Israel may help the Arab world reach its potential.
By Frida Ghitis, September 22, 2008.
 http://www.israel21c.org/bin/en.jsp?enDi…;

In the wake of the Kadima party’s primary elections, the process of replacing Israel’s prime minister will begin in earnest. The leading candidates, as one would expect, have been discussing the familiar litany of problems facing the country: the threat from Iran, the challenge from Hamas, the dangers posed by Hezbollah, and the conflict with Palestinians and Arab countries.

Considering the long list of grave dangers, it might seem surprising that Israel’s economy is not flashing distress signals. In fact, while the global economy has split into two camps - one swimming in oil wealth, the other limping partly because of the high price of oil - Israel, a country with almost no natural resources, has just reported its best unemployment rate in more than two decades.

To be sure, Israel’s economy will slow down because it is deeply intertwined with the rest of the world. But it has kept growing strongly despite an international credit spasm and a spike in commodity prices. One can only imagine the explosion of prosperity that would follow if real peace were achieved in the Middle East.

Glimpses of potential:

We can already see glimpses of the potential. In Dubai, the dazzling emirate that dares to be different, an Israeli-born Italian architect, David Fisher, will build another astonishing addition to the Gulf skyline. The 80-floor tower will feature floors that rotate independently, changing the shape of the building and the views from each window. The undulating structure will produce its own energy, with solar-power cells on the roof of each floor. The idea is revolutionary for many reasons, beginning with the birthplace of the architect. Arab countries don’t do business with Israelis. But Israelis have much to contribute, and progressive Arabs working with them could create world-transforming partnerships.

Israel today attracts more foreign investment than anyone, except the United States and the European Union, because its entrepreneurs and scientists have proven that they can produce and innovate. Israeli products and inventions touch all of our lives.

Israel has what the Arab world needs. And Israelis would rejoice in true partnerships with their Arab neighbors.

Until now, the Arab Middle East has looked like a grotesque display of haves and have-nots. Oil-rich countries have splurged on luxuries while importing servants and cheap labor from poor neighbors. Israel, meanwhile - and, for a time, Lebanon - built an economy that relies on the skills and talents of its people. Israeli prosperity created thousands of jobs for Palestinians, until suicide bombings led to check points and dreadful difficulties for West Bank and Gaza residents.

A vibrant economy:

Despite wars, violence, and political scandals, Israel has kept investing in its people and creating a vibrant economy that could one-day help remake the entire region.

Last year, the Organization of Economic Cooperation and Development invited Israel to apply for membership. The exclusive OECD brings together 30 of the world’s richest economies that are committed to democracy and free markets.

Undeterred by political scandals and by defense spending - far exceeding US aid to Israel - that sucks out a huge portion of the national income, Israel has an exceptional educational system that stimulates creativity and independent thinking. The country has some of the world’s highest rates of university graduates, of doctorates, book production, technology companies, patents, innovation, discoveries, and much more.

The Arab world has always had enormous potential and, for a time, it produced great knowledge. Then came cultural stagnation. But that will change one day.

Much of the region has been derailed by war, extremism, and despotism. Precious time and treasure have been wasted. Israel, meanwhile, has focused on survival - and has thrived.

Last year, for example, the government decided to give a big push to electric cars. Israel will become the world’s lab for electric cars, with participation from several European companies, and Israeli technology and government incentives to create a national network for electric transportation.

Israel doesn’t have to be an isolated island of innovation. Can we imagine the citizens of a place like Dubai joining hands with Israelis to seek alternatives to oil? Picture that: Gulf oil money and talent working with Israelis pursuing the future beyond oil, or tackling global warming; or working together to build on Israeli inventions that lower water usage in that parched part of the world. Israeli ingenuity and resourcefulness, plus Arab funding and creativity, could turn the Middle East into a region of peace and prosperity, instead of one of violence and extremism.

For now, however, one hears the politicians and returns back to today’s reality. For now, it’s about facing dangers and focusing on survival.

Uri Avnery
Tel Aviv, 20.09.08

Fly, Tzipora, fly!

THE POLLS were wrong, as usual. And in a big way. As usual.

Instead of winning by a huge margin, as predicted until the very last moment by all the polls, she just squeaked through. Of the 72 thousand or so registered Kadima members, only 39,331 troubled themselves to go to the polls, and among these she defeated Shaul Mofaz by just 431 votes.

But a majority is a majority. Tzipi Livni was duly installed as Kadima chairperson.

What does that say about the Israeli public?

FIRST OF ALL: this is the victory of a person without a military background over someone with almost nothing apart from a military background.

On the advice of his right-wing American political strategist, Stanley Greenberg, Mofaz emphasized the word “security” on every occasion, almost in every sentence. A popular talk-show turned this into a parody: Security, security, security, security.

Well, it did not work. T-h-e general, the chief of Staff, the Defense Minister, was beaten by a mere woman devoid of any military experience (even if she did serve for 15 years in the Mossad.)

That does not mean that Tzipi Livni may not turn out to be a warmonger, like Elisabeth I, Catherine the Great, Margaret Thatcher and Indira Gandhi. But fact is fact: the Kadima voters have preferred a non-general to a general.

MOREOVER, KADIMA is a party of the center. The very center of the center. Its members are not fervent about anything, neither on the right or the left, they have no strong convictions of any kind. So their decision can be regarded as a reflection of the general mood.

Mofaz presented himself not only as Mr. Security, but also as a genuine right-winger, a man who opposes both peace with Syria and peace with the Palestinians, a leader prepared to set up a coalition with the Right, even with the extreme Right. He was the declared exponent of open-ended-war.

Tzipi Livni presented herself as the personification of the peace effort, the woman who conducts the negotiations with the Palestinians, who prefers diplomacy to war, who points the way to the end of the conflict. All this may be sleight of hand, pure deceit. Perhaps there is no difference at all between the two. But even if this is so, that is not the most important aspect. The important fact is that the Kadima voters, the most representative group in the country, accorded victory - well, a tiny victory - to the candidate who at least pretended to favor peace.

In his “The Second Coming”, the Irish poet W. B. Yeats describes utter chaos: “Things fall apart, the center cannot hold”. The metaphor is taken from military history: in bygone days, armies drew up for battle with the main force in the center, and lighter forces defending the two flanks. As long as the center held, everything was fine.

In Israel today, the center is holding. The centrist party voted for the woman of the center.

***

It can also be described otherwise: in Israel, 2008, the forces are divided equally between the “Right” and the “Left”, and the “Left” won this time by the smallest possible margin.

I REMEMBER the elections nine years ago. In May 1999, Ehud Barak won a decisive victory over the incumbent, Binyamin Netanyahu: 56.08% against 43.92%, a difference of 388,546 votes. The public was just fed up with Netanyahu.

The response was overwhelming. The general feeling in the peace camp was of a release from servitude to freedom, from an era of failure and corruption into an era of peace and well-being. Without any proclamations, without anybody planning it, masses of people streamed into Tel-Aviv’s Rabin Square, the place where a Prime Minister had been assassinated four years earlier. I was among them.

In the square, the atmosphere was intoxicating. Delirious people danced, embraced each other, kissed. Tel Aviv had not seen anything like it since November 1947, when the United Nations General Assembly decided to establish a Jewish (and an Arab) state. I experienced a similar scene in April 1948, when I was part of the force that brought a huge relief convoy into beleaguered and starving West Jerusalem. A similar atmosphere was captured by film of Charles de Gaulle entering liberated Paris.

Barak promised to be a second Rabin, only more so. He promised to make peace with the Palestinians within months. A rosy future was warming the horizon, “the dawn of a new day”.

A year and a half later, nothing of all this remained. Ehud Barak, the hero of peace, brought on us the greatest disaster in the annals of the struggle for peace. He came back from the Camp David conference, which had taken place on his express demand, with a declaration that was to become a mantra: “I have turned every stone on the way to peace / I have offered the Palestinians unprecedented generous terms / Arafat has rejected everything / We have no partner for peace.”

With 20 Hebrew words Barak destroyed the peace camp and brought about a public mood which even Netanyahu could not create: that there is no chance for peace, that we are condemned to live with an everlasting conflict.

Therefore, no one got excited about Tzipi Livni’s victory. The masses did not stream into the square, did not dance and did not embrace - and not only because this was just a party-internal election. The general reaction was a sigh of relief and a shrug of the shoulder. So Kadima has voted. So it has a new chairperson. So there will be a new Prime Minister. Let’s wait and see.

***
SO WHAT to expect, after all?

There are already jokes circulating about “Tzipi and the Tzipiot” (a Hebrew word-play, “tzipiot” meaning expectations), a new rock-band which is about to take to the road. Nobody really knows what kind of a Prime Minister she will be. Strong or weak. Determined or open to pressures. Tough or compromising. Warmonger or peace-seeker.

One can only point at her background, as I hinted last week, and perhaps go into some detail.

On the eve of the elections, in one of those vapid questionnaires the media are so fond of, she was asked who was her hero. Her answer: Jabotinsky.

That was the most predictable answer there could be. Tzipi Livni grew up in a Revisionist household. She is a Revisionist, model 2008. What does that mean?

Her father, Eitan, who was born in Grodno (a town that has belonged variously to Lithuania, Poland, Russia and now Belarus), came to this country at the age of 6 and joined the Irgun underground in 1938 (the same year as I did), when he was 19 years old. He lived all his life under the influence of Ze’ev (Vladimir) Jabotinsky and his teachings.

Eitan Livni, as I knew him, was not a brilliant or exceptional person, but rather solid, loyal, as his name suggests. (In Hebrew, “eitan” means strong, steadfast). A person one could rely on. He served in the Irgun as an operational officer, and among other operations he took part in the daring break-out from Acre prison, where he was being held. As a Knesset member for the Herut Party, the predecessor of today’s Likud, he was rather inconspicuous and supported Menachem Begin through thick and thin.

In order to understand Tzipi, one has to go back to Jabotinsky. His many enemies have often called him a Fascist, but that is inaccurate. He was born in the 19th century, and was a nationalist in the 19th century mold. Born in Odessa, he lived for some years as a young man in Italy, and his heroes were the leaders of contemporary Italian nationalism: the ideologue Giuseppe Mazzini and the fighter Giuseppe Garibaldi.

Jabotinsky wanted, of course, all of Palestine to become a Jewish state. When he founded his party in the 1920s, he named it according to this vision: the demand was for a “revision” of the British decision to separate the land west of the Jordan river from the land east of the river, today’s Kingdom of Jordan, then called Transjordan. In her youth, Tzipi sang Jabotinsky’s most famous song: “Two banks has the Jordan - this one belongs to us and that one, too.”

But Jabotinsky was also a real liberal, and a real democrat. He entered the political arena for the first time when he formulated the “Helsingfors (Helsinki) Plan”, which demanded human and national rights for the Jews and the other minorities in Czarist Russia.

A PERSON educated according to these values is faced today with a tough dilemma.

***

Years ago, the Revisionists used to tell this joke: rewarding David Ben-Gurion for founding the state, God promised to grant him one wish. Ben-Gurion asked that every Israeli should be honest, wise and a Labor Party member. “That’s too much even for me to grant,” God replied, “but every Israeli can choose two of the three.” So a Labor member can be wise but not honest, a Labor member can be honest but not wise, and somebody who is wise and honest cannot be a Labor member.

Something like this is now happening to the Revisionists themselves. They ask for three things: a Jewish State, a state that encompasses all of historic Palestine and a democratic state. That is too much even for God. So a Revisionist must choose two of the three: a Jewish and democratic state in only a part of the country, a Jewish state in all the country that will not be democratic, or a democratic state in all the country that will not be Jewish. This dilemma has not changed over the last 41 years.

Tzipi Livni, an honest to goodness Revisionist, has announced her choice: a Jewish and democratic state that will not encompass the whole of the country. (We leave open here the question of whether a “Jewish” state can be democratic.)

***

In up-to-date Hebrew, we differentiate between “national” and “nationalistic” attitudes. A national view recognizes the importance of the national dimension in today’s human society, and therefore respects and recognizes the nationalism of other peoples, too. A nationalistic view says “we and no others”, my nation ueber alles.

It seems that Tzipi, like her hero Jabotinsky, adheres to the national view. Hence her emphasis on “two nation-states for two peoples”. She speaks about a Jewish nation-state and is ready to sacrifice Greater Israel on this altar.

That may not be an ideal basis for peace (what would be the status of Israel’s Arab citizens in this Jewish nation-state?) but it is realistic. If she has the power to implement her ideas, she can make peace. If.

REACTING TO the election results, Gideon Levy wrote that the heart wants to hope, but the brain cannot. That is an understandable reaction.

Since Tzipi, short for Tzipora, means bird, one wants to cry out: Fly, Tzipora, fly! Fly to heaven! After your election as Prime Minister, lose no time! Set up a government coalition with the peace forces, use the first few months of your term to achieve peace with the Palestinians, call new elections and submit yourself and the peace agreement to the public test! As Livni herself phrased it in her direct way: “There is no time for bullshitting!”

That is what Ehud Barak should have done in 2000. He did not take the chance, and therefore he lost.

Will Tzipora the bird reach these heights? The heart hopes. The brain has its doubts.

————-

Collected articles      http://zope.gush-shalom.org/home/en/chan…

permlink: http://zope.gush-shalom.org/home/en/chan…

 gush-shalom.org

————-

 

www.ft.com/maverecon

America will need a $1,000bn bail-out.

ByKenneth Rogoff, The Financial Times, September 17 2008.

One of the most extraordinary features of the past month is the extent to which the dollar has remained immune to a once-in-a-lifetime financial crisis. If the US were an emerging market country, its exchange rate would be plummeting and interest rates on government debt would be soaring. Instead, the dollar has actually strengthened modestly, while interest rates on three- month US Treasury Bills have now reached 54-year lows. It is almost as if the more the US messes up, the more the world loves it.

But can this extraordinary vote of confidence in the dollar last? Perhaps, but as investors step back and look at the deep wounds of America’s flagship financial sector, the public and private sector’s massive borrowing needs, and the looming uncertainty of the November presidential elections, it is hard to believe that the dollar will continue to stand its ground as the crisis continues to deepen and unfold.

It is true that the US government has very deep pockets. Privately held US government debt was under $4,400bn at the end of 2007, representing less than 32 per cent of gross domestic product. This is roughly half the debt burden carried by most European countries, and an even smaller fraction of Japan’s debt levels. It is also true that despite the increasingly tough stance of US regulators, the financial crisis has probably already added at most $200bn-$300bn to net debt, taking into account the likely losses on nationalising the mortgage giants Freddie Mac and Fannie Mae, the costs of the $29bn March bail-out of investment bank Bear Stearns, the potential fallout from the various junk collateral the Federal Reserve has taken on to its balance sheet in the last few months, and finally, Wednesday’s $85bn bail-out of the insurance giant AIG.

Were the financial crisis to end today, the costs would be painful but manageable, roughly equivalent to the cost of another year in Iraq. Unfortunately, however, the financial crisis is far from over, and it is hard to imagine how the US government is going to succeed in creating a firewall against further contagion without spending five to 10 times more than it has already, that is, an amount closer to $1,000bn to $2,000bn.

True, the US Treasury and the Federal Reserve have done an admirable job over the past week in forcing the private sector to bear a share of the burden. By forcing the fourth largest investment bank, Lehman Brothers, into bankruptcy and Merrill Lynch into a distressed sale to Bank of America, they helped to facilitate a badly needed consolidation in the financial services sector. However, at this juncture, there is every possibility that the credit crisis will radiate out into corporate, consumer and municipal debt. Regardless of the Fed and Treasury’s most determined efforts, the political pressures for a much larger bail-out, and pressures from the continued volatility in financial markets, are going to be irresistible.

It is hard to predict exactly how and when the mega-bail-out will evolve. At some point, we are likely to see a broadening and deepening of deposit insurance, much as the UK did in the case of Northern Rock. Probably, at some point, the government will aim to have a better established algorithm for making bridge loans and for triggering the effective liquidation of troubled firms and assets, although the task is far more difficult than was the case in the 1980s, when the Resolution Trust Corporation was formed to help clean up the saving and loan mess.

Of course, there also needs to be better regulation. It is incredible that the transparency-challenged credit default swap market was allowed to swell to a notional value of $6,200bn during 2008 even as it became obvious that any collapse of this market could lead to an even bigger mess than the fallout from subprime mortgage debt.

It may prove to be possible to fix the system for far less than $1,000bn- $2,000bn. The tough stance taken by regulators this past weekend with the investment banks Lehman and Merrill Lynch certainly helps.

Yet I fear that the American political system will ultimately drive the cost of saving the financial system well up into that higher territory.

A large expansion in debt will impose enormous fiscal costs on the US, ultimately hitting growth through a combination of higher taxes and lower spending. It will certainly make it harder for the US to maintain its military dominance, which has been one of the linchpins of the dollar.

The shrinking financial system will also undermine another central foundation of the strength of the US economy. And it is hard to see how the central bank will be able to resist a period of allowing elevated levels of inflation, as this offers a convenient way for the US to deflate the mounting cost of its private and public debts.

It is a very good thing that the rest of the world retains such confidence in America’s ability to manage its problems, otherwise the financial crisis would be far worse.

Let us hope the US political and regulatory response continues to inspire this optimism. Otherwise, sharply rising interest rates and a rapidly declining dollar could put the US in a bind that many emerging markets are all too familiar with.

The writer is professor of economics at Harvard University and former chief economist of the International Monetary Fund.

***

Hard lessons to be learnt from a Minsky Moment.

By Larry Hatheway, The Finasncial Times, September 18 2008.

After the US Treasury secretary Hank Paulson’s brave stand on “moral hazard” at the weekend, it took less than 48 hours for pragmatism to prevail over principle in the form of a government rescue for the ailing insurer AIG. For all the hand-wringing of the “no bail-out” proponents, the takeover was almost certainly necessary, given the potential for significant contagion via the unwinding of complex counterparty exposures.

With the demise of AIG, the markets’ verdict has been rendered: a reactive, ad hoc, mostly private sector approach to the challenges of the financial sector will not work. The problems are systemic and the remedies need to be comprehensive. The challenges - including a shortage of capital, dysfunctional wholesale credit markets, widespread deleveraging and significant asset sales - are too large, too widespread and too complex to be managed by the private sector alone.

US and European financial institutions do not have the capital or balance sheet strength to offset the downdraught of falling asset values. Those with capital are unwilling to subsidise those without, at least not at prevailing prices. Put differently, if a (quasi) private sector solution was in the offing this past weekend, then Mr Paulson and Timothy Geithner, president of the Federal Reserve Bank of New York, invited the wrong financiers. The only sources of capital large enough to address the problems reside in Asia or the Middle East, not New York or London.

And that speaks volumes about the future of global finance.

Practically speaking, the only balance sheet capable of absorbing the deleveraging is the US government one. Understandably, Mr Paulson has been reluctant to put more taxpayers’ money at risk. But, as the events of the past two days demonstrate, he has had little choice. Moreover, the sharp fall in commodity prices is a clear sign that the tumult in the markets is expected to drag down an already weak global economy.

What, then, are, the basic contours of a comprehensive financial sector strategy?

* The stigma on government involvement should be jettisoned. Government intervention has precedence and can help stabilise the system. That is true of emergency liquidity provision or the relaxation of collateral rules by central banks. But it is equally true of efforts to promote consolidation, capital injection and ownership change in the banking sector.

* Central banks should ease monetary policy. Falling commodity prices, the likelihood of falling inflation and the reality of sharply slowing global growth demonstrate the need for concerted global easing .

* As the Financial Stability Forum recently noted, banks and other financial institutions will have to raise at least another $350bn of capital to deal with yet-to-be-realised losses. Yet, as Lehman’s bankruptcy demonstrates, capital is harder to come by and considerably more expensive. Government- sponsored re-capitalisation appears unavoidable and ought to be anticipated by policymakers.

* The creation of government- backed asset management companies would allow problem banks and non-performing assets to be sold or run down in an orderly fashion. The establishment of a “clearing house” to net liabilities, including in credit default swaps, may also be necessary.

* Although depositors have remained - for the most part - calm amid the turmoil, broader assurances on bank deposits may be required, backed by adequate funding for the FDIC and other national deposit insurance entities.

The strong theme underlying the Minsky Moment - the tipping point between market euphoria and decline - is that a systemic problem in the financial system requires a systemic solution. Central banks can do and have done a great deal to keep the financial system liquid and funded. But the nature of the ongoing deleveraging, in which declining asset values, debt reduction and asset sales reinforce one another, calls for additional intervention by government.

The matter is pressing in its own right, but also because most of the advanced economies are either already in or on the verge of recession. This is no longer just a financial matter.

The author is chief economist at UBS.

The Wall Street Journal of todaty has also intersting articles on its Opinion page.

Like: Bad Accounting Rules Helped Sink AIG by Zachary Karabell, The author of “Climerica: How the United States and China Became One” - to be published by Simon & Shuster NEXT YEAR,

Don’t Worry About Inflation, by Frederick S. Mishkin, Professor at Columbia Business, and author of “Monetary Strategy” (MIT Press. 2007);

The Credit Crunch Will Go On, by David Roche of www.instrategy.com

—————–

HOW OBAMA CAN DEMONSTRATE REAL LEADERSHIP ON THE ECONOMIC CRISIS
By Arianna Huffington, Huffington Post
Obama needs to put himself at odds with the Dem
establishment: He did it with Iraq in 2002, and he can do it
in 2008 with the economy.
 http://www.alternet.org/election08/99610…
VAN JONES: WE CAN’T DRILL OUR WAY OUT OF OUR ENERGY PROBLEMS
By Van Jones, AlterNet
In an electrifying speech, Van Jones explains that we have
to invent and invest our way out of the economic and
environmental crises.
 http://www.alternet.org/environment/9955…

From:       euromoney_conferences@xactpromos.com
  Subject:     Your Complimentary Invitation from Euromoney: Opportunities in the Oil & Petrochemical Sectors
Date:     September 9, 2008

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• H.E. Mintimer Shaimiev, President, Republic of Tatarstan
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• Patricia Cloherty, Chairman and Chief Executive Officer, Delta Private Equity Partners
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From:  liasieghart at hotmail.com
Subject: Yemen, cogeneration and the CDM an outline of opportunity
Date: September 4, 2008

The Clean Development Mechanism has been instrumental in the development of a number of cogeneration projects around the world, but none yet in Yemen, where the scope for projects is certainly present. Lia Carol Sieghart looks at the role that cogeneration could play as part of efforts to reduce greenhouse gas emissions from the country. The Kyoto Protocol was signed in 1997, at the 3rd Conference of the Parties (COP 3) to the Framework Convention on Climate Change (UNFCCC) in Kyoto, Japan. This treaty significantly bolstered the Convention by committing parties from developed countries, known as Annex 1 Parties, to legally binding limits on GHG emissions. They may also acquire emission reduction credits by taking advantage of the three ‘flexibility mechanisms’ defined under the Protocol.These mechanisms are:

• International Emissions Trading (IET)
• Joint Implementation (JI)
• Clean Development Mechanism (CDM). The latter is the only mechanism that involves developing countries. The CDM allows Annex 1 Parties (or entities from those Parties) to invest in project activities that reduce GHG emissions and contribute to sustainable development in non-Annex 1 countries.The CDM has seen an exponential growth since the Kyoto Protocol came into effect in 2005. The end of 2007 provided a milestone with the 100-millionth certified emission reduction credit being issued. In April 2008 the 1000th project, an energy efficiency project, was registered with the Executive Board. At present there are more 3000 projects in the UNFCCC pipeline.

  Nevertheless, the number of host countries playing a vital role is still very limited. The geographic dispersion of registered projects remains imbalanced. So far the main share of projects is with Asia and Latin America. Most projects are registered with India as a host country, followed by China, Brazil, Mexico, Malaysia and Chile. India and China in particular have been early movers and have grasped the investment opportunities provided by the CDM. The vast majority of projects registered are in the energy sector. Taking into consideration the projects under validation and those requesting registration, it seems that this distribution pattern will not change significantly during the first commitment period.

  There are many reasons why the CDM has so far fallen short of its full potential, many of which are country-specific while others are repeatedly reported from various countries. In the Middle East and North Africa (MENA) region 18 countries have ratified the Kyoto Protocol, but to date only 20 projects have been registered (Table 1). This amounts to ~2 % of the total of registered project activities.

  Click here to enlarge image

  The MENA Region population comprises about 6% of the total world population, almost equivalent to the population of the European Union. Most MENA countries are experiencing a rapid population growth. The region is economically diverse – the spectrum ranges from oil-rich economies to countries that are resource-scarce in relation to population.

  By 2050, the MENA countries will reach an electricity demand of the same magnitude as Europe (3500 TWh/y). In some of the countries, electricity demand is expected to triple from almost 1500 TWh/y at present to 4100 TWh/y in 2050. Correspondingly, the effects of climate change will become more severe. The fossil fuel-based power sector offers enormous potential for CO₂ emission reductions, both through energy efficiency improvements in existing applications as well as utilization of state-of-the-art technology for new capacity additions.

  Given the surging growth in energy demand, the region needs to develop sustainable energy patterns, increase energy accessibility – particularly for marginalized populations in rural areas – and encourage efficient use of energy. Countries need to embark on a less carbon-intensive development path. Utilizing the CDM can provide a vital trigger in this process.

  CHP has a clear opportunity to expand quickly. CHP installations, by combining electricity production with a heat recovery system, provide reliable and cost-effective opportunities for GHG emissions reduction and an important contribution to meeting heat and electricity demand. Cogeneration projects also have the potential to bring energy efficiency measures to large industries in the region, while the MENA oil industry and refinery capacity offers further significant cost-effective potential for heat recovery and cogeneration.

  THE REPUBLIC OF YEMEN

  The Republic of Yemen lies to the south of Saudi Arabia, bounded by the Red Sea and the Gulf of Aden. The 2004 census recorded a population of 19.72 million, with an average annual population growth rate of 3.2 % and one of the highest birth rates in the MENA Region. Yemen remains one of the poorest countries in the world, and currently ranks 49 on the UN’s list of the 50 Least Developed Countries. Yemen’s GNI per capita is US$760, compared to, for example, US$12,510 in Saudi Arabia, US$23,990 in the United Arab Emirates and US$9070 in Oman². According to the Country Social Analysis (2006) by the World Bank the GDP growth rate has been falling steadily in recent years. Inflation has been averaging at almost 12% since 2002, rapidly increasing the cost of living.

  The country, a non-OPEC member, is the smallest oil producer in the Middle East³. Nevertheless, the economy is highly dependent on the oil sector, with the country’s oil exports accounting for approximately 85% of export revenues and 33% of gross domestic product (GDP). Yemen’s energy use relies heavily on fossil fuels. Thus, there is potential to reduce GHG emissions in the energy sector, the oil and refinery industry and in the industrial sector.

  GREENHOUSE GAS EMISSIONS IN YEMEN

  The 2001 First National Communication to the UNFCCC used 1995 as a reference year for Yemen’s GHG emissions inventory due to the high uncertainty of 1994’s information as a result of the April–July 1994 civil war. The total GHG emissions (CO₂, CH⁴, N²O) of the country, in 1995, amounted to 18.7 million tonnes CO₂eq, (CO₂=11.4 million tonnes, CH⁴=128,000 and NO₂=15,000). Taking CO₂ removal into account, the total net emission of CO₂ is 845,000 tonnes. These figures are exclusive of the emission from the international bunker (114,350 tonnes CO₂) and from combustion of biomass (353,290 tonnes CO₂).

  Yemen’s emission profile by gas type for 1995 shows that CO₂ accounts for 61% of the total national GHG emissions (113,580 tonnes CO₂), N²O 25% (465,700 tonnes CO₂eq) and CH⁴ 14% (269,400 tonnes CO₂eq). Table 2 shows gas emissions by various sectors.

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  If we look at the industrial processes, there are many that create GHG emissions as a by-product of the process itself. Cement production generated the most emissions (99.3%). Other production processes with minor emissions are lime production, limestone use and soda use (food & beverages). The total GHG generated by these processes was estimated at 547,000 tonnes CO₂eq, which accounted for 2.92% of the country’s total GHG emissions. The production of cement in Yemen in 1995 was 1,089,000 tonnes that resulted in CO₂ emission of 543,000 tonnes CO₂eq representing 4.8% of the country’s total CO₂ emissions (energy sector, industrial processes etc), while it represents around 2.9% of the total GHGs.

  The CO₂ emission from cement production was calculated by multiplying 1995 cement production (1,089,000 tonnes) by the emission factor (0.4985 tonnes of CO₂ per tonne of cement produced). The SO₂ emitted from cement production was obtained by using an emission factor of 0.3 kg SO₂/tonne cement, thus leading to 330 tonnes SO₂ in 1995.

  THE YEMENI ENERGY SECTOR

  Yemen’s 100% state-owned Public Electricity Corporation (PEC) formed in 1991, under the Ministry of Electricity, is the sole public utility with the mandate for generation, transmission, distribution and sale of electricity in the country. The entity operates approximately 80% of the country’s generating capacity as part of the national grid. The remainder is generated by small off-grid suppliers and privately owned generators, predominantly in rural areas⁴. In urban areas diesel generators are also used as back-up systems. The efficiency of diesel generators can be up to 40%. Electricity demand amounted to 3294 GWh in 2005, an increase of 9.6% annually since 2000.

  The Yemeni population has the lowest access to electricity in the region, with only 53%⁵ of the total population having access. Of the 72% of the Yemeni population living in rural areas, only 23% have any access to electricity, which compares unfavourably with 85% of the urban population that have access to electricity. Out of this 23%, about 10%–14% is connected to the national grid system while the remainder is estimated to have some access from other sources, typically a diesel generator that operates only a few hours in the evening. Even for those connected to the grid, electricity supply is intermittent, with regular rolling blackouts in most cities.

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  Yemen has been experiencing a chronic power supply shortage. An estimate for the electric power deficit in 2006 was 220 MW, a figure that is expected to increase to 250 MW in 2008. With the 2005 increase in diesel prices, the cost of diesel generation has become economically unsustainable thereby significantly increasing the demand for a lower-carbon, more-efficient, lower-cost and reliable energy future.

  The Poverty Reduction Strategy Paper (PRSP, 2003–2005) states the following: ‘Indicators show the failure of electric power in Yemen in keeping pace with demand [is] due to the ageing of the power stations and the distribution networks, which is reflected in the high losses that are currently estimated at about 38%, well above the internationally prevailing levels. This situation prevents the full utilization of machinery and equipment in the different productive and service units, or burdens the private sector facilities with the cost of setting up their own generating plants, not to mention the inability to systematically fulfil domestic lighting requirements. This situation is expected to continue over the medium term due to the increase of demand at high rates, and thus increases the adverse aspects on investment opportunities and the growth of output, income and employment, clearly showing the importance of strategic investment by the private sector in this field.’

  In the industrial sector, power is purchased either from the national grid or off-grid from privately owned diesel generators with poor electrical efficiency ranging from 25% up to 35% especially in light industry. Heavy industry, e.g. the cement sector – the most energy intensive of any industry⁶, covers its heat needs using boilers fired either by heavy fuel oil or diesel, again with an overall poor fuel efficiency. The main electricity consuming sections in a cement plant are the mills (finish grinding and raw grinding) and the exhaust fans (kiln/raw mill and cement mill) which together account for more than 80% of the total electrical energy usage.⁷ The separate production of heat and power is an obvious waste of energy. Change is needed by using a range of existing and emerging technologies, particularly in relation to the production and consumption both of heat and electricity.

  The cement industry is considered as one of the main players in the industrial sector. Commercial production started back in 1973 with the launching of the first production line of the Bajil Cement Factory. Cement production is highly competitive, both locally and internationally, so any improvements in production efficiency can result in important increases in competitiveness.⁸

  Despite 16.9 trillion cubic feet (tcf) of proven natural gas reserves, a cleaner source of non-renewable energy, heavy fuel oil or diesel-fuelled power generation remains the energy source. Use of natural gas is hampered by the absence of a domestic natural gas infrastructure. On the downstream side there is a crude refining capacity of 130,000 barrels/day from two ageing refineries. The Aden refinery has a capacity of 90,000 to 120,000 barrels/day, while the capacity at the Marib refinery, is 10,000 barrels/day.

  So the challenge for the government is to meet the energy needs of the country in an economic and environmentally sustainable manner. To address this challenge, one approach is to integrate the use of CHP as part of a larger portfolio of low-carbon energy technology solutions. Also the First National Communication under the UNFCCC suggests CHP as a viable measure to reduce GHG emissions and to cope with climate change.

  COGENERATION – AN OPPORTUNITY FOR YEMEN

  The Yemeni electricity sector driven by fossil-fuelled power generation is characterized by a loss of waste heat and a deficient transmission and distribution system resulting in poor net generation. Energy use and efficiency are important factors for economic development and environmental integrity.

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  CHP applications could be viable and cost-effective in the Yemeni setting because they:

  • reduce energy-related carbon dioxide emissions
  • provide a decentralized energy source which results in reduced investment in energy system infrastructure
  • reduce transmission and distribution losses.

  Energy-intensive industrial sites such as oil refining, heavy processing (food and textiles) and the cement industry with its simultaneous demand for heat and power, could all benefit. Also the commercial and institutional/residential sectors could match their thermal and electrical needs. CHP application in the commercial/institutional sector could address light manufacturing, hotels, hospitals and large office complexes.

  Despite good potential for CHP, to date no systems are operating in Yemen. The main barriers are: technical, financial, lack of maintenance capacity and awareness, the heavy subsidy of petroleum products and the absence of a domestic natural gas infrastructure – the fuel of choice for most new industrial CHP systems. However, access to reasonably priced and reliable electricity supply systems are an obvious prerequisite for economic stability and development. The development of a strategy for CHP would assist in kick-starting the momentum in Yemen and should include the following elements:

  • identification of projects that could be initially implemented by the public sector and identify pipeline of projects that can be promoted for private sector development
  • formulation of CHP-enabling market
  • elaboration of incentives that attract private investors and lower the costs of electricity generation from CHP applications.

  Coupling GHG emissions abatement with CHP installation would help guide the country’s economic growth to a less carbon-intensive development path. The emission reduction potential makes CHP applications, in principal, eligible for the CDM. In order to qualify for Certified Emission Reductions under the CDM, one needs to address ‘additionality’, ‘permanence’, and ‘leakage’ requirements as well as satisfy sustainable development criteria defined by the country. By gaining CDM support for projects, Yemen could gain access to significant additional flows of technology and finance to assist in achieving a more sustainable, less greenhouse-intensive pathway of development. Also the National Adaptation Programme of Action⁹ is suggesting CHP systems as an efficient method of power generation and a suitable measure to reduce GHG emissions. Considering a cogeneration project as a CDM project activity would assist in generating emission credits and thereby make the project more feasible.

  RECOMMENDATION AND CONCLUSION

  The CDM is a key model fostering broad engagement in climate change mitigation, and can be used as a means of promoting sustainable development by providing access to improved energy services. The energy sector is a major source of GHG emissions and a critical area for socio-economic development of the country. Yemen has a good potential for cogeneration projects in the industrial, commercial and institutional/residential sectors.

  In keeping with the dual aim of climate protection and sustainable development, the CDM can trigger the installation of CHP systems by removing barriers to implementation of state-of-the art technology in this area. Despite the strong potential of cogeneration for GHG reduction to date there is no installed capacity – project developers often lack the technical and financial capacity to identify projects within their operational activities. Mainstreaming carbon finance into business operations would have a catalytic impact on facilitating CDM project development and consequently assist in the feasibility of cogeneration in Yemen.

  Lia Carol Sieghart is with the Ministry of Water and Environment, DNA Secretariat, Republic of Yemen.
  e-mail: sieghart@yemen.net.ye

  References

  1. Status: 29.03.2008

  2. World Development Indicators database, World Bank, 1 July 2007

  3. Report No.: 34008-YE – Republic of Yemen – Country Social Analysis – January 11, 2006 – Water, Environment, Social and Rural Development Department, Middle East and North Africa Region

  4. Energy Information Administration  www.eia.doe.gov): Yemen – Country Analysis Brief (October 2007)

  5. World Bank and UNDP (2005): Household Energy Supply and Use in Yemen: Volume I, Main Report

  6. WADE (2007): Concrete Energy Savings – Onsite Power in the Cement Industry

  7. IPPC (Integrated Pollution Prevention and Control). 2001. Reference document on best available techniques in the cement and lime manufacturing industries, European Union.

  8. WADE (2007): Concrete Energy Savings – Onsite Power in the Cement Industry

  9. 2001 First National Communication to the United Nations Framework Convention on Climate Change

  Cogeneration and On-Site Power Production July, 2008

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Gulf ruler buys top club – then reveals his plan to spend, spend, spend…
Tuesday, 2 September 2008, The Independent.

The tiny Gulf state of Abu Dhabi launched an audacious raid on one of Britain’s top football clubs yesterday in a move that will transform the shape of global football.

The £210m takeover of Manchester City threatens to dethrone their closest rivals Manchester United and establish City as the biggest team in the world. The club announced that it had signed a memo of understanding with the Abu Dhabi United Group (ADUG), a holding company set up by Middle East investors, backed by the country’s royal family. The new regime’s first move was an attempt to gazump United’s £30m signing of Tottenham Hotspur’s star striker Dimitar Berbatov with an offer of £34m. And they quickly followed that by lodging bids for Spain’s highly rated forward David Villa and Stuttgart’s Mario Gomez.

ADUG will spend the nextfew weeks examining the club’s books before taking control, and will become the first Middle East investor to be in control of a Premier League team.

The Arab group is fronted by Sulaiman Al Fahim, a multi-billionaire nicknamed the “Donald Trump of Abu Dhabi,” who has pledged to invest enough to break up the “Big Four” of Manchester United, Chelsea, Liverpool and Arsenal by next year.

It could herald a whole new era for transfer fees, as the investors’ plans could dwarf even Roman Abramovic