The ingredients for creating a successful technology hub in Lebanon are on the table: ambitious entrepreneurs, power hungry venture capitalists and enthusiastic accelerators and incubators. Along with this growing ecosystem, there are increasing opportunities to invest in startups and when opportunities arise, money usually follows.
The ventures of capital
Venture capitalists (VCs) are a more recent card added to the funding deck. While only a handful of VCs are active in the local market, the increasing awareness of the value added provided by these experienced backers, combined with the growing need for capital, is making this avenue of financing one that is gaining more and more importance. Many banks are also supporting VC players by investing in their funds.
“The general attitude of local banks is ‘let someone else get the process right’, as the industry has not been streamlined yet. It will take some time and once we start to see real genuine long-term businesses, we will allocate resources to it; this a testing period,” says Khaled Zeidan, who wears both the hat of a banker as general manager of MedSecurities, a BankMed subsidiary, and of a venture capitalist as chairman of one of MEVP’s two funds.
Berytech Fund, MEVP, Cedrus Ventures and more recently Wamda are all looking to invest in early stage startups. Accelerator Seeqnce has also jumped on the bandwagon through a different proposal: a competition in which anyone with an idea within the tech space can apply and the founding members will eventually create eight startups — each receiving $100,000 of which $38,000 is in cash and the rest in services — in exchange for a 30 percent equity in their newly founded startup.
Lack of upstream support
Fadi Bizri, one of the founders of Seeqnce, said the idea to start this competition came because of the lack of upstream support for start-ups in Lebanon. Entrepreneurs at an early stage often struggle to find enough support — regarding things such as developing a business plan or finding missing talent in the team — to turn their ideas into viable businesses that would eventually become interesting investment opportunities.
Hanna believes that what is missing within the ecosystem is “more of the like of Seeqnce and Berytech”, providers of upstream support for early stage entrepreneurs. Michel Nehme of Cedrus Ventures agrees on this shortfall and believes that all venture capitalists should provide a “shove” to entrepreneurs through mentorship on a voluntary basis.
Targeting that lack of upstream support, Ideaz Factory has made a call for business ideas from Lebanese between the age of 16 and 30, to be submitted to a high profile jury made up of established entrepreneurs who will select eight ideas and help develop them into viable businesses. The whole process, which ends with the selection of a winner, will be broadcast on national television from mid-September and provide an opportunity for the public to invest in the ideas too. Many believe the lack of upstream support curtails the development of quality start-ups and investment opportunities. Zeidan notes, “There are very few quality companies and quality entrepreneurs in Lebanon.” Hanna concurs, saying “there are only one or two crème de la crème start ups in Lebanon."
Collaboration vs. competition
With only a few quality startups to pick from, one might think there would be tight competition between VCs to scoop up the best pickings, but, running small funds — no larger than $15 million in size — they are actually more likely to cooperate and share the meals. For instance, Berytech’s fund and MEVP invested together this year in Wixel Studios, a provider of gaming applications, for an undisclosed amount. Hanna says that VCs go “clubbing together” and share investment ideas.
Cooperation can spoil the meal though, as hungry VCs can turn into “vulture capitalists” by taking control of the venture from the entrepreneurs. “Asshole VCs that team up together can come up with very harsh terms,” complains Haddad. Bizri adds that “a lot of entrepreneurs know very little about raising funds, don’t know what their options are and they get massively ripped off by people.”
Infrastructure issues
The workshop, however, for building any sort of hub for innovation in Lebanon is lacking some tools, among them proper Internet and telecommunication connections, online payments facilitated by local banks and talent mobility, to name a few.
“If you want to use Lebanon as a test bed for your e-commerce company it is very tough to do that,” says Haddad of Wamda. Stephane Abi Chaker, head of investment banking at Blom Bank also notes that, “information technology (IT) infrastructure is much more important than financing for technology and telecommunication start-ups.”
Talent mobility is another issue. “In the United States, a country of 300 million people, there is lack of talent as Google and Facebook hire from all over world,” says Haddad. “So in a country of four million people, of course there is a lack of talent and we need to open up to allow that talent to come in.” He points to Jordan’s more advanced web space and to companies such as Maktoob Yahoo as sources of potential talent.
In the end, however, “If you are a real entrepreneur, nothing will stop you,” says Nehme of Cedrus Ventures. Financing issues seem to be less of a challenge, as most of the players of the ecosystem tend to agree that when there is a good deal, there is the money. Getting more of the deals “investment ready” seems to be the key obstacle for now. “Entrepreneurs in Lebanon are not mature enough and not trained well enough to become investment ready but once they are investment ready, they could find money” adds Hanna.
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.
"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
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.
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.
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
