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Tripoli
Microsoft chat rooms in Lebanon have been shut down. The move comes after the world
There is anger and disappointment in south Lebanon that a $62 million World Bank cultural heritage and urban development loan will not cover Beaufort Castle. The castle, a 12th century monument built during the Crusades, was used both by the PLO and Israel and its Lebanese allies as a strategic outpost during the war years and up to May 2000.
Mustafa Badreddine, a former president of the municipality of Nabatieh, under whose jurisdiction Beaufort Castle falls, said he was at a loss to explain why the
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The ministry of telecommunications and its network-operating subsidiary, Ogero, have installed the first wave of public payphones in Lebanon, with apparent success. The rollout began in late 2003 with payphones at Beirut airport and in the capital. According to ministry figures, installation shall continue until 4,000 public phones are available nationwide. The total project cost is $8 million.
The new network offers consumers an affordable alternative to mobile telephone communication. It employs the same smart card technology that has been successful around the world, but the new payphones do not accept coins. The prepaid card required to operate the phone offers the buyer of a LL10,000 card 100 minutes of domestic landline talk time. Rates for calling a mobile phone are priced at three times that, at LL300 per minute. The public phones also allow international calls, reportedly at rates below those from a regular landline phone. For the time being, customers have to visit an Ogero telephone exchange to purchase a card. Representatives at Ogero
At the press conference in which he outlined the 2004 budget, minister of finance, Fouad Siniora, began by justifying why the 2003 budget was missed by such a sizeable margin. According to figures for the first nine months of 2003, the deficit stood at around 38%, compared to almost 40% for the same period last year, thus registering a modest improvement. While revenues seem to be on target for the year, and may reach the budgeted LL6.475 billion by year-end, expenditures remain high. Current expenditures (excluding debt servicing) grew almost 8% between January and September 2003, compared to the same period last year, reaching LL3.4 billion against a full year budget of LL4.2 billion. On the other hand, debt servicing, which was expected to be capped at LL4 billion for the year, has already exceeded LL3.4 billion by September, and remains the main factor behind the government’s failure to trim the deficit further. In an effort to justify this performance, Siniora stressed that failure to implement structural reforms in the public sector was to blame for the government’s inability to trim current expenditures and meet its targets, while debt servicing targets set for 2003 were primarily dependent on the proceeds from privatization of state assets, a move yet to be implemented.
In doing so, Siniora absolved his ministry from failing to meet the budget for 2003, placing the blame primarily on the political bickering that has hampered the implementation of structural reforms and the progress of privatization. That done, Siniora moved on to sketch the main highlights of the government’s draft budget for the coming year, repeating the importance of structural reforms in the public sector, and their critical role in achieving any target set for 2004.
He said that the new budget would take into consideration the current and expected burdens on the ministry and the treasury. No new taxes would be levied, nor would there be any modifications to existing taxes, including the famed Value Added Tax, expected to remain at 10%.
On the revenue side, total proceeds were expected to remain stable at around LL6.4 billion, yielding an initial surplus in the budget of LL1.45 billion – until debt servicing comes into play.
Setting the debt-servicing burden aside, total expenditure by the government is expected to stretch by almost 8% to reach LL4.95 billion. Around 69%, or LL3.4 billion of such expenditures are allocated to salaries and wages for the workers of the public sector. With the national debt holding steady at current levels, total interest on the debt for the year 2004 is expected to reach at least LL4.3 billion, constituting 46% of total expenses, 67% of total revenues, and yielding a net deficit for the budget of LL2.85 billion, or 30.8% of spending.
As such, wages and salaries, in addition to debt servicing costs, amount to a staggering LL7.7 billion, or 84% of total expenditures. The remaining 16% of expenditures, or LL 1.9 billion, are allocated among various ministries as normal operating expenses for government entities. While such “discretionary” costs may be trimmed, it would conceivably be difficult to significantly improve efficiencies on that front with no radical structural reforms.
On the other hand, if privatization plans do materialize early in 2004, and if proceeds from such efforts are up to expectations, total debt servicing for the year may drop to LL3.9 billion. Such a drastic improvement would reduce the deficit to LL2.45 billion, or 27.7% of spending. The ability of the government to meet even the high end of the deficit for 2004 remains to be assessed, however, as it still marks a significant improvement over the numbers seen in the second half of 2003, where the deficit reached 38% of spending. In fact, as it has been clearly outlined by Siniora, prospects for additional cost-cutting outside debt servicing are bleak, while revenues are expected to remain flat. On the revenue side, options appear to be very limited, or so the government would want us to believe. Income taxes are already being levied on companies and individuals alike. Consumer taxes are being levied through a 10% Value Added Tax system being applied to almost every type of good or service. Custom duties are still applied to almost all import, including unfortunately raw materials and semi-finished goods for industrial use. From this perspective, it does seem that there is virtually no room for improvements. Any additional or higher taxes and the already high cost of living in Lebanon would squeeze consumption, investments, and subsequently economic growth.
Nevertheless, the case may not be as hopeless on that front as the government is painting it out to be. The government should be able to significantly improve its income not from increasing taxes and duties, but by simply improving tax collection. While no official records are kept on who pays what taxes, or at least no records are disclosed, the possibility of digging in that direction should be seriously considered because the current situation leaves no room for slacking off, especially with the World Bank and IMF breathing down the government’s neck. Improvements can be achieved through better tax collection on currently levied taxes, in addition to levying taxes on some job sectors to this day indemnified from paying taxes (medicine, law, etc…).
On the expenditure side, and apart from debt servicing, it was made clear by the government that the overwhelming majority of expenses (or 86%) is non-discretionary and cannot be significantly reduced. Furthermore, almost two thirds of all expenses are allocated to wages and salaries of public sector “servants”. The majority of members in the government and the parliament seem to believe that no cuts can be implemented on that front. Basic finance stipulates that reducing the debt servicing cost can be achieved by either trimming the amount of debt on the books, or negotiating lower interest rates on the existing loans. It appears that perhaps the easier solution is negotiating lower rates on existing loans, or replacing existing obligations with more suitable ones. However efforts in that direction are limited, with the benefits of Paris II beginning to dissipate as the country still fails to meet the requirement set during the summit last year. The government has failed to prove to potential lender/donor countries it ability to implement needed reforms and complete privatization.
As the current situation stands, on the other hand, reducing the overall debt level without privatization seems practically impossible. Severe drainage at the power company, a sizeable budget deficit, and increasing spending on social welfare are likely to force the government to continue borrowing over the near term. As such, the total public debt level is expected to breach the $33 billion level in the foreseeable future.
Therefore, we again realize that the fate of the country hinges on a matter debated so many times over the past five years: privatization of state assets. Three matters should be addressed with that regard:
– The importance of privatization and its impact on government finances
– The urgency of completing privatization plans
– The likelihood that privatization takes place in 2004.
The critical importance of privatization of state assets and its proceeds has been underlined so many times by various parties, including the World Bank, the IMF, international banks such as Citigroup, Merrill Lynch, and rating agencies such as Standards and Poor’s and Moody’s. The country’s economy is severely burdened by the level of debt, high debt servicing costs and the resulting deficits forcing the government to borrow more. Such factors have prompted a number of rating agencies to downgrade Lebanon’s sovereign rating yet again, stating the pace of reforms and privatization as the main factors behind such a move. Furthermore, the presidential elections to be held towards the end of 2004 are likely to stall any major moves on the part of the government.
Standard and Poor’s proceeded to revise Lebanon’s outlook from Positive to Stable due to fiscal consolidation delays. “The outlook revision reflects our view that the draft budget for 2004 implies a postponement in fiscal consolidation and hence delays the envisaged reduction in the government’s debt burden,” said S&P’s credit analyst Ala’a Al-Yousuf.
The only conceivable solution to reduce the level of debt is through the privatization of some state assets. The two profitable cellular operations should CONCEPTUALLY be easily sold. The power company, on the other hand, is a losing business, with accumulating debts and losses. Nevertheless, serious efforts should be undertaken to sell-off EDL, which by itself is burdening the treasury and forcing on more debts. Proceeds from privatization can range from $2 to $4 billion, and can substantially reduce the overall debt servicing cost by more than 10% in 2004 alone.
Moreover, the benefits of privatization are not limited to the use of proceeds to reduce debts, but such a move would considerably boost the government’s image on the international scene, prompting cheaper lending, more donations, and improve the overall foreign investment climate in the country.
However, as the political bickering has delayed privatization for almost 4 years, the value of the assets, to the contrary of the level of national debt, are certainly not rising. The longer the privatization is delayed, the less the proceeds of such a move will be, and the more damage the government’s already frail credibility will suffer.
The year 2004 is the presidential election year. President Emile Lahoud is eager to improve his public image, while Prime Minister Rafik Hariri is equally keen on meeting his economic targets. It remains to be seen, however, if their plans to improve their public image include a certain compromise on such critical issues as privatization, and how soon, if ever, such precarious steps are to be taken.
The stock market’s upward move this year has humbled many analysts and perplexed even the most optimistic financial experts. Take the all-tech/all-emotions Nasdaq as an example: it’s up a mind-boggling 73% from its October 2002 lows, a tempting sign to many that it’s safe to invest again. But are Wall Street’s happy days here to stay, or is the stock market’s upswing operating on borrowed time?
It is crucial when looking at the market to keep an eye on the big picture, which in this case is that stocks cracked in 2000 and have embarked on a massive bear market. Any moves up within this bear market have to be analyzed in the context of the larger force in action: the bear. In fact, for the SP500 index, the bear market is in the earlier stages of its decline. The Nasdaq, although on the rise – some Nasdaq dream makers are up two, three, even five-fold – it is still down 60% from its March 2002 numbers. This latest rally has brought little real solace for the buy and hold crowd, as they are still down. The short-term punters that have played the move up, however, have cleaned up nicely. But in the meantime, the individual investor must ask the following question: “Is it for real and do I keep my money in?” The answer to both is a resounding “no”.
The move up, from a technical perspective is not so irrational – there have been three other moves up since the crash started, and all had been mistaken for a real revival. This latest surge came with a whole media blitz on how “the US economy is recovering” and in three months, the word “recovery” replaced the word “recession”. The current mainstream view is that the recovery in the US will lead to ever-higher asset prices, but there are two important cautionary factors that should be considered. The first is that the sentiment is extremely positive. This may seem counter-intuitive, but with market participants feeling so buoyant, there is ample room for disappointment. Ever forgetful of the past, the public and the media are being lured into a false sense of security. The market never bottomed at multiples beyond seven or eight and we are currently at 28 times earnings on the SP500. The second factor is that with consumption being the catalyst of any recovery, it is hard to imagine it staying robust without improvements in job creation. Job growth, especially weak in Europe, has faded significantly in the US, with the unemployment rate increasing from 4% at the height of the mania, to near 6%. Chances are, unemployment will continue to rise given the massive overcapacity in most sectors.
The technical factors abound, but the most relevant for the individual investor, is that the bear market is not over. People should be looking at their portfolios and cutting stock exposure to a bare minimum, and while the media and large financial institutions will have you believe that “cash is trash”, this advice will likely turn out ruinous. The notion that people must invest in the stock market is outdated. From 1982 to 2001, the markets were hugging a near perfect up trend (see chart). Since then, it has gone back and forth, sometimes with inebriating speeds, but the market remains below the trend line broken three years ago. What does that entail? It simply reinforces, visually, that despite the recent large move up in stocks, and the hope driven discourse about elections, recoveries, and the “new world”, the markets are still in dangerous territory. Even the sexiest alternative investment will not dodge the coming deflation in prices across the global markets, especially in US stocks and corporate bonds. It is much simpler to adopt the optimistic scenario, as it flows strongly in the ambient media. But one must be more cautious than ever before of the dream of long-term prosperity in stocks. Having been devastated by hope on multiple occasions in the past, it is an elixir that should be passed up. Stay in cash, invest where you live, and preserve hard-earned money. Cash, far from being trash, is the ammunition for investing when no one, including CNBC, will be positive on stocks. For now, stay liquid for the stormy winter.
“No serious newspaper will survive in Iraq today unless the security situation improves. Advertisers aren’t interested. Locals can’t afford to spend much on a newspaper. As a newspaper owner, you’re in trouble,” said Mark Gordon-James, 25, the former finance director of the BAGHDAD BULLETIN, the English language newspaper that has gone belly-up. Established by a team of mainly young, adventurous British expatriates straight after the war, the paper showed early promise. Little did the team predict the persistent operational hazards – power outages to street crime – that would thwart growth from the beginning. All eventually kept advertisers at bay.
“Our mistake was to assume that Iraq would be better off three to five months after the war,” said Gordon-James who estimated losses at $20,000 and who argued that if there had been a genuine effort by the coalition to inject money into Iraq and get reconstruction underway, Iraq would have seen a massive influx of foreign investment.
“Instead, just nothing has happened,” he said bleakly back in London after spending over four months in Iraq. “The place has simply stagnated and started to decompose with the social rot that sets in when you take basic services away from a people – in other words, the collapse of the state.” Ralph Hassall, 24, a young British entrepreneur and graduate from Oxford University, recruited Gordon-James to handle the business side of the paper in May. “Within a week of hearing the idea and meeting Ralph, I was on a plane to Amman,” said Gordon-James, who at 25 was the Bulletin’s oldest staff member. “I thought it an entirely appropriate and essential project for Iraq … plus I found the idea of being an entrepreneur pretty attractive. Didn’t Richard Branson start like this?”
For his part, Hassall was inspired by his mother to start the paper whilst on a trip to the UK from Beirut, where he had been studying Arabic at the American University of Beirut (AUB).
“I spoke to my Mum and she said: ‘You know what they’re going to need in Iraq after the war? They’re going to need an English language newspaper,’” he said. Searching for investors, Hassall solicited start-up funds of $14,000 from what he described as “a wealthy banking friend.”
“A rich friend from Oxford gave me the start up cash. It’s a high risk venture that he did more as a favor for me,” said Hassall, who has an MA in chemistry from Oxford.
With funds in the bag, Hassall and Gordon-James braved the dangerous desert highway from Amman to Baghdad and published the first edition of the paper on June 9. Half of the initial $14,000 was spent on flights, a car, equipment and setting up the office in Baghdad. “Later, when things were looking positive, we got $10,000 more in seed capital from the same investor,” said Gordon-James, who added that the paper also received various donations of around $1,500 per month.
While inefficient printers and the difficulty of importing paper set the printing costs in Baghdad at $2,000 to $2,500 for a print run of 10,000, operational costs in Baghdad were generally cheap, said Gordon-James. “We were the cheapest newsmagazine in the world,” he said, estimating the entire costs of running the paper at $8,000 a month. “That is ridiculous for what it was.” At the height of operations, the paper employed 20 people, paying local staff members $50 per week – a huge salary for Iraqis who were used to being paid a pittance under sanctions-ravaged Iraq.
Nonetheless, without proper funding, the BAGHDAD BULLETIN was destined for failure. While the paper had ad agencies in Saudi Arabia (Saatchi & Saatchi) UAE and Jordan (Promoseven) and Kuwait (Impact/BBDO) lined up to sell advertising, only one ad was ever sold, despite the paper’s rate of 70 cents/cm2.
“We depended on growing ad sales relatively speedily in order to cover our operational costs, but they didn’t materialize because there was and is no vibrant business in Iraq,” said Gordon-James flatly. “No international companies are really interested in advertising in a pure Iraq-circulated paper while the country remains so volatile; they have to see a return for their investment, which is impossible from a country in crisis.”
Gordon-James said that if the paper had backing beyond its shoe-string budget, it could have grown through an international circulation in Jordan, Kuwait, the UAE and Saudi Arabia, building sustainable ad sales revenues on the back of this. “But as it was, we couldn’t afford to even send our director to Kuwait just to sign the distribution agreement,” he said. By the seventh issue, just when regional interest in the magazine was apparently taking off, the money ran out.
After flying close to bankruptcy for many weeks, the paper’s staff members were forced to evacuate Baghdad in mid-September. “We still exist as a company by the way and we could re-start tomorrow if we found financial support,” said Gordon-James, who would gladly travel back to Baghdad if decent funding were secured. “In the meantime we plan to run the BAGHDAD BULLETIN website as an information forum.”
Aside from enduring financial difficulties, the chaotic situation on the ground made it extremely difficult to get the paper off to print. Without a generator, the staff’s working hours were dictated by power outages that saw electricity flow between 2am and 4am. Security was also a serious concern. In July, Richard Wild, a young British journalist who had come to work in part for the BAGHDAD BULLETIN, was shot dead hailing a taxi on a Baghdad street at point blank range. “We were supposed to meet with him the evening he was killed,” said American David Enders, the paper’s 22-year-old former editor. “The staff, which was mostly young Brits, freaked out for the most part – as it seemed to drive home how dangerous the situation was in Iraq.”
At that point, Enders hired an armed security guard. “We didn’t have a gun in the house until that point, and we agreed to getting a guard after some [staff members] started saying they wanted their own weapons,” he said. “From then on, we always kept an AK-47 on the sofa by the front door.”
Back now in his relatively serene home city of Grand Rapids, Michigan, an exhausted Enders has time to reflect on his surreal experience in Baghdad. “At one point it almost felt like we were playing some sort of bizarre prank, printing a newsmagazine in a war zone,” said Enders, who was invited to edit the paper by Hassall after they met while he was a visiting student at AUB. He recalls a fitful night before the first edition went to print where the staff had a “solid freak-out” about how the paper would be received by Iraqis.
“We had a very eclectic group of guest contributors, from Daniel Pipes to a human shield, and we weren’t sure how they would be taken by the population at large. I was especially concerned about being viewed as cultural imperialists, and also didn’t know what would be totally taboo,” he said.
The paper originally relied on overseas contributors for content, yet later employed local and foreign journalists. The foreign journalists, mainly young British university graduates were not paid, rather offered board and a chance to further their journalism careers. “They got a lot out of it, because it’s experience that counts for foreign journalists. They have to make a name for themselves, and we gave them the perfect excuse and safety net to come to a flash point and cover it,” said Gordon-James. Two of the Bulletin’s former journalists are now working in Mosul and Basra, respectively, as stringers for Reuters, another in Baghdad for the BBC and the Associated Press.
While Enders and Gordon-James convey a sense of exhaustion about their time in Baghdad, they impart a sense of thrill about their extreme, almost action-movie like experience.
“We were caught in a number of close-quarter fire-fights, were on the scene of the UN bombing before the Americans, went to all-night raves with gun-firing party goers and hired Uday’s chief engineer and drinking partner as a distribution man,” said Gordon-James. “I almost crashed my car trying to swerve a dead body in the street … the bottle store next door to our house was shot-up in a drive-by shooting; a carjacker was nailed on our street by the neighbors; we were given one of Moktada Sadr’s only ever foreign interview, and we were called by an MP in London saying she’d just given Tony Blair an issue.”
While Gordon-James said he would have never risked the venture had he known the outlook for post-war Iraq, or the improbability of financial success given the start-up funding, he still views the founding of the paper as an achievement.
“Without hindsight, what we did within a month of the end of official hostilities was create an informative, balanced, insightful, publication driven by pure ideology and it was totally unexpected to everyone, especially Iraqis.”
Hassan, a 38-year-old marketing manager, is talking about his first bout with lower back pain. “It was so bad, I could hardly step off the sidewalk,” he said. “I tried everything. I did stretching and when that didn’t work I rested. I used Deep Heat on the afflicted area. I even thought I had cancer when I diagnosed my self on the internet,” he laughed. “In the end, I went to the pharmacy and the woman gave me muscle relaxants. They worked, but they played havoc with my stomach."
Hassan has since pinpointed the reason for his pain. “It was stress related. I would feel it coming back if I started to feel tense or anxious. It was like a wave lapping me on the beach, getting closer and closer. I would have to lie down and really relax for the sensation to go away.” More than 80% of the world’s population will experience some sort of lower back pain at least one time in their life. It is the second most frequent disability after the common cold, afflicting people between the ages of 18 and 30, and the most prevalent ailment to affect adults under the age of 45. Of the $27 billion spent on musculoskeletal trauma worldwide, $16 billion is spent on the treatment of lower back pain, over half of which is spent on surgery. “There are a lot of economic ramifications resulting from lower back pain, like absence from work and financial compensation for those immobilized from the affliction,” said Dr. A.F. Masri, attending physician of arthritis and rheumatology at the AUH and the former president of the Lebanese Rheumatology Society. There are no statistics in Lebanon for just how many days are lost from back related illnesses but it is estimated that in the United States last year, the total cost of back pain from back disorders in the workplace, was between $50 billion to $100 billion. This figure includes the cost of medical care, absence from work, social costs, personal loss and disability payments. So, what exactly is lower back pain?
“Lower back pain can best be described as a feeling of discomfort in the lower part of the spinal column – which is basically the area from the waist to the buttocks,” said Masri. Masri explained that there are three forms of back pain: acute, chronic and sub-acute. Acute pain generally comes on suddenly, lasting – as in the case of Hassan – up to four to six weeks, and the degree of pain ranges from mild to severe. A high percentage of acute pain sufferers take days off work to recover.
Chronic back pain lasts beyond three months but the level of pain experienced is not necessarily high. Chronic pain has higher economic repercussions, however, because this is where financial compensation due to immobility comes in the picture – i.e. the sufferer is laid off because he/she is no longer able to continue working. Sub-acute pain is in between acute and chronic and lasts about six to 12 weeks. According to Masri, treatment for lower back pain depends on the type of injury, of which there are four main categories. The first, mechanical injuries, usually consist of sprained muscles as a result of lifting heavy objects. “Such injuries heal with time, and can be eased with massage therapy, medication or physical therapy,” said Masri. Osteoarthritis is another type of mechanical back injury and it is the most common cause of lower back pain in the elderly, as it comes with age. Treatment is usually medication, physical therapy and massage. Falling under the same category are fracture injuries – which are usually caused by falls and treatment is bed rest – and herniated discs – which usually heal with time and proper care, including rest, physical therapy, muscle relaxants and avoiding any heavy lifting. The second form of back injury is inflammatory, which is usually a result of chronic arthritis that affects the joints of the back. “This usually affects young people between the ages of 18 and 30-years-old,” explained Masri. Treatment for such ailments is usually anti-inflammatory analgesia drugs, like Panadol, Advil and Volteran.
Next come infections, which affect the spine and cause extreme pain in the back region. “The most common spinal infection in Lebanon is BRUCELLOSIS, and to a lesser extent, TUBERCULOSIS,” said Masri. “Signs of infection are fever, chills and weight loss, and treatment is antibiotics.”
However, Masri was quick to point out that perhaps the most severe form of back ailments is cancer, which results in a high degree of pain if affecting the spinal area. Treatment is chemotherapy or radiotherapy. “No matter what form of back pain a patient is suffering from,” said Masri, “surgery is usually a last resort,” adding that although not generally a necessary treatment, back surgery is common. For the most part, lower back pain eases with time, however, Masri advises that if the pain continues longer that one to two weeks, a consultation with a physician is necessary. “About 90% of the time, a diagnosis can be made based on the history of a patient combined with a physical exam,” said Masri, adding that x-rays are usually not needed. “Most of the time, x-rays are unnecessary and just a waste of money.”
To avoid the most common lower back pains, Masri advises to always maintain proper posture – keeping shoulders back, and when sitting, making sure both feet are on the floor and knees form a right angle – exercise regularly, avoid putting stress on your back with heavy lifting, and lose weight if you are more than 10% overweight. “It’s important to remember that lower back pain affects all people, all races, all ages, is very common, and, a diagnosis is relatively simple to determine.”
Anti-inflammatory drugs
Those, like Hassan, who were plagued by discomfort such as nausea and stomach pain, when they took anti-inflammatory drugs, can look forward to milder treatments. Enter rofecoxib, a newly developed painkiller and anti-inflammatory drug, which, in recent tests, has proved to be as efficient as traditional treatment techniques and much safer. It has also been formally endorsed by the US Food and Drug Administration (FDA).
“[There is] a growing international concern about the safety of traditional pain treatment techniques, which are based on prescribing Non-Steroid Anti-Inflammatory Drugs (NSAID),” said Dr. Tore Kvien, speaking at the 6th Pan-Arab Congress of Rheumatism and Rehabilitation, held in Beirut in September. “Those traditional medications have proven to be dangerous to the human gastrointestinal (GI) system, and the international medical community has been looking for new alternatives for over a decade.”
The symposium discussed the results of two most recent studies, which showed that rofecoxib provided fast and powerful relief from the pain of osteoarthritis (OA), rheumatoid arthritis (RA), and chronic low-back pain (CLBP). The studies, which were conducted on 1,925 patients, also proved that the new medication was more effective than traditional anti-inflammatory drugs.
Other studies revealed that rofecoxib provided superior pain relief in dental and regular surgery. Those studies showed that pre-operative use of rofecoxib is not associated with increased risk of procedure-related bleeding. Finally, treatment with rofecoxib was safe in treating both upper and lower gastro-intestinal disorders. “The emergence of certain drugs, such as rofecoxib, gave prolonged and safe duration of pain relief and analgesic effect from a single dose. The importance of these qualities in acute pain relief has only recently been appreciated and quantified,” Kvien noted.
Israel’s surprise attack on Syria shattered nearly 30 years of calm between the two countries, since the guns fell silent after a negotiated truce following the October 1973 Arab-Israeli war. Despite this, the “situation” between Syria and Israel has been one of a conflict under control.
However, Damascus does periodically pop up on Washington’s political radar screen and since the war in Iraq began last March, President Bashar Assad’s Baathist government has never truly been completely out of Washington’s line of political fire. Particularly active in the drive to keep the Syrian issue alive in Congress are Bush’s neo-conservative friends and Lebanon’s former army commander, General Michel Aoun – strange bedfellows, indeed, when you stop to think about it. But you know how the old adage goes, the enemy of my enemy … and so forth. And there is hardly a town that loves complex politics as much as Washington.
Since the invasion of Iraq began, various members of the Bush administration have at times accused Syria of assisting the Iraqi military and abetting Saddam Hussein’s regime. Among the alleged offenses are the claims that Syria is sending the Iraqis night-vision equipment, allowing Islamist jihadis to cross the porous border into Iraq to fight American troops, supporting major “terrorist” organizations (a number of which maintain offices in Damascus) and of possession and continued development of weapons of mass destruction. Some even went as far as to assert that Saddam hid his WMD in Syria shortly before the outbreak of hostilities. Syria denies the charges and claims the offices maintained in Damascus are “information bureaus” of groups it regards as resistance movements.
However, at a roundtable discussion on Syria last month on Capitol Hill, Congresswoman Ileana Ros-Lehtinen, a Republican from Florida, accused the Syrians of running “a terror center near Damascus.” Of course, no mention was made of the intelligence center that is reportedly based near Aleppo and where Syrian intelligence is rumored to be closely cooperating with the CIA in the war against terrorism. This might explain the White House’s reluctance in signing the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003, calling for economic sanctions against Syria unless it deploys out of Lebanon and alters its policy towards these groups regarded as terrorists by the US State Department. But again last month, friends of Israel and enemies of Syria stepped up their efforts to pass the bill in a renewed effort to have sanctions imposed on Syria as punishment for failing to toe the US line. Marc Ginzburg, a former US ambassador to Morocco, said, “Syria continues to believe it can ignore any threat from the US.” Syrian Foreign Minister Farouk Shara, however, said earlier Syria would meet any “reasonable” US request for help following US accusations that Damascus was not doing enough to end support of “terrorist activity.”
Undersecretary of State John Bolton also announced last month that the administration had now dropped its objection to the bill and Representative Eliot Engel said, “I think it’s time to pass this important legislation.” Engel said the bill has the support of the majority of the House (266) and the Senate (73), including the majority of Democrats and Republicans. It would be worth looking at what those sanctions would in fact accomplish should President Bush, who last year opposed passing the act, now decide to sign it.
However, a number of high-ranking seasoned State Department officials, who have served many years in Damascus and other Arab countries, and together possess more than 100 years of experience in the Middle East, believe passing the anti-Syrian legislation would be counter-productive and would not profit US interests. Instead, they say it would marginalize Syria, rendering future negotiations all the more difficult, and further infuriate an already volatile Arab world. They say it would be seen as an insult by Syria, whom the US needs as it continues to fight its war on terror. Particularly at this point in time, when events are not turning out as smoothly as the Pentagon expected.
Closing offices of what the US and Israel consider terrorist organizations, the State Department diplomats argue, would force the groups underground and would simply render the task of keeping tabs on them all that much harder. Far from solving the problem at hand, it would create new ones. Its only accomplishment would be to mark political points, which would not translate into much in real practical terms. Particularly in the spotlight are Hamas, Hizbullah, Islamic Jihad and the Popular Front for the Liberation of Palestine-General Command.
Maintaining relations with Damascus allows the United States to pressure Syria to, in turn, pressure Hezbollah, the Lebanese Shiite paramilitary organization, which Syria partially funds and somewhat controls. Consigning Damascus to the proverbial corner would remove those constraints, rendering the situation along the Lebanese-Israeli border all the more precarious. This would have the opposite effect of one of the intended aims of the Syria Accountability Act — that of providing greater stability and protection for Israel from cross-border raids on northern Israeli towns and settlements. Aoun, a staunch opponent of the Syrian presence in Lebanon, accuses Syria of “playing the role of both arsonist and firefighter.” Given the influence Damascus holds in the political arena, Syria, in this instance, can indeed be the firefighter, if it chose to. Imposed sanctions on Damascus would be received as a slap in the face and could well find them playing a single game, that of arsonist, a move that would be counterproductive in any future peace effort, say Middle East analysts. Meanwhile, following his appearance on Capitol Hill, the Lebanese government censored Aoun for his remarks. While the economic sanctions that would accompany the Syria Accountability Act does somewhat worry the Syrians, its ramifications are not all that devastating, seeing the current level of trade between Syria and the US is not all that important in the first place. According to the US-Arab Chamber of Commerce and the US Census Bureau, exports to Syria from the US in 2002 amounted to a pitiful $274.1 million, while imports from Syria for the same year were only $148.1 million. And sanctions aimed at keeping technology out of Syria would simply not work. “If Syrians need a computer, they simply drive to Beirut,” said a veteran US diplomat, intricately familiar with the area. Smuggling banned items into Syria from Lebanon would be all the more simplified by the fact that Syrian troops are still present in large chunks of Lebanon, especially along the border between the two countries. In any case, those trade figures do not represent the real volume of imports, seeing there already exists much transport of goods between the two countries. And that’s not counting imports from American companies based in Europe.
Engel, one of the congressmen pushing for the bill, blames the lack of progress on the State Department, which he said “seems to be full of Arabists supporting Syria over Israel.” The State Department, which he called “one-sided,” continues to “frustrate” the issue.
Leading up to the war in Iraq, the administration – particularly the Department of Defense – chose to ignore the State Department’s advice, whose “Arabists” seemed to know the mindset of Iraq and the Arab world far better than most others in the administration, particularly the neocons closest to the president. The rest, as they say is history. Let’s hope that this history, in this instance, does not repeat itself.
(Claude Salhani is foreign editor and a political news analyst for United Press International in Washington, DC.)
Lebanon’s ranking in the 2003 Corruption Perception Index of international watchdog organization, Transparency International (TI) was poor. Receiving a rating of 3.0 on a scale ranging from 0 (totally rotten) to 10 (impeccably clean), Lebanon ranked 78th for perceived levels of corruption in 133 countries. However, it did rank significantly higher than the dirty dozen of nations that earned less than two on the scale. According to TI founder and chairman, Peter Eigen, the ranking puts Lebanon on the borderline of highly corrupt countries, and in middle of the pack of the world’s less affluent countries which are all cursed with the affliction. “Five out of ten developing countries score less than 3 out of 10, indicating a high level of corruption,” Eigen said at the release of the 2003 CPI on October 7.
To Mohammed Matar, president of Lebanese TI affiliate La Fasad, the outcome of the poll is useful as a wakeup call. “Having countries such as Syria come out ahead of them will be shocking to the Lebanese,” he said. But he also cautioned that the CPI represents perception levels, not an actual base of statistical evidence on corruption, leaving Lebanese civil society, “to reach our own evaluation of the results.”
Lebanon’s relatively low regional ranking may be less disturbing than at first appears.. The point is technical in nature but as the CPI ranks countries based on a compilation of several indices, each rating reflects a larger or lesser span of divergence. Lebanon’s high-low rating discrepancy is less than those of these neighbors (2.1 to 3.6 for Lebanon, versus 1.8 to 5.3 and 2.0 to 5.0 for Egypt and Syria). In a nutshell, the rating for Lebanon may reflect the actual perception of the polled rather accurately whereas the wider discrepancies between surveys for other countries in the region could be indicative of tendencies to project a positive image against more accurate knowledge. Could this, however, be an excuse for turning a blind eye to the immense threat of corruption? Even as companies here are weary of the damages that a low reputation of Lebanon could cause for their chances to win international clients and investors, they do not actively pursue an anti-corruption stance. What fetters the corruption resistance of companies is the perception that the advantages of paying bribes and swimming with the flow of corruption outweigh the benefits of fighting it. But that, say advocates of transparency and good governance, is the fundamentally wrong idea. Patterns of corrupt dealings divert the power of trust in relationships into a closed system where the first order is self-enrichment at total disregard of greater structures. As such, corruption is based in an amoral attitude of egotism that refuses to take others into consideration or strive for success based on real achievements. This is bad for both company and economy. The latest business wisdom therefore teaches that a base of trust founded upon transparency enables players to achieve mutually beneficial relationships that are profitable in the larger frame of providing added value to market and society.
Not the least factor to drive home the lesson how detrimental corruption is for business was the wave of American corporate accounting and ethics violations that ruined once mighty companies and decimated US stock values over the past few years. Comparing the impact of the 9-11 disaster on the financial world with that of the scandals at Enron, WorldCom, Tyco, Arthur Andersen et al, purely on economic grounds, there is no doubt what impacted most on the US stock market.
All these developments, the scores of company breakdowns and prison sentences handed out to executives found guilty of corruption in the US and elsewhere notwithstanding, when it comes to instigating real changes in business practices, making more money by doing it cleanly could be the biggest motivator. Small and medium enterprises – ie, the overwhelming majority of Lebanese companies – could dramatically improve their funding and profit prospects through greater financial transparency. This proactive message fits well with aims for reducing corruption in the business community, and it has recently been pushed by a coalition ranging from the Association of Lebanese Industrialists and the Kafalat loan guarantee corporation to the Lebanese American University. Small and medium sized, family-owned businesses are vulnerable to corruption, especially if they succumb to shortsighted views on reducing their tax dues by underreporting financial results or mixing company and personal funds, thus opening the way for abusing corporate money for private pleasure, said Josianne Fahed-Sreih, assistant professor at LAU and head of the university’s Institute for Family and Entrepreneurial Business. Family-owned businesses in Lebanon are still lagging on issues of transparency and disclosure and should create structures that fit the requirements for long-term success of good governance for both family and business, she told EXECUTIVE last month during a conference organized at LAU. “Organizations have first to institute rules on the side of the business, but they also have to do so on the side of the family, differentiating between the two.”
At the core of this new initiative promoting financial transparency to Lebanese enterprises is a brochure explaining the pathways by which an SME can acquire funding if it meets the requirements of good governance and accountability.
“In a mathematical equation, the financial benefits of transparency would far outweigh the financial benefits of underreporting. The issue is not preaching to them but highlighting the benefits of financial transparency and accessing varied sources of funding and attractive funding terms,” said George Azar, director of financial consulting firm GAConsult. “If Lebanese SMEs are looking for institutionalization and growth – which is a must for survival in the context of regional integration of the Middle East – it would be foolish not to lure those funds through good governance, cost efficiency and transparency.” Azar, whose firm produced the SME guidebook under a grant from the US Agency for International Development, USAID, noted throughout his career how local businesses encountered growth barriers because of transparency problems. “Companies have felt the pain of financing all their investment needs through debt,” he said. “I look at good governance, transparency and profitability as the three prerequisites for tapping into alternative sources of funding.”
The business sector on its own would nonetheless be overstretched in trying to clean up the national act. It is established that corruption and incompetence breed one another. Public sector implementation of administrative reforms and legislation of measures to support transparency and curb corruption thus are equally indispensable for advancing good governance on a national scale. But under consideration of the national experience in the last decade and in light of a recent World Bank analysis that diagnosed MENA countries with a significant deficiency in good governance, it is hardly surprising that Lebanese analysts and pro-transparency campaigners view civil society as offering better prospects as cornerstones in building transparency.
“Being ranked on the CPI might move businesses to do something more to improve transparency,” Matar said. “But I don’t expect much from the political elite.”
In context of building a wider culture of non-corruption, civil society could play an enormous role in combating the decay of ethics in public and private sectors, said transparency and accountability activist Randa Antoun. “It is a civil society responsibility to make things better. It is easy to complain and criticize; we think this is not good enough,” she told Executive. “We are fighting corruption indirectly, through good governance, by encouraging people to know their rights and supporting a higher role for civil society.”
Antoun, a professor of public administration at AUB, is involved in promoting civil society responsibility through the same US AID funded program that provided the grant for the SME financial transparency brochure. Under the name TAG (Transparency and Accountability Grants) and managed by US-based education and training organization Amideast, the initiative has financed numerous projects by Lebanese NGOs, including a regional study, executed by research firm Information International, that made Lebanon’s inclusion in the 2003 CPI possible. “We are trying to increase the abilities and capacities of local institutions to tackle these issues,” said Amideast Lebanon country director Barbara Batlouni. “We do not work with government departments as such but with NGOs that work with government departments.”
Many of the projects supported by Amideast with funding and advice since March 2001 have helped informing citizens about procedures in dealing with government institutions on all levels. In her quest for better governance, the presence of corruption in itself is not what worries Antoun the most. “The worst thing in Lebanon is that people now have reached a state of apathy in accepting corruption,” she said, diagnosing a sharp contrast to a past where the country and its people had been reputed for hard work and honesty. To Antoun, the years of internal conflict carry much of the blame in explaining the rupture in societal attitudes and spread of lassitude. “Never underestimate the impact of the war,” she said, confessing little hope that structural changes would begin to reduce the presence of corruption here unless the country’s international donors force changes upon the system.
But for a nation tempted to torment itself to death with lamentations over its countless problems, civil society’s interest in transparency and good governance is actually very strong. The NGO sector in Lebanon is dynamic and has much more leverage than in other countries of the region, Batlouni said. “Our assumption in this project is that the Lebanese are not corrupt by nature.”
This high interest in transparency grants is documented in the fact that Amideast in little over two years received 157 proposals for funding TAG projects, of which 59 were granted. Also from the side of donor, US AID, the high response rate drew a positive reaction. “Demand was high,” Antoun acknowledged. “Because of this demand, we were successful in that the program was extended twice.”
In these extensions, US AID raised the budget for the TAG program from an initial $500,000 for one year to $3 million and extending the duration until 2005. Interestingly enough, the entire initiative was ignited by the 1998 inaugural speech of Lebanon’s president, Emile Lahoud, whose strong verbal commitment to a fight against corruption motivated US AID to back and then launch the program.