A short clip on the issues surrounding the subject of Female Labour Force Participation (FLFP) in the Arabian Gulf. The focus is on national women in the UAE.
Category: United Arab Emirates
The United Arab Emirates, ‘the UAE,’ or simply ‘the Emirates,’ is at the eastern end of the Arabian Peninsula. It is a federal elective monarchy made up of seven emirates, with Abu Dhabi serving as its capital. The seven Emirates are: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah. The UAE shares land borders with Oman to the east and northeast, and with Saudi Arabia to the southwest; as well as maritime borders in the Persian Gulf with Qatar and Iran, and with Oman in the Gulf of Oman. As of 2025, the UAE had an estimated population of 12.2 million, of which just one million were Emiratis. Thus, less than one in ten individuals in the UAE have claims to the country’s sovereign wealth.
Dubai: alive to the financial competition
From the Financial Times (Feb 4, 2014) by Simeon Kerr
Dubai’s financial centre says it will slash telecommunications rates as it seeks to sustain growth amid increasing competition from neighbours such as Abu Dhabi, Qatar and Saudi Arabia. The DIFC is set this year to roll out a technology transit zone within its data centre, offering prices that can compete with London and other western cities to ease costs for trading desks and asset managers.
Telecommunications costs in the United Arab Emirates, dominated by two state owned companies, are a major cost disadvantage of doing business in the DIFC and the rest of the country. Located in liberal Dubai, the DIFC’s popular cluster, featuring familiar regulations and common law courts, has become the financial gateway to the region. But the indebted commercial capital of the region faces growing competition from its energy-rich neighbours.
The capital of the United Arab Emirates, oil-rich Abu Dhabi, is pushing ahead with Global Marketplace Abu Dhabi, a financial centre modelled on the DIFC. Gas-rich Qatar is seeking to boost asset management and insurance at its financial centre in Doha. And Saudi Arabia, the regional economic superpower, is to open King Abdullah Financial District – dozens of towers near Riyadh’s airport – later this year.
Growth in Dubai’s financial sector, which contributes around 12 per cent to Dubai’s overall GDP, reflects the broader revival of the emirate’s economy, whose bedrock remains trade and tourism.
In 2013, the DIFC had its strongest year since the financial crisis, with the number of registered firms rising 14 per cent to 1,039. The number of people working within the district grew 11 per cent to around 15,600. Regulated financial companies operating from the centre have risen by 11 per cent to 327 in 2013.
The DIFC rented out the largest amount of real estate since the global financial crisis last year, with occupancy at almost 100 per cent in the buildings it operates. But buildings operated by third parties will over the next year provide enough space to house another 15,000 staff.
Filling this extra space is the centre’s main challenge, especially as it faces increasing competition from neighbouring states keen to develop their own financial sectors. The centre has already frozen rents that had become less competitive compared to other parts of Dubai.
Dubai hopes to attract more Asian companies. Reforms this year allowing Chinese banks to open branches in the centre has allowed four major Chinese institutions operating in the DIFC to use their home balance sheet to lend in the region.
Future of Emirati women often determined by parents
Parental attitudes can reduce the cultural barriers that keep Emirati women from entering the workplace.
https://www.thenational.ae/uae/education/future-of-emirati-women-often-determined-by-parents-1.687617
Melanie Swan | The National | January 29, 2014
A study polled 335 female citizens between the ages of 15 and 24 from across the country.
The research team was led by Dr Emilie Rutledge, associate professor of economics at UAE University, who presented their findings to academics at the Mohammed bin Rashid School of Government (MBRSG) on Tuesday.
“Parental influence has a significant role on a given female’s likelihood of seeking to enter the labour market post-graduation,” she said. “Parental support reduces what women perceive as cultural barriers to employment.”
Sixty-eight per cent of the women said their parents influenced their decisions about careers, and 80 per cent said they preferred to work in the public sector.
Forty-six per cent said they felt it was the Government’s responsibility to find them work in the public sector.
Working in education, the civil service and police were deemed the most culturally “acceptable” careers for an Emirati woman, although areas such as advertising, marketing and pharmaceuticals were deemed more “attractive”.
“However, if parents are engaged in the vocational decision-making process, the female is more likely to consider exploring opportunities in the private sector,” Dr Rutledge said.
For Emiratisation to be successful, there must be more emphasis on these other fields rather than banking, human resources and finance, which the women did not consider interesting or attractive, Dr Rutledge said.
“Being in a gender-segregated environment was not as important to the girls as the salary or the job being interesting was, even if society or parents as a whole object to this,” she said.
Dr Rutledge cited holiday time and maternity leave as important, both of which were more attractive in the public than private sectors.
Ensuring the women return to the workplace through flexible working times and better maternity benefits was vital.
“A lot of females leave the workplace when they have a family because of the poor provisions, so they simply don’t go back and in turn, they lose their skills,” she said.
A father’s level of education was key in determining how his daughters would be guided. Fathers with degrees are more likely to support and encourage women to seek employment.
“Private-sector career paths are more attractive if the parent already works in the private sector,” Dr Rutledge said.
“This is of importance as there is merit to incentivising more Emirati males into higher education for the long-term participation of Emirati women in the labour market.”
Women graduate at a 3 to 1 ratio from UAE federal universities.
Dr Maryam Salem Al Marashad has been a long-standing academic at UAE University since she graduated with the first batch of students in 1977.
She left her post as dean of students two years ago but is still active in academia. She said a husband’s influence could not be underestimated.
“We see many girls at UAEU get married in their third year, so by the time they are going to the labour market, it is not only the family but their husband – she is stuck with an answer from her husband that she can or cannot work here or there.”
Geography will also sway a woman’s choices, she said.
“In Fujairah when I go to my bank, the whole first row is full of Emirati women who are supporting their families and are interested to work,” she said. “In Abu Dhabi or Dubai where there are many more opportunities, they can afford to be more picky.”
MBRSG’s head of gender and public policy, Ghalia Gargani, said more research was needed for the long-term participation of Emirati women in the job market.
Only 9 per cent of the labour force is Emirati, a fifth of them women.
“We need to think of ways to have policies for both men and women to balance their work and life and the responsibilities that come with their culture here,” she said. “It’s very relevant to research we’re doing here on the family unit.”
Dubai to repay Abu Dhabi debt
Economist Intelligence Unit | September 30th 2013 | Dubai to repay Abu Dhabi debt
Dubai, which needs to repay US$20bn to three Abu Dhabi entities next year, will meet its obligations and is not negotiating to refinance its debt, according to the chairman of the emirate’s Supreme Fiscal Committee, Sheikh Ahmed bin Saeed Al Maktoum. However, if necessary, Abu Dhabi would probably roll over the debt, to avoid any negative impact on market sentiment.
The emirate, which was on the brink of a default in 2009, borrowed US$20bn from its wealthier neighbour to shore up a troubled conglomerate, Dubai World, and others. The debt comprised US$10bn from the Central Bank of the UAE and US$5bn each from two state-owned banks, National Bank of Abu Dhabi and Al Hilal Bank. The US$10bn debt is due to mature in February and the bank debts in November 2014. In comments to reporters, Sheikh Ahmed also said that Dubai’s state-linked companies were doing well and were able to meet their debt repayments.
Debt rises on improved sentiment
Dubai’s debt, including that of government-related entities (GREs), has continued to rise since the global financial crisis. The IMF stated in June that the total debt of the emirate and its GREs rose by US$13bn between March 2012 and April 2013, to US$142bn. This is equivalent to 102% of the estimated 2012 GDP of Dubai and the UAE’s poorer northern emirates. Of the estimated US$93bn owed by GREs, US$60bn will fall due between now and 2017, the Fund added.
The increase in GRE debt in 2012 and early 2013 reflects successful debt restructuring, the strengthening of the UAE economy and its property sector and ample global liquidity. These factors meant that Dubai GREs regained access to international credit markets and sought to take advantage of favourable borrowing conditions.
Fundamentals
Dubai’s performance in 2014 will be pivotal to maintaining solid investor sentiment. Senior government officials have said consistently that the emirate will meet its debt obligations next year, buoyed by the UAE’s wider economic recovery. The UAE is not well served with high-frequency economic indicators, but what indications there are regarding tourism, transport, the property sector, the stockmarket and company results point to considerable strength in the economy persisting in 2013. Ongoing support from high oil prices and the UAE’s appeal as a safe-haven investment location in the region have bolstered the economy.
Rises in airport traffic and hotel occupancy contributed to a strong performance by the tourism industry in Dubai and Abu Dhabi in the first six months of the year. Tourist arrivals in Dubai rose by 11.1% year on year to more than 5.5m in the first half of 2013, helping to drive overall hotel occupancy to 84.6%. The city state’s main airport handled 32.6m passengers during the period, marking an increase of 16.9% year on year. Furthermore, the property market in Dubai sparked back into life in 2012 and has continued to gain momentum in 2013. This has certainly benefited the finances of many GREs.
The main risks to this ongoing rebound include a shift down in oil prices and slowing global growth. We forecast that international oil prices will dip next year but will remain above US$100/barrel. On balance, we expect global GDP this year to expand by 2% at market exchange rates, down from global growth of 2.2% in 2012. However, we expect most of the currently suffering emerging markets to perform better in 2014, if only because the US, the EU and Japan are poised for faster growth. This should lead to a mild rebound in global GDP next year, to 2.7%.
More reforms needed
Dubai has been successful in restructuring GRE debt since the financial crisis, with most major agreements in place; a final deal regarding the debt of Dubai Holding is advanced but still pending. Progress with restructuring certainly boosted investor sentiment in 2012. Alongside this, the UAE is working on reforms to limit the risk of a renewed debt crisis.
The Central Bank has moved to curtail local banks’ exposure to GREs, proposing that lenders should offer no more than 100% of their capital base to local governments and to state-linked entities. This law was announced in April 2012, and banks were told to be in compliance by the end of September last year. However, several banks—including leading UAE banks such as National Bank of Abu Dhabi, Emirates NBD, Abu Dhabi Commercial Bank and Noor Islamic Bank—said that they were unable to comply. The Central Bank has not yet managed to finalise this rule, but it announced in mid-September that an agreement had been reached with commercial banks and would be confirmed before the end of 2013.
The IMF has also stressed the importance of greater transparency with regard to the finances of GREs. The Fund acknowledged that the government had taken some steps towards better oversight. For example, the Dubai government has put in place a team to oversee debt issuance, and any new borrowing by GREs needs to be approved by the Supreme Fiscal Committee. Abu Dhabi, meanwhile, has improved its monitoring of GRE debt. Nevertheless, the IMF has urged a more comprehensive approach to transparency and the governance of GREs, stressing the importance of better data availability on debt and further reforms to improve corporate governance of GREs.
Roll over?
The finances of Dubai and the emirate’s GREs have benefited from the economic rebound in 2012‑13. As a result, Dubai may now be in a position to repay its debts to neighbouring Abu Dhabi on schedule in 2014. However, any difficulties in meeting the due debt would play out behind closed doors, and Abu Dhabi would probably roll over the debt if necessary, to avoid any negative impact on market sentiment.
Companies to be rated according to how ‘Emirati-friendly’ they are
Amna Al Haddad | The National | October 16, 2011
https://www.thenational.ae/uae/companies-to-be-rated-according-to-how-emirati-friendly-they-are-1.473096
A list is being compiled by the Great Place to Work (GPTW) institute in the UAE, which will conduct surveys to sort the best from the average.
1,400 teachers to lose their jobs by end of year Move is part of Emiratisation plan and will also see male teachers replaced with females in lower grades. Read article
GPTW-UAE is part of a global research and consultancy group that releases an annual list of the best places to work in the world, and in 45 countries.
The Great Places for Emiratis to Work index is a new sub-list of their annual survey, which will highlight companies with strong Emiratisation programmes in various sectors.
“We want to highlight the diversity of disciplines available to Emiratis,” said Dr Farrukh Kidwai, the chief executive of GPTW-UAE.
“This will broaden the avenue for them to participate in the private sector and hopefully boost the knowledge economy in the UAE.”
A paper by Ingo Forstenlechner and Emilie Rutledge from UAE University, published in the Middle East Policy Journal last summer, showed Emiratis account for only 4 per cent of the private sector workforce.
Nadia Salameh, a consultant who specialises in Emiratisation at Cobalt Recruitment, said Emiratis were most likely to take up private-sector jobs in human resources, marketing, engineering, business management and organisational development.
“Emiratis should believe from an early age they can work in any field,” Ms Salameh said. “Companies that encourage continued learning are the most successful in Emiratisation.”
The normal GPTW-UAE list is drawn up according to two scores.
A “trust” survey is completed by all employees to measure aspects such as camaraderie, respect and pride, and accounts for two thirds of the final score. A second survey quizzes management and HR to gauge the corporate culture.
The Great Places for Emiratis to Work list will only take the corporate cultural audit into account, as many companies may not have many national employees but do have excellent Emiratisation programmes at management level.
“There are companies that have impressive programmes regarding Emiratisation and we want to communicate those to the wider public, as they are doing outstanding work,” he said.
Mohammed Hamza Al Qasimi said his experience in working for the French oil company Total helped him to develop many skills.
Mr Al Qasimi was recently sent to Paris to oversee a project related to a challenging oilfield in the Middle East. “The international experience I’ve gained from my assignment in Paris is not only beneficial on a personal level,” he said.
“I am really looking forward to more challenges in my career in France and by absorbing those challenges I will be able to return the favour to my country, and bring new and innovative ideas in the development of UAE oil and gasfields.”
Mr Al Qasimi was chosen for an internship while studying for his bachelor of applied sciences at the University of Waterloo in Canada. He did an internship at the Abu Dhabi office of Total in 2004.
“I was given a challenging project in the geosciences domain,” he said. “I was a bit worried but the confidence management placed in me made me realise I was up to the challenge.”
The company then offered him a scholarship to complete a Masters of Science at Institut Francais du Petrole in France before he joined Total full-time in 2009.
Suaad Al Hajri, 33, who has 12 years’ experience in the private sector and now works at a senior level in treasury and cash management for Aldar Properties, said the workplace was challenging at first because of the misconception private companies had about Emiratis.
“I tried my best to work hard and prove myself,” she said. “I was so lucky that my management noticed me and gave me all the chances to develop my career, motivate me and give me all the delegation I needed to get the job done.
“If you want to be successful in your career you have to take the charge of your own growth. Ask for specific and meaningful help and plot out your personally developed plans and goals.”
Companies older than two years that employ more than 50 people may register to be included on the GPTW-UAE list until October 31.
Government a draw for Emirati women
Many Emirati women prefer private-sector careers, but the allure of high-paying, stable government jobs is hard to resist, new research shows.
Asa Fitch | The National | October 6, 2011
https://www.thenational.ae/business/government-a-draw-for-emirati-women-1.428959
Emirati women often prefer careers in the private sector but see government work as more realistic and socially acceptable, according to new research from the UAE University and the Emirates Foundation.
The study by professors at the university in Al Ain asked 335 Emirati women with an average age of 21 to rank what they considered the most “attractive” and the most “appropriate” jobs.
The women put educational careers at the top of both lists, but listed jobs in advertising, sales, consumer goods and beauty therapy as the next most “attractive”.
Jobs near the top of the “appropriate” list included bastions of the public sector: civil service, the police force and health care.
“The public sector is considered much more appropriate and that’s still a major issue,” said Professor Ingo Forstenlechner, one of the academics who worked on the research project. “It’s not an unknown issue, but it’s a big one.”
The research, funded with help from the Emirates Foundation and Occidental Petroleum, comes as the UAE steps up its long-standing Emiratisation drive, which aims to bring more UAE nationals into the private-sector workforce as the country’s economy develops.
Surveys have repeatedly shown Emiratis would rather take government jobs because of the better pay, better benefits and shorter working hours they offer.
“Our findings add weight to the contention that the UAE’s labour market distortions are in no small part due to the national cohort’s desire to work in [the public] sector,” the UAE University research paper said.
“Irrespective of profession or occupational role, the public sector is a more realistic sector to pursue a career in because of the compensation packages and work-life balance it affords to national employees.”
The study, led by Emilie Rutledge, an assistant professor of economics, found that in addition to better pay and shorter hours, Emirati women considered government work preferable because it was more acceptable culturally.
“It’s not that they don’t want to work anywhere else [other than the public sector], it’s that it’s expected for them,” Prof Forstenlechner said. “There are some occupations they report as being attractive which simply don’t happen among Emirati women.”
The study’s authors also noted some of the sectors targeted by government Emiratisation bodies did not align with jobs women actually wanted.
“Of particular note to labour market policymakers in the UAE, it seems that the professions, industries thus far targeted for labour nationalisation quotas, particularly human resources and secretarial positions, are not in sync with the sorts of career choices Emirati women consider, be it in terms of [appropriateness] or attractiveness,” the study said.
Manar Al Hinai, an Emirati fashion designer and writer in Abu Dhabi, pointed to better pay packages in the public sector as a critical force behind the preference for government work.
Women had been moving into the private sector in greater numbers before the Abu Dhabi Government raised salaries across the board a few years ago, she said.
“Before Abu Dhabi increased the salary packages just a few short years back, many of my female friends preferred to work in the private sector,” she said.
“To them it was fun working in, for example, an advertising agency, or a TV network.
“However, now the salary packages have increased, many find it useless to work in an organisation that offers Dh6,000 [US$1,633] or less in comparison with the government sector that is secure, has shorter working hours and pays way higher.”
The UAE University study also looked at the role of parental influence on Emirati women’s career choices.
Those whose parents were well educated and in the workforce were more likely to follow suit. Those whose parents were less well educated were more likely to be discouraged from working.
“Parents also interfere when it comes to the job-selection process,” Ms Al Hinai said. “They know how much the government jobs pay and if they are going to allow their daughter to enter the workforce, then it might as well be worth their time.”
The push given by parents, however, was found to be a weaker factor than the pull of the public sector.
Fewer than 10 per cent of respondents to the survey said they planned to work within the private sector, while a full 28.4 per cent said they would not work at all unless they could get a government job.
Another 49.6 per cent said they would wait for a future government job rather than taking a private-sector job right away.
“We do observe, though, that the subsamples whose parents both have advanced levels of education or are both currently employed are on average more willing to consider private-sector career paths,” the study’s authors said.
“In addition, the sample members who had a parent working in the private sector were themselves significantly more likely to consider employment in this sector.”
Arabian Gulf Labour Markets: Women are ‘underutilised’
A recent study suggests that although women are better skilled than men, it is harder for them to find work.
https://www.thenational.ae/uae/women-are-underutilised-1.422350
Bana Qabbani | The National | February 1, 2011
“Female nationals are a valuable human capital resource in the UAE – one that is significantly underutilised,” said Dr Emilie Rutledge, assistant professor of economics at UAE University.
“Existing evidence suggests females find it much harder to find employment than their male national counterparts, yet paradoxically they typically have much higher levels of educational attainment,” she said.
She said officials should implement more gender-aware labour policies to correct the imbalance.
“While labour nationalisation policies have acted to increase female labour force participation, many more gender-aware policies need to be implemented,” she said.
A paper to which Dr Rutledge contributed, titled “Women, labour market nationalisation policies and human resource development in the Arab Gulf States,” will be published in the peer-reviewed journal Human Resource Development International in April.
Four researchers, including three in the UAE and one in Saudi Arabia, collaborated on the paper and interviewed policy makers who are directly involved in the Emiratisation and Saudisation processes.
Dr Rutledge said Emirati women need to be more willing to travel in order to take full advantage of their employment opportunities.
Other notions that need addressing involve family constraints, such as parents who frown on their daughters’ working in a mixed-gender environment, or the perception that women who work in the private sector only do so because they do not have adequate wasta (connections), explained Dr Rutledge.
“Some private-sector employers are unwilling to recruit from [among women], either because they believe it might be costly in infrastructural terms or because it would be costly if the newly recruited national female employee was to be ‘offended’ in some way by an incumbent non-national employee,” Dr Rutledge said.
The study stresses that labour nationalisation bodies need to improve their monitoring and evaluation of the consequence of policies in a gender-sensitive way.
Political reforms that have resulted in women being appointed to senior positions can broadly be seen as part of the process to “normalise” the role of women in the workplace, the researchers state.
“Increasing women’s participation will depend not only on their motivation, but also on the ability of society to accept new roles for women and remove existing barriers to economic integration,” said fellow researcher Dr Fatima al Shamsi, secretary general at UAE University and faculty member at the Economics Department.
Dr al Shamsi, who has also served as a consultant to the UAE National Human Resource Development and Employment Authority, added, “Above all, women should not shy away from the kind of work that was previously reserved for men, and they should impose their skills and education on the labour market, and not let the market impose the marginal and secondary positions on them.”
Interviewees also said conditions in the private sector – like a lack of child care, flexible working hours and length of maternity leave – were also contributing factors that needed to be tackled to increase female participation.
“There is over-representation of women in lower-paid and non-decision making positions,” Dr al Shamsi said.
Emiratis ‘must be steered into private sector’
The public sector employment market is reaching ‘saturation point’ and focus should be on education and subsidising the private sector.
https://www.thenational.ae/uae/emiratis-must-be-steered-into-private-sector-1.514367
June 6, 2010 | The National | Kareem Shaheen
The Emirati public sector employment market is reaching “saturation point” and the Government should focus on educational reform and the subsidisation of private sector wages rather than Emiratisation quotas, according to a new policy study. The state can no longer act as an employer of first and last resort and public sector jobs should not be part of the “social contract” by which the Government distributes oil wealth to its nationals, according to the radical report to be published later this year.
Instead, the Government should concentrate on diversifying the economy, greater career exploration in school and college, subsidising the salaries of Emiratis in the private sector and increased support of state-owned private companies. The study was compiled by researchers from United Arab Emirates University (UAEU) and will be published during the summer in the Middle East Policy journal. The authors present a range of solutions to boost employment and communicate the message that over-reliance on the Government for employment is not feasible, drawing on wide-ranging employment research.
Concern has been rising over Emirati unemployment, which has reached 14 per cent in the capital. In January, the director general of the Abu Dhabi Education Council called the figure “alarming”, saying it demanded urgent attention. Emiratis make up just four per cent of the private sector workforce, compared with 52 per cent of the public sector. “There is a growing realisation within the region that public sector bureaucracies have reached the saturation point. They can no longer act as an employer for first and last resort,” the study says.
Ingo Forstenlechner, assistant professor of human resources management at UAEU, and one of the paper’s authors said: “The dream of most of my students is to work in the municipality. That’s not going to help the country and it’s not going to be possible.” His co-author, Dr Emilie Rutledge, an expert on Gulf fiscal policy, is an assistant professor of business and economics at the same college. Feddah Lootah, the acting director general of Tanmia, the UAE’s employment agency, said the deep divide between the public and private sectors was to blame for Emiratis’ preference for government jobs.
Experts often argue that the higher wages, shorter working hours and greater job security of the public sector act as incentives that drive locals away from private companies. “Not only this, but they continue to encourage the private sector to import and recruit cheap foreign labour under the umbrella of competitiveness,” said Ms Lootah. Under-15s make up roughly 39 per cent of the Emirati population in the capital, and those between 20 and 40 constitute 40 per cent. Emiratisation experts argue that the public sector cannot absorb such large numbers.
This new approach is necessary because many long-standing employment policies have not reversed the absence of nationals in private companies, the paper says. Employers still lack confidence in the country’s education system. A survey by the Mohammed bin Rashid Foundation found that just half of Arab executives felt that nationals were competent enough to work in their industries. This was because the education system rarely adhered to the needs of private sector employers in the Gulf, said Ms Lootah, which “was at the core of these countries’ dilemma of importing expatriate labour to bridge the vacuum of qualified human resources”.
This gap was still contributing to the unemployment of new national graduates, she added. Almost double the number of students in Grade 12 in the UAE choose the humanities track instead of sciences, according to the Ministry of Education, contributing to this gap in expertise. Many attempts at diversification have met with limited success. Manufacturing is not viable because of the small size of Gulf markets, and job categories like hairdressing and waitressing are deemed inappropriate for the local population, the paper says.
Quota systems, which require private companies in some sectors to hire a set percentage of Emiratis, call into question the “region’s business-friendly persona”. Affinity towards the government sector had contributed to unemployment because many nationals preferred to stay out of work for years rather than work at a private company, said Dr Forstenlechner. One solution, he said, was to strengthen state-owned private companies. Another was to subsidise private sector employees from the UAE, “topping up their private sector salary” or giving them government pensions.
He said the UAE’s significant investment in educational reform and new university campuses were good first steps. The country’s nuclear programme has won praise for including a development plan that ensures the deep involvement of Emiratis. Shaikha Eissa, a public sector employee at the Ministry of Social Affairs, who used to work for a private company, felt that concern that the public sector was “saturated” was overblown, but said she would not mind working for a private company again.
“Both types of jobs are enjoyable, I don’t know why people make a big deal out of it,” she said. “As Emiratis, we aren’t scared of the private sector. There is no constant worry that the company might fail, because our Government stands by us even if we are in the private sector.” She acknowledged that working in a government job could often be comfortable, but “work in the private sector is enjoyable and has creativity, and you can play a big role in the company”.
Ms Eissa said she preferred working at the private company as it had better long-term incentives and individuals were more likely to shine. While the public sector constantly needed new blood to replace its retirees, “if I had the chance, I would work in the private sector because it has a future.”
Casting off from the dollar
So the GCC central bank might come to Abu Dhabi. The statement has since been retracted, but it was a headline last week, and would be some sort of coup for the UAE.
September 23, 2006 | Gulf News | Andrew Shouler
https://gulfnews.com/business/sectors/banking/casting-off-from-the-dollar-1.256170
For many observers, however, the bigger story lay underneath in any case, in the apparent confirmation by Central Bank Governor Al Suwaidi that the US dollar will be abandoned in its role of currency peg, not by 2010, but by 2015.
If confirmed, it raises all sorts of questions, not just for the monetary regime and economies of the Gulf countries, but maybe for the dollar itself, hitherto pretty much unchallenged as the world’s unofficial reserve currency.
Central banks around the globe have stockpiled it in their reserves, and the Asian countries running huge trade surpluses have found themselves recycling those funds back whence they came, not only for investment opportunity but to help cover their own exposure.
The US has been able to run increasingly heavy deficits accordingly. Not even the triumphalist emergence of the euro took too much of a shine off the dollar’s pre-eminence. But if the creditor countries, in whole or in part ditched their traditional benchmark, this perpetual motion model might be under threat. It may be an unduly alarmist view, but it’s worth scouring around for some answers to the general proposition of a dollar implosion.
Some of the facts are plain and their implications unavoidable. US deficits imply dollar weakness for some time to come. “Some are suggesting that one of the reasons for current euro and sterling strength is that oil surpluses are [already] favouring those currencies,” Philip Khoury, Head of Research at EFG-Hermes, observes.
“Likely US slowdown driven by weaker consumption is likely to [bring it down further] due to lower interest rates.” The outlook seems no better. “Rising external indebtedness does not portend well for the dollar’s role.”
There are many who would agree with that prognosis. “We continue to be dollar bears over the medium-term”, says Steve Brice, Head of Regional Research at Standard Chartered. Even so, the idea of breaking easily from the dollar meets with little bullishness. The relationship has been in place for so long, there is a certain comfort zone involved. Jasim Ali, Head of the Economic Research Unit, University of Bahrain, believes “GCC states tend to avoid change and risks. I think the GCC states would most likely avoid other arrangements, despite some of the statements made.”
The picture may be muddier than that, however, insofar as the GCC states have differing levels of motivation. “States that are more diversified (like Oman, Bahrain and the UAE) have less of an incentive to keep the dollar peg,” opines Jane Kinninmont, economist at the Econ-omist Intelligence Unit. That’s an issue which may still delay monetary union anyway, she suggests.
There’s another reason to be cautious. “I’d be surprised if the single currency were to float,” Gulf analyst Robert Powell, also of EIU, remarks. “It would expose the single currency to the vagaries of the oil market, would create uncertainties for firms looking to invest in the GCC, and could also be a setback for those states’ efforts to diversify their economies.”
So the prospect of setting the GCC currencies free may be dimmer than supposed. But what if it did happen? Would that be serious?
Any such shift, particularly if oil were to be priced in different currencies, may exacerbate the dollar’s downtrend, Brice at Standard Chartered confirms. “To some degree this would be a fundamental issue, in both current account and capital account transactions from the region. However, it could also have a significant psychological impact, as a step towards a shift in hegemony.”
That said, there is no obvious replacement at this juncture, he continues. “Europe and Japan are still struggling economically, and the Chinese yuan is still a long way from being a reserve currency.”
Therefore, the US dollar is likely to remain kingpin for years to come, it would seem. Brice reiterates the importance of the US to the rest of the world. “As such, we expect any such reduction in reliance on the dollar to be gradual.”
Amid this conjecture, the bolder line is to say that the hour of the independent regional currency is fast approaching. “I feel it is about time the GCC states allow their common currency to float. This would enable them to really determine their competitive situation in the world market,” says local economist and entrepreneur Abdullah Sharafi.
Emilie Rutledge, visiting professor at the UAE University, goes further, anticipating the creation of a Gulf ‘dinar’ which might itself displace the dollar in central bank accounts. “From a geo-political context, the dinar may be perceived as more morally acceptable than holding the US dollar, and also a more Islamically-acceptable currency to hold either in reserve or indeed even to peg to.” That thought cannot be too far from the authorities’ minds, although it puts the regional order and international relations right into the melting pot.
Yet, while the system of the US swapping paper greenbacks for manufactures and commodities is losing viability, it will still be the decisions made by China which will carry far greater weight, Rutledge maintains. At the same time, a certain fatalism applies. Sharafi argues: “The USA is a superpower, behaves like a superpower, and is treated as a superpower. These monetary changes would not affect its position. The two are just not linked.” Whatever lies ahead, uncertainty prevails for now. Once the GCC countries have resolved the currency matter, clarity should ensue.
“It is important that the central bank’s intentions are flagged some time in advance, so businesses can protect themselves against the different currency and interest rate exposures they will face,” says Brice, ushering in the risk management story.
Risk indeed there is, but the dollar might itself sail serenely into its sunset. And, since the world is round, it might even return from the other side. Tomorrow is another day.
Andrew Jeffreys, Editor in Chief of Oxford Business Group, puts it as succinctly. “2015 is far off, and conditions may change,” he reminds. Hard to argue with that.
US ports deal: A bitter aftertaste
First published in:
Rutledge, E. J. (2006, August 19). US ports deal: A bitter aftertaste. Al Jazeera. https://www.aljazeera.com/news/2006/4/19/us-ports-deal-a-bitter-aftertaste
As a consequence of the furore by the US congress over DP World’s acquisition of several American ports, the Dubai state-owned company decided to avert a long legal battle and agreed to put these assets up for sale.
That DP World had already sought and obtained the necessary US regulatory approvals did little to temper the irrational concerns expressed by many American commentators.
Congressional concerns were not over DP World’s business plan or its security record – the US navy has been using Jebel Ali for more than 15 years – but were almost exclusively because it was an Arab company. It is clear, though, from a brief review of the regional and international press, that the consensus view is that congress was unnecessarily discriminatory and in the wrong.
It happens that many other US ports are owned and/or operated by foreign companies, many of which are Asian. According to the New York Times, foreign-based entities own over 30% of America’s ports. Over 80% of Los Angeles’s port terminals are run by foreign companies. A Singapore state-controlled company operates Pacific coast ports from Los Angeles to Alaska.
In a similar incident last year the Chinese energy company CNOOC had to give up its bid to take over Unocal as a result of US congress disquiet. At the time America was accused of hypocrisy. On the one hand it was, and still is, advocating free trade as the global panacea and on the other protecting its own back yard; the DP World affair will only compound this sentiment. In other respects America is likely to lose out from its treatment of DP World.
There is little doubt that the decision will deter other GCC investors from US acquisitions. America will also find it harder to win support for its much-hyped Middle East free-trade area and at the very least the timetable for negotiating a free-trade agreement with the UAE will be put back.
Advantage Dubai
DP World expects to raise about $750m from the sale of its recently acquired US assets. Its US ports business operates five container terminals and handles cargo and passengers at a number of other sites. Since these operations accounted for around 10% of P&O’s annual global turnover and are less profitable than other operations in emerging markets, the company will make a tidy profit if it realises its asking price.
The US ports sector can hardly be viewed as having as high a growth potential as P&O’s Asian assets, as it is a mature market. The forced sale will also mean that the company will have more money and time to concentrate on the more lucrative emerging markets of Asia.
Despite the sale of its US assets DP World is now the third-largest port operator in the world. DP World has gained huge amounts of free publicity and a fair deal of sympathy. The company, which is borrowing $6.5bn to fund its takeover of P&O, had received commitments of over $14bn by March 20 and this is a clear sign that the episode in America has done nothing to dampen investor confidence in the company’s future prospects.
Although on a much smaller scale, it is somewhat ironic that another government of Dubai-controlled investment body, Istithmar, has bought into the US ports business this year. In January Istithmar bought Inchcape Shipping Services for $285m. Inchcape has various interests in America and, for instance, works with the customs department in the key ports of New York and San Francisco.
Turning to the UAE-US free-trade agreement, on the face of it the US stands to benefit more than the UAE from a bilateral agreement. US companies stand to gain in the short term, as most bilateral trade comprises US exports to the UAE. If the agreement fails as a result of the DP World fiasco, it would represent a considerable blow for American economic interests.
Nevertheless, the UAE will no doubt act pragmatically and if it considers the longer-term benefits of a free-trade agreement, such as increased levels of US inward investment, as credible, it is likely that it will still go ahead. GCC states will still invest in the US, but may decide to do so in the more traditional behind-closed-doors fashion.
By forming partnerships and not seeking to acquire controlling stakes, GCC investment bodies can make strategic investments without incurring political costs. According to an Abu Dhabi Investment Authority executive, the authority is not going to stop buying assets in the US, however ADIA will increasingly be looking East for longer-term investment opportunities.
Disadvantage USA
US misguided anti-Arab sentiment will not only tarnish America’s reputation as a free-trade nation but by making it harder for Arab governments to invest in the US may well deter the process of petrodollar recycling – something which since the collapse of Breton Woods has greatly benefited the American economy.
Sultan Bin Nasser al-Suwaidi, the UAE’s central bank governor, said that “trade and investment relations with the United States must now be viewed from a new perspective”. Many analysts, including some from the US, have said that the DP World affair may set a damaging precedent and deter investors, particularly from the Middle East, from investing in the US.
The US economy would inevitably suffer if petrodollars did not filter back into its economy and were instead converted into euros or yen. Mohammed Sharaf, the DP World chief executive, recently said that other foreign companies could be put off investing in the US by DP World’s experience, especially oil-rich Arab states.
Asian exporting economies and Opec states seem less willing simply to hold their US dollar assets in treasury bonds and are looking for better returns by buying fixed assets such as companies and property.
For example, another Dubai government-owned company, Dubai International Capital, is in the process of buying Doncasters, a UK-based aerospace manufacturer, for $1.2bn. The takeover is relevant because Doncasters has various interests in US military weapons programmes, including the Joint Strike Fighter.
Dubai International Capital’s takeover of Doncasters has yet to receive much media attention in America, but if it does and the attention is similar to that DP World received it will further tarnish America’s free-trade reputation and the US will be seen as increasingly hypocritical.
[As Aljazeera then put it: “Emilie Rutledge is a British economist who is currently based at the Gulf Research Center in Dubai”]