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Hariri’s legacy continues

by Nicholas Blanford
written by Nicholas Blanford

There were few more poignant and telling indicators of the impasse that has befallen Lebanon in the past two years since Rafik Hariri’s assassination than the shuttered shops, restaurants and cafés and empty cobble-stoned streets of the downtown district during this holiday season.

The Solidere-run city center was regarded as the jewel in Hariri’s reconstruction crown, the fulfillment of the former prime minister’s long-standing ambition to restore Beirut’s pre-civil war image as a financial and services entrepot for the Middle East.

But, the legacy Hariri unintentionally bequeathed the nation through his untimely death is not one of a flourishing economy based on tourism and services, but to turn Beirut into the nexus of an ongoing tussle for control of the Middle East, pitting Iran and its allies against the West and its regional partners.

It was clear within hours of the St Valentine’s Day truck bomb that killed Hariri and 22 others in 2005, that Lebanon had been struck by a political earthquake, the shockwaves of which would linger and travel far. His death triggered the mass rallies of the Beirut spring, a cathartic eruption of anger and outrage that led to Syria’s disengagement two months later. The demise of Pax Syriana also meant that Lebanon’s quarreling politicians could no longer resort to the Damascene arbiter, but would have to resolve their own differences.

That inevitably led to deadlock over key issues such as disarming Hizbullah or removing President Emile Lahoud from office. With the Syrians gone, foreign and domestic opponents of Hizbullah redoubled their efforts to have the party disarmed. But, Hizbullah dug in its heels and the party’s new found ally, Nabih Berri, initiated a series of largely futile national dialogue sessions, while Lebanese society became increasingly polarized along sectarian lines.

In the months before his death, Hariri had worked hard on securing a compromise with Sayyed Hassan Nasrallah, Hizbullah’s leader, over the group’s weapons. As long as there was no peace with Israel, Hariri would deflect international pressure to disarm Hizbullah, and in exchange Nasrallah would forego any rash actions that could drag Lebanon into a war with Israel. Hariri understood that Hizbullah was strong enough to resist disarming by force or political persuasion. But he hoped that over time as Hizbullah became more firmly enmeshed in Lebanese politics, it would find that its priority lay with the interests of its Shiite constituents and would no longer heed the siren call of Iran’s clerical rulers.

Hariri’s murder shattered that compromise, however, and although his son Saad attempted to kindle the same warm relationship that his father had enjoyed with Nasrallah, high stakes politics intervened.

While the fate of Hizbullah’s arms was of direct interest to Iran, the United Nations commission tracking Hariri’s killers appeared to pose an existential threat to Syria’s rulers. The commission – the first set up by the UN to investigate a political murder – owes its existence chiefly to the US recognizing that the probe had the potential to bring about a regime change in Damascus with nary a protest from the international community.

The initial progress reports suggested that high-level Syrian officials and their Lebanese allies were behind Hariri’s murder and subsequent reports, although less forthcoming, have indicated no significant change of direction.

The stakes are high. The commission’s mandate expires in June and last month the chief investigator said that the probe was reaching a “sensitive stage”. If indictments are issued against senior Syrian figures it could spell the end of the Assad regime. The administration of US President George W. Bush, contending with disaster in Iraq and uninterested in pushing Israel to resume the Middle East peace process, appears to have recognized the importance of Lebanon in shaping the future direction of the region. The Iraq Survey Group’s recommendation to engage with Iran and Syria is being ignored by the White House. Bush appears to be betting on the UN commission accusing senior Syrian officials to help cripple the recalcitrant regime in Damascus, thus saving him the ignominy of having to approach Assad to help sort out Iraq.

If Assad’s top security lieutenants are indicted and the regime falls as a result, with a new Western-friendly administration taking over, it will have serious repercussions for Iran and Hizbullah, Syria’s principal allies in the anti-Western alliance. Syria plays a crucial role as Iran’s only Arab ally and as the geo-strategic linchpin connecting Iran to its Lebanese protégé, Hizbullah.

The anti-Western alliance will inevitably collapse into its constituent parts without the glue binding them that is Syria. Hizbullah will find itself isolated and struggling to resist calls to disarm, and Iran’s ability to project itself on the Arab-Israeli conflict will be weakened. Iraq and the Palestinians will also feel the effect of a change of regime in Iraq.

The events of this year may yet prove that in death Hariri will have had a far greater impact on the Middle East than he ever could have had in life.
 

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

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Learning a thing or two from Qatar

by Norbert Schiller
written by Norbert Schiller

Twenty years ago, I arrived at an airport in the middle of a desert peninsula in the Persian Gulf. The arrival hall was basic, not one to remember, and the duty free consisted of one room with items piled up on the floor. The passport control officers were unfriendly and the customs agents scrutinized every item of luggage. As I remember, there were only one or two decent hotels and little traffic on the road.

Qatar was engaged in a wasteful, low-intensity war with Bahrain over a few patches of sand in the sea. My first thought was why the Qataris can’t learn a thing or two from Dubai, which was in the birth pangs of a historic economic revolution.

Ten years later, I arrived in Qatar again, this time invited by the ministry of tourism to attend the country’s first ever tourism festival. I was met at the airport by a polite representative from the company hired to showcase Qatar’s tourism potential. The streets were new and had been planted with trees to break the monotony of the desert landscape. The group included a German designer with a posse of stunning Polish models. He told me that this is the new frontier in fashion. “I’m here to get into the market before anyone else,” he confided. I was still not convinced.

A decade later, Qatar launched its latest campaign, one that was seen on television stations around the globe: “Proud Sponsors of the 15th Asian Games … The Games of Your Life.” One would have had to be living in a monastery not to have seen it. I was surprised and impressed by Qatar’s aggressive approach. Then came the phone call asking me to cover the games. Qatar and I were hooking up again.

At the end of November, I once again landed in Doha and like everyone involved with the games – athletes, organizers and journalists – was ushered into a private terminal, greeted by a member of the games’ organizing committee. I was given accreditation, put on a bus and shuttled to an apartment complex, which would be my home for the next 15 days. I was also given meal cards, a locker key and a bagful of souvenirs. Buses to the various sporting venues ran like Swiss (or Japanese) watches and as a photographer, my access to each event was planned with precision.

Never in all my 25 years of covering the Middle East and Africa as a photographer had I seen such meticulous organization. The Qatari’s had retained the international know-how of the people who brought us the Sydney Olympics to ensure these games were the best ever.

Twenty years ago, or even ten years for that matter, I would have never imagined that Qatar, built on a peninsula of sand, could have pulled-off such an extravaganza. During the 15 days a total of 13,000 athletes from 39 countries competed in 45 disciplines. There were 1,700 journalists – 400 of whom were photographers – on the ground, covering the games. The Qataris had also hired hundreds of Indian computer engineers to patiently attend to our technical needs. They worked quickly and efficiently and did not get flustered. It was yet another example of the professionalism that underscored this event and proof of what can be done with vision.

Granted, Qatar had the money to blow and will have made a loss (attendance at most venues over the 15 days was far from bulging). But what a loss-leader! Yes, there were rumors that tickets were purchased well in advance by the ruler and given to students (schools were closed during the games) and guests so that the stands would look full for the TV cameras. Nevertheless, there was energy and a will to make these games the catalyst and benchmark for future sporting events. It’s no secret that Qatar wants to host the Summer Olympic Games in 2016 – even though it might be a tad hot.

Lebanon, my erstwhile home, has been given the honor of hosting the 2009 Asian Winter Games. It offers yet another opportunity for Lebanon to take center stage and showcase its own diversity. But for the Winter Games to be successful, Lebanon will have to put away its divisions and learn a thing or two about unity and brotherhood by watching how athletes from different countries with different beliefs can come together in competition.

As for Qatar, well it knew where its priorities lay. The barren peninsula has become an example of what the Middle East can achieve. Qatar had demonstrated it is a global player. It had arrived. It made its choice and is beat the drum of economic progress. It has chosen investment over conflict and growth over blinkered ideological stagnation.

And don’t write them off as hosts for a summer Olympics. They will surely find a way around the heat.

Norbert Schiller is a photographer/editor. He covered the 2006 Asian Games for UPI

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Bush’s Middle East mission

by Lee Smith
written by Lee Smith

As every upper level manager knows, you bring the consultants in to buy you some peace and quiet with the shareholders while you’re deciding whether the buy-out clause in your contract turns out to be more lucrative than the year-end bonus. So why did George W. Bush, the Harvard Business School-educated CEO of the United States of America, let the consultants get all the headlines? After the mid-term elections, all anyone could talk about in Washington was the Baker-Hamilton Iraq Study Group.

Leaks from the ISG provided the press with plenty of cannon fodder, as conservative publications went on the offensive against Baker, the man who handed Lebanon over to Damascus, and let Saddam stay in power to become the symbol of anti-Americanism in the region. White House critics on the other hand called it the end of the Neoconservative project in the Middle East, a return to a “mature” Middle East policy, managed by the Bush family’s long-time fixer. Savvy insiders wondered if the formation of the bi-partisan group was some clever plan of the president’s to make the Democrats equally culpable for the meltdown in Iraq. And everyone wanted to know if the study was likely to become the blueprint for American foreign policy.

In the end of course, it was all much ado about nothing, as Bush acted like a proper CEO and tossed the report in the garbage. Jim Baker shouldn’t give up his day job, one White House wag remarked, putting an end to weeks of speculation: the President still makes American foreign policy. And yet after the Democrats won both houses of Congress, and polls show an American public increasingly dissatisfied with Bush’s Iraq strategy, the major question still lingers: what is this president’s foreign policy?

Bush’s legacy rests entirely on Iraq. The problem is that it is precisely this large Arab state that is preventing the White House from seeing how much the ground has shifted during the last four years, partly due to Iraq itself, but largely just because the region is always highly volatile.

After September 11 the Americans were mad at the Sunnis, especially Saudi Arabia. It was Riyadh after all who had provided, unwittingly or not, much of the staffing and financing for the largest terror attack in history. Part of the idea then behind the invasion of Iraq was to rearrange the regional balance, thereby empowering the Shia. But four years after the fall of Saddam’s regime, the US’ major problem in the region is not Sunni jihadism, but the Islamic Republic of Iran. Tehran is at war with the US, and is fighting American allies, interests and troops throughout the region.

The key to understanding this new regional alignment of course is not Iraq, but Lebanon. Israel’s war against Hizbullah drew the lines very clearly, and now Jerusalem is reportedly offering the Saudis a chance to re-affirm the casual alliance contracted during this past summer. Ehud Olmert intends to meet with Saudi officials to kick-start the moribund peace process. Does that mean that a comprehensive peace deal between the Israelis and Palestinians is finally in the offing? Of course not. The point of the exercise is to take the Palestinian file away from Hamas’ Iranian and Syrian sponsors and return it to the Sunnis.

So, if Israel and the traditional Sunni regimes have lined up under Washington’s umbrella, why doesn’t the US know it? Because of Iraq. If the White House sides with the Sunnis, the Shia will make it impossible for US troops there. And thus, the White House is caught in a strange bind – it knows that pro-Sunni policies in the rest of the Middle East will affect its standing in Iraq, but cannot yet admit it is impossible to detach Iraq policy from a larger strategic vision.

And it’s not just the administration that’s stuck; the Baker Study Group is the clearest manifestation of this confusion about the region. James Baker is as close to the Saudis as any other living American and the Saudis obviously do not want the US to engage Syria and Iran. And here he is putting forth advice – withdrawal from Iraq to leave the Sunnis at the mercy of the Shia, while “talking” with Iran and Syria – which would undermine an ally whose vital interests, at least in this case, are perfectly in line with Washington’s: to maintain the position of the US in the Persian Gulf.

The fact is that the Bush administration, its critics and enemies have greatly misunderstood the nature of American power. Remember that Osama Bin Laden said the US was a “paper tiger” because it was flushed out of Vietnam, Beirut, Somalia, etc., and hence Bush says he will not “cut and run.” So what is next? To prove to an obscurantist fanatic like Bin Laden that it is the earth that revolves around the sun and not the other way around?

It is easy to see how the US has failed in Iraq, and it is equally easy to forget the degree of difficulty involved. In a matter of months, the US brought down two troublesome Middle Eastern regimes, and only a country as rich and powerful, capricious and arrogant as America could afford to believe it was in the interest of the world to democratize these places as well. That 150,000 US troops and scores of American diplomats could not bring Jefferson to the land of the two rivers describes the limits of a missionary vocation, not power. So, what is the point in saving Iraq if it costs Washington the world – or worse, American hegemony in the Persian Gulf? 

Lee Smith is Hudson Institute visiting fellow and reporter on Middle East affairs

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Consumer Society

Regional retail boom counting on luxury

by Executive Staff
written by Executive Staff

After several years of sluggish turnover, the global luxury industry roared into life in 2006, with worldwide sales reaching a hefty $150 billion. A testament to the industry’s revival is the number of flagship stores spawning around the globe from such über brands as Louis Vuitton, Chanel, Hermes and Gucci.

By 2010, the Middle East luxury market potential is expected to hit the $100 billion mark as Gucci, Chanel et al make headway into the demand-filled region through local franchisers and retailers. Department stores, including Saks Fifth Avenue and Harvey Nichols, are also opening outlets in the region. In Dubai, Harvey Nichols opened a three storey, 12,500 square-meter store in the Mall of the Emirates, their biggest store outside London. With oil revenues and a growing population, the luxury Arab market has a seemingly insatiable appetite.

Global vision

Enter the Middle East Luxury Group (MELG). Established in 2005, the company is hoping to reap the rewards of this exciting market trend, especially when considering that 40% of all haute couture clients are Arabs. The group, which expects yearly sales of $80 million, believes it is revolutionizing the luxury industry.

“What we are actually providing here is a unified concept in luxury, encompassing everything from clothing to eateries, media and hotel businesses, and we are forcing others to keep up with this trend,” explained Elias Abi Khaled, MELG’s CEO.

The man behind MELG, Bahij Abou Hamzi, who made his name in telecom with his Global and Liban Call services, has so far invested $25 million in Beirut through his company. “The owner’s strong network base gave us contracts with popular brand names,” said Abi Khaled.

MELG’s media arm includes Fashion TV Arabia and Avenue, a fashion magazine that is currently preparing its first issue. The luxury retail activity consists of 13 exclusive brands and multi-brand stores, including Gianfranco Ferre, Vicini, IT, M for Missoni, Exte, and Just Cavalli. The group has also dipped its toes in the hospitality sector with the 109 Café.

“The MELG vision is of a global nature, as we treat the various fashion interrelated activities as one, with complementary functions interacting for the benefit of the whole entity,” explained Abi Khaled, adding that the group intends to expand its line of products and services to eventually include a luxury hotel.

At the moment, MELG employs 150 people and is expected to grow by 100 more within a year, an indication of the group’s aggressive expansion plan. Outlets are scheduled to open in Kuwait, UAE and Bahrain within a year, as well as stores scheduled to open in Qatar, KSA, Egypt and Jordan.

Unique approach

“We avoid franchising for obvious profitability concerns,” says Abi Khaled. “Opening our own points of sales underlines our concern for quality. Each outlet conveys the image of the MELG and we control every aspect of the service.”

Boasting a varied product base within its retail activity, MELG had to face conflicting interests in certain markets, where local exclusivity contracts preempted the company’s representation. As a direct consequence, MELG does not carry a uniformed basket of goods over the region. “Certain brands, including Versace Jeans Couture, Galliano, GF Ferre and Plein Sud, are however available through our multi-brand store,” said Abi Khaled, adding that “within the retail line of activity, outlets are all serviced by the Beirut purchasing platform, as it remains, after all, the fashion capital of the Middle East.”

Abi Khaled believes MELG to be currently among the top five luxury retail companies in the country (the group’s competitors are the El Tayyer group, Villa Moda and Chalhoub) but expects the group to eventually be the only one with an effective regional presence in the Middle East and GCC areas.

“Our goal is to establish a regional identity, which is built through a strong presence in most markets in the Levant and GCC areas,” he said. However, because MELG was first launched in Lebanon, the marketing campaign was kept on hold because of political unrest. “For other countries, one main marketing theme is adopted, which takes into consideration local cultural differences and is adapted to each country individually using TV, print and the group’s monthly fashion magazine, as well as other specialized shows and events.
 

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Editorial

Tailoring a dream

by Yasser Akkaoui
written by Yasser Akkaoui

Qatar can look on its hosting of the recent Asian games as a job well done. But the Genesis of the nation’s rise to prominence from being a Gulf backwater is predicated on a vision in which it deliberately chose to differentiate itself from its glitzy neighbor Dubai and Singapore, with its thick seam of Asian diligence.

Where would be the value-added in duplicating a wining formula? Qatar finally chose education and excellence among its new set of core values. Sport and the locally-initiated Aspire campaign – launched through the prism of the Asian games – represents the latter of these values, while Doha is now a hub for foreign campuses of some of the finest international names in education like Cornell and Carnegie Mellon.

Elsewhere, the GCC real estate boom is in full swing and stretching its network across the region. This presents new challenges to those developers who are used to creating from scratch in desert expanses – a la the compound culture from which it could be argued this formula sprung. The nations of the Levant and North Africa are going concerns and any mega developments will need to embrace the cultural, social and ethnic mores of these countries. Citizens – like the SIMs in the SimCity computer game – cannot be imported like the eager westerners brought into the GCC.

But let us not forget that as the second anniversary of the assassination of Rafic Hariri draws near, that he was the granddaddy of these mega projects. Hariri, like the visionary gulf rulers, was weaned on the GCC experience and was imbued with the idea of developing a dream that he could export to Lebanon. The Beirut Central District, the Dbaye Marina and the now Rafic Hariri International Airport were the examples he set and now his template is being rolled out across Jordan and the UAE.

That Lebanon has fallen behind is more to do with its erractic political dynamic. The governments of North Africa, not to mention Syria and Jordan, can execute these projects because the central government can directly control their implementation, by fast tracking laws that directly affect the economic good.

Sadly, in the Middle East, you still need absolute power to get absolute results.

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Lebanon

Pioneering Real Estate

by Executive Staff
written by Executive Staff

As many developers and investors eyed the Lebanese real estate market cautiously at the start of 2007, Bassil Real Estate Developers (BREI) attracted significant local and regional attention for moving forward with new projects despite political uncertainty. Last month, BREI formally unveiled plans for the seventh edition of its luxury Convivium brand, a $15 million venture with leading Kuwaiti asset management and investment banking organization MARKAZ.

The new ‘it’ neighborhood

With a total development area of 12,000m2, Convivium VII, which will be built in the Badaro area of Beirut, marks the brand’s first departure from the Gemaizeh neighborhood, where Convivium I-III are located and IV-VI are at various stages of completion. In fact, BREI was among the first companies to recognize Gemaizeh’s potential: now, as the company shifts its gaze to Badaro, many people are beginning to speculate as to whether BREI might be, once again, ahead of the crowd. Is Badaro Beirut’s next ‘it’ neighborhood?

According to Patrick Geammal, general manager of Ascot Real Estate in Beirut, Badaro’s potential is enormous. “Karim [Bassil, BREI’s CEO ] is a pioneer to have thought of the area. He’s always a pioneer,” noted Geammal, who believes that BREI’s venture will mark the first step in the development of Badaro. Three to five years from now, he predicts, the neighborhood will be on every developer’s list.

Badaro’s potential, explains Geammal, is built on three factors: its geographic location, its relative affordability, and its pleasant tree-lined mixed-use character.

On the first count, Geammal observed that “Badaro has all the geographic components for success: it is the crossway of Beirut. It’s just minutes from Verdun, Hazmieh or downtown. But it’s also right by Ashrafieh.” Proximity to Ashrafieh leads into Badaro’s second cachet: affordability.

As Ashrafieh and Sodeco have become increasingly expensive (and, to put it simply, full – there is little undeveloped land in the area), people have begun to look elsewhere for residential property. At present, prices per square meter in Badaro range from around $800 to $1,300; in Ashrafieh, average prices for new build are around $2,200/ m2. “In the future, Badaro will simply be a continuation of Ashrafieh,” predicted Geammal. “It’s already starting to emerge as an option: people realize they can get a bigger house on a smaller budget. It’s a normal extension of the market.”

In demand

This effect has already been seen in Sioufi, a residential neighborhood on Ashrafieh’s eastern edge that has seen a boom in recent years. However, Geammal believes Badaro will quickly outstrip Sioufi as the best Ashrafieh alternative. While Sioufi is almost exclusively residential, lacking commercial facilities, Badaro is mixed-use, housing residences, offices and numerous shops, banks and restaurants. Badaro also offers something rarely found in Beirut: an abundance of trees and greenery.

“Badaro gives the impression of Rabieh, but it’s just a bridge away from the BCD,” noted Geammal. “It’s a very interesting spot.”

BREI certainly thought so. The Convivium VII project was tentatively drawn up several months before the four plots in Badaro were bought in October 2006. “It’s a great location, and it goes perfectly with our concept. With the Convivium brand, we don’t want to be everywhere – we only consider places that match the brand’s identity, which means a very specific urban environment,” explained Rania Tueini, marketing and communications manager. The two-building residential project, which will be ideally-situated between the museum and the hippodrome, also includes its own 120-meter-long private garden, which Tueini cites as a way of blending the development in with the neighborhood (one of Convivium’s trademarks). So far, response has been positive: BREI policy demands that 20% of units be sold before any project is launched, to confirm sufficient demand. Construction has yet to begin, and Convivium VII was only just announced – but 35% of available units have already been snatched up by eager buyers.

Say you read it here first.

 

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Lebanon

BoB: a new Frontier

by Executive Staff
written by Executive Staff

Bank of Beirut (BoB) took a leap into a new market last month by opening a branch in Oman. BoB is determined to pursue its strategy of growth and expansion despite the local political upheaval gripping Lebanon, where the bank has grown in the past 13 years into a major innovative player.

BoB is the first Lebanese bank to operate in Oman, which was chosen for its growing economy and stable environment, BoB chairman Salim Sfeir told Executive.

Apart from receiving necessary approval from the Omani authorities in mid 2006, BoB did not get any special incentives from the government in Muscat. The BoB branch office in Oman opened for business on December 12 with a capital of $26 million and a team of 20 persons.

“What is good for us is that Oman is very similar to Lebanon in terms of economies of scale. Their banks are as big as ours and the needs of the economy could easily be served by any Lebanese bank our size,” Sfeir said.

While other GCC countries have set up fancy financial hubs and harbors, these specialized centers are still untested value propositions and are tailored to host very large banks that are looking to finance mega projects outside the range of BoB. Sfeir pointed out that Oman is a “much easier and much cheaper” market than Qatar or Dubai – where BoB feels sufficiently represented through a rep office.

Established in 1963, BoB has a network of 41 branches in Lebanon. It operates on the international level through Bank of Beirut (U.K.) Ltd., a wholly owned subsidiary in London; an offshore banking unit in Cyprus; and representative offices in Dubai and Lagos, Nigeria.

Also in mid-2006, BoB was issued a license by Iraq’s central bank to open an office in Baghdad. The office was established, Sfeir said, but is a far lower priority than the Oman operation.

Experts agree that most leading Lebanese banks have taken on an expansion strategy outside Lebanon in an effort to create new revenue streams and diversify incomes. Lebanese banks, which have in recent months been increasingly scrutinized for their high exposure to local government debt, have for the last five years moved into various markets in North Africa and the Middle East.

Regardless of the underlying reasons, the trend of regional and even international expansion by Lebanese banks continues to gather momentum. Some are playing it safe, like BoB, while banks like BLOM, Audi Saradar, and others are much more aggressive. Given all the uncertainties in Lebanon, experts and even government officials encourage this trend, seeing as it positive for the banking sector.

Inasmuch as selection of markets, Oman has a very attractive foreign investment policy. In the financial sector, foreign ownership of a locally incorporated bank or financial institution is allowed up to 70%. Given these attractive regulations, two other banks from Lebanon are also eyeing opportunities in Oman.

“We are interested in expanding our retail and corporate banking services in the area,” Sfeir said, adding that he was not concerned that other Lebanese banks have also announced plans to enter the Omani market.

The Omani market is also opportune because of the government introduced expansionary budget, which will bring higher spending on infrastructure and progress on major projects in the industry and tourism sectors. In turn, this creates favorable prospects for corporate lending and could give banks more opportunity to move away from heavily relying on personal lending.

Banking highs

Despite the pressures on the Lebanese market, BoB’s performance did not suffer in 2006. In its latest forecasts for full-year 2006 performance, BoB expects its net profits for 2006 to rise by 32% to $36 million, compared with $27 million in 2005. The bank’s total assets are expected to increase 8.2% to $4.6 billion, compared to $4.3 billion in 2005, and total customer deposits are projected to grow by 11.7% to $3.17 billion. The annual deposit growth for 2006, thus, will be substantially stronger than it has been in 2005, when deposits increased by 1.2% from 2004.

BoB said in August that its net profit in the first half of 2006 surged by 72% to LBP29.21 billion ($19.47 million) from LBP16.94 billion a year earlier while shareholders equity grew by almost 51% to LBP428.36 billion from LBP283.92 billion.

Speaking on the future performance of the bank, Sfeir said the ongoing political instability in Lebanon may affect revenues in the first half of 2007 for the entire sector.

BoB expects to open a second branch in Oman within the coming six to eight months. “It is very much a question of how successful our operation will be,” Sfeir said. “The more successful our people in Oman, the larger the operation will get. We are here to support them, but if they are not successful in penetrating the market, our support will stop there.”

 

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Myth busting n Beirut

by Paula Schmitt
written by Paula Schmitt

Reporting on the Middle East for Brazilian viewers is no easy task. The world has been fed so many half-truths from this region that I spend most of my time having to concentrate on the other halves. So, when my report is about Iran’s wish to enrich uranium, I must explain to my TV audience that the only country in the region with nuclear weapons is Israel. And then I must clarify the principle of MAD – mutually assured destruction – and deterrence power. Making this intelligible on television is challenging, but essential.

When I report, say, on Israel’s massacre in Beit Hanoun, I must give Israel’s official excuse for the attack. But, once I mention their justification – “to defend against the Palestinian rockets” – I feel compelled to add that, in the past five years, all the rockets launched from Gaza have killed fewer than ten people, less than half the fatalities in one day in Beit Hanoun.

Myth busting is as difficult in Brazil as anywhere else. To give an idea of the pro-Israeli bias in the Brazilian media, for the first half of the war, I was the only Brazilian reporting from Lebanon with sound and image. All the other chief correspondents were in Israel, watching the launching – rather than the landing – of the missiles.

Though we accept that objectivity doesn’t really exist, it is the duty of every journalist to present the best arguments of all sides involved. In my program, I usually have two minutes – within the 40-odd minutes allocated for all the news of that day – to tell a story. Yet, despite the short time, I don’t try to summarize with a ready-made verdict. What I do, rather obsessively, is try to know everything I can from all sides involved and present the best arguments. Like a judge, the audience deserves a good prosecutor arguing against, and a skilled lawyer speaking for, to reach the fairest judgement.

But, it is hard to even present the facts right when one has to compete with, say, that bastion of world media, CNN. On December 1, the day of the Hizbullah demonstration, Hala Gorani spent the afternoon saying there were “up to 200,000” people demonstrating. She didn’t say “at least 200,000”, a common face-saving device to avoid accuracy. But it didn’t stop there. CNN’s footage corroborated the ‘miscalculation’ by focussing the camera only on Martyrs’ Square. With only a very small part of the scene in the frame, the images miraculously backed up Gorani’s estimate. Later on, Brent Sadler ‘corrected’ the truth by upgrading the “up to 200,000” to “at least 200,000”. He was not lying, although he was probably 800,000 short of the truth.

And speaking of truth, when Christiane Amanpour makes a two-hour ‘documentary’ about Al Qaeda and chooses not to mention that America was one of its main sponsors in Afghanistan, good reporting starts to sound like a conspiracy theory, showing that even the most high-profile reporters do not know of, or choose to ignore, the whole truth.

One of the best Brazilian correspondents, a personal friend whose honesty and seriousness is beyond doubt, was here to cover the events in Martyr’s Square. When I suggested that many Lebanese thought that Israel may have been involved in Pierre Gemayel’s assassination, he looked at me like he was staring at a crackpot. But that was little wonder: he had never heard Israel accused by a former American ambassador to Lebanon of trying to kill him in 1980, nor was he aware of the USS Liberty incident or the Lavon Affair.

Yes, the Middle East is full of conspiracy theories and Israel is often the main suspect by default. But, to believe in all conspiracies is as naïve as to dismiss all of them unexamined.

Yet in Lebanon, unlike in the Palestinian-Israeli conflict, it is harder to understand who is the victim and the perpetrator – especially when the task is to give each side’s best argument. When I report that Fouad Seniora accuses the opposition of staging ‘a coup’, Brazilians will no doubt laugh: street demonstration is the ultimate weapon of democracy, and we got rid of a corrupt president using that very tool. The Hizbullah cause also has the support of left wing Brazilians who see an imbalance in the social dynamic of Lebanon, particularly in the new downtown. I have received emails from Lebanese-Brazilian viewers mockingly referring to Nijmeh Square as Rolex Square, and Martyrs’ Square as Bank Square, a reference to a new bank development.

On the other hand, Hizbullah’s tactic of accusing anyone against its agenda of being pro-Zionist has little room for appreciation, as does accusing Seniora of being pro-America, when one knows the links between Hizbullah and Iran are all too obvious. In fact, I could say with almost certainty that most Brazilians would rather live under the worst American government than under the best Islamic Republic. Freedom, for us, is sacred. Unlike Iran, but much like Lebanon, Brazil allows people to believe in what they want, and chador-wearing women will always be welcome on our bikini-infested beaches. 

Paula Schmitt is the Middle East correspondent of the Brazilian SBT and Radio France International Portuguese service

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Lebanon

Ecological disaster area

by Executive Staff
written by Executive Staff

Damage to Lebanon’s ecology and agriculture due to the war with Israel amounts to over $400 million, according to research by Lebanon’s Ministry of Environment (MoE) and a recently published survey by the World Food Organization (FAO).

Following the bombing of the Jiyeh power plant in July, an estimated 12 to 15 million tons of heavy fuel poured into the Lebanese coast. Today, according to the MoE, the ongoing post-war clean-up operation has cost some $150 million.

Extensive clean-up operation

“Lebanon’s oil spill differs from all other spills known so far,” said Ghada Mitri, the ministry’s oil spill communications officer. “Most oil spills occur at sea. The Lebanese spill occurred on land after the Jieh storage tanks were bombed. The fuel oil then leaked into the sea, was carried by water and wind north of the site and then washed up all along the Lebanese coast.”

Some 150 kilometers of mainly Lebanese coastline have been affected and according to Mitri, the ongoing clean-up has so far recovered some 1,145 cubic meters of liquid oil and 5,434 cubic meters of polluted debris. It is difficult to estimate the spill’s long term damage, as this still needs further monitoring and research.

“No two spills are the same and habitats and ecosystems react differently,” said Mitri. “For example, the USA is still carrying out monitoring activities along its shores 17 years after the Exxon Valdez disaster.”

In March 1989, the Exxon Valdez struck a reef off the Alaska coast and spilled an estimated 50,000 to 150,000 cubic meters of crude oil into the pristine wilderness. Some 250,000 sea birds, 3,000 sea otters, 300 seals, 250 eagles, as well as billions of salmon and other fish eggs were killed. Having been found guilty of negligence, Exxon, settled a lawsuit by paying $1.1 billion in damages.

Even in 2001, researchers in Alaska found oil traces at 58% of the 91 sites they surveyed. They warned that buried oil is especially dangerous as it remains toxic. Surface oil, on the other hand, weathers and becomes a kind of natural asphalt layer preventing toxic elements from spreading.

According to Mitri, as most of the oil washed up on the shore, swimming along Lebanon’s coast will most likely not pose any health hazards. However, it is not known to what extent fish stocks have been affected.

According to the FAO, overall damage and losses to Lebanon’s agricultural sector, fisheries and forestry amount to an estimated $280 million. The organization stressed that hostilities not only directly affected crops, livestock and equipment, but also indirectly hit the sector as market opportunities and jobs were lost. Agriculture accounts for almost 70% of household income in south Lebanon and many farmers were left with crippling debts.

Farmers hit hard

“With the loss of income from harvests and lost animal produce, many farmers have become indebted, as they usually repay their debts during the May to October harvest period to secure credit for the following season,” said Anne Bauer, director of the FAO’s emergency operations and rehabilitation division. “This year, their ability to repay was reduced to a minimum, making it impossible to start the new cropping cycle .”

According to the FAO, the biggest economic losses were attributed to the lack of access to fields during the conflict – which coincided with the fruit and vegetable harvest – many crops perished. An estimated 25% of all farm land in the south will remain inaccessible until all unexploded ammunition and cluster bombs are removed.

The total loss due to damaged or lost harvests amounts to some $94 million, while the overall damage related to crop production is estimated at $232 million. In addition, some 3,000 dairy cows, 1,250 bulls, 15,000 goats and sheep, 18,000 beehives and over 60,000 broilers were lost. The FAO estimates financial losses to the livestock sector at nearly $22 million.

In the fishing sector, destruction of boats, infrastructure and equipment cost roughly $3 million, while trout farms in the Bekaa Valley lost 300 tons of fish. The overall loss to the sector amounts to $9.7 million. Finally, the estimated damage to forestry is $16 million, mainly due to the inability to fight forest fires during the conflict.

The FAO secured funding to aid some of the south’s most vulnerable farming communities. Seeds, seedling, fertilizers and irrigation equipment will be provided to, if possible, resume agriculture. Livestock farmers, traditionally the poorest of the rural population, will receive animals and beehives, as well as medication for livestock, feed and equipment.

One question mark remains over the ecological war damage. The Israeli army possesses uranium enriched ammunition, but it is not clear if it was deployed this summer and what, if any, will be the level of the fallout. While one British lab stated it found traces of uranium at two bomb craters, the UN Environmental Program announced it had not found any.

 

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Lebanon

Death of a shopping district – BCD retailers cry SOS

by Executive Staff
written by Executive Staff

One week into the opposition demonstrations that effectively paralyzed commerce in the capital throughout much of December, a few hardy businesses in the Beirut Central District (BCD) cautiously opened their doors – despite the presence of the Lebanese Army and its armor, dogged protesters, and coils of razor wire – to holiday shoppers. They hung their Christmas decorations and slashed prices in a last ditch effort to woo shoppers. It capped off what has been, by all accounts, a disastrous six months for Lebanon’s luxury retail and hospitality sectors.

Indeed, the commercial fortunes of tenants in the BCD, where rents average $1,000 dollars per square meter per year, have been in the epicenter of the bruising political events of the past two years that began with the assassination of Rafik Hariri. After bumper years in 2003 and 2004, the demos and funerals of 2005 saw business in the BCD drop by 50%, while in 2006 that dip has increased to 70% due to the summer war and more demos, funerals and sit-ins.

Dying a ‘slow death’

This trend will surely continue into 2007. Retailers were reportedly in the midst of scouting alternative, less economically vulnerable locations in December, and said they would be forced to move if the deadlock continued into the New Year. The Lebanese finance minister said that each day of demonstrations has cost the economy $70 million in losses, and according to some estimates up to 70% of businesses in BCD are in danger of collapsing. At the time of writing, Jihad Murr, the owner of the Virgin Megastore – not just a shop, but a landmark that at one point epitomized the retail magic of the BCD – declared that they were dying a “slow death” and may be forced to shut down.

Paul Ariss, the president of the Hotel, Café, and Restaurant Syndicate, confirmed that many members of his association have been considering a change of venue since the war and some have begun to expand elsewhere in the region, namely Saudi Arabia, Egypt, and Qatar, but said it was too early to estimate the number of departures from the BCD.

“In 2005 BCD was closed for at least 40 days following the death of Hariri, and I don’t know how many days for the assassinations afterward,” he explained.

“Then there were 70 days for the national dialogue and the Council of Ministers meetings. Then 43 days during the war, and now the sit-in. Add all this up and no commercial venture would survive. Businesses are either paying operating costs out of their own pocket, selling shares, or whatever is necessary to stay afloat.” He explained that investors were in too deep to just pull out. “Right now, everyone is just hoping that things will get better.”

Staying afloat

Solidere preferred not to comment on the situation, with General Manager Mounir Douaidy saying it was “premature to determine the impact of political events on Solidere.”

Though rents will probably remain unchanged, Solidere did exempt tenants from two-months of rent for July and August. According to Sami Hochon, owner of a Lina’s franchise, a popular BCD café, Solidere has indicated its willingness to do so again if the current stalemate continues into February 2007.

Hochon was one of many high-end business owners to attend the launch of an advertising campaign to kick-start the holiday shopping and tourist season held at the Phoenicia InterContinental in Beirut in mid-December. He said that many foreign companies have closed their Beirut branches since the war, and feared he would have to follow-suit if the situation continued for three or four months.

“People are not spending money so none of my locations are doing well, but business (at Lina’s BCD location) has dropped 80% from last year,” Hochon admitted.

Mall power

The outlook is better for Beirut’s malls, which could benefit from the potential exodus of retailers and restaurants from Solidere, assuming they have the vacant space. Ariss said some in his syndicate are interested in relocating to the Ashrafieh branch of ABC, which is already 90% occupied, and the mall’s operations manager confirmed that inquiries have surged since the sit-ins began downtown.

At City Mall in Dora, also 90% occupied, the number of inquiries into temporary leases for the holidays is below the expected level, according to the mall manager Rony Aoun. They have, however, received 12 applications from retailers looking for permanent space during the last quarter of 2006, although Aoun insisted the increase in demand was not necessarily linked to the political situation in the BCD.

Meanwhile Solidere – the biggest company listed on the Beirut Stock Exchange – saw net profits in the third quarter of 2006 drop by 81.5% from the same period of 2005, from $23 million to $4.25 million. Douaidy tried to put a brave face on the figures, saying they did not show the true picture. But, at the end of the day, chaos is not good for business. Just ask Jihad Murr.

 

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