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Even big powers want friends

by Lee Smith
written by Lee Smith

A friend at the State Department relates a meeting he had recently with a high-level official from a one-time Soviet satellite state, one in fact where the US waged a major, and very unsuccessful, war. But with the Cold War over and the US having won it, this nation, like most others, wants a deal with Washington.

“We are looking for a Category One relationship,” the official told my friend. “But there’s no such thing as ‘Category One,’” the man from State explained. “Washington doesn’t work like that.” My friend continued: “The United States has bilateral relationships with a number of different countries and explores various ways of strengthening ties.” “Ah, OK,” the foreign official said, indicating that he fully understood. “But we want a Category One relationship—just like Israel!”

Israel is perhaps the US’s most famous—and most controversial—ally, but it is hardly the most privileged one. After all, Washington’s most enduring alliance is its “special relationship” with the United Kingdom, which partly explains why Tony Blair was one of the few European leaders to stick his neck out on behalf of the Bush administration and join the coalition of the willing.

The fact is that Washington has plenty of friends the world over—including the Middle East, though many of them think it best to play down their relationship with the Great Satan. For instance, the centerpiece of US-Middle East policy for the last 60 years has been the Kingdom of Saudi Arabia, home to the world’s largest known reserves of oil. And the US taxpayer keeps the Bahrain-based 5th Fleet afloat to make sure that Gulf Arab energy stays readily available, a boon to the US and Khaliji kings and sheikhs alike, as well as markets around the world.

The White House stands with the Seniora government not just because Lebanon is a front, among many others, to advance democracy and fight Iran’s project in the region, but because Washington believes business is good for America and Beirut believes doing business is good. Egypt is another regional ally, the second largest recipient of US aid, getting $2 billion a year, partly as a bribe to maintain its peace treaty with Israel, but also because the US thinks it wise to be on good terms with the most populous Arab state. Indeed, the US spends loads of cash on its friends in the Middle East, including non-Hamas Palestinian institutions, and has free-trade agreements with a host of nations here, like Morocco and Oman.

Washington is not friendly with the Jewish state instead of the Arabs, but in addition to them.

The fact is that the US does not see the world as a zero-sum equation. The United States is perhaps unique in history among all Great Powers insofar as its default strategy is not “divide and conquer”; nor, unlike many other actors, does Washington typically seek to destabilize other states to knock rivals and friends off kilter. Rather, the US usually seeks to keep the peace around the globe and maintain the balance of power by using local actors. And this brings us back to Israel.

It is true that the United States was the second nation in the world to recognize the State of Israel (the USSR was first), but the relationship didn’t kick into high gear until later. After the Arabs’ catastrophic 1967 defeat, Washington recognized that the Jewish state could be a useful ally against the Soviets’ Arab proxies. But it was the 1973 October War that really cemented the US-Israeli alliance.

The 1973 oil embargo keyed in on the Americans’ Achilles Heel—their dependence on Gulf energy sources. In turn, Washington took advantage of the Arabs’ glaring weakness—their fanatical hatred of Israel. By arming Israel to the teeth so that the Arabs had little real hope in driving the Jews into the sea, the US ensured that if the Arabs wanted concessions from Israel they would have to go through Washington to get them, thereby securing the Americans’ position as the region’s prime mover. In lesser hands, the “Peace Process” may seem a maudlin exercise in fruitless diplomacy, but it is a masterstroke of realpolitik—one however that has probably outlived its usefulness with a Hamas government in power and Israel coming off of two wars along pre-67 borders this past summer.

All this has thrown a number of US policymakers and other experts into a state of confusion. Pity poor James Baker and his stillborn Iraq Study Group report. And then there’s sorely confused ex-President Jimmy Carter, who owes his place in history to the Israeli-Egyptian peace deal and yet whose new book now describes Israel as an apartheid state. No one however has misunderstood the principles of American foreign policy as dramatically as the authors of “The Israel Lobby,” Stephen Walt and John Mearsheimer. In following the Aljazeera line, and recommending that dumping Israel will lessen anti-American terrorism, they have posited a superpower without a spine. Imagine if during the midst of “the Troubles,” the Irish Republican Army had targeted the US for its alliance with the UK—would any serious analyst argue that Washington drop the Brits because of it?

Great Powers, as we have seen, make all sorts of alliances for all sorts of reasons; however, they are no longer Great Powers once they begin to accept terms dictated to them by terrorist gangs.

LEE SMITHis a Hudson Institute visiting fellow and reporter on Middle East affairs 

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Government vague on Paris III

by Michael Karam
written by Michael Karam

If I appear vague, forgive me, but looking at the document the Lebanese government was supposed to show the assembled international donors in Paris, a group that included sovereign governments, the IMF, the World Bank and other supranational institutions, one can only have a deep feeling that it was published half-cocked. Based on this, we were lucky to get the money.

The contents are undeveloped and some important parts of the economic and social reform program appear blurred and unconvincing, leaving the reader with the nagging feeling that the government is too fearful to upset certain political parties or even entire communities.

There is also a significant lack of any data projecting anticipated future economic performance. Parameters are limited in number and, wheere they do exist, they are insufficiently substantiated. Moreover, there is no executive summary that clearly itemizes the reform program.

The reader reads on and on and never sees any clear-cut proposal on how to reform the country as a whole. Instead, the reform program seems to be: Yes, we need a capital markets authority, to reduce interest rates, etc. But we never find out what is the end game.

So what does it say? The privatization section is limited, includes no details and is by and large superficial. Privatization is the key issue for donors like the World Bank and the IMF, who have insisted on it as a condition for the Paris I and II conferences. It’s as if the government has not yet learned that it needs to take the bull by the horns on the privatization issue and elaborate the privatization program in the future. Securitization is only briefly mentioned yet it is a crucial part of the process. The document does not say what will be privatized, how it will be privatized and how long the process will take. In short, the government appears not to want to commit itself.

And still the fluff appears. Governance and good practice measures are not comprehensive. These are major issues in Lebanon and although the will to tackle them is apparent in the document, the method is not clearly laid out. Transparency of the non-banking sector is not really mentioned, neither are the ways as to how it is going to be tackled. There is no description of the corporate sector’s physiognomy.

The banking section is supremely lightweight when it should have been a major focus for the government. Basel II should have been be mentioned, as should the plans to make Lebanese banks compliant and the problems of raising capital to achieve this compliance. All this would facilitate arguments with donors.

There is also no clear explanation as to how the government is going to push banks to become intermediaries in government paper and the central bank’s latest measures are nowhere to be seen. One wonders whether the BDL and the Ministry of Finance even liaised on this report.

There is an absolute need to create (or reactivate) a small claims tribunal. There are lots of private entrepreneurs in Lebanon who don’t get paid by their customers and the law is too slow and weak to enforce their claim expeditiously. This should be included in the governance and best practice section. Delays in claim payments are plaguing the economy and are slowing down GDP growth and private consumption. Given the entrepreneurial nature of the Lebanese and their economy, an efficient small claims tribunal can only contribute towards GDP growth.

The document does not mention in any detail how the government intends to develop new franchises and create diversity for the economy. This is a part the donors would be really interested in. Raising taxes and VAT (to 12% by 2008 and to 15% by 2010) is merely a partial solution to increase government revenues, and the government does not even attempt to propose innovative ways to increase revenues without affecting the purchasing power of the population. The document’s plan to increase and diversify government revenues and reduce the budget deficit is incomplete, scattered and, yes, once again, blurred.

Ordinarily, donors are in no mood to fill in the blanks. They want to see a more detailed analysis of the economic and social dynamic, as well as details on how these problems are going to be sorted. We can conclude therefore that the government relied more on its pals in the international community—French President Jacques Chirac and the majority of the European Union—to convince them to hand over the money and that the Paris III document appeared to have been drafted for cosmetic purposes only.

Michael Karam is the managing editor of EXEVUTIVE

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Abizaid: the Mad Arab who disagreed with the President

by Claude Salhani
written by Claude Salhani

Gen. John P. Abizaid, the most senior military officer of Arab descent to serve in the US armed forces, disagreed with President Bush over the president’s Iraq strategy—and he is out.

On Dec. 20, 2006, the Pentagon announced that Abizaid, an American of Lebanese origin, would step down from his position as Commander of CENTCOM (US Central Command) and retire in March 2007. Abizaid said he would have liked to retire later but that these decisions are never made alone, a subtle way of saying he was pushed. “At the Pentagon, the knives are inserted so slowly that they are hard to notice,” said one long-timePentagon observer.

Abizaid, who as a cadet at West Point was nick named the “Mad Arab,” is considered a no-nonsense man, someone who is not afraid to speak his mind or to take the initiative. During the 1983 invasion of Grenada, Abizaid and his unit jumped from a helicopter onto a landing strip. Under fire from Cuban troops and lacking proper armor, Abizaid ordered one of his Rangers to drive a bulldozer toward the Cubans as he advanced behind it—a scene reenacted in Clint Eastwood’s 1986 film, “Heartbreak Ridge.”

But acts of derring-do aside, he was a realist, one who dared oppose the White House over Bush’s surge of US forces in Iraq. “You have to internationalize the problem,” Abizaid said. “You have to attack it diplomatically, geo-strategically. You just can’t apply a microscope on a particular problem in downtown Baghdad and a particular problem in downtown Kabul and say that somehow or another, if you throw enough military forces at it, that you are going to solve the broader issues in the region of extremism.”

The problem is that his opinions clashed with those of the White House. Abizaid was the first officer to officially call the fighting in Iraq a guerrilla war, despite denials from the White House and the Pentagon. He was the first to raise the alarm that sectarian violence was spreading. Abizaid saw the rising civil war in Iraq as replacing terrorism as the biggest threat to Iraq’s stability. He was the first to tell Congress that Iraq faced the risk of slipping into civil war.

Abizaid opposed Bush’s troop surge on the grounds that he felt the answer to Iraq’s problems lay more in a political settlement than in escalating the conflict. Senate Armed Services Committee, Senator John McCain, Republican of Arizona, told the general during a heated debate, “I’m of course disappointed that basically you’re advocating the status quo here today, which I think the American people in the last election said is not an acceptable condition.”

Abizaid also coined the phrase “the long war” to describe the challenges in fighting radical Islamist terrorism. He believed the United States is not properly organized to face the emerging threat of Islamist terrorism head-on. “I think our structures for 21st century security challenges need to adapt to this type of an enemy,” he said. “The 21st century really requires that we figure out how to get economic, diplomatic, political and military elements of power synchronized and coordinated against specific problems wherever they exist.”

He was the first to publicly say that a solution in Iraq required talks with Iran and Syria. The dispute over the increase of troop levels brought out in the open the schism between the uniforms and the suits. Testifying before a Senate committee on Nov. 15, Abizaid said, “I do not believe that more American troops right now is the solution to the problem. I believe that the troop levels need to stay where they are.”

Abizaid predicted that the insurgencies in the four Sunni provinces in northern and central Iraq will be there for the foreseeable future (a view that goes against President Bush’s hopes that by deploying an additional 21,500 soldiers and Marines, the insurgency may be somehow contained) and believes that the U.S.’s primary enemy in Iraq is al-Qaeda, whose plan is to keep casualties in the media until the American public becomes convinced that victory is impossible and leaves the region.

“When you take a look at the reach of the extremism as exemplified by al-Qaeda, it’s not just in Afghanistan, it’s not just in Iraq—it’s in Pakistan, it’s in Saudi Arabia, it’s in Great Britain, it’s in Spain,” he said. “It attacked the United States. It is organized in the virtual world in a way that is very unique, very modern, very dangerous.”

But then what does he know? He’s just a mad Arab, isn’t he?

CLAUDE SALHANI is an international editor and political analyst at United Press International (UPI)

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Ras Al Khaimah set to grow

by Riad Al-Khouri
written by Riad Al-Khouri

Ras Al Khaimah (or RAK as it is affectionately known by the sprinkling of expats that have lived and worked there) was the Gulf’s best kept secret—until it positioned itself as a serious investment destination. An important milestone in this respect was the May 2005 investors’ conference held in the emirate by the RAK government and the World Bank. Setting the tone of that high-profile event, HH Sheikh Saud bin Saqr al Qasimi, Crown Prince and Deputy Ruler of RAK in his opening address said, “I believe the economy of RAK is on a verge of a tipping point after which we will see exponential change and growth that will be unstoppable.”

He turned out to be right, with RAK now rapidly attracting investment. While RAK products like glass and sanitary goods already export to over 100 countries, there is vast potential for more investment in industry, which remains the emirate’s “engine room” generating income and jobs, as well as inputs for building other sectors. According to Dr. Khater Massaad, who runs RAK Ceramics and helped develop it from humble beginnings to become the world’s largest single ceramic tile manufacturer, the emirate’s investment authority (which he also heads) has “been able to attract over $1 billion of investments in various industry segments” since its inception two years ago. That includes cement, in which RAK is undergoing a massive capacity boost to become a leading producer in the Gulf, with the emirate’s 2005 capacity of 3 million tons planned to exceed the 10 million ton mark once expansion is complete.

The extra volume will be needed, as demand for cement and other building materials is set to increase in a big way in RAK with the launch of several mega-projects. RAK has just begun to develop it tourism capability, and hopes to attract investors for constructing more hotels, golf courses and many forms of water-based recreation and sport. Tourism can showcase the emirate’s economic development, attracting people to RAK and further proving to regional and international investors that it is on the map and open for business.

All of this, of course, will act to promote other sectors, including real estate development. The logic behind this emphasis is simple: much of the growth in the UAE over the coming decade will require high-value workers. One of the advantages of RAK is a location close to Dubai with potential for development of working space and lifestyle accommodation meeting requirements of high-end human resources. Explosive growth in Dubai has created considerable pressure on real estate. Land prices there have increased markedly in the last fifteen years, while people find it increasingly difficult to move about as growing road traffic has increased travel time significantly.

By contrast, RAK has considerable land that can be made available for residential, commercial, and service industry development. At the same time, strengthening of land use planning and management institutions is one of the priorities of the emirate. A comparison of land prices between RAK and other emirates indicates great potential. Besides lower-cost land, RAK is also capitalizing on its good environment and recreational facilities to attract visitors and new residents. The road trip to Dubai has been cut to about 45 minutes and RAK airport facilities are being revamped and expanded to allow better access to the emirate by plane. This enhanced connectivity makes it easier for people and businesses to locate in RAK and take advantage of the lower cost land there, further establishing the emirate as a world-class residential destination in its own right.

The main lesson to learn from RAK’s investment drive is to profit from the boom in Dubai and the rest of the region, but avoid mistakes that led elsewhere to overcrowding and other problems. The emirate is undertaking comprehensive and realistic land-use to guide future development, and RAK’s capacity to enforce well-designed standards of zoning and environmental management will be an important complement to such planning. This will keep the industrial “engine room” and the touristic “showcase” in a healthy, mutually-enforcing relationship, attracting more people and businesses alike. The strategy is nicely encapsulated by Matt Sawaqed, board member of Rakeen, one of the emirate’s flagship real estate developers, who presents his firm’s core values as “Sustainability, Responsibility, and Prosperity” – which could also apply to the emirate as a whole. As RAK’s boom gathers steam, the emirate is starting to become prosperous like its neighbors, but in a sustainable and responsible way. The challenge facing the RAK public and private sectors alike will be to keep things moving in that direction: raising incomes, profits, and living standards while caring for the environment and safeguarding core values.

RIAD KHOURI is an economist, director of MEBA Ltd Amman and a senior associate at BNI, Inc. New York

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Sri lankans still opt for Lebanon

by Zvika Krieger
written by Zvika Krieger

Sharjah International Airport looks exactly like you would expect for an airport in the United Arab Emirates: drop boxes collect money for your favorite Islamic charities and Qur’anic societies; security checkpoints have separate rooms for women to preserve modesty during frisking; and more than half of the airport is “under construction,” an adequate description of the desert boomtown itself. There is only one thing missing: Arabs. Instead, I am surrounded by Sri Lankans.

Thousands of Sri Lankans (mostly women) pass through Sharjah every month, flying on the emirate’s budget airline AirArabia to fan out across the Middle East. But these women aren’t here to ride the camels or see the pyramids; they make up Sri Lanka’s legion of migrant laborers, and the Middle East is their biggest market. According to the International Organization for Migration, more than 1.5 million Sri Lankans work in the Middle East, mostly as domestic servants. What started as a trickle in the 1970s has quickly become a pillar of Sri Lanka’s economy—in 2005, annual remittances from Sri Lankan migrant workers totaled almost $2 billion, surpassing tea exports as the country’s top source of foreign income. As I wait in the Sharjah airport for my flight to Sri Lanka, I strike up a conversation with the two Sri Lankan women sitting next to me. One of them, a twenty-year old from a village three hours outside of Colombo, has been working in Lebanon for over two years. This is her first time home since arriving in the Middle East and, she admits after looking over both shoulders, one of the first times away from the watchful eye of her “madam.” But she is thankful—most domestic workers don’t get to come home at all during their time working abroad. Her friend sitting next to her has it a bit easier—her employer allows her to go to church once a week, where she has the opportunity to socialize with fellow Sri Lankans. But both are quick to emphasize how lucky they have been, considering the horror stories they have heard from friends. The Arab world has become infamous in Sri Lanka for its horrible treatment of Sri Lankan migrant laborers. Though usually happening behind closed doors, human rights organizations have begun to chart abuse to foreign house servants—including widespread physical and sexual abuse. Even those that are not assaulted in the traditional sense are often forced to work seven days a week with no holidays, their passports confiscated upon arrival in order to keep them prisoners. If they try to run away, their employers often accuse them of stealing and, when inevitably caught by the police, they are thrown in jail with scant legal representation. Some Middle Eastern countries have taken measures to protect these foreign workers. Lebanon, for example, has formed a task force comprised of representatives from the Lebanese government and security forces, United Nations, International Labor Organization, foreign embassies, and local NGOs to confront the issue. But since many of these workers are undocumented and most abuse happens in private homes, there is little governments can do in practice. Abuse has become so prevalent in countries like Lebanon that the certain governments (such as India and Bangladesh) have barred their women from traveling there to work.

Such restrictions are not an option for Sri Lanka, whose migrant laborers are yet another casualty of the country’s 20-year civil war. Jobs are scarce and salaries rarely support the average Sri Lankan family. Women are forced to turn to the dozens of foreign employment agencies and sell themselves into servitude for upwards of three years. “People move on their own two legs, so restricting labor isn’t like restricting tea,” said David Soysa, director of the Migrant Workers Centre in Sri Lanka. “People are going for better prospects, so if they want to go, there is little the government can do to stop them.”

The situation does not look to improve any time soon. Combined with years of war and the effects of the 2004 tsunami, Sri Lanka’s increasing reliance on remittance payments from migrant labor does little to bolster its development prospects. According to a new study by the Marga Institute for Development Research in Sri Lanka, over 50% of these remittances travel back to Sri Lanka through unofficial channels, causing substantial foreign exchange leakage and depriving the economy of much-needed foreign currency reserves. The report also emphasizes that the use of unofficial channels, rather than banks, encourages Sri Lankans to spend the money they receive from abroad rather than depositing it in savings accounts—thus perpetuating the cycle of poverty.

The tales of abuse that filter back to Sri Lanka have not stemmed the tide of migrant laborers to the Middle East. Both of the women I am sitting with in the Sharjah airport had heard such stories before they left Sri Lanka, but came anyway. They call over a third friend, who decided to come back to Lebanon even after being heavily abused by her first employer. “My husband is drunk all the time because he cannot find a job, so he abuses me too,” she says matter-of-factly. “What options do I have?”
ZVKA KRIEGER is currently in Lebanon writing for the Washington Monthly

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Banking & Finance

Of royals and rotors: Choppers taking off

by Executive Staff
written by Executive Staff

In the Middle East’s market for executive travel, business jets have a well-established presence. Another segment of privileged transportation, one with underused potential, is the market for helicopters.

Demand drivers for helicopters in the region have traditionally been oil, royals and defense—three components of a flourishing helicopter market that many Arab countries have no shortage of. Additionally, the region has been engulfed by the increased security concerns in the post-9/11 world that have pushed global helicopter sales upwards.

“Helicopter sales are not only increasing in the Middle East but really worldwide, the primary reasons being increased oil prices and the need for security post 9/11,” Dan Pranke, Middle East sales director for American helicopter manufacturer Bell, told Executive.

Nonetheless, sales of helicopters between Dubai and Cairo have been less than they could be, especially in the corporate and VIP markets. Sales managers for some of the industry’s major manufacturers blame restrictive regulations and reluctance of governments to license operators.

Oil boom boosting chopper market

In Arab oil-producing countries, the rise in oil prices from $15 a barrel five years ago to levels of $60 or more has induced oil companies to enhance their exploration and exploitation efforts onshore and offshore, meaning more helicopters needed to transport crews and supplies to digging sites.

The mid-sized workhorse helicopters used in the international oil industry constitute a substantial investment, as illustrated last month by delivery of three 19-passenger Sikorsky helicopters to Brunei Shell Petroleum for its oil service operations. The choppers were said to cost $18.5 million apiece.

GCC countries naturally have a strong role in this market. Companies like Saudi Aramco, the world’s largest oil producing company, operate veritable helicopter fleets to support oil field exploration, drilling and production. In Qatar, Gulf Helicopters, a firm established in 1970 by Qatar Petroleum, has a fleet of 24 helicopters consisting mostly of Bell’s model 412.

Military and security forces worldwide and in the Middle East are prime customers for helicopter manufacturers, accounting for around half of global sales for leading producers. The other half of the market is the civilian sector, including uses in offshore, corporate transportation, medical and emergency services, sightseeing and media, which are served by manufacturers such as Eurocopter, a daughter of Airbus maker EADS, and American firm AgustaWestland, in addition to Bell and Sikorsky.

Although most helicopter sales in the Arab world are military and police-related, industry experts say that there is a rise in commercial and civil helicopter use in recent years and the market is tipped to become more lucrative.

“I see a great deal of potential in the market because unlike Europe, this market is still in its infancy. There will be a couple of drivers for it in the next five years, especially Dubai with the World Islands and Palm Islands projects,” said Pranke, adding that sales in the Europe, Middle East, and Africa region represent about a quarter of Bell’s global sales.

A worldwide demand survey by turbine manufacturer Honeywell and others projected in its latest (2005) edition that the Middle East, Oceania, Asia and Africa will account for 16% of global deliveries of new civilian helicopters between 2006 and 2010.

The United States is the world’s leading market for helicopter sales, followed by Europe. The survey said more than 2,600 civilian helicopter deliveries are expected in the five years from 2006 to 2010. Total deliveries of both civilian and military helicopters are estimated to reach in the neighborhood of 12,000 units during the period from 2006 to 2016, and analysts forecast substantial growth rates that will hike the value of the global helicopter market to $15 billion in 2011, up by about 50% when compared with 2005.

Well over 500 sold civilian units per year is not bad for an industry where a manufacturer like Sikorsky reported 2006 revenues of $3.2 billion from all its activities (they delivered 110 helicopters last year) and Bell last month peddled some 10-year old “pre-owned” units at prices of up to $5.5 million on its web site. They don’t publish retail prices for new machines.

No wonder that new trade fairs for the helicopter buyer are in the Middle East. The Dubai Helishow is a biennial industry show which debuted in 2004. It reported 30% exhibitor growth to 104 participating companies in its December 2006 show.

For Bell, the Dubai Helishow in December was good in terms of contacts and future leads, said a manager for the company while refusing to give any information on unit sales in the Gulf region.

“While we did not sign any deals in the Dubai Helishow, there were numerous conversations and meetings with very senior people in the region that opened or furthered negotiations that will lead to conclusion of deals,” said Mike Cox, vice president of communications at Bell Helicopter.

Another helicopter conference, Heli Mideast 2007, is scheduled to be held in May to address the growing needs for helicopters for emergency and rescue services, firefighting, industrial and private ownership.

Loosening their grip on airspaces

Organizers of the event, the UK-based aviation publisher Shephard’s, say the event will also tackle the issue of governments relaxing their grip of the airspace.

That’s where the issue of the royals comes in. While persons of royal blood in the various countries of the region are excellent customers for expensive flying gear, helicopter manufacturers bemoan the fact that many countries of the region lack regulations that authorize commercial operators.

In Saudi Arabia, people other than the royal family are not allowed to own helicopters. “It’s a security issue because helicopters can land anywhere, so the Saudi government limits the ownership of helicopters to special government agencies,” Pranke said.

“It really comes down to how senior the royal person is and how much clout they have with the relevant police force,” said Andrew Drwiega, publishing director of the Shephard’s Defence Helicopter magazine.

“Rolls-Royce has a 42% share of the civil engine market in the region,” said Martin Brodie, communications director at Rolls Royce, adding that the main engines are for civil airlines like Emirates and Etihad.

Abu Dhabi Aviation, which has a paid-up capital of $110 million and is 30% owned by the emirate’s government, operates a fleet of 38 helicopters and fixed wing aircraft to the private and public sectors, signed a deal in December with AgustaWestland to become its regional spare parts and repairs center. The value of the deal remained under wraps.

AgustaWestland have also sold choppers to the Libyan Red Crescent and the Abu Dhabi police. AgustaWestland said in December its Middle East sales in 2006 increased by 15%. It said sales from the region will contribute around $260 million, or 11.8%, of its $2.2 billion global sales, according to Gulf press.

Helicopters will continue to claim a growing role in corporate transportation in the Middle East. It is entirely predictable that the rapid growth of population centers and the high-speed commercial development of office cities, industrial cities, special trade zones and super-luxury residential towers in emerging regional centers will create demand and outright need for wider VIP and executive travel options by helicopter, given the security, prestige, and time benefits accorded by these super-convenient transportation machines.

Additionally, helicopters can be expected to even start playing a new role in short aerial commutes in association with commercial air travel in an age where the drive to the airport and security check in the terminal sometimes take as long as a flight to a nearby country. Last year, a member company of Korea’s Tongil Group launched a manufacturing project to develop helicopters that will be used in the framework of mass transport.

The Middle Eastern helicopter market may still require some time to develop into a civilian market but manufacturers will not want to miss it. “I think in today’s market any potential market is important for any manufacturer, even if it’s a small number. They are all in competition for the ones out there and also if there are rulers and royals who want to have extras on their rotors,” said Drwiega.

Industry representatives and observers agree that states like Abu Dhabi and Dubai will lead the market opening for commercial operators and private ownership of helicopters in the Middle East. If you have your million-dollar abode on the Palm, the Pearl or the World islands, where will the fun be if you and your neighbors can’t drop in on each other in a stylish chopper.

 

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Banking & Finance

Driving fast for sales: Nissan stays ahead of the chasing pack

by Executive Staff
written by Executive Staff

Nissan cars once again topped the regional sales charts. That the brand was able to do this in Lebanon was down to the energy of local agent Rymco, which achieved its projected annual sales targets despite the destruction wrought by the month-long summer war that wiped out a vitally important tourist season. Rymco’s CEO Abdu Sweidan recalls a challenging year, how he snatched retail victory from the jaws of defeat and explains what drives the Lebanese car buyer.

E How would you describe the major rhythms or trends that drive the Lebanese car market?

Whenever you want to talk about the Lebanese market specifically, you have to identify two major segments: B2C, or business-to-consumers, and B2B—that is business-to-business. The size of these two segments is very interesting. B2C is constant and has been constant for the past 5-6 years. B2B is the segment that varies. If the season is booming, and the country is comfortable, then B2B business grows and takes the total demand for new cars with it. If the tourist industry is slow, and corporate business is down, then demand from car rental companies and fleet operators diminishes, thus reducing the total volume of demand in Lebanon.

E So what has the industry looked like over the past few years?

In 2004, we witnessed a peak in total demand for new cars in Lebanon, hitting the 20,000 unit mark for both consumer and commercial sales. In the years prior to that—2003, 2002, 2001 and 1999—we saw record lows, especially in 2001 and 2002, when annual sales were 14,000 cars in total. But since 1999 we have seen many humps and dips: anyone in an industry like this should be extremely cautious about forecasting or planning for the next year, because when you talk about 20-25% variances in product demand in any industry—if you are trading in shirts and cottons and undershirts, it’s scary enough, what if you are dealing with the car industry where 20-25% variance translates into from 5,000-6,000 cars a year? This is potentially catastrophic.

E Planning and predicting is life or death?

All car dealers have to watch their planning processes, because unlike any other industry, we have to plan our sales and productions one year in advance, and in some instances, two years in advance. And all our quotas have to be filled, we have to buy all the cars that we order irrespective of whether the market can sell them or not. This creates heavy pressure. We have to ask ourselves, ‘Are we going to sell them? Is the country going to be safe enough in three or four or six months or next year to be able to absorb this new model?’ The scariest part is really planning and inventory management, not exceeding the ratios that are acceptable in best business practices, which allow you to have inventory from 2-3 months—but that is highly subject to continuous sales. If you have interruptions, then your inventory piles up month after month.

E Is that what happened in Lebanon in recent years?

In the last two years, we witnessed two major hits: in 2005, we had the assassination of the late Prime Minister Rafik Hariri and the 14 explosions and the six assassinations that followed. From February to November, we were subject to vibrant—in the bad sense, not in the good sense—political instability that affected the sales rotation. So we were all—car dealers, as an industry—we were all affected by a high level of inventories that stockpiled because the sales rotation of the period did not match our forecasts. Again, our cars, our inflow, come to us irrespective of whether the country can absorb them or not. So we have to find markets, and secondary markets. Then of course we had the war in 2006, and all of the instability that followed. If you add the two years together, I can tell you that in the past 24 months, we saw no more than six to seven months of stability and they fell in the first and second quarter of 2006, the only stable period in the last two years.
 

E Did we perform in that period?

Funnily enough, yes. This non-event period saw the best two quarters ever for us here personally, at Rymco, and for the industry in general. The total market demand for the first six months of 2006 was around 10,000 units, so we heading for the 20,000 unit cycle again and heading for a peak.

E Do you normally hit 50% of targeted sales by the first two quarters?

No. We expect to reach 50% from May to July, so we were on track for an even bigger year, because June was big, and July was expected to be bigger as car rental agencies and fleet operators were gearing up for what was supposed to be a superb season, but then we were hit with the war, so all orders stopped, all orders were cancelled, while our inventories were already in. Like all car dealers, we stock inventories during the months of the high season. 50% of our sales happen in the four months of May, June, July, August. This is our big season and we were stripped of a major opportunity to exceed the 20,000 unit mark.
 

E Sales must have slumped to zero?

Correct. July sales were nil. August sales were niller, and September was nil as well. At least it was nil for all the fleet operators, which currently constitute about 45% of the total demand. So today, if you asked me, “Can you please draw me a roadmap of the car industry in Lebanon?” I would tell you, “Very simple. 10-12,000 units a year will be bought, no matter what, by you, by me, by him, by your friend, by your neighbor—this is constant. Business-to-business, however, will buy 8,000 units a year in a good year—in a bad year, it will go down to 2,000, because it is subject to business, not to a buyer’s emotional decision.” So anything above 10-12,000 units total is subject to the political instability and the tourist season in Lebanon. If it’s a good year, sales go up to 20,000, 22,000 maybe; if it’s bad, sales go down to 14,000 to 15,000, as we have seen in 2005 and 2006. Business-to-business has the potential for growth, and it is increasing, but the business-to-consumer market is stable. We don’t have baby boomers here—they are in Dubai, Qatar, the GCC and Europe.
 

E How did you deal with the challenges presented by the war, as a business? Did you close up shop?

No. During the war, we kept our operations up and running, with adjustments. We managed to divert most of our inbound shipments to other markets, though we did have some units stuck in Barcelona and Cyprus. After the war, we had four record months when we made offers. We had to offer extra value to the customer to sell the 2006 models. People were looking for deals, so we figured if deal hunters are on the prowl, let’s provide them with some meat. We performed so well that we found ourselves short—we had to buy 150 units from the Dubai free zone.
 

E How much competition do you face from the used car market? What are your strategies to woo customers into the new car market?

The market for imported used cars has diminished and been replaced by new cars, only because of the availability of financing, auto loan programs that are now available with at least 10-12 banks. And they all offer attractive rates, rates that are more attractive today in 2007 than they were in 2001. Interest rates from 2001 to 2007 have increased by at least 3-4%, but interest rates on auto loans have diminished 20% from 2001 to 2007. This is because the pressure of liquidity on the local and foreign banks here has forced the banks to find outlets for financing, and they discovered that auto loan programs are a secure instrument. So the ability of auto loan financing has migrated sales from the used car business to the new car business.

E Do you have figures?

In 2001, the total market for imported cars, new and used, was around 66% used and 33% new. Today, it’s 50/50. And the trend is continuous cannibalization for the new car against the used car. Safety requirements have become a priority, and cars are now tested for compliance on an annual basis. All this has added to the headache, the extra burden, for any adventure with an imported used car. Consumers now want a car with a 3-4 year warranty, one that is headache-free, worry-free, so they go to a dealer where auto loan finance is available: all of a sudden, your perception of a purchase is no longer the price of a car, it is what you can afford each month. You no longer think of a car as costing $30,000; you think of it costing $550 or $700 a month. The dealer is there, you have a warranty, if anything goes wrong you just go back, etc.

E How have the various car segments fared over the past two years? Which cars are still selling well, and which have taken a hit?

Over the past two years, one of the segments that has not been affected is small, family sedan cars. Typically, this car has a four-cylinder engine, 1.6 to 1.8, it’s economical and worry-free. Cost of ownership is low and repair minimal. This car can last five years without you ever having to worry about anything like the transmission or engine, and it’s priced anywhere between $15-20,000. It is sporty, trendy, and has a brand. The focus today is on the brand; people here are brand-oriented. Because of the high customs paid on these cars, it is the investment that the customers want to capitalize on when they sell the car again. They want to own it for five years, and sell it at 50% of value, and this is what’s happening amongst all major brands in Lebanon.

E 50%? That’s a good return after five years.

Of course it is. The second segment that is also growing is the small SUV. It’s a multi-purpose car. Again, they are usually 4-cylinders and again they are worry-free, again they have brand value and today, most car manufacturers are offering them. We love them here in Lebanon because of the high mountains. They are safer; they are higher up and they cost anywhere between $25-30,000. It’s better than buying a large sedan family car. It is dual purpose. The third segment, which is not surprising, is the luxury segment. The luxury segment in Lebanon has not been affected, even in the troubles of 2005 and 2006.
 

E So what took a hit?

Low priced cars, let’s say, below $10-11,000, with no brand equity—cars that are usually bought for the fleet business. The reduction in demand from the fleet businesses affected the demand for them, not because they are not good cars—but because they are used by the fleet segment and when they see a dip in business, they do not renew the fleet. So, if you are the owner of a large pharmaceutical company, and you need to regularly replace 100 or 200 cars because you need these cars for your sales reps, in a good period you change them every 2.5-3 years. In a bad period, you say, ‘I’m not going to change my fleet.’ This business is subject to the sensitivity of the country.

E But consumers will always buy, right?

Yes. The Lebanese consumer will spend more—not in absolute terms—but if the value of the car has a monthly payment issue. Take a $10,000 car or a $15,000 car: the difference is 30% if you pay cash, but if you are financing, it might cost you only $40 to $50 more a month. So you rationalize it, saying, “For $50 a month extra, let me drive this sexy car that I really want, and not the one I can afford—I’ll cut costs elsewhere.” As I mentioned earlier, today we buy what we can afford to pay on a monthly basis. So we have to develop those segments—family sedans, SUVs and the luxury cars—and work on a strategy to encourage growth in these areas. But you need to have the right product and fortunately, at Rymco, we do. We are well-positioned within every growth segment in the Lebanese market, which is good news. Not only is it enough to be well-positioned, we must be fairly positioned, so we evaluate what our competition is doing in these segments, and what our products offer against the competition in value and in price. In all these segments, we have discovered that we are very well positioned.

We have become more of a financial engineering firm than a trading company. In Europe, the biggest departments are financing and insurance. As an industry, we are still a long way off in Lebanon—we have too many family-run firms. We are the only one listed on the BSE; we have a board of directors, we have shareholders, and we have huge leverage with our financial institutions. We are well integrated, and they know where the money is going.

E Who is your primary market for financing programs?

We are targeting the $1,200 salary bracket because we know that banks will not give a loan unless the salary is three times the monthly payment. But we also know that he might be under financial pressure elsewhere, he might be financing a fridge, so we have to be creative in helping him pay. If we aren’t, he will go elsewhere, so we tailor a program to ease the burden with an annual balloon payment or multi-balloon payments or accelerating or decelerating payment schedules. I can confirm that 47% of Lebanese households live on between $800 and $1200 a month, not including remittances. Banks don’t care about remittances, they look at what you actually earn, so we have to get the buyer ready for marriage—we have to get him hooked up with a bank.

E But how are you convincing people to splash out on a new car in such times of uncertainty?

Leasing is our new weapon. It targets the medium-luxury, $40K-50K car buyer who has either left the country, or can leave and doesn’t want to commit. Without leasing, we would not have sold so many cars in the post-war period of 2006. In the first three days, our phone lines were jammed with people inquiring about leasing. In the past, leasing never really caught on here because the proper structure wasn’t in place. Even our partners were skeptical at first, but when they saw the response, they got on board. Right now, we have three more banks that want to join us in leasing, because leasers are the customers they want.
 

E How does Lebanon fit into the regional automotive dynamic?

Lebanon is the trendsetter. Cars that do well here do well in the rest of the Middle East. Our disadvantage is our market. The region sells 1.2 million news cars and our most optimistic forecast for 2007 is 20,000 units. That is if all the segments, B2C and B2B are performing, and we have a good tourist season and so on. But as I said, we are a brand volcano. Manufacturers are cautious, because they want their models to work here. Many tourists from the rest of the region rent cars here, and they might like them and want to buy them. Some brands are not launched in Lebanon for that same reason—manufacturers are scared of having an unpopular car on our market.
 

E Lebanon is more of a trendsetter than Dubai?

Yes, of course. Dubai is a consumer bully; here, we are a brand bully. Lebanese consumers are cruel—they can reward and they can destroy.

 

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Editorial

The last dance

by Yasser Akkaoui
written by Yasser Akkaoui

Last month saw the cream of the world’s leaders, businesspeople, economists and experts meet at the World Economic Forum in Davos to discuss today’s most pressing issues. And they are plentiful as they are urgent: poverty, climate change, trade barriers, famine and disease, to name a few.

But as the world works together against malaria, the digital divide and melting polar ice caps, the Middle East continues to be mired in its own set of anxieties – anxieties compounded by the vaulting ambition of President George W. Bush, whose presidency has been garnished with equal dollops of steely determination and colossal hubris.

Back in 2005, the Middle East’s leaders put impressive store in the issues that plague our planet, but the conflicts America’s influence in the Middle East has directly and indirectly fomented, have not only put real developmental issues (à la those discussed at Davos) on hold, they have stripped an entire region of its focus. It is as if the whole notion of development has fallen off the region’s agenda. We are lagging behind in our global priorities, and this will inevitably be reflected in our societies.

Nowhere has this been more evident that in Lebanon over the past month. While world and industry leaders held dialogues at the Swiss resort, laying the groundwork for progress and cooperation, in the streets of Beirut, old wounds were opened amid senseless violence.

So even as Fuad Seniora returned from Paris with $7.6 billion, there was only muted applause. We are all well aware that if the funds are used for a quick fix, with no meaningful attempt to ease internal pressure and seek to remove Lebanon from the regional political dynamic, it will only be a matter of time before another Lebanese delegation takes the begging bowl to Paris.

If that happens, there may be no one left to tango with.
 

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Lebanon

Stormy weather ahead for BMed as potential investors circle

by Thomas Schellen
written by Thomas Schellen

The skies between the Levant and London got a little cloudier at the start of the year, as airline BMed admitted it had suffered such substantial losses in 2005 and 2006 that its main stakeholders refused to pump more cash into the operation.

According to the Times of London, BMed reported profits of $10 million in the financial year ending on March 31, 2005. Indeed, the carrier (formerly British Mediterranean Airlines) boasted impressive annual growth rates through 2004, before taking an initial blow from increased fuel costs. But profits were hit hardest last year by Israel’s war.

Jokes in Beirut suggested that the airline should appoint certain anti-government Lebanese politicians as marketing agents, because every inflammatory statement and call for protests led to a spike in bookings on BMed flights from Beirut to the calmer shores of the Thames. Nonetheless, UK media projected 12-month losses of BMed by to reach or even exceed $40 million by end of March 2007. With Beirut as BMed’s signatory destination, it appears that instability in Lebanon over 2005 and 2006 and, above all, Israel’s 2-month blockade of civilian flights to Rafik Hariri International dealt a severe blow to the airline.

BMed flew its maiden flight to Beirut in 1994 and celebrated its tenth anniversary in the Lebanese capital. While the carrier has developed routes to central Asia— Baku, Tehran, Bishkek, and Yerevan are among its destinations—and recently Africa, its Middle Eastern routes have always been its bread-and-butter.

Conversely, BMed has been an economic lifeline for Near Eastern travelers who have business in the City. The carrier offered the highest frequency of daily flights between Heathrow and Beirut (eight flights per week before last summer), Damascus and Amman. BMed was the one carrier that gave Levantine travelers an alternative to the respectable national carriers MEA and Royal Jordanian, the not-to-everyone’s-taste Syrian Air, or cumbersome indirect flights.

Partnership approach

BMed adopted an approach of complete partnership with the United Kingdom’s big carrier, British Air as its business model. Using the same livery, uniforms, and booking system as BA, the BMed identity was downplayed until it was indistinguishable from BA’s to many passengers; the carrier’s destinations were limited to those ceded by its larger cousin—in Egypt, for instance, Alexandria became a BMed destination, but BA-serviced Cairo was no-fly zone for the airline.

BMed’s chairman and a major shareholder was Lord Hesketh, former Conservative Whip in the House of Lords. Privately-held and run with the tight-lipped approach of a firm that had no stock market obligations—and adhering to the Arab habit of keeping private ownership out of the public eye—BMed managers refused to discuss shareholding structure with the media. The standard line only stated that BMed was owned by British citizens of Middle Eastern origin.

When a UK newspaper revealed in early January that BMed was facing troubles, it also reported that the airline’s main shareholder was an investment trust for the family of Syrian-born financier and philanthropist Wafic Said, whose name is associated with the Said Business School at Oxford University and the Karim Ridda Said Foundation, which sponsors the education of young Middle Easterners.

As news of the investment negotiations became public, BMed management issued a statement confirming that the Mikati family of Lebanon—which appears to be in an excellent financial state after its sale of telecoms holding Investcom—was riding into town as the primary contender.

A subsidiary of Mikati-owned M1 Group was in talks to become the new main shareholder in BMed, confirmed the airline’s CEO, David Richardson, in a statement.

If the investment deal were completed, M1, founded by brothers Najib and Taha Mikati, would infuse close to $60 million in new capital into BMed. As an intermediary step during the negotiations, the Mikatis provided the airline with bridge financing of up to $7.5 million to cover immediate needs.

According to a statement on the talks, the M1 Group has business interests that include “property, telecoms, oil and gas, and aviation.” The aviation interest currently stands for a recent shareholding participation in a four-year-old Geneva-based airline called FlyBaboo that offers short-hop service in Europe.

The M1 subsidiary for aviation is M1 Travel Ltd, run by a younger-generation Mikati, Maher. In a previous executive role, he tried managing several of the Mikatis’ information technology ventures in Beirut, including software company IdealSoft and an embryonic cable television company that fell victim to the failure of Lebanese lawmakers to regulate the piracy-dominated cable services market.

Talks continuing

However, as the talks for restructuring BMed progressed through January, M1 Travel lost the exclusivity of the negotiations and may no longer be the frontrunner for buying into BMed. In late January, BMed, true to its secretive style and without naming the new contenders, said it was now negotiating with three interested parties, including M1.

Media reports in London alleged one of two new aspirants is bmi (formerly British Midland) the second largest full-service airline in the UK and a member of the Star Alliance. Bmi, which has also reported a decline in passenger numbers in recent years, serves European and long-haul destinations but has no overlap with BMed’s route network; like BMed, bmi may need new concepts to stay in the air.

A partnership with another airline might make better sense for BMed than working with investors, who cannot provide the same operational synergies as a carrier with potential to develop network relations.

However, a partnership with a BA competitor would raise questions over the future of BMed and BA’s tight relationship. In any case, BMed will need to decide if the franchisee business approach—with its inherently limited freedom—is the best way to continue its development, which includes plans for fleet expansion.

Should BMed opt for the M1 partnership after all, it will be required to prove to the UK’s Civil Aviation Authority that the company is still majority-owned and controlled by British citizens, in order to maintain its international traffic rights as a British airline. Fortunately, several members of the Mikati family hold British passports, so this is unlikely to become a major issue.

The good news for the Near Eastern business community is that those convenient seats to London will hopefully still be available in the future. It remains to be seen whether under different ownership, BMed would put as much emphasis on the Lebanese market as in its first decade.

However, that question will largely hinge on the ability of the Lebanese to settle their internal affairs: the main issue pending is whether Beirut can pull back from the brink and reassert itself as a business and tourism center, or whether it will revert to an image of senseless chaos. The path the country chooses will play a much larger role in determining the appeal of ‘destination Lebanon’ to airlines and passengers than the identity of the next owner of BMed.

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Lebanon

Ad agencies enter fray in Beirut Campaigns spark debate

by Executive Staff
written by Executive Staff

Traditionally advertisement serves as a communication tool to brand and promote a product, yet in recent years its role is less and less restricted to the corporate world. Today, numerous non-governmental organizations, politicians, military, religious groups and even artists have discovered the power of TV ads and billboards to promote their cause. It is the so-called “information society” that rules and Lebanon is no exception, certainly not in the turbulent times it is currently going through. Most creative work for non-profits.

For both ad agencies and the public, it is an absolute blessing that they can also apply their creative energies in the non-profit sector. As they are less restricted, they often produce their best work. Take a recent campaign for Amnesty International in Switzerland. Under the slogan “It is not happening here, but it is happening now” we see images of human suffering and injustice, superimposed on images of Swiss daily life. In Lebanon, arguably the most visible and well-known non-corporate campaign are the “I Love Life” billboards and balloons we see everywhere. Designed by Saatchi & Saatchi in simple red and white centered on a heart, its message is a simple one. “As Lebanon and the region are increasingly caught up in a culture of violence,” said Ibrahim Eid, one of the campaign’s organizers, “we wanted to emphasize a culture of love and life. We wanted to offer people a window of hope: there’s more to life than politics.”

Notwithstanding its seemingly universal message, the campaign was politicized from the start by members of the opposition who claimed the I Love Life campaign was an attempt by March 14 to stigmatize Hizbullah and the downtown demos. Eid admitted that all of the campaign’s organizers are individuals who met “in the spirit of March 14, 2005,” yet most of them were not affiliated to a political party. “We truly wanted this to be a logo for all Lebanese,” he said. “The message was born out of a deep conviction that Lebanon’s only hope lies within civil society, not in politics.”

The I Love Life campaign was sponsored by a number of individuals, companies and trade associations, including the Chamber of Commerce and Bankers Association, while ad agencies and printers did not demand their usual fees. Still, no matter how much Eid and others emphasized I Love Life was apolitical, within no time the opposition launched a counter campaign.

This time there was no doubt whatsoever that the campaign had a political edge, as it was signed, “the opposition.” The design and main slogan were almost identical but added were the words “with colors,” “with dignity” and “without debts.” On the internet circuit, I Love Life spoofs appeared, “I love Aishti” and “I Love Capitalism” being just a few of the new takes.

Opposition chimes in

The trouble with the opposition’s campaign was that it bore too close a resemblance to the original. The public merely assumed that it was a new take on the same theme, churned out by the same people. An altogether more interesting non-profit campaign was created by H&C Leo Burnett for 05AMAM—Arabic for “forward”— and is an abbreviation of al-mujtama al-madani (civil society). 05AMAM also fell within the spirit of the March 14 movement and was also non-political. Its aim was to reflect the main issue underlying the political divide, which according to those within 05AMAM, is sectarianism. At the end 2006, H&C Leo Burnett created a series of billboard ads that have become something of a cult hit on the internet. The images show, among other things, a Lebanese car number plate with “Shi’ite,” a building for sale to “Druze only,” and a parking lot “for Maronites only.” A number of doctor signs show not only name and specialization, but also their religious background, while another ad shows business cards that state nothing but name and sect. With each of the images the accompanying tag line was, “Stop sectarianism, before it stops us.”

“With an eye on the crisis, we wanted to do something, yet nothing political, but rather something that would spark debate,” said Bechara Mouzannar, regional executive creative director at H&C Leo Burnett. “So, we came up with the ‘Stop sectarianism’ campaign for 05AMAM. At first, we faced some difficulties getting it approved by the censors, as it took them some time to realize the campaign was not meant to insult or upset people, but to make them reflect.”

In an advertising world which generally opts for the beautiful and glamorous, the campaign was unusually edgy and gritty. Surprisingly, there was only one incident. “It was a misunderstanding,” said Mouzannar. “The images should be seen in relation to each other. Unfortunately, in this particular case there was only one image in the area, and some people took it as an insult.”

Overall however, the campaign was an enormous success, not just within Lebanon, but around the world. For many a foreign newspaper, the ad campaign became the peg for a news or feature story on Lebanon’s complicated sectarian society. As in the case of I Love Life, the anti-sectarianism campaign was paid for by sponsors, while ad agencies, printers and billboard companies waived their usual fees.

The Lebanese Broadcasting Corporation (LBC) liked the campaign so much they sent a letter to all agencies to produce a TV ad, for which LBC would offer the studio, equipment and free air time. H&C Leo Burnett created two clips. The first shows a series of cars, each with a “sectarian number plate,” after which the camera slowly zooms in on a broken car with a Lebanese number plate. The slogan, freely translated from Arabic: “Drive the sectarian way and this is where you’ll end up.” The second was a critique of the state’s employment practices, which place maintaining the sectarian balance over qualification. Ad a powerful indictment of sectarianism

Elsewhere, Grey International produced a film on the same theme, showing people from around the world in front of their flag, stating their nationality. It ends a number of Lebanese, who instead state their sect in front of the Lebanese flag. Finally, the private sector had its say with “I Love You in Winter.” Sponsored by Aishti, ABC, Banque Mediterranee, Banque Audi-Saradar, the Phoenicia InterContinental Hotel, Virgin Megastore and MEA, the campaign encouraged the Lebanese (and any tourists that happened to be here) to shop like hell during the festive season. A similar campaign, by more or less the same group of companies, was launched in the summer of 2005 following the assassination of Rafic Hariri and the string of bomb attacks that followed.

According to Maya Matalani of Aishti, special discounts were offered and special events were organized, while MEA offered 23 free tickets. Anyone buying for more than LL 30,000 worth of products had the chance to win an air ticket. “The last two weeks of December were very good,” said Matalani. “People really did go out, although in downtown it depended a lot on where you were located. The area closer to Riad el Solh Square, where the demos were, did not do as well as other areas.”

And “I Love Life”? The billboard campaign has already expanded. After the New Year’s party, a new website is imminent. It will include news, a blog, forums, an article archive and plenty of interactivity. I Love Life downloads will also be available, with visitors encouraged to propose their own activities within the virtual community. Will the opposition respond? We will have to see. But as an I Love Life spokesman pointed out, “What better subject is there to debate?”
 

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