Executive Magazine

Sponsoring slavery

by Paul Cochrane April 2, 2013

written by Paul Cochrane

Every minute, one person is sold over an international border. Human trafficking is now the fastest growing international crime; it is second in size only to the drug trade and ahead of arms trafficking, according to the United Nations Office on Drugs and Crime.

Due to its nature as a hidden crime, there are no precise figures on human trafficking, but profits are estimated to be $32 billion annually — $4 billion from forced economic exploitation and $28 billion from forced sexual exploitation. In terms of trafficked people, some 20.9 million people are victims of forced labor, of which 9.1 million, or 44 percent, are moved either within or outside of their country and therefore likely to be trafficked, according to 2012 data from the International Labor Organization (ILO).

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Shocking though such numbers may seem, they are just the tip of the iceberg. Part of the problem is defining exactly what human trafficking is, while a United Nations resolution was inked in 2003, many countries do not have a precise definition, yet alone laws criminalizing the trade. Getting the legislation right is essential to tackling this crime. Furthermore, there needs to be increased focus on targeting the financial side of what is a low-risk, high-reward activity.

Only recently has the financial side of human trafficking become a focus, with the intergovernmental Financial Action Task Force issuing a report in 2011 on human trafficking and including it as a predicate offense in its latest anti-money laundering recommendations for countries to adopt.

Non-governmental organizations (NGOs) are also increasingly active, such as Finance Against Trafficking, which is soon to release a manual for businesses to identify suspicious financial activity and human trafficking. The delay in taking on human trafficking at the financial level is by and large political. Since September 2001, the major focus by the world’s de facto regulator — the United States — on tackling financial crime (after the drug trade and money laundering) has been countering terrorist financing during the “War on Terror” years. A ‘war on human trafficking’ has not yet started, but the momentum is building. As the focus grows, the Middle East and North Africa will inevitably come under the spotlight, with the Gulf Cooperation Council (GCC) countries in particular.

In Lebanon, the parliament, under American pressure, passed an Anti-Trafficking Law (No. 164) in 2011, adding a section to the criminal code prohibiting and punishing all forms of human trafficking; enforcement, however, has been lackluster. The GCC, on the other hand, is lagging seriously behind on the legislative and enforcement side, and a primary reason is the sponsorship or kafala system. Under kafala, foreign laborers have to have a sponsor, who typically charges the worker for the privilege and takes the worker’s passport until he or she is allowed to leave the country.

It is a big business, with the ILO estimating there are 15 million guest workers in the GCC. In Kuwait, for example, a sponsor normally charges between $5,260 to $8,770 per worker, depending on the nationality. Sponsor 100 people, and you are making some seriously easy money. According to Jamal Abdul Raheem, founder of the Business Crime Bureau in Kuwait and an outspoken critic of the kafala system, the sponsor is in effect breaking the law by not declaring the source of income, therefore committing a money-laundering crime.

The ILO has urged “major reform” of the kafala system and human rights groups have called for GCC states to designate foreign laborers as migrant workers not as guest workers. Changing the designation is important to provide more legal rights for workers. Additionally, while migrant workers are not initially trafficked persons, as they leave countries such as India, Pakistan, Sri Lanka and the Philippines voluntarily, many become trafficked persons by being deceived and exploited by sponsors, which fits into the ILO criteria of forced labor: debt bondage, where a worker is not paid but works to pay off a debt; restriction of movement; and retention of passports or identity documents so a worker cannot leave or prove his or her identity. Tackling this issue is going to be a long and hard process as it goes to the very foundations on which many of the GCC’s skyscrapers and economies are built.

As income inequality continues to rise around the world, human trafficking is likely to only grow as an international crime. Getting the financial community on-board to red flag suspicious transactions related to human trafficking is essential to tackle the monetary reward and help curb this nefarious trade.

Paul Cochrane is the Middle East correspondent for International News Services

April 2, 2013 0 comments

Comment

Seizing a Golan chance

by Nicholas Blanford April 2, 2013

written by Nicholas Blanford

Israel has had an easy time on the Golan Heights since 1974, when a United States-brokered ceasefire arrangement came into effect and a United Nations observer force deployed in a demilitarized zone between the Israeli and Syrian armies. Israeli settlers moved onto the basalt plateau, planted grape vines and apple orchards and turned the southern slopes of Mount Hermon into a ski resort. In 1981, the territory was formally annexed into the state of Israel, a move that flouted international law but failed to raise much international opposition.

Militarily, the Israeli-occupied Golan has been perhaps Israel’s quietest border, with the Assad regime — both father and son — preferring to wage their battles against the Jewish state in Lebanon.

Now, the calm may be drawing to a close. In recent months there have been several incidents of cross-border fire from the Syrian side into the Israeli-occupied territory. Most of the mortar fire and machine gun shooting appears to have come from the Syrian army, but it is not altogether clear whether the incidents were accidental or deliberate. Fighting between the regime forces and rebel groups has flared lately along the edge of the Golan. Israel has built a new security fence along the edge of the demilitarized zone and adopted a policy of retaliating against all sources of fire emanating from the Syrian side. But these stray rounds may only be the opening shots in a broader struggle in the Golan in the months or years ahead.

In mid-March, a Syrian rebel fighter delivered a video-taped message in which he harangued former President Hafez al-Assad and his son, Bashar, the current leader, for failing to seek the liberation of the Golan.

“These lands are blessed and the despicable Assad family promised to liberate them, but for 40 years the Syrian army did not fire a single bullet,” he said. “We will open a military campaign against Israel. We will fire the bullets that Assad did not and we will liberate the Golan.”

True, these were the off-the-cuff comments of a man riding in the back of a truck. But his is a sentiment that would resonate with many Syrians, whether they are for or against the Assad regime. The Lebanese Resistance, namely Hezbollah, managed to liberate South Lebanon from Israeli occupation so why can’t the Syrians do the same for the Golan?

Clearly, the Israelis are gearing up for an imminent end to the calm on the Golan front. In July last year, Major General Aviv Kochavi, the head of Israeli military intelligence, warned that foreign jihadists were flocking to Syria and moving into areas adjacent to the Golan.

“The Golan area is liable to become an arena of operations against Israel in much the same way the Sinai is today, and that’s a result of the increasing entrenchment of global jihad in Syria,” he said.

That makes it all the more curious that Israel only now has decided to begin offering oil and gas exploration contracts in the Golan region. In February, the Israeli government granted a permit to Genie Energy, an Israeli-American company headed by Effie Eitam, a hawkish former Israeli cabinet minister and army general, to begin drilling for oil in the Golan. Shareholders include the media tycoon Rupert Murdoch. Dick Cheney, the former US vice-president under George W. Bush, is an advisor. The process began with geological surveys of the Golan last year that discovered the potential for sizable oil deposits at the southern end of the plateau.

Oil permits for the Golan were dropped in the early 1990s with the advent of the 1991 Madrid Middle East peace process. It was assumed at the time that within a few years a peace deal would be reached between Israel and Syria entailing the return of the Golan to Damascus. The peace never materialized of course, but it is only now that the Israeli government has renewed permission for oil exploration licenses.

Other than the security implications of drilling for oil and gas in an area that could soon become a new theater of conflict, there are significant legal ramifications too. The Golan is recognized internationally as an illegally occupied and colonized territory. Therefore, any company exploiting the plateau’s oil reserves could face punitive legal measures. One wonders what advice Cheney might proffer to Genie Energy as it prepares to pump Syrian oil from the southern Golan.

Nicholas Blanford is the Beirut-based correspondent for The Christian Science Monitor and The Times of London

April 2, 2013 0 comments

The Buzz

Morning briefing: 2 Apr 2013

by Executive Staff April 2, 2013

written by Executive Staff

Economics and Politics

Qatar plans to boost the government spending by 18 percent to QAR210.6bn (US$57.8bn) in the 2013/14 fiscal year that began on Monday, the QNA state news agency quoted Finance and Economy Minister Youssef Kamal as saying.

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But elsewhere in the Gulf, Bahrain’s economic growth slowed sharply in the final quarter of 2012 as growth in hydrocarbon output stalled and two years of social unrest weighed on the banking sector.

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Sudanese president Omar Al Bashir has claimed that he will release all political detainees, a move welcomed by the opposition as tensions ease with South Sudan.

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Despite the demand for oil, Saudi Arabia has begun deporting thousands of Yemeni labourers following new regulations requiring foreigners to work only for their sponsors, a Yemeni official said on Monday, a move that could “significantly damage” the poor country’s economy.

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Turkish authorities have developed a plan to assume unprecedented control over revenues from Iraq's northern oil exports.

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Organizers are canceling or delaying conferences in Lebanon, including a major international oil and gas exhibition, because of political and security instability in the country.

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Sharjah Islamic Bank has picked four banks to arrange meetings with fixed income investors ahead of a potential Islamic bond or sukuk issue, a lead manager said on Tuesday.

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April 2, 2013 0 comments

Finance

Local fund invests abroad

by Thomas Schellen April 1, 2013

written by Thomas Schellen

A recent homegrown option for rich Lebanese to invest in a fund with global reach is being pushed into the market by Banque Libano-Francaise (BLF) — in fact, it is the only such locally founded fund, according to the bank. Domiciled in Luxembourg but managed by the BLF Fixed-Income Desk in Beirut, the fund comes with a track record of six-plus percent annual returns and, more interestingly, with a three-person board whose chairman is an independent director.

Incepted in September of last year, BLF’s Total Return Global Bond Fund has been marketed to BLF clients since January and has just completed formalization of disclosure and governance practices, which include four annual board meetings and compliance with regulatory regimes in Luxembourg, Switzerland and Lebanon. Besides its promise on governance, the investment paper comes with a hope to co-create a local asset management industry, says Jamil Koudim, head of Fixed Income at BLF.

Participation in the open-ended fund requires a minimum subscription of $100,000. Above that threshold, the fund is open to any investor who values the opportunity to invest in global credit markets. Emphasizing the fund managers’ direct accessibility, BLF is targeting the product to high-net-worth individuals that are Lebanon-based or expatriate Lebanese, Koudim says. “We are not comparing ourselves to the big names in the global funds industry like the Templetons or Pimcos, except for the advantage of having the fund manager based in Beirut and knowing the institution, BLF,” he adds.

Koudim’s team honed their strategy for the fund in proprietary trading with BLF’s own money, using the same methodology with a 6.4 percent annual return over two years from mid-2010; BLF then seeded the fund last September with $10 million, becoming a co-investor. The bank obtained approval of the fund from Banque du Liban, and also took the steps for compliance and registration with Swiss financial market supervisor FINMA and Luxembourg’s Commission de Surveillance du Secteur Financier, including adherence to Risk Management and Conflicts of Interests policies and a clear board structure for fund governance.

In formal terms, the BLF team is the fund’s investment advisor, and Libano-Francaise Finance, a Geneva-based unit of BLF, is the investment manager and monitors all decisions for compliance with the fund’s statutes. These terms say that the fund can allocate no more than 20 percent to non-investment grade bonds and must also limit exposures per issuer.

Preservation first

In the same spirit as those written stipulations, the team follows a conservative approach. However, the fund is not a capital-guaranteed product, Koudim emphasizes. “Capital preservation is a main objective,” he says. “The second aim is to generate moderate return, for anywhere between four and seven percent.”

The strategy is international with geographic emphasis on Europe, the United States and the Gulf countries. The heaviest allocations have been to European countries and cash, as per the published fact sheets in the last quarter of 2012. Allocations by sectors are focused on banking, insurance, utilities and telecoms.

In designing the fee structures, the managers oriented themselves more toward international than local standards, because of the lack of reference points in the Lebanese fund management scene. “The management fee is 0.75 [percent] and there is a performance fee of 10 percent of any return above 5 percent, the hurdle rate. There is a high watermark provision, which is also to the benefit of investors. We thought this was a fair deal,” Koudim says.

BLF wants to build on the first product and add new fund offerings, but it is giving itself time. According to Koudim, the aim is to grow the fund’s assets under management to $50 million and then launch new funds with different strategies in roughly two years.

Tapping the expertise

The new BLF fund is a young product by an ambitious team, judging from the impression conveyed by Koudim, who joined the Lebanese bank three years ago following a stint with Credit Suisse in London. He envisions the product as forerunner of a local asset management industry even as institutional investors are still missing regionally.

Koudim acknowledges that concerns over transparency and problematic infrastructure in Lebanon have made it difficult to warm up European and American investors to the idea of basing fund management in Lebanon, despite the high expertise that Lebanese demonstrate in the financial industry worldwide.

This notwithstanding, Koudim is enthusiastic that the creation of the BLF bond fund can find many followers in Beirut’s financial community. “We hope that this grows and gets the appeal that it deserves under the aim of developing an asset management industry in Lebanon,” he says, “whether from a front office perspective, the fund management perspective or from the research side.”

April 1, 2013 0 comments

The Buzz

Morning briefing: 1 Apr 2013

by Executive Staff April 1, 2013

written by Executive Staff

Economics and Politics

A delegation from the IMF is due to arrive in Egypt on Wednesday for talks with the government on a $4.8bn loan, a government spokesman said on Sunday.

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Meanwhile, inside the country the Egyptian pound has fallen sharply against the dollar on the black market in the last few days due to dwindling supply of the US currency.

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Cooperation among Arabian Gulf nations is vital to the protection of what is the world's busiest oil export zone, security chiefs agreed yesterday at a Gulf Cooperation Council meeting.

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Emirates NBD, Dubai's largest lender, listed a US$750m conventional bond on the NASDAQ Dubai bourse on Sunday.

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State-owned Oman Air, the sultanate’s national carrier, plans to launch a budget airline to handle regional and domestic flights as a measure to expand its business, chairman Darwish Ismail Al Balushi said on Sunday.

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April 1, 2013 0 comments

Real Estate

Lending homeowners a hand

by Thomas Schellen April 1, 2013

written by Thomas Schellen

They are not actually new-new. They give banks smaller margins than they did in their previous incarnation. They are tightly controlled with very little to no wiggle room on interest rates for most of the duration of the loan.

Yet the central bank’s current offering of housing loan subsidies was met with tremendous enthusiasm at commercial banks, which told Executive that they presented the subsidized loans to their customers within days of the issuance of a Banque du Liban (BDL) circular that announced the terms at which banks could rush to the subsidy pots.

Banque Libano-Francaise (BLF) and Bank Audi are but two examples for the high speed with which the lending programs were rolled out throughout the banking sector. When the central bank issued its circular on January 16, Bank Audi was ready to go within 48 hours, Head of Retail Banking Grace Eid told Executive. BLF also took all of two days to introduce its BDL-subsidized home loan. “We were waiting for this circular so we launched directly,” said Ronald Zirka, BLF’s head of retail and marketing.

Bank of Beirut added an extra incentive to its application of the subsidies, said Antoine Chamoun, the general manager of Bank of Beirut Invest and a top real estate finance expert at the bank. According to him, the bank lowered its interest demand to home loan customers by using financial engineering tools. “The interest rate is fixed according to BDL stipulations, which means the maximum interest rate is 5.44 percent based on the one-year Treasury Bills. Bank of Beirut has offered a special loan based on the 5.44 rate but due to certain manipulations on the amount of the down payment and the loan, the interest rate drops from 5.44 to 2.5 if we are talking a 20-year duration of the loan,” he said.

Old dressed as new

The rapidity with which commercial banks posted the new home loans is a telltale sign that the housing-loan support of the central bank stimulus program is in many ways a reiteration of a previous program, where banks could extend similar offers at comparable interest rates, although under a different funding formula that allowed the banks to tap into their own reserves, rather than use central bank funding as under the new terms.

As a result of the new formula, margins are tighter for banks, said Zirka. He explained that the costs of funds to the banks are today 1 percent instead of zero percent under the BDL program that was launched in 2009. “We can take only 0.3 from the customer, which means our profits are lower by 0.7 points. Having said that, it is still profitable. That is why we launched this product,” he said.

Bank Audi’s Eid emphasized that the new loans augment existing home loan offerings and are addressing different demand profiles than, for example, the loan offerings supported by the Public Corporation of Housing (PCH). “You can’t compare PCH and BDL-subsidized loans; while they are both subsidized, they are addressed to different market segments. The bottom line is, home buyers will be definitely better off if they take these subsidized loans whether the subsidies come from the PCH or the BDL,” she said.

For consumers, the loan subsidies can translate into substantial savings on the financing cost, and some home buyers could save up to 25 percent this year when compared with taking a loan last year that did not benefit from the central bank stimulus package, said Hanadi Saad, head of retail at Credit Bank. “With the new BDL product, we will definitely have more demand, because this is addressed to low to medium-income consumers who will look for products that can help them save a lot, especially since these are long-term products.”

For Credit Bank, this translates directly in higher expectations from the home loan business. “We anticipate housing loans to account for approximately 20 percent of the total retail lending portfolio. This ratio has gone up in 2010 and 2011 but dropped back in 2012 [to 10 percent] from where we expect it to double in 2013,” she added.

BLF, whose target market comprises Lebanon’s mid- to high-end earners, equally expects a boost to its home financing activities. “We want to have a 100 percent increase in the number of housing loans,” said Zirka, telling Executive that BLF had expected the home loans to stay at the levels of last year until the details of the stimulus package were released by BDL.

A level pitch

The ceilings and exclusions in the new home loan program are straightforward and easy enough to understand — the maximum allowable amount is LL800 million ($533,300), down payments are a must and the home buyers cannot combine the BDL-subsidized loan with other bank borrowing, for example.

Comparing the terms of 20 or 30 BDL-subsidized home loan offerings of Lebanese commercial banks may hardly yield more than minimal variances in interest rates and fees. However, this is an advantage rather than a disadvantage for lenders with a smaller franchise than the top five retail banks, said Credit Bank’s Saad. “When you have a fair game where the conditions are the same, your know-how and expertise and personalized service come to play a greater role,” she said.

On the other hand, the overall growth of the housing loan segment in Lebanese banking has not been felt positively by Iskan Bank (also known as Banque Habitat), which used to be one of two specialized providers in the home loan segment. According to a senior official at Iskan Bank, who declined to be identified, until 2010 the bank used to be, next to the PCH, one of the country’s two natural addresses for home buyers to seek finance. However, as a small bank with this specialization it today faces overwhelming competition from the big lenders. This is “better for the country,” because competition makes banks offer more flexible rates, but not necessarily better for Iskan Bank, he said.

Feeding the bubble

For developers, the loan subsidies come at a time when the engines of property demand are sputtering worse than at any time in the past five years. While half-year figures suggest that 2012 may still have generated substantial-enough borrowing from home buyers to keep the year’s issuance of new home loans at respectable rates, when seen within the five-year trend, 2013 could have been trending toward frigid climates for banks, borrowers and developers, had there not been the giving hands of the central bank.

Sampling the main trading floors in the property market, meaning developers and real estate intermediaries, the new financing opportunities are naturally and definitely welcome, but will not necessarily have a direct impact for all.

In the premium areas of Beirut, where real estate intermediary Ramco does most of its business, the lending ceilings of subsidized loans mean that few properties will be eligible.

Focused on apartment sizes of at least 150 to 180 square meters with prices at $4,000 per square meter (sqm), a minimum budget to buy an apartment will be around $600,000, said Ramco director Karim Makarem.

He was appreciative of the likelihood that the BDL-subsidized loans will incentivize some buyers but pointed out how buyers in general face other barriers before they come to the annual interest rate hurdle. “Incomes are limited so the big question is if people can afford the down payment,” he said.

Another developer focused on Beirut, a niche player with a foible for the unusually located flat, saw little demand since the beginning of the year but asserted “the first question is about a subsidized loan” when people are interested in buying a unit.

Georges Zard Abou Jaoude, the developer of the BeitMisk project said that the stimulus package will be helpful, but within the restrictions of a recent drop in demand.

So what’s new?

A main difference between the current stimulus package and the previous edition in 2009 seems to be that the first round of BDL-subsidized lending was fueling demand in a period of overall expansion of the Lebanese economy. The 2013 package is more a response to tough economic times and its stimulus of home loans signals possible redemption for professions that rely on the real estate market’s vibrancy, from developers and construction-related professionals right down to advertising agencies and real estate media.

“It is a very good initiative by Banque du Liban and will help developers which have finished their projects and need to sell them,” said Chahe Yerevanian, chairman and chief executive of Sayfco.

Early signs from the 2013 subsidies are positive and banking players told Executive that they encountered expanding demand for home loans from their customer bases. “The home loan product, whether subsidized or non-subsidized, is very important for the community, the bank and the individual,” emphasized Bank Audi’s Eid. “What the central bank did this year was make funds available to banks in order to build momentum in the economic cycle where real estate and apartment sales are a key factor.”

Jad Abi Haidar, financial analyst at Credit Libanais bank, whose research department publishes a number of real estate reports, said figures on the weak performance in property transactions this January are not indicative of the impact of the new BDL subsidies and results from the stimulus package should materialize over the course of 2013 and more clearly in 2014.

He cautioned, however, that the market’s decisive influences are not economic. “If the political situation worsens, the stimulus effect may not be as large as expected. But on the other hand, if the political situation improves dramatically the impact of the stimulus plan may be magnified,” he said.

The well-established vagaries of the current market notwithstanding, Bank of Beirut’s Chamoun blew a horn for optimism. “I think it is a great time to apply for a home loan, because the market is very slow now and prices did neither decrease nor increase. Now is a moment to buy and a moment to give loans.”

April 1, 2013 0 comments

Finance

As Cyprus struggles, Lebanon watches

by Maya Sioufi March 29, 2013

written by Maya Sioufi

Endless queues at ATMs, protests in front of Parliament, banks closed for 12 consecutive days and businesses under increasing pressure to continue operating: the eastern Mediterranean island of Cyprus, just 200 kilometers from Lebanon, is in crisis management mode.

The aptly named Cypriot central bank governor Panicos Demetriadres has tried to calm the situation, saying that “superhuman efforts” were being made to get the banks to open. And yesterday they did finally reopen — albeit with stringent capital controls such as a daily €300 ($384) cash withdrawal limit on depositors, a €5,000 ($6,400) monthly limit on card transactions and a €3,000 ($3840) cash limit per trip for people leaving the country.

The real cause of the mayhem is the size of the Cypriot banking sector’s investments. These investments accounted for 6.5 times the island’s tiny economy, compared to Lebanon’s 3.5 ratio. With money flowing into their coffers, the deposits were deployed into Greek bonds and as these went down the toilet, the Cypriot banking sector went into crisis mode.

The vast majority, 74 percent, of the deposits in Cyprus’ banks are held in the top two banks: Bank of Cyprus and the Popular Bank of Cyprus (Laiki Bank). The latter will now be wound down as part of a €10 billion ($13 billion) bailout agreement between Cyprus and an international group of lenders.

A key requirement for the agreement was for the island to come up with €5.8 billion ($7.5 billion) before getting the money. European finance ministers initially suggested doing so by taxing depositors across the board — a plan that provoked a furious backlash amongst Cypriots and also Russians who are large depositors with $31 billion in the island’s coffers, according to Moody’s Investors Services.

The final financial rescue plan agreed on Monday sees depositors with accounts under €100,000 ($130,000) – previously expected to contribute 6.75 percent of their savings – spared but leaves those with accounts over that amount expecting cuts to their savings of between 30 to 40 percent; much more punitive than the initial plan of having a tax levy of 9.9 percent.

Nicosia’s pain, Beirut’s gain?

The effect of the plan on Lebanese investments is difficult to judge. Cyprus is home to 52 banks, of which 36 are foreign – including nine Lebanese. The Lebanese exposure, however, is not huge: the combined deposits of the nine banks account for less than 3 percent of the total deposits of Lebanon’s banking sector, Makram Sader, secretary general of the Association of Banks in Lebanon (ABL), wrote in the Lebanese newspaper As-Safir this week. With $128 billion in deposits held by Lebanese banks as of the end of 2012, this implies that around $3.8 billion are in Cyprus. The Lebanese accounts make up fewer than 2.2 percent of the total deposits of the Cypriot banking sector — which stood at $88 billion as of the end of January 2013, Sader wrote. He was not, however, overly concerned about the deposits of the Lebanese banks in Cyprus as he confirms that they have not been invested in Greek or Cypriot bonds.

With regard to investors, as the number of Lebanese with accounts worth over €100,000 ($127,000) in Cyprus is not available, it is difficult to gauge how many will be affected. Nevertheless, the reaction from the Lebanese banking sector has been hostile. “It is unfair to burden the Arab banks with the cost of increasing the capital of the troubled Cypriot banks. The customers of these banks should not pay the price of this decision,” said Joseph Torbey, head of the World Union of Arab Bankers and president of the ABL said.

And many would argue he is right. One is left wondering whether the tough terms for the bailout are Europe’s way of punishing the wealthy visitors interested in the island for reasons that go beyond its golden beaches and sunny weather.

With the island’s hefty levy on wealthy depositors and strict capital controls — the first Eurozone country to impose such controls — the Cypriot banking sector is rapidly losing its appeal. Rich Spaniards and Italians might worry that policymakers will impose the same kind of drastic measures in their own debt-ridden countries, while non-EU investors will be looking for new places to stash their cash. Whether Lebanon’s banking sector could benefit from a flight of capital remains to be seen.

Maya Sioufi is Executive's Banking and Finance editor

March 29, 2013 0 comments

Society

Cleaning up the scraps

by Nabila Rahhal March 29, 2013

written by Nabila Rahhal

The Lebanese do not have a good record when it comes to the environment. There are few facilities for disposing of your waste in an environmentally-friendly manner, and those that do exist are often underused. But have you ever wondered what happens to the leftover scraps of food on your plate at a resturant or what pubs do with all their empty bottles? A new scheme aims to ensure that none of that waste ends up as landfill.

Food Establishments Recycling Nutrients (FERN), a nonprofit social enterprise based in Lebanon and advocating for environmental stewardship in food establishments, works with hotels and restaurants to help them both compost and recycle. Established less than a year ago by Meredith Danberg-Ficarelli and Naji Boustany, FERN aims to encourage establishments to reduce waste through a “multistep process beginning with a chat with the food establishment owners to explain what we do,” Danberg-Ficarelli says.

Once the restaurant is on board, FERN then conduct a waste analysis where they weigh the garbage and assess how much the venue generates every day. “The average resturant usually generates from 60 to 100 kilograms per day, with about 75 percent to 95 percent of that of organic nature,” Danberg-Ficarelli says. “Imagine how useful that would be as fertilizer for a greener Lebanon, instead of going to a landfill.”

The final step of the process is the staff training which, aside from going over the importance of recycling environment-wise, also involves training on recycling plastics and metals as well as organic items. “A challenge we face is to get staff on board as some just don’t care. But there are many who become very enthusiastic after our training and adopt the project wholeheartedly,” says Boustany.

Once a restaurant signs up, FERN collects waste twice daily and takes it to their small warehouse for further sorting. Organic wastes are sent to Cedar Environmental, a waste management company run by their collaborating partner Ziad Abi Chaker, who is offering them his services free of charge. Recyclables are sent to various end-line recyclers in Lebanon.

The company is already working with Hotel Gabriel in the Ashrafieh area of Beirut and with seven other restaurants in the city (Casablanca, Tawlet, Angry Monkey, Lux, Couqley, Mayrig and Pacifico). They are currently in the process of adding three new venues: Dragonfly, The Gathering and Urbanista. The majority of these restaurants are located in the Gemmayze area as it is part of FERN’s long-term plan to make it Lebanon’s first environmentally responsible community.

The main expense for FERN is gas for their collection truck, but there are also small salaries for their four staff members and driver, as well as the cost of the garbage bins they loan to the restaurants and the bags they provide them with.

The group’s funding comes mainly from the monthly donations made by the participating food establishments, but they have also received a grant from the British Embassy. They also run regular events the first Thursday of every month at Tawlet restaurant in Mar Mkhayel, with a different chef every month. “Though these events only raise enough to cover our operational costs, we want to have those events because we want people to learn about what we do, have fun and get excited about composting and recycling in Lebanon,” says Danberg-Ficarelli.

According to Boustany, incentives for restaurants, other than some minimal cost reduction that comes with more efficient waste management, are mainly social promotion through the exposure they get with FERN and being part of a community of environmentally responsible restaurants committed to social change.

March 29, 2013 0 comments

The Buzz

Morning briefing: 29 Mar 2013

by Executive Staff March 29, 2013

written by Executive Staff

Economics and Policy

Dubai’s index rallied from an eight-week low Thursday as bargain hunters returned, but this was not enough to stop the benchmark making its largest weekly decline since May.

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OPEC crude production slipped to a 16-month low in March as output in Nigeria dropped to the lowest level in over three years.

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Lebanon’s acting energy minister Gebran Bassil has announced that 52 firms from 25 countries have submitted applications for the pre-qualifying round for the country’s offshore oil and gas.

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Starwood Hotels and Resorts has announced plans for a $200 million renovation strategy for all its Le Méridien hotels in the Middle East and Africa.

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March 29, 2013 0 comments

Society

Seven ways design is making Lebanon a little better

by Mirna Hamady March 28, 2013

written by Mirna Hamady

Randomly pick any Lebanese citizen and they’ll be able to list many negative things about their home country: power cuts, traffic jams, excruciatingly slow Internet. But Lebanon is also home to hundreds of talented design professionals in all sectors, some of whom are starting to tackle these problems. From graphic designers, to app developers, to urban planners and architects, the country is full of brilliant individuals who are helping to improve it, whether through a tiny urban intervention or a large-scale project.

Here are seven exciting ways designers are already helping improve the country.

1. Easing the electricity crisis

In a country which suffers from crippling electricity shortages, streetlamps are often switched on during the day and off during the night. The mobile app Waffir, run by the Muhanna Foundation, allows citizens to anonymously report the locations of lit streetlamps during the day.

The app gathers these notifications and forwards them to the respective municipalities, reporting the energy waste. This crowd-sourcing app aims to reduce energy wastage and creates a platform for citizens to hold municipalities accountable – something we rarely see in Lebanon.

2. Empowering rural businesses

Farmers across the country cultivate food that defines our culinary traditions but they face problems getting their products to market and getting a fair deal.

Initiatives such as Souk el Tayeb and Slow Food Beirut bridge the gap between rural food producers and the marketplace centered in Beirut. Both organizations offer spaces for these producers to sell their goods.

Slow Food Beirut commissions graphic designers to work on the brands of these rural producers, facilitating their entry to the marketplace and consequently improving their businesses. Simply by turning a handwritten label into a professionally branded product, designers can help rural farmers get better deals.

3. Helping the sick

When children are diagnosed with cancer, a long battle lies ahead. Designers are not doctors, but they understand the importance of maintaining high-morale for sick children.

The Lebanese charity Toufoula has for the last nine years brought color to the lives of children with cancer through art and design. The organization has designed dozens of ‘Dream Rooms’ in various hospitals around the country, harnessing the power of design to inject a surge of positivity into young cancer sufferers.

4. Reducing pollution

The toxins breathed by Beirut’s residents are double the limit set by the World Health Organization, according to a study by the American University of Beirut. Around 93% of the city’s residents are exposed to dangerous air particles due to heavy use of diesel generators, a surplus of cars and a lack of green spaces.

Cleaning up our air is not the job of environmentalists alone. Researchers can partner with urban planners and architects to create easily implementable solutions, such as architect Sandra Rishani’s Beirut the Fantastic, a blog charged with practical solutions for greening the city amid today’s current setbacks.

Smaller projects can also have a powerful impact on society. Metel ma Shelta, a witty campaign by AUB graphic design students last year, raised awareness about littering in the streets. The campaign revolved around mock-ups of a 10,000 Lira banknote thrown randomly on the streets. Once pedestrians eagerly lunged for the money, they realized it was a piece of paper with a message on the back: “If you can pick this up, then you can also pick up your trash.”

5. Rethinking public transport

“A developed country is not a place where the poor have cars. It's where the rich use public transportation,” Gustavo Petro, the mayor of Colombia’s capital Bogota, once said. Fifty years ago Lebanon had a train, tramway and bus system. Today there is little public transport and our streets are clogged with cars.

Designers are starting a debate about how to change this. Architect and urban planner Sandra Rishani shows in her car-free city proposal that creating mixed-use streets, designating bus lanes and designing a solid transport map could help reduce traffic.

6. Reviving artisanal trades

Lebanon was historically known for its artisanal craftsmanship, such as metal and woodworking, glass-blowing and hand chiseling. Foreign imports have weakened these trades, with many of them on the brink of extinction.

Product designers and interior architects naturally create jobs for these people. Upon co-founding Kashida, my partner and I scavenged the country for reliable, talented producers to work with us. It is an example of a Lebanese brand designed and manufactured in Lebanon, empowering local artisanal trades.

7. Empowering other designers

One way to help designers change the country is to train them better. Design educators must involve more real-life projects in the classroom, especially community projects addressing real problems.

A good example is Desmeem, a cross-cultural design collaboration organized by the MENA Design Research Center in Beirut last year. Desmeem was a three-month-long project involving young professionals that came up with design solutions for lingering issues, ranging from public transport and sustainable consumerism to gender equality and migrant integration. The results were displayed at the Ministry of Tourism and are currently being executed.

Design is more than making a water-bottle label look pretty. Advertising your product on a visually pleasing billboard or designing mass-produced eyeglasses for impoverished communities are two very different forms of design. One betters the pocket of your client, while the other betters the lives of your community.

Design will not save the world without political stability and a decent economy. However, creatives that think outside the box can help find solutions.

If you are not a designer, join a collective whose cause you believe in. Your skills, contacts and mere presence will be a push forward. If you are a design educator, bring the real world into the classroom.

And finally, if you are a successful entrepreneur in the creative field, invest in the passionate newcomers. Funding can get a team together, create momentum, attract media coverage and even gain enough traction for lobbying.

Call it corporate social responsibility, then everyone is happy.

Mirna Hamady is the co-founder of kashidadesign.com

March 28, 2013 0 comments