As Islamists exploit financial crisis, Lebanon stands fast
Its economy has thrived thanks to sound fiscal policy.
More than two weeks into the Israeli-Hamas war, the eyes of the world are narrowly focused on the crisis in Gaza. In the Middle East, however, it is not just the Palestinians and Israelis who are suffering, and it is not only Hamas which hopes to capitalize.Skip to next paragraph
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Lost amid the ongoing hostilities is the profound impact of the global economic crisis on the Middle East. Like the rest of the world, Arabs have also found themselves victims of the downturn. Even the Gulf, still floating on a cash cushion from the recent oil boom, is tightening its belt.
Not surprisingly, the economy is providing plenty of fodder for Islamists. In Jordan – Washington's closest Arab ally – the Islamist parliamentary bloc is demanding a loosening of regulations on Islamic banking and a shift to an "Islamic economy." Meanwhile in Egypt, the Muslim Brotherhood is saying that "Islam is the solution," and advocating rescue plans that include, among other things, "trust in Allah," "exploiting the crisis to advance the plan for Islamic civilization," and "uniting the Arab and Islamic states with their insurmountable power in confronting the United States."
Islamists are no doubt hoping to capitalize on the economic meltdown. Amid the adversity, however, one nation is thriving: Lebanon. It's doing so not by turning to Islamist governance, but by focusing on disciplined and prudent economic policies. In fact, in its recent report on the country, the International Monetary Fund (IMF) noted that "so far there have been no spillovers to Lebanon from the global financial crisis."
My recent trip to Beirut seemed to confirm the IMF assessment: Bars and cafes were packed and hotels were brimming with occupants. Like other Middle Eastern states, the local bourse has declined somewhat, but real estate markets hadn't crashed, and banks were not failing. According to Central Bank Governor Riad Salameh, as of November, the Lebanese Banking sector was up an astounding 12 percent for the year.
Lebanon's economy is a remarkable story, particularly given the political upheaval the state has seen in recent years. Once known as the "Paris of the Middle East," the state's fortunes declined dramatically during 15 years of civil war and 30 years of Syrian occupation. Making matters worse, since 2005 Beirut experienced the murder of a former premier, a devastating war with Israel, an Islamist uprising in the North, periodic attacks – probably perpetrated by Syria or by local Islamists – against the Army, and a military takeover of the capital this past May by the Shiite militia-cum-political party Hezbollah. Complicating matters, Lebanon's pro-West majority governs today in an uneasy coalition with Hezbollah and other local Iranian and Syrian-backed parties.