Unreal Estate: Dream House

Construction has stopped on Beit Palestine, or House of Palestine, the grand mansion commissioned by Munib Masri, a patriarch of the most influential Palestinian family on either side of the Jordan River. Nearly complete and perched atop the highest mountain in Nablus, the villa seems to levitate, Olympus-like, above a city that was known as the industrial heartland of the Palestinian territories before the current intifada shut it down, along with the rest of the West Bank.

The mansion is an extravagant monument to the Masri family vision of a rich Palestine emerging from the economic decay of the Middle East. Masri, a flamboyant 68-year-old, has embroidered Beit Palestine with luxury trimming--fireplace mantels, statues, tiled floors--all collected from his travels in Europe. Thousands of wooden crates containing baroque and Victorian fixtures are stacked on the grounds, awaiting installation. Think Hearst Castle in the Holy Land and you get the idea. Once finished, says Masri, Beit Palestine will open its doors to the Palestinian people. "I have an obligation to them," Masri says, scampering up a catwalk to the main dining room. "When the Israelis tear out a tree, we plant a tree. When they destroy a house, we build a house." Even an unfinished Beit Palestine is a hopeful symbol to Palestinians, particularly compared with the devastation of Yasir Arafat's compound, leveled by Israeli forces last month.

The Masri family, with Munib and his 64-year-old second cousin Sabih at its head, has been the leading investor in the Palestinian Authority and Jordan since the Arab-Israeli peace process began a decade ago. Arab leaders hailed Masri investments as a valuable peace dividend. Even now, Sabih Masri in particular continues to invest, against the counsel of some family members. Sabih says the Masris can afford to bet on the region since most of the family fortune is invested elsewhere, particularly Saudi Arabia and the United States. But he acknowledges the risks. "I'm an optimist," he says from his office, adorned with Southeast Asian antiques. "At the end of the day, Israel will have to accept the fact that peace is inevitable."

Many Palestinians have invested in their homeland, but few if any are so powerful as the Masris. Sabih has close links to the monarchies in both Saudi Arabia and Jordan and is friendly with Lebanese prime minister and real-estate mogul Rafik Hariri. Maher Masri, Sabih's nephew, is Yasir Arafat's trade minister. Another nephew, Taher, has served as Jordan's prime minister. Munib's current home in Nablus, where he awaits the completion of his mansion, is considered one of the few places Arafat will sleep without a bodyguard present.

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The Masri empire has been expanding rapidly since Sabih made a fortune supplying the U.S. Army during the 1990 gulf war. Their holdings now include hotels, telephone grids, water projects, supermarket chains, port developments, an investment bank and auto dealerships scattered about the West Bank and Jordan. Most significantly, Sabih Masri owns critical water rights and is poised to play a role in what one day could be the region's most vital asset: a pipeline linking the Dead Sea and Red Sea that would provide the region with fresh water for generations. "Both King Abdullah and Arafat know the economy is the issue and Sabih Masri is one of the biggest investors in the region, if not the biggest," says Mahmoud Awwad al-Kharabsheh, a Jordanian lawyer and parliamentarian. "No one can outbid Sabih Masri. His money allows him to influence important decision makers."

In a region dominated by largely unpopular leaders, the Masris are genuinely admired. Sabih favors cabs over limos, and Munib and his two sons are involved in a rare Israeli-Palestinian joint effort, planning a day-care center in the Old City of Jerusalem. Israelis tend to see the Masris as a force for moderation. Palestinians see them as an authentic Palestinian voice--one wealthy enough to command Israeli respect.

The Masri influence wasn't always so dominant. In 1990, with a weak global economy and the first intifada raging, their prospects looked grim. At the time, says a person close to the Masri family, "Sabih couldn't cover a [Pound sterling]20,000 check." Then the Masri luck turned, thanks to Saddam Hussein.

After Iraq's invasion of Kuwait in August 1990, Masri leveraged his contacts as a food distributor for the Saudi Arabian Army to win an exclusive contract to provision U.S. troops during Operation Desert Storm. In six months, say people close to the enterprise, Sabih Masri made a billion dollars. Masri won't comment, except to say, "I'm a lucky man."

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The end of the gulf war raised hopes that the Middle East would become a hot emerging market. It was a heady time for Palestine Development and Investment Ltd., or Padico, a holding company launched in 1976 by Sabih Masri and other investors. Padico controls critical local assets, including the telephone monopoly and the stock market, which enjoyed a bull run in 1999.

Now, Padico is struggling to survive the second intifada. It has a 35 percent stake in the Jacir Palace-Intercontinental Hotel, a 19th-century landmark that reopened in September 2000 after a $55 million restoration, only to be shuttered almost immediately by clashes between Palestinian youths and Israeli troops. Padico's agribusiness has been devastated by Israeli road closures, which delay shipping and send the rate of chicken deaths and egg spoilage skyward. Yet Sabih continues to buy local. "Sometimes," says Taher Masri, the ex-prime minister , "I will remind Sabih of the political risks. But he keeps his own counsel."

Perhaps Masri's most vital asset is water rights in a desert kingdom facing a dire water shortage. Though Masri has said he'd be happy to sell his stake in the Disi Reservoir, which is costly to maintain, its value could be inestimable once Jordan, the Palestinian Authority and Israel resume work on the $6 billion Dead Sea-Red Sea water pipeline, in addition to desalination plants estimated to be worth several billion dollars. "Masri is thinking about the long term," says Labib Kamhawi, an ethnic Palestinian trader in Jordan. "Whoever controls water in this region controls the region." No family has risked more than the Masris on what now looks like slim prospects for peace. But none stand to gain more if the dream comes true.

Unreal Estate: Dream House | News