Society

Whisky: A popular cheer in down times

by Paul Cochrane
written by Paul Cochrane

Amid the current economic recession, there has been a general downward shift from luxury spirits to medium-priced bottles, while most distributors have put the launch of new brands on hold. With competition getting tougher, brands are working on revamping their image to appeal to the high-end drinker, while distributors are still paying eye-watering sums to get exclusive rights at the capital’s premier nightspots.

“The market always strives to go upwards, but it has been a difficult year globally and in the Middle East, and it is maybe not the right time to introduce new brands,” said Wadih Riachi, cellar manager at Vintage in downtown Beirut. “Yet the drinks sector has not reached a critical mass in Lebanon, by far, in terms of new products, spirits and packaging.”

The spirits segment has developed over the past few years, evident in the rise in premium vodkas, gins, brandies, rums and tequilas on offer. Vodka sales grew by up to 4 percent over the past year, above the120, 000 cases benchmark, but Lebanon is still very much a whisky market, with more than 450,000 cases imported every year.

It is in whiskies that there has been a maturing of the segment, with tipplers increasingly opting for single malts instead of reaching for the ubiquitous Johnny Walker Black Label. “Knowledge about single malts really started last year; we’re on the right track,” said Paul Atallah, wine and bar manager at Le Gray Hotel. “I think single malts will boom, and it is a great match with cigars,” he added.

Currently, imported fine and single malt whiskies average more than 8,000 cases per year, far more than cognac, at around 1,000 cases. Of those 8,000 cases, an estimated 70 percent are the 12 and 15-year-old single malts.

To differentiate the malts from the mass whisky market, companies are working on packaging. For instance, Glenfiddich, the biggest selling single malt label in the world, realized that the packaging for its 21and 30-year-old malts being the same as the significantly cheaper 12 and 15-year-old malts was detrimental to sales.

To make these older and super premium malts stand out,  Glenfiddich got rid of the cardboard tubes in favor of wooden boxes, first for the 30-year malt and later this year for the 21-year. There has been a corresponding 15 to 20 percent rise in the price, but the brand is banking on the improved aesthetic appeal.

The bottle has also changed, along with specific numbering on the labels, which has an appeal to collectors. “Some people want special numbers, such as one customer asking for the ‘600’, for example,” said Vintage’s Riachi.

Glenfiddich’s re-packaging seems to have worked. Vintage typically sold one to two bottles of the 30-year malt a month, but after the makeover they sold two cases in three days. “They got it right,” said Riachi.

Outlets are also emphasizing the range of whiskies a distillery offers. “People like collecting whisky in the same way as wine; instead of a 2001 or 2003 vintage it is a 12, 15, 17, 21 or 30-year-old malt. You drink less but better. And that is the magic of spirits; wine is drunk immediately [after opening], but spirits keep for ages,” added Riachi. 

Rising from the snow

Rare malts and varieties from specific years are also proving attractive.

“Scarcity is the best salesman of wine or spirits,” said Riachi. The Camus 1971 Armagnac, for instance, is likely to sell well this year as a lot of people will be turning 40. And in terms of a unique drinking experience, one of the most sought after this year by whisky connoisseurs is Glenfiddich’s Snow Phoenix.

The Snow Phoenix is a one-off combination of single malts that came about following  heavy snowfall at Glenfiddich’s distillery in the  Scottish Highlands in January 2010 that caused some warehouse roofs to collapse. With casks exposed to sub-zero conditions, the master distiller decided to bring together the whiskies from ex-bourbon and Oloroso casks that had aged for 13 to 30 years into a non-aged single malt. It is now being hailed as a cult malt; some websites selling the Snow Phoenix have already sold out, while in Lebanon only 250 bottles are to be available for sale and half have already been pre-ordered ahead of the July launch. 

The region’s window display

With the summer season not expected to be as dynamic as in years past due to a dearth of tourists, and Ramadan falling in August, drinks sales are expected to be down. But Lebanon still remains a top venue for marketing spirits, from the low to the premium level.

“Lebanon has become a Club Med destination, with two seasons, and the rest of the year having to survive on the Lebanese,” said Carlo Vincenti of Vincenti & Sons, distributor of St. James, Label 5, Glen Moray and Pitu Cachaca. “Lebanon is a window display for the whole region, as a big percentage of the profits from spirits sales in the United Arab Emirates and Saudi Arabia is spent on marketing in Lebanon.” Surprising though it may seem, Saudi Arabia is unofficially the fifth largest whisky market in the world.

Marketing is evident at Beirut’s infamous Sky Bar, where distributors have been spending ever-increasing sums over the past three years to target trendsetters. This year, according to distributors, some $630,000 was spent by Diageo for exclusive rights to sell its brands and by distributor Etablissements Antoine Massoud to plug its Russian Standard vodka at the rooftop bar.

“It is ridiculous, but more outlets are asking for money in advance to exclusively sell alcohol brands, despite the downturn,” said Nagi Hmouda, business manager at Fattal, distributor of Dewar’s, Grey Goose and Patron. “We are skeptical about the season as a lot of losses will be incurred.”

Fattal will not be introducing any new brands this year. Vincenti has launched the premium cognac Bisquit, but is focusing on faster moving spirits such as cachaca — the fastest growing spirits category in the world — rum and vodka.

Yet Vincenti also expects the upward swing in vodka to tail off. “Vodka was a discovery drink and many new brands were introduced to the market, but I think people will shift back to something less neutral in terms of taste, to whisky, rum and tequila, which are taking off.”

With sales down in on-trade — at bars, restaurants and hotels — the less glamorous supermarket has become an important point of sale. Indeed, supermarkets are now charging higher listing fees and investments to display brands.

“High-end brands are on supermarket shelves, but in terms of shelf off-take it is very weak,” said Vincenti. “Such brands shouldn’t be there as the consumers are not the type of people that go to supermarkets. There is a question mark on prestige if a bottle is on a supermarket shelf for months.” The supermarket as a high-end spirit venue may constrain the launching of new products and curb rise in consumption of single malts.

“Demand for single malts has risen over the last two years but I’m not sure it can go on. If on-trade doesn’t evolve, launching luxury spirits will not succeed. You can’t launch a 16-year old whisky in a supermarket, and you can’t sell more than one case per month,” said Vincenti.“But the downturn is not necessarily a bad thing. Lebanon was living in an imaginary world, as you never saw anyone in Europe paying $400 for a bottle in a club. It wasn’t healthy.”

 

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Economics & Policy

Executive Insight – Paul Naimeh

by Paul Naimeh
written by Paul Naimeh

When the tourism minister starts talking about how we should change the country’s strategy from attracting “land” tourists to “air” tourists you know that the industry, which props up around one-third of our economy, is anything but buoyant. 

Obviously, those who travel over land (as many coming from Jordan, Kuwait and Saudi Arabia do) will be put off by the prospect of driving by a Syrian rebellion on their way to a relaxing vacation on a Lebanese beach or mountain resort.

And because we don’t know how long the Syrian uprising will last, this year may just be the best time to stop resting on one’s laurels and chart a new course for investment in the industry, just like all those tourists who will be leaving their cars at home this year.

The alternative is to indirectly put over half a million jobs at risk as the sector also plays the role of a catalyst for construction and manufacturing and economic growth as a whole.

Last year, capital investment in the sector was estimated at $455 million, accounting for 12 percent of overall investments. According to ANIMA Investment Network, capital investment for travel and tourism is expected to reach $714.8 million, or 11.8 percent of estimated overall investments in 2016.

Golden days are gone

But gone are the days when Lebanon posted the highest growth rate in tourists arrivals in the world (39 percent in 2009). The current social, economic and political circumstances provide an entirely different reality.

This year tourism numbers have already fallen 18.6 percent. Hotel occupancy in Beirut fell by 20 percent in the first five months of the year, putting it near the top of the loser’s club among capital cities that have been rocked by revolutions, such as Cairo (-42 percent) and Manama (-44percent).

As bleak as all the above looks, the Lebanese investors, notorious for their resiliency and entrepreneurship, still move forward, spending millions this year in an industry that could come to a grinding halt.

From the perspective of the foreign investment experts, investing in Lebanon today would equal lunacy. However, as Lebanese, we think we know how the tides of change sweep across an economy and that those who hesitate and sit on the sidelines miss out on the profits reaped by the brave.

War, lack of government, assassinations, economic stagnation and fear have not been able to blow out the light of our determination to play by the rules that we create and only we understand.

This is the underlying truth of our culture and the promise every Lebanese citizen makes to the investor that chooses to launch a new touristic project in Lebanon.

Unfortunately, the speed at which investments must be made, and profits collected in this sector, have left us counting the change. 

Business in this industry has an average lifespan of two to three years and the effect of rising inflation, not the underlying fundamentals that would have any investor heading for the hills, are what we have to fear most at this point. A government without an inflation policy, coupled with an economy controlled by oligopolies, means prices go up and quality goes down.

Hence an industry which used to be showered with praises for its memorable service in the past has now begun to lose its shine and is sending heavy spending visitors to other areas of the world where they receive more ‘bang’ for their buck.

At this point, as investors in this sector, the question is not what to invest in and when to do it that plagues our minds, but rather “why” and “how effectively”.

Attracting scores of visitors is great; getting them to spend happily is another story. It is time for business managers and investors alike in this sector to choose the right “why” and capitalize on the “how effectively”; otherwise we will again fall in the trap of being held back by alack of government policy. We have learned to live with that in the past, but this time it may just be the difference between the black and the red.

PAUL NAIMEH is founder of Enologia, Route 69 and El Rancho

 

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Society

A prime selection from Lebanon’s vineyards

by Michael Karam
written by Michael Karam

Michael Karam, award winning author of Wines of Lebanon and Michael Karam’s Lebanese Wines 2011: A Comprehensive Guide, and associate editor-in-chief for executive, selects his favorite full-bodied Lebanese wines.

Note: These wines are not for what people like to call easy drinking. They can be drunk now but most won’t have reached their best for at least seven to 10 years after vintage if allowed to age properly. Aging allows the tannins to soften and give a silky structure to ‘carry’ the fruit and spices which the wines have in abundance. They should also be decanted at least three hours before serving. This gives them time to settle and breathe.

Château Belle-Vue 2006

A blend of Cabernet Franc, Syrah, Cabernet Sauvignon and Merlot. The wine has a reddish purple hue with notes of bell peppers, leather and stewed fruit, with a whiff of pork sausage. In the mouth, there is a lovely velvet texture with notes of plums and hints of cloves, leading to an outstanding finish. The winery makes only 18,000 bottles so these are not that easy to find.

 

Château Kefraya

Comte de M 2007

This behemoth of a wine is made from Cabernet Sauvignon and Syrah. It has a deep cherry hue with aromas of black pepper and thyme on the nose. In the mouth it has a wonderfully elegant structure and a smooth finish. One of Lebanon’s most famous reds, and deservedly so. 

Château Ksara

Le Souverain 2006

Made from Cabernet Sauvignon and the little-known Arinarnoa, it has a deep cherry hue with bell pepper and hints of figs on the nose. The Arinarnoa gives wonderful flavors of cassis and cured meats. Texture is silky, while the finish is dry and powerful.

 

Château Marsyas 2007

A blend of Cabernet Sauvignon, Syrah, Merlot and Petit Verdot. The color is a deep cherry hue. The nose is fruity if slightly toasted, but in the mouth this sumptuous wine is balanced with a superb tannic spine dressed in a cornucopia of ripe forest fruits. A newcomer to watch.

 

Château Musar 2003

A world famous wine made from Cinsault, Carignan and Cabernet Sauvignon. All vintages are aged for seven years before release. The 2003 tends have a deep garnet hue and aromas of oranges and cinnamon with hints of berry fruits. In the mouth, there is a heady combination of peppers and fruits with hints of chocolate. 

 

Château St Thomas 2006

A gentle giant made with Cabernet Sauvignon, Syrah and Merlot. It has an intense dark cherry hue. It is redolent of strawberries and cinnamon. The texture is soft and warm and the tannins are integrated to give a wonderfully balanced drinking experience. Older vintages age wonderfully.

 

Domaine de Baal 2007

Wine from a micro-winery (only 12,000 bottles are produced each year) in Zahle made from Cabernet Sauvignon, Merlot and Syrah. The color is dark purple and the aromas give off notes of black fruits with hints of soft peppers and licorice. In the mouth there are further flavors of black currants, cloves and cured meats. The finish is powerful.

Domaine des Tourelles

Syrah du Liban 2006

With a deep cherry hue it has pepper, eucalyptus and roast coffee beans in the nose. Possessing a robust texture with nicely integrated tannins, there is a lot of fruit on the middle palate and the finish is powerful and sustained. Good aging potential but ready to drink now. It won many plaudits at the recent London wine fair.

 

Domaine Wardy

Private Selection 2004

This elegant and suave wine is made with Syrah, Merlot and Cabernet Sauvignon. It has a dark ruby hue and an intensely smoky nose. Balanced in the mouth with a fruity finish. Good aging potential with well-integrated soft and velvety tannins.

 

Ixsir

Grande Reserve 2008

Ixsir is based in Batroun but has vineyards across Lebanon. Its top red is made with Syrah and Cabernet Sauvignon. It has a deep purple hue and a menthol nose with hints of black pepper. Forest fruits on the mouth herald a sustained finish that brings out the spices.

 

Karam Winery

Saint John 2004

South Lebanon’s only producer (and no relation to the author). This gloriously playful red is made with Cabernet Sauvignon, Merlot and Syrah. It has a black cherry hue with a nose of chocolate, peppers and other spices. In the mouth, the tannins have developed well and in no way obscure the abundance of fruits that dance around the mouth. The finish is sustained and memorable.

 

Massaya

Reserve 2006

Massaya’s senior red is made from Cabernet Sauvignon, Mourvedre and Syrah. It has an intense cherry hue and a complex nose of green peppers, cloves and cedar. On the palate the texture is velvety and elegant.The tannins appear gradually and the finish is smooth and underpinned with fruit.

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Comment

Lebanon’s subjective truths

by Nicholas Blanford
written by Nicholas Blanford

The recent bomb attack against the United Nations Interim Force in Lebanon (UNIFIL) and the outbreak of sectarian violence in Tripoli came as no surprise. UNIFIL itself was expecting to feel the backlash of the unrest sweeping the region, particularly the violence that is roiling neighboring Syria.

It is an uncomfortable fact of life for the peacekeeping force, with its European-heavy battalions, that it serves as a huge soft target for anyone that wants to send ‘messages’ to the international community at large. Indeed, since UNIFIL was expanded after the 2006 war from 2,000 peacekeepers, drawn mainly from Ghana and India, to more than 11,000 troops and a maritime component, force protection has dominated its agenda. There was a spate of actual and attempted bomb attacks against UNIFIL four years ago, most of them unprofessional and resulting in few casualties. The one exception was a highly-sophisticated bomb attack against the Spanish battalion that killed six peacekeepers, UNIFIL’s highest single day casualty toll since 1978, when it was established.

As usual, the perpetrators and motives of the latest bombing of an Italian UNIFIL convoy near Sidon remain unknown. But UNIFIL is expecting more attacks, especially if the regional situation deteriorates further.

The same applies to that perennial flashpoint between Jabal Mohsen and Bab Tebbaneh in Tripoli. The clashes that broke out on June 17between the Alawite community in Jabal Mohsen and the Sunnis of Bab Tebbaneh and neighboring Qobbe were widely anticipated.

The frontline between the two districts, marked by a string of raggedy bullet-pocked and unpopulated buildings, remains probably the most consistent and volatile flashpoint in Lebanon. There have been several bouts of fighting here over the past six years as Lebanon lurched from one political crisis to another. Who started the June 17 clashes that left six people dead, including a soldier and a 14-year-old boy, depends on whom you ask. The Alawites insist that the Sunnis shot first, while the Sunnis say the Alawites opened fire on a demonstration held to support the Syrian opposition movement.

Rifaat Eid, the convivial head of the Alawite community, accused leading Sunni politicians and clerics in Tripoli of fomenting anti-Alawite sentiment and distributing weapons to be used in street battles. He said that the Sunnis have been provoking the Alawites for months by firing occasional rocket-propelled grenades into Jabal Mohsen. “They want a war and they are preparing for it,” he said.

But wander down the hill into Bab Tebbaneh and you will hear the diametric opposite, with local residents claiming that it is the Alawites who have been firing the RPGs. During an earlier clash in 2008, one could hear Alawite combatants insisting that Saudi jihadists were fighting with their Sunni enemies in Bab Tebbaneh. But the Sunnis would insist with equal vigor that Iranians were taking pot shots at them from the heights of Jabal Mohsen.

There is a weary predictability about the fighting between these two communities, which consistently allow themselves to be exploited as pawns in a broader political struggle.

The formation of a new government after five months of bickering over the allocation of ministerial seats has already increased the levels of political vitriol.

Mouein Merhebi, a Future Movement MP from Akkar, recently accused Hezbollah of deploying 130mm artillery guns in the rugged and remote hills southwest of Hermel, specifically Wadi Fissane, Marjhine and Ayoun Oghosh. The suspicion, of course, is that Hezbollah could use the cannons against the Sunnis of Akkar and Dinnieh. Hezbollah dismissed the claim as fabricated and ridiculous.

Take a drive along the remote trails winding through the ochre-hued hills of Hermel, studded with dark green juniper trees, and no artillery guns are to be seen. If they exist, they are well hidden. Still, talk to Sunnis living on the western side of the mountain ridge that separates Dinnieh from Hermel and you will receive avid assurances that Hezbollah’s artillery guns are pointed at them. But cross over to the eastern side of the ridge and chat to local Shia farmers and the claims are dismissed out of hand.

Like all unproven and politically-charged accusations and counter-claims in Lebanon, truth lies in the eye of the beholder.

Nicholas Blanford is the Beirut-based correspondent for

The Christian Science Monitor and The Times of London

 

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Society

Book review: The End of Modern History

by James Reddick
written by James Reddick

Bernard Lewis’s new collection of essays, “The End of Modern History in the Middle East”, is an often fascinating, sometimes dull and endlessly frustrating continuation of the author’s 50-plus years of scholarly musing on the region. For those unfamiliar with Lewis, he is best known for coining the phrase “clash of civilizations”, which he introduced in a 1990 article in The Atlantic entitled “The Roots of Muslim Rage”. In that piece, Lewis presented his hypothesis that there was a deepening schism between Islam and the West — one founded in an inherent hostility toward Western values on the part of the Muslim world.

The events of 9/11 emboldened such thinking and Lewis’s ideology was espoused by the Bush administration in its hammerhead approach to creating ‘democracy’ in the Middle East (Lewis has criticized the implementation of the invasion of Iraq but has stood by its goals). This approach was largely discredited in the years following the Iraq invasion but it seems that Lewis continues to see the Middle East through the same lens, which pits democracy against fundamentalism in an epic struggle of progress versus regression.

The principal essay, which gives the book its title, is centered around the notion that the Middle East has reached a moment in history when it is free to charter its own course. Rid of the meddling superpowers (an arguable assertion in itself), the time is now to either move into the light —toward democracy, development and peace — or to revert further into the darkness of fundamentalism, autocracy and instability. If it is to move in the direction of the former, three catalysts would lead the way: Turkey, Israel and, most important of all, women.

Lewis asserts that, as the largest economy in the region and the first Muslim country to establish a democracy, Turkey could be the bellwether for development in the Middle East, depending on whether its own parliamentary system can withstand the Islamic leanings of the ruling party.

“It may choose… to turn its back on the West and return to the Middle East,” Lewis writes. “[Or] it may choose… to tighten its ties with the West and turn its back on the Middle East.”

In fact, Turkish Prime Minister Recep Tayyip Erdogan has done well in choosing both, maintaining strong economic and diplomatic ties with its eastern neighbors as well as with Europe, thus rebuking Lewis’s finite divisions between East and West.

Rightly, Lewis sees the Arab-Israeli conflict as the greatest impediment to development in the Middle East, “diverting energies and resources from creative to destructive purposes and preventing the progress of the region toward a new age of advanced technology and political freedom.”

But Lewis’s attitude toward the peace process, and his refusal to lay any blame on Israel, undermines the foundation of his argument. For him, the intransigence of Arab regimes that manipulate the Palestinian cause is the greatest impediment to peace; there is no mention of any stubbornness on the part of the Israelis.

“Dictatorships that rule much of the Middle East today will not…make peace because they need conflict to justify their tyrannical oppression,” he writes. “Real peace will come only with their defeat…and replacement by governments that have been chosen…by their people and that will seek to resolve, not provoke, conflicts.”

Omissions of Israeli accountability stand in stark contrast to Lewis’s strengths; his in-depth and lucid analysis of the linguistic and ethnic make-up of the Middle East’s states and the internal challenges facing each.  It is when he shifts to his trademark epic ideas of good versus evil that his credibility wanes. Take for example this passage from the title essay: “The war against terror and the quest for freedom are inextricably linked, and neither can succeed without the other.”

As any “Bush Doctrine” survivor knows, seductive as it maybe, such language should be met with trepidation.

 

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Society

The new connoisseurs

by Lauren Williams
written by Lauren Williams

 

On a Wednesday evening in downtown Beirut, Wadih Riachi is carefully explaining to an engaged group the fermentation and maceration process that goes into the Joseph Drouhin Beaune Greves Premier 2006 that they will shortly be tasting at this evening’s wine course. The intimate group of around 20 professionals, most in their thirties, consists mainly of regulars at the weekly tasting event; most have developed a sophisticated enough palette to detect the grape and smoky blackcurrant tones of the wine and they can wax lyrical about its vintage. Some even boast of their own private cellars.

Guests to Riachi’s course are part of what the owner of Vintage Cellars in Saifi believes is a growing class of wine connoisseurs. Increasingly sophisticated in their taste and selections, they are driving a move away from spirits and towards high-end wines.

Riachi, who distributes to major restaurants, hotels and bars across the country, says, “wine has been elevated to the status of a luxury product [in Lebanon]”. But with more information and better availability of a vast range of good wines he says, “for wine to be luxury, the product must be flawless.”

“People can now read consumer reports and wine critics and they understand their wines more and more,” he added. That sentiment is echoed by Henri Debbané, owner of Enoteca cellars and alcohol distributors, who says Lebanon’s traditionally consumptive wine culture is increasingly discerning, evident in the mushrooming number of private cellars in homes around the country.

Thirsty market

“Wine is becoming trendy — you find people have cellars now in boutique apartments,” Debbané said. “Drinking good wine is a sign of prestige — more than good spirits even —because of the connoisseurship.” Riachi agrees: “Lebanon until recently has been a purely consumption market; you buy,you drink, which is nice, but we are starting to see more people collecting wine like art.”

 

Wine sales in Lebanon have increased a solid 5 percent for both local and imported wine in the last year.  The market, now valued at close to $6.5 million per year ,according to Debbané, has seen Lebanese increase their consumption from around half a bottle per person annually in 1993, to two bottles per person today. Heargues that the Lebanese are increasingly willing to spend more on a good drop. Rampant Chinese demand for top-of-the-range “brand” Bordeauxs and Burgundys has driven global prices through the roof in recent years. Debbané says he has seen Lebanese connoisseurs increasingly opt for mid to high-end wines in the same category, as taste has developed.

Maturing tastes

“The demand for luxury is growing,” Debbané says. “For the Bordeaux wines especially, prices are going up in a consistent way. Mid-range to high-end is going up 20-25 percent on already high prices, so what you used to drink for $50 you now drink for $200.”

Budgets for high-end wines have remained about the same he said, “so we are varying the range to propose wines in the same category but not necessarily of the same prestigious brands.”

Unlike other luxury products, said Riachi, price has little to do with prestige. “When it comes to luxury we are able to say there is a best in each category,” he said. “Once you develop an accomplished taste for wine, it is difficult to go back. What may have been drinkable yesterday is not drinkable today. That’s what is happening to the market now — they are demanding better wines.”

As co-directors of vineyards Chateau Marsyas in the Bekaa valley and Domain Bargylus in northern Syria, Karim and Sandro Saade have witnessed the same trend. “People around the world are drinking better,” says Karim Saade. “And in Lebanon the prestige culture around wine comes from an increasing awareness of its convivial, cultural and scientific value.” With the Syrian Bargylus red wine selling well at around $28 a bottle, and the white around $17, he says the price reflects the cost of production. 

Michel Khoury of MK Holdings, distributor of Muscato Roseand premium 24-carat gold-plated Luxor Brut, rosé, and vintage from Champagne, came to similar conclusions when selecting his latest product range of Italian Barolos, which he will begin distributing through exclusive partnerships this year. Sales of the exclusive $1,060 to $3,000 Luxor Champagne are slowing, he admits, and while there is a “saturation” of alcohol in the market, “there is always room for a quality, well-priced wine.” The Barolos will retail for between $25 and $50 — a price deemed reasonable given the market’s willingness to spend the same on a quality Bordeaux.

“To tell you that sales of Luxor haven’t decreased would be a lie; even though we deal with the top-end clients, the top 5 percent of the market. Our private clients who used to order a case are ordering a bottle as a luxury gift instead. We used to sell about 150 bottles a year, so far this year we have sold around 35.”

Globally, demand for Champagne has taken a hit, although Debbané says Lebanon’s thirst for the bubbly, like wines, is also developing.

“In Lebanon we are seeing Champagne experience the same changes in consumption as wines; people are starting to see it as a wine that is not just consumed for the celebration of festivities,” he said.

Trouble ahead?

Increasingly discerning as Lebanese wine drinkers or collectors may be, retail alcohol sales are closely linked to tourism which, with political unrest around the region, is set to take a hit.  Expecting this summer’s peak season volume to be half of last year, Debbané says many of his hotel and restaurant clients are preparing for a downturn in wine retail sales.

Meanwhile MK Holdings’ Khoury says he has aborted plans to distribute to beach resorts in the troubled South Lebanon. “I am not going to invest a quarter of a million dollars and pay all the insurance when I have no guarantees — it’s all on hold,” he said.

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Editorial

Arabs and advocacy

by Yasser Akkaoui
written by Yasser Akkaoui

Search Amazon for books on lobbying and advocacy and you will find more than 9,000 on the subject. It does not take 60 years to understand the American system of checks and balances. All you need is a cause, conviction and the tenacity to keep pushing your message until it is heard and repeated by congressmen, senators, the media, influential personalities and the president. Mobilize networks of mutually-interested individuals to muster electoral money and resources for candidates that supports your cause, and, voila! Welcome to influence.

To have the world’s strongest economic power as an ally, learn the local vernacular and the ideological concepts that resonate. A little bit of democracy and a whole lot of fiery advocacy for a few decades or so should earn the leaders of your cause a regular spot to speak at congress and, if you’ve manage to scare the politicians enough about their dependence on you for reelection, expect them to jump to their feet and offer 29 standing ovations for a 45-minute speech.

This is the prism through which the Middle East and North Africa needs to assess Obama’s ‘Arab Spring’ speech, in which he outlined a new era of America engagement within the region; undoubtedly he supports the concept of Arab democracy, but this will extend only so far as it does not conflict with his reelection, and at the moment it is not the Arab lobby whom he feels beholden.

For Arabs to ever be the primary consideration and beneficiaries of American policy in the MENA, they must create an energized and expansive lobbying network — not just in Washington, but in every major US state. Then, perhaps, when another American president unveils a new US policy direction for the Arab World, it will be to the Arab American Political Action Committee that he offers his justifications.

For this we would need real leaders, and leaders we have none.    

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Economics & Policy

The GCC expands

by Fabio Scacciavillani
written by Fabio Scacciavillani

The ‘Arab Spring’ is yielding some unexpected and exotic political fruits. The proposal to accept Jordan and Morocco into the Gulf Cooperation Council is certainly among the most intriguing, and it was followed almost immediately by Palestine’s request to join.

GCC Secretary General Abdul Latif al-Zayani announced that the current six members (Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Bahrain and Oman) would welcome Jordan and Morocco into the bloc, saying that meetings “to complete procedures” are to be initiated soon.

Given the swift response by an institution not known for the timeliness of its decision-making process, it is likely that there were earlier discussions on this matter at the highest level (although Kuwait, Oman and Qatar reportedly expressed reservations about the move, preferring a limited membership, like that of Iraq and Yemen, confined to cultural and sporting events).

Previously, Jordan had shown interest in joining the bloc, but its requests had been politely turned down. Yemen’s request for membership has stalled for years but the country, though currently embroiled in political unrest, hopes to join by 2016. On the other side of the region, Morocco has apparently been invited to join.

This development could mark the coming of age of an international forum with ambitions to be a sort of Arabian version of the European Union, but which has been marred by a weak institutional framework and erratic procedures. Created in 1981 as a bulwark against a perceived threat from Iran, the GCC’s original agreement was ambitious in scope and covered vital areas with the potential to reshape and modernize the economies of the Gulf, while fostering a common foreign and security policy in a region endemically at risk of destabilizing crises. These included:

  • Harmonizing regulations in economy, finance, trade, customs, tourism, legislation and administration
  • Promoting scientific and technical progress in industry, mining, agriculture, water and livestock
  • Establishing scientific research centers
  • Setting up joint ventures
  • Establishing a unified military presence (the Peninsula Shield Force)
  • Encouraging cooperation of the private sector
  • Strengthening ties between populations
  • Establishing a common currency by 2010

Within the GCC framework the six countries have undoubtedly made some progress, for example in creating a Customs Union, in freeing the movement of citizens (but not of foreign residents), in establishing a joint military force (which was deployed recently in Bahrain), in cross-border investments and capital movements and in a number of other minor fields.

However, there are two fundamental differences between the GCC and the European Union. First and foremost, the members of the EU have transferred national powers to EU institutions. The most visible, influential and famous of these is the European Central Bank, which exercises its monetary authority in full independence from any political interference, as enshrined in the Amsterdam Treaty.

In several additional key areas member states have devolved their functions to the EU Commission or other supranational bodies: international trade, antitrust legislation, agriculture policy and visa regulation. The EU Commission issues directives through a  common legal charter, which can span virtually any field, to which all national legislation must adhere.

In case of controversy or lack of compliance with a directive, the European Court of Justice can rule to force national governments to conform to EU legal provisions. Often pieces of national legislation are struck down by the EU Courts, which in some cases can even overturn the verdicts of national Tribunals.

Furthermore, one of the main achievements of the EU, the single market, allows for goods and other services to be traded freely across the EU and removes customs and passport controls between most member countries. One can travel from the Arctic to the Mediterranean without encountering a single frontier post. In essence the EU is a super-state with institutions that exercise powers even against the will of national governments, an elected Parliament and a body of laws and principles (the so called acquis communautaire), which is valid for all citizens and all the 27 countries. More recently the EU has adopted a Constitutional Treaty that establishes the fundamental principles guiding its actions and the decision-making rules.

By contrast, so far the GCC has been mostly a permanent structure of regional diplomacy, facilitating the exchange of views at the highest level. The implementation of decisions made by the GCC is the responsibility of national governments, not of common, independent institutions. The only (limited) exception is the Monetary Council, which is the precursor of the Gulf Central Bank to be established when, or if, the GCC issues a common currency. This will be the first genuinely independent supranational institution in the Arab world. But the plans for the monetary union, which was supposed to go into effect at the beginning of 2010, are proceeding slowly, with two countries (Oman and the UAE) out of six having declared their intention not to join.

The accession of the Jordanian and Moroccan monarchies to the GCC could help inject new life into the integration project and would mark a historic step forward, so long as it is conducive to an institutional framework modeled on the EU, with a devolution of powers at GCC level.

A major goal could be the establishment of a true single market, styled on the EU, with completely free movement of capital, goods and labor, plus an antitrust authority with pervasive powers.

At present, border controls, trade barriers and protectionist measures among GCC members are still very much in place (even to transfer a used vehicle between two countries requires a dose of patience and money which could be put to better use). This hampers the development of industries and economic activity that could create the several million jobs needed to absorb an increasing youth population, which, as recent events clearly show, is ever more restless and impatient.

On the other hand, the proposed enlargement might turn out to be just a political card played on an increasingly shaky table. It could very well be that the GCC’s newfound hospitality is intended to raise the six nations’ profile in the region and is more of an internal security pact by which member states would intervene in the case of internal unrest. If this is the case, the GCC would merely gain a front row seat to events unfolding in Algeria and Syria (as it already has in Yemen).

But for the GCC to limit itself to merely preserving the political status quo of its member states would be a missed opportunity: United States President Obama delivered a major policy speech on the Middle East last month, which foreshadows an unprecedented involvement in the region outside the security arena, and a clear indication — underlined by the explicit mention of the pre-1967 borders between Israel and Palestine as a natural negotiation platform — that the wind has dramatically changed.

The enlargement of the GCC could either constitute a myopic move for preserving the status quo (and another form of diplomatic jostling) or the means to address the roots of the economic malaise in the region by following a cooperative approach along the lines of the EU. The next few months will tell.

FABIO SCACCIAVILLANI is chief economist at the Oman Investment Fund

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