Kuwait signals resilience as Iran war tests Gulf nation’s economy

Kuwait Petroleum Corp.’s scorched waterfront headquarters has become a symbol of the Iran war’s impact on the Gulf nation.

The government is trying to reassure businesses that the country remains open for business despite the April drone strike that forced employees to relocate while operations continued, Bloomberg reports.

After seven months of conflict, Kuwait is focused on maintaining oil exports, electricity and desalination supplies and normal economic activity, including a $16 billion pipeline deal with North American firms.

The response reflects a resilience shaped by the 1990 Iraqi invasion, with many Kuwaitis seeing the latest conflict as another chapter in the country’s struggle to preserve its independence, the news agency said.

Weekly Circuit: Lockheed showcases F-35s + Endangered coral reefs

👋 Good Monday morning in the Middle East!

Gulf nations are pursuing new investment opportunities in 2023, buoyed by last year’s record growth in sovereign wealth funds that was fueled by high oil prices. Government funds in Saudi Arabia, Qatar, the UAE and other Gulf Cooperation Council members invested some $89 billion last year, enabling them to diversify their economies and extend their influence globally, Bloomberg found. Finding themselves flush with money has made funds such as Abu Dhabi’s Mubadala more discerning and assertive about what to do with their cash. “We’re an active, not a passive, long-term investor,” Mubadala Deputy CEO Waleed Al Mokarrab told the news agency. “That means we have control of when to invest, when to monetize, and through board representation, when to be a voice for change.”

Mulling the future in the frosty Alpine heights of Davos last week, government ministers, bankers and investors from the Middle East who attended the World Economic Forum projected optimism while advising caution. “I have not seen a confluence of positive factors coming together at the same time in at least the last 30 years [such as] the political stability, [high] oil prices, the human capital that has been developed,” Sunil Kaushal, Standard & Chartered Bank’s chief executive for Africa and the Middle East, said at the conference.

In the realm of foreign assistance, Saudi Arabia plans to be more assertive with aid recipients in neighboring countries and prod economic reform. “We used to give direct grants and deposits without strings attached, and we are changing that,” Saudi Finance Minister Mohammed Al-Jadaan told a Davos panel.

Israel, where one tech startup after another has announced new waves of layoffs as global tech funding dries up, is focused on controlling inflation, Bank of Israel Governor Amir Yaron said. “One has to understand that if you want a stable economy, you’ve got to have stable prices and that involves raising interest rates,” Yaron told CNBC in Davos. “Raising interest rates involves pain, especially for those who have taken mortgages, but it’s pain today in order to avoid pain in the future.”

The chilly mountain temperatures provided an opportunity to offer a Middle East alternative to Swiss hot chocolate. Outside the UAE pavilion, Davos delegates lined up at a roadside cart to receive small free cups of a steaming beverage billed as “Emirati hot chocolate.” The brew consisted of ghawa, green unroasted coffee, flavored with cardamom, saffron and Swiss chocolate. It was the creation of chef Nawal Al Nuaimi, who took a break from the Paper Fig restaurant she runs in the emirate of Sharjah to brave the cold in the Swiss Alps. “We wanted to make a drink that is a perfect fusion of Emirati and Swiss culture,” she told The National.

Welcome to The Weekly Circuit, where we cover the Middle East through a business and cultural lens. Read on for the stories, deals and players at the top of the news. Please send comments and story tips to [email protected].

Spread the word! Invite your friends to sign up.👇

TOP GUN

Lockheed showcases F-35 Israel sales in face-off with Boeing

As tensions with Iran simmered last November, Israeli Air Force officers turned up at Nevatim Air Base in the Negev desert to greet the delivery of three F-35 stealth fighter jets. The message was clear: Israel is equipped with the most advanced aerospace technology that can attack multiple sites in Iran if it escalates its nuclear program. The aircraft delivery by Lockheed Martin, which increased the size of Israel’s F-35 fleet to 36 planes, was also a message to Boeing and other competitors that it will battle across global markets for dominance in military aircraft sales. The Bethesda, Md.-based aerospace company is the biggest weapons manufacturer in the world, and is strengthening links with Israeli defense contractors as it fights to maintain its stature in the Middle East, Yaakov Lappin reports for The Circuit.

Large footprint: Heading that effort is Joshua Shani, a retired brigadier general in the Israeli Air Force, who has been CEO for Lockheed Martin’s operations in Israel for 30 years. The company has engaged in over $1 billion of offset deals through manufacturing agreements with Haifa-based Elbit Systems, state-owned Israel Aerospace Industries and other Israeli firms. Elbit produces helmet-mounted displays for the F-35s that project information onto a pilot’s visor. IAI produces wing parts for both the F-35 and F-16 jets. “Lockheed Martin has a large footprint in Israel,” Shani, 77, said in an interview with The Circuit.

Laser cannon: Besides the fighter aircraft, Lockheed Martin is working with state-owned Rafael Advanced Defense Systems on a variant of Israel’s Iron Beam laser air-defense system for the U.S. market. Iron Beam is a 100-kilowatt air-defense laser cannon, developed by Rafael in cooperation with Elbit, and the Israeli Defense Ministry. The defense system shoots down rockets, mortars and unmanned aerial vehicles at far cheaper costs than missile interceptors. The system was displayed for visiting U.S. President Joe Biden at Ben Gurion International Airport in July by former Prime Minister Yair Lapid and former Defense Minister Benny Gantz. Just last week, it was reported that Israel and the U.S. are in initial talks for the purchase of 25 Boeing F-15 fighter jets.

Gulf sales: Lockheed Martin is active throughout the Gulf region, where it sells Hercules C-130 transport aircraft to Saudi Arabia and maintains a Center for Innovation and Security Solutions in the United Arab Emirates. The company is expected to begin delivering new F-16 jets to Bahrain in 2024. Meanwhile, U.S. Air Force pilots stationed in the region, who fly F-16s and F-35s out of Al-Udeid Base in Qatar, regularly cooperate with Israeli Air Force pilots and often train together. With Israel’s entry into CENTCOM, the U.S. military command responsible for the Middle East, joint military drills with Gulf allies Bahrain and the UAE are becoming formalized. In October 2021, the Emirati air force chief, Maj. Gen. Ibrahim al Alawi, arrived in Israel for a groundbreaking visit to observe the IAF’s Blue Flag combat drill.

Born in Bergen-Belsen: Bridging the gap between the aerospace giant and the State of Israel is only the latest of Shani’s many exploits in a 58-year career. Born in 1945 to Holocaust survivors in Germany’s Bergen-Belsen displaced persons center, which had previously been a concentration camp, Shani came to Israel as a child. He received his pilot’s wings from Ezer Weizman, the commander of the IAF who went on to become Israel’s president. Shani’s skills were recognized in his selection for the IAF’s aerobatic flying team, but he was ultimately transferred to the transport flying division. Starting on the Boeing B377 Stratocruiser aircraft, which began flying in 1947, Shani rose through the ranks until he started flying the C-130 Hercules, which was the aircraft that in 1976 transported Israeli commandos to the Entebbe airport in Uganda to rescue more than 100 hostages taken captive by Palestinian and West German terrorists. Among those killed in Entebbe were three hostages and the ground unit commander, Yonatan Netanyahu, older brother of Israeli Prime Minister Benjamin Netanyahu. 

Click here to read the full story:

Share

UNDERSEA JUNGLE

Endangered Red Sea coral reefs connect Sudan and Israel

Less than two years ago, Israeli and European researchers took a Nazi-built naval ship that had been used to place mines, outfitted it with modern scientific equipment and set sail from the Israeli city of Eilat to the Port of Sudan to study coral formations. The journey, which took place just months after Israel and Sudan normalized relations through the Abraham Accords, was among the first instances of formal scientific cooperation between the two countries, Melanie Lidman reports for The Circuit. But in the middle of the night, just a day into the voyage, a huge crash threw the researchers out of bed. The ship had run aground on a coral reef off the coast of Sinai, causing extensive damage and canceling the survey, which was sponsored by the Swiss-founded Transnational Red Sea Center.

Strained relations: “It was scary,” Maoz Fine, a professor of marine ecology at Hebrew University in Jerusalem and the Interuniversity Institute for Marine Science in Eilat, told The Circuit. “We were stuck on the reef for a few hours before we were rescued by the Egyptian navy. We lost a lot of equipment and personal stuff, but… the biggest loss was not to continue the cruise to Sudan.” Although Sudan signed onto the normalization agreements in January 2021, and there have been some high-profile visits between the two countries, relations are still strained. While some European researchers flew to Sudan for a coral survey a few months later, Fine has not returned. Next month, the Transnational Red Sea Center, founded by the Swiss Federal Institute of Technology in Lausanne, plans to carry out the full coral survey that was planned for 2021. The European and Sudanese researchers will study why coral across the Red Sea has been much more resilient to rising ocean temperatures than other places around the world. Researchers believe that the Red Sea’s hardy corals might contain the secret to help struggling corals around the world, which have declined by 14% globally since 2009.

Psychedelic playground: Just below the surface of the Red Sea is a riot of psychedelic color, a Dr. Seuss-like jungle of more than 200 species of corals stretching down to the seafloor. Diving in the Red Sea is like entering a playground of underwater cliffs and caves and narrow canyons filled with corals that look like giant brains the size of a school bus, two-dimensional neon yellow oak trees, and bright orange tubes waving hello to the circulating schools of fish. The water in the Red Sea is exceptionally clear compared to other marine environments, which allows sunlight to penetrate farther down than other areas, so the color is spectacular at every depth. And, most enticing for researchers, the Red Sea’s vibrant corals have been barely perturbed by the rising sea temperature that is bleaching other corals around the world, causing them to lose their color and sometimes die.

Bleaching danger: “We think the northern Red Sea has the best chance of survival, because the corals are farther away from the bleaching threshold than any other locality in the world,” said Fine, who has spent decades studying the corals in the Red Sea. Until recently, he’s only been able to collaborate directly with Jordanian and Egyptian scientists. There are eight countries that border the Red Sea: Israel, Jordan, Saudi Arabia, Yemen, Djibouti, Eritrea, Sudan and Egypt. Cooperation across the entire Red Sea is essential for understanding why the coral are so resilient, Fine said. “If we don’t have a spread of monitoring and research along the Red Sea, we miss part of the picture,” he said. “There is a latitudinal gradient in temperatures, and of course there are local parameters like overfishing, so to have a full picture, we have to do it all along the gradient.” Since its founding in 2019, the Transnational Red Sea Center has run two research missions to Jordan and Djibouti.

Click here to read the full story:

Share

Share

Bahraini envoy pitches Israeli companies on operating in Gulf

Touting low operating costs and significant labor subsidies, Bahrain is reaching out to Israeli companies and pitching them on the idea of moving some of their operations to the tiny Gulf nation.

Ambassador Khaled Al Jalahma outlined his government’s intention to set up a regional hub that would cater to the needs of Israeli startups at a July 28 meeting in Tel Aviv with executives from more than a dozen companies.

Bahrain is both “willing and flexible” to help foreign companies get set up, said Yariv Becher, vice president for “innovation diplomacy” at Start-Up Nation Central, a nonprofit organization that promotes emerging Israeli companies, which arranged the meeting. Setting up in Bahrain, Al Jalahma told the executives, can also enable them to tap into broader international labor pools of engineers and other skilled employees.

The Israeli group was assured by the ambassador that “whatever is needed to accommodate the companies will be provided, whether it’s, first, information that they need, and second, help with regulatory issues,” Becher said. “Also to find the right model that would fit an Israeli startup so that it can be hiring tech engineers, or establishing some sort of manufacturing operation or doing clinical trials for healthcare companies.”

The ambassador told the Israelis that his country “is business friendly and our work attitude is tachles,” according to several people present, scoring points with the group by using a Yiddish word that means straight talk.

Israeli executives who attended the meeting said Al Jalahma made a good case for his country as a Middle East hub for sales and R&D. “We want to be very active in the region and Bahrain can be a gateway,” said Rotem Arad, director of business development for H2Pro, an Israeli company that produces so-called “green hydrogen” by splitting water into its component molecules and generating cleaner, renewable energy. Among H2Pro’s investors are Microsoft founder Bill Gates, Japan’s Sumitomo Corp. and Jerusalem-based OurCrowd.

Other companies at the Tel Aviv event, which was sponsored by the Bahrain Economic Development Board, were Addionics, Aleph Farms, Beewise, C2i Genomics, Finteka,, Papaya Global, Minute Media, Monday.com, Scorpio Labs, See Tree, Set Point and Trieye.

Bahrain and the United Arab Emirates both signed the Abraham Accords with Israel at a White House ceremony on Sept. 15, 2020. With a population of about 1.7 million, however, Bahrain’s economy is less than one tenth the size of the UAE’s, and its business potential for Israel has been overshadowed by its Gulf neighbor. One unique attraction, though, is Bahrain’s close proximity to Saudi Arabia – they’re linked by a 16-mile causeway – which has made it a gateway to the Gulf’s largest market.

Both countries are magnets for skilled workers from India and elsewhere in Asia, making them a useful source to help address Israel’s chronic shortage of engineers. Morocco, which signed the Abraham Accords three months after the two Gulf states, has presented itself as a source for employing engineers in Africa.

Becher said the ambassador, the first-ever envoy to Israel from the Gulf nation, was an enthusiastic salesman and promised to follow up  on any expressions of interest. “He is very active, willing and eager to get companies to go [to Bahrain],” Becher said. “He talks with them. They ask him specific questions. If he doesn’t have the answer, he writes it down. He’s gonna get back to them. He’s very well-connected.”

UAE set to become a global hub for NFTs and crypto

The United Arab Emirates has long been considered a desirable destination for doing business. Now, the Gulf nation appears poised to become a global hub in the burgeoning — but controversial — field of cryptocurrency. As more and more countries seek to ban or impose strict regulatory measures on cryptocurrency, the world’s largest crypto trading platform, the Chinese company Binance, is going all-in on the UAE. At the same time, a surge in the buying, selling and creation of digital assets called NFTs — or Non-Fungible Tokens — is also taking place in the UAE.

“The good news about the UAE is that they are welcoming this new technology versus places like America and China — America’s and China’s loss is the UAE’s gain,” Jamil Abu-Wardeh, director and co-founder of METKAF.com, a crypto learn-and-launch company in the UAE, told The Circuit. “The UAE has realized that you need to have the right people and technology in place to make this something you can monitor.”

At the end of December 2021, Binance struck an agreement with the Dubai World Trade Centre Authority (DWTCA), which is in the process of establishing an international virtual asset ecosystem. With the deal, Binance became one of the first cryptocurrency exchanges to join DWTCA’s new crypto center, which according to bitcoin.com, is set out to become a “comprehensive ecosystem for cryptocurrencies and providers of related services.” In its announcement, Binance said “it believes that Dubai’s new agenda will contribute to the growth of the global economy” and that through the agreement it would help advance “Dubai’s commitment to establishing a new international Virtual Asset ecosystem that will generate long-term economic growth through digital innovation.” 

Binance founder and chief executive Changpeng Zhao, photographed on July 12, 2021. (Singapore Press via AP Images)

On Dec. 21, 2021, Changpeng Zhao, the CEO of Binance, tweeted just one word — “Dubai” — after the company had signed the agreement with DWTCA. With a new worth of $96 billion, Zhao — also known as CZ — rivals tech titans such as Facebook’s Mark Zuckerberg and Google’s Larry Page, and is banking a lot on Dubai.

In November, Zhao bought his first home in Dubai in a show of support for a city he has described as “very pro crypto.” In December, Bloomberg reported that Binance was in talks with Dubai and Abu Dhabi with officials from the special economic zones Abu Dhabi Global Market, Dubai International Financial Centre and Dubai Multi Commodities Centre about its plans in the Gulf nation. 

A potential Binance headquarters in Dubai signals much about the booming crypto scene in Dubai, especially as it continues to face global regulatory pressure. Founded in China in 2017, Binance is striving to establish itself as a regulated and mature finance institution. Despite recent crackdowns by regulators across the globe, trading volumes at Binance soared between July and August, suggesting that it had little impact on the platform’s business.

While many countries have moved to ban the use of Bitcoin (BTC) and digital assets, UAE regulators have taken a different approach by pushing forward its vision to become a blockchain capital via specific frameworks designed to guide crypto businesses on how to operate within the Gulf nation’s laws.

“Binance controls 70 percent of crypto transactions, and the fact that it is being headquartered in the UAE is further proof of how the UAE is becoming a capital for crypto and digital assets,” said Abu-Wardeh.

As interest in blockchain and cryptocurrencies grows globally, it is increasing exponentially in the UAE as the global economy shifts to include less traditional modes of money transactions, such as digital wallets, that can hold both fiat currency and cryptocurrency. 

In May 2021, the DMCC Crypto Centre launched to promote cryptographic and blockchain technologies in Dubai. It is now home to over 100 organizations operating in the crypto space, with a further 900 having applied for licenses. There are more than 400 crypto businesses now operating in the UAE. 

Within the UAE’s welcome arms to crypto, a surge in the buying, selling and creation of NFTs is also taking place. NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. However, unlike cryptocurrencies, they cannot be traded or exchanged at equivalency because they are unique representations of real-world assets.

NFTs exploded onto the art scene in February 2021, when artist Michael Joseph Winkelmann, known as Beeple, sold his first NFT artwork at Christie’s auction for $69.4 million.

In November 2021, the percentage of people who own a non-fungible token (NFT) in the UAE was more than double the global average, according to a survey of 28,000 people conducted by finder.com.

According to the survey, which polled 1,004 people in the country, 23 percent of people in the UAE own at least one NFT. The average rate of NFT ownership around the world was found to be 11.7 percent. The UAE is ranked fourth-highest on the list, behind the Philippines (32 percent), Thailand (27 percent), and Malaysia (24 percent). After the UAE, Vietnam had 17 percent. On the other end of the spectrum, Japan had the smallest at two percent, followed by the U.K. and the U.S. with three percent, Germany at four percent, Australia and Canada at five percent. 

“I feel like the new generation coming out of school feels like they can’t play in the normal industries: banking, legal,” Liontree founder and CEO Aryeh Bourkoff said on a recent episode of Boardroom’s “Out of Office” podcast. “ Like, what’s the point of going through the normal school system? What’s the point of going through the normal banking programs, going into the stock market? Ten percent of people own 90% of stocks. And they’re thinking, what’s the point of entering a race that’s already been won? That is informing the mindset of creating NFTs: a new asset class; crypto: a new currency; Metaverse: a new internet world. It’s not just innovation, it’s creating new worlds.”

For the UAE’s 50th birthday celebrations last month, the country’s postal operator issued NFT stamps to celebrate the federation’s National Day.

Dubai Culture has also ventured into NFT art with its latest exhibition — a collaboration with NFT curatorial platform MORROW, which opened on Jan. 15 at the Al Safa Art and Design Library. Titled “50/50” to mark the UAE’s 50th anniversary, the exhibition includes works by Gigi Gorlova, Khalid Al Banna, Alia Al Gaoud, Dalal Ahmed and Marwan Shakarchi. 

“We founded MORROW in March 2021,” said co-founder and artist Jen Stelco, who was introduced to NFTs last year. “Just under a year ago, gallerists and traditional artists were hearing a little bit about NFTs, and it was scary.”

At the time, it seemed an individual had to either be a traditionalist or into NFTs — you couldn’t be both. It also seemed like there was no room for art galleries in the NFT sphere, as NFT artists upload their work onto virtual platforms, leaving no need for it to be exhibited physically. 

“Galleries were not on board with NFTs, but we love galleries, so we sought to find a way to bring galleries into NFTs by building a platform that is for galleries,” explains Stelco. 

Stelco and her co-founder Anna Seaman co-curated their first NFT exhibition for the digital art marketplace SuperRare in February 2021 called “Orchestra of Crickets.” 

“This was arguably the birth of the MORROW idea,” added Stelco. “It worked, and so we decided to go ahead.”

Also jumping on the digital art-cum-NFT bandwagon is Art Dubai. For the art fair’s upcoming 15th edition in March, it launched a new digital art section examining the context from which NFTs, cryptocurrency, video art, and virtual reality developed since the beginnings of digital art in the 1980s. 

“There is a thriving crypto scene in the UAE,” said Chris Fussner, curator of the new section and a web3 specialist and director of Tropical Futures Institute, a leading design strategy studio in Cebu, Philippines. that elevates early stage artists and web3 tech startups. “The main reason is mostly due to macro forces. By being so agile with their policy, especially in today’s world, the UAE government has looked at web3, blockchain and crypto as a good bet for taking on the future. Dubai is a forward-facing city and it has to look towards the future in order to remain competitive in today’s global landscape.”

An exhibition view of “50/50” by MORROW Collective at Al Safa Art and Design Library in Dubai, UAE. (Photo: Jen Stelco) 

Art Dubai’s new section will include a dedicated gallery section featuring international platforms working with NFTs as well as those that have been working with digital art since the 1980s. It will also include a space introducing visitors to the main players in the digital world, with explanations of where to buy bitcoin and trade in crypto, among other activities.

The latest and perhaps most symbolic representation of the UAE’s NFT boom comes in the form of the historic Pontifex carpet woven by Afghan women and gifted by Sheikh Mohamad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and deputy supreme commander of the UAE Armed Forces, to Pope Francis in September 2016 during a visit to the Vatican. The two leaders met to discuss the strengthening of existing diplomatic ties and the promotion of inter-religious harmony and tolerance. The Fatima Bint Mohammed Bin Zayed Initiative (FMBI) has replicated the physical version of the carpet to be gifted to whomever buys it as an NFT. 

It was sold on Jan. 14 for 300,000dhs ($82,000 USD). The MORROW collective helped create the NFT in collaboration with Zuleya, and sold the NFT through the NFTone platform.

The new owner will receive the physical replica of the carpet and an ornate gold frame on a 165-centimeter digital canvas with the NFT loaded onto it. The money will go to aid vulnerable families in Afghanistan. The charity sale of the carpet is in itself an expression of the UAE’s new digital landscape — as well as its aims for interreligious and inter-cultural tolerance.