Lebanon on the up despite uncertainty over future conflicts

The war in 2006 between Hezbollah and Israel had a severe impact on Lebanon. Tourism in 2006 plummeted as international holidaymakers shied away from a country seen as unstable, plagued by an internal lack of security and on the verge of another war, as Israel warned of future military action if the government did not do more to disarm Hezbollah. While some progress has been made in this regard, the greater achievement is the country’s resurgence in the areas of investment, construction and tourism even as the global economy quivers at the edge of a possible second downturn in Europe.

It took several years, but in 2009 the tourism sector really began to recover, a record number of 2 million tourists visited the country and the Daily Star, a Lebanon news provider, reported in the first quarter of 2010 that the number of tourists visiting the country had increased a further 32%. This was chiefly down to security normalization and an increasingly stable political landscape. The country was even able to benefit from the 2006 conflict with newly opened ‘Hezbollah village’ officially Mitta Village, which has proven popular among both regional and western tourists.

In the village, tourists wander among defense positions and military hardware left behind during the war between Lebanon and Israel, which started in 1982. The complete withdrawal of Israel did not come until 2000. While the village was established in cooperation with Iran to mark the tenth anniversary of the withdrawal, the 2006 conflict is a more recent reminder of the proximity of war for many Lebanese, while for tourists it is a curious landmark, filled with dummies in various poses of attack, carrying weapons, firing a gun, and scattered with abandoned Israeli tanks and armored vehicles.

But the recent conflict is not all that Lebanese is known for, increasingly, attention is being drawn to other quarters. Beirut Boat 2010, an ‘international’ boat show in the capital reinforced the country’s potential as a yachting center on-a-par with Dubai or Bahrain. While much progress is still needed in this regard, the boat show saw strong sales from regional visitors amounting to more than 30,000 people.

However, the boat show, which was suspended for three years after the 2006 conflict, has faced some issues in getting back onto its feet. Many international companies did not set up pavilions, but instead came as observers and this was a reflection of ongoing issues over both the reality and the perceptions of the country’s security situation. Despite this, domestic boat sales grew 20%.

Construction activity is also up in the country as investors tentatively develop more confidence in the country. It was recently reported by Lebanon news media that the Kuwait Fund for Arabic Economic Development (KFAED) was working in conjunction with the Lebanese government on a plan to revamp many public services, such as water supply, roads and electricity around the summer resorts on Mount Lebanon. The project has a total cost of $7 million, $5 million of which is being funded by KFAED. 

Such developments are a part of the 56% increase in construction activity in the country this year, compared with figures from 2009, much of which revolves around rebuilding after the conflict, but also around the development of new tourist projects, such as Sannine Zenith on Mount Sannine, a massive $1 billion project which, when completed toward the end of the decade, will see the construction of hotels, ski resorts, holiday homes and nature reserves in an area that accounts for almost 1% of the entire country.

This is extremely important as construction account for almost a sixth of Lebanon’s GDP. Project Lebanon, an international exhibit held every year, proved to be a good barometer of confidence in the industry.

“Project Lebanon is a sign of Lebanon’s construction boom,” Economy Minister Mohammad Safadi told Lebanon news media, adding that 6000 delegates from 19 countries attended the event.

A resurgence in confidence was the focal point of the event, with many local commentators arguing that the strong attendance was a vote of confidence from the international markets. However, such statements are eerily similar to those made just before the 2006 conflict between Israel and Hezbollah. In 2005, when plans for the Sannine Zenith project were being finalized, investors in Lebanon were assured of the projects success.

“Investors have great confidence in Lebanon because they realize that peace in the Middle East may be near,” said Firas al- Amine, the public relations officer of Sannine Zenith Holding in 2005, when asked by a Lebanon news reporter about the feasibility of the project.

With Hezbollah still active in Lebanon and vowing future aggression against Israel, with Iran making plans to provide military support for aid ships trying to break the Gaza Blockade and Syria entering the fray, conflict in the Middle East seems ever more apparent than peace, in the meantime, optimism is growing.