The conflict in Syria has wrought serious damage on the Lebanese economy, effectively closing off the country's trade routes through Syria. However, a new program geared at balancing the price disparities between land and sea transit is poised to help Lebanese industries.
Conflict in neighboring Syria has had a devastating impact on Lebanon, with the refugee crisis most often hitting headlines around the world. One main consequence, however, has been the closure of the Lebanon-Syria border and the effective land isolation this has brought to Lebanon. About 80km away from the Syrian border, in the port of Beirut, the negative effects of this isolation can be seen. The lack of ability to export over land has hit the industrial and business communities, who have begun to look to the seas as a method of getting goods to foreign markets.
According to the World Bank, when the war in Syria began, Lebanese exports began to fall, from USD4 billion to USD3 billion by early 2014, meaning a 3% reduction in the exports-to-GDP ratio in less than two years. Moreover, the sudden cutoff in the demand for Lebanese products from Syrian nationals has caused Lebanon to lose its fifth-largest trading partner, which formerly represented over 5% of its total exports. The blow to Lebanese exports became particularly concerning due to the country’s traditionally far-reaching trade deficit of around USD1.3 billion.
To counter this negative effect, in September 2015 the Lebanese government, through the Investment Development Authority of Lebanon (IDAL), set up the Maritime Lebanese Exports Bridge (M.LEB) to create a temporary alternative for land transport exports. The program entails a subsidy program of USD13 million to absorb the difference in the costs between land and sea transport for industrial and agricultural products going to Arab countries. As the Minister of Industry, Hussein Hajj Hassan, told TBY, “Half of our exports used to go by land through Syria. We launched this maritime exports program to counter the negatives effects incurred by the closure of the border and to enhance our industrialists’ ability to maintain their profits.”
M.LEB is based on three pillars: to contribute to opening a regular maritime shipping line between Lebanese ports and the targeted ports in Jordan, Egypt, Saudi Arabia, and the Gulf nations; to facilitate the daily transportation of 35 trucks to key target markets, and to grant direct support for each truck loaded with Lebanese products. When interviewed by TBY about this program, Nabil Itani, Chairman of IDAL, commented that M.LEB is meant “to take all the goods through sea freight from the Beirut port to places like Jeddah (Saudi Arabia) or Aqaba (Jordan) to cover part of the expenses so our exporters could retain their competitive advantage.”
When the initial results of the program were measured, the level of Lebanese exports had peaked again to pre-Syrian conflict levels to reach a number of 14,096 tons of agricultural exports, 368 tons of industrial exports, and 1,113 tons of agro-food exports by the end of December 2015. In the first quarter of the program, the number of trucks covered by M.LEB reached 86% of total export transportation, with Saudi Arabia (66%), Kuwait (18%), and Jordan (12%) being the top destinations for Lebanese exports.
The contribution of M.LEB to balancing export costs has been highly beneficial and has already been extended until 2017. Based on The World Bank’s data, this program has allowed Lebanon to sort out the trading problems caused by the border closure in a much better way than close by Jordan. The benefits of the M.LEB program are set to continue for the totality of its duration to the benefit of thousands of Lebanese exporters.