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French Version

War strikes double blow to economy

Tourism, construction sectors shrink and skilled workers leave

The Israeli military blitz against Lebanon may cause unemployment to jump from 10 percent to 16 percent in the short and medium term, economists said on Sunday.

In addition, the attack may cause a workforce drain due the departure of thousands of skilled engineers and laborers to other countries, they said.

"This war has left Lebanon in a dilemma. On one hand, there are thousands of people in the tourism and contracting sectors who lost their jobs during the summer season and on the other hand, over 200,000 Lebanese, some of whom are holding double nationality, left the country either temporarily or for good," Kamal Hamdan, a leading economist, told The Daily Star.

The war, which has damaged most parts of the country, dealt a severe blow to an economy that had been expected to grow by 5 percent this year.

Apart from the departure of thousands of Lebanese to Syria, Cyprus and other countries, many Lebanese who hold dual nationalities flooded the US, Canadian, French and Australian embassies to return to their second homelands, fearing that the fighting may spill over to the rest of the country.

"I estimate that between 10 percent and 20 percent of the Lebanese who left the country during the war may not come back at all, even if the fighting subsides," Hamdan said.

Hundreds of Lebanese engineers and holders of business degrees have also sought jobs in the oil-rich Gulf states, a move that will affect the performance of many local firms.

The tourism and construction sectors also have suffered from the war as many establishments were forced to lay off a large share of their employees.

Lebanon was expecting more than 1.6 million tourists in the summer season. Most hotels in Beirut and the mountains were fully booked by Arab and European tourists.

"Many offshore companies will surely relocate from Lebanon because they cannot afford any military showdown in the future if the pre-war situation remained," Hamdan said.

Sources say that dozens of international companies moved their offices to other locations such as Dubai and Cyprus. "Tourism alone employs more than 100,000 people during the peek period," Hamdan said.

But former Finance Minister Demianous Kattar said that the government should come up with a plan that aims to give job incentives to Lebanese.

"If we can train Lebanese laborers to replace the vacant positions left by Syrian nationals then we can solve a major problem," Kattar said.

He added that the state can offer tax incentives to Lebanese companies to encourage them hire Lebanese: "If the government takes a national action motto then the Lebanese can fill the jobs left by foreigners."

Sukleen, the company contracted to clean and sweep the streets of Beirut and Mount Lebanon, offered full employment packages to hundreds of Lebanese after thousands of Syrian workers left the country.

"We have to come up with a new mechanism to solve the problems in the job market. We can't go back to old-fashioned ideas," Kattar said.

He proposed the creation of free zones in different parts of Lebanon that would allow employing Lebanese between the ages of 24 and 40.

Kattar was not too concerned by the impact of the war on foreign investments.

"The post-war may be prosperous for Lebanon. Investors will not leave Lebanon if the Lebanese remained united."

Hamdan echoed the view.

"I think that the reconstruction of the areas that were destroyed will create more jobs opportunities," Hamdan said.

Saudi Arabia and Kuwait have already pledged $500 million and $300 million respectively for the reconstruction of destroyed areas. The government has not assessed the cost of material damages but sources said that the toll is more than $3 billion.

"The Council for Reconstruction and Development came up with a five-year plan for rebuilding areas in Lebanon," said Hamdan. "I think this plan can be used now."

Beirut 31-07-2006
Osama Habib
The Daily Star

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