Feature

Untying the tyrant’s tentacles

by Executive Editors
written by Executive Editors

From his humble tent in the south of Tripoli, Libya’s currently embattled leader Colonel Muammar al-Qadhafi had under his control at least $210 billion — almost three times the worth of Carlos Slim, the world’s richest man according to Forbes. The United States, Canada and the European Union had, since the Libyan uprising began in mid February until the end of March, frozen approximately $70 billion in assets controlled by Qadhafi, through the Libyan central bank, 18 family members and at least 16 companies and investment vehicles, but the search for additional assets continues.

Executive has scoured data and reports from governments, financial institutions and media outlets around the globe to compile what is perhaps the most comprehensive, publically available listing to date of Libya’s direct foreign asset holdings [see page 50]. Given the sheer enormity of the size and spread of these assets, and the opaque nature of Qadhafi’s secretive investment vehicles, there are likely significant assets unaccounted for in this listing — indeed, it is speculated that the web of investments is so far flung that the Colonel himself cannot account for all his billions.

Weaving the web

Since the lifting of sanctions on Libya in 2004 and the subsequent increase in oil exports and global prices, Qadhafi collected hundreds of billions of dollars in oil revenues, a large part of which were transferred to personal foreign accounts and to a complex web of Libyan sovereign wealth funds. Key individuals identified by Western authorities to be acting on behalf of Qadhafi or at his direction include his wife, Safia, his seven sons, most prominently Saif al-Islam al-Qadhafi, and his only daughter Aisha. Other senior government officials were also targeted by the US sanctions, but their roles are limited to security aspects and do not appear to hold any notable foreign assets.

Libya’s main foreign investment vehicle is the Libyan Investment Authority (LIA), a holding company founded in 2006 to oversee and manage the country’s various investment funds. The authority was created with capital of $40 billion, but is now estimated to hold $70 billion in assets with private investments in real estate, banking, agriculture, infrastructure and oil and gas, in addition to bonds and equity stakes in publicly listed companies around the world.

More than seven investment funds with foreign assets fall under the umbrella of the LIA, with the $8 billion Libyan African Investment Portfolio (LAP), established in 2006, perhaps the most prominent, if not the largest. LAP focuses on direct investments across the African continent, partly through its telecom holding company LAP Green Networks. LAP Green Networks’ portfolio comprises investments in Chad, Niger, Ivory Coast, Nigeria, Rwanda, Sudan, Togo, Uganda and Zambia.

LAP’s other subsidiaries include Libya Oil Holding Company (OiLibya, previously Tamoil Africa), which manages the country’s oil-related investments in Africa, and the Libyan Arab African Investment Company  (LAAIC) which manages holdings in virtually every African country and sector ranging from the Rainbow Tourism Group in Zimbabwe to the Democratic Republic of Congo’s Oryx Natural Resources diamond mining company.

Also under the LIA is the Libyan Arab Foreign Investment Company (LAFICO), founded in 1981 and boasting $2 billion in assets as of the end of 2009. LAFICO was the main investment arm of the Libyan government, focused on international equities and fixed income holdings, before the establishment of the LIA.

 LAFICO’s regional investments include stakes in United Arab Emirates-based Kingdom Hotel Investments, Jordan’s Arab Potash Company and Bahrain’s First Energy Bank.

At the same time, the LIA oversees the $10 billion Long Term Investment Portfolio (LTIP), which owns several real estate and banking foreign assets. In effect, the holdings of LTIP would be classified under the LIA, similar to foreign holdings by the National Investment Company, so it is difficult to separate the portfolios of every investment fund under the LIA.

In Europe, Libya established Dalia Advisory Limited in 2009 at a property on Upper Brook Street in London — valued at approximately $9.8 million — with the aim of managing Libyan investments in the UK and the rest of Europe. During the same year, LAP reportedly poured hundreds of millions of dollars into a newly-established London-based hedge fund, FM Capital Partners.  On the other side of the Atlantic, in a 2010 diplomatic cable released by WikiLeaks, LIA’s Chairman Mohamad Layas spoke to the US ambassador in Tripoli of $32 billion in liquidity held by several American banks, each managing $300-500 million. These amounts have now been reportedly frozen.

On the banking side, the Central Bank of Libya (CBL), which is fully-owned by the Libyan government, held $139 billion in foreign exchange as of the middle of 2010, according to a CBL Director, though it is not clear how much of the foreign exchange assets are physically available in Libya and how much are part of the assets frozen by foreign governments. (For example, the International Monetary Fund reported last month that the CBL had on hand roughly 144 tons of gold, currently worth some $6.5 billion.)

The CBL also holds equity stakes in regional financial institutions, including Bahrain’s Arab Banking Corporation and ALUBAF Arab International Bank, either directly or through its subsidiary, the $2 billion Libyan Foreign Bank.

In addition to Libya’s official investment vehicles, Qadhafi and his family members are estimated to hold several billions of dollars in secret personal accounts.

Speaking to British-based newspaper The Guardian, Professor Tim Niblock, a Libya specialist at the University of Exeter in the UK, said, “The bulk of that wealth is distributed between bank accounts and liquid assets in banks in Dubai, United Arab Emirates and other Gulf states, as well as in the countries of Southeast Asia.”

Despite the variety of Libyan investment fund names, Libya’s known direct assets in more than 60 countries are ultimately all under the control of Qadhafi and his sons. As Western governments push ahead with their military and financial offensive, the coming weeks will likely bring more light to bear on Libyan elite’s secret assets around the world.

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Feature

A view to a rebellion

by Executive Editors
written by Executive Editors

The luck of the rag-tag rebel forces in Eastern Libya has swung wildy since the uprising began in February. Revolutionaries seized the momentum early on to head west and liberate towns along the coast, only to be beaten back by forces loyal to Colonel Muammar al-Qadhafi; NATO airstrikes  turned the tide again just as loyalists were preparing to lay seige to the rebel stronghold of Benghazi.

To document the rebellion and life in the newly-liberated east of the country, Executive made its way to North Africa last month, crossing the border of Western Egypt into Libya. Shops and restaurants had reopened, even if some had no running water with which to cook, while old men and young children alike were signing up to bolster the ranks of a rebel outfit increasingly beset by losses. From Tobruk to Benghazi, Ajdabya to Ras Lanuf, these photographs show a people desperate, yet full of hope, that their struggle could free them and their country from decades of tyranny.

1.The coastal town of Ras Lanuf has seen intense fighting, changing hands multiple times

2. A rebel mans air defenses outside Ajdabya

3. Rebel fighters in Ras Lanuf prepare to head to the frontline

4. Refugees camp out at the border between Libya and Egypt. Many had lost their jobs and belongings and were demanding international aid to allow them to start new lives in their home countries

5. A fresh coat of graffiti marks almost every wall on the streets of Benghazi as residents express their new found freedom

6. Benghazi residents wait for a bank to open. Cash reserves were in short supply after protracted closures

7. The sun rises over eastern Libya, just south of Benghazi.

8. Rebels re-load an artillery piece as they fight to retain control of the oil refinery town of Ras Lanuf

9. A rebel fighter mans a checkpoint north of Ajdabya

10. Children play on a tank in the city of Benghazi

11. TV crews watch as an oil refinery explodes near Ras Lanuf

12. Volunteer border guards check passports on Libya’s border with Egypt

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Feature

Frontline Headlines

by Executive Editors
written by Executive Editors

On a chilly early March evening in  Benghazi, staff at the recently formed newspaper Libya worked furiously under the dim light of two dangling bulbs. Notebooks, hard drives, empty water bottles and tangled cords covered the news desk as writers’ faces glowed blue from the light of their laptop screens, their eyes tired from long days of hard grind.

Operating out of a former state security building on the Mediterranean waterfront, the newsroom walls were covered in colored caricatures criticizing Libyan leader Colonel Muammar al-Qadhafi. One poster showed him as half of a two-headed dragon and another with Michael Jackson’s nose. Like other writers, journalists and activists that have mobilized in the midst of Libya’s uprising, the volunteer team has embraced newfound media freedoms after nearly 42 years of repression. 

For the first time in more than four decades, radio broadcasts relate accounts of events across the country uncensored by government authorities. While rebels battle Qadhafi’s forces on the front lines, press warriors back in Benghazi’s media bastion armed themselves with the power of the printed word, waging their resistance with computers and notebooks. As Executive went to press, more than half a dozen new publications had been founded in rebel-liberated eastern Libya since the revolution began on February 17.

“This paper allows us to get out the depression we’ve been storing within ourselves for years,” said Libya editor Mohammad Sader Mousa. The head of the media department at Garyounes University in Benghazi came up with the idea for the paper just before midnight on February 22, in the early days of the anti-Qadhafi uprising. He worked furiously throughout the night making calls to colleagues whom he thought would be willing to help.

“I was here in the media center and I told people about the significance [and] the role of media in revolutions,” he said, sporting a button of the red, black and green pre-Qadaffi Libyan flag on his navy blue coat. “The only way we could communicate locally was by making a newspaper and then try to have it reach the world outside through the Internet.”

That night, electrical engineers moved in to the soon-to-be news bureau to set up a satellite Internet connection. All other networks across the country had been cut. While writers hastily gathered to flesh out reports, a publishing house volunteered to print the paper for free. By 10 am that morning the first edition was printed.

“When it was finished we couldn’t believe it,” he said. “We looked at it and thought, ‘How come?’” Neither Mousa nor anyone else on his team has spent a penny on the publication, which has a print run of 1,500 papers a day and a team that quickly grew to 62 members.

“Freedom is the sweetest thing,” said 47-year-old volunteer Amal bin Ghazi as she tapped away on her silver laptop – one of nine personal computers spread across the table, all used by writers and editors nearing deadlines. “Because I’m working with this group there is a feeling of liberty within me.”

“I always saw the truth but I could never talk about it. There was no freedom of speech, no real journalism”

A print-run repressed

If it weren’t for the uprising, another Libya volunteer, 25-year-old Ousbah Awami, would have been pounding out words in the office of a newspaper with much different stripes; for years Awami worked at Qurayna, a paper created in 2007 by a company owned by Saif al-Islam al-Qadhafi, one of Colonel Qadhafi’s sons. While Awami did occasionally write articles for the paper that were critical of the regime, his editor consistently prevented them from being published.

“I always saw the truth but I could never talk about it,” he said. “There was no freedom of speech, no real journalism.”

But the tide changed for Awami and his colleagues when Libya followed Tunisia and Egypt in revolt. He and a handful of others spent nights sneaking into the Qurayna office to send pictures and videos of the uprising — not yet widely covered by international press — to news agencies outside of the country, as at the time, the newspaper had one of the country’s only working Internet connections. In doing so they were not only at risk of being attacked by Qadhafi’s supporters, said Awami, but also from rebels if they were mistaken for supporting the dictator.

Operations at the newspaper took a turn after a bloody Benghazi battle left scores of anti-Qadhafi protesters dead. Members of the staff decided to write and run a story documenting the events and announced they had sided with the rebels. “After that we stopped calling Qadhafi a leader and called him a criminal, a murderer,” said Awami. But this didn’t come without risk. “One by one, every staff member received a phone call from someone saying, ‘We can kill you. We can kill your family,’” he explained.

When the newspaper’s editor fled the office shortly thereafter, Awami claims he took 100,000 Libyan dinars ($83,194) with him, swindling the 120-person staff of two months’ salary, although this could not be independently verified by Executive. Awami added that their Internet connection was subsequently inoperable. For two weeks the employees worked without pay, but have since been receiving funding from Libya’s Al Khaleej oil company, allowing them to continue to print 10,000 copies per week under a new editorial committee and the new name, Bourniq, after an ancient city northeast of Benghazi.

Journalists under fire

Despite the new tastes of freedom in parts of Libya, concerns loom large for local and international journalists. As the momentum of the uprising shifted in the favor of pro-government forces through mid-March, conditions deteriorated for reporters. Al-Jazeera cameraman Ali Hassan al-Jaber was killed and another wounded on March 12 on the outskirts of Benghazi when gunmen opened fire on their car; on March 19, Mohammed Nabbous, founder of the recently-launched independent Libya AlHurra TV (and one of the founders of the Benghazi media center) who provided video coverage of the rebellion, was shot in the head by a sniper while covering a government attack on Benghazi.

The Committee to Protect Journalists (CPJ) has documented more than 50 anti-press attacks that include assaults, detentions and threats. Some 13 journalists are either missing or in government custody, according to the CPJ. The missing include four from Al Jazeera and two from Agence France-Presse. In addition, six Libyan journalists are unaccounted for, the group said. The tense situation prompted at least three Bourniq reporters to resign from the paper for fear of losing their lives. “I don’t sleep at home anymore; I don’t use my own car; everyday I’m concerned for my safety,” said Awami.

“We will fight back with media. We are going to destroy him”

Warrior poets

To enter the rebels’ political headquarters, inside an old courthouse in North Benghazi, one must pass a short interrogation by armed guards and walk through a metal detector at a side entrance. Tucked into a small corner room of the courthouse last month was 21-year-old Ash Mohamed Zagogo, writing poems about the liberation of Libya. Judges’ robes hung from a coat rack to Zagogo’s right and law books lay dusty in a bookcase behind him. The former break room is now the operating base of Libya Al-Hurriyah, Arabic for “Free Libya.”

“I write these words not from my mind, but from my heart,” Zagogo said, after reciting a poem he wrote for the paper, which publishes both articles and art. Like other start-up newspapers here, donations cover the operation costs of running Libya Hurriyah, printed every other day and distributed in cities all the way to the Egyptian border. Most of the people on the staff are female lawyers and students. “They volunteer because they feel the injustice that people are living,” said Warida Bernawi, the 35-year-old director of Libya Hurriyah.

While she bustles about the room, a group of young women hunch over a single computer across from where Zagogo and two others quietly write. Although night had long fallen over the Mediterranean town, it would still be hours before the staff went home for a few hours rest.

“Do you know Qadhafi called us rats?” Zagogo asks, his face stiffening as he quickly sat up. “He crossed the line, so we will fight back with media. We are going to destroy him.”

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Feature

Reforms in reverse

by Executive Editors
written by Executive Editors

In setting targets for foreign investment in Syria during a speech last year, the country’s then-Deputy Prime Minister for Economic Affairs, Abdullah Dardari, admitted that there was “a long way to go.”

“A competitive economy is a mindset, a new way of seeing things,” he said. “This is the real challenge. But the political determination is unquestionable. There is no going back.”

That, however, was before regional unrest in recent months spread to the home front and spurred a reshaping of Syria’s policy direction. The government’s almost decade-long embrace of an economy-first model unraveled as events unfolded in Tunisia and Egypt; to keep the wolf of revolt from Syria’s door, a slew of small appeasement packages and limited social reforms were implemented — sometimes in complete reversal of long-term economic strategies. This strategy initially appeared to have kept investor confidence high and popular unrest at bay but in the later half of March, previously unthinkable public demonstrations of dissent began in cities across Syria.

As Executive went to print a clampdown by state security forces had killed at least 61 in the southern city of Daraa and dozens more elsewhere, while hundreds had been injured and arrested throughout the country. Needless to say, Syria’s social and economic future seems somewhat uncertain. At least one major foreign investment was halted on March 23, according to Reuters, the same day stocks on the Damascus exchange dropped an average of 3 percent across the board.

In need of help

Syria’s economy is in bad shape. Ten years of reforms aimed at moving the country toward a free market system — such as opening up the banking sector, lures for private investment, a nascent stock market and cutting subsidy programs — had begun to nudge the economy into recovery after 50 years of centralized, national socialist policies.

But with declining oil reserves, inefficient and decrepit industries, weak and arbitrary trade and competition regulation, high inflation and an unemployment crisis looming, the economy still desperately needs more fixing. Reforms were recognized as being potentially painful for ordinary Syrians in the short term — especially in regards to an increased cost of living — but unavoidable if the country was to develop economic security, improve its standard of living and raise foreign investment to the targeted $55 billion.

The question now is, with unrest erupting across the country, how severely will short-term efforts to assuage the public derail the long-term plans to revamp the economy?

In the barrel

With Syria’s oil reserves diminishing rapidly, the cost of extraction rising and demand skyrocketing, the country has been looking to its neighbors to secure lucrative oil and gas pipeline deals and shore up domestic energy supplies. The country’s crude production peaked at 583,000 barrels per day (bpd) in 1996, but by last year had dropped to 390,000 and the country will deplete existing reserves within 18 years, according to its reserves-to-production ratio, as calculated by British Petroleum (BP).

Foreign investment is necessary to enhance old, inefficient oil refineries, such as those in Banias and Homs, which together have a capacity to refine 240,000 bpd — well below domestic demand of nearly 350,000, according to a 2007 study by Syrian economist Ziad Arbash. Syria worked hard to position itself as a regional transit hub for gas into Europe through proposals to extend the Arab Gas Pipeline — linking Egypt, through Jordan, to Syria — to connect to a pipeline between Syria and Turkey; an idea that was plugged during a recent presidential tour of Turkey and Eastern Europe.

Plans for a second auction of offshore exploration rights (the first failed to attract any investors) were also announced by Oil Minister Sufian Alao in February, covering a total of more than 5,000 square kilometers across the Mediterranean. Despite relatively lower yields and unfavorable production-sharing contracts, until now Syria’s political stability, as compared to other more oil-rich countries like Iraq, had worked in the country’s favor. But the ambitious plans to develop an extensive gas transport infrastructure now look uncertain. With instability across the region and the breakout of revolt at home, it is likely that the endeavors will be put on pause as nervous investors wait to see what unfolds.

These are long-term plans with the goal of increased price stability, easier access and less waste to meet demand. More immediately, Syria is looking to cut the costs of inefficient energy handling without unsustainably increasing the financial burden on households, and that means one thing: subsidies.

How severely will short-term efforts to assuage the public derail the long-term plans to revamp the economy?

Subsidies setting back the clock?

 On January 16 — one day after the Tunisians forced president Zine al-Abidine Ben Ali to flee the country — the Syrian government announced plans to reinstate fuel subsidies for public workers by 72 percent, up to the equivalent of $33 a month. Shortly after came the announcement of a $250-million package for 420,000 families, to combat poverty. Currently, approximately 14 percent of the population is below the poverty line. Last month, the state also reduced the cost of many imported food items.

These moves appear to be a complete reversal of a policy in recent years of repealing subsidies. Beginning in 2007, with subsidies costing an estimated $2 billion annually and artificially lowering retail prices, the government embarked on a three-phase plan to eradicate them. By doing so, it was reasoned, the government would not only allow fuel and electricity prices to meet international market levels, but make more funds available for public investment.

The plan had begun to yield results. The initial 2007 hike in gasoline prices succeeded in reducing fuel consumption by more than 50 percent per household, but electricity consumption shot up by an average 10 percent each year. Nonetheless, direct energy subsidies still cost Syria around 5 percent of gross domestic product.

But households were feeling the pinch. With energy and food previously subsidized by around 50 percent, under the new system food and energy were adding up to an average of 10 percent of monthly household income. Inflation, stable but high at around 3 percent between 2010 and 2011, after spiking at 15.7 percent in 2008, has still not been matched by an increase in wages, with the average family income sitting at 13,000 Syrian Pounds ($260) a month.

Following the 2011 National Household Survey, which showed overall higher living costs and a growing gap between rich and poor, sources told Executive that plans were already underway to use the results to implement a secondary study to assess how removal of subsidies affects popular approval of state policy.

But even if temporary and relatively modest reintroduction of subsidies may go some way to quell unrest, reversals might be hard to undo. “The size of the subsidy is not the important issue here, especially in the short-term,” explained Said Hirsh, Middle East economist at Capital Economics in the United Kingdom. “My concerns will be on its impact on medium-term structural reforms and economic policies. We don’t understand yet whether this will divert money away from more important investments, for instance, or if any are to be shelved/delayed due to this.”

Already, implementation of the value added tax has been delayed indefinitely, but the real test, according to Joshua Landis, director of the Center for Middle East Studies and associate professor at the University of Oklahoma, will come on April 1 when subsidies for heating fuel were supposed to be lifted.

“If the government cancels this, we can safely say that it is due to the mood of revolt in the Arab world,” said Landis.

Hirsh expects the short-term political gains to have long-term costs. “There is no doubt that these measures are targeted at short-term political survival,” he said. “They are dangerous in the sense that it is very difficult to reverse these policies, especially if there are no changes to living standards and an end to economic hardship. Syria is amongst the poorest countries in the region and there is still a big gap to fill before it is able to improve economic conditions.”

Looking to finance

In a secondary attempt to reduce the budget deficit and diversify its sources of finance, Syria last month announced its second ever offering of $63.9 million in treasury bonds.

Following the first bond offering in December, February’s offer was oversubscribed in a sign of optimism in the country’s political stability.

But with the sale only open to 14 local banks, and with yields well below the rate of inflation, analysts warned that such optimism is premature. For bonds to become a substantial source of funding, Hirsh said, the government will need to issue more and at longer maturities.

And, while traditionally opposed to dependence on foreign players, Syria may also need to consider extending the offer to foreign banks, a measure the International Monetary Fund (IMF) has long urged, if results are to have any real impact on treasury finance. Current yields will likely be unacceptably low to international investors, and recent events may make the prospect even less appealing.

“Although Syria’s government appears stable, this position may change very quickly given events elsewhere and Syria’s political and economic conditions,” said Hirsh. “Any international investor is likely to take this into account more than local banks.”

Selling debt locally may cover costs in the short term but, according to Landis, “it means little because the alternative for Syrian banks is to keep their money earning no interest… It is an expression of the lack of alternatives,” he said. “The below market interest rates make clear that Syria does not yet have a free market, which will have to be encouraged to up foreign investment.”

“Although Syria’s government appears stable, this may change very quickly given Syria’s condition”

The youth

If there is one thing that Arab governments should have learned by recent events, it is that securing youth employment and satisfaction is a priority. There is little doubt the protests are primarily linked to a failure of the country to secure jobs and growth. In many ways more so than elsewhere, the demands are particularly urgent. Amid falling oil revenues, the population has soared to 22 million since the mid-1980s. Birth rates are skyrocketing at a 2.7 percent annual increase. Syria already has one of the highest youth unemployment rates in the world and with 50 percent of the population under 30 and over 30 percent under 14, it is only likely to get worse, presenting a potentially disastrous youth unemployment bubble unless jobs can be created.

Aside from curbing population growth rates, the real challenge to this is encouraging the private sector and increasing youth job skills.

While the Syrian government has engaged in initiatives to promote entrepreneurship and business development, the 2010 “Silatech Index Report: Voices of Young Arabs” found that despite the growing need to shift a greater share of the country’s workforce from public sector to private sector jobs, 54 percent of young Syrians say they would still prefer to work for the government at a time when public sector jobs are increasingly scarce.

As a result, increasing private investment and job opportunities, has topped the government’s to-do list for the last two ‘Five Year Plans,’ but private investors still grumble about significant obstacles to entering the market. Despite the introduction of foreign banks, relaxed bans on trade and the opening of the Damascus Stock Exchange, private investment has remained low in the face of poor competitiveness ratings, inefficient industry, unsupportive legal frameworks and the perception of dogged corruption, not to mention the renewal of United States sanctions.

As of last year, foreign direct investment was expected to reach just $2.5 billion. Infrastructure investments, especially funds targeting agriculture, are going ahead, but without a specific timeline, such as the recently announced $2.1 billion irrigation project to pump 1.25 billion cubic meters of water from the Tigris to irrigate some 200,000 hectares (2,000 square kilometers) of land in the northeastern governorate of Hassakeh, the home of the country’s struggling drought-afflicted oil, gas, wheat and cotton industries.

Half way up and half way down

While investment plans plod along, the fundamental problems with the economy-first model are emerging in sharp relief. Stuck half way between a free-market economy and national socialism, Syria risks losing on both political and economic fronts by sitting on the fence.

“I think the economic reforms that Syria has started are important,” said Hirsh. “Nonetheless, it is still very slow and it is very difficult to see how the political class will handle the economic changes without any major political reforms or changes… At least, Syrians have to be prepared for major, and in some cases painful, re-adjustments to their way of life.”

As in Egypt, said Hirsch, this may provoke social and civil unrest. “Not everyone will be a winner through this process.”

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Feature

Eyes for the world

by Executive Editors
written by Executive Editors

If it weren’t for people like Malath Aumran, the video showing Syrians mourning over the bloody corpses of demonstrators killed by state security forces in Sanamein would never have reached the outside world. Nor would detailed documentation of demonstrations, arrests, injuries and deaths end up on the breakfast table in morning newspapers around the globe. If the Internet is the information highway, Aumran and his ilk are the on-ramps.

Anti-regime demonstrators are up against a litany of barriers, within and without: a brutal and pervasive secret police force, a stunted political culture and the international community’s near-universal dread of an unstable Syria were it freed from the iron grip of Bashar al-Assad’s regime. And for the most part the press, too, have abandoned those on Syria’s streets; most notably Al Jazeera, the ‘voice of the people’ during the Tunisian, Egyptian and Libyan revolutions, has — when it gives Syria coverage at all — increasingly settled for interviews with pro-government officials and police, and reports disproportionately from pro-Assad rallies.

In their stead, citizen journalists like Aumran are putting their lives in danger to present a different reality of Syria to the world.

The birth of activism

Aumran is a fitting representation of what can happen when a social and political consciousness converges with the power of the Internet. Today, he is a cyber activist working under a pseudonym, but not long ago he was, in his own words, “like any other Syrian.”

“I thought that we had the best country, the best regime, and all of that,” he said. It was in 2006 that his worldview changed, with the honor killing of a friend who had been caught having sexual relations with a man her family disapproved of. The killer, her brother, was sentenced to just six months in prison, in accordance with Syria’s permissive laws surrounding honor crimes. It would be a moment that wed the future activist’s sense of social justice with alternative information sources, and which would lead him on a beeline toward the “Arab Spring.”

“My friend told me about this thing, the Internet,” he said. “I searched for information about honor killing and it was all there.” He became involved with Syrian women’s rights groups, while at the same time developing his awareness of the other issues that plagued his country. “I started to be aware that we had a bigger problem — not just women’s rights: human rights and political rights.”

Some friends accompanied Aumran on his ideological awakening and others were picked up along the way. Eventually, they had developed a small activist community. At this time he was still working under his real name, and in order to protect his identity Executive cannot reveal his specific activities.  “The problem is that our people are not political at all, especially our youth,” he explained. “Four decades of regime have taken them out of public life.”  So Aumran and his friends set out on a campaign to “poison their milk for them.” One of the primary, and most successful, initiatives was called “Proxy to your inbox.” In 2009, 10 people, including Aumran, sent an email out to their contacts with a link to a program called UltraSurf that facilitated users’ connections to a “proxy server,” an intermediary online gateway that allows users to bypass censorship restrictions. Thanks to the viral nature of the Internet, it quickly spread, and with it the Syrian Facebook community grew. Aumran isn’t sure of the exact number but, he said, the fact that the email has ended up back in his inbox nearly 100 times is an indication of its mileage.

“Before recently, our role was to organize protests, but the role now is to cover them [and] develop media attention”

The Arab Spring

Though cyber activism in Syria was making some headway by 2010, it wasn’t until the Tunisian uprising that the youth population awoke. “After Tunisia, hundreds of young people began to get Facebook accounts under nicknames and call for change,” Aumran said.

But the Syrian “day of rage” planned on Facebook for February 5, by whom Aumran doesn’t know, failed to gain popular support and was a step back for those who hoped Syria would follow Tunisia and Egypt’s example. The streets were even quieter than on a normal day, apart from the secret police milling about.

Again, on March 15, another Facebook-led “day of rage” passed without results. Aumran and other activists watched as the expectations of most were seemingly confirmed: President Bashar al-Assad’s state apparatus was untouchable. But the next day something changed. Small groups, usually linked together by the Internet but under no central organization, began to stage small but much more successful acts of civil disobedience than the prior attempts of pulling off an instant mass protest.

In Damascus, 27 families of political prisoners marched to the Ministry of Interior to demand the release of their relatives. Within minutes they were set upon by secret police. Some were beaten. The organizer of the protest, a human rights activist who asked to remain anonymous, told Executive that she saw “mothers beaten and pulled on the ground.” According to her, there were 45 confirmed arrests and 32 will face trial on criminal charges of “weakening national feelings,” which carries a one to three-year sentence in prison. One of those arrested was Tayeb Tezeni, a prominent Syrian philosopher and intellectual, though he was quickly released. “His arrest was a clear message that nobody is safe in this country,” the organizer said.

Within days, protests were popping up in Daraa, Homs, Banias, Damascus and Deir al-Zor. For devoted activists like Aumran, long at the forefront of anti-regime activity but suddenly observing a movement without any centralized control, the playbook had to be revisited. “Before recently, our role was to organize protests,” Aumran said. “But the role now is to cover them, to develop media attention and to articulate demands.”

As events unfold in Syria, the lack of a traditional journalistic presence in the country has made activists and amateur videographers crucial; despite having no coverage on the ground, satellite television news outlets like BBC and Al Jazeera were able to show, for example, an attack by security forces on the Omari Mosque in Daraa on the night of March 22. The video was posted on a social media site and quickly did the rounds on the Internet. The original videographer is not known.

The contribution of blogs, social media and YouTube in the movements that have swept the Arab world has in many ways been overblown. To dub Hosni Mubarak’s ouster the “Facebook Revolution” discredits the blood and sweat of those who camped for weeks in Tahrir Square far from the glow of a computer screen. But the Internet does provide activists the unique ability to synthesize and disseminate information in the midst of an otherwise disparate campaign.

For example, last year at this time, for the Kurdish holiday of Nowruz, there were major confrontations in Syria’s northeast between demonstrators and security forces. This year, expecting a repeat on March 20, Aumran enlisted the help of a Kurdish friend living abroad to mobilize people he knew on the ground to develop a system by which information could reach the outside world. This involved two people shooting video and taking pictures on the ground and two others transporting the memory cards to safe houses where they would be uploaded to the Internet.

Activists in the crowd had Turkish SIM cards — common in this area of Syria — to avoid monitoring by Syrian state security, as colleagues outside the country periodically called in for updates, which they then typed into emails and tweets, spreading them across the Internet and to their contacts with the press. In the end, however, demonstrators this year did not face the same resistance from the authorities and the holiday passed without major incident.

On March 22, as Aumran spoke with Executive, he tweeted information as it came to him from all over Syria. He found out the daughter of Sultan al-Attrash, a legendary figure in Syria’s struggle for independence, had been arrested. “This will backfire for them,” he said emphatically. From Daraa however, where on March 19 soldiers fired on protesters from helicopters and killed at least six, there was only silence; the two activists sent to the city from Damascus hadn’t been heard from since. In a way, the group is unorganized; it is an unofficial network of friends (and friends of friends) each doing their own part. “Everyone works individually, but we cooperate as a team,” one activist, who focuses on documenting human rights abuses and informing the press and non-governmental organizations, said. “Usually all of us do everything, but some are more able to do certain things than others so we try to refer that kind of work to him or her… for example when we need something related to Internet expertise we ask [Aumran].”

As the demonstrations have gained traction, the online community has continued to expand and to splinter. In one case, on the Facebook page of “The Syrian Revolution March 15,” a wall post (a publicly viewable message) suggested using alternative protest tactics, such as, for example, demonstrating at a soccer game.

One day later, March 18, in the town of Deir al-Zor a small group of fans-turned-flash-mob stormed the field at halftime calling for their rights. The Syrian National Television broadcast of the game suddenly went black, due to “technical difficulties.” It is unclear who organized them but the original inspiration for the idea is likely that seemingly innocuous wall post. According to the human rights activist, “Every day there is a new group calling for a new movement on Facebook.”

For activists calling for regime change, there is a long and dangerous road ahead. As Executive went to press, 61 had been confirmed killed in Daraa, dozens in Latakia and Sanamein and, since March 1, hundreds injured and arrested throughout the country. Even if it were possible it is yet unknown whether the majority of Syrians would support the overthrow of Bashar al-Assad’s regime. Nonetheless, the “Sturdy House That Assad Built,” as a Foreign Affairs article dubbed it in March, is clearly showing cracks. In large part due to Aumran and his fellow artisans of information, its flaws are the world’s to see.

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Editorial

You are on your own

by Yasser Akkaoui
written by Yasser Akkaoui

On March 29, I woke to the news that the heads of almost every Arab state and Iran were speaking out in support of Syrian President Bashar al-Assad, whose country had begun to feel the thaw of the “Arab Spring.”

Never before did the realpolitik of foreign policy seem so nakedly apparent: regional and international leaders spout rhetoric endlessly when the occasion suits, but their strategic interests are laid bare when they are threatened.

In every Arab country that has witnessed unrest, governing is led by the Ministry of the Interior and the Ministry of Foreign Affairs — not the ministries of economy, social works, health or education. Unsurprisingly, nothing in Arab leaders’ words of support for Assad portrayed any understanding of why the people were still uprising despite the hundreds of deaths, injuries and arrests.

When Muammar al-Qadhafi began attacking his own people in Libya, his only steadfast support came from Venezuela’s Hugo Chavez; indeed, the Arab League backed United Nations intervention against Qadhafi.

So, why the double standard? What is clear is that there are no enemies, only interests. And it is in the interest of the powerful that Assad stay in power.

For the Syrian in the street — demonstrating for the development of his country, for his dignity, for his freedom — is all the Arab world, indeed the entire world, against him? It would seem so. And yet for thousands, the agony of remaining voiceless outweighs the risks of speaking — and to speak out in Syria is to risk everything. 

While mass protests and the ensuing security crackdown have been brought to the world by videos posted on the Internet, there is a singular reality on the streets of Daraa, Damascus, Latakia, Aleppo and the rest.

They are alone.

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Economics & Policy

For your information

by Executive Editors
written by Executive Editors

The path to petroleum 

As the formation of a new government run by the former opposition draws ever nearer, some of the next government’s priorities are starting to take shape. Last month parliament speaker Nabih Berri said to As-Safir that “of course” oil and gas exploration would be amongst the cabinet’s priorities. “Oil exploration is the victim of the current political vacuum,” he said. Berri’s political ally and current caretaker Minister of Energy and Water Gebran Bassil also weighed in last month at a press conference where he announced that the ministry had signed a contract with the French consulting firm Beicip-Franlab to prepare for an eventual oil and gas exploration tender. The consulting firm will work with the Norwegian government and a Norwegian oil firm, PGS (which has conducted several three-dimensional seismic surveys in Lebanon’s offshore area) to finalize nearly 30 implementation decrees, of which 17 are needed before a bidding round can take place, according to advisors from the energy ministry. The ministry hopes to finalize all decrees by July and submit them to a new cabinet, with the assumption of course that there is a cabinet in place at that time. Beicip-Franlab will supervise technical aspects, the Norwegian Oil for Development program will oversee legal and institutional aspects, and PGS will be responsible for marketing and promotion. The ministry hopes that the first licensing round can take place by November with the start of exploration slated for November 2012.

Not so combustible after all

As cries for regime change echo across the Middle East and North Africa, Lebanon has been labeled one of the less likely countries in the region to experience widespread unrest. According to Bloomberg’s Combustibility Index for 20 countries in the MENA region, Lebanon is the seventh least prone to unrest. Countries are scored on a weighted basis from one to 100, with 100 being the most stable. The factors considered are gross domestic product per capita, median age, income inequality, access to information, unemployment and the “repression factor,” which accounts for 50 percent of the basket’s weight. The repression factor is derived from the size of the military per 1,000 persons, tenure of the current head of state, as well as whether his or her background is in the military, if the ruler commands the army, whether the current head of state came to power in a coup or assignation, total military spending and military spending as a percentage of GDP. Lebanon achieved a score of 56.6 while Qatar was deemed the most stable with a score of 78.4. Libya was the least stable at 27.3. 

Off the peak

Growth in the number of new cars on the road seems to have peaked in 2009, according to data released by the finance ministry last month showing car sales to have dropped in 2010 from their historical high the previous year. Last year saw 100,354 more cars hit Lebanon’s traffic-jammed roads, constituting a 7.7 percent decline on 2009’s high of 108,739. Used car imports accounted for 60 percent of the total, down from 65 percent the previous year. However, the average prices per car rose last year to $14,216, from $13,446 in 2009 and constituted an estimated 3.7 percent of gross domestic product. Government revenue on car imports also declined marginally last year by 3 percent to hit $1.4 billion. Cars of German origin took the lion’s share of the total, at 37 percent of all vehicles, followed by cars from Japan (25 percent) and the United States (15 percent). Figures from the first two months of 2011, however, show a rebound may be in the works; car sales are up 7.2 percent on last year, with some 3,550 cars sold, according to the Association of Automobile Importers in Lebanon.

Legal action over telecoms

Private Lebanese telecommunications providers are taking their case to the courts once again in a renewed effort to prod the government into increasing the private sector’s share of the industry and adhering to an existing telecom law. Five local private sector firms — two data service providers and three Internet service providers — submitted an official notice to the telecom ministry on March 8, citing unfair practices within the ministry’s plan to introduce third generation (3G) services into the market through mobile operators Alfa and MTC without granting them licenses or frequencies, as reported by Executive last month. The companies also attempted to file a case with the Telecom Regulatory Authority (TRA) on March 14, as the present telecom law gives it the authority to be an arbitrator, but a board member rejected this. The TRA and Charbel Nahas, caretaker minister of telecommunications, were not available for comment. Nahas has stated in the past that he deems the telecom law to be inapplicable, a claim the TRA has rejected.

Still touting the tourist

Tourism has always been one of the mainstays of the Lebanese economy and this year will be no exception, predicts the World Travel and Tourism Council (WTTC), a private international tourism association. According to the WTTC, travel and tourism will directly contribute $3.77 billion to Lebanon’s gross domestic product this year, equivalent to an estimated 9.5 percent of the total. Employment in the industry will reach 122,000, representing some 9.1 percent of the job market. The association forecasts that when the indirect economic effects are taken into account the total contribution of travel and tourism to the country will reach $13.5 billion, or 33.8 percent of total economic activity this year, maintaining 431,700 jobs in Lebanon, or 32.2 percent of the workforce. The WTTC expects the sector to grow at an average rate of 4.3 percent per year in real terms between this year and 2021. Currently, Lebanon ranks 15th globally in its proportion of GDP to travel and tourism revenues.

Cost of living climbs

Living in Lebanon is becoming more expensive. Despite relatively low oil prices through 2010, data released by the official Central Administration for Statistics (CAS) last month showed that in 2010 the consumer price index (CPI), the main measure of inflation, rose 4.6 percent on the previous year. Many economists doubt the accuracy of official CPI figures, however, due to the fact that the baseline is set at December 2007, and the basket of goods and weights are questionable. Nonetheless, a large part of the rise was attributed to a global increase in food prices, which the United Nations Food Price index put at 24.6 percent year-on-year in 2010. Housing, water, electricity, gas and other fuels were the main driver of the index, making up 25.7 percent of the index’s total weighted average. The highest sub-category rise in average prices was clothing and footwear, which saw a striking 20.3 percent increase. By comparison, figures from the private Consultation and Research Institute (CRI) indicate that CPI in 2010 hit 6.2 percent. CRI uses 2004 as the base year and assigns a larger weight to food and beverages than the CAS.

Usual suspects in rich list

The much-heralded billionaire’s survey from Forbes was released last month for 2010 and showed no change in Lebanon’s richest class from the previous year. A total of six people living in Lebanon made the list, all from the Hariri and Mikati families. Current prime minister designate Najib Mikati and his brother Taha were ranked jointly in 409th place with $2.8 billion each, followed by Bahaa Hariri in 459th place with $2.5 billion. Caretaker Prime Minister Saad Hariri is ranked 595th with an estimated fortune of $2 billion. The total fortune of the Lebanon’s billionaires increased 3 percent in 2010 to $13.1 billion. Billionaires of Lebanese descent also made a good showing, starting with the richest man in the world, telecom tycoon Carlos Slim Helu, who has an estimated fortune of $74 billion, followed by Joseph and Moise Safra, who control banking operations in Brazil worth $11.4 billion and $2.4 billion respectively. The richest man in the Middle East, who has a Lebanese mother, was Saudi Prince Walid bin-Talal, with a fortune of $19.6 billion.

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Real estateSpecial Report

Karim Bassil

by Executive Editors
written by Executive Editors

Founder of BREI sarl Karim Bassil has been stirring up some heated debates in real estate. His Beirut Convivium series, which features seven developments and 14 buildings, deflates many of the common justifications other developers and architects site for building sky high towers that have drawn significant criticism from Beirutis. Bassil says he has been striving to “add value to the area [he] builds in,” and others are now following suit. He says he aims to put the social value of his projects above their commercial price tag. Executive sat down with him to find out more about his unique perspective on real estate.

  • What is your development philosophy?

If I don’t feel I am adding value to an area, I don’t build. I have always had a conviction to improve things around me. It’s not a question of one building with beautiful architecture; it’s a question of integration. For example, the architect for Convivium 6 in Gemmayze proposed a tower. Although the style of the tower was art deco, I refused it, because a building of that height just didn’t fit in well with the surrounding area. I asked him to spread out the building over the plot, to reduce its height to complement the other structures beside the project. I am happy with the result.

  • How do you feel about towers?

I would build a tower, but never in a historical area or a place where they don’t integrate well within the existing environment. I would never destroy my heritage. Building towers in historical areas destroys the charm. Towers do not exist on a human scale — they make you forget about the people living in the area. There is no interaction, and human interaction is part of what makes heritage, low-rise areas cultural places. Towers are too individualistic. They scream “me, me, me!” with no real community value. It becomes an ego game of who can build the highest tower, and it becomes like a trophy for some people, to show everyone that they built such a huge thing.

  • Many developers claim that they must build towers to benefit from their full exploitation factor, but your projects maximized your exploitation factor. How did you do that?

Instead of building higher, I build wider. For example, instead of constructing one big tower, you can build several shorter buildings with courtyards and common spaces in between. It’s not about building in an old style, but about integrating and creating convivial living. You can do something modern that integrates. For Convivium, I used between 80 and 100 percent of my exploitation factor, and they all sold out very fast. In cases where I sacrificed exploitation factor, it was often for green space.

  • Did you sacrifice any profit? What is the financial benefit of building this way?

I could’ve made a bit more money with towers, sure, but it would have been boring for me and for everyone living around it. Also, the speed at which I sold out the projects compensated for this, making for an acceptable IRR [internal rate of return]. When you get the money back faster, it’s like selling at a higher price over more time; the faster you regain your investment the more the money is worth: the sooner you can re-invest it in another project. Also, what I am doing is building a brand, which has value in the long run. When you have a reputation that people recognize you sell faster. I just saw proof of this with my last project, Edelweiss, which sold out 50 percent in two weeks.

  • Can you tell us about Edelweiss?

Oh, Edelweiss is fun. It will be the heart of the village in Faqra Club. When you go up to this area now, there is nowhere central to go. You ski and you just go to some restaurant. Edelweiss will fill this gap with a public space of small streets, shops, cafes, restaurants, cultural venues and plazas, and there will be some chalets between 100 and 120 square meters. I am modeling it after the village centers in Europe, like in Switzerland. I had the opportunity to build a complex of villas in an area near there, but I didn’t want to do that because it was too lonely and boring, doomed to become a ghost village without any real life happening there.

  • How did you first become inspired to do your projects?

Gemmayze has always inspired me, and thanks to Lady Cochrane we still have a few nice old houses left. She inspired me with what she preserved. Solidere also has a good example of a master plan, with certain areas set aside for low-rise districts that combine residential and commercial real estate.

  • Who is to blame for the destruction of Beirut’s architectural heritage?

We cannot blame the architects and developers for it; they are working within the law. If we had a stronger government with time to focus on urban development and setting strict regulations that block off certain historical areas, then it would be different. There are good people like Salim Warde, but they can’t advance much with the political situation in the country. It’s a shame what’s happening in Beirut.

  • How can this problem be solved? How have you tried to contribute through any of your projects?

I think these towers should be transferred to other areas; they are destroying the picture of Beirut and turning it into something completely incoherent. We need a good master plan [to be] imposed. The transfer of development rights referred to in the architectural heritage preservation draft law in Parliament is a good solution. With my projects, I didn’t save any old buildings, but I tried to preserve the character of the areas I built in.  I don’t claim my projects are beautiful, I just can say that they blend in. If everyone did that, then we’d have a much sexier Beirut.

  • What kind of feedback have you received about your projects?

Very mixed. Some developers and architects don’t like it, but in general, everyday people do. People felt that the apartments must be very expensive, and they were pleasantly surprised to find out that they were going at market price. As I said, the projects sold out fast, and mainly to people who are culturally refined, artistic, and sensitive to a certain type of values.

But there are also people who don’t share those values. These people want something straightforward. Heritage makes you dream, and my customers like this. I even had several customers from the Gulf who fell in love with it. I’m not selling sea views; I am selling the authentic charm of living in a neighborhood, a community.

  • Is anyone following in your footsteps?

Well I don’t know if I would put it that way, but yes, I think my projects had an impact. The high ceilings characteristic of traditional Lebanese houses are becoming very popular again, and high ceilings were an important aspect of my projects. There are some other developments coming up in a new old style… they realized there is a demand for this, and it matches with the areas where they are building.

  • Will we be seeing any more of your projects in Beirut?

I don’t think so. The market in Beirut is saturated and has so much oversupply. Developers in this city should really consider being a bit more reasonable and lowering their prices. Buying today and building at today’s prices would force you to sell at double, and I am not interested in that. I am going back to my roots in Jbeil to develop new projects for a different market that I cannot talk about right now. It will be innovative and exciting… but for now, it is still a secret.

  • Why do you continue to work as you do?

Because more money comes in the long run, and I am enjoying making a positive difference in the meantime. I love my job and money is not the only thing I care about. I am having fun.

“I don’t claim my projects are beautiful, I just can say that they blend in. If everyone did that, then we’d have a much sexier Beirut”

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Real estateSpecial Report

An unsustainable future

by Executive Editors
written by Executive Editors

Take the many woes afflicting Lebanon — electricity blackouts, traffic congestion, lack of parking, pollution, water shortages and overflowing sewers — and now amplify them; this is the scenario facing the city if steps are not taken to see that infrastructure is updated to cope with the number of new buildings being added to the grid in the next few years.

With approximately 350 residential buildings under construction in Beirut alone, the added demand on an already strained infrastructure grid will be too much for it to take, assuming, of course, that the buildings are inhabited. If this is the case, the consequences on the quality of life will resonate for everyone. While the real estate boom since 2005 has been heralded as a mark of Lebanon’s economic success, an urban disaster looms as a result of poor planning.

Real estate developers may have “Plan B” solutions to supply utilities to their buildings, like generators and private wells, but these solutions are costly, environmentally irresponsible and shortsighted.

Even if the private sector can solve utility supply deficiencies, they can do nothing about an overflow of sewage or a traffic jam outside the building’s front door. In such a scenario, the luxury living that developers are offering only extends to the end of the driveway.

And while Solidere may be the only area of the city where some sense of urban planning and infrastructure management has been executed, even the Beirut Central District will not be spared the overflow of traffic from the rest of the city, the increase in air and water pollution and the shortage of water supply.

The lack of basic services in the city will also distinguish the “haves” and the “have-nots”  much more clearly, adding fuel to the fire of a class conflict that already simmers beneath the surface of sectarian loyalties. Revolts in the streets over electricity cuts last summer come vividly to mind. With no government and a tense political situation, addressing the most basic factors that make a city livable has slipped off the list of priorities. What is worse is that while the civic infrastructure is already behind, the construction moves ever forward, increasing the gap the next government will need to cover once the cabinet is formed, and increasing the long-term social, physical and economic costs inflicted on the people.

“The private sector cares about its profits and portfolio, but they forget about the roads”

As if there weren’t enough cars already…

At present, the government has no plan to deal with the increase in the number of cars on Beirut’s roads that will result from urban growth and the high number of residential complexes going up in the city.

The only traffic initiative being successfully implemented is the Urban Transportation Development Program (UTDP), under the oversight of the Council of Development and Reconstruction. The program, which aims to increase both mobility and safety in Greater Beirut, includes the installation of bridges and tunnels, traffic lights, signage, camera surveillance for traffic violations and the opening of a Traffic Management Center. It also deals with parking, which Project Manager Elie Helou classified as “the number one issue slowing movement on the streets today.”

The program, which is two-thirds of the way finished, has taken years to implement since an initial study was done in 2001. After securing funds and approval, construction began in 2005. While it will decrease bottlenecks and increase the flow of traffic to some extent, Helou suggested that the improvements made will be compromised by the significant increase in the number of cars on the road, which already exceeds projections made in 2001.

“These mega-towers are not helping,” he said. “The private sector cares about its profits and portfolio, but they forget about the roads. They put in parking, but this doesn’t change the size of the road. We are looking at a big problem, especially in areas like Ashrafieh where the streets are very narrow.”

Helou anticipates that over the next five years, Beirut’s already terrible traffic problems will only get worse; peak times for traffic today are pushing closer to periods of three hours each, from what used to be between 7 and 9 in the morning and 5 to 7 at night. Helou estimates that the interim hours, when traffic moves freely, will slowly be filled in.

“People will be stuck driving between five to 10 kilometers per hour all day long in Beirut,” he predicted. “We’re not far from the choking point.”

According to Helou, the only sustainable solution to the city’s traffic problem would be to create more efficient forms of public transportation to reduce car use in the city.

“The government thinks that the only way to solve traffic is by adding more roads,” he said. “But this is also part of the problem. When you increase the number of roads, you increase demand, and it just becomes a vicious cycle.”

What is needed instead is a strategy for changing behavior by adopting measures that discourage cars, such as decreasing street parking or raising its price. However, this cannot be done until an efficient and affordable alternative mode of transportation is available.

At present, there is a project being financed by the Paris Regional Authority in coordination with the Municipality of Beirut to improve citizen mobility through public transportation options. Architectural and urban planning consultancy URBI won the bid for the project and is in the first stage of conducting studies.

“Beirut is not unique in its problems,” said Habib Debs, owner of URBI. “Other cities have had these problems and solved them. There is no excuse for the government not to learn from other cases and address these issues.”

“For each year that nothing is done, we are looking at an average decrease of one hour of electricity per day… Big towers stress the network heavily”

Grinding the grid

A shortage of electricity supply is already considered a sign of governmental impotence in Lebanon. “Today we are planning backwards for a demand in the past,” said Raymond Ghajar, senior adviser to the caretaker minister of energy and water. “We are already 1,000 megawatts behind.” Last June, the ministry proposed an energy policy under then Minister of Energy and Water Gebran Bassil that accounts for a large surge in demand, but it is not being implemented due to the collapse of the government.

“We had a clear recommendation plan to deal with the urgent issue of supplying energy for this summer,” Ghajar said, referring to a plan to bring power rental barges that would sit off the coast during the summer to provide additional electricity. Fast, reliable and cost efficient, the solution has proven effective in countries like Yemen, Iraq, Nigeria and Pakistan.

“We needed money from the government to launch the tenders and it was not even discussed in the Council of Ministers,” he said. Unable to address even the most imminent of electricity crises, the ministry is ill-positioned to take on the challenges being posed to the electricity grid in the coming two to three years, when many new buildings now under construction will be finished. Many of these are high-end, meaning they feature energy-guzzling digital and electronic features.

“There is no plan to bring the grid up to speed with the level of construction, at least not in the coming six months to one year,” said an executive in the cable business who requested anonymity. “There is no plan to figure out how to service the needs of all these new buildings,” he said, adding that his company is selling far more cables than the electricity grid can sustain, given that the grid was not build to supply the types of mega-structures that are increasingly coming online.

“For each year that nothing is done, we are looking at an average decrease of one hour of electricity per day,” Ghajar said. Because the rolling blackout schedule is different across the country, the decrease will be distributed unequally. “If the north and south are getting electricity for about 50 percent of the time, let’s say that they will be getting it for something more like 30 percent of the time,” he estimated. “Big towers stress the network heavily.”

Although buildings beyond a certain size are required by law to have their own transformers, they still add stress to the network via feeder cables, which are already operating at more than 100 percent of their intended capacity, by Ghajar’s estimation. “What most people do not realize is that electricity cut-offs during summer are usually due to an overload on the system, not a shortage of electricity,” he said.

Overloads lead to underground fires, a deterioration of electricity service when cables are being replaced, and an increase in technical losses (power that is lost without being used, usually caused by poor distribution infrastructure) for Electricité du Liban (EDL), Lebanon’s public electricity provider, which is already operating at a loss that is subsidized every year by the Ministry of Finance, adding to the public deficit. With recorded technical losses already nearly double the worldwide standard, additional losses will be difficult to sustain. And it does not help matters that of the country’s four operating power plants, two (Zouk, Jiyeh) are roughly 40 years old.

Generators are the private sector solution to the electricity deficit, but they are expensive and unhealthy to use. Electricity from a generator is at least three times more than the price per kilowatt of electricity charged by EDL, regardless of fuel price, according to Ghajar. “Five years ago, private electricity was cheaper than public electricity, but now diesel has become expensive,” he said.

Because the price of running the generator is pegged to the price of diesel, generator use is due to grow more expensive. Prices for private electricity can’t be regulated as legally speaking, the providers don’t exist. “To declare them illegal we have to have a substitute to provide the electricity the country needs, and we don’t have that,” he admitted.

Without the ability to police the business, rates for private electricity vary wildly within just a few kilometers, depending on how much the local population can afford to pay. Despite the fact that it is an illegal business, Ghajar estimates the revenue private electricity suppliers earned in 2010 in the range of $1.7 billion. This figure is set to grow to $4.5 billion by 2015.

Prices aside, generators pose significant health and environmental consequences. “Private generators are spewing diesel,” Ghajar said. With a coming increase in traffic and in generators, Beirut is looking at even higher levels of air pollution. A standard generator produces 25 to 30 pounds of nitrogen oxide per megawatt hour, which can damage lung tissue, increase susceptibility to respiratory infection and contribute to chronic lung diseases such as asthma, especially for children and the elderly.

Worst of all, because diesel exhaust contains other substances such as arsenic, benzene, formaldehyde and nickel, it poses a significant cancer risk. According to estimates issued by the National Air Toxics Assessment of the United States Environmental Protection Agency, cancer risk from exposure to diesel emissions is 10 times higher than the combined cancer risk from all other hazardous air pollutants. The California Air Resources Board estimates that operating an uncontrolled one-megawatt diesel generator for just 250 hours per year results in a 50 percent increase in cancer risk to residents living within one city block of the engine.

Beyond individual health risks, diesel emissions also contribute to smog, atmospheric haze, acid rain and climate change. Diesel-fueled generators are neither a safe nor cost effective solution to Lebanon’s electricity problems, and they are poisoning the population and the environment gradually over time.

Because the day when Lebanon will be able to switch to alternative power sources remains distant at best, the most practical short-term solution for reducing emissions from generators would be to enforce the installation of proper filtration systems. But because the generator business is illegal, even this form of minimal control on the behalf of public health and the environment would be impossible for the government to enforce.

Even small initiatives appear to be difficult to implement. Last year the ministry began a campaign to promote solar water heating, but this has fallen behind due to the country’s political impasse. Sustainable solutions for private electricity such as solar power generators are perfect for a country like Lebanon that gets approximately 10 months of sunshine per year, but their installation would have to be taken up by private initiative, as the public sector is paralyzed by more existential problems.

Operating an uncontrolled one-megawatt diesel generator for just 250 hours per year results in a 50 percent increase in cancer risk to residents living nearby

Thirsty towers

The Ministry of Energy and Water (MoEW) has prepared a National Water Sector Strategy (NWSS) based on population growth of 1.74 percent per year in Lebanon over the next 25 years. The estimates are based on growth trends in Lebanon over the last five years, meaning they don’t factor in the water demand of Beirut’s myriad high-rises that will be completed over the next four years. “We have taken things into consideration on a national level. Population growth has been accounted for, but not on a location by location level,” said Abdo Tayar, adviser to the MoEW. Tayar advised Executive to speak with the Beirut and Mount Lebanon Water Establishment, but they were not available for comment.

According to Tayar, for buildings with as many concentrated dwellings as some of those in the works in Beirut, public water supply may not have the capacity to service their needs. “They can apply for a private well if the need for it is justified,” he said. Licensing for a well is subject to strict regulations; what happens more often than not is that many developers choose to avoid the hassle and dig their own wells without licensing. On top of the fact that the water cannot be measured for efficient forecasting, the practice of illegal well drilling depletes the groundwater supply for everyone.

“Five-hundred-million cubic meters of water underground are replenished every year by nature, and we are already extracting more than that today,” said Tayar. With levels of water use already at unsustainable levels, 350 more buildings in Beirut will only make matters worse, adding to existing water shortages and to water salinity due to saltwater intrusion. This occurs when seawater enters fresh water aquifers due to changes in underground water pressure, a process exacerbated by extracting excessive groundwater from wells.

According to hydro-geologist Mark Saadeh, there is a wide range of consequences of increased water salinity. On a household level, salinized water causes corrosion of pipes, which leads to cracks and leaks in the walls through which pipes enter the house. It also prevents soap from lathering for daily washing, making cleaning of any kind much more difficult. More dramatically, if salinized water is used in construction to mix concrete, it could have disastrous consequences in the event of a future earthquake. As Beirut is an increasingly dense city sitting near the branch of the Yammouneh fault line, the region’s most volatile, which was responsible for the famous earthquake that struck the city in 1956, the concern is valid.

“Water mixed into concrete has to be as good as drinking water, which is rarely the case in Lebanon,” Saadeh said, explaining that the highly salinized water in Beirut can corrode the foundation of a building, thereby decreasing its stability.

What goes in…

“If each person in Lebanon today uses around 200 liters of water per day, then you can estimate that at least that same amount is being dumped across the coastline,” Saadeh said. The more people that Beirut accommodates, the more untreated sewage it will release onto the coastline. An increase in the level of coastal water pollution is a problem that has not received sufficient attention due to public misconceptions, even among the highly educated, about saltwater being able to dilute and sterilize wastewater to safe levels.

“One gram of human feces contains 10 million viruses and up to two million species of bacteria,” Saadeh said, explaining, “while salinity disinfects to a certain extent, it does not sterilize… and viruses do not respond to salinity.” Raw sewage outlets release directly onto the coast, and as the general volume of wastewater increases, so will the concentration of the sewage. “People are already fishing and swimming in it,” Saadeh said, pointing to sewage outpoints that dump wastewater into the sea on a daily basis just beside the luxury beach resorts of Movenpick and Riviera.

Worse than sewage at the beach, however, is sewage at the front door. There is already great pressure on the existing sewage network, meaning an even greater load will lead to overflowing sewage in the streets. This can already be seen when it rains and a sudden increase in pressure causes overflow of the combined rainwater and sewage systems.

Exposure to raw sewage can lead to a host of diseases transmitted by the fecal matter of humans, rats and other pests. Certain disease-causing microorganisms can enter through the nose, mouth and eyes, either through splashes from street-level or through inhalation as a fine mist or dust. An overflow of raw sewage can also contaminate the water supply network through groundwater, according to Saadeh.

While it is theoretically possible to update the network, doing so would be both costly and disruptive. Sewage pipes are laid beneath roadways, so each time pipes are changed or repaired, the  traffic must be stopped, sometimes for several days. Installing larger pipes can cost around $1 million per kilometer.

“It is more costly to lay down a new pipe like this than it is to build a road,” said a civil engineer who requested anonymity due to a conflict of interest with his position. He claims that bigger sewage pipes are needed all over the city, but the size of the roads dictate how big a pipe can be. Large buildings going up on narrow roads spell trouble.

Saadeh urges for the treatment of wastewater to ease the demand on water supply, and while many treatment plants have been constructed across Lebanon, often with help from foreign aid, they remain empty and idle. “We are missing about 80 percent of the staff required to run this utility efficiently,” the MoEW’s Tayar admitted. As usual, in Lebanon the problem is implementation of an idea.

“These issues need to be tackled on a long-term basis and the ministry cannot do this when it’s changing every four years,” said Saadeh. “It is chronically a problem of implementation, not of money, and as a result, foreign aid agencies have already begun to give up and leave,” he added, citing the examples of the Japanese International Cooperation Agency (JICA) and the Gesellschaft fur Internationale Zusammenarbeit (GIZ) — Japanese and German engines of foreign aid. “They see Lebanon as a hopeless case,” he said. “There are other countries where they can concentrate money and effort to make real changes.”

“This is a loss that affects everyone… whether they live in a luxury tower or not”

Quality of Life 

“Urban planning in Lebanon is always equated with infrastructure, but there are social, economic, political, environmental and cultural dimensions to consider as well,” said Mona Harb, assistant professor and coordinator for the Graduate Program in Urban Planning and Design at the American University of Beirut. “It is all of these together that make up quality of life.” As traffic, pollution, energy and water are set to become increasingly problematic, quality of life in Beirut is in obvious decline. “The municipality is barely keeping up infrastructure, and there is no reflection on what could be done. The Director General of Urbanism is not doing anything — not only in Beirut, but on a Lebanese level; people are ahead of the law, and it is always a matter of how to catch up instead of how to plan,” she said.

One of the most pressing issues contributing to the decreasing quality of life in the city is access to public pedestrian space. Without public spaces, the city is linked through a detached, private network, similar to that of the Gulf, said Harb. “This is a loss that affects everyone, regardless of whether they live in a luxury tower or not,” she said. “The more you experience the city by vehicle, the less interaction and social diversity you have.”

Harb points to this last point as problematic for long term sustainable civil peace of the country, given that social segregation leads to polarization and ignorance between different groups, which then sows a fertile ground for the type of hatred that spurs urban violence.

Instead of taking something away from the city, Harb suggests that developers recognize their power and responsibility toward the city with a plan to give something back. “It could be a small park, a level of parking, preserving a heritage house… there are many possibilities,” she said.

Because the strength of the private sector relies on the fact that the state of Lebanon is weak and inefficient, expecting the state to pick up the pieces when housing projects overload the infrastructure is irresponsible development. Before considering private gyms, swimming pools and spas, developers would be better suited to think about what the city really needs and take a wider perspective of the old adage that ‘location is everything.’ No matter how tall the tower, no one wants to live in a city where nothing works.

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Real estateSpecial Report

Under destruction

by Executive Editors
written by Executive Editors

Beirut’s architectural heritage is disappearing at an alarming rate due to skyrocketing land prices, shortsighted zoning, a lack of urban planning, a limited availability of empty plots and a dearth of government policy.

Illegal demolitions and efforts to destroy a house gradually over time are only marginally penalized while building codes and zoning laws simply add incentive to demolish. As a result, many fear that Beirut — once a glamourous destination oozing charm for the cosmopolitan jet set — is well on its way to becoming a chaotic city of shadowed streets and skyscrapers, lacking a congruent sense of history and identity.

The Ministry of Culture has been trying to find a solution for nearly a decade, but while some ground has been gained, far more has been lost. A 2007 draft law that merged the urgent need to preserve architectural heritage with private property interests was formed over the course of several years of intensive study, but it remains stalled in parliament while the situation on the street is fast deteriorating. As law-makers fail to grasp the important link between heritage and national identity, tourism, education and the economy, the skyline surges ever upward during a period of rapid urban growth.

The only legislation in Lebanon designed to protect the country’s heritage is severely outdated. The 1933 heritage preservation law, inherited from the French mandate era, only addresses structures constructed before 1700, which excludes Beirut’s mansions and villas built during the French mandate and Ottoman era, as well as its more contemporary architectural gems. A survey conducted in Clemenceau just 10 months ago for a private client by architectural urban planning consultancy group URBI revealed that approximately 50 percent of the area’s historical buildings are gone — the definition of ‘historical’ is difficult to pin down, but generally it applies to buildings ‘relevant to the Lebanese collective memory.’

A public record of how many buildings still remain across Beirut is not available, but of the 1,016 heritage buildings classified by a government study in 1995, experts estimate that 250 to 300 are left.

Many activists have lost hope, but there are still a few passionate pragmatists who believe it is possible to find a solution that serves both private and public interests. To formulate a solution that honors both sides of the divide requires understanding of how the city reached its present point, whose interests are at stake and how cultural heritage can be preserved in a way that considers private property rights and the progress of the economy.

[You can] make your profit off of the historical character of the district rather than a sea view

FAR too far

“When you want to protect an area, typically you set the FAR [floor-to-area ratio] equal to existing buildings, or less,” said Habib Debs, owner of URBI, an architectural and urban planning consultancy. “In Beirut, it is too late to do that.” FAR is at the heart of Beirut’s heritage problem. It determines exactly how much is allowed be built on a plot in a specific area. A FAR ratio of 1 means that on a plot size of 1,000 square meters (sqm), a developer could build one floor over the full surface of the land, two floors of 500 sqm each if only 50 percent of the plot were developed, and so on. FAR determines how high the exploitation factor is, and this determines the land’s market value.

Typically, in most cities of the world that have historic quarters, the FAR is set between 0.5 and 2. In Cairo and Istanbul, as in Paris and other European cities with historic quarters to preserve, the FAR is low in the old center and rises toward the periphery, concentrating towers in specific areas. In American cities that were built on flat open lands, the opposite is true. FAR is set high in the center and low at the periphery.

In the 1930’s, the French mandate set rules governing street alignment and the maximum height of buildings allowed in both Damascus and Beirut. The rules followed a model of urban planning common in countries across Europe, North Africa and the Mediterranean Middle East, following a deliberate strategy to prevent tall buildings from overshadowing a city’s historical areas.

The critical point where Lebanon’s urban planning went disastrously wrong was in the 1950’s, when the public authority opted to change the regulations inherited from the French mandate era. Michel Ecochard, a Chicago-educated urban planner, arbitrarily changed the zoning to follow the model of an American city. Ignoring Lebanon’s rich past and the fact that American cities rarely have low-level historical centers to respect, this modification set Beirut off on an illogical path that didn’t fully realize itself until the city’s developers began having the capital, knowledge and technology to build ‘up.’

Perhaps somewhat symbolically, the first two towers to grace Beirut, Burj al Murr and Burj Rizk, were both used as platforms for snipers firing onto the city throughout the civil war.

After the war, developers began merging plots to maximize the building height and profits. This new strategy resulted in higher towers with luxurious sea views. “We tried to point out that this is not the only strategy that makes a good profit,” said URBI’s Debs. “In a historic area, instead of merging plots to build high, you can construct a lower building with a wider surface area on each plot and make your profit off of the historical character of the district rather than a sea view that can only be guaranteed until the next tower pops up,” he added.

Land prices around the world are usually higher in heritage areas, making historic property a valuable resource. Ironically, in a city that had so many buildings spanning numerous architectural periods, their destruction has erased not only social, educational and cultural assets, but economic ones as well.

In 1995, Minister of Culture Michel Edde put together three commissions aimed at solving the heritage dilemma by studying different conservation aspects: economic, legal and architectural. At his request, a protection list of historical buildings was drafted. In all, 1,016 heritage buildings were counted, but only about 500 were kept on the list, because the aim of the study was to preserve heritage quarters, where there were clusters of historical buildings rather than isolated ones. After Edde’s term, the initiative fell off the rails. Prime Minister Rafiq Hariri bowed to private sector pressure and requested the list of buildings be reduced by half.

When the architectural commission, which had continued working under its own will, refused to revise the list on principle, the private company Khatib & Alami was commissioned to the task in 1998. The resulting study whittled the list down to 459 buildings; this remains a compass for the Ministry of Culture until today. A 1999 directive based on the study classified buildings according to a letter system of A, B, C, D and E, with “A” buildings being the most untouchable due to their high heritage value, and “D” and “E” buildings being easy to remove from the list and demolish. The list of buildings has never officially been made public.

Throughout the decades, Beirut’s zoning was modified numerous times. “Each time it was modified to allow more construction, more density, higher FAR… and it was always in the interest of the developers, owners and investors and never in the interest of the common good,” said Debs.

The building code was modified again as recently as 2005, resulting in a 20 to 25 percent increase in FAR, according to the estimations of Fadlallah Dagher, a renowned Lebanese architect and a long-time advocate for architectural heritage preservation. Although the change was presented as a way to build thicker walls for insulation and wider stairwells and elevators, the visible result on the market since 2005 shows markedly larger and taller buildings.

“[The change to the building code] was voted on by Parliament, but it was unofficially written by developers,” said Dagher. “We have a lot of politicians who deal in development, and this is key to understanding why, for more than 15 years, the government has shown no real interest in [creating] a master plan for the city,” he added. Ostensibly, that is why Parliament’s bi-partisan finance and budget committee has shot down a tax on vacant properties and has yet to approve increases in proposed capital gains and sales taxes on property.

 It does not help matters that successive cabinets  have not appointed a full-time head of the Director General of Urbanism (DGU) since 2006. Acting directors are appointed by ministers, and are thus accountable only to their boss and not to the general public.

Recent attempts to reign in zoning over specific areas, such as Gemmayze, have thus predictably failed. The DGU commissioned a study of Gemmayze in 2005 to survey the quarter’s remaining heritage buildings and determine what type of urban planning to apply to the area. Claiming a lack of funds, the DGU never commissioned a private company to execute the study. A circular that aimed at setting building heights to twice the width of the street, enforcing a building’s required distance from the sidewalk and forbidding plot merging was issued but never enforced. Building permits continue to be granted in Gemmayze and towers continue to rise, casting long shadows over the quarter’s future.

“[Property owners] beg for advice on how to get their building de-listed, or to simply just get rid of it”

A web of interests

Many developers and property owners in Beirut do not see in terms of houses but in terms of land. Given that high FARs of 4 and 5 are common in historic areas such as Gemmayze, Ashrafieh, Ain El Mreisseh, Zoqaq El Blat and Clemenceau, a heritage house simply gets in the way for most property owners.

“They regret having a palace, but I can understand them,” said Guillaume Boudisseau, a consultant at RAMCO Real Estate Advisers. “Regardless of how beautiful it may be, it does not translate into any tangible economic value.”

As a real estate consultant, he has seen many property owners who are intent on selling their plot at the same price per square meter as the nearest plot that stands empty. “I tell them that they have to adjust their price to the reality of having a house on it,” Boudisseau said, “but they insist on having an estimate of the empty land value; they beg for advice on how to get their building de-listed, or to simply just get rid of it.”

Some owners also grapple with old tenants paying frozen pre-1975 rent prices as a result of another policy quagmire, the 1992 Rent Act, which allows tenants to pay pre-Civil War prices on leases signed before 1975. Given next-to-nothing rents, buildings often fall into disrepair as landlords lack funds or the incentive to maintain their assets. Because owners cannot evict tenants without lengthy and costly legal proceedings, a developer who is willing to take this burden off their hands by buying the building and land is a dream come true.

For tenants, of course, it is more like a nightmare. Their sole recourse is to petition for the Ministry of Culture to intervene if the building is of any arguable historical or cultural value. As private property rights are prioritized over the public use of land in Lebanon, owners have the right to demand that the government compensate them should it rule that they cannot demolish their house to make a hefty profit like their neighbor.

Owners who wish to maintain their houses also face disincentives. Steep inheritance taxes make an old house a heavy burden to cast on one’s family. It is not even possible to donate the structure freely, as donations of private property are highly taxed. There are also licensing fees for renovation and municipal taxes to pay. Regardless of any good intentions, owners do not have preservation options that make financial sense. Instead of being rewarded for having a classified heritage house that is of great value to the nation’s culture and identity, they are penalized.

As for developers, increasing land values also decrease incentives for preservation. “Six or seven years ago it was still possible to buy an old building at $700 to $800 per square meter, renovate it up to modern standards for about $1,000 per square meter and then sell it off at a substantial profit,” said Karim Bassil, founder of BREI real estate developers. “Now, you can’t buy something historical for less than $2,000 to $2,500 per square meter, making pure renovation work financially illogical.”

Other developers argue that there is no clarity concerning heritage. “They keep on changing the policies and procedures,” said Housam Batal, owner of Premium Properties. Claiming to be unaware of the public outrage his company provoked when it demolished two art deco houses — one of which belonged to painter Aida Marini, famous for her renderings of Beirut during its golden age — to build the Sursock Yards, Batal insisted that he had no idea the buildings were of any cultural value. “They were two ugly, concrete buildings. The government should define specific elements and standards of ‘heritage’ so that we know what constitutes heritage and what does not,” he said. “We are demanding this as developers.”

While many developers frequently argue that because the Khatib & Alami study is not public there are no official guidelines for determining whether a house is classified or not before they purchase the lot, the Ministry of Culture points out that if it were to release the study listing classified houses, it could endanger many buildings; those listed in the “D” and “E” categories can be easily de-classified. Also, it is not difficult to find out if the building is classified or not. “They can always ask the Ministry of Culture… and then they will know the answer,” said caretaker Minister of Culture Salim Warde. 

On the municipal level, recent efforts have been made to cooperate with the Ministry of Culture on demolition permits and to purchase some of the city’s old houses. However, neither the municipality nor the ministry has sufficient funds to buy a large enough number of buildings to make a real impact.

The municipality did manage to save the 19th century mansions belonging to Lebanese luminaries Fayrouz and Bechara El-Khoury — both in Zoqaq El Blat — but two further houses of immense heritage value near Burj al Murr remain “out of budget,” according to Bouchra Itani, chairwoman of the municipality’s new Cultural Heritage Commission that was founded last year.

Although the Commission’s five members — described by Itani as a computer engineer, lawyer, businessman, writer and information technology engineer — are municipality staff, Itani hopes that a commission can be formed in the near future that includes heritage experts and members of cultural movements. “The municipality does not have enough resources for now,” Itani said. “And we cannot stop people from exercising their right to build as long as they are within the law.”

Legal limbo

To date, Lebanon is the only country in the Arab world without a modern heritage preservation law, even though its adoption is just a vote away. The first draft law arrived in Parliament four years ago, with an aim to fairly address the interests of all stakeholders. Proposed by former Minister of Culture Tarek Mitri in 2007 after carrying out extensive case studies, the draft law carefully outlined three major forms of incentive for architectural heritage preservation: compensation, fiscal measures and state support. The law detailed solutions to balance the interests of all stakeholders, including the private sector.

In the draft law’s present form, compensation to owners is dealt with through a method known as the transfer of development rights (TDR). Because land without a heritage structure on it has a high value in the market, TDR would allow the owner to transfer, or sell, 75 percent of the current value of the built-up area he theoretically could build on his land to a developer in another area. The developer would be able to add these additional square meters to his building, beyond the zoning limit to increase his FAR. This mechanism — which has been applied with success in Europe to save historical areas and in the US to create value for depressed areas — allows the owner to benefit financially from selling the virtual built-up area on his lot without losing the house or the property.

To provide incentive to renovate the house, possible fiscal measures in the law include a waiver of inheritance and rent taxes and a fixed period of exemption from municipal and building taxes. Renovation licenses would be waived, and a renovation fund set up by the government would be available to assist owners. Two percent of licensing fees for construction would be funneled back into the fund, with a new committee appointed to direct renovations.

The law regroups buildings by area, with an intention to preserve not individual buildings, but heritage clusters.

The law ran into political trouble, however, and was among 74 proposed pieces of legislation during the period between 2006 and 2008 that were quashed when Speaker Nabih Berri refused to convene Parliament and considered any law that was proposed during the period the product of an illegitimate government.

Late in 2008, the Minister of Culture at the time, Tammam Salam, was contacted by Berri with an inquiry about what could be done to resolve a problem facing one of his partisans who had purchased a property with a classified house on it and wanted it demolished. Salam took the opportunity to explain the draft law to Berri.

On his own initiative, Berri proposed having a member of Parliament from his March 8 coalition extract and re-launch the law from the legislative branch; Salam secured then-Prime Minister Fouad Siniora’s agreement and MP Ali Hassan Khalil reintroduced the law in Parliament. When Salam finished his term, it was still being discussed. In 2011, the law is still sitting in Parliament, waiting to be voted on. Caretaker Minister of Culture Salim Warde worked steadily to get it approved, until the government collapsed this January.

“There are people who don’t want the law to be passed,” Warde admitted to Executive. “But the problem is that [it] is misunderstood. It’s very fair; of that I am certain.” According to Nabil De Freige, an MP in support of the legislation, “a lot of owners don’t want this law because they think they will lose money, but they are wrong. They don’t trust the government, but if [it] is applied as intended, it is a just law that represents the best interest of everyone,” he explained. “We are running out of time to save our heritage. This law is the only practical solution.”

As a successful businessman himself, Warde has worked hard to make the law as considerate of the private sector as it is of patrimony. He has prepared modifications to it that he said “will make [it] even more fair for everyone,” but declined to comment further.

Responding to the impending crisis on the ground while the draft law wallowed in Parliament, the Ministry of Culture under Salim Warde, together with the Ministry of Interior and in cooperation with the Municipality of Beirut, took a major step in 2009 in granting the Ministry of Culture the power to veto demolition permits. Warde told Executive that as of February 2011, the demolition of 84 buildings had been halted. The ministry also set up a hotline (01 612299) to report buildings under threat of demolition.

These moves initially prompted some anger from developers, but many are now either biding their time and hoping that the next minister will be more lenient, or finding ways of coping with the new regulation method by incorporating old buildings fully or partially into their architectural layout. If they cannot destroy it, they build around it or on top of it, as there is no master plan for the city outside of Solidere in downtown.

“No matter how financially attractive the alternatives, destroying the whole building was not an option for us”

Hybrid hopes

“There are no incentives to preserve an old, unlisted building; the easiest and cheapest thing to do in the past was to just knock it down,” said Karim Saade, General Manager of Greenstone, a local development firm that brands itself with “responsible development.”

 In 2005, Greenstone began preparing a pioneering project, L’Armonial, on a plot of land in Ashrafieh that had an art nouveau building on it from the 1920s. Feeling it was their responsibility to find a solution that allowed for its preservation rather than its destruction, they devised a plan to merge the “L”-shaped facade of the building with a modern tower.

Preserving the facade cost at least $1 million, but compared to the cost of the entire project Saade felt it reasonable. “No matter how financially attractive the alternatives, destroying the whole building was not an option for us,” he reaffirmed.

Today, due to the recent demolition freeze, other developers have begun seeing such hybrid alternatives as the only solution to being able to build anything at all. The Aya Tower project in Mar Mikhael by Har Properties is a clear example. The developer initially intended to create a modern tower after demolishing three historical buildings: the Cinema Vendome and two old houses. After the demolition of the cinema provoked the ire of both civil society and the media, Philippe Tabet, vice president and general manager of Har Properties, recalled that “Minister Warde requested another solution.”

This involved finding a way to integrate the first third of the two remaining buildings into the tower, which is easier and more cost effective to do than preserving only the facade. The other two-thirds would be demolished. To his surprise, Tabet discovered that incorporating the older structures into the project was not as difficult, nor as costly, as he had assumed. The architects found a solution in just three months, it was still possible to dig deep for multiple levels of underground parking, and additional costs were but a fraction of the overall funding of the project. With a little creative planning, a small part of the area’s heritage was preserved.

“A modern project puts the house on display,” said Ziad Akl, architect of the controversial MENA Capital Ibrahim Sursock Residences project that includes two towers rising up in what used to be the garden around the famous Villa Linda Sursock. Akl reasons that building a tower around the house is better than demolishing it completely. Nonetheless, the project provoked strong criticism.

In what is an apparent conflict of interest, Akl is also a member of the Superior Council of Urbanism (Conseil Superieur de l’Urbanisme), which serves the DGU and is meant to regulate urban planning, a practice that strives to preserve coherent urban form to promote order in city planning. In defense of the idea to build towers around heritage houses in low-rise areas, Akl said “an incredible sense of disorder is part of what makes Beirut what it is.”

Despite the fact that he is consulting with Ziad Akl on a heritage project on May Ziede Street, long-time proponent of heritage projects, MP Walid Joumblatt, described the Ibrahim Sursock Residences to Executive as “an aberration.”

“People are tempted by profit more than preservation,” he said. “We have a government that is made up of businessmen, capitalists and developers.”

‘Old new’ is the new new

However, profit and heritage are not mutually exclusive, and market forces are beginning to adjust to the shock caused by the sharp decrease in the supply of old houses over the last six years. “Nostalgia has been created by the destruction, and whenever something is disappearing, you want it,” said Saade. “The trend is on.”

In Greenstone’s project, living in the heritage part of L’Armonial will carry a price premium, with a first floor apartment in the old part of the building costing more than an apartment in the tower. Confirming a possible trend, real estate broker Century21 stated that since last year the agency has experienced a significant increase in calls from buyers interested in purchasing or renting historical houses that are either renovated or in need of light renovation.

“It seems to be a growing segment of demand,” confirmed Radwan Sleiman, marketing and sales manager with Century 21 property brokers. Other developments are also beginning to go up in what has been coined an “old new” style.

“There is a demand for this style,” said Tanya Naamani, Marketing and Sales Director of Noor Gardens, which is erecting a low-rise French mandate style building in Solidere with a prestigious British architect. “The type of living this architecture accommodates is more about family and community, which reflects Lebanese culture,” Naamani said. “It’s a lifestyle choice.”

On the other end of the spectrum is the solution to serve public demand for heritage through commercial space. Some companies such as IBL, Bank Audi and Quantum Group have chosen to renovate Beirut villas for use as corporate offices.

While such benevolent sponsors are hard to come by, Bassim Halaby, chairman and chief executive officer of the developer Benchmark, has another idea. “Investment in preserving these cultural landmarks could be incentivized through the concept of linkage,” he said.

 In the US, where Halaby worked for many years, large companies sponsor cultural venues, such as museums, and in return get their name added to the structure for a number of years. “If we sponsor turning an old house into a museum, for example, it becomes the Benchmark Museum,” he explained. “There is a deficiency of land being used for cultural spaces in Beirut, and this could help solve the problem.”

Although the private sector is often demonized by civil society groups, profit motives could help to protect heritage. “People need to feel ownership of something to take care of it,” said Halaby. “Think of the ‘mybar’ idea,” he suggested, referring to a recent project where shares, and profits, of a bar and restaurant are distributed among stakeholders who put down a minimum of $2,000. “Why not apply that to cultural real estate? Instead of investors, get shareholders.”

Following the mybar logic, an old house would be converted into a public venue such as a gallery, hotel, restaurant or bar, and any profit would be shared between investors. Tabet from Har Properties, now a supporter of preserving heritage in the city, took the idea a step further. “Why not create a REIT [Real Estate Investment Trust] for cultural heritage houses?” he suggested, as a REIT would sell on the stock market like a security. A REIT composed of a group of heritage houses used for commercial purposes is a radical idea, but possible applications of the idea are worthy of exploration.

“Nostalgia has been created by the destruction… The trend is on”

Power of the people

There is a prevailing misconception in the real estate sector that the Lebanese public does not care about heritage. But the truth is that while there is an emerging segment of affluent Lebanese who are willing to pay a high price to protect and own their own piece of the past, the majority of Lebanese demanding the preservation of their country’s cultural heritage are everyday people without the means to purchase a luxury apartment. These people wish to share Beirut’s cultural icons, and they are not to be overlooked as stakeholders in the issue.

“Despite the efforts of so many ministers of culture and the media, the law is not drawing enough public support to make it a priority,” said former Minister of Culture Tarek Mitri. “If parliamentarians know that a law is important to the people, they will prioritize it,” he added, urging civil society to press the issue. Although many citizens are frustrated with the powerful reach of certain people in the private sector to block political action on issues of national concern, the past does provide a glimpse of civil society’s potential to make a difference.

In the 1990s the Association for Protecting Natural Sites and Old Buildings, commonly known as APSAD (L’Association pour la Protection des Sites et Anciennes Demeures), managed to stop the complete destruction of Beirut’s old downtown. “They destroyed 90 percent of the historical buildings in the city center and restored only 10 percent, after pressure from civil society,” said Lady Yvonne Sursock Cochrane, founder of APSAD.

The group reached out internationally to gain support for stopping the destruction of Beirut’s historical center.

“As a result of our efforts, a German film crew came and made a shocking documentary about the destruction of heritage that Solidere was doing, and [Rafiq] Hariri was not pleased with the negative publicity,” Cochrane said. According to her account, the media coverage is what prompted Hariri to preserve the 10 percent of historical buildings remaining in the Beirut Central District at that time. “He did a book about the preserved buildings, “Beirut Reborn.” He sent me a personal copy, with a note, ‘Are you happy now?’” she recalled.

In 2006, civil society activists protested 10 new tower projects in the area of Gemmayze. They formed a petition and collected 5,000 signatures, which Mitri presented to then-Prime Minister Fouad Siniora, who blocked the permits to build. Gemmayze was to be put under study to decide the type of development to be permitted from an urban planning perspective. Unfortunately, the July 2006 War broke the rhythm of the civil society effort, causing it to fail. Naturally, the war shifted civil society priorities to larger humanitarian issues, and the tower permits were signed once the attention had been turned elsewhere.

Today, new civil society groups are sprouting up in the city to protest the destruction of heritage. Save Beirut Heritage and the Association for the Protection of the Lebanese Heritage have been founded over the last year and a half and are collaborating with each other, using social media like Facebook and Youtube to reach out to supporters.

“There needs to be a more organized effort at staging civil actions that express the people’s disapproval of what is happening,” said BREI’s Bassil, who is happy to see so many young people interested in the issue, but is still waiting to see a professional movement that reaches effectively across all generations.

APSAD’s Sursock-Cochrane is concerned that the new groups “are not organized enough,” but she has invested her hopes in the stamina of the young generation to carry the issue forward in what she strongly suggests should be a united front. “The problem is that if each one wants to be the head of a small organization, there are too many… and the power is divided,” she said. “If everyone would work together, we could do more.”

According to Warde, even if he does not retain his post at the ministry after the formation of a new government, he will not stop trying to protect heritage buildings and applying pressure for new and effective legislation. “This momentum is reaching the masses,” he said. “I believe civil action can make a change. Whether I am in the ministry or not, I will continue this fight.”

With a logical law ready and waiting in Parliament, civil society must organize and push for a vote and, should it pass, its proper implementation. However, given the lessons of the past, turbulent political circumstances make vigilance all the more necessary.

Without the law’s passage, it is a choice between, at best, a city of hybrid structures that blends the old with the new, or at worst a graveyard of towers. Those responsible for making this choice are not only within the government but are also the citizens who  grant that government its power. No one can be blamed for the loss of heritage more than the Lebanese people, who have either not cared enough to stop it or who have given up hope.

No matter who they are — developers, politicians, owners, architects, investors and even activists — many have allowed this destruction by taking the easy way out, prioritizing their short-term individual interests over a truly national cause.

Diagnosing the architectural heritage issue as the symptom of a greater disease, Salam, the former culture minister, summarized: “Unfortunately, Lebanese people are very aggressive and ambitious on an individual level, but rarely on a collective level. If we go on like this… we will never advance anywhere.”

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