800 politicians, economists attend Arab Economic Forum in Beirut

Prime Minister Hariri stresses importance of Arab countries’ partnership with EU, Turkey

Prince Khalid al-Faisal attends forum, opens Arab Thought Forum workshop

Prime Minister Saad Hariri said on Thursday that the 2010 draft budget should fulfill the developmental and social needs of Lebanese citizens as well as serve political stability.

“The 2010 draft budget aims at achieving two major goals including the improvement of the social subsidies in addition to the increase of state investments in the vital sectors,” he said.

Hariri’s remarks came during the opening of the Arab Economic Forum, which Beirut is hosting for the 18th consecutive year. Greek Prime Minister George Papandreou, whose country has plunged into a menacing financial crisis, Arab League chief Amr Moussa, Governor of the holy city of Makkah Prince Khalid al-Faisal al-Saud, and Kuwait’s Deputy Prime Minister for Economic Affairs Sheikh Ahmad al-Fahad al-Ahmad al-Jaber al-Sabah were among this year’s guest speakers.

The forum was also attended by top government officials and a wide array of business, finance and investment leaders in the region, as well as regional and international organizations, experts, media representatives, journalists and other interested parties.

The forum, which was held at the Phoenicia Intercontinental Hotel in Beirut and organized by Al-Iqtissad wal Aamal Group in cooperation with the Central Bank of Lebanon and the Association of Banks, aims at highlighting the challenges facing the Arab region following the eruption of the global financial crisis. It also focuses on the Arab world’s position in the changing international economy, as well as priorities for future economic and social development policy in the region.

Hariri, in his speech, underlined the importance of following up on the volume of public debt to GDP in Lebanon and the need to increase the investment expenses of the state on developmental projects in different sectors and in all the Lebanese regions. “This policy will lead to the reinvigoration of the economy and will increase the quality life of the citizens,” he said.

He emphasized the need to undertake appropriate economic reforms and conduct a solid dialogue with investors in order to maintain their trust. “At the end of 2008, we noticed how investors started to lose their trust in the market and hence, they preferred to be neutral and not to invest their money,” he said. “This is the most important factor that will ensure stability in our market and losing this factor will lead to a crisis.

Hariri assured that the Lebanese government today is watchful of the trust of investors coming from Lebanon and from outside the country as well. “Trust was the most important factor that helped Lebanon to curb the consequences of the global financial crisis. Hence it became a secure harbor for the world capitals in particular during the past two years,” he said.

For his part, Central Bank Governor Riad Salameh said that the financial markets in Lebanon were maintaining their stability and the trust in the financial sector was very high, giving an incentive to the consumption and investment.

“According to the economic indicator of the bank of Lebanon it is expected that the real growth this year will be between 7 and 8 percent while the inflation rate will be between 4 and 5 percent,” he said. “The deposits, which amount today to $105 billion, increased by 2.5 percent in the first quarter of 2010 and therefore the expected annual growth will be 10 percent.”

He added that the balance of payments registered a surplus of $978 million in the first quarter of 2010 compared to $298 million in 2009. “Moreover, the credit for the private sector increased by 8.3 percent during the first quarter of 2010 compared to 1.6 percent during the first quarter of 2009,” he said.

Salameh said that the profits of the banks increased despite the surplus in liquidity and the reduction of interest rates. He said that the goal of the Lebanese Central Bank is to control inflation. “Hence, the Central Bank is maintaining its control on the Lebanese pound through the foreign currency liquid assets which reached $30 billion and the increase in gold prices,” he added.

Lebanon’s Central Bank governor also pledged to keep on working with this policy of controlling liquidity in order to provide the financial needs of the private and public sectors.

He also insisted on sterilizing liquidity surplus in order to prevent any inflation in the prices, particularly the consumption prices, which will have an effect on the purchasing power in Lebanon. “It will also have an effect on the competitiveness of our sectors in the international market and mainly the tourism sector,” he said.

However, the Arab League chief did not paint a very optimistic picture for the region. While Moussa gave positive statistics about exports and foreign direct investments in the region, he said that better results can be achieved through cooperation.

“The total Arab exports in 2009 reached $1.3 trillion which represents an increase in growth rate of 20 percent,” he said.

“This represents 7 percent of the total international global exports.”

Inter-Arab exports amount to $85 billion while inter-Arab investments amounted to more than $34 billion in 2008, he said.

“Moreover, the volume of Foreign Direct Investments (FDIs) in the Arab countries by the end of 2008 was $8 billion. The volume of FDI in the Arab countries represents 40 percent of the total FDI in the same period,” he added.

Moussa believes that the positive aspects of these figures lie in the comparison between them and figures registered 5 years ago. “However, the negative aspect is that these figures are not a source of pride. In fact, through cooperation and Arab economic integration we can double these figures,” he said.

He highlighted that the Middle East, despite the crisis, is a promising region and has a bright future. “However, it is at the other bank of the river,” he said.

Moussa’s views were echoed by the Greek prime minister, who called on the international community to live up to its responsibilities. “The issues in the region many years ago were focused around the Israeli Palestinian conflict but today this conflict has become a world issue,” he said.

Papandreou said security was important for the region and a necessary requirement for growth and prosperity.

He praised the economic ties that exist between the Arab region and Greece. He said that despite the economic crisis, relations between Greece and Arab countries in general have shown significant progress in the past few years.

“Commercial transactions have risen by almost 35 percent last year and the volume of trade between Greece and the 18 countries of Gulf, the Middle East and Northern Africa amounted to 5 billion euros,” he added. “In the same year Greece’s exports to these countries represented 9 percent of total Greece’s exports, while imports from these countries accounted for 10 percent of total Greece’s imports.”

Papandreou called on Lebanon and Arab countries to support Greece either by visiting it or by investing in it and working with it in common projects in the region. “Greece today is an opportunity for new business. It is also an opportunity to further strengthen our cultural and historical ties,” he said.

Meanwhile, Makkah Governor Prince Khalid Al-Faisal, who is also chairman of the Arab Thought Foundation (ATF), opened on Thursday a workshop to mark the Foundation’s 10th anniversary in Beirut.

Prince Khalid told the workshop he lamented the lack of unity and progress in the Arab world, claiming countries in the region were becoming almost isolated islands with feeble bridges to connect them, while their rate of development was at the bottom of the international scale.

"Like any Arab, I find the distance between our Arab world and the world of advanced knowledge and technology growing," Prince Khalid said.

"While attempts to bring the Arabs closer are still hitting obstacles in various spheres, the sphere of thought is the greatest common area that is bringing them together."

Prince Muhammad Al-Abdullah Al-Faisal and Prince Bandar bin Khalid Al-Faisal also attended the two-day event.

The 18th session of the Arab Economic Forum currently being held in Beirut honored Prince Khalid for his achievements since establishing the Foundation. Lebanese Premier Saad Hariri opened the forum on Thursday.

Saudi participation in the forum also included Chairman of the King Faisal Center for Research and Islamic Studies Prince Turki Al-Faisal and Saudi Arabian Monetary Agency Gov. Muhammed Al-Jasser.

Other notable participants also included Greek Prime Minister George Papandreou, Deputy Prime Minister of Kuwait for Economic Affairs Sheikh Ahmad Al-Fahd Al-Ahmad Al-Jaber Al-Sabah and Secretary-General of the Arab League Amr Moussa.

The ATF is an international and independent non-profit and non-governmental organization. Founded by Prince Khalid in 2001, it is an initiative developed collaboratively by intellectuals and businessmen to help advance the economic, social and cultural development of the Arab region.

Among other important goals, the Foundation aims to initiate cultural and media programs that contribute to a better understanding of the Arab civilization on an international level.

The Foundation also believes that open and constructive dialogue between the business community, academia and civil society is imperative for the future development of the region.

It is an institution interested in the fields of science, medicine, economics, administration, media and literature and also calls for solidarity and the promotion and preservation of identity in the Arab world.