Executive Magazine

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by Executive Editors May 28, 2011

written by Executive Editors

ABL adjusts benchmark lending rates

The Association of Banks in Lebanon (ABL) has recommended an adjustment of local and foreign currency benchmark lending rates to its member banks. In a circular dated April 12, ABL urged Lebanese banks to lower the Beirut Reference Rate (BRR) on lending in Lebanese lira (LL) from 7.27 percent to 7.21 percent. At the same time, it recommended raising the BRR on US dollar (USD) lending to 4.79 percent from 4.72 percent. The BRR on USD lending replaced the London Interbank Offered rate (LIBOR) as the national reference rate for lending in foreign currency in 2009, after the ABL had judged the LIBOR to no longer reflect the cost of funding and lending in Lebanon. The new benchmarks were adopted on both USD and LL lending in March and May 2009, respectively. Both BRRs constitute the basis to calculate the Beirut Prime Lending rate. ABL’s latest recommendations are part of efforts by Banque du Liban, Lebanon’s central bank, and the association to stimulate lending in local currency. The proposed adjustments will be effective as of May 2011.

El Zein group acquires controlling stake in MedGulf

Lutfi El Zein (LFZ) Holding, the investment vehicle owned by the insurance sector personality of the same name, has acquired a 51 percent stake in Mediterranean and Gulf Insurance and Reinsurance Group (MedGulf Group) in a transaction valued at $400 million. El Zein, long-time chairman and chief executive officer of MedGulf Group and previous holder of a minor shareholding in the group, purchased the stake from Saudi Oger, the conglomerate owned by the family of Lebanese caretaker Prime Minister Saad Hariri. The acquisition is the largest leveraged buy-out (LBO) in the Middle East since 2007 and the largest ever insurance LBO in the Middle East and North Africa region. A consortium of 16 banks arranged the deal, which includes a $175 million syndicated loan facility, part of a multi-tranche financing package. Lead arranger on the acquisition was Bank Audi; Deutsche Bank was the book runner. MedGulf Group, which is Lebanon based, is stakeholder in MedGulf Bahrain, which in turn owns 32 percent of MedGulf Saudi, a listed company.

Moody’s raises DP World debt to investment grade

Moody’s ratings agency raised the credit ratings of DP World, a leading global port operator and subsidiary of Dubai World, to investment grade with a stable outlook, citing the company’s rapid recovery in terms of operating performance in 2010 and into 2011. The upgrade to Ba1 from Baa3 includes DP World’s long-term foreign and domestic currency ratings, and the rating on its $1.5 billion Sukuk Islamic bond, due in 2017, with a total of $3.25 billion in debt affected. The positive rating action follows DP World’s late March announcement of 35 percent increase in 2010 net profits to $450 million, buoyed largely by strong volume growth in the second half of the year. According to Moody’s, the ratings are sustained by the company’s diversified global operations, expected growth in container traffic, as well as solid profitability and a strong liquidity profile.

Auction for Syria’s third mobile license postponed

Syria has suspended plans to auction off the country’s third mobile license due to political tensions and changes in its government. Scheduled for April 17, the license auction could not proceed due to a change in the supervisory committee overseeing the auction after Syrian President Bashar al-Assad replaced his prime minister and cabinet and promised to introduce new electoral and media laws in response to popular revolts. By the time of the auction’s suspension, the number of bidders had already shrunk from five to two companies. In March, the United Arab Emirates’ mobile giant Etisalat pulled out of the bidding, stating disappointment with the stipulated 25 percent revenue share allocation to the Syrian government. Etisalat’s bid was estimated at $122 million. Also citing Syria’s revenue terms, potential bidders France Telecom and Turkcell quickly followed suit and dropped out. By early April, Qatar Telecom Company (Qtel) and Saudi Telecom Company (STC) were the only bidders left. At the time, both companies reconfirmed their bidding commitments. Following postponement of the auction, Qtel said it was still firmly interested in pursuing the license despite the delay.

Plastic payment

on the rise in LebanonFigures released by Banque du Liban (BDL), Lebanon’s central bank, for February 2011 show that payment cards are still gaining favor with Lebanese consumers. According to BDL, the number of payment cards in the country reached 1.69 million in February 2011, up by 7.3 percent from the same time last year. Of all plastic payment methods, credit cards experienced the highest year-on-year increase in February of 15.4 percent, now totaling 395,000, or around 23 percent of all issued cards. Prepaid and charge cards were up 9 percent from the year before, amounting to 10 percent of all payment cards. Debit cards still held 66 percent of the market — with 1.12 million in all — though they recorded just a 4.5 percent increase year-on-year. Point of sale purchases in February jumped 24 percent year-on-year.

Kafalat guarantees fall

Guarantees issued under the Lebanese Kafalat loan guarantee program dropped 23.21 percent year-on-year in first quarter of 2011. However, the average value per guarantee rose to $139,200, up 17.76 percent from an average of $118,200 a year earlier. The face value of guarantees issued in the first quarter of 2011 reached $41.9 million. Allocation of loans by sector saw the industrial sector in the lead with 39.87 percent of total guarantees. Loans to the agricultural sector, comprising 37.21 percent of total guarantees, took the biggest hit as they declined 41.97 percent from a year earlier. In contrast, tourism sector guarantees increased by a yearly 38.10 percent since end-March 2010, accounting for 19.27 percent of total guarantees. Geographic distribution of loans at the end of the first quarter showed that companies in Beirut and Mount Lebanon accounted for 50.5 percent of Kafalat loans. The Kafalat scheme has been noted internationally for its quality, including praise as best performing credit guarantee scheme in the Middle East and North Africa in a March 2011 report by the World Bank.

Lebanon’s life premiums up 15 percent in 2010

Total life insurance premiums in Lebanon increased 14.8 percent to $356.7 million in 2010, according to the annual insurance sector survey by Al Bayan magazine. The report said the 2010 growth was double the 7 percent increase achieved the previous year, adding that life insurance penetration in Lebanon stood at 0.9 percent of gross domestic product for 2010, at an insurance density of $89.2 per capita. Firms reporting higher life premiums vastly outnumbered losers as 27 out of 33 life providers posted gains, led by two firms claiming triple-digit gains. Market share concentration by Lebanon’s top five life insurers dropped by about five percentage points year-on-year to 59 percent in 2010, representing an aggregate value of life premiums of $210.3 million. Metlife ALICO ranked first in life premiums volume with $70.7 million, or 19 percent market share. The other companies in the top five for 2010 were Allianz SNA, Bancassurance, Arope and LIA with life premiums of $40.8 million, $37.5 million, $36.5 million and $24.8 million, respectively. Arabia Insurance reported the biggest growth, an 829 percent leap that propelled it from 15th to 7th place in one year. MedGulf saw the sharpest decline among the country’s top 10 insurers; its life premiums dropped 14.4 percent in 2010.

UAE IPOs rising, but slowly

In signs of life for Gulf Cooperation Council primary markets, three companies in April announced plans to sell shares through Initial Public Offerings (IPOs) in 2011. Between May 1 and May 11, United Arab Emirates’ Eshraq Properties will be offering 55 percent of the company in an IPO worth $220 million, the first IPO on a UAE exchange by a real estate developer since Dubai’s Deyaar in 2007. Funds raised are expected to finance Eshraq’s developments, including the $2 billion Marina Rise on Al Reem Island. After a dry spell of no public offerings in more than two years in the UAE, the Eshraq flotation will be the Abu Dhabi Exchange’s third IPO in 2011, following two insurance-related offerings in February and April. While financial observers judge the return of primary markets positively, international firms have warned recently that political risk could deter investors. In the two other new IPO announcements, Saudi Integrated Telecommunication Company (ITC) received approval from the country’s Capital Market Authority to offer 35 percent of its shares between May 2 and 8 in a bid to raise $93 million. In Oman, electricity producer SMN Power Holding said it is planning a 35 percent offering on the Muscat Securities Market in 2011; further details on the offering’s size and timing were not available.

May 28, 2011 0 comments

Comment

Iraq emerging

by Riad Al-Khouri May 28, 2011

written by Riad Al-Khouri

Eight years after the American-led invasion of Iraq, the country’s business climate seems to finally be showing some substantive improvements. Granted, the essential quality for the country to re-emerge as a target for investors is physical safety and stability, and on that score the numbers at first sight don’t appear encouraging; the level of violence in Iraq in March more than doubled compared with February. According to statistics from official Iraqi sources, in March, 136 civilians and 111 Iraqi police and soldiers died in attacks across the country; in Baghdad alone, 79 civilians and 31 security personnel were killed: more than twice the previous month’s total. The current level of violence is, however, still far below what Iraq saw during the sectarian warfare peak of 2006-2007; and a suggestion as to why the violence grew recently is that relaxed security forces, over-confident that the situation is calm, are making their searches less vigilant. Hopefully, neither this nonchalance nor the violence will become a trend.

Despite the security slips in Iraq of late, in recent months there have been rising numbers of international organizations and foreign businesses heading for the country’s capital to set up shop. Among the former is the United Nations Development Program for Iraq — previously based in Amman — which is due to begin relocation to Baghdad this month. And the lifting of a travel ban to Iraq on officials of the Paris-based Organization of Economic Co-operation and Development (OECD) is a further indication of a potential ‘Baghdad Spring.’ In the private sector, interest in Iraq on the part of big multinational banks is also growing: at an OECD workshop on Iraqi infrastructure development, held in Jordan in March, the Hong Kong and Shanghai Banking Corporation (HSBC) Group, Citibank and J.P. Morgan showed a keen interest in doing more business in Iraq. HSBC is already in the country through a majority holding in a local bank, and Citi has also been focusing more on Baghdad in the past few months.

Whatever political contortions and security issues may arise in Iraq, more business is certainly coming to the country. For example, the OECD event looked at vast projects to be undertaken, including an Iraqi Ministry of Agriculture plan to set up market complexes for the storage and distribution of farm produce. The recent announcement of an Islamic Development Bank grant for a feasibility study indicates that the project is under serious consideration.

Agriculture in particular could be the country’s new center of business attention (after the always-present focus on oil). Recovery in Iraq generally has not been matched by a revival of agriculture, once a mainstay of the country’s rural economy. Government wholesaling through the country’s creaky public distribution system is now increasingly recognized as problematic and technology, human capital and machinery in the sector lag behind as well. The scope for Iraq’s food production is enormous, and a focus on this kind of business would provide attractive solutions to internal migration, among other key issues plaguing the country.

Though a full recovery is not going to happen automatically or overnight, indications are now positive for the first time in decades — and certainly since the US invasion of Iraq in 2003 — that an improved business climate in the country is beginning to attract interest in non-oil investment, which in turn will help businesses to prosper and reinforce a positive cycle. Physical security is of course crucial, so before rushing to book a flight to Baghdad (where planes no longer land in a “corkscrew” pattern dictated by security concerns) one must remember that this is still no Disney Land. However, the recent economic and political momentum means that the risks of doing business in Iraq are slowly being outweighed by the potentially enormous benefits. Investment climate tipping-points are difficult to spot and to analyze but Baghdad is now heading in the right direction.

Riad al Khouri is dean of the business school at the Lebanese French University in Erbil, Iraq, and a senior economist at the William Davidson Institute in the Ross School of Business of the University of Michigan, Ann Arbor

May 28, 2011 0 comments

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The tale of two Ammans

by Peter Speetjens May 28, 2011

written by Peter Speetjens

Jordan is often said to be divided, both demographically and politically, between so-called “real” Jordanians and those of Palestinian descent. Yet that is hardly the only fault line lurking below the relative peace that has reigned over the Hashemite Kingdom in recent decades.

The capital, Amman, for example, is like an apple split into two unequal halves. West Amman is rich and spacious, dotted with grand villas complete with lavish lawns and pools. Here one finds French supermarket chains, luxury hotels and foreign embassies. Here live the diplomats, aid workers and just about every Jordanian who “made it”. Here when they eat, the choice is between sushi, steak or pizza.

East Amman, on the other hand, is a giant beehive of cheap concrete in desperate need of a lick of paint. Here live most of Amman’s 2.8 million people on a variety of bread and beans. The city’s east and west meet at the Husseini Mosque in downtown which, though not even 100 years old, is one of the oldest buildings in the young capital. The mosque was also the center of recent demonstrations that have attracted a few thousand people — and nearly as many policemen. Yet so far people have not taken the streets en masse.

“I have no time for politics. I have three kids to feed,” said a taxi driver, Ahmad. To do so, he works an average of 10 hours per day, 6 days a week. Every morning, he rents his yellow cab for JD 24 ($33.8) and buys petrol for around $22. On a good day he goes home with nearly $30 in profit, on a bad one with about $10. “You know the difference between Bahrain and Jordan?” he asked. “In Bahrain people have money but no freedom. In Jordan they have freedom but no money.” Still, as if to illustrate the limit of liberty à la Jordanienne, he insisted that his full name not be used.

Based on 2008 figures, the 2010 Jordan Poverty Report determined the national poverty level as below an income of $80 a month for an individual, and below an income of $5,473 annually for an average family of 5.7 members. The average annual family income in 2008 in Jordan was just $8,706. The report concluded that the number of people living in extreme poverty in 2008 increased by 0.3 percentage points to 13.3 percent, despite the fact that gross domestic product that year increased by no less than 7.6 percent, prompting economist Yusuf Mansur to conclude that “economic growth has nothing to do with poverty reduction.”

Purchasing power in the different spheres of spending becomes clear at a market in east Amman, where one Jordanian dinar (equal to $1.4) will buy four pairs of large underwear, six pairs of socks, 10 kiwis or 10 kitchen knives “made in China”; for the same amount in west Amman one can buy half a hamburger in an American fast food joint. The rift between east and west, rich and poor, is perhaps more profound than between “real” Jordanians and “Palestinian” Jordanians, given that these groups live on either side of the city’s socio-economic divide.

However, the divide between haves and have-nots is also linked between capital and country, said Nawaf Tell, head of the Center for Strategic Studies (CSS) at the Jordan University. A recent CSS study concluded that the tribal regions of Ma’an in the south and Mafraq in the north of Jordan are by far the country’s poorest. For people living there, west Amman is like another planet, with even poor east Amman a step up the social ladder. According to Tell, the government’s development policy and constant focus on Amman is only exacerbating the divisions; the provinces have seen hardly any development and the north and south threaten to become a “chain of ghost cities” as the poor continue to migrate to the capital city.

“Amman does not have the resources to absorb such growth,” he said. In this era of regional unrest, one can only wonder how long this increasingly lopsided tale of two Ammans can remain a stable one.

PETER SPEETJENS is a Beirut-based journalist

May 28, 2011 0 comments

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

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

Comment

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