The above image is of Executive director of Dubai Holding Real Estate, Jassim al Abdool (left), managing director of Dubai Holding, Khalid al Malik (centre) and managing director of three subsidiary companies under the umbrella of TECOM Group, Majed al Suwaidi.
Wealthy sheikhs behind Smart City leave trail of failed projects
Smart City Malta isn’t the only project masterminded by Dubai Holding, a subsidiary company of the UAE crown’s real estate arm, that has departed from its original terms, according to research conducted by The Shift following the Maltese government’s recent decision to change the parameters of the deal.
Similar projects in India and Morocco have also suffered the same fate – incomplete, then turned into residential projects yielding more personal profits instead of the investment in the economy and the creation of jobs promised.
The three Emirati nationals on Smart City (Malta) Ltd’s board of directors are Khalid al Malik, Jassim al Abdool, and Majed Mohammed Khamis Sabt Al Suwaidi. Dubai Holding’s subsidiary company, SmartCity Dubai FZ-LLC, owns a majority of the shares of SmartCity (Malta) Ltd.
The new terms of the deal for Smart City Malta ratified by the Labour government mean the three wealthy businessmen have been granted a much freer rein over what happens with the massive tract of land they purchased in Kalkara in 2007.
Al Malik is listed as the managing director of Dubai Holding, while Abdool is the executive director of Dubai Holding Real Estate.
Al Suwaidi is the managing director of three subsidiary companies under the umbrella of TECOM Group. TECOM Group also forms part of Dubai Holding’s portfolio of companies.
The Smart City project in Malta amounts to almost a fifth (17.55%) of Kalkara’s entire surface area – 316,000sqm from a total of 1,800,000sqm of land.
In 2007, the Maltese government first signed the deal which was supposed to lead to the creation of an ICT city, a project backed by a €300 million investment that was supposed to create 5,600 jobs, which never materialised.
From Kalkara to Kakkanad
That same year, Dubai Holding announced an almost identical Smart City pitch for an area in India known as Kakkanad.
Smart City Kochi, as the project is known, bears striking similarities with the one in Malta, albeit on a larger scale – in 10 years, the project was supposed to convert over 800,000sqm of land into an ICT city, creating 90,000 jobs in the process.
Like Smart City Malta, Smart City Kochi also lists Malik and Abdool as directors.
In 2020, the New Indian Express published an article describing how a state government representative sitting on Smart City Kochi’s board had allegedly attempted to sell off over 120,000sqm of land meant for IT development as residential real estate instead.
The attempt to sell off this land mirrors what happened in Malta with the Shoreline residential development – even though the original agreement stipulated specific parameters for ICT-related development.
Two years later, the same news portal published another article comparing Smart City Kochi with an IT hub located across the street known as Infopark, with the portal describing the promised Smart City hub as a project that “failed to live up to all the initial hype even 11 years after its launch”.
An analysis of the concept art originally showcased for Smart City Kochi compared to satellite imagery of the area on Google Maps shows that while some of the proposed projects are under construction, ten years later, the project is far from what was advertised as the end stage of the project.
The conceptualisation of the Smart City Kochi project.
A Google maps view of the region in which the Kochi project was supposed to be built (the box in red marks the location of Infopark).
The Rabat-Salé connection
Al Malik’s biography on Dubai Holding’s website states that the managing director “is also responsible for the company’s international real estate investments in places such as Malta, Kochi and Morocco as well as managing its strategic relations with local and international investors, and its government affairs”.
The Shift’s research indicates that Dubai Holding had, in 2005, announced a $2 billion project in an area known as Bouregreg, nestled between the cities of Rabat and Salé in Morocco.
Similar to the project in Kakkanad and Kalkara, the ambitious plans announced initially by the then-king of Morocco, Mohammed VI, do not match what is seen in Bouregreg today.
A conceptualisation of the urban development between Rabat and Salé.
A Google maps screenshot showing the same area between Rabat and Salé as it currently stands.
The project was originally supposed to convert a massive 40 million sqm area into an entirely new urban district featuring 2,000 apartments, 300 retail outlets and adjacent malls, parks and theatres.
The only visible structure in the area is the Grand Théâtre de Rabat, the construction of which was completed last year, two years past its deadline.
Iraq’s discontent has like for most countries of the MENA, been there for all to see. In effect, many of these depend on Russia and Ukraine, the two warring parties for their wheat supplies. How to fix that or how to begin fixing it is not exactly a downhill walk in the park. Here is Bamo Nouri‘s explanation.
Iraq food protests against spiralling prices echo early stages of the Arab Spring
Iraq has been seeing protesters take to the streets as food prices spiral upwards because of the Ukraine war. Around 500 people protested in Iraq’s southern city of Nasiriyah a few days ago as flour suddenly rose in price by nearly a third. With food-related protests subsequently taking place in Albania and Sri Lanka, the ripple effects of the war are spreading.
Iraq’s markets were largely unaffected by the surging inflation in months gone by. But Iraqi officials have confirmed that the Russian invasion has massively increased the cost of the region’s food and is also causing shortages. Flour prices are up from IQD35,000 (£18.29) for a 50kg sack to IQD45,000 (£23.52), rice by 10%, and cooking oil has doubled in price. Iraqi consumers have been stocking up fast because of fears of further shortages and price rises, and Iraqi traders have capitalised on the situation to increase their profits.
The Iraqi government has already put measures in place to tackle shortages, distributing food to those in most need, as well as rationing food during the upcoming month of Ramadan. Rapid government measures also include a monthly allowance of around US$70 (£53) for pensioners with incomes of less than one million Iraqi dinars (£522) per month to help them afford food, as well as for civil servants earning less than half a million Iraqi dinars.
Additionally, a temporary suspension of customs charges on consumer goods, construction materials and international food products has been introduced for a period of two months to help keep prices down. In Iraq’s Kurdish region, the Kurdistan regional government has introduced emergency measures including store closures in Erbil, the region’s capital, to stop rogue traders overcharging.
Turkey and Iran restrict exports
Imports from Russia and Ukraine, two of the world’s largest exporters of energy and agricultural products, have been massively reduced. The situation has also been exacerbated by neighbouring Iran and Turkey, which according to Iraqi sources have restricted food exports to Iraq to prioritise their own national stocks.
Despite Iraq being part of what is known as the fertile crescent, a region famed for its high-yielding farmland and access to water, a series of interventions in the last three decades have depleted the area’s water supply and crops. These range from Saddam Hussein formally drying out Iraq’s marshes, to water flow restrictions from Turkey and Iran causing severe drought. These events had already put pressure on Iraq’s agriculture sector and reduced internal production of food.
Distrust in the political system continues. In Iraq’s latest October 2021 Iraqi parliamentary elections, the lowest-ever voter turnout in post-2003 Iraq was recorded at 41% – creating a legitimacy crisis for Iraq’s yet-to-be-announced next government.
The key issue is that there is no clear progressive national government strategy, which in turn severely impedes development and weakens the Iraqi state, especially in the face of challenges such as global food price rises. However, what makes this particular protest noteworthy is that it comes at a time when all governments may be expected to do more to support their populations as prices spiral worldwide.
Protests start to spread
Given that two of the key drivers of the Arab Spring were the high cost of food and other goods, and restricted access to water, the latest protests may have worldwide significance. Iraqis may be the first in a global movement of protests over price rises as the Russia-Ukraine conflict continues.
Albania became the first country to follow in Iraq’s footsteps with protests, then Sri Lanka, amid warnings from the World Bank that Ukraine war-related inflation could drive other protests and riots.
While some other governments have already intervened with subsidies, there is also an argument that energy providers should act more responsibly in such times of crises. For example, Exxon, Chevron, BP and Shell recorded their highest profits in seven years in 2021, which they attributed to surging oil prices as post-pandemic demand increased but suppliers struggled to keep up.
The cost of food has provoked outrage throughout history. The 2007 and 2008 food crises triggered riots in Haiti, Bangladesh and Mozambique. Even in the French revolution, when Parisians stormed the Bastille on July 14 1789, they were not just looking for arms, they were looking for grain to make bread.
Highlighting these important lessons from history to drive more responsible government and corporate power may be pivotal in preventing political unrest and instability. There is little doubt that both governments and corporations need to do more to make sure that food is affordable for their citizens, or face the consequences.
The MENA countries where socio-political monopolization is fundamentally due to low levels of democracy and obscure political transparency have generated over the years Corruption. All attempts to strengthen business integrity and fight corruption were in vain. Chatham House‘s post on the subject of Tackling corruption is the focus for MENA in 2022 is worth going through. Here it is.
Integrity is central to the development of competitive and open economies in which growth and opportunities are sustainably and equitably distributed.
To tackle corruption in the MENA region, the international community must prioritize accountability over stability.
Tackling entrenched corruption will be a key focus of the political discourse in the Middle East and North Africa in 2022. International policymakers will look to anti-corruption as a framework that can be used to help stabilize conflict countries, support economic reform, or to pressure adversarial regimes. Pressure to deal with corruption also stems from popular anger in countries that suffer from poor governance as corruption can have very serious – even fatal – consequences, as the deadly hospital fires Iraq suffered last year illustrate.
Corruption can have very serious – even fatal – consequences, as the deadly hospital fires Iraq suffered last year illustrate
Across the region, anti-corruption processes are meant to signal accountability. However, they can also be weaponized by elites to consolidate power and target opponents, particularly in countries where the political system itself is built on politically sanctioned corruption. This makes anti-corruption efforts unlikely to succeed. These dynamics highlight the need for international policymakers to develop strategies that promote accountability and transparency over the long term instead of prioritizing political expediency.
Anti-corruption efforts not what they appear
At first glance, anti-corruption processes underway across the Middle East and North Africa appear to suggest that states in the region are serious about combatting graft. In Libya, a recent wave of arrests by the attorney general has seen two sitting ministers, a former deputy prime minister and a former head of a state-owned investment vehicle detained on charges of corruption. In Iraq, the commission of integrity and the prime minister’s special committee have arrested dozens of former and current officials on charges of corruption.
Across the GCC, governments are seeking to double down on their economic diversification plans. Against the rising tide of nationalism and populism, anti-corruption efforts will feature as part of a good governance agenda that serves a domestic audience by targeting elites and patronage networks. The UAE is the GCC’s most nimble economic player and leads the pack in efforts to stamp out corruption. In Lebanon, political competition and initiatives by members of the judiciary have resulted in investigations of alleged corrupt practices by the heads of major state institutions such as the central bank.
The case of Lebanon has clearly illustrated that appeasing elites does not deliver stability, and countries such as Iraq and Libya could potentially face a similar fate.
But appearances can be deceiving. In none of these countries have anti-corruption efforts led to meaningful change. In Libya, past efforts have petered out and officials have all too rarely faced trial, let alone been convicted. There is little to suggest this round will be any different as the government is unlikely to support the attorney general’s cause. In Iraq, this year’s top story will be the protracted government formation process following last year’s elections – a process rife with politically sanctioned corruption as the usual cast of characters come together to negotiate their share of power and money. Despite the 2019 October revolution that called for reform of Iraq’s ethno-sectarian political system (muhassasa), not much has changed.
Saudi Arabia, which is pushing ahead with its Vision 2030 targets, has an anti-corruption agenda but will face challenges in connecting its legal framework and process, led by the Oversight and Anti-Corruption Authority (Nazaha), with realities on the ground. Many sectors suffer from a lack of transparency when it comes to decision-making, yet the importance of personal and social connections (wasta) remains high in Saudi society.
Weaponizing anti-corruption processes
The darker side of the anti-corruption drive is the weaponization of such processes, whereby corruption allegations can be used to settle political scores, especially by those who are politically dominant. In Lebanon, this can be seen in the growing standoff between the governor of the central bank and Hezbollah and its allies, who see him as a political opponent.
The darker side of the anti-corruption drive is the weaponization of such processes, whereby corruption allegations can be used to settle political scores.
In Iran, under pressure from US-imposed sanctions, President Ebrahim Raisi will continue to promote anti-corruption measures to demonstrate good governance and accountability to help distract from the economic pain of sanctions. However, these efforts will by no means root out entrenched corruption. The Islamic Revolutionary Guard Corps (IRGC) and various parastatal entities have used predatory sanctions-busting strategies to ensure their economic survival, while crowding out the private sector. Without meaningful reform of the economic system, the government will likely see more protests and unrest.
The scale of the challenge facing the international community
There is no doubt that these problems will be difficult to tackle. Corruption stretches far beyond the upper levels of government. Where corruption has become politically sanctioned, such as in Iraq, the elite has shifted its focus away from formal government roles, such as cabinet ministers, who are now by design independent and technocratic, but weak. Instead, the key to state power has become the almost 1,000 senior civil servants under the special grades scheme, who do the elite’s bidding in government ministries and agencies without any transparency or accountability. They may not be the minister in charge, but these director generals and deputies make the decisions when it comes to government contracts and procurement, helping to generate huge sums of money for those whose interests they serve.
Any successful anti-corruption strategy must go beyond sanctions on individuals to address the core of the problem – the economic system of governance.
The international community have opportunities to address some of these entrenched problems this year. But its record to date is mixed. In Libya, the international community’s credibility on corruption has been greatly damaged by it prioritizing stability over accountability. A long-awaited audit of the Central Bank of Libya drew ‘no conclusion or determination’ over ‘any fraud or misappropriation’, while a UN report into allegations of vote-buying at the UN-created Libyan Political Dialogue Forum that selected the current government has not been made public. These developments have only strengthened the impression that Libyan officials enjoy impunity. As the Libyan political process is reshaped in 2022, measures to ensure accountability and transparency must take a much more prominent place in the architecture of international efforts.
Lebanon is perhaps the greatest test of the international community’s commitment to tackling widespread graft. In need of an economic rescue plan to reverse the severe depreciation of its currency and decline in GDP and foreign reserves, there is hope that a deal with the IMF and international assistance could materialize this year. The IMF and international bodies like the EU insist that any aid will come with conditionality regarding reforms, but there are fears they may soften their stance. They must hold firm. If their current position softens, this will damage both Lebanon and the credibility of the international community.
The international community must prioritize the legitimate grievances of MENA citizens, rather than pleas by entrenched elites to help maintain ‘stability’. The case of Lebanon has clearly illustrated that appeasing elites does not deliver stability, and countries such as Iraq and Libya could potentially face a similar fate.
Any successful anti-corruption strategy must go beyond sanctions on individuals to address the core of the problem – the economic system of governance.
The image above is of Image — A man checks electrical wires in Baghdad, 13 September 2017. For years Iraqis have denounced the bad management and financial negligence that have stifled the country and let its infrastructure fall apart. Photo: AHMAD AL-RUBAYE/AFP via Getty Images.
The following story is about how one country responded to disappointing Doing Business scores to reform its rules and regulations for its own benefit. Would discontinuation of this instrument mean its non-availability to others?
The above image is for illustration and is of iStock.
How one country responded to disappointing Doing Business scores
On September 16, 2021, the World Bank discontinued the Doing Business (DB) report, one of its flagship diagnostic products. This action follows what the World Bank called “a series of reviews and audits of the report and its methodology.”
The DB report, published each year since 2004, was one of the World Bank’s most influential reports in recent years. Every autumn, people around the world would wait eagerly and, in some cases, with some trepidation, for its release. Over time, the reports increasingly attracted the attention of heads of governments who wanted to see their countries do well in the rankings.
When the DB report came out in 2015, the Indian government was disappointed. Soon after taking office in 2014, Prime Minister Modi announced his government’s intention to bring India’s ranking into the top 50 within a few years. Several reforms were carried out in the following months, which the Indian government hoped would put India on a trajectory of rapid annual improvements in the ranking. The 2015 report (officially called “Doing Business in 2016”, since the World Bank always gave the report a forward-looking title) indicated only a modest improvement in India’s rank, from 142 to 130.
The World Bank explained to the Indian government that while several reforms may have been enacted on paper, Indian businesses did not report feeling an impact on the ground. Some responded, “What reforms?”, while others heard about the reforms but had not seen improvement on the ground. The reforms could not be officially recognized until the private sector reported real improvements. The World Bank suggested that the government put in place feedback loops to provide real-time information from businesses on whether the reforms were being well implemented. The government, instead of whining further about the scores, started working on such feedback loops. For several regulatory reforms covered by the DB indicators, it started surveying businesses on whether they felt any reform impact on the ground.
From February 2016 to May 2017, the government carried out a series of business-to-government (B2G) feedback exercises and focus group discussions (FGDs) on how much the businesses were aware of the enacted reforms and their views on the quality of reform implementation. Nine B2G feedback exercises were carried out. Topics covered construction permits (three surveys each in Delhi and Mumbai), starting a business (two surveys), and trading across borders.
The exercises revealed several implementation gaps, some major and some minor. An example is construction permitting. A business survey carried out in Delhi in March 2016 revealed the following implementation issues: a) significant lack of agency coordination—architects still need to obtain approvals from up to 10 different agencies; b) some facilities for online payment were not properly implemented and certain fees were still paid manually; c) very low awareness of the online system among users; d) no way to track the status of an application; e) information lacking on documentary and other requirements. In other words, the reforms had not gone far enough to have impact on the ground.
This feedback exercise helped generate several recommendations to address the deficiencies. These were provided to the Municipal Corporation of Delhi (MCD), and most were acted upon. Follow-up feedback exercises in October 2016 and February 2017 validated these actions while generating additional recommendations for further improvement. A similar effort was made in Mumbai.
The impact of these efforts can be seen in the trends in India’s performance on the “Dealing with Construction Permits” indicator. In the Doing Business in 2016 report, India’s ranked 183 on this indicator. Thirty-three procedures were involved taking 191 days according to the indicators. Two years later, the number of days had come down to 144 with a modest improvement in the rank to 180. The more substantial improvements came the following year when the DB report published in October 2018 indicated a reduction in the number of procedures and days required to 18 and 95 respectively. Still a long way to go but enough to propel India’s ranking on this indicator to 52. While all this improvement cannot be attributed to the feedback exercises alone, it is possible to trace a substantial part of this improvement to actions taken as a result of these exercises.
The Indian government also recognized that the DB indicators did not cover many regulatory interfaces that created problems for businesses and that the indicator measures were based on conditions in just two cities, i.e., New Delhi and Mumbai. Thus, in parallel to its efforts on the DB front, the Indian government embarked on an ambitious regulatory reform program at the state-level covering all states and union territories in the country. A long list of regulatory reforms was identified covering several regulatory areas, and state governments were instructed to carry out the reforms. Called the Business Reforms Action Plan, the program started in 2015.
Progress was monitored through annual indicators that ranked states according to their performance on implementing the reforms. The first such indicators, published in 2015, did not take into account business feedback. However, seeing the usefulness of the feedback exercises carried out as part of the DB program, the government changed the state-level reform indicators in 2018 by making a substantial part of the indicator scores dependent on business feedback.
The powerful demonstration effect of such feedback exercises had touched individual state governments too. In 2018, four state governments, Chhattisgarh, Jharkhand, Orissa, and Rajasthan, expressed an interest in knowing why there was poor uptake of self-certification and third-party certification options provided in business inspection reforms carried out by these states. At their request, the World Bank carried out an independent feedback exercise that could help design corrective actions to improve uptake.
The Indian experience from 2016 onward is a good example of what the DB indicators can lead to if governments use them well. First, the government refocused its attention from reforms on paper to reforms on the ground. Second, it recognized the importance of consulting with the private sector, which knows best where the shoe pinched, and designed corrective actions based on the feedback. This iterative process helped improve reform implementation quality. Third, the government recognized that while the DB indicators were useful, they were not adequate to diagnose the myriad of regulatory issues that businesses all over India faced. Thus, the government embarked on a more comprehensive, state-level, reform program, and, inspired by the power of indicators, underpinned this program by a set of performance indicators. Finally, once the pioneering DB-related feedback exercises proved useful, they created a demonstration effect, first within the central government, which replicated such exercises for the state-level reform program, and then on individual state governments.
Nobody running Lebanon, says central bank boss, as reported by Laila Bassam and Nafisa Eltahir, whilst hitting back at criticism over fuel subsidy removal. The above image is a general view of Beirut central district, Lebanon, August 22, 2019. REUTERS/Mohamed Azakir
BEIRUT, Aug 14 (Reuters) – Lebanon’s central bank governor said nobody was running the country as he defended his decision to halt fuel subsidies that have drained currency reserves, saying the government could resolve the problem quickly bypassing necessary legislation.
In an interview broadcast on Saturday, governor Riad Salameh pressed back against government accusations that he had acted alone in declaring an end to the subsidies on Wednesday, saying everyone knew the decision was coming. read more
Part of Lebanon’s wider financial meltdown, the steadily worsening fuel crisis has hit a crunch point, with hospitals, bakeries and many businesses scaling back operations or shutting down completely as fuel runs dry. read more
Deadly violence has flared in fuel lines, protesters have blocked roads, and fuel tankers have been hijacked this week.
The central bank’s move to end subsidies, which will mean a sharp increase in fuel prices, is the latest turn in the financial crisis that has sunk the Lebanese pound by 90% in less than two years and pushed more than half the population into poverty.
Salameh said Lebanon could recover but it was not possible to say how long that would take. “So far you have nobody running the country,” he told Radio Free Lebanon.
The central bank has effectively been subsidising fuel and other vital imports for the last two years by providing dollars at exchange rates below the real price of the Lebanese pound – most recently at 3,900 pounds to the dollar compared to parallel market rates above 20,000 – eating into a reserve which Salameh said now stood at $14 billion.
In order to continue providing such support, the central bank has said it needs legislation to allow use of the mandatory reserve, a portion of deposits that must be preserved by law.
“We are saying to everyone: You want to spend the mandatory reserve, we are ready, give us the law. It will take five minutes,” Salameh said.
The government has said fuel prices must not change, leaving fuel importers, who say they cannot import at market rates and sell at subsidised rates, demanding clarity.
“HUMILIATION OF THE LEBANESE”
Critics of the subsidy scheme say it has created huge incentives for smuggling and hoarding by selling petroleum products at a fraction of their real price.
Salameh said the bank had been obliged to finance traders who were not bringing product to market, and that more than $800 million spent on fuel imports in the last month should have lasted three months.
Despite an unprecedented wave of imports, Salameh noted there was no diesel, gasoline or electricity. “This is humiliation of the Lebanese,” he said.
Lebanon’s sectarian politicians have failed to agree on a new government since Prime Minister Hassan Diab quit last August after the catastrophic Beirut port blast. He has continued in a caretaker capacity since then.
Salameh said Lebanon could exit its crisis if a new government was formed that would embark on reforms. The Lebanese pound was “hostage to the formation of a new government and reforms”, he added.
The government has said steps to end subsidies must wait until prepaid cash cards for the poor are rolled out. Parliament approved these in June, but the financing has yet to be determined.
“When is the card? Let’s assume in the best case after two or three months … we will spend $3 billion while waiting,” Salameh said.Reporting by Nafisa Eltahir/Laila Bassam; Writing by Tom Perry; Editing by Kirsten Donovan
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