"Lebanon has emerged out of the economic through - the Middle East's former showcase state is reawakening."
Thursday, November 19th, 2009
- Expatriate Lebanese are important initiators
- International travel market rediscovers the ”Switzerland of the Middle East”
- Investors trust the political new start
Lebanon has two strong neighbors, Syria and Israel. Although the Maronite Christians are a minority, they have traditionally governed the country that was declared a French mandate in 1920, was granted formal independence on November 26, 1941, and gained complete autonomy with the reinstatement of its Lebanese officeholders on November 22, 1943. Since then, the 22nd of November has been its national day. Lebanon threatened to break apart because of a civil war that broke out between Muslims and Christians in 1975. In 1989, Saudi Arabia negotiated a peace settlement in its western city of Ta’if that fixed confessional parity. The political situation became stabile and economic recovery slowly began in the country bordering the Mediterranean with a population of just under four and a half million (c. 95% Arabs, 4% Armenians, and a Kurdish minority). Its capital lying on the Mediterranean is Beirut. Once known as the “Paris of the Near East,” it is home to more than a forth of all Lebanese.
The victor in the Lebanese parliamentary elections of July 7, 2009, was the pro-Western “March 14 Coalition,” which was able to gain 71 of a total of 128 Parliament seats. The “March 8 Coalition” won only 57 seats. Saad Hariri, the son of Rafiq al-Hariri, the former head of government assassinated on February 14, 2005, in Beirut and now charged with forming a government, spoke after the election of a victory for Lebanon and the Lebanese people. Nevertheless, the new government is facing a great number of major tasks, with the real challenge probably being dealing with the Hezbollah. A consensus seems (at least outwardly) to have formed among the major political players for a will to return to institutional normality. For the chronically instable country, this is certainly a noteworthy step toward more political and, further on down, economic stability: although a number of unresolved conflicts continue to broil beneath the surface.
Peace and personal security – that is what the generally very peaceful people want living in this country with a total area of 10,452 square kilometer. Significant social problems have resulted during the last half century from the massive rural exodus to the cities where more the half of all Lebanese now live and an even larger percentage work. Along side Arabic as the official language, French is widespread on traffic signs and as the language of the elite, while English has only recently emerged as the third language and is gaining influence. A little more than half are Muslim, the majority being Shi’ites; in addition there are Christians of every denomination, including the Maronites, the Greek Orthodox, the Greek Catholic and the Armenian-Apostolic believers, as well as Druze and Alawites. A special feature in the constitution is that the head of state must be a Maronite Christian, the head of government a Sunni, and the president of parliament a Shi’ite.
Geographic and Climatic Features
The country is divided into four topographical zones running parallel to the coastline.
- the 225 kilometer-long, narrow, and usually steep coastal strip, which widens principally in the north but also somewhat in the south;
- the very rugged Lebanon Mountains that reaches up to 3,000 meters;
- the fertile Beqaa Valley, though lying in the rain shadow of the Lebanon Mountains, is very productive due to artificial irrigation (wine, fruit, and grain cultivation, as well as dairy farming);
- the dry Anti-Lebanon mountain range and the 2,814 meter-high Mount Hermon on the border to Syria.
The Litani, known to the Romans as “Leontes,” with a length of 145 kilometers, is by far the longest river flowing through the Al Biqa depression. It remains within the state’s territory the whole length of its run to where it empties into the Mediterranean near Sur. The climate also varies greatly in accordance with the four, very different topographical zones. A Mediterranean climate dominates along the coast with dry, warm summers and wet, rainy winters. One finds a typical mountain climate in the mountains, with most of the precipitation in winter generally turning into snow. A very arid steppe climate dominates on the border to neighboring Syria that forms the transition to the desert climate of southern Syria and Jordan. In the coastal city of Beirut the daytime temperatures range from a pleasant average of 18 degrees Celsius in January to a scorching 30 degrees in July and August. December and January record an annual average of eleven rainy days, while August generally has a total lack of precipitation.
Opportunities for Economic Development after 15 Years of Civil War
The country is having difficulty recovering from the unrest of civil war. Thanks to foreign financial assistance and efforts to make wide-reaching reforms, a significant recovery took place in the 1990s with a stable rate of growth at the time, but which greatly slowed down at the end of the last decade. In 2001, the Lebanese economy found itself in a deep recession due to the sustained high budget deficit, rising public spending, and the long overdue economic and fiscal policy structural reforms. Privatization of the economy is only slowly moving ahead. Drug dealing and corruption still continue to have a significantly negative impact on the interest of potential investors. Thankfully, the illiteracy rate (only c. 10%) in Lebanon is one of the lowest in the whole Arab world, providing hope for good development. Basic medical care is sufficient. The staffs in the hospitals are once again almost as large as before the war.
Economic growth of seven percent is expected for 2009, while inflation last pegged at 10.7% could sink to as low as four percent. Despite the global economic and financial crisis, it was possible to perceptibly lower the national debt last year. In the meantime, the government has announced a stimulus program aimed at supporting the liquidity of the market, increasing employment, and raising private and public investment. The core points of this stimulus package are raising wages in the public service sector, speeding up publicly finance projects, and making credit available to encourage private business that is supported to this purpose by foreign donors.
About thirty percent of the nation’s land is suited for agricultural use. Most farming is done on the up to 10 kilometer-wide coastal plain and in the southern section of the Al Biqa depression. Animal husbandry (sheep, goats, cattle) is concentrated in the northern part of the Al Biqa depression and in the highlands. Unfortunately, this does not in any way meet the personal needs of the population, making the extensive import of food goods indispensable.
Many industrial businesses were destroyed by the civil war. The industrial sector contribution make up about a quarter of the gross domestic product. The processing of food, wood, and petroleum, as well as the production of textiles and paper dominate. Uncontrolled logging and quarrying during the civil war, as well as chaotic urban development, have left their mark to this day. The resources that Lebanon has include a modest amount of oil deposits, along with salt, iron ore, limestone, cooper, manganese, and phosphate. Imported oil used to feed the many power stations largely meet the country’s energy needs. A decidedly lower portion of the energy supply is contributed by the hydroelectric power plants along the Litani river.
Since the signing of the Doha Agreement of May 21, 2008, a stronger increase in imports has been recorded, particularly of industrial equipment. Over the last 25 years, Lebanon has developed from a national economy typified by the processing industry to an economy dominated by the service sector. Nonetheless, the import statistics will continue to be dominated by the industrial sector, which, according to experts, must be more strongly developed in the future to widen Lebanon’s economic base in order to be more independent of those industries more vulnerable in times of crisis – tourism, for example.
Obligation to Tradition renews Hope for the Future
Banks and trading companies traditionally play an important role in the economy. The currency is the Lebanese pound (1 LBP / L£ = 100 piaster). In mid-August 2009 the euro traded at (1 euro) 2154.8 LBP and the USD at 1507.5 LBP (fix). Seen another way, for 1,000 LBP you would get 0.46408 euros. The tourist business is showing a positive trend. Just recently, tourism has staged a comeback. 191,000 tourists were registered alone in the month of June 2008, more than 40 percent than in the same month of last year. At the same time, hotel occupancies increased on average 85 to 90 percent in June 2009. In the first half year of 2009, about 20% of travel business revenue came from Saudi Arabian guests, with 12% each from the United Arab Emirates and Kuwait. In the meantime, an unbelievable record to date of close to two million travelers from home and abroad are expected over the whole of 2009. Impressive, considering that in 2008 it was already 1.3 million – proof that Lebanon has once and for all re-entered the international tourist business. The major tourist attractions are the cities of Beirut, Baalbek, and Tripoli, as well as the crusaders’ castles, Roman sites, and the ancient Phoenician city of Byblos. The increasing number of passengers at Beirut Rafik Hariri International Airport can primarily be traced back to tourism. From January to July 2009, 2.7 million passengers used the airport; 28.9% more than the same time period of last year. That means 31,100 arrivals and take-offs; 31.4% more than in the first seven months of 2008. The airport was also able to record an increase in freight handling during this period, namely around 11.3%, up to 41,000 tons.
Besides the Beirut international airport, the capital’s ports and those of the coastal city of Tripoli to the north are of very great economic importance. The Beirut Port Authority announced the scope of its …
(Berlin/Brussels), Economic Editor,
Journalist specialized in tourism and
( AEJ / FIJET / TELI / UBJET )