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The conflict will damage Lebanese workers

Heather Stewart

The damage to infrastructure in Lebanon is The damage to infrastructure in Lebanon is estimated to cost at least œ13 billion to repair.

ISRAEL'S ONSLAUGHT on Lebanon over the past three weeks has been totted up in lives lost, prisoners taken and refugees created; but when the bombing stops and the troops leave, the economic devastation wrought by the conflict will prolong the suffering of the victims, with potentially profound political effects.

The Israeli general who promised to "take Lebanon back 20 years" may not have been speaking for his country's government, but many of the targets the military have chosen have a distinctly economic character. Roads, bridges and power stations have been destroyed, Beirut's spanking new airport has been left barely usable, and its normally bustling port has been completely blockaded. Prime Minister Fouad Siniora says there is now only enough oil left to last a week.

The extremists' cause in Lebanon is unlikely to be harmed by this sense of economic, as well as physical, siege. You don't have to be a hardened Marxist to believe economic conditions shape politics.

Before the Hamas government was elected in Palestine, the EU, the World Bank and other donors were working hard to create a healthy Palestinian economy to help dry up the pool of shiftless youths ripe for radicalisation.

The debate about whether the Israeli response to Hizbollah's outrages has been "proportionate," in human and moral terms, is a complex one, but the financial equation is easier to solve. The U.N. has estimated that the damage to infrastructure in Lebanon will cost at least £13 billion to repair — and that price will tick up each day the fighting continues.

In Lebanon, with its heavy reliance on tourism and agricultural exports that farmers can't even harvest, let alone ship, the effects will be longer-lasting, and tight budget discipline is a faraway dream.

The story of Lebanon over the past 30 years provides an instructive example of the debilitating financial impact of war. Before conflict broke out in 1975, Beirut was both a regional financial centre and a stop on the tourist trail.

Lebanon's economy was expanding at a cracking 7 per cent a year, and GDP per head was £530. By 1990, after 15 years of on-off conflict during which Beirut's name became a byword for the urban battlezone, GDP per head had slumped to £430 — barely a third of the pre-war level once inflation had been taken into account.

After the conflict ended in 1990, the economy was slowly coaxed back to life by the government of the late Rafiq Hariri, with a textbook programme of liberalisation, privatisation and World Trade Organisation membership. Billions of pounds of investment poured in from Gulf states swimming in oil revenues; tourists, who make up 20 per cent of Lebanon's GDP, came back — and many of the skilled Lebanese who had fled the country began to return.

The events of the past three weeks could well provoke a slide back into the chaos and mass unemployment of the long war years.

In that case, whatever the physical impact of the onslaught on Hizbollah and its rocket launchers, the anger of even moderate Lebanese will surely only harden — shored up by the farmers whose crops are rotting on the vine, the homeowners whose properties have been destroyed and the workers whose jobs depended on the arrival of moneyed tourists.

- Guardian Newspapers Limited 2006

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