-filled notions. Famously, one such bill took over 18 years to pass through the Parliament. This is all the more surprising given the huge success in some industries which have been privatized – see Zain and Wataniya.

3) People demand cash. And debt relief. And no bills. And salary increases. And they get them, in spades. The government acquiesces to these demands to keep the natives vaguely silent: they essentially buy off citizens in droves. But the demands of Kuwaitis in the face of what they see as mounting and pervasive corruption is insatiable, even though they are the best paid of any nationals in the Gulf (where there is, let’s not forget, rather a lot of competition): it’s almost like that feel that they need to get their share before the elite graft it all away.

Indeed, Kuwaitis look at their staggering oil revenues, the small size of their country and then actually look around Kuwait, especially in comparison to the more glamorous cities further down the Gulf, and wonder where all their money has gone: ‘clearly’ it’s not been spent on Kuwait itself, so the elite must have stolen it all. This logic forgets, of course, the fact that Parliament can barely spend the cash (on big budget packages, at least) so tightly do some MPs agitate against any such plans.

It is difficult to overemphasize just how damaging this cycle is for Kuwait’s long term future. Kuwait can afford this now. Yet this will not always be the case. And when Kuwait needs to rely on income that is not derived from rent (oil), not only will it lack the infrastructure to pursue a ‘normal’ economy, such are the difficulties of investing in Kuwait to any significant or regular degree, but there must be core concerns that there will simply not be the Kuwaitis to staff any kind of competitive economy: neither trained particularly well nor with the skills or the drive to work efficiently and productively in a truly competitive economy, Kuwait will find itself at a considerable disadvantage.

Where to go from here? There are no easy answers, as the New York Times eloquently sums up.

If the emir allows Parliament to remain in place while at least one-fifth of its members are investigated for graft, he risks the growth of ever larger street protests and an erosion of public trust. But if he dissolves Parliament and calls for new elections, public outrage could help usher in a legislature hostile to the monarchy and more assertive in demands for constitutional changes.

However difficult, the current Emir, Sabah Al Sabah, simply must sort this out in some way, shape or form. He has genuine popularity and legitimacy in Kuwait as a whole. His successor is guaranteed none of these things and will likely endure questioning the likes of which would never happen to Sabah. Somehow he needs to marshal this to his advantage.

Kuwait needs a proverbial ‘truth and reconciliation’ commission. An opportunity for everyone to sit down, discuss what has gone on, make amends and to move forward on a new footing. Yet the recriminations and bitterness that characterises much of these interactions, coupled with astounding levels of obstinacy in the Government and – arguably – with a cultural aversion to public acts of contrition (can you really see an important Kuwaiti MP or member of the Cabinet publicly admitting he was corrupt?), makes such a scenario seem unfortunately unlikely.

Before the Arab Spring, I’d have said that there’d be a good chance that the Emir would unconstitutionally dissolve Parliament (as has happened a few times before) to pass some laws, push through some projects and to take the relentless pressure off his Governmnet as a whole and his PM in particular. But in this popular and febrile atmosphere, I don’t think that even Sabah’s charisma and support could pull it off.

Some kind of half-way-house would presumably involve the public flagellation of a couple of corrupt MPs. Give the mob some blood, show that the courts and the Parliament has teeth and scruples and follow this with exorbitantly punitive new anti-corruption laws and some kind of new independent body to pursue corruption with teeth. On the other side, scurrilously populist MPs would have to  – against their shameful temporary interests – agree to hold their fire and resist the so far irresistible lure of the lowest common denominator elite bashing with the stick of assumed corruption.

Many would fear that this would give the mob the taste of blood while most would surely be loathe to cast out one of their own, perhaps knowing that it could have been them, yet the impasse is growing in size and acrimony. Something needs to give on one side and it hardly seems likely that the populist MPs or the Kuwaiti public will spontaneously forgive and forget.

Out of this morass is the opportunity for an MP to make his name; to mark himself (or herself) out as a whiter than white, judicious negotiator. Perhaps such a prize will convince a suitably powerful MP to stick his/her neck out, eschew the trends and to embody the would-be new politics of Kuwait.

Kuwait most corrupt GCC state: 2009 Corruption Index 17, November 2009

Posted by thegulfblog.com in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, The Emirates.
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(Saudi: Red. Kuwait: Purple. Bahrain: Green. Oman: Orange. UAE: White. Qatar: Blue)

2004 2005 2006 2007 2008 2009
Qatar 38 32 32 32 28 22
KAS 71 70 70 79 80 63
Bahrain 34 36 36 46 43 46
Kuwait 44 45 46 60 65 66
UAE 29 30 31 34 35 30
Oman 29 28 39 53 41 39

Transparency International have released their 2009 index of perceived corruption around the world. The above graph and table show how the GCC states fare on the latest rankings in comparison to previous years.

Whilst Saudi Arabia has made the largest improvement jumping up some 17 places, as it did this from such a low base I feel that Qatar’s 6 place improvement from 28th to 22nd is just as (and if not more) impressive. For Saudi Arabia, it is good to see them make such advances. As I have discussed before, their relatively good placing in the ‘East of Doing Business’ tables can only be maintained if they get a serious grip on their somewhat endemic corruption problems. A rise of 17 places suggests that someone in Riyadh is thinking much the same thing.

As for the other GCC states, the UAE improved a not enterily unimpressive 5 places to 30th place, Oman rose a negligable place to 39th, Bahrain dropped 3 places to 46th and Kuwait dropped a place to 66th leaving with them with the dubious title of the GCC’s most corrupt member state.

Improvements in the Emirates have taken them back to where they were back in 2005. The effect of the credit crunch is unlikely to have been fully appreciated in this survey so – either which way -I expect a sizable change next year too. Bahrain are now 10 places higher (in a bad way) than in 2005-6. Of all the GCC states, they can least afford to become some quasi-corrupt backwater: they need to address these difficulties quickly. Kuwait, as I have discussed on several occasions, currently operates under the false assumption that they do not need foreign investments. As such, they may well not really care too much about their poor score. Yet now that they are rock-bottom of the GCC table and are fully 20 places worse than they were 4-5 years ago, perhaps they may seek to redress this balance, yet, given their institutional/governmental paralysis, their anti-foreign investment mindset and their apparent belief that oil will last forever, I doubt this very much.

China’s Corruption 25, September 2008

Posted by thegulfblog.com in China.
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Here is an excellent article in the International Herald Tribune, expounding on the vicious and widespread problem of corruption in China, the effects of which – unfortunately – are being felt now with the baby food crisis.

China’s Robber-Baron Ways

Only a short time after China’s magnificent Olympic coming-out party, the land of Mao’s successors found itself making less celebratory news.

“Tainted Milk Formula Sickens Thousands of Chinese Infants” read one of many recent headlines. Twenty-two companies that produce or distribute milk powder had been secretly adding melamine, normally used for making plastics and glue, into milk powder, making thousands of infants sick and causing several deaths.

It is one of the puzzling questions about China: How can a country that organized such a splendid Olympic splash be the same country that produces deadly food scares on a regular basis?

The answer says a lot about today’s China. In its March to modernity, Beijing’s ruling Communist Party took off the economic shackles of the Mao years and relaunched the country as a capitalist-communist state – a real oddball coupling, if ever there was one. Part of this process involved the radical devolution of economic power to over 30 provinces, fostering a kind of anarchic federalism.

As with American federalism, the national government in China is responsible for certain duties and the country’s provincial governments are responsible for others. But in China, none of this arrangement is written down or spelled out anywhere, as it is in the U.S. Constitution.

Instead, it is still a work in progress, with provincial officials taking as much rope as they dare. Power at the provincial level is still vested in the local Communist Party, but also intertwined with personal and family networks, motivated by the former leader Deng Xiaoping’s maxim, “to get rich is glorious.”

That’s an odd motivation for the heirs of Karl Marx, and in practice it’s led to lots of cronyism and corruption.

The scale of corruption in China is startling. The Chinese researcher Sun Yan has written that the average “take” in the 1980s was $5,000, but now it is over $250,000. The number of arrests of senior Communist Party members quadrupled between 1992 and 2001. Four provincial governors and one provincial party secretary recently were charged with corruption.

Even at the level of the central government, corruption has been debilitating and helps set the national tone. High-level officials, including the mayor of Beijing, a vice chairman of the National People’s Congress, the former president of the Bank of China, the vice governor of the People’s Bank of China and the director of China’s foreign exchange administration, were arrested and imprisoned for embezzlement and fraud. One of them eventually was executed, and another leaped to his death.

To put that in perspective, says the author Will Hutton, it would be as if the mayor of New York, the speaker of the House of Representatives, and the chief executives of Goldman Sachs and Citibank, along with a governor of the Federal Reserve, were all either imprisoned for fraud, executed or committed suicide.

The Chinese economist Hu Angang has estimated an annual economic loss due to corruption of approximately 15 percent of GDP. In this climate, cutting foreign substances into milk formula, pet food or medicine becomes standard operating procedure, like a drug dealer looking to maximize the street value of his stash by mixing in filler material.

To be fair, not all the provinces and not all the business people or bureaucrats engage in such illicit behavior. And China’s leadership has taken steps to crack down. Punishments have been increased, tougher laws have been passed. Officials now are forbidden to enter business relationships with family members. Audits and anti-corruption screenings have been introduced.

But when I questioned a Chinese official about corruption, his defense – “we’re not as bad as Burma” – was hardly convincing.

Yes, the central government in Beijing can use its authoritarian power to pull off a brilliant Olympics party. And over the past 30 years, the Chinese leadership has accomplished the remarkable feat of lifting 400 million people out of poverty. But China is still very much a developing country, plagued by a mess of contradictions.

It is difficult to imagine how the country’s anarchic, robber-baron ways will serve China well for the next 30 years. Either political reform and accountability will slowly take root, or China’s modernization will falter.

Steven Hill is director of the Political Reform Program of the New America Foundation.