The writer reminisces about his first assignment abroad as a foreign officer of the EEPC on a three-year assignment to Beirut. The 48th part of a series describing the unknown triumphs and travails of doing international business
Our Lufthansa flight left Washington Dulles International airport very much on time, thanks to typical German efficiency. As we all settled down comfortably, friendly hostesses began to serve our drinks, followed by our supper. The last few days were hectic in Washington and now our planned retirement schedule has just began and would become more apparent once we set our foot on the Bangalore soil.
I remember I was talking to a leading gasket manufacturer in Delhi, when I was on the final leg of my Bharat Darshan tour, prior to my posting as a foreign officer in Beirut. I was scheduled to return to return back to Calcutta the next day, and a few days thereafter, I was to take a flight to Beirut. Only a few days earlier, before I left Calcutta, I had been to the Lebanese Consulate office and met Mr Hada, the Honorary Counsellor and obtained my multi-entry visa. I was very excited about this first international trip and that too on a three-year posting.
The operator had transferred a call from Girish, who asked me to return back to base immediately and I advised him that I was on the wait list for the next day. “No, make it tonight, and be in the office first thing tomorrow morning”. Meanwhile, our Delhi office managed to get my seat for the same day and I returned back. Next morning I left home early, stopped at the Bharat Battery factory at Tangra, when Girish located me again and asked me to return to office immediately. When I did, it was a rush job, running from one place to another, Reserve Bank of India (RBI), our head office and quick meetings. At the end, I was told that all documents, including the passports would be delivered at home, as I was flying that night, taking a Pan Am flight 002 to Beirut, leaving at 0030 hours!
I was embarking on an international journey; I had not bid goodbye to my close friends and even my family came to know of my trip that day only after I had reached home. My dear friend and well wisher, Girjashankar Shivshankar Joshi, was the MC directing all of us as to what to do; his car was at my disposal and hurried packing began, and our family came to Dum Dum airport to bid goodbye.
Apparently, I was the only passenger boarding the Pan Am flight going west, and at 11.30, I was asked to go through customs formalities. The flight left on schedule at 00.30 hours. Around an hour later, they served a hot breakfast, and as I had not had time to sit and eat a proper meal, I enjoyed it, but only to go back to sleep. The coach came and collected some five passengers, including me, and another twenty minutes later, having collected my baggage, I was outside, in the lounge. It was early morning in Beirut, and my predecessor, V Lakshmipathy personally came to pick me up. The city looked beautiful as we drove along the sea and reached home on Jean D’ Arc off Hamra Street.
Lakshmipathy had spent some four years in Beirut, and was promoted to take over the London office of EEPC. After a quick shower, we walked to Wardieh Square, and went up the Commestra Building, where I was introduced to Rozine Gulvartian the secretary. As we had coffee, Lakshmipathy generally explained our activities, and assured me, that it would be a cake-walk for a person like me, coming as I did from the industry. We then rushed off to the British Bank of the Middle East, so that account operation responsibilities were passed on to me. On his advice, I had carried my passport, and registration and signature attestation formalities were quickly complied.
We were on Rue Hamra, the main thoroughfare and fashion centre of east Beirut; the same street led all the way to Buruj (or the Martyr square), but near the Sabbagh Centre, where in the corner was the Central Bank of Lebanon, the road was known as Rue Kantari, which is where the Indian Embassy was located. Not a great distance to walk, half a mile at best, and so, we took a brisk walk to reach there. The ground floor of the building had a huge glass paned display of goods. This turned out to be the office of the State Trading Corporation. We did not stop here, but quickly rushed to pay a courtesy call on Ambassador AK Dar. I was introduced as the new successor; Lakshmipathy reconfirmed that he was leaving for London on posting there. It was a general chat and he was given a brief about me; the Ambassador was courteous and mentioned that he looked for to continuous support and cooperation from the Council's new representative.
We moved on to stop over at STC office, where I was introduced to Ganga Lal Casewa, the manager. We spoke briefly; he too was nice and looked forward to close cooperation from the new foreign officer.
We returned back, walking to our office, taking the same route of Rue Kantari becoming Rue Hamra and then a brief walk by the Jean D’ Arc to reach home. Mustafa, a cab owner was the man Friday for the entire Indian community, which is what Lakshmipathy told me. It was he and a couple of others who took us all in the afternoon to the airport to bid good bye to Lakshmipathy and his wife. I think we had a quick bite in Amritlal Parekh’s residence, who was also living in the same building in the seventh floor.
Our apartment was in the Saleh Shatilla Building on Jean D’ Arc, where Lakshmipathy had begun his Beirut career some four years earlier. It was a very spacious flat with three bedrooms, and reasonably furnished.
I think we returned back from the airport, had some food in Mr and Mrs Kumar's residence, and who arranged to have me dropped near the Commodore hotel, which was a couple of minutes away from our apartment. I woke up early, because of the time difference, and got ready to reach the office by 7.45 am, because I was told that offices opened at 8 am. I had the key and when Rozine came in, I was already in the office, making notes, surveying the set up, so that I could start early!
By about 11.30, I had the first surprise visitor; Kish Kapoor, my ex boss, and general sales manager of Indian Cable Co Ltd, under whom I worked for some six years and established a proper export department, write later, had just walked in. It was a pleasant surprise; he wanted me to give him the pleasure of company over lunch. We had a lunch and returned back to office. I had left InCab in 1968 and had moved over to Ushas to work under Lala Bishanswaroop Agarwal, the man who built the ‘Usha’ brand in India. I had worked under him for a little over a year, before applying and getting the job with EEPC as its Foreign Officer, in May 1969.
Rozine was waiting for me to explain a few things, as our office, apparently closed by 2 pm every day, in line with the Indian Embassy. Sorry, poor girl, you are in for a surprise, as I thought to myself. After she left, I continued to investigate the office work procedure, filing system, data that we had to give to visiting exporters and the information that we have been passing on to intending buyers from the market.
Customer service of a different kind was expected in disseminating knowledge of India. Our job was to build the image of India as a supplier of products and services; we had to explain that we have the manpower to come and assist them in building factories and there were hundreds of products, with American, British and European brands that were being made in India, many of which were being exported back to their parent companies, where there was collaboration.
The task before me was enormous and on the very first day I realized that I had to pick up some Arabic and French, which were the main languages in Lebanon, though I was told that the Arabic spoken locally was very ‘refined’ compared to the ‘crude’ form used in many other parts in west Asia, Middle East in particular.
So, working from 8 to 2 was not going to help; I had made up my mind that it would have to change from 8 to 5 in the next few days, whether Rozine liked it or not!
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at [email protected].)
With a weakening global economy European markets will no doubt test those lows. When they do, the worst place to invest might just become the best
Over the past few weeks an army of financial professionals have been frightening the markets about the potential meltdown in Europe. They tell us that the core of European bank reserves consists of toxic sovereign debt. With a meltdown imminent, the safe investments are US treasuries or German Bunds. Yet it might be time to think again. The greatest returns on investments come when fear is greatest. As Baron Rothschild said “Buy when there’s blood in the streets, even if the blood is your own.”
First as to the analysts, basically they should be ignored. According to Professor Philip Tetlock’s new book “Expert Political Judgment”, political forecasters are worse than a crude algorithm at predicting events. The more prominent the expert, the worse the predictions and there is an inverse correlation between the confidence of the individual forecaster and the accuracy of their predictions.
Problems in forecasting are not limited to the political realm. Financial experts are best only when markets are reasonably calm. They failed to predict the upside momentum of the internet boom between 1997 and 1999 and also failed to predict the depth of the crash between 2000 and 2002. They were reasonably accurate between 2003 and 2007, but of course they failed miserably in 2008. So when you need the experts most, they are not around.
The real problem is that no one can reliably forecast the future, especially the short-term outlook for economies or stock markets. Warren Buffett does not even believe that it is worth anyone’s time to do so.
But amid the uncertainty and hot air, one thing is definite. Markets do eventually return to mean. Business cycles are called cycles for a reason. Down cycles are always followed by up cycles as night follows day. It just takes time. The difference is that it may take even more time. Governments and central banks trying to solve the problem may have made it worse. The stimulus that is supposed to be so indispensable to save the market from itself may be preventing the markets from reaching equilibrium. So instead of preventing pain, they just prolong it.
But depressions and recessions even with government help do not last forever. During a financial crisis investors have to remember one thing. The basic components of an economy don’t just evaporate. Most companies have tangible assets. Their stock may be falling like a rock, but the real estate, equipment and intellectual property is still there. Some workers may lose their jobs. Others might be underemployed, but they are still around. As investors discovered in the US, real estate loans are secured by land, which doesn’t dissipate in the morning mist. Its value is not what it was, but it does still have worth. Yes, some investors do lose money, but there is always another side to the trade. Someone’s loss can be another’s opportunity.
The Greek situation is unresolved and may remain so for many weeks. Markets do not like unresolved issues, especially political ones. This uncertainty will weigh on the markets, especially European ones. Doubt also surrounds the rising bond yields in both Spain and Italy. So it is hardly surprising that European shares have fallen 16% since the early April highs compared to 6% in the US. Money has flowed out of large stock European funds for the past 14 months. It appears that Europe is the worst place to invest, which is exactly the point.
The reality is that European equities are not totally European. American and many emerging market corporations, especially state-owned ones, earn profits mostly in their home markets. In contrast 44% of European profits come from outside Europe. European corporations earn 24% of their profits from emerging markets, almost double the amount as American corporations. So the problems in Europe will be cushioned for European corporations by their exports. The higher exports of European corporations will be helped by a plunging Euro, but this assumes that the economies of their trading partners remain strong.
Another advantage of European shares is their dividend payout. The average dividend yields for corporations in the strongest European countries, France, Netherlands and Germany is 4.1%. This compares very favourably with government bonds and the average yield for US stocks, which are only 2.2%.
Some European countries are also positioning themselves for a rebound. The recent stresses to some economies like Spain have forced their governments to make the real reforms that are necessary for sustainable growth specifically in the labour market. Germany’s present strength is due to similar reforms ten years ago.
The German market and others have not reached their lows of last September. It will take another 14%. With a weakening global economy European markets will no doubt test those lows. When they do, the worst place to invest might just become the best.
(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected].)
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