Beirut renaissance: United and divided

The capital of Lebanon has bounced back after its long civil war, but the old rivalries still run deep.

By Andy Serwer, managing editor

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Outside a Hezbollah fundraiser in the Bekaa Valley town of Baalbeck.

BEIRUT, Lebanon (Fortune) -- I'm in the northern end of Lebanon's infamous Bekaa Valley (as in terrorists and drugs) in the city of Baalbeck about to enter its dramatic Roman ruins. Near the entrance of the site I see a large colorful tent set up, with music pouring out. I walk in, not realizing that what I've stumbled upon is a Hezbollah fundraising exhibition. But with the photos of smashed Israeli army tanks, weeping Palestinian children and triumphant jihadists that becomes apparent pretty quickly. And if that's not enough, then there's the backroom with the coffin in the center surrounded by photos of dozens of martyrs, as in suicide bombers.

Half a day later I'm driving around Beirut in a BMW SUV with Marc, an executive at one of the world's biggest ad agencies on the way to dinner at a swank French restaurant. "Those people are sick," says Marc, who grew up in Beirut during the chaos of the 1980s. "All they want to do is create trouble to collect more money." Welcome to Lebanon, where despite a major renewal of Beirut and a tourism boom -- Byblos Bank reports visitors to the country increased 60% in the first of the year to over 760,000, making the airport a madhouse -- divisions still run deep.

For most Americans, Lebanon isn't exactly the first place they think about when it comes to business, but for many Middle Easterners, Beirut has long been a key place to bank and do deals. Oh, and then there's the nightlife. Before the destruction of the Civil War, Beirut was known as the Paris of Mediterranean. It's long been known as a place where residents of conservative Gulf States (read Saudi Arabia, Kuwait, etc) can go and literally let their hair hang down. The wildness and craziness appear to be back. For the jet set, the night starts late in Beirut, try 11 p.m., and goes on until 4 a.m. The city's Sky Bar was recently voted best nightclub on the planet according to worldsbestbars.com.

"My generation was completely divided up by the civil war," says Marc a Lebanese Christian. "This new generation, Muslim, Christian, they all party together." And there's much to celebrate. Nighttime traffic is heavy along the waterfront and construction continues in the downtown and along the city's Gold Coast -- Saudi billionaire Prince Alwaleed's new Four Seasons is months away from completion. GDP growth in Lebanon was up an amazing 17% year to date in 2008, global slowdown be damned! But dig behind that number and you get another reminder of the fragility here. Lebanon's economy ground to a halt in 2006 and 2007, not because of any financial crisis, but because of the July/August 2006 war between Hezbollah and Israel in which southern parts of Lebanon sustained major damage. And some 1,000 Lebanese civilians were killed. So coming off that low, it's not a surprise the economy is growing double digits this year.

For Americans, that kind of death toll and risk are almost impossible to comprehend. But the 2006 conflict sadly was miniscule compared to what the country endured between 1975 and 1990. According to Wikipedia, the civil war "resulted in an estimated 130,000 to 250,000 civilian fatalities. Another one million people (one third of the population) were wounded, half of whom were left with lifetime disabilities." The war unfolded in phases, and at first businesses would leave and then come back in a lull and rebuild, but by the end of the fourth phase, few dared to return, and the city lay in ruins much of the following decade. When I last visited Beirut in 1998, it was still very much bombed out with only a smattering of construction.

Even with the striking rebirth of Beirut though, factionalism won't die easily here. "Hey, we have 18 religions in this country," a guide tells me. "They all want power." On a drive to south central Lebanon in the picturesque Chouf Mountain region, I pass through the town of Moukhtara and travel past the guarded Jumblatt palace, home to Walid Jumblatt, the head of the Druze, a relatively secular branch of Islam. The Druze were active participants during the Civil War, though are quiescent now. Still, my guide says: "Walid is like God up here."

On the other hand maybe it's all about perspective. I'm sitting in a bar in Beirut late one night and I tell the bartender I'm from America. "Oh I would never let my daughters go to New York City," he tells me. "Too dangerous." To top of page

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