Executive Magazine

The lasting change from Lebanon’s mass protests

by Executive Editors November 7, 2019

written by Executive Editors

A proposed levy on WhatsApp might have been the trigger for the October protests, but its backdrop was years of mismanagement and corruption that have brought the Lebanese economy to the brink.
The outburst of popular protests occurred throughout the country, unifying Lebanese from across socioeconomic divides. Unseen in previous protests was the breakdown of the barrier of fear, from Tripoli to Sour, protesters chanted out against their own political leaders with kullon ya’ni kullon (all of them means all of them) the rallying cry of the protests.
The October protests saw the wide participation and leadership of women and youth.
No matter the economic or political outcomes of the protests, a cultural and social shift has been unleashed within Lebanon.

Nour Square in Tripoli overflowing with protesters chanting in unison for the fall of the system and dancing to music spun by a live DJ. Men and women across the country have broken free of sectarian shackles, calling out the political class en masse. Street vendors selling kaak and corn on the cob in the streets of Downtown Beirut previously inaccessible to them in favor of high-end cafes and shops. Crowds of people dancing, chanting “hela hela,” “kullon yani kullon,” and the famous Arab Spring slogan of “ash-sha’ab yurid iskat an-nizam,” among others, or participating in public debates in “the Egg” and other reclaimed public spaces in Downtown Beirut. Countless Lebanese of all ages and backgrounds, and in regions all across the country fill up city squares and go on live television to voice their frustration and anger with an economic reality that was brought about by deep-rooted corruption and the entrenchment of the sectarian political order. Protesters across the country began setting up roadblocks that were at times removed by the authorities only to be reformed, sometimes multiple times per day. The most striking example of which was the roadblock on the Fouad Chehab bridge, known as the ring, which connects east and west Beirut, where protesters got creative, bringing sofas and fridges to block off the highway and on the 11th day of the protests posting the area on AirBnB as “Beit el-sha’ab,” which translates to “the people’s home.”

Those participating in mass protests have been united in their calls for a technocratic government and new elections under a new law.

These are just some moments of the October uprising in Lebanon, at the time of writing in its 13th day, which is being described as the tipping point and a game changer for the country. Those protesting—at one point media estimates put numbers at a quarter of the Lebanese population—succeeded in shutting down the country through blocking roads and organizing a general strike. Banks and schools have remained closed since the second day of the protests, despite some attempts to open the latter. A leaderless movement—an initial strength but as time goes on increasingly perceived as a weakness—those participating in mass protests have been united in their calls for the resignation of the government, a technocratic government put in its place to address immediate economic concerns, the calling of new elections, a more proportional electoral law, and the overthrowing of the post-war sectarian system. Their first victory came just three days into the protests, with the resignation of the four Lebanese Forces ministers from the government. Ten days later, on the 13th day of protests, one marred by violence against protesters from Amal and Hezbollah supporters, Prime Minister Saad Hariri announced his resignation, and by extension, the resignation of his unity government. In the streets, the crowds chased away by the earlier violence returned and celebrated their victory, however, to these protesters the prime minister’s resignation was just one important step on a long path toward much needed reforms and fundamental change in Lebanon.

When enough became enough

Initial protests were sparked by local media reports on a series of proposed taxes that cabinet discussed in line with the 2020 budget. When it emerged that cabinet had agreed to impose a tax on Voice over Internet Protocol services, which would have resulted in a charge on the use of WhatsApp calls up to $6 per month on top of by regional standards high phone bills (two to three times those of regional peers), this was seen as the straw that broke the camel’s back. It was not, however, the underlying cause of this October uprising, as was initially naively reported in both local and international media.

Our own coverage of the Lebanon economy over the past 20 years has shown time and again what needed to be addressed to prevent a looming economic crisis (see Executive’s 2019 Economic Roadmap). As we entered into this October, Lebanese had faced multiple gas station strikes and strikes from bakeries over difficulties that gas distributors and wheat importers had in securing dollars at the official rate to pay for imports. Fear over the potential dollar shortage was stoked by residents facing issues withdrawing dollars from ATMs and banks, trouble depositing Lebanese lira in dollar accounts, and increasingly higher unofficial exchange rates.

In the days leading up to the protest, Lebanese literally watched in horror as some of the worst wildfires in over a decade spread across the country aided by a heatwave and high winds, with the Chouf and Metn areas particularly hard hit. Over two days, Lebanon lost at least 1,200 hectares of forest according to George Mitri, director of the land and natural resources program at the University of Balamand, who was cited in several media reports. Added to the 1,300 hectares already lost this year, the annual average due to wildfires, Lebanon doubled its annual losses in the span of 48 hours. And while the Lebanese banded together to provide aid to those displaced, and food and water for the unpaid civil defense teams who fought the fires, it emerged that the country was in possession of three firefighting helicopters—donated by citizens who had raised millions of dollars for their purchase back in 2009—that the government had failed to maintain. To add insult to injury, Free Patriotic Movement MP Mario Aoun came on a local TV station to question why these fires were targeting Christian areas—a statement as categorically untrue as it was moronic. It is against this backdrop that when it was announced that the cabinet had decided on regressive tax measures, including the tax on WhatsApp, hundreds of people took to the streets. Across the country, the common call was for the downfall of the corrupt and inept regime. The Lebanese revolt had begun.

The times they are a changin’

The first line in the Tunisian poet Abu al-Qasm al-Shabbi’s “The Will of Life” translates into, “If one day a people desires to live, then fate will answer their call.” With the October uprising, it seems that the Lebanese people have loudly and clearly chosen life. Regardless of whether fate will answer their call or not, their desire to live has manifested itself in ways that cannot be taken away from them.

The most powerful outcome of the October protests is the breakdown of the barrier of fear across Lebanon that had prevented the people of Lebanon’s various sects from openly questioning leaders. For the first time in recent memory, Lebanese from Tripoli to Sour—through Nabatieh, Saida, Batroun, Beirut, and others—were publicly criticizing and cursing those in the government from Foreign Minister Gebran Bassil to Speaker Nabih Berri to Prime Minister Saad Hariri, and, following his first speech on the third day of protests where he backed the current government, even Hezbollah Secretary General Hassan Nasrallah.

Across the country, the common call was for the downfall of the corrupt and inept regime. The Lebanese revolt had begun.

While protesters in Nabatieh and Sour were met with aggression by supporters of Amal and Hezbollah, the majority still persisted in their critiques and demands that the government resign. The economic reality of the majority of Lebanese—the bottom 50 percent receive just 10 percent of the national income—has led to an unprecedented breakdown in the current sectarian order. Across the country, and particularly outside the capital, Lebanese citizens decided that is was no longer acceptable for them to struggle to find work to support themselves and their families, while the politician they had blindly supported grew richer at their expense. Lebanese realized their roles in keeping these politicians in their chairs and entrusting them with the job of securing their basic rights as citizens. If the government does not deliver, then they, the people, have the power to hold them accountable—and so they did.

The resignation of Hariri’s government affirmed Lebanese people’s new-found faith in their power to effect change in their country, and there is no turning back now. Even if the protesters do end up leaving the streets and opening roads, they now know they can go back down again and demand change when needed. The anger and the power that has been released cannot be easily bottled up again.

Another rarely seen before outcome of the protests is the spontaneous unity among Lebanese across sects and social classes. The fact that an estimated 1 million people gathered across Lebanon on October 20, without any call from a political party or sect leader to do so, is truly heartwarming. Reciting both the Fatihah and the Rosary in Jal el-Dib is unprecedented. Public space has been reclaimed as a long soulless Downtown Beirut becomes the balad again, alive with street vendors, town hall-style debates—a place for all people to gather. In Martyr’s Square and Riad el-Solh, university students and intellectuals can be found alongside moped riders, coordinating on roadblocks.

The resignation of Hariri’s government affirmed Lebanese people’s new-found faith in their power to effect change.

And while accusations that the protests have, over time, become more middle class are valid, there have still been important steps toward breaking down class barriers and shifting to more horizontal alliances. That sense of caution and fear that many Lebanese have of “the other”—whether that other is from a different sect or a different social background—has also been broken as the realization that we are all suffering from the same economic strains under the corrupt system becomes clearer. In Tripoli, long seen as a bastion of Sunni extremism, they chanted in solidarity with the protesters of Sour.

Breakdown of a protest

While Lebanese of all ages are participating in the protests, they are largely sustained by the youth who did not live through the civil war and are thus less cautious and more optimistic than their parents’ generation that change can be achieved without a descent into violence.

The role of women in October’s uprising also needs to be highlighted. One of the most iconic images, taken on the first day of the protests, was of protester Malak Alaywe kicking one of Education Minister Akram Chehayeb’s armed bodyguards in the groin. After the first two days, when protesters were met with tear gas and rubber bullets by the riot police in response to mild provocations from the crowd, day three saw women standing on the frontlines, creating a barrier between security forces and the male protesters to prevent the escalation of violence. Tripoli’s Jana Jammal became another icon of the revolution when she spoke about being a university graduate unable to find a job without wasta and about her mother’s healthcare issues. Across social media, other examples emerged. In Riad el-Solh and the public gardens in its vicinity, women are leading debates on public spaces, anti-sectarianism, and the way forward after the
protests.

The protests have affirmed that women and youth, both of whom are traditionally marginalized in Lebanon’s patriarchal political system, are capable leaders.

When they try to fight back

Mahatma Gandhi said, “First they ignore you, then they laugh at you, then they fight you, then you win.” Lebanon’s revolt has passed through these three stages and has secured its first major victory with the resignation of Hariri. What was striking throughout the past 13 days was the protesters’ persistence and their insistence to persevere with their peaceful approach despite security forces forcing open roads and counter-revolutionary forces attacking them.

The political elite’s response to these protests—until Hariri’s resignation—was lacking. Hariri addressed the protesters on the second day, announcing a 72-hour deadline for the cabinet to agree on reforms. When these reforms were announced, they were met with general distrust from protesters. It took over a week for the president of the republic to address the crisis, doing so in a prerecorded and short statement that also failed to address demands. After an initial speech on day two, backing the government, Bassil—the subject of a lot of the protesters’ ire—had stayed silent until after the 13 days. Most notably, after this first speech failed to have any impact on the streets, Nasrallah spoke again on the ninth day of the protests, alleging that what began as a spontaneous revolt was now being influenced by foreign embassies and local political parties, calling on the protesters to disclose their funders and for his own supporters to leave the streets. Social media posts declaring themselves the funders of the protests began to appear, along with jokes of sandwiches supplied by different embassies.

In Sour and Nabatieh, protesters have been facing violence from the second day of the uprising. The protesters in Beirut were met with violence three times—the most recent of which was at the ring when thugs attacked protesters and journalists while chanting pro-Hezbollah and pro-Amal chants before the army was deployed to separate them. The same group headed to Downtown Beirut where in a matter of minutes they tore down the tents and infrastructure the protesters had built over days. Protesters did not take the bait. They persisted with their peaceful protesting, and once the security services had cleared the thugs out of Downtown began to rebuild their tents.

On roadblocks, protesters proved persistent and determined. When security forces would open one road, protesters would simply close it again. When rumors spread that security forces would reopen the streets at dawn, protesters slept on the streets to prevent that from happening, or abandoned their cars to block off highways. Road closures became a power struggle between the government and the people, one that the people seemed determined to win.

Corruption is so deeply entrenched in Lebanon that it is difficult to erode.

Corruption is so deeply entrenched in Lebanon—starting from the public sector employee who asks for a bribe to complete a simple procedure to elected MPs stealing the people’s money—that it is difficult to erode in a few months or even years. So while there may be short-term political gains from these protests, manifested in the formation of a technocrat government and early parliamentary elections, a complete system overhaul is required—and when or whether that happens is uncertain.

Some economic changes may be immediately apparent following the protests, but real economic reform will take years. What can be said with certainty is that October’s uprising has irreversibly changed Lebanese people’s relation to themselves. It has led them to fall in love with their country again, and to know that they have the power to fight for it. This has regional implications that could be the start of a real spring. And that is something beautiful.

November 7, 2019 0 comments

Lebanon’s uprising has potential ripple-on effects

by Executive Editors November 7, 2019

written by Executive Editors

As the aftermath of the Arab Spring saw the Levant descend into another iteration of political posturing and advantage seeking of what in earlier times was often derogatorily called Levantine behavior, Iraqi-Lebanese journalist Husain Abdul-Husain shared his dismay. In a story published five years ago, he drew as his conclusion from a decade of Iraqi, Lebanese, and Syrian experiences of seeking change from popular roots that “non-sectarian, liberal citizens are few, helpless and irrelevant.”

One of the experiences he explained as underlying his judgment was the juxtaposition of the March 14 and March 8 protests and subsequent political movements in Lebanon. Expressions of two sharply separate (but each partisan and partially goaded) popular wills, these mass demonstrations on Martyr’s Square and Riad el-Solh Square in response to the assassination of former Prime Minister Rafik Hariri deteriorated all too soon into the wrangling for political power and positions by and within their eponymous movements.

Unprecedented unity

On March 8, 2005, hundreds of thousands had followed calls of their leaders for a pro-Syrian demonstration. The March 14 anti-Syrian demonstration saw Martyr’s Square packed again with hundreds of thousands—crowd size estimates were unreliable for both demonstrations. Regardless, the crowd on the latter day was so dense that one of Executive’s editors was unable to walk a straight line from one end of the square to the other. It was the largest demonstration in Lebanon’s history.

Last month, Martyr’s Square was, by comparison, loosely packed—noting, however, that protests were nationwide. The difference between the calls for freedom, sovereignty, and independence on March 14 and the thawra (revolution) shouts of October 2019 could not have been larger. Contrary to what felt at least partly orchestrated and what was even affixed with some sort of marketing label by revolution-happy American diplomats as the Cedar Revolution, the Lebanese citizen’s protests in 2019 (and, according to reports, the protests in Iraq) delivered overwhelming evidence that the liberal, non-sectarian citizens in the Mashreq countries are no longer few, helpless, and irrelevant. Not anymore.

Far from making a defeatist impression, the young and older protesters of 2019 were uniting beyond political affiliations and bursting old mental shackles. Not just in the heart of Beirut—all over Lebanon. They were powerful, they were many, they were completely determined and defiant of intimidations and assaults. In Martyr’s Square, the ragtag assemblage of protests and revelry in late October radiated with an intensity that can only be described as revolutionary ecstasy—a web of powerful emotions, and an atmosphere supercharged with lifetimes of frustration and fear, of suppressed desires, and of dreams and hopes.

Even outside of the frenzy on Martyr’s Square, you could see it in the eyes of people who were walking back home from the protests—and even those attending a sober editorial meeting at our magazine—that these days of October 2019 were qualitatively and—in their nationwide dimensions—quantitatively incomparable to any Lebanese moment and national experience in the past 100 years.

The October protests had no primary leaders but rather relatively utopian demands for a fair society.

The narrative of this emanation of popular sentiment and will began to be formulated within the first three days of protests and will certainly evolve. As a continual wave of events without precedent in this country, however, the developments pose a tremendous challenge as to pinpointing their exact political, social, and economic drivers and demands, and, most difficult of all, their outcomes over time.

The difficulty and simultaneous need to talk about possible impacts of this new revolution is put into perspective when one thinks of the aspirations, expectations, and actual results of the Arab Spring in Tunisia, Egypt, and Libya at the beginning of this decade. Not only did the Arab Spring uprisings devour some of their children in the often-seen pattern by which rebel leaders turn into the next iteration or mirror image of the leaders they rebelled against, but the entire movement came to be lamented by many Arab scholars as an Arab Winter just a few years after the initial euphoria of 2011 and 2012.

It has to be mentioned here that the Lebanese October protests had no primary leaders but rather relatively utopian demands for a fair society and political system, a better economy, and an end to corruption.

Prospects for Lebanon

It, furthermore, should be self-explanatory, but still needs to be emphasized, that the Lebanese national case of a multi-fragmented, consociational country is beyond comparison. No other country would be similar in having a confessional political system that persists in contradiction to its constitution and that exists under economic conditions that defy all conventional understanding.

The list of the peculiarities of this economy only begins with a dollar-peg that has lasted for more than two decades, and a balance of trade that has been not just consistently negative, but immensely so. It stretches to a public debt that has not been lower than 120 percent of official GDP for longer than half of the population has been alive. Inversely, the list also includes achievements of Lebanon never having defaulted on its obligations despite a succession of economic, political, and security shocks (that extended to assassinations of several key personalities) and of monetary inflows that brought banking deposits to a multiple of GDP.

Its curious constellation of economics and politics in locale that qualifies as one of the top global crisis hotspots for the past 70 years means that it is only possible in a most general sense to think of Lebanon as a country that is stepping in the footprints of other countries and populaces that have gone through revolutions. It is certainly not like Egypt, Tunisia, Libya, or any other MENA country. But when thinking about Lebanon’s prospects after October 2019, perhaps some general allusions to the uprisings of the 20th century can give some pointers, namely to the Prague Spring and the May 1968 cultural revolution in Western Europe with its Parisian center.

These two revolutionary chains unfolded and ended very differently from each other in the short term—the Prague Spring was quenched by Warsaw Pact troops and Soviet tanks with blunt force, May ‘68 produced new elections, but not system change, in Paris. Despite its socialist dreams and slogans calling for an overthrow of the capitalist order, there was no change in the political systems in Western Europe and very limited impact on institutions beyond those in tertiary education, nor did ‘68 put the economies of their source countries on new tracks.

Notably on the economic development side, the much bigger shock for economies in Western Europe occurred in the oil crisis and resource shocks of the 1970s—but Western capitalism only reemerged with greater vigor afterward. In Eastern Europe, societies continued to limp behind the West as they followed central planning paradigms of self-declared scientific socialism that was presented by its proponents as a form of technocracy.

The political and economic aspirations of many in the post-war student generation proved to be impossible to achieve. But ’68 had profound cultural and social impacts which, in the reflection of European historian Ian Kershaw, indelibly impacted the minds and perspectives of those who participated. “The anti-authoritarian, egalitarian and libertarian attitudes of the ‘68ers had a lasting impact,” Kershaw affirmed 50 years later.

Also, the seeds of popular will sown in the Prague Spring, growing painfully over time in dissident movements such as Charta 77, contributed at long last in the post-1989 revolutions to the delayed outcomes of liberty for the peoples that had been living behind the Iron Curtain since the end of World War II.

In this sense, the long-term social and cultural impacts of Lebanon 2019 might materialize in advancing and making more resilient the spirit, responsibilities, and freedoms of self-determination that the region excitedly—and in hindsight prematurely—sensed as rising in the Arab Spring, only to see it submerged again in the swirls of regional and geopolitical realities. This is to say that cultural departures from the narrow systems of the patriarchal past might ultimately find their verification and results in the ultra-long term, through changes in the Arab world that are beyond imagination and which could include both political and economic blooming.

The economic bloom could be enormous, considering the long past of unrealized potentials for such increases under existing systems with heavy ceilings of backward business organization, severe political and economic under-participation of women, and social tutelage of vast population groups. This awakening of Arab economies could, at least by today’s standards of capitalist growth, be realized to the tune of significant productivity increases and double-digit growth spurts in utilization of human capital, financial inclusion, economic outputs and—with improved diversity and complexity of Arab economies—mutually beneficial regional trade interactions and integration of Arab countries.

Such long- and ultra-long-term developments would be a boon to Lebanon as an economy with a bridge function and historic networks, not to mention its immensely charged-up young human capital. Yet, it cannot be denied for a second that such propositions of economic and political freedom and prosperity are dreams and hopes with a large dose of pro-Lebanese bias and are—by nature of all economic expectations, hopes, projections, and predictions—speculative with an exponentially increasing degree for uncertainty for each futuristic conjecture. In the long term, it certainly is also a conjecture and one that attempts to deliberately counter both existing international stereotypes and the last five to seven centuries of Arab peoples’ history, to believe that this October uprising could shine 50 years from now as a central ignition point of new cultural and social intercontinentally effective lead roles of enlightened Arab women and men in a less insane global society.

In the immediate outlook for Lebanon there is, of course, more economic uncertainty than one could wish for. The rise of social discrepancies and economic pains for households, the damaging but necessary potentials of controls in the financial sector, the price and inflation spirals to the detriment of consumers and producers, the likely hardships and business risks for importers, the failure prospects of enterprises of all corporate ages, the acceleration of unmitigated public sector problems, and the macro uncertainties can hardly be over-projected.

It is time to fight constructively on all economic fronts.

It, moreover, has to be acknowledged that the local stakeholders in the economy might have little or very little that they realistically can do in the immediate term to steer enterprises away from the cliffs and sandbanks of shallow credit and perilous monetary waters. And as far as betting on grand economic plans by expensive consultants, infrastructure visions that depend on international financial inflows, initiatives with weak institutional and incomplete legislative foundations (e.g. public-private partnerships), and mega-projects (other than, hopefully, the power generation and distribution plan), it appears advisable to take a deep breath and preserve one’s mental energy for just a bit.

Still, it will not be good to abandon all thoughts or send all passions into flight mode. It is time to fight constructively on all economic fronts. In this very important context of economic reforms and ideas for strategizing and talking development, what makes sense from the perspective of Executive is to think, debate, plan, and act in the same way that the October events found their success: inclusively and from the bottom up. We are not relenting to emphasize that the economy, while notoriously non-compliant with expert prescriptions or technocratic central planning, and while often behaving (like the humans that make it) in the most surprising ways, is the people’s action game and arena.

Executive, as another fight that we will not give up on, had one year ago launched a project for an economic roadmap that was distinguished by design: It sought out the inputs of civil society and local stakeholders in wider and more democratic participation than any other view on our future that, in Executive’s humble opinion, is full of our social needs and economic potentials. We call on you, our faithful readers, and on all who invested their heartfelt passions into determining a new future for Lebanon in October 2019, to contribute to the next round of developing a better economic and social future and together build, strategize, combat, and develop new pathways. Take our roadmap forward, improve it. We are ready to do it with you.

November 7, 2019 0 comments

Editorial Opinion

Time to rise above

by Yasser Akkaoui November 6, 2019

written by Yasser Akkaoui

Executive has been shouting over and over again for change in this country, calling the bluffs of successive governments in our more than 20 years of coverage. At times, it seemed as though we were screaming into the void. Ignored by the policy-makers, targeted by threats and lawsuits, and resigned to the lack of reaction from the public at large. And then suddenly Lebanon erupted, the people took to the streets in one voice—and we could not be happier.

Now we look back at our analysis and economic roadmaps over the past two decades as our contribution to every man and woman on the streets during this October uprising. The streets have revolted. No longer in self-denial, the people have banded together against the mismanagement of this country that has affected the livelihoods of the Lebanese people for too long.

The people have decided to risk the little they have left for a better tomorrow. As much as this popular revolt was long overdue and brings welcome challenges to the incompetent elites, a revolution in Lebanon is a whole other ballgame. Already, we have seen in the speeches of Hezbollah leadership and the presidential palace the stark difference between their concerns and the concerns of the people.

While the protesters out in force across the country can no longer bear the vulgar mismanagement of the political class and their abject failure to provide Lebanese citizens with even the most basic of services, those same politicians are worried about shifting the status quo that serves their geopolitical alignments. And that is where the danger lies, in the lines that have been drawn.

Meanwhile, attempts to attack Lebanon’s central bank are no more than a smokescreen to shift blame away from politicians whose mismanagement of the economy will always manifest itself in monetary repercussions—we are not taking the bait.

The reality is that Lebanon is part of the region’s northern front that spreads from Iran to the Mediterranean with Lebanon at its western end. We are in the heart of the storm, torn once again between east and west. As we go to print, we walk blindfolded on a tightrope demanding to live in dignity in our Lebanon. The cold reality is that in the geopolitical sphere, spilling our blood is cheap.

We should not give up the fight. Lebanon has a unique chance to fight for its own future and decide its own fate. What we have witnessed across this country since the uprising began in mid-October is nothing short of miraculous. Together as one we stand united—against sectarianism, against corruption, and against the economic realities imposed from the top down.

This is a once in a generation chance. Grab it fast before it is stolen away.

November 6, 2019 0 comments

Leaders Opinion

Final countdown for Lebanon has begun

by Executive Editors October 21, 2019

written by Executive Editors

The end of September is supposed to be good, bringing with it a general relief from summertime inertia, and sizzling with new economic energy as the business season gears up toward the best time of the year. This is supposed to be a season that yields a mix of harvests from successful endeavors and new projects in preparation of the coming year, which indeed should be most auspicious for Lebanon if history adheres to the idea of favoring perfectly round anniversaries.

What is going on?!? While the people watch Lebanon stumble and tumble into the fourth quarter of 2019 accompanied by a cacophony of rumors about the dollar, helpless ruminations by hapless politicians, and popular protests driven presumably by activists and determined minorities, everything looks possible—and most of it bad.

The shocks last month hit fast and seemingly out of the blue. They were shocks not felt for a generation and more, money-related shocks such as people waking up to learn that their lira in practice was not buying dollars at the rate that it had since 1997 with no single interruption. There were shocks when banking customers without warning were denied the cross-currency interchangeable ATM withdrawals of lira and dollars that they still could do a few days earlier, shocks of people witnessing their ATMs out of money, and shocks when long-term account owners asking for their money got harebrained excuses and delaying tactics from bank tellers and branch managers.

To make no mistake, the shocks could have been much more painful if the underlying tremors in the financial system had truly been existential. The dimensions of the suddenly forming parallel currency exchange market and the exchange rates found there were in the single-digit percent range and thus minor disturbances when compared with historic currency shocks in fragile economies or ongoing black market trends in countries such as Argentina or Zimbabwe.

Nonetheless, people became fearful and felt stranded. Official Lebanon, already not a beacon of trust in the citizens’ minds, let crucial time pass by without issuing convincing explanations on what was happening at the exchange offices, ATMs, and bank counters. Banks and the Association of Banks in Lebanon seemed to see no need to address the public with timeliness and clarity. We would have expected a coordinated message from our banking industry to explain the situation to their customers and counter the rumors and fears that spread rapidly. Instead, it seemed as though the rules changed daily, with different banks operating different polices. Our banks should not have expected anything but panic and rage to ensue by brushing off legitimate concerns with vague assurances, leaving their customers exposed to nothing but rumors, incomplete information, and conspiracy tales.

But such rage, as understandable and as consistent with human behavior as it is, does not solve anything. Fear and instinctive self-interest are two horribly bad advisers in making economic moves. This is one thing to remember when assessing the current mess and the outlook for the next two quarters—or roughly the time until the end of 2019 and the first few months in 2020.

Opinion makers and analysts that agreed to provide Executive with last-minute insights into the backstory of what unfolded in the last days of September are shedding light on some of the factors that contributed to the buildup of economic shocks that people felt toward the end of last month (see stories here and here). Whether they take financial/corruption, fiscal/monetary, or regional/geopolitical angles, what these narratives on the reasons for the sudden crisis have notably in common is that their explanations come in tandem with dire warnings that more, worse, and far longer pain is likely to visit upon the people if no true and radical change is accomplished very soon.

Indeed, the September money crunch corroborates what has been repeated ad nauseam this year—and said time and again in publications like Executive—that Lebanon is in need of an economic resuscitation whose dimensions need to incorporate efforts of constructing, restoring, reforming, rebuilding, and reinventing crucial pillars of public trust, governmental credibility, and economic strength.

The budget and public sector need to be put on sane footing and reformed. The energy sector needs to be restored on the side of electricity generation and newly constructed on the side of responsible use of yet uncertain natural oil and gas resources. Expectations on resource exploration and exploitation need to be kept rational and fortified against a dangerous shift from one resource curse (dependence on remittances that yield no investments in productivity) to another (reliance on oil and gas extraction). Infrastructure needs to be responsibly financed and rebuilt under minimization of social cost, environmental destruction, and obsolescence risks. The potential of the digital economy, a functional e-government, and good internet governance including cybersecurity have to be pursued with warp speed.

To zoom in onto the electricity plan as a case study in urgency, the hints on electricity in the International Monetary Fund’s (IMF) latest Article IV statement this summer had zero ambivalence in calling to advance the electricity sector plan without delay. (This was in contrast to the statement’s monetary advice, where some in the political stratum appeared to see ambiguity.)

On the electricity plan, the IMF statement admonished that authorities need to ensure that the plan incorporates a tariff increase that is built on robust and realistic assumptions (instead of wishful thinking and vain number plays, the reader might assume). “It is crucial to start increasing tariffs as soon as possible to generate fiscal savings, possibly targeting the largest consumers first,” the IMF statement emphasized—but when
Executive investigated the rate of progress in the electricity plan’s implementation last month, we could see that despite the government’s evident will for moving ahead, there was a lack of the needed complete clarity on either tariffs or implementation of power plant projects and timelines.

Executive has, over the years, written, analyzed, advocated, and written again about unmet economic needs in Lebanon, to the point of sometimes feeling like a lone voice in the wilderness. A year ago we designed a standalone issue on a possible roadmap for the economy that entailed over 260 proposals from varied stakeholders on areas from revising fiscal policy and reforming state institutions, to ideas for combating poverty and corruption. But frankly, since we have been on the case for longer than we care to admit, our archives are bursting with analysis and advocacy pieces that have accumulated to a pile that leaves us with the sense that solving the Lebanese knot would be a job for demi-gods with Herculean qualifications. The Lebanese government is short on superhuman heroes, even before the problem of the C-word, and the need for a constructive mindset are thrown into the national equation of needs.

However, it is not just the government and the political class that need to be called to order. It is urgent that all people of ethical, intellectual, and financial means stop acting based on what looks right at the moment from a personal interest perspective, which generally results in detrimental and dangerous herd behavior, and start pursuing what is right from the macro-perspectives of long term socioeconomic interest and the assessment of big national data. Put into the context of the make-or-break expectation for the coming two quarters as the most pivotal time for the polity since at least the end of the Lebanese conflict—if not the whole century since declaration of statehood—the situation means in Executive’s perception that the problems of September will: a) not go away if people rage at them, and b) require super-cool heads and even humility if there is to be an avoidance of the pains that threaten the Lebanese people.

The need for clear thinking is further accentuated if one considers that the problems of September 2019 are not transitory, but intertwined with deeply entrenched problems that are known to excess and that have gone unsolved since they emerged in the 1990s when they tested the ingenuity of the most outstanding governmental leader in the last three decades, late Prime Minister Rafik Hariri.

This leads to a third conclusion that the problems that are upon the Lebanese and their government in the remaining few months before a possible final meltdown can only be tackled with a mindset of having transcended all rational fear and narrow self-interest. The situation looks so extreme that in absence of magical superheroes and demi-gods, the coordinates where the government’s problem solving attempts are located are in the realm of the absurd. In a literarily tainted allegory of European archetypes, the space of maneuverability for the state and the citizen alike appears like a stage in an absurd theater where the Lebanese mind needs to find success in an identity quadrant formed somehow by Camus’ Sisyphus, Solzhenitsyn’s Ivan Denisovich, Kafka’s Gregor and Grete Samsa, and Dickens’ Artful Dodger. In this matrix, the rational does not cut it, and it is futile to pursue utilitarian thinking or personal rights that depend on the space of normalcy to have meaning. In other words, it is a moment for individuals to embrace the exponentially absurd, and a time to adhere to behavioral norms that are best suited for improving the state of the whole.

Camus defines Sisyphus as the absurd hero and archetype whose passion for life and hatred of death “won him that unspeakable penalty in which the whole being is exerted toward accomplishing nothing.” In this sense, the need for a Lebanese solution to the emerging crisis of 2019/2020 requires skills of surviving the pressures of a global financial system with the resilience of gulag inmate Ivan Denisovich, the agility for navigating the international political arena with the wits of the Dickensian master pickpocket, plus the determination and character that can retain the inner essence of Lebanese humanity against the most unspeakable changes that one can imagine, such as the protagonists of The Metamorphosis experience in Kafka’s narration.

Finally, by fully embracing the absurdities that are emerging and continuously going to emerge in the Lebanese polity over the coming months, it means for everyone to put their shoulder to the rock of our national insufficiencies and debts and push tirelessly and relentlessly in the direction of hope and solution, without an expectation or guarantee of success. This mental approach could even engender the happiness that comes with attempting to reach the impossible. At least in the perception of Camus, happiness and the absurd are inseparable: “One must imagine Sisyphus happy.”

October 21, 2019 0 comments

Editorial Opinion

Le monde du plus fort ou du plus fou

by Yasser Akkaoui October 21, 2019

written by Yasser Akkaoui

French anthropologist Marc Augé coined the phrase “non-lieu” (non-place) in the mid-1990s to describe places where considerations of history and identity were erased—think shopping malls or airports. Listening to him speak in Lebanon earlier in September got me thinking, Lebanon is the antithesis of a non-lieu. Every space in Lebanon is linked to our history and our identity—even the naming of our highways and airports evoke politics of our past.

In some ways that means we can never escape the economic and political realities of this country. Never free ourselves of our past to allow independent and forward thinking. Yet, many Lebanese—at least when times are good—seem content to stay in their heads, behind their screens, immersed in social media and technology. Those who stay in the lieu of it all are those with a bigger stake in protecting their share, but also those who have in the past been easily manipulated.

If we want to see change, real change, in Lebanon, then all of us have to get back into the lieu. We need the middle classes to be more aware of the realities around them in both good times and bad. Our political class has been taking advantage of the absence of oversight in this country, indulging in what is not theirs to take. But change is coming. It is no longer possible to detach ourselves from reality. The one space where we could express ourselves freely, the non-lieu of social media, is becoming a place of oppression. Our online thoughts and tweets subject to state scrutiny. But this overreach has a side benefit: More are beginning to take notice and understand the diversionary tactics employed by our politicians. And they will hold this political class accountable for every violation they have perpetrated against the people.

The end of September brought with it a whirlwind of rumors and fears over dollar liquidity in Lebanon. People rushed to withdraw their money from the banks. Panic ensued, while our delusional and dishonest politicians continued to squabble over the little that was left for them to steal. We have been here before. Many middle class Lebanese in the mid-80s, my family included, found themselves impoverished when the lira devalued. But chaos always has its victors; the few profited, while ordinary families struggled to get by. We were kept in the dark then, as we are now. But the cracks are beginning to show.

It has been 18 months since the international community pledged $11 billion on the condition of serious fiscal reform. In the time since, there has been a lot of talk, but little action. Duquesne and others no longer hide their impatience with the unruly rabble that we have in place of statesmen. Our politicians behave like kindergarteners, bickering among themselves, while the international community looks on with disdain. Warning after warning goes unheeded, and Lebanon teeters on the brink of crisis.

To our politicians, I say this: It is your choice. Be strong or be fools.

October 21, 2019 0 comments

Economics & Policy

Change is coming

by Executive Contributor October 21, 2019

written by Executive Contributor

This is the beginning of the end of Lebanon’s current financial model; the problem is that we refuse to accept it. There are clear signs that painful change is coming, made all the more painful by attempts to ignore the inevitable.
Chronic corruption has paralyzed the country. The absence of growth the past eight years has caused thousands of businesses to shutdown (3,000 in the last 18 months) and seen unemployment hit record high numbers in times of peace—unofficial estimates put unemployment at 35 percent in 2018, up from 16 percent in 2010. The Lebanese lira is under a pressure not seen in 27 years; an indicator that the post-war economic and financial system is coming to an end.
Banque du Liban (BDL), Lebanon’s central bank, has been forced to prioritize crucial imports, such as wheat, medicine, and fuel.

Long unsustainable

The choice to peg the lira to the US dollar is a monetary policy that works best for small open economies like Lebanon, where investors feel safe to transfer wealth because they know that they can take it back at the same exchanged value—along with their profits—whenever they please. And so, with the help of the peg, Lebanon was blessed with GCC investment and tourism dollars, and, more importantly, expats’ dollars— leading to one of the largest deposits to GDP ratios in the world. The latter seems like good news, but it came coupled with GDP growth rates that consistently lagged behind potential.
What does that tell us? With one of the largest debt stocks to GDP in the world, mainly borrowed from local banks, it means that every resident and non-resident depositor—who are currently fleeing—has funded 27 years of corruption, instead of financing an economy that had great potential 20 years ago.
It is not true that local debt is better for the stability of the financial system, because when the game ends, it is the locals that pay the highest price—not foreign banks. It is also not true that Lebanon is dollarized; it has a pegged system, but all government income and expenditures are in lira. Its debt service is in US dollars, which it is unable to generate. This all might be common knowledge, but a crucial point has been missed over the years when describing the rentier economy of Lebanon. The system of feeding corruption through the dollar deposits of Lebanese locals, expatriates, and GCC tourism could not continue forever because the rate at which the inflows needed to increase would never match the rate at which the problem was growing. The GCC tourists are long gone, and the Lebanese no longer trust their own financial system and currency.
We now live in a country that cannot afford to pay back what it owes and cannot finance its expenditures.
Instead, it is feeding its citizens cancer through the corruption and lack of basic infrastructure that permeates through every bite of local produce we eat and every breath we take.
We are one of the worst credit-rated countries in the world; our debt ratios are much worse than other countries that have faced government debt crises in the past few years. Interest to revenues per year in Lebanon is now at 50 percent; when the Greece economy tanked their interest to revenues was at 17 percent. Our pain will be several times their pain.

Time to choose

Our politicians are starting to throw around the hot potato; the head of state bluntly tells reporters to go ask the governor of BDL and the finance minister about the situation because he was busy traveling.
We have lost all credibility with the international community; foreign diplomats do not hesitate expressing their disgust with us. It has been 18 months since our leaders agreed to implement reforms in exchange for loans pledged by the international community, yet in that time we have failed to even start building one power plant. The electricity sector is in dire need of reform, but our latest electricity plan includes more barges under the excuse of a “temporary so lution” before new plants are built. The same excuse we heard in 2012. What a bad dream.

The first choice is to keep watching ourselves drown, allowing politicians to reinforce the denial they promote by promising us that offshore gas will solve everything. As a result, Lebanon will soon be force-fed the usual poison, which could have been avoided had change occurred earlier.
This will include a combination of devaluation, a haircut on debt and depositors, and selling government assets cheap—all of which will lead to extreme poverty and from which it will require decades to recover. The other choice is to say stop.

October 21, 2019 0 comments

Last word Oil and gas Opinion

Oil and gas will not save Lebanon

by Diana Kaissy & Sibylle Rizk October 11, 2019

written by Diana Kaissy & Sibylle Rizk

As Lebanon races to enter the new oil producers club, decision-makers display a dangerous tendency to put all hopes on this uncertain sector and label it as the economic savior. This goes against the advice of Lebanese experts who have been warning against a “presource” curse (the underperformance of economic growth after a commercial discovery, but long before production—a result of skyrocketing expectations and a correlated increase in public spending and/or borrowing) and calling for structural remedies to the economic crisis. Early last month, Pierre Duquesne, the French envoy in charge of the CEDRE dossier, warned against the “false hope” that oil and gas extraction was a “magic remedy.”

The Lebanese economy is facing great challenges. Indicators show signs of a prolonged contraction. The financial model long used to maintain the Lebanese standards of living—despite unsustainable levels of public debt, budget deficit, and current account deficit—is now on the verge of breaking. The deficit in the balance of payments accelerated from $0.76 billion in the first seven months of 2018, to $5.32 billion over the same period in 2019. In an attempt to lure back depositors, Banque du Liban (BDL), Lebanon’s central bank, has raised rates on its deposit facility to unprecedented levels.

Pierre Duquesne warned against the “false hope” that oil and gas extraction was a “magic remedy.”

Despite—or because of—this bleak economic picture, decision-makers (government, heads of political parties, members of Parliament) are putting all bets on the oil and gas sector.

The 2019 budget openly cites Lebanon’s potential oil and gas wealth as one of the reasons to not worry about the risk of default. The government is thereby implicitly dismissing the costly efforts needed to tackle the crisis, and using anticipated proceeds from oil and gas resources that are yet to be discovered in order to boost confidence.

Last April, the government launched the second licensing round for five new offshore blocks. This came prior to any commercial discovery in wells that will be drilled in the coming three to five years by the Total-Eni-Novatek consortium. Under more relaxed economic circumstances, in order to improve awarding conditions, the government should have waited for the results of the first round of drilling, scheduled for the end of 2019, before launching the second licensing round.

Total is also being pushed by Lebanese authorities to start drilling as soon as possible; a pressure the company says it has accepted. Instead of the usual one to two years to determine the exact location for drilling, Total did so in less than one.

All these signs are a clear indication that while authorities are buying time through unconventional monetary policies to compensate for increasing imbalances (growing debt, fiscal and current deficit), their only hope is to bet on an exogenous “miracle” such as petroleum wealth to save the day. Tapping into uncertain non-renewable assets that belong to future generations to cover for debt accumulation and mismanagement of current resources is not an option. All efforts should instead concentrate on developing a strategy to get back on a sustainable debt and fiscal path.

Tapping into uncertain non-renewable assets that belong to future generations to cover for debt accumulation and mismanagement of current resources is not an option.

Countries, such as Ghana and Sierra Leone that have pinned excessive hopes on uncertain future revenues have paid the price in the form of declining economic growth. The government is falling into this presource trap, notably by seeking at a very early stage to establish a Sovereign Wealth Fund outside the framework of a broader macroeconomic vision. We believe that prior to creating an oil fund, the government ought to reduce public debt to sustainable levels, and enact and enforce fiscal rules to credibly commit to fiscal sustainability in the future.

The real challenge that lies ahead for Lebanon is to agree on a new economic and social contract that promotes a competitive and fair economy, instead of capturing state resources to fuel a corrupt political system. The only way forward today is to tackle head-on the task of sharing the burden of losses accumulated by this failed economic model. Hoping that oil and gas proceeds will cover up for these losses is at best an illusion, and at worst a crime. Lebanon needs to make sure that future proceeds are not allocated through the same economic model and find channels that can transform them into investment capital within a new economic and social strategy. The only guarantee that this sector will not be used to fuel further corruption is sound governance practices that ensure an inclusive, transparent, accountable, and participatory management of this potentially lucrative sector. As a start, transparency measures, such as beneficial ownership disclosure as mandated in article 10.7 of Law 84 (2018) on enhancing transparency in the petroleum sector, need to be applied to all contracted and subcontracted companies working in the oil and gas sector in Lebanon.

October 11, 2019 1 comment

Comment Special Report Wine

Challenging misconceptions about Lebanese wine

by Farrah Berrou, Selim Yasmine Makram Rabbath Jean Kissonergis & Nabila Rahhal October 10, 2019

written by Farrah Berrou, Selim Yasmine Makram Rabbath Jean Kissonergis & Nabila Rahhal

There is a negative perception of Lebanese wine that views it as overpriced and headache-inducing. This perception may even be shared by some readers of this piece. Luckily, those in the retail and hospitality industries who sell local wine say that this misconception is changing over time. There is a vast range of Lebanese wines out there for consumers to try, and more and more, it seems, are doing just that.

Executive opened the floor to four players in the industry to weigh in on their experience with local consumers’ perceptions of Lebanese wines.

Farrah Berrou

At Wesley’s, because we specialize in imported products that aren’t found anywhere else, customers are already in this “discovery mindset” when they walk through the door. They want to find things they’ve never seen or tried before. When it came to our wine section, we wanted to leverage that by giving customers a chance to discover Lebanese wines they don’t usually see on supermarket shelves or in shop cellars. We have one of the most diverse ranges of local wines, and it’s still growing month by month as we procure new additions gradually.

There’s no need to fear what’s in your own backyard.

However, even with that extensive selection there is resistance when it comes to going for something new. There is fear of what they don’t know, especially when it may be more than what they wanted to spend on a bottle that’s just for Tuesday’s mac n’ cheese dinner. Sometimes, because it’s cheaper, customers tend to go for a foreign bottle. But it’s also because of this assumption that Lebanese isn’t “good enough.” It’s an unfair blanket statement to make about an industry that’s come a long way and is currently booming.

Through the Lebanese wine classes we host, it’s been much more effective to not only prove that our local wine scene is worth exploring, but also to tackle the common misconceptions when it comes to our wines—like pricing and the production process. Attendees have been pleasantly surprised by the variety and experimentation that’s happening across Lebanese regions. The experiential approach of our classes shows them that we’ve got something magical happening right here, and that there’s no need to fear what’s in your own backyard. We’re proud of everything else we produce, from olive oil, to cheese, to honey—why not wine?

Selim Yasmine

As a rather small country, Lebanon can only produce a small amount of wine, and therefore cannot compete in volume or quantity. The only edge for Lebanese wine is quality, and we are very confident that the quality of Lebanese wine is high. Moreover, if one were to compare the price of Lebanese wine, they must benchmark it to similar quality bottles. We need to compare apples to apples, and this is where we can see that the price of Lebanese wine is competitive when compared to bottles of a similar high quality.

Having said that, I believe it is impossible to put all Lebanese wines in the same basket. The wide diversity of Lebanese wineries—especially with the notable increase of winemakers of late—makes it very difficult to give a quality statement that applies across the board to the 60+ Lebanese wineries across the country. I am certain that we could find both Lebanese wines that are overpriced and bottles that are high-quality for their price. Ultimately, it is all about perception, taste, and education.

The only edge for Lebanese wine is quality, and we are very confident that the quality of Lebanese wine is high.

When it comes to that rather shallow yet popular belief that Lebanese wine causes headaches, this perception is inaccurate. We must bear in mind the sheer variety and diversity of wine that exists in Lebanon and not stereotype it by labelling it all as the same. Until now, there is no definitive evidence as to what causes some people to have headaches from drinking wine while others do not. A common misconception is to blame the sulphur dioxide (sulphites) within the wine, but the reason this is listed on the bottle is that for a small percentage of people sulphites are an allergen. There are more sulphites in dried fruit than there are in wine. Other reasons being explored as possible headache-inducers include the tannins in red wine, an antioxidant that comes mainly from the skin of the grape when it ferments, which is also found in black tea and dark chocolate. For those without an allergy, headaches will more likely be down to an overindulgence.

In the almost three years that I have been exclusively selling and promoting Lebanese wines, I personally have never faced any complaints about price or quality, mostly because consumers are becoming more educated and are being exposed to more accurate information. We are proud that our wine is being appreciated both locally and globally.

Makram Rabbath

Over the last two decades, local wine consumers’ habits have totally evolved and matured. The number of winemakers in the past decade has more than doubled. Traditionally, the perception of local wine had always been negative, with consumers tending to say they got headaches when drinking Lebanese wines, or that they were overpriced, or even that the wine is not up to international standards.

Over the years, three major parameters have radically changed, and in turn have led to a change in this perception. Technique has evolved, and today winemakers have a totally different approach to the wine making process. Some of the wineries have access to the latest equipment and technology, and make good use of it.

The number of winemakers in the past decade has more than doubled.

The second thing that changed is that local consumers are more and more attracted by wine. They often visit wineries, attend wine courses and seminars, and even travel to discover and taste new wines. Lebanese people in general, and Lebanese winemakers specifically, have today become the best ambassadors for our local wines. They are now proud to share and taste Lebanese wines with their friends from all over the world, and in some of the most renowned restaurants in the biggest cities across the globe.

Finally, the development of specialized wine shops selling a wide collection of local wines have helped people discover the richness of our terroir. Many activities and festivals themed around wine are also supporting this.

At Le Petit Gris, we have seen this big change with an increase of more than 50 percent in the sales of our local wines over these past two years.

Jean Kissonergis

In Lebanon, we are blessed with great landscape and weather—ideal conditions for wine production. Therefore winemaking is becoming an even bigger trend nowadays, and we find new emerging labels every few years.

I perceive Lebanese wines as being artisanal products and not mass produced items.

We offer a big selection of Lebanese wines at PepperTree and always encourage our customers to opt for local when pairing their wine or having a drink. However, our clients tend to request foreign wines more often, especially European bottles. This isn’t representative of the quality local wines have, but instead it is a product of minimal taxation over European wines—they end up having very similar price tags on our menu. I also believe that another reason customers order foreign wines is because they can try something new at the restaurant, a bottle they aren’t familiar with, and experience new tastes. Whereas most of our foreign customers go for the local selection for the same reason.

Personally, I perceive Lebanese wines as being artisanal products and not mass produced items. This explains the high production costs and thus, the somewhat high price tag. But in any case, we are proud of our Lebanese wines as they are getting more and more noticed abroad for their great quality and the care that goes into their production.

October 10, 2019 0 comments

Comment Special Report Wine

Lebanon must learn from New World wines’ successes

by Hady Kahale October 10, 2019

written by Hady Kahale

Lebanon has one of the oldest wine heritages in the world. It has been producing and trading wine for the past 6,000 years; is home to the world’s largest Bacchus temple, dedicated to the god of wine; and one of its cities, Botrys (Batroun), was named after the ancient Greek for grape bunch. Under Ottoman rule, wine production declined in favor of the production of arak, but the Lebanese never truly stopped making wine. In fact, the resurgence in wine production began before the end of the Ottoman period in 1857—some 162 years ago—when Jesuits planted vineyards in Ksara. And it was in the early 1990s that Lebanese wine exports started picking up.

Lebanese wine shares a similar story with the likes of American, Chilean, Argentinian, Australian, New Zealand, and South African wine. Some of these New World countries—a wine term identifying wine producing countries outside of Europe—started making wines in the 16th century, others later. They all went through tough times—e.g. economic downturns, adverse regulations on alcohol, international boycott, and grapevine pests—and all reemerged on the international export scene between the 1960s and 1980s.

But this is where the similarities stop. Without having thousands of years of wine heritage, these countries somehow managed in the span of a few decades to revolutionize, reinvent, and reshape the global wine industry and—in an equally unimaginable feat—tossed European wine makers out of their comfort zones. In the space of a few vintages, they built a strong identity for their wines.

Lebanon, however, despite its wine heritage, has yet to make an impact on the world stage. A Master of Wine—a title bestowed upon 390 people worldwide by the Institute of Masters of Wine, considered the highest accolade or title achievable in the wine world—was asked back in a closed session with Union Vinicole du Liban (UVL) in May what the perception was of Lebanese wine abroad. She paused, reflected, and her painful—but honest—answer was: “What perception?”

Is the world even aware that Lebanon is producing wine? And if it is, can it pinpoint what Lebanese wine identity is? To be clear, this does not mean that Lebanon is not producing beautifully crafted wines. It does not mean Lebanese wines do not have aficionados and cult followers. It simply means that very few people have ever heard about it, and if they have, they cannot define it. Only one winery has managed to shatter the hazy glass ceiling. In my experience of asking wine professionals all over the world about Lebanese wines, their answer will, almost invariably, point to Château Musar. This achievement makes us all proud. However, to market Lebanon efficiently, one winery is simply not enough.

What we need is a group of young Lebanese winemakers teaming up to experiment and transparently share knowledge.

Lebanese wineries produce close to 9 million bottles a year, according to estimates by UVL. Of that, approximately 3 million bottles are exported. It is a success story. Winemaking is one of just three industries in Lebanon that use local raw materials and have a positive trade balance; based on 2018 customs statistics, only wine, jam, and vinegar production meet these criteria. Winemaking is a craft that, by my own estimate—as official data is lacking—provides the livelihood of thousands of workers and their families in Lebanon. And, while it was historically the case that Lebanese winemaking was the purview of Christians, nowadays the industry is diversified by region, religion, and social environment. The government should take note of this and support winemaking as an industry that benefits all Lebanese.

Yet, the room for improvement is vast. Lebanon should be exporting far in excess of 3 million bottles, in line with the exports of its neighbors. In 2017, on the Eastern Mediterranean shoreline, Greece exported 34 million bottles of wine, while Israel exported 23 million (a ten-fold increase over a 15-year period), according to statistics from the International Organisation of Vine and Wine (OIV). And if we delve into New World countries, numbers become mind-numbing. According to the OIV, in 2017, Chile exported 1.3 billion bottles; Australia, 1 billion; South Africa, 597 million; the US, 437 million; Argentina, 297 million; and New Zealand, 377 million. How did they do it? By uniting, by experimenting with, and then promoting their own specific variety, and by expanding beyond speciality cuisine restaurants abroad. All are examples that Lebanese winemakers can learn from.

Strength in unity

In the mid 20th century, no one in the New World had dreamed of challenging France on the wine front—except, that is, for Californians, who decided to defy Europe by creating a Cabernet Sauvignon and a Chardonnay that could rival the best French wines. The sun-drenched vineyards of Napa Valley, following the wisdom of great winemakers like Andre Techilstcheff, and the impulse of visionaries like Robert Mondavi, were ready to take the wine world by storm. These great men realized that to take on the world, they would be more successful working together than on their own. It meant setting aside petty competitor behavior and embracing transparency and full cooperation. In 1944, seven wine merchants signed an association agreement that formed the Napa Valley Vintners trade association—now 550 wineries strong. For the last 75 years, the collective spirit and camaraderie of the association members ensured the success and quality of Californian wines. Technical, commercial, environmental, and marketing challenges were—and still are—tackled together, in unison and transparency unheard of in any other wine regions.

Unity, information sharing, and common experimentation are key if we want Lebanese wine to have the kind of international success that American wine has found. UVL does what it can to coordinate efforts. Likewise, the agriculture ministry, and its energetic director general, Louis Lahoud, try to help the industry, but are financially limited. The National Wine Institute, which should be the technical governing body of wine in Lebanon, is adrift amid Lebanese bureaucracy. What we need is a group of young Lebanese winemakers teaming up to experiment and transparently share knowledge. The wine world is unique in the fact that any experimentation in new grape varieties and winemaking techniques can take 10 to 15 years before seeing results. A group, working together, learning from each other’s mistakes, and sharing successes, will exponentially increase the learning curve’s speed and efficiency.

In search of Lebanon’s Malbec

Beyond working together, Lebanon needs to find and promote its own specific grape variety. Take the example of Nicolás Catena Zapata, who propelled Argentinian Malbec onto the world stage. In the 1980s, Argentina was perceived as a bulk wine producer. Going against the trend, Zapata sold his table-wine-producing company, keeping only the fine-wine branch of the family’s winery, and started playing around with a grape variety called Malbec. Many of his colleagues told Zapata he was completamente loco. Malbec has its origin in France, but was far from being a coveted grape variety by wine amateurs who were falling in love with wines made of grapes like Cabernet Sauvignon. Zapata wondered if Malbec would ever be able to reach such heights; it took five years of experiments before he was satisfied enough to make a Catena Malbec in 1994.

It was an absolute success. “Kudos to Nicolás Catena,” wrote American wine critic Robert Parker Jr; The Wall Street Journal ran its first ever feature on Malbec in 1999. A decade later, Malbec became a superstar, and Argentina became the Malbec capital of the world.

So, what is Lebanon’s Malbec? Cinsault, planted by the Jesuits in the mid-19th century? Maybe. Musar opened the way decades ago, followed more recently by the bold Vertical 33 and the colorful Domaine des Tourelles. Is it Syrah, which performs beautifully in the Mediterranean climate of Lebanon?

We need to gratefully, but painfully, outgrow the commercial bridge that led us to the international scene.

Or is it Obeidi, one of the very few indigenous local grape varieties to perform well in winemaking. Naysayers say it is not good enough. I say we have not tried enough. We have not yet explored in-depth what this fickle late ripening grape has to offer.

Is it the Mekssasi, championed by Karam Wines in Jezzine? Or the Merwah, a variety used with promising results, by the likes of Ksara, Sanctus, and Phoenix in Batroun? Or is it the same old Malbec, exclusively planted in Lebanon by Atibaia, a boutique winery—which as of October 15 I will head—established in Batroun in 2008?

We need to experiment, as Joe Assad Touma from St Thomas and Fabrice Guiberteau from Kefraya are doing. We need to embrace a local variety and use it to make some of the best wines ever made with it, and we need to make sure the world knows what we are doing. The wine world will soon start listening.

The Lebanese gastronomy trap

Lastly, Lebanese winemakers must expand their horizons beyond Lebanese restaurants abroad. Have you ever heard of Chilean gastronomy? New Zealand haute cuisine? Very few people ever have. And yet, somehow, Chilean and New Zealand wines can be found in every corner of the world. Not having an established Chilean and New Zealand gastronomy on which to base their wines’ expansion was an obstacle to overcome, but it was also a blessing that pushed those wine producers to find creative and bold ways to market their produce. Aided, albeit, by the heavy promotional budgets allocated by their governments—something we cannot even dream about in Lebanon.

Lebanese gastronomy is the pride of Lebanon as well as being the main client of Lebanese wine producers. Through my own research, I have estimated that Lebanese restaurants abroad buy 70 percent of Lebanese wine exports every year. But Lebanese gastronomy is a golden, honey-coated, trap.

It is a trap because, with the majority of wineries wanting to sell to the same restaurants, everyone has to discount prices. It is a trap because marketing efforts are widely channeled to Lebanese restaurants, without looking at the bigger picture. Growing Lebanese wine exports means growing beyond Lebanese outlets. How many people make truly informed decisions while choosing their wine at small-sized, family-run Lebanese restaurants abroad, when wine is usually included in set menus, or proposed as a house wine? How many will remember the wine after their meal? Lebanese wineries need to reach for wine critics and wine amateurs, create a unique image, and be present in wine shops, wine bars, and international wine restaurants all over the world. Mediterranean cuisine restaurants would be a good start. We need to gratefully, but painfully, outgrow the commercial bridge that led us to the international scene, if we want to achieve international recognition.

If the most dynamic Lebanese winemakers join efforts, if they agree on which grape variety, or grape varieties to push forward, and if they make concerted, intelligent, and creative efforts to grow beyond the home country gastronomy scene, then most probably, in a few years, when a wine critic is asked about the Lebanese wine international perception, the answer will be clear, obvious, and agreeable to hear. And when this starts happening, Lebanese wine exports will soar.

October 10, 2019 0 comments

Special Report Wine

In search of Lebanese wine’s identity

by Nabila Rahhal October 9, 2019

written by Nabila Rahhal

Although Lebanon has a rich history of wine production, dating back to the Phoenicians who used to trade it, it has only recently reached a high level of maturity that often leads to introspection and a questioning of identity. The last decade saw the number of wineries in Lebanon go up from about 20 to 54 registered wineries at the Ministry of Agriculture in early 2019, according to Zafer Chaoui, current head of the Union Vinicole du Liban (UVL) and chairman and chief executive officer of Château Ksara. The more than two-fold growth in the number of wine producers vying for local and international markets has led to self-reflection regarding the competitive value of Lebanese wine when compared to international wines.

What has also led to this self-examination is an increase, albeit slight, in Lebanese winemakers as opposed to foreign winemakers, which remain the norm for the majority of wineries in the country. “While 20 years ago it was very normal [to have a foreign winemaker], today there are more Lebanese winemakers educated abroad and working in Lebanon,” says Hady Kahale, a wine consultant who will be heading Atibaia winery as of October 15. “Although the majority of those work in wineries they or their parents own, or are somehow related to winemaking, it’s still exciting times.” Kahale explains that because of this ownership, Lebanese winemakers can take risks, experimenting with winemaking techniques, or exploring alternative grape varieties. A foreign winemaker with a contract is more restricted.

Obeidi Château St Thomas
Photo by Greg Demarque | Executive

French winemaker and technical director at Château Kefraya, Fabrice Guiberteau, says that this relatively new generation of Lebanese winemakers want to do wine differently, and so have introduced international grape varieties that were previously uncommon to Lebanon, such as Merlot or Pinot Noir. “This is pushing the industry forward, and this is why we have such a huge diversity of grape varieties in Lebanon,” Guiberteau says.

Meeting market demands

The identity of Lebanese wine has also been shaped by a consumer trend to embrace a country’s heritage and originality. “Our identity would have developed anyway with time, but what is accelerating this is the market,” Kahale says. “It is the international market that wants a clear identity for Lebanese wine.”

Several winemakers interviewed for this article—speaking from their own experience—confirm that the international press and critics’ appetite for Lebanese wine has certainly been whet. Guiberteau explains that it is ultimately those players who dictate what is defined as a good wine, and so offering them a competitive and unique product becomes even more significant.

“Today there are more Lebanese winemakers educated abroad and working in Lebanon.”

Maher Harb, winemaker and owner of Sept Winery in Batroun, echoes Kahale, explaining that both local and international consumer habits have moved toward demanding unique products that tell a story, and Lebanese wineries should capitalize on that. “If I open a bottle of Lebanese wine in Paris, and it tastes like Bordeaux or Burgundy or Australian wine, what is Lebanese about it?” Harb asks. “If Lebanese wine starts being called Lebanese Bordeaux, what have we done other than copied Bordeaux?”

Old and proud

For some, the identity of Lebanese wine is entrenched in its history. As Guiberteau explains, there is a common misconception that Lebanese wine is new to wine production, while in fact it is an ancient wine producing country. This misconception is brought on by the fact, Guiberteau continues, that wine production was severely restricted during the long Ottoman rule over the region, only to be revived again with the Jesuits coming from north Africa and bringing with them the grape varieties common to the hot Mediterranean climate such as the Cinsaut.

UVL’s Chaoui says they are working on, and have come very close to, proving that Lebanon is the first country from where wine was traded outside of the country of its production with the Phoenicians. They are also trying to determine whether it is the oldest country to produce wine, but here there is uncertainty as Georgia, Armenia, and Iran are also possible contenders to that claim. Currently, Georgia says it is the oldest wine producing country, and refuting this would prove difficult. The hope is that by forging this narrative, Lebanese wine production and sales will benefit. In Lebanon, the total production of wine, according to UVL figures, is only 9 million bottles and total turnover of the wineries of Lebanon is $55.3 million to $66.3 million.

To Guiberteau, celebrating Lebanon’s viniculture also means reviving ancient methods of wine production, such as aging wine in clay amphoras (a tall ancient Greek or Roman jar with two handles and a narrow neck) à la Phoenicians—Château Kefraya experimented with this technique and released its first vintage of Amphora 2017 Special Cuvee early in 2019. “The identity of Lebanese wine needs to be marketed under the story of their viniculture, and the fact that they are the oldest country to trade wine,” Guiberteau says. “This is followed by the diversity of our wines borne out of the diversity of the country’s soil, micro-climates, and grape varieties.”

A beautiful land

Indeed, highlighting and bringing out a winemaking region’s terroir—defined by Wine Folly, an online platform for wine knowledge and appreciation, as “how a particular region’s climate, soils, and aspect (terrain) affect the taste of wine”—is seen by some interviewed for this article as a crucial element of a country’s wine identity. “We need to celebrate our terroir,” says Sept Winery’s Harb. “Wine is an expression of the land, and the country is land so, for me, this is the only way to put an identity for your wine.”

Harb believes Lebanon is blessed with highly diversified micro-climates and terroirs. To illustrate this diversity, he gives the example of the same grape variety he plants in his vineyards, which are spread across Lebanon, having completely different tastes depending on the micro-climate and terroir in which they are grown.

A grape like no other

For consumers, perhaps the most easily recognizable aspect of a country’s wine character is the grape variety used in a mono-varietal wine. Joe Assad Touma, winemaker and co-owner of Château St Thomas in West Bekaa, gives the example of how Greek wine is synonymous with the Assyrtiko, and Argentinian wine is known for the Malbec, saying that this model of identity creation should be recreated in Lebanon.

Often times, such popular grape varieties are native to the country and are called indigenious grapes. “Indigenous grapes are today very much in fashion, and some countries are trying to emphasize on their native grapes,” Chaoui says. “In Lebanon, we have two indigenous grape varieties, the Obeidy and Merwah which, following a global trend, have been well developed by some producers who sell 100 percent Merwah, or 100 percent Obeidy wines.”

Initially, Obeidy and Merwah were thought to not stand well on their own, and as such were used in wine blends or to make arak. Château St Thomas was the first winery to produce a 100 percent Obeidy wine in 2015, as part of a collaboration with the Wine Mosaic project, a nonprofit organization championing vinodiversity by promoting and protecting original grape varieties of the Mediterranean. In explaining what led him to experiment with native grape varieties, Touma says: “What gave me the idea was that we were always asked why we use international grapes for our wines when we are an ancient wine-producing country.” He says both local and international response to Château St Thomas’s Obeidy have been extremely positive, as is evident by the increase of production from 3,000 when it was first launched to 20,000 bottles in 2018, all of which are sold out halfway through the season.

Following St Thomas’s success, several wineries began producing mono-varietal wines with native grapes, and Harb believes even more wineries will do so with time. “I think it is coming,” he says. “The Obeidy grape was the first native grape to be used in mono-varietal wines around five years ago, and I remember we faced doubt and resistance back then, but now there are more than 20 wineries experimenting with Obeidy in winemaking.” Harb has recently released a mono-varietal Merwah (see overview).

“We are always asked why we use international grapes for our wines when we are an ancient wine-producing country.”

Château Ksara has also released a mono-varietal Merwah, the 2017 vintage, to great success in 2018 (the second vintage, 2018’s, has recently been released in the market). “Merwah gave the world the opportunity to taste a rare and ancient grape,” says George Sara, Château Ksara’s Chief Commercial Officer. “Most of it was sold abroad as there is greater awareness of, and demand for, such esoteric wines. It has helped push the Lebanese wine narrative in the UK, and hopefully will do the same in other markets in the coming year.”

In search of the native

While the Obeidy and Merwah seem set as the indigenous darlings of white grapes, a native red grape variety is yet to be found, and the search is on, according to winemakers interviewed for this article. “The Wine Mosaic has around 40 varieties of grapes registered as native Lebanese, but many of those are table grapes,” Touma says. “Of these 40, if only five work for wine, it would be great. We need to have some native red winemaking grape varieties.” He explains that there is more room for experimentation when working with red wine as opposed to white wine, since it has to be aged, and hence a variety of techniques can be used (aging in oak or stainless steel, deciding how long to age it, etc).

Just as our own

Some wine producing grapes have been used in Lebanon for so long, they are considered heritage or adopted grapes and can be used to identify wine as Lebanese. “We can adopt Cinsaut because it has great potential and has been planted in Lebanon for more than 100 years with the Jesuits. So we can say that it is an adopted grape and can be used in Lebanese blends,” Touma says.

While Cinsaut is typically used in light wine blends such as rosé, Domaine Des Tourelles’ winemaker and co-owner Faouzi Issa challenged this notion and produced a mono-varietal red wine Cinsaut in 2014 that was well-received internationally and is the winery’s top performing wine in New York, London, and Budapest. In recounting what made him think of using Cinsaut in a mono-varietal wine, Issa says: “Being an old winery, Domaine Des Tourelles had 70-year-old Cinsaut vineyards which I used in my blends, but every time I would taste the Cinsaut tank during harvest, I would be impressed by its taste. So I thought it would be a good idea to give it a try as a mono-varietal wine and bring Lebanese wine back to its roots, since the Cinsaut was the king of red wines before the introduction of noble grapes (Pinot Noir and Cabernet Sauvignon) by French winemakers in the 1960s and 1970s.” Domaine Des Tourelles started out by producing 6,000 bottles of Cinsaut in 2014, and today has reached maximum production of 25,000 bottles and has prompted Issa to call his Cinsaut “the passport” of his wines “as it offers international distributors a unique and special product.”

Together we grow

There is a lot of energy and enthusiasm around indigenous or adopted grapes in Lebanon, and around finding an identity for the country’s wines, but both Guiberteau and Kahale say this will take time and requires patience—as Guiberteau points out, it took Burgundy three centuries to develop its reputation for wine.

Government support through the Ministry of Agriculture would serve to push this quest for an indigenous Lebanese grape forward, as it has done in other wine producing countries. “In France and other countries, there are privately funded institutions, or government-funded ones, that have all the tools to test and experiment indigenous grapes, and then help winemakers grow their grapes,” Harb says. “What we lack in Lebanon is this. There is no support, and it is based on individual initiatives, which is very hard.”

It took Burgundy three centuries to develop its reputation for wine.

Kahale believes this search for local grape varieties and an identity for Lebanese wines could be sped up if winemakers work together. “Making a new wine variety is at least 15 years experiment because you only get one yield per year, so you need Lebanese winemakers with experience ready to share the results of their experimentations with their peers in order to cut this time down; we have to cultivate this spirit. This will make the giant leap, otherwise it will take time, but the identity will develop,” he says.

Whether through local and adopted grapes or international ones, and whether through ancient winemaking techniques or more modern ones, the Lebanese wine industry has reached a level of maturity where debates about its identity and competitive edge are more common. As such, we raise a glass of local variety white wine—and soon hopefully red—to a rosy future for the wine industry in Lebanon.

October 9, 2019 0 comments