If Lebanon had a US-style colour-coded “war-fear” alert ranging from white to purple, we are now – courtesy of Israeli president Shimon Peres, the White House spokesman and the head of the Lebanese Hizbollah militia, Sayyed Hassan Nasrallah – hovering somewhere between pink and red.

Has Syria given the Hizbollah a set of Scud ground-to-ground missiles to fire at Israel? Can Israeli aircraft attack them if the Hizbollah also possess anti-aircraft missiles? Can the Lebanese army take these weapons from the Hizbollah before the balloon goes up?

It is a long-standing saga, of course, and Israel has been itching to get its own back on the world’s most disciplined guerrilla movement. You can forget al-Qa’ida when it comes to Hizbollah’s effectiveness – after the Israeli army’s lamentable performance in 2006, when it promised to destroy the Hizbollah and ended up, after the usual 1000-plus civilian dead, pleading for a ceasefire. Over the past few months, Mr Nasrallah has been taunting the Israelis to have another go, promising that an Israeli missile attack on Beirut airport will be followed by a Hizbollah rocket attack on Tel Aviv’s Ben Gurion airport.

But over the past week, a warning by Mr Peres that the Hizbollah has received Scud missiles from Damascus – or via Syria from Iran – and a refusal by the Hizbollah to even discuss its own disarmament within a Lebanese “national dialogue” chaired by the Lebanese President, Michel Suleiman, has darkened the spring skies over both Lebanon and Israel. The White House press secretary, Robert Gibbs, said this week that the United States has expressed its concern to both the Syrian and Lebanese governments over “the sophisticated weaponry that … is allegedly being transferred”. Mr Peres started the whole thing off a day earlier when he declared that “Syria claims it wants peace while at the same time it delivers Scuds to Hizbollah, whose only goal is to threaten the state of Israel.”

These hootings and trumpetings have always had a strong element of hypocrisy about them. The Scuds – even if Hizbollah has them – are as out-of-date as they are notoriously inaccurate. In the 1991 Gulf war, Saddam Hussein’s Scuds caused fewer than a hundred deaths. The more Peres thunders about the danger they represent, the more Hizbollah’s allies in Iran – supposedly trying to build a nuclear weapon – take pride of place in public imagination over the continued and illegal Israeli colonisation of Palestinian land.

As for Mr Nasrallah, he promised only a year ago that Hizbollah’s disarmament could not be discussed by the Lebanese government – only during the so-called “national dialogue”. And now the “national dialogue” has begun, the organisation has made it clear that it has no intention of discussing disarmament with other Lebanese political parties.

The problems are legion. Hizbollah is itself represented in the Lebanese parliament, and under the Doha agreement which followed Hizbollah’s one-day military takeover of west Beirut in May of 2008, it also has an effective veto over majority decisions taken by the Lebanese cabinet. And even if the Shia Muslim Hizbollah’s opponents in the Cabinet – they are largely Sunni Muslim with a prominent Christian contingent – ordered the Lebanese army to take weapons from the militia, they would be unable to do so for one simple reason. At least half the army – possibly two-thirds – are themselves Shia Muslims, and would obviously object to attacking the homes of brothers, sons and fathers in the Hizbollah.

A clue to the seriousness with which everyone now takes the possibility of war is contained in a remark made by an anonymous US spokesman who warned that the transfer of Scud missiles to Hizbollah would represent a “serious risk” to Lebanon. Not to Israel, mark you – but to Lebanon. There is no doubt that this is an allusion to frequent threats from the Israelis themselves that in another war with Hizbollah, the Lebanese government would be held responsible and as a result Lebanon’s infrastructure would be destroyed.

This does not sound so bad in Lebanon as it does elsewhere. For in its last Lebanese war – the fifth since 1978 – the Israelis blamed the Lebanese government for Hizbollah’s existence and smashed up the country’s roads, bridges, viaducts, electricity grid and civilian factories, as well as killing well over 1,000 civilians. Israel’s casualties were in the hundreds, most of them soldiers. What worse can Israel do now against the ruthlessness of the Hizbollah, even after the accusations of war crimes levelled against its equally ruthless rabble of an army?

Claire Wrathall
18.11.09

Strolling along the Corniche, which runs along the northernmost stretch of Beirut’s Mediterranean seaboard, on a warm Saturday evening, dodging power walkers, promenaders and soignée women with dogs in their handbags, it was striking how very good-looking so many Beirutis are.

Not perhaps the fishermen hoping to catch supper with a spindly rod balanced on the parapet wall; the narghile (or shisha-pipe) smokers huddled close to their cars from whose radios blasted loud Lebanese pop; or ka’ik vendors, peddling discs of hot bread with fist-sized holes, through which locals thread their arms in order to “wear” them home, like giant bangles.

But many of the women — some in hijabs, a few in sweats, others in Saturday-night best — had the demeanour of models. Even the mothers of children en route to the giant Ferris wheel at Lunapark looked more serene than their western counterparts might in similar circumstances.

This is most likely thanks to cosmetic surgery. Even in these credit-crunched times, Lebanon’s First National Bank is offering loans of up to $5,000 to “cover all your plastic surgery operations”, under the banner “Beauty is no longer a luxury”.

The reason has its roots less in vanity than in Lebanon’s war-torn past. Twenty years ago, when the civil war still raged, 90 per cent of surgeons’ work was reconstructive; today it’s almost all cosmetic.

Three years on from the Israeli bombing of southern Beirut, and despite what the UK’s Foreign Office calls a “fragile” peace and a visible military presence, Lebanon feels reborn.

Take the vibrant pedestrianised downtown district known as Solidère, a risen-from-the-rubble development of offices, shops, bars and cafés, stylistically a little too polished and post-modern, perhaps, but its faux rue-de-Rivoli arcades keep the sun off shoppers concerned for their complexions.

This was the part of town I was staying in, at the city’s smartest, newest hotel, Le Gray, a sophisticated, efficient 87-room boutique that opened on 1 November.

A more stylish alternative to the two InterContinentals on the Corniche — hitherto Beirut’s best hotels — it’s already made the city a more alluring destination for European weekenders.

It’s already so popular with locals that my friends and I in our group couldn’t get a table here for Sunday lunch, neither at its smart sixth-floor restaurant, Indigo — which offers a broadly international menu like its London namesake — nor its buzzy corner café, improbably named Gordon’s (despite a fine range of Lebanese salads) after its proprietor, Gordon Campbell Gray, the hotelier behind London’s One Aldwych and Dukes and Antigua’s Carlisle Bay.

Fortunately, there was space on the roof terrace, alongside its heated mauve-tiled, glass-walled swimming pool, from which on a clear day you can see not just the sea, but snow-capped Mount Lebanon.

Le Gray’s location on Place des Martyrs couldn’t be better, close to the café-encircled Place d’Etoile (they don’t call Beirut the Paris of the East for nothing) and Beirut Souks (more of a mall than a medina).

It’s also convenient for the city’s three main mosques — its proximity to the visible-for-miles 21st-century Mohammed al-Amin mosque ensures you never get lost — and the city’s three cathedrals.

Not that there aren’t myriad secular sights, too, ranging from Roman baths and colonnades to the Sursock Museum of modern Lebanese art (Le Gray, too, has more than 500 contemporary paintings and sculptures), by way of Byzantine mosaic pavements, crumbling Ottoman mansions and the National Museum.

Le Gray is metres from the Quartier des Arts, aka Saifi Village, a redevelopment of the area once bisected by the Green Line, the barricade that divided Muslim west Beirut from the Christian east side during the 15-year civil war that ended in 1990.

Here I found galleries and shops selling jewellery, richly embroidered local fashion (check out the coats in Assyla, on Riadh Sohl Street), carpets and homeware.

On Saturday mornings, Saifi also hosts a terrific farmers’ market, Souk el Tayeb, where locals buy organic veg, aromatic spices, flatbread brushed with herb-infused oils, the deep-fried lozenges of minced lamb and cracked wheat they call kibbeh and exquisite home-made marzipan.

That said, it would be a shame to spoil your appetite for lunch, especially if you’ve booked a table at, say, Casablanca, an old villa on the Corniche with modern interiors, sea views and a menu rich in slightly Asian takes on local fish.

Beirutis dine late, after which the beautiful people gather in the bars of Gemmayzeh, immediately east of Saifi and 10 minutes from Le Gray.

For the moment, the place to be is Myu on rue St-Antoine but next weekend sees the opening of Bar ThreeSixty on top of Le Gray, a glass-walled, blue-lit, lantern-shaped structure with jaw-dropping views. Beirut’s beau monde won’t be long in making it their own.

DETAILS

The flight
BMI flies daily from Heathrow, returns from £429.40, www.flybmi.com

The hotel
Le Gray has doubles from $346.50, www.legray.com

The restaurants
Casablanca Ain el-Mreisseh, Corniche (0011 961 1369 334) Myu Rue St-Antoine (0011 961 334 476)

Tours
Black Tomato offers a Beirut-based four-day package from £1,105pp that can include skiing, from January to March, as well as visits to Baalbek, Byblos and into the Bekaa Valley, www.blacktomato.co.uk, www.lebanon-tourism.gov.lb

Tair Falsieh gathering up the tails of blast media rumors
As if they had been waiting for some event, Israel initiated with the first news of the explosion Tair Falsieh to exploit it and put it in the context of breach of resolution 1701, and lodge a formal complaint against Lebanon in the UN Security Council, led in his news headlines Hebrew media, which aired a videotape allegedly Army occupation that «prove» that Hezbollah the means of escape from the combat scene. Quoted a delegate of Israel to the United Nations, Gbriila Shelef, complaint against Lebanon to the Secretary-General of the United Nations Ban Ki-moon, and the President of the Security Council. Claims Tel Aviv through the complaint, that the event is a «serious breach of resolution 1701», and to talk about «a second explosion of a weapons depot belonging to the Hezbollah in the past three months, and it proves that the organization maintains a weapon is illegal south of the Litani River, and build military infrastructure in the region ».
The following Shelef, in its letter, that Hezbollah «use villages inhabited by civilians for the storage of ammunition … In this way the (Hezbollah) have used residents as human shields ». He also pointed the finger at the Lebanese army, saying that the «parties in the army (Lebanese) turn a blind eye deliberately building up Hezbollah, renewed infrastructure in southern Lebanon», stressing that «the Lebanese government responsible for each event is located on the territory».
A spokesman for the Israeli army had been circulated the tape, which says that an Israeli drone image of the sky of Lebanon. The video shows a persons occupation they claim «Hizbollah militants in possession of the means of combat on the back of a truck in an attempt to smuggle them before the arrival of UNIFIL and the Lebanese army to the scene», with reference to the pictures are not clear. Continues to monitor the video trucks that came out of the scene. The Israeli military claims that it «went to another store in the village of Deir Qanun river».
In turn, accused the Israeli President Shimon Peres, Hezbollah as «exposes Lebanon at risk», and saw that Israel «re what was to be returned to Lebanon», and therefore they «are not a threat to Lebanon». The Peres, during a speech at the Galilee, that «there is no reason not to be peace between us, was in Lebanon could become a Switzerland of the Middle East, but Hezbollah is destroying Lebanon as Hamas, the Palestinian Authority Palmyra». And Perez expressed his confidence in «we will be victorious in the field of security and other areas as well».
According to Israeli media that the army of occupation, called UNIFIL forces to investigate the explosion, on the background as evidence that Hezbollah continues to smuggle weapons into southern Lebanon and hiding in the houses, contrary to Resolution 1701. And saw an Israeli military spokesman said the blast «a continuation of the explosion in the Armory in Khirbet peace», on 14 July.
The former chairman of the research division of Military Intelligence, Brigadier General Jacob Amidror reserve and saw that the “explosion Tair Falsieh enabling Israel to achieve political gains achieved if the international forces of the incident, and this is what will not be, because it will violate the Hezbollah point of resolution 1701, and this is precisely what Israel will want working on the show ». But he pointed out that the talk about the «active filter or store a weapon of bombing would weaken the party, is the word of exaggerated».
I tried some of the Israeli media suggest that there is a role for the Israeli security services in an explosion Tair Falsieh over the question of the fact causes, although the result of a technical error, or the work of the long arm of Israel.
Some Israeli media have suggested that there is a role for the Israeli security services in the blast
The “Ha’aretz” that “Israel is following developments in the preparedness of southern Lebanon since the explosion to make sure that Hezbollah will not try to ignite the front with Israel in the wake of the explosion.” The “Maariv” newspaper quoted a security sources said that “there are aerial photographs that show for a second bombing in the village in the wake of the first explosion, and that Hezbollah seeks to strengthen the offensive and defensive Mnzawmath in Lebanese villages.”
The field, according to correspondent “News” in the district of pictures (Amal Khalil) that the people of the village, who slept the night of the explosion to rumors talked about the killing of Jesus and his son, 3 others, and the house was destroyed by an explosion of an ammunition depot in the garage, woken by the White Btbakte erected without damage, as Jesus himself Touring the whole health of the journalists in front of his home, the future well-wishers on his recovery. The son, still since before the incident in Beirut, where he lives and teaches at the university, and found no trace “of the three men” alleged: What Every one is infected, one of the elements of civil defense, the result was suffocating smoke, fire, and is treated.
Surprising that seized people from inflating the media of the accident also appeared on the Lebanese army soldiers and members of the Italian contingent, who flocked in the morning, to impose the necessary measures, as many have expressed surprise at the limited damage that focused on the burning garage, which is an area of 4 square meters.

More than 200 Harley Davidson bikes checked in at the InterContinental Mzaar Mountain Resort & Spa on their first night in Lebanon.

Designated by the event’s organizers as Lebanon’s most prestigious and trendy hotel, InterContinental Mzaar was proud to accommodate the 1st Lebanon Harley Owners Group H.O.G. Tour, an officially recognized event organized by the H.O.G. Lebanon Chapter for Harley-Davidson owners only.
“The resort’s alpine architecture, spacious guestrooms and cozy lobby were perfect for kicking-back and relaxing after a day-long ride” explained one of the bikers enjoying a sip of coffee in the hotel lobby along with his wife/bike partner.

After spending a refreshing night at 2000m above sea level, the riders enjoyed the exquisite Mzaar buffet breakfast before gathering in front of the main entrance, ready to take off to the Cedars, their next destination.
Dressed up in original Harley Davidson gears, the bikers coming from all over the world were riding along the scenic Lebanese roads from seaside’s to winding mountains in a fun-packed adventure until reaching the resort where they lived an authentic InterContinental Mzaar Experience.

© 2009 Al Bawaba (www.albawaba.com)

Mohammed Zuheir Siddiq, a former witness in the inquiry into the assassination of ex-PM Rafik Hariri, was sentenced Monday to six months in prison and deportation from the UAE for entering the country on forged passport.

The sentence was handed down by Abu Dhabi Supreme Court.

Siddiq, a former Syrian intelligence agent, came into the United Arab Emirates with “a false Czech passport provided to him by French intelligence services,” his lawyer Fahd al-Sabhan told the supreme federal court on Monday, the daily Gulf News said.

The lawyer said that Siddiq, arrested in the UAE, had asked for refuge in the country, whose authorities knew he was heading there, the Gulf News said.

Contacted by AFP, Sabhan refused to comment on the case.

Siddiq, in initial reports of the United Nations inquiry commission, was described as a key witness in the February 2005 killing of Rafik Hariri in a huge seafront bomb blast in Beirut.

Nicknamed the “king witness”, Siddiq claimed that Lebanon’s former pro-Syrian president Emile Lahoud, and Syrian President Bashar al-Assad had given the order to kill the wealthy businessman who had become opposed to the grip exercised by Damascus over its tiny neighbor.

But later, Siddiq recanted and Lebanese and Syrian judicial authorities accused him of lying.

In May, the prosecutor at the international tribunal charged with bringing Hariri’s killers to justice said that Siddiq was no longer a credible witness and was of no interest to the inquiry.

Siddiq had been detained in France in a Paris suburb in 2005. He was freed in 2006 and disappeared from his French home in 2008, to reappear in the United Arab Emirates.

According to New TV, Syria has filed a request to UAE to get back Mohammed Zuheir Siddiq through the interpol. The neighboring country considered that the Emirates has no other choice but to turn him over to the International Court or to send him back to Syria which is waiting for him with open arms. (AFP-Naharnet)

According to a recent report by Mercer, a US consulting firm, Beirut is one of the least hospitable places on Earth when measured against the firm’s annual “quality of life” index. It ranks 175th out of 215 countries surveyed. I find this news a little hard to digest. Even within the Middle East, the people at Mercer say the Lebanese capital doesn’t perform well. They say its “quality of life” trails behind that of Kuwait City, Riyadh and Jeddah.
Why then is everyone dying to be in Beirut?
The New York Times has rated the Lebanese capital number one city to visit in 2009. This summer thousands of Saudis, Kuwaitis and other Gulf Arabs flooded its streets, as they do every year, eager to spend loads of cash in the city’s luxurious bars, restaurants and hotels.
Yes, tourism and quality of life are totally different indicators, and Beirut has many problems politically and econo mically. Corruption is widespread, there is a huge gap between rich and poor, traffic and state services can be terrible. But these problems exist in different forms in other cities. (Why does it take me 45 minutes to travel 5 kilometers in NYC?)
Plus the Mercer survey is not about reporting wealth distribution or political mobility for average citizens. It’s intended largely as a tool for multinational corporations in assessing hardship allowances for executives sent to live abroad.
Judging by the endless stream of parties thrown by diplomats and executives in Beirut, I wonder how “quality of life” is defined.
Beirut has its disadvantages and so do other cities on the list, especially in the Middle East. But when it comes to climate, geography, attractions, cultural diversity, entertainment, dining, social life and personal liberties, Beirut is at the forefront. (Thus the high tourism numbers, especially from Arab countries.)
Perhaps these factors did not carry much weight in the final assessment; but again, how does one define quality of life? Is infrastructure more important than entertainment and social relations?
I admit, doing business in Beirut can be challenging yet at the same time, the cost of living (such as groceries/rent) is much cheaper than Western capitals – while income taxes are relatively non-existent. Yes there is political violence (aimed mainly at politicians), but crime is insignificant compared to Europe and the US.
Beirut has plenty of other problems: the Internet is slow, cell phones are expensive – but these are offset by panoramic views of the sea on a daily basis, cheap housing, beaches, mountains, sking less than an hour away … beautiful retreats urban and rural, layers of fascinating history to explore, exciting nightlife, the list goes on and on …
It may not be conventional, but Beirut definitely has quality of life, heaps of it. To rank the city 100 places behind Dubai and 125 places behind New York and 50 places below Kuwait just doesn’t seem right.
Perhaps it would be interesting to visit other cities ranked on the bottom of Mercer’s list and see if “quality of life” there is really as bad as they say it is.

Habib Battah is a freelance journalist and documentary filmmaker based in New York and Beirut. He blogs at www.beirutreport.blogspot.com

BEIRUT: A total of 730 parking meters have been erected throughout Beirut, as part of the Urban Transportation Development Project, sponsored by the Lebanese government and World Bank. Beirut residents will recognize the rectangular, silvery, high-tech looking machines adorning streets such as Hamra, Verdun, Bliss, Corniche al-Mazraa, and other areas both commercial and residential. Originally, only 100 meters were added to specific areas as part of a pilot test program and due to positive response, the project was able to be fully implemented allowing for all 730 intended meters to be installed.
Elie Helou, the engineer responsible for the project, stated that “there is very good public response and acceptance,” noting that there has not been a single vandalism incident.
Each solar-powered, computerized parking meter controls 12 parking spaces and accept coins, cash, debit cards, and credit cards, technology that is rare to find even in most American cities. Motorists receive a printed parking slip from each meter that is placed on the dashboard of the vehicle to designate that they have properly paid for the space in the designated time.
The main purpose for these meters is to shorten the length of time that motorists can park in designated areas for, creating greater availability of parking spaces in streets where it was impossible for short-stay visitors to find one, explains Helou. He adds that this has a positive impact on businesses since consumers can park easily, finish their shopping, and continue home. In the past, cars parked for long amounts of time made it difficult for visitors to find parking.
“We see drivers abusing parking spaces when they go to work for 5 hours but leave their cars in the same spot for 12 hours” says a ministry of interior representative. With parking meters, drivers are forced to limit their time in a specific space so that other drivers can use the same space. Aside from creating more availability of parking spaces, this also lessens the number of cars parked on a road, reducing traffic congestion.
Though overall, the project has been met with positive response, MP Mohammad Qabbani says that there has been some negative backlash in residential areas. “People are complaining that they have to pay to park their cars in front of their homes” explained the MP. He explains that this has been an issue on Bliss Street specifically. On streets like Bliss, that are both commercial and residential there seems to be a tension because residents may not want to pay for parking where they live but business calls for an improved parking situation.
But Helou explains that the flexibility of the parking meters allows for such concerns to be addressed explaining that parking meters’ operating times are adjusted based on residents’ commuting hours so that “densely residential areas have operating hours that are shorter than business areas” allowing more time for residents to park free of charge, making these concerns minimal in comparison to the overall positive response.
If further expansion of parking meters were to occur, Helou believes that it may include areas such as Jdeideh, Bourj Hammoud, and Jal al-Dib. These of course are largely residential municipalities and expansion to these areas will only occur upon the request of the municipality and will not be under World Bank Funding but will require local financing.

BEIRUT: Solidere organized on Thursday a media tour around the newly opened Beirut Souks project, which has been rebuilt in its same original location. The tour, which was intended to introduce the project to the media, introduced journalists to the the traditional souks which have been built with a contemporary new design, while keeping the site’s main landmarks intact.
Solidere officials told The Daily Star earlier that the revenues are expected to rise next year once the souk opens.
They added most of the shops in the souk have already been booked by prospective merchants and investors.
Thursday’s preview coincided with the opening of the first few retail outlets, ahead of the project’s grand opening by the end of the year.
The company said in a statement that the Beirut Souks form a modern commercial district that stands apart from all other contemporary commercial centers and malls.
“The unique concept safeguarded the Souks’ historical street grid and brought back to life their historic names; some are covered Souks like Souk al-Tawileh, Souk al-Jamil and Souk Arwam while others are open air such as Souk Ayyas and Souk Sayyour. These souks, along with the Intabli and Ajami Squares and the Gold Souks constitute the southern area of the development, which features retail outlets from different categories, offices, and a variety of restaurants and coffee shops,” the statement said.
The upcoming northern area will be delivered progressively over the next three years in two distinct phases, one consisting of a 14-cinema entertainment complex equipped with state of the art technologies, and the other consisting of a major department store with a landmark architecture.
Officials say that the flagship project by Solidere aims at restoring Beirut’s pioneering stature on the regional and international scenes: a business hub and touristic and cultural destination that attracts businessmen, investors, tourists and shoppers from all over the region.
“Besides being one of the most important commercial nodes locally and regionally, the project creates employment opportunities through the participation of a large number of Lebanese architecture, engineering and construction firms and other commercial institutions,” the statement said.
The Beirut Souks area will be accessible to the public as of Friday October 2, 2009. – The Daily Star

A military court in Beirut has sentenced two Lebanese nationals along with a fugitive Libyan man to life in prison and hard labor over charges of planning to murder Libya’s prime minister.

Military Examining Magistrate Fadi Sawwan made the ruling against Lebanese citizens Mehdi al-Hajj Hasan, his son, Haidar, and Libyan Abdel Salam Mohammed.

According to the senior judge, the convicts sought to carry out their assassination bid last June when they placed explosive charges inside a package bound for Libya.

The parcel was, however, seized by the Lebanese General Security before it could reach the North African state.

The two Lebanese men have explained seeking revenge for Imam Moussa Sadr’s disappearance along with his companions in Libya in 1978 as the motive behind their plot to murder the Libyan Prime Minister al-Baghdadi Ali al-Mahmudi.

Iranian-born Lebanese philosopher and prominent Shia leader, Imam Moussa Sadr, and two of his companions went missing during an official visit to Libya in August 1978. They were scheduled to meet with officials from the government of the Libyan leader Moammar Gadhafi’s.

The case has been a long-standing sore issue in Lebanon, where authorities blame Tripoli for the disappearance of the three. Libya, nonetheless, claims that Sadr and his companions left the African nation for Italy.

This is while, there are allegations that the top Shia figure is secretly being incarcerated at a detention facility in the mostly desert Libya.

BEIRUT: Lebanon’s economic growth could exceed the 7 percent forecast by the International Monetary Fund (IMF) providing the country maintains the relative political and security stability it has enjoyed this year, the central bank governor told Reuters on Friday. “It is essentially the consumption market. Tourism was good. The activity this summer was at record levels,” Riad Salameh said, explaining the performance of an economy that grew by more than 8 percent in 2008.
An IMF staff visit to Lebanon in September concluded real gross domestic product could grow at around 7 percent in 2009 – more than a previous forecast of 4 percent.
“This can be achieved and even more, provided we keep having this environment of political and security stability,” Salameh said in an interview at his Beirut office.
Lebanon’s economy has largely shrugged off the effects of the global financial crisis and economic slowdown. The country has been helped by a more stable climate since May 2008, when Qatar mediated a deal to defuse a deep political crisis.
Remittances have poured into Lebanon over the past year – a trend which Salameh said would produce a 20 percent increase in bank deposits this year.
High interest rates on the Lebanese pound combined with the country’s relative stability have encouraged depositors to switch their funds into the local currency. As a result, liquid foreign assets at the central bank, which intervened to mop up excess liquidity, have almost doubled in a year, Salameh said.
T-bill interest rates have responded by gradually declining. The 6.34 percent yield on a 12-month T-bill issued last week was more than a full percentage point lower than the January rate.
“This decline is not hurting at all the sentiment vis-a-vis the Lebanese pound,” Salameh said. “The markets are satisfied with the level of rates as they are and we are watching to see at what level this decline will really have an impact on the [deposit] inflows,” he added.
“Our view is that the rates of interest will remain stable or decline slightly, but we are not foreseeing any increase in the rates,” he said.
Salameh said the proportion of bank deposits held in dollars now stood at 65.5 percent – a fall of more than 10 percent since early 2008, when the political crisis hit a nadir, spilling into armed conflict.
Until July, the central bank had been mopping up liquidity through issuing 5-year certificates of deposit. The central bank now hopes that credit markets and the private sector will absorb any excess liquidity.
“We are trying to encourage lending in Lebanese pounds. If this effort is successful, there might be a drastic drop in dollarization because the economy will start demanding the Lebanese pound for its activity,” he said. Eighty-five percent of all loans currently made are in dollars, he added.
The bank has issued several circulars to encourage lending in Lebanese pounds. A campaign has recently been launched to encourage home loans in the local currency. “There is a positive response from almost all the banks,” Salameh said.
Credit demand could grow quickly upon the formation of a new government, which may seek project finance, he added.
Source Daily Star