Political Crisis Drives Financial Losses in Lebanon
DEBORAH AMOS, host:
The ongoing political crisis in Lebanon shows no sign of easing, leaving many people worried about the stability of the country and the damage to the Lebanon's already battered economy.
Current estimates are that this crisis is costing Lebanon more than $50 million a day, just as many were hoping to recover from the disastrous summer marked by the war between Israel and Hezbollah fighters.
With the holiday season approaching, NPR's Peter Kenyon reports that some businesses are beginning to wonder how long they can hold on.
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PETER KENYON: In central Beirut the tents are full, the loudspeakers are blaring and most of the banks and shops in this upscale neighborhood are dark, behind padlocks and iron grates. Some stores have removed their merchandise.
Just across Martyrs Square, Rita Manugee(ph) sits in one of the few shops that are still open. She manages Johnny Farah's, which sold leather goods: bags, wallets and belts. But she says in the two years the shop has been open, political strife has kept many customers away.
Ms. RITA MANUGEE (Store Manager, Central Beirut): When we opened, we thought that it's going to become much better because we knew that summer was going to be very, very good. But it's all going backwards, not forward.
KENYON: Since then, she says, the owners have doggedly kept up their inventory and stuck it out, hoping for a turnaround. But she wonders how long they can wait.
Ms. MANUGEE: We don't want to think about it, because every time we think about it, they say, okay, we have this budget, but it's not coming in. We don't have anything coming in, you know. I don't know for the future if we can continue like this. I don't think so.
KENYON: Writing in the English language Daily Star newspaper, business magazine editor Michael Karam declared that, quote, “the economy is hurtling to hell in the proverbial hand basket,” and delivered the depressing figures to quantify the situation.
Lebanon's public debt is growing by nearly seven percent a year, to roughly $40 billion. The money required to service that debt is devouring nearly 30 percent of government spending. Tourism is heavily depressed. Financial houses have downgraded Lebanese bonds.
In a La Posta gourmet food store, Sergeil Harz(ph) has all of his neighbor's problems plus the fact that his products are perishable. Italian cheeses and cured meats sit near bottles of olive oil and Chianti.
Harz says he's had to throw away a substantial choke of his inventory when it wasn't sold by its expiration date. But he's not closing his doors.
Mr. SERGEIL HARZ (Store Owner): No, not yet. Product sales went down. Customers were afraid to come. It's not good for our shop over the years, especially when you're dealing in food and beverage, okay, because we deal with delicate products.
KENYON: This summer, Harz says his order for new products went up in Cairo because of the Israeli shipping blockade. Now, the Christmas/New Year season is suddenly looking gloomy as well.
Mr. HARZ: A lot of investors are asking themselves - what's next, we have to find a solution. But there's always a solution, that's what I think. Until now, we have some politicians in our country from both sides that don't agree on a piece of paper, or I don't know what exactly - I'm not a politician, myself. But still, until they don't find an agreement, we will have bad business.
KENYON: Looming on the horizon for Lebanon is the January 2007 Paris Donors Conference, where Lebanon is hoping for pledges of $48 billion to cover its debts and hopefully finance postwar reconstruction efforts. Economists say if the government falls that conference may be postponed again, sending the economy into a further tailspin.
Peter Kenyon, NPR News, Beirut.
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