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Long crisis tears Lebanon's economic fabric

After more than 10 years of conflict, the Lebanese are feeling the crunch economically, aggravated by the country's fragmentation into ``militia republics.'' At Khalde, about five miles south of Beirut, three freighters bob at anchor just off the coast. They are waiting to unload their cargoes at Lebanon's latest illegal port, opened by the Druze a few months ago and already bustling with activity.

Two miles along the coast toward Beirut, cranes labor to complete another harbor, this one sponsored by the Shiites, behind the shanty dwellings that line the coastal highway. It should be ready to start receiving ships in a month or two.

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That's about the time the company running the official Beirut port, just a few miles away, will be going out of business, according to its director, Henri Pharaon. The port used to be the best and most modern in the Middle East, and the focal point of a booming entrep^ot trade that was one of the pillars of Lebanon's prosperity before the crisis.

But the port is at the northern end of the Christian-Muslim confrontation line that bisects Beirut, and hostilities have discouraged shipping. Imports have also dropped recently because of the slump in value of the Lebanese pound.

For the port's misfortunes Mr. Pharaon mainly blames the illegal harbors -- one of which is operated by the Christian militia at the official port's own fifth basin. Company receipts have dropped to less than 18 percent of expected levels, and Pharaon says he'll have to stop paying employees and longshoremen within two months.

Control of illegal ports by freebooting militias also eats heavily into one of the government's few sources of income. Customs revenues from the Port of Beirut have fallen to a record low of less than 10 percent of normal levels.

Another problem is fuel subsidies, which are costing the already bankrupt government an estimated 7 billion (Lebanese -- about $388 million) this year. ``Who's benefiting from the subsidy?'' asks former Finance Minister Elias Saba. ``To a small extent, the private car owner -- but mainly it's the big traders and smugglers who gain. The government's squandering money like Saudi Arabia in its heyday.''

That is something Lebanon can ill afford to do. The government's accumulated internal public debt stands at an estimated 42 billion ($2.4 billion) and its budget deficit this year is expected to reach more than 20 billion ($1.1 billion).

It took nearly 10 years for the crisis to catch up with the economy, despite the fact that, as Mr. Saba puts it, ``One stronghold after another was shattered -- first tourism and other services, then industry, the transit trade, agriculture -- and now the last bastion, banking, is under heavy strain.''

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For the man in the street, the real crunch began last fall, when the Lebanese pound started a headlong slump that took it from 6 to the American dollar to its current level of around 18 in just six months. Economist Saba notes that per capita income has dropped to around $200 a year, from about $1,300 in 1982, and he says Lebanon is ``suddenly in a category with countries like Zaire and Bangladesh.''

In a country that imports some 85 percent of what it consumes, the effect of the currency collapse is disastrous. Prices of many items have doubled and tripled in recent months.

``A tin of dried milk which cost 42 [Lebanese] last year costs me 125 today,'' says Lillian Dagher, a west Beirut housewife.

And yet there is money around -- much of it generated by smuggling, gunrunning, and other rackets. These, says Saba, represent a ``new class of people with a stake in keeping things the way they are.'' That, as much as the numerous factional conflicts in this country, is hurting Lebanon's ability to reestablish economic order in the country.

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