Riyadh, Asharq Al-Awsat—The expression “when Xyou sneezes, YI catches a cold” could have been coined to describe the relationship, both political and economic, between Syria and Lebanon. Joined at the hip since their birth as independent states, instability in one quickly spills over into the other.
With the fighting in Syria now entering its third year and the country and its people falling into ruin, Lebanon——despite often being a beacon of prosperity in a troubled region——has experienced sharp declines in several key sectors of its economy as the fighting has worsened. Asharq Al-Awsat spoke to Vrej Sabounjian, the country’sa former Lebanese minister of industry and now the CEO of a successful food processiong company, about Lebanon’s attempts to cope with the crisis in its larger neighbor.
Asharq Al-Awsat:As Lebanon’s former Minister of Industry, how do you assess the state of industry in Lebanon today, the challenges it faces, and its growth rate in light of the crises in the region?
Vrej Sabounjian: Lebanon’s situation today is affected by its surroundings. A crisis has been under way for three years, and we are affected by the events that are unfortunately unfolding in Syria. Thus the economy has been impacted in some sectors, such as tourism, which has fallen by 50 percent. We no longer see the number of tourists we used to see. It has been by far the most affected sector. The industrial sector is unlike others. It hasn’t been affected too much, except for the fact that a variety of industries and products that used to come to Lebanon from neighboring countries no longer reach us, as the roads between us have been closed more than once due to these incidents. Before, we imported certain products related to particular industries. That trade stopped because of the [conflict]. But in general, growth in the industrial sector is outpacing growth in other sectors by more than 20 percent.
Q: Why has the industrial sector in particular been less affected by the conflict in Syria?
For several reasons, including the fact that Lebanon currently hosts more than a million Syrians. They are a big consumer base for consumer products of industry, in particular food. It creates a sort of balance between what the sector lost from the foreign market and the availability of a domestic market at the same time. Second, the foreign markets developed at a time when the domestic markets retracted. Lebanese businessmen in general, and industrialists in particular, focused on foreign markets, bringing growth to Lebanese exports. The growth of exports is rising annually by between 10 percent and 15 percent. This has helped us a little bit in maintaining relative stability in Lebanon’s economic situation.
Q: How much does the industrial sector contribute to gross domestic product (GDP)?
According to some figures, the industrial sector contributes between 10 percent and 15 percent to GDP. It contributes greatly to economic stability in Lebanon, given the complexities of domestic problems and the Syrian [crisis]. Foreign markets are therefore very important to us. Our country has many great opportunities despite its small size, given its diverse interests. I personally encouraged industrialists to connect with Lebanese expatriates to help open up their respective markets to Lebanese products.
Q: What role can Arab markets, and especially the Saudi market, play in Lebanon during such times?
Of course, the Arab markets are overall very important for Lebanon during such highly complex circumstances. Naturally, the Saudi market comes at the forefront of these markets. However, we also care about the African markets, because they are home to many Lebanese expatriates.
Q: To what extent have the Syrian crisis and domestic problems contributed to the decline of the Lebanese economy?
As I mentioned earlier, there are some sectors, such as tourism, which have declined by more than 50 percent, and some whose growth has slowed. This is especially true of sectors connected with tourism. At the top of this list is real estate, which completely froze, as did its corresponding sectors. Industry and services performed well and bore the burden of realizing economic equilibrium. But in total, the economy has grown by 2.5 percent to 3 percent.
Q: What are the most important Lebanese industries for the economy?
Among our important industries are computer software, electrical generators, food and food products and the fashion industry. There is also hotel equipment, electronic equipment and other industries that have gained prominence around the world. Exports have experienced significant growth. So I think that in this globalized economy we must have globalized companies and partnerships between all countries. We need partnerships between Lebanese and non-Lebanese companies—especially their counterparts in the Arab countries, and especially those that work in Saudi Arabia, with remarkable success.
Q: What about the state of the Lebanese real estate market and the extent to which it is influenced by the tourism sector?
Real estate right now is at rock bottom. It froze a year and a half ago after events worsened and the situation became direr. It had a significant impact on the economy and the investors who put their money into this sector. I hope that we overcome this difficult situation and that Lebanon returns to what it once was.
Q: In your opinion, what are the highest aspirations of Arab businessmen for their governments?
I think that all businessmen and economists have high hopes. It is therefore imperative that our Arab governments work towards achieving their goals by building factories and companies. They must also adopt business-friendly systems . . . Quite frankly, I’m worried about the migration of Arab capital to foreign countries. Officials must create adequate space and suitable ground upon which businessmen can invest in Arab countries, instead of other countries. Despite the fact that I’m against foreign investment, I recognize that it is important because of the both the employment and the global expertise it brings. However, it is necessary to create space in Arab countries for Arab investors to invest in new ideas and projects.
Q: What ways do you see of improving the prospects of the Arab economy in the light of this complex situation?
Personally, I strongly advocate a policy of integration and acceptance surrounding mutual buying and selling. Also, I see it as a roadmap for successfully overcoming the issues of mergers and acquisitions. We’ve seen some states, such as China, emerge into the global economy. The question that arises is why we don’t operate like these countries that have joined the global economy. We must recognize that our market does not have the force of 1.3 billion people, [but] we do however have active and important markets in Arab countries. Arabs must therefore unite economically.
Q: What is your assessment of the shape of Saudi–Lebanese relations in the future?
First, let me emphasize that in this regard Saudi Arabia is the older brother of all Arab countries, so we are naturally keen to have a very strong relationship with it. We are accustomed to this in Lebanon; strengthening bilateral relations at all levels is nothing new for us. I hope that we look at issues from a long-term perspective, that we are realistic, and that we secure the future for coming generations in all Arab countries.
Q: Some observers from the international community have accused Lebanon of not being serious about solving the Syrian crisis. Do you have any comment on that?
I look at this issue in terms of interests. So I think that the international community has economic interests that have made it slow and indifferent in finding a quick solution to the Syrian crisis. At the same time, we have our own interests and we must look at these issues in terms of our interests as well. Also, as Arab countries, we must say to the international community that we have the right to live with dignity and to have a secure future. Arab countries represent an international community in and of themselves, and should be seen as such. In addition, we must end the perception of inferiority of the Arab community; Arab opinions must be taken into consideration when determining the future of the Arab community and Arab voices must be heard. It is this voice that unanimously agreed on the need to find a quick solution to the humanitarian disaster experienced by the Syrian people, who currently live as displaced persons and refugees and lack the most basic rights to life, food, education and medicine.
This interview was originally conducted in Arabic.