By Bassem Mroue, AP

BEIRUT, Lebanon — Syria’s conflict
has caused hundreds of thousands of refugees to flee to Lebanon, putting
a huge strain on the Lebanese economy and its already-crumbling
infrastructure. But the five-year Syrian civil war has been a boon for at least one economic sector: the tobacco industry. At Lebanon’s main tobacco factory, located southeast of the capital,
Beirut, employees work round-the-clock but can barely cover the high
demand for locally-made cigarettes.

“We are lucky that there are
Syrians in Lebanon,” said George Hobeika, a senior official with the
state-owned factory, adding that consumption of some local brands in
Lebanon has more than tripled in five years. Lebanon is hosting
over a million registered Syrian refugees. Unofficially, the number of
Syrians who have fled to Lebanon is estimated to be closer to two
million. Many of them are unable to find work, and spend much of their
day smoking in tented encampments or makeshift accommodation around the
country.

In the months following the outbreak of war in March
2011, many of Syria’s cigarette factories closed down. Others were not
able to cover market demand after imports of tobacco stopped, leading to
a sharp rise in demand for Lebanese cigarettes – particularly Cedars, a
brand that is similar to Syria’s widely-smoked Hamra cigarettes.
Lebanon’s state-owned cigarette company sales peaked at US$1 billion in
2012.

Later that year, Syrians began importing cheaper brands of
cigarettes through their ports, leading to a drop in imports from
Lebanon. But demand in Lebanon is still high, due to the Syrian refugees
and the introduction of two new premium labels, Cedars Silver and
Cedars Plus, which have taken market share away from expensive imported
brands.

Lebanon’s government-owned Regie Libanaise des Tabacs et
Tombac, better known as Regie, is the only firm authorized to produce
and import cigarettes and tobacco and is a rare success story among the
country’s often dysfunctional state companies. It is one of the few
institutions to bring money into the state’s coffers.

At the
Regie factory in Beirut’s Hadath district, all the machines are
functioning at nearly maximum capacity and Italian engineers are
installing a new machine that is expected to boost production by 12,000
cigarettes a minute within weeks.

“There is high demand to export
Cedars to neighboring countries, but regrettably demand in Lebanon is
higher than production,” said Hobeika, a member of Regie’s board of
directors, sitting in his office overlooking Beirut’s international
airport.

Karim Dawali, 36, runs a small shop where he sells
coffee and cigarettes downtown, and says he sells on average about 20
packs of Cedars Silver per day compared to 17 packets of Marlboros,
which are almost double the price.

“It’s clean and tastes good,” said Dawali, as a plainclothes policeman bought two packs of Cedars Silver.