Executive Magazine

Turning tragedy into transformation

by Paul Cochrane May 3, 2012

written by Paul Cochrane

The notorious ‘old rent’ law that has pitted landlords against tenants for more than half a century may, after two decades of legislative delays, be seeing its last days. If the draft of the new rent law passes in Parliament this month, landlords and real estate developers will be lighting up the sky with fireworks. The prospect of reclaiming properties in the coming years — meaning land to be bought and sold — entails billions of dollars in potential earnings amid a renewed construction frenzy in land-scarce Beirut. But for tenants, a less certain future awaits, hinging on a planned government fund to financially assist economically disadvantaged tenants pay gradually higher and higher rents, and the actualization of public housing projects to re-house the dispossessed.

The lingering law

The ‘old rent’ law is one of the more bizarre laws still in existence. Enacted after World War II to prevent socio-economic deprivation and protect tenants from greedy landlords, the law resulted in the saying, “the tenant is an owner”, as it gave many rights to the renter. Under the law, all rental contracts would be extended — against the will of the landlord — until a new one was enacted, meaning rents were fixed at the originally agreed upon rate despite inflation and changes in market dynamics.

If that was not bad enough for the landlord, getting the tenant out is nearly impossible without significant financial compensation, which ranges from 25 to 50 percent of the value of the property (not the land) and decided upon by a judge based on the financial situation of the tenant in relation to the landlord.

Furthermore, there are only two ways to ask a tenant to leave if no contractual mistakes have been made: if the purpose is to destroy the building, or if the landlord (or his family) wants to live in the apartment for which they have to prove a need to do so. “You can’t lay a trap to kick out the tenant. The law provides a very powerful status and protection for tenants. The only way is by default [on contractual obligations] or to pay them to move out,” said Nader Obeid, a partner at law firm Alem and Associates.

Rent law number 160 materialized after the Civil War in 1992. Crucially it liberalized the rent market allowing for new contracts, with the landlord able to raise rent after three years, yet it made minimal difference to landlords with tenants paying old rents. These rents were adjusted in line with the depreciation of the Lebanese lira in the early 1990s and a government-mandated minimum wage increase, although not to market rates. For instance, according to research by The Monthly, a residential rent agreement from 1970 estimated at LL1,000 per year would come out to LL390,000 ($260) at today’s prices.

Since 1996, Rent Act 160 has been extended 12 times, with the last extension, law number 171 dated August 29, 2011, having expired at the end of March this year. If the new draft law does not pass, a 13th extension will have to be enacted.

Problematic numbers

While the old rent issue could have been a marginal one if the number of tenants was relatively low, according to the advocacy group named the Committee for the Rights of Tenants (CRT), some 170,000 of Beirut’s 210,000 tenants pay old rent rates. But just as no one is exactly sure how many people there are in Lebanon (the last national census was in 1932), the number of properties on old rents — and the number of people living in them — is not exact either.

“The differences in the estimates of how many people are on old rents is a weapon in the fight between the pro and against camps for restructuring the law,” said Obeid.

According to Ministry of Finance statistics published by Executive in 2010, there are 139,719 properties rented before 1992 throughout Lebanon, with 58,341 in Beirut. In February, online publication NOW Lebanon challenged these statistics, stating that the Finance Ministry did not have a breakdown between old and new rents, while the Central Administration of Statistics (CAS) also said they had never carried out any research, and information released in 2004 only distinguished between residential renters and owners. [However, CAS’s statistics in general are out-of-date and unreliable, notably claiming there are only 3.5 million people in Lebanon when other estimates put the figure at well over 4 million, if not closer to 5 million.

According to Joseph Zoghaib, head of the Association of Landlords in Lebanon, based on taxation records and copies of rent laws submitted by municipalities to the Finance Ministry, there are 81,000 tenants on old contracts and an estimated 40,000 to 50,000 on new contracts. As to the number of landlords affected, Zoghaib estimates it at anywhere between 15,000 to 20,000. Whatever the statistics are as to the number of tenants on old rent, clearly tens of thousands of Lebanese will be affected if the new law passes; at the same time thousands of landlords have been financially out of pocket due to receiving such low rents. [The Committee for the Rights of Tenants could not be reached for comment.]

No money for maintenance

Zoghaib likens the old rent law to a cancer as it has deprived landlords of return on initial investment in constructing buildings and meant there have been insufficient funds for proper maintenance of properties.

“Rent control is a cancer on Lebanon’s economy, the standard of living, and should be aggressively treated,” he said. “Most landlords have lost hope that the issue will ever be resolved.”

Zoghaib has plenty of accounts about the trials and tribulations of being a landlord with tenants on old rent, with some forced to become doormen in the buildings they own to get access to the National Social Security Fund. According to Zoghaib; one landlord is so fed up he is considering a class action suit against the Lebanese government in the United States to pressure Beirut to overturn the law or face having the state’s assets frozen in the US.

Anger runs deep among the association’s members over what Zoghaib calls an “unjust law”, while in TV talk-shows addressing the issue over the past year heated words have been spoken between those ‘pro-landlord’ and those ‘pro-tenant’.

“Landlords have been suffering for 70 years. Before, when we talked of our plight, we were laughed at, but the second generation are freedom fighters,” said Zoghaib. “The silent majority think they are not affected by the old rent issue, but they are. For every $1 the renter saves, the Lebanese public is paying thousands of times more when it comes to higher rent and higher real estate prices, and it has caused huge revenue losses to municipalities and the government.”

Indeed, it would make for an excellent research paper to estimate the financial losses incurred by old rents on the Lebanese economy and how this factored into current real estate prices. The existence of old and new rent contracts has certainly wreaked havoc on trying to effectively analyze the real estate market, while it has contributed to Lebanon having an average price-to-rent ratio (how long monthly rent would have to be paid to cover the selling price of the property) of 22 years, compared to 11 to 16 years in peer countries. Lebanon also has much lower gross rental yields than elsewhere, at 4.65 percent, whereas it is more than 6 percent in Egypt, Morocco and the United Arab Emirates, according to the global residential property investor portal Global Property Guide in 2011.

“There is a gap between rent and real estate prices. It is between 3.4 percent to 4.5 percent gross rental yield versus the price, while it should be 6 percent, 8 percent or even 10 percent,” said Ayman Sanyoura, general manager of ProServices, a property services and management company in Beirut.

The shortage of properties available for rent on post-1992 contracts has also driven up prices, while the existence of the old and new rent contracts has often caused confusion between tenants and landlords as to their rights. “People are still unconsciously living under the old law,” said Obeid.

Furthermore, the lack of funds for maintenance has led to the loss of heritage buildings throughout the country, with buildings in such a dilapidated state that it is cheaper to tear them down — once the tenants have been compensated to move — than renovate.

“We are fighting for the law to be changed to be more fair as far as owners are concerned. It is not possible that a 200 meter square apartment is rented for $200 a year,” said Mona Halak, an architect and member of the Association for Protecting Natural Sites and Old Buildings in Lebanon (APSAD). “For heritage buildings, the owner should have the right to charge more. When we ask an owner of a heritage building ‘why are you tearing it down?’, he says ‘I get $300 a year, so why keep it?’”

The draft law

What galvanized the government into action to address the old rent issue was the collapse of a building in the Fassouh district of Beirut in January that left 27 dead and 12 injured. While there were tenants paying new rents, the majority of the occupants had been on old rent contracts, which opponents of the old law cite as a reason for the building’s tragic collapse due to lack of funds for maintenance. “It is sad to say it took 27 dead people to shock the government to draft this new law,” said Zoghaib.

The new law was drafted by the Parliament’s Administration and Justice Committee, chaired by West Bekaa Member of Parliament Robert Ghanem. A copy of the draft law in the form submitted to the committee was obtained by Executive, despite Ghanem’s office attempting to withhold it from the media. In its current form, the draft law seeks to find a solution by having tenants on old rent pay gradually higher rents over a six year period. Through government-appointed experts that report to a judicial committee, properties will be evaluated and an amount agreed upon by both the landlord and tenant. Then each year for the first four years the tenant will pay a 15 percent increase in rent, then 20 percent per year for the fifth and sixth years. After this time, the property can be rented at free market prices, but the tenant has the right, if they notify the landlord three months before the period ends, to stay on for a further three years, although at market rates agreed upon between both parties.

If a landlord wants to reclaim the property for family usage during the six-year extension period, then he has to pay compensation to the tenant equivalent to four years rent after four years of rental increases. To tear down a building, the same principle will be applied but on the value of the total six years of increased rent. In either of the above situations, if a property is considered ‘luxurious’, compensation will be reduced by half.

This proposed solution means that the compensation landlords pay out to tenants would be significantly less than the 25 to 50 percent of the value of a property under the old law, which is clearly to the advantage of landlords keen to reclaim their properties. The big question if this law passes is whether tenants will be able to pay the higher rent.

According to Zoghaib, out of the 81,000 tenants he claims pay old rent, 13,000 are economically disadvantaged (again the Committee for the Rights of Tenants were not available for comment). To alleviate the pressure, a government fund is to be established for tenants with a household income that does not exceed three times the minimum wage of LL675,000 ($450) to cover the difference in rent for nine years. By that time, the plan would be for the Public Corporation of Housing to have built apartment blocks that evicted tenants could live in under a ‘lease-to-own’ agreement (which cabinet approved last month) with no age stipulation, meaning elderly tenants could be part of the scheme. However, while the draft law is still being hammered out at committee sessions, there have been no announcements as to how the housing scheme will be financed, what land will be available for construction or where, and how willing private banks are to be a part of the scheme. What is more, Lebanon has been without an official budget since 2005.

While government sources suggest the bill will pass in May, the socio-economic repercussions could force politicians to oppose it. “Nobody wants to lose the next elections [in 2013] for passing this law,” said Sanyoura. Indeed, it is such a contentious issue that Ghanem said at a committee meeting in early April that he had received an anonymous letter threatening to kill him, his wife and his children if the bill passes.

Billions to be made?

If the bill remains relatively intact after numerous rounds of amendments and reformulations, and then passes into law, it will have a profound impact on the real estate market.

“Definitely there are both positive and negative repercussions from the eventual introduction of a large [amount] of stock to the market,” said Karim Makarem, director of Ramco, a real estate advisory firm. “If landlords are looking to sell or to rent, a substantial amount comes online, not to mention that the former tenants who vacate will need to be housed. So there are many new possibilities as well for developers.” One possible knock-on effect would be more supply than demand, which would lower real estate prices. For that reason, Sanyoura suggested it is “a good time to consider implementing this law as we’re not in a boom market.”

With buildings being vacated and renovated, and others being torn down for new projects, Zoghaib opines that $50 billion could be pumped into the economy in the coming years. A back of the envelope calculation of 30,000 buildings being re-developed at an average of $500,000, would generate $15 billion and potentially billions more in associated services.

A further boom could occur if another stuck-in-a-time warp law is overturned: the pre-1992 law concerning commercial rents, which is similar to the residential law in fixing rents, but to remove a tenant requires the landlord to compensate for the “loss of footfall” to the premises. “We’ll have a party when the [new rent] law passes and the next day move onto proposing a commercial rents bill,” said Zoghaib.

May 3, 2012 1 comment

Economics & Policy

Tunisia: Moderating Islam and government

by Daniel Harris May 3, 2012

written by Daniel Harris

On a brisk spring day last month in the Tunis, one could have been forgiven for thinking the revolution was still in full swing. Stepping out of a hotel onto Habib Bourguiba Avenue — normally a bustling artery through the Tunisian capital lined with cafes and restaurants — Executive was enveloped in teargas and forced to flee down side streets with other bewildered bystanders, lest be trampled by the waves of whistle-blowing, baton-waving police in riot gear.

There was a sense of déjà vu to witnessing interior ministry forces in full pursuit of perhaps the very same shabaab (or ‘youth’) whose sustained protests helped oust former President Zine el-Abidine Ben Ali from power in January 2011. Now, however, instead chanting against dictatorship, they were denouncing the party that had won the plurality of seats in the first post-Ben Ali elections last fall, Ennahdha — or in English, the “Renaissance” Party.

Several days later at this once-banned Islamic movement’s headquarters — an apartment building draped with blue banners in the Montplaisir neighborhood of Tunis — phones rang incessantly and were answered by a young, multi-lingual staff, who hurried between offices clutching folders and papers. Men wore business suits, minus the tie, with clean-shaven faces or closely cropped beards; women mostly, though not uniformly, wore a hijab to compliment their western fashion sensibilities. The atmosphere was all at once casual, stressed and excited. There was energy in the air.

As it turned out, the casual factor was purposeful and came straight from the top. The movement’s septuagenarian founder, Rachid al-Ghannouchi, is “easy-going” and not the stuffy kind of Islamic theologian one might expect, according to an elderly man named Ahmad who sat in the waiting room. He would know — the two men shared persecution for their activist pursuits under the Habib Bourguiba regime that preceded Ben Ali, spent some two decades in exile together in London and returned to Tunisia only after revolution.

Born in 1941, Ghannouchi, who studied philosophy in Damascus and at the Sorbonne in Paris, came back to Tunisia and joined the Quranic Preservation Society in 1970, helping to organize the Islamic Tendency Movement, Ennahdha’s predecessor, in 1981. As a political activist and Islamic philosopher, from early on his energies and publications had focused on real-life issues facing Tunisians — such as the economy, political reform and human rights — rather than doctrinal Islamic matters.

“What concerns the young people of today?” Ghannouchi was quoted as saying in the early 1970s. “The position of the Mu’tazilites on the attributes of God?… Whether the Quran is pre-existent or created? Was Islam revealed for this kind of useless, sterile argument? I wonder how our students feel studying ‘Islamic philosophy’ when it offers them only a bunch of dead issues having nothing to do with the problems today.” For an Islamic leader in the Middle East, such opinions are decidedly liberal.

To protect and clarify

Back in the waiting room, after a seemingly endless stream of well-wishers, friends, advisers, petitioners and politicians and had passed through, Ghannouchi’s secretary — a pleasant young woman with a degree in English literature — ushered Executive into a large conference room.

In attire, Ghannouchi was an older version of his staff — dressed in a gray suit, blue shirt with an open collar and close-cropped beard — but he seemed worn for this late afternoon interview. There was a definite, if subdued, gravitas around the man who had been imprisoned, tortured, and exiled from his home, and now led the political party with the most power and influence in Tunisia at this crux in history.

After handshakes, the interview moved to a corner crook of black couches. Throughout the conversation Ghannouchi’s right eyebrow was cocked upward and he spoke slowly and purposefully in a soft, brittle English that stressed the burden his words carried. Ahmad, who sat close to his side, leaned in and as the interview went on his eyes took on a concerned look. Ahmad’s affection for the older man was obvious, and he interjected on occasion when Ghannouchi’s statement tripped on broken English. There was a sense that Ahmad was present both to clarify for, and protect, Ghannouchi.

Perhaps there was good reason to feel defensive. Since Ennahdha electoral victory and subsequent formation of a governing coalition to write a constitution, intermittent strikes and protests have gripped the country. The party has come under significant criticism of late, mostly from the Tunisian left. Secular organizations, trade unions and young activists who took part in the revolution claim that Ennahdha is stealing the revolution away from those who carried it out in order to Islamize the country.

“They fear sharia [Islamic law] because they don’t know the sense of sharia,” said Ghannouchi, adding that this fear is isolated to the Tunisian elites. After a teargas bath courtesy of Tunisian police, Executive questioned whether the situation was so easily explained.

“It is normal for the Ministry of the Interior to forbid demonstrations in some streets, in some places in the capital,” said Ghannouchi. He explained that there had been a temporary ban enacted on Habib Bourguiba Avenue at the request of businesses on the street. Previous demonstrations had disrupted the flow of foot traffic, driving away customers and tourists from the cafes and the Old City at a time when the economy is already suffering. He pointed out that protests on major thoroughfares in European capitals were also not allowed. While critics had compared Ennahdha’s use of police suppression to that of former President Ben Ali’s, Ghannouchi dismissed this as exaggeration and propaganda designed to damage Ennahdha’s reputation.

At a press conference following the protests, Ghannouchi had appealed to Tunisians to be patient. But how patient are Tunisians at this point? Are they not fed up with waiting for positive change?

“People now are fed up with demonstrations, with [streets being cut off], and strikes,” said Ghannouchi. “People would like to work. They are fed up with the freezing of the economy.”

The demonstrators, claimed Ghannouchi, want to stop Tunisia’s economic progress — they want Tunisia to fail because that would mean Ennahdha would fail too. It was those elites, not the main body of the Tunisian people, who were afraid, and were acting in this way.

“We respect this fear,” he said. “And we would like to build our constitution on common ground… Fifty-one percent is not enough to build a constitution.”

To its credit, Ennahdha has gone allayed many secular fears. Its officials have stated that it will not try to ban alcohol or force the hijab on women, and Ghannouchi recently announced that it will not include sharia law in the constitution. And yet the fear persists, amongst both Tunisians and outside observers, that Ennahdha will eventually go too far.

Ennahda’s fellow Islamists, the Salafists, compound that fear among the more secular segments of Tunisian society. When a Salafist Skeikh called for Jews to be murdered, there was a popular outrage in Tunis and Ennahda was critizied for not condemning the statement quick enough. “We oppose what some Salafists have done,” Ghannouchi countered when asked about this an other incidents such as attacks on media by Salafists. “When they made some slogans against the [Jewish minority] in the country, I phoned the Chief Rabbi and I [expressed my support]. The Chief Rabbi, after we won the elections, he visited me to congratulate our movement and explained that he had no fear from Ennahdha, that it was moderate, but he said he feared the Salafists..”And while he may not approve of media outlets publishing caricatures of God or the Prophet Muhammad, Ghannouchi said that he disavows the use of any violence to oppose it.

Same but different?

For many Tunisians, the ills of Ben Ali’s rule have not faded, not least the economic ones like the 18 percent offical unemployment rate. Ennahdha’s platform would initially seem to differ little from that of former President Ben Ali, in its support of free market mechanisms and privatization buffered by a social welfare net, and its emphasis on tourism. Acknowledging this, Ghannouchi underlined two main differences: “Ben Ali [was] corrupt,” he said plainly, eliciting frank nods and laughter from others in the room. “We want to have a sacred war against corruption.” Secondly, Ghannouchi stressed that the focus of public spending would switch from the more developed coastal regions to developing the neglected interior. The government is planning to pour public resources and infrastructure programs in cities such as Kasserine, Gafsa, and Sidi Bouzid — hometown of Mohammad Bouazizi, whose self-immolation sparked the Tunisian revolution, and indeed the entire so called Arab Spring.

Ghannouchi admitted this increase in public spending would strain government coffers, but said it was necessary in the short-term to spur the private sector recovery, growth and employment in the long term, while also creating an environment attractive to foreign investment. “The real enemy of Tunisia now is unemployment,” he noted. Pointing to the positives, Ghannouchi said the investment, tourism and exports had all seen recent increases.

A ‘rational’ West

When it came to foreign relations, one could imagine an American official at State Department listening in to Ghannouchi while going down a checklist of things that they want to hear an Islamist leader in the Middle East say. While the United States supported the previous regimes in Tunisia, Egypt and Yemen, Ghannouchi pointed out that the US did not intervene to try to save them when the revolutions erupted.

“The US behaved, vis-à-vis the ‘Arab Spring’, rationally, supporting democratic change, supporting its development,” said Ghannouchi. “What we want is for the US to not give any priority to any side because of ideology, to treat all parties the same, equally, regardless of religious background.”

There will be changes in foreign policy, however: “Ben Ali and Bourguiba opened only one door. This door is towards Europe and the West. We will preserve this door, and we will widen this door,” he said, “but we will open other doors, to the [Arab Maghreb], the Middle East, the [Persian] Gulf, Africa, Asia, [Latin America]… We keep this door to the west open, but we will open other doors.”

Throughout the interview it was clear that Ghannouchi wanted to impress upon people that Ennahdha was different — different than Ben Ali and different than other Islamist movements. And yet the paranoia persists that Ennahdha has a secret agenda to impose strict Islamic adherence upon the country.

One must concede that in such an environment it is entirely possible that Ennahdha’s opponents are demonizing it in order to weaken it, that Ghannouchi may have a case in claiming that the demonstrators would rather see Ennahdha fail then see Tunisia succeed. However, the youth on the streets of Tunis today would surely beg to differ.

“Freedom and justice is the main sense of Islam,” he said at one point in the discussion. If it really is just about freedom and justice, than it remains to be seen what makes Ennahdha different from secular Tunisian political parties that emphasize the same things. And perhaps it may be Rachid Ghannouchi himself, with his story of struggle, persecution and return from exile to a homeland that becomes Tunisia’s Nelson Mandela, or just another Islamist.

May 3, 2012 0 comments

Ad-vice from the top

by Executive Editors April 14, 2012

written by Executive Editors

“The problem is this [‘Arab Spring’] came in the wake of the remnants of financial struggle. The environment is not conducive to a high level of investments. Clients are maintaining their strategies rather than implementing aggressive ones.”

“At times like the ones we are in today, tactical or immediate-result advertising becomes the main requirement. The pressure is definitely on creatives today to deliver immediate or short-term results. I can see that 2012 will be similar to 2011 and 2013 will also be similar in the way that everybody is looking for immediate results. The big ideas and big deliveries will not disappear but they will be less and less.”

Joseph Ghossoub, chairman and chief executive officer, Menacom Group

“We have come a long way in developing planning and doing campaigns that no longer address a single media but are integrated. Our creative people are now thinking in a broad spectrum way of thinking, rather than in the silos of the media disciplines.”

Ramzi Raad, group chairman and chief executive officer, TBWA Raad

“The agencies are being put under pressure and our margins are suffering because of the pressure, but at the end of the day you have to stand for something and if you stand for quality and a certain standard, you have to find a way or quit this business.”

Raja Trad, chief executive officer, Leo Burnett Group MENA

“Mobile, specifically in our markets, will take up more and more share of the digital spending. The opportunity to connect with people on a 24/7 platform will generate exponential growth, especially [since] we’re starting from such a low base.”

Tarek Miknas, chief executive officer, Promoseven Group

“With the apps model we finally have a way where people can pay one dollar for something. With a paid website you obviously want people to pay but more importantly you want some people to think it is so valuable that they are willing to pay for it.”

Jimmy Wales, Internet entrepreneur, founder, Wikipedia

“I would say 2011 was the year when companies significantly improved their online investments. Better infrastructure means more users in the GCC. North Africa and the Levant also show significant improvements in [online] usage, so ads [will] follow.”

Ari Kesisoglu, Google regional director for MENA

Hussein Friejeh, commercial director, Yahoo Middle East:“The industry is dominated by 30 clients. Out of those 30, you have 10 who spend up to 10 percent of their ad budgets online. Once other clients get onboard, market will jump.”

Ajay Shrikhande, chief executive officer, DDB Gulf:“Perhaps one can compare the advertising industry awards with the air cargo industry awards, and how is the public excited with the air cargo industry awards?”

“We still have high hopes for Syria. It is a big market, a manufacturing market, and we believe that a lot of Syrian manufacturers and services providers will eventually grow into the region, including Iraq and Lebanon.”

Mark Daou, chief operating officer overseas, Rizkgroup Communications

April 14, 2012 0 comments

Feature

Syria rendez-vous with the rebellion

by Executive Editors April 14, 2012

written by Executive Editors

The deep, single boom announces a symphony of staccato gunfire, and the calm spring morning in Syria’s eastern mountains descends into chaos.

Two rag-tag groups of Syrian Army defectors, part of a loose umbrella group commonly known as the Free Syrian Army (FSA) have just detonated a gas canister full of explosives beneath a Syrian army tank which was patrolling outside their village. Having left their hilltop hideouts late the night before, the 11 rebel soldiers are now executing their hastily planned attack. Their payload delivered, the rebels fight their way home beneath airburst anti-personnel artillery and withering fire from the Syrian Army; of the three wounded that day one would later die.

Holed up in a small farm building on a cliff-top near the village of Janoudiyeh, this small group of defectors operating autonomously but in loose collaboration with similar groups in the area, is one of many such units striving to write the next page in the Syrian uprising. Saying they have learned from the mistakes of Homs, where the FSA was forced to make a “tactical withdrawal” after a month-long artillery bombardment, these fighters have taken to the hills, preferring quick surprise attacks over a protracted urban struggle.

But while they may maintain the element of surprise, supplies are scarce. This group relies on FSA comrades in a nearby village to keep them stocked up with food, but on a bad day lunch is foraged from the ground outside: cabbages, greens and spring onions.

A string of government assaults have recently driven the FSA from many of its strongholds, but the group’s fortunes may be on the rise. On Saturday, March 24, FSA chief Colonel Riad al-Asaad joined forces with a unit led by the most senior army deserter, General Mustafa al-Sheikh, to form a united military council.

The FSA needs to move beyond its fractious nature if it is to prove a substantive oppositional force. Foreign states with an interest in seeing the FSA succeed would then find it far easier to supply the weapons and support it with what it desperately needs.

“Given the weapons we have and what they have, we can’t do anything. Of course we don’t want outside interference but if things keep going the way they are then of course I hope that NATO would interfere,” said Lieutenant Mohammed el-Hajj. “Any kind of alliance…let Israel come into the country and it would be better than Bashar al-Assad… At least if they are bombing our children we would know it is not our brothers, cousins, our [own] army bombing us.”

April 14, 2012 0 comments

Consumer Society

For your information

by Executive Editors April 6, 2012

written by Executive Editors

Hello again, Mr. Moto

After 2011’s less robust showing in terms of new car sales — a major economic indicator of consumer confidence — automobiles are again flying off the lots. According to figures from the Association of Automobile Importers in Lebanon, which are compiled from car registration statistics, the sector has seen a 17.7 percent rise in the first two months of 2012, with 3,796 cars sold in the first two months of 2011 and 4,469 new passenger cars sold in the first two months of 2012. Again, Korean brand Kia was the big winner in these new statistics, selling 1,252 new cars, against 938 in the same period last year. Korean models also took second place, with Hyundai selling 702 cars versus 538 in 2011. Third, fourth and fifth in the rankings were Japan’s Nissan, Japan’s Toyota, and rounding out the pack was the US brand Chevrolet.

The power of women

Of the CEO Middle East’s 2012 list of the 100 most powerful Arab women, 12 were Lebanese. The majority of Lebanese entries came from the entertainment sector, with Fairuz, Elissa, Nancy Ajram and Haifa Wehbe all making an appearance, at rankings 13, 41, 65 and 69 respectively. This trend to celebrate women’s roles in the ‘culture and society’ category was apparent across the list, with 43 out of the 100 overall listed being from this background. Other notable Lebanese entries include filmmaker and face of Johnnie Walker’s ‘Keep On Walking’ campaign in Lebanon 2012, Nadine Labaki (14), CEO of Treats Holding (Dunkin Donuts, Semsom) Christine Sfeir (15), and journalist and political analyst Maria Maalouf. The most powerful Arab woman was listed as the United Arab Emirates’ Minister of Foreign Trade, Sheikha Lubna al-Qasimi, for the second year in a row, ahead of Yemeni Nobel peace prize winner Tawakkul Karman in second place.

Organic food takes off

The well-established global trend toward organic foods will soon be reaching new heights, as Abu Dhabi-based carrier Etihad airways announces the introduction of organic produce to its in-flight menu, in exclusive partnership with Abu Dhabi Organics Farms. First class diners will find fresh organic food products on their plates, from eggs to vegetables to honey. Organic products are produced by sustainable farming practices and internationally certified, making them popular with discerning eaters. Etihad has plans to extend the provision of organic ingredients across all cabin classes in the future. The initiative comes after Etihad launched an on-board five-star restaurant service for First class last October, recruiting international chefs.

Superhero Con

The Middle East region’s first consumer convention devoted exclusively to pop culture, comic books and cult entertainment is being held this month, from April 20 to 21 in Dubai. Tickets for the Middle East Film and Comic Con (MEFCC) range from AED 55 ($14) for a day pass to AED 500 ($136) for a VIP festival pass. The festival will feature blockbuster movie previews, gaming and competitions, workshops, panels and Q&As. To promote local talent, artists from all over the region are invited to set up stalls in ‘Artist Alley’ to promote or sell their collections. Areas covered by the MEFCC include science fiction, fantasy, manga, anime, animation, illustration and collectables.

The call of the camel

Demand is growing worldwide for camel milk products, according to Emirati chocolatiers Al Nassma. They launched their camel milk chocolate in August 2011, and it has just been announced that Al Ain Dairy, one of the biggest producers of dairy products in the UAE, will shortly be introducing camel milk ice cream flavored with dates, caramel, saffron and chocolate. The company plans to renovate its facilities at a cost of AED 10 million (nearly $2.7 million) in order to produce the range commercially, according to CEO Abdullah Saif al-Darmaki in UAE daily Gulf News. Camel milk is an essential part of the traditional Arab diet. Research has shown that the milk offers plenty of health benefits as well.Al Nasmaa chocolatiers — which also sells drinks like Camelcinos and Camelattes at its coffee shop in Mall of Emirates — is available in 60 outlets in Switzerland, as well as in Japan, Europe and the Gulf, where the product has proved extremely successful. Global expansion, however, is currently stalled by the EU, which is unlikely to give permission for the export of fresh camel milk until 2013.

April 6, 2012 0 comments

Real estate

For your information

by Executive Editors April 6, 2012

written by Executive Editors

Hyperactivity around the Hippodrome

Solidere, the largest real estate developer in the country, and Minister of Culture Gaby Layoun are getting an earful of objection regarding a decision to dismantle ancient ruins once part of the Roman Hippodrome — to build a luxury residential development on a construction site in downtown Beirut. Layoun dismissed the decisions of three of his predecessors when he gave permission on March 15 for the destruction of the ancient ruins on the site to make way for development. For his part, he said the process would be respectful to archeological interests since it would involve dismantling and then recombining certain walls of the hippodrome to integrate them into the new structure. In response, the Association for the Protection of Lebanese Heritage called for a rally on March 24 near the site to voice their opposition to the destruction of the ancient ruins. The group’s Facebook page says the protest is “to protect the Phoenician port of Beirut, on plot 1398… and work for the reversal of the Ministry of Culture’s decision to allow the ‘integration’ of the Beirut Roman Hippodrome in Wadi Abou Jmil, into a development project, especially because the Hippodrome is on the list of culturally relevant monuments in Beirut.” Other politicians are taking a stance as well. A March 20 statement from the media office of Progressive Socialist Party leader Walid Joumblatt clarified his earlier published statements about the ordeal in Al Anbaa newspaper, placing full blame on Solidere rather than the Beirut Municipality, which is tasked with preserving archeological sites in collaboration with the General Directorate of Antiquities. Former Culture Minister Tammam Salam urged Parliament on March 15 to reject the decision, calling it an “unacceptable crime” against the Lebanese, according to The Daily Star.

Fashionable arrival

While there are currently two “So by Sofitel” boutique hotels globally, the French hotel group, Sofitel, plans to expand that brand to 18 properties worldwide in the next five years, Sofitel CEO Robert Gaymer-Jones told Hotelier Middle East in a March 14 article. “Eventually we’ll have somewhere between 15 and 18 Sos operating around the world in the next five to seven years,” he said. “I’d love to bring it to Dubai, Cairo and other parts of the Middle East. We’re looking at an opportunity in Beirut.” The two existing properties are the original in Mauritius and a property in Bangkok, which featured the design collaboration of Kenzo Takada and Christian Lacroix, respectively. The Lifestyle-hotels heavily depend on a fashion-centered brand identity, where employee uniforms, bath robes and even toiletries like soap are designer products. Sofitel opened 9 more hotels in 2011 and its Bahrain property, Sofitel Bahrain Zallaq Thalassa Sea & Spa, contains the first thalassotherapy (therapy that uses seawater) in the Middle East. After three years of construction work, the company’s Egyptian property, the Sofitel Legend Old Cataract Aswan, reopened its doors in 2011.

Luxury incentives

Adding to the bevy of luxury hotels in downtown Beirut, a new five star hotel has been announced by the Investment Development Authority of Lebanon (IDAL), which gave the project owner, Sabah Barakat, a handy incentive package on March 16, according to Byblos Bank. Barakat, the general manager of Al Bashoura Company, will build a hotel that will hold 153 rooms, 62 suites and 35 apartments, costing $208 million to include retail area, a pool, and a conference room. Since the project will reportedly create 250 jobs and contribute to tourism, the 10-year incentive package will allow the owners to skip paying income tax for a decade while reducing construction fees by half. IDAL expects that close to $1 billion worth of projects will receive similar incentives in 2012.

Shop ‘til you drop

While the external work is already complete on what will be Lebanon’s largest shopping mall, Beirut City Center in Hazmieh, its Dubai-based developer, Majid Al Futtaim, announced that the $300 million development would be complete by early 2013. Originally, the mall, which will contain 200 stores within 60,000 square meters of retail space, was to be completed by this summer. MAF has developed 10 malls in the Arab region, including the United Arab Emirates, Egypt, Oman and Bahrain, and has two more under development in Fujairah, UAE and Cairo, in addition to its first mall development in Lebanon. In the fourth quarter 2011 report by Ramco Real Estate Advisors on the Lebanese real estate sector, it noted that Lebanon has a total of 240,000 square meters of gross leasable area (GLA) within six existing shopping malls and five shopping galleries, but that there is need for more malls outside the capital. There are four malls under construction, which will add another 130,000 square meters of GLA. These are Le Mall Dbayeh, the Landmark in downtown, Beirut City Center and the expansion of Beirut Souks on the North Side.

Investor–friendly rooms

While Saudi Arabia’s Mecca and Medina came in first and second place in a poll of hospitality performance among Arab cities, Beirut came in 16th place. A February 29 report in Arabian Business, based on data from Ernst & Young, showcased the best Arab cities for hotel investment, ranking them by hospitality performance based on occupancy and room rates from the year 2011. Beirut had an average hotel occupancy rate of 57 percent and an average room rate of $220, while the average room yield (the average revenue per room per night) was $126. The report indicated that less Arab visitors came to Lebanon because of political upheavals in the surrounding area. Mecca had an average occupancy rate of 73 percent in 2011, partly due to an increase in religious tourism.

Dubai, which saw an increase in tourists (and 78 percent occupancy rate) in 2011, came in 3rd, while Abu Dhabi ranked 9th place. By January, however, Lebanon’s local hospitality industry had picked up. Hotel occupancy rose by 16 percent compared to January 2011, reaching 60 percent, and the average room rate increased 4 percent to $229 by the first month of this year, compared to January 2011, according to Ernst & Young. The room yield, which shot up 40.4 percent in comparison to January 2011, was the second highest rise in the region after Medina, where it was 114 percent.

Sales slow but values rise

According to figures from the General Directorate of Real Estate and Cadaster, the number of property transactions fell 1.2 percent in January compared to January last year, hitting 5,387 total transactions. It is important to note that this represents a fall of 44.9 percent compared to December 2011 figures. Ninety-seven of the sales in January 2012 were to foreigners, showing a 12.8 percent rise in sales to foreigners compared to January 2011. The value of property sales, however, was up 17.4 percent in January 2012 compared to January 2011, reaching $562.1 million. Newly issued construction permits covered an area of 793,988 square meters in January 2012, up 5.81 percent compared to January 2011, while 61.63 percent of the area which received a construction permit is in Mount Lebanon, according to the Order of Engineers.

April 6, 2012 0 comments

Banking & Finance

Financial quotes of the month

by Executive Editors April 6, 2012

written by Executive Editors

“The idea that ‘drill, baby, drill’ can cure our jobs deficit is basically a joke.”

Paul Krugman, American economist, regarding former US vice presidential candidate Sarah Palin’s statement

“We call on banks to continue stimulating growth in their deposits, even at the expense of slowing growth in profits.”

“The Turkish lira now has a symbol, just like the US dollar, the euro and the yen.”

Recep Tayyip Erdogan, Turkish Prime Minister

“They [the Bahrainis] will pay if there is no race. The money is in the bank already. So we’re not going because we’re going to get paid. That has nothing to do with it.”

Bernie Ecclestone, the Formula One tycoon, defending his decision to go ahead with the Grand Prix in Bahrain in April

“We used to be the people of the Book. Now we became the people of the Facebook. Much better.”

Shimon Peres, Israeli President who recently opened a Facebook page

“The risks of turning away from Greece now are incalculable. No one can assess what consequences would arise for the German economy, on Italy, Spain, the Eurozone as a whole and finally for the whole world.”

“I hope US companies would come. Even the US oil companies haven’t started coming back.”

Abdurrahim al-Keib, Libyan Prime Minister

“Britain seeks to protect Lebanon’s lucrative banking sector from sanctions against Syria, and we will do our utmost to safeguard its credibility.”

Tom Fletcher, British ambassador to Lebanon

“Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets’.”

Greg Smith, ex-Goldman Sachs banker, in his resignation letter published in The New York Times

“We do realize that a 25 percent increase on the third salary bracket would not be realistic, but this is our legal right.”

Assad Khoury, head of Lebanon’s Association of Bank Employees

“We received a letter from Exxon on March 5 saying they are freezing the contract with the Kurds.”

Abdul Kareem Luaibi, Iraq’s oil minister after US oil company Exxon infuriated Baghdad by signing a contract with Kurdistan

April 6, 2012 0 comments

Banking & Finance

Investment guide MENA stock tips

by Executive Editors April 6, 2012

written by Executive Editors

Stock indices continue their upward trend this year despite investor skepticism, with global fundamentals remaining weak as March came to a close. Last month markets were wavering between signs of improvement in the United States and the continuing European debt crisis, while in the Middle East and North Africa, several countries’ continuing instability kept investors wary on where to invest their money. Executive spoke to Lina Makarem, head of treasury at Lebanon’s BBAC Bank and Raj Madha, financial analyst at Rasmala, a Dubai-based investment bank, for their investment recommendations in these topsy-turvy complex times.

Lina Makarem

View on global markets:

Makarem is cautious with regards to the markets, as she does not believe we have seen the full extent of the negative repercussions from the European sovereign debt issues. “The measures taken so far are only postponing the problems and not solving them; the authorities are taking money to pay the bondholders but the population still has problems.”

Where would you put your money?

Her preferred sectors to invest in would be technology, “As it is hot now with the upcoming Facebook initial public offering.” She would also recommend the telecommunication and energy sectors. Having said that, she would prefer to hold onto liquidity in these challenging times, as there is too much volatility in the markets. She is not convinced that there are any solid opportunities anyway at this point. “You don’t know where you can go with your money with all that’s happening in the markets from the downgrades by rating agencies to new regulations; it is better to keep your money.”

Thoughts on investing in the MENA?

Makarem believes with all the turmoil still going on in the region, it is best to sit on the sidelines for at least the next six months. “Hopefully when new governance is put in place, there might be real opportunities.” For the time being, she likes Qatar and Saudi Arabia for the safety of the investments rather than for their returns. She is also optimistic on the United Arab Emirates. She is keeping an eye on Libya, but waiting for good governance to put be in place before starting to invest.

Thoughts on Lebanese securities?

Makarem believes stocks listed on the Beirut Stock Exchange are cheap but she is not that enthusiastic about them, as they remain highly dependent on the political situation. With some stability, she would look into the BSE as the listed companies have solid fundamentals. She also likes Lebanon’s government bonds despite the high level of sovereign debt, as she believes that the highly liquid banking sector, which owns around 70 percent of the sovereign bonds, can defend the security in case the value drops. “We have a lot of liquidity so that’s why you see some resilience.”

Raj Madha

Your thoughts on the markets?

Madha is cautious on the external environment and its effect on the MENA region. He sees potential for Europe to create more risk aversion in the region going forward. He also believes that the recent run in local markets, especially in the UAE and Egypt, will not last. “Not much has changed since the beginning of the year and we may see some caution going back into the market. I wouldn’t be aggressively buying for now.”

Main concerns?

Because Madha focuses on the financial sector in three markets — the UAE, Egypt and Qatar — his main concerns depend on the market in question. In the UAE, he is worried about future growth and believes the growth in lending will be difficult this year. In Egypt, there is no clear path to democracy at the moment and Madha is looking for further assurance on this front. For Qatar, he needs to see the projects that were put on the table throughout 2011 come to fruition and the government spending filter down to the economy.

Thoughts on Egypt given its strong rally year-to-date?

Madha believes the main question in Egypt is whether the political transition has gone far enough. One of the main risks at the moment is the balance of payments as the central bank’s reserves are drying up and Egypt will be facing trouble funding the current account deficit. According to Madha, the ideal scenario would be for tourism to come back strongly, which would narrow the current account deficit. Another option would be for an increase in foreign direct investment.

Top financial stocks in the region?

For the financial sector in the MENA region, Madha would buy Commercial Bank of Qatar, Emirates NBD and First Gulf Bank.

April 6, 2012 0 comments

Banking & Finance

For your information

by Executive Editors April 6, 2012

written by Executive Editors

M1 upping the stake in Sainsbury’s

Investment fund M1 group, owned by Prime Minister Najib Mikati and his brother, Taha, raised its share to just over 3 percent in J Sainsbury, owner of the third-largest chain of British supermarkets, the level at which it needs to be declared to the stock market in the United Kingdom. At the current market capitalization of $8.9 billion (as of March 15), the Mikatis’ stake is worth $265 million. The interest in the British retailer is ostensibly due to its significant property portfolio valued at $17 billion at of the end of 2011, almost twice the size of its market capitalization. Sainsbury’s largest shareholder remains the Qatar Investment Authority sovereign wealth fund, with a 26 percent stake. Despite withdrawing a £10.3 billion bid ($20.6 billion at the time of the offer) to acquire the entire company in 2007 due to shaky credit markets, speculation still lingers that the Qataris could renew a bid in the future.

SWIFT to cut Iranian bank ties

The European Union is banning all financial transactions with blacklisted Iranian financial firms, which include Iran’s central bank and more than a dozen financial institutions. Belgium-based Society for Worldwide Interbank Financial Telecommunication (SWIFT), which operates a financial messaging network linking most of the world’s major banks, is abiding by the EU’s ban. Nineteen banks and 25 financial institutions from Iran are being blocked from using SWIFT. The United States is pressuring for more action, as their policy makers are demanding an end to financial transactions with all firms and not just selected ones. The US is threatening penalties against SWIFT, arguing that Iran could shift financing for its nuclear program from the sanctioned financial firms to other firms. The US, which has blacklisted 23 Iranian banks, believes that Tehran is using more than 20 banks to finance its nuclear program and assist militant regional groups. Lebanese officials and banks confirmed to David Cohen, the US Treasury Undersecretary for Terrorism and Financial Intelligence, that Lebanon is complying with the financials sanctions imposed to Syria and Iran. With increasing pressure from Western sanctions and with a rising demand for dollars, Iran’s central bank lifted its strict foreign exchange policy, which was imposed in January this year, allowing money traders to exchange dollars at the unofficial rate as opposed to the unprofitable and artificially fixed official rate of 12,260 rials to the dollar. An illicit trading of foreign exchange had pushed the unofficial rate to around 19,000 rials to the dollar.

Lumber for La Resistance

The Democratic Republic of Congo has awarded profitable forestry concessions to Trans-M, a company owned by Lebanese businessman Ahmed Tajideen, according to a Reuters report. Tajideen also runs Congo Futur, a sawmilling factory accused by the United States federal prosecutors of being a cover for Hezbollah. It has been put under US sanctions since 2010 for being part of a network of businesses controlled by Tajideen’s three brothers, Kassim, Hussein and Ali, which generated “millions of dollars in funding” for Hezbollah. The US measures are part of a wider attempt at countering rising business activity in Africa by Hezbollah. The concessions granted by Congo’s environment ministry to Trans M consist of 25-year leases for hundreds of thousands of hectares of rainforest which, according to forestry experts, could bring hundreds of millions of dollars in revenues if they are fully exploited. Ahmed Tajideen denies his brothers’ involvement in the companies, the link between the two companies as well the accusation of being a Hezbollah front. John Sullivan, a US Treasury spokesman, recently warned that Trans M would face sanctions if Congo Futur owned a majority.

Lebanese credit worthiness drops

In a credit worthiness survey of 179 countries conducted semiannually by Institutional Investor and published in March, Lebanon ranked 105th globally, down from its 99th spot in the September 2011 survey due to local instabilities as well as political unrest in the region. Lebanon ranked 12th among the 18 countries from the Middle East and North Africa. Qatar had the highest rank among the MENA countries (20th globally) followed by United Arab Emirates (27th globally) and Kuwait (28th globally); Syria ranked 126th globally, down from 124th in September. The survey rates the creditworthiness of a country on a scale of 0 to 100, with 100 representing the least chance of credit default. Lebanon’s score stood at 32.5 points in March 2012, down 3.2 points from September’s score. Its score is below the global average of 44.3 points (excluding South Sudan with a score of 10.3 points) and is also below the MENA average of 48.2 points.

The billionaires among us

Forbes’ 2012 billionaires ranking is out and includes 1,226 names, an all time high with a combined net worth of $4.6 trillion. Mexican telecom tycoon of Lebanese origin Carlos Slim topped the list with a fortune estimated at a whopping $69 billion, followed by Microsoft’s Bill Gates with $61 billion and business magnate Warren Buffett with $44 billion. Rotation is the biggest feature this year with almost as many billionaires dropping out of the list (441) as those making it (460). From the Middle East, 33 billionaires made the list. Prince al-Waleed bin Talal, chairman of Riyadh-based Kingdom Holdings, which owns stakes in the Four Seasons Hotel, Apple, Newscorp and Citigroup, tops the Arab list with an estimated $18 billion fortune. From Lebanon, Prime Minister Najib Mikati and his brother Taha top the list with $3 billion each. They are followed by the Hariri brothers Baha ($2.5 billion), Saad ($1.7 billion), Fahd and Ayman ($1.3 billion each).

Middle East carriers up in a downwind

The International Air Transport Association (IATA) expects profits for Middle East carriers to increase this year to $500 million from $300 million in 2011, bucking the worldwide trend. Global profits for the industry are forecasted to fall by $500 million to $3 billion, mainly due to higher oil prices. “2012 continues to be a challenging year for airlines. The risk of a worsening Eurozone crisis has been replaced by an equally toxic risk: rising oil prices,” says Tony Tyler, CEO of IATA, which represents 230 airlines making up 93 percent of scheduled international traffic. With a price of oil forecast of $115 per barrel, IATA expects fuel costs to constitute 34 percent of average operating costs of airlines and total fuel costs in the overall industry to reach $213 billion. Passenger demand is expected to increase 4.2 percent this year. Asia-Pacific carriers are expected to report a profit of $2.3 billion, the largest profit by region. European carriers are expected to face the toughest conditions with a forecasted $600 million net loss this year.

Bank Audi bonanza in Turkey

Bank Audi plans on opening 50 to 60 branches in Turkey in the next few years, of which 15 will be in Istanbul according to Chief Financial Officer Freddie Baz. The bank received in October last year a license to establish a deposit bank in Turkey with a starting share capital of $300 million, the first permission of this sort by the Turkish regulator in more than a decade. Turkey has not granted any new bank licenses since 2001 when a financial crisis brought down the number of lenders in the county to 61 from 81 two years earlier. During the economic crisis of 2008, Turkey did not have to bail out any of its banks. The banking sector’s profits fell 10 percent in 2011 to $11.3 billion, with loans growing by 22 percent to $388 billion. The chairman of the Turkish Banking Regulation and Supervision Agency Tevfik Bilgin expects the profits in 2012 to be in line with 2011. He also expects new banks to enter the country this year.

April 6, 2012 0 comments

Economics & Policy

For your information

by Executive Editors April 6, 2012

written by Executive Editors

Still searching for power

Yet another plan to resolve Lebanon’s chronic electricity shortage is on the ropes, thanks to political squabbling. While visiting Lebanon late last month, Georgian Prime Minister Nika Gilauri, at a joint press conference with Prime Minister Najib Mikati, said that transmitting low-cost electricity from Georgia to Lebanon “through Syria or by installing pipes under the sea” is feasible. The plan, which would include leasing power generators at a cost of some $1.2 billion, is backed by Energy Minister Gebran Bassil, who says the ministry will begin issuing tenders in May. Throughout the month the minister and Mikati were at loggerheads over Bassil’s plan to bring power-generating barges offshore to provide extra capacity. The premier believes that Bassil’s plan is too costly and was said to be preparing alternative approaches to provide electricity in the coming months, when consumption peaks. Speaking to As-Safir, Mikati said the ministerial committee setup to appoint a new board at Électricité du Liban and amend the electricity law had “exhausted all means available without making recommendations” to resolve the electricity crisis, and therefore its members were not invited to the meeting. “Let the cabinet assume its responsibility in taking the appropriate decision after all opinions are heard,” he said. Presently, Lebanon has around 1,500 megawatts (MW) available, including generation and imports, but demand requires roughly 2,500 MW, leading to rolling blackouts across the country.

US warns Lebanese banks on Syria

On his first visit to Lebanon, United States Treasury Under Secretary for Terrorism and Financial Intelligence David Cohen met with Prime Minister Najib Mikati and central bank Governor Riad Salameh to discuss issues ranging from sanctions on Syria to banking transparency. In a statement, the US embassy in Beirut said that Cohen, Mikati and Salameh “discussed the steps Lebanon should take to ensure a transparent and well-regulated financial sector for Lebanon’s continued prosperity.” Cohen also warned of “potential attempts to evade US and international financial sanctions,” referring to Syria. Currently, sanctions against Syria’s central bank, as well as private banks with Assad regime ties are being enforced by Bank du Liban (BDL), Lebanon’s central bank, a bank official told AFP. The official said BDL is “keen on respecting international decisions and cooperating with financial and international authorities.” Days after the meeting, Salameh told Hezbollah’s Al Manar TV that Lebanon’s banking sector “is under a [smear] campaign from certain parties irked by its success.” Last month, Salameh also said banks needed to cooperate with the BDL’s Banking Control Commission to conduct stress tests following information that payments to the accounts of Syrian borrowers were becoming problematic, according to Lebanon’s Byblos Bank. In related news, Salameh also urged banks to distribute dividends of just 25 percent of profits, with the remaining amount to go to meeting capital requirements of Basel III by 2015. The governor also made a turn around in his policy and stated that banks should apply the new United States Foreign Account Compliance Tax Act (FACTA), which would allow the US Internal Revenue Service to circumvent Lebanon’s long-standing banking secrecy to tax US citizen’s wealth in the country.

Prison sentences cut

Seeking to relieve overcrowding in Lebanon’s prisons, parliament last month approved a draft law that reduces prison sentences by three months for every year served. For inmates serving less than one year, each month will count as 20 days. Life sentences, death sentences and repeat offenses are excluded from the reduction. The Kataeb, Future Movement and Walid Joumblatt’s Democratic Gathering members of Parliament opposed the law. In a country report last year, Human Rights Watch said, “Conditions in [Lebanese] prisons remain poor, with overcrowding and lack of proper medical care a persistent problem.” Roumieh prison, which was originally built to hold 1,500 prisoners, currently houses at least 3,700 inmates and is regularly the scene of riots protesting overcrowding and poor living conditions. Many prisoners have been in prison for months awaiting trial.

Chinese workers leave Syria

China’s Commerce Minister early last month said around 100 Chinese nationals working inside Syria were pulled from the country over security concerns. “The Chinese government and ministries must seriously undertake the protection of Chinese firms’ production and projects overseas, and the protection of the lives of Chinese citizens overseas, especially engineering teams,” the minister told reporters in early March. No figures are available on how many Chinese workers are currently in, or have left, Syria. Chinese workers had to be rescued from Libya during the civil war there last year. According to Reuters, Chinese firms were involved in $17 billion worth of Libyan projects before the war began, and the companies are now seeking “compensation for these projects in accordance with international norms.”

Penetrating communication

In a report last month, the International Telecommunication Union said that by the end of 2011, Lebanon’s mobile penetration rate, the ratio of mobile phones to people, rose to 72.2 percent, a 6.5 percent rise on 2010. By the end of last year, 3.06 million Lebanese were using mobile phones, up from 2.88 million users at the end of 2010. The number of broadband Internet subscriptions also rose last year. By July 2011, broadband Internet subscriptions were up 43 percent, with roughly 286,000 fixed-line broadband connections in the country. Also, according to the report, the most popular Lebanese website, measured by unique monthly visitors, is Tayyar.org, the digital mouthpiece for Michel Aoun’s Free Patriotic Movement.

Maritime border beef

After the United States said it would help mediate the maritime border dispute between Lebanon and Israel, Lebanese Foreign Affairs Minister Adnan Mansour told As-Safir that “If it succeeds in finding a solution regarding the Exclusive Economic Zone then the US would have scored positive points in [the eyes] of Lebanon and concerned countries and that is what we want.” A 2010 report by the United States Geological Survey estimated that an average of 1.7 billion barrels of recoverable oil and 3.5 trillion cubic meters of recoverable gas sits in the Levant Basin Province, a geological formation in the Eastern Mediterranean extending from Syria to the Sinai. Three years ago, Israel discovered an estimated 8 trillion cubic feet of natural gas in the Tamar reservoir, followed by the 2010 discovery of the Leviathan Basin, which is said to hold 16 trillion cubic feet of natural gas. Israel has drawn its maritime border in the area, with around 850 square kilometers of territory in dispute.

New bioenergy plan

The Ministry of Energy and Water, together with the United Nations Development Program’s ‘Country Energy Efficiency and Renewable Energy Demonstration Project for Lebanon’ (CEDRO) have developed a National Bioenergy Strategy for Lebanon. The plan largely focuses on building waste-to-energy plants and the development of liquid fuels production. Under this strategy, 12 percent of Lebanon’s total energy needs will come from renewable energy sources, something that was promised at the Copenhagen climate conference in 2010. If all goes according to plan, within the next eight years Lebanon will produce biofuels equivalent to around 17 percent of the country’s transportation-related fossil fuel consumption.

Gender gap

Lebanon was ranked 118 among 135 countries on the World Economic Forum’s (WEF) 2011 Global Gender Gap Index, putting the country in eighth place among 15 Arab states. Among upper-middle class countries, Lebanon was ranked 29 out of 32. The index is ranked by countries’ gender equality and is meant to put focus on gender-based disparities in each nation listed. On the WEF’s Economic Participation and Opportunity Sub-Index, which measures the participation, remuneration and advancement gaps between men and women in the workplace, Lebanon ranked ahead of Iran and Algeria, but fell behind Egypt and Nepal. Last month saw increased legislative activity surrounding an amendment to the nationality law, which if passed would allow Lebanese women married to foreigners to pass on their nationality to their spouse and children. Discussions over the law have been postponed because they require “further study.”

April 6, 2012 0 comments