ARTICLE: "The Mideast Money Flows: Americans Seek Funds There and Seek to Invest Funds There," by Andrew Ross Sorkin, New York Times, 27 September 2007, p. C1.
MUTUAL FUNDS: "Chinese Leap at Chance to Invest Outside: Global Stock Fund Attracts $8 Billion on Its First Day; Five More Firms Lining Up," by Murray Coleman, Wall Street Journal, 28 September 2007, p. C13.

DEALS & DEALMAKERS: "The Obedience Rules for Hedge Funds: Managers, Investors To Separately Draft 'Best Practices,'" by Deborah Solomon, Wall Street Journal, 26 September 2007, p. C3.

Private equity funds focused on the Mideast and N. Africa rise from $316m in 2004 to $5.2b in 2006.

Interesting how that works, given all this war, huh?

Says the CEO of a Dubai LBO:

"Post-9/11 shook up the politics in the West. It was a watershed event because it made us realize that there were a lot of opportunities at home. The days of the Middle East just being a source of capital are over--it's become a destination."
This is why--among other long-term trends--why the Big Bang will ultimately succeed, if we don't screw up the pol-mil.

Ditto for China's democratization: all that external financial connectivity fuels popular demands for transparency and accountability and participation in decision-making over time.

In short, the connectivity drives code, as I like to say, and that code is: economics drives politics.

September 27, 2007
The Mideast Money Flows

By ANDREW ROSS SORKIN
As head of the Carlyle Group, David M. Rubenstein is a regular at power lunches along the New York-Washington corridor.

But he recently had his midday meal in Dubai, in the United Arab Emirates, 6,847 miles from the Washington headquarters of his private equity firm, with the Persian Gulf on one side and a desert on the other.

Mr. Rubenstein and other American financiers have long traveled to the Middle East in search of energy dollars to finance deals in the United States. Carlyle, in fact, has been one of the more aggressive in courting Mideast investors.

These days, as Dubai and its neighbors have begun to invest aggressively outside the Persian Gulf, American investors, in turn, have begun investing in the region — and some of the money is coming from American pension funds.

Buyout managers and Wall Street bankers are setting up shop so they can invest in transportation projects and real estate developments and privatizations of state-owned companies. Their use of pension fund money, however, could complicate America’s already sensitive relations with the region.

The investment attention on the Middle East comes at a particularly delicate moment. Lawmakers in the United States have increasingly questioned the public-policy implications of pension fund investments. On Monday, Gov. Arnold Schwarzenegger of California pledged to sign legislation forcing the state’s two pension funds to shed holdings of all companies that have energy or military-related business in Iran. Seventeen other states, including Florida and Texas, have either passed or are considering similar legislation.

Pension funds have become a crucial source of money for buyout firms as they the funds have increasingly allocated more to private equity and hedge funds in search of higher returns.

And the political tensions extend beyond pensions. When Halliburton, the military contractor based in Houston, announced in March that it was moving its headquarters to Dubai, some lawmakers expressed outrage.

The politics has not stopped the buyout firms. Carlyle, which owns Dunkin’ Donuts, is raising $1 billion for a fund for acquisitions in countries like Egypt, Jordan, Kuwait and Saudi Arabia. Ripplewood Holdings, a New York private equity firm that owns Reader’s Digest, spent $200 million for a controlling stake in Egypt’s largest bank. And Colony Capital, a property buyout firm, has bought control of Libya’s largest oil company.

Private equity funds devoted to investing in the Middle East and North Africa grew to $5.2 billion in 2006, from $316 million in 2004, according to Zawya Private Equity Monitor.

Calpers, the California Public Employees’ Retirement System, among other pension funds, is planning to invest in Carlyle’s Middle East fund and is also an investor in Ripplewood. The pension fund opposed Governor Schwarzenegger’s pledge. To comply, the fund expects to sell nearly $2 billion in investments in 10 companies and has estimated it will cost $17 million in transaction fees.

“We don’t have political strains,” said Patricia K. Macht, a spokeswoman for Calpers. “We are agnostic where specific investments are made.”

Some in Washington are not so willing to put politics aside completely. “Public pension funds are public and should respond to democratic forces,” said Representative Brad Sherman, Democrat of California. While he is “not for boycotting the entire Middle East,” he does have concerns about investments in certain countries.

“Syria would not make me happy,” Mr. Sherman said. “We should be trying to change Saudi behavior.”

While Syria or Iran may not be reflective of the rest of the Middle East, buyout chiefs still need to sell investors and politicians on the merits of a region that is politically fraught and, in some cases, still better known to some for terrorism than capitalism.

“I was on the phone with my mother last night and told her I was in Dubai,” said Mr. Rubenstein, a white-haired 58-year-old with large tortoise-shell-rim glasses, explaining the challenge he faces. “Of course, she asks, ‘Is it safe? There’s always bombs going off and wars,’” he recounted, rolling his eyes for effect. “I told her Dubai is probably a lot safer than Florida.”

Mr. Rubenstein may be helped by the billions of dollars that Middle Eastern countries are investing in the United States and Europe. The region has spent $64 billion so far this year on investments abroad, according to Dealogic, compared with $30.8 billion in all of 2006.

Last week, the Borse Dubai, the government-controlled exchange, agreed to take a 19.9 percent stake in the Nasdaq and buy Nasdaq’s 28 percent stake in the London Stock Exchange. And the Qatar Investment Fund said it had acquired 20 percent of the London exchange. On top of that, Abu Dhabi government bought a 7.5 percent stake in Carlyle. And in July, Istithmar, an arm of the Dubai government, bought one of fashion’s crown jewels: Barneys New York.

Some deals have already caused friction. Last year, the proposed sale of some American ports to a Dubai firm set off a firestorm in Congress that abated only after alternative buyers were found.

Still, these crosscurrents of investment are increasing the economic ties between the Persian Gulf countries and the United States — ties that have been strained after Sept. 11. Indeed, 9/11 was a turning point in the flow of capital into the region.

“Post-9/11 shook up the politics in the West,” said Arif Naqvi, chief executive of Abraaj Capital, a buyout firm in Dubai. “It was a watershed event because it made us realize that there were a lot of opportunities at home. The days of the Middle East just being a source of capital are over — it’s become a destination.”

Not all private equity executives are rushing in. Joseph Rice, a founder of Clayton, Dubilier & Rice, which owns Hertz, said his firm was still “years away” from investing in the region. Nonetheless, he has been traveling to the region to raise money.

“We’re here for fund-raising,” he said, overlooking the Burj Al Arab, a hotel that towers over Dubai’s beachfront.

Mr. Rubenstein defended his firm’s Middle East fund. “People see that there’s going to be a lot of economic activity here and a lot of value creation.” Still, he acknowledged, “it doesn’t hurt” with fund-raising that the firm has shown a commitment to the region.

For Carlyle, the decision to wade into the Middle East is particularly delicate. For the last five years, the firm has tried to distance itself from what was seen as Middle East ties and its political connections.

Former President George H. W. Bush and former Secretary of State James A. Baker III had been advisers, which opened up relationships for the firm to raise money in the 1990s. As a result, however, the firm collected money from the bin Laden family. The firm has spent six years trying to rid itself of the image that created..

Then last week’s announcement that the Abu Dhabi government would take a minority stake in Carlyle resurrected old ghosts, and bloggers surfaced with new conspiracy theories.

One other potential source of controversy for Carlyle: the fund will not invest in Israel. Mr. Rubenstein refused to discuss why certain countries were included or excluded, but people involved in the fund-raising said it would make it difficult politically to raise money from most Middle Eastern countries if Israel were included.

Of course, the big question is whether there are promising investment opportunities in a region already sloshing with money and at a time when the dollar is at its weakest.

Mr. Naqvi said of Carlyle’s entrance into the market: “I think their timing is a little off. There’s already too much liquidity. A donkey can raise money. You can’t just ride in here in a Rolls-Royce.” Still, he added: “Carlyle is at our doorstep and we love it.”

Niger

A radioactive rebellion
Sep 13th 2007 | NIAMEY
From The Economist print edition

A combustible mix of rebellious nomads, uranium, oil and poverty
THE last time there was a crisis in the landlocked Saharan country of Niger, the president claimed his people were well-fed, yet images of skeletal children shocked the world and aid workers scrambled to deal belatedly with a famine. That was two years ago. Now nomadic rebels have taken up arms again in the north, but President Mamadou Tandja says they are nothing but a bunch of bandits.

It is a lot more menacing and complicated than that. Seven months after its first attack on Niger's army, the Niger Movement for Justice (MNJ) is rattling Mr Tandja. Fifty government soldiers have been killed and dozens more kidnapped. The entire north has been turned into a battle zone, with army checkpoints and both sides laying landmines. Charter flights no longer bring tourists to gaze at the dunes.

Even if the president does not openly recognise the gravity of the rebellion, he is plainly determined to crush it. He has dispatched 4,000 soldiers to the northern region of Agadez. On August 24th he declared a state of alert, giving them a free rein to operate. Television and radio stations have been banned from discussing the crisis live on air and journalists are barred from going near the affected area. “You can't report up there: there's a blackout,” an official told The Economist's correspondent when he asked for accreditation.

This rebellion is the latest in a series of uprisings led by the Tuareg. They are Saharan nomads who were split up between five post-colonial countries (see map). Long complaining of neglect, they first rebelled against their new masters in the 1960s, in Mali. In the 1990s they again rebelled there and also in Niger. Both countries are now dealing with fresh revolts that are loosely connected.

Depicted by some as simple nomads wandering around the desert on camels or motorbikes, in fact the MNJ is well organised. Heavily armed and guided by GPS systems and satellite phones, its guerrillas launch lightning attacks before fading back into the desert sands. The MNJ's contacts in Europe or underground in the capital, Niamey, then inform the world via the group's website. Keen not to depict themselves as a purely Tuareg movement, the rebels say they want a fairer slice of the country's wealth, especially from its gold, oil and uranium, all found in the north. The UN rates Niger, despite its natural resources, the poorest country in the world.

While Mr Tandja sounds firmly against negotiation, some people in and outside his government may be readier to talk. But he is under pressure from his southern-dominated army not to give ground.

The conflict could spread
Regional politics are also at play. Neighbouring Libya has a longstanding territorial dispute over Niger's north and many in Niamey, including some in the government, accuse Muammar Qaddafi and his regime in Tripoli of backing the revolt.

Uranium is a big factor too. With more governments around the world planning for nuclear power and Niger producing some 3,500 tonnes of uranium a year, the apparently empty wastes of northern Niger are suddenly worth fighting over. A French nuclear company, Areva, which operates in the north but recently lost its 36-year monopoly, has been labelled sympathetic to the rebels, who recently seized a Chinese uranium worker, presumably to deter China from backing Niger's government. Niger's uranium production is still going up; 90 new exploration permits have been handed out in the past year.

The Sahara is also at the centre of an American initiative to stop terrorism getting a foothold in Africa. But apart from the odd smuggling deal over guns, drugs or cigarettes, no solid links between the Tuareg and Islamist groups have been established. Still, Western governments may have to take the rebellion seriously. It is unlikely to be squelched by military means alone. Muhammad Anacko, a former rebel leader in the 1990s who is now Niger's commissioner for peace, is calling for dialogue. The rebellion “may last five years or 15 years but it will end in talks,” he says. “Why don't we just go to them now?”

Who Committed the Yezidi Massacre in North Iraq?

GMT 10-1-2007 23:43:1
Assyrian International News Agency
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On Tuesday, August 14th 2007, the Yezidis, one of the minorities in norhern Iraq, were the target of a bloody and ruthless massacre. This massacre took place in the city of Sinjar, in the Nineveh province.

Early Tuesday morning, several trucks - fully loaded with several tons of the much sophisticated and explosive substance of Trinitroluene - TNT - exploded. The explosive is very hard to retain and is used by very well equipped armies or terrorist regimes that cooperate with super powers.

The explosion was aimed at the civilians and is by far the most brutal and ruthless attack against civilians since the American invasion of Iraq in 2003.

The massacre took 520 lives and several hundreds were wounded. This act of terrorism made thousands of families homeless, as they got their homes blown away.

Nineveh-the future of the province

According to the constitution of Iraq, law number 118, paragraph IV (II), the Assyrian province of Nineveh is considered "a province which is not part of a current region." This means that in the Assyrian province of Nineveh, the jurisdiction of the occupational power is the one that should be followed.

The province of Nineveh is today the core area of the Assyrian triangle; the area between Nineveh, Turabdin and the province of Urmi. The Kurdish parties in northeastern Iraq want to change this demography. The do everything in their power to occupy and, against the Iraqi constitution, conquer the Assyrian province of Nineveh - a province rich of oil.

The Assyrian parties have petitioned, to the central government in Baghdad, that the province of Nineveh will be the base for The Assyrian Administrative Area. This would partly give the Assyrians living in the province of Nineveh a safe haven, and partly make way for the Assyrians in the rest of Iraq to be saved from the ethnic cleansing they are being subjected to.

All in all, this means that the issue of the future of the Assyrian province of Nineveh, is not in accordance with the illusion of the Kurdish parties - to conquer the province.

Many questions after the attack in Sinjar

Attacks of this kind against a minority which does not take part in the war, or struggle for power in Iraq, have lead to many questions.

What was the purpose of the attack? Who gained from the attack? Why the province of Nieneveh, and why now?

As usual, the accusations were made aginst the "demon" al-Qaida. It has, so to speak, become a standard procedure; to blame all acts of terrorism on the "demon" al-Qaida.

But nobody asks the question: what would al-Qaida gain in murdering the Yezidies?

Neither Shia nor Sunni muslims consider the Yezidies as enemies in Iraq, a country in civil war. This fact makes it easy to delete these groups from the list of suspects.

Power of protection

After the attack, several of the Kurdish parties and their militias have tried to gain authority to enter the province of Nineveh. The Yezidi Mahmoud Eido, minister in the Kurdish rule, was fast to publicly demand that Kurdish military forces would be allowed to enter the Nineveh province, in order to "protect" the population. The government in Baghdad has not even bothered to answer Eido's demand.

The Kurdish parties have also employed Assyrians in order to try to convince Assyrians to accept a Kurdish occupation of the Nineveh province. The Kurds have employed the Assyrian Sarkis Aghajan. He has, since he was hired, eagerly urged Assyrians to ask for a safe haven with the Kurdish parties.

All in all, the Kurdish parties from northeastern Iraq, through their military forces, for a long time in one way or another, have tried to include the Nineveh pro! vince, a province full of oil, into the area they already illegally occupy. All this in hope of making an illusion turn to reality.

Correlation between the act of terrorism and the protecting power

To be able to understand the background to this act of terrorism, one must relate it to a similar mechanism in our surroundings.

It has probably not remained an unknown fact to anyone how some criminal gangs in Sweden have put into system to blackmail business leaders and others in order to get money, as they on the other hand "offer" their protection against violence.

If the targeted business leaders, against all odds, would decline the offer of the criminal gangs, they will -- as a consequence of this -- receive a visit, which is also a threat and/or warnings. If they then choose not to obey the criminals' demands, the threats of bombing and shooting become reality. In Sweden, such acts are classified as criminal and felonious.

In order to answer the question:

"Who lies behind this inhumane act of terrorism?"

one first must answer the question:

"Who is offering his protection?"

Conclusion -- the Kurdish terror

The by far worst act of terrorism in Iraq was aimed at the Yezidis in Sinjar, a city situated in the Assyrian Nineveh province. Yezidies are not part of the Iraqi civil war. Yezidies are neither Muslims nor Christians. They have their own belief and are mainly living in the areas around the city of Sinjar in the province of Nineveh.

The groups that have something to gain in turning the Assyrian Nineveh province into an inferno, are the Kurdish parties and militias.

None of the armies included in the occupation forces wants to interfere in an insecure province, and therefore an offer from the Kurdi! sh force s to "establish" law and order in the province of Nineveh can seem tempting for the occupation power.

In order to urge such a decision, the Kurdish militia forces for the last two years committed acts of terrorism against the civilians in the province of Nineveh. The Kurdish terror is either disguised in Iraqi army uniforms, or as al-Qaida terrorists.

All in all the aim is to intensify and increase the violence in the Nineveh province, with the result of the situation becoming unbearable and forcing the occupation power to considering the option of letting the Kurdish militias invade Nineveh, with the mission of "protecting" the population.

This intrusion will not be limited in time. On the contrary, it is part of the Kurdish militias' plans. Much indicates that the goal is chasing away the Assyrians of Nineveh, in order to set their hands on the oil of the province.

The fact is that the kurdish militias have, during their time as a power factor in northeastern Iraq, been able to cleanse the area from minorities in general, and Assyrians in particular. The experience and the result of the Kurdish protection are unbelievably frightening. As a result of Kurdish terrorism, 58 Assyrian villages have been occupied. These cities are today populated by Kurds.

Many of the Assyrians who protested against the Kurdish terrorism were murdered without the ones responsible for law and security -- the Kurdish militia forces -- trying to find or prosecute the murderers. All in all Assyrians have a long experience of political terrorism from the Kurdish parties. What started as election fraud by the Kurdish parties in the Iraqi elections of 2005, has now developed into an ethnic cleansing of the Assyrians.

The Kurdish parties are trying to portray themselves as a democratic and lawful unit towards the international community. The representative for the Kurd! ish part ies in the US, Qubad Talabani, guaranteed in washingtonpost.com on September 6, 2007, a fair treatment of the religious minorities.

Nothing in Talabani's claim about protection for the religious minorities is a lie. The Kurdish parties are very careful in treating religiously oriented groups well. The Kurdish parites, and their militias in particular, attack the ethnically oriented groups. The Kurdish parties do not want to know of any other ethinical group than the Kurdish in northern Iraq.

If this distincition in the treatment of religiously versus ethnically oriented Assyrians is not being emphasised, this persecution and terrorism of ethnically conscious Assyrians will lead to the pressure on the Assyrians, from having been forced to be Christian Iraqis, to turn into Christian Kurds.

It is, therefore, important to understand the ulterior motive and the idea why the Kurdish parties, with Kurdish money, "approve of" Sarkis Aghan building churces worth 20 million dollars, such as the church/palace in which the Assyrian Patriarch Emmanuel Delly is moving into in Erbil.

This magnificent treatment forms a sharp contrast to the terror and violence regular Assyrians in the province of Nineveh are put to daily. It has turned their lives into a living hell on this earth.

EasternStar News Agency

October 2, 2007
Iraqi Violence Ebbed in September, Reports Say

By PAUL von ZIELBAUER
BAGHDAD, Oct. 1 — The number of violent civilian deaths in Iraq dropped precipitously in September compared with the previous month, an Iraqi government official and an independent monitoring group said Monday.

The general downward trend in violence was also apparent in the decline, to 63, in the number of American service members killed last month, from 84 in August, the American military reported Monday. That was the lowest monthly total in more than a year.

American military officials here quickly asserted that the decline in civilian and military deaths was a direct result of the rapid buildup of American forces in Iraq this year.

In September, 1,654 civilians were killed in Iraq, a 29 percent decline from the 2,318 civilians killed in August, according to an Interior Ministry official here. The official spoke only on condition of anonymity; American and Iraqi government officials here are reluctant to provide figures for civilian deaths.

The Iraqi official’s September civilian death count was much higher, and the percentage decline much smaller, than those seen in reports provided by other groups that regularly monitor civilian deaths in Iraq. For example, Iraq Body Count, a nongovernmental group based in Britain, said the number of civilian deaths in September was 1,280, compared with 2,575 in August, a reduction of nearly half.

Also on Monday, Reuters, citing information gathered from the Iraqi health, interior and defense ministries, also reported a 50 percent decline, but gave different figures, saying 884 civilians were killed in September — the lowest monthly total this year — compared with 1,773 in August.

Iraq Body Count had reported that violence against civilians in Iraq reached highs in the last six months of 2006, and that the first six months of 2007 was the most deadly first half for civilians of any year since the war began.

The recent drop in violence against noncombatants in Iraq occurred during a time when Al Qaeda in Mesopotamia had promised to inflict more. Al Qaeda in Mesopotamia is a homegrown Sunni Arab extremist group that American intelligence has concluded is led by foreigners. More than two weeks ago, at the start of Ramadan, the Muslim holy month, the group said it would escalate its attacks, particularly against Sunni Arab tribal leaders who were cooperating with American military and Iraqi security forces.

An American military spokesman here said Sunday that attacks led by Al Qaeda in Mesopotamia in Anbar Province, Iraq’s largely Sunni western region, were down 38 percent compared with the same period last year.

While the number of American troops killed in September was the lowest monthly total seen this year, the fatality total through the first nine months of the year, 801, is more than 200 higher than what had been recorded through that period in any year since the war began.

“The casualty figures are still too high,” the spokesman, Rear Admiral Mark I. Fox, said during a news conference in the fortified Green Zone. But he added, “The trend is in the right direction.”

In a joint statement, the top American civilian and military leaders in Iraq praised Iraq’s security forces, religious leaders and ordinary citizens.

“You and your fellow citizens have demonstrated resolve in the face of challenges posed by Iraq’s extremist enemies,” said the statement by Ryan C. Crocker, the American ambassador to Iraq, and Gen. David H. Petraeus, the commander of American forces. “Increasing numbers of citizens have rejected extremism,” the statement went on, also praising the followers of Moktada al-Sadr, the anti-American Shiite cleric who in August ordered his militia to cease fire against American troops.

Meanwhile, as October arrived, a measure of violence in Iraq continued, against American forces and civilians. A car bomb exploded near a university in Mosul, in northern Iraq, killing a professor of agriculture and five other people, a police spokesman said. Also, 11 bodies were found in Baghdad, the Interior Ministry official said. In the southern city of Basra, an assassination attempt against the city’s chief of police failed, the police reported.