Migrants in UAE turn to crypto to send remittances home

A vendor waits for customers at his store in a market area in Dubai on May 18, 2023. (Photo courtesy: AFP)
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Updated 09 June 2023
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Migrants in UAE turn to crypto to send remittances home

  • Almost 90 percent of the UAE’s population are migrants
  • Many say crypto is cheaper and easier way to send cash

Muhammed Bilal used to have to wait his turn outside a money transfer office in the scorching heat of Dubai to send home $1,000 to his wife and parents in Pakistan each month, at a cost of about $7 per transfer.

He has since switched to an app that allows him to send money instantly with no transfer fees, joining a growing number of migrants in the United Arab Emirates using cryptocurrencies and blockchain services to send remittances quickly and cheaply.

“Now, I don’t need to wait in queues,” said Bilal, a 27-year-old customer service agent.

“I do it at home from my mobile phone and the money is sent within seconds.”

The Middle East and North Africa had the fastest-growing crypto market in the world last year, according to blockchain data platform Chainalysis, with crypto transfers into the region rising by 48 percent to $566 billion in the year to June.

The use of crypto for remittances and savings, as well as increasingly permissive regulations are helping to drive growth in the region, it added.

The UAE plans to make Dubai “the first city fully powered by blockchain,” and has developed laws and regulatory systems around digital assets as it pushes to become a hub for the crypto industry.

Antti Arponen, CEO of Dubai-based fintech firm Pyypl, said 5 million people had downloaded the app since its launch in 2017.

“Eighty percent of our users are migrants and the numbers have been growing exponentially in the past few years,” he told the Thomson Reuters Foundation.

Migrant workers said crypto offered a better deal than traditional banking and money transfer services, despite a crash in the market last year that left many holders of digital coins nursing heavy losses.

“With crypto, there are almost zero fees — easy, instant and safe,” said Gerard Dingal, a 30-year-old pastry chef, who has been using crypto and Pyypl to send money to his mother and sister in the Philippines.

But such platforms expose users to the risk of scams and highly volatile currencies, said Pete Howson, a crypto expert and assistant professor in international development at Northumbria University, in the British city of Newcastle.

“Users’ funds aren’t insured when they use these sorts of platforms (crypto and blockchain-based apps), like they are with a bank,” he said.

Migrants seek value

Nearly 90 percent of the UAE’s 9.3-million population are migrants, according to a report by the UN Capital Development Fund last year, many from India, Pakistan, Bangladesh, Indonesia and Egypt.

They account for billions of dollars in remittances to their home countries, but most are manual workers who do not earn the 5,000 dirham ($1,350) minimum monthly income required to open a bank account in the UAE, it said.

Migrants also often use cash transfer services because they are cheaper, said Mohammad Jalal Uddin Sikder, a researcher in labor migration and a coordinator at the Center for Migration Studies in Bangladesh.

“Migrants carefully consider every cent. Going to the bank and sending any form of remittances entails high fees,” he said.

Money transfer services in the UAE typically charge a flat fee of 25 dirham per transaction.

But cryptocurrencies, which allow “peer-to-peer” transfers between users online without any intermediaries such as banks or financial authorities, can be better value still.

Migrants can buy crypto using credit cards or crypto exchange offices and then transfer it instantly to their families’ digital wallets. Their relatives will then have to convert the crypto to the local currency.

Transfer costs usually range from free to 0.5 percent depending on the app used and the country coins are being sent to. There is also typically a charge for conversion in or out of local currencies, though some services charge as little as one cent.

Volatile market

As crypto services in the Gulf cash in, banks and other financial institutions are also trying to harness tech developments to make it easier and cheaper for migrant workers to send remittances home.

The UAE’s central bank has announced a “Digital Dirham” currency which it says will help ease cross-border payments and improve financial inclusion.

In March, it signed an agreement with India’s reserve bank to pilot a shared infrastructure to facilitate cross-border transactions of national digital currencies for remittances and trade.

The Foreign Exchange and Remittance Group, a UAE industry body for the money transfer industry, said in its 2022 annual report that its members are also increasingly offering mobile and digital payments in response to demand.

But some migrants who held cash in crypto say they are looking for less risky options.

Ahmed Abdel Fattah, an Egyptian migrant in the UAE, used to invest and send remittances in crypto, but he started to lose faith in digital assets after the 2022 market crash.

“I lost more than half of my investments,” said Abdel Fattah, a driver.

“It is a very volatile market. That is why I stopped investing in crypto and I am now thinking about other options.”

Howson said that take-up of cryptocurrencies and blockchain services will be limited where better, safer options exist.

“Crypto works for migrants, until it doesn’t,” he said.

“Blockchains are useful when you don’t trust political and financial institutions ... (but) no one wants to be held accountable when things go wrong.”


Israel eyes scrapping free trade deal with Turkiye

Updated 18 May 2024
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Israel eyes scrapping free trade deal with Turkiye

  • War in Gaza has stirred public reaction significantly ahead of March 31 local elections

ANKARA: After Israeli Finance Minister Bezalel Smotrich announced on Thursday that Israel intends to scrap its free trade agreement with Turkiye and impose a 100 percent tariff on other imports from the country in retaliation for Ankara’s recent decision to halt exports to Israel, eyes are now turning to imminent implications for regional trade.

The plan, which aims to reduce Israel’s dependence on Turkiye, has not been finalized yet and will have to be submitted to the Cabinet for approval.

If approved, all reduced tariffs on goods imported from Turkiye under the current free trade agreement would be abolished, while a tariff of 100 percent of the value of the goods would be imposed on all imported products, in addition to the existing tariff.

Experts note that trade ties between the two countries had been mostly insulated from political disagreements in the past. Trade continued when diplomatic relations hit rock bottom, especially between 2010 and 2020, a politically tense period during which parties chose not to burn “trade bridges.”

But this time, Turkiye’s continuation of trade relations with Israel while at the same time being vocal in denouncing its war in Gaza stirred public reaction significantly ahead of the March 31 local elections, when large crowds and some Islamist breakaway parties criticized the government for not taking a hardline stance against Israel and for not matching rhetoric with action.

In late April, Turkiye, whose bilateral trade with Israel was worth about $7 billion a year, announced it would impose trade restrictions on 54 products exported to Israel until a permanent ceasefire in Gaza was declared.

The product range was diverse, from cement to dry food, iron, steel, and electrical devices.

However, companies have three months to fulfill existing orders via third countries.

In his statement, Smotrich described Turkiye’s move as a serious violation of international trade agreements to which Ankara is a signatory.

He added that Israel’s latest decision would last as long as President Recep Tayyip Erdogan remained in power.

Turkiye and Israel have had a free trade agreement since the mid-1990s, making Ankara a key commercial partner for Israeli importers. Relatively cheap imports were transited quite quickly, and Turkiye was Israel’s fifth-largest source of imported goods.

Israel mainly imported steel, iron, motor vehicles, electrical devices, machinery, plastics, and cement products, as well as textiles, olive oil, and fruits and vegetables from Turkiye, while Turkiye mostly bought chemicals, metals, and some other industrial products from the Middle Eastern country, with Turkiye’s trade with Israel tilted in Ankara’s favor.

“Since Erdogan announced that Turkiye would impose a trade ban on imports and exports from Israel, Israeli officials have been trying to determine how best to respond,” Gabriel Mitchell, a policy fellow at the Mitvim Institute, told Arab News.

“The first was Foreign Minister Israel Katz, who criticized Turkiye’s decision and later announced that Turkiye had lifted many of the restrictions. This put pressure — once again — on Erdogan to show the Turkish public that he is willing to ‘put his money where his mouth is’ with Israel and forced the Turkish government to deny these rumors,” he said, adding that it also compelled “Erdogan to be even more vocal in his criticism of Israeli policy.”

According to Mitchell, Smotrich — who is a minister but not a member of the Likud party — saw this as an opportunity to make his own headlines in proposing the move to cancel the free trade agreement.

As this move requires Cabinet approval, Mitchell said he would be very surprised if it were approved.

“It would be an escalatory step and undoubtedly have serious short-term economic consequences,” he said.

“It is important to bear in mind the domestic situation in Israel. There is increasing pressure on Netanyahu, and as a result, the more radical voices feel that by pushing populist policies, they are in a win-win situation: Either their policy is adopted, and they get credit for the idea, or it is rejected by others in the government, and they can criticize them for being soft,” Mitchell added.

“Erdogan is very unpopular in Israel — arguably the most unpopular regional leader — so some believe that while there are voices in Israel that would oppose the decision, there are many that would go along with it without really understanding the economic implications.”

Mitchell also noted a caveat, saying that the free trade agreement would be canceled until Erdogan steps down.

“I don’t understand what that means, given that such agreements are made bilaterally. Who is to assume that in 2028, Erdogan will no longer be president, and whoever succeeds him will be interested in signing a free trade agreement with Israel? It is a risky approach,” he said.

“My final point, and it is worth considering, is that Smotrich also wrote (in) a letter to Netanyahu that ‘representatives of Turkiye’s president, the anti-Semitic enemy of Israel, Erdogan’ were involved in the hostage negotiations — so it all gets mixed up and confused,” Mitchell added.

Continuing its strong rhetoric, Turkiye recently announced that it would join South Africa’s genocide case against Israel at the International Court of Justice.

From its side, Israel filed a complaint to the Organization for Economic Cooperation and Development against Turkiye over the latter’s decision to suspend trade with Israel.

Sinan Ulgen, director of the Istanbul-based think-tank EDAM and a visiting fellow at Carnegie Europe, says Israel’s latest decision should be seen as an economic and political response to the Turkish government’s earlier decision to impose a trade embargo on Israel.

“The economic impact can be significant, especially on some of Israel’s critical products imported from Turkiye, such as construction materials, including cement. However, this does not mean Israel couldn’t import these items from other countries.

“But for Israel, it would be a costly trade diversion, and it will increase the internal cost of these products and possibly have an impact on domestic inflation,” he told Arab News.

Israel imports about a third of its cement and almost 70 percent of its iron construction materials from Turkiye.

“Another consequence is that unlike Turkiye’s decision to impose a temporary trade embargo with conditions, Israel is now moving in the direction of essentially imposing a permanent and lasting measure, which is to cancel a free-trade agreement that has been in place since the mid-1990s,” Ulgen said.

After the Turkish boycott of all trade with Israel, prices, especially in the housing sector, are expected to increase gradually, pushing up the cost of living in Israel.

Ulgen noted, however, that Turkish products could still indirectly reach Israel through third countries, for example, by transiting from the EU because Turkiye and the EU have a customs union. However, alternative transportation trade routes that circumvent the restrictions can be longer, more complex, and costlier.


Israeli leaders split over post-war Gaza governance

Updated 18 May 2024
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Israeli leaders split over post-war Gaza governance

  • Prime Minister Benjamin Netanyahu comes under personal attack from Defense Minister Yoav Gallant for failing to rule out an Israeli government in Gaza after the war

JERUSALEM: New divisions have emerged among Israel’s leaders over post-war Gaza’s governance, with an unexpected Hamas fightback in parts of the Palestinian territory piling pressure on Prime Minister Benjamin Netanyahu.
The Israeli army has been battling Hamas militants across Gaza for more than seven months while also exchanging near-daily fire with Iran-backed Hezbollah forces along the northern border with Lebanon.
But after Hamas fighters regrouped in northern Gaza, where Israel previously said the group had been neutralized, broad splits emerged in the Israeli war cabinet in recent days.
Netanyahu came under personal attack from Defense Minister Yoav Gallant for failing to rule out an Israeli government in Gaza after the war.
The Israeli premier’s outright rejection of post-war Palestinian leadership in Gaza has broken a rift among top politicians wide open and frustrated relations with top ally the United States.
Experts say the lack of clarity only serves to benefit Hamas, whose leader has insisted no new authority can be established in the territory without its involvement.
“Without an alternative to fill the vacuum, Hamas will continue to grow,” International Crisis Group analyst Mairav Zonszein said.
Emmanuel Navon, a lecturer at Tel Aviv University, echoed this sentiment.
“If only Hamas is left in Gaza, of course they are going to appear here and there and the Israeli army will be forced to chase them around,” said Navon.
“Either you establish an Israeli military government or an Arab-led government.”
Gallant said in a televised address on Wednesday: “I call on Prime Minister Benjamin Netanyahu to make a decision and declare that Israel will not establish civilian control over the Gaza strip.”
The premier’s war planning also came under recent attack by army chief Herzi Halevi as well as top Shin Bet security agency officials, according to Israeli media reports.
Netanyahu is also under pressure from Washington to swiftly bring an end to the conflict and avoid being mired in a long counterinsurgency campaign.
Washington has previously called for a “revitalized” form of the Palestinian Authority to govern Gaza after the war.
But Netanyahu has rejected any role for the PA in post-war Gaza, saying Thursday that it “supports terror, educates terror, finances terror.”
Instead, Netanyahu has clung to his steadfast aim of “eliminating” Hamas, asserting that “there’s no alternative to military victory.”
Experts say confidence in Netanyahu is running thin.
“With Gallant’s criticism of Netanyahu’s failure to plan for the day after in terms of governing Gaza, some real fissures are beginning to emerge in the Israeli war cabinet,” Colin P. Clarke, director of policy and research at the Soufan Group think tank, wrote on X, formerly Twitter.
“I’m not sure I know of many people, including the most ardent Israel supporters, who have confidence in Bibi,” he said, using Netanyahu’s nickname.
The Gaza war broke out after Hamas’s attack on southern Israel which resulted in the deaths of more than 1,170 people, mostly civilians, according to an AFP tally of Israeli official figures.
The militants also seized about 250 hostages, 125 of whom Israel estimates remain in Gaza, including 37 the military says are dead.
Israel’s military retaliation has killed at least 35,386 people, mostly civilians, according to the Hamas-run Gaza’s health ministry, and an Israeli siege has brought dire food shortages and the threat of famine.
Many Israelis supported Netanyahu’s blunt goals to seek revenge on Hamas in the aftermath of the October 7 attack.
But now, hopes have faded for the return of the hostages and patience in Netanyahu may be running out, experts said.
On Friday, the army announced it had recovered bodies of three hostages who were killed during the October 7 attack.
After Israeli forces entered the far southern city of Rafah, where more than a million displaced Gazans were sheltering, talks mediated by Egypt, the United States and Qatar to release the hostages have ground to a standstill.
“The hostage deal is at a total impasse — you can no longer provide the appearance of progress,” said Zonszein of the International Crisis Group.
“Plus the breakdown with the US and the fact that Egypt has refused to pass aid through Rafah — all those things are coming to a head.”


Sudan paramilitaries say will open ‘safe passages’ out of key Darfur city

Updated 18 May 2024
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Sudan paramilitaries say will open ‘safe passages’ out of key Darfur city

  • El-Fasher has been in the grips of fighting as the RSF seeks to control it

PORT SUDAN: Sudan’s paramilitary Rapid Support Forces have announced their willingness to open “safe passages” out of the former haven city of El-Fasher in Darfur, which has been gripped by fighting for weeks.
The RSF, battling the regular army for more than a year, affirmed in a post on X late Friday “the readiness of its forces to help citizens by opening safe passages to voluntarily leave to other areas of their choosing and to provide protection for them.”
El-Fasher, the state capital of North Darfur and once a key hub for humanitarian aid where many had gathered for shelter, has been in the grips of fighting as the RSF seeks to control it.
The paramilitaries called on residents of El-Fasher to “avoid conflict areas and areas likely to be targeted by air forces and not to respond to malicious calls to mobilize residents and drag them into the fires of war.”
Sudan has been in the throes of conflict for over a year between the regular army led by de facto ruler Abdel Fattah Al-Burhan and the RSF led by his former deputy Mohamed Hamdan Dagalo.
The conflict has killed as many as 15,000 people in the West Darfur state capital of El-Geneina alone, according to United Nations experts.
Medical charity Doctors Without Borders on Wednesday said its hospital in North Darfur had received more than 450 people killed in the fighting since May 10, but noted that the actual death toll was likely much higher.
Also on Wednesday, the UN’s humanitarian coordinator said residents of Sudan were “trapped in an inferno of brutal violence” and increasingly at risk of famine due to the rainy season and blocked aid.
Tens of thousands of people have died and millions have been displaced since the war broke out in April 2023.
The UN on Friday warned it only had 12 percent of the $2.7 billion it sought in funding for Sudan, warning that “famine is closing in.”


Funerals offer displaced Lebanese villagers a chance to go home

Updated 18 May 2024
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Funerals offer displaced Lebanese villagers a chance to go home

  • Many residents of towns and villages on either side of the Israel-Lebanon border have evacuated their homes for safety

MAIS AL JABAL: For displaced south Lebanese villagers, funerals for those killed in months of cross-border clashes are a rare chance to return home and see the devastation caused by Israeli bombardment.
“My house is in ruins,” said Abdel Aziz Ammar, a 60-year-old man with a white beard, in front of a pile of rubble in the border village of Mais Al-Jabal.
Only a plastic water tank survived.
“My parents’ house, my brother’s house and my nephew’s house have all been totally destroyed,” said Ammar, who was back in Mais Al-Jabal this week for the funeral of a Hezbollah fighter from the village.
Many residents of towns and villages on either side of the Israel-Lebanon border have evacuated their homes for safety.
The Iran-backed Lebanese movement has been intensifying its attacks, while Israel has been striking deeper into Lebanese territory, in cross-border violence that has killed at least 419 people on the Lebanese side, according to an AFP tally.
Most of the dead are Hezbollah fighters, including seven from Mais Al-Jabal, but at least 82 are civilians, three of whom journalists.
Israel says 14 soldiers and 11 civilians have been killed on its side of the border.
For funerals in the south, the Lebanese army informs United Nations peacekeepers, who then inform the Israeli military, a spokesperson for the United Nations Interim Force in Lebanon said.
The peacekeepers usually patrol near the border, and act as a buffer between Lebanon and Israel.
Ammar fled his village for Beirut’s southern suburbs, a Hezbollah stronghold, two weeks after the violence broke out.
The International Organization for Migration says more than 93,000 people have been displaced in south Lebanon, while authorities in Israel have evacuated tens of thousands from the country’s north.
“We come for the funerals, but we inspect our homes. Those whose houses haven’t been destroyed use the time to collect their belongings,” Ammar said.
“The house meant a lot to us, it was big,” with plenty of space for the children outside, he said of his home in Mais Al-Jabal.
“My daughter always tells me, ‘I miss the house, when will we go back?’”
An AFP photographer saw dozens of houses razed or partially destroyed in the village, which resembled a battlefield surrounded by green countryside.
A funeral procession crossed the rubble-strewn streets, with people chanting slogans in support of Hezbollah, not far from Israeli positions across the border.
Hezbollah flags fluttered in the wind as women in chadors walked together, some wearing yellow scarves -the color of the Shiite Muslim movement — or holding pictures of the fallen “martyr”.
“Whether I carry a weapon or not, just my presence in my village means I am a target for the Israelis,” Ammar said, noting the fighting does not always stop for the funerals.
On May 5, a man, his wife and two children were killed in a strike on Mais Al-Jabal while a funeral took place.
They had returned to the village to collect things from a store they owned, believing it to be a moment of calm, local media reported.
In front of a half-destroyed house, people piled a small truck with whatever they could — a washing machine, a child’s stroller, a motorbike and plastic chairs.
Amid rubble in the village, a sign was propped up reading: “Even if you destroy our houses, your missiles cannot break our will.”
Lebanese authorities are waiting for a ceasefire to fully assess the damage, but have estimated that some 1,700 houses have been destroyed and 14,000 damaged.
Emergency personnel have reported huge damage and villages emptied of residents, while many journalists have been reluctant to travel to the border areas due to the heavy bombardment.
The overall bill already exceeds $1.5 billion, authorities estimate, in a crisis-hit country where compensation procedures remain vague.
But to village resident Khalil Hamdan, 53, who also attended the funeral, “the destruction doesn’t make a difference.”
“We will rebuild,” he told AFP.


Oil tanker hit by missile off Yemen: security firm

Updated 18 May 2024
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Oil tanker hit by missile off Yemen: security firm

  • The vessel and crew are safe and continuing to its next port of call: UKMTO
  • The incident occurred 76 nautical miles (140 kilometers) off Yemen’s Hodeidah

DUBAI: A crude oil tanker was hit by a missile off the coast of Yemen’s southwestern city of Mokha overlooking the strategic Bab Al-Mandeb strait, maritime security firm Ambrey said Saturday.
“A Panama-flagged crude oil tanker was reportedly ‘attacked’” about 10 nautical miles southwest of Mokha, Ambrey said, adding that information “indicated the vessel was hit by a missile and that there was a fire” in the ship’s rear.
The firm later said it had “received information that indicated that the tanker had received assistance. One of the steering units of the vessel was reportedly functional.”
The British navy’s maritime security agency said earlier it had received a report of a vessel “sustaining slight damage after being struck by an unknown object.”
“The vessel and crew are safe and continuing to its next port of call,” United Kingdom Maritime Trade Operations (UKMTO) added.
It said the incident occurred 98 nautical miles (180 kilometers) south of Yemen’s Hodeidah, without specifying the type of vessel involved.
Iran-backed Houthi rebels who control much of Yemen have launched dozens of attacks on vessels in and around the Red Sea since November in a campaign they say is in solidarity with Palestinians in war-torn Gaza.
The attacks have prompted reprisal strikes by US and British forces and the formation of an international coalition to protect the vital shipping lanes through the Gulf of Aden and the Red Sea.