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Comment

The man who could bring peace

by Gareth Smith May 10, 2013
written by Gareth Smith

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

May 10, 2013 0 comments
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The Buzz

Morning briefing: 10 May 2013

by Executive Staff May 10, 2013
written by Executive Staff

Economics and Policy

The economic devastation of Syria’s war could drive the economies of neighboring Lebanon and Jordan into reverse, Syria’s former deputy prime minister has said.

More from The Daily Star

 

Oman’s central bank has stipulated that commercial banks’ loans to small and medium-sized firms must account for at least five per cent of their total loans, in a new rule aimed at easing unemployment.

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Qatar Investment Authority (QIA), actively involved in making opportunistic investments, has future aims of acquiring more trophy assets and diversifying its portfolio.

More from Arabian Business

 

Middle Eastern governments are being warned to beef up the protection of military and government satellite communications in the face of a rising tide of cyberattacks.

More from The National

Companies and Business

Lebanese Central Bank Governor Riad Salameh has said that the the lender could not approve Middle East Airlines’ bid to acquire financially troubled Cyprus Airways as this could increase risk.

More from The Daily Star

 

Dubai-based Emirates Airline has posted a 52 percent increase in profits to $622m in the last financial year.

More from Arabian Business

Also in aviation, Etihad Airways could more than double its stake in Virgin Australia, in a move to compete against the new alliance between Emirates and Qantas.

More from Arabian Business

 

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Economics & Policy

Lebanon as a telecommunications hub?

by Alexandra Talty May 9, 2013
written by Alexandra Talty

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.  

May 9, 2013 0 comments
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Economics & Policy

‘We have almost no cyber security’

by Alexandra Talty May 9, 2013
written by Alexandra Talty

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.
 

May 9, 2013 0 comments
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The Buzz

Morning briefing: 9 May 2013

by Executive Staff May 9, 2013
written by Executive Staff

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.

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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.

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Qatar and Egypt agreed on a “gas swap” deal for the supply of liquefied natural gas to help the North African country meet soaring power demand in the summer months, an Oil Ministry official said.

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Sanctions in Iran are boosting the property market, but fears of a bubble are growing.
 
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Companies and Business

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.

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Dubai Group, an investment vehicle owned by the emirate's ruler, aims to secure a final agreement with creditors on its $10bn debt restructuring by June 6, potentially ending marathon negotiations that have dragged on nearly three years.

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Society

The survivors

by Nabila Rahhal May 8, 2013
written by Nabila Rahhal

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.

 

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.

May 8, 2013 0 comments
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Business

More than just your mailman

by Maya Sioufi May 8, 2013
written by Maya Sioufi

Where else can I renew my Lebanese passport, pay my cellphone bills, pay that parking ticket from the time I was late to a meeting, and send my brother in London the pair of shoes he left at home? LibanPost, Lebanon’s postal service operator, does more than just drop letters in mailboxes.

With 82 post offices throughout the country — with plans to reach 100 by the end of the year — and 950 employees, LibanPost has been diversifying its services since 2002.

That year, after attempting to run the postal service company for four years following its privatization in 1998, the Canadian postal operators and several Canadian investors threw in the towel. Due to the Lebanese Civil War, Lebanon had been without postal services for 20 years, leaving a whole generation accustomed to living without them, so a change of culture was critical to revive the use of postal services. The Lebanese government had promised the Canadian operators that they would provide them with all the support they needed, from delivering municipality bills to telephone and electricity bills. It was a series of promises that it failed to deliver on.

“We were promised more or less the same support as the Canadians, but, being Lebanese, our expectations were lower,” says Khalil Daoud, LibanPost’s chief executive since 2002, the year it was taken over by a consortium of Lebanese investors including the Mikati family, Bank Audi and affiliates of Bank Audi. In 2011, Bank Audi and its affiliates left their place to the Saradar group which now shares the ownership of the postal operator with the Mikatis’ M1 Capital.
From the onset of Daoud’s helm at LibanPost, he initiated a more commercial-oriented direction for the postal operator, realizing that the company would not be financially viable if it relied on the government as a client or failed to diversify its services.

Khalil Daoud has been chief executive of LibanPost since 2002

From government-related services such as renewing passports and facilitating papers of foreign workers, to vehicle services such as checking the amount due on a car’s annual motor inspection, to financial services such as paying phone bills, depositing money at certain banks and settling parking fines, LibanPost is continuously adding services. Today, 55 percent of their revenues come from non-postal related services. As for the government, it contributes to just 5 percent of revenues.

While Daoud refused to disclose the total revenues of the company, he revealed that the country’s postal operator has been averaging 13 to 14 percent annual growth in revenues since 2002 and started generating profits in 2006. With a lot of debt that piled up during its earlier years, LibanPost still has cumulative losses, but Daoud says “they are declining as we grow and we hope to be [phasing] those out and making a few bucks,” before their contract with the government expires in 2016. “We still have a few years,” he says.

As for the impact of the ongoing turmoil in neighboring Syria on the company’s performance, distribution and delivery of mail between the two countries was only stopped in March of this year. The suspension was without precedent. Even during the 2006 war with Israel, services, which were suspended for just 48 hours, transited through Syria for international mail, and domestic mail was still being dispatched. The Universal Postal Union, a United Nations agency, sets postal rules and instructions for its member nations and, according to Daoud, “It asked us to stop sending mail to Syria until a practical solution is identified. Things are getting more difficult now.”

Getting the right directions

Another difficulty that the company faces is homegrown and simple: addresses. “Close to the hospital”, “after the school”, “the building of the supermarket”, “take a left after the petrol station”, and other inexact directions are often used to locate an address in Lebanon. To complete their deliveries, LibanPost places its postmen to service the neighborhoods they are from. “Is it scientific? No. Is it reliable? To a certain extent. Is it legal? No … It could be a divorce case or a lawsuit and we can’t play with people’s lives like that,” Daoud says.

Having worked with public committees for over 10 years trying to establish an address system in Lebanon, Daoud finally gave up. “The problem is that within the municipality council, they fight to name the street after their late father or late uncle. In New York, streets are given numbers. What is wrong in giving numbers to our streets?” says Daoud.

But Daoud points to another solution. Google, using its global positioning system, can translate an exact location into a 36 to 38-sequenced number. Working with a Canadian company, LibanPost is developing an algorithm that transforms this sequence number into a more manageable 8 to 10 character code and plans to offer the application for free to the public by the end of the year. “At a later stage, we will see if the government wants to adopt it,” says Daoud.

With the Saradar group on board and following their acquisition of a majority stake in the Swiss-owned Near East Commercial Bank at the beginning of the year, is LibanPost going to start offering banking products similar to its French counterpart, La Banque Postale? “Why not?” says Daoud as he explains that most of the growth in the future is likely to come from basic banking products catered to low- to mid-income citizens. “If a taxi driver needs $1,000 for his engine, there is no possibility for this support,” he says and this is an opportunity that the postal operator eventually strives to tap into.

LibanPost has come a long way since its reestablishment in 1998, and it has big plans ahead. Its diversified and efficient services are realizing many benefits for citizens. It serves as an example to the government of how putting public companies in the right hands within the private sector could reduce debts, increase efficiency and, most importantly, help facilitate some of its citizens’ cumbersome chores.

May 8, 2013 0 comments
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The Buzz

Morning briefing: 8 May 2013

by Executive Staff May 8, 2013
written by Executive Staff

Economics and Policy

Saudi Arabia should cut energy subsidies that are burdening public finances, the economy minister and the head of the state-run utility said, a move that would also tackle the issue of erosion of crude exports.

More from Reuters

 

OPEC has appointed a Saudi Arabian candidate as its head of research over an Iranian, OPEC delegates told Reuters on Tuesday following a meeting at the organization’s headquarters in Vienna.

More from Reuters

 

Internet connections between Syria and the outside world were cut off on Tuesday, according to data from Google Inc and other global internet companies.

More from Reuters

 

Companies and Business

Saudi Basic Industries Corp (SABIC), the world's biggest petrochemicals group, will issue a sukuk late this year or next year to fund coming projects, a senior company official said on Tuesday.

More from Arabian Business

 

Lebanese real estate giant Solidere has successfully closed a $185 million securitization transaction through BLC Bank and BSEC – Bemo.

More from The Daily Star

 

Emirates Aluminium (Emal), a joint venture between Abu Dhabi investment fund Mubadala and Dubai Aluminium, is planning a further smelter expansion around 2017, its CEO said.

More from Reuters

 

Two Omani electricity generating companies plan initial public offers of their shares around June next year, the companies said in statements on Tuesday.

More from Reuters

Dow Chemical Co has received $2.2bn in damages from Kuwait's state chemicals company, bringing an end to a more than four-year dispute over a scrapped plastics joint venture.

More from Reuters

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The Buzz

Morning briefing: 7 May 2013

by Executive Staff May 7, 2013
written by Executive Staff

Economics and Policy

Kuwait's inflation rate fell to a three-and-a-half year low in March, with drops in housing costs and utilities driving the decline, KFH-Research has said in a new report.

More from Arabian Business

 

The UAE has denounced a visit by a delegation from Iran's Shura Council to three disputed islands in the Arabian Gulf.

More from The National

 

The Palestinian Authority has praised Google's decision to use "Palestine" on its home page for the Palestinian territories, and accused Israel of "paranoia" for rejecting the move.

More from The National

 

Visitors to the UAE spent around $4.7 billion via their Visa cards last year, a 17.1 per cent increase compared to the previous year.

More from Gulf Business

 

Companies and Business

Qatar is planning what it is dubbing "the most advanced library in the world".

More from Arabian Business

 

Dubai-based Emirates Airlines plans to have around 180 destinations worldwide by 2020, mirroring the emirate’s rapid growth plans, according to a senior official.

More from Gulf Business

 

Qatar Airways is in talks with Airbus to buy up to 15 of the European planemaker's A330 passenger jets, a deal potentially worth $3.6 billion at list prices, citing production delays to Boeing's 787 Dreamliner aircraft.

More from Reuters

May 7, 2013 0 comments
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Economics & Policy

Clever planning keeps airports aloft

by Fadi Majdalani, Alessandro Borgogna & Marwan Bejjani May 7, 2013
written by Fadi Majdalani, Alessandro Borgogna & Marwan Bejjani

Unexpected disruptions are a regular ocurrence for air travelers across the globe, including in the Middle East. Bad weather, civil unrest, industrial action or even a volcanic eruption in Iceland can be the culprit. While the impact on travel is considerable, the potential damage to airports’ reputations and long-term business can be even worse. It can result in travelers avoiding certain airports or regulators pushing for costly controls and financial penalties. Ultimately, such disruptions have detrimental consequences for the Gulf Cooperation Council’s thriving aviation industry, which plays an important role in the region’s economic diversification.

Disruptions can severely affect the main priority of an airport: to maximize revenues by having as many passengers board planes as safely as possible. Airports achieve this goal through sophisticated and complex procedures that, if disrupted, limit valuable capacity and the number of flights they can operate.

Airports that lack the ability to handle these disruptions can face severe repercussions. Major and even minor operational disruptions can lead to significant revenue losses, incur massive response costs and cause broader economic losses at the local, regional and national levels. Disruptions from the 2010 spread of Icelandic volcanic ash over European airspace had a $253 million net impact on the aviation sector in the Middle East and Africa, according to Oxford Economics, a United Kingdom-based forecasting and analysis firm.

The disruption resulted in roughly $11 million in lost business each day for Emirates Airlines, whose European routes make up a third of the carrier’s operations.

In addition to facing knock-on effects from other regions, GCC airports experience local disruptions such as those that stem from fog, which annually causes disruptions of more than 200 flights, affecting 30,000 passengers in the United Arab Emirates alone.

Airport disruptions are typically caused by one of three types of factors: circumstantial, structural or administrative. Circumstantial factors, such as political instability or natural disasters, can have low to high impact on airports and are nearly impossible to control. Structural factors are those that involve infrastructure and facilities, regulatory constraints and operational complexities, which can have low to medium impact on airports. Airports have a low to medium degree of control over these factors.

Lastly, there are administrative factors that can be fully managed, but will have considerable impact on airports if ignored. These problems stem from a lack of collaborative planning, command and control, use of information and technology or dedication of resources, or from the failure to make continuous improvement to airport operations.

While some disruptions caused by circumstantial and structural factors are clearly unavoidable, others can be eliminated or reduced by administrative improvements. But all potential disruptions, whether avoidable or inevitable, must be addressed, meaning that operational resilience should be a strategic priority for every airport in the Middle East.

Operational resilience

With the region’s airports becoming increasingly important global hubs, operational resilience should be considered crucial for the future economy of the entire GCC. One regional hub, Dubai Airport, has become the world’s second-busiest airport for international traffic, accommodating 57 million passengers in 2012, compared to 10 million in 1998. Similarly, Jeddah Airport served 19 million passengers in 2010, up from 10 million in 1998. Additionally, regional air traffic is set to rise further due to investment in airport infrastructure in places such as Qatar, Oman, Kuwait and Bahrain.

So far information on the number and type of disruptions at regional airports has largely remained anecdotal and exact numbers on administrative disruptions are not available for analysis. If anything, this highlights even more the urgency for regional airports to deal with not only resolvable but also circumstantial and structural factors by achieving and maintaining operational resilience.

Attaining operational resilience requires airports to plan for the foreseeable and prepare for the unexpected. A resilient airport should be able to prevent or manage and recover from a disruptive event. In essence, airport managers have to proactively get on top of manageable resilience issues, such as clear command and control structures and well-coordinated management of passenger welfare. By improving operational resilience airports can mitigate the impact of disruptions, maximize their capacity and continue to maintain their high standards.

Moreover, operational resilience can enhance an airport’s overall performance, not just during disruptions. For this reason, efforts to improve operational resilience should be implemented in line with a coherent strategy that addresses the short and long-term priorities of the airport as a business and the interests of the entire community of airport stakeholders.

Operational resilience involves focusing on 10 key areas. Successfully focusing on these will likely require substantial and often transformational changes to airports and their management, but all will make them better businesses.

The first is ensuring that resilience is a strategic priority for the airport. This is best done by making operational resilience a key part of the chief executive’s agenda and securing support from senior executives who can champion it constantly.

The second area involves taking additional steps to maintain solid relationships among key stakeholders, including base carriers and providers of priority services such as air traffic control and emergency response. Airports can achieve this by conducting regular meetings with stakeholder representatives so that resilience plans can be shared and coordinated, ensuring synchronized readiness among stakeholders when a disruption occurs.

Enabling proactive ways to respond and manage disruptions is the third area of focus. Airports can do this by increasing their capabilities, setting up early warning indicators that are monitored and acted upon and establishing an airport operating plan so that decisions are made in the interest of the entire airport.

The fourth area involves leveraging information such as historical and real-time information and making it available to all stakeholders. Airport executives will likely find that using information platforms and databases are helpful and can provide analysis on everything from operational performance to forecasts and threats.

The fifth area involves uantitatively measuring performance and impact to better understand an airport’s strengths and areas for improvement. Airports should aim to capture a complete view of the situation, which they can do by employing a response scorecard that assesses key performance indicators, and by taking into account media coverage and financial impact.

Sixth, coordination among command and control centers is key. Airport executives must ensure these centers operate in close coordination, and that roles and responsibilities are well defined so crisis responses are quickly implemented.

New and innovative technologies are the seventh area of focus for airport executives. Airports should employ closed circuit television with automatic incident detection and airside and landside vehicle tracking to enhance operational resilience.

The eighth area revolves around preparedness. Airports and stakeholders need to exceed regulatory requirements with additional scenario planning, training and testing based on potential disruptions common to the airport.

The ninth focus involves remembering that passengers are the airport’s number one priority. One way to achieve this is by developing a cohesive and effective airport passenger welfare plan in coordination with the airlines.

The 10th and final area is continuous improvement. Airports have to review and refine contingency plans every year and examine the previous year’s disruptions. The aim is to ensure that sub-par responses are not repeated and that positive aspects are praised.

By coping with disruptive events through operational resilience, Middle East airports can maintain their capacity and value, and they will be able to contribute to the growth of the global aviation sector. Most importantly, they can improve their operations year-round and consistently offer passengers a first-rate experience.

 

Fadi Majdalani and Alessandro Borgogna are partners, and Marwan Bejjani is a senior associate at Booz & Company

May 7, 2013 0 comments
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Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

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