Syria sanctions risk Lebanon trade routes

Published December 1st, 2011 - 07:28 GMT
The number of tourists fell by more than 25 percent since the anti-regime demonstrations erupted in Syria
The number of tourists fell by more than 25 percent since the anti-regime demonstrations erupted in Syria

The prospect of Syria shutting its borders with Lebanon are haunting Lebanese officials and the private sector as they come under increasing pressure from the Arab League and the West to apply economic sanctions on Damascus in response to its crackdown on anti-regime protesters.

Prime Minister Najib Mikati, who wired $32 million to the Special Tribunal for Lebanon to avoid the possibility of international sanctions on the country, realizes that any miscalculated step toward Syria could harm the Lebanese economy which is already reeling under a severe slowdown. Most Lebanese officials and business leaders agree that Lebanon is in no position to reject or ignore any U.N. resolution and for this reason Mikati ordered the payment of money to STL.

Many bankers and businessmen had said that sanctions would cripple Lebanon financially and economically if the government failed to fund the tribunal. But they also realize that dragging the country into an open showdown with Syria has a very high price.

Lebanon and Iraq refrained from voting in favor of an Arab League decision to tighten economic sanctions on Syria and said they would not enforce such measures, warning that this step would have negative ramifications on their countries.

The volume of trade between Lebanon and Syria is not very significant as Lebanese exports to its neighbor are relatively small compared to other countries in the region. However, farmers and industrialists ship most of their goods through Syria since the cost of ferrying these products by air is high in comparison.

Economy Minister Nicolas Nahhas told CNN that a big bulk of Lebanon’s exports go through Syria since it is the only land gateway for Lebanon (apart from Israel which is technically at war with Lebanon).

“There are two sides of the relation with Syria. There is a commercial relation, where our relation with Syria on the commercial side is about 60 percent of our export to Syria. That could be handled. This is not a big impact. But the transit through Syria to the other Arab countries, if it comes to be disrupted for any reason, will have a huge impact on us. The tourism through Syria to Lebanon coming from the Arab countries or from Syria itself – this kind of activity is now reduced and tremendously reduced. That will [definitely have an impact] on the tourism activity we have with Syria and with the Arab countries. So we are feeling the heat. We are trying to see how we could disassociate ourselves because Lebanon has enough problems to have another one on its shoulders,” Nahhas told CNN.

The picture drawn by Nahhas reflects the overall mood in the Lebanese government, which is not keen to antagonize its neighbor. The number of tourists fell by more than 25 percent since the anti-regime demonstrations erupted in Syria.

Statistics show that many Arab tourists used to travel to Lebanon via Syria and most of these visitors came from Jordan, Iraq and Saudi Arabia.

Lebanese officials tell their Western and Arab counterparts that Lebanon will always abide by all international resolutions, while noting that the government has fully complied with a U.N. Security Council resolution to prohibit any dealings with Iranian banks.

Central Bank Governor Riad Salameh has reiterated that there is no direct relation or any form of business ties with the Syrian central bank. But Lebanese banks that have a strong presence in Syria have already seen their assets, deposits and profits fall this year as a result of the current crisis in Syria.

Lebanese banks have invested hundreds of millions of dollars into their Syrian operations in the past six years. However, all of these bankers seem determined to keep their business up and running despite the volatile situation in Syria. “These banks will continue to operate under all circumstances,” one banker told The Daily Star on condition of anonymity.

Former Finance Minister Jihad Azour told The Daily Star that Lebanon should comply with all international resolutions but in the case of the Arab League decision to apply sanctions on Syria, Lebanon is not actually obliged to adhere to these recommendations. “We should respect the decisions of the Arab League because Lebanon is a member of this league. However, we should make certain that Syria will not shut down its border as a means of retaliation,” Azour said.

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