The six Gulf Co-operation Council (GCC) states have used their oil exports revenues of the past years not only to spend lavishly but to plan for a peaceful and serene future. So English football: a proxy battleground for feuding Gulf states?
Decades earlier, low oil prices meant economic disaster for a region that once controlled the world’s leading energy supplies impacting their sovereign wealth fund holdings. The ‘rentier’ states had to cope, some for the first time, with rising budget deficits. They had to conjure up policies to make good use of the classic rentier state economy involving a reduction in their dependence on oil revenues. A historical shift was handled quite artfully with notable policies of diversification of the respective economies and eventually getting hold of some ‘Soft Power’. Education, Sports and TV Entertainment or News channels amongst many other sectors of human activities were not precisely only bad earners in terms of Dollars. While there seems to be no question about the proceeds from the sector as mentioned earlier’s sales, these might have been central to the development of the Gulf States rivalries, eventually leading to the enduring present day blockade of Qatar.
So: English football: a proxy battleground for feuding Gulf states?
There’s nothing like a Saturday night scoop to get social media buzzing. Revelations that a Qatari investor wants to acquire a stake in Leeds United certainly did. If the story is correct, then it seems Qatar Sports Investments (QSI), which already owns French club Paris Saint-Germain (PSG), is interested in buying shares in the Yorkshire based English Championship football club.
That a Qatari group is showing interest should be no surprise either; after all, the Yorkshire outfit already has a partnership with the small Gulf nation’s Aspire Academy. Over the last two years, rumours have been recurrent that big money from Doha will, sooner or later, be invested.
Hence, it was the timing of the latest rumour’s emergence that was actually more revealing than the rumour itself. It came after a tumultuous week in football (and sport more generally) which was stitched together by a narrative stretching from Manchester, through Paris, to Doha and Abu Dhabi.
A big week for Qatar
The previous weekend, Abu Dhabi-owned Manchester City won the English FA Cup, which ensured the club secured an unprecedented domestic treble of trophies (alongside the club’s Premier League title and Carabao Cup win). City’s success, however, was very quickly tempered by stories that UEFA may ban the club from the Champions League for what are alleged to be serious breaches of the European football governing body’s Financial Fair Play regulations.
Later in the week, news came through that two PSG board members – Nasser Al-Khelaifi and Yousef Al-Obaidly – are being investigated on suspicion of corruption in connection with Qatar’s bid to host the 2019 IAAF World Athletics Championship in Doha. Significantly, Al-Khelaifi is president of PSG but also chairman of QSI (the Qatari investment group behind the alleged Leeds bid) and a member of UEFA’s executive committee. Al-Obaidly is chief executive of the Qatari media group beIN.
It was quite a week for the Qataris, as news also broke that FIFA will concede during its forthcoming council meeting that the 2022 World Cup will be contested by 32 teams. FIFA had been pressing for an increase in tournament size to 48 teams, though this would have necessitated Qatar sharing the tournament with at least one other country. Qatar, though, is currently engaged in an acrimonious feud with its near neighbours, notably the United Arab Emirates (UAE), Saudi Arabia and Bahrain, so FIFA’s capitulation was effectively a victory for Qatar over its rivals.
The Gulf feud is ongoing, having broken out two years ago following a visit to Riyadh by a bellicose Donald Trump. Since then, all manner of tactics have been used by the countries involved, ranging from heavy political lobbying in Washington DC through to an online war in which misinformation has been spread.
Qatar hasn’t stood idly by in the face of such provocation, often spending lavishly both to demonstrate its oil and gas fuelled economic strength and to project its soft power. The world record breaking transfer of Brazilian international Neymar, from FC Barcelona to PSG, is the most potent symbol of this, as the government in Doha set out to shift attention away from its rivals while simultaneously making a statement about the aspirations of Qatar.
As such, the news that QSI may be circling Leeds United doesn’t seem to be about a Qatari penchant for Yorkshire puddings, nor is it merely a nice opportunity to generate some Saturday night clickbait. Rather, it suggests the opening of another front in a feud which, instead of resolving itself, appears to be intensifying. Rather than being the dawn of a new era for Leeds United, the club may consequently be on the cusp of being drawn into a bitter battle of competing geopolitical interests.
The dense network of connections and conflicts between the likes of Qatar Sports Investments, Saudi Arabia, UEFA and Abu Dhabi may therefore be about to span the English Pennines, sparking a new War of the Roses between Yorkshire and Lancashire. Given the on-off speculation about Saudi Arabia’s purchase of Manchester United, and Abu Dhabi’s continued lavishing of its wealth upon Manchester City (as well as its rumoured acquisition of Newcaste United), these Gulf states are strengthening their hold over Lancashire, the western side of the Pennines, and possibly further north too.
In buying Leeds United, their rival, Qatar, would be shoring up its own defences in neighbouring Yorkshire, meaning that the Gulf region’s proxy war could spill over into English football. Thus, as fans on both sides of a historic English divide anticipate the prospect of their clubs’ battle for supremacy, they should remain mindful that Elland Road and the Etihad Stadium could become modern day proxy battlefields in a new stand-off between the houses of York and Lancaster.
The IMFBlog on May 28, 2019, is about a world phenomenon that seems to still be present in all walk of life throughout the world. The Costs of Corruption running deep in the MENA, have been amplified by the hydrocarbon-related rentier economies to a point where only a defossilisation of the respective economies could somehow reduce their extent. In the meantime, costs of corruption running deep in the MENA seem to go unattended to. Anyway here is this IMFBlog article.
The costs of corruption run deep. Your
taxpayer dollars are lost in different ways, siphoned off from schools, roads,
and hospitals to line the pockets of people up to no good.
Equally damaging is the way it corrodes the
government’s ability to help grow the economy in a way that benefits all
And no country is immune to corruption. Our
Chart of the Week from the Fiscal Monitor
analyzes more than 180 countries and finds that more corrupt countries collect
fewer taxes, as people pay bribes to avoid them, including through tax
loopholes designed in exchange for kickbacks. Also, when taxpayers believe
their governments are corrupt, they are more likely to evade paying taxes.
The chart shows that overall, the least corrupt governments collect 4 percent of GDP more in tax revenues than countries at the same level of economic development with the highest levels of corruption.
A few countries’ reforms generated even higher
revenues. Georgia, for example, reduced corruption significantly and tax
revenues more than doubled, rising by 13 percentage points of GDP between 2003
and 2008. Rwanda’s reforms to fight corruption since the mid-1990s bore fruit,
and tax revenues increased by 6 percentage points of GDP.
These are just two examples that demonstrate that
political will to build strong and transparent institutions can turn the tide
against corruption. The Fiscal Monitor
shines a light on fiscal institutions and policies, like tax administration or
procurement practices, and show how they can fight corruption.
costs of corruption run deep.
Where there is political will, there is a way
Fighting corruption requires political will to
create strong fiscal institutions that promote integrity and accountability
throughout the public sector.
Based on the research, here are some lessons for
countries to help them build effective institutions that curb vulnerabilities
Invest in high levels of transparency and
independent external scrutiny.
This allows audit agencies and the public at large to provide effective
oversight. For example, Colombia, Costa Rica, and Paraguay are using an online
platform that allows citizens to monitor the physical and financial progress of
investment projects. Norway has developed a high standard of transparency to
manage its natural resources. Our analysis also shows that a free press enhances
the benefits of fiscal transparency. In Brazil, the results of audits impacted
the reelection prospects of officials suspected of misuse of public money, but
the impact was greater in areas with local radio stations.
Reform institutions. The chances for success are greater when
countries design reforms to tackle corruption from all angles. For example,
reforms to tax administration will have a greater payoff if tax laws are
simpler and they reduce officials’ scope for discretion. To help countries, the
IMF has built comprehensive diagnostics on the quality of fiscal institutions,
investment management, revenue administration, and fiscal transparency.
Build a professional civil service. Transparent, merit-based hiring and pay reduce
the opportunities for corruption. The heads of agencies, ministries, and public
enterprises must promote ethical behavior by setting a clear tone at the top.
Keep pace with new challenges as technology and
opportunities for wrongdoing evolve.
Focus on areas of higher risk—such as procurement, revenue administration, and
management of natural resources—as well as effective internal controls. In
Chile and Korea, for example, electronic procurement systems have been powerful
tools to curtail corruption by promoting transparency and improving
More cooperation to fight corruption. Countries can also join efforts to make it harder
for corruption to cross borders. For example, more than 40 countries have
already made it a crime for their companies to pay bribes to gain business
abroad under the OECD
anti-corruption convention. Countries can also aggressively pursue
anti–money laundering activities and reduce transnational opportunities to hide
corrupt money in opaque financial centers.
Curbing corruption is a challenge that requires persevering on many fronts, but one that pays huge dividends. It starts with political will, continuously strengthening institutions to promote integrity and accountability, and global cooperation.
Hunger continues to rise in the Near East and North Africa region where over 52 million people are undernourished.
Conflicts and widening rural-urban gaps hamper the region’s efforts to end hunger by 2030.
8 May 2019, Cairo/Rome – Hunger in the Near East and North Africa region (NENA) continues to rise as conflicts and protracted crises have spread and worsened since 2011, threatening the region’s efforts to achieve the 2030 Agenda for Sustainable Development, including Zero Hunger.
Conflict continues to be the main driver of hunger across the region. More than two-thirds of hungry people in NENA, approximately 34 million people, live in conflict-affected countries, compared to 18 million hungry people in countries that are not impacted directly by conflict.
Stunting, wasting, and undernutrition are also far worse in conflict countries than in the other countries.
“Conflicts and civil instability have long-lasting impacts on the food and nutrition security of both affected and surrounding countries in the regions” said Abdessalam Ould Ahmed, FAO Assistant Director-General and Regional Representative for the Near East and North Africa.
“The impact of the conflict has been disrupting food and livestock production in some countries and consequently affecting the availability of food across the region,” he added.
“Rising hunger is also compounded by rapid population growth, scarce and fragile natural resources, the growing threat of climate change, increasing unemployment rates, and diminished rural infrastructure and services” Ould Ahmed underscored. The report highlights that the region is not facing just a hunger crisis as some of the highest rates of obesity are also found in countries within the region, putting pressure on people’s health, lifestyles and national health systems and economies. Addressing obesity requires food systems that ensure that people have access to healthy nutritious food and also increased public awareness and information on the risks associated with overweight and obesity.
Inadequate rural transformation hampers efforts to eradicate hunger and malnutrition by 2030
The report shows that not only do conflicts undermine the region’s Zero Hunger efforts, but also the degree of rural transformation.
“Countries that are not in conflict and have gone furthest in transforming rural areas in a sustainable way including through better management of water resources, have achieved better food security and nutrition outcomes than those in conflict or with lower levels of rural transformation,” Ould Ahmed said, noting how the report stresses that more efforts are needed to boost rural employment, stimulate economic growth in rural areas, reduce urban-rural gaps, and improve agricultural productivity and rural infrastructure and services.
The report highlights how unemployment, particularly for young people and women across all age groups is a significant challenge in the NENA region and is often higher than in other regions of the world. This is aggravated by rural-urban gaps – with significant disparities in living standards and poverty rates between rural and urban areas – and differences in labour productivity between traditional agriculture and industry and services. This gap is deepened by differences in access to education, health as well as other public services and housing.
At the same time, rural areas accommodate around 40 percent of the population, where the majority of poor are living. The report shows that the average wages for those employed in agriculture are likely to be far below those of workers outside the sector. Partially as a result of lower wages in agriculture, rural areas in the NENA region generally have higher income poverty rates than urban areas. On average, rural poverty is about twice as high as poverty in urban areas.
Transforming agriculture to achieve Zero Hunger
At a regional level, there are significant opportunities for transforming agriculture in a sustainable way, starting with the provision of improved access to markets for farmers, promoting investments in agriculture, transfer of technology and other innovations, more efficient and effective management of water resources, as well as key policy changes that support the shift from subsistence farming to commercial and diversified production systems.
“There is a great need to encourage our region’s farmers to produce according to the comparative advantage of the region,” Ould Ahmed said, highlighting that the NENA region has a great potential in the production of crops and livestock products that are least intensive in arable land and water and more intensive in use of labour.
The report highlights that greater efforts and actions are needed to support the development and implementation of policies and programmes to abolish rural-urban differences.
Key facts and figures
Number of hungry people in the Near East and North Africa: 52 million, 33.9 million are in conflict countries directly and 18.1 million in non-conflict countries.
Children under five affected by stunting (low height-for-age): 21.1 percent.
Children under five affected by wasting (low weight-for-height): 8.7 percent.
Children under five who are overweight (high weight-for-height): 9.1 percent
Note to editors: NENA countries include Algeria, Bahrain, Egypt, Iran (Islamic Republic of), Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, the Syrian Arab Republic, Tunisia, the United Arab Emirates and Yemen.
‘Get them all out!’: Algeria three years on after Panama Papers – and to mark World Press Freedom Day, Lyas Hallas, Algerian journalist – a member of ICIJ elaborates on the current situation of Algeria.
To celebrate the third anniversary of the Panama Papers – and to mark World Press Freedom Day – we’re speaking with reporters from around the world about the investigation each week.
Like many of our partners, Lyas’ work is still having an impact. Most recently, authorities arrested some wealthy Algerians named in the Panama Papers and street protesters calling for the president’s resignation and an end to corruption waved banners that featured the businessmen’s faces.
What was the biggest impact in Algeria after the Panama Papers’ revelations?
There was an immediate debate about assets held by Algerians overseas. The reaction shook the leaders of our country who had planned their retirements abroad. The Panama Papers also hit hard the businessmen who consort with politicians and who enjoy tax and banking advantages at home and yet who hide their money offshore. The revelations politically weakened ministers who were at the height of their power and others who were on the cusp of bouncing back.
One example was the then Industry Minister Abdesselam Bouchouareb, who was tipped to be the next prime minister before that became awkward due to the global firestorm in the wake of the investigation
Maybe my work contributed to bringing attention to the pillage of the country’s resources. – Lyas Hallas
What was your favorite moment of the Panama Papers investigation? What surprised you the most?
Favorite moment? A huge ‘catch’ when just one minute after I opened the Panama Papers database for the first time, I found Rym Sellal, the daughter of the then prime minister, Abdelmalek Sellal. It was very motivating.
I also didn’t expect to find the owner of an offshore company linked to the entourage of former energy minister Chakib Khelil who is at the heart of the SONATRACH corruption scandal, our state-owned oil and gas company.
Italy and Algeria had opened court cases and Italian judges had identified this offshore company as one of 17 used to launder $216.92 million (€194 million) in bribes. Yet neither Italy nor Algeria had called on Khelil as a witness. Ditto for the son of the former SONATRACH CEO who received six years in prison for corruption.
What also stuck with me about the Panama Papers is the interest of Algerians in this kind of story. In two years, I published a dozen stories and there was a buzz every time. During the recent protests in Algeria, citizens took to the streets waving images of some of the people featured in his Panama Papers reporting. Lyas Hallas
What were the most significant reactions to your investigations?
The general public reacted well, which was satisfying… In Switzerland, a criminal court dismissed a case brought by an Algerian businessman based, in part, on my Panama Papers reporting.
I had to resign from the newspaper where I worked in order to get my investigation published. I had a story on the Minister of Industry at the time, Abdeslam Bouchouareb.
Bouchouareb put a bit of pressure on the editor – I don’t know what they said. Five days before the agreed publication date with ICIJ, I had to find another newspaper to publish my story… I found one easily, which was good.
I was harassed online by various digital players in the pay of government officials.
Some people said I was dancing to the tune of foreigners and others accused me of faking documents. Khelil wrote on Facebook, without naming me directly, that I was a “Zionist agent.” Obviously, I didn’t react to this kind of nonsense, which was mostly anonymous.
Some people even called me an “agent of Rebrab” [editor’s note: Issad Rebrab, Algeria’s richest man]. I had worked for 11 months in a newspaper where he is the majority shareholder and from which I resigned to publish my Panama Papers story. Yet Rebrab tried to sue me in France because of the Panama Papers.
For someone who has not followed anything, what has happened in Algeria now?
President Abdelaziz Bouteflika’s desire to seek a fifth term sparked massive demonstrations on February 22 that forced him to resign. Algerians have long lived through his power grab as a great collective humiliation. Bouteflika did leave, but the system that he built — even if it’s weakened — is still in place.
Every Friday during the protests, millions of people rallied in unity around the theme “Get them all out!” The term “all” referred to those widely-despised figures from the Bouteflika era who, in the eyes of the demonstrators, embodied mediocrity, injustice and corruption.
What’s the connection between your Panama Papers investigations and recent events?
It’s not my job to spark protests. Maybe my work contributed to bringing attention to the pillage of the country’s resources and to the lack of some people’s “tax patriotism.” Or maybe it accentuated the feeling of injustice among many Algerians given the impunity of some people I wrote about.
During the recent protests, one of the main slogans was “You have devoured the country, band of looters!” Some protest banners included photos of politicians and businessmen I exposed.
In response to the demonstrations, authorities jailed some of these businessmen, including Issab Rebrab, in order to calm protestors and temper the country’s anger. A few days ago, the Supreme Court reopened a case involving Khelil. They are not being investigated for what I wrote about, but for similar practices to the things I uncovered.
Can you give us a summary of your investigations around these recently arrested men?
Businessman Ali Haddad, and as I mentioned earlier Issad Rebrab, have been arrested.
My investigation of Haddad revealed the illicit transfer of foreign currency through a complex arrangement involving foreign partners in the group of companies that carries out infrastructure projects in Algeria. Anti-corruption investigations against Haddad have not yet been concluded, but he was arrested at the borders with Tunisia while trying to flee.
As for Issad Rebrab, he was detained on charges of “misrepresentation of illicit transfers of capital from and to foreign countries, overcharging of imported equipment and importation of second-hand equipment while he had benefited from customs, tax and banking benefits”. My investigation questioned his background and the origin of his fortune. Policy makers have always made it easy for businessmen close to them to access credit, import licenses and government contracts, while guaranteeing them impunity since for business in Algeria, political support is needed.
The Supreme Court has reopened the case of Chakib Khelil, who has fled the country. Khelil is accused of bribery in a case involving contracts awarded by the state-owned oil company. My investigation revealed that his wife and his son were beneficiaries of offshore companies linked to a money laundering machine worth $220 million (€197 million) in commissions.
You are a veteran of journalism in Algeria. In what state was investigative journalism in Algeria before these demonstrations?
Investigative journalism in Algeria is fragile. It’s difficult to access information and Algerian media remains fundamentally based on opinion.
Even if Algerian media has some freedom in what it says, it doesn’t invest enough in going after real information. It’s subject to the government’s agenda and corporations’ marketing strategies. I would even say that it’s in a pretty sick state because it hasn’t evolved independently of the political forces now being protested against.
Algerian media didn’t develop an economic model based on its relationship with the audience that would have allowed financial independence. Advertising revenue has made the media dependent on advertisers and policymakers.
In short, much of the press is completely discredited. Especially given that the media itself was not untouched by corruption.
Algerians today are demanding a new kind of information and the current media are having a hard time satisfying this demand. Of course, there are small islands of resistance that try to offer quality information. But, it’s necessary to completely rebuild the system.
What is your hope for Algerian journalism after these protests and regime change?
I remain optimistic. The entire community of Algerian journalists is aware of the stakes. I hope that we will have the collective intelligence to set new rules of the game; rules that will establish healthy competition and favor new editorial practices to properly inform Algerians.
I don’t dismiss the value of Algeria’s press in the past, which emerged from struggles that saw journalists sacrifice their lives from generation to generation to be able to freely exercise their profession, especially in the 1990s, a decade in which terrorism had wreaked havoc on Algeria. We lost a hundred journalists and others who were murdered because they were journalists.
But the media system as a whole requires a re-foundation to clarify the ground rules. The opacity that Algeria’s media has evolved into exposes it to arbitrariness.
There seems to be some race between the USA and Europe with France’s TOTAL that recently signed with Algeria a contract for a polypropylene plant in the country. There were afterwards two days of public demonstrations in different localities close to the country’s oil bases in the South. Locals were out and about shouting out their frustrations of possibly turning into passive witnesses to fracking within walking distance to their familiar and naturally unkind environment. Far from being left behind, Exxon Mobil also signed a gas contract with SONATRACH that was immediately followed by more public anger. Far north, along the 1000 miles long shores, Italy with its oil company ENI is rumoured to most probably sign a historic agreement in Algiers that will allow it to officially win the operation of two offshore oil blocks East and West of the capital city. It looks as if the absent and dormant elites, political or business alike got together, and that people’s rebellion is the only way to fight climate breakdown.
Whether it is a legitimate offshore operation with diversification as its goal or merely a costly stunt to divert attention from the potential fracking of those ginormous pockets of shale oil in the deep Saharan south would remain to be seen.
Meanwhile in the UK, George Monbiot’s thoughts dated October 18, 2018, on the same issue of the country’s future being tossed alternatively between the capital’s plush offices and the countryside’s and villages bucolic streets.
As the fracking protesters show, a people’s rebellion is the only way to fight climate breakdown
Our politicians, under the influence of big business, have failed us. As they take the planet to the brink, it’s time for disruptive, nonviolent disobedience
It is hard to believe today, but the prevailing ethos among the educated elite was once public service. As the historian Tony Judt documented in Ill Fares the Land, the foremost ambition among graduates in the 1950s and 60s was, through government or the liberal professions, to serve their country. Their approach might have been patrician and often blinkered, but their intentions were mostly public and civic, not private and pecuniary.
Today, the notion of public service seems as quaint as a local post office. We expect those who govern us to grab what they can, permitting predatory banks and corporations to fleece the public realm, then collect their reward in the form of lucrative directorships. As the Edelman Corporation’s Trust Barometer survey reveals, trust worldwide has collapsed in all major institutions, and government is less trusted than any other.
As for the economic elite, as the consequences of their own greed and self-interest emerge, they seek, like the Roman oligarchs fleeing the collapse of the western empire, only to secure their survival against the indignant mob. An essay by the visionary author Douglas Rushkoff this summer, documenting his discussion with some of the world’s richest people, reveals that their most pressing concern is to find a refuge from climate breakdown, and economic and societal collapse. Should they move to New Zealand or Alaska? How will they pay their security guards once money is worthless? Could they upload their minds on to supercomputers? Survival Condo, the company turning former missile silos in Kansas into fortified bunkers, has so far sold every completed unit.
Most governments, like the UK, Germany, the US and Australia, push us towards the brink on behalf of their friendsTrust, the Edelman Corporation observes, “is now the deciding factor in whether a society can function”. Unfortunately, our mistrust is fully justified. Those who have destroyed belief in governments exploit its collapse, railing against a liberal elite (by which they mean people still engaged in public service) while working for the real and illiberal elite. As the political economist William Davies points out, “sovereignty” is used as a code for rejecting the very notion of governing as “a complex, modern, fact-based set of activities that requires technical expertise and permanent officials”.
Nowhere is the gulf between public and private interests more obvious than in governments’ response to the climate crisis. On Monday, UK energy minister Claire Perry announced that she had asked her advisers to produce a roadmap to a zero-carbon economy. On the same day, fracking commenced at Preston New Road in Lancashire, enabled by the permission Perry sneaked through parliament on the last day before the summer recess.
The minister has justified fracking on the grounds that it helps the country affect a “transition to a lower-carbon economy”. But fracked gas has net emissions similar to, or worse than, those released by burning coal. As we are already emerging from the coal era in the UK without any help from fracking, this is in reality a transition away from renewables and back into fossil fuels.
Zawya #CONSTRUCTION of August 13th, 2018, posted this article by Anoop Menon, Thomson Reuters Projects News about an omnipresent side of the MENA region’s construction disputes in its diverse markets since the advent of oil and its ensuing building and infrastructure development dynamics. Like everyone knows this market has unlike preceding times become characterised by a high volume of claims and disputes mainly since market conditions that were booming up to the sudden crash of June 2014 oil prices have altered to the point where the MENA region’s Construction Disputes at $91 million in 2017 seem to continue into this year unabated. Meanwhile, the report says in its Executive Summary:
Since then, the region is feeling the pinch, and in such an environment, cents are cherished and counted. Many contractors are struggling and are naturally looking to squeeze as much as they can from contracts. This includes pursuing any payments that they’re owed through claims and formal disputes if necessary.
The value of construction disputes in the Middle East last year was double the global average and reached its highest level since 2011, although the time is taken to resolve them reduced marginally, according to a new report by building consultancy Arcadis.
Average value of construction disputes in the Middle East touched $91 million in 2017, says Arcadis Getty Images/PhotoAlto/getty images
Average value of construction disputes in the region touched $91 million in 2017, says Arcadis report.
Arcadis’s annual 2018 Global Construction Disputes Report said the average length of time needed to resolve a dispute in the Middle East in 2017 declined 1.5 percent year-on-year to 13.5 months. The global average increased by 6.5 percent to 14.8 months.
However, the average value of disputes in the region in 2017 increased by a whopping 62 percent year-on-year to $91 million, despite the volume of disputes being about the same as in the previous year, the report said. In comparison, the global average dispute value increased by 33.5 percent year-on-year to $43.4 million.
The report’s findings are based on an assessment of the construction disputes handled by the Netherlands-based firm’s contract solutions team over the previous 12 months.
According to the report, the 2017 dispute value is the region’s highest since 2011, when the average dispute value was $112.5 million. However, 2011 also saw the region reporting the lowest average length of disputes at nine days, before moving to double digits in subsequent years, where it has remained.
A press statement that accompanied the report attributed the steep rise in value to “a small number of high-value disputes and a flow of ‘mid-value’ final account claims.”
The report pointed out that the economic backdrop for 2017 remained similar to 2016, when liquidity issues “due to a comparatively low oil price” squeezed cash flow across the supply chain and saw contractors taking a tougher approach to entitlements.
The most common reasons cited for disputes saw two new entrants in 2017. A failure to make interim awards on extensions of time and compensation was the top cause of disputes, while owner-directed changes took the third. Failure to properly administer the terms of a contract, a recurring issue for the past three years, took the second spot.
The report pointed out that both the first and third causes are related to “client responsibility”.
“When the project manager or engineer is the material influence for the dispute, the most common causes include a failure to be impartial to the employer’s interests, a lack of understanding of the procedural aspects of the contract, or a lack of authority that is limited by levels of authority issued by the employer (i.e. not allowed to issue variation orders over a certain value),” it said.
Rob Nelson-Williams, regional head of contract solutions for Arcadis Middle East, said in the press statement that the firm continues to see “a lot of the same issues” crop up in its analysis of construction disputes in the Middle East.
“This underlines the need to get the basics right, and the importance of seasoned technical and commercial advice when it comes to contract or claims strategy,” he said.
According to the report, as regional construction-related events loom closer and as pressure increases to meet fixed deadlines, “a sharper focus on removing ambiguity from within a contract at the very outset and better training on how to prepare a robust and credible claim are two relatively simple steps that would make a significant difference.”
On the dispute resolution front, as in previous years, party-to-party negotiation and arbitration were the two most common methods of resolving construction disputes in the region in 2017, the report said, with a Dispute Adjudication Board taking the third spot.
(Reporting by Anoop Menon, Editing by Michael Fahy)