Economics & Policy

Executive Insight – Stronger but not immune

by Fabio Scacciavillani
written by Fabio Scacciavillani

After months of burying their heads in the sand, markets and policy makers are waking up to the reality of a double dip in many mature economies. The logic of the recovery was quite simple: the massive bank bailouts, the fiscal stimulus and the monetary injections were supposed to provide temporary support to avoid depression while the deeper underlying causes of the crisis were addressed and resolved.

The reality has been utterly disappointing. As soon as a timid recovery materialized in mid-2009, world leaders, financers and central bankers patted each other on the back, hailing the “green shoots of growth” in a self-congratulatory ritual. Hence difficult but unavoidable decisions were postponed day after day while the stock market was inflated by the liquidity injected by the United States Federal Reserve and, to a lesser extent, the European Central Bank.

Once the ‘quantitative easing’ programs expired, stock markets lost steam, and by the second quarter of 2011 all major economies were close to stagnation.

Faced with evidence of declining economic activity, most media and analysts started to drum up the “soft patch” rhetoric, suggesting the slowdown was a mere pause in the global recovery. Yet by the summer, with the intensification of the fiscal crisis in Spain and Italy, the smoke and mirrors were wiped away, revealing a chronic lack of leadership and policy direction, laid bare by the squabbles over the debt ceiling in the US. Investors were forced to realize there was no long-term plan to tackle the crisis.

Belatedly, the reality of an impending double-dip recession has sunk in, although the extent and the duration are still being debated. But it will not be a matter of a few months given that there is no catalyst for growth in sight. Nor are current policies going to rectify the situation in the short-term. It is unlikely that the structural reforms that are key to boosting long-term growth prospects — including revamping fiscal systems, European Union governance, financial regulations and welfare programs —  will be enacted before the end of the year. In the meantime risks of a large sovereign default or other disruptions loom.

Buoyed by barrels

So far the Gulf Cooperation Council (GCC) has emerged relatively unscathed from the global economic crisis, not withstanding the effects of the Arab uprisings this year. But how long can this last? The resilience results from healthy growth in the emerging markets — above all in China —  which has maintained high oil prices and international trade. If the recession deepens, we could experience a situation similar to that in early 2009 when the oil price plunged below $50 a barrel.  

GCC states remain obviously reliant on oil revenues, which account for close to 78 percent of total exports. Saudi Arabia in particular has embarked on a program of increased social spending to defuse political tensions. Standard Chartered estimates that Saudi Arabia will incur budget deficits if the oil price falls below $106 per barrel.

Break-even oil prices have increased in the rest of the GCC, although they are still below current market prices. The UAE and Kuwait need oil prices at $80 per barrel to balance their budgets, while Qatar based its $6.1 billion surplus budget projections for 2011 on an oil price assumption of $55 per barrel. Oman’s 2011 budget was drafted with a slightly higher figure, at $58, and while higher spending has been incurred the high average oil prices of $106 so far in 2011 gives them a fairly comfortable cushion. 

Even the International Monetary Fund in its latest World Economic Outlook, issued in late September, underscores that growth in the MENA oil exporters will be almost 5 percent in 2011, gliding to almost 4 percent in 2012. The IMF mentions downside risks from political unrest and a deeper fall in commodity prices (in the baseline scenario oil prices are expected to fall by only 3 percent on average in 2012), but overall the picture is rather positive, especially if compared to mature economies.

If the global picture were to deteriorate, there are two elements to keep in mind. The lessons from 2009 have been internalized: commitment to public spending kept the economies going then and will again act as an anchor of stability in 2011/12.

Actually, governments would be wise to reiterate their commitment to expenditure on infrastructure now, without waiting for the situation to worsen. This will reinforce confidence, thereby sustaining credit, private investment, consumption and the job market.

Lessons learnt

There is an even more important factor compared to 2009: financial markets have improved markedly. High-grade credit from the GCC has been buoyant, with Abu Dhabi and Qatar outperforming most sovereign benchmarks from emerging markets. International portfolio managers have developed a more insightful knowledge of the region, whereas in 2008 there was hardly any significant fixed income market.

During 2011 regional bonds withstood the bouts of global volatility, in contrast to 2009 after the Nakheel default. Traders for example recall that Qatar sold $7 billion in bonds in November 2009, subscribed mainly by investors in the United States and the United Kingdom, and as a result of the turmoil ensuing the Dubai World debt moratorium, some portfolio managers sold them on the belief that the Emirate was part of the UAE.

The notable progress made in the past two years in creating a fixed income market and some central banking facilities has paid off: liquidity is improving dramatically, with several benchmark issues now gettingt he attention of large funds with the analytical resources to assess the economic situation professionally and not hysterically. Crucially, GCC paper finds better acceptance in the repurchase (repo) market with low haircuts. This is of the utmost importance because in crises heightened risk aversion affects dramatically those securities that do not provide liquidity and that cannot be used as collateral in repo operations.

The Lehman bankruptcy was essentially a run on the international repo market and hit the GCC banking system because short-term financing became difficult. If such an extreme event were to take place again the lines of defense are stronger. Additionally, commercial banks have painstakingly cleaned their balance sheet of non-performing loans, while name lending after the Algosaibi-Saad affair is being replaced, albeit sluggishly, by careful assessment of balance sheets and business plans.

Not everything is rosy: corporate governance remains patchy, macroeconomic statistics in some areas are far below emerging market standards (in the UAE especially) and stock markets remain extremely fragmented and illiquid. Sovereign bonds from the region are not included in emerging market indices; hence the GCC bonds are an off-index choice for most international funds. This means they are the first to be dumped by investors whose portfolios track broader indices.

In conclusion, thanks to solid fundamentals and an improved financial landscape, the GCC can reasonably withstand another mild recession lasting two or even three quarters, but the ripple effects of a deeper downturn or a traumatic sovereign default would be felt on Gulf shores. Accumulated wealth is a strong bulwark, not total protection.

 

 

 

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Society

The end is nigh for the age of rage

by Jeff Neumann
written by Jeff Neumann

Lebanon has among the slowest broadband Internet speeds in the world. This has been well documented, and as Executive went to press the country was ranked 169 out of 170 by broadband monitor Ookala — putting Lebanon ahead of only Iran, while trailing directly behind Mali, Bolivia and Sudan. And not only are Lebanese Internet connections painfully slow, they are also prohibitively expensive.

The grand rollout of the upgraded broadband digital subscriber lines (DSL) in Lebanon is set to take effect on October 1, according to comments made by Telecommunications Minister Nicolas Sehnaoui to reporters in late September. With the assumption that the plan will be realized and broadband speeds will move beyond a crawl Executive found out what the increase in bandwidth could mean for businesses here.

The hold up

Because of the extortionate cost of a decent Internet connection in Lebanon today — by all accounts the most expensive broadband in the Middle East — running a web-based business can be extremely frustrating and logistically problematic. And one does not have to look far to find the source of such frustration. Tom Shepherd, an analyst for telecommunications market research firm TeleGeography says, “On the subject of affordable access to newly increased bandwidth, the overriding factors are local infrastructure and local commercial agreements, often dictated by political decisions, [which is] particularly true in Lebanon.”

Lebanon has had the proper fiber-optic network to handle upgraded Internet speeds in place for years, but government bickering has kept the additional bandwidth unavailable. This inaction has caused “puzzlement” among members of the telecommunications industry and the government, Shepherd says. Most current broadband subscribers would likely use a somewhat less innocuous adjective to describe their feelings about the holdup.

Lebanon is connected to the India-Middle East-Western Europe (IMEWE) submarine cable that runs from mainland Europe to Cyprus, and on to Tripoli. The IMEWE cable has designated levels of bandwidth assigned to each country it is connected to, as Shepherd explains: “Of IMEWE’s overall design capacity of 3.84 Tbps [terabytes per second], 120 Gbps [gigabits per second] is allocated to Lebanon.” And Lebanon is connected to more than just the IMEWE cable.

“Increased bandwidth is also coming via other cables — potentially a larger capacity increase than the IMEWE launch,” Shepherd says, with upgrades planned for the Cadmos submarine cable that also links Lebanon and Cyprus, in addition to upgrades on the Berytar cable running between Syria and Lebanon. Clearly, and unsurprisingly, the main culprit in the failure to bring Lebanon’s connectivity up to date is not infrastructure, but rather government wrangling and bureaucracy.

Average consumers aside, perhaps the biggest beneficiary oft he upgrade will be web developers, who today find themselves constantly behind on the latest technology, trends and software. Put simply, their business is wholly dependent on connectivity. Nagib AbdelNour, head of business development at Koein, a Lebanon-based web and software development company, says that for his developers it is difficult to even download new software that is essential to keep the company current in a highly competitive market, putting the company at a distinct disadvantage to regional rivals.

One such technology currently unavailable in Lebanon is cloud computing, or the sharing of information and software over an online network. “[We’re] left out of new products, like applications. You can’t use them here,” AbdelNour says. “Cloud computing is the future of computing. It could take four years for  Lebanon to get into serious cloud computing. That’s a long time in this business. Everyone is moving to cloud computing, and for this you need a good and cheap connection.”

On a consumer level, cloud computing is used to store and share photos, music and other media through services offered by Apple, Amazon and many others. But being years behind on this technology ensures that local developers cannot stay as competitive. AbdelNour says that while the initial upgrade will be “good for today,” he warns that it is far behind other countries in the region, and as others progress Lebanon will “not be ready for tomorrow.”

Another missed opportunity for Lebanon is the global information technology (IT) outsourcing market. “All of the big corporations are outsourcing to Egypt and Dubai,” AbdelNour says. He notes that many Lebanese can speak at least three languages and that the country should, under normal circumstances, be well positioned to attract large-scale IT outsourcing contracts from some of the tech world’s biggest players. But without a fully functional, modern fiber-optics network, “you will never see them in Lebanon.”

While the revolution in Egypt has stifled economic growth and investment, the country remains a perennial favorite atop the National Outsourcing Association’s ‘Offshore Destination of the Year’, and is shortlisted for this year’s award in November. Last year alone Egypt generated over $1 billion in IT outsourcing revenues from overseas contracts, and revenue predictions for the coming years are even greater.

But even as frustrations with bureaucracy and inaction have reached fever pitch, the positive aspects of better bandwidth are countless. As businesses and consumers spend more time online, advertising rates will increase, too. According to a recent study by Omnicom Media Group, online advertising in the Levant and GCC this year should take up some 9 percent of a roughly $2 billion regional advertising market. Lebanon’s share of that can only grow with time as the means and technology catch up.

Mobile broadband is set to take off as well. TeleGeography’s Shepherd points to the vast experience that the management behind Alfa and MTCTouch — Orascom Telecom and Zain Group, respectively — have with mobile broadband networks around the world as reason to be hopeful that up-to-date technology could be quickly and efficiently implemented. “Mobile broadband —using the new upgraded Internet capacity — will of course also be very important as a means of Internet access, as in many countries around the world where cellular has often overtaken fixed access as the primary method of getting online,” he says.

Security concerns

With increased bandwidth will also come the need for better online security. According to Ziad Badaoui, product manager for security systems at BMB Group, a Beirut-based IT consulting firm that partners with Cisco, McAfee and other global online security companies, “Across the years, security threats have evolved from traditional computer viruses, which were commonly detected by legacy antivirus applications, to sophisticated, blended threats with one major target: steal as much data as possible.” Large-scale data  theft is a terrifying thought for any business owner.

According to BMB Group’s Product Manager for Security, KarimAbillama, as “businesses are moving into ‘always on’ reliable connections, allowing them to host E-services, web-based and mail services in their data centers,” the multitude of security threats will only grow. “Although this [always on] approach allows organizations such as banks, telcos [telecommunications operators] and universities to offer reliable services such as e-banking, e-portals, e-learning, outlook web access and CRM [customer relationship management], security risks from both the public accessibility of those services and the variety of threat vectors targeted at them make enterprises realize that security is a big concern.”

Abillama points to a variety of constantly evolving threats, such as denial of service (DoS) attacks and distributed denial of service (DDoS) attacks, whereby a website is overwhelmed with a flood of data that can bring a company’s online operations to a halt. These attacks are also used to steal vital information from businesses.

Consultants at BMB Group also tackle the problem of inefficient and, in turn, costly Internet usage in the workplace.

“Solutions include enterprise class cache engines that will enhance the Internet browsing experience, lower the Internet overhead fees and offer better and faster response,” Badaoui says. “These caching solutions are usually bundled with traffic shaping solutions that help IT administrators prioritize bandwidth per service or user. Packet shaping tools ensure the availability of Internet bandwidth whenever needed, as well as fairly distributing the available bandwidth among users.”

Global markets

At an e-commerce event during Beirut’s Social Media Week in September, Louise Doumet, the co-founder of Lebanese online fashion retailer Lebelik.com, told attendees that she was surprised to notice people from all over the world were suddenly buying from her. As she put it, marketing online through Facebook and other social media brought in “clients [we] never even thought of,” through friends and acquaintances sharing links and pictures, commenting on purchases and passing it on through their personal networks.

At most, one third of the audience at the e-commerce event said they had purchased something online in Lebanon. Better and cheaper connectivity will increase this, opening up countless opportunities for businesses. Running a web-based retail business keeps overhead costs far lower than, say, a traditional storefront with high rents and costly maintenance.

The unlimited potential for small and medium-sized enterprises to thrive in a modern online environment could also spur a new generation of entrepreneurs. “Today’s social, economic and political pressures have driven the corporate environment in a continuous quest for cost reductions. Businesses must increase their responsiveness to change and continue to minimize operating costs,” says Sandra Salame, senior consultant at BMB Group. “New paradigms, such as software as a service and cloud computing are emerging; in the near future, many organizations will, for example, save cost by renting e-mail, backup and security.”

And the future benefits to citizens are endless; “Applying those trends to industries like healthcare, we would see the emergence of tele-health, doctors and medical staff collaborating together, reaching remote locations, smart connected medical devices that would relay information in real time,” Salame says.

Jawad Abbassi, founder and general manager of Arab Advisors, an Amman-based media consultancy firm, calls high speed Internet in Lebanon “essential, like water.” He says that Lebanon “cannot have a vibrant e-commerce or online banking sector without reliable broadband,” and wryly adds, “We’re really just stating the obvious.”

Hurdles to come

In the near term for Lebanon, “average fixed broadband speeds will double or triple,” says TeleGeography’s Shepherd, adding that “Ogero has also piloted direct fiber access [fiber-to-the-home] for end-users in Beirut, which is expected to eventually offer speeds of at least 25 Mbps [megabits per second] and hopefully higher.”

It remains to be seen just how quickly that will come into effect. “The speeds in different areas of the country also depend on how complete Ogero’s fiber-optic transmission network is. Ogero began the roll-ou tof a nationwide next generation [Internet protocol] backbone in 2010 to support the spread of high-speed services,” he adds.

In the long term, the significant increase in bandwidth will bring with it new consumer demands — such as the ability to stream high quality videos, share large media files and open up many new opportunities. It will eventually make Lebanon a far more attractive destination for multinational corporations.

TeleGeography’s research shows that the cost of an Internet connection in Lebanon on average has not changed between 2008 and 2011 “for low and high usage customers,” Shepherd says.

The telecommunications ministry’s new table of rates indicates an 80 percent drop in cost, and there is a cap on how much Internet service providers can charge consumers. With faster broadband Internet, companies can conduct video teleconferences with clients or other branches overseas. Online banking will become quicker and more prevalent. The list of knock-on effects for businesses here is infinite.

While there are many reasons to be hopeful, do not count on your Internet connection becoming lightning fast overnight, either. Shepherd says, “In South Africa too, recent new international cable launches have taken a longer time than predicted to filter down to the end-user in terms of cheaper and faster broadband, largely due to complexities in the competitive domestic wholesale bandwidth provider market.”

The many variables and complexities at play here should keep things interesting, to say the least.

 

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Society

Your life on the line

by James Reddick
written by James Reddick

The concept of identity theft has long been a theme of the science fiction world. Jack Finney’s 1954 classic novel, Invasion of the Body Snatchers (later adapted into film no less than four times), is driven by uncertainty over who is a clone ­— duplicated by an amorphous extra-terrestrial race — and who remains human.

While the consequences are certainly more mundane, and the means more temporal, online identity theft is presenting a similar real-world scenario that has the potential to affect anybody with Internet access.

Take, for example, the case of Fafi Merhi, who has now had parts of her profile “cloned” on Facebook twice. In both instances, Merhi says,the perpetrator created an account under a different name from hers while using all of her pictures. She or he then attempted to add her friends, and then afterwards their friends, on a few occasions (that she was told about) sending messages to contacts with ambiguous come-ons such as “Let’s get to know each other”.

As far as she knows, the culprit had no financial motivation, and was most likely a “friend” or “friend of a friend”, since they would have had to have access to her photographs and list of contacts. When a tech-savvy friend gained access to the impostor’s affiliated email address, Merhi disconcertingly discovered that it was [email protected].

“I don’t know what satisfaction they could get out of this. Honestly, I felt sorry for this person,” she says. Sympathy aside, the consequences of cloning can be dire, especially since reporting security breaches on Facebook is a notoriously slow process. Merhi’s first clone account was up for six months before it was taken down, despite repeated complaints submitted through Facebook’s online security form.

“Consider if Fafi was working in a government position,”says Michael Chaftari, CEO of newly launched Beirut-based social media monitoring company Fetch. “Someone could seriously damage her reputation.”

‘Social engineering’

While online risks are typically associated with malicious software, predators more and more target users’ anticipated behavior. This, says Chaftari, is known as “social engineering”, a cynical approach to information gathering that manipulates a user’s proclivity to trust. This can come in elaborate forms, from pop-up windows that pretend to be a trusted site asking for a user name and password, to rummaging through garbage bins in search of clues about passwords, social security details and other sensitive information.

In the case of Facebook, fake accounts are the most common channels for social engineering. If a beautiful, scantily clad woman with no mutual friends invites you on Facebook, it is best to resist the temptation. Same goes for shirtless men, or any stranger for that matter.

With faster speeds in Lebanon an eventual reality, the nature of Internet usage is bound to change. Online shopping, for example, will no doubt increase, as companies are finally able to adapt to the 21st century. But as the usefulness of the Internet in Lebanon increases, the need for vigilance will rise accordingly as sensitive information will be more frequently submitted online.

“Your online presence is no longer limited to communication,” Chaftari says. “People are using the Internet for more serious things.” While Facebook remains a largely light-hearted social platform, it can be the gateway for predators to access more sensitive information.

With this in mind, Executive enlisted the help of Victor Sawma, chief technology officer and partner at NetDesignPlus and a lecturer at Notre Dame University in Lebanon, to dissect the risks of Facebook to the everyday user and to explain what he or she can do to protect themselves.

What are the potential security risks of using Facebook?

Connecting people is the goal and soul that drives this giant social network. But with each of Facebook’s innovative new methods to communicate — such as the ‘Places’ application, which is essentially an opt-in online tracking device — come new risks to users’ security. That in mind, Facebook is constantly trying to create a balance between the two; these efforts have increased lately with the release of Google+, which was advertised as an antidote to Facebook’s security “minuses”, a key feature for users to make the migration to a new platform. Facebook’s response was a rash of  security upgrades, such as more finely tuned privacy controls and increased default security settings.

From a security perspective, Facebook is prone to the following issues:

Identity integrity: This is directly related to when somebody else tries to pretend to be you or even to be your business and abuse your social relations. This is very common lately on Facebook, especially at the personal level. But it is also possible in some cases to see this taking place at the business level by somebody creating a business page for a competitor through a fake account for the sole purpose of harming the image of that business.

Personal/business privacy: This is related to information being leaked to other parties, whether directly or indirectly. It is not necessary for Facebook users to write about something for other people to know about it. The existence of a relationship, along with photos and status updates, are more than enough, in the majority of the cases, to allow other people to learn about information that you did not intend to tell them about.

Trust-relay issues: Facebook users are expected to trust applications  — additional programs that exist within the structure of Facebook —  by giving them access to personal, and sometimes sensitive, information. The majority of users do not realize how harmful this can be. For example, why would an application need access to publish on your wall if, at the same time, it claims that it will not tell anybody anything without your previous consent? The majority of users do not question why a certain application is requesting permission to certain information. They trust that application simply because it comes from Facebook.

What can users do to protect themselves?

The only protection that Facebook users can have is awareness. They have to learn what permissions are about, how the social network (called the social graph) of Facebook works, and so on. But is not an easy task, even for security experts. We end up, in many cases, uncovering potential risks that can rise from certain permissions or activities. As a start, Facebook users must consider giving permissions at the minimum level needed. They must also remember that giving an application permission once means that this application will gain access to the information that it needs (name, email, gender, friends list, etc.) and will still have that information even if that permission was denied later on. The majority of applications, if not all, save the information that it needs once permission is granted.

Is there any defense against cloning?

Any person (real or virtual) who knows or has access to your information can attempt to clone your profile. Who can access sufficient information to do so convincingly depends on your own privacy settings. Recent updates to Facebook’s privacy functions now mean that users have more control than ever over who can access their content; almost every facet of a Facebook user’s online presence can be designated as visible to either just their friends, friends of friends or be left completely unrestricted, visible to (and thus able to be ‘cloned’ by) anyone. Facebook also allows users to narrow this down further by creating specific lists of friends who are able to access their ‘wall’, profile updates and photographs. Users are also now able to embargo ‘tags’ in friends’ photos and restrict who can see any tags that they do choose to accept.

Where does Facebook go from here?

Facebook is currently undergoing dramatic changes at the security level, in general, and privacy and access control level in particular. A re-engineered news feed now allows users to better control what is being written about them by friends, family and other parties. Users are also now being asked about certain sensitive posts before Facebook posts them within their News Feed. Sawma believes this process will continue in the few coming months as Google+ pushes more and more into the social network market share.

 

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Increasingly called to arms

by Nicholas Blanford
written by Nicholas Blanford

The challenge facing Syria’s opposition protestors seems greater today than at any other time during the six months of demonstrations against the regime of Syrian President Bashar al-Assad.

Despite more than 2,600 people dead, according to United Nations figures, the imposition of sanctions against the Syrian leadership and an international outcry, an undaunted Assad has redoubled his efforts to crush the uprising by brute force.

This durability is causing dismay among opposition protestors who, for all their bravery in facing tanks and snipers on a near daily basis, have yet to gain the necessary momentum to topple the regime. Increasingly, there is talk in opposition circles of the inevitability of resorting to weapons to confront the regime. Reports are mounting of attacks against Syrian security forces and of arms being smuggled into Syria. The prices of black market weapons in Lebanon continue to climb, as they have done since mid-March when the uprising began in Syria. Although some of the demand is domestic, most of it is driven by the crisis in Syria. At this stage, it appears that the arms buying is being conducted on an individual basis, with Lebanese intermediaries purchasing illegal weapons, and legal shotguns, and selling them to Syrian contacts. The bulk of the opposition says it isdesperate to keep the demonstrations peaceful. Yet they admit that there could come a breaking point when protestors will no longer endure being gunned down in the streets each day and will choose instead to shoot back.

“The regime is going to do more killing, so the only way we can win is to have neutral observers, and lots of them, in Syria to monitor what’s happening,” said Ahmad, an activist from the port city of Banias who escaped to Lebanon last month. “We don’t want to go for the option of an armed struggle against the regime. But if the international community does not step in, we are afraid that it will lead to civil war.”

Resorting to weapons not only risks plunging Syria into civil war, it would also play neatly into the hands of the Assad regime. The Syrian leadership has consistently said it is fighting “armed terrorist gangs”, a claim that presently few believe. But such accusations would be harder to refute if the opposition takes up arms. Furthermore, the Syrian army — the elite units at least — and the intelligence services still back Assad, which means the regime is well positioned to confront an armed struggle.

The Syrian opposition, which remains critically divided with no single unifying figurehead nor effective, overarching organizational body that can speak for the opposition at large, cannot expect anytime soon an international intervention in Syria, similar to the NATO-led campaign to oust Colonel Muammar al-Qadhafi.

Syria, after all, is not Libya. Unlike the isolated North African country and its eccentric ruler (who was scorned by his fellow Arab leaders), Syria lies in the heart of the Middle East and wields influence — of a potentially malevolent nature — throughout the region. Syria’s Arab neighbors, and Israel, are wary of the Assad regime exporting mayhem and instability in the admittedly unlikely event that the international community chooses to intervene militarily in support of the opposition.

Instead of an overt military intervention, it is perhaps likely that interested parties — the United States, Iran, Saudi Arabia and Turkey  — will intercede to play a more active role in shaping the future of the country. Iran will probably continue to support the Assad regime for the time being, even as it sends outfeelers to some elements in the opposition to explore the possibility of whether any post-Assad administration in Damascus will continue to abide by the three-decade Iran-Syria alliance. Among the signs to watch out for are defections by senior Alawite military officers, some of whom may prove susceptible to under-the-table offers of cash and immunity from prosecution if they were to abandon the Assad regime and side with the opposition.

Another indicator would be the emergence of more organized transfers of weapons and communications equipment to the opposition, suggesting that the revolution has found financial sponsorship. Social media tools such as Facebook and Twitter may help promote a revolution and win international sympathy, but they are not enough to defeat a regime that shows no hesitation in using brute force to ensure its own survival.

NICHOLAS BLANFORD is the Beirut-based correspondent for The Christian Science Monitor and The Times of London. His book “Warriors of God: Inside Hezbollah’s Three-Decade Struggle Against Israel” will be published by Random House this month

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Society

Book Review: The Road to Fatima Gate

by Paul Cochrane
written by Paul Cochrane

A Book by Michael Totten

There has been a flurry of books published over the past few years by Westerners, primarily Americans, describing in depth their brief encounters with Lebanon and the Middle East. Their insights are telling not so much for the informative content, but rather how this budding vein of adventure writers perceives the region and its people.

Often misplaced in bookstores under ‘political journalism’, these titles — including Ted Dekker and Carl Medearis’ “Tea with Hezbollah”, Jared Cohen’s “Children of Jihad” and Lee Smith’s “The Strong Horse”  — ought to be stacked closer to the ‘adventure/fantasy’ section.  And relegated to the bin of banality they would be, did they not also wield such a dangerous degree of influence over the shaping of United States foreign policy. 

It is in this light which one must regard Michael Totten’s “The Road to Fatima Gate”, released earlier this year by Encounter Books, a publisher self-described as being a press for the “serious conservative”. Fitting, then, that the book is written from what could be called a ‘Western extremist’ perspective.

“The Road to Fatima Gate” traverses Lebanon’s politically tumultuous time between 2005 and 2008, from former Prime Minister Rafiq Hariri’s assassination and the Syrian army’s subsequent withdrawal, through the July 2006 war and the civil conflict of May 2008. Totten is in Lebanon only part-time during this period, but he does not let this pollute the aura of comprehensiveness he lends his accounts. Nor does the author let the selectiveness of his associations temper the license he allows himself to make sweeping generalizations regarding the Lebanese mindset — Totten has minimal meaningful interaction with ‘people on the street’, instead openly preferring the company of expatriates and barfly drinking buddies, with his most authoritative source on the country being Charles Chuman, an American-Lebanese from Chicago who came to Lebanon in 2003 and whom the author describes as knowing “the country better than almost anyone I ever met.”

Totten recounts the 2006 war in Lebanon from Northern Israel and being abroad when rival political factions faced off in block-to-block combat in May 2008, Totten retells the experience largely through the eyes and ears of Chuman, complete with dialogue and inner thoughts. (Perhaps tellingly, Chuman, Smith and Totten all spoke at the annual Institute for Policy and Strategy conference in Herzilya, Israel, shortly after the 2006 war.)

Totten’s myopic narrative is most blatant regarding Beirut’s southern suburbs and South Lebanon, despite the crux of the narrative being about Hezbollah. Totten describes these areas as throttled by totalitarianism, where Hezbollah violently suppresses self-expression. Totten does let Lebanese voices set some of the record straight, but only in chapters outside those in which he portrays “Hezbollahland”.

In his account, Lebanese police have never set foot in “Hezbollahland”, from which they are “forbidden” — news, no doubt, to the veteran law enforcement officers in Haret Hreik and Bint Jbeil. Similarly, Totten suggests Iran is the sole financer of post-war reconstruction in South Lebanon, completely ignoring the hundreds of millions of dollars pumped in from Qatar, Kuwait and other nations, including the US.

Leveraging his thorough understanding of Lebanon, Totten then graces us with his incisive insight into the region as a whole: “Arab countries have a certain feel. They’re masculine, languid, worn around the edges and slightly shady.”

This book does a good job of listing the many important events of the years it covers in Lebanon but it is rigidly selective in the sources it taps and the questions it asks. Further, it lacks historical insight and glosses over inconveniences such as ‘facts’ that would run counter to the agenda Totten is pushing. But then again, what adventurer would want to dilute his drinking stories with reality?

 

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Charged with tragic comedy

by Sami Halabi
written by Sami Halabi

Lebanon’s political theater played out another scene last month with a host of government actors trying to elbow their way to centerstage, propped up by a supporting cast of journalists and media figures. Entitled “Utterly Missing the Point”, the plot of this tragic comedy pitted these two groups in a mischievous conspiracy against the Lebanese in which they engineered dramatic distractions to obfuscate the true reason for the country’s failing public services. The scene opened with the infamous General Michel Aounand his son-in-law, Minister of Energy and Water Gebran Bassil, initiating a blistering quarrel in cabinet over how to divvy up $1.2 billion amongst different contractors and authorities in the installation of new power generation — a project that would, when finished in 2015, supply just barely enough electricity to meet what was needed in 2009. The argument was then duly taken up by a chorus of objecting cabinet blocs and members of parliament who, in the end, decided against implementing any effective checks and balances on the expense.

The obfuscation of the spectacle would not have been possible without the generous support of Lebanon’s newsrooms, which proceeded, with passion and dedication, to cover the controversy ad nauseam without ever elucidating the reasons behind the objections to the proposed legislation, or even the content of the initial proposal. In not focusing on the plan or the law, they scuttled any chance of a counter-narrative that may have pressured the government to actually implement the long-awaited basket of solutions to the country’s most basic needs.

Then there were the exhibitions in befuddlement (misleadingly labeled press conferences) of the principal architect, Minister Bassil, at the beginning of the month.

At the first exhibition, the media dutifully fulfilled their part of the bargain, focusing on why Bassil had not attended a meeting of other ministerial virtuosos aimed at putting the finishing touches on the plan earlier in the day, and not on the details themselves — a particularly canny contrivance. For sending their headliner journalists to the first exhibition and, after the bickering had subsided, their lower tier to the next — where the issues of how to actually realize the objectives of the newly finished piece were up for discussion — we should extend applause to Lebanon’s news agencies.

This propensity of the media to focus on the petty infighting and sound bites espoused by Lebanon’s sectarian leaders, as opposed to dissecting legislative deficiencies and potential solutions, arrives from the intersection of habit and our sectarian media landscape. Maintaining the irroutine throughout, the media furthers the narrative of “Utterly Missing the Point” by attributing utmost importance to Lebanese leaders’ intentionally insidious and vacuous polemics, entrenching in the mind of the public the insurmountability of the status quo.

The media and its partners in both the ruling majority and opposition have inspired journalists to usher in a new era of reporting and construct the closest thing we have to a national narrative. From here on out, we should endeavor to set the framework for a new philosophy, which all Lebanese, regardless of creed or social standing, can adhere to. As we have done recently, we must seek to adhere to the principle of the bare minimum: demanding only that reform allow us to continue our present state of existence, relative to the world at large, without aiming to actually effect any substantive structural reform.

After two post-war decades with the same headlines, and the same figures making headlines, it should be clear that no leader truly seeks structural reform. Then again, who among us really wants to be hamstrung by the laws and institutions propelling the rest of the civilized world? We would have to sacrifice our freedom to litter at will, to drive in the wrong direction, to smoke in public. We may even lose our entitlement to treat with disdain the foreign workers who build and clean our homes and streets because they work for salaries that we would never accept. This is what gives our country a unique charm that outsiders can only marvel at. Indeed, who needs real reform when you can have chaos and liberty that is only checked by the haphazard application of a law that you can get around with a little wasta?

Perhaps we should not express this notion too loudly lest we tip off those who will never understand how sublime our cycle of freewheeling really is under the surface of constant complaints and invective. So (in a lowered voice), if there is any lasting lesson in “Utterly Missing the Point”, let it be that we stop complaining, accept who we are and stick to the bare minimum. 

SAMI HALABI is EXECUTIVE’s
Economics & Policy editor

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Open to abuse

by David Segall
written by David Segall

The stench of mold in the dormitory was overpowering. A dozen bunk beds hugged the perimeter, lest one centimeter of potential sleeping space be wasted. Wooden planks served as mattresses for some of the men who called that barrack home.

This was not a prison or a housing complex in one of the world’s poorer regions. It was a company-built dormitory for Bangladeshi workers in the state of Qatar, the world’s wealthiest nation in terms of gross domestic product per capita. And it took only 15 minutes to get there from Doha’s breathtaking downtown.

Qatar aspires to be a global player in politics, business, education and sports. From the ubiquitous billboards of the Qatar Foundation touting Doha’s “Education City” — where Western universities are building high-tech campuses — to Qatar’s designation as host country for the 2022 FIFA World Cup, the ambition of this small nation is undeniable.

But not far from modern, cosmopolitan Qatar lurk the people upon whose backs the enterprise continues to be built: 1.2 million migrant workers, most from Southeast Asia, who outnumber Qatari citizens at least four to one. With the equivalent of at least $55 billion to $60 billion committed to World Cup-related construction projects, the number of migrants in the construction sector will only grow.

I recently visited Qatar on behalf of Human Rights Watch to document the conditions of migrant construction workers. The vast majority of workers we spoke with reported that employers confiscated their passports, making it difficult for some to leave the country or return home freely. Many said that their working conditions or salaries differed significantly from what they had agreed to before leaving their home countries. Many also reported having borrowed heavily to pay fees charged by recruiters in their countries of origin — Qatar, unlike the United Arab Emirates, does not require sponsoring employers to pay all fees associated with imported labor — and needing to work for months or years in Qatar just to pay off these debts. And many slept in unclean, overcrowded barracks, sometimes with no mattresses or air-conditioning, in a country where summer temperatures routinely exceed 40 degrees Celsius.

The Qatari government representatives who received the Human Rights Watch delegation cited domestic legislation as prohibiting practices like passport confiscation, overcrowded dorms and non-payment or delayed payment of salaries by employers, but generally would not acknowledge the pervasiveness of the violations. Despite serious instances of abuse, high-level officials at Qatar’s Ministry of Labor informed us that none of the 150 employees at the ministry’s labor inspections unit speak languages commonly used by the migrant workers. When we asked how the ministry could accurately monitor working conditions without staff members who could communicate directly with the workers, the officials informed us that they are able to monitor everything from working hours to payment problems through information garnered from the employers. The obvious consequence of this surprising lack of interest in obtaining information from the workers themselves is a disconnect between the ministry’s information and the realities of life for many workers.

Qatar also continues to maintain the “sponsorship system,” which prohibits workers from changing jobs without their sponsoring employer’s consent and requires workers to procure exit visas from their sponsors before they can leave the country. Trying to navigate the legal system to break the bond if their rights are abused is a terrifying or even impossible prospect for many workers, who fear losing their only source of income and often do not possess the language skills or financial means to pursue a case.

The root of the problem is a system that allows officials, employers and ordinary citizens to evade responsibility for abuses at every turn. Government officials point to laws on the books without enforcing them diligently. Employers claim that they treat their workers better than other employers treat theirs. And Qatari citizens sleep easy believing that these workers, despite low wages and vulnerability to abuse, earn more in Qatar than they would as farmers, craftsmen or menial workers in their countries of origin.

The Qatar Foundation’s billboards constantly remind us to “Think” in the service of “Unlocking Human Potential.” Qatar is employing much human and material capital to become a major force in global affairs, media and sports. If it deployed similar resources to improving the conditions of its migrant workers and promoting fair labor standards, it would become a regional leader in this realm too. It would set a commendable  example for the many neighboring countries that employ hundreds of thousands of migrant workers.

DAVID SEGALL is an associate for the Middle East and North Africa division at Human Rights Watch

 

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Abbas’ UN tour de force

by Ahmed Moor
written by Ahmed Moor

With one well-timed speech before the United Nations General Assembly, Palestinian Authority President Mahmoud Abbas focused global scorn on Israeli Prime Minister Benjamin Netanyahu while causing American President Barack Obama to undermine himself on the world stage. Equally importantly, Abbas partially resuscitated his reputation among Palestinians and regional powers, thus ratcheting up pressure on Hamas in Gaza.

The series of Arab uprisings changed Abbas’s relationships with the Americans, the Egyptians, the Israelis and others in different ways. But it also changed his relationship with his own people.

The waves of popular action against tyrannical regimes like the Palestinian Authority shocked Abbas into reaction. The PA’s heavy-handedness quickly stirred into action in much the same way as other security regimes throughout the region. Repressive, Mubarak-like tactics were quickly employed to quell small protests in the first part of the year, but these were only stopgap measures. Wilier than Mubarak, Abbas sought to win political approval for his leadership among disaffected Palestinians. It is still unclear whether he has succeeded, but his speech at the UN in September was met with approval by many, as the jubilant demonstrations on his return to Ramallah demonstrated.

In the zero-sum Palestinian political environment, his gains corresponded to Hamas’s loss. That loss has been compounded by Syria’s increased isolation (Syria is a patron of the Islamic movement). 

For the Israelis, too, the move could not have occurred at a worse time. Netanyahu’s abrasive personal style has combined with objectively poor decision-making to produce a nadir in the country’s relationship with European, Asian and Arab states. International opprobrium has jumped dramatically in recent years, catalyzed by events such as the 2009 assault on Gaza, which killed 1,400 Palestinians, 300 of whom were children, and the Israeli commando raid on the Mavi Marmara that left eight Turks and one American dead.

The marathon diplomatic battle that occurred in the run-up to Abbas’s UN submission saw the Israelis desperately lobby global capitals to follow the Netanyahu line. The unpalatability of the pro-occupation argument combined with residual ill will from the Gaza and flotilla assaults to produce a mammoth Israeli diplomatic failure at the UN. It is worth noting, however,that Netanyahu’s pugnacious speech at the international forum was positively received at home; barring some unforeseen event, he will likely remain in control in Israel. Obama was a bigger loser than his Israeli counterpart. While Netanyahu played up the threat of global isolation to corral domestic support, Obama found himself publicly vilified from both sides in his own country.

The presidential election season is in full swing in America, and Obama — whose approval rating is less than 50 percent — has been scrambling wildly to court the Israel lobby. It was with his own imminent electoral contest in mind that he entered the UN chambers. And it was with his own reelection in mind that he propounded the Israeli government’s talking points. But his placation strategy has not worked. Regardless of his pandering, Obama simply cannot convince the Israeli lobby that he is their man. His speech did little to change the common perception that he is weak on Israel.

On top of this, his speech worked to alienate important UN member states. France, for instance, was clearly alienated from the rightwing Zionist position. Without making a complete break from the American stance, Nicolas Sarkozy indicated that the status quo was untenable and that it was time to “change the method” of pursuing peace. Likewise, the Saudis have publicly pronounced their intent to break from US policies in the region if the Americans veto Palestinian attempts at official statehood status.

It is too early to assess the full impact of Palestine’s statehood bid, and many questions remain unanswered. Will the Israelis react meaningfully to increased global pressure and isolation? And could the Europeans edge America out to take a more forceful role in adjudicating the conflict?

What is clear is that the move is a catalyst for genuine change. For many Palestinians, this revision of the status quo will be welcome.

AHMED MOOR is a contributor to Al Jazeera English and is a Master in Public Policy
candidate at Harvard Universitys Kennedy School of Government

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Editorial

He who can bleed the most

by Yasser Akkaoui
written by Yasser Akkaoui

In different ways, both the Syrian people who are rising up against the regime of President Bashar al-Assad, as well as the regime itself, are pushing the limits of their own mortality.

Protests that began in March have spread across the country, but still they have not gathered the critical force necessary to topple the regime. The regime’s brutal attempts to suppress the demonstrations have sent the death toll multiplying into the thousands, and the numbers of arrested into the tens of thousands. For every protester martyred, the regime has bullets for 10 more; if this trajectory is maintained, the protest movement will literally die.

On the other hand, the government is watching the economy evaporate. Expenses have soared, with billions of dollars spent on populist subsidy programs, keeping the Syrian pound afloat and funding the massive deployment of army and militiamen, while revenue has precipitously fallen, with multiple billions lost in capital flight, in vanishing trade and taxes, and in tightening sanctions. When the EU embargo against purchasing Syrian oil exports hits next month, it will wipe away at least a quarter more of the government’s remaining revenue. Assad is losing the ability to fund his grip on power; if this trajectory is maintained, his regime will collapse.

As with all pivotal moments in history, it is often the events that were impossible to foretell — the so-called “black swans” — that irretrievably alter the outcome in one direction or the other.   

Barring blind luck swooping in for either side, however, this will remain a war of attrition, and the winner will be he who can bleed the most.

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Yemen’s incipient civil war

by Farea al-Muslimi
written by Farea al-Muslimi

The most horrifying week yet of the eight-month uprising in Yemen began on September 18. The terror and fear the people of Sanaa experienced was described by some as the worst since the civil war in 1994, with more than 80 civilians killed and hundreds more injured. In the areas surrounding Change Square — the heart of the protest movement against obstinate President Ali Abdullah Saleh — snipers fanned out on building tops, shooting randomly at sporadic intervals throughout the day and night. Those involved in the protests were shot, as were those who happened to live in the areas nearby. The sound of bombs exploding punctuated the muezzins’ call to prayers in Sanaa mosques, empty as never before. Those who failed to leave before the clashes intensified remained inside their homes for days, trying to survive with whatever supplies they had rather than risk venturing outside.

The clashes started when the protesters tried to enlarge the four-kilometer stretch they have occupied in Sanaa and expand to another nearby street. As protesters began to set up tents, security forces and Republican Guards opened fire. In less than an hour, more than 20 protesters had been killed. Later on, the First Armed Division, a powerful battalion of defected soldiers loyal to the uprising, returned fire. Fighting spread to the Al Hasba neighborhood, the stronghold of the powerful tribal leader Sadeq al-Ahmar. The neighborhood endured heavy clashes between Ahmar and Saleh’s forces only a few months ago; many homes remain abandoned after residents fled.

The tension in Sanaa ratcheted up a notch when Saleh made a sudden surprise return to the country on September 23, after three months in Saudi Arabia recovering from a bomb attack on the presidential palace mosque. Upon the announcement of Saleh’s arrival, celebratory gunfire from his supporters rang out around Sanaa, as demonstrators were being fired upon in Change Square.

Saleh still holds support from several different quarters.  He enjoys staunch military backing from the Republican Guards, which are led by his son, and similar support from the security forces led by his nephew, and neither lack firepower, in part due to American contributions intended to fight extremists like Al Qaeda. Then there are the corrupt network of stakeholders who will lose their patronage should Saleh go and the tribes who still support Saleh out of a historical enmity towards the Ahmars. But while pockets of support remain, Saleh’s majority lies in arms, not in popular sentiment. His return was a spark to the powder keg. His stubbornness amidst the chaos was a declaration of war. On September 26, while Yemen was celebrating its 49th anniversary of the 1962 revolution that overthrew the ruling Hamidaddin family, Saleh delivered a speech that for Yemenis contained nothing new. He reiterated his calls for dialogue and for an early presidential election, as he had disingenuously suggested on multiple occasions, while emphasizing that the vice president, not Saleh himself, sign the Gulf Cooperation Council initiative of a transfer of power.

The speech was seen by some as a stall tactic before all-out civil war, but it is not clear what the distinction between war and the current scenario is. It seems the line has already been crossed. Without an intensification of international pressure, particularly from within the GCC (Saudi Arabia’s hospitality and leeway in allowing Saleh to rally his supporters from the kingdom shows the tepid regional pressure on him), Saleh will lead Yemen to hell — indeed, it is already at the gates. But if so baited, the millions of Yemeni youth in the squares who have been demanding change peacefully could erupt like a volcano if their legitimate demands for the immediate departure of Saleh and his regime are not met.

Late last month, while Yemenis on the ground fought for the political future of their country, herds of NGO workers and embassy staff were lining up at Sanaa Airport with the very few Yemenis who can afford to leave the country. Yemen is among the most heavily armed countries on earth, with more than 68 million weapons — almost three arms for every man, woman and child. Yemenis have amazed the world over the last eight months with their peaceful protest. But their patience has run dry.

FAREA AL-MUSLIMI is a Yemeni activist
and writer for Almasdar
 

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