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Middle East unrest and home strife weigh on Lebanon

Businesses in Lebanon are weathering a financial storm of tropical proportions.

You know those images one sees on the news during hurricane season in the Caribbean? The ones of wearily resigned, often rain-lashed residents boarding up their property ahead of the impending storm?

You do? Well that's how many in the Lebanese business community are feeling.

We know a storm is coming. We saw dark clouds on the horizon when Barclays Capitalforecast a dip in growth of 2 percentage points, but I suspect that was based mainly on the fact that Lebanon has not had a government for two months and tensions surrounding the tribunal examining the death of a former prime minister are mounting.

That was before Bahrain declared Hizbollah a terrorist organisation, accusing it of training Shia protesters, and severed virtually all ties with Lebanon.

That was before civilians were dying in the streets of Syrian towns and cities, and definitely before seven Estonians on a cycling holiday were kidnapped in the Bekaa Valley in broad daylight soon after crossing into Lebanon from Syria.

Suddenly, Lebanon finds itself in a three-pronged pincer that threatens isolation, political fallout and a return to the days when it was the place to avoid.

Manama's anger at Hassan Nasrallah, the Hizbollah leader who has offered support - moral and material - to the Bahraini Shia, could have huge economic implications.

Mr Nasrallah might have raised his stock among the region's Shia but many other Lebanese are groaning.

A friend, busy chasing payment for work lost during the first days of the crisis on Bahrain, suddenly found he could not even call the country, while Bahraini students at the fee-paying American University of Beirut were summoned home.

More worrying is the real possibility that many Bahrainis will not be vacationing in Lebanon this summer. The decision to give Lebanon a miss might become contagious and it is this scenario the hospitality sector dreads the most.

Lebanon has been lazy in diversifying its tourism portfolio. It has relied on the dirham, riyal and dinar by offering a tried and tested formula based on luxury hotels, restaurants, cafes and boutiques.

Lebanon knows the Arab tourist, as regional visitors are known in these parts, comes for the relative coolness, the mountain air and the chance to kick back in a way they cannot at home.

It is such a winning formula that there have been only token efforts to truly develop Lebanon's other niche tourist sectors - religion, wine, heritage, ecology and winter sports - all of which tend to appeal more to Europeans (although we probably won't see any cyclists in the Bekaa for a while).

Tourism officials and members of the private sector have always boasted that Lebanon is not for the mass market. Club Med is unlikely to be coming to town soon. They know who their clients are and they know how to make them happy.

That all might change if the boycott spreads.

Of further concern are events in Syria. Not only could the demonstrations have economic consequences with a major trading partner but the political fallout could very easily spread over the border.

Indeed, on Sunday, a bomb exploded in a church in Zahle, the Bekaa city close to where the Estonians disappeared - and they are still missing.

"Bekaa Valley" - and its associations with shady guerrilla groups, drug lords and missile sites - and "kidnapping" are words that have fuelled many thrillers. They are the cliches that the Lebanese had hoped the West had banished from its Lebanon lexicon.

However shallow, the Lebanese would much prefer their country to be defined by words such as parties (the fun kind), nightlife and glamour. The last thing Lebanon needs, after much good press in the world's media, is to be re-labelled a bad place.

There's more: a regional economic downturn caused by the mayhem in Libya and the transition of power in Egypt could easily see a greater reliance on local hirings. Foreign remittances make up nearly a third of Lebanon's GDP and any depletion would hit hard.

We haven't even mentioned the effect a surge in oil prices would have on the cost of manufacturing and consumer goods.

Last week, I wrote, "suddenly Lebanon doesn't look too bad", arguing that at least it has the democracy much of the Arab world is demanding. I may have spoken too soon.

 

Michael Karam is a publishing and communications consultant based in Beirut

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