I was sitting next to a former minister at dinner. He had been a member of the cabinet headed by Saad Hariri that was ousted in January in what amounted to a bloodless coup by the Hizbollah-led March 8 bloc.
The minister (in this country once a minister, always a minister) was concerned over pressure from the US Treasury on the Lebanese banking system. The US Treasury had cited Lebanese Canadian Bank for moving "hundreds of millions of dollars monthly in cash proceeds from illicit drug sales into the formal financial system".
Money laundering "happens everywhere, even in the US", he said, throwing his napkin on the table, "but when it happens in other countries it doesn't affect the economy as much as it does here".
He had a point. Lebanon's banking sector makes up about 30 per cent of GDP. It is, along with foreign remittances, which make up about another 30 per cent, the cornerstone of the economy. Any lack of confidence in Lebanese banks would be acutely felt.
And yet it would not have to be so if the Lebanese economy were more diversified.
Simply put, Lebanon needs a structural economic overhaul just as parts of the Arab world are making a bid for greater democratic freedoms. Sadly, Lebanon's current government is unlikely to be the one to undertake the needed overhaul.
Back in January, the March 8 bloc cited a lack of confidence in the Hariri administration (which was hardly fair, given that it was a March 14/March 8 coalition) but the real reason for the collapse was that Hizbollah wanted to be at the helm when the Special Tribunal for Lebanon issued its indictments of four men in connection with the assassination of Rafik Hariri, the former prime minister, on February 14 2005.
Although the government is being hailed as technocratic, few sleeves have been rolled up.
There has been an attempt to fix Lebanon's woefully slow internet, but on Saturday, the day we were all expecting to wake up and browse, upload and download with the best of them, the connection was slower than normal and in many instances non-existent. I rest my case.
To make matters worse, since coming to power, Hizbollah has threatened to go to war with Israel over a territorial dispute involving offshore oil and gas assets. And on Tuesday, the Iranian Fars news agency quoted the Syrian president, Bashar Al Assad, as telling the Turkish foreign minister, Ahmet Davutoglu, that his country and Hizbollah would strike Israel if military operations were launched against Syria.
Hizbollah may be part of the government but it is also part of a wider regional alliance that fears it is being pushed towards a final showdown.
In short, Lebanon is still all blood and thunder at a time when Arabs want to swap the AK-47 for a MacBook Pro and would prefer to watch uninterrupted YouTube than burn the American flag.
The commentator Nadim Shehadi, writing in The New York Timeslast month, declared the Arab-Israeli conflict dead in the water. He compared today's young Arabs to the post-First World War generation - just happy to be alive and caring little for the politics of their parents.
This current crop of Arabs is tired of being told, as Mr Shehadi put it so powerfully, that "no voice rises above the sound of the battle for Palestine".
Today's young Arabs want the nations of the Middle East to be less dysfunctional, and Lebanon can light the way.
It has the capacity to be a wonderful boutique jewel, not unlike Singapore. It can be built on a core of industries such as banking, tourism, agriculture and small manufacturing, backed up by a service sector offering the region's best health care, education and hospitality as well as exporting the best in human capital to a region crying out for expertise in IT and media skills.
But there must be a commitment to job creation, regulation in all areas of the economy and more government subsidies. Lebanon must no longer be a place where people who work abroad plant their families. It must generate its own wealth across the board and not, as the minister bemoaned, rely on one sector, such as banking, to keep everything together.
Events in the region are moving fast. Syria has banned imports with duty higher than 5 per cent to preserve the country's dwindling foreign currency reserves, and many Syrian families have relocated to Lebanon, enrolling children in local schools.
The formation of a Syrian national council on Sunday marks a new chapter for the Syrian opposition, and the sentiment now is not whether the Assad regime will fall but when.
But one thing is certain, Lebanon will never be able to focus on economic reform when it has one eye permanently on conflict.
Michael Karam is a freelance writer and communication consultant based in Beirut
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
FIGHT CARD
Welterweight Mostafa Radi (PAL) v Tohir Zhuraev (TJK)
Catchweight 75kg Leandro Martins (BRA) v Anas Siraj Mounir (MAR)
Flyweight Corinne Laframboise (CAN) v Manon Fiorot (FRA)
Featherweight Ahmed Al Darmaki (UAE) v Bogdan Kirilenko (UZB)
Lightweight Izzedine Al Derabani (JOR) v Atabek Abdimitalipov (KYG)
Featherweight Yousef Al Housani (UAE) v Mohamed Arsharq Ali (SLA)
Catchweight 69kg Jung Han-gook (KOR) v Elias Boudegzdame (ALG)
Catchweight 71kg Usman Nurmagomedov (RUS) v Jerry Kvarnstrom (FIN)
Featherweight title Lee Do-gyeom (KOR) v Alexandru Chitoran (ROU)
Lightweight title Bruno Machado (BRA) v Mike Santiago (USA)
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Tuesday's fixtures
Kyrgyzstan v Qatar, 5.45pm
World Cricket League Division 2
In Windhoek, Namibia - Top two teams qualify for the World Cup Qualifier in Zimbabwe, which starts on March 4.
UAE fixtures
Thursday February 8, v Kenya; Friday February 9, v Canada; Sunday February 11, v Nepal; Monday February 12, v Oman; Wednesday February 14, v Namibia; Thursday February 15, final