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Inter Arab Trade” no longer a joke

by Riad Al-Khouri May 1, 2007
written by Riad Al-Khouri

Arab political unity, from being a mantra in the 1950s,has turned into a joke, and today the Arab world’s 22″sister” countries regularly bicker in an endless politicaltragic-comedy. Politically, fragmentation of the Arab worldis clear, but what about economics? The same lack ofintegration had been true in the late 20th century of Arabeconomies as it was of states themselves, but couldintra-Arab business now be reversing that? It used to be thecase that Arab states traded little with each other, butthat is starting to change, thanks in part to the Arab FreeTrade Area (AFTA). AFTA was launched in 1997, and seventeencountries are now part of it (with Mauritania, Djibouti,Somalia, the Comoros, and Algeria still outside) accountingfor 96% of the total intra-Arab trade. The agreement aims toabolish tariffs and other barriers to intra-Arab commerce,and the goal of duty-free merchandise trade among members isnow close.

Partly thanks to AFTA, trade among Arab states has risen:in 2001, 7.2% of Arab merchandise exports went to other Arabstates; by 2005, the figure was 8.1%; with the comparablenumbers for imports moving from 10.2% to 12.4% over the sameperiod. This is not a spectacular jump, and is still farfrom the percentages for intra- EU or North Americancommerce; but the trend is clear, with partial figures for2006 indicating a further rise and the outlook for 2007 evenbetter. The same is true for non-merchandise trade, asbusiness in sectors such as banking, transport, and tourismbooms among Arab countries.

Going beyond AFTA, Egypt, Morocco, Tunisia, and Jordanentered in 2004 into the Agadir Agreement, which seeks toestablish an Arab-Mediterranean free trade zone by 2010.(Lebanon and Syria have also expressed interest in joiningAgadir, and other serious potential adherents are Algeria,Libya, Mauritania, and Palestine.) Encouraged by the highlysuccessful Israeli-Jordanian-American Qualifying IndustrialZone (QIZ) model, which has seen Jordan selling billions ofdollars worth of goods to America in the past decade, Agadirseeks to boost exports to Europe through accumulation ofvalue added among Arab and European producers. To do thisfirst requires unifying “rules of origin” (i.e. the way thatcountries determine where and how goods are transformed intofinished products) to allow member exports to benefit from duty-free entry into the EU market. The principle is simple: forthe manufactures of one country to enter another at a low orno tariff charge under a free trade agreement, a certainamount of local value added has to occur. Agadir aims to dosomething similar to QIZ, but vis-à-vis Europe, adding valuefrom there and from Arab signatories to export to theEuropeans duty-free.

While not a panacea for economic fragmentation, AFTA andthe more ambitious Agadir accord are quietly drawing Arabcountries closer. As the rest of the world integrateseconomically, the Arabs will have little choice but to dothe same. To help thing along, the likes of the Arab TradeFinancing Program (ATFP) is bankrolling intra-Arab tradedeals. One of several schemes of this type, the ATFP, aspecialized Arab financial institution with a mission tocontribute to development of regional trade, was started in1989 by Arab shareholders including regional funds, centralbanks, and a number of private financial institutions. Oneof its latest deals came this year when four Lebanese bankssigned agreement for USD82 m in lines of credit from theprogram. The money is part of a pledge made by the ATFP atthe January Paris III donor conference to give Lebanesebanks USD90 m in soft loans, and the program has nowprovided more than USD930 m to Lebanon since the ATFPstarted operations.

Finally, and related to this trend, intra-Arab investment isalso rising strongly, partly as a result of capitalrepatriation from the West after 911. Jordan is a case inpoint: investments recorded during the first quarter of thisyear by the state Jordan Investment Board (JIB) totaledUSD1.357 b, 212% higher than the USD435 m made during thefirst three months of 2006, with most of the non-Jordanianinflow from the Gulf region. (Actual investments are evenhigher, but these numbers are for projects benefiting fromJIB exemptions.) To spur this process, JIB investmentpromotion offices will open in Kuwait, Qatar and Abu Dhabithis year. You have only to remember the early 90s, whensuch a move would have been unthinkable, to realize how farArab economies have moved together in the past decade and ahalf. Driven increasingly by the private sector, this trendshould continue no.

Riad al Khouri is Director of MEBA wll, Amman andSenior Associate of BNI Inc, New York
 

May 1, 2007 0 comments
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Lessons of a hostage crisis

by Gareth Smith May 1, 2007
written by Gareth Smith

The United States’ cold war with Iran has taken aseries of sinister turns in recent weeks. Hopes of regionalco-operation over Iraq’s future are just one victim ofWashington’s drive to apply the thumbscrews.

The good news was Tehran’s release of 15 British sailors andmarines, and the freeing in Baghdad of Jalal Sharafi, secondsecretary in Iran’s embassy, after his kidnap two months agoapparently by Iraqi special forces.

But the bad news was weightier. Washington has now allegedTehran has supplied lethal weaponry not just to insurgentsin Iraq but to the resurgent Taliban in Afghanistan.

In turn, there is increasing anger in Tehran over thedetention since January of five Iranians seized by US forcesfrom a consulate building in Arbil, northern Iraq. The case,which began shortly after George Bush announced a ‘new Iraqstrategy’ that basically consisted of countering Iran, isfor Tehran a disturbing sign of hostile US intentions.

Rumors of tit-for-tat seizures were encouraged by thedisappearance of a former FBI agent, Robert Levinson, inIran’s Kish island in early March, with mystery surroundinghis motives for the trip and what happened to him after hemet a black American who fled to Iran in 1980 afterassassinating a former diplomat under the Shah.

Meanwhile, Ali-Reza Asgari, the former deputy Iraniandefense minister, is still missing after disappearing inTurkey either in December or February. Political opinion inTehran divides between thinking he defected and thinking hewas kidnapped by the US or Israelis.

While Iranian officials continue to emphasize their opennessto “serious” talks over their nuclear program, Tehran haspressed ahead with uranium enrichment at its Natanz plant,despite two UN security council resolutions demanding itsuspend all atomic activities barring the preparation of theRussian-built reactor at Bushehr.

The most tangible pressure on Iran is Washington’s militarybuild-up in the region’s waters, especially with the arrivalin early May of a additional aircraft carrier, the Nimitzalong with its strike fleet.

Given the wider picture, the case of the 15 Britons wasalmost light relief. The world watched a theatrical 13 daysof televised “confessions,” tub-thumping from British primeminister Tony Blair, and president Mahmoud Ahmadinejadannouncing their release as a gesture of Islamicmagnanimity.

Iran, Britain and the US all deny any links between the fateof the 15 and the ‘Arbil five’ or Sharafi. But many saw morethan coincidence in the timing of Sharafi’s release.

Nonetheless, the freeing of the 15 Britons did follow quietcontact between Blair’s office and Ali Larijani, Iran’s topsecurity official, who apparently co-ordinated Iran’shandling of the crisis. It is unclear what Britain promised,if anything, although Ahmadinejad said a letter [fromforeign secretary Margaret Beckett] has said there would be“no repetition” of the incident. Iran gave no indicationBritain has accepted its demand for an apology andAhmadinejad noted that “the British government was not evenbrave enough to tell their people the truth.”

The release also came only after London toned down itsrhetoric. Tehran-based diplomats, led by ambassador GeoffreyAdams, had argued from the beginning that a “softly, softly”approach was more likely to lead to an early release.

And despite all the speculation outside Iran about conflictswithin the political elite over the crisis, there was aremarkable level of agreement. Indeed, the crisis over theBritish sailors and marines encouraged a closing of ranksafter heated arguments in recent months over the economicmanagement of Mr Ahmadinejad and aspects of nuclear policy.

Both conservative and reformist newspapers, which act partlyas mouthpieces of political currents in the absence ofeffective parties, were united in their support for Iran’sposition in the stand-off over the detained Britons.

Etemad-e Melli, a reformist paper critical of Ahmadinejad,accused Britain of pushing a “crisis scenario” to preparewider confrontation with Iran and relieve the pressure on MrBlair over the situation in Iraq. Officials close to AkbarHashemi Rafsanjani, former president and still influentialconservative pragmatist, said they feared the crisis was apretext for a US and UK military attack.

However confusing the details, the direction is clear. TheUS administration believes that increasing pressure withthrough sanctions and a military build-up will lead to splitin Iran’s political elite and force the leadership toreverse nuclear policy and abandon Iran’s relationship withIraqi Shia groups, Hizbollah and Palestinian groups.

It is a dangerous strategy based on assumptions thatunderestimate Iranian nationalism and the commitment of itspolitical class. Iranian military commanders who as youngmen fought in the trenches of the 1980-88 war with Saddam’sIraq will not have been cowered by British forces makingtelevised confessions after a few days’ captivity and laterselling their spiced-up stories to the highest bidder.

But, at bottom, the Bush administration believes the 1979Revolution as boil that can still be lanced. And if onlyIran can be changed, then the wider region will belatedlyenter the new American century.

Gareth Smyth is The Financial Times Tehran correspondent

 

May 1, 2007 0 comments
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Dubai and Halliburton hardly an ideal match, business is business

by Thomas Schellen May 1, 2007
written by Thomas Schellen

When US oil services behemoth Halliburton said this springit was moving its corporate headquarters to Dubai, exudationof praises ensued at full throttle. Maestro developerMohammed Alabbar of Emaar grandeur for example recentlycited the move as proof that a global city is underconstruction in Dubai with no real estate bubble about toburst.

Local and regional commentators from academia and media usedthe occasion to hail Dubai’s new international appeal andits welcoming attitude to foreign businesses, especiallywhen compared with the, at best, lukewarm US reception ofUAE-based companies to American shores. Even the soberFinancial Times called it the emirate’s biggest marketingcoup yet, even if it did allude to Halliburton’s reputationfor untoward corporate behavior.

As a romantic fling, the affair between the US corporateanimal and the overachieving emirate would be worth chasingby gossip columnists and paparazzi—were it not for onemissing element: emotion. It is more a marriage ofconvenience and a dubious one at that. It is a questionableunion and one that will not advance the corporate culturefor which Dubai wants to be known.

Halliburton knows Dubai because it has maintained an officethere since 1991. Having a single executive holding thepositions of chairman, president, and CEO, Halliburton alsohas at least one corporate culture aspect in common with agood number of companies in the GCC. But when thetri-functional David Lesar in March announced his migrationfrom steamy, hot Houston to steamier, hotter Dubai, he spokeentirely the lingo of more business growth, better customerrelations in the “Eastern Hemisphere”, and bringinginnovative “rotary steerable tools” to the company’scustomers in the oil and gas business.

There was not a single hint from Mr. Lesar of any emotionalattachment to the city of Dubai of the sort that top MiddleEastern corporate heads often freely profess, and definitelyno signal that Halliburton wants to be a model for goodgovernance, aspiring to widen the ranks of multinational andlocal companies questing to make Dubai a regional center ofsocially responsible corporations.

In fact if the truth be told, American perception actuallypointed in the opposite direction. Upon hearing the news, USpoliticians and watchdog organizations flooded the publicforums with allegations that Halliburton might try to cutits tax burden through the relocation, shift jobs abroad,avoid scrutiny of its supposedly Un-American activities inIran, or even escape from scathing inquiries into its pastsins of corruption and allegations that is was ripping offthe US army in Iraq via its subsidiary, KBR.

The company immediately acted to deny those accusations,emphasizing that it would remain registered in Delaware, payits taxes, and hire more employees in the US. It alsocompleted its separation from KBR last month and announcedthat it will end its involvement in Iran, which Halliburtonhad managed through a subsidiary registered in the CaymanIslands and working from, yes, Dubai.

But distrust of Halliburton looms large in the US, whereself-appointed watchdog groups included the firm in lists ofthe ten worst corporate criminals of the 1990s and as one ofthe ten worst companies in 2004 and 2005. ConfirmedHalliburton haters also pointed out that Dubai has noextradition treaty with the US.

Part of the over-enthusiasm in cheering Halliburton’s officemove may be rooted in the fact that Dubai is a regionalbigwig but by no means a global contender yet. This showsfrom its position on many of the global, from the WorldBank’s Doing Business ratings (77th) to the World EconomicForum’s Competitiveness Index, where it ranked 29th amongthe 40 most developed economies. Even though it was theindex’s top Arab country, it was still near the top of thebottom third for competitiveness in the high-income peergroup. It also doesn’t help Dubai’s cause to be rated—fairlyor unfairly—as 74th and only just “moderately free”in theHeritage Foundation’s ranking of 153 countries for theireconomic freedom.

Dubai has taken many good steps and it is at a point whereit needs to implement some corrections rather than gettingexcited about another corporate addition to its overcrowdedspace. There are already more than enough companies whoopened shop in Dubai and its various free zones with motivesthat have little to do with a vision of building acosmopolitan center for business and leisure and more to dowith being somewhere that a foreign company can avoidquestions or chase money. Dubai should refocus on the bestpractices and honest aims it set out to pursue not so long ago.

Thomas Schellen is business editor for Zawya Dow Jones in Beirut

May 1, 2007 0 comments
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Chapter 7 and the tribunal

by Nicholas Blanford May 1, 2007
written by Nicholas Blanford

Despite the hesitation of the United Nations secretariat andthe warnings of the Lebanese opposition, the adoption of theInternational Tribunal under a Chapter 7 mandate appearsalmost certain.

The government and its supporters have stepped up efforts tohave the tribunal adopted under Chapter 7, believing thatonce it becomes a fait accompli it will break the politicaldeadlock with the opposition.

There is much uncertainty over the powers and legalparameters of the tribunal which has only helped exacerbatethe tensions surrounding its formation. Hizbullah says it isworried that the US—the main external driving force behindthe tribunal—will use it as a political weapon to settle oldscores, such as reopening “files” dating back to the suicidebombings and kidnappings of the 1980s. Those fears are notwholly without foundation. One senior Christian politiciantold me that was exactly what he hoped would happen once thetribunal is formed so as to undermine Hizbullah’s oppositionrole. Former Prime Minister Omar Karami has suggested thatthe tribunal’s powers be expanded to include the murder ofhis brother, Rashid. If Rashid Karami’s death is included,then there is no end to the number of assassinations,massacres and killings that could end up before thetribunal.

UN officials, however, have said that the tribunal willlimit its work to the series of murders, attempted murdersand bombings that began in October 2004.

International tribunals are a relatively recent phenomenonin international law, a result of greater cooperation amongglobal powers after the polarization of the Cold War came toan end. The first since the Nuremburg and Tokyo tribunals in1945 and 1946 was the tribunal for the former Yugoslavia in1993. Since then numerous ad hoc tribunals have been formedto deal with international war crimes such as those forSierra Leone, Cambodia and Rwanda among others. Critics ofthese tribunals claim they are politically motivated and aform of victor’s justice. Certainly, there can be littledoubt that Lebanon’s tribunal owes its imminent existence tothe exigencies of United States policy toward Syria ratherthan an impartial attempt to discover and prosecute thekillers of Rafik Hariri and his companions.

Much of the ambiguity surrounding the Lebanese version isthat it is a hybrid of several other international tribunalsrather than a direct copy and will be treading new legalground. For example, the tribunals for the former Yugoslaviaand Rwanda were adopted under Chapter 7 from the beginning.There were no local judges sitting on the tribunal andinternational law was adopted for both. The tribunal forSierra Leone included a token local presence and was heldin-country although international law was adopted again. Themixed Lebanese International Tribunal will have equalparticipation of local and foreign judges and will sit underLebanese law (with the exception of the death penalty).Unlike its Sierra Leonean counterpart, however, the Lebanesetribunal will not sit in Lebanon.

Furthermore, the original intention was to establish thetribunal under a bilateral treaty between Beirut and theUnited Nations. The recourse to Chapter 7 only arose whenthe passage of the treaty through parliament became blocked.

Nicolas Michel, the UN’s top legal adviser, has suggestedthat even if the Security Council approves the tribunalunder Chapter 7, it will not be put together until the UNcommission concludes its investigation. That statement wasintended to reassure critics of a Chapter 7 tribunal, buttheoretically the tribunal can begin operating as soon as itis approved by the Security Council, a location chosen andthe judges selected. For example, the tribunal could begintrials of the four generals presently languishing withoutcharge in Roumieh prison. They were detained nearly twoyears ago on the advice of Detlev Mehlis, the then head ofthe UN investigation commission. While, their detention waslegally permissible, their indefinite incarceration withoutcharge nor arraignment in a court of law is not.

In normal circumstances, there should be no need for thetribunal to have recourse to the raft of coercive measuresat the disposal of the UN Security Council under Chapter 7.Indictments issued by the tribunal are legally binding underinternational law irrespective of Chapter 7.

However, Chapter 7 could be applied if any party refused tohand over individuals indicted by the tribunal. AlthoughArticle 42 of Chapter 7 permits the use of military force toimplement Security Council decisions, the UN could opt forthe softer measures contained in Article 41 such as economicsanctions and the severance of diplomatic relations. Even ifthe Security Council was unable to forge a consensus onusing military force, the indicted persons would be unableto travel internationally and could face a freeze of theirinternational assets. However, the down side is that thewhole legal process could grind to a halt, the prosecutionspending, until those indicted are turned over or handthemselves in.

Such is the case with Ratko Mladic and Radovan Karadzic whohave been under indictment by the tribunal for the formerYugoslavia since 1995. The Serbian authorities agreed toturn them over, but both men remain at large, apparently inSerbia, and their prosecution consequently pending.

Nicholas Blanford is a Beirut-based reporter and author of Killing Mr Lebanon: The Assassination of Rafik Hariri andits Impact on the Middle East.

 

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Region needs real journalism

by Fadi Chahine May 1, 2007
written by Fadi Chahine

Local and foreign observers across the MENA region are inconsensus that the region lacks a key ingredient to anythriving democracy: a pool of professional journalists. Thishas created a drought of oversight and accountability.

While the problem is known, there is hardly any evidenceit is being addressed. Even the institutions that one wouldturn to first, the region’s universities, have failed intheir task. The lack of journalistic standards in the regionhas allowed those universities and colleges that do offer adegree in journalism—which are few and far in between—tograduate students with little practical know how and writingskills based on the standards used in the developed world.

Whether the education was Arabic, English or French, theacademic training afforded to journalism students does notcome close to being equal to the education and trainingavailable in more developed countries, which means that mostof these colleges graduate wannabe journalists.

Governments of the region are keen to maintain theirofficial news agencies, and some of these agencies havestaff sizes rivaling those of international wire services.However, the state influence over the media has been drivenby a desire to control and is a huge obstacle to thedevelopment of journalism as democratic regulative or fourthestate. The dominant culture of unquestioning submission tothe state and any kind of institutional authorityexacerbates the problem. From Lebanon to Sudan, politicalaccountability and scrutiny is nil in the region.

In most countries, governments have either neglected ordeliberately avoided creating training programs to improvethe ability of Middle Eastern and North African journaliststo report effectively about politics, business and economicsand increase understanding among Arab populations of theseissues. Press associations and journalist unions also havenot delivered impulses that would stimulate the creation ofa press corps deserving of the name.

Finally, by not doing enough to nurture young journalistsand reward them for thorough inquisitive reporting anddisclosure of political, social, or corporate wrongdoings,media owners and publishing companies share part of theblame for the absence of a professional press corps. Thus,today very few journalists take a serious stand on issuesrelated to the welfare of the public and maybe one in athousand journalists makes an attempt to hold governments orgovernment officials accountable for their misdoings.

A good number of the region’s journalists find it hard toseparate being responsive from caving, being accountablefrom being a tool, being sensitive from being weak.Journalists are meant to be, by definition, eager forinvestigations of government misconduct. That is supposed tobe their purpose, embedded in their DNA.

A recent study conducted by the Amman-based Higher MediaCouncil (HMC) on the training requirements for members ofthe media showed that journalists lacked the most basicskills of the craft, including proper training for writingand editing skills, use of languages, computers and theInternet.

The study revealed that 35% of media practitioners havenever been involved in any training courses, while only22.7% of those working in the sector have a degree injournalism. Most writers have less than 10 years ofexperience.

In recent years, media institutions like Al Jazeera andinternational news organizations like Reuters, as well asNGOs such as the International Journalism Institute havemade efforts to offer workshops and training programs forpractitioners of journalism in the Middle East. Journalismprograms at some universities receive token support from theUN or have linked up with international programs. But goodas they may be, these efforts are not enough to create apool of journalists who are ready and primed to tackle thebig issues facing the region’s countries.

To start doing this, the Middle East needs a trainingenvironment where centers in all major cities provide thosewho want a career in journalism the understanding of therequired knowledge and skills. This training environmentwill only succeed if it is centered on building journalisticskills that are rooted in practice and suited to addressingthe challenges which working writers face daily in theirwork. It must also empower journalists in building a newjournalistic culture that serves the larger needs of theMENA region.

It is now more than ever that we need new writers, editorsand readers to step forward and speak up. Journalism in theMENA region is calling and good journalists to representpeople who do not have a voice in society. The press mustgive voice not only to those in power, but also to those whoare not being heard.

We need more active inclusion of journalists in continuousmonitoring of governments work, further understanding offree access to information and conflict of interest conceptsand better integration of legal frameworks in journalisticpractice. If we are able to achieve this in the MENA regionthen there is a chance that the media can be triumphant.

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

 

May 1, 2007 0 comments
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The Blonde on the Billboard

by Rana Hanna May 1, 2007
written by Rana Hanna

You must have seen her. She’s blonde, fair andclear-skinned, blue-eyed with a perfect pout and an evenmore perfect nose. She’s staring at you frompractically every billboard in Beirut and urging you to takeout a “Plastic Surgery Loan” from First National Bank, sothat you too can look perfect.

Going under the knife to give you that edge—personally orprofessionally—is no longer a taboo. Beauty is no longergenetic luck. It has become attainable and affordable, andFirst National Bank have just made it even easier to getthere.

In fact they’ve made it very easy. As long as you earnover $600 a month and can afford to pay it back within 24months (with 6% interest), the patient-to-be can borrow upto $5,000 within 48 hours, with no down-payment required.You can have any procedure you want, from laser eye surgeryto orthodontics via laser hair removal and botox. Hate thatgut? Get rid of it!

The ad itself, part of a bigger brand awareness campaign, issomething of a marketing coup and has the whole towntalking. Among the hundred or so daily calls that the bankhas been receiving since the launch of the campaign, areinquiries from CNN and the BBC, who, like everyone else,noticed the blonde on the billboard and decided it was aquirky story.

While many who believe that we should not tamper with whatHe gave us, or feel that as a society we are heading toShallowsville, it would not be fair to accuse First Nationalof exploiting vanity—buying a car is also a style statement.It is merely responding to a demand that reflects the needsof a population that places high value on looking its best.Each year the Lebanese spend a fortune on cosmeticprocedures and First National expects to approve hundreds ofloans. And it’s not only the women. Over a third of thecalls that the bank has received have been from men.

According to FNB, the product is not new and had been indevelopment since 2004 and was scheduled to launch on 28July 2006. The project was delayed because of the summer warbut after the guns fell silent, the bank noticed that demandhad not diminished; quite the contrary, it increased.

It transpired that the war had proved the perfect window fora quick surgical procedure. Social events were kept to aminimum—a combination of decorum and danger had seen tothat—and so there was ample time to recover from a minorprocedure. Others had more pressing needs, especially thoseinjured during the war—burns and facial disfigurement andthe like—and who could not pay for a procedure without aloan and FNB have gone to some lengths to explain this.

Still there is the billboard picture of the perfect blondestaring at me telling me that I can now get the makeover ofmy dreams and live the life I’ve always wanted.

It’s nice to be a looker but is it a factor in success? Wellapparently yes. Many studies have shown a positivecorrelation between beauty and professional success, bettermarketability, better positions in the workplace, highersalaries and even stronger political prospects (baldleaders, for example, are perceived as lacking in that finaldollop of charisma).

In Lebanon, plastic surgery is available on every streetcorner, it is relatively affordable and the doctors areexcellent. And with the country so depressed at the moment,it’s probably a good idea to give yourself a littlesomething to feel good about. The Lebanese have proved, onceagain, to be above all hardship. The trophy wife mantra usedto be “when the going gets tough, the tough go shopping.” Inour case, when the going gets tough, we sign up forRhinoplasty.

RANA HANNA admits to having had plastic surgery

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Ruffing it, Bahrain style

by Paul Cochrane May 1, 2007
written by Paul Cochrane

A recent trip to Bahrain, what should have been a fairlyrun-of-the-mill interview with a CEO to discuss the launchof the Middle East’s first sports car plant turned intosomething rather different from the usual chat over coffeein a hotel lobby.

I was informed just an hour before the interview by theassistant to Alois Ruf, the owner of Germany’s highperformance sports car company Ruf, that I was to meet himout at the Bahrain International Circuit (BIC), home of theFormula 1 racetrack and the location for Ruf’s $20 millionfactory.

When I arrived at the VIP section of the Formula 1 track,my eardrums were subjected to the magnificent roar of adozen Lamborghinis straining at the leash. I hadunexpectedly gate-crashed the Speed Trip, one of the BIC’s200 annual events, at which owners of super cars and Ducatimotorbikes use their machines for what they were meant for:pushing the pedal to the metal and not worrying about overlyzealous traffic cops.

Lined up in the pit stop off the racetrack were the Ruf RKCoupe and Ruf Rt 12, which both looked pretty much likeunmarked Porsche 911s. This was not far from the truth, withthe chassis modeled on the Porsche, but everything else,from the electrics to the engine, completely refitted andseriously supercharged.

Talking with the head engineer while waiting for Mr Ruf toshow up I asked if either of the Ruf cars could take on oneof the Lamborghinis going hell for leather around the track.“The silver one no, the blue (RK Coupe), sure.” With the RufRK Coupe topping 220 mph and the Ruf Rt 12 reaching a mere189 mph, its no wonder Ruf is highly sought after cars bycar enthusiasts in the know.

In business since 1939, Ruf is not well known outside of caraficionado circles but those who can afford them buy them.

Ruf has had a 20-year relationship with the Bahraini royalfamily, inviting sheikhs over for test drives and servicingmodels at the Pfaffenhausen base in Germany. Indeed, LotharDrescher Ruf-Bahrain’s General Manager used to supervise theservicing of the royal family’s sizeable car pool.

With the Gulf awash in petrodollars, Bahrain close to SaudiArabia, a tax-free haven and with the region’s only F1track, Bahrain was a natural choice for Ruf’s first factoryoutside of Germany.

With plans to manufacture 20 cars a year by 2008, Ruf willsoon be pumping out 100 “boutique super cars” a year by 2012for export worldwide.

Ten days later, I was back in Bahrain for the opening of thefactory and in the short time I had been away the Ruffactory had been transformed, lights flooding out of thewindows into the desert, and pools of water shimmeringaround the entrance.

Following the arrival of Crown Prince Sheikh Salman binHamad Al Khalifa and his entourage of assorted sheikhsdecked out in black abayas, a surprise was in store for the200 guests.

Heralded by the revving of a powerful engine coming frombehind the seated audience a sleek, silver matt sports cardrove up to the stage and out swung Alois Ruf from hiscompany’s latest creation—the $450,000, 375 km/h Ruf CTR3.

If rubbing shoulders with royalty and not having a sizeableenough bank account to afford a car like the CTR3 didn’tinform me of my lowly financial position, nothing can putyou further in your place than not attending the Formula 1,and certainly if one is not watching the grand prix from theBIC’s VIP viewing tower.

“Are you coming to the Formula 1?” asked a rather lovelyBrazilian lady. “It’s so much fun up in the VIP box,mingling with the sheikhs and bumping into walls and PrinceAndrew saying, ‘Ah, here are the Brazilians!’ No? Shame.”

Shame indeed, so I headed for the parking lot chomping on afree cigar to locate my rather staid mode of transport totake me back to Manama.

PAUL COCHRANE is a regional business writer based in Beirut 

 

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Retailors join forces

by Executive Staff April 12, 2007
written by Executive Staff

Major Lebanese businesses, such as Aïshti, Bank Audi, ABC, Patchi, MEA, BankMed, InterContinental Phoenicia, Virgin Megastore, Global Refund and CityMall have joined forces in a new campaign dubbed “Bhebak Bil Rabih,” (I Love You in Spring.) Promoting Lebanon as a tourist and shopping destination in a conference held on March 1, business owners highlighted the activities planned, including fashion shows, festivals, prizes, car giveaways and more. Participants took, however, a stern stance against both the Lebanese government and politicians, who were taxed with irresponsibility for their failure to solve the ongoing political deadlock paralyzing the BCD (Beirut central district) since the beginning of December. 

“In this year alone, we have witnessed a 70% drop in activity. We’re currently trying to compile loss estimates, while our lawyers study different options, including a possible lawsuit,” said Tony Salameh, chairman of the Aïshti department stores. “A committee mainly responsible for looking into rental, electricity and tax expenses with a possible waiver of companies’ payments will be also formed.”

Michel Ferneyni, owner of La Posta, said Lebanon’s political situation presented an unfathomable paradox that started first with the “ongoing dialogue” resulting in the closure of the BCD, followed by “pacific demonstrations,” which crippled the country’s economy. According to participants, to date, over 80 companies have closed down, most of them permanently. Rumors also circulated about the Habtoor Hotel being put up for sale.

Paul Ariss, president of the Syndicate of Restaurant Owners, who met recently with leaders from all political factions, announced that the prime minister’s office had formed a committee, including representatives from the economy, tourism and finance ministries as well as leaders of industry associations to look into possible solutions. In addition, he asked the government to subsidize no interest, medium and long-term loans for existing businesses.

“The greatest damage done is not merely to Lebanon’s economy, but to its image as well, as the people are increasingly losing faith in their country,” concluded Ferneyni. “Many employees, even those with a secure job in Lebanon, are opting for a career abroad, and will never be coming back.” 

April 12, 2007 0 comments
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Lebanon

Radio Orient goes global

by Executive Staff April 12, 2007
written by Executive Staff

Radio Orient, aka Izaat Al Shark, has become the first Arabic language radio station broadcasting worldwide. In its January issue, Forbes included the station, which is owned by Future TV, as number 17 on its list of the top 40 brands in Middle East. This month, in order to take advantage of its new global reach and maximize its coverage, the station is revamping its grid of programs, bolstered by three major shows as well as a prime entertainment program called “With a Stars.”

Available all over the MENA region through its internet and satellite networks, the radio station is using local channels to retransmit its programs. “In some countries they’re even retransmitted in full,” said Elie Rahme, manager of Radio Orient in Lebanon. The program grid has been modified to take advantage of its new global coverage, including the morning show (airing during peak drive time in Australia), the afternoon show (broadcast in the morning in the US), and the night show. The program “With a Star” features a different Arab star every week, with giveaway prizes that have participants calling in from the all over the world.

Although Rahme did not reveal international market penetration figures, he stated that the international audience participation to the station’s various programs is substantial. “The fact that people call from the United States, Iraq, Australia or Africa provides us with a clear idea of the station’s global reach,” he explained. 

Radio Orient is supported by a staff of 17 employees based in Lebanon, with the sound operators and editors shared with Future TV. The joint features of the TV and radio stations explain the unified overall marketing approach, however, it should be pointed out that they do not share advertisement booking deals. “People advertising with Future TV will not necessarily use our radio network, because each medium achieves a different type of exposure,” explained Fayez Bizri, Future TV’s financial manager.

According to Bizri, Radio Orient complements Future TV’s network by reaching beyond the traditional televised medium. “Whether they’re at work or driving in their cars, most people have access to a radio. This exposure will likely increase in countries where driving distances are longer,” says Bizri.

When asked about the cost of the worldwide reach of Radio Orient, Bizri did not disclose any figures, saying, “It is difficult to tabulate leasing, licensing and marketing expenses involved in the process.” He did state, however, that the most advanced technology had been used to place the radio station on the satellite system.

Further bolstering Radio Orient’s appeal is the growth of Future TV’s network. “The TV station expansion plan includes the addition of a 24-hour news channel – scheduled to air in April or June – which will definitely benefit Radio Orient by providing up-to-the-minute reporting,” said Rahme.

During April, Future TV will witness another major overhaul besides its new expansion plan and program grid, when current Chairman Nadim Munla will be replaced by BankMed executive, Samir Hammoud.

April 12, 2007 0 comments
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Financial Indicators

Global economic data

by Executive Staff April 12, 2007
written by Executive Staff

Obesity

Percentage of population aged 15 and above with a MBI greater than 30, 2003 or latest available year

Source: OECD

More than 50% of adults are now defined as either being overweight or obese in no less than 10 OECD countries: the United States, Mexico, the United Kingdom, Australia, the Slovak Republic, Greece, New Zealand, Hungary, Luxembourg and the Czech Republic. By comparison, overweight and obesity rates are much lower in the OECD’s two Asian countries (Japan and Korea) and in some European countries (France and Switzerland), although overweight and obesity rates are also increasing in these countries. Focusing only on obesity, the prevalence of obesity among adults varies from a low of 3% in Japan and Korea to a high of 31% in the United States.

Based on consistent measures of obesity over time, the rate of obesity has more than doubled over the past twenty years in the United States, while it has almost tripled in Australia and more than tripled in the United Kingdom. The obesity rate in many Western European countries has also increased substantially over the past decade.

Gender differences are striking. Over all countries, more men are overweight than women, but in just over half of OECD countries, more women are obese than men. Taking overweight and obesity together, the rate for women exceeds that for men in only two countries—Mexico and Turkey.

Forest

Forest and other wooded land

As a percentage of land area, latest available year

Source: OECD

The percentage of land covered by forest and other wooded land varies widely from country to country: from shares of over 60% in Finland, Sweden, Japan and Korea to 10% or less in the United Kingdom, the Netherlands, Ireland and Iceland.

Long time series are required to capture changes in forest areas. Increases are generally due to active government policies of land afforestation while decreases may be caused by fires, clear-felling of forests without replanting, and conversion of forest land to residential, agricultural and other uses.

The area of forests and wooded land has remained stable or has slightly increased at national level in most OECD countries and has remained stable in the OECD as a whole. However, forest areas have been decreasing at the world level due in part to continued deforestation in tropical countries.

Tsunami aid

DAC member country responses to the tsunami disaster

Millions of US dollars

Source: OECD

The unprecedented humanitarian response to the Indian Ocean tsunami prompted governments, international organizations, private individuals, charities and companies to pledge $13.6 billion to the affected countries. Of that, $5.3 billion was from OECD member governments, and a further amount from private citizens in OECD countries.

Donor governments and the European Commission have committed $1.7 billion to emergency aid and $1.9 billion to longer-term reconstruction projects, to be spent by 2009. More than 90% of the emergency aid—nearly $1.6 billion—was spent in the nine months immediately following the disaster. For reconstruction, $473 million has been spent, leaving $1.4 billion committed and in the pipeline for spending over the coming years.

Together, Indonesia and Sri Lanka have received more than 60% of the funds committed so far.

Government debt

General government gross financial liabilities

As a percentage of GDP

Source: OECD

From 1990 to 1996, government gross financial liabilities were rising in most countries. Since then, government debt has been decreasing as a percentage of GDP in many of the 27 countries in the table. There are, however, exceptions: government debt ratios continued to increase particularly fast in Japan and Korea and significantly in France, Germany and Greece. Korea’s government debt ratio rose by over 7% per year from 1990 to 2003, but this is measured from a very low initial rate and by 2003, Korea’s government debt ratio was still among the lowest in the OECD.

In 2004, government debt ratios exceeded 100% in Greece, Italy and Japan and was close to 100% in Belgium. Most countries were in a band between 40% and 70%, with three countries reporting debt ratios of under 20%—Luxembourg, Korea and Australia.

April 12, 2007 0 comments
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Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

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