saudi-arabia

Abu Dhabi Shares Fall to Lowest in Two Months on Aldar Loss; Dubai Drops

May 2, 2010

By Zahraa Alkhalisi May 2 (Bloomberg) — Abu Dhabi’s benchmark index retreated for a fifth day to the lowest in almost two months, leading a decline in United Arab Emirates shares, after Aldar Properties PJSC and Deyaar Development PJSC reported first-quarter losses. Aldar , Abu Dhabi’s biggest property developer, fell as much as 5.6 percent after missing analysts’ estimates. Deyaar , the Dubai-based developer is poised for the lowest close on record. The ADX General Index retreated 0.4 percent to 2,767.25 at 1:06 p.m. in the emirate. The measure has lost 1.9 percent in the past five days. Dubai’s benchmark index declined 0.7 percent. Earnings “have all come out weaker than expected, particularly on the real-estate front,” said Dubai-based Rabih Sultani , a fund manager at Duet Mena Ltd. in Dubai, a unit of Duet Group, which oversees $2.1 billion. Home prices in Abu Dhabi dropped 30 percent from the market’s peak in the second quarter of 2008 and will remain little changed this year, Nomura Holdings Inc. said in a January report. The property market in the U.A.E. was hurt after banks curtailed lending and speculators exited at the onset of the financial crisis. Aldar was last down 1.8 percent at 3.85 dirhams after reaching a low of 3.7 dirhams. The net loss was 314.2 million dirhams ($86 million) after a year-earlier profit . Analysts surveyed by Bloomberg had expected a profit. Deyaar declined 2.9 percent to 40.8 fils, headed for the lowest close since the shares began trading in September 2007. The company posted a net loss of 100 million dirhams. Qatar’s DSM 20 index dropped 0.5 percent. Saudi Arabia’s Tadawul All Share Index gained for a second day, increasing 0.1 percent. Oman’s MSM30 Index rose 0.3 percent. The Kuwait Stock Exchange Index was little changed. Bahrain’s market was closed for a holiday. To contact the reporter on this story: Zahraa Alkhalisi in Abu Dhabi at zalkhalisi@bloomberg.net

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Oil Volatility Sinks to 3-Year Low as Supply Concern Fades: Energy Markets

April 27, 2010

By Alexander Kwiatkowski April 28 (Bloomberg) — Crude oil volatility is falling to the lowest level in almost three years as brimming stockpiles and rising OPEC investment in production capacity eases concern of shortages. Oil’s 50-day historical volatility, a measure of how much crude fluctuates around its average price during that period, declined to 23 percent yesterday, the lowest since July 2007. The measure rose to a record 108 percent at the beginning of 2009 as prices collapsed following the demise of Lehman Brothers Holdings Inc. and the onset of global recession. The Organization of Petroleum Exporting Countries said it is planning 140 oil projects over the next five years and that its 6 million barrels a day of unused production is enough to meet demand and avoid a repeat of the price swings of 2008. U.S. crude stockpiles rose to 356 million barrels on April 2, the highest since June, and inventories held on ships are climbing, according to Morgan Stanley. “When inventories go up, the precariousness of the market starts to fall as there is so much of this stuff sloshing around,” said Michael Lewis , head of commodity research at Deutsche Bank AG in London. “People are not so fearful of a supply event because spare capacity is higher.” BP Plc, the biggest oil producer in the Gulf of Mexico, said yesterday that crude’s declining volatility may limit profits from its trading this quarter. Oil has held between $69 and $88 a barrel in New York this year and is up 3.9 percent amid speculation the global economic recovery will spur demand. Prices slumped from a record $147 a barrel in July 2008 to $32 in December that year. Creeping Higher Crude oil for June delivery traded near $82 a barrel yesterday on the New York Mercantile Exchange. Volatility has weakened as prices have moved “gently” through successively higher price ranges during the past few months, said Paul Horsnell , head of commodities research at Barclays Capital in London, unlike the rapid price swings of 2008. Oil’s declining volatility also reflects increased liquidity, a phenomenon seen across most asset classes, Lewis said. Governments and central banks provided an estimated $11 trillion to rescue financial institutions and cut interest rates to spur the economy. In stock markets, volatility has decreased for the Standard & Poor’s 500 index, falling as low as 9.6 percent earlier this week on the same 50-day historical basis, the lowest since June 2007. “Volatility looks far too low,” Lewis said. “This enormous liquidity which has come into the market through central banks has been something that has been driving it lower.” Goldman’s View Volatility is rising in natural gas, where the measure increased to 41.7 percent yesterday after falling to an eight- month low of 35.3 percent on March 29. Gas futures traded in New York, prone to swings during the summer hurricane season as storms threaten to halt offshore production, traded near $4.22 per million British thermal units yesterday. Goldman Sachs Group Inc. analysts Jeffrey Currie and David Greely said in a March 31 report that commodity markets are set for “violent price spikes,” as investment constraints on new supplies and emerging market demand threaten shortages. Volatility may increase as global oil demand grows faster than supply and spare production capacity diminishes, according to Horsnell. Barclays Capital estimates that West Texas Intermediate crude will average $85 a barrel in New York this year, then rise to $97 in 2011. Recipe for Volatility “Volatility is going to be related to the amount of slack there is in the system,” Horsnell said. Barclays sees “a steady erosion of spare capacity and that is a recipe for high volatility.” Traders attempt to profit from rising or falling volatility by purchasing or selling options contracts. When volatility is expected to rise, investors may use a strategy known as a long straddle, whereby they buy both a call option and a put option on the same commodity, at the same strike price. Saudi Arabia, OPEC’s biggest producer, has sought to rein in oil, expecting that more predictable prices will allow producers to invest the billions needed to meet future demand. The nation has spare capacity of about 4 million barrels a day, Khalid al-Falih , the chief executive of state-run Saudi Aramco, said in an April 19 speech. OPEC’s Capacity OPEC, supplier of 40 percent of the world’s oil, pumped 29.2 million barrels a day in March, with another 5.6 million barrels idle, according to data compiled by Bloomberg . The group’s spare capacity was as low as about 2 million barrels a day in July 2008, when oil prices peaked. Saudi Arabia’s spare capacity acts as a “bridging loan” to meet future demand, said Lawrence Eagles , head of commodities research at JPMorgan Chase & Co. in New York. While OPEC has been increasing production, “it has been behind the curve in adding supply to meet demand,” Eagles said in an e-mail. “OPEC’s failure to respond to higher prices with higher output today has market implications that could result in a much more serious thrust higher,” he said. OPEC Secretary General Abdalla El-Badri said on Feb. 1 that the group will add 12 million barrels a day of capacity over five years. The extra oil more than offsets field declines and is enough to “satisfy demand and provide a cushion of spare capacity,” he said. To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net ;

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Alwaleed Holds Wallet With Warren Buffett as Princely Riches Incur Setback

April 26, 2010

By Vernon Silver April 27 (Bloomberg) — Prince Alwaleed Bin Talal sits under an almost full moon near a campfire at his rustic retreat in Riyadh, Saudi Arabia. He’s surrounded by a zoo with zebras and giraffes, an artificial lake and a lodge that has an indoor pool, saunas and steam rooms. Three hooded falcons are perched on stands in front of him. Five young women, dressed in black miniskirts and jackets and orange knee-high boots that match their nail polish, serve clove-and-cardamom tea to Alwaleed and his entourage, which includes his personal physician. On this evening in late March, the prince perks up in his easy chair as a newscast on a large-screen television behind the campfire reports on a rally in global hotel stocks — a sign of hope for the billionaire investor who’s trying to revive his slumping fortune, Bloomberg Markets magazine reports in its June issue. “Hotels are on the way up; they’re taking off,” says Alwaleed, before he rises to lead about 15 courtiers and retainers down a hill for a feast of Saudi, Lebanese and Italian food. Alwaleed, 55, one of the world’s richest men, saw his net worth climb to $21.1 billion in May 2000, according to his tally of investments and personal wealth. He achieved that mostly by investing in big-name companies such as Apple Inc. and News Corp. Since then, many stocks have turned against him, especially those of Citigroup Inc. and Time Warner Inc. The Saudi royal’s fortune has been trimmed to $16.6 billion, based on the value of his Kingdom Holding Co. stake on March 31 and his personal assets as of Feb. 10. ‘Buffett of Arabia’ Alwaleed often refers to himself as the “Buffett of Arabia,” although the comparison to Warren Buffett , chairman of Berkshire Hathaway Inc., doesn’t hold up. Berkshire Hathaway’s Class A shares more than doubled in the same span of almost ten years, swelling Buffett’s stake to $48.7 billion. Alwaleed, who’s a nephew of Saudi King Abdullah , is plotting a rebound. The prince’s Riyadh-based Kingdom Holding, which invests most of his wealth, has been retreating from U.S. equities and pouring billions into luxury hotels and large-scale housing and commercial developments in Saudi Arabia and around the world. Kingdom Holding, where Alwaleed serves as chairman, has boosted its property-related assets, such as Four Seasons Hotels Inc., to 75 percent of its holdings , according to his company’s 2009 annual report. Publicly traded stock, which made up at least 79 percent of Alwaleed’s assets in 2000, now constitutes only about 23 percent of his wealth. 371-Room Palace Alwaleed’s most ambitious undertaking is the 1-kilometer- tall (0.62-mile-tall) Kingdom Tower in Jeddah. When completed, the skyscraper will be the world’s tallest, surpassing the current record holder — Dubai’s Burj Khalifa — by 21 percent. The prince says his shift in strategy at Kingdom Holding, which he controls with a 95 percent stake, may put him on a path to surpass the riches of the 79-year-old Buffett. “When he was my age, he was not as big as me,” Alwaleed says. “I still have 20 years.” Alwaleed’s preoccupation with his status and wealth, which includes four jets, a 281-foot (86-meter) yacht and a 371-room palace, is also on display at Kingdom Holding’s headquarters. The glass tower that he built has an oval-shaped hole in the top that resembles the eye of a sewing needle. In his 66th- floor office, models of his airplanes decorate his desk. Bookshelves display reprints of magazine articles about his ranking on billionaire lists. Bill Gates The prince keeps meticulous track of the ups and downs of his fortune, Kingdom Holding Chief Financial Officer Shadi Sanbar says. Alwaleed hires appraisers to value his private assets — such as a jewelry collection worth more than $700 million — and makes those figures available to publishers of rich lists, Sanbar says. After a ranking is published, the prince sometimes issues a press release touting his position. “He wants to be the best, the wealthiest; that by itself is what motivates him,” says Saleh Al Fadl , who worked for Alwaleed from 1989 to 1993 at United Saudi Commercial Bank, one of the prince’s earliest investments, and now helps run retail banking at Riyadh-based Saudi Hollandi Bank. In addition to chasing Buffett, Alwaleed has also been preoccupied with Bill Gates , the Microsoft Corp. founder who has often topped the billionaire rankings, Al Fadl says. “He was always referring to Bill Gates,” he says. Buffett Letters Alwaleed is particularly fond of his correspondence with Buffett by mail and fax over a span of at least nine years. Buffett started the exchange, writing Alwaleed after a 12- day stay at New York’s Plaza Hotel. In the May 1999 letter, Buffett called the Plaza his “home” when in New York and praised the prince, who then owned a 42 percent stake in the hotel, for the extraordinary service. “You have restored The Plaza to its former luster — indeed your managers have enabled it to surpass its previous heights — and I congratulate you,” Buffett wrote in the first of a series of letters that Alwaleed gave to Bloomberg News. The prince responded a month later, saying he was elated to have an individual of such discriminating tastes attest to the Plaza’s high standards. Alwaleed then got down to business. “Needless to say, I should be pleased to consider participating in any of your future investments that you may deem pertinent,” the prince wrote. A Laggard Buffett, who grew rich by investing in consumer brands such as American Express Co. and Coca-Cola Co., wrote back three days later. He said he would be delighted to team up with the prince. He also piled on the praise. “In Omaha, I’m known as the ‘Alwaleed of America’ — which is quite a compliment,” Buffett wrote. In December 1999, Alwaleed told Buffett in a letter that he found news coverage of a slump in Berkshire’s stock “highly objectionable” and had written to editors to defend him. “Dear Prince Alwaleed,” Buffett responded the next day. “You’re terrific!” A decade later, it’s the prince’s investments that need a boost. As of March 31, Alwaleed’s net worth had dropped 21 percent from May 2000, the tally shows. Citigroup shares, which fell 90 percent during the period, did the most damage to his fortune. The prince even fell behind the Dow Jones Industrial Average, which returned 27 percent, including reinvested dividends . “He’s become a laggard,” says Laszlo Birinyi , founder of equity research firm Birinyi Associates Inc. in Westport, Connecticut. “As an investor, his record is not worth following.” Unrealized Losses Sitting at his gray-marble desk in his office, Alwaleed defends his stock picking, saying most of his losses came in 2008 as a wave of subprime-mortgage defaults convulsed the financial world. He grabs a copy of Richard J. Connors’s book “Warren Buffett on Business” (Wiley, 2009) and flips it open to a passage he has highlighted with a green marker. It describes Berkshire Hathaway’s assets declining in 2008, reducing the book value of the company’s shares by 9.6 percent. “Just read this,” he says. “Look what it says. In 2008, everyone had a hiccup. He went down also.” Buffett declined to comment for this story. Alwaleed’s decline may be worse than his accounting shows. In its 2008 annual report, Kingdom Holding classified more than $4 billion of its $7.45 billion of stock market losses as temporary — and therefore didn’t subtract them from its earnings. Ernst & Young Note Kingdom Holding’s auditor in Riyadh, Ernst & Young, qualified its approval of the accounts, saying it couldn’t determine whether the company took a big enough deduction for the market losses, according to its notes on the company’s statements . Ernst & Young didn’t say the company had violated accounting standards generally accepted in Saudi Arabia. A year later, as the unrealized loss shrank to $3.53 billion, Ernst & Young didn’t attach any qualification to its audit of Kingdom Holding. Even though the unrealized loss has come down, the auditor’s notes suggest that the value of Kingdom Holding may be less than its market capitalization of $9.49 billion as of April 26, says Steven Bankler , a San Antonio-based forensic accountant who examined the company’s financial statements at the request of Bloomberg News. Kingdom Holding’s Sanbar says the company correctly judged the size of its unrealized loss and that it expects its stock investments to bounce back. Kingdom Oasis Alwaleed also hopes to boost his fortune in the desert of Saudi Arabia. Northeast of Riyadh, the prince’s armored GMC Suburban bumps over rocks as he prepares to inspect his latest project: Kingdom Oasis, a development that includes an equestrian resort, a banquet facility and villas. Oasis is part of the 16.8-square-kilometer (6.5-square-mile) Kingdom City Riyadh planned community. His driver, who has a black pistol holstered under his arm, turns past what will be a safari park and lake and stops in front of a clubhouse next to horse stables. Alwaleed ducks inside the clubhouse and spots a flaw: Two Ping-Pong tables in the recreation room instead of one. He thrusts his wooden walking stick at one of the tables. “This should be removed,” he barks at his project managers. “And put in billiards.” When he’s not inspecting his investments, Alwaleed sometimes meets with foreign officials and heads of state as part of his role as a Saudi royal. Saudi King “I’m a businessman, but that’s only a platform,” he says. When asked if he wants to be king, he said he would serve his nation in any capacity if asked. In a country with thousands of princes and an autocratic regime with no firm order of succession, Alwaleed doesn’t have a clear path to the throne. Unlike his cousins from other lines of the Saud family, he lacks a formal role in government. Alwaleed’s father, Talal Bin Abdulaziz , does sit on the kingdom’s commission for succession, which helps pick the crown prince after the death of a king. Talal became a black sheep of the royal clan after pressing unsuccessfully in the 1950s for more democracy in Saudi Arabia. He later founded the Arab Gulf Program for United Nations Development Organizations in 1980 and currently serves as its president. The group raises money to support reproductive health education in Mauritania and women’s entrepreneurship in the Gaza Strip. Princess Ameerah Altaweel Alwaleed has followed his father’s example by advocating for greater freedom for Saudi women, who must wear neck-to-toe robes to mask their figures in public. The prince has hired a mostly female staff at his offices, creating workplaces rarely seen in Saudi Arabia. The women he employs dress in Western clothing and hold jobs managing his construction projects, piloting his jets and directing catering at his palace. Three times divorced, the prince has a son, 32, and a daughter, 27. Alwaleed is now married to Princess Ameerah Altaweel, 27, who speaks fluent English with an American accent she picked up from watching the television show “Friends.” The princess, who’s vice chairman of the Alwaleed Bin Talal Foundations for Charity and Philanthropy, says she wants to be the first Saudi woman to drive on public roads — if it becomes legal. “She’s the vanguard,” Alwaleed says. Starting with $30,000 The prince says his liberal views were nurtured in the U.S., where in 1979 he received an undergraduate degree in business administration from Menlo College in Atherton, California. After Alwaleed returned to Riyadh, his father jump-started the prince’s investment career by giving him a $30,000 loan and a house, which he mortgaged. As the prince started to build his fortune, he earned a master’s degree in social science from Syracuse University in Syracuse, New York, in 1985. Alwaleed says he made his first billion by 1989 from investments in Saudi real estate and banking as well as commissions he earned as a local agent for foreign construction companies. In the next two years, the prince began investing in Citicorp, which was then drowning in bad real estate loans. After Citicorp Chief Executive Officer John Reed asked Alwaleed for a cash infusion, the prince in 1991 added $590 million to his stake. That brought his total investment to $797 million, making him the bank’s biggest individual shareholder — a position the prince says he still holds today. Technology Splurge Seven years later, the bank merged with Travelers Group Inc. to form Citigroup, and by 2000, Alwaleed’s shares were worth $8.6 billion, even after he’d sold off some of his original holding . “He took a big risk and it paid off,” says David Webb , head of the finance department at the London School of Economics. “Big fund managers didn’t buy the stock, and then some guy from the Middle East puts all his eggs in one basket. We all could have been rich, looking backwards.” The billionaire used his new riches to splurge on U.S. technology shares in the first half of 2000. Just as stock markets were beginning to plunge that year, with the Nasdaq Composite Index falling 78 percent through October 2002, Alwaleed bought $400 million of Compaq Computer Corp. shares and $200 million of WorldCom Inc. He also purchased shares of Amazon.com Inc. and DoubleClick Inc. as well as household names such as AT&T Corp., McDonald’s Corp. and Coca-Cola. The prince told Bloomberg News at the time that he was buying all of these stocks on the cheap. Praise from Murdoch As he spread his money around corporate America, Alwaleed won many friends. News Corp. Chairman Rupert Murdoch was among the 355 guests who gathered at the Plaza Hotel to honor the prince in November 2000 at an awards dinner thrown by the Arab Bankers Association of North America. After the guests took their seats in the Grand Ballroom, Alwaleed entered the room with his retinue and walked to the head table, drawing applause. He sat next to Murdoch, and the two men chatted over a dinner of lobster tails and rack of lamb. Then the media mogul took the podium to praise the Saudi royal for his investment in News Corp., at the time an Australian company that had U.S.-traded shares. From his initial News Corp. investments of a combined $600 million in 1997 and 1999 through that evening in 2000, Alwaleed had almost doubled his money. “Very proud, we are, that Prince Alwaleed is one of News Corp.’s largest shareholders ,” Murdoch said. Selling Apple After six tribute speeches, Alwaleed returned to the hotel’s Suite 537, decorated with gilded furniture, where journalists quizzed him about ill-timed investments he had announced about six months earlier. “We don’t see any further investments in the Internet,” Alwaleed said. “Many companies are going to go bankrupt.” In 2002, the same year in which WorldCom went belly up, the prince deployed another $1 billion in three companies whose stock he already owned: AOL Time Warner Inc., Priceline.com Inc. and Citigroup. Priceline.com was the only winner: The shares he’s held on to have jumped fourfold to about $175 million, based on data in Kingdom Holding documents. The investor would be worth several billion dollars more today had he not chucked the bulk of his stake in Apple in 2005. He had poured $115 million into the computer maker in 1997. Under founder and CEO Steve Jobs , the company introduced the iPod four years later. Returning to Saudi At Alwaleed’s Hotel George V in Paris in November 2005, the prince told Bloomberg News his motive for selling his Apple stake. “The benefit of iTunes and all the good moves that Steve Jobs has done have already been put in the price,” Alwaleed said. He was wrong. The rapidly selling iPod was followed in 2007 by the iPhone, which transformed mobile devices, and the iPad in 2010. The prince missed a sevenfold rally starting from the middle of 2005. His holding would have been worth about $6.75 billion as of today. As Alwaleed was selling his Apple shares, he began moving money from the U.S. into Saudi Arabia, which itself was in transition. In 2005, King Fahd , who had ruled for 23 years, died at age 82, propelling Alwaleed’s uncle — Crown Prince Abdullah — to the throne. “The prince made a commitment to the king,” Sanbar, 62, says. “He said, ‘Instead of having 80 percent of my wealth outside, I’m going to bring it here.’” Kingdom IPO In 2007, Alwaleed put together an initial public offering for Kingdom Holding on the Saudi stock exchange. The 240-page prospectus, which appeared on Kingdom Holding’s Web site only in Arabic, said the company’s listed assets had achieved lifetime annual returns of 19.9 percent through March 30, 2007. The figure included only shares held at the time, omitting money losers such as WorldCom that Alwaleed had already sold. “These historical results do not represent all of the investments that Management has made during the relevant historical periods,” the prospectus said. The prospectus contained one number that concerned potential shareholders, Sanbar says. Some 40 percent of its assets were in Citigroup stock, which was just starting to slip from its record high of $56.41 in December 2006. Kingdom Holding assured investors it would pare back the Citigroup stake. “The answer was, we were going to start selling and shift to regional and Gulf investments,” Sanbar says. Citigroup Crashes Kingdom Holding’s stock jumped 20 percent on its first day of trading on July 29, 2007, giving the company a market value of about $20 billion. But Kingdom never sold its Citigroup shares as planned. From the IPO to the end of 2007, as credit markets tightened, the bank’s stock plunged by more than a third. “Buy-and-forget can be deadly to a portfolio,” says Frederic Dickson , who manages $25 billion, including Citigroup shares, as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. As the deepening credit crisis sent Citigroup shares tumbling 77 percent in 2008, Alwaleed had one reason to cheer. At Microsoft’s annual CEO summit in May in Redmond, Washington, the prince finally got to meet his pen pal, Buffett. During the event, a beaming Alwaleed posed with Buffett for a photo taken by the prince’s personal photographer. Buffett hammed it up for the camera, handing his black wallet to the prince as the flash went off. Photo With Buffett After the conference, Alwaleed sent Buffett a copy of the photo, and Buffett wrote back to thank the prince. In signing off, he continued their banter about collaborating. “I hope we can come up with something in which we can work together,” Buffett said in the June 2008 letter. Alwaleed could use some help from the Oracle of Omaha. In 2008, Kingdom Holding reported a net loss of $7.98 billion. That year, as the U.S. government injected $45 billion into Citigroup to save it, the prince began to buy more of the bank’s shares. “At $3, you have to buy,” Alwaleed says. His purchases from 2008 and 2009 turned a profit as Citigroup shares rose to $4.61 on April 26. While Kingdom Holding rebounded to a profit of $107 million for 2009, it also reported the unrealized loss of $3.53 billion that carried over from 2008’s rout . Bankler, the forensic accountant, says the profit could vanish, slashing the company’s market value and Alwaleed’s net worth, if even a small portion of those unrealized losses became permanent. Fairmont, Four Seasons “One of the factors of market value is earnings per share, and they didn’t take that hit,” Bankler says. Alwaleed’s fortunes are improving this year. On April 19, Citigroup posted a first-quarter profit after two years of losses, and the next day, Kingdom Holding also reported a gain . But the company’s shares remain in the doldrums. Since its first trading day in 2007, Kingdom Holding’s stock has fallen 54 percent to 9.6 Saudi riyals on April 26. “Alwaleed is a major player, always will be,” says Four Seasons CEO Isadore Sharp , who became fast friends with the prince after they met on Alwaleed’s yacht in 1994. “The markets are turning. Things are getting back on track.” Alwaleed says he plans to take his hotel businesses public in the next few years. He bought his first stakes in Toronto- based Fairmont Raffles Holdings International and Four Seasons in 1994. Fairmont also runs the Plaza Hotel, which is jointly owned by Kingdom Holding and Israeli billionaire Isaac Tshuva ’s Elad Properties. Hotels made up 63 percent of the assets in the prince’s company in 2009, according to its year-end report. ‘He’s a Hotelier’ “He’s a hotelier,” Bankler says. “This is a hotel company.” Alwaleed’s partners in Fairmont, which runs more than 90 hotels worldwide, include Qatar’s sovereign wealth fund and Colony Capital LLC, the Los Angeles-based buyout firm founded by billionaire Thomas J. Barrack. The prince is in business with Gates at Four Seasons, which operates 83 hotels globally. Kingdom Holding and Gates’s investment company, Cascade Investment LLC, each hold 47.5 percent of the hotel management company. Sharp, who founded Four Seasons, retains a 5 percent stake. Fairmont and Four Seasons may be ripe for an IPO as the recession eases and companies stop trimming travel expenses, says Smedes Rose , an analyst who covers hotels at Keefe, Bruyette & Woods Inc. in New York. Kingdom Tower “Trends are turning much better for them, and you’d want to go public into the momentum of a recovering market,” he says. “Four Seasons has a lot of legs.” Alwaleed says that within two years he also plans to hold an IPO for his Riyadh-based media company, Rotana Holding, which includes Arabic movie and music channels and a record label. In February, Murdoch’s News Corp. agreed to buy 9.1 percent of Rotana for $70 million. The prince’s Kingdom Tower project in Jeddah, Saudi’s commercial hub on the Red Sea, faces several obstacles. The spike-shaped skyscraper anchors a project that includes shopping malls, a marina, hotels, villas and parks. Alwaleed, who says the tower will be completed in four to five years, plans to raise some of the $20 billion that the complex will cost from equity investors and the sale of Islamic bonds. And he has hired Emaar Properties PJSC — the Dubai-based contractor that erected Burj Khalifa — to manage the project. “The beef is in Saudi Arabia,” Alwaleed says. “In 2010, we’re seeing ourselves coming out of it.” Burj Khalifa opened in January, just after the Arab emirate went from being the world’s best-performing real estate market to the worst. Prices for apartments in the tower have dropped to less than half of their 2008 peak during the credit crackup. $32.1 Billion Difference Alwaleed may have an even tougher time filling his skyscraper in Saudi Arabia, says Saud Masud , head of Middle East research at UBS AG in Dubai. Masud says Saudi laws and customs, including restrictions on travel, women’s attire and the purchase of local securities by foreigners, deter visitors and businesses from entering the nation. “It’s not going to be a straightforward build-it-and-they- will-come,” Masud says. “What the market needs now is affordable housing and not kilometer towers.” As the prince rides in his GMC truck around the site of his Kingdom City residential development, he once again draws comparisons between himself and Buffett: The prince says they both buy undervalued assets. The offices of Kingdom Holding and Berkshire Hathaway have roughly the same square footage, and both companies have small staffs at their headquarters. Pepsi Versus Coke “I drink Pepsi; he drinks Coke,” Alwaleed says, with a laugh. The biggest difference between the two men: The investor from Omaha is worth about $32.1 billion more than the Saudi prince. Alwaleed’s sluggish performance over the past decade hasn’t crimped his style, though. In 2012, he’ll take delivery of a custom-fitted double- decker Airbus A380, becoming the first private buyer of the world’s biggest airliner. While he may not be the world’s richest man, he knows how to act like he is. To contact the reporter on this story: Vernon Silver in Rome at vtsilver@bloomberg.net

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Oil Contango Soars as Oklahoma Tank Farms Brim With Crude: Energy Markets

April 26, 2010

By Grant Smith April 26 (Bloomberg) — Oil storage costs are soaring to the highest level in four months as tanks in Oklahoma brim with near-record crude inventories. Oil for delivery in June cost $1.95 a barrel less than the July contract as of April 21, the biggest gap since Dec. 15 on the New York Mercantile Exchange. The premium for further-out delivery, or contango, mirrors the expense of stockpiling. It emerged after inventories jumped 5.8 percent in the week ended April 16 to 34.1 million barrels in Cushing, Oklahoma, where traders make deliveries for futures, government data show. Inventories are near the record 35.7 million barrels on Jan. 1 as Canadian imports rise refineries shut for maintenance. Supplies are so plentiful that West Texas Intermediate, or WTI, oil costs less than Brent crude in Europe, a lower quality crude. Brent cost more than WTI three times in the past year. “The problem is you cannot get a lot of crude out of the region, it’s landlocked,” said Lawrence Eagles , head of commodities research at JPMorgan Chase & Co. in New York. “It points to being a very local issue.” New York crude oil for June delivery rose 22 cents to $85.34 a barrel today, $1.87 less than July. The June contract has traded in a range between $72 and $88 so far this year on the New York Mercantile Exchange. While the oversupply weighs on the front-month contract for WTI, European benchmark Brent crude traded today near the highest price since Oct. 7, 2008 on London’s ICE Futures Europe exchange. Brent for June delivery increased as much as 0.6 percent to $87.75, and the contango against the July contract was at 72 cents. About 16 million barrels of unused storage capacity remains around Cushing, Barclays Capital estimates. Should that site reach capacity, producers will need to halt operations because there will be no place to put it. A wider contango means traders can potentially earn more from storing crude, and in turn means tank terminal owners can charge them more for the service. Gulf Coast Connection Cushing was used to connect Gulf Coast companies with refiners in Chicago and the Midwest. Declining onshore production means the hub is now also being used to store additional barrels from Alberta, Canada, according to the Energy Department. In other energy markets, gasoline prices last week reached their highest since October 2008 as refinery maintenance curbs production. Nymex gasoline dropped 0.1 percent to $2.352 a gallon today. Refineries are running at 85.9 percent of capacity , below the 10-year average of about 88 percent for this time of year, according to the Energy Department. The refinery restrictions are making existing operations more profitable. The gasoline crack spread, or the difference between fuel and crude oil based on June contracts, widened about 11 cents to $14.08 a barrel today. The June gasoline crack spread is up 26 percent in three months. Handling Canadian Crude Refiners in the Midwest have added equipment such as coking units to handle more Canadian crude, which is heavier and cheaper than WTI, according to BNP Paribas SA. “In periods of weak refining activity, either due to maintenance or weak oil demand, you have greater chance for the more expensive, lighter crudes to back up in storage at Cushing,” said Harry Tchilinguirian , head of commodity derivatives research at BNP Paribas in London. Total U.S. fuel demand , averaged over four weeks, fell 1.1 percent to 18.9 million barrels, the biggest decline since the week ended Jan. 8, the government reported April 21. Storing at Sea Vitol Group of Cos. is among companies that can profit from holding oil when the difference between near-term and future delivery exceeds the cost of storage. A record contango last year coupled with low freight rates made it possible for traders from Royal Dutch Shell Plc to BP Plc to store as many as 150 million barrels on ships anchored at sea. Ed Morse , the head of commodities research at Credit Suisse Group AG, called WTI a poor indicator of global oil prices last year because of its link to stockpile levels in Oklahoma, rather than world supply and demand. In October, Saudi Arabia’s state oil company dropped WTI as its U.S. pricing benchmark in favor of another grade that is priced at the Gulf Coast. The contango may unwind as U.S. refineries whittle down inventories at Cushing when they bolster operating rates to make gasoline in time for the peak summer driving season, David Greely , a New York-based commodity analyst at Goldman Sachs Group Inc., said in an April 20 report. The bank, Wall Street’s biggest commodity broker, said growth in Cushing inventories is “likely temporary,” and recommended buying WTI and selling Brent contracts to profit when the difference between the two narrows. To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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Geithner Harnesses G-20 Behind Yuan Push as India, Brazil Raise Pressure

April 22, 2010

By Simon Kennedy April 23 (Bloomberg) — Group of 20 finance chiefs may intensify pressure on one of their own today as the U.S.-led campaign for China to revalue the yuan broadens from Washington to Mumbai and Brussels. Three weeks since U.S. Treasury Secretary Timothy F. Geithner called today’s G-20 talks in the U.S. capital an “avenue for advancing U.S. interests” on the Chinese currency, counterparts are rallying to his side. Central bankers in India and Brazil this week backed a stronger yuan as did the International Monetary Fund and European Union governments. Speculation the G-20 will press China for a revaluation, after the body ducked the topic of exchange rates in recent years, lifted yuan forwards to a three-month high yesterday. Whether the lobbying proves successful provides another test of the G-20’s ability to achieve results as splits over hedge fund rules and bank taxes fracture the united front its members formed in battling the global recession. “Given that Secretary Geithner has forestalled pressure for unilateral U.S. action by framing the China currency issue as a G-20 multilateral concern, it would be surprising if exchange rates were not discussed at some length,” said Daniel Price, former President George W. Bush ’s G-20 negotiator, who is now a partner at law firm Sidley Austin LLP in Washington. Daylong Talks G-20 finance chiefs including Geithner and European Central Bank President Jean-Claude Trichet begin a day of talks at 9:30 a.m. in Washington, with a statement and press conferences scheduled for about 5 p.m. It’s their first meeting since September’s decision by leaders to make the G-20 the premier forum for setting international economic policy. G-7 officials dined together last night without releasing a communiqué. After scrapping a peg to the dollar in July 2005, the Chinese government allowed the yuan to gain 21 percent before holding it at about 6.83 to the dollar since July 2008. While that aids its exporters, it has incurred criticism abroad for hurting foreign companies and fanning Chinese inflation. In delaying a twice-yearly report on whether China is manipulating its exchange rate, Geithner said April 3 that he aimed to use the G-20 meeting “to make material progress” at a time when U.S. lawmakers are threatening tariffs on the nation. Brazil’s Take Geithner is already finding supporters abroad. Brazil’s central bank President Henrique Meirelles said April 20 it’s “absolutely critical” that China let its currency appreciate. European officials will today seek an “effective real appreciation of the renminbi,” according to an EU draft document prepared for the G-20 talks. Finding backers “should be quite easy” for Geithner because less developed economies are suffering the most from China’s currency regime, said Harvard University professor Niall Ferguson . Reserve Bank of India Governor Duvvuri Subbarao said April 20 exports to India from China have grown faster than shipments in the other direction “and that obviously is a reflection of differences in the exchange-rate management.” “The principal losers from the weak renminbi are other emerging markets, not the U.S.,” said Ferguson, author of “The Ascent of Money: A Financial History of the World.” China may not hold out much longer, said Kevin Lai , an economist at Daiwa Capital Markets Hong Kong Ltd. The IMF said in an April 21 report that allowing the yuan to gain would help cool the country’s expansion, which the Washington-based lender expects to accelerate to 10 percent this year from 8.7 percent in 2009. Industry Support Chinese executives including Yang Yuanqing of Beijing-based computer maker Lenovo Group Ltd. and Qin Xiao of China Merchants Bank Co. said last month they favored a stronger yuan. “There is a consensus that an appreciation now works to China’s advantage,” Lai said. Bank of Israel Governor Stanley Fischer said in an interview in Washington yesterday that tempering “the threat of domestic overheating” was a reason to let the yuan rise. The G-20 avoided the topic of exchange rates after its leaders began regular meetings in November 2008 because of the need to first integrate China into the international policy- making fabric. That may now be changing as the recovery strengthens and authorities pledge policies that make the world less reliant on U.S. demand and Chinese savings. “One problem which had been extensively discussed before the crisis about the global imbalances has been a little forgotten during the crisis” and “are clearly coming back today with the recovery,” IMF Managing Director Dominique Strauss-Kahn said in a press conference yesterday. Slow Progress International lobbying may still take time to pay off. It took almost two years of G-7 pressure for China to loosen the yuan’s peg to the dollar in July 2005. In a sign some in China are still against allowing the yuan to gain, an industry ministry official, Zhu Hongren , yesterday said another global recession remains a risk and criticism of the yuan hurts the country’s trade outlook. “We expect China to wait a bit longer,” said Marc Chandler , global head of currency strategy at Brown Brothers Harriman & Co. in New York. Any currency dispute may not be the only schism at the Washington talks, which occur a year after G-20 leaders agreed to craft a $1.1 trillion plan to aid the world economy. While policy makers favor having banks cover more of the cost of future bailouts, an IMF recommendation that taxes be applied to non-deposit liabilities and the sum of profit and compensation has received a mixed reception. Divisions Although the U.K. and U.S. have welcomed the IMF’s ideas, Canadian Finance Minister Jim Flaherty said a levy may hurt banks and backfire by fueling risky behavior. Japanese Finance Minister Naoto Kan has noted “situations differ for each nation” and his country already has its Deposit Insurance Corp. Geithner has also been urging European leaders to reconsider their approach to tightening regulation over hedge funds. Europe’s proposed Alternative Investment Fund Management directive includes provisions to limit non-European funds’ access to the EU market. Differences also extend to how to raise the quantity and quality of capital at banks. “The risk, which is not only a risk but already materialized somewhat, is that different parts of the world will have their proposals, which all make sense when you’re looking at the interests and problems of the countries preparing these reforms, but which may be somewhat inconsistent,” Strauss-Kahn said yesterday. The G-20 accounts for about 85 percent of global gross domestic product. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., U.K. and EU. To contact the reporter on this story: Simon Kennedy in Washington at skennedy4@bloomberg.net

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GM Rushing Into Shanghai Where Google Refuses to Tread in Expo Sales Drive

April 6, 2010

By Bloomberg News April 6 (Bloomberg) — General Motors Co. expects three million people to visit its pavilion at the Shanghai World Expo . The chance to lure customers in what has become GM’s largest market this year makes being there worthwhile, even as companies such as Google Inc . face difficulties operating in China. The exhibition “is going to be the biggest expo ever,” said Karin Zhang, a spokeswoman in Shanghai for Detroit-based GM. “It will bring huge benefits for the company.” Companies including GM and Siemens AG , along with 192 nations ranging from Saudi Arabia to France, are coming to the Expo. GM was first in line among corporations committing to build a pavilion, and Siemens has signed up as a “global partner” for the event, which opens on May 1. The Saudis are spending 1.1 billion yuan ($146.5 million) to erect a pavilion shaped liked a half moon suspended on pylons. Japan’s “Purple Silkworm Island” will cost 13 billion yen ($138 million). France has budgeted 50 million euros ($67.5 million) for its “Sensual City.” The foreign spending hints of China’s imperial past, said Richard Baum , a professor of political science at the University of California Los Angeles . Emperors of the Ming and Qing dynasties, which ruled from the 14th to early 20th centuries, required other courts to pay tribute with gifts for the right to trade with the Middle Kingdom. China would “dominate tributary states by intimidating their rulers with awesome symbols of imperial potency and grandeur,” Baum said. “In some ways, the over-the-top expenditures on Shanghai Expo are redolent of the lavish tributes” foreigners paid the emperors. Territorial Concessions The system began to erode two centuries ago as rising powers Britain, France and the U.S. started exacting trade and territorial concessions. Now China is reclaiming a dominant role in the world economy. It has leapfrogged the U.S. as the biggest trading partner of Japan, South Korea, Thailand and Singapore. Last year it became the world’s biggest exporter . GM is the largest overseas automaker in China, selling 230,048 vehicles in March, more than the 188,546 it sold in the U.S. So nations and companies are seizing the opportunity to make an impression at the Expo, even as some encounter setbacks in China. Google in Mountain View, California, last month redirected users of its China-based Web browser to a Hong Kong site after it said in January its network was hacked from within China. Four executives of London-based mining company Rio Tinto Group were sentenced in a Shanghai court to as many as 14 years in jail on March 29 after being found guilty of bribery and stealing commercial secrets. New Regulations U.S. businesses say they are constrained by new regulations that may restrict market access, according to a recent survey by the American Chamber of Commerce in China. Shanghai is spending 28.6 billion yuan on the exposition, which will draw an estimated 70 million visitors, mostly Chinese, by Oct. 31. Government officials have made it clear a successful event — a descendent of world fairs popular in the 19th and 20th centuries — is a top national priority, much like the 2008 Beijing Olympics. “Expo diplomacy is one of the focal points of Chinese diplomacy this year,” Foreign Minister Yang Jiechi told reporters in Beijing March 7. Vice Premier Wang Qishan showed the degree of involvement for top leaders when he urged stepped-up work in a “race against time,” the official Xinhua News Agency on March 23 quoted him as saying. Foreign Dignitaries About 100 foreign dignitaries are expected to attend. Secretary of State Hillary Clinton already toured the U.S. site in November. British Foreign Secretary David Miliband last month visited the British pavilion, whose protruding acrylic rods resemble a dandelion . Germany’s exhibit focuses on urban life. France ’s trumpets French culture. Japan’s features intelligent robots, some who play the violin. Xu Wei, an Expo spokesman, says nations are drawn to the event by the potential to show off their country to millions of potential tourists. GM, along with Munich-based Siemens , Europe’s largest engineering company, and other businesses can advertise to affluent Chinese attendees. GM ’s exhibit will showcase urban transportation in 2030. It agreed to participate in 2006, three years before its 2009 bankruptcy, said spokeswoman Zhang, declining to provide the cost. In addition to illustrating the pull of China’s rising economic and political clout, the fair is a means for Chinese leaders to bolster their domestic authority, said Shen Dingli , vice dean of the Institute of International Affairs at Shanghai’s Fudan University . Communist Party “All nations understand that if they don’t go, they will miss an opportunity,” he said. Their attendance also “gives us face,” or enhances China’s reputation, while supporting what Shen calls the government’s core interest: “the survival of the Communist Party.” The Expo reinforces the party’s hold on power because it is expected to boost growth, perpetuating a tacit bargain China’s people have made with the government to “yield their demand for political rights” as long as the economy expands and China’s image is burnished, Shen said. “This is for domestic consumption more than anything else,” said Robert Ross , a professor of political science specializing in Chinese politics at Boston College in Massachusetts. “This will be spun as ‘The world is coming to China to praise China.’ What better symbol for China’s domestic masses of the greatness of their leaders?” — Michael Forsythe . Editors: Melinda Grenier , Bill Austin . To contact Bloomberg News staff on this story: Michael Forsythe in Beijing at +8610-6649-7580 or mforsythe@bloomberg.net

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Iran Trails Only China in Executions Amid Political Turmoil, Amnesty Says

March 30, 2010

By Ali Sheikholeslami March 30 (Bloomberg) — Iran executed more people last year than any other country except China, according to a report by Amnesty International. The Islamic Republic accounted for 388 of at least 714 executions worldwide, excluding China, Amnesty said in its Death Sentences and Executions 2009 report published today. China, which doesn’t release figures, executed thousands of people, the report said. The number of executions increased from a minimum of 672, excluding China, the year before as Iran stepped up political repression, Amnesty said. Almost a third of those killed in Iran were executed between the June 12 election and the Aug. 5 inauguration of Mahmoud Ahmadinejad as president for a second term. “To us that’s a way of sending a political message of ‘we will not tolerate any form of dissent’,” Claudio Cordone , interim secretary general of Amnesty International, said by phone. Ahmadinejad’s re-election drew large numbers of protesters to the streets in the biggest challenge to the Islamic Republic since the 1979 revolution that brought it to power. Some individuals were accused of “enmity against God,” a charge that may cover membership of opposition groups, Cordone said. “Many of those executed were convicted in flawed legal proceedings, some after having made televised confessions,” according to the report. Iraq, U.S. Worldwide, almost two-thirds of countries have abolished capital punishment, while 58 retained it in 2009, Amnesty said. Iraq executed at least 120 last year, while Saudi Arabia, publicly beheaded 69 people. The U.S. was the only country in the Americas to carry out executions. It killed 52 and sentenced at least 105 individuals to death, the report said. This year Amnesty has not published numbers for China. Previous estimates for China were “flawed” and “understated the reality,” according to Cordone. “The information on the statistics, the offences for which the death penalty has been imposed, how many people have been sentenced to death or executed remains a state secret,” Cordone said. Those charged with corruption, drug trafficking and rioting in the province of Xinjiang Uighur got death sentences. Cordone called on President Barack Obama to abolish the death penalty in the U.S. New Mexico became the 15th state to ban capital punishment last year, he said. “Even though we can’t predict when it’s going to be, and it will take a long struggle, the trend toward abolition continues and we’re confident that we’ll get rid of the death penalty like we eventually got rid of slavery and apartheid,” Cordone said. To contact the reporter on this story: Ali Sheikholeslami in London at alis2@bloomberg.net .

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Dubai Shares Rise to Three-Month High on Debt-Plan Optimism; Arabtec Gains

March 28, 2010

By Zahra Hankir March 28 (Bloomberg) — Dubai shares gained for a second day, rising to the highest level this year, as the emirate said it will support Dubai World’s $24.8 billion debt restructuring. Arabtec Holding Co., the United Arab Emirates’ biggest construction company, increased the most in almost three months on improved sentiment following the announcement. Emirates NBD PJSC, the U.A.E.’s largest bank by assets, climbed for a seventh day after saying it may sell debt when the restructuring is complete. The DFM General Index rose 1.9 percent to 1,880.62, the highest since Dec. 16. Abu Dhabi’s ADX General Index rose 0.9 percent to 2,929.32, the highest since Nov. 18. Dubai shares jumped 4.3 percent on March 25 after the government said it will support state-owned Dubai World with as much as $9.5 billion, doubling to $20 billion the amount the emirate paid to holding company. Lenders to Dubai World will be repaid their principal in full by swapping loans with two tranches of new debt with five and eight-year maturities, according to the proposal. Today’s move “is a follow through from last Thursday’s announcement on the Dubai World restructuring, which was above expectations as it addressed the concerns of customers, trade creditors and sukuk holders, other than just the financial creditors,” said Yong Wei Lee, senior fund manager at Emirates NBD Asset Management. “Institutional investors who have been significantly underweight the U.A.E are most likely to increase their weighting in the market,” said Lee, who oversees around $200 million for Middle East North Africa equity funds. Nakheel’s Restructuring Dubai World’s property unit Nakheel PJSC will receive $8 billion in funding and $1.2 billion by converting government debt to equity. Dubai World and its property units Nakheel and Limitless LLC used loans to finance real-estate projects such as palm-shaped islands off the emirate’s coast, which they struggled to refinance after the credit crunch made banks reluctant to lend. The sheikhdom will supply Dubai World with $1.5 billion to support its new business plan and will convert $8.9 billion in debt to equity. Arabtec jumped 12 percent to 2.59 dirhams, the biggest increase since Dec. 28. “Thursday’s news sent a wave of optimism in the market that the cash flow cycle of contractors might improve,” said Ismail Sadek , a Cairo-based analyst at Beltone Financial. Arabtec is owed a “significant portion” of its total 4.6 billion dirhams ($1.25 billion) of receivables from Nakheel, Sadek said. Nakheel had delayed payments to contractors and suppliers causing Arabtec to stop work at its Al Furjan project earlier this year after building 550 villas at the project, which was designed to include 4,000 homes. Arabtec Upgrade Separately, Arabtec was raised to “outperform” from “market perform” with a price estimate of 3.20 dirhams at Al Mal Capital. Emirates NBD increased 3.6 percent to 3.17 dirhams, the highest since Dec. 21. The biggest bank in Dubai plans to sell debt after the restructuring is complete, Chairman Ahmed Bin Humaid Al Tayer said March 25. Qatar’s measure advanced 0.7 percent to 7,465.08, the highest since Oct. 11. The Kuwait Stock Exchange Index fell 0.3 percent. Oman’s MSM30 Index rose 0.5 percent. Bahrain’s measure retreated 1.3 percent and Saudi Arabia’s Tadawul All Share Index dropped 0.1 percent. To contact the reporters on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

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Dubai Shares Rise to Three-Month High on Debt-Plan Optimism; Arabtec Gains

March 28, 2010

By Zahra Hankir March 28 (Bloomberg) — Dubai shares gained for a second day, rising to the highest level this year, as the emirate said it will support Dubai World’s $24.8 billion debt restructuring. Arabtec Holding Co., the United Arab Emirates’ biggest construction company, increased the most in almost three months on improved sentiment following the announcement. Emirates NBD PJSC, the U.A.E.’s largest bank by assets, climbed for a seventh day after saying it may sell debt when the restructuring is complete. The DFM General Index rose 1.9 percent to 1,880.62, the highest since Dec. 16. Abu Dhabi’s ADX General Index rose 0.9 percent to 2,929.32, the highest since Nov. 18. Dubai shares jumped 4.3 percent on March 25 after the government said it will support state-owned Dubai World with as much as $9.5 billion, doubling to $20 billion the amount the emirate paid to holding company. Lenders to Dubai World will be repaid their principal in full by swapping loans with two tranches of new debt with five and eight-year maturities, according to the proposal. Today’s move “is a follow through from last Thursday’s announcement on the Dubai World restructuring, which was above expectations as it addressed the concerns of customers, trade creditors and sukuk holders, other than just the financial creditors,” said Yong Wei Lee, senior fund manager at Emirates NBD Asset Management. “Institutional investors who have been significantly underweight the U.A.E are most likely to increase their weighting in the market,” said Lee, who oversees around $200 million for Middle East North Africa equity funds. Nakheel’s Restructuring Dubai World’s property unit Nakheel PJSC will receive $8 billion in funding and $1.2 billion by converting government debt to equity. Dubai World and its property units Nakheel and Limitless LLC used loans to finance real-estate projects such as palm-shaped islands off the emirate’s coast, which they struggled to refinance after the credit crunch made banks reluctant to lend. The sheikhdom will supply Dubai World with $1.5 billion to support its new business plan and will convert $8.9 billion in debt to equity. Arabtec jumped 12 percent to 2.59 dirhams, the biggest increase since Dec. 28. “Thursday’s news sent a wave of optimism in the market that the cash flow cycle of contractors might improve,” said Ismail Sadek , a Cairo-based analyst at Beltone Financial. Arabtec is owed a “significant portion” of its total 4.6 billion dirhams ($1.25 billion) of receivables from Nakheel, Sadek said. Nakheel had delayed payments to contractors and suppliers causing Arabtec to stop work at its Al Furjan project earlier this year after building 550 villas at the project, which was designed to include 4,000 homes. Arabtec Upgrade Separately, Arabtec was raised to “outperform” from “market perform” with a price estimate of 3.20 dirhams at Al Mal Capital. Emirates NBD increased 3.6 percent to 3.17 dirhams, the highest since Dec. 21. The biggest bank in Dubai plans to sell debt after the restructuring is complete, Chairman Ahmed Bin Humaid Al Tayer said March 25. Qatar’s measure advanced 0.7 percent to 7,465.08, the highest since Oct. 11. The Kuwait Stock Exchange Index fell 0.3 percent. Oman’s MSM30 Index rose 0.5 percent. Bahrain’s measure retreated 1.3 percent and Saudi Arabia’s Tadawul All Share Index dropped 0.1 percent. To contact the reporters on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

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Chertoff Joins BAE, Defense Contractor Recently Embroiled In Bribery Scandal

March 25, 2010

BAE Systems, the British defense giant that is the eighth-biggest contractor to the U.S. government, recently promised it wouldn’t bribe people anymore. The occasion for the promise — along with a staggering $447 million in fines to the U.S. and U.K. governments — was the company’s guilty plea settling long-running allegations of corruption, which were first disclosed by the British newspaper The Guardian in 2003. Among the allegations: That BAE secretly paid Prince Bandar of Saudi Arabia, then the ambassador to the U.S., $2 billion in connection with Britain’s biggest-ever weapons contract. So bribery: Not OK anymore. That’s officially corruption. But the revolving door? Bring it on. The company announced today that Michael Chertoff, who served as secretary of the Department of Homeland Security in the Bush administration, is joining the company’s board of directors to “provide oversight and strategic counsel, further ensuring that BAE Systems, Inc. is well positioned to meet current and future customer requirements in the defense and security markets.” Chertoff was welcomed by the board’s chairman, retired four-star General Tony Zinni Chertoff was DHS’s second secretary, serving from 2005 to 2009, and brings BAE invaluable information about how the hulking often-dysfunctional behemoth was cobbled together from elements of 22 pre-existing agencies, along with intimate knowledge of the people who work there. “It gives them an unfair competitive advantage, and in the long run hurts taxpayers,” said Scott Amey, general counsel for the Project on Government Oversight. “The advantage is now they have very senior-level people that are very well connected and can potentially influence their standing with an agency in receiving federal contracts.” When Chertoff calls his old friends, Amey speculated, he won’t spend much time on hold. BAE received $7.1 billion in U.S. government contracts in 2009, making it the government’s eighth-biggest contractor. BAE has received over $200 million from DHS since 2005, according to the ffata.org Web site and Amey’s calculations — with big-ticket contracts going to FEMA and the Coast Guard, among DHS’s other sub-agencies. According to its 2008 annual report , BAE acquired that year a company called Detica, which provides software that helps governments and commercial organizations manage and analyze large amounts of data . The acquisition was intended to build on BAE’s “established position addressing Homeland Security markets in the U.S.” Chertoff was most recently in the news when questions emerged about his possible abuse of public trust. After the attempted bombing of a U.S. airliner on Christmas Day, he gave dozens of media interviews touting the need for the federal government to buy more full-body scanners for airports — without mentioning that the Chertoff Group, his security consulting agency, has a client that manufactures the machines. Chertoff is also senior of counsel for the Covington & Burling law firm, where he is “a member of the White Collar Defense and Investigations practice group.” BAE’s guilty plea — to conspiring to defraud the United States, making false statements and violating international arms control agreements — accompanied “one of the largest criminal fines in the history of DOJ’s ongoing effort to combat overseas corruption in international business and enforce U.S. export control laws,” the Justice Department said. “As part of its guilty plea,” the department said, “BAES has agreed to maintain a compliance program that is designed to detect and deter violations of the FCPA [Foreign Corrupt Practices Act], other foreign bribery laws implementing the OECD Anti-bribery Convention, and any other applicable anti-corruption laws,… as well as similar export control laws.”

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Raymond J. Learsy: The New York Times Continues Its Fawning Coverage of Saudi Oil Policies

March 22, 2010

In an article titled

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Dubai Shares Advance on Debt-Deal Expectations; Emirates NDB, Emaar Climb

March 21, 2010

By Dana El Baltaji March 21 (Bloomberg) — Dubai shares were poised for the highest close since January on speculation Dubai World’s restructuring proposal won’t disappoint investors and after Saudi Arabia’s benchmark index rose to a 17-month high. Dubai Financial Market PJSC surged 6.3 percent as Al Khaleej reported shares listed on Nasdaq Dubai may trade on the exchange in a few weeks. Emaar Properties PJSC , the United Arab Emirates’ biggest developer, rose for a second day. Emirates NBD PJSC, the country’s largest bank by assets, gained the most in more than a month. The Dubai Financial Market General Index increased 2.8 percent to 1,774.43, the highest level since Jan. 11. The ADX General Index advanced 0.9 percent. Dubai’s benchmark index has gained 11 percent this month as investors expect satisfactory repayment terms for state-owned holding company Dubai World’s $26 billion of debt. The company will announce a “fair” proposal “very soon ,” Sheikh Ahmed Bin Saeed Al Maktoum , chairman of the Dubai Supreme Fiscal Committee, said in an interview last week. “It appears markets are anticipating a positive surprise,” said Sameh Hassan , director of research at Rasmala Investment Bank Ltd. The emirate isn’t likely to need more central bank aid, U.A.E. Central Bank Governor Sultan bin Nasser al-Suwaidi has said. Dubai World, one of the emirate’s three main state-owned business groups, said Nov. 25 it would seek to delay repaying debt until at least May 30. Saudi Stocks Saudi stocks, the only market in the Persian Gulf to trade on Saturdays, yesterday soared to the highest level since October 2008 as crude remained above $80 a barrel and investors bet on gains as companies report first-quarter earnings next month. The kingdom is the Arab region’s biggest economy and holder of 21 percent of the world’s proven oil reserves, according to data compiled by Bloomberg. The Tadawul All Share Index gained 0.3 percent today at 1:20 p.m. in Riyadh. “When the Saudi Arabian market goes up, investors see that as a bellwether for our market as well,” said Ian Munro , head of research at MAC Capital Advisors in Dubai. Dubai Financial Market climbed to 1.85 dirhams. Emaar gained 4.9 percent to 3.85 dirhams. Emirates NBD rose 4.6 percent to 2.75 dirhams, the highest close since Jan. 13. Zain Gains Oman’s MSM30 Index climbed 0.7 percent. Bahrain’s gauge gained 0.4 percent, while Qatar’s measure lost less than 0.1 percent. Kuwait Stock Exchange Index retreated 0.2 percent. Zain climbed 1.5 percent to 1,380 fils, the highest intraday level since March 16, on speculation Bharti Airtel Ltd. will make a formal bid for the African assets of Kuwait’s biggest phone company this week. Bharti, the Indian phone company planning a $9 billion purchase of Zain’s African wireless assets, intends to make a formal offer this week after Bharti’s board yesterday approved the bid, according to two people with knowledge of the negotiations. For Related News and Information: Middle East stock market news: NI ARABWRAP Top stock market news: TOP STK On Gulf stock movers: TNI GULF MOV Global market map: MMAP Stories on Gulf stocks: TNI GULF STK World equity index monitor: WEI Today’s top regional news: TOP MIDEAST Most-read stock market stories: MNI STK

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Stocks, Commodities Gain as S&P Affirms Greek Rating, Fed Seen Staying Put

March 16, 2010

By Rita Nazareth and David Merritt March 16 (Bloomberg) — Stocks and commodities rose after Standard & Poor’s affirmed Greece’s credit rating and amid speculation the Federal Reserve will signal plans to keep interest rates at a record low for much of the year. The dollar weakened and 10-year Treasury yields fell to a one-week low. The S&P 500 increased 0.4 percent to 1,155.15 at 1:30 p.m. in New York, maintaining its highest level in 17 months. The Stoxx Europe 600 Index gained 0.9 percent. Gold jumped the most in a month and copper and oil climbed for the first time in three days. The Dollar Index lost 0.5 percent as the U.S. currency weakened against 13 of 16 major counterparts. The 10- year note yield decreased to 3.68 percent. The U.S. central bank’s Federal Open Market Committee meets today amid forecasts that inflation will remain subdued and as White House officials predict the jobless rate will remain elevated for an extended period. Senate Banking Committee Chairman Christopher Dodd diluted a proposed overhaul of bank rules yesterday, while European finance ministers worked out a strategy for possible emergency loans to Greece. “Inflation remains very mild; that suggests the Fed can stay on hold for longer,” said Jeffrey Kleintop , who helps oversee about $279 billion as chief market strategist at LPL Financial in Boston. “Still, the stock market is holding its breath a little bit ahead of the FOMC statement, especially when it relates to the purchases of mortgage-backed securities, which are expected to end at the end of this month.” 17-Month High Fed Chairman Ben S. Bernanke may keep the target rate for overnight loans between banks in a range of zero to 0.25 percent, according to Bloomberg News surveys. The Federal Open Market Committee will release its statement at about 2:15 p.m. New York time. U.S. equities gained as a report showed prices of goods imported into the U.S. declined more than anticipated, pointing to few signs of inflation pressure from abroad. The import price index fell 0.3 percent, the first decline in seven months, Labor Department figures showed. Economists forecast a 0.2 percent drop, according to the median estimate in a Bloomberg survey. Intel Corp. rallied 3.2 percent after saying it shipped more than 100,000 of its new chips, while General Electric Co. gained 2.7 percent after saying it may resume dividend increases in 2011. Global Advance The MSCI World Index of 23 developed nations’ stocks advanced 0.8 percent. Barclays Plc, Britain’s second-largest bank, and BNP Paribas SA, France’s biggest, rose more than 2 percent after Morgan Stanley raised its price estimates. BHP Billiton Plc, the world’s biggest mining company, helped lead gains by basic-resources shares, rising 0.6 percent in London. The Dubai Financial Market General Index climbed 2.1 percent. United Arab Emirates Central Bank Governor Sultan bin Nasser al-Suwaidi said in an interview that Dubai isn’t likely to need more central bank aid, while a Dubai World restructuring plan will be discussed “very soon.” The MSCI Emerging Markets Index rose 0.7 percent after tumbling the most in more than two weeks yesterday. The euro appreciated 0.5 percent to $1.3742 and climbed 0.5 percent versus the yen after Germany’s ZEW Center for European Economic Research said investor confidence declined less than analysts had estimated. Gold, Copper Gold futures for April delivery rose 1.8 percent to $1,124.90 an ounce in New York. A close at that price would be the biggest gain for a most-active contract since Feb. 16. Copper for delivery in three months rose 1.5 percent to $7,416 a metric ton on the London Metal Exchange, while zinc added 1.3 percent to $2,309 a ton. Crude oil for April delivery rose 2.3 percent to $81.65 a barrel in New York as Saudi Arabia’s oil minister said the Organization of Petroleum Exporting Countries will probably maintain output at a meeting tomorrow in Vienna. The Reuters/Jefferies CRB Index of 19 commodities climbed 1 percent to snap a six-day losing streak, its longest in 13 months. To contact the reporters on this story: Rita Nazareth in New York at ritanazareth@bloomberg.net ; David Merritt in London on dmerritt1@bloomberg.net .

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Stocks, Metals Advance as Greece Default Concerns Ease; Swiss Franc Gains

March 16, 2010

By David Merritt March 16 (Bloomberg) — Stocks rose, led by mining companies, as metals rallied and plans for an emergency European loan package eased concern that Greece might default. The Swiss franc strengthened for a third day against the euro. The Stoxx Europe 600 Index of equities gained 0.8 percent at 9:58 a.m. in London while futures on the Standard & Poor’s 500 Index increased 0.2 percent. Copper climbed for the first time in three days. The Swiss franc advanced to its strongest level since October 2008 against the euro. Greek bonds gained and the cost of insuring against default declined. European finance ministers worked out a strategy for emergency loans to Greece should the nation’s plan to raise taxes and lower wages fail to reduce the region’s biggest budget deficit. In Washington, Senate Banking Committee Chairman Christopher Dodd diluted proposed bank rules, while the Federal Reserve meets amid predictions inflation will remain subdued. “The idea is to give the market confidence that the EU would be the lender of last resort to Greece,” said Gary Jenkins , head of credit strategy at Evolution Securities Ltd. in London. “We shall see over the next couple of months whether this game of poker plays out positively for Greece when they next approach the market for funds.” The MSCI World Index of 23 developed nations’ stocks advanced 0.4 percent. Rio Tinto Group led gains by basic- resources shares, rising 1.3 percent in London. Barclays Plc, Britain’s second-largest bank, and BNP Paribas SA, France’s biggest, rose more than 1 percent after Morgan Stanley raised its price estimates. Asian Gains The MSCI Asia Pacific Index advanced 0.2 percent. Sony Financial Holdings Inc. surged 14 percent in Tokyo after saying it will hold more bonds to reduce risk. Sun Hung Kai Properties Ltd. fell 1.6 percent in Hong Kong after the city’s government took steps to cool real-estate prices. U.S. futures rose after the S&P 500 yesterday closed at the highest level since October 2008. Financial shares reversed declines in the final hour of trading after Dodd outlined his proposals to overhaul banking rules. The plans for the biggest Wall Street changes since the 1930s drop provisions he sought in November and dilute others as he seeks bipartisan support. Fed Chairman Ben S. Bernanke may keep the target rate for overnight loans between banks in a range of zero to 0.25 percent, according to Bloomberg News surveys. The Federal Open Market Committee will release its statement at about 2:15 p.m. New York time. Greek Aid Greek bonds rose, with the yield on the 10-year security falling as much as 17 basis points to 6.16 percent, after officials from the 16 euro nations came up with a strategy for providing emergency loans to Greece. The government of Prime Minister George Papandreou is struggling to narrow a deficit that reached 12.7 percent of gross domestic product last year. The Dubai Financial Market General Index climbed 2.2 percent, the steepest advance among benchmark equity indexes worldwide. United Arab Emirates Central Bank Governor Sultan bin Nasser al-Suwaidi said in an interview that Dubai isn’t likely to need more central bank aid, while a Dubai World restructuring plan will be discussed “very soon.” The MSCI Emerging Markets Index rose 0.3 percent after tumbling the most in more than two weeks yesterday. The Swiss franc rose 0.1 percent versus the euro, trading at its strongest since the month following the collapse of Lehman Brothers Holdings Inc., on speculation the central bank’s resistance to the currency’s advance is waning. The SNB started selling francs a year ago to contain declines in consumer prices and safeguard exports, intervening at about 1.4578 per euro, according to UniCredit SpA. Euro Strengthens The euro appreciated against the dollar and the yen after Germany’s ZEW Center for European Economic Research said investor confidence declined less than analysts had estimated. Copper for delivery in three months rose 0.9 percent to $7,373.25 a metric ton on the London Metal Exchange, while zinc added 0.9 percent to $2,300 a ton. Crude oil for April delivery fell 0.3 percent to $79.57 a barrel in New York after Saudi Arabia’s oil minister said the Organization of Petroleum Exporting Countries will probably maintain output at a meeting tomorrow in Vienna. U.S. builders probably broke ground in February on the fewest homes since October, partly because of record snowfall in parts of the country, economists said before a government report due at 8:30 a.m. in Washington. Housing starts fell 3.6 percent to an annual rate of 570,000 last month, according to the median forecast of 71 economists in a Bloomberg News survey. A separate report may show the cost of imported goods dropped 0.2 percent, signaling price pressures will be contained. To contact the reporter on this story: David Merritt in London on dmerritt1@bloomberg.net .

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OPEC Expands Oil Rigs Most in Three Years as Quota Promises Prove Illusory

March 15, 2010

By Grant Smith and Alexander Kwiatkowski March 15 (Bloomberg) — OPEC is increasing oil drilling at the fastest rate in 2 1/2 years even as production exceeds its quotas by the equivalent of a supertanker of crude a day and delegates prepare to pledge no increase in output. The 12-nation group boosted its number of oil and gas rigs 8.4 percent in January and February, the biggest two-month gain since June 2007, data from Baker Hughes Inc. show. OPEC members excluding Iraq pumped 26.8 million barrels a day last month, 1.9 million more than targeted, data compiled by Bloomberg show. Shipments will rise again this month, according to tanker- tracker Oil Movements. While oil prices recovered from a four-year low at the end of 2008 as OPEC announced a record supply cut, excess production means the doubling in oil prices since then may have run its course, according to the Centre for Global Energy Studies and Commerzbank AG. The premium charged for crude deliveries in 2015 has plunged 51 percent in three months, indicating investors are less concerned of future shortages. “OPEC will have to show its mettle,” said Leo Drollas , deputy director of the CGES in London, which was founded by former Saudi oil minister Sheikh Zaki Yamani . The consultant predicts Brent crude will fall 25 percent to $60 in the fourth quarter of this year. “If they can’t hold discipline, we’re looking at prices going to $50 by 2015.” Vienna Meeting Oil surged last year as the Organization of Petroleum Exporting Countries curtailed as much as 3.7 million barrels a day of output and the global economy emerged from its worst slump since World War II. Forty-two of 44 analysts surveyed by Bloomberg predict the organization will maintain its official 24.845 million barrel-a-day quota when ministers meet in Vienna on March 17. In a March 10 report the group estimated that its current production is 1.5 million barrels a day more than the demand for its crude in the second quarter, after analyzing non-member production and global consumption. Crude has risen 2 percent in the past two weeks, including a 1.1 percent retreat on March 12 on the New York Mercantile Exchange. OPEC plans to add 12 million barrels to its daily production capacity by 2015, equal to what Saudi Arabia can pump today. The gains would exceed the expected growth in demand, according to the International Energy Agency. Exploration Rigs OPEC has taken on an extra 22 rigs this year, raising its total to 283, as increases in Africa compensate for a reduction in Saudi Arabia and Venezuela, the Baker Hughes data show. Producers outside of the organization have added the same number to total 785 rigs, a gain of 2.9 percent. The Baker Hughes rig count is a barometer of current drilling and an indicator of future oil and gas supplies. The Houston-based company, the world’s third-biggest oilfield- services supplier, says its figures represent the number of rigs exploring and developing new fields, not ones for maintenance or “workover” activities. “Despite OPEC’s production capacity goals being very aggressive, I think a large part of it will be sustainable,” said Eugen Weinberg , an analyst at Commerzbank AG in Frankfurt. “The chances for spare capacity increasing are larger than it narrowing. This potentially puts a ceiling on oil prices. Even if demand increases strongly, price increases should be dampened.” Saudi Heavy Oil Members are reviving some of the 35 projects delayed by the recession, OPEC Secretary-General Abdalla El-Badri said in December. Saudi Aramco’s Manifa heavy oilfield is “back on track” for completion in 2015, after being halted, according to the Paris-based IEA. Nigeria increased its oil-rigs the most among OPEC states in February, boosting the count to 12 from 7. The country may lobby OPEC for a higher output ceiling to compensate for production lost over four years to rebel attacks, Austen Oniwon, a group executive director at state-run Nigeria National Petroleum Corp., said in a March 9 interview in Cape Town. The biggest prospect for additional OPEC oil lies with Iraq. The war-torn country signed deals last year with BP Plc, Royal Dutch Shell Plc and Exxon Mobil Corp. to help boost production to eventually rival that of Saudi Arabia, OPEC’s largest exporter. Goldman Sachs, Bank of America Merrill Lynch and Societe Generale SA expect the oil demand recovery in emerging economies after the recession will require new crude supply. Goldman Sachs sees crude reaching $96.50 a barrel within 12 months, while Societe Generale forecasts an average of $104 in 2012 and Merrill says prices may rise as high as $150 in 2014. Wall Street Forecasts “If the OPEC rig count is increasing, and OPEC has plans to grow capacity down the road, that doesn’t strike me as bearish,” said Mike Wittner , head of oil market research at Societe Generale in London. “In fact it’s part of the bullish story, because non-OPEC supply has already hit a plateau so only OPEC can meet long-term global demand growth.” Oil’s advance has failed to meet the most optimistic Wall Street analyst forecasts. Goldman Sachs predicted that crude would reach $85 a barrel before the end of 2009. The price of options contracts allowing investors to buy $100 crude for December delivery has fallen 60 percent since October. The OPEC rig count last jumped in mid-2007, rising more than 10 percent through May and June as oil prices rallied toward $75 a barrel on accelerating demand from China and India. The rig count advanced with crude until October 2008, when a 10- month slump started as the banking crisis rattled the global economy. Forward Curve Flattens Increased drilling will have a greater impact on prices in the years ahead than on the rest of 2010, IEA Executive Director Nobuo Tanaka said in a March 10 interview in Houston. The forward curve graph of future prices is flattening as traders anticipate greater availability of oil. The premium for crude to be delivered in 2015 compared with this year was $6.08 a barrel on March 12, down from $12.42 three months earlier. “The world is still over-supplied,” Edward Morse , head of commodities research at Credit Suisse Group AG, said in a March 9 interview in Houston. “On the supply side Iraq overwhelms everything else.” Iraq’s oil exports reached the highest level in more than a year last month, jumping 7.4 percent to 2.07 million barrels per day, according to the country’s Oil Ministry. Estimates collated by OPEC show the group’s adherence to its 4.2 million barrel-a-day supply cut, the biggest in its 50- year history, has withered to 53 percent as the recovery in oil prices above $80 a barrel spurs members to exceed their allocations. Shipments Rising Production from the 11 OPEC members bound by quotas rose to 26.811 million barrels a day in February, the organization said in a March 10 report . Shipments will increase 0.9 percent by the end of the month, according to Oil Movements based in Halifax, England. Saudi Arabia sits on 4 million barrels a day of idle capacity that can be started when demand climbs. Iran, Angola and Nigeria are all pumping more than promised. Among OPEC’s 12 members, only Iraq is exempt from limits. “Iraq doesn’t have a formal quota and Nigeria is acting like it doesn’t,” said David Kirsch , director of oil markets at PFC Energy, a consulting company in Washington. “The potential of Iraq to substantially increase its production over the next few years has really changed the supply dynamic.” While the economy is recovering, OPEC Secretary-General el- Badri said Feb. 2 that ministers are unlikely to lift their quota. Libya is proceeding with plans to bolster production capacity, Shokri Ghanem , the chairman of Libya’s National Oil Corp., said in a March 9 statement on the company’s Web site. Even so, at the March 17 OPEC conference, “no new decision is expected.” To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

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Al-Maliki’s Party Says It Wins Most Seats in Iraqi Parliament, Seeks Talks

March 14, 2010

By Kadhim Ajrash March 14 (Bloomberg) — Iraqi Prime Minister Nouri al- Maliki’s political bloc, predicting it won most seats in March 7 parliamentary elections, named a commission to hold talks with rival parties on forming a government, an official said today. Al-Maliki’s State of Law group is leading in five of 11 Iraqi provinces, including Baghdad, the Independent High Electoral Commission reported this weekend. Results are partial as no more than 30 per cent of ballots have been reported. Seven remaining provinces have yet to release any results. Al-Maliki’s bloc will win about one-third, “or more than 100,” seats out of the 325 at stake, Abbas al-Bayati, a State of Law candidate, said in a telephone interview in Baghdad. “We have formed a small committee to go into talks and we will make sure that we won’t close doors to anyone that wants to negotiate with us.” Osama al-Najafi, a member of former Prime Minister Ayad Allawi ’s Iraqiya alliance, said his group will win 80-90 seats. “We have started communicating with other parties,” he said by phone. “The doors of dialogue are open.” The statements track with analysts’ opinion that no party or bloc will win a majority when final votes are tallied. Contestants are generally winning in areas of core sectarian support, according to the first tallies. ‘Bargaining’ “The vote won’t produce a decisive winner and there will have to be bargaining for a ruling coalition,” Marina Ottaway , an analyst at Washington’s Carnegie Endowment for International Peace, said in a telephone interview. Such uncertainty challenges President Barack Obama’s plan to reduce U.S. troop strength in Iraq from 96,000 to 50,000 by August. Violence may increase if Shiites, Sunnis and Kurds aren’t all included in a governing coalition, said Ahmed Ali, an analyst at the Washington Institute for Near East Policy . Iraq pumped about 2.4 million barrels of crude oil a day last month, according to Bloomberg estimates. Its 115 billion- barrel reserves are behind only Saudi Arabia and Iran. The U.S., which led a 2003 invasion to topple Iraqi leader Saddam Hussein , is scheduled to pull out all its troops by the end of 2011. State of Law, dominated by al-Maliki’s Shiite Dawa Party, is winning in southern provinces populated mainly by Shiite Muslims. A rival Shiite-led group, the Iraqi National Alliance, is leading in two southern provinces. Iraqiya, whose candidates ran on a non-sectarian platform, is ahead in three Sunni Muslim provinces. The Kurdistan Alliance leads in a Kurdish province. Coalition negotiations could last months, analysts predicted. To contact the reporter on this story: Kadhim Ajrash in Baghdadt .

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Dubai Shares Gain Most in 3 Months on Debt Deal Expectations; Shuaa Jumps

March 14, 2010

By Dana El Baltaji March 14 (Bloomberg) — Dubai’s benchmark stock index rose the most in three months, leading gains in the Persian Gulf, as investor confidence rose on the possibility the government may back state-owned Dubai World. Shuaa Capital PSC, the biggest investment bank in the United Arab Emirates, soared 11.5 percent, the most in three months. Dubai Financial Market PJSC , the only Gulf Arab stock market to sell shares to the public, increased 9.6 percent. Dubai Investment PJSC , the owner of stakes in more than 40 companies, gained 3.1 percent. The Dubai Financial Market General Index advanced 3.7 percent, the most since Dec. 14, to 1,746.6. “One of the messages investors wanted to hear and got last week was that there’s a possibility of a government guarantee,” said Tarek Zohny , a Dubai-based trader at EFG-Hermes Holding SAE. Investors saw it as a sign that Dubai’s troubles may be over, he said. The government is “always behind” Dubai World, Sheikh Ahmed Bin Saeed al-Maktoum, chairman of Dubai Supreme Fiscal Committee and the Chief Executive of Emirates Airline and Group, said in New Delhi on March 12. The government is separating “the bad business from the good business,” he said. Dubai World, which is restructuring $26 billion in debt, will ask banks for permission to delay loan repayments when it presents a plan this month, said three bankers familiar with the negotiations on March 8. The company will present a restructuring proposal to its creditors after its advisers finish valuing company assets, a person close to the Dubai government said Feb. 17. Shuaa Capital Advances Shuaa Capital advanced to 1.36 dirhams. The bank was raised to “neutral” from “underweight” at HSBC Holdings Plc with a price estimate of 1.40 dirhams on March 10. Dubai Financial Market increased the most in three months to 1.82 dirhams. HSBC raised its rating to “neutral” from “underweight” with a price estimate of 1.60 dirhams on March 10. Dubai Investments rose to 1 dirham, the highest since January 11. Abu Dhabi’s ADX General Index gained 1.2 percent, and Qatar’s benchmark stock index rose 0.9 percent. The Kuwait Stock Exchange Index increased 0.4 percent. Bahrain’s gauge dropped 0.3 percent and Oman’s MSM30 Index dropped 0.1 percent. Saudi Arabia’s Tadawul All Share Index advanced 0.2 percent at 1:30 p.m. in Riyadh. To contact the reporter responsible for this story: Dana El Baltaji in Dubai delbaltaji@bloomberg.net .

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Iraqi Leaders Maneuver Amid Signs No Party Will Win Majority in Election

March 10, 2010

By Caroline Alexander and Daniel Williams March 10 (Bloomberg) — Iraq faces tough political coalition-building as leaders maneuvered amid indications that no party would win a majority when initial results from the parliamentary election are announced. Iraq’s Independent High Electoral Commission expects to release preliminary results today, spokesman Qassem al-Aboudi said. The commission had promised to announce the provisional vote count yesterday and then said it hadn’t yet tallied enough ballots. Final results may not be certified until the end of the month. Jockeying over positions in the new administration is already underway. Vice President Tariq al-Hashemi told a televised news conference in Baghdad that the next president of the country must be an Arab because “this country is Arab and an Arab should be on top.” The current president, Kurdish politician Jalal Talabani , has already declared his intention to stay on in the job. The president is elected by parliament. The main competitors in the election are Prime Minister Nouri al-Maliki’s State of Law alliance and the Iraqiya party of a former premier, Ayad Allawi . Coalition-building is essential to the U.S. plan to withdraw troops as Iraq establishes a stable government. American officials insist the pullout will go ahead. “I think they all realize that no one will have an outright majority,” General Ray Odierno , the top U.S. commander in Iraq, said on CNN. “So, they know that they are going to have to form a coalition government.” He said he’s “confident” U.S. troops will withdraw on schedule. ‘Neck and Neck’ Al-Maliki’s and Allawi’s lists of candidates may each get less than a third of the 325 seats at stake, according to reports from Iraqi media. Turnout in the March 7 vote was 62.4 percent, the commission said. Allawi’s list is “neck and neck” with al-Maliki’s bloc, Allawi’s official spokeswoman, Maysoon al-Damluji, said yesterday in a phone interview from Baghdad. “We are doing pretty well.” Al-Damluji said that Allawi’s group had success with voters in Baghdad and the western provinces. She declined to provide details until results are released. Al-Damluji is a lawmaker in the current parliament and a member of Allawi’s alliance. Initial signs are that the vote will be divided along sectarian and ethnic lines. Al-Maliki’s alliance is leading in nine predominately Shiite Muslim provinces in the south, Sumaria Television reported. Abbas al-Bayati, an official from al- Maliki’s coalition, told the Associated Press the group also did well in the mixed city of Baghdad. Sunni Votes Allawi’s Iraqiya, which campaigned for a non-sectarian Iraq, was winning in four mainly Sunni Muslim provinces in the center and north of the country, Sumaria and the Iraq News Agency reported. Vice-President Al-Hashemi, a Sunni, is a key figure in the Iraqiya party. An alliance of the two main Kurdish parties, Talabani’s Patriotic Union of Kurdistan and Massoud Barzani ’s Kurdistan Democratic Party, was sweeping the Kurds’ autonomous zone in the northeast, with other Kurdish, Shiite and Sunni parties running behind, Sumaria and the INA said. The ruling coalition that emerges from the election must resolve disputes over sharing oil revenue among regions and whether to include the oil-rich city of Kirkuk in the Kurdish autonomous region in the north, as well as cope with violence between Shiites and Sunnis. The parties must agree to share out government posts including the influential Oil Ministry. Oil Revenue Iraq’s 115 billion-barrel oil reserves place it third in the world behind Saudi Arabia and Iran. The country pumped about 2.4 million barrels a day last month, according to Bloomberg estimates. Once official results are announced, Talabani will have 15 days to convene a new parliament. The first session elects a speaker and two deputy speakers. Next, a new president is elected, requiring a two-thirds majority. The new president has 15 days to task the leader of the largest bloc with forming a government. Parties will probably spend months haggling over the makeup of a coalition government, said Wael Abdel Latif of the National Iraqi Alliance, a major Shiite Muslim bloc. “The formation of the government may face big problems if the results are close and there is no clear winner,” Latif said in an interview in Baghdad. Preliminary results showed “a very close race,” he said. It could take more than six months to form a government, the Washington Institute for Near East Policy said in a March 3 report. Risk of Violence Violence may escalate if the majority Shiites and the minority Sunni Muslims and Kurds aren’t all included in a coalition, said Ahmed Ali, an analyst at the Washington Institute for Near East Policy . That would thwart U.S. ambitions to leave a stable Iraq as it withdraws its troops. U.S. troop strength is due to shrink from 96,000 to 50,000 by Sept. 1, and the remaining forces will leave Iraq by the end of 2011, under a schedule set last year by President Barack Obama . The parliamentary vote was the second since Saddam Hussein’s overthrow by U.S. forces in 2003. More than 6,200 candidates competed for seats in the legislature, the Council of Representatives. To contact the reporters on this story: Caroline Alexander in London at calexander1@bloomberg.net ; Daniel Williams in Cairo at dwilliams41@bloomberg.net .

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Iraqi Coalition, Kurd or Arab Presidency Debated as Election Tally Looms

March 9, 2010

By Caroline Alexander and Daniel Williams March 9 (Bloomberg) — Political maneuvering was under way in Iraq before initial results from the parliamentary election are announced, with early indications that no party would win a majority and tough coalition bargaining lies ahead. Vice President Tariq al-Hashemi told a televised news conference in Baghdad that the next president of the country must be an Arab. “This country is Arab and an Arab should be on top,” he said. The current president is Kurdish politician Jalal Talabani , who has already declared his intention to stay on in the job. The president is elected by parliament. The main competitors are Prime Minister Nouri al-Maliki’s State of Law alliance and the Iraqiya party of a former premier, Ayad Allawi . Coalition-building is essential to a U.S. plan to withdraw its troops as Iraq establishes a stable government. American officials insist the pullout will go ahead. Iraq’s Independent High Electoral Commission said it will announce preliminary results later today as districts that have tallied at least 30 percent of their votes report to Baghdad. Final results may not be certified until the end of the month. Turnout was 62.4 percent, the panel said. Al-Maliki’s and Allawi’s lists of candidates may each get less than a third of the 325 seats at stake, according to reports from Iraqi media. Allawi’s list is “neck and neck” with al-Maliki’s bloc, Allawi’s official spokeswoman, Maysoon al-Damluji, said today in a phone interview from Baghdad. “We are doing pretty well.” Al-Damluji said that Allawi’s group had success with voters in Baghdad and the western provinces. She declined to provide details until results are released. Al-Damluji is a lawmaker in the current parliament and a member of Allawi’s alliance. Sectarian, Ethnic Initial signs are that the election is breaking along sectarian and ethnic bounds. Al-Maliki’s alliance is leading in nine predominately Shiite Muslim provinces in the south, Sumaria Television reported. Abbas al-Bayati, an official from al- Maliki’s coalition, told the Associated Press the group also did well in the mixed city of Baghdad. Allawi’s Iraqiya, which campaigned for a non-sectarian Iraq, was winning in four mainly Sunni Muslim provinces in the center and north, Sumaria and the Iraq News Agency reported. Al- Hashemi is a Sunni from the Iraqiya party. Kurdish parties were sweeping the Kurds’ autonomous zone in the far northeast. Other Kurdish, Shiite and Sunni parties were running behind, the Iraqi broadcaster and news agency said. Oil Revenue Top government jobs, including the head of the influential Oil Ministry, will be at stake. The ruling coalition that emerges from the election will have to resolve disputes over sharing oil revenue among regions and whether to include the oil-rich city of Kirkuk in the Kurdish autonomous region in the north, as well as cope with violence between Shiites and Sunnis. Iraq’s 115 billion-barrel oil reserves place it third behind Saudi Arabia and Iran. The country pumped about 2.4 million barrels a day last month, according to Bloomberg estimates. Once official results are announced, Talabani will have 15 days to convene a new parliament. The first session elects a speaker and two deputy speakers. Next, a new president is elected with a two-thirds majority. The new president has 15 days to task the leader of the largest bloc with forming a government. U.S. Troops Violence may escalate if the majority Shiites and the minority Sunni Muslims and Kurds aren’t all included in a coalition, said Ahmed Ali, an analyst at the Washington Institute for Near East Policy . That would thwart U.S. ambitions to leave a stable Iraq as it withdraws its troops. U.S. troop strength will shrink from 96,000 to 50,000 by Sept. 1. All U.S. forces gone from Iraq by the end of 2011, under a schedule set last year by President Barack Obama . Parties will probably spend months haggling over the makeup of a coalition government, said Wael Abdel Latif of the National Iraqi Alliance, a major Shiite Muslim bloc. “The formation of the government may face big problems if the results are close and there is no clear winner,” Latif said in an interview yesterday in Baghdad. Preliminary results showed “a very close race,” he said. It could take more than six months to form a government, the Washington Institute for Near East Policy said in a March 3 report. The parliamentary vote was the second since Saddam Hussein’s overthrow by U.S. forces in 2003. More than 6,200 candidates competed for seats in the legislature, the Council of Representatives. To contact the reporters on this story: Caroline Alexander in London at calexander1@bloomberg.net ; Daniel Williams in Cairo at dwilliams41@bloomberg.net .

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Iraqis Face Months of Coalition Wrangling as Bombings Fail to Deter Voters

March 8, 2010

By Caroline Alexander and Daniel Williams March 8 (Bloomberg) — Vote-counting is under way in Iraq, where citizens defied bombs and mortar shells to get to the polls in yesterday’s national parliamentary election. They probably will face months of haggling by fractious leaders over the formation of a coalition government. Initial figures on turnout in the election, which was contested by 86 political blocs, are expected today. Sixty percent of voters may have taken part, and there were no complaints of major irregularities, said Amal Bairaqdar, a member of the Independent High Electoral Commission, in an interview. The 2005 turnout was more than 76 percent, the panel said. A final vote count may take until the end of the month. At least 36 people were killed yesterday in attacks, most in Baghdad, according to the Associated Press. Iraqi affiliates of al-Qaeda, the global terrorist network, had vowed to attack voters on their way to the polls. Violence may escalate if the vote doesn’t produce a coalition that includes the country’s main ethnic and religious groups, the majority Shiite Muslims and the minority Sunni Muslims and the Kurds. That would thwart U.S. ambitions to leave a stable Iraq as it withdraws its troops. Preliminary election results may be released in two or three days, Faraj al-Haidari, head of the electoral commission, said today in a televised interview from Baghdad. Oil Revenue The ruling coalition that emerges will have to resolve disputes over the sharing of oil revenue among regions, the borders of the Kurdish autonomous region in the north and whether it encompasses oil-rich city of Kirkuk, and the volatile relations between Shiites and Sunnis. Iraq’s 115 billion-barrel oil reserves place it third behind Saudi Arabia and Iran. The country pumped 2.3 million barrels a day last month, according to Bloomberg estimates. The violence in Iraq is “episodic, lethal, but ultimately incapable of derailing the political process,” said Reidar Visser , an Iraq analyst at the Olso-based Norwegian Institute for International Affairs . “The more fundamental question relates to the quality of the political process” and Iraq’s transformation to democracy which “remains highly tentative.” In Baghdad, voters had to endure grenade, mortar and bomb attacks. At least 19 people were killed when explosions struck two buildings in the northeastern part of the capital, AP said. The cities of Fallujah, Baquba and Samarra were also struck by mortars or bombs, many of them near polling stations, Agence France-Presse reported. Voters Undeterred “Despite the bombs that I heard on my way and the fact that I was stopped and searched three times, I insisted on voting,” Ali Salim, a 32-year-old teacher in Baghdad and a Shiite Muslim, said at a voting station. “I even put on my best suit and tie.” President Barack Obama called the election “an important milestone” and congratulated the Iraqis yesterday for not succumbing to intimidation. “I have great respect for the millions of Iraqis who refused to be deterred by acts of violence, and who exercised their right to vote,” he said in a statement issued by the White House. “There is no better rebuke to the violent extremists who seek to derail Iraq’s progress,” U.S. Secretary of State Hillary Clinton said in a statement. “We salute the determination of the Iraqi people to reaffirm their commitment to democracy and to chart their own future free of fear and intimidation.” Security Forces Defense Secretary Robert Gates said the top U.S. commander in Iraq, General Ray Odierno , had reported that “the Iraq Security Forces have performed superbly, and the turnout is as high, if not higher, than earlier expectations. So all in all a good day for the Iraqis and for all of us,” Gates told reporters traveling on his military plane. Prime Minister Nouri al-Maliki predicted last week that no one party would win a majority. A Shiite Muslim alliance that brought him to power in 2005 has disintegrated and his State of Law coalition was in a contest for Shiite votes with former Shiite allies now in the National Iraqi Alliance. Al-Maliki’s alliance was leading in nine of the country’s 18 provinces, AFP reported, citing unofficial estimates by local electoral officials. It said the key results for the Baghdad region weren’t yet available. Iraq’s Kurds, who backed al-Maliki after the last election, have since feuded with him over sharing oil revenue and control of Kirkuk. The main Kurdish parties, the Kurdistan Democratic Party and Patriotic Union of Kurdistan, formed an alliance that was challenged by a new party called Change. Sunni Muslims Sunni Muslims, who boycotted the 2005 election, were wooed by an array of Islamic parties, while former Prime Minister Ayad Allawi is leading the Iraqiya party, which advocates non- sectarian politics. “The fun and games will start after the votes are counted, and the parties have to form a coalition,” Qubad Talabani, the representative of Iraq’s Kurdish autonomous zone in Washington, said in a telephone interview before the election. “It will take time.” The vote was the second since Saddam Hussein ’s overthrow by U.S. forces in 2003. More than 6,200 candidates were competing for seats in the 325-member legislature. In the coming days, the focus will be on the vote count. “The great number of Iraqis who risked their safety to take part in these elections are watching,” Allawi said after the polls closed. Six Months Results may not be formally certified until the end of March. It could then take up to six months, or longer, before a government emerges, according to a March 3 report by the Washington Institute for Near East Policy . “The inevitable delays before the next Iraqi government forms will cause understandable anxiety within the Obama administration as it contemplates the appropriate speed for U.S. withdrawal,” the institute said. The U.S. is pulling its troops out of Iraq and has handed most security duties to Iraqi forces. Under a schedule set last year by Obama, U.S. troop strength will shrink from 96,000 to 50,000 by Sept. 1. All American forces are due to be withdrawn by the end of 2011. Over the past few months, violence has been periodic in Iraq, with deadly, sometimes multiple attacks separated by days of relative calm. American officials insist the pullout will go ahead and Iraqi officials say they are taking over. The withdrawal is “strongly on track,” White House Press Secretary Robert Gibbs told reporters in Washington on March 4. To contact the reporters on this story: Daniel Williams in Cairo at dwilliams41@bloomberg.net ; Caroline Alexander in London at calexander1@bloomberg.net .

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China Reiterates Call for Resolving Iran Nuclear Issue Through Dialogue

March 7, 2010

By Bloomberg News March 7 (Bloomberg) — China’s Foreign Minister said new sanctions aren’t the solution for halting Iran’s development of nuclear weapons, two days after one of his diplomats said China may vote for such measures at the United Nations. “We believe that diplomatic efforts have not been exhausted,” Yang Jiechi said during a televised press conference today at the National People’s Congress meetings in Beijing. “Pressure and sanctions are not the fundamental way to resolve the Iran nuclear problem.” Yang’s comments come after the U.S. gave China, Britain, France, Russia and Germany a proposal in the past week to tighten restrictions on dealings with Iran’s banking, shipping and insurance industries. The plan also targets the Iranian Revolutionary Guard Corps that U.S. Secretary of State Hillary Clinton said has largely taken control of the nation. China may vote in the coming weeks for tougher UN sanctions aimed at blocking Iran’s development of nuclear weapons, a Chinese diplomat said on March 5. China’s differences with the U.S. and its European allies aren’t as great as have been reported, according to the diplomat, who spoke on condition of anonymity. China isn’t refusing to back sanctions, and its difficulties with the latest U.S.- drafted proposal can be overcome, the envoy said. Veto Power Winning China’s approval for sanctions is important because the country wields veto power over UN measures with its permanent seat on the Security Council. China also has recently overtaken the European Union to become Iran’s biggest trading partner, the Financial Times reported. “We want to resolve the Iran nuclear issue through consultation and dialogue,” Yang said. “We have been playing our active part to that end.” Yan Xuetong , director of the Institute of International studies at Tsinghua University in Beijing, said the U.S. and European Union shouldn’t expect cooperation from China on imposing sanctions on Iran because they have maintained an embargo on arms sales to China for more than two decades. “I don’t know why the U.S. and European countries expect China to be willing to support the sanctions when China is suffering from sanctions,” Yan said in a Feb. 25 interview. China’s monthly imports of Iranian crude oil fell to 1.09 million tons in January, the lowest level in three years, China’s customs administration reported. China imported almost three times as much crude from Saudi Arabia, 2.91 million tons, during the same time period. The UN International Atomic Energy Agency’s inspectors reported on Feb. 19 that Iran enriched uranium to 19.8 percent, 0.2 percentage point below the 20 percent threshold needed to start the chain reaction seen in an atomic weapon. — Michael Forsythe . With assistance from Bill Varner in New York. Editor: Eugene Tang . To contact Bloomberg News staff on this story: Michael Forsythe in Beijing at +86-10-6649-7580 or mforsythe@bloomberg.net

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Dubai Shares Rise Most in a Month on Oil, Global Stock Gains; Emaar Climbs

March 7, 2010

By Dana El Baltaji March 7 (Bloomberg) — Dubai shares led gains in Gulf markets as oil rose to the highest level in almost two months and global markets advanced after smaller-than-expected U.S. job losses boosted optimism for a global economic revival. Emaar Properties PJSC , the developer of the world’s tallest skyscraper, advanced the most in a month as its Indian joint venture got approval for a share sale. Dana Gas PJSC , a United Arab Emirates-based explorer and producer, gained the most in two months after making two discoveries. The Dubai Financial Market General Index increased 1.5 percent, the most since Feb. 11, to 1,609.23 at 1:38 p.m. in the emirate. Abu Dhabi’s gauge climbed 0.7 percent and Oman’s MSM30 Index rose 0.5 percent. “There is a strong correlation” between the performance of Gulf stocks and the price of oil, said Ian Munro , head of research at MAC Capital Advisors in Dubai. “Economic growth and corporate earnings in the region are derived from barrels of oil.” The U.A.E. holds 7.8 percent of the world’s proven oil reserves. Five of the six Gulf Cooperation Council states will probably post fiscal surpluses this year, based on an oil price of $72 a barrel, even as they increase spending, Moody’s Investors Service said last month. Crude oil rose 1.6 percent to $81.50 a barrel on March 5 in New York. Emaar MGF Global stocks and the dollar rallied while U.S. Treasuries fell March 5 after the Labor Department reported payrolls dropped 36,000 last month. The total was forecast to fall by 68,000, according to economists surveyed by Bloomberg News. Emaar climbed 3.7 percent, the most since Feb. 11, to 3.10 dirhams. India’s capital market regulator approved a plan by Emaar MGF Land Ltd. to sell shares in an initial public offering. The company’s board will consider an “opportune time” for the sale, it said. Dana Gas increased 4.9 percent, the most since Jan. 5, to 0.85 dirham. The company made two natural gas discoveries in the Nile Delta, Egypt. Bahrain’s measure added 0.2 percent. Saudi Arabia’s Tadawul All Share Index dropped less than 0.1 percent, the Kuwait Stock Exchange Index lost 0.3 percent and Qatar’s bourse was closed for a holiday. To contact the reporter on this story: Dana El Baltaji in Dubai at delbaltaji@bloomberg.net

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Hotel complex in Saudi Arabia praised by ambassador

March 4, 2010

04 Mar 2010 A hotel complex in Saudi Arabia has been singled out for its excellent service by the Jordanian ambassador to the country. HE Quftan Al Majali presented the Coral International Hotel – …

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Hotel complex adds rooms in time for Umrah

March 4, 2010

04 Mar 2010 Movenpick Hotel & Residence Hajar Tower Makkah has added 129 to its hotel complex in Saudi Arabia to accommodate what it believes will be a surge in visitors this year. The hotel has ha…

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Arabs Back Indirect Talks With Israel; U.S. Envoy Mitchell Heads to Region

March 3, 2010

By Alaa Shahine and Jonathan Ferziger March 4 (Bloomberg) — Arab states backed a U.S. proposal for indirect negotiations between Palestinians and Israel, a move that analysts said would let Palestinian leader Mahmoud Abbas sidestep his vow to avoid talks while Israel builds settlements. Arab foreign ministers meeting in Cairo agreed to give the talks four months to succeed and will call an emergency UN Security Council meeting if they fail, Arab League Secretary- General Amre Moussa said in a televised speech yesterday. Israeli Prime Minister Benjamin Netanyahu welcomed the Arab League decision to support the talks, his spokesman Mark Regev said. The U.S. said it “appreciated” the Arab League proposal, and announced that American envoy George Mitchell would fly to the Middle East in the next few days to consult with both sides. Secretary of State Hillary Clinton , commenting during a visit to Brazil yesterday, said she hoped the step would lead to the Palestinian state sought by the U.S. “This is a last-ditch attempt,” Moussa said of the new effort for talks. “I repeat: this is a last-ditch attempt.” Ministers approved the proposal even though Israeli policies make it likely that “indirect talks will not yield results,” he said. Israel-Palestinian talks have been frozen since Israel’s military offensive in the Gaza Strip in late 2008. U.S.-led efforts to revive negotiations have foundered on the issue of settlement construction, with the Palestinians demanding a cessation of all building and Israel agreeing to a partial halt. Helps Abbas “The only meaning of this decision is to cover Mahmoud Abbas,” said Moustafa El-Husseini, co-author of a book on the Arab-Israeli conflict called “The Dilemma of an Arab, the Dilemma of a Jew.” “Abbas had said no talks before a freeze on settlement construction, and now he wants to back down.” Mark Heller , a researcher at Tel Aviv University’s Institute for National Security Studies, also expressed skepticism. “I doubt it will produce any substantial breakthrough unless the U.S. is prepared to put a great deal of pressure on both sides,” he said. “This is a way for everybody to revive the appearance of a working peace process.” Getting the two sides talking again by any means is a necessary first step toward any peace accord, U.S. State Department spokesman Philip J. Crowley said. Water, Borders “We want to get these parties talking about the specific issues, not just the final-status issue,” Crowley said. “Until you get into a process it is almost impossible to make progress” on issues including water resources and borders, he said. The final-status issues include the political status of Jerusalem. Mitchell will meet both sides to assess their readiness to talk and work out a framework for the discussions, Crowley said. The mechanics of the indirect talks haven’t been established, and could involve the sides meeting in the same building or city, or in a more complex situation, Crowley said. Israeli and Palestinian positions on marking their common border are much closer than their positions on issues such as Jerusalem, which both sides claim as their capital, and on the right of Palestinian refugees to return to homes in Israel they left in 1948, said Aaron David Miller , a fellow at the Woodrow Wilson Center in Washington. “Proximity talks, or indirect negotiations held together by George Mitchell, are in reality the only way at the moment to go about resuming the peace process,” Miller said. American Role The approach could “provide a way for the parties to talk to one another through Mitchell on issues that could be bridged — territory and borders — and it could legitimize a U.S. role in negotiations over time,” Miller said in an interview. The decision to back indirect talks was taken by a special committee of foreign ministers that includes Egypt, Jordan, Qatar, Syria, Saudi Arabia, Bahrain and Yemen. Abbas said he would accept any decision by the committee. Nabil Abu Rudeineh , a spokesman for Abbas, said in a statement carried by the authority’s official Wafa news agency that the Palestinian leader “looked at the committee’s final statement and found out that it is accepted by both the Palestinian Authority and the Arab countries.” Regev said Israel hoped now “that it will be possible to move forward.” He declined to discuss details about the structure and content of the talks. Partial Freeze The administration of U.S. President Barack Obama has criticized Israel for building settlements and called for their halt to revive peace talks. Clinton praised Netanyahu for agreeing in November to a partial settlement freeze. Arab analysts including El-Husseini say the U.S. wants Arabs to compromise after failing to extract more concessions from Israel. “Netanyahu has swept the floor with Obama,” El-Husseini said. “Obama had upped the ante and couldn’t keep it.” Arab support for the plan wasn’t unanimous. Syrian Foreign Minister Walid Al-Muallem unsuccessfully tried to interrupt Moussa’s speech to express reservations about the agreement. “There was no consensus on the statement,” and the decision to restart talks should have been left to the Palestinians, al-Muallem said later when given the floor. To contact the reporter on this story: Alaa Shahine in Cairo at asalha@bloomberg.net

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David Harris: America Over a Barrel

February 28, 2010

There are some things I just don’t get. One of them is America’s chronic inability to address our energy dependence on countries hostile to our core values. Though grave damage is being done to our national security and economy, as a nation, we just can’t summon the will to solve a problem which does have a solution. Thirty-seven years ago, a shot was fired across our bow. OPEC, the oil cartel, decided to mix politics and economics by declaring a boycott of the U.S. Then came the quadrupling of oil prices, sending our economy into a tailspin. Our political leaders all promised dramatic action to wean us from our addiction. Initially, some progress was made in raising fuel economy standards and improving overall energy efficiency. But, in the end, their promises fell short. The price of oil stabilized as output kept pace with demand, and we were quickly lulled right back into collective national complacency. We felt that it was no one’s business to tell us what to drive, how to drive, or what to do in our oil-heated homes. This was America, after all, not some nanny state. So when President Jimmy Carter turned down the thermostat in the White House one winter, donned a sweater, and asked us to do the same, we scoffed at our leader. Didn’t he know that, as Americans, we were entitled to be the world’s biggest energy consumers? How dare he ask us to sacrifice? Then Congress made matters worse. Even as fuel economy standards were being raised for cars, Capitol Hill exempted light trucks and vans from the rules. Lo and behold, as Americans bought more and more of these gas-guzzlers — eventually more than half of all vehicles sold in any given year — our oil needs only grew. In more recent years, we again became aware of the danger of our oil dependence. The 9/11 attacks were a sobering reminder. We learned that Saudi Arabia, with the world’s largest oil reserves, was spending tens of billions of dollars in oil revenue to support the extremist Wahhabi version of Islam around the world. Mosques and madrassas were purveying a message of intolerance and conflict, even as Saudi Arabia was taking out slick ads in the American media promoting our two countries’ “shared values.” We watched as Venezuela, the fifth largest exporter of oil to the U.S. and owner of CITGO, used its petrodollars to undermine American interests in Latin America and to forge ties with Iran. And more broadly, we witnessed energy security issues penetrate just about every nook and cranny in international relations. America tried to bring the horrors of Darfur to an end, but China’s interest in Sudan’s oil made it difficult to get concerted international action — and China isn’t alone. We’ve tried to forge consensus against Iran’s nuclear program, but China’s interest in Iran’s oil complicates that, too — and, again, China isn’t alone. Meanwhile, European countries, most of which are heavily dependent on imported oil, are forced to tiptoe politically around the likes of Libya, a nation with the eighth largest proven reserves in the world. And do we Americans need reminders about the costly consequences for our own foreign policy of our reliance on Middle Eastern oil? What can be done about this? For starters: First, focus on the prize — a world where the value of oil has dropped dramatically. Imagine what that could mean for the distribution of global power. And think about the impact on our economy if we could keep hundreds of billions of dollars per year right here rather than sending them overseas to Venezuela to buy weapons from Moscow or to Saudi Arabia to fund madrassas in Pakistan. Second, it’s time we demand — yes, demand — concerted action by all our elected officials. Words won’t suffice. We’ve had too many of them. Excuses for inaction won’t wash. The very future of our nation is at stake, and it’s high time to put this issue at the top of our agenda and keep it there. Third, let’s drop the partisanship. This is about America, not about political parties. Both parties should have an identical interest in moving the country toward real energy security. However naive it may sound, what a sight it would be to see Democrats and Republicans standing shoulder-to-shoulder and pledging united action to deal with our energy dependence head-on until we reach the goal. Fourth, think bold. Brazil did in the 1970s. It was even more dependent than we on imported oil. No longer. The country today is energy independent, through a combination of national planning, technological innovation, and exploration. And now China is on the way. Beijing has already announced that it seeks to be the global leader in post-oil technologies. Are we going to be content one day to replace our dependence on Middle Eastern oil with dependence on Chinese alternative energy technologies? Fifth, look in the mirror. How many of us have been part of the problem — by our buying and driving patterns, by our lifestyles, by a sense of entitlement, and by a belief that some are exempted from the rules that should govern others? With modest changes in our own behavior, we can have a dramatic impact. And sixth, look to Europe. Not a single one of the most fuel-efficient cars in the U.S. would make the comparable list in Europe, where the base line for the top ten models is 64 miles per gallon. Are Europeans any less interested in safety, emissions controls, or comfort than we are? Europe has also gone much further than the U.S. in developing public transportation. So, too, has Japan. Now China is leaping ahead. This is especially striking in the realm of high-speed trains. We waited decades for the Acela, but compared to what’s available elsewhere, including the Maglev in Shanghai and the TGV in France, forgive me, it’s practically ancient. This is true in metropolitan areas as well. Outside a handful of American cities, public transportation options are few and far between, compelling residents to rely on private vehicles for everything from work to shopping. And even in New York, with its extensive network, a project like the Second Avenue Subway has been in the works, according to author Robert Caro, since “shortly after World War I,” yet we’re still not there. Saddest of all is the knowledge that it’s well within our grasp to break the stranglehold. We can dramatically reduce our dependence on imported oil from hostile countries, while boosting our national security and enhancing our domestic economy — not to mention the benefits that measures reducing greenhouse-gas emissions will provide in terms of climate change and the environment. We have the scientific and entrepreneurial know-how to develop new technologies, and, save oil, abundant natural resources. There’s no one silver bullet for our problem, but there are several promising possibilities. All should be pursued, consistent, of course, with strict environmental safeguards. President Obama, speaking last year of “our journey toward energy independence,” said that “America’s dependence on oil is one of the most serious threats that our nation faces. It bankrolls dictators, pays for nuclear proliferation, and funds both sides of our struggle against terrorism.” By contrast, the former director of Saudi intelligence, Prince Turki al-Faisal, replied that “Like it or not, the fates of the United States and Saudi Arabia are connected and will remain so for decades to come” because of the oil link. Which will it be? President Obama’s vision or Prince Turki al-Faisal’s? The answer should be obvious. The ways to reach it are clear. The bottom-line question is whether there’s the national will.

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Dubai Stocks Climb as U.S. Growth Spurs Oil Price; Emaar, Arabtec Advance

February 28, 2010

By Zahra Hankir Feb. 28 (Bloomberg) — Dubai shares climbed to the highest level in almost a week as oil gained on prospects for increased fuel demand in the U.S. after the economy of the world’s biggest energy-consuming country grew the most in six years. Emaar Properties PJSC , the developer of the world’s tallest skyscraper in Dubai, advanced the most in a month. Arabtec Holding PJSC, the biggest construction company in the United Arab Emirates, rose to the highest in almost two weeks after it agreed with Aabar Investments PJSC to extend the due diligence process. Dubai’s DFM General Index advanced 0.7 percent to 1,592.91, rising for a second day. The measure gained 0.2 percent in February, the first monthly gain since October. Markets are being helped by “resilient oil,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. Locally, “market volumes are not that convincing and, from what we could see, there was limited participation from international clients.” About 143 million shares traded in Dubai today, 57 percent below the index’s six-month daily average of 331 million shares, according to Bloomberg data . Crude oil rose 1.9 percent to $79.66 a barrel on Feb. 26 after a report showed the U.S. economy grew at an annual rate of 5.9 percent in the fourth quarter. Oil, which accounts for 75 percent of the revenue of the six monarchies in the Gulf Cooperation Council, advanced 9.3 percent in the month, the biggest gain since May. Prices have more than doubled from their February 2009 low of $34 a barrel. Due Diligence Emaar advanced 3.5 percent to 2.98 dirhams, the most since Jan. 28. Arabtec added 1.4 percent to 2.17 dirhams, the highest since Feb. 17. The company said it approved extending a due diligence process with Abu Dhabi government-owned Aabar to April 16. Aabar said in January it plans to make an offer to buy 70 percent of Arabtec by buying mandatory convertible bonds. Saudi Arabia’s Tadawul All Share Index fell 0.6 percent to 6,437.50. Oman’s MSM30 measure dropped 0.2 percent. Abu Dhabi’s gauge added 0.1 percent and Qatar’s Doha Securities Market 20 Index increased 0.4 percent. Markets in Kuwait and Bahrain were closed for a holiday. To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

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Raymond J. Learsy: $80 Barrel Oil. The Billion Dollar Day Extortion: A Somnolent Administration and Dysfunctional Congress’ Gift to the American People

February 21, 2010

At $80 a barrel, an excess of one billion dollars a day is being lifted from the pockets of the American consumer through higher gas prices, heating bills, lost jobs because of higher industrial feed stock costs, all going into the pockets of oil interests and most ominously to foreign suppliers, many of whose policies present us with grave national security concerns. Let me explain. First the math. We consume some 20 million barrels of oil a day in the United States. Without manipulation nor speculation, with rational government initiatives that are totaling lacking at present, the price of oil should be $30/bbl and probably less (doubters, please note the quoted price of oil was $33/barrel just about a year ago). The difference between today’s $80/bbl price and a $30 price is, of course, $50/bbl. Multiplied by 20 million brings us to a billion dollars a day or $365,000,000,000 a year. I leave it to your imagination what that sum could mean to our struggling economy. (As an aside, a functioning government could readily mandate other policies to reduce consumption of fossil fuels, necessary to confront the existential danger of global warming, rather than transferring billions upon billions of our dollars to oil interests and their allies worldwide) It has been the contention of this post that the price of oil is being grossly distorted by a combination of irresponsible if not collusive government policies in combination with feckless oversight of a corrupted commodity trading process. All this resulting in oil prices that have little or nothing to do with the market discipline of supply and demand. And especially at this moment where the world is awash with oil and supply is beyond industry’s capability to store it readily (super tankers are being chartered to stockpile oil because land storage is at capacity) and consumption is diminishing to the point that a number of refineries have shut down (please see “Obama Finally Takes on the Banks–Commodity Futures Trading Needs be Next” 0l.22.l0). Much of today’s price aberration can be attributed to the policies of the oil industry’s President in residence, George W. Bush. He carried the beacon of the oil patch’s priorities, from a policy coaxing Iraq back into the arms of OPEC, from lack of oversight and regulation of oil trading on the commodity exchanges, from tepid automobile gas mileage standards, from a Department of Energy almost totally wedded to and becoming an apologist for the oil industry and its interests, from a corrupted Department of the Interior filled with oil industry partisans ever happy to accord the industry cozy accounting in the determination of royalties, from coddling Saudi Arabia and OPEC policies, from blocking all Congressional initiatives for “NOPEC” legislation which would have ended the sovereign immunity under U.S. law extended to OPEC national oil companies precluding legal action against OPEC’s monopolistic conspiracy, and on. Of particular significance was Bush’s State of the Union address in 2007 pledging to double the nation’s Strategic Petroleum Reserve (SPR) to 1.5 billion barrels from its then 727 million barrels (for those counting, 727 million bbls is the approximate equivalent of Iran’s annual oil exports to world markets). The impact of that announcement, though little commented upon at the time, was cathartic. Prices had already risen to a then extraordinary $60/bbl weeks before and were in the process retreating toward $50 and below. Well Shazam! The President’s announcement changed all that to the consummate glee of oil producers and potentates. The turnaround was immediate. Prices jumped $2.45/bbl or 5% with the announcement to $55/bbl and never looked back for long until hitting $l47/bbl by the summer of 2008, price levels undreamed of, even in the wildest fantasies of the vested oil barons. Bush’s declaration doubling the SPR had a dual impact. First it stopped in its tracks the downward pressure on oil prices at the time. Doubling the SPR would take ever more expensive oil out of the market, at government expense, but would also reduce market availability of oil thereby putting additional pressure toward higher prices for oil and oil products. Most critically it sent a message to the oil barons and their flock that the sky was the limit and the government would be tolerant of whatever they construed, used, hyped, orchestrated, to raise the price of oil. This government was on their side and would worry about its impact on the daily lives of Americans some other time. As the price of oil escalated, the government and the media, extending to Nobel laureates, bent over backwards to keep us all in a trance, spinning the same old threadbare song, “It’s all about supply and demand,” and its all about the “weak dollar.” Please see: -”Paul Krugman and the New York Time’s Pious Pontifications At The Pump” 05.l6.08 -”Our Treasury Pumps For Opec,” 06.02.08 -”Oil’s Largest One-Day On Record:Thank You, Mr. Bernanke,” 06.06.08 -”A Short Tutorial on the High Price of Oil and The Falling Dollar,” 10.19.07 Until it all blew up. With hindsight quite a number of economists have found that it wasn’t simply spurious financial engineering, but the triple digit oil prices of the summer of ’08 that made a major contribution to the collapse of the financial markets. After all, how may spec homes in the suburbs can you sell with gasoline at over $4 per gallon and at $5 in some locations, with no end to the acceleration in prices in sight. Please remember, among others Goldman Sachs, was ‘helpful’ in ‘calming’ matters at the time by predicting $200/bbl oil. Well the financial collapse and the resulting economic downturn was so pronounced, money became so tight that even oil was impacted with prices retreating to just over $30/bbl in December 2008 . After a brief hiatus given the distorted pricing of the summer the SPR was put back into full operation in January 2009. Far be it for Bush and Energy Department to leave the scene without giving their oil patch buddies one last swipe at the SPR boondoggle. And then the Obama administration took over. During the campaign Obama had made statements about suspending the purchases and releasing oil from the SPR (please see “Obama Nails It: Calls For Release of 70 million Barrels From The Strategic Petroleum Reserve” 08.04.08). For the first 30 days of his administration lingered around $30plus/barrel. Then it became clear that Obama had neither the will nor ability totake on the oil interests and deal with escalating oil prices by releasing oil from the SPR let alone suspending oil purchases for the SPR, and oil prices went on their merry way. They are now more than l00 percent higher than they were a year ago. So much for realtime energy leadership. Well and good that windmills will be built, corn for ethanol will be planted, nuclear plants are on the drawing board, but the day to day economic problems caused by high and distorted oil prices are in the here and now and the economic bite taken out of the economy, given the jobs and income impacted by high oil prices are being felt by the country at large, now, at this very moment. There is not excuse for the current high price of oil. Saudi exports of oil to the U.S. are at the lowest levels in 22 years. And not because OPEC mandated export quotas have restricted shipments. There is just no call for more product. Nor because the Pacific Rim markets are pulling more crude. Russia has only recently initiated a pipeline for Siberian Oil shipping from the Russian Pacific port of Kozmino. It has already taken significant market share from such as Saudi Arabia and Iran in the Japanese, Korean and Chinese markets. But there are also other reasons. We continue to have dysfunctional oversight agencies such as the CFTC, that has only now, after much internal debate with commissioners who give the impression of being more focused on the post commission sinecures on Wall Street than the issues at hand, has finally proposed limits on energy speculation subject to a 90 day comment period. It was in August of last year that Chairman Gensler acknowledged that oil prices were being influenced by ‘speculative’ trading (please see “The Huffington Post Outs The Oil Price Speculators,” 08.02.09) and in near one year nothing of consequence will have been done . NOPEC legislation has not been introduced nor acted upon by this administration. Its Department of Energy, while working diligently on long lead time alternative energy issues, seems asleep at the switch on real time economic concerns related to the current high price of oil, And of course, there is the SPR still being dutifully filled to the happy cheers of the oil pooh-bahs both here and abroad at evef increasing expense to American pocketbooks. Ladies and Gentleman, this is an emergency. The economy in its current condition can not tolerate $80/bbl oil. It is time to release oil from the reserve as a signal that enough is enough and to make the oil speculators aware, finally, that the price of oil is not a one way street!

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Development of Saudi Arabia-Russia international cooperation

February 17, 2010

Development of Saudi Arabia-Russia international cooperation

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Clinton Says Warning of Iran Army Dictatorship May Boost Sanctions Support

February 16, 2010

By Indira A.R. Lakshmanan Feb. 16 (Bloomberg) — U.S. Secretary of State Hillary Clinton said her warning that Iran is turning into a “military dictatorship” may solidify support for sanctions against the Islamic republic’s nuclear program. Clinton, speaking in an interview with Bloomberg Television in Jeddah, Saudi Arabia today, said her comments are “important for countries that are still evaluating” whether to support sanctions, and that may believe Iran is “a democracy but for a flawed election.” Clinton said her comments were also a message to Iran’s religious and political leaders. Yesterday, she told a student audience in Qatar that those leaders are being “supplanted” by the Republican Guard Corps, which has played a key role in suppressing anti-government protests since June. It was one of her bluntest critiques yet of the Islamic republic, as she seeks support among Iran’s neighbors for tougher United Nations sanctions to rein in its nuclear program. The UN is moving toward a resolution on fresh sanctions against Iran, Clinton said in the interview. Clinton’s three-day trip took her to Saudi Arabia and Qatar, oil- and gas-producing nations. The U.S. is seeking support from such countries to show Iran that its nuclear program is a concern for neighbors as well as Western countries. Iran’s President Mahmoud Ahmadinejad said last week that his country has enriched its first batch of uranium to 20 percent. Iran says the fuel is for use at a medical-research reactor in Tehran. UN Sanctions Iran is already subject to three rounds of UN sanctions, including a 2007 resolution freezing assets and banning travel for some individuals and companies affiliated with the Revolutionary Guards. The U.S. Treasury Department said Feb. 10 it would freeze assets of four companies and one individual linked to the Guards. The Republican Guards have been central to the crackdown against Iranian opposition movements which say Ahmadinejad’s re- election to the presidency in June was rigged. At least 44 people have been killed in protests since the June vote, and thousands more detained. Iran’s government has also restricted communications on mobile phones and the Internet. Clinton said in the interview that the State Department has funded technologies to help people avoid Internet restrictions. Clinton yesterday discussed with Saudi King Abdullah the role his kingdom can play in overcoming Chinese concerns that sanctions on Iran would hurt its oil supplies. China, which has a veto on the UN Security Council, has resisted Western calls for tighter sanctions on Iran. Saudi Arabia is the biggest oil supplier to China, and Iran is third, according to Chinese government statistics. China is Iran’s largest trading partner with bilateral trade of $29 billion in 2008, according to the Iran-China Chamber of Commerce. To contact the reporter on this story: Indira Lakshmanan at in Jeddah, Saudi Arabia, or ilakshmanan@bloomberg.net

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Nigeria Rally Getting Started as World’s Cheapest Stock Market Rises 10%

February 15, 2010

By Michael Patterson and Janice Kew Feb. 15 (Bloomberg) — Nigeria, last year’s worst- performing stock market, is rebounding as the world’s lowest valuations and projections for record bank profits lure Citigroup Inc., Exotix Ltd. and Insparo Asset Management. The nation’s benchmark All-Share Index has rallied 10 percent in 2010 after tumbling 34 percent last year, the biggest drop among benchmark indexes in the 70 largest equity markets. The gauge is valued at 4.6 times earnings estimates as analysts predict profits at First Bank of Nigeria Plc , Guaranty Trust Bank Plc and Stanbic IBTC Bank Plc will climb an average 43 percent, according to data compiled by Bloomberg. Investors are returning to Africa’s biggest oil producer after central bank governor Lamido Sanusi pledged to rid banks of bad loans, oil prices doubled and crude output climbed on an amnesty agreement with rebels in the Niger Delta. Shares are rallying even as President Umaru Yar’Adua’s two-month absence causes a power vacuum in the continent’s most populous nation. “The Nigerian market is picking up,” said Jamie Allsopp , who helps oversee about $165 million at Insparo. The London- based firm’s Africa and Middle East fund returned 31 percent in 2009, compared with a 7 percent gain in the MSCI Frontier Markets Index. “Banks are offering a lot of value. The equity is still cheap.” Oil Rally The All-Share Index climbed 0.3 percent to 23,028.14 at 9:55 a.m. in London. Nigeria’s economy is set to grow 4.8 percent this year after expanding 4.3 percent in 2009, according to the World Bank . That compares with the Washington-based lender’s forecast for 2.7 percent growth in the global economy. Oil prices have jumped to $74 a barrel from about $35 in December 2008. The growth rate helps make Nigeria one of the world’s most attractive so-called frontier markets, Andrew Howell , an emerging-market strategist at Citigroup in New York, wrote in Feb. 3 research report. Nigerian shares are recovering from two years of losses spurred by a collapse in oil prices during the global recession and a banking crisis sparked by bad loans to stock speculators. Toxic assets at banks may have reached as much as $10 billion, according to estimates by New York-based research firm Eurasia Group. Sanusi, who replaced Chukwuma Soludo as the governor of the Central Bank of Nigeria in June, has fired the chief executive officers of eight lenders and injected at least 620 billion naira ($4.1 billion) into 10 banks. Heart Ailment The central bank has pledged to guarantee all interbank loans until the end of 2010 and asked parliament to create an asset-management company that will buy bad debts from banks. The intervention in the country’s banking industry is “restoring confidence,” Sanusi said in an interview in the commercial capital, Lagos, last week. “If banks are stable and making good profit, their stocks will go up.” Nigeria has the potential to deliver “very strong” long- term returns, though political uncertainty may deter investors, according to John Lomax , an emerging-markets strategist at HSBC Holdings Plc in London. “There is still a lack of clarity,” he said in an interview in Johannesburg on Feb. 9. President Yar’Adua, 58, hasn’t been seen in public since he was flown to Saudi Arabia on Nov. 23 for treatment of a heart ailment. Yar’Adua’s failure to temporarily hand authority to Vice President Goodluck Jonathan left government initiatives pending, including the implementation of the amnesty for former militants in the Niger Delta. Earnings Growth Armed groups said last month they would resume attacks after cutting oil output by more than 25 percent between 2006 and 2009. Militants said Feb. 7 they disabled a trunk oil pipeline operated by The Hague-based Royal Dutch Shell Plc. While developing-nation equities may face short-term declines, markets remain in a “secular” rally driven by accelerating economic growth and consumer demand, according to Templeton Asset Management Chairman Mark Mobius . Nigerian stocks are attractive and banks provide the nation’s “most interesting” investment opportunities, Mobius, who oversees about $34 billion in Singapore, said in a Jan. 8 interview. “It’s a good market.” Investors are paying the equivalent of $4.60 for every dollar Nigerian companies will earn this year, according to Bloomberg data. That compares with $8.40 in Pakistan, $8.50 in Greece and $13.80 in the U.S., Bloomberg data show. Increased consumer lending will fuel bank earnings, according to Insparo’s Allsopp. About 15 to 20 percent of Nigeria’s 150 million people have bank accounts, he said. ‘Clear Value’ First Bank of Nigeria Plc , the country’s biggest lender by market value, may earn 2.2 naira a share in the fiscal year ended March 2011, up from 1.87 naira this year, according to the average of seven analysts’ estimates compiled by Bloomberg. The Lagos-based company trades at 6.7 times profit estimates, compared with 12 times for the MSCI Emerging Markets Financials Index. The stock, up 5.3 percent this year, may gain 38 percent in the next 12 months, according to the average of projections on Bloomberg. Guaranty Trust Bank Plc , Nigeria’s third-biggest lender, may increase per-share earnings 67 percent this year, according to analysts’ estimates. The shares trade for 8.2 times profit projections after climbing 19 percent in 2010. “The Nigerian banks clearly have value,” London-based strategist Christopher Hartland-Peel of Exotix Ltd. wrote in a report. The shares “are going to be the most interesting part of our Sub-Saharan Africa universe in 2010.” To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net ; Janice Kew in Johannesburg at jkew1@bloomberg.net .

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Nigeria Rally Getting Started as World’s Cheapest Stock Market Rises 10%

February 15, 2010

By Michael Patterson and Janice Kew Feb. 15 (Bloomberg) — Nigeria, last year’s worst- performing stock market, is rebounding as the world’s lowest valuations and projections for record bank profits lure Citigroup Inc., Exotix Ltd. and Insparo Asset Management. The nation’s benchmark All-Share Index has rallied 10 percent in 2010 after tumbling 34 percent last year, the biggest drop among benchmark indexes in the 70 largest equity markets. The gauge is valued at 4.6 times earnings estimates as analysts predict profits at First Bank of Nigeria Plc , Guaranty Trust Bank Plc and Stanbic IBTC Bank Plc will climb an average 43 percent, according to data compiled by Bloomberg. Investors are returning to Africa’s biggest oil producer after central bank governor Lamido Sanusi pledged to rid banks of bad loans, oil prices doubled and crude output climbed on an amnesty agreement with rebels in the Niger Delta. Shares are rallying even as President Umaru Yar’Adua’s two-month absence causes a power vacuum in the continent’s most populous nation. “The Nigerian market is picking up,” said Jamie Allsopp , who helps oversee about $165 million at Insparo. The London- based firm’s Africa and Middle East fund returned 31 percent in 2009, compared with a 7 percent gain in the MSCI Frontier Markets Index. “Banks are offering a lot of value. The equity is still cheap.” Oil Rally The All-Share Index climbed 0.3 percent to 23,028.14 at 9:55 a.m. in London. Nigeria’s economy is set to grow 4.8 percent this year after expanding 4.3 percent in 2009, according to the World Bank . That compares with the Washington-based lender’s forecast for 2.7 percent growth in the global economy. Oil prices have jumped to $74 a barrel from about $35 in December 2008. The growth rate helps make Nigeria one of the world’s most attractive so-called frontier markets, Andrew Howell , an emerging-market strategist at Citigroup in New York, wrote in Feb. 3 research report. Nigerian shares are recovering from two years of losses spurred by a collapse in oil prices during the global recession and a banking crisis sparked by bad loans to stock speculators. Toxic assets at banks may have reached as much as $10 billion, according to estimates by New York-based research firm Eurasia Group. Sanusi, who replaced Chukwuma Soludo as the governor of the Central Bank of Nigeria in June, has fired the chief executive officers of eight lenders and injected at least 620 billion naira ($4.1 billion) into 10 banks. Heart Ailment The central bank has pledged to guarantee all interbank loans until the end of 2010 and asked parliament to create an asset-management company that will buy bad debts from banks. The intervention in the country’s banking industry is “restoring confidence,” Sanusi said in an interview in the commercial capital, Lagos, last week. “If banks are stable and making good profit, their stocks will go up.” Nigeria has the potential to deliver “very strong” long- term returns, though political uncertainty may deter investors, according to John Lomax , an emerging-markets strategist at HSBC Holdings Plc in London. “There is still a lack of clarity,” he said in an interview in Johannesburg on Feb. 9. President Yar’Adua, 58, hasn’t been seen in public since he was flown to Saudi Arabia on Nov. 23 for treatment of a heart ailment. Yar’Adua’s failure to temporarily hand authority to Vice President Goodluck Jonathan left government initiatives pending, including the implementation of the amnesty for former militants in the Niger Delta. Earnings Growth Armed groups said last month they would resume attacks after cutting oil output by more than 25 percent between 2006 and 2009. Militants said Feb. 7 they disabled a trunk oil pipeline operated by The Hague-based Royal Dutch Shell Plc. While developing-nation equities may face short-term declines, markets remain in a “secular” rally driven by accelerating economic growth and consumer demand, according to Templeton Asset Management Chairman Mark Mobius . Nigerian stocks are attractive and banks provide the nation’s “most interesting” investment opportunities, Mobius, who oversees about $34 billion in Singapore, said in a Jan. 8 interview. “It’s a good market.” Investors are paying the equivalent of $4.60 for every dollar Nigerian companies will earn this year, according to Bloomberg data. That compares with $8.40 in Pakistan, $8.50 in Greece and $13.80 in the U.S., Bloomberg data show. Increased consumer lending will fuel bank earnings, according to Insparo’s Allsopp. About 15 to 20 percent of Nigeria’s 150 million people have bank accounts, he said. ‘Clear Value’ First Bank of Nigeria Plc , the country’s biggest lender by market value, may earn 2.2 naira a share in the fiscal year ended March 2011, up from 1.87 naira this year, according to the average of seven analysts’ estimates compiled by Bloomberg. The Lagos-based company trades at 6.7 times profit estimates, compared with 12 times for the MSCI Emerging Markets Financials Index. The stock, up 5.3 percent this year, may gain 38 percent in the next 12 months, according to the average of projections on Bloomberg. Guaranty Trust Bank Plc , Nigeria’s third-biggest lender, may increase per-share earnings 67 percent this year, according to analysts’ estimates. The shares trade for 8.2 times profit projections after climbing 19 percent in 2010. “The Nigerian banks clearly have value,” London-based strategist Christopher Hartland-Peel of Exotix Ltd. wrote in a report. The shares “are going to be the most interesting part of our Sub-Saharan Africa universe in 2010.” To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net ; Janice Kew in Johannesburg at jkew1@bloomberg.net .

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Saudi Arabia Rating Raised One Level to Aa3 by Moody’s on State Finances

February 15, 2010

By Jeran Wittenstein and Shamim Adam Feb. 15 (Bloomberg) — Saudi Arabia’s credit rating was raised by Moody’s Investors Service, which cited “strong” government finances that have withstood volatile oil prices and the global recession. The kingdom’s foreign- and local-currency government debt ratings were raised one notch to Aa3, the fourth-highest grade, from A1 with a stable outlook, Moody’s said in a statement in Singapore today. It also increased the country’s ceiling for foreign-currency bank deposits to the same level. “The upgrade was prompted by the continued strong state of government finances, which have largely withstood oil price volatility and the global economic crisis,” Moody’s said. For the rating to move higher, “Moody’s will assess prospects for the continued strength in public sector finances and the success of the government’s infrastructure program in improving the country’s long-term competitiveness and economic strength,” Thomas Byrne , a senior vice president at Moody’s in Singapore, said in the statement. Saudi Arabia’s rating upgrade comes as investors increase scrutiny on government finances of some European nations on concern widening budget deficits will make it difficult for the countries to repay their debt. Greece, Spain and Portugal are among those struggling to control their budget gaps, prompting investors to dump the countries’ assets and question the sustainability of the recovery in the global economy. More than $3.6 trillion has been wiped from stocks worldwide since Jan. 14, while credit-default swaps have risen as investors seek protection against deteriorating European government finances. Regional Comparison Saudi Arabia is now one rank below Abu Dhabi, Kuwait, Qatar and the United Arab Emirates, all rated at Aa2. Dubai, the second-biggest of seven states that make up the United Arab Emirates, in November announced that state-owned Dubai World would seek to delay debt repayments. Abu Dhabi on Dec. 14 provided $10 billion to help Dubai World avoid defaulting on a $4.1 billion bond payment. Saudi Arabia’s economy will grow more than 4 percent in 2010 after expanding 0.2 percent last year, Finance Minister Ibrahim al-Assaf said Feb. 11. Moody’s said the Middle Eastern nation’s banking system had absorbed shocks from the global credit crisis and the current account has probably stayed in surplus. ‘Stable Outlook’ “The kingdom’s banking system is only one of a few globally to have maintained a stable outlook during the crisis,” Moody’s said. “It has demonstrated the ability to absorb and contain shocks emanating from the global financial crisis, Dubai and domestic corporate debt problems.” Banks in Saudi Arabia, where lending to non-government companies shrank 0.3 percent last year, are returning to project finance as the government spends more to stimulate the economy, Samba Financial Group said in a report this month. The kingdom, the world’s largest oil exporter, last year announced that it would spend $400 billion on infrastructure over a five-year period to bolster the economy. The country is allocating almost $70 billion to investments this year, a 16 percent increase on 2009. About half of its $400 billion economic development plan has been spent and the government may finish the program ahead of schedule, al-Assaf said last week. Any downward pressure on Saudi Arabia’s rating would stem from a “sharp, secular decline” in oil prices, or an inefficient public expenditure program, the ratings company said, adding that it considers both scenarios remote. To contact the reporters on this story: Jeran Wittenstein at jwittenstei1@bloomberg.net ; Shamim Adam in Singapore at sadam2@bloomberg.net

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Clinton Pushes Hard Line Against Iran, Says Evidence Grows of Nuclear Plan

February 14, 2010

By Indira A.R. Lakshmanan Feb. 15 (Bloomberg) — U.S. Secretary of State Hillary Clinton , shoring up support in the Middle East for a hard line against Iran, said “evidence is accumulating” of that nation’s intention to produce nuclear weapons. The world has “little choice but to impose greater costs” on Iran to force it to rein in its nuclear program, Clinton said last night in remarks to the U.S.-Islamic World Forum in Doha, Qatar. She said the U.S. is working with allies “to prepare and implement new measures to convince Iran” to reconsider. Clinton is visiting Qatar and Saudi Arabia to build support for pressuring Iran and for urging Palestinians to return to peace talks with Israel. Clinton also used her speech to address concerns in the region that the U.S. has not done enough to make good on President Barack Obama ’s promise of improved relations with the Muslim world. Qatari Prime Minister Sheikh Hamad Bin Jasim Bin Jaber Al- Thani , speaking in a question-and-answer session following Clinton’s speech, said Iran has told its neighbors its nuclear program is for peaceful purposes. Iran has said its intention is to provide material for a medical-research reactor. The Qatari prime minister acknowledged that if fears over Iran’s intentions spur “a nuclear race in the region, it will be an unhealthy race for all.” He urged “direct dialogue between Iran and the United States” to resolve the impasse. Clinton replied that Obama made numerous overtures last year to engage Iran, with scant results. “Engagement has to be a two-way street,” she said. “It cannot be done alone in a room talking to yourself.” Referring to concerns by UN atomic energy inspectors that Iran has built a secret facility near Qom, she added, “We don’t want to be engaging while they’re building their bomb.” Turkey’s Possible Role Turkish Prime Minister Recep Tayyip Erdogan , also in Doha, said his country is willing to serve as the venue for a swap of Iran’s low-enriched uranium for fuel rods needed for the Tehran medical reactor. Iran rejected a similar offer last October by members of the UN Security Council. Erdogan said the UN’s International Atomic Energy Agency recently approached Turkey about being a neutral venue for such a deal. The U.S. is worried about the risk a nuclear-armed Iran would pose to Israel and other neighbors, as well as the possibility of a regional nuclear arms race. Clinton and other U.S. officials are trying to rally support in the Mideast and at the United Nations for sanctions to force Iran to halt the enrichment of uranium, which may be used to make a bomb. Other top U.S. officials visiting the region in the coming days include General David Petraeus , chief of the U.S. Central Command, and Mike Mullen , chairman of the Joint Chiefs of Staff. China’s Veto Power China, a veto-wielding member of the UN Security Council, relies on Iran as the third-largest source of its crude oil, according to official statistics, and has resisted pressure from the U.S. and Europe to back new penalties on Iran. The U.S. wants any new sanctions to target Iran’s Revolutionary Guard Corps, a military unit involved in nuclear and missile programs. Iran is subject to three rounds of UN sanctions, including a 2007 resolution freezing assets and banning travel for some companies affiliated with the Revolutionary Guards. Addressing concerns about stalled Israeli-Palestinian peace talks, Clinton said the U.S. is disappointed that “we have not yet achieved a breakthrough” in a comprehensive Middle East peace. She said Arab states need to rally behind getting Palestinians to return swiftly to talks. “The United States stands ready to support the parties and play an active and sustained role in these negotiations,” she said. Frozen Peace Talks Peace talks have been frozen since late 2008, when Palestinians broke off a year of negotiations to protest Israel’s offensive in the Gaza Strip. Israeli leaders said that action was aimed at halting rocket fire by the Palestinian militant group Hamas. U.S. mediator George Mitchell , who helped forge a peace agreement in Northern Ireland, is shuttling through the Middle East this week to get sides back to the negotiating table. Efforts to restart talks have foundered on the issue of Jewish settlements in the West Bank. While Israeli Prime Minister Benjamin Netanyahu imposed a partial 10-month freeze on settlement building, Palestinians want a complete halt. “We see the current Israeli settlement moratorium as a positive step, and we look for further steps,” Clinton said. “The United States’ policy on settlements has not changed: We do not accept the legitimacy of continued Israeli settlements.” She acknowledged concerns in the region about air travel restrictions on citizens of nations that prompt U.S. terrorism concerns, the U.S. failure to close the prison camp in Guantanamo by the start of this year, and the sense that efforts to improve relations with the Muslim world have been “insufficient or insincere.” The U.S. is determined to better relations with the Muslim world, she said, adding, “building a stronger relationship cannot happen overnight or even in a year.” To contact the reporter on this story: Indira Lakshmanan at in Doha, Qatar or ilakshmanan@bloomberg.net .

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Saudi mortgage law ‘will help banks increase investments’

February 8, 2010

08 Feb 2010 A planned mortgage law in Saudi Arabia which is set to give people on lower incomes easier access to property loans will also help banks in the country increase their investments, it has…

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Dubai Shares Drop After Decline in Oil, Global Stocks; Shuaa, Aldar Fall

February 7, 2010

By Zahraa Alkhalisi Feb. 7 (Bloomberg) — Dubai’s index slid the most in almost two weeks, leading declines in the Gulf, as crude prices tumbled to the lowest level in seven weeks and investors awaited details of a new oil field off the emirate’s coast. Shuaa Capital PSC , the biggest investment bank in the United Arab Emirates, slumped the most in two weeks after reporting a fourth-quarter loss of 154.3 million dirhams ($42 million). Aldar Properties PJSC , Abu Dhabi’s biggest real-estate developer dropped the most since Jan. 26 after the company said Khadem Al Qubaisi resigned from its board. The DFM General Index lost 2 percent to 1,630.81 and Abu Dhabi’s ADX General Index lost 0.9 percent. “There is still an atmosphere of risk adversity and so we see a magnified effect on any sell-off, especially in the U.A.E. where liquidity is close to record lows,” said Julian Bruce , director of equity sales at EFG-Hermes Holding SAE, the biggest publicly traded Arab investment bank. “There is no news on Dubai World, no disclosure regarding the size of the new oil discovery so there is no reason to buy.” U.S. stocks fell for a fourth week, the longest streak since July, as concern grew that widening budget deficits in Europe will slow the economic recovery. Crude closed at $71.19, the lowest since Dec. 15. The six countries that make up the Gulf Cooperation Council supply 20 percent of the world’s oil. Oil Discovery Dubai’s government said Feb. 5 a newly discovered offshore oil field will enter production within a year and increase crude output by a “noticeable percentage” once commercial operations starts. Dubai World failed to present a restructuring offer to lenders in December and declined to say when a deal could be struck. Dubai, the second biggest member of the U.A.E., last year received a $20 billion lifeline from Abu Dhabi, the U.A.E. capital and home to 90 percent of the country’s oil reserves. Shuaa declined 7.5 percent, the most since Jan. 24, to 1.24 dirhams. Aldar dropped 3.9 percent to 3.94 dirhams. Emaar Properties PJSC fell for the first time in five days, sliding 3.3 percent to 3.2 dirhams. Oman’s measure slid 0.9 percent and Qatar’s gauge declined 1.5 percent. Saudi Arabia’s Tadawul All Share Index was little changed, gaining less than 0.1 percent to 6,216.16. Bahrain’s index gained 1.2 percent and The Kuwait Stock Exchange Index added 0.5 percent. To contact the reporter on this story: Zahraa Alkhalisi in Abu Dhabi at zalkhalisi@bloomberg.net

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Afghanistan Will Invite New Iron Mine Bids After Issues Over Transparency

February 3, 2010

By Eltaf Najafizada and James Rupert Feb. 3 (Bloomberg) — Afghanistan said it will start a new bidding process for one of the world’s richest iron ore deposits to “improve transparency” as it faces international pressure to crack down on corruption. “Some evidence shows that the bidding process for the Hajigak iron ore deposit was not transparent,” Finance Ministry spokesman Aziz Shams said. Finance Minister Omar Zakhilwal, who retained his job last month when President Hamid Karzai announced a new cabinet, wants to invite new bids, Shams said in a phone interview on Jan. 30. Mines Minister Wahidullah Shahrani expects to formally cancel bids this week for the 1.8 billion-ton deposit at Hajigak, his deputy, Abdul Qudus Hamidi, said in an interview. Shahrani made the decision after taking office last month to replace a man accused of taking a bribe of at least $20 million for a previous mining license. New bids may help Karzai’s government persuade the Obama administration and other backers that it’s confronting corruption, a key demand made by more than 60 governments assisting Afghanistan at a meeting in London last month. Former Mines Minister Mohammad Ibrahim Adel denied reports by the Washington Post and Associated Press that he took a bribe from the Metallurgical Corporation of China Ltd. for Afghanistan’s biggest mining license so far, at the Aynak copper deposit south of Kabul. MCC is one of three companies that dropped out of the Hajigak bidding shortly before the government decided to scrap it, Hamidi said. MCC “decided not to progress with the project,” said investor relations officer Wei Hao, who spoke yesterday by phone from Beijing without elaborating. India, China The Mines Ministry expects to approve the decision to scrap the 10-month-old bidding process at a Feb. 4 meeting of officials from six government agencies, Hamidi said. Indian and Chinese companies eager to tie up resources for the world’s two fastest-growing major economies had sought the Hajigak deposit, which government surveys show is high-grade, with an iron content of 62 percent. China has wrestled with the world’s main iron ore suppliers — Brazil’s Vale SA , London- based Rio Tinto Plc and Australia’s BHP Billiton Ltd. — in an attempt to circumvent rising global prices. For Afghanistan, mining jobs and revenue will be central to efforts to reduce the unemployment and despondency that help fuel the Taliban insurgency. While the United Nations 2009 Human Development Report ranked Afghans’ living standards as the world’s second-most impoverished , the country’s mineral resources are worth $1 trillion, Karzai told journalists on Jan. 31, citing an almost-finished U.S. Geological Survey report. Afghan War In the intensifying Afghan war, the government generally controls the Hajigak area, in the Hindu Kush mountains 100 kilometers (60 miles) west of Kabul, although Taliban insurgents have shown an ability to strike in such regions. Of 14 companies that expressed interest last year in Hajigak, seven were invited to submit final bids by Feb. 15. In addition to MCC, India’s JSW Steel Ltd. withdrew because the current bidding process already had been delayed, said Tuhin K. Mukherjee, the company’s executive director. “Due to our pre-commitment of our global resources we told them we will not be able to bid for the mine this time,” he said yesterday in a telephone interview. Sesa Goa Ltd., an Indian unit of Vedanta Resources Plc, was disqualified for declining to sign a required confidentiality agreement about the deposit, Hamidi said. Pavan Kaushik, Vedanta Group’s India corporate communications chief, failed to return phone calls for comment. Other finalists in the current bidding process are India’s Essar Minerals Ltd., Rashtriya Ispat Nigam Ltd. and Ispat Industries Ltd., as well as the Pakistan unit of Saudi Arabia’s Al-Tuwairqi Group, according to a list from the Mines Ministry . The ministry may send representatives to a mining conference in Canada in March “to invite other investors to invest in this mine,” Hamidi said. To contact the reporters on this story: James Rupert in New Delhi at jrupert3@bloomberg.net ; Eltaf Najafizada in Kabul at enajafizada1@bloomberg.net .

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Dubai Shares Fall on Decline in U.S., Dubai World Uncertainty; Emaar Drops

January 31, 2010

By Anthony DiPaola Jan. 31 (Bloomberg) — Dubai stocks retreated for the first time in three days after U.S. shares fell, oil closed at the lowest in five weeks and investors sought clarity on the restructuring of government-owned holding company Dubai World. Emirates NBD PJSC , the United Arab Emirates’ largest bank by assets, declined to its lowest level since October 2007. Emaar Properties PJSC , the country’s biggest construction company, dropped for the first time in three days. The DFM General Index lost 1.1 percent to 1,582.23 at 1:13 p.m. in Dubai, bringing the slump this month to 12 percent. Crude closed at $72.89 a barrel in New York on Jan. 29. “Stocks in the U.S. saw a sell down over uncertainty about the implications of a possible change in the monetary policy stance from quantitative easing to liquidity tightening,” said Ali Khan , head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “We are also continuing to wait for clarity on the Dubai World restructuring. Until there is some clarity it will continue to be an overhang on the market.” The Standard & Poor’s 500 Index dropped on Jan. 29 as technology companies missed earnings estimates and surging Greek bond yields triggered a flight from riskier assets. The S&P Index and European stocks fell the most in January for any month since February as concern grew countries worldwide may step up plans to withdraw stimulus measures and some earnings disappointed investors. Emirates NBD Dubai’s benchmark index has retreated 24 percent since Dubai World on Nov. 25 said it would seek to freeze or delay repaying debt until at least May 30. The company said Dec. 1 it wants to alter terms on about $26 billion of debt. Dubai World repaid $4.1 billion on an Islamic bond from Nakheel PJSC last month after Dubai raised a $10 billion loan from Abu Dhabi. Emirates NBD tumbled 4.5 percent to 2.34 dirhams, the lowest level since the bank was formed late 2007 from the merger of Emirates Bank International PJSC and National Bank of Dubai PJSC. Emaar dropped 1.9 percent to 3.03 dirhams. Union Properties PJSC, another developer, lost 3.9 percent to 50 fils. Abu Dhabi’s benchmark index fell less than 0.1 percent, Qatar’s DSM 20 Index declined 0.6 percent and the Kuwait Stock Exchange index retreated 0.5 percent. Oman’s MSM30 Index added 0.3 percent, Bahrain’s measure gained 1 percent and Saudi Arabia’s Tadawul All Share Index rose 0.2 percent. To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net .

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Dave Johnson: America’s Competitors Will Use Supreme Court Ruling To Block Our Green Jobs Effort And Close Our Factories

January 29, 2010

It’s not personal, it’s business. The Supreme Court recently ruled 5-4 that George Bush will be President corporations can spend unlimited amounts in elections to support or oppose candidates. Corporations! Since there are no restrictions on the citizenship of the owners of corporations foreign companies and governments now have a direct way to manipulate our laws and regulations. Outside interests have been influencing American opinion for decades, but have not before this been able to directly support or oppose candidates. The Washington Times , Fox News, and other corporations with significant foreign ownership already work full-time to turn American public opinion against our own government. “Free trade” advocacy groups with funding from outside our borders work to get us to open our markets to imports that close our factories, outsource our jobs, lower our standard of living and drive us into ever-increasing debt. We have seen this with “grassroots” lobbying on important issues like climate change, trying to make people think that the science is a “hoax”: see Grassroots’ Opposition to Clean Energy Reform Bankrolled by Foreign Oil, Petro-Governments . But this new ability to directly support or oppose candidates offers a vastly more effective and immediate way for America’s competitors to achieve their goals . What will they go after first? Of course a top goal of our competitors is to take down our manufacturing capacity — the foundation of a country’s economic power. And, of course, this is exactly what is happening. Oil countries are already planning strategies to use this ruling to block our alternative energy and green jobs efforts. According to Think Progress : For instance, Saudi Arabia has already signaled that the progressive effort to build a clean energy American economy is its ” biggest threat “: Saudi Arabia’s economy depends on oil exports so stands to be one of the biggest losers in any pact that curbs oil demand by penalizing carbon emissions. “It’s one of the biggest threats that we are facing,” said Muhammed al-Sabban, head of the Saudi delegation to U.N. talks on climate change and a senior economic adviser to the Saudi oil ministry. Climate talks posed a bigger threat, Sabban said, and subsidies for the development of renewable energy were distorting market economics in the sector, he said.” Presumably because of the Citizens United ruling, Saudi Arabian-owned subsidiaries operating in the United States can now spend unlimited amounts advocating the defeat of candidates who support clean energy legislation. According to a ThinkProgress investigation , foreign-oil backed lobbyists in America are already instigating efforts to kill clean energy legislation. What are we doing about it? What is our plan? Every other country has economic/industrial policies, but for one reason or another the American public has been persuaded that America should not have an economic/industrial policy of our own. We’re bombarded with propaganda that says having a plan would be government – that We, the People thing – “interfering” with “the market.” This ideology is like an anchor on our country, holding us back from progress . We must rally and take back control of our democracy and our future. This Supreme Court decision must be countered with immediate legislation or it means the loss of so many things that we value. And we must develop an economic/manufacturing policy for our country’s future. This time it’s personal. This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.

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Gulf Gap in Davos Belies Booming Economies in Oil-Rich Saudi Arabia, Qatar

January 28, 2010

By Henry Meyer and Arif Sharif Jan. 28 (Bloomberg) — The program for this year’s World Economic Forum in Davos features no speakers from Qatar, Dubai or Abu Dhabi in any of the conference’s 230 events. Five spots are occupied by Saudis and four by Kuwaitis. “I think the absence of the Middle East is quite conspicuous,” said Ibrahim Dabdoub , chief executive officer of the National Bank of Kuwait, interviewed in the conference center in the Swiss village. “It’s a pity that Gulf involvement is so low.” Especially for anyone looking to make money. Six weeks after Dubai almost defaulted on $4.1 billion in debt, the region as a whole is set to prosper. Oil prices, which account for 75 percent of the revenue of the six monarchies in the Gulf Cooperation Council , have more than doubled from their February 2009 low of $34 a barrel. Saudi Arabia, Qatar and Abu Dhabi are spending $600 billion by the end of 2013 to build roads, railways and new cities while expanding energy and manufacturing. The GCC countries are forecast by HSBC Holdings Plc to post an average expansion of 4 percent or more in 2010, after no increase last year. That compares with projected growth of 2.7 percent in the U.S. and 1 percent in the 16-nation euro zone, according to the International Monetary Fund . Serious Opportunities “As a region I think we are on the cusp of some very very serious growth opportunities in the years ahead,” said Arif Naqvi , CEO of Dubai-based Abraaj Capital Ltd., the biggest private-equity company in the GCC, in an interview in Davos. “It is probably higher than in other parts of the world. There is liquidity and there is a desire.” The new spending may benefit Munich-based Siemens AG , Europe’s largest engineer, which said in November it is looking to win more contracts in Saudi Arabia to tap rising demand for power generation. Paris-based Total SA , Europe’s largest oil company, said Nov. 24 it is in talks with Qatar to build a petrochemical cracker, a fuel-processing plant. Emad Mostaque , a Middle East equity-fund manager in London for Pictet Asset Management Ltd., which oversees more than $100 billion, plans to add to Saudi shares that currently represent a third of his portfolio. Saudi Arabia’s benchmark Tadawul All Share Index jumped 28 percent in 2009, the best-performing of the Gulf markets , followed by Oman. “Saudi Arabia is where we see the most potential,” Mostaque said in a phone interview. He said he recently bought more shares in Riyadh Bank, Riyadh-based Saudi food producer Almarai Co. and Riyadh-based Saudi Basic Industries Corp. , the world’s largest petrochemical producer. Pipes and Building He plans to acquire stock in Jeddah-based Saudi Cement, Riyadh-based pipe manufacturer Saudi Arabian Amiantit Co. and Zamil Industrial Investment Co., a Dammam-based maker of building materials. The kingdom last year announced that it would spend $400 billion on projects including three new railway lines and six new industrial cities over five years. It is the largest stimulus package in the Group of 20 nations as a share of gross domestic product. This year, almost $70 billion will go to roads, railways, airports and other projects, a 16 percent increase over 2009. Crude prices, which have rebounded to about $75 a barrel, are likely to boost Saudi oil revenue in 2010 to $151.7 billion from $116.7 billion in 2009, according to EFG-Hermes. The Saudi 2010 budget was based on an average oil price assumption of $46 a barrel, according to Riyadh-based Banque Saudi Fransi. New Airport Qatar, which has the world’s third-largest gas reserves, is spending more than $100 billion over three years on projects including a new financial center and an airport. Abu Dhabi, the largest sheikhdom in the United Arab Emirates, is allocating $100 billion to such investments as a $40 billion project to build an island tourism and leisure destination. Abu Dhabi holds 8 percent of the world’s oil reserves. “Oil prices will be a very important driver of confidence in the region,” said Dubai-based Monica Malik , chief Middle East economist at EFG-Hermes, which forecasts an average price of $80 a barrel in 2010. The six Gulf Arab nations in the GCC supply about 20 percent of the world’s oil — two-thirds of that crude output in Saudi Arabia alone. Growth will be slower in the smaller Gulf nations of Oman and Bahrain, which have less oil wealth, and Kuwait, where political infighting is slowing spending programs, said Simon Williams , chief Middle East economist at HSBC. Less Risk In a sign of the economic disparity, investors see less than one-fifth the risk in Saudi Arabian bonds compared with Dubai’s, according to trading in credit-default swaps. The cost of protecting against Dubai government default stood at 473 basis points on Jan. 27, CMA Datavision prices show. Bond-default risk for Abu Dhabi was 138, for Qatar 97 and 83 for Saudi Arabia. The seven-member U.A.E. will grow by no more than 1 percent this year because of a continuing contraction in Dubai, the IMF forecast Jan. 26. Saudi Arabia will post growth of almost 4 percent, according to a Jan. 13 forecast by Banque Saudi Fransi. Qatar, which plans to raise its production of liquefied natural gas by 42 percent to 77 million tons by September, is expected to have GDP growth of 17 percent in 2010, according to a median forecast of analysts surveyed by Bloomberg in November to December 2009. The country is considering an investment in Petroleo Brasileiro SA , Brazil’s state-controlled oil company, Qatari Energy Minister Abdullah bin Hamad al-Attiyah said on Jan. 21. The next day, Brazilian Energy Minister Edison Lobao said Qatar may invest in a refinery joint venture with Rio de Janeiro-based Petrobras. Credit Squeeze The Gulf region as a whole suffered from a credit squeeze last year provoked by the global financial crisis. That, along with the sharp fall in oil prices from a peak of $147.27 a barrel in July 2008, led to the slump in 2009. Dubai, where real-estate prices have plunged 50 percent since their 2008 peak has fared the worst as it struggles under at least $80 billion in debt. Dubai World, one of three main state-owned holding companies, avoided default in December only with an infusion from neighboring Abu Dhabi that allowed it to repay a $4.1 billion Islamic bond. Bank lending elsewhere in the Gulf was also upset by the default of two Saudi family conglomerates. Eighty lenders, including BNP Paribas SA and Citigroup Inc. , are owed at least $15.7 billion by the two groups. Bank credit in Saudi Arabia declined 6.6 percent in the 11 months through November, 2009, central bank data shows. This year, government spending will remain the key driver of growth in Saudi Arabia as well as in most other Gulf economies as banks remain reluctant to lend, said John Sfakianakis , chief economist at Banque Saudi Fransi. In addition, Abu Dhabi has sovereign assets of about $426 billion, one of the world’s largest funds, according to RGE Monitor in New York. Saudi Arabia holds a fund of $358 billion, Qatar $75 billion and Kuwait has about $271 billion. To contact the reporters on this story: Henry Meyer in Dubai at hmeyer4@bloomberg.net ; Arif Sharif in Davos at asharif2@bloomberg.net

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Clinton Makes Rounds in London to Push for Tougher Sanctions Against Iran

January 27, 2010

By Indira A.R. Lakshmanan Jan. 28 (Bloomberg) — U.S. Secretary of State Hillary Clinton is taking advantage of meetings with foreign ministers in London to push for tougher sanctions aimed at Iran’s nuclear program. “In the course of many consultations, including today, we believe that there is a growing understanding in the international community that Iran should face consequences for its defiance of international obligations,” Clinton told reporters traveling with her last night. Clinton is discussing strengthening the implementation of existing sanctions and the possible elements of a new United Nations resolution aimed at reining in Iran’s nuclear ambitions, according to U.S. officials who spoke on condition of anonymity because of the sensitivity of the private talks. While Iran says its nuclear program is aimed at generating electricity, the U.S., Europeans and UN inspectors have cast doubt on Iran’s motives for building clandestine atomic facilities and enriching uranium, which can be used for bomb- making. President Barack Obama said he would focus on diplomacy through 2009 before pressing for tougher international pressure this year in an attempt to force Iran to comply with inspectors. Clinton’s effort to drum up support for sanctions while in London for international meetings on Yemen and Afghanistan is a sign of the Obama administration’s attempt to rejuvenate a policy that has foundered in the UN Security Council. China in particular has resisted new sanctions on Iran, which is China’s third-largest source of crude oil. ‘Openness’ to Sanctions Asked how she would change Chinese Foreign Minister Yang Jiechi ’s mind about sanctions when they meet today, Clinton said, “I don’t think there is a mind to change. I think there is an openness” to sanctions and “an awareness of the importance of the international community standing together.” Clinton told reporters she thinks there is a “growing sense” among Security Council powers that Iran’s refusal to “agree to the Tehran research reactor proposal” was “a turning point.” She was referring to an international offer to swap Iran’s uranium for enriched fuel for a medical reactor. Clinton is also scheduled to meet today with foreign ministers from Britain and France, the other nations that sit with the U.S., Russia and China as permanent member of the UN Security Council with veto power. She talked yesterday with her counterparts from Russia, Indonesia and Turkey, and will confer tomorrow with ministers from Germany, Italy, Saudi Arabia and the United Arab Emirates, U.S. officials said. A State Department official said Clinton and Russian Foreign Minister Sergei Lavrov had a constructive talk about how to effectively pressure Iran, including what the official called appropriate action at the UN. Iran Absent Iran announced yesterday that it wasn’t sending a representative to today’s international conference, though it shares a border with Afghanistan. “The approach to the London conference is increasing military presence and not the root of problems,” Ramin Mehmanparast , a foreign ministry spokesman, told the state-run Mehr news agency. Clinton is pressing some countries, such as Indonesia, to use moral persuasion to convince Iran that it isn’t meeting its obligations to the international community, while talks with others will focus on the possible language of a new UN resolution, U.S. officials said. Revolutionary Guard Clinton has indicated the U.S. wants to target Iran’s Revolutionary Guard Corps, an elite military branch with far- reaching business interests and involvement in nuclear and missile development. Iran is already subject to three rounds of UN sanctions, including a 2007 resolution freezing assets and banning travel for some Revolutionary Guard-affiliated companies and officials. Officials representing the five permanent Security Council members and Germany — a group that has held regular talks on the Iranian nuclear issue for several years — plan to hold a conference call this week to discuss the first draft of a sanctions resolution, according to a European diplomat. The group will discuss a proposed U.S. text that suggests strengthening existing measures and probably would add certain Revolutionary Guard individuals or entities to the UN travel ban and asset freeze, the diplomat said. Sanction Implementation U.S. Treasury Undersecretary Stuart Levey , who has played a pivotal role in the design and enforcement of financial restrictions on Iran since the George W. Bush administration, is in London to discuss the implementation of sanctions with foreign officials, the U.S. officials said. The Treasury Department has identified 119 Iranian companies, banks and officials, saying they support Iran’s nuclear or terrorist activities and banning them from dealings with U.S. companies and allowing the U.S. to seize their assets. Treasury officials have discussed with European counterparts the possibility of additional restrictions on financial transactions or insurance for Iranian cargo shipments. Lutz Guellner , spokesman for European Union foreign policy chief Catherine Ashton , told reporters in Brussels yesterday that while there’s “no precise calendar” for a UN debate on Iran, “we can’t wait forever.” To contact the reporter on this story: Indira Lakshmanan in London at ilakshmanan@bloomberg.net .

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Saudi Arabia Will Not End Stimulus This Year, Finance Minister Assaf Says

January 24, 2010

By Maher Chmaytelli and Camilla Hall Jan. 24 (Bloomberg) — Saudi Arabian Finance Minister Ibrahim al-Assaf said the kingdom will continue to pump money to boost growth in 2010, even as the economy rebounds from last year’s stagnation. “At one point there will be a curbing of spending, but in my view 2010 is a year that needs continuous stimulus to the economy,” al-Assaf said today at the Global Competitiveness Forum, an [bn:URL= http://www.gcf.org.sa/ http://www.gcf.org.sa/ http://www.gcf.org.sa/ http://www.gcf.org.sa/] investors’ conference [] in the Saudi capital. Saudi Arabia expects growth of more than 4 percent in 2010, the finance minister said. The country’s economy expanded 0.15 percent in 2009, according to Ministry of Finance estimates. Saudi Arabia, the world’s largest oil exporter, is spending $400 billion on infrastructure over a five-year period starting from 2009 to stimulate the economy. Rising oil prices, which have rebounded to around $75 a barrel from less than $35 in February, are also likely to boost growth this year. “Stimulus packages shouldn’t be withdrawn prematurely, nor should they be extended more than required so as not to produce inflationary pressures,” al-Assaf said. To contact the reporters on this story: Maher Chmaytelli in Riyadh via the Dubai newsroom at 1029 or mchmaytelli@bloomberg.net Camilla Hall in Riyadh via the Dubai newsroom at chall24@bloomberg.net or

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Yemen’s Poverty Breeds Al-Qaeda Terror as West Focuses Its Aid on Security

January 10, 2010

By Henry Meyer Jan. 11 (Bloomberg) — The U.S. and British strategy of fighting terrorism in Yemen by focusing mostly on security fails to deal with the poverty that is the root cause of extremism, say Yemeni officials and foreign experts. Yemen is increasingly becoming a base for al-Qaeda. The terrorist group’s Yemeni branch, al-Qaeda in the Arabian Peninsula, claimed responsibility for the Dec. 25 attempt to blow up a Northwest Airlines plane as it approached Detroit. And rebellions in the south and north are driving the economy deeper into crisis even as the government forecasts that in 10 years it will run out of the oil reserves that fund 70 percent of the budget. “The hotbed for breeding terrorism is unemployment, poverty and lack of services,” Abdul-Karim Al-Eryani, an adviser to Yemeni President Ali Abdullah Saleh , said in a Jan. 4 phone interview. The U.S. and its allies should “be more focused on the future of Yemen rather than the present crisis we face with al-Qaeda.” A Western failure to address Yemen’s economic and social weaknesses will exacerbate the threat from al-Qaeda in the poorest Arab nation, said Gregory Johnsen, a Yemen scholar at Princeton University in New Jersey. Yemen gets about one-third the foreign aid accorded to equally poor parts of Asia and Africa on a per capita basis. “You can’t focus only on killing people and not on what turns them into al-Qaeda supporters,” said Mustafa Alani , a security expert at the Dubai-based Gulf Research Center. More to Africa About 40 percent of Yemen’s population, which is expected to almost double by 2030 to 40 million, lives on less than $2 a day, says the U.K. Department for International Development . Foreign aid comes to $12 a year for each Yemeni, compared with an average of $33 in African and Asian nations suffering similar levels of poverty, the department says. A security conference on Yemen hosted by U.K. Prime Minister Gordon Brown in London on Jan. 28 isn’t aimed at securing new pledges of aid, said Ed Hawkesworth, a spokesman for the U.K. Department for International Development. “It will be about coordinating existing programs and linking them up,” he said by phone on Jan. 6. The meeting will cover social and economic development along with security, according to a statement by Brown. The U.K. is giving 25 million pounds ($40 million) in civilian assistance to Yemen in the current fiscal year, a 100 percent increase from two years before, and plans to give a total of 100 million pounds in the next three years. Aid Increase The State Department announced an increase in non- counterterrorism aid to $63 million from $52.5 million on Jan. 4, for the fiscal year that started Oct 1. Counterterrorism aid almost doubled , to about $150 million, this fiscal year versus the previous year. “Development and security assistance go hand in hand,” Philip J. Crowley , U.S. assistant secretary of state, said in an e-mail. “We are committed to improving Yemen’s capacity to deal with extremism and conflict within its borders. And we are committed to helping Yemen meet the needs of its people. But the government must be an equal partner.” By contrast, the U.S. is giving Pakistan $7.5 billion over five years for schools, power, roads and other civilian aid. Donors at a previous Yemen conference in London in 2006 pledged almost $5 billion. Only $415 million was delivered, Yemeni Deputy Minister for Planning and International Cooperation Hisham Sharaf said in a phone interview from Sana’a. Several hundred al-Qaeda members in remote tribal areas of Yemen may be preparing for attacks similar to the Detroit plane plot in the U.S. and elsewhere, President Barack Obama’s assistant for homeland security and counterterrorism, John Brennan , said on Jan. 3. Border Rebels Yemen is in need of development help as the conflict with Muslim Shiite rebels on the border with Saudi Arabia exacerbates its economic troubles. Christopher Boucek , a Yemen expert at the Washington-based Carnegie Endowment for International Peace , estimates that the government is spending $200 million a month on the war. In the province of Amran, refugees have crowded into six schools in one mountain valley near the conflict zone. The 1,200 children have been unable to go to class since September, said Lucienne Maas, country program director for U.K.-based charity Save the Children . More than 175,000 refugees have fled the fighting, according to the United Nations. In rural areas, in which 70 percent of Yemen’s population lives, only 20 percent of houses get electricity, according to the U.S. Trade Development Agency. Less than half of the rural population has access to clean drinking water. The U.S. and U.K. are counting on oil-rich Gulf nations at the Jan. 28 meeting. U.K. Foreign Secretary David Miliband told the House of Commons on Jan. 5 that Gulf countries, which pledged $2.5 billion in 2006, should disburse that money. The London conference should focus on Yemen’s development needs, estimated by the government at $11 billion, as well as anti-terrorism assistance, Selva Ramachandran, the UN development program’s country director for Yemen, said in a phone interview on Jan. 6. To contact the reporter on this story: Henry Meyer in Dubai at hmeyer4@bloomberg.net ;

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Dubai Stocks Fall on Arabtec’s Below-Market Takeover Price; Emaar Declines

January 10, 2010

By Zahra Hankir Jan. 10 (Bloomberg) — Dubai shares dropped for the first time in four days after Abu Dhabi-based Aabar Investments PJSC agreed to buy a stake in Arabtec Holding PJSC for 20 percent less than the company’s previous closing price. Arabtec, United Arab Emirates’ biggest construction company, retreated the most in a month. Emaar Properties PJSC, the U.A.E.’s biggest developer, declined to the lowest level this year. The DFM General Index lost 1.2 percent, the biggest fluctuation among the seven Gulf markets, to 1,814.33. Most other Gulf benchmarks advanced. “The Arabtec news is negative in the short-term because of shareholder dilution,” said Yazan Abdeen, a fund manager at ING Investment Management (Dubai) Ltd. In the longer-term, Arabtec will benefit on two levels, “first, cash, which will make the working capital of the company more efficient, and second, the amount of backlog that Aabar will bring to the table.” Aabar, the Abu Dhabi government-owned investor, said Jan. 7 it plans an offer to buy 70 percent of Arabtec through the purchase of mandatory convertible bonds that will convert into shares at a price of 2.3 dirhams each, it said. That’s a 20 percent discount to Arabtec’s closing share price on Jan. 7. Alaqaria Arabtec tumbled 6.9 percent, the biggest one-day drop since Dec. 9, to 2.69 dirhams. The shares have increased 21 percent in the past two weeks. Aabar added 4.6 percent, bringing the gain this year to 11 percent, and pushing Abu Dhabi’s benchmark index up 0.2 percent. Emaar shares dropped 2.5 percent to 3.95 dirhams, the lowest since Dec. 31. Oman’s MSM30 Index advanced 0.5 percent, the Kuwait Stock Exchange Index rose 0.7 percent and Bahrain’s measure increased 0.1 percent. Saudi Arabia’s Tadawul All Share Index and Qatar’s DSM 20 Index each lost less than 0.1 percent. Qatar Real Estate Investment Co., also known as Alaqaria, jumped the most in four years after Barwa Real Estate Co. agreed to purchase the developer of industrial and residential projects. Alaqaria soared 9.7 percent, the most since March 2006, to 30.5 riyals. Barwa added 2.7 percent to 33.9 riyals, the highest close in almost three weeks. To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net .

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Abdulmutallab Indicted on Six Charges in Christmas Day Airline Bomb Plot

January 6, 2010

By Andrew M. Harris and Margaret Cronin Fisk Jan. 6 (Bloomberg) — Umar Farouk Abdulmutallab , the Nigerian man accused of trying to destroy a Northwest Airlines plane carrying 290 people on Christmas Day, was indicted by a federal grand jury on six counts including attempted murder. The U.S. said Abdulmutallab, 23, tried to trigger an explosion on Flight 253 from Amsterdam using chemicals hidden under his clothing as it approached Detroit Dec. 25. Passengers and crew restrained him until the aircraft landed. Failure to stop the attack before it happened prompted U.S. President Barack Obama to order a review of the nation’s intelligence gathering and sharing, as well as a tightening of airport security measures. In addition to attempted murder, Abdulmutallab is accused in today’s indictment of attempting to use a weapon of mass destruction, willfully trying to wreck an aircraft, placing a destructive device upon an aircraft, and two counts of possession of a firearm in furtherance of a crime of violence. Miriam Siefer, Abdulmutallab’s attorney, declined to comment. Jonathan Tukel, federal prosecutor on the case, said an arraignment date hasn’t been set. A bond hearing scheduled for Jan. 8 may be postponed, he said in an interview. He declined to comment further. The U.S. Central Intelligence Agency said it learned about Abdulmutallab in November when his father went to the U.S. Embassy in Nigeria to seek help in finding him. Government List Abdulmutallab was on the government’s Terrorist Identities Datamart Environment, or TIDE, list which names about 550,000 individuals with possible terrorist links. He hadn’t been moved to a terrorism watch list, or to the “selectee” list of about 14,000 names that triggers additional screening at airports, or to the “No Fly” list of about 4,000 names, according to Janet Napolitano , the U.S. Secretary of Homeland Security. U.S. lawmakers have questioned why Abdulmutallab’s visa allowing him to travel to the U.S. wasn’t revoked after he was first linked to terrorist groups. Obama said the nation’s intelligence agencies should have thwarted the attack before Abdulmutallab smuggled explosives onto the jet at Amsterdam’s Schiphol Airport. “This was not a failure to collect intelligence, it was a failure to integrate and understand the intelligence that we already had,” the president said after a Jan. 5 meeting with top advisers at the White House. Evidence indicates that Abdulmutallab was trained and equipped by a Yemeni group affiliated with the al-Qaeda terrorist network, the president said. Obama’s administration has ordered additional screening for air passengers bound for the U.S. from 14 countries including Algeria, Pakistan, Saudi Arabia and Nigeria. He also said the government will increase explosives-detection teams at airports and air marshals on flights. Other new procedures include visa information included in State Department warnings it sends about people with suspected terrorist ties. The case is U.S. v. Adbulmutallab, 10-cr-20005, U.S. District Court, Eastern District of Michigan (Detroit). To contact the reporters on this story: Andrew M. Harris at the U.S. Courthouse in Detroit at aharris16@bloomberg.net ; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net .

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Obama Says U.S. Had Sufficient Information to Stop Christmas Day Bomb Plot

January 5, 2010

By Kate Andersen Brower and Nicholas Johnston Jan. 5 (Bloomberg) — President Barack Obama said U.S. intelligence services had sufficient information to foil the attempted bombing of an airliner on Dec. 25 and “failed to connect those dots.” “This was not a failure to collect intelligence, it was a failure to integrate and understand the intelligence that we already had,” Obama said at the White House today. The administration will act to repair the system to try to ensure such failures don’t happen again, he said. The president spoke after meeting with his top advisers to review steps the government is taking to close gaps in intelligence and security procedures in the wake of the failed attempt to bomb a Detroit-bound Northwest Airlines flight from Amsterdam. Umar Farouk Abdulmutallab , a 23-year-old Nigerian, is charged in the U.S. with smuggling explosives onto the flight from Amsterdam’s Schiphol Airport and attempting to set them off as the plane approached Detroit’s airfield. Obama has said evidence indicates Abdulmutallab was trained and equipped by an al-Qaeda affiliated group in Yemen. The Yemen connection has complicated Obama’s plans to close the U.S. prison at Guantanamo Bay, Cuba. About 90 of the detainees still being held at the facility are Yemeni, according to the Justice Department. Some prisoners were slated to be repatriated to their home countries while about 100 would be transferred to a prison on U.S. soil, under Obama’s plan. Closing Guantanamo Obama reaffirmed his intention to close Guantanamo even as he said no more prisoners will be transferred to Yemen for the time being. “We will not be transferring additional detainees back to Yemen at this time,” he said. “But make no mistake, we will close Guantanamo prison.” The Christmas Day attack was thwarted by passengers and crew aboard the Northwest jet. The attempt exposed “a potentially disastrous” security failure, Obama said. Intelligence agencies failed to connect a variety of information about the suspected bomber, his movements and his connections to extremists, he said. “The U.S. government had sufficient information to have uncovered this plot and potentially disrupt the Christmas Day attack,” he said. “But our intelligence community failed to connect those dots which would have placed the suspect on the no-fly list.” The Central Intelligence Agency has said it learned about Abdulmutallab in November, when his father went to the U.S. embassy in Nigeria to seek help in finding him. Government Lists Abdulmutallab was in the government’s Terrorist Identities Datamart Environment, or TIDE list , which includes the names of about 550,000 individuals with possible links to terrorism. He hadn’t been moved to a terrorism watch list or to the “selectee” list of about 14,000 names that triggers additional screening at airports, or the no-fly list of about 4,000, according to Homeland Security Secretary Janet Napolitano . Deputy White House press secretary Bill Burton said yesterday that the lists have been “scrubbed” since Dec. 25 and that dozens of people were shifted to categories that require further action by authorities. People were added to the more restrictive lists based on age and national origin, according to a U.S. counterterrorism official who spoke on condition of anonymity. The official wouldn’t specify which characteristics resulted in people getting added to the lists, saying they were the result of information learned during the investigation of the Christmas day bombing attempt. Additional Screening The administration already has announced it will require additional screening for air passengers bound for the U.S. from any of 14 countries, including Algeria, Pakistan, Saudi Arabia and Nigeria. Obama also said the government will add more explosives detection teams at airports and more air marshals on flights. Obama said the State Department is now requiring visa information to be included in warnings it sends about people with suspected terrorist ties. Lawmakers have questioned why Abdulmutallab’s visa allowing him to travel to the U.S. wasn’t revoked after he was first linked to terrorist groups. The president also said he ordered members of his administration, including Napolitano and counterterrorism adviser John Brennan , to review security procedures from airport screening to the watch list system. Obama said a summary of a preliminary report will be made public “within the next few days.” Today’s White House meeting included 20 of Obama’s top advisers on security. “The tone that he set in there was one of urgency,” Deputy National Security Adviser Denis McDonough said after the session in the Situation Room. To contact the reporter on this story: Kate Andersen Brower in Washington at Kandersen7@bloomberg.net ; Nicholas Johnston in Washington at

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Brennan Says Closing Embassy in Yemen `Prudent’ Because of Al-Qaeda Threat

January 3, 2010

By Ian Katz and Bill Schmick Jan. 3 (Bloomberg) — Closing the U.S. embassy in Yemen was the “prudent thing to do” because of intelligence that al- Qaeda might attack the compound, President Barack Obama’s assistant for homeland security and counterterrorism said. John Brennan today cited intelligence indicating al-Qaeda plans “to carry out attacks in Sana’a, possibly against our embassy, possibly against U.S. personnel.” The U.S. decided “it was the prudent thing to do to shut the embassy,” Brennan said on ABC’s “This Week.” The closure of the embassy and that of the U.K. came a day after the top U.S. general in the region, David Petraeus , paid an unannounced visit to Yemen and pledged more assistance in combating terrorism. Petraeus held talks yesterday in the capital Sana’a with President Ali Abdullah Saleh during which he reaffirmed the U.S. commitment to support anti-terrorism efforts in Yemen, the Yemeni presidency said in a statement on its Web site. The U.S. general told reporters in Baghdad on Jan. 1 that in the 2010 fiscal year the U.S. will almost double last year’s $70 million in security aid for Yemen. Asked on “Fox News Sunday” if the U.S. might send American troops to Yemen, Brennan said: “We’re not talking about that at this point at all.” “The Yemeni government has demonstrated their willingness to take the fight to al-Qaeda,” Brennan said. “They’re willing to accept our support. We’re providing them everything that they’ve asked for.” Failed Bombing The Yemen branch of al-Qaeda claimed responsibility for the failed Dec. 25 attack in which Nigerian Umar Farouk Abdulmutallab was charged with trying to blow up a Northwest Airlines flight with 278 passengers. Brennan said on Fox there are “probably several hundred” al-Qaeda members in Yemen and the U.S. worries they may be training other operatives for attacks in the U.S. and elsewhere in the West similar to the one attempted by Abdulmutallab. U.S. intelligence agencies had “snippets” of information that were recognized “in hindsight” to be related to the failed attack, Brennan said. There was a “failure to integrate and piece together those bits of information,” he said. Yemen has become an increasingly important base for al- Qaeda, which may have 200 to 300 militants in the country, Yemeni Foreign Minister Abu Bakr al-Qirbi said on Dec. 29. He said the group may be planning further attacks after the Detroit plane bomb plot. Yemen’s Struggle Yemen is also struggling to subdue both an insurgency by northern Shiite Muslim rebels that has drawn in neighboring Saudi Arabia, a key U.S. ally, and a secessionist movement in the south. It is the poorest Arab nation and the government expects oil reserves that fund 70 percent of the budget to run out over the next decade. The top Republican on the Senate Intelligence Committee, Kit Bond of Missouri, said the U.S. national security system failed. “With all of the leads dangling out there, somebody screwed up by not reporting it,” said Bond, who also appeared on Fox. In addition, the airport screening “was a disaster,” he said. The Intelligence Committee, one of several congressional panels planning investigations of the incident, will hold a hearing Jan. 21. Bond said there are no grounds at this point to fire Homeland Security Secretary Janet Napolitano , National Intelligence Director Dennis Blair or Leon Panetta , head of the Central Intelligence Agency. Republican Criticism Other Republicans criticized the Democratic Obama administration’s anti-terrorism efforts. “What we had in this case was a failure to act on a very credible report from the terrorist’s father that should, at the very least, have caused the State Department to revoke his visa,” Senator Susan Collins , a Maine Republican, said on “This Week.” Abdulmutallab’s father warned officials at the U.S. embassy in Nigeria that he was worried about his son’s extremist views, U.S. authorities said. “Why wasn’t this individual’s visa revoked once we had such a credible report that he posed a threat?” Collins said. “That to me is an even bigger failure than the failure to screen him effectively.” She called it “unacceptable” that there is no system in place to detect the explosive used in the Christmas Day incident, even eight years after would-be shoe-bomber Richard Reid used “the exact same explosive.” Lost Opportunity Senator Jim DeMint , a South Carolina Republican, said the U.S. “probably lost valuable information” by not viewing the attempted airline bombing as an act of war and the suspect as an enemy combatant. “If we had treated this Christmas Day bomber as a terrorist, he would have immediately been interrogated military- style, rather than given the rights of an American and lawyers,” DeMint said on CNN. The Obama administration was “distracted” by issues including health care and the economy, said Tom Kean , a Republican who was chairman of the commission that examined the Sept. 11, 2001, attacks. “I think they weren’t giving this enough attention. It’s understandable, but it’s not acceptable,” Kean said on CNN. Unfair, Political Democratic Senator Claire McCaskill of Missouri said it is “unfair and, frankly, political to take pot shots at the president as we respond to this failure in our systems that we’ve got to get fixed.” Obama has said “very clearly and very forcefully that there is a war against terror and violence that is a vast network,” McCaskill said. “And we have been taking it to that network through the intelligence community, through additional resources in Somalia and Yemen.” Brennan, speaking on NBC’s “Meet the Press,” defended Obama against criticism by former Vice President Dick Cheney , who told Politico on Dec. 30 that the president “is trying to pretend we are not at war” and is taking a “low-key response” to the airline bombing attempt. Cheney is either “willfully mischaracterizing this president’s position both in terms of the language he uses and the actions he’s taken, or he’s ignorant of the facts,” Brennan said. To contact the reporters on this story: Ian Katz in Washington at ikatz2@bloomberg.net ; Bill Schmick in Washington at wschmick@bloomberg.net .

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Embassies in Yemen Shut by U.S., U.K.; Brown Cites Risk in `Failing’ State

January 3, 2010

By Ian Katz and Henry Meyer Jan. 4 (Bloomberg) — The U.S. and U.K. closed their embassies in Yemen yesterday, citing threats of attack by al- Qaeda terrorists. “We’re not going to take any chances with the lives of our diplomats and others who are at that embassy,” White House counterterrorism chief John Brennan said on “Fox News Sunday,” one of four Sunday news shows on which he appeared. The U.K. and U.S. are offering more security aid for Yemen, an impoverished Arabian Peninsula nation which is emerging as a base for al-Qaeda attacks as the terrorist group comes under pressure in Pakistan and Afghanistan. The Yemen branch of al-Qaeda claimed responsibility for the Dec. 25 attack in which Nigerian Umar Farouk Abdulmutallab was charged with trying to blow up a Northwest Airlines flight with 278 passengers. Brennan, President Barack Obama’s assistant for homeland security and counterterrorism, said there are “probably several hundred” al-Qaeda members in Yemen and the U.S. worries they may be training other operatives for attacks in the U.S. and elsewhere similar to the one attempted by Abdulmutallab. Asked if American troops might be sent to Yemen, Brennan said: “We’re not talking about that at this point at all.” “The Yemeni government has demonstrated their willingness to take the fight to al-Qaeda,” Brennan said. “They’re willing to accept our support. We’re providing them everything that they’ve asked for.” Visit by Petraeus The embassy closures came a day after the top U.S. general in the region, David Petraeus , paid an unannounced visit to Yemen and pledged more assistance in combating terrorism. Petraeus, in talks Jan. 2 in the capital Sana’a with President Ali Abdullah Saleh , reaffirmed the U.S. commitment to support anti-terrorism efforts in Yemen, the Yemeni presidency said in a statement on its Web site . Petraeus told reporters in Baghdad on Jan. 1 that the U.S. in fiscal 2010 will almost double last year’s $70 million in security aid for Yemen. “The Yemeni president and parliament take this threat very seriously,” Petraeus, the top U.S. commander in the Middle East and Central Asia, said in Baghdad. “And that is of enormous significance, especially in a country facing such challenges.” U.K. Prime Minister Gordon Brown warned that Yemen is a “failing state,” and he has called a Jan. 28 aid conference on Yemen in London at which the U.K. hopes to enlist support from oil-rich Gulf nations. Development Needs The conference should concentrate on Yemen’s $11 billion development needs as well as anti-terrorism assistance, Deputy Minister for Planning and International Cooperation Hisham Sharaf said by phone from Sana’a yesterday. A November 2006 donors’ conference in London led to pledges of $5.7 billion in aid for Yemen, almost half from Gulf nations, of which only $415 million has been received, Sharaf said. “What is needed is a long-term aid strategy,” said Mustafa Alani , a regional security expert from the Dubai-based Gulf Research Center. “It would be wrong to focus only on security and counterterrorism.” Yemen is struggling to subdue both an insurgency by northern Shiite Muslim rebels that has drawn in neighboring Saudi Arabia, a key U.S. ally, and a secessionist movement in the south. It is the poorest Arab nation and the government expects oil reserves that fund 70 percent of the budget to run out over the next decade. Obama and Brown agreed to fund a police unit in Yemen to target terrorism and will support coast guard operations in the Arabian Peninsula nation, according to an e-mailed statement from the two governments yesterday. ‘Prudent Thing to Do’ Shutting the U.S. embassy “was the prudent thing to do,” Brennan said yesterday on ABC’s “This Week” program. He cited intelligence indicating that al-Qaeda plans “to carry out attacks in Sana’a, possibly against our embassy, possibly against U.S. personnel.” Yemen said Dec. 24 it had foiled an al-Qaeda attack on the U.K. embassy a week earlier modeled on a twin suicide car bombing on the U.S. embassy in September 2008 that killed 17 people, including seven security guards and seven attackers. Yemen has become an increasingly important base for al- Qaeda, Yemeni Foreign Minister Abu Bakr al-Qirbi said on Dec. 29. Abdulmutallab, a 23-year-old, spent about three months in Yemen before leaving the country in early December. He told U.S. investigators that in Yemen he received training and the bomb- making materials he used in his attempt to blow up the airliner. Brennan said U.S. intelligence agencies had “snippets” of information that were recognized “in hindsight” to be related to the failed attack. There was a “failure to integrate and piece together those bits of information,” he said. ‘Somebody Screwed Up’ The top Republican on the Senate Intelligence Committee, Kit Bond of Missouri, said the U.S. national security system failed. “With all of the leads dangling out there, somebody screwed up by not reporting it,” said Bond. In addition, the airport screening “was a disaster,” he said. The Intelligence Committee, one of several congressional panels planning investigations of the incident, will hold a hearing Jan. 21. Bond, appearing yesterday on Fox, said there are no grounds at this point to fire Homeland Security Secretary Janet Napolitano , National Intelligence Director Dennis Blair or Leon Panetta , head of the Central Intelligence Agency. Other Criticism Other Republicans criticized the Democratic Obama administration’s anti-terrorism efforts. “What we had in this case was a failure to act on a very credible report from the terrorist’s father that should, at the very least, have caused the State Department to revoke his visa,” Senator Susan Collins , a Maine Republican, said on “This Week.” Abdulmutallab’s father warned officials at the U.S. embassy in Nigeria that he was worried about his son’s extremist views, U.S. authorities said. “Why wasn’t this individual’s visa revoked once we had such a credible report that he posed a threat?” Collins said. She said it is “unacceptable” that there is no screening system in place to detect the explosive used in the Christmas Day incident, even eight years after would-be shoe-bomber Richard Reid used “the exact same explosive.” Senator Jim DeMint , a South Carolina Republican, said the U.S. “probably lost valuable information” by not viewing the attempted airline bombing as an act of war and the suspect as an enemy combatant. “If we had treated this Christmas Day bomber as a terrorist, he would have immediately been interrogated military- style, rather than given the rights of an American and lawyers,” DeMint said on CNN. Democratic Senator Claire McCaskill of Missouri, also appearing on CNN, said it is “unfair and, frankly, political to take pot shots at the president as we respond to this failure in our systems that we’ve got to get fixed.” To contact the reporters on this story: Ian Katz in Washington at ikatz2@bloomberg.net ; Henry Meyer in Dubai at hmeyer4@bloomberg.net .

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Embassies in Yemen Closed by U.S., U.K. Over Threatened al-Qaeda Attack

January 3, 2010

By Ian Katz and Henry Meyer Jan. 4 (Bloomberg) — The U.S. and U.K. closed their embassies in Yemen yesterday, citing threats of attack by al- Qaeda terrorists. “We’re not going to take any chances with the lives of our diplomats and others who are at that embassy,” White House counterterrorism chief John Brennan said on “Fox News Sunday,” one of four Sunday news shows on which he appeared. The U.K. and U.S. are offering more security aid for Yemen, an impoverished Arabian Peninsula nation which is emerging as a base for al-Qaeda attacks as the terrorist group comes under pressure in Pakistan and Afghanistan. The Yemen branch of al-Qaeda claimed responsibility for the Dec. 25 attack in which Nigerian Umar Farouk Abdulmutallab was charged with trying to blow up a Northwest Airlines flight with 278 passengers. Brennan, President Barack Obama’s assistant for homeland security and counterterrorism, said there are “probably several hundred” al-Qaeda members in Yemen and the U.S. worries they may be training other operatives for attacks in the U.S. and elsewhere similar to the one attempted by Abdulmutallab. Asked if American troops might be sent to Yemen, Brennan said: “We’re not talking about that at this point at all.” “The Yemeni government has demonstrated their willingness to take the fight to al-Qaeda,” Brennan said. “They’re willing to accept our support. We’re providing them everything that they’ve asked for.” Visit by Petraeus The embassy closures came a day after the top U.S. general in the region, David Petraeus , paid an unannounced visit to Yemen and pledged more assistance in combating terrorism. Petraeus, in talks Jan. 2 in the capital Sana’a with President Ali Abdullah Saleh , reaffirmed the U.S. commitment to support anti-terrorism efforts in Yemen, the Yemeni presidency said in a statement on its Web site . Petraeus told reporters in Baghdad on Jan. 1 that the U.S. in fiscal 2010 will almost double last year’s $70 million in security aid for Yemen. “The Yemeni president and parliament take this threat very seriously,” Petraeus, the top U.S. commander in the Middle East and Central Asia, said in Baghdad. “And that is of enormous significance, especially in a country facing such challenges.” U.K. Prime Minister Gordon Brown warned that Yemen is a “failing state,” and he has called a Jan. 28 aid conference on Yemen in London at which the U.K. hopes to enlist support from oil-rich Gulf nations. Development Needs The conference should concentrate on Yemen’s $11 billion development needs as well as anti-terrorism assistance, Deputy Minister for Planning and International Cooperation Hisham Sharaf said by phone from Sana’a yesterday. A November 2006 donors’ conference in London led to pledges of $5.7 billion in aid for Yemen, almost half from Gulf nations, of which only $415 million has been received, Sharaf said. “What is needed is a long-term aid strategy,” said Mustafa Alani , a regional security expert from the Dubai-based Gulf Research Center. “It would be wrong to focus only on security and counterterrorism.” Yemen is struggling to subdue both an insurgency by northern Shiite Muslim rebels that has drawn in neighboring Saudi Arabia, a key U.S. ally, and a secessionist movement in the south. It is the poorest Arab nation and the government expects oil reserves that fund 70 percent of the budget to run out over the next decade. Obama and Brown agreed to fund a police unit in Yemen to target terrorism and will support coast guard operations in the Arabian Peninsula nation, according to an e-mailed statement from the two governments yesterday. ‘Prudent Thing to Do’ Shutting the U.S. embassy “was the prudent thing to do,” Brennan said yesterday on ABC’s “This Week” program. He cited intelligence indicating that al-Qaeda plans “to carry out attacks in Sana’a, possibly against our embassy, possibly against U.S. personnel.” Yemen said Dec. 24 it had foiled an al-Qaeda attack on the U.K. embassy a week earlier modeled on a twin suicide car bombing on the U.S. embassy in September 2008 that killed 17 people, including seven security guards and seven attackers. Yemen has become an increasingly important base for al- Qaeda, Yemeni Foreign Minister Abu Bakr al-Qirbi said on Dec. 29. Abdulmutallab, a 23-year-old, spent about three months in Yemen before leaving the country in early December. He told U.S. investigators that in Yemen he received training and the bomb- making materials he used in his attempt to blow up the airliner. Brennan said U.S. intelligence agencies had “snippets” of information that were recognized “in hindsight” to be related to the failed attack. There was a “failure to integrate and piece together those bits of information,” he said. ‘Somebody Screwed Up’ The top Republican on the Senate Intelligence Committee, Kit Bond of Missouri, said the U.S. national security system failed. “With all of the leads dangling out there, somebody screwed up by not reporting it,” said Bond. In addition, the airport screening “was a disaster,” he said. The Intelligence Committee, one of several congressional panels planning investigations of the incident, will hold a hearing Jan. 21. Bond, appearing yesterday on Fox, said there are no grounds at this point to fire Homeland Security Secretary Janet Napolitano , National Intelligence Director Dennis Blair or Leon Panetta , head of the Central Intelligence Agency. Other Criticism Other Republicans criticized the Democratic Obama administration’s anti-terrorism efforts. “What we had in this case was a failure to act on a very credible report from the terrorist’s father that should, at the very least, have caused the State Department to revoke his visa,” Senator Susan Collins , a Maine Republican, said on “This Week.” Abdulmutallab’s father warned officials at the U.S. embassy in Nigeria that he was worried about his son’s extremist views, U.S. authorities said. “Why wasn’t this individual’s visa revoked once we had such a credible report that he posed a threat?” Collins said. She said it is “unacceptable” that there is no screening system in place to detect the explosive used in the Christmas Day incident, even eight years after would-be shoe-bomber Richard Reid used “the exact same explosive.” Senator Jim DeMint , a South Carolina Republican, said the U.S. “probably lost valuable information” by not viewing the attempted airline bombing as an act of war and the suspect as an enemy combatant. “If we had treated this Christmas Day bomber as a terrorist, he would have immediately been interrogated military- style, rather than given the rights of an American and lawyers,” DeMint said on CNN. Democratic Senator Claire McCaskill of Missouri, also appearing on CNN, said it is “unfair and, frankly, political to take pot shots at the president as we respond to this failure in our systems that we’ve got to get fixed.” To contact the reporters on this story: Ian Katz in Washington at ikatz2@bloomberg.net ; Henry Meyer in Dubai at hmeyer4@bloomberg.net .

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Yemen `Failing State’, Brown Says, as U.S. Embassy Shut by al-Qaeda Threat

January 3, 2010

By Khaled Abdullah and Henry Meyer Jan. 3 (Bloomberg) — U.K. Prime Minister Gordon Brown warned that Yemen is a “failing state” as the U.S. and U.K. shut their embassies in the country because of the threat from al-Qaeda. The closures came a day after the top U.S. general in the region, David Petraeus , paid an unannounced visit to Yemen and pledged more assistance in combating terrorism. The U.K. and U.S. are offering more security aid for Yemen, an impoverished Arabian Peninsula nation, which is emerging as a base for al-Qaeda attacks as the terrorist group comes under pressure in Pakistan and Afghanistan. Brown has called a Jan. 28 aid conference on Yemen in London at which the U.K. hopes to enlist support from oil-rich Gulf nations. “The weakness of al-Qaeda in Pakistan has forced people out of Pakistan into Yemen and Somalia,” Brown told the British Broadcasting Corp. today. President Barack Obama said Jan. 2 that the U.S. would work with Yemen’s government “to strike al- Qaeda terrorists.” The Yemen branch of al-Qaeda claimed responsibility for the Dec. 25 attack in which Nigerian Umar Farouk Abdulmutallab was charged with trying to blow up a Northwest Airlines flight with 278 passengers. ‘Fighting Terrorism’ The London conference will be “an important means by which we will help the Yemeni authorities who are fighting terrorism develop the means and will to do this even more,” Brown told the BBC. The conference should focus on Yemen’s $11 billion development needs as well as anti-terrorism assistance, Deputy Minister for Planning and International Cooperation Hisham Sharaf said by phone from the capital Sana’a today. The failed Christmas Day airliner bomb plot mounted by al- Qaeda’s Yemeni arm was “a wake-up call to help Yemen,” Sharaf said. A November 2006 donors’ conference in London led to pledges of $5.7 billion in aid for Yemen, almost half from Gulf nations, of which only $415 million has been received, Sharaf said. Petraeus held talks yesterday in Sana’a with President Ali Abdullah Saleh during which he reaffirmed the U.S. commitment to support anti-terrorism efforts in Yemen, the Yemeni presidency said in a statement on its Web site . The U.S. general told reporters in Baghdad on Jan. 1 that in the 2010 fiscal year the U.S. will almost double last year’s $70 million in security aid for Yemen. “The Yemeni president and parliament take this threat very seriously,” Petraeus, the top U.S. commander in the Middle East and Central Asia, said in Baghdad. “And that is of enormous significance, especially in a country facing such challenges.” Secessionist Movement Yemen is struggling to subdue an insurgency by northern Shiite Muslim rebels that has drawn in neighboring Saudi Arabia, a key U.S. ally, as well as a secessionist movement in the south. It is the poorest Arab nation and the government expects oil reserves that fund 70 percent of the budget to run out over the next decade. Obama and Brown agreed to fund a police unit in Yemen to target terrorism and will support coastguard operations in the Arabian Peninsula nation, according to an e-mailed statement from the two governments today. Petraeus conveyed a letter to Saleh from Obama on cooperation in anti-terrorism and combating piracy, the Yemeni presidential statement said. Ongoing Threats The U.S. Embassy said in a message on its Web site that it was closed today “in response to ongoing threats by al-Qaeda” to attack American interests in Yemen. The U.K. Embassy suspended operations today for “security reasons,” Foreign and Commonwealth Office spokeswoman Victoria Hibell said in a telephone interview today. Closing the U.S. Embassy in Yemen “was the prudent thing to do” John Brennan , Obama’s assistant for homeland security and counterterrorism, said on ABC’s “This Week” program. Yemen has become an increasingly important base for al- Qaeda, which may have 200 to 300 militants in the country, Yemeni Foreign Minister Abu Bakr al-Qirbi said on Dec. 29. He said the group may be planning further attacks. Abdulmutallab, a 23-year-old, spent around three months in Yemen before leaving the country in early December. He told U.S. investigators he received training and the bomb-making materials he used in his attempt to blow up the airliner in Yemen. Yemen said Dec. 24 it had foiled an al-Qaeda attack on the U.K. Embassy a week earlier modeled on a twin suicide car bombing on the U.S. Embassy in September 2008 that killed 17 people, including seven security guards and seven attackers. To contact the reporters on this story: Khaled Abdullah in Sana’a via the Dubai newsroom at kabdullah2@bloomberg.net ; Henry Meyer in Dubai at hmeyer4@bloomberg.net ;

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