Elections in Egypt to test Western commitment to democracy

By James M. Dorsey

Deutsche Welle

Egyptians head to the polls on November 28 to vote for their next parliament amid criticism of systematic repression. Will Western nations step up their support for political reform or simply stand on the sidelines?

The parliamentary elections in Egypt are shaping up to be as much an indication of US and European commitment to human rights and democracy as they are a dress rehearsal for next year's Egyptian presidential election.
Michele Dunne, a Middle East expert at the Carnegie Endowment for International Peace, said people in Egypt and other Arab countries were watching the West closely to see to what extent they press for free and fair elections in the Arab world's most populous country.
"They will take that as a sign of whether the US and Europe are serious about these issues or whether they have relegated them to the sidelines," Dunne said.

For much of the past year, the US and the European Union have largely been quiet about the deterioration of human rights and prospects for real democracy in Egypt. These issues were glaringly absent from US Secretary of State Hillary Clinton's agenda when she met with Egyptian Foreign Minister Ahmed Aboul Gheit earlier this month in Washington. Similarly, Egyptian President Hosni Mubarak's poor human rights and democracy record has not figured prominently in recent high-level contacts between the EU and Egypt.
Crackdown on opposition

The western stance appears to have led Mubarak, in power since 1981, to conclude that he has a free hand in shaping the electoral process. For weeks, police and supporters of the Muslim Brotherhood, the largest opposition movement, have been clashing. The banned group controls a fifth of the seats in the present parliament by running candidates as independents.

According to Human Rights Watch, security forces have so far arrested over 1,300 Muslim Brotherhood members, including five candidates. The government has also shut down several independent media organizations.

"The regime is sending a message that there will be no election," said Mohamed Saad el-Katatni, the head of the Brotherhood's parliamentary bloc.
Monitors? No, thank you

The US has, however, called for free and fair elections. Earlier this week, State Department spokesman Philip Crowley appealed to Egypt to allow peaceful political gatherings, open media coverage and admit international observers to the polls. The foreign ministry in Cairo countered in a statement that this constituted meddling in Egypt's internal affairs.

"The latest positions taken by the administration toward internal Egyptian affairs is something that is absolutely unacceptable," the foreign ministry said in the statement, quoting an unnamed official. "It is as if the United States has turned into a caretaker of how Egyptian society should conduct its own politics. Whoever thinks that this is possible is deluded."
The statement said Egypt would honor the tradition of mutual respect as long as the United States did the same.

The heated discussion over the Egyptian political scene is nothing new and has been going on for some 20 years, said Adel Iskandar, a professor at Georgetown University's Center for Contemporary Arab Studies. But it was crucial for the US and Europe to foster debate about democracy and human rights.

"The regime has taken two steps forward and five steps back," Iskandar said. "Instead of focusing on how much progress has been made, the debate should revolve around how little progress has been achieved."
Weighing the pros and cons

It is a fine line, though, considering the volatile, geo-strategic part of the world. Western governments fear that taking Egypt to task for its dismal democracy and human rights record could prompt Mubarak to withdraw support for the stumbling Israeli-Palestinian peace process. Egypt also supplies valuable logistics for allied military operations in Afghanistan and Iraq.

Some analysts argue, however, that the long-term risks of the US and Europe being perceived as perpetuating authoritarian rule in Egypt and elsewhere in the Arab world could prove costlier than the short-term benefits of turning a blind eye to flagrant violations of human rights and democratic deficiencies.

But Edward Walker, a former US ambassador to Egypt, said changes were up to the Egyptian people.

"It is not something that the US can or should dictate, but neither should we be quiet about what we believe in," Walker said. "So I think it is appropriate for the administration to review what is going on."
In addition, western powers may just have more leverage than they assume. Analysts said Egypt had a vested interest in continued support of US policy in the greater Middle East.

The Arab nation would not backtrack on support for the Israeli-Palestinian peace process and risk US congressional favor for its substantial annual aid package. The government in Cairo uses much of the aid to strengthen its domestic security and ability to confront opposition groups. Putting that in jeopardy could spark unrest in the military concerned that it could lose its prerogatives at a time that Egypt is gearing up for a battle over who will succeed the country's octogenarian leader.

The government is also unlikely to risk its control of all US and European democracy and human rights assistance to Egyptian non-governmental organizations. It exercises that control through an agreement with donors that they will only fund NGOs, which are officially recognized and authorized by the government.

Pivotal presidential elections next year

This month's parliamentary polls are of only moderate importance compared to the presidential elections scheduled for next year that could change Egypt's political landscape, many US and European officials believe.
Speculation is rife about whether 82-year-old Mubarak, who is in poor health, will run for a sixth six-year term or whether he will push his banker son Gamal or his intelligence chief Omar Suleiman as his successor. Even if Mubarak does opt for reelection, it is unlikely that he would be able to serve another full term.

Proponents of a more assertive American and European stance said the time will then be ripe to address Egypt's human rights record and stifling of democratic development.

By publicly focusing on the issue, the US and the EU would shape debate in Egypt prior to a changing of the guard along the Nile, encourage democracy and human rights activists and alter widespread perception in Egypt and the rest of the Arab world that the United States favors authoritarian rule.

U.S. Should Push for Democracy in Egypt

By James M. Dorsey

World Politics Review

Human rights were glaringly absent from U.S. Secretary of State Hillary Clinton's agenda when she recently met with Egyptian Foreign Minister Ahmed Aboul Gheit ahead of Egypt's Nov. 28 parliamentary elections. The silence is noteworthy, given Cairo's suppression of the political opposition in advance of the elections as well as its overall dismal human rights record.

The Obama administration fears that Egyptian President Hosni Mubarak will respond to criticism by withdrawing both political support for the stumbling Israeli-Palestinian peace process and logistical support for U.S. military operations in Afghanistan and Iraq. The administration is also concerned that criticism would boost the Muslim Brotherhood, Egypt's popular Islamist opposition group. Finally, should Egypt simply reject the criticism, it could paint President Barack Obama as too weak to influence one of the United States' closest allies and a major recipient of U.S. aid.

Apparently testing the waters, State Department spokesman P. J. Crowley called on Egypt in a written statement to allow peaceful political gatherings and open media coverage, and to admit international election observers. Egypt immediately rejected the call, saying it has a system of judges and other safeguards in place to monitor the fairness of the elections and that the government has issued guidelines for free and fair media coverage of the campaign.

To be sure, repression of the opposition, intimidation and control of the media, and electoral restrictions virtually guarantee that Mubarak's ruling National Democratic Party will win the elections. But for the U.S., the long-term risks of being perceived as perpetuating authoritarian rule in Egypt and elsewhere in the Arab world may well outweigh the short-term benefits of turning a blind eye to flagrant human-rights violations and measures that stymie democratic development.

Read more at World Politics Review

Proposed NATO Defense Shield Fuels Discussion of New European Security Architecture

By James M. Dorsey

A proposed $280 million NATO missile defense system upgrade is straining relations between the United States and Turkey in the run-up to this week’s NATO summit in Lisbon. Turkish officials say they will only agree to having radar components of the system on Turkish soil if NATO abstains from identifying any potential target of the system and promises not to share intelligence with non-NATO members.

The Turkish demands reflect a mounting divergence in US and Turkish foreign policy with Turkey no longer signing up to Western policies simply to align itself with the West but instead making cost-benefit analysis a key element of its decision-making. As a result, Turkey is demanding a quid-pro-quid for its accommodation of the proposed missile defense shield upgrade that threatens to put it between a rock and a hard place.

If Turkey rejects the upgrade, it risks angering its US and NATO allies; if it joins the shield, it would upset Iran, a neighbor and major energy supplier, and could complicate its relations with Russia, which opposed the upgrade when it was first proposed by US President George W. Bush. "We do not perceive any threat from any neighbor countries and we do not think our neighbors form a threat to Nato," says Turkish foreign minister Ahmet Davutoglu.

The Turkish demand that NATO refrain from identifying the system’s target strikes at declared US policy: a White House fact sheet recently described Iran as the threat the proposed shield would be designed to counter. Turkey opposes Iran becoming a nuclear power but advocates continued engagement in the hope to expand its trade with Iran to $30 billion a year over the next five years. The US Treasury’s point man on Iran sanctions, Stuart Levy, last month failed to convince his Turkish counterparts to go further than the largely symbolic United Nations sanctions, which Turkey opposed, and endorse the much stricter US sanctions regime.

Turkey, concerned that any US or Israeli military effort to disrupt Iran’s nuclear program would further destabilize the Middle East, moreover wants assurances that any intelligence garnered from radars on its territory will not be shared with Israel. Turkish officials refused to confirm or deny reports that the Turkish Security Council last month approved changes in its national security document, called the "Red Book," removing Iran and Syria and adding Israel to the list of countries that pose a "major threat."

Turkey fears that allowing the radar to be based in Turkey will raise Iranian suspicions that it would be associated with a potential US or Israeli strike against the Islamic republic. The United States wants to base the radars in Turkey after US President Barak Obama promised Russia in September of last year that it would seek to accommodate Russian objections against basing them in Poland and the Czech Republic. Turkey’s position on the defense shield is influenced by the fact that its past accommodation of US and European interests has not pushed forward as Turkish leaders had hoped its efforts to join the European Union.

The quid-pro-quid Turkey is seeking for possible accommodation of NATO is US pressure on France and Germany to reverse policies that are preventing progress in negotiations for Turkish European Union membership. The US has signaled its willingness to accommodate the Turks by putting high on the agenda of a US-EU summit scheduled immediately after the NATO gathering Turkish EU membership. In expectation of a NATO compromise, Turkish officials say they have begun technical studies on the radars in preparation for possible deployment. The studies are in part designed to reduce tension between the government of Prime Minister Recep Tayyip Erdogan and the armed forces, which view Iran’s nuclear program as a threat and favor deployment of the NATO missile shield.


While most analysts and officials believe that Turkey is genuinely seeking to balance its long-standing commitment to Western interests with the impact of paradigm change since the end of the Cold War, some analysts caution that a failure to take Turkish interests into account could provoke a rupture with Turkey feeling forced to choose between the West and Iran.

Mitigating against a rupture is the fact that Europe may have a renewed interest in embracing Turkey because of the United States’ perceived preoccupation with security risks posed by the Middle East and China at the expense of its past focus on Europe. Calls in Europe for a new European security architecture that would put a greater emphasis on the role of Turkey as well as Russia are gaining momentum. A recently published European Council on Relations report entitled "The spectre of a multipolar Europe" argues that Obama’s failure to participate in ceremonies marking the 20th anniversary of the fall of the Berlin Wall was the latest sign that the US is no longer focused on Europe’s internal security. “Washington has its hands full dealing with Afghanistan, Iran and China and is no longer a European power,” the report concluded.

To fill the void, the report calls for an informal dialogue that would allow the EU, Turkey and Russia to build a new European security architecture from the ground up. This would require blowing new life into Turkey’s EU accession negotiations by expanding them to include common security and defense policies as well as energy. “The post-Cold War order is unraveling. Rather than uniting under a single system, Europe’s big powers are moving apart. Tensions between them have made security systems dysfunctional: they failed to prevent war in Kosovo and Georgia, instability in Kyrgyzstan, disruption to Europe’s gas supplies, and solve frozen conflicts… The EU has spent much of the last decade defending a European order that no longer functions. Russia and Turkey may complain more, but the EU has the most to lose from the current peaceful disorder,” the report says.

US Risks Little With Support for Egyptian Human Rights

Human rights were glaringly absent on the agenda of U.S. Secretary of State Hillary Clinton's meeting with Egyptian Foreign Minister Ahmed Aboul Gheit in the run-up to Egypt's parliamentary elections scheduled for November 28.

 

U.S. officials fear that criticism of Egypt's dismal human rights record could jeopardize Egyptian support for the Middle East peace process and U.S. military operations in Iraq and Afghanistan encourage the country's popular Islamist opposition and set President Barak Obama up for a failure if Egypt ignores U.S. pressure.

 

Repression and electoral restrictions virtually guarantee that the ruling National Democratic Party (NDP) will win this month's elections, but the long-term risks of perpetuating authoritarian rule in Egypt and elsewhere in the Arab world may well prove costlier than the short-term benefits of turning a blind eye to flagrant violations of human rights.

 

Analysis of the feared risks, moreover, shows that they are grounded more in perception than in reality and that U.S. support for adherence to human rights is a battle that can be won over time rather than a zero-sum game. Divided over whether or not to participate in the elections, Egypt's foremost opposition group, the Muslim Brotherhood, is going into the elections substantially weakened with many of its leaders in prison and a quarter of its candidates barred from standing as candidates. Egypt would risk U.S. Congressional support for its substantial annual aid package by backtracking on support for the Israeli-Palestinian peace process or logistics for U.S. military operations in the region or reducing intelligence. Similarly, Obama could avoid perceived failure by raising the human rights issue publicly without invoking threats or sanctions and instead taking a leaf out of former President George W. Bush's playbook.

 

Egyptian President Hosni Mubarak would surely reject Obama's criticism. Nonetheless, Obama's public focus on human rights and democracy would shape debate in Egypt, encourage activists and influence perceptions of the United States. All in all, the United States has more to win by nudging Egyptian and Arab debate about democracy and human rights and more to lose by maintaining a policy that so far has exclusively identified it with repressive, corrupt regimes and significantly tarnished its image.

Al Qaeda Threat Heightens Need to Resolve Western Sahara

It’s hard to see the United States’ faltering efforts to resolve the seemingly intractable Israeli-Palestinian dispute as a model for conflict resolution. Yet, parallels between the Middle East conflict and the Arab world’s other seemingly intractable dispute in the Western Sahara that has soured relations between Morocco and Algeria, suggest otherwise.

Resolution of the 35-year old conflict, one of Africa’s longest festering disputes, has become more urgent with the realization that lack of cooperation between North African and Sahel nations undermines efforts to stem the rise of Al Qaida’s affiliate in the region, Al Qaida in the Islamic Maghreb (AQIM). The need to align North African nations was driven home by AQIM’s brazen kidnapping in Niger in September of seven foreigners, including five Frenchmen, that threatens France's major source of uranium. Algeria, which backs Polisario, the Sahrawi liberation movement in its dispute with Morocco, last month refused to participate in a meeting in the Malian capital Bamako organized by the G8 Counter-Terrorism Action Group to discuss AQIM because of the presence of Moroccan representatives.

While there are obvious differences between the Israeli-Palestinian dispute and the conflict in the Western Sahara, similarities between the two suggest that the most recent Middle East peacemaking experience may be applicable.

At the heart of both conflicts is annexation of territory that has displaced population groups and subjected them to occupation. The parties to both conflicts pay lip service to international peace efforts but in practice act to subvert them. Both conflicts position a Western-backed ally against a liberation movement supported by influential regional powers. The United States and Europe, despite their support for the occupying power in both conflicts, pay lip service to the rights of the dispossessed.

It is these similarities that positions Middle East peacemaking as a model for preventing the festering conflict in the Sahara from playing into AQIM’s hands. The Obama’s administration message to Israel that security can only be achieved by accommodating Palestinian national aspirations is applicable to Morocco too: regional security demands a two-state solution. Morocco and the Sahrawis need to agree on a formula that balances Moroccan claims of sovereignty with Sahrawi demands for independence.

The roadmap adopted by the Middle East Quartet, which groups the United States, the European Union, the United Nations and Russia is equally applicable to the Western Sahara based on UN Security Council resolutions that call for a negotiated solution and recognition of the Sahrawi right to self-determination. A Saharan roadmap would allow the international community to empower former US diplomat and current UN envoy Chris Ross with the same mandate given to US Middle East peace negotiator George Mitchell: impose a one-year deadline within which the parties seriously negotiate a resolution of their seemingly intractable differences.

To provide the roadmap, the international community would have to come together as it did in the case of the Middle East rather than ignoring the dispute in the Sahara or adopting contradictory policies.In the past the United States was the only power seeking to bring the parties to the negotiating table with little support from its fellow council members. That is no longer a tenable situation with AQIM’s increasingly brazen operations and threats by Polisario, the Saharan liberation movement, to revive its armed struggle.

New York Court Rejects Awal Bank Petition for Chapter 11 Bankruptcy

A New York bankruptcy court has rejected a petition for limited Chapter 11 bankruptcy protection by Bahrain-based Awal Bank, a subsidiary of Saudi Arabia’s embattled Saad Group owned by Saudi billionaire Maan al-Sanea. The court’s decision offers temporary relief to creditors who stood to be left high and dry if the court had ruled in favor of Awal’s request, which would have allowed the troubled bank to keep information confidential and would have exempted it from creating a U.S. creditors committee

U.S. Bankruptcy Judge Allan Gropper however kept the door open for Awal to repetition the court provided it the bank agreed to establish such a committee. Groper told David Molton of Brown Rudnick LLP, the lawyers for Awal’s Bahrain Central Bank appointed administrator, Charles Russel LLP, that the committee was needed as a watchdog because US courts do not appoint administrators.

Groper suggested the request be resubmitted by Nov. 1, the deadline for the U.S. Trustee, which oversees U.S. bankruptcies, to seek candidates for a creditors committee. Alisdair Haythornthwaite of Bell Pottinger Middle East (UAE), speaking on behalf of Charles Russel said the administrator intended to follow the judge’s advice and reapply for Chapter 11 protection. Awal had argued that a U.S. creditors committee would duplicate proceedings in the Cayman Islands and the Middle East involving the bank’s largest creditors.

Awal Bank’s request for Chapter 11 came little more than a year after it had filed for Chapter 15 bankruptcy in the same court. Chapter 15 bankruptcy seeks to protect companies from U.S. litigation while they reorganize in a non-U.S. court. Molton told the court that Awal Bank needed Chapter 11 protection to help it recover what it called “avoidable” transfers out of the estate prior to bankruptcy.

Defaults on loans last year by Awal Bank as well as Saudi conglomerate, Ahmad Hamad Al-Gosaibi & Brothers Co. set off a bitter legal battle on three continents between the two groups that are related by al Sanea’s marriage to a daughter of the Ghosaibi family. Gosaibi has accused Al-Sanea in court filings on three continents of siphoning off $10 billion from his in-laws.

Awal’s Chapter 11 court filing suggested that it would it file a reorganization plan or opt for liquidation in Bahrain rather than the United States. Even though the court papers kept reorganization on the table, the Chapter 11 filing suggests that liquidation is the more likely option. 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 next year 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.

Al-Gosaibi is seeking to recover $9.2 billion in lawsuits in the Cayman Islands against al-Sanea and Awal subsidiaries. The lawsuits were stayed after al-Sanea challenged the Cayman court’s jurisdiction, and an appeal of that decision is set to be heard in November. In July, New York State Supreme Judge Hon. Richard B. Lowe dismissed a lawsuit Al-Gosaibi had filed against Awal and al- Sanea, on grounds of that court being an improper forum. Court proceedings involving Awal are also ongoing in Bahrain, Kuwait, Saudi Arabia, Switzerland and Britain.

U.S. Counterterrorism Strategy Boomerangs in Yemen, Somalia

By James M. Dorsey

World Politics Review

U.S. and European efforts to stabilize Yemen and Somalia are boomeranging. Rather than weakening militants in both countries, Western counterterrorism and counterinsurgency strategies are fueling radicalism and turning wide swathes of the population against the West.

With little real effort to economically and politically stabilize the two countries, U.S. military and security support for Yemeni President Ali Abdullah Saleh and the embattled head of Somalia's Transitional Federal Government (TFG), Abdullahi Yusuf Ahmed, exacerbates local fault lines and strengthens deep-seated anti-Americanism.

The backfiring of Western policies is compounded by a one-size-fits-all approach and a failure to address local grievances. To be sure, the Saleh and Ahmed governments are as much a part of the problem as they are part of the solution. This, and differences between the goals of Western nations and those of their regional allies, complicates efforts to embed security and military policy within initiatives to improve the population's economic lot and enhance good governance. Nonetheless, the incentive to get the policy right is compelling: Together Yemen and Somalia control key oil-export routes through the Gulf of Aden; mounting instability in both countries threatens regional stability in the oil-rich gulf and surrounding resource-rich African nations.

Western policy assumes that ungoverned spaces fuel instability and provide oxygen to al-Qaida's Yemeni affiliate, al-Qaida in the Arabian Peninsula (AQAP), and to al-Shabab in Somalia, rather than viewing both countries as territories with alternative power structures that, if properly engaged, could potentially further Western interests and undermine support for the militants. A recent Chatham House report (.pdf) concludes that "no amount of international support can compensate for the TFG's lack of internal legitimacy," a shortcoming clearly illustrated by the desertion of TFG military recruits to al-Shabab. By contrast, the emergence of stable forms of local government in Somalia based on reconciliation among clans calls into question assumptions that a lack of central-government control in Yemen must necessarily result in tribal safe havens for AQAP.

Western policy assumptions also fail to adequately distinguish between AQAP's global ambitions, which were demonstrated by the failed Christmas 2009 bombing of a U.S.-bound airliner, with al-Shabab's continued focus on regional, rather than Western targets. For instance, al-Shabab's twin attacks in June on soccer fans in Kampala, which killed 74 people, were aimed to persuade Uganda to withdraw its troops from the African Union peacekeeping force in Somalia. Western policymakers also see Somali refugees as potential jihadist recruits, ignoring the fact that most of those who have fled the country did so to escape the Islamists.

The Obama administration earlier this year took a step toward expanding its regional focus beyond piracy to address the emergence of lucrative networks engaged in human trafficking as well as the smuggling of arms, drugs and fuel. To move against these networks, which often operate with the connivance of government and security officials, the administration imposed sanctions on Yemeni and Somali arms merchants with close government ties, coupled with increased efforts to strengthen the coast-guard capabilities of Yemen and Somaliland, a self-declared republic in northwest Somalia. Yet, such actions are likely to have limited effect as long as they fail to similarly align the interests of the Yemeni navy, controlled by the Defense Ministry, and the coast guard, reporting to the interior minister. They must also guarantee that these forces are complemented by an effective customs service and ensure that Somaliland anti-piracy efforts move beyond targeting only those activities that threaten the interests of government ministers.

The threat posed by misguided Western policy extends beyond the borders of Yemen and Somalia into their extensive diaspora communities. Yemenis and Somalis increasingly see the U.S. and Europe as aggressors seeking to exclude domestic actors, rather than enhancing their ability to resolve local issues and build a system that provides greater accountability. The Somali community in the United States is proving to be a fertile al-Shabab recruiting ground, while Somali-Americans constitute the largest contingent of U.S. nationals suspected of joining al-Qaida affiliates. Britain's MI5 Director-General Jonathan Evans warned last year that terrorist plots hatched in Somalia and Yemen pose an increasing threat to U.K. security.

Increasingly, Yemen and Somalia demonstrate the need for finding and supporting creative measures that involve the private sector and civic groups in efforts to deradicalize individuals and groups. Such measures do exist. One campaign backed by FIFA, soccer's world body, and local Somali businessmen has shown success at luring child soldiers away from the jihadists with a program whose slogan is "Put down the gun, pick up the ball."

Another key to a successful policy is to align Western interests and those of regional allies. In Yemen, a division of labor between the U.S. and the U.K. has emerged, whereby Washington focuses on security and London on economic issues. However, Saudi Arabia, Yemen's single largest donor, has no clear Yemen policy and simply wants to keep the country afloat. In their new book, "Yemen On the Brink," the Carnegie Endowment for International Peace's Marina Ottaway and Christopher Boucek caution, "Without strong pressure to address the systemic challenges facing the country, it is extremely doubtful that the Yemeni government will make any serious efforts to curb corruption, improve governance or address political grievances, which are directed against the government itself. As long as donors remain divided, there can be no such pressure on the government of Yemen."

International donors have already begun to use badly needed foreign assistance as leverage to force the Yemeni government to address the issues fueling radicalism. At a meeting earlier this year, they demanded that Yemen clearly explain how aid will be managed before monies are transferred. But such aid must also be coherently designed and integrated if it is to provide a perspective of change to significant chunks of the population and, with it, an alternative to militant Islam.

US House Committee Investigate Gosaibi and Maena

A US House Committee on Financial Services inquiry will this week focus on the multi-billion dollar dispute between al Gosaibi business family of Saudi Arabia or their former associate, Maan al Sanea, the head of the Saudi conglomerate the Saad Group as part of an investigation of money laundering by Middle Eastern and US financial institutions.

In a hearing scheduled for September 28, the committee will hear evidence from witnesses concerning the movement of US$1 trillion of funds between Middle East financial institutions and US banks over a six-year period ending last year. That evidence is not expected to involve links to finance of terrorism or illegal activity such as drugs or human trafficking, but will include transactions of Al Gosaibi and Al Sanea. The dispute between the two Saudi groups erupted when institutions of both entities defaulted on payments amid accusations of forgery, fraud and theft.

One focus of the inquiry will be to what degree institutions like Bank of America complied with the obligation for “red flag” notifications of transactions requiring a suspicious activity report (SAR) by banks or regulators. The witnesses appearing before the committee include regulators, officials, financiers and New York lawyer Eric Lawyers wto represents the al Gosaibi family. Al Sanea’s spokesman declined to comment on the House hearing, but reiterated denials that the group had been involved.

The hearing could revive US legal interest in the dispute between the Saudi groups. A New York and Cayman Islands court ruled in July that the dispute should be settled by Saudi authorities rather than in a foreign jurisdiction.

A Saudi committee that includes business, financial and political and political leaders has been looking into the dispute for the past year, but has yet to propose a solution. Global creditors are trying to recover $20 billion owed by the two groups as a result of the defaults.