Tuesday, July 25, 2006

It’s a loss-loss scenario

Here we are on the 25th of July, the 13th day of aggression against Lebanon. The clock is reset on every midnight but the number of civilians killed is still rocketing, leaving the already moaning country in a deep bloodshed that would affect the whole society for months and maybe years to come. It’s conspicuous that the whole world endorsed a punishment for Hezbollah (with the exception of Iran and Syria for sure) in a way or another. What they are betting on is that Hezbollah will go for some compromises after some Israeli incursions inside the Lebanese territory, at least to accept a buffer zone in the South that couldn’t halt the attacks on Northern Israel theoretically, but could practically. Why am I saying that? The deployment of a special force in the South can’t be used as a shield for future attacks on Israel on both military and legal point of view. Such deployment will follow a mutual treaty forcing both sides not to use military means using any territorial or aerial space of the buffer zone. By that, both sides will declare, at least not a short-lived cease-fire under the UN and the International Community supervision. Until such agreement, the bloodshed and destruction will continue unfortunately for further “clean-up” of Hezbollah fortified posts in the Southern region of Litany. This should come at a cost for the IDF (ironically, it calls itself “defense” forces but most of its campaigns have been offensive) that makes the Hezbollah leadership more comfortable in its defense strategy by increasing the casualties in the Israeli side in a hope for fewer compromises. It is time for the Lebanese government officials to scratch their heads for a feasible solution with adequate procedures that satisfies the International Community as well as Hezbollah. Time is running out, we are losing civilians, time and money.

The civilian casualties have been frightening. As for material losses, the costs are compounding with every minute and every raid. Some people say that Israel is hit as well, but the casualties have been much less in a country that can secure tons of free money from abroad , either from its Diaspora or through governmental grants from the US and EU mainly. The Israeli economy is not paralyzed except in the upper north at the time the Lebanese economy is utterly paralyzed with the destruction of some infrastructure, the closure of the seaports and airports which provide the necessary cash flows to the treasury to keep up with its due payments, let alone the siege imposed since the beginning of the war. The private sector is obviously hit as well due either by direct damages by air raids or by shrinking consumer spending or a bit of both. Even if Hezbollah thinks that it has enough rockets to pound Israel for months, the economy doesn’t have enough oil to lubricate its wheels for that long. The opportunity cost has been already high, but any procrastination in a cease-fire process is going to lead to a lethal financial distress. The tax revenues almost dried up, with huge due payments for debt services coming up, along with the wages for the public sector employees.

The opportunity cost encompasses all missed revenues due to the war. This cost should be capped accompanied by a post-war sagacious plan leading to a fully-efficient reconstruction of the infrastructure and the build-up of the consumer confidence again. The ministry of tourism staff is supposed to go for a blueprint concerning the winter vacations and go ahead with their marketing plans with the help of the Lebanese embassies over the world. No time to moan the missed opportunity!

The ministry of finance is strongly responsible for an enhanced lucrative plan to borrow at reasonable cost to assist with the post-war rebuilding. I say “reasonable” cost because as long as the situation is getting worse, the probability of a hike in interest rates will increase which could widen the already ailing budget deficit. The taxpayers aren’t supposed to get taxed twice, one through paying for the damages and one by paying direct and indirect huge tax bills. I am not going to go into details concerning this plan but I should outline the most cutting-edge ideas; tax incentives (and breaks) for the damaged industries by the raids, significant reductions on some of the import products used for the reconstruction.

A for the service sector, mainly the banking sector, is responsible to proceed with soft (low-interest) loans helping to get reconstruction in place for the public and private sector. In addition, the consumer confidence should be restored as soon as possible, so the economy gets back on track (or close to it, to say the least). Our biggest problem in this war lies in being a service-oriented economy, depending on the tourism and the foreign capital wired from the Diaspora. This helped much in the vulnerability of the economy since our industrial capacity is very limited to some humble local industries. Remember! The wired capital could leave our border overnight and we could end up busted.

The biggest question is: is it going to be the last war? Well, the elected officials are supposed to come up with a final solution that protects us from future risks due to any geopolitical problems before it is too late.

Bachir Nasr

2 comments:

  1. This might be the first article i read about "The after war", i can see you have many interresting ideas.
    Good work!

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  2. Interesting points, I think it is very true that whatever happens, Lebanon has lost a lot, however it is good to point out that the Lebanese Tourism Ministry should start working on the winter season, if possible to be more successful than previous seasons in order to make up for the wasted summer.

    Hopefully, they will come up with a final solution that will prevent any future war, I guess we all know what it is but is anyone in the Lebanese government willing to apply it?

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