Executive Magazine

Responsible to govern

by Executive Editors September 11, 2015

written by Executive Editors

The small matter of private property and the duties and rights that are attached to its ownership are to capitalism what the solid inner core is to earth. Thus it was a good time for Executive to perk up our collective editorial ears – which are always on the listen for deeper economic truths – upon the surfacing of a speech with the question, “Who owns a company?”, asked by no lesser mind than the chief economist at the Bank of England, Andy Haldane.

“At least for publicly listed companies, its owners are its shareholders,” Haldane asserts at the start of his learned discourse. It’s their prerogative to claim the company’s profits and control its management. “And it is they whose objectives have primacy in the running of the company”.

But then he turned to the issue of corporate governance, from a broad definition that corporate governance is “the set of arrangements that determine a company’s objectives and how control rights, obligations and decisions are allocated among various stakeholders in the company.” Haldane advised in this context that the implementation of corporate governance according to the shareholder-centric model found in the UK and US has produced short-termism and other forms of corporate behavior whose macro-economic consequences are far from benign and the micro-economic frictions of which can have very negative impacts on stakeholders.

What erudite economists tell us about corporate governance in discourses such as Haldane’s is that it is not a box. There is no one-size-fits-all application of corporate governance. Corporate governance is, however, a vital process in the economy and it is vital for the health of the company, any company, to partake in this process. It is, moreover, vital that governments and regulators immerse themselves with full dedication in the setting up of legal frameworks and institutions that enable, strengthen and enforce corporate governance and create opportunities to invest into companies that demonstrate well-governed business potency.

This is why we are appalled when we see that the corporate governance report cards of Lebanon’s handful of listed companies suggest aptitudes and attitudes which one would associate with either a hopelessly dull or an actively recalcitrant pupil. So what are we to make of it if corporate governance practice at the arguably best-known and, by market capitalization, largest non-banking corporation in Lebanon is rated as inadequate? What are we to think if one of the top five banks by profit, one that is noted among leaders in profit growth, is given a failed grade in corporate governance? (See story on page 68).

The only thing that one can call for – and one must – when faced with this documentation of insufficiency in the communication of board behaviors and corporate disclosures of top Lebanese companies, is for them to shape up; or shape up even faster and more so. There is no alternative. Lebanese corporate leaders, the whole alphabet of them, have to assign corporate governance to be the first entry in their daily agendas.

But the public sector too has to come out and play for good. The frameworks of corporate law are overdue meaningful improvements or rewrites if need be; and promises have to be meaningful. Talk of a soon-to-be-created electronic stock exchange for small and medium companies is not acceptable, even from the central bank governor, if a young reporter on a quest for details is told by the Capital Markets Authority to come back at an unspecified later time because nothing real can yet be said about the project. (see story page 78).

When Chinese currency and stock price tremors shook global financial markets in August, Andy Haldane’s insightfully incisive remarks on one of the pillars of capitalism earned extra attention by capitalists, as times of unexpected tribulations always present an occasion for productive introspection.

The dust of the latest storm in equity markets will settle. It always does. But as Haldane said at the end of his speech, “Challenges to the shareholder-centric company model are rising, both from within and outside the corporate sector.” He concluded that if his country wants to tackle these problems at their source, “a more fundamental re-rooting of company law” may be in order.

The conclusion of this conclusion may be that no corporation should ever think it can settle on last week’s corporate governance laurels. Perhaps eternal volatility is the price of free equity markets and certainly no degree of governance can eradicate market risk – but the best answer to this is to improve governance to the greatest strength that is achievable at any specific moment.

September 11, 2015 0 comments

New wine producing countries are making inroads

by Michael Karam September 10, 2015

written by Michael Karam

The Eastern Mediterranean is on the move. Greece may be on the ropes economically but its wines have never been more popular, with its indigenous Assyrtiko grape, grown mainly on the island of Santorini, the current darling among informed consumers. Turkey, for so long a country with a dubious reputation in terms of wine quality, is taking huge strides to remind the world of its impressive heritage and its dozens of indigenous grapes by retaining the services of an award winning PR manager and at least two Masters of Wine. Cyprus too is slowly shedding its image as a bulk producer selling cheap wine to thirsty European tourists and now has a slew of high quality boutique wineries. Throw in Macedonia, Croatia, Georgia and Armenia, and wine lovers can now mine a region that has been making wine longer than anyone else, with dozens of grape varieties to delight their palates.

Lebanon is also part of this exciting movement. Indeed, our tiny Mediterranean country with an even smaller production rate – 9 million bottles per year – has been something of a pioneer in promoting the wines of the region. In 2010, I was privileged to be involved in the Wines of Lebanon publicity campaign in the UK. It was the first time our leading producers worked together to promote the idea of Lebanon as a wine producing country. It was a well-trodden path, one taken by all the major New World wine producing countries and regions including California, Australia, New Zealand, South Africa, Chile, Argentina and the like, and in doing so we signaled our desire to be taken seriously.

We created a logo, opened a UK press office, held tastings at fairs, went on the road to London, Manchester and Bristol and held masterclasses at the London Wine Fair and Prowein in Dusseldorf. We invited high profile wine writers and sommeliers to Lebanon and they all left the country as fully paid up members of the “I love Lebanon” fan club, becoming informal roving ambassadors.

What made this all the more incredible was that it was all self-funded. There was not a penny from the Lebanese state, which was still unsure about what to do with wine. Meanwhile, regional neighbours were impressed, aiming to reach Lebanese standards. The Turks, for instance, put the word out that they wanted to do what the Lebanese were doing.

All this interest and increased regional activity comes at a time when Lebanese producers are quite naturally feeling the pinch. The results of generic campaigns are notoriously hard to quantify. Yes, sales in the UK have gone up by around 40 percent in the past five years and yes, there is no doubt that our stock has risen among the media and consumers alike. But now the government has to step in and pick up the slack.

In 2013, the state did make funds available, presumably because the growing popularity of Lebanese wine at home and abroad could no longer be ignored, but now the challenge must be to spend that funding efficiently so that Lebanon can not only compete internationally but can also take advantage of the current interest in Eastern Mediterranean wines. It won’t last forever though; before long there will be another region, country or grape to swoon over.

Thus, the challenges are twofold: Lebanon’s wine producers, who have shown so much foresight thus far, must recognize and react effectively to this increased interest in their product. Moreover, marketing must robustly position Lebanon within this geographical zone to remind consumers that we are a Mediterranean country as well as a Middle Eastern country, with a glorious culinary tradition – food plays a huge part in piquing consumer interest – and an awesome wine heritage.

But it is also essential that the state work even closer with the Union Vinicole du Liban, Lebanon’s association of wine producers, to spend what funding there is in the most efficient way possible. What has been made available so far has been generous, but spending has been wasteful. It is simply not enough to choose a major world city, hire a conference room in a five star hotel and turn up with our wines. Where to hold events and how to organise them should be the decision of people who know how wine must be marketed.

We have a great opportunity. Let’s not waste it.

September 10, 2015 0 comments

Special Report Wine Tourism

Production of Lebanese wine is on a slow but steady growth path

by Nabila Rahhal September 10, 2015

written by Nabila Rahhal

People the world over have long been infatuated by wine, with writers and poets ranging from William Shakespeare to Abu Nawwas singing its praises.

Indeed, wine production has a very rich global history, with the oldest winery – discovered in modern day Armenia – dating back to 4100 BC. Lebanon’s own history with wine can be traced back to the Phoenicians who traded it across the Mediterranean to some parts of Europe. Some also believe that Jesus’ first miracle of transforming water into wine took place in Qana, Lebanon.

This rich history, however, is not without ups and downs. The Ottoman Empire banned wine production (save for religious reasons) and more recently, the Lebanese civil war largely put a stop to most industries in the country. Lebanese wine, however, has since survived these obstacles, emerging more diverse and interesting than before.

Brief Background

Following the end of the Civil War in the early 1990s, only five wineries (Château Ksara, Domaine des Tourelles, Château Musar, Château Kefraya and Château Nakad) were operating. However, the 1990s was an active period for the Lebanese wine sector. Seven new wineries were created during this time and the Union Vinicole du Liban (UVL), a private sector body made up of all existing wineries which aimed to coordinate and protect common interests, was established, according to Zafer Chaoui, current head of the UVL and chairman and CEO of Château Ksara.

The last ten years saw another boom in Lebanese wine production, with 23 additional wineries launching their first vintages and a few more wineries rumored to be in the works for 2016. In conjunction, general interest in wine consumption has also increased among Lebanese. “When I arrived to Lebanon in 2006, I noticed that people used to order mainly whiskey and spirits in restaurants. Today, I see more people ordering wine, so there is a wine culture growing in Lebanon,” says Fabrice Guiberteau, oenologist and technical director at Château Kefraya. Interest in wine culture among the Lebanese is also evident by the growing market for wine tourism in the country, with most wineries reporting an increase in visitors over the past few years.

Current status of Lebanese wine

Today, Lebanon’s 40 wineries, according to the UVL’s website, produce around 8.5 million bottles of wine annually, with Château Ksara and Château Kefraya accounting for almost half that number and with the other, relatively newer wineries, growing and increasing their production yearly. However, wine production is not only about volume but also about quality, as Lebanon’s boutique wineries demonstrate. These wineries pride themselves on producing fewer bottles per year, believing that this allows them to offer better controls for quality and taste.

But wine production in Lebanon is very low compared with neighboring wine producing countries such as Greece or Cyprus. While Lebanese wine has thus far dominated the Eastern Mediterranean export market, other countries in the region are rapidly catching up. According to the wineries interviewed for this article, the reasons for the lack of real growth in wine production mainly include the lack of stability in the country which has discouraged major investments in wine production, the lack of serious government funds supporting the sector’s growth and comparatively low local wine consumption, despite the recent increase. “Consumption in Lebanon, which is the first and most important market for all of us, is definitely not growing as it should because of the lack of tourists and other reasons [which] we always state,” says Hady Kahale, general manager of Ixsir, adding that the winery still managed to achieve 50 percent market growth so far in the year 2015.

Exporting Wine

Today, the majority of Lebanon’s wine producers export a hefty percentage of their bottles, ranging from 20 to 60 percent according to the wineries interviewed. In fact, according to Kahale, the only two exports for which the balance of trade in Lebanon is positive are wine and jewelry. Michael Karam, author of Wines of Lebanon, explains that Lebanon has long been on the radar when it comes to wine because of the late owner of Château Musar, Serge Hochar, and his promotion campaign in the United Kingdom during the Civil War. More recently, according to Karam, Lebanese wine found success in the UK due to the Wines of Lebanon campaign, which was initiated and funded by the UVL in 2010 to collectively promote Lebanon’s wine in the country.

“It was a major turning point, not only in the way Lebanese producers marketed their wine but also in the way they came together as a group. It was a game changer and a momentous time in the history of Lebanese wine marketing initiatives,” says Karam, speaking of the campaign.

Indeed the UVL, which represents almost 95 percent of the wine producers in Lebanon, has done a lot to promote Lebanon’s wines beyond the UK. At international wine festivals the UVL represents Lebanese wine in pavilions and programs they fund themselves. “We understood a very simple fact which is that being part of a bigger cake is much more important than eating each other out of a smaller cake. If we were a saturated market with no growth and consumption is at a maximum, maybe then we would be in cut-throat competition [with one another]. But since wine consumption in Lebanon can still increase three fold, and we are able to export ten times more, with room for all, the only way to grow like this is by working all together,” says Kahale. Today the main export markets for Lebanese wines are France, where it is mainly sold to numerous Lebanese restaurants, the UK, Germany and the US, with some wineries citing clients in cities as far off as Tokyo and Sydney.

The Government’s Role

Any growth in the wine sector over the past decade can be attributed to the efforts of the UVL and winemakers themselves. While governments of wine producing countries typically support them with exports through generic campaigns, support from Lebanon’s government only recently kicked in. “I think as a result of the momentum which Lebanese wine gained through this initiative (the UK campaign), the government, which was previously reluctant to support the wine sector, realized that it couldn’t ignore Lebanese wine anymore, so in 2013 it sponsored a Lebanese wine day in Paris at the Four Season’s George V Hotel and another one last year in Berlin,” explains Karam. This year, explains Chaoui, the Ministry of Agriculture was planning to host the Day of Lebanese Wine in New York but as the annual budget has not been allocated yet, it appears to now be too late.

All winemakers interviewed commended the Ministry of Agriculture and the government for the positive role it was beginning to play in supporting this important industry in Lebanon. Some, however, felt that the budget allocated for wine production could be spent in a more efficient manner to maximize impact. “The government is playing a huge roll but the problem is that it doesn’t use its budget in an effective manner. It holds one event with a big budget when we can use the same budget in more diverse ways,” explains Faouzi Issa, winemaker and owner of Domains Des Tourelles. “Any state budget should be spent in coordination with the UVL, which has good experience in budget allocation for marketing initiatives; there needs to be strategic planning,” recommends Karam.

Others feel that the budget allocated for generic campaigns is a good start but more money is needed to be able to compete with other wine producing countries. “If historically you spend zero dollars on the sector and then you start investing up to $50,000, this is [beyond our] expectations, so coming from a zero budget we are extremely happy and grateful for what they did. But if we start comparing with other countries, where millions are being poured into this sector, it’s nothing. The day we receive financial support from the government – about $4 million dollars to cover international advertising and positioning – then we can really start competing with other neighboring countries,” explains Kahale. He added that while financial support from the government may be low, they have nonetheless been supportive and accommodating when possible, such as helping to create Routes De la Vins Du Nord.

Chaoui adds that the Chamber of Commerce has been supportive of the sector as well, allocating a yearly budget for wine production which is typically spent to supplement the government’s generic campaign. “This year, since we have no budget from the government for the generic campaign, we will go as the UVL to an exhibition in October in Brussels called Megavino where buyers come from the whole region,” he says.

Chaoui also urges the Ministry of Agriculture to prioritize funding for the National Wine Institute (NWI), which was formed last year but has yet to receive a budget to function properly. Once it does, explains Chaoui, the NWI, which has members from both the public and private sector, will assume the role of technically regulating wine production and ruling on appellations. “The NWI is what central banks are to local banks. We need it for technical and control reasons and for the reputation of the Lebanese wine,” concludes Chaoui.

Wine production in Lebanon remains on a steady course, not significantly increasing production but not decreasing either. Only time and the right budget will tell if production will eventually skyrocket.

September 10, 2015 0 comments

Comment Opinion

Police brutality in Lebanon

by Nadim Houry September 10, 2015

written by Nadim Houry

The images of police and soldiers violently repressing demonstrators gathered in downtown Beirut on August 22 to protest the garbage crisis and political corruption sent shock waves through Lebanese society. Security forces beat unarmed protesters, turned water cannons on journalists, and fired rubber bullets towards fleeing crowds. The security forces even shot live bullets into the air, sending terrified families back home.

The next day, as a new round of protests was called, a small group of angry protesters attacked the security forces with stones – eventually leading the security forces to respond with more teargas canisters, rubber bullets and water cannons. Since then, there have been almost daily confrontations in downtown Beirut between protesters and security forces.

The Beirut protests, like many social movements, pose a challenge for security forces, who have a dual responsibility – to protect the basic right to protest while also maintaining order. Even in overwhelmingly peaceful protests like the one on August 22, one can often find some protesters who throw stones or try to provoke the police. So how should security forces respond?

The United Nations Basic Principles on the Use of Force and Firearms provide that law enforcement officials may only use force if other means remain ineffective or have no likelihood of achieving the intended result. When using force, law enforcement officials should exercise restraint and act proportionately, taking into account both the seriousness of the offense and the legitimate objective to be achieved. Lebanon’s own police force, the ISF, adopted a code of conduct in 2011 which stipulates that, “Police members will not resort to the use of force unless it is necessary, proportionate and after exhausting all possible non-violent means, within the minimum extent needed to accomplish the mission.”

While the principle is clear, the challenge is how to carry it out during the often tense situations that arise during protests. In this respect, Lebanon’s security forces should adopt certain good practices that are employed in other countries. First, security forces should make every effort to communicate clearly with protesters before resorting to shooting teargas canisters or bullets in the air. This was demonstrably lacking during the Beirut protests, when security forces issued no warnings before resorting to violent means.

There also needs to be more coordination between the multiple security agencies on the ground, including riot police, other ISF units, the army, and units responsible for the security of parliament and government. For anyone monitoring their behavior on August 22, it appeared that there was no clear coordination among them.

There is also an issue of equipment. On August 22, as protesters tried to make their way to Parliament, they came face to face with soldiers equipped only with loaded machine guns. The encounter, caught on camera, shows soldiers who appear taken by surprise and who quickly resort to firing into the air. The shots angered the crowd, who threw water bottles and sticks at the soldiers. Luckily no one was hit with a live bullet. But one mistake and the death toll could have been terrible.

To control protests, Lebanon often relies on soldiers who are untrained in performing policing roles such as crowd control, and are frequently deployed without protective gear and equipped only with a standard machine gun. This has led to deadly consequences. In 2004, the Lebanese army was sent to face protesters in the Beirut suburb of Hay al-Selloum, which ended tragically when army troops opened fire at the protesters, killing five. Similarly in 2007, Lebanese army soldiers opened fire on Palestinian protesters marching near the Baddawi camp, killing two. In both cases, these deaths may have been avoidable if more appropriate equipment and orders had been issued.

But the right equipment isn’t everything. Witness accounts and footage from the August 22 protests strongly suggest that security forces used rubber bullets and teargas excessively. Many wounded protesters reported being shot at with rubber bullets as they were helping other wounded protesters or as they were running away.

Which leads to the main measure that has been lacking: accountability. Law enforcement officials who use excessive force should face criminal liability as well as disciplinary action. Yet, impunity is the norm in Lebanon. There is no indication that guilty officers in past instances of excessive use of force were ever held to account. The public prosecutor, interior minister, and even the prime minister promised to investigate and hold any official accountable for the August 22 violence. But given the authorities’ track record, trust in such investigations is low.

To overcome this potential breakdown of trust, many countries rely on fact-finding commissions that can hold public hearings and report their findings publicly. In some countries, national human rights commissions play a key role in investigating and issuing findings and recommendations to address police violence. Unfortunately, Lebanon’s draft law for a National Human Rights commission – like many other reform projects – has been stuck in parliament’s drawers for years.

The recent protests have brought to the surface the high level of frustration that the Lebanese have toward a political system that has repeatedly failed to provide them with basic services. Expect more demonstrations. Lebanon’s security forces need to show they can respect the rights of protesters lest they find that they become targets of protests themselves.

September 10, 2015 0 comments

Business Entrepreneurship Entrepreneurship in Lebanon

Drawing production power from the sun

by Jeremy Arbid September 9, 2015

written by Jeremy Arbid

For any manufacturer, a reliable and affordable source of electricity is a necessity. This summer, Technica, a regional leader in the building of automated end of line solutions – machines that prepare already assembled products for shipping – switched on its new photovoltaic (PV) panels. This, says Strategy Manager Cynthia Abdul Khater, is a first step toward electricity independence, by drawing power from the sun.

Technica requires a lot of electrical juice to run the factory. They estimate a daily minimum of 100 kilowatts to power operations and the new PV system will supply 64 kilowatts during peak sunlight. Currently, demand is supplied from the government’s electrical grid, affordably at $0.12 per kilowatt hour, but blackouts have forced the factory to rely on expensive generators which they estimate to cost $0.30 per kilowatt hour.

Saving funds one solar panel at a time

The PV system is paid for by a subsidized loan from Lebanon’s Central Bank through Circular 331, and they estimate the new system will save the factory $21,000 in its first year and $674,138 over the next 30 years. Technica is also projecting to eliminate 1,679 tons of carbon dioxide emissions, during the system’s lifetime as they reduce reliance on generators. Technica is now beginning to study the technical and financial benefits of expanding the PV system to 180,000 kilowatt hours per year, double the current output.

When the factory is not operating, the panels feed electricity into the public grid through the government’s net metering scheme. The scheme, and solar energy, is part of the government’s plan to generate 12% of energy needs through renewable sources by 2020 – for the government’s National Energy Efficiency Action Plan.

September 9, 2015 0 comments

Business Entrepreneurship Entrepreneurship in Lebanon

Beirut River Solar Snake turned on

by Jeremy Arbid September 9, 2015

written by Jeremy Arbid

Last month’s heat wave saw near record highs in temperature and heat indices across Lebanon, causing rolling blackouts on top of the regular scheduled electricity cuts in Beirut. Amid the power shortage comes 1 megawatt of good news – the Beirut River Solar Snake (BRSS), a photovoltaic system spanning the Beirut River, has been switched on.

“The Solar Snake is on and already feeding electricity into the network – now it is connected to the grid and is in a testing period, but we didn’t announce it yet officially,” says Pierre Khoury director of the Lebanese Center for Energy Conservation (LCEC). He says the BRSS began its testing phase at the end of July and will be announced in a formal ceremony before or during September’s Beirut Energy Forum. Ferial Nohra, assistant general manager at Phoenix Energy, confirmed to Executive by email that the photovoltaic system is feeding electricity into the public grid.

BRSS was originally scheduled for early 2015, but a long winter season, Khoury says, plus final preparations and aesthetic installations – a chainlink fence, greenery, and signage – delayed delivery by nearly two months. “We could announce it today but we’re waiting for the right moment to announce to give [BRSS] visibility,” Khoury says.

The BRSS is a two phase project with a total planned output of 10 megawatts. Khoury says the LCEC has begun planning for the next phase but is currently focused on designing a 1 megawatt solar farm to be built at the Zahrani oil installations south of Beirut.

September 9, 2015 0 comments

Business Entrepreneurship Entrepreneurship in Lebanon

Renewing the Source

by Jeremy Arbid September 9, 2015

written by Jeremy Arbid

It was at the Copenhagen Climate Summit in 2009 that Lebanon committed itself to generate 12% of total energy from renewables by the year 2020. An electricity whitepaper from 2010 laid out the plan, and the government has made incremental headway toward generating electricity from renewables, particularly in capturing the sun’s rays.

Pierre Khoury, director of the Lebanese Center for Energy Conservation (LCEC), says Lebanon is well on its way toward reaching its goal. “By the end of 2015, Lebanon will have 15 megawatts of solar farm installations. All these installations are done through two main incentives – one by the ministry and the other through financial incentives from Lebanon’s central bank,” says Khoury. 1 megawatt, he says, is enough to satisfy 1000 Lebanese houses. He also says that nearly 15 percent (150,000) of Lebanese households have water heaters powered by solar panels.

The target for 2020 is to have between 200 – 250 megawatts generated, so the 15 megawatts is only a small portion of the goal. “Today we have around 2 percent of the 12 percent [goal] coming from solar water heaters. Around 4 percent of the goal will come from photovoltaic (a method of converting solar energy into direct current electricity) – now we have 15 megawatts.” The remaining 6 percent is to be generated from wind and hydro power.

The other renewable energy sources haven’t moved forward as quickly. Khoury says the third priority was wind energy and that an inter-governmental committee has finished evaluating offers for projects submitted by the private sector. The minister of energy has yet to forward the committee’s recommendations to the Council of Ministers. Hydro power, Khoury says, has a lot of potential but is very complicated due to legal and environmental issues – most recent plans for the Janna Dam were halted by a parliamentary committee.

The photovoltaic projects, like the Beirut Solar Snake or Technica’s solar panels, are not meant as replacements to traditional power supplies but to raise awareness and signal that the government is committed to renewable energy sources. The ministry of energy, together with the LCEC and other stakeholders, are now preparing the policy for the period 2016 – 2020 – one policy dedicated to energy efficiency and the other specific to renewable energy.

September 9, 2015 2 comments

Special Report Waste Management

In photos: People take their frustrations to the streets

by Greg Demarque September 8, 2015

written by Greg Demarque

Protesters take to the streets in anger over government corruption and inaction. August 22, 2015.

Protester defiant in the face of armed security forces. August 22, 2015.

Protesters face off with security forces in Downtown Beirut. August 22, 2015.

A bystander looks calmly on as security forces use water cannons to disperse protesters. August 22, 2015.

Hundreds of protesters have been injured as a result of security force brutality. August 22, 2015.

Tensions mount between protesters and security forces as some see them as protectors of the system and not the people. August 22, 2015.

A concrete wall was erected to prevent protesters from reaching the Serail, but was removed after just 24 hours. August 24, 2015.

Protesters carry a banner which reads "Leaders shoot bullets at their people. They belong in prison, not in power." August 25, 2015.

People have thrown piles of trash in front of the parliament building in protest. August 25, 2015.

People are angry at Interior Minister Mashnouq for partying in Greece while protesters were being beaten up by security forces. August 29, 2015.

"Let's get rid of the deals of the sectarian leaders." August 29, 2015.

People of all ages took to the streets to vent their anger over the trash and larger political crisis. August 29, 2015.

Parents took their children to the anti-establishment protest in nationwide solidarity with the movement. August 29, 2015.

Protesters attempted to cut through the barbed wire which separated them from the Serail. August 29, 2015.

People have vowed to continue protesting until change is brought about. August 29, 2015.

September 8, 2015 0 comments

Special Report Waste Management

The world of waste

by Matt Nash September 8, 2015

written by Matt Nash

Imagine following your trash.

On Twitter.
“Hello, this is container 100406100067629 in Le Roy, USA. I am 20% full.”

You’ve heard of smartphones and smart homes. Meet smart trash. Or, to be less anthropomorphic, web savvy systems for efficiently collecting household waste.
The trash bin Twitter feed comes to us from Enevo, a Finnish startup founded in 2010 which this year secured $15.8 million in funding, following $10.3 million raised in 2012 and 2013, according to the company’s website. Enevo’s value proposition is simple: make trash collection more efficient – meanwhile reducing both cost and carbon footprint – by using sensors and the web to identify which bins actually need emptying. And it’s not just bins getting more intelligent. In cities with advanced waste management plans, individual households or business establishments may have to pay extra fees for generating more than their allotted amounts of garbage. To help calculate those fees, there are garbage trucks fitted with GPS trackers and scales so that the amount of waste collected from a certain location is known and priced immediately. And while the digital age is providing smart solutions for how waste is collected, intelligent ways for dealing with tons and tons of trash are, by 2015, pretty well established.

King of garbage mountain

When talking trash, one phrase you are certain to come across is “waste hierarchy.” As the US Environmental Protection Agency describes it, “the hierarchy places emphasis on reducing, reusing and recycling the majority of wastes.” Treatment and disposal are at the very bottom of the inverted pyramid. At the top is a call for action incongruent with a consumerist society: generate less waste. The more we buy, the more we throw away. A 2012 World Bank study on global waste management practices notes that “as a country urbanizes and populations become wealthier, consumption of inorganic materials (such as plastics, paper and aluminum) increases, while the relative organic fraction decreases.” This is not to imply that as wealth grows, people become more wasteful. Packaging also plays a role, and it is therefore incumbent – according to the waste hierarchy – on producers to minimize their product containers. This applies equally to restaurants offering delivery services.

What a dump

That said, for all the talk of reducing, reusing and recycling, it seems the majority of the world’s household waste is still simply buried away somewhere. The 2012 World Bank report found that over 40 percent of the municipal solid waste (MSW) for the 85 countries for which data were available ends up in a sanitary landfill. The report says that around 8 percent ends up in a dump. For those not well versed in waste management lingo, a sanitary landfill is a purposefully engineered garbage depository. As waste disintegrates, it produces a toxic sludge called leachate – which can seep into and poison groundwater – and unwelcome gases, particularly methane. Sanitary landfills include, among other things, systems for controlling leachate and gas emissions, thus making them more environmentally friendly than dumps – which are sites where waste is thrown without controlling for the future. In Lebanon, according to a 2015 presentation by the Ministry of Environment’s waste expert Bassam Sabbagh, 51 percent of Lebanon’s MSW goes into a sanitary landfill while 26 percent winds up in a dump. The remaining 23 percent is either composted (15 percent) or recycled.

The ministry refused an Executive request to interview both Sabbagh and Minister Mohammad Mashnouq for this report. As a result of the closure of the Naameh sanitary landfill on July 17, the percentage of trash dumped is significantly higher. The country’s only other sanitary landfills are in Zahleh and Bsalim. The latter is only used for inert, dry materials like wood and tires, not MSW. The government’s “temporary solution” to the waste crisis has been telling municipalities in Sukleen’s service area to find their own dumping grounds. Evidence from Executive’s own investigations and photos shared on social media suggest waste from Beirut and its surrounding districts is being dumped seemingly at random, burned or both. Asked at an August 19 press conference how the ministry plans to clean these environmental disasters, Mashnouq referred Executive to an advisor who did not answer when contacted after the event.

Garbage power

In industry parlance, waste to energy means burning garbage to create electricity. Incineration, however, is not the only way Lebanon can use its refuse to help solve its power crisis. In fact, waste is creating electricity in Lebanon right now – and the amount is only set to expand. US-based General Electric announced in July 2013 that it would be installing landfill-gas-to-energy engines in Naameh as part of a pilot project. In early August, Sukleen and Sukomi officials gave Executive a tour of their operations, including the electricity generation station. The officials – who agreed to the tour on the condition they not be named – said they are currently producing 0.5 Megawatts of power, but could ramp that up to 6. According to Council of Minister’s decision 111 of May 21, 2015, the Council for Development and Reconstruction – which is the contractual partner of Sukleen and Sukomi – was given $10 million to make the upgrade. The money – along with over $6 billion to be paid for unidentified services rendered in 2012 – will be paid “to a company [previously] chosen” by CDR, according to the decree. The decree does not name the company, and CDR refused Executive’s interview request.

Down in Saida, a group of six Saudi and two Lebanese investors formed a company in 2004 and reached an agreement with the municipality to treat waste from the city and several neighboring municipalities (See story page 20). The company – IBC – is generating power to fuel its own operations through composting, or the conversion of organic waste into a soil conditioner, which is different from fertilizer in that it is beneficial for the soil, not just plants. Compost is made in one of two ways: with oxygen and without. Making compost in an oxygen-rich environment (as Sukomi does in its Coral facility in Bourj Hammoud) takes 72 days and requires the organic waste to be laid out in what are called windrows – creating the look of a fallow field ready to be planted. Making compost without oxygen – as IBC does – requires more investment in technology and machinery (called digesters, in controlled waste decomposition lingo) and comes with a potentially useful byproduct: biogas, which is mostly methane. This gas can be burned to create electricity. And IBC is doing just that. The plant has a capacity to receive and treat 500 tons per day of waste, but is currently only receiving around 250, general manager Nabil Zantout tells Executive. As such, IBC is only producing 1.6 megawatts for internal use, although he adds that .15 MW are used at night when the plant is not operating to power Saida’s streetlights.

[pullquote]waste is creating electricity in lebanon right now – and the amount is only set to expand[/pullquote]

IBC is also using some of the waste it collects to produce refuse-derived fuel (RDF) – or garbage logs that can be burned to create electricity for industry. Globally, cement plants are big RDF users. Sukomi wanted to create RDF for the cement industry, according to Averda CEO Maysarrah Sukkar who spoke during a late July interview on the popular LBCI talk show Kalam An-nas. But the government never reacted. At least one local cement producer – Cimenterie Nationale – is in favor of using RDF, according to its website, suggesting there is at least some market for the material in Lebanon. For now, Zantout says he has no local market for his RDF, though he is hopeful the Ministry of Environment will soon start licensing industry to use this source in the future. Until then, Zantout shows Executive non-load-bearing breezeblocks and sidewalk tiles made of waste which he says can be used as construction materials.

Incineration: A dirty word in Lebanon

Lebanon today does not have a waste incineration plant although building them has been part of the Ministry of Energy’s various national strategies for waste management for nearly a decade. During the war years, there were incinerators, and the state even paid $7 million to rehabilitate and upgrade one in Karintina in the late 1990s, only to close it shortly after the work was completed. Since then, activist opposition to incineration and resident rejection of a plant “in my backyard” have been the consistent barriers to waste to energy in Lebanon, according to interviews with officials responsible for waste management over the past three years. Incineration creates pollution, but suppliers of these plants in 2015 include the proper filters to minimize this pollution as part of their plants, which is already included in the price. Burning garbage also produces a toxic byproduct known as “fly ash” which must be properly landfilled, meaning an incinerator is not a complete replacement for a sanitary landfill.
Globally, according to the World Bank study, waste to energy follows closely behind recycling as the third most common method for waste disposal. A technical barrier to waste to energy in Lebanon is the country’s high percentage of organic content in its garbage. The moisture content of this type of refuse is high, thus it does not burn well. A 2015 Ministry of Environment presentation based on 2012 data says 53 percent of Lebanon’s waste is organic. A separate Ministry presentation reporting on a study conducted by the Danish company Ramboll on waste to energy solutions in Lebanon says that 15 to 20 percent of the organic material would have to be removed from the waste stream for it to be useful in an incinerator.

Separating the organics

Composting, therefore, would work well in Lebanon, albeit less well if garbage continues to come to a treatment plant mixed. IBC’s Zantout explains that receiving mixed waste gave the company a years-long headache as it tinkered with getting the compost clean and pure enough for farmers to be willing to use it. It’s very difficult, he says, to get small bits of plastic, broken glass and other impurities out of the organic stream. “It took us three years to get the compost right,” he adds. He explains that the plant is using German-made equipment and sorting machines, but they were not able to simply plug them in, start them up and begin compositing. “We had to do lots of modifications.” All of this experimentation, however, will pay off, Zantout believes. He says IBC and a German consultant who helped design the process they have in place for creating compost will file a joint partnership patent. “We have a model for anaerobic digestion of mixed waste,” he says. This model, he believes, is exportable. Throughout the MENA region, waste has a high organic content, so there is no shortage of opportunity. As for what valuation he’d give IBC at this point, he laughs. “It’s premature because we’re still in debt.”

IBC was not alone in having trouble turning mixed waste into compost in Lebanon. Sukomi – which composts 300 tons per day of organic waste – had the same problem, an official tells Executive on a tour in mid-August. The company has since also experimented and invested in more advanced sorting technologies. The official says that Sukomi gives the compost free to farmers, and notes 80 percent of those who take it travel from across the country to Bourj Hammoud to pick it up, suggesting that were it for sale, there is a market for such a product. Zantout is also giving his compost away for free while continuing to work on increasing the purity. He too believes there’s a compost market in Lebanon.

The country’s garbage future

While it may seem hard to believe given the current state of waste management in Lebanon, the country has several garbage innovators. IBC is one example, but Cedar Environmental also has a patented technology for composting mixed waste with anaerobic digestion. Since 1999 Cedar has been building plants in Lebanon, company CEO Ziad Abi Chakra told Executive in an interview earlier this year. And, love them or hate them, Averda used Lebanon as a training ground and is now managing waste in several cities outside of the country, according to the company’s website.

Had the government not cancelled the waste management tenders it organized, there would have been many more solutions throughout the country. Although these solutions would have been costly, they were based on internationally proven technologies. Instead, there are now more open dumps – which entail zero technology and come with absolutely no sustainability – and no clear strategy for what to do with them. It is unclear if the plan to send waste to Akkar includes trying to clean up the damage that has been done since the Naameh landfill closed. And if the three-year Akkar ‘emergency plan’ falls through, who knows what will come next. Perhaps we will revert to the ways of antiquity. Former Environment Minister and current Agriculture Minister Akram Chehayeb has one such solution. Along the coast near Amrousayeh, south of Beirut where Sukomi currently has a sorting facility, he says untreated wastewater has for years been dumped into the sea, killing off any life that once lived there. Given the advanced state of degradation in the area, Chehayeb says, “I would suggest to construct a breakwater and dump [the waste] into the sea.”

[pullquote]It may seem hard to believe [that lebanon] has several garbage innovators[/pullquote]

It was not exactly clear how serious the proposal is meant to be, given that Chehayeb acknowledges that this “solution” would violate any imaginable international treaty and environmental obligation that Lebanon has, plus notes that Speaker Nabih Berri is against it. Optimism, a national virtue in the face of a garbage disaster that is unresolvable given the current political procrastination, dictates that the next iteration of tendering will result in some form of real solid waste management. When this will happen however is anyone’s guess, but we can rest assured that it will not be as soon as needed. This leaves the door wide open for ad-hoc initiatives to make as much money with as little responsibility as possible, whilst condemning Lebanon to its rotten fate. The currently uncontrolled burning of trash – which is the surest way to release toxins and carcinogenic substances such as the notorious dioxins, into our already poisonous city air – makes even the absurd marine dumping idea look appealing. Indeed, to environmentally and economically justify this ‘lesser’ of two evils, Chehayeb goes so far as to note that the offshore area next to Amrousayeh has both depth and a high salt concentration – plenty of decomposing space in our wonderful waters. Chehayeb quips that the waterfront area Solidere reclaimed near the old Normandy dump “is the most expensive land in Lebanon.” So once the dump in the sea is full, we’ll have a nice slice of new seafront real estate to develop.

September 8, 2015 0 comments

Comment Opinion

Five human rights priorities for Lebanon

by Executive Editors September 8, 2015

written by Executive Editors

Torture victims

Torture and ill-treatment remain a serious problem in Lebanese detention facilities and jails. Documented cases range from security forces beating a janitor suspected of theft during his interrogation, to members of the intelligence services subjecting security suspects to systematic torture over several days. An October 2014 UN report found that “Torture in Lebanon is a pervasive practice that is routinely used by the armed forces and law enforcement agencies.” Lebanese authorities should establish a national mechanism to visit detention facilities, monitor the treatment of and conditions for detainees, and develop a national strategy to prevent ill-treatment. Legislation to create such a body has been stalled in parliament for several years.

The disappeared

No country can move forward without addressing its past. And one of Lebanon’s open wounds is the issue of those who disappeared during and after the 1975-1990 Lebanese Civil War and whose fate remains unknown. In October 2012, Justice Minister Shakib Qortbawi put forward a draft decree to the cabinet to establish a national commission to investigate the fate of those who had disappeared. The cabinet formed a ministerial committee to examine the draft, but no further action was taken. The Committee of the Families of the Kidnapped and Disappeared in Lebanon as well as other civil society groups are advocating for a draft law to create a national commission to investigate the fate of the disappeared. Lebanon needs to create an independent national commission that would include representatives of the victims’ families as well as civil society experts to investigate the issue of the missing and the disappeared in Lebanon, and those abducted from Lebanon. The adoption of the draft prepared by the Committee of the Families would be a good place to start.

Women’s rights

Despite women’s active participation in all aspects of Lebanese society, discriminatory provisions continue to exist in Lebanon’s laws. Women cannot confer nationality onto either their spouses or children, and Lebanon’s religion-based personal status laws discriminate against women across the religious spectrum and don’t guarantee their basic rights when it comes to issues such as divorce, property rights, or custody of children. It is time for Lebanon to amend its laws in order to treat women equally. This country will not move forward if 50 percent of the population are legally considered second class citizens.

Impunity

The bigger the crime in Lebanon, the less the likelihood of punishment. When was the last time anyone was held accountable for a political assassination? When was the last time an official went to prison for corruption? Since the end of the Civil War (when the country’s warlords adopted an amnesty to cover all their crimes), impunity has been the norm. This impunity extends from top leaders to local police officers, all protected by their respective leaders. The only way to break this vicious cycle is to reform the judiciary and allow the many promising young judges to exercise their oversight role. Without rule of law, there are no rights.

Rights of migrants and refugees

There are many non-Lebanese living in Lebanon today. From the 1.2 million registered Syrian refugees in Lebanon, to the estimated 300,000 Palestinian refugees and the 200,000 domestic workers. These migrants and refugees are unprotected by local laws and accordingly subject to exploitation and frequent abuse. It is time to provide them with their basic rights. This is the right thing to do but also a wise policy to adopt. Otherwise, we risk waking up one day with large numbers of disenfranchised, angry residents. Key reforms include removing the kafala system for domestic workers, easing residency requirements for Syrian refugees, and allowing Palestinian refugees – most of whom were born in Lebanon – to work and own property in the country.

September 8, 2015 0 comments