Liability for Online Comments: European Court of Human Rights Adopts Saudi View

Discerning users of LawyerofArabia will notice that the comments section is moderated.  Most comments received are spam, which is easily resolved with a “delete” function.

Potential defamation, on the other hand, is not so easily resolved.  Once posted, defamatory comments can carry liability for any website operator – in Saudi Arabia, and now in Europe (and also in America, though a reasonable response to a “cease and desist” notice by taking down offensive conduct usually suffices to avoid lawsuits).

The European Court of Human Rights’ recent ruling in Delfi AS v. Estonia appears to apply a standard by which news sites can be held liable for defamatory comments or hate speech posted in the forums.  Even if they post rules indicating that offensive content will be taken down. Logically, that means that any other site that posts comments can also be held liable.

In this, the European Court of Human Rights has adopted the Saudi practice: moderated comments, even with a “notice and take down” mechanism, are inadequate protection – simple display of offensive content is sufficient to establish liability.  In Saudi Arabia, the concern is primarily with defamation or offensive comments directed at the government, or the faith.  In Europe, the concern is primarily with incitement to racial hatred.

While advocates of free speech may clamor, the law is clear and the risks are substantial.

Saudi Arabia perceives itself as a stalwart defender of human rights.  In many ways, the country has taken a lead, particularly in accordance with the Kingdom’s unique definitions of concepts such as the freedom from attacks upon faith.  Some folks in America protest the “war on Christians” (even framing the shootings last week in Charleston in terms of “Christian persecution“) or the “war on Christmas” – but the Kingdom has certainly ensured that such comparable “attacks” on Islam will never be tolerated. One wonders if such spectators and commentators would prefer that America – like the European Union – follow the Saudi example for balancing rights.

Be that as it may, as this site is read in Saudi Arabia and Europe, which both offer a distinctive view as to liability for comments, the comments section shall remain primarily closed.

Note: This lawyer has advised numerous international corporations on this precise liability issue in Saudi Arabia, and stands prepared to continue to do so – but in view of the policy of non-solicitation on this website, such advice shall not be rendered directly in these pages.  Any person seeking advice on the law of Saudi Arabia is advised to find a lawyer with the appropriate expertise.

Alternatives to Breast Milk Law

Saudi Arabia has one of the strictest laws on the books against marketing alternatives to human breast milk to mothers.  Severe fines and even criminal penalties can apply for firms that violate this law, which has prompted distinctive marketing and labeling of products in order to comply.

The Saudi law is a harsher variation of the  “International Code of Marketing Breast-Milk Alternatives.”  Where the code favors educational and informational materials that refrain from displaying pictures of babies (e.g., the Gerber baby), the Saudi law imposes criminal and other penalties.

Infant formula makers, by and large, agree that breast milk is preferable to any other food for babies of a certain age, but they note (1) some mothers are unable to produce it, (2) many women are unable to produce and store it (absence of refrigeration) – which requires they keep their babies with them at all times to be able to feed them (reducing their life options), and worst of all, (3) some mothers offer horrible alternatives – like milk from cows, sheep, or goats – which is absolutely improper and unhealthy for babies.

The debate over breast milk alternatives arises these days in attacks against various free trade agreements.

Consider this report:

In the mountains of Guatemala, graduate student Christine Bixiones watched mothers feed coffee and soda to their newborns. She saw some of the poorest women in the world — who could barely afford to eat — buy baby formula instead of simply breastfeeding their babies. And she saw way too many malnourished children — 78 percent in the highland indigenous communities, where pneumonia and diarrhea are the two main causes of childhood death. (Source: Endeavors)

Horrible.  “Simple” breast feeding could save so many babies from malnutrition.  Yet is it really so simple?

In 1981, Guatemala signed onto the “International Code for Marketing Breast Milk Alternatives” and then proceeded to issue a code for marketing that required all breast-milk alternatives to be labeled a certain way.  Gerber sued to prevent the law from taking effect in Guatemala, as it would block their products from importation.  In the 1990s, the Supreme Court in Guatemala sided with Gerber, determining that the code only applied to domestically produced products.

Activists have been incensed with the “corporate power play” – when perhaps they ought to be incensed by the plight of poor women in Guatemala and malnourished babies.  How might one actually help those babies?

Ideally, a few hundred doctors would miraculously spring up, to provide education in impoverished areas (for free).  Ideally, entire regions would spring toward fruitful tranquility, enabling local farmers and producers to grow all they need to protect their babies.

But in the real world, who is best positioned to provide some nutrition that may not be ideal – but is at least better than coffee and soda (or other forms of milk, which are routinely used)?  Corporations like Gerber, with profit incentives, can finance low-grade sales agents to speak with mothers and discourage absolutely inappropriate food for babies (coffee, soda, pasteurized cow/sheep/goat milk).  Such sales agents may not be doctors, but they can at least point out some of the risks of malnutrition.  The profit incentive requires selling some product that is clearly better than at least some of the available options. After meeting such sales agents, mothers choose from available options.

Having represented at least one major multinational firm involved in infant formula, I was struck at the efforts made by the company to limit the use of its own products to those cases where a mother might not be able to produce milk, or might not be able to store it in a refrigerator.  I was also struck by the powerful irony – so many of the activists that despise the corporate world also despise the Saudi patriarchy (they tend to have a long list of despicables).

If women are to work, without having their babies with them at work, they need options.  Even in a wealthy country like Saudi Arabia, many people lack reliable refrigeration to pump and store their breast milk.  The only way to advance the cause of women is to enable them to pursue education and employment – so they control certain options about how to spend their day.  To the well-meaning activists seeking to attack the “corporate profit power grab” – consider how many millions of women will have far more limited prospects if an “ideal” of motherhood is imposed upon them, as opposed to the “realities” that mothers confront each day.

Note 1: the more modern solution to the problem has been to focus on maternity leave, to enable women to tend to their babies and still return to work after six months, rather than to enforce the criminal elements of the “Breast Milk Alternatives Law.”  As it should be.

Note 2: Bixiones, as a grad student at UNC, appears to have offered helpful medical advice to a number of Guatemalan women – e.g., colostrum is safe and healthy (renaming it ‘leche de oro’ – so the yellowy milk is not regarded as ‘dirty’) –  if using a bottle, be sure to sanitize it with clean water, etc. That’s wonderful, important work, and creative branding.   Sadly, one is unlikely to see hundreds of such medical advisers permanently basing themselves in poor regions of Guatemala (most such students return to finish grad school and build a career – in a wealthy country, like America).  One must do the best one can with the world one has, see it as it actually is, and then strive to improve upon what one finds.

Mass Murder, Terrorism: America and Others

Every time there is an incident of mass murder in the Muslim world caused by Muslims, Western media clamors to hear Muslim voices denouncing the incident.  After Muslims issue such denunciations, Western pundits pick and choose whom to review.  Frequently, they find some Muslim commentator who asserts the killers were misguided, deranged, sick individuals.  Western media sources then pounce on such statements to claim “Muslims are divided on terrorism” or “Muslims fail to take a strong stand against terrorism.”  The most xenophobic assert that “Muslims support terrorism by their weak condemnation.”

Quite unlike America, where every time there is an incident of mass murder in the Western world caused by Westerners, at least some symphathetic voice in Western media finds the perpetrator a “mentally ill” individual.  And then changes the subject.

Responses to the tragedy in Charleston, South Carolina now focus upon removing the Confederate flag (the perpetrator allegedly hoped to ignite a civil war by killing black people), gun control, attacks on Christians (FoxNews), and numerous other angles.  “Terrorism” by white Americans against non-whites is a matter of debate.

Washington Post writer Philip Bump argues that we shouldn’t call Dylann Roof a terrorist.  It’s not a very convincing argument, amounting to

…our insistence that terrorism is somehow a higher order of evil than simply murdering elderly people for being black even as they held their Bibles in a church. It implies that his mass murder was one thing, but that his scaring us was made things more problematic.

Let’s review the actual argument after speculating for a second: if Bump were a Muslim, say from Qatar, and if Mr. Roof were also a Muslim, then the simple headline would suffice to indict Muslims generally as “supporting terrorism” – at least in some corners of American media.  Those corners wouldn’t bother assessing the argument.

But let’s try to do so, as a token of respect.  Bump is not “justifying” terrorism, but arguing against wantonly using the label.  As a white American commentator reviewing the facts involving a white American shooter, Bump seeks to direct policy towards resolving this problem and avoiding simplistic labels.  It’s a fair point (one raised by many Muslims, who are routinely derided when they raise it) – the goal is not just to demonize an evil act, but to frame the act in a matter helpful toward preventing and addressing it.

 

The problem of terrorism, and why it is a “higher order of evil” has little to do with the possible “fear” created by any “terroristic attack.”  Terrorists often (but not always) hope their actions will result in broader wars that ultimately serve their agenda (e.g., Gavrilo Princip assassinated Archduke Ferdinand, sparking World War I – a war that resulted in the destruction of the Austro-Hungarian Empire – or Osama bin Laden, who helped set the U.S. on a path toward invading Iraq, which he hoped would result in the destruction of America, just as he believed the invasion of Afghanistan caused the destruction of the Soviet Union).

Terrorists seek to mobilize misguided, blunt anger to direct their enemy to do things their enemy otherwise would not do.  It is a political act calculated to magnify numerous other evils.  That sort of premeditation renders it a very different sort of crime than murder.

Fringe individuals on both the right (Roof, McVeigh, Nichols), the left (e.g., the Galleanists responsible for a wave of bombings in 1919), and others – perceive that something sacred it being taken from them (their country, their women, their faith).  Some may expect others to rise up and follow their example, but most expect the forces that they believe to be attacking them to do so bluntly and exhaustively – they calculate that their enemies response will prompt further bloodshed.

When Bump argues Americans frequently use the term “terrorist” to mean “Muslim, foreign,” – he argues for reining in the use of the term.  A better response is the cold, simple, indiscriminate application of the term in every case that fits – including the many “white male” perpetrators – and then a colder, logical assessment of the number of perpetrators and the potential threats.

Once all the threats are assessed, calm voices may ask: what is the appropriate investment of resources to challenge specific terrorists?

18 U.S.C. Section 2331, defines “domestic terrorism” as activities which:

1. Involve acts dangerous to human life that violate federal or state law;
2. Appear intended (a) to intimidate or coerce a civilian population; (b) to influence the policy of a government by intimidation or coercion; or (c) to affect the conduct of a government by mass destruction, assassination. or kidnapping; and
3. Occur primarily within the territorial jurisdiction of the U.S.

The FBI has reported that over 40% of domestic terrorism in America was the work of Latino gangs, around 25% the work of left wing extremists (typically, property attacks), and 30% the work of right-wing extremists (typically, direct attacks on individuals – like Mr. Roof).  Less than 6% is the work of Muslim extremists.

How does DHS allocate its resources?  The Pentagon?What portion is directed at Muslim extremists, v. other threats?

Groups like Al-Qaeda and the Daesh (the self-called “Islamic State”) are nasty.  But there are endless forms of nasty – and too many Americans believe (mistakenly!) that “most terrorists are Muslims” – simply because that’s the only report they hear.  Once upon a time, many Americans believed “most criminals are black” – which was also never been true.  A media camera fixates upon an “evil other” – obscuring the many evils closer to home from people who look like us.

That sort of preoccupation coalesces into stereotypes about certain groups, driving lousy policy and worse law.  One does well to subject any such policies and laws to “strict scrutiny” – and to eliminate them unless they are absolutely, clearly justified.

The notion of “strict scrutiny” first arose in America as a constitutional law doctrine when examining the internment of Japanese Americans in parts of the West – California claimed it was required to protect against a “threat.” Oddly, Hawaii, which had actually been attacked during Pearl Harbor, and which had a far larger Japanese population, never felt so threatened and never interned them.

One does better to grow up, and overcome fears by looking honestly at other people, coming to know who they are, how they see the world, and realizing, those “others” – by and large – aren’t all that different from ourselves.

Ramadan Kareem

Ramadan is scheduled to begin on Thursday, June 18. Ramadan Kareem, to our Muslim friends.

As a side note, several Muslims in America also celebrate Ramadan. For some, like inmates at Pleasant Valley State Prison, the celebrations are unpredictable (see the civil rights action filed by a Muslim inmate at the prison, Menefield v. Yates, which resulted in a settlement agreement between the Muslim inmate and the prison officials – as well as subsequent litigation on the matter).

Shari’ah Law and Traffic Law

The grand body of shari’ah law was set down long before the invention of the automobile, centuries before the creation of modern traffic regulations – or traffic cameras used to monitor speeding on public freeways.

Given that ancient pedigree, it’s fascinating to hear conflicts between Shari’ah scholars on the practice of alerting drivers to traffic cameras.

On the one hand, Sheikh Ali bin Abbas Al-Hakami, termed the act of alerting other motorists to the cameras (known as “Saher”) as immoral and “un-Islamic.”

On the other hand, Sheikh Mohammad bin Mohammad Al Mukhtar Al-Shanqeeti, noted that in many countries, authorities install warning signs before a car approaches the camera’s location in order to control the speed and foil other traffic violations.  Since some drivers might be justified when they speed (???), or may not intentionally violate the traffic laws, alerting them as to the cameras is a “favorable” act of looking after others.  Both appear to have asserted that obedience to the laws is important, but have regarded the effort to point out the cameras as having different legal significance (Al-Hakami seems to regard the practice as intended to enable drivers to evade punishment for breach of the laws – Al-Shanqeeti might agree with Al-Hakami if that is the actual intent and outcome, but that is indeterminable).

As an outsider, looking at others grappling with shari’ah concepts in a modern era, the interplay is instructive.  Just as American judges looking at the same facts grapple to apply legal principles to establish rules and norms, Saudi clerics make the same effort.

In some parts of America, efforts have been underway to ban shari’ah law.  Oddly, efforts at banning “foreign law” seem to overlook that both shari’ah law and Biblical texts were formulated in the Middle East.  Sadly, proponents of such bans as issued in Kansas miss the fact that Muslims, like all humans, struggle to abide by laws, and understand laws in the modern era – touting insurmountable differences based on culture and other “fundamental” distinctions.  LawyerofArabia asserts that Muslim traffic cameras operate by approximately the same mechanisms as American traffic cameras.  Now if only traffic conditions followed suit…

Spouse has no constitutional right to reside with husband in America

On April 21, 2015, I offered my guess at the court’s ruling in Kerry v. Din:

My expectation: 4-1-4 ruling with Kennedy trying to thread the needle, ultimately ruling the wife cannot prevail in this case for some narrow reason (perhaps overruling or reconstruing part of Mandel in the process)…(LawyerofArabia)

The actual holding by the US Supreme Court?  5 (3/2) – 4, holding the wife cannot prevail for some narrow reason, with Kennedy trying to thread the needle but ultimately joining a majority against Din (the Afghan wife, who just wanted to know why her husband had been denied a visa to join her in America).  Unexpectedly, Justice Alito joined Kennedy’s concurrence, which narrowly avoided consideration as to whether one has a “right” to marriage that cannot be infringed upon without due process of the law.

That guess, along with the analysis, flew in the face of a large share of immigration experts.  LawyerofArabia occasionally engages in the practice of immigration law, but refers prospective clients elsewhere: there’s an established bar with thousands of attorneys, some of whom offer far better expertise and experience.

Intriguingly, the American Bar Journal thinks a very relevant concern about this decision is it’s potential implications for homosexual marriage in America.  Perhaps the tea leaf readers see that.  I see a case in which an American woman is forced to choose whether to leave America to join her husband, who has been denied a visa because he might have once served dinner to the Taliban and can’t prove that they were never in his house.  I see a case in which three Supreme Court justices rejected that a spouse has a “liberty” interest in marriage (four justices refused to accept that reasoning, and two justices – Kennedy and Alito – argued that the court need not even consider this reasoning, on narrow grounds).

It has long been the case that a non-citizen spouse can be blocked from entry into the United States, simply because Congress has broad power in such matters.   Most countries have similar restrictions in place, where a spouse can be denied a visa to join a husband – many classes of workers have such reasoning used to bar their applications in Saudi Arabia as well.  Entry into a country is a privilege, not a right.

And yet…the drafters of the Magna Carta – which celebrated its 800th year anniversary yesterday- and which the Court majority cited at length – included “church” rights among the rights of the common law that the Crown could not infringe.  Of course, the authority of the church over marriage in England would prove contentious (and result in the creation of the Church of England) – clearly, “marriage” mattered in the Magna Carta.  I suppose Justices Scalia, Roberts, and Thomas see history slightly differently (for some reason, their preferred commentators sort of gloss over the implications of the Magna Carta and marriage – perhaps because the role of “church rights” in the Magna Carta was abundantly obvious – and contentious – in a country that had undergone vast civil strife on that issue).

The Middle East is NOT Falling Apart

The Middle East is falling apart!  The sky is falling!  The world is doomed!

Once upon a time, headlines like Philip Gordon’s piece in Politico would have irritated more than they do now.  Ten years ago, genocide in Darfur led to the deaths of 200,000 to 450,000+ people (the toll is contested; the brutality is not).  That long-running set of fights, coupled with Sudan’s long-running cadence of civil wars in the largest country in Africa (a country beset with struggles in its North, South, East, and West) reflected a major player in the Middle East – of which, one piece elected to separate into the new country of South Sudan in July 2011.

The colonial-entity crafted by British mapmakers once known as “Sudan” fell apart into two new entities.  But Africa remained vibrant enough to host the 2010 World Cup (despite FIFA shenanigans).

Africa is huge.  So is the Middle East.  Struggles between Palestinians and Israelis are grandified into “The Middle East Conflict” – even as numerous other struggles take place.  Meanwhile, elsewhere in the region, the tallest towers on the planet have been erected, business is being done, and most folks go about their work unaffected by struggles in Iraq, Syria, Libya, Yemen, or Egypt.

That said, Gordon’s piece notes something important – the focus is on “blaming” President Obama for failing to instill stability – when in practice, neither stability nor instability can be imposed from the outside.

That said, what most of the current critiques have in common are an assumption that U.S. policy is the most relevant variable in explaining what is going on—it’s not—and an utter failure to present an alternative approach that would work.

Well put.

The harsh reality is that the Middle East today is going through a period of tectonic and destructive change.

Not so well put.  The Middle East today is continuing a period of tectonic and CREATIVE change, which includes provinces where extreme bloodshed is underway, but also where general stability prevails.    But this is right on the money –

the U.S. policy debate about the Middle East suffers from the fallacy that there is an external, American solution to every problem

One critique of the various movements contending for power in the Middle East is that so many reflect a weak social society, where mainstream thinkers and community builders are sidelined, while radicals vie for domination.  Such action divides the world into “friends and enemies” – as opposed to “better and worse neighbors.” The Middle East has long been a realm in which “neighbors” struggled occasionally, then reached some compromise – while one faction came to dominate, perpetuation of that domination mandated a degree of cooperation.

The ultimate, ironic conceit of “LawyerofArabia” – aside from mocking the initially well-meaning efforts of a certain T.E. Lawrence (which ultimately contributed to the form of the modern Middle East – including it’s less than logical maps and borders) – the intent is to draw attention to law and its role in producing a realistic world.  Not because law generates justice (though it can help), nor because any one person’s opinion on law is likely to change many facts.  But because simply honoring contracts, regulations, rules – understanding them and using them appropriately – builds a possibility of community action and unity in the face of difference.

The collapse of authority of certain states in the Middle East, the persistent of authority in other states, and the current sporadic religious and other fights – all these things strike “LawyerofArabia” as indicia of an absence of law – a regime in which power untrammeled works its mischief.

A large number of Americans look at these trends and want to give up. They conclude the region is just too complicated and too dysfunctional, and we should just get out.

Perhaps LawyerofArabia is one of them.   But a piece of me will always be in the Middle East.  And another piece looks closely at this history –

When implying the United States can “fix” Middle Eastern problems if only it “gets it right” it is worth considering this: In Iraq, the U.S. intervened and occupied, and the result was a costly disaster. In Libya, the U.S. intervened and did not occupy, and the result was a costly disaster. In Syria, the U.S. neither intervened nor occupied, and the result is a costly disaster. This record is worth keeping in mind as we contemplate proposed solutions going forward.

Bingo.  The issue is not whether America should or should not intervene, or what will or won’t happen in the region.  It’s one of “who are we.”  Are there a large number of shared principles?  Do they create a possibility of broader action?  Is it worth it to do business with “those people” – who so often turn out not to be so different from “our people” at the end of the day?

Law is about two (or more) parties pursuing their interests – within bounds.  In time, the bounds take on power of their own, such that violating those bounds alleviates conflict and helps build something new, something that occasionally turns out to be surprisingly grand.

 

Taiwan, Los Angeles, and Arabia

The twin ports of Los Angeles and Long Beach, California, are the 19th and 21st largest container ports in the world, and between them, serve about 35-40% of America’s global imports. They handle about 8 million and 6 million containers apiece, roughly the same size as the Jebel Ali port in Dubai (13 million containers) (according to World Shipping Council).  In the Middle East, the Jeddah Islamic Port is the 2nd largest port by volume, handling approx 4 million containers – about 10% more than Sharjah, UAE (the 3rd).

Taiwan has long been a major investor in Saudi Arabia, e.g., the massive Jubail Fertilizer investment in partnership with SABIC; the focus how is on medium-sized foreign enterprises.  One report indicates that trade from Taiwan to Saudi Arabia grew from USD $4.6 billion in 2003 to USD $14.79 billion in 2013 – wow!

Taiwan does approximately the same volume of trade through Los Angeles – USD $17 billion (and the LA ports import about 25% of Taiwanese goods into America).

Right now, Taiwan is heavily reliant upon factories located in mainland China to produce the bulk of the goods sold to the U.S. and to Saudi Arabia.  China is a growing power, which has occasionally targeted foreign-owned enterprises.  As the world continues its “Pacific pivot” (regardless of whether politicians in any single country are on board) – it makes sense that both America and Saudi Arabia to cultivate close ties with Taiwan in order to balance suppliers.

Local Preferences and Investment: a broader picture

In the Middle East, anyone with extended experience knows the power of local “expertise” in a business context. Outsiders may take a bit of time to learn that “expertise” is almost always code for “connections.”

Outsiders often think of “local expertise” as somehow equivalent to “battlefield knowledge” – e.g., American revolutionary soldiers “knew” where to hide when British forces attacked in 1776, and “knew” where to go to attack them.  That mythologized view reflects domestic prejudices and attachments – such as the “mythologized” role of irregular militias (e.g., in Mel Gibson’s “The Patriot” – one revolutionary leader acknowledges that militias broke down in nearly every direct engagement with Redcoats – but Hollywood revisionism is far more powerful).  Historically, the French naval forces turned the tide of the American Revolutionary War even without any “local expertise” – not so much by directly destroying British forces, but by threatening British interests in Europe and throughout all of the British Empire.

The role of “outsiders” can easily be overstated – again, Hollywood plays a big part in that (e.g., “Lawrence of Arabia” – the figure whom this website mocks for ironic effect).  Expats like to tout their crucial significance (far easier to negotiate a better contract with their employers), when in practice, their main role in an international corporate setting is to be a “disposable working part” – managers in a bigger machine who can be exchanged with other managers.  Unless they have “connections.”

One aspect of “connections” that is most frequently misunderstood is the role of a small/mid-size firm in international business.  In the Middle East, such firms typically strive to act as an “agent” or a “reseller” – and scrupulously fight to avoid such a label.  They make their money selling other peoples products, contributing their “local knowledge” to help make large deals possible.  Marketing, in other words.

There’s absolutely nothing wrong with this – most business operates this way.  What is wrong is the mythologized view of a small firm – seeing “scrappy small-scale producers pitted against global goliaths” – when in fact, the two tend to strive to work together whenever possible.

Take this excerpt for example:

The effect on development [of international trade treaties] is also pronounced, forcing local governments to give “national treatment” to multinational companies when they might prefer to support local small- and medium-sized businesses. Supporters will call this “leveling the playing field,” but the reality is that NAFTA has created an extremely imbalanced set of rules that favor multinational investors but ask nothing of them in return. Requirements, for example, that a multinational company in a certain jurisdiction agree to operate for a certain period of time, or source a portion of its inputs locally, have been prohibited as illegal “performance requirements” by NAFTA. Chapter 11 therefore created a set of rights, but no responsibilities, for foreign investors and corporations. (Source: Foreign Policy in Focus)

The goal of fostering local “development” – at least insofar as it means, improving the lives of most people on the ground – is a good one, but too often, lazy, well-meaning souls miss some crucial realities.

Many “small and medium-sized businesses” offer services to local customers that consist primarily in hiring large multinationals to do the work and taking a slice off the top. Costs would be reduced if those large multinationals could do the work themselves, directly.  Lower costs would mean greater benefits for the broader public (but a few prominent elites in that public would not earn disproportionate rewards from their “access”).  When governments erect regulatory protections for “small/local firms” – they usually create a racket that protects certain elites at home by ensuring they can fleece multinational enterprises – effectively, they trade “connections” for “capital” (even when that’s explicitly illegal, as it is in Saudi Arabia and in other states).

A foreign multinational looking to do business with a local partner needs to assess those partners to determine whether this sort of parasitic relationship is what is intended.  Newer, smaller “local firms” are often fronts with access to “major figures” who wield unknown influence on transactions.  By engaging them, one can avoid “bribery” problems and other such issues – but only by accepting the lost profits from a normal, direct deal.  Should those “small/mid-size” firms undergo a change in family structure or political access (e.g., a key patriarch who “knew the right prince” passes away) – then an entire business case evaporates overnight.

Better by far to search out legitimate businesses which actually do some portions of their work themselves, and actively seek to expand on a proven track record.  Better still to seek out “local expertise” that does not also consist of “access.”

Egypt’s Minimum Wage: Charge foreigners more to hire locals…

In a February 25, 2015 op-ed published by the Washington Post, “The Trans-Pacific Partnership clause everyone should oppose,” Elizabeth Warren (an imminent Harvard Law professor elected to the Massachusetts Senate) published a story citing the risks of Investor-State Dispute Settlement mechanisms.

The op-ed has become a mantra, and the claim that Egypt is being sued by a foreign multinational corporation for raising the minimum wage has now become an established “fact” among a number of progressives.  Unfortunate, since that’s not really the dispute at all.

Labor unions, like the AFL-CIO, are outraged that a foreign company might sue to stop a government from raising the minimum wage.  Except, that isn’t what is happening in Egypt.  Indeed, if they reviewed the facts of the case, they’d quickly realize that Veolia’s investment in Egypt shifts a substantial number of non-unionized “informal sector” workers (who constitute about 75% of Egypt’s work force) from the informal sector to the formal sector – from a space where they could never even obtain a minimum wage, to a space where they can.

The World Bank chimed in on the debate over Egypt’s minimum wage, asserting that the problem isn’t the minimum wages are applied differently to different sectors, but rather, that minimum wages don’t benefit the vast majority of Egyptian workers who fall into the “informal” sector (agricultural workers, small family run businesses, and the like).  While this is indeed a problem, the bigger picture is that a sophisticated government like Egypt’s can use “selective” minimum wages to target ONLY the foreign multinationals doing business in Egypt (letting local businesses evade such minimum wages through numerous practices, most of which are legal, some of which are not).  The World Bank reports that 95% of Egyptian firms have fewer than 10 employees – meaning, the minimum wage won’t affect any of them.

Mind you, Egypt’s minimum wages are pretty problematic.  Doctors, for example, receive less than USD $500 a month – and most are required to work part of their day for free in public hospitals (effectively, instead of taxing  their income, doctors are taxed by their time).  Many of them work for 5-6 hours a day in the “public” hospital (if they even show up), then turn to their own “private” clinics for the evening, where they earn their real salary.  The ultimate result is a mixed “formal/informal” sector for medicine (and for every other service).

This sort of structure creates hardships for everyone, because no one (with any sense) focuses on performing one job to the best of their ability – instead, most Egyptian workers split their time between public sector jobs (which don’t pay much, but protect other benefits – like access to prominent people) and private sector jobs (which do pay, sometimes).  Drive through Cairo in the afternoon, and you’ll experience firsthand the problems of people struggling to balance 2-3 jobs.

The World Bank proposes temporary targeted wage subsidies as an alternative to minimum wage increases – a proposal with zero chance of succeeding (Egypt subsidizes the petrol for people to drive from job to job, as well as bread and other goods – there’s little budget for such “extravagance”).  But if 5% of the employers can be forced to pay more (and if 80% of the foreign companies doing business there are hit, but only a small number of local companies) – then that’s far more politically acceptable.

Except, as in this case, the “selective” component of the minimum wage kicks in: which firms will be forced to pay the new minimum wage?  Local, powerful companies, many of which are state-owned enterprises (or closely linked with the state – esp. the military’s broad number of industrial, food service, and other “semi-private” companies)?  Or foreign corps?

The saddest thing in this case is that well-meaning individuals who are out of their depth in Egypt have turned this into a debate about minimum wages in America – using a lazy, dishonest distortion of the Egyptian story to serve their own, separate political ends.  Shame on those offering this listing, who know so little about what they say!

The real problem with a “selective minimum wage” is that the selection can appear facially “fair” (after all, trash processors SHOULD earn a living wage, as should all workers) – but become discriminatory in practice.  History is rife with regulations and laws that “appear fair” but are actually intended to discriminate (in America, typically against African-Americans and other minorities).  One should not play this game, in any country, by obfuscating or ignoring the laws and contexts.