Who Said You Can’t Gamble in the UAE

We are watching a high stakes poker game being played in the region with RIM the maker of Blackberry at the table along with a number of Middle Eastern countries led by the United Arab Emirates. They are playing for big money and for cyber security. I am not going to take sides today because all the players at the table have a legitimate interest and that is something I’ll let others determine. It is clear everyone knows what they are playing for and what the potential wins and losses can be.

UAE, Saudi Arabia, India, Kuwait, and others have been communicating with RIM for 2 to 3 years attempting to resolve their particular national security concerns. For India it was Mumbai, for the UAE the assassination of a HAMAS leader plus outside groups trying to use the region for illegal activities, prompts concerns how groups communicate without detection. The Saudi’s have similar problems and therefore each nation at a minimum is concerned about illegal activities be it terrorist or porn. It is also reasonable to assume that all these nations want to have other agenda’s when it comes to watching what is being said or being seen. I may not personally like it, but you understand when you go abroad in many nations that’s the deal and you live with it.

RIM could just say fine, look at the data and that would be that, but it’s a great deal more complicated than that. They are a worldwide provider of the Blackberry product in 175 countries, therefore rolling over could cause all kinds of problems for them in each country they operate. RIM declared in a press release that it would “not compromise the integrity and security of the BlackBerry” by turning over its users’ private information to “any third party to read encrypted information under any circumstances.” If they can’t work out a deal with the UAE and Saudi Arabia then they lose about a million customers out of 40 million in other words 2.5% of its customer base. I guarantee you that will be painful but when playing high stakes poker a loss of a big hand is acceptable if you believe it will help you win the game.

UAE is playing the hand very strong. First, after I’m sure many private conversations with RIM, they set a drop dead date and made it public to the entire world. Then Etisalat, in all the within 48 hours, the state owned telecommunication company which sells Blackberry packages, announces it will of course comply with the government announcement and present a plan to replace all the phones. Etisalat and Du, the other provider, purchased full page ads which offers very inexpensive new packages to Blackberry users (as good as or better than the deal they have with Blackberry now) to trade in the old and get a new smartphone such as IPhone which seems to be in legal compliance.

As I said, UAE is sending every signal possible saying they aren’t bluffing that the date is real ,and unless RIM strikes a deal this will happen even if it causes chaos for outside travelers and for corporations who are forced replace mobile phones systems in less than 60 days. As a person who likes to play and watch poker you love to see how a player will react when a player tries to buy the pot. They may fold or lose if you stay in the hand but you just don’t know. That’s why they call it gambling!

I’m not sure how this will turn out but both sides have the ability to survive the ordeal. It is reported, on Tuesday by an Indian newspaper that RIM has agreed to give India’s security authorities the right to monitor e-mail sent and received on the smartphone. However this report was pulled by Yahoo the next day. As you can see the situation is fluid. People I know who have some knowledge of the situation are hopeful that UAE and SA will work this out with RIM but no one will bet on it.

What lessons are to be learned for companies who do business in the Middle East? First, your priorities and the host nation’s priorities while similar are probably not the same. The UAE is very friendly to business and desires to continue to be a world player with multi-national corporations residing in its region, but cultural issues and how security is perceived can override this friendly haven. Second, things can change in a moment’s notice. Countries in the Middle East, like the UAE play, their cards close to the chest and do not tell their intentions to very many people until they act. It makes it very difficult to plan and prepare when the real possibility exist the business or social environment will change. Laws can be enacted or interpreted differently from one year to the next. It doesn’t mean you can’t do business in this part of the world, but rather your leadership must have a mindset that things can and will change. Also it is not smart to embarass the government or it’s corporate  groups. RIM may have done that a year ago when a “patch” was sent to customers by a phone carrier that RIM then told its customers how to delete. 

It is why you hire people who live and work in the Middle East and have a feel for the lay of the land. They can’t predict what will happen but they can get you prepared to get through it with little damage.

Stay tuned to see how this card game turns out. Don’t be shocked if its settled tomorrow or the final day before services are cut off or RIM is out of business in the region on October 11th.

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