Po­lit­i­cal cri­sis threat­ens Le­banon’s econ­omy

PM’s res­ig­na­tion puts fi­nan­cial re­vival at risk

Las Vegas Review-Journal (Sunday) - - WORLD - By Philip Issa

BEIRUT — Just when things were start­ing to look up for Le­banon’s econ­omy, a new po­lit­i­cal cri­sis threat­ens to send it crash­ing down again.

Prime Min­is­ter Saad Hariri’s shock res­ig­na­tion could un­ravel the first steps in years to­ward in­ject­ing some cash and con­fi­dence in Le­banon’s ane­mic econ­omy. Al­ready, the cri­sis is putting at risk multi­bil­lion-dol­lar plans to re­build de­cay­ing roads and elec­tri­cal and com­mu­ni­ca­tion net­works and get the oil and gas sec­tor mov­ing.

Le­banon has long been buf­feted by blows from the great-pow­ers ri­valry be­tween Saudi Ara­bia and Iran. But its econ­omy sput­tered on un­der a tacit un­der­stand­ing among the re­gional heavy­weights and their lo­cal prox­ies that left Le­banon on the side­lines of that con­test.

That may have changed Satur­day when the Saudi-aligned Hariri an­nounced his res­ig­na­tion in a tele­vised state­ment from the kingdom’s cap­i­tal, Riyadh, say­ing Hezbol­lah, Iran’s proxy in Le­banon, had taken the coun­try hostage. It was an un­ex­pected an­nounce­ment from the pre­mier, who formed a coali­tion gov­ern­ment with the mil­i­tant group less than a year ago.

Since then, the news has only got­ten worse. Saudi Ara­bia, which feels it has been hu­mil­i­ated by Hezbol­lah’s ex­pand­ing in­flu­ence in Syria and Iraq, says it will not ac­cept the party as a par­tic­i­pant in any gov­ern­ment in Le­banon.

Saudi Ara­bia, Bahrain, Kuwait and the United Arab Emi­rates all or­dered their cit­i­zens out of Le­banon this week, and the Le­banese are won­der­ing and wor­ried about what’s to come.

“We don’t know how things will es­ca­late,” said Rida Shayto, an as­so­ciate di­rec­tor at the phar­ma­ceu­ti­cal man­u­fac­turer Al­go­rithm, which does half its sales in the Gulf.

The de­vel­op­ments have stunned the Mediter­ranean coun­try, which once looked to Saudi Ara­bia as a pil­lar to its own sta­bil­ity. The kingdom bro­kered the Taif agree­ment in 1989 that ush­ered in peace for Le­banon af­ter 15 years of civil war. The kingdom has plowed decades of in­vest­ment into Le­banon, opened mar­kets to trade and al­lowed gen­er­a­tions of tal­ented and am­bi­tious Le­banese to work in its oil-based econ­omy.

The con­cern now is that the kingdom and other Gulf na­tions will throw out Le­banese work­ers, as they did with Qatar this sum­mer in a rage over that coun­try’s per­ceived close­ness to Iran.

Some 220,000 Le­banese work in Saudi Ara­bia and send back close to $2 bil­lion in re­mit­tances each year, ac­cord­ing to Mounir Rached, a se­nior eco­nomic ad­viser to the Fi­nance Min­istry.

Le­banese are hop­ing Saudi Ara­bia will be too wary of the neg­a­tive im­pact on its own econ­omy from such a mass ex­pul­sion. Many Le­banese hold man­age­rial po­si­tions, in­clud­ing in the kingdom’s all-im­por­tant oil sec­tor, and it would take time to re­fill the posts.

“I think those who are in­vested in Le­banon are not go­ing to come and de­stroy ev­ery­thing that they did in terms of re­la­tion­ships and as­so­ci­a­tions and cred­i­bil­ity,” said Kamel Wazni, an econ­o­mist and some­times ad­viser to Hariri’s gov­ern­ment.

Bi­lal Hus­sein The As­so­ci­ated Press

Tourists from Iraq win­dow-shop in front of a store on Fri­day in Beirut, Le­banon. Prime Min­is­ter Saad Hariri’s shock res­ig­na­tion could de­rail the first steps in years to­ward kick-start­ing Le­banon’s ane­mic econ­omy.

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