True||The catastrophe that struck Lebanon Tuesday will further exacerbate the economic woes in the country as the government rushes to secure massive financial assistance in order to rebuild Beirut Port and devastated areas.||

BEIRUT: The catastrophe that struck Lebanon Tuesday will further exacerbate the economic woes in the country as the government rushes to secure massive financial assistance in order to rebuild Beirut Port and devastated areas.

The fire in one of the warehouses that triggered the explosion of 2,750 tons of ammonium nitrate at Beirut Port has not only leveled this vital facility but also wreaked havoc in many areas in Beirut and other regions.

This disaster could not have come at a worse time for Lebanon as the country grapples with coronavirus pandemic, severe economic recession and sharp devaluation of the Lebanese pound against the U.S. dollar.

Senior Lebanese officials have urged some of the European state and a number of Arab countries to provide badly needed financial assistance to help rebuild the devastated areas.

The government has yet to assess the cost of rebuilding the areas although some economists estimate that the total losses from this explosion are not not less than $5 billion.

Marwan Barakat, chief economist and head of research at Bank Audi, said the Beirut explosion inflicted huge human and material damage unseen in Lebanon since the Civil War.

“The damage exceeds the capacity of Lebanon to sustain in the short to medium term. Losses of the Beirut explosion are estimated at no less than $5 billion according to most conservative estimates,” Barakat told The Daily Star.

He added that the collapse of the Beirut Port with its silos and containers, the collapse of the medical system and the collapse of the shelter system, with more than 20 percent of the houses and buildings in the vicinity of Beirut Port are not repairable, in addition to the 60 percent of the housing units in Beirut that are repairable but that will cost a fortune amid the fluctuation of the USD exchange rate in the midst of its economic crisis.

Over 85 percent of Lebanon’s imports came through Beirut Port, which was considered one of the most important ports in the Middle East.

Furthermore, Lebanon counted heavily on the revenues generated from Customs, VAT receipts and fees collected from the facility.

But the outbreak of the pandemic, the anti-government protests and import restrictions had already resulted in a sharp decline in revenues collected from Beirut Port.

Elie Zakhour, chairman of the International Chamber of Navigation, told The Daily Star that Lebanon does not have the means to rebuild or operate Beirut Port.

“We have no choice but to resort to B.O.T. to rehabilitate and operate our port. I don’t see any reason why we can’t seek the help of China for example. China is interested in operating Beirut Port. Either this or we seek the help of the private sector better known as Public-Private-Partnership,” he explained.

Zakhour assured that the terminal for containers at the port was still intact but the port could not resume normal operations for the foreseeable future.

But Zakhour stressed that Lebanon would have to temporarily rely on Tripoli Port although this facility only has two large cranes while Beirut Port had 15.

“Beirut Port used to generate $250 million from fees each year, Almost 80 percent of Customs and value added tax were collected from this facility each year before 2019,” Zakhour said.

Economist and researcher Kamal Hamdan believes that Lebanon will be obliged to expedite the assistance from CEDRE donors, who will earmark funds for rehabilitation of Beirut Port and some of the devastated areas.

But Hamdan does not see any chance the International Monetary Fund will commit any financial assistance to Lebanon until September 2021.

“Once there is a clear winner in the U.S. presidential elections in November, Lebanon will have a clear idea how to deal with Washington, which has a big influence on the IMF. We also have to wait to see how the relations between Iran and the U.S. will develop after the November elections,” he added.

Hamdan stressed that the destruction of Beirut Port would also encourage the advocates of PPP to push the government to allow the private sector to handle the port.

Barakat said Lebanon was already caught in an unprecedented macro crisis that drove it into real sector depression, monetary drift and huge socio-economic pressures.

“The explosion is set to worsen further the economic conditions, disregarding any foreign assistance that Lebanon is apt to receive. BDL Liquid FX reserves are already at a low of $16 billion and are getting depleted at a fast pace,” he noted.

Barakat said that what was needed in these critical times was a firm sense of national responsibility and unity among Lebanese, an imminent call for an international investigation on the causes of the explosion, an immediate mobilization of domestic and foreign aid and the launch of an immense reconstruction site similar to the one that prevailed in the early 1990s in the aftermath of Lebanon’s Civil War.