Gulf investments could play a vital role in reviving Lebanon's struggling economy and aiding its recovery process. However, the Gulf countries remain cautious, emphasizing the need for political and institutional stability in Lebanon
The economic ties between Lebanon and the GCC countries have historically served as a cornerstone for stabilizing Lebanon’s economy, particularly after the Civil War and the signing of the Taif Agreement in 1989.
Currently, the Gulf states view the potential election of Joseph Aoun as president and the appointment of Judge Nawaf Salam as prime minister positively. These developments are seen as a possible turning point for renewing their economic support and reviving investments in Lebanon, however, years of political deadlock and Hezbollah-influence in the institutional framework have made Gulf investors wary, making them hesitant to re-engage in the Lebanese market.
UAE-based businessman Khalaf Al Habtoor has decided to cancel all planned investments in Lebanon, just days after announcing his intention to undertake a large-scale project in the country. It was stressed that any new investments will depend on the right formation of the government at the time he made the decision of investing in the country.
Al Habtoor, who is the chairman of the UAE conglomerate Al Habtoor Group, attributed this decision to the deteriorating security situation in Lebanon, the lack of political and economic stability, and the absence of any signs of improvement in the foreseeable future.
On Monday, Habtoor criticized the chaotic return of South Lebanon residents to their villages and the provocative motorcycle rallies by Hezbollah and Amal supporters in Beirut.
“The random return to homes in South Lebanon caused dozens of casualties from Israeli fire. This tragedy raises the question: Who is responsible? Allowing the duo-militias to lead this return brings back a past we hoped was over. We believed the state was regaining its authority, but the reality tells a different story,” He said.
According to a World Bank report (March 2024), Lebanon requires investments in key service sectors such as energy, water, and transportation in the short term. Additionally, investments in tourism and trade could play a crucial role in stimulating the country’s economic growth.
The importance of Gulf relations and investments
The Gulf region, with its tourists and investments, has always been a vital source of progress and growth for Lebanon’s economy. Between 2007 and 2010, Gulf countries poured massive investments into Lebanon, driving economic growth to an impressive 10% over three consecutive years.
Lebanon’s true essence began to shift as it grew isolated from its Gulf neighbors’ and sank deeper into economic collapse. However, after a long wait, a glimmer of hope has finally appeared with the election of a president and the appointment of a prime minister, signaling the start of a new chapter for Lebanon’s economy and its relations with Arab allies, but for prominent Gulf investors, the country’s security remains in danger, and the new leadership’s credibility is being put to the test.
“This situation demands decisive and immediate action from the President of the Republic in collaboration with the designated Prime Minister. Either the leadership takes firm steps to restore the state’s authority and renew hope among the Lebanese people, or we will find ourselves once again hostages to the agendas of militias using the streets as a tool for blackmail, whether in government formation or future decision-making.” Al Habtoor said on X a day before the decision to cancel all investments and sell his properties in Lebanon emerged.
The beginning of a new chapter?
Political journalist Mouna Makarem who has worked in newspapers in the Gulf explained to NOW: “The Arab return to Lebanon is on the horizon, with clear signs beginning to emerge,” Makarem told NOW. “Saudi Arabia has taken a proactive step by appointing Prince Yazid bin Farhan to handle the Lebanon file. His efforts, under the guidance of the Kingdom’s leadership, were instrumental in addressing the presidential vacuum in the country.”
According to Mouna, Lebanon is stepping into a new “Arab era,” driven by political and governmental stability that is gradually restoring confidence at home and abroad. However, meeting key demands and expectations is crucial to fully regain the trust of Gulf nations.
“Any misstep could quickly reverse this progress, as seen in the past two days with the Habtoor Group, a major and influential investor in Lebanon, suddenly pulling out due to security concerns.” Mouna said.
Reforms first
Riyadh has made it clear that it is no longer willing to pour money into Lebanon only to see those investments squandered due to mismanagement and corruption.
Saudi Arabia is looking for tangible reforms that will address the deeply entrenched corruption within the country’s political and economic systems. The Saudi Foreign Minister underscored this point following his meeting with the Lebanese president, emphasizing that meaningful reform is a prerequisite for renewed financial or political support.
One of the most critical and contentious challenges lies in the disarmament of Hezbollah. This issue remains a major obstacle to stability in Lebanon and a key concern for Saudi Arabia and the international community.
Gulf investments remain a cornerstone of Lebanon’s economy, with their effects anticipated to improve living standards, boost economic growth, and contribute significantly to the country’s recovery.
The UAE also announced the reopening of its embassy in Beirut. Furthermore, Prince Alwaleed bin Talal’s announcement to rebuild and renovate the Four Seasons Hotel in Beirut has brought additional hope to the Lebanese people, signaling that the country is on the right track toward reintegration into the Arab fold.
Qatar and Kuwait are also expected to inject life back into Lebanon’s economy through investments in the near future, further solidifying Arab economic support.
There are 22 cooperation agreements between Saudi Arabia and Lebanon, which have been frozen since 2017. These agreements, covering trade and food sectors, are now being revived and are expected to be finalized during President Aoun’s anticipated visit to the Kingdom.
Rodayna Raydan is a Lebanese-British journalist. You can follow her on Twitter @Rodayna_462
The views in this story reflect those of the author alone and do not necessarily reflect the beliefs of NOW.
