A historic announcement by US President Donald Trump to lift decades-long sanctions on Syria sends shockwaves across the region, with Lebanon poised to reap economic benefits and face new challenges.
The recent announcement by US President Donald Trump to lift decades-long sanctions on Syria has sent shockwaves across the region, with Lebanon poised to reap the benefits – or face the challenges. As the two countries share a border of just 85 kilometers, the implications are far-reaching and multifaceted.
Economic Opportunities
A key aspect of this development is its potential impact on regional trade and investment. With Syria reentering international markets, it can attract foreign investment and regain diplomatic support from Washington, Saudi Arabia, and several Gulf states. This, in turn, could create new opportunities for Lebanon to engage in economic activities with its larger neighbor.
Regional trade refers to the exchange of goods and services within a specific geographic region, such as a continent, country, or group of countries.
It involves the movement of products across borders within a defined area.
Regional trade agreements aim to reduce tariffs and other trade barriers, increasing economic cooperation among member states.
The benefits of regional trade include increased economic growth, job creation, and improved living standards.
Refugees and Rebuilding
Lebanon has long been hosting over 1.5 million displaced Syrians since the beginning of the Syrian civil war in 2011. While some Lebanese politicians have called for repatriation, others argue that many may now be classified as economic migrants due to the country’s own internal challenges. The lifting of sanctions could pave the way for Damascus to establish diplomatic relations with neighboring countries, including Lebanon.
Challenges and Opportunities
However, there are also concerns that Lebanon may struggle to keep pace with the rate of change across the border. Analysts warn that if Damascus precedes Beirut in reconciling with Gulf states and establishing geopolitical relations, it could gain an advantage over its neighbor. On the other hand, Lebanon’s smaller market size and population offer a unique opportunity for economic integration with Syria.
Economic integration refers to the process of unifying different economies into a single market.
This can be achieved through various means, such as free trade agreements, customs unions, or monetary unions.
The goal of economic integration is to increase economic efficiency, reduce transaction costs, and promote economic growth.
There are three main types of economic integration: free trade areas, customs unions, and common markets.
Free trade areas eliminate tariffs between member countries, while customs unions also unify external trade policies.
Common markets go a step further by unifying factor markets, such as labor and capital.
Integration Exceeds Competition
The Levant Institute for Strategic Affairs director Sami Nader sees significant potential for Lebanese goods to be exported via land corridors to Jordan, Iraq, and Gulf countries, thereby creating a massive market. Lebanese companies are also expected to contribute to the reconstruction of Syria’s infrastructure, which has been severely damaged during the civil war.
Exporting goods and services can significantly boost a company's revenue and global presence.
According to the World Trade Organization (WTO), international trade has increased by over 10% in recent years, with exports accounting for a substantial portion of this growth.
To capitalize on export opportunities, businesses must adapt to changing market demands, invest in logistics and supply chain management, and comply with regulatory requirements.
Statistics show that companies that export are more likely to experience revenue growth and job creation, making exporting an attractive option for businesses looking to expand their reach.
A Delicate Balance
While the lifting of sanctions holds promise, it is crucial that Lebanon prioritizes the return of refugees while addressing its own pressing internal challenges, including soaring inflation, a collapsed banking sector, and years of political turmoil. The World Bank estimates that Lebanon will need around €9.83 billion in aid to support reconstruction and recovery efforts.
Removing sanctions first benefits those in Syria, many of whom are living in temporary accommodation due to their displacement. However, caution must be exercised against rushing returning people back to Syria, given the complexities of their experiences and the time required for them to make informed decisions about their future.
As Lebanon navigates this complex landscape, it is essential that policymakers prioritize economic integration, refugee return, and regional stability to ensure a brighter future for both countries.
