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Getting the Saudi fight against corruption right

Dr. James M. Dorsey

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Kuwaiti billionaire Maan al-Sanea should have seen it coming after Saudi Crown Prince Mohammed bin Salman vowed to root out corruption.

Embroiled in one of the kingdom’s largest financial scandals and collapses that involved a bitter $22 billion battle with a prominent Saudi merchant family, cost some of the world’s biggest banks billions of dollars, and is being slugged out in courts across the globe, Mr. Al-Sanea was low hanging fruit. He was arrested in October when police raided his Saudi mansion two weeks before Prince Mohammed’s frontal assault on the kingdom’s political and economic elite.

Mr. Al-Sanea’s arrest failed to set off alarm bells. Members of the ruling family and business community as well as senior officials likely saw it as a one-off incident. Together with Mr. Al-Sanea, they also grossly underestimated Prince Mohammed’s brashness and ruthlessness and ignored his warning in June that “no one who got involved in a corruption case will escape, regardless if he was a minister or a prince.” 

Mr. Al-Sanea, the ruling family and business community had good reason to be complacent: they, like the crown prince and the Salman branch of the family, were all part of a system and a way of doing business that went back to the founding of Saudi Arabia.

That is why rather than creating a large number of enemies and opening himself up to accusations of selectively targeting people in a bold move that appeared to be more about grabbing power than rooting out corruption, Prince Mohammed may have been well-advised to make his anti-corruption stand differently.

The crown prince’s anti-corruption committee, established hours before the first arrests and announcement of dismissals of prominent princes, officials and businessmen were made, has projected itself as an enforcement agency with the powers to arrest, freeze assets and impose travel bans rather than a regulatory body that would introduce legislation designed to fundamentally alter an ingrained system.

Rooted in a system that until the late 1950s made no distinction between the budgets of the state and the ruling family, Saudi laws still only barely delineate the dividing lines between them nor do they contain anything that would amount to a code to prevent conflict of interest or regulate the way members of the ruling family do business with the state. In fact, business deals often amount to insider baseball in a country in which the family’s finances and sources of revenue are a closely held secret. In fact, if revealed, the Fortune 500 billionaire’s list could well look very different.

Members of the ruling family and associated businessmen initially often made their money by representing foreign companies and receiving huge commissions on government contracts. They often took loans from banks which they failed to pay back. National Commercial Bank, where numbered accounts of princes were managed by senior management, nearly collapsed at the beginning of this century because of unpaid loans.

Life magazine editor Noel F. Bush on a visit in 1943 during which he travelled in the country with its first king, Ibn Saud, portrayed a ruler who operated on the principle of ‘the state is mine’ and doled out welfare to his subjects. It is a system that has since repeatedly been upgraded but whose fundaments remain in place.

“Our unemployment rate would drop rather significantly if the billions we squandered on kickbacks and lavish personal enrichment schemes dressed up as public-works projects were spent instead on the development of small to medium enterprises, vocational training and 21st-century education reforms… In Saudi Arabia, senior officials and princes become billionaires as contracts are either enormously inflated or, at worst, a complete mirage,” wrote Jamal Khashoggi, a Saudi journalist who recently moved to the United States in anticipation of the crown prince’s crackdowns.

Mr. Khashoggi cited the example of an airport built “in the wrong location simply to benefit the princes who own the land. They received the land for free from the government and then got extravagant compensation for the property.”

Prince Mohammed’s plans to diversify and streamline the economy, loosen strict social codes to further his economic reforms, and, in a world in which autocracies can no longer primarily rely on repression, cater to social and job aspirations of an in majority young population while avoiding political change and tightening his grip on power, may well be the most far-reaching upgrade of the system.

No doubt, Prince Mohammed’s tackling of corruption and targeting of prominent people strikes a popular cord with many Saudis who have long been unhappy with arbitrary privileges members of the ruling family were able to accrue to further their business and financial interests.

Nonetheless, the impression that the most recent wave of arrests constituted a power grab rather than a systemic tackling of corruption is reinforced by the fact that the crown prince’s dealings as well as that of his tack of the ruling family remain beyond scrutiny.

The $500 million purchase by Prince Mohammed of the Serena, the world’s 15th largest yacht, raised eyebrows when it was disclosed in 2016 by The New York Times at a time that the crown prince had imposed austerity measures as a result of which many in the kingdom were struggling to make ends meet. The 32-year old crown prince never clarified how he had amassed his wealth.

Nor is it clear how his father, King Salman, funded the use of two offshore companies in the British Virgin Islands to take out mortgages on his London homes worth $34 million and manage a yacht. Similarly,  this week’s publication by the International Consortium of Investigative Journalists (ICIJ) of the Paradise Papers disclosed offshore holdings by several other members of the monarch’s branch of the family.

The New York Times moreover reported that a major Saudi investment firm founded by one of the king’s sons, and now chaired by another, owned a significant stake in a conglomerate that does extensive government business, including in a shipbuilding partnership with a French defense contractor. A smaller firm founded by another of King Salman’s sons operated in sectors regulated and/or funded by the state such as health care, telecommunications and education.

To be clear, offshore assets are not illegal nor are members of the ruling family barred under Saudi law from benefitting from doing business with a state that was named after the family. Equally clear, however, is that Saudi Arabia may benefit more from a reformer who exudes transparency, lives up to his vow that all are equal under the law, and tackles corruption structurally rather than punitively.

To achieve that, Prince Mohammed may be better served by an anti-corruption committee that is less vindictive and more focused on developing and enforcing a set of laws, rules and regulations that ensures rule of law by institutionalizing anti-corruption norms, policing conflict of interest, and introducing transparency into the finances of the state as well as the ruling elite.

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog, a book with the same title, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario and three forthcoming books, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africaas well as Creating Frankenstein: The Saudi Export of Ultra-conservatism and China and the Middle East: Venturing into the Maelstrom.

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Middle East

NATO and the puzzle of a nuclear deal with Iran

Mohammad Ghaderi

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A meeting of NATO (North Atlantic Treaty Organization) Heads of State and Government was held on Wednesday 11 and Thursday 12 July 2018 in Brussels, Belgium. NATO leaders met in Brussels amidst a terse environment that threatens to further weaken the post-war order.

This year’s meeting came at a tense time for transatlantic relations since the US president is set to sit down one-on-one with Russian president Vladimir Putin on May 16 in Helsinki. One of the topics the US president sought to discuss with his Western counterparts in Brussels was “the nuclear deal with Iran” and its fate.  Regarding this controversial issue Time wrote:

“After ripping up the Iran nuclear deal in May, the Trump Administration is fanning out across the globe to rally support for a return to economy-crippling sanctions against Tehran.”

It continues: “The effort comes ahead of President Donald Trump’s trip next week to Europe, where he is expected to pressure leaders into joining the far-reaching campaign to handcuff major aspects of Iran’s economy, including driving oil exports to zero. If European allies don’t join, Trump has threatened secondary sanctions on any company that does business with Tehran.”

According to the Time and other Western sources, Donald Trump intends to press NATO leaders over the Joint Comprehensive Plan of Action (JCPOA), and “The president hopes his bare-knuckled approach will coerce European leaders to unite behind him, even as they publicly oppose a return to sanctions and scamper to salvage the existing nuclear deal without American participation. This is while the White House keeps to press its European allies for increasing the military and defense budget (to 2% of their GDP).

While the transatlantic tensions are raising day by day due to the imposition of tariffs on steel and aluminum imported from Europe, what meaning can negotiations on the JCPOA imply? Does Trump intend to make a deal with his European partners in this regard? Do NATO’s European members welcome the integration of the JCPOA amid their conflicts with the US?

The British Prime Minister Theresa May has recently asked other European countries to remain silent against Trump’s actions in imposing tariffs on imported goods from Europe, and not to seek retaliatory measures. She also asked European authorities to negotiate with the US president on the JCPOA. Indeed, what’s going on among NATO members?

The truth is that in near future, the JCPOA will turn to the Europe’s leverage for making deals with the United States in security grounds, an issue witch its signs we could well see in the Brussels summit. It shouldn’t be forgotten that in its calculations, the EU is still regarding itself as dependent to the United States. Those like Theresa May, Emmanuel Macron and Angela Merkel are adjusting their policies in the international system based on their security dependence on the United States. It might be possible that the European officials agree on “restraining Trump”, but that’s all, and we can’t expect them to go further as to fulfil their obligations in this regard. The EU would never confront the US seriously, since “resisting against the White House” is in no way defined in Europe’s strategies and tactics.

In the course of the G7 recent meeting in Canada, Donald Trump discussed various subjects with Angela Merkel, the German Chancellor, including Iran nuclear deal, tariffs on steel and aluminum imported from Europe, and the increase of NATO defense budget. But these talks resulted in the intensified disagreements among EU member states and Trump. The tensions were so high that the meeting ended with no final statement. Now the US president is pursuing the same approach I dealing with NATO states.

Trump and the European countries both regard the tensions raised in the international system as a “single package”. In this equation, Trump asks the European authorities to cease their support for the JCPOA and the continuation of the nuclear deal in exchange for a decrease in the US economic and security pressures. It should be noted that one of the main reasons for the European leaders’ refusal of offering a conclusive, detailed and effective package to Iran regarding the JCPOA was their secret negotiations with the American officials. Since the U.S. withdrawal from the nuclear deal, Mike Pompeo the American Secretary of State had been constantly in contact with the European troika’s foreign ministers, and announced them the exact positions and policies of the US government.

In the course of the NATO summit, we witnessed the continuation of the Europe’s paradoxical game playing towards the JCPOA. It shouldn’t be forgotten that the EU’s main strategy towards Iran and the JCPOA, is to make us remain as part of the nuclear deal as long as possible, and without benefiting from its advantages, so that the influence of the US sanctions would be multiplied. The offering of the EU’s unacceptable and useless package of proposals is also to be analyzed in the same vein; a weak package which is resulted from the special relations between the US and Europe.

First published in our partner MNA

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Middle East

God’s Grace: Reichstag Fire and July 15 Military Coup

Zakir Gul, Ph.D.

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“By the grace of God!” Some rulers use the cry to explain why certain events happen and why they play out as they do. They will argue that God, in allowing the events to happen, has bestowed his grace upon the ruler. Two rulers and two events—the Reichstag fire in Germany on February 27, 1933,and the military coup attempt in Turkey on July 15, 2016—illustrate the devastating consequences this twisted logic can have on the lives of ordinary people.When Adolph Hitler arrived at the scene, he told German Chancellor Franz von Pape, “This is a God-given signal” to crush Communists (and later opponents). Immediately after the failed military coup, Recep Tayyip Erdogan announced that the event was “a gift from God” and justification for Erdogan to start cleansing the military (and later purging opponents).

The similarities between the two events are striking in terms of beneficiaries, consequences and suspicions about the rulers’ true intentions going forward. Soon after the fire, Hitler started to consolidate his powers in the name of protecting the state’s security and democracy. To do so, Hitlersuspended civil liberties and shut the door on the rights and freedom of the country’s citizens. The fire in the heart of the countrywas used to justify the notion that the country was in a great danger. With decrees, Hitler purged his opponents, even though there was only one person considered to be responsiblefor the fire. Erdogan followed a similar path when he has declared a state of emergency after the coup attempt and consolidated his powers with radical changes in the country’s political and legal systems. With decrees, Erdogan purged hundreds of thousands of people under the guise of protecting the country’s security and democracy—even though soldiers who allegedly were involved in the coup attempt that night already had been into custody.In the political arena, Hitler increased the number of votes he received in the election that took place a week after the fire. Similarly, public support for Erdogan increased after the coup attempt. History does, indeed, repeat itself. These are two of many examples that could have been cited.

It may not be possible to know for sure who staged and orchestrated the Reichstag fire orthe military coup attempt; however, it is clear that the rulers’ purported motives are suspicious and their explanations filled with inconsistencies, given the many controversies arising from both events.The Reichstag firehas been discussed by scholars and historians who concluded that Hitler and his team—either directly or indirectly—helped to instigate the fire. Indeed, the arsonist responsible for the fire was pardoned years later. The military coup in Turkey wasa terrorizing and wicked deed against humanity and democracy, and the persons responsible must be identified and punished based on the rule of law and democratic values. It is, however, a Herculean task. Too many loopholes and controversies about the coup attempt need to be clarified. Erdogan should provide evidence-based, honest and objective explanations to remove the suspicions surrounding the coup attempt. Many answers are needed. For example,why did Erdogan refuse to answer questions from the major opposition party (the Republican People’s Party, or CHP) about the coup? Why has the investigation case report and the report of the parliament’s investigation committee deemed inappropriate and unsatisfactory even by some members of the committee? More important, why has an international committee not been allowed to investigate the case? Questions such as these highlight the many mysteries and suspicions that still surround the event two years after it occurred.

An independent international investigation committee should be established by the United Nations to examine the coup attempt and eliminate possible suspicions about Erdogan and his governing team. The committee also should determine whether thousands of people were responsible for organizing the coup attempt, as the government alleges, and clarify the following: whether some U.S. citizens, such as Andrew Brunson, who is still in jail, were among the primary plotters of the coup; whether some other U.S. citizens for whom bounties were offered were behind the coup attempt; and whether the United States was behind the coup attempt, as Turkish politicians and government officials claim—even though the United States has denied any involvement in the event.

Another independent international investigation committee should be established by the U.N.(or some other internationally accepted institution)to investigate the aftermath of the coup. Violations of internationally accepted human rights (as reported by credible human rights organizations such as Amnesty International and Human Rights Watch) that have been committed by government security and intelligence officials since the coup attempt should be investigated. The committee also should also determine whether persons victimized in any way (such as imprisonment, job loss, inhumane treatment, and deprival of constitutional rights and freedoms)were based on evidence or resulted from the arbitrary application punishment. A final task of the committee should be to investigate allegations of abductions, extrajudicial executions and torture by government security and intelligence agencies. As John Dalhuisen,Amnesty International’s Europe director, has said, “It is absolutely imperative that the Turkish authorities halt these abhorrent practices and allow international monitors to visit all these detainees in the places they are being held.”

An independent and objective domestic committee that consists of members from every political party in the country—regardless of the parties’ percentage of the vote among constituents—should be established to investigate the same issues the two international committees need to review. Care must be taken to ensure that the members of this domestic committee—unlike those serving on the committee that was formed after the coup attempt—can maintain their objectivity and are aware of their responsibilities. The committee should be transparent and its actions and discussions observed and by international representatives of the U.N., the Organization for Security and Co-operation in Europe, the European Union, and individual countries and/or journalists.

Finally, the European Court of Human Rights, an internationally accepted high court of which Turkey is a member,should determine for itself—rather than rely solely on the response from government officials—whether the country’s domestic legal and judicial system can be accessed openly and freely by all citizens and the attorneys representing them in legal matters.

It is only through these independent international and domestic investigations that the truth about the failed coup attempt can come to light.

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Middle East

Ghassan Kanafani, the Palestinian Pioneer Author of Resistance Literature

Sondoss Al Asaad

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The eighth of July marks the 46th martyrdom anniversary of Ghassan Kanafani, who was assassinated by the Zionist Intelligence;  Mossad, along with his 17-year-old niece Lamees. Days before their martyrdom, Lamees had asked Kanafani to diminish his activitism and to concentrate on his writings. He answered her,” I write well because I believe in a cause, in principles. The day I leave these principles, my stories will become purposeless. If I were to leave behind my principles, you yourself would not respect me.”

Kanafani was born in 1936, in Palestine, to a father who was a national activist in the resistance against the British colonialism. After the 1948 Zionist occupation, his family sought refuge to Syria, when he was 12-year-old. In the refuge camps, Kanafani wrote most of his novels which highlights the sufferings that the Palestinians endure in the diaspora. He won multiple awards for his works both during his life and posthumously. For instance, in “Umm Saad,” Kanafani’s protagonist is a symbol of the Palestinian women in the refugee camps.

Kanafani was inspired by Jamal Abd al-Nasser’s ideas of national independence and defiance of imperialism. Due to the decline of Nasserism after the 1961 failure to consolidate Egypt and Syria under a unified United Arab Republic, the ascendancy of imperialism and Zionism and the rise of communism; Kanafani, along with his comrade George Habash, resolved to adopt Marxism. They belived that the political crisis in the Arab world could only be solved by turning the anti-imperialist struggle into a social revolution.

In Lebanon, Kanafani adopted the Communist philosophy and become a leading member of the Marxist-Leninist Popular Front for the Liberation of Palestine (PFLP). He says, “The Palestinian cause is not a cause for Palestinians only, but a cause for every revolutionary, wherever he is, as a cause of the exploited and oppressed masses in our era.”

Besides, he was a prolific creative and brilliant novelist and the first to anticipate the “resistance literature” genre. His literary products and fictitious works have inspired a whole generation of resisting youth, both during and after his lifetime as they are greatly rooted in the Palestinian culture and cause. Kanafani dedicated his works to reflect on the Palestinians’ lives and the challenges they face under the Zionist occupation. He states, “My political position springs from my being a novelist. In so far as I am concerned, politics and the novel are an indivisible case and I can categorically state that I became politically committed because I am a novelist, not the opposite.”

The assassination of Ghassan Kanafani was the result of his commitment to the Palestinian cause and the resistance methodology. Today, his legacy echo within every free revolutionary who devoted his life to confront the imperialist conspiracies. Indeed, Kanafani was murdered merely because he had constituted an intellectual threat to the Zionist entity. He refused the negotiations with the enemy, pointing that it would be “a conversation between the sword and the neck […] I have never seen talks between a colonialist case and a national liberation movement.”

The chief thematic field of Kanafani’s writing was inseparably connected to the anti-imperialism struggle. He stressed that the Palestinian cause could not be resolved in isolation of the Arab ‘s social and political crisis. Further, he insisted on developing the resistance movement from being a nationalist Palestinian liberation movement into being a pan-Arab revolutionary socialist movement of which the liberation of Palestine would be a vital component.

Definitely, Kanafani played an influential role in raising consciousness on the issue of imperialism. He maintains, “Imperialism has laid its body over the world, the head in Eastern Asia, the heart in the Middle East, its arteries reaching Africa and Latin America. Wherever you strike it, you damage it, and you serve the world revolution. “Shortly after Kanafani’s obituary in Lebanon, “The Daily Star” stated, “He was a commando who never fired a gun, whose weapon was a ball-point pen, and his arena the newspaper pages.”

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