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.