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Closed Border with Syria Costing Lebanon Billions

By Alex Young | The Media Line

August 17, 2015

Logistics Truck in Lebanon (Photo: Alex Young/The Media Line)
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Lebanese air and shipping facilities unable to compensate

[BEIRUT] — As Syria’s civil war grinds on with no sign of ending, neighboring Lebanon is under increasing strain, especially in the transport and logistics sector.

“The Syrian crisis has cost Lebanon billions of dollars,” Nassib Ghobril, chief economist of the Byblos Bank Group, told The Media Line. “This is the reason that you had growth averaging 9% before the crisis and 1.2%–1.3% between 2011 and 2014.”

A recent World Bank report found that a Lebanese exporter before the war had lost an average of $90,000 in exports to Syria by 2012 – just one year into the conflict. This figure does not take into account the trade between Lebanon and other markets, which have been lost due to the crisis.

The loss of almost all land trade routes out of the country has taken a serious toll on Lebanon’s economy. It particularly affects goods bound for major trade partners Turkey, Iraq, Jordan and the Gulf Cooperation Council (GCC). This has increased the costs of transporting goods, leading to higher prices for consumers in Lebanon and lower profit margins for logistics companies. The closure of land routes has hit the agricultural sector the hardest as they rely predominantly on road transport and cannot be easily switched to air or sea routes.

Air freight and container traffic has increased dramatically over the last 4 years to account for the loss of land transport. However, these routes are overloaded and expensive. Both the port of Beirut and Beirut Airport would require critical investment in order to effectively manage the increased traffic, but that does not appear likely at least in the short run.

“We’re working in a very challenging environment,” Mourad Aoun, CEO of Net Logistics, a major Lebanese logistics and shipping company operating across the Middle East, told The Media Line. “Working in Lebanon is a challenge in itself, Syria always had potential and we had a very big operation there but we have had to downsize,” he said.

While Net Logistics has benefited from aid money now entering Lebanon, this only accounts for a fraction of lost trade and comes with its own challenges, Aoun said.

Jordan and Turkey transport the bulk of humanitarian aid that enters Syria. Lebanon, however, is not considered a major gateway, which those in the logistics sector say is due to Lebanon’s absence in negotiations with the international community and perceived challenges with importing into and transiting through the country of just four million people.

“I think the Lebanese government should have played a better role in getting gateway status. From a logistics perspective, what we’re getting from Lebanon into Syria isn’t generating any real business. We’re doing it, but I didn’t feel that it’s positively affecting our economy,” Aoun explained.

Net Logistics moves a few hundred trucks per month into Syria, a low number when compared with a contract that Net Logistics won to transport 2,000 trucks of humanitarian aid into northern Iraq in the first few months after Islamic State gunmen overran parts of the country’s western regions in 2014.

The haulage company uses Beirut’s port to bring in the majority of the World Food Program’s supplies for Syria – those that can’t be bought locally, Dina el Kassaby from the aid agency, told The Media Line. This accounts for some 200 trucks a month crossing the Lebanese-Syrian border.

Until earlier this year there were still routes open to Jordan and one to Iraq that a number of Lebanese firms used, despite the dangers. However in April rebel groups seized the four main crossing points to Jordan, closing off the last routes to the country and the GCC region – a bilateral trade conduit worth over $2 billion a year.

The Syrian crisis is not the only thing that has caused problems for Lebanese logistics companies. Syria recognizes the dramatic impact of closing the border and has threatened to do so on a number of occasions over the last decade — most recently in January following a surprise move by the Lebanese government to require Syrians to obtain a visa to enter Lebanon.

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