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Society

Automobili Lamborghini celebrates 50 years

by Nadim Mehanna January 6, 2013
written by Nadim Mehanna

In May this year, 50 years to the week after Lamborghini laid its first foundation stone in Sant’Agata Bolognese, the Raging Bull of Italy comes home. Owners and dealers, drivers and aficionados from around the world will sweep across 1,200 miles of Italian highway, turning the country, for a moment, into a roaring Pamplona of carbon fiber and horsepower steel.

The event’s organizers anticipate that this will be the largest assembly of Lamborghinis ever convened. The Anniversary Grand Tour, as it has been named, will flow from Milan to the Tyrrhenian coast, passing through Rome and concluding with a final procession to the original factory in Sant’Agata. Along the way, guests will be treated to an ongoing exposition of the brand’s evolution through time, from the classic GTs to the sports cars of tomorrow, and who knows, maybe Lamborghini’s most daring innovations like the Urus luxury SUV will roll.

The Tour is a celebration of history, but in a way it is also a triumph march — a reminder that, only a decade and a half after the struggling super-car maker was brought under the wing of Volkswagen Group (VW), Lamborghini has charged back stronger than ever.

The purchase of Lamborghini by VW subsidiary Audi marks the first period of relative stability for the company since the market crash of 1973 threatened to run it off the road. In its first decade of operations, under the leadership of founder Ferruccio Lamborghini, the company saw robust growth, turning out classic models like the 350 GTV, 400 GT and eventually the Miura. But the economic downturn following the 1970s oil crisis saw the company slip from its pedestal into more than two decades of unprofitability, its ownership passing from Chrysler to investment firm Mycom Setdco, and finally into the haven of VW’s wide wings.

Tying the knot with V.W.

It is easy now to see, with the advantage of hindsight, that the marriage of Italian charisma with German clout was a shrewd move for both Lamborghini and VW. Freed from the exhausting pursuit of short-term profits and bolstered by Audi’s unparalleled research and development capabilities, Lamborghini turned inward in the first years following the acquisition; with a relentless focus on performance, it began to test its own limits. It was in this period that Lamborghini began to make serious use of carbon fiber, and achieved advancements in power and pull that would later be featured in the Sesto Elemento ultra car. Some of the prototypes born from that period of introspection — particularly developments to the engine and gearbox — set new milestones within the industry.

VW, for its part, has seen ample return on its investment. The immensely popular Gallardo, debuted in 2001, has sold close to 20,000 units to date; thanks in part to its success, Lamborghini was listed as one of the most profitable luxury car makers in the world in 2008. To its credit, VW has taken a hands-off approach to the management of its subsidiary, offering support but allowing Lamborghini to go its own way.

There have been twists and turns along that route, but in the end, the company has remained committed to Ferruccio’s original vision of a top-of-the-line grand touring car.

May’s fete will provide an excellent opportunity to survey that journey. Car enthusiasts attending the Anniversary Tour would do well to bear a few points in mind: first, the brand is preparing to do some amazing things. The first Elementos will roll out next year, and with them a new precedent for ultra-light, ultra-fast vehicles. With a power-to-weight ratio of 1.75 kilograms per horsepower, the Sesto Elemento is a super car among super cars.
Amazingly, the Elemento’s speed and power are achieved not with turbo or supercharging, but simply through the painstaking work of amping up engine performance and shaving off ounces. Just as a master watchmaker returns again and again to the roots of his craft, refining his skills even as the world abandons gears and springs in favor of the digital clock, so Lamborghini adheres to its own tested discipline. The purpose of the brand is not to invent a new class of cars, but to refine the ideal laid out by Ferruccio half a century ago.

This speaks to the second point of consideration. More than perhaps any other brand in the world — with the possible exception of Ferrari, its main competitor — Lamborghini has remained steadfastly loyal to core super car principles. At first glance, the new 2013 Gallardo may not look all that much like a classic GT, but closer inspection reveals the same commitment to form, the same seat positioning and the same sleek refinement that came to define the company’s more sophisticated brand of sportsmanship. And when the engine roars, it still thunders with that quintessential Lamborghini sound.
That roar will sound loudly on the causeways of Italy this spring. The 50-year celebration will not be marketed widely, but will nevertheless be heavily attended. Gala dinners, resorts and entertainment will all feature in the four-day program; ultimately, though, this event is about the cars and the company behind them.

The next fifty years

While Lamborghini is certainly exploring new territory with the Urus, and more recently the revitalization of the LM series luxury off-road vehicle, as it joins a growing rank of luxury brands experimenting with hybridization, the citing of the Anniversary Tour demonstrates that the company is still very much in touch with its roots.

Like Lamborghini, Italy has had its ups and downs. The country has yet to free itself from the shadow of a Greek collapse and the prospect of falling dominos that threatens to topple the region. In May 2012, severe earthquakes rocked the north of the country, destroying many historical landmarks concentrated in the Emilia-Romagna region. Restoration is ongoing.

Through its Anniversary Tour, Lamborghini has found a way to give something back, allocating 10 percent of all sponsorship proceeds to earthquake relief efforts. No less important, the company’s resurgence is a point of pride for Italy, and a reminder that perseverance often wins out over economic uncertainty.
Heading into the latter half of its first century, Lamborghini has enough momentum to carry it far into the future. The brand has been tested, and proven itself enduring. Here’s to a great 50 years, and another 50 to come.

January 6, 2013 0 comments
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Comment

Tehran optimistic after all

by Gareth Smith January 4, 2013
written by Gareth Smith

Lebanon is presented with the most serious challenges it has faced in the past decade. The economy is struggling, the internal security situation is deteriorating and the country’s neighbors pose real threats. In these circumstances the very fact that the country continues to operate can be seen as a success. And amidst everything, there are opportunities — not just in newfound offshore oil and gas but also within the country’s ingenious population.

As we head into 2013, what can be done to help the country unite, to overcome its challenges and ultimately to grow? Over the course of this week, eight influential figures will address seven important topics, each suggesting one proposal to help the country move forward. In this first article, former Labor Minister Charbel Nahas argues that the country’s economy needs fundamental reform.

Iran is looking at 2013 with more optimism than seemed likely just a few months ago. True, tougher United States and European Union sanctions introduced in the summer have halved oil exports to around 1.1 million barrels a day, but predictions of economic implosion have fallen flat. 

Likewise, the durability of the Syrian regime has confounded many expectations, with varying reports of Iranian assistance. Above all, to Iran’s satisfaction, November’s conflict between Hamas and Israel brought the Palestinian cause back up the agenda, thereby challenging the narrative of a bipolar region defined by tension between Sunni and Shia camps.

When Hamas leader Khaled Meshaal publicly thanked Iran for its “unconditional” support, he evoked a better past relationship: Six years ago, Iran transferred resources to help Hamas govern Gaza after the party won the Palestinian legislative elections and its new government was snubbed by Arab leaders and the West. 

Now, the acknowledgment from General Mohammad Ali Jafari that Iran supplied Hamas with the know-how for ‘home-made’ versions of the longer-range Fajr-5 rockets painted a stark contrast between Tehran’s military help and the caution of the Sunni-led regional states. Perhaps, we wondered, Iran could now recover some of the influence lost when Hamas’ leadership moved from Syria to Qatar early in 2012 and expressed support for the opposition to President Bashar al-Assad. 

No wonder, then, that Tehran’s assessment of the conflict in Gaza was upbeat. On a trip to Syria, Ali Larijani, Iran’s parliament speaker, extolled a renewed rhetoric of “resistance”, linking Hezbollah to “the victories won up to now” by the Palestinians and even claiming that Syria was playing a “fundamental role”. Hezbollah Secretary General Sayyed Hassan Nasrallah questioned whether an Israel “shaken by a handful of Fajr-5 rockets” could cope with Hezbollah’s far greater arsenal. And this too brought back golden memories, in this case the early 1990s, when Israel deported to South Lebanon several Palestinian leaders, mainly from Hamas, where they were welcomed by Hezbollah.

The Iranian media has been quoting military analysts suggesting Gaza highlights the challenge Israel might face in a war on three fronts, including Hezbollah and Hamas, if it attacked Iran’s nuclear facilities. And there was another common theme: that Israel lacks the public support and appetite for any sustained conflict.

Iran has another calculation. While the Sunni triumvirate of Egypt, Qatar and Turkey played a successful role in helping end the conflict and may be now hoping to draw Hamas into a ‘peace process’ with Israel, their chances of success hang on Israel taking a far less confrontational approach — and Tehran sees little chance of this happening.

True, there is for Iran no simple way to improve relations with the Sunni world, damaged by developments since at least the shift in Iraq toward a Shia-led government after the 2003 US invasion. And the war in Syria, while showing the resilience of the regime, is also radicalizing militant Sunnis to the extent that Khaled Oweis, former Reuters bureau chief in Damascus, spoke recently of Syria as “the new Yemen”: it seems a long time since ‘experts’ saw the demise of Al Qaeda in the ‘Arab Spring’. 

Alongside discussion in Iran about Gaza has been a lively debate about the possibility of talks with the US. Some parliamentary deputies and Revolutionary Guard officers opposed to talks have extolled the values of a “resistance economy” in which sanctions encourage self-sufficiency. But there are many others taking up the notion, put forward last spring by former President Akbar Hashemi Rafsanjani, that Iran can talk to the US if there are “equal conditions and mutual respect” and that “not talking and not having relations with America…[is] not sustainable”. The pragmatists will have welcomed the reports that officials from the two sides met quietly in Qatar in October.

The Obama administration — anxious to avoid an early Israeli military attack — likes to argue that sanctions will force a weakened Iran into a diplomatic solution and the acceptance of stringent limits on its nuclear program. At the same time, those in Iran who want talks have to argue that their country can enter them with confidence from a position of relative strength. Hence, in the roundabout, interconnected way the Middle East fits together, Hamas may have helped their case.

Gareth Smyth has reported from the Middle East for almost two decades and is the former Financial Times correspondent in Tehran

January 4, 2013 0 comments
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The Buzz

Morning briefing: 4 Jan 2013

by Executive Staff January 4, 2013
written by Executive Staff

Economics

Jordan aims to cut its budget deficit by about a third this year to curb the impact of soaring fuel import costs and high social spending linked to the wave of Arab uprisings.

More from Arabian Business

 

Iraq's monthly oil exports fell by 10 percent in December, highlighting the volatility that still characterizes the country's growing oil sector.

More from Iraq OIl Report

 

Egypt dipped deeper into its rapidly shrinking currency reserves Thursday, fighting to slow a sliding pound which is likely to push up inflation and risks reigniting popular unrest.

More from Reuters

 

Standard & Poor’s Ratings Services ranked Lebanon in the high-risk group eight in its latest Banking Industry Country Risk Assessment.

More from The Daily Star

 

Companies

A Saudi-listed company has announced the acquisition of a 32.5 percent stake in an Indian car leasing firm.

More from Arabian Business

 

Dubai Islamic Bank (DIB) has announced that its board has approved plans to buy 100 percent of mortgage provider Tamweel, in which it already holds a majority stake of 58.2 percent.

More from Arabian Business

 

The UAE has signed an agreement with Turkey, which will allow state-linked energy giant Taqa to develop $12 billion worth power plants and explore coal mines in the resource rich Afsin-Elbistan region.

More from Khaleej Times

 

 

January 4, 2013 0 comments
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Real Estate

Running Lebanon’s newest mall

by Thomas Schellen January 4, 2013
written by Thomas Schellen

Pure commercial plays are a sideline of real estate development in Lebanon when compared with the country’s mixed-use projects, and when measured against large-scale commercial projects elsewhere in the region, like upcoming new mega-malls in the Gulf and Egypt. Malls specialist Majid Al Futtaim (MAF) from the United Arab Emirates is taking its first Lebanese retail project into the home stretch as it is readying the Beirut City Centre mall for its opening in March. With 62,000 square meters (sqm) of gross leasable area, the property represents a major addition to commercial real estate in Lebanon. Executive talked about MAF’s strategy with Sleiman Mallat, senior mall manager for MAF Properties Lebanon.

Why do we need another shopping mall in Lebanon?

According to the studies that were done in Lebanon, the Lebanese market is underserved with shopping malls. That is why we need to build this shopping mall: to complement the offer that exists in the market.

Related: Battle of the Beirut Malls

Where will your customers come from? Does the mall aim to be a destination attracting people to drive in from a long distance or is it going to be a neighborhood mall?

We are aiming for both. In our study, we defined two trading areas. The primary trading area will be within a 15-minute drive from this shopping center. This will be the neighborhood around the shopping center. The secondary trading area will be a 30-minute drive from here, and for them this shopping mall will be a destination. 

What will be your anchor stores and the mix of offerings you will rely on in attracting customers?

We will have a Carrefour [hypermarket] and another anchor store will be [clothing retailer] Marks & Spencer. We will also have a Magic Planet for children and Vox Cinemas.

Click here to see a promotional video of the mall

And you said the Carrefour store will be the largest in the Middle East?

Yes, at 13,000 sqm.

That means almost one quarter of the entire shopping mall will be the Carrefour?

Yes.

Is it correct that this store is linked to the mall not only as a tenant but also because MAF Holding is a partner with Carrefour in the Middle East?

It will be managed by MAF Retail. We have MAF Properties taking care of all the development and management of the shopping center. MAF Retail, which is a separate business unit of MAF [Holding], is taking care of Carrefour and other retail brands that similarly are represented by MAF Retail.

Is the Magic Planet entertainment area also under MAF Retail?

Magic Planet is under MAF Ventures and Vox Cinemas is also under MAF Ventures; the leisure offerings are under MAF Ventures.

Can you tell us about the business mix between MAF Properties, MAF Retail and MAF Ventures? What will be the most important component in terms of generating revenue?

For us this is Carrefour because it will be the biggest operation inside the shopping center. The others will complete the offering and the revenue stream. However, for us as MAF Properties, the relationship we have with Carrefour and all other retailers is on a tenant base. They have a lease and they have to pay the rent just as any other retailer in this shopping center.

But on a group level, the relationship is synergetic?

Yes, 100 percent.

So you have already an occupancy guarantee from group clients that covers more than 50 percent of the whole leasable space at Beirut City Centre?

This is the main strategy. When we study a plot to build and develop a shopping center there, we secure that our major brands will work in this location. Then we start developing the location further. We have to make sure that our major brands and some other major groups are present, such as [Kuwait-based retail group] Alshaya and [Dubai-based group] Landmark.

Will you have exclusivity to have store brands of such groups in Lebanon?

No, we don’t oblige them to have this exclusivity but what we do have is the exclusivity of opening their first shop [in Lebanon] in Beirut City Centre. After that, they can open wherever they like.

You have much experience in the mall business in Lebanon, including working with the ABC Mall. How do you see the business of building and operating malls evolving in Lebanon?

Lebanese developers mainly develop small shopping centers that are not real malls. The complete offering is what will differentiate this shopping center from the small shopping malls. ABC is a shopping mall and City Mall is also a shopping mall, but as I said, Lebanon is underserved. All studies show that we can develop more shopping malls in Lebanon and we have another project, the Waterfront City Centre in Dbayeh.

Other than those two, does MAF have projects lined up in Lebanon?

No, not at this stage.

MAF was also in the process of building a retail complex near Damascus in Syria, which had to be halted during the unrest. How important were intended synergies with the operation in Syria for you?

There is a delay in the execution of the project but what is good about Syria is that due to the situation, we are now expanding and changing the whole design for the plot there. We have big hopes for Syria after the situation settles down.

But do you not need economies of scale to economically run a mall operation?

This is 100 percent right. In the business model we have a center of operations in Dubai that can provide us with all the support we need for the purpose of decreasing the cost of operations and management, so we don’t have double functionalities between the regional offices and Dubai. In Lebanon, once we have the other shopping center [up and running], we will also have a Lebanon office that will take care of both operations.

Syria would not be under this umbrella?

Syria can be under it. They would have their own office but when it comes to major functions like for example leasing, the leasing office in Lebanon will do all the leasing for the Levant. In future, the asset management [office] will do asset management for Syria and Lebanon at the same time.

Will you charge for parking at Beirut City Centre?

We bought the equipment and will study how the market will be at the time of the opening but there will be a free hour at the beginning. We will try to implement a paid parking scheme to reduce abuses. We don’t want to be a park and ride center and at the same time we are not interested in gaining money from the parking. What we want is to organize parking.

You told me you invested in what usually would be the municipal road infrastructure directly outside the building. Can you say how much?

Around $2.5 million.

And how much is the total investment into the mall?

More than $350 million.

Do you have a fixed time expectation during which you expect amortization of this investment?

Actually, in real estate we normally target 10 years or 10 percent of return on investment.

Some malls or would-be malls in Lebanon have turned out to be empty and even at leading malls you see retail spaces that did not find demand. Are you concerned that this would happen to Beirut City Centre?

You always have to replace some tenant or change a mix inside a shopping center. But we are at this stage 96 percent fully leased. This is signed contracts. The other four percent, we have signed proposals but we are still negotiating some terms and that is why we didn’t sign the contracts yet.

Are your leases based on profit sharing?

It is fixed rent plus percentage over sales, a combination of both.

How many people do you have to hire to run this place?

The management team will be around 30 persons and there will be service providers, like cleaning, security and parking management coming to around 160 people. This is for the management of the building. Then there are around 1,300 opportunities at the retailers, at the shops that will open in the spring. We are creating around 1,500 permanent jobs.

January 4, 2013 0 comments
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Society

Villa Clara restaurant review

by Nabila Rahhal January 4, 2013
written by Nabila Rahhal

It’s truly a family business,” says Mary Helene Gougeon, describing Villa Clara, a restaurant and boutique hotel in Mar Mkhayel she owns with her husband, Olivier Gougeon. With Olivier, a French chef, preparing the food for the venue, Mary Helene managing the hotel, and their two young children Clara and Patrick on the premises, her words ring true after even a short visit to Villa Clara.

Gougeon first came to Beirut in the year 2000 to complete his civil service requirements in Lebanon. He loved the country, staying on after his service ended and developing several cuisine projects, including Downtown’s Aziz and Edde Yards in Jbeil souks. Still, Gougeon wanted to have his own venue serving traditional bourgeois French cuisine, and so Villa Clara came to be.“We chose Mar Mkhayel area because it still has the old Beirut feel of a real sense of community that I love,” says Mary Helene.

The Parisian venue

Speaking of the 1920s-style, spacious two-floor house in which Villa Clara is now located, Mary Helene says, “When we saw this villa we immediately knew this is the place for our project and  felt that it lent itself perfectly for a boutique hotel as well.”

Walking into the venue from a serene leafy sidestreet, one steps into a charming front garden café with a small children’s area and dark red classic French bistro style tables and chairs.

The interior hall, the main Villa Clara restaurant, seats 25 people on several large tables scattered around the room, creating a spacious feel.

According to Mary Helene, most of the furniture — including the Napoleon III chimney and the same Andrée Putman chairs that were in the Parisian St. James Hotel — was shipped straight from different venues in France. It is no wonder, then, that one feels transported into a typical Parisian eatery upon entering the room.

The architect responsible for putting it all together is Ramy Boutros. He was also behind the perhaps-out-of-place idea of metallic birds on the ceiling of the otherwise traditional looking abode. “He wanted our clients to feel that the interior is a continuity of the garden, hence the birds,” explains Mary Helene.

Can’t rush perfection

The project cost approximately $1.4 million to create, and the Gougeons dipped into their personal accounts and took a Kafalat loan to finance it. “Because of our focus on quality, we don’t expect a return on investment before three to five years,” explains Mary Helene. Although the venue easily fits more tables, she says they kept it small to keep up with all their customers and provide them with good quality food. 

Their resolve for quality extends to using only grain-fed free-range meat and organic fresh products, which Olivier gets during his daily visits to the market. Because of this, the menu varies daily depending on what products are found in the market.

“We also have a partnership with the Maronite Order in the Chouf where we rented a vegetable garden and a cellar to cure our own ham,” says Mary Helene, explaining that her husband is so insistent on freshness he even refuses to slice the carpaccio beforehand for fear of it changing color.

While a focus on quality is certainly desirable, Executive’s party also waited an hour and twenty minutes for the main courses to arrive — a bit over the top and, depending on how famished one is, flirting with disaster if one is left too irritated to enjoy the meal. That said, the meal did approach divinity: the foie gras with cinnamon was a perfect blend of the savory and the sweet, the mushroom steak succulent and tender and the steak tartar dish was prepared live at our table, an act both entertaining and supportive of the Gougeons’ claims of freshness. Less impressive was the chicken — a touch on the dry and bland side — leaving one to think that it is preferable to order only traditional French staples, which are the restaurant’s specialty anyway. 

For high-end French cuisine, Villa Clara is reasonably priced; an appetizer and a main dish with a glass of French wine will set one back roughly $60. For a more casual meal, one can try the café menu during the daytime. 

Thus it seems a piece of France has landed in Lebanon at the Villa Clara. With their culinary expertise in a charming setting, they might just capture the ever-wandering Lebanese palette. That is, if they can get the food out in time.

January 4, 2013 0 comments
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American University of BeirutEconomics & Policy

Q&A: AUB’s president Peter Dorman

by Thomas Schellen January 3, 2013
written by Thomas Schellen

The venerable American University of Beirut (AUB) is preparing for a new spring of engendering broad leadership of civil societies in the countries of the Middle East. A recently announced institute is to be a core conduit for this ambitious challenge. Executive explored this in an exclusive interview with AUB President Peter Dorman.

In the first announcement of the Asfari Institute, you said that it will bring together experts for dialogue, conduct research, and propose innovative ways forward. That sounded like a three-partite structure of conferencing, research and advocacy.

Yes.

Is this the essence of the plan and what other components does AUB hope to include in the project?

Absolutely, and in addition to those three, we would ultimately like to put an emphasis on education. We would work this out in the years to come, but it is certainly part of our thinking to develop a master’s program that will relate to some aspect of citizenship or civil society. It could be a very exciting master’s [degree] because of the interdisciplinary nature of the institute.

You have a $10 million grant from the Asfari Foundation. Is that going to be an endowment or an operational grant and seed money to start the institute?

We have an initial amount of seed money to begin operations. There is a promise of additional funding up to $10 million and I think they are looking at the possibility of a much larger endowment that would go toward the permanence of this particular institute.

How long will $10 million last you for operating the institute?

The initial operation plan is for five years and we hope the expectation is for longer than that.

See also: Mission Citizens

Will AUB use any of its own financial resources or seek to find additional funds during the five years?

Absolutely. Part of the expectation for AUB is that we will be going to do this sort of fundraising and bring additional support and government support to the center and magnify the effectiveness of its activity.

In terms of structure, will it be like a department of AUB or incorporated independently?

It is situated very firmly within the university as a research institute and it has two governance bodies that can provide advice and counsel. The internal steering committee will be made up of the institute’s director and the provost of AUB, plus a series of faculty members. An external advisory board will include two representatives of the Asfari Foundation and a number of other people drawn from universities, from NGOs (non-governmental organizations), and from perhaps even the European Union.

Between conferencing, research, and advocacy, how would you see the distribution of activities — in equal thirds?

I suspect it will in the beginning be less on advocacy. Advocacy will depend ultimately on what kind of research, what kind of interactions with NGOs, what kind of network we can achieve. Advocacy is I think at the forefront of the ultimate result but the purpose of the institute is to allow faculty to explore the ways in which civil societies develop.

You are surrounded by countries with state-aligned universities. In context of the Asfari Institute’s specificity, would you seek to invite representatives from regional universities that are not under the American umbrella?

We would love to develop as wide a regional partnership as we can for this initiative. We are also keenly aware that the notion of open liberal democratic societies is not going to be instantly embraced by every country in this region. Citizenship as the way in which the individual behaves in society is a relatively new idea here in Arab societies whose populations have been living under autocratic regimes for decades.

Was AUB the only horse in the race for being the host of the Asfari Institute or was there a competition between you and other potential host universities?

It is a more complex relationship. Ayman Asfari is one of our trustees and he has been wonderful and generous in supporting scholarships. [As we are approaching the 150th anniversary of AUB] it is very exciting for us in the moment of the ‘Arab Spring’ to think how our graduates in the next 10 or 20 years will eventually impact the societies they will go back to. All of the trustees are looking at ways in which they can contribute to the impact and Mr. Asfari brought this idea to us.

So he was the originator of the concept of the Asfari Institute?

He really was. He was thinking very carefully about how AUB could affect the dialogue in Arab countries in ways that would substantially enhance the chance for the development of open societies there.

What got you, as AUB, excited about it and say this is what we like?

Oh, a number of things. This kind of institute matches precisely both the mission and the values of the university, the mission being to serve the peoples of the region but also develop individuals who think responsibly and behave responsibly in society and make an impact in the communities they live in. Our location also made perfect sense. It is a perfect place to build the bridges of dialogue between east and west.

These strengths are inherent in the AUB role. What about the opportunities that the institute brings to the university for heightening its influence or even economic performance?

The point is that [civil society and citizenship] is the kind of topic that we could pursue but we would not do it nearly as well without this kind of support.

This brings up the ‘non olet’ question of grant money where in this case you are dealing with oil money. Does oil money not smell from a perspective of the Arab civil society and can you fully approve of the funding link based on having scrutinized all the resources involved?

When we look at large gifts, we always consider the source and do due diligence. In this particular case, Ayman is a very distinguished member of our board of trustees. When we select trustees we are always very careful to consider the connections and who they know and what kind of value they bring, but also the personal integrity they maintain. We clearly have no issues involving the Asfari Foundation.

Mr. Asfari has been active with AUB but apparently has maintained a low profile in relating to the public. What can you tell us about him from your personal encounters?

He is a great participant in our board meetings and he always bores down on issues of policy and transparency. He speaks authoritatively and yet with total honesty. But he doesn’t come with pre-conceived opinions.

In looking for the director of the institute, wouldn’t it be necessary to have someone of Arab identity run it?

It would make perfect sense if we can do that.

So why are you looking worldwide?

Because many Arabs live and work worldwide, the search has to be international but we certainly hope to bring someone who is native to the culture and who speaks Arabic.

Who would be vetting the potential partner NGOs and what will be your criteria in selecting and qualifying civil society leadership initiatives?

In essence these proposals will be vetted by the director of the institute. The first director will play a very critical role because she or he will set up the initial directions and specific areas that will be focused on.

How many candidates are on your shortlist?

We have only just sent out the advertisement but we have about five or six names that come to mind and they all look very good in different ways.

If governments from the region said they want to be involved with the institute, what would be your approach to that?

We would certainly include them if they wanted to engage in the kind of conferencing that we have and it is very enlightening to us to listen to the experience and the outlook governments have in dealing with the problems of the ‘Arab Spring’. However, governments do tend to come with their own agenda, don’t they?

What is Peter Dorman’s vision for Arabia 2030, meaning the state of Arab citizenship and society by the year 2030?

I think by 2030 you will see several democratic states in the Arab world and a number of other states that are presently under monarchic regimes will have moved to some kind of enlightened constitutional monarchies. This is inevitable I think and there is a lot to be said for benevolent monarchies. Centralized decision making is terrific under certain circumstances.
 

January 3, 2013 0 comments
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American University of BeirutEconomics & Policy

Mission citizens

by Thomas Schellen January 3, 2013
written by Thomas Schellen

Until the eruption of the so-called ‘Arab Spring’, constructive Arab thinking in the mind of many observers appeared stifled and chained to the point of ineffectuality. This state of forced tutelage, it seems, was unbearable not only to the peoples on the often-quoted ‘Arab street’ — epitomized in Cairo’s Tahrir Square — but also for academic institutions such as the American University of Beirut (AUB) and business leaders such as Ayman Asfari, the main shareholder and chief executive of Petrofac, a rising corporation operating in the global oil services arena. AUB and the Asfari Foundation have teamed up in establishing the region’s first university-based center for civil rights and citizenship, the Asfari Institute.

For gauging the scope and breadth of what the Asfari Institute might aspire to achieve it is a good starting point to note that for AUB President Peter Dorman, independent thinking may currently be emerging in new forms in countries of the Middle East. He talked about this rise in a conversation with Executive, offering his view on Arab protests for dignity and opportunity, but also by pointing out initiatives where states in the region have chosen, and very deliberately so, to adopt models of higher education that lead to independent thinking.

Dorman attributed the region’s process of upheaval and transition to “yearning on the part of millions of people to achieve societies that provide equal access to resources, personal dignity, freedom to pursue their own goals, transparency in their governments and the kind of openness and transparency that we find in the West.” Yet, he also emphasized that the change in the Arab world will not be resolved by carbon copy models of Western of democracy or civil society, such as uniformly prescribing separation of state and religion.

See also: Exclusive interview with AUB President Peter Dorman

“What is happening now is a very open ferment of ideas that will challenge individuals to think about society in the context of the culture they have and the Islamic framework is very strong here,” he said. “It is thus very important for us to include those notional concepts of citizenship that may evolve in the context of Islamic society. In much of the West there is separation of state and religion. Whether that works in the Middle East is really for the countries here to decide for themselves.”

The mission of researching the civil societies as they are forming in the Middle East over the coming years is the primary task as Dorman sees it for the Asfari Institute. The institute’s networking with civil society organizations but also with academic, religious and state-defined stakeholders is to be driven by the Asfari Foundation’s vision for an “educated, open and just society, based on the rule of law, which promotes development and progress through knowledge, tolerance and integrity.”

If these lofty visions and well-chosen words, in combination with AUB skills and some real financial donor power, create a fertile patch in Beirut, the proposition is that we may universally learn some new tricks in determining our individual identities and building citizenship standards in the context of societal forward evolution toward moral truth.

The academic stakeholder

AUB is reputed as the top-ranked academic institution of tertiary education in the whole Middle East and North Africa region and more importantly, it has produced crop after crop of graduates, many of whom have been engaged as diplomats, business leaders, scientists, academics and people who run the countries of the region. As President Dorman affirmed to Executive, the university is cognizant of the many intricate traps that come with the role, beginning from being perceived as bearers of a “liberal American values” virus, to having to preserve academic freedoms, to keeping the best brains, to being in an inevitable position of interacting with state powers — any of which will have an agenda. In discussing the potential advocacy angle of the Asfari Institute, Dorman was careful to point out that advocacy will not be the domain of AUB, but of the civil society organizations in the different countries that would be the institute’s partners. AUB is already in preparations for its 150th anniversary in 2016 and the process will include new fundraising campaigns to fund institutes and activities for sailing the university to new horizons. One of the first fruits of this forward thinking and appeal to donors is the Asfari Institute.   

The socioeconomic stakeholder

The Asfari Foundation, President Dorman confirmed, is a family foundation whose trustees are four family members. It reflects the philanthropic zeal of Ayman Asfari, who according to his website is the son of a Syrian diplomat and naturalized citizen of the United Kingdom. His extraordinary business acumen has been demonstrated in the rise of Petrofac, an oil services company that was recently named one of the UK’s 10 most admired companies — up from 68th position in only one year. Jersey Islands-registered and London Stock Exchange-traded Petrofac has also been highly recommended to investors and was recently reported to target 15 percent profit growth in 2012. In a December 4 announcement, the company said that it had inked a deal worth $1.4 billion in new engineering, procurement and construction packages for Saudi Aramco’s Jazan Refinery and Terminal project. The Asfari Foundation was established in 2006 and until now, the public visibility of the foundation and Ayman Asfari has been limited.

The challenge and synergy

According to Dorman, the Lebanese environment provides a democratically themed, multi-religious, multi-lingual and complex civilization that enjoys a premium in freedom of speech versus other countries in the region. As such, he sees it as an apt stage in the region for exercising and developing the talents of individual and independent thinking, assessing one’s identity and locating it within the frame-of-reference choices of nation, family, clan, community and religion. 

The challenge in this as experienced by AUB was the culture engrained in its students in their early stages of personal development, where they internalized concepts of the Lebanese framework including such things as you “don’t get anywhere without wasta” or that your sectarian belonging is what primarily defines you and your chances in life.

The art required for changing this viewpoint in future decision makers to one of more independent thinking lies in creating, on one hand, a student body where local and international identities can come together in a diverse environment, and in developing an overriding culture that models different behaviors. In Dorman’s analysis of the synergy between AUB and the new center for civil society and citizenship, what the Asfari Institute is trying to create on levels of society or public policy framework is exactly what AUB has been trying to foster on an individual level for its students: “to become individuals of integrity, responsibility, transparency and accountability in everything they do.”

Inside the university space, this culture of fostering individual integrity could be developed from administrative and faculty angles. In civil society and non-governmental organizations, the tasks of researching, imagining and building the pillars for an authentic and regional culture of organization are likely to present researchers, NGO thinkers and academic innovators with very new and complex requirements.

January 3, 2013 0 comments
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Business

More space to work

by Maya Sioufi January 3, 2013
written by Maya Sioufi

Say you are an entrepreneur and you need a space to work, but want to avoid hassles such as finding a usable Internet provider, ensuring uninterrupted electricity, and the like, while you also want a place to share thoughts and insight with other entrepreneurs — where should you go? Well, the options have been growing recently, and Executive investigates a few of the spaces on the menu.  

I’m on Cloud 5

The most recent addition comes from the abundant stock of vacant space held by Solidere, Lebanon’s mammoth real estate developer. Right smack in the middle of downtown, close to Star Square, Solidere is offering a 500 square meters (sqm) space, dubbed Cloud 5 — as it is located on the fifth floor — which is intended to fit up to 60 entrepreneurs from the Information, Communication and Technology (ICT) sector. At a rental cost of $300 a month, an entrepreneur renting in Cloud 5 gets access to 24/7 security — it is Solidere after all — and to unlimited fiber optic Internet. 

“The whole of Solidere is wired with redundancies so if something happens to one wire, it switches to another,” says Richard Azoury, director of business development at Solidere. This attractive value proposition has lured a number of entrepreneurs jumping on board. Wamda, a platform for entrepreneurs in the Middle East and North Africa region, is moving its offices to Cloud 5 this month by renting space for up to nine people. Vinelab, a digital entertainment startup, has hired space for five entrepreneurs and aims to add another seven within six months. The third startup on board is Procomix, a Lebanese startup that assists businesses in their Information Technology decisions. 

Cloud 5’s aim is to become the venue not just for Lebanese entrepreneurs but for regional ones too. Management is currently in talks with Amman-based business accelerator Oasis500 and Cairo-based accelerator Flat6Labs to have their startups take up space in Beirut’s downtown. Cloud 5 is not positioning itself to compete with the accelerators and incubators, but rather aims to build on their efforts and provide their graduated startups with a location to work out of efficiently. “Whatever [Beirut-based accelerator] Seeqnce needs to be here, we will help them get and whatever Oasis500 needs, we will help them get,” adds Azoury. “We want them to bring their startups here. That’s the ultimate plan. They are the ones who are in this business, we are in the real estate business.”

He says that eventually Cloud 5 plans to extend its services and provide, by the middle of 2013, an auditorium for everything from ‘boot camps’ to investor days, located on the 300 sqm fourth floor, as well as a public café for entrepreneurs to mingle and share thoughts and ideas. 

AltCity

A café, boot camps, investor days, big spaces, mingling and sharing ideas — these things are all on AltCity’s agenda too. Having set up shop in Hamra in the summer of 2011, AltCity was closed for renovation for several months before it started hosting activities and making noise in the entrepreneurial world last year. 

With a 600 sqm space with an industrial feel, it currently has capacity for just 11 entrepreneurs — and was at full capacity as last year ended — but once work on the space is completed, slated to be in a couple of months, it could host up to 50 entrepreneurs. The center targets different sectors whereas its neighbor accelerator Seeqnce, located a few blocks away, focuses specifically on mobile and web sectors. 

For $250 per month, an entrepreneur can rent a desk, get access to unlimited Internet — albeit not fiber optic — and other perks, such as discounts to AltCity events, which include weekly brunches, workshops and less formal fish and chips pub quizzes. 

AltCity is not relying solely on rental fees for revenues, with several events organized last year, many more on its agenda for the upcoming year and a café to be launched this month. “We are thinking of an energetic, viable and engaging space for when things are good, and for when they are difficult in Lebanon,” says David Nabti, the “mayor” of AltCity, also known as its ‘chief entrepreneur and organizer’. 

Increasing revenues has moved up on their priority list after an attempt to raise $25,000 through crowd funding failed and a Kafalat-guaranteed loan was put on hold by the banks, following the bombing in Ashrafieh in October 2012. It was a loan of a “modest amount”, says Nabti, but banks were reluctant as they put on hold all funding related to restaurants and cafes. “We tried to explain [that the café] is just part of our revenue stream but they are hesitant; the concept is new to Lebanon.”  With banks still hesitant, Beirut-based private equity firm Middle East Venture Partners (MEVP) is supporting the space and has put in “some funds” says Nabti. While the relationship is still informal for now, MEVP “might invest [in AltCity startups] a few years down the road,” adds Nabti. 

Nabti does not consider that the space is in competition with Seeqnce or any other entrepreneurial space. “We want to engage Seeqnce and Berytech in doing stuff here; one of our core beliefs is around ‘coopetition’ [cooperative competition],” he says. “We need three Seeqnces, three AltCities, three MEVPs, three Berytech funds… we need more of this stuff.” 

Beirut Digital District

Also available to entrepreneurs is the Beirut Digital District, an ambitious project located in Bachoura near Martyr Square, which was launched in September 2012 with entrepreneurs expected to start moving into the fiber-optic wired and 4G-enabled district this month. “What could we do to create jobs in Lebanon? That’s how the idea to launch the district started,” says Karim Kobeissi, a lawyer, adviser to the Minister of Telecommunications and a leading figure behind the project. 

The Ministry of Telecommunications, the Lebanese incubator Berytech and property developer Zein Real Estate (ZRE) run the project jointly. The ministry — which will not be deploying “a single penny” according to Kobeissi — is guaranteeing the fiber optic infrastructure and promoting the district. ZRE has been mandated by the ministry to develop the area, made up of several land plots and totaling around 15,000 sqms. “We have an understanding with ZRE that it will build by December 2016 around 40,000 to 45,000 sqms of built up area,” says Kobeissi. At an expected cost of $800 to $1,000 per sqm, Kobeissi expects that the project will cost ZRE a maximum of $40 million and that it will host around 4,000 workers by 2016. 

So far, two buildings have been built. One, of 2,200 sqms, will be hosting, as of January 2013, two Lebanese companies: The telecommunications operator Touch, and a web and graphic design firm Cleartag, as well as two major Chinese telecommunication corporations, Huawei and ZTE. “It is the role of the Ministry of Telecommunications to attract these companies to come,” adds Kobeissi.Another building of 2,500 sqms is entirely rented out under a 10-year contract to Berytech, which will be moving in this month. Berytech has committed to eventually rent 10,000 sqms in the BDD. 

At a rental cost of $200 per sqm per year, a total of 10 sqms would cost just under $170 per month, cheaper than both AltCity and Cloud 5’s rental fee per entrepreneur. Focused on the ICT sectors, Berytech and ZRE will be deciding jointly which startups can work out of the space, which will eventually include additional facilities such as coffee shops, conferences and gardens. 

More choices for entrepreneurs

The basket of options of where to work out of is getting wider and more varied for startups and entrepreneurs in Lebanon; a welcome and healthy competition for startups. What these spaces have in common is that they are all looking to cover entrepreneurs’ basic needs and alleviate some of the core challenges of startups, allowing them to focus on their product      and service. 

As Nabti points out: “Every minute or hour spent on worrying about decent electricity or the Internet, on registering your business or stuck in traffic is an hour not spent on developing your product and is lowering your competitiveness.” 

January 3, 2013 1 comment
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The Buzz

Morning briefing: 3 Jan 2012

by Executive Staff January 3, 2013
written by Executive Staff

Economics

Fitch Rating agency says an expansionary 2013 budget based on a conservative oil price will support another year of healthy economic growth for Saudi Arabia.

More from AME Info

 

Public expenditure in Dubai is set to increase by 7.8 percent in 2013 as the emirate's ruler HH Sheikh Mohammed bin Rashid Al Maktoum approved a budget worth $9.3bn.

More from Construction Week

 

Lebanon has imposed a temporary ban on the import of cattle from the Brazilian state of Parana over fears of mad cow disease.

More from The Daily Star

 

Companies

Abu Dhabi-based Etihad Airways is in the final stages of buying a stake in India’s Jet Airways, a senior Indian government source has said.

More from Gulf Business

 

Dubai’s Emirates Integrated Telecommunications Co, or du, has signed a $100 million financing deal with Standard Chartered to shore up liquidity.

More from Reuters

 

Dubai Duty Free announced on Wednesday that its full-year sales for 2012 totalled AED5.9bn ($1.6bn), a 10 percent increase on the previous year.

More from Arabian Business

 

Dubai Electricity and Water Authority (DEWA) has awarded a AED167m ($45.4m) contract for a project to supply and extend the emirate's water transmission network.

More from Arabian Business

January 3, 2013 0 comments
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Lebanese killing Lebanese in Syria

by Nicholas Blanford January 3, 2013
written by Nicholas Blanford

Lebanon is presented with the most serious challenges it has faced in the past decade. The economy is struggling, the internal security situation is deteriorating and the country’s neighbors pose real threats. In these circumstances the very fact that the country continues to operate can be seen as a success. And amidst everything, there are opportunities — not just in newfound offshore oil and gas but also within the country’s ingenious population.

As we head into 2013, what can be done to help the country unite, to overcome its challenges and ultimately to grow? Over the course of this week, eight influential figures will address seven important topics, each suggesting one proposal to help the country move forward. In this first article, former Labor Minister Charbel Nahas argues that the country’s economy needs fundamental reform.

The latest bout of violence in Tripoli in mid-November once again refocused attention on the beleaguered city, in particular the flashpoint combat zones of the Alawite-populated Jabal Mohsen and the surrounding Sunni areas of Bab Al Tabbaneh, Qobbe and Badawi. The fighting this time around was among the most intense yet seen according to combatants on both sides.

The frequency of fighting between the Alawite and Sunni communities in Tripoli has turned the city in the eyes of many into the number one flashpoint in the country. Indeed, the fighting in Tripoli is a tragedy for those living there, but crucially it does not spread to other areas. The clashes in Tripoli are invariably contained to one area, centered on Jabal Mohsen. That may not be a comfort for the residents but it dampens the threat the Tripoli fighting poses to the rest of the country. However, there is another latent flashpoint that has the potential to ignite a chain reaction of fighting that could sweep across much of the country.

The northern Bekaa currently faces a bizarre and risky situation. The western flank of the northern Bekaa, centered in Hermel, is Shia-populated and an area of strong support for Hezbollah. The eastern flank from Arsal to Masharih Al Qaa has a large Sunni population and is a bedrock of support for the armed opposition in Syria. Indeed, not a small number of residents from the area have joined the Free Syrian Army (FSA) and are fighting inside Syria.

Between August and October, there was heavy fighting just across the border in the villages and hamlets around the town of Qusayr. These villages are populated by a mix of Syrian Alawites, Sunnis and Christians, as well as Lebanese Shias and Sunnis. In other words, Lebanese Shia members of Hezbollah (and a few allied fighters from the Bekaa’s Shia tribes) were fighting Lebanese Sunnis serving with the FSA. When both sides withdraw to their respective areas on the Lebanese side of the border, they eye each other warily — if for now peacefully — across an expanse of uninhabited flat stony ground some six kilometers wide.

Both sides appear to understand the implications of allowing the fighting in Syria to spread into the northern Bekaa. Masharih Al Qaa, a mainly Sunni area of arable fields and orchards studded with small farms, includes a mosque on the side of the main road that has been transformed into a Hezbollah command post, replete with yellow party flags and a picture of assassinated Hezbollah commander Imad Mughniyah. Although the mosque is in an area dominated by FSA militants and supporters, no one has attacked it. The FSA militants say they realize such a step would trigger a conflict in the northern Bekaa. By the same token, Hezbollah supporters in Hermel say they will not pursue FSA fighters hiding out in Masharih Al Qaa or Arsal because they acknowledge such a step would trigger a civil war.

Yet the standoff is inherently unstable and prone to miscalculation by one side, especially if clashes just across the border intensify. The pocket of territory across the border is strategically significant in the context of the war in Syria. It abuts the critical highway that links Damascus to Tartous on the Mediterranean coast, a potential escape route for the Assad regime if it can no longer hold the capital and chooses to retreat to the Alawite mountains between Tartous and Latakia. For the Syrian opposition, control over the Qusayr district allows the free flow of weapons and militants from Lebanon to the Sunni-populated belt stretching north from Homs to Idlib and Aleppo. There have been reports that the Jabhat Al Nusra Islamist front is making its way toward the Qusayr pocket and the area west of Damascus, bringing it closer to Hezbollah and potentially aggravating a fraught situation even further.

As well, the Shia and Sunni communities in the Bekaa are relatively heavily militarized. The Shias have Hezbollah, but many Sunnis in the Bekaa, especially from the villages of the central Bekaa, such as Majdal Anjar, have gained combat experience not just in Syria but earlier in Iraq and are a fiercer breed than their co-religionists in the coastal cities.

Given the demographics of the valley, it is easy to see how an incident in the northern Bekaa could quickly spread southwards engulfing the overlapping Sunni and Shia communities.

The fighting in Tripoli catches the attention and headlines, but it is the northern Bekaa that should bear closer attention.

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

January 3, 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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