By Georges Pierre Sassine, Olga Antoine Jbeili

A version of this article appeared in the print edition of The Daily Star on January 22, 2013, on page 7.

Political instability has become the norm in Lebanon. The country’s economic and political outlook seems to be tightly dependent on regional developments, especially in Syria. In 2012, Lebanon’s economic growth stood at 2 percent, falling significantly from an average 8 percent between 2007 and 2010. Analysts expect future growth of Lebanon’s tourism and financial services sectors to be negligible until a resolution is reached in Syria.

However, there is tangible hope in sight and Lebanon’s economic outlook can be improved regardless of the current uncertainty plaguing the country.

Risk and complexity are here to stay. Therefore, Lebanese businesses and government must learn to adapt. One approach is to identify global trends and find ways for Lebanese to leverage them.

For example, the U.S. National Intelligence Council, representing the 17 intelligence agencies of the United States government, recently published a report fleshing out global trends during the next 15-20 years. The NIC report highlights different scenarios of how the world could unfold, but also identifies megatrends that will likely occur under any scenario. Lebanese decision-makers should think and plan for the long term and find opportunities in these trends that are most likely to occur.

Lebanon’s economic outlook can be improved regardless of the current uncertainty … One approach is to identify global trends and find ways for Lebanese to leverage them.Georges Pierre Sassine, Olga Antoine Jbeili

One of the megatrends identified by the NIC is an increase of the global population by more than 1 billion people by 2030. This will put strains on food and water resources where demand for food will increase by 35 percent, and the global food production outlook will worsen due to climate change patterns.

Higher and volatile international food prices are already negatively affecting Lebanon – which imports more than 80 percent of the food it consumes – and will continue on driving up local food prices in the future. This will provide a unique opportunity for Lebanese farmers and entrepreneurs to expand domestic agriculture production and improve Lebanon’s food security. Specific measures include incentivizing investments in Lebanon’s agricultural sector, a strategic shift to high-yielding grains, crop diversification and developing irrigation infrastructure.

In addition, the growing demand for agricultural resources has also been driving countries such as Saudi Arabia, the United Arab Emirates, Qatar, Kuwait and China to acquire farming lands in foreign countries, mainly in Africa, in order to ensure their food supplies. However, land acquisitions have been leading to disastrous consequences for poor communities – as families are kicked out of the acquired lands – and attracting sharp international and local criticism.

The well-established Lebanese diaspora can then play the role of middleman and help make these land acquisitions more sustainable. They can facilitate cooperation and communication among foreign investors, international organizations, African governments and local communities ensuring more equal benefits to all parties involved. Lebanese can also play several roles across the agriculture value chain: Opportunities are not limited to the farming of acquired lands but also include food processing, agro-industrial and agribusiness services, traders and other businesses at multiple levels from the farm to consumers.

The Lebanese government can play a big role in enabling such opportunities to national businesses. Laying the groundwork for partnership with countries such as China and Gulf countries in Africa and stressing the involvement of African partners will be critical. Such cooperation will be an evolving process with few precedents but an opportunity that should not be missed.

The NIC report also suggests rapid urbanization in the developing world to be another megatrend certain to be witnessed. The volume of urban construction for housing, office space and transport services over the next 40 years could roughly equal the entire volume of such construction to date in world history.

This could have serious consequences for Lebanese construction companies, engineers and architects. While the construction industry, one of the most vibrant sectors of Lebanon’s economy, has traditionally focused on domestic and regional markets significant new opportunities could be reaped elsewhere.

According to the United Nations, 11 countries will contribute to 62 percent of the world’s urban growth by 2030 including China, India, Brazil, Mexico, Nigeria and the United States. Lebanese can and should play a role in helping serve the construction needs of urban formation and expansions in such countries. Demand in the Levant and Gulf countries will continue to come primarily from foreign markets for Lebanese developers, but diversifying to new growth destinations could set them up to unprecedented growth. The competitiveness of Lebanese businesses in these future markets can be improved if they start tapping today into Lebanese emigrant networks, chambers of commerce, Lebanese embassies and Lebanese banks which could facilitate access to credit for their expansion plans.

Fundamental changes to the mindset, capabilities and organization of Lebanese institutions are required.Georges Pierre Sassine, Olga Antoine Jbeili

These are a few illustrations of the myriad opportunities that Lebanese businessmen and policymakers can identify if they incorporate long-term planning in their decision process. Political instability is likely to persist and the only way to secure Lebanon’s future is to adopt a flexible, innovative and adaptive approach to policymaking. It requires fundamental changes to the mindset, capabilities and organization of institutions. Tools like scenario planning, policy gaming and horizon scanning should all be added to the decision toolbox in order to secure sustainable development for future generations.

In summary, growth and opportunity are possible for Lebanon if private and public institutions are redesigned for new times.

Georges Pierre Sassine
is a public policy expert and a Harvard University alumnus. Olga Antoine Jbeili is a development economist and a University of Sussex alumnus. They wrote this commentary for THE DAILY STAR.

A version of this article appeared in the print edition of The Daily Star on January 22, 2013, on page 7.

(The Daily Star: Lebanon News:

Improving quality of life should be cornerstone of government policy

By Georges Pierre Sassine on January 03, 2013

A version of this article appeared in the January 2013 print edition of Executive Magazine, on page 56.

The government’s proposed wage scale hike has hit a dead-end as the debate rages over how the salary increases will be funded, whether by raising taxes or other channels. However, this is not the right question to ask. The fundamental question is: How do we improve the quality of life for Lebanese citizens?

Salary increases will not be enough to improve our purchasing power. If a public sector employee’s pay packet increases, so too will the prices of essentials from food to rent — the net improvement in living standards will be minimal. The government must focus not only on increasing income but also managing the spiraling costs of living. Yet, a solution is within the government’s reach. It will require a combination of policy initiatives that fundamentally alter the supply-demand balance within the market, increase competition and control inflation.

For example, food prices in Lebanon have risen by more than 66 percent in the past six years and are expected to escalate further. Rising food prices are partly driven by the country’s high exposure to international food prices, as Lebanon imports more than 80 percent of the food it consumes. Part of the solution is then to reduce Lebanon’s exposure to international food markets and expand domestic agricultural production. Specific measures include incentivizing banks and the private sector to invest in Lebanon’s agriculture sector, making a strategic shift from low-profit traditional agricultural practices to more economical and less water-intensive products, and promoting bilateral and regional trade agreements to improve the competitiveness of Lebanon’s agricultural sector.

Gasoline prices have also almost doubled in the past six years. About 22 percent of the price of gasoline is due to government taxes. These fees can be reduced if alternative sources to the treasury are ensured. Sixty-seven percent of the price of gasoline reflects the price of purchasing fuels on international markets. The government cannot control international fuel prices but it could adopt a clear public strategy of how and when to purchase so as to minimize price increases and volatility. Other measures also include reducing oil consumption by encouraging more efficient cars and fuel standards, and by developing a more efficient transport system.

Housing and real estate prices have risen drastically in recent years, making it unaffordable for many Lebanese to live in Beirut and other large cities. Currently, 45 percent of houses in Beirut are leased under the old rent law, which is causing a shortage of land available for real estate development. The reform of the rent law in a gradual and fair way that protects lower income families could alleviate land shortages and add about 2 million square meters of new properties suitable for development. This would likely stabilize and decrease housing prices in the medium term.

Domestic and foreign investments have also been inflating residential and construction prices in Lebanon. The relative stability of Lebanon’s economy after the 2008 global financial crisis drove a flow of capital to lower-risk and longer-term investments in Lebanon’s real estate. This makes the regulation of real estate transaction revenues a necessity, including the revision of real estate taxes.

Much of this investment has come from the well-lined pockets of the Gulf. One way to maintain foreign investment and control its inflationary impacts involves modifying foreign ownership laws. Following the system adopted by England, foreign ownership can be modified from a “property ownership” system to a “lease ownership system”; or by restructuring registration fees, which distinguishes between Lebanese and foreigners.

Beirut has become one of the most expensive cities in the world, and the purchasing power of Lebanese citizens declined by about 40 percent since 2005. Debating salary increases will not suffice. The Lebanese government should develop a comprehensive vision to improve the quality of life of its citizens, including a revision of agriculture, energy, real estate and tax policies.


Georges Pierre Sassine holds a master’s degree in public policy from Harvard University’s John F. Kennedy School of Government. He writes about Lebanon’s public policy issues at

A version of this article appeared in the January 2013 print edition of Executive Magazine, on page 56.

(Executive Magazine: a leading business, economics and policy magazine in Lebanon and the Middle East)