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from Breakingviews:

Saudis wouldn’t gain much from a union with Bahrain

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Saudi Arabia’s call for Gulf nations to combine into a single entity appears to lay the ground for some kind of union with Bahrain. King Abdullah first highlighted the security issues facing the region when its leaders met in December - nine months after the kingdom sent tanks to tame a pro-democracy movement in Bahrain. Speculation is now swirling about how the relationship between the strongest and weakest members of the six-nation bloc could evolve, ahead of a meeting of the Gulf Cooperation Council this week.

The old idea of a Gulf union has taken on a new meaning after the Arab uprisings. Saudi Arabia hasn’t given any details on what it envisions beyond the existing cooperation on security and selected financial issues. But the six Gulf countries won’t easily set aside their political differences just to please each other. And plans for a Gulf monetary union, loosely based on the European model, appear to be stuck following the intention of the UAE and Oman to opt out.

That leaves the focus on Bahrain and Saudi Arabia, which already share strong links. As well as underwriting security of the island state, the house of Saud already partially bankrolls its finances. Bahrain gets roughly 150,000 barrels per day of oil from the offshore Abu Safah field, operated by Saudi Aramco under a decades old agreement. The revenues generated from its share of the field accounted for as much as 70 percent of Bahrain’s budget revenues in 2010.

A full fiscal union would help Bahrain lower its borrowing costs. Even with current Saudi support, it may run a budget deficit at four percent of GDP this year. The IMF estimates Bahrain’s gross public debt is around 40 percent of GDP. Total foreign debt is almost 15 percent. Bahrain’s gross domestic product is barely five percent of that of the two kingdoms taken together.

But a union formalising the status quo carries risks that don’t make it worthwhile. A pre-emptive move would pour fuel on the flame of the protests. It would also antagonise Iran, which once laid claim to the majority Shi’ite island. Any transfer of Saudi social austerity would also kill Bahrain’s raison d’etre among the Saudi businessmen and expatriates who escape to Manama to relax. Saudi rhetoric paves the way for a stronger union in the event that Bahrain’s regime is overwhelmed - but in that case, union would be just a name for annexation. In the meantime, the move isn’t worth the bother.

from David Rohde:

The Islamist Spring

TUNIS – Like it or not, this is the year of the Islamist.

Fourteen months after popular uprisings toppled dictators in Tunisia and Egypt, Islamist political parties – religiously conservative groups that oppose the use of violence – have swept interim elections, started rewriting constitutions and become the odds-on favorites to win general elections.

Western hopes that more liberal parties would fare well have been dashed. Secular Arab groups are divided, perceived as elitist or enjoy tepid popular support.

But instead of the political process moving forward, a toxic political dynamic is emerging. Aggressive tactics by hardline Muslims generally known as Salafists are sowing division. Moderate Islamists are moving cautiously, speaking vaguely and trying to hold their diverse political parties together. And some Arab liberals are painting dark conspiracy theories.

Ahmed Ounaies, a pro-Western Tunisian politician who briefly served as foreign minister in the country’s post-revolutionary government, said that he no long trusted Rachid Ghannouchi, the leader of Tunisia’s moderate Islamist party. Echoing other secular Tunisians, he said some purportedly moderate Muslim leaders are, in fact, aligned with hardliners.

“We believe that Mr. Ghannouchi is a Salafist,” Ouanies said in an interview. “He is a real supporter of those groups.”

Months after gaining power, moderate Islamists find themselves walking a political tightrope. They are trying to show their supporters that they are different from the corrupt, pro-Western regimes they replaced. They are trying to persuade Western investors and tourists to trust them, return and help revive flagging economies. And they are trying to counter hardline Salafists who threaten to steal some of their conservative support.

from David Rohde:

The Arab world’s Silicon Valley?

Update: At Leila Charfi's request, I added a paragraph below and shortened her quote to give it more context. She was concerned that the original version highlighted the role of the Internet in Tunisia's revolution but did not credit street protesters. At least 219 protesters died during the uprising, according to the UN.

TUNIS -- Last November, dozens of young Arabs lined up for the chance to meet him. When he spoke of his struggles and triumphs, they hung on his every word. And when only one of the 50 attendees was chosen for training, some of the young Arabs grew frustrated and complained of being excluded.

A jihadist back from battling Americans in Afghanistan? A recruiter for al Qaeda’s North African affiliate? A Hamas member looking for volunteers to attack Israel?

No, the visitor was a Tunisian-American eBay executive who has worked for Apple and Oracle, and founded two Silicon Valley startups. His audience? Young Tunisian entrepreneurs and programmers who dream of turning this city into the Arab world’s Silicon Valley.

“There is a lot of potential,” Sami Ben Romdhane, the eBay executive, told me in a telephone interview this week. “I don’t see any difference between students who are graduating there and students who are graduating here and in Europe.”

Fourteen months after a Facebook-facilitated popular uprising here sparked the Arab Spring, the appeal of American technology remains overwhelming. But a sputtering economy, the emergence of hardline Islamic Salafist groups and the failure of the United States and its European allies to deliver on promises of assistance are prompting growing frustration and instability.

from MacroScope:

Employer of last resort, Arab Spring style

The concept that the government should serve as an employer of last resort in times of economic stress was first floated by the late economist Hyman Minsky. Its modern-day proponents remain largely marginalized, despite the nation’s persistently high unemployment and the extreme damage to the job market that was done by the deepest recession in generations. 

But Ali Kadri, senior research fellow at the National University of Singapore, argues the policy, which works as an automatic stabilizer when economies are struggling, is all the more appropriate for an Arab world that has been plagued by extremely high joblessness and a general lack of infrastructure and development. He says the Arab spring creates an opportunity for a drastic shift in the region’s approach to social and economic policy.

The retention of resources and their redeployment within the national economy are indispensable conditions for development and job creation. Employment policies are best set subject to social efficiency criteria distinct from the salient neoclassical productivity ones. It is highly unlikely, in view of the sheer smallness to which industry and the productive economy have shrunk under neoliberalism, that it would be possible to reemploy the massive redundant labour force on the basis of expanding private sector expansion and productivity gains. A criterion valuing and remunerating social work may be costly in the short term, but the social returns will reimburse initial expenses over the long term.

Notwithstanding the reductionist nature of the neoclassical criterion of efficiency, equity, in an Arab context of war and oil, must precede any received criteria for efficiency. More egalitarian rent, land and resource distributions redressing the dispossession of the working population during the neoliberal age represent the necessary conditions for effective demand enhancement and a successful development strategy. In practical terms, the state has to act as the employer of last resort (Minsky's ELR) creating socially relevant and public sector employment. Increasing-returns industry and a granting of preferential status to regional capital and labour are also required. In view of the instability besetting capital accumulation, a regional security arrangement bolstered by working class security and substantiating autonomy over policy can underwrite long-term employment generating investment

from Photographers Blog:

Watching Libya from Malta

By Darrin Zammit Lupi

When the Arab Spring got underway late in 2010, few of us imagined it would spread to Libya with any tangible effect. To those of us of my generation here in Malta, Libyan leader Muammar Gaddafi was the bogeyman - he’d always been there lurking not too far from our shores - Libya is less than 350 km to the south of the island, and Gaddafi was a frequent visitor and close friend of the Maltese government in the 70s, my childhood years.

A year later, when I look back on the events that kicked off on February 17, 2011, I’m amazed it all happened so fast. Who would have dreamed that Gaddafi would be overthrown within six months, and dead within eight?

The start of the uprising turned Malta, normally a rather quiet news backwater spot in Europe into the center of world attention, as countries from all over the world struggled to evacuate their nationals from Libya. As soon as we got the first indications that there may be evacuations, I immediately started looking into ways of how I could get as comprehensive a coverage as possible.

My plan was to try to fly into Tripoli on an evacuation flight and fly straight out again – the shots I was looking for were of Europeans boarding the aircraft. Evacuations seemed to be starting off slowly – my first point of contact was the Austrian Embassy in Malta, as they were the first to send a military plane to the island to be on standby to fly into Tripoli. The Reuters Vienna bureau got in touch with authorities there, but no luck. There was no way they would take a journalist with them, occupying a very precious seat on the plane on the return flight.

We next tried the Maltese national airline Air Malta, who were laying on extra flights to try get as many Maltese and other nationalities out of the country as it descended into chaos. Though I made it clear to the airline that I wouldn’t even need to walk away from the bottom of the aircraft stairs, they refused to take the risk of flying me in without a visa. And no visas were being issued by the Libyan embassy in Malta.

from Global Investing:

A scar on Bahrain’s financial marketplace

Bahrain's civil unrest -- which had a one-year anniversary this week -- has taken a toll on the local economy and left a deep scar on the Gulf state's aspiration to become an international financial hub.

A new paper from the Sovereign Wealth Fund Initiative, a research programme at Center for Emerging Market Enterprises (CEME) at the Fletcher School at Tufts University, examines how the political instability of 2011 is threatening Bahrain's efforts in the past 30 years to diversify its economy and develop the financial centre.

Asim Ali from University of Western Ontario and Shatha Al-Aswad, assistant vice president at State Street, argue in the paper that even before the revolt, Bahrain lagged in building the foundations of a truly international hub in the face of competition from Dubai and Qatar.

Unlike DIFC (Dubai International Financial  Centre) and QFC (Qatar Financial Centre), Bahrain insists upon local labor; currently 70% of employees in its banking and financial services industry are Bahrainis.  Bahrain’s reluctance to hire non-resident  talent  has made  Dubai...an alternative for those investors looking for a centre with more flexible labor practices such as DIFC provide...  The constraints  – a lack of formalized institutional and regulatory structure, along with an ad hoc business environment, underdeveloped infrastructure, and under-supplied skilled workforce – have negatively affected its growth and  potential to become the financial gateway in the Middle East.

Then came the crackdown of protesters.

Its ruling Al-Khalifa family unleashed  a ferocious extra-judicial crackdown against the opposition. It appeared the standard axiom of Gulf ruling families – securing legitimacy and counter-acting political opposition through redistribution of oil wealth – was sorely insufficient to address  citizens’ grievances.  These led not only to international opprobrium of  the  Bahrain government but also made foreign businesses reconsider Bahrain as a financial center – with many foreign business shifting  workers and operations to Dubai... Indeed, confidence in Bahrain as a financial hub took a major blow along with its image as a stable, tolerant and liberal state.

It remains to be seen what impact last year’s pro-democracy uprising will have on the state of Bahrain and its  ambition as a regional financial gateway– especially at a time when Dubai (DIFC) and Qatar (QFC) remain serious contenders to become dominant financial centers in the Middle East.

Bahrain had shown perseverance and strength in building its financial center, but democracy efforts and human right violations were able to  threaten the hard work of more than 30 years.

Bahrain's sovereign wealth fund Mumtalakat, which is leading the country's efforts to diversify its economy away from the hydrocarbon sector, suffered a series of ratings downgrades last year as a result of sovereign downgrades. Mumtalakat is rated triple-B.

from Full Focus:

Photographer notebook: Zohra Bensemra

Born in Algiers in 1968, Zohra was recruited as a stringer photographer for Reuters by Mallory Langsdon in 1997 during the last years of the conflict in Algeria. In 2000, Zohra was sent on her first assignment abroad for Reuters to Macedonia where ethnic Albanians were taking refuge from Serbian forces. In 2003 she went to Iraq while Saddam was still on the run. In Najaf, Iraq, in 2004 Zohra was made staff photographer from Reuters.

Zohra won the European Union prize for the best African press photographer in 2005. Still based in Algiers she continues to cover some African and Middle East countries. Last year she documented Sudan’s referendum, Tunisia’s uprising and Libya’s revolution. In the following showcase, Zohra recounts her experience as an Arab woman photographer.

WARNING: GRAPHIC CONTENT

from John Lloyd:

Multiculturalism: A blasphemy or a blessing?

Multiculturalism is a Western ideal, amounting to a secular faith. Every Western government at least mouths its mantras – that a mix of peoples in one nation is a social good, that it enriches what had been a tediously monolithic culture, that it improves (especially for the Anglo-Saxons) our cuisine, our dress sense and our love lives. Besides, we need these immigrants: In Europe at least, where demographic decline is still the order of the day in most states, where else will the labor come from? Who else replenishes the state pension fund? Even where leaders criticize multiculturalism’s tendency to shield communities from justified criticism – Angela Merkel of Germany and David Cameron of the UK have both spoken out on this – they touch only on its more obvious failings. As a process, they agree it is welcome.

Forgotten, or at least suppressed, in this narrative is religion and the animating force it still gives to many groups. Animating – and also divisive. To believe deeply in a religion had been, in the West as well as elsewhere, to believe deeply in the error of those not of the same faith, and to shun them. It has been one of the remarkable transformations of the past century that in the West, those of religious faith, or none, should accommodate the faiths of others. Indeed, they should even honor them. Those societies where that did not happen -- say, until very recently, Ireland -- the culture was seen as aberrant.

The reverse is true in many strongly Islamic societies. And that’s causing a problem for the Christians still living in them.

In Pakistan, the Christians number around 2.5 million. At 1.5 percent of the population, it is the largest minority in an otherwise wholly Muslim country, its origin as a community stemming entirely from the missionary activities of the British colonialists and the small number of Christians who stayed on after independence came in 1947. Promised complete equality, the progressive Islamization of the state has put increasing pressure on Christians, who face both official discrimination and periodic popular violence. The latter increased in the past decade: Last year claimed two prominent victims.

Shahbaz Bhatti, 42 years old, was the federal minister for minority affairs, a Catholic and a strong opponent of the country’s blasphemy laws: In March, his car was sprayed with bullets. By the time he got to the hospital, he was dead on arrival. The group Tehrik-i-Taliban claimed responsibility, citing Bhatti as a “known blasphemer.” The murder came two months after another, of Punjab Governor Salman Taseer. Although not a Christian, Taseer had also strongly opposed the blasphemy law and offered support to those caught in it. He was shot in January by one of his bodyguards, Malik Qadri, reportedly associated with the Dawat-e-Islami group.

There also isn’t much multicultural harmony in countries where Christianity and Islam are both strong. In Nigeria, where the two religions each make up about half the population, tension and violence has tended to increase. Over the Christmas and New Year's period, the Islamist group Boko Haram (the name means “Western education is a sin”) attacked Christian worshippers, culminating (so far) in a Jan. 20 gun and bomb attack in Kano, a mainly Muslim city in the north of the country: The attack, on police as well as Christians, claimed 185 lives. The aftermath has seen Muslims and Christians come together in the capital, Lagos, to pray for peace. The present reality is increased fear and distance.

from Ian Bremmer:

The world’s year of reckoning

DAVOS--If 2011 was the year of the protestor, 2012, at least where the World Economic Forum is concerned, is the year of the reckoning. Through the events of the Arab Spring, major power vacuums have been created in countries all over the Middle East. More governments, such as Syria’s, are likely to topple. But the time to start thinking about what’s next for countries like Egypt is already here.

The thing is, it’s coming at an inconvenient time for Western democracy. Having long held themselves as the global models for governance and economic structure, Western Europe and the U.S. have in recent years shown their warts as never before. That has opened the door for state capitalist models -- like China’s -- to take the stage. And the simple fact that new models for how countries and economies should work are even being considered is a blow to the Western world’s power and prestige. Obviously, well before the G-7 system broke down, China was already on a path of state capitalism, and that has turned out to be a successful course for that country to chart. But here’s the problem: While it has led to wealth and a rise in living standards for the Chinese, it hasn’t led to more democracy.

Here at Davos, and in capitals around the world, the paths countries should chart for themselves in the future is always topic A, and what we’ve learned over these last years is that transforming those countries and indeed the world is about a lot more than simply swapping out the players who legislate and lead. Look at the precarious situation in Egypt. Consider Putin’s long hold on power in Russia. For that matter, look at the situations in many countries on the euro zone periphery. Going down that list, nations that have simply replaced one power-grabbing leader with another are in trouble. (In Russia’s case, that leader has simply replaced himself.) Countries that have revolved leadership without addressing deeper institutional weaknesses are not setting themselves up for success in the long run.

That’s why changing not just the leaders at the table but the system by which the country is governed is such a real and important goal -- it reconfigures the country’s "end result" trajectory. When countries like China and Russia become economically important, they of course support the models that made them powerful: strong authoritarianism and state capitalism. Specifically as China gains more and more economic power, it continues to improve its bargaining position with the West — that is, it can get away with bargaining less and less. And China’s ability to eschew compromise will only grow as its position in the world continues to get stronger -- so why would the Chinese negotiate about anything? When their growth starts to level off or their cost structures begin to match the West’s -- a change that will be measured in decades, not years -- they’ll be willing to cooperate more. But not before.

If you believe in the values of Western democracy -- equality, fairness, opportunity and freedom -- that’s precisely why the West must rise to the occasion and continue to challenge state capitalism and press Arab Spring countries to fight for democratic institutions in their new national orders. Otherwise the fate of the West will be to represent an important but diminishing subset of the global economy -- and to have almost no sway over a group of countries whose economic fortunes are on the rise. And that’s not just about prestige -- those are the countries with weaker values. For example, the New York Times has published a devastating series on the Foxconn factories that assemble Apple products, highlighting worker abuses, deaths and practices that would have been outdated in the U.S. even a century ago. Those workers might be making state-of-the-art products, but they live as though they are indentured servants, or worse. It would be naive to think Foxconn is an isolated incident. In China, Foxconn is a success story of state-directed capitalism. Will the West tolerate Foxconn? And if so, how many more Foxconns will it tolerate?

It’s pointless to worry about China stealing U.S. manufacturing jobs -- China has taken far more jobs from Mexico than it has from the U.S., by some measures. What the West should worry about is the manner in which those jobs are performed and what our tolerance of that says to the parts of the world that are today at a crossroads.

This essay is based on a transcribed interview with Bremmer.

from Paul Smalera:

Twitter’s censorship is a gray box of shame, but not for Twitter

Twitter’s announcement this week that it was going to enable country-specific censorship of posts is arousing fury around the Internet. Commentators, activists, protesters and netizens have said it’s “very bad news” and claim to be “#outraged”. Bianca Jagger, for one, asked how to go about boycotting Twitter, on Twitter, according to the New York Times. (Step one might be... well, never mind.) The critics have settled on #TwitterBlackout: all day on Saturday the 28th, they promised to not tweet, as a show of protest and solidarity with those who might be censored.

Here’s the thing: Like Twitter itself, it’s time for the Internet, and its chirping classes, to grow up. Twitter’s policy and its transparency pledge with the censorship watchdog Chilling Effects is the most thoughtful, honest and realistic policy to come out of a technology company in a long time. Even an unsympathetic reading of the new censorship policy bears that out.

To understand why, let’s unpack the policy a bit: First, Twitter has strongly implied it will not remove content under this policy. If that doesn’t sound like a crucial distinction from outright censorship, it is. Taking the new policy with existing ones, the only time Twitter says it will ever remove a tweet altogether is in response to a DMCA request. The DMCA may have its own flaws, but it is a form of censorship that lives separately from the process Twitter has outlined in this recent announcement. Where the DMCA process demands a deletion of copyright-infringing content, Twitter’s censorship policy promises no such takedown: it promises instead only to withhold censored content from the country where the content has been censored. Nothing else.

To be sure, that’s censorship of a kind, but compared to the industry censorship even Americans have long lived with -- take the Motion Picture Association of America, which still censors films based on dubious standards of taste and morality -- it’s positively enlightened. And it never permanently destroys or pre-empts content, the way the MPAA does.

Further, for a country to censor content, it has to make a “valid and properly scoped request from an authorized entity” to Twitter, which will then decide what to do with the request. Twitter will also make an effort to notify users whose content is censored about what happened and why, and even give them a method to challenge the request. According to Twitter’s post, a record of the action will also be filed to the Chilling Effects website. The end result of a successful request is that the tweet or user in question is replaced by a gray box that notifies other readers inside the censoring country that the Tweet has been censored: