Reconstruction of Lebanon

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ECONOMIC RECOVERY AND RECONSTRUCTION IN POSTWAR BEIRUT

 

By DONA J. STEWART

 

Source: Geographical Review, Oct96, Vol. 86 Issue 4, p487, 18p

 

After sixteen years of brutal civil war Beirut is being rebuilt. In this article I note the causes of the city's destruction and examine the fundamental demographic shifts that lie behind Lebanon's internal power struggle. Current reconstruction plans, already being implemented, call for a new, peaceful Beirut. Despite their aspirations, the plans fail to address the underlying tensions in Lebanese society, which is divided along religious and socioeconomic lines. Finally, I assess the likelihood of Beirut's economic recovery, given the current regional political situation. Keywords: economic recovery, Lebanon, Middle East, reconstruction.

 

For many westerners the dominant image of Beirut, its buildings reduced to bombed-out shells riddled with bullet holes, freezes the city in time. Although the memory of Lebanon's civil-war landscape looms large in the collective consciousness, the nation has moved forward and seeks a revived economic role in the Middle East. And Beirut is being rebuilt. The society and government confront the dual tasks of reconstructing the physical infrastructure of the city while attempting to create interreligious societal harmony to ensure peace.

 

In light of the major demographic and political shifts that initiated and sustained intersocietal hostilities, it is imperative to place reconstruction plans for Beirut within Lebanon's social and political context. Although armed conflict has ended, many of the issues that aggravated relationships among the country's various confessional groups remain unresolved.[1] The physical and economic reconstruction of Beirut thus holds enormous implications for the future of Lebanon. The greatest challenge is to use the reconstruction process to weld the divergent sectors of the multireligious society and to create, along with economic prosperity, a stronger sense of national unity. Yet reconstruction also has the potential to aggravate old tensions between groups and to renew internal strife.

 

Although the case of Beirut has unique aspects, the problem of joining divergent sectors of society while repairing the built environment is not limited to Lebanon. The apportionment of representative space for ethnic or religious groups will surely be raised during the reconstruction of Sarajevo and throughout the republics of the former Yugoslavia as well. Issues of economic and cultural integration face East European cities as they try to attract investment and create a regional economic presence. A unified Berlin, specifically, faces the challenge of integrating "Ossies" and "Wessies" economically and culturally. Admittedly, though, the stakes may be higher in Lebanon, where reconstruction is assumed to be the foundation for future stability and where the propensity for violence is certainly great.

 

HISTORICAL DEVELOPMENT

 

Though not as monumental an Arab city as Cairo or Damascus, Beirut has held an important and occasionally central role in the Levant for 2,000 years. Much of its historical prominence derived from a favorable maritime location that allowed creation of a trade-based economy. Its important role as a broker for trade between Europe and the Middle East expanded in the fifteenth century with the return of Europeans (they had twice seized the city during the Crusades but were lastingly repelled in 1291) (Boulanger 1965).

 

Beirut's central role in the economy of Greater Lebanon was solidified during the last stage of Ottoman rule (1840-1920).[2] In a period marked by rapid growth, the city's population increased from 6,000 in 1820 to 120,000 by the dose of the nineteenth century (Reed and Ajami 1988, 16). Newly created infrastructure, including a major addition to the port of Beirut, facilitated economic growth and drew additional immigrants. The city expanded beyond its old walls as immigrants and refugees arrived, fleeing a civil war between the country's Maronite Christians and Druze sectarians. Members of each religion tended to live among their own, creating Beiruti suburbs that were distinctly homogeneous (Reed and Ajami 1988).

 

Following the defeat of Ottoman troops in 1918 by British and Arab troops, control of Lebanon and Syria was given to France under the newly established League of Nations mandate system. During French control, which lasted from 1920 to 1943, economic and cultural links were forged between Lebanon and Europe that would persist long after French rule ended. Economic and educational opportunities further facilitated the growth of Beirut, the center of French administration, and its population.

 

In the twentieth century Beirut absorbed waves of immigrants, ranging from Armenians to Kurds, who increased both the size and the diversity of its population (Khalaf and Khoury 1993). Among the largest groups of immigrants were Palestinian Arabs who fled the new state of Israel in 1948 and whose arrival hastened the deterioration of Lebanon's delicate religious balance. On the eve of the civil wars Beirut was estimated to have a population of 1.2 million--nearly 45 percent of the country's total population--and approximately 350,000 of the country's inhabitants were of Palestinian origin (Held 1994, 222).

 

ECONOMIC AND CULTURAL TIES

 

By the 1960s Beirut had become known as the "Paris of the Middle East" for its cultural and economic vigor. In the ten years prior to 1975 Lebanon's economy, characterized by low inflation, high levels of economic growth, and a large balance-of-payments surplus, made it one of the region's strongest nations (Sena and others 1995). Before the war Lebanon was classified as a middle-income country with a per capita income equivalent to that of Portugal. Its income level was twice that of neighboring Jordan (Economist 1996a, 12).

 

While the largest port facilities on the eastern Mediterranean ensured Lebanon's continued role in interregional trade, "Swiss-style" banking regulations encouraged the development of a large financial sector. Beirut became the publishing center of the Middle East and home to head or regional offices for many Western multinational firms. Lebanon's pivotal function was as an "intermediary between the developed economies of Europe and the developing economies of the Middle East" (Sena and others 1995, 1).[3] But economic prosperity concealed simmering religious and political tensions. In the summer of 1975 they erupted into the civil wars that destroyed much of the urban core of Beirut and changed the balance of power in Lebanon.

 

With the coming of civil war, Beirut was explicitly divided into east and west. The city became split along what came to be known as the "green line," which cut through Martyrs' Square at the center of the city (Figure 2). The sectarian division of the population increased as residents in formerly mixed neighborhoods moved to be on the appropriate side of the green line. Muslims, who had made up 40 percent of the 1975 population of "Christian" East Beirut, were just 5 percent of the 1989 population. A similar redistribution occurred in West Beirut, where the Christian population dropped from 35 percent of the total in 1975 to 5 percent in 1989 (Nasr 1993, 69). As Lebanon, which had described itself as the "Switzerland of the Middle East" because of the diversity of its populace, exploded, the belief that various religions could cohabit in the volatile Middle East also faded.

 

Warfare ceased only in 1990, after a large Syrian military presence moved into Christian-controlled East Beirut and Mount Lebanon, overpowering the Christian militias and ending the violence. Political power was essentially shifted from Maronite Christians to Sunni Muslims under the Taif Agreement, signed in 1989. The agreement substantially increased the powers of the prime minister, who was required to be a Sunni Muslim under the National Pact, and substantially reduced the authority of the Maronite-held presidency. Lebanon came under Syrian control and, except for the southern security zone claimed by Israel, became a de facto Syrian protectorate with the establishment of a Syrian-sponsored, Muslim-controlled government. Since 1990 Lebanon has been in a period of normalcy, with political power largely in the hands of the Muslims and their Syrian backers.

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THE DESTRUCTION OF BEIRUT

 

The cost of the fifteen years of war was very high and severely weakened Beirut. The damage to the city is estimated to be at least $25 billion (Robison 1993a). The international airport, sewer systems, electrical grid, and telephone lines were destroyed. More important, at least 170,000 people lost their lives in the hostilities, 300,000 were injured, and scores remain listed as missing (Economist 1996a, 1).

 

Much of the Lebanese conflict was an urban war, fought in the streets and boulevards of Beirut. Approximately 180,000 of its housing units were ruined, and 180,000 were badly damaged. The destruction left an estimated 300,000-500,000 people homeless or displaced, forced to live either with relatives or amid shattered buildings (Meadows 1994, 20). With the city destroyed, many of Lebanon's highly skilled professionals left to work in other countries. Estimates of the number of expatriate Lebanese range from 500,000 to 800,000 persons, but there is no accurate count (Economist 1996a, 12). When they left Lebanon these expatriates took with them an estimated $10 billion in capital (Abu Fadil 1992, 35).

 

Beirut was literally a battleground during much of the civil war. At the onset of hostilities in 1975, nearly half of the country's population of 3 million lived in the city. By 1992 its population had dropped to an estimated 300,000 (Held 1994, 221), as residents fled to other cities in Lebanon or overseas. The old city center, anchored by Martyrs' Square and divided by the green line, was most severely damaged by the war. Nabil Beyhum (1992, 44) noted that as the center, one of the most devotionally mixed areas of the city, was demolished, "a shift in the center of gravity to the outskirts" took place, with residents moving into the religiously homogeneous suburbs. The result of the shift into what Beyhum termed "single community ghettos" further fragmented the population along sectarian lines. A particularly significant aspect of the destruction was the loss of common spaces, areas that had been shared by members of all sects. Located in the old section of the city, these areas had brought together groups to transact business and for social opportunities. Moreover, the old souks (markets) were destroyed, as was the more upscale Hamra commercial district.

 

The protracted warfare severely injured Lebanon's economy. Beirut lost its preeminence as interpreter between Europe and the Middle East. Many expatriate firms relocated their headquarters or regional offices to Cyprus, only twenty minutes away by air. Arab-owned businesses also fled, often to the Arab Gulf states. Bahrain, for example, became the new home of many banks and insurance firms that had formerly been located in Lebanon. Firms that did not leave Lebanon were unable to reach suppliers or customers and often lacked electricity or telephone lines. Lebanon's once-thriving tourism industry was crippled. In total, the International Monetary Fund estimates that real gross domestic product in Lebanon dropped from Leb L 8.1 million in 1974 to Leb L 4.1 million in 1993 (Sena and others 1995, 4).

 

RECONSTRUCTION GOALS

 

For many Lebanese the first tangible--and highly symbolic--proof of the country's emergence from civil war and return to normalcy was the return of Fairuz, often considered the Arab world's greatest living singer, to the Beirut stage on 17 September 1994. A highly emotional concert, the Greek Orthodox singer's first in Lebanon since the onset of civil war 1975, took place in the ruins of Martyrs' Square (Muir 1994). The mixed audience of Muslims and Christians embodied hope for Beirut's future based on multiethnic cooperation.

 

Significantly, the concert was underwritten by Solidere, the private holding company created to reconstruct the Beirut Central District (BCD). The reconstruction is part of Horizon 2000, a plan created by the Council for Development and Reconstruction to provide for the comprehensive development of Lebanon as a whole. Designed to restore Lebanon's battered economy and rebuild the country, Horizon 2000 was originally scheduled for completion by the turn of the century, a tentative completion date that has slipped to 2007 at the earliest (Economist 1996a,13). The restoration of Beirut alone will take much longer than that, with the final stage of the three-stage project scheduled for completion in 2018 (Solidere 1994, 23). When completed, the new downtown area will house 40,000 citizens and work sites for 100,000 daytime employees. Moreover, reconstruction of the central district is to be a catalyst for economic growth throughout the country. So important is the success of this effort that Philip Khoury (1995b, 9) declares that "investment in Solidere more closely represents a wager on a country than an investment in a company."

 

The initial goals of reconstruction are mainly repair of the built environment, including commercial and residential buildings, and the provision of such key services as telephones and sewerage. A longer-range economic aim is revival of the Lebanese economy, enticing back Lebanese investors and their capital while also attracting investment from other regions. The most difficult task lies in creating a climate of religious harmony, or at least tolerance, without which uncertainty dominates the prospect for long-term economic and social development.

 

DETAILS OF THE PLAN

 

The central core of Beirut encompasses 395 acres of built space. Although the BCD is not large (Figure 3), challenges to its reconstruction are great. Solidere (1993, 16) identified the following major hurdles:

 

[T]he virtually complete destruction of its infrastructure; the Normandy garbage dump, formed in the course of the war, in the absence of an alternative dumping site. Today, this site poses severe local and regional health and environmental problems and disfigures the coastal facade of the city; the extreme fragmentation and entanglement of property rights involving owners, tenants and lease holders; the large percentage of very small real estate properties, 48% of the lots are smaller than 250 square meters; squatters in certain zones of the central district.

 

The first stage in the planned redevelopment covers the repair of Beirut's basic infrastructure and services, which will be completed by 1997 (Economist 1996a). This first step is crucial, for as late as 1995 the city had no streetlights, and electricity was available only for twelve hours a day (Jansen 1995b). Other concerns relate to the development of Beirut as a new international center of business designed to rival Hong Kong and Singapore (Economist 19961). A barrier to the realization of this aspiration, however, is the large Normandy landfill, an informal dump that developed during the civil wars, which hardly makes for an attractive business site. Situated only one-quarter of a mile from the famous St. George Yacht Club on the seashore, the dump will be transformed into a beachfront park and commercial complex. Existing refuse at the landfill will be augmented by the thousands of tons of rubble still to be cleared from downtown Beirut, and the enlarged landfill will be converted into a fifty-four-acre island, linked to the mainland by a short causeway (Meadows 1994). Solidere sustains great hopes for this reclaimed area, which will house a financial center where, it hopes, national and multinational firms will find a "prestigious location for their headquarters or local branch offices" (Solidere 1994, 19).

 

Other features of Beirut's commercial revival include restoring the old souks, preserving the historic core area as a pedestrian district, and opening Martyrs' Square to the sea (Solidere 1994). Through these efforts Solidere hopes that commercial establishments, which once occupied the BCD, will return and take advantage of its central location, infrastructure, and "new attractive urban landscape" (Solidere 1994, 20).

 

AGENTS OF RECONSTRUCTION

 

On paper, two major organs are responsible for the reconstruction of Lebanon. The Council for Reconstruction and Development, a government entity set up originally in 1977 and recently revived, is responsible for reconstruction outside the BCD. Solidere, as previously mentioned, is the private holding company that is reconstructing the BCD. The truest catalyst behind the reconstruction of Lebanon, particularly central Beirut, is Lebanese Prime Minister Rafic Hariri. Not only has the Hariri government advanced reconstruction in Beirut through legislation, much of the reconstruction has been financed out of Hariri's own personal fortune.

 

Hariri, a Lebanese national who made his fortune in Saudi Arabia, has assets estimated at $3 to $4 billion (Walden 1994). One of the world's hundred wealthiest people, he owns several banks in the Middle East and Europe and is one of Saudi Arabia's largest publishers of the Koran. He owns real estate on four continents, including the Texas Commerce Tower in Houston (Walden 1994), and he has long played a philanthropic role in Lebanese society, building hospitals and providing scholarships for students to study overseas. A Sunni Muslim, he became prime minister after the 1992 elections, which were boycotted by the main Christian parties. After Hariri took office he unveiled an aggressive plan for the economic recovery of Lebanon, and he used his own money to pay for the $5 million redevelopment feasibility study (Partner 1995). He is also the largest single shareholder in Solidere (Walden 1994).

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PROSPECTS

 

There is little doubt that the physical form of Beirut will be rebuilt. With the backing of Hariri and Solidere it is also likely that the final form of a new Beirut will reflect the prime minister's preferences. What is less clear is whether Beirut will ever regain its position as the middle agent and broker between the West and the Middle East. In many respects the Middle East no longer needs Beirut to fill the role that gave it predominance in the 1960s. At that time Lebanon was an extremely important intermediary because its businesspeople could speak the languages of both regions and explain each other's cultures. Today, however, nearly all of the Middle Eastern countries have created an elite, typically Western educated, that can represent national political and financial interests in the West. The shift of economic fortunes in the Middle East as a result of oil production has also focused the attention of Western firms away from the Levant, with its smaller, poorer markets, to the Arab Gulf region. Here, large Western expatriate communities are present, and institutions have already been developed to facilitate East--West exchange. Moreover, as the global economy continues to reorient itself toward the emerging economies in Asia and the Pacific Rim, it is likely that the Arab Gulf states, especially the United Arab Emirates, with its massive free-trade zone in Dubai, will assume the role of broker between East and West.

 

Lebanon continues to be unstable from a political and security viewpoint. The southern portion of the country remains under Israeli military occupation, with daily administration and policing duties carried out by a client militia, the South Lebanon Army. Hezbollah wages a guerrilla campaign against Israel's continued presence in the zone. Although leaders of the rest of the countries in the region met in Egypt in March 1996 to discuss means to combat terrorism, Lebanon and Syria were notably absent (Erlanger 1996). Such a signal is likely to be noticed by potential investors. In late April 1996 Solidere's worst fears were realized when Israel, in response to Hezbollah missile attacks, launched a large-scale military operation at Lebanon that included areas outside the security zone. The most devastating aspect of this engagement was the bombing of a U.N. refugee camp at Qana. Beirut was directly affected, for its port was blocked, the newly installed electricity-generating stations were hit, and a flood of refugees headed north toward the capital city (Economist 1996b).

 

Internal problems have persisted. In February 1996 the Lebanese government deployed troops to impose a nationwide curfew in response to anticipated antigovernment demonstrations. The demonstrations were organized by unions that sought wage increases (Trendle 1996).

 

In the current reconstruction plan social concerns have been overlooked in favor of economic goals. Although the city was destroyed by sectarian and intersect violence, the plan fails to adequately address this most significant of Lebanese problems. With the shift in formal power to the Muslim community, tensions between Christian and Muslims groups have not abated. The Shi'as are numerically superior, but under the current system the highest governmental position they can occupy is that of Speaker of the Parliament.

 

The failure to thoroughly address the needs of the poor is perhaps the most risky aspect of Beirut's reconstruction. Outside Beirut, especially in the southern suburbs, there has been little reconstruction of infrastructure or improvement of the living standard. Violence rooted in the poor urban areas, in which groups such as Hezbollah and Amal operate, could squash economic recovery before it even takes root.

 

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[UZTAAD]

good case study for somalia's reconstruction

[GaraadMon]

We'd have to go a lot further in terms of creating social cohesion. Lebanon could easily be dragged back in to civil war at any given moment.

[Mario B]

^^ I agree, there are sectarian [sunni,Shia, Christian] faultlines in Lebanon that work against their national interest by becoming proxy's to S Arabia's, Iran's or Israel's hegemony in the region.

[N.O.R.F]

The sources of finance need to be secured before anything can happen. Lubnaan has rich individuals and rich friends in the GCC.

[Somalia]

We have years till major reconstruction starts, we ought to focus on nation building, which public institutions and agencies should be created and which ought to be focused on the most, that will have an effect on all of this.

[Chimera]

^It has already started, there is more construction happening in 'failed state' Somalia than some peaceful African countries, We also have a major trillion dollar economy backing us, not to mention the diaspora returning in their thousands and Gulf countries are ready to invest ( and China watching the situation closely). I agree though that we should create the most powerful institutions possible that could ensure stability for the next one hundred years, but I'm confident we can.

 

Also, Lebanon might be a powderkeg, it still reclaimed its role as the 'Paris of the Middle East' and is still a major finance and cultural capital. I created this topic because I wondered whether the old beauty and character of Mogadishu as one of the few cosmopolitan grand cities in Africa could be regenerated or whether this status was lost forever. These Beirut images clearly shows a city can return from the brink and go beyond.

,

[NGONGE]

N.O.R.F;875542 wrote:

The sources of finance need to be secured before anything can happen. Lubnaan has rich individuals and rich friends in the GCC.

Uncle Rafiiq you mean?