Finance

Mena stock tips, August 2012

by Executive Staff
written by Executive Staff

Last month new banking scandals came to the forefront. JP Morgan announced  first-half trading losses of $5.8 billion amidst intensifying fraud investigations, while Barclays was engulfed in a rigging scandal regarding the London Interbank Offered Rate, which saw heads roll — including that of CEO Bob Diamond — with investigations potentially expanding to nearly two dozen banks. The European sovereign debt crisis is still heated, with Spain approving yet another austerity package — its fourth in seven months — and receiving a 100 billion euro bank bailout. For investment recommendations, Executive sits again with Khaled Zeidan, general manager of MedSecurities, a BankMed subsidiary and Ammar Bakheet, head of asset management at Bank Audi.   

Khaled Zeidan

General market thoughts? Zeidan is somewhat bullish and expects stock indices to end the year on a positive note. “Maybe up between 9 to 12 percent but in the meantime it could be choppy,” he says. He believes that there will be further stimulus from the United States because “the economy needs this.” He would avoid investing in Europe as he believes that we have not seen the worst yet. “I think there is no political will today to resolve this issue,” he adds.

Favorite asset classes? Last September, Zeidan recommended investing in both equities and bonds and now he recommends keeping a balance between asset classes with a slight preference for equities over bonds. With risk premiums up and with a positive correlation between the two asset classes, choosing one asset over another becomes “sort of insignificant” according to Zeidan. The only asset class which remains unhurt is cash but its “problem is that it is experiencing slow death which you don’t see; it’s like aging. You don’t feel it; then you see a friend you haven’t seen for 10 years and you realize that this is how they probably view me; that’s the problem with cash.”

Thoughts on the MENA region? His view on the region’s top markets  have not changed from last September as he still likes Saudi Arabia and Turkey, but he is also adding Egypt now as he expects the markets in this country to recover as “ultimately the Muslim Brotherhood are red-blooded capitalists. One of the main figures is Khairat al-Shater, one of the wealthiest men in Egypt.” Another MENA market he finds interesting is Iraq and he wouldn’t be surprised to see an “astounding performance” once the proper structure for equity markets is in place. 

Thoughts on Lebanese securities? He would only buy Solidere as he believes it is cheap and undervalued (to keep everything above board, it should be noted here that BankMed is one of Solidere’s largest shareholders). Once there is a resolution in Syria, “Solidere will be limit up [limit on the shareprice] for three to four days. You need to be willing to make that bet and I think its reasonable given that your downside is limited,” adds Zeidan. 

Ammar Bakheet

General market thoughts? Bakheet is risk averse and says investors generally are not excited about risky investments either, such as equities, due to the sovereign debt crisis in Europe, the slowdown in the economy of China and emerging markets. He would prefer being exposed to the US markets over Europe as he believes “Europe will be in a mess for a while.” Within Europe he would favor safe companies with solid earnings, good balance sheets and high dividend yields such as food manufacturer Nestle or pharmaceutical company Roche.

Favorite asset classes? In September, Bakheet recommended high quality fixed income bonds and blue chip companies. Now he recommends starting to gradually add exposure to the equity markets as they are at “very attractive levels.” He favors high quality stocks with solid dividends.

Thoughts on MENA markets? Bakheet is still sticking to the same countries he recommended last year: Saudi Arabia (SA) and Qatar because of their solid fundamentals, attractive valuations and dividend yields. As for Egypt, he prefers to see signs of stability before stepping into this market. He would invest in the telecommunications, banking, food and beverages, retail and cement sectors both in SA and Qatar. His top picks are Saudi Arabian telecommunications company Mobily — which he recommended back in September and is up 20 percent since — Al Rajhi Bank in SA and Qatar National Bank.

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Society

A motley affair

by Kate Marris
written by Kate Marris

"What do you get in an Italian restaurant in Beirut? Sashimi and a hamburger,” and perhaps some of the best Italian cooking outside Italy. This is how one member of the Arts Faculty at the American University of Beirut described the Beirut Art Fair 2012. In the aftermath of the third edition of Lebanon’s first art fair, Executive spoke to a wide range of participants: gallerists, critics, collectors, first-time buyers, sponsors, artists and the fair’s organizers Laure d’Hauteville and Pascal Odille. Each had something to say about an art fair exhibiting art of wildly varying calibre side by side. Yet for every word of criticism, of both the art itself and the conception of the fair, there has been levelheaded enthusiasm and support for the determination of Laure d’Hauteville and her tiny team — with its tiny budget — to put Beirut on the art world map.

The gamble

And it is in spite of everything. Imagine persuading galleries, particularly those outside of the region, to ship in millions of dollars worth of work to a country that is beginning to feel like a pressure cooker. There were huge questions facing local and international gallerists about insurance, how many big spending Gulf Arab tourists would come and whether people would buy art at a time when many Lebanese are considering an exit plan from a country increasingly under threat of a wide ranging regional conflict.

Gallerists’ fears were justified when only 12 of the 52 Gulf collectors invited showed up. Once again Lebanon felt the power of the media: “[It was] when I saw what’s happening in Tripoli,” explained a representative from ABK Gallery in Metz in France, which pulled out at the last moment because they deemed the risks greater than the rewards, and the fact that the artists simply wouldn’t allow their work to travel to Lebanon. And yet, the organizers still convinced 14 galleries to travel from abroad, among them Portugal’s Cordeiros Galeriad that showed, for the first time in the region, its Andy Warhol portrait of 1970s American starlet Barbara Molasky — a piece whose import to Beirut was felt to be a measure of the fair’s credibility.

“Convincing galleries and collectors to come was the biggest challenge,” said Odille, who also devised the fair’s three-day cultural program. Yet some came here not to make sales, at least not immediately. For Bruno Simpelaere, director of ChinaToday Gallery in Belgium, the object of exhibiting in Beirut was to develop a new Middle East client base and scout artists from the region. Why doesn’t he do this in Dubai? A big factor is cost: there is nowhere else in the region, or globally, where he said he can run an exhibition for just $10,000 to $12,000, including the hire of a 20-square meter booth for $7,200. Organizer d’Hauteville cites the size of Art Dubai, which hosted 75 exhibitors this year, as a reason relatively small Beirut appeals to some exhibitors who she says feel lost in the vastness of Dubai; an equivalent. 20-square-meter booth, depending on location and other marketing factors, costs double that of Beirut at approximately $15,000. A similarly small booth at an established fair like Art Basel can easily cost $30,000 and galleries have to sell hard to make back their costs.

Artful adolescence

But fair comparisons, says Simpelaere, only go so far. “Beirut Art Fair needs time. It is young, let the market evolve,” he said. “In the 90s no one paid attention to Hong Kong; now it’s been bought by Art Basel.” Incidentally, China Today no longer exhibits in Miami and other fairs in the United States, which Simpelaere says are an “organizational disaster”. On that front he had no complaints about Beirut, which he said provides attractive practical services available in a city where artists have been working for centuries: “Where else do you find a framer who turns around five to six works overnight and does an impeccable job?” asks Simpelaere, answering: “Not in Dubai.”

Corporate backing

Indeed, unlike the Gulf Cooperation Council states, Beirut’s own art community has grown organically over time; it is for this reason that local partners were lining up to support a commercial art fair that presents an opportunity for both the private and public sectors to cash in on spending from cultural tourism. While the three major international sponsors of the 2011 fair — Ferrari, luxury watch maker Girard Perregaux and Merrill Lynch — were feeling the pinch of declining budgets and withdrew their support, Mini Cooper Lebanon, Air France and major Lebanese banks and hotels provided significant financial and operational backup. For Rita Saad, public relations manager at Le Gray Hotel, the fair was an opportunity “to put Beirut in the limelight”. The downtown hotel opened its luxury suites to international visitors, threw a party and capitalized on an event which, said Saad, takes the city beyond its traditional tourist realms of “history, heritage and gastronomy."

BankMed was the biggest financial backer and hosted the opening party at the Phoenicia Hotel, while Byblos Bank launched its first event to support Lebanon’s young creative scene in conjunction with the art fair. In an award not unlike Deutsche Boerse’s annual photography prize (Lebanese photographer Walid Raad was the winner in 2007) Byblos short-listed 15 young Lebanese photographers who were given a collective exhibition space at the fair. Now the bank is giving the winner, Dora Younes, a student in Beirut, an exhibition, a catalogue and the kind of first break-through package every young artist looks for.

For Byblos Bank, the Beirut Art Fair “answered a specific CSR strategy in Lebanon,” said Nada Tawil, head of communications at Byblos, namely “a brand strategy to support contemporary art.” She said the bank perceives Lebanon as “an incubator of talent”, and wants to play an active part in that story.

So too does the public sector, even if funding is limited. For the first time since the fair’s inception, both the Ministry of Tourism and the Ministry of Culture were a visible part of the fair’s proceedings. When Executive spoke to Michel de Chedarevian, advisor to Culture Minister Gaby Layoun, he reiterated the sense that the public sector is waking up to the value of Lebanon’s artistic contribution in the international arena and there are plans to take Lebanon to next year’s Venice Biennale. (Last year the official Lebanese pavilion was withdrawn for reasons which are still unclear.) When asked what the ministry thought about the fair organizers flying in from France, de Chedarevian had no reservations: “Lebanon is a Francophone country — it’s not an issue.”

Too little Lebanese?

But for some it was. Local and foreign observers expressed dismay that this was not a locally conceived event. “But it is not my Beirut Art Fair,” repeats the French organizer d’Hauteville . In a country where debates surrounding national identity and power wielding inform every aspect of life, it should come as no surprise that an art fair in Lebanon is not immune from politics. But that is exactly the hope of Jean Doummar, a Lebanese businessman and collector whose views represent the many who are sick of Lebanon’s reputation for “cheap tourism and violence”.

“There is so much more,” he said, adding that he believed that whatever the shortcomings of some of the exhibits the organizers proved themselves first of all by managing to assemble 40-plus galleries, almost doubling the size of last year, and no less significantly by attracting wide coverage from the international press whose attention usually falls on political turmoil and Lebanon’s flailing economy.

At a time when the air was thick with the smell of burning tires, Paris Match, Le Figaro and art market publications such as Art Price cared more about revealing this new institution as a major success story for the country. But while galleries like Agial echoed this sentiment, achieving greater sales than expected (only five of the fair’s 43 galleries did not sell at all), and Mark Hachem’s works by autistic artists sold to both Christie’s and Sotheby’s on the back of the fair, many like Saleh Barakat, the director of Agial, were concerned about the quality of the art, the mixed-up souk effect of jewelry and design, and most of all, that this did not reflect the Lebanese art scene at its best.

“Its embarrassing,” said Kristine Khoury, an art writer based in Lebanon, who felt the overall “mishmash” impression and some of the embellishments of the fair overshadowed the stronger work represented in some of the booths.  Rafiz Majzoub, an artist who exhibited at the fair (his studio is based in Beirut’s Dora neighborhood) told Executive that the fair was “simply not art in Lebanon.” Some of Lebanon’s most prominent galleries, including Sfeir Semmler, also choose not to exhibit.

Looking ahead

Organizers, and many of those who care about this fledgling institution, want expansion. And not just in size. Art collector Doummar believes the regional MENASA criteria – Middle East North Africa South Asia – is limiting. “Why limit yourself when there are 10 million Lebanese living all over the world?” Real Diaspora figures aside, he’s got a point, and added that the fair has the potential to mobilize Lebanese populations in, say, South America, where artists relatively new to the international market are fetching high prices.

The touch-and-go regional political situation aside, many factors are at play in the search for institutional identity. Local audiences want to see what is being produced in the rest of the world, while international — specifically Western collectors — are often interested in artists responding to the political conditions of the MENASA region.

With the right consideration these demands are not necessarily incompatible — as the graffiti tour this year showed — and the organizer d’Hauteville stresses that Beirut Art Fair can be a commerical exchange as much as it is a cultural forum. If the fair can successfully incorporate the pluralism that defines this country it may have the potential to sell to a uniquely multifaceted audience. And yet however uncontrollable political insecurities may be, one thing is certain: the quality of the art will determine if this new institution flourishes or whether ultimately Beirut Art becomes synonymous with Beirut Art Supermarket and simply fades away.

The initial version of this article included factual errors. They have been amended as of 24 September 2012

 

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Society

Carbon Democracy: Political Power in the Age of Oil

by Executive Staff
written by Executive Staff

The oil industry’s manipulation of governments and the economies of countries to secure and increase profits has been happening almost since there was an industry to speak of. In Timothy Mitchell’s book “Carbon Democracy,” he highlights how through much of the early 20th century big oil companies worked to contain supply — in particular by preventing the emergence of an oil industry in the Middle East — to keep oil prices up, and consequently bolster profit margins.

Last year, the profits of the Big Five international oil companies (IOCs) — BP, Chevron, ConocoPhillips, ExxonMobil and Shell — were up 75 percent on 2010, at a record $137 billion, yet production was down by 4 percent. And rather than invest heavily in production or job creation, these companies sunk $38 billion, or 28 percent of annual net income, in repurchasing their own stock, therefore boosting investor returns.

However, a major difference from the first half of last century is that IOCs are not able to negotiate quite the same profitable agreements with oil producing countries, or delay development, as before. This is reflected in the 2011 oil export revenues earned by members of the Organization of Petroleum Exporting Countries (OPEC), which for the first time exceeded $1 trillion. At the same time the OPEC results were announced last month, the Fraser Institute’s 2012 Global Petroleum Survey indicated that Middle Eastern countries have higher barriers to investment in hydrocarbon exploration and production than anywhere else in the world. There is a clear correlation here, as OPEC members have had to learn the hard way about who takes what for the extraction of underground riches; the IOCs have responded to this through the modes they still have influence over to retain profits.

In Carbon Democracy, Mitchell’s focus is the relationship between hydrocarbons and political institutions, tracking the changes from the industrial revolution all the way up to the so-called “Arab Spring” and how revenues from hydrocarbons are connected to democracy and economic development. Without oil, Mitchell argues, the current economic model of unlimited growth would not be possible, while the management of economic growth provided modes of regulation to govern carbon democracy.

Controlling supply is clearly a way of influencing prices and means of governing. This is one reason why there is a distinct lack of refineries in some oil producing countries, as delaying refining can artificially restrict the amount of oil that flows to the markets. But another reason is to drive a wedge between production and transportation, which helps prevent strikes and disruptions to the flow of oil by not overly centralizing the value chain and thus not have large concentrations of workers. This is a crucial point in Mitchell’s revealing book, as it was a deliberate government policy in the West in the lead up to World War One to switch from coal to oil to nip-in-the-bud further strikes by miners that had brought economies to a standstill. After all, miners’ strikes had led to the adoption of better working hours and conditions, welfare, healthcare and more democratic rights.

The chapters on the Middle East are particularly revealing, along with his debunking of conventional historical accounts — namely the discovery of oil and delayed exploitation — and what is misleadingly called the “oil crisis” of 1973, which was a pivotal event in transforming international finance, national economies, flows of energy and in placing the weakened carbon democracy of the West into a new relationship with the oil states of the Middle East.

Rather than being a black and white textbook case of supply and demand at work, of OPEC members cutting oil supply to pressure the United States over its unequivocal support for Israel during the October 1973 war, Mitchell shows that it was difficult to know how much oil prices went up due to a cut in supply or even how much supply was actually cut. For while Saudi Arabia and Kuwait reduced exports, other countries increased production. Furthermore, unlike today, there was no ‘market price’ for crude oil, so no one could know what ‘the market’ actually was, while OPEC’s decision to raise tax on oil production by 70 percent at the time was somewhat coincidental, having been decided before the war broke out.

Mitchell’s book ends by considering the impact of supply constraints due to the rising demand for oil, and how climate change impacts market conditions in a post-oil world where alternative forms of energy will affect how people and economies are governed. How and when we might emerge into the post-oil world is, however, a question that remains to be answered.

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Real Estate

More Bling on the beach

by Jeff Neumann
written by Jeff Neumann

To the more timid businessman, breaking ground on another exclusive beach club in Lebanon might not seem like a sound investment at the moment — given this summer’s grim tourism receipts and the grimmer questions over the civil war next door and how long that will go on. But the doom has done little to gloom the enthusiasm of another breed of developers who see so much long-term profit potential on Lebanon’s beaches that they won’t be deterred by a bit of war.

Among the new investment destinations is Nikki Beach, a project for a 46-villa seaside resort with hotel and club south of Beirut that is being developed as collaboration between local property company Zardman and Nikki Beach EMEA Hotels and Resorts, a unit of the Miami-based brand that specializes in glamour hospitality.

Forget your troubles in luxury
The chief underlying asset for the project is a 42,000-square meter seafront property in Damour and Zardman touts the location and accessibility from Beirut as selling points sure to attract investors when sales open later this month.

According to the developer, the project will entail a boutique hotel on the property, as well as amenities that five-star resort patrons would expect: spas, multiple swimming pools, restaurants, water sports, a fitness center and more.

However the resort's biggest asset, according to general manager of Zardman, Makram Zard, is its very limited capacity. “We are being very exclusive with sales,” he says, adding that, “If a client comes in with no background or familiarity with us we simply will not give them information. You will not see billboards advertising the sale [of our villas], we know who we want to attract.”

But another key selling point will be the Nikki Beach moniker aiming to brand the resort with global glitterati appeal. “We will operate the hotel and Zardman will sell villas. We will focus on quality of service and invest heavily in staff training,” Jihad Khoury, the chief executive of Nikki Beach EMEA Hotels and Resorts, tells Executive.

Set for delivery in 2014, the resort would be the third Nikki Beach in the Middle East and North Africa region, after resorts that are scheduled to open (with different partners) in Qatar this year and Cyprus in 2013. Plans for expansion of the Nikki Beach brand in the Middle East date back a few more years but did not pan out either in Lebanon or in Aqaba, Jordan.

Lebanon's 225-kilometers long coastline is dotted with many clubs and resorts in every price range and type, from the low-key bohemian to the techno-blasting beach party. Offering a glimpse on what Nikki Beach will use as lure for its clientele in Lebanon, the group eagerly flashes that it was once called the “Sexiest Place on Earth" in a British newspaper and voted the “World's #1 Sexiest Beach Bar” by international media outlets.

“When we met with the people from Nikki Beach we clicked right away,” says Zard. “We had the same vision for the project and knew this is something we would both benefit from.” Most of Zardman’s staff are in their 20s and early 30s — "a very young company,” according to Zard — and are tapped into what the mostly young and affluent clientele that Nikki Beach attracts worldwide are looking for in a beach destination.

Villas will start at around $320,000 and reach up to $600,000, and are offered in three sizes: 105, 125 and 155 square meters. Payment plans for the villas start at 15 percent down with the remaining balance to be paid over a four-year period. For the overall design, the Beirut office of US-based Soma Architects was tapped to lay out the villas, with Gatserelia Nawar & Associates handling the interiors. 

A sunny (and sandy) future
The Damour project will be Zardman’s first resort and while eager to disclose the price range for the villas the company would not disclose the cost of the entire planned development or the value of the assets it brings to the beach. Zardman holds a 27-year renewable lease on the land but would divulge in an interview with Executive only that the deed is held by its founder, and former Lebanese Canadian Bank chairman, Georges Zard Abou Jaoude.

According to Khoury, Nikki Beach EMEA Hotels and Resorts came aboard the project in 2011 after all licenses and planning for building structures had been completed. His rationale for getting involved is that Lebanon will remain a regional reference in hospitality and high-level entertainment and Nikki Beach would be seen as missing out if it did not open a branded resort here.

Khoury radiates confidence that the new project will be a winner even as the current wind is blowing tourism straight in the face. “It is an act of faith and as Lebanese, we have to have courage. The good years will more than make up for the bad ones," he says.

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Rebuilding Syria after revolution

by Jihad Yazigi
written by Jihad Yazigi

Although now is apparently the time for destruction in Syria, hopefully, the time for reconstruction is not far off.

While it is difficult to estimate the actual cost of the damage inflicted to the country’s physical infrastructure by more than 16 months of a popular uprising — most of the destruction having actually occurred after the summer of 2011 — the Syrian National Council (SNC), which is considered by Western nations as their main interlocutor in the opposition, recently estimated that Syria would need some $12 billion in immediate financial support in the first six months after a potential fall of the regime.

While little of Syria’s large industrial concerns — such as power plants and refineries — have been hit, the urban landscape of many of the country’s cities is littered with flattened buildings, destroyed water, electricity and phone networks and crumbled roads and bridges. The cities of Homs — the country’s third-largest city — and Deir-ez-Zor have been particularly devastated, but so too have been dozens of smaller cities and towns across the country, in additional to the suburbs of Damascus and Aleppo. All-in-all, large parts of Syria will need to be entirely rebuilt.

It’s difficult to estimate what the $12 billion figure encompasses but if it were to cover only the first six months, this amount would exclude the cost of rebuilding most of the hard infrastructure, as this would obviously take much more than six months to carry out — in other words the total budget for rebuilding the country is likely to run much higher. In all cases, the question of how to source the money remains open.

Spokespersons from the SNC have said that they will seek support from “friends.” Knowing the financial turmoil the European Union and the United States are going through, they probably have in mind the deep-pocketed Gulf states, in particular Saudi Arabia and Qatar, which have been very active in supporting the opposition. Another issue to have in mind is the handling of any large disbursement of money. Indeed, contrary, for instance, to Libya or Iraq, which have vast reserves of oil and gas and therefore the means to reimburse almost any amount of debt they incur, Syrians will need to be very careful to efficiently use the money they will receive. Indeed, no one will lend money to Syria for free, and aside from the political cost that will come with such help there is also a financial cost, i.e. a debt burden that will be supported by the population for years if not decades to come.

Will any transitional government in Syria have the means to manage and spend $12 billion in financial support, let alone that it will have to be spent in only six months? From a political perspective, can a non-elected body — because any transitional authority is unlikely to be elected — legitimately spend such a large amount of money, an amount that will burden Syrians for years to come? How about the longer term and the larger amounts of money that will be associated with any reconstruction program that a future Syrian government will be in charge of? Can Syrians avoid the missteps and massive corruption that have come to be associated with the Iraqi reconstruction program?

The current and previous Syrian governments have shown a remarkable inability to handle large projects and to manage efficiently investments that carry significant costs. Indeed, very few of the large infrastructure projects announced by the Syrian authorities in the last two decades have taken off because of numerous bureaucratic and political constraints; and those that have been carried out have faced endless delays, cost overruns and suspicions of corruption.  It would be naïve to think that these obstacles will be bypassed easily. From what the opposition has shown in terms of (lack of) knowhow and capacity, and from what we know from the Iraqi experience, there is serious ground to worry.

Because of its political implications and future costs, any reconstruction program for Syria will have to make clear how it will be funded and repaid and what measures will be taken to limit corruption as much as possible; more importantly, however, it must be sanctioned by legitimate representatives of the people if it is to embody a meaningful new beginning for the country.

 

JIHAD YAZIGI is editor-in-chief of The Syrian Report

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Syria’s arms economy

by Nicholas Blanford
written by Nicholas Blanford

The prices of some popular weapons on Lebanon's black market have dropped for the first time since the uprising against the regime of Syrian President Bashar al-Assad began in March 2011.

Bearing in mind that the demand that drove prices to record highs was almost all from Syria, the recent dip appears to strengthen reports that Syria's armed opposition is gaining ever-greater access to weapons and ammunition.

The two weapon types that recorded the largest drop are AK-47 rifles and rocket-propelled grenades. In March 2011, a good-quality Russian AK-47 or the Polish-manufactured version, known in Lebanon as a “Circle 11” from the stamp on the metalwork, cost around $1,100. By April this year, however, the rifle had doubled in price to around $2,200. The price climb for RPGs was even higher. A single grenade in March 2011 was worth $100 (itself a significant rise given that five years earlier it was selling for about $10). By April, however, it was nudging close to $1,000. Arms dealers were grumbling that they could not even find RPG rounds on the market.

However, since the beginning of May, both AK-47 and RPG prices have dropped to around $1,800 and $700 respectively. The cost of 7.62mm ammunition for the AK-47 also has declined from around $100 for a box of 50 rounds in April to $83 in June. Both AK-47 rifles and RPGs were the most commonly used, and sought after, weapons for the Free Syrian Army (FSA) and other armed opposition groups. The drop in prices suggests that the FSA is receiving a regular supply of armaments today, which has lessened demand in Lebanon.

It is widely believed that Saudi Arabia and Qatar have begun funding the FSA and that fresh arms supplies are reaching the fighters, mainly from Turkey. The New York Times reported in mid-June that CIA officers were in Turkey monitoring the flow of weapons to ensure that the recipients were not groups that shared Al-Qaeda's ideology.

The FSA also has had increasing success in raiding Syrian army depots and stealing weapons and ammunition, or co-opting Syrian army officers with access to arsenals. Indeed, the profits to be made from selling weapons have spurred Syrian soldiers to steal weapons and sell them on the black market, according to Lebanese arms dealers. That has led to some Syrian army weapons, including RPG rounds, to enter the Lebanese market.

The enormous profits to be made from selling arms has blurred political loyalties. There is a story presently circulating in the Bekaa about a member of a Syrian-backed political party who was in charge of the group's arsenal in his village. He struck a deal with a man from an influential family to sell the weapons to the Syrian opposition and they would split the proceeds. The weapons were duly sold across the border, but the second man then refused to share the profit with the party member. In revenge, the party member told the police where they could find the second man, who had a string of arrest warrants. The police laid an ambush and the second man died in a gunfight. The relatives of the second man then kidnapped the party member and he has not been seen since.

While AK-47 and RPG prices have declined, the cost of prestige weapons continues to climb. They include arms such as the AKS-74U, popularly known in Lebanon as the “Bin Laden gun” as it apparently was favored by the former Al-Qaeda leader. A Bin Laden gun costs $5,000 today, compared to about $2,800 a year ago. A Russian “Dushka” 12.7mm heavy machine gun is worth a staggering $9,000 compared to $3,000 in March 2011. Even that pales to the price of an American M4 assault rifle fitted with a M203 grenade launcher. Worth $5,000 in March 2011, today it will set you back at least $15,000.

 

NICHOLAS BLANFORD is the Beirut-based correspondent for The Christian Science Monitor and The Times of London

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Getting Beirut’s green back

by Ali Sayed-Ali
written by Ali Sayed-Ali

On a hot Saturday in mid-June, hundreds of young people across Beirut took part in a campaign to temporarily occupy key high traffic locations and replace them with ‘guerrilla gardens’. What took place was a welcome contrast from the tire-burning and road-blocking protests of late; instead, participants laid out patches of grass on sidewalks and roundabouts and picnicked under umbrellas to raise the profile of their cause for public green spaces.

Only two days before, the chief of the Beirut municipality, Bilal Hamad, held a press conference to announce the launch of the “Beirut is Amazing” initiative. Attempting to both respond to public pressure and direct the discourse, Hamad announced plans to rejuvenate the city’s parks. Unfortunately, the project is as uninspired as its name, and ignores an area constituting 77 percent of the city’s public green space — the Horsh Beirut. This park is a key issue of the guerrilla gardeners.

The Horsh — destroyed by fire in an Israeli raid during the civil war — is a sprawling 330,000 square meter urban park that until now is reserved for the exclusive use of those selected by the Beirut governorate. Only two years ago this historic piece of real estate was a non-issue for most Beirutis. That was until a non-governmental organization called Nahnoo (Arabic for ‘us’) rallied supporters and started asking the right questions. Today, beyond their media campaign, Nahnoo has compiled research, consulted legal experts and urban planners, organized public events and coupled advocacy with a policy focus to lobby cooperatively with decision makers.  The movement, however, isn’t without detractors — including many ordinary citizens from neighborhoods around the park. In typical ‘tragedy of the commons’ rationale, critics of the campaign say the Lebanese will not be able to collectively own such a pristine space without destroying it, pointing to threats as terrifying as barbecues, argileh, littering, and “immoral behavior”; thus, we must deprive ourselves of our public space in order to protect it. Hamad himself made these very arguments during a public forum organized by Nahnoo earlier this year.  The forum attracted an almost full house at Hamra’s Madina Theatre, where the majority of the audience was too young to remember the park in its glory days. Many were also angry. They saw the park’s closure as an act of exclusion, one that deprived them of a much-needed refuge from Beirut’s concrete jungle and a meeting point in a city that has one of the lowest levels of public green space in the world. Of course, it is not simply about green space, and the reasons given for the parks closure are superficial at best.

In a sectarian and segregated city the park takes on new meaning. Its triangular shape separates the suburbs from the city with barb-wired walls, keeping Christian, Sunni, and Shia neighborhoods apart. The question that many are asking away from the spotlight reveals an unspoken yet palpable sectarian turf war: “Who will control the park?” Of course legally, the municipality would be required to ensure the park remains clean and safe. On the ground, control is exercised differently. Groups of young men loyal to this or that political bloc could set up shop, hang their flags and effectively “take over” the space. Some believe that Sunni and Shia youth will clash and the violence could ruin Horsh Beirut.

Those leading the campaign for public access to the park understand the risks and realize that a sense of community ownership is necessary for its survival once opened. This is why they are planning to use the space to bring youth together, undertake public education programs and create an active Horsh Beirut neighborhood association to play a role in ensuring responsible use of the park. The tug of war over this rare publicly-owned green oasis in a slowly suffocating city represents a clash between two ideologies: those with a ‘fear-of-the-other’ worldview and a new generation that refuses to submit to prevailing stereotypes and are adamant about reclaiming public space for the people; while the former sees the park through the prism of perpetual conflict and eyes it with suspicion, the latter looks to make the Horsh a space for community and unity, and a source of hope for the future. In many ways, it is the struggle between continuing to entrench the trauma of the civil war and moving Lebanese society forward.

 

ALI SAYED-ALI works in democracy and civil society development in the MENA region

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