‘Boom’ Town

(Picture depicts two Israeli jet fighters flying above Beirut's hotel district on Monday 24th July)

Once upon a time there was a little country on the eastern Mediterranean coast called Lebanon. This tiny country with a little over 4 million people was plagued by cycles of prosperity and destruction. Over a year ago, this Lebanon found itself propelled into a new era when its divided people were able to successfully unite and drive out an authoritative foreign power. It seemed Lebanon at last found the way to a bright future. Billions of dollars of investments were being directed to the country, the stock market was booming, new companies were being set up, jobs were being created, reforms were being studied, privatization was being discussed, sky scrapers, hotels, office buildings and residences were being erected and tourists were flocking in. However, this is not a fairy tale with a happy ending, this is the Middle East!
This certain Lebanon is now no more. All the major roads that have been weaved throughout the years of reconstruction have been rendered useless. All the major bridges which Lebanon was so proud of have dissipated into thin air. Factories have been targeted by missiles, businesses have been shut, beach resorts are covered with thick black ash, the stock market has been frozen and hotels are empty. To estimate the damages to the economy at this moment in time would be a foolish endeavor as it is too soon to assess the full effect of the massive blitz that is taking place. However, the government did estimate that Lebanon would cash in over US$2 billion this year through the 1.6 million tourists which were expected to visit – the best tourist season in Lebanon’s history. That is now gone. The government did also estimate that the damages to the infrastructure have nearly reached, if not exceeded, the US$1.5 billion mark. That will surely be surpassed. And with the latest statement by Finance Minister Jihad Azour estimating the costs of the material damages, economic losses in terms of tourism, exports, trade and industry as well as loss in earnings to have already reached several billion dollars, rest assured that Lebanon has been dealt a severe blow under the belt.
And what is even more worrisome is that these excessively high numbers are adding up even though the core of the infrastructure – electricity, water and communication – has not yet been struck hard. Power stations are still running, even though their fuel tanks have been blown up. Communications are still available even though calling on the mobile network from one area to the other is slowly becoming more tedious. Even the international airport and the ports have so far been spared as only the airport’s runways and the ports’ empty docks have been shelled. The question is what would happen to the country if there is a sudden shift of strategy?
All in all, Lebanon suffered a total of US$4.6 billion in physical damage due to Israeli attacks from 1968 till today according to Lebanese-Canadian economist Kamal Dib. Throughout these 38 years of attacks, the housing infrastructure was struck the hardest with a total of US$1.6 billion of damages. In the 2006 attacks, Dib estimated so far that total physical damages have already reached US$1.6 billion, out of which the roads/infrastructure recorded a total of US$700 million – by far the most damaging Israeli attack on Lebanon’s roads. In comparison, the second most damaging attack on infrastructure took place in 1982 when the Israeli ground forces reached and shelled Beirut under the leadership of Defense Minister Ariel Sharon. That attack was estimated to have cost Lebanon some US$1.7 billion in total, out of which the road infrastructure represented a mere US$50 million in damages.
However, there is a light at the end of the tunnel. As an example, the core of Lebanon’s economy – its banking sector – has been tested to be war proof and is armed with US$11 billion in foreign exchange reserves to shield it from any potential financial crisis. The banking sector remained open throughout the entire ruthless civil war and has so far not closed during this latest assault. Every banking branch in Beirut is up and running, even though dollar bills have become scarcer to obtain. In terms of electricity, close to 80% of all buildings in Beirut are equipped with generators in case the current distributed by Electricite du Liban (EDL) is disturbed. This would allow businesses to continue operating for at least a month after EDL runs out of fuel. Even Middle East Airlines (MEA) is up and running and operating – even though with a limited scope – out of Damascus International Airport.
The biggest danger that could emerge from this raid is two faced. The first would be the breakdown of the confidence investors have had in the country. So far, Gulf investors who have funneled billions of petrodollars into high end real estate projects, have continued to show their interest in the Lebanese market. The two largest project developers in Downtown Beirut – Abu Dhabi Investment House’s Beirut Gate and Levant Holding’s Phoenician Village – have both expressed their confidence in a strong Lebanese real estate sector even after the onslaught. If downtown Beirut is struck, this feeling could quickly change.
The second danger, however, could be the fatal blow to the economy. This ongoing bombardment has brought about one of Lebanon’s largest exodus in its history. Already over 150,000 people have fled Lebanon via Syria, while another 50,000 are expected to flee to Cyprus via the naval war ships of countless countries of the world. Lebanon has fought hard throughout the reconstruction years to attract the millions of Lebanese spread throughout the world back to the country. It is true that most of these people have fled for safety reasons and are planning to return as soon as diplomacy settles in, but if Lebanon loses as little as 1% of its people due to this crisis, then the country would have lost enormous value in its most important economic asset.
What is truly a shame is that Lebanon was heading the right way, even though there were some hiccups in the economic planning. Our vision was taking us to a new Lebanon, an economically powerful Lebanon. It’s as if we had a bottle half full and instead of filling the rest or drinking what was inside, someone blew massive holes in the container. We are seeing our future slip through our fingers. But we shall not give up, we will reconstruct and show to the world what Lebanon is all about. We will demonstrate why Beirut’s name is derived from the Phoenix, the resurrecting bird.
mrtez