Prosperity amid gloom

Lebanon today

Bankers, real estate agents, and contractors are prospering in Lebanon while the world struggles to emerge from a year-long financial crisis. Growth is at 6-7 per cent, in spite of the country’s massive $47 billion debt, which is 162 per cent of Gross Domestic Product (GDP).

Money is flowing in from overseas Lebanese and Arabs pulling out of the financially troubled Gulf, attracted by Lebanon’s well-regulated banks. Tourism is booming. Hotels are booked to capacity.  Construction is mushrooming.

Cities and towns are high-rise jungles where elegant Lebanese houses and apartment blocks of two, three and four stories are being reduced to rubble to make way for 15-20 storey luxury blocks where the square meter costs $10,000. Property values double every two-to-three years. Trade is brisk.

Imports from India alone were $178 million and exports to India $9 million from January-July 2009, a rise of 49.5 per cent over the same period in 2008. The chief imports are pearls, precious stones, mineral products and textiles.

For migrant labour, including workers from India, the vibrant economy is good news. Most of the 10,000 to 12,000 Indians who work here are in construction, services and agriculture. Although 2,000 were evacuated during Israel’s devastating 2006 military campaign, many have returned.

A small number of IT experts are also employed in high paying jobs. But Lebanon is, once again, in the throes of a political crisis.

This began in December 2006 when the Shias, the largest community represented by Hizbollah and Amal, withdrew from the government. They returned, after defeating rival militiamen in street fighting in May 2008 and Qatar mediated a power-sharing deal providing for rule by consensus. But this was not accepted by some political personalities and factions in the majority bloc as a long-term mechanism of governance.

Last June’s parliamentary election returned to power the Western-backed Sunni-Christian bloc headed by Saad Hariri. He was chosen to be prime minister but failed to form a government because the Shia-Christian opposition, supported by Iran and Syria, refused to permit him to appoint its ministers according to a formula worked out by Saudi Arabia and Syria.

Hariri resigned but was asked to try again. He began by holding consultations in Saudi Arabia during the three-day Eid al-Fitr holiday which ends the Muslim fasting month of Ramzan. However, he has been weakened by initial failure. Parliamentary speaker Nabih Berri, a key opposition leader, has withdrawn support. Druze chief Walid Jumblatt, Hariri’s ally, has castigated his right-wing Christian partners for trashing the Saudi-Syrian deal.

Mess again

Without the cooperation of Berri, who can deliver the opposition, and Jumblatt, who holds 11 seats in Hariri’s 71 member majority, Hariri cannot form a cabinet. If he names a government excluding the opposition, he risks Jumblatt’s withdrawal from the majority bloc or an opposition boycott and, possibly, a return to violence.

Opposition chief and Hizbollah secretary general Sayyed Hassan Nasrallah urged Hariri to take his time to avoid “dragging the country into chaos.”  No one expects a cabinet to be formed any time soon.  Lebanon has waited three and a half months for Hariri to succeed, Lebanese can wait another month or two.

On the internal front, Lebanon’s politicians do not seem to care if there is a government. Each is focused on his personal agenda. Pollster Abdo Saad says that the politico-commercial elite cares nothing for Lebanon. He said the elite, rather than the communal political system, was to blame for Lebanon’s woes.

Asked about Hariri’s failure to form a government over the past three and a half months, Lebanese from all communities shrugged their shoulders. “We don’t need a government.  Ministers are interested only in stealing.”
But Muhammad Shatah, finance minister in the caretaker government, warned that the political crisis “will have a negative impact on the economy,” particularly on investor confidence.

On the external front, the failure of US envoy George Mitchell to secure an Israeli settlement freeze in occupied East Jerusalem and the West Bank is said to be slowing cabinet formation in Lebanon.

Pundits hold that the US must knobble Israel before Hizbollah — the regional ally of Iran and Syria — can seriously contemplate working with Hariri, widely regarded as Washington’s man.

While Shatah is concerned about investors, other Lebanese fear the political crisis could prompt Israel to take military action with the aim of crushing Hizbollah, mainstay of the opposition. At the same time, Tel Aviv would wreak revenge on Hizbollah for defeating the Israeli army in its 2006 summer offensive.

In recent weeks, senior Hizbollah figures have repeatedly warned that Israel would pay a high price of it strikes Lebanon. Israel, barred by the US from attacking Iran with the aim of obliterating its nuclear facilities, could use the opportunity provided by Lebanon’s political crisis to hit Hizbollah, Iran’s ally. If Israel decides to strike, India’s 672-strong contingent of UN peacekeepers based in the south near the frontier with Israel, would be in the line of fire.