[LCM Articles] Robert Fisk: Financial doom and gloom is everywhere - except Lebanon

[Loai Naamani]

October 25, 2008

Robert Fisk's World: Financial doom and gloom is everywhere - except Lebanon

Beirut's Blombank has just boasted a record 34 per cent rise in profits

A monster roars all day - and much of the evening - next to my Beirut home.

My landlord Mustafa sits in his little soft drinks store downstairs with his
fingers in his ears. I work in The Independent's office, windows tight shut,
as a slurry of fine powder pours below the frame, coating archives and
books, laptop and printer (and Fisk), with a patina of brown, greasy dust.
Yes, I have a building site right next door, where diggers roar in an effort
to build a spanking new twin-towers apartment complex. All over Beirut, it's
the same, the skyline constantly transformed by housing projects and
high-rise office blocks. Yup, that's right. In Lebanon, in a country whose
name is still synonymous with war - and in a world where capitalism is
enduring a collapse of biblical proportions - business is booming.

Now readers, I am not - I am absolutely not - advising you to invest in this
little statelet, with its sectarian government and mass graves and squalid
Palestinian refugee camps. I am not an economist. At school, I failed
O-level maths three times and as a result lost an offered place at Liverpool
University. But someone needs to explain to me how this little Middle
Eastern cabbage patch is bouncing along so happily amid the cyclones ripping
through the world's economy.

Beirut's Blombank has just boasted a record 34 per cent rise in profits in
the first three quarters of this year. The chairman of Audi Saradar Bank,
who happens to be minister for the displaced in the Lebanese government,
says that Lebanon is expected to record its highest GDP growth in many
years. House prices continue to soar. And this in a nation that suffers a
$45.5bn public debt. So out came the little leather-covered Fisk notebook
this week to garner words of Lebanese wisdom from the men (few women) who
know the secrets of the country's financial miracle. Well, it turns out the
Audi bank did lose about $20m with Lehman Brothers but made a hair's-breadth
escape from the Wachovia collapse because the maturity date on its $200m
deposit investment fell on 3 October. In all, Lebanon's 58 banks made about
$750m profit this year. And why does this money look so safe? Because three
years ago, the Lebanese Central Bank forbade all commercial banks to go into
derivatives. Not one Lebanese bank made any investments in US sub-prime
mortgages. Commercial banks, in fact, are prohibited from making real estate
investments anywhere outside Lebanon.

Lebanon, of course, has no oil - or has it? Back in 1976, when Ghassan Tueni
was minister of petroleum, most of the world's oil conglomerates showed
interest to explore parcels of sea-bed off the coast between Batroun and the
northern city of Tripoli. But the day Lebanon was to open offices for the
bids in Tripoli, fighting broke out there between Syria and the
Palestinians, embracing the very area where staff would be working. Then in
1980, Lebanese economist Marwan Iskander suggested to then President Elias
Sarkis that the exploration bids should be opened again. Iskander offered a
large Cuban cigar when he told me the Sarkis story. For some reason, all
Lebanese smoke cigars when they are talking about financial folly.

"When I made my suggestion, Sarkis turned to me and said: 'Look Marwan, the
Lebanese are crazy without oil. If we get oil, they'll go out of their
minds! Anyway, if we did find oil, the Syrians are not going to allow us to
export it.'" Today, the Syrians have - politically - returned to Lebanon and
the Siniora government is in no hurry to discover oil reserves under the
Mediterranean.

But the Lebanese may have a commodity as wealthy as oil: it is the only
country in the world that has 35-40 per cent of its population working
abroad, and they are sending home about $7.5bn a year. Lebanon has also
received $1.3bn of its $7.6bn Paris aid commitments - which will total
$7.6bn after Lebanese government reforms. Not to be mentioned, by the way,
is the estimated $1bn which the Hizbollah militia receives from Iran each
year. So much for America's ability to "staunch the flow of money to
terrorist organisations".

As for the public debt, no problem. At least $24bn of the $45.4bn is in
foreign currency and $21bn in Lebanese currency. But 80 per cent of the
foreign debt is held by Lebanese banks or individual Lebanese businessmen
who have no interest in taking their own country into bankruptcy; they are
quite happy to go on taking their massive interest payments. As for the
internal debt, Siniora can print more money if anything goes wrong.

Phew, that's the first time I've ploughed into the profit and loss of this
strange country. In the hell-disaster of the Middle East, it's almost
comical to find that Lebanon - politically, a Rolls-Royce without wheels -
manages to make ends meet. Should the world learn anything from this? Next
time we meet, I told Iskander on Thursday, he can define a "derivative" for
me. "No," he said, "you can explain it to me!"

How do the Lebanese do it? By being optimistic. Surprisingly, few of them
know T S Eliot's dark warning to their ancestors, the Phoenicians. In "Death
by Water", he wrote: "Phlebas the Phoenician, a fortnight dead,/ Forgot the
cry of gulls, and the deep sea swell/ And the profit and loss./ A current
under sea/Picked his bones in whispers/ ...O you who turn to the wheel and
look to windward,/Consider Phlebas, who was once handsome and tall as you."

But who in Beirut cares about Phlebas under the Mediterranean? The day may
come when the Lebanese can find, richer, darker treasures beneath his bones.

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