A political shock throws Lebanon’s economy back into crisis

BEIRUT (AP) – Just when things were starting to look up for Lebanon’s economy, a new political crisis threatens to send it crashing down again.

Prime Minister Saad Hariri’s shock resignation could unravel the first steps in years toward injecting some cash and confidence in Lebanon’s anemic economy.

Already, the crisis is putting at risk multi-billion-dollar plans to rebuild decaying road and electrical and communication networks and get the oil and gas sector moving.

Lebanon has long been buffeted by blows from the great-powers rivalry between its neighbours.

But its economy sputtered on under a tacit understanding among the regional heavyweights and their local proxies that left Lebanon on the sidelines of that contest.

Shoppers select products displayed on the shelves inside a supermarket in Beirut, Lebanon. – AP

That may have changed Saturday when the Saudi-aligned Hariri announced his resignation in a televised statement from the kingdom’s capital, Riyadh.

It was an unexpected announcement from the premier, who formed a coalition government with the militant group less than a year ago.

Since then, the news has only gotten worse.

Saudi Arabia, Bahrain, Kuwait, and the United Arab Emirates all ordered their citizens out of Lebanon this week, and the Lebanese are wondering and worried about what’s to come.

“We don’t know how things will escalate,” said Rida Shayto, an associate director at the pharmaceutical manufacturer Algorithm, which does half its sales to the Gulf.

The developments have stunned the Mediterranean country, which once looked to Saudi Arabia as a pillar to its own stability.

The Kingdom brokered the Taif agreement in 1989 that ushered in peace for Lebanon after 15 years of civil war.

The Kingdom has plowed decades of investment into Lebanon, opened markets to trade and allowed generations of talented and ambitious Lebanese to work in its oil-based economy.

The concern now is that the Kingdom and other Gulf nations will throw out Lebanese workers, as they did with Qatar this summer in a rage over that country’s perceived closeness to Iran.

Some 220,000 Lebanese work in Saudi Arabia and send back close to $2 billion in remittances each year, according to Mounir Rached, a senior economic adviser to the Finance Ministry.