Dubai financial hub sees growth from Asia links

Updated 14 February 2013
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Dubai financial hub sees growth from Asia links

DUBAI: The Dubai International Financial Center, a business zone, says it aims to double the number of companies there over five years by serving as a base for business with China, south Asia and Africa, not merely the Gulf.
With political unrest plaguing parts of the Middle East and Western financial firms still retrenching because of debt problems in their home markets, the business environment is challenging for Dubai.
But Jeffrey Singer, chief executive of the DIFC Authority, which manages the business zone, said Dubai could keep expanding rapidly as the Gulf’s main financial center by becoming a conduit for trade and investment with a larger region.
“Increasingly institutions are using Dubai not just as a base for business in the Gulf, but as a base to access a much wider area,” he said.
The DIFC, opened in 2004, is one of the United Arab Emirates’ “free zones,” offering foreign investors 100 percent ownership of their ventures and business-friendly regulation.
The number of registered firms operating in the DIFC rose 7 percent last year to 912, while workers at those firms jumped 16 percent to 14,000. The DIFC has declared it wants to double its size in the five years from 2011, when it had 848 companies.
The DIFC has had to contend over the past year with the shrinkage of some of its top US and European clients. Citigroup Inc. this week began laying off investment bankers across its Europe, Middle East and Africa division, with 50 positions to be eliminated in the near term.
But Singer said that overall, cutbacks of investment bankers and back-office staff at Western institutions in the DIFC had been more than offset by their expansion in other areas, as foreign firms tried to capture part of the Gulf’s infrastructure spending boom.
In some cases, retrenchment by foreign firms in the Gulf has prompted them to bring staff back from other parts of the region to Dubai, actually boosting their presence in the DIFC.
“The European presence has grown every year in terms of both employment and the number of firms here,” said Singer, an American who took his job last July after heading the NASDAQ Dubai exchange.
Much of the DIFC’s future growth is expected to come from Chinese institutions. Assets at Industrial & Commercial Bank of China’s (ICBC) Middle East unit, which operates from Dubai, soared 128 percent from a year earlier to $ 6.1 billion in the first half of 2012.
Four Chinese institutions — ICBC, Bank of China, Agricultural Bank of China and Petrochina — now have presences in the DIFC. Singer said the DIFC was discussing the possibility of others coming, but declined to elaborate.
Trade in the Chinese yuan by banks in Dubai has been increasing; ICBC said it conducted $ 2.1 billion of yuan transactions in the interbank money market in the first half of 2012, up 58 percent. Last week Emirates NBD, Dubai’s largest bank, said it had started offering yuan accounts.
Dubai may struggle to become a major market for trading the yuan, however, if it does not arrange for clearing of trades to be done locally.
Yuan clearing is conducted in Hong Kong and Taipei, and last week China named ICBC as the clearing bank for yuan business in Singapore, but Singer said any similar arrangement for Dubai would depend on discussions between UAE and Chinese authorities.
“Banks in the DIFC would like to have yuan settlement occur here but that is an issue for the UAE central bank to handle,” he said, without predicting when that might happen.
Risks for the DIFC include political instability in other Arab countries, which Singer said could deter foreign investment throughout the region, and any major slowdown in the Gulf’s infrastructure spending.
The DIFC also faces competition from nearby financial centers, particularly Qatar, but it has maintained its lead over them in recent years. The Qatar Financial Center Authority’s register lists about 140 active, licensed firms.
Bahrain’s status as a financial center has been hurt by political unrest that erupted there two years ago. Some financial operations moved to Dubai from Bahrain for that reason, though Bahrain has been successful in preventing a mass exodus of financial firms, Singer said.
Some fund managers complain that new UAE investment fund rules introduced late last year could hurt the DIFC by placing a bigger burden of regulation on it and making it harder for funds to market themselves in the wider country outside the free zone.
The DIFC is continuing to hold discussions with the UAE Securities and Commodities Authority on how to apply the rules to the DIFC, Singer said.


Telegram Russia ban spurs privacy debate

Updated 21 April 2018
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Telegram Russia ban spurs privacy debate

  • Telegram has always attracted a mix of criticism and respect for its use of encryption to ensure its messages between users remain confidential.
  • A Moscow court decided last week to block the app in Russia because it refused to hand over encryption keys to authorities.

LONDON: Telegram, the messaging app that re-located from Russia to Dubai, has again fallen foul of the authorities in its mother country. So what is it about the social media platform that simultaneously has governments worldwide so concerned and freedom of speech advocates so agitated?
Telegram has always attracted a mix of criticism and respect for its use of encryption to ensure its messages between users remain confidential.
A Moscow court decided last week to block the app in Russia because it refused to hand over encryption keys to authorities — sparking fresh controversy around the app, which has previously been banned in countries such as Iran, Afghanistan and Indonesia.
Telegram has been under close scrutiny in Russia since legislation was passed in mid-2016 that required communication companies to hand over encryption keys to the Federal Security Service (FSB), if requested.
There was also a move to place companies on a “register of information distributors,” which requires firms to store user online communications for a set period of time and hand over data to the authorities when needed.

 


Some of Russia’s large social networks are reportedly on the register and Telegram was pressurized to register in mid-2017. Other Western social media companies such as WhatsApp are not listed. WhatsApp did not immediately respond to a request for comment.
Weeks after joining the register, Telegram refused to agree to FSB requests for encryption keys, resulting in the Russian media watchdog Roskomnadzor seeking court approval this month to block the app.
On the day of the court decision, Telegram’s founder Pavel Durov tweeted: “Privacy is not for sale, and human rights should not be compromised out of fear or greed.” The company has also said it is technically impossible to transfer encryption keys.
It was not the Russian entrepreneur Durov’s first run-in with Russian authorities. Telegram — which was launched in 2013 — originally had its development team based in St. Petersburg, but had to leave the country due to local IT regulations. It is currently based in Dubai.
The messaging app prides itself in being the most secure and independent form of instant messaging that respects the need for privacy. Its “secret chats” option makes use of end-to-end encryption that ensures only users can read them. Messages cannot be forwarded and you can order messages to “self-destruct” within a set amount of time. It can also alert users if the recipient of the message takes a screenshot of the correspondence. So-called Telegram “Channels” can be used to broadcast public messages to a large audiences.
While WhatsApp — which is owned by Facebook — also provides end-to-end encryption, Telegram differentiates itself with claims it is faster and more secure.
Damir Gainutdinov is a legal analyst at Russian human rights group Agora, which represented Telegram in court. He has headed up its project on the defense of online freedom in Russia since 2010.
He told Arab News that the block placed on Russia was more of a power-play by the authorities.
“I think that Russian authorities believe that Telegram is a threat because they cannot control it.
“But I wouldn’t say that it is really the biggest threat. The attack on Telegram is more about showing that they can block any global service if they want,” he said.
Russia’s government has argued that the app helps to enable terrorist attacks in the country, saying that access to encrypted messages is a national security issue.
The FSB said a suicide bomber who killed 15 people on a St. Petersburg subway in April last year had used Telegram to plan the attack.
Voices from outside Russia have also criticized Telegram for not doing enough to clamp down on terrorists using the app. “Terrorists and extremist groups such as ISIS (Daesh) use encrypted applications like Telegram because it allows them to recruit new members, fundraise, incite to violence, and even coordinate terrorist activity without the threat of being discovered,” said executive director David Ibsen at the US-based non-government organization Counter-Extremism Project.
“ISIS also created public channels on Telegram to broadcast pro-ISIS news updates and disseminate other propaganda materials,” he told Arab News. Durov has been quoted as saying at a conference in 2015 that the right to privacy is more important to the company than “our fear of bad things happening, like terrorism.” Following the Paris attacks in 2015, Telegram did revise its policy on its public channels, but it has refused to take down private Daesh chats, according to Ibsen.
Social media sites are coming under increasing pressure from authorities worldwide to do more to limit the promotion of extremism online.
In a statement to Arab News, Twitter said it had permanently suspended 274,460 sites in the second half of last year — down more than 8 percent on the previous reporting period.
While Telegram is far from the only social media app to be criticized for its counter-terrorism policies, it is seen by some as the more reluctant player in the battle against online extremism. “Social media companies remove content regularly that violates their stated terms of service, and some of this includes extremist and terrorist videos, images and other propaganda,” said Ibsen. “However, despite the availability of technology that can identify and permanently prevent prohibited materials from being re-uploaded, the biggest social media platforms are not taking this vitally important step,” he said.
“Telegram has become a refuge app from the moment the preferred apps (Twitter in particular) started to clamp down on extremist content,” said Rik Coolsaet, a professor of international relations at Ghent University in Belgium who has written extensively on counter-terrorism efforts. “Its encryption offered a secure environment for terrorist recruiters and groomers, but at the same time limited their propaganda outreach, since it is more difficult to access. For that reason, Twitter remains their preferred app,” he added.
Russia is not the only country clamping down on Telegram. Iran restricted certain channels in December last year during the protests and there have been recent threats that restrictions could be reimposed. A estimated 40 million Iranians use Telegram’s channels and messaging services.
“In the case of Russia and Iran, the Telegram crackdown has much more to do with controlling the lives of its citizens than it does with preventing terrorist activity,” said Ibsen.
Telegram did not respond to Arab News’ request for comment.

 

Q&A
We talk to leading world cyber terrorism expert Chris Sampson, co-author of “Hacking ISIS: How to Destroy the Cyber Jihad” and an analyst with the Terror Asymmetrics Project

Why are governments so worried about Telegram?
Telegram was launched as an encrypted messaging app. This meant that government agencies were less likely to be able to intercept messages passing across the Internet and read private conversations. However, in September 2015, Telegram also created an option for channels, which act like chat groups. This allowed like-minded individuals to essentially host a chat room. Unless the channel was set to public you couldn’t read what was discussed without being given an invitation link. Groups like ISIS began using these channels to share propaganda and information. Other groups use Telegram in much the same manner. Non-violent resistance groups around the world would also use the messaging app and channels to communicate so authorities in the countries they fear would be less likely to intercept their discussions.

Will clamping down on social media apps be effective?
As governments crack down and ban apps, others will rise and replace them with new features and focus on security from outside eyes. They will operate either within the legal construct or outside of it depending on the countries they seek to circumvent. Since laws around the world differ dramatically, what is legal in one country could be illegal in another. We’ve seen this already happen as countries sought to ban use of Telegram, WhatsApp or even Twitter. Inevitably the access to the technology remains the same and users find a way to use both encrypted messaging and social media platforms.

Does Russia’s action set a precedent?
Countries such as Indonesia, Iran, Afghanistan and others have banned Telegram. Brazil banned WhatsApp around the timing of the World Cup only to lift the ban. Such bans are largely ineffective because the majority of users are engaged in lawful communications yet want their privacy, those engaged in illegal and potentially violent activities make up a fraction of the userbase. The better solution is to know where nefarious users are lurking on the web and keep track of them in observable spaces. Banning the public’s access to messaging apps will always fail. Telegram and similar companies should deny government agencies the keys to encryption unless there is a reason given that would justify unlocking communications. If the governments are able to seize a phone and unlock it, they’ll already have access to a suspect’s communication if they haven’t erased the data.

Decoder

Telegram

Telegram, founded by Russian entrepreneur Pavel Durov in 2013, is an app that enables encrypted messaging, together with “self-destruct” messages. It is used by 200 million people worldwide. Authorities in a number of countries criticized it for providing secure communications channels for terrorists and criminals.