Lebanon’s Economy Minister Amer Bisat has acknowledged his country’s difficult relationship with Arab and Lebanese investors, saying that confidence was “lost very quickly” during years of economic and financial crisis.
Since 2019, Lebanon has been struggling with a historic fiscal crisis caused by decades of corruption and mismanagement by the ruling elite. The prolonged collapse has left many investors wary and deprived people and businesses in the country of accessing their money stuck in the banking sector.
The crisis has slashed economic output, hollowed out public finances and eroded long-term trust in state institutions, while reform efforts have repeatedly stalled amid political deadlock.
“Our relationship with our Arab investors is as … fractious or problematic as it is with the Lebanese investors,” Mr Bisat told The National on the sidelines of the World Governments Summit in Dubai. “Let’s not forget that we all went through a horrible period.”
Mr Bisat said the government was focused on practical measures to rebuild trust and show Lebanon’s economic potential, even if progress remains gradual.
“Our objective is to look forward and regain confidence. Confidence has been lost, unfortunately, and we lost it very quickly, and it’s going to take a while to bring it back. We’re trying to do the serious hard work of bringing back confidence, slowly but surely,” he said.
“We have the plan,” Mr Bisat said. He added that both the strategy and the mechanism for spending were already in place, but “the money has to come from our friends” for it to succeed.
He said Lebanon’s priority was to secure reconstruction funding through grants rather than debt. “We want to borrow them at concessional rates, very cheap interest rates. We need the money,” he added.
Lebanon’s ability to tap international capital markets on conventional terms remains severely constrained by its credit profile. Rating agencies such as Moody’s continue to assign the country one of the lowest possible sovereign grades – a C rating – which reflects continuing defaults on foreign debt and deep financial distress.
The Mediterranean country has been working to repair ties with Gulf countries after years of tension over the influence of the militant Hezbollah group. Hezbollah, weakened by a 14-month war with Israel, recently called on Saudi Arabia to open a new chapter in relations. The World Bank estimates the costs of reconstruction and recovery from the war at $11 billion.
Last month, UAE-based Al Habtoor Group said it will halt all operations in Lebanon and terminate its employees in the country as it takes legal action for its investment dispute. Legal proceedings are under way between the company and the Lebanese government.
Al Habtoor Group runs among other things a hotel in a Beirut suburb as well as Habtoor Land, a large theme park east of the Lebanese capital. The group’s businesses in Lebanon were severely affected by the economic meltdown.
As part of Lebanon’s efforts to attract investment, Mr Bisat pointed to a government-organised conference in November that drew 50 international companies, including Goldman, Accor and BlackRock. “They’re interested in Lebanon,” he said. “Lebanon has so much opportunity.”
Cautious re-engagement
For decades, Gulf investment and financial inflows were a major source of foreign currency for Beirut. But following the financial collapse, some Gulf states scaled back investments and banned imports of Lebanese goods. While relations are slowly thawing, most remain hesitant to invest until Lebanon enacts reforms approved by the International Monetary Fund.
Qatar, however, has taken a different approach, announcing last month more than $430 million in aid to help stabilise Lebanon’s energy sector.
Mr Bisat said engagement with the Arab world had intensified since the current government took office in February last year.
President Joseph Aoun and Prime Minister Nawaf Salam both made it a foreign policy priority to improve relations with Arab countries.
“You can see it at many levels, in terms of the visits, more bilateral visits, the incredible interests that the [Gulf sovereign wealth] funds have in the Lebanese economy,” he said.
He pointed to contacts with the UAE, Kuwait, Qatar and Saudi Arabia, saying diplomatic exchanges had resumed after years of silence.
“Even the Saudis have broken the silence by sending a delegation,” he added. “The engagement is there. And more important than the engagement is the attitude. The attitude is very positive.”
Mr Bisat said there are three key areas that Lebanon is focusing on when it comes to ties with Saudi Arabia: removing export restrictions, enabling the entry of Saudi tourists and businessmen to the country and advancing the many economic, cultural and environmental agreements that Beirut hopes to sign with the kingdom.
Saudi Arabia was Lebanon’s top destination for agricultural exports in 2019, accounting for 22.1 per cent of total shipments, according to a Lebanese government report published in 2020. However Riyadh suspended imports of Lebanese fruits and vegetables in April 2021, citing drug-smuggling concerns and accusing Beirut of failing to take action. Saudi Arabia has banned its citizens from travelling to Lebanon since 2021 because of security concerns.
“We need to assure them that we’re not exporting drugs,” he said, adding that Lebanon was advancing technical controls and scanning systems.
Mr Bisat said Saudi Arabia and other Gulf states were proceeding carefully and gradually, linking deeper engagement to reforms and measurable progress. “We have to do our homework,” he said.
Southern Lebanon economic free zone
When asked about the southern Lebanon economic zone US officials first raised last year as part of wider discussions on stabilising the border area and supporting post-conflict reconstruction, Mr Bisat said there have been no advancements as it’s still premature to discuss.
“The first thing [is that] the war has to finish,” he said, adding that the next step would be making the area operable.
Israel still occupies five positions it considers strategically vital in the south, and continues to carry out daily strikes in Lebanon on what it says are Hezbollah targets despite a November 2024 ceasefire that sought to end more than a year of hostilities between it and Hezbollah. The group is under heavy US pressure to disarm.
“Reconstructing, rebuilding the south is a huge priority, socially, morally, politically, we have to do it,” Mr Bisat said.
He said the government was already advancing economic zone projects elsewhere in the country, including in Tripoli and at Beirut port. The strategy also includes a focus on high-end technology.
“We now have virtual free zones for tech,” he said, adding that Lebanese companies are producing advanced technology, including “chips for AI that Nvidia is buying”.
