Wed, Nov 15, 2017 - Page 9 News List

A political shock throws Lebanon’s economy back into crisis

Al-Hariri’s resignation has sparked concern that Riyadh and its Gulf allies would expel Lebanese workers, as they did with Qatar, and stall investment plans

By Philip Issa  /  AP, BEIRUT

Just when things were starting to look up for Lebanon’s economy, a new political crisis threatens to send it crashing down again.

Lebanese Prime Minister Saad al-Hariri’s shock resignation could unravel the first steps in years toward injecting some cash and confidence in Lebanon’s anemic economy. Already, the crisis is putting at risk multibillion-dollar plans to rebuild decaying road and electrical and communication networks, and get the oil and gas sector moving.

Lebanon has long been buffeted by blows from the great-powers rivalry between Saudi Arabia and Iran. However, its economy sputtered on under a tacit understanding among the regional heavyweights and their local proxies that left Lebanon on the sidelines of that contest.

That might have changed on Nov. 4, when the Saudi-aligned al-Hariri announced his resignation in a televised statement from the kingdom’s capital, Riyadh, saying Hezbollah, Iran’s proxy in Lebanon, had taken the nation hostage.

It was an unexpected announcement from the prime minister, who formed a coalition government with the militant group less than a year ago.

Since then, the news has only gotten worse. Saudi Arabia, which feels it has been humiliated by Hezbollah’s expanding influence in Syria and Iraq, says it will not accept the party as a participant in any government in Lebanon.

Saudi Arabia, Bahrain, Kuwait and the United Arab Emirates all ordered their citizens out of Lebanon, and the Lebanese are wondering and worried about what is to come.

“We don’t know how things will escalate,” said Rida Shayto, an associate director at the pharmaceutical manufacturer Algorithm, which does half its sales to the Gulf.

The developments have stunned the Mediterranean nation, which once looked to Saudi Arabia as a pillar to its own stability. The kingdom brokered the Taif agreement in 1989 that ushered in peace for Lebanon after 15 years of civil war.

The kingdom has plowed decades of investment into Lebanon, opened markets to trade, and allowed generations of talented and ambitious Lebanese to work in its oil-based economy.

The concern now is that Saudi Arabia and other Gulf nations will throw out Lebanese workers, as they did with Qatar this summer in a rage over that nation’s perceived closeness to Iran.

About 220,000 Lebanese work in Saudi Arabia and send back close to US$2 billion in remittances each year, said Mounir Rached, a senior economic adviser to the Lebanese Ministry of Finance.

Lebanese are hoping Saudi Arabia will be too wary of the negative impact on its own economy from such a mass expulsion. Many Lebanese hold managerial positions, including in the kingdom’s all-important oil sector, and it would take time to refill the posts.

An expulsion would also undermine decades of Saudi efforts to cultivate ties with Lebanese Sunnis.

“I think those who are invested in Lebanon are not going to come and destroy everything that they did in terms of relationships and associations and credibility,” said Kamel Wazni, an economist and sometimes adviser to al-Hariri’s government.

However, the kingdom and its powerful crown prince, Mohammad bin Salman, who has made his name by dramatic — or reckless, as his critics put it — moves, cannot be seen as doing nothing, said Randa Slim, a Lebanese analyst at the Washington-based Middle East Institute.

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