Arab assistance can help turn Lebanon around

A month more of Israeli air strikes and artillery shells and the figure has rocketed. It is, of course, difficult to say precisely how much it will cost to transform heaps of rubble into the roads, bridges and homes they once were, but current predictions point to around $3.6 billion.

From bad to worse

There is never a good time to see your country's infrastructure blown apart but, for Lebanon, the timing of this conflict couldn't really have been much worse. Its public debt makes up 174 per cent of its GDP and the government has been looking for $7 billion in order to reduce interest payments on its liabilities. The IMF recently stated that Lebanon stood on the brink of an economic crisis.

Lebanon's economy, however, was slowly starting to pick up; growth forecasts had been estimated at about five per cent this year, up one per cent on last year, exports were expected to increase by at least 40 per cent and the country was looking forward to a thriving summer holiday season.

But Israel's military offensive began in mid July, at the start of the peak period, and while the cost of repairing the ever worsening bomb damage grew by the day, so too did the losses to Lebanon's tourism industry, which usually contributes up to 15 per cent of the GDP.

One of the worst aspects of the five week onslaught must have been seeing so much of the $50 billion spent rebuilding the country after the civil war ended in 1990 quite literally go up in smoke. One government official was quoted last week as saying that Lebanon suffered as much damage in one month of Israeli aggression as it did in nearly 15 years of civil war.

Backing up rhetoric with money

Lebanon's plight was the focus of an emergency meeting of the Arab League in Cairo on Sunday and the war ravaged nation was probably disappointed with the outcome, as no firm proposals were put forward regarding reconstruction strategies.

Arab leaders at the summit naturally voiced plenty of support for Lebanon and, behind the rhetoric, actions are now starting to back up the words. Kuwait used the conference to declare that it would give $800 million to the reconstruction efforts, while Saudi Arabia has already pledged $500 million.

Lebanon will certainly need further support from the Gulf states to pick itself up quickly, and it seems that these countries are beginning to take a pro-active stance. Qatar is to rebuild two towns in southern Lebanon, while the UAE has pledged to help rebuild vital amenities such as schools and hospitals.

Prior to the conflict, Lebanon was receiving significant investment from the Gulf. UAE businesses alone had ploughed $2.7 billion into various ventures, the majority being in the real estate sector. Once the truce came into effect last week, the share prices of UAE based cement producers rose sharply, in anticipation of a construction frenzy in Lebanon and increased demands for cement across the region.

It seems that, as long as the truce holds and businesses can undertake projects securely, then Lebanon might once again become a keen investment target for Gulf based business groups.

Double-edged donations

A donor conference takes place next week in Sweden but various nations are making commitments to Lebanon ahead of that, with the United States pledging $230 million. But commentators such as Mary Robinson, the former UN Commissioner for Human Rights and ex-President of Ireland, have remarked that the US could possibly have used its influence over Israel to bring a much swifter conclusion to the fighting. If that had transpired, then Lebanon might not now be facing such a major task in rebuilding its homes and its economy.