Real Estate

Waking the sleepers

by Rayya Salem
written by Rayya Salem

Grandiose visions of splendor have dissipated for Dubai’s developers after a sobering couple of years spent rethinking their payment schemes and trying to re-galvanize investor confidence. Now they are left with an array of unfinished projects, many of which are currently dormant.

 

“Not many projects have been restarted except the Nakheel ones,” says Charles Neil, chief executive officer of Landmark Advisory, a division of Landmark Properties. “Most of the ones that are stalled will remain stalled.”

Neil adds that it was the combination of the financial crisis and many developers’ lack of experience that led to the huge swaths of unfinished projects scattered throughout the emirate. Certain areas like Business Bay and Dubai Marina have a concentration of unfinished work, though some slow and cautious crane activity recently restarted. In June 2010, Proleads, a construction consultant, said $5 billion worth of Dubai projects were stalled, some of which had never physically started construction. More recent data published in The National suggests that more than a fifth of Dubai’s projects are postponed or have been cancelled completely.

According to Fadi Moussalli, regional director at Jones Lang LaSalle in Dubai: “Some projects went beyond the point of no return; depending on the project’s financing [or re-financing], how much was sold and how much of the down payment has been paid in cash, a developer may reach a conclusion that it would be less costly to re-launch building [work] rather than do nothing because of the liabilities on that building.”

Dubai World’s property arm, Nakheel, repaid $930 million to creditors as early as September of last year, announcing a mighty revival of construction on eight of their stalled projects (see chart). Though priority was given to Al Furjan and Jumeirah Park villas, Nakheel, in a November 12 announcement, only mentioned reactivating the first phases of construction. That means Arabtec, the construction company assigned to Al Furjan, is back on payroll but will complete only 800 units out of the 4,000 originally planned by the first quarter of 2012, after it had halted work in January 2010.

Pauling Middle East and Al Huda Contracting Company will both go back to stacking up villas in Jumeirah Park, but Al Huda will only deliver 289 out of the 2,764 villas originally planned by the fourth quarter of 2011. In response to investor frustration over Nakheel’s delivery delays, Chairman Ali Rashed Lootah said in February that about half of the company’s liabilities to buyers were swapped for these and other units to be completed in the next two years.

Landmark Advisory’s Neil believes most developers have opted to downsize their projects: “For people who put down payments on five villas, their deposits will all go towards one villa; that’s how they consolidate.”

The cost of stalled projects

A project’s revival will be driven by its uniqueness, its location and “the possibility of securing an anchor tenant, if that’s relevant” said Mark Fraser, partner at Dubai law firm Taylor Wessing, who believes that “it’s not just Nakheel that will be resuscitating projects.” Areas other than Business Bay, Dubai Marina (where Abyaar and Omniyat are trying to restart projects) and Jumeirah are seeing re-construction, such as the tourism mega-project in Dubailand, City of Arabia, which is being developed by Dubai Properties.

The biggest issue for developers is reeling in their contractors. “If you renegotiate with the appointed contractor, there are certain running costs in addition to remobilization costs for the stalled projects,” said Rizwan Shaikhani, managing director of Shaikhani Contracting. “If you appoint a new contractor, he’s got big liability concerns because he has no idea how it was built by the other contractor and has to go through complicated legal formalities and project details to ensure nothing has been overlooked.”

Any delays pose structural concerns, as exposed projects are subject to Dubai’s harsh environment. When slabs under the foundation are exposed to high temperatures for years it can cause a defect, posing a legal headache for the old and new contractor as well as safety concerns for the owner and future residents. The United Arab Emirates’ civil code does not specifically address who is at fault in such a situation, but, as Fraser asserts, “Given the potential liabilities that a contractor can face under the UAE civil code, he is going to implement exhaustive surveys to manage such risks.”

For example, exposure to salt and humidity in porous concrete can alter its composition after a year or two, depending on its quality, according to Tanmay Biswas, an engineer at Meinhardt Dubai who spoke at a June 2010 conference in Dubai about the risks of re-constructing stalled projects. Exposed pumps, electrical cablings, rebar and steel also need to be protected from the elements, but owners and consultants often spar over who should pay the maintenance fees when a project has been stalled, according to Biswas.

Anyone in business knows that time is money. But for Dubai’s half-built structures, time is more costly than elsewhere because the climate weighs heavily on the cost of re-starting construction. According to Taylor Wessing’s Fraser,    when Thailand was finally bouncing back from the 1997 Asian financial crisis some five years ago, half-built developments that had been stalled for six or seven years were resuscitated. Contractors weren’t particularly concerned about degraded materials because of Thailand’s wet tropical climate.

“[Dubai] is obviously different because of salt and heat issues, but you could still resuscitate a building 3-5 years after, if a reputable survey company, either local or international, has carried out a comprehensive examination of the building,” said Fraser.

Oversupply

Given the oversupply across all sectors in Dubai and the resulting negotiating power of the tenant shopping around for the best deals, one of the prickliest thorns for developers is not reconstruction but rather trying to fill the units after they are finished.

Dubai Pearl shining up a treat
Pearl Dubai FZ Chief Executive Officer Santhosh Joseph seems to have weathered the financial storm better than most. In a February email to Executive, Joseph said that fundraising was underway for phase one of the Dubai Pearl – a 1.86 million square meter ‘city-within-a-city.’ “A total of 3 million man hours have been spent since work started and over 70,000 cubic-meters of concrete has been poured on what is one of the largest construction projects still being developed in the UAE,” he said.
 
It has been a long road for the project since it was conceived in 2003. Pearl Dubai FZ, a consortium headed by Abu Dhabi’s Al Fahim group, took control of the project in 2007 after its previous owners had to give up on it due to financial concerns. In November 2008, the UAE’s largest construction group, Al Habtoor-Leighton, bagged the $2.4 billion main construction contract, the largest deal in the region at the time.
 
The initial phase will cost $2.5 billion to build, but construction “[has] never stalled and remains on schedule” since starting in March 2010, though it was earlier announced that construction would begin in January 2009 after structures were demolished on-site during the enabling works phase in September of 2008. Most probably because of the change of ownership and drastic “revival plan” that called for a $6 billion project instead of the originally planned $800 million project on the cards, the project was “stalled” for years, according to various local and non-local media outlets.

In 2011, Dubai’s total housing stock will see an increase of 25,000 new units, bringing the total number to around 335,000, according to Jones Lang LaSalle’s fourth quarter 2010 report released in January, adding that the value of transactions dropped 65 percent in the year leading up to the third quarter of 2010. Reports issued last month say properties such as Jumeirah Lakes Towers are still empty, as is half of Dubai Marina, where 36 crane sites are actively humming along.

Jones Lang LaSalle’s Moussalli said, “It’s very tough to fill a building with over 100 units when tenants are dictating [the market].”

Landmark Advisory’s Neil adds to the gloomy mix: “I think the investors don’t have a lot of confidence that these projects will be completed on schedule. For example, we [Landmark Properties] get some of these houses on the secondary market.

Buyers are not interested because there’s plenty of choice to buy something ready and functioning and because you have no idea when they will be completed.” There are also problems such as a lack of utilities connections and infrastructure in zones like Business Bay, meaning that even if homes are complete, they are still not immediately livable. 

Next target… malls

Developers seem to be turning to Dubai’s greatest pastime, shopping, to grease the cash-flow wheel since it became rusty in the dry financial climate of the last two years. Emaar, the other Dubai-based construction giant often described as Nakheel’s rival, pulled in 24 percent of its 2010 revenue from its retail and hospitality sector, according to its 2010 earnings statement released on February 10. In 2009 it was about nine percent of revenue.

Perhaps that’s why Nakheel is set to expand its Dragon Mart and Ibn Battuta malls in Dubai as soon as the eight priorities it listed in September are brought to fruition, as a serious cash inflow would be more of a priority than finishing work on other stalled projects.

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Finance

Checking up

by Executive Staff
written by Executive Staff

Lebanon saw a 38.7 percent rise in check clearing activity in the first quarter of 2010. According to figures released by the Association of Banks in Lebanon, total cleared checks came to $16.9 billion. The increase was attributed to a 43.1 percent surge in foreign currency denominated checks, 22.7 percent higher than in local currency.

Activity peaked in March, up by 56.6 percent on the same month last year, and 17.4 percent and 32.6 percent higher than January and February, respectively. The rise in foreign currency denominated checks has led to an increase in dollarization to some 80 percent in the first quarter versus 78.4 percent over the same period in 2009.

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Israel’s parting shot

by Nicholas Blanford
written by Nicholas Blanford

At a sharp turn in the road between the villages of Meiss Al Jabal and Houla along the Lebanon-Israel border, a small patch of scarred asphalt still sparks my memory from a decade ago.

May 23, 2000 marked the third day of Israel’s headlong retreat from South Lebanon and the border zone it had occupied for 22 years. The western and central sectors of the zone had already collapsed, with militiamen from the Israeli-allied South Lebanon Army (SLA) fleeing across the border the night before.

At around noon, I was watching a procession of captured SLA armored vehicles grind through the nearby village of Aytaroun when I heard my name shouted and saw a familiar face emerge from a shop. It was Abed Taqqoush, a long-time driver for visiting BBC journalists.

Abed hurried over, grinning broadly, eyes bulging with excitement. He handed me a can of Pepsi and slapped me on the back.

“Isn’t this amazing?” he said, gazing at the chaotic scene around us.

We were joined by veteran BBC Middle East correspondent Jeremy Bowen and his cameraman Malek Kenaan. Bowen said he was going to Aadayseh where the SLA had blocked the road, denying access to Marjayoun and the eastern sector of the zone still held by the Israelis. Taqqoush and the BBC team departed and I followed a few minutes later. Along the way, at Meiss Al Jabal, I pulled over to call The Times newspaper.

As I spoke to one of the editors there was an explosion just to the north, loud enough to be heard down the phone line in Wapping, east London. A thin column of smoke rose gently into the sky ahead. Motorists heading south flagged me down and said Israeli tanks were shooting at cars. It was a little later that I learned Taqqoush had been killed in the explosion.

The BBC crew had stopped on a corner opposite the Israeli settlement of Manara. Bowen and Kanaan left the car and walked 100 meters back down the road to record a news piece, using as background Manara and the wreckage of a car in which a civilian had been killed by Israeli tank fire the day before.

Bowen, who was wearing a distinctly unmilitary pink shirt, saw what looked like a military observation position at Manara and waved to indicate his friendly intentions. Taqqoush remained in the car chatting on the phone to his son.

An Israeli tank positioned on the border beside Manara fired a single round into his Mercedes, engulfing the car in a ball of fire. Bowen was speaking to the camera when the blast occurred; wreckage from Taqqoush’s car flew into Kanaan’s camera shot.

The horrified pair ducked behind a wall and were pinned down for an hour by machine gun fire while the flames stripped Taqqoush’s car to its metal skeleton. It was not until four hours later that Taqqoush’s body was removed.

The Israeli army subsequently claimed that the tank crew at Manara had suspected Bowen and Kanaan of being Hezbollah men preparing to fire an anti-tank missile.

Pink shirts are not the customary garb of Hezbollah fighters, nor do their anti-tank teams fire from the middle of roads in broad daylight within clear view of their target and begin the operation by giving a cheery wave to their intended victims.

The Israelis killed several other civilians during the withdrawal, all of them by tank fire. But Taqqoush had the tragic distinction of being the very last Lebanese civilian to be killed during Israel’s occupation of South Lebanon.

The next day, the Israelis completed their withdrawal from Lebanon. The blackened carcass of Taqqoush’s car was towed away a few weeks later.

While, over time, long grass and thistles smothered all traces of the burnt earth, a melted patch of asphalt remains on the road where his Mercedes was engulfed with flames — a permanent cicatrix to jolt my memory and somber my mood every time I pass by.

 

 NICHOLAS BLANFORD is the Beirut-based correspondent for The Christian Science Monitor and The Times of London

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Time to lay new tracks

by Paul Cochrane
written by Paul Cochrane

The Middle East and the United States have a lot in common when it comes to transportation. Both places have a love affair with the automobile and both had long-distance train networks well over 100 years ago. Both now also have an over abundance of private vehicles clogging up the roads while railways and public transport systems are substandard, if they exist at all.

There is a clear correlation that can be drawn here, between the rise of the car and the demise of rail transportation. But what is more noticeable on a macro-level is how the Middle East and the US stand out from nearly everywhere else in neglecting and underfunding their respective railway networks. Around the world, from South America to South Korea, investment in railways, metros and high-speed trains has been ongoing for decades.

In recent years a growing web of tracks has enmeshed the globe, with China alone earmarking $300 billion over the next decade to build 25,000 kilometers of high-speed railroads. By comparison, the US has just 735 kilometers of high-speed track. The Middle East has, well, zero.

The tide seems to be turning in the US, which had long practiced a policy of “starving the beast” — underfund the railways then shut them down due to inefficiency — until the American Recovery and Reinvestment Act in 2009 allocated $13 billion to improve the railways over the next five years.

It’s been a long time coming but the Middle East is also finally undergoing a railway renaissance. Jordan and Syria are both reinvesting in train lines that were built in the early 1900s and once linked Damascus to Mecca, part of the famous Hijaz Railway.

Meanwhile, in the Gulf Cooperation Council investment in railways could reach $109 billion over the next decade, according to a report by the Kuwait Financial Center. Saudi Arabia is expanding its railway network, which will include a $1.8 billion high-speed railway between Mecca and Medina; Qatar is spending nearly $25 billion on railways and a metro; and the United Arab Emirates is mulling a railway network to compliment the Dubai and Abu Dhabi metros.

All three countries would then link to the 2,177 kilometer GCC rail network slated to open in 2017. With an estimated cost of $25 billion, the network will run from Kuwait through Saudi Arabia, Bahrain, Qatar and the UAE before the last stop in Oman, or possibly Yemen. This will be money well spent, as an effective railway will better connect the people and economies of the region and reduce the environmental impact of travel.

What is remarkable is how long it has taken the GCC to roll out a regional track, despite its obvious benefits, and to not have done so as a priority over other major infrastructure projects. The same incredulity can be applied to Lebanon, with the government squandering the opportunity in the early 1990s to implement a comprehensive railway network alongside all the other post-civil war reconstruction work. A train line running down the coast between Tyre, Beirut and Tripoli would be a dream; connecting Beirut to Damascus beyond a fantasy.

But Lebanon may yet take part in the Middle East’s railway revival. The French government announced in May that they plan to fund a study to rehabilitate Lebanon’s coastal railways, which would be a start. The traffic situation around Beirut is appalling, and is set to get even worse as more cars pile onto the roads. It is the same in pretty much every major city in the region.

The public will be hoping that for once, talk of improving Lebanon’s transport network goes beyond the planning stage. But judging by some of the discourse on transportation heard in Beirut of late, they shouldn’t hold their breath.

Earlier in the year Beirut’s muhafez (governor) came up with a creative idea to solve the city’s traffic problems: sidewalks should be no wider than one meter. And in 2005, during discussions of the national master plan, investment in public transport was dismissed with the claim: “Lebanese like their cars and don’t like public transport.”

Considering the problems that the region’s cities face in terms of congestion, pollution and infrastructure, governments need to get serious about public transport planning. Their citizens deserve better than smaller sidewalks and clapped-out old taxis: it’s time to wean people off their love affair with cars and start laying tracks.

PAUL COCHRANE is the Middle East correspondent for International News Services

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Ill placed pride

by Alice Fordham
written by Alice Fordham

There was a tone of triumph after Iraq’s elections. Western diplomats crowed that the polls were as democratic as any in the Arab world, ever. An American military commander told me he even yelled “attaboy!” to the Iraqi troops who kept the country relatively secure as people cast their ballots on March 7.

World leaders paid tribute to Iraqis who had committed to democracy. Even as a post-election vortex swirled and bombings filled a political vacuum, people stressed that the elections had been an achievement. As one British politician put it, Iraq was on its way to becoming a “beacon of democracy” for the Middle East; the withdrawal of American troops, which depended on successful elections, is now set to begin at the end of August.

But this election was held up with the scaffolding of an American-led international presence, which bullied and wheedled a recalcitrant Iraq into holding a poll. Although the voting had a veneer of credibility, it was not exactly a model of democratic process, and without help, it would not have happened. For there to be any crowing, the diplomats would have to be able to look to the next parliamentary elections, to the Iraq of 2015, and say with some certainty that they would be as democratic as those held in March.

The chances of that are slim. Without American support, the Iraqi government as it now exists would struggle to hold an election. The March poll happened only after telephone calls from Washington to Kurdish leaders to persuade them to stop stalling electoral legislation. All political parties — except the Sadrists — came to the United States embassy for lessons in how Iraq’s convoluted election system worked. While US soldiers were not directly responsible for security in the cities, their training is still the backbone of the Iraqi security forces.

There is also little commitment to democracy among Iraq’s leaders. Politicians showed a strong tendency toward tactics that were more than dirty politics, from the exploitation of rules to disqualify candidates for links to the regime of former President Saddam Hussein, to Prime Minister Nouri al-Maliki’s threatening to invoke his powers as commander-in-chief in calling fraud on the results, in which his rival Ayad Allawi won a plurality of the parliament seats. Security may have held during the elections, but in the aftermath, coordinated bombings — which killed dozens — have sharply increased in frequency, as have assassinations, largely of Sunni leaders.

Allawi, who campaigned on a platform of secularism and was supported by most of Iraq’s Sunni Muslims, claimed 91 parliamentary seats out of 345, two more than Maliki’s State of Law party. But he will probably be sidelined; a grand Shiite coalition is being formed, whose power will likely leave Allawi’s voters feeling disillusioned with democracy, deepening sectarian rifts.

The electoral framework is also shaky, symptomatic of a country where institution building has taken second place. Laws have been contested throughout the electoral process and the judiciary, which rules on legal disputes, is corrupt, as is the government — the fourth most corrupt in the world, according to Transparency International. Also, ordinary Iraqis continue to live without reliable electricity or clean water. Basic infrastructure, let alone the regeneration of the roads, schools and banks that the country needs, is still lacking. The recent revelation of secret prisons for Sunni Arabs shows that brutal human rights abuses are still prevalent, and it seems likely they are used for political ends.

Even with its current international presence, Iraq can only manage what John McCain called a “messy, but effective” democracy. As the country’s security forces grow in strength, it is unlikely to return to the sectarian bloodbath seen from 2005 to the end of 2007. But as oil revenues begin to pour into the country, the money will reinforce a government that tends toward autocracy, corruption and disinterest in the principles of democracy and human rights.

The US, the UN and the international community should spend less time trying to convince the world that democracy has landed in Iraq, and more time working on building law, the parliament and infrastructure, so the country does not backslide as they leave.

Perhaps then, Iraqis, who have suffered so much, might get something close to the country they deserve.

ALICE FORDHAM is a Baghdad correspondent for The Times of London

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Sex, lies and politics

by Peter Grimsditch
written by Peter Grimsditch

While politicians caught with their trousers down are noted for inventiveness in deflecting blame, Deniz Baykal has elevated the practice to an art form. The 72-year-old Turkish opposition leader resigned last month after a video showing him in bed with his former secretary, now a member of parliament, was posted on the Internet.

To Baykal, the culprit was obvious. “This is not a sex tape, this is a conspiracy,” the leader of the Republican People’s Party (CHP) told reporters. Baykal pointed his podgy finger at the ruling Justice and Development Party (AKP), saying its leaders must have had prior knowledge of the tape.

In the murky world of politics in Ankara, anything is possible. But it makes little sense for the AKP to bring down a man who has not won an election for almost two decades. Some even argue that Baykal’s divisive and dictatorial stewardship of the CHP is more an asset to Prime Minister Recep Tayyip Erdogan than a threat to his political future.

Indeed, Baykal’s explanation of his affair with Ankara deputy Nesrin Baytok well illustrates how his eccentric logic continues to befuddle voters. “If this has a price, and that price is the resignation from the CHP leadership, I am ready to pay it,” he said. “My resignation does not mean running away or giving in,” added Baykal. “On the contrary, it means that I’m fighting it.”

Erdogan called his own press conference and denounced Baykal’s comments “as cheap and ugly as the video itself,” although he didn’t say whether he had actually seen it.

The nine-minute soundless tape, filmed with a camera that was hidden in a wardrobe in the bedroom of a private house, was first posted on Habervaktim, a radical Islamist website. It was then reposted on the comparatively benign YouTube, which, ironically, is banned in Turkey.

“Once my friends informed me about the incident,” said Erdogan, “I ordered the transportation minister to block Internet circulation of the video. We could not have remained silent in the face of such footage, which may damage society’s moral values.”

The prime minister has asked the head of military intelligence to investigate the video. Baykal is a stout defender of the army and is campaigning to disrupt the AKP’s proposed constitutional reforms. These include forbidding judges to close political parties without the say-so of a parliamentary commission, allowing military officers to be tried in civilian courts and lifting the amnesty that the 1980 military coup leaders granted themselves before leaving power.

The AKP narrowly escaped one closure attempt and fiercely secular judges are more likely to see off the Islamic-leaning party in court than Baykal is at an election.

There is another theory behind the bedroom movie, as well as a suggestion for how the affair started. Baykal has survived several attempts to oust him by stacking the delegates, who vote for leaders, with his own supporters. Some longtime CHP activists would like to see a democratic, secular and successful party, free of army influence. Since ‘fair’ means have failed to dislodge Baykal, the alternative was to indulge in the ‘foul’ variety. In this vein, it has been suggested that the tape could be one of a set, with release of the rest hinging on Baykal’s agreement not to stage a comeback.

Meanwhile, the junior partner in the Baykal-Baytok bedroom coalition has been talking to the press about the virtue of family values. She told the Aksam daily that her husband, Can Baytok, and the couple’s daughter have been very supportive. “This is a great test and I know that I have passed that test in the eyes of my family,” she said. Then, there was the little matter of her husband’s ailing and failing computer business.

Baytok said she had never used her political influence to get favors for her husband. “The allegations that he won contracts from CHP municipalities are lies,” she claimed. “In the past 20 years, he has applied for only one municipal tender… and Can sold a small number of computers at very low prices,” said Baytok.

At least she is displaying consistency, a rare trait in Turkish politics. The two men known to be in her life have both been failing at their jobs for the past 20 years.

PETER GRIMSDITCH is Executive’s Istanbul correspondent

 

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Derision of democracy

by Sami Halabi
written by Sami Halabi

When things go wrong, progressive types normally try to fix them. But in Lebanon, this simple logic is rarely followed; more often than not we go along with the situation so as not to stir up tension, in the hopes that somewhere down the line things will fix themselves. But our problems don’t get fixed — they fester.

The Lebanese still adhere to an archaic and dysfunctional municipal system based on the dictates of an Ottoman sultan, with a dash of French colonialism thrown in for good measure. Looking at our current administrative process — in which it takes 67 signatures to fix a truck belonging to a municipality, according to economist Marwan Iskandar — it’s obvious that applying an old system to a new world just doesn’t work.

 Change is painfully slow in this country, where political power is tied to sectarian affiliations and local loyalties, and people’s sense of disenfranchisement is so engrained that it becomes self-fulfilling. Lebanon’s political leaders have a vested interest in maintaining the entrenched patronage systems in their sectarian fiefdoms, which ensure that no major decisions are taken without their consent.

Citizens suffer as a result; around $480 million stuck in the Beirut municipality’s coffers that could be used to develop the city has been tied up for months because the mayor, Abdelmounim Ariss, and the governor, Nassif Kaloosh, are from opposing parties and can’t agree to sign the same piece of paper.

The election process itself is no more democratic than the system of governance. A significant portion of last month’s municipal elections were over before they started, with 15 percent of the seats won uncontested — amounting to 56 council seats and 199 mayoralties. The polls were supposed to be a platform to continue the government’s piecemeal electoral reforms that were introduced in last year’s parliamentary elections. Proposals ranged from the introduction of pre-printed standardized ballots and campaign finance reforms that prevent vote buying, to proportional representation and quotas for women to make for a more balanced outcome.

The much needed reforms would have provided a more democratic and equitable outcome for Lebanon’s voters. However, seeing the status quo that so benefits them threatened, our politicians engaged in the time honored tradition of stalling the matter by reviving age-old excuses that reforms such as lowering the voting age (opposed by all the Maronite-led parties) and allowing non-residents to vote (opposed by non-Christian-led parties) would upset the sectarian “balance” of the country, even though there is scant evidence as to the sectarian impact of either. The constitutional deadline for the elections was duly ignored until it was too late and the reforms had to be abandoned.

With electoral reform dead in the water, lawmakers then went on to neuter the democratic process further with “consensual lists” that allowed the interior minister to announce the “results” of some contests before the actual ballots were cast. And where the Free Patriotic Movement and Hezbollah didn’t get their way with the lists, instead of running a campaign based on policy to defeat their opponents, they packed up and pulled out. The Future Movement and the Nasserites didn’t do much better; after they couldn’t come to agreement over how to divvy up the spoils, their supporters decided to have a punch-up in the polling stations.   

But all the blame cannot be laid squarely at the feet of our politicians. After all, if they can get away with making a mockery of the democratic process and still get people to come out and vote for them, then why wouldn’t they take advantage of the situation?

With every year that passes of politics-as-usual, we complain that things aren’t getting any better. But if we genuinely want to see reform, there is no other option than to do what the politicians always tell us will tear the country apart: end confessionalism and change our political and administrative system.

We need to change our mindset and realize that what we let fester will never fix itself — or we should simply shut up and stop complaining.

SAMI HALABI is deputy editor of Executive Magazine

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A Nile of denial

by Peter Speetjens
written by Peter Speetjens

Conflict is looming on the Nile’s southern horizon. Following 13 years of fruitless negotiations with Egypt and Sudan over a new Nile Agreement, four of the river’s upstream countries decided to go it alone on May 14.

Ethiopia, Tanzania, Uganda and Rwanda signed a new treaty that calls for equitable water sharing, while Kenya, Congo and Burundi are to follow suit. Ethiopia, source to some 80 percent of all Nile water, wishes to develop its hydroelectric capacities, while countries such as Kenya and Tanzania aim to increase their agricultural output through irrigation.

“This agreement benefits all of us and harms none of us,” said Ethiopia’s Minister of Water Resources Asfaw Dingamo. “I strongly believe all Nile Basin countries will sign the agreement.”

Minister Dingamo should have known better, as the treaty sent a flood wave of concern further downstream.

Egypt has warned numerous times that any developments anywhere along the Nile will be regarded as a threat to its national interest and a potential cause for war. In fact, right until the moment of signing, high-level Egyptian and Sudanese diplomats attempted to alter the course taken by their southern neighbors.

The new treaty and the failure to reach a last-moment compromise were fiercely debated in Cairo, where Zakaria Azmi, a member of the Egyptian Presidential staff, warned members of Parliament against “talking nervously about the issue.”

Egypt gets understandably nervy where the Nile is concerned as 97 percent of its water resources stem from the world’s longest river, which supplies nearly all of its drinking water, feeds an extensive agricultural sector and generates a substantial part of the country’s electricity.

Meanwhile, 95 percent of Egypt’s ever-increasing population lives in the delta, which is subject to erosion and degradation.

Khartoum is Cairo’s closest ally in this regard. Sudan possesses more water resources than just the Nile, but nearly all of these are located in the politically volatile south of the country. Egypt and Sudan refuse to sign the new treaty, demanding acknowledgement of all existing agreements and a timely notification of future projects — which should be approved unanimously, not by majority vote.

Egypt essentially rejects proposals to water down previous agreements, which are highly in its favor and hinder any upstream developments. A handful of bilateral treaties signed since the late 19th century culminated in the 1929 Nile Agreement, which entitles Egypt to monitor and veto all upstream developments, while it can undertake any project without the consent of upstream countries.

The 1929 treaty formed the basis for the 1959 Nile Agreement. At that time, Egypt was planning to build the Aswan High Dam and needed a reliable flow of water, while a by-then independent Sudan demanded an amendment to the 1929 treaty, which it deemed unfair. The 1959 Nile Agreement stipulates that Egypt is entitled to 55.5 billion cubic meters (BCM) and Sudan 18.5 BCM annually. It also entitled Egypt to build the High Dam and allowed Sudan to construct several smaller dams, as well as irrigation and hydroelectric projects.

The upstream countries led by Ethiopia refuse to have their future dictated by the 1959 Nile Agreement, which not only disregards their interests, but was also based on previous treaties that were all ordained by the then-colonial master of the world, Great Britain.

Downstream and largely devoid of rain, Egypt’s citizens have every right to be concerned, yet should not blindly blame their upstream neighbors for their (potential) future woes. They would do better to look to a political establishment that, for the past 13 years, refused to move even an inch toward recognizing the upstream demands.

Meanwhile, that establishment poured billions of dollars (and gallons of water) into trying to make the desert bloom at Toshka near the Sudanese border — a project that by the day grows into an ever larger white elephant. In addition, the fertile Nile delta is shrinking as urbanization and real estate development march onward, thanks to the inability of the Egyptian authorities to formulate and implement a proper zoning and urban planning system.

At the same time, it is not Egypt, but China and other Arab nations that have become the leading investors in the upper-Nile’s East Africa.

Should the Egyptians one day face water shortages, a large portion of the blame must surely fall on their ostrich-like politicians for a shocking lack of foresight.

PETER SPEETJENS is a Beirut-based journalist

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Society

The New Italian Stallion

by Nadim Mehanna
written by Nadim Mehanna

Whenever an automaker departs significantly from its own standards and norms, it raises certain questions about the maker, the marque, and the industry as a whole.

Manufacturers — and sport and luxury car manufacturers in particular — invest millions of dollars in creating “attitudes” consistent with their products, and for these attitudes to stick, it is important that any car manufactured under their marque be recognizable down to the smallest detail. Customer loyalty depends on consistency. Radical innovation, even if it means radical improvement, is always something of a gamble.

So what do we make of the Ferrari 458 Italia? The Italia is, in the company’s own words, “a completely new car from every point of view,” and demonstrates both the company’s experience in Formula One (F1) racing and increasing global awareness of acceptable levels of fuel consumption and carbon dioxide emissions.

The F1 influence is apparent from without as well as within the car: the bodywork is compact and aerodynamic, favoring elegant simplicity and light-weight materials, though some may find the Italia’s rounded rump less appealing than its predecessors, the 430, as Ferrari has halved the stoplights from four down to two, while also trimming the tailpipes to three. From the driver’s seat though, the parallels are unmistakable, as the steering wheel and dashboard both hew strongly to racing lines.

Under the hood, a new 4499 cc V8 employs the low piston compression height characteristic of racing engines. Capable of 570 CVs at 9000 rpm, the Italia has the highest power output we’ve seen not only in its range, but in the history of the company as well. However, equipped with a seven-speed dual-clutch transmission, the Italia may leave the fundamentalist Ferraristas longing for the more raw F1 sequential gearbox.

With all that power, you’d expect fuel consumption to be egregious — sports cars have largely ignored the current auto market trend toward increasing fuel efficiency and lowering emissions. Instead, they’ve enjoyed riding high above the storm on the checkbooks of their clients.

The Italia, however, is one of the first to make a serious stab at fuel economy, largely by fine-tuning its component parts to utilize light-weight materials and reduce internal friction. Thus, despite the fact that its engine is significantly more powerful than any other in its class, the Italia produces only 320 grams per kilometer of CO2 – another benchmark for the maker and something of a novelty within its segment. 

This shows that growing environmental awareness has reached even the upper echelons of the auto industry.  More interesting is what the Italia can tell us about Ferrari itself, as a company, a brand and an image.

In many of Ferrari’s recent models — the California being a prime example — the company has added versatility to provide customers practicality as well as performance in a bid to enter new territory for the speed-centric superbrand.

 The Italia, on the other hand, is sporty to the 10th degree, entirely focused on the driving experience. Ferrari is, at its core, Italian. That it would name its new model Italia is, in effect, an affirmation that Ferrari’s finest qualities are encapsulated here. Though a step forward in terms of handling, power and fuel efficiency, the Italia is also a reversion to Ferrari’s core principles. Whatever differences from the past it displays can be taken as signposts to the company’s future — the Italia is Ferrari’s new flag-bearer. 

NADIM MEHANNA is an automotive engineer and the pioneer of motoring on Middle Eastern television since 1992

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Society

Football and politics: fair play?

by Rany Kassab, Zeina Loutfi & Ramsay G. Najjar
written by Rany Kassab, Zeina Loutfi & Ramsay G. Najjar

June. The grip of football fever will soon engulf the globe as all eyes turn to South Africa, the host nation of one of the biggest events on the planet: FIFA’s World Cup 2010.

Whether one supports the mighty Spanish, the spectacular Brazilians, the creative Dutch or the resilient Germans, emotions always run high; the results can make or break a country’s morale.

The popularity of the game is such that it transcends borders, language barriers and social classes. What was once regarded as the common man’s sport of choice has become a multi-billion dollar business controlled by a few men (it is still largely a man’s world) who yield the power to assign lucrative broadcasting rights and grant countries the privilege to host an event capable of attracting hundreds of thousands of spectators and scores of companies vying for a piece of the pie.

The popularity of football and its mass appeal means that it often draws public figures and politicians, eager to be associated with a game steeped in nationalistic fervor, competitiveness and outright machismo.

Ratings by association

While politicians such as Henry Kissinger and Silvio Berlusconi are known to be genuine fans of the game, most others are often advised by their communication consultants to attend key matches, on the proven premise that the jubilation that accompanies a national team’s win will translate into higher approval ratings for the politician, while turning him into some sort of lucky charm for fans (especially when considering the level of superstition in the game).

The power of football is undeniable. It can lift a nation’s spirit, unite people from diverse backgrounds and even help overcome racism and social prejudice. When the French won the World Cup in 1998, one poll showed that more people would have voted for Zinedine Zidane for the presidency than they would have for any other political candidate, despite his origins and background. While this might have been somewhat influenced by the euphoria that surrounded the win, it nevertheless shows the potential gains that could be achieved by leveraging the cult status of the sport.

The universal language of football, and its ability to surpass differences, was probably best illustrated on Christmas Eve 1915, when German and British soldiers came out of their trenches, after weeks of fierce fighting, for one improvised game of football, which, while it may not have influenced the course of the war, showed how the love of the game can bring down barriers.

Closer to home, the game on April 13th that brought politicians representing both sides of Lebanon’s political divide together for a symbolic football match, illustrated – besides the less than perfect physical fitness of our representatives – the ability of football to serve as a common denominator and a medium to communicate key messages away from rhetorical discourse or political debates, which often fail to reach their intended audience.

Historically, football, and sport in general, has always been used as a means for political showboating and to rally constituents on nationalistic grounds. In 1980, the “Miracle on Ice” victory by the American Hockey team over the Russians became a symbol of American triumph and superiority at the height of the cold war, thanks to a well-crafted communication strategy. The event galvanized Americans and lifted their spirits and feelings of national pride following the debacles of Vietnam and the takeover of the American embassy in Tehran.

The dark side

That said, despite all the good that it can bring, football can sometimes be a source of division and an excuse to fuel sectarian and sometimes racial prejudice for pure political gain.

A few years back, France’s Jean-Marie Le Pen criticized the French national team for fielding an entire squad featuring “non-native” Frenchmen, in an attempt to solidify his role as the protector of “French Identity.” In 2002, Le Pen was a runner-up to elected President Jacques Chirac, with 18 percent of the total popular vote.

Similarly, the much publicized World Cup qualifying game between Egypt and Algeria was a chance for the leadership in both countries to show restraint and call for calm, but instead they took the opportunity to play on the heightened emotions of football fans to bolster their own domestic credibility and nationalist credentials.

Talking the talk

At the end of the day, what seals the sometimes-unnatural bond between football and politics is communication, and politicians’ desire to project a certain image of themselves to voters and opinion leaders.

In that sense, football becomes a communication channel and its lingo part of politicians’ lexicon, adding to the military jargon of speeches and discourse to portray leadership attributes and unflinching confidence.

Incidentally, a close look at the industry terminology reveals the similarities between the worlds of football and communication; target, audience, defensive, offensive, goals, and strategy are terms used regularly in both fields.

Whoever wins the World Cup, we can be sure that the game will continue to grow and expand its reach and popularity, provided that we do not turn it into a sport that is within the reach of only a fortunate few who can afford entrance fees to the stadiums or subscriptions to cable channels.

Football, the most democratic sport in the larger sense of the term, is the game of the masses, which is arguably its forte.

For this reason, the role of professional soccer’s governing bodies and the political establishment should be, first and foremost, to ensure that the sport remains accessible to everyone, and to leverage and channel its popularity in the right direction.

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