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The unarmed intifada

by Nicholas Blanford
written by Nicholas Blanford

There has been a suggestion that a “third intifada” is imminent following the deadly border incidents on May 15, when Israeli troops fired live rounds into demonstrators commemorating the Nakba (or “catastrophe”) anniversary in south Lebanon and in the Golan Heights, with eight confirmed deaths and well more than 100 wounded.

There has been talk for several months of launching a fresh drive for Palestinian emancipation, with a focus this time on the rights of the Palestinian refugees expelled from their homeland in 1948 and 1967. The first intifada between 1988 and 1993 was associated with stone-throwing children and the second between 2000 and 2005 with suicide bombers. The third could adopt the tactic of mobilizing mass marches of unarmed Palestinians to the borders of Israel, including from the West Bank.

This would present a serious dilemma for the Israeli army, which knows how to deal with armed aggressors and unarmed individuals but, as history shows, is unprepared to deal with large crowds of unarmed civilians.

The May 15 marches in Maroun Al Ras on Lebanon’s southern border and opposite Majdal Shams in the Golan Heights, and Israel’s deadly —and characteristically disproportionate — use of live ammunition against unarmed protestors, diverted attention, albeit briefly, from the crisis in Syria. The increasingly beleaguered Syrian president, Bashar al-Assad, would be wise to recognize the value of mounting future marches against the Golan Heights in the coming weeks.

There is no shortage of willing volunteers. The Palestinians would enthusiastically volunteer for such marches; so would the descendants of the roughly 120,000 Syrians driven from their villages on the Golan in the 1967Arab-Israeli war. As for the Lebanon front, there is little to prevent further mass Palestinian marches to the southern border.

The threat of breeches along the Lebanon-Israel border by a crowd of Palestinians is a nightmare scenario for the Israelis. Even with the relatively small breech in the Golan on May 15, one enterprising Palestinian made it all the way to his ancestral home of Jaffa before turning himself in to the police.

There have been previous gatherings of Palestinians at the Lebanon-Israel border fence. In October 2000, a crowd of Palestinians gathered at Marwahine in the western sector of the border to protest Israel’s crackdown on the nascent Al Aqsa intifada. Four of them were shot dead by Israeli soldiers when they tried to scramble over the fence. Shortly afterwards, Hezbollah launched its operation to kidnap three Israeli soldiers from the Shebaa Farms in the eastern sector, confirming that the Palestinian protest was intended to divert the attention of Israeli military commanders. Perhaps the most effective target for a civilian march along Lebanon’s southern border is not the original boundary with Palestine, but the Shebaa Farms.

The Shebaa Farms is not sovereign Israeli territory; it is internationally recognized as occupied Arab land. It is unpopulated except for Israeli troops deployed in seven hilltop outposts, most of them beside the Blue Line. There are three potential points of access for large crowds looking to infiltrate the farms — the Shebaa Pond gate at the northern end, the Hassan Gate in the middle and via the road from the Arslan family estate at Majidiyah in the south. Israeli frontline outposts, including Rowsat Allam and Jabal  Summaqa, overlooking Kfar Shuba and Ramta above the Bastara farmstead, could beblockaded by crowds deployed on the military roads connecting the outposts.

The Israelis would face three unpalatable choices. They could attempt to physically prevent the crowds from crossing the Blue Line by shooting at them, evacuate troops in the frontline posts before the access roads are cut by the civilian marchers, or leave the troops in the outposts and resort to a diplomatic means of ending the crisis. 

Such a march would require a high degree of prior planning and coordination and it would risk a confrontation with the United Nations Interim Force in Lebanon (UNIFIL), which is mandated to preserve the integrity of the Blue Line. But if the Lebanese state approves the march — or at least fails to prevent it from occurring — then UNIFIL will be in a bind. It too will not want to stand in the way of thousands of determined and angry marchers and would probably step aside. The tactic of civilians marching into occupied territory hastened the withdrawal of Israeli troops from south Lebanon in 2000. One wonders whether a similar tactic would work with the Shebaa Farms.

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

 

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Fatally missing the point

by Lauren Williams
written by Lauren Williams

 

Many questions have been raised following the May 15 “Nakba” border incidents in southern Lebanon which left six demonstrators confirmed dead. But so far they haven’t been the right ones.

International coverage of the day was a predictable whitewash. The security of Israel’s borders was debated — with the United Kingdom’s the Independent claiming Israel was “reeling” after the border breach at the Golan Heights — followed by news that Israel would be filing a complaint against Lebanon and Syria to the UN Security Council. Speculation abounded about the launch of a third intifada, complete with bogeyman reminders of mass mobilization and suicide bombers. The simultaneous killing by Syrian snipers of a woman attempting to flee the country into the northern Lebanon village of Wadi Khaled prompted a spate of finger-pointing that Syria and Hezbollah had choreographed the Nakba event to divert attention from unrest at home, somehow hijacking the Palestinian cause for their own advantage.

Syria and Hezbollah did indeed supply buses that drove tens of thousands of people to the border. Yellow-capped Hezbollah medics and security personnel were on hand at the Maroun Al Ras park and later Hezbollah Secretary General Hassan Nasrallah praised protesters for their honor. But every person protesting on the day was there of their own volition.

Domestically, the focus was on the security arrangements on the day. Questions have emerged about why the Lebanese Army, working with the United Nations Interim Force in Lebanon (UNIFIL), were deployed north of Maroun Al Ras, at Fatima Gate. UNIFIL, which defines its mandate as monitoring the cessation of hostilities in southern Lebanon in support of the Lebanese Armed Forces and ensuring humanitarian access to civilian populations, were nowhere to be seen, though UNIFIL deputy spokesperson Andrea Tenenti told Executive that they had provided aerial observation upon request and had helped to coordinate blockades at the base of the hill, according to their mandate.  These are important concerns but they should not overshadow the principal issue — Israeli soldiers shot and killed at least a half dozen demonstrators, and yet it seems everyone is to blame for this loss of life except Israel.

Late last month Mounib Masri, a 23-year-old American University of Beirut student was in intensive care at the American University Hospital in Hamra, recovering from a gun-shot wound to his lower back. One of more than 100 wounded, he had surgery to remove his spleen, one kidney and fragments of bullet around his spinal cord. Like most of the 40,000-odd men and women that day, which included young and old, secular and religious, Lebanese and Palestinian, Masri took the winding bus route to the border hills to show his support for the right of Palestinians to return home after 63 years in exile. Like most of those stationed on what became the macabre viewing platform overlooking the valley, alongside ice-cream vans and plastic chairs set out for prayers and speeches, the ringing out of machine-gun fire and the five-hour pattern of bloodied bodies arriving up the hill on stretchers was shockingly at odds with his expectations for the day.

Masri, in deciding to head down the valley to the technical border fence, certainly didn’t expect to end up with a bullet in his spine. There was never any chance of Masri, or any of the protesters, getting over two sets of electrified barbed wire fences, and the rocks thrown from the Lebanese side of the border were no match for the returning bullets, shot at close enough range that the Israeli soldiers, protected in their full military garb and helmets, could look most of their victims in the eye before pulling the trigger — those that were facing them, that is.

The most important issue — lost in discussion about security arrangements, border security and the character of the Arab Spring — is that of the unnecessary force and criminal disregard for human life that has become so characteristic of the Israeli Army that we take it for granted. Protests are scheduled to take place again at Maroun Al Ras on June 5, on the anniversary of the outbreak of the 1967 Six-Day War. Organizers say events will not become violent; let us hope they are right, although that is easier to say than ensure given that it is the Israelis who decide whether or not to pull the trigger.

Lauren Williams is a freelance correspondent for The Guardian

 

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An alternative to Assad

by Rami Nakhle
written by Rami Nakhle

On the surface, the status quo of recent months in Syria continues; each Friday tens of thousands of protesters throughout the country face live ammunition from security forces, widespread detention persists and entire towns are still being put under siege by the army. People are now starting to find mass graves.

While the situation in the streets remains largely consistent, behind the scenes the organizational structure of a grassroots political movement is beginning to take shape. Syrian President Bashar al-Assad, like his father before him, has always relied on the mantra that for Syria it is either “us or chaos”, and this principle has been put into full effect in recent months. What this mentality asserts is that without a strong-handed leader the many sects that make up the country’s population will fight to fill a power vacuum, with bloody results.

But recent developments in Syria suggest the possibility of an ordered, inclusive and participatory alternative to dictatorship.

Though revolts continue to be largely decentralized, and not centered on Damascus or any other major city, individual communities throughout Syria have developed opposition councils, or Local Coordination Committees. These groups were informally established weeks into the uprising and have overtime developed into an extensive organizational network. On the ground they coordinate protests, organize members and provide valuable information to the outside world about what is happening inside Syria.

They seek to give a voice to the people in the streets, the people who have been tortured and those who remain in prison. In a country that methodically seeks to disempower civil society, the formation of these organizations is a critical step, especially as they are now beginning to communicate and organize among each other. They have formed an umbrella group, the Local Coordinating Committees of Syria (LCC Syria), consisting of 15 LCCs from Daraa to Deir El Zor, to better synchronize their activities and develop a platform beyond the local level.

On May 15, LCC Syria issued a statement declaring the conditions under which the opposition would negotiate with the regime, among them the cessation of violence against protesters and the release of political prisoners. Ultimately, this organizing effort could create the foundation for a lasting and deep democracy, where citizens have empowered themselves to make their demands heard.

In another sign of increasing political organization, on May 31 supporters of the Syrian opposition were invited to participate in a meeting in Turkey in order to discuss plans for a transitional council and to further coordinate activities. As of this writing on May 26, many opposition groups were expected to come together, including the Damascus Declaration. Although those on the ground in Syria will most likely have been unable to attend, various other participants will hopefully have represented the LCCs’ demands. Ideally, the agenda will have been set, not by politicians, but by those who are actually seeing what’s happening in the streets. 

While these are small steps toward building a foundation for democracy, they are important reminders of the true nature of the movement, which is neither sectarian nor violent. On May 20 in Talbisah, a town just outside of Homs, 15,000 demonstrated (the largest gathering of this Friday), an event organized by the local LCC, including local Christians and Alawites, who are said have the most to lose from Assad’s departure. That same day there were protests in 50 towns and cities around Syria.

The regime doesn’t have the manpower to cut off all of these focal points. In Banias, 20,000 soldiers occupied a town of 40,000 people. After 15 days of occupation, the army withdrew, and the next Friday 3,000people in Banias took to the streets in protest — even people who had been severely injured while in security custody. These acts, while certainly preventing many from demonstrating, out of understandable fear for their lives, only serve to further politicize the Syrian people. The general population has been engaged and, most terrifying for Assad, increasingly they have a political outlet for their demands.

RAMI NAKHLE is a prominent Syrian human rights cyber activist, until recently working under the pseudonym Malath Aumran

 

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Mubarak’s fallen foreign policy

by Jonathan Wright
written by Jonathan Wright

The staff at the Israeli embassy in Cairo must be feeling a little uncomfortable these days. In the heated atmosphere of post-revolutionary Egypt, few people in the city are willing to talk to them and diplomats sometimes have trouble even reaching the embassy building due to the frequent clashes outside between riot police and pro-Palestinian protesters.

On top of their short-term logistical difficulties, the Israelis are facing the increasingly apparent medium-term reality of the Egyptian government abandoning the cozy arrangements that have prevailed on the border between Egypt and Gaza for the last several years — in many ways the operational centerpiece of the Israeli-Egyptian relationship. Former President Hosni Mubarak, who remains in hospital in the Red Sea resort of Sharm El Sheikh, worked closely with Israel and the United States to isolate Gaza and put pressure on the Palestinian Islamist group Hamas to accept Israeli conditions for peace talks. That meant giving the Israelis a de facto veto over the goods and people going in and out of the impoverished coastal strip, which was under Egyptian control from 1948 until 1967.

Mubarak’s policy, which flew in the face of Egyptian public opinion, was hard to sustain even when he was in control of the country. Several leading members of the ruling military council have been skeptical about the wisdom of his approach, and the post-revolutionary government had promised to reopen the border as of the end of last month and bring an end to the blockade that began in earnest when Hamas defeated the rival Fatah movement in Gaza in 2007. If Egypt did indeed fulfill that promise, a new era in the foreign policy of the Arab world’s most populous country will have truly begun.

This shift is a natural outcome of the uprising that drove Mubarak from office on February 11 after 18 days of protests throughout the country. Free at last to assemble and express their opinions, large numbers of Egyptians from the main political groups — leftists, Islamists and liberals — have set their minds to ensuring that the new government does fulfill that pledge. Thousands were out on the streets of Cairo in commemoration of the Palestinian Nakba (or “catastrophe”) on May 15, and a major battle broke out that night when protesters tried to break through the cordon of police around the Israeli embassy. Unlike the demonstrations in Lebanon and Syria, no one could claim that the protesters were acting on anyone else’s behalf. The police repelled them with tear gas and rubber bullets, but the protesters made their point — to the Egyptian government, to Israel and to those who naively enthused in January and February that the Egyptian revolutionaries paid little attention to the Israeli-Palestinian conflict.

The Egyptian government, which has already succeeded in one respect where Mubarak failed — to mediate reconciliation between Hamas and Fatah —knows it will not be easy. Reopening the Gaza border could drag Egypt into conflict with Israel and with the United States government, which gives Egypt $1.4 billion each year, mainly as a reward for protecting Israel’s southern flank.

Cairo is anxious to ensure diplomatic cover for its change in policy by bringing Fatah and the European Union into the new arrangements for the Gaza border, in the hope that this might offset US and Israeli displeasure. In the wider, tumultuous Middle East, Egypt’s new rulers are feeling their way tentatively, mulling the possibility of better relations with Iran, which Mubarak always kept at a distance. But they are wary of any regional commitments at a time when no one knows who will still be in power at the end of the year.

The government’s last-minute nomination of Foreign Minister Nabilel-Arabi as secretary-general of the Arab League, rather than old-regime politician Mustafa el-Fiki, has saved the position for Egypt and given a morale boost to the post-revolutionary foreign ministry. But a struggle now looms over who will replace Arabi. The military council, which has the final say, could choose someone with the same Arab nationalist tendencies, reinforcing a shift in Egyptian policy toward the Arab center. But the pool of candidates, probably all of them current or former Egyptian diplomats, is heavily weighted towards the more conservative segment of the Egyptian establishment.

After parliamentary elections, scheduled for September, foreign policy changes are inevitable. None of the most vocal political forces will defend Mubarak’s geopolitical alignment without reservation. They say instead that they will have to listen to the will of the people.

 

Jonathan Wright is managing editor of Arab Media and Society

 

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Bin Laden’s last laugh

by Yasser Akkaoui
written by Yasser Akkaoui

On May 2nd, television cameras broadcast around the worldimages of jubilant crowds at ‘Ground Zero’ in New York, in front of the WhiteHouse and across the United States celebrating the killing of the figurativeleader of Al Qaeda in Abbottabad, Pakistan. While many Americans may view thedeath of Osama bin Laden as an emotionally cathartic ‘closing of the accounts’,the reality is far less clear.

With the 9/11 attacks on New York and Washington, bin Ladengoaded America into invading Afghanistan, where a decade on US marines stillwallow in a grinding game of attrition against an enemy they cannot seem tokill, all the while hemorrhaging hundreds of millions of dollars of taxpayers’money daily. Riding on the coattails of the Afghan war, the Bush administrationinvaded Iraq, which provided Al Qaeda the platform it needed to ignite aninferno of sectarian hatred and killing, and recruit thousands of new adherentsto the anti-American jihad. 

Besides the hundreds of thousands of casualties, projectionshave these wars adding trillions of dollars to America’s debt, which is rapidlyapproaching a ratio of 100 percent of GDP and threatening the US’s AAA creditrating.

That it took 10 years for US intelligence services tofinally find bin Laden is a mark of failure; his killing by US special forcesis hardly a final victory, given that his legacy — his impact upon America —will likely outlive those who hunted him down. Moreover, the US militarycommanders were lucky bin Laden did not meet an untimely end all on his own bysimply tripping over stairs, or from kidney failure, in the time he spentwaiting for them.

To say the world’s only superpower is suffering decline isno controversial statement, with the limits of its once vaunted militaryexposed and its status as the global economic engine quickly eroding.

America has always been looked to as the torchbearer offreedom and democracy in the world; if the US cannot get its house in order andreverse the slide it has found itself in since that fated September day 10years ago, it faces the real possibility that bin Laden, from whichever hell heis in, will be left the last one laughing.

 

 

 

 

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Economics & Policy

Easing entrepreneurship

by Executive Editors
written by Executive Editors

The recent political unrest in Middle East and North Africa (MENA) countries has underscored the importance of boosting the region’s economic stability.

Small and medium-sized companies have an important role to play in securing the region’s economic future, and as a result, interest in entrepreneurship has surged. A recent Booz & Company survey illustrated that the face of self-employment is changing, shifting away from small shops and other relatively unsophisticated businesses toward the development of innovative products and services with the intention of building new large businesses.

This is a positive trend consistent with dynamic industrialized economies and suggests that a long-term change in the region’s economy is afoot. There was a 100 percent year-on-year increase in business plan submittals to the MIT Arab Business Plan Competition in 2010-2011. Several banks and finance centers are establishing programs aimed at appealing to entrepreneurs and start-up businesses. Many organizations, such as YallaStartup, INJAZ, Arabnet and Endeavor have created mentorship programs and other one-stop centers for entrepreneurs. Venture capital firms and banks have established specialized funding arms for small businesses.

Charting the challenges

But these initial activities and signals of interest are only modest steps in what will need to be a much larger and more sustained effort.

Booz & Company conducted a survey of more than 300 individuals, most of whom consider themselves entrepreneurs, and a series of focus groups to determine what must be done to remove the institutional barriers to entrepreneurship in the Middle East. This showed that for a number of reasons, it is difficult for entrepreneurs to establish themselves, secure necessary seed capital and family support, negotiate complex and lengthy bureaucracy and regulatory systems and then develop the necessary infrastructure to build self-sustaining businesses of their own.

The survey took place in Saudi Arabia (where it was conducted in collaboration with the National Young Businessmen Committee, associated with the Chamber of Commerce), the UAE and Qatar.

The key issue raised regarded financing; of those surveyed, 42 percent said that family, friends and government sources provided primary debt financing and 60 percent said that those same sources provided primary equity financing. Yet beyond those sources, entrepreneurs face an uncertain and challenging process to secure the capital needed to buy equipment, establish a payroll and meet ongoing needs during the startup phase. In particular, there are funding gaps in sectors such as education, technology, tourism and hospitality, which get less investment than the energy-intensive sectors that dominate regional economies. In addition, although there is funding in place for small and large businesses, few have addressed the “missing middle” — those business with an enterprise value between $500,000 and $8 million. Even financial institutions that do offer funding need to do a better job of broadcasting that fact: approximately nine out of 10 entrepreneurs we polled were not aware of financial institutions that provide entrepreneurial and small and medium-sized enterprise (SME) financing.

Meanwhile, entrepreneurs face considerable cultural barriers: in the MENA region, there is greater prestige in working in large and established businesses than in experimenting with an entrepreneurial idea. This is especially so as the fear and stigma of failure is a pervasive problem for entrepreneurs, more so in the region than in Europe and the United States, where most successful entrepreneurs routinely cite their first failed efforts as critical opportunities for learning. For example, 78 percent of those surveyed said their teachers did not encourage them to pursue entrepreneurial businesses; a similar percentage reported the same treatment from mentors. Among the major challenges facing entrepreneurs, those surveyed said lack of prestige and lack of support from family members were the biggest, outpacing competition, time, financial demands and regulatory hurdles.

Complicating the startup process even more is the difficulty of gaining access to market opportunities. In the US and other markets, governments and large enterprises reach out to small businesses and even reserve slots on tender opportunities; by contrast, in the MENA region, tender requirements tend to call for certain qualifications, financial records and business networks, all of which make such opportunities a remote possibility for startups.

At the same time, entrepreneurs have limited access to education and training in business management, such as how to develop business plans. Formal mentoring programs are not available nearly enough, judging by the fact that close to 70 percent of those polled said they resorted to mentoring from family or friends, rather than from colleagues, investors, consultants or others. This was true for training as well. While entrepreneurs reported seeking training in skills such as marketing, management, finance and planning, they resorted to training from friends and family, or self-learning, in 40 percent of cases — far more than any formal online or technical institute or university, which collectively helped 26 percent of respondents.

The way ahead

Taking on these challenges will require a multifaceted approach. Although MENA nations can’t be expected to immediately overcome certain challenges — such as cultural resistance to risk-taking and failure — they can put into place several programs and efforts to develop an active entrepreneurial ecosystem. Booz & Company, leveraging workshops with key stakeholders, has identified several opportunities to increase entrepreneurship.

One such method is the creation of entrepreneurial service centers to help start-up founders write proper business plans, learn where and how to apply for financing, understand key business financial concepts such as bookkeeping standards and income statements and master more informal but equally valuable skills such as client recruitment and retention.

In addition, such service centers could provide beneficial data and statistics for companies seeking to develop greater market awareness, which would help them to further sharpen their business strategies.

Finally, one of the most valuable offerings of such one-stop centers is informal meetings; the ability to network with other entrepreneurs gives business founders a way to share experiences, learn from others’ mistakes and connect with interested financiers.

Entrepreneurs would also benefit from a more formal mentoring process, featuring communities of advisers led by those who have succeeded in the region already. Ideally, each mentor “pod” would consist of five to 10 young entrepreneurs and one experienced and successful entrepreneur. Each pod would focus on business plan development, financing assistance, introductions to key networks and a regular review of emerging challenges.

While the region’s banks may already be launching financing arms with a focus on entrepreneurs, policymakers could streamline the financing process by establishing a one-stop shop for those seeking loans and those offering them. These may include both private lenders and government sources. Importantly, these centers will help early-stage businesses properly apply for financing and track applications so they do not stall unnecessarily. 

Regional entrepreneurs could also secure greater access to opportunities if large corporations and government-backed entities initiate programs to attract SMEs as potential suppliers. Such a program would call for these organizations to set aside a certain amount of tender contracts for entrepreneurs and small and mid-sized enterprises. This would greatly reduce the barrier to entry for such startups and elevate their visibility to key purchasers.          

Taken together, these actions will provide a powerful tool to support and fund startup founders and will provide a valuable outlet for those entrepreneurial individuals who have been frustrated in the past. Importantly, such a coordinated effort would demonstrate to the rest of the industrialized world that MENA countries are ready to move to the next major stage of economic development — one that is led by innovative and small companies focused on building value throughout the economy and which are seeking to compete regionally, if not internationally.

Ahmed Youssef is a partner, Chady Zein a principal and Raymond Soueid a senior associate at Booz & Company

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Economics & Policy

Wasting away

by Executive Editors
written by Executive Editors

For the most part, a drive out of Beirut down Lebanon’s southern coastal highway offers a scenic respite from the city; to the right lies the sparkling waters of the Mediterranean and to the left the mountains of the Chouf. But the natural beauty becomes marred when another mountain emerges to block the seascape. It is the gargantuan massif of garbage just outside the southern city of Saida that has been growing for some 40 years, due to the lack of solid waste planning and program implementation by the government.

“It was a mountain, now its two mountains and there is no place to have a third one,” said Mohamad Seoudi,  head of Saida’s municipality, which is charged with managing Lebanon’s most infamous waste disposal site. “The dump yard is overloaded. It was always overloaded. We have had to deal with this dump yard for over 40 years and the situation is now critical.”

Last month a crisis erupted in the areas around Saida when Seoudi refused to accept the garbage from the city’s surrounding municipalities. He said the reason was that they were not willing to allocate 40 percent of the money they receive from the Independent Municipal Fund to pay for separation and solid waste treatment.

This same process occurs in Beirut, where the money goes to the private waste management company Averda. This arrangement is far from cost effective, however. According to Seoudi the price of processing one metric ton of garbage comes to $170 in the capital when you include sweeping costs; by comparison, the upper estimate of the average cost of waste treatment in Germany ranges between $81 and $91 per metric ton, according to a report published by the European Commission.

Garbage began to pile up on the streets of Saida at levels reminiscent of civil war days, when the lack of functional government left garbage uncollected around the country.

“Nobody pays [for] anything,” said Seoudi “This is the difficulty, you tell them to come and share the burden and let the government manage the plant, and to deduct 40 percent from their budgets, and they don’t accept because they are used to paying nothing.”

What adds to the incredulity of the issue is that a solution is already present. Just next to the dump, a solid waste treatment plant sits idle. The plant belongs to the Lebanese-owned, Saudi funded IBC company, according to Seoudi. He said that an agreement was signed with the company to process the waste as far back as 2003 with operations slated to begin in 2005, yet nothing happened due to a dispute over pricing.

“We asked Prime Minister Hariri to deal with the issue and with the owners and they have to negotiate,” he said, adding that discussions are ongoing between the company and members of the ministries of interior and environment.

The annual cost of environmental degradation in Lebanon could be around $1.48 billion

The tip of the trash mound

The Saida dump seems to be only the tip of the iceberg when it comes to Lebanon’s environment issues. The new Country Environmental Analysis (CEA) study on Lebanon currently being compiled by the World Bank sheds light on many of the environmental problems Lebanon faces and will continue to face if action is not taken. The study seeks to identify the difference  between the cost of mitigation and the current level of government financing to recommend policies to improve the country’s environmental standing.

As ever in Lebanon, timely figures are few and far between. But extrapolating the latest figures available (from 2005)  — which set the annual cost of environmental degradation in Lebanon at 3.7 percent of gross domestic product  — into a context of today’s economy , poor environmental practices could be costing the country some $1.48 billion per year.

Proportionally, this figure is actually a decrease on the last estimate taken in 2000 when the figure was put at 3.9 percent of GDP, with the fall attributed to the one piece of major environmental policy passed by a post-war government targeting pollution. Before 2002, anyone driving down from the mountains above Beirut could hardly make out the empty Burj Al Murr tower through the thick layer of smog. Thankfully, that is no more the case, after a 2002 decision to ban diesel engines in cars.

Not surprisingly, the CEA document predicts Lebanon will most likely not achieve United Nations Millennium Development Goal Seven, which aims to “ensure environmental sustainability,” mostly due to a lack of adequate reform in reforestation, solid waste and wastewater management. The problem of solid waste was highlighted as a “major environmental problem with more than 700 open dumps used by the municipalities and where some of the waste is still burned.” 

The lack of proper solid waste management also weighs down Lebanon’s poor ranking on the World Bank’s 2010 Environment Performance Index. The index ranked the country 90th of 163 countries in the world, according to the CEA study, with a noted rapid decrease in environmental sustainability since 2008.

May Jurdi, director of the department of environmental health at the American University of Beirut, said that in addition to the disease-ridden cockroaches and rodents that come with these open dumps, there are also long-term health risks associated with the lack of action. “When it rains all the garbage goes into the groundwater and into the rivers,” she said.

But getting an accurate reading of the problem and how it affects the population is difficult.

In order to assess how much the issue is affecting public health, real monitoring figures are needed, and these currently don’t exist. Jurdi said the health ministry has collected some data, but it is far from sufficient.

“The problem is that there are no clear indicators,” she said. “In countries like ours [the government is] afraid of indicators. We are a country of conspiracy theories and doubts. Everything is a conspiracy because we don’t have trust.”

Already citizens consider water from the taps undrinkable. Groundwater is the most commonly used source of water in Lebanon because of the widespread prevalence of wells in the country, and the lack of dams. The Ministry of Energy and Water estimates that the total number of private wells exceeds 42,000, compared to the 620 officially sanctioned and government-owned wells. Private wells’ total yield is estimated at around  440 million cubic meters per year while the government wells draw only 260 million cubic meters.

However, due to the fact that most of these wells are illegal, ministry officials admit that the number could be as high as twice the official estimate. As a result, no one really knows how much of the water being consumed by the people is safe or how much is contaminated by garbage.

“People are unhappy if VAT is increased but they don’t want to pay directly for services”

Wasting water

Probably the most work that has been done in the past decade toward protecting the environment has been in the wastewater sector. At present 11 wastewater treatment plants operate in the country, with six others constructed but not yet connected to a network, according to the CEA study [See page 100]. When the existing facilities are all online, the country will have the capacity to treat 400 million cubic meters a year (CM/yr). At present, only 46.5 million CM/yr are being treated, according to the study.

Furthermore there is dispute over what constitutes a treatment plant and also what is being achieved. “Ghadir is not a plant because it does not have secondary treatment, Saida is a pumping station and at Baalbek, 20 percent is reaching the plant because people are stealing the wastewater for irrigation,” said Jurdi. 

That practice is causing widespread public health risks, which at present are not being measured. For starters, when wastewater is used to irrigate plants, carcinogenic trace metals accumulate in the soil; change in the soil’s PH levels can cause them to enter the plants and thus be ingested by humans. Fruits and vegetables destined for market shelves are often ‘cleaned’ with wastewater, causing fecal material to accumulate, not to mention the parasites, bacteria and viruses that are attracted to such material.

Manfred Scheu, principal advisor at the German Agency for International Cooperation (GIZ), said that the development of the wastewater sector over the past decade is “remarkable,” given that just to find a place for a treatment plant in Europe takes around a decade. “If you are not a dictatorship [that] can expropriate land without worrying about people then this takes time. Its absolutely normal,” he said, adding that by 2020 most of the wastewater discharged in Lebanon should reach a treatable level.

“Today the treasury is broke, the institutions are broke and the people are broke”

Paying for it

Paying for everything will be a monumental task. At present, just covering operations and maintenance (O&M) in the wastewater sector will require an estimated 50 percent increase in the lump sum tariff that consumers pay, according to Scheu. “That is only O&M. That is not going to cover your investment. But in Lebanon it’s much cheaper, in Europe you have to double [the tariff],” he said.

So far no government official has been willing to stick his or her neck out and propose such an increase on a highly sensitive political issue of this kind.

“People are unhappy if VAT is increased but they don’t want to pay directly for services,” said Fadi Doumani, an environmental analyst and World Bank consultant who worked on the CEA report.

Last month Gebran Bassil, caretaker minister of energy and water,  declined to comment on any increase in the tariff structure associated with building new water infrastructure. When pressed by Executive on whether the plan was to borrow the money needed for water infrastructure, such as dams, he responded that the debt is already mounting due to the subsidies to the regional water establishments.

“Today the treasury is broke, the institutions are broke and the people are broke,” he said. Since Lebanon’s only law protecting the environment was passed nine years ago, no government has issued the implementation decrees needed to put it into effect. The law covers many areas of environmental protection, including mandatory environmental impact assessments for approval of projects that would affect the environment and the formation of a National Environmental Council to protect Lebanon’s natural sustainability. Other laws also call for the environment ministry to house environmental police to implement the law. However, there is currently little legal means or active framework to mitigate the effect of environmentally harmful developments. The environment has “remained a secondary priority characterized by an uncompleted legal and institutional framework as well as by ineffective policies to address the challenges and political constraints to deliver reforms,” states the World Bank report.

Still, even if the Lebanese government does not implement the reforms needed to protect the environment, it is unlikely to affect their ability to attract funding, as World Bank funding has continued despite the lack of substantive reform measures by any post-war government. 

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Economics & Policy

For your information

by Executive Editors
written by Executive Editors

Economy taking knocks

The political upheavals in Lebanon and around the region, coupled with a natural cyclical downturn, may signal the end of Lebanon’s economic honeymoon of the past several years. According to a statement issued by the International Monetary Fund, Lebanon will grow at just 2.5 percent this year — the worst rate since the 2006 war with Israel. To make matters worse, the inflation rate is also expected to climb to 6.5 percent this year. The IMF estimated the economy’s growth rate last year to be 7.5 percent. This year’s low growth rate was attributed to the cabinet’s collapse in January and the continuing political deadlock over the UN Special Tribunal for Lebanon investigation, according to investment bank Merrill Lynch. The bank cited the drop in the balance of payments to $2.6 billion in January along with $1 billion in capital outflows, an increase in dollarization and a deposit growth deceleration as the main reasons for the prediction. The central bank’s coincident indicator, an average of eight weighted economic indicators published on a monthly basis, echoed this sentiment, falling from 254.4 points in January to 243.2 points in February, the lowest since September 2010, indicating a deteriorating economic situation.

A dream of sanitation

The Ministry of Energy and Water last month released a new wastewater management plan entitled “Wastewater strategy: not to waste our water”. Lebanon creates more than 310 million cubic meters of wastewater each year, and while 60 percent of the population is connected to wastewater collection networks, only 8 percent of the generated wastewater is treated. The plan seeks to connect 80 percent of the population to wastewater collection networks by 2015 and 95 percent by 2020. It also seeks to achieve full operations and maintenance cost recovery in the sector within nine years. The ministry said that so far only four major wastewater treatment plants exist in the country. The total existing investment in the sector was set at some $1.5 billion. A further $1.69 billion is needed to complete all existing plants, while further investment is needed to fulfill all the objectives by 2020 was put at more than $3 billion. The plan will need to be passed through the cabinet to become policy; the money required must come from either a national budget, treasury advances or donors.

Damming the future

The Ministry of Energy and Water last month unveiled the new “Lebanese Strategy for Surface Water Storage,”part of the National Water Sector Strategy, which aims to build 30 dams across the country to address Lebanon’s water shortages. The document serves as an unofficial plan to invest $1.98 billion to build the structures, which will have a static storage capacity of 680 million cubic meters (MCM) and dynamic storage capacity of around 900 MCM. The plan is an updated version of a previous 10-year plan to build 27 dams, approved by both government and parliament over the last decade. Of those 27 proposed dams, only one saw the light of day.  A total of 10 were said to be ready for implementation while the remainder required further studies before they could be priced and implemented. Caretaker Minister of Energy and Water Gebran Bassil put the annual water deficit in 2010 at an estimated 426 MCM. In response to a commonly voiced objection to building dams Bassil admitted Lebanon’s geological formations were “not helpful,” but insisted that the projects go ahead. He added that even if all other reforms — including groundwater regeneration, network reconstruction and demand side initiatives — are enacted, it would only reduce the water deficit by 369 MCM as of 2015. Bassil declined to comment on a new tariff structure when asked how much citizens’ bills would increase as a result of the measure. He added, however, that citizens would be happy to pay one bill instead of three and that the reform would help the water establishments and relieve the public purse from having to cover their losses, which weighs on the public debt.

The cost of sectarianism

On the back of protests calling for the downfall of the sectarian system, a study by American University of Beirut Professor of Economics Jad Chaaban has put the accumulated cost of sectarianism to the Lebanese economy during the span of one lifetime at a minimum of 9 percent of GDP, or an estimated $3 billion. The report combined the costs of the sectarian system and its added costs from birth, to schooling, to housing, to marriage, to living expenses and old age, to arrive at a per capita burden of around $114,000. It identified the cost of residential segregation at $800 million and estimated that 16 percent of public servants are employed solely due to their confessional affiliation. Chaaban told Executive that the study was only preliminary and that he expected the actual cost to be much higher.

Suing to open the telecom market

Lebanese Internet Service Provider (ISP) and broadband operator Cedarcom is taking legal action against the country’s Ministry of Telecommunications (MoT) and government-owned GSM mobile network operators, Alfa and MTC. Cedarcom is mounting a legal challenge against Mobile Interim Company (MIC) 1 operated by Alfa, and MIC2 operated by MTC for monopolistic and unfair competition practices. Lebanon’s largest ISP claimed that the MoT, Alfa and MTC had breached telecom Law 431, ratified in 2002, by taking active steps to implement 3G networks and services without having received the required licenses from the Council of Ministers and the Telecommunications Regulatory Authority (TRA) in Lebanon. Cedarcom stated that the Lebanese Telecom Association, which includes a number of Lebanese ISPs, had repeatedly cautioned the MoT and TRA on the threat of a new monopoly in wireless broadband services if 3G services were introduced in the absence of proper licensing, unequal taxation and fair competition among government-owned and private operators. Cedarcom also argued that fixed-line and mobile GSM monopolies are already there, adding that private ISPs and data operators are kept on interim transitory yearly licenses, prohibited from increasing their DSL capacity and forced to pay up to 60 percent of indirect and direct taxes, all rules and regulations from which Alfa and MTC are exempt. VAT scandal

Al Akhbar newspaper last month reported millions of dollars had been stolen from government coffers by front companies claiming to be foreign import-export firms eligible to claim refunds for Value Added Tax (VAT) receipts. According to the newspaper, the finance ministry had paid out some $254 million in refunds to these companies,  which had accounts with the ministry, and that no inspections of the claims had been made to investigate any wrongdoing. In theory, the newspaper reported, these businesses had a right to file for refunds, while  the ministry has four months to check the legitimacy of their claims, otherwise refunds are automatically made. The newspaper claimed that this practice had been going on since 2005.  The finance ministry responded that such practices were common around the world and that it had uncovered the cases and forwarded requests for legal action to the general prosecutor’s office. The ministry added that its responsibility was not to inspect whether companies were truly established or not, but to inspect the financial statements it receives from companies. The ministry claimed inspections were in fact the responsibility of the commercial registry department at the justice ministry. In addition, the finance ministry refuted that $254 million was stolen, instead claiming that figure was the total amount refunded to all companies in 2010. The finance ministry did not reveal how much had been stolen by the front companies.

Tipping the scales

The balance of payments (BOP) continued its downward trend after registering a deficit of $668.8 million during the first two months of 2011, compared to a surplus of  $714.2 million over the same period in 2010. The BOP did post a surplus of $103.3 million in February, however, constituting a turn into the black after January registered a deficit of $772.1 million. The turnaround was attributed to a rise in the net foreign assets in Banque du Liban, Lebanon’s central bank, and that of other banks and financial institutions. This is the first time in the past three years that the first two months of the year did not see a BOP surplus.

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Real estate

Venus towering over Phoenician past

by Executive Editors
written by Executive Editors

The threat that cultural heritage faces in Beirut as a result of rising land prices and the scarcity of empty plots is a familiar theme. There seems to be no shortage of fresh cases to highlight and local and international media, as well as local NGOs devoted to preserving national heritage, are doing their part to raise the issue.

Over the last several weeks, Venus Real Estate has been in the spotlight over the discovery of what local news media has claimed is an ancient Phoenician port on “lot 1398”, an approximately 7,000-square-meter site where the company is preparing to construct a luxurious three-tower high rise complex called Venus Towers. 

“I haven’t seen the site; it is closed to the public and even to archaeologists — this is what happens every time there is an important discovery in the Beirut town center,” said Leila Badre, museum director of the Archeological Museum of the American University of Beirut. The Directorate General of Antiquities (DGA) has been carrying out work on the site since the discovery of the ruins by the Ministry of Culture nearly two months ago. At present, the ministry is consulting with local and international experts to determine the value of the site, and as of April 27 five reports had been submitted, signifying that a final decision is coming soon. “We found slopes going down toward the sea that can be interpreted in many ways,” said caretaker Minister of Culture Salim Warde. “It might be a port, a shipyard, or even a quay, but it is surely something very interesting, and we are seeing how we can work with the owners of the land to save this site,” he said.

Over the month of April, An-Nahar criticized Venus Real Estate in two reports that cited numerous experts on the potential archeological value of the site. On April 27, Venus Towers issued an official statement to “clarify” the situation to the general public, threatening media outlets with legal action for making damaging accusations. The statement contends that the plot is too far from the sea to have been used as a port, and too far above sea level, but did not address any historic changes in sea level since the period when the ruins are thought to have originated from.

“The coast of Beirut today is not as it was over 2,000 years ago,” said Warde. “We know for a fact that over the last century this area was covered by stones at least four times. Before then, we don’t know how many times this occurred.” The last time land reclamation like this occurred was by Solidere, whose damage of historic sites was notorious during the post-civil war reconstruction boom. Disturbed by the situation and what he referred to as yet another challenge between the national interest and the private sector, member of Parliament Walid Joumblatt expressed his concern to Executive following the issuance of the Venus Real Estate statement. “I don’t believe a word they say; it’s all rubbish. They will find any excuse for the sake of a few square meters,” he said.

Prior to the publication of the statement from Venus Real Estate, Venus Towers spokesperson Wajih al-Bazri told Executive on April 25 that there was a great difference of professional opinion from archeological experts about the importance of the site. Bazri claimed that while local experts believe the site is important, the international expert brought by Solidere ruled the site unimportant. “The Ministry of Culture and Solidere are working together to get more opinions,” said Bazri. “There is no final opinion yet, but they are working to finalize as soon as possible to be able to go ahead with the project.”  He added that the real estate company will abide by the ruling of the Ministry of Culture, whatever it may be. In the worst case scenario, “we will build around it,” said Bazri, explaining that the ruins only cover about 1,000 square meters of land, then adding: “The newspapers are making a bigger fuss out of this than it really is.”

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Real estate

For your information

by Executive Editors
written by Executive Editors

Illegal buildings on public property

Security forces in Lebanon are cracking down on the illegal construction of residential buildings on public land. Particular areas of concern are Hezbollah-controlled regions in the southern suburbs of Beirut and south Lebanon. According to As Safir, the Ouzai district was constructed entirely on public property while nearly 1,000 residential units were built on thousands of acres of public property in southern Lebanon. On April 18, six policemen in the southern suburbs of Beirut were injured while attempting to evict the occupants of illegal houses. A similar incident on April 21 in Tyre left two civilians dead and two others wounded by police gunfire. According to the Associated Press, caretaker Prime Minister Saad Hariri indicated that Hezbollah has turned a blind eye to the construction. Hezbollah defended itself against the accusation, urging officials to severely punish such violations.

Syrian tycoon Makhlouf in the spotlight

Last week, London-based World Finance magazine announced that it was reconsidering an award it had presented in March to Syrian businessman Rami Makhlouf, calling it “appropriate to factor in the wider political agenda” after Syrian protestors have been widely vocal about his perceived corrupt business dealings in the country. Makhlouf, the 41-year-old maternal cousin of Syrian president Bashar al-Assad, was commended for “visionary leadership and contribution to the Syrian economy” through his holding company Cham Holdings (Syria’s largest private company), which includes businesses ranging from aviation to telecommunications, energy and banking. Makhlouf’s businesses control more than 60 percent of the Syrian economy. His main property group, BENA holdings, is developing mixed-use, resort and hotel properties on a total of more than three million square meters of land from Aleppo to Damascus. In an email to the Financial Times, later published in an April 20 article, Magda Sakr, chief executive officer of Makhlouf’s telecommunications firm Syriatel, said that “Makhlouf is a businessman and is therefore seeking — as any serious businessman — to get investment opportunities… The fact that he is ‘well connected’ does not make him a criminal who has to justify each contract he gets.” The email went on to ask, “Is somebody going to claim that Mr. Makhlouf’s success was due to him using Syrian intelligence officials to intimidate the Syrian public to use the services of [his] companies?” Makhlouf has been widely criticized by the international media and was sanctioned by the United States Treasury in 2008, banning him from operating with any American person or business.

One big hotel purchase

Monaco resident and Lebanese businessman Toufic Aboukhater has coughed up $643 million to Morgan Stanley Real Estate Funds (MSREF) for seven InterContinental hotels in France, Vienna, Amsterdam, Madrid, Rome, Frankfurt and Budapest, according to a report by the Reuters press agency. Arguably the most prized asset in the portfolio is the Carlton Hotel overlooking the Mediterranean coast in Cannes. MSREF had bought the hotels in 2006 for $925 million using a debt-heavy strategy, with Barclays Capital organizing an assortment of lenders to complete the deal. The reclusive buyer once owned London’s Dorchester Hotel and Monte Carlo’s Grand Hotel, in addition to others throughout Europe.

Eco-design is flourishing

The Build it Green conference held at the end of March highlighted the vitality of eco-friendly living in Lebanon. Host to more than 300 real estate professionals from Lebanon and the Middle East, the conference addressed several aspects of green building. Featured at the conference was a new project by the event sponsor Greenstone. ‘La Broceliande’ in Yarze, outside Beirut, is to be Lebanon’s first residential BREEAM (an environmental assessment method and rating system) green-certified building, scheduled for completion by mid-2012. Fouad Hanna, an architect with Dagher Hanna and Partners, who worked on the La Broceliande project, emphasized the increased demand for green construction in Lebanon. “The interest that we find today is phenomenal compared to even just a few years ago,” he said. “Though consumers focus on quality and location when making purchasing decisions in Lebanon’s real estate industry, quality living and energy cost saving through environmentally-friendly architecture are gaining popularity.”

Jordan retains value

Despite the political unrest in the region, Jordan’s property market has not experienced dampened prices, according to a first quarter report from property consultancy Asteco Property Management, with some residential sales transactions exhibiting higher prices. The report noted that during the first quarter of 2011 the activity of sales and leasing of small and medium sized apartments has kept the same pace as in 2010, partly due to scarcity of land in  high-demand areas and low housing budgets. “The Jordanian government moved swiftly in adopting policy changes… [and] as a result of these changes, which included limitations on price increases and the waiving of transfer fees, Jordan’s property market has shown little sign of slowing,” said Elaine Jones, chief executive officer of Asteco Property Management. However, average apartment sale prices in Amman’s 4th Circle street have decreased by 1 percent to $1,340 per square meter compared to an average price of $1,481 per square meter in Abdoun, the most expensive residential area in Amman.

Egyptian land mogul detained

Former Egyptian housing minister Mohammed Ibrahim Suleiman was arrested by Egyptian Authorities on April 6 for allegedly awarding government land to real estate developers in the country for less than fair market prices, according to the Assocated Press. Suleiman, who is the second former housing minister to be arrested since the fall of the government, is believed to have approved biased deals while in office from 1993 to 2006, generating the possibility that land transactions made under previous governments may be annulled, much to the dismay of some regional real estate investors. Authorities also arrested Egyptian businessman Magdi Rasikh, accusing him of purchasing public land through a deal brokered with Suleiman, which indirectly lost the public purse some $100 million. Property companies have already been battling a series of legal challenges after a court ruling last year that an earlier land deal made with the country’s biggest developer, TMG Talaat Moustafa Group, was illegal.

Coughing up for the coppers

Construction company Saudi Oger – owned by the family of the Lebanese Caretaker Prime Minister Saad Hariri – plans to finance the construction of police training facilities in Saudi Arabia with a $2 billion syndicated loan. Saudi Oger last participated in the loan market in August 2010, borrowing $250 million via Credit Agricole, which will mature in December 2014. Bank sources claim that Saudi Oger has nearly reached the limits of its credit lines and has been trying to diversify its financing beyond domestic banks. According to Maktoob, Deutsche Bank has been attempting to put together a syndication of small banks to provide the loans. Similarly, lenders have each been asked to contribute $200 million.

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