Wednesday, April 16, 2008

Fencing Around

Commentary - Executive magazine

In an era when free trade, globalization, freedom and democracy are the mantras of the day, there is something physical going on that runs counter to these overly bandied about terms. Walls. Or fences, or ‘separation barriers’, ‘peace walls’ or ‘apartheid walls,’ depending on your political perspective as well as how rigidly you want to apply the correct terminology to a particular structure. But we can all agree such structures are meant to keep people out. That’s been the purpose of walls ever since stones or logs were piled together to ward off the neighbouring tribe.
Walls have left us with some great historical monuments, but since the Berlin Wall came down to much fanfare in 1989, walls were supposed to be confined to history. Instead more are going up, and none with the aesthetic grandeur of the Great Wall of China. Concrete, sandbags, pipes, barbwire and metal fences, along with the added extras of no-man’s land, landmines and electronic surveillance, are the materials of the times.
But just as I asked myself while perched on the edge of a vertical drop when camped out on the Great Wall - Why on earth did they build this when there is the natural deterrent of mountainous terrain? – questions in the same vein can be asked about the Middle East’s barriers.
Unlike the rationale of the Chin and Ming dynasties to build a wall that was practical but also signified dynastic might, the Middle East’s barriers are solely to keep out terrorists, migrants and other undesirables.
There is the 2,410 kilometre long sand and stone barrier built in the 1980s by the Moroccans to keep Polisario guerrillas out of the Western Sahara that Rabat claims as its own. Fences divide Kuwait and Iraq, the UAE have erected a fence with Oman, ostensibly to thwart immigration, and most famously, the “security fence” as the Israelis call it that cuts like a scar through the West Bank. There are also the blast walls of Baghdad, and the occupation forces’ construction of a five-kilometre long wall to divide the Sunnis and Shias in the capital’s Adhamiya district.
Then there are other more specific walls, such as the one around the tourist and diplomatic hobnobbing hot spot of Sharm El Sheikh, and the Egypt-Gaza fence that Hamas enjoys breaking through every now and again.
“Good walls make good neighbours” is the oft used mantra to justify such barriers, but the problem is that what are originally intended as temporary measures often end up being more long term. Such was the case in Berlin, lasting 28 years, and in Belfast, where more “peace walls” have gone up since the Good Friday agreement that ended ‘the troubles’.
Walls can keep people out, but as the defenders of a castle under siege knew very well (and as the French discovered in World War II after spending 3 billion francs on the supposedly impregnable Maginot Line), all it takes is for someone to use the back entrance and the barbarians can swarm in.
Such barriers are not only dividing people rather than bringing about mutual co-operation, but are also an environmental nightmare for wildlife and limit the movement of nomadic tribes, particularly in the case of Saudi Arabia and its neighbours.
Indeed, walls are more like taking medicine to tackle the illness rather than seeking out the root of the problem, which in the case of barriers are invariably due to economic disparity and/or occupation.
The Gulf’s fences are not so easy to pigeonhole, especially as the Gulf Common Market (GCM) that went into effect at the start of the year, which is based on the European Union model, is supposed to allow the free movement of people within the GCC. Saudi Arabia’s recently announced plan to “improve security” along its 6,500 kilometre borders include two GCM members as well as two aspirants, Yemen and Iraq.
As Ahmad Hammauda, manager of a Kuwaiti logistics firm, told me, “all this putting up of walls is not good for removing borders.”
But it is clearly good money, at least for defence contractors which have been having a field day since “the global war on terror” was announced. Saudi Arabia is to spend a whopping $10-$15 billion on its border security over the next decade, while the Israeli “security fence” costs $2 million per kilometre, with the total cost slated at $2.1 billion. That’s a boatload of money that could be sunk into alleviating the symptoms behind the supposed need for such barriers. But maybe that’s just overly utopian thinking, although if you’d said to a French engineer working on the Maginot Line over 70 years ago that decades later there would not even be a visible border between France and Germany, he would probably have thought you were a sandwich short of a picnic. Or a few bricks short of a wall.

(Photo of Israel's "security fence/wall" by Justin McIntosh - Wikimedia Commons)

Tuesday, April 15, 2008

Re-Connecting Lebanon

The Serail (parliament) surrounded by tents and barbwire erected following the Hizbullah-led opposition sit-in, which has gone on since Dec, 2006

By Paul Cochrane in Beirut for TRENDS magazine (Dubai)

Economically speaking, Lebanon is a basket case. The Hizbullah-led opposition has turned the center of Beirut into a ghost town, the state has no president and the government is paralyzed. All of this is leaving Lebanon's economy limping along, but the reasons lie as much in its antiquated court system, crony-laden regulatory and ministerial organization as due to sectarian strife. Indeed, the sectarian strife is, at heart, exacerbated by the lack of economic activity.
Lebanon’s political shenanigans are hindering the country’s development at a time when the rest of the region is moving ahead, implementing reforms, improving infrastructure and attracting foreign investment.
In the zero-sum game that is global capitalism, Lebanon has kept the outside world at arms length with barriers to communications and trade, and it’s paying dearly for it.

Corruption and Subsidies. Fady Abboud, president of the Association of Lebanese Industrialists, estimates some $2-$3 million is spent on bribes every day, amounting to almost a billion dollars a year. Backhanders are not only common practice for land purchases, acquiring licenses and lining the pockets of bureaucrats, but also at one of Lebanon’s life lines with the world, the port of Beirut.
“A container from my factory to aboard the vessel costs $500: $100 for the truck, $50 for port dues, $50 for forwarding and another $200-$300 worth of bribes,” says Abboud. Such unpredictable “extra charges” make shipping to Lebanon a dicey proposition.
Restrictions on foreign workers are further hindering the economy, with pricey work permits required for white-collar workers and cheap foreign labor officially disallowed. “You can import anything from the Gulf, all made by an expatriate workforce, into Lebanon without duties, but we are not allowed to import foreign workers,” says Abboud. “How can we compete?”
These barriers to trade mean Lebanon is never going to be a major industrial hub. And tourist dollars won’t make up the difference. Not when a car bomb is enough to prompt ticket cancellations by the planeload.
And, not coincidentally, the one area where Lebanon is doing well – it’s banking industry – relies on foreign markets and connections to foreign markets. They also keep afloat by relying on remittances from abroad, which accounted for 25.8 percent of the country’s GDP at $5.72 billion in 2006. The Lebanese diaspora is the one reliable link to international capital.
“The middle class has disappeared from view but not from the banks; they are working in the regional markets,” says Tarek Khalife, chairman-general manager of Credit Bank.
However, the exodus of Lebanese seeking better opportunities overseas is negatively impacting on the very sectors that Lebanon could compete in, namely the knowledge-based service and IT sectors.
Brain drain. For Lebanon, its connectivity to global labor markets goes one way: out. Indeed, emigration has become so commonplace that a recent cartoon showed Lebanese university graduates being handed their diplomas and walking straight onto an airplane, invariably destined for the booming GCC markets where an estimated 400,000 Lebanese work.
“Young people have given up on Lebanon, with probably 90 percent of American University of Beirut students leaving after graduation,” says Marcus Marktanner, assistant professor of economics at AUB.
To keep talent in country, repatriate Lebanese and attract foreign investment, the country needs to better integrate into the global economy. And for that to happen effective and transparent regulations and cheap communications is paramount.
“The legal system has to be reformed,” says Robert Jreissati, president of the Lebanese International Business Association Network. Because of low wages, judges are easily bought off. Meanwhile the lack of an independent judiciary means regulations to protect investors are nonexistent or unenforceable.
“With no independent legal system, law suits last five to 10 years,” complains Jreissati. “And you want to attract investment?”
Equally, the country’s consumer protection law has never been enforced, the small claims court has not been activated, and the privatization of the telecom sector, proposed in 2004, has yet to happen.
“One of the myths of Lebanon is that it is a free economy where the government doesn’t interfere, but there is still a trust law where you can have a monopoly,” says Khalil Gebara, co-executive director of the Lebanese Transparency Association. “And in which country does a religious leader [Maronite Patriarch Nasrallah Boutros Sfeir] speak out against an anti-trust law as it will affect the sectarianism balance? He becomes anti-globalization without even knowing it.”
Such sectarian concerns extend to Lebanon’s telecommunication sector. Hizbullah leader, Hassan Nasrallah, has spoken out against privatizing the mobile phone networks, as it would run counter to sectarian interests.

Barbwire skirts Beirut's empty downtown.

Talking taxes. These intricacies of Lebanon’s tortured confessional political system and the political-business elite allow such monopolies to flourish. One of the worst examples is Ogero, the country’s national telecom that provides – if you can call it that – lackluster Internet connectivity and overpriced telephone charges. Its chairman is – coincidentally, surely – also the telecom minister.
Such cronyism has resulted in two politicians and a judge being granted Internet service provider (ISP) licenses, but who have, as yet, done nothing with the grants.
And although a Telephone Regulatory Authority (TRA) was established following a 2004 draft law to oversee the privatization of the telecoms sector, it is being “leashed by the establishment,” says Gabriel Deek, president of the Professional Computer Association. With some 30 percent of government revenues coming from telecoms, a budget deficit of 10.4 percent of GDP, and public debt 171 percent of GDP, “every penny counts,” says Joe Faddoul, chairman of IT software development company BML Istisharat.
“There is a huge Lebanese diaspora that make incoming international calls,” he says. With voice-over-IP services officially banned (but which are widely available), “the government is dragging its feet as it could lose that revenue” if it sold off its telephone and Internet interests, he adds. As a former telecom minister joked a few years ago, the ministry should be called “the Ministry of Taxcom.”
So Lebanon is caught on the horns of a dilemma. The government is strapped for cash, so it can’t afford to let go of a lucrative revenue stream. But high communication costs are choking off economic growth, because connectivity is not a luxury. It is an economic necessity.
Under the current system, companies are paying roughly 70 percent more for communications than in the Gulf, with phone costs among the highest in the world. Such costs discourage international firms from basing themselves in Beirut, and industries that could thrive from utilizing Lebanese bi- and tri-lingual skills – such as call centers – paying more for phone bills than for salaries, eliminating profits.
“For steady Internet, an average IT company spends $1,000 a month,” says Nicolas Rouhana, director of business incubation at Berytech, a private initiative by the Universit√© Saint Joseph. “That’s the wage of an engineer, so companies either hire an engineer or get better Internet.”
When Intel chairman Craig Barrett visited Lebanon last year to promote e-government, he said that affordable and reliable Internet connectivity was “absolutely key in developing Lebanon.”
“Our message is loud and clear,” Barrett said at the time. “If you regulate and price connectivity as a revenue source, then you inhibit the economy.”

Connectivity. A glimmer of hope is in sight, however, with an Internet Exchange Point (IXP) installed at Berytech in March. The region’s second IXP after Egypt, the system allows ISPs to exchange Internet traffic between their networks, freeing up bandwidth for outside traffic.
“Whole country connectivity with the world is less than one gigabyte right now,” says Deek. “Our vision for Lebanon is very high broadband. Not just open connectivity for ADSL - of 256kb to 2MB - but we’re looking for 100 megabits per second per citizen, like in Japan.”
Deek estimates one million Lebanese are connected to the Internet, and the IT sector was valued at $570 million in 2007.
“I can’t say how much investment is needed, but future growth will be 30 percent a year, if we have stability, based on the government’s revival plan of five percent economic growth a year,” he says.
However, with Business Monitor International predicting annual trend-level real growth of just two percent between 2008 and 2012, Lebanon has a long way to go to get better connected and have an economic turnaround, especially given the current domestic and regional political situation.
“How can you talk of privatization if you feel you are on the verge of a civil war?” Gebara asks.

Photos by Paul Cochrane

Sunday, April 06, 2008

Damascus Revisited

Damascus at night: the Barada River and the Four Seasons Hotel

From gas guzzlers to Dachias: A slash in import taxes on cars in 2005 has resulted in congestion on Damascus' roads

AISHTI magazine

For a city fabled as the longest continuously inhabited city in the world, change has always been a constant. But Damascus has not undergone the kind of change the first several years of this century has brought since the French Mandate ended.
Up until three or four years ago, Damascus seemed stuck in a 1970s time warp. Old American muscle cars plied the roads, haircuts and fashion styles would have suited unscripted walk on parts in “That 70s Show,” and cinemas were still advertising outdated Bruce Lee movies on hand-painted signs. Even changing greenbacks required a trip down a back alley, and the number of ATMs could be counted on one hand.
A raft of economic reforms since 2001 has brought about the gradual opening up of Syria, with the capital the natural centrepiece.
Private banks, fashion retailers, bars and restaurant chains are springing up around the city, while the old American gas guzzlers have been replaced with newer models following a slash in import tax.
Some will no doubt lament this change, but Damascus is no longer a destination frequented by Arabists, history buffs and Lebanese looking for a cut-price rug, a box of barazi, and a cheap mezze. There is much to now entice the discerning, and more demanding, visitor.

A break from shopping beside the entrance to the Umayyad Mosque

Damascus is now home to several boutique hotels, the Four Seasons, and an assortment of restaurants in renovated Ottoman-era buildings. The old city, a Unesco World Heritage site, has also seen a burst of innovation, with bars and nightclubs improving the formerly lackadaisical nightlife, and restaurants such as Naranj in Bab Sharqi a boon for the taste buds in its reworking of traditional Syrian cuisine.
On the cultural side, the fact that Damascus now has a Cultural Diary is a sign of the city’s reawakening. With Damascus the UNESCO Arab Capital of Culture of 2008, music and theatre are in the spot light, attracting talent from around the world, including Lebanese diva Fairuz’s (in)famous performance of the Rahbani brothers’ Sah al Nom at the Damascus opera house, Dar Al Assad.
For art lovers, the contemporary Syrian art scene has burst onto the international art map in the last two years, led by the Ayyam Gallery, Art House and the Atassi Gallery. The National Museum, which has been overhauled by a team of German archaeologists, also exhibits modern Syrian art.
Souk Hammidiyeh, with Roman pillars in the background

But while Damascus is gradually metamorphosing into a more consumer-orientated metropolis, the sites that have attracted visitors for so long are still there to revel in. The Umayyad Mosque, containing the shrine of St. John the Baptist, is a masterpiece of Islamic architecture, while the narrow streets of the old city hide the traditional Damascene houses that lie behind. Souk Hammidiyeh, one of the region’s largest covered bazaars, is still divided into categories, but along the main strip Bakdash is still the place to go for a pistachio nut ice cream. A Damascene tradition, the cream is pounded with large wooden mallets in front of customers by employees sporting 70s style mullet haircuts. Plus ca change, plus c’est la meme chose.

Pistachio ice cream at Bakdash


Damascus was sorely lacking in the luxury hotel segment until 2006, when the Four Seasons Hotel appeared on the city’s skyline, bumping the Meridien – which needs a facelift -and the Sham Palace – which needs to get rid of the ghastly plastic flowers – off the map.
With good restaurants, a much frequented lobby by Damascene businessmen to see and be seen, and art from the capital’s premier contemporary Syrian art gallery, Ayyam, the Four Seasons has raised the bar. Commanding great views of Damascus, particularly at night, a highlight is the Royal Suite, which is furnished with Oriental antiques and occupies the entire eighteenth floor. Attached to the hotel are several luxury boutiques, including Aishti and Aizone.
Damascus is soon to see more five-star hotels though, with the Kempinski Group to manage three hotels, and Cham Holding to build a $70 million hotel to be managed by the Marriot.

Photos by Paul Cochrane