Consumer Society

Micro machines

by Executive Editors
written by Executive Editors

The Anthony Bonja Fortress watch has a look to match its name. With a thick steel casing held together by six hefty screws and a weighty leather strap, it’s the kind of timepiece you would want on your wrist when facing down an angry bear or a brutish boss. It exudes an aura of solid self-confidence in a way only $5,000 concentrated in four square centimeters of stainless steel can. But inside, there is an entirely different matter at hand — or in this case, on hand.

As a mechanical watch, the Fortress is powered by a system of gears and springs so delicate and so precise that their dimensions and alignment must be measured to the micrometer. It’s this balance of aesthetic sophistication and technical precision that makes a luxury watch, but Anthony Bonja, like the dozens of Middle Eastern brands offering luxury watch lines, is only responsible for half of the equation.

The company is a jeweler, not a watchmaker. The mechanical aspects of its watches — called the “movements” or “ébauches” — are purchased outside of the region, the fruit of a niche market of specialized producers. 

“To the best of my knowledge, all manufacturing of movements used by Arab luxury watch brands occurs outside of the Middle East,” said Susan Maroua, public relations manager at Tabbah Jewelry. “This structure isn’t unique to the Middle East either — it’s the norm for most of the industry.” Companies that produce their own in-house movements — like Rolex, Zenith and Jaeger LaCoultre — and sell to other private groups “are exceptions,” according to Maroua.

Step by step

The majority of the watch making industry is structured ‘horizontally,’ according to the Fédération de l’Industrie Horlogère Suisse (FH) — the association of Swiss watch makers — meaning that any given watch passes through several companies or technicians, each of whom is responsible for a different step in its development, before it reaches the showroom.

“As a luxury jewelry line, we work in participation with a number of specialists to produce our watches,” explained Stephan de Palmas, regional director for Van Cleef & Arpels in the Middle East. “Our company will develop a concept and send its specifications to one of the manufacturers we work with – Jaeger LaCoultre, for example – which will produce and send us the disassembled movement. The movement is then sent to another specialized technician who adds complications [mechanics that run off the movement] that will, say, cause a couple to meet and kiss on a tiny bridge every twelfth hour, or show the cycles of the moon.”

“Finally, when the watch’s mechanical aspects are fully assembled, it returns to our workshops to be decorated and jeweled, and from there goes to our retailers to be sold,” he said.

Regional markets

On the receiving end, Middle Eastern states are among the top importers of luxury watch movements globally. According to the FH, the United Arab Emirates is the 9th largest importer in the world, with Saudi Arabia, Lebanon and Bahrain not far behind.  Taken on a per-capita basis, the Middle East accounts for nearly as many watch sales as some of the world’s largest markets in Japan, Europe or the United States, and the region’s segment seems to be growing.

Middle Eastern markets, along with heavyweights China and India, played a major role in pulling the luxury watch industry out of its 2009 slump, and international retailers are increasing their regional foothold as a result.

“Dior is up this year 6 percent,” said Jacob Hrayki, regional manager for Dior. “I believe retailers are in a more confident position this year, investing better in their stocks and mainly in their strategic brands.”

FH estimates that Swiss watchmakers exported some 2.1 million watches and 35,000 movements, worth a combined $1 billion, to the Middle East in 2009. That constituted a decrease of 22 percent from 2008 sales, which is a testament to the difficulty the industry faced that year. However, sales have picked up sharply in the first months of 2010, with regional sales of Swiss watches and movements increasing by nearly 40 percent in January and February.

As Swiss as cheese with holes in it

Although Japan, Russia and Germany produce and export a portion of the markets’ movements for use in luxury watches, Switzerland is still the industry’s silverback gorilla.

The alpine state exported $12.3 billion worth of watch related products in 2009, while its closest competitor, Hong Kong, achieved sales of only $5.6 billion.

Much of the country’s own industry is dominated by a single company, ETA SA, a wholly owned subsidiary of The Swatch Group, which supplies the movements used by the majority of mid-range luxury watch brands made in the Middle East.

However, that partnership is slated to end in the very near future. In 2003 ETA announced that it would end all sales of movements to makers not allied with the Swatch group by 2006, prompting a panic among smaller makers and driving sales as makers rushed to build up their reserves in anticipation of the closure.

“There was no innovation, no new development, and when I pushed them to start new production, everybody started shouting,” Nicolas Hayek, the chief executive officer of Swatch, said at the time. “I said I was not going to deliver any more of my movements unless they try to do their own production. Otherwise the Swiss watch industry… will go down.”

Following protests by smaller makers, the company was investigated by the Swiss Competition Commission and found guilty of abusing its dominant market position.

During the settlement period, ETA agreed to push its export closure date back to the end of 2010 while engaging in a slower “phasing out” of its movements from the market. By the end of this year, however, Middle Eastern jewelers along with other makers around the world will need to look for new sources to furnish their machinations.

The alpine state exported $12.3 billion worth of watch related products in 2009, while its closest competition, Hong Kong, achieved sales of only $5.6 billion

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Editorial

Leave us alone

by Yasser Akkaoui
written by Yasser Akkaoui

Even the piecemeal tax increases contained in the Lebanese Ministry of Finance’s 2010 budget proposal are insulting. The private sector and the expatriate community — the two entities that keep the Lebanese economy alive and the government afloat — can’t help but feel that they’re being forced to give more blood to the leeches of the state and still receive nothing in return.

For example, in some countries taxes on cigarettes help cover healthcare costs. In Lebanon, taxes are what the Ministry of Finance, through the Regie Libanaise du Tabac et Tombacs, uses to pay tobacco farmers for their crop, at times registering up to a 500 percent loss. This is insane.

Such complaints are not just the moaning of the wealthy. This is a reaction to the crude policies of a government that, under pressure from donor nations to get its fiscal house in order, will further burden those who already carry it, instead of attempting to lighten the load through measures that are simple common sense.

Lebanon is neither a classic laissez-faire economy that lets businesses run wild and free — it is too corrupt for that — nor is it a typical welfare state which provides education, healthcare and housing for its citizens. Quite simply, it falls between the two stools and instead of seeking to remedy the failings in its national infrastructure and behave like a mature government, it takes the easy route and taxes those whose economic health is predicated on unfettered economic activity. 

For years now, Lebanon has prided itself on its fiscal wisdom, boasting that it is this prudence that has kept it from ‘pulling’ an Argentina or a Greece. But that our politicians even talk in those comparisons — that yes, we are looking over the cliff, but no, where others have fallen we will keep our balance — is a testament to their fiscal ineptitude.

The private sector cannot be held responsible for this colossal waste. Should government one day become transparent and accountable, and show it has spent the money we already gave wisely and efficiently, then we could talk about, perhaps, paying more into government coffers.    

But that day is a long way off. Until then, quite simply, the private sector should be left well alone. We, the private sector, have kept Lebanon afloat for over 50 years. Let us work; let us employ; let us create; let us spur consumption.

Let us be.

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An irrelevant election

by Peter Grimsditch
written by Peter Grimsditch

The brilliant classical scholar and poet A. E. Housman had a profound mistrust of opinions that are shared by a large number of people. Even, perhaps especially, when the vast majority of manuscripts contained the same version of a line of Latin poetry, the former Cambridge University professor was dogged in pursuit of what he saw as a more likely — and correct — alternative. His views on last month’s presidential elections in Northern Cyprus would doubtless have been entertaining and scathing in equal measure.

The anonymous commentators and analysts so oft quoted (or invented) by political writers have mostly been trotting out the same, simplistic line of the likely effects of the outcome, no matter who won.

The incumbent president, Mehmet Ali Talat, was credited with holding 71 meetings with his long-time fellow trade unionist, Greek Cypriot leader Demetris Christofias, which led to a series of unofficial and unenforceable agreements between the two sides of the divided Island, which was split in 1974 when Turkey invaded after a Greece-backed coup attempt. All these would be jeopardized, ran conventional wisdom, if the so-called nationalist hardliner, Turkish Cypriot Premier Dervis Eroglu, were to win the April 18 vote. The entire process of unification for an island now in its 36th year of division would be put on hold at best and vanish forever at worst.

Eroglu won an absolute majority in the first vote, eliminating the need for a run-off the following Sunday. And with that victory, the pundits continued, Turkey’s chances of joining the European Union suffered another devastating reverse. All of this somewhat misses the point.

Turkey’s ruling Justice and Development Party (AKP) calls the shots in the Turkish Republic of Northern Cyprus (TRNC) and it made very little difference who actually won last month. Turkish-Cypriots are financially dependent on Turkey. Without the $500 million annual contribution from Ankara, the TRNC would sink into bankruptcy faster than Greece. The rhetoric from both candidates during the election was mainly for domestic consumption.

Christofias said he was ready to negotiate with whomever was elected but insisted he would not resume talks from scratch. Eroglu told supporters: “Talks will continue because I want peace more than those who say that I don’t.”

Much more significant is what Recep Tayyip Erdogan, the Turkish prime minister, had to say. His clear disdain for what he sees as disruptive tactics from the European Union was illustrated by his public description of the union as a Christian club. It may well be true that a solution to the Cyprus issue is a prerequisite for Turkish EU membership. However, rapid accession is unlikely with or without a solution, and Erdogan’s desire for an answer to the divided island’s problems has other motives. Opening the northern side to direct trade would improve its economy and eventually lessen its dependence on Ankara’s money, and a reduction in the 30,000 troops stationed there would cut Turkey’s contribution to maintaining their presence.

Even additional benefits accorded to Turkish Cypriots if they become “official” members of the European Union alongside their fellow Cypriots in the south are less than they might appear. Around 40 percent — or 80,000 — Turkish Cypriots already hold EU passports. Roughly the same number cross into Greek-Cyprus daily to work jobs that pay far more than the equivalent employment in the north.

For all the publicity surrounding the Talat-Christofias talks, nothing of worth was achieved in two crucial areas — a system of governance or a solution to the property problem. In the north, 30,000 villas and apartments have been built since the split, mainly on land owned by Greek Cypriots. Properties subject to claims by their former owners are being sold at discount prices to foreigners, perhaps unaware of the difficulties of ever securing full title to them. The land problem is not one-sided. The land that houses the old Larnaca Airport and part of the terra firma on which the new one stands belongs to Turkish Cypriots. Optimism stemming from the 18 months of meetings between politicians on both sides of the island is based on little, save an excess of shallow public relations, cheerfully and regularly trotted out by the foreign media.

Housman-style followers of useful information would do better to watch for results from Erdogan’s visit to Athens this month.

PETER GRIMSDITCH is Executive’s Istanbul correspondent

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United by farce

by Sami Halabi
written by Sami Halabi

Optimists have lauded the sight of Lebanon’s politicians playing a game of football together, under the banner “we are one,” as a sign of good faith to mark the 35th anniversary of the Civil War.  But for those of us less buoyant in nature, the sight was a slap in the face. We would rather see our public figures stop playing games and start getting serious about governing the country.

The players — a mixture of ministers, members of parliament and members of the Lebanese Football Association — managed to muster “unity” for a full 30 minutes, the duration of the match.

However, once the final whistle was blown — much to the relief of Lebanon’s heavier public figures — the youngest player and only goal scorer, Phalange MP Sami Gemayel, did little to contain his contempt for the opposing team’s captain, Hezbollah MP Ali Ammar.

“It seems that Ali Ammar’s defense strategy is a failure,” Gemayel was quoted as saying in the press, ostensibly alluding to the discussions over a national defense strategy currently being mulled at the National Dialogue sessions. 

Playing foul-for-foul, Ammar was quick to boot the ball back into the other end: “Our defense strategy is only directed against the Israeli enemy, and our team did not want to defeat the team of PM Hariri because he is the Prime Minister,” he retorted.

Notably absent from the game were the public, who have been banned from football matches since 2005 due to fears of sectarian violence pouring out into the streets. The irony of this, of course, is that some of the same politicians waddling haplessly across the pitch were the ones to stoke sectarian tensions in the first place.

Thus, with the stands empty, the absence of the public from the political field of play — from parliamentary committees to national dialogue sessions — was extended from the figurative to the literal.

The fact is that many of the player-politicians at last month’s “unity” match have done more to reinforce Lebanon’s sectarian divide through sports than anyone else, given that many own sporting clubs and/or interfere with appointments at the various sports federations.

And while our public figures kick out cash for personal prominence in Lebanon’s sporting arena, when it comes to supporting sports as a national institution — through the Ministry of Youth and Sports, for example — the ball gets deflated, with thread-bare funding for the ministry making it little more than a pawn in the greater struggle for power in Lebanon’s cabinet.

In front of the cameras, of course, the player-politicians told a different story. All agreed that sports needed to be encouraged in Lebanon, though as a former member of Lebanon’s national rugby league squad myself, as well as a development officer for the sport, this doublespeak looked clearly offside.

During a meeting with an adviser to a former sports minster, our team was promised only partial funding for travel expenses if Lebanon made it to the 2008 world cup finals; qualifiers would not be funded at all. When Lebanon hosted an international tournament in 2004 and the lights cut out in the middle of a game, then-President Emile Lahoud had to intervene to get them turned on again; a massive poster of Lahoud was later draped over the grandstand for the final, which Lebanon won against France.

If Lebanon’s politicians truly wanted to encourage sports in the country, they could start by giving the people access to “public” municipal sporting facilities — currently off-limits to those without the right political connections or money to pay.

It was the public who paid some $100 million to reconstruct Camille Chamoun stadium, only to be barred from its first event of the year, as the politicians played their “unity” match. Perhaps the referee should have given them all red cards at the opening whistle and consigned this self-congratulatory sham to an early shower.

SAMI HALABI is deputy editor of Executive Magazine

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Of politics and profits

by Riad Al-Khouri
written by Riad Al-Khouri

Iran and Turkey’s respective economic involvement in the Middle East continues to grow, but as is so often the case in our region, business is becoming mixed up with politics. A good example of this is Tehran’s relations with the United Arab Emirates, home to about half a million Iranians and one of Iran’s largest business partners in the region. Iranian exports to the Emirates increased 50 percent from 2005 to 2009, and at the same rate in the previous five years. Last year, trade between the two countries was worth some $15 billion.

Great, you might think — unless you are the United States, which has been pressing the Emirates to limit business dealings with Iran as Washington continues to place sanctions on the Islamic republic and browbeat others into following suit. Over the past few months, a series of high-ranking US officials have been sent to the emirates in an effort to promote an anti-Iranian line and convince the UAE to restrict profitable centuries-old trade across the Gulf, warning of the consequences of strong economic relations with Tehran.

The UAE is aware of the ‘reputational risk’ run in the US over dealings with the Iranians, and accordingly humors Washington — without taking the matter seriously at a practical level. The American position is that normal consumer goods getting into Iran do not undermine sanctions, but that high tech is another story — the Emiratis, however, continue with business as usual, and despite US pressure, trade volumes between Iran and the UAE look set to continue growing.

Esfandiar Rahim-Mashaei, the head of Iran’s Presidential Office, called for Iran-UAE trade ties to be strengthened on a recent visit to the UAE, stressing that “both countries have a lot to offer as key players in the region’s economy.”

Ultimately, Iran and the emirates have a mutual interest in increasing trade, and so will work to promote business co-operation, irrespective of Washington’s bluster.

The other big economy on the northern border of the Arab Mashreq is Turkey, officials of which have for the past few years crisscrossed the region to open doors for the country’s businesses. Thanks in part to these improved trade links, Turkey has seen a strong recovery  after the economic slump of 2009.

Turkey’s youthful profile drives much of its development: over a quarter of the population is under 15 years old, with only 6 percent aged 65 or older. Turkey is notably more youthful than the Eurozone countries, where 18 percent of the population is over 65 and only a sixth younger than 15. With such creaky demographics, Brussels should rush to have Turkey enter the geriatric European Union, yet Turkey’s prospects for admission remain slim.

As the EU snubs Ankara, the Turks have sought friends and business partners elsewhere, including in the Arab world. In the past seven years, while total annual Turkish exports tripled to $102 billion, sales to the Middle East grew twice as fast.

Jordan, for example, saw its imports of Turkish goods jump from $188 million in 2004 to some $386 million last year, a whopping rise, but still way below the rate at which other Middle Eastern states bought Turkey’s products. Another interesting case can be found in Lebanon’s imports from Turkey, which went up 150 percent from 2006 to 2008, though they retreated somewhat in 2009.

Finally, it must be asked if Turkey and Iran are competing economically with each other in the Arab world, especially in places like Iraq — which they both neighbor — or Syria, which shares a long border with Turkey but is politically allied with Tehran. The answer so far seems to be no, with Turkey exporting more manufactured goods while Iran focuses mainly on raw materials. So for the time being at least, Tehran and Ankara’s respective strong economic drives to the south continue, but without mutual competition.

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

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A liberty too far?

by Peter Speetjens
written by Peter Speetjens

If I were to be one country of all the countries in the world, I would be Israel, at least in terms of external relations. After all, what other country has the liberty to invade neighboring territories with impunity, bomb civilian targets, assassinate adversaries using forged Western passports, spy on its most fervent financial and military backer, the United States, and snub its vice president while he is on an official visit to the country.

Perhaps this is what former British Prime Minister Tony Blair had in mind when he told the annual conference of the American Israel Public Affairs Committee (AIPAC) on March 23: “The Middle East should regard Israel not as an enemy but as a model.”

A member of the British lobby group “Labour Friends of Israel,” Blair today is the largely invisible envoy of the “Quartet on the Middle East.”  He was not the only celebrity invited by AIPAC, which advocates pro-Israel policies to the US Congress and executive branch and is widely regarded as one of the most powerful lobby groups circling the White House — a core of American politicians and some 130 evangelical leaders also gave acte de presence. Among them was US Secretary of State Hillary Clinton, who said: “Our commitment to Israel’s security and Israel’s future is rock solid.”

Note that this declaration of “rock solid” love came less than two weeks after Israel’s Interior Ministry announced the construction of 1,600 new illegal settler homes while US Vice President Joe Biden was on a mission to Israel to revive peace talks.

Clinton’s remark came only days after the emergence of 21 declassified documents from the Federal Bureau of Investigation (FBI) that bring the 1984 AIPAC spying scandal back into the limelight. The documents concern an FBI probe into the theft of a confidential report, which compromised the Reagan administration’s position in the 1984 negotiations over a US-Israel Free Trade Agreement (FTA).

The US International Trade Commission (ITC) had solicited data, under strict secrecy provisions, from US industries concerned about reducing tariffs on Israeli goods. They were compiled into a report called "The Probable Economic Effect of Providing Duty-Free Treatment.”

According to the FBI, AIPAC obtained the report and handed it over to a high-ranking Israeli diplomat. In 1985, the US signed a FTA with Israel. Ever since, the cumulative US trade deficit with Israel has soared to some $70 billion. It was not the only spying scandal concerning AIPAC.

In 2004, the FBI arrested Jonathan Pollard, who had handled the Iran dossier while working as a political analyst under Douglas Feith, former under secretary of defense for policy, and Paul Wolfowitz, former deputy secretary of defense. Both are well-known neoconservatives, while Feith is one of Washington’s most hard-line hawks regarding US foreign policy in the Middle East. Pollard handed more than one million classified documents to Steve Rosen and Keith Weissman, AIPAC’s former policy director and Iran analyst, respectively.

In this context, it is worth recalling that AIPAC was established as a spin-off of the American Zionist Council (AZC) in 1962, only six weeks after the US Justice Department ordered the AZC to register as an Israeli foreign agency. Today, AIPAC is the beating heart of a myriad of pro-Israeli organizations, individuals and think tanks, which comprise “The Israel Lobby.”

Political scientists John Mearsheimer and Stephen Walt, who can be credited for igniting the first public debate over the many troubles and travails of the lobby, wrote that AIPAC has an “almost unchallenged hold on US Congress.” It is no secret that political careers get a boost once AIPAC support is secured. Hence, the popular annual conferences and the recent AIPAC letter calling for an end to public criticism of Israel, which was signed by three quarters of the US House of Representatives.

But the Zionists may recently have been caught poking thorns in the side of their most powerful patron: the US Army. American military circles are increasingly aware that their country’s unconditional support for Israel’s regional belligerence is compromising American initiatives in the Muslim world, and endangering the lives of US soldiers in Iraq, Afghanistan and elsewhere. Should this perception spread through the halls of American power, it may be hard indeed for AIPAC’s silver tongue to keep its shine.

PETER SPEETJENS is a Beirut-based journalist

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Society

The new riddle

by Ayman Haddad
written by Ayman Haddad

In the beginning there were three risks. Or at least that is how the pre-1970s corporate observers and academics saw it. Like many fields of science, the initial elegant simplicity was to prove deeper and more profound than those early pioneers of the field could first imagine.

The historical view of risk 

* Market risk observed that markets could fail without warning.

* Contingency risk revealed that risk lay in not having a robust and thorough enough strategic plan to engage in these markets regardless of their climate.

* Agency risk was, in days gone by, focused on the risk of a company’s management failing in its capability to deliver plans and steer a company to success.

That was the old model. More than 30 years later, it is time for a major rethink.

Leadership risk is now emerging as the most significant future management issue. The quality of a company’s leadership determines how well the company performs and how it is able to differentiate itself from the competition.

Yet, companies all over the world are finding it increasingly difficult to find good leadership talents. The types of challenges business leaders face have multiplied, the complexity of the issues has grown and broad global trends are adding variables to the equation.

In the next decade, three key “storms” are likely to come together to make the job of finding the right leadership talent tougher than ever before.

Storm 1: Population

The population of the planet has tripled in the last century to around 6.5 billion and is still growing. Projections suggest that it could hit 11 billion this century. Over 95 percent of this surge will, from now on, come from the developing world — particularly China and India.

It is expected that by 2050 the population of today’s ‘developed world’ will fall from 1.2 billion to less than a billion. The developing nations’ populations will double in this time, as will the global migration of temporary workers.

Today, China and India together account for a sixth of the global economy. By 2017 this will be a quarter, with India’s growth fuelled by education, languages and technology.

China’s  growth will be spurred by industry, resources and supply of labor. To meet their commercial needs for the next 10 years, they will together require more oil per year than Organization of Petroleum Exporting Countries has currently been able to produce each year-to-date. This level of growth requires vast resources, technical talent and knowledge.

But the real demand concern is executive talent.

China has said that to meet its business industrial needs for the next 10 years in the telecommunications and technology sectors, it must fill a deficit of nearly 70,000 executives, who will be drawn from abroad. Germany is declaring a 48,000 deficit in engineers and will also seek them from outside its borders.

This draw on talent is just one small influence on the next major source of concern: the aging population. In 2006 in the United States, two workers left the workforce for every one that entered. In short, the populations of the western world are becoming both smaller and older.

A recent Harvard Business review survey said that by 2011, 50 percent of the workforce of the western world will be over 50 years of age, rising to 80 percent by 2018.

Japan claims that by 2020, 65 percent of its financial services workers alone will be over 50. China expects that by 2050, 31 percent of workforce will be over 60 years old.

The European Union expects a work-force deficit ranging between 42 and 70 million people. The US estimates range from 32 million to 48 million. The peak will strike as the last of the baby-boomers hit 65 — the current legal retirement age in many countries.

Both regions cite solutions that include the ongoing employment of an otherwise retiring workforce, as well as significant sourcing of talent and leadership from fast developing nations. But developing nations, with their rapidly growing populations, are also in need of executive talent and will therefore have to take measures to retain domestic talent or look to the developed world to fill their requirements, thus compounding the issue.

With populations shrinking in the developed world, the work force of these nations will have to include employees above today’s accepted retirement age if there is to be sufficient support for the senior generations, which will outnumber the young.

Resetting the balance

Labor, talent and leadership will also need to come from more diverse sources. The mix of genders, ages, races, nationalities and languages is about to surge in the workplaces of developed nations.

The male-female balance is also likely to go up, and at older ages than before. A study by the International Labor Organization this year reported that 63 percent of women in the developed world are in employment today; 40 percent of them are in the global frontline workforce, while 34 percent are in management.

It also found that 25 percent of women in their 20s in Britain do not intend to have children until their 40s and 12 percent do not intend to have children at all. In Italy, a third of women in their 30s are in full-time work, but the birth-rate there fell from 2.6 in 1985 to 1.2 in 2005. Indeed, in the last 20 years, birth-rates in developed nations fell from 2.4 to 1.6, a trend that looks likely to continue.

Storm 2: Mobilization

Today, 200 million people live in countries they did not grow up in, as the laws that previously kept talent at home have become more relaxed. Fifty percent of Saudi Arabia’s 13 million citizens are under 18 and 65 percent of Iranians are under 25 — workforces in nations with declining oil reserves and, in Iran’s case, employment droughts. They will likely have to migrate.

It isn’t just international migration but intra-national as well: 120 million people have mobilized from rural to urban areas in China in the last 10 years. China is encouraging talent migration to enable learning and knowledge. In 2007, 50 percent of the planet was living in urban regions.

Storm 3: Multi-generation

So as the veterans hang on and the new generation becomes employed, we could see five generations in the workforce by 2013 of all races, genders, abilities, languages and wealth.

In October 2006, the World at Work consortium surveyed 487 organizations and over 3,000 workers around the world: 88 percent of respondents stated that the ongoing management of the multigenerational workforce was a major factor in a company’s growth and success.

A work force of diverse beliefs, cultures, skills and generations needs to be provided with the conditions in which it can succeed. We need to go back to the basics. We need to again talk to, listen to and engage with our people, like we used to.

The needs of multiple generations must be catered to, to sustain the number of employees required to service the much larger retiring population. We won’t be able to throw cash at this problem. With so few people to fill so many jobs, good wages for talent will be a given.

Thus, today’s system of cash reward will have to be bolstered by intrinsic incentives: in good times and bad, the most powerful means of attracting, engaging, developing and retaining top talent is to provide it with the conditions for it to succeed and feel successful, rewarded, valuable and influential.

It is this mindset we need to now understand again. Employee branding and employee equity is at its peak when well-led. Word of mouth spreads, and through this well-led organizations attract talent and earn loyalty.

 

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Economics & Policy

Movement for everyone

by Fares Saade
written by Fares Saade

Fueled by demographic growth, urbanization and economic development, the cities of the Gulf Cooperation Council are growing at a rapid rate that is outpacing their current transport infrastructure and services.

The United Nations forecasts that 88 percent of the GCC will be urbanized by 2025, compared to a world average of 57 percent. What’s more, an increase in income levels will cause demand for mobility to outpace even the region’s rapid population growth.

So far, this surge in demand has been largely met by private vehicles and taxis, with public transportation accounting for less than 10 percent of all motorized trips. This approach has resulted in congestion, pollution and deteriorating road safety. It threatens to slow the growth of the region’s cities and undermine the quality of life for urban residents.

To address these challenges, authorities have been making massive investments in public transportation systems; regional governments have recently announced that they will pour a combined $26 billion into metro systems, trams and monorails. However, these investments alone will not change commuters’ habits and attract them away from cars and onto public transport. Other countries’ experience shows that careful policy formulation and planning are indispensable to the success of public transportation. For the car-dependent cities of the GCC, those lessons are particularly critical.

The path to public transport

Transport authorities must be realistic about how many people will actually use public transportation. With strong car cultures and populations spread over large areas, GCC cities will have to work hard to drag drivers out of their cars.

To reach even modest success, transport authorities must consider five critical steps. Although their implementation will vary by country, each serves a common goal: enhancing the attractiveness of public transport and dissuading individuals’ use of cars.

Focus on convenience: People will not use public transportation if it is not easy to do so, and thus public transport should first aim to be accessible. The recently opened Dubai Metro is a case in point: It is still working to reach a satisfactory and sustainable level of use with plans for “park and ride” facilities and better feeds from high-frequency bus services and taxis.

The cleanliness and comfort of stations and vehicles are also important in attracting riders from all socioeconomic brackets. Finally, fare levels and structures need to balance affordability for users with transport authorities’ goal of maximizing revenues. To offset the reduced convenience of public transportation, the cost of the trip to the customer — in both money and time — must be lower than the cost of the same trip using a car.

Integration: The easier it is for commuters to ride multiple modes — for instance, bus and metro lines — the more convenient public transport becomes.

There are two main levels of integration. The first one is at the station level; major interchange stations provide commuters with access to metro, tram, bus and taxi services. Metro stations in sparsely populated GCC cities would require strong feeders, such as buses and taxis. Fares and ticketing are the second level of integration: Allowing users to pay a single fare and use a single ticket for multiple modes is another element of convenience, particularly when the combined fare is lower than the sum of the fares on the different modes.

Smart card ticketing technology has now become the standard for many metros, as it offers users the added benefit of being able to use it for parking and various small purchases, such as newspapers and drinks.

Discourage car use: Disincentives for car use are probably the best way to encourage riders to use public transportation. Recent studies have shown that urban rail systems mostly attract riders who had previously been using the bus rather than those who had been driving — unless authorities impose severe restraints on the ownership and use of personal cars.

Such measures may include limiting car ownership (via sales taxes, import duties, and annual fees) and restricting car usage (via parking charges, congestion and road tolls, and fuel taxes). For GCC cities, the challenge is substantial. Taxing car ownership and fuel is likely to be contentious in an oil-producing region accustomed to low taxes and import duties.

The dynamic management of parking space and policies that charge for it would likely prove not only easier to implement but also be better targeted to specific congested areas of city centers. A number of cities, most notably in Saudi Arabia and the United Arab Emirates, have been moving in that direction recently.

Overall, in a region where very few people use the existing bus service, restricting car usage is inevitable if public transportation is to really take off. Measures can be gradually introduced over time as public transport becomes available and convenient.

Bring in the private sector: Private- sector involvement can offer a number of benefits to GCC cities in developing or operating modes of public transport.

u The greater efficiency that characterizes private-sector operation leads to reduced government spending on subsidies for urban transportation. Other countries’ experiences show that competition for operating franchises is the primary way to reduce subsidies.

* Public-private partnerships in infrastructure projects, such as rail transport and station development, alleviate the fiscal burden on governments and facilitate the projects’ execution. There is an increasing need for better financial management of these projects as GCC governments attempt to boost their reserves and ensure fiscal discipline, despite the oil boom of the last few years.

 

* Private operators tend to have the discipline and much-needed customer orientation to ensure high standards of service quality, reflected in service frequency, schedule suitability, maintenance, image and staff friendliness.

Create an enabling institutional and regulatory framework: Few of the above-mentioned policies and measures are possible without a solid and integrated framework for planning and regulation. Public accessibility, intermodal integration and disincentives for car use require well-integrated planning between the relevant government entities. Private-sector participation requires transparent and well-developed licensing, regulations and enforcement mechanisms. This is difficult in the current GCC institutional context, which remains largely fragmented and underdeveloped. Planning, regulation and enforcement responsibilities are often distributed among different uncoordinated entities with overlapping roles and responsibilities.

However, in the past few years, a growing number of countries have been establishing integrated transport authorities with a clear mandate for planning, regulating and enforcing all matters related to surface transport and traffic management. Not all countries may want to have a single entity; nonetheless, the allocation of responsibilities and the coordination mechanisms have to be well-established.

Public transportation may not be the sole remedy for the looming mobility challenges facing GCC cities, which demand a holistic approach that includes strategies for traffic management, non-motorized transport such as walking and cycling, and the integration of transport with land-use planning. But none of these strategies will dispense with the need to develop and promote the use of public transportation. Accordingly, following these vital steps to encourage public transport use will help public transportation reach its ultimate objectives.

FARES SAADE is a principal at Booz & Company

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Economics & Policy

Tallying tobacco

by Karah Byrns
written by Karah Byrns

The proposed tobacco control law being mulled by the Lebanese Parliamentary Administration and Justice Committee has stirred debate between health-minded civil society activists, lobbyists from the tobacco and advertising industries keen to protect their commercial interests and a public skeptical of how serious the government is about enforcing any real tobacco control policy.

Arguments have covered not only health concerns but also Lebanon’s economy, asking whether or not the country can afford to lose the cash raised by the tobacco industry, specifically in the agricultural, hospitality and advertising sectors.

The controversial legislation would be surprisingly strict compared to the current law, calling for a ban on smoking in indoor public places including bars and restaurants, forbidding advertising of all tobacco-related products and insisting on pictorial warning labels on cigarette packs equivalent to 40 percent of the packaging size.

Proposed as a series of amendments to a draft law from 2006, this version revisits the country’s stance on tobacco following its commitment to the World Health Organization Framework Convention on Tobacco Control (FCTC), an international treaty that Lebanon signed in 2004 and ratified the next year. The FCTC arose as a global response to scientific data, albeit from the 1960s, which revealed the gravity of the health risks associated with tobacco use and is the treaty that prompted tobacco control legislation across the world.

Implementation of the draft tobacco control law would allow Lebanon to catch-up on its FCTC obligations, as the country has already missed the 2008 compliance deadline for implementing larger warning labels, the 2009 deadline to ban advertising and the 2010 target to ban smoking in indoor public places.

According to George Saade, program coordinator at the health ministry’s National Tobacco Control Program (NTCP), the tentative deadline for parliamentary approval of a national tobacco control policy is May 31, coincidentally “World No Tobacco Day.”

Smokey quantification

A study released last month by the American University of Beirut’s (AUB) Tobacco Control Research Group — authored by Jad Chaaban, Nadia Naamani and Nisreen Salti — has quantified a number of previously undocumented tobacco-related figures.

Cost of smoking as a percentage of GDP in Lebanon

For starters, the study reports that 40.3 percent of Lebanese are smokers. With cigarette consumption reaching an estimated rate of 12.4 packs per person per month, Lebanon also has one of the highest overall consumption rates in the world. The figure is three times that of Syria, and 12 times that of Singapore.

Looking at the overall benefits to the economy, the net revenue from tobacco is estimated at $271 million, taking into account tax revenues, subsidies to Lebanon’s 24,000 tobacco farmers, advertising, revenues from licensing and all other net gains for the government, international tobacco companies, distributors and retailers, and the Regie du Tabac et Tombacs — the state-run entity under the Ministry of Finance, which oversees Lebanon’s tobacco industry.

When evaluating overall costs to the economy, the sum includes health care costs, productivity loss, environmental costs due to forest fires and street waste clean-up, totaling $326.7 million, around 1.1 percent of Lebanon’s GDP. This figure is relatively high; in Egypt, where smoking prevalence is also high, the costs represent 0.7 percent of GDP.

The balance of tobacco’s revenue and costs leaves the country with a net loss of some $55.4 million. The real figure could be even higher since the study excluded costs related to regular exposure to second-hand smoke, as well as excluding many smoking related diseases due to a lack of sufficient data.

 “What is obvious is that Lebanon’s economy is losing money on smoking,” said Chaaban.

According to Public Health Researcher Jade Khalife at the Ministry of Health’s NTCP, international data strongly supports the economic assertion that employers will benefit from increased tobacco control in the form of improved employee productivity, reduced hiring costs and lower building maintenance costs. Khalife raised the example of Ireland, where smoke-free environments saved employers the equivalent of 1.1 to 1.7 percent of GDP.

In the hospitality sector, studies conducted in other countries generally show that banning smoking in indoor public places either does not affect, or actually increases, revenue for restaurants and bars. In Ireland, the first European country to ban smoking in enclosed workspaces in 2004, a study in the Irish Journal of Medical Science found that a year after the ban was enacted customer numbers in Dublin pubs had increased by 11 percent.

More recently in Turkey, hospitality sector revenue rose some 5 percent in 2009 following a public indoor ban. And in Lebanon, apart from the fact that the majority of Lebanese are non-smokers, a recent survey done by the NTCP underlined that restaurants could also see increased business from a ban, with 56 percent of Lebanese smokers reporting that they are bothered by smoke in restaurants, and 98 percent recognizing that second-hand smoke is harmful to them.

“In our bars and restaurants 60 to 70 percent of the people are smoking,” estimated Gemmayze Development Committee member Paddy Cochrane, who is coincidentally Irish-Lebanese. “After experiencing the ban in Ireland and being a non-smoker myself, I think it’s a fantastic idea, but as a bar owner, I’m not there to tell people what they can and cannot do. But if the government passes a law, it’s different.”

Although restaurants and bars would lose money made off of the promotion and sale of cigarettes in their venues, the impact is negligible, added Cochrane.

No more Marlboro man

The advertising sector also stands to lose from the proposed legislation. According to AUB’s study, tobacco advertising comprised 4.5 percent of total advertising spending in Lebanon in 2009, a figure roughly coinciding with an estimate of 4 percent provided by the President of the Lebanon Chapter of the International Advertising Association (IAA) George Jabbour. Research company IPSOS reported that tobacco advertising made up 1 percent ($7.2 million) of the total media advertising, excluding ‘below the line’ advertising, such as promotions, handouts and events – which the industry would rather see exempt from any ban.

According to Jabbour, advertisers need time adjust to the change. 

“We need a grace period. We have employees that we cannot just throw away. We need to restructure,” he said.

“No one is saying it should be stopped as a legislation. But we don’t want this legislation to just be propaganda. We don’t want the advertising industry to be the scapegoat,” said Jabour, concerned that ban or no ban, smokers will carry on regardless, leaving advertisers to carry the can.

Skeptics argue that smoking is as much a part of the local culture as general disregard for the law. In focus group studies conducted by the AUB Tobacco Control Research Group, even researchers in favor of the policy had to admit that the most frequent concern about the policy implementation cited by participants was the willingness of the general public to abide by a law, even if it passes. Last month NTCP’s Saade released a statement saying that fines for breaking the law may reach $663 for establishments and $33 for individual smokers. But who would implement this remains undetermined as yet.

More recently, a modification of the draft law regarding the public ban was introduced to provide exemptions for public establishments that make separate smoking and non-smoking areas. This move drew sharp criticism from the AUB Mechanical Engineering Department, which “strongly advises against any such exemption because it has been shown through numerous scientific studies that partitioning indoor spaces into smoking and non-smoking areas does not work, even when advanced ventilation and filtration technologies are used.”

A similar attempt to impose separated areas in Spain failed and the country is now considering a complete ban, after many establishments already invested in redesigning their businesses.

Applying policy… maybe

The AUB Tobacco Control Research Group also strongly warned that “multinational tobacco companies have consciously thwarted previous policy attempts to limit the reach of this harmful product… The industry should not be allowed to weaken tobacco control policy.”

While the NTCP estimates that 3,500 Lebanese die each year due to tobacco use, the public health aspects of the tobacco control law, and even the economic ones, have thus far been trumped by political interests in the halls of government. Lebanon’s three largest tobacco importers, Philip Morris, British American Tobacco and Japan International Tobacco, declined the opportunity to contribute to this article.

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Economics & Policy

Burning a hole

by Sami Halabi
written by Sami Halabi

The Lebanese government has developed a habitual pattern of behavior in regards to progressive policy: the idea is lit with good intentions, smoked by vested interests and political squabbling, then forgotten like ash flicked away in the wind. When not tossed aside entirely, major policy initiatives are often simply relegated to an indefinite sentence in a bottom drawer somewhere in parliament.

There have been signs recently that government may be trying to curb this damaging addiction, however, in light of the tobacco control legislation currently being mulled by politicians.

The first puff

The draft law on tobacco control was first proposed in 2004 by Member of Parliament Atef Majdalni – who was also the acting chairman of the Public Health Parliamentary Committee at the time — as well as MPs Nasser Kandil, Ghattas Khoury and Ahmad Fatfat, only to find itself promptly shelved.

In March 2004 Lebanon signed, and later ratified, the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC). The country has since missed every deadline for the staged implementation of the convention, with none of its articles having yet been applied.

In 2006, under a new cabinet and parliament, another draft law was again submitted for consideration, a copy of which was obtained by Executive. This new draft was a diluted version of the first, removing clauses pertaining to testing tobacco before sale and confiscation of materials in contravention of the law, and limiting the authority of inspectors to implement the law.

According to the document, these amendments were made after consulting with the Regie Libanaise du Tabac et Tombacs (Regie) — the Lebanese government entity under the Ministry of Finance in charge of tobacco imports and exports and the licensing of farmers, wholesalers and retailers — as well as the syndicate of advertisers, syndicate of doctors and the Ministry of Public Health (MOPH). Even this watered-down version was shelved, however, as the country spiraled into conflict and political stalemate from 2006 to 2008.

Without the new legislation, Lebanon’s tobacco regulation is based on the six-article long Law 394, issued in 1995, which falls well short of the international obligations mandated in the FCTC. The current law states that health warnings should cover 15 percent of advertising media (print, outdoor, TV and cinema) and read: “The Ministry of Health warns: Smoking leads to serious and fatal diseases.”

Notably, it does not forbid the sale of tobacco to people under the age of 18, but bans handing out free samples to this age group.

Starting again

At the beginning of 2009, the draft law was still gathering dust in a government drawer. Executive’s investigation uncovered that the parliamentary Administration and Justice Committee of the previous government went back to the original 2004 legislation and began the entire amendment process over again – work which has continued under the Administration and Justice Committee of the current government. This amendment process includes “consulting and listening to opinions of stakeholders,” according to a source on the committee, who spoke on condition of anonymity.

Tobacco production by region in 2009 - Lebanon

These stakeholders include international tobacco companies whose lobbyists sit in on committee meetings — a fact confirmed by several sources close to the proceedings.  Lebanon’s three largest tobacco importers, Philip Morris International, British American Tobacco (BAT) and Japan Tobacco International declined the opportunity to contribute to this article.

“The tobacco lobby, like all the lobbies, will try to stop anything that might threaten their business,” says Yassine Jaber, a former minister of economics and trade and current MP in the Amal party.

George Jabbour, president of the International Advertising Agency’s Lebanon chapter, conceded that members of the advertising industry have also lobbied members of the committee, though he disagrees with the ethics of this.

“You cannot change the facts of life, and this is a fact of life,” said Jabbour. “Today, there is a trend and there are proven facts that cigarettes are not a good thing.”

The source on the committee said civil society groups who work on tobacco control issues were not invited to give their opinions.

They went on to explain that a sub-committee, under former minister and MP Samir al-Jisr, has been formed with the purpose of carrying out proceedings without the involvement of industry lobbyists. This sub-committee met twice in April in the presence of members of the Regie and the MOPH.

The absence of an official tobacco lobby at sub-committee meetings is, however, is a matter of switching hats: an international tobacco lobbyist, who asked not to be identified, confirmed that the Regie asked Jihane el-Murr, BAT’s head of corporate and regulatory affairs, to attend sub-committee sessions under the auspices of a “representative” of the tobacco industry, rather than a lobbyist.

The committee source confirmed that subcommittee negotiations are revolving around the details of the advertising ban, the definition of public space, fines on violators, forbidding sales to persons below 18 and the obvious display of cigarettes at retail points.

Tobacco taxation and smuggling

Notably absent from discussions is a hike in tobacco taxation, normally a cornerstone of tobacco control policy.

According to a Turkish international tobacco representative, when tobacco control legislation was introduced in Turkey — which had comparable smoking incidence to Lebanon — consumption dropped some 5 percent. However, when taxes were applied, the market saw a 20 percent fall in consumption.

The government could have, technically, proposed a budget this year including increased taxes on tobacco — it did not. The stated reasoning behind this decision, and the impetus to keep tobacco prices low, is the fear of increased smuggling across Lebanon’s porous borders.

“England, a developed country surrounded by water, has a tobacco market of which 30 percent is supplied through smuggling,” said Mohamad Daher, head of the Regie’s anti-smuggling unit. “What about us, whose sea, land and air borders are completely open? How much smuggling do you think we have?”

In the late 1990s then-Prime Minister Salim el-Hoss spearheaded a raise in the tobacco tax. Smuggling soared and the government lost revenue, forcing Hoss to backtrack on the measure. However, another official present at subcommittee meetings, who also spoke on condition of anonymity, attributed the increase in smuggling to Syrian control over Lebanon’s borders at the time, as well as politicians’ protection of smuggling rackets.

The Regie is the only body in Lebanon authorized to license wholesalers and retailers. Presently, there are around 490 licensed wholesalers in Lebanon, who must pay the Regie $10,000 for a license, prove that they have a place to store merchandise and open their books up for spot inspections, according to Khalil Dugan, legal advisor to Regie Chairman Nasif Siklawi.

But as far as licensing retailers goes, nothing has been done for decades. “Because the amounts are small, [the government] deems them negligible,” says Daher. “If you are going to chase people for one or two cartons then you need 1,000 men, and they don’t exist. If you see cigarettes at smeneihs [stores licensed to sell only food], all those cigarettes are smuggled.” Daher’s unit consists of up to 50 inspectors for all of Lebanon.

Farming fear

The combination of increased smuggling and a decrease in consumption would no doubt have widespread economic, health and social effects on Lebanon. But there is one sector in society that stands to lose out more than anyone else.

According to the Regie, Lebanon currently has 24,000 licensed tobacco farmers spread throughout the country, some 57 percent of whom are located in the south. Farmers receive a subsidized set rate for their crops through the Regie’s ’Price Support Program,’ depending on the quality and type of tobacco they grow.

The price farmers are paid, however, has not changed for 15 years according to MP Jaber, whose electoral support in the south stems from many of those same farmers. At present, farmers in the south and the Bekaa Valley receive an average of $7.46 and $6.04 per kilogram, respectively, for the same type of tobacco, according to the Regie. Farmers in the north produce another type of tobacco used in the nargile, or water pipe, and are paid an average price $6.04 per kilogram.

The total amount paid out to farmers last year was $52.6 million, according to the Regie, an increase of 3 percent on 2008, with the south counting for 61 percent of production last year. Total production of tobacco in Lebanon last year reached some 7.7 tons.

According to the World Bank, on the international market the average price per metric ton of tobacco is $3,500, meaning that the Regie lost some $3,330 per metric ton of tobacco it sold last year, totaling losses of some $25.6 million.

The tobacco bought by the Regie is sold on to international tobacco companies according to a barter system, whereby international tobacco companies buy a share of Lebanon’s tobacco output equal to that of their present market share.

The arrangement constitutes a net loss for the Regie, which still manages to be a profitable organization through money funneled to it from the finance ministry and other activities, including the sale of the local Cedars brand, which is produced at its headquarters in Haddath using Lebanese tobacco.

Meanwhile, the government raked in around $189 million in tobacco tax revenue in 2008, according to the latest data from the World Bank and Lebanese Customs.

Money ain’t everything

While the arrangement is a monetary loss for Lebanon, it does serve several functions that are socioeconomic and political in nature. Farmers are ensured a fixed and steady income, allowing them to stay on their land. This prevents further migration to Lebanon’s cities, which are already struggling to provide infrastructure for urban living.

To boot, this arrangement helps the main political parties in the south — Amal and Hezbollah — to provide for their key constituents, both keeping the parties in power and maintaining a population base near to the border to stand against Lebanon’s main military threat — Israel.

“In the south our role was more important during the [Israeli] occupation, and even now it is still important,” said a high-ranking member of the Regie, on condition of anonymity.

In a bargain that is renewed annually, international tobacco companies have, for years, enjoyed secure access to the Lebanese market by buying the country’s relatively low-quality tobacco. Marwan Iskandar, economist and managing director of MI Associates, and several other sources who spoke off the record, said that the companies actually discard a portion of this tobacco due to its poor quality.

“In the north we are planting something that does not have a place in the international market,” said the source at the Regie. “We are trying to sell it to the countries that do not know tobacco well.”

The source added that Lebanon used to lose some 500 percent on sales of northern tobacco, though current losses are between 200 and 300 percent. Abdul Mawla el-Mawla, tobacco technology manager at the Regie who is also responsible for buying and selling all of Lebanon’s tobacco, denies that the tobacco is still being discarded, as he claims quality has increased over the years to a level that “has become acceptable” to international companies.

But if tobacco legislation is enacted and consumption decreases, as is expected, a domino effect may occur.

“The international companies will tell me that ‘you are not selling as much for us,’” says Mawla, implying they will change the arrangement. “If my revenues fall, who is going to take Lebanese tobacco? What do I do with the farmers?”

Irrigation irritation

Amal MP Jaber, who holds a parliamentary seat allocated to the Nabatiye district, says he doesn’t see the link between tobacco legislation and his constituents’ livelihoods. He is, however, aware that the situation cannot continue forever. “Nobody in the south of the country is fond of planting tobacco. Tobacco is the most difficult type of crop you can ever dream of; the whole family works 7 days a week to make it,” he says. “Farmers hate the whole system of [growing] tobacco, they hate the way they have to work so hard and how they are humiliated by having to wait in [long] lines when they sell their crops to the Regie.”

According to the World Bank, the average labor days per hectare needed to cultivate tobacco in Lebanon is 610, as opposed to 25 for cereals and 242 for fruits and vegetables.

The bank also estimates that tobacco constitutes a third of household revenue for tobacco farmers, with around 40 percent of them working off-farm and 23 percent rotating tobacco with other crops such as chickpeas and fava beans. “Why do people [in the South] choose tobacco? Because they have no alternative,” says Jaber. Tobacco is a ‘dry plant’, which means it is rain fed and does not require irrigation, an asset currently lacking in much of South Lebanon.

What is vexing about the situation is that there are solutions and the legal infrastructure to facilitate them is already in place. In 1950’s, the government created the Litani River Authority (LRA), mandated to enact projects along the river and around the region. Later, Law 221 — entitled the Water Authority Law — was passed. Its implementation decrees gave the LRA the mandate to irrigate 42 percent of Lebanon, including all of the south and southern Bekaa, not to mention supplying 7 to 10 percent of the country’s electricity through hydropower and providing potable water to 20 percent of the population.

Apparently, the government had other priorities. “If we calculate over the years how much money we have paid to subsidize the planting of tobacco, we could have done the Litani river project five times over,” says Jaber. “Unfortunately, there has not been a sense of responsibility…”

Environmental experts have begun working with the government on proposals to expand the Litani river projects and Jaber added that after receiving $50 million in funding from Kuwait, “we are halfway there.” Whether it will take another 60 years to make it the rest of the way remains to be seen.

In principal, everyone agrees

All the stakeholders Executive interviewed for this article said they were in favor of enacting the proposed tobacco control law, but its actual application will be another issue.

“We are with stopping smoking, and sections for smokers, and all of the elements of the law, and with a complete awareness program; but we have to be realistic. There are people who are addicted,” said Mawla, who advocates having a grace period to implement the law, as do members of the advertising and hospitality sectors.

Rima Nakkash, assistant research professor at the faculty of health sciences and coordinator of AUB’s Tobacco Research Group believes that a grace period will only allow for piecemeal reforms and give stakeholders the chance to dilly dally around the law and maintain the status quo.

With or without the grace period, if the proposed tobacco control legislation is passed without being neutered by amendments, smoking rates and tobacco consumption will undoubtedly decrease in the mid to long term.

“By that time we will have finished the Litani River project,” said Jaber. “God willing, by that time we won’t need to have tobacco plants.”

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