Top priced tipples – The Lebanese drinks market

Executive magazine

Getting a premium brand into the Lebanese market is the same as getting into a packed club at 2 a.m. on a Friday night – it's going to cost you.

To get a table at a club, you may be shelling out $600 for the night. To be the exclusive alcohol dealer to a bar or club, it can cost anywhere from $3,000 a year to $800,000 a year. The most infamous case is at Beirut's Sky Bar, which was paid $450,000 last year by alcohol brands. This year, Sky Bar was paid $800,000 in cash by a distributor and the alcohol to be provided at half price, although the bar would neither confirm nor deny these figures.

“Three years ago it was $50,000 at Sky Bar for non-exclusive rights, then competitors came to offer more,” said Nagi Hmouda, business manager at Fattal, distributor of Dewar's, Bollinger, Grey Goose, and Patron. “We corrupted the market by over-bidding. Today, anyone opening a bar thinks companies will come to pour money on them. And for some bars, if they don't get that endorsement money, they don't survive.”

Hmouda estimates that $3.5 million to $4 million is spent every year on on-trade marketing in Lebanon's $105 million wine and spirits market.

“Beirut is one of the most expensive cities in the world for on-trade marketing,” said Khalil Mansour, senior brand manager at Gabriel Bocti, distributor for Stolichnaya, William Grant brands and Laurent-Perrier. “It's a war for customers, and it has become very expensive to sustain and keep a brand,” he added.

One bar owner gave the example of a distributor offering him $60,000 to $70,000 worth of free alcohol if $250,000 was purchased – on condition of being the sole distributor.

“The industry is not giving consumers choice when only a few brands are on offer,” said Hmouda. “Exclusivity is down to being insecure about selling certain brands that are not popular.”

The exclusivity and incentive strategy has had mixed success. Distributor and brand owner Diageo, which along with Fattal handles 60 percent of the alcohol trade, owns the biggest brand in the market, Johnny Walker Scotch whisky. But it has not had the same success in distributing Smirnoff vodka, despite having one of the largest marketing budgets for a brand.

“Diageo tried to push Smirnoff at Sky Bar and they paid s**t loads, but it didn't work as people weren't into it,” said Haytham Nasser, a former marketing manager and founder of My Bar in downtown Beirut.

“The thing about Beirut is demand is driven by word of mouth and trend-setters. The key to marketing is how to get these connectors to drink your drink and make it a buzz thing. It takes maybe just 15 people to order a new vodka for it to spread and you've reached the tipping point. Until people feel the trend it won't fly. So many marketing campaigns have died a thousand deaths because they couldn't get those connectors,” he added.

The brand war is particularly intense over vodka, which accounts for 80 percent of on-trade sales at bars and clubs, while in off-trade whisky accounts for 70 percent of sales, versus 30 percent vodka.

Some five brands have 65 percent of the vodka market, dominated by Stolichnaya at 29 percent and Absolut at 23 percent. “Lebanese are into Stolichnaya and Absolut. Grey Goose is a premium brand but the price has been lowered at clubs to $160 [a bottle] to compete with Stolichnaya Gold, which goes for $140,” said Mansour.

In addition to Smirnoff, Diageo is now pushing brand Russian Standard, which has been making steady inroads into the premium segment, with around 4 percent market share.

The vodka market has doubled in the past three years to 120,000 cases (of 12 bottles each) imported every year, while 450,000 cases of whisky are imported.

“Scotch dominates with two-thirds of the market and it is very difficult to change that. Over the past 50 years in hard liquor, arak has declined in favor of Scotch, sales then stabilized, and now vodka is up,” said Hmouda. “People take vodka home now, which was not the case three or four years ago.”

Single malts, ice allowed

The whisky market has entered a mature phase, but the sector is struggling to wean Lebanese tipplers off dominant premium brands Black Label and Chivas, which are blended whiskies, to push sales of single malts.

“If people understood whisky, there would be more single malts on the market,” said Nasser.

With just a few hundred cases of single malts imported each year demand is growing slowly, encouraged by tastings and bringing brand ambassadors to inform consumers about the culture of whisky.

“We used to stock just three or four malts, but now we sell 15,” said Wadih Riachi, cellar manager at Vintage in downtown Beirut. “And before, people didn't ask for a certain label, but now are much more specific. Maybe 30 percent is driven by the label – on 18 or 25 year old whiskies – and 70 percent is pleasure.”

While whisky enthusiasts can be as pretentious as wine connoisseurs – how to store a bottle, pour a glass, the correct temperature and so on – allowances have to be made for the less initiated to start getting into single malts, such as adding ice, which is considered by aficionados as an act verging on the sacrilegious.

“When the master blender at Glenfiddich came here, he told me that if he wanted to forbid people from putting ice in their whisky, he'd lose 50 percent of his clients,” said Riachi.

With sales of single malts expected to spike in coming years, distributors are paying to get brands and deals with suppliers. “You can feel the buzz, because big distributors are competing to get better brands and better cuts of the market,” said Mansour.

The distilleries are certainly viewing Lebanon as a potentially lucrative market for single malt sales, with prices starting at $40 a bottle. Grant's, which is the fourth best-selling whisky brand in the world, is to launch its 12-year old malt this year. Out of six countries selected worldwide as launch venues, Lebanon is one of them, “because of the high ratio of leisure and upscale sales,” added Mansour.

Indeed, super premium and reserve brand alcohol sales are slated to rise over the next year.

“It is a growing niche that is estimated at 8 percent [of the market] and the projection for next year is to be higher than 10 percent,” said Sylva Yazerly Bayram, trade marketing manager at Diageo.

Glittering champagne

While super premium whiskies are relatively pricey – an 18-year old Glenfiddich single malt sells for $95 – it pales in comparison to champagne. Real champagne that is, which is only from the Champagne region of France; any other is just sparkling white wine.

In 2008, sales of champagne doubled, and demand has remained strong ever since. But the days of 12-liter bottles and 3-liter Jeroboams being ordered for the show-off value are not what they once were.

“At a club a few years ago I saw 18 Salmanazar (9-liter) bottles of champagne opened in less than an hour to impress [singer] Haifa Wehbe. And a Libyan once bought 120 bottles of champagne to cover the floor. But while the extravagant days are not over, the novelty of it is,” said Hmouda.

Nonetheless, while the club that started the mega-bottle trend, Crystal, has shut its doors, clubs like Cassino still sell Balthasar (12-liter) bottles, which go for $3,000 to $5,000 - “depending on where you're from; wealthy Gulf Arabs are charged more,” said one bar owner. And while popping bottles of champagne will always happen at clubs, 4.5 liter bottles of premium vodka are increasingly seen on tables.

Away from the strobe lights a new craze has come to town: a champagne with 24-karat gold flakes inside that, once poured, swims in the bubbles for nearly half an hour. The only copyrighted champagne from Champagne in the world with 24-karat gold, the $1,100 to $7,000 bottles of Luxor Brut, rose and vintage are stored in a bank vault until ordered and then hand delivered by a bodyguard handcuffed to a Samsonite briefcase.

Indicative of how the super premium alcohol market works, MK Holding, the exclusive distributor of Luxor in Lebanon, did not have to do any marketing to generate sales.

“We've not launched and not spoken about it, but sold 11 bottles in less than two weeks,” said Michel Khoury, managing partner of MK Holding. The first buyer was Hafia Wehbe.

With only 1,300 bottles of Luxor available a year for sale worldwide, MK Holding has been allocated 140 bottles for Lebanon. Of the vintage bottles, only 111 are produced a year, with only two to be available in Lebanon.

To ensure the brand's high profile is maintained, clients are profiled before delivery. “We don't want it getting in the wrong hands and ending up as a spraying champagne,” said Khoury.

Luxor is to officially launch in late September at an exclusive invitation only event. “I hope I'll have some bottles left for Christmas,” added Khoury.

Villas on the sea

Executive magazine

If you're investing millions of US dollars on a yacht, shelling out a couple hundred dollars for an extra pair of Sebago Docksiders is hardly a financial concern.

Leather slip-on deck shoes are the preferred form of footwear among the yachting crowd. Yet when it comes to luxury yachts, you need two pairs: one for on deck, the other dockside. The reasoning is straightforward. The fine grain, smoothly sanded wooden decks that are scrubbed down on a daily basis show up the slightest specks of non-maritime dirt. Owners who want their pricey investments kept pristine have two choices: go barefoot or it's shoe-changing time.

An ocean of choice

But if you don't want to change shoes more often than a model on a photo shoot when going from sea to shore and vice versa, then you can opt for marble over wood.

In fact, in the world of luxury yachts, any whim can be catered to. One client of Italian yacht company Benetti spent a further $4.2 million to have his $7.8 million, 93-foot yacht kitted out in marble and stone – although not so he could wander the decks of his yacht in a pair of soiled moccasins, but just because he liked marble.

“A yacht is like a floating villa, so each customer has their own demands, like aquariums, jacuzzis, helium beds, even submarines to heli-pads, and everything in-between,” said Marcello Maggi, president of sales and marketing at International Shipyards Ancona, Italy during the Beirut Boat Show 2010.

As Mustafa Chehab of Chehab Marine, representative of British made Princess yachts put it, “boats go from $160,00 to whatever figure you can think of.”

The demand for such highly specialized, and exceedingly expensive, yachts is not as high among Lebanese as in the Gulf countries, with the average price of a yacht sold in Lebanon $1 million to $2 million, according to Maggi. Ancona's yachts on the other hand start at $19 million, while Benetti's starting prices are in the millions.

The disparity in the yachting markets between Lebanon and the Gulf was exemplified at the Abu Dhabi Boat Show this year, where several “concept yachts” were launched, including the 383-foot ES117 mega-yacht designed by Lebanon's Elie Saab.

One of three Saab designed yachts, the ES117 is the height of decadence. Two private suites on two decks are for the yacht's owner, along with 10 guest suites, a swimming pool, whirlpool, theater, spa and gym. Topping it all out is a heli-pad, submarine port, space for a car and water sports area.

Sales of such concept yachts are few and far between, with big name brand Sunseeker Middle East's largest seller the 88-foot yacht out of its 43-feet to 170-feet range. Lebanon accounts for some 30 percent of the brand's regional sales, according to general manager Francesco Pitea.

Boating back to Beirut

The Gulf may boast the clientele to pay tens of millions of dollars for mega yachts, but Lebanon is still a port of call for international yacht builders, with all the major names descending on Dbayeh marina for the Beirut Boat Show, the first to be held in three years.

“Beirut is a center of gravity in the region so a good selling spot, and Lebanon is the Cote d'Azur of the Middle East,” said Maggi. “In Dubai, you sell yachts to the people of Dubai, in Qatar to Qataris, but here is for the whole Middle East,” he added.

Lebanon's growing tourism sector and geographical positioning make the country a perfect base to moor a yacht and to cruise around the Mediterranean sea. However, despite Lebanon having dozens of small and medium sized marinas – from hotel to private marinas – they lack infrastructure and facilities to cater to luxury yachters. “Lebanon needs more and bigger marinas, more prestige,” said Maggi.

This is set to change with the opening of the Beirut marina development and the Tourism Ministry pledging to back the development of new marinas, the first to be in Jounieh. “Everyone's looking forward to the opening of the Beirut marina as many marinas are partially or semi-full,” said Chehab.

With the Lebanese economy going through a boom period and expecting record numbers of tourists this year, sales of yachts have been on the up, growing by 14.5 percent in 2009 and 40 percent in the first quarter of 2010 on last year. Sales are projected to grow a further 20 percent in 2010, according to government figures.

Further driving growth is the strength of the dollar over the euro, making it a good time to place an order. “People are rushing to buy bigger boats to receive next year, so the situation is pretty good,” said Chehab.

To get a luxury yacht designed to your specifications and interior designer wants, patience is required. In the case of Benetti yachts, it is a one year wait for a 90-foot yacht, and up to three years for anything bigger, said the brand's sales manager Tomasso Bilotta. According to Chehab, yachts are then often exchanged after a year or two for a brand new model.

Sailing to greener waters

The high price tag for luxury yachts has as much to do with the materials used and high skilled labor as the technology now on board, from chart plotters to sensory lighting to entertainment systems. Benetti for instance has invested $540 million over the past 12 years to retain its classic design while keeping an eye on innovation.

The biggest trend in recent years is for displacement yachts for cruising over faster yachts. “Maybe people are more environmentally friendly, or sensitive to fuel consumption, or don't want to go fast but have comfort instead,” said Bilotta.

In line with growing environmental awareness globally, greener yachts will be the boats of the future. “Customers are asking for cleaner boats and we can't ignore the state of the world,” said Maggi. “We are using hybrid engines and developing a boat with zero emissions, which is impossible, but we're trying to get close to that. We're also trying to pollute less when we build,” he added.

Indeed, Benetti's Blue Bay yacht, which was on display at the Beirut show, has fuel tanks that hold 38,000-liters, while Saab's ES117 mega-yacht has a fuel capacity of a staggering 762,000 liters. For now at least, it seems that the traditional focus on speed, comfort and glamour is destined to prevail over environmental concerns in the world of luxury yachting.

Antiquities right of return

Commentary - Executive magazine

German Chancellor Angela Merkel eyes the 3,400-year-old bust of Queen Nefertiti at the Neues Museum in Berlin, which Egypt wants back.

I am among those fortunate enough to not only have visited the cream of the Middle East’s major historical sites — among them Persepolis, the Valley of the Kings, Palmyra and Baalbek — but also viewed antiquities taken from these places in European and American museums. Few people in Iran, Egypt, Syria and Lebanon have the same opportunity.

Though the ancient palaces and structures may remain, much of what they held is no longer on site, or even in the country. Spirited away over the past 200 odd years, many of the region’s most famous artifacts are in the West, torn from their historical and spatial context through acts of Elginism. The term — defined as cultural vandalism — was coined after the Earl of Elgin, who removed the Parthenon Marbles from Athens in the early 18th century to decorate his house in Scotland.

At the Louvre in Paris recently, I was taken aback by a huge Phoenician sarcophagus discovered in Sidon, far more imposing than any on display in Lebanon. It would be one of the centerpieces of the National Museum in Beirut, but instead is tucked into an underground gallery in one of the largest museums in the world.

I became only more indignant entering a gallery devoted to Palmyra, which shamed those in Tadmur or in Damascus. And then there was the Achaemenid exhibit containing sculptures taken from Persepolis. Why should I travel to Paris, London and numerous museums in the United States to see what should rightfully be shown in Persepolis, Palmyra or Sidon?

While I appreciate that millions of people have been able to admire the wonders of the ancient Middle East at these museums and that artifacts have been kept in safe conditions, there is a strong argument for the repatriation of relics.

Near perfect copies can be made if museums want to maintain their permanent collections or borrow items, a widespread practice. The idea that the region cannot look after its heritage properly is without merit and reeks of paternalism.

After all, the Lebanese National Museum managed to protect its collection throughout the civil war, while Syria, Egypt and Iran have all overhauled their museums. Indeed, one of the worst cases of cultural barbarism in modern history was instigated by the US-led invasion of Iraq, when the occupation forces failed to prevent the looting of what was perhaps the most significant collection of antiquities in the world at National Museum of Baghdad. There is growing momentum for artifacts to be returned to their roots, though this has been hindered by a well-meaning 1970 UNESCO convention calling for the restitution of antiquities and works of arts, but only for objects taken to other countries before that date.

The convention is one obstacle stopping the Rosetta stone, held by the British Museum for more than 200 years, or the 3,400-year-old bust of Queen Nefertiti at the Neues Museum in Berlin, from being returned to Egypt. While Lebanon has no official position on this matter, Syria, Iraq, Libya and Egypt are calling for the return of their cultural artifacts. In April, Cairo hosted a conference of 25 “countries that have suffered from theft,” as the outspoken head of Egypt’s Supreme Council of Antiquities, Zahi Hawass, put it.

“We will make life miserable for museums that refuse to repatriate,” said Hawass at the conference.

His threats have worked in the past. Last year Egypt broke off relations with the Louvre until steles stolen from a tomb in the Valley of the Kings in the 1980s were returned. Further arm-twisting came when Hawass threatened to ban French scholars from excavating in Egypt. The Louvre then capitulated.

But there are few precedents of Elginism being reversed — most pointedly exemplified by Greece’s as-yet unsuccessful 30 years spent lobbying Britain to return the “Elgin Marbles.” As Hawass suggested, cooperation between the aggrieved countries is needed to make threats effective, with countries putting together “wish lists” of what they want returned.

These wish lists deserve broad international support to allow the artifacts of human history to be seen in their proper context, rather than in foreign museums thousands of kilometers away.

PAUL COCHRANE is the Middle East correspondent for International News Services

Tokyo’s Manga Madness

School girls on "Maiden Road" in Ikebukuro

Plastik magazine

By Paul Cochrane in Tokyo

The Japanese are crazy about manga and no where more so than in the manga capital of the world, Tokyo. Comic books come in all sorts and sizes, from samurai and science fiction to haute cuisine and porn. Comics café’s offer all you can devour for an hourly fee, while in “cosplay café’s” waitresses dress up as anime characters to serve drinks and, at times, a “happy ending.” Welcome to the wonderful world of manga, which in Japan alone is worth a staggering $31 billion annually.

To get a sense of how manga mad the Japanese really are you must visit Tokyo's “otaku” (geek) districts of Akihabara (Akiba) and Ikebukuro. Originally known as “Electric City” for its cut price electronics, Akiba in central Tokyo has morphed into a manga and gamers' paradise. Store employees call out deals on megaphones, young women dressed as saucy maids hand out fliers on the streets, music pulses from store fronts, while men and women of all ages browse the store’s shelves for the latest titles to bargain-bin deals at $1 a copy.

Building after building along the district’s main drag is covered in bright colorful strip lighting and advertising while the interiors hold floor after floor of manga: comics, dvds, games, costumes and merchandise of all that can seemingly be commercialized: chocolates, toys, bottled water, clothing, models, playing cards, headphones, plastic dolls.

Akihabara aka Electric City

Browsing for manga on "Maiden road"

One store has five floors of normal manga – Japanese for “whimsical sketches” or cartoons – while the top two-floor “adults only” section is stacked floor to ceiling with manga “dojin” (porn), ranging from feature-length stories and one-off 10-page sexual encounters, usually between a bug-eyed, big breasted, tiny waisted girl and an exceedingly well-hung male, to all-female-action, alien sex and hermaphrodites with colossal boobs and swinging dicks.

Vivid is hardly the word to describe much of the content – nearly all dojin manga involves such a copious amount of splattered cum that you can almost feel it oozing out of the bindings. Meanwhile, outside each floor are machines selling models of nude female manga figures in “interesting” postures dispensed in plastic cylinders for reassembly back home.

If purchasing models or dressing up in the costumes of a favorite character are not enough, then there are the cosplay (“costume play”) cafes, where waitresses are dressed up like anime characters. More personal maid cafes are dotted around Akiba, where massage “happy endings” and fetish inclined wants can be satiated.

Dojin manga on sale in Ikebukuro

Drink dispenser in Akiba

It is over in Ikebukuro in northwest Tokyo that you find “otome” (geek girls) on so-called “Maiden Road.” Otome hang out at manga shops to browse boys' love, or “boizu rabu,” a female-orientated manga that focuses on homo-erotic or homo-romantic male relationships that are usually created by female authors (but distinctly different from “bara,” or gay manga). There are even role-play cafes featuring women in drag waiting tables as butlers.

For the more mainstream reader who is low on funds yet wants to buy all the cartoon candy the eye desires, “manga kissaten” (comics cafes) are found all over Japan, where customers can read manga, watch dvds and surf the internet for an hourly fee or stay all night to plough through a 25-part manga series in-between cat naps.

The amount of manga available in Japan is truly staggering, with the all encompassing manga industry - from comics to anime to toys - worth an eye-popping $31 billion a year. The Kyoto International Manga Museum alone stocks what is considered a conservative number at 50,000 manga volumes. And manga, in all its forms, covers all genres: samurai tales, history, fantasy, science fiction, action, romance, porn and even educational content. Food is also an immensely popular genre, evidenced in the “Oshinbo a La Carte” series by Tetsu Kariya and Akira Hanasaki, which have sold over 100 million copies worldwide.

Japan's visual entertainment has certainly made its mark on global popular culture, despite a lack of translations and promotion over the past 30 years. That Japan has done so in the face of the Hollywood entertainment empire is down to the vivid, artistically rich imaginings of futuristic and fantastical worlds coupled with a willingness to take the material, as well as the viewer, seriously. A realization that comics are not solely a medium for children as escapist entertainment and can verge on the high-brow in the stories and ideas expressed.

Indeed, the international commercial success of post-apocalyptic anime films “Akira” (1988), “Ghost in the Shell” (1995) and “Appleseed” (2004) showed that what some deride as “cartoons” requires not only a “Parental Advisory” warning but also a more than functioning brain.

Ikebukuro

What pushed anime into the realm of adult entertainment was the development of manga from the easily digestible American superhero comic of the 1940s and '50s into a more realistic, violent and sexually explicit style. Spearheading the rise of manga was legendary artist Osamu Tezuka – aka the “God of Manga” - who revolutionized the medium by adopting film-frame visualization in his drawings and taking manga from child-safe series (and current American film) “Astro Boy” to the likes of “MW,” a story about a gay priest sexually entangled with a schizo-psychopath whose mind was messed with as a child by exposure to a US-made chemical weapon.

Since Tezuka put pen to paper manga has never looked back, providing the inspiration for anime films, TV series, video games and e-manga. What is on the page is on the screen. And as entertainment in general became increasingly hardcore so did manga in its über violence and graphic sex, particularly in genres such as “yaoi” (“boys' love”) and dojin.

But while manga comics in Japan are a $5 billion-a-year business, outside the Far East just a fraction has been translated or is readily available. Annual Japanese sales of manga magazines are estimated at $2.2 billion and manga books at $2.5 billion, while best selling magazine “Shonen Jump!” has a weekly circulation of 2.9 million copies. Manga is such big business that in 2009 the Japanese government made manga part of its economic recovery plan by aiming to boost exports of manga, anime and pop music from the current two percent of the country’s total exports to 18 percent over the next decade.

“Japanese content, such as anime and video games, and fashion draw attention from consumers around the world,” said Taro Aso, the then prime minister and a self-confessed manga addict. “Unfortunately, this soft power is not being linked to business overseas. By linking the popularity of Japan's soft power to business, I want to create a $212-$318 billion market by 2020 and create 500,000 new jobs.”

This is great news for manga aficionados around the world, some of whom are so starved of new content that they learn Japanese to be able to delve into the ever expanding universe of manga, while more translations will make manga grow beyond the largely “geek” sub-culture following it has in the West.

Yet for manga to hold truly global appeal, merely translating content may not be enough. Perhaps it is about time the “value added” visual entertainment readily available in Tokyo is exported alongside the newly translated content, so we can enjoy dojin, college-age girls dressed in drag and manga kissaten on the streets of Berlin, Paris and Beirut.

GLOBAL MANGA CAPITAL: TOKYO, JAPAN

PRIMARY RETAIL DISTRICTS: AKHIBARA AND IKEBUKURO; CONVENIENCE STORES EVERYWHERE

PLACES TO READ MANGA ON THE CHEAP: 24HR MANGA KISSATEN (CAFES)

MANGA READERS TO BE SEEN: ON PUBLIC TRANSPORT, PARK BENCHES, AT NOODLE VENDORS, STRETCHED OUT ON THE GRASS UNDER CHERRY TREES...

READERS: ALL AGES, GENDERS AND SOCIO-ECONOMIC GROUPS

MARKET VALUE: $5 BILLION A YEAR

All photographs by Paul Cochrane

Hayao Miyazaki: The Akira Kurosawa of anime

Plastik magazine
By Paul Cochrane in Beirut

Spirited Away

Film maker Hayao Miyazaki hates the nickname that has been pinned on him in the West, “the Walt Disney of Japan”. He may have teamed up with Disney to translate and distribute his movies, but Miyazaki is certainly no Walt. If any monikor should apply it's the “Akira Kurosawa of animation.”

While a small man, at just 1.64 meters tall, Miyazaki is the towering figure of anime in Japan and renowned internationally for his children-orientated, yet agelessly appealing stories that continue to emerge from his sublime imagination.

Consider the train that traveled across the surface of an aquamarine sea in Spirited Away, the cat bus in My Neighbor Totoro, or in his latest film, Ponyo, of a girl leaping from one tsunami size wave to another. Pure movie magic.

Indeed, Miyazaki's work is anything but staid or formulaic; neither do his creations suffer like James Cameron's recent blockbuster Avatar did, from being visually stunning in portraying a fantastical “other” world yet weak in character development and storyline. Miyazaki's plots are entertaining, the characters are compelling and his artwork breathtaking in its scope and vision.

My Neighbor Totoro

Ironically it was because of a crap English language release of Nausicaä of the Valley of the Wind (1984) in the US, which cut nearly 30 minutes of time, changed character names and watered down the film's themes, that Miyazaki's films were not available in English for an overly long time. The director was reportedly so angry about how the film had been butchered that he would only grant distribution rights for his movies - eventually to Disney - if there was a strict translation of the Japanese dialogue and no scenes were removed, even if they might puzzle the audience, as he admitted during an interview.

“I can't believe companies distribute my movies in America. They're baffling in Japan! I'm well aware there are spots where I'm going to lose the audience. Well, it's magic. I don't provide unnecessary explanations. If you want that, you're not going to like my movie. That's just the way it is,” said Miyazaki.

Given his commercial success it is exactly because his movies have that magical touch that Miyazaki's work has resonated with audiences worldwide. Yet while a multiple award winner in Japan, his talent was only recognized in the US in 2003 when Miyazaki won an Academy Award for best animated feature film, Spirited Away.

Castle in the Sky

What also makes Miyazaki's films stand out compared to the crowd-pleasing Disney films is his frequent references to nature, ecology, and pollution by humankind; his homages to the working class; and the promotion of peaceful dialogue over violence.

But in that Miyazaki (born in 1941) is not alone in Japan, part of a generation of artists that grew up in the wake of two atomic bombings that had profound impact on Japanese cinema and its depictions of a hypothetical, post-apocalyptic world. The difference between Miyazaki and his Japanese counterparts is that his imaginings of such a future is not of one destined to be a dystopia ad infinitum but can be overcome – the silver lining – by respecting and living side by side with nature, as in the film Nausicaä.

Miyazaki has also never let his own misgivings about the direction the world is taking or his own political stance – he famously refused to attend the 2002 Academy Awards out of protest over the US invasion of Iraq - result in a negative story.

“When I'm making a film, I don't want to transfer my pessimism onto children. I keep it at bay. I don't believe that adults should impose their vision of the world on children, children are very much capable of forming their own visions,” he said in an interview.

Miyazaki's opus very much indicates hope, of creating enchanting worlds and through letting his imagination run wild inspire the next generation to do the same, to imagine another world.

Ponyo

“Virtual reality is a denial of reality. We need to be open to the powers of imagination, which brings something useful to reality. Virtual reality can imprison people. It's a dilemma I struggle with in my work, that balance between imaginary worlds and virtual worlds,” he said.

Miyazaki's reliance on drawing in creating his anime reflects his stance, not allowing more than 10 percent of footage in his films to be computer generated (CGI). “I've told the people on my CGI staff not to be accurate, not to be true. We're making a mystery here, so make it mysterious,” he said. “Do everything by hand, even when using the computer,” he has said elsewhere.

There is also a degree of mystery in how he develops a film and the script. “I don't have the story finished and ready when we start work on a film. I usually don't have the time. So the story develops when I start drawing storyboards. The production starts very soon thereafter, while the storyboards are still developing. We never know where the story will go but we just keeping working on the film as it develops. It's a dangerous way to make an animation film and I would like it to be different, but unfortunately, that's the way I work,” he said.

Experience is a central part of Miyazaki's ad hoc method, something he has decried among contemporary animators. “When I think about the way the computer has taken over and eliminated a certain experience of life, that makes me sad. When we were animating fire some staff said they had never seen wood burning. I said, “Go watch!” It has disappeared from their daily lives. I don't think you can become an animator if you don't have any experience,” he said.

Miyzaki, curiously enough, studied political science and economics at university – no doubt giving him a taste of the big, bad real world – while his fondness for depicting flying machines (evident in Nausicaä, Porco Rosso, Castle in the Sky) stems from his early exposure to aviation due to his father being the director of a company manufacturing fighter planes.

Porco Rosso

Taking experience to a further level is that the majority of characters in Miyazaki's work are based on people he knows in real life. In Spirited Away, for instance, the main character, a young girl called Chihiro, is based on the daughter of one of his friends.

Miyazaki's belief in experience and relying on his own mind for stimulation has meant that he pretty much shuns watching contemporary pop culture, saying the only images he watches regularly are on the weather report.

Nevertheless, it was Miyazaki's incredible attention to detail, exceptional drawing ability and endless supply of new ideas that got his career started in 1963 as an animator at the Toei Douga studio in Tokyo. This lead to work at other studios until he brought out Nausicaä of the Valley of the Wind in 1984.

The film's commercial success provided him with enough capital to establish Studio Gibli, from where he has developed all his movies since – such as Howl's Moving Castle, Whisper of the Heart, and Princess Mononoke - while a few years ago creating the immensely popular Studio Gibli Museum in Tokyo. His next film, currently in post-production, is The Borrowers.

Lebanese designer Basil Soda's interior ambitions

iO Magazine
By Paul Cochrane in Beirut

Kelly Rowland wears Basil Soda

The oblong, stone clad exterior of Basil Soda's new fashion house in Beirut oozes style. Inside, the design is minimalist, with graphite-colored tables, sofas and walls while the fashion collection itself is conspicuously absent, a handful of mannequins the only indication you are not in the lobby of some boutique hotel.

The collection itself is hidden behind mirrored cupboards, where on opening, taffeta and raw silk shimmer amid hues of purple, orange, red and sequined cocktail dresses. Attendants show around two Khaleeji ladies, giggling while admiring the dresses and imagining the possibilities presented when wearing such glamorous fashion.

The building is a perfect mix of fashion and interior design. Soda's designs emphasize women's curves, while the interior is linear and clean cut – mirroring the designer's pencil marks and the tailor's scissors - to optimize the fabric on show.

For Basil Soda who, since 2000, has carved out for a niche for himself as one of Lebanon's leading designers in haute couture, the 2009 building is a symbol of a decade of creativity and a lifetime's passion. “If I wasn't a fashion designer, I would've been an architect, for sure,” said Soda.

That the building has turned out the way it is, is down to a fusion of Soda's ideas and interior designer Danny Aoun's abilities. “After working on my house with Danny, it was different doing a work space as I needed a place I could be relaxed in - it's my playground,” he said. “But I knew what I wanted, and he's a good listener and artist.”

The layered building has a workshop on the lower floor, the boutique and a more private area upstairs for meeting customers. The decision to use gray for the custom-made furniture and walls was a reflection of modernity and unity. “It will last longer in terms of trends, unlike black and white. And you can combine gray with any shades of a fashion collection. The choice was also influenced by my liking of the graphite look, as I don't use pens but pencils,” said Soda.

The use of mirrors that encase the front of the wardrobes – but not the sides, allowing for another perspective of the dresses within – reflects a careful blending of artificial and natural light while imposing the vegetation around the Horsh Tabet area of Beirut.

“How many thousands of graphics do we see everyday? I think the eye needs to be more relaxed to see beautiful things,” he said.

But while Soda is a perfectionist, he sees the importance of contrasts and mixing styles, as in his fashion when using raw silk. “To see an unfinished product has a beauty. Raw materials are like a chandelier with rope, and such a mixture gives a new view,” he added.

And while the interior is all straight lines to not detract the eye's attention, Soda carried out a tiny touch that makes all the difference in such a minimalist environment – the tables are gracefully curved, “for some femininity and allure.”

Time to lay tracks

Railways are a need, not an option for the Middle East
Commentary - Executive magazine

An undated postcard shows the old Rayak train station in Lebanon’s Bekaa Valley

The Middle East and the United States have a lot in common when it comes to transportation. Both places have a love affair with the automobile and both had long-distance train networks well over 100 years ago. Both now also have an over abundance of private vehicles clogging up the roads while railways and public transport systems are substandard, if they exist at all.

There is a clear correlation that can be drawn here, between the rise of the car and the demise of rail transportation. But what is more noticeable on a macro-level is how the Middle East and the US stand out from nearly everywhere else in neglecting and underfunding their respective railway networks. Around the world, from South America to South Korea, investment in railways, metros and high-speed trains has been ongoing for decades.

In recent years a growing web of tracks has enmeshed the globe, with China alone earmarking $300 billion over the next decade to build 25,000 kilometers of high-speed railroads. By comparison, the US has just 735 kilometers of high-speed track. The Middle East has, well, zero.

The tide seems to be turning in the US, which had long practiced a policy of “starving the beast” — underfund the railways then shut them down due to inefficiency — until the American Recovery and Reinvestment Act in 2009 allocated $13 billion to improve the railways over the next five years.

It's been a long time coming but the Middle East is also finally undergoing a railway renaissance. Jordan and Syria are both reinvesting in train lines that were built in the early 1900s and once linked Damascus to Mecca, part of the famous Hijaz Railway.

Meanwhile, in the Gulf Cooperation Council investment in railways could reach $109 billion over the next decade, according to a report by the Kuwait Financial Center. Saudi Arabia is expanding its railway network, which will include a $1.8 billion high-speed railway between Mecca and Medina; Qatar is spending nearly $25 billion on railways and a metro; and the United Arab Emirates is mulling a railway network to compliment the Dubai and Abu Dhabi metros.

All three countries would then link to the 2,177 kilometer GCC rail network slated to open in 2017. With an estimated cost of $25 billion, the network will run from Kuwait through Saudi Arabia, Bahrain, Qatar and the UAE before the last stop in Oman, or possibly Yemen. This will be money well spent, as an effective railway will better connect the people and economies of the region and reduce the environmental impact of travel.

What is remarkable is how long it has taken the GCC to roll out a regional track, despite its obvious benefits, and to not have done so as a priority over other major infrastructure projects. The same incredulity can be applied to Lebanon, with the government squandering the opportunity in the early 1990s to implement a comprehensive railway network alongside all the other post-civil war reconstruction work. A train line running down the coast between Tyre, Beirut and Tripoli would be a dream; connecting Beirut to Damascus beyond a fantasy.

But Lebanon may yet take part in the Middle East's railway revival. The French government announced in May that they plan to fund a study to rehabilitate Lebanon's coastal railways, which would be a start. The traffic situation around Beirut is appalling, and is set to get even worse as more cars pile onto the roads. It is the same in pretty much every major city in the region.

The public will be hoping that for once, talk of improving Lebanon’s transport network goes beyond the planning stage. But judging by some of the discourse on transportation heard in Beirut of late, they shouldn’t hold their breath.

Earlier in the year Beirut’s muhafez (governor) came up with a creative idea to solve the city's traffic problems: sidewalks should be no wider than one meter. And in 2005, during discussions of the national master plan, investment in public transport was dismissed with the claim: “Lebanese like their cars and don't like public transport.”

Considering the problems that the region’s cities face in terms of congestion, pollution and infrastructure, governments need to get serious about public transport planning. Their citizens deserve better than smaller sidewalks and clapped-out old taxis: it’s time to wean people off their love affair with cars and start laying tracks.

PAUL COCHRANE is the Middle East correspondent for International News Services

Eruption disruption

Iceland's volcanic disaster shows the need for real contingency planning Commentary - Executive magazine

Expect the unexpected” is a terrible cliche, but given the wars, natural disasters and financial crises of late, it could be considered standard procedure for our times. While a volcanic eruption was to be expected — at some point or another as volcanologists frequently warn — Icelandic volcano Eyjafjallajökull's burst of ashy activity on April 15 caught everyone with their pants down. Military powers had developed no secret weapons able to stop it and all the 'enhanced' airport security measures and full body X-ray scanners could do nothing to screen the threat.

As the ash cloud's creeping tendrils closed one major Northern European airport after another, it became starkly obvious how easily aviation — the predominant means of international travel — could have its wings clipped. One day of inactivity might have been tolerable, but five was catastrophic. The impact of the volcanic eruption was staggering: 29 percent of global aviation was grounded, 1.2 million passengers were affected, airlines lost some $1.7 billion in revenue and the International Air Transport Association (IATA) said it may take up to three years for airlines to recover.

The volcanic eruption also exposed supply chain vulnerabilities, such as Gulf supermarket chain Lulu saying they were running out of fresh produce, usually flown in from Europe. Personally, I was scheduled to be back in Beirut April 16, returning from Tokyo via Paris' Charles de Gaulle (CDG) airport. Instead, after the 14-hour flight from Japan, I was diverted to Lyons in Southern France, where passengers were herded onto a bus for a further seven hours on the autoroute to Paris to spend the rest of the day lining up for assistance in CDG. After that, we waited in limbo, unsure whether tomorrow the ash cloud would clear to allow for take-off.

Yet, where one pillar of the globalized world fell, another, telecommunications, stood tall to save the day. On the second day stuck in Paris, Air France became “unwilling” to provide another night's accommodation. I put out the word, via my Facebook status, that I was stuck in Paris and needed a place to crash until April 20, my re-scheduled departure; within an hour I received an SMS message on my mobile offering me a bed. One clear lesson for individual contingency planning is that access to cash and telecommunications is essential; judging by reports and personal experience, airlines overwhelmingly failed to live up to their legal obligations to comprehensively assist passengers during the “volcano crisis.”

Many passengers, left to fend for themselves with their own funds, took to more old fashioned means of transportation — by land and sea – to complete their connection. In my case I pondered how to get from Paris to Beirut the fastest way possible: 40 hours by bus to Plovdiv, Bulgaria, another seven-hour bus to Istanbul, and from there a flight to Beirut. As fate would have it though, the ash cloud cleared just enough on the morning of my rescheduled flight to permit takeoff, before closing in again later in the day to silence the runways. Had the eruption continued — as some predicted it would — adaptation would have set in, with streams of people moving up and down Europe by any means possible.

Still, this would have been far less tragic than the last big Icelandic “volcano crisis” in 1783, when the eruption lasted eight straight months, spread ash as far as Damascus, causing massive crop failure and livestock loss leading to the death of some 9,000 people.

With the spate of natural disasters to hit the world recently — from Hurricane Katrina in the United States, to the Asian tsunamis and the Haitian earthquake — one might have thought airlines and governments would have planned for a volcanic occurrence. Contingency plans, however, were not effectively in place to deal with widespread airport closures, governments dithered and insurance companies pulled the “Act of God” clause to escape claims. Few can predict when natural disasters will occur, but we know for certain that they do occur, and so it is prudent for governments, businesses and individuals to prepare.

Crises, by their nature, arrive unexpected — we should expect that.
PAUL COCHRANE is the Middle East correspondent for International News Services

Dancing the night away

Aishti/Gossip magazine

By Paul Cochrane in Beirut

The New York Times ranked Beirut as the number one destination to visit in 2009, while the travel guide Lonely Planet named the capital as one of the top 10 liveliest cities in the world. Deserving accolades for this party town, but when it comes to dancing, Beirut would not seem to be a natural contender for a ranking as one of the top 10 cities to shake your booty.

Indeed, when dance-starved friends descend on Beirut from the Gulf, Damascus, Egypt or the more provincial cities of the West, there are the inevitable questions about where to go out and party, as well as where to dance the night away. It's easy to answer the first question, but the second requires a bit more brain power, simply because there aren't that many places to dance. And by dance I mean really dance, where your cares are lost in the beat and your body is at one with the rhythm, not shuffling between revelers, shaking your shoulder blades, or trying to dance without kicking a chair or risk falling off a table. For while the Beiruti two-step is an acquired skill to carry off gracefully, confined as it is to a half a meter square radius, it is not a carefree dance.

That all said, Beirut is not devoid of dance spots, it's just thin on the ground when it comes to dance floors. And what's more, cavorters don't seem to mind being crowded into a tight space, shaking, gyrating and swaying their bodies amid all the other dancing bodies. It's a “fuck the dance floor” mindset as any space will do.

One of Beirut's liveliest night spots, Basement used to have a good amount of dance space, but was reworked to pack in more tables. Music Hall, Buddha Bar, Element and the like in downtown and off Monot street mix up the table-and-dance concept, as White and the notorious Sky Bar do in the summer.

BO18 remains the perennial favorite as a dance hub in the early hours, pumping out electronic beats from 2am until sunrise, whether under the stars when the roof is open or coffined in the macabre interior. Acid in Sin el Fil is still a magnet for frenetic dancing, and in Gemmayzeh, Electro Mecanique, Trend and Green Door are warm up dance spots for after-hours clubs.

Those are the permanent places. With Beirut on the map as one of the world's hottest cities, there is a steady stream of international big-name DJs playing at events, usually summertime in the capital or at beach clubs. Then there are the independent, entrepreneurial dance organizers that have one-off, biannual or regular events at different locations to keep the more hardcore dancers dancing. Cotton Candy has become a regular on this circuit, building up a reputation for often outrageous parties in offbeat venues with heavy rhythms fueled by an open bar.

So while circling tables may be the standard Beiruti dance, there is plenty of full-on dancing happening on the sidelines, under the stars, and even in abandoned places reclaimed for the night. Perhaps it all just depends on your spatial needs as a dancer.

Photograph - Kate Brooks/Polaris, for The New York Times

Treasure Ships: Somali piracy and the spectre of money laundering

Money Laundering Bulletin (March, 2010)

Piracy has increased exponentially off the coast of Somalia in recent years, with ships hijacked deep into international waters despite the presence of a multi-national naval task force and pirates demanding ever higher ransoms from shipping companies. But while the spoils of piracy are evident in coastal Somali towns, tracking down where the remaining millions of dollars disappears to is hard to pin down, with allegations circulating of ransom money entering the real estate markets of Kenya to money laundering in Yemen and Dubai. Paul Cochrane in Beirut investigates.

Over the past two years, the number of vessels attacked has spiked, from 111 ships attacked in 2008, to 214 attacks and 47 hijackings in 2009, according to the International Maritime Bureau (IMB). And while the number of attacks has increased, so has the area the pirates are operating in, with the United Nations mandated naval force patrolling an area of 9-million square kilometers, almost the territorial size of the United States.

The presence of the 20-nation UN naval task force has led pirates to be increasingly audacious, using faster boats and 'mother ships' to target vessels as far as 1,200 nautical miles from the Somali and Yemeni coasts, from where pirates are based. This has heightened the ransoms demanded to fund the more sophisticated and costlier operations. “When the navies united under a task force, ransoms went up. Before it was $250,000, but now it is an average of $1.25 million per ransom,” said Simon Davis, a former detective and special investigator with Scotland Yard and a consultant on financial crime and piracy in East Africa. “That [ransom] pie graph is getting more and more cuts in it as the money is shared around,” he added.

In January (2010), the highest-ever ransom was paid out to release oil supertanker Maran Centaurus, with reports of anywhere between USD$5.5 million to USD$9 million. According to Chatham House in London, Somali pirates have been paid over USD$100 million in ransoms in the past two years, with USD$80 million accrued in 2008 alone. But where is this money going, especially given that Somalia effectively has no functional banking system?

According to a 2008 UN report using information gathered from the pirate town of Eyl in Somalia, the ransom money is divvied out, with the maritime militia – the pirates involved in the hijacking – getting 30 percent, the ground militia that secures the pirates' bases 10 percent, the local community – elders and officials – 10 percent, the financier 20 percent, and the sponsor 30 percent.

The 50 percent that ends up in the hands of pirates and the local community is having a direct impact on the Somali economy. Cyrus Mody, Manager of the IMB, said that living standards are going up due to “lavish spending by pirates, which is encouraging local industry to build up, and flashy new cars to be driven around because of the new money.” Other parts of the loot is earmarked for investment in the next venture, including faster boats, weaponry and more sophisticated nautical tracking devices.

The pirates run what Mody called an “extremely business orientated” operation, similar to many organized crime syndicates around the world. The three to five major pirate groups that operate from bases on the Somali coastline are either self-funded or financed by external investors.

This is where it gets interesting, and increasingly vague as to where that remaining 50 percent of the ransom money goes out of the hands of the organizers, as well as money the pirates may wish to stash somewhere.

“Somalia is a cash based economy so money disappears before anyone knows where its gone,” said Mody. “And from what I've heard is that they demand bills [in US dollars] of low denominations, X amount in 100s, 50s, 20s, and 10s, specified for the drop offs.”

The Kenyan connection

For the money to enter the financial system, it will have to leave Somalia. Kenya is an obvious choice, sharing a 500-mile border with the country and home to some 200,000 Somali refugees. From there, the money could be transferred out through banks or using the informal remittance system hawala to the rest of the world. “The Somali diaspora is a lot wider than people think,” warned Davis.

Furthermore, Kenya is “developing into a major money laundering country”, according to the US State Department's International Narcotics Control Strategy Report 2009, while the Kenyan government has not passed a law that explicitly outlaws money laundering, created a financial intelligence unit or developed “an effective anti-money laundering (AML) regime”. The report further highlighted that Kenya’s financial system “may be laundering over USD$100 million each year”.

In January(2010), Nairobi opened an investigation into property owned by foreigners as real estate prices in the capital have soared in recent years and there have been allegations that Somali piracy money is being invested in the country.

“We do know a lot of money gets siphoned into Kenya where a lot of real estate is being picked up at double and triple the price it really is,” said Mody. “One could speculate that the money is going into property, but we need more evidence.”

The Middle Eastern angle

Maritime consultancy company Idarat Maritime Ltd. (IML) has stated that the pirates use forward operating bases in the Seychelles and also work with Yemenis to launch attacks. According to an AML report, the pirates “are believed to have received financial support from wealthy individuals in the Middle East, seeking to make good returns in this business. There have also been suggestions from the Saudi military that Iran’s Revolutionary Guards have assisted the pirates, a move that may make sense given Iran’s covert involvement in Yemen’s civil war.”

Yemen's president Ali Abdullah Saleh also has close links to Somali leaders, which could be hindering security developments in preventing piracy, while the Yemeni government is notoriously corrupt, ranking 154 out of 180 countries in Transparency International's Corruption Perceptions Index 2009, making the country a possible money laundering haven. Yemen has AML regulations and is a member of the Middle East and North Africa Financial Action Task Force (MENA-FATF), but the country is “vulnerable to money laundering and other financial abuses,” said the State Department report.

“Ransom money could be entering Iran, Yemen and maybe the United Arab Emirates,” said Davis.

In April 2009, a US Naval Institute confirmed that piracy funds are being deposited in Dubai, where they are then laundered. However, the UAE authorities said such allegations were “baseless.” Beirut was also flagged as a possible money laundering destination, but again the Lebanese authorities denied any illicit activity.

Indeed, more evidence is needed all round. “You will never find “evidence” that funds have been dealt with by any bank or city, all you will get is denials,” said one maritime analyst that wished to remain anonymous. “All you need to do is to follow the same rules that you apply to any criminal organization, there really is no difference, and terrorists are normally also gangsters as well, so the same rules apply. Remember that the IRA used to hold up banks and sell drugs, while the Rajah Sulaiman gang in the Philippines used terrorist means to get protection money from ferry companies. So you cannot say that Dubai, London, or New York are involved,” he added.

Illicit money?

While concrete evidence linking the ransoms to money laundering is lacking, a further complication of the piracy issue is whether the ransom money is actually proceeds of crime, and therefore illicit funds to be watched out for. “The money is not from an illegitimate source, there are no claims of mistreatment, the ship is freed and the owners are happy they got the ship back – insurance is collecting, so no one is complaining,” said Davis. “It is not a suspicious payment but a business transaction,” he added.

Davis said other factors should be investigated, particularly given the presence of the UN task force, which is supposed to secure the Horn of Africa for shipping. “Are sea faring companies ignoring advice and gambling by plying certain routes? Have companies been approached to pay off pirates not to be hijacked? And why is there no true Maritime Law to cover all and everyone who arrests pirates?” he queried.

However, the situation on the ground in Somalia is clearly exceedingly complex, with a UN arms embargo monitoring group reporting that Egypt, Iran, Libya, Saudi Arabia, Syria, Yemen and Lebanon’s Hizbullah were all supporting warring factions, while the maritime analyst said that secret services from numerous nations are involved in gun running and criminal activities.

Nonetheless, the proceeds of Somali piracy can be considered high risk.

“Given that the US has taken a strong stand on the piracy issue, that there are known designated terrorist entities inside Somalia who could be involved, and that world opinion is squarely against anything involving these pirates, you do not want to be on the wrong side of the United States on this matter; Watch yourself,” said Kenneth Rijock of World-Check, a British company that maintains a database on politically exposed persons (PEPs) and high risk individuals and entities.

The company has advised compliance officers to raise the country risk on neighbouring Eritrea, Yemen and Kenya, while being vigilant about transfers out of Dubai.

Money Laundering Bulletin - Informa UK Ltd

Liquid Gold - The Syrian Olive Oil Sector

Syria Today magazine

Syria’s burgeoning olive oil sector has expanded from small producers catering solely to the domestic market into a SYP 23bn (USD 500.5m) industry. The country is now the fourth largest producer in the world. In just over a decade, exports from the sector have reached European and regional markets and now look set to hit Asia.

The sector could get a further boost when the Association Agreement (AA) between Syria and the EU is finally inked. The deal will make it easier for Syrian producers to do business in Europe, although just how much the sector will benefit from the agreement depends on prices and economies of scale.

On average, Syria produces 150,000 tonnes of olive oil per year, with some 100,000 tonnes consumed locally, Samir Jazzar, general manager of Olive House, said. However, annual production is highly dependent on the season and tree yield – one year a tree will provide a 100 percent fruit yield, the next year a 55 percent yield and the following year a 60 percent yield.

Last year’s olive harvest was down by some 20,000 tonnes. This year, however, the sector has recovered.

“This season was a good season, a bumper season,” Hassan Zeno, director of Zeno Oil, which exports 1,000 to 2,000 tonnes of olive oil a year, said. “But due to the Mediterranean fruit fly infestation, we produced 70 percent virgin and 30 percent extra virgin oil. Normally it is the other way around.”

Indicative of this season’s good crop is the price of 1kg of olives costing SYP 136 (USD 2.95), compared to last year’s price of SYP 150 (USD 3.25).

“Syria has jumped [from being the fifth] to the fourth largest producer in the world because there was a crop failure in Tunisia,” Philippe Chite, an export promotion consultant with the Syrian Enterprise and Business Centre (SEBC) in Aleppo, said. “If the crop fails in Spain, there is a need for Syrian oil, so sales are very dependent on the season and how it is sold in the world.”

Long-term rise

There are currently 93 million olive trees in Syria, predominantly around Aleppo, the north-west and in the Dera’a region in the south. Some 65 million trees are currently bearing fruit. When the remaining planted trees mature over the next 10 years, production is expected to increase to more than 200,000 tonnes annually, according to Omar Adi, executive manager of Near East Olive Products (NEOP), the country’s leading olive oil exporter with a 40 percent market share.

“Back in 1997, Syria only had two or three serious companies,” Chite said. “Now it has developed and there are 20 serious companies in the sector, such as NEOP, Zeno, Zaitoun, Emoc, Al-Khair, Al-Mutawasit and United Olive Oil.”

Unusually for Syria, the sector has no state involvement and is totally in the hands of the private sector. The government has, however, provided assistance to farmers.

“The government has played a big role in providing trees at a competitive price, making farmers plant in areas where there is not much rainfall and introducing irrigation,” Chite said. “This has helped as production in the coastal areas has been declining.”

The government also backs a research centre in Idleb that carries out studies on developing the sector, such as gene research and agronomy, as well as tastings and tests to produce oils tailored to the palates of individual markets. To boost production and create better coordination between producers, private companies have teamed up to establish the Association of Syrian Olive Oil Exports. But further assistance from the government is needed to bolster the sector, Adi said.

“The first thing the government could do is give subsidies to exporters,” he said. “Another option is to give subsidies to farmers, not in the form of money but in infrastructure. The third thing that would help is if we could create farming cooperatives since all the land is owned by small landowners.”

Barriers to expansion

The lack of economies of scale – in field size, collective ownership and mechanisation – is a major disadvantage for the competitiveness of Syrian exports. This is further compounded by the fact that EU producers receive agricultural subsidies to produce an estimated 2m tonnes of olive oil per year.

“New laws are being studied to bring farmers together into collectives,” Adi said. “But if it stays like it is today, it is hard for companies to compete internationally, especially with all this competition from countries in South America such as Argentina, Chile and Brazil where the cost of production is low. The problem we have is that we don’t have economies of scale – production is too small and that increases costs at the end of the day.”

Adi gives the example of Syrian olive oil exports to Europe costing SYP 151 (EUR 2.40 / USD 3.28) per kilo and Tunisian exports to Italy costing SYP 126 (EUR 2 / USD 2.74) per kilo, a 20 percent difference. Extra virgin oil from Syria sells at SYP 200 (EUR 3.17 / USD 4.35) per kilo, while Spanish companies are buying oil for SYP 139 (EUR 2.21 / USD 3.02) per kilo from local Spanish producers. With logistics and transportation costs added on top of this, as well as EU customs duties, the cost of Syrian oil on EU supermarket shelves is simply too high.

It is no small problem, given that the future of the sector lies in exports.

“Looking to the future, a surplus of 60,000 to 70,000 tonnes of olive oil needs markets which will pay a reasonable price to the farmer, otherwise they will lose interest in planting,” Adi said. “Some 70 percent of business will go away if we can’t export.”

A further issue the sector is facing is the high acidity of its olive oil. As a result, most Syrian oil sold to the EU is blended.

EU deal on the way

The pending AA will abolish many duties imposed on bio-based oils – oils which break down naturally such as olive, canola and soya – in both Syria and the EU. The duty on Syrian oil, currently SYP 6,942.60 (EUR 110.20 / USD 150.93 ) per 100kg, will disappear, while the 50 percent tariff imposed by Syria on EU-produced olive oil will gradually be phased out. The agreement was initialled by both parties in 2004, but its formal approval has been held up by diplomatic complications. Jazzar, Zeno and Chite all said that the AA will be beneficial to local olive oil producers.

“It will help a lot because it will give Syria an advantage and a guaranteed amount to be exported, whether that is 8,000 or 15,000 tonnes,” Zeno said.

Adi is less optimistic about the agreement, pointing out that the deal will open up the Syrian market to imports while the EU market will not consume all of the country’s surplus stock.

“This agreement is interesting, but not a revolution,” he said. “We are not going to be able to export our entire surplus just from this agreement, but it will help the sector if Syria has a 10,000 tonne quota for bulk sales.”

However, Zeno said that Syrian brands will have to target niche markets.

“Europe is already saturated with Italian, Spanish and Greek brands and it is hard to change the mentality of consumers, even though Spanish buyers say Syrian oil is the wine of oils for its aromatics and great quality,” he said. “Consumers are too used to Spanish and Italian oils.”

The high cost of entry into EU markets also stands as another barrier to local producers, Adi said.

“I think most Syrian companies lack the finances to get into the market because there are only a few brands on [supermarket] shelves,” he said. “European retailers are trying to limit the number of brands.”

Looking east

Due to these factors, Syrian exporters are increasingly eyeing up the Gulf and Eastern markets to offset their surplus.

“Everybody is betting on the Gulf and Asia,” Adi said. “With Chinese purchasing power increasing and rising health awareness, it’s a new market that is opening up.”

Syria is also entering markets where the Mediterranean diet is being adopted, particularly in the Gulf, to cater to expatriate diets.

“The Gulf has great potential and there is the advantage of proximity to Syria, taking just three or four days to deliver goods,” Zeno said. “And they are used to our quality.”

Photograph courtesy NEOP