July/August 2010 /N° 145
July/August 2010 /N° 145
IRAN
PALESTINE
Spy novels provide readers Western clues
Consumers boycott settlement products
Boom Town
Hotel developers scramble to fill the housing gap in Saudi Arabia.
Riding the Wave
As the Dow Industrials edge upward, so do orders for a new generation of mega-yachts
H MEDY G A U CO
P L -U D M N
Turkish Delight
’E RS STA E AK VE
An airline’s new strategy is shaking up the hub-and-spoke model in the Middle East
M T DISCO
YP EG
A MediaquestCorp Publication
TRENDS
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July/august 2010 • Issue 145 • www.TRENDSMAGAZINE.NET S.C.C. Arabies, 18 rue de Varize, 75016 Paris, France Tel: +(33) 1 476 64600 • Fax: +(33) 1 438 07362 E-mail: editor@trendsmagazine.net
COVER STORY
ROOM SERVICE
Hoteliers are investing in Saudi Arabia’s booming internal tourism market in their quest for rapid growth.
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leading TRENDS
Turkey
SHARIA’S FINAL FRONTIeR?
ONE NATION…
With all the interest in Islamic banking, the industry still isn’t mainstream. Here’s why.
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Despite Turkey’s divisive politics, everyone agrees: The country needs a new constitution.
leading TRENDS
Iran
LEADERSHIP LESSONS
SPY VERSUS SPY
A new book about the Middle East offers valuable advice to business leaders.
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Novels fixated on Iran’s secrets might tell us more about the rest of the world.
leading trends
BUSINESS
WHAT A MANAGER WANTS
ELECTRONIC SLIDE
The latest survey of asset managers reveals where the money is – and where it’s going.
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As companies expand across the Gulf, investment in information technology rises. July/August 2010 | TRENDS 3
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July/august 2010 • Issue 145 • www.TRENDSMAGAZINE.NET S.C.C Arabies, 18 rue de Varize, 75016 Paris, France Tel: +(33) 1 476 64600 • Fax: +(33) 1 438 07362 E-mail: editor@trendsmagazine.net
BUSINESS
Riding the wave
As the Dow Industrials edge upward, so do orders for a new generation of decadent mega-yachts.
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BUSINESS
PERSPECTIVES
WEDDING SINGER
STAND-UP GROWS UP
After years of playing local parties, Omar Souleyman is hitting the big time.
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A particularly Western style of comedy is the new toast of the town in Cairo.
BUSINESS
ON THE ROAD
TURKISH DELIGHT
ALL CHARGED UP
With the enchanting city of Istanbul as its hub, Turkish Airlines charts a new course.
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Tesla’s roadster gets more stares than the classics at Newport’s Concours d’Elegance.
BUSINESS
LAST WORD
WHERE YOU WANT TO BE
JOHN REID
A crackdown on visa policy means new business for those who stick to the rules.
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Coca-Cola’s market whiz says the company has a product portfolio that ensures success.
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investing
Islamic Finance’s Next Move
Getty/Gallo Images
By Emily Meredith Dubai
A
t a recent meeting in Dubai, lawyers from several international firms talked about the legal issues surrounding Islamic finance. In spite of their reputation, involvement from lawyers signifies maturation of the market. More than 75 countries are involved in Islamic finance, and there are consulting firms built around advising companies and banks about Shariah-compliance. “Where we are in Islamic finance today is where [foreign exchange] was in 1971. We are on the cusp, technology is the next phase,” the global head of Islamic finance for Thomson Reuters, Rushdi Siddiqui, says. But while these developments give reasons to hope that Islamic financing will soon move from an alternative to a
mainstream option, the market still faces critical challenges. Experts say a lack of consistent rulings on Shariah compliance, short supply of Shariah scholars, isolation from broader financial markets, and constraints on the time-frame of debt instruments are major challenges to the growth of Islamic finance. “The problem with religious scholars is they don’t understand Islamic financing,” the executive vice president of corporate finance for Saudi’s giant industrial firm Sabic, Mutlaq Al Morished, says. Finding people who are both Islamic scholars and have a deep understanding of financial tools and how they work is proving to be one of the most difficult problems to overcome, and often leads to the confusion over different instruments.
“The availability of high-quality scholars is the biggest deficit,” the head of Islamic products at Barclays Capital and Barclays Wealth, Harris Irfan, says. One of the biggest challenges for bankers interested in Islamic financing is the variation in what is considered Shariah-compliant. For instance, the sukuk issued by Sabic is ruled on by Shariah courts in Saudi Arabia, Al Morished says, which he notes “tend to be more conservative than our brothers in the G.C.C.” Developing new products can be an arduous process. Scholars may make decisions without giving much explanation to the company attempting to issue a Shariah-compliant instrument. The Malaysian-based Islamic Financial Services Board is attempting to introduce some standardization. Currently the board is reviewing possible regulations on capital requirements. “How big a crisis you have to be able to survive is the subject of huge debate,” the director of policy and Islamic finance at Dubai International Financial Center, Peter Casey, says. “We’re going to get new liquidity standards. The numbers may not be what some have predicted but we’re going to get them. And in many countries they will be applied just straight on to Islamic financial institutions.” The countries with a serious concern for Islamic finance will probably want to see them adapted, and the Islamic Financial Services Board is already working on how those standards can be adapted with Islamic finance, says Casey. A report from the International Institute of Finance in May says local debt markets need to be better developed, but Casey says that Shariah-compliant money markets need to be developed first.
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LEADERSHIP
Letters From the Heart By Jay Akasie Dubai
E
ffective leadership begins with the ability to cut through the clutter and concentrate on the issues that matter. The same philosophy goes for reading. Because we’re inundated with so much material, it’s a joy to focus on a book that uplifts and inspires. “Letters to Dalia: Reflections on Lebanon and the Middle East” (Easton Studio Press, 2010) is the sort of book that will challenge every leader who reads it to rethink his strategy and purpose. And that’s just what Hani Soubra, the book’s author, had in mind over the last two years while he was writing it. Soubra is a Lebanese national who now lives in Dubai as the regional director for the B.B.C. His new book, published last month, imagines a young lady named Da-
lia to which the author writes several essays questioning entrenched Middle Eastern ideologies in the hopes of beginning an intellectual dialogue with his readers. “In Lebanon, issues of religion and ideology have touched us in such a way that an entire generation is at risk,” Soubra said to TRENDS in his first interview since the book was published. “Go to Scandinavia and you’ll find their young people are concerned about the environment and infrastructure. But go to Lebanon and they worry about jihad. Let’s just put these religious issues on the back burner for once and put intellectual issues on the front burner.” A literary work is most potent when it comes out of its author’s life struggles. For Soubra, he decided to write “Letters to Dalia” as both he and his father were battling cancer. (His father died last year.) The pain and anguish he encountered along the way helped temper how he approached hot-button issues of Middle Eastern politics and religion. He’s not afraid to discuss what he sees as the region’s biggest problems (chastising Arabs for living in medieval times, for instance), yet he does so in an extremely sensitive and thoughtful manner. One of the objectives of “Letters to Dalia” is to start a dialogue, according to Soubra. “We have the right to disagree. Unfortunately, there are a lot of people who only see things as black or white. Dalia is an intellectual who sees things in shades of gray,” he said. Being able to discern subtleties is key to the future success of Lebanon and the rest of the Middle East, according to Soubra. He writes about a Middle East with an addiction to edicts. “Yet religion is about common sense. Nobody has the right to
force anything on anybody,” he said. He also said leaders – in the Middle East and the West – often use ideology in the most hypocritical ways. For instance, Soubra points to the fact that at no point did the pope tell Hitler to stop his path of destruction in World War II. But a different pope centuries earlier was sure to tell Galileo to stop his astronomical research. Three Middle Eastern leaders are models of reform and point the way to a bright future, according to Soubra. The late Lebanese prime minister, Raifk Hariri, came to power amid a brutal civil war, and instead of using his position to wield military power, he set up foundations whose aim were to send children to school. The late Sheikh Zayed of the U.A.E. focused with a theretofore unseen intensity on his country’s unification and economic development. The current ruler of Dubai, Sheikh Mohammed, is another U.A.E. leader that Soubra says the region should emulate: He pioneered the vision that his tiny Gulf emirate could rival economic centers like Hong Kong and Singapore. “The common element among these three men is that they were [and are] addicted to economic metrics, and that’s how success in the modern world is measured. They weren’t guided by fiery ideology and sermons. These men spoke of economic growth,” Soubra said. Will his new book begin to encourage real-life Dalias to come forth and take bigger roles in the life of the Middle East? Soubra says he hopes so. And if the book touches some nerves, his hope is that readers react with intellectual vigor. “If you disagree with what I have to say on religion or other topics, write a book or an article and let’s start a dialogue,” he said.
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investing
What a Manager Wants By Emily Meredith Dubai
T
ransparency. If you’ve heard this word ringing from the financial rafters lately, then thank the fallout from last fall’s Gulf debt crisis. Lack of data is a common complaint for professionals trying to assess education and energy consumption needs and to those looking to invest in local markets. In May, the asset management firm Invesco tried to answer a few questions about the region’s finances when it announced the results of its first survey of asset managers. What do those controllers of wealth want? According to the survey, they desire short-time horizons and opportunities to invest in emerging markets. The wealth controlled by these managers is large. Invesco estimates that asset man-
agement in the region totals $2 trillion, although the head of Invesco Middle East, Nick Tolchard, says institutional investors have less flexibility now than they did in 2007 and 2008. One conclusion serves as a cautionary clause for the rest: The survey found that investment location in the G.C.C. has huge influence on asset location. That is, asset managers in each country have more in common with one another than they do with the region as a whole. Investors abroad commonly group the countries together – a practice not backed by the preferences found in the data, but one managers have seen before, according to Tolchard. “When American investors started to develop interests, they viewed Europe as one whole,” he says.
The shift that saw France and the United Kingdom as separate entities, Tolchard says, will likely occur as global investors become more familiar with the Middle East. Invesco, which is also primarily an asset manager, said the objective of the study was to better design products that meet the needs of regional investors. “I think it’s common knowledge that data in the Middle East is very scarce,” Tolchard says. The Middle East is still a relatively small component for investors from developed markets. The non-oil economies of the Gulf countries are small, and the region’s sovereign investors look outward to invest their wealth. More information won’t necessarily usher in a new era of investment from abroad.
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What will help are more investment opportunities. Most of the exchanges in the region are small, put constraints on foreign ownership, and are relatively illiquid. Tolchard says I.P.O.s will be more realistic in the coming years than they have been, as owners come to price expectations more in line with the market’s appetite. “Our expectation is that there will be significant listing in the next three years.” Most investors in the region said emerging markets were their highest priority over the next few years. The issue is whether this is cyclical or whether this is a strategic change, he says. The survey also asked about risk appetite. Thirty-three percent of Saudi managers said they were more risk averse – a figure that is only surprising when compared to the 67 percent of Kuwaitis and 65 percent of Emiratis who said they were risk averse. Saudi Arabia is known more for its
careful plodding than its appetite for risk. But the U.A.E. and Kuwait, as well as 59 percent risk averse Qatar, were much more exposed to the global economy during the crisis, and they suffered more severely. The risk aversion is somewhat contradicted by a desire to invest in emerging markets – where the higher potential returns are earned simply because of their risk. Even with an interest in emerging markets, the region’s asset managers don’t appear to want to hold on to their investments for long. In the G.C.C., 38 percent of the people interviewed had a time horizon of less than a year, and in the last six months the timelines have decreased, something Tolchard hypothesizes could be caused by “the transient nature of expatriate populations.” High expatriate populations mean that investors are typically saving for retirement in another country, and that com-
panies are not obligated to contribute to large, long-term pension funds that they also must hedge against. Expatriates who feared losing their jobs, or ones who actually did and left home, could have influenced the shrinking time horizons. But Tolchard says he thinks other factors also contribute to the short time frame. He says many investors – perhaps accustomed to high yields in emerging markets – expect high returns. Advisors, wary of not meeting the outlined goals, shift strategies quickly when one is not generating the expected returns. Tolchard says his company works with professional advisers to help them understand how to talk to their clients about long-term investments. “With better expectation management comes more confidence, and more confidence comes with a longer term investment. I think those time horizons will change. It will be interesting to see.”
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MANAGEMENT
Nomadic Success
Getty/Gallo Images
By Aline Sara New York
T
he business world knows him as Cost Killer. In Japan, he was recently crowned Father of the Year. But the chairman and chief executive of the RenaultNissan alliance, Carlos Ghosn, is proudest of another title: World Nomad. The Brazil-born, French-and-Lebanese Ghosn addressed an eclectic yet intimate crowd of some 100 New Yorkers last month, including fellow nomads like the chief executive of Invus and chairman of Weight Watchers, Raymond Debbane; the internationally-acclaimed fashion designer Reem Acra; and the recent Tribeca film festival winner, Carlos Chahine. As some lingered outside in hope of a last-minute ticket into New York’s sold-
out French Institute/Alliance Française “LeSkyRoom,” others headed to their seats for what most would argue was the highlight of the month-long World Nomads Festival. Ghosn is responsible for more than 340,000 employees worldwide as head of two separate companies, on two separate continents, that together comprise the globe’s third largest automotive group. He spoke about how his nomadic upbringing helped bring him corporate success. Ghosn began by saying that he is not the product of a single country, but rather one of France, Lebanon, and Brazil. Drawing on his conviction that a nomad in today’s world has a significant number of advantages, he said that such benefits
nevertheless come at a cost. At the personal level, nomads undoubtedly suffer. “At times you want to be like everyone else, but you are not. You struggle to find your identity, which eventually makes you tougher,” he said. Whereas nomads survive through adaptation, individuals, regardless of who they are, must all make mistakes: “You jump in, you make a mistake, you learn from it, and you try, time and time again,” Ghosn said. Japan is a country with a strong identity, according to Ghosn. Breaking in was synonymous with being scrupulously careful about respecting local customs. After studying the Japanese language and traditions, he followed every single one of the company’s rules, except for those he felt were hampering corporate performance. “I wanted to make sure I didn’t come across as a foreigner coming in to revamp the situation with his culture’s tools and strategies,” he said. As a result, because he could not be labeled a “big U.S. executive,” he was given the benefit of the doubt, which was the very gateway into the entire automobile company’s rescue operation. Different cultural values breed differences in opinion, which in turn lead to better achievement, Ghosn said. Even if varying perspectives are more difficult to manage, the ultimate outcome is much better, especially when it comes to global competition. “If you can’t make tough decisions, you just don’t take the job, because learning to take tough decisions is part of the process,” he said. Indecision might indeed be paralyzing, but it should not even be part of the equation in the first place. Ghosn said that when starting with Nissan, he was well aware of the challenges, namely the
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ponderous task of having to lay off a significant number of employees. “When you take the job, you are responsible for the company’s history, present and future,” he said. At the end of the day, it’s about performance and results. A chief executive’s job is to push the limit, but never cross it, he said. Experience, through the years, has helped polish Ghosn’s skills in understanding the limit. Highlighting the differences between Renault, a French company, and Nissan, a Japanese one, the renowned business leader said he believes that regardless of the culture, the best way to optimize a person’s performance is to ensure he preserves his
identity, because once he feels he has lost it, he loses motivation. As such, there is a notable distinction to be made between partnership and acquisition. The former preserves a company’s identity, whereas the latter arguably absorbs it. This is why understanding and valuing each culture’s tendencies is essential. “Michelin gave me the opportunity of working among France’s best,” he said, pointing to the observation that French executives are sophisticated and analytical. He also said that such individual qualities tend to dissolve at the team level. This is not to say that there are not many lessons to be learned from French culture.
“Once you have a French company that is capable of mastering work at the team level, then you have a winner, as illustrated by models such as L’Oreal or Michelin,” he said. Ghosn gives the example of Nissan: 40 percent of the company’s employees are international. They learn from being surrounded by one another. Whereas one Lebanese-American spectator who currently works at CNN in Manhattan commented on Ghosn’s charisma, engaging personality, and charm, the chief executive of InterAudi Bank, Joseph Audi, summed up his impression in one simple word: “Brilliant.”
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Focus: Turkey
Avoiding the Draft Istanbul has a fractured political scene, but there’s one issue on which everyone can agree: the need for a new constitution. By Bill Sellars Istanbul
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here are few issues on which Turkey’s fractured society can find any solid unity. Deep divides over politics, religion, minority rights, perceptions of the country’s past, and its future direction are all creating chasm-like rifts. However, there is one issue on which there is little disagreement: the need to reform or replace the constitution, drafted under the supervision of Turkey’s military commanders after they had staged a coup in 1980. That coup, which halted escalating political violence and removed a deadlocked parliament, replaced it with an era of widespread human rights abuses and a political system where the armed forces’ role in daily life was even more firmly enshrined.
All of Turkey’s major parties – the ruling, pro-Islamist Justice and Development Party (A.K.P.) of Prime Minister Recep Tayyip Erdogan; the main opposition bloc, the center-left Republican Peoples’ Party (C.H.P.); the far right Nationalist Movement Party (M.H.P.); and minor groupings such as the leftist Democratic People’s Party (D.S.P.) and the pro-Kurdish Peace and Democracy Party (B.D.P.) – want to see the constitution changed. So do business groups wanting a more open society (one with fewer barriers to trade) and non-government organizations of various hues who want to see greater freedoms enshrined in law. Even the Constitutional Court, the supreme judicial body charged with upholding the constitution, regulating the
activities of political parties, and the last resort for those seeking to have state legislation overturned, supports rewriting the document so that it better reflects the needs of a modern society. Unfortunately for the A.K.P., that is about as far as consensus goes, with no other political party voicing support for a package of reforms covering 29 separate articles of the constitution unveiled by the government in late March. While there is little of controversy to be found in proposals such as establishing a state ombudsman’s office or enshrining the rights of children within the constitution, some of the proposed amendments would make fundamental changes to core state functions. In particular, it is the A.K.P.’s plans to overhaul the judicial system that has aroused the most opposition.
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The A.K.P. wants to change how the country’s senior judges and prosecutors are appointed Among the proposed amendments, the A.K.P. wants to change how the country’s senior judges and prosecutors are appointed. Currently, the justice minister only has limited input into the appointments process for the top jurists in the land, but under the planned changes, the president will choose 16 out of 19 members of an expanded Constitutional Court panel, with parliament nominating the remaining three judges. There would be a similar shift in the process of promoting officials to the Supreme Board of Judges and Prosecutors, the body from which other senior judicial posts are filled. These proposals, which would see professional jurists completely dependent on political forces for their advancement, are central to the A.K.P.’s planned overhaul of
the constitution. Given that President Abdullah Gul is the former deputy leader of the A.K.P. and is one of Erdogan’s closest allies, the judiciary has spoken out strongly against the moves, claiming they would dismantle the pillar of checks and balances in the constitution. The judiciary is either viewed as crucial for the defense of one cornerstone on which the modern Turkish republic is built – that of Turkey being a democratic and secular state – or as a reactionary force impeding the development of the country, political freedoms and human rights. The first view is held by the opposition C.H.P. (which was established by republican Turkey’s founding father and first president, Mustafa Kemal Ataturk), most political parties and non-
government organizations not affiliated with the government, the military, and the judiciary itself. It is no surprise that the second position is that held by the government and its supporters, who contend that the judiciary has long put a brake on the development of a civil society and has repeatedly intervened in politics and subverted the will of the people. In particular, the courts have incurred the ire of many by banning a series of pro-Islamic parties, the predecessors to the A.K.P., on charges of seeking to overthrow the secular order. The government may struggle to get its views accepted, at least in the parliament. Though holding an absolute majority in the 550-seat legislature, having returned 337 deputies at the last election, the A.K.P. is still short of the two-thirds backing required to have its reforms passed through the Grand National Assembly and into law.
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‘A new system that frees the judiciary from political interventions should be introduced’ Should it fail to get any of the minor parties to sign on to the program (and as long as it can keep its own deputies in line and gets more than 330 votes), the government can lay the package before the electorate and call a referendum. Anything less than 330 votes in the parliament will see the package getting rejected outright.
This would also put paid to another amendment, once close to the A.K.P.’s basic philosophy, that would clear the way for the government to pass regulations to allow women to attend schools and universities wearing the Islamic headscarf. With the backing of the M.H.P., the A.K.P. did have this ban removed briefly in 2007, only to see the
1982
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The constitution of Turkey is ratified, establishing the principles and rules of the state
Council of Europe criticizes Article 42, which says Turkish must be taught as a first language
The current governing party, the A.K.P., proposes a major overhaul of the constitution
Constitutional Court overturn the law. The short lifting of the ban also highlighted the deep divides in Turkish society, sparking nationwide protests by secularists that drew hundreds of thousands to anti-government rallies. The A.K.P.’s efforts to remove the headscarf ban prompted Abdurrahman Yalcinkaya, the chief prosecutor of the Supreme Court of Appeals, to open a case in 2007 seeking to have the party closed and many of its leading officials, including Prime Minister Erdogan, banned from any political activity for five years on charges they were trying to overturn the secular regime. Ultimately the court found the A.K.P. guilty, but not guilty enough, with the judges deciding to impose a fine and a caution to Erdogan and his supporters, rather than closing the party. However, the decision was a near run thing, with the vote of just a single judge on the panel standing between the A.K.P. remaining open and its joining the long list of proIslamist parties that had fallen foul of the constitution and the judicial process set in place to protect it. While the A.K.P. may be able to find the numbers, either in the parliament or through the ballot box, to push through its reforms, the secular establishment has made it clear that it intends to mount a vigorous defense. On April 9, Yalcinkaya re-entered the fray, slamming the proposals by saying they represented an attempt by the government to gain control over the judiciary. “The proposed method of choosing members of the Constitutional Court and the Supreme Board of Judges and Prosecutors is undemocratic. The supreme board is being politicized by the reforms package. A new system that frees the judiciary from political interventions should be introduced,” he said. Equally staunch in its views is the center-left opposition C.H.P. During the initial hearing of the proposed amendments by the parliament’s Constitutional Commission, the C.H.P.’s Sahin
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The prime minister has called on judges unhappy with the proposed measures to enter politics Mengu argued that the government’s efforts to change the constitution were in fact in violation of the very document they were seeking to rewrite. “What the A.K.P. wants to do is obvious,” he said in early April. “They are trying to change through indirect ways the unchangeable principles of the constitution such as secularism and democracy.” Responding to judicial criticism of the package, the prime minister has called on judges unhappy with the proposed measures to remove their robes and enter politics, with Erdogan saying senior judges should remain within the limits set down within the constitution itself. “There are already some political
parties that are against the constitutional amendments,” he said. “Join them and maintain your struggle publicly.” The government’s reforms almost came unstuck before they were tabled before the parliament. Having submitted its draft reform package to the office of the speaker of the parliament, the A.K.P. was forced to withdraw it almost immediately, after it was revealed that among the parliamentary deputies who had signed the petition requesting the document be tabled before the legislature’s Constitutional Committee was the speaker himself, Mehmet Ali Sahin. Although a member of the A.K.P., under the parliament’s by-laws the speaker is supposed to be above pol-
itics and is forbidden to vote or support new bills. Although a technicality, Sahin’s name on the petition would have been cause for the opposition to apply to the courts to have the package ruled invalid. With the A.K.P. trying to weaken the grip the judiciary has over political activity, the government was keen to prevent giving away any free kicks. They withdrew the legislation and then tabled a new version, without Sahin’s signature, in early April. It is unlikely the government will get the numbers it needs in parliament to pass its package. Even though it has tried to woo the 11 independent deputies in the house, along with the pro-Kurdish B.D.P. and the left leaning D.S.P., who between them hold some 30 seats, the courting has not brought about any engagement, let alone consummation. As such, the government will have to go to the public if it wants to pass its proposals into law, possibly in the middle of the year. A.K.P. officials have predicted that any referendum on the package of amendments will receive 60 percent backing from the electorate, and will also serve as a vote of confidence in the government itself. This might be optimistic, with many opinion polls showing support for the government having slipped to around 30 percent, well below the levels Erdogan and the A.K.P. enjoyed when re-elected in 2007, when they won almost half the popular vote. Whether at the top end or the low end of potential electoral support, the vote would be nowhere near the endorsement given to the last major constitutional referendum held in Turkey. Looking back some 30 years, the military-drafted constitution that the A.K.P. is seeking to overhaul was also put to a public vote, with some 80 percent of Turks casting a ballot in favour of its being adopted. Although the vote’s result may have been colored by there being little in the way of organized or even permitted opposition, it may also have been the last time such a large cross-section of Turkish society was as unified on any subject.
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Focus: Israel/Palestine
Let the Buyer Beware Hoping to shore up its standing at home and abroad, the Palestinian Authority is waging a boycott of goods produced at Israeli settlements in the West Bank. By Ben Lynfield Ramallah
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alestinian Authority inspector Ibrahim Mahmoud walked past the bookstand featuring Stephen King novels in Arabic and kept going through the aisle of Pampers and toiletries until he came to a stop amid aluminum foil and paper plates at the Bravo supermarket in the upscale Tira neighborhood of Ramallah in the West Bank. “These are suspicious products,’’ he said, lifting up foil sold under the label Hoppy and plates bearing the name Rainbow. He explained that the absence of a factory address on the packages, and the fact that just a mobile phone number was printed there, raised the likelihood that these were actually produced at illegal West Bank settlements rather than inside Israel proper.
Soon Mahmoud’s attention turned to kitchen sponges made by the Nikol company. He flipped through a booklet and found them to be one of more than 500 products the Palestinian Authority has banned for being manufactured on the settlements that have proliferated across the occupied West Bank since 1967, eating away at the territory Palestinians envisage as forming the heartland of their future state. Colleagues removed all the sponges from a shelf, placing them in a cart. “We will take it with us and destroy it later. It is illegal, not allowed in the Palestinian market,’’ Mahmoud said. Some confiscated products end up being burned, while others are dumped in landfills. The snap-inspection in late May came as part of an unprecedented Pal-
estinian Authority campaign to encourage the more than two million Palestinians in the West Bank to boycott all products made on the settlements. Half a million Israeli settlers have moved to the West Bank, including East Jerusalem, in contravention of the Fourth Geneva Convention, since 1967. The campaign also hopes to transfer all 25,000 Palestinian workers on settlements to jobs within the Palestinian economy. However, alternative employment has not yet been developed and workers are wary of not having a livelihood if the P.A. enforces its rapidly approaching deadline for the transformation, by the end of this year. While some dovish Israelis and Palestinian sympathizers abroad have long called for a boycott of settlements, the
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Focus: Israel/Palestine
The campaign is aimed at encouraging the international community to get tough on settlements P.A, grasping for a way to show it is combatting occupation, has only now decided to risk a confrontation with Israel over the matter. The campaign – including inviting foreign journalists on inspections – is aimed at encouraging the international community to get tough on settlements. It is also a way for the Palestinian Authority to gain legitimacy and mobilize backing for itself domestically among a population that has traditionally seen it as corrupt and, in the eyes of many, too close to Israel because of its security cooperation with the Jewish state. “Settlements are illegally built on our land and the land for a Palestinian state. They are a theft of our land and natural resources,” a spokesman for the P.A., Ghassan Khatib, says. “Settlements are
the main practical obstacle to a two-state peace solution. They are built in a way to prevent the ending of occupation and to prevent the possibility of peace.” The campaign hopes to encourage Palestinian consumers to buy Palestinian produced goods in place of those from settlements, and thereby give a push to building an economic base for a future state. A plan authored by the Palestinian Prime Minister, Salam Fayyad, specifies that all the institutions and infrastructure for a state be ready by the end of next year – regardless of whether or not there is progress in peace diplomacy with Israel. Khatib stresses that the boycott is of settlement goods and not those produced inside Israel’s pre-1967 borders. Therefore, he says, the boycott does not violate
economic agreements with Israel. The Israeli government, however, views the boycott as an “intolerable” act, while settler leaders are calling for Israel to retaliate by closing its harbors to Palestinian imports and exports. Currently, $200 million a year of settlement goods is purchased by Palestinians, out of a total of $3 billion in imports from Israel, according to P.A. officials. “Settlements are our problem as Palestinains, so we have to do this step,” a deputy speaker of the Palestinian Legislative Council and normally a vociferous critic of the Palestinian Authority, Hassan Khreisheh, says. “If the Europeans are standing with our struggle, we have to stand up for ourselves at least.” The inspection in Tira was done in a friendly way, and the chief executive of Bravo, Aram Hijazi, said he backs the crackdown and that the eight Bravo outlets throughout the West Bank will comply.
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Hundreds of volunteers have been going door-todoor to persuade people to sign the “Dignity Oath” “We are a national supermarket and it is our duty to have a good relationship with the government. They already gave us a list of settler products we shouldn’t have in the store. From that moment we’ve removed products. We are not 100 percent free of settler products, we are 99 percent free. With agricultural products it’s difficult to find out if they are from
settlements or not. With some products it can be tricky. And you have to educate consumers. They like variety.” Hundreds of P.A. volunteers have been going door-to-door in the West Bank to persuade people to sign the “Dignity Oath” to refrain from settlement products. And an estimated 300,000 booklets are being distributed with pictures of the products to be
300,000
$15,000
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Fine and 2-5 years in jail for dealing in products produced on the settlements
Fine and 3-6 years in jail for anyone who imports settlement products
avoided, including pretzel sticks, sesame paste, apple sauce, stereo speakers, cosmetics, and a computer mouse. Pamphlets for children emblazoned with a pointing finger reminiscent of American army recruitment posters and the slogan “you and our conscience” are also aimed at raising awareness. “Did you know that the settlers in the 9,600 settlers in the Jordan valley consume one quarter of the amount of water used by all 2.5 million Palestinians in the West Bank?” it asks. On paper, at least, there is a big stick behind the campaign. Presidential decrees issued by Mahmoud Abbas in April provide for stiff penalties for merchants who do not comply, although until now the P.A. has merely issued warnings. Anyone dealing in goods produced on the settlements will be imprisoned for 2-5 years and fined the equivalent of up to $15,000, according to the decree. Those who import settlement products face 3-6 years
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Focus: Israel/Palestine
Finance Minister Yuval Steinitz termed the boycott “intolerable” during a recent interview in jail and fines of up to $3,000. Abbas in late May ceremoniously affixed a sticker to his house proclaiming it to be free of settlement products, while Fayyad has attended burnings of settler goods. With Israeli G.D.P. at $200 billion annually, the boycott by itself can hardly be felt in the Israeli economy, although it is believed some settler firms will feel the pinch. Still, the government fears that it could encourage boycotts of Israel from abroad, particularly Europe, which in recent years has begun singling out settlement products and denying them the tarifffree status given to other Israeli products. Finance Minister Yuval Steinitz termed the boycott “intolerable” during a recent interview, arguing that – by contrast – Israel had eased restrictions to en-
able growth of the Palestinian economy over the past year. “Israel has made gestures promoting economy and peace, while on the other hand we are receiving a cold shoulder. This must stop,” he said. The chairman of the manufacturers’ organization of Israel, Shraga Brosh, went further, saying Israel should close its ports to all imports and exports for the P.A. “As far as we are concerned, they can transfer their activities to Jordan and Saudi Arabia. This way we will show them that after their slap in the face, we will not turn the other cheek.” The weak link in the campaign is the P.A.’s requirement that Palestinians working on settlements leave their jobs by the end of this year. Official pronouncements of how they will be ab-
sorbed lack specifics, although a fund is to be set up to encourage the private sector to give jobs in Palestinian areas. However, how many jobs can be provided will depend on the overall health of the economy. And that is a direct function of Israeli policy, including how strict a checkpoint regime Israel maintains for intra-West Bank transit of goods. The P.A.’s reasoning is that the 25,000 settlement workers would much prefer not to be participating in the takeover of Palestinian land and that they are therefore open to accepting new work within Palestinian areas, even if that means lower wages. But in interviews with TRENDS, workers at the Mishor Adumim industrial zone, part of the sprawling Maale Adumim settlement east of Jerusalem, were worried over the P.A. plan. Despite the looming deadline, no one from the P.A. has been in touch with them, they said. “I say, give me an alternative. Right now, there is no alternative,” said Khalil Qirat, 42, while eating a lunch of pita bread, humus, and olives under a tree, the red roof of the sprawling settlement visible on a hill behind him. The resident of a sleepy biblical town 15 minutes’ drive away, supports two wives, six children, his mother, and a deceased brother’s children on his salary of 200 shekels ($60) a day at a dry cleaning facility. Qirat, who has been working at the settlement for 15 years, says he previously toiled in agriculture, but that he could not make a living at it. “I have good conditions but everything is expensive. I spend all of my salary on school, electricity and water. Still, if they give me an alternative job for half of what I make I will take it,” he said. However, another worker, who declined to be identified, said bluntly that the P.A. plan is “no good. The Palestinians pay badly. We are working to feed our children, and what the Palestinians pay is not enough. I will not leave. I grew up working for Jews. In this country an Arab cannot live apart from the Jews and the Jews cannot live apart from the Arabs. I’m not interested in politics and hassles.”
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Focus: Iran
Fact From Fiction Two new fictional works offer a fresh insight into Iranian life. Perhaps more important, they give the Islamic Republic a glimpse of how it is viewed by the West. By Iason Athanasiadis Istanbul
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here’s a generous book acquisition budget in the Iranian foreign ministry. It allows for the regular refreshing of a private access library in North Tehran containing specialist geopolitical titles. Proliferating on its shelves are the latest Persian and English-language periodicals and books about Iran, the Middle East, Caucasus, and South Asia. Here, middle-aged functionaries clad in the foreign ministry’s uniform of dark suits and gleaming white collarless dress shirts browse the bookshelves, or request titles from female librarians wearing the maghnae headscarf obligatory to female civil servants. The English-language book selection is eclectic. Visitors can flip through titles on the Pakistani nucle-
ar program, books on the British intelligence agency MI6, several Mossad whistle-blowing memoirs, and chronicles penned by Shah-era American and British ambassadors. Judging from the attentiveness of the men poring over these books, Iranians are better informed about America’s view of their country and the region than vice versa. In the looking-glass game of second-guessing an enemy’s actions, information is valuable. The Iranians know that cultural understanding is as important as hard intelligence, as the several tatty copies of “Know Thine Enemy,” the account of a clandestine journey into Iran by a former C.I.A. spy, Reuel Marc Gerecht, attest. Gerecht “penetrated” Iran stuck inside a coffin-shaped metal container
lodged in the nether-regions of a truck. Times have changed, and another Farsi-speaking C.I.A. dropout, Robert Baer, has visited Iran openly, but the value of Gerecht’s book remains. It comes in several passages of insightful ruminations by C.I.A.’s only Persianspeaking case officer in the 1980s on the Iranian national character. “Among themselves, Iranians were meaner, more hypocritical, and duplicitous than they’d been before,” Gerecht wrote of the post-Revolution type he encountered while inhabiting the persona of an American consular official in Istanbul. “They prayed less often and far less hopefully. Persians no longer thought they had a mandate from God. Worst of all, 16 years after the Revolution, America was more idealized than before.”
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Focus: Iran
The Increment has been prophetic of the nuclear confrontation between Iran and America If Iranian officials are interested in how American authors with insight into the C.I.A. view them, then two recently-published novels are bound to be dropping into the North Tehran library’s stacks soon: David Ignatius’s ‘The Increment’ and Claire Berlinski’s “Lion Eyes.” Although “Increment” was published in early 2009, it has been eerily prophetic of the unfolding nuclear confrontation between Iran and America. It features a hidden facility, purposely malfunctioning equipment funneled by Western intelligence agencies into the Iranian program, and disappearing scientists. The C.I.A. admitted in March that an Iranian nuclear scientist who disappeared last year while on pilgrimage to Mecca had defected. Ignatius’s longtime beat at the Washington Post was the C.I.A. He has turned
out an impressive stream of books about international intrigue. The books’ dust jackets glow with testimonials by retired C.I.A. operatives affirming that real-life spies read them. Given Ignatius’s excellent relations with the agency and the apparent accuracy of his novel’s plot, a nagging question arises: Is “The Increment” the C.I.A.’s very Persian way of letting the Iranians know it is always one step ahead of them? Berlinski’s “Lion Eyes” (2008) is the follow-up to her debut, “Loose Lips,” a first-person narrative on joining and flunking the C.I.A.’s trainee program. “Lion Eyes” is an intriguing examination of an online romance between an Iranian spy and an American novelist recruited by the C.I.A. The novelist moves from Paris to Istanbul, deepening an obsessive rela-
tionship with an online acquaintance who purports to be an Iranian architect. Night after night, she studies his Flickr online photo account for clues as to his life in the serene riverside city of Esfahan. Both books are fiction, making them welcome additions to the journalistic analyses, dry academic treatises, or firstperson exile memoirs currently available on Iran. In the era of Google Earth and extensive Facebook slideshows that document everything from obscure Iranian villages to out-of-the-way neighborhoods in Mashhad and Bushehr, both these books contain detailed descriptions of Iran. Remarkably, Berlinski has never visited the country and Ignatius only went once for a week. Still, the lyricism of personal experience comes through in a particularly tantalizing description of Tehran by Ignatius that hints at its mystique. “It was a magnificent sight, this feast-bowl of a city: Close by were the skyscrapers and grand apartment blocks
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of North Tehran, mounting the hill so arrogantly. Then came the green spaces with their fountains and gardens – Mellat and Haqqani and Lavizan parks – where people went to escape the heat and dirt. But it was the vast beyond that stretched your mind, the city tumbling mile after mile onto the plains, from the covered bazaar all the way south through the numberless alleyways of South Tehran to the martyrs’ cemetery of Behesht-e Zahra. Here it was – a city too big to take in with your two eyes, a city where nobody could know everything, a city so big that perhaps secrets could be hidden and no one would see.” Unspooling between Tehran, Washington, London, and Ashgabad, “The Increment” relates what happens after an Iranian nuclear scientist performs a virtual “walk-in” by contacting the C.I.A. on its online treason form. Ignatius masterfully charts both the crisis of conscience prompted in the scientist and the bureaucratic struggles fought by the director of the C.I.A.’s Persia House as he tries to stave off a disastrous attack on Iran. “The Increment” is populated by scenarios so realistic, they seem to be ripped from the headlines. A disclaimer nestles in the epilogue, teasing the reader with the assertion that “this novel is about an imaginary country… and none of the characters, companies or institutions described in this book are real.” But the essence of both books is civilizational warfare and its morals. The biggest ethical struggle in Ignatius’s book is between a straitlaced GreekAmerican C.I.A. boss and a polished but deeply flawed MI6 character who is in cahoots with a wealthy Arab businessman and MI6 asset. In a climactic scene, the two face off with each other. The Brit tells the American: “This isn’t America, Harry. We aren’t infected with all your politically correct cultural re-education crap, my friend. We don’t have the same rules about not sticking your pen in the company inkwell. Here in Britain, it’s ‘Don’t ask, don’t tell,’ for heterosexuals too.”
Recent experience has taught the Pentagon that a military intervention against Iran is unrealistic Berlinski also instructs her readers in ambiguous ethics on both sides of the civilizational divide. Although her virtual lover from Esfahan ends up using her to further his intelligence goals, she is also manipulated by an Istanbul-based C.I.A. agent anxious to get promoted. In a satire of the society that Berlinski has escaped (she lives permanently in Istanbul), the cuckolded husband of the C.I.A. agent
goes on to write a bestselling memoircum-cookery book that mixes exotic recipes from his wife’s C.I.A. postings with the catchy title, “Diamonds Are Supposed To Be Forever, You Lying C.I.A. Bitch.” Recent experience has taught the Pentagon that a military intervention against Iran is unrealistic. The Iranian focus on asymmetric warfare as a riposte to the American military’s battlefield dominance
suspicions
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In 2002, Iran rejected the U.K.’s ambassador, David Reddaway, calling him a spy
In 2003, the U.S. began flying unmanned vehicles from Iraq into Iran to gather intel
In 2008, journalist Seymour Hersh detailed covert C.I.A., D.I.A. and U.S. special forces plans
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Focus: Iran
Last summer’s Green movement was a blessing in disguise for Iran’s image abroad has redirected Washington’s energies toward funding covert operations and ethnic separatism in Iran’s minority hinterlands. Ignatius conjures up a campaign of scientific destabilization of the Iranian nuclear program by the C.I.A. and British MI6 that has real life echoes in the Mossad’s attempted scuppering of the Iraqi nuclear program in the late 1970s. Iran’s nuclear priesthood is obsessively controlled by an intelligence elite that monitors their every move, especially on highly restricted visits abroad where they would be exposed to recruitment pitches or assassination attempts by Western intelligence agencies. This is demonstrated by the rumors that have surrounded the mysterious deaths of Iranian nuclear scientists in recent years. These insights seep into Ignatius’s narrative through the strokes
outlining his Iranian characters: the nuclear scientist, his disgruntled and destructive former Republican Guard cousin, and a counter-intelligence chief tasked with protecting the nuclear program. Ignatius’s Western characters confirm the strongly held Iranian belief that whereas America possesses brute power, British guile is far more threatening. When the C.I.A. is stumped by its lack of assets inside the country, it is to MI6 that they go. The British agent oozes shabby British public school chic but is deeply, morally compromised. Ignatius has trouble with his Iranians. He stretches to attribute convincing psychologies to the anti-regime Iranian characters. But the “baddies” are cookie-cutter evil. The nadir comes with a psychotic, opium-addicted Arab intelligence mastermind
(loosely modeled on assassinated freelance operations planner Imad Mughniyeh) hilariously nicknamed Al-Majnun (“the Madman”). Passages like the following are more reminiscent of pages in the right-wing American press than a sensitive character treatment: “The Lebanese man seemed to disappear into the darkness itself, a cape of black. Even when Mehdi opened the door, letting in the light of the hallway, it was impossible to distinguish clearly the form of the man in the shadows.” For a better-aimed stab at attributing motivation to a villain, we have to return to Gerecht’s “Know Thine Enemy.” Referring to himself as “the Angel,” Gerecht traces where his Iranian quarry fulfills his own spiritual gap. “A highly-evolved parasite, the Angel had stayed alive while feeding off the dreams and frustrations of young Iranians. Yet he wasn’t all lies and deception. He’d always wanted to help Iran while advancing his own country’s interests. Incapable of faith, he’d needed Iranians to lead him to the white light, the ineffable divine essence for which Khomeini too had searched. He wanted to feel the warmth and fraternity of Muslim men losing their identities in collective prayer. Not unlike the holy warriors he hunted, the Angel wanted at least for a while to turn off America’s static noise.” Despite also being an intelligence operative, Berlinski’s Iranian inhabits a more ambivalent plain. The reader is left perplexed about the extent to which he’s caught between the inclination to charm or manipulate, or is just the hostage of pressures on his family. Last summer’s Green movement was a blessing in disguise for Iran’s image abroad. For a country demonized in the Western press, images of photogenic young people manning 1968-style barricades on Tehran’s smoking tarmac helped humanize Iran in the West. Literary offerings such as “The Increment” and “Lion Eyes” take a few timid steps towards deposing the Iranian from the throne of permanent villain. Ed. Note: Iason Athanasiadis lived in Iran from 2004 to 2007.
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Education
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Wharton’s Arab Connection Wall Street’s next batch of superstars includes the best and brightest from the Middle East. By Aline Sara Philadelphia
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vy League business schools like Columbia Business School and the University of Pennsylvania’s Wharton School pride themselves on having international rosters of students. Most businesses – like the ones Wharton graduates will work for – have gone global, and having an international student body prepares students for the challenges of a highly competitive marketplace. Wharton’s senior associate director for admissions, Jackie Zavitz, says that over the past 10 years opportunities in the Middle East have exploded. As such, the region is a very interesting area to exploit. “People in the Middle East are very cosmopolitan, they’ve seen a lot and tend
to be global citizens,” she says. “Applicants are becoming increasingly aware of the return on investment of coming to school in America.” Recent Wharton graduates Fabrice Atallah, Walid Mansour, and Wassim Moukahhal, from Lebanon, and Khaled Zurikat, from Jordan, say they’re happy they chose to pursue their degree in America. Twenty-six-year-old Atallah, who completed his undergraduate studies in engineering at the American University of Beirut, says he chose America for its wider networking opportunities even though European establishments – notably the London Business School, Insead in Paris, and I.E. in Madrid – are closer to
home. He also says Wharton appealed to his international aspirations, which were fulfilled by a semester abroad in Spain. Before coming to Penn, Atallah had worked with Booz and Company, which sponsored his M.B.A. Mansour, 30, says he would not have had the privilege of attending Wharton had it not been for a fellowship from the Dubai-based Mohammed bin Rashid Al Maktoum Foundation. A graduate of both the French and Lebanese baccalaureate, Mansour studied engineering in France and worked as a strategy consultant in Beirut and the U.A.E. Given the high-octane academics of American schools, Mansour had no July/August 2010 | TRENDS 47
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Education
Wharton’s M.B.A. program is among the most international of the top-tier business institutions doubts about wanting the challenge of studying in the States. His fellow classmate, 30-year-old Zurikat, says the two-year M.B.A. is more appealing and comprehensive given it offers more options than schools in Europe, namely majors in real estate or healthcare. The students also stressed on the myriad of extra-curricular activi-
ties on campus. Indeed, rather than introducing their peers by their names, some favored referring to them by their talent, such as the salsa dancer of the promotion, or Wharton’s biggest comedian. For Moukahhal, 28, working in private equity and investment banking during his post-graduate years in the Gulf was behind his desire to attend Wharton.
38%
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Of students in Wharton’s 2009-2010 batch were from abroad
Of the students who graduated last month were from the Middle East
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“Three of my managers, although only one was from the Middle East, always linked back to what they learned at Wharton,” he says. Learning goes well beyond the classroom, as the curriculum includes participating in special “learning teams” that incorporate familiarizing oneself with different leadership styles. Wharton also offers to fund small group dinners between students and their professors to promote interaction with faculty. Boasting a whopping 38 percent rate of scholars from abroad in its entering class of 2009-2010, Wharton’s M.B.A. program, says Zavitz, is among the most international of the top-tier business institutions. Atallah, Mansour, Moukahhal, and Zurikat are among the 20 Middle Easterners who represent 2.5 percent of last month’s 800 graduates at Wharton. “Given the changing landscape in the region, applicants from this part of the
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world have a particularly creative and entrepreneurial nature,” says Zavitz. She also points to their exceptional people skills, adding that at the end of the day, business is all about relationships and building rapport, something all four of the graduates undeniably had the opportunity to further develop during their time in Philadelphia. Students at Wharton, whether due to their classmates, faculty, campus life, or courses, say they benefit tremendously from their M.B.A. experience. “At Wharton,” says Zurikat, “there is a big momentum for continuous achievement, and this momentum just pushes us to do more.” This year’s graduating class saw the first ever “Student Trek to Lebanon.” Following in the footsteps of many other international classmates who plan Wharton- sponsored trips to their countries of origins, Mansour and Moukahhal, alongside two of their close friends, Lebanese-Americans David Abraham and Albert Sara (the brother of the author of this article), led 40 among 110 wait-listed Whartonites to Lebanon last August. Through visits to historic sites and natural reserves such as the Cedars and Jeita Grotto, many who had never been to the region discovered the complexity and nuances of the tiny country. Bearing in mind that the tourists were also business students, the organizers made sure to include a visit to Solidere, the Lebanese Company for the Development and Reconstruction of Beirut Central District, as well as a private meeting with the Central Bank President, Riad Salameh. “We painted a complete image of the country, showing them both the good and the bad, traveling from Beirut, to Tyr and Saida, to the mountains and the beach,” says Moukahhal. He is certain the Lebanon Trek will become a tradition that will carry on long after the founders have left Wharton, for although fans of the American academic system, Atallah, Mansour, Moukahhal, and Zurikat will head back home to the Middle East this summer. “I always knew I would come
Business graduates share a common economic knowledge that transcends cultural differences back, so why not now?” says Atallah, who will get married end of July and start work back at Booz and Company. Deeming himself entrepreneurial, Mansour says that from a professional standpoint, he will thrive more in the fast-growing economy of Lebanon rather than in mature markets, such as in America, especially given the recent crisis. Offering the example of the multinational consulting company Roland Berger, which he will join, Mansour believes the opportunities will be more exciting and include more responsibility, as opposed to work in America that might be more about optimization. On a more personal level, he says he feels generally optimistic about the Middle East, foreseeing a healthier political
agenda, improved socio-economic policies, favorable demographic changes as well as stronger collaboration among countries via organizations such as the Gulf Cooperation Council. The economic meltdown, says Mansour, has also profited the region, specifically through increased investments in internal infrastructure, energy, transportation, media, and communication, “Investment is turning inwards,” he says. Confident Likewise, Zurikat and Moukahhal say they feel confident about the prospects of the local economy. Insisting on a sense of both belonging to the region and having a better understanding of its culture and politics, both graduates will move July/August 2010 | TRENDS 49
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Earning a solid income is one thing, giving back to their local community is just as important to Dubai – Zurikat to join Exxon Mobil, and Moukahhal to work in private equity at EFG-Hermes. “The middle class here is emerging,” says Moukahhal, “particularly in the Gulf, the financial engine of the area. That in turn affects the neighboring, less affluent countries where economic activity takes place.” Finance can be used as a tool to incentivize change and growth in local business and society, he says. Of course, when it comes to this part of the world, and more especially the Levant, worrying about disruption through wars or political instability is within reason. However, Mansour dismisses such concerns and is convinced that politics do not directly impact the market, because to him, the economy is easi-
ly adaptable. Security threats, he says, no matter the source or origin, have not really hindered the country’s growth, except momentarily, during fighting or other instants of crises. “Speaking from a purely numbers perspective, the weakest G.D.P. growth in the region is 4- to 5 percent, a rate much stronger than many European countries, with the highest numbers comparable to those in China or India,” he says. As Middle Easterners flock back home, it seems that no matter where they are, M.B.A. graduates, at least those from Wharton, seek similar types of jobs. According to Zurikat, rather than having different ambitions, the students learn from each other how to be even more determined. To him, whether Western or Arab, classmates pursue jobs in consult-
ing, finance, industry, or start-ups. Mansour says that despite diverging experiences growing-up, business graduates share a common economic knowledge that transcends cultural differences. As for Moukahhal, the chief difference stems from the context. “Matured markets in the West are about sustaining growth, whereas the emerging markets are about creativity, amid which you build the machine itself, as opposed to just keeping the engine running.” Indeed, after speaking to the recently crowned alumni, it is obvious these Whartonites are clear on one thing: Earning a solid income is one thing, but giving back to their local community is just as important. “I like to sum it up as technology transfer,” says Moukahhal, “We acquire certain skills in the global world and bring them home, where we can have a direct impact on our society, its future, and our children’s future.”
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Information Technology
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Electronic Slide Faced with random crises and well-laid expansion plans, even old-economy firms must invest in the latest information technology. By Emily Meredith Frankfurt
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n the last few years, Arabian Construction Co. has spread its reach throughout the Middle East. With projects in Jordan, Syria, the U.A.E., Iraq, and its home base in Lebanon, keeping track of the activities at each of the sites was becoming increasingly complicated, the company’s information technology manager, Mazen Al Mamlouk, says. Data about each project’s inventory and expenditures was spread throughout the region in the company’s site offices. Managers in Beirut wanted more access to the data on each project. “The complexity associated with these big, megaprojects, which sometimes are in excess of $1 billion, is large, and you have to
have very good control over them. We needed reporting first so we could have meaningful business decisions,” he says. Managers at the construction company made a decision that an increasing number of companies in the Middle East are making: investing in information technology systems that collect and analyze company data. Computers are supposed to simplify operations. But often text documents are just electronic versions of handwritten notes. Crude spreadsheets calculate no more than a chart outlined by hand. According to Al Mamlouk, Arabian Construction needed software that would allow it to be in better control of opera-
tions. The company purchased software from SAP, the Germany-based provider of business management software. “We were looking for one solution where we could have an integrated system… and less of a headache,” he says. Arabian Construction is not alone. Last year SAP’s sales in the Middle East and North Africa increased 40 percent, according to the managing director of SAP’s activities the region, Sergio Maccotta. Growth in SAP’s sales comes on the back of an overall increase in demand for business software. Citing numbers from the advisory firm International Data Corp., Maccotta says the market for information technology increased 11 percent over the same period. July/August 2010 | TRENDS 55
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In the Middle East, the oil industry has long looked toward analytics as critical to its businesses This is part of an overall investment in technology. According to a report released in April by the data firm, spending on information technology security is also up: Investments in technology security from Saudi Arabia, the U.A.E., Bahrain, Kuwait, Oman, and Qatar make up 70 percent of all security expenditures. The investment in comprehensive systems like the ones SAP
provides is not small. While Al Mamlouk declined to say how much installing the SAP system cost the company, the investment is for the long term. Each year the company pays a licensing fee equivalent to 18 percent of the initial license. Committing to information technology infrastructure carries a huge price tag. After looking briefly at Microsoft and
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Oracle, Arabian Construction said there were only two firms, SAP and Swedenbased IFS, that could meet the needs of its project-based business. The business of information technology is not, on the surface, a business of high-powered decision-making or revolutionary management ideas. But it can help companies make the kinds of seemingly small decisions that add up to millions of dollars. In the Middle East, the oil industry has long looked toward analytics as critical to its businesses. The business generates billions of dollars and is necessary for the region’s governments to meet their budgets. When pumps are taken offline for maintenance, it affects revenues. Deciding when to repair or maintain pumps is not a sweeping decision, but SAP’s head of oil and gas upstream operations, Stephane Lauzon, says helping managers in massive oil companies understand the data coming out of all of their pumps helps them make maintenance decisions without stopping production. But more businesses are making that commitment, even smaller ones. While SAP has served the region’s bread-andbutter petrochemical businesses for years, sales to small and medium enterprises grew 30 percent in the first quarter of 2010. Maccotta says the region’s businesses realize they need to invest in technology as they try to expand. “What we see in the Middle East is still a market that is still in strong need of information technology due to the growth,” he says. For SAP, this means a rapidly increasing customer base. In May’s annual convention, SAP brought a delegation of 130 customers and potential customers to Frankfurt, Germany, to show off its wares. Included in the lavish convention, amid cocktail parties and gourmet dinners, was a concert by the pop group Duran Duran. Maccotta says that as of today, SAP sees the Middle East heavily investing in technology in order to support business. “If I look at the results of the business in the Middle East today, we are looking at
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Making a commitment to information technology infrastructure carries a huge price tag 750 customers. And the excitement comes from the fact that we are continuously moving with a ratio of two new customers per week. Not commercial transactions, but two new customers per week,” he says. Last year, Emirates Steel, part of the Abu Dhabi Basic Industries Corporation, implemented one of SAP’s systems when the company undertook a massive expansion project that increased production to 2 million tons of steel from 600,000 tons. As the company moved to five plants from one and grew from just 250 employees, it found it needed a more comprehensive way of tracking production and expenditures, the company controller in charge of business planning, Soumyajit Ghosh, says. Some companies have found that investing in new information systems al-
lows them to collect payments more easily. Right now, because of the availability of information, the salesman who goes to collect the order actually knows in the morning what was the exact amount outstanding before he leaves the office, according to Ghosh. “He can take the printout and it is absolutely up to date. When he goes and talks to the customer, the information he provides to customers is actually up-to-date and correct, whereas previously he was never exactly sure. He didn’t have the information to counter the customer’s claim,” he says. In the past this was a problem because Ghosh’s sales system and production system were not integrated. So there was always a gap and that gap could be a week to 10 days. “You could have invoiced a cou-
ple of million dirhams in the last week. There was always a mismatch,” he says. Emirates Steel implemented the system at a time when the company was trying to meet high demand brought on by construction companies exploiting low material prices. The downturn caused the price of cement and steel to drop significantly, creating a surge in demand in this area as companies stocked up for future projects. “The downturn affected the price of the material. [There were] a lot more purchases of steel and cement specifically at the lower prices, so while the sales prices were low the volumes were absolutely huge. That helped us to get the volumes in and make up for the low prices,” Ghosh says. “[The IT system] helped us ride over the hard times. You could follow our working capital, where our material was. It allowed us to quickly manager our inventories, to get rid of the slow moving inventories and to do a better collection from our customers.” By 2013, the company plans to increase production to 5 million tons as it meets the needs of several additional projects in the U.A.E. The company gets involved at many stages of these projects, according to Ghosh. As new parts of the plant come online, Emirates Steel will produce heavy materials for infrastructure as well as construction projects. But the Middle East’s businesses might just be catching up to their counterparts in other parts of the world. “What we see in the Middle East is the behavior of Europe seven or eight years ago in terms of the interest of adopting information technology,” Maccotta says. As those companies grow, SAP is expanding in the region. The company recently appointed managers to oversee operations in both Qatar and Saudi Arabia, and has tie-ups with regional universities to recruit young technology graduates. “We see the same wave of adoption of information technology and it’s due to the growth that the companies have faced in the last three or four years,” Maccotta says.
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Arts & Entertainment
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All the Parties In All the World From Syrian wedding singer to techno phenomenon, Omar Souleyman has travelled a long road to success. By Karen Thomas London
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hey are mostly young, mostly white – a mixed student crowd, self-consciously on-trend in tweed waistcoats, outsized spectacles, and arm-long tattoos. During the shocked silence that follows the “Japanese doom metal” support act, they eye each other’s outfits and wait for the main act to surface. But as the lights dim and Syrian dabke rhythms fill the air, the faces and bodies dissolve into a churning, writhing mass, synthesized drumbeats whipping the crowd into a frenzy. With every new song, the beat becomes louder and more insistent, the dancing faster and more frenetic, raised arms pumping the air.
In the middle and above it all, the calm eye of a raging storm, is a small, middleaged man wearing an elegant gray thobe, a red and white chequered keffiyeh and 1970s-style aviator shades. He faces the audience, microphone to lips, and wanders across the tiny stage, a wave of his arm urging the dancing to new heights. The man is Omar Souleyman, onetime village wedding singer, now the face of an indie dance phenomenon hailed on the Internet as jihadi techno, his music played in urban clubs from Brooklyn to Barcelona and from Belfast to Beirut. It is an unlikely outcome for an artist who started his career on the river plains of upper Mesopotamia, but this summer sees
Souleyman complete a four-month tour of Europe and North America. His new audiences are a million cultural miles removed from his Syrian fan base. And Souleyman is enjoying every second of the ride. Roots Hasake Province in northeast Syria is famous for many things. Dissected by the River Khabur, Hasake was the breadbasket of Syria, producing wheat and cotton until drought struck three years ago. Closer to Iraq and Turkey than to Damascus, this remote eastern region is known as Al Jazeera – the island. Souleyman comes from Ras Al Ayn, a border town of 50,000 souls whose inJuly/August 2010 | TRENDS 61
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Souleyman’s music fuses mawwal traditions with pop sensibilities of sha’bi and dabke rhythms habitants include Arabs, Kurds, Armenians, Turkomen, Chechens, and Assyrians, and whose musical traditions draw from its mix of Mesopotamian cultures. In 2006, the American record company Sublime Frequencies dispatched IraqiAmerican musician and filmmaker Mark Gergis to Syria. Gergis had travelled around the country in the 1990s, absorbing its music and culture. The soundtrack to that first trip was a rough but charismatic voice played in taxi cabs and blaring from music stalls in the souq. “I was hearing a lot of fast and frenetic dabke music,” Gergis says. “When I heard sounds that grabbed me, I’d ask to see the cassette and it usually turned out
that Omar was the culprit. He had a genuinely different sound to many other dabke and folkloric artists. Syria’s bigger-name dabke artists tend to be on the glossier end of the spectrum.” Gergis returned to Syria determined to track down and sign Omar Souleyman. On arriving in Damascus, he met a man who knew a man who had met the singer personally. Several phone calls later, Gergis and Souleyman met up in Hasake. The rest is Sublime Frequencies history. Now 42, Souleyman spent much of his childhood shuttling from clinic to hospital, after injuring his eye in a car accident when he was five. His education was patchy, due to the long months of medical
treatment. Instead, he took whatever casual work he could find, laboring and selling trinkets. From the time he was seven, his singing voice had attracted attention, but his family did not see music as a career. He carried on singing nevertheless, and in 1994 started singing full-time, performing at weddings in villages and towns across Al Jazeera. Soon, kiosks across the country were selling cheap cassette recordings of Souleyman’s songs. Two years later, the song Jani (She Came to Me) became a nationwide hit. Souleyman’s music fuses classical mawwal traditions of improvised poetry with the pop sensibilities of sha’bi and dabke folk-dance rhythms, drum machines, and synth hurled into the mix. The sound is rooted in the Assyrian, Turkish, Iraqi, and Kurdish influences that have shaped Ras Al Ayn. His wedding shows are built around performance poetry. He works with half a dozen poets, most frequently with Mahmoud Harbi. Singer and poet stand together in the center of the party, and Harbi whispers improvised lines of poetry in Souleyman’s ear. Souleyman – acting as M.C. – then relays the poems to the crowd. This summer’s tour is a poet-free affair, however, a stripped-down show built around the singer, his keyboard player, and Ali Shaker on electric saz. But in any case, it’s not the poetry but the frenetic rhythm that grabs young Western clubbers. Beats That rhythm comes courtesy of Souleyman’s musical partner and keyboard player Rizan Sa’id. A shy, unassuming figure on stage, Sa’id composes Souleyman’s music, creating a solid wall of sound from darbouka drum loops, overlaid with sampled reed flutes and electronic keyboard riffs. Sa’id’s upbeat rhythms and Souleyman’s downbeat charm have set the band apart from other dabke artists. “Omar’s blend of musical styles, his voice, the energy that the band generates and his im-
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Arts & Entertainment
If Damascus sophisticates are sniffy about shawi music, Souleyman has won over new audiences age and presence all contribute to his anomalous standing,” Gergis says. If urban Damascus sophisticates are sniffy about shawi (redneck) music from the rural east, Souleyman has won over new audiences in the wider Arab world. In 2000, his first music video aired on Ar-
abic satellite channels, raising his profile across the Middle East. Since then, he has notched up half a dozen pan-Arab hits including Khattaba (A Proposal), a sardonic song poking fun at a village father’s shameless dowry list, and gone global with the stomping dance an-
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them, Leh Jani (When I Found Out), which has more than 600,000 hits on YouTube. Even now, when not touring abroad, Souleyman sings at up to 20 weddings a month – but these days his party circuit covers Lebanon and the Gulf. Souleyman agrees to meet TRENDS before the sound-check for his gig in London. It is his sixth British date this summer, at the start of the mammoth tour that will take him to more than 30 venues across Europe and North America by the end of September. We track him down to the circular turret of the converted 1920s London cinema, where he and his translator sit cross-legged on the flagstones. Two hours before he will appear on stage, Souleyman is dressed for the night’s performance in his gray thobe, a pack of Marlboro tucked in top pocket, face hidden behind the ever-present aviator sunglasses. While the trademark frames add a rakish air of rock-star cool, they also disguise his damaged eye. After 16 years in the business, Souleyman has a back-catalogue of around 500 cassette albums, mostly distributed, Grateful Dead-style, as bootleg recordings of his live concerts and party appearances. What this means, Souleyman admits, is that his reputation outweighs his earnings. It is a problem common to many Arab artists, who have no access to copyright protection and thus no guarantee that they can make a living wage from music. “Most of my 500 albums were not recorded in the studio,” Souleyman says. “Other people recorded them from performances I gave at parties. I haven’t made money from my music – other people have. But for me, what is more important than the money is the fame. After the fame comes the money,” he says. “It’s now the second time that we have toured in Europe and the shows have attracted large crowds who really seem to enjoy themselves. Wherever we go on tour, we like to say that we leave our fingerprints – but really, these are great audiences. I want to play to all the parties in all the world.”
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To his young audiences, Souleyman’s Middle East rhythms hold a subversive underground appeal The tour promotes Souleyman’s third album for Sublime Frequencies. “Jazeera Nights” was released in May, a follow-up to the studio-recorded “Highway to Hassake,” which first unleashed the Souleyman/Sa’id sound on Western audiences three years ago. Last year brought a live follow-up album, “Dabke 2020.” “Highway to Hassake” met with huge critical acclaim. The rave reviews prompted British indie bible the N.M.E. to rank Souleyman fifth on its annual Future 50 list of the top alternative music industry movers and shakers, high above global heavy hitters Jack White and Lady Gaga. Celebrity fans include Icelandic superstar Bjork, who praised Souleyman’s
“alive and very urgent” sound, and Blur/ Gorillaz singer Damon Albarn, who put “Leh Jani” on his radio playlist. Despite hints that an Albarn/Souleyman collaboration would soon follow, however, nothing has materialized yet. Wide appeal “Omar’s appeal is extremely varied,” Gergis says. “Who else is adored by Saudi princes, Kurds, Arab Muslims, and Christians, indie record collectors, world music enthusiasts, punks, academics, Hollywood hipsters, and pop stars? You can count the names on a hand.” For all the hype about globalization and the Internet bringing world culture to wider
audiences, however, few Arab singers have achieved enduring success in the West. Of those that have broken through, most have needed partnerships with big-name Western stars to secure media exposure. And so Cheb Mami scored a crossover hit through his “Desert Rose” duet with Sting. Hakim has worked with both Stevie Wonder and the late James Brown. Rachid Taha toured America after film director Ridley Scott used his track “Barra Barra” for the helicopter crash scenes in “Black Hawk Down.” For record companies, the cross-cultural duet is a marketing tool – a win-win strategy for the Western artist, who gains new access to audiences in the developing world, while taking credit among the fans at home for “discovering” a fresh new sound. The developing-world artist scores a one-hit wonder and walks away with nothing. Souleyman is open to working with a Western partner – on his own terms. “A lot of Arab artists have become famous through duets,” he says. “But sometimes there’s a problem of cultural attitudes, and of differences in style. It would be interesting to put together a duet with an American or European artist, with the right person.” Meanwhile, he is working on a documentary with Gergis and enjoying his new clubland fan base, even if singer and audience seem a little at cross-purposes: To his young dance rebel audiences, Souleyman’s traditional Middle East rhythms hold a subversive underground appeal. Which brings us to the subject of jihadi techno: Um, what exactly is it? Souleyman looks baffled. “Jihadi techno, you say? Where did you hear that? It’s not a name I’ve heard before.” The term appears in Sublime Frequencies’ marketing blurb, TRENDS persists. Souleyman shoots another baffled look at his translator and shrugs. “I think of my music as dance music, as sha’bi music,” he says. “When I get up on stage, I have to get the people to dance. To me – honestly – getting people to dance is the only thing that matters.”
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Aviation
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Turkish Delight Turkish Airlines’ new expansion strategy is taking off thanks to Istanbul being an attractive hub amid the spokes. By Jay Akasie Istanbul
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city has to be a sterling piece of real estate for the emperor of Rome to relocate his capital there. But that’s just what the Emperor Constantine did in 476 A.D. when he upped and moved to what’s now Istanbul. Constantine preferred calling the city Constantinople – a big stretch there – as he began a dazzling building program on the shores of a river that links Europe with Asia. Indeed, part of Istanbul’s appeal is that it’s the only city in the world that straddles two continents. For more than 2,000 years, its location has made it a hub of trade, commerce, culture, and religion. What really makes a great city is that no matter how old it is, there’s always the pos-
sibility that something new is around the bend. The same goes for companies. Take Turkish Airlines, for instance. The national carrier has been around for 75 years, but it’s transforming itself into a nimble and aggressive airline in the manner of a young company. The innovative blueprint that charted the airline’s transformation comes from Temel Kotil, Ph.D., the company’s chief executive officer. Just as Constantine (and later, the Emperor Justinian) utilized the city’s strategic location to build one of three great empires that would call Istanbul home, so has Dr. Kotil taken a look at the map in much the same way. “What I noticed is that there are few places on earth that afford such an ide-
al place for a commercial airline hub,” he said to TRENDS during a recent interview at the company’s Istanbul headquarters. The leaders of the Roman, Byzantine, and Ottoman empires were accustomed to fighting for their hold on the crossroads of the world. Today, Dr. Kotil has developed a strategy that will help him navigate Turkish Airlines through a fiercely competitive industry that would make even Justinian’s head spin. Those familiar with the Gulf are no strangers to airline hubs. Indeed, Dubai has staked much of its future on it being the word’s pre-eminent transportation hub. These days, success in the airline industry hinges on several factors, such as July/August 2010 | TRENDS 69
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Dr. Kotil is concentrating on putting smaller commercial airplanes on shorter routes the absence of pesky unions, stable fuel prices, and national subsidies to keep fares competitive while not skimping on service. But the foremost factor, proven by the rise of airport powerhouses like Dubai, has become location. Dr. Kotil is a shrewd and experienced businessman: His strategy acknowledges the recent rise of the Dubai airports and the success of the airlines associated with them. He’s quite content to leave fleets largely consisting of giant wide-body jets to the blue-chip Gulf carriers. What he’s concentrating on is putting smaller commercial jets on shorter routes, an advantage of flying out of Istanbul. That’s not to say the company doesn’t have a long-haul plan as well; it has 12 Boeing 777s and 10 Airbus A330s on order. “We order from
both manufacturers to keep prices manageable,” he said with a smile. The strategy is paying off. Turkish Airlines is now the third largest European airline and the only carrier offering fourstar services in all cabin classes within Europe. The company expects to carry 31 million passengers over some 4,500 flights by the end of this year, up from 10.3 million over 1,750 flights in 2002. In 2008, Turkish Airlines carried more international passengers than domestic ones for the first time. That gap is widening as it adds destinations in North America (like Washington, D.C. and Los Angeles), Africa (Dar Es Salaam), and the Far East (Ho Chi Min City and Dhaka). Dr. Kotil also knows that when the widebody jets fight over the world’s huge air-
ports, Turkish Airlines can carve out a niche flying to mid-sized and small terminals. When’s the last time you took a direct flight to Sochi or Novorsibirsk? (It’s okay if you can’t answer that question.) Perhaps the best thing about having your corporate headquarters and hub in Istanbul is that most people want to fly to you and vacation there. It’s nice to have a really attractive hub amid all those spokes. The 20-mile Bosphorus Strait is what connects the Asian continent to the Mediterranean Sea, and throughout history the man who controlled that passage controlled most of the known world. The historic heart of the city is Sultanahmet and the Bazaar Quarter. These two neighborhoods are within the old walled capital that forms the “Golden Horn” jutting out into the Bosphorus. Much of Istanbul’s distinctive skyline comes the domes and surrounding minarets of the various medieval mosques
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around the city. The grandest one of them all was actually dedicated by Justinian as the Hagia Sophia Church in 537 A.D. For nearly a thousand years this church stood at the center of the Orthodox Christian world. When the Ottoman Turks expelled the Byzantines in the 15th century, they converted the massive edifice into a mosque, which included building four minarets around the perimeter of the dome. Hagia Sophia is now a museum that stands adjacent to the grounds of the Topkapi Palace, the home of the Ottoman Sultans between the 15th and 19th centuries. The palace is also a museum, with the rooms of the Treasury and the Sultan’s Harem used to display many of the jewels and religious relics of the royal family. Nearby is the 17th century Sultanahmet Mosque. Most people – especially English-speaking tourists – know it as the Blue Mosque because of the brilliant blue marble used in what stands as the last of the imperial mosques. It’s difficult to believe the Blue Mosque and the Hagia Sophia are separated by 1,100 years; their architectural styles are strikingly similar. The Blue Mosque stands out because of its six minarets. No visit to this neighborhood would be complete without lunch at the Four Seasons, one of two hotels of the famous hotelier in the city. The Four Seasons Sultanahmet is a jewel among jewels. The main building began life as a prison for Turkish dissidents in the 19th century. Its recent renovation into a hotel involved the painstaking preservation of period artwork and antiques. Architects also kept its location in consideration while planning numerous rooftop terraces and a courtyard that afford spectacular views of the nearby Hagia Sophia. Within the courtyard is a glass pavilion that houses “Seasons,” the hotel’s gourmet hotspot. For those who want a different scene, consider staying at the city’s other Four Seasons. It’s larger than the 65-room boutique hotel at the historic core and sits on the shore of the Bosphorus. With all that room come amenities like pool and cabanas along the waterfront and a spa that rivals any in
It’s difficult to believe the Blue Mosque and the Hagia Sophia are separated by 1,100 years Switzerland. Down the street from this hotel is the hottest nightclub in the city: Reina. Most of it is outdoors, under the Bosphorus Bridge, in a set-up that reminds New Yorkers of that city’s hip DUMBO scene. A party warning, perhaps: Don’t go to Reina on an empty stomach. All that revelry with the most beautiful people that Istanbul has to offer will take its toll on even the heartiest of constitutions. Not to mention that a night of Red Bull and spirits at Reina can do a number on a man’s memory, too. So be sure to write down “Topaz” in your list of must-visit restaurants in Istanbul. Topaz sits atop a bluff in the fashionable Taksim neighborhood with a view that, despite as many Red Bulls and spirits as you can down, will be one of the
most memorable, for dinner or otherwise. What Topaz does best is to fuse traditional Turkish cuisine – dolmas, stuffed grape leaves, buttered rice, and anything made of chickpeas – with Western classics like the Chateaubriand for two. A walk down the hill from Taksim will take you to the largest – and one of the oldest – bazaars in the world. The Grand Bazaar boasts 4,000 shops devoted to carpets, jewellery, copper, and ceramics. The other notable bazaar in the city is the Spice Bazaar, which sits next to the New Mosque, so named because it was built in 1663, a baby by the city’s standards. When it’s time to fly home, they might have to drag you to the airport. But if you’re flying Turkish, chances are you’ll have a direct flight to wherever you’re going. July/August 2010 | TRENDS 71
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Maritime Industry
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Riding the Wave We’ve found the mother of all economic indicators: As the Dow Industrials edge upward, so do orders for a new generation of decadent mega-yachts. By Liz Peek Nantucket
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zure shoots are bubbling up in the yachting industry. Just in the past few weeks, Brazilian shipyard MCP, Turkey’s Sunrise Yachts, and Italy’s Benetti have all announced orders for boats above 40 meters. Even better, Christensen Yachts in Vancouver announced the first North America contract signed since the financial crisis – for a pair of identical 50-meter yachts, each costing roughly $30 million. Why two? Apparently, for the anonymous buyer, one was not enough. This is not the first time an owner has treated himself to two identical boats; after all, when you jet from the Caribbean to the Mediterranean you don’t want the stress of having
to learn a whole new deck plan. What if you’re taking a romantic moonlight walk? You certainly don’t want to bark your shin on an unexpected outcropping. It’s easy to poke fun at the excesses built into the luxury yacht trade. There is perhaps no market on earth where men compete more aggressively in measuring their… equipment. (I actually have never heard of a woman ordering a superyacht. These days, in America, women who have shattered the glass ceiling seem content to spend their fortunes on more humdrum opportunities like campaigning for the Senate.) Like skyscrapers, yachts continue to grow in size, with the newly affluent happily pushing the envelope.
Recently, the envelope soared from letter to legal size, as the latest, greatest super-yacht ever built steamed out of the Blohm and Voss shipyard in Germany. The Eclipse, commissioned by Chelsea Football owner Roman Abramovich, is all of 557 feet long, surpassing by 36 feet the record previously held by the 532-foot Dubai, owned by Sheikh Mohammed Bin Rashid Al Maktoum. Because the Eclipse project has been carried out under the strictest security, descriptions of the boat (ship?) have bordered on the incredible, or possibly the ludicrous. The cost had been originally estimated by Huffington Post at between $400 million and $1.2 billion; even to a former stock July/August 2010 | TRENDS 73
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There is perhaps no market where men compete more aggressively in measuring their… equipment sive camera. No yacht should be without one. The truth is, no one really knows what is aboard the Eclipse; the level of secrecy surrounding the project makes the Stealth Bomber look like one of those planes towing advertisements above overcrowded beaches. Recent press accounts that the owner has gotten into a row with the builder over whether the reptile and leopard skins in the massage room were ethically sourced may or may not be true.
analyst, that seems like a large range. The current betting is $486 million. The vessel is said to contain a missile defense system, a submarine, bullet-proof glass, swimming pools and hot tubs (of course), not one but two helipads (handy for large parties), gazillions of flat-screen TVs, 600 doors, and – my favorite – an “anti-paparazzi laser shield.” The shield can apparently detect and deflect the kinds of light impulses that stem from an intru-
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It is remarkable, perhaps, that the super-yacht industry is already recovering. After all, even our wealthiest global citizens took a beating during the financial crisis, and other sectors, such as fine jewelry, are still struggling. And yet the signs are unmistakable. Miriam Cain of the British broker Camper and Nicholson says that industry-wide there were 33 sales of existing yachts in April, up from 24 in March, for a rise of 65 percent. Sales were up 36 percent from a year ago, based on asking prices. Demand, she says, is particularly strong for the cream of the crop vessels – those made in Italy or Northern Europe. Buyers are Americans or English, as well as Asian and Middle Eastern. Kenny Wooten, the American editor of the Yacht Report, says orders tend to pick up when the Dow Jones Industrial Average moves above 10,000. One would think that there is no more discretionary purchase than a yacht. On the other hand, just a couple of years ago, those craving the ultimate status symbol
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were stymied by the flood of purchasing, which led to long waits and rising prices for new craft. According to Boat International, between 2005 and 2007, some 250 yachts measuring above 40 meters were delivered, up from a more normal 30-40 boats per year. Imagine wanting to spend hundreds of millions on a new toy and having to stand in line – Xbox fanciers had it easy by comparison. Wooten says that “the over-100-foot market was on a rage through the first quarter of 2008.” Cain confirms the froth. “Some buyers were ordering and then selling their contract halfway through the build period,” she reports. “Most builders globally had full order books, with wait periods of up to three years.” Wooten says that in the third quarter of 2008 – after Lehman failed – the market turned “squirrely” and then three months later “went vertical,” with orders simply disappearing off the page. Boat International reports that some 100 new orders were placed in the first three quarters of 2008 alone; in the final three months of the year, only two. In 2009, there were fewer that a dozen new commissions. Because of healthy backlogs, builders were busy through most of 2009, but then the downturn began to force layoffs and closings. Cain says that the industry produced 77 new custom super-yachts in 2008, but the number tumbled to 66 in 2009. For builders, new orders are arriving in the nick of time. When the largest yards quickly sold out, new entrants emerged; many have since gone under. Backlogs have been sinking, thanks to a dearth of buying and rising cancellations. Some yards had begun to build hulls on spec during the heady buying spree, and so were stuck with un-bought inventory, as well as falling workloads. Buyers today can count on quicker deliveries, but are unlikely to find that prices have receded much. Wooten says that yards have chased cheap labor around the world, but that most of the costs of a new vessel are fixed. A good portion of the total cost of a mega-yacht is focused on the
Venture capitalist Tom Perkins unloaded the stunning Maltese Falcon last year for $100 million interiors; flat screen TVs and Wolf ranges haven’t gotten any cheaper. This is not true for existing boats, where prices have fallen as much as 40 percent from their highs. Boat International reports that while 21 existing yachts over 24 meters were sold in May, 36 boats went on the market, and 33 price reductions took place. Tom Perkins, a venture capitalist who got in early on the phenomenal success of Google, unloaded a super-yacht last year called the Maltese Falcon – the largest sailing craft in the world, and considered by some the best designed. His asking price was $165 million; the sale took place at $100 million. This discount is extreme, but since boats in this category are typically highly personalized, they can be tough to unload. They are also tough to keep, if your fortunes have taken a turn for the worse.
Wooten says that a rough rule of thumb is that it costs 10 to 15 percent of the build cost per year to operate a vessel. So, if you plan to spend $100 million on your dream boat, you should count on laying out $10 million or so each year just to keep it afloat. And that’s only the tab for crew, dock fees, insurance, and other necessities. In other words, you pay $10 million to sit still. If you actually decide to travel, the price tag soars. Add in fuel (these vessels are not exactly fuel efficient) and food (five-star chefs are considered essential), and you start to talk real money. This brings us to the legendary banker J.P. Morgan’s oft-repeated quote that if you have to ask how much one costs, you can’t afford one. Although that advise seemed to have fallen on deaf ears a couple of years ago, it may have played a role in the sudden collapse in new orders. After all, there are othJuly/August 2010 | TRENDS 75
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Yachts continue to grow in size, with the newly affluent happily pushing the envelope er ways to enjoy a yachting vacation. For instance, you can always charter. Though most of the biggest and most renowned vessels are not available to the hoi poloi, there are hundreds of boats available from reputable yacht brokers like Edmiston, Camper and Nicholson’s, Burgess, and others. Cain says that charters are strong. “The charter business fell 30 percent off the boom years, but since has come right back.” Chartering isn’t exactly cheap, but there is a variety of boats available at different price points. Figure on spending as much as $1 million a week for the very largest and most luxurious craft. More reasonable (funny how quickly you can lose your bearings in this sort of analysis) are the boats measuring between 100 and 200 feet, built in the past 10 years, that cost around $250,000 to $350,000 per
week. For example, a week on the Christensen-built, 162-foot Remember When costs around $225,000. The boat may be chartered anywhere in the world – including the Caribbean or the Mediterranean, can accommodate up to 12 guests, and has a crew of 10. That fee probably does not include tip for the crew, and other oddments. The boat is gorgeous, and has a number of luxury features, including heated marble floors in the baths. In other words, you may never want to return home. While practical issues such as finance have impacted the super-yacht market over the past few years, the allure of sailing the world’s oceans in a customized super-yacht has not faded. In fast-growing parts of the world like Asia and the Middle East, appetites for all sorts of luxury
goods are soaring. The recent Dubai International Boat Show attracted tens of thousands of visitors and 700 companies. The sale of a 72-meter Sunseeker boat on the show’s first day set the tone. Participants noted that demand for yachts was stronger in the Middle East than in the Mediterranean or Caribbean. Similarly, orders are beginning to flow from Asia, which has in recent years accounted for less than 5 percent of demand. While Taiwan and China have emerged as credible suppliers, producing boats for one-third to one-half off the going rate in Western Europe (and reportedly some reduced quality in the bargain), they have recently begun to produce buyers. The current oversupply of luxury craft will eventually recede, and the industry will stabilize. Wooten, though, remains cautious. “I have the feeling the market will never get back to the overheated level of 2007,” he says. If indeed the Dow Jones is the best indicator of demand, let’s hope his caution is misplaced.
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Boom Town There’s a seismic shift in the Gulf’s hospitality industry: The cash-cow hotel business, long the domain of Emirati cities, is headed to Saudi Arabia. By Emily Meredith Riyadh
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he steely blue Kingdom Tower distinguishes itself from the rest of Riyadh with a semicircular cut-out that can be seen from everywhere in the city. But the sad fact is that for most of its recent history, Saudi Arabia’s glamorous office buildings haven’t been enough to attract the kind of free-spending tourists that make the economies of other prosperous Gulf countries hum. To be sure, Saudi Arabia has always been a destination for religious tourists. But strict visa laws and even stricter social codes have prevented the country from becoming a destination for sun-seeking leisure travelers and year-round convention tourists.
But that’s changing in a big way. Enticed by government spending on massive infrastructure projects, Gulf hoteliers are betting big on Saudi Arabia. With a population on par with a mid-sized European country, internal migration, and a shortage of housing options, the country’s hospitality industry is now more appealing to hotel developers than the Gulf’s more traditional centers of business and leisure tourism. “In Saudi Arabia it’s been the oil business and the petrochemical industry,” the director of development for Hilton Worldwide in the Middle East, Carlos Khneisser, says. “But now, internal tourism is driving demand.”
The missing piece of the puzzle for Saudi Arabia has been the internal, nonreligious tourist. With its plethora of fivestar resorts, entertainment facilities, and more liberal attitudes toward alcohol consumption, Dubai has long been the Gulf’s leisure and business convention destination of choice. But the forces of hotel supply and demand are at work in Saudi Arabia. Khneisser says the country faces a shortage of 1.3 million residential units, and that many families use long-stay residential apartments in hotels to cope with the problem. Hilton’s budget over the last two years has targeted secondary cities like Jizan and other cities around the main July/August 2010 | TRENDS 79
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The Saudi government is working with developers and trying to help with some financing as well urban cores, Khneisser says. Companies like Hilton are salivating over the prospect of the enormous populations shift within the country’s borders coupled with the alarming housing shortage. Most of the companies are mid-market brands. The chairman of Kuwaitbased Action Hotels, Mubarak Abdulla Al Mubarak Al Sabah, says there is a
lack of available rooms in the industrial cities where his company, which specializes in mid-range brands, is trying to build hotels. “We believe this is one sector that is in crisis,” says Al Sabah, “We believe the mid-market will benefit.” And the government is helping, as it usually does in Saudi Arabia. The assistant vice president for investment serv-
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ices at the Saudi Commission for Tourism and Antiquities, Dr. Hamad M. Al-Ismail, says the government is encouraging developers to build in Riyadh. He says he’s working with developers and trying to help with some financing as well. Al-Ismail’s department has set up a program with the government called “Loans for Hotels.” “The big names have been introduced into Saudi Arabia,” he says. Some of the assistance will be directed at sites for religious tourism – Mecca and Medina. According to a recent report from consultancy Jones Lang LaSalle, many of the existing rooms in hotels in the holy cities are not up to what the report termed “international quality.” And supply is far outstripped by demand, pushing prices far higher than a comparable room in another city would fetch. According to the report, even a medium-sized increase in the number of rooms
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helps bring some reality to the market. In Mecca, new rooms resulted in a 30 percent price drop in 2009. Al-Ismail says the commission hopes the hotels in secondary cities will help raise the profile of those cities and will make those locations visible to create jobs. This is his main goal. Industry in Saudi Arabia needs encouragement, he says. In April, the government announced its ninth five-year economic plan and promised continued emphasis on developing smaller cities. Foreign tourism comprised 3.7 percent of Saudi Arabia’s G.D.P. in 2009, according to the head of statistics at the Commission for Tourism and Antiquities, Munthir Al-Aansari, who says the government is happy to focus on domestic tourism. “The economic investments in Saudi include [investment in] a new budget airline, King Faisal Economic City, developing tourism. All of these initiatives are making Saudi attractive to investors,” the senior vice president for U.A.E. operations at Abu Dhabi-based Rotana hotels, Omer Kaddouri, says. Rotana’s projects will capitalize on the attention to economic diversification by eventually employing locals in 30 percent of staff positions. “Most of them are doing this for the first time. Is it a challenge? Yes. Do they succeed? Yes,” Kaddouri says. Tourist detour Kaddouri, though, is not so positive on all of the markets in which Rotana is investing. While the company will have 30 hotels open in the U.A.E. by the end of this year and 40 by the end of 2011, he calls the current market “oversaturated.” For several years, the emirates of Dubai and Abu Dhabi were the darlings of investors and hotel brands entering the Middle East. But the rapid development and oversaturation means that investors still looking for growth are searching elsewhere in the region. Abu Dhabi suffered a shortage of rooms until last year, when Yas Island
Now it’s Saudi Arabia. But for years Dubai was the darling of hotel developers entering the region came onto the market. With it came a deluge of hotel rooms meant to cater to tourists when the emirate’s planned attractions come on line in the next several years. According to the executive vice president of Jones Lang LaSalle, Jaliil Mekouar, revenue per available room has declined rapidly in Abu Dhabi. The market is less certain than it was two years ago and customers no longer book two to three months in advance. As a result, hotels compete with each other on price. The rate of decline in revenue per available room has slowed, but is still not near the old levels. “In Abu Dhabi, they are working hard to expand the leisure business with the development of the Louvre, the Guggenheim, all these attractions,” says Khneisser.
But these developments won’t be ready for the public for several years still. In the meantime, competition is tough and hotels have had to lower their prices. Some of the more spectacular and troubling announcements for the hotel industry have been signals of failure. Earlier this year, the head of Union Properties said everything was up for sale at a price when asked if the development company would consider selling Ritz Carlton. “I don’t think we will be encountering what Ritz Carlton has been encountering with U.P.,” Khneisser says. Hilton partnered with family and sovereign wealth fund businesses when entering the region’s markets. Hilton says the decision not to partner with property July/August 2010 | TRENDS 81
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According to Khneisser, Rotana looks at North Africa, Saudi Arabia, and Egypt as growth markets groups was not a deliberate strategy on its part, but acknowledged that in the wake of the crisis it proved to be a lucky one. “There is still a way for us to develop our luxury brands, which are the Waldorf Astoria and the Conrad, and specifically target Saadiyat Island and the Corniche area in Abu Dhabi,” Khneisser says. Other areas of the region are growing as well. Hilton has announced projects in Lebanon and Jordan. According to Khneisser, Rotana looks at North Africa, Saudi Arabia, and Egypt as growth markets. And the regional markets are coming back from their lows last year. Khneisser says the average daily rates in the U.A.E., Saudi Arabia, and Lebanon have all grown more than five percent over the last year.
The biggest problem facing developers, then, is not demand. As more investors look to build while prices of materials are depressed in the wake of the financial crisis, the challenge they run into is the availability of cash. According to data compiled by Jones Lang LaSalle, as many as 60 percent of projects in the pipeline have been put on hold or canceled. Because credit is so tight, the spread on loans for developments have been very high, the president of I.F.A. Hotel Investments, Joe Sita, says.“While [the Emirates Interbank Offered Rate] and Libor are still very low, spreads are very high. When you’re talking about total cost, debt is available, but at a very high price at 15 percent or more,” he says.
And in a region where financing can be subject to Shariah compliance strictures, hotels can have an even harder time finding sources of funding for projects, according to the director of the hotels and hospitality division at Premier Group, Roger Blackwell. “I think most of that type of money is likely to come from an international bank that is operating in the region that is really the leader, and then maybe able to assemble the loans from different banks,” Blackwell says. Without easy access to funding, owners and developers are more focused on current properties, he says. “I think that people are definitely much more yieldfocused today. They’ve built all sorts of things and now they realize these things have to make money, and maybe they’re not able to pay their debts at the moment. So they’re really conscious of cash flow at the moment.”
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Visas Rule In Saudi Arabia Demand for travel services is on the rise. So why is the number of tour operators in the country shrinking? By Emily Meredith Riyadh
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sizeable chunk of the world’s 1.8 billion Muslims travel to Islam’s holiest cities of Mecca and Medina every year. Government officials have talked about increasing the number of visitors. They’ve said that infrastructure and development plans will increase the country’s capacity for handling tourists. Yet tour operators say strict enforcement of visa regulations is constraining their ability to do business. Brought on by concerns that some religious tourists would remain in Saudi Arabia, tighter applications of visa rules have caused the number of tour operators to drop by as much as half.
Tour operators in the country escort travelers from the airport and throughout their journey from Mecca to Medina. The Ministry of Umrah and Hajj has always reviewed the record of these operators, penalizing those who do not adhere to the regulations. Saudi Arabia’s oil wealth is enticing, and the market is appealing for young people from impoverished Muslim countries. Some enter on a religious tourism visa and then stay, working odd jobs and sending money home. “A lot of Muslims, they want to come to Saudi, but they don’t want to go back,” the chief operating officer of Hajeej tour operators, Fayyaz H. Siddiqui, says.
Unlike other countries in the G.C.C., Saudi Arabia’s already substantial population is economically diverse. Expatriates comprise 28 percent of the country’s 27 million residents. The government, though, cannot babysit the more than 4 million tourists entering the country for pilgrimage each year. In an attempt to keep people from overstaying, it is cracking down on tour operators. Operators say the government is reviewing company records more frequently. “What they have done this year is close the period. So instead of annual it will be monthly,” the general manager of business development and marketing at Elaf Travel tourism and hotels, Ehab A. Eid, says. July/August 2010 | TRENDS 85
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The only way for operators to guard against people who may overstay is to do background checks Operators cite different figures, but agree that the number of agents has fallen by nearly half. For Eid, who says his company has been in business since 1981, this has meant greater demand for his services. For the time being, he says this is good. Fewer competitors means more certain businessBut if the trend continues, he says there
could be a problem. “We are very much worried about the number of agents.” The only way for operators to guard against people who may overstay is to do extensive background checks on the tourists, ensuring they have reasons to return: A family, a home, and a job. “When we are reviewing requirements for a visa, we don’t accept the young. We prefer to take fami-
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lies,” Eid says. He says Elaf works with just 65 agents – companies in a traveler’s home country that reviews their application for a visa – rather than expanding to access more tourists. He says this has helped the company keep problems to a minimum. Siddiqui says he has seen a dramatic decrease in the number of operators since the peak of approximately 200 from seven years ago. “These are the companies that do not follow the rules,” he says. But Siddiqui says he will not be able to gain market share even with fewer other tour operators. “We have limited capacity. I have limited rooms. A serious problem would be accommodation in Mecca.” The government appears to be tightening restrictions on the agents that help tour operators in Saudi connect with travelers. Abdullah Al Rukaibi, the assistant marketing manager for Al Marway Hajj and Umra, based in Kuwait, says he once was
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While capacity may rise dramatically, that does not mean the number of tourists necessarily will able to find tourists from around the globe to assist in applying for visas. “If we wanted, we could get a client from Egypt.” Now, the company can only vet Kuwaiti citizens and residents – those with a permanent visa for Kuwait. “We can’t get most of the markets like North Africa, South Africa, or Egypt,” he says. Those markets made up as much as 40 percent of Al Marway’s business in the past. The strict enforcement comes at the same time as massive infrastructure projects aimed at building the country’s capacity for religious tourists. The Haramain High Speed Railway will shuttle pilgrims between Mecca and Medina and will circumvent the current heavily traversed roads. A monorail within Mecca will enable tourists to travel more free-
ly within the city. And the government is helping hotel operators with financing. The efforts to improve infrastructure in the holy cities coincide with a concerted effort by the Saudi Commission for Tourism and Antiquities to bring in tourists interested in historical sites the country has to offer. Speaking in March, the vice president for marketing and media at the authority wanted to increase the number of tourists by 4 percent in 2010. “This is a new market,” Eid says. Elaf is trying to diversify its operations away from religious tourism by investing in hotels and bringing in non-religious tourists. Siddiqui says his company works with a more diverse set of tourists. “We have seen an increase in interest in every part of the world and from people from coun-
tries like England, America, and Malaysia,” he says. “The Saudi Supreme Commission is advertising more. People were not aware of the historical sites.” A recent report from consultancy Jones Lang LaSalle shows that the number of annual pilgrims to Mecca and Medina could increase to 13.75 million based on planned infrastructure and developments. But while capacity may rise dramatically, that does not mean the number of tourists necessarily will. “The only problem would be visas and regulatory constrains. So [it could be lower] if they decide they don’t want that number of people in,” the head of research for the Middle East and North Africa in Jones Lang LaSalle’s Dubai office, Craig Plumb, says. Citing the number of Muslims worldwide, he says: “There is sufficient demand to accommodate more than that. It’s only being held back by the capacity constraints.”
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I Gotta Tell Ya… The year 2010 may just be remembered as the one that homegrown stand-up comedy turned a corner in Egypt. By Ashraf Khalil Cairo
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he scene was the Sawy Cultural Center, a multi-stage performance space tucked underneath a busy bridge in the upscale central Cairo district of Zamalek. The room was badly ventilated and sweltering hot, with blinding stage lights that forced some audience members to don sunglasses. The event was essentially a massive night-long social and comedic experiment. One after another, with the capacity crowd roaring at almost every line, more than a dozen comedians took what is essentially an Anglo-American art form and gave it a decidedly Egyptian spin.
Tamer Farag, a 35-year-old professional tour guide, riffed cleverly on the bizarre linguistic games Egyptians play – incorporating English words like “coffee shop,” “upgrade,” and “jacket” into Arabic, then randomly applying Arabic grammar rules to them. “So what’s the plural of jacket?” Farag asked the crowd in Arabic. “No, it’s not ‘jawaacket,’ that’s low-class! All the chic people say ‘jacketaat.’ What’s wrong with you?” Noha Kato, a young woman who wears the hijab, talked about how hard it is for veiled women to find places to swim. Her options are either to find a pool with women-only hours or opt for the slightly
ridiculous “Islamic swimsuit.” “For people who don’t know, it’s like a diving suit with a ballet dress stuck on it. So you end up looking like a Muskateer,” she said, drawing a huge laugh. Kato, delivering her routine in fluent English, joked that at age 22, her parents are already fretting about her never getting married. “I feel like a yogurt cup with an expiration date stamped on my forehead,” she said. The year 2010 may just be remembered as the one that homegrown stand-up comedy turned the corner in Egypt. If so, the Feb. 19 comedy showcase known as Hysteria may be the moment that proved Western-style could
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Twenty-two-year-old Noha Kato jokes about how hard it is for a veiled woman to find places to swim thrive here. The stand-up scene has been bubbling below the surface for several years. Clubs and coffee shops have started hosting occasional stand-up nights, drawing on a growing pool of locals eager to perform. “It’s going to be very gradual. It will still take time for people to catch up to it,” the manager of the Cairo Jazz Club, Shady Hamza, said. Hamza started experimenting with stand-up nights earlier this year, bringing in two or three comics to perform brief routines as an opener to the night’s band. To his surprise, he discovered that his nightclub – which normally doesn’t start filling up until 11 p.m., was packed by 8:30. “I’m excited about the idea and I want to be part of its growth,” Hamza said.
Maha Hosni, an advertising executive who organized the Hysteria mega-show, described the event as a crucial test to see whether Egypt had both the talent pool of comedians and the audience interest to make regular stand-up shows a viable business venture. By almost any standard, the experiment was a raging success. The 500-seat cultural center was sold out for two separate shows – at a comparatively high price of 60 Egyptian pounds ($12) per ticket. Despite an air-conditioning malfunction that left both the audience and the comics sweating profusely, the crowd was clearly primed and laughed hard at almost everything – including some gags that weren’t really all that funny.
The comics moved back and forth between English and Arabic – with the audience seemingly following along in both languages. “I thought it would go well, but this was beyond my expectations,” said Hosni, the events and media manager for the Benchmark Advertising Agency. “This shows people want to laugh. They know stand-up comedy and they love it. All the university students know this culture and watch the comedy channels.” Egyptians are, of course, no strangers to comedy. The country is famous for producing generations of iconic comedic actors (from Ismail Yassin to Adel Imam and Mohamed Heneidy), and Egyptians in general are known throughout the Arab world for their humor. “Egyptians are the best comedians,” said Hosni, using a common local colloquialism. “We’re known for our ‘light blood’.” But that comedic spirit has always been channeled into slapstick movies and raucous four-hour plays. “We’ve always had comedy, but it wasn’t an individual thing. It was in the framework of something else,” Farag said. This new explosion of the solo standup form actually owes its roots to a group of Middle Eastern immigrant children from the United States. Somewhere around 2006, a quartet of Arab- and Iranian-American stand-up comics started to gain notoriety in America, performing together under the banner of the Axis of Evil Comedy Tour. The group (Ahmed Ahmed, Dean Obeidallah, Aron Kader, and Maz Jobrani) had spent years honing their craft on comedy stages across the country. Ahmed, Kader, and Jobrani were based in Los Angeles and rose through the ranks at legendary clubs like the Comedy Store and Laugh Factory. Obeidallah, based in New York, worked the East Coast clubs, and helped found the now wildly popular annual Arab-American Comedy Festival in New York City. The collaboration produced a successful stand-up tour and an hour-long special on the American channel Comedy Cen-
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Perspectives
tral. Then the group decided to take their act to the Middle East, performing in Dubai, Cairo, and Beirut. At each stop, they held open tryouts for local talent. Obeidallah also helped found the annual Amman Stand-up Comedy Festival in Jordan, which is now entering its third year. “We’re trying to build a comedy infrastructure” in the Middle East, Obeidallah, who is Palestinian-American, said. “I tell people we’re comedy missionaries.” Sherif Zaher, who performed at the recent Cairo Jazz Club comedy night, got his first taste of the spotlight thanks to one of
these talent initiatives. The 29-year-old was encouraged to enter tryouts when Obeidallah and company performed a show at the Cairo International Convention Center in 2008. He won the competition and received the chance to perform briefly on stage. “For the first time in my life, I performed in front of 3,000 people,” he said. Now Zaher, who works in asset management at EFG-Hermes, dreams of going full-time. But it’s going to take a while before that’s an option locally. “There are no comedy clubs in Egypt. It’s just you by yourself,” said comedian Mohammed
$12
$85
$9
Price of a ticket at the Hysteria mega-show held in Cairo in February
The most that budding stand-up comic Noha Kato has been paid for a performance
And a free meal is what the 22-yearold, who performs wearing a hijab, usually gets
Shaheen, who estimated that there are 15 stage-ready Egyptian comedians trying to gain experience with any gigs they can find. “We need a comedy club or a big sponsor,” he said. At the moment, none of the comedians is actually making a living from their performances. Kato, the veiled comic, has a day job at Egypt Air. The most she has ever made for a performance is 1,000 Egyptian pounds ($85) and most of her gigs pay her “50 pounds ($9) and a free meal.” But Hosni, the event organizer, says she is thinking big after February’s success. She plans to host several such events a year and to continue to build up the local stand-up scene. Once the talent pool is ready, she wants to launch an international tour and “invade London and other places with Egyptian talent.” The comics are also encouraged and looking for greater opportunities. Farag said he hopes to quit his tour guide job and become a full-time comic within a few years. Kato said she and other young comedians have already formed a group with a shared interest in building a stand-up scene in Cairo. “All of us stick together. If one person gets a show, they call the others and get them on it,” she said. “It helps that Egyptian crowds are very friendly. I’ve almost never seen someone get booed. At worst, the audience just sits there.” And while the audiences tend to be encouraging and receptive, some of the comics have a harder time selling their own families on their dreams. Kato said her father remains very much on the fence about her passion for public performance. “I told him it was like acting, and he asked if there would be any kissing or love scenes,” she said. Her father has yet to attend any of her performances – which may be just as well since much of Kato’s act centers on observational humor about her own family dynamics. Her mother, however, has started regularly attending Kato’s gigs and is now suggesting new material to add to the act.
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On the Road
All Charged Up At the Newport Concours d’Elegance, Dan Scanlan discovers the new Tesla.
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n an era of consolidation in the automotive industry, the appearance an entirely new car company, unrelated to any of the major established players, is something of a curiosity. Such is the case with Tesla Motors, a California-based start-up that is applying a Silicon Valley philosophy to a field whose basic features were shaped a century ago. Tesla’s all-electric high-performance cars are causing some observers to reevaluate basic assumptions about how passenger vehicles can be powered and produced. That’s why it is surprising that such a forward-looking company should look backward, to an inventor from the first half of the 20th century, for its name. But Nikola Tesla’s AC motor lies at the heart of the car, and his sometimes outlandish imagination is well-suited to the company’s efforts to make practical Electric Vehicles (EVs) a reality.
I recently had the opportunity to get a close-up look at a Tesla Roadster Sport at the Newport Concours d’Elegance, where the Tesla vehicle technician, Raphael Garcia, explained the features of the car’s unique power train and offered some of his perspective on the experience of introducing it to the public. From the outside, the Roadster looks like an ordinary sports car. It’s a lowslung two-seater with aggressive but not groundbreaking styling. Its frame, custom manufactured for Tesla by Lotus, gives it handling and responsiveness on par with other cars in its price range (the Roadster that I tested sells for about $140,000). It is the engine that is, of course, the real difference in the experience. When it’s turned on there is no rumble, no indication that the car is ready to pounce. Rather, stepping on the accelerator yields pure movement forward, accompanied only by
a slight hum. Unlike a conventional internal combustion engine whose power varies based on RPM, the 288hp/215 kWh electric motor’s power is instant and constant. In fact, it is capable of reaching 60 miles per hour in a mere 3.7 seconds. And this is part of the car’s special appeal. “You don’t have to be doing triple digits to have fun with this car,” says Garcia, who has worked with Lotuses and Lamborghinis, and races a BMW. “You don’t have to learn how to drive it to get the most from it.” That rush of performance is apparent, even on city streets where there is no possibility of reaching its top speed of 125mph. When the traffic light turns green, getting to a mere 30mph is fun. Tesla owners are a unique group too, says Garcia. “They have a commitment to what the company is doing. It’s a culture that you don’t get with ordinary production cars.”
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Garcia gets to see this first hand as he provides the company’s mobile at-home service. Rather than bringing their cars in to a dealer, a technician like Garcia makes house calls to troubleshoot problems, perform routine maintenance, and help owners get the most out of their cars. The maintenance, though, is mostly on the order of software updates to the computer system that manages the power that flows to the motor from 6,831 lithium-ion battery cells located just behind the passenger seats, over the rear wheels. The car electronically keeps in touch with the manufacturer, who is able to monitor performance and even detect problems before the driver ever senses them. The real-time information derived from on-the-road performance influences the software updates, allowing for the model’s performance to improve potentially beyond the original expectations when it rolled off the showroom floor.
This is, in fact, where the real innovation of the vehicle comes into play, for Nikola Tesla’s motor has been around a long time, as has the concept of electric cars. What is new is the practical range the vehicle: About 200 miles per charge. Some of the earliest production cars were, in fact, electric. They benefited from a reputation for safety and reliability when gasoline was known as a smelly, volatile, and unsafe way to power a car. But things changed as the internal combustion engine was refined and a network of stations to supply the fuel sprang up. Electric cars, though clean and quiet, could not stray far from their charging stations and soon became associated with impracticality. The Tesla offers the possibility of the convenience of charging from ordinary household current with the ability to take extended trips without need for a recharge. This frees it from the restrictions and lim-
itations of a network of charging stations that had accompanied earlier attempts at promoting EVs. Owners of Tesla Roadsters can pull into the garage, plug the car in overnight and be ready to travel the next morning. Having set out on a busy day only to find that my car was running on empty, I see the appeal of this feature. The response of the public has been positive, according to Garcia, with curious passers-by calling it “the wave of the future.” He has found it heartening, he says, how willing people are to get behind something so different. The future plans for Tesla’s next model will take it into more familiar territory, however. The Tessla Model S, will be the company’s first foray into the field of the family sedan. The car’s extended range, increased passenger capacity, and lower price could potentially make this a serious contender when it hits the road in 2012. July/August 2010 | TRENDS 99
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Montblanc Meisterstück Cover
M IXA bags
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f we can put a man on the moon, why can’t someone come up with a laptop case that’s lightweight, durable, AND fashionable? Credit the people at IXA – and not NASA engineers – for doing so. Their latest line of laptop bags stand up to the rigors of the airport, the school bus, and the boardroom, all while protecting your precious computer. IXA also makes cooling pads and ergonometric stands so that you have no excuse for not finishing that big report.
ontblanc has long been known for its superpricey pens. Now it’s expanding its product offering in the Gulf with a series of two leather mobile phone covers. Whether you’re a serious businessman who connects to the office with a BlackBerry or a trendy teenager who surfs the Web on his Iphone, you now have the option of subscribing to the U.A.E.’s Du mobile elite plan and receiving a Montblanc cover for your device. The covers were designed by Lothar Lips, otherwise known as the “Man with the Magic Hand,” according to Montblanc. The company plans another special edition cover featuring a 43-faceted star-shaped diamond. Ring a ding bling.
‘Swyping’ Samsung Smartphones
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he range of high-tech features in Samsung’s cell phone duo fills a book. One feature on the Wave and the Galaxy S that stands out for us – and promises to change the way we communicate forever – is the so-called Swype technology. As it stands now, even the fastest textmeister can’t input a message faster than a wireless operator with a rudimentary knowledge of 150-year-old Morse code. But Morse’s speed supremacy on the telegraph is being eclipsed – and it’s about time. Screens on these little Samsung gizmos have gotten so good that you can drag your finger across them to input the information, not unlike a stylus, instead of typing onto those tiny keyboards.
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Panasonic Camcorders
Chanel Bleu
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esidents of Manhattan’s Upper East Side – count this hack among them – know that just about every company pines to use their scenic neighborhood as a backdrop in television commercials. The outfit that takes the prize for capturing Uptown best is Chanel with its advertising campaign for Bleu cologne. Of course, hiring Martin Scorsese helped. The veteran director worked with the rising international star Gaspard Ulliel to make one of the best TV spots we’ve come across in ages. The character of Hector in the 60-second commercial says it best: “I’m not going to be the person I’m expected to be anymore.”
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t seems there are plenty of people at Panasonic who have been forced to sit through home movies shot by a cameraman with shaky hands. Panasonic has just unveiled its new line of high-definition camcorders that compensate for the kind of annoying camera shaking that so many amateur moviemakers can’t seem to avoid. The new camcorders, HS700, TM700, and SD700, incorporate sensors that reproduce color better than any camcorder out there. Plus, they’re designed to excel under those challenging low light conditions. All this technology makes sitting through home movies all the less painful.
FondaTion de la Haute Horlogerie
E
ver wanted to see a Frenchman seethe with anger? Pick up a bottle of California sparkling wine and refer to it as champagne. The Swiss get bent out of shape in much the same way when it comes to wristwatches. To make sure someone doesn’t dump a batch of stinky fondue on your head, the TRENDS maestro and the dean of watch journalism, Alfred Coachman, reminds us what makes a watch “Swiss-made”: The watch must have Swiss movement, the movement must have been cased in Switzerland, and the final inspection must have been carried out in Switzerland. Coachman learned all this nifty information from the Fondation de la Haute Horlogerie, a watch-dog group that has recently unveiled a new advertising campaign. Its slogan reads: “Fake Watches are for Fake People.” Well!
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Panasonic Panaboard
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ay goodbye to those dusty chalkboards. Panasonic’s durable Panaboard touchboard holds up to the wear and tear of even the rowdiest of classrooms. It has built-in stereo speakers and, if touch isn’t your thing, an electronic pen that changes color with a twist of the shaft. Play a movie while surfing the Internet – all on an 82-inch screen. “Our interactive boards are already used across the Australian state of New South Wales,” the director of Panasonic’s system sales and marketing group, Masao Motoki, said. He was in Abu Dhabi recently showing off the Panaboard and all of Panasonic’s other commercial products, like highspeed color scanners, broadcasting equipment, and projectors. “Our products are famous, so there’s no need to advertise, but it always helps to demonstrate our latest technology,” he said.
Hogan Olympia “Artribe”
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o sneaker better expresses the urban-chic philosophy of Hogan than the Olympia “Artribe.” Ultra-clean athletic footwear has long been the footwear of choice for the hip-hop elite and suburban youngsters who want to emulate their trendy city lifestyles. That’s why Hogan has released yet another exclusive line of trainers. They’re perfect for strutting through the shopping mall with your homeys. Word up.
Cyber Clean
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e have a colleague at this publishing company whose computer keyboard is so disgusting that we have a hunch it harbors several lost civilizations. In fact, the ingenious gang at Cyber Clean tell us that her keyboard is dirtier than most toilet seats. No surprise there if, like us, you have to sit near this woman each day. That’s why Cyber Clean recently sent us its new product aimed at tackling those filthy keyboards. Children of the 1990s will recall the slimy play stuff called “Gak.” That’s pretty much what Cyber Clean amounts to – it’s a super-conductive putty that picks up all sorts of dust and grime off your keyboard. Now if they’d sent us a ton of the stuff to clean away our annoying colleague.
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LetterS to the editor LETTER OF THE MONTH
Home Cookin’
Re. Last Word with Martin Sorrell: My company did several years of advanced temperature work at molecular levels to see the cause of urban heat and how billions in energy is used each year responding to it. Solar interaction with buildings and exposed ground cover is causing them to generate extreme heat they aren’t insulated for. We can’t give up on climate negotiations – we need to see the problem to address it. Paint your buildings – why do you think they whitewash buildings? We did the opposite in North America and we are cooking the atmosphere while responding with emissions that are toxic.
Curtis Bennett (British Columbia, Canada)
Coachman the King Re. TRENDS Watch Spectacular: I couldn’t believe my eyes when I opened the June issue of TRENDS and saw the byline of the alwayseffervescent Alfred Coachman. My wife and I were living in Lucerne in the mid-1950s after I secured a job at a Swiss merchant bank. There was nobody we enjoyed seeing more on a regular social basis than the vivacious Alfred. In those years he was working on the first series of wristwatch essays that would establish him as the king of timepiece journalism. My wife and I did some back-of-the-envelope calculations and concluded that our friend must be 86 years young. We’re thrilled to see him back in front of a typewriter (does he still use that clunky Remington?) and displaying his enormous talent to the readers of your magazine. Alfred, here’s to your next column!
Elliott Thorsen (Grand Cayman, Cayman Islands) Mick, Keith, and Alfred Re. TRENDS Watch Spectacular: Hats off to the crew of TRENDS magazine for bringing Alfred Coachman out of retirement for the special Swiss watch issue. I have been following Coachman and his jet-setting life for years in the society pages of the world’s newspapers. My favorite story about CoachHave something to say? Email us your thoughts at editor@trendsmagazine.net; send a letter to: The Editor, trends, s.c.c. arabies,18 rue de Varize, 75016 Paris, France; or a fax to: +(33) 1 4380 7362. Be sure to include your name and location
man was when he visited the Rolling Stones in the south of France when they were recording their “Exile on Main Street” album 40 years ago. According to some groupies who were partying with the Stones in their chateau, Keith Richards is said to have burst out laughing when he saw Coachman stride through the parlor buck naked – save for the enormous Swiss watch strapped to his wrist.
Carl Bauer (Beverly Hills, Calif., U.S.A.) Before Swiss Neutrality Re. TRENDS Watch Spectacular: I had no idea Alfred Coachman was back. I thought he had retired for good. A quick recollection of my knowledge of Mr. Coachman: My brother-in-law was a corporal with the U.S. Army’s 82nd Airborne Division during World War II. It was December of 1944 and the Wermacht surprised the Allies with a giant offensive across the Ardennes Forest; the Battle of the Bulge had begun. As the troops fought hard against the Nazis, my brother-in-law met a young reporter with the Stars & Stripes named Alfred Coachman. Granted, he was still a decade away from achieving success with his articles about wristwatches. But there he was, reporting from the front lines and doing what he could to contribute to ultimate victory. I’m sure that the rest of his reporting career was far more leisurely – Swiss watch aficionados are more fun than Nazis, I would imagine.
Floyd Forsythe (Boston, Mass., U.S.A.) CLARIFICATION A. Lange & Söhne is a German company that competes in the Swiss watch industry.
18 rue de Varize – 75016 Paris Tel: +(33) 1 47 66 46 00 Fax: +(33) 1 43 80 73 62 www.trendsmagazine.net E-mail: editor@trendsmagazine.net Founder: Yasser Hawari Managing Editor: Jay Akasie jay@mediaquestcorp.com Business Editor: Emily Meredith emily@mediaquestcorp.com Copy Editor: Salil Kumar Creative Director: Aziz Kamel Art Director: Janett Kheil Art Contributor: Alvin Cha Contributors: Sarah Abdullah, Iason Athanasiadis, Alfred Coachman, Tanya Goudsouzian, Orly Halpern, Liz Peek, Daniel Scanlan Correspondents: Abu Dhabi: Edmund Sheen – Beirut: Nathalie Bontems – Istanbul: Bill Sellars – Jeddah: Alex Malouf – Jerusalem: Ben Lynfield – Kuwait: Jamie Etheridge – London: Clare Dunkley – Kabul: Helena Malikyar – Washington: Afshin Molavi ADVERTISING sales@mediaquestcorp.com Europe: S.C.C. Arabies, 18 rue de Varize – 75016 Paris – France Tel: +(33) 1 4766 4600 – Fax: +(33) 1 4380 7362 GCC: Dubai Media City Al Thuraya Tower 2, Office 2402/05, U.A.E. Tel: +(971) 4 391 0760 – Fax: +(971) 4 390 8737 Lebanon: Beirut – Lebanon Tel: +(961) 1 202 369 – Fax: +(961) 1 202 369 Printers: France: Corlet S.A. U.A.E.: Emirates Printing Press (Dubai) N˚ Commission Paritaire 1201 K80 202 – N˚ ISSN 0983-1509 PUBLISHED BY Medialeader FZ/MediaquestCorp FZ Europe: 18 rue de Varize 75016 – Paris, France TEL: +(33) 1 4766 4600 – FAX: +(33) 1 4380 7362 GCC: Dubai Media City, Al Thuraya Tower 2 Office 2402/05, Dubai, U.A.E. Tel: +(971) 4 391 0760 – Fax: +(971) 4 390 8737
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The Last Word with JOhn reid Chances are that if you traveled to the remotest region on the face of the earth, you wouldn’t find much of anything. Except, perhaps, a Coca-Cola vending machine. Indeed, Coke is everywhere. There are few brands with more history and consumer loyalty than CocaCola. These days the company is attempting to address one of its most significant challenges since the New Coke debacle of the 1980s – questions about healthy consumption of food and drink. Coke’s John Reid tells TRENDS that the company is well positioned for this challenge because of the breadth of its product portfolio.
W
hat do you see as the single greatest challenge to health in America, where you are based? What is the greatest challenge in the developing world? As a global business that serves more than 200 countries, I can tell you one of the challenges we see is the increasing social and financial consequences of chronic diseases caused by poor nutrition and obesity, and the need for our business to do its part to help educate consumers and support their efforts to live healthy lives. What is Coca-Cola doing to address this? We have a three-pronged approach. It involves education, variety, and physical activity. We educate on the importance of energy balance; we provide variety in the products and package sizes; and we encourage active, healthy living. In essence, our approach can be summed up as “think, drink, and move.” There is consensus that weight gain is primarily the result of an imbalance of energy, basically too many calories in and not enough calories out. We believe that all foods and beverages can have a place in an active, healthy lifestyle that combines a sensible, balanced diet with regular physical activity. That’s why we actively support nutrition education and physical activity initiatives in more than 100 countries.
Part of the education process also involves us making it even easier for our consumers to make decisions about what they choose to drink. Last year, we were the first beverage company to commit to putting the calories on the front of our packaging. While it’s important to reduce calories in many parts of the world, it’s equally important to fill nutrition gaps in others. And we hope to use our beverage expertise to help in this area by increasing the variety of products we offer with added vitamins, minerals, and other beneficial ingredients. For example, in South Africa and Chile we offer Nurisha, a beverage enriched with 12 vitamins and minerals, to address a range of nutritional deficiencies in children, and in the Philippines we offer NutriJuice, a beverage focused on providing iron to children who have iron deficiency. These are complex, challenging issues and we know we do not have all the answers. So we are focused on learning, contributing, and working with government, academia, health societies, and other responsible members of civil society to address poor nutrition and obesity. What role does Coca-Cola have to play in the future when there are noticeable moves toward eating unprocessed foods as part of a healthful diet?
For 124 years we’ve had an uncompromising commitment to product safety and quality, and to create great-tasting products we can be proud to put our name on. We are all about providing options, so people have access to choices that suit their needs and lifestyles. Today, our beverage portfolio includes more than 500 brands, including sparkling beverages, juices and juice drinks, water, sports drinks, and ready-to-drink coffee and tea. And you can bet our portfolio will continue to grow as we strive to stay ahead of what consumers want. What plans does Coca-Cola have to make its products healthier? We think all of our products can fit into healthful lifestyles. That’s why we work so hard to provide a variety of products for every lifestyle, life stage, and occasion. Consumers who want to reduce the calories or sugar they consume from beverages can choose from our continuously expanding portfolio of no- and low-calorie beverages, as well as smaller portion sizes of our regular beverages. Today, we provide more than 800 no- and low-calorie beverages, which make up nearly 25 percent of our global portfolio. This means we’ve got a great-tasting, no-calorie option for all of our leading sparkling beverages. Essentially, there’s a Coke for everyone.
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