Executive Magazine

No end to injustice

by Ahmed Moor December 3, 2012

written by Ahmed Moor

For the Palestinians the passage of time offers little reprieve. While their circumstances have changed this past year, they have only changed for the worse. Israel has systematically worked to isolate them and hem them into smaller spaces. Governments worldwide seem prepared to accept their continued deprivation and Israel’s steroidal apartheid. The latest salvo between Palestinians in the Gaza Strip and Israel ended with more than 150 dead Palestinians, the majority of whom were civilians, and five Israelis killed. The conflict is deepening.

Some analysts continue to insist that there is a two-state blueprint that is workable for the Palestinians and Israelis. In fact, reality has moved sharply away from any such accommodation. The settlements in the West Bank and around Jerusalem have altered the ‘reality on the ground’ in irreversible ways. Jerusalem is being ethnically cleansed. Palestine has been colonized into nothing. That’s the reality.

At this stage it is worth evaluating what the overall Israeli policy in Jerusalem and the West Bank appears to be. While decision-making in Israel appears to be driven by short-term considerations, there is a long-term outlook, and it is becoming more evident daily. Nir Barkat, the Jewish Israeli mayor of West Jerusalem, has been very effective at restricting the growth of Palestinian neighborhoods in occupied East Jerusalem. In some cases, public works projects are cynically announced with the object of forestalling Palestinian development. For instance, a large tract of private Palestinian land near the neighborhood of Silwan has recently been designated as “state property”. The Jerusalem municipality has declared that a park will be constructed on the site, a claim that some observers regard as a pretext for continued Israeli colonization of East Jerusalem.

In Jerusalem, Palestinian life is so circumscribed that many of the city’s indigenous residents are forced to live elsewhere. The lack of development in Palestinian neighborhoods along with the refusal to grant building permits work to drive the Judaization of the city.

Processes in the West Bank follow the dominant Jerusalem strategy. More than 60 percent of that occupied territory, the Oslo process’s “Areas B and C”, is off-limits to Palestinians. They are not granted building permits in their rural villages — a policy that forces many people into the Palestinian Authority (PA) administered “Area A”. In other words, a West Bank version of ‘bantustanization’ — the apartheid-era South African policy dividing up the territory of black inhabitants — is developing with few impediments.

Essentially then, the Israeli strategy is to Judaize Jerusalem through ethnic cleansing while doing the same to Areas B and C of the West Bank. The “Gaza solution” — isolating Palestinians in shrinking cantons — is being adapted to the particular geography of the other Palestinian territories.

Historically, the PA leadership has demonstrated its profound impotence in the face of persistent Israeli apartheid and occupation. But that may be changing.

President Mahmoud Abbas’ decision to seek a status upgrade at the United Nations on November 29 is the most concrete challenge the PA has posed to the Israelis in years. In fact, the move poses a serious threat to the Israeli leadership because it could provide the Palestinians with access to international adjudicatory bodies. In particular, the International Criminal Court could be called upon to intervene in cases where sufficient evidence of Israeli crimes exists. Analysts have speculated that the Israeli decision to attack Gaza in November is linked in part to the Palestinian Authority’s decision to petition the United Nations for upgraded status. The Israeli elections in January and the fact that the other three Knesset elections this past decade were all preceded by massive military operations against Palestinian areas provides additional context for understanding the extent of the airstrikes.

The context of the attacks in Gaza — indeed, the broader context of what’s happening to the Palestinians — has changed. The Middle East is no longer ruled by programmable autocrats. Egypt and Turkey in particular may produce a ceasefire in the short term and a change in European policy — if not American policy — in the long term. Egypt and Turkey succeeded in enhancing their diplomatic clout after brokering a ceasefire between Hamas fighters and the Israeli government; that trend is likely a sustainable one.

It is far too early to know what the different constellation of powers in the Middle East means for the Palestinians in the long term. As for the short term, the safest assumption is that 2013 will bring no real change; apartheid and arbitrary war are the twin governors of the Palestinian territories. The Palestinians will continue to suffer into the near future.

Ahmed Moor is a master of public policy candidate at the Harvard University Kennedy School of Government

December 3, 2012 0 comments

Comment

One pharaoh for another

by Dalia Rabie December 3, 2012

written by Dalia Rabie

It seemed to many that President Mohammed Morsi was paving the way for his own dictatorship at the end of November when he issued a game-changing constitutional declaration radically expanding his authority, and further deepening the divide in an already polarized society.

The seven-article declaration effectively immunized all presidential decisions from formal oversight, whether parliamentary or judicial. Following the declaration, Muslim Brotherhood offices around the country were ransacked and thousands flocked to Tahrir Square denouncing the move, while others rallied at the presidential palace in support of Morsi. As Executive went to print, both Morsi supporters in the Muslim Brotherhood and opposition figures were rallying Egyptians to the streets for mass protests.

What Morsi’s detractors see is a power grab, with articles in the declaration ominously reminiscent of deposed President Hosni Mubarak’s notorious emergency law under which arbitrary arrests were common on the pretense of protecting national security. Morsi supporters say his declaration is a necessary measure to protect the revolution and preserve national stability.

Either way, it caps off a year beset by turmoil. The unrest of 2011 continued straight into 2012 when, on February 1, fans of the Al Masry football club attacked fans of the rival Al Ahly club in Port Said Stadium, killing 74 and injuring thousands. Accusations abounded that the security services had been complicit in the massacre. Anger amplified towards the then de-facto rulers of the country, the Supreme Council of the Armed Forces (SCAF), triggering a vicious cycle of public protests and violent repression, which resulted in at least 11 further deaths.

The country then shifted attention to the first free election for a head of state since the end of Mubarak’s 30-year autocratic rule. The Presidential Elections Committee, however, disqualified some of the most prominent candidates mid-campaign, spurring another round of protests that left at least 10 dead when Salafi candidate Hazem Salah Abu Ismail was barred from running.

SCAF then weighed in, dissolving parliament — based on a Supreme Constitutional Court ruling that the 2011 parliamentary elections were unconstitutional — and then issuing a constitutional declaration broadening its powers and stripping the president’s office of much of its executive authority, only hours before the preliminary election results were announced. Somewhere in the middle of all this, Mubarak ‘awoke’ from a questionable coma to begin serving a life sentence in prison. All this, on top of an ailing economy, lax security and widening fractures between the country’s different factions.

Sadly, hopes of seeing old regime elements purged from Egypt’s different institutions after Morsi took the presidential oath were short-lived. While among his first orders of business was to replace Hussein Tantawi, head of the armed forces, and the chief of staff, Sami Anan, as well as to cancel SCAF’s constitutional declaration, these ‘bold moves’ were seen by many as the outcome of closed-door deals guaranteeing SCAF’s ‘safe exit’.

Morsi has since faced a series of domestic crises — the most painful of which was a bus crash south of Cairo that took the lives of 49 schoolchildren in early November — to which he was generally seen to have reacted poorly, and he has largely failed to live up to the ambitious 100-day program he set for himself.

Even some of the most basic human rights and standards of transparency, which were expected to take hold after the revolution and set the new Egypt apart from its predecessor, still seem out of reach. Human rights groups criticize the current government’s unwillingness to abandon repressive tools and guarantee citizen rights in the draft constitution. A report prepared by El Nadim Center for the Rehabilitation of Victims of Violence, assessing Morsi’s first 100-days in office, says that arbitrary arrests, torture and ill-treatment of citizens continued unabated.

Morsi’s recent declaration, however, does reopen investigations into the crimes against protesters last year. This, on top of foreign policy successes — most notably helping to broker the ceasefire which ended Israel’s recent assault on Gaza — are among the new president’s few shining achievements in the eyes of Egyptians. Thus, with the second anniversary of the January 25 Revolution approaching, many wonder whether the shadow of another pharaoh looms over Egypt. With little positive change materializing on the ground, the same chants will likely echo through Tahrir Square in future months, with people still demanding “bread, freedom and social justice.”

Dalia Rabie is a Cairo-based journalist

December 3, 2012 0 comments

Comment

A bitter pill to swallow

by Gareth Smith December 1, 2012

written by Gareth Smith

The death last month of Manouchehr Esmaili-Liousi, a 15-year-old boy suffering from hemophilia, has been reported in the Iranian media as the first fatality caused by the latest financial sanctions imposed by the United States and European Union.

While sanctions do not directly target Iranian pharmacies or the wider medical sector, 75 percent of the medicines for treating hemophilia are made in the US and the EU, and supplies have dropped by two-thirds. Drugs are also in short supply for patients suffering from cancer and multiple sclerosis.

The problem is that Iran’s central bank, the only official channel for transferring money abroad, is a major target of sanctions. Many international private banks are increasingly loath to handle transactions or accounts in any way linked to Iran, given the risk of attracting attention from the US Treasury Department.

Without a doubt, 2012 has seen an unprecedented tightening of the noose around Iran. US and EU measures against third-party buyers have halved Iran’s crude oil exports to between 1.1 million and 1.3 million barrels per day, undermining government revenues and helping send the rial into a decline that has seen its international value halved in a year. What’s more, the US congress is intent on legislation that would further reduce President Barack Obama’s room for maneuver in loosening sanctions as a quid pro quo in any negotiations.

The military stand-off, especially in the Persian Gulf, has become an accepted day-to-day reality. Iran’s shooting at a US surveillance drone early in November reflects a trend that saw 2012 begin with extensive Iranian naval exercises in the Persian Gulf and threats from senior officials — including the first vice-president, Mohammed Reza Rahimi — to close the Strait of Hormuz if there were any move against Iran’s oil exports.

Talks between Iran and the permanent members of the UN Security Council plus Germany, which were revived in May after a lapse of over a year, failed to get beyond generalities. Real progress will not be made through such an unwieldy structure, and it is significant that Sergey Ryabkov, Russia’s deputy foreign minister and point-man on Iran, made it clear last month for the first time that Moscow accepts the need for direct contact between Washington and Tehran.

Reports that senior US and Iranian officials met quietly in Qatar in October may indicate the two sides accept this. The word in Washington is that a window of opportunity has opened with the re-election of Obama as president and will last until preparations begin for the Iranian new year, Nowruz, a festival that closes down the country for several days before March 21.

The window may close then because when Iran goes back to work after Nowruz, politics will be dominated by the presidential election scheduled for June 14, when voters choose a successor to Mahmoud Ahmadinejad on the expiry of his maximum second term. But the window could then re-open, especially if, as widely expected, the new president has a better relationship with the rahbar (‘leader’), Ayatollah Ali Khamenei, and a clearer unity of purpose replaces the current rivalries between the foreign ministry, the president’s office and the leader’s office.

Loud whispers in Washington refer to a ‘more for more’ process in which the US would seek verifiable nuclear curbs from Iran in exchange for US concessions, including sanctions relief. But where the US bottom line lies — would Iran have to ship out all its 20 percent-enriched uranium? — is unclear, and considerable political opposition exists on both sides to any kind of deal.

Another problem for US would-be peacemakers is the perception abroad that the Islamic Republic is vulnerable and even in danger of collapse. Despite sanctions, this is far from true. June’s presidential election will probably have a higher turnout than the 65 percent in the March 2012 parliamentary elections and will no doubt be hailed by the authorities as a victory over the scheming foreigners.

In fact, it may be that tighter sanctions, in ‘heating up’ politics, were partly responsible for March’s turnout being comfortably higher than parliamentary elections in 2004 and 2008, when it barely reached 50 percent.

Continuing coverage of Iranians dying for lack of medicines may help the authorities to motivate voters. With the US claiming ‘success’ with the sanctions and the Iranian leadership ‘victory’ in its defiance, 2013 is unlikely to make either side any keener on compromise.

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

December 1, 2012 0 comments

Finance

Private versus public exposure

by Maya Sioufi December 1, 2012

written by Maya Sioufi

With $42 billion tied up in loans to the private sector, accounting for 28 percent of commercial banks’ balance sheet, the dismal performance of the economy has banks reassessing their lending strategy.

“Banks are being flexible with some clients in terms of extending maturities,” says Ghassan Assaf, chairman of BBAC. Anwar Jammal, chairman of Jammal Trust Bank, notes that, given the dismal tourism season, “We scrutinized lending to projects involving hotels and restaurants as any feasibility or payback program they give you needs to be revisited.”

Loans in decline

For now, there has not been a significant rise in default rates, according to the chairmen of Lebanese banks that spoke with Executive, but if the deteriorating economic situation does not start improving soon, this scenario is bound to change. “Hopefully, we will have a smooth Christmas. It is important for tourism and for sectors linked to tourism,” says Saad Azhari, chairman of Blom Bank.

The fatigued economy has not prevented banks from continuing to extend their lending arm but the growth in lending has been declining in the past two years. “We are not lending to tourism and hospitality. We are lending to people who can export, unless it is something essential for the local market,” says Rami el-Nemr, chairman of First National Bank. For the first eight months of the year, banks lent an additional 6 percent to the private sector, down from an 11 percent increase in the same period last year and 17 percent in the same period in 2010. The private sector still swallows a larger share of banks’ lending capacity than the government — a strategy the banks have slowly been implementing in order to reduce their hefty exposure to the country’s sovereign.

While European banks knock on their governments’ doors for bailouts, in Lebanon the sovereign owes its local banks $30 billion as of August 2012, 20 percent of the banking sector’s balance sheet. But the growth in lending to the sovereign has been slowing — for the first eight months of the year it increased just 2 percent, following a 6 percent decrease in the same period of last year.

As Executive went to print, Lebanon was still in the process of raising $2 billion in Eurobonds to refinance $1.5 billion worth of debt maturing in 2013, while using the rest for treasury expenditures. In June, the country issued Eurobonds worth another $2 billion for the early redemption of Lebanese lira treasury bills and two months prior to that, in April, $950 million worth of Eurobonds were issued. So if the latest issue goes according to plan, Lebanon would have raised a total of $5 billion in 2012, as it had originally planned at the beginning of the year.

Balance the budget

Due to attractive interest rates, the government has been able to depend on the country’s banks to fund its expenses year after year — a situation that becomes less tenable as growth rates of deposits flowing into the banking sector drop (see overview page 88).

Lebanon’s debt-to-gross domestic product ratio has been consistently falling: from a jaw dropping 180 percent in 2006 to around 130 percent today. With GDP no longer growing at the high single digit rates that were enjoyed in the past — as the year ends the IMF expects a 2 percent growth for 2012 — the debt component needs to come down for the ratio to continue on falling.

“I believe banks will exert pressure on the government to balance the budget,” says Assaf. With deposits unlikely to start flowing back into the banks’ vaults at supersonic rates any time soon, the sector will likely continue conservatively allocating its resources favoring the fatigued, yet more lucrative, private sector over the heavily indebted public sector; unless the well overdue reforms are implemented.

“If reforms which should have started years ago are implemented, it will create opportunities; they have to happen one day,” says FNB’s Nemr.

December 1, 2012 0 comments

Comment

After Ahmadinejad

by Gareth Smith November 30, 2012

written by Gareth Smith

As president of Iran, Mahmoud Ahmadinejad has been nothing if not controversial. Internationally, he has goaded the Israelis and their American allies with his views about the Jewish holocaust, while his government’s populist economic policies have stirred domestic controversy unknown since the 1979 Islamic Revolution.

But with a presidential election due next June, Ahmadinejad is well into his last year in office, given the two-term constitutional limit. The change will be welcomed by most of Iran’s establishment, including senior clerics and close associates of Ayatollah Ali Khamenei, the rahbar (leader).

The election comes at a crucial time, with tightening Western sanctions that have halved Iran’s oil exports to around 1.1 million barrels a day and have helped spark depreciation of the nation’s currency, the rial, that accelerated dramatically last month.

Khamenei will be keen to see the poll pass off peacefully and won by a less volatile figure than Ahmadinejad. But recent Iranian presidential elections have been unpredictable — Ahmadinejad’s victory in 2005 was a surprise, and his re-election in 2009 produced the largest street protests since the Revolution.

Iranian presidential elections are partly managed, firstly because the Guardian Council, a constitutional watchdog body, vets candidates. But Iran has weak political parties, and the voting system is almost haphazard; if no one wins 50 percent, the two best-placed candidates enter a run-off, and with many contenders — there were seven in 2005 — 20 percent or so of votes can take a candidate through.

For Khamenei, one priority will be to avoid a repeat of 2009, when reformist candidates alleged the poll was rigged and the suppression of street protests sent Iran into a period of tightened political control.

The Guardian Council may well bar reformist candidates, as it did in 2005 before Khamenei intervened to reinstate Mustafa Moein and Mohsen Mehrali-Zadeh. But it may concern the leader that blocking reformists, who might then call a boycott, would hardly restore the legitimacy the system lost in 2009.

It is widely expected, however, that the Guardian Council will bar Esfandiar Rahim Mashaei, or any other associate of Ahmadinejad. Mashaei has been at the center of Ahmadinejad’s tension with Khamenei — indeed the leader overruled the president in 2009 when he appointed Mashaei as first vice-president, instead appointing him chief of staff. Later spats over Ahmadinejad’s removal of the intelligence minister originated in the maneuvering of Mashaei, whom one senior cleric accused of sorcery. In any case, Ahmadinejad and Mashaei have failed to create a sustainable political current that could propel an Ahmadinejad ally into the president’s office. Their efforts to sponsor lists for local and parliamentary elections have fared poorly.

That suits Khamenei, whose priorities are a quiet election and a president with a safe pair of hands. The leader would like a new president to calm Iranian politics by mending relations with parliament, the leader’s office, senior clerics and the central bank. This might also improve economic management in the face of sanctions. It could also tighten co-ordination over the nuclear program between the presidency, the Supreme National Security Council and the leader’s office. Iran is open to compromise but has red lines over its ‘right’ to enrich uranium, and any agreement will require skillful negotiating, as well as carrying domestic opinion. Given the election’s importance, the media is already weighing up potential candidates. Ali Larijani, parliamentary speaker and establishment insider, is liked by Khamenei, but lacks charisma and won only 5.9 percent of the 2005 vote.

Mohsen Rezaie, Islamic Revolutionary Guards Corps (IRGC) commander from 1981 to 1997, has also been suggested. But he appeared in 2005 even less appealing than Larijani, and withdrew shortly before polling.

Other names bandied about are Gholam-Ali Haddad-Adel, former parliamentary speaker; Manuchehr Mottaki, former foreign minister, and Saeed Jalili, the security official who has led Iranian negotiators in talks over the nuclear program.

A more effective candidate could be the charismatic Mohammad-Bagher Ghalibaf, Tehran’s mayor since 2005 and a former senior IRGC officer, though he received only 13.9 percent of the vote in 2005. In an interview in September with the Italian newspaper Corriere della Sera, Ghalibaf spoke of “moderation” in foreign policy while keeping “firm lines” on “fundamental questions”; as well as diverting oil revenue from current spending into productive investment.

This is exactly what Khamenei needs. This far out from June 2013, Ghalibaf looks like the man to beat.

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

November 30, 2012 0 comments

Comment

The Kurds quietly ascend

by Josh Wood November 30, 2012

written by Josh Wood

Past the sand berm marking the border between northern Iraq and northeastern Syria, a small military outpost sits amid the oil derricks that dot the parched landscape of this country at war. A few months ago, the flag of the Syrian regime flew here. Today, it is replaced with a green, yellow and red tricolor banner, flying above a few Kurdish fighters and a pickup truck with a mounted DShK machinegun.

This is Kurdish land now, mostly.

While the eyes of the world and the Assad regime turned to Aleppo this summer as fighting engulfed the city, Kurdish groups moved aggressively to wrest control of parts of their northeastern heartland in Syria’s Hassake province from the government, corralling the regime’s presence to a few towns and checkpoints along the highways.

The endgame here for many is autonomy. Under Syria’s Baath Party, Arabization policies alienated the Kurds by limiting the use of their language, stripping many of citizenship and for the most part refusing to acknowledge that the ethnic group existed. Chronically mistreated, ignored and sitting on top of much of Syria’s oil (which generated some $4 billion in annual exports before the uprising and subsequent war), most feel entitled to a post-conflict deal that at least matches that of the Kurdistan Regional Government in Iraq, if not better.

And so they are getting ready: Signs are being changed from Arabic to Kurdish, local governments are being set up, armed forces are being trained. In Derek, which the regime called Al Malikiyah as part of its Arabization policies, there is a certain afterglow of liberation. One evening in late September, scores of youth gathered downtown cleaning the city’s streets, smiles on their faces as previously banned nationalistic Kurdish music blared through truck-mounted loudspeakers.

There is exuberance and hope here, but also danger.

The Kurdish experience in Syria made many distrustful of those outside the community and there is a strong aversion to again submitting to Arab authority. The militias being readied here — most notably the Popular Protection Units or YPG — seem to be preparing themselves as much for a fight against President Bashar al-Assad’s forces as they are for a possible fight with the rebel Free Syrian Army, should it try to enter their territory.

While Kurdish groups are currently trying to stay on the sidelines of the conflict and are not attacking the remaining Assad forces, continued government occupation of the major oil fields in the Rmeilan area could bring the war to their doorsteps eventually.

There are also sharp internal divisions in Syrian-Kurdish politics. The Democratic Union Party — known by its Kurdish-language acronym PYD — is the most dominant party in Hassake. Despite publicly denying links to the militant Kurdistan Workers Party (PKK) in Turkey, offices of the Syrian group often feature portraits of PKK founder Abdullah Ocalan and Kurds martyred in battles against Ankara’s authority.

Opponents of the PYD — primarily those Syrian Kurds who identify with Massoud Barzani, president of Iraqi Kurdistan — accuse the group of working with the Assad regime, cracking down on dissent and ensuring PYD control of the area through its near monopoly on weapons. The PYD responds to its detractors — some of them not as hostile to the Free Syrian Army as they are — by calling them traitors.

In northeastern Syria, the PYD is currently able to keep dissenters confined to grumbling under their breath. But in Kurdish areas elsewhere in the country closer to the conflict — such as Aleppo’s Sheikh Maksoud neighborhood, the nearby town of Efrin and Kobane in Al Raqqa province — guns are easier to get a hold of and limited battles between Kurdish groups have already occurred.

The PYD’s alleged links to, and ideological inspiration from, the PKK also land the group in a tough spot regarding Turkey. The country’s prime minister, Tayyip Erdogan, has threatened to take action in Kurdish areas of Syria if Turkey deems that groups which have risen up there are a threat. Calls for autonomy on some level or another are also likely to be frowned upon by Turkey, a key supporter of Syria’s rebels, as it faces rising Kurdish dissent at home and increased fighting with the PKK in northern Iraq and southeastern Turkey this year.

For Kurdish groups in Syria to retain or expand the autonomy they have gained, it will likely entail a good deal of diplomatic brinkmanship and horse-trading — fail that, they will be at war.

Josh Wood is a regular contributor to The International Herald Tribune and Esquire Middle East

November 30, 2012 0 comments

The Buzz

Morning briefing: 30 Nov 2012

by Executive Staff November 30, 2012

written by Executive Staff

Economics

Oil prices are expected to fall slightly over the next year as high production feeds softening demand at a time of slowing global economic growth, a Reuters poll shows.

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Tension between Egypt’s Islamists and seculars after President Mohammad Morsi’s power grab risks spurring borrowing costs and delaying aid vital to economic recovery, Barclays Plc. and Beltone Financial Holding said.

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Lebanese Prime Minister Najib Mikati and leading businessmen on Thursday joined calls to keep the Lebanese economy away from politics, warning that sharp differences and regional tensions have already dealt a severe blow to most economic sectors.

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Gulf Air's CEO, brought in to restructure the airline's operations in 2009, has resigned, the struggling Bahrain-based carrier has said.

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Abu Dhabi tourism chiefs have said hotels in the UAE capital posted their best ever October in terms of the number of guests.

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Politics

The UN General Assembly has voted overwhelmingly to recognize Palestine as a non-member observer state – a move strongly opposed by Israel and the US.

Offshore ineptitude

by Zak Brophy November 30, 2012

written by Zak Brophy

Lebanon entered 2012 with the resolute promise to tap “huge wealth” from offshore hydrocarbons. Determined to ride in the new year on a wave of applauding headlines, the Minister of Energy and Water Gebran Bassil announced the creation of the Petroleum Administration, paving the way for the sector’s evolution.

In January the ministry announced that the board of the Petroleum Administration would be made public by the end of the month, the first licensing round for exploration launched within three months and the first contracts inked on paper by the end of the year. The bulk of the nation’s press obliged the minister, lauding a new page in Lebanon’s history, drunk on the promise of energy independence and untold wealth. However, as 2012 draws to a close the rhetoric rings hollow and the lofty plans remain stuck in the starting blocks.

The initial clamor was not without some justification. The odds are stacked in favor of the prospect that Lebanon is sitting on a tidy offshore treasure trove. A 2010 report by the United States Geological Survey estimated an average of 1.7 billion barrels of recoverable oil and 3.5 trillion cubic meters of recoverable gas in the Levant Basin Province, a geological formation in the Eastern Mediterranean extending from Syria to the Sinai.

What’s more, Israel and Cyprus have made impressive discoveries in recent years, which will have considerably whetted the appetite of international oil companies to tap into Lebanon’s seabed. In 2009, Tamar, a 237 billion-cubic-meter (BCM) gross natural gas field, was successfully drilled off the coast of Israel, and an additional 453 BCM of natural gas were discovered in the Leviathan field in late 2010 — the world’s largest deep water gas discovery in the last 10 years. In December 2011, the Cypriots tapped into what could amount to 226 BCM of natural gas in the Aphrodite field.

Sitting idle

Lebanon, meanwhile, has been left on the sidelines. “Israel’s and Cyprus’ relationship has been developing well, to the detriment of Lebanon,” says Malek Takieddine, a Lebanese lawyer specializing in the oil and gas industry. “The Ministry of Energy and Water wanted to pick up on the relationship with Cyprus but you need to have much more practical steps for that to happen, especially with regards to the appointment of the Petroleum [Administration] and the launching of the licensing round.”

In early July, industry bigwigs from around the globe came to the Lebanon International Petroleum Exploration Forum & Exhibition to see what the nation had to offer. The answer was sadly, not much. “Triggered by the success in Israel and Cyprus we cannot afford to idly sit by,” remarked Fadi Nader, advisor to the energy minister. Yet the impression was exactly that once the attendees had wafted through the hot air. Minister Bassil promised the Petroleum Administration within a few weeks and then the Ministry of Finance gave a 45-minute presentation revealing pretty much nothing about the tax scheme to which prospective companies would have to adhere to.

While several International Oil Company representatives expressed a skeptical caution to Executive about the ability of Lebanon’s politicians to actually get moving, others have thrown in their lot and aligned themselves with local partners (only consortiums of three or more companies in an unincorporated joint venture can actually bid for tenders). For example the Scotland-based firm Cairn Energy has joined Cove Energy and Consolidated Contractors in anticipation of the race to the ocean floor.

The eleventh hour

Minister Bassil took the opportunity to score some local cheers by maintaining, “we will not compromise on our right to the full 860 square kilometers.” However, such grandstanding did little to inspire investor confidence and seriously irked the Americans, who had been working behind the scenes to negotiate a settlement to Lebanon and Israel’s disputed Exclusive Economic Zones (EEZs); Lebanon has since dismissed the proposal.

Having stumbled and tripped at every step of the way, there was little reason to anticipate the creation of the Petroleum Administration before the year was out. And then in true theatrical style Minister Bassil pulled the rabbit out of the hat at the 11th hour — actually the 11th month, with the government agreeing upon the six appointees in mid-November.

“The [Petroleum Administration] must now start preparing the acreage pre-qualifications and tenders and lay the groundwork for the production sharing agreements once the companies and the consortiums are short listed,” says independent energy consultant Roudi Baroudi. In short: Now the real work begins.

November 30, 2012 0 comments

The Buzz

Morning briefing: 29 Nov 2012

by Executive Staff November 29, 2012

written by Executive Staff

Economics

Gold ticked higher on Thursday, after suffering its biggest daily decline in nearly four weeks in the previous session, as the looming deadline for averting a US fiscal crisis kept investors on their toes.

More from Reuters

The Kurdistan Regional Government (KRG) has cut in half oil exports as producing companies grow increasingly worried that Baghdad will not honor the payment terms of an export deal struck in September.

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Saudi Arabia and Sudan are seeking to start in 2014 deep-water mining of a Red Sea basin believed rich in gold and copper.

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Zain Saudi extended the maturity of a SAR9 billion ($2.40 billion) Islamic loan for another 21 days on Wednesday, the fifth time the loss-making telecom operator has deferred payment.

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Kuwait's Environment Public Authority (EPA) has announced a plan to gradually switch to using shopping bags made of paper or bio-degradable material, as the Gulf country aims at zero plastic use by the year 2020.

Morning briefing: 28 Nov 2012

by Executive Staff November 28, 2012

written by Executive Staff

Economics

Brent crude steadied at over US$110 per barrel on Wednesday, not far from a one-week low hit in the previous session, as investors nervously eyed talks to head off a looming fiscal disaster in the United States, the world's top oil consumer.

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Gold traded flat on Wednesday, after falling for two consecutive sessions, as the euphoria over a Greek debt deal fizzled out and investors shifted their focus to US negotiations to avert a looming fiscal disaster in the world's largest economy.

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The UAE economy is strong and is registering high growth rates in economic and social sectors, according to the country’s central bank governor, Sultan bin Nasser Al Suwaidi.

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Officials in the UAE are reviewing a draft commercial law that will allow 100 percent foreign ownership of some companies, Bloomberg reported, citing the undersecretary of the Abu Dhabi Department of Economic Development.

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Companies

Lebanon’s biggest bank, Bank Audi, will launch operations in Iraq next year and rival Byblos Bank is to enter the Libyan market as both contend with a flagging domestic economy

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International Petroleum Investment Co (IPIC), the investment vehicle owned by the Abu Dhabi government, will price a $2.9 billion dual-currency bond, at tighter guidance than earlier indicated, due to strong demand.

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Ahli Bank, Qatar's seventh-largest listed bank, said on Wednesday that its strategic partner, Bahrain's Ahli United Bank, would sell nearly all its stake in the lender.

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November 28, 2012 0 comments