Y2K IN MIDEAST STIRS SUSPICIONS

Y2K IN MIDEAST STIRS SUSPICIONS

Y2K-related problems are expected in the Middle East and are likely to feed popular suspicion about the West's attitudes to the region and the motives of international companies operating there.

Serious Y2K-related problems, such as a breakdown in essential services or a major incident, will fuel conspiracy theories on Western attempts to subjugate the region.Any difficulties may be seen as a plot to undermine Islamic traditions and disrupt the most important Islamic month, Ramadan. The finger would probably be pointed at U.S. and other foreign companies that installed the computer equipment in the first place. They would be blamed for failing to ensure its millennium worthiness.

Turkey's decision to close the Bosphorus to large ships over part of the vital 12 hours of the New Year transition demonstrates the scope for a major incident.

The precautionary measure probably owes more to fears about lack of preparedness in the Black Sea states of the former Soviet Union than to Middle East-related concerns.

Nevertheless, there is a real risk of widespread problems in the region. The Y2K issue has not received the same attention it has in the West and in East Asia. This is due to a mixture of cultural, economic and political factors.

For the majority of the region, 2000 is not the start of a new millennium. In the Islamic calendar, it is the year 1420. Many countries in the region also do not have the economic resources to update computer equipment and systems.

The region is not totally unprepared. The private sector has taken the lead, and the level of compliance is particularly high in the banking and financial sector and among larger companies. The oil will still flow, and airlines are unlikely to suffer major disruption.

However, essential services such as water, electricity and telecommunications are state-controlled. A breakdown would cause a great deal of discomfort.

Much of the computer software used in the region is pirated and will not have been properly checked for Y2K-related bugs. The date change may indeed reveal the true extent of pirated software use.

Although any Y2K problems may cause short-term disruption and inconvenience, longer-term impact may be beneficial. It would demonstrate the need to invest and to create investor-friendly environments more open to private and foreign participation.

Substantial liberalization is required to attract private investors, especially foreign investors, and to overcome any reluctance to enter a market that may be hostile to foreign involvement.

The combination of Ramadan, when religious feelings run high, and substantial difficulties that are attributable to the West may prove an emotive one. Any incident where the West seems to damage Middle Eastern interests engenders conspiracy theories that are widely believed.

At best, such incidents fuel popular suspicion of the West. It would take years to overcome any serious problems in the Islamic world caused by the start of the third Christian millennium.