Breakfast Wrap: Egypt Must Stop Crying Wolf, Hussein Salem’s Seedy World

I was on a conference call with several Arab (some of them Egyptian) economists and analysts based in New York yesterday, and they told what their biggest concern is regarding Egypt’s transition to democracy.

It wasn’t the confusion over writing a constitution, nor the risk of violence from protests. It wasn’t even nationwide subsidies that have bled the country dry for the past few years.

The analysts’ biggest worry was the credibility of news announcements that come out of Egypt almost on a daily basis.  For example, do we believe the government’s statement that they will secure an IMF loan by November when they’ve been repeating this statement for months?

As if to prove their point, within hours of the phone call Egypt’s prime minister denied a report that he asked Algeria’s government for $2 billion during an official visit to the country this week.

Even if the loan deal turns out to be true, this kind of denial doesn’t help the countries involved in these announcements.  Someone may have breached a confidence to expose the deal earlier than planned.

A deeper concern is trusting political parties and their often contradictory and confusing statements on business and financial plans.  Egypt’s political parties will lose the trust and confidence of the general public and business community if all that is remembered are countless denials.

Sifting through hundreds of news articles on the IMF loan alone will offer a glimpse into the number of delays, denials and dithering Egypt is subjecting its people to.  Enough.  If a decision has not been made, keep your mouth shut, or else we’ll stop listening and that would be a big problem for the country’s biggest political party which needs public support. 

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The National newspaper’s series on corruption is a must-read for anyone that is following Egypt.   The first in the series spelled out how Mubarak’s family had millions, as opposed to the billions.

This morning, the second in the three-part series by Bradley Hope, explores the seedy financial dealings of tycoon and Mubarak confidante, Hussein Salem.

Known as the “Father of Sharm El Sheikh”, documents obtained by The National show “Salem and his family presided over a business empire that stretched from France to Hong Kong and included companies and off-shore accounts in the UAE, Spain, Switzerland and Romania.” 

Yet, Mr Hope writes, “Egyptian investigators examining the financial dealings of Mubarak-era political and business figures found only meagre amounts of cash held in Salem’s name in Egypt.”

The figures show these people amassed modest fortunes and were hardly even millionaires in some cases.

But the inflated idea regarding the real wealth of the former regime is a testament to how it was despised by many.

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Confused about all the conflicting stories on what’s happening with energy subsidies in Egypt?  Then read this Bloomberg report which aggregates a number of important factors and speakers in one article.

Namely, the issues surrounding the black market that has developed for gas cylinders, the comparison to Iran which Rebel Economy has touched on, and the role of big companies such as Citadel Capital in reforming energy subsidies.

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Dubai, the home of many former (and active criminals) and where some failed businessmen can start afresh, is involved in another scandal.

Couriers carrying millions of dollars worth of gold bullion in their luggage have been flying from Istanbul to Dubai, where the gold is shipped on to Iran, according to industry sources with knowledge of the business, Reuters reports.

Reuters says “the sums involved are enormous.”

Official Turkish trade data suggests nearly $2 billion worth of gold was sent to Dubai on behalf of Iranian buyers in August alone.

The shipments help Tehran manage its finances in the face of Western financial sanctions.  It is yet another controversy for the Gulf state which has been linked to a number of dodgy deals, often involving the smuggling of counterfeit currencies.

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Another Dubai-related story on how the emirate is merely hiding behind grandiose statements with its giant Taj Mahal, when in fact a weak real estate market is still gripping the economy.

The gist of the story:

The eye-catching developments may be creating a buzz. In reality, the nascent recovery has been limited to a few areas of Dubai, which suffered a slump that caused property values across the emirate to fall by as much as 65 percent. About a quarter of Dubai’s residential properties are empty and an additional 25,000 are due to be completed next year as developers fulfill contracts awarded before the crash, Jones Lang LaSalle Inc. estimates.

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The threat of cyber attacks on individuals and companies is growing in the Arab world.   Now, as the FT writes, “rising regional political tensions and a flurry of recent cyber attacks have raised fears about the growing use of viruses to target critical national infrastructure in the Middle East“.

The story touches on recent attacks on Saudi Aramco and Qatar’s RasGas and who and what organisation might be behind potential attacks on other companies.




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