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Violence Causes Lebanese Trade with Iraq to Take a Beating, says Business Group - 2004-08-18

Violence in Iraq has all but shattered Lebanon's trade with that country. According to the Lebanese truck drivers association, road transport is down 70 percent and shipments to Iraq through Lebanon's Tripoli port have been cut in half.

Until international sanctions were imposed on Iraq in 1990 for the invasion of Kuwait, the country was Lebanon's number-one trading partner. Even during Saddam Hussein's rule, Lebanon's annual trade to Iraq totaled $300 million worth of petrochemical supplies, generators, air conditioners, and cement and wood.

But all that has changed. During the past three months, shipments from Lebanon to Iraq have been drastically reduced. According to the owner of one of Lebanon's largest shipping and transportation companies, Ahmed el-Kheir, lack of security in Iraq is the reason.

Mr. el-Kheir says shipments from Lebanon to Iraq have declined 70 to 80 percent since the beginning of summer. He says most Lebanese truck drivers are too afraid to enter Iraq because of kidnappings and robberies. Some trucks have been looted and burned. And he says no one is willing provide insurance for truckers who enter Iraq.

Lebanese trucking company owner Sameh Hussein Fahda says he has 23 trucks that used to operate in Iraq. Mr. Fahda says he stopped all work in Iraq a month ago, after one of his trucks was hijacked and burned. He says his driver was tied up and left on the side of the road. He says another of his drivers was kidnapped for ransom.

Out of 15 Lebanese kidnapped in Iraq, one was found murdered in Baghdad in June. According to the truck drivers association, three Lebanese drivers are being held. A Lebanese businessman, Antoine Antoun, was released last week after being kidnapped in Baghdad nearly three weeks ago.

Shipments to Iraq through Lebanon's Tripoli port have been sharply reduced because there are no guarantees the shipments will arrive safely.

But even though Lebanon's trade with Iraq is currently suffering, the president of the Lebanese industrialists association, Fadi Abboud, says there is a high level of optimism about future investment opportunities.

"Iraq has always been our number one export market," he says. "So, Iraq is extremely important for Lebanon. Certainly, after the Saddam era, optimism is much more than it used to be during Saddam. No one thought of starting industrial projects in Iraq during the Saddam era. Now we know there is a rule of law and people are very optimistic."

Mr. Abboud says Lebanese businessmen, saddled with expensive energy and employee costs, are eager to set up manufacturing plants in Iraq where energy prices are low and cheaper labor is readily available. He says Iraq is seen as a very lucrative manufacturing market. But he acknowledges that until the security situation in Iraq improves, investing in the country will be "very risky business."