June 29, 2012

TSG IntelBrief: Attention to Detail: Regulatory Enforcement in a Tech Savvy Middle East

      As of late June 2012, Jordan's publicly announced decision to proceed with the planned 2015 construction of the first of four nuclear power plants presents an intriguing new chapter in the decades-long narrative of technology and regulation in the Middle East, with the former far outpacing the latter with deepening consequences. The Hashemite kingdom's drive for nuclear energy is certainly understandable given the fact that it must import a monumental 97% of its energy, a substantial recurring expense that accounts for more than 20% of it's GDP. And this figure is rapidly climbing.

Jordan — a country with significant uranium deposits — is not alone in this narrative, as regional neighbors Saudi Arabia, the United Arab Emirates (UAE), and Qatar are all at varying stages of exploring nuclear power. The key feature in the story at this point in its evolution is how Jordan, and the region in general, will be able to viably leverage time-tested regulatory enforcement tactics to most effectively harness their technological advances.


The Technology-Regulatory Nexus

In exploring the trajectory of this effort, an often overlooked and seemingly banal trend that runs parallel to Jordan's decision on pursuing nuclear power technology — and arguably all high-technology endeavors throughout the region — is the state's rapid embrace of technology without a corresponding and equal emphasis on the vital regulatory and enforcement mechanisms that are necessary to ensure the favored technology will not suddenly and dramatically turn against it. In the excitement over the prospect of resolving a major national challenge (such as the punishingly high cost of imported energy) with newly emerging technologies, it is easy to lose sight of the fact that old-fashioned mechanisms of rigorous code enforcement and a broad consensus on the proper role of regulation in a nation's development will be, in the end, what enables the region to benefit from its advanced technologies. In essence, how well the region is able to seamlessly strike a balance of expanding technologies supported by a practical regulatory underpinning will ultimately determine whether governments and businesses in the region thrive or struggle in the years ahead.


Marvels of Technology

At the height of 828 meters (2717 feet), the Burj al-Khalifa tower in Dubai is, depending on how the structure is measured, at or near the top of the list of the tallest buildings on the planet. While its precise placement on that list may be in dispute, its technological sophistication is not. Just as with the Jubail Desalination Plant in Saudi Arabia, the largest and most advanced facility of its kind in the world, the Burj al-Khalifa tower stands as a testament to the regions's increasingly impressive ability to leverage cutting edge technologies. Clearly, no expense was spared in the design and construction of either of these impressive structures. Nonetheless, both the tower and the desalination plant exist — as with many other technological wonders in the region — in a landscape of uncertain maintenance and regulation.

A graphic and tragic example of technology operating without the supporting infrastructure is the Villagio Mall in Doha, Qatar, without question one of the finest shopping malls to be found anywhere. And yet, the late May 2012 fire that killed 19 people suggests that this facility was also a case where the sophisticated design and construction that was not subsequently matched by equally advanced maintenance and regulation.

Structures such as these do not exist in isolation, but rather arise ultimately as symbols of a culture's progress and promise, both of which depend not only on a vision born of technological prowess, but also by a discipline that results from prudence. In charting the way ahead, it is not a question of the creative design or the brilliant employment of emerging technologies, but rather of enforcement. And this comes down to an intriguing, even vexing set of challenges. How might the necessary building codes and maintenance schedules be enforced when the landlord is the sovereign? Similarly, how does anyone enforce needed standards when the structures themselves are national icons?

It is far too easy to dismiss the question of enforcement as mundane and obvious, but it strikes at the heart of the region's push for modernity. It is an inescapable factor in learning how to aggressively, yet judiciously, employ technology. Technology offers an incredible array of tools to help control the environment, even a nation's way of life, but the tools themselves must also be carefully and consistently controlled. In this regard, the inspection and maintenance personnel with pens and clipboards in hand are as vital to the future as are the design and engineering professionals using the most advanced computer systems.

While the latter depend on education, funding, and the proper equipment to complete their part of the task, the former is inescapably dependent on the legal authority to carry out their mission. Once again, when the landlord is the state, a badge and a clipboard is unlikely to be sufficient without the law to support them. And there is real hope on this front.


Turning the Corner

After the aforementioned Villagio fire, Qatar began taking immediate steps to both understand what happened and to initiate definitive action to prevent a recurrence. It is working diligently to ensure the necessary laws and regulations are consistently applied across the board, regardless of status. This precedent provides the UAE, Jordan, Egypt, Saudi Arabia, and other countries in the region with an opportunity — and, perhaps, the motivation — to pause for the briefest of moments to ensure their enforcement mechanisms are the equal of their technologies. Indeed, the UAE completed a nationwide inspection of childcare facilities after the Doha tragedy to ensure their enforcement matched their intentions. And it is very possible that future investments will, at least in part, depend on how well the tallest buildings, the most opulent malls, and even the most advanced nuclear reactors are regulated and governed.

Returning to Jordan and its vision for harnessing nuclear power to address its energy needs — a form of technology that requires comprehensive and redundant control mechanisms and regular maintenance — one must set aside the obvious questions of how to safely run such a facility. Of equal importance is the question of how to effectively regulate all the peripheral supporting technologies when the owner of the plant is ultimately the nation's king. And what remains unclear is how to consistently enforce structural and maintenance codes for the countless, interconnected suppliers and vendors for Jordan's nuclear industry when any fine levied for violations would have to be delivered to the state. Even if the plant itself is compliant with the most advanced codes, it must still operate in a country seeking parity between technology and enforcement. This same conundrum applies for the other countries in the region that are considering nuclear power and other technologies to aid in resolving increasing resource shortfalls.

These countries must strengthen their code enforcement now or soon face unacceptable risks and an ultimate slowing of growth. The bright and shiny future of the region might just depend on dull and daily regulatory enforcement, men and women with four dollar clipboards and cheap pens enforcing standards on billion dollar projects owned by royal families.

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