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Last Updated: Monday, 17 July 2006, 12:03 GMT 13:03 UK
Lebanon's fragile economy suffers
Smoke continues to billow from a fuel dump at Beirut International airport in Lebanon at sunset Friday, July 14, 2006
Israeli military strikes have hit key parts of Lebanon's infrastructure
Lebanon's stock market has closed along with much of the rest of the country's economy as Israel's air and sea blockade continues.

The government said that damage from Israeli military strikes has already cost its economy about $500m (273m).

Israel launched its offensive last week following the capture of two of its soldiers by Lebanese guerrillas.

It is feared that the conflict between Israel and Hezbollah militants has wiped out Lebanon's tourism industry.

Foreign visitors

Tourism accounts for about 15% of the Lebanese economy, and had risen 50% in the first half of 2006.

The government had hoped the country would draw in 1.6 million visitors this year, bringing in about $2.5bn for the economy.

The tourism industry isn't just on its knees, it is flat on its back.
Michael Karam, Beirut businessman

"The Lebanese have been working very hard over the past fifteen years to build up the tourism industry, but all this has been wiped out," said Michael Karam, editor of Executive, a Beirut-based business magazine.

"Five days ago Beirut was the playground of the region - there was a lot of Gulf money flooding in and lots of apartment blocks being built.

"Now the tourism industry isn't just on its knees, it is flat on its back."

Share slump

Lebanese shares had slumped by 14% last week, with the country's largest company, real estate giant Solidere, particularly badly hit.

Solidere was established by the late Lebanese Prime Minister Rafik Hariri to rebuild much of Beirut after the 1975-1990 civil war.

Although saddled with massive foreign debts, the Lebanese economy has been growing in recent years and had been expected to reach an annual growth rate of about 4-5% this year.

Economists are now suggesting that the economy could actually contract if the Israeli-Hezbollah confrontation continues, or widens to involve other Middle East states.

Much of the country's business infrastructure is currently out of action.

The airport has been repeatedly bombed, along with a number of key bridges and roads, including the main highway linking Beirut and Damascus in Syria.

Beirut's port is blockaded, meaning that any imports or exports will have to find more expensive alternative routes, probably via Syria.

Lebanese people salvage belongings from bomb crater
Lebanese people say their economy has been badly damaged

BBC News reporter Martin Patience said the greatest damage appears to have been inflicted on the Lebanese economy.

"People are saying that these attacks have been focused on hitting the Lebanese government in the wallet."

The UK government has now started evacuating its citizens from Lebanon, with plans in place to move up to 10,000 Britons.

"I have put myself and my family on the British Embassy's list, but I am not going anywhere," said Mr Karam, who was born in the UK to Lebanese parents, but moved to Beirut in 1992.

"My family is settled here and the country would have to disintegrate for me to leave."




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