Lebanon Energy and Security

By | June 1, 2022

Economy and energy

Lebanon has an economy traditionally oriented towards an open market and is dominated by the service sector. The percentage growth of GDP has been very high in the last decade, except between 2005 and 2006, when the repercussions of the war against Israel added to a slowdown in the economy. Since then, however, the main indicators have recorded a growing economy, albeit moderate (2% in 2014). Above all, the crisis in Syria, one of the major trade partners, is holding back better performance.

Tourism, banking and construction are the three pillars of the Lebanese economy. The construction sector is driving growth in the post-war reconstruction phase. Tourism is also an important sector, being the country a traditional destination for tourists from the Persian Gulf monarchies that also attracts a fair number of visitors from Europe and the United States. The sector, however, suffered a slowdown starting from 2010 first due to the European crisis and, immediately after, due to the conflict in Syria. At least a quarter of the active population is indirectly linked to tourism. And it is still tourism that drives a large part of the construction boom. The banking sector, one of the traditional strengths of the Lebanese economy, proves to be solid and benefits from a progressive increase in capital inflows. The ability of the banking system to overcome both the international financial crisis of 2008-09 and the chronic internal and external tensions unscathed rests largely on its stability, guaranteed on the one hand by the strict rules that the Lebanese central bank imposes on financial activities. and, on the other hand, from the high liquidity that the deposits of national banks have, thanks to the inflows of remittances from Lebanese living abroad. Lebanon traditionally has a sizeable trade balance deficit usually offset by the robust influx of foreign investment. The current account deficit has however recorded a contraction in recent years, settling in 2014 at -4 billion dollars (8.5% ofpil). Finally, many hopes are placed in the recent discoveries of crude oil and gas fields off the Lebanese coast that could transform Lebanon into a producer of hydrocarbons and eliminate the huge expenses (3 billion dollars a year) for their importation leading to a considerable reduction of the trade deficit.

Although the long civil war has reduced its importance and centrality, Lebanon still represents today one of the financial hubs and a reference service pole in the Middle East region. The most important export partners are Saudi Arabia, the U ae, Syria and Switzerland, with which Lebanon mainly trades in jewelery and goldsmith products, mechanical appliances, food, tobacco, chemical compounds, plastics and rubber. From the point of view of imports, on the other hand, the first Lebanese partner is China, followed by Italy, France and the USA.and from Germany; refined petroleum, means of transport, chemicals and metallurgical products represent the most traded goods. According to indexdotcom, despite the significant signs of growth, the Lebanese economy continues to be very vulnerable, especially in consideration of the high public debt, inherited from the unrest of the past and which, at the end of 2009, represented 145.6% of GDP.The ratio then fell slowly and in a fluctuating fashion to 132.4% in 2015. At these levels the Lebanese debt still remains the highest in the entire region and one of the highest in the world, so much so that the government has to use about a third of its tax revenues to finance it. This is why, despite the drastic reduction in current and investment expenses that Beirut has been implementing for years, the budget deficit still stood at around 16% in 2015.

The country is considered to be at high risk by the main international ranking companies, especially in consideration of the internal political situation and tensions with Israel, always at the risk of escalating into open war. Since 2007, both the International Monetary Fund and the World Bank have agreed on major financial aid projects with Lebanon as part of the post-conflict assistance plans. The country also receives a large amount of aid from international refugee assistance agencies.

The ‘You Stink’ movement

In August 2015, some tens of thousands of Lebanese started taking to the streets to protest against the inefficiency of the waste collection system. Years of mismanagement had in fact led to the system stalling and the accumulation of waste on the sides of the roads for whole months, with serious risks for public health, especially in the more peripheral neighborhoods. The attitude of politicians, who initially preferred to ignore the demands of citizenship, sparked protests. The demonstrations involved hundreds of thousands of people under the slogan ‘You Stink’. The phenomenon has attracted public attention both inside the country and abroad. Although ‘a-sectarian’ protests had already occurred on a smaller scale throughout the previous decade, for the first time there has been a mass movement motivated simply by the inefficient and corrupt management of public affairs. Until the beginning of October, the center of Beirut was in fact invaded by demonstrators from all social strata and religious denominations that make up the complex Lebanese society. Although the demonstrators failed to achieve any of the declared objectives (resignation of the minister of the environment, of the government and new elections), the protest allowed to publicly reopen the debate on the sectarian system that governs Lebanon since its creation and reconfirmed after the war. civil from the peace of Ta’if. Many groups in favor of the reform of this system, considered the main culprit for the corruption and inefficiency of the public administration, they had the opportunity to give voice to their ideas and to have the attention of social groups up to that moment impervious to this type of message. According to many observers, the 2015 waste protests would have shown the first signs of a crisis in the Lebanese sectarian system and the possibility of its future reform.

Lebanon Energy