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Lebanon Reconstruction Burdens Country's Economy


Lebanon has made long strides in rebuilding its economy after 16 years of war. But, the price it paid, mostly with borrowed money, is steep.

Up until just a few years ago most descriptions of Beirut almost always included the words "war-torn." Between 1975 and 1991, the city and much of the country were devastated by years of war.

However, over the past decade Beirut has been substantially rebuilt, thanks in large part to $20 billion in loans from domestic and foreign banks. In downtown Beirut, there is little evidence the city was ravaged by war.

Farez Bouez, a member of Lebanon's parliament and a former foreign minister, told VOA that practically everything in the country had to be re-built.

"Lebanon was, in the 1990s, going out from a very long war, 20 years nearly, and most of our infrastructure was destroyed at this time and we needed to rebuild this infrastructure. That is why we had to spend a lot of money on roads, bridges, airports, harbors, telephones, electricity, etc., which imposed on us a very huge amount of debt," he said.

Paying off the billions of dollars in debt is now one of the biggest, if not the biggest, problems facing Lebanon. The government has begun, among other things, collecting taxes, something past governments were rather relaxed about. But many analysts doubt whether Lebanon can repay its debt by itself.

Sami Baroudi heads the political science department at Lebanon-American University in Beirut. He says not only is the debt huge, estimated at between $10 billion to $15 billion, many of the loans are from foreign banks that, unlike a foreign government, are not interested in finding a political way around the problem. They want their loans repaid.

"Now, as far as the foreign component of the debt, there is really no immediate political solution to that because much of it is owed to private banks," he said. "It's not really state-to-state loans. Of course there is a part of the debt that's owed to other governments and that is amenable to political solutions. But at the same time much of the debt is owed to commercial banks and I don't see how those banks would waive part of the debt as part of some political change in the course of events."

Mr. Baroudi says Lebanon will face deep debt for years to come. He says the country is "terrified" of the economic impact a U.S.-led military strike against Iraq might have on Lebanon.

To avoid defaulting on its debt, the Lebanese government is seeking large-scale international aid, as well as, where possible, interest rate reductions on the money it borrowed. It is also encouraging rapid privatization of state-owned enterprises.

Lebanese Prime Minister Rafiq Hariri told VOA while the country's economy is struggling, Lebanon is better off than many other countries, including those in the West.

"Look at the market in the United States, the market in Europe," he said. "So the whole world is shaking economically. Our economy, at least it is stable. We are suffering from the public debts and the service of the public debts. This is the problem we are facing," he said.

Mr. Hariri says he remains optimistic about his country's future, but he also says that rebuilding the economy, like rebuilding the country, will take time.

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