Wednesday, December 17, 2008
Commentary - Executive magazine
The double whammy of the subprime market crisis followed by the deepening financial crisis has seen a remarkable change in fortunes among the vanguard of economic power. Recall British Prime Minister Gordon Brown’s visit to the Gulf in November to essentially beg for money to help shore up Britain’s ailing industry.
Not even a year ago such a trip by the leader of one of the world’s leading financial centers - and accompanied by 27 senior business executives - would have been unthinkable. Rather the trip would have been about cementing economic relations, making some speeches about the value of the free market, a veiled reference to democracy, and hopefully the flogging of British goods/services/weapons.
But these are different, and difficult times, and pride is being forced off faces to be replaced with knitted brows and forced smiles of gratitude (if the money is stumped up).
And perhaps rather unsurprisingly, there are elements among this increasingly dishevelled elite that are not happy about this change, particularly when it comes to non-Western entities buying up landmark buildings and sizeable assets in Europe and the USA.
The British popular press is a glaring example, which appears unable to accept the shifts in economic power, with regular commentaries and articles bemoaning such “humiliation” on the world stage. Gulf sovereign wealth funds (SWFs) have come under particular criticism over the past year and a half, largely knee-jerk jingoism of the sensationalist kind.
Take this example from an editorial in The Daily Express in November: “There is mounting concern about individuals and sovereign wealth funds in the Middle East that are buying into key British businesses...Now they are buying out our assets, our country, with our own money. It is a sad, sickening prospect.”
That a change in fortunes affects the psyche of a former world power is somewhat understandable, though there is little need, to use a common expression, “to bite the hand that feeds you.”
But such resentment has been around for quite some time, and recent changes are no exception. One notable factor in this new alignment of the financial stars is how pragmatic political leaders are compared to popular feeling. Just think back a few years to Dubai Ports World’s attempt to acquire the rights to run American sea ports. The Bush administration was all for it, whereas US media made a mountain out of a mole hill. Newspaper cartoons depicted terrorists hidden inside containers, Arabs dressed in jelabas turning a blind eye to dubious cargos sailing past the Statue of Liberty, and all the old, staid Orientalist clichés were dragged out that seemed to confirm what the Arab world has long suspected: that Americans and the West view Arabs as untrustworthy and potential terrorists.
The Dubai Ports episode was a particularly virulent case, and the emirate did well to back out quietly without making a fuss. The spate of SWFs buying up assets and icons over the past year is being taken in a rather different light, but is nonetheless seemingly dependent on the acquisition. After all, Manchester City’s supporters couldn’t have been more enthusiastic about the Abu Dhabi United Group for Development and Investment purchase of the soccer team this year. But when it came to Abu Dhabi's SWF pumping some $7.5 billion into Citigroup, and Kuwait investing in Merrill Lynch a year ago, up went the cry of the barbarians being at the gates and concern over vested political interests. As if Western multinationals, the International Monetary Fund (IMF), or the World Bank don’t have vested political interests everywhere they operate!
But as with jingoistic attitudes having to change, so it looks as if the West’s dominance of the IMF may also have to adapt to the fallout from the financial crisis. The fund is looking to the Gulf’s finances – with oil producing countries generating some $1 trillion over the past few years from high oil prices – to help the IMF’s bail out packages. In return, Gulf countries will want more than just a seat at the IMF’s table; they will want to have an actual role in the fund’s decisions.
As Brown said in Abu Dhabi, “I very much accept the argument that countries which do contribute in this way should have a greater say in the overall governance of the IMF.” Whether this will happen, and to what degree, will have to wait until the next meeting in April.
And as for the Gulf helping to shore up British business – despite the reservations of the popular press – Brown’s visit helped to land $1.5 billion in deals, while Barclays Bank bypassed a handout from the British Treasury through a $11 billon stake from the Abu Dhabi royal family. The times are a-changing, and hopefully so will attitudes as the axis of financial power starts to shift.
Tuesday, December 09, 2008
By Paul Cochrane in Dhaka, Bangladesh
International News Services
As the old dictum goes, one man’s loss is another man’s gain. In a globalized world in the midst of a financial downturn, this saying is particularly true, with certain countries unexpectedly benefiting from the ongoing crisis.
Bangladesh is one of the unexpected gainers, especially as 75.83% of its national exports come from knitwear (39.21%) and woven goods (36.62%), primarily to the EU and US markets. The expectation would be that exports of Bangladeshi ready made garments (RMG) would slide in accordance with the drop in global stock markets and plummeting retail sales. After all, India has laid off 700,000 textile workers, Indonesia 120,000 (10% of the sector), and China has equally downsized operations in the RMG sector in the past few months. But the reason that Bangladesh’s prospects are looking rosy – in woven, knitwear and footwear - is that the goods the country exports are not medium- to high-end wear, as China, India and elsewhere have increasingly moved into of late.
Bangladesh predominantly produces low-end goods, and low-end priced goods are in greater demand as people in the US and Europe tighten their belts for what appears to be a financially rocky road ahead. Bangladesh also has much lower minimum price fixation than elsewhere, with a dozen cotton t-shirts exported to the EU-27 market costing US$19.56 in 2006 but just US$15.60 in 2007, significantly less than nearest rival Cambodia at US$29.04, according to Eurostat.
In a period where companies are cutting costs at every possible corner, such figures speak for themselves. Sure, in the near term Bangladesh’s RMG sector will not report the kind of double digit growth figures they have experienced over the last few years, but static and marginal growth is certainly more preferable than laying off workers and downing tools. And if Bangladesh effectively utilizes the opportunities this crisis is providing to cement good working relations with major buyers, Bangladesh over the next few years will rise up the ranks to be among the top three RMG manufacturers in the world.
Photo by Paul Cochrane
Tuesday, December 02, 2008
By Paul Cochrane in New Delhi, Executive (Commentary)
Over the last 1000 days India has been trying to get its nuclear status green-lighted by the USA despite not being a signatory to the Non-Proliferation Treaty (NPT) or the Comprehensive Nuclear Test Ban Treaty.
The US Senate's ratification in October of what is known in India as the '123 Agreement' - in reference to Section 123 of the US Atomic Energy Act - will have a profound shift in geo-politics for Asia, the Middle East and the West. For behind the deal is big power politics – the two giants of Asia, China and India, the region's basket cases, Afghanistan and Pakistan, and Washington's perennial thorn-in-its-side, Iran. There is also the US-led 'war on terror' to consider.
For by inking the 123 civil nuclear pact, India now has access to nuclear reactors, fuel and technologies from the US after a gap of 34 years, when New Delhi first conducted a nuclear test in the Rajastani desert in 1974. The deal has also put the US top of the list to supply the nuclear technology, valued at $100 billion over the next 20 years, and will enable India to develop 200 nuclear warheads as well as indigenously designed nuclear submarines. Sizeable arms deals and economic cooperation agreements have also been inked, with the US expected to get the proposed $10 billion Multi Role Combat Aircraft deal and replace Russia as India's biggest weapons supplier.
But in the bigger picture, what the bilateral agreement has achieved for Washington is a new ally in Asia that can pressure Iran, with whom India has energy agreements yet little desire to have another nuclear power in the neighborhood. India can also act as a bulwark against the emerging dragon, China. Just over the border from India in the Tibetan Autonomous Region are an estimated 500,000 troops of the People's Liberation Army (PLA), as well as Intercontinental Ballistic Missiles (ICBMs) bases. It has long been a trigger point and could be again, with numerous skirmishes occurring between the PLA and Indian troops over disputed border areas high in the Himalayas.
By bringing India onboard - the world's largest democracy at some 1.2 billion people and counting - the US has a country that borders other countries of concern whose democratic credentials are dubious at best: Pakistan, Myanmar, and Bangladesh.
The agreement may also well be the Bush Administration's last positive foreign policy achievement. It certainly put a smile on the face of Bush when Indian Prime Minister Manmohan Singh told G.W. that "India loved him." But while the agreement is advantageous for Washington, it yet again sends signals of hypocrisy and double standards to the world. There are only four countries that are non-participants in the NPT: Israel, India, Pakistan and North Korea; but with the exception of Pyongyang, whose nuclear arsenal is still in an embryonic stage, the US has strong relations with the first three. Iran on the other hand, which is cooperating with the IAEA, is continuously under pressure to rein in its nuclear program.
The thawing of relations between New Delhi and Washington DC have however come at a time of heightened terrorist attacks within India by Islamists. Although homegrown, the attacks have links to Pakistan.
Islamabad was after all fingered as a perpetrator of the terrorist attack on the Indian Embassy in Kabul in July, and there are allegations of financial support for Indian Jihadists coming from Pakistan and Bangladesh. The deluge of fake Indian Rupees, which are a contributor to inflationary pressures, have also been traced to state-of-the-art printing presses in Pakistan. Furthermore, during meetings at the White House Bush and Singh reportedly discussed the prospect of Pakistan imploding and the notorious Inter-Services Intelligence (ISI) becoming "a state within a state."
New Delhi is now mulling a beefed up anti-terrorist law and its National Security Agency has been briefed by the US Department of Homeland Security on how to set up a similar body to better integrate its intelligence services which, according to one analyst I spoke to in Delhi, are still operating with a World War Two mindset. Additionally, the Indian press has reported growing pressure on New Delhi to send troops to Afghanistan.
In the global 'war on terror,' India clambering onboard the US train can been seen as a boon, but for the more skeptical, India has sold out in this new alliance and Washington DC has once again shown its Janus face when it comes to nuclear issues. Iran and China are the biggest losers in this, while the world has become an even more uni-polar place.
PAUL COCHRANE is a freelance journalist. He is currently in India.
Thursday, September 18, 2008
Commentary - Executive magazine
Over the summer the spectre of cyber warfare gained international significance, spurred on by reports of cyber attacks that crippled Georgia’s infrastructure in the wake of Russia’s ‘intervention’ in South Ossetia.
Reportedly carried out by nationalistic Russian hackers rather than by the Kremlin itself, the incident has shown how vulnerable a country’s critical national infrastructure (CNI) is to cyber attacks. Even presidential campaigns are open to attack, with senators John McCain and Barack Obama’s systems allegedly hacked into by the Chinese.
The dark side of technology has also come to the attention of the private sector in the Middle East, with a handful of banks in Dubai hit by ATM card theft and fraud in September. Furthermore, cyber crime continues to rise in the region, with some 50 million incidents of hacking against the public and private sectors in March, up from 15 million in December 2007, according to a study by internet security firm Trend Micro.
How seriously Middle Eastern governments are taking cyber crime is difficult to gauge however, particularly in terms of prevention and awareness. Additionally, businesses and governments are reluctant to announce cyber attack incidents to not cause concern to shareholders and the public, while statistics like the one above need to be taken with a pinch of salt as internet security firms have a vested interest in making out that cyber crime is worse than it may actually be.
Nonetheless, last year’s Virtual Criminology Report by NATO, the FBI and other agencies stated that cyber spying is one of the biggest security threats nations face, with 100 countries having experienced some form of cyber warfare. Britain’s secret service, M15, went as far as saying the country was “four meals away from anarchy” if there was a serious interruption to CNI and the distribution of food.
That countries are starting to take the threat seriously was highlighted at a conference I attended in Crete in September organized by the European Network and Information Security Agency (ENISA), which was set up in 2005 to investigate internet security problems and make recommendations for EU member states on how to protect themselves. What struck me was how long the EU has taken to tackle the issue on a collective basis, and that between three to five years are needed for all EU countries to be at a common level of protection. Furthermore, in a speech given by German Member of the European Parliament (MEP) Jorgo Chatzimarkakis, he said he “couldn’t understand politicians who doubt the importance of this endeavour” to tackle cyber crime. ENISA itself was at risk of not even getting established at one point, while few MEPs know much about cyber crime. Meanwhile, a speech by Lord Toby Harris stressed how ambivalent Britain’s political establishment is about information security, with less than 10 out of the 1400 members of the House of Commons and the House of Lords taking a serious interest in the subject. This in a country where six government departments have reported system compromises over the past year, many multiple times, and identity theft is estimated at $3.4 billion a year almost beggars belief. But while the EU is starting to take on the challenge of improving cyber protection for governments, businesses and consumers, the fact that ENISA’s budget is only $11.5 million a year indicates that more needs to be done and for regulations to be enacted.
Naturally, I started to think about how the Middle East is prepared for this phenomenon when so many EU countries are just setting up Computer Emergency Response Teams (CERTs) and Disaster Recovery Plans (DRP). The picture is not overly rosy, with the International Data Corporation estimating that total internet security spending in the region will only touch $9.3 million by 2009, with the UAE, Saudi Arabia, Kuwait, Qatar and Bahrain the top five investors. When you consider that security systems for small networks of 100 computers cost roughly $15,000, and those involving 1,000 computers $30,000, the region’s spending is woefully inadequate to protect CNI and businesses. What is being done on the legal front also needs to be addressed.
For instance, how protected are governments and businesses from cyber attacks when European countries do not have a Data Breach Notification Law? Are there units of law enforcement adequately trained to take on e-crime? And are there Disaster Recovery Plans and CERTs in place for when the seemingly inevitable happens?
Such questions need to be asked as the region gets more connected, and will gain further importance if many Arab countries go ahead with plans to build nuclear power plants (NPPs). After all, a NPP in Baxley, Georgia was shut down for 48 hours in March after a software update was installed on a single computer, and in 2003 a NPP in Ohio had its safety monitoring system disabled by a virus.
National responses to the problem and heightened regional cooperation are undoubtedly necessary to protect CNI and citizens from what is already a global phenomenon that is not going to go away.
Since 9/11 the issue of combating money laundering and terrorist financing has taken on greater importance for the banking and financial sectors, forcing institutions to shake up their administrative divisions to comply with regulations as well as apply initiatives like ‘know-your-customer’ at the branch level. It’s been a costly and time consuming process, but with the Middle East and North Africa (MENA) region a focus of international anti money laundering (AML) and counter terrorism financing (CTF) initiatives, central banks and financial institutions were left with little choice.
The USA’s Patriot Act has been the main driver, sections 311 and 314 in particular, calling for ‘Special measures for jurisdictions, financial institutions, or international transactions of primary money laundering concern,’ and in Section 314, ‘Cooperative efforts to deter money laundering.’ The seriousness of these requirements cannot be downplayed.
Unless MENA banks comply, they will be unable to have a representative bank or depository in the US, and other day-to-day operations, such as letters of credit, face heightened suspicion if not downright refusal. Furthermore, failure to comply with the Patriot Act and the OECD’s Financial Action Task Force’s 40 Recommendations on money laundering (ML) plus 9 Special Recommendations on terrorist financing (TF) can blacklist a country and its banks, as the Commercial Bank of Syria and Iranian banks currently face. Additionally, the consequences of non-compliance are not just operation- and reputation-related but also financial, with Arab Bank fined $24 million in 2005 by US banking regulators for failing to implement AML controls at its New York branch.
The costs of implementing AML and CTF compliance certainly outweigh the risks, but are nonetheless costing institutions a pretty penny, whether installing new software, employing and training staff, or building up a compliance division. Middle Eastern banks are cagey about releasing such figures, but for an idea of the costs involved, a Pricewaterhouse Coopers report in Australia estimated the cost of AML/CTF compliance for a financial institution at $48 million to $96 million.
A recent survey by KPMG found that from around the globe, the regions that recorded the highest increase in costs of AML compliance were, “unsurprisingly,” North America and the Middle East/Africa. “This reflects the significant legal and regulatory changes in the US, and the wider impact of the extra-territorial provision of US law around the world,” the report noted. Middle East-Africa banks average percentage increase in AML investment between 2001-2004 was 68%, and between 2004-2007 an estimated 70%.
In terms of cost, topping the list was enhanced transaction monitoring, greater provision of training, sanctions compliance, remediation of ‘know your customer’ documentation, and transaction ‘look-back’ reviews.
Need for more regulation
The region has been fairly successful in curbing money laundering and terrorist financing, at least according to official accounts, with the Middle East North Africa-Financial Action Task Force (MENA-FATF), a regional body based in Bahrain, claiming a 90% decline since the body was set up in late 2004.
But tackling ML and TF is a slippery business, as heads of financial intelligence units and compliance officers unabashedly make clear. Indeed, ML and TF is considered to occur more in major financial centers, such as London and Frankfurt, where there is greater safety in numbers, than in the smaller and more risk associated markets of parts of the Middle East.
The countries in the MENA region that have warranted censure, Iran and Syria, are arguably lower in the money laundering stakes than the likes of Dubai, and in terms of terrorist financing, Saudi Arabia.
But the matter is politically tinged (see Islamic Banks and TF article, page xx), as a private sector dialogue with the US government attended by all the region’s major banks in Cairo a few years ago highlighted when there was a heated discussion about what constitutes a terrorist group. The 5% that were in disagreement concerned Hamas and Hizbullah, two groups at the top of US concerns with TF that also enjoy popular support around the Middle East, including Saudi Arabia, a known financial backer of Hamas.
Politics aside, banks are making noticeable progress in tackling ML and TF, but there is still reluctance amongst Middle Eastern banks to voluntarily adopt higher AML standards in line with global policies as it would put them at a competitive disadvantage. This was reflected in the declining importance senior management placed on AML issues in the KPMG survey, with 88% of respondents in 2004 citing AML as a high profile issue, but by 2007 only 54%.
There is optimism however, with 84% of respondents from banks in the UAE expressing the view that AML regulations should be increased. Indeed, although MENA-FATF has been carrying out country evaluations, to improve AML and CTF in the region commercial and retail banks need to be encouraged to do more, for their reputation as much as curbing money laundering and terrorist financing.
Photo by Paul Cochrane
Saturday, September 13, 2008
BY PAUL COCHRANE IN BEIRUT for Aishti magazine
That Beirut has the best nightlife in the Middle East has not been in question since the civil war ended and the capital replaced Jounieh as the country’s prime spot for drinking and cavorting.
Come rain or shine, conflict or peace, Beirut has always offered a vibrant scene, from restaurants to bars, to after-hours clubs.
But as Beirut can be with fashion - fickle to say the least - so is the nightlife scene. Bars open, a trend is set, other spaces are established, and hey presto, a new nightlife hub hits the capital.
Then the Beiruti capriciousness sets in, with the scene moving elsewhere as people tire of that locale or places are run into the ground. So it was with Monot street a few years ago, and now perhaps with the current nightlife hub of Rue Gouraud in Gemmayzieh, after the revival of Downtown Beirut.
There is nothing overly surprising about this – it’s the free market after all – but there is a degree of herd mentality, in not only the setting up of bars, but also how people migrate with the nightlife vibe. And that can lead to what, to some, is a bad sign: homogeneity.
“It seems Beirut has a diverse nightlife but if you scratch the surface you realize there isn’t much diversity,” says Paddy Cochrane, owner of Gauche Caviar and lounge bar Cloud 9 in Gemmayzieh. “I find it curious that 90% of Beirut’s nightlife limit itself to one street - Rue Gouraud. And how many really unique places are there? Very few. Many are a copy with slight adjustments.”
Cochrane may have a point. Many bars on Gouraud are near carbon copies of each other, offering the same drinks, the same menus and the same music in similar interiors. One recent edition to the street allegedly even asked the interior designer of one bar to do exactly the same thing for their establishment. The feeling is that if it works in one place, it will work again. But on the very same street?
Veteran bar owner Michel Saidah, behind nightlife institutions Havana (Jounieh), Pacifico (Monot), and Dragonfly (Gemmayzieh), points the finger at wannabe entrepreneurs setting up bars without any professional experience in the field. But what he thinks is really missing is passion.
“And not only passion, its taste. Those succeeding are the most professional in taste and music, lighting, technical stuff and in solving problems. Also keeping stock. It’s a whole machine, and owners have to give 90-100% of his time to do it,” says Saidah.
“I went to South America, Asia and Europe to get inspired but not to copy, and those ideas are part of your inspiration,” he adds.
Inspiration, like necessity, is the mother of creation. But when you are catering to a mere 10,000 people that are willing and financially able to have a night on the town, numbers can be a problem. On an average week night bar owners reckon between 300-400 revelers go to Gemmayzieh, and over a 1,000 are knocking back cocktails on Fridays and Saturdays.
This has prevented European-style dance clubs and live music venues from opening up. Beirut does have Music Hall, which puts on great live acts from around the world, but the venue doesn’t allow Lebanese artists to perform. And there are a number of Arabic music-orientated venues but they are not always to the taste of the Europhiles.
“People who like Lila Braun have a more difficult choice than those that like Concerto or Casino,” says Andreas Boulos, owner of Torrino Express in Gemmayzieh.
The current political situation obviously doesn’t help, but neither do cash strapped 20-somethings that want to party but can barely afford a shot. This hasn’t stopped people from thinking that larger spaces could, and should, open.
“It’s remarkable, given the Lebanese love of dancing, that there isn’t a European-style night club - the size of Basement - with a proper dance floor in the middle that would get people away from their tables and get the community spirit back,” says Cochrane.
Zeid Hamdan, the producer and musician behind bands Soap Kills, the New Government and electronic band ShiftZ, says that if a venue for alternative live music opened, he “could fill it every week.”
But the idea of opening a place that needs a good volume of people through the doors is fraught with problems. BO18 has survived as the only - and best - place in town for dancing into the small hours. But when the likes of Sky Bar and White are open during the summer months, the action is diverted there away from Gemmayzieh.
“Sky Bar pulled all customers out of the town. Every sales man was saying, ‘Can you believe how many boxes of champagne we sell everyday?’” recalls Boulos. “But that’s the thing, one hub takes it off everyone else.”
So where next for Beirut’s nightlife? Monot Street is making a bid for a comeback with the re-launch of Lila Braun, and bars keep opening in Gemmayzieh, despite the area’s near saturation point.
Boulos thinks that the strategic location of Gemmayzieh will continue to attract new bars.
“Some mention Badaro as a possibility but most likely down to Mar Mikael. We are already from Paul’s to Electricite du Liban, so will probably connect all the way to Art Lounge,” he says.
Ultimately, the question is what kind of nightlife are people looking for?
Beirut isn’t New York or London, lacking both the numbers and the cosmopolitanism of greater metropolises, but considering the population here and what is on offer, there is little to really complain about. Although a bit more passion and a lot less homogeneity wouldn’t go amiss. After all, having the best nightlife in the region doesn’t mean you can’t get even better.
Friday, August 29, 2008
On May 7, what was supposed to be a day of strikes to demand higher wages metamorphosed into eight days of fighting between the Hizbullah-led opposition, “March 8”, and the pro-government, “March 14” forces. (1) At the forefront of Lebanon’s bloodiest infighting since the civil war were the media, relaying the heated words of politicians that stoked the conflict while beaming out propaganda thick and fast. Lebanon’s media divisions became further entrenched in their sectarian and political camps, pan-Arab media did the same, and media outlets came under direct attack. (2) The Lebanese public, meanwhile, holed themselves up inside and watched events play out on TV.
After Ghassan Ghosn, the head of the General Confederation of Lebanese Workers, announced that the strike was cancelled, Hizbullah and its supporters shut down Beirut by blocking roads with piles of rubble, burning tyres and overturned rubbish bins. The following day, Hizbullah military units moved into the west of the city and started taking over, engaging in street battles with members of Sunni politician Saad Hariri’s Future movement and affiliated parties.
What changed a day of socio-economic concerns into political violence were demands Prime Minister Fouad Siniora’s government made in the days prior to the clashes. Walid Jumblatt, the pro-government Druze leader and head of the Progressive Socialist Party (PSP), had called for Hizbullah’s private phone network to be shut down, the removal of surveillance cameras Hizbullah had installed by runways at the airport, and for the head of airport security (a Shia by the name of Wafik Shoukair), to be replaced as he was alleged to be working for Hizbullah.
On May 8, Hizbullah’s Secretary General Hassan Nasrallah responded in a press conference, saying the decisions of the government were “tantamount to a declaration of war and the start of a war...on behalf of the United States and Israel.” He also went on to say that the phone network was used in “defending the country against Israel,” and that Jumblatt’s dream “is Sunni-Shia strife. We will not fulfil his dream.” (3)
That evening, as reported by only a few media outlets and relayed in a firsthand account from an employee of the Hariri-owned, pro-government Future TV (FTV) channel, the Future movement brought in thousands of men from Akkar and Tripoli to the Kantari area of West Beirut. “There were two six-wheeler trucks full of mattresses for the guys to sleep on in preparation for a fight. When we saw them we felt more comfortable, then the next day they all disappeared. Maybe they ran away or the Future movement changed its mind and didn’t want a clash. The men were paid to be there, and not armed, just with batons,” he said.
The next group to disappear from around the FTV offices in Kantari were the Lebanese Army, including three armoured personnel carriers that had been stationed in the channel’s parking lot. Then the SecurePlus security guards hired to protect FTV fled, bar one blubbering 18-year old security guard that had to be slapped around by the news editor to “act like a man.” (4)
On the morning of May 9, the FTV employee said an army officer entered the Kantari offices. “He said armed men were outside and if you don’t leave the building, they will come in or burn the building down. The news editor asked for re-assurances: for employees to be allowed to leave and the station to not be harmed, as well as for one technician to stay behind. After everyone left - according to the technician - the Colonel came back with Hizbullah technicians to be taken to the master control room. Cables, uplinks and satellite links were cut – they were professional and knew what they were doing. They needed to find the server, so made the technician call the head technician to find out, and on the phone [Hizbullah] said they knew where he lived.”
Future TV’s terrestrial, satellite and news channel, Future 24, were off the air. New TV, a pro-opposition TV channel, was later given exclusive access to film the seized offices. Meanwhile, Future’s radio station Al Sharq, the Future-owned Armenian radio station Sevan, and the Mustaqbal (Future) newspaper had their offices raided and ceased operations.
Later that Friday afternoon, Syrian Socialist Nationalist Party (SSNP) members, in an act of revenge for the burning of SSNP offices by Mustaqbal supporters during clashes in February 2007, set the FTV offices in Raouche on fire. The FTV employee said an estimated 20-30% of the channel’s archives were lost during the fire, including footage of Harb Tamouz (the July 2006 war between Hizbullah and Israel). “Fortunately, the week before a big part of the archives had been copied, and all the footage relating to Hariri was in a different location,” he said.
New TV's footage of the seized Future TV offices
Propaganda a go-go
Prior to the shutdown of FTV, violence had escalated on the streets of West Beirut and in other parts of the country. Lebanese TV channels were constantly streaming live news of the events, with reports, statements, claims and counter claims forcing viewers to keep an eye on all channels to get an idea of what was going on. (5)
Even pan-Arab channels were showing their true colours, with Saudi-owned Al Arabiya TV clearly on the side of the Siniora government and against Hizbullah, while the Qatar-owned Al Jazeera gave sympathetic coverage to Hizbullah.
Members of the government came out and decried Hizbullah’s actions as a “coup d’etat,” which was quickly picked up on by March 14 affiliated media outlets, on Al Arabiya TV, as well as by the Western media. March 14 also denied that Future had a militia, reiterating that the only militia in Lebanon was Hizbullah, and that, in the words of Hani Hammoud, senior adviser to Hariri, “the end result is that Iran has taken over the country.” (6)
Al Manar and NBN, on the other hand, spoke of the “government’s militia”, and that March 14 was receiving orders from Washington and Israel, making Lebanon a pawn in the US-Zionist agenda for the Middle East, thus a legitimate target.
Hizbullah played the take over of Beirut as a move in a “correction-ist direction, bringing a new identity to Beirut, of being against Israel,” said Dr Ibrahim Mousawi, a Lebanese political analyst allied with the March 8 movement.
The night of May 9 was an exception to all the news that had filled up the airtime of Lebanon’s television channels. The Christian channel LBC, lacking any competition from FTV, which had the rights to air Superstar (the US’ Pop Idol), broadcast live reality show Star Academy at peak time. (7) The show featured a choreographed sequence of women in leather dancing amid chains at the start, and a full audience in attendance. (8) Al Manar broadcast a Syrian soap opera.
LBC's Star Academy aired live while the clashes continued in Beirut...
...Al Manar aired a Syrian soap opera
The next day, May 10, propaganda went into overdrive, with Al Manar showing video montages of March 14’s connections with the United States via slowed-down, key-hole style images of Jumblatt meeting with US Assistant Secretary of State David Welch, and Siniora meeting with US Secretary of State Condoleeza Rice (but notably avoided showing footage of Rice and Welch meeting with Parliamentary Speaker and Amal leader (March 8), Nabih Berri). (9) Al Manar also showed footage of a hand grenade with Hebrew writing on it that was allegedly found in pro-government offices, implying March 14 was receiving military aid from the Israelis.
Al Manar footage of an Israeli hand grenade allegedly found at a Future Movement office
But with Future TV off the air, March 14 was left with only one sympathetic Lebanese TV station, LBC, which aired footage of a demonstration outside the FTV offices to protest the channel being taken off air.
"The shutting down of FTV showed the increasing importance of the media as a target on the battlefield,” said Habib Battah, an independent media analyst on the Middle East. “Keeping FTV off the airwaves was a psychological attack on Future's political supporters. It also gave the other side a monopoly over propaganda messages, with no channel to rebut the damaging allegations that were made against it.”
Among the opposition there was a great deal of schadenfreude over FTV being silenced. The fact that Al Manar and Hizbullah had made so much noise over the destruction of Al Manar’s studios in Beirut’s southern suburbs by Israeli fighter jets in Harb Tamouz (the July, 2006 war) aggravated many people when it came to the shutting down of FTV, with condemnations coming in from around the world. And unlike Future TV, which re-started broadcasting on May 14, Al Manar had contingency plans for an attack on its facilities and was only off air for two minutes. (10)
“It is ironic that Al Manar protested Israel's attack on its headquarters as a violation of the free press while Al Manar supporters helped shut down a Lebanese-owned media outlet less than two years later," said Battah.
The decision to not merely gag by totally silence FTV even angered some March 8 supporters, with Mousawi saying he didn’t agree with FTV being shut down and that it “backfired” on Hizbullah.
According to Ramez Maalouf, Professor of Journalism at the Lebanese American University, Hizbullah’s rationale behind taking FTV out of the media equation was to calm down the situation in the country.
“People in Hizbullah said [if FTV stayed on air] it would make the war more violent and dangerous, and was a way of keeping things quiet,” he said. “To me it was dangerous, as it further underlines the idea that people have that Hizbullah can do anything as it is on a mission from God.” (11)
Later on May 9, however, Hizbullah issued an apology for the closure of FTV and the treatment of journalists while covering events, but laid the blame squarely on the government’s shoulders. (12)
"We are sorry about everything that has happened to the press corps, but the government is to blame for letting things get this far. We hold the government fully responsible for everything that has happened to the media. We hope these media will be operating again soon under the control of the Lebanese Army,” Hizbullah MP Hassan Fadlallah said in a statement issued to the Lebanese National News Agency. (13)
Somewhat ironically, on the final day of the conflict, on May 14, when fighting had shifted from Beirut to the Chouf and Tripoli, Al Manar released a statement citing “violations of press freedom” when viewers in northern Lebanon complained that Future movement supporters had pressured local cable providers to stop broadcasting Al Manar, NBN and OTV.
“Truth was the victim of this war, and there was a lot of misleading propaganda,” said Mousawi. “Of course there were variations between one outlet and another, and I believe the media that followed the March 14 camp made the largest distortion – FTV became just like any media outlet of a gang, and didn’t hold to basic principles of journalism, inciting hatred and creating news about things that didn’t exist. At the same time, the March 8 media was not impeccable either - all made mistakes.”
Mousawi added that March 8 media was keen not to fall into the trap of provoking fitna – discord – between the Sunni and Shia, which Nasrallah claimed Jumblatt and the government were trying to do, and what Hizbullah claims is an American project in the region (this Shia-Sunni divide is referred to in some Washington DC circles as the “Sushi war”).
To Maalouf, blame lay less with the media than with Lebanon’s sectarian political system.
“It’s a case of politicians bringing things to a boil, but the media needed to use words more carefully,” he said. “I think the fault lies with the politicians as it’s about the choices the political system gives people, not the media.”
Maalouf said LBC was seen as the least biased of all the channels.
“But all in all, LBC is like An Nahar (newspaper), centre-right,” he added. Notably, he said OTV, allied to opposition leader Michel Aoun’s Free Patriotic Movement, increased its viewership during the clashes.
“The more divided the audience became, the more people navigated to the channels that reflected their views. For instance, the tenser it became, the more Christians watched OTV, which they didn’t watch much usually,” Maalouf said.
To Battah, the conflict showed that most Lebanese television stations have become an intrinsic part of the infrastructure of the political establishment.
“Lebanese TV is no longer just biased, it is one of the most important weapons in the hands of political groups,” he said.
“This has led some Lebanese politicians to justify attacks on the media, and unfortunately this is now accepted by many of their constituents. It’s a very dangerous development because even now average citizens are engaging in attacks on journalists just because they don't agree with the broadcaster's politics. This is definitely a low point for Lebanese journalism. The polarization of society has increased sectarianism in the press and stoked hatred toward the press as a whole.”
While viewing habits had changed during the clashes, the media environment started to get even more virulent once the fighting died down and FTV was back on air.
With the fighting ongoing, FTV had re-located to Beirut Hall to prepare for getting back on air. “We waited for the political green light as Future faced a lot of threats that the Kantari offices would be burned down [if FTV went on air],” said the Future TV employee.
When FTV re-launched, channels like Al Arabiya showed solidarity by re-broadcasting footage, while LBC aired a statement by the Mufti of Beirut on Marcel Ghanem’s show saying FTV was back.
“It’s a different story how coverage changed after re-broadcasting,” said the FTV employee. “FTV went from being biased to being extremely biased. It started calling it an Alam Harb (“media war”), people were asked not to say certain things and to cut a statement to change the meaning. For instance, they transcribe a speech and then the editor underlines the words you can use, five words here and 20 words there, and this changes it all, it becomes a different speech. The management and the news directors also started saying they [March 8 media] are lying in news bulletins and creating this story, so it’s ok for us to do whatever. I think this is the worst effect of what happened,” he added.
Al Manar meanwhile started portraying the end of the conflict as a victory for Hizbullah, which had not capitulated to any of Jumblatt’s demands and, by force, driven March 14 into an agreement in Qatar that ended a political crisis that had lasted 18 months. In December 2006, Hizbullah and co. pulled out of the government and established a tent city that closed off downtown Beirut. Once President Emile Lahoud stood down from office in November last year, the political standoff stalled the election of a new head of state some twenty times. By June 21, with a compromise reached on a new president, General Michel Sleiman, the tents were taken down and Beirut appeared to be back to normal.
On the TV, programming returned to its usual content, including politically partisan points of view and journalism that skirts the line between news and propaganda.
1) The March dates refer to demonstrations in downtown Beirut in the wake of former Prime Minister Rafik Hariri’s assassination on February 14, 2005. March 8 consisted of Hizbullah and Amal, while March 14 (the date of the so-called ‘Cedar Revolution’) consisted of Hariri’s Future movement, the Progressive Socialist Party, the Lebanese Forces, the Phalange Party and Aoun’s Free Patriotic Movement (FPM). The predominantly Christian FPM later joined March 8, diving the Christian community.
2) Lebanese TV channels are split into two camps: The pro-opposition channels are Hizbullah-backed Al Manar TV, the National Broadcasting Network (NBN), which is partially backed by Shiite parliamentary speaker and head of the Amal movement Nabih Berri, New TV, and the Free Patriotic Movement-run Orange TV or OTV. Pro-government channels are Mustaqbal (Future) TV, owned by the Hariri family, and the Lebanese Broadcasting Company (LBC). See Paul Cochrane, ‘Are Lebanon’s Media fanning the flames of sectarianism?’ in AMS - www.arabmediasociety.org/?article=206
3) A transcript of Nasrallah’s speech is available at http://yalibnan.com/site/archives/2008/05/nasrallah_justi.php
4) Members of the opposition, and opposition media, claim the Hariri-owned security company SecurePlus is the Future movement’s militia.
5) Both Al Manar and Future TV did not reply to official requests for interviews with the management.
6) Nick Blandford, ‘Uncertainty deepens in Lebanon as Hezbollah seizes control of west Beirut’, Christian Science Monitor, May 9, 2008 - www.csmonitor.com/2008/0509/p25s23-wome.htm
7) Saudi prince and billionaire Walid Bin Talal increased his stake in LBC-Sat and the Production and Acquisition Company to 85% in July this year.
8) Beirut Report – www.beirutreport.blogspot.com/2008_05_01_archive.html
9) For screen shots and descriptions of media coverage during May see Lebanese-American journalist Habib Battah’s blog, Beirut Report – www.beirutreport.blogspot.com/2008_05_01_archive.html
10) See Paul Cochrane, “Bombs and broadcasts: Al Manar's battle to stay on air” in AMS - www.arabmediasociety.org/?article=19
11) Maalouf was making a reference to the slogan Hizbullah adopted after Harb Tamouz – “Nasr min Allah,” Victory from God.
12) Many journalists, foreign and Lebanese alike, were threatened by Hizbullah and Amal gunmen when trying to cover events. Two Al Jazeera TV staff were also wounded during clashes in a Beirut neighbourhood. An Al-Arabiya TV crew were briefly taken prisoner in a Beirut suburb on May 8, released after half an hour by Hizbullah.
ALL PHOTOS COURTESY OF HABIB BATTAH - www.beirutreport.blogspot.com
Tuesday, August 19, 2008
By Paul Cochrane in Damascus, Executive magazine
SYRIA IS IN THE MIDST of its third year of drought. Some 90% of the barley has been lost due to crop failure, the wheat harvest is down by over 50%, and ground water reserves are running low.
In the face of such a crisis, Syria has had to resort to the international wheat market for the first time in 15 years, no longer self-sufficient or able to export from what was, since antiquity, one of the region’s bread baskets.
This hydrological crisis couldn’t have come at a worst time for Syria, with the country attempting to implement widespread economic reforms and reduce subsidies while food, energy and living costs continue to spiral upwards. Furthermore, the international price of wheat has risen 83% over the past year, putting strain on Syria’s budget deficit and wheat reserves.
Such hard realities couldn’t be further from the rosy picture presented by the media and investors in the wake of Syria’s economic reforms, who cite surging investments, the financial sector’s exponential growth, a stock market in the offing, and rising tourism figures.
“People are bullish on Syria, but there are problems we are facing,” said Dr Nabil Sukkar, managing director of the Syrian Consulting Bureau for Development and Investment. “Agriculture is not fashionable, people instead talk of industry and ICT, but it should be given the priority it deserves in Syria,” he added.
The scale of Syria’s hydrological woes is forcing the government to rethink its agricultural policies as wheat and barley reserves dwindle. Last year, Syria produced 4.1 million tons of wheat, more than enough to meet demand for the 4 million tons consumed domestically. But the government estimates this year the harvest could be as low as 2 million tons, a drop of over 50%, if not lower. Barley, which accounts for 10% of Syria’s grain production, has declined 90%, having an immediate knock-on effect on the livestock sector, which used 60% of all barley as animal feed. Many small-scale farms have been forced to close as a result.
The decline in production is attributed to low rainfall, the land freezing over at the beginning of the year, and the over-usage of groundwater resources.
“Everywhere received only 50% of rain, and in agricultural areas this is a major problem,” said Dr Abdullah Droubi, Director of Water Resources at the Arab League’s Arab Center for the Studies of Arid Zones and Dry Lands (ACSAD) in Damascus. Other areas received only 15-30% of normal precipitation levels, with the exception of the coastal regions, resulting in an average of 2 inches or less between September 2007 and April 2008, according to the United States Department of Agriculture’s Foreign Agricultural Service (FAS).
The water shortage is most severe in the northern governorates of Al Raqqah, Al Hasakah and Aleppo, which account for 75% of the country’s wheat production. The problem is further compounded by Syria obtaining an estimated 85% of its renewable water from the Euphrates, Tigris and Orontes rivers, but with poor rainfall in neighboring Turkey, where the rivers originate, Syria is struggling to meet its water needs.
“They are trying to irrigate some places with supplementary water and from ground water, but as ground water is not recharged, it is a closed cycle - no precipitation means groundwater will decrease,” said Droubi. Utilizing ground water also means less water flows into lakes and rivers, as well as increasing the salinity of ground water reserves.
Pollution, inefficient usage of water and above all a surging population, growing at 2.11% a year, is putting further strain on resources. Additionally, demand for domestic potable water is growing at 4.5% a year and consumption is expected to increase by 40% a year over the next 15 years, according to research by Makram Shakhshir at the University of Damascus.
The problem is particularly acute in urban areas such as Damascus, home to six million people, a third of the country’s population.
The growth of Damascus has impacted directly on the city’s water table as the capital expanded from 1,900 hectares in 1945 to 8,500 today. The nearby Ghuta Oasis, a prime source of water and arable land, has also shrunk, from 25,000 hectares to 10,000 hectares, and continues to lose some 200 hectares per annum as the city expands outwards.
The Barada water basin, located under Greater Damascus, has also retreated in the past 20 years, from 50 meters below ground to 200 meters. Some experts suggest this could this could drop to 400 meters in the next 20 years, exacerbated by some 87% of the 25,000 wells around Damascus being illegal, according to Francesca de Chatel, author of Water Sheikhs and Dam Builders. Furthermore, with Damascus’ ground water table shrinking, sewage is reportedly seeping in and contaminating the water below.
With greater demand and a rising population, Syria’s water problems are only likely to get worse, said Droubi. “Drought is a very big issue in the region and related to climate change, but no one knows to what extent. As for the future, the region will suffer from more drought and lowering precipitation - a 20% reduction in 50 years is one scenario,” he said.
Walking a fine line
To offset the crop reduction, Syria received 190,000 tons of wheat in aid from Abu Dhabi, and canceled a deal with Egypt to exchange 176,000 tons of wheat for rice. The government is also dipping into its estimated 4 to 5 million tons of wheat reserves to keep bread affordable as other food prices have risen by an average of 20% in the last six months, according to the World Food Programme.
“Rice went from 20 SYP ($0.40) to 120 SYP ($2.25) a kilo; olive oil has also risen in price, which we have for breakfast, lunch and dinner. People are hurting,” said Yassir Hamod, a storeowner in Damascus.
To counter rising prices, the government raised public salaries by 25% earlier this year, but with accommodation and energy costs also surging, it may be only a matter of time before people take to the streets to protest, as has occurred in 30 countries around the world over rising food costs.
“We have not seen real repercussions from the rise in prices,” said a political analyst with close ties to the Syrian government. “Maybe in February or March 2009 when people feel the repercussions of winter fuel costs coupled with food expenses, here is a test, so we may witness some disturbances but the crisis is not yet mature.”
Nevertheless, with so many issues converging at once, Syria is struggling to find the right balance between keeping the populace placated through cheap food and fuel - spending an estimated 15% of GDP on fuel subsidies alone - and implementing reforms that will phase out subsidies that have been a mainstay of the Baathist socialist system. Finance Minister Muhammad al-Hussein was quoted in April as saying removing bread subsidies is a “red line,” particularly as consumption of bread has increased as other staples have risen in price. But with the wheat crop half the level of domestic demand, Syria could use up much of its wheat reserves this year alone, forcing the country to buy on the international market, where prices have risen 83% over the past year. Such an outcome would have an immediate impact on Syria’s budget deficit, which was 10% of GDP last year. Furthermore, with Syria now a net importer of oil but with demand for oil rising as well as for electricity, up 5% in the first half of 2008, the budget deficit is expected to soar this year.
“It is a mounting crisis and measures are minimal compared to the extent of the crisis,” the analyst said. “The government doesn’t have a clear view on how to manipulate price rises and salaries, it is still very ad hoc and experimental. The government will support employees, but leave to the rule of the market the others,” he added.
It is in agriculture that the biggest changes need to be made however, the biggest net user of water with some 45% of the sector irrigated, a figure hydrologists consider an inefficient usage of water. And with the state the sole buyer of wheat, barely, sugar beet, millet and cotton, the onus is on the government to reform.
“The debate in Syria is what priority agriculture should take,” said the analyst. “In principle, what is needed is a revision of the state plan for agriculture regarding the distribution of crops and harvests.”
The government has already embarked on a scheme to reduce cotton production to solely cater for local needs, particularly as cotton is highly water-intensive as well as accounting for nearly 25% of the total global insecticide market, a further cause of land and water degradation. However, Sukkar said agriculture is still operating along traditional lines as land reform has not been implemented.
“We are faced with constraints, such as land reform laws which put a ceiling on ownership and prevents mechanization of agriculture,” he said. “Law 10 of 1986 allowed joint public-private projects in agriculture, the government allocating 25% in land allocation and 75% private. It was meant to encourage commercial agriculture but it didn’t work, it was a failure,” Sukkar added.
In reforming other areas, such as reducing production of certain crops like tobacco and cotton, it will be a case of losing export dollars but at the same time helping to ensure water sources, said Droubi.
“I say that water policy should be more important than politics, as water decides economic development in the country, but this is lost in bureaucracy and the public sector is not at the right level,” Droubi said. “We need a technical revolution and support from developed countries, especially as the trouble in the region will impact on the Europe and the USA,” he added.
One solution put forward is for Syria to build desalinization plants. “It was discussed during the peace process and has good potential,” said the analyst. But with prices tags of $1.5 billion upwards for a facility, as well as the time needed for construction, the suggested solution for the short term is improved water usage, stopping leakages, and public awareness campaigns.
“One of the key issues is people are wasting water as there is not a culture of saving resources,” said Poul Gadegaard, Team Leader of the Syrian Enterprise Business Centre. “The government is more focused on petrol and diesel than water, but it should be the other way around. Water prices should rise as people need to learn to economize; I think this is a big, big problem.”
Syria’s water woes go beyond crops and potential social unrest to geopolitics. Hydropolitics is the proverbial 1000lb gorilla in the room that somehow gets overlooked amid the region’s ongoing political problems.
“Water should be a top priority now, we are not in the 1960s or ‘70s. We can see that the situation is dropping very fast, and there is no time to even think of a solution,” said Droubi. “Cooperation is needed on a regional level.”
Some progress has been made, with Syria, Turkey and Iraq earlier this year agreeing to establish an institute to find solutions to water and environmental issues between the three water-linked countries.
“Where political relations have had an impact on the water crisis is Turkey allowing more water through its dams to Syria,” said the analyst. But in rain starved southern Syria the issue is still a political one. The Israeli-occupied Golan Heights provide an estimated 30% of the Jewish state’s water, while the water basin connects to Syria, Western Jordan and Northern Israel. Access to the water of the Golan region will be pivotal in any peace discussions between Damascus and Israel, but Syria should not bank on gaining much water the analyst said, despite the Golan’s proximity to Damascus.
“Syria cannot expect big amounts of water to come from this area. I don’t think the Golan will add much political speaking – Syria should look for a solution elsewhere,” said the analyst.
Ultimately, unless a multi-pronged solution to Syria’s water woes is enacted – politically, socially and economically - the country could face rising socio-economic problems just as Syria is opening up to the world.
Graphs, charts and satellite images courtesy of the United States Department of Agriculture’s Foreign Agricultural Service. Photographs by Paul Cochrane.
Unlike the heady summer of 2006, this year’s season is hardly a memorable one. It was back to business as usual, and as the summer winds down and tourists pack their bags to head home, the tourism sectors of Lebanon and Syria are no doubt pleased there actually was a summer season.
That Lebanon needed a calm summer far more than Syria is a given, particularly following the July war and the ensuing 18-month political debacle. But Syria has also benefited from greater stability in Lebanon, especially when it comes to attracting tourists from the West, who have a tendency to lump the Levantine countries together and avoid the region if there is a crisis.
Both countries were therefore lucky that the May clashes and the resulting Doha Agreement happened when it did, giving ample time for tourists to plan a summer visit.
The big difference between Lebanon and Syria’s tourism sectors however is that Syria is beating Lebanon hands down when it comes to attracting tourists.
Earlier this year Syria made the sound decision to advertise in the Gulf - bar Saudi Arabia -and the county is resultantly chockablock with Khaliji (Gulf) tourists, reflected in the joke circulating around Damascus that if you want to get a taxi outside any of the major hotels you have to wear a white jellaba or otherwise you’ll never get a ride.
The other noticeable difference is that Syria is getting tour groups by the busload, sweating their way around Damascus’ old city and the country’s numerous historical sites. Indeed, sitting in the lounge area of a hamam after a rigorous scrub one sultry August afternoon, I was taken aback by a dozen South American tourists that swarmed in and started snapping away at everything in sight. My fellow hamam clientele also seemed a little bewildered, with a chap opposite me rolling his eyes. But as soon as all the ajnabi (foreign) tourists left, he then thrust a camera in the hands of a hamam attendant to take a photo of himself bedecked in towels, and then asked me to join him. Ahmed, as he introduced himself, was from Libya and marvelled at what Syria had to offer, regaling me with his trip around the country.
Lebanon on the other hand doesn’t seem to be doing much to attract tourists other than appealing to expatriate Lebanese to come home for the summer. True enough expat Lebanese spend a bundle when they are over here, as a trip any night of the week to Sky Bar and downtown shows, but Lebanese returnees with foreign passports aren’t exactly tourists, particularly as most stay with friends or family. And while Khalijis are back on the streets of Beirut, the tour groups are conspicuously absent. It is quite clear Lebanon needs to develop a tourism plan and start marketing the country globally.
After all, if tiny Dubai with just shopping malls and flashy hotels can attract 6.4 million tourists a year, then Lebanon can surely boost figures from an estimated 1.5 million, especially if a modicum of stability prevails.
Lebanon has much to offer, and has a clear advantage over Syria when it comes to quality accommodation, restaurants and services. That isn’t to say that Syria doesn’t have the latter, but the country is desperately short of hotel rooms, reflected in a supply gap of 2 million nights per year in the four to five-star range.
But while Lebanon has few plans to boost tourism numbers, Syria aims to turn the country into a prime tourism destination, with 377 investment projects underway worth some $3.3 billion and international chains clamoring to get in. Damascus has also offered three huge locations for tourism development that are expected to attract up to $15 billion in investment.
How successful Syria’s tourism developments have been so far is reflected in the stats, with tourism numbers surging from 2 million in 2004 to some 4.6 million last year, spending $2.8 billion and accounting for 14.5% of the country’s GDP. Of the tourist numbers, 73% were Arabs, a figure that has increased 15% since 2005, and some 500,000 were from Iran, predominantly coming on pilgrimage. As Faisal Najair, director of Damascus’ Tourism Department was quoted as saying: “We hope to make Syria a resort for all Arab and Gulf tourists.”
With such developments underway, Syria could soon surpass – if it hasn’t already – Lebanon as the preferred destination in the Levant for higher-end tourism and even tourism of the more dubious kind. According to reports, the number of super nightclubs in Damascus has soared in the last three years from 15 to 40.
It’s time Lebanon, for once, took a leaf from Syria’s book if it wants to remain the region’s playground, as well as give the economy a much need boost.
Friday, August 15, 2008
The Pakistani side of the climb up to the Khyber Pass.
Photo by James Molliso, Wikipedia Commons
Money Laundering Bulletin July/Aug 2008
After the US-led invasion in 2001 to overthrow the Taliban, Afghanistan took some important steps to curb money laundering and terrorist financing. The continued conflict, the profit that impoverished farmers can earn from poppy cultivation and entrenched corruption have, however, rendered these developments largely ineffectual, says Paul Cochrane.
In 2004, Afghanistan enacted anti-money laundering (AML) and counter terrorist financing (CTF) law, which also set the parameters for a Financial Investigation Unit (FIU). But instability, coupled with Afghanistan being the world’s top opium supplier, has stymied these measures. Corruption is wide spread, the government has minimal control over much of the country, and borders are porous despite attempts by NATO to better regulate entry points. In addition, there are concerns such as those aired by the International Crisis Group when it told the US House Foreign Affairs Committee last October that “Afghanistan is in danger of becoming a failed state, in part because it is in danger of becoming a narco-state.”
Following the installation of the Islamic Republic of Afghanistan led by President Hamid Karzai, the state was reorganized under a new constitution, and by 2003 the Central Bank, Da Afghanistan Bank (DAB), was re-establishing relations with the international community. New licences were issued to commercial banks (currently 15 foreign and Afghan banks), and by late 2004 an AML and CTF legislative framework had been adopted designed to meet the recommendations of the Financial Action Task Force (FATF).
In 2006, Afghanistan became a member of the Asia Pacific Group (APG), and has observer status in the Eurasian Group. According to the APG Secretariat, the APG will carry out a country evaluation in late 2009. The Central Bank is also to establish a Financial Services Tribunal to review certain decisions and orders of the DAB.
The country’s AML law addresses criminalization of ML and TF, customer due diligence, international cooperation, extradition, and the freezing and confiscation of funds in addition to cross-border currency reporting. Transactions and cash transactions equal or exceeding 1,000,000 Afghani (US$19,890) have to be declared to the FIU, a semi-autonomous unit within DAB established in 2005, which has the legal authority to freeze assets for up to seven days.
According to the US State Department’s March 2008 International Narcotics Control Strategy (INCS) Report, the FIU receives approximately 10,000 large cash transaction reports from financial institutions each month, up from the 4,000 reports received and processed per month in 2006.
The FIU has over 140,000 large transaction reports currently stored in its database that can be searched using a number of criteria, while institutions have to keep records for at least 10 years.
AML examinations have been conducted at all commercial Afghan and foreign banks, up from half assessed last year.
There is reportedly growing awareness of AML requirements in banks, bolstered through DAB’s work with the recently created Afghan Bankers Association (ABA). The ABA has drawn up a “know your customer” (KYC) form that has been adopted by the sector and is providing seminars on identifying suspicious transactions. According to the INCS report, seven suspicious transaction reports were received in 2007 by the FIU, one of which was referred to law enforcement for investigation.
But despite such moves, commercial banks are confined to major cities, resulting in Afghanis relying on money dealers and the hawala system, an alternative remittance system (ARS) popular throughout Asia, Africa and the Middle East. There are over 300 hawaladars in Kabul, with some 100-300 additional dealers in each of the country’s 34 provinces. Hawaladars are supposed to be licensed by the DAB, and from September 2006, a new ARS regulation system was introduced to replace former regulations. The DAB has issued approximately 100 licences in Kabul, and this year embarked on a scheme to register hawaladars in other major cities.
But as the INCS report notes, “Given how widely used the hawala system is in Afghanistan, financial crimes undoubtedly occur through these entities.”
And therein lies the nub of the problem in curbing ML and TF in Afghanistan. Not just better regulating hawaladars, but enforcement of AML and CTF legislation in the face of corruption and the narcotics trade.
“The Afghan AML documents looks good, but it’s going to be really tough to make a dent on the endemic corruption and opium trade that permeates the economy in addition to border issues,” said John Solomon, a Central Asia specialist at World-Check, a British company that runs an intelligence database on financial risk.
According to the April 2008, UNODC Illicit Drug Trend Report, Afghanistan accounts for 93 percent of the global annual output of opium, utilizing 4 percent of the country’s farmland and involving 14 percent of the population. Warlords and the Taliban benefit directly and indirectly from the trade, said Solomon, issuing an usher tax on opium production of up to 20 percent, 15 percent on processing at laboratories, and 15 percent on transport. Furthermore, with such large amounts of money involved, there is suspicion that the opium trade is linked with the upper strata of the political establishment as well as law enforcement agencies.
“The Anti Narcotics chief, or police chief, gets an official salary of US$60 a month, and to land a job like that there are bidding wars reaching as high as US$100,000 for a six-month appointment, so clearly there must be bribes involved, and related to the opium trade,” said Solomon.
He added that there was anecdotal evidence that drug money is being laundered through purchasing real estate in Kabul, particularly in the upmarket and “surprisingly expensive” area of Sherpa.
But for more extensive ML related to opium, observers say the money and drugs flow out of the Central Asian countries to the North of Afghanistan, through neighbours Pakistan and Iran, and also via Dubai. Solomon added that there were reports that Ariana Afghan Airlines is being used to smuggle drugs and money.
To counter cross-border movements of people, weapons, money and cash, the NATO-led International Security Assistance Force in collaboration with the Afghan and Pakistan intelligence services embarked this year on the first of six joint intelligence centres to be built on either side of the Durand Line. But with borders of 3,435 miles, curbing illegal crossings will prove difficult.
“Most of the border is not policed or regulated in anyway, and there are loads of smuggling routes so this initiative will not solve the problem,” said Solomon.
Tuesday, August 05, 2008
A RECENT TRIP to London and Rome brought home how precarious the future of newspapers is in Europe, particularly in the capitals where commuters are inundated with free copies of tabloid newspapers.
Glancing around at fellow passengers on the London Underground, few were reading ‘normal’ newspapers while every other person was flicking through freebie Metro - which is to be found in most European capitals – or sister-paper London Lite.
Light these newspapers (if you can call them that) certainly are, all celebrity news orientated with a splash here and there of local news; it was as if Britain were in no way involved on the international stage, or in Iraq and Afghanistan.
The rise of these dailies have hit the national newspapers doubly hard, struggling as they are for advertising in the midst of an economic slowdown while trying to retain a readership in an era of immediate news. This has had a direct impact on the news the papers are producing, with newspapers jumping on the bandwagon of reduced hard news and foreign coverage in favor of the sensational and glamorous. All these factors thrown together have resulted in gloomy prospects for the industry.
Total sales of national newspapers in the UK are down 2% year on year, with broadsheets falling 3.4%, while the tabloid press has only dropped 1.2%. In the USA it is a similar story, with all newspapers reporting a drop in sales, bar a few exceptions, with total newspaper advertising, combining print and online revenues, falling 9.4% last year.
Less disheartening is the fact that there are still people around who want serious news, with The Financial Times’ circulation growing 2.1% while the Wall Street Journal’s circulation of 2.1 million copies has risen 0.4% over the past year.
Of concern however is that the increased commercialization and sensationalism of newspapers is leading to much larger papers, page wise, to give people supposed value for money – with some Sunday editions weighing in at nearly 2 kilos – but written by a near skeleton staff and almost devoid of original content. This has led to what Nick Davies, author of “Flat Earth News,” has called ‘churnalism’.
In a study Davies carried out with Cardiff University on the sources for articles in British newspapers over a two-week period, they found that 60% of stories in the more serious newspapers were wholly or mainly wire copy (i.e. Reuters, Associated Press or the UK’s Press Association) or from PR firms, 20% had clear elements of wire copy or PR, and 8% were from uncertain sources. That left only 12% of articles that were actually researched by journalists in person or over the phone - real journalism in other words.
But with Britain now having more PR people than journalists (47,800 vs. 45,000), it is perhaps no real surprise that PR is having an impact on a sector that is desperate for content while at the same time slashing their budgets for staff and expenses. Of further concern in our globalized world, and naturally for the Middle East, is that foreign coverage is on the decline. In 1970, for instance, CBS had three full-time correspondents in Rome alone, but by 2006, the entire US media, print and broadcast sector had only 141 foreign correspondents to cover the whole world.
While this is all bad news, particularly for newspaper journalists, it has meant that other media and entertainment outlets are picking up the slack.
For instance, a recent PricewaterhouseCoopers (PWC) survey of 15 global media markets, from online, TV, and newspaper advertising to theme park and cinema ticket sales, estimated that these markets were worth $1.6 trillion, and will be worth $2.2 trillion by 2012.
The ad battle between online publications and newspapers is where things will get the bloodiest though, with PWC predicting that by 2012, newspaper print ads will be worth $123 billion, only $3 billion more than online advertising, while newspaper ads and circulation is expected to rise from $186 billion last year to $208 billion. Notably, where newspaper circulation is dropping, in the US, UK and Europe, there is to be a rise in the emerging markets of China and India. So while new media will make inroads everywhere, old media may see an upturn in newer markets.
The question that plagues journalists and people that like to be kept well informed though is what kind of content these new publications will have as the battle between new and old media takes on epic proportions – heavy on quantity but not much quality appears to be the obvious conclusion.
Ultimately, what is likely to happen is that there will be an upswing in demand for specialized and niche publications catering to people’s specific business and personal interests, while general news becomes more marginalized, slotted in-between ‘churnalism’, saucy sex scandals and photo shoots of what celebs were wearing at some cocktail bash.
Monday, July 28, 2008
THE LEBANESE TRADE UNION movement dates back to the 1920s during the French Mandate period, but it was not until 1958 that an organization collectively representing the country's workers and 18 trade unions was established, the Confédération Générale des Travailleurs au Liban (CGTL), or General Confederation of Lebanese Workers.
In the period that followed the creation of the CGTL urban centres mushroomed in size as the agricultural sector declined and the need for workers rose as Lebanon industrialized.
The late 1960s and 1970s were the movement's self-described 'golden era,' when there was a widespread call for change (reflecting global developments), frequent socio-political demonstrations, an expanding membership, and active Leftist and socialist movements.
With the advent of the civil war (1976-1990) the trade union (TU) movement was effectively paralyzed, labour conditions of secondary concern to the militias and the government. But despite the government's weakness in the war years, the state was able to increase membership to 22 TUs and the CGTL remained operational, representing the country's fractious confessional groups and political parties.
However, the TU movement never recovered its former role in society in the post-war years. With the country struggling to get back on its feet politically, socially and economically, and a laissez-faire government led by construction billionaire Rafik Hariri, the rights of workers were sidelined by the establishment to not hamper, in their opinion, the reconstruction process. Equally, Leftist political parties such as the Communist Party, which had had a strong political role prior to 1990, did not get a position in the post-war government, losing the workers' movement a much needed voice in parliament.
Along with being belittled by the government and industry, the TU's pre-war independence was usurped by the Syrian presence in Lebanon and came under pressure to become tools of political parties.
"Following the civil war the TUs became increasingly aligned with political parties as civil society gradually replaced the militias," said Ghassan Ghosn, President of the CGTL.
And with Syria interfering in Lebanese affairs, the Labour Ministry, which grants permission for an organization to be established, came under control of Damascus, according to Samir Farah, a Representative at the Friedrich Ebert Stiffung (FES) institute in Beirut. The Syrians also encouraged federations that had no TU representatives to exert influence in the CGTL.
The dispute within the TU movement and the CGTL over the direction of the movement, its structure and membership composition, came to a head in 1997 when the Labour Ministry authorized seven new unions, related to the Amal and Baath parties, to enter the CGTL. The CGTL's president Elias Abu Rizk (1993-1997) refused to admit the new unions saying it was an illegal action and they had no right to participate in elections.
Two elections were eventually held, one under the auspices of Abu Rizk and the other by the Labour Ministry. Abu Rizk lacked government support resulting in Chuman Zoghby to be voted in as the new leader of the CGTL. Zoghby only stayed one year in office, his attempts to unify the movement under one leadership continuously thwarted by bickering and governmental interference.
Abu Rizk returned as president until 2000 when Aviation Trade Union leader Ghassan Ghosn took office, re-elected in 2005.
"Under Ghosn's tenure there are many unions related to parties and Syria, given authority by the Labour Ministry and members of CGTL," said George Hajj, head of the Banking Federation.
Over 50 federations are now affiliated to the CGTL, according to Farah, along with 43 TUs.
The organization of the CGTL reflects Lebanon's constitution, divided along sectarian lines with the president Christian and the board dived 50:50 Christian-Muslim.
In the 1970s the CGTL had 200,000 members, but now has between 50,000 to 70,000 according to Ghosn. Hajj believes TU membership is around 10 percent of Lebanon's 750,000 workers but the Friedrich Ebert Stiffung institute thinks TU's are around six to seven percent of the working force. Walid Hamdan, Senior Workers' Specialist at the International Labour Organization (ILO) in Beirut, thinks these figures are exaggerated, considering 3 percent a more realistic figure.
"In Lebanon the whole TU movement is hibernating. This goes back to a structural problem, the desperate political situation, interference by government and parties, lack of freedom, and allegiance rather than alliance," said Hamdan.
Hamdan said that even though there are 600 unions, syndicates and federations in the country, "whenever you call for action, they are not able to muster more than 100 to 150 people. If they succeed its because political parties can really mobilize."
Not all political parties are involved in the workers movement. The pro-big business party Mustaqbal (Future), which has the premiership, is against the TUs, said Ghosn.
Lebanon's political system reflects the struggle underway throughout much of the world between neo-liberal elements and more populist movements, with the political parties opposing the likes of the Future party drawing their political base from the working population.
In Lebanon the split became more pronounced after the assassination of former Lebanese Prime Minister Rafik Hariri early last year. Following demonstrations on March 14, 2005 that resulted in the withdrawal of Syria from Lebanon, the pro-West, pro-big business "March 14 movement", which dominates much of the government, manifested in opposition to the March 8 movement, consisting of the Shia Muslim parties Amal and Hizbullah, and the secular Free Patriotic Movement (FPM) led by former Lebanese Army General Michel Aoun.
Ghosn said the CGTL is more aligned with the March 8 movement as their support base derives from workers. However, to critics the CGTL has become too aligned with parties that have their own political interests in mind.
"Trade unions are declining and don't exist anymore. They represent political parties in order not to collapse," said Farah.
"Movements can be used for political ends, not the interests of workers," said Hamdan. "Hizbullah is new to the TU movement but can mobilize the streets. In the future they could control more, and the FPM is also mobilizing," he added.
The CGTL's role, said Ghosn, is to apply ILO conventions and improve working conditions and social benefits. "In Lebanon this is difficult to fight for, especially when the economy is weak and with huge government debts," said Ghosn.
The CGTL's weakness is evident in what the organization has not been able to achieve in the past decade, said Hajj.
"From 1996 until now no adjustment on salaries, unemployment is up, the National Social Security Fund is in deficit, and the CGTL not doing anything, only trying to have a role in the political conflict in coordination with Hizbullah, Amal and the Baath," added Hajj.
The CGTL however has refused government reforms that wanted to raise taxes and minimize social security and education spending. The CGTL also opposes IMF and WTO stipulations that advise the government to minimize the government's role as a social provider ( Lebanon is awaiting WTO membership).
But the movement's attempts to counter the government's drive to implement neo-liberal economic reforms that would be detrimental to workers and demand better working conditions have been repeatedly thwarted by the state.
On 27 May 2004 a general strike was organized by the General Labour Confederation to protest hikes in fuel prices and the lack of social services alongside a demonstration by taxi and bus driver organizations held in Hay-e-Seloum, a poor area of Beirut's Southern Suburbs. The demonstration became violent and was put down by the Lebanese Army, killing five civilians and wounding dozens.
In May 2006 a small demonstration by state sector employees took place to oppose economic reforms the March 14 government wanted to implement. Although the opposition to the reforms were successful, largely due to Hizbullah's support, the TUs did not participate as state employees are not allowed to organize into TUs. If Lebanon had signed the 1987 ILO convention, this would have been allowed, according to Farah.
"Lebanon has not signed the conventions of the ILO in order for the government to keep control of the movement. It should have been signed decades ago, but seems now the TUs are now working to force the parliament to sign it," said Farah.
Lebanon's labour law, implemented in 1946 and briefly revised in 1975, is also outdated, say critics, with the Labour Ministry no plans to implement any changes.
"The labour law is outdated and not applicable to the current situation," said Hajj.
Ghosn claims the Labour Ministry "has no influence over TUs, but they have the labour law" and either cooperate or hinder the CGTL.
In the past several months the TU movement has taken yet another blow. Following the 34-day war between Israel and Hizbullah and a two-month sea and air blockade this summer, Lebanon's economy is in bad shape.
Critics say the CGTL did not mobilize during the war and are not doing enough to alleviate the aftermath of the war for Lebanon's workers.
"The CGTL has no role in the socio-political situation. Their only role during the war was calling for support for the resistance (Hizbullah)," said Hajj.
But the CGTL said their arms are tied by the socio-political situation.
"The Israeli war on Lebanon made things a lot more difficult. The priority is politics, people are talking less about the economic crisis," said Ghosn. "Employers are taking advantage of the war to diminish debts by laying off workers, we have less room for movement or negotiation, and a big burden in terms of unemployment."
Adding to complications is the government's inability to financially aid businesses or social services due to the country's inordinately high debt, equivalent to 180 percent of Lebanon's GDP.
Nonetheless, no demonstrations have been organized to address socio-economic concerns in the post war period, only political rallies. "The last demonstration (on September 22) was to celebrate Hizbullah's victory, not socio-economic issues," said Farah.
As for the future of the TU movement, observers are pessimistic. The FES and the ILO have made several attempts to create grass roots movements, made appeals to the government that have often resulted in rebukes, and urge a re-structuring of the movement.
FES suggests cutting the number of organizations the CGTL represents down to 18 organizations to better represent different sectors to be "more democratic and independent from the political parties." The CGTL also wants restructuring to take place.
But to Hamdan there will only be a solution if there is a stable political system and TUs are independent of political parties.
"To be realistic, I personally don't see a way out of this movement, because TUs are a phantom for different groups that want TUs under their control," said Hamdan. "There is no national consensus to lift their hands from the TU movement to restructure and have a free, independent representative movement. As long as the political situation is the same, there is no way out."