$53 million in Luxury Cars Lost At Sea

I came across an interesting story that was posted January 6, 2015 about how the cargo ship Hoegh Osaka, destined to the Middle East with $53 million in luxury cars, never completed it's delivery. Shortly after the Hoegh Osaka began its journey from Southampton, it began to list (tilt). This can happen if cargo shifts, or is unevenly loaded. The crew made a critical decision to run the ship aground not far from Southampton to prevent capsizing. Then, it was a race against time to stabilize the ship before being swept out to sea.

Once the Hoegh Osaka was returned to port, there was an investigation of the crisis while the cars were driven off the ship. There was speculation that the cargo was unstable when it left port. So what does this mean for the car manufacturer and exporter? Will the cars become scrap due to potential safety issues from damage unseen? Check out the links below to read more about this event.

http://www.businessinsider.com/nearly-400k-worth-of-luxury-cars-may-be-scrapped-from-tilted-cargo-ship-2015-1

http://www.bbc.com/news/uk-england-hampshire-35823182

http://www.bbc.com/news/uk-england-hampshire-31002891

Commodities Spike After Missile Strikes In Syria

Commodities like oil and precious metals have stabilized over the past several months after the uptick during the United States Presidential Election. But this has not been the case since the recent missile strike. Gold and silver increased by 1.07% and 1.02% respectively. Oil is up 1.26%. These increases were observed overnight after the attacks. Analysts suggest that even after the spikes in crude oil, the price per barrel should fall back below $50/barrel. As tensions grow in Syria and the Middle East, what will this mean for future oil flows?

Reference:

http://www.businessinsider.com/gold-silver-oil-price-reaction-us-missile-strike-syria-april-7-2017-4

Eric and Dustin

Looking at the Middle East as a market to enter in the retail aspect may be harder than one could imagine.  Using the data collected from NRF, I was able to determine that there were only three companies that have their origins in the region.  They hail from Turkey, UAE, and Saudi Arabia.  That’s three out of the top 250 retailers globally (nrf.com). However, for two alias of Syria, Russia and China, it might be easier for them to enter the market.  Of the 250 global retail leaders, 13 of them hail from these two countries.  Still, that is only 6.4% of the top retailers in the world that would even consider doing business with these countries just based on global military positioning.  It’s an interesting topic to see if the countries that back Syria are concerned with their economical position or if it is strictly based on their weapons capabilities and positions in the Middle East.

Source: C. (2017, January 16). 2017 Global 250 Chart. Retrieved April 12, 2017, from https://nrf.com/2017-global-250-chart

Though Syria and the middle east are known for their oil exports, war and IDPs (internally displaced persons) have taken a toll on the economy.  From the report last updated in October of 2016, we see how many of the many of the middle eastern countries have been excepting or purposing taking funds from foreign entities including the U.S. to help support the growing refugee issue as well as the rebuilding of war torn areas.  This no doubt will have an impact on the areas exchange rate.  I know from personal experience when I was in Iraq in 2009, the Iraqi Dinar was far less of value than that of the U.S. dollar.  I could purchase 5250 Iraqi Dinar for only $5 American.  The situation at the time in Kuwait was considerably better as $5 American would only get you just over 3 Kuwaiti Dinar.  Needless to say, I passed on it.  At the time, Iraq was contemplating scraping their current currency since it was still heavily associated with the former dictator Suddam Hussain, and starting over.  Most of the primary concerns for these countries governments right now is to focus more on the macroeconomics of the country to help combat the issues that they face.  The main driving force for countries like Jordan and Lebanon are to keep schools and infrastructure operational and to help with the rising demand for everyday essentials due to the huge numbers that are flooding in holding refugee status. However, not all is rosy for all businesses. For an example, National Commercial Bank (Ranked #433 on the Global 2000) in Saudi Arabia. For them and other banks in the Middle East, business is down considerably and are suffering cuts in credit ratings due to a down economy.

Reference:

 https://www.forbes.com/sites/dominicdudley/2016/04/03/pressure-is-building-on-saudi-arabias-economy-but-riyadh-isnt-blinking-yet/#79199117e9e1

http://www.worldbank.org/en/country/syria/overview#2

Thanks,

Eric and Dustin

Measuring GDP Proves Difficult During Civil War in Syria

What happens to GDP and other economic data when a country is in civil war? Since the civil war in Syria began in 2011, measuring the country's wealth has become most challenging. The two key factors in measuring a country's wealth are population and GDP. Since the civil war began, the population has been significantly reduced. What was measured in 2010, at 20.7 million people, was reduced by 4.8 million fleeing the country. Approximately 7 million more fled their homes as domestic refugees. By 2014, the population is anywhere between 16 million and 18.8 million. Click HERE to read a good illustration of how measuring wealth of the war-torn Syria has become difficult for world trade institutions.

https://www.gfmag.com/topics/blogs/measuring-gdp-civil-war

Though Syria and the middle east are known for their oil exports, war and IDPs (internally displaced persons) have taken a toll on the economy.  From the report last updated in October of 2016, we see how many of the many of the middle eastern countries have been excepting or purposing taking funds from foreign entities including the U.S. to help support the growing refugee issue as well as the rebuilding of war torn areas.  This no doubt will have an impact on the areas exchange rate.  I know from personal experience when I was in Iraq in 2009, the Iraqi Dinar was far less of value than that of the U.S. dollar.  I could purchase 5250 Iraqi Dinar for only $5 American.  The situation at the time in Kuwait was considerably better as $5 American would only get you just over 3 Kuwaiti Dinar.  Needless to say, I passed on it.  At the time, Iraq was contemplating scraping their current currency since it was still heavily associated with the former dictator Suddam Hussain, and starting over.  Most of the primary concerns for these countries governments right now is to focus more on the macroeconomics of the country to help combat the issues that they face.  The main driving force for countries like Jordan and Lebanon are to keep schools and infrastructure operational and to help with the rising demand for everyday essentials due to the huge numbers that are flooding in holding refugee status.

Reference:

http://www.worldbank.org/en/country/syria/overview#2

Syria Water issues

After reading the article attached, I found that the Middle East, particularly Syria, has issues when it comes to its natural resource of water.  Water is the life sustaining element that everything needs to survive.  With climate changes taking its toll and the fact that this region is susceptible to dry climates, the lack of water creates a wide variety of issues for the country.

                First is that with dry climates, growing of local agriculture is impacted heavily.  This in turn provides a shortage of food for the local populous driving imports of food higher for a country that has over a million-people facing hardship.  With low above ground water available, they seek to irrigate land with ground water, which can be a costly project for both the drilling of wells and electricity used to pump the water to the surface.  Draining the ground water table also takes away from neighboring countries, reducing this natural resource availability for the whole region. 

With climate and water source shortages, this impacts the local government to act in a way that causes more turmoil in country that is already failing.  This leads to a global impact of refugees fleeing the country in search of a better life.  For starters, the country is losing a work force that could find jobs because of a lack of investment in the region.  Then, with the migration of the refugees to other countries, these safe havens that they seek are gaining even more people to add to their work force that takes time to implement.  Part of this is that there are cultural and language barriers that reside in any migration of a foreign populous to a new region. 

Between the conflict of water shortage and a war-torn country, the people of Syria find that their only means to survive is to leave the country and find a better way of life.  Economies of scale and the rapid loss of a population leaves Syria in a tight spot.  Government of this country, unfortunately, are seeing their country fall to pieces and may not be able to recover.  My prediction is the complete collapse of Syria within the next decade, and it being absorbed by one of the major powers that surround the country through a long battle that will be costly on a global scale.

 http://pacinst.org/news/water-drought-climate-change-conflict-in-syria/

Syria's Economy - A Long Road To Recovery

Syria has been at war for some time now which negatively impacted their economy. Since 2011, Syria's GDP fell dramatically in manufacturing and agriculture. Between 2010 and 2015, their exports fell some 80%, which oil makes up 50% of total exports. Population is a major factor in Syria's ability to recover. Prior to the recent wars, their population was around 22 million. Since then, there have been some 4.8 million refugees who left the country - nearly 22% decrease in population.

It gets worse...

Did you know that nearly 4 million children in Syria are not in school as a result of war? This does not look good for the long term recovery.

http://www.businessinsider.com/syria-economy-destroyed-2016-6

~Eric Hesbol

Good Morning Fellow Bloggers,
chapter four was a really interesting in that it covered so many different aspects of how to go about international business.  When I spent my 10 months in Iraq, it could almost be considered a business venture.  We prepared by going to intensive classes on culture and language as well as knowing the differences between the different religions.   Being that we worked in prisons, it was important that we knew what religion the prisoner was so that we put them with like minded individuals.  How a normal in-processing event would go would be a search and then the question "Sunni or shite?" depending on the response, determined which way they went.  If they wanted to be a stubborn and not answer us, all we had to say is "oh, so you're Takfiri?" the Takfiri were the extremists and if you were not actually a Takfiri, they would insure you had a quick death while in prison.  This little memory brings in to my mind thinking of how different cultures work and operate and what kind of necessary training could be required to enter a foreign country.  An article that I found very interesting that plays a great deal into what Hall and the others from the book discussed is attached below to get a better grasp on the cultural dimensions of Iraq.

http://www.everyculture.com/Ge-It/Iraq.html

Thanks,
Dustin Weinert

              Business as usual in the Middle East seems to comprise of the violence and terrorism that most of us hear about in the news.  An interesting aspect that I found is though there is much turmoil in this part of the world, there are still organizations and councils that work with the EU.  One group, the Middle East quartet, is comprised of the U.S., EU, Russia, and UN and have strived to resolve the conflict between Israel and Palestine.  Any time a resolution is purposed, any country or group of countries, such as the EU, must either contribute financial, physical, or informative support to the region, which all cost money.  The advantage that the EU has is that they can spread the strain of resources over their member nations so long that the vote approves of the measures that are purposed to be put into place. With resources, such as oil in the region, the Middle East is always a topic of conversation in the global society and though many people would like to believe it is because of true feelings of support for peace, I believe that the real reason for a want of stability in the region comes back to resources that these countries have to offer and at what price they (the supporting nations of “peace”) can get those resources.

 

http://www.eubusiness.com/regions/middle-east/

If you’re interested in business from around the globe and how different trade organizations operate, checkout some of these blogs from the International Business class.

http://unitedkingdomstout.blogspot.com/

http://tppandnafta.blogspot.com/

http://northerneurope-balticsea.blogspot.com/

http://ib260germany.blogspot.com/

http://bumgt260brics.blogspot.com/

http://internationalbusiness2017.blogspot.com/

https://ib260bh.blogspot.com

 

Thanks,

Dustin and Eric

FREE TRADE IN THE MIDDLE EAST

In 2003, when the United States invaded Iraq, there was much action taken to liberate. In addition, there were steps taken to reform trade agreements and conjure economic development. This began when President Bush, on May 9, 2003, proposed the Middle East Free Trade Area Initiative (MEFTA) be in place by 2013. This would begin a process to stimulate economic growth in the Middle East. Also, would bring forth access to World Trade Organization (WTO), and eventually a freer trade between the Middle East and other regions. If you want to learn more about this topic, please follow the links below.

https://ustr.gov/trade-agreements/other-initiatives/middle-east-free-trade-area-initiative-mefta

http://www.washingtoninstitute.org/policy-analysis/view/free-trade-agreements-the-quiet-economic-track-of-u.s.-middle-east-policy

So where are we now? Feel free to comment and share your insight.

~Eric

Good morning fellow bloggers,

                Today we kick off the new blog that will take us half away across the world and into the professional and business lives of those in the Middle East.  This diverse part of the world has politicians and financial experts a buzz these days with the new U.S. administration.  On top of these two topics, we may dabble a bit in U.S. foreign policy as it relates to the war efforts that have spanned the past six decades.  Some of us have spent time in the region and have experienced firsthand how the culture and people interact with one another and with outsiders.  Please join us for an engaging and interactive discussion of Syria and the Middle East that will have everyone on the edge of their seats.

Thanks for joining us,

Dustin and Eric