The recent visit to Lebanon by Iraqi Prime Minister Iyad Allawi produced little in the way of progress on three pressing economic issues: the fate of $500 million deposited by the previous Iraqi regime in Lebanese banks (now in the custody of the central bank); alleged losses incurred by Lebanese exporters who say contracts with Iraq, or Iraqi trade pledges, were not honored once the war ended; and the drastic drop in Lebanon-Iraq trade because of security concerns, which were accentuated by the harassment and kidnapping of truck drivers and businessmen, some of them Lebanese.
For example, the Port of Tripoli has registered a 50% drop in Iraq-bound trade, while road transit from Lebanon to Iraq has plummeted by 70%, denting any optimism generated by Lebanon’s $197.1 million cumulative balance of payments surplus for the first five months of 2004.
“Up until now, there has been nothing on the economic issues,” said Fadi Abboud, president of the Lebanese Industrialists Association. Although the oil, gas, transport and currency sectors were all discussed, observers said Allawi’s visit was primarily of a political nature, designed to improve diplomatic relations between Syria and Lebanon on the one hand, and Iraq on the other. “As long as the security situation in Iraq remains as it is, nothing will be done with respect to the economic matters discussed during Allawi’s visit,” Abboud added.
“I don’t think the issue of the Iraqi deposits will be resolved in the near future,” opined economist Kamal Hamdan. “It will depend on the political situation in Iraq. We may have to wait for elections there, and a legitimization of the political structure.” Hamdan predicted that Lebanese exporters would, eventually, be compensated for actual contracts not honored by Iraq. But he said that Lebanese exporters hoping to be compensated for investments they claim they undertook in response to informal import agreements could be disappointed, in part because of the difficulty in verifying such claims.
