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WEEKLY NEWSLETTER
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Lebanon
Index
Lebanon, torn by its sectarian and political disputes, was
further cursed by invasion and a seemingly endless intermingling of
internally and externally inspired conflict from 1982 onward.
Beirut suffered grievously between June 6, 1982, when Israeli
troops first crossed the Lebanese border, and September 16, when
they completed their seizure of West Beirut. Normal economic
activity was brought to a standstill. Factories that had sprung up
in the southern suburbs were damaged or destroyed, highways were
torn up, and houses were ruined or pitted by artillery fire and
rockets. Close to 40,000 homes--about one-fourth of all Beirut's
dwellings--were destroyed. Eighty-five percent of all schools south
of the city were damaged or destroyed. The protracted closure of
Beirut's port and airport drastically affected commerce and
industry. By 1984 the
World Bank (see Glossary)
and the CDR agreed
that Beirut would require some US$12 billion to replace or renovate
damaged facilities and to restore services that had not been
properly maintained since 1975.
In a December 31, 1982, national broadcast, President Amin
Jumayyil called for the world to launch a new "Marshall Plan" to
help reconstruct Lebanon. A series of conferences were held with
major potential aid donors. A number of reconstruction projects
were launched with support from the World Bank, the United States,
and France. Roads began to be repaired, ports were cleared of
debris, and schools and hospitals were built or rebuilt. But
nothing was done on the grandiose scale Jumayyil had originally
envisaged.
It became clear that Saudi Arabia and the Persian Gulf
countries were not prepared to provide Lebanon with major
reconstruction funds until the World Bank and other Western
financial institutions had taken the lead in the reconstruction
effort. And repeated breakdowns of fragile truces meant that from
1984 to 1987 there were no real opportunities for large-scale
reconstruction efforts.
Still, financial and business circles were optimistic between
September 1982 and January 1984 because Western-backed
reconstruction plans seemed attainable under the presidency of Amin
Jumayyil. But the mood did not last. Economic progress was
insufficient to override the recurrence of sectarian strife, and
the government seemed ineffective in reconstruction and
reconciliation. When Beirut was again divided in February 1984, and
the troops of the ill-fated MNF evacuated, a turning point was
reached. From that point on, it became impossible to ignore the
downward spiral of the Lebanese economy.
Foreign banks began selling and moving out. The decline of the
Lebanese pound intensified, and hyperinflation set in. Public debt
soared, and only drastic cutbacks in government purchases, which
were virtually restricted to oil, ensured an overall balance of
payments surplus in 1985. By 1986 the inflation rate was well over
100 percent. Government revenues from taxation and customs duties
continued to erode. And one account declared that at the end of
1986 "currency speculation and black marketeering have become the
principal areas of business activity." Economic control was falling
into the hands of those who possessed hard currency. The militias'
tight grip on customs revenues gave them increasing control over
what was left of the national economy; and their strength increased
as the central government's control over national finances
weakened. Although the Central Bank was still the guardian of one
of the highest volumes of per capita foreign assets in any
developing country, the government's ability to use these assets to
reconstruct the country's shattered financial system or national
economy was doubtful.
Data as of December 1987
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