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Lebanese businessmen not hopeful on future trade with Iraq (Daily Star)

Lebanese businessmen not hopeful on future trade with Iraq - Few expect to get a piece of the post-saddam pie - The Daily Star

'One thing is for sure, the war won't only affect the Arab world, but Europe as well'.

Lebanese businessmen are not keen to predict how a looming US-led war on Iraq could wreck their livelihoods, but few expect to get a piece of the Iraqi pie if a "regime change" takes place."The impact of the war can only be assessed if we know how long it will last," said Jacques Sarraf, the former president of the Lebanese Industrialists Association and a major investor in Iraq. "One thing is for sure, the war won't only affect the Arab world, but also Europe."

Europe, Lebanon's primary import market, does more than just send goods to Lebanon. It provides various industries with raw materials needed to build motors, electrical equipment and cables that make their way to Iraq."If our business suffers from a war, our British partners will suffer too," said one businessman. The majority of Lebanese products that are sold to Iraq are assembled goods, such as motors or consumer products like soap, detergent or shampoo that are imported and then re-exported by Lebanese merchants.

Industrialists exporting to Iraq are less in number than merchants, but still stand to lose a market that currently consists of 15 percent of all industrial exports."The war's immediate effect will probably be a drop in industrial exports to Iraq, which reach $150 million a year," said LIA president Fadi Abboud.

This figure excludes some $350 million in non-Lebanese industrial goods exported to Iraq by Lebanese businessmen."A war on Iraq is not only disastrous to industrialists," said Elie Zakhour, the head of the Beirut Chamber of International Shipping. "Loss of the Iraqi market means lower export activity at the port, fewer letters of credit at banks, redundancies at factories and lower imports." No less than 60 Lebanese industries and trade firms are currently working in the Iraqi market under the UN-brokered oil-for-food program set up in 1996 to bring humanitarian goods to sanction-stricken Iraq. A rising number of industries have begun to sell goods to the Iraqi private sector through a Lebanese-Iraqi free trade agreement signed in 2002.

An unknown number of Lebanese merchants also conduct business through a Syrian-Iraqi oil protocol and direct cash payments, making it harder to assess the true size of trade with Iraq."It is also difficult to assess the current levels of trade, because a number of Lebanese contracts won under UN programs have yet to be implemented," said trade fair organizer Fares Saad. Lebanese traders have complained that the UN Sanctions Committee was late in providing credit as the US and the UK tightened the noose around Iraq's oil exports."Credits were opened just a few months ago, just as the war drums began to beat," said Saad. The opening of the credit lines is not abating the fears of Lebanese businessmen, who are afraid they might win contracts, but won't be able to deliver them.

Still, businessmen have not ceased trading. They are going back and forth between Beirut and Baghdad to broker deals before a war breaks out. "We have to keep on bidding on tenders, but at the same time we are hesitant when it comes to signing," said the businessmen. "This hesitancy is as damaging as the onset of war," he added. Industrialists are not only worried about a war affecting their exports to Iraq, but also to nearby Arab countries that depend on the Iraqi economy. "A war on Iraq is meant to change the politics of the region and thus their economies," said Saad.

Lebanese and Arab businessmen could lose their advantages in the Iraqi market if a war brings about regime change."The current regime cares first and foremost about political support," said Mohammed Shaar, a Lebanese resident of Iraq for 25 years and regional sales manager at tile maker Uniceramic. "If Prime Minister Rafik Hariri goes to Iraq today, Lebanese traders would get all the contracts they want."

Another Iraqi regime may not adopt the same strategy for granting contracts."The Iraqi state has always been the main purchaser of goods, will it remain so after a regime change?" asked Saad. "I think it is a myth that Lebanon could play a role in a post-Saddam era, particularly as the damage incurred on the region will not be easy to compensate."

But Sarraf believes that Lebanon could have a market niche in Iraq in the event of a regime change."Lebanon will one day be the hub of the Levant," said Sarraf. "We have never been the No. 1 partner to Iraq, but we could be No. 2."

Beirut,03 03 2003
Dania Saadi
The Daily Star
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