DATE=5/1/2000
TYPE=BACKGROUND REPORT
TITLE=LEBANON ECONOMY
NUMBER=5-46236
BYLINE=SCOTT BOBB
DATELINE=BEIRUT
CONTENT=
VOICED AT:
/// EDS: THIS IS THE FIFTH AND LAST IN A SERIES OF
BACKGROUND REPORTS ABOUT LEBANON ///
INTRO: In Lebanon, the country's trade association
last week declared a state of emergency, saying three
years of economic decline has serious hurt the
business climate in the country. Middle East
Correspondent Scott Bobb has been in Lebanon. He
discussed the country's economic problems with experts
and filed this report.
TEXT: A visitor arriving in Lebanon after a long
absence is immediately struck by how quickly the
country appears to have recovered from the devastating
civil war of the 1970s and 1980s. Most of the
buildings in the famous "Green Line" which were
destroyed by years of artillery and gun battles have
been razed or restored. New superhighways now link the
city to the airport and the south. And a construction
boom has extended the urban area some 30 kilometers
along the coastline.
However, the Lebanese economy is not healthy.
Economic growth has slowed for the past three years,
and last year the economy shrank by more than one
percent.
Analyst Paul Salem says the situation is due to a
number of factors.
/// SALEM ACT ///
The economy is suffering from a heavy
indebtedness which we accumulated in the
reconstruction period at a time when we were not
receiving much foreign aid. It is also
reflecting the current tension in the region
that Lebanon is suffering from which discourages
investors of all types.
/// END ACT ///
Many blame the recession on Lebanon's ballooning debt,
which has risen to 22 billion dollars, or 150 percent
of gross domestic product (GDP). More than 90 percent
of government revenues go to service the debt and as a
result, the government has to borrow to pay the
salaries of civil servants. This has led the
government to raise taxes and cut expenditures.
One of the repercussions of the recession has been a
rise in emigration by Lebanese who go abroad seeking
work. Economist Marwan Iskandar says 16-thousand
working-age people are now leaving Lebanon each month.
/// ISKANDAR ACT ///
Lebanon's single most important problem today is
represented by this emigration of the young
because of lack of opportunities, because of a
high cost of living and earnings that do not
suffice to cover
requirements.
/// END ACT ///
Professor Iskandar says if this trend continues, in
three years Lebanon could lose one-third of its
workers, and these are primarily young, educated
people it needs to staff the new information
industries.
Economists say another problem is the predominance of
state and public corporations. which account for one-
half of the economy. Professor Iskandar says in
addition, the civil service is bloated and politicized
because of the war.
/// ISKANDAR 2ND ACT ///
In Lebanon, the public sector suffers from the
sectarian nature of political representation,
whereby people from different political sects
have to occupy certain leading positions in the
government sector and
not only in the government sector, but
organizations that fall under the government
sector.
/// END ACT ///
Professor Iskandar says privatization is one solution
because it will improve productivity.
The President of the Association of Lebanese
Industrialists, Jacques Serraf, agrees the legacy of
the civil war is at the heart of Lebanon's economic
problems, but says that is also part of its strength.
/// SERRAF ACT ///
War was in a way for us a kind of a lesson, a
kind of culture, that today we are more flexible
to crises. We can understand crises and react
quicker.
/// END ACT ///
Mr. Serraf notes that Lebanon is paying its debts and
still has a good credit rating. He is looking to make
Lebanon the regional business hub it once was.
However, he says the main problem is the lack of a
secure climate for investment.
///SERRAF 2ND ACT ///
Today there is no peace and no war. And this is
more critical. If there is a war or a peace, at
least a businessman can understand where to go.
/// END ACT ///
Professor Salem concludes that if there is peace in
the coming year, the situation will quickly improve
because, he says, this is the cornerstone for any
economic recovery.
/// SALEM 2ND ACT ///
Although we've made a lot of headway in terms of
physical reconstruction and preparing the country
for growth, in today's globalized and
regionalized economic reality, unless you're
really open and you're
communicative with the region and the world, you
cannot be very productive economically. And that
awaits the peace.
/// END ACT ///
Israel says it is withdrawing from south Lebanon after
a 22-year occupation. Lebanese hope this will improve
the investment climate in their country.
However, they also note that peace negotiations with
Syria, Lebanon's influential neighbor, are stalled and
until they resume, the fate of Lebanon will remain
unsure. (Signed)
NEB/SB/ALW
01-May-2000 04:47 AM EDT (01-May-2000 0847 UTC)
NNNN
Source: Voice of America
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