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June 2010

News Letter - 1st June 2010

After reporting in our last newsletter the predicted growth figures from the Institute of International Finance the IMF has published their figures which are a little lower. They predict growth of 1.3% for the UAE this year and 3.1% in 2011 but they expect the GDP of Dubai to shrink 0.5% over the rest of this year. They caution that the debt crisis in Dubai and the unfolding crisis in Greece adds an element of uncertainty.
It has been reported that property rental prices in Dubai are still dropping and are set to fall further over the rest of this year due to oversupply. Good news for residents as this is further evidence they can be firm when negotiating the renewal of existing tenancy agreements. Over 31,000 new units are entering the market this year and a further 29,000 in 2011. Office rents have dropped a whopping 52% in the first quarter of 2010 from the peak of late 2008.

Dubai based ship repair company Goltens has formed a joint venture with Al Fattan in Abu Dhabi creating Al Fattan Goltens Shipbuilding & Repair in Taweelah, Al Sadr Port Shipyard, Abu Dhabi. The company will focus on the growing need for shipbuilding, ship repair and maintenance services in GCC area. The two companies are already building their first vessel in the new yard, a 72m landing craft for UAE Navy, which is planned for delivery in Q2 of 2011. The infrastructure in Al Sadr Port has grown substantially in the past twelve months with the addition of equipment including floating dock, two travel lifts and several sheds, overhead cranes and office buildings. Carmania wish all concerned the best of luck in this new venture.

The biggest news story of the last few days has been the Israeli attack on a ship flying the Turkish flag in international waters. Carmania is not going to get involved in the politics surrounding this and we are not a law firm however we feel a couple of points need to be made.

A state attacking a vessel in international water is not piracy but an act of warfare. It is our understanding that in addition to international law in this case Turkish law also applies as the Law of the Sea states when an attack takes place outside any states territorial waters it is the law of the flag state of the ship attacked that applies. This frightening development could result of one of two outcomes in our opinion:

  1. If the Israeli forces were acting on the orders of the Israeli government and this resulted in the deaths of people onboard the Mavi Marmara then Israel is in a state of war with Turkey.
  2. If these military personnel acted without orders then they were acts of murder under Turkish law.

In summary if Israel and Turkey are not at war, Turkish law applies to the incident onboard and Israel is obliged to handover the perpetrators for trial under Turkish law. Further while the idea of Israel investigating the incident is laughable it is also irrelevant. It is up to Turkey to carry out any inquiry or investigation into events and to initiate any prosecutions.

As we’ve said we are not lawyers so welcome feedback from the lawyers amongst our readership on this. We have simplified the circumstances and legalities for brevity: for e.g. it is reported that the ship declared it was going to run the blockade and that it could be argued mitigates the Israeli action. Whilst we have no wish to be seen as warmongers we do feel the forgoing is an accurate summation of the situation. This would appear to be a case of the Israeli’s acting with impunity again – simply because they can relay on the support of the American government, no matter what they do. I wonder what the American reaction would have been had a small Far East or South American country had acted in a similar manner to that of the Israelis’’. After all Israel is only a small Middle East country!!!

Moving back to an act of piracy and further to our report about Russian Special Forces freeing the hijacked Russian tanker “Moscow University" it seems the captured pirates were not in fact taken for trial. We have leant that during the exchange of fire one pirate was shot dead and others wounded prior to their capture. However it seems the Commander was told to release them as there was no legal system in place to try them and Russia did not want them. The Commander of the war ship did not want them back in the system and told HQ they were released.

Now this would seem to be terrible but we have some good news. The navy released them by setting them adrift in a small inflatable boat without navigational equipment and it appears the pirates did not survive their ordeal at sea. An unnamed Russian Defense Ministry source has told reporters the pirates did not reach the coast and have apparently perished. Kudos to the Russians – now that sends a message! We need a few more similar instances and maybe the pirates may start to get the message. One thing is certain if we wait for IMO (i.e. the U.N.) to act then we wait in vain!

We thank those readers who brought this to our attention and always welcome feedback and contributions of all kinds.