Wednesday, April 06, 2005

Microsoft in the Middle East

Microsoft is well-known among researchers of information infrastructures and information labor for several things: (a) its global near-monopoly position as a provider of PC operating systems; (b) its participation in grant programs through the Bill and Melinda Gates Foundation to donate free hardware, software, and training to deserving information and education agencies such as libraries and schools; and (c) its longstanding battles with its generally high-skill and high-wage labor force of designers, coders, testers, and other information workers over issues of temporary employment, subcontracting, and equitable relations of labor. So I was intrigued when all of these strands seemed to come together in an area I haven't really given much attention to: the country of Bahrain on the Arabian penninsula.

According to this story in the Gulf Daily News, "Two hundred Bahrainis graduated yesterday from a scheme designed to equip them for jobs in the information technology industry. Sixty-three have already found jobs" out of the "first group from the Career Connections initiative, held yesterday under his patronage at the Bahrain Training Institute (BTI) in Isa Town." The sponsors of this training program include "Microsoft in partnership with the ministry, Bahrain Institute of Technology (BIT) and Bahrain Development Bank (BDB). Its aim is to give unemployed Bahrainis basic computer skills, to open up job opportunities for them."

So here is an interesting non-US example of a rapidly-changing economy in a Gulf nation directing resources toward lessening its position in the global "digital divide" and bolstering the competitive position of its workers and its firms in the global information industry. But why call upon Microsoft? Turns out that Microsoft (not the Gates foundation) has a global program geared toward training future technology workers: "Career Connections is part of the Microsoft Unlimited Potential (UP) programme, which is a global initiative that focuses on improving lifelong learning for disadvantaged young people and adults. Microsoft Bahrain country manager Samir Benmakhlouf said they believe that by providing technical skills training they can partner with other community leaders to create social and economic opportunities that can change people's lives and transform communities." According to Benmakhlouf, "We are helping to bridge the global technology gap by providing the training tools people need to realise their potential. When you are a leader like Microsoft then you have a social responsibility towards governments and customers you deal with. Helping solve the unemployment problem is an issue that we see is very important."

This all raised some further questions for me: Why would high-tech companies like Microsoft be interested in investing in Bahrain in particular? Are there general state incentives, particular computer industry incentives, or particular Microsoft-strategy-related incentives at work here? How much of this program is a public relations strategy and how much is a strategy to build a network of subcontractable employees, sympathetic vendors, and open markets for the firm? So I started to gather some fragmentary evidence ...

From we find that Bahrain's government is aggressively pursuing foreign direct investment even if it involves more expatriate labor than indigenous labor:

Earlier this year, the Bahraini government rejected a Chamber of Deputies proposal to charge a 1 percent tax on remittances made by expatriates, who make up about 64 percent of Bahrain's workforce. Under the proposal, revenue collected from the tax would go toward an unemployment benefit fund for Bahraini workers. The government opposed the idea on the grounds that it would deter foreign investment and harm the country's commitment to free enterprise.

From we find that the US and Bahrain share a bilateral trade agreement, modeled on the WTO-based "Agreement on Government Procurement," allows the US government to purchase goods and services from Bahrain with US tax dollars with no restrictions, just as if the goods were produced here. This of course would be very important to a Microsoft-owned Bahrain subsidiary since Microsoft derives significant revenue from government contracts for operating systems, software, and services:

The AGP is a plurilateral agreement that currently applies to 38 Members of the WTO.[i]   The AGP was negotiated as part of the Uruguay Round, and implementing legislation was passed by the U.S. Congress as part of the Uruguay Round Agreements Act in 1994.[ii] The AGP entered into force for the United States on January 1, 1996.[iii] Federal agencies, 37 U.S. States, and various port authorities currently are listed as entities covered by the disciplines of the AGP. The agreement requires that covered entities treat foreign goods, services and suppliers from the other 37 signatory countries “immediately and unconditionally”[iv] the same as domestic suppliers when purchasing goods and services with taxpayer dollars. The AGP “applies to any law, regulation, procedure or practice regarding any procurement by entities covered by this Agreement…” and “applies to procurement by any contractual means, including through such methods as purchase or as lease, rental or hire purchase, with or without an option to buy, including any combination of products and services.”[v]The only caveat to this broad scope is that the agreement’s rules do not apply if a procurement opportunity involves only a relatively small amount of money.  The AGP also prohibits non-performance-related conditions in product or service technical specifications and supplier qualifications. Thus, with limited exceptions, covered entities are not allowed to adopt or maintain procurement policies that award contracts by considering factors beyond price and the ability to perform the contract.

Trade flows both ways, however. Microsoft can also sell software to the Bahrain government under this agreement, and from we see why it might be in Microsoft's interests to do this:

Bahrain's Central Informatics Organisation and Microsoft have launched a project to improve the e-literacy of civil servants in the country. The announcement was made by acting President of the Central Informatics Organisation, Shaikh Ahmed bin Ateyatalla Al Khalifa, and Country Manager for Microsoft in Bahrain, Samir Benmakhlouf.

They announced their initiative after signing a memorandum of understanding that boosts the Kingdom's e-government drive towards building an "intelligent Kingdom."

"By helping our government staff through individual training and developing information-technology skills we're better equipped in driving our e-government initiative successfully. With Microsoft as a strong partner, we look forward to achieving our goals and objectives for e-government in the Kingdom," said Shaikh Ahmed.

According to the agreement, government personnel will be entitled to subsidised prices on Microsoft Office packages while other hardware and software products will be also available at reduced prices.

Alongside this, road shows will be organised to introduce IT education and learning into the homes of government personnel to generate interest in the project. Microsoft will also provide e-learning tools that will individually assist each employee in the Bahraini government through online training on Microsoft software.

The Bahrain government is thus acting strategically as well in attempting to attract and keep Microsoft on its soil in order to bolster its own regional political-economic strength as the site of the MIddle-Eastern financial industry. From the Bahrain Embassy itself:

Bahrain could become a centre for the development of financial software, particularly that related to the Islamic banking sector, says an expert. It could export tailor-made software to other countries. Microsoft is planning to work with local software developers to create a software industry specifically catering to the financial industry.

The interests of the Bahrain government, the interests of Microsoft in terms of securing both future contract laborers and current state-mandated consumers, and the interests of neoliberal "free" trade advocates in the US government are all aligned here. What might on the surface seem like either a generous policy on Microsoft's part to overcome the global digital divide, or a single-minded policy on Microsoft's part to build a low-wage, high-skill overseas labor force, is actually much more complex and intertwined with the political-economic projects of both the US and the Bahrain governments.

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