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No right to laugh

by Sami Halabi May 3, 2012
written by Sami Halabi

It is the proper application of law that separates anarchy from order, suppression from representation, people from slaves and fosters a society with a respect for the structures of governance. The opposite is just as true, where it is the selective application of law — for example when charges are conjured up to suppress freedom of expression in the name of preserving ‘public morality’ — that leads to the destruction of faith in the institution of law itself. As citizens’ distrust of their government mounts, the social contract between the two becomes less tenable and society breaks down. This is where Lebanon is today.

Following a recent string of arrests related to freedom of expression, last month actress Rawya el-Chab and comedian Edmund Hedded were in court to appeal a one-month sentence of imprisonment and a fine for committing “acts of offense against public morality”. Their crime: hosting a mock-auction of men at a pub in 2009 in order to raise money for the Brave Heart Foundation, which helps children with heart diseases. 

The General Prosecutor’s office dug deep through the Penal Code to find a way to invoke paragraphs two and three of Article 532 which cover, respectively, “words or screams that have been manifested by a person and heard by a party that has nothing to do with the act,” and “visuals presented in a public context or for a public or in exhibition or broadcasted or sold or distributed to one or more persons.” 

While Parliament’s library (yes, it does exist) is stacked with unapplied laws relating to the most basic functions of the state and serving the public — such as passing a budget, providing public services (electricity, water, telecoms) and ensuring human rights (among them the law against child abuse) — our justice system found the time to apply its energies and resources to exercise obscure laws to subdue free speech. 

But to think that the judiciary all of a sudden has the intent to weed out villainous threats to virtue and goodness would be a laughable assertion. Aside from the absurdity of a subjective concept such as ‘morality’ existing in a piece of law, an hour of local television will provide one with more than a dose of ‘immoral’ words and screams and the visuals to go with it, especially if one watched Parliament last month. Fortunately for them, our MPs can hide behind their legal immunity; we cannot.  And, as if there were not more pressing issues in the country, those who claim to defend freedom of expression — journalists from El Nashra and Annahar —provoked the judiciary by writing articles critical of the mock-auction. Indeed, the judge who sentenced the comic duo did so largely on the basis of these media articles. At the Appeals Court last month it was clear that the judge had no clue what the case was about and, worse still, after expelling the public from the courtroom, cross-examined the accused and the prosecutor, without allowing the defending lawyer to be heard; that will only happen on May 30. 

This is no laughing matter. If the General Prosecutor can convict someone for violating some backwards piece of legislation on the basis of an article, and without an investigation, then a harrowing precedent has already been set.  

Furthermore, what faith should the public have that the judiciary has any sense of ‘justice’ about it? Or that the laws passed by our government have as their intent any sort of proper governance?

What are meant to be the sacred words of our social covenant, also known as the constitution, have been defiled by the very people who are supposed to uphold them. We, the people, are not “sovereign, free, and independent,” the people are not “the source of authority and sovereignty,” the political system is not “established on the principle of separation, balance, and cooperation amongst the various branches of government.” Instead, imbeciles and their whims are given authority over our freedom of speech. 

If they wish to begin winning back the faith of the people they have so often betrayed rather than served, it is incumbent on our judiciary to see to it that these sentences are repealed, the charges dropped, and spare us their selective morality.         

May 3, 2012 0 comments
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Hope of compromise in Iran

by Gareth Smith May 3, 2012
written by Gareth Smith

Talks between Iran and the leading world powers, including the United States, in mid-April have revived hopes of compromise on Tehran’s nuclear program. Essentially the two sides agreed that the basis for agreement would be the Nuclear Non-Proliferation treaty (NPT) and so respect Iran’s right to peaceful use of nuclear energy, with specialists preparing in advance for a second round of talks in Baghdad on May 23.

As I have written here before, the outlines of a potential agreement with Iran have knocked around for some years.  But an article by Dennis Ross, the pro-Israeli former Obama adviser, in the New York Times in February was telling in suggesting Washington would accept Iran enriching uranium, a “concession” that could enable Iran to claim victory with its “rights” acknowledged.

In a second article, Hossein Mousavian, the former Iranian security official at Princeton University, argued Tehran’s bottom line was “the ability to produce reliable civilian nuclear energy” as “entitled” under the NPT, while the US and European bottom line was “never having Iran develop nuclear weapons or a short-notice breakout capability.” 

Discussion in Washington over how to achieve its bottom line reflects the nature of nuclear technology. In broad terms, enriching uranium to low-level for civil use — to 3.5 to 20 percent — implies the ability to enrich to the higher level — 90 percent — required for a bomb. Broadly, you just keep the centrifuges spinning.

This is “break out”. A country can enrich uranium for civil purposes while developing missile delivery systems and so maneuver itself into a position where it can move relatively quickly towards making an atomic bomb.

Hence Mohammed ElBaradei, then head of the International Atomic Agency (IAEA), the UN body that monitors the NPT, said in 2004 that 35 to 40 states had the technology to make a bomb.

So why have the NPT? The first five states to possess nuclear weapons — the US, Russia, France, Great Britain and France — are among the 189 NPT signatories, but the only other states who subsequently developed weapons either left the NPT — North Korea — or were not signatories — Israel, Pakistan and India.

This suggests developing nuclear weapons within the NPT is far from easy, which is because signatories face IAEA monitoring, under article 3 of the NPT, to prevent “diversion of nuclear energy from peaceful uses.” 

The limits of basic monitoring under the NPT led to additional protocols (APs) with over 100 countries giving the IAEA more intrusive powers of inspection of declared and “possible undeclared” nuclear facilities. Iran agreed an AP in 2003, when it also suspended uranium enrichment as a goodwill gesture during talks with the European Union, but in 2006 announced it would resume enrichment and no longer apply the AP.

The US and allies are now demanding that Iran re-apply the AP, so building confidence it could not undetected divert enriched uranium into a weapons program. This could happen in one of three ways: by operating clandestine plants, by diverting nuclear material from declared facilities, or by leaving the NPT.

An enhanced AP — known as a ‘Model AP’ — could widen monitoring from enrichment facilities to mines and waste disposal, and so reduce both the danger of diversion from declared sites and the feeding of undeclared sites. It could even involve 24-hour access to sites not under inspection.

Clandestine activity is considered the most likely and most dangerous option by the Americans, given IAEA inspections are currently limited to declared facilities. Hence Washington’s interest in an extensive Model AP.

One option is WAES (wide-area environmental sampling) under which monitoring stations would be built through Iran to check air, water and sediments for unusual readings. This would amount to what one US report calls “expansion from monitoring individual facilities to monitoring the state as a whole”. 

The US considers the third danger — of Iran leaving the NPT, which any state may do under the treaty’s Article X on grounds of “supreme national interest” — the least likely. But even so, negotiators may want an Iranian commitment it would never do so.

There are certainly devils in the technical details. And there are also questions of political acceptability. Crucially, even if sanctions are lifted ‘step by step’ and Iran can unlock the real potential of its energy reserves, it remains to be seen how far the leadership in Tehran may go in accepting an inspection regime far beyond that agreed by any other country in the past.

May 3, 2012 0 comments
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Society

Interview: Saad al-Barrak

by Thomas Schellen May 3, 2012
written by Thomas Schellen

The story of Arab telecommunications is rife with great achievements, rapid changes, sudden setbacks, and yet-to-be-realized potential. New technology, infrastructure and mass uptake have allowed the region’s information communications technology (ICT) sector to provide more exciting corporate tales than most other industries between Casablanca and Kuwait City could offer. The Arab ICT sector has also attracted some of the most enterprising and daring minds in corporate Arabia — among them is Saad al-Barrak. As the head of Kuwait’s MTC/Zain, Barrak led the telecom company from a purview over one small nation to a customer base of some 70 million customers and an intercontinental footprint. His narrative of how Zain became a marker in the history of Arab enterprise success is the subject of his first book, “A Passion for Adventure”. Barrak sat down with Executive for an exclusive interview to discuss his newly published work.   

The PR announcement of your book trumpets that Saad al-Barrak “transformed a moribund ex-state-owned Kuwaiti operator into the telecom giant Zain”. Do you see the story this way, as one person’s singlehanded triumph – yours?  

Nothing could be further [from the truth]. There is no one-man show. No, I think the issue was building a coalition and extending it to a whole organization composed of people who are believers and achievers at the same time, because believing is achieving. And that is how it happened; it was the Zain cult that achieved this transformation.

You wrote about your mother as being the ruler of the bayt (house), the interior life in the family and that she was very important for your evolution. How does this reverence for your mother as a person who manages the home correlate with the ability to manage a global company?

It correlates very well. It [describes] dedication, belief, and determination. For example my mother’s dedication to her family and to her children was insurmountable. Family is a unit and managing it is managing a group of people trying to achieve objectives. This is very much in line with managing [a company] where you are responsible for managing a certain group of people and achieve objectives. The sense of dedication and commitment and sacrifice and tenacity in pursuing your objectives are extremely interrelated.

You highlight the importance of achieving objectives, but in your book you took a jab at Peter Drucker’s management by objectives and said your way is management by love. Why?

That’s right. I think objectives are stationary or static and limited in that regard. We therefore should look at objectives as the floor and not as the ceiling. We also should look at them in an evolutionary way because objectives evolve. For example when we started our 3x3x3 [Zain growth strategy] we were talking about 30 million customers, which soon moved to 100 million as our objective. The issue is the direction and the way forward, thriving, growth, and so on. To thrive you need objectives as stepping-stones and not as the architecture itself.

You said that 90 percent of managers are stuck in a structural approach to management of the type introduced by 19th century economist Frederick Taylor. Do you see this high prevalence of focusing on management by task as opposed to relationship as something specific to the Middle East region?

No, I think it was an outcome of the industrial age. Mechanization was a historical stage. People were too loose and you needed quantification to measure and streamline advancement. That is needed and Taylor was definitely one of the greatest contributors to management who tried to take a step forward by bringing quantification and mechanization in a way that is conducive to better managing and progressing in your objectives. It is great as long as we look at it as a stage, but we must not forget the essence of management, which is the human side and the humanization of business. I say the emotional, spiritual side is the essence of management and leadership, not quantification.

The story of Zain as you were involved has a beginning and an end. In your book, did you conceal any regrets about how it ended?

Not at all. I am a warrior, not a worrier. If I finish one battle, I go to another battle. If I finish one war — and by that I mean peaceful war — I go to another one. I have no regrets in that regard. Of course, I look at regrets as learning episodes and not mourning episodes. I will have to employ this in the next episode of my life, but it is a journey and the achievements have already happened. We have achieved a great dream of taking a very small company from a very small country to be nearly a global company, highly international with massive achievements and 16,000 people working on it. The moments of happiness were 99 percent. I hope we will all enter our new stage in life, wherever we are and whatever direction we are taking, in a very positive and enticed way that should make us happier and make us better achievers and better global citizens.

In the sense that Zain’s role did not continue on the world stage and that the project regressed to a smaller level, is this not a point of regret?

It is not a matter of regret. It is a matter of being objective and pragmatic. We always strive to change it but we are not surprised or shocked to see that this limitation is there. It is sad if you go back to a smaller level, definitely. We wanted to be an example to the whole world and set an example for our region at the same time.

Seeing yourself as you say as cultural revolutionary, can you change the mindset of the Arab corporations?

That is the reason why I wrote this book. We wanted to document the great experience of the Zain story and reflect in it the new business and economic ideology that we are preaching and which is compliant and part and parcel of our universal, open philosophy — an all-encompassing philosophy considering the universe as our homeland and humanity as our tribe.

In your opinion, why are there not more globally known Kuwaiti entrepreneurs?

Kuwait is a very rich country and many Kuwaitis can make a lot by staying in Kuwait and around it. This did not really push them to be on the bigger platform. No incentive.

Do you want to play a role in Kuwaiti politics?

That is a very dangerous question. I also have a passion for politics as I have a passion for leadership. So far I am really enjoying the private sector and the space that the private sector gives you. Politics is very limiting to the space. I still can give and be very active and so [being in politics] could be extremely inhibiting to my soul. But later on, at the right moment and with the right combination of the leading change coalition, if the circumstances are conducive and if the country is ready to accept such a coalition to change it to a better country, I will not hesitate to be part of this.

Looking forward, you are talking about a company and other ventures. Where do we stand?

I have started a company called Ila, meaning forward or toward in Arabic. In this company we focus on two things. One is that we provide management expertise and strategic advisory for ventures in telecom and telecom-related IT. The other side of the business is investing in very small startups that are extremely promising.

So you take a financial stake in those companies?

We invest in each startup between $1 million and $5 million. Later on, we want to set up a fund of $300 million to invest in telecom-related IT, according to our philosophy of creating small startups that are very promising in value creation.

One of your statements is do not set out to make money, set out to make history and the money will follow. What is your net worth as result of practicing this maxim?

We made money for our company, for Zain. But it was on our expense, because it took all our efforts and the remuneration was not as commensurate as it should have been. We have no regrets in that regard. We are trying now to make good wealth out of this new venture, Ila. 

May 3, 2012 0 comments
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Simmering discontent in Nahr el-Bared

by Josh Wood May 3, 2012
written by Josh Wood

It is five years to the month that the siege of Nahr El Bared began near Tripoli, and while the guns have gone silent, the potential for renewed conflict involving Lebanon’s Palestinian refugee camps looms ever as large. 

In conversations and interviews since with representatives from the different Palestinian factions in the camps — often in places where Kalashnikovs are stacked indiscreetly in the corner — the topic of Nahr El Bared has inevitably come up. The 2007 battle destroyed the camp, displaced tens of thousands and killed hundreds of Lebanese soldiers and mostly foreign Fatah Al Islam militants; it also represents for many Palestinians both their precarious position in Lebanon and the country’s careless disregard for their suffering.

To the south, in Lebanon’s largest refugee camp, Ain Al Helweh, the precarious security conditions that resulted in the Nahr El Bared fighting are mirrored in many ways. In Ain Al Helweh, the absence of proper governance, or even a single dominant armed faction or alliance, has allowed space for militant Jihadist organizations such as Usbat Al Ansar, Jund Al Sham and the Abdullah Azzam Brigades to establish themselves. Like Fatah Al Islam, such organizations operate with little regard for camp residents, the stability of the country or the few observed “rules of the game” that exist in relations between the Lebanese and mainstream Palestinian factions. 

The potential security threat these groups pose came up again in March when an Abdullah Azzam Brigades cell was discovered within the Lebanese army.  For the Lebanese government, trying to move security forces into the camp and arrest wanted extremists like Abdullah Azzam Brigades leader Tawfik Taha could risk another Nahr El Bared-type conflict. And yet, if nothing is done, the government facilitates the perpetuation of such groups and risks the increased likelihood of future confrontation. For mainstream Palestinian factions, who may not see eye-to-eye with the Lebanese government in general but also reject these fringe groups, moving against an organization such as the Abdullah Azzam Brigades risks sparking intra-Palestinian fighting within the camp. There are no easy solutions.

The Lebanese government has not, however, made any effective attempt to repair relations with mainstream Palestinians groups since the Nahr El Bared conflict. With the reconstruction still incomplete, mired in the contentions of politics and security and assailed by accusations of corruption, many Palestinians, already skeptical of the Lebanese state, have become even more suspicious of its intentions towards them. Relying primarily on donor funding for the rebuilding of the camp, the United Nations Relief and Works Agency, tasked with managing the reconstruction, seems hobbled by mismanagement, ineffectiveness and underfunding: it is still more than $180 million short of the funds it says it needs for the project, but with little headway made on the reconstruction, donors have been hesitant to pump more money in.

Declared a closed military zone, there is also a fear that Lebanese security forces will also attempt to maintain a presence in Nahr El Bared if the camp is ever rebuilt — a move that would be an unwelcomed precedent in Lebanon’s other camps. 

If the intent of the heavy-handed destruction at Nahr El Bared was meant to teach a lesson to the more mainstream Palestinian factions that hold sway in most of the camps and encourage them to disarm, it largely failed. Having lost another of their camps, many Palestinians see arms as the only way to guarantee their safety from the government or militant groups, and today the camps remain one of the few places in the country where weapons are openly flaunted and military positions are occupied during times of peace.

With the eyes of Lebanon following potential crises that seem to present a more immediate danger — such as the specter of a return to political assassinations and the possibility of the Syrian conflict spilling across the border — the problems brewing in the camps are allowed to fester unseen on the other side of Army checkpoints. To ignore and leave unaddressed the plight of Palestinians in Lebanon’s refugee camps, however, is to leave burning a fire which could easily flare out of control, yet again.

May 3, 2012 0 comments
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Society

Firing up the frozen desert

by Nadim Mehanna May 3, 2012
written by Nadim Mehanna

As the last snow melts on Lebanon's mountain tops and with the ski season firmly over, ice racing is probably not the kind of driving experience you are gearing up for. But Lebanon's coldest winter in more than a decade certainly proved advantageous when our team went to the Arctic Circle for some extreme driving on ice, with Lebanon's mountain roads and abundant snowfall having provided a degree of preparation for extreme driving in minus twenty degrees Celsius. 

The ice circuit in Sweden's Lapland came about by chance some fifteen years ago, when a research team from Bosch accidentally arrived at a dot on the map called Arjeplog and found the perfect environment for testing equipment in sub-zero conditions. Bosch was soon joined by German car manufacturers for the same reason, creating replica racing tracks like Formula 1's Hockenheim, Indianapolis, the Euro Speedway and the Spa Francorchamps.

No brakes, all engine

So when Mercedes’ AMG asked us to stay at their Arjeplog lodge we leapt at the chance. After the plane touched down on the ice, the first stop was the garage: three lines of 15 E63 AMGs, C63 AMGs and the new SLK AMGs. Our group jumped into the E63 monsters with 525 horsepower and 700 Newton meters (Nm) of torque, to take us to an iced-over lake that, once out of the car, was so slippery we nearly ended up on our backsides.

The first firm order from instructor Bernd Schneider, five-time winner of the DTM (German touring car championship) and an ex-Formula 1 driver, was to “DSC OFF” — all electronic aids deactivated, so no guardian angels and just spiked tires to help stay on the “track.”

The first push on the accelerator delivered such a rush of torque that the spikes were unable to cope with it and the car went on a 80 degree drift. Running through bends at a 100 kilometers per hour there is some serious G-force at work that can only be countered by steering, throttling and never breaking. But despite the E63 AMG weighing in at two tons, the chassis was incredibly stable while the surgically precise throttle, the torque and the power made the AMG a cinch to drive in that icy wasteland. 

The next morning was spent roaring around the simulation race tracks, and in the afternoon the AMGs were fitted with on-board cameras with telemetry equipment for the competition to really begin. With a benchmark set by Schneider of 1.22.30, the AMGs set off one by one, with the teams keeping a watch out for cars that slid off into the snow banks on either side of the tracks. Any car requiring a tow from the G Class Mercedes cost the team a point, so there was a lot of snow spraying around as drivers tried to get back on the ice and team members puffed and panted to push the car out as best they could.

Drifting to win

After the race was over, telemetry analysis started with most recorded times 5 to 10 seconds slower than Schneider’s time. Then it was announced that the Lebanese team had collectively scored the fastest times, even slightly faster than Schneider's, although it must be said that he did not set his best time ever. Given the competition out on the ice, Schneider was surprised by the Lebanese effort, quipping: “You guys are really quick, where did you learn how to drive on snow in the desert?” Obviously, the remark was met with more than a few raised eyebrows. 

The last day was spent on faster tracks where drivers could really let the cars go full out, drifting at speeds of up 130 km per hour. It soon reached a point where drifting became almost second nature. While the AMGs were incredible out on the “rink,” we also drove the SLK 55 and C-Class 63 Coupe. The C63 Coupe was over powered for such conditions, and the SLK was the by far best on ice, being smaller and feeling like your were almost go-carting as the car drifted around the track.

Overall, a highly recommended trip, a total disconnection from everything and the ability to drive in a way you would never normally experience, even if you managed to get your car to the top of one of Faraya’s ski slopes.

 

May 3, 2012 0 comments
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The celebration of suffering

by Jihad Yazigi May 3, 2012
written by Jihad Yazigi

The announcement by French Foreign Minister Alain Juppé on April 17 that Syria’s foreign currency reserves had halved since the beginning of the popular uprising in the country is hardly something to celebrate. Valued at $17 billion at the end of 2010, they would now be standing at some $8.5 billion according to Juppé’s estimate. 

Providing a correct measure of Syria’s foreign reserves has always been problematic. While in most parts of the world foreign reserves are handled by the central bank, in Syria they are managed by two separate institutions: the Central Bank of Syria and the Commercial Bank of Syria (CBS). This is a consequence of the fact that CBS has been acting for decades as the bank of all public sector enterprises, including the Syrian Petroleum Company whose exports of crude oil were the main source of the Syrian government’s foreign reserve accumulation in the last 20 years.

The foreign assets previously known to be held by these two banks, however, adds up to only about $10.7 billion — somewhat short of $17 billion. One explanation for this, according to some insiders, is that not all reserves are calculated at the same conversion rate, with some pegged at 47 Syrian pounds to the United States dollar (the going rate at the end of 2010), and others at 11.5 pounds to the dollar (a rate the government used in some transactions until the late 1990s). The conclusion of all this is straightforward: you cannot rely much on Syrian central bank data.

But let’s go back to Mr. Juppé. The French FM made his announcement a few days before foreign ministers of western countries were set to meet in Paris to discuss additional sanctions on Syria. The collapse of Syria’s reserves was presented as a success for the international community in using sanctions to inflict damage on the Syrian economy — and, as a consequence, on the regime, as many analysts would have us to believe.

However, one needs to be clear: rejoicing in a country losing in less than a year assets it took decades to accumulate is simply insane, if not cruel. The implosion of Syria’s middle class and a gradual decline in the average purchasing power began in the mid-1980s, when a severe foreign currency crisis reduced the country’s reserves to the equivalent of less than one month of imports. Things began to improve only from the latter part of the decade when the first oil fields discovered by Royal Dutch Shell and Total S.A. began production.

Syria’s production of crude oil then increased gradually until it peaked at around 600,000 barrels per day in 1996. The period witnessed strong economic growth but also the implementation of a strict austerity program by the government, similar in many ways to the stabilization measures applied by the IMF in various countries across the world.

This program was strongly criticized by economists, and has been blamed for the state’s disinvestment from vast segments of the economy and for the stagnation in real incomes, but it had one benefit, namely saving foreign reserves for future generations.

This is what Syria is now set to lose. Not only are years of efforts being spoiled, but it is the reconstruction of the country that is rendered more difficult; future investment requirements that are made more difficult to fund. One good argument for this state of affairs, from the point of view of Western governments at least, is that a weakening of the state — because that is what the fall in reserves is about — would lead to a weakening of the regime and as a consequence to its fall.

There is historical precedent. This is exactly what many decision makers were saying in 1990 when sanctions were imposed on Iraq. We all remember the consequences of that, not least that Sadam Hussein stayed in power for 12 more years. In the meantime, the Iraqi population suffered, its social fabric was destroyed, and millions were displaced and driven into poverty. Failed sanctions were then followed by an American-led invasion.

May 3, 2012 0 comments
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Society

Lacking the LUXury

by Yasser Akkaoui May 3, 2012
written by Yasser Akkaoui

The problem with opening a restaurant that pleases everyone’s palate and becomes one of the city’s institutions is that if you try to do it again, you have set the bar so high that you might not make it over. Such is the case of Beirut’s latest upper-crust addition to the cities cuisiniere: LUX. Brought to us by none other than the same Johnny Farah and co. behind the famed and flavorful Casablanca, LUX has the feel of an upstate New York-style dinner with the clientele of Brooklyn’s Peter Luger Steakhouse.  

What its creators understand well is the economics of proximity: the Marfaa district of Beirut is fast becoming our version of the Empire City’s Meat Packing District with names like Farah’s own IF, Karen Chekarjian’s Atelier and Robert Keyrouz’s boutique, all choosing it for its ‘edgy on the water’ feel. But its not there yet. 

All the districts that have become our capital’s bohemian bread and butter — from Monot to Mar Mikhael — started with a select few flagship locales before bursting out into multi-million dollar industries in and of themselves. To reach this critical economic mass, those first few concepts have to be airtight, not places that lose steam once people figure them out.  

For those of us who expect the quality and feel that Casablanca gives us (and we do), the Asian fusion at LUX leaves much to be desired, apart from the meat Carpaccio, but do not try the fish as it is, well, fishy. What is perhaps even more perplexing is how an organic salad made by the same folks at Casa can taste so different — now that takes talent. And even for those of us who don’t mind spending a little extra to get a little more, a nice bottle of wine and a par-for-the-course dinner shouldn’t cost $250, even if the bottle docked me around $100.

This can all be overlooked if the ambiance can cover for it. But apart from the character the rusty sign at the entrance brings — which I recall seeing at the Carawan Gallery just a stone’s throw from the place — there is not much else to keep me enthralled except for the politeness of the staff. 

One thing that works at the moment is the clientele. Already, given the name and the area, the people you want to see and be seen by are there. But even if you strike up a conversation with the jolly bartender and then look around for less-busy company, you will find it hard to make the usual eyes around the room. Unlike Casa, the layout of LUX means you will be poking your head around the corner and glaring across the room, instead of flicking a glance at the lady in red. 

If LUX were just another addition to an already thriving district of bars and restaurants perhaps its shortcomings could be overlooked. But as a flagship restaurant of the Marfaa district it lacks the lure to drive people away from their comfort zones in other parts of the city. So, like many things in life, the original turned out considerably more captivating than the sequel.

May 3, 2012 0 comments
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We’ve heard that joke before

by Thomas Schellen May 3, 2012
written by Thomas Schellen

April has the connotation of pulling people’s legs. On April 1, for example, Israel’s naval commander Major General Ram Rotenberg’s ordering of three vessels to prepare an overnight sail to Naples to commence a 10 day exercise. Reports on Israel Radio said officers and crew were not amused when they found out on Sunday morning, after working through the night, that the whole thing was their commander’s idea of a wholesome joke. April Fools!  One hopes it was not meant as such a cruel jest when it was suggested that Lebanon could get a new techno park for entrepreneurs — a locale where startup companies and small enterprises with a high-tech edge could avail themselves of broadband connectivity and hard and soft business infrastructure. Yet when two highly positioned voices in the Lebanese socioeconomic fabric said, in a curious coincidence of timings just ahead of April 1, that they could provide the country with a techno park, more than one person asked me if I thought they were serious.

The economic heavyweights who announced techno park project ideas were Mounir Douaidy, the general manager of Lebanon’s urban developer, Solidere, on March 29, and Nicolas Sehnaoui, the minister of telecommunications, on March 30.  Doueidy positioned his projected park in Solidere’s Waterfront District while Sehnaoui pointed to a government property in the municipality of Dekwaneh. 

The idea of a techno park is neither bad nor new. Clustering of businesses is a good way to enhance competitiveness and generate synergies. The concept rose to global acceptance in the 1990s through the mother of all information and communications technology (ICT) clusters, Silicon Valley. The datedness of the techno park concept, however, casts the first doubt over the seriousness of these latest Lebanese projects. There have been at least three major aborted ICT park projects in this country among the many victims of Lebanon’s chronic disease of unrealized projects. The latest attempt was called the Beirut Emerging Technology Zone (BETZ). Researched from the late 1990s, this tech zone project was finally shipwrecked about five years ago in Damour, the sleepy coastal town south of Beirut selected as “perfect” for locating the zone.

Why would a new Lebanese techno park succeed, more than a decade after other countries in the Middle East established their ICT clusters, such as Smart Villages in Egypt and Dubai Internet City in the United Arab Emirates? On the other hand, the absence of first-mover and big-size advantages doesn’t predicate failure of a good concept.  Also, the success of other clusters in the Middle East (and some will argue, of Lebanon’s Berytech technopole) demonstrates the potential of new techno parks. The next question is why did Lebanon’s ICT zones never get off the ground at the time when they were avant-garde projects? Dumb question, sad answer: politics, of course. BETZ ran into petty political cliffs even on the municipal level. Looking at Damour in hindsight, it seems it was much easier to build beach resorts than create ICT clusters. This notwithstanding, there is no disputing Lebanon’s comparative advantages vis-à-vis other locations in the Middle East in human capital, entrepreneurial spirit, and even private sector business dynamism. 

The ingredients are there, but are the consensus and will strong enough to overcome political inertia and clusters of administrative incompetence? This crucial question returns us to the issue of insincere projects and reputation management. Douaidy was sincere on the company’s agenda by saying that Solidere was thinking about making Waterfront lots available for the project on a temporary basis as, “it could be a few years before we start selling these lots for development.” 

Even before his presentation at the ArabNet entrepreneurship summit in March, members of his team emphasized that Solidere is “only thinking about a techno park in the Waterfront.” Asked almost a month later if there was any progress on the idea, they said, no, not really. 

It is true that temporary projects in Lebanon mysteriously instill more confidence than big master plans. But will a consultation with entrepreneurs and a presentation of a good idea be enough to start us on an ICT cluster in Beirut, where budding Lebanese entrepreneurs can gear up in the next few years toward serving the growing markets of countries such as Iraq and, hopefully, Syria?

Methinks not. Kindly, Lebanon, prove me wrong

May 3, 2012 0 comments
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Rooted in the roof

by Thomas Schellen May 3, 2012
written by Thomas Schellen

When people mess with botany in the design sort of way, you either get a sculpted garden or a jungle feeling. The former can be as totally enthralling as the Jardins du Château de Versailles, but at the economic cost of having to be manicured constantly and at the ecological expense of being and appearing highly artificial. 

The less obviously intrusive design is the hallmark of the organic approach, which appears to be working well enough on the business side for Green Studios, a recent Lebanese entrepreneurial venture. Green is so ueber-in as a corporate marketing mantra that it is almost prohibitive to trust a company that comes bearing a green moniker on its forehead. But you can trust the business story of the Green Studios venture to be solidly rooted in the most traditional art of shaping and uplifting the human environment with greenery: they design and deliver rooftops and walls that resemble green fields and gardens. “We are a local startup of four major partners, each coming from a different discipline,” said Jamil Corbani, chief executive of Green Studios.

The twist is that the partners in Green Studios have approached this conventional business with some novel homegrown research and development (R&D), a patent (how rarely does a reporter hear of new patents made in Lebanon), and have sprouted from zero revenues to profitability in only the company’s second year, with a net income of slightly over $100,000 on revenues of $471,000 in 2011.

Profits bloom

For the current business year, (which ends on August 30), Green Studios predict a year-on-year increase of 17 percent in revenues to $550,000 and 7 percent net income hike to $110,000. Corbani said revenues and gross profits from September 2011 to February 2012 jumped 300 percent when compared with the same period in 2010 to 2011, implying that the company made a huge leap in the second half of its fiscal 2011. Green Studios was incorporated on September 1, 2009. 

The elements driving their growth spurt were initial market exposure through the Project Lebanon exhibition in June 2010, registration of its patent in April 2011, winning of an entrepreneurship award from the Beirut Traders’ Association and Bank Audi in June 2011, and landing a green wall project with the Lebanese benchmark developer, Solidere. 

“As soon as we registered the patent we were well positioned for business,” Corbani said. He called the win of the first prize in the Beirut Traders’ Grow My Business (GMB) competition “super important” for boosting the team’s morale and for building the company’s momentum, in combination with the contract for the green wall in the Sweat Tea hospitality establishment in the Beirut Souks, the flagship commercial development of Solidere. 

Working on the Sweat Tea project with a renowned French landscape architect and expert in green walls provided Green Studios with a huge learning experience, Corbani said. The company furthermore established contacts with a German firm, ZinCo Green Roof, which holds a number of patents in the technology. According to Corbani, Green Studios will collaborate with ZinCo on green roof technology for hot climates. Joachim Stroh, a spokesperson for ZinCo, confirmed to Executive that the two companies had signed a letter of intent. 

The German firm, which has activities in about 40 countries and on its website claims to be a global market leader in the technology of green installations, eyes the Arab market for expansion, Stroh said. 

Remarkably, the evolution of Green Studios did not, at least not initially, involve any market research or business plan. It was more of an existential move, as his spouse’s determination to have the couple’s first child in Lebanon motivated Corbani to look for an entrepreneurship opportunity in their home country where he could use his training as an economist and experience in hydroponics and agriculture. Linking up with friends versed in architecture, landscape architecture and agricultural engineering, led to the establishment of the company.

Each contributed modest financial capital — the company’s description in the business outline submitted to GMB put its combined common equity and additional paid-in capital at $106,000 — with Corbani the largest single shareholder at 46 percent. The partners split their investment capital equally between R&D into hydroponics and plants on one hand and landscape design capabilities on the other hand. The firm’s operational bases are a nursery in Tabarja, north of Beirut, and a small design office in the Beirut suburb of Antelias. 

According to Corbani, the firm’s competitive edge lies in its specialization in green installations in hot climates. Its patent is for a “skin”, the plantable surface that can be mounted on a wall or roof to make it a green wall or roof. 

The market size that Green Studios sees in Lebanon is only a rough guess. “We estimate that three percent of landscaping jobs are high-end jobs and that five percent of these high-end landscaping jobs are up for grabs [for the company]. This gives you a target to reach $3 million to $4 million annually after five years,” Corbani said.

In pursuing its long-term commercial aims of becoming a leader in green installations suitable for hot weathers, the company now wrestles with two objectives of doing more R&D and acquiring more business through regional expansion of operations. “Our main concern is how we will really balance these two, because we are very young and have time to grow,” Corbani said.  

Balancing growing and growth

He aims to achieve the balance by registering several patents in the United States and through establishing a base outside of Lebanon as a platform for the next growth stage. “Then strategically I would be interested to team up with an American or Japanese company that is willing to enter into the hot-weather markets. I want to have such a partner.” 

In the meanwhile, Green Studios is competing for work on high-end residential projects in Lebanon like the Beirut Terraces, an apartment tower scheduled for construction across from the Phoenicia InterContinental and Monroe hotels in the central district. 

By midyear, work is also expected to start on a green roof for one block of the Hamra head office of Banque du Liban (BDL), Lebanon’s central bank. The initiative is a collaboration of BDL and the United Nations Development Project’s (UNDP) energy efficiency support program for Lebanon, dubbed Cedro.

Cedro-UNDP has taken the project through its preparatory phases to the point where three competitors for the project have been short-listed — a joing bid by Green Studios and ZinCo among the three — and the contract is to be awarded and execution to commence within two months from end of April, according to Cedro-UNDP Project Manager Hassan Harajli. 

The project is for an intensive green installation with about 80 percent greenery and 20 percent recreational space for central bank employees, and thus fits the high-end categorization. Harajli told Executive he could not provide an estimate of the project’s value, but added that UNDP had allocated a budget and the BDL had committed to filling eventual funding gaps. 

According to Harajli, Cedro will use the project to measure the green roof’s energy savings effect on the heating and cooling of the very active BDL floor located beneath, as a case study for energy efficiency. 

But it is also a standard-setting project and for that reason the UNDP applied very stringent selection criteria on the qualification of contractors. Harajli said, “It is the first time doing a green roof of this size on a public building in Lebanon. We can’t get it wrong.” 

May 3, 2012 0 comments
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The perils of pipedreams

by Paul Cochrane May 3, 2012
written by Paul Cochrane

Serious plumbing problems have arisen in the last year for the region’s multibillion-dollar pipeline plans. For starters, the Euro Arab Mashreq Gas Pipeline, also known as the Arab Gas Pipeline (AGP), has been attacked 14 times over the past year in Egypt’s Sinai Peninsula, ending exports to Jordan, Syria and Lebanon, as well as to Israel via an offshoot pipeline. At the tail end of the 1,200 kilometer pipeline, the uprising in Syria has postponed the completion of the AGP’s final leg to Kilis in Turkey.  

Meanwhile, the recent European Union (EU) sanctions on Iran have spelled the end of the viability of the much feted Nabucco gas pipeline that was to take gas from the AGP, Iran and the Caspian region, via Turkey, to Europe. The root of such pipeline problems is that usual suspect: politics. The AGP was attacked in the Sinai, according to statements by the Egyptian Ansar Al Jihad group, as part of a campaign against “the corrupt (Egyptian) regime and its Jewish and American backers.” Indeed, last year’s revelations about the preferential pricing of Egyptian gas have shown the shadowy political bends of the pipeline. When the AGP was launched in 2003, the Egyptian Natural Gas company described it as facilitating “the dawn of Arab integration”, but recently revelations have shown how it was used to sweeten Egyptian ties with Amman and Tel Aviv, with Washington’s blessing.

In 2005, Cairo had inked a long-term deal with Tel Aviv to sell gas at anywhere from $0.70 to $4 per million British thermal units (BTU), depending on which media sources one consults, well below the global average of $6 to $7. Jordan’s special price arrangement with Cairo was $3 per million BTU. The pipeline attacks have cost Egypt needed export revenues, likely the reason they pulled the plug on the Israeli contract last month. Now the Israelis will continue to shell out an additional $4 billion to source gas elsewhere while Jordan’s energy bill will be an extra $2.4 billion this year to offset the loss of as much as 25 percent of the kingdom’s energy supplies. 

Significantly, the pipeline shutdown has highlighted the AGP’s over-dependence on Egyptian gas, something energy observers have pointed to for years. On paper, Egyptian gas was to flow through Jordan to Syria and Lebanon, with Syria pumping in its own gas for export on to Turkey and ostensibly to Europe. The problem is Egypt’s domestic energy consumption is rising fast, as is Jordan’s and Syria’s; even if the pipeline is completed, there will likely not be enough Egyptian or Syrian gas flowing through the AGP to meet even the Levant’s needs, let alone leave extra to sell on to Turkey or Europe.  

For the AGP to be viable if or when it re-starts, more gas must be sourced — perhaps from Iraq or Qatar to supply the AGP in Syria, or from Iran and the Caspian region which can connect to the AGP via the Nabucco network in Turkey. Iraqi instability, however, means completion of that part of the pipeline network is years away, while the Nabucco pipeline is no closer to realization than when it was announced in 2002. 

Financing Nabucco has been a major obstacle, which is forecasted to cost as much as $25 billion. But what may be the death knell was the EU’s decision to follow Washington in slapping sanctions on Iran earlier in the year, ending all energy exports from Iran to the EU. Nabucco is only commercially viable if it can draw on Iran’s reserves — the world’s second largest — as Azerbaijan and the Caspian states cannot provide enough gas for Europe, Turkey, the AGP and other export commitments. 

What is supremely ironic about the EU’s decision is that Nabucco was supposed to loosen Russia’s grip on the EU’s gas imports — currently at some 34.2 percent — given Moscow’s propensity to turn off the taps to enforce its will, as it did during a price dispute with the Ukraine during the icy winter of 2009.

Theoretically, pipeline networks linking the Middle East, the Caspian region and Europe would make for glorious dividends for all involved. Political shenanigans, however, will likely keep these networks pipedreams, especially given that the crucial link — Syria — looks to be spinning down the tube for some time to come.

May 3, 2012 0 comments
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Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

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