Lebanese trade faces a new reality

The lessons of the past won't ease Lebanon's new economic reality.

The history of Lebanon since the end of the 1975 civil war – perhaps even since the country won independence in 1943 – could be defined on some level as the struggle between the inherent entrepreneurship buried deep in our DNA, in other words the pursuit of money, and the need for the country’s various political and religious groups to have a strong and reliable regional patron. Last week’s Arab-Islamic summit in Riyadh, led by Saudi Arabia’s King Salman, and attended by the US president Donald Trump, once again highlighted this tension.

The Lebanese president Michel Aoun should have been invited, but he is seen as Iran’s man and Iran is again, much to the pleasure of the Saudis, in the US’s crosshairs. The stiff envelope instead went to Lebanon’s prime minister Saad Hariri, who is not only Saudi Arabia’s man and a businessman, but the son of the late Rafik Hariri, who was also Saudi Arabia’s (albeit much bigger) man and a (much, much bigger) businessman.

Meanwhile, Mr Trump is, as we all know because he never lets us forget it, a very big businessman, “yuge” even. The Saudis are also money people and to prove their commitment to the anti-Iranian regional alliance, they kicked off the goodwill by signing an arms deal with the US worth a cool US$110 billion; just the kind of language Mr Trump understands

The whole thing is being positioned as a game of good versus evil and this is where things get a bit sticky for Lebanon. Hariri Junior was undoubtedly invited because in the GCC at least he is seen as the palatable side of Lebanon, but it is Mr Aoun’s Iranian masters who have a firm grip on the tiny, fragmented and economically wobbly Mediterranean country, courtesy of Hizbollah, its very powerful private army.

It was never always thus and it is important to trace the history of the past dozen or so years to see why Lebanon is in danger of losing its mojo. Back in the early 1990s, when the country was dusting itself down after more than 15 years of civil conflict, the Syrians ran the show. Lebanon had been “gifted” to Damascus after the late Syrian president Hafez Al Assad, Bashar’s father, helped the anti-Saddam coalition in the First Gulf War.

The rules of the game, as outlined by Brigadier General Ghazi Kanaan, head of Syrian intelligence in Lebanon at the time, were clear. “You Lebanese, you are shrewd, creative and successful merchants ... Create light industries. Engage in trade and commerce. Indulge in light media, which does not affect security. Shine all over the world by inventiveness, and leave politics to us. Each has his domain in Lebanon: yours is trade; ours [is] politics and sec­urity”.

Hariri Senior was a shrewd man and knew how to play the game. He rebuilt the country, at the same time imbuing the Lebanese with the belief that, as well as seeking their fortunes abroad (as he had done in Saudi Arabia decades earlier) they could also, as they had been for millennia, be the service providers to a new generation of Gulf investor and consumer.

All this placed a burden on a ballooning national debt, but Hariri was convinced tourism and investment would eventually recoup his losses. It was one of the bigger flaws in his master plan. And so Hariri kept everyone happy, and built a workable business environment.

When he was murdered in 2005 in a massive bomb attack in Beirut, that balance evaporated and ever since Lebanon has been torn apart, divided by allegiances, loosely by those who want to put regional alliances, and the ongoing struggle with Israel, ahead of the national good, versus those who want Lebanon to function as a democratic and transparent country, with prosperity and opportunities for all.

But the reality is that Lebanon will continue to fall under US – and Saudi Arabian – scrutiny.

There will be greater limits placed on the Lebanese banking system via the 2014 Hizbollah International Financing Prevention Act. There will be no let-up in either the GCC’s unofficial tourism embargo of Lebanon or the brain drain. The property market will stagnate even further, and as the economy contracts there will be less funds in the state coffers to spend on infrastructure. This is the new reality.

Michael Karam is a freelance writer who lives between Beirut and Brighton

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