The Industry of the Future & the Future of the Industry

Believe in the industry of the Future and the Future of the Industry was a Report to the French Government on the impact of the Fourth World Economic Revolution is believed to be as relevant to the new Algerian growth model global geostrategic challenges of 2030 as it is to that of France itself. 

Hoping for a concrete application and meaning for the well-being of Algeria, I have with few experts worked free of charge, on what I was and still am advocating the reasonable solution of deep reforms, as always taking into account the social reality.

Several international media have recently asked me about Algeria and its economic choices that affect its future sustainable growth, taking account all of the geostrategic changes that lie ahead between 2020 and 2030. My reply was that I have discussed the very topic between 2010 and 2016.  Would these be applied by the new Government, I wondered ?

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Believe in the industry of the Future and the Future of the Industry Is a Report to the French Government on the impact of the Fourth World Economic Revolution and is believed to be as relevant to the new Algerian growth model as global geostrategic challenges of 2030 as it is to that of France itself. 
Hoping for a concrete application and meaning for the well-being of Algeria, I have with few experts worked free of charge, on what I was and still am advocating the reasonable solution of deep reforms, as always taking into account the social reality.

Several international media have recently asked me about Algeria and its economic choices that affect its future sustainable growth, taking account all of the geostrategic changes that lie ahead between 2020 and 2030. My reply was that I have discussed the very topic between 2010 and 2016.  Would these be applied by the new Government, I wondered ?

So, instead of indulging in the installation of yet again other commissions or to rush to other expensive consultancies, I would with all due respect recommend to the Government to study so as avoid the mistakes of the past and in order to adapt it to the country’s reality the important and useful white paper titled “Believe in the industry of the future and the future of the industry”; a report addressed to the French Government (2017) in 84 pages based on a survey of French industry leaders.  It is as a matter of fact, the backbone of the economic program of the French president Emmanuel Macron (1).

This report first recalls that industrial history would without doubt that the formalization of the concept of industry of the future was born in Germany under the heading “industry 4.0”as of a will to drive upmarket the German machine tool industry in the face of competition from Asia. But with the gradual rise in power of the processing of industrial data and acceleration of innovations, the concept took a whole other dimension.

Meanwhile, the avalanche of new technologies that occurred in recent years has indeed an important potential for transformation and improvement of the performance of the industry which could make the assumption of re-industrialization of our country credible again.

The goal is to customize mass production that has not yet been reached, the ecosystems that will be the first to provide a “digital continuity” will also be those that help get production that much closer to the final customer.

The report is structured as follows:

Part I – Industry of the future: framing, context and issues

  1. Framing and context
  2. What economic issues?

Part II – The five challenges of the industry of the future:

  1. How to think the transition?
  2. L’ industry of the future must be thought of in terms of performance, not technology.
  3. Do not underestimate the emergency, nor the competitive pressure
  4. Make transformation a matter of skills and organization
  5. Adopt a broader vision of the value chain
  6. Place the internal operational model and the ecosystem management at the heart of transformation plans.

Part III – different degrees of mature businesses: an industry of the future with variable geometry

  1. Introduction and definition of the criteria taken into account
  2. Variable maturities
  3. Putting into perspective of the model

Part IV – threat or opportunity of an industry of the future

  1. What are the prospects for French industry?
  2. The French specificities
  3. What decisions are at stake? –

Conclusion

  1. Business leaders
  2. Public leaders
  3. A shared vision?
  4. Survey methodology and assumptions of the model.

It must be said that the majority of the experts including those of the Economic and Social Council of Algeria use to always say the opposite of what is proposed today by the Government. How then can they be now that credible?

In several of my contributions from several years ago, I drew the attention of the Government that hydrocarbons price will be low and for a long-time; refer my conference before the Prime Minister and the members of the Club of the Pines of Algiers on November 4, 2014 and before the senior executives of the National Security Department on May 15, 2015

I elaborated on the policy of widespread subsidies that together with current industrial policy could lead Algeria right against a brick wall.  Short of ideas, the country must avoid living on the illusion and outdated patterns of development, such as conventional mechanical industries of which car assembly of very low capacity, highly capital-intensive with Algeria taking on all costs with the rule of 49 / 51% is at the forefront.

Without a serious shift in economic policy, based on good governance and the development of knowledge, Algeria may end up deadlocked by 2018/2020 with the risk of depletion of its foreign exchange reserves when foreign operators, not getting remunerated, may decide to leave it altogether.

As far as the “emergence of an economy” and a globalized product of development of today’s capitalism is concerned, the process is not yet complete, and since the end of the Cold War and the disintegration of the Soviet Union, questioning on the one hand of the ability of nation States to do in the face of these changes.

This is no longer the time where the wealth of a Nation identified with its major firms, large firms having been modelled on military organization and have been described with the same terms: chain of command, job classification, scope of control with their leaders, operating procedures and standard guidelines.

All jobs were defined in advance by rules and pre-established responsibilities. As in the military hierarchy charts determined internal hierarchies and great importance was attached to the permanence of control, discipline and obedience. This rigour was necessary in order to implement plans with accuracy to benefit from economies of scale in mass production and to ensure a strict control of prices in the market.

As in the operation of the army, strategic planning required a decision on where you want to go, followed up by a plan to mobilize the resources and troops to get there. In the totally outdated mechanical era, the production was guided by predetermined objectives and sales by pre-determined quotas. The innovations were not introduced by small progress, but by technological leaps due to the rigidity of the organization.

At the top, large bureaucracies occupied the rectangle of the chart, halfway up middle managers and right at the bottom the workers. Education, from elementary to upper education through high school, was only a reflection of this process, orders being transmitted by the hierarchy, the schools and universities in large sizes to ensure economies of scale as well.

These analyses have also been widely developed between 2012 and 2017 in the Algerian press and internationally under the titles as shown below.

A new organization is currently taking place showing the limits of the old organization with the emergence of new dynamic sectors in order to adapt to the new global configuration. We are seeing the successive passage of the so-called Taylorism organization marked by integration, the Divisional, matrix organization that are intermediary organizations and finally to the recent organization in networks where the firm focuses its strategic management on three segments: research and development (heart of value added), marketing and communication and under the Treaty all the other components.

And with more and more oligopolistic organizations of a few companies controlling the production, finance and marketing networks are no more national. Even those said small and medium-sized enterprises connected as networks of subcontractors to large ones could be among these.

Jobs in current production tend to disappear involving mobility of workers, the widespread use of temporary employment, and therefore a permanent flexibility of the labour market with the permanent recycling training called upon in the future.

Thus, other types of jobs appear including the breakthrough of producers of symbols whose conceptual value is higher than the added value from the classic economies of scale, questioning the ancient theories and economic policies inherited from the mechanical age era like the old political “industrialising industries” based on the model of the old Soviet Union while the 21st century is characterized by the dynamism of large firms but especially those linked in networks to them SMIs/SMEs all devoting a good portion of their budget to research and development.

With the predominance of services that have a more and more merchant character contributing to the increase in the added value, the firm turns into a global network, and it is impossible to distinguish between individuals affected by their activities that as a consequence would be a large, diffuse group, around the world. In this global village, there exist only consumers/producers cross networks.

This will have implications for the future organization at all political, economic and social systems levels.

Finally, this analysis raises the issue of national security. Since 2012, I did not do enough warning the Government on the inconsistency of its policy of subsidies, the inconsistency of its industrial policy and against a policy of hidden import of car assembly plants as well as other industrial segments living off a certain rentier situation.

Two lessons are to be learned.

  • First, the money capital does not create wealth; it is only a means to an end. In fact it’s the work and intelligence that are the source of permanent and sustainable wealth of a Nation.
  • Second, globalization is a reality and time is never caught back in economics. There is urgent need for a strategic vision as an adaptation to this unstable and turbulent world, a Nation that does not move forward, would necessarily step back.

I would not remind enough that the engine of any development process lies also in research and development, and that without the integration of the knowledge economy, no industrial and economic policy would have a future in the 21st century, where technological innovations would be inevitably have a constant changing feature.

Algeria would be best in investing in democratic institutions than in segments where it can temporarily have some comparative advantages: agriculture, tourism major deposit, new technologies and in sub segments of industrial sectors taking into account the profound technological changes. I would suggest a Monitoring Committee to coordinate the investment policy which must synchronize with the dialectical relationship between the complementary roles of the State and the market, put an end to the present distortions which may cause losses, due to lack of visibility and strategic coherence. ademmebtoul@gmail.com

(1) « Croire en l’Industrie du futur et au futur de l’industrie » as translated by “Believe in the industry of the future and the future of the industry” – white paper – report to the French Government – (2017) in 84 pages – A survey of french industry leaders with (1) to Ernst Young by Opinion Way between September and October 2016 directed by Alain Galloni and Olivier Lluansi associate, Ernst & Young Advisor (Paris 2017) . The same report in PDF format is at

http://www.ey.com/Publication/vwLUAssets/ey-resultats-enquete-industrie-du-futur/$FILE/ey-resultats-enquete-industrie-du-futur.pdf

$1 billion project of Dubai’s Largest Indoor Theme Park

Of all the achievements that Dubai could claim to have realised since or after the formation of the United Arab Emirates, is this semi-loony $1 billion project of Dubai’s Largest Indoor Theme Park that is not really such a loony one.  It may however seem so at first glance but at a closer look, the city has dramatically changed since dredging of what is called its “creek”, that is a finger of the Gulf sea water coming into the desert shore land.  What followed after that is a succession of more and more amazing developments as decidedly helped by the unprecedentedly ginormous inflow of petrodollars and the accompanying expatriates to service them. 

It would be interesting to follow up on the current Qatar crisis as intimated in our Qatar crisis impacts on the rest of the MENA region and its direct effect on such a project.

Of all the achievements that Dubai could claim to have realised since or after the formation of the United Arab Emirates, is this semi-loony $1 billion project of Dubai’s Largest Indoor Theme Park that is not really such a loony one.  It may however seem so at first glance but at a closer look, the city has dramatically changed since dredging of what is called its “creek”, that is a finger of the Gulf sea water coming into the desert shore land.  What followed after that is a succession of more and more amazing developments as decidedly helped by the unprecedentedly ginormous inflow of petrodollars and the accompanying expatriates to service them. 
It would be interesting to follow up on the current Qatar crisis as intimated in our Qatar crisis impacts on the rest of the MENA region and its direct effect on such a project.
We feature this article of India Times written by Anjali Bisaria and published on July 8, 2017. 

Dubai’s Largest Indoor Theme Park Costs $1 Billion & Is As Big As 28 American Football Fields

When it comes to building the world’s ‘firsts’ buildings, hotels, or artificial islands, trust Dubai to be ahead of the game, all the damn time!

For Dubai is now home to the globe’s first largest indoor theme park – IMG Worlds of Adventure. Sprawled across 1.5 million square feet with a capacity to hold 30,000 visitors at a time, the $1 billion theme park threw open its doors on August 31, 2016, reports The Independent.  

IMG WORLDS OF ADVENTURE

The size of the theme park equals 28 American football fields which also houses a 12-screen cinema complex with IMAX screen. Its opulence is Dubai’s yet another promise of becoming the country’s entertainment capital.

And by 2019, IMG Worlds of Adventures is expected to see a rise in its revenues by 78% to $837 million!

IMG WORLDS OF ADVENTURE

The park is divided into four zones – MARVEL, Cartoon Network, Lost Valley – Dinosaur Adventure, and IMG Boulevard. There are 22 rides and attractions including the Velociraptor roller-coaster that speeds up to 100 km/h in 2.5 seconds.

IMG WORLDS OF ADVENTURE

IMG WORLDS OF ADVENTURE

Apart from this, visitors can check out 25 shops and 28 restaurants and bars with prices soaring through the sky. Imagine buying a pen worth 115,000 dirhams, i.e., $31,300!

A land that also sees soaring temperatures, this indoor theme park is both a respite and a delight.

 ANJALI BISARIA

JULY 08, 2017

Latest Diplomatic Crisis impacts Dubai City

The Gulf countries plunging into their latest diplomatic crisis impacts Dubai city. This crisis by all accounts would definitely have some bearing on that city that tied its future to that of being a centre for the whole and detail retail trade not only for the GCC countries. It is and by far the main point of convergence of all world imports destined for Qatar. All goods whether from Europe, the Americas and / or the Asian sub-continents would automatically transit by Dubai’s Jebel Ali. Up to now that is. The analytics of such blockade of Qatar will shortly be available if however these were not to be willfully distorted for those obvious reasons. We will dwell here on oil and gas related exports that also but only in part pass through some GCC ports before leaving the Gulf.
Meanwhile what are the consequences of the above mentioned blockade of Qatar on Dubai? For instance on its ports and airports. What about its banking system. Could we take the proposed article as some sort of an answer? Although it is that of an expert, we believe that the Qatar boycott has not been factored in yet and if that were to be, it could not affect Dubai but possibly the whole of the Gulf countries . . . .

The Gulf countries plunging into their latest diplomatic crisis impacts Dubai city. This crisis would by all accounts and definitely have some bearing on that city that tied its future to that of being a centre for the whole and detail retail trade not only for the GCC countries but for the whole region.  It is and by far the main point of convergence of all world imports destined for Qatar.  All goods whether from Europe, the Americas and / or the Asian sub-continents would automatically transit by Dubai’s Jebel Ali.  Up to now that is.  The analytics of such blockade of Qatar will shortly be available if however these were not to be willfully distorted for those obvious reasons. We will not dwell here on oil and gas related exports that also but only in part pass through some GCC ports before leaving the Gulf.
Meanwhile what are the consequences of the above mentioned blockade of Qatar on Dubai?  For instance on its ports and airports.  What about its banking system.  Could we take the proposed article as some sort of an answer?  Although it is that of an expert, we believe that the Qatar boycott has not been factored in yet and if that were to be, it could not only affect Dubai but possibly the whole of the Gulf countries.

Dubai’s retail sector faces short-term hiccups as rents fall

Landlords offer tenant-friendly terms to retain them, says JLL.

Dubai’s retail sector will continue to face challenges in the short-term, but long term prospects are bright, according to JLL.

In its latest Dubai real estate report, the global consultancy said the sector witnessed single digit rent declines in the second quarter of the year, confirming the fact that the market remained under pressure.

“While the short-term picture for retail in Dubai is challenging due to the slowdown in the rate of economic growth and the strength of the US dollar, the medium to longer-term picture remains more positive,” it said.

Given the high supply, landlords continued to adopt approaches to leasing that are favourable to tenants, in order to retain them, JLL said.

According to the report, only one neighbourhood retail mall was completed in Jumeirah Islands, adding 2,800 square meter (sqm) of gross leasing area (GLA). Nearly 220,000 sqm of GLA is currently under construction that is expected to be completed by year-end, with The Pointe on Palm Jumeirah and Marsa Al Seef in Al Hamriya expected to contribute more than 50 percent of the total.  Dubailand will add nearly 40,000 sqm of GLA which is scheduled to be finished in the second half.

JLL said Dubai undoubtedly is the leading retail location in the Gulf region, with 3.39 million sqm of retail malls, ahead of other major cities such as Abu Dhabi (2.62 million sqm), Jeddah (1.21 million sqm) and Riyadh (1.17 million sqm). On an international scale, Dubai has approximately twice as much retail space per capita as London, indicating its reputation as a major international retail hub.

The consultancy said delays may occur given the soft market conditions.

“The pressure to complete and hand over projects is expected to intensify in the coming two years, in anticipation of the potential boost to retail spending around Expo 2020,” the consultancy said.

The retail sector, JLL said, continues to evolve, with retail brands and centres merging both online and offline experiences as lines between bricks and mortar and online retailers blur.

In the second quarter, the Dubai Chamber of Commerce and Industry said it expected e-commerce to account for 10 percent of Dubai’s total retail trade in the near future.

 

 

How to improve the Climate of Business in Algeria

This brief analysis is a synthesis of the Doing Business Report 2017 data compiled upto and as of June 1, 2016. The indicators are used within the context of Algeria to analyze economic outcomes of countries of the same calibre and identify the regulatory reforms of all legislation that are required so as the economies where they have been adopted and the reasons for which they have been implemented have born fruits. The question that such report brings to mind would therefore be about how to improve the Climate of Business in Algeria and how to go about it.  

In the meantime, the above mentioned report findings were that :

Starting a business
Algeria made starting a business easier by eliminating the minimum capital requirement for business incorporation.

Dealing with construction permits
Algeria made dealing with construction permits faster by reducing the time to obtain a construction permit.

Getting electricity
Algeria made getting electricity more transparent by publishing electricity tariffs on the websites of the utility and the energy regulator.

Paying taxes
Algeria made paying taxes less costly by decreasing the tax on professional activities rate. The introduction of advanced accounting systems also made paying taxes easier.

This brief analysis is a synthesis of the Doing Business Report 2017 data compiled upto and as of June 1, 2016. The indicators are used within the context of Algeria to analyze economic outcomes of countries of the same calibre as first reviewed back in October 2016 and identify the regulatory reforms of all legislation that are required so as the economies where they have been adopted and the reasons for which they have been implemented have born fruits. The question that such report brings to mind would therefore be about how to improve the Climate of Business in Algeria and how to go about it.  
In the meantime, the above mentioned report findings are excerpted below:
  • Starting a business
Algeria made starting a business easier by eliminating the minimum capital requirement for business incorporation.
  • Dealing with construction permits
Algeria made dealing with construction permits faster by reducing the time to obtain a construction permit.
  • Getting electricity
Algeria made getting electricity more transparent by publishing electricity tariffs on the websites of the utility and the energy regulator.
  • Paying taxes
Algeria made paying taxes less costly by decreasing the tax on professional activities rate. The introduction of advanced accounting systems also made paying taxes easier.

 The authors state at the outset that there are some important areas not covered by the Doing Business report and that it does not evaluate all of the factors such as policies and institutions that affect the quality of the framework of the economic activity of an economy or its competitiveness. It does not for example,  consider the macroeconomic stability, the development of the financial system, the size of the market, the frequency of bribery and corruption, nor the quality of the workforce, deadlines and costs as related to the logistics of the import and export of goods, indicators on the cross-border trade, or the cost of international transport as well as the effect of roads, rail, ports and inadequate communication systems that can have on operating a business and their consequences in terms of competitiveness.

However, if this report does not evaluate and/or is not intended to assess the benefits of all social and economic programs funded by tax revenues, assessing the quality and efficiency of the business regulation is something to take into account in the debate on the burden on enterprises regulatory objectives, which may vary from one economy to another.

The score awarded to each country on entrepreneurship is based on the following criteria.

– Procedures, deadlines, costs and supply minimum capital required to create a limited liability company.

– Obtaining a building permit:-procedures, time and costs related to execution of all required formalities and controls of quality and security in the system of obtaining a building permit.

– Connection to electricity: procedures, time and costs of connection to the electric network, electricity supply reliability and transparency of prices.

– Transfer of property: procedures, delays and costs of ownership transfer, and quality of the land administration system.

– Getting credit: laws on the pledging of movable property and credit information system.

– Protection of minority investors: rights of minority shareholders in transactions between related parties and corporate governance.

– Taxes and payments: payments, delays and total pay for a business applying all tax legislation as well as procedures subsequent to its declaration.

– Cross-border trade: delays and costs associated with the export of a product with a comparative advantage.

– Performance of contracts: delays and costs of settlement of a trade dispute and quality of court proceedings.

– Insolvency regulation: delays, costs, results and recovery rates in insolvency cases and solidity of the legislation in this area.

– Regulation of the labour market: labour regulation flexibility and aspect of the quality of employment.

 

The three main conclusions of this report are:

  • Europe and Central Asia have improved significantly more commercial regulatory over time than any other region.
  • It is in the area of entrepreneurship that economies have improved their regulatory processes the most.
  • The economies in which it is easy to create a business tend to have lower levels of inequality in income on average.

 

Doing Business 2017 in its 14th Edition gives the following classification:

The first ten are :

1

2

3

4

5

6

7

8

9

10

New Zealand with a note of

Singapore

Denmark

Hong Kong

South Korea

Norway

UK

USA

Sweden

Mecedoine

87.01

85.05

84.07

84.21

84.07

8282

82.45

82.13

81.74

80.87

 

Classification of the major countries. 

17.

22.

25.

28.

29.

32.

34.

40.

42.

50.

Germany

Canada

Portugal

Netherlands

France

Spain

Japan

Russian Federation

Belgium

Italy

79.87

78.57

77.40

76.38

76.27

75.73

75.53

73.00

73.19

72.25

 

Ranking of middle  of the pack countries

63

66

68

69

74

77

78

83

94

102

116

120

122

123

130

Bahrain

Oman

Morocco

Turkey

South Africa

Tunisia

China

Qatar

Saudi Arabia

Kuwait

Argentina

Iran

Egypt

Brazil

India

68.44

67.73

67.50

67.19

65.50

64.89

64.28

63.66

61.11

59.55

57.45

57.45

56.64

56.53

55.27

Ranking of countries at lower grades than 50 requiring deep reforms

149

150

155

156

159

160

164

165

169

173

Bolivia

Niger

Bénin

Algéria

Ethiopia

Mauritania

Gabon

Iraq

Nigeria

Syria

49.85

49.57

48.52

47.76

47.25

47.26

45.88

45.61

44.63

41.43

 

Ranking of countries with less than 40 points

180

184

186

187

188

189

190

Tchad

Républic of Congo

South Sudan

Venezuela

Libya

Erythrea

Somalia (last)

39.07

39.28

33.48

33.37

33.19

28.05

20.29

 

In summary, the deplorable ranking at the 159th of Algeria that belies the euphoric statements of the former Minister of Industry having induced on the line the country’s authorities, and which I had been cautioning against on several occasions the Government, does not reflect the country’s significant potential.  There is no more a justifying speech that in anyway no-one believes in, therefore the only way is to go towards the necessary reforms to improve the business climate that primarily depend on Algerians themselves.

This ranking together for that matter many others would explain the collapse of the productive fabric and the importance of all hard currency services outflow and legal capital transfer that annually amounted between 2010 and 2016 to $14 / $15 billion to which the value of imports of goods need to be added for the calculation of currency.  These were $60 billion in 2013 and were brought back to $45 / $47 billion in 2016 and are currently extrapolated to be around $45 / $46 for 2017 giving approximately a total of $60 billion still less than what could paralyze the entire economic machine whose integration rate does not anyway exceed 15%.

Let us remember that the reserves of $114 billion as per the official data of both the IMF and the Bank of Algeria as at December 31, 2016. The Governor before the National Assembly on April 12, 2017 gave the amount of $109 billion as at end of March 2017 and as recorded by the official press agency APS.

With the deficit of the balance of payment as shown, during the first five months of 2017 customs statistics and those of the Office of National Statistics, reflecting an outflow of currency between April, May and June 25, 2017, the amount should be less than $109 billion on July 1, 2017.

According to this report, which gives a central place to the analysis of the informal sphere, an effective regulation would facilitate access of companies to the market, creation of jobs, productivity and the improvement of the levels of economic development in general; each new reform of the regulation is associated with a substantial increase in economic growth and thus improvement of the standard of life of the citizens. This report points out to what Haidar & Hoshi (2015) made 31 recommendations to achieve this goal for reform, classified into six different categories, depending on whether the reform is administrative or legal, and according to the level of potential resistance at the political level. 

By Dr Abdulrahmane Mebtoul, Mobile +213 0661552928- fax +213 041415837- +213 041446148

Armenia and Turkey 2 neighbouring countries of the MENA

Robert Fisk once said in The Independent  of Tuesday March 9, 2010 the following:  Jemal Pasha, one of the architects of the 1915 genocide, and – alas – Turkey’s first feminist, Halide Edip Adivar, helped to run this orphanage of terror in which Armenian children were systematically deprived of their Armenian identity and given new Turkish names, forced to become Muslims and beaten savagely if they were heard to speak Armenian. The Antoura Lazarist college priests have recorded how its original Lazarist teachers were expelled by the Turks and how Jemal Pasha presented himself at the front door with his German bodyguard after a muezzin began calling for Muslim prayers once the statue of the Virgin Mary had been taken from the belfry. Nowadays, would both Armenia and Turkey 2 neighbouring countries of the MENA live side by side and transcend the past.

Always on the same subject, The Economist of June 26, 2017 published this article on possibly one of the most dramatically lived trauma that the Middle East ever experienced and did never since then get over it.  Amongst all that is currently going on in this part of the world, it is worth mentioning that after all happy ending such as Reverse diaspora does exist and this is the story with our compliments to the author and thanks to the publisher.

Robert Fisk once said in The Independent  of Tuesday March 9, 2010 the following:  Jemal Pasha, one of the architects of the 1915 genocide, and – alas – Turkey’s first feminist, Halide Edip Adivar, helped to run this orphanage of terror in which Armenian children were systematically deprived of their Armenian identity and given new Turkish names, forced to become Muslims and beaten savagely if they were heard to speak Armenian. The Antoura Lazarist college priests have recorded how its original Lazarist teachers were expelled by the Turks and how Jemal Pasha presented himself at the front door with his German bodyguard after a muezzin began calling for Muslim prayers once the statue of the Virgin Mary had been taken from the belfry. Nowadays, would both Armenia and Turkey 2 neighbouring countries of the MENA live side by side and transcend the past.
Always on the same subject, The Economist of June 26, 2017 published this article on possibly one of the most dramatically lived trauma that the Middle East ever experienced and did never since then get over it.  Amongst all that is currently going on in this part of the world, it is worth mentioning that after all happy ending such as Reverse diaspora does exist and this is the story with our compliments to the author and thanks to the publisher.

Syria’s Armenians are fleeing to their ancestral homeland

The war may bring an end to a Christian minority’s century-long story

Europe

WHEN war broke out in Syria in 2011, some of the wealthier families from the country’s Christian Armenian minority decamped to Yerevan, the Armenian capital, where they rented luxury flats on the city’s Northern Avenue. It felt, some would later say, as though they were on holiday. The government allotted them space in a local school, where Syrian teachers who had fled as refugees continued to instruct their children using the Syrian curriculum. It took some time for it to dawn on them that they might never go home.

Syria’s six-year-old civil war has forced more than 5m of its citizens to seek refuge outside their country. In 2015-16 hundreds of thousands trekked through the Balkans, seeking safety in Europe. But hardly any of Syria’s Armenian minority took this route. Instead, many went to Armenia. With its own population shrunken by emigration (falling from 3.6m in 1991 to 3m today), Armenia was happy to welcome as many Syrian Armenians—most of them educated, middle class and entrepreneurial—as would come.

Before the war some 90,000 ethnic Armenians lived in Syria, two-thirds of them in Aleppo. Many were descended from ancestors who had fled their homeland in 1915, escaping systematic Ottoman massacres and ethnic cleansing. For most of them, the civil war has put an end to a century-long story. Hrair Aguilan, a 61-year-old businessman, invested his life savings in a furniture factory in Aleppo just before the war, only to see it destroyed. Now he is in Yerevan to stay. “It lasted a hundred years. It is finished,” says Mr Aguilan. “There is no future for Christians in the Middle East.”

No more than 30,000 Syrian Armenians are believed to remain in Syria. Many dispersed to Lebanon, Canada, Turkey, the Persian Gulf states and elsewhere. The rest, up to 30,000, went to what they regard as the motherland. (Some have since moved on to other countries.) The wealthy, who found it easy to move, came first. Others tried to wait out the war in Syria, fleeing only once their means were exhausted. They arrived in Armenia with nothing.

Vartan Oskanian, a former foreign minister of Armenia who was born in Aleppo, says many of the refugees have started small businesses. In Syria, members of the Armenian minority tended to be skilled professionals or artisans; they were known as jewellers, doctors, engineers and industrialists. Native Armenians are delighted by the restaurants opened by the newcomers, who have brought their much spicier cuisine to a country where food (and almost everything else) has long been influenced by the bland flavours of Russia.

Almost all of the refugees have ended up in Yerevan, apart from some 30 families from a farming area, who were resettled in Nagorno-Karabakh, an Armenian-held territory that is disputed with Azerbaijan. Some young men who had fought in the Syrian army have volunteered to serve on the front lines of that conflict, but many more young Syrian Armenians hold off on asking for Armenian citizenship so that they do not have to do military service.

Vasken Yacoubian, who once ran a construction company in Damascus, now heads the Armenian branch of the Armenian General Benevolent Union (AGBU), a global charity. He says refugees are still arriving from Syria, if no longer in large numbers. A few have even gone back, especially those with property (if only to try to sell it). Some Syrian Armenians argue that they have a duty to return: their diaspora forms an important branch of Armenian civilisation, and must be preserved.

Yet Mr Oskanian says those who have returned to Syria see little future for the community there. In Syria, Armenians have staunchly backed the regime of Bashar al-Assad, which has protected them from persecution by Muslim extremists. But that government controls only a portion of Syria’s territory, and Mr Assad’s fate in any peace deal is uncertain. Meanwhile officials at Armenia’s Ministry of the Diaspora, which was caught unprepared by the influx of Syrians, are taking no chances. They are making contingency plans in case a new conflict erupts in Lebanon, sending thousands of Lebanese Armenians their way.

 

A new Saudi Arabia will gradually be emerging

A new Saudi Arabia will gradually be emerging as this seems to be the word that is the leitmotiv of the young and fresh at the helm prince MbS (Mohammed bin Salman).  This latter’s elevation to heir to the crown at the age of 31 that was already showing in quiet and unheard of boldness is now blatantly in full sight.  Would this possibly generalise to a whole generation of leaders in the country’s life and take it towards modernity?  Would a radical reform program as embodied in the prince’s “Vision 2030” generate a new self-sufficient country living in good harmony with its neighbours and for this purpose would it need all that accumulated wealth from oil related revenues since its advent in the 30s to be ploughed in to generate conditions that are perhaps propitious to another vision?  Or would all this just lead to more clinging to Tradition, survival endurance and frictions of all sorts as restricted OPEC oil output and US shale oil production seem to be the other leitmotiv of the time.

A new Saudi Arabia will gradually be emerging as this seems to be the word that is the leitmotiv of the young and fresh at the helm prince MbS (Mohammed bin Salman).  This latter’s elevation to heir to the crown at the age of 31 that was already showing in quiet and unheard of boldness is now blatantly in full sight.  Would this possibly generalise to a whole generation of leaders in the country’s life and take it towards modernity?  Would a radical reform program as embodied in the prince’s “Vision 2030” generate a new self-sufficient country living in good harmony with its neighbours and for this purpose would it need all that accumulated wealth from oil related revenues since its advent in the 30s to be ploughed in to generate conditions that are perhaps propitious to another vision?  Or would all this just lead to more clinging to Tradition, survival endurance and frictions of all sorts as restricted OPEC oil output and US shale oil production seem to be the other leitmotiv of the time.
In any case, lots of speculative writings are coming to enlighten us on the situation of the country.  Bloomberg’s Donna Abu-Nasr  and Zainab Fattah and published on June 23, 2017.

Saudi Arabia’s New Heir Leads Revolution of Powerful Millennials

The youngest crown prince in living memory represents a broader youth revolution in Saudi Arabia.

While the elevation of Prince Mohammed bin Salman, 31, as heir to the throne this week caught the attention, some of his cousins and relatives whose fathers held key posts in past decades have been installed in the royal court as advisers, sent to the U.S. and Europe as ambassadors and appointed to government institutions in Riyadh.

Together, they are some of the world’s most powerful millennials, increasingly in control of a Gulf kingdom where two-thirds of the population is under 35. The challenge will be to sell Prince Mohammed’s “Vision 2030,” his road map to a post-oil economy that will require social upheaval and financial sacrifices never experienced by this generation.

“Having young princes at the helm, who understand young people’s needs, is the message being sent,” said Sanam Vakil, associate fellow at Chatham House’s Middle East and North Africa program. “Perhaps the princes can talk in the same language as the youth and listen to their concerns so they would be able to address them in more effective ways.”

Prince Mohammed is likely to be among his country’s youngest kings with a potential for his rule to last half a century. He joins a roster of youth wielding more power elsewhere. French President Emmanuel Macron is 39, Jared Kushner and Ivanka Trump in the U.S. are 36 and 35 and Ireland’s new prime minister is 38. Then there’s North Korean dictator Kim Jong Un. He’s thought to be around 33.

The decision by the prince’s father, King Salman, to pick some of his younger children as well as grandsons and great-grandsons of the kingdom’s founder is meant to ensure a smooth transition in the royal household. It also comes under the watchful eye of the older traditionalists.

Saudi Arabia is going through arguably the biggest changes since the kingdom’s founding in 1932. The new crown prince is aiming to effectively tear up a lot of the social contract that’s kept the royal family in power to create jobs and modernize the economy. It was one of state handouts in return for adherence to an autocracy underpinned by an ultra-conservative brand of Islam.

The appointments are a way to protect Prince Mohammed when he becomes monarch, said Nabeel Khoury, a former U.S. State Department official who is now non-resident senior fellow at the Atlantic Council, an American organization focusing on foreign affairs.

It avoids the dangers of the old guard “using their old contacts against the new king,” he said. “The transition to youth is a good story,” but the way it was done “does not necessarily imply good things for the future of the country,” he said.

The new appointees include Prince Khalid bin Bandar, who is being sent to Germany as ambassador. His father, Prince Bandar bin Sultan, was one of the most powerful Saudi envoys to Washington and later was in charge of intelligence. Another is Prince Abdullah, now an advisor to the royal court and son of Prince Khalid, who served as deputy defense minister.

Along with Prince Mohammed, the king has appointed another young son — he is under 30 — as ambassador to the U.S. and another one as minister of state for energy. While other kings have sought to help and encourage their children, “this was the most blatant act of nepotism ever in Saudi Arabia,” said Khoury.

There’s also the new interior minister. Born in 1983, Abdulaziz bin Saud bin Nayef will succeed his uncle, the ousted crown prince who successfully managed to halt al-Qaeda in Saudi Arabia when he headed the ministry.

With so many young faces in charge, change may come faster to Saudi Arabia, but also potentially without the careful deliberation about the effects on society, said Kristian Coates Ulrichsen, Middle East fellow at Rice University’s Baker Institute.

“King Salman has been, for decades, the family ‘enforcer’ of discipline and the keeper of the family secrets,” said Ulrichsen. “If the family files are not picked up by someone of similar stature to Salman, there is a risk that discipline within the Al Saud may begin to fragment if the unifying glue becomes loosened.”

Read More: a QuickTake Explainer on Saudi Arabia

Impact of non-conventional Finance in Algeria  

The purpose of this contribution is to analyze the operationality of the adopted unconventional financing by the Council of Ministers of June 14, 2017. This is done by a critical review of the impact of non-conventional Finance in Algeria that appears to be not a suitable response at this conjecture. This method of finance is by the way applicable to a structured competitive market economy, with idle production factors, i.e. underemployed equipment and skilled labour whereas Algeria suffers from structural rigidities with a dieback productive fabric and a total dependence on the volatile price of oil, hence the risk of printing more money, with a consequent inflationary process.

The purpose of this contribution is to analyze the operationality of the adopted unconventional financing by the Council of Ministers of June 14, 2017.  This is done by a critical review of the impact of non-conventional Finance in Algeria that appears to be not a suitable response at this conjecture. This method of finance is by the way applicable to a structured competitive market economy, with idle production factors, i.e. underemployed equipment and skilled labour whereas Algeria suffers from structural rigidities with a dieback productive fabric and a total dependence on the volatile price of oil, hence the risk of printing more money, with a consequent inflationary process. 

The Foundation of the non-conventional funding

The Council of Ministers held unconventional financing which is a recipe of anticipating the growing demand in investment and consumption but in the case of structural rigidities and not boosting the productive fabric, it could end up speeding up the inflationary process.

Unconventional financing has been used but in a structured market economy with potential for possible added value in the case of growing businesses or companies in restructuring, used when traditional financing does not enable an enterprise to fully develop, or when funding is simply not available.

In fact, when a company has assets and/or generates a cash flow, non-conventional financing options open to it, in addition to the traditional financing.

Central banks have used these methods which may take the form of easing of certain standards of conventional monetary policy and massive injections of liquidity into the financial system in circumstances which justify, including with the occurrence of a risk of deflation, a stock or bond market crash, bankruptcy of a large credit institution and crisis of confidence in the financial sector.

This is how for instance, the Bank of England launched in July 2012 the Funding for Lending Scheme (FSL) to encourage banks and loan companies to lend more to households and non-financial private corporations. This method has helped credit institutions to refinance loans in the long term by providing in return a wider range of collateral facilities.

This program has also inspired the Long-term Target Refinancing Operation (TLTRO) of the European Central Bank.  Specifically, the non-conventional measures are temporary monetary policy measures whose goal is the restoration of the transmission of the monetary policy and ultimately channels support to bank credit and liquidity in the monetary market.

In any case, the non-conventional measures fall into three categories.

  • First, quantitative easing (QE) measures are those measures by which the Central Bank offers an unlimited amount of money to commercial banks.
  • Saturation of demand for money of these must lead them to spend surplus balances, that is, they grant more Bank loans to households and businesses again.
  • Second, measures of orientation of the future rate expectations are for the Central Bank to engage in the future path of rates contributing to lower interest rates in medium and long term and so to bring them closer to the rate of the Central Bank.  These take the form of explicit commitments to maintaining a very low level or zero rate for a significant period of time.
  • Third, the easing of the credit tend to bypass the blocking of credit channel caused either by the phenomenon of ‘door to liquidity’, or tensions on some key segments of the financial markets.

The Central Bank then acts as a “last resort” by directly funding the economy.

De facto a relaxation of the eligibility criteria will lead banks to less hesitation in their risk-taking, and so to grant more loans to companies of medium or small size.

Keynesian theory cannot be applied to the Algerian economy

Political ‘strategies’ of Keynesian stimulus are based on the importance of the role of the State as regulator and not as state-manager of the economy.

As far as Keynes is concerned, the State is able to stimulate demand when it is insufficient through monetary injection by anticipating the revival of aggregate demand in investment and consumption.  The use of factors of production is according to Keynes due to the fact that entrepreneurs have pessimistic expectations whilst underestimating the actual demand; the salary is not only a cost, but an important determinant of demand.

Investment cannot “start” if business expectations are not positive. It’s a matter of consumers’ confidence; to implement the means of distribution of wealth allowing economic agents who have the average propensity to consume the highest (i.e. all ‘disadvantaged’ social categories) to spend and therefore kick-start the economic machine; lower interest rates to stimulate consumption and investment credit and finally to embark on a policy of major public works will cause a multiplier and accelerator of investment income.

The recovery of consumption will bring in investment increase so employment will be improved and this thanks to the income multiplier. The State intervenes transiently in time of crisis so located as part of short-term actions applying the elasticity available factors of production, equipment, and work quality.

Also the Keynesian, short-term and based on assumptions reasoning of a closed economy, has resisted any long-term vision of the economy, unlike the conventional theories of Adam Smith (morality), of David Ricardo, Karl Marx and Joseph Schumpeter who internalizes the dynamics of institutions and dynamics of social groups.

However with the current crisis we, taking into account the interdependence of economies, need a dynamic model for the medium and long term, the new ecological challenge and this unbearable duality between North and South, for a shared responsibility; governance of many leaders of the Third World being most questionable.

The growing internationalization of economies at the present time is a major limiting factor on the model. Thus, in the light of the Algerian experience, the Keynesian model is hardly transposable. For this country in 2016, 97 / 98% of foreign exchange earnings came directly and indirectly from hydrocarbon, 83% of the productive fabric is made up of small trade/services enterprise, the industrial sector less than 5% of GDP with more of 95% made up of little innovative SMIs and SMEs.

So there exist on one hand incompressible but necessary imports for the public and the productive segments, 70% of public and private – enterprise integration rate below 15%, working with imported inputs.

In case of not stimulating the productive sector between 2017 and 2020, by sticking to our own internal financing, we would necessarily deplete the foreign exchange reserves. As foreign exchange reserves sustain the value of the Dinar (DZD) already officially rated at more than DZD120 an Euro and over DZD190 per Euro on the parallel market, the amount of reserves of $10 to $20 billion will necessarily mean an official rating of over DZD200 per Euro, possibly leading towards to an inflationary process with necessarily raising of interest rates.

Because between 2000 and 2016, we have seen bad programming, overestimation of costs and long delays in the execution of vital projects, with very important budget overruns including the appearance of gaps between the budget planning and sectoral priorities, the lack of effective interventions due to fragmentation of the budget as a result of the separation between the investment budget and the operating budget potentially significant contingent liabilities, long delays and extra costs for the execution of the projects.

This testifies on the weakness of the enforcement capacity of the State agencies that neither the line ministries, nor the Department of Finance have sufficient technical capacity to oversee the quality of these studies, limiting itself to financial control, technical or physical follow-up exercised by entities or at best by insufficient and unknown enforcement.

Many weaknesses are rooted in the urgency that accompanies the preparation of projects including the myriad of specific requests that the projects are supposed to respond to with overlaps of responsibilities between the various authorities and stakeholders (from dozens of ministerial committees and commissions of local authorities) that witch economists refer to as transaction costs and this because of a non-optimal institutional organization.

Therefore, we would have 4 impacts of inefficiency in public spending:

  1. on the value of imports because the swelling is the essentially to public spending.
  2. on the inflationary process that is originally for part of inflation and very incidentally wages that are less than 25% reported to gross domestic product;
  3. on the balance of payments of the fact that the doubling of the value of services between 2002 and 2016 of $10 to $11 billion a year mainly concerns the infrastructure/oil (foreign aid) post referring to the devaluation of knowledge;
  4. on the global and sectoral growth rate. Here also the numbers need to be replaced into their true contexts because hydrocarbons irrigate the whole economy and nonhydrocarbon segment of more than 80% with a total of 5 to 6% of non-oil growth rate as invoked by officials ( on average between 2000 and 2016), remaining only real businesses real participation of less than 10% of the total of the Gross Domestic Product (GDP) as shown for several years (about 3% of the total) nonhydrocarbon export.

Non-conventional financing and the inflationary

Generally, public spending has its own limits as shown in the recent global crisis, and the fundamental strategic problem which arises in Algeria lies in the urgency of a renewed good governance as based on a Rule of Law and the Democratisation of decisions, development of a competitive national or international enterprise as founded on the development of knowledge. How can we forget that during the national conference on economic and social development on November 4, 2014 in the presence of the Prime Minister at the time and members of the Government, reproduced in October / November 2014 in the national and international press, I had proposed to deepen structural reforms and put in place a broad social front against the fall in the prices of oil under the title “Prof. Mebtoul advocates the creation of an independent Committee to safeguard against the effects of the crisis”.

Were we listened to since then?

Ministry of Finance in Algiers

The monetary expense encouraged by infrastructure building is only one way that has little impact for sustainable development.  There is urgency to pose real problems to the deepening of the comprehensive reform for a true development of non-hydrocarbon and the passage from a rentier to a non-oil economy.

And only internal reforms would allow change and reach sustainable growth in non-hydrocarbon condition of value-added job creation, ending gradually this volatile growth and subject to external shocks, monetary expenditures without worrying about the impacts and the importance of foreign exchange reserves, is not synonymous with development because function, the price of oil.

However, paradoxically, the advanced or the acceleration of reforms in Algeria is inversely proportional to the price of oil, being held back when prices rise making it for Algeria to wonder whether oil was a blessing or a curse?

ademmebtoul@gmail.com