Trade with the Middle East – Libya, Syria, Egypt and Iraq

(Excerpted from the Merrill, J, Fernando autobiography)

Libya: In my bulk trading days, I did considerable business with the Middle East. AF Jones and another company dominated the supply volumes to Libya. In retrospect, I deeply regret the environmental damage caused by this trade, as many tea shipments were in five and 10 kg packs, in sapu and albizzia boxes. These were shipped out regularly in container loads. Our distributor in Libya was a wealthy Maltese family, M. Albernozo and his two sons, John and Marcel.

Libya is a beautiful country and was administered as a colony of Italy from 1912 till well in to World War II. After the defeat of the Italian and German forces in Africa, Libya was under Allied occupation from around 1943 to 1951. The Italian influence is very evident in their food, drink, and clothing. Food, in fact, was also as cheap as drink. A good bottle of wine cost no more than a shilling.

Until the overthrow of King Idris, who ruled the country from 1951 to 1963, when he was ousted in a coup by Colonel Muammar Gaddafi, it was a comfortable country to trade in. I visited Libya regularly from 1958 till about 1985. In the early days I used to stay at the Grand Hotel, Tripoli, an old but well-maintained hotel overlooking the harbour. Both the service and food were very good when it was being managed by an Italian group.

Gaddafi introduced an iron-fisted rule and his style of governance soon impacted on my business in the country as well. Procedures for foreigners at the airport became difficult and humiliating, with arrogant young immigration officials being equally discourteous and unhelpful. Once, I was rudely told to fill my disembarkation card in Arabic! Customs inspectors treated all incoming visitors as if they were potential smugglers, checking travel bags by simply throwing the contents out.

The best hotel in Tripoli at that time was the Al Waddan, referred to as the “Waldorf Astoria of Tripoli,” built in 1935 and designed in collaboration by two famous Italian architects. Accommodation, service, and food were excellent, until Gaddafi issued an edict suddenly that all foreigners employed in the country should leave within 24 hours. My distributor, Albernozo’s Finance Director, a Greek, was told that whilst he could stay on, his Italian wife would have to leave the country immediately. The quality of facilities and services declined but business continued to be good, though the import trade was also nationalized.

Albernozo returned to Malta soon afterwards and we continued our business with Nasco, a large Libyan tea importing company. I established a good relationship with its Chairman, Mohammed Zigallai, who gave me some decent orders. Conditions within the country, however, became both restrictive and oppressive under the Gaddafi regime. At the request of my friends in the country, on my visits to Libya I used to carry with me many items which had become unavailable in the country. However, more often than not, those had to be left behind at the Customs.

The discovery of oil in Libya enriched it and the country prospered during Gaddafi’s rule, despite its authoritarianism. However, his military interventions in other countries in the region and internal opposition to his rule created instability within. The civil strife, compounded by NATO-led military action led against Gaddafi, culminated in his death in 2011. Since then, that once-peaceful country has been in a constant state of turmoil.

Syria

My experience with Syria too mirrors those of Libya. I found it to be a very sophisticated society, a composite of an ancient classical culture reaching back many centuries and influenced subsequently by French colonization. Its tea trade had been in private hands for many years and I used to visit the country at least twice a year. Syrians, by nature, were very friendly and I formed warm relationships with my business contacts, who frequently invited me to their homes for meals.

Once the importation was taken over by the State organization, TAFCO, the nature of my interactions in the trade changed dramatically. The new barons of the import/export trade were blatantly dishonest and attempted to entice me into various fraudulent schemes, the main purpose being personal enrichment through deliberate downgrading of the quality of deliveries, against agreed shipment standards. The shipment broker came to meet me several times seeking commissions as well. I refused to compromise on quality and, as a result, lost the business.

Egypt

Egypt was another lucrative market for Ceylon Tea until its nationalization of the import trade. My first agent, who is my friend to this day, was Ibrahim Soudan and his family. My business with Egypt went very well, during a period when Egypt was buying about 40 million kg of Ceylon Tea annually. However, the Egyptian Government signed a trade pact with Kenya and the Egyptian off take of Ceylon Tea diminished rapidly as a result.

Today, the Egyptian market is dominated by cheaper East African teas and the Ceylon Tea presence is not significant. However, with the development of the tea bag market, Dilmah is regaining a foothold in Egypt. Regrettably, with the commencement of my food service and restaurant supply business, by mutual agreement, we severed our business connection with the Soudan family. They were importing their own brand in Ceylon packs, supplied by my friend Gamini Fernando’s company, Ceylon Tea Marketing.

Our agent in the restaurant tea supply business is my very good friend, Hassan Al Shahin, one of the biggest merchants in Egypt. It is a great privilege to deal with people like Hassan and Ibrahim, warm and family-oriented businessmen, with whom I have established trade connections spanning generations. Before long, between those family companies and Dilmah, there will be respective third generations trading with each other.

That is the charming connectivity of the world of tea, especially when the business is controlled not by multinationals but by families with a philosophy of delivering genuine quality to the customer. That was also the attractive and genuine face of much of the international trade many decades ago, before being rolled over by the multinational juggernaut.

Iraq

In Iraq, a country which is still an important destination for Ceylon Tea, my distributor was Dhanoon Ahmed Khootachi. He provided me with very good business, taking care of me personally on my visits to the country. I used to stay in the Baghdad Hotel, where food and service were both excellent. However, hotel accommodation used to be both limited and expensive and, in view of the stringent exchange controls in Ceylon, one had to be frugal as well.

It was not uncommon for delegates from Ceylon to overseas trade fairs to share hotel rooms, especially when the more affluent delegates from other countries, or from the richer companies from Ceylon itself, commandeered available accommodation. I recall one occasion in Iraq when I shared a room, I think with my friend Kumar Paul. I slept the night on a sheet I spread on the floor.

Once the trade was nationalized in Iraq, the importation of tea passed from private hands to the State-controlled Iraqi Government Tea Purchasing Board. Its representative in Sri Lanka would purchase the country’s requirements, generally around 30 million kg per year, through appointed agents in the country. The first such representative was Farouk Murad, who was accompanied to the country by his wife and his two children. I was a regular supplier for many years.

The decline of Iraq in the last decade is not dissimilar to the fate of Libya; engineered largely by the US and UK, through the transparently-false ploy of a search for weapons of mass destruction, when the real motive was the destabilization of the Saddam Hussein regime and the seizure of control of oil production.

In essence, the Middle East was a common market for tea, with a general similarity of consumer preferences across most countries. When Egypt, Iraq, Iran, Syria, and Libya were free markets, with several importers purchasing tea in Colombo, there was a healthy market competition. Once the economies of those states came under central state control, with one corporation representing 20-30 buyers, countries like Egypt and Iraq established their own buying offices in Colombo.

Purchasing arrangements impacted on prices. When a delegation came out to make large-scale purchases, exporters competed with each other to sell at unrealistic prices, which spelled disaster to the Low-Grown producers. The system of large-volume forward contracts, not an uncommon feature then, contributed to price depressions which prevailed for months.

The Syrian tender procedure also paved the way for various irregularities. Another factor is that when centrally-controlled economies are represented by a single buyer to the country, they also have the power to determine the sources of supply, invariably gravitating to the cheapest buying centre, to the obvious detriment of Ceylon Tea, which has always been the highest priced.