Al Monitor – By Scott Preston a  journalist based in Beirut, Lebanon writing about
social and political issues in the Middle East. On Twitter: @scottapreston

According to the World Bank, the restoration of Syria represents an industry estimated to be worth over $200 billion. The figure has some businessmen and policymakers hoping that the anticipated boost in multinational trade will save the Lebanese economy, which has stagnated in recent years.

Two free trade agreements, a common language and historic commercial
ties are expected to give Lebanon a competitive advantage over other
countries that share a border with Syria. “In the last 10 or 15 years
when we started liberalizing the economy, at the time when Syria was
pursuing a protective planning system, Lebanon was pursuing a free trade
economy,” Nabil Sukkar, the managing director of the Syrian Consulting Bureau for Development and Investment, a consultancy specializing in market and investment expertise, told Al-Monitor.

“Lebanon became sort of the Hong Kong of Syria. A lot of business was
done in Lebanon to serve Syria, and I expect that in the post-conflict
reconstruction period, Lebanon will again become the Hong Kong of
Syria,” he said.

However, Lebanon’s ability to make the most of its prospects hinge on
whether it can draw foreign corporations to its shores despite its
uncompetitive business environment. Currently, Lebanon ranks 13 out of
15 Arab countries on the World Economic Forum’s Global Competitiveness Index.
Across the country, the government, along with international partners —
including the World Bank, the Islamic Development Bank and United
Nations agencies — are evaluating a number of initiatives that could
spur foreign investment as well as bilateral trade.

In anticipation of lucrative reconstruction contracts, the Ministry of Industry and the UN Industrial Development Organization are evaluating the possible creation of up to three industrial zones.
These zones might be established in the eastern Bekaa Valley or
southern Chouf region, where local manufacturers would be well-placed to
service the Damascus area.

Several other projects are being enabled through funds from a new financial instrument established in April by international donors. The Concessional Financing Facility
(CFF) is meant to offer loans at highly concessional rates with a
40-year repayment window and a 10-year grace period. “The grant money
that was initially received during the April meeting from the
international community is put into a CFF trust fund. This will allow us
to program about $800 million worth of money,” Peter Mousley, the
program director at the World Bank’s regional office in Beirut, told
Al-Monitor.

That money will be put to use in Lebanon’s north where World Bank
funding is being used to upgrade 700 kilometers (435 miles) of roads,
according to Hassan Dennaoui, a special consultant at the Tripoli
Chamber of Commerce. Through this initiative, the government is hoping
to stimulate job creation while laying the ground work for Syrian
reconstruction activity.

Perhaps no city in Lebanon stands to gain more from Syria’s repair
than Tripoli, an impoverished city that, as recently as March 2014, was
the site of fierce clashes between factions on opposing sides of the Syrian war. Now, with the violence quelled, Tripoli
is set to become the country’s most crucial hub for the Syrian
reconstruction business and a key supply route to the devastated Syrian
province of Homs, located north of Lebanon.

The potential wealth to be made from Syria’s restoration has also
energized work on existing projects such as the expansion of Tripoli’s
seaport. In 2012, the government awarded a contract to Gultainer for the construction and operation of a terminal at the port, and new developments are ongoing.

For his part, Dennaoui told Al-Monitor that the city is even being
prepared to compete with Syria’s own harbors to the north. “There is no
readiness for the seaports in Syria to host the big shipments because,
here [in Tripoli], we have a depth of around 15.5 meters [51 feet] and
it will be [dredged] for 17 meters, which does not exist is Syria,”
Dennaoui said.

With the coordination of the Tripoli Chamber of Commerce, the seaport
will work in tandem with a special economic zone (SEZ) that is in the
early phases of development. The site of the SEZ, which is located next
to the sea, is currently under reclamation and is expected to be
finished by mid-2017.

“There’s a lot of desk work that has to be done,” Raya al-Hassan, who
formerly served as minister of finance and was thereafter appointed as
the chairman of the SEZ, told Al-Monitor. “Our law allows us to work
with private developers. So either we mobilize funding through
concessional financing by multinational organizations or we have to
knock on the door of private developers, equity or loan financiers to
basically provide funding no less than $30 million for the
infrastructure.”

If all goes according to schedule, Hassan believes that the SEZ could
be operational by 2020. Once completed, the zone is expected to play an
integral role in attracting foreign corporations to Lebanon with a
scheme of tax breaks and incentives, including a 50% foreign worker
allowance.

Tripoli’s most ambitious project will be the laying of a 30-kilometer
(19-mile) railway to the Syrian border that will be used to transport
construction materials and other goods for reconstruction. Dennaoui said
that the Islamic Development Bank has accessed the CFF and committed
some of the $85 million that are needed to build the railroad over the
next five to six years.

According to Dennaoui, the chamber predicts that these megaprojects
and subsequent foreign investment could create as many as 7,000 jobs
across a range of sectors, including information-technology, consulting,
construction and logistics.

However, skeptics like Nassib Ghobril, the chief economist at Byblos
Bank, are hesitant to put their hopes in Syrian reconstruction markets.
“For the Lebanese economy,
you have an obsession now: the reconstruction of Syria. We have to wait
for the reconstruction of Syria and the Lebanese economy will boom
again. … But you need to upgrade the infrastructure in the country
regardless of what happens in Syria for a simple reason: our
competitiveness is declining, and second you don’t know when the war in
Syria will end,” Ghobril told Al-Monitor.

One thing that experts can agree on is Lebanon’s need to prepare for
reconstruction-related activity to maximize its earnings. If the country
cannot meet expectations, Syrian reconstruction could become a missed
opportunity for Lebanese and Syrians alike.