Media Bias in International News Coverage (or the lack of International News Coverage)

Why is the news coverage in the US so poor?   Domestic US media oftentimes fails to delivery the whole story when it comes to world affairs.  Television news in the US often leaves much to be desired when it comes to international news. Interestingly CNN International, beamed around the world with an eye to the world outside of North America, is exceptionally better in its coverage than the U.S. version of the channel.

Even the most urbane of publications pale in comparison to some of their western European and other counterparts.  The deficiency permeates into print media as well.  The New York Times is an excellent publication, but even the Financial Times has better coverage. 

The advent of US access to channels  such as BBC News, France 24, and Al Jazeera certainly offer in-depth coverage of foreign news that the US channels simply do not provide.  US viewers in major metropolitan areas can now watch the news from a different perspective, not just manifested in the angle of coverage but also by what is covered.  The question is, are these channels being watched by those who want to expand their horizons, or those who would normally seek such media outlets out?

Improved coverage of international news can only have positive effects in this country. It will certainly make the political debate more international and arguably progressive.  The lack of in-depth knowledge of the rest of the world is unfortunate, as it prevents us from learning from other countries and understanding other cultures.

Should Dubai Be Written Off?

Dubai Marina

 

There has been much in the media about the recent push back from Dubai World to reschedule billions of dollars of debt payments to international creditors.  Markets were shaken when neighboring Abu Dhabi stated that it will not write a blank check to bail Dubai out.  The government of Dubai has said that Dubai World is autonomous, while others beg to differ.  The news has prompted much discussion about Dubai, its credibility and its future. 

What is Dubai World? 

Dubai World is a holding company owning many blue chip assets, such as the Jumeirah Group of hotels (think: Burj Al Arab, Essex House right by Central Park in New York, and London’s Carlton Tower). 

In fact, many critical Dubai companies, such as Emaar (developer of the Burj Dubai) and Nakheel (developer of the Palm Jumeirah, Palm Jebel Ali, Palm Deira and the World series of islands) are in trouble. Other Dubai institutions like Deyaar (a division of Dubai Islamic Bank) have also been hit by scandal.  

How much? The total tally for Dubai is about US$60 billion. 

How bad is it? 

The truth is that Dubai does owe a lot of money.  But is Dubai finished? Absolutely not. The media has loved to criticize Dubai, even when it was a succcess story.  The thought of a successful city in the Middle East stealing thunder from other jurisdictions does irk some. Sure, Dubai is not without its problems and some comon criticisms are valid, but critics often forget that the story of modern Dubai is about 50 years old, when Sheikh Rashid (current leader Sheikh Mohamed’s father) assumed control, undertaking grandiose plans to ake Dubai a major international player. 

Dubai’s Past 

Most people in the U.S., when hearing Dubai, may think of the burj Al Arab, the Palm islands, and other large projects. The truth is Dubai has been a 100-year project.  The town was always a [albeit modest] trading hub, back then for pearls and gold.  The ruler of Dubai then eliminated taxes, thereby implicitly and explicitly attracting traders from around the region, including Iran and India. This article from The Economist from 1970 tells the story of an emerging hub which even then was the second largest importer of Swiss watches.  Dubai grew dramatically again in the 1980s, profitting from Iran’s isolation and the country’s war with Iraq.  The Lebanese civil also diminished Beirut’s role as a banking hub, moving more financial transactions to Dubai.  The opening of Jebel Ali port in 1979  also made Dubai a major international port.

The fact is that the Middle East / North Africa (MENA) region needs a Dubai. Abu Dhabi has tried very hard to also become a major player (and has succeeded in some regard) but Dubai remains the tourism, financial, and trade hub of the region.

 

US Sanctions Malaysian Branch of Bank Mellat

November 5, 2009.   The US Treasury Department imposed sanctions on the Malaysian subsidiary of Iran’s Bank Mellat today.  First East Export Bank PLC and Mellat’s CEO Ali Divandari were the subjects of the new restrictions.  Read the article here.

How Effective Are Sanctions?

The New York Times on Sunday published this piece on how sanctions could prove ineffective in isolating Iran from the global economy.  This talk could of course be arguably moot if Iran proves cooperative in the currently ongoing 5+1 nuclear talks.

Islamic Securitization

I gave a roughly three hour talk today in the Washington, DC office of a major international law firm, educating lawyers about the intricacies of Islamic or Sharia finance.  As such, I will increasingly be posting information on this area.

Islamic Securitization

As I mentioned today, this is a fairly new area.  Islamic securitization is limited due to the constraints on Sharia finance, and as such the limited range of eligible asset classes.  The international Sukuk (Sukuks are Islamic participation shares) has increased tremendously over the years, although it is currently experiencing a slump in part due to the global financial crisis.

Editorial on Sanctions

I just read this editorial in the New York Times by an American who apparently spent the summer working for a hedge fund in Tehran.  He claims that despite sanctions, American goods (including high tech) is readily available in Iran, and that sanctioning Iran even more, particularly with bans on the sale of refined gasoline, would only feed into the hands of certain economic oligarchies in Iran.  This, the writer argues, would ultimately hurt the Iranian people.  This link is being provided for informational purposes only, and not to convey any political position.

DHL Settles in US For Shipments to Sanctioned Countries

German freight carrier DHL and the United States Departments of Treasury and Commerce recently entered into a settlement agreement wherein DHL resolved to pay $9.4 million in penalties for (1) roughly 300 shipments to Sudan, Syria, and Iran made over an almost five-year period between 2002 and 2007; and (2) poor recordkeeping over certain shipments during a roughly three and a half year segment of this time period.

More information on this matter will be forthcoming. This will include an analysis of how US sanctions on certain countries treat private carriers. In the meantime, read the article here.

International Real Estate Markets: Recovery At Last?

First off, my apologies for the delay in the arrival of this entry.  Work has picked up and I’ve been tied up, which I presume is a good thing.  This week’s entry is about a topic new to this weblog, real estate. As such, I have decided to keep this short and more fact based, with the intention of writing more on the topic as I increase my knowledge of the nuances inherent to the industry.

The real estate market is a driving force in the economy, as well as an obvious if not entirely precise metric for measuring its overall performance.  As with most other industries, real estate has generally been on the decline in the past year. Nonetheless, there may be room for some reasonable optimism.

Real Estate: Up For Grabs

United States

The foreclosures that have plagued the market have surely added to the stock of housing.  Of course, the downward trend preceded the financial crisis which commenced late summer / early fall 2008.  In spite of this, housing starts in the US were up by 3.6% in June.  Those with cash to spend will find that prices have dropped tremendously since even two or three years ago, and that this phenomenon is not limited to places where the real estate market has suffered the most loss (e.g., Miami and Las Vegas), but also metropolitan areas like greater Washington, D.C.

Europe

This report from the Wall Street Journal states that prices in the United Kingdom are starting to stabilize, though another article by Bloomberg suggests that UK prices are still falling.  That said, sales in June were up 15% from the previous month based on a report by HM Revenue and Customs (HMRC) as stated by the BBC.   One article by Reuters suggests that real estate prices in Italy will not bounce back until the end of 2010.   As Europe tends to be a less dynamic market than the US and emerging markets and in some ways more vulnerable to economic downturns, this should not be surprising. 

Middle East

This article in Arabian Business posits the theory that Dubai real estate prices may never reach their 2008 levels, though it must be said that Abu Dhabi has seen a very moderate fall in its market.  Outside the UAE and GCC, prices have fallen in markets such as Tehran, but the market looks steady in Saudi Arabia.

What’s Next?

Real estate markets internationally are starting to show positive signs.  While it will take considerable time for prices to once again reach their recent peaks, real estate will remain a popular asset class.  If anything, real estate provides investors with a comfort that is not afforded by securities markets, in other words, real estate is a physical, tangible asset class. It does not dissapear.  Therefore, while prices may diminish, there will always be a salvage value for real estate.

Real estate prices in many markets today are extremely attractive for those having cash to invest. It goes without saying that the real estate market is a microcosm of the greater economy as it is driven by inputs from a wide spectrum of the economy. As such, low prices (albeit with limited access to credit) may help drive the global economy out of the current crisis.

The Business Cost of Iran’s Elections

The world’s eyes have been on Iran in recent weeks, following a very dynamic presidential campaign that has served as an effective referendum on the policies of incumbent Mahmoud Ahmadinejad.  The official results released by the Iranian Interior Ministry indicate a landslide victory for Ahmadinejad, though this has come under strict scrutiny by his opponents, notably his main challengers Mir-Hossein Mousavi and Mehdi Karroubi and their supporters. 

Riots and protests started within hours of the election results being released.   While many people are discussing the political future of the Islamic Republic and Ahmadinejad, another particularly important aspect of the protests is the effect they will have on Iran’s economic climate.  Should Messrs. Mousavi and Karroubi’s supporters take their protest to the next level, i.e., national strikes, this could have a paralyzing effect on Iran’s economy.

Notwithstanding the threat of widespread strikes, Iran has essentially over the last 30 years made its economy particularly vulnerable to a crisis like this.  While some credit Iran’s economic isolation as a shield against the recent financial crisis, lack of adequate infrastructure investment and foreign direct investment has created particularly salient problems in this crisis.  While being integrated into the global economy can make a country particularly at risk to contagious international economic malaise, it also removes certain local grips on the economy and makes it arguably less political. Very tight regulations on the Iranian economy have created monopolies and oligopolies in Iran’s economy and have prevented adequate infrastructure investment and international involvement. As such, business and industry in Iran is significantly more political in countries like Iran than the US (when wealth is spread thin, certain individuals and companies are less likely to be in the spotlight and are therefore less prone to economic and political targeting). These problems can exacerbate if the political crisis is not solved. 

Many foreign businesses are developing a “wait and see” approach on doing business in Iran – I myself have had a few potential projects touching on Iran be put on hold until Iran settles.  

Mass resignations at universities and major government and government-affiliated entities (including banks and oil companies) can also present the government with a human capital problem.  In a country without foreign banks, a strike by bank employees can create massive capital rushes and financing difficulties.  Foreign banks typically do not involve themselves in national political issues (in other words, while Iranian bank employees may strike, I simply cannot see Standard Chartered or HSBC employees in Iran striking in the event of a political crisis).  This holds true even in a country a country like Iran that has very high unemployment.  There are simply not enough people in Iran with advanced degrees and know-how who are lying around unemployed who can substitute for those who have left or are on strike.

Then there is the infrastructure.   Closures, strikes, and resignations at certain ports, airports, and even cell phone networks as particularly damaging.   When very few airports in a country can handle transcontinental flights, the movement of people and goods becomes very difficult. The same applies to container and other shipping ports.  Iran only has two substantial mobile phone networks. Futhermore, the country appears to have has a single internet gateway (a laughable proposition in industrialized countries).  Therefore, it is very easy to shut down the internet.  While this may close the door to engaging in anti-government contact and dissent, it also limits the ability of private and public businesses to be transacted internally and internationally.  Like any other country, Iranians depend on e-mails, SMS messages and mobile calls to do business.  This has become particularly hard in recent days.

Lastly, I should mention the media.  Given the prohibition on private television and radio, many may find state media biased.  Add to this problem the increasing absence of foreign media in Iran, and Iran suddenly becomes a black hole in terms of news.  Everybody from consumers and employees all the way up to employers can realistically be in the dark with respect to what is going on in Iran.  In such a situation, it is human nature to expect the worst, and this in and of itself may prevent and/or delay a lot of investment decisions.

The government appears to be reluctant to realize the crisis that these protests will impose on the country’s economy, which could put the entire country in a more precarious position.  While I do not negate the impact of this political crisis and its ramifications on Iran’s society (thanks to cell phones, the internet, and cable tv, we have all been witness to particularly horrific scenes there in recent days) but I think problems can only increase for Iran and its economy if these protests take on an increasingly economic tone.

Sanctions, the Internet, and Spreading Broadband

One issue I have pondered for a while is the intersection between US sanctions laws and the internet.  I specifically want to focus this week’s post on the two examples of Windows Messenger and Facebook, and expand on them to illustrate certain policy and legal discussions that can arise from this issue.

On one hand, United States persons generally cannot export software and computers to certain sanctioned countries, such as Cuba (though that will soon change to some extent), Iran, and Syria. Clearly, in the case of licensable software such as Microsoft Windows, the Department of Commerce’s Bureau of Industry and Security (BIS) has laws in place restricting and in some cases blocking the sale of certain software, especially encryption programs, to many countries.   The general sale of goods (controlled or not) to many countries such as Cuba and Iran is blocked by the US Treasury Department’s Office of Foreign Assets Control (OFAC). 

The US Berman Amendment created an essentially permanent carve-out in US sanctions regimes allowing for the exchange of informational materials (e.g., books, movies, music) between the US and sanctioned countries. This apparently extends to the viewing of websites and transfer of web material and e-mail.  While OFAC regulations do not really appear to contemplate the internet, it would appear difficult to shut any one country off the internet or even block access to US-based websites due to the intricate web of servers that make up the internet.

E-mail appears to be treated by US laws as telecommunications and is permitted (granted you almost certainly need US software to generate e-mail).  But is the use of US internet applications and websites, such as Windows Messenger, Facebook, Twitter, Yahoo! Mail, or even Charles Schwab accounts by people in sanctioned countries a form of telecommunication or do they constitute the export of a service?  I am unsure as to whether OFAC has a clear answer to this, though I have heard of one case where a US person visiting his home country (under US sanctions) received a letter from OFAC asking him to explain his logging into his US investment account from a computer in the sanctioned country (apparently the issue was later resolved).

Closing Down Windows Messenger

You may have heard that Microsoft decided this week to stop offering certain Windows Live products such as Windows Messenger to users in Cuba, Iran, North Korea, Sudan, and Syria.  The reason cited was apparently compliance with regulations promulgated by OFAC.  The announcement is very cryptic and simply makes reference to OFAC.  It is unclear whether Microsoft considers the usage of its software in sanctioned countries as the export of a service or the deemed export of sophisticated, export-controlled software.

This issue generally brings to attention another key problem facing companies seeking to implement US trade law compliance policies – their often seemingly poor knowledge of the scope of current laws.   Oftentimes, the private sector in the US will take an approach vis-a-vis a sanctioned country that is considerably more restrictive than the actual US laws.  For example, even though family remittances between the US and Iran are generally permitted subject to certain conditions, few banks in the US are willing to process such payments.  Notably, such policies also arise from a reluctance to consistently have to make judgment calls.  Some companies just shut off business with a country wholesale to avoid any possibility of problems, an understandable policy albeit one that prevents the company to avail itself of whatever pecuniary benefit US laws will allow the company to derive from the sanctioned country.  This may be similar to what has driven Microsoft’s decision on Windows Messenger.

Facebook for a Change

Also this week, in light of the upcoming Iranian presidential elections, that country’s government restricted and soon after restored access to Facebook.  The leading reformist candidate in that country, Mir-Hussein Mousavi, has been utilizing Facebook to mobilize young voters, which may have served as the impetus for the initial blockage.  Facebook spoke out against the filtering decision by the Iranian government.  Is Mousavi’s usage of the Facebook page basically a transfer of informational materials between the US and Iran, or is Facebook actually providing a service to a person in Iran – a government official running for public office in Iran, no less?

The point of these examples is to highlight the vagueness of the law on this issue.  It may be that the laws have purposefully been left vague by necessity – thanks to the open nature of the internet and technologies such as proxies, it may be hard to define what constitutes providing a service to the sanctioned country and likely difficult to definitively ascertain whether a website is being accessed from Cuba, Iran, North Korea, Sudan, or anywhere else for that matter.  In other words, the host of a US-based webmail service may not be able to determine if a user is physically in Cuba, and not say, Mexico.

The internet is a powerful tool that can help foster improved communications between peoples. As such, it would be best to leave this medium alone, meaning maintain the current policy that prevents the exportation of most software to sanctioned countries, but allow internet communications.  Drafting regulations to enable such restrictions would be a very formidable challenge.  

One can even go as far as to say that in order to facilitate (1) improved communications within the sanctioned country and between it and the outside world; and (2) private enterprise in sanctioned countries, it would be appropriate for OFAC to enable the hosting and coding by US persons of non-profit and for-profit websites belonging to non-government persons in sanctioned countries.

It would also be fitting for BIS to enable the exportation of non-dual use internet-oriented products, such as routers, fiber optic cables, internet satellites, etc. to these countries in a careful way that does not compromise our national security interests. It appears the administration plans on doing something similar with Cuba, but pushing for widespread broadband and internet use in sanctioned countries can only help those countries return to the international community in more ways than one.  If we in the US say we promote the free flow of information, this should obviously extend to promoting wired and wireless broadband technologies.