By Tony Akleh
August 4 Beirut Port blast piled on new misery for Lebanese already reeling from the coronavirus and an economic crisis
Today at 6:08pm local time marks a month since the most destructive single incident in Lebanon’s history, and the grieving country is still living under the shock of the massive explosion at Beirut.
The enormity of the human and material losses that afflicted Lebanon is gradually unfolding. The overall damage caused by the explosion is in the range of $3.8-4.6 billion, while the economic losses are estimated to be between $2.9-3.5 billion. As a result, total damages and losses exceed $8 billion, according to the latest estimates by the World Bank.
On August 4, a massive explosion in the Port of Beirut rocked the city, killing 200 people, wounding more than 6,500, and displacing around 300,000. The detonations destroyed the country’s largest port, one of the busiest in the Middle East and most of Lebanon’s grain reserves.
The city’s dense residential and commercial areas were severely damaged within 5km of the site of the explosion. Search-and-rescue efforts were launched immediately after the explosion, which have transitioned to humanitarian and early recovery efforts.
Judicial interrogations, led to the arrest of 25 suspects in connection with the explosion of 2,700 tons of ammonium nitrate stored in a warehouse at the port.
The judicial investigator into the Beirut Port explosion, Judge Fadi Sawwan, questioned Lebanon’s outgoing Prime Minister Hassan Diab on Thursday, the first cabinet official to be involved.
Exactly a month since the massive blast, a pulsing signal was detected under the rubble of a building on Thursday, leading to the search for survivors and giving hope to people who followed the news on television, wishing for a miracle.
Beyond the human tragedy, the economic impact of the explosion is notable at the national level despite its geographical concentration, reflecting the prominence of economic activity in the affected areas, particularly in commerce, real estate and tourism - the Port of Beirut is the main entry/exit point for the small economy, channeling 68 percent of the country's total external trade.
The social sectors - housing and culture - are the most affected, enduring substantial damage totaling between $1.9–2.3 billion and $1–1.2 billion, respectively. Tourism, and commerce and industry has also suffered with damages between $170–205 million and $105–125 million respectively while damage to infrastructure is estimated at between $280–345 million, according to the Beirut Rapid Disaster Needs Assessment report issued by the World Bank.
The disaster is estimated to result in declines in real GDP growth rates of up to 0.4 and 0.6 percentage points in 2020 and 2021, respectively, due to loss of physical capital stock while import constraints could subtract an additional 0.4 and 1.3 percent from growth in 2020 and 2021, respectively.
These impacts are beyond the double-digit contraction in real GDP growth stemming from the pre-existing economic and financial crisis and Covid-19 effects.
The explosion is expected to cause further output loss due to discontinued economic activity, resulting in physical damage to the country's main port and to Beirut's busy retail and commercial centres.
Increased incidence of poverty are being reported due to direct loss of livelihood, the decline in aggregate output, higher inflation rates, loss in quantity and quality of essential services and deteriorating social indicators (especially health and education).
A significant loss in government revenues, dragged down by falling VAT revenues and custom taxes and fees, is also expected.
Because imports are constrained, an increase in the transaction costs of external trade is also expected which will push up the cost of imports and domestic inflation, further impoverishing the Lebanese who are already reeling from very high inflation rates, sovereign default, and the broader economic crisis.
The public sector reconstruction and recovery needs for 2020-2021 are estimated at up to $2.2 billion, with at least $605 million needed by the end of this year while housing reconstruction needs are estimated at up to $265 million.
Analysts say Lebanon needs, with the assistance of the international community, to establish appropriate institutional and implementation arrangements, based on good governance and transparency, for an effective reconstruction approach.
French President Emmanuel Macron vowed in his second visit to Beirut in the space of weeks to push toward a new political pact to reshape the country’s government and implement the necessary reforms to unlock the international aid to Lebanon.
A new government headed by Mustapha Adib is expected to be formed within 10 days to implement the reforms, in accordance with the promise made by the heads of the parliamentary blocs to the French President.