Thursday, August 31, 2006

Lebanon's Cash Flow Problems

Beirut to the Beltway is discussing the Lebanese economy post war. Before the war an economic plan was presented by Prime Minister Siniora which was vigorously resisted by Hizballah and its allies in the government.

One of the main proposals fought by Hizbullah and co concerned public sector workers. The finance minister at the time proposed then quickly withdrew an idea aimed at reducing public expenditures by hiring public sector employees on a contractual basis. Hizbullah and Aoun both strongly opposed this idea, and threatened "street revolutions."

Well, fast forward to the present. The Daily Star is now reporting that the finance ministry has "enough cash to cover salaries of public sector staff for a few more weeks, adding the ministry has spent $1.5 billion since war broke out."
So what are the odds that these fixed expense government workers are supporters of the Hizballah faction of government?
The Central Bank has reportedly intervened with $2.5 billion dollars (at least 2% of total deposits) to stabilize the pound, and the ongoing blockade is costing the treasury hundreds of millions of dollars in lost revenues from VAT and customs duties,usually collected at the Beirut port. (According to the finance minister Jihad Anzour, the 34-day war caused more than $3.6 billion in material damage and another $3 billion in indirect losses, especially in the tourism sector.)
B2Bw (Beirut to the Beltway) then quotes frm a Reuters report.
Thousands of shipping containers filled with vital imports have been turned away from Beirut Port by the Israeli blockade, causing commercial cargo bound for Lebanon to flow through Syrian ports. Containers destined for Lebanon have started arriving over the last few weeks at the Syrian ports of Latakia and Tartous, where they are being loaded onto trucks and moved to Lebanon on roads bombed by Israel in the recent war, port officials told Reuters.
This total blockade is designed to prevent arms smuggling and encourage the UN to get its forces deployed as soon as possible.

Then B2Bw delivers some more really bad news for the Lebanese economy.
The industrial, tourism and hospitality sectors were hit hard. The factories that were not destroyed by Israel are now operating at a 20% capacity. Many restaurants had to lay off their seasonal workers.
Of course this is going to affect employment adversely. B2Bw gives some estimates.

Then he quotes economist Marwan Iskandar:
"An economic rebound will allow 80 percent of lost jobs to be recovered if political stability is assured and a public aid program is enacted," he said.
And gives his acid observations about the requirements.
Political stability? Tell that to Aoun and Nasrallah. They didn't want it before the war, and they don't want it now. With Siniora overbidding Hizbullah by offering a $33,000 $40,000 compensation package to families who lost their homes, it almost seems as if Lebanese people will be paying Hizbullah and Aoun for co-destroying the country along with Israel.
That is very interesting. Hizballah's initial offer of $12,000 was a low ball. Assuming 15,000 homeless families $33,000 comes to $500 million (about). A $400,000 offer bumps that $100 million.

Evidently human shields are worth a lot to Hizballah, because the hizzies will determine where houses are built if they pony up the cash. Like on top of bunkers and arms depots. So I do not think B2Bw has that point entirely correct.

If the government (probably with Saudi help) outbids Hizballah the hizzies will be out of business in south Lebanon.

Also note that the people of Iran are livid about the $500 million offer when a lot of Iran still hasn't been rebuilt from the last earthquake.

B2Bw has links. Visit him to learn more.

Update: 31 Aug '06 1902z

Commenter Carol Herman reminds me ever so gently that the proper abreviation of Beirut to the Beltway is B2Bw. So that has been changed.

1 comment:

Anonymous said...


As usual, M. Simon, great, great stuff. Thanks for the link to B2Bw.

I've gotta tell ya,with all these money offers floating about, no wonder Jessie Jackson showed up. And, ditto, for Kofi Anan. THEY WANT THEIR SHARE. And, their spotlights in the sun.

I am reminded, however, that a lot of "promises" get made in the Mideast. But the money rarely shows up on the table. And, when it does, it's been cut, cut, cut.

The Lebanese clearly lost. They are also so full of hatred for Israel (people with money who live next door, who will never spend a single tourist dollar), that ya gotta laugh.

What, exactly, does Lebanon make to export?

And, if ships are docking under syria's eye, (don't forget assad's cousin runs Tripoli); then the cuts that normally go to the thieves in Beirut, ARE DIVERTED. Money flows towards one pocket, with the Israeli siege. That's why such ugly mouths are talking. Their Lebanon's freaky elites. And, they're mad!

Meanwhile, I suspect that Israel has every intention of keeping the siege going. Even with the airport in fine shape. Since we know Anan, and others, are flying in and out. And, not useing broomsticks.

Up ahead? There's still the reality of the kidnapped Israeli soldiers.

And, the other reality. That assad now has one million more Shi'ites, previously living in Lebanon, nowhere near able to get back. And, when they do, it will be really, really funny, if the Saudis are their new landlords. Heaven help them. Nobody will.

WHile the Saudis are no friends of Israel, they do want to remain the big Kahuna on the block. And, the Shi'ites won't be able to do much, now, except clean toilets and remove garbage. They were "-" this close to having political power. And, their wings are being clipped. (Even in Iraq!) Too funny.

But people have to know it's not in the numbers of crap at the base of your pyramid that counts. It's the kinds of people you elect to represent you. The ones at the top.

I don't see Olmert making mistakes with the powers that are now in his hands.

Less than a month away to a New Year. So the tale continues, ahead. Thank GOD for blogs!