Beirut, Lebanon – Yara Adada, 28, sits at the window of her bakery and cafe in Gemmayze, a lively neighborhood in central Beirut known for its bars and restaurants.
Adada is the only one there. “We kill flies,” she says.
Behind her, the counter is filled with pastries, the coffee machine is silent, and the chairs and stools that are usually full are empty. This has been the setting at Adada’s Café and many other businesses since the start of the conflict between Hamas and Israel, as fears grow that the country could be drawn into a war with Israel.
“We have seen a very significant decline in customers, more than 50 percent,” Adada said. The normally busy café had between 30 and 35 customers daily. “Now on a good day I have 10 to 15. Today it’s already midday and I’ve only had one.”
“Yesterday I only made $4. It’s scary,” she said.
A plane takes off from Beirut airport. Since October 7, many airlines have reduced or canceled flights to and from Beirut, hurting Lebanon’s tourism-dependent economy [File: Emilie Madi/Reuters]
Economic “agony”
Since October 7 and the start of the ongoing exchange of fire between Hezbollah and Israel in southern Lebanon, the restaurant sector has seen a decline in business of up to 80 percent, according to the Lebanese Association of Restaurants, Nightclubs and Cafes.
Tourism, which accounts for 20 percent of Lebanon’s gross domestic product (GDP), has been hit hard. Due to the unstable situation at the border, Australia, France, Germany, the United Kingdom, the United States and many other nations have not only asked their citizens not to visit Lebanon, but also advised the country’s residents to leave the country, as long as there are still commercial trips flights available.
The warnings came as airlines including Lufthansa, SWISS and Saudia canceled their flights. On October 20, Lebanese airline Middle East Airlines announced that it would reduce its flights “due to the ongoing circumstances in the region and reduced insurance coverage for wartime aviation risks.”
The decision, criticized by the government, has led to an 80 percent drop in the Lebanese airline’s flights. At Beirut airport – the only one in the country – there are now only a few planes on the tarmac, no queues and hardly any passengers.
“The restaurant [sector] is completely devastated,” Nagi Morkos of Hodema, a Lebanon-based consulting firm, told Al Jazeera. Morkos, who works with restaurants, hotels, resorts and malls, said operators were “worried.”
“The biggest concern is not the war, but the status quo that will keep the situation like this for months. So it’s more torture than death,” Morkos said. “A war, yes, it is terrible, but war has its time. Here we don’t know, it’s a wait and see situation.”
“We feel trapped and it is very bad for business, very bad for tourism, very bad for hospitality and very bad for investment.”
Empty shelves in a bakery in Tripoli, Lebanon [File: Emilie Madi/Reuters]
It’s not 2006 anymore
On October 22, the Lebanese government announced that it was developing a contingency plan in the event of an outbreak of war. The measures included securing key infrastructure such as Beirut’s airport, ports and main roads, all of which were bombed by Israel during the 2006 conflict with Hezbollah.
But Lebanon and the region are in a different, more challenging situation than in 2006: the Lebanese banking system was relatively normal then, which allowed the central bank to provide banks with liquidity when needed during the war; Likewise, there was still trust in the financial systems and millions of Lebanese expats were still sending foreign currency into the country.
Although Beirut airport was bombed in 2006, Middle East Airlines continued to operate from Damascus throughout the months-long conflict, and goods and people were still able to cross the border to and from Syria. But the war in Syria and frequent Israeli airstrikes on Damascus airport mean that option is lost.
Lebanon is also almost entirely dependent on imports for food, fuel and medicine, 70 to 80 percent of which arrive by sea.
In 2006, the country’s ports were unusable due to the threat of Israeli warships, but Lebanon was able to draw on healthy reserves such as grain stored in Beirut’s port silos, which have since been destroyed by the 2020 port explosion.
The still half-destroyed port can be seen from the office of Lebanese Economy Minister Amin Salam.
He tells Al Jazeera that Lebanon is in a worse situation than ever before and that food security is one of the government’s main concerns as it develops its contingency plan for a possible war.
Lebanon faces food security “catastrophe”.
Lebanon’s current reserves of food, fuel and medicine are only enough for a worrying two to three months, the minister said, adding that the reserves should normally last for “about a year.”
“[B]Due to the lack of vision of previous governments, no one thought of establishing multiple sites for national reserves. Everything was loaded at the Beirut port and when the explosion happened, we lost the only national reserve we had,” Salam said. “So if it is not delivered at the seaport, we have no wheat, no grain and no bread.”
Salam said the government is working with private partners to increase the delivery of essential goods in the coming weeks. However, the providers require advance payments “because they know.” [Lebanon’s] “The banking system is paralyzed… so that creates another layer of obstacles,” he explained.
Hani Bohsali, president of the Syndicate of Food Importers of Lebanon (IFBC), was one of the representatives who met Salam.
He told Al Jazeera that just like in aviation, insurance companies for the maritime industry have started raising premiums or withdrawing their war insurance altogether, causing consumer goods prices to rise by up to 3 percent.
“If I bring my shipments without war insurance and then the port is hit and I lose my cargo, who will compensate me? Nobody… people [may reduce] their inputs to reduce their risk,” he said.
Bohsali is confident that current shipments already on their way to Lebanon will not be affected. Even if future orders have not yet been canceled, the situation must be assessed “daily”.
“Let’s put it cynically: Realistically speaking, we don’t know. Nobody knows,” Bohsali said. “If war breaks out, what scenarios can you imagine if the Syrian border is closed and an embargo is imposed on the seas? Even if you create 100 contingency plans, it’s a waste of time if you don’t know what will happen.
“So we, the private sector, demand that the government do its best to stop the war because that is the only option.”
Lebanese Economy Minister Amin Salam [File: Mohamed Azakir/Reuters]
“Forget about tomorrow, worry about today”
Salam recognizes that Lebanon faces a “catastrophe” if war breaks out. However, he admits that the country’s financial problems did not start on October 7th.
When he took office in 2021, Lebanon was already facing one of the worst financial crises of modern times: losses of over $72 billion, a 98 percent devaluation of the national currency, 80 percent of the population living below the poverty line, and the central bank is failing in shambles after its governor was accused of defrauding the public finances to the tune of $330 million.
An agreed $3 billion loan from the International Monetary Fund is seen as a light at the end of the tunnel, but implementation of the reforms to which it is linked has been slow.
“Everything that is happening now adds… another layer of chaos and a lack of attention to the reforms needed to rebuild the Lebanese economy, because… if something like this escalates, it means ten steps backwards,” Salam told Al Jazeera . “When you’re in crisis mode, you forget about tomorrow, you have to worry about today.
“[O]Their infrastructure is very, very, very bad. And our economy is in a very challenging situation,” the minister said. “We cannot afford even a small escalation.”
A street vendor arranges kaak, a bread, in the southern Lebanese city of Sidon [File: Aziz Taher/Reuters]
A high price
Adada, the cafe owner, knows well the burden of Lebanon’s “crisis cycle”: The 28-year-old became unemployed after the 2019 financial collapse and remained unemployed during the pandemic and the Beirut port explosion. Her shop was one of the first to open after the explosion in the Gemmayze district opposite the port.
Almost everyone she knew warned her not to open a business in Lebanon, she said. But her dream was to stay and help the economy. “It’s home,” she said.
She’s not giving up yet. Despite high operating costs and rising ingredient prices, Adada has enough savings to keep the store afloat for at least six months.
“If a war breaks out, I can close the store for a while, but I worry about my employees and other businesses that are not doing so well,” she said.
Adada sympathizes with the Palestinian people and their struggle, but knows exactly the price Lebanon has to pay for it.
It’s a complex feeling shared by many in Lebanon. “We can’t be selfish, but we have to,” Adada says, looking out the window.
A few cars drive by outside. Even fewer pedestrians walk through the normally lively district.
“Lebanon doesn’t deserve this, we’ve been through enough,” she says. “Let’s just breathe.”
Source : www.aljazeera.com