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Time has stopped in Beirut, the capital of Lebanon, as its inhabitants wait for a war that has yet to begin.
Following Hamas's attack in Israel on October 7 that kicked off a massive escalation of violence in Gaza, the southern border of Lebanon has been the site of tit-for-tat clashes between Iran-backed Hezbollah and an ally of the Palestinian militant group on one side, and Israel on the other.
Beirut residents told The National they are fearful of what could come next, as some governments, including Canada and the US, have advised their citizens to leave.
The skirmishes Israel and Hezbollah, which have resulted in dozens of fatalities, including civilians, have been contained so far, as the two sides loosely follow the so-called rules of engagement, which have prevented escalation since a full-blown war in 2006.
However, the situation could shift in an instant: a ground invasion of Gaza – which could potentially lead to Hezbollah and its primary backer, Iran, coming to the rescue of Hamas – or miscalculation by either side could lead the entire nation to be pulled into the conflict.
The national mood is sombre as Lebanon's almost ruined economy teeters on the edge of collapse, with many fearing another war will be the final straw
In Beirut, the line between war and peace already seems blurred. The usual vibrant streets are quieter, with many events being cancelled in solidarity with Gaza, where Israeli air strikes have so far killed more than 5,000.
Faced with uncertainty, many in Beirut are preparing for the worst.
Some have already begun stockpiling food and emergency provisions as they recall the 2006 war, a month-long conflict that pitted Hezbollah against Israel and claimed the lives of more than 1,200 Lebanese – mostly civilians – and 165 Israelis, mainly soldiers.
Mariam, a 35-year-old mother of two living in Beirut’s southern suburb of Dahieh, which was heavily affected during the 2006 conflict, told The National she had packed suitcases in case she needs to quickly evacuate her family.
“Each bag has several changes of clothes, water, food and medicine in case of emergencies,” she said. “Because who knows where we’d end up if we had to leave suddenly.”
She and her husband Mohammad own a small chain of accessory shops in Dahieh.
Last weekend, the couple packed up all their merchandise and stored it in a nearby warehouse for safekeeping.
“If the area gets hit, we can’t afford to lose all our merchandise,” she said. “We need to make sure our capital is protected.”
Unfortunately, that means the couple are out of work for the time being. They sell the occasional accessory online but it is not the same revenue stream as having an active storefront.
“The worst part is that we don’t know when or if things are going to get worse. And in the meantime, we can’t do much besides sitting and waiting for something to happen.”
While many Lebanese find themselves with no alternative but to wait, some foreign residents, among them staff from NGOs and international organisations, have already initiated the process of evacuation.
Many embassies, including those of the US and Britain, have advised their citizens to leave Lebanon while flights remain available. The primary concern is that the airport could become a target, as was the case during the 2006 war.
Lebanon's Middle East Airlines has cancelled half of its flights due to changes in insurance coverage. the airline has also transferred a significant portion of its fleet from Beirut–Rafic Hariri International Airport due to the security risks in the region.
Several other airlines, such as Swiss International Air Lines and Germany's Lufthansa, have already temporarily suspended flights to Beirut.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
COMPANY PROFILE
Name: Lamsa
Founder: Badr Ward
Launched: 2014
Employees: 60
Based: Abu Dhabi
Sector: EdTech
Funding to date: $15 million
