USCFL - Can Beirut Rise Again?

For 5,000 years - through seven devastating earthquakes, one great famine and numerous invasions - Beirut has been a city of conflict and comeback. Now, as it forges ahead with the most extensive postwar reconstruction in modern times, can Beirut rise again?

Before civil war ripped up this cosmopolitan city, Beirut was the sparkling civic jewel of the Middle East. It was the intellectual center, banking hub and fashion mecca of the region. Then, in 1975, local Lebanese and Palestinian factions began fighting for control of the city. Foreigners and affluent Lebanese fled. By the time a truce was called 15 years later, Beirut was in ruins.

Fifteen years of ethnic and civil conflict took 150,000 lives and inflicted $25-$30 billion in damage. At one point, 18 Lebanese factions fought for control of the city. Before the war was over, American, Israeli and Syrian troops, among others, were lured into the conflict for an assortment of reasons.

Syrian soldiers arrived in 1976 to impose a peace pact on feuding militias. With the blessing of the Arab world, Syria still keeps 35,000 troops in Lebanon, supposedly to maintain order. But Syria also allows the militant Muslim group Hezbollah to keep a stronghold in Beirut. Hezbollah, fueled by $100 million a year from Iran, spends much of its time planning and executing mortar attacks against Israel, an enemy of Syria and Iran.

Seven years after the fighting ceased, Beirut is still a shell of its former self. For most people, peace has not brought prosperity - just hard times of a different sort. While rich Lebanese and Arabs reap huge windfalls from reconstruction, a third of the population lives in bombed ruins and bullet-pocked quarters. Political differences still simmer, and the government - led by ex-fighters turned politicos - operates under heavy interference from the Syrian government. And while Beirut's leaders boast of a downtown rebuilding effort as the most monumental in modern times, there is skepticism over whether the city will regain its pre-war glory. It seems that the Beirut as we all knew it died with the war and it seems that nobody today has any idea what the city is becoming.

Is it time to invest in Lebanon? It is clear that Lebanon's reconstruction program is moving today at a much slower pace than anticipated, especially given the breakdown of the peace process and the disenchantment on the part of a number of Lebanese citizens with Hariri's track record.

Lebanon has been quasi-successful in attracting capital for infrastructure and real estate related projects. However, what the country mostly needs is to develop its industrial and manufacturing base. In the latter areas, there is a tremendous shortage of capital. Also, there is a growing consensus among Lebanese today that they have been sold a bag of empty goods by Hariri and his friends adding to that a severe liquidity crunch among citizens.

SOLIDERE, which planned to attract $1.8 billion in Lebanese, Arab and European bank money is the biggest flop in Lebanese corporate finance history and should serve as a lesson for international investors as to what they should expect when dealing with a "State Mafia" clique of sharks as accurately described by Minister Walid Joumblatt. It is in fact not surprising that the company which was supposed to attract capital to Beirut has drawn bristling criticism for its financial dealings, sucked up a tremendous amount of cash from the local Lebanese investors and has not shown any decent returns yet.

This should not come to the surprise of anybody when key government figures are Solidere's major shareholders, including Prime Minister Rafik Hariri, who owns $150 million in Solidere stock and stands to make a sevenfold profit. And it is equally not surprising that critics in Beirut's building-related trades say Solidere is rife with sweetheart contracts, corruption and influence trading. They accuse Hariri of creating a monument to his ego and say the project is merely an Arab money-laundering operation.

It seems that as long as Prime Minister Hariri, under the aegis of the Syrians and their Hezbollah brethren are in power in Lebanon, investing in the "former Paris of the Middle East" is tantamount to throwing money down a sinkhole.

So the city must look elsewhere for the estimated $30 billion it will need to rebuild over the next two decades. So where do we go from here?

The urgent issue in Lebanon today is not how to accelerate the reconstruction program, but rather how can the country regain its political independence, territorial sovereignty, and personal and communal freedoms that are the true sources of its distinctiveness before embarking on these giant project finance schemes. As Habib C. Malik correctly noted in his recent article entitled Beirut Rising, "giving precedence to physical and material reconstruction of the city, over the restoration and rejuvenation of Lebanon's eclipsed freedoms is placing the cart before the horse".

If the Lebanese try at least to focus less on their many differences and more on their few commonalties, they might find the single unifying element to serve as the foundation for the Lebanon of tomorrow.

Lebanon has to find a way to make peace with Israel, with or without Syria's approval. Not being part of the new Middle East economic block that is being formed between Turkey, Israel, Jordan and Egypt under the aegis of the United States is a killer for Lebanon, whether in the short or long term; and especially when it comes to accessing the $ 7 trillion in U.S pension fund capital to fund Lebanon's development. Lebanese should know by know that Arab capital alone is not going to solve their woes. On the contrary, it is clear that it will rather tie Lebanon even more to the Arabs contradicting political agendas and make Lebanese even more hostage to what they are today.

It is high time for Lebanese to stop blaming the Zionists, the American imperialists and God knows whom for all their pleas, and start looking deeper as to the vision and track record of their leaders before electing them to such positions of power.

If Beirut is to ever regain its former leading position in the region, time has come to bring in back to the city the real competent Lebanese, who know how to manage the country's affairs, and not construction people like Rafik Hariri who is driving the country toward bankruptcy. Mind you, there are plenty of candidates out there who fit the sought profile.

I guess that only time will tell if Lebanese are responsible enough to build a nation for all people from all walks of life and all religious backgrounds. It is hoped that future Lebanese generations realize what is at stake before jumping too quickly to the conclusions brought about by their corrupt leaders, other warlords and their Syrian masters.

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Article:	Can Beirut Rise Again?
Author:	Ziad K. Abdelnour -- e-mail: ziad@freelebanon.org
Date:	March 1998