Society

Pimp my Rolls

by Nadim Mehanna
written by Nadim Mehanna

It is a truth universally acknowledged in the luxury goods market since the 2009 recession; people have become blasé about bling, and those who do spend on big name brands are looking for the narrative beyond the label. While customers cough up for coffee from Brazilian rainforests and rugs hand-knitted in Nepal, the canniest luxury brands are letting people build their own stories into high-end products. New figures released by Rolls-Royce in January prove the success of this strategy: last year 56 percent of customers who bought the carmaker’s latest Ghost model worldwide employed their ‘bespoke personalization’ service, a particular form of customization that is far removed from a paint job. In the Middle East, the proportion of Phantom cars sold with bespoke content rose from 75 percent in 2005 to 99 percent last year.

These numbers point to a new truth, exemplified by brands like Rolls, that top-drawer customers no longer buy from the showroom. Rolls has always had a customization service, but new trends are making those extra options an essential part of any Rolls purchase, rather than the whims of a few super-rich. 

It is all about control — Rolls’ website even features a standalone ‘configurator’ where color schemes and add-ons can be tried out virtually, from picnic tables and lambs’ wool foot mats to champagne sets and humidors, and from privacy glass to up to 44,000 different shades of paint. There is also the separate website 21stcenturylegends.com that shows videos of extraordinary stories about extraordinary motor cars. The message is unequivocal: these cars are unique, handcrafted, exceptional legends, and you, the customer, can write your own. Rolls’ new Phantom Coupé, the third newest model from Rolls since the BMW Group became custodians of the marque in 1998, has partly been driving the surge in Middle Eastern business, and will surely be a darling of 2012. At a stately five and a half meters long and two meters wide, the Phantom Coupé has all the Rolls-Royce trademarks: long bonnet, short front, long rear overhangs and large-diameter wheels, but with a more dynamic and rising profile. The inside is equipped with polished woods and hand-dyed leather, rear-hinged doors, picnic boot and fiber-optic-cable-studded rear cabin roof, giving the impression of a star-filled night sky. All this glamour conceals a 6.75-liter V12 engine that features advanced direct fuel injection with variable valve lift and timing. With 453 horsepower and maximum torque of 720 newton-meters at 3,500 rpm, the 2,590 kg Phantom Coupé offers an agile, fast, refined drive, accelerating from zero to 100 km/h in 5.8 seconds and reaching a limited top speed of 250 km/h. 

Whatever you choose to do to your Rolls, customization is no barrier to reselling it at a very respectable price — David Beckham’s black Phantom Drophead, which he bought in 2008, is now reportedly on the market in Los Angeles for $390,000. Wooden decking, 24-inch alloys and a black Spirit of Ecstasy make this car unique regardless of who owned it previously. For his part, Beckham will be back for another Rolls, and like 84 per cent of buyers in the North American market, he will be making sure it stands out as his own.

Customization is big business, not merely surface fripperies. Rolls confirmed earlier in January that its biggest sales ever were in 2011, up 23 percent in the Middle East. The new Phantom Coupé, with a suggested retail price of around $400,000 (excluding the additional Lebanese taxes and registration fees), has found a way to appeal to those customers for whom simply owning a Rolls isn’t enough — they need one they feel they have designed themselves. In case you needed any more proof, Rolls-Royce is expanding its United Kingdom manufacturing plant to keep up with worldwide demand, doubling its staff headcount on the bespoke program by the end of 2011. 

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Finance

No longer happy to lend

by Maya Sioufi
written by Maya Sioufi

The Lebanese government would be broke if it were not for the country’s banks. For decades the banks have lent to the sovereign to help make up the vast difference between money it spends and money it takes in. Of late, however, bankers have been increasingly vocal that they are no longer happy to lend money to a government that has shown no sign that it will ever be able to to pay the money back. 

“Banks can’t continue indefinitely financing the deficit and the high level of public expenditure without concrete reforms,” says Nassib Ghobril, chief economist at Byblos Bank. “Some banks have been very clear in that they are willing to renew maturing issues but not to subscribe to totally new issues.”

As of September 2011, Lebanon’s debt stood at $54.37 billion, according to the latest figures from the Ministry of Finance (MoF). Holding 50 percent Lebanon’s outstanding Treasury bills and 70 percent of its outstanding Eurobonds, the tab owed to local Lebanese banks amounted to $29.4 billion at the end of 2011, according to the Association of Banks in Lebanon. 

Given that the government has, for the sixth year running, failed to pass a national budget, while also recently upping spending through, among other things, implementing a wage increase package for most public sector workers without any offsetting revenue gain, there is little hope for a short-term reduction in the deficit or debt. Quite the opposite actually: with more than $12 billion in debt maturing this year — $2.35 billion in Eurobonds and LL15 trillion ($10 billion) in treasury bills — the MoF has stated it aims to raise $5 billion in Eurobonds and T-bills to cover the 2012 public deficit and the maturing debt.  

Tied to a stone

The exposure to the public debt is restricting the banks’ rating and constitutes a burden on their balance sheets,” says Ghobril. In short, lower credit ratings mean higher borrowing cost for the banks, but their credit ratings are effectively capped by those of the Lebanese government, given how much of the banks’ balance sheets are made up of Lebanese government debt.  

Nadim Kabbara, head of research at FFA Private Bank, concurs: “Most of the debt is held locally by commercial banks and the central bank and as such both the government and banks are joined at the hip.” In Moody’s December report on Lebanese banks, in which it downgraded the outlook on the sector from stable to negative, it stated that Lebanese banks’ “credit risk profile will continue to be closely linked to that of the Lebanese government.” 

With an estimated debt-to-gross domestic product ratio of 137 percent, Lebanon has one of the highest debt ratios in the world, which makes the banks’ exposure to this debt increasingly unsettling. 

“We had several moments in our recent history where we could have put in place reforms; clearly for political reasons those reforms have stalled,” says Khaled Zeidan, general manager at MedSecurities, a BankMed subsidiary.

Biting at the yields

Zeidan added, however, that rather than refusing new debt issues altogether,  “I expect banks will try to negotiate higher yields for the new bond issues with the Ministry of Finance.”

The average yield on a Eurobond in early March stood at 4.33 percent; yields on T-bills offered higher returns, with two-year T-bills returning 5.4 percent and five-year T-bills returning 6.2 percent. The International Monetary Fund recently published a report in which it argued for increased interest rates on T-bills that have a less than seven-year maturity, to compensate for the country’s higher risk and make them more attractive for local banks. Towards the end of last month yields began moving in that direction, with the yields on one-year, two-year and three-year T-bills increasing some 50 basis points in the weekly T-bill auction on March 22. 

Incestuous debt

In many ways the local banks are locked into continuing to lend to the government: having lent so much already, they can ill afford to even contemplate a sovereign default and thus are, in a sense, forced to step in to cover the budget shortfall if no one else will.

An alternative to local banks would be for international investors to fill the gap, but that is easier said than done. In August of last year, at the height of the Arab revolutions and the European debt crisis, Lebanon issued a $1.2 billion Eurobond, which saw international investors come in for 21 percent of the subscription, raising questions on whether they would be willing to subscribe again this year. 

“I don’t believe that foreign institutional investors today have sovereign Lebanese credit on their radar as yields on Lebanese debt are either similar or lower than other regional and emerging market sovereign issues,” says Zeidan. Marwan Abou Khalil, head of capital markets at BLOMINVEST Bank, expects that the international investor community would require the implementation of debt reforms as a main condition of any subscription. 

Looking ahead

After several years of double-digit deposit growth, local banks still managed to realize an 8 percent in 2011. While some $118 billion in deposits will keep Lebanon’s banks afloat on abundant liquidity, the prospects for more growth this year are quite dim as neighboring Syria remains in turmoil and the global economy fragile.  With slower deposit growth, interest spreads, the main source of banks’ income, need to widen to maintain the net income of banks. Raising their exposure to the sovereign debt without a risk-adjusted compensation will only squeeze banks’ balance sheets further, thus they are likely to demand better returns on money they lend the government. Higher yields would also provide banks with more leeway to increase rates on deposits. 

From the government’s perspective, higher yields entail higher debt payments, meaning the government is spending more money it has not yet figured out a way to earn, thus it will be reluctant to up its own cost of borrowing. 

Both sides have too much to lose to let the confrontation elevate to the level where the government is unable to pay its bills, but that does not mean there will not be some tense negotiations and brinkmanship, as the details of how it all plays out are of fundamental importance to everyone. 

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Society

New kid rising?

by Yasser Akkaoui
written by Yasser Akkaoui

The Lebanese love of loud engines and sleek curves has lured to its shores a classic automotive racing icon, Lotus. Lebanon is to be the brand’s launchpad into the flush markets of the Middle East, but by the admission of Group Lotus Chief Executive Officer Danny Bahar, “It’s going to be a challenge.”

A collaboration between Lebanon’s vehicle retailer Rasamn-Younis Motor Company (RYMCO) and real estate developers Zardman will bring to Beirut the first Lotus showroom in the Middle East. As any car enthusiast knows well, the arrival of Lotus means the challenge is on for them to take on Porsche, which is a long established and well-respected brand in the region.

“We spent a lot of time studying Porsche drivers, because they take a lot of things as a given,” said Bahar while talking to Executive. Lotus may carry the prestige of British racing heritage, but now that the not-so-glamorous Malaysian firm, Proton, owns them, their work is cut out to match the pedigree of their German counterpart.   

“If you compare the 2012 and the 2009 Evora they are two different cars and we’ve been working harder and harder to get closer to the expectations of the Porsche driver,” said Bahar. Even if Lotus is striving to hit the mark that will win over the loyalty of discerning drivers, the group’s CEO is adamant that they are no copycat outfit. 

“We are trying to have a differentiation strategy… The Lotus car will always be different,” he explains. What’s more he reasons that the lotus driver will get an experience at a price they would not find elsewhere.  

However, in this regard there are conflicting messages coming from the firm. The 911 has carried the history and style of Porsche for near-on 50 years to which Bahar concedes, “You cannot compare. The Evora is to compete with the Boxter and the Cayman, not the 911.” But the Evora price tag of around $60,000 is encroaching what one would expect to pay to get the 911 off the forecourt. 

“The price [for the Evora] is closer to the 911, the horsepower is closer to the 911,” says Baher, not to mention the speed and size are comparable to the 911, and yet we are told the car is competing with the smaller Porsche siblings.

As Lotus enters into the Middle East it is banking on the deep pocket of the region’s automobile enthusiasts to help lift global sales from the current level of 2,500 to 3,000 cars per year, past the breakeven point of 4,000, and into the profit making regions of 6,000 sales per annum.

“We decided three months ago to move to the Middle East and chose Lebanon as our base. I believe if we continue our aggressive strategy we should be able to sell 400 cars in the region every year,” explains Bahar. “We expect the United Arab Emirates to be the biggest market and Saudi Arabia and Lebanon look promising as well.” 

To match the territorial expansion Lotus is pushing for a “total evolution of the brand” in the coming two to three years, including a radical change to the Evora. The flagship model currently has a Toyota Camry engine but Baher said, “In 2013 it will be one of the finest cars. We are even going to change the gearbox and so many other things. It will be a totally different car.”

This is exciting news for Lotus enthusiasts but it must leave any potential buyer wondering why buy an Evora now when next year “a totally different”, and superior, car will be hitting the tarmac. 

Even if there seems to be a lack of clarity in the company’s strategy of attack, Lotus does create cars of distinction that inspire admiration from passers by and exhilaration in the driver. Indeed, in the Evora they have managed to build a thrilling and refined car.

While Lotus carries a legacy of sporting dynamism, the test is on to see if that spirit will deliver the company success in Lebanon and the wider Middle East. 

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Economics & Policy

The ministry’s call

by Zak Brophy
written by Zak Brophy

It’s the classic hustle: squeeze a sucker for time so he signs on the line before he has the chance to think twice. Right now there are more than a few Lebanese wondering if they’ve just been duped. 

At the end of January this year, the Lebanese government signed new contracts with Orascom Telecoms Media and Technology (OTMT) and Zain to manage the two state-owned mobile phone operators, Mobile Interim Company 1 (MIC 1) and Mobile Interim Company 2 (MIC 2), commonly known as Alfa and MTC, respectively. 

The signing of the new contracts initially caused little commotion. That was until Future Movement opposition parliamentarian Ghazi Youssef publically denounced the Ministry of Telecommunications (MoT) for forgery and underhand dealings. The ministry was swift in its rebuttal, accusing Youssef of abusing his parliamentary immunity in order to level slanderous accusations. 

What has helped raise the eyebrows of suspicion is the fact that Minister of Telecommunications Nicolas Sehnaoui only presented the new contracts to the cabinet on the day that the old ones were set to expire. 

“Exactly on the night of the end of the contract there was a council of ministers {Lebanon’s cabinet) meeting and the minister asked for a new contract to be signed with the managers,” complains Youssef. “It was put on the table on the last day and it should have been discussed at least two months before.” 

With the deals presented as fait accompli there was little room for debate or discussion before the vote, yet there were some significant changes in the details of the new contracts. 

In negotiating the new agreements the MoT has settled a new reward scheme for the managers, which Minister Sehnaoui has touted as a shrewd deal that will pump more of the telecommunications bounty back into the public purse. 

Alfa’s Chief Executive Officer and Chairman Marwan Hayek told Executive that in the best of scenarios OTMT can expect to pocket at least 30 percent less of the company’s revenues than they did last year. Perhaps the ministry can claim this as a victory due to its ploy to keep the companies guessing until the last minute. However, Youssef says the new arrangement is a ploy by the ministry to harness excessive control over this lucrative sector while sidestepping any meaningful oversight. 

The new deal

The original deal was signed in 2009 — and renewed as was in 2010 and 2011 — with Zain and Orascom. As part of this contract the management fee Alfa and MTC collected was a fixed $2.5 million per month, supplemented by an 8.5 percent share of total revenues; from this combined income the managers had to cover all of the companies’ operational expenditure (OPEX) such as salaries and transport. 

Under this agreement Orascom and Zain were left looking pretty, reportedly taking home some $50 million in combined profits last year. However, in the new contract the minister has set a monthly fixed fee of just $600,000 for OTMT and $700,000 for Zain, which will be supplemented by a variable fee dependent on their respective managers meeting a list of 13 key performance indicators.

“Today all the OPEX will be borne directly by the ministry, meaning the minister will decide who to hire and fire, which company to use for supplies, security, distribution channels… he decides everything,” says Youssef. “The minister can use it as a tool for spending on favored providers for electoral purposes, by taking it under his direct control.”

Executive examined copies of the previous contract and the new one signed in January, and found that while there are differences with regards to control of the OPEX it would seem that Youssef is overstating his case. The Owner Supervisory Board (OSB), a body of industry consultants directly answerable to the MoT, is in both contracts designated considerable oversight into the monitoring and evaluation of the companies including, “the right to previously authorize and approve revenue generating service provider contracts, expenditure on new marketing initiatives, capital expenditure” and so on. 

  The 2012 document further stipulates that the manager is entitled to spend in each quarter “an amount not to exceed the amount for each of the specified categories during the equivalent quarter of the proceeding year without the approval of the Owner Supervisory Board.” 

“The total [operating] expenditures of last year are our level and anything over and above that level of expenditure we will have to go to the OSB for approval,” says Hayek. The catch is that while the OSB is external to the telecommunications ministry, it is under the direct control of the minister, effectively concentrating operational authority and oversight in the same hands. 

“It seems to me that the OSB are more and more involved in the day-to-day business of the companies and the managers are just acting as a front,” says a source within the MoT, who spoke to Executive on condition of anonymity. He also anticipates the budgets will increase this year much more than the forecasted 10 percent, and will more likely be in the range of 40 percent given the developments in the 3G telecommunications network. 

In regard to this, Alfa’s Hayek contends that, “All the approvals are done from a budget perspective and not from [the suppliers’] perspective so they will never say we advise you to spend such and such amount with ‘X’. It is up to the management to follow their own internal procurement procedures.”

While this is the case on paper, the ministry insider says the practice is often very different. “Have [the managers] ever refused a direct request from the ministry? They are not willing to say no, and if the ministry wants to impose something, there are many ways they can do that and the operators know that.  They are just hiding behind a theoretical approach to the whole thing.”   

Details defined later

Concerns are also being raised regarding the nature of the incentives scheme in the 2012 contract. The list of 13 key performance indicators on the contracts is nondescript and open to considerable interpretation. For instance, when it requires the company increase the number of seats in a call center, by how many exactly and with what supporting infrastructure? Or if it is necessary to create an innovation department, how many staff should it employ and what will be their objectives?

The financial reward for meeting these targets could exceed $20 million over the year and as such critics argue their vagueness could be used as a lever with which the ministry will be able to decide how much and on what conditions money is paid out.  

However, says Alfa’s Hayek, “Each and every objective in the incentive scheme now, but not at the signing, has a defined scope. The entire negotiations were less than two weeks. We did not have time to clear all of the details. This is the way it is with the ministry, negotiations always happen at the last minute.”  

Antoine Hayek, advisor to the telecommunications minister (and no direct relation of the Hayek at Alfa) explained further: “The number of seats for a call center within an operator is something that has a global standard, so we know we need around 1 seat per 10,000 subscribers… We have stipulated objectives of the innovation department, how many staff it must have and how much experience they must have. Everything is clear.”

If the devil is in the details then it would surely have been preferable to have had such a key component of the contracts, which covers a major part of the reward structure, agreed upon before the Council of Ministers were asked to consent and put pen to paper. 

Who owns what?

Another source of contention regarding the new telecommunications contracts finds its roots not in Lebanese soil, but in Egypt. The company managing Alfa from 2009 until the signing of the new contract in January 2012 was Orascom Telecoms Holding (OTH), a telecoms giant established in 1997 to consolidate the interests of the Orascom group of companies controlled by the Egyptian Sawiris family. Over the past year the Orascom empire, presided over by Naguib Sawiris, has undergone radical changes that mean the name on the 2012 contract with the government is no longer Orascom Telecoms Holding S.A.E., but rather Orascom Telecom Media and Technology S.A.E. (OTMT). 

Youssef claims that “it is forgery” to have renewed, without any review or tender process, the contract with what he claims is a different company. In April 2011 the mother company of OTH, Wind Telecom, underwent a ‘merger’ with another global telecommunications heavyweight, the Russian firm Vimpelcom. 

As part of the deal, certain assets were de-merged from Wind Telecom and transferred back to Weather Investments II S.A.R.L, which has the same share holders as Wind Telecom and as such is also under the control of Naguib Sawiris. The new entity that was born from this spin-off was  OTMT. The question that arises is can OTMT legitimately slip unchecked into the shoes of OTH as the manager of Alfa?

The same, but different

“It is a totally different company,” claims Youssef, a view echoed by many of his supporters in the opposition.

However, the MoT’s Hayek dismisses such accusations: “The company didn’t change, they are the same… A group of shareholders entered into a merger and in the deal related to Lebanon they remain the owner and controller,” he said. “So they say we will change the name of the company from X to Y. But they are the same, and they have continued to commit to all of the agreements of X.” 

In reality, however, the two companies are not identical. OTH and OTMT are both traded separately on the Egyptian stock exchange with different registrations, market capitalizations and trading values, and are involved in different global operations. According to the Egyptian General Authority of Investments, OTH’s pre-merger capital of EP5.25 billion ($870 million) was split 58 percent to OTH and 42 percent to OTMT.

Alfa’s Hayek referred to the company’s official statement when challenged over the legality of the transfer, which acknowledges that OTMT is a new entity but also argues it is the legal successor to OTH. The reasoning is that it has the same administrative and executive structures and it is legally bound to abide by all the contractual obligations previously held by OTH. 

Both share the same majority shareholder, with Wind Investments owning 51.7 percent of OTH and Weather Investments II owning 51.7 percent of OTMT. Both Wind and Weather II Investments are 100 percent owned by Naguib Sawiris. 

But the source within the telecommunications ministry says that there are some important issues to consider: “For the new entity to be accepted as the new manager it would have to be qualified on the same basis that Orascom was qualified to start with. It should have gone back through a qualification process. Does it have the qualifications? I have major doubts.”

The same source explains that two major benchmarks that would be used in such an assessment would be the market capitalization of the company and its experience in managing networks of at least the same size and scope. In both cases there is at the very least room for debate over OTMT’s viability. 

On the first count of qualification, the new company has working capital of just more than $350 million, which is around half of what Alfa generates. But the MoT’s Hayek retorts that: “There is a financial warranty deposit at the BDL [Bank du Liban, Lebanon’s central bank] of around $40 million. This money is in our hands and is much stronger than putting your expectations on someone’s capital. If there is any dispute then we [are able to] take hold of that money directly.” 

Furthermore, both Alfa and the ministry cite the backing of Sawiris as the security, though opponents point out that the contracts were signed with OTH and OTMT, and not Sawiris as an individual.

On the second qualification criteria, OTMT has a fraction of the involvement in other mobile networks that its predecessor did. In 2010, OTH had more than 100 million subscribers in networks across countries as far flung as Canada, Pakistan, Iraq and Algeria. OTMT, on the other hand, is in the process of selling the majority of its stake in Egypt’s Mobinil, which will leave it with a 5 percent stake and 30 percent voting rights, with its only majority stake in another telecommunications company being with North Korea’s Koryolink.   

Opposition MP Youssef takes aim at the company saying, “OTMT, in terms of expertise and experience in managing a cellular company, only has one company in North Korea which has 810,000 subscribers.” That is roughly half of Alfa’s current 1.6 million subscribers. 

The unnamed source at the MoT argues that in assessing a company’s viability to manage, “You are looking for an entity that has already managed a mobile operation the size of [Alfa]. This is a must.”

Challenged on this point, advisor to the minister, Hayek, says, “We did not change any member of the board and there is the same technical support. In the current board those guys have been here from around 2008 to 2009. They were here from before the merge and they are still here. Are you telling me before they were smart and now they are stupid?”

That all-important pinch of salt

There is good reason to be suspicious when assessing the broadsides from opposition parliamentarians such as Ghazi Youssef, who have an axe to grind as their old fiefdoms in government ministries are ruled over by their foes. But in the lucrative enclave of Lebanon’s telecommunications sector, which is free from virtually any oversight and exists in a dubious legal limbo, there is perhaps even greater reason to be skeptical of the current ruling masters. 

It is easy to understand the potential motive for the MoT to extend its control over the bountiful industry. What is more, the clinching of deals at the eleventh hour and the penning of multi-million dollar details after the signatures have dried does little to inspire confidence in the process.  

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Society

Still horsing around

by Ellen Hardy
written by Ellen Hardy

On Easter Monday, the Hippodrome hosts a new horse race, one a little different from all the others. Just six or seven horses will run that day, and to the untrained eye, the beasts stampeding around the track may look much the same as all the others billeted in the Hippodrome’s stables. But whereas the regular runners set their owners back in the region of $8,000 to $10,000, those running on Easter Monday can be worth around $50,000 – possibly much more. 

The difference is that their bloodlines are DNA accredited by the World Arabian Horse Organization (WAHO), a British-based society that controls the stud books for purebred Arabian horses all over the world. The Easter race in Beirut for WAHO horses is the first of its kind in Lebanon, opening a new chapter for investors in high-class equines, and throwing the precarious situation of their heartland, the Hippodrome, into sharp relief.

Arabian steeds are desert horses, a breed perhaps as much as 4,500 years old, favored by the ancient Egyptians and the Bedouin in battle. A Bedouin myth describes Allah creating the Arabian horse from the south wind, saying: “I create thee, Oh Arabian. To thy forelock, I bind Victory in battle. / On thy back, I set a rich spoil / And a Treasure in thy loins. / I establish thee as one of the Glories of the Earth. / I give thee flight without wings.” 

This is the sort of story that gives aficionados of the breed their passionate emotional investment in their charges. Known for their speed, agility and physical beauty, Arabian horses have high-set tails, large eyes and the famous ‘dished’ faces. When the automobile replaced horses for transport in Lebanon at the beginning of the nineteenth century, it was this breed that stayed on in local programs for racing and beauty pageants. Farms such as that of Future Movement Member of Parliament Nabil de Freige, whose father was a founding member of WAHO in 1967, still breed them today, though as objects of personal passion rather than in expectation of any great profit. 

“I was born between their legs,” says de Freige. “In Lebanon, you have some experienced guys — my father was one of them — who could tell you [from the horse’s] action, his character, his way of running, his muscles, even his ears, his eyes, the largeness of his muzzle, if it’s really an Arabian horse. And me also, I can see.” 

Breeding trouble

But despite this long lineage of professional breeders, in recent history the fortune of Arabians in Lebanon has been fraught. During the chaos of the civil war, illegally imported horses and unscrupulous breeders contaminated bloodlines with thoroughbred blood to produce faster horses. Post-war, de Freige and others were able to build up a collection of horses they considered purebred. Problems came when submitting this collection to WAHO for consideration. The WAHO Arabian horse definition is “one which appears in any pure-bred Arabian Stud Book or Register listed by WAHO as acceptable.” And though Lebanese “oral pedigrees” and blood tests may satisfy local experts of an animal’s heritage, WAHO DNA testing is very strict, even if the horse’s physical appearance would put off traditional experts. Nabil Nasrallah, director of the Society for the Protection and Improvement of the Arabian Horse (SPARCA), describes Lebanon as an “orphan” from WAHO.

So there exists today two classes of race horse in Lebanon: around 1,700 that are accepted by the local stud book, with its relatively low financial worth, and the few WAHO horses that the organization considers acceptable by their DNA testing criteria — originally one stallion and 24 mares, their numbers have now grown to around 200. In contrast to the local horses, the WAHO horses have a high international market value for sale and competition. Despite the bloodline travails, the nucleus is there to build a profitable industry. Much of the work of improving Lebanese stock is made easier by the legal loophole that allows artificial insemination for WAHO horses, unique in equine breeding programmes. Rather than investing in a breeding stallion for a hundred thousand dollars, frozen semen from a WAHO stallion can be flown in at a cost of $500–$50,000 per dose, depending on the lineage of the stallion. 

But although interest is on the rise, to date there has been little real competition and investment in Lebanon: most foals are sold on to Dubai at around one year old, to take advantage of their superior training facilities, and potential for hundreds of thousands of dollars in prize money. The question is whether enough Lebanese investors can be attracted to make such schemes part of a cohesive network of breeding, training, trade and racing in Lebanon.

Passion not profits

The business of breeding and owning horses in Lebanon is not, traditionally, for those seeking profits, though around 7,000 families are said to depend on horses for their livelihood. 

“Having horses is a hobby and a passion but it also costs lots of money. Nobody can really earn money with this,” warns de Freige. 

For local horses, as well as the costs of acquiring the animal, they cost around $6,000 per year each, or $500 a month at the Hippodrome, to feed, train and maintain for racing. Training starts a year later in Arabian foals than it does with thoroughbred racehorses, and though Arabians bred exclusively for showing as beauty horses can be kept and trained privately, facilities and expertise in Lebanon are far from professional. Race winnings at the Hippodrome are never more than about $2,000, which is all that SPARCA, which runs the Hippodrome for the Municipality of Beirut, can afford from its income. These revenues are generated by the betting volume of around $250,000 per year and has remained relatively static since roughly 1996. 

Though one or two horses might make money, they have no international value and as a general rule private stables will operate at a loss.

For WAHO horses the picture is currently similar, though the stakes are much higher; WAHO horses can be worth five to 10 times as much as their local counterparts, and their breeding and prize money potential is much greater. But there are two elements that could change this picture: attracting increased investment to produce a thriving WAHO program, and investment in the Hippodrome to increase its capacity for horses and facilities for race-goers.

Hi Ho Hippodrome

The first WAHO race is a step in this direction, as are the WAHO beauty pageants that have been held in the Bekaa for the last two years and are due again this summer. According to Youssef Chahine, a WAHO horse owner and advisor to the Minister for Youth and Sports, they attract around 1,000 spectators and offer prize money up to $5,000 drawn from local sponsors, suggesting that there is a growing potential for the animals bred as show horses rather than for racing. But “it’s very expensive to compete with the best horses in the world in Dubai,” with their desert race runs and air-conditioned stables, he points out. Still, all experts Executive spoke to agreed that now is a good time to consider investing in WAHO horses in Lebanon.

But for both de Freige and Nasrallah, what is really holding back the future of horse racing in Lebanon is the state of the Hippodrome. A treasured element of Beirut’s heritage, the structure was almost completely demolished by the Israeli army in 1982 and today cannot support the crowds for the number and size of events needed to make the enterprise turn a profit. 

“We need an infrastructure,” says Nasrallah. “If you go in the middle of the racetrack you need toilets, you need walking areas, you need a lot of things we cannot afford to do today.” The Hippodrome currently does not cover its costs from the 15 percent of betting volume it receives annually. They have some financial reserves, says Nasrallah, but “we are coming into trouble very soon.” $15 million, he estimates, would do the job, and give the industry a shot at regenerating itself, with more facilities and stables on site and opening part of the Hippodrome’s park to the public. But although the municipality gains five percent of the betting volume, there are currently no moves to boost the Hippodrome in this way. 

“They don’t know what they have,” concludes Nasrallah. “The race track is not only betting and getting money out of betting, it’s a whole generating wheel of workmanship, from the breeders to the jockeys to the lads to everybody… to bring the people to do something positive, it’s very, very difficult if it’s not in their direct interest.”

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Finance

The man with your books

by Joe Dyke
written by Joe Dyke

When Abdul Hafiz Mansour says 2011 was an “active” year, he leaves the impression that an off-the-record interview would yield a coarser word choice. As the “Secretary” of the Bank du Liban’s Special Investigation Committee (SIC), Mansour has the task of rebuilding confidence in the Lebanese banking sector’s ability to deal with money laundering, following the Lebanese Canadian Bank (LCB) crisis in early 2011. Along the way he has faced constant pressure from American authorities, including new legislation that could undermine Lebanon’s banking secrecy, and a slow-moving Lebanese legislature that has stalled implementation of laws conforming to international banking standards.

He believes the LCB crisis that began in February 2011 when the United States Department of the Treasury labeled LCB as ‘non-compliant’ is  finally over. 

But Executive notes that critics have raised concerns about the process by which many of LCB’s assets were acquired by Societe Generale de Banque au Liban (SGBL), with a number of ‘suspect’ accounts being allowed to remain.

Mansour defends the plan for the accounts as “well defined” and promises the Lebanese central bank is watching them closely. “Those accounts [that SGBL] did not take, we know where they were transferred eventually and we follow those accounts just like the banks that acquired them… there is nothing wrong with those accounts,” he says, but declines to discuss specific accounts. 

Loads of laundry

In 2010, the SIC only dealt with 254 investigations. When it was setup in 2001, the SIC published the actual dollar figures involved in reported cases and the sums that were frozen: $5.2 million out of a total $18.8 million. Since then it has stopped publishing these figures, thus reducing transparency and the ability to gauge the SIC’s productivity. Mansour says that because these figures represent a “moving target” during an investigation, reporting amounts is a frivolous exercise. 

Mansour admits that due to unusual circumstances last year the number of cases the SIC dealt with may be higher. But that figure is likely to grow exponentially once new rules are implemented.

Exchanging blows

Following the LCB scandal, the SIC took aim at currency exchange with a series of new measures, including higher capital thresholds. Mansour concedes that this will mean much stronger regulation on an industry of 400 businesses without any significant new allocation of resources — a seemingly daunting task, especially outside of Beirut. Yet he insists the SIC is prepared to take on this role.

“Lebanon is very well equipped, the SIC is very well staffed. I don’t like to name and cite other countries but certain countries with populations and banking sectors much bigger than Lebanon… don’t have as big an FIU [Financial Investigation Unit],” he says. Lebanon’s SIC has a staff of around 40, while Russia has some 600 and Saudi Arabia having roughly 110.

Last month Executive revealed that adapting to the US FATCA declarations on tax evasion could require a change to Lebanese banking secrecy laws, with Law 318 that created the SIC having to be amended to include tax evasion as a money laundering crime. The government and the central bank have yet to confirm this, but Mansour admitted it would be necessary to remain compliant.

These changes could threaten remittances, which are more than a fifth of gross domestic product, but Mansour disagrees, pointing out that the same fears were raised when the SIC was created in 2001, yet the financial sector continued to grow.

“It will be recommended that tax evasion would be a predicate offense…under the umbrella of anti-money laundering laws. So if you committed tax evasion all the monies that [are] involved in it will be considered as falling under the anti-money laundering rules,” he says, adding that corruption and politicians’ accounts will also be covered.

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Society

Complications amass

by Michael Karam
written by Michael Karam

The message from Baselworld 2012, the watch and jewelry industry’s annual conference in the Swiss town of Basel, was that business is back on track after a few wobbly years. In 2011, Switzerland exported a record $21 billion in watch sales (nearly 30 million units), a 19 percent increase over 2010  due to growth in the Asian and  Middle Eastern markets. China led the charge, overtaking the United States as the nation with the biggest demand for luxury watches. Overall growth projections for 2012 are 7 percent, up from 2011’s 5 percent.

Lebanese importers attended Basel and were not disappointed. “Brands seem to keep surprising us each year by developing more and more complications,” declared Mher Atamian, managing director of Ets. Hagop Atamian, using the industry term for features beyond the normal display of time. “There is just no end to the imagination and development of high-end complicated pieces that will keep the watch aficionados interested.”

According to Simone Tamer, marketing manager at the Tamer Group, the models at this year’s show were defined by quality, technology and price. “The main engine working behind the scenes of these developments are the research and development as well as the design departments,” she said. “Every company is seeking to become partially independent in creating their own movements from their old suppliers.”  

There is also good news for female consumers. “In Basel we noticed a development in the women’s segment, where we saw wider ranges of female products in the collections, especially in brands like Breitling,” explained Tamer. “Today’s woman wants a man’s watch so brands are expanding their women’s collection to incorporate a masculine aspect in both design and mechanism.”

 The watches that caused a buzz during March included the Tudor Heritage Black Bay Diver. Tudor is a brand that has long lived in the shadow of its parent company Rolex, but seems to becoming a high-end name on its own. Many of the previous models looked too similar to their Rolex cousins, but recent designs have been very refreshing, especially the Heritage Chrono, which many believe is destined for iconic status. The Heritage Black Bay Diver, with its stunning cherry red bezel and the achingly elegant snowflake hour hand, sits up there with the Breitling Superocean Heritage, also modern with a design nod to a previous age.

Zenith is another brand that hides its light under a bushel. It is known among watch aficionados for making the El Primero, the most famous chronograph movement ever made. This year, Zenith unveiled the Big Date Special, a pared down, understated aviator chronograph, which is sure to enhance the brand’s status even further.

Another impressive watch was Omega Speedmaster professional. With a manual wind mechanism and a Hesalite Plexiglas glass (so as not to shatter in space), Omega has introduced a limited edition model that resembles the Speedmaster pre-Professional worn in space in 1962 by Walter Shirr.

Elsewhere, TAG Heuer showed off its limited edition Carrera to celebrate the 80th birthday of Honorary President Jack Heuer, while IWC unveiled the Big Pilot’s Watch Muhammad Ali Edition with fantastic red lume in honor of the great man’s trademark gloves, a watch auctioned for the Celebrity Fight Night charity on March 24. 

For those who love a bit of bling, Swiss watchmaker Hublot showed off the most expensive watch at this year’s fair. With a price tag of $5 million, the ‘watch’ was inlaid with more than 1,200 diamonds, including six weighing more than 3 carats. Call me a purist but I’d take the Tudor Black Bay Diver any day.

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Business

Q&A Ghassan Hasbani

by Thomas Schellen
written by Thomas Schellen

The Saudi Telecommunications Company (STC) currently leads the expansion of telecommunications operators from the Middle East. It also is a main player in the development of regional content offerings both as distributor of content and as 71-percent owner of Intigral, a company focused on the mobile applications and content space. Executive caught up with Ghassan Hasbani, the chief executive of STC International, at the ArabNet Entrepreneurship Summit in Beirut and asked him about the group’s strategies.     

What role do mobile applications play in the STC strategy?

Mobile applications are now at the heart of most of our activities in the region and globally. For mobile applications to be widely spread and available we need to make sure that we do not play a direct role as telecom operators but allow a maximum level of creativity by encouraging the environment for application developers. Our strategy stems from the fact that the people that will make up the economy from now on over the next 30 years are people who were born after 1990. Those people live of applications and a connected world.

When I asked a Lebanese developer of mobile apps what question he has for the international CEO of STC, his question was, 'How can I make more money off them?’

Of course. The answer is simple. It depends what they are developing. If they are a startup they can make money by submitting their business plan to our venture capital [fund] so that we can co-invest with them. If they want to be a supplier, we have an application store where they can upload their applications and share revenues, or we have a company that deals with contents and applications and they can direct their developments towards the needs of that company. This company knows the market very well and interacts with us quite closely on our customer base. They can help the developer in developing the right things or modify their applications to suit the demand in the market, and make more money. These are the three channels we have.

Some people in the industry told Executive that only very few apps control attention while most have trouble to find market share and be profitable. As host of a very large customer base, your company presumably could decide which applications get visibility and which developers will fail to do so. How does STC approach this?

You need to strike a balance between a democratized service and a central command and control enforced distribution. If you have too much interference in enforcing distribution you move more into a socialist type of environment as opposed to a democratized type. In a true democratized environment applications are running based on their attractiveness to the consumer. If you create a randomized accessibility to searches rather than a prioritized accessibility to searches, then the smart applications and the popular applications will end up winning. Our policy is to provide an equal opportunity across the board. Saying democratization of access means that the developer has to be very smart in describing the applications that they are putting in the app store or online. It is about the ability of the developer to market their applications with the right key words, and the right targeting. This is what I call a true democracy.

Today you are described as being one of the top 20 operators worldwide and largest in the Arab markets. When another regional telecommunications operator went into an expansion spree some years ago with a declared aim to become one of the world’s top ten networks, STC was reported to announce similar aspirations to rise to being a top ten operator. Are you still pursuing this type of goal?

We are not saying that we want to be among the top ten telecommunications operators in the world. We want to be an operator – and we are effectively where we want to be – and continue being an operator that contributes to the economy and the society where we invest a higher value than we extract from it. That doesn’t mean we are making losses and we are not actually squeezing every penny out of the market. This is a business discussion. What we are saying is that for every dollar extracted from a specific market we contribute in value to that economy and society much more than one dollar. We believe effectively that for every $700 invested through our infrastructure development investments, a job must be created somewhere in that society whether inside or outside of telecoms.

Is this a benchmark you have devised?

No, this is the World Economic Forum’s benchmark. It was an OECD study on the Mediterranean countries published by the World Economic Forum. I am looking at this as a benchmark. If beyond this, we are looking at the relations to our shareholders, it is not our objective to be in the top ten for the sake of being there. Our objective is to be large enough to create synergies, to create economies of scale, to be able to serve our customers with the best possible prices and the best possible offerings. The objective is to remain profitable from our international investments, to diversify our base, and create enough scale to give us the economies that we are looking for.

On the side of profitability you said here at ArabNet that STC last year generated $100 million in Saudi Arabia in direct billings related to mobile application and content services. Is it correct that a lot of that revenue is created in profit sharing between STC and content developers?

Yes.

I also understand that a lot of content demanded by your customers has specific cultural relevance in Saudi Arabia, such as information of Hajj rites. Where do you see your position between commerce and cultural obligations?

Part of our strategy is always to be culturally sensitive to the market we operate in while preserving our values and our beliefs and our value system. In fact, there is huge demand for content that is Arabized and tailored to the culture that we operate in. That doesn’t mean it contradicts with profit making. For example, among the most popular contents and applications we have are religious contents. That content serves the requirements of the market, is culturally an extremely valuable content, and at the same time provides the right profits for the developer and for the producers and for us as distributors.

If you agree that mobile applications are at the drivers of future growth in the telecommunications industry, one will expect this to be the center of competition. In the past, we have seen for example the previous browser wars. Will the next wars be those of app stores, do you expect a commercial war between the STC store and the Android App market or Apple’s App store?

I don’t see this emerging into a full-fledged war because there is always going to be demand for global type of applications and contents that are useful to everyone. I think what we can do is differentiate on relevance. There could be market specific applications and activities that we can do that complement global international applications. This is what we would encourage developers to focus on and this would also allow those developers to differentiate themselves from the masses of developers in India, in Europe, in China, the US and all over the world.

But there is also the financial element. You are not part of the revenue stream if the app is sold to your customer via the Apple or Android markets.

Let me put it this way: how much is that revenue worth? It is a small portion and that revenue will not exceed ten to 15 percent of the total revenue base. This industry has been there for 150 years and it has been making the bulk of its revenues from connectivity services. I am not just saying connectivity infrastructure but access and capacity.

So you see your role also for the future to be providing access more than building a community and provide content?

I am not saying no but the dominant part of our revenues will still come from selling capacity, access, and quality of service. By being smart carriers we bring value to the industry and continue to build value for the next 150 years because somebody has to create that part of the industry. If we try to pretend that we will turn our business model into applications and contents and go and compete with every developer in the world, which means we will have to develop our own content, it doesn’t make sense because we don’t have the mass.

If someone were to try to convince you to scale up in other ways and add non-telecom capacities by for example buying a bank or buying a handset maker, what would you say?

That would be the biggest mistake because if you buy a bank, you limit yourself to the license of that bank.  If you buy a handset player, you limit yourself to the creativity of that one player. Trying to do other people’s business is wrong. Equally, if Google is trying to become a telecoms operator, it is also wrong. They will fail.

As STC has a growing international profile and has recently been invited to join the International Telecommunications Union’s Broadband Commission, what do you see as your role and contribution in shaping the global broadband culture and its social and socioeconomic performance?

Our position is to turn what today is broadband into the narrow band of the future. [We also aim] to create a differentiated quality of service approach, which is based on the experience of consumers and on the value they extract from it and are willing to pay for as well. This maintains value across the telecommunications industry and enhances the ability of the top players to use the broadband infrastructure effectively and it creates a system by which everyone can happily live for the next 20, 30 years until the next big thing comes up.

What can your specific experience as operator in Saudi Arabia as a market with extremely high mobile phone penetration and at the same time vastly different income groups tell you about the priorities for the development of mobile communications in the coming few years in developing and emerging markets?

Our experience is summarized in one word, competition. Whenever you have fair competition in a market regulated by a transparent, fair and independent regulator with a clear government strategy to enhance and build the ICT sector, knowing full well that this sector will build the entire economy, this is where you get a system that caters to everyone and enhances penetration, provides affordability to everyone, and creates a momentum in the economy and society.  

Is STC planning to grow into any new areas?

We always look for opportunities.

Are there still opportunities for expansion of telecommunications through new licenses or acquisitions?

There are always opportunities and the price is a function of the value to the operator. If it is something you can extract value from, adjacent to a market you have, the synergies, why not? You can pay for it the proper value. It is always based on the right calculations. We always look for opportunities that complement our portfolio and at the same time, on a standalone basis, make a business case. 

 

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Society

The Tobacco Keeper

by Ellen Hardy
written by Ellen Hardy

How do you tell the story of modern Iraq? For novelist, film producer and war correspondent Ali Bader, it’s not enough to recount the terrible cycles of violence that have made his country unrecognizable. His fictional account of Iraq in “The Tobacco Keeper” — first published in Arabic in 2008 as “Hareth al-Tabgh” and newly out in English from Bloomsbury Qatar — is filtered through an identity that is as complex and multivalent as history itself. As an idea, it intrigues, but as a finished book, it becomes mired in its own ambition.

The unnamed journalist narrator takes us through 80 years of Iraqi history, with diversions through Israel, Moscow, Iran and Syria. An ambitious and wide-ranging setting for a political tale of the Middle East, Bader’s novel is also an intensely personal and artistic one. Its central character, a musician, reflects after a performance for Saddam Hussein: “There has always been an ego that watched me and made fun of everything I did. Don’t those great politicians possess a similar ego that watches them and makes fun of their acting and role-playing?”

This existential angst — for the artist, and for Iraq itself — underpins the unfolding plot, and with good reason: the musician character turns out to have lived three different identities during his life, all filtered through the political convulsions of Iraq. Born Yousef Sami Saleh in 1926, a middle class Iraqi Jew exiled to Tel Aviv in 1952, he witnesses what, for him, was the key event in the collapse of Iraqi values: the 1941 Farhoud incident, involving a series of violent and murderous attacks against Iraq’s Jews, events Bader describes as “a real turning point in the history of this society, being the first attack of its kind against its own citizens, and opening the door to civil conflict. Although historians have devoted little attention to it and have done nothing to address our collective amnesia, we can safely say that all the subsequent civil strife in Baghdad may be traced back to what happened on that fateful day.”

At moments like these, there is a real sense of atmosphere in the book, and of a fresh analytical perspective that brings internal Iraqi struggles to the forefront of history, but the narrative never settles for one answer. In closing, the narrator muses, “How could we define the identity of the enemy? Sectarianism? Imperialism? Foreign Intervention? Was it the desperate defense of private wealth, the class system, international law, or the conflicts of the governments? How could one label what was happening?”

The character Yousef Sami Saleh avoids labels as thoroughly as his home country. With a forged passport, he escapes Tel Aviv to Moscow and then Iran, returning to Iraq as the Shia Haidar Salman in 1958 after the fall of the monarchy, only to be deported again in 1980 as Iraqis with Iranian affiliations lose their citizenship in the shadow of the Iran-Iraq war. In 1981 Salman changes his identity a third and final time, for that of Kamal Medhat. This was the Sunni character that brought him back to Baghdad for the third and final time — a Baghdad that would, in 2006, claim him — an 80-year-old man kidnapped and murdered by an unnamed armed group. With a characteristic sense of tragedy, the narrator declares, “He thought that identities spelled the end of the world.”

The book is a worthy choice for translation by Bloomsbury Qatar — it was long listed for the Arab Booker Prize, and Bader himself is well known and respected in Arab literary circles. But despite some poignant moments, its overall execution is frustrating. Bader’s often dry, repetitive prose and paper-thin characterizations seem to have suffered from both indifferent translation and uncritical editing, resulting in a text which, while fascinating in set-up, will neither convert new readers to Arab literature in translation nor thrill those already on the lookout for titles previously unavailable in English. The title of the book comes from a poem, “Tobacco Shop” by the Portuguese poet Fernando Pessoa, whose three narrators — the author’s heteronyms — correspond to Saleh’s three lived identities. Again, a fascinating possibility, but the repetitive musing on this connection drags the book down further. At a time when the appetite for voices from the Arab world has never been greater, this is a missed opportunity.

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Comment

An unnecessary tragedy

by Nadim Houry
written by Nadim Houry

Alem Dechasa-Desisa’s death at age 33 would have probably gone unnoticed — like that of so many other migrants — if not for a widely circulated video showing her being physically assaulted by a man, later identified as labor recruiter Ali Mahfouz, at the gates of the Ethiopian consulate 20 days prior. Dechasa-Desisa had come from Ethiopia to Lebanon in December 2011 to work as a domestic worker. She committed suicide on March 14. Caught on film, the abuse of Dechasa-Desisa triggered a public outcry that pushed the prosecutor to charge Mahfouz on March 22 with contributing to and causing her suicide. 

The abuse of Dechasa-Desisa was outrageous and its perpetrator must be held accountable. But the issue here is not just the criminal behavior of a recruiter, but the entire system of recruiting and regulating migrant domestic workers. Dechasa-Desisa’s death was entirely foreseeable and could have been prevented had the Lebanese authorities granted domestic workers their most basic rights.   For years now, human rights groups have been raising the alarm over the high suicide rate among domestic workers in Lebanon. A 2008 Human Rights Watch study concluded that domestic workers were dying at an average rate of one a week, mostly from suicides and failed escape attempts from buildings. KAFA, a Lebanese women’s rights group, compiled information about nine deaths for the single month of August 2010. This year, The Guardian newspaper reported on the death of Lila Aacharya, a Nepalese woman who arrived to Lebanon in late 2011 and died on January 29, her body found dangling from a balcony window near Beirut. A few days later, Paltishi Hendor, an Ethiopian domestic worker, was found dead after she hung herself at her employer’s house in Keserwan. The situation has gotten so bad that three years ago an ambassador from one of the ‘labor sending’ countries told me that he was no longer running an embassy but a funeral parlor. 

Suggestions that these women were simply unstable are unfounded. Interviews with embassy officials, and friends of domestic workers who committed suicide, suggest that the main factors in these deaths are isolation caused by forced confinement, excessive work demands, employer abuse and financial stress. Dechasa-Desisa’s overriding worry, according to a social worker from the Caritas Lebanon Migrant Center who visited her at the psychiatric hospital a few days prior to her death, was her ability to feed her two children in Ethiopia and repay the debt she had incurred to travel to Lebanon. 

Faced with overwhelming evidence of a broken system that regularly drives migrants to despair, the Lebanese authorities’ lack of an effective response amounts to negligence. Under pressure from rights groups and countries that started barring their nationals from coming to Lebanon, the authorities introduced a compulsory standard employment contract for domestic workers in January 2009. But the contract provides weak protections, is only available in Arabic — a language most workers cannot read — and is rarely enforced. Most importantly, the authorities took no measures to grant these workers the right to move freely during their time off, which would help end the isolation they often endure.  

If Lebanon wants to end the high suicide rates among migrant domestics, it must fundamentally revisit the current kafala (sponsorship) system that grants employers so much control over domestic workers’ lives. As one ILO representative told the media, the kafala system creates “a total dependency of the worker on the employer for her food, sleeping, health, everything. Total dependency creates total vulnerability and opens the door wide to exploitation.”

Lebanon needs to catch up with international standards by ending this dependency and ensuring that workers can — as a matter of law — leave the household during their time off. Visa regulations must be amended to allow them to live on their own if that is the arrangement they prefer. And finally Lebanon must reexamine the role of private recruitment agencies whose business is to make money by finding and selling cheap labor to Lebanese families. At a minimum, the authorities need to ensure that all agencies are licensed through a rigorous inspection process and monitored regularly. Better still, they should explore an alternative recruitment process that reduces the role of intermediaries.

Short of that, Dechasa-Desisa’s tragic end will be far from the last. 

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