First Media e-Session with the UAE Prime Minister (4th add)Apr 18, 2009 - 07:46 - WAM x x x very soon.
Emirates Business 24/7 Q: There has been increasing federalism in the handling of the financial needs of the Emirates, which has been hailed as a good step forward. How do you see this evolving in future? A: The UAE follows unified legislative, financial and fiscal systems. Federal authorities, led by the UAE Central Bank and the Ministry of Finance, assume full responsibility of developing and implementing these systems. Measures adopted by the UAE government in response to the global financial crisis only reflect conditions of the UAE market, which has been around for the last 35 years since the Fiscal Council was first established. The UAE government's swift action to address impacts of the global financial crisis has amazed many people. It is important to remember that the UAE's response to previous crises, such as the real-estate crisis of the early 1980s, has always been carried out at the federal level. The increased federalism that you refer to in your question is yet another proof that the federation is getting stronger.
Q: Many laws including the Federal Companies Law have been under scrutiny for a long time. Do you feel there is a need for faster amendments to federal laws to meet today's economic and social needs of the country? A: Issuing the first amendment of a law usually takes some time. Rushing things may lead to undesired consequences while delay reflects unnecessary bureaucracy. The pace of passing new amendments to laws bound by international agreements and world systems - for example, the Companies Law -- is determined by the progress of these agreements. Several important international agreements, including a significant number involving the World Trade Organization, are still not ripe. Yet, we are very keen on passing or amending any laws if necessary to strike a healthy balance between our local interests and our commitments to international trade and finance organizations.
Q: Speculation about the dirham's peg to the United States dollar keep flowing back out. What value do you see in keeping the peg in the short term and the long term? Is there any move to change the structure or composition of the peg? A: Governed by strict banking principles and guidelines, the UAE Central Bank is taking care of the issue of dirham's peg to international currencies. The US dollar's devaluation against the Euro and the pound-sterling during the past few years has triggered several debates about economic threats posed by the dirham's peg to the dollar. Today, after the dollar's significant gains against other international currencies, we can barely hear these voices.
There are no absolute wins or absolute loses to pegging a local currency to a single foreign currency or a currency basket. Decisions are always determined in light of the size of benefits.
Q: One of the many effective measures taken by the UAE Government to deal with the fallout of the global financial crisis has been to maintain or increase spending on infrastructure projects, even if this leads to a deficit budget. Would the UAE be comfortable with a deficit budget for the first time in many years? Would you immediately put in place measures to wipe out the deficit (if that happens) in the next year? What such measures would you consider? A: This is a hypothetical question. Actually, we evaluate all possible scenarios and we are very keen on endorsing a deficit-free budget. Yet I can read between the lines of your question about potential measures to face budget deficit. My reply is: No Income Taxes.
Q: The public relations image of UAE and Dubai is being taken to task in sections of the Western press. What is the official strategy of UAE going to be to counter this? A: Our strategy in that regard is very consistent, as we strongly believe in the sanctity of truth. Our commitment to transparency is unequivocal and unquestioned. Our ultimate response to these reports can be seen in our relentless efforts and ongoing success. The life span of lies is always short.
We have been very transparent with all measures undertaken over the past few months to counter the impact of the global financial crisis. Senior government officials have spoken openly about the current situation, highlighting key facts and figures -- including the actual size of the debts by both the government and government affiliated companies.
His Highness the President of the UAE has also openly clarified different dimensions of the crisis's impact on the UAE economy. Despite all that, some people in the media have continued to weave rumors and negative speculation into their articles. We welcome all media from around the globe and we have never silenced any resident or visiting reporters or stopped them from doing their job.
We shall continue to do the same because of our confidence in ourselves, our economy and our measures -- and because we always believe deep in our hearts that truth prevails. Yet our self-confidence does not stop us from dialogue with the media to offer them straightforward information. We urge them to adhere to professional integrity, objectivity, and fair scrutiny and use of information.
Q: There has been some contraction in business volumes in the UAE over the last few months. The harshest effect of this seems to have been on small and medium-sized enterprises. Is there any plan to revitalize the small business sector, which is usually considered the growth engine of an economy? A: We are fully aware of the vital role of the small and medium enterprises sector; I believe that the contraction it has suffered is only temporary. Our success in overcoming the worst will positively reflect on the overall economy, including major enterprises as well as small and medium-sized ones. Our position is far better than other countries, and encouraging economic indicators have just started to emerge. Enhanced liquidity levels across the banking sector, banks' resumption of credit operations, increased number of investors eager to seize investment opportunities in the real estate sector and financial markets, are among many other positive and encouraging indicators.
Q: The region is clearly looking at nuclear energy as means to meet its energy needs in the future. What is your view on the proliferation of nuclear technology in the Middle East? A: The UAE's announced stance is very clear: All countries have the right to use nuclear power for peaceful purposes. We look forward for the day when the entire Middle East region will be declared free of all nuclear and mass-destruction weapons.
By Ali Mutalq Al-Quhais Al-Shammari - AlReyadh Newspaper Q: What comments do, Your Highness have about the rumors that Your Highness had a health problem lately? We pray God that the rumors were baseless, and that He may grant Your Highness good health, long life and happiness to make Your Highness a model to be followed in the region? A: I thank God that I am well and in the best of health and peace of mind and soul. The rumors about me are a part of the psychological war that was waged on Dubai in recent months. Rumors have never targeted unsuccessful, backward or marginal people. I personally pay no attention to rumors, as I know they are short -lived. When people find out the facts, they respect and appreciate you more; their good feelings toward you grow, and the rumor-mongers diminish in their eyes. In fact the last few months I have participated in 4 endurance races where I was able to race for more than 120km in each.
Q: By the end of the first quarter of 2009, what is your evaluation of the economic performance of the UAE in light of the financial crisis? What is the UAE government's strategy to raise the national economy, and emerge from the financial crisis stronger than before? How do you respond to the unfair and hateful rumors that Dubai has turned into a ghost city? A: The performance of our economy in the first quarter of this year proves that we are on the way out of the crisis, and that we are on the right track. Our economy will resume its health faster than other economies, but the speed of that resumption is not governed only by the strength of our economy and its abundant resources. The speed will also be influenced by developments in the international economy - including the measures of revival in the grouping of industrialized states known as the G-20, whose role in international trade movement is about 90 percent of the total international trade, and whose GDP is about 60 percent of the entire world GDP. The speed of general recovery will also be influenced by the capability of international measures connected with monitoring markets, and the role, functions and work mechanisms of international financial institutions, especially the International Monetary Fund. I am optimistic that good implementation of the decisions of G-20 and the International Monetary Fund will speed up the recovery of the global economy.
Q: Sometime ago, several Western papers published unfair reports about the UAE, claiming human right violations of foreign labor in the UAE, and the lack of free elections in the UAE, etc. What do you think of these allegations? What do you think is the reason behind spreading such malicious reports? A: They may write whatever they like, and play the tunes that please them. We are not annoyed by criticism, nor do we fear campaigns. They have their models, experience, values, standards, their cultural and intellectual frames of references. We have our models, values, standards and frames of references. We are open to the entire human experience in every field. We learn from them, but we will never import ready-made models. We do not accept that, and our society does not accept this. As for the allegations about foreign labor, it is an old theme, repeated every now and then. Yes, certain sectors of foreign labor are not in the state we like or hope. But we are steadily improving that state, and we are making progress every year. For years, the talk about foreign labor has not ceased. Such talk is open to all and to the countries that provide such labor. Despite that, millions are trying to come to work in our country. So, why do those foreign countries don't stop their citizens from coming to work in the UAE if the work situation is such as these nasty reports claim? By Al Emarat Al Youm Q: The UAE is facing a regional and global media campaign that questions its ability to overcome the global financial crisis. How does Your Highness evaluate such campaigns? What are the tools and the initiatives with which to respond, including the development of local media? A: Action is louder than words. Our achievements and hard work would be the response to these campaigns. The UAE is immune to such campaigns, and questioning of its ability to continue developing a strong federation is not going to yield anything. When we established the UAE federation, we faced analysis and speculation campaigns, questioning our ability to sustain the Federation and ensure its success. Similarly, the launch of every major project was met with uncertainty and rumors from media campaigns. All these campaigns are history now and their promoters have been proven to be wrong.
As for your suggestion of responding to these campaigns with tools and initiatives, including the development of local media, our response is to continue on our path of hard work and to highlight our achievements. Ongoing development has always and will remain a key objective to our local media; however, we will not allow anyone to drag us to media confrontations. Our policies and procedures are clear, transparent, and always in the end, truth will prevail and will defeat all rumors.
Q: The UAE government has taken notable measures in combating corruption, referring senior officials to court. Are there further steps the government intends to undertake in the same regards? And does Your Highness believe that an independent watchdog body might be needed to audit governmental and semi-governmental organizations? A: The UAE has efficient independent watchdog bodies that include the federal State Audit Institution, as well as local auditing departments. I've visited the State Audit Institution lately where I was updated on its activities. I've given directives to revamp its systems and provide all necessary tools to enhance its performance. Systems and processes of the Dubai Financial Audit Department are also being reviewed and enhanced. Besides, there are other auditing bodies that operate under the Rulers' Courts across the seven Emirates.
Q: Your Highness received His Highness Sheikh Khalifa bin Zayed Al Nahyan, the President of the UAE, in Dubai last week, and escorted His Highness on a tour that included key landmark developments across the Emirate. What was the significance of this visit? I meet with His Highness Sheikh Khalifa on regular basis. We are companions on our journey of development, and he is our Leader and our President. Dubai is his home and he is most welcome at anytime. The visit comes in line with His Highness' ongoing follow up on development efforts across the seven Emirates. He is always keen on meeting his people across the country to listen to their views and ensure their own welfare.
As a matter of fact, all His Highness visits to Dubai are important. His latest visit was significantly important as he toured Dubai's new landmarks, expressing his satisfaction at Dubai's milestone achievements. He was also very keen on visiting "Dar Al Ittihad" (the Union House) where establishment of the United Arab Emirates federation was proclaimed. The visit was in honor of this remarkable achievement.
Questions by Al Shorouk Egyptian Daily Q: Arab funds, particularly GCC ones, have suffered big investment losses in international markets due to the global financial crisis. Sovereign Arab funds have also lost a lot of their money. How did the UAE benefit from this tough lesson, and does it intend to direct more money into Arab markets? Are there any plans to direct part of this money into Egypt? Does the crisis become a chance for a comeback of Arab money to the Arab region, or we are going to turn back to international markets when the world catches its breath? A: All investments worldwide have been affected by the crisis, to be sure. But the notion about big losses [on the part of the UAE] is not accurate because the biggest part of investments is in productive assets -- and as long as you are not obliged to liquidate some assets, then the loss will be in book value only. Such a loss will not continue for long, and the crisis, no matter how long it will continue, is going to end. Eventually, the assets will regain what they have lost in their book value.
Sovereign funds are already investing in the Arab World. What is important is creating a favorable investment environment and the appropriate channels. We have to be sure that investments are governed by the logic of economic feasibility, leaving aside any other presumptions. I am talking from experience. The UAE's favorable investment environment has attracted huge Arab and international investments. As for Egypt, the improvement in the investment environment has attracted, and will further attract, Arab and non-Arab investors. I am fully confident that Arab investors, notably GCC ones, will prefer to invest in the Arab countries if favorable investment environments and opportunities are abundant.
Q: Does the acquisition of some UAE investors of diminished assets of struggling foreign companies -- like the recent deal of "Aabar" in "Daimler" and the UAE's intention to buy a share in "Opel" -- create a risk for Arab funds? Do such acquisitions reflect the determination of the Arab investor to invest far from home? A: There is no risk-free investment around the world, whether at ordinary times or times of crisis, and it is important that risks should be well calculated. Thus, there is no crisis without opportunities. The smart investor is the one who seizes promising opportunities. UAE investors do not invest in collapsing companies; their investments are well researched, and well thought-out, and made in companies that have strong productive assets like the companies mentioned by you.
Q: There were several attempts by the United States and some other European states to make Arab states partake in helping the industrialized world to get out of the international financial crisis -- the latest outreach was that of Britain's Prime Minister to some GCC states. Do you accept such participation? And do you consider it fair? A: The purpose of such visits was neither partaking nor making the Arab states pay the price of salvaging the industrialized world. Some people presume that the Arab financial might is extraordinary and has a huge influence on the world economy. We wish that such conceptions were indeed accurate. Arab financial power is important, but it is modest when compared with the world economy. You may remember that Saudi Arabia was the only Arab country to take part in the recent G20 Summit in London, while there were several countries from Asia, Latin America as well as Europe and North America.
Q: A number of Egyptian ministers spoke recently about an imminent return of a big number of Egyptian expatriates working in the GCC countries, which might create a new challenge to the Egyptian economy. What is your forecast about the number of returning laborers from public and private institutions in the UAE? Are there any plans to maintain the presence of such force in the public institutions? A: The number of lay-offs is not big and does not constitute a high percentage in the expatriate labor force, including Egyptians. There are no lay-offs in the public sector and while some jobs were cancelled in some crisis-hit companies, a lot of vacancies are available at other companies. I am sure that recruitment levels will return to their earlier status within a short time. The worst days of the crisis have gone, and the local and international economic recession is a temporary one. There are also some indications that the world economic recovery will start early next year.
Q: What is the fate of the GCC common currency after the global financial crisis? Does the postponement of its proposed launch in 2010 suggest a kind of undesignated delay or there will be some new plans to make this currency see the light? A: There is no retraction on the GCC common currency. The concerned authorities in the GCC have achieved a lot with regard to regulatory and technical requirements. Not launching the GCC common currency at the beginning of 2010 does not mean undesignated delay. The issuance of any common currency for any economic entity takes a long time with regard to professional procedures and successful implementation. I would like you to remember the European experience in this respect -- and the long time and relentless work that was needed to finally come out with the Euro.