Finance

Life saver Lang

by Emma Cosgrove
written by Emma Cosgrove

Before 2006, Near East Commercial Bank (NECB) was going nowhere. “There was no increase in revenues, no increase in assets — no increase at all,” said Dominique Lang, the Swiss banker who has acquired the task of reviving it. “It was, in our opinion, a dormant company, but it had a good name and good staff.”

Where the Central Bank saw a stain on Lebanon’s thriving banking scene, Lang saw an opportunity.

Playing the long game

Lang, a Swiss banker for nearly 30 years and chairman of Nomina Finance in Zurich, and his business partner Alfred Wiederkehr finalized the acquisition of the bank in April of this year — a deal nearly 10 years in the making.

NECB has been located at the Place de Beyrouth since 1978 when SNA insurance group owned it, before the Caland family took control.

Since 1993, Lang had been aware of Lebanon’s banking potential through a business relationship with the Caland family, and he became a shareholder at NECB when he and Wiederkehr wholly subscribed to a $9 million capital increase at the bank in 2006, gaining a 43 percent stake. Lang remained a shareholder until 2007, when the Central Bank began putting pressure on NECB to shape up its neglected balance sheets. He then became chief executive and soon enough, the sleeping bank began to show signs of life.

And indeed, the Central Bank’s concerns were not unwarranted. At end-2007 NECB had $142 million in assets and just $17.6 million in loans, with 40 percent of these considered “doubtful” and 10 percent classified as “bad debt.” The bank posted $3 million in losses that year.

But soon after Lang took over the management of the bank, he began to clean house.

“The bank had a big portfolio in real estate which was bringing in no money so we sold the biggest part of this portfolio. The operational result was then in the black,” he said.

Lang dropped most of this underperforming portfolio in favor of much higher-yielding treasury bills. This move significantly improved the bank’s interest margin and sped up the transition from red to black. The recovery was helped as well by the fact that NECB managed to spend significant time in red figures without losing a single depositor — a feat Lang attributes to the relationships between bank staff and clients.

In 2008 the bank made $283,000 in profits; 2009 saw more growth to almost $2 million. And according to Lang, the bank has already generated $2.6 million in profits for the first half of 2010 “The bank is now back to a normal situation,” he said.

It was this success in bringing NECB back from the brink, combined with the owning family’s dwindling interest in the bank that led Lang and Wiederkehr to buy the remaining 57 percent of the bank. The decision was made in January of 2010 and the deal, the value of which both parties have agreed not to release, was approved by the Central Bank in April.

According to Lang, the central bank was very receptive to the acquisition. He says that the close involvement of the Central Bank and Banking Control Commission (BCC) with regards to strategic planning has helped, and was not a hindrance as some of the bigger banks often complain.

Selling secrecy

Now Lang has the job of improving the bank past mere profitability.  A feasibility study is currently being conducted regarding the opening of two new branches in Beirut and Lang plans to continue the bank’s niche profile, focusing mainly on retail and private banking. He plans to focus on small and medium loans (ranging from $50,000 to $500,000) as smaller loans have a better profit margin and entail much lower risk.

Further, Lang says that the banking secrecy law and the know-how within the sector are good selling points to international clients.

“We see a slight demand from people in Europe, in Switzerland, to have an alternative to banks in Europe for the secrecy,” he said. “Lebanon is one of the remaining countries that has a law for banking secrecy. Until now we have brought [international] private clients for an approximate amount of $250 million.”

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A perversion of principles

by Michael Young
written by Michael Young

Recently, The Economist took an interest in Arab autocracy, titling a leader on the subject “Thank You and Goodbye.” The premise for this statement was that the leaders of Egypt and Saudi Arabia were getting old, therefore change is coming to both countries “for good or ill.” Change is indeed coming, but the rule in the Arab world has tended to be that the more things change, the more things remain the same.

The tenor of the leader was interesting, if for the wrong reasons. After listing the advantages and disadvantages of the policies of Egypt’s Hosni Mubarak and Saudi Arabia’s King Abdullah, the magazine carried its argument into a minefield of “ought to.” It advised that the regimes in both countries ought to do this and ought to do that, without really explaining why they would want to do so, given that they have spent decades avoiding the path of rule of law, democratic elections, human rights, and so on.

 

What positive developments there were during their respective rules came on relatively non-political fronts. Mubarak has managed to bring in investment, causing the Egyptian economy to grow quite rapidly of late. King Abdullah has sought to loosen the reins of the Saudi system by expanding education and opening up avenues for internal dialogue. However, as the framers of the Barcelona Euro-Mediterranean process learned years ago, against their initial hopes, Arab regimes’ economic and social liberalizations have not generated much in the way of political openness.

One reason for this is that the business community in the Arab world has tended to avoid rocking the political boat. Prominent businesses or businessmen often have established close ties with regimes (when they are not actually also regime figures), and therefore see few advantages in challenging a profitable status quo. Income disparities in the region also tend to be great, while higher education is of relatively low quality, making it even more difficult for a middle class to emerge and challenge the order in place.

That conundrum is one reason why even usually sharp observers, not least The Economist, are obliged to resort to the circular “ought” formulation – condemned to repeat, with little expectation of a response, what the Arab world needs by way of amelioration, without which reform would be impossible.

But this circular argument also leads to a paradox, one related to revolutionary change: Arab regimes are bad, but they are often better than their likely alternatives, namely militant Islamists who would impose far worse governance systems than the ones we have today. However, for these Islamist oppositions to be marginalized, Arab regimes need to open their systems up politically and economically, to reduce the popular discontent that allows the Islamists to thrive. Yet here is where things goes sour: If regimes become more tolerant, this could be exploited by the Islamists to expand their power, and many have actually done so quite successfully at the ballot box, as in Algeria, the Palestinian territories, Lebanon and even Egypt.  Where does this paradox lead?

Greater acceptance in the West for Arab regimes that abuse their societies, since this keeps Islamists at bay; and a higher likelihood of revolutionary change, because if a regime falters — as happened in Iran in 1979 — the Islamists, having no alternatives, will embrace violent and absolute transformation.

In other words, if Arab regimes untighten their fists, stability may suffer, and if they keep the fist tightened stability may eventually suffer too, in a dramatic way. So the West, particularly the United States, which provides many Arab regimes with vital financial and economic aid, is at a loss about what to do. That’s why the Western states also have a package of ‘oughts’ in hand, though few of them are ever adopted that could threaten the regimes implementing them. 

Here is an irony: standing against those lamenting Western “neo-imperialism” in the Middle East is a reality of harsh Arab sovereignty. It is a sovereignty based on instilling the fear in the hearts of the outside world, the West in particular, that tinkering with the machine of the dictators may have terrible consequences. So Arab regimes everywhere remain free because their people are kept in chains.

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Grand Ayatollah Mohammed Hussein Fadlallah, 1935-2010

by Nicholas Blanford
written by Nicholas Blanford

Sayyed Mohammed Hussein Fadlallah was a difficult man to pigeonhole, although many tried. From the early 1980s, he became, in the minds of many, synonymous with Hezbollah and was forever described as the group’s “spiritual leader” who had personally blessed the suicide bomber who blew up the United States Marines’ barracks at the Beirut airport in 1983. It was a tag that endured, even though Fadlallah eschewed a formal role within Hezbollah.

The claim that he blessed the Marines’ barracks bomber has also been put down as a rumor deliberately circulated by Lebanese military intelligence during the presidency of Amin Gemayel to discredit the cleric.

Fadlallah, despite being a leading advocate of an activist and modernist Islamism, tended toward dispensing guidance and advice and disdained the parochial obligations of running a political institution. Yet his teachings and writings served as an inspiration for Hezbollah’s founders and he continued to wield influence from afar during the party’s formative years. Among his early followers was a skinny bespectacled youth named Hassan Nasrallah, who even before reaching the age of 10 was a regular attendee at Fadlallah’s sermons in Nabaa.

Even though the official marja (religious reference for followers) for Hezbollah is Iran’s Ayatollah Ali Khameini, it is no secret that many members of the party actually followed Fadlallah. I know of one Hezbollah fighter who was utterly inconsolable on hearing of Fadlallah’s death and in his grief made unflattering comments about Khameini.

Fadlallah was a magnificent public speaker with a showman’s knack for whipping up an audience. But in the 1970s, he faced stiff competition from Imam Musa Sadr for the hearts and minds of the Shia community. Sadr was an Iranian of Lebanese ancestry who had arrived in south Lebanon in the late 1950s and soon made a name for himself as a progressive and dynamic cleric determined to better the lot of the marginalized Shia. He established the Amal Movement in 1975.

Both Sadr and Fadlallah were brilliant orators, but there the similarities ended. Sadr was slim, tall, charismatic, enlivened with boundless energy that saw him holding meetings, lectures and sermons up and down the country. Fadlallah was short and portly, a scholastic figure who centered his activities on his Nabaa neighborhood, glossing over doctrinal differences between Shia and Sunnis and emphasizing the unity of all Muslims.

Sadr’s purview essentially was limited to the communal betterment of Shias in Lebanon within the Lebanese system, while Fadlallah advocated the creation of a modern Islamic state and espoused a universal Islam that ignored man-made frontiers.

Sadr regarded Palestinian militant activities in south Lebanon with misgivings because of the suffering it brought upon his Shia constituents, but Fadlallah embraced the Palestinian cause, considering the eradication of the Zionist state as a moral and Islamic imperative.

Sadr vanished, mysteriously and famously, on a 1978 trip to Libya. For many Shia, dismayed at the more secular direction of the Amal Movement under the subsequent leadership of Nabih Berri, it was natural to gravitate toward the bolder views of Fadlallah.

Fadlallah originally objected to suicide bombings, but changed his stance in the mid 1980s when Lebanon was in the grip of Israeli occupation. In justifying suicide bombings, he said “there is no difference between dying with a pistol in your hand or exploding yourself.” But he pointedly added that suicide operations could not be condoned lightly and that if alternative means of attacking the enemy were available then they should be used instead.

Fadlallah supported Hezbollah’s goal of establishing an Islamic state in Lebanon, but recognized that given Lebanon’s pluralistic society, the attainment of an Islamic state was an impossibility in the short term. His perspective helped shape Hezbollah’s decision in the late 1980s to reverse its outright rejection of Lebanon’s power-sharing system of governance and to submit candidates for Lebanon’s parliamentary elections in 1992.

NICHOLAS BLANDFORD is a Beirut-based correspondent for The Christian Science Monitor and The Times of London

 

 

 

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Shifty as a desert fox

by Paul Cochrane
written by Paul Cochrane

As readers of a business magazine, I am no doubt preaching to the converted, but it really does pay to scan the financial pages to know what’s going on with the movers and shakers of this world. If you had confined yourself to reading ‘straight’ news and the op-ed pages, or watching TV news for that matter, you would have missed out on the biggest media deal in the Middle East this year. A deal that has been a long time coming and is set to have major implications for the region’s TV landscape.

In February, global media ‘emperor’ Rupert Murdoch, owner of News Corp, acquired a 9.09 percent stake for $70 million in Saudi Prince Alwaleed Bin Talal’s Rotana Group, which has six TV channels and is the world’s largest producer of Arabic music.

Murdoch has been itching to get into the booming Middle Eastern market to extend his control over the planet’s media consumption, with an empire already spanning the Americas, Australia, Europe and Asia with the Fox network, the Star TV network, Sky News and a plethora of newspapers including The Wall Street Journal   (WSJ) and The Times of London. Signs of News Corp’s entry into the region started with Rotana launching two Fox channels last year. Then came the stake in Rotana, which sparked speculation that a Fox Arabic news channel was in the pipeline.

Bin Talal denied this in February, but in July the prince announced that he is to launch, independently of Rotana, a 24-hour Arabic news channel in partnership with the Fox network. Murdoch’s move into the region then took a further twist in mid-July, with news that British pay-TV broadcaster BSkyB, 39 percent owned by News Corp, is in talks with a private Abu Dhabi investor to launch an Arabic news channel.

Such developments would have previously lit up the news wires and the blogosphere, as happened when News Corp bought Dow Jones, owner of the WSJ, in 2007. Instead, the News Corp-Rotana deal seemed as if it had never happened. Few regional newspapers ran any form of commentary, and the news was nowhere to be seen outside the business pages.

Perhaps editors assumed that Bin Talal’s news channel, whenever it may launch, will have little impact, given that there are 487 Arabic satellite channels already broadcasting in the region. But one might have thought that in the Arab world, of all places, there would have been more than a muted response to the entry of a media empire that banged the drums of war louder than any other organization for the invasions of Afghanistan and Iraq, and, moreover, is rabidly pro-Zionist.

The more likely reason for the media’s silence is more alarming.  Elsewhere, when News Corp expanded, people decried the fact that media consolidation would lead to less diversity in opinions and affect freedom of expression.

Yet in the Middle East, the major media outlets and newspapers have long been in the hands of the few. Bin Talal is the biggest shareholder in News Corp outside of the Murdoch family, at 7 percent, while he owns the majority stake in the Lebanese Broadcasting Corporation’s (LBC) satellite channel and is a stakeholder in Lebanese newspapers An Nahar and Al Diyar. Other Middle Eastern media heavyweights are owned by or linked to Gulf royalty. Clearly, no one wanted to ruffle any feathers or affect future job prospects by critiquing the deal. As Bin Talal is one of the richest men in the world, Murdoch’s buy-in is not solely about further monetary gain.

The prince said as much in February: “The [News Corp] transaction is way, way beyond finance… Rotana does not need to be financed. It has near zero debt.” Perhaps when Murdoch acquires a further stake in Rotana — which he is entitled to do in late 2011, to 18.8 percent — courageous voices in the media will speak up about what a strange tie-up this is, between a Saudi prince and a media mogul whose outlets continuously bash Arabs and Muslims while offering unflinching support for Western and Israeli military aggression in the very region where he is investing.

Or, perhaps, there will just be a short story in the business pages to let us know it is, well, business as usual.

PAUL COCHRANE is the Middle East

correspondent for International News Services

 

 

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The rial’s slow starve of Yemen

by Alice Fordham
written by Alice Fordham

Yemen’s currency woes do not top global concerns. And yet the wobbling Yemeni rial, having depreciated 13 percent against the dollar since January, could have devastating consequences for the stricken nation, the ripples of which could well wash ashore through the Arabian Gulf and beyond.

When oil prices plummeted more than two years ago, Yemen’s single-resource economy took a pounding, as the government had overestimated its income and overspent. The result was a 2009 deficit around 10 percent of GDP: crippling for a country unable to borrow from international financial markets and whose primary means of raising funds is to borrow from its central bank and sell foreign currency reserves.

International Monetary Fund policy advice and some aid have reduced the deficit, but the finance ministry predicts it will still be 7.7 percent of GDP in 2010.  Further problems have come in the form of a national shortage of dollars. Yemen imports nearly everything it consumes, and a policy designed to make importing easier and more profitable saw low taxes on imported goods last year. Reliable statistics are hard to come by in Yemen, but Deputy International Planning Minister Hisham Sharaf said that luxury goods, including cars and electronics, came pouring into the country as never before. Exporting dollars for imported goods, traders have depleted dollar reserves, which stood at $6.2 billion in March, their lowest level in five years. This dollar demand consequently boosted its value over the rial.

Respected economists also allege that as much as $3 billion dollars has left the country in money-laundering activities. Political analyst Abdulghani al-Iryani, however, reckoned that sum to be on the high side, and said that the more common practice was for people to dump their rials for dollars and stash them in Dubai banks, exacerbating the dollar shortage and leaving the rial ever-more vulnerable.

Recently the rial has held stable on exchange markets, but only because the government has propped it up through drawing on some $1.1 billion in foreign currency reserves; this is unsustainable and would devour these reserves within two years. As long as the pressure on Yemen’s economy is maintained, oil supplies dwindle, gas exports remain negligible, investors are scared and no cash injection comes, the rial’s fall is inevitable.

How much it will fall is debatable: optimists hope for a gradual, controlled descent, while pessimists foresee a rush to change assets to dollars and a possible run on the banks. Even the current stability measures are harmful. Interest rates, for instance, are being held around 20 per cent, which businessmen say is preventing them taking out loans to expand or start businesses.  Given that almost all Yemen’s food is imported, food prices have risen and will rise more. Yemeni consumers are fairly thin already and will have to tighten their belts further, despite there being more malnourished children here than anywhere in Africa, with the World Food Program classifying a third of the population as “acutely hungry.”

High food prices in 2007 sparked riots. Yemen is critically unstable, and large parts of the non-urban areas of the country are ungoverned, with Houthi rebel groups in the north, an increasing Al Qaeda presence and secessionists in the south. The IMF and World Bank, along with the government, are attempting to improve the situation. The bloated civil service has had its pay frozen and last year’s Ramadan bonus was cancelled. Massive government fuel subsidies, which benefit the rich far more than the poor, have been cut slightly, and a general sales tax has been introduced targeting importers.

There is talk of helping Yemen move from an oil to a non-oil economy, encouraging fishing, mining and tourism. But these are slow, long-term changes difficult for a country hanging on the edge of civil war and bankruptcy, with dwindling income, growing population, chronic unemployment and rapidly-diminishing savings. It is also an open secret that those close to the top of Yemen’s opaque power structure benefit from oil subsidies and unreformed business laws.

Western powers worried about Al Qaeda, and Gulf countries worried about a failed state on their borders need to look to the nitty gritty of the Yemeni economy. They should use their leverage with the government to cut corruption, slash fuel subsidies and get Yemenis trained and internationally employed in Saudi to help rebuild Yemen, one rial at a time.

ALICE FORDHAM is a correspondent

 for The Times of London

 

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American imports of influence

by Riad Al-Khouri
written by Riad Al-Khouri

In praise of free trade, 19th century British politician Richard Cobden described it as “God’s Diplomacy,” bringing people together to prosper. Taking a page from his book, the United States has successfully applied this idea in the region, using trade to further political ends even as America’s traditional Middle East diplomacy stumbles.   

This regional success for America began with the launch of the Qualifying Industrial Zone (QIZ) model in the mid-90s, allowing joint Israeli-Jordanian output to enter the US duty-free, mandating 7 to 8 percent Israeli value-added input into a product as one condition for the trade privileges. QIZ resulted in massive Jordanian garment exports to America, reaching a peak of over a billion dollars annually. So successful was the model in promoting trade that Egypt got the same privilege — the Israeli component in the Egyptian case being 11.7 percent — and started in 2005 to sell textiles and apparel to the US, with those exports jumping to $764 million in 2009.

On the political side, QIZ has been another way for the US to both support Israel economically and effectively buy off Jordanian and Egyptian complicity with the Jewish state, thus furthering America’s political agenda in the region.

Investment in a QIZ is particularly attractive to industries such as textiles and clothing, which are subject to high US tariffs. Consequently, 80 percent of QIZ companies in Egypt and almost all of those in Jordan produce such articles, with big-name US buyers including, among others, Wal-Mart, Van Heusen and JC Penny. Around the States these past few months, I saw more of these products, labeled “QIZ made in Jordan” (or Egypt). This is a far cry from 15 years ago, when it was almost impossible to find Jordanian products on sale in the US, and very rare to see items from Egypt.

There were times when almost the only things our region exported to the rich markets of the West were crude oil and a few other minerals in raw form. By the 1980s, with the expansion of immigrant communities, some foods joined the list of regional exports, as Lebanese hummus and such became available on Western supermarket shelves.

The counterargument runs that selling these ethnic products is easy and ultimately a small niche, while exporting garments to be sold by Wal-Mart is a poor man’s game, so all this exporting hubbub is not really making people rich through higher value-added products.

Could this pattern now be changing? The answer from Egypt, Jordan, and a few other countries in the region seems to be yes. Egyptian QIZs are now kicking in with furniture, leather products, footwear, and glassware. Jordan, which has had a free trade pact with the US since 2000, goes beyond QIZ garment production and has started exporting a growing breadth of goods to America, including air conditioning equipment, branded pharmaceuticals and cosmetics, among many others.

Of course, the hummus and falafel mixes are still there, but in increasingly sophisticated form, and joined by higher-end goods such as spices, herbal tea, and burghul wheat — products that have also penetrated Europe Union with help from EU free trade deals with many Arab states. Not that this is a simple process: such hurdles as EU technical requirements and US Food and Drug Administration product guidelines have to be negotiated, but regional exporters are increasingly managing to comply with requirements of Western markets.

The image of a Middle East exporting only crude oil and crude hummus is fading as regional exporters manage to penetrate Western markets with a widening variety of higher value-added goods, thanks to free trade deals. The next big surprise on this score could even be the Syrians, whose commercial pact with the EU may be coming on stream soon, after which Syria’s industrial exporters will no doubt begin invading European markets.

Given the current state of the regional peace process, however, God’s Diplomacy may take a little longer to bridge the divide between Damascus and Washington.

RIAD AL-KHOURI is a senior economist at the William Davidson Institute at the University of Michigan in Ann Arbor, and the dean of the business school at Lebanese French University in Erbil, Iraq

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Sanctions stalk Iran’s free market

by Gareth Smith
written by Gareth Smith

As Iran’s 2005 presidential election approached, a broker active in Tehran’s stock exchange was downbeat. “Pessimists look at the elections and see no new ideas and no new faces,” he told me. “They worry that pressure from outside means tighter rule at home. And that, in turn, means more bad politics, more bad economic policy and no markets.” Five years later, his words appear prophetic. Expanded economic sanctions imposed by the United States and — to a lesser extent — the United Nations have curtailed Western investment in Iran’s economy, strengthening the role of the state. The conservative president Mahmoud Ahmadinejad has presided over a crackdown on the reformist opposition and reversed the sluggish economic liberalization that took place under the previous president, Mohammad Khatami. Strange, then, that the Tehran stock exchange (TSE) should be at record levels, with the most-quoted index, Tepix, reaching 15,361 in the third week of July, above even the bull market that peaked at 13,882 in late 2004. But today’s “boom” at the TSE is very different to 2003 and 2004. In those days, expatriate money was flooding back, feeding rising prices in stocks and real estate. At the same time, private banks were expanding, Western energy companies were signing deals for developing Iran’s oil and gas resources, and Tehran was in talks with the European Union over its nuclear program.

The current rise of stocks in Tehran takes place in an exchange more and more dominated by state, or quasi-state bodies, which have proved adept in exploiting the Ahmadinejad government’s privatization policies. Funded to a greater or lesser degree by oil revenue, the state sector is far better placed to survive sluggish economic growth, currently at 2 percent according to the International Monetary Fund. The retirement fund of the Revolutionary Guards was also involved in the consortium that last year bought a 50 percent plus one share stake in the state-owned Telecommunications Company of Iran (TCI).

“The government and quasi-government bodies have made the TSE far more of a co-operative than a competitive game,” an Iranian economist told me. “As a general rule, in developing or risky economies cash dividends are more prevalent [than retained earnings] and pay-out ratios higher. Buying and selling stocks can help increase an extraordinary income to make up for declining profits from normal businesses. And of course, we should not forget that high oil revenue over recent years, despite the falls since 2008, has built up greater liquidity and that there are a limited number of investment opportunities in Iran.” Isolation cuts both ways, and sanctions make Iranians reluctant to invest abroad.  Government and quasi-government bodies are especially cautious. Another factor in the bourse’s boom, said the economist, was a perception that political unrest after last year’s disputed general election had died down: “The surge in the TSE began around five months ago as people perceived an apparent stability after nearly a year of uncertainty.” The buoyancy of the Tehran stock market has also attracted liquidity from falling markets in the region and elsewhere. Turquoise, an investment firm majority-owned by the London Stock Exchange, offers an Iran equity fund and has described the TSE as “one of the most under-valued emerging markets in the world.”

Traders detest the growing politicization of the Iranian economy. Many Western media outlets described last month’s protests in a Tehran bazaar against tax rises as a potential return to the strikes that helped topple the Shah in 1979. On the other hand, Hussein Shariatmadari, editor of the leading conservative newspaper Kayhan, recently wrote that officials were slow to take action against “a handful of prosperous capitalists” in the bazaar. Shariatmadari has been a strong supporter of Ahmadinejad and is clearly in no mood to pander to advocates of lower taxes or market liberalization.

Across the board, sanctions weaken the private sector. If the US is successful in blocking the insurance of goods being transported in and out of Iran, then the government may well take over the responsibility. 

As the broker said back in 2005, “more bad politics, more bad economic policy, and no markets.”

GARETH SMYTH is the former Tehran correspondent for the Financial Times

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Society

“Those who tell the stories rule society”

by Mark Helou
written by Mark Helou

The above quote from Plato has never rung more true. At a time when perception is stronger than reality, the people who can tell the stories and influence public opinion are now as powerful as the strongest armies in the world. Heads of media conglomerates are feared and even revered by most heads of state and politicians, who are fully aware that they can ‘make or break’ them.

The power of the media today is such that it can even make or break the image of a whole country. With the proliferation of 24-hour news, satellite TV, social media and the Internet, influencing people’s perceptions of a country has never been easier. Inhabitants of the “global village” are continuously subjected to a stream of movie and TV productions that also contribute to forming numerous stereotypes and images, which they end up perceiving as reality.

 

This is not to say that motion pictures and television are the only, or the most influential media channels, but they are often the channels most able to transcend linguistic, ethnic, social, and cultural barriers. Whether you are watching a Charlie Chaplin or a Steven Spielberg movie in English, Spanish, or Chinese, chances are, you are going to understand the messages behind it and sub-consciously pick up and form what you believe are your own ideas and perceptions.

How a country is perceived by investors and visitors can make the difference between economic prosperity and stagnation – especially for a state such as Lebanon, which is eager to attract investment and rebuild its tourism industry as an economic backbone.

A nationwide thinking process around this issue is all the more relevant today, as Lebanon is at the threshold of an extremely promising touristic season, confirming the country’s potential as a destination of choice for tourists of all nationalities. Its image should thus be optimized to take full advantage of this potential. 

Sadly, the media – especially Hollywood – continues to portray Lebanon as a land of war and violence, perpetuating an image of the country as being unsafe, dominated by extremists, or a haven for terrorists. There are many examples of Hollywood movies such as Syriana, Spy Game, Naked Gun and, more recently, From Paris with Love, in which silver screen stars use Beirut as a metaphor to express a state of mayhem and anarchy. While we might think that this is only done in the context of a movie, and will not have any lasting effect, emphasizing again and again that same message will ultimately affect global opinions of Lebanon, especially in the many without first-hand knowledge.

Shorthand for destruction

The same applies for other media outlets such as TV and newspapers, where Beirut has been constantly used as shorthand for destruction and anarchy. Whether there is intentional malice behind it or not, this further confirms the fact that Beirut remains a byword for chaos. This originated with the stream of horrific images that came out of Beirut during the Lebanese Civil War. Among the first conflicts in the era of 24-hour news and live broadcasting, and also involving foreign deaths and hostages, the 15-year conflict seems to have burned an indelible mark on the city’s reputation.

The fact that Beirut was a sophisticated westernized city in the eyes of the international community made its rapid descent into mayhem all the more striking, rendering it a sensationalist example of a ‘good thing gone bad.’

The interest that the international media had in Lebanon during the war years was such that the terminology “Lebanonization” or “Libanization” even became part of the media and political analysts’ lexicon. Such terms even made it into dictionaries as synonyms for the breakdown of a country into various religious communities.

Believing the hype

But the media can not only break a country’s image; it can also help build it to the extent where the line between fiction and reality often becomes a blur. 

Take the case of the United States: While Hollywood and the US media in general have often portrayed Lebanese and Arabs as violent, backward, and blood-thirsty terrorists, they were able to create an image of the regular American as the quintessential hero in the waiting, always willing to sacrifice himself to save the world. Movies like Armageddon and Independence Day are only a couple of the scores of films that have helped build the image of America, among its citizens at least, as “the land of the free and the home of the brave.”

Westerns also succeeded in the acrobatic task of portraying the settlers of the new world as the “good guys” while their Indian victims were confirmed as all-time villains, and series like “Sex and the City” have established the image of New York as glamorous and romantic, downplaying its darker side.

What the media has effectively done is to entrench the feeling among Americans that they have a responsibility to lead the world, that they are the guardians of humanity. In that sense a cliché becomes a stereotype, and a stereotype becomes a reality for many.

One thing we can learn from Hollywood is that the only way for us to amend Lebanon’s image is by using the same medium that got us here in the first place: the power and reach of the mass media.

Changing scene

So far, there have been a number of sporadic and ad-hoc efforts, some spearheaded by the government and the Ministry of Tourism, and others that came spontaneously or as a result of a particular media’s interest in Lebanon, such as the New York Times article that ranked Lebanon as the number one destination to visit in 2009, the article in Paris Match focusing on Lebanon’s  joie de vivre, or the report on CNN highlighting the fact that Beirut has become a “top city to party in.”

That said, a concerted national effort to develop a clear and holistic communication strategy to rebuild Lebanon’s image is still lacking.

We have to decide how we want Lebanon to be perceived and which key attributes we want communicate. Do we want Lebanon to be seen as a place for those looking to party all night long and enjoy the naughtier side of the country? Do we want Lebanon to be seen as a perfect getaway for family relaxation and for those looking to enjoy its mountains and beaches? Do we want Lebanon to be positioned as a place filled with history, focusing on our archeological heritage, or do we want to position Lebanon as a hub for business and investments instead?

Media campaigns should focus on communicating Lebanon’s positioning and edge, as should politicians and civil servants abroad in all their meetings and conferences.

Seeing how the movies can help build a country’s image, the government must support the local film industry; several home-grown offerings have already started shifting the public perception of Lebanon away from that of a bombed-out haven for terror and fundamentalism.

But more importantly, we as Lebanese citizens should take advantage of the current emergence of new media channels and the drastic decrease in production costs that have come about thanks to the omnipresence of digital technologies.

The global media and communication scene has reached a new stage where anyone can make themselves heard across the globe, and where creating and disseminating impactful content has become accessible to each one of us.

As such, changing existing perceptions or creating new ones becomes only a matter of creativity, a creativity that each Lebanese citizen can exercise in order for us to help successfully build the image that truly reflects the history, values and uniqueness of our country.

 

 

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Society

“War Games”

by Executive Staff
written by Executive Staff

Aid is big business. The wealthy donor governments that belong to the Organization of Economic Cooperation and Development together give around $120 billion annually. In addition to the United Nations, there are a growing number of both international and local non-governmental organizations (NGOs) competing for a piece of this sizeable pie — but very little popular debate over how they spend it.

In her new book “War Games,” Linda Polman seeks to redress this omission through a savage critique of the aid industry. The veteran Dutch journalist accuses aid organizations of continuing the cycle of violence in the countries they are supposed to be assisting, as aid is appropriated by various militias in conflict zones and used to further their own, often bloody, ends.

In Rwanda, for example, Polman claims that the Hutu extremists would not have been able to murder up to a million Tutsis, based from their UN camps in what is now the Democratic Republic of Congo, without the humanitarian benefits they received as refugees. “Without humanitarian aid, the Hutus’ war would almost certainly have grounded to a halt fairly quickly,” she states.

Polman also touches on the issue of bribes, the morally questionable kickbacks that aid organizations often have to offer local militias in order to be able to safely deliver aid in some of the most lawless places in the world. It’s something the people involved want to keep a lid on: “Aid organizations and donors usually prefer to keep silent about the aid to war-torn countries that is extorted or stolen, and there’s no collaborative attempt to quantify the damage,” says Polman.  

Polman argues that ignoring politics when delivering aid is murderous. “Humanitarian crises are almost always political crises, or crises for which only a political solution exists. When donors, militias and armies…play politics with… aid, NGOs cannot afford to be apolitical.”

“War Games” offers a strong argument for aid organizations to engage with their context. But simultaneously, it also unknowingly provides a counter argument as to why aid organizations should be wary of dabbling in politics. What if they get it wrong, or misunderstand a complex situation, as Polman does several times?

For example, in criticizing UNRWA, the UN agency responsible for Palestinian refugees, for supposedly allowing the creation of militant breeding grounds by providing shelter and services to the civilians displaced by the creation of

Israel, she makes the following statement: “When Sabra and Shatila… were attacked by Phalangist militia units in 1982, half the world was incensed, saying the militia had massacred innocent people, while the other half believed the attack was justified because the camps were in fact military bases.” If Polman had done even the most basic research she would know that the armed members of the Palestinian Liberation Organization had left the camp and that the massacre was carried out on an unarmed civilian population. Polman also makes no mention of the Israeli Army’s collaboration in the massacre.

So, what if aid organizations get it wrong politically? Polman argues convincingly that by not engaging they are getting it wrong anyway. The question is not whether we should simply do nothing at all — rather, donors and NGOs need to ask themselves where the balance lies between the positive effects of aid and its exploitation by warring parties. At what point do humanitarian principals cease to be ethical?

Despite the many faults of this book, Polman delivers a stirring polemic that does ask important questions about the aid industry today. Whether aid organizations will seriously take on the debate raised by “War Games” is yet to be seen.  

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Society

Crisis-proof style

by Emma Cosgrove
written by Emma Cosgrove

What does luxury powerhouse Louis Vuitton do as designers step away from haute couture and multi-national brands file for bankruptcy? They throw a party – several in fact.

Still basking in the golden glow of their World Cup triumph – providing the trunk from which the cup itself traveled from Paris to Johannesburg  – the legendry fashion house finally opened its long-awaited Beirut store with a string of soirees and press events. The ostentatious branded trunk facade that covered the Beirut Souqs store whilst it was being prepared came off with a fanfare, perfectly illustrating the statements of brazen confidence from Vuitton’s chief executive officer Yves Carcelle.

“We were the only brand which published double digit growth 2009 worldwide, so yes there was a crisis but we didn’t feel it. We rather have the feeling that each time there is a crisis, that reinforces our market share because people in these periods tend to turn to objects of real value,” said Carcelle at the July 15 opening of the Allenby Street boutique. The Beirut store marks Vuitton’s 453rd store worldwide with regional outlets in Bahrain, Qatar, Abu Dhabi, Riyadh and Jeddah. In addition to the traditional Louis Vuitton luggage, bags and shoes, the brand will also produce a city guide for Beirut, as they do for all of their stores, with restaurants, hotels and activities fitting the brand, which should be available in October. Joseph Ghosn, editor in chief of several Conde Nast Paris websites and a native of Lebanon will be heading the effort.

Vuitton is one of the headlining brands of luxury conglomerate Louis Vuitton Moet Hennessy (LVMH). In 2009 LVMH profits dropped 13 percent, causing group Chairman Bernard Renault to announce that “bling went out of fashion with the crisis.” But Vuitton seems to be one of the few brands not affected by the bling backlash.

Though Louis Vuitton has been growing strongly, the brand’s behavior is congruent with current trends in the luxury fashion world, which is squarely looking east.

In October 2009, Vuitton became one of the first luxury brands to open a store in Ulaanbaatar, Mongolia. The brand is also choosing to upgrade its flagship stores in London and Paris, even in these lean times.

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