Lebanon’s ‘lung’ to Arabian Gulf markets choked by politics

1 / 2
Workers close the doors of a refrigerator truck loaded with fruits for export from Lebanon to the Gulf and other Arab countries, at a packaging warehouse, in Bar Elias town, in Bekaa Valley, Lebanon. (AP/Hussein Malla)
2 / 2
A Lebanese customs officer walks past trucks waiting to cross into Syria from the Lebanese border crossing point of Al-Masnaa, in Bekaa Valley, Lebanon. (AP/Hussein Malla)
Updated 13 November 2018
0

Lebanon’s ‘lung’ to Arabian Gulf markets choked by politics

  • Lingering disputes between Lebanon and Syria, and political gridlock in Beirut, mean that many Lebanese businesses still rely on longer and costlier transport by sea
  • Lebanon’s exports plunged from a high of 78 percent of GDP in 2008 — three years before the start of Syria’s civil war — to a low of 36 percent in 2017

AL-MASNAA, Lebanon: Lebanese exporters rejoiced last month when the Syrian government opened a key land crossing with Jordan that had been closed by years of war, restoring a much-needed overland trade route to lucrative Arabian Gulf markets.
But lingering disputes between Lebanon and Syria, and political gridlock in Beirut, mean that many Lebanese businesses still rely on longer and costlier transport by sea, further stalling efforts to restore an economy battered by years of war in its larger neighbor.
The reopening of the Naseeb-Jaber crossing allowed Mohammed Araji, owner of a trucking firm in Lebanon’s Bekaa Valley, to retrieve two trucks that had been stranded in Jordan since 2015, when Syrian rebels captured the crossing. Two other of his refrigerator trucks had been parked in front of his house for the last three years.
Even before the crossing officially closed, his brother was briefly abducted by rebels while driving a truck through Syria, underscoring the perils they faced in trying to keep the route open.
The crossing was Lebanon’s “lung,” Araji said, and its closure was a “death blow” to the economy, affecting farmers, merchants, industrialists and drivers. So he was pleased when Syrian government forces reopened the crossing and secured the route.
But for weeks he was unable to find exporters ready to give him shipping contracts. Finally, on Saturday, he sent his first truckloads to Saudi Arabia after offering an exporter an attractive price.
“People are still waiting to see what will happen,” he said.
The land route through Syria, Jordan and Iraq is vital to Lebanon, which is squeezed between Syria, the closed border with Israel, and the sea. Lebanon’s exports plunged from a high of 78 percent of GDP in 2008 — three years before the start of Syria’s civil war — to a low of 36 percent in 2017.
Before Naseeb’s closing, more than 250 trucks a day headed from Lebanon to markets in Syria, Jordan, Iraq and the Gulf. After the closure, that dropped to some 300 trucks in a good month, bound only for Syria, customs officials said.
An estimated 550,000 tons of vegetables and fruits a year used to be exported through the Syria-Jordan crossing, according to Ibrahim Tarshishi, head of the Bekaa farmer’s union. Since the shutdown, that flow has dropped by nearly 40 percent, to no more than 330,000 tons. Exports from Bekaa to Saudi Arabia have dropped by 60 percent, according to figures from the Bekaa chamber of commerce.
After the crossing reopened, Syria and Jordan imposed new transit tariffs on trucks heading to the Gulf. The Syrian increase alone was five-fold, Tarshishi said. Lebanon meanwhile subsidizes transport by sea.
Traders hope improved ties between Syria and Lebanon will lead to reduced tariffs, but Lebanon’s political leaders are fiercely divided between supporters and opponents of President Bashar Assad, and they have been unable to form a government since elections in May.
Contacts among Lebanese and Syrian officials remain personal and partisan — and some complain Syria is using the tariffs to force normalization. Experts say opaque policies and decision-making have also hindered trade.
Charles Zarzour, the head of the government agency for agricultural exports and imports, said the opening of the crossing has at least offered “psychological relief” to traders.
“God willing, when we have a government in Lebanon, it lays down a wise policy that serves the country’s interest,” including tariff reductions, he told The Associated Press.
Syrian officials had no immediate comment.
Tarshishi has pressed for an end to the sea shipping subsidies and other government action to revive land exports, but in the caretaker government “no one wants to take responsibility,” he said.
On a recent afternoon at Al-Masnaa, the Lebanese side of the crossing into Syria, nearly a dozen trucks loaded with bananas were bound for Damascus. Just one truck, carrying cleaning supplies, was heading to Jordan. None were bound for the Gulf.
Talal Darwish, a produce exporter, is still sending his grapes, apples and pears by sea, and on a recent day, workers raced to prepare a shipment bound for Kuwait. By land would be cheaper and faster — a five-day trip as opposed to 25.
He has heard talk of efforts to reduce tariffs, but says “we still don’t know officially, so there is no rush.”


Bitcoin craze hits Iran as US sanctions squeeze weak economy

Updated 18 July 2019
0

Bitcoin craze hits Iran as US sanctions squeeze weak economy

  • Some Iranian officials worry that “mining” is abusing the subsidized electricity
  • Iranian Bitcoin miners are purchasing more affordable Chinese ready-made computers

TEHRAN: Iranians feeling the squeeze from US sanctions targeting the Islamic Republic’s ailing economy are increasingly turning to such digital currencies as Bitcoin to make money, prompting alarm in and out of the country.
In Iran, some government officials worry that the energy-hungry process of “mining” Bitcoin is abusing Iran’s system of subsidized electricity; in the United States, some observers have warned that cryptocurrencies could be used to bypass the Trump administration’s sanctions targeting Iran over its unraveling nuclear deal with world powers.
The Bitcoin craze has made the front pages of Iranian newspapers and been discussed by some of the country’s top ayatollahs, and there have been televised police raids on hidden computer farms set up to bring in money by “mining” the currency.
Like other digital currencies, Bitcoin is an alternative to money printed by sovereign governments around the world. Unlike those bills, however, cryptocurrencies are not controlled by a central bank. Bitcoin and other digital currencies like it trade globally in highly speculative markets without any backing from a physical entity.
As a result, computers around the world “mine” the data, meaning they use highly complex algorithms to verify transactions. The verified transactions, called blocks, are then added to a public record, known as the blockchain. Any time “miners” add a new block to the blockchain, they are rewarded with a payment in bitcoins.
To work, the expensive specialized computers require a lot of electricity to power their processors and to keep them cool. In Iran, “miners” have an edge because electricity is cheap thanks to longtime government subsidies. “Miners” also buy cheaper Chinese ready-made computers to do the work.
But the constant raids and authorities’ conflicting statements on the issue have Bitcoin “miners” in Iran incredibly leery of being identified. Those contacted by The Associated Press refused to speak about their work or to say how much they earn from their “mining.”
But they acknowledge they do this to make some money at a time when Iran’s currency, the rial, tumbled from 32,000 rials to $1 at the time of the 2015 nuclear deal, to around 120,000 rials to $1 now.
“It is clear that here has turned into a heaven for ‘miners,’” Mohammad Javad Azari Jahromi, Iran’s minister for information and communications technology, recently told AP in an interview. “The business of ‘mining’ is not forbidden in law but the government and the Central Bank have ordered the Customs Bureau to ban the import of (mining machines) until new regulations are introduced.”
Ali Bakhshi, the head of the Iran Electrical Industry Syndicate, said earlier this month that the country’s Energy Ministry likely would boost costs for Bitcoin “miners” to 7 cents for each kilowatt of electricity they consume, a massive increase from the current half-cent but still almost half the cost of electricity in the United States, according to the semi-official Fars news agency.
Still, there are concerns, especially among Iran’s religious leaders, that people might try to circumvent paying extra for the electricity as well as using digital currency to hide or move money illicitly.
Tabnak, a hard-line news website associated with a former commander of the country’s paramilitary Revolutionary Guard, quoted three ayatollahs describing Bitcoin as either problematic or “haram,” meaning forbidden. Islam prescribes strict rules about finance.
But Jahromi said clerics became more receptive to the idea after his staff briefed them that Bitcoin had a value in the real world, which is required under Islamic finance. Islamic finance also prohibits gambling, the payment of interest and misleading others.
“Some of our top clerics have issued fatwas that say Bitcoin is money without a reserve, that it is rejected by Islamic and cybercurrencies are haram,” Jahromi said. “When we explain to them this is not a currency but an asset, they change their mind.”
Iran has tried to keep its economic situation in check by controlling foreign currency rates and cutting down on those moving their money from the rial to other currencies, including Bitcoin. Last year, the semi-official Mehr news agency quoted Mohammad Reza Pour-Ebrahimi, the head of the Iranian parliament’s economic commission, as suggesting that about $2.5 billion left Iran through digital currency purchases. He did not elaborate and authorities have not discussed it since.
The US, meanwhile, has been keeping a close watch on Iranians holding bitcoins. In November, a federal grand jury in Newark, New Jersey, accused two Iranian men of hacking and holding hostage computer systems of over 200 American entities to extort them for Bitcoin, including the cities of Newark and Atlanta.
“As Iran becomes increasingly isolated and desperate for access to US dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers and other providers of digital currency services harden their networks against these illicit schemes,” said Sigal Mandelker, Treasury’s undersecretary for terrorism and financial intelligence.
Not so, said Jahromi.
“Cybercurrencies are effective in bypassing sanctions when it comes to small transactions, but we do not see any special impact in them as far as mega-transactions are concerned,” he said. “We cannot use them to go around international monetary mechanisms.”