‘An absolute disaster’

Ben Gilbert Aug 8, 2006

TEXT OF STORY

KAI RYSSDAL: At the United Nations in New York today, there was some resistance to a resolution calling for an international force in Lebanon. Diplomats from the Arab League are pushing back against the plan written by the US and France. Over on the ground, though, the fighting goes on. The human toll continues to mount on both sides, and the economic toll in Lebanon is reported at around $7 billion. Ben Gilbert reports now from Beirut.


BEN GILBERT: Sami Hadad spent years bouncing from country to country as an economist and regional director for the World Bank’s International Finance Corporation. Like many Lebanese, he left after civil war erupted here in 1975. The fighting lasted for 15 years and tore his country apart. Then, last year, he saw Lebanon start to blossom again. Investment was growing and tourism was up. He decided it was time to do his part and move back.

SAMI HADAD: “I was very eager to help rebuilding the Lebanese economy. I initially thought I would end up somewhere, the private sector, more specifically in financial sector.”

Sami Haddad was named the Minister for Economics and Trade last year, a position he had never imagined having, but one that would have allowed him to carefully shepherd the economy’s growth. But he says that in the past month, his hopes for Lebanon’s future have been pulverized.

HADAD: “The war is having a devastating effect on economy, it’s an absolute disaster.”

Lebanon has a population of about four million people, roughly the size of Connecticut. It had a GDP of around $24 billion a year until the bombing started. The southern part of the country has taken the brunt of the bombing, but the war’s impact on the economy is everywhere. Shops are shuttered. There are few cars on the street. Gasoline is being rationed and power cuts get longer each day. But the most obvious sign is the destruction of infrastructure.

MARWAN ISKANDER:“Which means roads, which means lets say water delivery systems, which means electricity distribution systems, which means hospitals, plants, factories, etc.”

Economist Marwan Iskander estimates the total damage to Lebanon’s infrastructure alone to be $2.5 billion, so far. Then, Iskander says, there’s the opportunity loss. In early 2006, The Lebanese economy was growing at 6 percent. Now he expects the economy to shrink by 9 percent.

ISKANDER:“Nine percent is just over $2.1 billion, in addition to infrastructure destruction that has taken place.”

Essentially, Lebanon’s economic lifelines have been destroyed. The government won’t be able to collect hundreds of millions of dollars in taxes for months, because there’s no income. The record-breaking 1.5 million tourists who were set to arrive this summer have fled or changed plans, with a loss of possibly $2 billion. Along with the tourists might have gone Lebanon’s most valuable asset, it’s educated and enterprising citizens with dual nationality.”

ISKANDER:“The wealth of this country is its human capital, so if the best leave, it impoverishes the country tremendously.”

And the largest cost may be yet to come. So far, an estimated quarter of the population has been displaced by the fighting. Government officials estimate 25,000 people lost their homes in Beirut’s southern suburbs alone.

Whole villages have been leveled in southern Lebanon. Those residents are now living in schools around the country. Some have fled to Syria. Iskander says that eventually they will want to go home.

ISKANDER:“When these people come back, how will we accommodate them? The essential problems are problems relating to housing, to schools, to infirmaries and hospitals, and this is a difficult challenge to meet.”

With a land and sea blockade virtually sealing off Lebanon from the rest of the world, most Lebanese these days worry more about getting enough gasoline and food than about the future effects of the current conflict.

In Beirut, I’m Ben Gilbert for Marketplace.

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