Interpreting Middle East Economic News and Analyzing Market Trends

Archive for March, 2013

Riyadh, we have a problem!

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Gulf Cooperation Council (GCC)* countries continue to consume large amounts of water even though they are among the driest countries in the world.  Saudi Arabia, the largest of the GCC countries in terms of population and size realizes that something needs to be done.  However, tackling the main issue remains a taboo subject as we’ve mentioned in earlier posts.

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EU and IMF ask Cyprus to steal from its depositors in return for bailout

Euro zone finance ministers agreed yesterday on a long-awaited bailout package for Cyprus.  The country has been asking for a bailout of its banking system for a while, but the EU, as you can imagine, has had larger problems to deal with.  Cyprus was asking for $17 billion to shore-up its banking system, equal to its annual GDP.  However, EU finance ministers had a better idea; give Cyprus less than it was asking for, steal up to 10% of depositors money and raise corporate taxes. The theft will take place on Tuesday.  Banks will be closed on Monday so that the theft can take place without a hitch first thing Tuesday morning.  There are so many things wrong with this ‘package’, but first here’s a report from Reuters:

  

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Fujairah set to become oil storage center

Fujairah, one of the seven Emirates that comprise the United Arab Emirates (UAE), is set to become the oil storage center for the Middle East.  The main reason is strategic.  Fujairah sits outside the Persian Gulf and the Strait of Hormuz.  It is also part of the UAE and the Gulf Cooperation Council (GCC); a six nation bloc of Arab oil producers (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE.

 

Map courtesy of the BBC

 

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Saudi Arabia’s water problems stink

Saudi Arabia needs to act quickly to come up with new water supplies.  The country has been known to turn dessert into farmland, which made the country a net exporter of wheat for many years.  This policy consumed valuable water supplies and is now being wound down as the country faces increasing pressure on its water resources.  This, however, is not the country’s only water problem.  Years of poor sewage planning have lead to contamination of underground water supplies, making the need to for desalination plants even more urgent and putting additional pressure on the country’s energy sector.

  

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Qatar says no more aid to Egypt, IMF loan still on hold, expect pound to resume decline

Last December, Qatar injected $2.5 billion ($500 million of which was gifted) into Egypt to support the pound as foreign currency reserves dried up.  Qatar has been actively helping Egypt since the revolution in 2011.  To date, Qatar has given $5 billion in aid to the country.  According to Reuters, Qatar will not give Egypt any more aid for the time being.

With Egypt’s sugar-daddy taking time off for now, who will step in to help?  The IMF is eager to give Egypt $4.8 billion in aid (with many strings attached), who else will come to the rescue?

Chart forUSD/EGP (USDEGP=X)

 

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