Macki gets the cheque book out in Libya

In more local news, Oman agreed to form a $500 million joint investment company with Libya during the visit by His Majesty and senior Omani Government officials.

Hey, why not? Its obviously not proving easy to spend all the money Oman is currently coining with the high oil prices. The Government is already spending as much, if not more, than it sensibly can in Oman without the economy running white hot with inflation and running out of materials (and opportunities). And the main Government investment funds are also straining to find investment opportunities that meet the criteria.

So, this offers a quick spend of $250mln, a source of leverage and opportunity in a country with strong prospects for long-term growth, and a nice diplomatic coup for HM. There will undoubtedly also be opportunities for investments in Libya's upstream oil and gas sector, as the spending and exploration programs of the newly re-invited oil majors start to seek traction. Thus, I'd expect a potential follow through in Libya for companies like Renaissance Services, MB Petroleum, Galfar and Al Turki, as well as perhaps opportunities in pipe supply, real estate development, tourism etc.

Nice one.
S

ultanate, Libya ink MoU on joint venture
TRIPOLI As part of His Majesty Sultan Qaboos Bin Said’s visit to Libya, the Sultanate's government and the Libyan government signed a Memora-ndum of Understanding (MoU) on Wednesday to establish a joint holding company with a capital of $500 million at its headquarters in Tripoli.

The agreement was signed on behalf of the Sultanate's government by HE Ahmed Bin Abdul nabi Macki, Minister of National Economy and Supervisor of the Ministry of Finance, and Dr Ali Abdul Aziz Al Isawi, Secretary of the General People's Committee for Economy, Trade and Investment on behalf of the Libyan government. The ceremony was attended by Dr Al Baghdadi Ali Al Mahmoudi, Secretary-General of the General People's Committee.

"The MoU comes as crown and translation of His Majesty Sultan Qaboos Bin Said's visit to Libya and desire of the two countries to enhance and develop the existing cooperation in different domains, especially in economic and joint investment fields, said Macki.

"The aim of the joint holding company is to explore investment opportunities in industry, trade, tourism, real estate and banking institutions in both countries,” he added.

"The incorporation of a multi-purpose company is aimed at exploring investment opportunities that can develop economy in both countries,” he added.

The two sides agreed to establish a joint committee that will prepare the incorporation agreement of the holding company and explore the potential investment opportunities that can be undertaken by the proposed company.
...

Israeli involvement in Georgia confirmed. Pentagon again cool things down

Reports in the Israeli newspaper Haaretz confirmed the involvement of Israeli companies in providing training and arms sales to Georgia. Not actually too unusual perhaps, as arms sales are a huge component of Israels exports. (note that the Russians shot down 3 Georgian drones yesterday).

The report also confirms web reports that 2 of the Georgian cabinet (including the Defense Minister) are, if not Israeli, Zionist Jews with very close ties to Israel. It seems the Georgian President is trying to confirm they are Israeli, while the Israelis are trying to counter claim that they are certainly not.

Interesting.

Georgia president denies Israel halted military aid due to war
By Anshel Pfeffer, Haaretz Correspondent

Georgian President Mikheil Saakashvili denied on Wednesday night that Israel has suspended its military aid to the country. "I haven't heard anything about that, and I haven't had time to think about that issue for some days," he told Haaretz.

Saakashvili said he is aware of problems with supplying the pilotless drones that his army ordered from Israeli companies, but not of the stopping of any other shipments of military aid.

"The Israeli weapons have proved very effective," he said at a press conference at his office. When asked whether the Israeli arms played a role in the military successes he claimed the Georgian army had achieved, he joked: "Are you asking me as a representative of Elbit or of Israel Aerospace Industries?"

To a reporter's question about Jews who have fled the fighting and come to Israel, he said: "We have two Israeli cabinet ministers, one deals with war [Defense Minister David Kezerashvili], and the other with negotiations [State Minister for Territorial Integration Temur Yakobashvili], and that is the Israeli involvement here: Both war and peace are in the hands of Israeli Jews."

Yakobashvili is actually not an Israeli citizen. Saakashvili's statements are part of his government's attempt to bring other countries into its war against Russia. During the briefing, Saakashvili noted that he is in constant contact with U.S. Vice President Dick Cheney and Secretary of State Condoleezza Rice. He promised that U.S. warships would be docking in Georgian ports within a few days to make sure they remain open.

Saakashvili tried to project confidence during the interview, but could not completely hide the stress he is under. A few hours earlier, refugees from Gori held a spontaneous demonstration in front of parliament, calling for Saakashvili to resign. ...

President Saakashvili himself is no paragon of democracy either, having instigated a big crack down on the opposition in Georgia late last year, and clearly acting somewhat precipitously in Sth Ossetia by triggering what would obviously be a firm Russian smack-down.

He's also trying hard to pull the US into the conflict, by claiming the US would be taking control of Georgia's air and sea ports. See this report in The Tribune Tribune
(note the headline is misleading)

Also note, once again, it's the Pentagon who are pouring the ice water, not the Bush Administration.

US ‘to take control’ of Georgian sea, airports
TBILISI
President George W. Bush’s pledge to send aid to Georgia means that the US military will take control of the ex-Soviet state’s ports and airports, Georgian President Mikheil Saakashvili said on Wednesday.

But the Pentagon denied it planned any such action to proceed with deliveries of humanitarian aid.

“You have heard the statement by the US president that the United States is starting a military-humanitarian operation in Georgia,” Saakashvili said in a television address.

“It means that Georgian ports and airports will be taken under the control of the US defence ministry in order to conduct humanitarian and other missions. This is a very important statement for easing tension.”

Pentagon press secretary Geoff Morrell said: “We are not looking to, not do we need to, take control of any air or seaports to conduct this mission.”

In his White House remarks, Bush said he had ordered the US military to deliver humanitarian aid. A C-17 aircraft with supplies was on its way to Georgia and in the days to come Washington would use
military aircraft and naval forces to make deliveries....

Woes continue at Blue City. Poor sales and Bovis heads for the exit

In the on-going saga that is, supposedly, Oman's biggest single investment project, Blue City or Al Madina A'zarqa, the woes continue. The grand design is struggling to move forward on plan.

The project failed to meet its August 7th revenue target that it committed to when it borrowed the almost 1 billion dollars to start the project.

Abu Dhabi media outlet The National reports yesterday that BCC1 management confirmed that Blue City sales receipts were only $31mln, well short of the $101 commitment, and despite new CEO Richard Russell previously expressing confidence that they would meet the target.

The next challenge will be making November's revenue target, with BCC1 needing another $155m in revenue to meet the next target of $186m by Nov 7. And in a local (and global) real estate market hit by falling prices, tightening credit and a glut of similar opportunities that are much further down the track of completion (like the Wave), thats a hill to climb with 1 month taken out by Ramadan. That's 5 times the revenue raised in the last 6 months to get in the next 3 months. The CEO is already talking of promotions and discounts, but with much of the original money already spent on redesign and rapidly rising costs for construction, he'll have his work cut out. I'd expect the only option he has will be to offer discounted blocks of villas and apartments to some big players, perhaps in exchange for a much higher upfront deposit. Which will hardly help profitability but may get him past the important November hurdle.

Mr Russell's problems aren't restricted to a slow summer in Muscat either. My sources tell me that the experienced international management company hired by BCC1 to manage the development, Bovis Lend Lease, are (allegedly) heading for the exit and making plans to pull out of the job. Another horse change in mid-stream will not help, with the CEO being replaced only a couple of months ago. And it begs the question who will step into the breach? I predict a move 'downmarket' to a possibly less western company.

The disfunctional relationship between the owners Cyclone LLC and AAJ Holdings, who are still only talking through their lawyers as they battle for control and ownership in the Omani courts, also means the Board of Directors of BCC1 is certainly not running at full speed. And this is the sort of time when firm and steady governance at the most senior levels would be most wanted by the CEO and investors.

In June, sources close to the project told me that W.J. Towell, who had been asked to design the 1 million rials fit-out of the new headquarters office for BCC1, were kicked to the curb and new Contractors had to be hired. There are additional reports I can't confirm of other contractor change outs too.

It would seem contractor management is not a strong suit for the BCC1 team, headed of course by Said Anees Issa Al Zadjali, Chairman of the Board at Blue City Company 1.

Oh dear. Don't expect to read this in the Times of Oman, nats.
The big question is: when will the Government be forced to move in and do a rescue? I don't think there's anything fundamentally wrong with the concept or the location, but doesn't such a strategic project need to be in the hands of the professionals?

Watch this space.

Blue City misses yet more revenue targets

Bradley Hope
August 13. 2008
ABU DHABI // Blue City, a US$20 billion (Dh73.4bn) development that could put the Sultanate of Oman on the global property map, has fallen further behind in meeting its revenue targets in the wake of a Fitch Ratings warning that identified financial threats to the project.

The project has been consistently short of its revenue targets since it began sales earlier this year because of delays caused by a redesign of the master plan, legal disputes over the ownership of the parent company and a management shake-up.

In the past three months, Blue City has booked revenue of $3 million from home sales, taking its total revenue to $31m – far short of its Aug 7 target of $101m, said Richard Russell, the chief executive of Blue City Company 1, which is in charge of the first phase of construction of the project.

“We’ve had progress on collections, but there is still more to go,” he said of the development, located about 45 minutes northwest of Muscat.

The shortfalls led Fitch Ratings last month to put the project on “ratings watch negative” for $526m worth of debt it had raised for the first phase of the project as part of a $925m bond.

The Fitch report warned that while missing the targets would not likely lead to immediate sanctions by investors, it could mean problems on the horizon.

“If sales performance does not improve significantly over the coming months and quarters, the borrower may eventually struggle to continue funding the construction costs of the project,” the report said. Another report from Fitch is expected in the coming weeks.

Mr Russell said those concerns were premature and that the project would be finished on time, in 2012. In the coming months, more than 3,000 units, including 200 golf-course villas, will go on sale. There are also negotiations to sell large blocks of apartments to investors, which Mr Russell said “were getting very close” to completion.

Another $155m in revenue is needed to meet the next target of $186m by Nov 7. “We want to be on target by that date,” Mr Russell said. “In the summertime things slow down here, so we haven’t really been pushing new launches. Those are very much on track now. You’ll start to see some promotions.”
...

More on Iran, US And Israel: The Pentagon keep their common sense

In a sort of good news/bad news story, Israeli newspaper Haaretz reported yesterday that America was strongly against supporting an Israeli strike on Iran, denying them military assistance, Iraq overflight rights, and acting to downplay the effectiveness of such a strike. (The report was also republished in The Oman Tribune.)

However, readers should note that these efforts are mainly coming from the Pentagon and the Joint Chiefs - American Institutions that seems refreshingly removed from the idiotic machinations of the theo-cons and the likes of VP Cheney.

So the good news is the Pentagon and the US Military are firmly against attacking Iran, and against enabling Israel to perform such a strike, and sensibly pointing out that such an attack would do little to actually halt the nuclear programme (see Haaretz Report), and blocking Israeli efforts through leaks. Similar leaks of the CIA intelligence assessment also helped cool down GW Bush's sabre rattling earlier this year. It would seem the guys in the Pentagon have got our backs on this one, thankfully.

The bad news is that Israel is clearly both asking for permission to overfly Iraq and trying to obtain US advanced weapons and intelligence to carry out such a strike, and were it seems very close to executing such a strike. US Administration hawks are also intent on keeping, as they like to say, all options on the table.

The danger would be that the fall back strategy of such hawks and the theo-cons could be to pressure Iran into making the first move, by for example, a partial naval blockade, or placing elements of the 5th Fleet in close proximity to trigger happy Iranian militias in the straights of Hormuz... Hmmm.

U.S. puts brakes on Israeli plan for attack on Iran nuclear facilities
By Aluf Benn, Haaretz Correspondent

The American administration has rejected an Israeli request for military equipment and support that would improve Israel's ability to attack Iran's nuclear facilities.

A report published last week by the Washington-based Institute for Science and International Security (ISIS) states that military strikes are unlikely to destroy Iran's centrifuge program for enriching uranium.

The Americans viewed the request, which was transmitted (and rejected) at the highest level, as a sign that Israel is in the advanced stages of preparations to attack Iran. They therefore warned Israel against attacking, saying such a strike would undermine American interests. They also demanded that Israel give them prior notice if it nevertheless decided to strike Iran.

As compensation for the requests it rejected, Washington offered to improve Israel's defenses against surface-to-surface missiles.

Israel responded by saying it reserves the right to take whatever action it deems necessary if diplomatic efforts to halt Iran's nuclearization fail.

Senior Israeli officials had originally hoped that U.S. President George Bush would order an American strike on Iran's nuclear facilities before leaving office, as America's military is far better equipped to conduct such a strike successfully than is Israel's.

Jerusalem also fears that an Israeli strike, even if it succeeded well enough to delay Iran's nuclear development for a few years, would give Iran international legitimacy for its program, which it currently lacks. Israel, in contrast, would be portrayed as an aggressor, and would be forced to contend alone with Iran's retaliation, which would probably include thousands of missile strikes by Iranian allies Hezbollah, Hamas and perhaps even Syria.

Recently, however, Israel has concluded that Bush is unlikely to attack, and will focus instead on ratcheting up diplomatic pressure on Tehran. It prefers to wait until this process has been exhausted, though without conceding the military option. Israel's assumption is that Iran will continue to use delaying tactics, and may even agree to briefly suspend its uranium enrichment program in an effort to see out the rest of Bush's term in peace.

The American-Israeli dispute over a military strike against Iran erupted during Bush's visit to Jerusalem in May. At the time, Bush held a private meeting on the Iranian threat with Prime Minister Ehud Olmert and Defense Minister Ehud Barak, and the Israelis presented their request for certain specific items of military equipment, along with diplomatic and security backing.

Following Bush's return to Washington, the administration studied Israel's request, and this led it to suspect that Israel was planning to attack Iran within the next few months. The Americans therefore decided to send a strong message warning it not to do so.

U.S. National Intelligence Director Mike McConnell and Chairman of the Joint Chiefs of Staff Mike Mullen both visited here in June and, according to the Washington Post, told senior Israeli defense officials that Iran is still far from obtaining nuclear weapons, and that an attack on Iran would undermine American interests. Therefore, they said, the U.S. would not allow Israeli planes to overfly Iraq en route to Iran.

The Americans sent a similar message to Iraq, which had objected vociferously to the idea of its air space being used for an Israeli attack on Iran.

These private messages were accompanied by a series of leaks from the Pentagon that Israel interpreted as attempts to thwart any possibility of an attack on Iran. For instance, the Americans revealed details of a major Israel Air Force exercise in the Mediterranean; they also said they doubted Israel had adequate intelligence about Iran's nuclear facilities. In addition, Mullen spoke out publicly against an attack on Iran.

Two weeks ago, Barak visited Washington for talks with his American counterpart, Robert Gates, and Vice President Richard Cheney. Both conversations focused on Iran, but the two Americans presented conflicting views: Gates vehemently opposes an attack on Iran, while Cheney is the administration's leading hawk.

Barak presented Israel's assessments of the Iranian situation and warned that Iran was liable to advance its nuclear program under cover of the endless deliberations about sanctions - which have thus far produced little in the way of action. He also acknowledged that effective sanctions would require cooperation from Russia, China and India, all of which currently oppose sanctions with real teeth.

Russia, however, is considered key to efforts to isolate Iran, and Israeli officials have therefore urged their American counterparts in recent months to tone down Washington's other disputes with Moscow to focus all its efforts on obtaining Russia's backing against Iran. For instance, they suggested that Washington offer to drop its plan to station a missile defense system in Poland and the Czech Republic - a proposal Russia views as a threat, though Washington insists the system is aimed solely at Iran - in exchange for Russia agreeing to stiffer sanctions against Iran. However, the administration rejected this idea.

In an attempt to compensate Israel for having rejected all its proposals, Washington then offered to bolster Israel's defenses against ballistic missiles. For instance, Gates proposed stationing an advanced radar system in Israel and linking Israel directly into America's early warning satellite network; he also offered increased American funding for the development of two Israeli missile defense systems - the Arrow-3, an upgrade of Israel's existing Arrow system for intercepting ballistic missiles, and Iron Dome, a system designed to intercept short-range rockets. In addition, Washington agreed to sell Israel nine Super Hercules long-range transport aircraft for $2 billion. However, it would not agree to supply Israel with any offensive systems.

Now, Israel is awaiting the outcome of the latest talks between the West and Iran, as well as a formal announcement of the opening of an American interests section in Tehran. Israel views the latter as sure proof that Washington is not planning a military strike.

Storm clouds - Is war about to break out in the Gulf?

OK, after some frivolity of late, this one is of interest, and potentially serious. (But I have to say, we're been here before several times, and the US has never done anything that would be seen as precipitating a crisis in Iran. So far its all been threats and bluster. And its still difficult to find any 'official' confirmation of the true size of the US Navy build up. It was big to start with.)

Many of the somewhat wacky web sites are buzzing with the current state of the rising tensions between the Western Powers and Iran, alongside the implications of the outbreak of a pretty nasty shooting war between Russia and Georgia, some say precipitated by the US.

At the same time, the US and its allies have allegedly assembled in the Gulf the largest armada of US and allied Navy power seen for a long time, possibly since World War II.

There were reports on August 8th in the Kuwait Times that Kuwait has hurredly updated its emergency war plans in response to the US naval build up and the threat of war.

Govt finalizing war emergency plan
Published Date: August 07, 2008
KUWAIT: The government is finalizing its emergency plan this week in order to ensure that the country is protected from foreign dangers in case the regional situation escalates and a war breaks out between Iran and the USA.

An unnamed senior official revealed that the government has learnt that two aircraft carriers are scheduled to arrive in the Gulf and the Red Sea in preparation for the expected war at any time. The official said that this information led the government to accelerate its emergency plan preparations, which include arrangements for protecting all sectors and vital installations. ...

The list of 'platforms' the US and western allies has recently moved into the Middle East theatre is long and impressive. Here's the list as posted in the pretty 'out there' conspiracy blog of the rather wacky (and that's an understatement) Lord Stirling [thanks for the link Willie!]. The list includes the Somali pirate chasing USS Peleliu which I blogged earlier, presumeably they were on their way north.

Global Research

The US Naval forces being assembled include the following:

Carrier Strike Group Nine
USS Abraham Lincoln (CVN72) nuclear powered supercarrier
with its Carrier Air Wing Two
Destroyer Squadron Nine:
USS Mobile Bay (CG53) guided missile cruiser
USS Russell (DDG59) guided missile destroyer
USS Momsen (DDG92) guided missile destroyer
USS Shoup (DDG86) guided missile destroyer
USS Ford (FFG54) guided missile frigate
USS Ingraham (FFG61) guided missile frigate
USS Rodney M. Davis (FFG60) guided missile frigate
USS Curts (FFG38) guided missile frigate
Plus one or more nuclear hunter-killer submarines

Peleliu Expeditionary Strike Group
USS Peleliu (LHA-5) a Tarawa-class amphibious assault carrier
USS Pearl Harbor (LSD52) assult ship
USS Dubuque (LPD8) assult ship/landing dock
USS Cape St. George (CG71) guided missile cruiser
USS Halsey (DDG97) guided missile destroyer
USS Benfold (DDG65) guided missile destroyer

Carrier Strike Group Two
USS Theodore Roosevelt (DVN71) nuclear powered supercarrier
with its Carrier Air Wing Eight
Destroyer Squadron 22
USS Monterey (CG61) guided missile cruiser
USS Mason (DDG87) guided missile destroyer
USS Nitze (DDG94) guided missile destroyer
USS Sullivans (DDG68) guided missile destroyer

USS Springfield (SSN761) nuclear powered hunter-killer submarine

IWO ESG ~ Iwo Jima Expeditionary Strike Group
USS Iwo Jima (LHD7) amphibious assault carrier
with its Amphibious Squadron Four
and with its 26th Marine Expeditionary Unit
USS San Antonio (LPD17) assault ship
USS Velia Gulf (CG72) guided missile cruiser
USS Ramage (DDG61) guided missile destroyer
USS Carter Hall (LSD50) assault ship
USS Roosevelt (DDG80) guided missile destroyer

USS Hartfore (SSN768) nuclear powered hunter-killer submarine

Carrier Strike Group Seven
USS Ronald Reagan (CVN76) nuclear powered supercarrier
with its Carrier Air Wing 14
Destroyer Squadron 7
USS Chancellorsville (CG62) guided missile cruiser
USS Howard (DDG83) guided missile destroyer
USS Gridley (DDG101) guided missile destroyer
USS Decatur (DDG73) guided missile destroyer
USS Thach (FFG43) guided missile frigate
USNS Rainier (T-AOE-7) fast combat support ship

Also likely to join the battle armada:

UK Royal Navy HMS Ark Royal Carrier Strike Group with assorted guided missile destroyers and frigates, nuclear hunter-killer submarines and support ships

French Navy nuclear powered hunter-killer submarines (likely the Amethyste and perhaps others), plus French Naval Rafale fighter jets operating off of the USS Theodore Roosevelt as the French Carrier Charles de Gaulle is in dry dock, and assorted surface warships

Various other US Navy warships and submarines and support ships. The following USN ships took part (as the "enemy" forces) in Operation Brimstone and several may join in:

USS San Jacinto (CG56) guided missile cruiser
USS Anzio (CG68) guided missile cruiser
USS Normandy (CG60) guided missile cruiser
USS Carney (DDG64) guided missile destroyer
USS Oscar Austin (DDG79) guided missile destroyer
USS Winston S. Churchill (DDG81) guided missile destroyer
USS Carr (FFG52) guided missile frigate

A quick summary:
- Georgia has been ruled by a western leaning Government for some time, with a western sponsored oil pipeline from the Caspian running through it, and a history of a semi-independent province (South Ossetia) dominated by Russians since the days of the Soviet Union. It is alledged that there have been 1000 US Advisors in Georgia recently, and that the attack by Georgia on South Ossietia was deliberately timed to precipitate a Russian response. Rumors of Israeli arms shipments and military personel supporting Georgia can also be found.
- Iran continues to do what it wants on Uranium enrichment, and recent sanctions by Europe and the US imply a possible 'search of cargoes' headed to Iran. Any attempts by the west to effectively impose a naval blockade of Iranian imports (or exports), especially of refined petroleum products, would undoubtably be seen by Iran (and China) as an act of war. See also Debka on the blockade
- It would seem US forces are there in such quantity and quality to ensure that, not only can they enforce a (partial)blockade, but more importantly so they can respond in force to any attempt by Iran to shut the straights of Hormuz.
- The wild card remains whether the Israelis will act to bomb Iranian nuclear facilities, and if so, will the US allow them to overfly Iraqi airspace (which they control)?
- Everyone knows that GW Bush has only a few months left. The timing of the November election may be something to watch, as no-one will want to be seen to influence the Presidential election. But once the election is over, Israel may feel free to act, and GW can claim to have no control.

Iran have also indicated that they would act against American interests in the Gulf (Qatar? Oman???) if there was any force applied by the US.

All in all, something to watch over the coming few weeks. Plus, I'm not planning a visit to Musandam soon....

More classic Times of Oman self promotion

Just a quick one - this classic item of self promotion in the 'hard hitting' Times of Oman today, about how fantastic Essa bin Mohammed Al Zedjali the editor of Times of Oman is. In fact the paper quotes the Omani Ambassador to China, Abdullah bin Salleh bin Hilal Al Saadi, as naming him "the author of English journalism in Oman"

Meanwhile, the continuing problems at Blue City, usually hailed by Essa as the most important project in Oman's history, remain surprisingly unreported by the Times. Just co-incidence that Essa's relative is the Chairman of the main company responsible for the development. Oops. More on that soon.
UPDATE: Just to clarify/expand, its Essa's son Said Anees Issa Al Zadjal who is Chairman of BCC1, the company responsible for the development of Blue City Phase 1.

Envoy to China hails ‘Times’ initiative
From Arif Ali
Tuesday, August 12, 2008 12:09:14 AM Oman Time
BEIJING — Abdullah bin Salleh bin Hilal Al Saadi, the ambassador of the Sultanate of Oman to China, yesterday hailed the initiative of Times of Oman in producing Oman in Beijing, a special publication to mark the Sultanate’s participation in the Bejing Olympics, which will be launched today at his residence in the presence of the Omani contingent and Chinese officials.

“I am deeply impressed by the imitative of Times of Oman which is bound to boost the growing Oman-China ties in addition to bolstering the morale of the Omani squad taking part in the Olympics,” said the senior envoy as he made a special mention of Essa bin Mohammed Al Zedjali, chairman and editor-in-chief of Times of Oman and Al Shabiba, for his sterling role in producing Oman in Beijing, striking both in manner and matter.

“Sheikh Essa remains the author of English journalism in Oman and we value his contribution to the promotion of mass media communication,”, said the ambassador who remains an avid reader of his hard-hitting and widely-read weekly column — Viewpoint — published also by the sister Arabic daily Al Shabiba.
...

The comment describing the Viewpoint opinion piece as hard-hitting made me laugh hardest.

Will the real Omani intellectuals please stand up?

Dead cat bounce?

As expected, the MSM index rebounded somewhat yesterday, up about 3.5%.

Those with a penchant for risk and opportunity should keep a weather eye out for the next few days. I'd expect to see a further drop as short term profits are taken, and that should be a buying opportunity for quality stocks that get caught up in the low liquidity and general panic: EG:
Bank Muscat, Galfar, Renaissance. (one could add Omantel, given the expectation of the long awaited strategic partner, but they are such a badly run and incompetent Government monopoly I wouldn't touch them with a 10 foot pole).

However, given the volatility lately, you need a good broker, or you'll find out you paid the highest price during the day.

But no matter what, the market will be interesting to watch for the next few days...

Oh, for those unfamiliar with the term Dead Cat Bounce used in the title: it comes from the phrase 'even a dead cat will bounce if you drop it from a great height': Thus, its a common observation of markets that following a big drop, there is often a slight rise immediately afterwards, but this does not mean prices will recover - its a slight blip on a downward trend.

Bloodletting continues on Muscat Stock Market

The Muscat stock exchange top 30 Index - AKA the MSM 30 - continued its freefall today, and as I post, it's dropped 5.7% from an opening of 10,115 to 9,537. Many leading and widely held stocks fell by around 9%, and that's today alone (plus see table below).

This recent plummet seems to have gotten the small investors running for the hills and the market shows signs of turning into a rout. If you know anyone who's been getting into the market in the last few months, they've probably taken a bath, especially if they borrowed to invest. You might quote the Bhagavad Gita to them...
"hell has 3 gates: lust, anger and greed". And that its only a paper loss unless they sell.
[Although my personal favorite quote on greed is from PJ O'Rourke, the American satirist, "No drug, not even alcohol, causes the fundamental ills of society. If we're looking for the source of our troubles, we shouldn't test people for drugs, we should test them for stupidity, ignorance, greed and love of power."]

Since the market peaked on June 11th, the market index is down nearly 22%. Ouch. But remember the index is still up over 40% since this time last year, so it was always likely that Muscat's recent over-exuberance would calm somewhat.

The institutional sharks (possibly with the support of the Government's coffers as HM's government is probably the largest investor in the market) will now start to circle I expect. Some of the shares look like good bargains at these prices on historic P/E (price/earnings) ratios (check out Bank Muscat). Even Galfar and Omantel look under-priced, but, hey, what do I know.

Certainly watch for the dead cat bounce. If the index drops below 8000 even I might buy in...

(Note that this blog is not a source of investment advice, and any readers are advised to do their own research. Do not make any decisions based on this blog).

Source MSM website
Company Price Change
Aug 11, 2008 01:08 PM
Company, Price, %change,
OMINVEST (OMVS ) 0.909 -9.82%
ONIC. HOLDING (ONIC ) 0.991 -9.42%
MAHA PETROLEUM (MHAS ) 16.052 -9.36%
OMAN CABLE INDUSTRY (OCAI ) 2.802 -9.03%
AL ANWAR HOLDING (AAIT ) 0.435 -8.61%
AL HASSAN ENG. (HECI ) 0.266 -8.59%
UNITED FINANCE (UFCI ) 0.312 -8.24%
GALFAR ENGINEERING (GECS ) 1.567 -8.20%
OMAN UNITED INS. (OUIS ) 0.370 -8.19%
NATIONAL ALUMINUIM (NAPI ) 0.550 -8.18%
BANK MUSCAT (BKMB ) 1.529 -5.79%
OMANTEL (OTEL ) 1.883 -7.15%
AL ANWAR HOLDING (AAIT ) 0.435 -8.61%
RENAISSANCE SERVICES (RNSS ) 1.441 -5.32%
NAT. BK. OF OMAN (NBOB ) 0.559 -7.30%

Will Oman move to a Friday Saturday weekend?

More scuttlebutt in the press today about how the Government is 'studying a move to a Friday Saturday weekend'.

The banks have already effectively moved. HE The Minister of Oil and Gas sent a letter to all operators and Oil and Gas service companies in the middle of last year telling them that the Oil and Gas industry would be moving to a F/S weekend as of 1st January this year, but nothing happened.

Rumor has it the Cabinet and leading industry figures are keen to align with UAE and Qatar, and to switch to the F/S. However, His Majesty is apparently not convinced that it would go down well with the general population, and has resisted the recommendation.

There are also grumbles in the boon docks of Nizwa that Saturday is a Jewish holyday, so the change in weekend is being represented by these agitators - somehow - as part of some Zionist-Imperialist conspiracy. Surprising that that viewpoint hasn't (yet?) been captured as an opinion in the Times of Oman yet!

Oman gets into the European hotel business.

In a nice deal, Oman’s State General Reserve Fund (owned by the Ministry of Finance and administered under the financial affairs and energy resources council) has bought half of an Irish company who own a chain of hotels.

To balance the numbers reported in the press though, with the private equity group Quinlan buying the chain last year for around 1.16 bln euros, yet it now being reported that Oman bough half for just 200mln euro... That must mean the hotel company is saddled with ~800mln euro in debt.

Quinlan have a history of buying such assets and then flicking a piece at a profit, recently making $100mln on a similar deal with the Saudi Prince Alwaleed bin Talal bin Adbulaziz al-Saud for the British Savoy hotel group a few years ago.

See more at Irish Times
and RTE Business.

Oman fund takes half of Jurys Inns
Thursday, 7 August 2008 12:04
An investment fund from Oman has bought a 50% interest in the budget hotels chain Jurys Inns. The announcement was made by property investment group Quinlan Private, which bought the business for €1.15 billion last year from the Jurys Doyle group.

Oman Investment Fund is the investment arm of the Sultanate of Oman. Its deputy CEO Hassan Al Nabhani said it was impressed with the quality of the business and its growth potential.

The timing on this investment should be good. Jury's are somewhat 'downmarket' hotels, and as the UK economy tanks they are actually seeing an increase in business as travellers opt for lower cost accomodation. Other potential buyers are strapped for ready cash right now, and Quinlan would have wanted to offload such a big piece. Plus the hotel group plan to expand into Eastern Europe, where Oman's diplomatic efforts will help grease the wheels.

The Sultanate's fund, established in 1980, holds a large proportion of Oman’s Sovereign wealth, and while results unfortunately aren't public the fund is widely estimated to hold around $6 bln and has been growing fast lately as oil funds pour in. Most of that will have been built up in just the last few years, as the cupboard was bare in 1998. The funds are not open to the public, and there is also no transparent explaination to average Omanis of either cash flows or the totality of investments. This is not unusual in GCC sovereign funds, naturally. Oman recently had to deny it was the purchaser of 2% of UBS in Dec last year, after market rumors that the buyer was Oman. (A good thing too - UBS' share price has since dropped by 50%!).

Getting rid of the money in an active sense can't be easy. Earlier this year for example it was announced that Oman will be getting into the real estate development market in of all places Minsk, in Belarus. (note the visit around that time of the Belarus President).

Oman's fund needs to invest abroad, to help get rid of the excess US dollars it's earning and avoid pumping the economy even more than the Government already is. In a fiscal sense this is true excess money, unlike some of the Asian funds (like China's) which while large is mainly offset by savings account liabilities to ordinary savers in the domestic currency.

Oman will want to make a diversified long term return, and presumably help somewhat Oman's economy. Thus, there are often bi-lateral investment deals, which doesn't help acheive a net transfer overseas.

I wonder if Omanis will be able to work in the Jury Hotels...? That would be a great bonus as long as it doesn't hurt the business...

Warith Al Kharusi, who leads the SGRF, has a great job. Getting to play with $6 bln jetting all over the world must be a lot of fun. I'm very jealous.

Ooops. Somali pirates have an 'Oh no' moment

The infamous Somali pirates had a close call near Yemen a couple of days ago when they tried to attack a big merchant ship while an American Navy strike group was close by, lead by a Tarawa-class amphibious assault ship the USS Peleliu.

No wonder they ran away. (here they are, in a photo supplied by the US Navy)

The lead US ship alone – essentially a light aircraft carrier - carries the following:
Armament: 2 x RAM launchers, 4 x 25 mm Mk 38 Bushmaster gun mounts, 2 x Phalanx CIWS, 5 x 0.50 cal (12.7 mm) mounts
Aircraft carried: 6 x AV-8B Harrier attack planes, 4 x AH-1W Super Cobra attack helicopters, 12 x CH-46 Sea Knight helicopters, 9 x CH-53 Sea Stallion helicopters, 4 x UH-1N Huey helicopters.

Nice. And more than enough to take on a few rag tags with AK47s and a grenade launcher. Here’s the US Ship.


Those must have been some nervous pirates. Ever since they made the mistake of kidnapping a French luxury boat last year, prompting the French Navy to assult the pirates and kill most of them, they are finding out what happens when you become enough of a menace to get noticed by the great powers. Franch went to the Security Council and got an official declaration of 'open season' on Somali pirates. Ha.

More please. These parasites need a lot more close and uncomfortable encounters with real navy boats.
Report

The Associated Press
Fri, Aug 8, 2008 (5:57 a.m.)
The U.S. Navy says it has stopped a pirate attack on a merchant vessel north of Somalia in the Gulf of Aden.
The Navy says the USS Peleliu responded to a call for help from the Gem of Kilakari on Friday morning. The ship said it was under attack from armed pirates as it was traveling to the Suez Canal.
The Navy's Bahrain-based 5th Fleet said in a statement that the USS Peleliu was about 10 miles (16 kilometers) from the Gem of Kilakari when it received the distress call.
The Navy says the suspected pirate ships fled the scene after the USS Peleliu launched three helicopters. The Navy says one grenade landed on the Gem of Kilakari's bridge wing but didn't explode, and no injuries were reported.

Royal Hospital basically confirms the rumors on virus

This classic today in the outstanding Times of Oman, with a statement from Royal Hospital ... err... effectively confirming an outbreak of drug resistant bacteria (bug un-named, but presumably Acinetobacter). I haven't read all the rumors, so maybe there was the idea around that this was some unusual bug that could infect large numbers of healthy adults.

The issue, as I think Royal is trying to say, is that these sort of bugs are unfortunately around everywhere these days - especially hospitals and old folks homes, and predominantly infect really sick people (see previous post). They are not actually super-bugs, but just the same nasty bugs that have been around for ever who have become resistant to many of the antibiotics used to cure the disease. Its a case of welcome back to the 19th century folks.

The problem is the treatment for these resistant bugs, especially in people who are sick/immuno compromised anyway, is tricky. It usually needs some heavy and expensive antibiotic like intravenous vancomycin, which is more toxic than the synthetic penicillins. This can be a problem if you're already treating someone for kidney failure for example.

Occasionally it seems these bugs do kill healthy people.

A good reason to:
1/ avoid hospitals
2/ if you go, try not to touch anything. Wash your hands well and often.
3/ don't shake hands with doctors or nurses
4/ don't use the pens provided to you, use your own.
5/ don't take small children, or anyone with an open wound, old people, etc.
6/ avoid touching your face, nose, scratching etc.


Here's the confirmation statement.( No I didn't change the headline).
Times article

Royal Hospital denies rumours on virus spread
Wednesday, August 06, 2008 11:57:47 PM Oman Time
MUSCAT — Dr Ahmed bin Mohammed Al Saidi, senior consultant at the Royal Hospital, yesterday denied the rumours making the round about the spread of a fatal virus at the Royal Hospital.

He said the fact was that there was the presence of a type of bacteria, that is resistant to antibiotics which could be carried even by healthy people.

The presence of the bacteria in the Intensive Care Unit was due to the weak immune system of the patients transferred to the said unit for various medical reasons. Such patients, if infected, would be at risk compared to other patients, he added.

This type of bacteria could also be a factor leading to death, but not the main reason for death, he said. The presence of such bacteria is natural, whether in the Sultanate or in other countries, he said.

The medical teams at the hospital were ready to deal with any emergency and were working round the clock, he said, stressing the need for adhering to the hospital's instructions to the patients as well as visitors.

For those interested in more scientific information on the topic, here's a really nice paper on the problem with another (and more famous) super-bug - MRSA. All about how to treat outbreaks, what is means, etc etc.

POST-PRESS (thanks for the link Willie!): New Yorker - Superbugs story

Avoid Royal Hospital - reports of drug resistant bug outbreak

Rumours flying at the moment - especially in the Arabic Omani blogosphere - about an outbreak of drug resistant bacteria at Royal Hospital. Several ICU units have been closed. Unhelpfully, the authorities are maintaining that the closures are just for regular maintenance, and there's no official statement I've seen on the bug thing.

The best info I have indicates its a relatively minor attack of Drug-resistant Acinetobacter. You can find out all about it here at the excellent US Government Center for Disease Control or CDC.

Outbreaks of Acinetobacter infections typically occur in intensive care units and healthcare settings housing very ill patients. Acinetobacter infections rarely occur outside of healthcare settings.

According to the experts, as with the super-bug MRSA, its therefore in theory not a huge issue for 'normally healthy adults'. But of course it is a big issue for the immuno-compromised, people with open wounds, lung disease, the very young and very old, and diabetics. Unfortunately, that's a list of conditions that includes large numbers of people, especially in a hospital.

This would, of course, not be the first time. There was an outbreak at Royal reported in the Saudi Medical Journal in 2004, July V25(7):page 961-3: 'Outbreak of multidrug resistant Acinetobacter in the neonatal intensive care unit.' By Manzar S.
Department of Child Health, Royal Hospital, PO Box 1331, Postal Code 111, Muscat, Sultanate of Oman. I'm sure our hospitals get super-bug outbreaks all the time. Its one of the reasons I like to stay away from hospitals - they are not healthy places!

Attempts to not talk about super-bug outbreaks in hospitals is also far from restricted to Oman. You'll read lots on the net about the same suppression of the truth about infection outbreaks in the UK and USA too. In fact, the whole super-bug thing can make some pretty scary reading. Last year it was reported that more people died of MRSA in the USA than of AIDS...

See google for more, if you want. Look up MRSA and Acinetobacter.

And wash your hands please.

UAE Minister sacked over business fraud case

The recent sacking of a UAE Minister, Dr. Khalifa Bakhit Al Falasi, was widely reported last week, and a few commentators have asked me if there’s any more to the story.

Of course there is. The Zawya story seems to get closest to what supposedly went on (see below). And now its reported he’ll be up in court on Sept 15th facing the public prosecutor (ie this seems to be a criminal case for fraud, not a civil case). Here he is in, presumeably, happier days.

The story: My source tells me that Dr. Bakheet Al Falasi was in partnership with a Lebanese Businessman, who built a successful company dealing in the manufacture of security smart cards and other high end printing products. The business had a load of expensive machines, and premises. Business had grown over the years and was good.

Unfortunately, the Lebanese businessman died. When his wife and son returned to the UAE, it is alleged that they found the good Minister had somehow managed to acquire the company and all its assets, leaving next to nothing for them. She went to the cops. The cops clearly felt there was a case to answer.

Of course, the rumors would have it that its not a very good indication of his chances in court that he’s been sacked as a Minister before the case, and that the public prosectutor agreed to pursue the case at all. In the UAE, a public prosecutor doesn't take on a Minister lightly, especially a relatively rich businessman Minister.

The trend is definitely one of the UAE wanting to be seen as a place where the rule of law takes precedence over the old ways of connections and fiat power, emphasised also by the recent case of the UAE Ministry official who was done for selling visas on the side.

It will be very interesting to see how the big Omani test case of the (well blogged, but poorly reported) Blue City dispute between Cyclone LLC and Bahrain's AAJH ends up, seeing as Cyclone is apparently significantly owned by HH Sayyid Haitham bin Tariq al Said, Oman's Minister of Heritage and Culture.

For those of you living a cave, here's one of the many press reports about the UAE Minister - this one from Gulf News

UAE Minister relieved from post
Staff Report
Published: July 27, 2008, 17:57

Abu Dhabi: President His Highness Shaikh Khalifa Bin Zayed Al Nahyan has issued a federal decree relieving Dr. Khalifa Bakheet Al Falasi from his post as Minister of State, WAM reported.

Gulf News and other newspapers had earlier published a report quoting Dubai's Attorney General Essam Eisa Al Humaidan as saying that the Public Prosecution had referred a minister and his supposed associates to the Dubai Court of First Instance where they would be prosecuted.

The case had been filed by a Lebanese businesswoman.

"A woman allegedly accused the minister of breaching the trust of her family's business, including a huge property and a company based in Dubai," Al Humaidan said.

And the pretty accurate Zawya Story published a week earlier.

U.A.E. Minister Al Falasi Faces Charges Of Fraud - Official
Monday, Jul 21, 2008

BEIRUT (Zawya Dow Jones)--United Arab Emirates Minister of State Khalifa Bakheet Al Falasi will face charges in the emirates for breach of trust and fraud in a case filed by a Lebanese woman, senior Dubai officials said Monday.

Al Falasi's case, referred to court by the Dubai Public Prosecution, was originally filed in Abu Dhabi by the Lebanese woman who claims Al Falasi mishandled the assets of her brother after his death, an official, who declined to be identified, told Zawya Dow Jones Monday.

The Lebanese businessman owned several companies in Dubai and took Al Falasi as a local partner since 1995.

Al Falasi refused to talk about the case after repeated calls to his office by Zawya Dow Jones.

The case is the latest in a series of high profile fraud scandals in Dubai following the arrest of the former chief executive of Deyaar Development Co and a number of business executives linked to an investigation into financial mismanagement at Dubai Islamic Bank.

"The Dubai government will not tolerate any corruption," another senior government official told Zawya Dow Jones Monday. "The public prosecution is taking the case to court." He declined to give further details.

Al Falasi is still officially a member of the U.A.E. government, he said.
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Easy Credit the rule in the GCC, and Oman

Interesting article this week in one of the UAE financial mags about the explosion in UAE and GCC Credit card debt and personal loans. As in Oman, it seems many people are in debt up to the eye-balls in loans. In fact, a rising problem in Dubai and Abu Dhabi are so-called ‘skips’, young expats (usually European) who live the high life a little too well, get into a deep pit of personal debt, and end up maxing out everything and then fleeing the country.

The key problem is the immaturity of the financial markets: in most of the GCC you can go from bank to bank, applying for personal loans and credit cards, with no cross-check between the lenders as to the actual debt load of an individual, as there are no real credit rating agencies. Across the GCC banks have relied on an adhoc system of requiring letters from employers, insisting salaries are paid directly into the accounts, and ‘blacklists’ of people who are to be denied credit.

Easy unsecured credit is a huge problem in the US and UK, so you can imagine the damage it could do in a country like Oman, where the average citizen is even less fiscally smart. In addition, Oman seems to have a tremendous cultural expectation that, no matter what, the mighty government (or Daddy) will step in to fix all financial ills. Interestingly, Kuwait’s Government have recently had to create a $2bln fund to bail out locals who have effectively borrowed themselves into bankruptcy.

Oman has done something good with the plan to create such a real credit rating agency here by 2009, teaming up with Experian, a major global consumer credit rating agency. Called the National Bureau of Commercial Information, it is (naturally) backed by the big boys (Zubair, Bahwan, Hosni…) and supported by the Central Bank. This is well overdue, but ahead of the rest of the GCC.

Why is this an issue?

In a report in June the CBO reported that the level of outstanding credit in Oman rose almost 50% in 2007, rising to $19.4bln. They also lowered the ceiling on the maximum interest rate on personal loans to 8%. (in theory only on new loans, but people could refinance old loans to the new rate). According to the CBO official report, Personal Lending by Oman’s Commercial banks rose in 2007 by 42%, from $4.7bln to $6.7bln.

A credit crash seems almost inevitable in Dubai with the whole 'running on vapor' attitude to everything, and a society dominated by relatively young expats. Dubai is also a net importer of oil…

Hopefully it isn’t too late to forestall a ‘debt crunch’ here, plus deposit growth in Oman is pretty robust, also at 40%+. But its a worry that so much of the easy credit is being spent on cars, weddings and holidays. As long as oil prices and the MSM stay high, things should be OK in Oman for now. Else the next bit of financial sophistication will need to be bankruptcy laws.

Oman Tribune article

Sultanate gets first private credit bureau

MUSCAT The National Bureau of Commercial Information SAOC (NBCI) launched Oman’s first private credit bureau on Monday under the auspices of HE Hamoud Bin Sangour Al Zadjali, executive president of Central Bank of Oman (CBO).

NBCI has partnered with Experian to acquire technical know-how and systems for the bureau. Experian, one of the three largest global information services companies, has signed an agreement with NBCI for supply of its proprietary software to enable NBCI to establish a credit reference data base and bureau service in Oman.

The partners of NBCI are Al Jawhar National Corporation, Infoline, Zubair Corporation, Qurum Business Group and Al Farqad Investments; and Hind Bahwan is its chairperson. NBCI vice-chairman and MD Khalid Ahmed Al Hosni said credit bureaus are part of the financial infrastructure of a country and are among the providers of basic information for developing credit strategies.

The function was attended by Executive President of CMA Yahya Al Jabri