A Shattered City Bounces Back...While Trying To Rescue Its Past

It's business as usual in Beirut for Aramex manager Asma Abboud. A half-dozen of the international courier's delivery cars are in the shop, wrecked by crumbling roads. The office staff of 50 is crammed into a 160 square-meter office near the Mediterranean Sea. And today, it's raining. "When it rains, the phones go off," says Abboud. "The first question in the morning is: `Are the phones working?"

But the siege-like conditions facing Beirut's business community are changing. Lebanon is well under way on Horizon 2000, its 10-year, $11 billion plan to rebuild its shattered infrastructure. Construction equipment is everywhere in Beirut. Bulldozers have leveled the remnants of the war-ravaged central district (BCD), and rebuilding is beginning in the first step by city planners to restore Beirut as a business hub.

DRAWING FLAK. It won't be easy. Everything--phones, electricity, water, garbage removal--suffered crippling damage during Lebanon's 1975-90 civil war, and nothing was done to rebuild while the threat of more fighting lingered.

Under Prime Minister Rafik Hariri, the government decided two years ago that the nation's future was in its capital city. A special law created a company called Solidere and gave it wide-ranging powers to expropriate property and rebuild, focusing on the BCD. By issuing shares to property holders and holding a cash subscription more than a year ago, Solidere is worth $1.9 billion.

Since its launch, Solidere has drawn flak from critics as a get-rich scheme for real estate developers, which ignores local industry and social needs like education. But Solidere Chairman Nasser Chamma defends the company's strategy: "We have demonstrated our abilities and focused our energies on tackling the fundamental issues."

For Solidere, this means Beirut's banking district, the traditional marketplace, or souk, and central government buildings. Over the next three years, more than one-third of a total 1.8 million square meters will be rebuilt, intended as magnets for future development.

Italy, Germany, and France have gained the lion's share of infrastructural contracts. Alcatel, Siemens, and L.M. Ericsson are rebuilding the phone system for more than $500 million. Italy's Ansaldo won the $536 million contract to reconstruct the two main power stations. Neither project will be finished until 1997.

But most of Lebanon's financing is through loans, and debt service is sucking the lifeblood out of the economy, claims Yusuf Khalil, director of financial operations at Banque du Liban, the Lebanese central bank. "The issues we have to concentrate on are our public debt and deficit," says Khalil. "In the last year, public debt has increased, and so has the deficit."

So far, few people outside of Lebanon are investing in the country, including expatriates--many of whom have been burned in the past by false indications of stability. Solidere's master plan is a gamble that by recreating a stable business climate, money will return and fuel further expansion.

When the original Beirut master plan ignored the city's ancient history, archaeologists cried foul. They knew there were extensive ruins under Beirut. But new plans commissioned by Solidere will preserve some of the city's legacy.

Solidere is funding the work after an initial grant from the Prime Minister. Discoveries have revealed a 2nd century Greek city plan, with remains of Roman, Byzantine, and Islamic civilizations. Mosaic floors from 5th century homes will be removed from their sites and reintroduced when the new souk is completed in three years. All excavations must be done by this June. Solidere's plans include an archaeological park in the new downtown to showcase the city's history.

American University of Beirut professor Helga Seeden was one of the early critics of development plans. She now coordinates work in part of the souk. "Many are worried that the history of Beirut is being bulldozed away," she says. "We are here to ensure that doesn't happen." If all goes according to plan, the new face of Beirut will still feature some old wrinkles.

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