Notes Management and Entrepreneurship

MANAGEMENT AND ENTREPRENEURSHIP

ME in the history – before 1900

Before 1900:

The Persian Empire

 The Caliphate

 The Ottoman Empire



After 1900 and WWI:

Oil Discovery

 The fall of the Ottoman

 The Arab Nations



Middle East History in 1900…1934

1901: Oil discovered in Iran

 1914 WWI begins, Ottomans align with Germany

 1915: Armenian Genocide

 1917: Balfour Declaration Britain declares that Palestine must create a nation

 for the Jewish people

1918: Britain and France occupy former Ottoman Empire lands

 1919 to 1921: Franco-Syrian War

 1919 to 1923: Asia Minor Catastrophe reshapes Anatolia, as continuous fighting

 incorporates the newly founded Republic of Turkey, Armenia, France and Greece

1922: Egypt is granted nominal independence from the UK

 1922 to 1923 – French Mandate of Syria and Lebanon and British Mandate of

 Palestine come into power, Emirate of Transjordan is an autonomous region

under the Mandate for Israel

1924: Abolition of the Caliphate as part of Atatürk's Reforms

 1925: Sheikh Said rebellion of Kurds against Turkey

 1932: Kingdom of Saudi Arabia declared in unification of Najd and

 Hejaz

1934: Saudi-Yemeni War



A peace to end all peace

"When the British armed forces occupied the Middle East at the end of the war,

• the region was passive."

"In retrospect, one sees Britain undergoing a time of troubles everywhere in the

• Middle East between 1919 and 1921; but it was not experienced that way, at

least not in the beginning."

"The principal British fantasy about the Middle East – that it wanted to be

• governed by Britain, or with her assistance – ran up against a stone wall of

reality.

The Sultan and Egypt’s other leaders refused to accept mere autonomy or even

• nominal independence; they demanded full and complete independence, which

Britain – dependent on the Suez Canal – would not grant."

Middle East History in 1935-1954

1935 – Persia becomes Iran

• 1939 to 1945 – Mediterranean and Middle East Theatre

• 1946 – Emirate of Transjordan becomes Kingdom of Jordan (named Transjordan

• until 1948)

1946 – Kurdish Republic of Mahabad declared along with Azerbaijan People's

• Government, but defeated by Iranian military forces and dissolved

1947 – UN General Assembly proposes to divide Palestine into an Arab and

• Jewish state 1

1948 – Israel declares independence and Arab-Israeli war erupts

• 1952 – After a

• revolution in

Egypt the

monarchy is

overthrown

1953 – The

• coup d'état

in Iran

1954 – Gamal

• Abdel Nasser

becomes

president of

Egypt

ME History in 2000

2000 - Israeli troops leave Lebanon

 2001 - Members of al-Qaeda attacked sites in the U.S.

 2003 - The 2003 Iraq War

 2004 to present – Shia insurgency in Yemen

 2005 - Syrian troops leave Lebanon as a result of the Cedar Revolution

 2006 - The 2006 Israel-Lebanon conflict; Saddam Hussein executed for "crimes

 against humanity"

2010 - Arab Spring, which culminates in the Syrian Civil War with involvement of

 many regional powers to either support the Syrian opposition or the ruling

Ba'ath party

2014 - ISIS rises in Iraq and Syria; rival groups try to overthrow Syrian president

 2016 – Aleppo Battle

 2017 - Donald Trump

 2017 – Qatar Crisis

 2

What is the Middle East Today

System of Government

Nationalist and socialist revolutions achieved independence (Algeria, Tunisia,

• Lebanon) or overthrew monarchies (Turkey, Libya, Egypt, Iraq, Syria, Yemen,

Iran) during the 20th century.

Royal families survive in the GCC countries, Jordan and Morocco.

•

Gulf States divide – Sunni vs Shia

SUNNI

Ahl al-Sunnah = ‘People of the Tradition’

• 632 AD – followers of Abu Bakr, friend and father-in-law to Prophet Muhammad

• > 80% of global Muslim population

• > 90% in Egypt, Saudi Arabia, Jordan, United Arab Emirates

• Consideration to literal tradition Wahhabism)

• Role of Saudi: Moral and Economical Authority

•

SHIA Shiat Ali = ‘the party of Ali’

 632 AD – followers of Ali, cousin and son-in-law to Prophet Muhammad

 ~ 10% of global Muslim population

 Significantly in Iran, Iraq, Yemen, Lebanon

 Consider ayatollahs as agents of spiritual precepts



Salafi movement

The Salafi movement or Salafist movement or Salafism is an conservative reform

branch or movement within Sunni Islam that developed in Arabia in the first half of the

18th century.

The Salafist doctrine is centred around the concept of looking back to a prior historical

period in an effort to understand how the contemporary world should be ordered.

They reject religious innovation or bid'ah, and support the implementation of sharia

(Islamic law).

The movement is often divided into three categories: the largest group are the purists

(or quietists), who avoid politics; the second largest group are the activists, who get

involved in politics; the smallest group are jihadists, who form a tiny minority. 3

Wahhabism and Saud Family

Muhammad ibn ʿAbd al-Wahhab; (1703 – 22 June 1792) was a religious leader

• and theologian from Najd in central Arabia who founded the movement now

called Wahhabism.

Born to a family of jurists, Ibn 'Abd al-Wahhab's early education consisted of

• learning a fairly standard curriculum of orthodox jurisprudence according to the

Hanbali school of law.

Despite his initial rudimentary training in classical Sunni Muslim tradition, Ibn

• 'Abd al-Wahhab gradually became opposed to many of the most popular and

established Sunni practices, such as the veneration of saints and the visitation

to their tombs, which he felt amounted to heretical religious innovation or even

idolatry.

He formed a pact with a local leader, Muhammad bin Saud, offering political

• obedience and promising that protection and propagation of the Wahhabi

movement meant "power and glory" and rule of "lands and men

Global Firepower index

The Global Firepower (GFP) index weighs up more than 50 such factors,

• including the range of weapons in the arsenal, the amount of available

manpower and the abilities of the local defense industry, to come up with its

rankings of the most effective fighting forces globally.

Lower scores are best in the GFP index.

• There is a theoretical perfect score of 0.0000, although the closest any country

• comes to that is the U.S., which tops the rankings with a score of 0.0857.

Within the Middle East, there is a wide range of results, with Mauritania the

• worst performer by some distance, with a score of 4.2664 which is the fourth

worst out of the 130 countries ranked globally.

Further up the rankings, but still not high enough to make the cut for the

• regional top ten despite huge investments in recent years, is Qatar, with a score

of 1.8943. Also missing out from the higher echelons is Jordan, whose armed

forces have often been thought of as among the most capable in the region. It is

ranked at 13 in the MENA region, with a score of 1.2024.

US – Saudi Relations (WWII to the born of Petro-Dollar)

1931 – US Recognize Saudi – Standard Oil receive Authorization to Oil

• Exploration

1943 – Italy Bombed Bahrein – Saudi recognize the need for a defense

• February 14, 1945 — U.S. President Franklin Roosevelt signed an agreement

• with Saudi Arabia’s King Abdul Rahman bin Saud Al Saud aboard the USS

Quincy.

1951 First American Base

• 1971 – Collapse of the Gold Standard – US Seeks a tool to make the community

• to depend on the dollar again

1973 – Yom Kippur war. Israel Vs Arab. Saudi create the oil embargo.

• 1973 – Kissinger Deal:

• Transfer of Armco to Saudi

• US Pledge further military support

• Saudi commits to keep oil prices low

• Saudi agreed to sell oil only in USD and the same OPEC

•

1/1 - 1975 Commentary Magazine Robert W Tucker justified the

• invasion of Saudi from US.

1977 ESTABLISHMENT OF THE “PETRO-DOLLAR EQUATION”.

•

US - ISRAEL – SAUDI relations 4

The 1981 Israel operation- “Operation Opera”, a preemptive strike on

• nuclear reactor purchased by Iraq from France in 1976, took place with

the cooperation of Saudi Arabia, as the flight path was over Saudi

territory.

During the 2014 Israel–Gaza conflict, Middle East Eye editor David Hearst wrote

• an article claiming that Saudi Arabia was supportive of Israel's actions

in the conflict, and that officials from Mossad and the Saudi

intelligence agencies met regularly.

June 5, 2015 Director-General of the Israeli Foreign Ministry Dore Gold

• met Saudi General Anwar Majed Eshki at a conference in Washington,

when the latter presented his strategic MER plan. Key highlights of this

document are devoted to establishing cooperation between the Arab countries

and Israel and the need for joint efforts to isolate the Iranian regime.

28/09/2016 US Congress blocks Barack Obama's veto on law that would allow

• families to sue Saudi Arabia

US RELATION WITH SAUDI BASED ON COMMON INTEREST NOT COMMON

VALUE.

SAUDI changes

November 2017

Saudi Arabia Arrests 110 Princes, Including Billionaire Alwaleed Bin Talal

• Trump Tells Saudi King That He Supports Modernization Drive

• Saudis Intercept Missile Fired From Yemen That Came close to Riyad

•

October 2018

Saudi physicist and political dissident Mohammad al-Massari analyzes Turkish

• president Erdogan's speech on Tuesday.

Turkish President Recep Tayyip Erdogan said the "savage" killing of Saudi writer

• and critic Jamal Khashoggi inside Saudi Arabia's consulate in Istanbul was

"planned" days before his murder on October 2. Addressing the Turkish

parliament in Ankara, Erdogan raised several questions that he said still needed

answering from officials in Riyadh but stopped short of accusing the kingdom's

royals of playing any part in the assassination.

Gulf cooperation Council/Countries

The Cooperation Council for the Arab States of the Gulf is intergovernmental

• political and economic union consisting of all Arab states of the Persian Gulf,

except for Iraq founded 1981.

Its member states are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the

• United Arab Emirates.

All current member states are monarchies, including three constitutional

• monarchies (Qatar, Kuwait, and Bahrain), two absolute monarchies (Saudi

Arabia and Oman), and one federal monarchy (the United Arab Emirates,

composed of seven member states, each with its own emir).

There have been discussions regarding the future membership of Jordan,

• Morocco,

In 2011 proposal to transform the GCC into a "Gulf Union" with tighter

• economic, political and military coordination has been advanced by Saudi

Arabia, a move meant to counterbalance the Iranian influence in the region. 5

Objectives

Formulating similar regulations in various fields such

• as religion, finance, trade, customs, tourism,

legislation, and administration

Fostering scientific and technical progress in

• industry, mining, agriculture, water and animal

resources

Establishing scientific research centers

• Setting up joint ventures

• Unified military (Peninsula Shield Force)

• Encouraging cooperation of the private sector

• Strengthening ties between their people

• Establishing a common currency

• All GCG economies are Peg to the USD

• What Happens if GCC Members Drop the Dollar Peg?

• The GCC countries have reasons to drop their peg to the dollar. However, the

• GCC official policy is that members will retain the peg until the Council has

created a monetary union, similar to the European Union.

The peg fixes the exchange rate of each country currency to the dollar.

• When the dollar fell 40% between 2002 and 2014, it created an inflation rate of

• 10% in these countries.

It forced the price of oil and other commodities to increase.

• If they no longer peg to the dollar, they will not need to buy so many Treasuries

• to stabilize their exchange rate. That would cause the dollar to decline further,

causing more inflation in the United States.

On the other hand, it would also mean that oil is no longer priced in dollars.

• That could result in lower oil prices.

The ease of doing business – World Bank Group

Higher rankings (a low numerical value) indicate better, usually simpler,

• regulations for businesses and stronger protections of property rights

The ease of doing business index is meant to measure regulations directly

• affecting businesses and does not directly measure more general conditions

such as a nation's proximity to large markets, quality of infrastructure, inflation,

or crime. A nation's ranking on the index is based on the average of 10 sub-

indices:

1. Starting a business – Procedures, time, cost and minimum capital to open

a new business

2. Dealing with construction permits – Procedures, time and cost to build a

warehouse

3. Getting electricity – procedures, time and cost required for a business to

obtain a permanent electricity connection for a newly constructed

warehouse

4. Registering property – Procedures, time and cost to register commercial

real estate

5. Getting credit – Strength of legal rights index, depth of credit information

index

6. Protecting investors – Indices on the extent of disclosure, extent of

director liability and ease of shareholder suits

7. Paying taxes – Number of taxes paid, hours per year spent preparing tax

returns and total tax payable as share of gross profit

8. Trading across borders – Number of documents, cost and time necessary

to export and import 6

9. Enforcing contracts – Procedures, time and cost to enforce a debt

contract

10.Resolving insolvency – The time, cost and recovery rate (%) under

bankruptcy proceeding

GCC – Gulf cooperation council

GCC countries benefited from some of the world’s strongest growth rates since

• the financial crisis hit in 2008 mainly due to high oil prices.

Between 2008 and 2013, the real GDP of GCC countries grew by 24%, while that

• of the Eurozone shrunk by 2%.

Between 2008 and 2013, Qatar’s economy performed particularly strongly by

• 67% and that of Saudi Arabia by 30%.

Significant efforts for diversification of all GCC countries away from oil and gas

• revenues are creating substantial opportunities for foreign investors to set up

and provide their services in the region.

Qatar – the richest country in the world

Highest GDP per capita in the world in excess of $100k.

• Third largest gas proven reserves (885 tcf making up 13% of world reserves

• after Iran and Russia at 18% each), but by far the highest hydrocarbon reserves

and revenue per capita.

Largest exporter of LNG in the world since 2006.

• Substantial oil reserves as well (25 bl barrels).

• Growth drivers shift towards non-oil and gas sectors due to large-scale

• infrastructure spending as part of the build-up towards the 2022 World Cup in

Qatar and the 2030 Qatar National Vision investment plans.

Recently (January 2014) signed DTT with Cyprus.

•

Saudi Arabia – the largest economy in the Gulf

The largest economy in the Gulf (represents 25% of Arab GDP) and the 19th

• largest economy worldwide, which makes it a main player in the commercial life

of the world.

The largest oil reserves worldwide (267 bl barrels making 20% of world

• reserves).

Fifth largest proven natural gas reserves, but gas production remains limited.

• Huge unexploited shale gas reserves.

• Cheapest energy prices make it ideal location for projects that require energy

• consumption.

One of the world’s fastest growing economies with substantial opportunities for

• investments.

UAE – the most developed service economy in the Gulf

Successful economic diversification has made Dubai the regional center of

• finance, commerce, transportation and tourism.

Dubai’s successful bid to host the 2020 World Expo will compensate in the

• coming years for the slowdown in the oil sector and has already created an

economic boom with positive spillovers in Abu Dhabi and Sharjah.

Unlike Dubai that has oil about to run out, Abu Dhabi (the capital) is very oil

• reliant.

Abu Dhabi has taken important steps towards diversifying its economy towards

• tourism and financial services and is expected to grow faster than the UAE

average. 7

UAE Founded: 2 December 1971, The constituent emirates are: Abu Dhabi (which

• serves as the capital), Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and

Umm al-Quwain.

An absolute monarch governs each emirate; together, they jointly form the

• Federal Supreme Council.

One of the monarchs is selected as the President of the United Arab Emirates.

• 1970 Opening of Jabel Ali Port

• 1985 Emirates Airlines was Funded

• 1990 October - Sheikh Rashid Bin-Said Al Maktum dies and is succeeded by his

• son Sheikh Maktum Bin-Rashid Al Maktum as ruler of Dubai and UAE vice-

president.

1991 - UAE forces join the allies against Iraq after the invasion of

• Kuwait.

1991 July - Bank of Credit and Commerce International (BCCI) collapses. Abu

• Dhabi's ruling family owns a 77.4% share.

2000 Opening of DIC – Free Zone

• 2004 Opening of DIFC

• 2004 Opening of the Real Estate Market to foreigners

• 2009 Financial Crisis and