UAE Central Bank Orders Hike Saad and Gosaibi Provisions

The Central Bank of the United Arab Emirates has required UAE lenders with exposure to feuding Al Saad Group and Ahmad Hamad al Gosaibi & Brothers to increase their loan loss provisions from 50 to 80 percent. The requirement issued in a circular to all UAE lenders is designed to protect UAE financial institutions from a worst case fallout of the dispute between the two groups.

"All these provisions must be by the end of 2010 and the Central Bank's approval of the banks' annual audited results are conditional on the allocation of those provisions," UAE Central Bank Governor Sultan Nasser al-Suweidi said in the circular.

The circular comes a year after the Central Bank ordered lenders to raise provisions related to Al Saad and Al Ghosaibi to 50 percent. It follows press reports that Saad had offered Kuwaiti lenders a settlement based on payment of $0.20 for each dollar the group owes. The press reports said lenders were negotiating for up to $0.40 on the dollar.

The Central Bank circular asked banks to maintain their 100 percent provisions Saad Group’s Bahrain-based Awal Bank and Al Gosaibi’s The International Banking Corp (TIBC) that were taken over by the Bahraini central bank last year. The difference is provisioning ratios reflects the Central Bank’s assessment of exposure by UAE lenders to those entities and the likelihood that lenders will be able to recover their outstanding loans.

Defaults on loans by Awal Bank TIBC set off a bitter legal battle on three continents between the two groups that are related by Saad Group’s Maan al Sanea’s marriage to a daughter of the Al-Ghosaibi family. Al-Gosaibi has accused Al-Sanea in court filings on three continents of siphoning off $10 billion from his in-laws.

Al Gosaibi is seeking to recover $9.2 billion in lawsuits in the Cayman Islands against al-Sanea and Awal subsidiaries. Court proceedings involving Awal are also ongoing in the United States, Bahrain, Kuwait, Saudi Arabia, Switzerland and Britain.

A Chapter 11 filing by Awal in New York has suggested that the bank may file for liquidation in Bahrain. According to its court filing, Awal has assets valued at most at $100 million and liabilities of more than $1 billion. Under Bahrain law, the administrator has until the summer of 2011 to decide whether to liquidate Awal or return it to its owners.

Assuming that the bankruptcy filing was made with the consent of the Bahrain Central Bank, the filing suggests that Bahrain has decided that Awal is beyond salvation and should be liquidated. In its filing, Awal asserts that after payment of the administrators and other immediate expenses, it will not be able to compensate its unsecured creditors, who number somewhere between 60 and 100 and include: Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, AlGosaibi Money Exchange, Bank of Montreal, Bayerische Hypo-und Vereinsbank, Bayerische Landesbank, Boubyan Bank, Calyon Corporate and Investment Bank, Commercial Bank of Kuwait, Commercial Bank of Qatar, Commerzbank, Commonwealth Bank of Australia, Fortis Bank, Gulf International Bank, HSBC, HSH Nordbank AG, JP Morgan, Kuwait Finance House and The International Banking Corporation.

World Cup 2022: A Middle East Game Changer?

By James M. Dorsey

With its winning of the bid to host the 2022 FIFA World Cup, Qatar may face both its greatest challenge and biggest opportunity in positioning itself as a maverick regional peacemaker and agent of change.

Soccer constitutes for Middle Eastern regimes a double-edged sword. Only soccer commands the kind of deep-seated emotion evoked by Islam. And in a world of predominantly repressive regimes, soccer together with Islam provides the only public space for pent-up anger and frustration. Managing the national, ethnic, religious and social fault lines that soccer in the Middle East highlights could make cooling down football stadia in temperatures of 50 degrees Celsius the least of Qatar’s worries.

A look at the Gulf Cup that ended in Aden on Sunday as well as Middle Eastern soccer’s walk up to this year’s World Cup in South Africa tells all. To many residents of southern Yemen, which united with the north in 1990, the Gulf Cup highlighted the very reasons why southerners support cessation. It also highlighted the effect of political control of the game by regimes bent on retaining power. To southerners, Yemen’s national team represented the country’s most powerful government-aligned tribes rather than the nation. That sense was reinforced by the fact that southerners were virtually excluded from participation in the organization of the cup.

The picture is no better elsewhere in the Middle East where spectators in Lebanon have been barred from soccer games since the 2005 assassination of Prime Minister Rafik Hariri; Palestinians can’t compete because of Israeli travel restrictions; Iran and Iraq’s performance has been hampered by political interference; players on Egypt’s national team have to prove not only their soccer skills but also their religious devotion; and Saudi players struggle to maintain international standards because the government discourages players from joining foreign clubs. The world’s most violent derby between Cairo archrivals Al Ahly and Zamalek constitutes an epic struggle over nationalism, class and escapism. Women’s soccer is a continuous fight for its existence in a chauvinist, male dominated world in which women playing the game is at best controversial and at worst blasphemous.

If anyone can rise to the challenge a World Cup in the Middle East poses, it is Qatar, a maverick oil-rich Gulf state that maintains close ties to Islamic radicals while hosting a US military base and has rewritten the Middle East’s heavily controlled media landscape with Al Jazeera’s often no-holds barred reporting. Qatar’s successful bid could prove to be with FIFA President Sepp Blatter’s help the monkey wrench that forces Middle Eastern rulers to recognize opportunities offered by sports to manage the region's many fault lines.

The Middle East is riper than ever for a contribution by Blatter, who has successfully imposed his will on notoriously intransigent Middle Eastern leaders seeking to control the game. Take Middle East peace for example. Blatter could engineer Israel’s return to playing World Cup qualifying games in the Asian Football Confederation (AFC) against Middle Eastern teams rather than as it does against European squads in UEFA since the Arabs four decades ago forced its ouster from the AFC.

International tennis has paved the way for Blatter to force the issue. Three Israeli tennis players appeared this year at the ATP World Tour and World Tennis Association tournaments in Qatar and the United Arab Emirates despite the two countries’ formal ban on sports encounters with Israel and Israeli passport holders crossing their borders.

If Israel drew for example Iran, Syria, Saudi Arabia, Lebanon, Yemen or Iraq, governments would be hard pressed to prevent their teams from playing. Stopping their teams would cost their squads valuable points and reduce, if not eliminate, their chances of reaching the Asian and World Cup finals.

The teams would face censure from FIFA, which in turn could spark riots as soccer did in Tehran in 1998 and 2001. So deep-seated is soccer passion that governments would be acting at their own peril and would likely conclude that they have no alternative but to allow their teams to play Israel. By doing so, they would effectively recognize the Jewish state and offer Middle Eastern soccer fans a picture of Israelis that differs substantially from widespread preconceptions.

Rap and Metal on Planet Islam

The booming voice of pent-up Middle Eastern anger

James M. Dorsey from the December 2010 issue of Reason Magazine

Nabyl Guennouni, 30, is a heavy metal singer and band manager in Morocco. He also sits on a jury that selects rising talents to perform at Casablanca’s annual L’Boulevard des Jeunes Musiciens, a six-day extravaganza in two soccer stadiums that has become North Africa’s largest underground music festival, with some 160,000 visitors each year. This marks a dramatic change for Guennouni. When he and 13 other black-shirted, baseball-capped, middle-class headbangers tried to organize a music festival seven years ago, the police dragged them from their homes and charged them with wooing young Moroccans into Satanism, with a bonus count of promoting prostitution. Morocco’s legal system allows a maximum sentence of three years for such attempts to convert Muslims to another faith.

Egged on by conservative Islamist politicians, who six months earlier had doubled their number of seats in parliament, prosecutors produced as evidence against Guennouni fake skeletons and skulls, plaster cobras, a latex brain, T-shirts depicting the devil, and “a collection of diabolical CDs,” which they described as “un-Islamic” and “objects that breach morality.” In cross-examination, the government attorneys asked the defendants such questions as, “Why do you cut the throats of cats and drink their blood?” Al Attajdid, a conservative daily, depicted the musicians as part of a movement that “encourages all forms of delinquency, alcohol and licentiousness which are ignored by the authorities.” One of the trial judges maintained that “normal people go to concerts wearing suits and ties” and that it was “suspicious” that some of the musicians’ lyrics had been penned in English.

During the trial, some of the defendants recited sections of the Koran to prove they were good Muslims. It didn’t work. In a verdict that divided the nation, Guennouni was sentenced to one month in jail; the others received sentences ranging from six months to a year. Outside the courthouse, protesters organized concerts, waged an Internet campaign, and criticized King Muhammad VI for presiding over a travesty of justice.

Yet as dark as that moment was for Casablancan rockers, the trial was a turning point that set Morocco on a path to becoming one of the Arab world’s more liberal societies when it comes to accepting alternative lifestyles. A month after the sentencing, prosecutors, unnerved by the degree of popular support the musicians had attracted, urged an appeals court to overturn the verdicts. The appeals court acquitted 11 of the defendants and reduced the sentences of three others. The decision constituted a rare example of successful civic protest in the Arab world.

Weeks after the appeals court decision, Casablanca was rocked by a series of Islamist suicide bombings that killed 45 people. Musicians responded with a Metal Against Terrorism concert that boosted what Moroccans call Al Nayda, the Awakening, a movement for greater cultural freedom that is topped every year by the L’Boulevard festival. “We needed to channel the aspirations and frustrations of young people in Morocco,’ ” Guennouni tells me. “Al Nayda is a community of spirit,” adds Mohammed “Momo” Merhar, co-founder of the festival. “Moroccan youth was holding its breath for 40 years. A wind of freedom is blowing now, and creativity is exploding.”

Today L’Boulevard attracts metal, rap, and jazz performers from around the globe. King Muhammad donated $250,000 to the event last year. Marie Korpe, executive director of Freemuse, a Copenhagen-based organization funded by the Swedish International Development Cooperation Agency that advocates freedom of expression for musicians and composers worldwide, notes that “as musicians push the boundaries of acceptable musical performance in their countries, it is clear that, wittingly or not, they are helping to open their cultures and potentially their political systems.”

With L’Boulevard, Morocco is doing something new in a part of the world where repression and censorship are the norm. The cultural awakening nonetheless operates within a narrow band in a country where human rights groups, independent media outlets, and critical artists continue to live a precarious existence. Moroccan radio stations, acting on government instructions, recently boycotted a collection of rap songs that was appropriately titled Forbidden on the Radio. Invincible Voice (I-Voice), a Beirut-based Palestinian duo that fuses hip-hop with classical Arab music, was forced to cancel an Arab world tour when Morocco and other Arab countries denied them visas. Yasin Qasem, a 21-year-old freelance sound engineer and half of I-Voice, was subsequently denied entry to lead a sound engineering workshop in Casablanca. Qasem and his partner, TNT, a.k.a. Mohammed Turk, a 20-year-old construction foreman whose songs lament the sorry state of political, cultural, and economic affairs in the Arab world, finally obtained visas for the United Arab Emirates to finish production of their upcoming album, only to be declined entry when they landed at the Dubai airport.

Across a swath of land stretching from Morocco’s Atlantic coast to the Persian Gulf, underground musicians are playing a continuous game of cat and mouse with authorities to evade harassment and arrest. Musicians in Iran endure forced haircuts, beatings in jail, and threats to their families. Egypt bans heavy metal from radio and television. Earlier this year, Islamist police stormed a crowded auditorium in the Hamas-controlled Gaza Strip, where the hip-hop musicians B Boy Gaza had just started performing. “The show is over,” the officers announced before confiscating equipment and arresting six musicians, who were eventually released after signing a pledge not to hold further performances without police permission. The rapping Emirati brothers Salem and Abdullah Dahman have had their music banned in Kuwait and Saudi Arabia because their lyrics contrast the Arab world’s multiple problems with the glorious Muslim past. Last summer, police in the Saudi capital Riyadh broke up a metal concert in a residential compound attended by 500 mostly Saudi fans.

Civilian and religious authorities across the Middle East and North Africa have accused heavy metal musicians of threatening public order, undermining Islam, and performing the devil’s music. Metalheads are also singled out because of their music’s highly charged and often politically, socially, and sexually suggestive lyrics. As a result, their music flourishes mostly in underground clubs, basements, and private homes, and only occasionally on stage when a regime decides that banning a public performance is not worth the political risk.

Underground musicians pose a challenge to Middle Eastern and North African regimes because they often reflect in their lyrics pent-up anger and frustration about unemployment, corruption, and police tyranny. “We play heavy metal ’cause our lives are heavy metal,” says Reda Zine, one of the founders of the Moroccan headbanger scene.

With the growing realization that the region’s authoritarian regimes and controlled economies are unable to offer opportunity to their predominantly young populations, metal and rap have been elevated as channels to express discontent. Their role is enhanced by the Internet and other technologies for mass distribution that make government control difficult and allow musicians and their fans to carve out autonomous spaces that shield them from intrusion by censors and other cultural scolds.

In a recent report for Freemuse, Mark LeVine argues that music plays a role in the Middle East and North Africa similar to the role rock played in the velvet revolutions that toppled regimes in Eastern Europe. LeVine has a good vantage point for studying the subject: He is both a professor of Middle Eastern history at the University of California at Irvine and a musician who has performed with the likes of Mick Jagger and Albert Collins. The struggle and success of underground music, he says, “reminds us of a past, and offers a model for the future, in which artists—if inadvertently at first—helped topple a seemingly impregnable system of rule.” LeVine describes underground musical communities as “avatars of change or struggles for greater social and political openness,” saying “they point out cracks in the facade of conformity that is crucial to keeping authoritarian or hierarchical and inegalitarian political systems in power.”

Nowhere is that more evident than in Iran, where all rock music is forced underground. Musicians risk harassment and imprisonment by a regime that frowns on all music and routinely tortures dissidents. In May 2009, a heavy metal concert in Shiraz was raided by an Islamist militia that arrested some 100 people on charges of consuming alcohol and worshiping the devil. Musicians are forced into exile or onto the Internet to carve out creative spaces of their own.

Coming under particular scrutiny are Iranian underground musicians who replicate American accents, indulge in obscene lyrics, and use female singers—all viewed as symbols of Western decadence by the authorities. Most CD shop owners refuse to sell underground music, fearing raids, imprisonment, and hefty fines. Concerts in private gatherings are often canceled because of threats from neighborhood vigilantes. Kalameh, an Iranian rapper, recently uploaded one of his latest songs to YouTube in response to the regime’s crackdown on the country’s reform movement: “This nation says No / Says NO to autocracy / Says NO to censorship / Says NO to sedition / Says NO to beating and killing / Says NO to injustice / Says NO to democracy / This constant pain of mine, emanates from being a human / Because one night, they stole my light of hope / If I stay silent, if I stay still / Who is gonna right? Who is gonna say? / If I leave it that way?”

Yet hip-hop’s lyrical style and heavy metal’s pounding beat may be natural fits in a world where poetry is a popular art form and praying often involves rhythm and bobbing. Some Muslim religious figures, particularly practitioners of more mystical forms of Islam, recognize an affinity with metal, even though some of the genre’s most popular forms in the region are its most extreme. “I don’t like heavy metal,” a Shiite cleric in Baghdad told LeVine. “Not because it’s irreligious or against Islam; but because I prefer other styles of music. But you know what? When we get together and pray loudly, with the drums beating fiercely, chanting and pumping our arms in the air, we’re doing heavy metal too.” Cyril Yarboudi of Lebanon’s Oath to Vanquish agrees. “You can practice your religion; you can go pray in a mosque and listen to metal,” he says. “What’s the problem?”

In a 1997 crackdown that put its stamp on much of the heavy metal scene in the Middle East and North Africa, police in Cairo arrested 100 heavy metal fans. The arrests followed publication of a photo from a metal concert allegedly showing someone carrying an upside-down cross. One newspaper reported that the house raided by the police was “filled with tattooed, devil-worshiping youths holding orgies, skinning cats, and writing their names in rats’ blood on the palace’s walls.”

Muslim and Christian clerics were up in arms. Cartoons in newspapers depicted scruffy, marijuana-smoking musicians with T-shirts emblazed with the Star of David who play guitar while being seduced by scantily dressed blond women. The musicians’ critics portrayed them as Zionist agents subverting Muslim society and blamed their emergence on a government that, in their view, was in cahoots with the Zionists in allowing Western culture to undermine Egypt’s social and religious values. Interestingly, this criticism was expressed by many in the underground music community as well. A broad segment of Egyptians, cutting across political, ideological, religious, and social fault lines, accuses the government of failing to effectively support the Palestinians, acquiescing in the Israeli control of Palestinian territories, and supporting unpopular U.S. policies in the region.

Emotions peaked when Sheikh Nasr Farid, Egypt’s mufti at the time, demanded that those arrested repent or face the death penalty for apostasy. In response, intimidated musicians and fans destroyed their guitars and shaved off their beards to avoid the worst. A decade later, many Egyptian musicians remain reluctant to publicly discuss their music or lyrics, even though government policy has become somewhat more relaxed. (The regime of President Hosni Mubarak is currently more concerned about the Muslim Brotherhood and dissident bloggers than it is about underground music.)

“You can’t get arrested for being a metalhead so easily now,” an Egyptian heavy metal fan tells me. “They can still stop you in the streets, or stop your car if you listen to very loud heavy music. But when it comes to arresting they can’t now unless you have some sort of drugs on you. It’s not that the law is more liberal now. Rather, it’s because the whole media is not so interested to know about us anymore.”

Morocco’s bow to popular pressure and Egypt’s recent shift of focus highlight a lesson most Arab regimes have yet to learn: The velvet glove is often more effective than the baton. The more mainstream underground music becomes and the less censorship it endures, the less socially and politically potent it may become.

But as long as there is discontent to be expressed, there will be musicians eager to channel it. Even if metal and hip-hop lose their bite, LeVine predicts, the “cultural avant-garde of youth culture will naturally search for other genres of music to express the anger, anxieties, and despair that originally made the music so powerful.”

U.S., Europe Press GCC States on Yemen Membership

By James M. Dorsey

World Politics Review

The United States and Europe are pressuring oil-rich members of the Gulf Cooperation Council (GGC) to forge closer ties with Yemen in a bid to link the fight against al-Qaida to tangible economic benefits for the Arab world's poorest nation.

U.S. officials say the Obama administration recently conveyed to GCC leaders Yemen's reiteration of its 10-year-old request for GCC membership. The officials believe that U.S. and European endorsement of the request will prompt GCC leaders to respond more favorably when they meet in Abu Dhabi in December.

The U.S. and Europe are exerting pressure against the backdrop of an increasing number of attacks in Yemen on foreign diplomats and nationals. Suspected operatives of al-Qaida's Yemen-based affiliate, al-Qaida in the Arabian Peninsula (AQAP), last week fired a rocket at a British embassy vehicle in the capital San'a. Employees of Austrian energy giant OMV were injured in a separate incident. The attacks on foreigners follow scores of incidents targeting Yemeni military and government officials. AQAP has killed some 100 Yemeni security and intelligence personnel in recent months in hit-and-run attacks launched by assassins on motorcycles using grenades and AK-47s.

The GCC's vested interest in ensuring stability in Yemen coupled with the Gulf's reliance for its security on the U.S. -- and to a lesser extent Europe -- militates in favor of the GCC moving beyond its repeated rejections of Yemen's aspirations. Gulf states, first and foremost Saudi Arabia, see their security threatened by AQAP as well as the Yemeni government's intermittent war against tribal rebels in the north and its fight with secessionists in the south.

The GCC, in a prelude to closer relations, has admitted Yemen to several of its institutions, including its councils of health, education, sports and culture ministers. GCC members also contribute substantially to funding of the Yemeni government's payroll. The GCC agreed last month at a meeting in New York of the Friends of Yemen, which groups 22 nations concerned about the growing strength of jihadists in the country, to open an office in San'a that would "help all donors to plan, coordinate and deliver assistance to Yemen more efficiently." GCC members have held back billions of dollars in aid pledged to Yemen because of concerns that the country would not be able to absorb the funds, and also due to widespread Yemeni corruption -- a weak argument for Gulf states that have transparency issues of their own.

A political marriage between the Gulf states and Yemen is likely to prove difficult for the conservative GCC members. In many ways, Yemen and the GCC states have little in common beyond geography and their Arab identity. Yemen is a republican democracy, at least in name, that ousted its royals in the 1960s; GCC members are all authoritarian monarchies that have forgotten that they once wallowed in the same abject poverty Yemen suffers today. Gulf leaders, particularly in Kuwait, have never really forgiven Yemeni President Ali Abdullah Saleh for his support of Iraq during the 1990 Gulf War, in which U.S.-led forces reversed Saddam Hussein's invasion of Kuwait. Yemeni officials concede that in order to persuade the GCC, the government will have to improve the security situation, narrow the economic divide with the Gulf states and significantly reduce the country's addiction to qat, a plant stimulant consumed by a majority of Yemenis that is classified by the World Health Organization as a drug.

In lieu of granting Yemen full membership, the GCC is likely to look at ways of improving employment prospects for Yemenis. Yemen's economic problems were exacerbated in the early 1990s when Saudi Arabia expelled some 1 million Yemeni workers in retaliation for Yemen's support of Saddam. The expulsion deprived Yemen of badly needed remittances that were often invested into small and medium-sized enterprises that constitute the backbone of the Yemeni economy. GCC member states are discussing allowing Yemeni workers to return -- a move that segments of Gulf society, concerned about the high number of foreign, non-Arab workers in their countries, would welcome.

Twenty years on, many Yemeni workers lack the employment skills that Gulf states now require. One way GCC states may seek to compensate for that would be to grant Yemenis access to the same professional and technical training available to Gulf nationals. GCC states are also likely to fund job-creation programs in Yemen. A report commissioned by the Yemeni government recently estimated that Yemen needs to create 4 million new jobs in the next 10 years. A Saudi delegation visited Yemen this weekend as part of a project to develop Yemeni educational programs, prepare Yemeni trainers and help the government draft regulations for the Higher Yemeni Technical Institute, which is funded by the Islamic Development Bank and South Korea.

A recent report (.pdf) by a London School of Economics researcher suggested that stabilizing Yemen was a key GCC interest because the country's problems potentially foreshadow problems that could emerge elsewhere in the Gulf. "Yemen is the canary in the coal mine. It is an indication of what can go wrong when a country fails to develop political legitimacy and build a sustainable, productive non-oil economy," said Kristian Coates Ulrichsen, the author of the report. "The challenges to government authority in southern and northern Yemen demonstrate how existing socio-economic discontent and regional marginalization can fracture and fragment social cohesion. Similar fissures and unequal patterns of access to resources exist in the GCC states and could become transmitters of conflict in the future."

The United States and Europe share GCC concerns about Yemen's lack of good governance. Getting the GCC to assume responsibility for helping Yemen ensure that its development aid is put to proper use will have the added advantage of focusing Gulf attention on transparency issues within the GCC itself.

U.S. Lawsuit Tarnishes UAE Anti-Corruption Drive

By James M. Dorsey

JustAnti-Corruption

The United Arab Emirates finds itself battling to hold on to its image as well as its role as a big player on the world economic stage.

Read further at JustAnti-Corruption

US and EU struggle to make Iran sanctions watertight

by James M. Dorsey

Deutsche Welle

The US has designated three Maltese companies owned by an Iranian shipping company for violation of its sanctions regime to restrict the Islamic republic’s ability to import what the US terms as dangerous cargoes.

The focus on shipping is being closely coordinated with the European Union and US Treasury officials say the emphasis on shipping compliments their earlier focus on Iran's banking and energy sectors that forced European banks accused of violating the sanctions regime, including Credit Suisse and Lloyd's, to pay hefty fines.
Barclay's Bank recently agreed to pay $298 million (236 million euros) in penalties for hiding transactions with banks in Iran and other countries sanctioned or embargoed by the US.

"Commerce with Iran requires extraordinary vigilance. Iran has used channels of legitimate commerce, by which I mean banking, shipping, transshipment. They have used all these facially legitimate methods to facilitate illicit conduct," said the treasury's undersecretary for terrorism and financial intelligence, Stuart Levey, at the beginning of a Middle East tour to ensure adherence to the sanctions by key Iranian trading partners, foremost among them the United Arab Emirates.

The treasury officials say the Islamic Republic of Iran Shipping Lines (IRISL), Iran's national shipper, which owns the Maltese companies - Marble Shipping Limited, Bushehr Shipping Company and ISI Maritime Limited -, is a prime carrier of cargoes related to Iran's missile and other military programs as well as of arms shipments to Hezbollah, the Lebanese militia-cum-political party designated by the US and some European countries as terrorist.

The treasury designated IRISL in 2008, but is now seeking to ensure that its sanctions are effective and prevent the company from circumventing restrictions by renaming and reflagging its vessels or chartering third-party ships. The renewed focus is also designed to make it more difficult for IRISL to obtain insurance and services. In line with the US effort, the EU last month expanded its restrictions on shipping to Iran to include all shipping companies and vessels as well as air transport rather than only IRISL or other Iranian shippers and vessels.

Prosecutors in the southwestern German city of Karlsruhe this month charged a German and an Iranian national with violating the arms embargo and the EU's export ban on dual-use equipment by shipping to Iran a vacuum sintering furnace in July 2007 worth 850,000 euros ($1.1 million). The prosecutors charge that the furnace needed to construct parts for a missile's guidance system and warheads, falls under the embargo because long-range missiles could carry weapons of mass destruction in their payload.
Britain's Lord Chancellor Ken Clarke is investigating claims made by a BBC documentary and The New York Times that Isle of Man shipping companies set up as shells by IRISL are busting sanctions by shipping arms to Iran. The Isle of Man government has denied the allegations. The BBC documentary said Israeli navy commandos seized a cache of arms off the coast of Cyprus last November. The weapons were packed in crates marked IRISL on an Isle of Man-registered vessel, the Visea, that had set sail from Iran to Egypt, the BBC said.

Levey warned that "some of Iran's most dangerous cargo continues to come and go from Iran's ports, so we must redouble our vigilance over both their domestic shipping lines, and attempts to use third-country shippers and freight forwarders for illicit cargo." Levey's concern is particularly true for freewheeling Dubai and Ras al Khaimah (RAK), the two UAE emirates that operate as major Iranian transshipment nodes. Iran does $12 billion-a-year worth of trade with the UAE, on which it relies for the import of goods, many of which fall under UN or US sanctions.

The UAE recently restricted Iranian use of Dubai's port and its central bank froze accounts of 40 entities and an individual blacklisted by the UN for assisting Iran's nuclear and missile programs. Ras al Khaimah's free zone, home to some 200 Iranian firms, has stopped issuing licenses to new Iranian companies, according to the zone's CEO, Oussama el Omari. "RAK was looking to offer benefits to attract Iranian companies in the past. Now perhaps it's not in their favor to do so due to sanctions so they have changed their viewpoint," said Morteza Masoumzadeh, the head of the Iranian Business Council in Dubai.

The UAE's apparent renewed commitment to the sanctions regime follows the disclosure via satellite imagery of Iranian military installations on Abu Musa, the largest of three islands at the entrance of the Strait of Hormuz occupied by Iran. The installations included three missile launch pads, an elaborate underground market, and a sports field with the words "Persian Gulf" emblazoned on it - a provocative reminder of Iran's hegemonic view of a region the Gulf states describe as the Arab Gulf. UAE Foreign Minister Sheikh Abdullah Bin Zayed Al Nahayan recently stopped short of comparing Iran's occupation of the islands to Israel's occupation of Palestinian territory. "Iran refuses to allow us to send teachers, doctors and nurses. I am not comparing Iran to Israel, but Iran should be more careful than others," Al Nahayan said.

Ensuring that the sanctions against Iran are watertight is proving difficult despite the stepped up commitment from countries like the UAE. China, Russia, India and Turkey, in response to the latest US and EU sanctions, have moved to capitalize on investment opportunities. The four nations have reiterated their adherence to weaker sanctions imposed on Iran in June by the UN Security Council, but say they are not obliged to follow the recently announced more stringent US and EU rules.

In violation of petroleum-related deals with Iran, China and Turkey recently sold gasoline to Tehran while Russian officials say they will ship gasoline by the end of this month. The four countries are also signing deals to invest billions of dollars in Iran's oil and gas fields, petrochemical plants and pipelines. "Sanctions will not hinder us in our joint cooperation," Russian Energy Minister Sergei Shmatko said at the signing in July in Moscow of an energy partnership agreement with Iran.

In his talks with Lebanese leaders, Levey, according to well-placed Lebanese sources, raised US and EU concerns about a mysterious twice-monthly Iran Air flight from Tehran to the Venezuelan capital of Caracas with intermediary stops in Damascus and Beirut. Current and former EU, US and Israeli intelligence officials assert that Iran Air flight 877 ferries people and weapons to Latin America in advance of possible retaliatory attacks against the US should the US or Israel strike at Iranian nuclear sites. They also say the flight may be ferrying back to Iran sanctioned items for Iran's military programs. Although flight 877 is publicly announced, would-be travelers seeking a reservation are invariably told by Iran Air that no seats are available, Western intelligence sources say.

Former CIA Direct Michael J. Hayden concedes that Western intelligence services are unable to substantially monitor the flights or understand their precise purpose. Hayden says the flights are a concern because they constitute a direct and uncontrolled Iranian link into the Western Hemisphere. "I can tell you that we're really interested in that direct flight… It is something that we are sensitive to," Hayden said. The State Department declined comment on the flight, saying in a statement that "nations have the right to enter into cooperative relationships with other nations."

Iran: A Different Perspective

One probably shouldn't hold one's breath, but the dawn of the Obama administration offers an opportunity to revisit the question whether confrontation or dialogue is most likely to produce an understanding with Iran that would alleviate Western, Israeli and Arab fears. Engaging Iran in a constructive dialogue would help reduce tension and the potential for violence in the Middle East. Obama has said he intends to engage Iran more actively.

The Israeli offensive in Gaza highlights the threat to stability in the Middle East that confrontation with Iran poses. If Hamas rockets were the immediate driver of the Israeli offensive, tacit support by conservative Arab governments, including Saudi Arabia and Egypt, effectively gave it at least initial diplomatic cover and support. Underlying Israeli and conservative pro-Western Arab calculations, is a deep-seated fear of Iranian ambitions in the region that through Hamas cuts across the Sunni-Shiite divide.

Reading between the lines of statements by militant forces in the Middle East often is an exercise comparable with Kreminology in the days of the Soviet Union or second guessing succession in Saud Arabia. Messages designed to open the door to dialogue, settlement of differences and even rapprochement or at least intended to test the waters, are usually buried in a torrent of militant phraseology, war-mongering rhetoric and blood-stalling verbage and often contained in what a radical state or group does or does not do. Iran is no exception.

Iranian leaders from across the country's political spectrum have been signaling a desire to engage in a dialogue with the United States that could define the Islamic republic's role in the region provided that takes into account Iran's size, resources and regional clout. Some fear that engaging Iran on those terms could shift the balance of power in the Gulf. "US-Iranian detente would sacrifice GCC interests. There is a fear that … a grand bargain would marginalize the GCC states," Mahmoud Monshipouri, a political scientist at San Francisco State University, said in a recent speech in Abu Dhabi. He said such a détente would harm Dubai, which has benefitted considerably from the embargo on Iran. UAE exports and re-exports to Iran amounted to $6.57 billion in 2007, according to figures from the UAE Federal Customs Authority. However, a lifting of the embargo may have less of an impact on Dubai than meets the eye. The Washington Post, quoting reports by the US Justice Department and the Institute for Science and International Security, reports that Iran has shifted the axis of its smuggling of components for its nuclear program from Dubai to Malaysia.

Some US intelligence officials believe that Iran is already capable of building one nuclear bomb every eight months and that Obama will have no choice but to engage Iran and embed it in a broader regional security arrangement. The New York Times reports that President Bush last year rejected an Israeli request for specialized bunker-busting bombs it wanted to drop on Iran’s main nuclear complex and had also refused Israel permission fly over Iraq to reach the facility. Instead, Bush, according to the Times quoting US and non-US officials, advised Israel that he had authorized new covert action intended to sabotage Iran’s suspected effort. Some US intelligence officials however argue that the covert operation, if the past is any indication, will at best delay but not derail the Iranian nuclear program.

Iran most recently signaled its interest in playing a constructive role and engaging in dialogue through its response to the Gaza crisis – a combination of theatrics and some diplomacy. Iran has ruled out military support for Hamas, witness the refusal of Hizbollah to attempt to alleviate Hamas, by opening a second front against Israel on its northern border. Beyond not wanting to jeopardize Hizbollah's ability to perform well in Lebanese elections scheduled for later this year, Iran believes that Israel has created a situation that will cost it dearly, if not in military terms, certainly in political and diplomatic ones. Reason for Mohammed Ali Jafari, head of the Islamic Revolutionary Guard Corp (IRGC) to say this weekend: "Gazan resistance does not need other countries' military help."

No doubt, an advertisement last week offering a reward of $1 million to anyone who would assassinate Egyptian President Hosni Mubarak for betraying the Palestinians placed by the Basij, a volunteer-based paramilitary force subordinate to the revolutionary guards, hardly points to a desire for dialogue. It does however fit into the category of tasteless, counterproductive and provocative theatrics. It is unlikely that Iran is about to dispatch a team of assassins. More probable is that Iran would like to stir the pot in Egypt, witness the call by Iran's Lebanese ally, Hizbollah leader Hassan Nasrallah, on Egyptians to protest their government's refusal to fully open the Rafah border crossing with Gaza. Hizbollah does "not like to target Israeli civilians during election years – and Lebanon has parliamentary elections coming up in April. Hezbollah even kept their rocket attacks down for 1998’s local elections... Extrapolating, this trend indicates how highly Hezbollah values its legal and political standing in Lebanon and its recognition that this standing is damaged when it is held responsible for provoking Israeli strikes," says Aaron Mannes, who works on models of terrorist group behavior at the University of Maryland’s Laboratory for Computational Cultural Dynamics on the TheTerrorWonk blog.

Iranian President Mahmud Ahmadinejad has a particular pension for setting himself up as the boogeyman, denying the Holocaust and calling for Israel's demise. Yet, his predictions that Israel with be destroyed or simply wither away from the pages of history reflect a belief that Israel is digging it own grave and will self-destruct as a result of its own contradictions and policies. Critics of Israel in the west may too argue as they watch the carnage in Gaza continue that Israel's is its own worst enemy. Moreover, Iran's real targets are the conservative Arab governments of Saudi Arabia, Jordan and Egypt, Israel is a tool towards that goal.

Iran sees political mileage in the mass demonstrations across the Arab world not only denouncing Israel but also Arab government failure to bring an end to the crisis. That political capital is all the more important in a period of transition in which it has yet to emerge whether US President-elect Barack Obama will break with the Bush administration's policy of seeking to force Iran to make concessions before engaging in constructive dialogue.

Iran limiting itself to theatrics and rhetoric in Gaza contains another message: compare Iran's response to Gaza to its response to issues about which it is really concerned: Iraq and Afghanistan where Iran's hand in the resistance against the presence of US troops is clearly visible.

Nonetheless, theatrics and rhetoric contain pitfalls. Iranian leaders encouraged Iranians to pour into the streets to protest the Israeli offensive and to volunteer to fight in Gaza. Supreme leader Ali Khamenei declared that "true believers" were "duty-bound to defend" the Palestinians promised anyone who died for the cause of Gaza that he would be a martyr. Demonstrators took things in their own hands and attacked foreign embassies, including those of Britain and Jordan. They had to be cautioned to maintain public order.

Some 200 volunteers of the 70,000 who reportedly signed up to fight in Gaza held an angry sit in at Tehran's Mehrabad Airport, demanding that they be sent to the strip. Ahmadinejad's brother, Dawoud Ahmadinejad, was sent to the airport to advise them that they would not be travelling to Gaza any time soon while IRGC commander Jafari asked them to end the demonstration and called for a "mental and political jihad" against the enemy.

Struggle for Identity

At the core of the Israeli Palestinian struggle lays a struggle for identity couched in existential, political, national and religious terms – a struggle that reflects a quest for identity across the Middle East. That quest pervades all aspects of politics, economics, culture and daily life and shapes countries' domestic and foreign policies. The quest for identity is the architect of the region's future, sculpted in opposition to one or more perceived enemies.

For much of the Middle East's post-World War Two history, Arabs and Israelis viewed one another as the enemy. Already before 9/11 but certainly in the wake of those attacks, definitions of the enemy became more complex with new, more radical forces emerging. These new threats produced new alliances, particularly across the once impermeable Israeli Arab divide, which is giving way to a majority of Arab countries agreeing with Israel that Iran as well as Shiite and Sunni Islamists pose the greatest threat to regional stability. In turn, strategic re-alliance, even if it doesn't translate into peace treaties and diplomatic relations, has widened the gap between Arab government policy and public sentiment.

For much of post-World War Two history, Israel served as a lightning rod for Arabs, deflecting attention from domestic issues and authoritarian regimes' failure to cater to people's economic and political needs. As Arab governments shifted the geopolitical paradigm, large segments of the public turned to Islamist forces as the only credible opposition to discredited, corrupt regimes. Even so, the fault lines are not always crystal clear when it comes to defining regional threats. Conservative governments, moderate Islamists and their sworn enemies, Sunni Jihadis, may disagree in their assessment of Hamas or their attitude towards Israel, but find common ground when it comes to Iran and the Shiites. In recent months, conservative Arab governments together with Sunni moderate and militant Islamists have waged a war of words with strong racial overtones against Iran, Hizbollah and the Shiites.

Domestically, Arab governments use a carrot-and-stick mix of pervasive security forces and economic incentive to manage restive public sentiment. Nonetheless, tensions have been on the increase. Rising food and commodity prices raised temperatures in the course of 2008. Gaza is raising temperatures further. Emotions are running so high that some media even in the UAE, the Arab nation that prides itself of multiculturalism and tolerance, has harked backed to the worst demagogic rhetoric of the Israeli Arab conflict. "Today, the whole world stands as a witness to the fact that the Nazi holocaust was a mere lie, which was devised by the Zionists to blackmail humanity. The same Zionist entity swindled the world out of billions of dollars over the years to compensate the wrong and unjust which they claim to have been inflicted on their people. It is evident that the holocaust was a conspiracy hatched by the Zionists and Nazis, and many innocent people gave their lives as a result of this inhuman plot," writes Mohammad Abdullah Al Mutawa, a professor of sociology at Al Ain's UAE University in the Gulf News.

Arab governments from Oman to Morocco walk a tightrope that is becoming shakier as public anger explodes into protests demanding Arab action to put a halt to the violence. It puts governments hoping privately for an Israeli defeat of Hamas and incapable of exploiting the regional and international outcry to achieve an immediate ceasefire on the defensive. It illustrates the region's inability to translate financial clout and control of much of the world's energy resources into political and diplomatic clout and highlights Arab dependence on the United States, which in Arab eyes has little regard for Arab concerns when it comes to definitions of Israel's security.

Mounting public anger and frustration on Arab streets is unlikely to spark immediate or radical political change, but it does contribute to Arab government's continued loss of credibility and an ever growing quest for change -- a creeping process continuously boosted by regional crisis, pressure for greater political freedom, existential fear and a struggle to forge a post-colonial identity. In an emotional denunciation of Egyptian government policies towards the Gaza conflict as well as corruption, Zeinobia, author of Egyptian Chronicles,concludes: "Big strong country's future are not planned by other countries." In Saudi Arabia, where public protests are banned and demonstrators protesting the Israeli offensive have been arrested, people have started to wear Palestinian-style keffiyahs in solidarity with Gaza and are expressing their anger in the blogosphere, according to John Burgess's blog, Crossroads Arabia.

The Israeli offensive immediately after Israeli Foreign Minister Tzipi Livni rebuffed Egyptian President Husni Mubarak’s pleas for restraint, reminds Egyptians of their country's apparent helplessness. It plays into the hands of the secular neo-Nasserites and left-wingers as well as the Islamist opposition, who charge that Cairo’s alliance with Washington has brought Egypt to its knees, rendering it incapable of opposing Israeli policies. Israel’s attacks in Gaza will inevitably radicalize Egypt’s political discourse in much the same way they did after the July 2006 war in Lebanon, which placed Mubarak on the defensive, says Stephen A. Cook, a Council on Foreign Relations fellow. Robert Fisk, writing in The Independent, adds: "To admit that Egypt can't even open its sovereign border without permission from Washington tells you all you need to know about the powerlessness of the satraps that run the Middle East for us. Open the Rafah gate (to Gaza) – or break off relations with Israel – and Egypt's economic foundations crumble. Any Arab leader who took that kind of step will find that the West's economic and military support is withdrawn."

While Fisk's widely-circulated writing reflects a popular sentiment, the article coupled with demonstrations in several capitals outside Egypt's embassies against Egypt's alleged collaboration with Israel in the build-up to the Gaza war and the shooting of an Egyptian border guard by Hamas gunmen is provoking a backlash among Egyptians, including government critics. The backlash is compounded by calls by Hizbollah leader Hassan Nasrallah on Egyptians to rise up in their millions to force open the Rafah border gate and Al Qaeda second-in-command Ayman al-Zawahiri's description of the killing of the border guard in an internet message as "an example to follow for the zealous and free in the Egyptian army". Says female Muslim blogger on Tales of a Fattractive Egyptian Woman: "I'm sick of the sudden 'let's blame Egypt' mentality." Blogger Sandmonkey was far more explicit, laying into "all of you f*****s who are badmouthing my country, which – by the way – fought four f*****g wars for the Palestinian cause and lost more people than all of you."

Authoritarian Arab governments have little to be proud of. They preside over anemic economies and poor educational systems and have failed to educate their citizens to participate effectively in a globally competitive economy. Average unemployment hovers around 15 percent, second only to sub-Saharan Africa. Some 30 percent of the region's population of which 60 percent is under 30 years of age is believed to be illiterate. Political and economic reforms have been cosmetic and symbolic at best, primarily designed to maintain the image of progress. In many Arab countries, dissidents still go to jail, albeit that today they are given the courtesy of a trial.

Many Egyptians see the Palestinian problem and Egypt's role in it as inextricably linked to corruption, repression and the looting of Egyptian state assets by the country's western-backed business and political elite. Opposition demonstrations in the 1990s rallied around the slogan "The road to Jerusalem goes through Cairo." Demonstrators then saw Egyptian financial interests and the country's security forces as prolonging the status quo of Israeli occupation. Today, they view the government's privatisation programme accompanied by corruption scandals, rising unemployment and inflation as part and parcel of global interests that keep Gaza under siege and consign Palestinian self-determination to a pipe dream. "The Gazan crisis has emerged just as popular actions to subvert the systems of social repression that keep Egyptians alienated from their own economic and political processes are snowballing. The previous two years have seen more strikes and sit-ins than at any time since the second world war; a second major industrial sector has managed to break free of the five-decade state monopoly on trade unions; over 2,000 police officers have just resigned en masse over the use of torture as a security tactic and woeful working conditions, writes Jack Schenker in The Guardian.

The battle for Gaza does not constitute exclusively a boon for Islamists, across the Arab world, with the Muslim Brotherhood in the vanguard. Public anger at a lack of Arab response constitutes a welcome opportunity to garner increased support for their efforts for political change. The Islamists will be able to capitalize on the Gaza war as long as Hamas retains control of Gaza and is not ousted in favor of the Palestine Authority headed by President Mahmoud Abbas. Israel is unlikely to destroy Hamas or crush continued resistance against Israeli occupation but could deal it a significant blow from which it will take time to recover. Glorification of the Palestinian struggle will resonate with public sentiment and allow the Islamists to blame a possible setback on Arab collusion with Israel and the United States. "A solution (to the Palestinian problem) has to be found on an equal basis. That is what the new message is from Hamas and Hizbollah. Arabs will no longer allow themselves to be subjugated to colonialism. They no longer accept colonialism. They can resist as long as any human can resist. There are new rules that apply to the Israeli-Arab conflict by some people who insist on fighting for their rights. This is the new paradigm" in the region's quest for identity says Rami G. Khouri, director of the Issam Fares Institute for Public Policy and International Affairs at the American University of Beirut told Al Jazeera International.

The rise of the Islamists is the product of a pervading colonial-era mentality that dominates Arab governments who look for protection and salvation from foreign forces rather than their own populations, which they seek to control through heavy handed security forces and a buy-in into economic development. As a result, Arab governments are dependent on the United States. That mentality and dependence increasingly has polarized Arab society. In response, large segments of society have turned to religion for their salvation and self-assertion in what is the most dramatic social and political shift in the region in the past three decades. Spearheaded by Islamists, the shift constitutes a break with the 'vassals of the West' mentality in a bid to assert their own identity and interests.

Yet, the Islamists have been unable to translate their call for an Islamic state and the rule of Shari'a into a coherent program offering solutions for political modernization, economic development including job creation and protection of the environment. Gaza buys the Islamists time given their effectiveness at confronting Western powers and Israel to formulate constructive and coherent positions on economic and social issues that will become even more pressing as the global economic turn down takes its toll.

Islamist movements have so far failed to influence policy. They must convince their supporters that political participation is the best way to affect government in the long term, despite seemingly poor short term gains, concludes a Carnegie Endowment study,Islamists in Politics: The Dynamics of Participation, written by Marina Ottaway and Amr Hamzawy. “While participation is not invariably a process of further democratization and moderation, it is also clear that non-participation—either enforced by governments or chosen by the leadership of Islamist parties and movements—is a guarantee that a process of moderation will not take place. This is a sobering thought for those governments and their international backers that would like to set the bar for participation by Islamists extremely high. The choice is not between allowing the somewhat risky participation by Islamists in politics and their disappearance from the political scene. It is between allowing their participation despite the existence of gray zones with the possibility that a moderating process will unfold, and excluding them from the legal political process—thus ensuring the growing influence of hard-liners inside those movements and the continued existence of gray zones," the report says.

An Israeli victory against Hamas would pose a problem for the Muslim Brotherhood and like-minded Islamists, who dominate the religious inspired opposition among Sunnis in the Middle East, not only because it could affect their standing in the region, but because it would create a vacuum that at least in part could be filled by the Jihadi fringe of the Islamist movement. The rise of Jihadi groups in Gaza would repeat developments in Palestinian refugee camps in Lebanon. To Al Qaeda and its supporters, Hamas constitute a deviation from the true path of Islam. "They are traitors. Compared to us, they are Islamism lite… Hamas represents an American style of Islam," says Abu Mustafa, a Jihadi leader in Gaza who studied chemical engineering in Germany in a rare interview prior to the Israeli offensive.

Dressed in Pakistani garb and walking on crutches since he was wounded after an Israeli retaliatory missile strike a year ago minutes after he and his comrades fired rockets into Israel said Gazans were disappointed with Hamas' failure to introduce a real Islamic lifestyle and its willingness to accept democracy.. He said up to 10 people, many of them Hamas fighters, approach him daily to join the ranks of the Jihadis. "These are tough men and they have insider knowledge. They will be very useful should it come to a power struggle," he says. Many of the Hamas defectors opposed Hamas willingness to join a Palestinian conflict and agree to a truce with Israel. Jihadis in the Gaza Strip first made their mark when in 2007 they kidnapped BBC correspondent Alan Johnston and held him for four months. "It was nothing personal. It was a message to the West that they should release imprisoned Muslims," Abu Mustafa says.

Seeking to exploit, the moderate Islamist dilemma and Jihadi criticism of Hamas, Al-Qaeda's second-in-command Zawahiri called on Muslims on Tuesday to strike Western and Israeli targets around the world in response to Israel's raids on the Gaza Strip. He accused US President-elect Barack Obama of complicity. "Hit the interests of the Zionists and crusaders wherever and in whichever way you can," Zawahiri said in an audio tape posted on Islamist websites. "What you are facing now ... is a link in a chain in the Zionist crusader campaign on Muslims and Islam," Zawahiri said. "These attacks are Obama's present to you (Palestinians) before he takes office." Zawahiri, an Egyptian, blasted Egypt's President Hosni Mubarak as a "traitor" for failing to back Palestinians in the face of Israel's blockade of the Gaza Strip.

A Hamas weakened by the Israeli offensive is likely to complicate Egyptian efforts led by General Intelligence chief General Omar Suleiman to mediate between Hamas, Israel and the Palestine Authority. The Israel Hamas ceasefire that ended last month aimed to position Hamas as the force preventing other militant factions like Islamic Jihad, the Fatah-affiliated Al Aqsa Martyrs brigade and Al Qaeda supporters from launching rockets on Israel. In post-war Gaza, Hamas is unlikely to be able to wield that kind of power and may well be unwilling to do so. As a result, Egypt, and Israel, could face turmoil, lawlessness, and factional violence in Gaza. Egyptian officials fear that could undermine stability in Sinai where Palestinian and Egyptian militants could link up and attack Israel from the peninsula. The question for Egypt is how Israel would respond to such an attack. In his internet message, Al Qaeda leader Zawahiri called on the bedouins in the Sinai to help Palestinians break the Israeli blockade of Gaza.

If Hamas viewed a full-fledged military confrontation with Israel as its opportunity to repeat Hizbollah's 2006 success in Lebanon, it made a strategic miscalculation; not only because of the ferocity of the Israeli offensive but because the very success of the ceasefire with Israel in the period between June and November 4, 2008 was turning Hamas into a legitimate negotiating partner. That may well have been one reason why Israel pounced on Hamas' refusal to extend the ceasefire. Egyptian Foreign Minister Ahmed Abdoul Gheit, a key mediator between Hamas, Israel and the Palestine Authority, for that reason, described Hamas' refusal to extend the ceasefire as Hamas giving Israel – and with it conservative Arab states like Egypt itself and Saudi Arabia -- a gift on a "golden platter." Boston University professor Augustus Richard Norton and Harvard Middle East Center researcher Sara Roy quote an Israeli intelligence report published on the website of the Israeli Foreign Ministry as saying that "Hamas was careful to maintain the ceasefire" and that "the lull was sporadically violated by rocket and mortar shell fire carried out by rogue terrorist organizations in some instances in defiance of Hamas." The report goes on to say that the vast majority of rockets fired from Gaza at Israel occurred after November 4 when Israeli forces killed six Palestinian fighters in an attack on Gaza. In addition to failing to exploit an opportunity that even Israel was forced to acknowledge, Hamas went to war at a military disadvantage and in an environment in which it had alienated key Arab governments. Only weeks before the Israeli offensive, Hamas infuriated Egypt by foiling Egyptian attempts to bridge the divide between it and the Palestine Authority. One indication of Hamas' post-war strength will be its ability to follow through on a pledge to derail an Egyptian and Saudi initiative to extend Palestine Authority President Mahmoud Abbas’s presidential term until 2010. Hamas has said it intends to appoint as president the Palestinian parliament speaker – a Hamas member now in an Israeli prison – once Abbas’s presidency officially ends on January 9.

For all the horror of the television pictures emerging from Gaza, the suffering of the Palestinians in the strip, the discussion of proportionality and Israeli denials of the humanitarian crisis in the strip, identity also shapes Israel's conduct of the campaign. Israeli leaders are quick to note that their assault is a far cry from past wars waged by others like the United States against Germany and Japan or the Russians in Chechnya where less caution was exhibited to limit the number of civilian casualties; yet the public relations battle over the humanitarian aspects of the conflict is one Israel cannot win. If anything, is Israel is shooting itself in the foot by seeking to downplay or deny the human suffering and suppress coverage by preventing media from accessing Gaza. To be sure Israel is exercising a degree of caution in a bid to buy the time needed to fulfill its military goals before international pressures forces a focus on the humanitarian cost of the war and a halt to hostilities. Priding itself on being a democracy, it also has to take into account intense scrutiny by its own lawyers, judges, opposition politicians, reporters and human-rights activists. Mass demonstrations in 1982 in the wake of the massacre of Palestinians in the Beirut refugee camps by Christian militiamen under the watchful eye of Israeli troops forced the resignation of then Defense Minister Ariel Sharon and led to an independent commission condemning the Israeli government. Virtually every Israeli military campaign against a non-state actor has had its Sabra and Chatilla, a single incident that occurs by design or default involving the deaths of a large number of civilians that comes to symbolize the hostilities. The Gaza war's may have been yesterday's attack on a UNWRA school.

Israel's conduct of the war is defined by a field of tension between on the one hand the moral fiber of a democratic society exhibited in the response to Sabra and Chatilla and the scrutiny mechanisms that go with that and on the other the concept of the New Jew described so well by Tom Segev in his book, Elvis in Jerusalem, the Jew who unlike his brethren who allowed themselves to be led like sheep to the gas chambers during World War Two, does not turn the cheek but hits back hard at those who threaten his existence. This latter mentality leads to the view that will to resist can be broken by overwhelming force and terror, a view that focuses on the effect of resistance rather than he cause. Israel cannot ignore Hamas's attacks, not only because of the primarily psychological damage they inflict, but also because Israel continues to view itself as a state that is one battle away from destruction, and therefore cannot allow its enemies to think that it can be attacked with impunity. But at the same time Israel cannot do what it takes to wipe out the enemy, because of the constraints imposed by its own public, which is far less willing than in the past to suffer or inflict bloodletting and at the day more sensitive to human suffering than Israeli conduct of the Gaza war and current public support for that war reveals. "Israelis have to discard Gen. Douglas MacArthur's famous maxim: 'War's objective is victory -- not prolonged indecision. In war there is no substitute for victory.' They will have to settle for a substitute because from their standpoint 'prolonged indecision' is better than the alternatives -- the annihilation of themselves, which would be unthinkable, or of their enemies, which would be unconscionable," writes Boot, a senior fellow at the Council on Foreign Relations in The Wall Street Journal.

Gaza: A Godsend for Islamists

Israel's Yediot Ahronot newspaper reports that the humanitarian aid allowed into Gaza this week despite Palestinian rocket attacks served as one of several measures to give Hamas a false sense of security so that an already authorized attack would catch the Palestinian Islamists off guard. Today's air strikes, apparently designed to at least weaken Hamas to the degree that it no longer can complicate or obstruct talks with the Palestinian Authority, inevitably beg comparison with Israel's 2006 attack on Hezbollah in Lebanon.

That attack failed to achieve its target, the destruction of an Islamist group and the liberation of Israeli soldiers held prisoner. If anything, Hezbollah emerged politically stronger, having fought the first Arab war with Israel in which Israeli military superiority was dented and Israel failed to achieve its objective. Granted Gaza is not Lebanon, and Hamas is not Hezbollah. Hamas took a serious beating on the first day of what Israel promises could be a prolonged offensive, a drubbing that appears to be far more punishing than pain inflicted on Hezbollah in the initial days of the war. Hezbollah constitutes far more of a military power than Hamas does.

Israel will certainly have drawn military conclusions from its 2006 experience and taken those into account when its National Security Council last Wednesday unanimously authorized the attacks on Gaza. The devastating effect of the attacks indicates that Israel's effort to deceive Hamas about its plans including statements to the media suggesting that Israel was still discussing and had yet to decide on military moves appears to have succeeded. Hamas police officers were killed as they attended their graduation in Gaza's main policy academy. Yediot quotes Israeli sources as saying that Hamas officials who had gone into hiding reappeared before today's air strikes and resumed normal operations.

Drawing a distinction with the Lebanon war, Israeli sources insist that today's attacks serve more limited objectives and are designed to stop the firing of rockets from Gaza into Israel and not the destruction of Hamas or the liberation of Gilad Shalit, the Israeli soldier being held by Hamas since 2006. It would, however, not be the first time that a war has involved Israel expanding its goals as fighting continued. Israel's initial objective in the 1982 war fell far short of expulsion of the PLO from Lebanon or occupation of Beirut but ended with Yasser Arafat and his cohorts setting sail for Tunisia and Israeli troops in control of the Lebanese capital. That is not to say that Israel is likely to expel Hamas. It is however a confrontation that could follow the pattern of Israeli Arab-confrontations since the 1967 Middle East war up to the 2006 Lebanon war: a battle that Israel wins militarily, but looses politically.

That is all the more true in a world where western nations are grappling with the fact that Islamists in the Arab and Muslim world are popular because they are seen as agents of reform and change. They do well in those countries where free and fair elections are held – Turkey or Jordan for example – and would do very well if more authoritarian countries such as Egypt would let the ballot decide. Islamist popularity makes Western support for often politically and morally bankrupt governments more risky and costly. Israel's attacks on Gaza, certainly if they continue for some time with this intensity, could raise that risk and cost.

Within hours of today's Israeli bombing, clashes on the West Bank between Palestinian youths and Israeli troops erupted reminiscent of the second Intifada. At a demonstration of the Muslim Brotherhood-affiliated Islamic Action Front (IAF) in the Jordanian capital Amman, an IAF leader warned that Arab leaders who deal with Israel were criminal, a less than veiled reference to Jordanian King Abdullah and Egyptian President Hosni Mubarak. It was in Cairo after talks with Mubarak that Israeli Foreign Minister Tzipi Livni warned with reference to Hamas that "enough is enough." The Israeli attacks must put UAE Foreign Minister Sheikh Abdallah Bin Zayid Al Nahyan, who this week paid a rare official Arab visit to the West Bank, in an embarrassing position. The visit, although to the Palestinian Authority, constitutes a de facto recognition of Israel as the minister and his delegation would have had to pass Israeli passport control. The UAE does not recognize Israel and does not even acknowledge it on maps of the region printed in the country.

Various Arab countries are likely to privately take a much milder view of Israel's attempt to cut Hamas down to size than is evident from their public condemnations. Egyptian Foreign Minister Ahmed Aboul Gheit earlier today said Egypt had long warned Hamas that Israel would respond to rocket attacks in this manner, and that those who did not heed the warning "should bear the responsibility." Arab governments have privately sought to discourage Western contacts with moderate Islamists whom they view as their most serious challenger. Moderate Islamists to them constitute a political challenge given their public appeal, militant Jihadists are a security problem that can be harshly dealt with by security forces. This is all the more true in an economically depressed world where lower oil prices make it more difficult to create jobs and give legions of unemployed or underemployed youths at least an economic stake in the status quo. Public anger at the Israeli strikes coupled with Arab impotence is likely to fuel the vicious circle in which anger and frustration in the absence of a free media and freedom of expression can only be channeled through one outlet in the Arab world: the mosque.

Although unrelated to the violence in Gaza, the risks were highlighted when Bahrain Interior Minister Sheikh Rashid bin Abdullah Al Khalifa today accused Bahrain opposition leaders in London of having masterminded Bahrainis arrested earlier this month on charges of planning bomb attacks in the Gulf kingdom. He said the group had travelled this summer to Syria for military training under the guise of visiting religious shrines. Khalifa said Bahrain would have to introduce stiffer punishments in terrorism cases and toughen current legislation. Arsonists set fire to an electricity substation on one of Bahrain’s busiest streets hours before the arrest of the 14 was announced. Bahraini police have repeatedly clashed with Shiite villagers in recent weeks wanting to commemorate victims of unrest in the 1980s and 1990s.

Gulf Benefits from Media Crisis in the West

Global economic turndown is accelerating an already painful transition in the Western media. While journalists and media professionals grapple with the fallout and debate the fate of the mainstream media as we know it, for many of the more than 15,000 who this year alone lost a job in journalism in the US, the issues are existential. Many are looking for salvation in the Middle East where despite economic doom and gloom, the media industry is still expanding.

Recruiters report a more than 50% increase in the number of western journalists looking for jobs in the region. For Middle Eastern media this means the ability to choose from a larger and more qualified pool than before, a development that started with Abu Dhabi’s launch earlier this year of The National, an English-language daily, that recruited from some of the West’s greatest brand names, including The Wall Street Journal, The New York Times and The Daily Telegraph.

The National constitutes in many was a breath of fresh air, producing in layout and content one of the region’s journalistically most professional publications. Yet even it has had to tome down its aspirations to be a hard-hitting, investigative product that lets the chips fall where they may and acts as the force that holds the powers to be accountable. For those that find employment in a region and an environment they know little about, the transition may prove more difficult than expected. Those that preceded them and have encountered the boundaries of a free press in the region can tell the story. This is not to say that press freedom in parts of the region have not come a long way. Qatar’s Al Jazeera and The National are undeniable proof. Yet, it remains a far cry from the freedoms the Western press enjoys as a result of legal restrictions, informal red lines and the lack of a culture in which sources see the media as more than mere scribes.

Often the issue is that governments have yet to go beyond simply talking the talk. The UAE is currently discussing a new media law to pass the existing one that was enacted 28 years ago. Dubai kicked off the development of media free zones and has become with Dubai Media City a regional hub. Similar initiatives are underway in Abu Dhabi, Qatar, Jordan and Egypt, the later two certainly being locations with degrees of media control. In September, UAE Vice President and Dubai ruler Sheikh Mohammed bin Rashid al Maktoum, suggested that the new law should no longer allow for journalists to risk imprisonment for carrying out their duties. An appeals court in Dubai within weeks of Sheikh Mohammed’s statement overturned the conviction of two journalists on libel charges.

International press organization Reporters Without Borders ranks the UAE as one of the region’s most liberal media environments. It sees the main problem for press freedom in the emirates as self-censorship practised by media, which eschew criticism of the government in order to avoid repercussions. Putting a legal framework in place that allows journalists to fulfil their role as part of the fourth estate is a key ingredient for nurturing a free press. Encouraging a culture receptive to critical reporting without red lines is another. Sheikh Mohammed’s statement and the obvious effect it had on the appeals court is an important step in shaping an environment conducive to independent investigative reporting.