Dubai’s Woes, Iran’s Headache

Aspirin tablets / Photo: wikimedia commons
Aspirin tablets / Photo: wikimedia commons

Dubai has celebrated the opening of the world’s tallest skyscraper, the Burj Dubai, with a spectacular – not to mention costly – fireworks display. But the 10,000 fireworks did not blind us from the fact that the city and those who have put their hopes and money into Dubai are hurting. We all know who the main losers are:

    • The all-too-credulous investors willing to give cheap loans to Dubai World and Nakheel assuming their loans were guaranteed by the governments of Dubai and Abu Dhabi: A significant amount of this debt is believed to be bad debt (read: not backed by viable assets) – Moody’s has put the figure at about USD25 billion.

 

    • The city of Dubai itself, whose debt load – depending on whose estimates you are referring to – amount to between 100 and 200 percent of Dubai’s USD82 billion GDP: And it is not over yet – real estate prices in Dubai are expected to decline even further in 2010 as investors are abandoning their construction projects.

 

  • Dubai’s political independence within the UAE’s loose federation: Dubai has been enjoying special sovereign rights, such as control of customs, over parts of the judiciary and of its stock market. The UAE’s oil-rich capital Abu Dhabi’s offer to partially bail out its broke neighbor will most likely come at a political price. It is likely that Dubai will have to relinquish some of its sovereign powers to federal authorities.

Yet another loser, less talked-about but most significant in geopolitical terms, could be Iran.

During the Iran-Iraq war, Dubai was one of three UAE emirates that leaned more toward Iran, and it has continued to maintain the closest ties to the country among all UAE emirates. Iran is one of Dubai’s major trading partners. Both benefit tremendously from this relationship. As one observer states, “The trade between Iran and Dubai is one of the principal sources of Tehran’s confidence that it can survive US-led sanctions. Iranian investment in Dubai amounts to about US $14 billion each year.”

Some banks have been accused by the US government of indirectly doing business with Iran through Dubai-based institutions. Vice versa, Tehran has been accused of circumventing sanctions by doing business through Dubai based front companies.

Abu Dhabi has long resented Dubai’s ties to Iran. The UAE fears Iran’s regional ambitions and nuclear program, and it still has a territorial dispute over three UAE islands currently occupied by Iran. Besides, Dubai’s closeness to Iran is an embarrassment to the UAE in its close relationship with the US.

Dubai’s financial crisis is putting Abu Dhabi into the enviable position of being able to attach strings to its bailout offer. Although the US has kept mum about it in public, no doubt Washington encourages Abu Dhabi to make bailout money dependent on Dubai severing commercial ties with Iran.

And as Dubai is tightening its belt, Iran may find it just a little harder to circumvent international sanctions.

Religion and Politics in Israel

Orthodox Jews at the Western Wall, courtesy of Premsagar/flickr
Orthodox Jews at the Western Wall, courtesy of Premsagar/flickr

Recently, Israel has experienced several inner conflicts. But this time, Palestinians have nothing to do with them. It is a series of conflicts and tensions between the two faces of the Israeli population: Orthodox Jews and secular Jews. As a report by the Institute for National Security Studies of Tel Aviv mentions, “a different but no less serious challenge to Israel is the deep ideological divisions among the Jews themselves.”

Examples of this division can be observed almost daily in the local media. From the settlement policy to the future of Palestine, the ideological difference is clear. Part of the Orthodox minority, most of them are settlers, is determined to occupy, if not conquer, the land they believe God gave them. As a short example of their determination, the government needed 40,000 troops and policemen and months of preparation to remove fewer than 8,000 settlers from the Gaza Strip over a period of a few months.

Until recently, this minority had little to say in terms of national policy. But the last election that saw Israeli Prime Minister Binyamin Netanyahu gathering a right-wing coalition changed the presence of the orthodox group on the political stage. The coalition government now includes several members of the Shas party and even one member of The Jewish Home. Theses religious parties are strong advocates of the presence of the Halakha, the Jewish law, in Israeli law. This once-stable coalition is now starting to fall apart:

A Seasonal Reading List

Candle light, photo: Alesa Dam/flickr
Candle light, photo: Alesa Dam/flickr

In light of our weekly theme – religion and international affairs – we thought we’d link to an excellent reading list compiled by Foreign Affairs on this very timely and often ignored topic.

Whether seen as a civilizational clash; a clash between modernity and traditionalism; secularism and religion, the nature of conflict in the international realm makes it clear that powerful forces are at play and tend to evolve, more than ever, around religious identities and clashing interpretations thereof.

As Foreign Affairs notes, the relevance and effectiveness of US and indeed western foreign policy depends on acknowledging the place religion occupies in global politics and engaging in candid conversations that include both secular and religious voices.

Instead of allowing religiously couched fear-mongering to take root in our minds and in our policy, and effectively allowing Huntington’s ‘clash’ to become a self-fulfilling prophecy, we need to engage openly with religion in the political realm, while keeping in mind that religious rhetoric often masks deep socio-political malaise and distinctly non-spiritual problems.

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NPT Review Conference / Shanghai Cooperation Organisation

CSS Analyses
CSS Analyses in Security Policy

The Center for Security Studies has just published two new policy briefs:

    • Oliver Thränert analyzes the main issues to be discussed at the May 2010 Review Conference of the Non-Proliferation Treaty (NPT). According to him, the challenges of the Iranian and North Korean nuclear programs make it difficult to achieve agreement. He also point out to the discord among state parties over whether to
      prioritize non-proliferation or disarmament.

  • Stephen Aris examines the role of the Shanghai Cooperation Organisation (SCO) in Central Asia. He argues that it is not as anti-western as you would think. Taking into account the growing importance of the SCO to the region, he writes, the West should not exclude a priori the idea of selective cooperation with the SCO on common security interests.
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ISN Partners’ Copenhagen Specials

Image by CCAC North Library / flickr
Image by CCAC North Library / flickr

My colleagues and I have seen an impressive surge in publications on climate change in the run-up to the Copenhagen Summit.

This demonstrates just how widely relevant the issue of climate change is. Across geographical and thematic research focus, a large part of the ISN’s partner institutes have published on the topic in the last few months.

Here is a small selection of what has come across our desks recently:

 

 

 

 

 

  • … and for many more, see publications classified under ‘climate change’ in the ISN digital library.