Lebanon Economy Back in Crisis

Just when things were starting to look up for Lebanon’s economy, a new political crisis threatens to send it crashing down again.

Prime Minister Saad Hariri’s shock resignation could unravel the first steps in years toward injecting some cash and confidence in Lebanon’s anemic economy. Already, the crisis is putting at risk multi-billion-dollar plans to rebuild decaying road and electrical and communication networks and get the oil and gas sector moving, AP reported.

Lebanon’s economy has sputtered on under a tacit understanding among the regional heavyweights and their local proxies that left Lebanon on the sidelines of that contest.

That may have changed Saturday when the Saudi-aligned Hariri announced his resignation in a televised statement from the kingdom’s capital, Riyadh, saying Hezbollah had taken the country hostage. It was an unexpected announcement from the premier, who formed a coalition government with the militant group less than a year ago.

Since then, the news has only gotten worse. Saudi Arabia, which feels it has been humiliated by Hezbollah’s expanding influence in Syria and Iraq, says it will not accept the party as a participant in any government in Lebanon.

Saudi Arabia, Bahrain, Kuwait, and the United Arab Emirates all ordered their citizens out of Lebanon this week, and the Lebanese are wondering and worried about what’s to come.

“We don’t know how things will escalate,” said Rida Shayto, an associate director at the pharmaceutical manufacturer Algorithm, which does half its sales to the Persian Gulf.

The concern now is that the kingdom and other Persian Gulf Arab nations will throw out Lebanese workers, as they did with Qatar this summer in a rage over that country’s perceived closeness to Iran.

Some 220,000 Lebanese work in Saudi Arabia and send back close to $2 billion in remittances each year, according to Mounir Rached, a senior economic adviser to the finance ministry.

Lebanese are hoping Saudi Arabia will be too wary of the negative impact on its own economy from such a mass expulsion. Many Lebanese hold managerial positions, including in the kingdom’s all-important oil sector, and it would take time to refill the posts. An expulsion would also undermine decades of Saudi efforts to cultivate ties with Lebanese Sunnis.

“I think those who are invested in Lebanon are not going to come and destroy everything that they did in terms of relationships and associations and credibility,” said Kamel Wazni, an economist and sometimes adviser to Hariri’s government.