Lebanese economy: costs of war

The battles that have engulfed Lebanon since 1975 constitute in large part a struggle for power and resources. While the political dynamics of this strife are now of primary interest to leading governments and press alike, only minor attention has been paid to the economic dimensions and consequences of the protracted conflict. Indeed, despite the remarkable resilience of the Lebanese over the past nine years, Lebanon could emerge from the conflicts of 1983 with an economic base so shattered as to be all but irreparable.

Even before the renewed violence of the summer of 1983, the gap separating Lebanon's potential economic recovery from its further decline had widened to a dangerous expanse. Studies undertaken at the close of 1982 by the World Bank, United States government, International Monetary Fund, and government of Lebanon generally agreed in estimating the extent of physical damage incurred between 1975-82 at approximately $12 billion. Reconstruction estimates that included unattended maintenance or repairs, and also stagnant development, were more realistically in the realm of $15 to $20 billion.

Pledges from the West and the Arab world, nearing $600 million for 1982 through 1984, covered only a fraction of Lebanon's larger needs. The government of Lebanon was optimistic that private initiatives, including investments by Lebanese at home and abroad, would play a catalytic role in the reconstruction process - attracting urgently required foreign capital.

But prolonged uncertainty over the withdrawal of foreign troops and heightening fear soon dissipated these expectations, with new ventures effectively frozen for more than a year. The Gemayel administration's ability to implement emergency development measures is thus severely handicapped, with assessments for long-range action increasingly pessimistic.

Remittances from Lebanese working in the Persian Gulf and in Africa averaged offsetting what would otherwise have been a sizable balance-of-trade deficit. But as these oil-producing countries cut back development programs, remittances were similarly affected. By spring 1983 they had dropped by as much as 25 percent (to $150 million per month), with larger declines anticipated.

A future Lebanon that faces a significant reduction in remittances with parallel growth in internal economic activity would mean a further erosion in the government's capacity to function and deepening levels of poverty.

The heart of the government's fiscal difficulties lies with the collection of taxes. Illegal or extra-legal trade and services remove substantial sources of revenue from taxing authority; smuggling through official and illicit Lebanese ports, for example, has cost the treasury as much as $50 million per month. Lebanon's ''black economy'' also involves as many as 100,000 jobs at an annual value of more than $3 billion, hardly a reassuring reality for the government.

Recognizing the scope of this illegal sector and the fact that 40 percent of Lebanon's GNP originates in the Gulf, it is clear that maneuverability in the best of circumstances would be difficult.

While there is as yet no unusual flight of money from Lebanese banks, the long lines daily before Western consulates, seeking permanent emigration, suggest a further weakening of the nation's skilled work force. The Lebanese pound remains strong, with Beirut shops generally well stocked, yet for the first time the feeling is pervasive that ''Lebanon is dying.'' If the caviar is still readily available, the critical element of hope now seems in short supply.

The continuing isolation of different parts of the country also compounds the stagnation, which threatens to become a permanent rather than temporary feature of the economy.

Ironically, the very resources that are at least partially at issue in the present crisis are rapidly being squandered by the principle players. Whether the Lebanese talent for coping with adversity can sustain the population through enduring conflict and despair is quite another matter. The key indicators of healthy economic growth suggest a grim scenario, with the likely prospect of Lebanon emerging in 1984 as a newly impoverished nation, and thus an even more fertile ground for terrorism.

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