Economics & Policy

Executive insight – S2C

by Salem Osseiran
written by Salem Osseiran

 

As we take a long hard look at Lebanese society, we cannot help but grimace at the prevalent corruption. It is a painful reality that corruption is deeply entrenched in our country.

Bribery, nepotism and embezzlement are not simply the way we do business, nor only a matter of political economy; they are integrated into our social and cultural norms to the extent where we glorify the cunning Lebanese citizen who manipulates the system.

Upon asking a government employee about his income, the half-tragic, 

half-comedic response is that he usually classifies it under two categories: his salary and everything else he makes “on the side,” as if the latter is an inherent benefit that comes with the job.

In response to this national epidemic, the government, civil society and even the private sector are all playing a part in trying to find a cure. But what about our other major pillar of society? Where do the media find themselves in this process?  It isoften said that “the media is the mirror of society.” But when the reflection becomes this twisted, the media can no longer be content to simply reflect reality, to simply be a silent and passive witness to the bitter situation. In a country where the other three powers are struggling to counter corruption, it becomes the duty of the “fourth power” to institute positive change in order to enable a better society. 

Of course, one cannot deny the efforts made by some media outlets that are trying, through their investigative reporting, to act as the watchdog of democratic society. However, the strengths of the media in fighting corruption and bribery far exceed its mere reporting role. Indeed, in a society that condones rule breaking and short cuts, the media must act both as a critic and a conscience.

Obviously it should inform, but more importantly it should educate, inspire and call for collective action; corruption is omnipresent in Lebanon, but its hold on the norms of our society is not evenly matched by our awareness of the wide-ranging social, political and economic implications of this problem. Examples of these implications are numerous, from the discouragement of potential foreign investors to the exodus of qualified Lebanese professionals, who leave the country in droves because, though they have merit, they do not have waste to aid them in gaining meaningful employment. The result is a brain drain and a lack of investment that Lebanon can ill afford, either economically or socially.

The media has a role to play in helping to deter corruption by highlighting these negative outcomes and encouraging citizens to reflect on their behavior and its consequences. If it chose to do so, the media could assume its proper place as a powerful tool, not only for greater transparency, but also for increasing our understanding of the acuteness of the problem.

With the rising trend in online users, another approach for the media is to tap into this community when discussing corruption, especially considering the need to connect with the younger generation. Examples abound of anti-corruption campaigns that turn the public into active participants in reporting instances of corruption, debating the causes, and solving the problem.

Such a network, if properly mobilized and mediatized, would prompt stronger public opposition to corruption as more and more citizens join in. More importantly, this cooperative action system establishes public ownership of these anti-corruption efforts.

By rolling out similar initiatives, the media could provide the public space necessary to debate the issue of corrupt practices, while explaining to citizens how their decisions about corruption are influencing issues ranging from the amount of money in their pocket to their general safety. This effort would also entail building strategic coalitions and partnerships with civil society, government and the private sector.

The media’s presence in every household in Lebanon grants it an unrivalled ability to communicate with the public directly. But this capability entails a tacit agreement with the audience to move beyond mere sensationalism and reflect a sincere commitment to serve as a catalyst for change.

By informing and educating, the media can empower the people, ultimately creating the conditions necessary for bringing about fundamental change in our system of values. It is only then that we can have the courage to look at our reflection in the mirror once more.

 

 

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Real Estate

Q&A – Salvatore Saker

by Rayya Salem
written by Rayya Salem

Green Precast, a global precast-concrete manufacturer and contractor, offers a unique on-site automated construction procedure that builds by pouring concrete into pre-designed housing molds to make customized, one-piece frames that can be stacked. This process reduces human error and cuts construction time by over 50 percent and cost by between 5 and 30 per cent when  compared to conventional methods. The firm was founded in Australia 65 years ago and operates globally, with Lebanon being its most recent market entry. Executive spoke to Salvatore Saker, the company’s chief executive officer, about concrete and the Middle East’s construction industry.

E   Why is Green Precast investing in Lebanon now, and how much is the initial investment?

Lebanon became a strategic market for us after venturing into the Middle East [United Arab Emirates] about a year ago. We found [the Lebanese] extremely receptive to new construction methods. It helps because we spend less time explaining and more time on implementation. We have found a niche market that hardly anyone else is catering for.  When we first came to Lebanon, we didn’t realize the market size; we were working on investing between $5 million to $10 million and watching it grow organically. However, now our level of entry is going to be around a $20 million investment. We will be [building] thousands of residential units. Almost 80 percent of our [construction] products will be sold here.

E   What is the size of your upcoming project portfolio in Lebanon?

In the last two months, we have accumulated over 10 projects totaling over 2 million square meters of construction. More than 70 percent [of our portfolio] will be on the outskirts of Beirut; this is where the real demand is. At the moment, we expect 70 percent of construction to be catering to the residential market, 25 percent commercial — hotels, hospitals, universities, schools — and 5 percent industrial. In the last few years, we have been looking toward development so now we are looking to acquire our own land and develop upon it. We are looking at 31 sites in Lebanon. We have secured the land, are in the process of design, and will be delivering in six to eight months.

E    What makes your system different?

We benefit from value engineering. It creates a building that is almost four times more sustainable and superior in speed and quality than conventional precast methods. For example, we delivered a mock up 500square meter built up area dwelling within 24 hours, whereby it took other [conventional precast systems] two weeks to deliver.

We achieve this speed by minimizing the labor traditionally used for construction and combining our technology with heavy equipment. The module that comes out of the mold is manufactured using a pre-prepared steel cage of reinforcement and has all  [electrical and plumbing] conduits positioned and cast in. The procedure allows for four walls and a roof to be made in one pour with no joints between the parts.

E   So you rely on advanced technology rather than labor?

We use a lot less labor in our system, so o one Green Precast labor unit is equal to 10 workers in other firms because we don’t require a lot of labor to actually manufacture the product through our molding technology system.

E   Are there certain projects that this kind of system favors?

Our system is designed to cater for large-scale projects. The smallest project is 50,000 square meters of built up area, up to 10 million square meters per annum per market. That requires a lot of mobilization, manpower and preparation. We eliminate the margin of human error by providing [specialized molding] equipment.

E   What kind of cost savings are we talking about?

On average, on anything from 5,000 square meters upwards, if design and value engineering is done properly, you should come up with 5 to 10percent cost savings on the building. You can have access to the building within six months instead of it taking two to three years to complete. So for a commercial building, it means you have started earning money two years ahead of a conventional program, plus you have saved at least 15 percent on your holding cost.

Your construction method provides thermal insulation – is that relevant in the Middle East?

Thermal insulation is becoming a must. It applies for cold and hot weather. The cost to apply the thermal insulation, in our system, is absorbed into the construction cost, while you still save 5 to 10 percent on construction cost. On a 100,000 square meter [project], your savings can vary10 to 30 percent on the whole building, compared to conventional methods. We have proven studies that say, if you have external thermal insulation and combine it with an outer coating of [ultraviolet and infrared] reflector paint, you can save on 50 to 70 percent of air conditioner usage in Gulf countries. In Lebanon, you would hardly ever have to use AC if this was applied.

E   Is green construction a growing trend in the Middle East?

Dubai and Abu Dhabi have LEED and Estidama certification [incentives]. [In Lebanon] it should be mandatory in order to obtain a construction permit. Why do we have Lebanese groups and consultants implementing green technology outside Lebanon but not in their home country? However, today they are starting to zone different areas of Lebanon. We are already saying you can’t cut trees or pollute in certain areas. This is much tougher than requesting certification of LEED.

E   Do you predict labor and material costs will rise in the near future?

When demand eases, prices should drop, but labor costs haven’t dropped at all and in some areas [in the region] have increased. We do try to outsource most of our labor to third parties. We expect construction materials to always increase in price, but I don’t predict a rise in 2011.Hotspots like Saudi Arabia, Pakistan and India may drive up the cost of steel for neighboring countries. It was $1,700 per ton earlier this year and now it’s back to $2,700 per ton.

E   What is the main concern for those working in Lebanon’s construction industry?

When it comes to the quality of construction and materials, it’s up to every developer but there aren’t high standards on all levels. Also, the [poor] infrastructure in Lebanon is far more challenging than in other countries in the region. No other country in the Middle East has the mountains, snow, sea and the natural resources. It’s important that the right construction methods are used to preserve this natural wealth.

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Finance

Executive insight – Gazprom

by Executive Contributor
written by Executive Contributor

It is now an accepted fact that global warming is one of the most pressing threats facing the world today. The unusual weather patterns that result not only cause natural disasters and health hazards, they also impact production, productivity and efficiency. The industries affected by weather volatility are countless, from agriculture and construction to transport, energy, travel, leisure, retail and events.

The Intergovernmental Panel of Experts on Climate Change(IPCC) is well aware of the problem and of its consequences. Indeed, taking into account various demographic, technological and geopolitical hypotheses, the IPCC states in its recent report that the average increase in temperature on earth will be between 1.5° C and 4° C by 2100; a situation which is undoubtedly alarming.

In a world of increasing weather extremes, the question no longer is whether climate change is actually happening, but rather how can businesses protect themselves from it.

Weather derivatives were, as a result, created for the purpose of reducing the volatility of turnovers created by weather risk. The first weather derivatives deal was introduced in August 1996 in the context of a purchase of electric power from Aquila by Con Edison that was dependent on the August weather situation. Following that small introduction in the market, weather derivatives started to be traded in 1997 on the over-the-counter market and on the Chicago Mercantile Exchange (CME).

Weather derivatives are financial instruments that enable the management of risk associated with adverse weather conditions. There are different types of products: options, futures, swaps and more.

The products are based on a range of weather conditions in more than 47 cities in the United States, Europe, Canada, Australia and Asia, with hurricane products geared to nine US regions. Weather derivatives don’t take into account the damages but enable companies or individuals to hedge themselves according to their own predictions.

In fact, just like all the other options, weather derivatives are a sort of bet that you make on the upcoming weather according to your own expectations, based on the underlying temperature, cloudiness or the rainfall data. They are therefore potentially subject to individual speculation.

How does this product work? Let’s concentrate on the most commonly used product, the weather option. The trickiness in these products lies in their underlying asset, which is absolutely random and not scientifically predictable and very risky because of the controversy surrounding the climate change/global warming debate. This underlying asset has another issue as well: it is non-tradable, and thus inapplicable to the Black Scholes valuation model used for the other options. Therefore, weather options are valued either through the Burn analysis, which is based on historical data, or Monte Carlo-based statistical computer simulations.

Weather derivatives also enable protection against production cost increases. For example, a factory that uses some water in its process of production can protect itself against un favorable rainfall levels.

To trade weather options the following parameters must be determined:

• The contract type (call or put)

• The contract period

• The underlying index

• An official weather station from which the data is obtained

• The strike level

• The tick size

• The maximum payout (if there is any)

It is very similar to an insurance product. There are two types of weather options indices: “cooling degree day” (CDD) and “heating degree day” (HDD).

The number of CDDs on a single day is the difference of the daily average temperature from 65 degrees Fahrenheit. CDDs and HDDs are never negative. If the daily average temperature is less than 65° F, then the difference between the daily average temperature and 65° F is the number of HDDs. Over the course of a month, one might accumulate both CDDs and HDDs. The CME contracts therefore are based on the total number of HDDs or CDDs in the month.

Weather derivatives, now a multi-billion dollar industry, were originally created and traded in the US. Despite their use globally, these products have still not caught on in the Middle East and North Africa (MENA)region and no major contract has been launched in the area.

Catching on

Nevertheless, since weather derivatives are increasingly attracting energy companies, it has been said that the Organization of Petroleum Exporting Countries (OPEC) countries are starting to consider them in order to manage the increase in global demand resulting from the world’s changing weather conditions.

But the fact remains that energy companies are not the only ones concerned by weather shocks. The food sector is perhaps the most affected, through the impacts on agricultural production and decreasing supply coupled with increasing demand. It will therefore be important for African nations to consider weather derivatives to manage their food crises. In 2008, the World Bank launched a $1.2 billion financing facility to help developing countries in the region to overcome food shortages. This facility was meant to grant support mainly to Djibouti, Haiti, Liberia, Togo, Yemen, Malawi and Tajikistan by investing in multiple risk management tools.

In 2009, Malawi chose to use these funds to access the international weather derivatives market with the World Bank acting as an intermediary. In this context, Malawi was protecting its cereals production from projected harsh weather conditions. The new weather derivatives product created in June 2009 for Malawi was structured as an option based on a rain fall index. If rainfall drops under a certain level, a payout occurs; if rain fall doesn’t go beyond that certain level there is no payout. The amount was set to a maximum of $4.385 million as a start in order to test the market.

As African countries and the international weather derivatives market start becoming more familiar with each other, the World Bank is expecting more individual transactions of that type to occur in the region within the framework of global risk management strategies.

Eventually, the MENA region will have to embrace weather risk management tools in order to offset their weather correlated risks, particularly in the energy and food sectors.

Neyla Merheb is an associate in investment banking at Gazprombank-Invest

 

 

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Comment

The tale of two Ammans

by Peter Speetjens
written by Peter Speetjens

 

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

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

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

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

Based on 2008 figures, the 2010 Jordan Poverty Reportdetermined the national poverty level as below an income of $80 a month for anindividual, and below an income of $5,473 annually for an average family of 5.7members. The average annual family income in 2008 in Jordan was just $8,706.The report concluded that the number of people living in extreme poverty in2008 increased by 0.3 percentage points to 13.3 percent, despite the fact thatgross domestic product that year increased by no less than 7.6 percent,prompting economist Yusuf Mansur to conclude that “economic growth has nothingto do with poverty reduction.”

Purchasing power in the different spheres of spendingbecomes clear at a market in east Amman, where one Jordanian dinar (equal to$1.4) will buy four pairs of large underwear, six pairs of socks, 10 kiwis or10 kitchen knives “made in China”; for the same amount in west Amman one canbuy half a hamburger in an American fast food joint. The rift between east andwest, rich and poor, is perhaps more profound than between “real” Jordaniansand “Palestinian” Jordanians, given that these groups live on either side ofthe city’s socio-economic divide.

However, the divide between haves and have-nots is alsolinked between capital and country, said Nawaf Tell, head of the Center forStrategic Studies (CSS) at the Jordan University. A recent CSS study concludedthat the tribal regions of Ma’an in the south and Mafraq in the north of Jordanare by far the country’s poorest. For people living there, west Amman is likeanother planet, with even poor east Amman a step up the social ladder.According to Tell, the government’s development policy and constant focus onAmman is only exacerbating the divisions; the provinces have seen hardly anydevelopment and the north and south threaten to become a “chain of ghostcities” as the poor continue to migrate to the capital city.

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

PETER SPEETJENS is a Beirut-based journalist

 

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The Buzz

Year in Review – Middle East

by Executive Staff
written by Executive Staff

Dec28: The American oil company Noble Energy signed a letter of intent to provideIsrael with natural gas from the Tamar field, discovered in January 2009 and located some 90 kilometers offshore ofthe country’s northern coast. The field, which may run into Lebaneseterritorial water, can potentially produce up to $750 million worth of naturalgas annually, according to Noble.

Jan4: The world’s tallest building, theBurj Khalifa, officially opened in Dubai with a spectacular display of 10,000 fireworks, light beams, music andsound effects. Formerly known as the Burj Dubai, the 828 meter-high buildingwas renamed after the ruler of neighboring Abu Dhabi, who bailed outdebt-ridden Dubai at the end of 2009.

Jan9: In 2009, Abu Dhabi’s economymade a significant turnaround withjust 0.8 percent inflation, down from 14.8 percent in 2008, according to theStatistics Center of Abu Dhabi, the official body concerned with the collectionof statistical data in the emirate. A fall in commodity prices and the effectsof the global financial crisis were the primary reasons for the improvement,the center said.

Jan10: Sheikh Issa, the brother ofthe United Arab Emirates president, was acquitted on charges of torture, a year after a video obtained by the American TV networkABC showed Issa graphically torturing an Afghan grain dealer. According toIssa’s lawyer, “The court accepted our defense that the Sheikh was under theinfluence of drugs that left him unaware of his actions.”

Jan12: According to the US-based FreedomHouse Index, the Arab world is the most repressive region globally and several countries that had shown improvements inrecent years had regressed. Jordan, Bahrain and Yemen were downgraded from“partly free” to “not free” and 88 percent of Arab populations were deemed tolack basic rights. January 2010

Jan19: Mahmoud al-Mabhouh, an exiledHamas military commander who had been living in Syria for the past 20 years,was assassinated — by strangulationand electric shock — in a hotel room in Dubai. Israel refused to comment onallegations that it was behind the killing, and the UAE said the perpetratorshad already fled the country.

Jan20: According to the globalconsultancy firm Control Risks Crude, oil prices were expected to remainstable in 2010 after two years ofmarket fluctuations brought on by the global economic downturn, with barrelprices hovering around the $80 mark. “We called the price at $70 for 2009,which people said was crazy at the time, but which turned out to be pretty muchon tap,” said Jonathan Wood, global issues analyst at Control Risks.

Jan20: David Jackson, the CEO ofDubai Holding’s investment arm, Istithmar World, resigned and was replaced by the company’s chief investmentofficer, Andy Watson, as the government-owned conglomerate struggled torestructure an estimated $22 billion in debt.

Jan25: Standard & Poor’swithdrew its credit rating for the government-owned Dubai Holding CommercialOperations Group citing“insufficient information” and claiming that the group was “likely to bematerially weaker” than previously thought.

Jan25: Iran’s Central Bank governor,Mahmoud Bahmani, said Iran’s banking system had $48 billion innon-performing loans and was on the brink of a crisis. Meanwhile, Iranian President Mahmoud Ahmadinejad announcedthat three zeros would be knocked off the Iranian currency, but did not statewhen the measure — intended to help recover the rial’s depreciated value —would take place.

Jan25: Shortly after taking off fromBeirut in stormy weather, Ethiopian Airways Flight 409 crashed into theMediterranean, killing all 90 persons on board, including 51 Lebanese nationals, 31 Ethiopians andthe French ambassador’s wife. Media speculation abounded about the cause of theaccident — ranging from lightning and pilot error to sabotage and a bomb onboard.

Jan31: The Washington Post reported that the Obama administration wasquietly speeding up arms sales and upgrading defenses for oil terminals and keyinfrastructure in Saudi Arabia andother Persian Gulf allies, to thwart attacks by Iran. The initiatives wouldtriple the size of America’s forces in Saudi Arabia.

Feb1: Following the cessation of atwo-month long military campaign against Yemeni rebels along the border inwhich at least 133 Saudi troops were killed, Saudi Arabia’s deputy defenseminister, Khalid bin Sultan, said some 69 percent of Saudi soldiers areoverweight and that this posed a threat to “combat efficiency.” Bin Sultan himself underwent gastric bypass surgeryin the US to lose weight, the UPI newswire claimed.

Feb3: Ahead of scheduled Marchelections, an Iraqi appeals court overturned a ban on hundreds of candidatesfor suspected ties to the former Baath party. “The appeal court will look at their file after the election,” and ifthey find them to have links to Saddam’s outlawed Baath party, “they will beeliminated,” Hamdia al-Husseini, an electoral commission official, told Iraqistate TV.

Feb4: Loaded House, a traditionalEmirati restaurant in Dubai, introduced its newest entrée — a quarter-poundcamel burger, which comes loadedwith cheese and burger sauce and a side of fries, priced at $5.45. Therestaurant’s assistant manager claimed that the burger was fat andcholesterol-free, but declined to comment on how the outlet tenderized the toughmeat.

Feb7: Saudi Arabia’s Prince Turkial-Faisal smiled warmly and shook hands with Israeli Deputy Foreign MinisterDanny Ayalon at a securityconference in Munich, following a diplomatic spat about seating arrangementsfor a panel. Ayalon began his talk to the panel by saying that “arepresentative of a country with a lot of oil” had pressured the organizers toseparate the panel because he “did not want to sit with us.”

Feb8: The world’s tallest building, theBurj Khalifa in Dubai, was unexpectedly shut down  only a month after opening. Witnesses cited electrical problems with the towers’elevators and visitors told the media they were stranded on the skyscraper’sobservation deck for around 45 minutes as the lift faltered.February 2010

Feb15: Dubai’s police departmentpublished passport photos and CCTV footage of 11 alleged Mossad agents at the hotel where Hamas operative Mahmoudal-Mabhouh was assassinated in late January. The passports — six British, twoIrish, one French and one German — corresponded to the real names ofIsraeli-European dual citizens, some of whom contacted the press claiming thattheir identities had been stolen.

Feb15: A year after she was denied anentry visa for a tournament in Dubai, Emirati authorities permitted Israeliplayer Shahar Peer to play in the Dubai Tennis Championships, though she was restricted from speaking to thepress and could only travel from the hotel to the tournament site. Peer endedup beating Belgium’s Yanina Wickmayer, the world’s number 15.

Feb18: According to the STR GlobalConstruction Pipeline Report, Dubai reported the largest number of hotelrooms currently in the active pipeline and construction phase in the region, with 30,222 rooms and 15,563 rooms, respectively,followed by Abu Dhabi. Region-wide, a total of 456 hotels with 123,764 roomsare in the active pipeline, the report said.

Feb23: According to the KhaleejTimes, the UAE central banklifted restrictions on the percentage of profit at which bonus shares may bedistributed, overturning a 60percent restriction put into place just one week before. The paper reportedthat the cap was put into place in order to retain liquidity in the banks. Itwas removed when bankers suggested that allowing bonus shares to be distributedat an unlimited percentage of profits would expand the banks’ capital base.

Feb24: Saudi Prince and billionaireal Walid bin Talal, agreed to sell a 9.09 percent stake of his Rotana Media for$70 million to Rupert Murdoch’s News Corp, with an option to take this up to 18.18 percent. The move marked NewsCorp’s most significant investment in the Middle East.

March3: Nissan said it would recall50,000 vehicles across the Middle East due to faulty fuel gauges and brakepedals, as part of a worldwiderecall of some 50,000 automobiles. The recall affects several of the Japaneseautomaker’s pick up truck, sports utility vehicle and minivan models, rangingfrom 2005 to 2010. Nissan said no accidents had been reported and blamed aparts supplier for the defect.

March18: As global demand for oilincreased, the head of Libya’s delegation to the Organization of PetroleumExporting Countries (OPEC) said that the cartel’s ability to raise productionwas being stymied by Russia’s increased output, since the December inauguration of its EastSiberia-Pacific Ocean pipeline. OPEC would, however, not change output targetsin the hope that rising demand later in the year would absorb excessproduction.

March22: According to the FinancialTimes, the UAE was awaiting ananswer from the US in response to its request for new American-made JointStrike Fighter planes. The US said it would first have to review arms salesto the Gulf, in light of its policy of maintaining Israel’s “qualitativemilitary edge” in the region.

March22: Undersecretary of Abu Dhabi’sdepartment of economic development Mohammed Omar Abdullah told a pressconference that Abu Dhabi would not permit 100 percent foreign ownership ofcompanies outside existing free zones. However, the revised Companies Law, which is under review by the government,will relax foreign ownership rules, Abdullah said.

March22: In a notice sent to all foodestablishments, the Dubai municipality ordered restaurants to stop servingdishes with alcoholic content or risk a fine of $5,440, Abu Dhabi-based The National reported. Restaurant owners criticized the decision,which is based on a 2003 law. The Dubai Municipality retracted the ban one daylater, saying it was a misunderstanding.March 2010

March23: Dubai International Airport saw cargo volume rise by 26.7 percent to 171,707tons in February, and the number of passengers increase from last year by 22.6percent to 3.64 million. The announcement marked the ninth consecutive month ofdouble-digit passenger growth at Dubai airport. By comparison, 2009 saw anannual passenger increase of only 9.2 percent, up from a 4.6 percent rise in2008.

March24: Former director of the DubaiInternational Financial Center (DFIC) Omar bin Suleiman, who was removed fromoffice last November, was reportedly being detained and questioned by state security for alleged financial crimesamounting to some $13.6 million, according to the daily Gulf News. Suleiman hadnot yet been charged, and DIFC and public prosecution officials refused tocomment.

March24: United Kingdom ForeignMinister David Miliband announced his country would expel an unnamed Israelidiplomat, after investigations byBritain’s Serious Organized Crime Agency revealed “compelling reasons” tobelieve Israel was behind 12 forged British passports used in the Januaryassassination of a Hamas operative in Dubai.

March25: Investigators formallycharged and slapped a travel ban on Mansour bin Rajab, a Bahraini minister who stands accused of laundering money reportedlytotaling more than $30 million, according to the daily Gulf News. The move cametwo days after Bahrain’s king issued a formal decree dismissing bin Rajab.

March25: According to the local daily TheNational, the UAE was consideringnew legislation which would fine traffic violators based on their salaries. Head of public health and safety at the DubaiHealth Authority Ali al-Marzouqi told the paper: “If someone is earning 50,000dirhams or 60,000 dirhams a month, a few thousand dirhams worth of fines isnothing so it would not be fair to increase the amounts for everyone.”

April1: As oil prices reached their highest levels since October 2008 at $84 perbarrel, energy ministers concluded a two-day meeting of the InternationalEnergy Forum in Cancun, publishing a joint statement calling for greatertransparency to curb energy market volatility and strengthenedconsumer-producer dialogue.

April2: According to the Sisters’ ArabForum for Human Rights, a 13-year old Yemeni girl, Elham Assi, reportedlydied of injuries to her genitals four days after her marriage to a 23-year oldman. Authorities detained herhusband.

April8: Dubai police announced theyhad arrested Steven Moos, who posed as renowned plastic surgeon Dr. StevenHooping to lure patients into thebasement of his Dubai villa and performed surgical procedures on his kitchentable. Moos apparently used rudimentary tools and disposed of fat removed byliposuction in a cooking pot.

April11-15:  Several major opposition parties boycotted the firstmulti-party presidential, legislative and local elections held in Sudan in more than two decades, citing the logisticaldifficulties of holding fair elections in the war-torn south and Darfur. The USCarter Center and European Union observers concluded that the elections did notmeet international standards, while Russia concluded that the elections werefair by “African standards.”April 2010

April15: In the greatest disruption to air travel since 9/11, a massive cloud ofvolcanic ash from an erupted Icelandic volcano led much of Europe to shut downits airspace for four days. Canceled flights left thousands stranded across theMiddle East, with the Dubai-based Emirates Airlines estimating that 100,000passengers had been affected, amounting to $65 million in losses for thecarrier. The UAE responded by issuing 96-hour visas to passengers stranded atEmirati airports.

April18-21: According to eventorganizers, some 255 exhibitors from 36 countries and 800 company chiefexecutive officers participated in the Abu Dhabi Cityscape 2010, as well as regional and international visitors andinvestors. During the event, the Abu Dhabi-based developer Sorouh Real Estatesigned a $1 billion agreement with the Urban Planning Council to develop theWatani and Shamkha residential areas.

April19: Pan-Arab recruiter GulfTalentreported that Saudi Arabia and Qatar saw a rise in employment in the lastquarter of 2009 on the back ofgovernment spending and increased oil revenues, which helped to drive economicgrowth. Saudi Arabia’s employment rate rose 2.4 percent in the fourth quarterof 2009 with Qatar witnessing a 2.2 percent rise, according to the recruiter,while the UAE, Bahrain and Kuwait all suffered job losses.

April19: Spending on informationtechnology in the Middle East and North Africa (MENA) region was set to grow at12 percent in 2010, four times theglobal average of 3 percent growth, with total spending reaching $1.48 trillionthis year, according to a study conducted by telecom research firm IDC. Thestudy’s findings followed the announcement that Emirates IntegratedTelecommunications Company (Du) was planning to raise $273 million by sellingadditional stock to shareholders to fund accelerated growth, networkcapabilities and mobile infrastructure.

April23: Amnesty International accusedUAE authorities of torturing 17 Indians sentenced to death in the killing of a Pakistani man. According to thehuman rights organization, the suspects were beaten, given electro shocks,deprived of sleep and forced into stress positions.

April27: Kenya’s foreign minister arrivedin Dubai to defuse tensions after four members of the Emirati ruling family,who were vacationing at a resort in Mombasa over Easter, were questioned asalleged terror suspects byimmigration officials and subsequently deported. The UAE responded bytightening visa requirements on Kenyan nationals, only permitting universitygraduates to enter the country.

May11: The number of humantrafficking cases prosecuted in the UAE doubled last year, with 43 cases goingto court, compared to only 20 in 2008and 11 in 2007, The National reported, citing a report by the governmental National Committee to CombatHuman Trafficking.

May13: The German Ex Oriente Luxcompany unveiled a vending machine at Abu Dhabi’s Emirates Palace Hotel thatdispenses one, five and 10 gram gold bars, in addition to a one ounce bar. The fluctuating price of gold will bereflected in the bars’ pricing, with one-gram bars currently vending for$47.70. The machine includes security features and anti-money-launderingsoftware.

May18: The Israeli daily Haaretz reported that Israel rejected two Qatariproposals to renew diplomatic ties and allow Israel to re-open an office in Doha, in exchange for letting thekingdom carry out reconstruction projects in Gaza and import necessary constructionmaterials. Ties between the two were suspended following Israel’s December 2008pummeling of the Gaza Strip.

May19: Without explanation, Bahrainsuspended Qatari TV network Al Jazeera from broadcasting locally and barred a TV crew from entering the kingdom,accusing the station of breaching “professional media norms and flouting thelaws regulating the press and publishing.”The US-based Committee to Protect Journalists noted that it came a day afterthe station broadcast a report on poverty in Bahrain.May 2010

May24: The Dubai-based Spot On PublicRelations reported that, at 15 million users, the number of social mediasubscribers in MENA surpassed the combined circulation of newspapers in theregion, with the UAE, Egypt, SaudiArabia, Morocco and Tunisia accounting for 70 percent of Facebook users in theregion.

May24: Australia expelled an Israelidiplomat after a police investigation revealed that Israel was behind theforging of four Australian passports used in the January murder of Hamas operative Mahmoud al-Mabhouh in Dubai. “Thedecision to ask Israel to remove from Australia one of its officers at theIsraeli embassy in Canberra is not something which fills the Australiangovernment with any joy,” Foreign Minister Stephen Smith said.

May26: Baghdad’s municipality saidit had shortlisted eight foreign firms to construct a $3 billion metro systemthrough Iraq’s capital. Thecompanies — from Britain, Germany, Finland, Italy and the US — will presenttheir bids to the project’s consultants, French engineering group Systra. Themetro’s first line will span 21 kilometers with 21 stations, while the secondline will run a stretch of 18 kilometers and have 20 stations.

May31: Saudi Arabia announced plansto establish an independent firm to manage the kingdom’s eight ports and gradually privatize them, reactivating a processthat has been frozen since 1997 when a royal decree first permitted privatefirms to operate berths and equipment. The move aimed to raise the kingdom’scontainer handling capacity to 15 million 20-foot equivalent units by 2020.

May31: A total of nine civilians — eightTurks and one Turkish-American — were killed and dozens were injured afterIsraeli commando troops attacked and seized a Gaza-bound flotilla of humanitarian ships loaded with 10,000 tons of aidin international waters.

May31: In a press release thatcoincided with “World Day for Anti-Smoking,” the Director General of the GulfCooperation Council Executive Council for Health Ministers, Dr. Tawfeeq Khojah,said that the GCC states were working on a unified anti-tobacco strategy, in line with international criteria. The strategywould be set for 10 years, cost $3 million and would include national campaignsin each of the GCC states.

June7: A planned $3 billion,40-kilometer long causeway linking Qatar to Bahrain was put on hold for the second time. Inside sources told Reutersthat skyrocketing costs and political tensions were to blame for the delay inconstruction, which was scheduled to begin in the first quarter of 2010 and becompleted by 2015.

June8: Stunning its competitors at anair show in Berlin, Dubai’s Emirates airline placed an $11 billion order withAirbus for 32 double-decker A380s to be delivered by 2017, making it the mostexpensive commercial aircraft order ever.

June11: Al Jazeera, which wonexclusive regional rights to broadcast the 2010 World Cup from South Africa,came under fire for glitches during the opening game’s transmission. Subscribers, who paid up to $150 to watch thegames, were faced with blank screens, pixilated images and commentary in thewrong language for subsequent games. The station blamed sabotage and said thatsignals on Egypt’s Nilesat satellite operator and Saudi Arabsat were

deliberatelyjammed. June 2010

June13: Citing US government officialsand an internal Pentagon memo, the New York Times reported that the US had discovered nearly $1trillion in untapped minerals in Afghanistan, such as iron, copper, cobalt, gold and lithium, “enough tofundamentally alter the Afghan economy and perhaps the Afghan war itself.” TheAfghan mining minister later announced that mineral deposits could be worth upto $3 trillion, as the Afghan government launched an international biddingcampaign to attract investments.

June14: Abu Dhabi’s Criminal Courtsentenced an 18-year old woman who had accused six men, including one policeofficer, of gang raping her, to one year in prison for consensual sex. The plaintiff was not granted a lawyer. The policeofficer received a one-year sentence for extramarital sex and two defendantsreceived three-month sentences for being in the company of a female not relatedby blood, while two others were fined $1,361. One man was acquitted.

June17: As US crude oil prices roseto $77 per barrel, Arab Monetary Fundchief Jassim al-Mannai told reporters that growth in the Arab economies wouldreach at least an average of 4 percent this year due to higher oil prices, andthat the euro zone crisis’s impact on the region would be marginal.

June17: Dubai’s ruler Sheikh Mohammedbin Rashid al-Maktoum published a poem in the Al-Khaleej daily entitled “Gaza’s Iliad,” criticizing Israel’s blockade of Gaza and the attackon the aid flotilla, while urging Arab aid to the embattled strip.

June20: In the aftermath of a Hamasoperative’s assassination in January, Dubai’s police chief General DahiKhalfan Tamim told The National that the emirate needs to install security cameras “everywhere” and would invest an additional $136 million onsecurity technology this year. He added that residents of the emirate, whichalready boasts 25,000 security cameras, needn’t be concerned about theirprivacy, as such intrusions are against the law and not “accepted by ourreligion and tradition.”

June21: A few days after the UNSecurity Council slapped a fourth round of financial and military sanctions onIran for its controversial uraniumenrichment program, the UAE reportedly shut down 40 international and localcompanies for violating the UN sanctions, the daily Gulf News reported.

June21: Saudi Arabia’s official newsagency said that the kingdom was allocating $1.6 billion to build 6,000 homes for citizens displaced during the November 2009 toJanuary 2010 fighting between Yemeni rebels and the Saudi army along theirshared border. The funds would also cover educational facilities and healthinfrastructure in the southern Jazan province.

July2: Only 10 to 14 percent of the400,000 known HIV patients in the MENA region receive treatment due to stigma and discrimination, UNAIDS regionaldirector Hind Othman told Reuters. The number of reported HIV cases in theregion grew by 100,000 in the past two years according to UN statistics, thoughOthman cast doubt on the accuracy of those figures due to a lack of systematictesting for the virus.

July4: The UAE received approval fromthe European Commission to begin exporting camel milk to Europe beginning in 2011, following quality andsafety testing. The UN Food and Agriculture Organization estimated thepotential world market for camel’s milk at $10 billion, which is lower in fatand richer in iron and minerals than its bovine counterpart.

July13: Satish Khanna, general managerof Al Fajer Information and Services, which is staging the first GulfRail showand conference in Dubai in 2012, said that $170 billion worth of transportprojects are expected to be put in place in the Gulf region over the next 10 to15 years, with 85 percent ofinvestments made in the UAE, Qatar and Saudi Arabia.

July22: Following four days of powercuts, the UAE daily Gulf News reported that power had been restored in most of Sharjah. Industrial areas and the Al Wahda residential areawere the worst off with power gone for more than 70 hours, with the SharjahElectricity and Water Authority blaming technical faults. At least oneconstruction worker died from heat exhaustion, as hospitals reported four timesthe average number of heat-related illnesses.

July27: Abu Dhabi Ports Companyawarded a $280 million contract to ajoint venture between ED Zublin AG and Al Jaber Transport & GeneralContracting for the design and construction of its flagship offshore KhalifaPort and Industrial Zone project, set to commence operations in 2012. By 2030,the zone is set to span 420 square kilometers with a port container capacity of150 million 20-foot equivalent units and 35 million tons of general cargo. July 2010

July27: In an online poll by ArabianBusiness, more than 70percent of respondents said that additional protections for internationalinvestors would help inspire confidence in the region, a month after the UAE federal government introduceda scheme to offer Dubai investors and developers a ‘government guarantee’ incase of stalled or canceled projects that are already in the constructionphase.

July27: Sheikh Mohammed bin Rashidal-Maktoum, prime minister of the UAE and ruler of Dubai, approved a documenton “professional behavior principles and ethics” for employees of all ministries and federalauthorities, aimed at boosting the state’s reputation and developing a “spiritof responsibility with adherence to ethics while dealing with subordinates,colleagues or public.”

July27: According to a global survey byColliers International, of 145 business districts, Abu Dhabi’s daily privateparking rates for prime business areas are the highest in the world at $55 perday. Dubai ranked 13th at $40 perday, while Chennai in India was the lowest globally at a daily rate of $0.96.

July28: In its Global Economic WeeklyReport, Bank of America Merrill Lynch said the UAE’s economy would seesluggish growth of just 1 percent in 2010 and 2 percent in 2011, making it the worst performing economy in the GCCfor both years. Qatar’s predicted growth was highest in the region at 11.3percent for 2010 and 9.6 percent for 2011.

July30: On his first visit to Lebanonsince the assassination of Prime Minister Rafiq Hariri in 2005, SyrianPresident Bashar al-Assad joined Saudi King Abdullah and President MichelSleiman for a historic summit.Commentators said the meeting was a show of unity and support for Lebanesestability, amid fear of unrest over a possible indictment of Hezbollah membersby the international tribunal tasked with prosecuting Hariri’s assassins.

Aug1: According to a report by theUnited Nations’ Economic Commission for Western Asia, Kuwaitis and Emiratishave the highest average life expectancies in the region, at 77.6 years and 77.4 years, respectively. Thereport credited advanced health and education facilities for the ranking.

Aug3: A study by shoemaker RYN MiddleEast cited in Emirates Business showed that only 4 percent of Emiratis walkon a weekly basis, compared to theUK where the ratio is 10 times higher. Lack of physical exercise, blamed on theheat, contributes to some of the world’s highest obesity rates in the countriesof the GCC.

Aug3: In the biggest borderconfrontation since the 34-day 2006 war, three Lebanese soldiers, an Israelicolonel and a Lebanese journalist from the daily Al Akhbar were killed during border clashes between theLebanese Armed Forces and the Israeli army, after the latter cut trees near Adaysseh along the disputed Blue Line.After the media published photos showing Israeli personnel appearing to breachthe border fence, a UNIFIL investigation concluded that the trees were onIsrael’s side of the blue line.

Aug5: According to census figures, SaudiArabia’s expatriate population declined from 37 percent of the overallpopulation in 2004 to 31 percent in April 2010, though their actual numbers had risen by 37.7percent from 6.1 million in 2004 to 8.4 million this year. Workers from India,Pakistan, Bangladesh, Indonesia and the Philippines made up the vast majorityof expatriates.

Aug9: Figures from the DubaiStatistics Bureau showed a 10 percent rise in marriages between Emiratis andforeigners between 2007 and 2009 inDubai alone, with divorce rates among mixed-nationality couples only slightlyhigher than their Emirati counterparts. The cost of dowries demanded by thefamilies of Emirati women was encouraging men to marry foreigners, according toa spokesperson for the Ministry of Social Affairs. August 2010

Aug11: A YouGovSiraj survey showed thattwo in five residents of the UAE supported a governmental ban on BlackBerryservices, which had been scheduledto go into effect in October, with Western expatriates most resistant to theban. Saudi Arabia had also announced a ban on BlackBerry services deemed athreat to national security, but claimed that Canadian Blackberry makerResearch in Motion had agreed to fulfill regulatory requirements.

Aug15: Some 73 percent ofcounterfeit medicine seized at European borders was routed through the UAE, reported The National, quoting a report by the European CommissionTaxation and Customs Union, with the amount of fake medicine arriving via theUAE rising from 750,000 items in 2008 to almost 5.5 million items in 2009.

Aug22: According to UAE daily TheNational, Dubai opened a newcircuit within its court to deal with the huge volume of debtor cases overbounced checks. The circuit washearing more than 100 personal and commercial cases every week in itsafter-hours sessions, leading to calls for the government to overhaul laws thatmake it a criminal offense with jail time to bounce a check.

Aug30: According to a study by globaloffice solutions provider Regus, more than 50 percent of professionals inthe United Arab Emirates may quit their jobs after their annual summer leave due to low involvement by top management coupledwith a lack of promotions and company vision. Other factors contributing to theresignations included long commutes and bosses taking credit for the work ofemployees.

Aug31: Dubai’s Road and TransportAuthority delayed the opening of some of the remaining eight metro stations ofthe Red Line, due to be inauguratedin October, the Abu Dhabi daily The National reported. Director of RailOperations Ramadan Mohammed blamed disappointing passenger volume and the slowdevelopment of the communities around the stations, but didn’t specify which ofthe eight stations’ openings would be delayed.

Sept5: A report released by the UAE’sMinistry of Foreign Trade on commercial transactions between the Emirates andIndia, its largest trading partner, showed that the Gulf state now runs a tradesurplus. The UAE turned a trade deficit of $1.99 billion during the firstquarter of 2009 into a surplus of $599 million during the first three months of2010.

Sept6: Bahrain’s government decidedto reassert its control over the country’s mosques, after charging members of a Shiite opposition groupwith plotting to overthrow the Sunni government. Bahraini Crown Prince SalmanAl Khalifa said the measures were aimed at “regaining control of the pulpits sothey are not hostage to incompetent politicians or clerics who have lost theirway,” according to the official Bahrain News Agency.

Sept6: Lebanese Prime Minister SaadHariri told the pan-Arab daily As-Sharq al-Awsat that it was a ‘mistake’ to accuse Syria ofkilling his father, and that theclaim was a ‘political accusation.’ He said that “false” witnesses who “misleadinvestigations did harm to Syrian-Lebanese ties by politicizing the murder,”but tried to distance the tribunal from the earlier investigation. Hariri alsosaid that his visits to Syria feel like “going to a brotherly and friendlystate.”

Sept7: Seven years after signing acommon market agreement, the GCC shelved its latest plans to implement it after a meeting of GCC foreign ministers in Jeddah.“I do not want to say that there are hurdles facing the execution of theagreement but definitely there are differences of opinion among us,” KuwaitiFinance Minister Mustafa al-Shamali told the media after the meeting.

Sept8: Data released by theinternational housing research firm EuroCost International showed that Dubaihad dropped from the 12th most expensive city in the world in 2009 to 31st thisyear. The firm said that the cityexperienced “spectacular decreases” in the range of 30 and 50 percent dependingon the type of housing. September 2010

Sept11: Kuwait plans to build fournuclear reactors by 2022, with eachfacility producing 1,000 megawatts of electricity, according to a report by theofficial KUNA news agency. Secretary General of Kuwait’s National NuclearEnergy Committee Ahmad Bishara said that an initial analysis showed nuclearenergy was a viable option if oil prices remained above $45 to $50 a barrel.

Sept13: The Wall Street Journal reported that the US administration planned tosell $60 billion worth of sophisticated aircraft, weaponry and ballisticmissile defense systems to Saudi Arabia to “support Arab allies against Iran,” including 84 new F-15s, in amove that would create an estimated 75,000 jobs in the US.

Sept15: British Airways chief WillieWalsh told the European Aviation Club in Brussels that Europe had been tooslow in recognizing “the significant threat” posed by competitive MiddleEastern airlines and that it wasworrying to see European governments fund Dubai’s Emirates airline, which isthe biggest customer for Airbus’s A380 superjumbo, by “providing them withcheap access to capital.”

Sept15: Abu Dhabi’s government-ownedAdvanced Technology Investment Co will build the emirate’s first chipmanufacturing plant, investing some$7 billion in the endeavor, the Wall Street Journal reported, citing CEO Ibrahim Ajami. The plant willbe a 12-inch wafer production facility and will come online between 2014 and2015.

Sept19: Manama Municipal Councilmember Abdulmajeed al-Sebea’a accused the Bahraini police and tourismdepartment inspectors of encouraging prostitution to attract tourists during the Eid holidays, whichwas discouraging Gulf families from visiting the kingdom, the Gulf Daily Newsreported.

Sept23: Saudi Information and CultureMinistry spokesman Abdul Rahman al-Hazza told Al-Arabiya television stationthat Saudi websites and online media, including blogs and forums, would haveto register officially with the government to prevent libel and defamation,under a new electronic media law. The news sparked outrage from Saudi web users, leading Hazza to clarify thatonly online news sites would be “required” to register, while blogs would be“encouraged” to seek a governmentallicense.

Oct6: The US military presence inKuwait generates $6 billion annually for the state’s economy through logistics, supplies and other services, thelocal daily Al Watan reported, citing US Ambassador to Kuwait Deborah Jones.Kuwait’s exports to the US jumped 72 percent in the first seven months of 2010compared to the same period last year, while US exports to Kuwait rose 80percent during the same period, the ambassadorsaid.

Oct11: In what analysts were calling a‘bidding war’ between the neighboring countries, Iran announced that it hadovertaken Iraq in estimated oil reserves with 150.31 billion barrels ofreserves, a week after Iraq said ithad surpassed its neighbor with 143 billion barrels in proven reserves.

Oct13: On his first official statevisit to Lebanon, Iranian President Mahmoud Ahmadinejad was met by thousands ofsupporters who gathered alongBeirut’s airport road. During his two-day trip, Ahmadinejad met with PresidentMichel Sleiman and Prime Minister Saad Hariri, attended a rally near the borderwith Israel in southern Lebanon and reportedly received an assault riflecaptured from Israeli soldiers during the July 2006 war from Hezbollah leaderHassan Nasrallah.

Oct14: A Reuters poll of 16 economistsand investors estimated that Dubai’s debt stood at about $115 billion, despite its debt restructuring efforts over thelast year. All but one of the respondents predicted that Dubai would likelyfinance its debt obligations through asset sales, with port operator DP Worldtopping the list of likely sales.

Oct17: Ten workers at the privateKuwaiti Scope TV station were injured when a mob of 150 people, reportedly armedwith pistols and knives, stormed the station and assaulted employees over a talk show segment they deemed insultingto members of Kuwait’s ruling family. October 2010

Oct18: After the UAE abruptlycanceled an agreement allowing the Canadian military to use Camp Mirage nearDubai, Canada was reportedly “moving quickly” to find a new hub from which toresupply its troops stationed in Afghanistan. Canada had allegedly balked at a UAE request to give Emirati airlinesmore landing rights in cities such as Toronto, Calgary and Montreal. Shortlyafter, Canadian troops were told they had a month to clear out.

Oct18: The UAE’s Federal SupremeCourt ruled that a man has the right to beat his wife and children “provided he does not leave physical marks” and“abide[s] by the limits of this right,” the local daily The National reported.The court found that a man who had “slapped and kicked his daughter and slappedhis wife” had exceeded his rights under sharia law, because the beating was toosevere and the daughter, age 23, too old for such disciplinary measures.

Oct21: The UAE opened a naval baseon its eastern coast in the emirate of Fujairah to protect oil exports in the event that Iran closesthe Strait of Hormuz. Abu Dhabi was reportedly also building a massive oil exportand storage facility in Fujairah, as well as two oil and gas pipelines betweenthe emirates.

Oct23: In the largest classifiedmilitary leak in history, whistle-blowing website Wikileaks published400,000 secret US military logs detailing the torture of detainees in Iraqijails and the deaths of tens ofthousands of Iraqi civilians between 2004 and 2007. Wikileaks claimed the logsprove that approximately 15,000 more Iraqi civilians had died than previouslyestimated.

Oct28: Following the death of Ras AlKhaimah ruler Sheikh Saqr bin Mohammed al-Qassimi at age 92, the UAE’s FederalSupreme Council officially recognized his son Sheikh Saud bin Saqr al-Qassimias successor, despite a challenge bySaud’s older half-brother Sheikh Khaled, who had posted a video messagedeclaring himself the new emir on his website following their father’sdeath.

Nov4: A report released at the ArabForum for Environment and Development in Beirut warned of a looming regionalwater crisis, with Lebanon and theArab world facing “severe water scarcity” by 2015 and the region’s populationleft to subsist on 10 percent of the global average supply, if waste,mismanagement and pollution were not immediately addressed. Lebanon’s annualwater demand is expected to triple by 2050, the report noted.

Nov7: Etihad and Emirates airlinesstopped carrying cargo from Yemen after two packages containing explosives werefound aboard a US-bound Emiratesplane. The Yemeni branch of Al Qaeda claimed responsibility for the parcels,which were addressed to a synagogue in Chicago.

Nov8: Following disputes over landingrights in Canada for Emirati carriers, the closure of a Canadian military basein the UAE and threats to ban key services of the Canadian-owned BlackBerrymanufacturer Research in Motion, the UAE’s embassy in Ottawa announced that Canadiancitizens would require visas to enter the Emirates starting January 2, 2011.

Nov15: As part of its efforts to easecongestion and attract more religious tourism, Saudi Arabia marked the firstday of the hajj by unveiling a new 11 kilometer light-railway, dubbed the‘Mecca Metro,’ which will shuttle pilgrimsbetween holy sites. The railway is only open to Saudis and GCC citizens priorto becoming fully operational next year; the opening came a day after officialssigned a $7 billion deal to develop the nearby Jeddah airport.

Nov17: The UAE had the worst percapita record for greenhouse gas emissions, due largely to a sharp rise in desalination plants that run on fossilfuels, according to British consultancy firm Maplecroft’s ranking of 183countries. The ranking combined current and historic emissions, with the US thelargest cumulative emittersince 1900.November 2010

Nov23: After rights groups urged her toaddress the ‘systematic abuse’ of migrant workers in the UAE, IndianPresident Pratibha Patil inaugurated a counseling center for Indians working inDubai that includes a 24-hourhelpline and a shelter for runaway housemaids, the first of its kind outsideIndia.

Nov24: Dubai Pearl Chairman AbdulMajeed al-Fahim announced the developer was looking to sell some $6 billion inhospitality assets to raisefinancing for the 18.5 million square meter mixed-use project. Final completionof the Pearl project, which was restarted in March, was being postponed from2013 to the end of 2014, Fahim said.

Nov25: In her first visit to the UAE inmore than 30 years, British Queen Elizabeth II met with the UAE VicePresident and Prime Minister SheikhMohammed bin Rashed al-Maktoum to unveil the British design for the ZayedNational Museum, which is set to be built by 2014 on Saadiyat Island. BritishForeign Secretary William Hague reportedly also signed a number of agreementswith his Emirati counterpart, including one on civil nuclear cooperation.

Nov28: The first batch of some 250,000 secretUS diplomatic cables leaked to the press by the transnational whistle-blowingwebsite Wikileaks revealed that Gulf rulers, including the UAE’s leaders, hadencouraged the US to attack Iran toprevent it from obtaining nuclear weapons. In response, Emirati minister ofstate for Foreign Affairs Anwar Gargash dismissed the cables as revealing “anAmerican perspective.”

Nov28: A Gallup survey of young peoplein the region showed that the UAE was a more popular destination for immigrationamong women than men. One third ofyoung people polled want to migrate permanently to another country, and youngArabs are almost four times more likely to plan to start their own businessthan their European and North American counterparts, the survey revealed.

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Finance

Regional equity markets

by Executive Editors
written by Executive Editors

Beirut SE  

Current year high: 1,180.99                Current year low: 939.02

>  Review period:

Closed Nov 26 at 946.14 Points         47 Week Change: -15.2%

Beirut in November not only consistently beats international financial centers like London, New York, and Tokyo in terms of weather quality but in 2010 also proved again that the Beirut Stock Exchange is hardly swayed by global selling pressures — Irish debt or North Korean artillery assaults — that scared investors elsewhere. The BSE has its very own chimeras, the current one can be christened Special Tribunal for Lebanon (STL) phobia. This fear influenced the pattern of Lebanese share movements, making for a dull second half of 2010. Weakness in the share price of real estate stock Solidere, whose year-to-date drop of 22.5% contributed a large chunk to Lebanese index drops in 2010, seems to have no remedy until the STL storm has run its course or political waters calm by other means. Still an illiquid and bipolar market of banking and real estate, 2010 changed the BSE market cap profile notably in favor of banking. Top banking pair, Audi and BLOM, represented more than 50% of BSE market cap in November while the weight of Solidere was reduced to about 25% of the total.

Amman SE  

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

>  Review period:

Closed Nov 25 at 2373.24 Points       47 Week Change: -7%

The Amman Stock Exchange could breathe better toward the end of November after the harsh days of summer, given that the ASE benchmark index climbed 5.5% from September 1 through Nov 25. But the reprieve has not been enough to balance the losses Jordan’s bourse took in 2010 under pressure from diminished confidence and outflows of regional cash. Interim earnings reports were also none too reassuring. While Housing Bank for Trade and Finance and Arab Potash showed nine-month profit increases, three other ASE heavies — Arab Bank, Jordan Phosphate Mines and Jordan Telecom — reported net profit contractions in the same period. Losers on the ASE outnumbered gainers across the board in the year to date; this was reflected in the sector indices all coming home negative. Banking was the relative best, with a drop of 5%, followed by industry whose 7.9% loss narrowly trailed the general index. Services, however, gave up 10.5% while insurance took the deepest plunge with a 45.3% index fall.   

Abu Dhabi SE  

Current year high: 2,931.67                Current year low: 2,467.04

>  Review period:

Closed Nov 25 at 2,756.89 Points                  47 Week Change: 0.5%

Although the Abu Dhabi Securities Exchange showed gains in September and October, the autumnal improvements in the index positioned the ADX merely for a U-shaped performance. No heroic tales of rising from the troughs of wait-and-see and running with the bulls again. The sector index that stood as the bourse’s most tragic figure in 2010 was real estate, distinct in that it underperformed all other sectors from the beginning of the year and closed 47.5% down on November 25 when compared with January 1. Telecommunications and banking were the best performing sector indices, closing the review period up 8% and 6.5% respectively. Banks contributed many of the bright accents in the 2010 share performance picture, including Abu Dhabi Commercial Bank (49.3% up), Abu Dhabi Islamic Bank (25.8% up), and Union National Bank (14.1% up). ADX market-cap champion Etisalat closed the 47 weeks with a net share-price gain of 10.05%.    

Dubai FM  

Current year high: 1,889.99                Current year low: 1,461.80

>  Review period:

Closed Nov 25 at 1682.23 Points       47 Week Change: -6.7%

Its cityscape may have filled up with urban architectural dreams, but the specter of debt towered above even Dubai’s tallest construction feats in 2010. Volatility on the Dubai Financial Market was reported at 21.6%, five percentage points above that of Tadawul as the GCC’s second most volatile market. Insurance, real estate, and investment sector indices — respectively dropping 14.5%, 18.9% and 22.2% from the start of 2010 — underperformed the disappointing general index. But the DFM’s utilities index somehow underperformed the underperformers by another 30 percentage points. Market cap leader Emaar closed at $0.99 on November 25, clocking in about 5% lower from its last close in 2009. Developers Deyaar, cooling and utilities scrip Tabreed, and investment firm GGIC were stocks with primary listing on DFM that each shed more than 45% in value during the 2010 review period. Logistics firm Aramex could be noted as an exceptional gainer this year, closing the 47 weeks 45.7% higher.

Kuwait SE  

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

>  Review period:

Closed Nov 25 at 6928.00 Points       47 Week Change: -1.1% The story of the Kuwait Stock Exchange in 2010 was more consistent than that of the SSE, if only in the sense that the KSE benchmark index exhibited fewer changes in direction. The overall result, however, was not too different from that of TASI, even as the KSE slipped just into negative territory at the end of week 47. Best price performances included those of major companies; with banks Ahli United (cross listed, up 55%), Boubyan (52%), NBK (36%) and telecoms firm Zain (41%) all up, four of the 10 largest stocks by market cap were among the market’s leading gainers.  Seeing its index rise since midyear, banking was by far the best performing sector on the KSE with a year-to-date gain of 42.5% in the banking index by November 25. The real estate, investment and insurance indices were the underperformers, closing 15.9%, 12.6% and 9.8% lower respectively.   

Saudi Arabia SE  

Current year high: 6,929.40                Current year low: 5,760.33

>  Review period:

Closed Nov 27 at 6,298.89 Points      47 Week Change: 2.9%

The five trading weeks from October 24 through November 27 reinforced the narrative that, during 2010, up-trends were temporary on the Saudi Stock Exchange and long-term investors had little to fear but also little to gain. Sharply divergent performances of some sectors and companies stood against flattish moves of others. At the top, three new insurers tripled and quadrupled from their issue prices but a number of other insurers recorded significant share-price losses. Investment giant Kingdom Holding and insurance stalwart Tawuniya gained 65% and 51% respectively. Debutants of 2010, namely the aforementioned new insurers and Herfy Food Services (51% up), did well, but the biggest newcomer, Knowledge Economic City, was a disappointing 19.5% down by November 24. Of the SSE sector indices, banking ended 1.8% higher, closest to the benchmark. Energy and Petrochemicals were the best gainers, 13.4% and 12.4% higher. Negative index trends were most pronounced in media, down 30%.    

Muscat SM  

Current year high: 6,933.75                Current year low: 5,968.36

>  Review period:

Closed Nov 25 at 6,550.85 Points                  47 Week Change: 2.9%

The Muscat Securities Market suffered an incision similar to the Bahraini bourse in late spring but it did a tick or two better in the later months of 2010. This late surge was enough to position the MSM index in second place — albeit barely — among the four gainers in the GCC stock market universe. Poultry specialist A’Saffa Food should be giving its advisors bonuses this year, as its share price quadrupled from March to November, according to data compiled by Zawya. Overall, publicly traded companies in Oman showed far less spectacular share-price increases and the majority of firms found it hard to make headway in 2010. The MSM’s three sector indices for banking, services and industry all showed losses in the review period. When compared with the start of the year, the banking index retreated the most, at 12% down, and severely underperformed the MSM index.

Bahrain SE  

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

>  Review period:

Closed Nov 25 at 1,438.51 Points                  47 Week Change: -1.4%

The Bahrain Stock Exchange showed encouraging index trends in spring of 2010. However, the index retreated between late April and early July in a slide of almost 14%, and only partially recovered the lost ground at the end of November. Investors holding shares in Ahli United Bank since the start of 2010 could delight in the scrip’s 68% gain to the November 25 close. This was 30 percentage points better than the gain of the second-best price performer, Bahrain Duty Free. The market was dominated by losers, though. Gulf Finance House closed 55% down from January 1, while Nass Corp and Seef Properties, companies in the stressed construction and real estate sectors, also gave up more than 20% in share prices. Weaker still were three banks: Bahrain Islamic, ABC and Ithmaar fell 31%, 39% and 43%, respectively. Nonetheless, the banking index was the BSE’s positive exception, ending week 47 with a 23.3% gain for the year to date.     

Doha SM 

Current year high: 8,273.07                Current year low: 6,502.93

>  Review period:

Closed Nov 25 at 8,178.77 Points                  47 Week Change: 17.5%

Say what you will about Qatar’s uninspiring flat landscape, no GCC peer in 2010 came close to the peaks displayed on the Qatar Stock Exchange. Like its peers, the QSE benchmark index took a beating in late spring. However, the selling pressure turned and the index performed, on the year to date, more than 14 percentage points better than any other Gulf benchmark. All sector indices on the QSE ended the January through November period with gains. Insurance came out on top with a gain of 59%, followed by banking with 26.5%. Rises in the industrial and services indices were in the single digits, thus underperforming the general index. Major players in almost all core sectors, including QNB, Doha Bank, Qatar Navigation, Doha Insurance, Q-Tel and Industries Qatar, achieved double-digit share price gains. Notably, developers Ezdan (QSE market cap leader) and UDC failed to join the climbers in the second half of 2010.

Tunis SE 

Current year high: 5,681.39                Current year low: 4,077.39

>  Review period:

Closed Nov 26 at 5269.48 Points                   47 Week Change: 22.8%

The Tunis Stock Exchange was the region’s undisputed winner this year. Although the Tunindex had a losing month in October, its overall growth was above that of all other MENA exchanges covered. Top gainers included three out of four firms that underwent their initial public offerings in 2010, namely Tunis Re (up 55.1%) and Assurances Salim (up 47.3%) in the insurance sector and Carthage Cement (up 93.2%) in heavy materials. Servicom, a telecommunications infrastructure company, was an upward outlier with a 169.4% price gain. Poulina Group Holding, the manufacturing conglomerate that is the TSE leader in market capitalization, recorded a gain of 36.8% from start of 2010. Banque de Tunisie and Banque Internationale Arabe de Tunisie, numbers two and three by market cap, stayed on Poulina’s heels with respective share-price gains of 24.8% and 23.1%. The Tunisian bourse’s volatility over the 47 weeks was 10.4% and the price-to-earnings ratio climbed to 16.29x.

Casablanca SE  

Current year high: 12,457.59              Current year low: 9,997.56

>  Review period:

Closed Nov 26 at 12,115.95 Points   47 Week Change: 16%

The performance of the Casablanca Stock Exchange’s MASI matched that of Qatar’s QSE benchmark index at the end of week 47. However, where the QSE index rose from behind in the second half of the year, the MASI stayed closer to the year high it had reached at nearly 12,500 points in May. The CSE’s leading companies by market cap, Maroc Telecom and Attijariwafa Bank, advanced nicely and very nicely in the 47-week review period, with gains of 9.5% and 24.1% by the November 26 market close. The top industrial scrip by market cap, cement producer Lafarge, put even those gains into shadow, climbing 50.3%. Real estate stood out in that the largest listed companies displayed a mixed picture when compared with the benchmark index. Developers CGI and Addoha, which both showed significant fluctuations coming into 2010 and throughout the year, in the end closed with single-digit share price gains.

Egypt CASE  

Current year high: 7,603.04                Current year low: 5,850.00

>  Review period:

Closed Nov 25 at 6838.00 Points                   47 Week Change: 10.1%

The Egyptian Stock Exchange performed a program of two contrasting melodies in 2010. The first tune, played between January and end July, was contrapuntal, entailed strong volatilities and ended with hardly any net change versus the first close of the year. The four months from August through November, however, were much less polyphonic. The EGX 30 Index moved up in a succession of small steps that contained almost all the gains reflected in the November 25 close. Juhayna Food, the only EGX 2010 debutant gained 510% over the issue price and 42% from its June 15 close to November 25. One of Egypt’s higher flying heavies this year was Commercial International Bank whose 56.3% gain propelled it into the position of top bank by market cap and number three on the EGX overall. A year-to-date gain of 10.1% was enough for Orascom Construction to defend the place of market cap leader.

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Economics & Policy

Pipe Dreams?

by Executive Editors
written by Executive Editors

Politics and economics have always had an abusive relationship in Lebanon, with the latter habitually falling victim to the former’s unpredictable behavior. Like any odd couple, there are times when they get along, if only to fall back into a vicious cycle that consumes them both.

As 2010 began there was optimism in the air; the country had just emerged with a new government after Lebanon’s power brokers finished their long and drawn-out game of musical chairs over who would take which cabinet posts.

The new cabinet of “national unity” effectively meant, however, that basic national issues could not be decided upon without unanimous approval. Even without this inherent impediment to the kind of streamlined decision-making Lebanon desperately needed after years of (at best) ineffective government, results were going to take time. Many of the problems facing the country, from electricity shortages to water supply, require long-term solutions rather than quick fixes.

At the start of 2010, the cabinet approved a new ministerial statement that has since remained the only wide-ranging plan to address the country’s problems, with the stated goal: “to help all Lebanese benefit from economic growth in a proportional way that will allow all categories of society and all the Lebanese regions to profit.” The final part of the statement contains the priorities of each ministry, though most are vague enough to allow the ministers to evade accountability for tangible results.

While no one expected all elements of the ministerial statement to be fulfilled in the first year of operation, the pace of most reform in 2010 has been glacial.

“They didn’t do anything. Really, nothing happened,” says Jad Chaaban, acting president of the Lebanese Economic Association in November. “There are people who don’t want to rule with others on both sides. There are huge differences on how reform should be carried out and there is no real debate on these issues, from traffic, to electricity to water.”

The lack of action is even more unfortunate given that the new government was regarded by many as the first that could actually make some headway in terms of public policy, after previous post-Hariri assassination governments were plagued by political debacles that brought policy to a grinding halt.

Electricity

To be fair, some progress has been made this year, even if it was only at the planning level. Perhaps Lebanon’s most glaring policy deficiency is the abysmal state of the electricity sector, and in June the cabinet approved a comprehensive plan for an overhaul, which aims to provide 24-hour power throughout the country by 2015. It is not the country’s first electricity overhaul plan, though it may the most substantial to date.

Much of its success banks on the private sector, which will be asked to contribute $2.32 billion, or 58 percent of the total cost, to take part in the production and distribution of electricity, while the public sector will retain the infrastructure and control the transmission of electricity from plants to local districts. This collaboration, however, will require a Public Private Partnership (PPP) law to be passed by Lebanon’s parliament, which has barely managed to meet since being elected in June 2009, much less pass essential legislation.

“Clearly there is an interest from the private sector, given a proper PPP law that preserves the interests of the private parties involved, but the key aspect is a transparent, clear and implementable law that has to be very clear on how to solve issues between the private sector and the government,” says Nassib Ghobril, head of economic research and analysis at Byblos Bank.

With the draft law still swirling around parliament, and the latest draft viewed by Executive only referring to “the principles of transparency and equality among competitors,” rather than any mechanism for resolving conflicts, the Lebanese could be waiting some time for a resolution to their chronic energy problems. 

With the draft law still swirling around parliament the Lebanese could be waiting some time for a resolution to their chronic energy problems 

Water

Another sector that needs a substantial overhaul is water. A draft strategy is currently being compiled by the Ministry of Energy and Water, which is expected to be ready for submission to cabinet by the end of the year. A supply/demand forecast was completed and presented to domestic and international stakeholders in November, giving some idea of the amount of money that will need to be spent to close the gap in the coming 25 years. New storage alone, mostly in the form of dams and artificial lakes, will require around $2.65 billion in capital expenditures and then some $96 million each year in operating costs. Capital expenditures on transmission and distribution are projected to cost $875 million by the end of 2015, with associated operating costs at $249 million over the same period. New irrigation networks are expected to cost a further $1 billion over the next decade and beyond. Wastewater clocks in at another $1.6 billion by 2020.

“I am part of a large governmental block, so don’t talk to me about when to apply the law” – Charbel Nahas

Telecommunications

Lebanon’s government-owned telecoms sector is also in need of radical reform. Theoretically, the sector already has a framework that should be implemented in the form of Law 431, which calls for the creation of a corporatized, but not necessarily privatized, entity called Liban Telecom. Under the law, the telecom ministry’s assets would be transitioned to the company, which would be regulated by the existing Telecom Regulatory Authority that presently regulates around 5 percent of the market under its legal mandate. The liberalization of the sector is also called for in the ministerial statement, but when Executive asked Telecom Minister Charbel Nahas why no action has been taken on this front he replied: “I am part of a large governmental block, so don’t talk to me about when to apply the law.”

Nahas had also promised to publish his policy for the sector within one year of taking office in November 2009, but has failed to do so.

“The ministry’s policy is not a matter of a statement, it is a matter of practice,” said Nahas when asked when he expected to issue his policy for the sector.

Official policy or not, some progress may be in the works. The Ministry of Finance recently advanced $66.3 million to the Ministry of Telecoms to begin its proposed project to lay a new fiber-optic ‘backbone’ across the country. At the end of November, the telecom minister said the project would begin “within a few days or weeks.”

The project was awarded to Alcatel and the local civil engineering firm Consolidated Engineering and Trading, budgeted at $40 million; the telecom ministry has announced that the project should be ready by March 2012. According to Nahas, 4 to 6 percent of gross domestic product comes from the telecom sector surplus, adding that “it is the least of our duties to give back to the population and to the economy this very small part of this huge rent extortion that we inherited from the past period.”

Improved Internet access will require that the $45 million international IMEWE3 cable becomes operational. It was planned for March 2010, but Egypt has not opened up access on its end in Alexandria (where the cable connects to the rest of the world), due to reluctance on the part of the Egyptian security services, according to Riad Bahsoun, telecom expert at the International Telecommunications Union (ITU).

“We are now at a crossroads: to sustain high growth we must invest in infrastructure”

The debt

But perhaps the most pressing item on the government’s agenda is its largest source of expenditure: the public debt. It is projected to have cost the government $4 billion just to meet interest payments in 2010, with the principal reaching $50.85 billion, around one and a half times estimated economic output.

Finance Minister Raya Hassan admits that there is no foreseeable plan to reduce this principal in the absence of privatization of the telecoms sector, which she herself has said is undervalued on international markets.

Her debt strategy is to switch short-term debt for long-term debt now that Lebanon is enjoying better rates than it has before, and maintain a primary surplus as a “cushion” against debt obligations. “It’s a mixed blessing because even though the debt increase is going to be controlled, on the other side you are not going to have all the capital expenditures that would unleash the full potential of the Lebanese economy,” she says.

The lack of a government budget for the last half decade has created a situation where opening and closing accounts for the years ending 2005 and 2006 do not add up. The issue created a hubbub of accusations over mismanagement of public funds at the end of 2010.

“What they [the opposition] are trying to imply is that there are no accounts. That is totally untrue. There are accounts,” says Hassan. “What is lacking is the auditing. It’s not even auditing, it’s the control of the accounts by the Public Accounting Directorate (PAD),” she says, adding that, because public accounting laws are so old, the PAD has to cross-check around two million transactions a year with their supporting documents, which they are not able to do in any reasonable amount of time. “What we lack is a proper internal audit function — not a control function — and therefore at this point there should be a review of the laws themselves.”

Without modern laws or infrastructure spending on sectors such as telecom and electricity, Hassan and her ruling party’s platform — of relying on growth to spur jobs and keep the debt looking respectable as a decreasing proportion of GDP — look to be in serious danger of failing, especially as the economy has now started a natural downturn. “We are now at a crossroads; to sustain high growth we must invest in infrastructure,” says Mazen Soueid, head of research at BankMed, which is owned by the prime minister’s family. 

As Executive went to print in late November 2010, the cabinet had halted its weekly meetings because of political tensions over the Special Tribunal for Lebanon. Parliament had only managed to pass two piecemeal laws, one covering oil and gas exploration — without fleshing out the regulatory requirements or handling the touchy subject of a Sovereign Wealth Fund — and the other a reform of Palestinian refugee rights that maintains the ban on Palestinians owning property or being employed in some 30 professions.

All of this hardly encourages optimism. “Bottom line, I’m not happy with the way things are run as a tax payer,” says Chaaban. “We are still waiting for a push by those who are conscious of these issues to put them on the table.”

But are the country’s policy makers even aware of the gravity? “They don’t know and they don’t care,” concludes Chaaban. 

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Editorial

Good work but can do better

by Yasser Akkaoui
written by Yasser Akkaoui

Lebanon’s end-of-year report card shows it is the perennially underachieving student, full of promise but yet to live up to its full potential.

We end 2010 with a sense of achievement, uncertainty and hope. The achievements are there for all to see. Indeed, in early December, Merrill Lynch revised its forecast for Lebanon’s real GDP growth upwards to 8 percent in 2010 and 5.9 percent for 2011, from earlier forecasts of 6.5 percent and 5.1 percent for respectively.

These figures are even more remarkable when you consider that they have been achieved while the rest of the global economy was on its knees, a period when Lebanese growth went from strength to strength. For this, as usual, we have the private sector to thank, especially the banking, real estate and tourism industries.

But there is uncertainty. It is clear that when Lebanon suffers from acute political tension the idea of nation building and the economic development of other sectors, such as industry and agriculture, take a back seat. When people feel that their security — in all its many guises — is threatened, the thirst to create long-term growth initiatives dries up and people put their own wellbeing first. The Lebanese become survivalists.

It is the stop-start nature of life in Lebanon that is the virus in our economic software. The government, indeed the political class as a whole, must recognize that they can’t act out their regional drama in a vacuum. They must realize that the private sector, while it continues to carry the country as it has done for decades, is not immune to their bickering.

Finally, it is also with hope that we enter 2011. We hope that the state will create an environment in which the entrepreneur can focus on creating growth rather than one in which he is constantly looking over his shoulder, afraid that the country might collapse while his back is turned. We hope that the nation regains its long-lost self respect. Of course the challenges are many, but if they can be overcome then perhaps the raw energy that has come to define the Lebanese private sector will flourish.

All that leaves is to congratulate the many young entrepreneurs who have worked hard to take their businesses forward in 2010, creating jobs and bringing a sense of dynamism to the economy. It is they that Executive is proud to represent as a platform for their issues and concerns.

Wishing you all prosperous, but above all, a safe, healthy and happy 2011.

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Comment

An Afghan errand

by Adam Pletts
written by Adam Pletts

 

As the attack was radioed in, we upped our pace to such a speed across the rugged terrain that I was thrown across the inside of our armored vehicle. Looking out of the tiny window to my side, all I could make out was a ridge of Afghan mountaintops see-sawing from side to side through a cloud of earth-colored dust. “Demon 26 this is Monkey 6,” the military radio was saying. “We’re still taking indirect, three o’clock at three hundred meters,” to which someone in our vehicle retorted on the internal channel: “Well, if you know where they are then fucking shoot them,” and to my surprise we burst into genuine but bravado-flushed laughter.

We were on our way to make contact with the elders of Saray village, which sits geographically at the top of a valley but temporally much further away, in the throes of something I would only recognize as medieval. Our 27-vehicle convoy was winding its way through the Lal Por District of Nangarhar Province in the far east of Afghanistan. It’s known to American forces and their allies as an insurgent infiltration route from Pakistan to Afghanistan. Once over the border the Taliban make their way north to resupply the insurgency in Kunnar Province, which sustains the heaviest fighting anywhere in Afghanistan other than Helmand and Kandahar.

Lal Por is scarcely populated, apart from along the banks of Kabul River that forms its southern boundary, and there is no tarmac road leading to the village that shares a name with the country’s capital. Until now, the Taliban have enjoyed free reign to pass through the desolate mountain ranges that cover most of the district. 

The meeting lasted about 20 minutes and did little more than establish that the villagers seemed genuinely concerned about the Taliban presence. The lieutenant in charge promised them a well, but whether they’ll take him up on this is another matter. Like so many in isolated rural locations across Afghanistan, the villagers of Saray are stuck between the wrath of the Taliban and the suspicion of coalition military forces.

As the discussion came to a close and the group broke from the cover of a small line of trees where they had been taking shade, I couldn’t help but wonder whether such risk and expense had been worth it just to offer a well which may not be needed. But then I suspect the intention was every bit as much to send a message to the Taliban that they can’t move with impunity in the region.

Lal Por was one of many districts across Afghanistan where the Taliban did their best to disrupt the parliamentary elections last September, bombarding Afghan Police and United States military patrols with mortars from the hills north of its sleepy village capital.

The bombardment that I was caught in was the furthest south that the Taliban have attacked in this district since those elections but it was hardly a surprise; as two platoons, together with a mine-clearing unit, a quick reaction force and an Afghan army unit, we hardly looked subtle making our way up a valley into “coalition virgin territory.” The going was so tough that two vehicles were lost to mechanical failure, forcing lengthy pauses in the open valley as if to advertise our presence.

Intentional or not, the advert drew Taliban attention. Although some 25 mortars were fired at the convoy, together with heavy machine gun fire, none met their target.

In contrast, there were at least two confirmed hits on the Taliban before the arrival of air support prompted an effective disappearing act. The US officer in command told me he believed there were at least two Taliban killed in action and more wounded.

That’s certainly a message, but not necessarily the one the convoy was hoping to deliver. 

ADAM PLETTS is a freelance

journalist currently embedded

with coalition forces in Afghanistan.

 

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Society

Boutique bouquet

by Emma Cosgrove
written by Emma Cosgrove

 

Despite many new brands entering the Beirut market for the first time this year, a large number of existing shops have chosen to use the revival of downtown Beirut and the inauguration of the Souks to open up new stores and increase their brand exposure — a potentially pricey risk in such a small market.

“The idea of mono-brand outlets is relatively new here in Beirut and I think it reflects an increased interest by big-name brands in Lebanon and in the Middle East in general,” Stefano Macaluso, vice president of luxury watchmakers Girard-Perregaux, told Executive in July. “At a time when luxury watchmakers were tallying losses in Europe and the United States, sales soared in this region.”

Top-end retail executives seem to agree that having multiple points of sale even in a small country like Lebanon gives customers the most complete experience with the brand, making a more lasting imprint and, ultimately, financial sense.

“We find that whenever we open our stores nearby a place we already have distribution, the total distribution grows because you can see what the line [offers] much more,” said Jerome Griffith, chief executive officer of Tumi.

New strategy, new players

While the influx of mono-brand stores has not led to the abandoning of the very popular multi-brand stores, such as Aishti and Boutique 1, the trend has begun a wave of new fashion relationships between brands and local partners that defy the traditional requirements of exclusivity.

Luxury watch-makers, such as Jaeger-LeCoultre (above), flooded to downtown Beirut in 2010

“[Exclusivity is] like protectionism,” Griffith said. “It’s not really good for overall business. You think it is, because at a fundamental level it makes sense that if I’m the only one that has a brand, then I’m the only one that sells it, but actually you don’t really gain a brand’s potential until that brand is seen multiple times, because a customer has to recognize [it].”

According to Izzat Traboulsi, managing director of Hugo Boss for the Middle East, the relationship between local or regional partners and the brands themselves has changed quite significantly since the mono-brand invasion.

Brands tend to maintain their own mono-brand points of sale and then work with a different local partner to open a direct franchise location, as opposed to hiring a company as an exclusive representative or independent agent of the brand, as is the case with Hugo Boss. 

“Today the regional partners are already there. The set-up is already there. Today, lots of the emerging brands do it directly,” he said.

The shrugging-off of exclusivity is not yet universal, but should pave the way for more mono-brand stores to come.

As George Kern, chief executive officer of IWC Schaffhausen said, “There is no other way to express the brand [than] in a boutique. You cannot do it with a shelf.”

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