USA, Cuba and Russia, the Everlasting Threesome

“War and Economy: The All Time Best Friends” is a term that will always hold true no matter what era the world is living in nor what situation is occurring. Money, wealth and the need for more resources for cheaper costs have and will always propel the world, not necessarily forward but it definitely is a pushing force.
In 1962, the world held its breath as the standoff between the USSR and the USA nearly wiped off the modern world in a nuclear war; the star of the story back then was Cuba. Ruled by the communist hard liner Fidel Castro and euphoric from its previous success in fighting off the Americans in the Bay of Pigs incident, Cuba was considered a direct threat to the “communism paranoid” USA. As a communist regime, it was just normal that Castro would align with the USSR. As part of the ongoing political war between the USSR and the USA, the Russians tried to benefit from the situation by trying to deploy a set of nuclear missiles that would put Washington D.C. within their reach. After a few tense days, Russia agreed to remove those missiles and secretly the USA agreed to do the same by removing some missiles they had deployed in Turkey just at the borders of Russia.
In 1962 the 2 world superpowers were the USSR and the USA, the Castro’s were in power, President Kennedy was a democrat and both powers used Turkey and Cuba in their stand-off. In 2015, a democrat is in the white house, Putin who’s a former KGB (the offspring of the USSR) has been steering Russia since 1999, Cuba is still ruled by the Castro’s and the USA has used the NATO as a cover to redeploy a defensive missile system in Turkey. So the scene is still almost the same minus the Russian missiles in Cuba.
In an interesting twist of events, President Obama announced in the beginning of 2015 that USA was going to ease restrictions against Cuba and allow more trade exchanges with the isolated island. There are many reasons that can interpret such a move but only one reason is the most valid and it’s the economic one. The proof lies in the set of rules that allowed for exchanges and money transfers.
To begin with, the ailing US airlines can find a new travel line where they can actually make money and profits since they are losing on their own turf (the CEO of Delta Airlines recently went ballistic in his criticism of some Arabic airlines and claimed that that’s where the September 11 terrorists came from and that no Arabic airlines should come to the USA) and as Mexico becomes more and more of a dangerous place, Cuba can be the next ideal destination for spring breakers. The always suffering US car industry is thirsty to reenter a market it has lost more than 50 years ago. Images coming from Cuban streets show them bustling with good old American cars, question is will the Cuban consumers like what the new American car industry looks like?
In recent years the US economy has been coming under lots of pressure from outsourcing jobs, to foreign competition to a larger and alarming budget deficit – most of which is owed to communist China, another country aiming at being a superpower but with no luck yet. This explains why the USA is in dire need of finding new markets, but Russia is not standing and watching, they too want a piece of the Cuban pie. A recent report announced that the trade embargo imposed on Russia by the European Union has cost the old continent about 21 billion dollars in losses and although Russia has been so secretive about the effects on its economy but a weakening Ruble and a statement by Putin that the country needs 2 years to get out of this mess is a clear indication. In short, both countries need an escape plan.
So both economies are in trouble, and both are looking for new markets. The Middle East is already set ablaze, and although Africa is a promising market it is for now left for the Japanese and Chinese to feud over it. China and Japan in their turn are expected to have slower growth than what was initially estimated and India is still struggling to find its identity. Europe shot itself in the foot when they imposed the sanctions on Russia and Australia – as always – seems like a continent on a different galaxy (too much sun can have it effects if you know what I mean). This leaves very few options for the two giants and makes Cuba seem the most interesting of them all.
As USA tries to aggressively enter the Cuban market by easing business and travel restrictions to American citizens combined with more freedom of capital flow from and to the mysteriously romantic island, Russia is not willing at all to sit on the side bench and they have already set plans for Cuba. In recent years, the once communist nation has been opening up to globalism but not in the terms of allowing multinational companies in as much as it was by trying to compete on the international scene although they have not been a great success so far. Russian Automaker Avto Vaz is now a part of the Nissan-Renault conglomerate which has significant meaning for an automaker that has been one of the very few to survive the post soviet era and might now become a global player. On the telecom front, The Wall Street Journal ran an article late in 2012 about the Russian Telephone maker YOTA which was planning an aggressive entrance to the already crowded telephone industry. So far their presence has been limited and just recently they signed a deal to enter the Chinese market which is highly dominated by local makers. One should not forget that the makers of the Kalashnikov are one of the largest exporters of weapons. Although they are not major yet, those moves are significant signs as to where the country is planning to head to.
Perhaps the most significant indication is the recent news that Russia is in talks with a group of investors from Abu Dhabi to partner up in a $200 million dollar investment that includes the development of a major airport and might include later a seaport and a railway. This announcement has sent messages in all directions; first it was announced in a military trade exhibition signaling Russia’s aggressive strategy to earn a market share in an area that has been predominantly an American turf. The second is a loud message by the Russians that they are still at the center of action in whatever happens in Cuba, and the third and probably the strongest message of them all is that Russia is dealing with Arabic Countries as trade partners and allies rather than just customers as has been the custom before- something that Uncle Sam has not done before (remember in 2006 when Dubai Ports company was forced to drop a deal to manage some US ports terminals just for being an arab company? What is it that they say about Karma?)
In terms of politics, Putin has loudly announced many times that the missile system in Turkey and many countries of the Eastern European block are an act of aggression against his country, he has shown resilience and unwavering determination is Syria, was among the first highest ranking officials to visit Egypt after the presidential elections which brought an army general back to the presidency and has shown ice cold nerves in the recent Ukranian crisis and was able to hurt the already ailing European economy. Cuba will not be any different; there are no signs that the Russians are willing to give the country up no matter what. During the soviet era, they supported the country in billions of dollars and there is no reason for why they should stop now.
After all, just like the USA is surrounding them they have a great interest in returning the service to uncle Sam; the Cuban market is thirsty for investments, the democrats are still in the white house, the castro’s in Cuba, the communist ghost in the Kremlin and the missiles in Turkey. It is obvious that little has changed in the last 50 years or so……

Why Low Oil Prices are Bad for the Global Economy as Well

In 2 weeks I’m going to be in Lebanon for vacation and as I will stop by the gas stations to fill up my car, I will be paying almost the same price that I used to pay when I first graduated from university around 6 years ago. At nearly 25,000 Lebanese Pounds per 20 liters all the Lebanese will be raving about it and enjoying this Holiday season to the maximum ( yes they will forget all the economic, social, residential, and environmental issues, they will also forget the refugee spillover from the neighboring war-plagued Syria, they will forget that we are still without a president for almost 8 months now and that our parliament is aiming to outlive the parliament that was around during all the 15 years of civil war. Ironically enough most of the faces are still the same and yes I am talking about the parliament and not about a senior citizens residential compound)

Of course not only the Lebanese are the ones joyful about it; in fact they share the same feelings with more than half of the residents of the planet. Americans are planning more and more road trips and the demand for big SUVs is ramping up again, and the Europeans might have something to cheer them up and keep them warm this winter after fears of Russia cutting them from the oil supply as a result of the ongoing tension between Russia and well most of the world. But all this comes with a price tag and a hefty one also; just as the increasing prices have been hurting the economies so will the decreasing prices. OPEC is still insisting on keeping the production and supply levels on current levels although supply is far exceeding demand and thus challenging the free market theory that supply and demand will lead to a market balance. The reasons behind this decision are plenty but I am not going to delve into the politics of it right now but the fact is everyone is hurting from it.

Oil producing countries are going to face massive budget deficits with many of them starting to question for how long they will be able to sustain such low prices and still go on with their development plans. Europe seems to be heading towards another recession in which low oil prices will not be of much help (the PIGS are now PIIGS with Ireland joining the club) they should start looking for a different animal name soon and preferably a longer one it seems.

In USA seemingly it will have the worst effect. The country that started the global economic crisis in 2008 might as well be leading the world into another one and if USA sneezes, Europe gets the flu. Right after the crisis, a massive effort was put into creating a more efficient economy that is not as much relying on oil as before and as a result a wide variety of fuel economic cars started to take more place on the roads instead of the traditional much larger gas guzzling V8s, the Prius which was literally the laughing stock of every movie and every comedian started to have its last laugh against all the skeptics. Green energy was strongly supported and subsidized and the glass panels industry witnessed a great boom. Now the lower oil prices have halted all this with the people reacting very fast to the low oil prices and ordering big trucks again and the still expensive alternative energy sources are being ditched in favor of traditional energy sources. What is even more, GM has announced its plans to lay off some workers from its Lake Oreon plan starting January 2015 and the reason cited is simply due to decreased demand on its economical cars the Buick Verano and the Chevrolet Sonic and I am guessing it won’t be long before the other carmakers will follow lead. Such is how much shortlived is the people’s memory and that’s how quickly they go back to old habits. Am I the only one seeing a “cash for clunkers” campaign looming in the Horizon once more?

Fiat was gambling on its tiny 500 model to conquer the streets of USA, Smart America was hoping that this would be its revival point and VW group were betting that their fuel economical tiny cars will help them dethrone BMW and Daimler as the kings of European cars in the USA. Alas, all those dreams might be going with the wind now.

In Lebanon, we party all the time; in the middle of the Israeli invasion on us we were partying, in the peak of the global crisis we were partying and now we are partying. In fact we don’t need a reason to party, we just need…… a place! But this time we have a reason and it’s the oil crisis. While countries have been bracing for the damages that the oil prices will cause to their economies, we are planning where to spend New Year’s Eve! I just hope that the economy does not sour so much that I lose my job and miss the chance of enjoying the low gas prices!

Lessons from History: ISIS of our Days, is Taliban of the Last Century

“History repeats itself” one of the most controversial sayings out there that has lead to many debates and to lots of digging in our history just to prove it right or wrong. Whether it is true or not is a debate that will go on forever, but for now I will focus on an incident that is alarmingly similar to a historic predecessor and maybe, just maybe it will support the believers of that saying.

The whole world seems to be consumed and shocked with the uprise of ISIS and claiming that its ways and its brutality were never seen before. I beg to differ; for as brutal and unusual their acts might seem, they are not new because some 35 years ago a predecessor movement called “Taliban” emerged in Afghanistan and tried to implement the same plan that ISIS is trying to implement now in the Middle East. Not only their goals are similar, but how they came to power, how they were created, what was their role, and what they did are almost typical as if they were exact twins.

A few days ago, I came across a documentary that was once aired on The History Channel titled “The Taliban Declassified” and the similarity between Taliban as depicted in the documentary and ISIS is so striking that at one point you just can’t tell who’s who.

Here’s why I find both guerrillas to be of the exact genetic pool:

  • To begin with, little is known about the background and history of Mullah Omar, the leader of Taliban; even less is known about Abu Bakr Al-Baghdadi, the leader of ISIS which strikes me as very odd since we are in the era where nothing can be hidden from the internet (you might want to check the facebook pictures from your “latest event” to verify my sayings) – Many rumors link both man to secret services.
  • Pakistani secret services are believed to be the creators of Taliban – in the case of ISIS, there are many “Godfathers” who fit that profile. Maybe someday we will know the true father.
  • Back in the 80’s Mujahidin flocked from all over the world to support Taliban because they believed that it was there to implement what they viewed as the true Islamic teachings – in 2014 a main export item should be added to Europe’s GDP because they are the biggest exporters of fighters going to Syria to join ISIS.
  • ISIS performs flogging, crossing, beheading, stoning and takes extreme measures to perform their view of Shari’aa. They banned music, forced men to grow their beards, imposed the religious police, put the 5 prayers a day law into effect, they also forced women to be fully veiled, and banned them from driving cars. Moreover, they changed school books and the teaching curriculum, punished men who were caught eating during Ramadan fasting days. They are convinced that the whole world is fighting Islam and it is their job to protect it. A quick look into Taliban’s history and dogma shows that they were exactly the same, albeit ISIS seems to believe more in sexual freedom because they believe that a cow’s boobs are sexually provocative and should be covered – all of you heartless people who accused them of being sexually intolerant should rethink your accusations after this piece of information!
  • On October 21st 2014, and as US air force fighters were dropping military support to Kurdish Guerilla fighters defending Kobani they “mistakenly” dropped some supplies inside ISIS controlled territory. Of course the official account from US officials was that it was made by mistake but given all the technology and GPS systems makes it hard to believe such a “mistake”. What adds to my doubt is a piece in the documentary where US ambassador Peter Tomsen who was at one point a US special envoy to Afghanistan between 1989-1992 says, and I quote his exact words: “while the Soviet Military was still in Afghanistan there was every reason for the United States to continue supporting the Pakistani approach of providing the extremists with the greatest bulk of American weaponry. However after the soviets moved out in February of 1989 we should have readjusted our policy and provided weapons to all groups not only the extremists but the moderates and other groups in Afghanistan.” Perhaps this time the Americans have learned from their previous mistake and this is why they dropped the supplies “by no mistake”
  • ISIS does not tolerate any other military faction next to it and this is why we see them fighting with Al-Nusra most of the time. Back in the days, Taliban also eliminated all competition to reign on the Afghani scene.
  • There were always indirect talks between the USA and Taliban through many channels since after all they were their “Godfathers”. Mrs. Clinton admits in her memoirs that ISIS also is the offspring of American secret intelligence but it probably is a more refined version of Taliban. They probably sat down and learnt from all the mistakes committed in the Taliban era and tried to avoid them this time with ISIS. I believe it is safe to say that there will be no September 11 this time.
  • Taliban was created for the sole reason of fighting the Soviet Union back then; both the USSR and USA led a proxy fight on Afghani territory with little attention to the real needs of the Afghani people. Both were looking into increasing their territories, have access to more resources and in cheaper ways and stop the other side from doing so. The whole war in the region today is to try to cut off Russia’s access to the Mediterranean and also to try to find cheaper ways to get oil and gas to Europe in an attempt to break Russia’s monopoly.
  • In 1985 and in the height of the fight between Russia and Taliban, an unexplained surge in oil production made a downward push on the prices. This initiative was lead by Saudi Arabia and it hit right in the heart of Russia’s economy. Today oil prices are at an all time low and have hit lows never seen before ( I still can’t believe that gasoline prices are down to just $20 / 20 liters in Lebanon, it definitely must be a dream!) Saudi Arabia has reiterated many times that they have no plans to cut production which means prices are not going to go up again anytime soon – Another hit to the Russian and Iranian economy this time.
  • Just as Taliban became out of control, the USA eliminated it and Mulla Omar just disappeared into thin air – Just as ISIS became a threat to Kurdistan (USA’s protégée) the USA stepped in and hit ISIS with airstrikes to stop its march towards that state.

What I find to be extremely interesting is how accurate and effective where the hits performed by the US airforce against ISIS when they were threatening Kurdistan and how much less effective they became when ISIS was marching towards Kobani.

USA, Russia, oil seem the theme words of this decade just as they have been since the 50’s of the last century. This here is another model of the ongoing economic fight between the 2 global superpowers; they still lead their proxy wars on territories that aren’t theirs in the first place, innocent casualties still die and along the way they are creating more and more beasts. The question is how long will the life span of ISIS be this time? We surely hope it will be short because we are getting tired and frustrated of it.

ISIS as an Economic Threat

In the popular US Tv show called “The Mentalist” there’s a serial killer called “Red John” who’s famous for marking his crime scenes  with a red smiley face but that’s not what we’re here to talk about; a few days ago the Christian Minorities in Mosul, Iraq woke up to find their front doors marked in red. Ironically the red marking on the houses was the letter “”ن which is the Arabic letter for N which stands for Nazareens – the naming that ISIS members give to Christians in the region. Put that letter in a circle and it will somewhat look like our fellow’s funny face. Christians were not the only ones marked for death in Mosul, the Shiites in that region and other minorities faced the same fate.

Ever since ISIS’s star started to shine amidst the Syrian revolution they have been in a rapid expansion. Of all the so called “opposition” factions (they are referred to as “so called” because we have lost count of how many of them are there now) ISIS seemed to be the most organized add to that they are the most brutal and the most feared amongst all the guerrillas there. And unlike the others, they seemed to have a vision, mission and mostly a strategy; they targeted key points in the Syrian landscape, forged for resources and mostly spread fear with their brutal and beyond the extreme methods. Their tactical strategies helped them attain keypoints in the Syrian landscape including oil refineries – a strategic resource in any war.

After a series of setbacks in Syria they shifted their strategy to Iraq; a location where they had more fertile soil due to the policies of the ruling regime and as a result of years of sectarian tensions and just like the US invasion to Baghdad in 2003, Mosul fell in their hands with no resistance at all. The bounty was massive and it ranged from piles of cash money in banks to a huge supply of very advanced US weapons that were proctored to the Iraqi Army (or should I call this army Casper since it keeps disappearing?) that astonishingly vanished into thin air when word of the invasion came in. some statistics put their current fortune at $2 billion dollars – try to let this sink in for a moment!

After securing territory in Iraq and starting to perform their regular “cleansing” techniques in order to clean out all opposition and spread fear, they shifted towards Lebanon in a short stint where they tried to take over a border town in the farthest Northern Bekaa point with the Syrian borders. Their invasion lasted only a few days where they were forced to retreat back into Syria since they were not able to face the Lebanese army. But had they managed to conquer the town “A’arsal” and spread inside Lebanon their main target would have been the water resources for that country in addition to its seaports on the Mediterranean – an important focal point to help them have access to Europe. They previously tried to do so in Syria but back then Russia proved to them and to the whole world for that matter that they are willing to go to a world war but not let Syria or most specifically the Syrian shores fall in the hands of any opposing faction. Not to mention that in the last 2 years there have been important information and findings about massive amounts of oil in Lebanon mostly off of its shores.

So what will happen here is that the combined reserves of those 3 countries will exceed those of the current second biggest oil producer globally and the largest producer regionally which Saudi Arabia, they will also have access to the Mediterranean Sea through the Lebanese and Syrian shores which will give them ease of access to Europe and to USA. Having oil and gas as key commodities might represent Europe’s opportunity to get out of Russia’s grip and they can use the water resources to trade with the water thirsty gulf nations.

Forget about religion, minorities, women, children, senior citizens and human rights for that matter and focus on dollars here because this is the key point and it is another proof that war is the key for propelling economy forward. European Countries and the USA have no shame at all when dealing with blood diamond coming from the civil war–plagued-African continent nor they have any problem doing business with many of the tyrant regimes there so why should it be any different in this case? Tomorrow they will claim that ISIS prevailed because people allowed it to and that they are loved and popular in Lebanon, Syria, and Iraq. They will forget all the displaced people, they murdered victims and that atrocities committed and say that since this is what the people there want, we don’t have any problem in acknowledging that state and having diplomatic and business relationships with them.  But it is Saudi Arabia who has to be scared from that and the kingdom should go all-in to face this threat. At almost 10 million barrels a day, the oil rich kingdom’s economy revolves around that commodity only; take that from them and their economy will instantly collapse since all other economical sector are not as significant. Saudi Arabia should not under any circumstance accept that all those reserves fall in the hands of 1 regime that has proven over and over again that they have no ethical boundaries in what they do. They will lose a major European market, will be forced to lower their prices and maybe lose a competitive advantage against the USA

In short, ISIS is not a threat to Christianity or any other religious groups as much as it is a threat to oil rich countries. Building an empire on such a stretch will give them the upper hand and will surely make it easier for oil thirsty nations to go to one source instead of searching in many places. ISIS has shown over and over again that they have no interest in fighting with the Israeli regime – a fact that will make USA comfortable and it will encourage them more and more to go deeper in business with ISIS as long as they keep their little ally on the Mediterranean alone.

In the recent days, ISIS brutality in Iraq reached new heights with them emptying Mosul from all its Christians not to mention the casualties and then they moved to surrounding the Azydian minorities located in the Sinjar mountain area. Slaughtering 500 innocent and defenseless civilians sent a resounding message to the whole world; yet it was only when ISIS reached the borders of Kurdistan and threatened “US interests” in IRAQ that Mr. Obama ordered airstrikes against them. Yet another proof that the world is not moved by humanity but by money and interests. The airstrikes proved successful and ISIS was not able to reach Erbil although they managed to spread fear in the whole state and caused millions of dollars in economic losses. We still have to find out yet whether those airstrikes will be continued to totally destroy ISIS or they were just meant to draw borderlines for them.

As I was finishing that blog, I got a flash news that the UN council has voted to cut off all financial support to ISIS and Al Nusra, wait, what? Come again? Is this a confession? Are they admitting that they were the ones that created that monster? If the UN was designed to protect the world from agressors, tyrants, crazy dictators and war criminals well then who is going to protect the UN from itself?

I strongly believe that human nature is mostly controlled by 2 factors: greed and fear and it seems that ISIS greed has shown how far they can go. They seem to be confident about the success of their plan and their clients are already there. Rumor has it that Secretary of the State Hilary Clinton admits in her new memoirs “Hard Choices” that the USA is behind the creation of ISIS to fulfill exactly the purposes stated above; one small advice to the creators of Taliban and Al Qaeda in the 80’s “what goes around, comes around” maybe you would like to ask your troops in Afghanistan about that.

The “Hawthorne Effect” of the Tobacco Industry

In the 20’s of the last century, the Hawthorne Factory in USA commissioned a series of studies on their employees that led them to conclude that any attention whether positive or negative can lead to increased productivity. Although the effects were short lived and limited only to the duration of the study the important realization was that the negative attention was as effective as positive attention in giving good results. The concept of the study was simple and all they did was improved the lighting conditions for their employees which increased their productivity then they dimmed the lighting more than the normal level and also productivity increased. Later on those studies were branded as the “Hawthorne Effect” and up till today they are taught in organizational behavior courses.

Of all the industries on which you could see the Hawthorne effect it is perhaps the most evident in the tobacco industry – the industry which has been facing a brutal war since well before the 90’s- the main goal of this war was to stop all the exposure and the attention that the industry was enjoying due to its annual multi-million ad campaigns and drive it back to obscurity. Over the course of years, lobbyists and anti-smoking activists all over the world successfully enforced many laws that varied from banning smoking in closed places to banning any sorts of tobacco related advertisements. Interestingly, and instead of diminishing the attention and the noise that this industry was getting it helped push it more into the limelight. Today, rarely a day passes without a mention of the Tobacco industry.

The Date: 22 October 2006

Location: Sao Paolo, Brazil

Event: the last Grand Prix for the 2006 Formula one season

This marked the last year of tobacco sponsorship for Formula One Racing before the FIA ban became effective in the 2007 season. Out of the 11 teams that were on the start line there were 3 teams that were co-owned by Tobacco companies (mild seven Renault, Lucky Strike  Honda and Scuderia Ferrari Marlboro) those companies decided to stay in that sport till the last minute while others opted to leave a year earlier (Mclaren Mercedes was known as West Mclaren Mercedes a year before and Benson & Hedges were major sponsors for team Jordan before selling out at the end of the 2005 season to SPYKER MF1 Racing. Not to mention all the other companies that came and went over the years. It is estimated also that the tobacco industry spent a whopping 700 million USD on the 2001 formula one season injecting huge amounts of funding to that sport.

For the first while, one might think that this was the ultimate victory for the anti-tobacco community; after all they have conquered the tobacco marketing fortress and took down their last stronghold. The “Godfather” of Formula One was given its final blow….. Or has it? Let’s take a moment here to think of the string of events that happened later on because all what actually happened was that the anti-tobacco fanatics helped the tobacco companies save millions of dollars on marketing and instead they spent their money in marketing for them. From 700 million dollars in 2001 to almost zero dollars in 2007 just think of the things that this industry is capable to do with such an amount especially that they kind of “outsourced” the marketing to the lobbyists who were fighting them. It is now the lobbyists who are still spending millions of dollars per year on marketing campaigns and anti-smoking ads which only helps keep the tobacco industry in the limelight. This here is a reversed Hawthorne effect; the negative attention given to the tobacco industry gave it more and more attention. 7 years after the total ban, it is still a thriving multi-billion dollar industry thanks in a big part to the same lobbyists. The Tobacco industry has not disappeared; it has just reached higher levels.

Today, the tobacco industry has found more ways to get free marketing by using some social media platforms. They do not advertise their products but instead advertise the companies themselves. For instance, British American Tobacco is very active on LinkedIn in advertizing its sustainability and its activities and how they are being chosen among the best 100 employers in the world. You would think for an instance that after all the villainizing that this industry has been exposed to almost no one would want to work there yet instead the tobacco companies are among the best and most attractive employers.

Regardless of the right and wrong concept when it comes to this very controversial industry and without delving into any of the health drama, what happened here is a case of reversed results. The lobbyists tried to “dim” the light on the Tobacco industry and send it to obscurity but they ended up putting it in a different kind of spotlight. This is one industry in the world that is actually enjoying the “free lunch” concept to its fullest while some else is doing the job for them.

Dacia, the Smart Car That Did What “Smart” Couldn’t Do

“ Any customer can have a car painted any color that he wants so long as it is black” the famous quote from the legendary Henry Ford when he was referring to his T-model – the car that made history. The importance of this quote lies in the fact that although the Germans might be the ones who invented the car, it was Henry Ford who laid the basics and essential reasons behind making                 a car. And today and more than ever, the basics he laid are serving their best purpose and proving what a visionary this man was.

In the 80’s of the last century, the Lebanese Nicolas Hayek devised a plan to produce a small economic car that would sell for less than $10,000 and serve basically the European Countries. Having saved the entire Swiss watches industry singlehandedly by creating “Swatch” the low end but high quality Swiss watch that was sold to the mass market and made enough sales and profits to save the ailing luxury watch makers, he was convinced that he could do the same to the European Car industry. The idea he came up was brilliant but the realization – well not every fairy tale has a happy ending. Having designed the car, his idea was to offset the high production costs that might kill the car’s purpose so he reached out to existing car makers in the European Market and it was Daimler Benz that adopted the idea and agreed to bring “Smart” to life. Unfortunately, how they decided to do so was not so bright. The idea behind the car was to keep it as simple as possible and as basic as possible. Daimler’s first mistake was the location: “France” a country known for its high production costs while they should have opted to countries of the Eastern Block if not India or China unless they had in mind to compete with French carmakers: Renault, Peugeot, Citroen although the idea seems to be farfetched given the concept of the “smart” car. To make things worse they were obsessed with safety measures and wanted to earn all the safety stars that were possible which added additional cost to the car. Needless to say, when the car was launched it was not below $10,000 at all and thus the car did not serve its purpose. Sales were not as strong as the hopes that were built on it and the company started piling up losses. Along the years that followed, they further scaled down their operations by discontinuing 2 of their cars the Smart Roadster and the ForFour and many concepts that were in the pipeline were ditched, while at the same time Dacia was increasing its car range and foraying into new markets. Then all of a sudden, Daimler went all American on Smart by merging its management with that of Daimler and closing its independent design centers in an attempt to cut costs; this was the exact mentality with which Americans managed their car companies and which almost led to their demise.

The mistake that Daimler made was in trying to give Smart its identity instead of keeping it independent; they must have thought that their name would give leverage to the young brand and help push sales but the effect was negative because no one is used to an economical car from Mercedes and the car was not even economical in the first place. They should have alienated it from them and given it its unique character just like BMW has done with the Rolls Royce and the Mini brands. Daimler did that to Maybach and killed it and so far Smart seems to be facing the same fate unless Mr. Ghosn manages to save what is left of the brand.

It took another Lebanese to realize Mr. Hayek’s dream and it was Carlos Ghosn who found in the Romanian brand Dacia the perfect car for this purpose (Yes it’s all about my fellow countrymen this time!). Dacia has been closely affiliated with Renault since its inception and many Renault brands were simply branded as Dacia with very small modification. This flirting and foreplay between the 2 brands came to an end in 1999 just at the same time when Renault purchased a stake in Nissan. Ironically at the same time Daimler merged with Chrysler in a deal that was about $40 Billion worth and at the same time the very first Smart cars were sold. I do not know who came with the idea of merging 2 luxury carmakers together; what were they thinking? That is if they were thinking at all. That deal did not live to be 10 years old, while Nissan Renault continues to thrive and grow until today. It is interesting how the fates of those 2 car makers groups are intertwined.

Mr. Ghosn, who had just managed a legendary turn around for the once almost bankrupt Nissan, turned his attention to Dacia and in 2004 the Dacia Logan was the first car to roll out of the Romanian factories as a totally independent car. Although some parts are furnished by Renault, the whole car now has an independent identity in contrary to previous models that were basically Renaults with different make-up. So while Daimler was merging, Carlos was diversifying. He made sure that every brand was separate in order to avoid any brand being hurt by another and to avoid overlapping. “Go back to the basics” was the theme for Dacia, a simple stripped down car that would take you comfortably from point A to point B without the toys, gismos and distractions of the other more luxurious cars. They were not even interested in the safety stars. A car big enough to fit a family and small enough to keep it personal as the great Henry Ford used to say. It comes as no surprise then that during and after the crisis when most car sales were slumping, Dacia was the fastest growing car in Europe and still reins the European markets while slowly making headway in the Middle East and other markets.

Mr. Ghosn seems to understand the US market much more than the folks at Daimler. He knows that the US consumer is not interested in small basic economical cars and this is why you don’t even see the small Nissan cars like the Tiida and the Micra in the company’s showrooms in USA and this is why he did not bother to try to introduce the Dacia to the US market at least not yet. For the Indian market, he has decided to revive the once iconic Datsun brand (for my American friends who are younger than 30 ask your dads about Datsun because chances are they owned one back in the 70’s and early 80’s). Datsun will probably sell in India for even a much cheaper price so Mr. Ghosn did not even want to risk the Dacia name, another proof of his understanding of the market and its segmentation.

Strange how those 2 companies are intertwined together; in 2010 a strategic alliance was announced between Daimler and Renault Nissan Alliance and the very first fruit of this alliance was that the Smart for two will benefit from the French automaker’s small car technology. Mr. Hayek’s vision for the smart car was to be a hybrid car, a vision that Daimler shied away at the time but which is the corner stone in Carlos Ghosn’s strategy. Now more than ever, the late Mr. Hayek’s dream seems so close to be realized. I guess it takes a Lebanese guy to realize a fellow Lebanese’s dream. Unfortunately Mr. Hayek is not around anymore to see his vision materializing.

Korean carmakers were once known to have cars with just the basics and the best purse but nowadays they are obsessed with being the new Audis in terms of luxury and designs. It seems that only Mr. Ghosn is the one who wants to scale back and go back to the basics of car making in order to offer the car that can fit every purse, purpose and preference (excuse me GM for stealing your moto but it seems to fit Renault-Nissan more).  I would like to end with another quote from Mr. Ford autobiography My life and Work “I would like to build a car for the great multitudes” and he did so with Ford T-model and then VW did the same with its beetle and they both managed to do so by sticking to just the basics and Dacia seems to be well positioned to fulfill the same purpose. Something tells me that Mr. Ghosn has copies of this autobiography on his desk and nightstand.

Masters of Tax Evasion “Houdini” Style

“What the eyes see and the ears hear, the mind believes” a well known quote by the famous illusionist and escape artist Harry Houdini. In a nutshell he never did any magic, he simply tricked people into looking in a certain place while the real action happened somewhere else. What the big companies are doing these days is the same exact concept but each of them has a style.

For 20 years now Amazon has been dazzling the world with its new services and innovative and most of the time weird ideas (remember the delivery drone they paraded recently?) and for all that time Amazon has never reported profit or distributed equity to any of its shareholders. For 20 years Mr. Bezos has been able to convince his shareholders (who interestingly enough keep flocking in) that not recording any profit is a cool thing. By doing so, he has been able to avoid paying anything to the IRS, and avoid their scrutinizing. That in short is his “escape plan”.

Mr. Zuckerberg on the other hand likes the limelight and glamour in all what he does. Ranking the second biggest philanthropist in 2013 and the biggest in the under 30 years old category, Mark Zuckerberg donated almost half a billion dollars. He surely has reserved himself a big spot in the headlines and attracted more attention and interest in his social networking site, (Imagine this as a reason to start a facebook account: Mark is so sweet in all what he does, I am going to support him by starting my own FB account and maybe post a few unsuitable and nude pictures while I’m at it….) But before you jump into such hasty and life changing decisions such as having your own profile, take a minute to reflect on that fact that he is entangled in tax evasion issues in New Zealnd, Ireland, UK and Singapore among others. In Ireland alone, Facebook paid only 1.9 million british pounds on a gross profit of 1.75 billion pounds. How he did that? Very simple, create a company wherever you want in the world and incorporate it or create a mother company for it in a tax haven country to funnel your money to it. Ireland’s Facebook used the Cayman Islands whereas Google went for Bermuda. Perhaps this is the reason all major companies choose Ireland, the country itself has made many rules on lowering taxes in order to attract investors and does much less work to go after those who funnel their funds outside the country. Just like Houdini, they make people focus on their good deeds in order to distract them from what’s happening elsewhere. The same applies to Apple and Microsoft for that matter.

Dick Cheney always does things the “hard way”, by the end of 2007 and while the company was coming under heat for its “not so transparent” accounting techniques and tax issues, they decided to take drastic decisions that included moving their headquarters from Texas to Dubai. Of course the excuse was to “intensify their focus on Middle East markets” but the truth was to be found somewhere in the courts in the middle of all the litigation that the company was entangled in. Needless to say, that deprived Uncle Sam from a very big and important source of revenue and hiked up the company’s revenues.

The US government prides itself for it notoriety in enforcing its Foreign Corrupt Practices Act which bans all companies whether American based or have business in USA to pay any form of bribes outside the US territory (don’t be fooled with the shiny titles, most companies are evading that by creating “PR” budgets and those are not for lunches and dinners only. Ironically that’s another Houdini trick), yet they don’t seem to be so stringent on tax evasion. Of course everyone hates taxes and everyone wants to get rid of them. But it has been a trend in the last few years whether in the USA or anywhere else on the world that whenever the government needed the money they went after the poor regular individuals and enforced tax hikes on them.

There is no need to increase taxes on big companies; actually it is not a good thing because they are the biggest employers and the movers of economies. But forcing them to be transparent about their profits and paying their fare share of taxes will be more than enough and a good place to start at.