Roula Nasrallah, Head of Export Platform of Lebanon Trade Ministry spoke to Harici: “Israel destroyed a lot of olive trees, orchards, and agricultural lands in southern Lebanon. Around 50-60% of the olive oil season was destroyed in the south.”
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Roula Nasrallah commented on the current economic situation in the country, the effects of the war in Gaza on Lebanon, and trade planning.
It was reported in the press that the IMF would give a loan of $3 billion to Lebanon, but it is also said that IMF officials had put forward some conditions. At what stage are negotiations with the IMF? What are these conditions? What are the results after the IMF officials’ visit to Lebanon in May?
The IMF negotiation was specifically with the Minister himself, not with the ministry as a whole. He attended several meetings, and they came to the ministry several times. They asked for some anti-corruption policy amendments and so on. Then, the negotiation stopped. I mean, both sides are not really into it. It’s not just the IMF; even the Lebanese government is not so into it. Because at the end, it’s a loan, not a grant or something. So, there is no total approval to have this loan from the IMF. It has been postponed for the moment. It’s pending.
Now, other than the IMF, there is the GATE project with the World Bank. It’s also a loan. It’s not $3 billion; it’s around $250 million. It’s for infrastructure, specifically within the agricultural sector value chains, to enhance several value chains and increase export. This is another alternative to the IMF.
How did the war in Gaza and the Israeli-Lebanese conflicts on the border affect Lebanon’s commercial capacity?
Israel destroyed a lot of olive trees, orchards, and agricultural lands in southern Lebanon. Around 50-60% of the olive oil season was destroyed in the south. Logistically, many channels are altered because of this crisis, like in all other countries, not specifically Lebanon. Tourism-wise, at the beginning, it wasn’t safe anymore, and people were not going out anymore. But a few months later, it was back to normal. Now we rely a lot on tourism during the summer season, waiting for the diaspora and other tourists to come to Lebanon. So far, it’s a bit shy. You don’t feel the usual influx during this period of the year. We still need to wait until July and August to see if it will adjust or not.
What is your expectation? How much of the tourist capacity is lost because of this war? What other impacts did the war have on Lebanon’s development?
Well, so far, I would say it’s 70%. We are now a red zone area for many European and American companies, so they are not coming anymore. Even in terms of projects and businesses, because we are a red zone, their insurance won’t cover them coming to a red zone area. For example, many international exams were canceled. You have the MCAT exam done by the SAE. It’s an international exam for med school. It was canceled because of the war. This will alter the lives of many students who were supposed to enter medical school. They needed to go elsewhere in Europe to pass the exam. Some of them couldn’t afford to travel and get the visa and do the exam. They lost a year of their life because of the exam. So, this is another direct impact of the crisis.
Many of our kids are opting to continue studying outside Lebanon. We are losing our future generation. It’s a brain drain. Top-notch students are leaving the country. Many are leaving to work outside if they are qualified. So, this is another loss.
Many people are on medication and depressed because they cannot take it anymore. We have the economic crisis, COVID, the Beirut blast, and now the current crisis. It’s a lot. Many people are now on antidepressants just to survive and continue life. But we are a very resilient population. You see people dancing, partying, and going outside. The first couple of months were very intense, but later on, we adapted. Life goes on.
What about Turkey and Lebanon’s trade relations? Is there a joint action plan for the development of trade relations between the two countries?
Previously, there were discussions about a trade agreement between the two countries. But during the crisis, everything stopped, and nothing has been initiated since. Now it’s time to initiate a bilateral trade agreement between Turkey and Lebanon.
What is Lebanon’s roadmap to overcome the economic crisis?
A couple of years before the economic crisis, the government contracted McKinsey to develop an economic strategy for Lebanon across all sectors, and it has been done. Then the crisis came, and COVID, and the government issues. Based on this study, they elaborated more to cover the crisis’s impact and put a roadmap. It covers all sectors, including the financial update, banking sector restructuring, and other financial laws to protect citizens and organize the banking system. It focuses on small and medium enterprises, which are the main base of the economy, agriculture, infrastructure, and policy upgrades, including anti-corruption. Some laws have been issued, like the new public procurement law, which is very transparent and well-controlled. The strategy is there, but the next step is for each part of the strategy related to a certain public entity or ministry to develop an action plan to implement it. This part has not yet been translated, so we are just at the strategy level. We need to go further and have an action plan for each component to see activities and results on the ground.
Can you tell me about the Beirut blast? Was it an important reason for the economic crisis?
No, not at all. Beirut was destroyed, and the shock was tremendous. It’s more than the economy. But Beirut received a lot of funds from the diaspora all over the world, the EU, various European governments, and the USA. Within a year, the whole area was reconstructed, and it’s really better than it used to be. So now we see no remaining impact from the Beirut blast. But there is an emotional impact, and you feel a bit of injustice because the case is still open and hasn’t been closed in terms of investigation. There is emotional damage more than economic damage, and it has nothing to do with the total method. We bypassed the economic crisis’s impact, but there is still ongoing emotional damage. However, the economic crisis has nothing to do with the Beirut blast.
France often promises to invest in Lebanon but shows the stick simultaneously. Is there any development regarding France’s commitments?
France is investing a lot in Beirut port through CMA CGM. They have a big contract and have done many projects. They are buying big companies in Lebanon, managing the port, and expanding post-harvest facilities. Total was also about to take a contract on gas exploration in the south, but it has stopped because of the war. So, everything is pending. We are waiting to see how it goes. If Total is out, they will bring another company. Total was there because of the French. It was granted this block contract.
Israel and Lebanon signed the maritime jurisdiction agreement. How has the Gaza war reflected in this agreement?
The agreement has been signed, and the borders have been set. We are not negotiating again. The file has been closed. Gas exploration has been on hold because of the war activities, but the agreement is there. It has been signed and is in history. We cannot reopen and renegotiate it. It’s a closed file.
We needed to draw the line to know our border, and we are working on our part. We have nothing to do with them; we are at war with them. We can’t explore gas in our zone now because of the war. No company will come and explore if there is a war. These are business companies, coming to make a profit. They are not humanitarians. Whenever you have a conflict zone, it’s not time for any investment. So everything is on standby. When everything is solved, we can work on our block. We have nothing to do with their block, regardless of Gaza.
Do you think that Israel will also stick with this agreement?
They should, of course. They signed the agreement. Then it will be another thing, and we will escalate more with them. Once they signed an agreement, it’s signed. It’s sealed.
What are Lebanon’s top priorities regarding international trade cooperation globally to overcome its economy and make it better?
We need to do more trade agreements and partnerships to help our exporters and facilitate trade for our exporters in potential markets. We have good products to be exported and potential markets, but we need to do preferential agreements and partnerships with governments to facilitate trade for our exporters.
For me, this is the number one priority to stand by our exporters and producers because the markets are there.
Which countries are priority markets for you?
Well, the Asian market is booming and has significant untapped potential for Lebanese products. It’s now the time to work on trade agreements with them or preferential agreements, whatever suits both markets, to support our exporters in penetrating those markets.
