Trends | October 2011

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Canada ........................C$ 7.50 France .......................... 4.57 Germany ....................... 6.14

Egypt ..............................E 10 Italy .............................. 5.17Jordan ............................. JD 4

Kuwait ...........................KD 1.2 Lebanon .................... L 5,000 Morocco .........................DH 22

Oman ............................ OR 1.5 Qatar .............................QR 15Saudi Arabia ...................SR 15

Switzerland ....................SFR 8Syria............................ S 100Tunisia .......................... TD 2.5

UAE .............................AED 15 UK ..................................... 2USA ....................................$ 5

A MediaquestCorp Publication

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QatarSignificant salary rise to boost economy

SyriaActivists abroad go online to support revolution

Registered in Dubai Media City

October 2011 /N 158TRENDS

Uncertainty ReignsFollowing the Arab Spring, the Middle East enters a period of economic, social and political transformation

Winning Way Region's private equity firms adapt to modern investment model

Eastern PromiseOil producers in Arab region look toward Asia as Western economies struggle

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The pension of civilian retirees will go up by 60 percent. Employees referred to retirement before the enforcement will also benefit from the raise. The pension of retired military officers will also rise be-tween 50 and 120 percent.

The decision became effective on September 1.

The increase in the basic salaries and social allowances will amount to QA-R10bn ($2.74bn) a year, in addition to QAR10bn to be paid once for the pen-sion fund and another QAR10bn for retir-ees subscriptions ahead of implementing Qatars retirement and pension law.

The increase in salaries will definite-ly improve consumer spending, not only in Qatar, but also in other GCC countries.

ECONOMYGoing PublicBy Staff Dubai

If you were to ask any GCC citizen if they would prefer to work in the private or public sector, the majority would say the public sector. The perks offered by the governments to their employees in this re-gion are hard to match.

Last month the icing on the cake for government sector employees in Qatar was a significant increase in salaries.

In a royal decree that applies to Qatari government employees, retirees and military personnel, an increase of 60 percent in the basic salaries and social allowances for state civilian employees, a 120 percent raise for military personnel serving in officer ranks, and a 50 percent raise for those serving in other ranks was announced.

An analyst, who did not wish to be named, said that Qatar has taken a lead but other countries in the region are likely to follow the suit and raise salaries of public sector employees. There are mainly two reasons behind the substantial increase of salaries, she said. One is fueling the engine of econ-omy and the second is calming domestic emotions in the wake of Arab Spring.

However, the attractive salary-raise in Qatar has not gone down too well with the rest of the workforce. The Qatari employ-ees working in the semi-government agen-cies are unhappy over the exclusion from the recent pay raise granted to the nation-als, said a report in Doha-based newspa-per The Peninsula. The local workforce has called on the government to apply pay raise for all Qatari staff in public and pri-vate sectors, it said.

Qataris in the private sector will flee and head to government agencies in con-trary with the governmental directives and the development strategy approved in the 2030 Qatar Vision calling to recruit na-tionals in the private sector, said the report.

Despite the concerns expressed by the Qatari staff at semi-government and pri-vate firms, the salary satisfaction is quite high in the country. Vice-president of sales at Bayt.com, Amer Zureikat, said Qatar has recorded the highest salary satisfaction in the region, with three percent of respon-dents highly satisfied, 60 percent with me-dium and 37 percent with low satisfaction.

The online recruitment and research firm said in its 2011 Salary Survey that satisfaction across the Middle East regard-ing wages was looking stable, with three percent of residents stating they are high-ly satisfied, 52 percent saying they were averagely satisfied, and 45 percent stating they have low satisfaction.

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Chief Executive Officer of Newmont Mining Corporation, Richard OBrien, said during the Denver Gold Forum, that the gold may rise to $2,000 an ounce by the end of this year, and $2,300 an ounce by the close of 2012 because of investors buying the metal as a haven amid turmoil in financial markets.

Were going to continue to be in a bullish gold-price environment for the next five to seven years, said OBrien, accord-ing to Bloomberg.

Gold climbed to a record in early September and is in the 11th year of a bullish market, the longest-winning streak since at least 1920 in London, reported Bloomberg. It touched a record $1,921.15 on September 6, advancing by 25 percent this year. But is gold really a safe haven?

ECONOMYAll That GlittersBy Atique Naqvi Dubai

If diamonds are a girls eternal best friend, then gold is the darling of investors during hard times. In recent weeks gold prices have been flirting with the magi-cal figure of $2,000 an ounce, and analysts say that the popular yellow metal will cross that figure by the end of this year. Precious metals, especially gold, have time and again proved to be an elixir of economic life.

As the euro struggles to keep its head above water, the recent downgrade of Ita-ly by Standard and Poors has added more troubles to the fairly troubled euro zone. With the economic climate in the United States turning murkier, traders and inves-tors have been making a beeline in global markets to get their piece of gold. The re-sult: record-high gold prices.

Saxo Banks global head of FX options and forward training, Gustave Rieunier, says yes. Gold and other precious metals have been in great demand because people see them as a safe haven, he said. Global economy and capital markets are struggling and we have seen a great inflow in the buy-ing of Swiss francs, seen as a safe invest-ment, but after the Swiss government de-cided to weaken its currency, there are very few options left that are safe. One is gold.

It may not be an exaggeration when market insiders say gold prices are likely to cross $3,000 an ounce. It all depends on whether we are in a bubble or not, but the speed of increase seen in gold suggests that it may go beyond $3,000, said Rieunier.

The World Gold Council, in its recent report, said although the prices are skyrock-eting the demand is not slowing down. De-spite a higher gold price, Indian and Chi-nese demand grew by 38 percent and 25 percent respectively during Q2 2011, com-pared to 2010.

This growth is likely to continue, due to increasing levels of economic prosperity, high levels of inflation and forthcoming key gold purchasing festivals in India and Chi-na, said the report, adding that the impact of the European sovereign debt crisis, the downgrading of US debt, inflationary pres-sures and the still-fragile outlook for eco-nomic growth in the West are all likely to drive high levels of investment demand for the foreseeable future.

Head of precious metals at Emirates NBD, Gerhard Schubert, said, The Gold price has been holding very well and the current price is still within the 10 per cent correction level already seen. When the price fell from $1,912 to $1,703 it was the correction and everybody was expecting some sort of correction.

Reu

ters

TRE158-Trends Gold.indd 16 9/27/11 3:46 PM


gypts upheaval took over the country in a matter of days, Syrias commotion has lingered, nearing its eighth

month of bloodshed since the events started in March.

As international outcry escalates, President Bashar al Assad continues to crackdown on mostly peaceful activists, leaving close to 3,000 dead, another 3,000 unaccounted for, and scores incarcerated.

While Egypts revolution was short, sweet, and mostly focalized in Cai-ro, agitation in Syria is comparatively peripheral, sporadic, dispersed, if not borderline schizophrenic. It has spared both Aleppo and the capital Damas-cus home to 2.4 million where frac-tions of the population, particularly the

better-off and minorities, remain vehe-ment supporters of the regime.

Within the Arab awakening, Syr-ia distinguishes itself by a hefty net-work of activists abroad. Years of life under persecution for merely ques-tioning the regime has honed their skills in resistance, particularly cy-ber dissidence. Since before the Arab spring, a small network of activ-ists and citizen journalists has been working to expose the abuses with-in, Ahed El Hendi, a political activ-ist who fled Syria and now lives in D.C, tells TRENDS.

From sit-ins before Syrian embas-sies worldwide, to meetings with high- ranking global officials, Syrian activists abroad work around the clock to sup-port the uprising back home.

In Syria, there is systemic effort to document the abuses and propagate them, explains Mark Turrell, founder of Orcasci, an agency specialized in the science of spread. By transferring the happenings internally to the outside world, turning a blind eye is increas-ingly impossible. Even long-term allies Turkey and Iran have urged an end to the bloody clampdown.

It was only last winter that Assad, frenzied by turmoil in the region, en-abled access to websites such as Face-book and Youtube, hoping to appease those formerly deprived. After Tuni-sia, we felt Syria could be next, so we wanted [our friend inside Syria] to be prepared, said Hendi, founder of the Syrian Youth for Justice and coordina-tor of the Arabic program at Cyberd-

The Rise of the Arab Hacktivist

E

Events in Syria have led to the rise of a virtual society of hackers and activists abroad that are using the Internet to push and support the revolution. TRENDS investigates.

By Aline Sara Beirut

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issidents.org, a human rights organiza-tion that promotes the voices of Iranian and Arab web activists. But we had al-ready started to work to expose the re-gimes evil doings, months before the Arab Spring, he noted.

By sending in anything from basic camcorders and cameras to Thuraya satel-lite phones, the dissidents foresaw means of sidestepping basic restrictions on In-ternet to circumventing a telecommuni-cations shutdown, should Assad mimic his counterpart in Egypt, ousted Presi-dent Hosni Mubarak who had suspend-ed Internet and phone network to squelch Egypts dissent last January.

Those fighting from within document the violence and upload it online; while those abroad acquire the videos, verify

their authenticity, treat them and publish them on the net, explained Majd Eid, an-other Syrian in asylum in Paris. Todays developments in the Arab world are a log-ical outcome of massive development in communications, stressed Eid. Syri-an power heeds on stopping people from gathering and brainstorming on reform, but todays era of social media has caught up with the regime, he tells TRENDS.

Like Ahed, Eid is a political refugee who fled the country after his fathers ac-tivism put him under government watch. They and most of their counterparts abroad are former detainees and critics of the Baath regime. Others were forced to leave due to the lack of job opportunities or public liberties. At present, they are nowhere near close to giving up on their

countrys awakening. Many have become successful business men, offering their fi-nancial support to help sustain the oppo-sition and its network from afar.

But monetary contribution and cyber activism are just the tip of the iceberg, as political strategy and data collection also rank high on furthering the struggle.

Mohammad Al Abdallah, who served two prison terms in Syria and is now spokesperson of the Local Coordination Committee, said his group helps organize protest movements within, but also acts on the political front. We are the first to have provided a political vision as a solu-tion to the current situation in the coun-try, he tells TRENDS; We also assist in mobilizing the people over there.

As a US-based activist, he has met with a number of US officials, including the US Secretary of State, Hilary Clinton. Rather than merely addressing their con-cerns, these activists help update the in-ternational authorities on progress back home. The ultimate goal is to increase pressure on the Syrian government and lobby for a resolution at the United Na-tions Security Council, said Abdallah, currently based in D.C. To date, there has been no resolution from the UN body against the Syrian dictator, although both Europe and the US have slapped Assad and his entourage with heavy sanctions.

For his part, Ausama Monjad, who works between London and the States, uses a network of grassroot movements and activists to gather information. Monjad, who left Damascus after being detained back in 2005, covers news and provides commentary and analysis for media outlets, governments and academic institutions.

Operating under the umbrella of the National Coalition to Support the Rev-olution, the 31-year-old sends out the daily Syrian Revolution news-round up, a compilation of relevant articles and updated figures of the revolutions casualties.

He dedicates himself full-time to anti-Assad initiatives worldwide and says his

Developments in the Arab world are a logical out-come of massive developments in communications

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greatest challenge is finding enough time to respond to all of those interested in the Syrian cause. In addition to the newslet-ter, I also supervise the production of re-search targeting the transition period post-Assad, working closely with dissidents, both inside and out, to unite the opposi-tion, he said, clearly foreseeing an even-tual downfall of the regime and planning for options after its topple.

Meanwhile, being abroad does not spare him, or any other of those active, retribution from the regime.

In Latin America, Naima Darwish, a Syrian living as far out as Chile, said she was called in to the Syrian embassy in Santiago after mobilizing a protest in support of the Syrian people. They asked to come in, but when I refused they called

me and told me I should not risk my success and my career for stupidi-ties, said the 30-year-old clothes de-signer, originally from Homs. She esti-mates the number of Syrians in Chile at around 300,000.

In Lebanon, another major hub of pro-democracy activity for Syria, anti- Assad activists have long lived in fear given the intricate ties between the neigh-boring nations.

Working from France and the States would be easier and safer, as here all the activists take additional precautions, said Mojab Mahmoud al Samra, a 33-year-old father of two. As recently as last august, protesters before the Syrian embassy in Beirut were attacked by supporters of As-sad, equipped with belts and knives. The

incident left three protesters hospitalized and was not followed up by local authori-ties, said the activist.

Luckily for those in the States, the State Department issued a statement about local dissidents based in the Land of the Free. The statement condemned acts of intimidation against protesters expressing their right to speak, alluding to reports that Syrian embassy person-nel in DC was surveilling the demonstra-tors, taking their photographs and sending them back to Damascus to take vengeance on their families.

But perhaps most jarring was last Augusts incident at Place Chatelet, in the middle of Paris, as shabiha, the term given to label violent supporters of the regime, attacked peaceful protesters and attempt-ed to murder several by running them over in a car, a violation that is to be pur-sued in French court, according to Eid. He witnessed the event.

But it has not stopped him or his com-panions from going back to the streets.

Its the least we could do compared with what they deal with inside... and while we help deliver their voice, we also keep them abreast of happenings here, from which they are typically cut off, noted the 28 year old about the two-way street relations between protesters inside Syria and the web of activists overseas. According to him, the three-day summit last June in Antalya, Turkey, that gath-ered opposition members from a varie-ty of backgrounds, was a strong push for those inside.

The conference, whose final state-ment called for the passing of Assads power to the vice-president, as stipulated in the countrys constitution, also saw the formation of a 31-member council.

Weve created our own virtual society, and the regime cant seem to understand or control it, said Eid of the elaborate international network of Syrian dissent.

This society has decided to topple the Assad regime and wont stop before achieving its goal.

Weve created our own virtual society, and the regime cant seem to understand or control it

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HACKETT.COM

ESSENTIALLY BRITISH

UAE_Trends_Layout 1 12/09/2011 17:43 Page 1


ark Turrell is the founder of Orcasci, an agency special-izing in the spread of be-haviors, ideas, and prod-

ucts. Born in Canada to South African parents, Turrell grew up in England and now lives between Europe and the States. It seems natural that today the scope of his work is global. Rather than using his knowledge and experience for lucrative means, he is helping change the world. Turrell talks to TRENDS about the science of spread, how he got into the field, and how it plays out with-in the unprecedented Arab Spring.

What is the science of spread?The Science of Spread is the study of so-cial networks and network propagation.Combining the science of spread with

the science of people provides individu-als with new and engaging opportuni-ties to spread products, services, ideas and behaviors at a scale and speed im-possible until today.

How did you become interested in this field?Im interested in behavioral science and Ive long been interested in entre-preneurship. I started my proper entre-preneurial work around software tech-nology. I was very interested in data analysis and human psychology. Its very important to understand what drives people and motivates them.

My life totally changed in 2008 at the World Economic Forum in Davos, where I had won an award for technol-ogy planning. I knew I didnt just want

to be some software guy. I really want-ed to change the entire world for better. In 2006 I had created a company called Imaginatik which pioneered the use of crowd sourcing to solve problems. I had been developing new research around the science of spread, completing re-search on neuroscience, behavioral sci-ence, network science, complex systems and emerging behavior.

Over the months I met a number of fascinating people. In the meantime, I gained experience in managing dicta-torships, an Imaginatik collective in-telligence record, and had been build-ing this understanding of how things spread, but what I had actually created is a lens of how human beings and sys-tems behave and how things spread. In 2010, I created Orcasi.

The Viral Revolution

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TRENDS talks to Mark Turrell, founder of Orcasci, an ideas and products agency, about the science of spread and its role in the Arab Spring.

By Aline Sara Beirut

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TRE158-Focus Mark Turell Interview.indd 26 9/27/11 1:21 PM


How has the science of spread played out during the Arab Spring?To understand what is happening, looking back in history is important.

In 1660 a Dutch scientist spent years writing academic papers about things moving around in his glass of water. They thought he was crazy.

It turns out this man had invented the microscope. The small things had always been there, but the human eye lacks the capacity to see them. It doesnt mean they werent there.

What I did with my science of spread and my previous work is concentrate on brain power. I created the microscope to look at how the human being works on a small scale.

In Egypt, for example, you had 80 million people 20,0000 protesters who were actively agitated. What the regime was trying to do was prevent the spread of the activation so they turned off both the Internet and the phone system, which only further agitated. From then on I knew Mubarak was gone. It was about the phones not working, angering people who just wanted to make a phone call to their child in school, for example.

A few days later Mubarak was out. Most people didnt realize it would tip into other fields either. And they were all wrong.

How do you see things panning out in countries such as Syria?

To begin with these places have to be internally driven.

I think that with Syria the funda-mental reason why Syria has not put enough pressure on Assad is the lack of a unifying national symbol and name.

In Libya it became very obvious what side you were on, the green flag for Gadaffi, and the old pre-revolutionary flag for the opposition. And these flags were everywhere. Kids at night would put up posters, and you had stories of people in Tripoli spray-painting cats so you could clearly see whos on which side.

In Syria, at least today, the Syrian pro-testers carry the same flag as the people who are killing them. That will change in my opinion. I think Assad is gone the only question is whether its before the end of the year or not, and whether hes a dead man.

How do you compare the situations in Lybia versus Syria?All the situations are different and all of them in the future will be different, so you end up with a sub-set of tactics to be used. In Syria there is systemic effort to document the abuses and propagate them. That infrastructure of capturing what was going on was actually prepared months in advance.

Ive been working with Syrian ac-tivists since Deraa popped. I reached out to them. The spark looked totally ran-dom and I thought this looks like con-tagion, so I got in touch with activists. My philosophy is how can I help, and as a human rights issue, how can we help?

My first [action to help] was around media contacts, increasing awareness on what was going on, but there have been other things.

As for Libya, Ive been very active, involved, among other things, with the NGO Global relief in Libya. The first two aid boats into Misrata were crowdsourced through a German organization.

The first type of help needed was medical supplies and humanitarian relief, so we helped coordinate medical relief.

I created the microscope to look at how the human being works on a small scale

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It was a situation in Libya that the world hadnt experienced before.

How do you envision the future of the region?Despite reservations at the beginning of the NATO intervention, Libya is a success story. But because its so close to Iraq and Afghanistan which are now a catastrophe, there was fear [of foreign intervention]. But this was ultimately a popular uprising.

I think Libya will need to adopt more transparency and I think it could become a real beacon [of positive development].

As soon as Assad falls in Syria, we will have revolutionary ruffling within Iran.

Next year, in all likelihood, Ah-madinejad will try to do all he can to stay in power. So, Iran will tip.

There is also a possibility of change in Israel before the end of the year.

It is also worth looking at the type of revolution. For example, some parts will be womens rights. Historically speak-ing, it was a small nucleus of activist, usu-ally elite women, who had decided they wanted to vote. So they managed to con-vince the other women to want some-thing that hadnt previously wanted. That gives you an insight into tactics when applying the human microscope.

Does your agency tackle post-revolu-tion challenges, such as those in Egypt? We are active in Libya. Ive assembled a network of world experts in technolo-gy, water side, civil society, philanthropy and will have more news on that as it gets put together. There is enough groundswell that they never want it to happen again.

That hasnt quite happened this nice-ly in Egypt, but I think there are enough

agitated people that when really bad things start to happen, people start going back to the streets again. But I dont think Egypt has found its focal direction. I also think that notions of extremism has much to do with the press and people wanting to influ-ence and deliberately create mischief.

In the subsequent months of the Arab Spring, we will be seeing an in-crease in the concept of fairness and transparency.

The other thing is the demographic bulge of young people in the Middle East; The average age is 22, whereas the aver-age age in Russia is 27. Going back to psy-chology and neuroscience of the young brain, young people tend to have fewer in-hibitions. They are also hyper social, hyper socially sensitive. What this means is that this notion of spread begins to work. Right now you dont want to be isolated.

Its fairly easy to imagine the Syrian situation where 15 want to hit the streets, with 5 staying back. Well now youve got huge pressure to go.

. . . we will be seeing an increase in the concept of fairness and transparency

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ast month in the Lebanese vil-lage of Wadi Khaled, on the Syrian border in the northern region of Akkar, 27-year-old

Abir was mourning her brother, whom she says was tortured and killed before his body was delivered to the family.

But her other brother remained, hidden, in their village of Tel Khalakh, just across the border in Syria. Their only crime was participating in the demonstrations asking for freedom, she said. We have been oppressed for 30 years, so the people exploded asking for change. My husband left because he knew the authorities wanted to kill him, and we came with him.

Abir, her husband and three children are among nearly 3,000 refugees the United Nations has registered in Leba-

non. Many are living in schools or other makeshift centers. Also in Wadi Kha-led, Ahmad Abdul Karim, 22, said he had fled with his wife and 10-month-old son after he was one of 75 soldiers who refused to fire at protestors leaving Friday prayers.

Across the Middle East throughout 2011, thousands of such human dramas have unfolded. On March 19 hundreds of young men in Benghazi marched out from the city to meet a full-scale as-sault from troops of Muammar Gadd-afi. Among those who fell that day was the citizen journalist Mohamed Nab-bous, killed by a sniper three months before his first child, Mayar, was born.

Such ordinary Arabs have helped shift the geopolitics of the region, send-ing politicians and leaders here and in

the wider world into frantic calculations over national interest, access to energy reserves, and how best to rally support-ers, or undermine rivals, with appeals to religious and ethnic solidarity.

Iran is attempting to rescue friend-ly Syria from a civil war scenario and disintegration into tiny puppet entities, said Mohammed Sadiq Husseini, an Ira-nian analyst, to the Russian journalist Yelena Suponina, describing Augusts visit to Moscow foreign minister Ali Akbar Salehi.

Meanwhile, as Americas leaders ap-plauded the wave of democracy, a poll by Zoghby International in August put president Barack Obamas approval rate at under 10 per cent in every Arab country surveyed, lower even than that of President George W Bush. Ninety-

Tension Rising

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The Arab Spring and the power play between America and Iran has given birth to a more dangerous situation, with a rise of tensions between Sunni-Shia relations.

By Zeinab Charafeddine and Gareth Smyth Beirut

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five percent of Egyptians viewed the US unfavorably, as did 68 percent of Saudis.

It is five years since the Iraq Study Group, commissioned by then president George Bush, noted that all key issues in the Middle East the Arab-Israeli conflict, Iraq, Iran, the need for political and eco-nomic reforms, and extremism and terror-ism are inextricably linked. Setting a course through the maelstrom is not easy.

Fast-changing realities have unsettled those who see the Middle East as a bi-polar battleground between the United States and Iran, between Israel and Iran, or between Sunni-led and Shia-led states. Great, and not so great powers, see both dangers and opportunities. Iran welcomed protests in Egypt as an Islamic wave, and then cried conspiracy when they

reached Syria. The GCC was alarmed by change in Egypt and sent troops into Bah-rain, but by August they demanded presi-dent Assad stop the killing machine and end the bloodshed and withdrew his am-bassador from Damascus.

Sanguine observers have highlight-ed many ironies. On the same day Abdl-rahman Al-Naimi [founder of Waad, the opposition group] died in Bahrain, the monarchys security forces, most likely Pakistanis, killed a 14-year- old boy Ali Ahmed Al-Shaikh, Ali Al-Ahmed, di-rector of the independent think tank, the Institute for Gulf Affairs, told TRENDS. Meanwhile, the Bahraini King Hamad was in Paris attending the Friends of Lib-ya conference. [French president Nico-las] Sarkozy is shameless. The difference

between falling and standing dictators is the western backing. Everything else is the same.

The wests policy is three-fold, Ahmed Moussalli, professor of political science and Islamic studies at the Ameri-can University of Beirut, told TRENDS: One, there is a level of finishing regimes that are not useful for them anymore, as we have seen in Egypt, Tunisia and Lib-ya. Two, as in the case of the Gulf, [they aim] to put their hands on the major re-sources these countries have. Three, [they aim at] weakening Iran and its allies and those who oppose Israel, by any means.

Mr Moussalli believes sectarianism, especially between Sunni and Shia, is in-creasing as a result. We are going to pass through a very difficult time, he said. The US is making its wars through lo-cal groups. They are using the Muslim Brotherhood in Syria, but they are at the same time opposing it. The US is trying

Fast-changing realities have unsettled those who see the Middle East as a bipolar battleground

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to repartition the whole region into ethnic and sectarian states Sunni, Shia, Berber, Kurdish, etc.

Saudis decision that a change of re-gime is likely or desirable in Damascus may have ended several years of work-ing with Syria to achieve compromises in Lebanon. Michael Young, a critic of Syria and a defender of Lebanons confessional system, last month warned in Lebanons Daily Star newspaper of the danger of sectarian civil war, urging the main Sunni and Shia leaders in Lebanon, Saad Hariri and Hassan Nasrallah, to open channels to one another, and very soon.

Sectarian tension is also high in Bah-rain, where the government, having rout-ed opposition protestors, has continued to carry out arrests while hiring agencies such as Bell Pottinger, Qorvis, and Sen-

tis International to convey a message in western capitals that the country is deal-ing with Iranian subversion.

For Iran, delight at the toppling of Egypts then president Hosni Mubar-ak has given way to caution, even if the official line remains that regional turbu-lence is inspired by Irans 1979 Islam-ic Revolution. Iranian leaders view the future of Syria in the context of develop-ments in Libya, a former Iranian political prisoner, told TRENDS. They think the UN sanctioning intervention by Nato in internal affairs of countries sets a worrying precedence.

Tehran is thinking ahead to the possi-bility of regime change in Syria, said the former prisoner. The Islamic Republic is afraid that friendly Alawis will be re-placed by hostile Sunnis, who would join

the much of the rest of the Arab world in confronting the Islamic Republic; and that, as a side effect, Syrian extremist Sun-ni groups, already active in Iraq, would further try to undermine Iran in Iraq.

Similar calculations have been be-hind Nouri Al-Maliki, Iraqi prime min-ister, offering support to President As-sad. He said in a speech in August that the Arab spring would benefit Israel. But Maliki is also likely to agree to 3,000 US troops remaining beyond Decem-bers deadline for withdrawal, and he sur-prised US officials recently when he an-nounced that Iraq wanted to purchase 36 F-16 fighter jets, double the number orig-inally proposed.

This is a small part of the regional arms build-up. Tension is good for sales, and the Middle Easts total military ex-penditure was already $111bn in 2010, according to the Stockholm International Peace Research Institute, with Saudi Ara-bia accounting for nearly half.

Iranian leaders view the future of Syria in the context of developments in Libya

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UK daily The Times recently report-ed that British arms exports to the Middle East jumped by around 30 per cent year-on-year between February and June, in-cluding sales to Libya, Bahrain and Sau-di Arabia. Arms sales to the UAE rose to 9.3m from under 2m last year. But this is dwarfed by US sales. Since overtaking Israel as Americas main client in 2009, Saudi Arabia alone has agreed contracts put in the region of $60bn, including new F-15 fighters, naval vessels precision-guided bombs and Hellfire air-to-surface missiles.

Such sales make the Arabian Gulf one of the worlds most militarized regions. Anthony Cordesman, of the Washing-ton-based Center for Strategic & Inter-national Studies, has estimated the Gulf Arab states are outspending Iran by ten

to one. The disparity helps explain Irans efforts to improve its large inventory of ballistic missiles especially the Sha-hab, developed from Scuds bought from North Korea, which has a range of more than 1500km.

An arms race coupled with ten-sion between Sunni-led Arab states and Iran raises the hurdles for resuming di-alogue. Writing in the New Atlanticist at the end of August, Hossein Mousavian, the former Iranian nuclear negotiator now at Princeton University, argued Obamas policy of ratcheting up pressure on Iran through new sanctions, hinting at a readi-ness to take military action, and support-ing covert sabotage of Irans nuclear pro-gram had left Iran with the impression that the US has no real interest in thaw-ing relations.

Mousavian pointed out that the rheto-ric of president Mahmoud Ahmadinejad, including his questioning of the holocaust had increased tremendously the political cost to American politicians of being seen as soft on Iran, just as the US widen-ing sanctions and building up its military forces near Iran had raised the cost to the Iranian side of approaching the US.

Engagement might well fail, Mousa-vian wrote. But without a genuine test dur-ing which hostilities are put on hold, there is no way to make this judgment. Clearly, this will be risky for leaders on both sides, but taking a risk is better than ensuring fail-ure through a continuation of the same pol-icies, and thus the same escalation.

The first recommendation of the Iraq study group back in 2006 was for a com-prehensive New Diplomatic Offensive to deal with the problems of Iraq and the re-gion. That has not happened. Instead, tensions have increased and the machina-tions of states deepened.

Taking a risk is better than ensuring failure through a continuation of the same policies

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amidullah stepped off the air-plane onto the Istanbul airport tarmac with the air of arriving royalty. This 30-something Af-

ghan had received the kind of preferen-tial treatment on the way over to make anyone, even an illegal immigrant, feel regal.

At Kabul International Airport, friends working at the national airline had checked him in off-line. He had spent the next five hours sunk in an emp-ty row sipping soft drinks and watching Central Asia scroll by on the flight screen. But nothing hid the fact that he was going to Istanbul to become yet an-other in a ballooning statistic of illegal immigrants seeking to break into Eu-rope over its porous eastern border with Turkey.

Istanbul is where the holy relics of their holinesses Ali and Muhammad rest, where the Sufi saints Rumi and Shams al-Tabrizi died (sic), the most splendid Aya Sofya mosque and the home of the shawarma sandwich, Ha-midullah said, reciting the sum total of his knowledge about Istanbul.

For his foray West Hamidullah chose to outfit himself in designer spec-tacle knockoffs and a heavy metal T-shirt with a cross emblazoned on its front. He had spent the past few years running a nightclub in Moscow and liv-ing it up in Pakistan before returning home to sell off a family property in Kabul and join his family in Germany. In this, he was part of a typical Afghan demographic heading West: relatively well-off, literate and viewing illegal mi-

gration not so much as a last-ditch op-tion but rather a legitimate gateway to-wards upward mobility.

Ill spend two months in Kabul, maybe meet a Turkish girl that I can marry and then find a smuggler to take me into Greece, Hamidullah confided as he got off the airplane and embarked on his adventure.

Hamidullah was as ignorant of Eu-rope as he was of the powerful anti-im-migrant feelings he was likely to encoun-ter once there. His family who had lived in Germany since the Nineties chose not to tell him of the sharp change in public sentiments towards immigrants in the past decade. But the first coun-try in the Schengen zone was Greece, a country where the arrival of thousands of new immigrants every week for over

Europe, Immigration, Racism, and Security

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As the number of illegal immigrants crossing into Europe rises, so does racism and anti-Islamic sentiment. TRENDS investigates.

By Iason Athanasiadis Istanbul

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a decade has combined with a debilitat-ing economic crisis into a noxious new anti-immigrant climate that contribut-ed to the rise of nationalist, anti-Muslim parties.

Although EU authorities are unhappy with aspirational illegal im-migration such as Hamidullahs, they find more disturbing the efforts made by members of terrorist groups to penetrate into Europe.

Their fears have been augmented by the Arab Spring which has Western intel-ligence officials concerned that the col-lapse in central authority across several of Europes Arab neighbours will lead to fewer tip-offs from their Arab counter-parts and greater potential for terrorist at-tacks against the West.

The help we were getting from the Egyptian intelligence service, less so from the Tunisians, but certainly from the Lib-yans and Lebanese, has dried up, said former CIA officer Michael Scheuer. Ei-ther because of resentment at our govern-ments stabbing their political leaders in the back, or because those who worked for the services have taken off in fear of being incarcerated of worse.

Although Al-Qaeda may remain a threat, whatever remains of that organiza-tions operational backbone is more likely to be found in Iran, Yemen or within Euro-pean countries than in Afghanistan and Pa-kistan. And despite some ex-Taliban com-manders residing in European countries, the movement is not known to have planned a widening of its attacks into the West. This

disinterest in mounting assaults outside of Afghanistan is one of its main distinguish-ing features from Al-Qaeda-style groups willing to strike internationally.

Nevertheless, European intelligence services are increasingly disturbed by the prospect of an increasingly troubled region affected by unpopular Western military and political interventions and cultivating re-sentments that mature into anti-Western strikes. A 2009 State Department report on terrorism reported that Greece is increas-ingly an EU entry point for illegal immi-grants coming from the Middle East and South Asia. In 2008 and 2009 an explo-sion of illegal immigrants entered Greece through the Aegean Sea, with 100,000 ar-rested, the majority from the Arab World and Southeast Asia.

The effect on immigration is one of the least understood and appreciated after the Arab uprisings, said Joshua Walk-er, a Transatlantic Fellow at the German

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Marshall Fund in Washington DC. It has the potential to go either way depending on how the EU responds.

One important interdiction accord-ing to a study on Islam in the Balkans by Greek researcher Ioannis Michaletos was that of Anwar Mazrar, a leading al-Qaeda operative in Europe who was arrested in 2005 on the Greek-Turkish border. Micha-letos notes that about 20 Arab fundamen-talists were arrested with Greek passports in their possession elsewhere in Europe. Another high-profile arrest was that of Abu Sanjat, an Iraqi suspected of being a ringleader of Al-Qaeda in Iraq and in-volved in attacks in Baghdad.

I do not think the EU intelligence serv-ices have what it takes to interdict Islamists on European borders, said Walker. Par-

ticularly given how easily homegrown Is-lamists in Europe operate and move back and forth, I find it implausible that the EU can shut itself off.

This may be what extremists such as Anders Breivik, the Norwegian who went on a killing spree in July, may want. A spectacular terrorist strike inside the EU will boost support for self-styled Euro-pean guardians of the Continent. Studies show that those openly expressing feelings of racial superiority are a booming demo-graphic. A report by the Berlin-based Frie-drich Ebert Foundation titled Intolerance, Prejudice and Discrimination: A European Report, discovered that 70 percent of Eu-ropeans stated they were positive to immi-gration but about half of all European re-spondents said that there were too many

immigrants in their country and that jobs should be given to non-immigrants first in times of crisis.

A third of those surveyed still hold the view that there is a natural hierarchy of races, with whites heading it. In July, Germanys foreign intelligence chief pub-licly denied that there was an international far-right wing terrorist network operating in his country. Before going on a rampage that killed 76 people, Breivik had boasted in a 1,500-page manifesto that he was one of up to 80 solo martyr cells recruited across Western Europe to topple govern-ments tolerant of Islam.

One of the most controversial Muslim European demographics is that of Turkish immigrants who are often charged with fail-ing to assimilate with their host societies.

Turkeys chances of being accept-ed into the EU as a member are further diminished, said Michaletos, the Greek researcher. And since fewer young Arab male immigrants will have the chance of venturing to Europe to raise capital and de-fuse the population bomb in their own coun-tries, that may well lead to further social unrest so as to redistribute the inequality of wealth in countries such as Egypt or Morocco.

The Arab Spring could result in any of a number of domino effects, from the col-lapse of the Schengen free movement zone within the Continent under an onslaught of North African migrants to the devel-opment of a Fortress Europe and more violent convulsions across Arab North African and Mediterranean countries un-dergoing a process of internal reorganiza-tion. Even Israel has not been immune to large-scale demonstrations by a disaffect-ed youth protesting the high cost of living.

When I next see Hamidullah, his re-gal air has deserted him. He is still stuck in Istanbul, finds it overly expensive and has held a series of bewildering meetings with smugglers offering different prices and services.

I didnt realize that reaching Europe would be so complicated, he laments. And Im still not even in it.

Half of all European respondents said there were too many immigrants, study found

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hat is the current situa-tion in Bahrain follow-ing the revolt from the Shiite majority?

It is necessary to clarify an important matter relating to the Shiite majori-ty. The expression Shiite majority in Bahrain is similar to the one promoted by some Iraqis abroad before the Anglo- American occupation of Iraq. The Brit-ish-American secret services worked on promoting this expression. Then, the American British occupants support-ed the Dawa shiite party in order to rule. It has ruled Iraq for nine years, and we expect it to stay [like that] for a long time, as long as it is supported by the American power.

Going back to the Bahraini major-ity, we have to affirm that there wasnt

any confessional statistic made through-out the countrys history, and until now no side can affirm that the Shiites consti-tute the majority of Bahraini people. The events of February and March proved this opinion, because during the last two weeks of those events, the radical Shi-ites controlled the capital by force. Dur-ing the last three days they spread out-side the capital, while the security forces retired from the streets in order to give a chance for the Crown Princes initia-tive of dialogue Despite that, the rad-ical rioters plan did not work because they didnt have an important popular base. The Shiite majority allegations are just a lie promoted by the radical Shiite movement in Bahrain, re-promot-ed by the Western media. Shiites do not constitute a majority in Bahrain, and not

all Shiites in Bahrain support the Rad-icals (Shiites) who are loyal to Wilayat-al-faqih in Iran. The situation in Bah-rain is not completely stable because the radical and rioter groups are still go-ing out in villages during the night and causing riots. The rioters also deliberate-ly harm the security forces and [have] caused deaths and injuries among the security forces The government is still dealing with these groups through dif-ferent means, by security confrontation and continuing the dialogue between all parties and accelerating the democratic reform process.

What is the situation with the national reconciliation?The radical Shiites in Bahrain have one principal demand: regime change. For

Eye of the Storm

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Bahrain has been at the centre of the Arab Spring since the start. TRENDS meets with Samira Rajab, Bahraini Shura Council, to find out where its heading next. . . By Christian Malar Paris

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Bahraini people the regime constitutes a national legitimacy that protects all confes-sions and religions, whether Shiite or Sun-ni or others, and changing any standard in this regimes form will lead to authoritar-ianism of confessions, and to dangerous security confrontations. Thats why Bah-rainis insist that this demand has nothing to do with the democracy claimed by radicals, but aims at allowing the Shiite political Is-lam to rule. Radicals see that the region-al circumstances supported by Americans are for their advantage, Thats why they refuse any kind of national dialogue that could expose their positions and uncover the Bahraini peoples refusal of their de-mands On this ground, the national rec-onciliation between Sunnis and Shiites is going through ups and downs, and did not reach positive results. The most important

positive part is that Bahraini people insist on refusing all kinds of confrontation and violence.

What is the role of Iran?Iran represents a direct threat to the area.There is another more dangerous threat [to] the American scheme (The New Middle East Strategy), summarized by the Amer-ican administrations support in setting up confessional and ethnical microstates in the region, under the pretext of spreading de-mocracy and supporting confessional and ethnical rights. Iran tries to undermine the security and stability in the region by im-posing the Shiite hegemony in our coun-try through the spreading and support of the radical Shiite movement. But after nine years of occupancy in Iraq all that emerged during that period is the American-British-

Iranian cooperation in changing the polit-ical and demographical map in Iraq to the benefit of Iran. This, again, confirms that the Iranian role in Bahrain and the Arabi-an Gulf is supported by the Americans. The most dangerous American declaration is the one about pretending that they fear the repercussions of Bahrains events (against the Shiites) on the security of Ameri-can soldiers in Iraq, under the pretext that Americans have paid great sums of mon-ey for Al Sistani and the Iranians to protect their soldiers in Iraq. The Americans only seek their interests and lie in front of the media saying that the American adminis-tration defends the peoples interests in the region, and we can see a lot of political ba-nalities in those sayings, which makes the American administration lose its credibili-ty and the trust of others

Is Iran provoking a wider sunni-shia conflict in the region?Iran knows how to play its political game in the region. From one side it supports the Muslim Brothers in the terrorist Hamas (Sunni) movement in Gaza, and from an-other it associates its interests with the ter-rorist (Shiite) Hezbollah party in Lebanon, under the pretext of resistance against Isra-el. All Arabs know that these two organiza-tions (Hamas and Hezbollah) do not repre-sent any resistance, but work for putting an end to the resistance.

These two parties have succeeded in di-viding Palestinians and Arabs for the ben-efit of Israel. The Islamic Republic in Iran, therefore, plays with these two cards in order to prove that the Iranian revolution supports all liberation movements, while, in reality, the Khomeini republic regime Persian and Shiite holds a great hostili-ty against Sunnis and Arabs. These are part of the constants affirmed in their dogmatic publications that we, members of the Shiite confession, know very well.

Creating internal commotions in the Arab countries and in Gulf States is one of the most important objectives of exporting the Iranian revolution that was announced by the Khomeini in 1979.

The most important positive is that Bahraini people insist on refusing all kinds of confrontation

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Do you feel that there is still a need for the Peninsula shield to be maintained in Bahrain? The Peninsula Shield Forces are a joint Gulf army. One of its major objec-tives is to protect the security and stabili-ty of the region, and Bahrain participates in it through soldiers from the Bahraini army. The redeployment of these forc-es in Bahrain does not constitute any danger or problem for Bahrainis. These forces can also be redeployed in any other Gulf State. And the lies spread about the presence of the Peninsula Shield Forc-es in Bahrain are just part of the scheme against the regions states for the bene-fit of Iran and the Shiite movement It is strange how we didnt hear any criti-cism about the intervention of NATO forc-es in Libya, without the permission of the Security Council, while these forces have

used all kinds of violence and bomb-ing and indiscriminate killings against Libyan people.

The Peninsula Shield Forces are crit-icized while they are accomplishing one of the most important objectives of their creation. Knowing that these forc-es have not interfered in internal Bahraini affairs, and have not been present in any city or village, they protect vital institutions and terrestrial, maritime and aerial borders, by fear of an unex-pected external Iranian intervention against Bahrain.

What is the impact of the Arab Spring revolutions on the region?The expression Arab Spring revolutions was first introduced by President Obama, and is not an Arabic expression, especial-ly after the negative effects that emanated

from these movements which, in fact, con-stitute a dangerous chaos, more than revo-lutions. What happened in Tunisia is, un-til today, shaded by a lot of ambiguities and cannot be called a revolution. What happened in Egypt is still taking the coun-try to more chaos, poverty and dictator-ship. This will create a religious terrorism and a division that may lead to dividing the country between religions. Some Lib-yan (revolutionaries), trained in Europe and the US, entered Gaddafis palaces under NATO protection, certainly that could not be called a revolution revolution does by no means come from outside For what is carried out with an outside force is noth-ing but a reconstitution of new dictatorships in the region, without anything to do with oppressed populations who are now ex-periencing more suffering due to the con-tinuous chaos, from Tunisia to Syria and Yemen. We cannot deny the effect of this situation on the Arabian Gulf region.

Is instability in the region caused by Iran, and Israel?It is the international struggle for power that started after the end of the cold war, and that defines the threat centers and the way of deal-ing with these threats America declared, since September 11, 2001, the emergence of the terrorist threat to replace the communist threat, and it declared the war against terror-ism to replace the cold war. They defined the region of Eurasia, extended from Afghani-stan to Eritrea, as the center of this war. But this is the axe of the oil sources and its supply routes. The US decided that the Middle East region needed change. Since 2001 it is do-ing surgeries designed to change the region by force, under the pretext of supporting de-mocracy. The US and the old European co-lonial countries are undertaking these sur-geries in the region in order to ensure the direct control over the oil sources and pre-serve their power in the international system and save the Western economy threatened with collapse. This is the international strug-gle for power, and Iran and Israel are pawns used by the American administration accord-ing to its interests.

The Peninsula Shield Forces are a joint Gulf army and Bahrain participates in it

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n the GCC, where the big players in the economy are either government-run entities or family-owned businesses, the private equity firms operating in the oil-

rich Arab countries have been following a unique model based on personal relation-ships very different from the structure in Europe or North America.

While finer details of only a few trans-actions become public knowledge, most of the deals depend on personal and even family ties.

The personal network is key to con-ducting business successfully. Generally, deals are finalized following a close exam-ination of the account books in the devel-oped markets. However, sources in the in-

dustry said several investment deals in the region used to be verbally finalized by sen-iors in the company, and then executives at the PE firms chalked out a plan to ex-ecute those deals and make them profita-ble for their limited partnership investors (LPs) and, ultimately for the Private Eq-uity managers themselves (the GP or general partnership).

In the current economic climate, how-ever, the role of private equity firms has become more important and the regional firms are graduating to the more sustaina-ble and realistic model followed in the de-veloped economies.

Matteo Stefanel, senior partner at Abraaj Capital, which is an investor in

Mediaquest, parent company of TRENDS, said, The role [of private equity firms] is becoming more pivotal in this tough eco-nomic climate, as traditional forms of fi-nancing continue to shy away from the market, making private equity the source of capital of choice for companies look-ing to raise funds to fund and pursue their growth plans.

However, the old business model fol-lowed by some private equity firms in this region worked out fine during the boom years until the ripple effects of global cri-sis hit Arab economies. Its getting ex-tremely difficult for PE firms to exit their investments in companies in which they invested in 2002 to 2007, because the

Private EquityNew Realities

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The days of personal relationships are over as the reality sets in after the global crisis and the regions private equity firms adopt sustainable and realistic models.

By Atique Naqvi Dubai

TRE158-Private Equity.indd 57 9/29/11 10:48 AM


prices paid at that time were quite steep, while the recession combined with the Arab Spring has severely impacted busi-nesses in the Middle East and North Africa region, making profitable exits that much harder to achieve in the context of todays low market valuations. An executive associated with a private equi-ty firm said, We have no option but to wait and restructure our investee com-panies.

Stefanel said, The continued turbu-lence in global markets limits the pros-pects of IPO exits for PE firms, however, we believe that equally attractive and pop-ular exit routes remain wide open. These include divestments to trade buyers, who tend to have relatively superior access to third-party financing, and potentially sec-ondary sales to other PE firms, who are equipped with adequate amounts of fresh

capital raised pre-crisis and ready to be de-ployed in new investments.

Exits in the region have been histor-ically limited, partly because the majori-ty of completed deals are relatively young.

As investments mature over the next two to three years, we expect to see an in-crease in PE exits. The exit strategy is gen-erally a function of the size of the business and its target sector, the requirements of its future growth plans and the quality and aspirations of its management. These fac-tors help determine whether a business is best suited to be taken public, or be sold to a larger strategic or a financial buyer, he said.

Currently, the dry powder in the GCC market is available, but its unable to find instruments where the capital can be em-ployed, said an industry source, adding that the companies that need capital are

holding back as they watch the unfolding of developments in the MENA region, the looming crisis in Europe and abysmal fi-nancial figures in the United States. On record, about eight private equity and ven-ture capital deals were closed in the Mid-dle East during the first seven months in 2011. A report by the MENA Private Eq-uity Association said that 24 deals were fi-nalized in 2010, while 46 were signed in 2009. According to industry insiders, that wished to remain anonymous, the size of the industry used to be close to the $6bn in 2008, before dropping significantly and would not get back to this level be-fore 2013. They also said 2011 is one of the worst years for the regions PE firms. Speaking to Dow Jones, CEO of Qatars First Investment Bank, Emad Mansour, said PE firms would like to forget about 2011 and pretend it never existed.

Nowadays PE firms are focusing more on existing portfolio companies rath-er than closing new deals in a bid to save the available dry powder and protect bal-ance sheets amid ongoing market volatili-ty. Investors are also becoming very selec-tive and only firms with solid returns, clear exit strategies and track records are attract-ing attention, said sources.

According to the CEO of Dubai-based Abraaj Capital, Mustafa Abdel-Wadood, while getting buyers and sellers to agree on how to value a business and then ob-taining financing for deals were the big-gest challenges in 2009 and 2010, 2011 has seen significant deal flow as expecta-tions of both sides have re-aligned.

Managing director of The Carlyle Group, Firas Nasir, adds, Ive seen a lot of press about deal flow being the biggest challenge for PE firms in the region. I disagree.

Deal flow is plentiful, especially if the investors value-add is apparent. I believe the exit is the biggest challenge, which is why its a central part of our investment thesis. We focus on the IPO as the prima-ry exit and M&A opportunistically. We prefer to invest in enterprises with attrac-tive business models and the scale to be-

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come publicly-traded companies; ones that are domiciled in countries with liquid pub-lic markets such as Saudi Arabia. Rely-ing on M&A as the sole path to exit can be precarious.

Summing up the PE sector, CEO of Abu Dhabi-based Gulf Capital, Dr Kar-im El Solh, said, I think its early days for the region, but we will start to see a lev-el of maturity. In 2005 and 2006 everyone rushed to launch private equity firms, so there were at one point almost 100 differ-ent players in the Middle East, which is a staggering number for this region. A large number of players entered the market and that is not healthy. What you are seeing now is a consolidation. A number of play-ers raised funds, which they were not able to deploy or generate attractive returns [for their investors], he said.

Stefanel added: We believe the current conditions strongly favor the market lead-

ers who can bank on their superior record of deploying capital, creating value and generating returns to steer through these difficult times. The gap in the PE market between the leaders and weak performers is becoming more pronounced. This is evi-dent by the fact that about 75 percent of the value of completed transactions in 2010 was related to one transaction, Abraajs ac-quisition of a 49 percent stake in Network International. In addition, we see a polar-ization of raising capital between SME funds on one side, and multi-billion funds on the other, a trend already apparent in 2010, with 25 percent of total funds raised relating to venture/SME capital.

Among the most significant deals in the region in 2011 was Standard Chartereds acquisition in August of a minority stake in Saudi Arabias Construction Products Holding, a subsidiary of Bin Laden Group, worth $75m. This was the banks first pri-

vate equity deal in Saudi Arabia and its second in the GCC since the beginning of the Arab Spring.

Some of the few home-grown private equity funds have concluded deals outside the region this year, such as Investcorps acquisition in June of the Residence Inn Manhattan Beach hotel in Los Angeles, and the purchase in May by Bahrains Ar-capita of a majority stake in J. Jill, a multi-channel specialty retailer of womens ap-parel based in the United States.

The biggest deal of the year came when Abraaj Capital acquired a 49 percent stake of Network international. The transaction amount was $545m, according to Bloomb-erg. The sources said that the regional firms are increasingly looking abroad for investment deals because the GCC mar-ket is still quite small compared with op-portunities available in the developed and emerging markets, including Turkey. Also, the regions SME sector has failed to gain momentum.

The weaker state of the industry in the past few years has also triggered the start of the consolidation, with the few at the top starting to buy the smaller firms.

One of the first consolidation deals has been the acquisition of North African pri-vate equity platform of Amundi, the French asset manager jointly owned by Socit Gnrale and Crdit Agricole. Abraaj took over management of the $161m SGAM Al Kantara Fund, as well as absorbing the 11-member Amundi investment team. The transaction size was not announced and Abraaj refused to comment on it.

However, life has returned to the mar-ket with a recent exit from an investment.

Abu Dhabi-based Gulf Capital made a successful exit and sold Maritime Indus-trial Services to London-listed Lamprell in July. Talking to TRENDS, Dr Solh said that his firm is planning to exit two more investments in the next five months.

Gulf Capital and another regional pri-vate equity firm, Amwal Al Khaleej, sold their stakes in Maritime Industrial Servic-es in a $336m deal to Lamprell in one of the rare private equity exits from the re-

One of the biggest deals was Abraajs stake in Network International for about $545m

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gion. Rumors are that Abraaj would also be exiting a hospital deal in Turkeys Aci-badem, which they entered in 2008. Trans-action size is rumored to be north of $1.5 billion. The company did not comment when asked.

In the past few years private equity in-vestments have seen a sharp drop, with in-vestors backing out of capital calls, sellers demanding higher prices than buyers were

willing to pay, and increasing competition f

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Trends | October 2011