Comment

The media really are American

by Fadi Chahine
written by Fadi Chahine

Jeremy Tunstall hit the mark when he called his book,“The Media Are American.” Two of America’s oldest mediaoperators — the News Service and Hollywood — possess a remarkable strength on the world media scene. For decadesthe news-service wires have been and still are dominated by theAmericans and partly shared with Europe.

Although the American slice of the world media pie iswaning due to the growth of the Internet, nevertheless, massmedia is still in the realm of players in the United Statesand Europe. Even today with the internet and the World WideWeb, news content and information is produced anddisseminated by the mainstream Western media outlets, likeReuters, AFP, AP, BBC, CNN and Dow Jones.

Even countries with a longstanding abhorrence for the Westare clients of the Western media. If one is to visit anynews service on a web portal from the Middle East and NorthAfrica (MENA) region, one will find that more than 75% ofnews content on those sites is a product of the dominatingWestern media.

Even smaller and more local print publications the regionuse and rely for their sources of news and information onthese media houses, both in English and Arabic. Majorpublications, like Al-Khaleej, Gulf News, Jordan Times,Tehran Times and others, carry lead stories on their frontpages that are produced by the Western and European press.Even the Arabic press is not immune. Reuters and AFP storiesconstitute at least 50% of news content inside the pages ofBeirut’s dailies Al-Nahar and Al-Safir and the London-based Al-Hayat or theSaudi-owned Al-Sharq al-Awsat.

Although Western news agencies do provide real-time newsfrom the MENA region, their coverage tends to be limited inscope, focusing on conflict, natural disasters and majorevents like the peace process and presidential visits.Insightful and local reporting about the major issuesaffecting regional countries, their economies and businessprospects, is scarce. Analytical and contextual reporting israrer still.

What’s more disturbing is that the American mediastructure, while it sustains a wide array of expressions,has become more concentrated in its control by a very selectfew of large corporations and a certain ethnic make-up. It is inevitable that these corporations/ethnic groupswill have their own agenda to influence the reader, as isthe case in the United States and some European countries.

The point worth emphasizing here is the fact the flow ofinformation for the MENA region is overwhelmingly flowingfrom the West to the East. As such, it is essential forthose of us in the media business to reverse this processand give the opportunity to the people of the Middle East tovoice their opinions, report their news and write theiranalyses for consumption in the Western world in particularand globally in general.

It is sad to see the Middle East with all its riches,culture, talents, creativity, liquidity and intellect,relying on what is mostly American news, discussing anddebating issues that will effect and shape everything aboutthe region. And what’s even worse is the fact that thepeople of the region, whether knowingly or unknowingly, area very active participant in this unfortunate event.

Today, news coverage has to be looked at from a globalperspective but reaching to the local level. However, sincea distinct characteristic of American journalism isisolation it leads a Western journalist to determine goodguys and bad guys in the Middle East based on preconceivedideas and prejudices, or simply straight-out bias in orderto follow a preset agenda.

Most people learn about national and international eventsfrom the mass media — newspapers, radio, and especially,television. Therefore, the media can contribute to conflictescalation, either directly or indirectly. Media coverage ofthe conflict played a key role in turning US public opinionagainst the Arabs, Palestinians and Muslims and in shapingthe current American foreign policies.

The media can also contribute to conflict de-escalation.As such, media houses in the Middle East, publishers,editors and reporters have the duty and the responsibilityto do all they can to reverse the flow of information andmake it stream from the East to the West. We must provide anaccurate view of the conflict through both words andpictures, and we should serve as an example for honest andunbiased reporting by providing both sides of the story evenif it points out some of our own shortcomings.

What the Middle East, Arabs and Muslims need today is anhonest, clear and transparent effort to create additionalspace in the Western media for their perspectives and fornews coverage produced by professional journalists who livein the region and who have the proper background andexperience to provide contextual, honest and fair reportingfor consumption in the Western world. The Jews at-large havedone the same successfully. What’s stopping the Arabs fromaccomplishing this very important goal? We either have thewill and courage or we don’t. There cannot be a grey line inthis struggle. Half-hearted attempts are not enough and willnot work. Clear and credible conviction is required andthose who have this conviction have the responsibility toact and to act now!

Fadi Chahine, is the Managing Editor of Zawya Dow Jones Newswires in Beirut

 

0 comments
0 FacebookTwitterPinterestEmail
Comment

Dreaming in St. Michaels

by Nicholas Blanford
written by Nicholas Blanford

ST MICHAELS, Maryland, USA: Lebanon’s woes over the past twoyears have been keeping the Washington-based think-tankindustry busy as the country finds itself in the unenviableposition of being a point of convergence for most of thepressing quandaries besetting the Middle East — theArab-Israeli conflict, Iraq, Iran, terrorism, al-Qaeda andfundamentally the axis of resistance versus Pax Americana.Being a locus of multiple crises is bad for Lebanon butoffers plenty of food for thought for the many think tanksthat cram K, L, and M streets in the US capital.

Earlier in June, I was invited by a leading think tank toparticipate in a round table forum in which some 15 expertswere asked to brainstorm an ideal vision of Lebanon 10 yearsdown the road, identify the obstacles preventing that visionfrom being realized and offering suggestions to overcomethem.

The future aspiration for Lebanon derived by theparticipants was of a stable, prosperous, liberal democracywith a freewheeling economy and social welfare safety net.Whether all Lebanese would aspire to such a future forLebanon is questionable, but it certainly suited thecomposition of the group sitting around the table, mainlyWesterners including three Westernized Lebanese.

Still, the participants were in agreement that such autopian vision for Lebanon was most unlikely given thechallenges facing Lebanon both on both the short-term andlong-term.

Perhaps the chief obstacle raised by the roundtable was howto invigorate a sense of nationhood where Lebaneseprioritize loyalty to the state over loyalty to the sect orzaim. There is a will among some Lebanese, mainly theeducated young, to crack the stranglehold on Lebanesepolitics maintained by the neo-feudalistic zuama, be theytraditional landlords like the Jumblatt and Gemayel familiesor the post-civil war generation such as Nabih Berri and theHariris.

The independence uprising in spring 2005 generated for afleeting moment a hope among young street activists thatSyria’s disengagement from Lebanon would catalyze a generalreformation of the political system, giving rise to a newgeneration of politicians beholden to the state rather thanlocal sectarian interests. Of course, those dreams weredashed the moment the last Syrian soldier departed Lebanonthrough the Masnaa crossing and the leaders of the rivalMarch 14 and March 8 factions began cutting deals with eachother to ensure the re-election of themselves and theirlists in the parliamentary polls of May and June 2005.

Then there were the issues of Hizbullah and how to persuadethe Shiite resistance movement to relinquish its arms andserve first and foremost Lebanese interests rather thanfollowing a regional agenda. How to tackle and eliminatecorruption, Lebanon’s relations with the Arab world, Syriain particular, electoral and constitutional reform — allthese were discussed and debated.

For those of us who traveled from Beirut to attend themeeting, the tensions in Lebanon came with us. On touchingdown at Dulles airport in Washington, we learned of WalidEido’s assassination. We were on our way back home when newscame through that rockets had been fired from south Lebanoninto Israel, the first such incident since the end of lastsummer’s war between Hizbullah and Israel.

Yet the conference on the violence wracking Lebanon was heldSt Michaels, a resort for the east coast elite, besideChesapeake Bay, a two hour drive from Washington.

Lebanon felt a long way away when walking down the highstreet of St Michaels. The stars and stripes flags flutteredproudly from the front yards of simple houses of whiteclapboard and shingled roofs. Elderly married coupleswearing baseball caps, baggy shorts and polo shirts wandereddown the street, slurping on ice creams while gazing throughthe windows of a seeming endless array of shops with tweedynames such as Holly’s Haven and Three Crazy Ladies that soldpricey knick knacks. Huge SUVs that would humble the mostegotistical of Lebanese Hummer drivers ambled along thepristine asphalt roads at painfully slow — but legal —speeds.

Barely a car crawled through St Michaels without a yellowribbon motif stuck to the trunk carrying the demand “Supportour Troops.” Every now and then, a sign along the highwayrecorded that the next stretch was dedicated to the memoryof individual soldiers who had died in Iraq or Afghanistan.In one shop, a middle-aged man with steel-gray 1970s haircutand bizarre orange mirrored sunglasses extolled the virtuesof a new kind of body armor called Dragon Skin, apparentlypopular with troops serving in Iraq. “If I was deploying inBayroot, I’d accept no substitute,” he drawled.

After the sterility of St Michaels, it was somehowrefreshing to return to Beirut. As for the think tanksession’s future dream for Lebanon, don’t hold your breath.
 


Nicholas Blanford is a Beirut-based journalist and author of“Killing Mr Lebanon: The Assassination of Rafik Hariri and its Impact on the Middle East”

0 comments
0 FacebookTwitterPinterestEmail
Comment

In Name of the Disappeared

by Peter Speetjens
written by Peter Speetjens

With an eye on the fate of Alan Johnston, the BBCcorrespondent who disappeared in Gaza on March 12, 2007, CNNrecently interviewed Olaf Wiig. In August 2006, the Fox News journalist had been kidnapped at gunpoint by an obscure Islamist group that demanded the release of all Muslimprisoners in the United States.

Wiig related that he had not been mistreated and that hisbiggest torture was facing the uncertainty, the not knowingwhere he was, why he was there, and for how long he had tostay there before being released, if he was to be releasedat all. Wiig was eventually set free after two weeks incaptivity.

Uncertainty was also the word that constantly popped up ina series of interviews I did with Lebanese mothers whosesons and husbands had disappeared during or after the CivilWar. All of them said it was the uncertainty over the fateof their loved ones that tormented them the most. In fact,most of them said they preferred to know their son was dead,than to not know at all. At least, so they argued, theywould be able to turn the page and move on with their lives.

No doubt, the Argentinean Mothers of the Plaza de Mayo,whose children disappeared under the reign of the militaryjunta, would answer in similar fashion. And so would thefamilies of the thousands that disappeared in countries asvaried as Chile, Algeria and the former Soviet Union.

Although there are differences, Wiig and Johnston, and thechildren of Lebanon and Argentina, all fell victim to whatis known in the jargon as “forced disappearance,” whichapplies to an organization or state that kidnaps, illegallydetains and often tortures a person for political reasons.The victim is imprisoned without trial at a secret location,sometimes for years on end. At a certain point he or she maysuddenly be released, yet it will mostly end in murder,after which the body will be dumped in an unknown location.

For the families involved, the end result is the same, asin both cases the victim vanishes from the face of theearth, while the suspected perpetrators deny any involvementand make sure all physical evidence is destroyed. Seeing theexamples cited above, it is frightening to realize that theWest, lead by the self-proclaimed freedom champions in Washington, has embarked ona path not so entirely different.

On June 8, Swiss investigator Dick Marty submitted hissecond report to the Council of Europe which points at agrowing body of evidence that, ever since 9/11, the CIA haskidnapped hundreds of presumed terror suspects around theworld and flown them to secret prisons in countries such asPoland, Rumania, Morocco, Egypt and Afghanistan. Andapparently it did so with tacit support of its Europeanallies.

Thus, Maher Arar, a Canadian of Syrian descent, wasarrested at Kennedy Airport in New York City and deported toSyria where he stayed 10 months in jail. Khaled el-Masri, a German citizen of Lebanese descent, was arrested inMacedonia and flown to Afghanistan where he was held forfive months. In 2003, Egyptian Abu Omar was snatched by ateam of CIA agents in Milan and flown to Egypt where heremained in jail until February 2007. All three claim tohave been tortured.

These cases are arguably but the tip of the metaphoricaliceberg. Marty’s report was issued one day after six humanrights organizations had published a list with 39 names ofpeople, who at some point were in US custody, yet today areunaccounted for. In other words, they disappeared. Despiterepeated requests by organizations such as Human RightsWatch and Amnesty International, the US government refusesto comment or provide information about their whereabouts.

Lack of transparency and disrespect for basic human rightsseems to be the norm for the Bush administration inconducting its War on Terror. So, most Guantanomo Bay “enemycombatants” have still no clue for how long they will remainimprisoned, as they have never even been charged with anywrongdoings. In fact, it was only in 2006 that a courtruling forced the US government to release their names.

Much less reported in the mainstream media is the factthat in the aftermath of 9/11, thousands of people werearrested in the United States on immigration law violations.Most were Muslims and had overstayed their visa. Of coursethe administration had a legal ground to arrest thesepeople, yet most of them were jailed for months on end andeventually deported without having seen a lawyer or judge.

Hence, Shakir Baloch, a Canadian of Pakistani descent,stayed seven months in a New York jail and was only releasedafter his wife had managed to somehow track him down andfind an attorney.

On August 30, the annual International Day of theDisappeared takes place to draw attention to all thosepeople around the world detained in places unknown to theirrelatives or legal representatives. Let us hope that by thenAlan Johnston has been set free and that the United States,as the self-proclaimed beacon of freedom, recalls thatuniversal human rights are exactly that: universal.

Peter Speetjens is a Dutch writer and freelance consultant

0 comments
0 FacebookTwitterPinterestEmail
By Invitation

Role of governments in energizing the future of ICT

by Karim Sabbagh & Eddy Skaff
written by Karim Sabbagh & Eddy Skaff

Most governments in the Middle East are increasingly supporting the idea that information and communication technologies (ICT) can be made available to all citizens to truly improve their lives. In the not-too-distant future, ICT will positively transform how we interact as consumers with services such as banking, shopping, healthcare,transportation and many other facets of our everyday lives.Leading ICT regions such as Western Europe, North America,and Southeast Asia are already experiencing this paradigm.

The Middle East region, however, is still far from realizingthe full benefits of ICT and the path to true advancementwill continue to be tortuous unless the topic receives fullattention. A number of challenges must be overcome to getICT development on a sustainable path.

“The importance in giving the populations of the Middle Eastaccess to ICT cannot be underestimated,” said Eddy Skaff,Senior Associate at Booz Allen Hamilton (BAH). “In order tobe competitive on the world stage, Middle East markets willhave to prevail over some current obstacles they face, whichthreaten to hinder the successful implementation of anenvironment that supports and sustains ICT and its benefits.Governments in this region can play a key role in makingthese benefits a reality to consumers.”

Singapore is the world leader

The latest Networked Readiness Index, published by theWorld Economic Forum in collaboration with INSEAD,highlights the pivotal role governments play in driving thenational ICT agenda. In this ranking, one countryoutperforms the rest of the world in more than one pillar:Singapore. This underscores the “Singaporean government’sclear vision for ICT and the subsequent leading roleundertaken by the latter in promoting ICT diffusion andpenetration.”

The report shows the Middle East region remaining quitestable in network readiness and highlights several successstories with government-lead initiatives in the UAE (29thplace), Qatar (36th place) and Bahrain (50th place).

The single biggest hurdle is the lack of a holistic ICTdevelopment agenda at a national level. The definition of adevelopment plan at a market level is mostly non-existent in the region. This position does not undermine thesuccessful formulation and early implementations of sectorspecific ICT plans, such as e-government.

Saudi Arabia is a typical example where several governmentagencies are involved in different national IT initiativesand programs. The Communications and Information TechnologyCommission is championing Saudi’s e-government program aswell as several other IT sector initiatives such as theInternet Restructuring Project and Computer EmergencyResponse Team to name a few. The Saudi Arabian GeneralInvestment Authority has become a key player by launchingthe Knowledge Economic City in Madinah, establishing theIntel Capital Fund and signing an agreement with CiscoSystems to invest SR1 billion in the IT sector. Otheragencies have also contributed to the national ICTdevelopment.

Similarly, the UAE boasts several government-championedICT development projects. Dubai’s e-government program,launched in 2000, has been recognized as a success story bypractitioners. Dubai Internet City, Knowledge Village, andDubai Silicon Oasis are aiming to create and develop ICTclusters. The Abu Dhabi Systems and Information Committeelaunched earlier this year the Abu Dhabi Government’s portalalong with a very ambitious e-government project. TheTelecommunications Regulatory Authority, for its part,established an ICT Development Fund.

Such examples underscore the prevailing state offragmentation region-wide, albeit with a drive for increasedcoordination. The accumulation of these siloed initiativesmay be creating an inefficient allocation of resources andsubstantive delays in delivering meaningful services tousers.

How governments can promote ICT

Holistic ICT development agendas at the national levelshould be driven by governments through a complete SectorManagement Lifecycle. (1) Governments should begin bysetting national policies for the growth and development ofboth the telecommunications and IT sectors. (2) Thesepolicies would be translated into long-term master plansthat identify development priorities and programs. (3)Governments should also ensure the availability of adequateregulatory and legal environments to foster a faircompetitive market, regulate distribution of scarceresources, and protect consumers and businesses through aset of e-legislations. (4) Finally, government-ledinitiatives will create the right level of readiness amongthe country’s economic actors.

Telecom regulations are typically entrusted to astructurally and financially independent authority, whilesector development initiatives are usually overseen by anempowered cross-departmental program office reporting to thesenior program champion. However, some roles could also becombined within a single entity to accelerate theimplementation of the national ICT agenda.

“Governments implementing a highly structured program thatincorporates these approaches will more than likely seepositive results,” said Karim Sabbagh, BAH’s vice president.“ICT that is widely available will give Middle Easteconomies the very element they need to maintaincompetitiveness in the near- and long-term future withtechnologically advanced economies throughout the world.”

0 comments
0 FacebookTwitterPinterestEmail
By Invitation

Tapping into the GCC Infrastructure Boom

by Imad Ghandour
written by Imad Ghandour

Investing in a water desalination plant or a school was seenfor a long time to be a government’s job. Private companieswere usually interested to build such projects, but wererarely excited to own them. If seduced enough, a contractormight proceed to operate and finance them under a long-termcontract. But the general population of equity investors —not to mention the hyper private equiteers — were rarelyexcited about a business as stable as a toll road and neverhad the patience to wait 30 years to realize back theirinvestment.

But suddenly all that changed in 2006. Today infrastructurefunds are one of the hottest asset classes. Globalinvestment in infrastructure is rising exponentially, andglobal financial institutions like Macquarie Bank havediscovered how to convert infrastructure stability to a veryexciting investment. Private equiteers have hopped on thebandwagon, and creatively managed to make an asset classwith meager IRRs of 8-15% produce returns as high as 40%.Through creative financial engineering, private equiteershave pressed to put as little equity as possible and financemost of their investments through debt. Consequently,marginal improvements in asset value due to underestimatingdemand or improved margins significantly boosted the privateequity IRRs.

The developed world has build most of its infrastructureafter World War II, and such infrastructure is now comingtowards the end of its natural life. With most countries inthe developed world experiencing budget deficits, there isno appetite to fork out trillions of dollars over the nextdecade to replace the aging roads, ports, and bridges. TheUS, for example, needs between $2 and 3 trillion alone torehabilitate its road and transportation infrastructure.

On the other hand, the rising needs of the Chinese, theIndians, and other Asians for electricity, water, andtransportation, after decades of being satisfied withhumbler lifestyles, have put enormous stress on theinfrastructure of these countries. China is building in2006-7 more than 200,000 Megawatts of generation capacity —equivalent to the total generation capacity of the UK — ashundreds of millions of Chinese buy TVs, refrigerators, andwashing machines. In total, the World Bank estimates thataround $32 trillion is needed to be invested in the globalinfrastructure between 2005 and 2030.

In the GCC, the demand for capital to finance theinfrastructure needs has never been greater. By the end of2006, the GCC’s announced power, water, energy, real estate,and transportation projects financing requirements wereestimated to be around $723 billion according to MEEDProjects. Add to this amount a rough guesstimate for theunannounced infrastructure needs over the next decade, andit is easy to foresee the total crossing the trillion dollarmark. To put this in perspective, this amount is larger thanthe total GCC banking sector.

Despite the petrodollar windfall, GCC governments areasking the private sector to step in, and this is creatingsignificant opportunities for private equity players. Themost attractive opportunities will come from privatizinginefficient state companies, where private equity playerscan combine operational improvement to creative financialengineering to realize significant returns.

Private equity players will also tap into theinfrastructure boom through investing in the limitedinventory of private companies that design, build, operate,maintain, and finance infrastructure assets. These areprivate companies like Metito for building and runningdesalination plants, Madares for operating schools, and ACWAPower for building IWPPs. I will not be surprised to seestellar demand and exuberant valuation for such companiesfuelled by regional — and increasingly international —investors trying to tap into the upcoming GCC infrastructureboom.
 

Imad Ghandour is head of Strategy & Research — GulfCapital and Chairman of Information & Statistics Committee —Gulf Venture Capital Association

0 comments
0 FacebookTwitterPinterestEmail
By Invitation

Dancing around the International Monetary Fund

by Mounir Rached
written by Mounir Rached

Last March, Lebanon requested to use $77 million (25% of itsquota) of IMF financing as Emergency Post-ConflictAssistance (EPCA) for the first time since it joined thisinternational financial institution on April 14, 1947. TheIMF’s principal function is to provide balance of paymentssupport, particularly when reserves fall to a critical levelthat could jeopardize financial stability, and to monitorreform commitment that supports use of its resources.

The IMF Board in May approved the government’s request whichcoincided with a level of reserves close to $12 billion,equivalent to 20% of deposits; certainly one of the highestin the world in relation to the size of the economy. Thisamount can hardly make a dent in the above quantity ofreserves.

Clearly, the incentive for the arrangement is two-fold: tohave a solid commitment from the government toward itsreform agenda and to provide assurance to donors thatmacro-economic adjustment are adhered to and monitored bythe fund. EPCA then constitutes a catalytic part of ParisIII financing and (if implemented successfully) paves theway for future IMF financing under the standard and morestringent Stand-By arrangement.

Measures require prudence and governance

The risk to the government is that a failure to fulfillits commitment would engender doubt in donors and jeopardizetheir willingness to continue providing financial support aspart of their Paris III pledges of $7.6 billion in thecoming years. These risks for the duration of the programthrough 2007 are revealed in the quantitative programtargets: preserve foreign reserves at $11.5 billion, limitthe primary deficit to LP1.3 trillion ($870 million), anddebt accumulation to LP 2 trillion ($1.3 billion). All thesethree targets are inferior to the outcome of 2006. A fourthquantitative target is to repay LP 2 trillion ($1.3 billion)to the Central Bank. The other hurdle in the program is aset of administrative measures — “Monitorable Actions” —covering fiscal measures, electricity reform, andprivatization. None of these measures requires belttightening, but rather prudence and governance, and a timelydisbursement by donors of pledged resources. This isnormally the case of IMF EPCA programs, setting the pace forthe challenges ahead. The demanding reform will ensue in2008 and beyond. The monetary program is limited tomaintaining a high level of liquid foreign assets combinedwith a an exchange rate peg without creating an imbalancebetween the central bank’s liquidity injections — emanatingfrom its balance sheet cash losses — and money demand.

In the words of the IMF, “the authorities program for 2007 …focuses on maintaining financial stability and containingthe primary deficit while accommodating reconstruction andrelief spending. Keeping the excise rates on gasolineproducts at the levels prevailing in March will be a keymeasure to achieve the deficit objective. EPCA will thusprovide a transition to 2008, when the demanding fiscaladjustment is envisaged to commence. Then, it is perceivedthat the government will be able to embark on acomprehensive economic program that could be supported byfurther IMF financing in the context of upper credit tranchearrangement (Stand-By) arrangements.”

Problems fulfilling promises

What are the inherent risks then? Certainly, the politicalrisk, very well recognized by the IMF, remains the primeimpediment to government capacity to fulfill its commitmentunder EPCA. First, almost one year after the devastating warlast summer the economy remains in a recession. A nominalgrowth rate of 4.5% in economic activity envisaged in theprogram for this year is already beyond reach. While thegovernment met all end-March targets under EPCA, except forthe ceiling on government borrowing from the central bank,the outlook for the rest of the year is bleaker. June andSeptember targets are more foreboding in the ongoingpolitical stalemate and recurrent outbreak of violence.Attaining the revenue target (a 16% rise by the secondquarter) is very unlikely. And the government is alreadyburdened by rising spending to improve security. Failure tocontain the primary deficit to the set target in the secondquarter (by end-June) will in turn necessitate preaching theceiling on government borrowing from the central bank for asecond time. Commercial banks were hesitant to roll overmaturities in the first quarter, and a change in the banks’outlook is unforeseen. The deadline for fulfilling most(four out of six) monitored actions was due by the end ofJune as well, and with parliament not convening, these(including the budget) are yet to be approved. The reform isstumbling at the beginning of the race; to regain momentumit will need exceptionally favorable circumstances, and anend to the political stalemate.
 

Dr. Mounir Rached is a senior IMF economist and afounding member of the Lebanese Economic Association. The views in this article are those of theauthor and do not represent those of the IMF.

0 comments
0 FacebookTwitterPinterestEmail
Capitalist Culture

Summers of our discontent

by Michael Young
written by Michael Young

Many things can be said about the July-August 2006 war,whose first anniversary we will be commemorating later thismonth. However, for those who lived through it, a singleenduring image remains: that of sudden, irrevocable,traumatic collapse into chaos.

One minute the Lebanese were enjoying the start of whatlooked to be a prosperous summer, the country was awash withemigrants and visitors, and the football World Cup had hadcreated a sense of being hooked into the nodes of acelebrating world; the next minute, Lebanon was being bombedremorselessly, citizens had become refugees in their owncountry, tourists and visitors were taking to the sea, andthe link to the world had been brutally severed with thesudden closing of Beirut Rafik Hariri International Airport.

In what was an instant, Lebanon’s capitalist culture, aculture of openness, of the promotion of free minds and thefree pursuit of profit, had been overturned by one ofconflict and destruction. The country never recovered fromthat transformation, and to this day is paying the price forthe aftermath of that war, which profoundly divided Lebanesesociety.

The mythology of Lebanon’s summer tourism season has beenworn to the bone. The country can be heading to hell in ahand basket, but people will react most sensitively to thefact “summer” is threatened. Somehow, the symbolism of thatthree-month moment cannot be underestimated: it is themoment of Lebanon’s communion with the outside, when a yearof sluggish business can be righted, when politicians take abreak and when people can take a break from politics. Moreominously, it’s also the time when Lebanon has usually beenhit by disaster: the mass entry of Syrian troops in 1976;the 1978 Israeli invasion, followed by that of 1982; thebeginning of the killings after the Syrian withdrawal in2005; the summer war of 2006. The Lebanese psyche seemsforever buffeted by this struggle between profitablenormalcy and debilitating conflict; and most of the timethat psyche is bathed in the hues of a single season:summer.

Today we’re back to the same worries again. Things startedearly this year. In fact, the summer season was the firstcasualty of Lebanon’s proliferating crises and bomb attacks.The bombings in Ashrafieh, Verdun and Aley were all, to alarge extent, designed to suffocate the tourist season itits egg. While not devastating on a human level, at least inlight of what Lebanon endured in the past, the bombings havebeen devastating to the economy. Travel agencies now reportmass cancellations of reservations; restaurants areoperating at well below their capacity, particularly inBeirut; and by 9 p.m., most streets are empty.

Hanoi or Hong Kong?

Once again, the symbolism is stark. In denying Lebanonnormalization, those who planted the bombs went after itsAchilles heel: summer. The pendulum is again swingingbetween a culture of destruction and a culture of opennessand free-wheeling profit. This dividing line has been apersistent one in postwar Lebanon. It was the Druze leaderWalid Jumblatt who summarized it best when he distinguishedbetween “Hanoi and Hong Kong” in the early 1990s. What hemeant, or what he asked, was whether Lebanon would become anemblem of militancy and armed struggle, particularly againstIsrael, as best represented by Hezbollah? Or would thecountry opt for the path laid out by the late Rafik Hariri,who sought to transform Lebanon into a business nexus forthe region, a bastion of liberal capitalism and ecumenicalpermissiveness?

To this day, Lebanon hasn’t found an answer to thatquestion, hence its dilemma as two vastly different projectscontinue to drive apart its political class and its society.Some months ago, after the summer war, a publicity campaignplayed on this perceived difference. The “I Love Life”billboard campaign, which was directed against mainly whatwas seen as Hezbollah’s ideology of war, provoked animmediate reaction from the opposition. In response, it toobegan an “I Love Life” campaign, falling into the trap ofdeploying a discourse shaped by its adversaries. However,more significant was that the opposition was destabilized bythe accusation that it did not love life. Maybe there wassome hope there.

But hope or no hope, for the foreseeable future Lebanonseems destined to remain a front line in the clash between acapitalist culture and a culture that aims to underminethis; between Hong Kong and Hanoi; between a country thatawaits summer impatiently, but then all too often findsitself dealing with an early winter.

Michael Young

0 comments
0 FacebookTwitterPinterestEmail
Financial Indicators

Global economic data

by Executive Staff
written by Executive Staff

Journalists killed on duty 1992-2007

The Committee to Protect Journalists applies strict journalistic standards when investigating a death. It considers a case “confirmed” only if it is reasonably certain that a journalist was killed in direct reprisal for his or her work; in crossfire; or while carrying out a dangerous assignment. It does not include journalists who are killed in accidents – such as car or plane crashes – unless the crash was caused by hostile action (for example, if a plane were shot down or a car crashed trying to avoid gunfire).

It includes only confirmed cases in our database and in the statistical analysis above. If the motives are unclear, but it is possible that a journalist was killed because of his or her work, the Committee to Protect Journalists classifies the case as “unconfirmed” and continues to investigate to determine the motive for the murder. 

*Adds up to more than 100 percent because more than one category applies in some cases.

**CPJ considers justice fully served when both the perpetrators and masterminds are convicted. If perpetrators are convicted, but the intellectual authors are not, CPJ classifies the case as partial justice.

Older workers

Persons aged 55-64 in employment as % of the population of same age group

OECD countries must get more people into employment if they are to boost living standards and maintain welfare services. That is the message from the OECD Jobs Strategy 2006. Some population groups merit particular policy attention. For instance, only 65% of women of working age are employed in the OECD, versus 87% of prime-age men. Meanwhile, premature retirement and barriers to getting a job affect older people that wish to work. In several countries, including Italy, less than a third of 55 to 64 year olds were in employment in 2005, compared with over 60% in the US and Japan, and nearly 85% in Iceland. The Jobs Strategy sees four pillars to effective employment policymaking:

A: Setting appropriate macroeconomic policy

B: Removing impediments to labor-market participation and job-search

C: Tackling obstacles to labor demand

D: Facilitating the development of labor-force skills and competencies

Healthcare spending

Public and private spending, per capital

Healthcare spending has grown faster than GDP in every OECD country except Finland between 1990 and 2004. It accounted for 7% of GDP on average across OECD countries in 1990, but reached 8.9% in 2004. Spending is projected to increase as a share of GDP due to costly new medical technologies and population ageing. The public share of health spending – 73% on average in 2004 – has fallen in some countries, but has risen in others. This includes the US – 40% to 45% in 1990-2004 – where, despite a dominant private sector, US public spending per capita in health remains higher than in most other OECD countries.

Some workers will inevitably be in jobs for which they are overqualified, but the rate of overqualification is higher among foreign-born populations. In Italy and Greece, immigrant overqualification is particularly high compared with native populations. Immigrant overqualification is also relatively high in Norway and Sweden, though this reflects refugees rather than economic migrants. While the native/ foreign gap in overqualification rates is narrower in the UK and US, these countries have respectively the fifth and seventh highest overqualification rates for native-born workers of the 21 countries in

Youth and traffic fatalities

OECD countries

Proportion of youth in the population: 10%

Proportion of youth in driver fatalities: 27%

Traffic crashes are the single greatest killer of 15 to 24 year-olds in OECD countries. These drivers pose a greater risk than other drivers to themselves, their passengers and other road users. The problem also imposes great social and economic costs on individuals, families and societies. In the US alone, government estimates put crashes involving 15 to 20 year-old drivers at $40.8 billion in 2002. Some 8,500 young drivers of passenger vehicles were killed in OECD countries in 2004. Death rates for 18 to 24 year-old drivers are more than double those of older drivers. Moreover, death rates for young men are consistently higher than those of young women, often by a factor of three. In other words, even where overall road safety is improving, young driver risk is not.

0 comments
0 FacebookTwitterPinterestEmail
Financial Indicators

Regional equity markets

by Executive Staff
written by Executive Staff

Beirut SE: Blom  (1 month)

Current Year High: 1,550.85       Current Year Low: 1,168.36

 What some analysts camouflaged as “the events in North Lebanon” in the last third of May wiped out modest gains, which the BLOM index had made in the first part of the month. But owing to its resilience and apparent long breath of many investors, the index closed at 1,223.01 points on May 24, within half a point of its close on April 30. The mid-month top mark was 1,248.81 points on May 17. Solidere accounted for the bulk of trading volume in the nervous fourth week of the month but held its ground, all things considered. Main banking stocks Audi and BLOM also fared respectably, with Audi trading above $63 and BLOM at $70 and higher throughout the month. Byblos Bank confirmed that it bought 6.6% of Jordan Ahli Bank.

Amman SE  (1 month)

Current Year High: 6,920.89       Current Year Low: 5,267.27

The Amman Stock Exchange trailed its peers with a drop from 5,992.10 points on May 1 to 5,753.89 points on May 27, a 4% weakening. Although government officials and several companies used the World Economic Forum to announce investment initiatives, the ASE was listless because of the troubles in Palestine and Lebanon. Among the announced deals, Jordan Phosphate Mines teamed up with Bahrain’s Venture Capital Bank for a new $65 million chemicals complex. Kuwait Finance House-Bahrain will establish a new investment bank in Jordan with $50 million capital while Bank of Jordan got its license for Syria. According to an ASE publication, first-quarter earnings for 95 listed companies were up 50.4% from a year earlier and the banking sector reaped 65% of the total earnings.

Abu Dhabi SM  (1 month)

Current Year High: 3,833.94       Current Year Low: 2,839.16

The Abu Dhabi Securities Market shot up almost 600 points, or some 20%, between May 1 and May 27. This rally has lasted for two months and made the ADSM the top gainer among GCC bourses for the year to date. On May 27, the ADSM jumped 4.4% and closed at 3634.93 points, an eight-month high. Energy, real estate, and banking stocks had the most pizzazz with Taqa and Aabar Petroleum among the stocks in demand. The two energy stocks went up 33% and 37%, respectively, in May but were still outdone by real estate stocks Aldar and Sorouh, which climbed 45% and 53%. Fujairah National Insurance made its debut. At the end of the month, ADSM and the Bahrain Stock Exchange signed a memorandum of understanding.  

Dubai FM  (1 month)

Current Year High: 4,985.39       Current Year Low: 3,658.13

The Dubai Financial Market’s general index rose from 3,670.47 points on May 1 to 4,480.80 points on May 27. The gain of more than 20% mirrored that of the ADSM this month, but due to the DFM, ended the reporting period only 6.9% up for the year to date. Dubai saw the UAE’s second largest initial public offering for 2007, from real estate firm Deyaar. Retail investors pushed demand up to over $12 billion, or 14 times the $880 million share offering. Good performers on the DFM included Dubai Islamic Bank (up 31%), and the DFM stock (up 20%) in May. Emaar Properties  closed at AED12.35 on May 27. The UAE market regulator noted approvingly that for the first time, all listed companies met their results reporting deadlines for the first quarter.

Kuwait SE  (1 month)

Current Year High: 11,403.40     Current Year Low: 9,164.30

The Kuwait Stock Exchange ranked second among GCC bourses in 2007 index performance at the end of May, with a 13.27% increase for the year to date. Achieving its climb more steadily than the meteoric Abu Dhabi exchange, the KSE index moved from 10,776.40 points on May 1 to 11.403.40 points on May 27 – its highest stand since end of February 2006. Shares of MTC were in the limelight with rumors of strategic share buying by regional investors. The company formally denied that there was any buying or selling of strategic stakes in MTC or its African subsidiary, Celtel. Kuwait Finance House saw good demand and its shares went up 30% in May. In macro news, Kuwait stirred up the GCC by announcing its switch from a dollar peg to a basket of currencies, which was read as nay to the intended GCC currency union.  

Saudi Arabia SE  (1 month)

Current Year High: 13,509.09     Current Year Low: 6,916.85

The Saudi Stock Exchange remained volatile compared to its peers. From 7,574.48 points on May 1, the TASI moved lower in the first week and closed at 7,667.92 points on May 27. Sabic made headlines by purchasing the plastics business of US manufacturer GE for $11.6 billion. Saudi Kayan Petrochemicals, a Sabic affiliate, was the biggest IPO catch last month with a SR6.75 billion offering that was subscribed almost five times over. A bundle of five insurance firms offered between 31% and 40% of their capital and met good demand. The cement sector was the strongest gainer in the third week of May, after producers hiked their prices. Although the government mandated revocation of the price increases after a week, the companies’ outlook remains good. Agriculture was the most volatile sector in May.

Muscat SM  (1 month)

Current Year High: 5,956.46       Current Year Low: 4,657.16

The Muscat Securities Market showed further bullish sentiments in May and climbed from 5,807.53 points on May 1 to 6,092.65 points on May 27, giving the MSM a 6.7% gain since the start of 2007. BankMuscat continued to push for negotiations over an acquisition offer it made for Alliance Housing Bank (AHB), a bank with market capitalization of $205 million. The AHB board rejected the offer by BankMuscat, Oman’s largest bank with $2.95 billion market cap, citing other regional suitors. BankMuscat offered a 34% premium on the share price of AHB as of early May and the stock has since gone up by about one third. Oman United Insurance Company and privately owned Al Ahlia Insurance, however, called off a merger plan.

Bahrain SE  (1 month)

Current Year High: 2,298.67       Current Year Low: 1,996.68

The Bahrain Stock Exchange was the fourth GCC bourse with a steep ascent during the merry month of May. In a 9% gain, its index rose from 2106.70 points on April 30 to 2,298.67 points on May 27 – making good for losses in the first four months of the year and ending the month on a high note. The kingdom had its share in the month’s primary market glee through the successful initial public offering of Seef Properties, which met strong subscription demand from institutional investors. After announcing management changes and expansion plans, shares in Batelco moved up in May but the Bahraini operator denied rumors that it was talking with an international sector firm over selling it a 20% stake.

Doha SM: Qatar  (1 month)

Current Year High: 8,276.65       Current Year Low: 5,825.80

Continuing on its upward path from April, the Doha Securities Market took May in stride with an 18% gain from 6571.13 points at the start of the month to 7,749.37 points on May 27. With the concentration of gains in the second half of the month, the market’s main movers included Barwa Real Estate, Nakilat, Industries Qatar, and banking shares, including Doha, Rayyan, and International Islamic banks which all advanced by margins of more than 20%. Some investors cashed in on gains with profit taking at the end of the month.  Barwa Real Estate made news with a $1.1 billion Egyptian land purchase for a new super-sized residential project in New Cairo. Qatar Islamic Bank said it will set up a sharia-compliant subsidiary in London.

Tunis SE  (1 month)

Current Year High: 2,712.33       Current Year Low: 1,861.15

 After a third consecutive month of moving sideways, the Tunindex closed at 2,568.90 points on May 25, down 30 points from its close on April 30. This made the small Tunisian bourse the month’s most unspectacular performer among the three North African exchanges but kept it up by 9.68% when compared with the start of the year. Market cap leader SFBT saw its stock drop by 4% to TD79.98, while Banque de Tunisie lost 3% and Tunisair share prices weakened by 7% between May 1 and May 25.

Casablanca SE All Shares  (1 month)

Current Year High: 12,723.23     Current Year Low: 6,563.27

The Casablanca All Shares Index started the month with a week of gains to a pinnacle of 12,723.23 points on May 8 but then selling set in and the index shed 14% in a week’s trading that saw it briefly dip below 11,000 points on May 15. To the end of the month, the index picked up another 500 points and closed at 11,464.60 on May 25. Despite its downward fluctuation, the Moroccan bourse is still the best performer, index-wise, in North Africa for the year to date, with a gain of 19.4% from the start of 2007. Maroc Telecom dropped 10% and leading bank Attijariwafa Bank shed 18% of its market value in the middle of the month in the downtrend that showed across several sectors before the bourse’s slight recovery in the fourth week of May. Local brokers described the market’s dip as expectable profit taking. 

Cairo SE: Hermes  (1 month)

Current Year High: 68,274.93     Current Year Low: 41,965.37

The Hermes index for the Cairo & Alexandria Exchanges was 9.39% up for the year on May 27. Entering the month at 65,582.80 points, the index climbed to 68,274.93 points on May 27. Analysts were less ebullient about CASE than about the GCC markets last month but said that telecom and banking shares did reasonably well, the latter with expectations that several regional banks will compete to buy a significant stake in Al Watany Bank. Piraeus Bank Egypt launched a $53 million rights issue. Sodic, the real estate investment company that signed an urban development contract for Sodic land with Lebanon’s Solidere, had to acknowledge that merger talks with another company failed. Sodic’s stock dropped 13% in May.

0 comments
0 FacebookTwitterPinterestEmail
Special Report

Public Private Partnership can boost ME economic development

by Executive Staff
written by Executive Staff

Growth in the MENA region is enticing strategic partnerships between governments and private companies to create infrastructure critical to support and sustain growth.

A Public Private Partnership (PPP) provides a mechanism for the forging of the strengths of the private and public sectors to deliver more economical, higher quality services to the community.

Nizar El Hachem, Principal – Head of Investment Banking at Injazat Capital Limited (ICL), the first regional bank to have submitted a proposal for a $3 billion dollar PPP deal in the region – tells us more.

Provide us with a broader understanding of the PPP concept.

A PPP involves a government engaging the private sector to design, construct, finance and operate infrastructure traditionally developed by governments. In return, the private operator is rewarded with revenue generated from tariffs levied on users of the infrastructure, periodic service payments from a government, or a combination of both. Typically such an agreement spans 25-30 years.

Is it true to say that the current development of the GCC region provides the perfect platform for PPP arrangements?

The region is experiencing significant economic growth that is expected to continue well into the future, this combined with the fact that GCC countries have some of the highest population growth rates in the world provide private enterprises compelling incentive to invest in the area through a PPP. Likewise, governments in the region are looking for innovative solutions to ease the financial burden of providing quality services across all sectors particularly health, transportation and education.

What are the key principles of a PPP?

A PPP allows each of the parties involved to concentrate on activities that best suit their respective skills. The government ministry will focus on developing policies based on service needs and requirements, whilst the private sector consortium goal is to deliver the services at the most efficient cost and provide mechanisms for risk transfer.

Why should governments consider PPPs?

The current strain on infrastructure as a result of the development across the region is placing increased pressure on governments to renew, maintain and operate existing infrastructure and to build new infrastructure. The ramifications for governments with budgets insufficient to meet levels of consumer demand for quality infrastructure in each sector are significant.

The decision to enter into a PPP arrangement is driven by two major criteria:

1. Will the quality of service provided by the private sector continue to meet/ exceed government and the general public’s expectations?

2. Will the service provision provide value for money for both the government and the general public?

For the government, value for money will be achieved if the provision of services under private sector management results in cost savings and improves service quality to the general public.

The key benefits include:

  • Improvement in the quality and quantity of public services and public access to improved services now, not when a government’s spending programs permit
  • Deliver greater value for money compared with that of an equivalent asset procured conventionally through government
  • Transferring the risk of performance of the asset to the private sector
  • Reduction of government debt and freeing up of public capital to spend on other government services
  • Bringing in innovation and enhancing best practices resulting in reduced cost, shorter delivery times and improvements in the construction and facility management processes
  • Enhanced investment decisions based on symmetrical information
  • Decreasing the tax burden on citizens who do not need to pay higher taxes to finance infrastructure development
  • Supporting the reform efforts of the public sector 

What are the key success factors for the structuring and execution of a PPP?

The key structural considerations for a government and the private sector are represented in the diagram below.

In addition to these structural considerations, there are five requirements key to the successful execution of the PPP:

  • Political support
  • Public support
  • Enabling legislation
  • Expertise
  • Project prioritization

A real challenge considering the nature of the PPP investments appears to be the financing of projects. What size of investment is called for and what type of financiers are attracted?

Typically, PPP projects require large investments  – for example, the recent proposal submitted by ICL in the healthcare sector approximated $3 billion. Fortunately, a number of sources of financing are available to the private sector. Equity and debt financing, government to government debt or government funding in the form of aids and grants are potential sources of financing that may be utilized.

Financing requirements will differ by sector and region and may be capital intensive. A valid regional concern for lead managers in the Middle East is the prominence of Islamic banking. Islamic banking accounts for some $15 billion in sukuks, $500 billion in Islamic assets and $350 billion in Islamic funds. Further, the sophistication of Islamic financing tools are driving complex financing schemes that are attracting an increasing number of institutional and individual investors. It is evident that expertise and networks of the lead manager in both the sector and the region can be crucial to securing project funding and ICL has a clear advantage in the MENA through the provision of its sharia-compliant financial services and well established network with financial institutions.

The sector and region in which a PPP is conducted will also dictate the type of investors attracted to participate. In the emerging market for PPP projects in the Middle East, partners and shareholders of ICL have displayed a strong appetite to participate in investing and financing activities. In addition, international organizations are breaking ground in showing a willingness to co-finance PPPs through grants. ICL was successful in securing the support of international organizations such as the OECD in their recent proposal.

Who are the key stakeholders and how do they contribute to a successful PPP project?

A diverse consortium of stakeholders collaborates to reach the common objective of a PPP project. The government ministry holding the infrastructure that is the focus of the PPP provides:

  • Objectives of the PPP in consideration of community expectations
  • Education of the public on the benefits of the PPP
  • Legal and regulatory environments suitable to PPPs

Lenders, equity investors and consultants provide the funding required to obtain private sector involvement in the PPP to provide an off-balance sheet transaction.

Design, engineering and construction contractors bring the skills and experience in infrastructure development and construction.

Project managers manage and monitor the performance of the project to PPP objectives and operators and managers bring the skills and experience in operating in the sector.

Special purpose vehicles, formed by the private sector participants for the delivery of the PPP project oversee the delivery of the PPP project.

Insurers, legal and financial advisors provide administrative, legal and financial support to the PPP.

Finally, consultants provide the link between the government ministry and private sector financiers.

In the recent $3 billion PPP proposal, what was ICL’s role?

The role of ICL entails guiding a PPP from inception through the inception, structuring, fundraising, and finally management stages.

The attractiveness of ICL in the recent $3 billion proposal submitted in the North Africa region was promoted through its broad corporate advisory experience and the strategic networks relevant to each stage.

At the inception stage ICL performs the necessary market research to collect information relating to the PPP from the government and other relevant sources, as well as and identifying and resolving critical strategic issues.

In the structuring stage ICL utilizes its experience in financial modeling, valuation and funding options appraisal to develop an appropriate deal structure, manages the tender process and identifies consortium partners.

At the fundraising stage, ICL sets the investment terms and fund raising process, ensures the optimal financial management of the transaction and provides treasury management to the PPP.

In the management stage, ICL monitors and measures performance of the PPP to ensure key strategic objectives.

The success of PPPs has spread internationally with application to a diverse number of projects. What particular sectors are taking advantage of PPPs?

Sectors where PPP has been applied in the United Kingdom, Europe, Australia and Canada include:

  • Aviation
  • Road and rail transportation
  • Health
  • Energy
  • Water

How does ICL foresee the future of PPP in the region?

The current regional dynamics, particularly the accelerated economic and population growth, continue to place a significant burden on the existing infrastructure, highlighting the need for the heavy investment in infrastructure in order to support growth and secure a sustainable future. Governments and key financial institutions in the area are becoming increasingly aware of the necessary role the private sector must play in providing the resources required to develop the region and provide citizens with world class standards of living.

The current focus on PPPs as a viable solution to the growing burden on infrastructure in the region is evidenced by the exposure it has received in dedicated summits and through the attention of government bodies region wide. The stage has been set for PPPs and ICL believes the sophistication of the current financial markets is adequate to facilitate private sector involvement in the region.

All indications make it clear that the future delivery of traditionally government funded services and infrastructure lies in strategic alliances with the private sector.

Structuring a successful PPP project

0 comments
0 FacebookTwitterPinterestEmail