Nouriel Roubini: "Lebanon Politics: June Elections Test Lebanon's Stability"

RGE's Daily Brief: Excerpts:

Some hope that a stable unity government might create a peace dividend for the economy, which has been relatively sheltered from the financial crisis as investment flows from Lebanese abroad and GCC residents continued.  A majority victory or broader margin could help put in place economic reforms. ...  The country will remain almost evenly divided ... government is likely to remain gridlocked, regardless of which coalition wins, unless and until both sides are willing to make difficult concessions and compromise... EIU: Lebanon is used to fractious politics. Despite the years of turbulence, its economy is humming along nicely. It may tolerate another period of muddle and perhaps even emerge with a stronger centre, joining moderate parts of both the current coalitions (EIU) Stalled reforms could put a further freeze on international grants and loans promised at the Paris III donor conference in January, 2007. This will not make a great difference as the frozen aid is not indispensable for the budget, but some projects, including poverty reduction in the north, would not be implemented. (OxAn) The political conflict in Lebanon has partly been fueled by regional rivalry between Saudi Arabia and Syria. A recent thaw in ties between the two countries could help underpin stability in Lebanon Makdisi and Marktanner: Sectarian based domestic conflict and vulnerability to outside interventions led to tremendous socio-economic losses. Transiting from power-sharing along religious lines to full-fledged secular democracy would provide the necessary conditions for long-term stability and sustained development