Economics and Policy
Lebanon's caretaker Prime Minister Najib Mikati has once again promised that he would send the long-delayed salary scale bill to Parliament for approval.
A cornerstone of the renewal of the Lebanese healthcare industry is a series of investments in hospitals, paradigmatic among which is the project to expand and improve the medical center at the American University of Beirut (AUBMC). First announced two years ago in April 2011, ground was broken on the project last autumn. Construction is currently in the excavation phase for the new, nine-story academic and clinical center on a corner lot once occupied by a low-rise building. Other structures will be razed in the coming years to allow for new units in the massive project.
While the excavation activities and an extensive display project the scope of the project, the plan goes significantly beyond developing several physical structures.
“The idea is to make this institution really deliver the best care and maintain an edge in education and research,” says Dr. Mohammed Sayegh, AUB’s vice president of medical affairs and dean of the Faculty of Medicine. “When we are talking about best care, we are talking about North American standard-type care because this is, after all, the American University of Beirut,” he adds.
In pursuit of this aspiration, AUBMC came up with a 10-year, six-point concept that was dubbed Vision 2020 when it became clear that its schedule would run until 2020. When viewed against other “2020 visions” that have been produced for cities, statelets, and whole countries in the Middle East and elsewhere, the AUBMC project has a rather concise feel to it.
The six components of the plan are: building new physical structures, recruiting medical faculty, improving patient care and service, establishing new clinical and research centers, redesigning the curriculum for the Faculty of Medicine, and creating a collaborative network through strategic partnerships.
Aiming for the top
The driving force behind the plan is Sayegh, a 1984 graduate from AUB medical school and recipient of numerous awards in his field. He spent most of his career at Harvard before allowing himself to be recruited back to AUB in July 2009.
An initial assessment of AUBMC at the time showed that it “provided good care but I wouldn’t classify it as the best care we can provide,” Sayegh tells Executive. This insight led to the determination “to elevate standards on all levels”, with the six components of the plan all feeding into the provision of excellent care while fulfilling the medical center’s mandate as an academic institution.
In an approach typical for such a venture in the United States, the institution is relying on fundraising to develop new physical structures.
“We value this project at around $400 [million] to $500 million for the physical structures,” Sayegh says. In addition to the hefty construction price tag, he estimates that another $100 million or so will flow into hiring, investments in new research capabilities, network building and
so forth.
Cost factors related to the concept are vast and varied, as AUBMC has a host of 500 residents and fellows in the practical extension of the medical school. This training program alone, according to Sayegh, represents an annual budget of $4 million to $7 million in costs to AUBMC. On the patient side, the facility has to wrestle with the inequities of the Lebanese healthcare compensation, just as many other providers of healthcare services do.
Unlike the US, where the government allocates funding to support residency training, the Lebanese government provides no subsidies for the training of young physicians. On top of that, AUBMC feels the relentless pinch of the “dismal” reimbursements for treatment of patients that are admitted on Ministry of Public Health and National Social Security Fund (NSSF) accounts, Sayegh says. “We have an obligation and accept these patients but they cost us money. The nice thing is that we have a nice mix of patients, where we have some insurance patients, some self-payees and some who are [covered by] government and NSSF.”
The importance of networking
AUBMC’s mix of lucrative and money-losing patients makes balancing the bottom line easier than it is for other Lebanese hospitals.
The institution additionally changed its stance from academic isolationism of sorts to increased interaction with Lebanese hospitals. According to Sayegh, this was realized by entering into affiliations with several institutions to which AUBMC can dispatch physicians to treat patients who under existing contracts with municipalities and public sector entities are not eligible for admission to AUBMC itself.
Medical provider networking is one of the lessons taken from the AUBMC dean’s US experience at Harvard. Creating such partnerships, which represents the sixth component in AUBMC’s Vision 2020, is also on the agenda of regional interaction with Arab countries.
Although the six strategic items of the vision are equally important, implementation of some points does presuppose progress on other agenda items. The most pivotal point is reversing the brain drain by attracting highly qualified faculty members to Beirut. Expanding the hospital care capacity to about 360 beds in the immediate term and 600 beds later on is another facilitator required for entering into more strategic partnerships.
While a sound business model in today’s world is a must also for an academic medical center, the idea for AUBMC’s overall path forward is not commercial or profit-oriented but to financially sustain operations. “Sustainability is critical, otherwise you are losing money every year and cannot in fact have the best academic medical center,” says Sayegh.
This future will mean, however, a continued dependency on donors who support needy patients through several funds such as the Brave Heart Fund and the Neonate Fund, established in 2012. “The availability of citizens who believe in these missions is very important. You cannot sustain our operation with just pure business models, and none of the academic medical centers can do it unless [they] compromise either on training or on care,” says Sayegh.
Despite the uncertainties of the Lebanese health care system and despite anticipated dependency on the goodwill of the donor community, the leader of AUBMC and driver of Vision 2020 exhibits no shred of doubt in his return-on-investment projections. When asked how much value he expects each dollar invested in the institution’s universal upgrade project will generate, Sayegh’s answer is categorical: “hundreds, of course.”
The maxim in approaching the Lebanese healthcare “system” today appears to be simple: do not upset the patient. Keeping calm with strict bed rest can be a good short-term rule in caring for an acute heart condition or explosive backache. But for solving the Lebanese healthcare condition of ‘chronic dysfunctional systemitis’ (that disease newly discovered by Executive), not upsetting the status quo is nothing but a contraindication.
Besides overdue reforms to advance the social side of healthcare and make access equitable, the economic muscles of the healthcare industry in Lebanon need coordinated exercise. Unless these muscles are toned today, the health industry here will soon be outshone by other Arab countries and may even atrophy.
The Lebanese well know of the fragmentation of public health services and the weak supervision of commercialized private healthcare providers. Indeed, more than 90 percent of healthcare is conducted within the private sector, as Dr. Roger Sfeir, former adviser to the Ministry of Public Health (MoPH) and to several international bodies, told Executive. Meanwhile, public hospitals are underfunded, the National Social Security Fund (NSSF) is inefficient and bleeding money, and the political will for reforming the mess is lost in corruption.
Hospital operators across the quality spectrum suffer under the long delays in payment transfers from the NSSF and MoPH, and the more their patient mix is skewed against self-paying or privately insured patients, the more they are stressed, said Dr. Mohammed Sayegh, dean of the faculty of medicine and vice president of medical affairs at the AUB Medical Center. But even AUBMC, with a comparatively high share of well-compensated treatments, is impacted by the low payments coming from NSSF and MoPH. “The reimbursement is dismal and it costs the institution money, which impacts the efficiency,” he said.
From academic hospitals and diagnostic centers to plastic surgeons and specialists in stem cell medicine, stakeholders in the healthcare industry confirmed that their area of activity lacks legal frameworks and efficient collaboration with the public sector entities.
The World Health Organization (WHO) likewise said in a 2010 six-year country cooperation strategy (CCS) paper for Lebanon that “equity and fairness of the healthcare system are still far from being reached.” It also advocated a strong need to streamline and focus cooperation among key programs aiming for anything from accident prevention to tuberculosis control.
Notably, the WHO took the further view that “meaningful changes to health system expenditure will not occur without better management of the private sector.”
The CCS paper criticized competition among hospitals in acquiring costly medical machines and linked what the WHO called “the excessive use of resources and new technologies” to “perverse incentives that arise out of the way hospitals and health care providers are paid.”
Alarming medical outcomes
While the Lebanese health sector has seen massive investments in private and non-profit hospitalization facilities in recent years, including investments in high-end diagnostic machinery, the monitoring of hospitals for unintended negative patient experiences has neither a comprehensive scope nor an independent structure to report and evaluate all incidents and their causes, whether physicians’ errors, inadvertent infection, false medication, or others.
A glimpse into the issue and incident rates was offered in a recent study undertaken by GlobeMed, a healthcare payment services company affiliated with the insurance industry. Some of the findings in the study, published last November, were not pretty.
According to the study, one in every 143 people admitted to a hospital is going to die in what is called a “medical outcome” or negative change in the health status of a patient due to clinical intervention. Under the definition used in the study, medical outcomes also include infections, complications, readmissions and deaths.
The total rate of medical outcomes in Lebanon was 5 percent during the years 2005 to 2010, and the study only looked at patients whose accounts were managed by GlobeMed, which means large patient groups such as those on NSSF and MoPH accounts were not included. GlobeMed said the outcomes rate in Lebanon was higher than in the United States (3 to 4 percent) but lower than in Canada (7.5 percent).
Averages may be very deceiving
However, the average rate of medical outcomes at 5 percent was computed from 152,000 admissions, of which 137,000 represented a stay in hospital of one day or less. When counting the rate for the 15,000 admissions that exceed one day length-of-stay, the outcome rate more than doubles to 12 percent. Even more concerning is the timeline of incident rates: the number of outcomes advanced from less than 800 in 2005 to nearly 1,400 in 2010, and the percentage of outcomes recorded each year moved from 4 percent in 2005 to beyond 6 percent in 2010.
Shaking the picture further was that it only captured data on adverse events that occurred in the hospital, not recognizing any outcome that occurred after the patient was released.
The researchers additionally admonished the lack of legal obligations for hospitals to publish medical outcome rates and the reluctance of many doctors to completely fill in patient files. These insecurity factors on data quality notwithstanding, the reasons for the increase in adverse patient experiences in recent years need to be researched and understood. The GlobeMed study suggests that the expansion of hospitals might play a role in the rise of medical outcomes, due to hospital staff learning curves. Other possible reasons alluded to, but not further elaborated on, by the study are the increase in the average age of GlobeMed clients from 34.8 in 2005 to 36.5 years in 2010 and deficiencies in the ways adverse incidents are reported.
The study said that due to under-reporting of incidents, not enough measures will be taken to correct the underlying problems and avert repeat incidents. According to Dr. Sami Faddoul, a noted radiologist and diagnostic specialist, another factor driving the rise in incidents could be the freezing of treatment compensation that hospitals receive from public agencies and commercial insurance companies, as inflation and cost increases at hospitals have outpaced reimbursement rates that have been stuck at low levels for many years.
It was clear from the GlobeMed study that longer stays in hospital increase the probability of negative outcomes, such as contracting a dangerous hospital bug (nosocomial infection). Another clear conclusion was that the cost of a nosocomial infection is stellar. At an average cost ratio of 842 percent (!) when comparing an outcome-free hospital treatment with one involving a nosocomial infection, this type of infection is a supernova, blowing national medical expenses out of proportion.
Constructive needs
In the WHO’s view, Lebanon scores relatively well on overall health indicators, and life expectancy is above the regional and global averages for women and men.
Some of the organization’s documents on the Lebanon website cause wonderment — the CCS put its population estimate for the country at 3.4 million whereas another factsheet said 4.3 million people, for example, and the information value of regional comparisons is impeded by the fact that the WHO saw it fit to define the “Eastern Mediterranean” as a region comprising over 580 million inhabitants from Afghanistan to Somalia and from Morocco to Kuwait. Nevertheless, the WHO factsheet attests that the country has around 3.5 times the number of physicians, 35.4 per 10,000 residents, of the regional average.
The high ratio of medical doctors and the above-regional ratio of nurses point to the strengths of the Lebanese healthcare industry and its potential. The country’s healthcare sector has immense potential to be a lead supporting actor in the country’s wellbeing and economic growth.
It may not steal banking’s Oscar for gross domestic product contribution or claim the real estate sector’s function as a treasure chest, but besides education, and given that it creates a great deal of tourism, Lebanese healthcare has what it takes to be a national profit center.
As evidenced in Executive’s discussions with sector stakeholders and its research on healthcare, the industry provides jobs and services that can earn massive revenues on three levels: income from treatment seekers who come as “medical tourists” for anything ranging from oncology to a elective plastic surgery; as a source of remittances and financial giving by Lebanese who work as doctors abroad and support their preferred causes with generous amounts; and a source of revenue for companies that provide healthcare-related services from Lebanon across the Middle East.
All these economic potentials deserve to be fostered by a sound national strategy that begins with proper laws, regulation and oversight of the sector. It should provide efficient and equitable access to healthcare to all residents, and proceeds to extend support for the quality and regional growth of the Lebanese healthcare industry.
The potential of the Lebanese healthcare industry to generate revenues needs to be understood and quantified. The industry is seen today as a drag on GDP thanks to ballooning medical costs, but an alternative perspective can be realized through research and reform.
Executive’s special features on plastic surgery, radiology and stem cell banking show that physicians in each of these disciplines have taken the individual initiative to export Lebanon’s health services to the region.
Meanwhile, incentives for investment in the industry have only recently been extended by the Investment Development Authority of Lebanon, Lebanon’s national investment promotion agency, through investment assistance for pharmaceutical manufacturers and medical centers. Results of and potential for this investment support are still too early to gauge thoroughly, as the trade balance of pharmaceuticals in the past few years was ambiguous.
One difficulty in assessing the role of the healthcare industry is that the expenditure on GDP in a country’s balance sheet is perceived less as an economic activity than it is a social expense.
This perspective may be worthy of realignment in the context of the increasing globalization of healthcare, whereby medical capacity building, accumulation of specializations and preventive care and wellness environments can be seen as assets for an economy.
In the liabilities column of the healthcare balance sheet, challenges will continue to mount as a result of the increase in lifestyle diseases and of medical needs that go hand in hand with an aging Lebanese population. But both these health risks entail expanding economic opportunities in healthcare and thus need to be managed. Here is where the public sector’s limitations on devising a long-term health and healthcare industry strategy can be decisive.
The most disconcerting insight from our examination of health care provision in Lebanon is that so much is known about what is wrong and so much is agreed about what needs to happen to fix it, yet so little is done.
Economics and Policy
Occupancy at Beirut hotels declined 10 percent in the first quarter of 2013 as room yields dropped 35 percent, Ernst & Young’s monthly survey of the MENA hotel sector showed.
Israel's security cabinet on Sunday discussed proposed cuts in defense spending of over a billion dollars, as public opposition mounts to austerity plans.
Companies and Business
A planned flotation of Doha Global Investment Co, a $12 billion Qatari investment firm backed by assets from the Gulf state's sovereign wealth fund, has been postponed pending necessary approvals, a senior bourse official said on Sunday.
State-run Kuwait Airways will spend 850 million dinars ($2.98 billion) on 25 new Airbus jets and aims to lease a further 13 to upgrade its ageing fleet, a Kuwaiti newspaper reported on Sunday.
Hassan Rouhani’s entry into June’s Iranian presidential race adds a new ingredient. In a crowded field of ‘principle-ists’, Rouhani offers a hardheaded option for voters seeking less populist economic management and a more nuanced handling of talks with world powers over the nuclear program.
Best described as a pragmatic conservative, Rouhani is a man “of the system”, a 64-year-old cleric who has since 1989 sat on the Supreme National Security Council (SNSC) as an appointee of the rahbar (leader), Ayatollah Ali Khamenei. Rouhani’s record as the lead negotiator in nuclear talks with the European Union in 2003-2005 — when the reformist Shargh newspaper dubbed him the “diplomatic sheikh” — suggests his victory would increase the chance of a diplomatic breakthrough to ease Iran back from punitive sanctions and the United States and Israel back from attack.
His experience is rooted in the Islamic Revolution and Republic, but Rouhani has also looked outwards in a way that can unnerve ideologues. Born near Semnan, north of the central desert, he began jurisprudence studies at age 12, rising to the rank of hojjat al-Islam, one below ayatollah. After a degree at Tehran University, he began a Ph.D. in law in Glasgow in the 1970s but left to join Ayatollah Ruhollah Khomeini in Paris as the 1979 Revolution loomed.
Rouhani was at one point in the 1980-1988 Iraq conflict deputy to the war commander — and later president — Akbar Hashemi Rafsanjani. He remains close to Rafsanjani, and shares the wily 79-year-old conservative’s belief that dialogue with the United States can serve Iran’s interests. Two of Rafsanjani’s children, Yasir and Fatemeh, attended last month’s press conference when Rouhani announced his candidacy.
There is a hint of déjà vu to his candidacy. In the run-up to the 2005 election, ultimately won by Mahmoud Ahmadinejad, Rouhani was seen as a frontrunner, a man who could not only manage nuclear talks with Europe but also deliver cautious domestic reform.
But the lack of progress with the Europeans led to domestic criticism of the negotiators. When Iran suspended uranium enrichment as a “goodwill” gesture, the Europeans demanded the suspension be extended and offered in return only mild assurances of economic and diplomatic benefits. This impasse undermined Rouhani, who decided not to stand in the 2005 poll, and led to his removal as lead nuclear negotiator when Ahmadinejad won.
Eight years later, Rouhani still serves on the SNSC and is an elected member of the Assembly of Experts, the clerical body that monitors the Supreme Leader and when necessary chooses a successor. But this has hardly put him in the public eye, and if he is to fare well in the election, Rouhani will need to make the economy and the international situation the prominent themes of his campaign.
Firstly, he will need to project himself as a competent manager with a technocratic approach to an economy lacking productive investment. This means exposing Ahmadinejad’s populist and inflationary policies — including his cash handouts to most Iranians. As Rouhani put it: “We need a new management…through unity, consensus and attracting honest and efficient people.”
With sanctions halving Iran’s oil exports in the last year, prospects for growth are bound up with the nuclear program, which means relations with the US will be some kind of election issue. Rouhani can turn this to his advantage. In a recent interview, he said nuclear strategy was the responsibility of Ayatollah Khamenei, but that government could “greatly influence the tactics and the method of execution.” Clearly Rouhani believes that with “strategy” not an election issue, he can portray himself as a trustworthy executive. This may work. Rouhani is respected as a tough operator both in Iran and by European diplomats who dealt with him in 2003-2005.
How will such realism play with voters? Three of the past four presidential elections — the exception being Mohammad Khatami’s second victory in 2001 — have thrown up surprises. This is due in part to a volatile public mood and Iran’s lack of political parties.
The field of around 12 ‘principle-ist’ candidates will thin out as frontrunners emerge. Ahmadinejad’s ally Efsandiar Rahim Mashaei may be the man to beat, if the Guardian Council allows him to run.
Rouhani’s advantage over his opponents, however, is his potential to woo reformists who might otherwise ignore the election. With election season heating up and a new era of Iranian politics set to begin, Rouhani’s addition to the ballot should offer Iranians a clear break from Ahmadinejad’s two terms in office.
Gareth Smyth has reported from around the Middle East for nearly two decades and is the former Financial Times correspondent in Tehran
The Lebanese might be excused for laughing at the suggestion that their country is set to become a regional telecommunications hub. But while farcical Internet speeds, unreliable service and inflated prices justify such cynicism, the man at the helm of the sector, Minister of Telecommunications Nicolas Sehnaoui, insists that this is indeed the path on which Lebanon is set.
In an effort to improve the country’s state of connectivity, the Ministry of Telecommunications (MoT) and the Cyprus Telecommunications Authority (Cyta) entered into an agreement in early March to share capacity on Cyta’s Alexandros submarine cable, of which Lebanon will use 24 percent. Designs are also under way to construct a new submarine cable, dubbed “Europa,” that will link Cyprus to Lebanon.
Lebanon today relies primarily on two international cables for its Internet connection: IMEWE (India-Middle East-Western Europe) and Cadmos. Beginning construction on the new Europa cable is critical, as it is meant to replace the Cadmos line, which is scheduled to ‘die’ in five years. According to a June 2012 MoT market report, Lebanon’s contribution to the construction of the cable will be less than $10 million, excluding the cost of the equipment.
“I am very proud to say that this step is a historical step for Lebanon [and] Cyprus,” said Sehnaoui in a press conference in Sassine Square to announce the deal. “It gives us the redundancy we badly need because no regional hub can claim it is a regional hub if it doesn’t have redundancy.”
Related article: 'Lebanon has almost no cyber security'
The need for redundancy was stressed last summer when Lebanon’s connection to IMEWE was damaged. A country-wide Internet blackout lasted for several days, and the MoT estimated $11 million per day in economic losses.
The Alexandros cable can potentially provide up to 700 gigabytes per second (gbps) of additional Internet throughput to Lebanon. This may rise with future technological advancements. This augments the 200 gbps of capacity currently available on IMEWE and 79 gbps on Cadmos. Lebanon’s actual in-service capacity, however, is closer to around 30 gbps today – a significant increase from 3 gbps in mid-2011. This figure represents the rented capacity on the submarine cables as well as the local fiber-optic transmission capacity in place to handle the bandwidth to-and-from the international Internet gateways.
“Eventually, we want to be able to sell capacity. We have now a cable that connects Lebanon to Syria,” said Ministry Adviser Firas Abi-Nassif. “We can sell on any cable such as IMEWE or Beritar [an Internet cable connecting to Syria].”
Abi-Nassif remained vague on how much bandwidth will be distributed domestically versus sold regionally, but he maintained that the first priority is to distribute the additional throughput to Lebanese consumers. He noted that the current political situation in Syria might dampen plans to distribute excess capacity.
Unused bandwidth is necessary for future upgrades and unforeseen connection problems, making it integral for development in the sector. However, while more international bandwidth should translate into faster speeds and lower costs, the ministry still needs to overcome several obstacles if they are to capitalize on all of the additional capacity that they have purchased.
Beset by in-fighting
“Delays have hit the utilization of increased international broadband bandwidth, with the finger of blame pointed both at the government and Ogero,” said Tom Shepherd, research analyst at TeleGeography. “Political squabbles continue to beset the [telecommunications] sector.”
Ogero is the cornerstone of Lebanon’s telecoms sector, responsible for connecting the telecoms network internationally as well as internally. Although in theory Ogero is government-owned and operates under the supervision of the MoT, it has often acted against MoT policies, leading to confusion in the industry and delayed Internet access for users.
When the IMEWE cable was first opened in December 2010, Ogero and the MoT clashed publicly, with more than eight months passing before the international bandwidth was distributed to consumers in July 2011. The conflicting political affiliations and agendas of the MoT and Ogero are likely to remain a deadweight on the industry’s advancement in the foreseeable future.
Ogero has also been accused of not distributing bandwidth packages to Internet service providers (ISPs), akin to choking competition in the supply of Internet. These packages, known as E1s, are what allow ISPs to deliver Internet to consumers. By restricting their supply, Ogero is inhibiting private ISPs from competing with the state.
Ministry Adviser Abi-Nassif confirmed that ISPs claim to have not received their mandated E1 allocations from Ogero and maintained that “there should be absolutely no reason why, for other than technical reasons, there should be problems giving [out] bandwidth.”
Falling at the final hurdle
Another hurdle facing the MoT is modernizing the ‘last mile’ connection of the delivery network, where speeds bottleneck in Lebanon. If infrastructure between ISPs and consumers remains outdated, end-users will not enjoy higher Internet speeds despite the additional bandwidth from abroad. ISPs are not legally allowed to install these ‘last mile’ connections; they must rely on Ogero and the MoT, instead.
“Before IMEWE, there was no reason to do a proper network so there was almost no fiber optic network,” said Denys Fedoryshchenko, information technology consultant at Virtual ISP, a local service provider.
The ministry’s plans include rolling out a fiber-to-home project in select areas as well as upgrading current connections that use older technology such as DSL. The ministry aims to have 100 percent ‘last mile’ coverage from these two initiatives. Ogero, however, recently announced that they had not received funding from the MoT for their projects over the past two years. Abi-Nassif acknowledged this and said that whatever funding Ogero needed for the ‘last mile’ connection, “the ministry is happy to provide it.” He declined to comment on where funding for the fiber-to-home project would come from.
Minister Sehnaoui also announced in December his plan for “delayering” or restructuring the industry, aiming to decrease the government’s presence and allow privatization in certain areas. Most of the press on the new plan has focused on what this means for mobile, but the MoT confirmed to Executive that the delayering plan applies to the whole industry. The plan has come under considerable scrutiny as it does little to encourage meaningful private sector involvement and is likely to only superficially increase competition or incentivize infrastructure investment.
In a global ranking of Internet download speeds, Lebanon ranks number 153 out of 184 according to NetIndex.com, fairing worse than Afghanistan and Zimbabwe.
Although the ministry has made some commendable headway, such as through the Alexandros cable deal, major political and technical obstacles remain. There is still a long way to go before we are even close to the minister’s stated goal of Lebanon becoming a regional telecommunications hub.
To discuss the state of telecommunications in Lebanon, Executive sat down with Telecommunications Regulatory Authority (TRA) Chairman and Chief Executive Imad Hoballah. He also serves as president of the Pan Arab Observatory for Cyber Security and Safety.
A few years ago, the TRA was mandated to collect quality of service data. What is happening now?
We have it [new equipment, applications and technology to monitor services]. It has been about a month since the TRA became fully equipped and we are going through quality of service measurements throughout the country and in about three to four weeks, maximum, we will have a new quality of service report that should help with further improvements.
Will the quality of service data be published on the website or available to the Ministry of Telecommunications?
We hope that we will have good output to make available to the public. We are working towards it.
In terms of protecting against cyber attacks, what is the role of the TRA, what is the role of the ministry and what is the role of Internet service providers?
Cyber security for Lebanon is a big failure.
Related article: Lebanon as a telecommunications hub?
And who do you think is responsible for cyber security?
We are keeping our cyberspace, telecom networks, information and communications technology networks completely open to all kinds of terrorism attacks, pedophilia, all kinds of safety issues related to children. Our cyberspace is open and if anybody minces words about the state of our cyberspace, they are committing a crime as far as Lebanon is concerned. This is the biggest problem that we have.
So do you believe it is the responsibility of the government?
No, our belief is that there needs to be a body between the private sector and the government with civil society, a multi-stakeholder environment that works on cyber security. The government cannot give up responsibility for cyber security and as such it needs to pull these people together eventually. This is a national and social security issue above all. This is a security issue.
And you believe it is the government’s role to protect citizens against cyber attacks as a security issue?
It is everybody’s responsibility and the government has a big role to play in that.
How can the Lebanon telecoms sector make itself more attractive to foreign direct investment (FDI)?
The policy cannot change with every minister that comes. It is not something that changes every six months. The people need to have consistency — predictable and consistent regulatory framework with a consistent policy. It should work. But Lebanon in general has not provided that to our investors, [nor] to our potential investors.
Isn’t that, in theory, why the TRA was created?
Yes.
What is different today than when the TRA was first created that would make it more easy to attract FDI to Lebanese telecoms?
A new board needs to be given the authority, at least as it was mandated in Law 431. We are working and pushing for that with the minister.
What has been your proudest moment since you became the chairman of the TRA?
After the decision of the Shura Council [in 2011] to basically cut our feet from under us as a TRA, holding the TRA together has been the biggest accomplishment. The second biggest accomplishment has been related to cyber security and what we were able to accomplish related to the condemnation of Israel for its action against the Lebanese telecommunications network. Lastly, working with the Ministry of Telecommunications on the expansion of networks and services and the inclusion of the private sector in providing the services.
When you look to the future, how can the TRA continue to try to regulate after the decision of the Shura Council to suspend the TRA’s powers?
Whenever the government and the country are ready for independent bodies, the TRA should be an independent body financially and administratively and it should not be part of any other organization.
Do you think the country is ready for that?
It hasn’t acted as if it is ready so far.
Economics and Policy
MP Mohammed Qabbani, the head of Lebanon's parliamentary committee on energy, has accused caretaker energy minister Gebran Bassil over the stoppage of the Fatmagül electricity barge.
Kuwaiti politicians and media fumed Wednesday over $2.2 billion paid to U.S. giant Dow Chemical as a penalty for the Gulf emirate scrapping a joint venture, and called for those responsible to be held to account.
Majid Al Futtaim Properties LLC, owner of the Dubai mall with an indoor ski slope, plans to build a hotel in Beirut and another in Dubai to tap demand from visitors to its shopping centers.
There was Horse Shoe, most notable for being Ghassan Tueni, Raymond Edde and Charles Helou’s favorite watering hole in Hamra. And Dolce Vita, the sidewalk brasserie that was the hangout for exiled political figures from Iraq and Syria. And Bliss Street’s Faysal’s, the restaurant where the leftists — many of whom became ministers in their countries — used to meet. Today, however, they have been replaced by a Costa Coffee, a Pizza Hut and an anonymous apartment building, remaining only in memory.
Though these places had their fair share of the limelight and stayed in operation for more than 20 years, many other food and beverage venues rise to fame only to shut down some years later. Over time, this scenario has intensified, and lifespans have shortened as Lebanon trundles through its various political situations. Every time the country stabilizes for a couple of years and the tourists roll in, hopeful young entrepreneurs pool their resources to open a bar. A few years later, the situation deteriorates, the tourists leave and the bars shut down.
Despite this dismal picture, some bars in Beirut have persevered through the political crises, reaching and surpassing a decade on the scene. The question is: what makes these bars special? What has led them to remain in operation while around them new and more exciting places are opening? Executive analyzed a selection of 10 bars and nightclubs that have been in operation in Beirut for more than 10 years to find out what keeps them in business.
Serving 30 or 300
Brewing the right formula for success depends on the size of the bar. The smaller venues all have a couple of points in common. Their overhead costs are less than the bigger establishments, and they have no marketing or events budget to speak of.
They do, however, enjoy strong customer loyalty, as evidenced by the number of patrons who have been visiting them ever since they were old enough to drink. Nostalgia mixed with a sense of belonging is a strong motivator, and there is something touching about knowing that these little pubs will always remain the same and everyone there knows who you are. Loyal customers don’t have to come every night, but their loyalty is enough to keep these bars afloat. Naturally, good quality, friendly service and nice music have to be maintained. Loyalty can only take you so far.
The larger establishments profiled in the selection have each managed to carve a niche for themselves that has remained unchallenged — pioneers of entertainment. Each venture is built around the type of music they play or the bands they host. Others have attempted to copy their concepts but customer loyalty, added to their years of expertise, makes it hard for newcomers to grab a seat at the table.
Both the large and small venues have been touched by Lebanon’s harsh conditions and all have seen their business fluctuate, with some having more bad days than good. But the fact they have remained on the scene is a testament to their resilience. In these profiles, listed alphabetically, each bar’s owner offers advice for those thinking of following in their footsteps and establishing their own venues.
1. 37 Degrees
Location: Monot Street, Ashrafieh
Customer profile: Laid back, loyal customers who enjoy cozy and comfortable setting
Capacity: 70
Drink of choice: 37's Heat, a whiskey-based drink ($8.50)
Owner's advice: “Have a strong concept; choose a good location and good elements to manage it. Only then might you have a chance of succeeding as the market is not as easy as before"
Opened in June 2001, 37 Degrees was among the first bars to open in Ashrafieh’s Monot area. Ideally located in a then-deserted alleyway, 37 Degrees had a wide outdoor terrace where drinks could be enjoyed al fresco.
The street on which 37 Degrees is located was the Hamra or Mar Mikhael of its time in the early 2000s, but it is much calmer these days. Few bars have survived to tell the tale, and others sporadically opened only to close soon after.
37 Degrees is one of those surviving bars and retains the warm and friendly spirit it’s had since it first opened. Its claim to fame, according to the main partner Toni Rizk, is that it introduced the well known Lebanese shot, the “dodo” — named after the barmaid Dana — to the public. The shot was adopted from the “Mexican hootch” shot which 37 Degrees served with some adaptation, such as the olive, and vodka instead of tequila. Not knowing what to call it, people referred to it simply as the dodo shot.
2. Barometre
Location: Abd al Aziz Street, Hamra
Customer profile: Foreigners seeking an 'authentic' Lebanese experience, fans of the leftist movement or belly dancers
Capacity: 75
Drink of choice: A tall glass of Arak ($6)
Owner's advice: “Don’t go into the bars business unless you really love it. Otherwise, it’s difficult and it’s just not worth it”
With Ziad el-Rahbani songs playing in the background, and posters of Mahmoud el-Darwish and Samih el-Kassem — both nationalist Palestinian poets — on display, Barometre clearly capitalizes on the image of leftist Lebanon in the 1980s, even though it opened in 1998.
Owner Rabih el-Zahr is a self-proclaimed nationalist and proudly recounts how, during the 2006 war with Israel, foreign journalists would keep their equipment in Barometre and regroup there while he played the news in the background and served free shots every time Hezbollah hit an Israeli target.
Barometre’s concept has been replicated by several recently established bars in Hamra, but while they may have reproduced the image and music, they have yet to recreate the same delicious nibbles available at Barometre, which are family recipes passed down from Zahr’s mother.
More than 10 years since it opened, Barometre still manages to pack in a full house during the weekends, although it has had to introduce theme nights such as a “contemporary Arabic music dance night” to attract more customers.
3. Blue Note
Location: Makhoul Street, Hamra
Customer profile: Blues and jazz lovers
Capacity: 75
Drink of choice: Vodka or whiskey ($40-$55 charge including a la carte food and band)
Owner's advice: “Study the market and then carve a niche for your bar; be different and needed”
Established in 1987, Blue Note was Lebanon’s first jazz and live music club. Despite opening during the civil war there were already some interesting pubs in operation in the area, and Blue Note was a welcome addition to the mix. Years later, Blue Note is the only surviving bar from that period in the area.
Open all day, Blue Note offers a mixed menu of international and local cuisine. But it is not the rather average food that brings people to Blue Note, it is the jazz talent — sometimes international but mostly local — that regularly perform in the venue. Blue Note’s Khaled Nazha also proudly plays the role of cultural ambassador by promoting the international blues players he brings to play at Blue Note around the country. Though he would like to get more international players, their budget and the country’s situation does not always allow for that.
Blue Note launched Charbel Rouhana and Toufic Fadoul to relative fame and recently got Ziad el-Rahbani to play there for 11 consecutive nights. Understandably, the bar charges a cover fee for the music.
4. B018
Location: Karantina
Customer profile: 18-25 year-old fans of house and alternative music.
Capacity: 600-800
Drink of choice: Naji's Mood, a vodka-based drink ($13)
Owner's advice: “Don’t think that this is a fast cash business, and only enter it if you have experience in the business or study it well beforehand”
B018 was borne out of Naji Gebrane’s dream to change the music in Lebanon and move it away from the typical disco tunes that were available back in 1995. During the civil war years, Gebrane would play his favorite music to whoever happened to be in his chalet — number B018 — and by the end of the war he was inspired to start his own club. B018 continues to be a pioneer in electronic music 18 years later, attracting DJs from around the globe. With the party only really starting well after midnight and ending with the rising sun, B018 is not for the faint of heart.
In 2005, Gebrane attempted to attract his older customer base to a new club, B018 Classic, on Old Damascus Road, Ashrafieh, which played the classics of the 1980s. It only operated for three years, before protests in the area in 2008 forced it to shut down. Gebrane’s older clientele now gets one night a week when B018 opens early and plays 80s hits.
5. Captain’s Cabin
Location: Hamra
Customer profile: Foreign expats looking for cheap drinks and a game of pool or darts in a place that reminds them of their little neighborhood bar back home.
Capacity: 50
Drink of choice: A bottle of beer ($3)
Owner's advice: “Don’t go into this business if you have no experience in it; reading about it and having a business degree are not enough because you need to live it”
Established in 1964 by a group of pilots looking for a place to play cards and drink gin while away from home, the Cabin’s glory days were in the pre-civil war period. It became a destination for international pilots, American University of Beirut professors and the occasional spy.
Today the bar has a more shabby and neglected feel, with the leather on its bar stools torn in places and writing scrawled on the walls. The owner, Andre, prefers to call it an “easygoing place” and says that when a bar stool is broken, he won’t necessarily fix it rapidly.
Captain’s Cabin has very few overhead expenses: it doesn’t provide food and the drinks do not contain anything perishable. Also, Andre serves the patrons himself and has no employees. Although in Hamra, considered a prime location, the owner pays on the old rent scale and admits that the bar generates enough income for him to live modestly and no more.
6. Centrale
Location: Saifi area
Customer profile: People in their 30s or 40s who want to enjoy a well-mixed cocktail in a pleasant atmosphere
Capacity: 60
Drink of choice: Mona Lisa Smile, vodka-based ($12).
Owner's advice: “During difficult times and the low season, don’t sacrifice quality to save on costs as you will build a bad reputation that people won’t forget when the times improve”
Centrale was the first bar to open in the Gemmayze area, back in 2002, long before the neighborhood became the magnet for restaurateurs it is today. “We felt that Monot was out and that this was going to be the next happening area,” explains Talal Chehab, the main owner.
Intended to be a quality restaurant with an accompanying bar, the owners were surprised to see that people were more interested in the cylindrical bar area — along with its roof, which opens to reveal the star-filled night sky — than they were in the restaurant. Though the restaurant still operates on the first floor of Centrale, the bar on the second floor remains the main attraction.
Centrale is proud that they have had the same team since they first opened. Indeed, Michel Mhanna, the barman, has his own loyal patrons who come to Centrale especially for his freshly mixed drinks and innovative cocktails, served with a welcoming smile.
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7. Hole in the wall
Location: Monot Street
Customer profile: International and local rock music lovers of different ages who enjoy a vibrant atmosphere where not a lot of talking is done.
Capacity: 50 (seated) 100 if standing
Drink of choice: Guinness beer ($8)
Owner's advice: "If they haven't worked in this business and know all its details, or if they haven't hired a professional to get things done for them, it is going to be tough"
Tucked in the narrow alleyway off Monot Street, Hole in the Wall is as its name suggests. Upon opening an unassuming door, one enters a lively bar with classic rock blasting through the stereo and high tables packed close to each other near the bar.
Hole in the Wall has been in operation since 1999 but Ziad Kordahi, its current owner, bought it in 2003. He already owned another venue, Rai, on the same street. It is still packed on most days, especially with the recent introduction of live bands and new talents.
8. MusicHall
Location: Starco Center,
off Downtown
Customer profile: International music lovers of all ages and nationalities.
Capacity: 500
Drink of choice: If at a table, MusicHall follows a formula of $60 per person, including the show and drinks within that amount.
Owner's advice: “Someone who starts a new business is usually called an entrepreneur; those who are starting their own bars/nightclubs in Beirut at the moment should be called gamblers. But maybe the world is nothing but a big casino, as the Italians say."
Following his success with the “Amor E Libertad” nightclub in Kaslik in 1998, Michel Elefteriades decided to bring the same concept of live musical shows to Beirut in 2003, and MusicHall was born. Originally an old cinema theater, the Starco venue was ideal for live music on stage and Elefteriades easily transformed it into a club with state-of-the-art lighting and sound system.
Ten years into its existence, MusicHall has launched such renowned musicians as the Chehadeh Brothers and has become instrumental in introducing tourists to the more diverse music culture in Lebanon. It is full on the weekend and requires booking in advance during the peak summer season and holidays. MusicHall recently opened to much success in Dubai, and there are plans to open an outdoor venue in Beirut by this summer.
9. Regusto
Location: Hamra Street
Customer profile: Loyal patrons of Chez Andre and those who have heard about it from their parents (who may be few and far between by now).
Capacity: 60 people
Drink of choice: Vodka orange ($6.5)
Owner's advice: “Be correct with your patrons and always think long term”
Regusto’s history is interlinked with that of Chez Andre, the famed Hamra pub of the 1960s, which was owned by the uncle of Regusto’s owner — Arthur Chirvanian — who took over management in 1992. When Chez Andre had to close down in 2003 due to rent issues, Chirvanian decided to move the same concept into Regusto, which was being run as a nargileh place at the time.
Regusto’s location in Hamra Square means it avoids the neighbors and their noise, but it also sets it apart from the area’s other pubs, which tends to make people forget about it. The place is somewhat dark and dingy, though the music is good, if a bit outdated. Regusto, however, capitalizes on Chez Andre’s fame and its walls are covered with newspaper clippings of famous political and cultural figures who used to party at Chez Andre, which makes for interesting conversation.
Regusto’s owner has recently opened Belleneves, a small live-band concept bar, in one of the alleyways off Hamra’s main street.
10. Zinc
Location: Sodeco, Ashrafieh
Customer profile: Loyal customers, between the ages of 30 to 40, who grew up with Zinc and still love it.
Capacity: 100 people
Drink of choice: Margarita ($12)
Owner's advice: “The bar business is a very detail oriented one that you should be constantly working on”
When Fadi Saba first decided to open Zinc in 1997, the bar culture in Beirut was wanting. Saba’s inspiration was the nights spent at home with friends enjoying a few drinks and music while waiting for the clubs to open; hours that can these days be better spent in one of Beirut’s many bars.
Despite its age, Zinc manages to maintain a trendy feel and stays loyal to the elements that creates a bar’s atmosphere, such as the vibrant mood, the soft lighting and innovative music.
Probably due to the prevalence of rooftop bars, Zinc has shut down during the summer for the past four years.
“Zinc’s image used to suffer in the summer when our customers went to rooftops. Though financially it is still the same for me when I close in the summer, my customers miss us and we miss them,” says Saba.