LA REVUE GAUCHE - Left Comment

Saturday, September 02, 2006

The Economics of War In Lebanon

The conflict in the Middle East is no far-off war. For businesses around the globe, the warring parties are trading nations, sources of labour, supply, natural resources and food. Not for nothing were thousands of foreign workers doing business in Lebanon. Not for nothing are major western nations investing in the region. Lebanon: history and global impact

And in this case the State of Israel could afford to attack Lebanon. It also had too attack its major Port competitor, whose production and economy was begining to boom, threatening competition with Israels export market. Hezbollah was the pretext for a bit of good old fashioned capitalist punishment.

Israel economy should weather Lebanon war, for now
"War is unpleasant, but if Israel could have chosen the economy's best point for being attacked, this is the best timing because it is facing this challenge from very, very solid ground," said Ella Fried, head of research and development at financial information publisher Dun & Bradstreet Israel.Israel's war with Hezbollah guerrillas in Lebanon should not derail the Jewish state's robust economy as long as fighting ends soon.The $130 billion economy has ridden a wave of positive sentiment since 2004 and is headed for a second straight year of growth above 5 percent on strong exports, a revival of consumer spending and heavy foreign investment.Foreign investors have not been deterred. Financial markets have been fairly stable with stock prices and the shekel only down slightly since last Wednesday. Those that are selling are Israelis, not foreigners. The Finance Ministry said even if it needed to boost defence spending, it would do so within the budget framework since Israel is running a surplus so far this year.The credit rating agencies agree Israel is in a good position to overcome a short-term conflict with Hezbollah.

In a joint statement issued by D&B Israel and the Purchasing and Logistics Managers Association it was noted that the fall in the index was attributed to the war in Lebanon, which slowed down domestic demand for Israeli products, and caused a sharp drop in employment and output. The statement also noted that the Procurement Managers Index will drop further in August 2006, and will indicate continued economic slow down. However, according to D&B Israel, the expected continued growth in export demand should bring about a reasonable optimism about Israeli manufacturing recovery later this year.

Merrill Lynch: Shekel reflects economy's strength
In a report on prospects for the shekel, US investment house Merrill Lynch gives a generally positive assessment of the Israeli economy in the wake of the fighting in Lebanon. However, the report does point to certain worries, which it says are liable to cap any upside in the shekel. The report recommends long positions in Israeli inflation-linked Galil bonds, but also recommends investors to hedge foreign currency exposure.
"We believe that the shekel’s recent resilience in the face of the Israeli war against Hezbollah in Lebanon points to the country’s underlying economic strengths," Merrill Lynch analyst Mehmet Simsek writes. "The slowdown in domestic demand is likely temporary, inflation looks contained, external balance is healthy, and fiscal deficit is likely to remain below 3.0% of GDP."
Nevertheless, Simsek sees three clouds on the horizon. "First, investors are concerned about the impact of the war on political stability. Second, there is uncertainty as to whether the government will be able to maintain its pre-war fiscal stance. Third, strong domestic and external demand has underpinned solid economic performance. A slowdown in US activity may reduce external demand."

Israel is reconstructing despite the rocket attacks, which ended up as weak attacks, creating small scale fires more than any major damage to infrastructe. Unlike the economic effects of the Israeli airwar on Lebanon. Which was not collatoral damage but a deliberate and successful attack on Lebanese capitalism. An attack on a competitor nation.

Lebanon: Deliberate destruction or "collateral damage"?
The widespread destruction of apartments, houses, electricity and water services, roads, bridges, factories and ports, in addition to several statements by Israeli officials, suggests a policy of punishing both the Lebanese government and the civilian population in an effort to get them to turn against Hizbullah. Israeli attacks did not diminish, nor did their pattern appear to change, even when it became clear that the victims of the bombardment were predominantly civilians, which was the case from the first days of the conflict.

Blogger Aqoul noted that durining the hieght of the war the Lebanese domestic economy was in a desperate straight as dollars fled the economy. What the heck did you think was happening with the mass exodus of refugees. They may have left goods, relatives, and pets behind but they emptied their bank accounts.

Aqoul: The Economic Side of the Lebanon War
Building off of the desperate spin by Lebanon's Central Bank Governor, Riad Salameh (who seems to be doing a yoeman job in the face of disastrous circumstances, the article notes an emerging (as of one week ago) dollar shortage and attempts to keep the psychology in play by noting US protection:
"The dollars are going to be brought in by sea with international agreement, under US protection," said Mr Salameh.
The governor played down reports of pressure on the Lebanese pound, saying the central bank, which has about $13bn (£7bn, €10bn) in foreign exchange reserves, was committed to the currency's stability and would maintain the confidenceof the markets. Lebanese nationals tend to dump the Lebanese pound and shift into dollars during political crises.

It should be noted that Lebanon's banking system is already heavily dollarised (it is not common in region to be able to withdraw foreign currency from ATMs, as one can in Leb Land), and doubtless part of the shortage was (and is) because of the Israeli blockade, as well as panic dumping of Lebanse livres.

More interesting, however, are the seat of the pants figures cited here:

The central bank does not disclose the amount of money that it has used to prop up the Lebanese Pound. The English language Daily Star newspaper quoted a trader as saying $500m on the first day of the fighting and thereafter gradually less. Foreign reserves may have been depleted by$1bn-$2bn.

The time frame for the USD 1 billion is not clear, but let's say first week cost CB Lebanon USD 1 billion, second week almost that. Assume downward pressure will resume with the collapse of ceasefire talk and the open hostility between the Lebanese government - well the whole world really - and the US over its increasingly irrational position. One billion a week is obviously not sustainable, unless of course the Gulf comes to the rescue - which is very, very possible but obviously has its own costs.

Sad note to add:
The outbreak of the fighting found Lebanon in a relatively strong economic and monetary position, with a "historically high level of foreign reserves and foreign holdings", said the governor. The balance of payments surplus is estimated atabout $1.8bn.

Rather obviously the past month has not helped that.

At the end of the war and with the current dismal ceasefire, which allows Israel to continue to blockade Lebanon, the Lebanese economy has gone down the toilet.

Lebanon: Reconstruction and Rivalry
August 30, 2006 22 24 GMT
Lebanese Finance Minister Jihad Azour warned Aug. 30 that the country could sink into a recession in the wake of $15 billion worth of destruction wrought by Israeli bombing during the 34-day conflict with Hezbollah and the continuing Israeli blockade. As Lebanon is rebuilt, an array of regional rivalries will emerge as Saudi Arabia, Qatar and Iran shop for influence in the country.Even before the war, Lebanon was struggling to pull itself out of a massive debt that stood at $38.6 billion -- 183 percent of the country's gross domestic product. Current Lebanese estimates of the economic impact of the war are as high as $9.5 billion. U.N. estimates put the number even higher, around $15 billion. In an economy where value-added taxes from trade (Beirut's port earned the government $5 million a day before the war) and tourism (mainly from Gulf Arab nations) made up 37 percent of annual Lebanese government income, relieving the debt will not be easy. The Israeli blockade -- intended to cut off arms and supplies to Hezbollah -- and tourists' travel fears have all but eliminated these sources of revenue. This is where the regional jockeying comes in.

And the attack on the Lebanese power station not only has an impact on the environment of the Medditeranian , it also directly impacts Lebanese fishing and tourism industries.

An Environmental crisis at the door: Impact of the war on Lebanon
Impacts on Tourism
The tourism industry has badly suffered. Beach-based tourism was a major economic
activity in Lebanon and constituted a major part of the Lebanon’s gross domestic product
(GDP). Many public and private beaches have been heavily affected including fishermen
and leisure boats/ships and yachts. It is well known that he Lebanese harbors host
leisure and tourists’ yachts and boats from all over the Arab and Mediterranean
countries. The time needed to clean up the sand, the rocks, the shallow reef and the marine
ecosystem as a whole, is long to impact the tourism industry chronically.
Impacts on Biodiversity & the Fishing Industry
The fishing industry is suffering from both the siege on Lebanon by the Israeli army and
the oil spills that killed the living creatures and fishes in the nearby breeding areas.
In addition the Lebanese coastline is made up of mainly rocky shores. The initial
estimates show that the mortality of limpets and other herbivores is high. Further
detailed studies need to be carried out to assess the true scale of the damage.

While Israeli tourist resorts, while suffering a decline in tourists due to the war, are not devasted and destroyed. In fact even after the Hezbollah rocket attacks manufacturing in the North of Israel was minimally affected.

Fog of war dissipates: Finance Ministry puts total damages at NIS
About one week ago, the socio-economic cabinet announced an NIS 100 million grant to local government in the North. This followed NIS 50 million which had been transferred in an emergency measure two weeks earlier. The Interior Ministry press release announcing the funding said division would be determined by a professional committee headed by Belinkov. State officials believe a total of NIS 2 billion in aid will be transferred to local governments and emergency services in the North.

The treasury is currently focusing on limiting the damage to the 2006 state budget. According to treasury budgets director Kobi Haber, the day after the war is over, the treasury will begin to deal with the 2007 budget. Haber estimates that instead of an economy that had been expected to grow in 2006, according to all the usual indicators, by 5.2-5.5 percent of GDP, 2006 will end with less than 4 percent economic growth.

The allocation table for the NIS 100 million about to be distributed to northern towns, has created great confusion and resentment. It appears that the key criterion was the number of rocket strikes in a given jurisdiction. As a result, large regional councils that stretch across thousands of dunams, will get larger grants, even if their population is smaller and they need fewer services than more urban neighbors. Galilee authority Shagor is slated to receive NIS 1 million in aid, while neighboring city Nazareth will receive only NIS 765,000. In addition, the 240,000-dunam Mateh Asher, with a population of just 18,000 people, is entitled to NIS 3.3 million, just a little less than the four Haifa suburbs the Krayot will get to serve their collective population of 163,000.

In contrast, Kiryat Shmona mayor Haim Birbibai says, "we got 25 percent of the rockets from the Hezbollah, but only 3.8 percent of the compensation from the state."

Rafik Hariri rebuilt Beirut and northern Lebanon. With his assasination it remains to be seen if his family and corporation can do the Lebanese miracle twice.

Impact of the War on Terror on Certain
Aspects of US Policy in the Middle East
The early and mid-1990's marked a period of
economic promise. Several trends and events combined to offer hope that a
much-needed regional economic takeoff was finally under way. They included
the end of the Lebanese civil war; the onset of the Oslo peace process with its
promise of eventual peace and Arab-Israeli joint venturing in trade and
investment; relatively stable oil prices; significant progress on the part of
important Arab economies such as Egypt's in debt-restructuring and budgetary
rationalization; and the emergence of several viable local stock markets that
encouraged private sector capital formation and inflows of foreign investment on
the back of a promised wave of privatization of public enterprises

Certainly the attempt by the central government to match and beat Hezbollahs generosity in rebuilding homes, Hezbollah have give each Shia $12, 000 US Dollars ( ironic that, US Dollars, petro-dollars from Iran) , with a promise of $40,000 for Lebanese home and business owners , will put the economy in the tank.

Along with the need for massive expenditures in rebuilding roads, schools, the power station, hospitals, all the infrastructure of civil society, the politics of outmatching Hezbollah in generosity are poorly thought out. But given the chance to bribe the Lebanese with their own money, the state acts in its short term political interests rather than the long term economic interests of capitalism in Lebanon.

The irony here is that Lebanons benefactors are Arab nations like Saudi Arabia, who if they were any other capitalist state could sue Israel for its destruction of civilian infrastructure. They can't because they don't recongize the State of Israel. Opps.

Israel will benefit from increased US investment after this war. Already the American Jewish lobby is gathering support funds and business in Israel has not been as badly damaged. The use of anti-personal cluster bombs helped the US eliminate some of its excess military inventory which it could not legally use. Putting dollars in the hands of the US who badly need it due to their extended wars in Iraq and Afghanistan.

The use of the cluster bombs also was a deliberate attempt by Israel create a situation of very real economic insecurity, to delay the reconstruction of Southern Lebanon. One cannot rebuild as quickly if one is clearing away cluster bombs.

The continued illegal blockade of Lebanons ports also allows Haifa and other Israeli ports to open in advance of their Lebanese competitors. They are less concerned with humanitarian aid or even weapons getting in then they are about exports getting out.

It is Israeli state policy to attack the economic base of its competitors; whether Lebanon or Palestine.

ei: Economic Update: Westbank and Gaza

It follows that suspending revenue transfers, constraining Palestinian movement and access and reducing aid flows would cause severe economic damage if the available tools were employed with sufficient vigor. Second, the impact of the suspension of clearance revenue transfers and restrictions on movement and access would be much greater than the impact of reduced aid flows.

The relative impact of GOI and donor actions is borne out by the economics of the second intifada--a period in which the various restrictions placed on the movement of people, labor and goods, and on the transfer of revenues collected by GOI on the PA's behalf, led to a contraction in real personal incomes of almost 40 percent between the third quarter of 2000 (Q3/2000) and Q3/2002--despite a doubling of annual donor disbursements in the same period.

Also See:

Lebanon

Israel

Imperialism

Find blog posts, photos, events and more off-site about:
Israel, Lebanon, war, economics, Hizbollah, Hezbollah, USA, waristhehealthofthesate, Bourne, envrionment, oil, spill,

Friday, September 01, 2006

Support Our Troops Bring 'em Home

Sign the NDP online Petition

Support our troops. Bring 'em home.

Petition to the House of Commons

WHEREAS:

The Government of Canada has committed Canadian Forces to an unbalanced counter-insurgent mission in southern Afghanistan that has no clear objectives, criteria for progress, definition of success or exit strategy.
Jack Layton, leader of the NDP has called for the withdrawal of Canadian Forces from this mission.
We support the brave men and women of the Canadian Forces.

We, call upon Government of Canada to begin the withdrawal of Canadian Forces from the counter-insurgency mission in southern Afghanistan.

Also See:

Afghanistan

War

NDP

Find blog posts, photos, events and more off-site about:
NDP, liberals, Afghanistan, PB, BT, Canada, Progressivebloggers, bloggingtories, blogs, blogging, bringthetroopshome, Layton,NDP, Layton, TroopsOut, Afghanistan, War, Harper, Conservatives, Liberals, Canada, politics, military, NATO, peacekeeping, Karzai,

Why I Support Ignatieff

James Laxer hits the nail on the head......
To win the votes to turn out Stephen Harper, the Liberals need to look left not right. They are not going to cut into Stephen Harper’s hold on the right-wing vote in Canada. The Conservative Party is the natural home of those who support the embattled empire of George W. Bush and his failing expeditions in Iraq and Afghanistan. The Liberals need a leader who can appeal to social democrats, environmentalists and soft-nationalists in Quebec. The NDP, the Greens and the Bloc would take dead aim at the pro-imperial stance of a Liberal Party led by Ignatieff and they would be very effective.

Also See:

Liberal Leadership Race

Ignatieff

Liberals, D Liberalleadershiprace, Ignatieff, Canada, Politics,Trudeau, Ignatieff,iberal, Leadership, Race

Palagarist Gets Lecture Job

High School drop out, alcoholic, and a palagarist. Nice to know you can still find work. Premier Ralph Klein will lecture in Washington DC

Must be because he is able bodied......call this welfare for the rich and powerful...

Also See:

Ralph Klein

Alberta

Find blog posts, photos, events and more off-site about:
Klein, Alberta, Canada, Washington, Think-Tank, Premier, Lecturer,

Ralphs Big D'Oh

Boom caught Alberta off guard, Klein says

As Alberta Premier Ralph Klein left the provincial legislature for the last time yesterday, the retiring politician admitted for the first time that his government wasn't ready to deal with the downside of the province's economic boom.
"The boom came on us very, very quickly," the 63-year-old Alberta Progressive Conservative Party Leader said of the province's record-setting growth that has deepened Alberta's housing and labour shortage and has put incredible pressure on its infrastructure and environment.

"We were prepared for sustainable growth, but not the kind of growth that occurred."

He also acknowledged that the opposition was right when it accused his government of "not having a plan" to handle the growth that was brought on by soaring oil and gas prices. But he vowed one would be unveiled this fall to assist the communities such as Fort McMurray and Calgary that are suffering the most.

Sure and his governments plan is.......more of the same....

Outgoing Alberta leader wants industry to set pace
Oil sands developers, not the Alberta government, must decide when multibillion-dollar projects should go ahead amid a squeezed labor force that has led to huge cost overruns and delays, the Canadian province's outgoing leader said on Thursday.

Speaking to reporters in Edmonton after his final legislative session, Premier Ralph Klein said it would be a mistake for his successor to assume Alberta's booming economic growth is not a problem.
Cause thats all they can afford.....

They have not had a plan since Klein took office in 1995....when they gave away the Goose that laid the Golden Egg......

Taking the short view
Alberta's premier Ralph Klein says he doesn't give a "tinker's damn" about whether his province is getting a fair share of its energy wealth. "We do get our pound of flesh," said Klein while answering questions, in mid-July, about royalty reviews.

Tinkers, you'll recall, mended pots and swore like sailors. So a tinker's damn doesn't amount to a hill of beans. But that's exactly what Albertans are earning these days from their natural resource wealth. In June, Canadian Association of Petroleum Products figures revealed Alberta's share of the energy pie reached a high of 40% during Peter Lougheed's era. But over the past five years under Tinker Klein, the province's return dropped to 15% from 22%. That's below the government target of 25%.

Alberta's 1% royalty giveaway in the oilsands partly explains this folly. The government approved the royalty in 1995. Since then, oilsands revenue fell by 30%, while production grew by 133%, according to Amy Taylor, an economist at the Pembina Institute. (The royalty eventually increases to 25%, but that doesn't kick in until project developers have recovered all costs plus a return on investment.) Result? Between 2001 and 2004, Alberta made more from VLT proceeds than it did from the oilsands, according to Alberta Gaming and Revenue and the Alberta Ministry of Energy.
But more stringent regulation of the industry that is fueling the boom is not the answer, Klein said. He declined to say if royalty incentives for oil sands projects should be removed with oil prices at $70 a barrel and higher.

Oh wait here is their plan another focus group....just like the ones they have had on public healthcare......the ones that told them what to do but they ignored.......

Looking for feedback

EDMONTON — Representatives of the Alberta government will tour the province starting next month to get public input on oilsands development.

The panellists, from government, industry and aboriginal groups, will hear submissions in seven open forums over a three-week period ending Oct. 4.
They will then submit a report with recommendations to the government.
The oilsands are the engine propelling Alberta’s swiftly moving economy.
But they have led to questions about environmental impact, infrastructure and whether taxpayers are getting value for money on royalties.
Premier Ralph Klein has said there will be no brakes put on oilsands development.

Also See:

When will the bubble burst?

Ralph Klein

Alberta

Find blog posts, photos, events and more off-site about:
Klein, Alberta, Boom, Tarsands, Economy, Canada, PC, Conservatives, government, bigoil, Calgary

How To Create Terrorists

Those who claim that terrorism or what it really is; armed struggle, armed resistance to the armed/terrorist State, is somehow a creature that arises spontaenously for no reason....well here is exactly why groups pick up the gun when confronting a police/army controled state.

Bugti killing: Pak army braces for protests

The killing of Nawab Akbar Bugti during an army operation has not only destabilized Balochistan but has also isolated President Musharraf and his army.
The incident has not just shocked civil society and the media but also prominent members of the ruling PML party, who have publicly expressed grief over the Nawab's death.

Despite widespread condemnation the Pakistan President has vowed that the military operation in Balochistan will continue till all "miscreants" are eliminated.

However, others think that this will only lead a spiral of violence.

"This will have more reactions. Those who talked of democracy will be pushed to the back and people will take to the gun," said Hasil Bizenjo, Secretary General, National Party, Balochistan.

In the last few days, the Baloch Student Organization has been in the forefront of political agitation against the killing of Nawab Bugti.

They have been involved in the violent riots that followed, and hundreds of their members have been arrested.

Till last week, they were affiliated with Baloch nationalist parties but now they have broken away and taken to the path of violence.

"At the moment BSO does not have any affiliation with anyone. They say that we should go to the Parliament of Pakistan and we say no because we cannot achieve our goals through parliamentary politics. We do not trust in this Parliament."

"We do not believe in violence and neither have we taken to the path of violence so far. We are being pressurized now and all doors are being closed upon us," said Fahim Baloch, Member, Baloch Student Organization.

And might this have anything to do with economics, in this case petro-economics...all war is about capitalist expansion as I have said before.

Bugti, nicknamed the "Tiger of Baluchistan", was killed on August 26 during an assault on his hideout in the remote hills of gas-rich Baluchistan. His death sparked violent protests this week across Pakistan's poorest and least populated province.

Also See:

Pakistan

Find blog posts, photos, events and more off-site about:
Pakistan, Baloch, Bugti, terrorism, armedstruggle, nationalism, riots, stateterror

Pro War Bloggers Bash Layton

It doesn't matter if they belong to the Progressive Bloggers or Blogging Tories pro-war dweebs share a common view that the NDP announcement about Pulling Our Troops out of Afghanistan is....wait for it...appeasement....of course one expects this from the BT's but coming from so called Progressive Blogs, opps sorry thats right the PB's include Liberals. And these blogging Liberals are anything but progressive as these blog posts show.

Layton On The War

Support our troops? Then give Jack Layton money

Maybe they should move over to BT and join the chorus there.

Of course none of these pro war types have the guts to call for Total War

Also See:

Afghanistan

War

NDP

Find blog posts, photos, events and more off-site about:
NDP, liberals, Afghanistan, PB, BT, Canada, Progressivebloggers, bloggingtories, blogs, blogging, bringthetroopshome, Layton

When will the bubble burst?

In the East there is no housing bubble so the Toronto Star reports this story this way;

No housing bubble: TD

Market more balanced than in U.S.
Yet sharp decline there will cool us off

In the west there is a growing housing bubble in Edmonton and Calgary so the same TD report is viewed this way;

"If prices continue to rise at a close to 40% rate, affordability will quickly become a problem and fear of being priced out of the market may encourage hasty decisions," the study said.

"However, if the market becomes more balanced, the rate of price growth will eventually slow ... and we would argue that a price correction is not warranted."

Meanwhile, explosive price growth in Edmonton also prompted TD to pay close attention to that city.

"The message is the same as for Calgary," the report said.

"Much of the strength is supported by economic fundamentals, but prices cannot go up at this pace indefinitely. If the pace doesn't soften, a bubble could form." Housing bubble watch

When will this bubble burst? Not soon enough.

Homeless folks in Alberta are having a hard time finding affordable housing, as are workers in the Tar Sands and even the average university student looking for a place to rent. All the result of a speculative market in real estate. How about Price and Rent Controls along with subsidisation of low cost housing. Nope ain't gonna happen in I'm Alright Jack I Got Mine Alberta.

Of course our Glorious Leader only discovered the crisis this summer.

EDMONTON - Premier Ralph Klein says he only realized earlier this year that Alberta was experiencing a major boom and that his government lacked a proper plan to address problems such as a labour shortage, housing crisis and increased demand for schools and hospital The opposition was right

And his rivals for the Leaderhsip of the Party of Calgary have no solutions either.

Long school bus rides or schools in disrepair. Lack of hospital beds and emergency rooms in crisis. Traffic in gridlock and roads still needing building, despite all those cones already diverting traffic. Affordable housing impossible to find for the hard-working sorts we want to attract here and if an individual scores some modest digs they cost an arm and a leg. We have a provincial government with no idea where it's going except to prattle on about the free market. The wannabes wanting to lead the next Alberta administration look like a dog's breakfast with little nutrition on offer.Prosperity carries heavy cost