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.

The inclusion of President Bashar al Assad’s brother and brother in law in a confidential version of the Mehlis report leaked on October 21^st 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.”