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Dialogue of the deaf

by Peter Grimsditch
written by Peter Grimsditch

 

 

The clash between journalists and the establishment in Turkey has descended into a dialogue of the deaf. The ruling Justice and Development Party (AKP) is noted for its dedicated acquiescence to George W. Bush’s philosophy that the press is either “for us, or against us.” On the other side of this Mexican standoff is an equally dedicated press — though printing credible stories with detailed evidence to support the narrative is not necessarily part of that dedication.

As the battle now stands, dozens of journalists are in jail, accused of taking part in a vast conspiracy — dubbed the Ergenekon case — to overthrow the government. The mere fact that they have been accused is enough for organizations like Amnesty International to declare that the government is guilty of a low blow and is intent on curbing press freedom; the possibility that some of them may actually have something to answer for does not arise.

An impartial referee would do well to remember that the accused are journalists, not paragons of virtue who can do no wrong. In March the government introduced a draft bill purportedly to protect journalists from prosecution over articles related to judicial investigations. Foul play again, according to Ercan Ipekçi, a spokesman for the Freedom for Journalists Platform, who says the law would effectively ban journalists from reporting on judicial investigations altogether. Well, not quite. 

The preamble to the draft law talks of a “clarification about the circumstances in which reporting on investigations would break the law,” meaning press campaigns demanding the release of suspects detained by the police would be illegal.

“This is a retreat from the current situation and is thus unacceptable,” said Ipekçi. Journalists might not like to admit it, but it is not their function to represent a defendant or to put up the arguments of a lawyer seeking a dismissal of the charges, in this or any other case.

Turkish journalists ought to have no interest in prejudicing the cases of those under arrest, so why would they want to try a case in print ahead of an actual hearing? Whether or not journalists should divulge early on the discovery of supposedly manufactured evidence underpinning the charges is a moot point; in a well-ordered system there is recourse for lawyers to present such findings to a judge for a timely ruling on alleged skulduggery by the police or prosecutors.

The Turkish judicial system is in a state of flux and reform, however, and defense lawyers in the Ergenekon case have not been able to follow this path. Even if the journalists do provide the only forum in which to raise issues of official impropriety, they do not earn many plaudits for persistence. Among the failings of a press that, with exceptions, frequently prevents detail from getting in the way of telling a good story, is that it has yet to learn the virtues of doggedly pursuing its investigations until it gets a result.

There have been many stories in the past few months alleging faked “evidence” adduced against some of the Ergenekon suspects. Yet once the initial flurry of excitement inherent in exposing such alleged corruption had subsided, there were few attempts to follow up and force the issue to a conclusion. Yesterday’s good story is tomorrow’s lining on the floor of the birdcage.

There may well be serious doubts about the freedom of the press in Turkey — certainly the AKP in general, and Prime Minister Recep Tayyip Erdogan in particular, are very sensitive to criticism and shower the press with a confetti of writs — but interfering in judicial trials is not the battleground on which to fight.

The answer is that if a complementary set of laws safeguarding defendants’ rights were in place, these questions of interfering in the judicial process wouldn’t arise. In the developed world, for the most part, there is a time limit for detaining suspects without charging them and subsequently providing defense lawyers with copies of the evidence against those who do face trial. But in Turkey, under certain circumstances, a suspect can be held in jail for up to 10 years without facing a charge. 

The government’s real sin may be its procrastination in reforming a judicial system still emerging from the dark ages. Instead of introducing contempt of court legislation, it might be better engaged in creating a judicial system that ought not to be held in contempt.

Peter Grimsditch is Executive’s Istanbul correspondent

 

 

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Returning to tyranny

by Samer Muscati
written by Samer Muscati

Eight years have passed since the United States-led invasion ended Saddam Hussein’s totalitarian reign and promised Iraq a democratically elected alternative respectful of its citizens’ rights.

Today, Iraqis are still waiting. The country is at a crossroads: either Iraq will embrace due process and take human rights protection seriously or it will risk reverting back to a police state. Recent developments are ominous.

Protests sweeping the Middle East have motivated thousands of Iraqis from all walks of life to demonstrate in cities across the country. They are making more modest demands than their regime-change-seeking neighbors; for now, they are content in calling for an end to a chronic lack of basic services and widespread corruption. But the democratically elected Iraqi government has reacted to these protests in much the same way as its despotic counterparts around the region.

While authorities in Erbil and Baghdad profess the right of citizens to take to the streets, in practice both governments have brutally suppressed protesters and journalists covering the events. Since February 16 security forces have killed at least 17 protesters across Iraq and injured more than 250. Thugs acting with tacit official approval stabbed peaceful protesters in Baghdad, while their Sulaymaniyah counterparts beat demonstrators and set their tents on fire. Security forces and their proxies in Kurdistan and Baghdad have raided media outlets and the offices of a prominent press freedom group, confiscating or destroying equipment and documents. They have attacked, arrested and threatened dozens of journalists, smashed cameras and confiscated memory cards.

Media workers are unsafe even away from the protests. After the nationwide February 25 protests, security forces arrested four journalists at a Baghdad restaurant, blindfolded and beat them and threatened them with torture during their subsequent interrogation. This latest crackdown does not come as a surprise to many Iraqis, especially minority groups and detainees, whose rights are routinely violated with impunity.

Iraq has made some progress by pulling itself away from the widespread civil strife that engulfed the country in 2006 and 2007. But there has been a price for this success: the central and regional governments have consolidated their power and rejected challenges to their authority, often with violence.

As journalists try to cover daily news of any kind they find themselves contending with emboldened Iraqi and Kurdish security forces and their image-conscious central and regional political leaders. The journalists face harassment, intimidation, arrest and often physical assault by state or political party security forces, and senior politicians are quick to sue journalists and their publications over unflattering articles. Impunity for some of the worst crimes have become all too common and cover-ups the norm.

Secret prisons are back

In February, Human Rights Watch uncovered a secret detention site in Baghdad, run by elite security forces answering to Prime Minister Nouri al-Maliki’s military office. At two other Baghdad facilities over the past year, forces belonging to two brigades outside the Defense Ministry’s chain of command have tortured, with complete impunity, detainees accused of terrorism. The prime minister also directly controls the Counter-Terrorism Service, which is subject to neither ministerial nor legislative oversight.

Iraqi authorities should hold these security forces accountable, along with the commanders who gave the orders or who looked away from the abuses their subalterns were committing. Iraqi leaders owe it to their citizens, who have endured enormous trauma through decades of political strife, wars, tyranny, sanctions and corruption that have destroyed much of their faith in effective governance. The United States and the United Kingdom claim to have created a society based on the rule of law and respect for human rights, while training security forces to respect those basic rights. But the response of those forces to recent demonstrations shows a different reality. Fundamental change is needed.

Iraq’s long transition to a democratic society largely depends on whether its central and regional governments will take actions matching their rhetoric and end the environment of impunity, protect human rights and hold accountable those who violate them.

 

Samer Muscati is a Middle East and North Africa researcher for Human Rights Watch

 

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Calming Bahrain’s two seas

by Mohamed El-Moctar
written by Mohamed El-Moctar

 

 

The military intervention in Bahrain by the Gulf Cooperation Council is most likely to further divide the country along sectarian lines and force the Bahraini crisis to spill over to the rest of the region. We have already heard the echoes from Iran, Iraq, Lebanon and elsewhere. The GCC military intervention is likely to be remembered as a miscalculated step, and it might bring about the very results that it is trying to prevent: the legitimizing of Iranian interference, the transformation of the Bahraini crisis from a political to a geopolitical problem, from a local disagreement to a regional standoff. Most immediately, the GCC interference is widening the gap between Bahraini Sunnis and Shia. 

Every Arab dictator has said that his country is not Tunisia, or Egypt. These declarations have in some cases proved self-delusions, as we have seen in Libya and Yemen. In Bahrain, however, the argument seems to be true. The sectarian divide has made the Bahrainis’ appeal for political reform risky and unpredictable. Unlike the Tunisian and Egyptian revolutions that brought people from the entire social spectrum together against the dictatorship, the Bahraini ‘revolution’ was born divisive.

While the Shia majority is determined more than ever to have more political and social equality, the Sunnis are adopting the monarchy as their political capital and their ultimate shield against potential Shia hegemony. Both sides have a legitimate point: the Bahraini Shia deserve long due equity, while the fear on the part of Bahraini Sunnis is grounded in the misfortunes of the Iraqi Sunnis. The GCC countries would have done better by facilitating a political compromise in Bahrain that provides more fairness to the Shia without victimizing the Sunnis.

Neither a genuine democracy with this deep a sectarian divide nor a British-style monarchy is possible, so long as the Sunnis fear that their hegemony will be replaced by one of a Shia variety. What is feasible in the short term is some sort of power sharing agreement and greater social justice. Bahrain can follow the Lebanese constitutional model, without necessarily making it constitutional: A Shia prime minister, for example, working side-by-side with the Sunni king, a more inclusive government that gives the Shia half of the cabinet, an elected parliament and so on. Moreover, affirmative action measures in the poor Shia areas are a must. These are possible steps that would defuse the unrest in Bahrain in the short term, and open the door for a constitutional monarchy in the long term.

The worst scenario is to make Bahrain a battlefield between Iran and Saudi Arabia — two countries divided by deep ideological hatred and geopolitical competition. There have been news reports on a discreet Turkish effort to solve the crisis in Bahrain. Turkish Prime Minister Recep Erdogan’s recent allusions to Bahrain in his speeches support the credibility of these reports. If this Turkish initiative is confirmed it would indeed be good news. Turkey has strong relations with the main regional and international players on the Bahraini scene: Iran, Saudi Arabia and the United States, and the Turks can be seen as honest brokers by the Bahraini Sunni and Shia alike.

Among the GCC countries, Qatar is also very active diplomatically, and not divided along a Sunni-Shia line. Like the Turks, the Qataris’ strong relation with Americans, Saudis and Iranians — even with Lebanon’s Hezbollah — is leverage that can allow them to play a constructive role in Bahrain. A Qatari-Turkish initiative that brings regional and international players on board can save Bahrain from its deep crisis. But this effort must be founded on the fact that change in Bahrain is inevitable.

Two principles should rule this change: offering the Bahraini Shia a fair share of the political capital and economic welfare, and reassuring the Bahraini Sunnis that they will not be victims of the coming change in the way the Iraqi Sunnis were following the American-led invasion. With these two principles in mind, the future of Bahrain can be built on a solid foundation, without sectarian fractures and foreign interferences.   

Mohamed El-Moctar is a research coordinator at the Qatar Foundation

 

 

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Economics & Policy

Pricey prospect for pipe dreams

by Sami Halabi
written by Sami Halabi

The rectangular glass walls of Fathi Chatila’s office inHamra make visitors feel much like they are in an aquarium without water; perhaps that is appropriate for a hydro-geologist concerned with Lebanon’swater woes. Chatila, also the editor-in-chief of Arab Water World magazine, has been leading a campaign aimed at changing the heavily-indebted Lebanese government’s expensive water ways since 1996. His efforts thus far have been somewhat in vain; since the 1970s, the focus in upgrading Lebanon’s decrepit water infrastructure has been on large-scale projects that require more long-term funding, not less.

For a fiscally stable country this is a viable option, but Lebanon is anything but; it currently maintains a public debt around one-and-a-half times its annual economic output. The country loses 1.8 percent of its gross domestic product — or around $433 million — per year from the cost of inaction on water infrastructure, according to the World Bank. That figure doesn’t include the estimated $87 million spent annually by the Lebanese on private water due to the lack of a clean and reliable supply at the tap. Despite these financial burdens, the most recent plan to improve Lebanon’s water distribution capabilities, which appears close to adoption, is by no means an exception to the rule of expensive tastes.

In December of last year the World Bank gave its first nod of approval to Lebanon’s water sector regarding what those at the bank call the Greater Beirut Water Supply Project (GBWSP), also known as the Awali Project.

Ultimately, the project plans to provide constant water supply to Baabda, Aley, parts of Metn and the Mount Lebanon region, as well as to an estimated 350,000 low-income residents of Southern Beirut’s suburbs. The total cost of the project would come to approximately $370 million, of which the World Bank would put up $200 million in loans, the Beirut and Mount Lebanon Water Establishment (BMLWE) some $140 million and the Lebanese government the rest.

In a country where the areas outside the capital city are often neglected by public services — such as proper roads and electricity — water infrastructure is the rural revenge on city folk. On average, residents of the city suffer the most during the summer season, when average water supply reaches just three hours per day, if that. The water deficit in 2008 was measured at between 40 to 50 million cubic meters (MCM) per year by the Councilfor Development and Reconstruction (CDR), a financially autonomous public institution, accountable only to the cabinet, which plans and implements development projects. Furthermore, the BMLWE estimates that by 2025 the deficit will rise to 100 MCM.

In the short term, the GBWSP seeks to provide 24-hour supply to the areas that have suffered most. The project plans to take 50 MCM of water from the Qaraoun reservoir in the Western Bekaa — one of only two surface water storage structures built in the country since the 1960s — fed by the Litani River. The water will then be rerouted to the Awali river, treated and then conveyed to Greater Beirut, where, according the Ministry of Energy and Water (MoEW), a new network is currently being built that will distribute it to consumers whose homes are to be fitted with new meters.

In total, 200,000 new meters will be installed as part of a pilot project to reshape Lebanon’s water tariff structure. Currently, households are charged a flat fee depending on location (from $156.5 in Beirut and Mount Lebanon to $117.4 in the Bekaa). This will give way to a volume trictariff in these areas, initially at a rate of $0.39 per cubic meter of water, before increasing to a level that allows water establishments to break even in their operational and maintenance costs, according to the MoEW’s draft National Water Sector Strategy. It should be noted that none of this will be possible without a cabinet decision to change tariffs and, as of Executive going to press, no cabinet had been formed.

Hitch in the road

The GBWSP seemed to be going smoothly until last month when the World Bank announced that it would “expand a study already in process on water quality issues to cover water availability and costs,” after a report was submitted to the bank’s board of executive directors by the Inspection Panel, a “bottom-up” accountability and recourse mechanism of the World Bank that allows residents to file complaints to the board. It was hydro-geologist Chatila who authored the initial 21-page complaint signed by around 50 residents of Greater Beirut and submitted to the panel last November under the title, “Presenting a Much Better Project: Damour Dam.”

“If they accept the panel’s report or not, there is a crime that is going to happen against the residents of Beirut and the country,” says Chatila, in reference to the GBWSP. “It makes no sense that the water of the Damour River, [which] is just a short distance from Beirut and is clean and cheaper, is not brought to the city.”

Chatila has been lobbying the government to implement the proposed Damour river dam since 1996, he says, when he conducted his own study on the feasibility of placing a dam some two kilometers east of the juncture where the Damour meets the Al Hammam River, which he then submitted to the relevant water authorities.

The idea of using the water in the Damour River to supply Greater Beirut was first rejected in 1970 when the Lebanese cabinet decided instead on the plan that has since  become the GBWSP, which would operate from April to October: the dry season. The decision came as a result of studies carried out by the Ministry of Energy and Water and the Litani River Authority, which stated that only 5 MCM (as opposed to Qaraoun’s 50 MCM) could be stored by a dam on the Damour River and called for the idea to be scrapped.

Again in 1998 the Ministry of Energy and Water reaffirmed this position in a letter sent to Chatila stating that after consulting with international experts, including those from Électricité de France and the United Nations Food and Agriculture Organization (FAO). It stated that “the geological formations are highly fissured and the solutions are very expensive and complicated, and even impossible, hence we decided to neglect it.”

After following up on the matter with FAO hydro-geologist Alain Guerre, Chatila claims he was told that the studies were only done at a location in the Beiteddine village of Al Samkaniyeh, not at the location much further downstream where he had performed his own research. Despite this, Chatila says he managed to lobby the cabinet, which eventually issued a decree on September 1, 1999, to compile the conditions for carrying out a feasibility study at the Damour river and to launch a tender a month later.

On September 8 the cabinet asked the CDR to commission Guerre and Chatila to work on the project. Chatila then claims that on September 25 Guerre received a phone call from Lebanon informing him that his life would be in danger if he came to Beirut. Guerre then sent an email to Chatila saying he would not be able to come to Lebanon for personal reasons. Guerre did not respond to a request to comment for this story.  

Later that same September, CDR commissioned Peter Rae of Harza Engineering, now Montgomery Watson Harza (MWH), to carry out a preliminary report, which was submitted in November 1999 and stated that a dam on the Damour river could store 63 MCM at a cost of $90 million, or 90 MCM at a cost $140 million, but two years would be needed for complete feasibility to be covered. According to Chatila, the CDR called in another firm by the name of Water Engineering, which considered the geological formations in the Damour River and the hydro-geological conditions prevailing in the area “ideal” for the formation of a reservoir.

Another CDR-commissioned study was then performed by Harza Engineering, which found that a 60 MCM dam was technically feasible.  In 2005, a war of words erupted in the press between Chatila and then president of the CDR Al Fadel Shalak, after which Chatila claimed he was physically forced out of the CDR offices.

In 2007 the CDR again asked Liban Consult to carry out feasibility studies on building a dam at the Damour River. Liban Consult announced in 2009 that it was possible to store 42 MCM for a cost of $90 million. “I will not question the results of the studies reached by Liban Consult for the Damour Dam, although I know that such results were pre-determined by CDR even before the feasibility studies took place,” reads the complaint letter authored by Chatila. “I will nevertheless accept all that has been mentioned by Liban Consult… although this study does not reflect the real storage conditions at the Damour river… The dam site I have located… will store over 90 MCM at a very low rate.” The CDR, the World Bank and Montgomery Watson Harza did not respond to repeated requests for comment.

“Damour is a viable option to look at and I don’t think it has been given a chance,” says Nadim Farajallah, professor of hydrology and water resources at the American University of Beirut (AUB).

What now?

Despite the fact that a cabinet decision to conduct a full feasibility study has been overlooked for years, the Damour dam project has not been written off entirely, as it was in the 1970s. The dam was included in the government’s 10-year water storage project, which expired last year, and the MoEW’s current draft National Water Sector Strategy, at a cost of $150 million to store 39 MCM. As for the GBWSP, the MoEW, which is tasked with executing the project, does not seem fazed by the latest concerns raised by the World Bank’s top decision-makers. 

“There are no implications on the project; as far as we are concerned we are moving and there is a board decision to grant this money,” says Randa Nimer, advisor to the Minister of Energy and Water. “If they decide to stop the funding, then fine, we will find another donor. At the end of the day let’s agree on one thing, this is not charity; we are paying interest.”

According to Nimer, the reason the ministry is pressing ahead is that, despite what potential other options such as Damour might hold, the GBWSP is the only project for Beirut that is ready to go; the potential alternatives don’t havea final design or funding lined up. “For Damour, the World Bank wanted a sophisticated environmental assessment, and it was not ready and would take at least a year.”

Initially, the ministry was looking at integrating the Damour project with the GBWSP but found that there would be no place to treatthe Damour water before it converged with water from Lake Qaraoun, which wouldalready be treated at Ouardaniyeh, explains Nimer. “With Damour you need to have your conveyor with raw water, treat it somewhere near Hazmieh and then distribute,” she says. As a result the projects will have to be done separately.

Nimer says she “refuses” to accept the premise that Damour should be compared to the GBWSP because, at the end of the day, Beirut will need the GBWSP, the Damour dam, as well as dams at Bisri and Janah, so whether the cost per cubic meter for one is greater than the other should not be a major concern [see table].

Moreover, she explains that the conveyor being built for the GBWSP will have a capacity of 150 MCM to take water from the planned Bisri dam, and adds that Damour is planning to be integrated with the Janah dam, which will bring somewhere from 30 to 40 MCM on its own. “If I need water for Beirut, from Awali, Damour and Bisri, you cannot tell me Damour is $2 [per cubic meter(CM)] and Awali is $3 [per CM], so don’t do Awali,” she says hypothetically. All of them are projects that the MoEW is “going to implement in the next five to 10 years so [let’s] not compare prices between these. This is what is available and what I can do to bring water to Beirut.”

Not just cost

But the objections of Chatila and the Greater Beirut residents do not stop at merely cost and timing. Many of the opponents of the GBWSP cite the historically bad water quality of Qaraoun reservoir and the upper Litani River as the main reason they do not want the water. Residents around the Qaraoun in the West Bekaa have refused to use its water, opting instead to spend some $50 million under the auspices of the Council for the South, another public, financially autonomous body, to bring water from the low-lying Zarqa spring to their areas.

Arif Dia, professor of hydrobiology at the Lebanese University and a specialist in water contamination, has conducted studies on the Qaraoun, Litani, Awali and Damour rivers. He confirms that the waters of the Qaraoun are problematic. “I did a biological study and really life cannot exist in the Qaraoun. It’s scary how dirty it is,” he says. “The Damour’s water is safer for sure. Between all of the rivers it’s the best.”

Chatila claims that the water from the Qaraoun contains trace elements and heavy metal remnants of carcinogenic minerals such as zinc and lead bromide, which cannot be treated. However, both Dia and AUB’s Farajallah deny this.  “You can remove anything from water; they drink from the Thames, don’t they?” said Farajallah. “But the more you treat the more you pay. If you have the money you have the solution.”

Dia adds: “You need advanced technology, and I doubt that this exists in Lebanon… You know, these issues need a lot of care and are delicate and I am doubtful we have the capability.”

According to Nimer, beginning in April of last year the ministry began conducting weekly tests on the water at several locations of the project, including the Qaraoun reservoir for 11 months, and cross-checked these results with those from the Litani River Authority once a month. “The result is that the water is good and does not contain carcinogenic materials,” she said.“When the panel came and started raising the issue of water quality because [of] Chatila… the World Bank requested that we conduct further analysis… We had a team who went there, collected samples and sent them to the environmentl aboratory of AUB,” she added, saying that the samples would be ready by the end of March and others would be taken a month later to cross check. “That will be it because with the heavy metals you don’t do tests regularly, because either you have them or you don’t. I am not paying any more money on that issue.”

Whether or not the water is suitable for consumption or cost-effective treatment is one thing, but what’s certain is that the organs of the Lebanese government have not been able to identify the most cost-effective methods of managing the country’s water, in this case or in any other.

As a result the people have suffered, while millions of dollars have been paid to consultants for projects that were never started. Whether the GBWSP will suffer the same fate is a question of both time and money, but it alone will by no means solve the country’s chronic water problems.

For that to happen, Lebanon will need a cabinet to make a decision to pass a national water sector strategy, and it will have to stay in office long enough to implement it with its associated laws. Given the track record of ineffective cabinets and parliaments, the ambitions of the Lebanese water sector could very well end up washed out to sea, just like the valuable water in its rivers.

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“Old media” the unsung avenger

by Jonathan Wright
written by Jonathan Wright

 

 

“The revolution will not be televised”, sang Gil Scott-Heron in a 1970s proto-rap number in the wake of the United States civil rights movement. But when revolution broke out in Egypt in January, it was not only televised, it was tweeted, Facebooked, YouTubed, linked by email and splashed on the front page of newspapers at home and abroad.

Those far away in Europe and the United States, perhaps seeking to assert a Western contribution to the popular uprising, dubbed it another Facebook or Twitter revolution, as they had with Tunisia a few weeks earlier. Others emphasized the role of the Qatari satellite news channel Al Jazeera, which amplified the voices of the Egyptians protesting on the streets, carrying their words of defiance into living rooms and coffee shops across the Arab world.

Media academics are now picking through the electronic trail that the revolutionaries left behind them, trying to work out who was in touch with whom and which media was decisive in mobilizing the masses and winning over international public opinion. They should not ignore the old-technology media, which evolved incredibly in the latter years of Hosni Mubarak’s long reign. When he took office in 1981, the Egyptian state still had an iron grip on all information, through the three flagship mass-circulation daily newspapers nationalized in 1960 and the state broadcasting service, which monopolized television and dominated the radio airwaves. Alternative media in those days meant Radio Monte Carlo, the BBC and Voice Of America’s Arabic services, and a few weekly newspapers run by small opposition parties that were poorly produced and riddled with turgid rhetoric by polemicists. Egyptians with enough spare cash could buy foreign newspapers and magazines, which arrived several days late.

The media began to change in earnest around the turn of the millennium, as the price of satellite dishes and receivers dropped and Arab countries launched more satellites offering hundreds of television channels. Commercial interests, especially in Saudi Arabia and the Gulf, drove the boom and most of the fare on offer was popular culture, plus a heavy dose of Islamic televangelism. But news and current affairs found a niche too, especially after the September 11 attacks on the United States and the subsequent invasions of Afghanistan and Iraq. At about the same time, again under commercial pressures, the Egyptian government allowed independent satellite broadcasters to set up shop in Cairo. Their late-night talk shows, which delved deeper and deeper into the country’s internal affairs, stole millions of viewers from state television.

Egyptian businessmen were also pressing for licenses for independent newspapers, and the Mubarak regime relented, apparently confident that it had the country firmly under its thumb; the government’s attitude became one of indifference. Editor Ibrahim Eissa in al-Dostour and novelist Alaa el-Aswany in el-Shorouk attacked Mubarak and his family relentlessly week after week, usually without serious repercussions. In retrospect, Mubarak and his retinue may be regretting their tolerance. Independent media and the Internet, which the Egyptian government very rarely tried to censor, slowly eroded the prestige of the president and the people around him. State media lost its audience, depriving the government of what was traditionally a valuable propaganda tool.

Facebook clearly played its part too, especially in the last few years, creating online communities that rapidly evolved into solidarity on the street in the first few days of the uprising. But at one of the crucial moments of the revolution, a domestic television station helped to keep the protest movement alive. Millions watched talk show host Mona el-Shazli’s February 7 interview with Google executive and Internet activist Wael Ghonim on the evening he emerged from 11 days in detention. Ghonim put a modern human face on the young revolutionaries, whom the government had alternately dismissed as foreign agents or rabid Islamists. On February 12, the day after Mubarak lost power, even the state newspaper Al Ahram had to abandon the man it had loyally served for 30 years. “The People Overthrow the Regime” was the triumphal banner headline, a classic in the annals of turncoat journalism.

Today state media is in limbo, kept on life support by the inertia of the ruling military council, which has been reluctant to tamper with such longstanding institutions. But short of an improbable counter-revolution, it’s hard to imagine that any future Egyptian government will try to put the media genie back in the bottle.

Jonathan Wright is managing editor of Arab Media and Society

 

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Economics & Policy

Art with no admirers

by Saria Francis
written by Saria Francis

Tourism, that perennial contributor to Lebanon’s coffers, could be heading for a dry spell. The deteriorating domestic political situation coupled with widespread regional unrest has made for an arid start to the year, and things aren’t looking up for the rest of 2011.

“The closer we get to summer without a government, the more the tourism sector will be negatively affected since tourists won’t wait until the last moment to [decide] where to go,” said Marwan Mikhael, head of research at BLOMInvest Bank. 

Tourism’s direct contribution to Lebanon’s economy amounts to some 10 percent of annual gross domestic product; including indirect contributions (profits of tourism spent in other sectors of the economy), tourism amounts to around one third of the country’s economic output, according to the World Travel and Tourism Council (WTTC). Some 205,000 tourists came to Lebanon in the first two months of 2011, a drop of 12.7 percent from the 235,000 who arrived in the same month last year, Lebanon’s best to date.

“The number of tourists is declining even more due to several factors: political instability and what’s happening in the region,” Mikhael said. “Even though Lebanon is shielded from what’s happening — we won’t have the same revolution or unrest — tourists will be afraid anyhow.”

The effects of a less-than-stellar tourism season on economic output were palpable during the last economic trough after the 2006 war with Israel literally sent tourists fleeing; that year GDP growth reached just 0.6 percent. It since rebounded to peak at 9.3 percent in 2008 and dropped to 8.5 in 2009, the last year for which official GDP figures are available from the national accounts due to a lack of accurate and timely statistics.

Most estimates for 2010 suggested a 7.5 percent growth rate, with the decline sliding into 2011 as the coincident indicator, an average of eight weighted economic indicators published monthly basis by Banque du Liban (BDL), Lebanon’s central bank, fell 4.7 percent from November to January. Barclays Capital and Standard Chartered have revised their 2011 Lebanese GDP forecasts down to 5.5 percent, while BDL Governor Riad Salameh told the press he expected economic growth to slow to 5 percent.

Falling earnings and rising costs

Barclays Capital also indicated that the higher oil prices would increase the price of transfers to Electricité du Liban, which, combined with the government’s recent decision to lower gasoline import taxes by 57 percent, would chip away some 1.5 percent of GDP; these, among other factors, led Barclays to forecast an increase in the budget deficit to 8.2 percent of GDP this year from last year’s 7.5 percent. Standard Chartered expects the fiscal deficit to widen to 9.5 percent of GDP. Lebanon’s total debt topped $52.29 billion in January, up from $51.65 a year earlier, with domestic banks holding roughly 60 percent.

More bad news came as the Economist Intelligence Unit predicted Lebanon’s trade deficit to hit an all-time high this year of $13.75 billion. The country’s Higher Customs Council showed a $550 million year-to-year increase in Lebanon’s balance-of-trade deficit in the first two months of 2011, to $2.35 billion through February. Total exports fell 8.24 percent over the same period to $601 million, with a 20.24 percent jump in imports to $2.95 billion. Export decline will likely continue as Egypt, one of Lebanon’s main export markets, contracts.

Remittances, at an $8.2 billion all-time high last year according to the World Bank, are expected to decrease as regional unrest impacts Lebanese working abroad — particularly in Bahrain. The remittance decline may be mitigated somewhat, according to BLOMInvest’s Mikhael, by higher oil prices leading to increased earnings for Lebanese working in hydrocarbon exporting states.

Another pillar of Lebanon’s economy, the banking sector, saw the $128.92-billion consolidated balance sheet of commercial banks shed over $580.07 million in January. The dollarization rate of deposits is rising again, at 64.38 percent in January 2011, up from 63 percent a year earlier, indicating less faith in the local currency. Loans in the sector were still rising, however, with $30.08 billion in the market as of January, up from $24.66 billion a year earlier. 

The property sector is also slowing: in the first two months of 2011, sales transactions fell 18.7 percent year-on-year to 10,630, which included a 26.4 percent decrease in sales to foreigners. A report by The General Directorate of Land Registry and Cadastre shows that despite this dip, the total value of sales was only down 1.1 percent in comparison to this time last year.

Despite these poor indicators, Standard Chartered expects the Lebanese economy to demonstrate its distinctive flexibility. According to them, the economy’s basic structures ought to remain stable thanks to continued confidence in its banking system, and in the central bank’s ability to preserve the American dollar peg and follow an International Monetary Fund-accepted approach toward reducing the public debt-to-GDP ratio.

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Comment

A smiling police state

by Lauren Williams
written by Lauren Williams

 

 

Until late February Syria had remained, much to the bewilderment of headline-hungry newspaper editors, immune to revolutionary revolt.

When Tunisian-inspired unrest began rippling across the region, the regime had moved quickly to prevent the wave from rolling up on Syrian shores. The sophisticated public relations campaign was two-fold: international media was coveted to convey democratic, happy ideals of transparency and secularism; domestically, details of financial appeasement packages were heavily promoted.

First came the news that Syria was effectively reversing its decade-long policy of gradually cutting costly subsidies, announcing a $250 million dollar handout package to “combat poverty.” Then came an exquisitely placed interview in the Wall Street Journal with Bashar al-Assad — no local or Arabic media outlet has ever been granted such a privilege — where the president pledged a host of progressive reforms, including holding municipality elections and media liberties. (Many swiftly became suspicious of the lifting of the ban on Facebook and other networking sites, seeing it as designed for intelligence services to keep a closer watch on users.)

The Syrian government has recognized for some time that it was suffering somewhat of an image crisis, and last year employed German-based Keybrand PR agency to “re-brand” the government. Syrian Ali Mahmoud, who runs the agency, told local press the regime’s image was “a mess and they know it.”

Thus the stony-faced images of the president covering walls and billboards have been getting a face-lift, while long-lens paparazzi-style shots of the President sharing an intimate moment with his wife, Asma al-Assad, in Paris were leaked from the presidential palace to local media.

The Syrian state appears to have clocked on to something important; improving a regime’s international image is crucial to keeping one’s own house in order. Acceptance in Western circles gives anyone thinking of raising alarms over anti-democratic principles considerably less potency.

But there’s a problem. Those same newspapers used to peddle these messages keep catching on to unfortunate incidents, ramming home pervasive stereotypes that Syria is a closed and oppressive state with a brutal, feared and endemic secret police.

The case of 19-year-old blogger Tal al-Mallouhi, who was sentenced to five years in prison by a closed state security court on charges of espionage after being detained for nine months, made headlines. As did peaceful protesters beaten by secret service agents after staging vigils in support of protesters in Egypt and Libya.

Equally ineffective is expelling foreign journalists from the country and interrogating their professional contacts, given that Journalists have a habit of writing about it.

If there was one thing that oppressive regimes should learn from recent revolts, it is the power of the press. Brutal secret intelligence agents operating with apparent impunity cannot be kept secret anymore. But old habits die hard: since the first significant protests broke out in Syria in, of all places, the Southern city of Deraa, the state has reverted to its tried and tested means, opening fire on protesters, killing at least 61 and attempting to “secure” the area from the eyes and ears of the outside world while publicly claiming the protesters are a small group engaging in “acts of sabotage.” No one is buying that anymore. Killing your own people is a red line that has the ability to turn even the most politically apathetic or blind supporter (as Syrians are often labeled) into an opponent.

More social policy reform carrots followed those particular sticks, with a reduction in the length of compulsory military service, an announcement of the release of underage prisoners, dissolution of cabinet and rumors of an end to emergency law. But those carrots look damningly apologetic for a regime desperately trying to promote itself as a democratic ideal in the face of the unavoidable evidence.

Intriguingly, the Syrian state seemed to be aware of the problem. In January the British Syrian Society (BSS), which is headed by the First Lady’s father, Fawas Akhras, working with the Syrian ministries of tourism and the interior, launched a pilot project to “put a friendly face on Syrian policing” and change the perception of Syrian police from a “force” to a “service.” But If the Syrian state wants to fix its image problem, the challenge is to unravel a complex apparatus of fear and habit that infiltrates every level of society. The state has recognized the power of the media.

Now the question is whether it is ready, or able, to relinquish such control. But perhaps it is too little, too late.

Lauren Williams is a correspondent for The Guardian and is the former managing editor of Forward Magazine in Syria

 

 

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Banking & Finance

Money matters bulletin

by Executive Editors
written by Executive Editors

Regional stock market indices

Regional currency rates

UAE developers down at end 2010

Real estate firms in the United Arab Emirates suffered from poor earnings results in the fourth quarter of 2010. Abu Dhabi-based Aldar Properties reported a net loss of $3 billion in the quarter, accounting for its overall $3.07 billion loss for the year. Sorouh Real Estate, Abu Dhabi’s second largest developer by market value, also posted a net loss of $54.18 million compared to a net profit of $7.65 million a year earlier, as its revenues for the last quarter of 2010 fell 51 percent to $58.26 million. Moving to Dubai, Emaar Properties, UAE’s biggest developer by market value, registered a 62 percent decline in net income during the fourth quarter of 2010 to $74.6 million, down from $196.03 million a year earlier. Union Properties’ fourth quarter net loss increased as well, climbing fivefold to $211.8 million compared to a loss of $40.29 million registered in the same period last year, due to losses on property valuations.

Saudi oil production to rise 15.4 percent by 2020

Saudi Arabia’s government stated that local oil production increased significantly during December 2010 to a two–year high of 8.365 million barrels-per-day (bpd), recording a 1.3 percent increase since November. Separately, Business Monitor International (BMI) forecasted a 15.4 percent rise in Saudi oil production between 2010 and 2020, with output reaching 11.4 million bpd by 2020. BMI also expects oil consumption in the Kingdom to increase 40.1 percent during the same period, to 3.91 million bpd. In the near term, BMI believes local oil demand will climb from an estimated 2.79 million bpd in 2010 to 3.38 million per day in 2015, accounting for 38.8 percent of the Middle East’s regional oil demand.

The region’s idiosyncratic unemployment enigma

The number of unemployed in the Arab world is forecasted to reach 19 million by 2020, according to Kuwait-based think tank, Arab Planning Institute (API). The Middle East and North Africa region has been suffering from sluggish labor markets for some time, despite the fact that the workforce is generally young and shows 3.5 percent growth per year, relative to an average 3.1 percent population growth since the 1980s. This favorable employment dynamic has, however, not been used to benefit the region’s development and most MENA countries still lag behind in female employment rates, with less than 40 percent of women eligible for work employed in the labor force. North African countries, however, generally score better in this category, as up to 65 percent of the female population is in the labor force. Another factor contributing to high unemployment in the Arab world is the few job opportunities available for the educated. For instance, up to 50 percent of the unemployed in Tunisia and 44 percent in Morocco have secondary and tertiary degrees, according to API. Under these conditions, a large percentage of people eligible for work become discouraged, excluding themselves from the labor force. Unemployment rates in MENA countries are thus somewhat skewed and expected to remain in the range of 11 to 15 percent over the next decade.      

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Banking & Finance

Regional equity markets

by Executive Editors
written by Executive Editors

Beirut SE  

Current year high: 1,180.99    Current year low: 935.56

>  Review period: Closed Feb 28 at 936.99 Points                Period Change: -5.3%

More turmoil in the region, no cabinet and a real surprise in the United States going after a (non-listed) Lebanese bank for money laundering in a manner reminiscent of a B-movie: February was a month of few positives for Lebanese stock market investors. However, the BSE’s year-to-date performance of minus 3.6% is not too depressing, given the circumstances. Of the three largest stocks, developer Solidere closed the month in the mid $18s, Bank Audi came in at $7.11 and BLOM Bank at $9.14.

Amman SE 

 Current year high: 2,648.36                Current year low: 2,223.30

> Review period: Closed Feb 28 at 2251.73 Points               Period Change: -5.1%

With Libya and Yemen attracting the caravans of revolution-watching media, Jordan in February was not in the front row of international speculations over its future. The Amman Stock Exchange did not have an easy month, however. In the February review period, all sector indices pushed lower in tandem with the ASE general index, which is down 6% for 2011 so far. According to local media, a handful of investors took their cue from the popular protest handbook and staged a sit-in demanding dismissal of the head of the Jordan Securities Commission.

Abu Dhabi Exchange  

Current year high: 2,931.67                Current year low: 2,471.70

> Review period: Closed Feb 28 at 2,588.90 Points              Period Change: 0.1%

The richer emirate in the UAE was the only market in the GCC that did not drop in February. When seen across sectors, performance on the ADX was mixed; telecommunications ended the review period 4.3% higher while banking weakened 2.9%. But the real estate index suffered badly, dropping 19.9% and construction fell 12.2%. RAK Properties, Aldar Properties and Sorouh Real Estate all suffered double-digit share price losses, as did three financial stocks and Abu Dhabi Ship Building Co. Market cap leader Etisalat gained 3.9% but showed no progress on buying Zain.  

Dubai FM  

Current year high: 1,880.62                Current year low: 1,470.70

> Review period: Closed Feb 28 at 1410.70 Points               Period Change: -8.1%

Even directly after the Dubai World debt trauma, the DFM index did not slump as low as it did at the end of February 2011. With rampant talk of contagions from regional crisis spots, all DFM sector indices tended negative, with transport dropping 12% and real estate 13.3%. Utilities was the worst underperforming sector on the DFM for the review period, down 19.6%. Banking was a brighter spot, weakening only 1.8%. Market volatility in February reached 26.7%. On the year, the DFM index had given up 13.5% by Feb 28 close.

Kuwait SE  

Current year high: 7,575.00                Current year low: 6,319.70

> Review period: Closed Feb 24 at 6,481.10 Points  Period Change: -5.5%

The KSE benchmark index turned totally south in February. The regular market’s sector indices dropped on all fronts, led down by the investment index (-7.9%) and the industrial index (-7.7%). Bahrain’s Arab Insurance Group, which is cross-listed on the KSE, was also here a top gainer, up 21.1%. Shares in Mena Holding, a real estate firm with subsidiaries and projects in Egypt, lost more than 53%. The trading month in Kuwait was truncated Feb 24 as the country celebrated its 50th Independence Day.

Saudi Arabia SE  

Current year high: 6,929.40                Current year low: 5,538.72

> Review period: Closed Feb 28 at 5,941.63 Points              Period Change: -6.5%

Until Feb 14, the SASE Index stood firm but then the TASI fell nearly 700 points to the end of the month. For the year to date, this translated into a fall of 10.3%, the second worst year-to-date Gulf market performance after Dubai. Telecommunications and banking indices showed the weakest sector performances, falling 9.9% and 9% respectively. King Abdullah’s return from hospitalization abroad and his announcement of economic measures toward the end of the month had no visible positive impact.

Muscat SM  

Current year high: 7,027.32                Current year low: 6,058.11

> Review period: Closed Feb 28 at 6,142.42 Points                  Period Change: -10.2%

The MSM fell victim to political unrest and showed the worst drop of all GCC markets in February, wiping out the modest gains from January. Notably, the bourse’s average daily turnover was slightly higher than last month but losing stocks vastly outnumbered gainers. Volatility was substantial, at 21.5%. Within the MSM’s shock-induced downturn the banking sector fared worst, closing the month 18.6% lower. While there were no surprise gainers, investors in poultry specialist A’Saffa Food showed the biggest scare as the scrip fell 28.5%.

Bahrain Bourse  

Current year high: 1,605.98                Current year low: 1,361.19

> Review period: Closed Feb 28 at 1,430.77 Points              Period Change: -1.2%

It is an irony that will not escape careful observers: while Bahrain is being viewed as the GCC member with the greatest exposure to political protests and internal dissonance in Feb 2011, the BB remains the GCC exchange to drop the least in the year to date, at -0.1%. Even in February, market losses remained modest. However, turnover for the month fell about two thirds from January. Arab Insurance Group was the period’s best gainer, up 17.1%. Inovest, a real estate investment firm, slipped 39.6%.

Qatar SE  

Current year high: 9,242.63                Current year low: 6,647.18

> Review period: Closed Feb 28 at 7932.84 Points               Period Change: -9.3%

Like Saudi Arabia, Qatar was not a scene of unrest in February but like the TASI, the QSE Index took a steep downturn in the middle of the month, save for a brief respite on Feb 24. Owing to a share-price surge in early February, Masraf Al Rayan closed the month 8.5% up but the month’s unsuspected best gainer was Qatar Oman Investment Company. The bilateral company, with stake holdings by the two governments, gained 9%. Barwa Real Estate and National Leasing Holding Co underperformed the market with respective losses of 20.8% and 25.6%.

Tunis SE  

Current year high: 5,681.39                Current year low: 4,058.53

> Review period: Closed Sept 23 at 4,058.53 Points                            Period Change: -10.86%

The price of real freedom is never too high and even if the benchmark Tunindex of the TSE closed February 28 down 22.2% since the start of 2011 and 29.6% down from its year high in October 2010, it is far too early to open a cost-benefit calculation on the changes Tunisians initiated in January. The TSE, which had been closed for half a month until Jan 31, could easily have tumbled worse in Feb and there seems to be no historic benchmark for an average post-revolutionary stock market performance.    

Casablanca SE  

Current year high: 13,397.47              Current year low: 10,938.64

> Review period: Closed Feb 28 at 12,805.81 Points                              Period Change: 1.72%

Isn’t Casablanca in revolutionary North Africa? Political prospects on the region notwithstanding, Morocco’s benchmark MASI ended the review period with an upswing that made February into a typical V-month for its investors. The index lost 500 points in the third week of the month and regained them in the fourth. No trouble on the real estate front, it seemed, where Groupe Addoha climbed 5.9%.

Egypt SE  

Current year high: 7,603.04                Current year low: 5,647.00

> Review period: Closed at 5,467.00 Points (Jan 27)                        Period Change: N/A

The only events of record in the EGX during the month of February were postponements; there were several announcements that the bourse would reopen shortly, only to be rescinded before their implementation. The market, which recorded its last session close to date on January 27, has been shuttered for more than 20 regular sessions. The central bank kept pressure on the Egyptian Pound in check throughout Feb and banks returned to serving customers, but with increased controls on transfers.

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AdvertisingSpecial Report

Cooperate to elevate

by Executive Editors
written by Executive Editors

Over the years I’ve come to the conclusion that the ad industry has endured a lot of finger-pointing but not enough autopsy; a tendency for mudslinging instead of progress through cooperation.

Our region lags behind on so many practices prevalent in more mature and sophisticated markets, the per capita ad spending remains to be among the lowest across the globe and the level of confidence among marketers that advertising relates to growth remains timid.

However, the interesting aspect of this region is in its opportunities: it sits conveniently at the cross-roads of the rising East and the experienced West, with strong economic capabilities and young dynamic populations. Furthermore, the longer term positive effects of the current political change sweeping key Arab states will bring with it better governance, healthier business environments and hopefully a fairer distribution of wealth.

This begs the question of whether the advertising industry, with all its disciplines, will be able to lead and contribute to the process of change or will this industry remain hostage to the transactional cage built by lingering practices of the 1980s and the rising power of procurement, thereby leading to another “lost decade”?

Crafting the answer is the equal responsibility of all stakeholders.

The recent developments in data mining technology, as well as the transfer of frameworks from the science of operations research, has proven beyond a doubt that advertising can and will affect growth — and not just in consumer packaged-goods industries.

Concurrently, agency networks for the past few years have been showing solid commitment to the region by increasing equity holding in the local entities that carried their trademarks. That can only be good news, because if anything it means a “system upgrade” in various ways:

• Upgrade of agency services by transferring learning and experiences from mature markets while offering multinational corporations the ability to sync local activities with global.

• Upgrade of the financial practices and corporate governance, ushering-in higher levels of accountability with the implementation of global best-practice and tools.

• Upgrade of the terms that govern a client-agency relationship, ensuring a fine balance between trading strength and ideas that deliver business solutions.

As the agency reform takes shape it is acting as a catalyst for change. In order for it to take full swing, it requires an embrace from the other side of the spectrum: the marketing community. For advertising to contribute to growth it has to be measured; the good news is that agencies have developed the know-how to do that. Now it’s up to the marketers to increase investment in measuring every aspect of their activities and develop a much greater confidence in entrusting their agencies with access to such gems.

Eventually as we move toward an environment of “advertising that works,” marketers will want to measure value and not just efficiencies. The practice of advertising will become more focused on business results and less focused on the mundane marketing and advertising key performance indicators.

More importantly, when selecting their agency partners, marketers would want to differentiate between those that only offer a transactional solution and those that are capable of contributing to growth — this is key to the success of the partnership, as agencies that understand and contribute to growth cannot survive or operate on remuneration schemes prevalent in a trading/procurement environment that is focused on driving efficiencies in paid media.

Against all odds, and despite the fact that the industry still suffers from underdevelopment on a number of fronts, this region has always been credited for being entrepreneurial. In fact we’ve seen over the years many a high-profile marketer willing to experiment in unchartered territories.

In avoiding the fate of the “lost decade,” the advertising industry, with the participation of all its stakeholders, has the golden opportunity of experimenting with a reformed relationship that focuses on growth as the basis for all conversations.

If this proves to be successful — and it will — it carries the potential of being a global best practice exported out of this region.

SHADI KANDIL is managing director of OMD UAE

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