Prominent Beirut university hit by coronavirus cash crisis

The American University of Beirut is currently in the midst of the worst crisis it has faced in its long history. (Shutterstock)
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Updated 09 May 2020

Prominent Beirut university hit by coronavirus cash crisis

  • AUB cuts staff amid perfect storm of Lebanese currency crash, COVID-19 pandemic and unpaid government debts

BEIRUT: One of the Arab world’s oldest universities faces its worst crisis since its foundation, with huge losses, staff cuts and an uphill battle to stay afloat as Lebanon’s economic meltdown and the coronavirus pandemic hit revenues.

The American University of Beirut (AUB) has graduated leading figures in medicine, law, science and art as well as political leaders and scholars over the decades.

It has weathered many crises, including Lebanon’s 1975-1990 civil war, when a number of staff, including two presidents, were killed or abducted, and a bomb destroyed one of its main halls.

But Lebanon’s problems now may be the biggest threat yet to the institution founded in 1866 by Protestant missionaries. It ranks among the world’s top 200 universities and its collapse would deprive future generations in Lebanon and the wider region of internationally recognized higher education.

“This is one of the biggest challenges in AUB’s history. The country is crashing catastrophically,” AUB President Fadlo Khuri told Reuters in an interview.

With inflation, unemployment and poverty high, many families have little means to cover food and rent, let alone tens of thousands of dollars in tuition fees.

The heavily indebted state, which defaulted on its foreign currency debt in March, owes AUB’s medical center — which attracts patients from across the Middle East and Central Asia — more than $150 million in arrears.

Government officials have ruled out a haircut on the bank deposits of non-profit universities such as AUB, but Khuri still fears his institution may take a hit if a state rescue plan puts part of the burden on large depositors and includes colleges.

Along with other universities, his school has lobbied the state and, he said, received assurances from the president and finance minister that any such measures would not impact them.

But he remains worried, with plans for plugging vast holes in the national finances not yet finalized. “We have all this money they (the state) still owe us for the hospital so it’s very hard to rely on well-intentioned people who may or may not have the ability (to deliver),” he said. Government officials could not be reached for comment. 

The university and hospital expect real losses of $30 million this year after bleeding revenues. For 2020-2021 alone, it projects a 60 percent revenue reduction from this year, down to $249 million.

The stark revenue forecasts rely on an “optimistic assumption” that the Lebanese pound will stabilize at 3,000 to the dollar, but Khuri has said they do not take into account a possible haircut imposed on AUB’s bank deposits in Lebanon.

Finance Minister Ghazi Wazni has said there will be a shift to a flexible exchange rate in the “coming period.”

Khuri said AUB would have to set its own rate in the meantime, taking into account people who say they can pay in dollars to help cushion the impact of the pound’s collapse on poorer students.

AUB has already lost donations and scholarships it was expecting before the pandemic. On top of benefit and wage cuts, it is studying options such as closing whole departments and halting spending.

In an email to students and families, Khuri promised to work to protect their livelihoods and to raise money via an emergency fund.

“But there is no question that sacrifices must and will take place at every level,” Khuri wrote. “We must fundamentally change in order to survive ... Saving AUB must be our only priority. And save it we will.” 


Oil surges on hopes of new deal on output cuts

Updated 02 June 2020

Oil surges on hopes of new deal on output cuts

  • Brent price has doubled in five weeks
  • OPEC talks may be brought forward

DUBAI: Oil prices surged toward $40 a barrel on Monday as hopes rose for an early agreement to extend the big production cuts agreed by Saudi Arabia and Russia under the OPEC+ alliance.

Brent, the global benchmark, jumped by more 9 percent to nearly $39, continuing the surge that has doubled the price in five weeks — the best performance in its history. It recovered after record supply cuts agreed between the 23 countries of the OPEC+ partnership, and enforced cuts in US shale oil.

DME Oman crude, the regional benchmark in which a lot of Saudi Aramco exports are priced, rose above $40 a barrel for the first time since early March.

Market sentiment was buoyed by the possibility that the Organization of Petroleum Exporting Countries would agree with non-OPEC members to extend the cuts for a longer period than was agreed in April.

Oil analysts expect OPEC to fast track a “virtual” meeting to formally agree to maintaining cuts at the record 9.7 million barrels a day level. The meeting was scheduled for June 9, but bringing it forward would allow producers more time to set pricing levels.

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An official with one OPEC delegation told Arab News there was consensus among the 23 OPEC+ members for the new date, which could be as early as June 4. The meeting will also consider how long the current level of cuts would be maintained. Some OPEC members want it to run to the end of the year, other producers would prefer a two-month extension.

Omar Najia, global head of derivatives with trader BB Energy, told a forum run by Gulf Intelligence consultancy: “I’d be amazed if OPEC did not extend the higher level of cuts. As long as Saudi Arabia and Russia continue saying nice things to each other I’d expect the rally to continue.”

A Moscow source close to the oil industry said energy officials there had come to the conclusion that “the deal is working” and it was important to keep prices at an “acceptable” level.

Sentiment was also affected by a comparatively high level of compliance with the new cuts, running at about 75 percent among OPEC+ members, with only Iraq and Nigeria noticeable under-compliers.

Robin Mills, chief executive of Qamar Energy, said: “That’s where I’d expect it to be after two months in such a fluid situation. It will be even better in June.”