Albert Nasr heads the center for economic research at the Federation of the Chambers of Commerce in Lebanon, a key institution charged with collecting data and conducting studies of benefit to Lebanese industry. He discussed the role of the center with Executive, and issues of importance in the development of industrial exports.

On the Center of Economic Research

The Center of Economic Research at the Federation of the Chambers of Commerce is designed to supply the federation with support for its duties with regard to business and economic policies and regulations that the government is or isn’t taking. Our main aim is to be advisors to the government insofar as business legislation in general is concerned, in order to be able to protect the interests of the private sector. The bulk of our work is the preparation of position papers.

On the numbers of Lebanese industry

When we speak about Lebanese industry, we are not talking about 22,000 industrial units. The Association of Lebanese Industrialists has a constituency of about 2,000 registered industrial companies. The Federation of the Chambers of Commerce has a constituency of about 7,000 industrial companies. As for the 15,000 remaining firms that make up the number of over 22,000 industrial units reported in the surveys of the ministry of industry, the question here is over the definition of manufacturing. By one definition, a bakery is an industrial unit because they use machinery and transform raw materials into a product. But we in Lebanon are not used to considering bakeries as manufacturing entities. It is a matter of definition. Once we adopt a new definition, we will stick by it.

On industrial production and its share of GDP

Industrial production has grown in Lebanon over the past few years but in relative terms, other sectors have grown by larger proportions. Therefore I would not consider it a problem that the industrial share in GDP has gone down slightly, to about 17%. For one thing, you have to set a question mark behind the reliability of the GDP estimates. If you do not know the size of your pie, you cannot exactly know the size of your slice, that purports to be 20%. Another problem in industry is parallel production. This does not get tallied in any survey. There is a large amount of parallel production from enterprises, producing not only for the local market, but also for exports. These are enterprises that are not officially recognized because they have not registered, mostly due to some outdated administrative requirement that prevents them from registering. It is as if they are non-existent.

On export development and statistics

The export data does show an overall increase, but we deplore the fact that data gathered at customs sometimes includes re-exports. There is a special category for re-exports in the data sheets. But a product that enters Lebanon with its customs duties paid, that is then re-exported would enter the statistics under exports. It is not sufficient to have a single criterion of whether customs duties have been paid, to distinguish between exports and re-exports. A product may have paid customs duties but still be re-exported. An example is, if I were to import a Mercedes from Germany and pay customs duties on it, this car would enter the statistics under Lebanese exports – if I sell it to someone in the region without seeking reimbursement for my earlier import duties. This is an aberration, because exports ought to reflect our capacity to produce and export – rather than our capacity to import and re-export. Importing and re-exporting is a major activity, and we excel in it. This does indicate that we still have a role to play in triangular trade and that our regional status allows us to do this. But it doesn’t say anything about our manufacturing capacity. We need exports to reflect our manufacturing capacity. The only way to solve this issue is in my opinion to have a certificate of origin accompany all exports, regardless of whether the country of destination requires the certificate or not. The way things are now, exports do not get accompanied by a certificate of origin where a destination country does not require that form.

On the Euro-Mediterranean Agreement

With regard to Europe, exporters have to complete the EUR-1 form, which can basically be described as a certificate of origin. Our export data to the EU is reliable. The EU agreement opens up new markets to industrial products, without customs duties. As you know, an earlier agreement from 1979 had nearly the same clauses. I fail to see how we would benefit just on that point. However, the Euro-Med agreement has been launched within a larger framework, and we are going to benefit from that larger framework. Previously we were on our own. Now, support programs from the EU are designed to make us benefit more from this openness of the EU markets.
 

Up-and-coming film director and the winner of seven Phénix awards for work in advertising, talks to EXECUTIVE about creative freedom and her take on the industry

Has the phone stopped ringing since the awards?

No it hasn’t, but not in the way you think. It’s not as if they are all suddenly scrambling to hire me. All the agencies know me. I’ve been doing this for years. I’m not a new talent who has burst upon the scene, although I have had offers from abroad, France, Dubai, Italy and Egypt.

Surely your fees will go up?

Maybe they should but I am not a very good businesswoman. At the moment I’m having fun. Making ads is not my life and so maybe that is why I am not so focused on the monetary side of things.

But how much do you charge?

My fee is $3,000 per day. An advertisement can take two weeks with one or two days of shooting.

What was your first break?

It was an ad for Banque Audi in 2001, for H&C Leo Burnett. The one with the teacher in the classroom. I liked it very much, it was realistic (and) popular.

Are you targeting retail customers and what are your expectations for 2004?

We are aiming first at small and medium enterprises. We need to develop our network to at least 20 branches. I expect this year to be very hard. What you have seen here has been achieved in only six months. I spent 16 hours each day in the office. Sometimes I sleep there, to see my aims accomplished.

Do you look for realism?

We live in a society where there are so many taboos, so many things we can’t talk about. As a director, the things we cannot do – certain expressions and behavior that we can’t show on TV, limit me. In advertising you need to show a perfect world that does not exist and this is where I think advertising is fake. People are not stupid, they know when they can’t identify with an ad because it’s too good to be true, and they just don’t believe it.

What do you think of the quality of creative talent in the country?

I think being in an Arab country we’re not bold enough with our ideas, because we think that we’re going to be judged. There are too many boundaries and too many limits. The problem is not with the level of creativity that we have. I think we have a lot of talent and people who are really very creative. What we lack, I think, is courage. We think that if an idea is too bold it’s going to be rejected or it’s not going to sell. We’re afraid of how people will perceive things and consequently we’re still hiding behind easy things.

Do you find that you have to stifle your creative urges to please the client?

I’m very fortunate that this has never happened to me. I often change a lot of things on the shoot and storyboard, but I do this with the client and their message in mind. At the end of the day, you are doing a commercial, you are only the director, and this is someone else’s vision. I still introduce new things; I don’t just want to execute someone else’s idea. But I try to introduce my way of thinking in a way that the client will accept.

Do we spend enough on ads? I try to adapt whatever idea I have to the limitations without really knowing what the actual budget is. Of course, if we had more money we would be able to get equipment all the time, and could do bigger things. But, I’m more interested in concepts rather than huge productions. You are self-employed. How often then do you work?

I think two or three projects a month are enough for me because I can’t do more than that, even if the money isn’t great. Otherwise, you will not be able to give each project the time it needs and it will affect the quality of your work.

You also direct music videos. How did you get involved in this?

It was a coincidence. A friend of mine was a producer and she introduced me to singer Pascale Mashaalani. At first I didn’t think I’d be interested in shooting music videos, especially since I didn’t really like the formulaic stuff at the time. You know, the singer singing and dancing with a bunch of girls dancing behind him. But then I thought, why not? Maybe I can change things.

We also hear that you are working on a film. When will it be released?

By next year I think. I really can’t talk about it yet, but this is the next step in my career. I feel the urge to move on, to tell a story, to talk about my country, my people and I think a film is the only way I’m going to be able to say these things.

Colonel Moammar Gadhafi’s recent political aboutface over his country’s weapons of mass destruction and his willingness to relinquish them has caught much of the world by surprise. It was a rare bit of good news emanating from an otherwise tumultuous part of the world. In truth, the Libyan leader’s decision to try and alter his revolutionary image as the rebel with multiple causes, is nothing but his waking up to the stark realities of 21st century, post Cold War economic realpolitik.

In this new era of American political hegemony – with the United States as the sole remaining super power – and given Washington’s resolve in combatting “terrorism” and halting the proliferation of weapons of mass destruction (WMD) Libya’s move was the right one. But it was the economic crunch from sanctions and its isolation from the world community – more so than the threat of America’s military might, that changed Gadhafi’s mind and heart. Gadhafi’s socialist-based economy depends primarily on revenue from the country’s oil industry, which according to the US government, contributes to practically all export earnings and about one-quarter of its GDP. But despite lucrative revenues derived from its petrochemical industry and a relatively small population of just 5.5 million, which until recently enjoyed one of the highest per capita GDPs in Africa, the country has felt the strain of US-imposed sanctions and could no longer afford to continue being the world’s pariah.

Little if any, of the millions of dollars from oil revenues trickled down the ladder of Libyan society. Restrictions on imports and gross mismanagement of the economy have led to shortages of basic goods at times – a real problem for the population in a country that imports up to 75% of its foodstuffs. All sectors, including education and health care suffered, not to mention human rights and individual liberties.

The rise in world oil prices over the last three years has helped Libya, as it saw an increase of revenues. This has partially improved the macroeconomic balance, but overall, has had little impact on the economy. Given the results of Gadhafi’s failed politics and policies, there is little surprise that he has decided to “come out of the cold.” The Bush administration would like to take credit for Libya’s sudden change of heart that came with its recent admission to possessing weapons of mass destruction programs; its willingness to give them up and its newfound desire to re-establish ties with the West. Coming in an election year, this sort of revelation can only help Bush, who is already trailing about five points in the polls behind Senator John Kerry, the leading Democratic Party candidate.

Bush’s supporters, particularly the neoconservatives who planned, lobbied and supported the invasion of Iraq, point to the war and Saddam’s fall as a deciding factor that led to the Libyan leader’s policy change. They advocate that if the Bush administration had not routed Saddam, Gadhafi might have still kept his WMD programs. While there may even be some truth in the fact that Saddam’s demise may have speeded up Gadhafi’s decision-making, in reality negotiations between Libya and Britain had been in the works for several months.

The person who perhaps deserves the most credit in bringing about these drastic changes in Libya, is Seif al-Islam, Gadhafi’s son, and some say political heir. The leader’s second son runs the Gadhafi Foundation, a charity which tries hard to project a new and positive image of Libya. Seif al-Islam, through his foundation, has been active in attempting to obtain the release of Western hostages in the Philippines and Afghanistan. However, when the younger Gadhafi tried to negotiate the release of a group of Western hostages detained in the Philippines by the Abu Sayyaf Group in exchange for payment, the ransom only served to encourage the kidnappers into taking more hostages.

Sources familiar with the situation in Libya say that the young business-minded Gadhafi realizes that remaining a pariah state is simply bad for business. His brother Mohammed, for example, would like to obtain the Burger King fast food franchise for Libya. The Gadhafi sons realize that such deals would never occur so long as Libya remains on the US’ black list. Now aged 61, the Libyan leader is purported to be grooming Seif al-Islam, 31, to eventually take over the reins of power. The son, one of five, is said to be very different from his father. He is always impeccably dressed, usually in designer suits, and well mannered. He was educated in Switzerland and Austria, where he studied economics and engineering. In recent years he has toured many Western capitals, laboring to give Libya a better image. He is reported to have sued a London newspaper that had accused him of distributing counterfeit money in Iran.

Some observers believe that Seif al-Islam played a fundamental role in bringing about this new rapprochement with the West, and after decades of isolation, Britain’s Prime Minister Tony Blair is now planning a visit to Tripoli.

In an election year, ever quick to profit from Gadhafi’s concessions and congratulate itself – and no doubt to profit from potential lucrative Libyan oil deals – the Bush administration has been quick to ignore his human rights record and the abuses of his own people. Yet human rights abuses are a point Bush does not miss making when justifying the invasion of Iraq and the removal of the former Iraqi president Saddam Hussein.

“It’s truly sad to see Gadhafi and his son being patted on the back, without the slightest mention of his continued abuse of his own people,” says Ali Al-Rida, a Libyan-American. Al-Rida says the “desperation of both Bush and Blair to claim any kind of ‘victory‚’ is unmistakable, even at the cost of a total loss of any credibility that may have survived their Iraq claims.” Indeed, one should not lose track of this fact and allow gross abusers of human rights to get off the hook so easily, say Libyan Americans, who, still wary of the safety of family back home, refuse to be named. Reneging on his weapons of mass destruction program, is certainly a first step in the right direction, though it remains to be seen just how advanced those programs really were. But Gadhafi needs to do much more, exiled Libyans and human rights groups say. “The lack of any convincing legal and democratic reforms in Libya for 34 years, only a few weeks after President Bush lectured the world about the strategic importance of upholding these principles…is a travesty and a disastrous blunder, par excellence,” says Al-Rida.

Amnesty International “remains deeply concerned about the detention of hundreds of political prisoners – some of whom could be prisoners of conscience – detained without charge or trial and several cases of people who have ‘disappeared.’” Amnesty goes on to say that at a time when Libya seeks to end its isolation and develop its international diplomatic, cultural and commercial ties, “it has yet to take steps to improve its human rights record.”

Among those close to Gadhafi, and singled out by exiled Libyans and Western observers as one of the worst offenders of human rights, is Musa Kusa, the head of Libya’s intelligence service. Nicknamed the “envoy of death” by his enemies, Kusa was once among the most reviled men in Britain, accused of sending hitmen around the world to kill opponents of the Gadhafi regime. Vince Cannistraro, the former CIA head of counter-terrorism has said that Kusa has “blood on his hands all round the world.”

Given the unevenness of America’s foreign policy in the Middle East, it is by no means surprising when Al-Rida and other Arab Americans ask why Arabs and Muslims: “hate the United States and think of Americans as hypocrites?”

Gadhafi’s return to the fold of the international community is an encouraging first step. Libya should now be encouraged by Washington and London to address its other issues.

Claude Salhani is a foreign editor and political analyst at United Press International in Washington DC.

According to British tour operators, the Lebanese government is not investing in a properly funded marketing drive unlike Egypt, Jordan and the Gulf states. They complain that there is no Lebanese tourism office in London to provide essential back up for tour operators who have little incentive to sell the country, and there is no financial support for advertising, brochure production and other kinds of promotion – in contrast to support offered by competing destinations. The situation is exacerbated by costly visas, airport taxes, a lack of press coverage and the inflexible pricing of airline tickets.

Last year’s announcement by the Lebanese tourism ministry that the country received over one million arrivals in 2003, is to be applauded. But to talk of a truly international tourism revival seems premature, as the industry appears to be recovering old markets in attracting Gulf Arabs and expatriates – rather than winning new ones.

The real challenge lies in affluent and sophisticated Europe. Get that market and Lebanon will be back in the big league. With new infrastructure, a relaxed way of life, and the re-emergence of Beirut as a smart, hip magnet, Lebanon should be able to compete with other Mediterranean countries in attracting European visitors. But is it doing so?

The British travel frequently and can do so because of a developed outward-bound tourism structure. They like “exotic” destinations and there is much about the climate and easygoing atmosphere of Lebanon to attract them. But is the Lebanese tourism industry exploiting the potential of the British market? The answer, according to leading British tour operators interviewed below, is a clear no. This is what they said:

IS BRITAIN A GOOD MARKET FOR LEBANON?

There is no doubt about Lebanon’s tourism potential. The climate, beaches, the new center of Beirut, cultural heritage, chic shops, the food, the easy going way of life and reasonable prices are all big draws according to the experts.

“Prices are on a par with Egypt and Jordan. We can put together a four-night, four star hotel package for two people sharing, with flights, transfers and tours for under the crucial threshold of £500. We can also offer a seven-night package for under £1,000 which easily competes with Europe. But there is no demand at the moment,” says Hugh Fraser, the Middle East manager of Cox & Kings tour operator.

“Lebanon should be in the same league as Egypt and Jordan. It’s compact and visitors can cover the country from Beirut. But there’s no drive to sell the country in Britain,” says David Deane, marketing manager at Voyages Jules Verne tour operator.

“Lebanon is accessible – only four and a half hours flying time from London – and that’s a big advantage. And Beirut is the most tolerant, sophisticated and cosmopolitan city in the Middle East with a café society, which would attract British visitors if they knew about it – which they don’t,” says Steven Bray, the sales manager at Bales tour operator.

SO IS LEBANON NOT COMPETING?

“The ministry of tourism and Middle East Airlines need to do much more promotion. Last year we booked 15 holidays to Lebanon compared to 500 to Jordan. In a normal year, without a war in Iraq, Jordan generates about 1,500 bookings. Lebanon could easily overtake that figure but it’s just not happening,” says Fraser.

“Last year we sold over 5,000 holidays to Egypt and about a third of those were two center holidays with Jordan. We do not feature Lebanon in our program and I’ve heard nothing from the Lebanese ministry of tourism to make me feel I’m missing out because of this.

“I’m told that Lebanon has a great climate, beaches, shops and night life. But a lot of places have that. There’s a lot of product on the market and if a destination is not promoted it won’t get noticed,” says Kelly Fowles, the product manager for Egypt at Thomas Cook Signature tour operator.

“Tourists worry about security in the Middle East, but we can still sell Egypt and Jordan because their tourism authorities react to this concern and reassure visitors. A problem in one place can mean a market opportunity for another – SARS in China or a hurricane in the Caribbean can mean more bookings for other destinations, provided they adjust prices. But that doesn’t seem to happen in the case of Lebanon,” says Fowles. “Every November at World Travel Mart in London, I seem to meet almost every supplier in the world except somebody from Lebanon. They never come to look for me. Is the ministry targeting cultural tourists, business visitors, conferences, affluent young professionals, charter groups? They haven’t told me anything.”

“Last year we sold 25 holidays to Lebanon, 800 to Jordan and 1,250 to Egypt. We rank some 60 countries in terms of their profitability as destinations to us and Lebanon is number 56. Demand needs to be stimulated by advertising and marketing funded by the Lebanese tourism industry and there’s not much sign of that,” says Raymond Howe marketing manager at Bales. “We sold 8,000 holidays to Egypt, 500 to Jordan, 100 to Syria and 85 to Lebanon last year. A seven-night holiday to Jordan costs £80 less than to Lebanon, because greater volume creates costs savings. Markets need constant adjustments to remain competitive. For example, single travelers to Jordan do not pay a supplement which attracts older travelers,” says Deane.

OTHER PROBLEMS?

All the operators interviewed said they received no contributions from the Lebanese authorities for co-advertising campaigns. Advertising creates awareness, image and markets, and also generates data from travel agents for market development.

“Although Lebanon has recovered from the civil war, little is being done to counter out of date perceptions. The country needs a new image,” says Bray. “Visas are inconvenient and expensive. They’re in response to visas for Lebanese visiting Britain, but things could be less rigid. Visas should be abolished or at least granted on arrival at Beirut airport as they used to be,” says Fraser. “Taxes at Beirut airport are about £60 per passenger, compared to about £40 for Cairo or Amman airport, so when a tour operator puts together a package – he will probably use airports at Cairo or Amman rather than Beirut as the gateway.”

Tour operators look for financial support from local suppliers to meet the cost of a page in the brochure. With artwork, production and distribution to, say, 2,000 travel agents, a page can cost about £3000.

“We get a financial subsidy of up to 50% for pages in our brochures from suppliers in Egypt and Jordan,” says Fowles. “We get financial support for our pages from hotels in Egypt and Jordan, from Egypt Air and from the Jordanian Ministry of Tourism,” says Howe. “We get financial support for advertising and promotion from Jordan and Syria but not from Lebanon,” says Deane.

HOW TO REVIVE THE MARKET

The experts agree that Lebanon should reopen its tourism office in London and invest in a properly funded marketing campaign. Marketing needs to be targeted at the right sectors. These could be older affluent travelers interested in cultural tours on 10-day holidays, or high earning young professionals on four-day breaks who want to explore the club, shopping and café scene in Beirut, or the best skiing in the Middle East. The marketing campaign should also develop two center holidays with Jordan, Egypt and Syria.

“A tourism office in London can help us by organizing familiarization trips to the country for our sales staff and press trips for travel writers. Articles in consumer newspapers create a buzz about a destination, and articles in the trade press make operators and travel agents think about doing business with a destination,” says Fowles. “A good tourism office will educate our staff about a destination and also organize meetings for us with the national airline and ground agents so we can make our deals. We have this sort of productive relationship with the Jordanian tourism office in London and with Royal Jordanian Air – but not with their Lebanese counterparts.

“Good press coverage can make a big difference. When last year a leading Sunday newspaper ran an article saying Jordan was now safe, our phones rang big time on the Monday morning. If the Lebanese Ministry of Tourism invited a popular TV holiday program, the pay back would be big.”

Deane thinks that MEA could be more flexible on pricing. “Airfares account for more than half the price of a holiday and if an airline is flying with empty seats it makes sense to take £50 off a £250 ticket so we can pass this discount on to the customer. Flexible pricing always stimulates a market,” he says.

Howe praises the Egyptian tourism authorities for helping the country bounce back after the recent war in Iraq by negotiating competitive rates with hotels and the national airline. “A local tourism office can also facilitate contacts between operators and key people in the host country. If you don’t have these contacts, then the chances are that nothing gets done,” he says.

The Egyptians recently hosted the annual conference of the Association of British Travel Agents in Cairo, which created huge promotion for tourism to Egypt. Lebanon might think about doing the same sort of thing.

The matter of greatest obvious concern for stakeholders in sea and overland transportation is the new container terminal at Beirut Port. Idle since its completion some three years ago, the $200 million project’s commencement of operations depends on two factors: contracting an operator and installation of essential equipment, like the so-called gantry cranes.

Three of these giant cranes, capable of lifting containers between cargo vessels and shore-side facilities, have been manufactured in China at a cost of $27 million. The contract also includes six smaller, mobile gantry cranes and other equipment. Representatives of Lebanon’s shipping industry are eagerly awaiting the arrival of the cranes. “They were scheduled to arrive here in February or March but an agreement between the Port of Beirut and the supplier has been made to postpone delivery until May,” said Elie Zakhour, president of the International Chamber of Navigation in Lebanon.

Sector companies are nervous about any sign of delays in delivery of the cranes, as it highlights the fact that the tender for an operator contract is overdue and is reminiscent of the derailment of the container terminal’s start in 2001. At that time, the Dubai Port Authority (DPA) bowed out of a contract to operate the terminal, and shipping insiders believe that a key factor in the cancellation was problems between the port and a group of contractors who hitherto have been entrusted with handling cargo movements.

These operators are independent firms, which the Lebanese government invited at the end of the war to provide stevedore services when the authorities needed to bring the port back to life in the fastest and least costly manner available. The contractors were rewarded for their commitment by receiving a 30% share of the cargo fees collected by the port. This, said Zakhour, “provided the equipment owners with a total revenue of $15 million over the past 13 years” – but port and operators never signed a formal contract that would regulate their status and cover questions of canceling their services. Almost unavoidably, the current matter of contention is compensations. It was over this issue that stevedore companies last month staged a one-day walkout that paralyzed cargo movements at Beirut Port. Observers contend that similar disputes between the port and the same operators – whom some industry insiders call “the Mafia” – played heavily into the fact that DPA stepped out of its contract. And they are asking whether the interests of this smaller group again could, by using their alleged ‘pipelines of influence,’ prevail over the common good. Following the DPA withdrawal, cargo handling at Beirut Port continued in a fashion that made visiting specialists gasp at how well the operation was working – but only given that the work is done by using the methods of a bygone shipping era. The problem is, the system is simply unsuited for large ships. “No shipping line is interested to come to Beirut as long as there is no container terminal,” said Zakhour. “When we have the terminal, Beirut will have a chance to become a transshipment hub.” Completion of the container terminal will boost capacity of Beirut Port to be able to handle 500,000 twenty-foot-equivalent units (TEU), a theoretical increase of about 70% over its 2003 cargo volume that was in the magnitude of 300,000 TEU. But more important than this increase in capacity would be improvements in service quality and reduction in turnaround times for big vessels. Undoubtedly, even the best imaginable boom of Lebanese domestic consumption and exports could not provide Beirut port with the volumes and turnover of a major hub. To some operators, the facts that the port generates income and operates with some degree of efficiency thus serve as arguments to justify the current situation as acceptable. In the eyes of others, repeated postponements spell another lost chance for each day that the terminal remains idle. There is but one way to test whether Beirut would be able to succeed in competing for sea-to-sea transshipment business, and that is offering the services of a functional terminal.

What adds further spice to the situation is the recent upturn in cargo movements to Iraq. “Sea to land transshipment has much improved,” Zakhour said. “When the US/UK-led coalition made war on Iraq, we were afraid that impact on shipping would be disastrous, but it is now better than before the war. Under Saddam, everything in Iraq was state controlled whereas today, private importers rule the scene.”

Although much of the increase in deliveries to Iraq last year was in shipping cars, members of the industry view growth of container forwarding in 2004 as a sure thing. The main reason for the optimism is based on the situation in other ports, mainly the Jordanian Aqaba. It is the primary gateway for shipments into Iraq and favored as an ally by the Americans, but traffic at the port has become so intense that carriers have been leveling high congestion charges for sailing to Aqaba.

From the Syrian ports, Latakia and Tartous, shipments to Iraq have similar overland transit times as from Lebanon. But in these ports congestion reportedly is also becoming an issue, thus opening new prospects for Beirut and Lebanon’s second port of call, Tripoli, which also saw cargo business pick up in the second half of 2003. (Like Tartous, Tripoli Port is undergoing extension and modernization, financed by a development loan from the European Investment Bank.)

Trucking a container from Beirut to Baghdad currently costs between $1,200 and $1,800, depending on the circumstances, said Nabil Sakr, managing director of DAS Express, a firm with experience in overland forwarding to Iraq. He estimated shipping costs via Tartous to be about 25% lower, but claimed greater speed and expertise in Beirut could make up the difference for shippers. DAS management expects an increase of Iraq-bound container shipments via Beirut by 500% to 600% for this year alone. But even after such an increase, other ports would still be far ahead in their throughput of Iraq cargo. “What we are getting is almost peanuts,” Sakr said. Based on the reasoning that Beirut can equalize its higher port fees by already offering a faster turnaround time to ships and better service than the bureaucracy-heavy Syrian ports, Lebanon’s premier port could push its advantages further by offering lower rates and achieving additional improvements on service quality and speed – tasks for which a well-run, spanking new container terminal would come in more than handy.

A third industry concern and opportunity for developing the Lebanese shipping location is as a logistics hub. The crux of such an operation lies in the ability to provide large international manufacturing companies with a regional distribution base, from where adjacent markets are supplied and serviced.

International express shipping and logistics company DHL has already taken steps that could assist Beirut in assuming a stronger role in its regional network: it has set up new overland routes and their Lebanon operation has just received approval for expanding its facilities at Beirut International Airport by 3,000 square meters. The expansion involves a capital expenditure of $2 million and the hiring of some 40 new staff over the next three years, country manager John Chedid told EXECUTIVE.

He attributed much of Lebanon’s growth potential in providing logistics to improvements in the regulatory and customs environment. “When you have facilities and good customs practices, you start attracting transit material,” he said. “New procedures in customs have made everything clearer and much more transparent. If I dare make a prediction, 2004 will see further progress towards a much better regulatory environment.” One crucial improvement in operating conditions for international and domestic logistics firms is definitely in the making. Exploiting the geographical and skilled labor advantages of Beirut for providing logistics services to any of the big names in manufacturing requires a free zone environment that permits repackaging and distribution of shipments – which previously had not been possible under Lebanese regulations. However, EXECUTIVE learned the rulebooks for Lebanon’s free zones have just been rewritten. The revised rules, allowing freight forwarders to establish facilities in the free zones and implement regional distribution activities, are in the final approval phase at time of writing this article.

Joseph Harb, president of Beirut Cargo Center, told EXECUTIVE the new regulations will open tremendous opportunities for logistics providers not only for his company, but also for the economy at large. “If you want a big manufacturer like Addidas or Siemens to open an office in Lebanon, allow freight forwarders into the free zones,” he said. Additionally, the move would serve to promote Beirut Port internationally, Harb enthused. “Ports and customs authorities do not promote the free zones,” he said, “the freight forwarders are the ones to promote them.”

Is it fair to say that the port has been performing reasonably well in 2003?

Yes. Beirut Port has been performing well with regards to imports and total revenues, which increased from $71 million in 2002 to $75 million last year.

A much talked-about issue is the project of putting the port’s container terminal into business. Is the tender for finding an operator progressing?

It is ready. We have completed the tender documents, and they are now with the minister for final approval.

How long until an operator would be able to come in?

In the tender documents, we specified one-and-a-half months to receive responses from interested operators, but we think that we should extend that to perhaps two months. For the phase from awarding the contract, we have scheduled three to four months for the operator to mobilize and start operations. In total, we are talking about half a year.

For what duration will the contract be awarded?

It would be for 10 years, with a possible five-year extension.

A second big issue regarding the container terminal is necessary equipment, which you ordered from China. Are these gantry cranes ready for delivery?

Delivery of all the equipment we bought has already begun. I think the gantry cranes are on a boat and just left China. They require two-and-a-half months at sea because they have to go all the way around Africa. Then they require another two-and-a-half to three months of erection and testing, which, like the operator tender, brings us to the middle of the year.

Did you request a delay of delivery?

There was a delay by two months. Delivery was originally scheduled for end of March. However, we did not actually delay delivery. We pinpointed some issues in a punch list for modifications and we requested the manufacturer to change most of them in China.

Does this delivery provide all the equipment needed for the terminal?

Ideally, we should have four gantry cranes and not three, which means that ideally we should have eight Rubber-Tyred Gantry cranes [RTG] and not six. We opted to buy the strict minimum as an initial step and allow ourselves to buy more when need arises. In our contract, we have an option to buy one more fixed gantry crane and two more RTGs.

Steel prices have gone up. Could that alter prices under the contract option?

The option does not allow for a price hike due to steel price fluctuation. The only price hike is on the euro side. When we signed the option, 25% are to be rescheduled taking into regard euro appreciation.

Considering the total cost of $27 million for the equipment under delivery, you got a good deal?

We got an excellent deal.

As far as construction of the container terminal, is it correct that the total capital investment amounted to $200 million?

It was less than that and it was more than just the container terminal. The investment was closer to $180 million and it included rehabilitation of some of the old parts of the port.

Are the $27 million for the new cranes included in the $180 million or on top of that?

I believe, on top.

Did it incur specific costs for the terminal not to be operational for a period of several years?

Major cost would have been interest expenses, but the port self-financed this project and basically there were no interest-bearing loans involved. We have some maintenance costs, but those are peanuts.

But how would you assess the cost of lost opportunity from the delay?

I believe the cost of opportunity loss is in the extra services that we could have offered, mostly in transshipment, and in the quality of the service that we could have achieved. What the dollar figure for that is, who knows?

Do you consider attracting large carriers for transshipment to Beirut as a realistic vision?

I have been talking a lot with carriers, and the vision varies. There are those who think that it is absolutely impossible to have transshipment here, and then it ranges all the way to those who think that carriers will be lining up to transship out of Beirut. I think if we can sell that product at a good price we will have some transshipment but I don’t believe that we should aim at becoming a transshipment hub the way Dubai or some other ports are. Further expansion of Beirut Port would be very expensive and I do not believe that transshipment revenue would be able to cover such expenses.

Did the delay harm the concept of becoming a transshipment hub?

Today, we have very little, not to say no, transshipment cargo. The studies we have undertaken show that transshipment starts very slowly and tends to increase with time. So, a three year delay is costing some money, but not a lot.

Can you confirm that freight forwarders will be able to establish operations in the Port’s free zone?

Yes, we have been working very closely with customs on that issue and we just modified the rules for the free zone in order to allow logistics companies to operate inside the free zone. This is especially for re-packing, handling cargo for third parties, and to undertake stock control for major companies, in order to make Beirut a center of distribution for the entire Middle East area. This is much more interesting than transshipment alone.

Last month, the port saw disputes and compensation demands over termination of stevedore contracts with the equipment contractors that have been handling cargo at the port. Would you be able to comment on the validity of their demands?

While I understand their demands and might be sympathetic to some of them, legally speaking, I cannot resolve them from where I stand.

Could you give an estimate on the value of their equipment and what amounts these companies might have invested in the past five years?

Since we are not legally bound or allowed to provide any compensation, we didn’t look into this matter. Just as everyone, I have heard of astronomical amounts of money that are supposedly being demanded. I can only say that I think the numbers I heard are far exaggerated.

How do the Lebanese print media survive?

The word survive is very accurate. Before the war, the Lebanese media was flourished in terms of sales and advertising revenues. Unfortunately, during the war we had to spend all our reserves and now we are surviving. The print media market is depressed not just in Lebanon but worldwide has fallen by something like 25% to 30%, the broadsheet media and the dailies, that is. But because of the political and economic situation in Lebanon and the region, the advertising market has dropped – by something like 35% to 40% for television and 25% for the print media. We face a major problem with all our budgets, short-term, mid-term, and long-term. At the end of 2003, we had lost something like $1.5 million in advertising revenues. That’s a big amount in the print media.

How do you cover your losses?

Our first step, years ago, was to increase the price of the newspaper, from LL1,000 to LL2,000. Then, we increased the capital of the company that publishes An Nahar. We knocked on the door of people who were interested. We integrated them into our family. And of course, in buying the shares, they paid a different price than the normal price. We’ve been able to bring in something like $10 million, just to cover all the losses of the war, to ‘clean’ everything, and to prepare the budget for the next six years.

Has your dependence on investors interfered with the paper’s independence?

In our case, no, because in the charter of the company it is written very clearly that the policy of the paper is decided by the journalists and the Tueni family – because it’s a family business – based on the mission set out in 1948 by my grandfather, Gebran Tueni, concerning the role of An Nahar, the defense of press freedom, and the defense of the integrity of Lebanon. Anyone who buys shares in An Nahar must agree to this.

Is there an advertising monopoly?

I don’t oblige advertisers to advertise in An Nahar. And our prices are high. There is no monopoly of advertising. People can compare and choose.

Why has Prime Minister Rafik Hariri relinquished his 34.5% stake in An Nahar?

I don’t know but I’m happy. He has his own reasons. I had mine for buying back the shares. A lot of people told me I was stupid, but I said: No, no, no, when you want to pay for your freedom, it costs you a lot. I don’t think he was very happy to give them up. I was very happy, but you should know that the price was very high. I can’t tell you how high. But it was a very high price, a really high price. He did good business. But I think politically it was good for An Nahar. A long time ago, I asked him to sell me back the shares, but he didn’t want to at the time. Now I think he feels that the policy of An Nahar for the time being is very independent and maybe he thought that he cannot exert pressure to change that policy. Maybe he thought that it was too much for him to support.

Is there any truth to the suggestion that he relinquished the shares under pressure, indirect or otherwise, from Syria because An Nahar espouses an anti-Syria editorial line?

That is pure fantasy. That would mean that today, I can thank the people I attack in my newspaper for exerting pressure on someone to sell me shares, so that am now more independent. It was a very positive point for the readers also who wrote to congratulate me. Now I’m going to sell shares with the new philosophy that no one person can own more than 30% of An Nahar.

Why was it so important to you to get Hariri’s shares back?

It is very important for a journalist to feel that they are completely independent, that they are not dependent on the money of someone, that no one can say to them: I am a partner, especially when your partner is not always on the same political line.

Did Hariri ever try to exert pressure?

Frankly, yes and no. The relationship was comfortable, though. He endured much more from me than I endured from him, because he knew that he couldn’t exert pressure.

Does Antoine Choueiri have an unfair grip on media advertising?

How? Ok, he represents An Nahar, L’Orient Le Jour, As Safir, but I chose him, he didn’t choose me. Nobody obliged me to go to Choeuiri. I went to Choueiri because I think he is doing very good business. It’s a business contract between him and me. I chose him to manage my ads because I don’t want to create an advertising department in my newspaper. If someone has a newspaper or television station and cannot attract advertising, that’s not my fault. Let him improve his product, convince people that he is number one. Either we are in a free economic system, a free market, or not. This is not dumping. Before [we dealt with] Choueiri, we used to have our own in-house ad department, and it didn’t work. We had the problem then of going out into the market to collect payment. We need a cash flow.

Are the orders of the press and of journalists doing their job as they should?

They are doing the minimum and the minimum is never enough. In this business it’s never enough. With respect to major problems regarding press freedom, they are doing their job. We were able, through the Orders, to get the press law amended. Now, Lebanon’s press law – and I am against any press law – is a good press law. The government can no longer send someone to prison as they do with the audiovisual law, which is a very bad law. But none of the TV owners has presented an amendment of this stupid law, which allows the government to close down TV stations.

How did you feel about the arrest of New TV owner Tahseen Khayyat?

I’m against the arrest of any journalist, of any owner of a TV station or newspaper. I think the TV law in Lebanon is a very bad law. I can tomorrow morning say you are an Israeli agent and put you in jail for 24 hours.

So Tahseen Khayyat’s arrest constituted harassment?

I think it was a form of harassment.

Is this good for Lebanon’s image?

It is very bad for Lebanon’s image, for people to see, as well, that MTV is still closed because our government, our president, was upset with MTV’s policy. The government is trying to bring us back to the Middle Ages. It affects the credibility of the government, of the president, of the prime minister, of the general assembly.

Why is this happening?

Because we don’t have politicians in Lebanon. This is not an independent state. These people have been designated to do a certain job, by the Syrians.

What is your reaction to Walid bin Talal’s purchase of a 49% stake in LBC International?

It’s good. It’s good to see that Lebanese television can attract the interest of foreign investors. If it was a bad TV station, bin Talal would not have invested in it. It’s good for the sector, of course, good for the brand name of Lebanon, good for the whole industry.

What is your evaluation of Walid bin Talal’s newly-formed 24-hour Rotana music channel?

It’s good because I think that Walid bin Talal will be able to help a lot of Arab artists, who do not have the money to produce clips. I hope that we will have real artists and not popcorn artists and video-clip artists.