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Friday, 25 February 2011

FT Alphaville » Freezing Gaddafi’s billions

Or, just who is ’sovereign’ in a sovereign wealth fund, anyway?

Western powers were starting to catch up with the Libyan people in hitting Colonel Gaddafi where it hurts on Friday. In this instance, by freezing financial assets, as part of a package of sanctions.

From the Telegraph late on Thursday:

The Treasury is understood to have set up a unit to trace Col Gaddafi’s assets in Britain, which are thought to include billions of dollars in bank accounts, commercial property and a £10 million mansion in London…

In total, the Libyan regime is said to have around £20 billion in liquid assets, mostly in London. These are expected to be frozen as part of an international effort to force the dictator from power.

G20 governments and Dubai must act now to freeze and investigate any illicit assets - Zawya

Transparency International (TI), the anti-corruption organisation, is calling on the Group of 20 countries and Dubai to freeze and investigate immediately any illicit assets, particular those originating from Egypt and Tunisia.

A letter from TI Chair Huguette Labelle sent last night to the heads of state of the G20 countries and the Emir of Dubai urges them to implement the request made by Egypt's public prosecutor to freeze and investigate the foreign assets of former president Hosni Mubarak and his closest family members.

Global illicit financial flows present a massive transfer of wealth out of poorer nations, undermining poverty alleviation and sustainable growth.

Dow Jones Islamic Markets commentary: Lessons from the turmoil - bi-me.com

It is of no surprise that the Dow Jones Islamic Market Index (DJIM) covering Arab stock markets suffered the largest losses in February. Political crisis and civil unrest in Egypt, Jordan, Bahrain, Yemen, Morocco, escalating even to a civil war like in Libya, weighed on the markets.

The turmoil led the DJIM Kuwait Index to drop 8.64% to close at 908.36 (as of February 22’s close of trading).

The DJIM Gulf Co-operation Council (GCC) Index finished down 5.03% at 1293.33 and the DJ Dubai Financial Market (DFM) Titans 10 Index lost 4.83%, closing at 1,977.82. These declines stand in stark contrast to the rise in energy prices, which usually lift Middle Eastern markets.

domain-b.com : UAE replaces US as India's top trading partner

India's trade has undergone a major change in the geographical direction since the global financial crisis that erupted in 2007. The US, which has been India's top trading partner till 2007-08, has since been relegated to the third position with the UAE and China assuming first and second positions in India's trade relations.

This position continued in 2009-10 and the first half of 2010-11. Figures for comparable periods show India's trade with the UAE in both 2009-10 and 2010-11 (April-September) were higher than its imports, while its exports to China were lower than imports.

Among its top 15 trading partners, India had bilateral trade surplus with five countries, namely the UAE, the US, Singapore, the UK and Hong Kong, in 2009-10 and the first half of 2010-11.

WHY THE MIDDLE EAST IS A DRAG ON GROWTH | PRAGMATIC CAPITALISM

The Mid-East turmoil is not over, and, most likely, has only begun. The revolt in Tunisia spread to Egypt, and now Libya, a nation that produces 2% of the world’s oil. There have also been demonstrations in other Arab nations such as Bahrain, Yemen, Algeria and Iran. Others may be next. History tells us that revolutions of this type are contagious once the first nation shows what could be done. This was true hundreds of years before the age of the internet and cell phones, and is therefore even truer today.

We also know that revolutions seldom end in benign fashion and that violence and chaos are more the norm. This is particularly valid in the Mid-East where revolts have never ended with the formation of stable democracies. It is therefore likely that turmoil in this section of the world will continue for some time with unpredictable results.

As a result of this unpredictability and the extremely small chance of a quick and benign outcome, oil prices have already soared and will remain high and volatile for an extended period of time. Libya produces 2% of the word’s oil, an amount that could probably be replaced by Saudi Arabia within a reasonable period. What is particularly worrisome is that demonstrations in largely Shia Bahrain could spill over into neighboring Saudi Arabia, whose provinces bordering Bahrain produce most of its oil. This area also contains most of the minority Shia in a mostly Sunni country. In addition Bahrain’s rulers are Sunnis as well. Therefore it is easy to see that the potential for trouble is not insignificant.

FT Tilt - Mr. Muammer Gaddafi's final 4 to 6-month reign of terror(Registration)


Place your bets now. Eurasia Group reckons that the violence in Libya will rage for the next 4-6 months at least as Gaddafi launches a desperate attempt to maintain his grip on power. This will terrorize most parts of the country, fragmenting the political opposition to the Colonel's rule and dividing tribal groups. And even if Gaddafi was booted out of power soon, the resumption of oil output would take a long while.
Here's why the Libyan leader can stay in power for up to 6 months, according to Mohammed El-Katiri, Middle East analyst at Eurasia Group:
He remains in control of abundant financial resources that allow him to pay for special forces and mercenaries. He is also supported by his sons that who have their own political power aspirations and private paramilitary forces and appear committed to fight to preserve their leadership claims.


FT Alphaville » Libyan oil supply, and short-term whiplash

A confusing picture at the moment on measures to address the Libyan supply shortfall in the short term — even as Gaddafi’s end seems to be nearing, at last.

And it really is the short term that matters for those exposed to Libya.

While the International Energy Agency insisted that European refiners had enough supply for a month and said coordinated action was unnecessary, Reuters reported that Saudi Arabia has quietly lifted daily output above 9m barrels. Separately, the ruling council based in Libya’s eastern city of Benghazi said that all oil terminals under anti-Gaddafi control were working, but with a 75 per cent shutdown.

Nasdaq is running out of options - ft.com -

Bob Greifeld, Nasdaq OMX's chief executive, faces an uncomfortable reality.

The wave of consolidation that has swept the exchange business this month has left him with little choice but to talk through his options with bankers at Evercore Partners and Bank of America BAC Merrill Lynch.

But Greifeld's business is too small and too indebted to acquire most other big exchanges. Nasdaq has a market capitalisation of USD 5.5 billion which would mean it could only realistically consider a solo bid for BME, the Spanish exchange, or Bursa Malaysia.

Oil rises above $112 on Libya output cuts | Reuters

Oil rose more than $1 a barrel to over $112 on Friday as unrest in Libya sparked fears of supply shortages, despite assurances by top oil exporter Saudi Arabia that it would step in to fill any shortfall.

Unrest has cut a large chunk of Libya's output of 1.6 million barrels per day, prompting Saudi Arabia to launch talks with European companies that buy most of Libya's oil exports.

Brent crude for April delivery rose $1.31 to $112.67 a barrel by 0523 GMT. Prices briefly surged to a 2-1/2-year high of $119.79 on Thursday before settling at $111.36.

gulfnews : Dubai signs lease agreement for Smart City project

Within a month of the Kerala government and Smart City Dubai resolving their differences over Smart City Kochi, the much-delayed Rs15 billion (Dh1.21 billion) infotech project took another step forward with the lease agreement being registered here on Wednesday.

The first board meeting, being held here after the inking of the memorandum of agreement between the two sides, approved the lease agreement and cleared the way to get the registration process completed at a sub-registrar office near the city with clear cut guidelines that at no cost should the land be sold.

It was more than three years ago that the foundation stone for the project was laid.

Sheikha Mozah of Qatar warns of cycle of unemployment - The National

The influential head of the Qatar Foundation has criticised Arab governments for failing to provide sufficient education and work for the region's burgeoning youth population, and warned of a "devastating cycle of unemployment".

Sheikha Mozah bint Nasser Al Missned's criticism was published in a UN report today amid uprisings across the region in which young people have led calls for better job prospects and political rights.

"The education system in Arab countries is partly responsible for the soaring unemployment rate, because it focuses more on granting diplomas than on effectively training students in practical skills," wrote Sheikha Mozah, who is the wife of Qatar's emir, Sheikh Hamad bin Khalifa Al Thani.

Emirates bond likely used to fund expansion-banker | Reuters

A bond issue from Dubai's flagship carrier Emirates airline is likely to be for expansion purposes rather than refinancing debt and would attract strong demand in spite of the current regional upheaval, a banker said.

Emirates, one of the Arab world's largest airlines, which has a $190 million loan repayment due on February 26, has mandated banks for a bond issue, IFR markets, a unit of Thomson Reuters, reported earlier this month.

The airline has total debt maturities in the first quarter of 2011 of nearly $780 million. This includes a $500 million bond repayment due on March 24, Thomson Reuters data showed.

FT.com - Global insight: Revolts expose tawdry policies of west

The chain of uprisings across the Arab world plainly caught the US and Europe, as well as allied Arab rulers, on the hop. Comfortably aligned with dictators who ostensibly guaranteed them stability and cheap oil, western leaders dispensed liberal nostrums while checking in their democratic principles at the palace gate or the tent flap.

Their response to Arab revolution is evolving. From the first shocked vacillations between wobble and waffle, western rhetoric has become more assured. Yet the west’s performance still looks inadequate, especially in the face of the increasingly unhinged Muammer Gaddafi.

The Arab crisis has exposed mercilessly the cosiness of links between western and, above all, European leaders and their regional counterparts. The fawning greed with which Britain, France and Italy have sought oil and business opportunities from Colonel Gaddafi’s murderous regime now looks particularly tawdry. Is that only with the benefit of 20-20 hindsight?

An Egyptian diaspora bond?

Remittances are a fascinating and oft neglected slither of global capital markets.

Flows are inherently difficult to measure but the World Bank estimates ‘developing’ countries received in excess of $300bn in 2009 and 2010 — around three times more than official aid flows.

In a report out Thursday the CBO estimates that in 2009 $48bn of these remittances came from the US.