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Looking Back

Winning ground in the middle east

by Lee Smith December 1, 2005
written by Lee Smith

It is perhaps an index of globalization’s totalizing embrace that foreign policy communities around the world have been chuckling over the same one-liner all year long: The war in Iraq is over and Iran has won. Well, there’s no doubt that the Islamic Republic of Iran’s (IRI) long and assiduous cultivation of Shiite networks in Iraq reaped dividends once Iraq’s former president Saddam Hussein, the IRI’s most serious threat, was deposed from power. But in truth, nearly everyone with an interest in the region has a lot to be thankful for this New Year’s Eve. But given the disappointments, betrayals and miseries that have befallen the Middle East over the last century, it’s not clear that even younger Arabs are capable of seeing events except as a variation on catastrophe. Or, to put it another way, if the Israelis are still around, we must still be living in the shadow of the nakba.

The fact is that this really was one of the most momentous years in the history of the modern Middle East and most of the news for residents of the region was good, very good. The only clear losers were the Syrian and Iraqi Baath parties, the US taxpayer and the liberal interventionist wing of the Republican Party, otherwise known as the “neo-cons.” Iraq itself, which is in many ways now Ground Zero of the Middle East, is too tough to call. Obviously, ordinary Iraqi citizens are paying with their lives because, one, the US cannot provide security in regions that are not already secure; and two, some Iraqis and their jihadi cohorts take great pleasure in killing other Iraqis and will keep trying to do so come hell or high water. And yet, there are elections, there is the struggle to build democratic institutions, like a constitution, and there are the Iraqi people themselves, many of whom disagree with their neighbors that Iraq was better off under Saddam Hussein. So, it’s going to be many years before anyone knows whether Iraq was a winner or loser this year, and it’s going to be Iraqis who make the call.

As for the rest of the region’s major players, Executive braved the ever-capricious winds of Middle Eastern politics to bring you our year-end round up in the hope that things won’t change too much before we go to press.

Lebanon: a winner (triple plus)

In a region where the word “martyr” is perhaps a little worse for wear, the assassination of former prime minister Rafik Hariri set off a chain of events that effectively liberated his country, and set Lebanon back on the democratic course it was derailed from for thirty years of war and occupation. But the undisputed heroes of the revolution are the Lebanese people, all of them, including those who never took to the streets and those who some believe stood on the wrong side of the street. Pluralism is no doubt a harder ideal than national unity, but it is also sterner building material. As for all the post-March 14 disenchantment, much of it is legitimate – for instance, is there no room in Lebanese politics for the youth who led the uprising outside of the student cadres of General Michel Aoun’s Free Patriotic Movement? Still, it’s important to put this remarkable year into context.

Things are changing so quickly; most local skeptics haven’t had the time to figure out what’s going on. Last year the parliament wasted its time ruminating over Arabism and other ideological niceties; this year the country’s elected officials took up real matters, including the economy, election laws and security. It is the latter that has been on the minds of most Lebanese, especially since the wave of violence left many dead in its wake and did serious damage to the vital leisure and tourism sector. But insofar as the purpose of that terrorism was to set the nation at arms again against itself again, it failed and the Lebanese succeeded. The UN Mehlis report has delayed action on several important issues – especially national security and international investment, both of them tied to disarming the Palestinians and Hizbullah. Hizbullah had a middling year. It became part of the government – except apparently for those uncomfortable moments when Damascus insulted the government’s prime minister – and may indeed be transitioning from armed gang to political party. Premier Fouad Seniora has the attention of a concerned international community but lacks the support of a strong Maronite partner. If that sectarian power struggle sounds to many like politics as usual in Lebanon, it’s not, or at least it hasn’t been for thirty years. This is the real thing, and it was earned.

Saudi Arabia and the Gulf: winners
(double plus)

One of the Bush administration’s more reasonable, and less noted goals in invading Iraq was to boost that country’s oil-production, a potential capacity, it was hoped, that would give the United States some leverage with which to pressure their long-time allies in Saudi Arabia. You see, over the last many years, the American taxpayer has dished out many billions of dollars to float the US Navy’s Fifth Fleet, which protects the free flow of Gulf oil, which in turn ensures that the Saud family stays rich, fat and happy – and in power. But in the aftermath of 9/11 it became apparent that many in the Saudi elite believed those same US citizens were infidel scum who deserved to die. So, the White House wondered how it could get their nice friends to stop saying such bad things in Saudi schools, mosques and the media. They hit upon the idea that if only they could get more oil to market maybe that would help bring the Saudis to heel. But of course, that would’ve meant that the US actually had to protect Iraqi pipelines, and in Iraq the US is mostly only capable of defending Baghdad’s Green Zone.

Thus, the Saudis’ position as keystone of the global economy went unchallenged, and the Kingdom had a bumper year as oil surged to a whopping $70 a barrel. The Bush administration effectively declared major operations against Saudi Arabia over when US Vice President Dick Cheney rolled out the red carpet for the royal family’s brand new Lebanon hand. Saad Hariri may turn out to be a very good leader of his country someday, but it was his Gulf friends who got a young businessman with no political credentials or experience an audience in Texas. This is how a superpower tells a petro-monarchy: “We are not worthy, we are not worthy … ” And now all Washington can do is hope that with King Abdullah finally and firmly in charge, he’s serious about taking on his own domestic terrorists and that he won’t do it by letting them blow off steam in Iraq or Manhattan.

Other Gulf states are investing in a future where oil is not king. Construction, leisure and tourism projects have made Qatar the fastest-growing state in the Gulf, or the new Dubai, but that’s just until Sheikh Muhammad bin Rashid al Maktoum finishes Dubailand, or Dubai’s new Dubai, an enormous theme park that once completed will double the size of the existing Emirate. Look for the Gulf to keep thriving.

France: winner (double plus)

What a bonne annee for La France, the year it became relevant again in the Middle East! Without a large economy or formidable military, Paris has had trouble projecting power in the region since it was flushed out of Algeria. Two years ago, the Chirac government made a lot of noise about the US war on Iraq, which may have won it accolades throughout the region but distanced Paris too much from the US to have any impact in it. Then came Syria and Lebanon. For a host of reasons, French President Jacques Chirac was furious with the young Syrian president he’d effectively taken under his wing, and intimated to US President George W. Bush in the summer of 2004, that he had a project they might both profit from. France led the way with UN Resolution 1559 and the US, with troops in neighboring Iraq, served as a goonish enforcer and voila! France was back in the game.

Egypt: winner

A lot of people did well this year in umm ad-dunya: The Muslim Brotherhood surprised even themselves with the large number of seats they gained in parliament, and the ordinary Egyptian voter got a sense of what real political choice might look like, both in the country’s first contested presidential race and then the parliamentary elections. And since it is a law of nature that anytime the people fare ok, the regime loses big, Egyptian President Hosni Mubarak had something of an off-year, which might be expected after 24 other untouchable seasons. Oh sure, the president managed to keep Washington off his back by sending mukhabarat chief Omar Suleiman to consult with the PA on security issues, but at home 88 people died in an attack in Sharm el-Sheikh, and the regime showed little in the way of intelligence by rounding up thousands of Bedouins in response. (Self-help hint to Hosni Bey: It only gets better if you are honest about your issues. Now, say “Al-Qaeda.”) Still, many people, probably the majority of registered voters, really did re-elect Mubarak for a fifth term and would have done so even without his aggressive TV commercials. But all those slickly produced music videos were meant for Western audiences anyway, and the campaign wasn’t really about the Pharaoh but his son Gamal, a Western-educated, reform-minded man of the future. Sound familiar?

Jordan: winner

The Hashemites have enjoyed a tremendous financial boom since the onset of the US occupation of Iraq as real estate prices alone have surged some 30% over the last year. Most of that financing has come from money that left Iraq after the fall of Saddam, a trail that will be more closely watched now after 57 people, mostly Jordanians and Palestinians, died in an attack on three hotels engineered by Iraqi colleagues of Abu Musab al-Zarqawi. King Abdullah II replaced his reform-minded prime minister with a former security chief and the diwan’s new mantra is, “political reform plus security,” which means no reform and no matter how much money you bring to town, you’re going to pay dearly if you mess with Jordanian security.

Iran: winner

Compared to the other players in the region, Iran didn’t do as well as many observers suggest. Yes, it consolidated its influence in Iraq, and like the Gulf states it profited greatly from high oil costs. Also, it has managed so far to run circles around the EU 3 (England, France and Germany) that has been “negotiating” with the IRI over its nuclear program. But those talks have taken a few strange turns over the last year, especially after the election of Iran’s tone-deaf new president. Until President Mahmoud Ahmadinejad advocated the destruction of the US and Israel, even the hawks at the Pentagon had no real military option for Iran. Presumably, that is no longer the case, since American officials started to take “death to America” sloganeering pretty seriously after 9/11. And Ahmadinejad’s re-structuring of his foreign service to better suit Iran’s apparent new policy direction has also put a number of Western officials on edge. So the Iranian issue, relegated to the backstage for the last three years, has now moved to front and center and the curtain is rising. In the next few years look for Iran well south of here on the scorecard.

Israel: Winner

It goes without saying that Israel always stands to gain when Arabs lose – but what about when Arabs lose their illusions? If you’ve missed the news from Iraq, Mr. Zarqawi has put paid to the notion of one glorious Arab nation ranged against the outsider. He’s killing Arabs, mostly from a rather largish Muslim sect known as Shiites. As it turns out then, the Middle East is made up of lots of groups, many of whom, especially the smaller communities, will make alliances with others to advance and protect their interests and their lives. In this context, the Zionist imperialist warmongers to the south look less like outsiders and more like a regional minority that’s done well for itself – like Iraq’s Shiites and Kurds. Wow, those Jews win even when Arabs do too!

Ariel Sharon: winner

The Gaza withdrawal earned him international acclaim, including thawing relations with a number of Muslim and Arab states, like Pakistan, Qatar and the UAE. Now Sharon has left Likud to start his own party, Kadima, or Forward. In the last two elections, it was Arabs who elected the prime minister, but it’s unlikely the PA, Hamas, Islamic Jihad or Hizbullah, will have a very large say this time. Sharon has provided Israelis with plenty of security and even if he wanted to withdraw from the West Bank, and he doesn’t, there is no political will in any of the country to do so.

Palestinians: winner

The Gaza Strip isn’t much, but it’s a place to start – and more to the point, it’s a place where more than half a century’s worth of previous Palestinian leadership has been managed. And now President Mahmoud Abbas is busy trying to cobble together meaningful political institutions while tackling corruption and crime, noble and daunting tasks for any democratically elected leader. He’s got a lot of help from the international community and everyone’s rooting for him – except for his political rival, Hamas. Understandably, Abu Mazen doesn’t want to touch off a civil war, especially one he might not win, but without monopolizing legitimate violence, there will never be a sovereign Palestinian state, not because the US, Israel or the EU won’t allow it, but simply because it won’t be a state. Maybe he is waiting to see how the Seniora government takes away Hizbullah’s arms and gets them fully into the political process.

Syria: loser

Insofar as the goal of any regime is to ensure its continued existence, Syria didn’t do all that bad for an international pariah state. And just when we thought we’d seen the last of Baath party comedy as former Iraqi minister of information Muhammad Said al-Sahaf ran for the hills when US tanks he said didn’t exist were closing in, the Syrians roll out their own investigation into the Hariri assassination. What’s really a gas is that Damascus’ Westernized leader evidently thinks that a German judge goes about his business like a Syrian one. “Yeah, that’s the ticket – Mehlis built his whole case on Hosam Hosam and now he’s got nothing, nothing I tell you! Ha!” It would be really funny if there weren’t so many lives at stake, not that Syria cares as it’s been throwing its insults at its neighbors for several decades now just to keep its own hindquarters dry. Everyone else in the region is furious with the regime, but few wish its demise. Cairo, Riyadh, Amman cannot bear the idea of the Bush administration feeling its oats – What, us next? So, who knows if the family in Damascus will survive, but in the future, God-willing, Syrian high-school students will be hard pressed to believe that at one time their country was run by vicious, buffoonish adolescents.

The US taxpayer: loser

It is a tribute to Middle Eastern hospitality that so many in the region are eager to distinguish between the American people and the policies of their government. Nonetheless, it is useful to remember that government by and for the people means that Americans are their government and are thus endowed with the right to hire and fire their leaders. It’s actually a really good thing, even when voters re-elect a president for a second term, as they did the current inhabitant of the White House. Of course, the many billion dollars the US has spent to give Iraqis a chance to elect their own leaders, is a much smaller percentage of what WW II took out of the US economy, and the military casualties aren’t even as high as civilian deaths on 9/11. But as domestic support for Iraq is waning, the Bush administration has yet to disclose any real new strategy except: Stay the course! Ok, but for how long and what’s the price, in lives and dollars? The real problem is that the one workable solution that doesn’t entail vacating Iraq would demand not less but more from American taxpayers, like higher tariffs, especially on fossil fuels, and most likely a draft to fill the ranks of a military that was not trained for a mission it nonetheless mostly believes in: bringing democracy to Iraq.

The neo-cons: losers

Misunderstood and largely unloved by both those who do and do not understand them, the neo-conservatives are a boutique school of American policymakers, politicians, journalists and intellectuals who have very little in common except their shared belief that US policy in the Middle East over the last 60 years was in error. Given that the attacks on the World Trade Center left thousands of civilians dead in a major US city, they have a point. Once the administration found no WMD in Iraq, the neo-cons were pressed into service – now, the US was in the Middle East to import democracy. As farfetched as that thesis may sound to some, and as mendacious as it may sound to others, without it much of what transpired in the region this year wouldn’t have happened without that idea. For instance, there is a very powerful current in US policymaking circles that still argues that the US needs Syrian help and if that means giving Bashar al-Assad a free hand in Lebanon so be it. The neo-cons won that fight and some others, too. Still, it’s sheer fantasy to imagine that a group of academics and journalists ran the government of the United States while CEO millionaires like George W. Bush, Dick Cheney and Donald Rumsfeld looked on helplessly. No, the neo-cons deserve some credit and as they are not that powerful they’ll take a lot of blame, some if it in Iraq perhaps.

December 1, 2005 0 comments
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Money Matters

Spending by Jordanian Visitors on the increase

by Executive Staff November 25, 2005
written by Executive Staff

Significant Increase of Tourists from Jordan

Statistics released by the Ministry of Tourism show a dramatic increase in the number of Jordanian visitors to Lebanon, due to the easing of the visa requirement that came into effect in June 2005. During the June-September period, the number of Jordanians tourists rose by 82% compared to the corresponding period in 2004.

Tax Free Spending by Jordanians on the increase 

The increase in inbound tourists corresponded with a significant rise in spending by Jordanian tourists during the June-September period. It peaked in July, when spending increased by 48% compared to July 2004. With regard to ranking of top spenders by nationality, in the June-September period Jordanians came in fifth place after Saudi Arabia, Kuwait, Egypt, and the United Arab Emirates. Jordan climbed one spot, up from sixth position for the corresponding period in 2004.

Once the number of Jordanian visitors started increasing in June 2005, a rise in the number of Tax Free shopping transactions was anticipated. In July 2005, the number of transactions exceeded last year’s figure by 14% and it steadily increased until September when it reached as high as 101%.     

The rise in Tax Free shopping transactions, however, did not always correspond with an increase in spending in monetary terms. For example, in July 2005 the number of transactions rose by 14% and spending increased by 48% compared to the same period in 2004. Then in September 2005, the number of transactions rose by a staggering 101% but spending rose by just 26% compared to the same period in 2004. It is therefore safe to conclude that the subsequent rise in transactions indicates a greater awareness about Tax Free shopping by Jordanian tourists.

Preferred products among Jordanians:

The preferred product category among Jordanian tourists was fashion and clothing, which accounted for 77% of their total spending in the June-September 2005 period. Home and garden items follow with a 10% share. Interestingly, watches accounted for just 2% of their total spending, down eight percentage points from the 10% share it constituted for the corresponding period in 2004. 

November 25, 2005 0 comments
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Money Matters

International Markets

by David Rosenberg November 25, 2005
written by David Rosenberg

• We are now convinced that the Federal Reserve is going to tighten through year-end and into 2006, and we have raised our funds forecast from 4% to a peak of 4.5%. We’ve done so even though we think that inflation worries are overdone. Moreover, because of that view, we are not turning bearish on long-term bonds.

• The recently released FOMC minutes were on the hawkish side, and we certainly did notice the plural in the comment “further rate increases probably would be required” to “contain inflationary pressures.” The Fed sees Katrina’s effect as temporary when it comes to growth, but longer-lasting when it comes to underlying inflation. The minutes were also sprinkled with concerns about fiscal policy and its inflationary implications. In addition, Fed staff economists raised their forecast of both growth and core inflation for 2006 (the former reflecting the rebuilding effort, the latter reflecting the spillover from higher energy prices).

• Almost a year ago, we published a report that acknowledged that we may be too light on our Fed funds forecast. We went back over the past three decades to see what the market and macro landscape looked like when the Fed was done tightening, and we came up with a checklist. So far, only two of the 10 indicators on that list are in areas that, in the past, pushed the Fed to the sidelines; the yield curve is very flat, and the VIX is 60% above its low. Three more indications are headed in that direction: retail sales need to be flat-to-down for two months (but the data have to be clean), industrial production has to be flat-to-negative for three months, and commodity prices need to have peaked or rolled over. The jury is still out on the other five indicators: non-farm payroll gains below 100,000 for three months, the ISM index at 50 or less, real GDP growth below 3% for two quarter or more, Baa credit spreads around 50 basis points, and the stock market down by about 15%.

• Any central bank that can hike rates – and hint at further increases – after an unprecedented two-month 20-point slide in consumer sentiment obviously has a long list of concerns. Among them are the excesses in the housing and mortgage market, investors’ complacency about risk, fiscal largesse, the pass-through of high energy costs to core inflation, rising unit labor costs, heightened inflation expectations, tightening labor markets, and the possibility that the output gap has closed.

• Perhaps the timing of Chairman Greenspan’s retirement is also playing a role in the Fed’s unwillingness to pause. That is pure conjecture, but it may be that Mr. Greenspan wants to defend his reputation as an inflation-slayer and eliminate the term “Greenspan put” from the investment lexicon. Another point: the impending change at the helm of the Fed may be adding to the prospect that more tightening lies ahead. How? The record shows that a new chairman follows his predecessor’s policy about 75% of the time. Or maybe—just maybe— the Fed wants to be out of the picture by the time Congress hits the campaign trail for the 2006 elections; if that is so, it would mean that the Fed would do more now rather than later.

• Our Taylor Rule model says that a funds rate of 3.5% is justified now in view of the size of the output gap, core inflation, and real interest-rate proxies. Even so, the Fed has already gone beyond that and is moving into the same “overshoot” territory that it reached in the past. In fact, the historical record shows that the Fed has typically overshot neutral by 200 basis points, based on the funds-rate peak benchmarked against our fair-value Taylor Rule estimate. We cannot see how the inflation or growth picture gives the Fed any reason to go that far.

• It may be that today’s potent combination of factors—the housing market’s “froth,” the bond market’s “conundrum,” fiscal concerns, the current-account deficit, Katrina-related stimulus, and the potential that high energy costs will feed through to general inflation—means that monetary policy has to look beyond the classic Taylor Rule. After all, the Taylor Rule relies heavily on the output gap estimate, which Fed Governor Kohn basically said was no longer a particularly reliable predictor of inflation. Overshoot? Inversion? Could Be.

• With that in mind, we may have to consider the possibility that a classic overshoot is in the cards. That is not to be taken lightly. In our view, it would necessarily entail an inversion of the yield curve. During the past three decades, the Fed has tightened on eight occasions, and when it did, the yield curve inverted five times. Each time there was an inversion, the economy fell into a recession. We would recommend watching the two-to-five-year part of the Treasury curve; in the past, it has shown an uncanny ability to lead the entire curve into an inversion. Right now, it is only a few basis points away.

• The risks that would spring from a policy mistake are not trivial. However, it almost sounds as if Mr. Greenspan is ready to accept those risks. Recall what he said in his closing remarks at Jackson Hole in August: “Surely difficult times lie ahead for the Fed, some undoubtedly of our own making, and others that will be thrust on us by market or other forces” [emphasis added]. By the time we see the “thrust,” most or all of the 10 conditions on our Fed checklist will probably have been met. The question is when. The answer, at least for now, is the first quarter of 2006.

David Rosenberg

North American Economist, MLPF&S

November 25, 2005 0 comments
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Case StudyUncategorized

Taha Mikati

by Executive Staff November 25, 2005
written by Executive Staff

Taha Mikati is the founder of Investcom. He began building businesses in 1979 after founding a successful construction business called ACC in Abu Dhabi. His knowledge of the construction industry was based on his experience as a civil engineer. According to his PR Company In London, Taha Mikati decided to sell his share in ACC in 1992 “to focus his energies elsewhere.” Then it goes onto say that Taha Mikati “identified the opportunity to develop a high quality telephone service provider in developing, under-penetrated high growth mobile telecom markets. He founded Investcom for this purpose and remains today closely involved in the company’s strategy and operational performance.” His PR agency admitted that they had “no photograph of Mr. Mikati.” And apologized profusely.

Najib Mikati – Vice Chairman

Najib. Mikati is the brother of Taha Mikati and a former Lebanese prime minister, an office he held in the interim period after the murder of Rafik Hariri and the downfall of the government of Omar Karami. He has also held ministerial posts and is a former member of parliament. He was a member of the executive committee of the National US-Arab Chamber of Commerce in Washington DC, and a member of the Board of Directors, and Chairman of the Economic committee at the chamber of Commerce Industry and Agriculture of Beirut and Mount Lebanon. He has close ties with Syria’s ruling Assad family

Najib Mikati holds a Masters Degree in Business Administration from the American University of Beirut and according to Investcom’s PR company, “has also attended several Executive programs which include the “Owner/President Management Program” at Harvard, Boston in 1990, “Avira Program” at INSEAD, Fontainebleau France in 1994, and “Innovations in Governance Executive Program” at Harvard, Boston in 2004.

Azmi Mikati – Chief Executive Officer

Azmi. Mikati is the son of Taha Mikati. He was appointed CEO of Investcom Holding in 1998. He is responsible for the global strategy of the Holding and its implementation. Prior to this role, he was Director of T-One Corporation (International Carrier) and a board member of FTML (France Telecom subsidiary and the previous operator of one of two mobile networks in Lebanon). Azmi. Mikati was educated in the United States, where he earned a Bachelor degree in Science from Columbia University.

November 25, 2005 0 comments
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Feature

Barrels of Potential

by Michael Karam November 25, 2005
written by Michael Karam

Last month, as prime minister Fuad Seniora approved the extension of beetroot subsidies for a further three years with funding totalling $6,000 per hectare, Lebanon’s wine makers, who receive no such public sector support, were cheerfully wrapping up their harvest, too busy to ponder on the importance of beetroot. Their new wines will eventually appear on the shelves of Lebanon’s supermarkets, on the pages of restaurant wine lists and in pallets stacked in containers ready for export to willing quaffers in France, the UK, Germany, Canada, the US, Scandinavia and beyond.

And unlike the beetroot industry, the wine sector is expanding. This year Akram Kassatly, whose Kassatly Chtaura is a leading producer of soft drinks and who, several years ago developed the homemade alco-pop Buzz, is returning to his first love of wine making and producing the first bottles of Chateau Makse. Elsewhere, the Saadeh Group is reportedly planting grapes in the West Bekaa with a view to eventually producing its own wine. Both are multi-million dollar investment projects and reflect the current optimism in wine’s potential.

Another, relatively more modest venture, is Chateau Khoury, located in the hills above Zahleh. Raymond Khoury, like Chateau Kefraya’s Michel de Bustros and Cave Kouroum’s Rahal family, is a former grape supplier who has turned his hand to wine production. He has 13 hectares (130,000 m2) planted with a wide range of grape varieties (including frustratingly difficult but potentially thrilling Pinot Noir) and will release his first wines into the market next year.

When we meet, Khoury is entertaining the regional sales agent for Seguin Moreau, the manufacturer of arguably the best oak barrels in the world. The family has gathered for lunch in an outhouse on the estate. Nearby the Chateau, which Khoury will use as a home, tasting center and hotel, is still being built. “Don’t ask me how much I have spent,” he laughs. “The winery itself cost $1 million. Then you must add the land and the buildings… let’s say over $3 million in all.”

His son, Jean-Pierre, has just finished his winemaking studies in France and will be responsible for production, while his daughter XXX, who gained valuable experience working in wineries in South Africa and California will be responsible for marketing. Khoury hopes to produce 30,000 bottles but is confident that within the next decade he will eventually increase production to 100,000.

Even by Lebanon’s microscopic – by global standards – production levels, Khoury’s output is small, but he is not alone. There is an increasing number of “micro-wineries”, who no doubt inspired by the achievements of similar garagistes in California and elsewhere in the wine producing New World, want to make limited quantities – usually 20,000-50,000 bottles per year – of premium wines. In the ultimate boutique nation their aim is to produce the ultimate boutique wines (typically wines made from low, carefully selected grape yields, matured in brand new oak barrels with minimal filtration).

Too small to make it onto the nation’s notoriously crowded (not to mention expensive) supermarket shelves, these producers are taking a leaf out of the small Californian producers and selling direct to loyal consumers through often nothing more than word of mouth.

“More than half of our 265 members produce less than 10,000 cases per year. Many are small family producers with several thousand case production, making them small and their wines can be hard to acquire if they are popular,” explains Tori Wilder, Communications Director for the Napa Valley Vintners in California. “These small wineries often sell the majority of their wines directly to consumers, through mailing lists and wine clubs.”

It is a strategy that at least one small Lebanese producer is beginning to wake up to. In Bhamdoun, once famous for its grapes, but never a hub of wine production, Naji Boutros and his American wife Jill, owners of Chateau Belle-Vue, have just completed their fourth third major harvest. “We got just over 22 tons this year,” says Jill who is responsible for marketing.

Compared to the steel of the Khoury winery, Belle Vue, with its plastic fermentation tanks is still very basic, but that is how Boutros likes it. For those who care to listen, he is an advocate of starting small and building gradually. But small is a relative term. He is insistent that only grapes picked in the Bhamdoun area are used in his wines and to achieve this he has been gradually buying up pockets of suitable land and planting them with wine grapes. “Let’s just say that I have invested several million dollars so far,” says Boutros

None of Belle-Vue’s four wines have been released on the market; that comes next year. In the meantime, they have been donated a two cellars, one of which Jill is developing into a cozy tasting room. “We are setting up a mailing list because we want a wine community to whom we can sell directly,” she explains.

The Belle-Vue initiative is entrenched the philosophy of reviving Bhamdoun’s once-proud vitiicultural heritage and much of the drive for his wine making initiative stemmed from a desire to rebuild. When the former Merrill Lynch executive returned to Bhamdoun in the mid-90s, the pain he felt at viewing the devastation, inspired him to plant vines – particularly on the site of his grandfather’s hotel Belle-Vue – and make great wine. His dream may just be realized. His second tier wine, the aptly-named Renaissance, has been listed with nine other Lebanese wines in the latest edition of The Sotheby’s Wine Encyclopedia.

On a similar trajectory – his flagship St John was listed in the award winning Wine Report – is Captain Habib Karam, a commercial airline pilot with Middle East Airlines (MEA). His day job gives him responsibility of hundreds of millions of dollars of aircraft and its passengers, but today, not far from Chateau Belle-Vue, on a rocky hillside in Ras el Harf, he has an altogether different challenge. A consignment of new, empty wine bottles destined for his modest Jezzine winery has slipped from their palette. The lorry driver and his assistant, stand around, scratching their heads as Karam wonders how is will transport 10,000 loose bottles. Such are the pitfalls of the small winery owner.

Karam’s initiative began about five years ago. Apart from a love of wine and a desire to produce small quantities of beautiful wines, he is a proud son of Jezzine and wants to encourage local farmers to plant wine grapes, a strategy that outside the Bekaa has met with mixed results. Karam says the locals have responded positively, planting both Merlot and Muscat but in Ras el Harf the scene of Karam’s fracassement de bouteilles, Clos de Qana owner Fadi Gerges admits that his initiative to convince local farmers to do the same, went off half-cocked. Boutros didn’t take the risk and bought his own. He has 12 hectares so far. He believes that this is the only way to achieve consistency and guarantee that his wines are always made from Bhamdouni grapes.

Karam has bought and harvested a total of 55 tons this year. His objective is straightforward. “I want to make low-cost expensive wine, reach a level of 60,000 bottles and maintain this production for the next ten years. Then we will see.” He admits he relishes the solidarity that wine making affords and that it is a useful antidote to his day job. “I am winemaker, accountant and administrator.” He is also passionate about Lebanon’s potential. “I have vinified in the US in France and in Lebanon. This is a paradise. We will soon have a real status in the wine world and we will sell our wines. I can’t see how we can fail when we make such small quantities. Out total production is the same as one French vineyard,”

Habib Karam, Naji Boutros and Raymond Khoury are not alone. Domaine des Tourelles, one of Lebanon’s oldest wineries and the maker of arak Le Brun, has upped its profile, hired a new winemaker and produced a premiere red, Marquis des Beys. Then there is the Nazih and May Metni, whose vineyard in Richmaya is the basis for Nabise Mont Liban, while in, near Batroun, retired General Joseph Bitar makes small quantities of Kfifane wine, for the American market. More will surely follow. The age of the small producer is upon us – and he is not farming beetroot.

November 25, 2005 0 comments
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Feature

Can Syria go it alone

by Andrew Tabler November 25, 2005
written by Andrew Tabler

The inclusion of President Bashar al Assad’s brother and brother in law in a confidential version of the Mehlis report leaked on October 21st has deep implications for the Syrian regime. The pressure game is now on, as the United States and France push for Security Council Resolution that demands Syrian compliance with the ongoing investigation into Rafik al Hariri’s death or face possible UN sanctions. What remains to be seen is how international pressure will function in the milieu of Syrian reform, as the globalised environment so many Syrians have been looking to for hope begins to turn against them. So far, the Syrian government has organized poorly attended popular protests against what Damascus calls an “unprofessional investigation”, and all the while the implications of the report are beginning to sink in among Syria’s business classes.

Since Hariri’s assassination in February, power in the Syrian regime has been centralized in the hands of the Assad family. The president’s brother, Maher, is commander of Syria’s Republican Guards – elite forces that have been used to, among other things, put down rioting of Kurds in the spring of 2004. On February 14, the day of Hariri’s murder, the president’s brother in law, Asef Shawkat, was appointed head of Syrian Military Intelligence (MI) – perhaps the country’s most powerful mukhabarat agency. His rise through the ranks was relatively swift: Shawkat was named second in command of MI on November 20, just as UN Security Council 1559 went into effect.  At the same time, a rival to Assad from within the ruling Alawite sect, Ghazi Kanan, was demoted from the head of a mukhabarat agency to the civilian administration as Minister of Interior.

Then in June, during the Ba’ath Party conference, most of the country’s “old guard” retired from the party, including Vice President Abdel Halim Khaddam – long rumored to be a power center in the country. Khaddam played a key role in negotiating the end of the Lebanon War through the implementation of the Ta’if Accord. With Ghazi Kanan’s death in October in what officially was determined a suicide, most if not all alternatives to an Assad family-led Syria had been eliminated.

With the Mehlis investigation now pointing its finger at members of the Assad family, and Damascus promising it will cooperate, two options seem plausible. The first, full compliance with the probe to the extent that Maher or Shawkat would be delivered to an international tribunal, would likely lead to the collapse of the Assad regime rather quickly, or at very least, the transformation of Bashar into a Juan Carlos who presides over a democratic transition. The other and most likely option is Syrian compliance falling short of delivering Assad family members for trial. As Mehlis has indicated his work is far from finished, the moment for full UN sanctions is still not at hand.

Most people in Syria are betting on the second option. Damascus will now be in full defensive mode, and will likely hunker down and hope the storm blows over. Even if it does not, many question remain over Damascus’ ability to survive a blocade similar to that inflicted in Saddam Hussein’s Iraq.

Since Syria’s currency crisis of the mid 1980s, Damascus has employed a strict foreign exchange regime designed to suck up as much hard currency into Syria and keep it there, what economists call a “safe” model. Hard currency deposited in banks in the form of cash is not allowed to leave the country. Dollars transferred into the country, however, both for personal use or investment, can be transferred back out. The result has been impressive. To date, the Central Bank of Syria and the state’s mammoth Commercial Bank of Syria hold around $18 billion in reserves, enough to finance current import levels for three years. The majority of Central Bank reserves are held in cash. Currently, some $13 billion in Central Bank deposits held by the Commercial Bank of Syria are deposited outside the country at very low interest rates.

Even under pressure, the Syrian private sector will most likely continue to finance its hard currency needs through the black market, which is partially run through Lebanon. Reigning in that system could be difficult, as its remains unclear if Banque du Liban would pursue lesser offenders as they have Lebanese and Syrian security chiefs.

Other questions remain about how Syria’s new joint-venture private banks – most of which have Lebanese involvement – will fair under increased pressure.

“Sanctions would pose a lot of challenges for the new banks,” says Bassel Hamwi, Deputy Chairman and General Manager of Bank Audi Syria. “But we still don’t know what shape sanctions might take. Regardless of what happens, having a Lebanese partner is a strength.”

The real worry among banking sector observers is that increased pressure will impact ongoing reforms to Syria’s restrictive foreign exchange laws. Over the past six months, the Central Bank and Commercial Bank have eased access to hard currency to facilitate trade and better compete with private banks that are taking in larger and larger deposits every month. Some analysts predict that Syria’s foreign exchange restrictions are likely to remain in place for the foreseeable future.

In terms of agriculture and energy, two key commodities that could keep the country running even under the harshest of measures, Syria remains self-sufficient. While oil production is in decline, the government’s recent conversion of power stations from oil to natural gas could help the regime squeeze out every last drop for domestic use. Vital foreign involvement to develop Syrian oil fields, however, could be restricted as it was in Libya following the Lockerbie bombing. Best estimates show Syria has about 10 years of oil reserves, with rapid dips in production after five.

If the UN decides to cut off oil exports, however, this could go a long way to bringing the Assad house down. Officially, oil proceeds account for about half of all state revenue. Other estimates put that percentage much higher. Over the last few years, the Ministry of Finance has reduced Syria’s tax rates in a bid to entice Syria’s business classes to forego double and triple bookkeeping. While the law was passed with the business community’s input, another law enacted the same day gave the Ministry of Finance broad powers to investigate tax evasion. Businessmen immediately protested the move, causing the ministry to back down. Just how far the state would push businesspeople to pay taxes as Syria is under the gun remains unknown.

Syria is also skillful at circumventing sanctions as well. Damascus has been under US sanctions since 1979, which were toughed up in 2004 with the implementation of the Syrian Accountability and Lebanese Sovereignty Restoration Act (SALSA). Despite both measures, US goods are still readily available in Syria. The Syrian government allows sanctioned items to be imported through third countries, with Lebanon and Dubai topping the list. As the US embassy in Damascus openly admits that it does not have the resources to enforce its sanctions in Syria, it could soon be up to US companies to acquire end-user certificates for every microchip, modem and wireless router in the Middle East.

There are concerns over the Mehlis investigation’s impact on foreign investment. Syria’s population growth rate of 2.85% per annum remains one of the highest in the Arab World. Over the last few years, the State Planning Commission has produced studies showing that hundreds of millions of dollars in foreign investment per year will be necessary to create the minimum 185,000 jobs per year to absorb new market entrants. As current capital and labor productivity rates are pitifully low (with one World Bank team reporting that Syria has the lowest Total Factor Productivity in the world), it seems certain that any dip in investment from the Arab Gulf would spell disaster for Syria. Following Hariri’s assassination, capital from Saudi Arabia – one of Syria’s main foreign investors – slowed considerably. While projects funded from Qatar, the UAE and Kuwait have filled the gap for now, it remains to be seen if the petrodollar tap will keep flowing if Mehlis finds top-level Syrian responsibility for the murder.

Interesting thus far have been popular reactions to the report. Rallies held throughout Syria on Monday were considerably smaller than those held in March. Private sector sponsors, who last time donned company t-shirts while carrying banners opposing outside intervention, were no where to be seen. Only one mobile phone company, Syriatel, which is owned by Assad’s cousin, Rami Makhlouf, sent out text messages ahead of the event calling on Syrians to come out in support for their government. Students made up the majority of protestors. Most of those carrying banners in English renouncing foreign intervention in Syria affairs openly admitted they had no idea what their placards said. And last but not least, while the rally lasted but a few hours, Syrian TV kept replaying tape of the rally’s peak the entire afternoon before iftar.

Thus far, the report has been somewhat of a wake up call for Syrians, whose nationalist sentiments seem to be growing.

“People are starting to understand that we are in big trouble,” said one accountant, who preferred to remain anonymous. “They are starting to understand that all of Syria will soon be under pressure. This will rally support around the president for sure.”

Or will it? Ahead of the Mehlis report’s release, American diplomats in Syria have openly asked Syrians how the US and UN could punish the Syrian regime without hurting the population at large. The limited impact of SALSA thus far, however, shows that Washington’s ability to come up with much promised “smart sanctions”, where a regime is pressured to change without hurting the population at large, remains to be seen.

“Worldwide experience with sanctions shows that they hit from the bottom up,” says Hamwi. “The government can wait it out, and the people with resources will survive. Twenty years ago it would have been different. The private sector is the engine of economic growth in Syria now.”

November 25, 2005 0 comments
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Development

A long-due story of mismanagement

by Safa Jafari November 25, 2005
written by Safa Jafari

This year marks the beginning of the International Water for Life Decade 2005-2015.  The United Nations, through the United Nations Environment Program (UNEP) and World Health Organization (WHO), have introduced ten critical years, which started on March 22, 2005, to focus global attention on what should be obvious: water for life and aims, not just to highlight the magnitude of the world’s water problem, but also to bring all “stakeholders” together to apply workable solutions.

Clean water is asserted by the UNICEF’s Executive Director Carol Bellamy as “an inviolable right, not a privilege.” It is the basis of all life and is recognized as a humanitarian issue and a human right, the misallocation of which becomes a breach of legal norms.  According to UNICEF, two buckets – 20 liters – of safe water a day is the bare minimum a child needs to live.  This is enough for drinking and eating, washing and basic sanitation. But around 4,000 children die every day due to lack of access to an adequate supply of clean water. 

If that were not enough, each year more than 1 billion of the world’s people have little choice but to resort to using potentially harmful sources of water. About four out of every 10 people in the world do not have access to even a simple pit latrine and nearly two in 10 have no source of safe drinking-water, thwarting progress towards achieving the Millennium Development Goals (MDGs) discussed in last month’s issue.  Within these MDGs there is a specific target: to cut by half, by 2015, the number of people without sustainable access to safe drinking-water and basic sanitation. However, the UN Millennium Project Task Force on Water and Sanitation, however, recently added that integrated development and management of water resources are crucial to the success or failure of all the MDGs, as water is central to the livelihood systems, particularly those of the world’s poor. 

Lebanon was the first Arab country to host celebrations marking the United Nations’ World Environment Day on June 5, 2003, the theme selected was the aptly titled ‘Water – Two Billion People are Dying for It!’.  The agenda sought, “to give a human face to environmental issues, empower people to become active agents of sustainable and equitable development, promote the understanding that communities are pivotal to changing attitudes toward environmental issues, and advocate partnership among nations to allow people to enjoy a safer and more prosperous future.”

But the promotion of sustainable development entails more than just the engagement of communities.  These cannot be ‘active agents’ so long as better awareness of the problems is not coupled by effective means to tackle them, i.e. a healthy interplay amongst: grass-root action, accountable policy, and effective infrastructure. 

To what extent are these three present in Lebanon?  Let’s put it another way: the story of water in Lebanon is that a culture of mismanagement that has led to shortage and contamination.

Ironically Lebanon has a wealth of water resources in its numerous rivers, its underground aquifers, and has generous winter rains. But the country faces a perennial water shortage. It could theoretically meet all its own needs as well as export hundreds of millions of cubic meters to its more arid neighbors.  Most households suffer regular water cuts and irregular access to fresh drinking water. 

About half of the 2,600 million cubic meters of accessible surface and groundwater is wasted every year as it is left to flow into the Mediterranean.  Estimates of Lebanon’s annual water demand vary from 1.1 (Parsons study) billion to 1.4 (ESCWA) billion cubic meters. A USAID funded study by Development Alternatives in 2001 estimated that Lebanon uses 75% of its annual water supply for irrigation.  Domestic use accounts for 165 mcm and industrial use 130 mcm, according to Parsons.  However, the Parsons study concluded that real domestic demand for water is over 300 mcm.  For many Beirutis, water is rationed – or is not available at all – during summer.  Many Lebanese have to fill water bottles at public fountains or buy water from trucks.  Demand for water is expected to rise to 2.5 billion cubic meters by 2015, and perhaps as much as 4.0 billion cubic meters by 2025, according to ESCWA.

Donors have spent over $600 million since the end of the civil war on renovating the antiquated water supply networks, but a USAID-funded study estimates that more than half of the distribution systems still need to be overhauled. Irrigation systems are in equally bad shape. They use mostly inefficient flood methods and reach less than half of the potential agricultural areas. USAID has funded almost $6 million in potable water and irrigation projects in the past decade, while Japanese, French and other governments have also funded different water projects calling for privatizing the water sector, renovating potable water networks and the conducting of better water pricing schemes. 

To make matters worse, there have been disputes with Israel over accessibility of the Lebanese government to the Wazzani tributary from the Hasbani River. However, talk of building dams are still under way and Arab donors have pledged over $150 million to fund the first phase of the Litani River Project in the south.  Long-due plans for water projects are hoped to provide drinking water, irrigation and electricity.

But all that shines is not fresh water. Estimates of pollution in Lebanon’s waters vary and statistics are minimal, out of date, or faulty.  One study estimated Lebanon’s deposit of raw sewage to equal 38,095 cubic meters per day.  Another study stated the figure was as high as 500,000 cubic meters of untreated sewage. Sadly, both studies agree on two facts: sewage is untreated and deposited into Lebanon’s waters. Out of Beirut alone, there are 15 discharge points of raw sewage and a further 23 points along the Lebanese coast we bathe in.  And raw sewage is only part of what is being deposited in our waters.  Research carried out by the Greenpeace Organization in October 1997 showed the presence of ‘a high rate of heavy metal and organic bacteria in Lebanese waters’.

A study published last September in the Daily Star newspaper and another published last July in the Environment and Development magazine – showed that the Litani River has a high average discharge rate of 770 million cubic meters (mcm). Domestic wastewater is the largest pollutant in the upper basin of the Litani. And although about 50 percent of the population is connected to a sewer system, there are no wastewater treatment plants there yet. The Litani’s Qaraoun Dam, completed in 1956, holds some 220 mcms and approximately 70 percent of the damn is polluted water.  The levels of pollution vary from season to season but there are no ongoing tests being conducted on the dam. The tests that have taken place indicate high pollution in certain areas and some conclude that the upstream Litani River is microbiologically unsuitable for domestic use or bathing.

Several of the Litani’s tributaries are highly polluted due to contaminated discharge, not excluding solid waste. Most industrial facilities within the Litani area do not treat their wastewater before directly discharging it into the Litani or its tributaries. Also, the overuse and misuse of agrochemicals by farmers and farm run-off is another source of contamination.

The World Health Organization (WHO) measures the level of Fecal Coliform bacteria found in water to determine the level of its pollution. It is not recommended to swim in an area containing more than one hundred colonies of Fecal Coliform bacteria per one hundred millimeters of water.  Prolonged contact with contaminated sea water can lead to several health problems, most notably various forms of skin disease, as well as diarrhea and vomiting.  Studies carried out by Environment and Development magazine on September 14 showed that the level of Fecal Coliform bacteria found at one of Beirut’s most luxurious resorts and private beaches was drastically above international standards at 620 colonies per 100 millimeters of water.  This brings no surprise when waste from slaughterhouses is freely allowed to be tossed or flooded into nearby rivers.  

Incidentally, November 19 is World Toilet Day, an event that has been celebrated annually since 2001 on the same day.  The goal of the World Toilet Day is to educate people on sanitation issues and promote better toilets around the world.  President of the World Toilet Organization Jack Sim was quoted by Reuters as stating that 2.6 billion people, or 40% of the human population, do not have access to proper sanitation.  Ironically, to celebrate this day, countries such as Japan and others in the EU went on to compete in the design of the most luxurious and exquisite toilets while our part of the world continues to search for ways to dispose of its daily waste without severely putting human lives at risk. 

What we must understand here is that we are all stakeholders in this as we eat and drink; swim and bathe; and allow our children to play on formerly flooded riversides whose odor provides an indication of the bacteria they hold.  In addition to health and hygiene, the nation’s economic development is at stake.  Tourism is at risk as beaches and running water are declared unsuitable for human use, and Lebanese employees are naturally less productive if they end up often taking leave due to some mysterious ‘stomach virus’.

During the war much of the information about Lebanon’s sewage system was misplaced, lost or destroyed.  Water losses exceed 50% in many areas. Much of the country’s irrigation system dates from before the civil war, and cracks in canals, evaporation, and illegal use of canal water account for irrigation efficiency of only 30 to 40%.  It is also estimated that about 40% of the population uses cesspools, which consist of porous pits that receive wastewater from the toilets, showers, wash basins or other sanitary fixtures, with no proper service for sludge removal, so they are subject to overflow or contamination of groundwater.  Naturally, contamination finds its way to our potable water system through leaks from damaged networks, clogged wells, or flooding rivers. 

Due to lack of regulation, the Beirut River, as one example, has become a dump for garbage and sewage and according to Greenpeace Lebanon, if nothing significant is done before the rainy season starts, the river and underground reservoirs will be entirely polluted. 

Numerous governmental decrees have established standards for the proper disposal of pollutants. There are guidelines and “environmental limit values” set by various ministries. And there are decrees for the management of healthcare and hospital waste.  The problem, however, lies in two facts:  there is no system of accountability for those who breach the law, and there is no centralized, regular and uninterrupted monitoring of pollution quantities and qualities in Lebanon to date.

The people of Lebanon know that their country suffers a shortage and contamination of its waters; the funds have come to Lebanon, particularly to help solve the water problem; and our policy makers are well aware of the situation that has haunted them since the civil war.  Where does the problem lie?  The problem lies in the management of those three ingredients:  the people, the funds and policy. The people need to change their environmentally harmful behavior.  New and healthy infrastructure must be created to support the widening water network in the country.  And an effective policy must be put to force whereby any misconduct is monitored and its doers are held accountable.  For some reason, we seem to think that the problem of water in Lebanon yet needs to be made known to the people who today smell and taste the water they use – whenever it is available.

November 25, 2005 0 comments
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State department

Investing in people’s futures is good business

by Washington Correspondent November 25, 2005
written by Washington Correspondent

The urgency in bringing rapid relief to survivors of Pakistan’s devastating earthquake might not pass as a major business decision, but ultimately it is. Call it long-term investment in terror prevention, and file it under “insurance claims.”

In the aftermath of the catastrophe – close to 50,000 dead, maybe twice that figure once the numbers are finally in; 15,000 villages affected by the disaster, and, according to reports from international relief agencies and Pakistani government officials in the field; possibly as many as 3 million, possibly 4 million, people homeless. The numbers are astounding by any standard; it would be the equivalent of almost the entire population of Lebanon living in the street. The earthquake has destroyed more than 80 percent of structures in parts of northern Pakistan and strong aftershocks threaten buildings already damaged by the initial quake. Winter in the Himalayas is just weeks away and unless aid arrives fast, tens of thousands of people will starve and freeze to death.  The U.N. coordinator, Undersecretary General for Emergency Relief Jan Egeland, who was touring the area around Muzaffarabad described the situation on the ground as “desperate.” “With wintry conditions arriving in the higher elevations, children are facing a potentially deadly combination of cold, malnutrition and disease,” said UNICEF Executive Director Ann Veneman in New York. “Most housing has been destroyed in the hardest hit areas, so the survival of thousands of young children is now at stake. Shelter, nutrition, and health care for children must be a priority.”

And all this is taking place in a region of the world where you need only scratch the surface to discover the deep-rooted sympathy for al-Qaida.

How is this an economic affair? Simple mathematics really. Unless relief from the West arrives in the affected areas post haste, there are excellent chances for the region to turn into a vast breeding ground for potential al-Qaida conscripts. Recruiters from radical organizations seeking to refill their ranks will not waste time in signing up a new crop of jihadi fighters from among the tens of thousands of men aged 15-45 who overnight find themselves alone, homeless, jobless, penniless and ripe for the recruiter from any of the militant politicized Islamist organization, of which there is no shortage in Pakistan, will gladly join the ranks of those organizations who are willing to give them food, shelter and an AK-47.

That’s assuming they have not already started doing so. Already, the day after the disaster, reports from the quake-affected areas made mention of mujahedin fighters arriving with blankets, food and medicine to assist survivors in one village where no other help arrived.

Little matter to the cost of the relief operation, it will turn out costing the international community far less in the long run.

Back to the math: working on the assumption that the lower of the estimates is correct, assuming that among the 2 million homeless only a small percentage — just half a percent — of males aged between 15 and 45 accept the offer from the Islamists. That is still a staggering 10,000 possible recruits.

Much closer to reality the numbers could well be in the tens of thousands, if not more. As a reminder, it took only 19 men to carry out the terrorist attacks on the World Trade Center and the Pentagon.

If the investment is not made today to save those left stranded on the cold, barren hills of Pakistani Kashmir, a far greater investment will have to be made to fight them later. Consider it a race between international relief organizations and Islamists groups for the hearts and minds (and bodies) of the refugees. The importance of providing for the victims cannot be stressed enough. If it means deploying NATO, U.S. and EU forces toward that end, then it should be done. Every hour wasted could mean a successful “close” for the recruiter; every recruit a potential future terrorist.

It will get far worse unless massive amounts of aid start to arrive without further delay. Many cities and villages in Pakistan-administered Kashmir and the North-West Frontier Province, the most affected areas, have been wiped out. NWFP abuts Afghanistan and is the area where Osama bin Laden is believed to be hiding. He could soon be offering many more people refuge in his cave. His fighters are believed to frequently trek back and forth across the Pakistan-Afghan frontier.

The scope of the disaster requires new thinking – thinking outside the box. Once these disaffected youths have been fed and clothed, there will be the need to keep them occupied. This is where a sort of Pakistani Peace Corps should be created and financed by the international community, so that in turn, they can help rebuild the devastated areas.  In the long run, it will prove to have been a relatively low price to pay for the dividends reaped.

November 25, 2005 0 comments
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For your information

Daniel Kaufmann

by Executive Contributor November 25, 2005
written by Executive Contributor

Daniel Kaufmann is the director of global programs at the World Bank Institute and a noted researcher on issues of governance. On the occasion of his visit to Lebanon, he talked to Executive about the World Bank’s work to enhance governance, reduce corruption and alleviate poverty.

Is your visit to Lebanon part of a regional tour, or was it purposely scheduled?

It was purposely scheduled because of excellent discussions we had with the minister of finance [Jihad Azour] during the annual meetings of the World Bank and IMF [in September]. My visit is a follow-up to that. I don’t believe in regional tours for tours’ sake, I go only to places where there is a possibility for concrete help and work.

The World Bank categorizes nations into four brackets in terms of governance indicators. Knowing that you said you are not an expert on Lebanon, which policy recommendations tend to be the most important for a country situated in the lower middle bracket of achieving good governance, as Lebanon is?

Lebanon has a set of viable institutions. This is not a failed state, of which there are some. Lebanon has institutions and human capital. The range of issues in this type of country is the following.

One, we discuss the whole regulatory framework. Are there too many excessive regulations? This is usually associated with a lack of governance, monopolistic power, capture of state, and more corruption. 

Second, procurement. What are the vulnerabilities in terms of procurement and what reforms are required in that area?

Third, and related, is transparency. In all kinds of different realms, including procurement, transparency is very important. But transparency also relates to full disclosure of assets of politicians, of judges, public officials and their dependents.

Fourth is public finance, the issue of the budget. Are all public expenditures transparent through the budget, or are a lot offline? Are there issues of governance in tax collection? These are the broad areas that apply almost everywhere in countries with this type of challenge. In terms of specific issues, more research is required.

One peculiarity that participants also were alluding to in yesterday’s discussion is that data collection in Lebanon seems very weak and that even some high-ranking decision makers treat data in a very liberal fashion.

Let me say three things about that, because it is very important. Point number one is that data needs to be treated very cautiously anywhere in the world. This is not only about governance but also about investment climate and many other issues, and applies in some cases particularly to official data. 

The second point is that precisely because we are aware of that [need to be careful about data] we use different techniques to gather data from many different organizations, including international organizations. We have reasonable confidence that this data can be used with the caveat.

The third point is that there is not always objective criticism. It is not uncommon that a minority has a vested interest in criticizing data. It is what we call shooting the messenger. Nobody complains about our numbers if one is doing okay. When we come out with our numbers on governance, we have never heard criticism from officials in a country where things are improving. It is a one-to-one correlation as to where the criticism comes from. Let me rest my case there.

You were also discussing myths to debunk when discussing anti-corruption strategies. Of the myths about fighting corruption, is there one that you consider the most important to unravel?

The most important one to get rid of at the generic level is a bullet message: one does not fight corruption by fighting corruption. Corruption is a symptom of significant weaknesses somewhere else and one has to understand the issues of governance. That is why I mentioned those policy points. The myth that one can fight corruption by fighting corruption can be unbundled into sub-myths, such as [that it is effective to] throw another institution at the problem. It is very easy to create another anti-corruption commission or adopt another decree against it, do another campaign.

Does that mean that more stringent laws and higher penalties would not be key measures?

Setting of higher penalties is fine. The problem is the incessant drafting of laws which may or may not get adopted. Obviously having tougher penalties within reasonable limits – we don’t believe in people being executed because of corruption – is important. It is the drafting and thinking that the law needs to be improved.

Most every country in the world has decent laws against corruption. The problem is that they are not implemented effectively. Getting away from a state that is monopolizing who can have the dealership of such and such company, or a radio or TV or newspaper and who cannot, those are the much more difficult issues than creating another commission.

Research into human behavior that you quoted yesterday seemed to indicate that people are more inclined to act in a moral way when they are watched then when they are not. Do you advocate monitoring as key measure for inducing governance and better behavior?

The expression is that sunshine is the best disinfectant. We are not talking about monitoring but we are talking about transparency. Transparency in my view is a much more effective tool of policy and sometimes a substitute to other regulations. Having all kinds of procedures and regulations sometimes can create even more corruption. Instead, let’s have sunshine – if for no other reason that first you start rating the cost of corruption through the reputational risk.

In some countries, where politicians and others don’t care, the question of reputation may not matter. But it increasingly matters internationally in the competitive world. It matters for investors; it matters for the electorate, and so on.

Is improvement of governance a realistic possibility or is it a dream? Is human nature per se corruptible, or do you believe that human beings could be different from the corrupted?

Of course I believe in that, otherwise I wouldn’t be doing what I do. There is no question that you will never get rid of corruption. The challenge is to move from a situation where there is a systemic, endemic or even pandemic – not here but in some other countries – corruption to another stage where corruption is still widespread but not endemic or pandemic, and then to where it becomes individual. In a country like Norway, there is corruption. But it is individualized and is the exception, and when it comes to the light, it is a real scandal and penalties may be applied.

So, although you said yesterday that improvements of governance on the whole have not been strong over the past ten years, you have seen progress.

We have seen how countries have managed to make progress. What better example than to show that some countries are doing very well, even among emerging economies? That is why I bring in my own country, Chile. Singapore and Hong Kong were extremely corrupt only 20, 25 years ago. They have contained it. England took longer. It was a very corrupt country years ago, now it is doing very well. In Eastern European countries, the evidence speaks [of governance improvements] in countries like Slovenia and even in Africa. Botswana has better ratings than some countries in southern Europe.

Between public sector corruption and petty corruption in the public sector, how important is corporate corruption on your map of problems?

It is very important. The crucial issue with corporate corruption is how corporate corruption affects public corruption. More important than fraud within a company or between two companies is the collusion between the private and the public sector. Bribery takes two to tender, a briber and a bribed. Very often we are finding out that it is not the public official who is always extorting from the private sector. Some very powerful private interests sometimes capture the politician or the public official; in that case they have an enormous responsibility.

The Middle East has many autocratic regimes. How well can autocratic methods function in defeating corruption and inducing change in governance?

On the Middle East, you are the expert. What we find on average and on balance worldwide is that a country that gives more voice and freedom of expression and has also more transparency, is better able to control corruption. Of course that is not the only thing that matters. Countries can make very significant efforts through other means, through rule of law, transparency of budget.

But there is no evidence in the data that autocratic governments do better in fighting corruption than democratic ones. On average, it is to the contrary. It has to be that the citizens become the auditors of their country. What is the probability in a place like Lebanon that big daddy can be watching everybody? The whole idea of the freedom of expression is creating millions of auditors.

In a definition of governance you described it as a set of traditions and institutions in a country. In this region, religion-based traditions and institutions play a strong role. Can you fit them into your model of governance?

We are mindful of the relevance and importance of the religious dimension. We do not enter it into the data exercise. In part, this is deliberate because we want to remain neutral vis-à-vis religious beliefs. Our approach to what constitutes good governance is a more universal approach. I must say, however, that the World Bank has made a very concerted effort over the past seven, eight years of reaching out to the faith community and to the interfaith community. In all interfaith activism, the commitment to poverty alleviation and the same objectives that we have is extremely strong.

When you presented your evaluation of Lebanon in terms of corruption control, the graph’s margin of error was very large. Why?

Because there are very few sources. The margin of error in a significant way is a function of how many surveys there are. That’s an issue, because a country like Lebanon, a financial center, is not being rated by the World Economic Forum. If a country is jumping aboard the train of globalization, the moment that the WEF, IMD and others cover them, the margins of error start coming down. The first order of business is to be on the radar of all these investment ratings agencies and other large entities. There is nothing worse than being ignored. It is much better to be rated not very well.

In assessing governance in Lebanon at the World Bank, do you find a lot of cooperation from the Lebanese side?

Lebanon is now very interested in these issues of measurement and thinking where one can go in the next stage. But one has to distinguish two things. One is a worldwide measure – the indices on governance. This is all from independent outside sources, that’s why we cover the world. The other is what is needed when a country wants to do something about the problems. There one needs an in-depth study and analysis, and I find that the Lebanese are very open.  

How important is it for you personally to believe in the improvability of governance?

I think that the theme of justice, of alleviating poverty in the world, particularly in emerging economies, and empowering people to take their destiny in their own hands and improve their own welfare, is crucially important. Just giving people the opportunity and the enabling environment of not enormous regulations to be entrepreneurs, to express their views and innovations, that is what motivates me and that is why I work on governance for poverty alleviation. I feel affinity to a place like Lebanon, because I am Chilean. Chile until only about 15 years ago was considered a very troubled place. It was a country that was not living to its potential and not doing all the reforms that were needed. I feel enormous affinity to those type of challenges of the emerging world. I think it is feasible within a realistic timeframe to make enormous progress but it is very hard work, it is political leadership for governance improvement.

November 25, 2005 0 comments
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Pay or else

by Executive Contributor November 25, 2005
written by Executive Contributor

The Lebanese flag carrier MEA became embroiled in an embarrassing row over monies owed by the state to German construction firm, Walter Bau AG. A scheduled MEA flight from Istanbul to Beirut could not depart because representatives of the German firm had gained a court order impounding the plane to enforce payment of $7 million owed Walter Bau for highway construction contracts from the late 1990s.

The measure drew sharp criticism from MEA chairman Mohammed Hout who was quoted in newspapers as saying that MEA was a private sector company and not party to the dispute. MEA, one airplane short, had to ferry its stranded passengers via Athens back to Beirut.

The conflict between the German company and the Lebanese state appears to date back to 1997, when Walter Bau had been awarded a contract related to the creation of a proposed toll-based superhighway network under a Build-Operate-Transfer scheme. However, the entire project was shelved by the council of ministers, contracts were cancelled and Walter Bau soon after closed its Lebanon representative office.

The company sought recompense not unlike other international companies that claimed to have been wronged in financial dealings with Lebanon, including another German construction concern, Hochtief AG, which demanded compensation for higher costs it incurred in the rehabilitation and expansion of Beirut airport because of delays and design changes.

Walter Bau’s claim to $7 million was affirmed in arbitration and not contested by the Lebanese government, which just somehow did not get around to settling the amounts. It was only after the seizure of the MEA plane that Lebanese officials insisted that payment of the owed amount had already been authorized.  

MEA on its part would seek from Walter Bau yet to be specified compensation for damages caused by the impounding, Hout was quoted in the Beirut press. Interestingly though, the highly discourteous initiative to impound the Lebanese plane in Istanbul had not originated from Walter Bau itself.

Having fallen onto hard times, the once third-largest construction company in Germany had declared insolvency in early 2005. Much of the firm’s assets had been taken over by Austrian construction company, Strabag, while Walter Bau AG was left with debts of 3.3 billion euro owed to about 20,000 lenders and suppliers. The man who had used the bone breaker method to get Lebanon to meet its obligation was the insolvency administrator charged with satisfying the rights of Walter Bau employees and creditors. 

Banks go shopping

Lebanese banks indeed have their eyes peeled for regional buys. Market leader BLOM Bank last month advanced by a great step towards establishing its foothold in Egypt when it found consent for acquiring Misr Romanian Bank, a joint venture bank owned by Egyptian and Romanian financial institutions.

The kick-off in realizing the acquisition was the decision by Egypt’s state-owned Bank Misr to sell its 33.26% stake in Misr Romanian to BLOM Bank early in October. With a declared goal of buying Misr Romanian Bank in its entirety, BLOM reportedly has the right to withdraw from the purchase agreement if it fails to obtain at least 67% of the Egyptian bank’s shares. However, as the Romanian shareholders with their 49% stake in Misr Romanian have signaled their readiness to sell, according to BLOM general manager Saad Azhari, BLOM should be able to see the transaction, estimated at $100 million, through.  

Misr Romanian Bank had assets of $641 million at the end of the first quarter of 2005. While BLOM Bank was carrying out its due diligence for evaluating the bank in September, expansion-minded First Gulf Bank from Abu Dhabi also showed interest in Misr Romanian but later withdrew from the race.

In the meanwhile, Fransabank also seems to have thrown its heart over the fence in cross border growth. The bank announced in late October that it would be a partner in Capital Bank Sudan, a new Islamic banking venture that would start operations in early 2006, with a focus on investment banking. Fransabank, which also is working on expansion into Syria and Algeria, would own 20% of Capital Bank Sudan.

Third bank on a roll during October was Byblos, which opened a month-long subscription period for a massive rights issue that would double the bank’s share capital from $164.8 million to $329.6 million. The issue, which is open only to existing shareholders, aims to enhance Byblos’ position in achieving readiness for Basel II regulations and provide the group with funds for capital injections into various international subsidiaries, including the Algerian bank Al-Rayan, where Byblos was awaiting approval by Algerian authorities for acquiring a stake of 51%.

Beetroot gets stay of execution

Lebanon’s selective agricultural subsidies have little to do with economic policy and more to do with an antiquated view of crucial food sources, and crude political lobbying. Take beetroot for example. In 1959, a Government decree provided for the subsidization of wheat (for bread) and beetroot (for sugar) because the two were perceived as staples.

“Back then, the notion of food security was not the same as it is today,” said the ministry official, who asked not to be named because he requires permission from the Minister of Economy & Trade to talk to journalists. “The decree was designed to ensure that there was always enough bread and sugar.”

In 2001, the Government abruptly stopped the subsidies, which had reached the staggering sum of $40 million a year for 7,000 hectares of beetroot production, in an effort to cut state spending.  

In 2004, following political and social pressure, the Government agreed to subsidize beetroot production, at $3,000 per hectare for one year only. But then this year, the official said, the Government wanted to again discontinue the subsidies but was forced to eventually bow out again to political and social pressure and agreed to subsidize beetroot production from 2005-2007, reducing the total by roughly 30% each year, in a gradual phase-out. Thus, in 2006, instead of paying $3,000 per hectare, the Government will pay only $2,000, the following year $1,000, and the following year nothing at all.

The official noted that some grape growers had been asking for subsidies, but so far to no avail. “It’s not really fair,” said Salim Wardy, owner of wine producers Domaine Wardy.  “But since the Government’s policy is to stop subsidization completely in two to three years, what’s the point of trying to get them to subsidize grapes? Vines take several years to come to full fruition and only reach full production capacity in around six. If there is no long-term Government commitment to subsidies, they are of no interest to anyone.”

“I support subsidies,” noted economist Kamal Hamdan, “but a clear definition of the beneficiaries and eligibility criteria is needed so that the subsidies really do benefit the have-nots. On the ground I doubt this is happening.”

No Tamiflu for bird flu

AUB Professor of Agriculture and bird flu specialist Dr. Elie Barbour has told EXECUTIVE that Lebanon is ill–prepared for a probable outbreak of bird flu, while the director-general of Lebanon’s Ministry of Public Health, Dr. Walid Ammar, has said preparations for a human pandemic are far from perfect. It could cost the government around $10 million dollars in medicals bills. The cost to the economy and human lives would be higher.

“The Lebanese way of handling things is spontaneous,” Barbour said. “They don’t plan ahead of time. The Ministry of Agriculture doesn’t have a system of cooperation with the Ministry of Health or with the Ministry of Interior – so that the Army can play a certain role. The public sector is talking, not working.”

Barbour said a strain of H9 N2 bird flu – not the kind currently making headlines – was discovered in Lebanon last year after coming from China. “We got it here. This means that the wild bird route that passes over Lebanon has all the potential to pass on the very virulent H5 N1 bird flu strain,” he warned. “I think there is a very big chance it will happen.”

If it does, the financial damage to the poultry sector will be enormous.  Poultry sales in Lebanon are already down 50% – despite the fact that there have been no confirmed bird flu cases here. In the event of an outbreak, the cost of culling Lebanon’s roughly 60 million broiler chickens would be about $150 million, he said.

An employee in Lebanon of Roche, distributors of Tamiflu, an anti-viral drug that can treat the flu, said in mid-October that there was no Tamiflu in Lebanon but that an order had been put in and that the drug was expected by the end of October.

Meanwhile, Public Health Ministry Director-General Dr. Walid Ammar, said that although Lebanon was prepared for possible bird-to-human transmission of the virus, the country was not fully prepared for a mutation allowing human-to-human spread.

He said the Government had put in a request for enough medication to cover 10% of the population. “In rich countries they have enough for 20%-25% of the population,” he noted.

Diamonds in the rough

Lebanon’s profitable diamond industry was lent greater credibility recently when the Ministry of Economy and Trade announced its accession to the Kimberley Process Certification Scheme (KPCS), an agreement which controls world trade in rough diamonds.

The KPCS was drawn up in 2002 to prevent conflict diamonds, illegally sold by rebel groups to finance military operations, from entering the legitimate trade. It already imposes strict certification of origin rules on its 45 member countries, which account for 99.8% of global rough diamond production.

Similar import, export and transit regulations now apply to Lebanon’s rough diamond market, and, more importantly, allow it to legally trade rough diamonds with other KPCS countries – something it was previously banned from doing.

“This will raise Lebanon’s international status in the diamond trade,” said Antoine Mghanni, President of the Lebanese Jewellery Syndicate. “It allows us to compete more evenly with Dubai, the only other Arab country to be a KPCS member.”

Although the jewellery industry is Lebanon’s number one export sector, worth some $500m annually, the cutting of rough diamonds is only small-scale. There are currently only a handful of diamond polishers in Lebanon, but the KPCS will allow Lebanese traders, especially those in Antwerp, to start operations in Lebanon.

Yet despite the good news, black clouds hung over Lebanon’s membership.  In early August this year, an NGO called Global Witness complained that Lebanon was importing diamonds from the Republic of Congo (ROC), a country expelled from Kimberley last July for allegedly channeling conflict stones. According to the NGO, Lebanese customs data for February and March showed that $156m of rough diamonds were imported from the ROC. Although no customs official was currently available for comment, the ministry of economy says that the customs data on the Congo imports were overvalued due to a “technical error”, which has now been rectified.

But the affair cast doubt on Lebanon’s credibility. “By trading with a country removed for being in blatant violation of the scheme, Lebanon makes a mockery of the Kimberley Process,” said Corinna Gilfillan of Global Witness.

The hope is that by allowing legal trade with other KPCS countries, such trafficking can be curbed. It now looks as if the local jewellery industry – at least the legitimate one – is set to sparkle some more.

Pirates a go go!

Even by the Middle East’s generally poor standards, Lebanon is notorious for its piracy levels. According to the International Intellectual Property Association (IIPA), the country scores badly on all fronts with an average piracy rate of well over 70%. In Sabra street you pick up a copied film or CD for LL1,000, while in Hamra you enter a shop to choose a pirated computer program game from the catalogue for a mere LL 10,000. According to the IAA, cable piracy is particularly high at a level of over 80%.

However, if it is up to Fadi Makki, Director General at the Ministry of Economy (MoE), the “Beirut Spring” does not just refer to Lebanon’s political arena, but also to an economic clean sweep of the country. During the summer months, the ministry stepped up its efforts to crack down on piracy and counterfeited goods. “In some 50 to 70 raids all over the country,” said Makki, “up to 8,000 products were seized and destroyed.”

CDs, DVDs, computer programs and especially a lot of counterfeited fashion brands, such as Versace shirts and D&G bags were confiscated and destroyed. According to Makki, some 80% of pirated goods are imported, while only 20% is produced locally. “So our main battle lies at the border,” he said.

Sponsored by the international Brands Producers Group (BDG), last May a special telephone hotline, “1739” was introduced, so people can report any suspected forms of piracy. “We have hardly any manpower to perform inspections and raids,” said Makki, “so we rely heavily on incoming calls.”

 According to him, the idea that piracy hurts a country is slowly but surely gaining ground in Lebanon. “Most people argue that Lebanon’s terrible piracy record stands in the way of entering the WTO, which is true,” said Makki. “But there are a number of important reasons why we should fight piracy. It reduces tax revenues, discourages foreign investment, and perhaps most importantly, it is bad for the local industry. As soon as people realize that locally produced goods just cannot compete with cheap pirated brands – and so cracking down on piracy is good for Lebanon – I’m sure more and more calls will come in.”

EDF helps people help themselves

Its board of trustees may read as a “who is who” of the Lebanese business community, the Entrepeneurial Development Foundation (EDF) is a non-profit organization that promotes entrepeneurship among Lebanon’s poor and underprivileged, especially in the country’s rural areas. Established in 1999, the EDF offers training to improve knowledge and skills on how to start up and manage a business, as well as soft loans to graduates able to come up with a sound business plan.

“Traditionally, micro-credit programs do not offer leans worth more than $2,000, while we go up to $10,000,” said EDF’s chairman Nabil Sawabini, who is also CEO of the MENA Capital, an investment group specialized in private equities and real estate development. “What’s more, we offer not 1 year, but 3 to 4 years to pay back the loan and an effective interest rate of not 24% to 36%, but 15% per annum. So, we are not a micro-credit program in the strict sense of the word.”

Call it as you like, the EDF’s business approach of aid and the notion of helping people help themselves has so far proven extremely successful. Since April 2000, the EDF has trained 865 people and helped to establish 62 businesses, 60 of which are still operating. Some $300,000 has been disbursed, while over $100,000 is pending regarding files in process. “Less than 0,5% of the loans did not return,” said Sawabini.

Still, the EDF’s biggest challenge is funding. “We offer 8 training programs a year, of which we recently managed to reduce the cost to some $8,000,” said Sawabini. ”Our administrative costs are some 20-22% of the annual budget, which is not much, as many NGO’s go up to 35%, but that money has to come from somewhere.’

So far, the funding mainly came from international agencies such as Mercycorps, regional businesses and the trustees’ own pockets. Since the start of this year however, the EDF came up with a very original solution. “All Lebanese banks have to keep a minimal reserve at the Central Bank, an amount over which no interest is paid,” Sawabini explained. “We’ve agreed with one bank and the Central Bank that a portion of this can be used for our program.” 

The experiment started successfully with one bank early this year and will be continued with a second bank in the near future, which enabled the EDF to more than double its annual budget. “And if all things work out,” Sawabini concluded, “it will allow us to double the budget every year over the next few years, as existing bank will increase their contribution and others will be added.”

Argent comes to town

Despite continuing, often violent, political turmoil in Lebanon, and the absence, for the moment, of any clear move in the direction of telecom sector privatization, the New Zealand-based telecoms company Argent Networks, providers of billing and customer service solutions for fixed line, wireless, broadband and next generation telecommunications companies, are, in $250,000 move, setting up a regional Middle East and Africa office in Beirut, as they seek to create a foothold in the region.

“We’re looking to get a piece of the action here,” explained Argent Regional Manager Ziad Basha. “Lebanon has a good pool of technical resources which need support.”

The company has also opened a small representative office in Dubai.

Argent has just signed a deal with an Iraqi telecoms company and with Lebanese companies running operators in Africa, is in final negotiations over two other contracts, and expects to sign a few more in the coming months.

Basha said Argent hoped to acquire a 20%-25% share of the regional billing market – its core business – over the next few years.

He said competition would come mainly from similar companies in Dubai.

Telecoms observers and analysts are cautiously supportive of the move. “The telecoms sector in Lebanon and the region has huge growth potential,” said telecoms consultant Kamal Shehadi. “We’re closer to the start of the process of privatization because the Government has made it clear that’s what it wants to do, and I don’t see any opposition. But let’s be clear. This is not something that will happen at the push of a button.”

“I think it’s the right move,” said Notre Dame University Economics and Finance Professor and telecoms specialist Louis Hobeika. “It’s a good thing to be here when the situation improves. I believe it’s the right timing. You need to be here in advance. The telecoms situation here is going to pick up when tariffs are lowered and the regulatory authority is set up. But all of this has been delayed.

“I think it’s more the right time for the region than for Lebanon,” he went on. “The sector will grow fast in the region, especially in developing sectors.”

 Of Argent’s Iraq venture, he said: “Iraq has lots of problems. Not now, but when things do quiet down, it will be a good investment.”

Lebanon, too, is not free of problems acknowledged Basha. “There are problems with the political situation, with plans to liberalize and privatize the sector,” he said. But he added: “I still think it’s the right time to set up the office. And remember, we’re concentrating on the region as a whole.”

Basha said the Beirut office should be functional in early November. 

Forget Fast Food, Go Slow!
As McDonalds is to many people the ultimate symbol of globalization, it
comes perhaps as no surprise that it is the food sector that launched a
counter offensive under the name of Slow Food. Founded in 1986 in Italy,
Slow Food is an international non-profit organization in defense of
bio-diversity and “eco-gastronomy.” Among other activities, it records plant
species and animal breeds at the edge of extinction, as well as protects
outstanding food products and traditional production methods.
Recently, the first Lebanese item, the Darfiyeh cheese, was added onto the
Slow Food list of authentic food of outstanding quality. Ripened for six
months in salted goatskin, the cheese stems from the northern areas of
Mount Lebanon. The problem for the Darfiyeh, as for any other local
specialties in Lebanon or the rest of the world, is that it is extremely
difficult to compete with mass produced cheeses.
“Of course the recognition is important,” Kamal Mouzawak, Slow Food’s
representative in Lebanon and one of the founding father’s of the weekly
ecologically sound “Souk al Tayeb” in Saifi. “It is the recognition of
tradition and quality. But that’s only the beginning. With the help of Slow
Food we will bring in sponsors to preserve the cheese and bring it onto the
market. For example, by bringing in some experts in the field of marketing.
Most people do not know this cheese.”
The Rene Mouawad Foundation has started a program to help the farmers to
increase production of the cheese, as well as aid some 200 goat herders who
supply the milk.
If it’s up to Mouzawak, the Darfiyeh Cheese will not be Lebanon’s last Slow
Food listing. He has already proposed a special Chouf labneh and Baalbek
cheese which is ripened in terracotta jars. Bon appetitit!

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