."I think it was much easier for people during the war to make money," said Zakka, who is currently reconstructing private buildings for a living. Today, "You tell me how people are living-upon their own initiative," said the businessman, who has combined different sorts of odd jobs to get by. In these turbulent economic times, with rents for one-bedroom apartments as high as two thousand U.S. dollars, many people can hardly afford to live in Beirut, no less in the modern luxury promised by Solidere's project.
The crippling cost of living in Beirut has made it the 22nd most expensive city in the world (New York is 14th) according to a recent UN survey. "Solidere reflects the housing glut," said Paul Salem, executive director of the Lebanese Center for Policy Studies. "There was a big bubble when Solidere took off around '94-'95 and it didn't burst but it stopped and it stagnated because there was no peace and no real flood move back to Beirut." Real estate prices in the building market increased because people expected a heavy demand, but when that demand didn't come, prices never went down again.
Despite Solidere's desire to demonstrate through a fantastic face-lift that the country is back on track, Lebanon is in the midst of a painful financial slowdown that belies the new construction. Since 1997, the country has been hit by an economic crisis that has done nothing to boost the confidence of potential foreign investors, and has driven Solidere's shares from a high of 170 dollars to a rock-bottom of six dollars on the Beirut Stock Exchange. There are 6,000-7,000 unemployed engineers today (according to Daily Star article, 12.7.99), and employment in most other sectors is down. Five hundred million dollars in Solidere construction has been held up by delayed construction permits, keeping many construction workers out of work. --While the secretary of labor mentioned a nine percent unemployment rate, some economists argue that it could be as high as 25 to 30 per cent Foreign investment, vital to Lebanon's economy, has been put off by internal bank corruption, shaky markets, and bureaucracy that makes it easier to deal elsewhere.
Additionally, Lebanon is fighting tremendous debt. According to Bank Audi, one of the largest Lebanese banks, in 1998, the country had to face a budget deficit of 15% of GDP and a public debt standing at 115% of GDP. Tax evasion has always been a national sport, and loans for agriculture and private industry are very low --agriculture accounts for two percent of bank loans although it makes up 12 percent of the GDP, according to the Economist country survey.
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