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Beirut – the City that would not die though its banking may decline in
political conflicts
BEFORE, RISE - AND AFTER, FALL
For those
interested in researching the impact of politics on banking Lebanon is the
best location for such research because it frequently faces political
conflicts. Before the Civil War,
Lebanon
was called the banking capital of the Arab, and the
Switzerland
of the Middle East. It attracted deposits from the rich Gulf countries. It
attracted investments from the West. When the Civil War started the reverse
trend started. There was flight of deposits or capital from Lebanon. The
rich withdrew their riches. Some foreign banks working in Lebanon’s
financial markets closed. The other foreign banks ended their correspondent
banking relationships with
Lebanon.
Foreign confidence in Lebanon faltered. When the Civil War ended there was
rise in banking. But again there was fall in banking during recent conflict
with Israel. Israel targets the banks in Lebanon that it suspects are
bankers to terrorist organizations. The rise and fall in the banking is a
recurrent phenomenon. This is the way of banking in the violent political
environment that characterizes the Middle East. Peace or war, it makes a
difference in Lebanon banking.
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