The Buzz

When the workhorse refuses the whip

by Sarah Lynch
written by Sarah Lynch

A group of middle-aged men lie sprawled on the sidewalk outside a towering building in Egypt’s Nasr City, shading their faces with newspapers. For 15 days these oil and gas workers have been staging a sit-in, demanding that their petrochemical employer give back the jobs that they abruptly lost before their nation’s revolution.

“We are demanding to return to our old work because we don’t have any other way to make money,” says protester Hamouda Mohammed.

Back in downtown Cairo, Qasr Al Eini Street, lined with banks, hospitals and government buildings stretching south from Tahrir Square, has become ‘protesters’ row’. Since the uprising that swept the nation on January 25 and toppled President Hosni Mubarak in mid-February, teachers, lawyers, doctors and others can be found here most days, waving Egyptian flags and holding homemade posters, partaking in Egypt’s nationwide wave of labor strikes.

Week after week, protests, sit-ins and strikes continue to be staged across post-revolution Egypt; Kamal Abbas, director of the Center for Trade Union and Worker Services (CTUWS), a 20-year-old non-profit group, says that nearly one million workers were involved in labor strikes between the start of the revolution and mid-May, (although this figure could not be independently verified).

Experts say the strikes span all sectors of the economy, from textiles to agriculture to oil and gas and include both private and public workers. Strikes have been held from Aswan in the south to Alexandria along the northern coastline and the Suez Canal in the east.

Roots of the labor movement

The stronghold of the labor movement has long been in the Nile Delta, in the industrial city of El Mahalla El Kubra. The labor force in Egypt today consists of roughly 23 million citizens, almost one third of the nation’s more than 80 million people, with the largest sector of employment being agriculture, followed by industrial manufacturing.

The country has a long history of labor action dating as far back as the time of the pyramid builders under the rule of the Pharaohs. While the country has witnessed an up-tick in strikes since the revolution this year, today’s movement is rooted in decades of labor issues and uprisings whose modern history dates back a century.

In 1919, an Egyptian political figure named Sa’d Zaghlul attempted to attend the Paris Peace Conference with his colleagues to demand freedom from the grip of British occupation following World War I. Zaghlul and two others were arrested and later deported, leading to mass strikes among labor groups and workers — an event that led the way to Egyptian independence three years later, in 1922. This movement developed into a nationalist party that later became known as Wafd.

Workers in the early 1900s faced harsh working conditions and lacked a legal federation for the nation’s rapidly forming unions, which became regulated by the state in the 1940s. This continued with little substantive improvement until the government formed a labor federation in 1957 that was later reorganized and named the Egyptian Trade Union Federation in 1961. The federation represents roughly two and a half million people from the private and public sectors in 23 different syndicates. But many say the federation is simply an arm of the government and that it lacks independence and autonomy. Until January 30, it was the only trade union federation for workers in the country.

Throughout the first half of the 20th century, labor movements ebbed and flowed, often with nationalistic reverberations. Then in the 1960s, under President Gamal Abdel Nasser, an unwritten agreement was reached between the labor movement and the government; workers would be guaranteed lifetime employment, which included acceptable living wages and non-wage benefits such as job security, in return for workers’ compliance.

“People had the idea that the government was responsible for getting them a good job, an apartment, helping them [afford to] get married, and be educated and have good health services — this has been the idea for some time,” says Ahmed Kamaly, associate professor and chair of the economics department at the American University in Cairo (AUC).

But over time, the system reneged on those promises. Beginning with the liberalization of the economy in the mid-1970s, benefits and subsidies were slowly reduced. With the large-scale privatizations of state-owned Egyptian companies that began in the early 2000s, employment was no longer guaranteed; workers faced private owners bent on streamlining payrolls, sparking a new wave of protests.

According to a 2010 report by the Solidarity Center, a United States-based non-governmental organization that assists workers around the globe, there were more than 1.7 million protesters involved in demonstrations, strikes, sit-ins and gatherings across public and private sectors from 2004 to 2008. More than half a million of those were in 2008 alone.

“There [have been] many years of neglect of labor relations and a failure of old representatives, so now there is no running away from the fact that we need to take matters seriously and rewrite the labor law,” says Mona Said, an expert in labor market issues and an associate professor at AUC.

Wages remain the chief impetus behind labor action in Egypt where, as of May 31, the minimum wage was 118 Egyptian pounds per month (less than $20). Another major point of contention for workers is job security. Experts say some companies force workers to sign resignation forms before they begin employment; should an employee file a complaint with the Ministry of Labor after being unfairly dismissed, the employer can simply show the ministry the resignation form, putting an end to the case. Without alternative options, or a protective government, the workers are pressured to sign the forms.

Revolution, labor and economics

The labor movement played an important role in sparking and sustaining the nation’s revolution. One of the instigators of the political uprising was the April 6 Youth Movement, which started as a Facebook group in 2008 to support workers who were planning to strike on April 6 of that year in El Mahalla El Kubra. Labor strikes continued over the next few years. Then, as thousands descended on Tahrir Square in late January, workers across the country quickly mobilized, bringing their nation’s economy to a halt. Banks closed, textile mills shut down and even transportation was affected by the strikes.

While experts say the number of strikes has since dropped following those fateful days, the lingering revolutionary spirit continues to invigorate workers to take action to see that their demands be addressed.

The economy has been left reeling in the wake of the revolution — the Economist Intelligence Unit estimates gross domestic product growth to be just 1.2 percent in 2011, as of mid June the stock market index was down 22 percent on the year, the tourism sector lost well more than half a billion dollars in the first quarter and net foreign currency reserves had contracted some $13 billion on the year to the end of May. In May the Central Agency for Public Mobilization and Statistics, Egypt’s official statistics body, reported that the unemployment rate had reached 11.9 percent — some 3.1 million people — though Labor Minister Ahmed al-Boraie was later quoted in Al Ahram as saying true unemployment was likely to be much higher. The current political uncertainty combined with labor unrest has also shaken the markets, economists say, slowing both foreign and domestic investment.

“No investor is going to invest with this level of uncertainty, not only in terms of politics, but also in terms of the workers,” says AUC’s Kamaly. “At any time you can go to the streets and have a demonstration, and no one will tell you ‘Don’t do that’.”

Thus, while many of those on strike have legitimate grievances, their continuing labor action could hardly have come at a worse time for a country trying to rebuild its economy, and may be self-defeating. The strikes are contributing to a general loss of economic activity that leaves employers short of the revenues needed to meet strikers’ demands.

The interim ruling military council has imposed an anti-strike law intended to quell demonstrations, sit-ins and protests, but activists and workers have generally defied the ruling as they continue to voice their grievances.

“I do think strikes negatively affect the economy, but people don’t know what else to do,” says Hani Kheir, while standing outside the Petroleum Ministry one afternoon last month, demanding that the government give him a job. “It’s the only way to relieve their tension and at the same time ask for their demands.”

“I don’t see any changes after the revolution,” says Karem Saber Ibrahim, executive director of the Land Center for Human Rights, an Egyptian NGO. “The salaries are the same, contracts are the same, days off are the same, the lack of vacations and holidays are the same.”

He, like so many people on strike, doesn’t believe demonstrations affect the economy.

“The thing that affects the economy is the thieves,” he says. “The government has failed us and has not helped develop the country.”

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Bob, the bane of Bahrain

by Peter Speetjens
written by Peter Speetjens

If silence is golden then Bahrain would have been basking in fortune if it were not for the scandalous commentaries of Robert Fisk.

In a May 14 piece for The Independent, the award-winning British journalist shamed both politicians and media for not speaking out against the violence employed by Bahrain’s ruling al-Khalifa family to suppress the protest movement and its calls for political reform, led by the kingdom’s Shia majority lead.

Fisk was at it again on June 14, provokingly asking “if the Khalifa family has gone mad” by prosecuting 48 surgeons, doctors, nurses and paramedics for a series of crimes varying from concealing weapons to refusing to assist people in need. The latter is of especially bitter irony, as there are numerous accounts of how Bahrain’s medical personnel worked tirelessly to treat the hundreds of casualties, most of whom had been shot. Aided by Saudi troops and tanks, the Bahraini army crushed the opposition: according to official figures, some 30 people were killed, though it is feared that the death toll could run into the hundreds, while thousands of people disappeared behind bars. Many assert that the charges against the 48 medical professionals were cooked up as punishment for offering medical treatment to “subversives” and as a warning not to speak about what they had seen.

Fisk’s rage culminated in this parting shot: “Bahrain is no longer the kingdom of the Khalifas. It has become a Saudi palatinate, a confederated province of Saudi Arabia, a pocket-size weasel state from which all journalists should in future use the dateline: Manama, Occupied Bahrain.” It seems this was the symbolic final straw for the Khalifas, who were already in a foul mood due to the cancelation of the Bahrain Grand Prix. The world racing authorities in early June first announced that the F1 race — originally slated for March but postponed due to the popular uprising — was back on track, only to change their minds again a week later, following a wave of protests, some by a number of leading drivers.

Who could have guessed? F1 drivers reading The Independent! Furious, and missing out on up to half a billion dollars in revenues, Bahrain on June 14 announced it was to sue Fisk and his newspaper for slander.

According to the state-run Bahrain News Agency (BNA), they “deliberately published a series of unrealistic and provocative articles targeting Bahrain and the Kingdom of Saudi Arabia (KSA)… [and failed] to abide by professional impartiality and credibility in their one-sided news-coverage and reports.”

F1 drivers reading, and Bahrain and Saudi Arabia preaching about the principles of journalism: what on earth has become of this world? Yet, while the tiny desert kingdom and its bigger brother may find little trouble in silencing their own media (and medical workers), the decision to sue Fisk in Britain is likely to have a reverse effect. Firstly, Britain has a proud journalistic tradition and arguably does not like to be told what it can and cannot say by a country that excels in censorship and has not exactly boosted its reputation in recent months.

Secondly, with every day in court the British press is offered a gold-plated opportunity to recall what Fisk wrote and wonder if his words reflected correctly what happened in Bahrain during the first months of2011. Thirdly, the British trial is likely to draw attention to the parallel “medical trial” in Bahrain.  And so the British press may just decide to look into the case of one senior surgeon on trial, who during the demonstrations wrote a series of emails to a British colleague. On February 17, for example, he wrote: “It has been a long day in the theatre with massively injured patients equivalent to a massacre.”

 “Three weeks of hell,” he wrote in early April. “The military took control of the Salmaniya Hospital, doctors, nurses, paramedics and patients treated as suspects.” The surgeon in question himself was arrested in April and has not been seen since.

While suing Fisk and The Independent is unlikely to silence either, and arguably only enhances the kind of media attention Bahrain wants to avoid, there is a real danger that a long legal battle may bleed the British daily dry before truth, justice and freedom of speech can prevail. For now, however, the lawsuit can only be seen as a victory for the few who dare speak up, while others watch in silence.

PETER SPEETJEN is a Beirut-based journalist

 

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Society

Fashion – Celebrities seek Lebanese style

by Saria Francis
written by Saria Francis

Lebanese designers have achieved international recognition in the world of haute couture and high-end prêt-a-porter, in part due to their remarkable ability to drape their dazzling gowns on the world’s most photographed celebrities. Designers like Elie Saab, Reem Acra, Abed Mahfouz, Robert Abi Nader, George Chakra and George Hobeika, have dazzled the world with their Middle Eastern flair.

When Jennifer Lopez stepped onto the red carpet at the 68thAnnual Golden Globe Awards in 2011 in a white silk chiffon gown from Zuhair Murad’s Ready-to-Wear Spring 2011 Collection, fashion writers would never again forget the designer’s name. 

When just a 15-year-old boy from Baalbeck, Murad got his big break by accepting an invitation from the Camera Nazionale in Rome to present his collections during Alta Moda Week in 1995. Scroll forward 16 years and it’s commonplace to see both established celebrities and newcomers to the spotlight floating down red carpets in his bountiful designs. 

Zuhair Murad Communications Manager Andree Zovighian explained to Executive what it takes to get a dress into a celebrity’s wardrobe. “It is enough that she likes the style, the cut, the tailoring and, very importantly, the service we provide by delivering the dress wherever she is and by meeting her deadlines,” he said.

A relationship must develop with the celebrities or with their stylists “where we exchange styling ideas about the dress to be worn like any other client of ours,” added Zovighian. Though local celebrities don’t get as much press coverage as international stars, like Beyonce and Jennifer Lopez, Zuhair Murad still decorates singers like Najwa Karam and Haifa Wehbe with his designs. 

 

Lebanese designer Reem Acra, based in New York since 1996, is well known for her intricate embroideries and peerless fabric blending. She says that dealing with celebrities is neither simple nor easy, as the dresses carry a certain connotation and shouldn’t end up on the wrong “symbolic” mannequin. “We know who we want to dress and who we don’t want to dress,” Acra said. Celebrities who Acra has dressed, like Selena Gomez, Taylor Swift, Angelina Jolie and Halle Berry, “appeal to the brand” and therefore can represent it well.

For Abed Mahfouz, who has been presenting his collections at Rome International Fashion Week since 2003, dressing stars like Natasha Bedingfield, Michelle Alves, Jessica White and Irina Shayk is not only a complicated process but sometimes also requires an extra monetary incentive. “The celebrity’s stylist decides what she will be wearing at the end of the day,” he said.

Beirut’s edgy fashion sense

Back on home turf some designers in Lebanon complain of an unsupportive state.

“In Lebanon, we are incapable of even organizing a united Lebanese Fashion Week,” said Mahfouz. In other major fashion cities, according to the designer, fashion weeks are regulated by national and international standards, but in Beirut, though there are numerous small independent ventures, a concerted official event is lacking.

Efforts had been made to prepare Beirut’s Fashion Week under the patronage of the Lebanese government of former Prime Minister Rafik Hariri. “Following [Hariri’s] assassination, no one brought it up,” said Mahfouz, adding that the fashion syndicate in Lebanon was “ineffective”.

“Lebanon’s internationally known fashion designers don’t really care anymore about presenting their collection in Lebanon when they have the opportunity to show them in cities like Rome or New York,” he said.

However, Mahfouz still has faith in Lebanese fashion and considers Beirut the third fashion city in the world after Paris and Rome. “If you take into consideration demographic indicators, Beirut is the fashion capital of the Middle East,” he said, especially given the lack of full-fledged designers in the Gulf Cooperation Council (GCC).

A select clientele

Lebanon’s reputation may make it a loadstar in the Middle Eastern design world, but for the most part Lebanese fashion designers’ sales come from abroad. Mahmoud Hamwi, general manager of Zuhair Murad, said his client base was predominantly international, with major markets being China and Japan as well as the United States, the Middle East and Eastern Europe. Mahfouz’s clientele remains largely from the Gulf, but markets such as the United Kingdom and Russia are also taking interest in his designs.

However, catering for international markets has its downsides. The global financial crisis dealt a serious blow to consumer spending in GCC countries. A 2009 report from Booz & Company, the global consultancy firm, states that consumers made “fewer shopping trips, [bought] more items on sale, and [put] off purchases of luxuries or other material goods that [required] large cash outlays.”

Mahfouz said that fewer women are travelling from the Gulf to Lebanon to shop.  To keep their customers, his group is now hiring field delegates as a direct way of marketing new collections to clients hesitant to come to Lebanon.

Renting dresses is also increasing in the GCC, as is using cheaper alternatives to top-end brands. But Mahfouz says this is placing the exclusivity of luxury in peril. “You can’t get the same quality with less investment in the quality of fabrics,” he said, adding that the problem was exacerbated by the number of new fashion designers, which “are hazardously increasing,” pushing up supply. “Some aren’t quality seekers,” he said.

Recent years have not offered a clement climate for regional fashion markets. The ‘Arab Spring’ has cut into regional fashion sales, according to Mahfouz, adding that Lebanon failed to capitalize on the regional troubles. “If we had secured stability in the country, people would have fled to Lebanon, and we would have profited from tourism and more shopping,” he said.

However, Murad — who relies less heavily on the Gulf market than Mahfouz — found that spreading his net wider made for a less bumpy ride during the economic downturn. Murad said that their Midde East and North Africa region revenues were only “slightly” affected in 2008. Afterwards, business picked up and now the company is aggressively expanding, seeing around 23 percent growth in 2010. 

“The couture world has a life of its own and has always survived economic crises,” Zovighian said. “Wealthy clients have not been affected by the last one and will always buy their luxury pieces. We are still receiving requests from clients all over the world interested in buying dresses for big events and weddings.”

Reem Acra, who caters mainly to the American market, found away to bypass some of the effects of the dampening economy by widening her expansion and selling points worldwide. Still, she said: “If anyone tells you that they haven’t been affected, they would be lying.”

 

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A double dip foretold

by Paul Cochrane
written by Paul Cochrane

Are we headed for a ‘double dip’? The head of the United States Federal Reserve, Ben Bernanke, said last month that this is unlikely in the US, but a recent CNN poll shows 48 percent of Americans think the country is en route to another Great Depression in the next 12 months. The other options raging through economic debates around the world is whether the US is on track not merely for another dip, but a mega-dip, or indeed if the US economy ever actually pulled out of the first recession.

If a second financial crisis occurs it will be bad news not just for the world’s largest economy, but for everyone on the planet.  The problem, in short, is regulation, or the lack thereof. It was the lax regulatory oversight of such financial products as derivatives and sub-prime mortgages in the US and elsewhere that triggered the first financial meltdown in 2008.

Major banks were bailed out, consolidation occurred, but few individuals were effectively punished. Perhaps more worrying is the fact that regulators were not empowered to properly leash the insidious corporate culture of casino-style capitalism which, though briefly brought to heel in the throes of the first financial fallout, has now returned to rabid form.

Sure, the Restoring American Financial Stability Act of 2010was enacted, but financial institutions and the Republican Party are actively trying to weaken the framework. And unfortunately the Financial Crisis Inquiry Commission report was released in January, long after the act was passed, meaning its findings were not taken into account in crafting the legislation. The commission’s report makes for sober reading; “We conclude the financial crisis was avoidable… Widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets… Dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis…We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction.”

Where the report was weak was in addressing systemic financial fraud, which was present in much of the sub-prime mortgage loans — a major factor behind the financial crisis. According to William Black, author of “The Best Way to Rob a Bank is to Own One,” a fraudulent loan is where a lender loans to a debtor without knowing how the debtor can repay the loan, hence a form of fraud, or what criminologists call accounting control fraud.

With regulators still lacking authority and having little chance of successfully convicting individuals on charges of financial fraud in the US, the stage is set for “Financial Crisis Part II: The Really Big One”. The irony is that while the US has banged on for years about the need for other countries to implement financing laws — regarding anti-money laundering controls, due diligence and so on — the most pertinent regulations to been forced are in the US itself, given that a crippled American economy would have a precipitous downside worldwide.

As Black stated earlier this year, “elites can now commit white-collar crimes with near impunity. Yeah, there are exceptions, like the Galleon case [against hedge fund manager Raj Rajaratnam] and [Bernie] Madoff, but that is the teeniest, tiniest percentage of these elite frauds [which have] any risk of being prosecuted. And the result is catastrophic for our nation, and of course not just our nation: we’re seeing these epidemics of control fraud in many other nations.”

One of the more sensible decisions to come out of the US recently was by Treasury Secretary Timothy Geithner, suggesting countries should mutually enact tighter financial regulations and set standards to better control the $601 trillion over-the-counter derivatives market. This would be a sensible move and it would make sense for governments to push for this. Simultaneously, however, rightwing US lawmakers are trying to cut funding to the Commodity Futures Trading Commission and the Securities and Exchange Commission. This is obscenely irresponsible, raising the specter of the double-dip recession by hobbling effective oversight of multi-trillion dollar markets. Public outcry in the wake of the financial crisis was relatively muted. But if we are all plunged into hot water again due to a flimsy regulatory safety net, a hell of a lot of people will not only be burned, but also burning with rage — and will know who truly is to blame.

PAUL COCHRANE is the Middle East correspondent for International News Services

 

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Society

Q&A – Elie Saab

by Saria Francis
written by Saria Francis

Elie Saab, the Lebanese trailblazer of haute couture who broke into Hollywood and has put Lebanon on the global fashion map, sat down with Executive for an exclusive one-on-one. He spoke about the history and future of Beiruti style, the world of luxury and the balance between the business and creativity of being a designer.

What does the role of designer mean to the everyday workings of the Elie Saab brand?

My daily tasks as a fashion designer changed a long time ago. We started elaborating on the company brand as well as developing “Elie Saab” as a business. My daily routine transformed; it now includes a lot of travelling, developmental projects, as well as design matters. My daily life transcends that of a fashion designer.

Do you see yourself first and foremost as a businessman or as a fashion designer?

From the start I was a fashion designer and a businessman at once. The two were never separate. The marketing side of the fashion designer in me was always present. From the beginning, I always focused on the business side and on how to improve it.

How does Beirut figure into your designs?

All the work that I did in the last 20 years was to show Beirut’s fashion side. Beirut dresses the whole region and it has been known for that since forever. Beirut’s tailors are known to be the best. Even the prêt-a-porter [ready to wear] produced in Beirut before the civil war was famous for being the best quality. What’s more, the Lebanese buyer is known for buying the best products from Europe. What I’ve added to this already rich scene is the contribution of a Lebanese fashion designer. I take pride in being one of the first designers to have encouraged the emergence of a serious fashion design platform in Beirut.

What is it that makes an Elie Saab piece a “luxury” item?

Everything we produce is luxury. The recipe of my success was to always produce what my clients want. I also produce pieces that make them feel beautiful. This is the trading part of my business. I never thought of doing pieces that no one did, or to show people that I am a better designer than others, like a few designers that have this obsession. From the start my target was to produce something a woman will love and will definitely wear. My motivation comes from seeing her happy wearing it.

According to Forbes the top five selling luxury brands worldwide are Louis Vuitton, Hermes, Gucci, Chanel and Hennessy. In your opinion why and how have they have achieved their success?

It wasn’t by chance of course. They have worked for it. First, there is the historical importance of those brands; then there is the story behind the brand itself. For example, Maison Chanel, which is one of the oldest fashion houses, is striking partly because of the story behind Coco Chanel. Different aspects are behind the success of such businesses.

How do you promote luxury pieces? What is your marketing strategy?

We generally don’t work on marketing our pieces. It is not our way of dealing with our collections. For me, it is enough to produce beautiful quality pieces that attract clients. Our pieces promote themselves. Our reputation has spread by word of mouth. Till now we have never had to become aggressively present in publications and so on. We did not need to.

How important is social media in marketing luxury brands?

Social media is very important. Especially through our website and Facebook, this creates contact between Elie Saab and the fans or clients. We started working on this aspect of Elie Saab six months ago, because we felt we weren’t doing enough for young people who are trying to interact or talk to us. I find it very important to communicate with the new generation of fans and students that appreciate my work. And I believe it is for the long-term very beneficial for us as well as inspirational for them.

Which markets do you cater most to today?

We have gained international recognition and therefore we cater to everyone. The United States is an important market as well as Russia. But today people are starting to look more towards the Far East in general and China in particular, which is a new emerging market. The Middle East constitutes 30 percent of our worldwide sales, in couture as well as in prêt-a-porter.  My clientele are those who love what I do. Those who have the purchasing power of course buy the most, however, we are working on becoming closer to the average buyer by developing daywear and accessories. You do not have to have to be a millionaire in order to buy from our store. 

What has been your most successful design?

As I said before, I am a perfectionist and I am very meticulous when it comes to preparing my collections. We provide our clients with beautiful dresses that they are not able to find elsewhere, which creates excessive demand that is sometimes hard to handle. We face this every day but of course, we only sell one design by country.

Following the global financial crisis, and the revolutions in the Arab world, are there indications to show the industry is recovering? What are your expectations for fashion in summer 2011?

We noticed a little bit of difficulty in the first two months of the global financial crisis in the United States. But we weren’t at all affected and if you look at our figures you will see no difference whatsoever. It didn’t really hit us. When you really put high standards in luxury you won’t be seriously affected. We have a lot going on today. This year was pretty hectic. We have a perfume to be launched in July and we are always working hard no matter how tired we are.

Can you tell us more about the perfume?

It’s been a while that I’ve been thinking of having my own perfume. But I am a perfectionist and I kept working on it until it was perfectly done. Two years ago we signed an agreement with BPI [Perfume], and in the beginning of July you will see the result of two years of hard work. ELIE SAAB Le Parfum, written without flamboyance but in capital letters, reflects the fashion house’s codes. This perfume also announces the arrival of a new method of wearing the ELIE SAAB signature.

What does it take for a dress to be worn by local or Hollywood celebrities?

Through our offices in Los Angeles, as well as in New York and Paris, we established a relationship with the celebrities. Along with their stylists, celebrities select their favorite dress to wear for their special events.

In the last decade, what would you say the demand focus has been?

 We provide all kinds of designs and we have a high demand for everything that we do. And of course today there is a new demand for prêt-a-porter and accessories. Naturally, wedding gowns remain very important and they are a main product.

 

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Finance

Assets in the eye of the beholder

by Vanessa Khalil
written by Vanessa Khalil

He may be a business-savvy art connoisseur with a scholar’s comprehension of modern Arab art, a buyer for the London-based Fine Art Fund Group and a founder of Lebanon’s Agial gallery, but Saleh Barakat will gladly “kick people out the door” if he is asked to tip them on the next big art investment.

“The word [investment] irritates me,” he said. His is a love of art for art’s sake. But Barakat probably realizes, just as much as anyone who has tapped into Middle Eastern art recently, that the market is following a global trend away from volatile stock markets, and into “passion” investments.

“Financial markets are shifting from a multi-decade cycle of being overexposed to paper assets, toward a new cycle of investing in real assets such as real estate, gold, silver and collectibles such as art and diamonds that have no expiry date,” said Khaled Samawi, owner of Dubai-based Ayyam gallery. Capgemini and Merrill Lynch’s 2010 world wealth report states that the uncertainty of financial markets has led to a new breed of “investor-collectors” who are pouring their money into tangible items with long-term value.

The MENA art investment hub

Dubai, which anchored itself as the Middle East and North Africa region’s art capital after international auction houses Christie’s and Sotheby’s set up shop in the emirate, is already fostering tentative but burgeoning efforts by Emirati financial institutions to include art in their investment portfolios. In 2007, Daman Investments, the Dubai financial services company, set up a five-to-seven year, $13.6 million contemporary Middle Eastern art fund. In early 2011, Emirates NBD partnered up with the Fine Art Fund Group to include art advisory services for high net worth individuals with wealth of more than $3 million.

“An increasing number of financial institutions are regarding art as an alternative asset class, providing a hedge against inflation and also proving to be a relatively good store of value, particularly in the current climate of uncertainty,” says Michael Jeha, managing director at Christie’s Dubai.

But while art is gaining favor as an aesthetically appealing asset class for high net worth Arabs, institutions such as Addax Bank, the regional representative for the Fine Art Fund group, still hold a cautious stance on passion investments. Requiring a relatively low minimum commitment of $100,000 for its “Middle Eastern Fine Art Fund,” Addax Bank advises newcomers to invest no more than 5 percent of their net worth into art.

According to art consultant and artistic director of the 2011 Menas art fair, Pascal Odille, the conservative approach is due in part to the way these funds are devised with a short-to-medium term artwork resale in mind, which is unlikely to be profitable during an economic downturn. “When times are tough, art funds are as risky as stocks and bonds to investors,” says Odille.

Still, it is the dependable value of well established art that banks and financial investment companies bet on to hedge against risk. “If you have a $3 billion portfolio, it’s not a bad idea to have $15 million invested in art… When real estate bubbles burst [and] currencies fluctuate, a Tintoretto is still a Tintoretto,” says Barakat. Isabelle de La Bruyere, Middle East director at Christie’s, says the art market has shown stability and resilience to the wider economic environment, while other markets have not. “We continue to see impressive prices in the sale room with significant liquidity and participation at every level of the art market,” she adds.

For Roxane Zand, director of the Middle East department at international auction house Sotheby’s, keeping it safe lies in collecting blue chips. “An aspect of our advisory is to collect the best of an artist’s work, the best period and the best quality in each category. It’s hard to say where investors diverge in taste from passionate collectors because sometimes it can be one of the same,” says Zand.

Buy from the heart

Of course, the array for amateur and “investor” collectors is much wider than that for art fund managers. For those looking to cash in on their collections, connoisseurs unanimously agree on a first rule of thumb: buying from the heart. “No matter what, it should be a coup-de-coeur when you buy a piece of art,” says Nada el-Assaad, FFA Private Bank’s art consultant, the reason being that if the artwork proves to be valueless with time, the personal attachment could compensate for the bad investment.

“It is important to seek advice if possible and look carefully at the provenance, rarity and condition of a work of art when considering its acquisition,” says de La Bruyere.

And while Assaad asserts that no one has the clairvoyance to assess the future value of an artist’s work, she has some clear pointers for FFA, which exhibits contemporary Lebanese artists two to three times a year and buys their work through the exhibitions. “I’m advising them to buy middle range artists that are in their thirties or forties, those that have emerged but not quite reached their peak,” she says, adding that FFA could rake in quite a profit from its current collection.

Nadine Bekdache, owner of the Janine Rubeiz gallery in Lebanon, believes the staggering prices young MENA artists are charging for their work through auction houses hardly reflect their value. “When an artist has been around for at least 25 or 30 years and you follow their evolution, you can tell what the capital increase is going to be,” says Bekdache, adding that anyone purchasing a Chafic Abboud [the late Lebanese contemporary artist]painting 30 or 40 years ago understands where the investment lies. An Abboud painting that cost some $15,000 in 1996 or 1997 is worth well over $150,000today. Similarly, a Paul Guiragossian work from his peak years goes for no less than $200,000 and could reach $300,000. “When you buy a good [Guiragossian] it’s better than money in the bank,” says Agial’s Barakat.

Gregory Gatserelia, founder of Gatserelia Design, admits that certain artists always guarantee a capital increase. “When you are buying just for investment, there are certain names and this is what you have to buy. The consultants will tell you which [artists],” says the avid art collector.

Lebanon’s undervalued aesthetic

While Iranian art has broken all sorts of records at both regional and international auctions over the past few years — Iranian contemporary artist Farhad Moshiri scored a record price of $900,000 for his “Love” piece through Bonham’s in March 2008, while five works by other Iranian artists sold for over $1 million at Sotheby’s during the same time — Lebanese art has not. Nonetheless Nadine Bekdache from Janine Rubeiz gallery considers it to be at the forefront of the Middle East art scene along with both Iranian and Iraqi art.  But she also concedes many barriers devaluate Lebanese art as an investment. For one, the value of Lebanese artwork is distorted the very moment it circulates between Lebanon and abroad. “As a gallery we suffer from tariffs, as opposed to Europe where artwork circulates for free,” says Bekdache, noting that government, import, export and sales revenue taxes could make up as much as 20 to 30 percent of an art piece’s price.

 

Stressing the importance of exposure to boost an artist’s reputation, FFA art consultant Assaad says there simply isn’t any for the Lebanese artist. “We don’t have any public institutions for contemporary art except for the Sursock Museum,” she explains. The museum was recently refurbished and moved to new premises, which means it is likely to widen its collection of contemporary art. “That is not enough,” asserts Assaad.

What makes it all the more difficult, according to Assaad, is that high net worth Lebanese collectors who participate in offshore auctions do not come through for artists from their country.

“It’s a nationalistic feeling in that sense where Syrian collectors buy Syrian art, Iranian collectors buy Iranian art, while Lebanese collectors are not very keen on buying Lebanese art,” she says. Sotheby’s Zandagrees that regional Arab collectors tend to buy art representative of their own heritage, such as calligraphy, and are more than willing to support it in auctions when need be. 

But de La Bruyere says Christie’s latest auctions reflect more regional cross-buying activity, as collectors are being exposed to catalogues and sale viewings that are exhibiting artists from different countries at once. “As the market has matured, we have seen a change in collectors’ appreciation for art from other countries,” she says.

For Odille, the still blooming Middle Eastern art market functions, for now, on the fundamentals of supply and demand. Lebanon’s old and established art scene means there is ample Lebanese art to go around, which might weigh down on its value in the eyes of collectors.

“Everyone knows [Lebanese artists] Shawki Shamoun, Simone Fattale and even the younger Ayman Baalbaki. When [Saudi Arabian artist] Abdulnasser Gharem suddenly bursts on to the scene, there is a notion of novelty,” says Odille. Case in point: Gharem’s installation “Message/Messenger,” had a pre-sale estimate ranging between $70,000 to $100,000 but sold for $842,500 at Christie’s Dubai April 2011 auction, beating Ayman Baalbaki’s “Let A Thousand Flowers Bloom”, which still went for $206,500. According to Zand, modern Arab art is taking away the highest bids at Sotheby’s regional auctions, partly supported by the new blood of Arab collectors. “You have high net worth younger professionals who have their spending power and who enjoy art. The royal sheikhs have been known to lead the way in terms of collecting throughout the region,” says Zand.

Market drivers

But while de La Bruyere is encouraged by the 20 and 30-yearolds’ presence at pre-sale exhibitions, she says clients from Asia, Europe and America, which accounted for 45 percent of Christie’s latest auction sales —compared to a 20 percent share a few years back — are driving the market towards contemporary Arab art. “We have seen this group become increasingly interested in contemporary art [since 1960] versus modern [1915-1960] works and so, more recently, we have been curating our sales to better reflect this developing taste,” adds de La Bruyere.

Still, Barakat sees risk in a market-driven Middle Eastern art scene, one that he deems highly speculative and lacking the vital layers to educate buyers on viable art investments. “There are hardly any museums, no departments for Middle Eastern, regional or local art at universities and no specialized publishing houses,” he says. 

Much to her dismay, Bekdache acknowledges that promoting young, or even established but less renowned Lebanese artists, to auction houses means guaranteeing the latter a price floor for the artists’ works, and then locking down bidders for them. “If you have a Hannibal Srouji [a Lebanese artist], you go to Christie’s, convince them that this will bring in a minimum of $20,000 and then you talk potential bidders into making that price happen. Unfortunately it’s about deals now,” she says, adding that Dubai’s biggest auction house is driven by what it knows collectors want and therefore it doesn’t research and seek out artists whose short-term returns may not match their long-term potential.

Gatserelia concurs: “It’s a big conspiracy between galleries and auction houses. They know how to create attention; they have people who pretend to bid…the world of art is manipulated. The galleries can bring an artist up or down for their own reasons,” he says. But while speculation is almost inevitable in all markets, it puts in question the very safety and stability of art as an investment vis-à-vis other asset classes. The danger, says Bekdache, lies in the fads that are hyped up on the spot, only to turn out worthless later on. “Just like there is [Louis] Vuitton in fashion, you have five or 10 Vuittons now in Middle Eastern art,” she adds.

Political art in the Arab Spring

The “Arab Spring” brought in its wake an outpouring of artistic expression, evidenced by June’s Venice Biennale, where the Egyptian pavilion was dedicated to artist Ahmed Basiony, who died during the uprisingst hat toppled leader Hosni Mubarak, while works of Tunisian artist Nadia Kaabi-Linke, such as “Butcher Bliss”, spoke volumes against the Ben Ali regime. “There is no doubt that politically engaged art is more fashionable now,” says Barakat.

The Qatar Museum Foundation has already begun archiving works inspired by the Arab uprisings. But whether such art will be valuable in the future for its monumental content or not will only become known with time.  For now, some experts are wary of collectors’ interest, let alone investment, in newer mediums that young MENA artists are experimenting with. Photography is one example of an art that makes for tricky sales, says Odille, while video also poses difficulties. Ayyam’s Samawi has an even more worrisome outlook on conceptual art trends, which he believes will be both historically and financially worthless in the future. He says, “I am not a big fan of installations and other new forms of art. I believe that in 20 or 30 years from now a lot of big conceptual names in the spotlight today internationally and regionally will be forgotten.”

For Zand, nurturing artists and educating people on both the buying and management sides of the Middle Eastern art scene is the first step towards having a real market that is not easily manipulated. “That is where the challenges arise,” she says.

 

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Society

The new upper class

by Rayya Salem
written by Rayya Salem

As Beirut’s recently launched mega-developments slowly rise from their foundations, careful plans are being debated and re-evaluated to ensure that the new generation of luxury housing is topped with the sweetest cherry: the Penthouse. Executive takes a look at the particular decadence of some of Beirut’s upcoming “palaces within the city”.

3Beirut

Atop each of the three “sleek and elegant” towers that makeup 3Beirut, a forthcoming residential development by SV Properties near the Starco Center, sit penthouse duplexes of 1,300 square meters (sqm) each. To harmoniously blend with the exterior design and materials, Foster & Partners is also creating the interiors for all 150 apartments, a relatively new venture for the British firm.

“The client today is not only conscious about aesthetics, but also about functionality and green building concepts,” said Faris Smadi, chief executive officer of SV Properties and Construction. Catering to specific demands like larger wardrobe space and ceilings that reach five and a half meters, the collaboration aims to ensure the best use of space. “Especially with a larger unit, it’s important to achieve the perception of a higher ceiling by removing any light fixtures from the ceiling [and having light emanate from the walls].”

Folding glass panels open up to fully landscaped 180 sqm terraces — the landscape architect is Vladimir Djurovic, a long-time consultant for Solidere-area projects — while the pool area will be situated in the 900 sqm spa in Tower 2. Enlisting the help of Foster & Partners incurs “double or triple the fee [of a local designer]”.  However, according to the architects their designs have added 20 percent to the finished product’s sales value on previous projects outside of Lebanon.

According to Smadi, one of the penthouses has already been sold while they do not expect the other two to be snapped up until a later stage of construction. “already over 40 percent of the project is sold… and we still have five years for construction to finish,” said Smadi, who added the two remaining penthouses are priced at over $12,000 per sqm.

District//S

The eight two-story penthouses, which will rest atop Saifi’s upcoming residential community, District//S, each offer high ceilings of moret han four meters, landscaped terraces and pools atop the attached, adjacent buildings. But perhaps the game-changing characteristic of the development is the sense of community it is striving for, with art and furniture galleries, restaurants and cafes lining pedestrian walkways and a grocery store just downstairs.

The main difference between the “elevated yet accessible” luxury residences is size, with the top story units ranging from 542 sqm to 924 sqm. Though smaller units always sell faster than larger ones (especially when sales are off-plan), and penthouses are going for around $10 million, the group has already secured two sales, with two more reserved for clients. Namir Cortas, chief executive officer of Saifi Modern, the Lebanese company that owns District//S, says that “as larger mortgages become available, developers like us who are used to people buying without financing… are seeing more [financing take place] today,” even for large units.

Beirut Terraces

Two four-bedroom units on the 25th floor of Beirut Terraces offer unblocked views of Beirut’s urban skyline, seashore and mountains, with the floor-to-ceiling glass facade embracing the indoor/outdoor theme of this Herzog & de Meuron design, which sits across the street from the InterContinental Phoenicia Hotel. Though the sellable area is roughly 1,052 sqm for both, the terrace size differs, with one at 270 sqm and the other 451 sqm. A pool is on the first floor of the building. At $12,500 per sqm, the price tag of $13.15 million makes it one of the top-dollar abodes in town. By way of comparison, the last available penthouse in Marina Towers, spread 1,000 sqm over the 10th and 11th floors in Marina Court, has a serious negotiator flirting with the asking price of $7,400 per sqm, or $7.4 million, according to Stow Communications Manager Amal Khoury. Benchmark is offering the first ever iPad application for a real estate project in the region, allowing users to compare blueprints, unit size and features within the hotel-district development.

Sama Beirut

At the pinnacle of Beirut’s skyline is the upcoming 1,390 sqm duplex (including mezzanine), perched upon what will be the country’s tallest tower, Sama Beirut — a residential, office and retail development under construction in Ashrafieh costing more than $200 million. The amenities match the record-breaking views.  In addition to a swimming pool, the spa atmosphere is enhanced by internal gardens and a pond surrounding a solarium studio, while entertainment is elevated to a whole new level with a 25 sqm home theatre.

According to Alain Bassoul, chief operating officer of the project’s sales and marketing consultancy, Prime Consult, executives are currently scoping out contractors to provide home automation systems throughout all units of the building to be stamped green by a Leadership in Energy and Environmental Design (LEED), which can later be customized, in addition to penthouse perks like an internal elevator. But for now, Bassoul says, the company has not started marketing the suite.

 

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Finance

Q&A – Marwan Kheireddine

by Vanessa Khalil
written by Vanessa Khalil

An avid Lebanese contemporary art enthusiast, Marwan Kheireddine, chief executive officer at Al Mawarid Bank, recently sat down with Executive to talk about his personal art collection, his take on the booming Middle Eastern arts scene and ‘passion’ investments.

When did you first start collecting art?

I always had an eye for art. My father collects art [and] I started my own collection some 10 years ago by getting interested in [Mustafa] Farroukh [a pioneer in Lebanese contemporary art]. Someone told me that he was the art teacher at my school, at International College [in Beirut], so I started buying some [of his works] here and there. I moved to buying any and everything that I liked. Then I realized that maybe for the sake of having an ice collection, I should concentrate on something and at some point I concentrated on Lebanese artists [with a theme of] war in Lebanon.

Some say Lebanese art does not get enough support from Lebanese collectors, which leaves it undervalued. Do you agree?

I tend to say that in certain cases and at certain international auctions, some Lebanese art was overpriced, and some was sold for a significant premium. It’s not uncommon now to find Lebanese artists, some of which have passed away, others still alive, that are selling, at auctions, small paintings in size for amounts in excess of $100,000 and $200,000… For those prices you can get a painting that is signed by Picasso. But I do agree that some Lebanese painters have not yet achieved their worth. Aref Rayess for example — who’s one of the massive artists that passed away some while ago —[has] huge collections that are incredibly artistic and still not selling at their full value.

Is Middle Eastern contemporary art being overvalued at auctions?

To establish a market, a one-off sale does not really create a price. So it may very well be circumstantial; it may very well be that someone really liked that piece of Saudi art and decided to pay a lot for it. Saudi art is now hot. People are now looking because the image they have of Saudi Arabia is anything but art. It’s oil, it’s business, it’s the economy, etcetera. So art from there is attracting a lot of interest from regional and international art collectors. I’m looking at it but I have not bought anything.I have not seen anything yet that really caught my attention.

What art would you invest in?

This is the million-dollar question because if it’s only for investment, the objective would obviously be to buy something that will increase in value, and identifying the artists that will survive time is not easy. If we go back to the Lebanese artists, I think that really a handful saw their value increase over the past 100 years. You have Farroukh, Omar Onsi, Habib Srour — who has a limited number of paintings for collectors to view, let alone buy — Paul Guiragossian, Shafik Abboud and that’s out of what? Maybe 1,000 artists that have had their paintings circulated in Lebanon over the past 100 years. 

Auction houses in the region are believed to be overly speculative, focused on short-term profits. How would someone avoid art ‘bubbles’?

Auction houses are by no means experts, in the sense that they are selling something whereby they are guaranteeing its future value. They estimate the art prior to placing it but many times they’ve estimated prices that they were never able to achieve and at other times pieces sold for multiples of their estimates. They guarantee authenticity, condition and delivery.

At the end of the day, the price hike is happening because the bidders tend to be, in our part of the world, somehow emotional. So we had an [Ayman] Baalbaki [“Let a thousands flowers bloom”] sell for something like $200,000 dollars. That, I think, does a disfavor for Baalbaki, because if he sells at this price today, what are his chances of going much higher? You had two bidders that were hyped on that specific painting — especially with the Arab revolutions taking place — and they overbid. In my mind, from a monetary perspective it is not worth that much.

Is it very dangerous having young MENA artists reach record prices so early in their career?

Overbidding on certain pieces does create anomalies in the market. But I don’t think you can do anything about it… and I’m sure that whoever bought this Baalbaki is so proud of it that it’s probably hanging on the main wall in some mansion somewhere in the Emirates or elsewhere. The price is more a reflection of the feelings of the buyer at the time the piece was bought.

What would guarantee the value of the artwork inspired by the Arab uprisings next year?

Nothing will guarantee the value of art at anytime. A lot of [art] buying, especially for upcoming artists, is based on mood and general trends in the market. There’s always this ambiguity, animosity, in the art world because it relies a lot on emotions. It’s not a rational science.

In that sense, passion investments are not any less volatile than other investments, are they?

No, there are certain art lots or pieces that you cannot go wrong with; a Picasso, Monet, Van Gogh, a [Paul] Guiragossian or a [Shafik] Abboud. When you buy these pieces it is a safe haven, a low risk investment for your money. It’s just like the stock market; you can have a low-risk strategy and invest in safe instruments like treasuries and AAA-rated bonds, or you can be aggressive and go all the way into speculative investments.

Art prices are very volatile and getting it right is not easy. But then you can diversify, buy a bit of everything, and if something hits, it hits big. Art is a safe investment, but illiquid. So if you sell it quickly you will lose value. It is a good place to store your money over time, provided you can identify good art.

What would you advise young collectors?

Buy what you love. I definitely went wrong, many times. I have art that is worth nothing. What I like I have no problem with; I don’t care about its value or even monitor it, because typically what I buy I never sell. I take risks in investments. A few years back, I learned that Hitler —before he became the murderer — had some 700 known paintings. Now I have some 35 of his paintings. None of them is really shocking in terms of its beauty, actually most of them are on the ugly side. But it’s Hitler. I bought them here and there from the United Kingdom [and] Austria, so [my collection] must be one of the biggest single collections held by anyone in the world. I’m thinking that maybe I would sell them at some point as a collection. That could prove to be a very good investment or the lousiest one I’ve ever made.

What do you have your eye on right now?

An Ayman Baalbaki. And a very dear friend of mind promised me that he will make sure that I’m getting one. So I’m waiting on that promise.

 

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Society

Technology: the leisure of smart homes

by Rayya Salem
written by Rayya Salem

The Lebanese are known to seek out and import the newest and most advanced products. The technology segment is certainly no exception, especially if the product serves a purpose to entertain, shock or pump up the egos of those who buy them, whether clients are in the hospitality industry or homeowners.

For Beirut-based Triangle Sound & Image and Triangle Entertainment Services, one of the major distributers and installers of audio and lighting systems, the tides are changing as the Middle East and North Africa region builds its hospitality market. “[Our portfolio] used to be 80 percent residential versus 20 percent commercial and staging. Now, it is 45 percent residential versus 55 percent commercial,” says Triangle’s managing director Zahid Elian. As installation and design requests roll in from as far afield as Saudi Arabia, Kazakhstan, Mumbai, Istanbul, Las Vegas or even Paris, current work continues on 11 major commercial projects in the region, most notably the installation of the systems in the upcoming Palais Maillot club (of Parisian fame) in Beirut.

James Bond control

The action going on behind closed residential doors can rival that of the hospitality industry. Nowadays, controlling all electronic systems in a suburban home from the owner’s overseas iPhone is an old trick. And since Lebanon’s Energy Ministry is lagging in energy solutions, remote-controlled systems, promoted as energy-cost savers, are rising in popularity; several Lebanese distributers are now selling these technologies through different global brands.

Zoom Tech Electronics, for example, is the exclusive distributer in Lebanon for the American brand Lite Touch, which controls lighting, security alarms, television, air conditioning and any kind of electricity in your home on a single remote or iPhone, at a starting cost of nearly $6,000.

For entertainment, some private clients relish in confusing their guests with American-made Stealth Acoustics invisible speakers (hidden within the walls) or customized mirrored televisions, which will set you back nearly $5,000 for the 37-inch TV and up to $31,779 for a 65-inch screen. So far, the 15-year-old company has installed roughly 500 of the latter in Lebanese homes.

“Imagination is the limit; the budget is the response to that limit,” says Triangle’s Elian. In Lebanon, it seems the budget doesn’t have the same constraints as it might elsewhere, as another imagination-fulfiller offers.

“Knowing the Lebanese, they like to be the first to have the best products. They are willing to pay for and ask for the most advanced ones,” says Jean Gemayel, managing director for Lebanon and the Gulf for Algeco, a Roumieh-based engineering consultancy that builds aluminum and glazing structures. Though their automated glazing systems can, for example, create an indoor/outdoor pool area surrounded by retractable glass, a newer eye-catcher is picking up in residential popularity. In the last three years, they have installed approximately eight $25,000 steel retractable roof and waterfall systems (see picture) and in May they were commissioned to install a retractable roof with a waterfall over a 2,000 square meter terrace in Le Mall shopping mall in Saida.

Cost of sophistication

As many predicted, the iPod has become a tool and a base around which many other products, systems and services revolve, as demand and know-how grows for digital wireless multimedia streaming, wireless control and the programming of lighting. A major burden on distributers like Triangle is actually finding enough skilled people to install high-end audio and professional light and sound. Add to that the cost of importing foreign systems, and clients should be prepared to pay a premium, as manufacturers must cover the cost of research and development for new innovations, not to mention Lebanon’s import taxes.

Although expensive, such technology offers a long-run investment, including the complete concept and system offered, from the pre-design stage to installation and after-sale services. Just ask the club owners who keep going back to their same supplier when a new product is available.

 

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Finance

Q&A – Rami El Nimer

by Vanessa Khalil
written by Vanessa Khalil

Rami El Nimer is general manager at First National Bank (FNB) and an experienced art collector. He chatted with Executive about how his art collection fed on history and identity, the opportunities and risks associated with banking on art in the Middle East and his plans to build up FNB’s art assets.

When did your passion for art begin?

My passion for art started at a very early stage when I used to visit my ancestors’ house in Nablus, Palestine. As a young man in 1967 I used to visit my family there. There was a small museum that had our family artifacts, arms, armors and documents. Until the age of 16 or 17, I used to collect small artifacts concerned with the Ottoman Empire — like books or coins. And still today I keep them. Then I went to school in Switzerland where I met a lot of art dealers, and there I expanded my knowledge. But it was always Islamic art, particularly Ottoman art, that fascinated me.

Can you talk us through your art collection?

There are three parts. Firstly, since I’m of Palestinian descent, I collected anything to do with Palestine: books, postcards, stones. I have historical documents from 1620 until 1850, and when I couldn’t get them out of Palestine during the Intifada, the family decided to smuggle them for me. The second part is the Ottoman art, which I collected for beauty but also for national heritage. Our descendants lived under Ottoman rule, so it’s fascinating for me. My collection there consists of different areas, from manuscripts to calligraphy to furniture. The third part of my collection reflects my willingness to help contemporary Palestinian artists worldwide, trying to buy their works. My daughter and I are setting the scene for them in Lebanon; hopefully we’ll show that Palestinians are people with identity, with culture, with deep artistic roots; not just a bunch of refugees living in camps, or terrorists. For me this is a duty.

Is there an investment side to your art collecting?

I never approached art as an investment. But with time, apparently, I made a great investment. The [return] percentage was huge because I collected in the right period and the right areas. But I cannot afford today to compete with international collectors worldwide, museums who have unlimited means, especially in the Arab world.

Do you think there is a Middle Eastern contemporary art bubble in the Arab world now?

Previously, the Arab world was away from this movement, due to the political and economic situation for the past years. [Now] there’s a lot of new wealth and of course the younger generations are more interested in contemporary and modern art than, let’s say, Islamic art, which is becoming too rare and too scarce and also very expensive. With the new wealth emerging and no experience, there is a lot of manipulation in the art business. But value is irrelevant because it is a supply/demand issue. Of course some people will abuse this and try to promote artists that won’t necessarily make it in the long run. Now we [are seeing] some extremely exaggerated figures, which will discourage people. But when they are discouraged the market will go down to more normal levels. Then serious art lovers will start buying more because they are not necessarily very rich people.

What is your take on art funds that guarantee safety and greater returns?

I was thinking of doing one myself a few years ago. But then the war in 2006 happened so I decided not to proceed with it. It was too risky. It is much more speculative than you think, because in art you have trends. If you bought in China at the right time, a work of art which cost you $10,000 or $15,000 was worth a million dollars 10 years later. But this is a stroke of luck. If you’re going to buy in an academic, not a speculative manner, it takes a much longer period of time.

In financial stock markets, you analyze the company’s performance at the end of the year; if it goes down 50 percent you can exit. There’s liquidity in it. The art market is not very liquid; you will sit on hundreds of works of art and you might not sell them. What’s a ‘blue chip’ today is not a blue chip tomorrow. If one fund contains $10 million — like the ones in the region — it’s something, but if you’re talking 100 funds each at $50 million, the art has to perform so there will be more manipulation.

What about banks and other institutions building up their art collections?

There are a lot of institutional art collectors in Europe, the United States and China. They have art departments. They’re not looking for short-term properties. This is better than having pure business funds. Bank Audi is one of the banks in Lebanon which were pioneers in collecting art. I started doing it myself [for FNB]. Most of the works are mine; I exhibit and lend them to the bank. I decided to buy every year certain works of Lebanese artists for the bank, but I haven’t set the foundations yet. It takes time and maturity. Now we have different priorities than an art collection as a bank. I don’t want to use the funds of the bank for art; my shareholders will not be very happy.

What’s your advice for new collectors?

I would say ‘be careful’. You have to study your work, not try to color-coordinate your paintings with your walls. Stay away from decorators, go with your instincts, but also educate yourself in art and train your eye. First you have to love the piece, do your research, and then ask yourself whether you can afford the art and whether its price is justified. At the beginning I collected only decorative pieces in Ottoman art which are not pure, in the sense that there’s a lot of influence in them. So now I’m more selective in choosing pieces. You always learn something new.

What do you have your eye on right now?

Ottoman is my passion. I’m trying to buy a 16th century textile, which is very rare. I’m negotiating it in Portugal with my dealer. Ottoman art is much scarcer [than contemporary] and buying it at the right price, at the right moment, is not easy. You have to practically hunt it; it’s a nice feeling.

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