With football and basketball events followed religiously by millions of fans around the globe, modern ball games have become lucrative money making machines. In Lebanon, however, sectarian violence and political instability has kept the public away from stadiums and worsened an ongoing financial crisis faced by local sports leagues.

“The rise in political tensions in 2001, further exacerbated by the assassination of prime minister Rafiq Hariri in 2005, have significantly affected the Lebanese football scene,” says Rahif Alameh, head of the Lebanese Football Association (LFA). The LFA seems to reflect the ongoing Lebanese political struggle, with main community leaders intervening in the appointment of members.

“Sectarianism also plagues Lebanese basketball, with teams associated with the various religious communities, but we have managed to keep it out of the federation, our members being elected and not appointed, as is the case in other federations,” says Pierre Kakhia, head of the Lebanese Basketball Association (LBA) and president of the World Sports Group.

As an example, the basketball team Hekmeh is usually associated with the Christian community, the Antranik team with Armenian Lebanese and Riyadhi with Sunnis. In football, Homenetmen (an acronym for Armenian General Athletic Union) as well as Homenmen (Armenian Athletic Association) are both identified as Christian Armenian teams, while Al Ansar is perceived as a Sunni team and the Safa football club as a Druze club. Al-Ahad and Al Mabarra have mainly Shiite players and supporters.

Until 2006 and the subsequent ban on spectators, clashes erupted regularly between supporters of rivaling March 8 and March 14 political factions, who chanted respectively ”God, Nasrallah and the Dahieh,” while others shouted at the top of their lungs “God, Hariri, and Tarik Jdeideh.”

Killing the game

“The spiraling violence and the ban on the public have exerted significant pressure on Lebanese clubs, already facing financial difficulties,” Kakhia says. “This has trickled down to the management of clubs and resulted in the loss of their financial stability. As an example, big clubs such as Sagesse and Kahraba are still actively looking for a benefactor.”

Clubs’ worsening financial woes are not much of a secret in the world of sports as players’ salaries spiral out of control.

“Wages are increasing all over the region. Foreign players who used to be paid on average about $35,000 are requesting today double if not triple the amount,” says Karim Diab, president of the al-Ansar club. Alameh concurs, saying that about 65 percent of football club budgets are usually dedicated to players, coaching salaries and expenses.

Diab says maintenance, medical costs and equipment account for about 30 percent of the rest of the budget. In basketball, the breakdown seems somewhat similar as Kakhia says that while player and coaching wages together account for 80 percent of clubs budgets, the remaining 20 percent is generally spent on stadium rental. The head of the LBA emphasizes that while Lebanon spent $1.2 million on its national basketball team over the past three years, Jordan spent $7 million over the same period and Iran spends $30 million annually. According to Diab, the budget of Al Ansar — considered one of the richest clubs in Lebanon — amounts to about $1.2 million.

One reason behind the pauperization of Lebanese sports leagues is that most clubs have failed to tap into the lucrative, sports-associated  businesses.

TV rights paid to the Asian Football Federation have doubled every four years, from some $20 million between the years 1996 and 2000, to around $40 million between 2000 and 2004, to $80 million between 2004 and 2008. It is estimated that Asian football TV rights will almost double again between 2008 and 2012, to $140 million. In Lebanon, however, TV revenues for football teams have been “shrinking steadily,” complains Kakhia.

Comparison of contracts awarded to TV broadcasters

Empty seats and pockets

Most clubs thus find themselves in dire straits with the collapse of hefty broadcasting contracts and matches unattended.

“Broadcasting being the main money-spinner for clubs, the public needs to be allowed again into stadiums,” says Alameh. He also explains that the LFA’s $800,000 contract with the Al Jazeera sports channel, will not be renewed this year, leaving the federation with a $150,000 contract with Future TV, one that will be increased to $200,000 by next year. This amount will be divided among the various Lebanese clubs depending on their ranking.

Football and basketball clubs have not been able to rely on steady sources of revenue usually brought in by merchandising and ticket sales, as well as sponsorships, which should ideally account for up to 30 percent of a club’s income, according to Diab. Tickets to basketball games are usually distributed free of charge to club supporters. In football the situation is different.

“We used to generate $60,000 in ticket sales every year, this has definitely changed since the ban on the public,” says Diab. “In Egypt, sponsorship and TV rights fully cover the $35 million budget of the national Al Ahli club.”

Diab says TV rights for Al Ansar account for 1 percent of the team’s budget. He says sponsorships have become difficult to secure, adding that a few years ago the Coca Cola company had to sponsor three football teams representing the Sunnite, Shiite and Christian communities to avoid being perceived as taking sides in the sectarian struggle.

“To be financially successful, clubs ought to be branded and managed like real commercial companies, unfortunately this is not the case in Lebanon,” concludes Kakhia.

Last summer, demonstrators in Tehran’s central square shouted anti-Nokia slogans following news reports that the Finnish mobile giant had sold technology to the Iranian government allowing the government to monitor its citizens through Iran’s communications networks. This has since sparked a storm of protest actions against Nokia Siemens Networks (NSN) — the joint venture between Nokia and the German conglomerate Siemens — including the splashing of green paint (associated with pro-reformist presidential candidate Mir Hossein Moussavi) over Nokia billboards in Iran and calls for a boycott of NSN on social media outlets like Facebook and Twitter.

In Tehran, wholesale vendors told The Guardian newspaper that the demand for Nokia gadgets had fallen by nearly half following the news reports. Millions of Iranians currently use Nokia mobile phones.

Iran is known to be an avid practitioner of Internet filtering, but during the post-elections fall out, many suspected that the Iranian authorities were also implementing similar monitoring systems on mobile phones.

No dial tone for protest

A large portion of Iran’s network traffic is controlled by the telecommunications operator Iran Telecom. One day after the contested presidential election, on June 13, traffic on communications networks came to a near standstill according to an investigation by network security firm Arbor Networks.

When the election unrest began and communications traffic gradually increased, analysts suggested that the halt and subsequent re-start was a result of the Iranian authorities installing filtering and monitoring mechanisms.

The truth of the matter is that NSN did sell a so-called “monitoring center” to Iran Telecom through its Intelligent Solutions division. The product allows the authorities to monitor any network communications, including voice calls, short message service (SMS) traffic, instant messaging and Internet use.

Throughout the turmoil that erupted in Iran following June’s disputed presidential election, media reports suggested the Iranian authorities were practicing a so-called “deep packet inspection.” Through this, the authorities not only block communications but also monitor what kind of data is being passed back and forth between individuals using the country’s networks. Some reports have indicated that the data can also be altered and used for disinformation purposes.

The media flurry over Nokia Siemens’ Iran venture was then followed by further speculation that the company was supplying the Iranian regime with spyware, software installed on devices that collects information about users without their knowledge.

Nokia Siemens has denied the spyware allegations and stated it had supplied Iran only with “lawful intercept” capability in order to monitor local phone calls. The companies had not, they said, provided the Iranian authorities with either deep packet inspection or Internet filtering tools.

Nokian ethics

Ben Roome, head of media relations at Nokia Siemens, told Executive in a telephone interview that the wire tapping function, known as lawful interception, is a standard feature of modern telecommunications networks which was implemented under pressure from the European Union and the United States to “roll out those new networks.”

When asked about the interception capabilities provided by the server package sold to Iran by Nokia Siemens, Roome explained that law enforcement cannot scan broad and random swaths of any communications network.

“You need to know the telephone number you want to wiretap. You can’t, for example, scan a network for keywords. The request has to be made by law enforcement agencies to track the number,” he said.

Roome estimates that there are more than 55 million mobile lines in Iran. In no way does he believe it would be plausible for the Iranian authorities to tap millions of phone lines with the gear provided by the NSN monitoring center. After all, said Roome, the package sold to Iran was made up of traditional mobile phone technology due to limits imposed by trade regulations.

But members of Iran’s political opposition, along with rights activists, remain suspicious of the extent of the monitoring capabilities provided by the NSN product.

Issa Saharkhiz, a 56-year old Iranian journalist and former official at Iran’s Culture Ministry, implicated Nokia in his arrest in July by Iranian police. Saharkhiz told his family from an Iranian jail that his Nokia mobile phone helped the authorities to trace him, according to a report by Radio Free Europe. Saharkhiz had been campaigning for the reformist candidate Mehdi Karrubi and was an outspoken critic of Iran’s supreme leader Ayatollah Ali Khamenei and President Mahmoud Ahmadinejad.

NSN’s venture in Iran has also triggered some groups to undertake campaigns against the company. The American Islamic Congress (AIC) recently launched a letter-writing campaign against Nokia and has called for a boycott of the company’s products. So far, the AIC’s letter to Nokia Siemens officials has been signed by more than 10,000 people.

Nokia, said the AIC, has the “responsibility” to make sure its technology is used in an ethical manner.

“There are always business deals. The Nazis had lots of deals with big businesses. The point here is that Nokia’s technology is specifically enabling the Iranian regime to monitor and crack down on peaceful protesters,” said AIC North Africa director Dalia Ziada.

AIC has helped organize several public rallies against Nokia in US cities such as New York and Chicago. While Nokia has not responded to the AIC’s campaign efforts, Ziada said she is convinced that the image of the mobile phone conglomerate has been tarnished by its dealings with the Iranian regime. She believes thousands are currently boycotting Nokia products.

“Their strategy appears to be to try to ignore the campaign and make it go away. But people keep sending letters and the Nokia brand is definitely tainted,” said Ziada. “We have a simple request: don’t do business with the Iranian regime and disable the advanced technology. Until Nokia does that, thousands of people will be boycotting their products.”

Pass the hot potato

NSN no longer offers the monitoring service to its clients. The firm sold its Intelligent Solutions business to the German investment firm Perusa Partners Fund 1 LP in March. The product was marketed to around 150 countries while it was still under the control of NSN. However, the company maintains that it did not sell the system to China or Burma, whose governments have a reputation for keeping a close eye on citizens through various monitoring practices.

When asked why NSN decided to sell the Intelligent Solutions business, Roome responded that it simply did not fit with the firm’s “core.”

“We looked at assets and business we wanted to focus on, which is providing telecommunications networks to telecom operators. That business didn’t fit with the core we wanted in the organization,” he said.

NSN is not the first Western technology company that has been accused of aiding governments with poor human rights records through their technology.

In 2005, Yahoo came under fire after rights groups accused the company’s Hong Kong arm of providing information to the Chinese authorities that led to the arrest of a reporter for “divulging state secrets.”

Press freedom watchdog Reporters Without Borders (RSF) said Yahoo’s Hong Kong branch helped China trace reporter Shi Tao’s e-mail account and computer to a message containing an internal communiqué from the communist party.

RSF accused Yahoo of playing the role of a “police informant” in an aim to boost its business ambitions in China. Yahoo responded by saying it had to operate within the realm of each country’s laws.

Tao worked for the Contemporary Business News newspaper in Hunan province before he was arrested and sentenced in April 2005 to 10 years in prison. According to RSF, he was convicted of sending foreign-based websites the internal communist party’s message.

In 2006, the mobile phone provider Azercell in Azerbaijan provided prosecutors with information on political opposition activists who had raised concerns over the alleged rigging of the country’s presidential elections, including recordings of mobile phone conversations.

One of the largest owners of Azercell is the Swedish-Finnish telecommunications firm TeliaSonera which, through its Turkish subsidiary, Turkcell, has a majority share in Azercell.

When confronted about Azercell providing information to the intelligence services, TeliaSonera responded in a similar way to Yahoo in 2005, saying it also had to comply with Azerbaijanian regulations.

It remains to be seen whether high-tech companies will come under further pressure from ethics-conscious consumers. But if the case of NSN in Iran is anything to go by, telecom companies may have to balance their commercial interests with the realities of global human rights issues for some time to come.

The quiet Southern Lebanese village of Maaroub has recently found itself at the center of attention following the recent arrest and indictment of its deputy-mayor and a prominent businessman hailing from the Shiite town.

Forty-nine-year-old business-mogul Salah Ezzedine, known by many for his piety and closeness to Hezbollah, is bankrupt and stands accused along with his alleged partner, Maaroub Deputy-Mayor Youssef Faour, of running a giant Ponzi scheme similar to that of American financier Bernard Madoff, who earlier this year was sentenced to 150 years in jail. As a result, the Lebanese press has dubbed Ezzedine “Lebanon’s Madoff.”

A Ponzi scheme is a fraudulent investment operation that promises investors high rates of return over a short period of time. The investments are then used to pay the return instead of actually being invested.

Exactly how much money invested with Ezzedine has gone missing remains a mystery. Some media reports estimate that he allegedly squandered more than $1 billion of investor money. According to sources close to the case,  the total amount invested with Ezzedine was at at least $500 million.

On September 12, the Lebanese financial prosecutor’s office charged Ezzedine and Faour with embezzlement, loan-sharking, distributing bad checks and breaching financial laws. They are currently in jail awaiting trial.

A wolf in sheep’s clothing

Ezzedine’s indictment has shocked residents of Maaroub. Many of them remember him as a kind and generous man who always stood up for the poor. He was considered a religious man who apparently gained fame among the Shiite community in the 1990s for organizing pilgrimages to Mecca. Indeed, one of Ezzedine’s businesses is his travel agency Bab el-Salam, which specializes in religious pilgrimages.

“He helped everyone, the poor, the sick, and people wanting to put their children in school that couldn’t afford it. Whatever the request was, he was there to help out. He was there to help immediately,” said Hussein Ezzedine, an employee at the town hall in Maaroub and distant relative of the business-mogul.

With the money he made, Ezzedine built new mosques in the town and made financial contributions to building the town hall.

A few years ago, Ezzedine funded a brand new soccer field for the village. Looking out from a tower above the field offers a view of the town, as well as Ezzedine’s luxurious villa estate that now stands empty. Locals point to two large and still unfinished houses next to Ezzedine’s mansion and said they belong to his partner, Faour.

Ezzedine was also known for his close ties to Hezbollah, which apparently earned him credibility among his investors, the majority of them being from the Shiite communities in Beirut and the South Lebanon. It is also believed that several Hezbollah officials lost money with Ezzedine. One of them is Hezbollah MP Hussein Haj Hassan, who filed a complaint against Ezzedine when his check from Ezzedine bounced. Although Hezbollah has clearly distanced itself from the alleged crooked moneyman, with Hezbollah leader Hassan Nasrallah denying the party had any official links to Ezzedine in a televised address, the story is still a major embarrassment to the organization. Nasrallah has acknowledged that some members of his party invested with Ezzedine, but that the total sum did not exceed $4 million.

Ezzedine was known for his close ties to Hezbollah, which earned him credibility among his investors

The smell of something fishy

Ezzedine’s business scheme, which incorporated tens of thousands of investors, offered quick returns of 40 to 50 percent from a range of apparently bogus investment projects such as petrol, African oil and titanium. Some of his investors even say they were offered annual returns of 60 to 80 percent.

Nassib Ghobril, head of economic research at Byblos Bank, says that while there have been several similar schemes in Lebanon over the past years, there have been none “on this scale.”

Commenting on the high returns promised by Ezzedine, Ghobril says this should have raised doubts in the minds of investors. Indeed, returns of up to 80 percent should have had alarm bells ringing in the heads of Ezzedine’s investors. That, however, did not happen.

“Anyone should be suspicious about these kinds of high returns,” says Ghobril. “But people still tend to believe these things. People don’t learn, not in Lebanon and not elsewhere in the world. The victims have a hard time believing it. They learned the hard way this time.”

Ezzedine headed a number of businesses, including the publishing house Dar Al Hadi, which specializes in children’s books, and a children’s TV station carrying the same name. Following Ezzedine’s arrest, the authorities seized the Dar Al Hadi offices, sealing the company’s glass doors with red tape.

Another one of Ezzedine’s company’s is a Beirut-based financial institution established in 2007 called Al Mustahmir, which specializes in money management.

Another business that has been linked to Ezzedine is the mysterious East Line Company. The Financial Times and Abu Dhabi’s The National reports say this might be one of the investment vehicles that Ezzedine used for his business operations. Last year, in June 2008, Gambian President Yahya Jammeh issued a statement saying that he had received a $4 million check for “royalties paid to the Gambian government by Salah Ezzedine of East Line Company for 10,000 tons of sand minerals exported from the Gambia.”

Unwary victims

With expected returns of 40 percent, a sizable portion of Maaroub’s 5,500 residents decided to try their luck with Ezzedine.

Hussein Ezzedine estimates that around 15 percent of the villagers invested money with the businessman at some level.

He mentions one man who started investing with Ezzedine back in 2000 and lost $1.4 million, while others invested between $100,000 and $250,000. Some of the lower-income investors lost $10,000.

Another investor, 29-year old car importer Ali Fneish, invested $120,000 with Ezzedine half a year ago. That money is now all gone.

A man in the nearby village of Toura identifying himself as N. Chour says he invested “more than $100,000” with Ezzedine earlier this year. He says he lost all the money he earned working in Africa for 15 years.

Chour says 60 percent of Toura residents invested money with Ezzedine. To collect investment capital, lower-income investors in some cases mortgaged their houses and sold off land.

Mohammed al-Duheini, mayor of Toura, told Agence France Presse that some 250 residents from his town invested money with Ezzedine.

“He managed to win the trust of the Shiites of South Lebanon and handled a lot of their money,” he told AFP. Chour speaks of how one person in the village was appointed to collect the money from investors and hand over the investments to Ezzedine and his associates as lump sums.  According to several Ezzedine investors, Faour allegedly had an office in Tyre and served as a point man for investors in the south. Ezzedine, meanwhile, is said to have had an office in Beirut’s southern suburbs.

Paperwork, including official receipts, appears to have been scarce with Ezzedine. In place of receipts, investors were given checks for the principle amount they had invested.

The great conspiracy theorists

In a peculiar twist, several of Ezzedine’s investors still defend him despite the fact that their money went up in smoke.

In Maaroub, investors and residents whom Executive talked to spoke of Israeli and American conspiracies as the cause of Ezzedine’s bankruptcy. Others believed the business mogul had taken a hard hit from the global financial crisis. They deny that Ezzedine, the “respected man” they entrusted their savings to, is a swindler.

But Chour says he has “doubts” about Ezzedine, especially following his and Faour’s recent indictment. So do other villagers, he says.

“Of course I have doubts. We don’t know what happened to him or where the money went. We have been asking this question and no one is giving us an answer — not the Lebanese state, nor any other person.”

Many investors still holding on to their checks from Ezzedine now await the outcome of the investigation for a solution. Reports have surfaced about investors in the Gulf losing large sums to Ezzedine. Yet, it is still widely believed that the majority of the victims of the alleged scam are Lebanese investors, many of whom have earned their money abroad and then returned home.

Amid growing fears in Lebanese financial circles, Central Bank Governor Riad Salameh told Bloomberg in September that Lebanon’s banks were not involved with Ezzedine.

“There is no exposure by the banks to it,” he said. “The investigation is ongoing. It has nothing to do with the finance or banking industry. He had his own investors, and it’s a private matter that’s outside of the banking industry.”

The financial cost of piracy off the Horn of Africa has surged over the past year as pirates have become increasingly audacious, better funded and equipped, and able to extend their reach in the high seas. A few years ago vessels were warned to keep 50 nautical miles off the Somali coast; now, pirates are boarding ships as far away as the Seychelles, some 1,500 kilometers off the coast of Africa. The area the European Union Naval Force (EUNAVFOR) patrols is some 9 million square kilometers, almost the territorial size of the United States of America.

Just as the range of pirate operations has increased, so has the ransoms being paid out, rising from $250,000 to an average of $1.25 million in 2008. The London-based International Maritime Bureau recorded 111 pirate attacks off the Horn of Africa last year, of which 42 were successful hijackings. In the first half of 2009 there have been 130 incidents.

The situation turned into what was internationally deemed a “crisis” last year, prompting the European Union to establish its first naval security mission consisting of 12 ships, while Russia, the US, China and India also sent warships to the Western Indian Ocean to protect their maritime vessels. In a rare show of international solidarity, the armada patrolling the Gulf of Aden is coordinating to curb the scourge of piracy.

But covering the cost of bases in Djibouti, Kenya, Bahrain (the US naval base), Dubai and elsewhere runs in the tens of millions. The operating cost of EUNAVFOR alone is $12 million a year, excluding the cost of naval vessels, aircraft and military personnel.

The cost to the shipping and insurance industries, however, is far higher. Last year, pirates collected around $30 million in ransoms. Cyrus Mody, manager of the International Maritime Bureau, said that figure doubles when the legal fees, negotiators, delivery of ransoms and associated costs were added. “The amount paid out is pretty much equal to what the ransom is,” he said.

The cost to insure ships transiting the Gulf of Aden is estimated at $20,000 per ship per voyage, excluding injury, liability, and ransom coverage. A year ago, the cost of the additional insurance premium was only $500, according to maritime newspaper Lloyd’s List. It is estimated that the increased cost of “war risk insurance premiums” for the 25,000 ships that ply these waters, which includes an estimated 11 percent of the world’s petroleum, could reach as much as $400 million.

Keeping to the designated shipping lanes in what EUNAVFOR calls “group transit” of several ships, and paying up if captured, would seem to be the only options for the world’s shippers. The alternative of avoiding the Gulf of Aden and the Suez Canal is simply too expensive and time consuming.

According to the US Department of Transportation, to re-route a tanker from Saudi Arabia to the USA via the Cape of Good Hope adds approximately 2,700 miles to the voyage and some $3.5 million annually. A routing from Europe to the Far East via the Cape, rather than through the Suez Canal, would incur an estimated additional $89 million annually, which includes $74.4 million in fuel and $14.6 million in charter expenses. In addition, the rerouting would increase transit times by about 5.7 days per ship.

Pirate dens

The heightened international naval presence off the Horn of Africa has had a direct impact on curbing piracy. “The number of attacks has not decreased but the number of successful attacks has gone down, primarily because of the naval presence,” said Mody.

EUNAVFOR’s specific mandate protects ships of the World Food Progamme. Commander John Harbour of the British Royal Navy and chief media spokesman for the European task force, said the rate of success was one ship hijacked for every three attempts, whereas a year later it is one in nine successful pirate attacks. “Every single day there is an attempt and every day we thwart that attempt. And even when there is not a direct attack, we see many skiffs with armed men,” said Harbour.

A knock-on effect, however, of the naval presence has been the ramping up of the ransoms demanded by the pirates and heightened investment in faster speed boats, mother ships to refuel and launch skiffs on the high seas, and better weaponry.

“When the navies united under an Aden task force, the pirates needed to be more audacious,” and demand higher ransoms, said Simon Davies, a former detective and special investigator with Britain’s Scotland Yard and a consultant on financial crime and piracy in East Africa. “That [ransom] pie graph is getting more and more cuts in it as the money is shared around. There is money for bigger engines and dhows to ply the sea carrying extra oil,” he added.

The pirates run what Mody called an “extremely business orientated” operation, similar to many organized crime syndicates around the world. Up to five major pirate groups operate from bases on the Somali coastline and are either self-funded or financed by external investors.

Employing watchers in commercial hubs like Dubai, the pirates are informed of when a ship leaves port and what cargo it is carrying, or information is easily garnered from reading the shipping news published in local newspapers. A crew of armed men on speed boats or on a mother ship then head out on the high seas to track down potential targets. If successful, the pirates capture a vessel and sail it to Somalia. There, said Davies, the pirate crew is replaced with another crew for negotiations to take place. The onus is then on the owner of the ship and insurance companies to cough up the ransom.

Due to the frequency of attacks, ship owners have set up insurance cartels, with many owners paying into a pool that will then pay out in the case of a hijacking. Then the separate insurers of a ship’s cargo, hull, and other forms of insurance get involved.

“If say a cargo of sugar costs $50,000, the insurer pays 10 percent of the ransom, the owner 15 percent, hull insurer 15 percent. If [they are] maybe $150,000 short, the cartel of ships pays up,” said Davies.

Then the drop off — usually in small denominations of US dollar bills — takes place. Back in 2005, Mody said money exchanged hands in either airport lounges or hotels in Dubai.

“A phone call was made and the vessel released. In 2008, the money was taken by security companies by boat to the captured vessel,” he said. “This has been taken a step further. To make it safer for delivery, the money is now being air dropped on the vessel or nearby. This is how the delivery has progressed, as, if you have a security person on-board, he will automatically become a threat to the pirates. And sailing in with the money from, say, Djibouti or Kenya, you need to hire a crew, and the crew knows there is $1 million on-board… The air drop has made it cheaper and safer.”

Getting rid of the loot

One spin-off from the piracy business has been a boom for sectors catering to the pirates, from arms dealers to boat outfitters, car dealers, and other enterprises. Businesses have also emerged that cater to the unwilling European visitors to Somalia.

“With Europeans captured, there is a burgeoning restaurant business [in Somalia] to cater to Western palates,” said Davies.

Mody said that living standards are going up due to “lavish spending by pirates, which is encouraging local industry to build up, and flashy new cars to be driven around because of the new money.”

While part of the loot is divvied out among the pirates, some is earmarked for investment in the next venture. But if the ransom money doesn’t stay in Somalia, where does it go? There have been claims that the money is laundered in Dubai — a claim the Emirate has vigorously denied — and via Beirut. Mody said much of the money gets siphoned into Kenyan real estate, where there has been a marked increase in Somalis buying properties in Nairobi. Davies said money may also be laundered or invested in Iran, Yemen and the UAE.

Indicative of the pirates’ business savvy, there has been minimal violence toward captured crew members.

“It is a business for them and any violence towards the crew will affect this business model,” said Mody. “If violence increased, this would change the dynamic, and that could be a turning point in how nations look at piracy. Keeping that in mind, having a link to terrorism is also not in the best of their interests. If a link is established, there would be a very serious clamp down by certain external interests.”

General Michel Shakkour’s office, on the third floor of the Hbeish police station in Beirut, is lined with plaques and framed certificates from police departments around the world. The head of the Internal Security Force’s (ISF) General Crime Directory, Shakkour is responsible for combating narcotics, as well as prostitution and gambling. But for the past three years, Shakkour’s fight against illicit substances has largely been undermined when it comes to destroying the source of Lebanon’s narcotics production: the cannabis and poppy fields in the northern Bekaa valley.

Starting in 2006, the war with Israel and subsequent internal strife prevented the security forces from destroying the hashish crops at harvest time in early September. The next year Shakkour’s men tried again. But without the help of the army, which had been diverted to fight Fatah al Islam extremists, ISF forces came under fire from the farmers, who come from large, well-armed local families.

“This is why you have to show power through the army, because the army has tanks, planes and helicopters — they have everything,” Shakkour says.

This year has been different. Since a deal was brokered between the warring opposition and pro-government factions in Doha in May 2008, the country has witnessed a period of relative stability, allowing the security forces to focus on issues other than keeping the peace.

The ISF and Lebanese Army have reportedly succeeded in eradicating the majority of Lebanon’s illicit crops this year, as well as cracking down on some of the most notorious families in the drug trade. In late May, members of the Jaafar clan ambushed an army jeep in the Bekaa, killing four Lebanese Army soldiers and wounding a further 11. The attack was revenge for the death of a senior member of the clan, Ali Abbas Jaafar, who had 172 outstanding arrest warrants against him when he was killed by soldiers at a checkpoint near Baalbek.

In response, the army launched an offensive in the Bekaa, employing special forces and armored vehicles, setting up additional checkpoints, arresting close to 100 suspects and confiscating 1,500 kilos of drugs, weapons, military equipment and counterfeit money.

According to Shakkour, the farmers keep a close eye on political developments in Lebanon in order to anticipate how much attention drug eradication will receive from security forces and their government patrons.

“They find out sometimes that they can [complete] their plantation and then get their production. So this is why they are gambling. The last three years, no eradication — so they win. This year, they lost.”

ISF seizures of illicit substances in Lebanon 

Yammouneh

During the years of the civil war, cannabis grew everywhere along the Baalbek-Hermel highway. Today the strip is barren, with little growing in the fields that line the road. Gypsies have made homes of plywood and sheets in the windswept plains where the fields once stood; scrap metal yards and junk car lots occasionally make way for men selling sacks of potatoes on the side of the road.

Turning off the highway, a winding poorly-paved road up the foot of Mount Lebanon leads to the village of Yammouneh. Nestled in a valley, the village is markedly more lush than its surroundings and has an estimated population of 4,000 to 5,000, though these days, many people live and work outside the village and abroad because of the dismal economic situation in the area.

Seventy-five percent of Yammouneh’s remaining residents depend on hashish, an extract of the cannabis plant, for their livelihoods, a local drug dealer, Mansour*, explains. According to Al Hayat, in 2007 this little village produced some 5,000 of the 70,000 hashish-cultivated dunams (1 dunam = 1,000 square meters) in the Bekaa region.

But this year, the Lebanese Army and the ISF came in and bulldozed all the fields just before the scheduled harvest.

“Why do they wait until the harvest to destroy our crops instead of doing it in June?” Mansour posits.

“Out of revenge, to punish the farmers?”

“Why do they wait until the harvest to destroy our crops instead of doing it in June?”

Grows like weeds

During the long lawless years of the civil war, Lebanon became a major producer and exporter of hashish, and to a lesser extent, heroin and other opiates. At its peak in 1988, Lebanon’s narcotics market was making an estimated $1.5 billion, according to Newsweek.

After the civil war ended in 1990, the United States pressured the Syrian government, whose troops were occupying Lebanon at the time, to crack down on the cultivation of illicit crops with the help of Lebanese authorities. Production continued, however, with several politicians known to be taking a cut of the profits.

From 1992 onwards, farmer’s crops were destroyed annually during harvest time, and farmers eventually turned to alternative crops — agricultural produce and livestock provided by the United Nations Development Program (UNDP) and United States Agency for International Development. The Lebanese government also opened a sugar factory in the area to spur employment.

The problem was that the Holstein cows donated by the US government cost more in upkeep than they provided in income, and the alternative crops failed to turn a profit. The Lebanese government shut down the factory after two years and the farmers, unable to make a living, returned to cultivating their hashish crops.

While Lebanon has been removed from the US list of major narcotics producing countries, it was still the largest producer of cannabis resin in West-Asia in 2007, according to the UN Office on Drugs and Crime. This year’s crop eradication cost upwards of $200,000, with 1,000 army soldiers deployed in a show of force, in addition to the I.S.F. officers. Tractors were rented from villagers at a $100 per day to raze the crops, and additionally, manual laborers were paid to uproot any remaining plants.

“This year, a political decision was taken,” Shakkour says, alluding to an agreement between Hezbollah, which has clout in the area, and the security forces. He explains that the entire process of eradication took some three weeks and “approximately 15,000 hectares” were destroyed, which he believes constitutes “90 to 95 percent” of cannabis crops.

The help of some of the local residents was also essential to the success of the operation, Shakkour claims.

“We have a lot of informants in the areas,” he says. “Every day we get a call from one of my informants. As soon as we get this information, we go straight to the field and eradicate it.”

While Shakkour says his troops met little resistance this year because of the army’s overwhelming presence, not everything went according to plan.

“[On] the third day we were in the Bouday area, one of the tractors passed over a hand grenade. The way they put it was very smart. They got it from films,” says Shakkour.

The farmers had attached a trip wire to a grenade inside of a glass cup. “When the truck passed over, it broke. We were lucky that this bomb was under the truck. If it [exploded] under a soldier, it would cut his leg or he might die. This was the only incident that happened this year. Thank God.”

From seed to harvest

“In the best areas,” says Mansour pointing to the fields on his left, “a farmer yields about 10 kilograms (kg) of hashish per dunam of cultivated land.” In most areas, a dunam will yield an average of 4 kg of hashish. Cannabis is planted between February and April, and requires no irrigation.

The cultivation of one kilo of hashish costs the farmer about $200. This includes the wages for migrant workers who plant, weed and separate the male and female cannabis — only, the female plants are potent —  as well as rental costs of tractors and trucks to carry the crops from the plain to the storage rooms where they are left to dry. The farmer then processes the cannabis with a mechanized grinder made by and purchased from the village blacksmith.

“You only need a new one [grinder] every ten years,” says Mansour, commenting on the fact that the blacksmith makes little money from the area’s cannabis cultivation.

Finally, farmers extract the most potent powder through a large sieve. The congealed powder is then packaged and sold to the drug dealer for $300 to $400 per kilo. The farmer makes about $100 to $200 from every kilo he sells to the local dealer, and about $400 to $800 per average cultivated dunam.

Outside dealers then come to the Bekaa to buy hashish from the local dealers, who sell in bulk, starting at a minimum of 100 grams (g). One kilogram of hashish wholesale will cost approximately $1,000. In Beirut, the street value of 20g is approximately $50. Thus, dealers can make about $1,500 profit from one kilogram of hashish purchased in the Bekaa.

The export market

In Europe, a kilogram of Lebanese hashish sells wholesale for $4,400 to $5,900. Dealers, according to Mansour, come from all over including Spain, Egypt, Jordan, Saudi Arabia and Holland to survey the crop and negotiate the price. The dealers either ship or transport hashish by land to Europe.

“If I send 500 kg to Holland by truck, it will sell for about 1.5 to 2 million euros ($2.2 million to $2.93 million) there,” says Mansour. The dealer buys that amount of hash from the farmers for $150,000 to $200,000. He pays a truck driver $15,000 to drive the truck to Holland, and ends up keeping the rest.

“One ton of hash in Holland will sell for 3 million euros ($4.4 million). 2.5 million euros ($3.66 million) of that goes to the dealers,” Mansour claims. “In a good year, a dealer can sell 5 tons of hash and make seven to eight million dollars abroad,” taking into account expenses like labor, bribes, confiscated shipments and security.

“I used to be a dealer in Holland, Turkey and Bulgaria,” he say. From 1989 to 1997, Mansour claims he trafficked drugs with a partner who was “a policeman for Interpol.”

So who becomes a drug dealer and who remains a farmer in the village?

“People with contacts outside Lebanon become drug dealers,” says Mansour.

Shakkour says that hash can also easily be flown to Cyprus.

“The cost of smuggling is nothing — you can take it on the plane. 10 kg is [worth] 30,000 euros ($43,974). The dealer can send people with a handbag,” he says. “If he pays the ass [sic] — the guy who is taking the stuff — if he gives him $5,000, he will be very happy.”

If the estimated 20,000 hectares that were cultivated this year had been harvested and trafficked to Europe, 1 million kilos of hashish would have flooded the market, worth an estimated 3 billion euros ($4.4 billion). But when supply is up, prices go down, so even in years when the hashish plants were harvested without intervention from the security forces, dealers would often avoid selling off their entire stash.

“They didn’t plant a lot this year, because they have a lot in storage,” Shakkour says.

“In a good year, a dealer can sell 5 tons of hash and make seven to eight million dollars abroad”

A pretty penny for nose candy

Mansour also explains how cocaine is brought from South America to Lebanon for local sale. He says that on the street in Brazil cocaine sells for around $2 per gram.

“So for 5 kg, you’ll pay about $10,000 in Brazil. It will fit in the handbag you are carrying now,” he says. “In Brazil at the airport, you pay a bribe of $1,000 per kilo. So that’s $5,000 for 5 kg. [Upon arrival] in Lebanon, you pay $5,000 at the airport as a bribe. I’d pay you $30,000 to do that and I make a few hundred thousand dollars when I sell it here for $100 to $110 [per gram].”

Cocaine, however, is almost never sold pure to the end consumer.  Fahed*, a Lebanese man who dealt drugs in Europe before fleeing German authorities, says he normally cuts the cocaine he buys with lactose powder, at between a one-to-one to a one-to-three ratio.

Nationality of people arrested for drug offenses in Lebanon

The only game in town

There are few overt signs of loyalty to political parties in Yammouneh or even much of a political presence — there are close to none of the portraits of religious and political leaders or party flags that usually adorn homes and public spaces around the country.

Ahmed* is 21 years old and works as an assistant to Mansour. He also runs a one-man drug business — growing his own small plot of hashish, but also weeding, harvesting, processing, packaging and selling his stash across the country.

Asked how much money he earns. “A lot!” he boasts, adding, “This year was excellent, because supplies are down… I sell about 2 to 3 kilos a year… all over the country. In Beirut, I make the most money. I sell a gram for $2 there.” Ahmed grosses about $6,000 per year or $500 a month, not including the cost of gasoline for his moped. In addition, he delivers drugs for other dealers. Compared to his parents, who grow apples, Ahmed earns a good living. “My father hates what I do,” he says. “But what else is there?”

“In Brazil at the airport, you pay a bribe of $1,000 per kilo. So that’s $5,000 for 5 kg. [Upon arrival] in Lebanon, you pay $5,000 at the airport as a bribe”

Learning from UNDP’s failures

So far, no alternative crops have succeeded in earning the farmers a livable wage.

“We can grow some apples,” Mansour says, “but only one harvest in five years is any good, because of the cold.”

He adds that the merchants who purchase the apples often shortchange the farmers on even the pittance the apples sell for.

“The farmers pay more [to plant and harvest] than they get back with apples,” he says.

UNDP alternative crop programs were ceased in the late 1990s, and pledged international donations never materialized. According to a Newsweek article in 2001, donors gave only $16.7 million of the $300 million the UN says it needed to develop Bekaa agriculture. But Western officials accused the UN of wasting the money it did receive through mismanagement and corruption.

“We succeed in the eradication only by force,” says Shakkour. “But we didn’t succeed to combat the idea. This is why the next year, or any year, if they [the farmers] will find that the situation in the country is not good, they will go back to planting [hashish]. The only solution is to get rid of the idea from their minds. And to get rid of the idea, you have to show them [other] projects, [other] alternatives.

Edgard Chehab, the current UNDP Energy and Environment Program manager, admits that the agency made major mistakes in the past.

“They [the UNDP’s earlier initiative] did not identify alternative crops that farmers were used to,” he says. “The crops needed lots of water, maintenance and investment, which made the project unsuccessful. They didn’t look at the marketing for farmers before.”

Prices of heroin, cocaine and cannabis resin in various years (in $)

Harnessing cannabis’ potential

Chehab thinks he might have found a solution for Lebanon’s illicit crop farmers. In cooperation with the Beirut-based private investment firm Phystone, the UNDP is introducing pilot projects in the Bekaa for hashish farmers to grow industrial hemp — the non-intoxicating cousin of cannabis.

“The farmers are used to hashish and industrial hemp is very similar,” says Chehab. “It doesn’t need water and the Bekaa is dry. No fertilizer is necessary. ”

Hemp oil, which is rich in Omega 3 and Omega 6, can be extracted from the plants, and is a popular dietary supplement in Europe and the US to reduce cholesterol and the likelihood of heart attacks. In addition, the oil is used in cosmetics, and the fibers can be used as a combustible to heat homes, or to make rope and textiles.

Cultivation will begin in March 2010, in Deir El Ahmar, Baalbek and Hermel, according to Chehab. For the first year, they will cultivate only 500 dunams. By 2011 it will increase, he says.

“The UNDP will make sure that this is a joint venture between small farmers — who are guaranteed a lump sum — and that in addition, part of the profit will go to the farmers so they can stop thinking about hashish.”

Safi Harb, the chief executive officer of Phystone, says that the hemp seeds have already been purchased. He says his company identified the sector because they are interested in agro-industries, and to fill the void left by the Lebanese government and its seemingly non-existent infrastructure.

“This is a private equity project. We will have to convince the farmers that it can work by buying all the crops from them,” during the pilot phase. “Once we have enough supplies and raw material, we plan to set up a factory in Lebanon for hemp oil,” as well as for hemp-based cosmetics and by-products, and eventually a textile industry. Harb says he is ready to invest with the farmers and that they will not be exploited.

“We’ll buy all their products… at pre-agreed rates,” he says.

Harb acknowledges that they have yet to see how many kilos of seeds will be harvested per hectare. Phystone and the UNDP will guarantee the farmers a net profit of $150 to $160 per dunam, and farmers can plant and harvest two cycles per year, because each cycle lasts only 3 months.

“With industrial hemp, their profit will be cut by half — but its legal and sustainable,” Chehab says. “It is better than tomatoes, but not as good as hashish.”

Phystone plans to increase their project’s reach to a maximum of 5,000 to 7,000 hectares of industrial hemp. But while the project seemingly has all the elements of a successful venture, Harb admits that this depends on the farmers.

“This is the only plant that you can use everything with… Lebanon has the perfect climate and conditions — sunshine, the soil and seasons,” he says. Each phase of the project requires capital investment, though, and enough raw materials.

“The profits,” he says, “depend on the volume [produced].” With the pilot projects, Phystone will not be losing money. “We would not enter if the return on investments is below 20 percent over a three to four year period,” he says confidently. “The return on equity is higher.”

Harb plans to invite the farmers to be involved in the agro-industrial sector and also says he will offer the farmers shares. Chehab says the UNDP will ensure that the farmers are not exploited.

But not everyone has a sunny view of this newest venture.

“What are they doing — experimenting with us?” Mansour asks skeptically. “We will grow hashish until something works. We want a valid alternative, or next year, we will protect the hashish plants with our blood.”

Shakkour also expressed skepticism over the program, noting that the UNDP has not coordinated properly with the ISF. This recently led to the confiscation of hemp seeds which were being imported into the country, as the authorities confused them with their illicit counterparts.

The legalization question

The other program the UNDP has looked into in recent years is the legalization of cannabis.

“We were asked by the previous minister of agriculture in 2007 to study the possibilities for the legalization of hashish for medical purposes,” says Chehab.

The UNDP concluded, however, that hashish couldn’t be legalized because it has not proven useful for medical reasons. “It’s only useful for patients with HIV and cancer, against vomiting and loss of appetite. But it’s not yet proven to be a medicine,” say Chehab. The UNDP also concluded however that opium, which is used to make codeine, could be legalized.

“But the UN has very strict guidelines for this: Lebanon does not fulfill the minimum requirements in terms of stability, etcetera,” Chehab says.

While it seems like the private sector and the UNDP are the only ones concerned with a long-term solution to Lebanon’s cannabis problem, Shakkour thinks that the solutions for Bekaa farmers should not come from the outside, but rather from the Lebanese government. On this, the drug enforcement chief and Mansour, the drug dealer, agree.

“The government has done nothing but make promises,” says Mansour. “They have to understand, there is no life for us after hashish.”

*Editor’s note: Names have been changed to protect anonymity.

Skoun, founded in 2003, is Lebanon’s first and only out-patient facility offering prevention and treatment for drug users. Located in Achrafieh, the center offers voluntary counseling for addicts, group therapy and drug replacement therapy. The overwhelming majority of patients who seek Skoun’s help are addicted to heroin and between the ages of 22 and 30 years old, although patients range from age 16 to 50. With a budget of $600,000 to $800,000 per year, Skoun treated 172 drug users in 2008 through funds it received from grants and private donations.

The idea for Skoun came about because of a “lack of services in Lebanon,” says Skoun’s director, Nadya Mikdashi. Other drug rehabilitation facilities in Lebanon include the in-patient rehabilitation center called Oum al Nour, while several  hospitals have detox programs.

Skoun’s approach is different, as they seek to treat people on an ongoing basis while they are living their daily lives, so that they can tackle “other life issues, not just addiction issues,” Mikdashi says. This approach isn’t new; in the West, 70 percent of addiction care is out-patient. Skoun views addiction as treatable and a specialty of mental health.

Amin has been a patient at Skoun for one year to treat his heroin addiction. He says he spent only a short period of time in another facility, which he claims “seemed to work under the presumption [that] you have messed up on your own. From now on, we tell you what to do, what to think, who to see and even what to say.”

“Skoun is different,” he says. “You take responsibility for your feelings and emotions, confront them, and accept what makes you happy as much as what brings you down.”

Amin has slipped up and used heroin a few times, as most addicts do according to Mikdashi. But Amin says that “it’s important to know why it happens, and how to prevent it in the future. So to say if you lapse again, you are kicked out, like some facilities do, is dooming people to failure.”

Every week, Skoun administers Amin a controlled dose of buprenorphine, an opiate replacement, and also samples his urine to ensure his overall health. Over the past year, Amin has been gainfully employed as a journalist and writer.

Mikdashi says that she has seen a steady rise in substance abuse and addiction in the last several years, including party drugs, such as ecstasy or amphetamines.

There are no reliable figures on how many people abuse substances in Lebanon, although estimates range between 10,000 and 15,000 users. Mikdashi says that some users come to the center for addiction to hashish.

“The nature of the drug is different [from opiates or harder narcotics],” Mikdashi says. “But the psychology of addiction is the same,” even if hashish is not as debilitating. In addition, patients also come to Skoun for alcoholism — what Mikdashi calls the “unspoken drug. There’s not enough of an understanding of what alcoholism is.”

Education

Mikdashi thinks that attitudes towards drugs are changing, that people are better informed, and that there is less stigma surrounding addiction. She says the main problem is drug education in schools has not been specific, and teenagers only get told that “drugs are bad, drugs will kill you.”

Another issue is that this approach doesn’t take into account the prevalence of drug experimentation and that no distinction is made between heroin and hashish use, for example. So if a young person tries hashish or sees other people using it, and sees that it is not killing them or ruining their lives, they dismiss what they learned about drugs in general. “We try to explain to young people, because experimentation is a reality, that there are differences between substances,” says Mikdashi, so that they understand the danger of addiction.

Lebanon’s Internal Security Forces (ISF) General Crime division arrests drug users as well as dealers. While a law passed in 1998 states that drug addiction should be treated as an illness rather than a criminal offense, the law has not yet been implemented.

“According to the law, if I arrest an addict here, I should send him to the committee for drugs. In this committee there will be a judge and a doctor, and they will decide if this person will go to the hospital, to treatment or to jail,” says General Michel Shakkour, the director of the ISF’s General Crime division. “They should send him to a certain rehabilitation center and a detox center that is free and belongs to the government. But we don’t have this yet. It hasn’t been established. So you can’t use this system.”

Instead, drug users often end up in prison, even more often than drug dealers. Every year, about 1,000 to 1,300 drug users are imprisoned, compared with 400 to 500 dealers.

“When I arrest people, I send them to the judge. And the judge sends them to prison,” Shakkour explains.

Because of the absence of a free, government-run facility, usually only families who can afford rehab succeed in getting their loved ones released.

“The family or the parents come to the judge, and ask to take their kids to the treatment center,” says Shakkour. “They sign a paper in front of the judge, and he releases them.”

Laws less implemented

Mikdashi says that the problem with the 1998 law is not only that it can’t be implemented, but that it only decriminalized addiction and not usage. She points out that there also needs to be a clear division between addicts who will deal to support their habits and drug traffickers.

But penalties for small-time dealers, or facilitators, are usually the same as major traffickers — up to 5 years in prison, and many of the large-scale dealers remain at large because they can bribe their way out of getting caught.

“If he’s a user, he’s a user. If he’s taking one cigarette or two cigarettes, heroin or hashish, it’s all the same [sentence],” says Shakkour.

But is it wise to have the same policies towards users of soft and hard drugs?

“From my point of view, yes,” Shakkour says. “From my experience, all the drug users of hashish… go for harder drugs.”

He believes the majority of the Lebanese population, especially teenagers, will try hashish. However, the World Health Organization has stated emphatically that “the theory that marijuana use by adolescents leads to heroin use is the least likely of all hypotheses.”

Skoun has recently completed a two-year series of workshops, sponsored by the European Union, to sensitize judges, investigators and policemen to addiction and how to deal respectfully with addicts. In cooperation with Shakkour, 1,200 new police recruits have received “sensitivity training.”

“Recovery is not just about dropping drugs or addiction, it’s about having a satisfying life and healthy relationships,” Mikdashi concludes.

Drug regulations in the Middle East and North Africa

The majority of countries in the region – Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Sudan, Syria, the UAE and Yemen—currently have statutory provisions for executing drug-related offenders. In addition to narcotics-related prosecutions, Iran, Libya, Saudi Arabia, Sudan, Kuwait and Yemen also punish consumption and possession of alcohol.

Syrian and Iranian laws treat addiction as a medical problem. Syria prescribes treatment at state-operated rehabilitation facilities for drug addicts who surrender to the police. Iran has instituted opium alternative programs for addicts since the 1960s, but has also executed tens of thousands on narcotics charges in the last decade. The death sentence can be handed down for possession of more than 30 grams of heroin or 5 kilograms of opium; lesser drug offenses are punished with imprisonment, fines or lashes.

While the UAE has reportedly not carried out the death penalty for drug offenses, its laws are considered some of the most draconian — and confusing. Possession of painkillers and certain over-the-counter cold and flu medication can result in a mandatory four year prison sentence. A Swiss national is currently serving a 4 year prison term after three poppy seeds from a bread roll were found on his clothes at Dubai airport. A Briton was arrested in Dubai for carrying Melatonin jet-lag tablets, which are sold over the counter in the US — as well as in Dubai.

Syrian drug policy authorizes capital punishment for narcotics manufacturing, trafficking, or sales. In 2008, at least four Syrian nationals, two Turks and one Lebanese citizen were sentenced to death for trafficking heroin and cocaine. In Algeria three men were sentenced to death in 2008 for trafficking some 600 kilograms of marijuana.

In 2007, Morocco reportedly arrested 18,734 Moroccans and 255 foreigners for drug-related offenses. Moroccan law provides a maximum prison sentence of 30 years for drug offenses, as well as fines ranging from $20,000 to $80,000. Ten to 15 year prison terms are the typical sentence for major drug traffickers convicted in Morocco.