Special Report: Lebanon - Building on political stability

29 August 2008

The political agreement reached in Doha on 21 May has finally given Beirut a sense of stability that has long been lacking.

Talks on the formation of a new government had been deadlocked for 18 months, and it took the mediation of Qatar and the sight of Hezbollah rolling convoys of paramilitaries into the capital to shake the negotiating parties into a compromise.

The election of President Michel Suleiman has not been without its detractors, but it is a solution that is supported by the country’s major political factions.

Lebanon’s political instability and lack of natural resources have long left it reliant on foreign aid and remittances for its economic wellbeing. With global food and fuel prices higher than ever, its fiscal deficit reached 12.9 per cent of gross domestic product in 2007, according to the World Bank.

Bold plans are being considered to privatise the national telecoms operator and the loss-making state electricity company, and the real estate sector is booming. But politics is still hampering the freeing up of capital to invest in infrastructure.

In the few months that remain before the next elections in 2009, the government must take advantage of the new consensus to address the country’s economic problems. The window of opportunity is a limited one, and it must not be missed.

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