• Donate
  • Our Purpose
  • Contact Us
Executive Magazine
  • ISSUES
    • Current Issue
    • Past issues
  • BUSINESS
  • ECONOMICS & POLICY
  • OPINION
  • SPECIAL REPORTS
  • EXECUTIVE TALKS
  • MOVEMENTS
    • Change the image
    • Cannes lions
    • Transparency & accountability
    • ECONOMIC ROADMAP
    • Say No to Corruption
    • The Lebanon media development initiative
    • LPSN Policy Asks
    • Advocating the preservation of deposits
  • JOIN US
    • Join our movement
    • Attend our events
    • Receive updates
    • Connect with us
  • DONATE
Special Feature

Kenneth Morse

by Executive Editors June 3, 2010
written by Executive Editors

Kenneth Morse is the co-founder of 3Com Corporation, Aspen Technology Inc. and a number of other startup companies. He is also the former managing director of the Massachusetts Institute of Technology’s Entrepreneurship Center and currently holds the chair of Entrepreneurship, Innovation and Competitiveness at Delft University of Technology. Executive caught up with the business guru during a tour of the region promoting entrepreneurship to gather his insight on how governments and young business leaders can spur the creation of new and innovative enterprises.

  • What steps should governments in the region take to promote entrepreneurship in their respective countries?

They need to become good customers, meaning that they quickly make decisions to buy, and then pay on time. Governments have a tough time making quick decisions because they are rewarded more for not making mistakes than for doing the right thing — and because the press love to jump on mistakes.

This makes them risk averse. In the Middle East, the worst thing about governments is that they don’t pay their suppliers on time. It is easy to kill start-up companies by being slow customers who pay late.

  • But what about e-procurement models that we have seen some governments adopt in the region?

Do you think that is really happening? Every small company that I have found tells me that it is impossible to sell to governments. And the corruption problem compounds the challenge. They take a long time, then they want a bribe; you have to pay somebody off, so your profit is all lost in the bribe. Or, hopefully, the small company says it will not pay the bribe. Compare that with North America and parts of Northern Europe where governments like to buy from start-ups because they are more innovative. Of course, corporations need innovation and they love to buy from start-ups.

  • The bureaucratic processes that are part and parcel of governments in this region don’t give new businesses that luxury and facilitate corruption inside of government itself. Have you seen any progress on this front?

I have seen both some very exciting start-up companies here and some sincere commitment to start-ups.

  • In terms of public policy?

The leaders in the United Arab Emirates, Jordan and Lebanon know that the public sector has reached its limit in terms of its ability to create meaningful jobs. So they have turned to the private sector. Large companies in the private sector are growing and are so the small companies. It’s simple Aristotelian logic.

  • We have seen an increase in the amount of aid being supplied to the region by the United States since President Barack Obama’s 2009 speech in Cairo. Could there really be a paradigm shift in the US’s strategic policy for the region, or is it more likely that this is a public relations stunt?

There is a paradigm shift in thinking for sure. For example, one of the proposals in [Obama’s] speech in Cairo on America’s relations with the Muslim world was to have a conference on entrepreneurship in Muslim Majority Countries.

  • But these are just conferences. They may look good on paper but they don’t necessarily have effects on the ground.

Entrepreneurship is still a good thing for America to export to the world. It’s not controversial. However, I’m not sure how well implemented the new policy is.

  • Why are you not sure of the implementation?

Well, not if they work it through the United States Agency for International Development (USAID). USAID is reluctant to pay any of their consultants more than $565 a day, and I don’t think [they] are going to be able to attract fantastic entrepreneurs at those rates. 

  • So you think there needs to be more funding? 

The funding is there but they won’t spend the money because they are not willing to face up to the fact that [$565 a day] is a low sum.

  • But does it have to be done through USAID? 

There are competing forces in Washington but USAID claims that [the funds] should go through them — and they are brain-dead. Still, entrepreneurship is a message of hope and an export from the US, and there is plenty of interest in importing entrepreneurship.

  • So where do we go from here?   

There is a program that builds on all the current initiatives. It’s called the ‘10 by 20 program’ where each year 10 companies form a paragon [of companies] and commit to achieving $20 million in annual revenues within 5 years. This is an ambitions target; if you are not ambitious you need not apply.

The firms involved are given training and helped to access markets through the diaspora and other means. You were also talking about another model: public private partnership. The public sector could provide the money — it could be through the central bank — and the private sector would administer it because they [are more efficient], and then those companies that were in the program could take off like a rocket.

  • But many governments are in debt and may not be willing to put up the capital.

The payback on the [similar] Quebec program took one year; after that it was tax revenue. It’s about job creation — you take people off unemployment and onto the payroll.

  • When do you think young entrepreneurs should take the dive and start their own businesses?

The ambitious small and medium-sized enterprises of today are the big companies of tomorrow. I am not in favor of having kids start companies right out of school. They don’t know enough to achieve sustainable growth.

I am more a fan of having young people participate in business plan competitions to taste what entrepreneurship is about and then work for well managed, rapidly growing companies, where they learn how to sell, get a purchase order, how to move though an organization and how business processes work, and then start a company with a large team and a critical mass.

  • Where do you see the greatest growth potential in the Middle East?

Women. Female entrepreneurs in the Middle East are [proportionally] the highest percentage in the world. I teach at Delft University (in Holland), where only one in 112 CEOs that I have taught during my tenure [are women]. In the Middle East it is 25 to 30 percent.

This is because entrepreneurship does not suffer from a ‘glass ceiling’. When there is no glass ceiling, you start your own company, you are the president and you are all set.

Women entrepreneurs in the Middle East are doing well for other reasons. They work harder, they are more dependable and the men tend to be lazier.

Who would you rather buy from? Someone with hustle, or someone who is complacent?

  • Do you think this is a long-term trend?

I have observed it for seven years; I don’t know what you think long term is. It doesn’t seem to show any signs of letting up.

  • If you could speak to policy makers in the region about entrepreneurship, what do you think would you say?

Promote ambition. Fix the bankruptcy laws. Become good customers.

June 3, 2010 0 comments
0 FacebookTwitterPinterestEmail
Feature

A new American intervention

by Executive Editors June 3, 2010
written by Executive Editors

The policy of aggressive democracy promotion in the Middle East, a hallmark of former United States President George W. Bush’s administration, seems to have been sidelined by his successor in favor of a softer approach to international relations. While not renouncing the democracy campaign altogether, Barack Obama’s government has refocused its methods toward State Department projects that target economic advancement, education and job creation in the region.

This shift was exemplified by the Presidential Entrepreneurship Summit on April 26 and 27, where more than 250 delegates from 50 Muslim majority countries (MMCs), as well as Secretary of State Hilary Clinton, Secretary of Commerce Gary Locke and several members of Congress, gathered in Washington, DC to discuss methods to foster entrepreneurship as a means of spurring economic growth and community development.

The summit signals a wider move in the administration to position the Middle East as part of a worldwide religious community, rather than the home of the ‘axis of evil’, as America reformulates its role in the region. The US’s long history of involvement in the Middle East, however, begs the question of whether this new initiative is a genuine policy shift or whether the White House has simply entered another phase of the decades-old strategy of quietly promoting civil society development while maintaining relations with heads of state.

On the surface, the White House appears eager to trumpet its departure from previous US policy. At April’s summit, Secretary of State Clinton cited Obama’s June 2009 “New Beginning” address at Cairo University as the administration’s “new approach to foreign policy.”

In a press statement, the Chief of Media and Cultural Affairs at the US Embassy in Lebanon, Ryan Gliha, said he considered changing the way the US administration was seen in the region as the “crux of the point” for the event.

Many of the new programs differ in that they favor local expertise over imposing an external agenda for development or aid. Yet their details remain largely unknown, and citizens’ suspicions of American intervention lingers.

A new beginning

Former Secretary of State Madeleine Albright will partner with Walter Isaacson, president of the leadership-oriented Aspen Institute, and Muhtar Kent, the Turkish-American chief executive officer of the Coca-Cola Company, in launching the “Partners for a New Beginning” program — part of the State Department’s push for innovation. Described as “a team of eminent Americans from across sectors and industries who will lead an effort to engage the US private sector in carrying out our vision for a new beginning with Muslims,” little additional explanation was given as to the program’s specific plans.

Two other initiatives, the Silicon Valley-based Global Technology and Innovation Partners and the Innovators Fund, have already been set up by venture capitalists following Obama’s Cairo speech and aim to “support innovation” in Egypt, Jordan, Lebanon, Turkey and Malaysia.

Having already reached out to Jordanian venture capitalists Oasis 500 and several American firms, the Innovators Fund plans to expand.

Secretary Clinton also mentioned the e-Mentor Corps, a project that will allow entrepreneurs seeking advice to access mentors on-line from Intel, Ernst & Young, the Kauffman Foundation, TechWadi, the Young Presidents’ Organization, Babson College and Endeavor.

While many of the schemes sounded well intentioned if vague, Clinton delved into greater detail regarding the Global Entrepreneurship Program (GEP), which is set to begin in MMCs and grow from there. Clinton said that the private sector will partner with civil society groups to “help create successful entrepreneurial environments” by providing access to capital, business education from US business schools, mentoring programs and by identifying promising ideas. Launched in Egypt in April, the GEP pilot  will soon start in Indonesia, the countries with the largest Arabic speaking and Muslim populations, respectively.

Egypt exemplar

Egypt’s GEP was launched under the auspices of the US-Egypt Business Leaders Forum, the latest manifestation of a decades-long collaboration between wealthy Egyptian and American businessmen, such as Taher Helmy, co-founder of Hamza, Helmy & Partners Law Firm, and Steven Farris, chief executive officer of the Apache Petroleum company, Egypt’s largest US investor. Helmy and Farris, co-chairs of the Forum, explained that after years of economic and financial reform, Egypt is ready to receive support for entrepreneurship.

“Reforms [have been] substantially successful, the private sector controls over 75 percent of the Egyptian economy…our primary focus has shifted to entrepreneurship and education,” Helmy told The Daily News Egypt.

Egypt’s willingness to undertake controversial reforms won it recognition with the GEP pilot program, and Clinton urged other nations to follow suit: “We need to encourage your governments to make the legal and commercial reforms needed to encourage trade, allow for the free flow of ideas [and] lower the barriers to launching new businesses,” she said in her speech.

Endeavour sets the pace

Although the efficacy of the State Department and its affiliates in promoting innovation in MMCs remains untested, Endeavor is an independent organization already active in the region. Initially focused in Latin America, the non-governmental organization began giving entrepreneurs access to mentors and angel investors in Morocco, Turkey and Egypt in recent years and is contemplating a Beirut office.

Endeavor’s method — identifying successful small businesses and helping them grow to scale, becoming role models for other entrepreneurs — represents what Elmira Bayrasli, policy and outreach coordinator for Endeavor Global, refers to as a “paradigm shift” — offering support to successful local initiatives rather than descending with a list of externally-generated goals.

“We don’t apply a cookie-cutter model. We have a framework that is driven by finding local business leaders and local networks that will then define how their own framework is built,” she said at Endeavor’s International Selection Panel in Cairo in March. “It’s really up to them to drive it forward in the vision they feel is best suited to that country.”

The event brought Endeavor Board Chairman Edgar Bronfman to Egypt to advise small business owners hoping to partner with the group. Bronfman, the CEO of Warner Music Group and heir to one of the wealthiest families in Canada, explained his commitment to facilitating entrepreneurship, particularly in the Middle East: “I’ve always believed that the more people that have jobs, the greater the opportunities for peace and the fewer opportunities for anger and frustration,” he said. “This is true everywhere, but especially important in the Middle East.”

His statements echo those made by Clinton, who listed a strong economic foundation and a stable middle class as “essential” to good governance and the rule of law. While the words “democracy” and “US security” enter the vocabulary of the Obama administration with less frequency than that of his predecessor, its policies represent the unspoken understanding that Bush had the right agenda but the wrong methods.

As a congressman, Obama’s record for democracy promotion included co-sponsorship of the Advance Democracy Act, while in 2005 he introduced the Democratic Republic of Congo Relief, Security and Democracy Promotion Act. Monetary support for democracy in the Middle East may re-emerge after trust has been re-established by the US’s respect for sovereignty and international rule of law.

America comes first

In the meantime, civil society groups in Egypt, Jordan and other countries have watched funding disappear. United States Agency for International Development told the Associated Press that cuts resulted from a drawing down of military aid, especially to Egypt.

The DC-based Project on Mideast Democracy reported that funding in Egypt fell from $10 million in 2008 to $2.6 million in 2010, and that only groups registered with the Egyptian government may receive funding, a hindrance for those attempting to monitor the upcoming presidential election in 2011, for example. Perhaps in an attempt to counterbalance this loss of civil society funding, the Obama administration has sponsored social entrepreneurship in the region.

Ultimately, the Presidential Entrepreneurship Summit’s role as a catalyst may be more important than the event itself. For example, it inspired the recent Arab World Social Innovation Forum in Cairo, hosted by international social entrepreneurship NGO Ashoka and attended by representatives from Microsoft, Price Waterhouse Coopers, the Arab League and USAID, among others.

However, this one summit should not be taken as a sure sign of fundamental change in US policy in the Middle East. Although the White House may seem to have changed its methods, it will undoubtedly continue to pursue policies to promote what it considers best, both for the region and for its own interests.

June 3, 2010 0 comments
0 FacebookTwitterPinterestEmail
Feature

Bred to kill

by Executive Editors June 3, 2010
written by Executive Editors

For the aficionados, dog fighting is more than a sport — it is a platform to play God with the violence of Darwin’s natural selection.

“I have Hitler’s mentality,” says 35-year-old Mike Kennel, a pseudonym he chose to maintain anonymity. “I aim for humans to advance, just like I am allowing these dogs to advance — I only let the most intelligent marry each other and the strongest marry each other.”

On the outskirts of Beirut down a winding road off the Hadath highway, an iron gate opens onto a secluded path bordered by agricultural land. Yet the organically grown plots, the picturesque greenery and the peaceful ambiance camouflage a farm of another kind: This is doggie boot camp.

A seemingly abandoned building at the end of the path houses dogs enrolled in a rigorous training regimen, and on the other side of the clearing, leafy fichus trees shade a square fighting arena, in which they are trained to tear each other apart.

Apart from fulfilling his competitive lust, Kennel claims he stages fights to test for specific traits to ensure the preservation of the species.

“I check for the dog with the stronger jaw, the strongest mind and the longest breath, and I use it for the selection I breed. To test it, I need to put it in the ring,” says Kennel. “We believe in the rule of the jungle. We believe in the survival of the fittest, because the fittest will make stronger offspring, and prevent the extinction of the animal.”

When these canine “ultimate fighters” are in the ring, the faceoff is brutal. American pit bull terriers (APBT) have been bred for their capacity to fight and inflict maximum damage. It is also their “gameness,” or ability to attack regardless of their physical condition, that is one of their most appealing attributes for their masters.

APBTs have a predisposition to tolerate pain through anesthetizing compounds that their bodies naturally secrete. The selection and genetic make-up, rather than the use of any drugs, says Kennel, have allowed the development of strong, feisty pit bulls that are born with a predator’s instinct to hurt other dogs.

What started for Kennel as a fascination with animal competitions at age 12 led him, by 16, to become a professional dog-fighter, trainer, breeder, trader, handler and referee; in other words — a dogman. Today he says it is also a lucrative business, but one that he declined to quantify to avoid litigation by auditors from the Ministry of Finance.

Kennel owns 75 dogs that he trains and breeds; 25 are APBTs, which are the only species he raises for fighting purposes. Kennel’s work in breeding and training has earned him a region-wide reputation: in his workshop he builds self-powered treadmills that he sells for $600 around the Middle East to improve the cardiovascular fitness of the dogs without exhausting them.

Dogs also wear weighted collars, usually four kilograms, to increase upper body strength, and their biting power is improved by having them chomp on a hanging rope from which they are suspended for extended periods. Kennel has also developed strict nutrition regimes complete with vitamins and minerals to complement dogs’ training.

A puppy is trained until the age of two before entering the ring for the first time. Formal matches are usually arranged two months in advance to give time for training, with the details — such as the wager of each owner and the weight class of the dogs — drafted into a contract for the competing parties to sign.

Lord of the ring

Just before formal matches dogs are weighed to ensure they adhere to the agreed weight category, and if not, the party in breech of the contract pays a penalty, usually half the value of the bet, or an average of $2,000, to cover the cost of the training. The opponent can then also choose to cancel the bout.

After passing the weigh-in, the dogs are washed to remove any possible poison hidden in their fur. Handlers then bring the animals into the pit, or “ring” — a four meters by four meters square with walls up to 75 centimeters high. They hold the dogs by their hips behind “scratch lines” in opposing corners as the dogs prepare to attack.

The referee stands in the middle of the ring, ready with a wooden or plastic “breaking stick,” which is the only way to pry open a pit bull’s locked jaws. At the signal of the referee, handlers release the dogs for the first “scratch” — dog fighting terminology for an attack — and the animals leap at each other in a fever of bloodlust. 

“We don’t tell the dogs ‘Go’,” said Kennel. “The dog has an instinct to go on its own. If we have to invite the dog to the fight, we don’t want it.”

At the fight Executive attended last month, the dogs became entangled in a “dance of death” standing on their hind legs, then took turns mauling each other, quietly encouraged by their respective handlers with words the dogs were conditioned to hear when striking opponents.

During the first scratch, the dog that locked its jaws on its opponent first won a point. The dogs were then pried apart with the breaking sticks — no one flinched as blood oozed from the wounded animal.

At this point in the match the owners and the referee will check for the dog’s gameness.

“Even if the dog gets wiped, if it still has gameness then it is selected for breeding,” said Kennel.

At the second scratch, the dog that lost the first round will be released to attack his opponent. If after a 10 second count by the referee the dog still has not attacked, then the other dog must scratch and secure a lock on its opponent. If the second dog fails to attack as well, then the dogs are even and the match is over.

“Both dogs will go bye-bye,” explained Kennel with a hint of sarcasm. “They can’t be sold, there is no breeding, and their value will be zero even if they cost $10,000.”

When a dog loses, it gets a loss added to its title record, and if it does not display gameness it will never be bred or enter a ring again.

After each fight, Kennel injects the dogs with antibiotics to speed their healing. He confirms though that unless it’s a finishing game, where a dog has to be kept in the fight until its last breath, no owner would let his dog die in the ring. 

“No one kills a dog worth $4,000,” he said, though Kennel admitted that dogs often die the day after a fight due to injuries.

As a result, medical care for the dogs before and after the fight is essential in preserving their value and improving its performance.

Gambling on gore

With the blood sport underway in the ring, betting outside goes into full swing, with 10 percent of all bets going to the referee and ring, which usually go together. Kennel says there are three rings in Lebanon for professional fights.

“There are no limits for bets,” he explained. In Gulf countries, bets can reach up to $30,000, and can include automobiles and property.

Kennel says that in Lebanon,  the bets don’t go beyond $5,000, and the big betting is usually limited to a handful of insiders. The dog-fighting circle is secretive and clandestine, with heavy emphasis put on the anonymity of participants given the involvement of some of the country’s prominent businessmen, according to sources that also declined to be identified.

The price of a gladiator

As a fully-fledged dogman, Kennel takes a lot of pride in his lineage breeding. The price of a puppy ranges from $500 to $1,500. After that, prices increase with the level of training, the titles a dog earns and the owner’s emotional attachment to the animal.

With each match victory, a dog’s value normally doubles; three wins earns a dog a champion’s title, and five wins earn it the title of grand champion, which can elevate the price to as much as $50,000 in Lebanon.

Kennel’s endeavors have evolved into a highly disciplined enterprise compared to “street level” dog fighting. Sources, which asked for anonymity because they have received threats from dog fighters in these other circles, describe them as being associated with criminal networks, with bouts staged in secret locations that are only revealed to the participants shortly beforehand via SMS mobile messages. Dogs fighting in these settings tend to be subjected to extreme abuse, often deprived of food and forced to live in darkness to increase their aggressiveness.

Kennel, who sees himself as a professional, abides by the “Cajun rules,” a detailed list of guidelines related to dog fighting created in the 1950s in the United States. He argues that street dog fighters are amateurs and ignorant of important information pertaining to adequate dog training, such as the fact that darkness weakens the eyesight of a dog and makes him aggressive towards people in daylight.

“A dog that is aggressive towards humans is not allowed in [our] ring,” he says.

In fact, Kennel now recruits amateur dog fighters to join his training camp, teaching them how to be professional handlers and trainers in the creation of true canine predators.

“I recommend that anyone who has a pit bull, go to a professional to learn… the value and the love of the dog,” said Kennel.

There are currently no laws in Lebanon that pertain to dog fighting. Kennel says he believes that dog fighting should be regulated, and that those who fail to ensure a safe and secure environment for their dogs should be penalized. Inspection and regulation should be the job of the government, he says, and not that of animal rights activists who don’t understand the emotional and financial value of game dogs and want to “castrate” them.

“Why don’t we castrate Mohammad Ali? Or all the people who like boxing?” says Kennel.

“We don’t have to be enemies with animal rights activists, we can work together,” he said. “Instead of stifling those who are addicted to this sport, we can teach them to do things right. This is a dangerous sport and safety procedures have to be respected.”

June 3, 2010 0 comments
0 FacebookTwitterPinterestEmail
Comment

Deadly dithering in Yemen

by Abigail Fielding-Smith June 3, 2010
written by Abigail Fielding-Smith

If your knowledge of Yemen was gained entirely from donor briefings and government statements, you might think it was a politically troubled, developmentally challenged country, like Egypt on a bad day.

When the international community was spurred to ‘do something’ about Yemen, following the attempt to take down a United States-bound airliner by a would-be suicide bomber — who apparently trained there — the impulse was not to send over emergency relief, like Ethiopia in 1984, but to set up working groups to investigate Yemen’s complex developmental challenges.  

But as donors deliberate the best way to boost the country’s long-term institutional capacity, increasing numbers of its citizens are living on the margins of survival. In the capital, Sanaa, when your car slows down even for a few seconds, thin fingers will inevitably begin tapping on the window begging for money. Poverty and privation is even worse in the countryside.

On a trip to Al Mazraq refugee camp last year, I saw people who had fled the war in the northern province of Saada shouting angrily into the sandy wind that they had nothing — no means of ensuring their own survival. Their situation has since become much worse.

Yemen may superficially be a part of the Middle East — a “middle income” region — but its statistics are in a different league. Child malnutrition rates are second only to Afghanistan, and a recent shortfall in funding to the World Food Program (WFP) means that, quite simply, more children will die this year as their plates go empty.

“We are expecting the moderately malnourished children to fall into a severe malnutrition state, and those who are already severely malnourished will sustain life-long implications,” said Wisam al-Timimi, a nutrition specialist with UNICEF in Yemen. “Their survival will be jeopardized.”

According to the WFP, one in three Yemenis, some 7.2 million people, suffer from chronic hunger and 1.7 million people will become unable to meet their basic nutritional requirements with seasonal food price rises this summer. Lack of funding will force the WFP to withdraw assistance from 80,000 beneficiaries in July, and it has already almost run out of food for the 270,000 internal refugees from the northern conflict — between Houthi insurgents and government forces — who are completely dependent on aid handouts. As of last month, the agency began distributing half rations to trickle out the supply longer. 

“Anyone arguing this is a nightmare scenario wouldn’t be wrong,” said one humanitarian expert I spoke to.

Its not just the WFP that is suffering a funding crisis — an appeal for $177 million in humanitarian assistance for Yemen launched by a coalition of international agencies last year has only received around 30 percent of this target. 

“It’s puzzling,” said Gian Carlo Cirri, head of the WFP in Yemen. “There’s lots of talk about helping Yemen, but very little money.”

Some speculate that the Haiti earthquake has caused donor fatigue. Yemeni political analyst Abdul-Ghani al-Iryani blamed the government in Sanaa — which disputes the WFP’s findings — for not making food security a high profile issue due to the potential political embarrassment. 

“The callous position of the government on the issue of hunger is costing each year more lives than all the wars that Yemen has seen since its founding,” said Iryani. “The most vulnerable group is too powerless to protest.”

Another theory is that humanitarian aid has become the victim of development aid policy concerns . 

“Expectations that Western donors would give more money have not materialized,” said the Deputy Finance Minister Hisham Sharaf. Western delegates at a conference held in London after December’s failed bombing attempt didn’t pledge new funds to the country, but instead vowed to direct $5 billion donated following a 2006 conference, much of which remains untouched.

Donor desire to implement a considered development strategy that avoids propping up a system notorious for its corruption and inefficiency is understandable, but the country’s immediate humanitarian needs are too acute to be held hostage by such concerns. This is not only a moral issue, but a strategic one as well.

Protests have already begun in Saada after the announcement of half-rations for internal refugees, and there are fears the $35 million WFP funding shortfall for food supplies to feed these people could destabilize the situation in the north, where a fragile ceasefire is holding.

After all, $35 million is, as Cian Carlo Cirri keeps telling reporters, a relatively cheap price for stability.

ABIGAIL FIELDING-SMITH  reports on the Middle East for the Financial Times

June 3, 2010 0 comments
0 FacebookTwitterPinterestEmail
Editorial

Tomorrow’s zeal

by Yasser Akkaoui June 3, 2010
written by Yasser Akkaoui

Last fall, I was teaching a business ethics course at the American University of Beirut and explaining the ‘double bottom line,’ the concept that in modern business, a healthy bottom line must also include a firm commitment to corporate social responsibility and corporate governance. Two of my students, Omar Touma and Linda Sawaya, asked me how Executive could call itself a responsible company, and presumably claim to have a double bottom line, when it prints 25,000 copies of a magazine every month.

They had a point. So much so that Executive immediately set about improving its green profile. We started by only sourcing paper made from wood grown in sustained forests, while internally we began recycling. But it still wasn’t enough. We still felt we were falling short of being on good terms with our carbon footprint.

It was only back in the classroom this spring, this time teaching strategic management, that the final piece of the jigsaw fell into place. Another group of students suggested that for every magazine we distribute, we should make a commitment to collect up to three more, of any publication, for recycling.

We are empowered and inspired by the enthusiasm, awareness and talent shown by our young business leaders. What is all the more remarkable is that they have demonstrated such maturity in the face of a society that has dragged its heels in embracing the ethics, not only of the modern business community, but the wider world. That they have done so is a testament to the power of the media to cross borders and positively affect us all.

I am telling you this, not only because I am proud of the way Executive has reacted in its own small way to embrace best practice, but because the solutions came from our youth, our future leaders. It is the duty of our generation to ensure that they, and the generations that will follow as they mature, have a world worth inheriting.

Finally, it was with profound sadness that Executive learned of the sudden death of Melhem Karam, who for 50 years was head of the Lebanese Journalists’ Union. He was 78.

As a journalist and writer, he penned many works including ‘The Storm,’ ‘A Thousand and One Nights’ and ‘The Secrets.’ Karam also founded the Arabic weekly Al-Hawadeth, the daily Al-Bayraq and the magazines La Revue du Liban and Monday Morning.

He will be missed.

June 3, 2010 0 comments
0 FacebookTwitterPinterestEmail
Economics & Policy

Tightening inflows

by Executive Staff June 3, 2010
written by Executive Staff

Total net private financial inflows to the Middle East and North Africa are projected to be $12.9 billion in 2010, a decrease of 23 percent from 2009’s $16.8 billion, according to the International Monetary Fund.

The estimate accounts for 6.1 percent of global inflows to emerging and developing economies, projected at $210 billion. By comparison, Latin and Central America are slated to be the largest recipients of net private inflows in 2010 with $80 billion, or 38 percent of the total. The IMF’s predications, however, vastly differ from those of the Institute of International Finance, which forecasts inflows of $709 billion globally.

The IMF forecast net private direct investment to the MENA region at $71.7 billion this year and $77.8 billion in 2011, up from $70 billion in 2009. The body also estimated foreign currency reserves to increase by $60 billion in 2010 and $71 billion in 2011.

June 3, 2010 0 comments
0 FacebookTwitterPinterestEmail
Society

The New Italian Stallion

by Nadim Mehanna June 1, 2010
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

June 1, 2010 0 comments
0 FacebookTwitterPinterestEmail
Society

Football and politics: fair play?

by Rany Kassab, Zeina Loutfi & Ramsay G. Najjar June 1, 2010
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.

June 1, 2010 0 comments
0 FacebookTwitterPinterestEmail
Economics & Policy

Eastern expansion

by Andrew Horncastle & Georges Haines June 1, 2010
written by Andrew Horncastle & Georges Haines

As their North American and European competitors recover from the economic crisis, Middle Eastern chemical companies are facing new opportunities and new challenges.

They are continuing to build on their cost advantage in basic petrochemicals, which has made them formidable challengers in the global industry. They are also beginning to invest in more specialized chemicals to further strengthen their overall position and create more industrialized, diversified economies in their countries. However, as they expand into new chemicals, their cost advantage diminishes and they will have to be selective about their approaches to growth and develop new capabilities to compete successfully.

Cashing in on the crisis

As the global chemicals industry begins to pick up the pieces and recover, it is finding itself in a post-crisis landscape that looks significantly alien. Middle Eastern companies have capitalized on a cost advantage of 30 percent to 90 percent in natural gas-based feedstock — the raw material necessary for producing basic petrochemicals. As a result, regional companies will nearly double their share of global capacity from 2008 to 2013 (from 11 percent to 19 percent for ethylene and 7 percent to 14 percent for polypropylene). Additionally, Middle East chemical companies are well positioned logistically to serve Asian markets, which are currently growing faster than those in North America and Europe.

With these advantages, chemical companies in the Middle East are expected to emerge from the crisis in good shape, despite the fact that global demand for chemicals has dropped while supply has expanded.

To date, companies in the region have focused on basic commodity chemicals based on natural gas feedstock, such as fertilizers and plastics; these are relatively straightforward to manage and highly profitable. Indeed, Middle East firms have such a strong cost advantage in manufacturing these products that Western companies, including Borealis, ExxonMobil Chemicals and Dow, have partnered with regional forms in order to benefit from these advantages.

But with the gap between demand for gas and available supply widening in the region and pressure from governments to diversify economies and create jobs, chemical companies are investigating the possibility of expanding into a broader product portfolio that encompasses oil-based (e.g., naphtha) feedstock.

However, the cost advantage that Middle East companies enjoy with natural gas reduces significantly when moving to naphtha feedstock.

In addition, these products are more complex to manufacture, require greater interaction with customers to provide the necessary technical and applications support, and demand new capabilities for Middle Eastern companies to manage the diversified portfolios and complicated supply chains. 

To determine their path forward, Middle East chemical companies need to look at two elements: the competition and their own capabilities.

In terms of competition, North American and European companies are likely to be more aggressive in defending their territory in specialty chemicals — where their innovation capacity is a strong source of competitive advantage — than in basic chemicals. However, a lot of specialty segments are commoditizing rapidly and Middle Eastern companies are finding opportunities to put down stakes — particularly as Western companies divest businesses to clean up their balance sheets or adjust to their growth strategies and, in doing so, seek to sell or establish joint ventures for their businesses that could significantly benefit from integration with Middle Eastern players.

Earning and learning

In these cases, it will fall to the Middle Eastern firms to make sure that they truly capture knowledge from these partnerships, thus building their own capacity to develop a high-value and diversified product portfolio, rather than simply acting as the purveyors of inexpensive feedstock. In particular, regional companies should consider where else they might be able to build a competitive advantage, such as using their regional proximity to Asia and Europe to better serve those markets.

Saudi Arabia and the United Arab Emirates have both started to move into new chemical products and are making significant investments in integrated petrochemical and specialty chemical projects.

But the move is not without challenges. They must carefully choose those products that meet their profitability targets, yet at the same time balance government requirements for diversification and job creation in order to receive the feedstock they require. In addition, they need to further develop their technology and management capabilities to handle the diverse array of products. Marketing these products will also be more complex, as companies will need to work much more closely with customers to meet their needs; this requires them to place supporting infrastructure directly in Asia and Europe, where there is a demand for these products.

In order to overcome these challenges, Middle Eastern companies should focus first on just a small number of new products to allow for a learning curve, then build a sustainable, competitive position. They should continue to use acquisitions and joint ventures with Western and Asian companies to make use of existing technology, market access and management experience, as well as capabilities, in order to be competitive. In doing so, it is important for Middle Eastern chemical firms to have a clear strategic intent toward acquisitions or joint ventures and vital that they capture the integration benefits of such arrangements.

Forging the future

As the crisis recedes, companies in the Middle East will continue to shape the chemical industry by further increasing their footprint across products and regions, as they build on their relative advantages. As a result, they will be a main driver in the transformation of the chemicals industry by actively pursuing acquisitions and forging new alliances.

June 1, 2010 0 comments
0 FacebookTwitterPinterestEmail
Economics & Policy

Deals by the dozen

by Executive Staff June 1, 2010
written by Executive Staff

Nine new merger and acquisition (M&A) plans with potential worth of well over $12.4 billion have been announced by companies in the Middle East and North Africa (MENA), according to Regional Press Network (RPN)’s DealFlow Monitor.

The largest imminent M&A transaction is a sale of telecommunications assets by Egypt’s Orascom Telecom Holdings to South African MTN. 

Gulf Cooperation Council countries are expected to return to the pre-crisis boom times in M&As, projected to reach $25 billion this year and up to $100 billion in 2011, according to the GCC M&A Barometer survey conducted by Zawya and M Communications.

The GCC M&A Barometer surveyed 27 investment banks, which highlighted telecommunications and financial services as two industries in the Middle East that will see more consolidations. The majority of M&As are expected to take place within the GCC, with Saudi Arabia leading the United Arab Emirates, followed by Qatar. Some 85 percent of bankers expect mid-market transactions to dominate the M&A market this year.

The new projects announced in the one-month period between mid April and mid May of this year, have pushed the known portfolio of major business partnership deals in the region — acquisitions, mergers, joint ventures, venture capital participations, strategic and financial investments — to more than 940 deals with an aggregate value of $142.6 billion, since January 2009, according to the RPN’s DealFlow Monitor.

Telecommunications transactions represent the largest slice of the pie in this period, at $32.3 billion, followed by deals in financial services, at $25.6 billion.

Oil and gas investments rank third, with a value of $19.9 billion. The three sectors account for 60 percent of deals recorded by RPN Dealflow since January 2009.

A recent report by Ernest & Young found that M&A deals announced in the Middle East and North Africa dropped by 67 percent in value to $34 billion in 2009, down from $102 billion in 2008.

The largest transaction recorded in the past 16 months was concluded with a definite sales agreement in March when India’s Bharti Airtel acquired mobile communications network assets from Kuwait’s Zain Group in a $10.7 billion deal. As a comparatively large deal, the Zain IPO accounted for 48 percent of all telecom M&As recorded between Jan 2009 and end of March 2010.

The biggest deal cancellation over the same period was the $1.7 billion fire sale of Dubai construction leader Arabtec to Abu Dhabi’s Aabar Investments, which was called off in mid April.

The two companies said the cancellation was in mutual agreement, despite the suddenness and dearth of information involved, which was matched only by the suddenness and dearth of information involved in the initial bombshell announcement in January. 

One in every four M&A deals of just over 200 deals tracked by RPN Dealflow between January 1 and April 15 of this year involved a partner outside of the MENA region (inclusive of Turkey) but most of these deals related to assets located within MENA.

Analysts say that outbound M&A activities by cash-heavy Arab Sovereign Wealth Funds and private wealth aggregators will proceed with more scrutiny and inbound flows will witness the increasing appetite of international players for slices of MENA economic activities.

Dynamics of M&A in one sector often get a stimulus from a major deal closing, as demonstrated when Zain’s telecoms sale to Bharti was quickly followed by MTN and Orascom disclosing that they entered discussions for an MTN takeover of Orascom’s Algerian unit, Djezzy.

June 1, 2010 0 comments
0 FacebookTwitterPinterestEmail
  • 1
  • …
  • 417
  • 418
  • 419
  • 420
  • 421
  • …
  • 696

Latest Cover

About us

Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

  • Donate
  • Our Purpose
  • Contact Us

Sign up for our newsletter

    • Facebook
    • Twitter
    • Instagram
    • Linkedin
    • Youtube
    Executive Magazine
    • ISSUES
      • Current Issue
      • Past issues
    • BUSINESS
    • ECONOMICS & POLICY
    • OPINION
    • SPECIAL REPORTS
    • EXECUTIVE TALKS
    • MOVEMENTS
      • Change the image
      • Cannes lions
      • Transparency & accountability
      • ECONOMIC ROADMAP
      • Say No to Corruption
      • The Lebanon media development initiative
      • LPSN Policy Asks
      • Advocating the preservation of deposits
    • JOIN US
      • Join our movement
      • Attend our events
      • Receive updates
      • Connect with us
    • DONATE