We are seeing in the streets of the Arab World confirmation of the fact that au­thoritarianism is not stable. In our world, which is so connected and where people know what is going on outside of their small villages, people will insist on their freedom, and if not given a way to secure freedoms peacefully they will take them violently. I worry about what has hap­pened in the Middle East as reforms come too late. Now, instead of reforms, we have revolutions. The people in the Middle East are not going back. The Egyptians are not going back to Mubarak, the Tuni­sians are not going back to president Ben Ali. The game is over. What comes next? The first evidence is not so good. We have seen the Islamists, who were the strongest and most organized political forces, take power in the two elections that have been held. I think we’ll probably see more of this, because underneath the authoritar­ian regimes, democratic political forces were not allowed to organize. But the Islamists organized in radical mass, and now are very strong. But when people have to govern, not just talk, but actually govern, they find that there are certain con­strictions, there are certain limitations to what they can do.

      People on the streets in Egypt and Tu­nisia were seeking freedom, but also a bet­ter economic life; they were seeking jobs, they were seeking a way to get out of pov­erty. Now, if the islamist program is: “elect us and we will make your children suicide bombers and we will impose shari’a law”, that is not an answer to: how will we give you jobs?

      I believe for Islamists to keep power they will have to find ways to answer the question: How must we give you jobs? In Iraq and Kuwait, in the first rounds of elections, the Islamists stood very well, but in the second and third rounds, they didn’t do well at all. More moderate forces were elected.

      We are not powerless when all of this comes out. The challenge before the United States or Europe or Israel is to give support to the moderate forces – through economic development, through the training of civil society; it is to help channel some of the anger that is in the streets into more democratic institutions. so when we think about the future of this

We started with our very first hybrid vehicle in 2008. We launched the Lexus LS 600, and this was the very first hybrid car to come into the Middle East. Since then we’ve come a long way because at the beginning of 2011 we launched the Lexus CT200h as well. Lexus has been very strong globally in terms of hybrid technology, and we will launch more hy­brid vehicles in the UAE in coming years.

What has been the response to hybrid vehicles from this region?

The fuel is cheaper here and environmen­tally consciousness, if you will, compared to the other markets. Having said that, for Lexus there are two things that are really important. First of all, it’s just the right thing to do for Toyota Motor Corporation, and the Lexus brand is part of our pledge that we are doing things in a way that makes tomorrow better than today. The hybrid technology strategy is a part of our long-term strategy, making it a common-use technology for our customers.

For the second part, and that’s where I think the key discussion is, there is aware­ness building with our consumer base here with the market. The UAE is in the leadership position in terms of having the dialogue around what’s right for the future in terms of what should be happening in the transportation industry. At a very sen­ior level in the government we know that there is the appetite to go toward a more environmentally respectful approach. Based on those two points, we have a very positive outlook in terms of where we are going to go with the hybrid technology in the future for the UAE market.

Are there any other big players in the hybrid technology section in this region?

So far we are probably the strongest in terms of the type of technology we are providing. Lexus, by far, I would say, is the strongest in terms of our strategy with the hybrid technology, especially with the Lexus brand, is combining two very opposite extremes, which is environmen­tal impact with performance, and that’s where I think we are unique, and defi­nitely, the Lexus hybrid drive technology that we use is probably one of the most advanced in the world.

Please tell our readers a little more about hybrid technology.

There are two basic forms of hybrid vehi­cles – mild hybrids and full hybrids.

Mild hybrids are the vehicles that al­low for an electric motor supported by a unique battery to provide incremental en­ergy to the petrol engine that is running the car. So, it is a supplemental energy source.

A full hybrid actually provides the electric motor a separate energy source battery pack, which actually allows the vehicle to be driven entirely on the electric motor. So it allows the petrol engine to actually switch off, so in terms of emissions and fuel efficiency, it is by far more impactful in reducing the emis­sions. On all Lexus hybrid vehicles, for example, when you are applying the brake, the energy created by the pads and the heat that is generated is used to recharge the battery, so you never have to plug in the battery.

Where are most of these hybrid vehicles sold?

The key driver has been the North Ameri­can and European markets, led, of course, by government motivation, but also the fuel-economy ratio has become more im­portant over there and the awareness level is quite high there as well. Gradually, this is becoming a global phenomenon.

How many hybrid cars do you sell in a year?

We don’t usually publish our volumes, so I can’t talk about that, but overall, in terms of percentages, hybrid cars consti­tute a small percentage of our total sales. In the middle of 2012, we are launching a new hybrid, which is going to be phe­nomenal, and I think that is going to ac­celerate our mix of hybrids substantially.

Do you think that hybrid technology will be the future of the global auto industry?

Right now our stated objective from the manufacturer, Toyota Motor Corporation, is that this is the most feasible, accessible and affordable technology that is avail­able to reduce the impact on the envi­ronment. And, as you know, every brand is working on many different streams; you have fuel cells, ethanol, flex fuel, diesel, hybrid, electric plug-in. What to­morrow’s technology enables we don’t know, but for Lexus the future is hybrid. We are using that technology beyond the environmental story as it is actually a performance story for us.

Currently, the region’s leading retail and hospitality conglomerate is poised to exceed an annual turnover of $5 billion by 2015. The projection comes on the back of the Group’s milestone accomplishment of more than 1,000 outlets encompassing 18 million square feet of retail space across its portfolios in the Middle East and India.

      The group’s growth over the past four decades has witnessed the development of in-house brands that have emerged to become market leaders. Centrepoint, Ba­byshop, Splash, Shoe Mart, Lifestyle, Beautybay, Iconic, Emax, Home Centre, Q Home Décor, Max and Shoe Express are some of the home-grown brand names under the Group’s umbrella. In addition, Candelite, the Landmark Group’s latest retail offering, is already garnering a mar­ket positioning as the unique confection­ery and savory store in the Middle East.

       In a statement, the chairman of Land­mark Group, Micky Jagtiani, said, “We started with a single Babyshop store in Bahrain in 1973 with an initial capital of $6,000. Today, we have grown to become a major force to reckon with in the retail space. In the first two decades, we opened a steady number of six outlets. The year 1990 proved a turning point for the group when we shifted our headquarters from Bahrain to the UAE and opened our first Shoe Mart store. It was around the same time that we strategically decided to take on an aggressive growth path. Nearly 20 years later, we are indeed proud to have surpassed the 1,000-outlet milestone. We consider our accomplishments a sign that we are on the right path to achieving some of our ambitious corporate objectives.”

       Landmark Group’s development has been sustained by a structured expan-

 Post-liberation Libya has seen many military fiefdoms emerge, a disturbing trend that could lead to the country eventually being demarcated into militarized zones of influ­ence. Gunfire crackles through the nights, but it is no longer celebratory; instead, militias are settling scores between them­selves, fighting over turf, launching raids on suspected loyalists to the old regime or resisting government’s attempts to impose itself; the intense fighting simply high­lighting the army’s incapacity to deal with the challenges.

The government appointed a chief of staff and head of the airforce in January, but rival groups in the country’s East im­mediately dismissed the move as illegiti­mate. In a sign that the New Libya would be as disputed by new and old guards as it would be divided along regional­ist and tribal lines, a body naming itself the Military Council for Burka appeared. Largely composed of officers from Lib­ya’s Gaddafi-era army, it dismissed chief-of-staff designate Yousef al-Manqushi, a Misratan-born officer who grew up in Benghazi and whose background pleased these two most powerful rebel factions, appointing instead its own chief of staff, basing itself in the eastern city of Baida.

       Baida is a small town with a large his­tory: it produced the former Libyan King whose son returned to Libya in Decem­ber to attend independence anniversary celebrations and contest a position in a new Libya, and it was the birthplace of current Libyan strongman and head of the National Transitional Council Mustafa Abdel Jalil. In years past, it was known for being the hometown of former Libyan leader Muammar Gaddafi’s wife Safiah.

       Two months after the creation of an interim Libyan government that split the ministries of Defence and Interior equally between military powerhouses, Zentan and Misrata, Libya still lacks a national force capable of keeping the country together. Harassed by a small army of Western diplomats, spies and security professionals, the government is trying to eradicate the armed militias who hold strategic points in Tripoli and seek to parlay them into political influ­ence. But repeated deadlines have gone unheeded: three evacuation dates in De­cember passed unmarked with the excep­tion of the last one when interim Prime Minister Abdel Rahim el-Keib came out to state – almost apologetically – that it

      As the euphoria over Arab revolutions hangs heavy in the air, there are some who have already started counting the costs of uprisings in the region. Global advisory firm Geopolicity was the first to crunch the hard numbers. It said the popular protests in 2011 in North Africa and the Middle East – known as the Arab Spring – have cost the region more than $50 billion. Egypt, Syria and Libya paid the high­est financial price, but without a regional support program, the effects of the Arab Spring could be regressive, it said.

      However, the oil-producing na­tions that have avoided or suppressed rebellions have benefited the most. Us­ing data from the International Mon­etary Fund, the group said countries that have experienced intensive civil distur­bances or conflict during the Arab Spring are expected to lose the most in the short term.

      Libya, Syria, Egypt, Tunisia, Bahrain and Yemen have all been hit hard eco­nomically. Their costs to GDP amount to $20.56 billion, while costs to public fi­nance total $35.28 billion.

      In Yemen and Libya public expendi­tures have fallen alongside public revenues as governments collapsed. There has been a 77 percent fall in revenues in Yemen and an 84 percent fall in Libya. These figures do not take into account losses to human life, infrastructure damage and business and foreign direct investment losses.

      However, the region as a whole is ben­efiting economically from the Arab Spring. Oil-rich countries that have suppressed or avoided uprisings are set to gain the most.

      “Investors and market participants are going to sit up and watch the first bonds to reach maturity over the next six months in Dubai – if there are any signs of inabi­lity to repay debt, it’s going to have a do­mino effect for the refinancing needs of other entities down the line,” said Eric Swats, head of asset management at Ras­mala Investments in Dubai. “Many of these companies are government affilia­ted or owned, so if the government wants to be in a strong position by 2014, they must have a strong incentive to have these bond issues paid off in full and refi­nancing completed with little to no mar­ket disruption.”

     As Europe struggles with its own debt burdens and focuses on problems at home, European banks and investors have noti­ceably retrenched from the region. This adds to the refinancing risks faced in the GCC, where S&P estimates that $35bn of bonds and sukuk will reach maturity in 2014. The next two years are crucial as companies are forced to look for alterna­tives for their refinancing needs while as­sessing risk, since many bonds that had five-year terms will need to be repaid at a time when global debt markets are in flux. Moody’s Investors Service has spe­cified that Dubai alone has to repay almost $3.8bn worth of debt maturing next year.

     “It’s not a new story that a multitude of bonds are reaching maturity next year, but add to that that international lenders

The petroleum sector, especially in the Middle East, is as com­plex as it is vital to the world economy. And there is no doubt that the geopolitical tensions that wrack the region contribute to that complexity and have a direct bearing on the oil price. Lately, verbal exchanges between the US and Iran, with occasional input from Is­rael, have spiked prices northward. Con­versely, assurances from Saudi Arabia that it is able and willing to ramp up pro­duction as necessary have calmed the nerves of oil speculators as far afield as New York.

   As the year draws to an end ana­lysts issue judgments on the performance of the petroleum sector in that year and make predictions for the next. Two fac­tors believed likely to affect the region’s energy sector positively in 2012 are im­proving US economic statistics and ris­ing oil demand in Asia. The euro crisis is not seen to greatly impact the GCC’s oil sector because Europe sources most of its crude oil elsewhere. Nevertheless, there is cause for worry in Europe itself.

   At OPEC’s last meeting mid-Decem­ber in Vienna it was decided to maintain oil production quotas, which is a sign of price stability, but it might ring alarm bells in Europe.

   It was reported that Iranian Oil Min­ister Rostam Ghasemi met with his Sau­di counterpart, Ali Al Naimi, who prom­ised that the Saudis would not make up any shortfall in the market should an in­ternational embargo on Iranian crude hurt Tehran’s ability to sell its petroleum. This means that if Iranian oil stops flowing to Europe due to new sanctions, Saudi Ara­bia is unlikely to increase production to meet demand.

   And, also last month, Iran took the unusual step of attempting to improve relations with Saudi Arabia. Iranian Foreign Ministry spokesman Ramin Mehmanparast said Iran’s intelligence chief, Heidar Moslehi, had visited Sau­di Arabia to present its case that it is not developing nuclear weapons, and that Iran had no part in the assassina­tion plot against the Saudi ambassador to the US, Adel Al Jubeir. This plot was, according to Moslehi, a propaganda ex­ercise hatched by the US and Israel to drive a wedge between Saudi Arabia

With economic growth like­ly to soften in 2012 and fi­nancial markets to remain volatile and politicised, in­vestors should prioritise income, quality and cash flow. This stance leads us to em­phasise large cap equities and corporate credit in our asset allocation, particular­ly in the U.S.

     Our core scenario is cautious, not cat­astrophic. Merrill Lynch Wealth Manage­ment EMEA expects the global economy to grow by 3.7 percent next year, down from the 3.9 percent we anticipate in 2011. A contraction in the Eurozone and a slowdown in China weigh most heavily in this forecast.

     A reluctance of businesses to invest will lead to ongoing high unemployment. To address this, key central banks in the developed world will be undertaking very broad and aggressive programmes of quantitative easing. Interest rate hikes appear a long way off, especially in the U.S. where we expect no rate rise by the Federal Reserve before 2014.

      A disorderly Eurozone sovereign de­fault and/or withdrawal from the common currency head the major risks we identi­fy. Other potential negatives include con­tinued policy paralysis in the Eurozone, contagion to other regions from Euro­zone bank deleveraging, possible curren­cy wars, the risk of bank runs and over-zealous fiscal austerity.

      Europe offers the potential for posi­tive surprises too. The European Central Bank (ECB) is likely to eventually mon­etise sovereign and bank debt, we think, however, there is a chance that such a re­sponse comes only after further dam­age has been done to growth prospects in the Eurozone. A larger ECB rate cut than most economists anticipate may also im­prove the region’s outlook; we forecast a reduction to 0.5 percent. A depreciated currency should provide support for the region.

      We see scope for positive surprises elsewhere too. These include a rebound in business investment, particularly in the U.S., and a stabilisation in the U.S. hous­ing market. This would benefit employ­ment because of the construction indus­try’s labour-intensiveness.

Income, quality and secular growth

Against this uncertain backdrop, Mer­rill Lynch Wealth Management EMEA favors overweighting the U.S., the U.K. and selective emerging mar­ket equities. We like quality large cap companies with high dividend yields, strong cash flow and a focus to secu­lar growth.

      Our selection of U.S. large caps as our top pick reflects their more reliable performance in meeting analysts’ earn­ings forecasts verses peers elsewhere. Our favoured sectors are consumer dis­cretionary, consumer staples and infor­mation technology. These industries of­fer the best combination of earnings quality, valuation and alignment with the macro environment, in our view.

      We are also positive about broad or “secular” growth themes, including emerging market consumers and glo­bal infrastructure. Nonetheless, we await policy easing in China before increasing emerging market holdings overall.

      We are underweight, both Eurozone and Japanese equities. While Japan’s growth should recover in 2012, we expect corporate earnings to disappoint. Europe­an equities are cheap and sentiment to­ward them is already at rock bottom, but it is too early to re-enter the sector due to its continued high risk, in our view.

      In fixed income we prefer credit to sov­ereign plays. This includes both investment-grade and high-yield corporate bonds, with a preference for U.S. companies again. A tolerable level of defaults is already priced into the high yield market. Investors should avoid sovereign and bank exposures in peripheral Eurozone economies.

      The lower inflation outlook restrains our stance on commodities. Two of last year’s strongest performing assets, gold and oil, are unlikely to replicate the strong returns of 2011 next year. While support­ed by very low real interest rates, gold is likely to be held back by the U.S. dollar’s strength. Controlled supply should limit any decline in the price of crude oil.

      We do not preclude adding commod­ities exposure, if China reflates soon­er or stronger than we expect. Industrial