Arabian Business Weekly Update 6 February 2005

IT'S EASY to be cynical, confused and bemused at the latest actions of Dubai Holding, and its purchase of a US$1 billion stake in DaimlerChrysler. The Dubai government's umbrella company, which oversees just about every mega-project under way in the City, has for the first time branched out. From Media City and Internet City, to the massive Dubai Financail City and Jumeriah Beach Residence developments, it has now moved into the luxury car market.

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By  Anil Bhoyrul Published  February 6, 2005

Deal that will secure Dubai|~||~||~|Dubai Holding’s US$1 billion stake in DailmerChrysler is a winner. IT'S EASY to be cynical, confused and bemused at the latest actions of Dubai Holding, and its purchase of a US$1 billion stake in DaimlerChrysler. The Dubai government's umbrella company, which oversees just about every mega-project under way in the City, has for the first time branched out. From Media City and Internet City, to the massive Dubai Financail City and Jumeriah Beach Residence developments, it has now moved into the luxury car market. Last week, chief executive officer Mohammad Al Gergawi announced the deal that gives the Dubai government a 2% stake in the company, making it DaimlerChrysler's third-biggest shareholder. The obvious question is why? What on earth is Al Gergawi doing investing in the car market? And of all cars, one with serious problems: in the US, Chrysler has faced a price war, and suffers from over capacity and low production. Zero interest finance deals have cost the company dear. In three years, its US share price has plunged 50%. But Al Gergawi is no fool. The figures in the Middle East, with record sales in 2004 of US$1.53 billion, are encouraging, but it is back in the US where real growth lies. Despite suffering from Japanese competition, financial restructuring and new marketing initiatives have kick-started sales of Dodge, Chrysler 300 and Jeep models. Increased cashflow and falling production costs, particularly overseas, will stable the balance sheet and move the shares upwards again. They could rise 10% this year alone, making it Al Gergawi's best ever invesment. ||**||Iraq's new challenge|~||~||~|The Iraqi elections were a surprising, yet staggering, success. A victory for democracy, a defeat for terrorisim. Now the hard part begins. The new assembly must draw up a constitution, which will be put to a referendum in October, before fresh elections in December. If this draft constitution is rejected by any three of Iraq's 18 provinces, it will fail. Of course, four provinces are predominantly Sunni who largely boycotted the election. It is vital Iraq's new leadership embrace the Sunnis in high office by bringing in the likes of outgoing President Ghazi Al Yawer and former foreign minister Adnam Pachachi. Otherwise, come the end of the year, the country will again face a political crisis. That is the exact outcome the likes of terror chief Al Zarqawi are hoping for. Iraq has come too far to let them succeed. ||**||Power and pride|~||~||~|After much deliberation, we have to chosen to publish the Middle East's first ever power list: our guide to the 50 most powerful Arabs in the world. And we have also taken the decision to rank them, from one to 50. It is likely the list will rile many. Some business leaders may question why they are below others. Some readers may question why we have also included the “fearsome five", our guide to the most wanted Arab terrorists on the planet. The intention has not been to cause offence, but to spark debate and to restore a sense of pride at positive Arab achievement. The number of academics, scientists, authors and artists in our Power 50 is proof that for all its problems, the Middle East is at the very forefront of technology, business, academia and science. ||**||

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