By Aaron Greenwood
The economic fallout from the ongoing conflict in Lebanon signifies the great tragedy that has befallen a country and its people so often caught in the crossfire of regional conflagrations.
|~||~||~|The economic fallout from the ongoing conflict in Lebanon signifies the great tragedy that has befallen a country and its people so often caught in the crossfire of regional conflagrations.
After years of civil war, Lebanon had emerged as one of the great economic success stories of the Arab world.
The country was widely recognised for boasting one of the most stable and dynamic economies in the Middle East, a position confirmed by the decision by a raft of multinational companies – including Panasonic and Nokia – to establish regional operations in the capital, Beirut.
But now all that is gone. While no one can doubt the indomitable spirit of the Lebanese people, the sheer fact remains that the damage wreaked on the country’s infrastructure will take many years to repair.
The confidence shown hitherto in Lebanon’s economy by international investors – particularly in light of the country’s tumultuous past – has been shattered.
Adding to this great human tragedy is the undoubted economic impact the latest conflict is having not only Lebanon itself, but also the entire Middle East region.
Some analysts have placed the loss of revenue to the Lebanese economy at up to US$80 million per day, but this figure does not take into account the losses incurred by the country’s regional trading partners, many of which had invested huge amounts in spurring the country’s economic renaissance after the Israeli withdrawal from southern Lebanon in 2000.
The conflict has also had a direct impact on neighbouring economies in the region: in the UAE, retailers – including consumer electronics traders – have blamed a 20% drop in business on the ongoing violence.
Meanwhile, the Dubai re-export market has been significantly impacted. With little in the way of a domestic manufacturing sector, Lebanon’s young and increasingly affluent population had driven demand for imported high-tech consumer electronics goods in recent years.
Indeed, Lebanon boasted arguably the most dynamic, albeit small, consumer market in the Levant and could be easily compared to the booming markets of the GCC.
With a vested interest in Lebanon’s economic and social revival, it will no doubt be these Gulf trading partners that will eventually lead the country’s economy out of the quagmire. Saudi Arabia, the UAE and Kuwait have already pledged more than US$1 billion in immediate aid with more to come in the long-term.
Such initiatives are vital to ensuring Lebanon is given another opportunity to realise its true economic potential and to recover from yet another tragic episode in its tumultuous history.||**||