The City of Riyadh

Today Riyadh-based Jadwa Investment circulated its monthly Inflation Report which noted the October year-on-year rate of inflation dipped to 5.2 percent in October from 5.3 percent in September. Jadwa said the decrease could be attributed to lower food price inflation in Saudi Arabia which reflected the global year-on-year rate dropping from 33 percent in July to 6 percent in October, according to the UN Food and Agriculture Organization. The short term variations are not necessarily indicators of inflation trends, according to Riyadh Capital’s Khan H. Zahid, who told Arab News, “Month-to-month changes in inflation, especially at this time of the year, are due to seasonal factors, and need to be interpreted with caution. The small drop in October to 5.2 percent may simply be the post-Ramadan effect of prices slowing down.”

The Jadwa report provides analysis of inflation stats and trends.  It is provided here for your consideration.  We thank Mr. Paul Gamble and Mr. Brad Bourland, Head of Research and Chief Economist respectively for sharing this report here.

[Click here for original report with insightful graphs]

Jadwa Inflation Report – October 2011

Year-on-year inflation dipped to 5.2 percent in October from 5.3 percent in September owing to lower food price inflation. Rents rose again and other components were influenced by one-time changes.

Food price inflation fell to its lowest level since January 2010 in October. This was the result of the rapid drop in global food price inflation; according to the UN Food and Agriculture Organization, year-on-year global food price inflation dropped to 6 percent in
October from 33 percent in July (see chart on next page). With food accounting for the largest proportion of the cost of living index (26 percent), this slowdown was sufficient to lower headline inflation even though inflation in most other areas rose.

Inflation for “other goods and services” reached a three-year high owing mainly to jewelry prices, which were 31 percent higher than in October 2010. Jewelry prices are driven by the price of gold. Rental inflation continued to rise and at 8 percent was the highest since March. Bonuses for government workers and pay rises appear to have pushed up demand for property at a time when new supply continues to remain modest.

Inflation for education and entertainment hit its highest level since at least 2003. This was due to higher school fees. Fees for the new school year are always incorporated in the October data. Similarly, annual adjustments (for the cost of domestic staff) caused the jump in inflation for home furniture.

Monthly inflation dropped to 0.5 percent in October. Food prices were flat and “other expanses and services” inflation eased after the sharp rise in September caused by a surge in jewelry prices. There were notable jumps in the prices of home furniture and education and entertainment. In both cases these reflected the annual measurement of some components. For education, October is the month that fees for the new school year are included in the inflation data. Kindergarten and pre-school fees were up by 12.3 percent and primary, intermediate and secondary education fees up by 1.8 percent, 2.6 percent and 10.7 percent, respectively. The monthly jump in the price of education was the highest on record and reflected the pay rise awarded to teachers several months ago. For home furniture, the jump is the result of higher costs of domestic labor, which are also measured in October of each year.

About Jadwa Investment – Jadwa Investment is a Saudi Closed Joint Stock company operating under the supervision of the Saudi Arabian Capital Markets Authority (CMA). Under the CMA decision published on August 21, 2006, Jadwa was awarded a license to offer all types of investment services including dealing, managing, custody, arranging and advising. All investment services offered by Jadwa Investment are supervised by a Shariah Supervisory Board and are fully Shariah-compliant.

Prince Turki Al-Faisal

Prince Turki Al-Faisal, Chairman of the King Faisal Center for Research and Islamic Studies, updated the frame of reference for understanding the challenges, opportunities and conditions Saudi Arabia confronts in a speech hosted by the Washington, D.C. World Affairs Council yesterday. The former ambassador to the United States and chief of Saudi Arabia’s General Intelligence Directorate, built upon a tour d’horizon construct, a 360 degree assessment of the “weather” facing the Kingdom, with commentary on a host of issues dominating the Middle East agenda and an inward looking evaluation. Among his remarks that made headlines this morning were comments on the threats and “meddling” from Iran, including the “ample evidence” behind American charges of an Iranian plot to assassinate Saudi Ambassador Al-Jubeir; confronting President Assad over the “nightmarish” bloodbath that Syria has become; fighting terrorism in the region and addressing the Israeli-Palestinian conflict and the question of Palestinian statehood.

That last issue, Middle East peace, has been a frequent topic of discussion by Prince Turki in numerous presentations he has made on regional challenges. Many of those are documented in the pages of SUSRIS, including his keynote address at the recent Arab-U.S. Policymakers Conference in Washington. There he made mention of the curious interactions between President Obama and Israeli PM Netanyahu, “When I was watching Mr. Netanyahu lecturing Mr. Obama in the Oval Office on what Israel will do or will not do, I was flabbergasted by the audacity of the man.” His observation was a timely segue to reports a week later that President Obama at the G-20 meeting in Cannes responded to French President Sarkozy’s indiscreet open-mic complaint of Netanyahu’s mendacity with, “”You’re fed up with him, but I have to deal with him even more often than you.”

In yesterday’s tour d’horizon, provided here for your consideration, Prince Turki touched on the naming of Crown Prince Nayef as heir to the throne and he rebutted media reports that he was “liable to undo many of the reforms started by King Abdullah.” He offered that, “the forward-looking reforms that we have seen in Saudi Arabia under King Abdullah, that have so well positioned the country to become a global leader in so many areas in the 21st century, will continue under any new leadership, for these reforms have been done for the overall good of the nation, not through the temporary whim of one leader.

A collection of insights and perspectives on a host of issues addressed by Prince Turki is provided in the related material links provided below. SUSRIS is the only online venue where you will find complete texts of remarks and exclusive interviews with newsmakers on Saudi-US affairs like Prince Turki Al-Faisal.

Prince Turki Al-Faisal
A Tour D’Horizon of the Saudi Political Seas
World Affairs Council of Washington, DC
at the National Press Club
November 15, 2011

Turki Al-Faisal

Ladies and gentlemen. Thank you for inviting me to speak to you today. I present to you a tour d’horizon, as sailors have called it for centuries. To conduct a tour d’horizon is to simply take a 360 degree look around to assess the current weather conditions. Where there is calm, and where there are storms? And then, once the tour d’horizonhas been taken, the sailor turns his eyes to his ship itself – what is the condition of the vessel as it prepares to set to sea? Through this assessment the sailor can then determine the best way to guide his vessel safely to port.

As you well know, the Middle East has entered a phase of profound transition, with governments crumbling, new social forces emerging, partnerships re-aligning, and international tensions – some quite old, some fairly recent – mounting and requiring re-assessments from all policy angles. However, while the general picture of Saudi Arabia’s surroundings is predominated by this great turmoil, at the center of these many storms basks the Kingdom, which, I am glad to report, remains stable and secure thanks to the wise leadership of King Abdullah, evolutionary social and political reforms, a rising nationalism among the people, the continual investment of our government in infrastructure and security, and economic policies that have blessed our land with economic growth, budget surpluses and over $600 billion in foreign reserves. This is not to say that the Kingdom is without its challenges, both from within and outside its borders, but as I outline for you the various storms that mount upon our horizon, I also encourage you to keep in mind that the vantage point from which I view these tumults is safe and sound and has every intention of using its vast resources to help its neighbors weather the current difficult conditions.

First and foremost among these storms are the political changes occurring in a host of Arab nations. While Saudi Arabia recognizes the wills of all people to determine their nation’s leadership and accepts and in many cases supports the developments in its neighboring countries, the Kingdom must remain focused on the difficult realities that almost always follow social upheaval based on popular uprisings. Egypt, Libya and Tunisia, the lands from which the so-called Arab Spring, which I prefer to call Arab troubles, first sprang, have now entered stages of dangerous and difficult reorganization. All three countries’ economies and social orders are under threat and opportunistic politicians and groups are poised to significantly increase their power through upcoming elections. Strife in Yemen remains highly problematic. The situation in Bahrain seems to have stabilized for the time being, but problems could flare up again, as indicated by a recent discovery of an Iranian-supported plan to bomb installations including the Saudi embassy as well as the King Fahd Causeway. In Syria, a society now sits on the edge of an abyss of nightmarish internecine warfare, which could spill into Lebanon, Turkey and Iraq. In response to the atrocities committed by Assad, the Arab League has proven itself to be capable of bold action through its decision to suspend Syria’s membership and put strong political and economic sanctions against Damascus.

While these tenuous conditions are of relatively recent emergence, several older problems – storms that have been brewing for some time, as it were – exist, and their outcomes appear equally difficult to determine. First among these, and intimately linked with the difficulties many Arab nations are now facing, is the case of the ambitions of Iran’s leaders. From our perspective, there are two overwhelming issues with them–their ambition to acquire nuclear weapons and their persistent meddling in the affairs of other nations. As for the issue of nuclear weapons, Saudi Arabia continues to insist that Iran’s leaders should give up their goal of acquiring nuclear weapons and support, by deed, the creation of a zone free of weapons of mass destruction in the Middle East. This is clearly what is best for the future of the people of Iran and the region. And to convince Iran of this path, we fully support the tightening of sanctions, assertive diplomacy, and concerted action via the United Nations. The NPT review conference held last year in the UN called for a conference in 2012 to initiate action on the zone, which must be inclusive of all countries in the Middle East. The zone must include an incentives regime for countries that join composed, not only of technical and economic support for member countries to develop civilian uses of nuclear energy, but also a nuclear security umbrella for the zone’s member countries guaranteed by the five permanent members of the Security Council. It should also have a sanctions regime for countries that refuse to join which should not only be economic and diplomatic sanctions but also military action against those countries seen to be developing weapons of mass destruction, also guaranteed by the five permanent members of the Security Council.

Of the second issue – Iranian leaders’ meddling in the affairs of sovereign Arab nations – we have seen ample and heinous evidence in the uncovering of an assassination plot against the Saudi Ambassador to the United States, Adel al-Jubeir. The web of connections that were uncovered between the would-be assassins, elements of the Iranian government, especially senior members of the Quds force, and Mexican drug cartels indicates the depths of depravity and unreason to which the Ahmadinejad regime has sunk. Fortunately, this plot was foiled and we can only hope that those responsible are brought to justice and that those who are not will come to realize that such actions are entirely counter-productive to peace.

But this is just the tip of the iceberg. All over the Arab world, the current leadership in Iran consistently and covertly meddles in the affairs of other governments by funding non-state entities like Hezbollah, and various other groups. I mentioned the discovery by Qatar of Iranian surrogates planning terrorist acts in Bahrain. In Iraq, Iranian interference has deprived the Iraqi people of an inclusive government. As Saudi Arabia looks out at Iran and considers what is to come in the next decade, it can only hope that the people of that nation will encourage their leaders to take a wiser and safer route than the one they now seem bent upon traveling, much to the detriment of themselves and others.

Another storm of far longer gestation than the recent uprisings – a situation that lies at the center of so many difficulties faced by our region – is the plight of the Palestinian people. As former US President Jimmy Carter recently said, “the persecution of the Palestinians under the occupation forces is one of the worst examples of human rights deprivation.” And while many similar claims and counter-claims have been expressed on this issue the path to peace is clear. King Abdullah’s forthright Arab Peace Initiative of 2002 laid the groundwork for an end to hostilities: if the Israelis withdraw from occupied lands, including East Jerusalem, to their pre-June 4, 1967 boundaries and address the refugee situation through mutual agreement, Saudi Arabia and the Arab League and the Organization of the Islamic Conference will commence normal and peaceful relations with the State of Israel. And on the all-important issue of statehood, Saudi Arabia stands with those UN member nations who support a Palestinian state gaining recognition in that international body. Not only will this be a major moral victory, it will be a much-needed step in pushing forth substantive peace talks. Without statehood, the Palestinians cannot go to the negotiation table with Israel on an equal footing. It has been tried, and it has failed. Let us blaze a new path to solve this most urgent issue.

When it comes to difficulties facing our region, one must still admit that terrorism remains an important threat. But it is not just Al Qaeda that continues to plot against us. There are also various emerging and re-emerging non-state actors who are moving in to take advantage of power vacuums created by shifting political dynamics. With governance in so many MENA nations in such tenuous states, the perfect conditions for terrorist cells to take root and conduct desperate, evil and anarchical acts are created. This is why Saudi Arabia continues to work with its allies, wherever it can find them, to stamp out this scourge of individuals who feel it is their right to visit heinous violence upon others in the name of false and destructive ends.

All of these storms – Arab nations facing turmoil and violence, Iranian leaders’ regional aggressiveness, the continuing Israeli-Palestinian conflict, and the creation and exploitation of terrorist enclaves – share a common thread in that they deeply influence the general state of security and stability in the region, and when one is discussing security and stability in the Middle East, one inevitably comes to the issue of global energy. This is primarily due to the importance of Saudi Arabia to the planet’s energy supply and other factors. Iran, the UAE, Iraq, and Kuwait remain important suppliers of oil. Pipelines and shipping lines run throughout the region, crossing areas of great contention and conflict. The perceived stability of the region plays an ever more important role in oil markets and their influence on pricing, which inevitably affects almost every economy in the world.

So, as we look out onto the wider horizon of the global energy market through the storm clouds of the Middle East, what do we see? Again, we see transition. As most of you well know, Europe and the United States remain important energy consumers, but Asia is coming to play an ever larger role in global demand. Also, almost every nation is looking to diversify its energy mix to take advantage of alternative fuel sources, both to foster what you call here, “energy independence” and to prevent negative environmental effects. But from the Saudi perspective, it is not about energy independence, but energy inter-dependence, both for the good of our economies and our environment. So what we see, if only through the eyes of hope, are the wiser voices in each nation winning out and encouraging their governments to work together to guarantee an energy mix that comes from a variety of stable sources. Saudi Arabia, ladies and gentlemen, means to play a major role in helping them achieve that.

This leads me to my final topic – Saudi Arabia itself – for inevitably every tour d’horizon must be followed by an assessment of the ship’s conditions so that the sailor may know of what it is capable, given the current weather patterns. I am happy to report that the Saudi “ship of state” is in quite good sailing condition.

With 25 percent of the world’s oil reserves and over 70 percent of global spare capacity, current projections for the next five years estimate that the Kingdom will earn on average of about $250 billion in oil revenue per year (for 2011, the projection is almost $300 billion). To maintain current oil export levels while at the same time fulfilling its growing domestic energy needs, the government is investing heavily in solar technology, and will spend more than $100 billion to build at least 16 nuclear power plants across the Kingdom. Solar energy will fill the gap in the short term, satisfying some incremental domestic energy needs, and within a decade, plans call for nuclear power to play the leading role in augmenting oil as a source of domestic energy. Thus, Saudi Arabia will be able to fuel the growth of its burgeoning economy without significantly reducing its oil exporting capability.

I am also glad to report that Saudi Arabia’s oil producing infrastructure has proven, and will continue to prove, safe from attack. This is not only due to the money spent on security and surveillance, but also due to the creation of a 35,000 strong facilities security force. These troops come from across the Kingdom and receive extensive training through a U.S. technical training program. This specialized force, which did not exist before 2005, has the exclusive responsibility of guarding all energy installations against both internal and external threats.

In relation to the political storms addressed above, Saudi Arabia, as the birthplace of Islam and a leader of the Muslim and Arab worlds, has a unique responsibility to become involved in whatever way is prudent, fair and beneficial to help those states now experiencing ill weather to arrive to safer shores. We have every intention of carrying out that responsibility for the good of all. Not only through diplomacy, advisory missions and financial gifts, but also through a more robust foreign policy directed toward fulfilling our role as a contributor to regional stability.

None of Saudi Arabia’s efforts would bear fruit were they not emanating from a nation that has made great efforts, and I am proud to say has largely succeeded in those efforts, to create a nation that is stable and secure. The reasons for this are many. Over the last couple of decades our government has undertaken a series of reform measures – in education, in citizen participation, in security, in economic policy – that have born bountiful fruit. We now find among our population a rising tide of nationalist sentiment that is binding us together ever more firmly.

Three particular examples of late show the mix of progressiveness, security, and stability that can be found in Saudi Arabia. In terms of progressiveness, last September, King Abdallah confirmed the right of women to vote and be elected in our electoral process as well as to be appointed to the Shura Council. On the issue of security, one only need look at what happened recently in the Kingdom – the Muslim Pilgrimage, or Hajj. Three million Muslims from around the world came to Mecca to fulfill the fifth pillar of Islam. I’m sure that those of you here who deal in the logistics of setting up outposts for large numbers of personnel can appreciate the massive administrative and security issues that arise from a city of three million people suddenly emerging. Fortunately, and this is a credit to the Saudi officials involved as well as those pilgrims who made the journey, the entire massive event went off without a single hitch.

Finally, on the issue of stability, with the passing of Crown Prince Sultan, who served us nobly as our Defense and Aviation Minister for nearly five decades, Crown Prince Nayef has been named the heir successor to the throne, proving the effectiveness of the succession process now in place. Those familiar with Crown Prince Nayef know that he is a staunch and loyal advocate for progress in the Kingdom, despite some reports in the Western press that have painted him as overly conservative and liable to undo many of the reforms started by King Abdallah. Indeed, Jihad El-Khazen, the well respected and versed journalist in Saudi affairs and who has personally interviewed Prince Nayef several times, when writing for al-Hayat newspaper in London put it well recently when he wrote, and I quote: “Prince Nayef will not abolish any decision made by King Abdallah; the rule in Saudi Arabia is not individual. Rather, it reflects the consensus of its leadership.” In short, the forward-looking reforms that we have seen in Saudi Arabia under King Abdallah, that have so well positioned the country to become a global leader in so many areas in the 21st century, will continue under any new leadership, for these reforms have been done for the overall good of the nation, not through the temporary whim of one leader.

And now it is time to conclude my tour d’horizon in order that I may get back to my position as a crew-member of the Saudi ship of state. As is often the case, my analysis has emphasized the storms, and perhaps given too little attention to the calm. Yes, Saudi Arabia remains an eye at the center of these storms, serene and consistent in its leadership position in the Arab and Muslim worlds. I also believe that among the storms taking place in other countries there are major glimmers of a coming calm. I believe that the people in those nations that have seen so much turmoil, God willing, and certainly with the assistance of Saudi Arabia, will work out their differences and arrive at safe shores. I believe that the terrorists will have a difficult time remaining hidden and that anti-terrorist measures – much like those taken in Saudi Arabia so aggressively over the last two decades – will guide the way for other nations’ efforts to root out cells of destruction wherever they may be. I believe that sanctions, diplomacy, and common decency, if not internal instability and a change of leadership, will return Iran’s leaders to their senses and encourage them to pursue a more peaceful path. I believe that the Palestinians will see the long-awaited appearance of their own state, sooner rather than later, if the United States can shed the Israeli shackles that prevent it from supporting the just and unalienable quest of the Palestinian people for their freedom and independence from Israeli occupation and colonization. And I believe that our goal of energy interdependence is already being realized, and that we will work together, because we must, to arrive at the ideal energy mix from global sources. But most of all I believe that Saudi Arabia has an important and pivotal role to play in navigating these storms in order to show the way to all nations seeking to safely steer their ships of state. And with that I say, safe sailing to us all, and may we soon find ourselves tied securely to the shore, if only to conduct repairs and gain provisions for our next great voyage.

Thank you.

HRH Prince Turki Al Faisal Al Saud

Prince Turki is Chairman of the King Faisal Center for Research and Islamic Studies and is one of the founders of the King Faisal Foundation. He served as the Ambassador of the Kingdom of Saudi Arabia to the United States of America from September 13, 2005 until February 2, 2007. He also serves as a member of the Boards of Trustees of the International Crisis Group and the Oxford Center for Islamic Studies and is co-chair of the C100 Group, which has been affiliated with the World Economic Forum since 2003. Prince Turki was appointed an Advisor in the Royal Court in 1973. From 1977 to 2001, he served as Director General of the General Intelligence Directorate (GID), the Kingdom’s main foreign intelligence service. In 2002, he was appointed Ambassador to the United Kingdom and Republic of Ireland by then Custodian of the Two Holy Mosques King Fahd bin Abdulaziz.

Born on February 15, 1945 in Makkah, Saudi Arabia, Prince Turki began his schooling at the Taif Model Elementary and Intermediate School. In 1963, he graduated from the Lawrenceville School in Lawrenceville, New Jersey and subsequently pursued undergraduate studies at Georgetown University in Washington, D.C.

The King Faisal International Prizes, awarded by the King Faisal Foundation, are presented to “dedicated men and women whose contributions make a positive difference.” These annual prizes, which are awarded in five fields of endeavor – Service to Islam, Islamic Studies, Arabic Language and Literature, Science, and Medicine – have been likened, for the Arab and Islamic worlds, as similar in stature to, and nearly as coveted as, the more renowned and longer established annual Nobel Prizes. The King Faisal International Prizes, in addition to being bestowed upon Arabs and Muslims, have been granted to outstanding achievers from virtually all corners of the world.

Reproduced with the kind permission of SUSRIS, to view the original article please click here

Al-Shaybah oil field, Saudi Arabia

The strength and growth of the Saudi petrochemical industry in the third quarter was the headline in the latest Jadwa Monthly Bulletin. The report noted the sector’s earnings were at an all-time high and “were up 66 percent in year-on-year terms.” That performance is on top of very robust growth in petrochemicals last year. The 2010 profits were $7.8 billion compared to the 2009 mark of $2.8 billion, off by two-thirds that year due to the global downturn. The bullish performance of petrochemicals discussed in the Jadwa report offset generally weaker results in other sectors. The comprehensive view and sector by sector drill down provided by the Jadwa Month Bulletin is an extremely helpful scorecard in understanding the Saudi economy. SUSRIS thanks Jadwa Investment’s Chief Economist, Brad Bourland, and Head of Research, Paul Gamble, for providing this insightful product for your consideration.

Jadwa Monthly Bulletin – November 2011

Petchems dominate third quarter earnings

Results from listed companies for the third quarter were reasonable. Net income totaled SR26 billion, up by 22.3 percent in year-on-year terms and 0.6 percent higher than in the previous quarter. This was the highest net income level recorded since the second quarter of 2008 and was heavily dependent on the petrochemicals sector. Excluding petrochemicals, year-on-year profits growth was just 1.8 percent. The TASI did not respond to the results and traded in a fairly tight range in October.

Petrochemical earnings hit an all-time high in the third quarter and were up by 66 percent in year-on-year terms. This was largely due to higher product prices, supported by elevated production, particularly from Yansab and Sipchem. Despite the weakening of the global economy in the third quarter, there appears to have been little impact on volumes sold. Sabic’s profits were another record and the company accounted for 73 percent of total earnings for the sector.

Outside of petrochemicals performance was much weaker, though this was distorted by the telecoms sector. Telecoms recorded the largest year-on-year decline in profits since the sector was liberalized. This was primarily the result of Saudi Telecoms (STC) posting a foreign exchange loss of SR789 million. STC has operations in India, Malaysia, Indonesia, Turkey, Kuwait and Bahrain and was affected by large exchange rate movements; for example, the Turkish lira depreciated by 15 percent against the riyal in the third quarter. STC still recorded a profit, unlike Zain, where current liabilities exceeded current assets, and Atheeb, whose losses have absorbed most of its capital.

Ten of the remaining thirteen sectors recorded year-on-year profit growth in the third quarter and 113 of the 147 listed companies posted positive growth, compared to 115 in the second quarter. Profit growth was fastest for the real estate sector, up by 81 percent. These gains were concentrated in two companies, Emaar Economic City, which is now selling housing units and has restructured its construction costs, and Taiba, which received a one-time payment for a land transaction in Medina.

Profits for the building and construction sector rose by over 30 percent, supported by strong demand and rising prices for building materials stemming from high construction spending. Bank profits grew by 29 percent. Although lending continued to pick up, the main reason for the growth was lower provisioning for bad debts. Profit growth for the retail sector slowed, but remained healthy, at 21 percent. The impact of the bonus awarded to public-sector workers earlier in the year has faded, but it is still evident; earnings of small luxury retail company Fitaihi were up by 115 percent year-on-year, after a gain of 371 percent in the second quarter.

Insurance was the worst performing sector, with profits falling by 53 percent. The insurance sector has been hit by provisioning for bad debts in line with a SAMA policy that was implemented at the start of the year. Transport was the second worst performer owing to a sharp drop in profits at National Shipping. This was attributed to greater global shipping capacity reducing fees, higher fuel costs and the expiration of some contracts. Energy was the other faller, the 6 percent decline caused by less air conditioning use owing to lower temperatures than last summer (the sector is dominated by Saudi Electricity).

An interesting development was the first indication that the Nitaqat program, a new labor market policy, is impacting on company profits. Under Nitaqat, companies are required by late November to achieve a certain level of Saudiization, which varies from industry to industry, in order to avoid restrictions on their employment of foreigners. Building and construction company Al-Khodari noted that an increase in labor costs attributed to Nitaqat contributed to a near halving of its profits (in both year-on-year and quarterly terms). Nitaqat will impact on payroll costs, contributions to GOSI (the private-sector pension agency) and spending on training.

The slow quarterly growth in net income, of just 0.6 percent, is in line with the seasonal norm. The third quarter is the height of summer, when outdoor activity slows and many people take long holidays. In recent years it has also coincided with Ramadan, during which business hours are reduced and labor productivity declines. The impact is clearest in the building and construction and industrial investment sectors, both of which were down by over 30 percent in quarterly terms. Reduced construction activity and the difficulty of mixing cement in very high temperatures means cement sales decline and the 21 percent quarterly fall in profits for that sector was is in line with the seasonal norm.

In contrast, summer is the time of peak air conditioning use, meaning that the energy sector always performs strongly in the third quarter. This year was no exception, with quarterly profits up by 61 percent. It was not the fastest growing sector, however, as insurance surged by 249 percent. The volatility of the quarterly profits suggests that insurance companies are adopting differing approaches to the timing of the provisions for bad debts they are now required to make. The high quarterly growth in retail was also influenced by seasonal factors, as sales for the new school year, a key source of revenues for the largest companies in the sector, occur during the third quarter.

In brief: Stock market

The TASI stayed fairly stable during October. It recorded a 1.8 percent gain over the month and has traded within a range between 5,975 and 6,240 since the second half of August. Insurance was the best performing sector and dominated trading (see below). Aside from this, sectors generally moved in line with investor perceptions of third quarter results. Although the results were reasonable, they did not trigger a revival in the market, even though many global markets posted double-digit gains during the month as greater comfort over the policy response to the debt problems in the Eurozone lifted investor sentiment.

Insurance companies have accounted for a disproportionately large share of trading in the past few weeks. For the whole of October, trading in insurance stocks was 36 percent of the total, even though they only account for 2 percent of market capitalization. As a result of the high turnover of insurance stocks, the total number of stock market transactions was the highest since July 2009. Insurance companies tend to be targets for speculators, but the proportion of trading in October is unprecedented. Although trading in other sectors may have been affected by investors being cautious about taking positions ahead of the forthcoming one-week closure of the market for Eid al-Adha, this does not justify the surge in trading of insurance companies. The Capital Market Authority is reportedly monitoring the situation.

Foreign investors through the swap agreement were net buyers of local shares for the first time in three months in October. At $325 million, net purchases were the highest since April and total sales were the lowest since September 2010. The inflows reflect reasonable company results, particularly for petrochemicals, in addition to an improvement in global risk appetite during the month, which saw large gains in stock markets and stronger oil prices. For the year as a whole, foreigners have sold $1.1 billion more shares than they have brought. This is due to caution among foreign investors in the face of an uncertain global environment and some disappointment over the performance of the TASI.

Hail Cement became the third new listing on the stock market this year in mid-October. It was the largest listing so far this year, raising SR490 million. In common with most new listings, the share price jumped on the first day of trading, rising by 26 percent on October 16. It is currently a little above this price. Further IPOs are planned this year; that of electronics retailer Extra was announced recently, but for the year as a whole new listings are set to be the lowest since 2005. Volatile market conditions and low valuations are the main factors hitting local companies’ appetite for listing.

Oil market watch

Saudi oil output to decline as Libya’s recovers

Oil production has been raised to long-term highs this year to compensate for the disruption to Libyan output. Higher output is a key factor behind our expectation that economic growth this year will be over 7 percent. With stability being restored in Libya and oil output rising, the path of the Kingdom’s oil production cuts will distort growth next year and in 2013. We assume that Saudi Arabia will try to calibrate its moves so as not to unduly influence global oil prices.

There are varying estimates as to how quickly Libyan crude can be restored to its pre-conflict level of around 1.6 million barrels per day. Reports indicate that most production and export infrastructure are not badly damaged and output reportedly rose to 350,000 barrels per day in early October. However, Libya is very reliant on outside help for its oil industry and there needs to be an improvement in security before foreign oil workers will be comfortable returning. The Libyan National Oil Company is targeting output of 700,000 barrels per day by the end of this year and a return to full pre-conflict output in early 2013; some independent analysts only expect pre-conflict production to be reached in late-2014.

The pace at which the Kingdom lowers its oil production will not just be driven by Libyan output. Oil prices will play an important role. This is clear from the pattern in which production was increased, which occurred in two distinct phases. First, in February, when the bulk of Libyan production ceased, exports were raised by around 600,000 barrels per day to 7 million barrels per day.

In the following months Saudi exports fell, in part because the oil the Kingdom put onto the market was different to that produced by Libya. Then in June, exports rose by around 550,000 barrels per day to 7.4 million barrels per day (and owing to the seasonal growth in domestic consumption, total output rose by 1 million barrels per day). June was the month that the Opec meeting broke down amid disagreement on whether output should be raised to lower prices. After the meeting the Kingdom lifted production, owing to concern that prices could reach a level that would cause permanent demand destruction or destabilize the global economy.

Although the outlook for most of the leading economies is weak, performance should be stronger in emerging markets, which are the main source of oil demand. Global stocks of oil have fallen, suggesting some tightness in the market. However, this is caused partly by supply issues. Aside from Libya, there have been small output disruptions in Nigeria, some non-Opec areas (Yemen, Gulf of Mexico), and heavy maintenance of facilities on the North Sea. If these unwind and add to recent downward pressure on oil prices the Kingdom will be cautious about how much oil it takes off the market. However, if prices stay high Saudi Arabia may reduce output by less than that reintroduced by Libya.

We project a gradual decline in the Kingdom’s oil production to an average of 8.8 million barrels per day next year, 4.4 percent lower than this year. We assume that Libyan output will return to its pre- crisis level by end-2013, but with global and domestic oil demand rising, Saudi oil output is likely to be little changed that year.

In brief: Economy

Wholesale price inflation remained fairly subdued in the third quarter, easing to 4.5 percent from 4.7 percent in the second quarter. The trends are similar to those for consumer price inflation, with food prices low (up by 1.3 percent year-on-year) and “other commodities”, primarily gold, high (up by 33.8 percent year-on-year). Chemicals and fertilizers were the other main sources of wholesale price inflation. Moves in wholesale prices tend to be reflected quickly in consumer prices and the current data suggest that wholesale prices will not be a source of significant upward pressure on consumer prices in the near term.

Cement sales have rebounded after their usual Ramadan drop. Sales were 26 percent higher in September than they were in August. In year-on-year terms the growth was 37 percent, though in part this is because Ramadan ended in September in 2010. Nonetheless, there has been a consistent rise in cement sales this year, reflecting a buoyant construction sector. Cement sales in the first three quarters of the year were 12.6 percent higher than in the same period of 2010; the growth rate for cement production over the corresponding period is similar, at 12.1 percent.

Trade data for August show that the non-oil trade balance widened to $5.6 billion. Non-oil exports dipped to $3.4 billion from $3.5 billion in July, though much of the decline was due to a fall in re-exports (goods that transit through the Kingdom with minimal local value added). Exports of petrochemicals and plastics, which accounted for 69 percent of the total, were higher than in July. Imports recovered from an 18-month low of $7.7 billion in July to $9 billion in August, though this is the second lowest since February. Unusually, the breakdown was not published.

Interbank interest rates have ticked up in the Kingdom, as those elsewhere in the world have increased as a result of the stresses in the Eurozone banking sector. Three-month Saibor (the rate at which banks lend to one another) has risen steadily from 0.6 percent at the end of September to 0.7 percent. In the US the rise started earlier, in early August, and has been of a greater magnitude, from 0.25 percent to 0.43 percent. The increase in Saibor has been far less than the jump around the collapse of Lehman Brothers in 2008, which was from around 2 percent to over 4.5 percent, reflecting both the gravity of the situation in 2008 and the healthier finances of local banks now.

About Jadwa Investment – Jadwa Investment is a Saudi Closed Joint Stock company operating under the supervision of the Saudi Arabian Capital Markets Authority (CMA). Under the CMA decision published on August 21, 2006, Jadwa was awarded a license to offer all types of investment services including dealing, managing, custody, arranging and advising. All investment services offered by Jadwa Investment are supervised by a Shariah Supervisory Board and are fully Shariah-compliant.

Reproduced with the kind permission of SUSRIS, to view the original article please click here

The Mina Hajj site as Saudi Arabia readies for the annual Hajj. (SPA)

For the duration of the Hajj and the traditional visit to al-Madinah afterward, the Saudi government must insure that the Hajjis are provided with adequate housing (mainly in tents), food, water, health and sanitation, ground transportation, and public safety and security.

The government has spent billions of dollars on Hajj infrastructure from the two special Hajj air terminals which are the largest structures under a single roof in the world, to the extensive preventative and curative health and sanitation facilities at all the major Hajj locations. The Saudi government has also maintained a strict policy banning political activity so that militants do not desecrate this peaceful and joyous occasion. It is a task of almost unimaginable proportions.

Each year, several million Muslims perform the Hajj, or Great Pilgrimage to Makkah, the birthplace of the Prophet Muhammad and where the Qur’an was first revealed to him. One of the Five Pillars of Islam, the Hajj is required of all believers once in their lifetimes provided they are physically, mentally and financially able. Sura (Chapter) 3: 90-91 of the Qur’an states: “And the Pilgrimage to the Temple (the Hajj) is an obligation to God from those who are able to journey there.” Although it is not technically a part of the Hajj, most Hajjis then visit al-Madinah, 450 kilometers to the north. In 622 AD, Muhammad and his followers fled to al-Madinah from mounting persecution in Makkah. The flight, known as the Hijrah, marks the beginning of the Muslim, or Hijriyyah calendar. Many of the chapters (suras) of the Qur’an were written down in al-Madinah.

Although many religions have pilgrimages, the Hajj is virtually unique in its worldwide participation and sheer size. It is hard for anyone who has not been in the Kingdom during the Hajj to appreciate its full scope. How can a country with a relatively small population such as Saudi Arabia maintain such a good record in administering it each year? The following is a brief overview of administrative, political, economic, and social significance of the Hajj on Saudi Arabia and indeed the entire Muslim world. But first, for those not familiar with the rites of the Hajj, it would be instructive follow the pilgrims through the rites.

The Religious Significance of the Hajj

The Hajj takes place each year during the month of Dhu al-Hijja, the last month of the Muslim calendar. It is virtually impossible to describe the deep emotions generated during the Hajj, even by watching it on Saudi television which annually records it. Each rite has a special significance. The principal rites are Ihram, Tawaf, Sa`y, Wuquf, Nafrah, Rajm, and the `Id al-Adha:

Ihram is a ritual cleansing and consecration and declaration of intent to perform the Hajj, performed before entering Makkah. Afterwards, pilgrim don special Irham garb of white terrycloth representing the equality of all believers before God, regardless of race, gender, age or social standing. Men wear two coverings for the upper and lower body, and women wear white robes but need not cover their faces.

Tawaf, performed on arrival in the great Haram Mosque in Makkah, is completed by circling seven times around the Ka`bah, located in a great open area in the Haram Mosque. The Ka`bah is considered the spiritual and geographical center of Islam, toward which Muslims face in prayer. Tradition has it that the Ka`bah, a dark stone structure, was originally built by the Prophet Ibrahim (Abraham) and his son Ismail (Ishmael) as a place of worship of the one true God, and symbolizes monotheism which is at the heart of Islam. Each year just before the Hajj, the Ka`bah is covered with a new black velvet and gold drape called the Kiswah. Following the Arrival Tawaf, pilgrims say prayers at the Maqam Ibraham, a station near the Ka`bah, and also drink water from the holy well of Zamzam. Tradition has it that God created the well by striking a stone so that Hajar (Hagar) and Ismail might drink when they were about to die of thirst.

Sa`y consists of seven laps on foot between two elevations formerly adjacent to the mosque but now a part of the mosque complex. It commemorates Hagar’s frantic search for water. Sa`y and Tawaf together are called the Umrah (Lesser pilgrimage) and can be performed any time during the year but do not meet the obligation of Hajj.

Wuquf is performed in a ceremony of “Standing” on the Plain of Arafat, about 20 kilometers east of Makkah beginning at noon on the ninth day of Dhu al-Hijjah, called Yawm al-Wuquf, “Standing Day.” The favored spot to stand is Jabal al-Rahma, the Mount of Mercy, a rocky hill rising about 150 feet above the plain and crowned by a tall white stone obelisk. According to Islamic tradition, the Wuquf is the Hajj – the supreme hours. Everyone must literally be present at `Arafat at maghrib (sunset) or the Hajj is forfeited.

Nafrah: The word literally means “the Rush” in Arabic. As the sun finally disappears over the horizon, in its wake some 2 million Hajjis surge forth from `Arafat to Mina, some 17 kilometers away. They travel by bus, car, truck, and for many as an act of piety, by foot. With so many people, the Nafrah is one of the most chaotic and stressful exercises in this or any other religious observance. The first stop is Muzdalifa about seven kilometers west, where Sunset and Evening prayers (Salat al-Maghrib and al-`Isha) are traditionally said, and a special prayer can be said at a roofless mosque called al-Mash`ar al-Haram (the Sacred Grove). Because of the great crowds, now only the earliest to depart `Arafat usually arrive in Muzdalifa in time for Maghrib prayer, and many say them before leaving Arafat. After midnight and saying Early Morning prayer (Salat al-Fajr), the Hajjis travel on to Mina, a small town about ten kilometers farther west, where they will stay for three days.

Rajm: In Mina, Hajjis perform Rajm over the next three days, the ritual throwing of seven stones at three pillars, called Jamras which represent Shaytans (devils). The tenth through the twelfth of Dhu al-Hijja is also the `Id al-Adha (the Feast of the Sacrifice) which includes the sacramental sacrifice of a blemishless animal, usually a sheep. The `Id is celebrated not only at the Hajj but also throughout the Muslim world where it is a joyous time to visit family and friends.

On the thirteenth, Hajjis return to Makkah for a Farewell Tawaf and are free from all Ihram restrictions. At that point, the Hajj is technically over, and Hajjis are free to travel home or on to visit al-Madinah. There the pace is more relaxed and people can take more time to see the sights, principally the Prophet’s Mosque.

The Impact of the Hajj on Saudi Public Administration

Due to tremendous advances in transportation and communications technology, the Hajj has changed more in the past eight decades since Saudi Arabia formally became guardians of the Holy Places in 1926 than it had in the previous 1300 years of Islamic history. In 1927, an estimated 300 to 350 thousand attended with only about 150,000 from outside the Kingdom. In 1972, there was a total of 1,042,007 Hajjis, including 353,460 Saudis, 209,208 non-Saudi residents, and 479,339 from abroad. Today, an estimated 2 million perform the Hajj.

The unprecedented increase in the numbers of pilgrims has greatly increased the complexity of Hajj administration. Just to make room for foreign Hajjis, the Saudi government has restricted attendance by Saudis, many of whom formerly often attended every year, to once every five years, and has negotiated visa quotas for foreign Hajjis with their countries of origin.

Another huge logistical problem is how to dispose of the remains of the thousands of sheep annually sacrificed at Mina. For years, families were allowed to keep only what they consumed during the `Id and the rest was buried in huge pits. In recent years, however, an abattoir has been constructed to preserve the meat, and Hajjis may now purchase a sheep from an Islamic bank to be sacrificed in accordance with Islamic practice, with the meat then distributed to the poor throughout the Muslim world. Increasing numbers of Hajjis are choosing this option, which combines piety with charity.

Providing Zamzam water for so many Hajjis is a major task. Traditionally, the Zamzamis roamed the Haram Mosque providing water to all who asked. But with so many pilgrims today, they must now store the water well in advance, replenish portable containers and paper cups in numerous, strategically located places around the mosque, and continuously refill them as needed. A charitable foundation also bottles Zamzam water for sale throughout the world.

To meet these administrative needs, the Saudi government has established a combination of public services and government regulated privately administered Hajj services:

The Hajj Private Service Industry

For centuries, Hajj administration was largely in the hands of ancient, family-organized guilds that arranged for food, lodging and transportation, and also guided pilgrims through the Hajj rites: Wakils, or Agents, who guided them to Makkah, usually from the nearby port city of Jiddah; the Mutawwifs (from the word Tawaf), who guided Hajjis through the Hajj rites; Zamzamis, who distributed Zamzam water; and Dallils, or Guides, who guided visitors to al-Madinah. Lacking the resources to take over these tasks, King Abd al-Aziz (“Ibn Saud”) left them in the hands of the guilds. As the Hajj was the backbone of the economy of the Hijaz, the guilds had traditionally charged literally whatever the Hajj traffic would bear. However, the Saudi government, which takes its responsibility as custodian of the Two Holy Places very seriously, strictly regulates the guilds in order to insure that the Hajjis not be overcharged. Today, the guilds function much as public utilities. To the present day, the principal responsibility for providing personal services to the Hajjis rests with the Mutawwifs, who act essentially as religious tour guide companies for designated countries of origin. They are responsible for looking after the Hajjis under their care from the time they leave home for Saudi Arabia until they return home again.

The Hajj service industry also includes other regulated private sector enterprises. Overland bus transportation is provided by a combination of foreign and Saudi public and private companies. Of the 11,5000 buses in service in the 2002 Hajj, the Saudi Transportation Syndicate, made up of several private companies, provided 7,000, and the Saudi Arabian Public Transportation Company (SAPTCO) provided 600. SAPTCO is a publicly traded, government-managed company whose board of directors is chaired by the Undersecretary of Communications. It was created 24 years ago to provide bus scheduled intercity and international service and chartered service for the Hajj and Umrah. The rest of the buses come from foreign countries.

In 1945, Saudi Arabia established Saudi Arabian Airlines (Saudia) as a national air carrier. In addition to providing domestic and international air service, it was also given the mission to provide service “for Moslems on pilgrimage to the Holy Cities of Islam in Saudi Arabia.” In the 2003 Hajj, Saudia plans to carry 893,702 Hajjis on 1,754 flights from 70 international destinations. Most Hajjis will enter the Kingdom at Jiddah, the main Hajj port of entry, where two special Hajj air terminals await them, the largest structures under a single roof in the world.

Public and private Islamic foundations also are involved in operations such as providing and distributing sacrificed meat and Zamzam water. The Ministry of Awqaf (Islamic foundations; sing. Waqf) also acts as a repository for those who wish to donate charitable contributions as a part of their Hajj experience.

Hajj Public Services

In addition to government-regulated and government-owned Hajj service companies, Saudi Arabia must also provide extensive direct government services for the Hajj. Overall services are coordinated by the Hajj Ministry and the inter-agency Central Hajj Committee. Public safety, public security and traffic control are provided by the Ministry of Interior, and were a special crisis to arise, it can also call on the National Guard. It is responsible for regulating entry and exit from the Kingdom at all land, sea and air ports of entry, and insuring their safe overland travel to and from Makkah and al-Madinah. For the most part, overland traffic is spread out over a number of weeks, but during the Nafrah, all 2 million Hajjis set out at the same time for the same place. It has become one of the greatest traffic gridlocks in the world. Despite Herculean efforts by the traffic police, supplied with the most up-to-date equipment; the journey from Arafat to Mina can take over 12 hours. By comparison, consider a dozen Super Bowl games getting out at the same time and place, everyone all heading in the same direction.

Public health is another Herculean task. Modern health services were originally created in the 19th century because of fear in Europe and America over the spread of cholera. Asian Hajjis brought cholera to Makkah, and North African Hajjis spread it from there to Europe and America. The Western powers pressured the Ottoman sultan to create an international organization called the Paris Office of Hygiene to oversee the health and sanitation aspects of the Hajj. After World War II, the newly formed World Health Organization assumed this responsibility after absorbing the Paris Office. In 1956, the Saudi Ministry of Health assumed responsibility for Hajj health and sanitation and now operates extensive preventative and curative health and sanitation facilities at all major Hajj locations. The Saudi Red Crescent Society also participates, operating first aid and other facilities.

Of lesser magnitude but equally important, personnel in Saudi Embassies and Consulates abroad must be augmented each year to process foreign Hajj visa applications. At home, the Foreign Ministry also plays host to VIPs making the Hajj, including cabinet ministers, heads of state and other important personages.

Hajj Infrastructure

The government has also spent billions of dollars on Hajj infrastructure. This has included major expansions of the two holy mosques in Makkah and al-Madinah. The Haram Mosque can now comfortably accommodate a million worshipers, and during the Hajj, twice that number pack into it. There are also two new levels to increase capacity for performing the Sa`y. The Prophet’s Mosque in al-Madinah has also been expanded, although the crowds are smaller there during the Hajj. In Mina, the space for throwing stones at the three Jamras has been increased to three tiers.

To accommodate overland transportation at the Hajj, the Saudi government has constructed hundreds of miles of all weather, four lane highways, particularly between Arafat and Mina. It has also installed created a fully computerized traffic control system. Each year, portable tent cities are set up at `Arafat and Mina to provide housing, food, water, health and sanitation, transportation, telecommunications, public safety, banking facilities, markets – indeed all amenities of a city of 2 million people. All in all, nearly every Saudi government agency and ministry becomes involved one way or another in making the Hajj an administrative success.

The Political Significance of the Hajj

The Saudi government has always maintained a strict policy banning political activity under the pretext of attending the Hajj, welcoming Muslims regardless of their political persuasion. Nevertheless, over the years there have been a number of political activists that have tried to use the occasion to press their political agendas. During the height of Arab socialism, radical Arab nationalists made periodic attempts to embarrass the Saudi regime by disrupting the Hajj, but none of them were successful. In an attempt to challenge Saudi Arabia’s role of leadership in the Muslim world and discredit its custodianship of the Islamic holy places, the Khomeini regime in Iran sent provocateurs to disrupt 1982 Hajj in an attempt. Tensions mounted in subsequent years, until 1987 when 400 people were killed and Saudi security services had to be called in to quell violent agitation by Iranian Hajjis. Muslims throughout the world condemned the agitation as a desecration of the Hajj.

Since then, the Hajj has remained a peaceful and joyous occasion as it was intended to be. However, in the wake of the attacks on September 11, 2001, the threat of violent political activity has increased as militant Muslims put forward the claim that anti-American and anti-Zionist demonstrations would be in the name of Islam, not politics.

The Economic Impact of the Hajj

Prior to the oil era, the Hajj was the economic backbone of the Saudi economy. With vast oil wealth, the government no longer depend on Hajj revenue, but it is still a major source of income for the private sector. In addition to the Hajj service industry, the Hajj is a major season for the consumer retail season as well, somewhat analogous to the Christmas season in the United States. Hajjis from third world countries in particular buy items that are hard to get or highly taxed at home, such as medicines and luxury items such as perfumes and jewelry. For the 2003 Hajj, about 1500 young Saudis have been hired and trained to accompany the Hajjis on their sacred journey. According the project director, the aim of the project is to create employment for Saudi youth while helping guests and serving in the worship of God.

In recent years, Islamic religious tourism has been expanded far beyond the Hajj. Many Muslims from all over the world now perform the Umrah year round. The fasting month of Ramadhan is particularly busy season, as many Saudi residents also flock to the Holy Places. At the month draws to an end, Muslims celebrate the anniversary of the first revelation of the Qur’an. On this lailat al-qadir, or “night of power,” some three million people perform tarawih prayers in the Haram Mosque, more than at the Hajj.

With year round visits now to the two Holy Places, there are no published figures that break out gross revenues generated by the Hajj, but they are estimated to be in the billions of dollars, including annual government expenditures.

The Social Impact of the Hajj

In its size and global scope, the Hajj is the greatest single ritual celebration, not just of Islam, but of any religion anywhere. As one of the Five Pillars of Islam, it is an obligation for one-fifth of world’s population. During the month of Dhu al-Hijjah, virtually the entire population of Saudi Arabia is intimately touched by the Hajj, whether directly in its administration, its service industry, as a purveyor of personal goods and services, or indirectly by observing it on television. The `Id al-Adha, observed at the end of the Hajj, is celebrated throughout the Muslim world as a time of worship and fellowship with family and friends.

Unlike the impact of the Hajj on many foreign visitors, whose journey is a mystical, once in a lifetime experience, the Saudi experience while visiting the Islamic Holy Places, during the Hajj or at any other time of year, is a local, accessible reality. The sites are the physical and geographical manifestation of the birth of Islam. This blending of the highly sacred and the familiar commonplace has permeated Saudi society to such an extraordinary degree that it can be felt in virtually every human endeavor from politics to business to simple recreation.

Reproduced with the kind permission of SUSRIS, to view the original article please click here

Foreign Minister of the Palestinian Authority, Riyad Al-Malki delivers a speech on October 31, 2011 at the headquarters of UNESCO in Paris

Earlier this week, Palestine played a shrewd diplomatic hand and shook up global affairs while Palestine President Mahmoud Abbas joined Israel Prime Minister Benjamin Netanyahu as a founding member of those global leaders who are defining the weaknesses of US President Barack Obama.

What did Palestine do? It joined a culture club.

The Palestinian government petitioned for and was granted membership in UNESCO – a key international cultural organization. At the same time, because of laws passed by the US Congress in the early 1990s that opposed Palestine’s attempts at the time to seek international recognition, the United States will again withdraw from the organization.

Palestine in. America out. Palestine is making the weather. America is reacting to it.

The Middle East peace process is a vexing challenge for any American president. The divide between Israelis and Palestinians over a mutual security arrangement, over the governance over Jerusalem, over the right of Palestinian refugees to return, and over borders is more about institutions on both sides of the Israel-Palestine divide that are too weak to deliver any deal to their citizens.

The notion that Israelis and Palestinians could resolve their own differences has long been a fantasy and is the reason why other stakeholder nations like the United States, Russia, France, England, Egypt, and Jordan have been involved over the decades in attempting to work out an arrangement with the nudging and support of the international community.

American presidents have been unable either to achieve an Israel-Palestine settlement or to walk away from the problem. When America pulls away and ignores the dilemma, then either Israeli settlers or groups like Hamas turn up the violence and pressure on each other until America reengages.

President Obama made resolving the Israel-Palestine issue a “defining challenge” for himself – one that he chose in the first days of his presidency by appointing a special envoy, the now frustrated and resigned George Mitchell, to make peace between the two a reality. Obama believed he could create the conditions where a deal would be compelling – and he used as part of his approach, a Sumo-like challenge against Prime Minister Netanyahu over settlements.
The notion that Israelis and Palestinians could resolve their own differences has long been a fantasy
Pushing back and forth for more than 18 months, Netanyahu refused to yield to the Americans on suspending settlement construction in Occupied Territories, and thus became the first leader in the world to publicly rebuff and triumph in a war of wills over the new US President. Netanyahu, an ally of the US, also became a rival in that this battle in which a client state of the United States prevailed over its patron telegraphed to the rest of the world that the US was weak, very weak, and lacked resolve and a workable strategic roadmap on Middle East affairs.

Despite this setback, Obama took his anger and frustration with Netanyahu private and behind closed doors and on the public front issued strong calls of support for Israel’s security and interests. During this period of reassuring Israel, Secretary of State Hillary Clinton and Vice President Joe Biden each said, “America’s relationship with Israel was unconditional and unbreakable.” Palestine was largely ignored. Settlement building resumed – and President Obama then told the Palestinians that they had to go into talks with Israel even as the Israelis built out controversial settlements.

This was a disaster for the Middle East peace process, a signal of Obama’s weakness, a bridge too far for the Palestinian Authority, and a defining moment for US policy in the region as well. The Arabs, who had initiated a major “Arab Peace Deal” in 2002 and offered normalization between all Arab League states and Israel if it would accept the general terms of the 1967 borders, became convinced that the United States had become impotent, unable to execute policy, no matter how lofty and inspiring President Obama’s rhetoric. Eventually, Obama’s efforts collapsed entirely when envoy and former US Senator George Mitchell resigned from his task.

And then many months proceeded with Israel and Palestine in a deadlock and an American presidency issuing statements like “America can’t want peace more than Palestinians and Israelis” and other such statements acquiescing to the toxic situation that was hardening – until a frustrated and angry Tunisian fruit peddler poured gasoline over himself and lit a match, sacrificing himself and becoming the trigger of the Arab Spring revolutions that continue to shake the foundations of stale and rigid governments throughout the region.

With the fall of long-standing totalitarian regimes in Tunisia and Egypt – and now Libya – but also shaking Syria, Yemen and others, the Middle East North Africa map is being re-written. Those Islamists who had been jailed, tortured, and politically neutralized during the years when dictators like Hosni Mubarak and Ben-Ali were running the show are now emerging and demanding a role. In Tunisia’s first elections, the Islamist party just won a plurality of 41% of the vote. When Egypt moves to elections, most observers expect the Muslim Brotherhood to score significantly.

All of this means that the neighborhood that the US had helped to craft for Israel over the decades is coming undone. America had helped Israel strike peace deals with Egypt and with Jordan. There was an equilibrium in the Middle East that had endured for decades – but no one paid attention that there was an expiration date, that Palestinians could not be expected to remain the world’s forgotten people of this era and remain subject to the kinds of humiliation they were experiencing at Israeli checkpoints and under Israeli management in Occupied territories.

Palestine developed two tracks of leadership – one violent and committed to hard core resistance in the form of Hamas; and the other more technocratic, corrupt at many levels, but more willing to negotiate with Israel and other parties. That is the Palestinian party Fatah that Mahmoud Abbas leads.

The early lessons of the Arab Spring are not that totalitarian regimes are giving way to democracies – but rather that rigid, inflexible political frameworks are collapsing and giving way to highly fluid political circumstances. This is also true for America’s deals and structures in the Middle East. America’s security commitments to Israel have always been deeply committed – but they are look like New Orleans levies that work well enough until a giant storm comes and washes over.

That seems to be the situation today. The giant storm is coming – the neighborhood will become more hostile towards Israel’s interests – and yet the United States looks powerless and paralyzed and unable to change the environment.

The key events that punctuate the increasing irrelevance of the US to the Middle East peace process come from both Hamas and Fatah. Recently, Palestine President Mahmoud Abbas shook off and ignored American pleas not to proceed with a petition in the UN Security Council recognizing Palestine as a state. The resolution still sits at the Security Council – but what is important is that Abbas ignored America and ran the risk of having aid cut off. Abbas “invented political leverage” by using a non-violent international platform to make his case. His move embarrassed the United States and highlighted the hypocrisy of America’s position and bias towards Israel in the dispute.

Next move Hamas. Then out of nowhere, after years of holding a single Israeli soldier, Hamas negotiators and Israel Prime Minister Benjamin Netanyahu strike a deal in which they traded Gilad Shalit for 1027 Palestinian political prisoners. Message: violence also can work in getting leverage over Israel and the US.

Next move Mahmoud Abbas. Then upping the ante and again ignoring White House pleas not to move forward, Palestine petitions for membership in UNESCO, an international cultural and world heritage organization, which probably should have had Palestine as a member decades ago. This week Palestine succeeded in getting enough votes to enter. The US, because of draconian anti-Palestinian laws on its books, now must automatically withdraw from this key organization that it worked so hard to rejoin after 18 years of absence during the foreign policy reign Southern anti-internationalists in the US Senate.

The problem with being a superpower is that frequently “power” is seen in relative terms – power is associated with the mystique of having no boundaries or limits on what a state can do. This used to be the case for the United States. The world used to watch with awe as American economic and military innovation and capacity seemed to have no limits. But this mystique has been shattered by the sense many have that the US is militarily overstretched, that it allowed its financial sector to become deeply corrupt, and that its moral position in the world has become undermined by the creation of a grey area legal order with renditions, Guantanamo, secret prisons, and spying and killing its own citizens. When Netanyahu beat Obama in a standoff over settlements, the world saw a weak power control a great power.

Today, the United States is seen as more and more irrelevant in the Middle East, trapped in an arrangement that is rigid, inflexible, and which may fall just like the regimes of Mubarak and other political frameworks in the region that have been in place for decades.

From many of the President’s previous speeches about the Arab and Muslim worlds, Barack Obama clearly aspires to a different vision in the region than that which we are seeing today – and wants a humane resolution to the Israel-Palestine conflict. But as of yet, Obama has been a political victim of forces in the Middle East, not the leader who is shaping events and the environment, and making the world’s weather.

Anti-Qadhafi fighters celebrate

There are numerous illusions about the “Arab Spring”, some of which are apparent and clear to any observer, whilst others may require years or even decades for us to uncover.

Ever since popular uprisings erupted in a number of Arab capital cities, there have been a number of widespread claims that are thought to reflect reality but which in fact are nothing more than “wishful thinking”. These represent nothing more than the hopes for the future of society, and the results of the so-called “revolution” that has taken place in more than one Arab state. For example, there has been much exaggeration with regards to the assessment of the true role played by social networking websites such as Facebook, Twitter and others, whilst online activists have been portrayed as possessing greater significance than they truly deserve.

Without a doubt, some people lent unjustifiable credibility to damning accounts of former regimes, whether real or fictional, as well as the causes that led to the current clashes. There has also been a lenient handling and characterisation of the slogans raised by some young enthusiastic revolutionaries, such as those demanding “dignity”, “freedom”, “democracy” and “human rights.” There have been many hasty comparisons between the Arab popular uprisings and the European revolutions that erupted and overthrew empires in 1848, or the collapse of the Berlin Wall in 1989, not to mention other [positive] comparisons. However, the most significant illusion, which was exposed quickly, was the claim that such revolutions were peaceful or that they were free from any ideological or traditional bias.

We are not mistaken in saying that the majority of Arab revolutions included some violence, and were not free from ideological influence (leftists and Islamists) or traditional biases such as sectarianism, ethnicity and regionalism. The story that “non-politicized” youths staged peaceful revolutions against despotic regimes, with the aim of restoring political and social life, is therefore an inaccurate description.

It is true that there were indeed “idealists” who simply wanted to topple the former regimes, yet the opposition forces in the street never abstained from engaging in violence, sabotage, religious extremism, left-wing (anti-institutional) intransigence, and the use of sectarian and regionalist slogans.
In Libya, demonstrations transformed over the space of a few days into a civil war that necessitated foreign military intervention
The problems in Arab societies were clearly present, yet at the very peak of clashes between the regime and the people, the media and foreign observers – both awestruck – were indifferent to these differences – or structural imbalances – within the fabric of the opposition, claiming that we were simply experiencing a new stage in the history of the Middle East. However, as soon as the previous regimes fell, by coups or armed force, social ills and bias resurfaced, placing the futures of these countries – and even their internal unity – in real jeopardy.

Consider the Egyptian model, where sectarian violence suddenly erupted (last Sunday) between the Copts and the army, during which at least 24 people were killed and hundreds more were injured. Despite all that is being said about the peaceful revolution in Egypt, the incidents of armed violence and fierce confrontations between the demonstrations and the army reveal a state of continual deadlock in the security and economic arenas.

The military wants to initiate a transitional period via elections to hand over power to traditional parties and, at the same time, maintain its privileges and independence. Meanwhile, youth activists are seeking to stage a genuine revolution on the ground, beginning with a redrafting of the constitution and potentially including the trial of the military apparatus. It is for this reason that the Egyptian Supreme Council of the Armed Forces [SCAF] has found itself at a real impasse, because from the very beginning it was not honest enough to say that it had staged a military coup. By keeping pace with the youth and even using the “revolution” slogan, the military has placed itself in a state of confrontation with the raging and undisciplined masses seeking to carry out radical change.

If every group feels it can, or at least has the right to, change the principles and conditions of civil peace, as well as the political and social balance in the country, then why are the Copts being denied this?

In Libya, demonstrations transformed over the space of a few days into a civil war that necessitated foreign military intervention. In Bahrain, the sectarian and radical Shiite slogans dominated all other causes. As for Syria, the state is now divided between sectarian and ethnic demarcation lines, whereas in Yemen there is a tribal and sectarian undercurrent in the struggle between the President and his party on the one hand, and the allied tribal, sectarian, and political forces who oppose him on the other. Even in Tunisia, the “birthplace of the Arab Spring”, some experienced political leaders who were entrusted to undertake the transitional period have attempted to curb the revolutionary fever and reduce the aspirations of the revolutionaries. However, they were surprised to see hundreds of Islamists breaking into the offices of a private television channel to forcibly shut it down. Despite the transitional government’s attempts to perform its role as a caretaker government and prepare for the upcoming elections, tension and insecurity continues to exist in some areas.

Those who advocate the “Arab Spring” argue that what we are experiencing is nothing more than the inevitable result of the previous regimes’ policies, and that the transitional process may require an indeterminate amount of time before all these states are able to return to normal. No one can estimate the amount of time required until this can happen, but they [the Arab Spring advocates] do guarantee that the future will be better than the past.

So far, over 30,000 people have been killed in the states involved in the “Arab Spring”. The numbers may be so high because of the civil war in Libya, but we must remember that countries such as Syria and Yemen could slide into open conflict at any time.

According to a report by “Geopolicity” the Arab Spring states have sustained losses exceeding $56 billion, whilst the gross national income of Libya has declined by 84 percent, and the gross national income of Yemen has declined by 77 percent (The Cost of the Arab Spring, October 2011). In Egypt, SCAF has been unable to restore a sense of normality in light of the weekly one-million strong demonstrations that cripple state institutions, and the violations being committed under the pretext of freedom of expression.

Egyptian financial reserves abroad have declined from $29.8 billion to $19.4 billion, a sum that is not sufficient even to meet the requirements of Egyptian imports for 4 months. When we take all these figures into account, one must admit that the claim of peaceful Arab revolutions was nothing more than wishful thinking, and far from the truth. However, it is crucial that there is now a peaceful exchange of power. The results of the forthcoming elections must be respected, with no intentions of violating the principles of social co-existence between different sects and components of society.

In Sharon Nepstad’s book, ” Nonviolent Revolutions: Civil Resistance in the Late 20th Century” (2010), the author explains that when civil opposition resorts to arms, the situation often shifts into a lasting conflict between social components, often exacerbated by international sanctions which provide repressive regimes with additional tools to exploit the political situation. However, in rare cases where the opposition uses purely peaceful means, whereby it does not challenge the military or the security apparatus, it can gain social acceptance, thereby granting the country an opportunity to distance itself from the culture of the past.

The greatest challenge facing the “Arab Spring” is distancing itself from violence and politicization. If it fails to do so, the region will not benefit from this period and will only incur more failures and shortcomings. Indeed, the previous regimes were abhorrent, but the situation will not be rectified if the opposition is even more aggressive. Gandhi once said “I object to violence because when it appears to do good, the good is only temporary; the evil it does is permanent.”

In the winter of 1992, Cairo’s International Book Fair held a famous debate entitled “Egypt between a religious and civil state”. It was attended by sheikhs of Islamic movements such as Muhammad al-Ghazali and Ma’mun al-Hudaybi, as well as critics of the Islamist phenomenon such as Muhammad Ahmad Khalaf Allah and Farag Foda. The second Gulf War (1990-1991) had just ended, and popular sentiments had been inflamed after the Islamists led noisy demonstrations against the U.S. intervention in the war.

When news of the debate was announced, thousands gathered to attend. Despite attempts to regulate the discussion from the late Dr. Samir Sarhan, who was in charge, his voice was lost amidst the religious proclamations and chants of “God is Great”, from those in support of the sheikhs against their pro-secular counterparts.

What caught my attention most in this debate were the words of al-Hudaybi, who said that “the Muslim Brotherhood is completely against a religious state, we call for a civil state”. Farag Foda denounced al-Hudaybi’s statement, but [al-Hudaybi] returned later to clarify himself, saying that the civil state to which he referred to must be committed to the provisions of “Islamic Sharia law”. (The complete text of the major debate, Khaled Mohsen, 1992)

A quick reading of the debate leaves you feeling that the debate between the pro-religious and the pro-civil society supporters within political Islam in the Arab region remains at a standstill. Before the phenomenon of popular uprisings that swept a number of Arab capitals, how would we interpret the position of political Islam? There are three opinions with regards to this current phase, which can be summarized as following:

Are we facing a new (post Islamist) political Islam, or a non-ideological phase of the “Arab Spring”?
Firstly, the popular uprisings, even though they occurred on Fridays, religious supplications were chanted, and prayers were held inside the protest squares, bear no relation to political Islamic movements. Rather they are driven by the popular mobility of the youth, incorporating all intellectual currents and backgrounds. The demonstrators raised their voices demanding “freedom of expression”, “democracy” and the application of “human rights”. Therefore, we are facing revolutions without ideological foundations, primarily demanding regime change and not the application of Islamic Sharia law.

Those of the second opinion, and among them are some seasoned Islamists; believe that the Arab uprisings would not have succeeded were it not for the involvement of the Islamists – whether the Muslim Brotherhood or the Salafists – and that this intervention had provided the popular impetus for the uprising in the streets. Some even go so far as to say that the Islamists played a key role in fostering the resilience of the uprisings, as without the Muslim Brotherhood going to Tahrir Square, the April 6 Youth Movement would not have been able to stand on their own on the evening of 25 January. Likewise, were it not for (former) followers of the Libyan Islamic Fighting Group [LIFG] taking up arms against Gaddafi in Benghazi on the eve of 17 February, the Tripoli forces would have crushed the popular uprising. Even in Yemen, the youth of the Reform Party (a Muslim Brotherhood affiliate) played the primary role in organizing and coordinating demonstrations in Tagheer Square.

However, a third opinion argues that political Islamist movements and groups have themselves suffered from the earthquake that struck the ruling political regimes in the region, and we are now dealing with the emergence of a new Islamist discourse – a (post Islamist) policy focusing on political work and activity based more on shared interests than ideological commitment. In other words, this new discourse believes that the best way for the Islamist movement to succeed is by carrying out social and political action that is beneficial to the citizens, rather than forcibly imposing Islamic Sharia law or (ideological) Islamist solutions on the people.

In this context, the New York Times published an article entitled “Activists in Arab World Vie to Define Islamic State” (29 September), in which journalists Anthony Shadid and David D. Kirkpatrick reported that there are widespread debates taking place amongst young Islamists about the need to renew their social discourse, and the way in which political Islamists act, in order to establish themselves on civil and democratic foundations, citing the example of the Justice and Development party in Turkey. The article quoted a number of figures who stressed that a transition is coming, or rather this is becoming a necessity, with regards to young Islamists moving away from the traditional thinking of their leaders, and instead exploring a conciliatory (less ideological) model focusing on economic and social aspects, practicing politics in accordance with the conditions and rules of democracy, relying on their efficiency rather than Islamic Dawa rhetoric.

Are we facing a new (post Islamist) political Islam, or a non-ideological phase of the “Arab Spring”? To begin with, “post Islamism” is not a new idea. Previously researchers, most notably Olivier Roy (1990) and Asef Bayat (1996), wrote about the phenomenon of youth divisions within the body of traditional Islamist groups and parties, and the emergence of a (modern) Islamist discourse yearning to establish an environment for concepts such as the civil state, democracy, human rights and so on. The Welfare Party in Turkey in the 1990s, the Al-Wasat Party in Egypt, or the Al-Nahda in Tunisia, are all examples of this phenomenon, namely “post Islamism”. However, after two decades of such parties and personalities being involved in parliamentary political activity, we have not seen a genuine development in popular Islamist literature or practice, in terms of the Islamist movement’s politics and legislation. This was until the exception that is the Turkish Justice and Development Party, which openly declared its acceptance of a secular state, yet does not seem different from the traditional Islamist parties, except on the surface. The constitutional system, the army, and the secular and political heritage of Turkey have combined to form am arrangement which has so far served as a guarantee for the Islamists not to breach the equation of secularism and governance in Turkey.

If you want proof that the traditional Islamists have not changed much – despite their expansion of fatwas pertaining to personal status and behavior – then consider their extreme sensitivity towards the topic of a secular state. When Erdogan directed advice in this regard to the Muslim Brotherhood in Egypt, Islamists came out to claim that this represented interference in Egypt’s internal affairs. In Egypt, Erdogan had said: “A secular state does not mean that the people are atheists, it means respect for all religions and each individual has the freedom to practice his own religion”. In Tunisia, Erdogan reaffirmed that “on the subject of secularism, this is not secularism in the Anglo Saxon or Western sense, a person is not secular, the state is secular”.

There is no doubt that the Turkish example is an exception. Turkey’s Islamists (the post Islamists) have not affected– at least so far – the mainstream Islamist movements. Evidence of this can be found in the derogatory or unwelcoming remarks from the Islamists themselves with regards to the Turkish advice. It is suffice here to consider the statement of Rashid Al-Ghannushi, leader of the Tunisian al-Nahda Party, which can be considered one of the more progressive Islamist parties – compared with its Middle Eastern counterparts. In response to Erdogan’s remarks, al-Ghannushi said “he is describing issues specific to Turkey, as he (Erdogan) is trying to reconcile between his assertion that he is an Islamist, and his governing a secular state. I do not think that Tunisian or Egyptian citizens would be concerned with this reconciliation, because their states – Egypt or Tunisia – define themselves as Islamic states.” (The Majalla, 3 October)

Here I do not want to belittle the existence of “post-Islamist” discourse in Arab and Muslim societies, but it is necessary to realize that this is not a new phenomenon. It was there before, but only amongst the elite, within the broader and more encompassing Islamist movement. The writings of Tariq Ramadan and Rashid Al-Ghannushi, and the fatwas of individuals such as Hassan al-Turabi, perhaps went beyond the boundaries of traditional Islamist literature, but they did not replace traditional Islamist discourse. Furthermore, Islamist discourse also witnessed the emergence of writings heralding the “Islamist Left” in the 1970s, “Nationalist Islamism” in the 1980s, “Democratic Islamism” in the 1990s, and even “Jihadist Islamism” in the era of the “war on terror”. Nevertheless, the broader Islamist trend continued to adhere to traditional Islamist literature such as the works of the Muslim Brotherhood. Will we see a new change with the Arab uprisings? Needless to say, the current phase of popular uprisings is still ongoing, and those countries hit by “revolutionary fever” have yet to free themselves from the instability that surrounds them. It may take years until researchers can test how the Arab protests impacted upon the thinking of Islamist groups, and their future political behavior.

Libyan leader Muammar Qadhafi, circa 1985

In early 1970, the US Central Intelligence Agency [CIA] asked a number of psychoanalysts to draw up a profile of Libyan leader Muammar Qadhafi, who was thirty years of age at the time. Mr. Qadhafi’s psychological profile was not an exception, for the CIA had drawn up psychological profiles for most foreign leaders since the 1940s, and these were made up of a combination of political and psychological analysis. These profiles represent a major tool for US decision-makers as they revealed the psychological nature of foreign leaders that they are dealing with. Such reports usually contain information about the leaders’ background, their personal relations, their family, as well as their social, personal, and professional relations. These reports also contain a list of subjects and issues that these leaders either react positively or negatively towards, as well as occasionally some scandalous details (of a sexual nature) regarding their private lives.

This scientific methodology (of producing a psychological profile) of foreign leaders – developed within the CIA and the US Department of Defense – did not utilize practical clinical methods [of psychology], as it is based – in most cases – on studying the leader in question. These reports rely on multiple sources; most prominently reports made by intelligence agents that generally rely on incidents, rumors, and lies, alongside facts. Therefore those reading such reports cannot exclusively rely on them; indeed reliance on such reports reached its height during the 1980s. Despite the huge developments that have taken place in the study of [psychological] methodology in a professional and academic framework, specialist researchers continue to be divided over the feasibility or effectiveness of such psychological studies of political figures, particularly as they [the foreign leaders] are not subjected to a clinical medical examination.

For over 40 years, the psychological profile of Mr. Qadhafi was filled with information; some of which was correct while some of it was nothing more than pure flights of fantasy. In addition to this, his profile was filled with endless analysis and comments by senior specialists on Qadhafi’s personality, and his development and experience over the past decades. One can consider the “psychological profile” of Muammar Qadhafi as being between among the largest of such files, alongside the profiles of figures like Fidel Castro and Ayatollah Ali Khamenei. The “Los Angeles Times” was perhaps the first newspaper to publish information leaked from Colonel Qadhafi’s “psychological profile” with sources in 1981 describes Qadhafi as being “an exceptionally troubled personality, suffering from a serious inferiority complex.” In the early 1990s, one insider who viewed Qadhafi’s “psychological profile” told US “Foreign Policy” magazine that “there was a tendency in the beginning to view Qadhafi as a superficial (naïve) personality, but the profiles that were drawn up on him showed him to be crazy like a fox.” (Psychology and the CIA: Leaders on the Couch. Thomas Omestad, Foreign Policy Magazine, August 1994).

Nicholas Hagger has indicated that Qadhafi was in contact and communicated with US intelligence since the beginning of the Libyan [Fateh] revolution, after US intelligence agents noticed that he exhibited a tendency to criticizing Soviet interference in the Arab world. Since 1971, it is clear that Qadhafi operated in parallel to what the CIA wanted from him, namely for him to emerge as a nationalist leader hostile to the Soviet Union. This may perhaps explain Qadhafi sending airplanes and financial assistance to Pakistan during its war with India – which was backed by the Soviet Union – as well as his objection to an airplane carrying Sudanese citizens accused of being Shiites seeking to overthrow the [Gaafar] Nimeiri regime in Sudan [from landing in Libya]. However Qadhafi soon changed his position, with the US becoming his number one enemy, which led to him supporting a broad spectrum of groups and revolutionary and terrorist elements around the world. (The Libyan revolution: It’s Origins and Legacy by Nicholas Hagger). The CIA helped Qadhafi in exposing attempts to overthrow him at the beginning of the [Fateh] revolution; however since that time he has – as some argue – been overcome by paranoia and has begun to mistrust everybody, believing himself to be a CIA target. Colonel Qadhafi has exhibited contradictory – and occasionally outrageous – behavior, and we have sometimes heard him ramble incoherently. Even his personal appearance, wearing strange and brightly colored clothing, failed to camouflage the mistakes of his regime, and his victims, who include some of those closest to him. More than this, his behavior – which has been the subject of criticism – as his desire to attract attention to himself, manifested in the many titles that he has bestowed upon himself, the female “Amazonian” bodyguards that he surrounded himself with, as well as his views that were ripe for mockery. However under all the bright clothing, changing views, and contradictory titles, there is a very resourceful and quick-witted personality who has been able to remain in power despite all the sanctions imposed on his regime and attempted assassinations. Qadhafi knows when to back down, and how to avoid the storm, and he is capable – in an extremely dangerous manner – of deception. Therefore, at times he would kill those close to him or place them under guard, and at other times allow his opponents to escape into exile, or forgive them and bestow them with gifts. This is what made many people unable to trust him, or predict his actions.

There is one defining example of Qadhafi’s ability to surrender at a critical moment, for in 2003 he signed a deal with the Americans following the collapse of the Saddam Hussein regime. He sold the secrets of the trade in internationally proscribed weapons, and paid billions of dollars in order to resolve the issue of compensating victims of terrorist acts that his regime was embroiled in. Therefore it was not surprising for former CIA Director Michael Hayden to comment recently that Qadhafi was an important and reliable partner over the last few years in the war on terror.

In his book “The Struggle for Survival” (1993), Geoffrey Simons writes that Qadhafi continued to fluctuate between supporting militias and terrorist groups and between turning on them and providing information about them to different intelligence agencies. Therefore we can view Qadhafi – and his survival in power – as if he were the leader of a gang that is involved in every illegal operation but who cooperates with the security agencies in order to eliminate his opponents or alleviate the pressure that he is facing. Therefore, dealing with Qadhafi means dealing with a “liar” – as [former US President] Ronald Reagan once said – but temporary deals can be made with him, so long as this is in his interests.

Observers have divided over how this difficult to interpret leader – who is in his seventies –will end, particularly following the outbreak of the armed uprising against him. There are those who consider Qadhafi a narcissistic personality who is living in a world of delusion, and who will therefore fight until his last breath. Whilst others believe that Qadhafi is nothing more than an attention-seeking dictator who has squandered Libya’s oil wealth and who will flee the country as soon as he fills the noose tightening around him. However most analysts have a bleak view of Qadhafi, viewing him as a psychopathic personality who enjoys unusual intelligence despite his abnormal behavior, and he therefore is capable of strategic planning in the manner of a cold-blooded criminal.

Professor Jerrold M. Post, who founded and directed the CIA’s Center for the Analysis of Personality and Political Behavior, put forward an important analysis of Qadhafi’s personality following 20-years’ experience overseeing leaders “psychological profiles.” He also recently wrote that Qadhafi took drugs to treat severe depression. As for Qadhafi’s psychological state, Post said that “Qadhafi can best be characterized as having a borderline personality. The “borderline” often swings from intense anger to euphoria. Under his often “normal” façade, he is quite insecure and sensitive to slight. His reality testing is episodically faulty. While most of the time Qadhafi is ‘above the border’ and in touch with reality, when under stress he can dip below it and his perceptions can be distorted and his judgment faulty.” [Qaddafi under siege by Jerrold M. Post, Foreign Policy Magazine, 15 March].

Whatever Qadhafi’s end, his mental illness has affected – directly or indirectly – Libya’s modern history, and perhaps we must ask: to what extent has his policies and his suppression altered the psyche of millions of his people who have suffered under his rule?

In reality, we are facing a country that has suffered from mentally ill governance, and it may take Libya a long time – as any victim – to emerge from the nightmare of the past, and learn to live for the future.

This article was originally published in Asharq Al-Awsat 24/08/2011

Egyptian Muslim Brotherhood members of parliament hold up sings that read in Arabic 'emergency law is bad reputation' during a session in Cairo on 11 May 2010

The Muslim Brotherhood in Egypt recently announced that it had established an independent political party-the Freedom and Justice Party-to represent the group in the next elections. Clearly named in an attempt to keep pace with the current phase of popular uprisings, brotherhood member, Mohamed Morsy, said in his first statement as party head: “The [Muslim Brotherhood] Shura Council discussed many issues, and issued these decisions which we hope will be in the interest of Egypt, in light of the constitution and laws we hope will serve Egyptians.” He added that, “the party will be completely independent from the group [Muslim Brotherhood] in every way.”

How can the new party be independent from the Muslim Brotherhood? This is a legitimate question, for what is the need that prompts a group that is nearly 80 years old to establish a new [political] party that is administratively and politically independent from it? Those who know the subject of the Muslim Brotherhood justify this action under the pretext that the (amended) constitution still prohibits the establishment of [political] parties based upon religious platforms, which it does so in Article V.

But all that this means is that the oldest religious party in the region does not want to change its principle of politically exploiting religion, or re-draft its constitution to comply with the civil requirements of the national constitution. In other words this new party will be nothing more than a “front” for the old party. In truth, we do not know how a party can raise civil slogans whilst being owned by another party that raises religious ones, or how anybody can justify this legally and constitutionally. If the new party refers its establishment back to a decision made by the Shura Council of the Muslim Brotherhood, which raises a religious slogan, then the party by necessity is based on a religious platform that differentiates between citizens.

For more than six decades, writers and researchers have argued that the Egyptian Muslim Brotherhood party is made up of doves and hawks, and that reforming—or developing—the party is being prohibited by a group of the old guard. However, even after the latest change of names and faces, the party remains the same, along with its literature which was formulated in an atmosphere of conflict with now obsolete parties and clashes with former governments. Yet despite this, the brotherhood continues to garner new supporters.

The Muslim Brotherhood argues that they are “missionaries, not judges,” and that they stand against all forms of violence. This is relatively true in that the group has no recognized armed wing, but the problem with the Muslim Brotherhood is not whether it is armed or not, but that it promotes a fundamentalist culture that is at odds with the civil world. Meanwhile, the group has a supreme guide to whom all members must pledge allegiance.

The culture of the brotherhood is that there is only one path to take, namely “the Islamic solution,” or in other words, the totalitarian rule of the Muslim Brotherhood, which teaches its cadres religious extremism and fundamentalist discourse. In the end, however, the group says that it does not believe in bearing arms, and that this is part of the fiqh principle of ijtihad (making a decision based upon personal effort independent of any school of jurisprudence). The hadith, or words and deeds, of the Prophet claim that somebody who engages in ijtihad and reaches the correct conclusion receives two rewards [from God], whilst somebody who reaches a wrong conclusion nevertheless receives one reward.

The culture of the brotherhood is that there is only one path to take, namely “the Islamic solution,” or in other words, the totalitarian rule of the Muslim Brotherhood, which teaches its cadres religious extremism and fundamentalist discourse.

Each time the Muslim Brotherhood addresses a crisis there is a reference to a speech here, or an interview there, made by a member (a dove) of the group saying that in its forthcoming program his party will move towards democracy, or respecting civil rights, or women’s rights, or freedom of expression, or rights for minorities. However, it is not long before another member (a hawk) comes out to release a statement invalidating all those rosy and idealistic statements, and the result is that the group changes its tactical positions, or political maneuvers, but nothing happens to suggest there is a genuine intellectual effort to change its (radical) ideology in order to become a civil party. Anyone who exerts a genuine effort ends up leaving the party, because the Muslim Brotherhood allows reform within its branches but not its foundations.

Some are optimistic that the brotherhood will have to change in a democratic or civil sense because of the “revolution” against tyranny that is currently dominant in the region, and by providing an opportunity for the Muslim Brotherhood to engage in political activity without restrictions, this will enhance its chances of becoming a civil entity after it has experienced power, and people will be able to judge the Muslim Brotherhood based on its performance, not its rhetoric. Yet these people forget they are talking about a D’awa group that believes people are straying off the righteous track, a group that has not changed its slogans until this day, so how could it accept the terms of the democratic game that are only available in a secular or civil climate? Why should the head of a totalitarian party take power immediately, whilst others must wait for to be granted their “freedom” and “justice?”!

First published in Asharq Alawsat Newspaper on 04/05/2011.