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In the 1960s and early 1970s, the economic debate between what was then termed the ‘right’ and the ‘left’ focused on several issues, with the first camp stressing the importance of Lebanon as a service economy (mainly in tourism, insurance and banking) while the opposing group focused on the need to develop the agricultural and industrial sectors. The ‘right’ argued against corporate and progressive income taxes and the ‘left’ criticized the tax system as unfair.

Those debates persisted during the civil war along with overriding regional and national issues, but many in both camps have since changed their minds and forgotten what the argument was all about. Now, we are left with a country whose economic sectors all function below optimal production levels. The tourism industry, which recently recorded a slight improvement is now on the decline as a result of the war on Iraq. In March, there was a drop of over 34% in airport activity from the previous year, with hotel occupancy rates hovering at a mere 15%. Most of the beaches of Lebanon are inaccessible to the public or tourists and pollution continues to be a major impediment to the industry. Official statistics put tourism’s contribution to the GDP in the year 2000 at around 9%, compared with a figure of 19.4% in 1974.

On the other hand, the agriculture sector’s contribution to the GDP rose from 9.2% in 1974 to 12% in 2000, while the industrial sector rose from 16.8% to 18% for the same period. As for services and commerce (including the public sector), it still represents approximately two-thirds of the country’s GDP (69.6% in 1964, 54.8% in 1974 and 61% in 2000) with banking and insurance contributing only 7.5%.

Who has won the debate? Obviously neither camp since the government is still a major contributor to the services sector. In fact, the agricultural and industrial sectors are stagnant and tourism is not flourishing. What we now have is not a service economy, nor a productive one. As usual, we invented a new model: a consumer society that produces almost nothing (the import/export ratio is 7:1) and continues to survive.

How do we manage to pay what we owe when we are not producing? We don’t need to look any further than figures on emigration, national debt and foreign grants combined with our tilted scale of values for the answer. What about the ‘left’ and the ‘right’ debate? It is no more; the sects of Lebanon now dominate the scene, while the economic debate, instead of tackling the dilemma of badly invested human and financial capital, will soon center on the need to hold a Paris III and IV, as if we are the focal point of the world.

Jawad Adra

 



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