Lebanon's Economy

Transportation and Communication

| Introduction |
| Roads |
| Railroads |
| Shipping |
| Aviation |
| Telecommunications |


Lebanon's mountainous terrain limits transportation between different parts of the country. Transportation has also been limited by warfare in the 1970s and 1980s; by militia control of key ports, highways, and access points; by the destruction of the country's former railroad network; and by the near-destruction of its aviation links with the rest of the world.

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In 1987 Lebanon had some 8,000 kilometers of roads and a highway network, most of which was in various states of disrepair. There were three routes of overwhelming importance, each radiating from Beirut. To the north was the road to Tripoli, Lebanon's second largest city, a route that also passed through such major towns as Juniyah and Jubayl. To the east, crossing the Lebanon Mountains, was the highway to Damascus, passing through the key town of Shtawrah. And to the south was the road to Sidon and Tyre. Lebanon possessed a second north-south road axis, running along the length of the Biqa Valley. Roads in the northern valley converged on the Beirut-Damascus highway at Shtawrah and linked the important market towns of Baalbek and Zahlah with the primary road network. The southern valley's local road network also centered on Shtawrah at its northern end.

Cross-mountain routes, which linked the northern Biqa Valley with Juniyah and Tripoli and the southern valley with Sidon, were of relatively little importance in times of peace. In the 1980s, however, ordinary travelers have used these routes to circumvent roadblocks on the major roads, and drug dealers have used them for transport. Private militias have also used them to secure lines of communication between the coast and outlying areas. Minor cross-border routes into Syria have also been important entry routes from time to time for Palestinian and sometimes Iranian fighters entering Lebanon. These roads have also served as exit points for produce funneled via Lebanon onto the Syrian black market.

After its establishment in 1961, the Executive Council for Major Projects (Conseil Exécutif des Grands Projets) drew up a plan for a 241-kilometer highway network. The plan was to transform the three main routes from Beirut into four-lane, divided highways through the construction of new roads or the expansion of existing ones. But because of bureaucratic delays, little was done before the outbreak of the Civil War in 1975, although some roads were upgraded. A drive to complete the project was undertaken in 1980; the US$1.6 billion program continued, well into the mid-1980s, albeit somewhat haphazardly in view of the uncertain security conditions.

By 1987 most of the sixty-five kilometers of the Lebanon section of the Beirut-Damascus highway, including a difficult stretch through the Lebanon Mountains, approximated international highway standards. The government hoped to be able to implement plans drawn up by consultants from the Federal Republic of Germany (West Germany) for a full highway link between Beirut and the Syrian border. Likewise, most of the northern coastal highway to Tripoli was complete, except for the final section from Tripoli to the Syrian border. Work on the southern coastal highway lagged, however. Some sections between Beirut and Sidon had been completed, but there was little progress on the stretch between Sidon and Tyre.

The existence of new highways did not necessarily mean they were available for use. For example, during much of the early 1980s stretches of the northern coastal highway were blocked off by local Christian militias who found it easier to regulate traffic on the old coast road.

Although the government traditionally allotted high priority to road building and maintenance, the rehabilitation of the country's network has been badly hampered by war. Some roads, however, have been repaired at the behest of Syrian military authorities. In the south, in the area in which United Nations (UN) troops were stationed, roads were built and renovated. And along the Israeli border, but within Lebanon itself, Israel constructed a series of earth roads in the late 1970s and early 1980s designed to facilitate troop deployments.

The collapse of the central government necessitated the development of ad hoc transportation systems. Successive attempts to revive Beirut's public bus system after the 1975-76 fighting failed as a new fleet of French-built buses were turned into barricades in subsequent conflicts, including the 1982 Israeli invasion. In some parts of the country, business enterprises ran buses or trucks to ferry their employees to work, but there was no coherent national transportation system. Shared taxis became the most common form of public transport. Taxis could be hired to carry travelers from one town to another, but taxi service might not be available if militia groups declared a blockade along a particular route. Such blockades also affected deliveries of key products, such as food supplies, fuel, and goods intended for import or export. Travel became prohibitively expensive for ordinary Lebanese when roads were closed. Keeping the roads open became the responsibility of a series of armed forces: the militias, the Lebanese government forces, the UN forces, and, repeatedly, the Syrian Army. From time to time, responsibility lay with Israeli, Palestinian, United States, and West European troops.

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Lebanon used to have a patchwork railroad system. From the central Syrian railroad depot of Homs, two standard-gauge lines entered Lebanon. One line passed down the coast to Tripoli and Beirut and ended just north of the southern oil terminal at Az Zahrani; the other came down the Biqa Valley to Riyaq, near Shtawrah. A narrow-gauge, mountain railroad running from Beirut through Riyaq to Damascus linked these two lines. The coastal line was still being used for occasional fuel shipments from the Tripoli refinery to Beirut in the late 1970s, but the line's southern section to Az Zahrani was cut in several places just south of Beirut. French companies had begun limited repairs on the damaged line but had to stop as renewed violence erupted in February 1984.The Biqa Valley line, antiquated already in the 1960s, finally went out of commission during fighting in 1975-76. Finally, the Beirut-Damascus line was verging on obsolescence even before the outbreak of war.

By 1987 it was believed that no trains were functioning anywhere on Lebanon's 407-kilometer system, and the prospects for the rail system's recovery were poor. Canadian consultants studied a possible revival of the coastal line in 1983, but security conditions made rehabilitation impossible. If the railroads are ever revived, the coastal line will get priority.

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There are no navigable rivers in Lebanon, but there is some coastal shipping. Before 1975 the port of Beirut was a major entrepôt for the Middle East, especially for goods bound for Damascus and Amman. In 1974 approximately 3.4 million tons of goods were unloaded at the Beirut docks, 668,000 tons were loaded, and 932,000 tons of transit goods were handled. When the Civil War began, however, the port became a major battleground. Battles also took place there in subsequent clashes between 1978 and 1987.Despite strenuous efforts to restore the port to full working order, by 1987 it had yet to regain anything like its former prominence.

Between the start of the Civil War in 1975 until 1983, the port's best year was 1980, when some 2.7 million tons of cargo were unloaded, 248,056 tons were loaded, and 209,080 tons were handled in transit. The Israeli siege of Beirut led to a drastic drop in port activity in 1982, when goods handled fell to less than two-thirds of the 1980 level.

The shipping industry did not fare well in 1983, the last full year in which the central government could claim to control both halves of the national capital. Although cargo unloaded recovered somewhat to about 2.5 millions tons, cargo loaded was only 105,640 tons, and transit cargo dwindled to a mere 87,415 tons.

The port was closed for five months following the division of the city in February 1984, resulting in lost revenues of around US$30 million. The closure was the longest in the port's history. When the port reopened in July, the Jumayyil government tried to improve conditions by taking over the port's fifth basin, previously controlled by the LF, and closing another LF-controlled illegal port at Ad Dubayyah. These gains were purely temporary, however. In 1986 the LF regained control of the fifth basin, which the government allowed to be run by a new company owed partly by the LF. The government also allowed the company to run the illegal port at Ad Dubayyah and the official port of Juniyah. The establishment of the new company was really little more than legalization of an essentially illegal operation since the LF already controlled the ports and was denying the government customs revenues.

Illegal, or unofficial, ports--those not under the control of the government--developed in the 1970s. By the 1980s, they had become Lebanon's principal purveyors of imports. These ports, mainly controlled by the principal militia groups, were used for a wide variety of imports, ranging from basic necessities to military supplies from Israel and Libya. As of 1987, as many as twenty illegal ports, mostly controlled by militias, were in operation.

The volume of goods discharged at the illegal ports cannot be measured exactly. Nevertheless, two prominent Lebanese economists, Marwan Iskandar and Elias Baroudi, noted in a 1983 analysis of Lebanese port activity that the 19-percent drop in cargo unloaded at the legal Beirut port in 1981 did not necessarily reflect a drop in total imports--a large proportion of imports came through illegal ports. Observers believed an extremely effective central government would be needed to transfer or return revenues from the ports to the national treasury.

With rival militias flanking the port of Beirut and periodically forcing its closure, Lebanon's other ports might have been expected to pick up some of the slack (see table 5, Appendix A). Traffic at Tripoli did rise steadily from 1975 to 1979 but declined thereafter. It suffered from fighting in 1983 between Palestinian and Syrian forces in the northern section of the port of Tripoli and because of the increasing effectiveness of Lebanon's illegal ports. In late 1985, however, after Syrian forces had imposed calm, traffic at Tripoli grew to 50,000 tons per month by January 1986.

Lebanon's other traditional ports at Tyre and Sidon also have had troubled histories. Tyre suffered during the Civil War, during the Israeli invasions of 1978 and 1982, and during other Israeli military actions. Sidon was similarly afflicted, escaping only the 1978 assault. Both ports have also witnessed some internal conflict. After Israel's 1984 pullout from much of Lebanon, however, Tyre appeared to enjoy a revival of its local economy. Although Sidon suffered from further Shia-Palestinian conflict, it recovered modestly, and its export trade increased in early 1987.

Israel has persistently intervened in Lebanese maritime affairs. Its actions ranged from dispatching gunboats to positions off Beirut, a fairly common occurrence, to closing ports under Israeli control, such as Tyre and Sidon in 1984. From time to time, Israeli forces searched ships bound to or from Lebanese ports. In 1984, late 1986, and early 1987, Israel also stopped several ships ferrying passengers between Larnaca in Cyprus and Juniyah, the principal port of the Maronite heartland. Israel claimed that the ships were being used to infiltrate Palestinian guerrillas into Lebanon and warned that the Larnaca-Juniyah link would be closed altogether if the vessels continued to carry Palestinian fighters.

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For years, Middle East Airlines (MEA) was the star of Lebanese international communications. It had bought out two other private airlines, Air Liban and Lebanese International Airlines, and developed a style and service second to none. By the early 1970s, despite the loss of ten of its airplanes during an Israeli commando raid on Beirut International Airport in December 1968, it had become a model for oil-rich Arab states seeking to establish their own national carriers.

MEA represented the best of Lebanon. It reflected close Franco-Lebanese relations Air France had a 30-percent stake in the venture, and Intra Investment Company held the principal 62.5- percent shareholding. Its chairman from 1952 to 1978, Shaykh Najib Alamuddin, scorned sectarianism and ran MEA as a socially and religiously integrated operation. This tradition of integration continued after 1978.

By 1975 MEA had become the country's largest employer, providing work for 5,600 people. Although the airline survived the Civil War, it was unable to regain the ebullience that had characterized its prewar operations. MEA survived the 1975-76 fighting by leasing many of its aircraft and flight crews to other Arab airlines and by operating on routes between the Persian Gulf and Western Europe that did not require refueling in Beirut. Nonetheless, losses were heavy, totaling US$12.8 million during the first 10 months of the Civil War. As fighting intensified in 1976, hope for full recovery diminished. During the quieter years of the late 1970s, however, the airline regained momentum. Old routes were reestablished, although in April 1977 MEA lost the right to fly to Damascus, as Syrian-Lebanese relations became strained. (The Damascus right was finally reinstated in August 1985.)

The airline was almost back to normal in the late 1970s and posted a US$2.4 million profit in 1980. But fresh fighting closed Beirut International Airport in the spring of 1981, and passenger traffic dropped. At the same time, an important long-term leasing agreement with Saudia, the national air carrier of Saudi Arabia, came to an end. MEA's revenues fell 32 percent, and fuel bills rose 21.6 percent; the net result was a massive US$19 million loss. Nonetheless, the airline's ambitions remained undimmed, and in October 1981 MEA signed an order to buy five Airbus A310 aircraft, with options on another fourteen.

Then came the 1982 Israeli invasion, and Beirut International Airport was closed for 115 days. Five MEA Boeing 707s were damaged so badly they had to be written off; six others were also damaged, but less severely. Company hangars and offices, occupied by the Israelis, were also hit. Passenger volume plunged from 936,618 million in 1981 to 634,919 million in 1982. Losses for the year reached US$49.2 million.

There was little improvement in 1983. The airport was closed for thirty-two days in August and September and for another seventeen days in December. Faced with the prospect of a record US$54.6 million loss, in November the airline terminated its agreement to buy the Airbuses. Airport closures persisted in Beirut, grounding the airline, and in August 1985 a Boeing 720 was destroyed and a 707 badly damaged by gunfire. The airline's all-Boeing fleet was depleted to just three 747s, five 707s, and nine 720s. In January 1987, another 707 was destroyed when the airport came under artillery fire. The aircraft was not insured because of the high war-risk premium, and MEA had to absorb the loss.

By October 1985, MEA became the only airline serving Beirut, and passenger traffic was down to only 1,200 to 1,300 daily--the lowest level since 1953. Despite falling passenger volumes and a 50-percent reduction in the airline's route network, MEA still held out hopes for recovery and negotiated in 1985 with Boeing, McDonnell-Douglas, and Airbus Industrie for new aircraft. High fuel costs meant that the airline needed a new generation of fuel-efficient aircraft, but the company lacked the funds to purchase them outright and could not borrow money to pay for them because lenders did not have confidence in the airline. Between 1965 and 1975, Lebanese entrepreneur Munir Abu Haydar had turned a small freight carrier called Trans Mediterranean Airways (TMA) into the largest all-cargo airline in the Middle East. But instability at Beirut International Airport forced TMA to shift operations to Sharjah in the United Arab Emirates in the 1970s and 1980s. TMA suffered a blow, however, in mid-1985 when Saudi Arabia forbade TMA and several other airlines to overfly the kingdom. Iraq, too, had banned TMA from entering its airspace, and the airline was effectively grounded. TMA formally suspended services in August 1985 and began selling off its fleet, which, at the start of the year, had consisted of eight Boeing 707s. The airline, however, was able to sell only one of its aircraft.

The airline asked the government for a US$10.6 million bail-out loan, but the government was slow to respond, and bankruptcy became a distinct possibility. Discussions on a merger with MEA began as TMA's financial position steadily deteriorated; its routes were cut, and competition from state-subsidized airlines mounted.

The MEA board responded cautiously to merger suggestions and waited to see if the government favored the idea. Then in mid-1986, Jet Holdings, a company with which Intra Investment Company chairman Tamraz was closely involved, effectively took control of TMA and assumed responsibility for its US$7.5 million debt.

Aviation politics in Lebanon were increasingly partisan in the 1980s. Maronite concern about access to Beirut International Airport had prompted efforts to develop an alternative airstrip at Halat, a military airfield twenty kilometers north of Beirut, to serve East Beirut and the Maronite heartland. The project was carried out under the supervision of Jet Holdings.

By early 1986, the Halat runway had been extended to 2,600 meters. Tamraz sought to involve MEA in the venture, which he believed might begin with charter service to Larnaca and Athens. But MEA refused to operate flights from Halat because the Ministry of Transport had delayed recognition of the airfield's civilian status.

After the government set up a committee to study a plan to turn military airfields, as well as Halat, into civilian airports, Beirut Inyernational Airport reopened in May 1987. But without the opening of Halat to civilian traffic, the outlook for MEA--an airline that had once set world standards for service--was grim.

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The country's telecommunications system suffered severely from the violence that occurred after 1975. Damage to equipment from 1975 to early 1982 was estimated at about US$150 million. At the time of the Israeli invasion of 1982, the Directorate of Posts, Telephone, and Telegraph was in the middle of a US$325 million 2 year rehabilitation project aimed at installing 32 new electronic exchanges and adding 220,000 new lines. Although new telex facilities had become operational in February 1982, only a few of the new telephone exchanges were in operation when Israel began its siege of Beirut in June. The invasion froze improvements in the telecommunications system, although Lebanese authorities, with United States financial assistance, were able to carry out extensive repair work during the comparative calm of 1983. The Republic of Korea (South Korea) financed and repaired some 81,700 telephone lines around Beirut in 1983 during that period, and a local subcontractor carried out extensive repair work in East Beirut for the United States Federal Electric Corporation until funds dried up in 1984.

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Source: Federal Research Division - Library of Congress (Edited by Thomas Collelo, December 1987)

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