BACKGROUND NOTES:  LEBANON
PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS
U.S. DEPARTMENT OF STATE

JANUARY 1994
Official Name:  Republic of Lebanon

PROFILE

Geography
Area: 10,452 sq. km. (4,015 sq. mi.); about
half the size of New Jersey.
Cities:  Capital--Beirut (pop. 1 million).
Other cities--Tripoli (240,000), Sidon
(110,000), Tyre (60,000), Zahleh (55,000).
Terrain:  Narrow coastal plain backed by the
Lebanon Mountains, the fertile Biqa' Valley,
and the Anti-Lebanon Mountains, which extend to
the Syrian border.  Land--61% urban, desert, or
waste; 21% agricultural; 8% forested.
Climate: Typically Mediterranean, resembling
that of southern California.

People
Nationality:  Noun and adjective--Lebanese
(sing. and pl.).
Population (est.):  3 million.
Annual growth rate (est):  1%.
Ethnic groups:  Arab 93%, Armenian 6%.
Religions:  Christian (Maronite, Greek
Orthodox, Greek Catholic, Roman Catholic,
Protestant, Armenian Apostolic, other), Muslim
(Sunni, Shi'a, other), and Druze.
Languages:  Arabic (official), French, English,
Armenian.
Education:  Years compulsory--5.  Attendance--
93%.  Literacy--75%.
Health:  Infant mortality rate--50/1,000
(1989).  Life expectancy--male, 65 years;
female, 70 years.
Work force (750,000 in 1989):  Industry,
commerce, services--79%. Agriculture--11%.
Government--10%.

Government
Type:  Parliamentary republic.
Independence:  1943.
Constitution:  May 26, 1926 (amended).
Branches:  Executive--president (chief of
state, elected by simple majority of parliament
for 6-year term), council of ministers
(appointed).  Legislative--unicameral
parliament (128-member National Assembly
elected for 4-year renewable terms; last
parliamentary elections in 1992).  Judicial--
secular and religious courts; combination of
Ottoman, civil, and canon law; no judicial
review of legislative acts.
Administrative subdivisions:  5 provinces, each
headed by a governor:  Beirut, North Lebanon,
South Lebanon, Mount Lebanon, and Biqa'.
Political parties:  Organized along sectarian
lines around individuals whose followers are
motivated by religious, clan, and ethnic
considerations.
Suffrage:  Males at 21; females with elementary
education, at 21.
Flag:  Two horizontal red bands with white
center band, on which a green and brown cedar
tree is centered.

Economy
Note:  Due to drastic fluctuation in exchange
rates over 1992, and flaws in the central
government's economic database, figures
throughout this report are not authoritative,
but are estimates based on recent economic
performance.
GDP (1992):  $4 billion.
Annual growth rate:  (1992) 10%.
GDP per capita:  $1,500.
Natural resources:  Limestone.
Agriculture (7.2% of GDP):  Products--citrus
fruit, vegetables, olives, sugar beets,
tobacco.
Industry (21% of GDP):  Types--cement
production, ready-made clothing, electrical
equipment, light industry, refining.
Trade (23% of GDP):  Exports--$500 million
[f.o.b.--1992].  Major markets--Saudi Arabia,
Switzerland, U.A.E., France, Jordan.  Imports--
$4.8 billion [c.i.f.--1992].  Major suppliers--
Italy, Syria, France, Germany, U.S.
Official exchange rate:  [1992 average]  1,683
Lebanese pounds=US$1; [Dec. 1993] 1,711
Lebanese pounds=US$1.  (###)


PEOPLE
The population of Lebanon comprises Christians
and Muslims.  No official census has been taken
since 1932, reflecting the political
sensitivity in Lebanon over confessional
(religious) balance.  The U.S. Government
estimate is that more than half of the resident
population is Muslim (Shi'a, Sunni and Druze),
and the rest is Christian (predominantly
Maronite, Greek Orthodox, Greek Catholic, and
Armenian). Shi'a Muslims make up the single
largest sect.  Claims since the early 1970s by
Muslims that they are in the majority
contributed to tensions preceding the 1975-76
civil strife and have been the basis of demands
for a more powerful Muslim voice in the
government.

There are over 300,000 Palestinian refugees in
Lebanon registered with the United Nations
Relief and Works Agency (UNRWA), and about
180,000 stateless undocumented persons resident
in the country (mostly Kurds and Syrians).
Palestinians and stateless persons are not
accorded the legal rights enjoyed by the rest
of the population.

With no official figures available, it is
estimated that 600,000-900,000 persons fled the
country during the initial years of civil
strife (1975-76).  Although some returned,
continuing instability until 1990 sparked
further waves of emigration, casting even more
doubt on population figures.

Many Lebanese still derive their living from
agriculture.  The urban population,
concentrated mainly in Beirut and Tripoli, is
noted for its commercial enterprise, but
chronic instability until 1990 in much of the
country has had a strong negative impact on
both agriculture and commerce.  Lebanon has a
higher proportion of skilled labor than any
other Arab country.


HISTORY
Lebanon is the historical home of the
Phoenicians, Semitic traders whose maritime
culture flourished there for more than 2,000
years (c. 2700-450 B.C.).  In later centuries,
Lebanon's mountains were a refuge for
Christians, and Crusaders established several
strongholds there.  Following the collapse of
the Ottoman Empire after World War I, the five
Ottoman provinces that had comprised present-
day Lebanon were mandated to France by the
League of Nations. The country gained
independence in 1943, and French troops were
withdrawn in 1946.

Lebanon's history from independence can be
defined largely in terms of its presidents,
each of whom shaped Lebanon by a personal brand
of politics:  Sheikh Bishara al-Khoury (1943-
52), Camille Chamoun (1952-58), Fuad Shihab
(1958-64), Charles Helou (1964-70), Suleiman
Franjiyah (1970-76), Elias Sarkis (1976-1982),
and Amine Gemayel (1982-88).  From the end of
the term of Amine Gemayel in September 1988
until the election of Rene Moawad in November
1989, Lebanon had no president.

The terms of the first two presidents ended in
political turmoil.  In 1958, during the last
months of President Chamoun's term, an
insurrection broke out, aggravated by external
factors.  In July 1958, in response to an
appeal by the Lebanese Government, U.S. forces
were sent to Lebanon.  They were withdrawn in
October 1958, after the inauguration of
President Shihab and a general improvement in
the internal and international aspects of the
situation.

President Franjiyah's term saw the outbreak of
full-scale civil conflict in 1975.  Prior to
1975, difficulties had arisen over the large
number of Palestinian refugees in Lebanon and
the presence of Palestinian fedayeen
(commandos).  Frequent clashes involving
Israeli forces and the fedayeen endangered
civilians in south Lebanon and unsettled the
country.  Following minor skirmishes in the
late 1960s and early 1970s, serious clashes
erupted between the fedayeen and Lebanese
Government forces in May 1973.

Coupled with the Palestinian problem, Muslim
and Christian differences grew more intense,
with occasional clashes between private
sectarian militias.  The Muslims were
dissatisfied with what they considered an
inequitable distribution of political power and
social benefits.  In April 1975, after shots
were fired at a church, a busload of
Palestinians was ambushed by gunmen in the
Christian sector of Beirut, an incident widely
regarded as the spark that touched off the
civil war.  Palestinian fedayeen forces joined
the predominantly leftist-Muslim side as the
fighting persisted, eventually spreading to
most parts of the country.

Elias Sarkis was elected president in 1976.  In
October, Arab summits in Riyadh and Cairo set
forth a plan to end the war.  The resulting
Arab Deterrent Force (ADF), composed largely of
Syrian troops, moved in at the Lebanese
Government's invitation to separate the
combatants, and most fighting ended soon
thereafter.  As an uneasy quiet settled on
Beirut and parts of Lebanon, security
conditions in southern Lebanon began to
deteriorate.  A series of clashes occurred in
the south in late 1977 and early 1978 between
the Palestine Liberation Organization (PLO) and
Lebanese leftists on the one hand, and the pro-
Israeli, southern Lebanese militia (eventually
known as the "Army of South Lebanon," or SLA)
on the other.

After a raid on a bus in Northern Israel left
large numbers of Israeli and Palestinian
guerrilla casualties, Israel invaded Lebanon in
March 1978, occupying most of the area south of
the Litani river.  The UN Security Council
passed Resolution 425 calling for withdrawal of
Israeli forces from Lebanon and creating a UN
Interim Force in Lebanon (UNIFIL), charged with
maintaining peace.  When the Israelis withdrew,
they turned over positions inside Lebanon along
the border to their Lebanese ally, the SLA, and
formed a "security zone" which exists to this
day under the effective control of Israel and
the SLA.

In mid-1978, clashes between the ADF and the
Christian militias erupted.  Arab foreign
ministers created the Arab Follow-Up Committee,
composed of Lebanon, Syria, Saudi Arabia, and
Kuwait, to end fighting between the Syrians and
Christians.  After the Saudi ambassador was
wounded in December 1978, the committee did not
meet again formally until June 1981, when it
was convened to address security and national
reconciliation.  The committee was unsuccessful
in making progress toward a political
settlement and has been inactive since November
1981.

Israeli-Palestinian fighting in July 1981 was
ended by a cease-fire arranged by U.S.
President Ronald Reagan's special envoy, Philip
C. Habib, and announced on July 24, 1981.  The
cease-fire was respected during the next 10
months, but a string of incidents, including
PLO rocket attacks on northern Israel, led to
the June 6, 1982, Israeli ground attack into
Lebanon to remove PLO forces. Israeli forces
moved quickly through south Lebanon, encircling
west Beirut by mid-June and beginning a three-
month siege of Palestinian and Syrian forces in
the city.

Throughout this period, which saw  heavy
Israeli air, naval, and artillery bombardments
of west Beirut, Ambassador Habib worked to
arrange a settlement.  In August, he was
successful in bringing about an agreement for
the evacuation of Syrian troops and PLO
fighters from Beirut.  The agreement also
provided for the deployment of a three-nation
Multinational Force (MNF) during the period of
the evacuation, and by late August, U.S.
Marines, as well as French and Italian units,
had arrived in Beirut.  When the evacuation
ended, these units departed.  The U.S. Marines
left on September 10.

In spite of the invasion, the Lebanese
political process continued to function, and
Bashir Gemayel was elected President in August,
succeeding Elias Sarkis.  On September 14,
however, Bashir Gemayel was assassinated.  On
September 15, Israeli troops entered west
Beirut. During the next three days, Lebanese
militiamen massacred hundreds of Palestinian
civilians in the Sabra and Shatila refugee
camps in west Beirut.

Bashir Gemayel's brother, Amine, was elected
President by a unanimous vote of the
parliament.  He took office September 23, 1982.
MNF forces returned to Beirut at the end of
September as a symbol of support for the
government.

In February 1983, a small British contingent
joined the U.S., French, and Italian MNF troops
in Beirut.  President Gemayel and his
government placed primary emphasis on the
withdrawal of Israeli, Syrian, and Palestinian
forces from Lebanon, and in late 1982, Lebanese-
Israeli negotiations commenced with U.S.
participation.

On May 17, 1983, an agreement was signed by the
representatives of Lebanon, Israel, and the
United States that provided for Israeli
withdrawal.  Syria declined to discuss the
withdrawal of its troops, effectively
stalemating further progress.  Opposition to
the negotiations and to U.S. support for the
Gemayel regime led to a series of terrorist
attacks in 1983 and 1984 on U.S. interests,
including the bombing on April 18, 1983 of the
U.S. embassy in west Beirut (63 dead), of the
U.S. and French MNF headquarters in Beirut on
October 23, 1983 (298 dead), and of the U.S.
embassy annex in east Beirut on September 20,
1984 (8 killed).

Although the general security situation in
Beirut remained calm through late 1982 and the
first half of 1983, a move by Christian
militiamen into the Druze-controlled Shuf area
southeast of Beirut following the Israeli
invasion led to a series of Druze-Christian
clashes of escalating intensity beginning in
October 1982.  When Israeli forces unilaterally
withdrew from the Shuf at the beginning of
September 1983, a full-scale battle erupted
with the Druze, backed by Syria, pitted against
the Christian Lebanese Forces (LF) militia as
well as the Lebanese army.  U.S. and Saudi
efforts led to a cease-fire on September 26.
This left the Druze in control of most of the
Shuf.  Casualties were estimated to be in the
thousands.

The virtual collapse of the Lebanese army in
February 1984, following the defection of many
of its Muslim and Druze units to opposition
militias, was a major blow to the government.
As it became clear that the departure of the
U.S. Marines was imminent, the Gemayel
Government came under increasing pressure from
Syria and its Muslim Lebanese allies to abandon
the May 17 accord.  The Lebanese Government
announced on March 5, 1984, that it was
canceling its unimplemented agreement with
Israel.  The U.S. Marines left the same month.

Further national reconciliation talks at
Lausanne under Syrian auspices failed.  A new
"government of national unity" under Prime
Minister Rashid Karami was declared in April
1984 but made no significant progress toward
solving Lebanon's internal political crises or
its growing economic difficulties.

The situation was exacerbated by the
deterioration of internal security.  The
opening rounds of the savage "camps war" in May
1985--a war that flared up twice in 1986--
pitted the Palestinians living in refugee camps
in Beirut, Tyre, and Sidon against the Shi'ite
Amal militia, which was concerned with
resurgent Palestinian military strength in
Lebanon.  Eager for a solution in late 1985,
Syria began to negotiate a "tripartite accord"
on political reform among the leaders of
various Lebanese factions, including the LF.

However, when the accord was opposed by Gemayel
and the leader of the LF was overthrown by his
hardline anti-Syrian rival, Samir Jaja, in
January 1986, Syria responded by inducing the
Muslim government ministers to cease dealing
with Gemayel in any capacity, effectively
paralyzing the government.  In 1987, the
Lebanese economy worsened, and the pound began
a precipitous slide.  On June 1, Prime Minister
Karami was assassinated, further compounding
the political paralysis.  Salim al-Huss was
appointed acting prime minister.

As the end of President Gemayel's term of
office neared, the different Lebanese factions
could not agree on a successor.  Consequently,
when his term expired on September 23, 1988, he
appointed Army Commander General Michel Aoun as
interim Prime Minister.  Gemayel's acting Prime
Minister, Salim al-Huss, also continued to act
as de facto Prime Minister.  Lebanon was thus
divided between an essentially Muslim
government in west Beirut and an essentially
Christian government in east Beirut.  The
working levels of many ministries, however,
remained intact and were not immediately
affected by the split at the ministerial level.

In February 1989, General Aoun attempted to
close illegal ports run by the LF.  This led to
several days of intense fighting in east Beirut
and an uneasy truce between Aoun's army units
and the LF.  In March, an attempt by Aoun to
close illegal militia ports in predominantly
Muslim parts of the country led to a 6-month
period of shelling of east Beirut by Muslim and
Syrian forces and shelling of west Beirut and
the Shuf by the Christian units of the army and
the LF.  This shelling caused nearly 1,000
deaths, several thousand injuries, and further
destruction to Lebanon's economic
infrastructure.

In January 1989, the Arab League appointed a
six-member committee on Lebanon, led by the
Kuwaiti foreign minister. At the Casablanca
Arab summit in May, the Arab League empowered a
higher committee on Lebanon--composed of Saudi
King Fahd, Algerian President Bendjedid, and
Moroccan King Hassan--to work toward a solution
in Lebanon.  The committee issued a report in
July 1989, stating that its efforts had reached
a "dead end" and blamed Syrian intransigence
for the blockage.  After further discussions,
the committee arranged for a seven-point cease-
fire in September, followed by a meeting of
Lebanese parliamentarians in Taif, Saudi
Arabia.

After a month of intense discussions, the
deputies informally agreed on a charter of
national reconciliation, also known as the Taif
agreement.  The deputies returned to Lebanon in
November, where they approved the Taif
agreement on November 4, and elected Rene
Moawad, a Maronite Christian deputy from
Zghorta in north Lebanon, President on November
5.  General Aoun, claiming powers as interim
Prime Minister, issued a decree in early
November dissolving the parliament and did not
accept the ratification of the Taif agreement
or the election of President Moawad.

President Moawad was assassinated on November
22, 1989, by a bomb that exploded as his
motorcade was returning from Lebanese
independence day ceremonies.  The parliament
met on November 24 in the Biqa' Valley and
elected Elias Hraoui, a Maronite Christian
deputy from Zahleh in the Biqa' Valley, to
replace him.  President Hraoui named a Prime
Minister, Salim al-Huss, and a cabinet on
November 25.  Despite widespread international
recognition of Hraoui and his government,
General Aoun refused to recognize Hraoui's
legitimacy, and Hraoui officially replaced Aoun
as army commander in early December.

In late January 1990, General Aoun's forces
attacked positions of the LF in east Beirut in
an apparent attempt to remove the LF as a
political force in the Christian enclave.  In
the heavy fighting that ensued in east Beirut
and its environs, over 900 people died and over
3,000 were wounded.

In August 1990, the National Assembly approved,
and President Hraoui signed into law,
constitutional amendments embodying the
political reform aspects of the Taif agreement.
These amendments gave some presidential powers
to the council of ministers, expanded the
National Assembly from 99 to 108 seats, and
divided those seats equally between Christians
and Muslims (see GOVERNMENT section below).

In October 1990, a joint Lebanese-Syrian
military operation against General Aoun forced
him to capitulate and take refuge in the French
embassy.  On December 24, 1990, Omar Karami was
appointed Lebanon's Prime Minister.  General
Aoun remained in the French embassy until
August 27, 1991 when a "special pardon" was
issued, allowing him to leave Lebanon safely
and take up residence in exile in France.  1991
and 1992 saw considerable advancement in
efforts to reassert state control over Lebanese
territory.  Militias--with the important
exception of Hizballah--were dissolved in May
1991, and the armed forces moved against armed
Palestinian elements in Sidon in July 1991.  In
May 1992 the last of the western hostages taken
during the mid-1980s by Islamic extremists was
released.

In October 1991, under the sponsorship of the
United States and the then-Soviet Union, the
Middle East peace talks were convened in
Madrid, Spain.  This was the first time that
Israel and its Arab neighbors had direct
bilateral negotiations to seek a just, lasting,
and comprehensive peace in the Middle East.
Lebanon, Jordan, Syria, and representatives of
the Palestinians concluded round 11 of the
negotiations in September 1993.

A social and political crisis, fueled by
economic instability and the collapse of the
Lebanese pound, led to Prime Minister Omar
Karami's resignation May 6, 1992.  He was
replaced by former Prime Minister Rashid al
Sulh, who was widely viewed as a caretaker to
oversee Lebanon's first parliamentary elections
in 20 years.  The elections were not prepared
and carried out in a manner to ensure the
broadest national consensus.

The turnout of eligible voters in some
Christian locales was extremely low, with many
voters not participating in the elections
because they objected to voting in the presence
of non-Lebanese forces.  There also were
widespread reports of irregularities.  The
electoral rolls were themselves in many
instances unreliable because of the destruction
of records and the use of forged identification
papers.  As a consequence, the results do not
reflect the full spectrum of Lebanese politics.

Elements of the 1992 electoral law, which paved
the way for elections, represented a departure
from stipulations of the Taif agreement,
expanding the number of parliamentary seats
from 108 to 128 and employing a temporary
districting arrangement designed to favor
certain sects and political interests.
According to the Taif agreement, the Syrian and
Lebanese Governments were to agree in September
1992 to the redeployment of Syrian troops from
greater Beirut.  That date passed without an
agreement.  In early November 1992, Prime
Minister Rafiq al-Hariri formed a new cabinet,
retaining for himself the finance portfolio.
The formation of the Hariri Government was
widely seen as a sign that the Government of
Lebanon would seriously grapple with
reconstructing the Lebanese state and reviving
the economy.


GOVERNMENT
Lebanon is a parliamentary democracy in which
the people constitutionally have the right to
change their government.  However, until the
parliamentary elections in 1992, the people had
not been able to exercise this right during 16
years of civil war.  According to the
constitution, direct elections must be held for
the parliament every 4 years.  Parliament, in
turn, elects a president every 6 years.  The
last presidential election was in 1989.  The
president and parliament choose the cabinet.
Political parties may be formed and some in
fact flourish.

Since the emergence of the post-1943 state,
national policy has been determined largely by
a relatively restricted group of traditional
regional and sectarian leaders.  The 1943
national pact allocated political power on an
essentially confessional system, based on the
1932 census.  Until 1990, seats in parliament
were divided on a 6-to-5 ratio of Christians to
Muslims.  Positions in the government
bureaucracy were allocated on a similar basis.

Efforts to alter or abolish the confessional
system of allocating power have been at the
center of Lebanese politics for more than 30
years.  A series of amendments has
substantially altered the constitution of 1926.
Among the more significant is Article 95, which
provides that the confessional communities of
Lebanon shall be equitably represented in
public employment and in the composition of the
cabinet but that such a measure is not to
impair the general welfare of the state.  This
article supplements the National Covenant of
1943, an unwritten agreement that established
the political foundations of modern Lebanon.
The covenant provides that public offices shall
be distributed among the recognized religious
groups and that the three top positions in the
governmental systems shall be distributed as
follows:

-- The president is to be a Maronite Christian;
-- The prime minister, a Sunni Muslim, and
-- The president of the National Assembly, a
Shi'a Muslim.

Those religious groups most favored by the 1943
formula sought to preserve it, while those who
perceived themselves to be disadvantaged sought
to revise it on the basis of updated
demographic data or to abolish it entirely.
The struggle gave a strongly sectarian
coloration to Lebanese politics and to the
continuing civil strife in the country.

Under the national reconciliation agreement
reached in Taif, Saudi Arabia, in October 1989,
members of parliament agreed to alter the
national pact to create a 50-50 Christian-
Muslim balance in the parliament and reorder
the powers of the different branches of
government.  The Taif agreement, the political
reform aspects of which were signed into law in
September 1990, further modified the
constitution to permit greater power-sharing
and put in writing many of the provisions of
the national pact.

Constitutional amendments embodying the
political reforms stipulated in the Taif
agreement became law in 1990.  They included an
expansion of the number of seats in parliament
and the division of seats equally between
Muslims and Christians and the transfer of some
powers from the president to the prime minister
and council of ministers.

Constitutionally, the president has a strong
and influential position.  The president
appoints the council of ministers and
designates one of them to be prime minister.
The president also has the authority to
promulgate laws passed by the National
Assembly, to issue supplementary regulations to
ensure the execution of laws and to negotiate
and ratify treaties.

The National Assembly, only sporadically active
since 1975, is elected by adult suffrage based
on a system of proportional representation for
the confessional groups of the country.  Most
deputies do not represent political parties as
they are known in the West, nor do they form
Western-style groups in the assembly.
Political blocs are usually based on
confessional and local interests or on personal
allegiance rather than on political affinities.

The assembly traditionally has played a
significant role in financial affairs, since it
has the responsibility for levying taxes and
passing the budget.  It also exercises
political control over the cabinet through
formal questioning of ministers on policy
issues and by requesting a confidence debate.

Lebanon's judicial system is based on the
Napoleonic Code.  Juries are not used in
trials.  The Lebanese court system has three
levels--courts of first instance, courts of
appeal, and the court of cassation.  There also
is a system of religious courts having
jurisdiction on personal status matters within
their own communities, i.e., rules on such
matters as marriage, divorce and inheritance.

Principal Government Officials
President--Elias Hraoui
Prime Minister and Minister of Finance--Rafiq
al-Hariri
Minister of Foreign Affairs--Fares Bouez
Deputy Prime Minister--Michel Murr
Ambassador to the U.S.--Riad Tabbarah
Ambassador to the UN--Khalil Makkoui

Lebanon maintains an embassy in the United
States at 2560 28th Street, NW, Washington,
D.C. 20008, tel. (202) 939-6300.  There also
are three consulates general in the United
States:  1959 East Jefferson, Suite 4A,
Detroit, MI 48207, tel. (313) 567-0233/0234;
7060 Hollywood Blvd., Suite 510, Los Angeles,
CA 90028, tel. (213) 467-1253/1254; and 9 East
76th Street, New York, N.Y. l0021, tel. (212)
744-7905/7906 and 744-7985.


POLITICAL CONDITIONS
In addition to its indigenous political
groupings, Lebanon contains branches of many
other political parties of the Arab world.
These cover the political spectrum from far
left to far right, from totally secular to
wholly religious and often are  associated with
a particular religion or geographic region.
Palestinian refugees, numbering about 400,000
and predominantly Muslim, constitute an
important and sensitive minority.

Lebanese political parties are generally
vehicles for powerful leaders whose followers
are often of the same religious sect.  The
interplay for position and power among these
leaders and groups produces a political
tapestry of extraordinary complexity.

In the past, this system worked to produce a
viable democracy.  Recent events, however, have
upset the delicate Muslim-Christian balance and
resulted in a tendency for Christians and
Muslims to group themselves for safety into
distinct zones.  All factions have called for a
reform of the political system.

Some Christians favor political and
administrative decentralization of the
government, with separate Muslim and Christian
sectors operating within the framework of a
confederation.  Muslims, for the most part,
prefer a unified, central government with an
enhanced share of power for themselves
commensurate with their percentage of the
population.  The reforms of the Taif agreement
moved in this latter direction.


ECONOMY
Lebanon's economy is liberal and open, and
traditionally heavily oriented toward services.
Lebanon served historically as a haven for Arab
capital and as a Middle East transit point and
enjoyed a vibrant and largely unregulated
private sector.  Lebanon's banking and tourism
sectors flourished between the Gulf oil boom of
1973 and the beginning of Lebanon's civil war
in 1975 by serving regional needs.  Real GDP
growth was 6% per year from 1965 to 1975.

Despite the civil war and mounting government
budget deficits resulting from an inability to
collect taxes, Lebanon kept its currency stable
and inflation rate manageable until the early
1980s.  Expatriate workers' remittances, the
flow of capital from abroad to support various
militias, the PLO's economic activities, and
the narcotics trade all contributed to a
positive balance of payments.

Events in the early 1980s, including the
Israeli invasion of 1982, conspired against the
Lebanese economy, resulting in accumulated
infrastructure damage, massive dislocations of
the population, growing migration of people and
capital, and the uprooting of the PLO
bureaucracy.

Recession in the Gulf led to a sharp reduction
in remittances.  Beirut's prominence as a
center for finance, commerce, and tourism faded
away.  A calmer security environment in 1986-
87, combined with a sharp depreciation of the
Lebanese pound and a decline in labor costs
resulting from inflation of 600%, produced a
modest economic rebound.  Growth was cut short
by the general chaos of 1988-90.

Hostilities in 1989-90 in industrial and
prosperous areas of Lebanon had a dramatic and
negative impact on production and exports,
triggered massive outflows of capital and
people, and created circumstances resulting in
the "dollarization" of the economy.

The end of hostilities in 1990, the beginning
of the process of national reconciliation, and
the removal of internal barriers to the
movements of goods and people produced a short-
term economic boom in 1991.  This high level of
activity proved unsustainable, largely because
of enormous state deficits, poor economic
management by the government, public sector
corruption, the unavailability of commercial
credit, and the collapse of public confidence
in the nation's leadership.

A large, retroactive public sector salary
increase in late 1991, financed through the
sale of Treasury bills, precipitated a crisis:
From January 1, 1992, to early October,
inflation galloped to about 130%, and currency
lost 180% of its value.  The high cost of
living became, and has remained, an issue of
acute concern to the Lebanese public.

A surge of optimism swept across Lebanon with
the advent of the Hariri Government in October
1992, amidst expectations that the billionaire
businessman and his team of advisors would
reform state finances and administration,
embark on needed emergency infrastructure
reconstruction, and attract foreign aid.
Demand for Lebanese pounds jumped immediately,
despite substantial intervention by the central
bank to stabilize the exchange market (the
pound was valued at the end of May 1993 at
1,740 to a dollar, after an early October 1992
low of 2,400 to a dollar).  There was also
evidence of deflation.

The Ministry of Finance has achieved remarkable
advances toward closing the budget deficit,
despite rigidities in debt servicing, the
public sector payroll, and large subsidies to
the electricity and telephone companies.  The
deficit in the first quarter of 1993 amounted
to $104 million, compared to $550 million in
the first quarter of 1992.

The absence of functioning services is a
serious obstacle to growth.  The Hariri
Government has made infrastructure
rehabilitation a centerpiece of its efforts,
using the December 1991 emergency
rehabilitation plan (ERP) as a blueprint.  It
calls for spending $2.3 billion in the next 2.5
years, primarily on rejuvenating the
electricity, telecommunications, water supply,
waste water, and solid waste management
sectors.

The government has already begun pre-qualifying
international firms for projects in those
fields.  The government has in hand commitments
for over $900 million in allocated and non-
allocated foreign assistance, almost entirely
in the form of loans.

In February 1993, the World Bank signed an
agreement to loan $175 million in support of
ERP.  Future aid, necessary for partial
financing of an ambitious $13-billion, 10-year
development plan revealed by the government in
March 1993, will depend largely on the Hariri
team's ability to point to a record of economic
stabilization and well-managed use of current
assistance flows for reconstruction.

Hariri's economic policy is firmly rooted in
the principle that infrastructure spending and
budget austerity will stimulate private-sector
growth.  The prime minister's advisers hope to
develop more sophisticated capital markets to
attract a portion of Lebanese capital held
abroad, which amounts to tens of billions of
dollars, institutionalize exchange rate
stability, and help manage a debt burden which
is bound to grow as ambitious rehabilitation
plans proceed.

The formation of a private real estate company
to rebuild the downtown commercial center of
Beirut is a centerpiece of the Hariri team's
strategy for hooking economic recovery to the
engine of private sector investment.  The
company will expropriate property in the area
and compensate owners with shares in the
company.  The company is to obtain
capitalization equal to half of the estimated
property value in the development zone,
estimated at $4 billion.  Gulf Arab businessmen
have already committed about $500 million to
the controversial project.

Lebanon may have experienced a modest balance
of trade deficit in the first quarter of 1993,
estimated by a private bank at $1.8 million.  A
large trade deficit was virtually eliminated by
capital inflows.  Gold reserves amounted to $3
billion, and foreign exchange reserves at $1.2
billion.  Foreign debt may approach $700
million today, and domestic public debt exceeds
$2.5 billion.

Another issue bringing increasing attention to
Lebanon is its role as a major drug producing
and trafficking country.  In addition to
traditional hashish production, opium is
cultivated and processed into heroin in
Lebanon, and Lebanese traffickers have become
increasingly involved in the cocaine trade.

The dramatic expansion of drug activities in
Lebanon can be traced primarily to the
breakdown of central government authority.
Because of the potential for huge profits from
the drug trade, many militias in Lebanon,
including known terrorist elements, are thought
to be engaged in one or more aspects of the
drug trade to finance their operations.

Since 1976, Syrian troops have occupied
Lebanon's prime drug-producing area, the Biqa'
Valley.  They constitute the only formal
security authority in this area.


FOREIGN RELATIONS
Lebanon's foreign policy reflects its
geographic location, the composition of its
population, and its reliance on commerce and
trade.  Lebanon hopes to reestablish  good ties
with Western countries and in the Middle East.
Lebanon remains friendly with Western countries
and follows a generally cautious course in its
relations with countries of the former Soviet
bloc.

Lebanon's foreign policy is also heavily
influenced by Syria, which maintains forces
throughout parts of Lebanon.  Lebanon did not
participate in the 1967 or 1973 Arab-Israeli
war or in the 1991 Gulf War.  Lebanon and
Israel are now conducting bilateral
negotiations in the Arab-Israeli peace process.


U.S.-LEBANESE RELATIONS
The United States seeks to maintain its
traditionally close ties with Lebanon, to help
preserve its independence, sovereignty,
national unity, and territorial integrity.  The
United States also supports the withdrawal of
all non-Lebanese forces from Lebanon and the
disarming and disbanding of all armed militias.
The United States believes that a peaceful,
prosperous, and stable Lebanon can make an
important contribution to stability and peace
in the Middle East.

The United States supports the programs of the
central government to restore security and
unity to Lebanon and to rebuild that country's
national institutions.  One measure of U.S.
concern and involvement has been a program of
relief and rehabilitation assistance which,
since 1975, has totaled more than $250 million.

This support reflects not only humanitarian
concerns and historical ties but the importance
the United States attaches to the restoration
of a sovereign, independent, unified Lebanon.
Current funding is used to support the
activities of U.S. and Lebanese private
voluntary organizations engaged in humanitarian
relief programs.

Over the years, the United States also has
helped finance construction of the American
University Hospital in Beirut and has assisted
the American University of Beirut (AUB) by
financing part of its operating budget and by
providing scholarships to many of its students.
When the AUB administration building was bombed
in November 1991, the U.S. allocated an
additional $3 million to help defray the costs
of rebuilding this symbolic center of the
university.

In September 1989, all American officials at
the U.S. embassy in Beirut were withdrawn, when
safety and operation of the mission could not
be guaranteed.  A new U.S. ambassador returned
to Beirut in November 1990, and the embassy has
been continuously open since March 1991.
However, due to the size of the staff and
security concerns, normal consular and
commercial services and other embassy functions
are not available in Beirut.

Principal U.S. Embassy Officials
Ambassador--Mark G. Hambley
Deputy Chief of Mission--Vincent Battle
Political Officer--David Hale
Consular/Commercial Officer--Patrick Syring
Consul--Vacant
Administrative Officer--Louis Lemieux

The U.S. embassy operates in Awkar, Lebanon
(tel. 402-200, 403-300).  (###)


Travel Advisory
On January 26, 1987, pursuant to the authority
of 22 U.S.C. 211A and Executive Order 11295 (31
FR 10603), and in accordance with 22 CFR 51.73
(A) (3), all U.S. passports were declared
invalid for travel to, in, or through Lebanon,
unless specifically validated for such travel.
This action was required because the situation
in Lebanon was so chaotic that American
citizens could not be considered safe from
terrorist acts.

Although there has been some improvement in the
security situation, review of the situation has
led to the determination by the Secretary of
State that Lebanon continues to be an area
"...where there is imminent danger to the
public health or the physical safety of United
States travelers" within the meaning of 22
U.S.C. 211(A) and 22 C.F .R. 51.73 (A) (3).
Accordingly, all United States passports shall
remain invalid for travel to, in, or through
Lebanon, unless specifically validated for such
travel under the authority of the Secretary of
State.

Exceptions to this restriction may be granted
to professional journalists and to others for
compelling humanitarian considerations or if
travel is determined to be in the national
interest.  Exceptions will be scrutinized
carefully on a case-by-case basis in light of
the level of threat to the prospective
traveler's safety.  Requests for exceptions
should be forwarded in writing to the following
address:

Deputy Assistant Secretary for Passport
Services
U.S. Department of State
Washington, DC  20520
Attn.:  Office of Citizenship Appeals and Legal
Assistance, Room 300.

The request for an exception must be
accompanied by substantiating documentation
according to the category under which an
exception is sought.  Additional information
may be obtained by calling the Office of
Citizenship Appeals and Legal Assistance (tel.
202-326-6180 ).  (###)


Published by the United States Department of
State -- Bureau of Public Affairs -- Office of
Public Communication -- Washington, DC
January 1994 -- Managing Editor:  Peter A.
Knecht

Department of State Publication 7956 --
Background Notes Series.  Contents of this
publication are not copyrighted unless
indicated.  If not copyrighted, the material
may be reproduced without consent; citation of
the publication as the source is appreciated.
Permission to reproduce any copyrighted
material (including photos and graphics) must
be obtained from the original source.

For sale by the Superintendent of Documents,
U.S. Government Printing Office, Washington, DC
20420.  (###)

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