Lebanon caught in fallout from Syrian crisis

Lebanon is trapped in the Syrian conflict by geography, demographics, and economics and not simply by spillover from the conflict.

Lebanon’s sole friendly border is with Syria. More than half a million Syrians are refugees in Lebanon, 10 per cent of the country’s population. Nearly 340,000 have registered with the UN to receive aid while an unknown number are dependent on help from charitable organisations.

The influx is putting a heavy strain on electricity, water, fuel and food, already in short supply. Lebanon is more deeply polarised than ever before. The parliamentary election due in a few months time is unlikely to be held due to division and contestation.

The crime rate is soaring. Bank robberies and kidnappings for ransom are rife. Free-spending tourists from the Gulf are shunning Lebanon. Mountain resorts and luxury hotels are suffering.

Due to political, economic and social instability, a small incident could detonate an explosion at any moment, several sources declared.

Nevertheless, on the surface, a businessman argued, “Lebanon is booming. Cafes and restaurants are packed, the airport is busy, money is flowing into the country, real estate prices are soaring.”

'Corruption rampant'
He admitted, however, that the boom could be short-lived. During 2012, the GDP grew by 2.8 per cent but this figure does not reveal that the growth benefits the rich rather than the middle class and the poor.

“Corruption is rampant, worse than ever,” said the businessman. To make matters worse, it is not hidden or denied. Officials say in public that they are involved.

“A minister interviewed on television admitted that his daughter had embezzled $35,000 in public funds, but argued that the sum bought only a year’s supply of toilet paper, as if $35,000 is nothing,” an angry friend said.

Teachers and civil servants have been striking for a rise in wages, but bankers argue that if the salaries of public servants are increased, private sector employees will also demand more pay, sending the faltering economy into a tail-spin. To make the government’s stance clear on this issue, the finance ministry has announced that it has not including wage hikes in the new budget and is seeking $1 billion in cuts to curb the spiralling deficit.

Analyst Sofia Saadeh pointed out that after Lebanon’s 1975-90 civil war, former prime minister Rafiq Hariri, focused on the services sector while rebuilding the country.

“He encouraged hotels and furnished apartments to promote tourism but did not consider industry and agriculture. Now that tourism is down, the economy is suffering.”

Furthermore, Lebanese exports are not monitored for quality and safety. Consequently, she remarked, “Egypt, Saudi Arabia and the Emirates have stopped buying from Lebanon and our supermarkets bring goods from abroad.”

Financial consultant Walid Abu Suleiman said that the real estate and banking sectors have also been hit by the Syrian crisis. "There were seven Lebanese banks operating in Syria which have lost $450 million in loans to Syrians.

Transit trade
The Lebanese Central Bank compensated these banks from the country's reserves." Lebanon used to benefit from transit trade through Syria to Jordan, Iraq and Saudi Arabia, Mr Suleiman said, but the volume has fallen dramatically from 350 lorry loads of goods a day to three or four.

“We do not benefit from Syrian business,” he asserted, dismissing as “rumours” reports that Syrian businessmen seek to establish manufacturing plants or invest in Lebanon. “They fear the polarised situation. Lebanon is not a peaceful country. They use Lebanon as a transit point or place to stay temporarily. For business they go to Turkey or Dubai.”

During 2012, Beirut port increased the volume of trade due to the absence of the Syrian port of Latakia as a hub for trans-shipping goods from Europe to the region. But this, also, may not last. Turning to the political front, Harvard-educated Dr Saadeh said. “If Syria survives, we will survive. If Syria falls, we fall. It is stupid to think we will survive without Syria”, Lebanon’s hinterland.

With regard to Lebanon’s deepening political polarisation, she is critical of the political elite which, she said, “has adopted the divide-and- rule strategies of the former colonial powers” by pitting one sect against another.

Cultivating confrontation
In the past, certain politicians set Maronite Catholic Christians against Sunni Muslims; today, they are cultivating a confrontation between Saudi and Qatari-backed Sunnis who support the Syrian rebels, and Iranian-supported Shias, who largely favour the government. In her view, the fate of the two countries could depend on the protracted "battle for Damascus". If the rebels gain control of Damascus within three to six months, the conflict could be resolved by military means. But if the battle continues, Washington – which is uneasy about the fundamentalist agenda of the rebels – could join Moscow in pushing hard for a political solution.