July 15th, 2010
05:47 PM GMT
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Beirut, Lebanon - The Marketplace Middle East team took a helicopter tour of Beirut while in Lebanon on special assignment. That tour took us over Solidere, the downtown zone being rebuilt after years of on/off conflict.

While there are still pockets of empty land, this skyline has filled up quickly and it is safe to say there is more to come.

Unlike the rest of the world which is trying to gather its footing after the three-year shock of the global crisis, financial assets and deposits surged in Lebanon during 2007 and 2009.

The numbers are staggering. This population of just over four million citizens has a banking system with deposits of $100 billion dollars. During that three-year window, $55 billion flowed into the country, just over 40 percent of that money in the form of remittances.

I combed over these numbers with Freddie Baz, the Group Chief Financial Officer and Strategy Director of Bank Audi and the leading economist in this small but vibrant country. I mentioned to Baz after being in Lebanon for a week, people from different generations speak of the “brain drain,” where the country’s youth go abroad for university and never come back.

Depending on who you talk to - particularly the mothers of these young adults - you get a fairly emotional response – the most predictable being that the government is not providing enough opportunity for all its talent.

But upon a closer look at the numbers, a different reality emerges. Lebanon is doing what it does best -  exporting top-flight human capital to the world.

For Lebanon, it is a gift that keeps on giving back to the country’s bottom line. The per-capita income is just below $10,000, the highest amongst 22 countries in the Middle East for a non-oil based economy and that according to Baz with Lebanon running at only 70 percent of real capacity.

Herein lies the challenge for the country. Right now, it has limited capacity to absorb all its talent. Finance Minister Raya Al Hassan told me that the government is spending an extra $1.5 billion in this year’s budget to build out the fraying infrastructure - especially roads and telecommunications networks.

If Lebanon wants to specialize in services beyond banking, the basics need to be brought up to speed.

That handsome sum was also seen as politically essential to get the budget through the complicated coalition that is all part of the political mix.

But, Minister Al Hassan is in the camp that believes the country’s best resource remains its human capital and that infrastructure spending should promote those sectors that can leverage talent.

The capital flows coming back into Lebanon are giving the finance minister and her government some breathing room for extra spending. The budget deficit remains in double digits and the long-term debt of nearly 150 percent of GDP tops Greece, which went to its European neighbors for a bailout.

One does not get such a sense of concern from either the government or its financial brass. I toured a new apartment building designed by Foster & Associates called “3 Beirut,” just off the waterfront downtown.

Sixty of the 150 units are already sold despite a delivery date of 2014 and prices range from $7,500-$10,000 a square meter. What we are looking at here is a scenario where downtown Lebanon is on-par price-wise with West London or mid-town Manhattan and nobody blinks an eye.

In typical Lebanese fashion people live for the moment, whether it is a superb lunch at a French brasserie, one of the beach lounges or fabled nightclubs. The people here have been frontline witnesses to nearly everything, where conflict is all part of the equation and survival.

Again, the numbers tell an interesting story. After the tragic death of Prime Minister Rafic Hariri and the 2006 war, some $3 billion left the country each time, but not for long. Within a period of 18 months, that sum and more came back into the banking system.

The country and its people dust themselves, regroup and move forward - with the help of their number one export all along the way, which continues to give back.



soundoff (30 Responses)
  1. TMS

    Great article. I would have preferred a better picture of Beirut though. Loved the last sentence.

    July 17, 2010 at 6:22 am |
  2. mark santorini

    wowww good news and congratulations for the extra money you did guys ,,, but as a foreigner speaking could you please use a hence of that money towards cleaning the roads from the piles of rubbish and junks ,,and the beaches from the floating objects,, like plastic countainers and food and medical stauff including glass bottles and stuff,,,could you use a regulations and educate peoples that life is inportant when it gets to drive on the roads ,,coz it seem to me life is the cheapest thing in a very expensive country ,,, education is the key to knowlege and to enjoy life away from been a barbarian steaming towars the the fast lane to end his life and his kids with him on a motorway ,,, wish you all the best ,,hope i see a different then the time i came here ,,, keep working hard harder then ever to achieve a goal and that goal called ,,,, clean me up im waiting
    mark santorini ... british citizen

    July 17, 2010 at 8:49 am |
  3. Francis Doumet

    Remittances from expats are a in fact a mixed blessing. They do indeed help bolster the economy from the outside, as the article suggests. But it also contributes to significant inflation in the country. All the capital inflow eventually contributes to a raise in prices, to the detriment of the local population which often struggles to keep up with the increased cost of living. Especially as local salaries are not updated frequently enough to reflect this inflationary effect. The article is wrong, for example, in saying that people don't 'blink an eye' to real estate prices matching Manhattan's. These prices are affordable to the country's many expats, but their end result is a local population being increasingly pushed out of the city center to the outskirts. The people that make up the latter group do indeed 'blink an eye' and much more. But the problem is that they are rarely listened to, let alone accounted for, by macroeconomists.

    July 22, 2010 at 2:24 am |
  4. Georges Fadel

    is this the only picture you could really find on downtown beirut ???
    its very obvious you have never set foot in lebanon.
    you speak of 10.000$ per square meter, why dont you show the picture of that building or of that area ?

    July 22, 2010 at 7:48 am |
  5. talal abboud

    In Lebanon just like most places around the world no more middle class,you are either rich or poor,it is a very contradicting society where some people have no money to eat and others blowing $5000 on a saturday night in a club.Political stability is the barometer of the economy,this country needs real peace and for this to happen Lebanon is to be left alone away from political interference and presuures from various influential countries in the region and abroad.There is a common say in Lebanon "give us peace and you will see an astonishing Lebanon".People from all sects can live peacefully together but for this to happen,we say "hands off lebanon,everybody"..

    July 22, 2010 at 8:12 am |
  6. maryna kazakova

    good news for lebanon and the peoples who i admire a lot ,,,,i was here for 2 months and i cannot remember how many times i was closer to callopse in the car next to a friend coz of these crazy drivers carrying kids and family trying to even over take the car in front of them on the fast lane towards the curb ,, i never seen stuff like that in all my travelling experience ,, and im amazing about these gipsy uncleaned little kids running and climbing my car asking for money selling some crap ,,, and the police standing busy speaking on his mobile phone ,, or smoking a cigarette ,, what kind of country is that if they have a base of living,,, its expensive i agree but what for ,, so you spend a 400$ in a flushy restaurant and when u go back on the road you be parying to come back home safe ,, and you digeste the food faster then ever coz of all this risky movement you have to make driving a car ,, i think its easy to take the space shuttle to moon then drive in lebanon ,,,, well enough said realy i just wish one day they relize what they doing to there country and them future ,, the rubbish i better not comment on ,, i was wishing i had an extra money just to buy some extra bins and trash buckets to put in every corner ,,coz you bearly find one ,,, may god forgive you the way you treating this lovely peice of land ,,, ,,,,,one exemple in my country say ,,, if you not clean in your own house its sure you not clean outside it ,,
    wish the government all the best for trying hard ,,but it still lots to do ,, if you realy want more tourists
    thanks
    marina kazakova

    July 26, 2010 at 9:42 pm |
  7. R Trieger

    the reporter says:
    The per-capita income is just below $10,000, the highest amongst 22 countries in the Middle East for a non-oil based economy.

    First, the per capita for Lebanon on 2008 was 6400$...
    second, he forget to mention that in Israel (well within the Middle east and a neighbor to Lebanon), the per capita is 24.000$.

    you can find it all here:
    http://www.doingbusiness.org/ExploreEconomies/economycharacteristics.aspx

    do you homework CNN!!!!

    July 26, 2010 at 11:35 pm |
  8. JOHN 3:33

    LEBANON SHOULD BE A CULTURAL PLACE,BRING MORE TOURIST BY BOAT AND AIR LINES,OPEN TRADES .
    THEY SHOULD BUILD HIGHWAY SYSTEM FROM LEBANON TO TURKISH BORDER FOR TRUCKING AND TRADE.
    OPEN BORDERS FOR TRADE.

    July 27, 2010 at 2:15 am |
  9. lara abdul malak

    and yet again Lebanon makes headlines :).... hope its always this type of headlines....

    July 27, 2010 at 2:01 pm |
  10. Steve

    To R Trieger

    The GDP of Lebanon is actually way above the $10,000 mark you are questioning! According to the CIA Factbook, which is a US intelligence agency the GDP for 2009 was $13,100.

    source: https://www.cia.gov/library/publications/the-world-factbook/geos/le.html

    The growth rate is hovering between 7% and 9% on a yearly basis and even more during the worldwide recession that we have went through on a global scale! So yes the facts are incorrect, but the other way around. Also, it is very important to note that it is estimated that the GDP is 50% higher than what is known because of the Grey Market in Lebanon and the banking secrecy laws. Estimating wealth in Lebanon cannot be evaluated by general Western traditional measuring tools because many of the micro and macroeconomics of this country do not entirely comply with the "normal" international way of doing. lebanon has its own distinct ways and as the international auditors said again and again "we don't have a clue what you are doing and how you are doing it, but it works just great, so keep on doing it!"

    Nice article, very poor choice of picture. But then again, they do it on purpose, just like when they have a video of a reporter in Beirut, they always manage to have him posted right in front of the only destroyed or delabrated building left in the whole area, or even better, in front a palestinian refugee camp with little children lifting their fingers in a V for victory gesture... Always makes me smile out of dispair.

    July 28, 2010 at 4:43 am |
  11. Laura Lee Randall

    Was here ten years ago for the millenium, left August 2001 before September 11th. I returned after ten years!!! As the MEA plane turned revealing a glittering jewel in the night, a corniche full of activity, an extension to the fabulous Riviera Beach Club–And there was Beirut in all its splendor. Absolutely extraordinary! The sincere kindness of the lebanese is unrivaled. Hospitality with duty free shopping at midnight at the airport. I really do not know why I ever left. this small jewel of a country has everything. The base of religious history and archeology. I dare anyone to make a list of a minimum of 50 things the lebanese have given to the world thru medicine, engineering, history, communication, design and the cuisine. I have traveled around the world and found garbage dumps everywhere, including my own country, and even in central London. Make sure your own house is in order before you complain about a country that is known for outstanding service and hospitality. I can understand why the world is jealous, we have everything in Lebanon including the human talent which leaves a mark on the rest of the world. I LOVE LEBANON!!!

    July 28, 2010 at 1:10 pm |
  12. Laura Lee Randall

    Why did anyone who is a real photographer pick a photo that does not do justice to the country or reflect on its magnificent skyline? Courtney Kiley, the AMERICAN CNN photographer who lived in Beirut, would return from her grave if she saw this photo!!!! SHE LOVED THIS COUNTRY. As she had won many competitions for her news photos she would be shocked at this one. WHAT IS IT A VIEW OF LEMESOS, CYPRUS, NEW YORK, ATHENS, LONDON AREA OR WHAT?

    July 28, 2010 at 1:18 pm |
  13. Laura Lee Randall

    EXPENSE. There is something for every budget in Lebanon. There are jobs if you really want to work. There is more to a vacation than just grilling on a beach. Check out all the other activities in Lebanon and you will be pleasantly surprised. No wonder those people complain where ever they go. They go home unable to stand the clothes they are wearing from blistering sunburns and headaches from alcohol consumption beyond any normal budget limit.

    July 28, 2010 at 2:39 pm |
  14. Laura Lee Randall

    AND WE HAVE THE WATER EVERYBODY WANTS. THE NEIGHBORS BETTER THINK OF SOMETHING MORE IINTERESTING LIKE TRADING FOR WATER. It is high time the world starts taking better care of this jewel of a country called Lebanon.
    REGARDING PEACE. Everyone and I mean everyone says the same thing WE WANT PEACE. Let people live!!!! The lebanese have set an example for the world with what they are doing and intend to do with their natural resources. Yes we have pollution but so do you. Here we are working hard toward a program of hybrid cars etc.
    the cypriots could learn a lesson about peace from the lebanese. In my ten years on Cyprus I only saw people jealous and stubborn to the point where they will never be a united country and will forever remain divided with the UN to police the frontier at a tremendous cost and waste of the international communities time. In both countries the manipulation of foreigners is the biggest problem.

    July 28, 2010 at 2:53 pm |
  15. Laura Lee Randall

    REGARDING THE TRAFFIC AND DRIVING TECHNIQUES. Experts came to examine the traffic control and light system in Lebanon. They left with one comment "brilliant as it is". The traffic in Lebanon breathes like a vibrant living organism. Number of lanes will change automatically according to the time of day and speed accordingly. Very difficult for foreigners accustomed to following their nose at a traffic light. Once you get used to it, you will say the same thing pure brilliance. In other countries when the traffic lights do not function everything breaks down. Not here where they all were used to not having lights during the war.

    July 28, 2010 at 3:03 pm |
  16. Laura Lee Randall

    REGARDING BUSINESS. I have only one comment from one of the great businessmen when asked by a journalist for a comment, THE LEBANESE ARE THE BEST CRISIS MANAGERS IN THE WORLD. Business is the center party oscillating between the extremes. The result is creative, imaginative and profitable.

    July 28, 2010 at 3:08 pm |
  17. Laura Lee Randall

    REGARDING CULTURE. Lebanon has world class music festivals in the summer and innovative art galleries. Try the Beirut Art Scene under facebook. Visit the Museum of Khalil Gibran in his home town of Becharre in the cedars where you will find cedar trees indigenious to Lebanon. The museum is a monastery housing a collection of his painting and writings. The japanese government gave the new innovative lighting system showing respect to the writer and artist known for THE PROPHET. Over 40 million copies were published by 2004. It is on every serious reading list for literature. and has been translated into every language imaginable. Poets, writers, dancers, musicians and coreographers abound in such a rich culture.

    July 28, 2010 at 3:37 pm |
  18. Laura Lee Randall

    REGARDING TRAFFIC SAFETY. It is a lebanese that gave us the seat belt. A man called Ralph Nader.

    July 28, 2010 at 3:39 pm |
  19. Silvy Hoxha

    I never been in Lebanon, but I know that is a beautiful country, with beautifull, very intellegent, friendly, with a very good sence of humor people... and I am sure that Mr. Defterios could find some more interesting pictures from the pearl of ME. I strongly agree with the comments written by Laura Lee Randall.
    you guys are great..... heads up, and try to do the best for your country

    July 29, 2010 at 8:45 pm |
  20. Kareem Owaini

    I totally agree with the below comments, IS THIS THE ONLY PIC YOU CAN FIND. I visit lebanon quite often....why dont you show the buildings where units are selling upwards of $10M!!

    July 30, 2010 at 12:23 pm |
  21. WH Ghurabi

    Terrible photo of Beyrouth,Get real!

    July 30, 2010 at 9:27 pm |
  22. Laura Lee Randall

    REGARDING THE FINANCING OF CONFLICT: Some banking institutions make money financing transactions that cause conflict. From the debt the conflict breeds they gain control of a country. They do not even have to leave their offices to do this.
    Today we had an example of orchestrated conflict in order to create debt and hatred between two countries. It is high time people look at the newest and strongest enemy- THE SUN. THE SUN IS OFFICIALLY ACTIVE. THE SUN IS NOT A POLITICIAN OR A BANKER. Each time a solar flare or solar wind storm is hitting earth it creates havoc. When disaster hits we are all going to need each other, look at Haiti. It is high time everybody puts their pistols and egos in their pockets and start preparing for the new solar weather disasters. Check out http://www.spaceweather.com where they are trying to give some warning about the solar weather pattern.

    August 3, 2010 at 2:41 pm |
  23. Ash

    I loved lebanese food while in Doha many years ago, ate that for lunch and dinner for a whole week. Lovely! I think Lebanon along with Turkey are perhaps the only culture meccas that are cosmopolitan in the Middle East.

    August 5, 2010 at 12:46 am |
  24. Josh

    Really interesting the stuff that is going on over there. I really hope that things will start to change and we can get the world economy back in order. That is just something that I truly truly hope for! It would be so nice to see changes happen http://www.beirut.com

    October 6, 2010 at 8:30 pm |
  25. moonsear

    What this article fails to explain that the money flowing into the country is not used for fruitful investments and sleeps in vaults of banks. The interest on the money is artificially kept high as the government funds interest bearing bonds and keeps the money in the central bank vault rather than using it for fruitful investments

    In a nutshell Tax payers are funding investors

    November 15, 2010 at 12:34 pm |
  26. Paul Felix Schott

    Read well and study on your own after you have read this.

    This is not a game or joke our Sun gives off a Solar Wind all day year round if you live in the

    State of Alaska you see it in the sky above what a sight it is going through our Earth's Magnet

    Polls of the North and the South, North Poll. Its Called the Northern Lights or the Aurora Borealis.

    Our Sun's UV Rays will get stronger as each passing day go's by, read and i will tell you why.

    The Great big forest have be striped from most of the Earth for Greed of Money by the Wicked.

    The trees our are main source of Oxygen on this Plant.

    The Forest trees scrubs the Pollution out of the air and makes Oxygen from the rain and dirt that it grows in.

    The Pollution and CO2 carbon dioxide go into the bark as a sheild from most bugs so they do not eat the tree.

    Less Forest less Oxygen this is why the moon. That has no Oxygen is very cold on the side with out Sun Light,

    And hot as ever on the side with Sun Light. Way too cold and too hot to live there.

    With no blank of Oxygen to lessen or reduce the Sun's UV Rays and Solar Wind they are deadly there on our Moon.

    Every Mt. Climber and Aircraft Pilot knows the higher you go the thiner the Oxygen and colder it gets.

    Just spend a night on a Mt. top above 13,000 feet with no SunLight and you will see or should i say feel

    the cold stinging any of your exposed skin.

    Soon the Sun's Solar Wind and UV rays will be way to strong for most to go out in the Sun light

    for even a short time. The storms well you have not seen nothing yet and the Sea Level is Rising.

    They will get even bigger and worse less Oxygen the more UV Rays to the Earth and more Water molecules will

    evaporat and go up into the atmosphere. Less Oxygen colder with out sun light and hoter with it.

    The Sky full of more water vapor molecules, more snow in the winter and more Flash Floods in the Summer.

    If every living person on Earth were to plant a tree today we might have a chance.

    The Earth atmosphere blanket surrounding it protects life on Earth as Our Lord and GOD will all that seek Him.

    Then it is written when the tree is full it is harvest time. All the Earth will someday burn away.

    This is all Foretold in the Bible Read it

    The Lord's little Helper
    Paul Felix Schott KI4-AEX
    solardowork@yahoo.com

    P.S.

    2 Peter 3:10

    But the day of the Lord will come like a thief, in which the heavens will pass away with a roar and

    the elements will be destroyed with intense heat, and the earth and its works will be burned up.

    January 12, 2011 at 8:52 pm |
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