Executive Magazine

Economics & Policy

Rendez-vous with the rebellion

by Sam Tarling May 26, 2011

written by Sam Tarling

A Free Syrian Army fighter rests in a hill-top hideout near the Syrian city of Idlib [Photo: Executive/Sam Tarling]

The men are short of rocket propelled grenades, a key weapon in the FSA's arsenal [Photo: Executive/Sam Tarling]

FSA soldiers observe heavy fighting on a neighboring hilltop [Photo: Executive/Sam Tarling]

A member of the Free Syrian Army looks on as heavy fighting erupts on a hillside during an attack by his unit in the mountains of Idlib [Photo: Executive/Sam Tarling]

An FSA lieutenant assembles a remote trigger which will detonate the improvised explosive devices seen here [Photo: Executive/Sam Tarling]

An FSA fighter collects his weapons before heading out on an attack [Photo: Executive/Sam Tarling]

High demand and short supply has pushed prices for ammunition and weapons sky-high [Photo: Executive/Sam Tarling]

FSA soldiers go to great lengths to re-supply their base without being spotted by the Syrian Army [Photo: Executive/Sam Tarling]

An FSA fighter surveys his home in the town of Chatouriea [Photo: Executive/Sam Tarling]

An FSA soldier rests at a base near the Turkish border. Turkey, along with America, has recently pledged 'non-lethal' support for the Syrian opposition [Photo: Executive/Sam Tarling]

From the northern Syrian province of Idlib, a moment in the uprising

May 26, 2011 0 comments

Society

Book review: America’s Kingdom

by Paul Cochrane May 3, 2011

written by Paul Cochrane

Saudi Aramco, valued anywhere from $2 trillion to $7 trillion and employing more than 55,000 people, is the world’s largest unlisted company. How it got there is a story that has been told before — from the first discovery of oil to the entrance of the American oil majors, to the development of the so-called “special relationship” between Saudi Arabia and the United States.

But Robert Vitalis’s newly updated book, the product of a decade of research and writing, charts the history from a different perspective, viewing Aramco as a microcosm of the colonial order. It describes an ‘oil-garchy’, the partnership that began decades ago with some of the largest oil companies in the world —Socal, later renamed Chevron, Standard Oil of New Jersey, later Exxon, and Socony-Vacuum Oil, later Mobil — and the relations between Washington DC and Riyadh until Aramco was fully nationalized in 1980, becoming known in 1988 as the Saudi Arabian Oil Company or Saudi Aramco.

It is not a telling of history financed by Aramco or seeking to enter the good books of the Saudis or the oil industry — an independence that aids its veracity. As Vitalis notes: “Companies are like authoritarian countries. They keep records hidden…They open their archives only to those they hire [and] insist on the right to approve what is written… There are no sunshine laws and no Freedom of Information Acts against corporate privilege.”

Indeed, like other tomes exposing the costs of oil development, America’s Kingdom is blacklisted in Saudi Arabia.

Vitalis blasts commercially successful accounts of Aramco and Saudi Arabia that conveniently gloss over the company’s less than exemplary past and uncritically repeat Aramco’s creed that it acted differently from other oil companies; the company claims to have helped Saudi Arabia modernize through what Aramco President Frank Jungers called its “far sighted policies” and a “55-year record of cooperation and mutual respect.”

Vitalis exposes the situation of Saudi and non-American workers, their decades-long struggles for better accommodation, wages and rights, how protests were squashed, and the eventual ending of a system that divided labor based on race, imported from the US and similar to the ‘Jim Crow’ laws used in America to pay white workers more than African Americans and Hispanics.

He also exposed as myths many claims that Aramco still expounds; the company’s website states that, “Since 1940, Saudi Aramco schools have provided educational services to dependents of Saudi Aramco employees.” Infact, Aramco’s management worked to prevent Saudis and their dependents from being educated, arguing “the company should not engage in a general educationprogram,” despite a 1942 Labor Law that required Aramco to do so. It was not until 1955 that the labor movement and the Saudi government forced Aramco to “pay for a system of schools, training institutes, and, ultimately, an engineering college.”

The book debunks the notion of Saudi “exceptionalism” — the doctrine that its leadership steered the fledgling kingdom through the miasma of empire and imperialism without external influence; while Saudi Arabia became a state in 1932, what “everyone seems to forget is that (the Saudi Emir, later king) Ibn Saud signed a treaty in 1915 with Great Britain that conceded sovereignty rights for protection,” writes Vitalis. The kingdom has been keen to downplay such reliance on outsiders for its survival ever since, whether on Britain or later on Aramco and the US.

America’s Kingdom is an important contribution to the often-neglected field of oil history, and a powerful critique of the US-Saudi relationship and of Aramco, a company with monumental sway over the world’s energy markets.

May 3, 2011 0 comments

Society

Executive Insight – Post-revolution communication

by Mark Helou, Zeina Loutfi & Ramsay G. Najjar May 3, 2011

written by Mark Helou, Zeina Loutfi & Ramsay G. Najjar

The sweeping social changes and revolutions rocking the Middle East and North Africa in recent months have indeed taken the world by surprise. Although many analysts and experts agree that these movements will result in a lasting change that will drastically modify the region’s geo-political landscape, no one knows yet in which direction this change might head. As the French philosopher and political scientist Raymond Aron said, “Men make history without knowing the history that they are making.”

Will these revolts give rise to true democracies or give birth to new authoritarian societies? History provides numerous examples of revolutions that “devour their own children” and culminate in large-scale oppressions and exactions, starting from the most famous – namely the French revolution — and ending with the Soviet, Chinese, Iranian and Latin American revolutions of the 20th century.

Lighting the path

With this in mind, what role can communication firms play in helping to direct the winds of change in a positive direction? The question is all the more pertinent as these revolts have shown the extent to which communication has become a driving force in society through its multitude of channels, from global media outlets to online social networks. It is onlylogical to assume that this same force that helped to spawn these movements can ultimately steer their course in the right direction, toward a beneficial and lasting change for the people of the region.

The first crucial role to be played by communication outlets is to fill the void created after decades of despotism and an effective absence of meaningful political participation. As the revolutionary movements in Egyp tand Tunisia unfolded, one of the themes that recurrently surfaced was that they lacked powerful and effectiveleadership to guide and federate them. However romantic the image of a spontaneous and unplanned revolution might be, political reality dictates that in order to ensure its sustainability and to reach its objectives such a movement eventually must be channeled through a visible and empowered leadership. This has not yet occurred, delayed by the fact that these countries have been living for decades in a state of autocracy deprived of substantial opposition leadership. Proper communication can ultimately lay the groundwork for the natural emergence of an enlightened leadership by advocating the values that the society wishes to adopt and identify within the post-revolution era.

Contrary to the paradigm within the many surviving totalitarian societies, it is not the leader’s role to impose a system of values on his or her people. Ideally, it is the set of values determined by the people that ultimately gives rise to a leadership that embodies and defends them. In the case of the newly born Arab democracies still in search of leadership, the media and civil society should seek to communicate with all stakeholders to create a consensus toward a common system of values, which may include, for example, the protection of individual freedoms, secularism or social justice. It is then, by upholding these values and being held accountable by their standards, that citizens would raise political players to leadership status, offering them the blessings of the populace.

By entrenching a truly national set of values emanating from the people’s will, communication outlets could ensure that future leadership would be attuned to citizens’ aspirations. They would also set in place a unified and consistent vision for the country that ensures that citizens and leaders work toward the same national objectives; even if opinions diverge, they would still be grounded in the principles set forth by the people. Only then would the revolutions have transcended their original social demands to forge a national identity and set the tone for the full-fledged rebuilding of the national political system.

Closing the cycle

For all of this to happen, communication outlets must develop the political maturity of the people and entrench a sense of democratic responsibility. Decades of authoritarianism have suppressed awareness of the rights and the duties that a mature democracy offers and demands from its citizens. In this respect, the role of communication would be to effect a shift in mentality from the previous reactionary state of mind to a positive and constructive mindset in which citizens are ready to make sacrifices and build a system reflecting their aspirations.

Though the revolutionary spirit was necessary to break the people’s shackles, the post-revolutionary role of communication would be to ensure that this fervor does not give rise to a state of “permanent revolution” that would flare up every time a sacrifice — such as an increase in taxes or the removal of subsidies — is necessary.

Well-crafted communication would therefore be essential to make citizens fully aware of their responsibility in holding the new leadership accountable by empowering them and sharpening their political sense. By acting as the guardian of government transparency, communication mediums have the potential to ensure that the people and the government work as a team rather than as adversaries. Most importantly it will set the background for political stability by protecting against repeat revolutionary earthquakes which could arise from an inadequate resolution of the original issues.

By playing a largely informative role during the period of unrest, communication channels and social media networks contributed greatly to the development of the revolutionary movements and acted as the logistical backbone of popular action. As this phase has successfully come to an end, communication should take on a whole new level by moving from a reactive informative trend to a proactive constructive one by which it pursues the noble cause of shaping the post-revolution society at its best. To reach this end, media outlets and civil society players will have to work hand in hand to encourage dialogue with the various stakeholders and spark the emergence of a consensus concerning national values and constants, while raising the level of political awareness.

As media and communication outlets begin to reach their objective of establishing national values, they can begin to move toward effectively becoming the “Fourth Estate” by ensuring scrutiny and accountability with respect to the national principles that they would have helped establish and consolidate. Communication outlets would thus have successfully “closed the cycle” by helping to spark the revolution, accompanying it, establishing the social and political contract of the post-revolution era and, finally, acting as the guardian of this contract and the values that its stands for.

Leaders and governments are mere transitory players in the lives of nations, whereas the true cornerstones are the values on which these nations are built. Today, nascent Arab democracies should reflect back on the lessons of the French revolution and understand that once they establish a common set of national values, they will be setting the platform on which modern, just and perennial states can be built to prosper.

May 3, 2011 0 comments

Society

Executive Insight – Lebanese brands weak on the home front

by Joe Ayoub May 3, 2011

written by Joe Ayoub

As a general rule, it’s difficult to trust someone that you don’t know. Extending this rule to the commercial level, how can consumers be expected to choose Lebanese brands when so little is known about them?

A recent advertising campaign asked consumers to do just that. “You love your country, love its products”, read the campaign slogan — a suggestion that attempts to inspire consumers to purchase something based on its manufacturing origin alone. Certainly consumers would have had every right to respond to the recent campaign by providing a challenge of their own: “You want me to buy Lebanese brands? Then tell me more about them.” In truth, we would be hard pressed to know much about any of our local manufacturers. What is lacking is public knowledge of financial indicators (which can provide telling signals for consumer confidence), the people behind the brand, how the products are manufactured, what quality standards are enforced, how employees are treated, and so on. Why is this important? Because the more information a brand communicates about itself, the more familiar it becomes to consumers, thus empowering it to enjoy greater consumer preference.

Consumer power

The advent of the digital age has made the need even stronger for brands to open up, reach out and engage with consumers. In today’s world, brands can be crippled in a matter of seconds by virtually anything and anyone. For example, it only takes one anonymous ‘tweet’ on a company’s mishandling of employee affairs or revelation of malpractice to wipe value off a million dollar enterprise. This is why brands can no longer afford to stick their heads in the sand. Instead it is imperative that they place themselves in the hands of consumers and open up a two-way dialogue that takes in feedback. Importantly, being open with customers is key to reinforcing trust and can empower local industries to compete not just at home but abroad.

The only way is up

There are three levels on which industry branding in Lebanon could, and should, be improved. The first is on the industry level itself. The point here is to focus on industries that have strengths — in Germany one would think of the auto industry, for example — and to promote these industries collectively. In Lebanon, it could be jewelry or olive oil that are targeted for promotion.

Next there is the level of the corporate image, where companies need to communicate their values. Are they an exemplary employer, for example?

Lastly, there is the level of the brand image itself. Many brands don’t communicate their own story: the description that sums up the essence of where the brand comes from as well as what it delivers. And the brand story is just the beginning; beyond this there are many touchpoints which have to be aligned with the brand values and communicated with consistency.

One touchpoint, and a crucial area in which local industries fall short, is product packaging. Go to any supermarket and compare similar products from Europe and those from local manufacturers and you will see an immediate difference. Local manufacturers assume that customers want cheaper packaging to give them an affordable price, failing to realize this shows disrespect to the consumer. Beyond packaging, often the second big disappointment is the product itself, with low or inconsistent quality.

The way to go

We know that Lebanese services have the ability to reflect a positive image of the country and to compete on a regional and international level. The hospitality industry and banking are two prime examples of this. Yet, for manufacturing, we only have to look at the level of imports versus exports to realize that there is a still a long way to go before Lebanese manufactured goods become the strong competitors they could be, either here or abroad. To get consumers to believe in their products, local manufacturers need to wake up to the power of branding and take the first steps to unlock their full potential.

Joe Ayoub is the CEO of Brandcell

May 3, 2011 0 comments

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Assad’s dungeons

by Nadim Houry May 3, 2011

written by Nadim Houry

Marwan had trouble sitting down during our interview. He had bruises all over his body and bandages on his head from the beating security officers subjected him to during his two-day detention by the Amn Al Dawla — one of Syria’s notorious mukhabarat, or secret security services. His crime was participating in a peaceful protest in Douma on April 1, calling for reforms.

Marwan’s case is not unique. Syria’s mukhabarat have detained more than a thousand anti-government protesters since mid-March and many of those recently released have reported that security forces tortured them in detention. Often, like Marwan, they have the scars to prove it.

Particularly disturbing is the pervasiveness of ill treatment by security forces, the routine beatings, torture and humiliation that hundreds of protesters incurred in dozens of security detention facilities. Of the 22 released protesters interviewed by Human Rights Watch, almost all reported being beaten and tortured. Three of them were children, who were treated no differently from the adults. One protester detained at an unknown facility in Damascus vividly recalled that he could not sleep during his first three days of detention because of screams emanating from the interrogation room next door. “The screams pierced my ears. I could not sleep, could not eat,” he recalled.

A shopkeeper from the coastal village of Banias, one site of anti-government protests, described his treatment at the local military security facility: “They beat me during each one of my four interrogations. I think it was with sticks and with whips but I don’t even know; I couldn’t see anything. They beat me on my head, on my back, on my shoulders. They especially beat me on my face. With every word, they would beat me. They asked me why I was trying to destroy the regime.”

A protester from Al Tal, a suburb of Damascus, reported that officers of the Palestine Branch of Military Intelligence used electric shocks to torture him. Another protester from the town of Douma felt lucky that his Amn Al Dawla interrogators just beat him with cables. “Many others in my cell told me that they had used electric batons on them,” he said. In one particularly gruesome testimony, a detainee described how he helped his cellmate, another protester, walk to the bathroom after his cellmate’s toe-nails had fallen off following a vicious session of beatings on the soles of his feet.

The beatings were meant to punish the protesters and elicit information. Released protesters repeated that interrogators kept asking them about who paid them to protest. “They simply did not believe that we were doing this out of our own free will,” a Douma resident told me over the phone. After most interrogation sessions, protesters had to sign a confession that they could not read. Some detainees even reported being filmed by state television crews while they confessed to being “terrorists and killers.”

Brutality by Syria’s mukhabarat is not new. Human rights groups have documented such practices for years, prompting the UN Committee against Torture, tasked with monitoring compliance with the Convention against Torture, to say in May 2010 that it was “deeply concerned about numerous, ongoing and consistent allegations concerning the routine use of torture by law enforcement and investigative officials” in Syria.

What is new, however, are the increasing numbers of people across the Arab world who will no longer keep silent about this brutality. The revolutions in Egypt and Tunisia were both sparked by abuses committed by security forces. And Syria is no exception — it was the mukhabarat’s torture of a group of Daraa school children who had scribbled graffiti criticizing President Bashar al-Assad that originally drove people to the streets. And now that they are on the streets, we hope that their chants once and for all will end the screams emanating from the mukhabarat’s dungeons. For if this ‘Arab Spring’ is to usher in a new era, the torture chambers of today need to become a relic of the past — or better yet, museums that bear witness to the crimes committed against ordinarycitizens.

Nadmim Houry is director of the Beirut office of Human Rights Watch

May 3, 2011 0 comments

Editorial

We are under attack

by Yasser Akkaoui May 3, 2011

written by Yasser Akkaoui

Whether or not the accusations against Lebanese Canadian Bank are true, whether or not there is substance to the rumors that there is a list of banks yet to be targeted, we have to assume that doing business in Lebanon is now fundamentally different than it was just months ago. And not only is the timing of the attack no mistake, but the cause is unmistakable.

What is happening is an external response to our internal politics. It is the price we pay for Hezbollah and company taking over at the helm of government. The surging growth in business and commerce — the economic hiatus from reality we proudly took for granted over the last several year seven while the rest of the world was thrashing in crisis — is over. Now, with our heads out of the clouds, we are only just beginning to realize that we may not have a parachute.

We do not know who pulled which strings in Washington to spur the US Treasury’s accusations, and we do not know their next move, but what is certain is a central pillar — that spared our country the economic collapses seen elsewhere in recent years — is now being threatened.

No amount of honest dealing can make up for the Western perception of our new government and the repercussions of such. The private sector has gone through a blissful period of disassociation from political turmoil, but that period is ending and without conscious acceptance of this and efforts to counter it, we will all suffer the consequences.

Should we be lax in countering this threat, it is the Lebanese men and women who have done their best to build businesses for this country, indeed to build this country and spur prosperity while government has lain comatose, who will pay the price.

May 3, 2011 0 comments

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Syria’s crumbling wall of fear

by Ellen Hastings May 3, 2011

written by Ellen Hastings

After a week filled with promises — about lifting the hatedstate of emergency, granting the right for peaceful protests, abolishing kangaroo state security courts — the Syrian regime brutally shot down its own credibility along with hundreds of its citizens late last month.

As Executive went to press, the crackdown was continuing relentlessly, with the military increasingly involved alongside security forces and irregular troops loyal to the regime in closing off cities, raiding homes and shooting protesters.

Fridays in Damascus are now filled with fear. On each day of prayer, groups of armed men take up position all over the capital, near mosques, ministries, court houses, intersections and entry roads. They are literally everywhere, brandishing their often-identical clubs, ready and eager, it seems, to beat anybody who dares utter the slightest expression of dissent. The weapons are not there for show. Since the protests started in early March after a group of children were arrested for spraying anti-government graffiti in Daraa, more than 300 people have been killed. Most are gunshot victims, many others were beaten to death by clubs, and some had their skulls cracked open by the rifle butts of Syrian President Bashar al-Assad’s security forces.

But the “wall of fear,” which has been the main obstacle to this wave of unrest, now seems to be crumbling, along with Syrians’ faith in their government’s explanation for the killings. The protests have been unrelenting, and when word of the massacres of the so-called “Great Friday”protests on April 22 started to reach everyday Syrians, more and more people in Damascus were openly tuning in to Al Jazeera’s coverage of the slaughter. State television was no longer automatically switched on as customers entered the stores, though discussing the images remained sensitive.

One shopkeeper on the outskirts of Damascus waited until a ‘customer’ in a telltale leather jacket left the store before nodding towards the television set on the ceiling and angrily pulling an imaginary trigger. “They’re killing Syrians,” he said. “This is not good. I don’t agree withthis.”

The Syrian government, meanwhile, insists that they are not responsible for the killing, but by banning nearly all foreign journalists from the country and chasing after the rest, they pull the rug out from under their own credibility. Thus, while most of the horrific videos posted to the Internet from inside Syria still carry the disclaimer “unconfirmed” when broadcast on major news stations, there is little doubt, if any, regarding the veracity of what they show: the Syrian regime is murdering its citizens, and it is not about to stop.

The regime’s initially erratic response to the uprisings, alternating between still unfulfilled promises of reform and brutal violence, seemed to indicate dissent at the top on how to handle the unrest. But the killing of more than one hundred people in one day on April 22 must be seen as clear evidence that those who see any concession as a sign of weakness have won the argument.

Syria is no Egypt. Where the Egyptian president was sacrificed by his military in a last ditch attempt to hold onto power, the Syrian president — according to many observers — is firmly in power and the Egyptian solution, where a near-senile figurehead was ousted to protect the political-economic elite, is simply not feasible. This is Assad’s Syria. Moreover, the international community — notably the United States, the European Union, Russia and China — are refraining from putting real pressure on the regime to stop the violence for varying reasons. Israel itself seems to have lent tacit support to their arch enemy Assad. “You want to work with the devil you know,” seems to be the message from Jerusalem.

This leaves the demonstrators on their own, against a brutal regime that has nowhere to go and is fighting for its own survival. As it has shown in the past — when it bombed the city of Hama in 1982 and killed at least 10,000 of its own citizens to quell a revolt — the Syrian regime’s willingness to shed blood knows few limits. As one resident of Damascus recently put it: “They will kill millions to hold on to power. Millions. This is not Egypt.”

Ellen Hastings is the pseudonym of a journalist in Damascus

May 3, 2011 0 comments

Economics & Policy

Misrata under siege

by Sarah Lynch May 3, 2011

written by Sarah Lynch

Packed with humanitarian aid, food, weapons, ammunition and rebels soon to be on the front line, a small Libyan fishing vessel sailed away from the eastern port of Benghazi last month, making its way west.

“Qadhafi’s destroying buildings and shooting innocent people like women and children,” said 28-year-old Walid al-Fitouri as he sat in the captain’s wheelhouse. Like dozens of others on board, he was going to help his comrades in Misrata, Libya’s third largest city, which has been under siege by Colonel Muammar Qadhafi’s troops for two months. Caught in a crossfire and faced with heavy bombing and economic devastation, the city’s residents are facing countless struggles as rebels battle regime forces to keep hold of their western bastion; Executive was in Misrata to document the siege.

Indiscriminate targeting

For weeks, rocket propelled grenades and bullets have whizzed down the city’s central frontline of Tripoli Street, which runs from the center of town west toward the nation’s capital.

But this isn’t the only place where violence abounds; Qadhafi’s forces have surrounded the city. On a rooftop not far from Misrata’s port, a woman who asked to be referred to as “Mrs. Mustapha” rocked her six-month-old granddaughter, Aisha. Just two days earlier a rocket hit the family’s home and put a hole in the baby’s bedroom ceiling. “What’s wrong with them? These are children. Innocent children,” said Mustapha. It was 6:30 a.m. when four rockets hit the family’s home, causing part of Aisha’s bedroom ceiling to crumble. Now displaced from their home, the family lives in a makeshift apartment, where 30 people share two bedrooms and one bathroom. Aisha and her grandmother are a few ofthe lucky ones; no one was injured in the surprise attack. Like so many others, they have been pushed from their homes after weeks of heavy bombardment of civilian areas.

One local elementary school is home to at least 25 families, some with more than 30 members each. “We’re homeless,” said the elderly Hania Abdallah, who sleeps in one of the school’s classrooms, “[Qadhafi] is bombing our children and he’s taking us as prisoners.”

After two months of Qadhafi’s troops pounding Misrata, some estimates placed the city’s death toll by mid-April at more than 1,000 people. At one of Misrata’s hospitals, head doctor Fathi Mohammad said he was seeing eight to 10 deaths on average each day and had counted more than 1,500 injuries. Many of the victims are unarmed civilians.

Abdel Basat Ibrahim never thought he’d be confined to a hospital bed when he went out to buy his family groceries. On an afternoon last month he was with his neighbor when the two men were hit by a sniper. Doctors say many patients have also been wounded in their homes; too often they see injured, or dead, children.

Logistics of living under siege

As Executive went to print, mobile networks in the city had been down for about a month, and water and electricity had also been cut. Before the uprising began in mid-February, water entered Misrata via The Great Man-Made River — the network of pipes Qadhafi’s government built in the early 1980s. The flow of water has since been electronically switched off meaning that many residents were forced todraw water from coastal wells. But the wells could become contaminated by infected runoff because the city’s sewage system has been blocked.

“This is criminal,” said Nassar Sahli, a Libyan water quality consultant and professor. “Water and electricity shouldn’t be stopped for any human.”

Residents said electricity is out in areas of intense fighting, and that it was being rationed in residential areas. Roads leading to nearby farms and factories on all sides of the city were blocked, and the city’s dairy factory had been recently bombed. The only way goods could enter the city is via the port, which, too, has been continuously shelled by Qadhafi’s troops. On the same cold night that the rebel-packed Libyan fishing boat pulled into Misrata, the road leading from the sea into the city was lined with shipping containers in flames. The day before, rockets and cluster bombs hit the port.

“Nowhere is safe in Misrata — not one single place,” said the port’s radio controller Said al-Fitouri, adding that access to the sea let the city’s residents survive. “The port is like the mouth of the human. If you close the port, that means you will die.” The occasional shipment of vegetables came in by boat, but the small imports were not sufficient to meet the need. Grocery store shelves were sparsely stocked, some completely empty. The shortage of food — particularly fresh produce — had prompted the price of vegetables to increase tenfold. As an example, Shoukri Mohammad, a father of five, said that on a rare day last month when tomatoes were available he bought a one kilogram bag for 5 Libyan dinars [$4.16], up from 50 dirhams [$.41] before the siege.

“It’s difficult to live on bread and water alone,” said 50-year-old Mohammad. “But for change, we’ll go through anything.”

On sidewalks and side streets across the city, men young and old waited in bread lines for hours each day. Ahmed Rouad, 65, sat with his head in his hands; his skin is burnt from the coastal sun. “I’ve been waiting in line for bread since seven o’clock this morning,” he said. By then he’d been waiting four hours. Bread factory owner Ali Abdel Karim said there was a shortage of flour and it was difficult for his business to operate with little electricity. “We open from 10 to three o’clock everyday, but people wait in line from dawn,” hesaid.

At a nearby fuel station, the situation was not any better. On a typical day, more than 200 cars piled up. “I spend half my day waiting in line for bread, and the other half waiting for fuel,” said Abdel Hakim. With unpredictable attacks and snipers poised on roofs, many people were afraid to go to work. Countless numbers of shops and businesses had closed, and residents said only two fuel stations in the city remained open.

Strong family ties seemed to have kept Misrata functioning financially, even when every bank in the city had closed: many of those who did not have cash borrowed money from others.

“Many people in Misrata are businessmen and traders, so they keep money at home,” said Misrata resident Yahia Hamsa. “But people aren’t buying and selling a lot.”

Roads weaving through the city were secured by rebel forces at checkpoints, with roadblocks made of piled sandbags and metal pipes. Local groups had issued rebel fighters identification cards that they had to carry with them at all times. On one long road in particular, drivers tended to speed up. “There’s a sniper up there,” said Said al-Fitouri, pointing to the top of a white building.

Sailing away

Rain pelted the small fishing vessel as it pulled away from Misrata’s port. This time it carried more than 100 refugees who were lucky enough to be able to escape.

“Life in Misrata is unbearable,” said Mohammad Nour, huddled in a group to hide from the wind. “They’re striking all the time – night, dawn and morning.” And so dozens like Nour had boarded the rickety ship to make the 36-hour journey to safety. As the boat pulled close to the port in rebel-held Benghazi, the passengers cheered, “Free Libya!” and “God is great!” One man slowly stepped off the boat. His son greeted him with a hug as tears ran down his cheeks.

May 3, 2011 0 comments

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Hezbollah’s quiet discontent

by Nicholas Blanford May 3, 2011

written by Nicholas Blanford

Hezbollah’s silence on the unprecedented developments in neighboring Syria betrays a growing unease over the outcome of the uprising and the strategic ramifications of a collapse of the Assad regime.

If Syrian President Bashar al-Assad is toppled it could fundamentally reshape the strategic balance of the Middle East and present stark challenges to the Lebanese group and its Iranian patron.

At the end of April it appeared evident that Damascus was pinning its hopes on maintaining the status quo through force against the protestors rather than ushering in meaningful reforms. It has long been axiomatic among some analysts that reforming the system in Syria would weaken the regime’s grip on the country and spell the demise of the Assad family’s rule.

Syria plays a key role in the so-called ‘Jabhatal-Muqawama’, or ‘Resistance Front’, which groups countries and militant organizations opposed to Israel and the American policy in the Middle East. It is the crucial lynchpin that connects Hezbollah and Iran, serving as a conduit for the transfer of weapons into Lebanon, providing strategic depth (and in the past, political cover) for Hezbollah and granting Iran a toehold on Israel’s northern border.

A colleague recently recalled a conversation she had with a mid-level Hezbollah official during which she asked whether the party had drawn up a contingency plan for the possibility of a collapse of the Syrian regime. Hezbollah’s constant refrain is that it is “ready for all eventualities” and it is well known that the party does compile meticulous contingency plans to cover all potential developments. But the official told my friend that no plans had been made because a collapse of the Assad regime was considered something of a taboo subject amongst the leadership. I’m not sure that is strictly true.

The notion of Syria departing from the Resistance Front is not a new concept. Hezbollah long ago internalized the possibility that Syria might one day leave the alliance. It was generally assumed, however, that Syria’s departure would occur as a result of a breakthrough on the Israeli-Syrian track of the Middle East peace process rather than an internal upheaval. That moment almost occurred 11 years ago when the two countries seemed on the verge of signing a peace deal. At the time Hezbollah refused to reveal its planned course of action if peace had been reached, but it was evident that Syria, the dominant actor in Lebanon at the time, would have required the party to dismantle its military wing as a component of its settlement with Israel.

Hezbollah has grown more powerful since then, especially after Syria politically disengaged from Lebanon in 2005 following the assassination of former Lebanese Prime Minister, Rafiq Hariri. Iran entered the vacuum left by the Syrians and will probably seek to consolidate its influence in Lebanon through Hezbollah if the Assad regime falls or Syria collapses into chaos. As for the longer-term impact on Hezbollah and Iran, it depends very much on what new order emerges in Syria. For example, if a Sunni-dominated regime reaches power in Damascus, it could ally itself with Saudi Arabia at the expense of the three-decade alliance with Iran. A Saudi-friendly Sunni regime may prefer to cooperate more closely with Sunni elements in Lebanon and seek to roll back some of Hezbollah’s power.

Another possibility being aired is a continuation of the present system in Syria but under a new leadership, possibly drawn from the military or security establishment replacing the Assad clan. Such a regime may prefer to maintain the alliance with Iran and the confrontational stance against Israel.

For now, Hezbollah officials and cadres are closely watching developments in Syria, hoping that Assad will prevail and that there will be no fundamental change to the Resistance Front. But the Arab world is passing through a major upheaval where previous maxims no longer apply. The Arab-Israeli conflict paradigm has been superseded by the new reality of the people against the state. Iran, Syria and Hezbollah traditionally derive much of their legitimacy from their anti-Israel positions and it must be disheartening for them to see the struggle become relegated to the second tier of regional interests.

Nicholas Blanford is the Beirut-based correspondent for The Christian Science Monitor and The Times of London

May 3, 2011 0 comments

Real Estate

Bankrolling the builders

by Rayya Salem May 3, 2011

written by Rayya Salem

Though Lebanese real estate has always carried its weight as a prime investment tool and a win-win sector for both suppliers and end-users —even during the uncertainty of the civil war years — the cracks are finally beginning to show as both internal and external factors are affecting (former) market strongholds.

Banks, the middle-men who keep the property market in swing, are now in an unfamiliar situation and may be left with little option but to rein-in loan offerings to the real estate sector; its profit harvest has diminished compared to healthier years and its expected contribution to gross domestic product has weakened. The trickle-down effects of the financial crisis on Arab wallets (residential salesto foreigners plunged 31 percent this quarter), combined with sticky top-dollar prices that stem from the high cost of (limited) land, have come into play simultaneously, with the result a whopping 21 percent fall in transaction volume in the first quarter, compared to this period last year.

According to Hani Haddad, managing director at A&H Construction and Development, although the debt-to-equity ratio “has definitely decreased due to banks being more conservative given the weak performance of the real estate sector in the past year,” tightness of lending is expected to only have an effect on the financing of new projects. However, this likely won’t hit end-users, as banks are remaining aggressive in providing home loans to households.

At the end of 2010, loans to the sector reached $13.6 billion when taking into consideration loans to contractors and developers to build projects, to businesses to rent real estate and to individuals for home loans. Thus, lending to the sector made up nearly 35 percent of total lending, but the percentage is closer to 16 percent ($6.3 billion) if one only considers loans for construction, according to data from Banque du Liban (BDL), Lebanon’s central bank.

Though the number reflects a steady, mutually beneficial relationship between banks and real estate professionals (following a period of growth whereby loans to real estate increased 59 percent from the beginning of 2008 to February 2010), it can be attributed to what many say was the culmination of a real estate high note that saw an unprecedented wave of mega-launchings such as District S, the Landmark, Beirut Terraces and Damac Tower in Beirut’s central district last year.

Freeze over funds

According to Samer Kahil, vice president of finance and administration at MENA Capital, “definitely more than three” alpha banks have already frozen funding to developers in the last three to four months. “It could [last] a year, it could be a couple of months… it depends on their risk management department, their allocation of funds to real estate and the developer’s track record and location” of their upcoming projects.

“If you are talking about lending to projects, we have less than 10 percent [relative to total] lending,” said Saad Azhari, chairman and general manager of BLOM Bank. “We have about another 8 or 9 percent for housing loans for those with domiciled salaries. So in total… it comes out to 16 or 17 percent [of total loans that go towards the real estate sector].”

But Kahil said that banks were still funding nearly 50 percent of the equity in MENA Capital’s developments, due to the company’s strong reputation in the market. The company is expecting approval on financing for an upcoming residential tower. “They are providing more than $20 million, out of $45 million of total equity for the project [because] we had a good feasibility study, prime Ashrafieh location and they have the allocation,” said Kahil, though he declined to name which alpha bank.

Indeed, Hani Haddad of A&H affirmed that, “Banks are more concerned about who to lend to rather than which project to lend to,” placing a magnifying glass over developers’ financial statements.

Of course, banks are also betting on builders outside the country. With the unprecedented public infrastructure spending in Saudi Arabia, and the slew of projects lined up to build Qatar into a world-class destination fit for hosting the FIFA 2022 World Cup, the strategy makes for a strong game plan. Walid Raphael, general manager of Banque Libano-Francaise (BLF), added that financing contractors, even outside of Lebanon, remains a large part of the business. “We have three large markets [for contracting]: Saudi Arabia, Qatar and Algeria. And then wealso have the Emirates.”

We the people

Unless you’re one of the big players, it seems the tide has receded and bank loans to developers have reached a steady drift that mirrors the current sales volume in Lebanon.

“I don’t think that we are going to see real estate lending increasing but I see that housing loans [to individuals] are still healthy… and are going to increase,” said BLOM Bank’s Azhari.

“Banks still seem to have a big appetite for home loans,” added Haddad, as evidenced by an increase in housing loans from $2.8 billion in December 2009 to $4.5 billion in December 2010, according to the Central Bank. And since banks and developers had to get creative in order for individual households to afford homes when prices leapt in the last two years, providing home loans to residences still under construction created a new definition of risk. When a physical home cannot be secured as collateral, banks secure a simultaneous agreement with a project’s developer (or contractor) and end-user to diminish risk.

“So we know whether the funding is available to finish the house… In a way you are guaranteeing [its completion] because you are financing the building,” said Azhari. It is only to be expected that banks ask for additional security and hold the land as a mortgage, with all sales proceeds funneled to their accounts first in order to pay off the principal and interest.

“When you are financing the promoter, you’re already taking the risk of the project and you’re going to make sure that the project will be achieved and delivered, so you have less risk,” said BLF’s Raphael. However, many banks have buckled under pressure and frozen subsidized loans to individuals, according to MENA Capital’s Kahil, a move that acutely impacts developers building mid-range residential projects.

But the real risk hovering over our rooftops needs to be viewed from a regional perspective — not only does uncertainty plague the MENA region but Lebanon remains without a government and thus contributes to a wait-and-see stance from buyers.

May 3, 2011 0 comments