ByTheEast: How old are the bounds between Lebanon and Russia?
Jacques Sarraf: The first contact between Russia and the Lebanese population dates back to the reign of Tsar Ivan IV, who decided to support the Orthodox Church of Antioch and the Christians of the East. The Russian army carried out a military landing in the 18th century at the port of Saint-George in Beirut to support the population against Turkish oppression.
The first Russian consulate dates back to 1839. The relationship between the Russians and the Orthodox community started to develop in Lebanon, Palestine and Syria; more than 100 Russian schools were opened between the mid-19th and early 20th centuries. Things did not change even in the period of the Soviet Union, which was one of the first governments to recognize the independence of Lebanon in the year 1943 and the Union established its first embassy in Lebanon in 1956. The cooperation between Lebanon and the Russian Federation has developed in the past 20 years on political, economic and security levels. It should be noted that thousands of Lebanese students received university degrees in the Soviet Union first, and then in the Russian Federation.
“Lebanon wants to buy Russian military technologies.”
BTE: With such historic ties, how would you describe the present relation between Russia and Lebanon?
Sarraf: The late Lebanese Prime Minister, Rafik Hariri, was the first senior Lebanese official to visit Moscow under President Putin in 1997. This opened a series of official visits and in the year 2006 during the Israeli attack to Lebanon, Moscow stood by Lebanon’s side and supported its position in the Security Council to stop the July War and then participated in the reconstruction of destroyed infrastructure. Its assistance included the construction of bridges, roads and logistical training for the Lebanese army. As for the last two years, we have seen progress in the political and parliamentary relations, especially with the visit of Prime Minister Saad Hariri and the visit of Minister of Foreign Affairs Gebran Bassil to Moscow, which resulted in the formation of a joint committee to implement the Russian initiative in respect to the return of displaced Syrians to their country.
BTE: But about their commercial relationships in the past few years?
Sarraf: Russia’s investment in the Lebanese oil and gas sector is undoubtedly the biggest development in the economic relations that I have had the honor of contributing to over the past 25 years through chairing the Lebanese-Russian Friendship Association and the Lebanese-Russian Businessmen Council which includes preeminent Lebanese investors. The second step is the Russian-Lebanese cooperation in the reconstruction phase of Syria and Iraq in the years to come; we expect that the visit of Lebanese President Michel Aoun to Moscow will lay the basis for the establishment of strategic relations between Lebanon and Russia, not only based on the Russian military presence in the region, but on joint investments and mixed Russian-Lebanese companies to implement large projects in the fields of energy, infrastructure, natural resources, tourism, education, health, environment and navigation. It is true that the volume of trade exchange between Lebanon and Russia has increased to 17.5% in the year 2017, but it is still small for the potential economic cooperation opportunities between the two countries especially in the export of goods and services. We look forward to banking and financial cooperation to encourage Russian investors to enter into open opportunities and projects, especially that Russia has participated in Cedar 1 conference, which is expected to launch a large reconstruction project in Lebanon.
BTE: “Equipping the government” often means subventions for the Lebanese army in order to buy vehicles or military equipment. Any other cooperation axis?
Sarraf: I am not an expert in military relations, but the visit of Prime Minister Saad Hariri in September 2017 to Moscow resulted in the announcement of a plan to strengthen military cooperation between Lebanon and Russia. Lebanon wants to buy Russian military technologies, most notably tanks T-70 and Russia wants comprehensive military cooperation with Lebanon, but apparently this does not suit the US administration, which quickly encircled the Russian-Lebanese rapprochement with new offers to help the Lebanese army.
BTE: Russian exports to Lebanon are quite impressive. Mainly oil and hydrocarbon materials, if I’m correct. What other products does Lebanon import from Russia? Is there anything special to notice about Lebanese imports?
Sarraf: Russia is indeed the largest exporter of oil and hydrocarbon materials; however when it comes to Lebanon the export and import activities are very limited. Today Lebanon is importing cars and mechanical equipment from Russia that is a growing business in Lebanon for Russian manufacturers.
BTE: And what about Lebanon exports to Russia? How Lebanon (government, private companies…) could improve the situation?
Sarraf: Export activities from Lebanon to Russia are very limited in view of the international stand to boycott Russian products and the US sanctions. Our role at present in the Business Council is to reactivate this part.
“The agricultural and industry sectors in Lebanon alone have witnessed a loss of USD 2 Billion in 2018.”
BTE: Away from trade, let’s talk about politics. Last February, Russia and Lebanon draft a common agreement which could allow Russian Navy and Air Force to use Lebanese military facilities. How can it impact/affect the relations between the two countries? Critics say that it’s another way for Russia to have access to the East of the Mediterranean Sea…
Sarraf: I am not aware of this issue. My role as Co-Chairman of the Lebanese-Russian Business Council is limited to working on the development of the Economic, social and cultural relations between the two countries. I do not interfere into politics or military related subjects.
BTE: Let’s get back to Lebanese situation. Annual GDP went from 8% in 2010 to 2% last year. Which economic sectors were the most fragile in Lebanon? Why?
Sarraf: I believe that in 2018 the Annual GDP is going to be even less than 2%, it will decrease to 1% or 1.5%. All sectors have been affected without exception especially after the war in Syria and the closing of the borders, in addition to the major refugee crisis. Accordingly, the agricultural and industry sectors in Lebanon alone have witnessed a loss of USD 2 Billion in 2018.
BTE: What is the Top 3 of the challenges that Lebanese companies are facing, in Lebanon? Corruption, tax system, finding clients, loans… And why?
Sarraf: I can specify 2; 1st is the general economic downturn affecting the region as a result of the economic crisis that the region is going through, and 2nd is corruption.
BTE: What is the Top 3 of the economical fields that Lebanese companies should explore? Sustainable energy? Modern agriculture? IT services?
Sarraf: Infrastructure since it is the basis for the production of sustainable energy and other vital services. Lebanon’s infrastructure definitely needs reconstruction.
“Syria must be rebuilt by Lebanese expertise.”
BTE: You once said that Lebanese people were really good at working during war time. How Lebanese companies could benefit from the reconstruction process?
Sarraf: Business relations between Lebanon and Syria have always existed on good terms. Political issue should be kept out and both governments should agree on giving the opportunity to institution from the private sector to cooperate. Syria must be rebuilt by Lebanese expertise, as was the reconstruction of Lebanon after the war, and so will Iraq’s reconstruction.
BTE: How links between Lebanese and Russian companies could benefit our companies when the war will be over and the reconstruction process will start? Everybody wants its piece, Iranians and Russians first. How Lebanese firms can make a difference?
Sarraf: Let us now wait and see how the war will end in Syria and what would the deal be for that.
BTE: Syrian regime is currently selling raw materials, such as phosphates directly to Greece (which upsets the UE). Syria’s ground is rich of such minerals. Is there any role in this business for Lebanese companies? How?
Sarraf: Syria’s ground is indeed rich, same for the Agricultural and Industry sectors. Syrian businessmen have a lot of potential and the ability to manage their businesses. If Lebanese companies are asked to contribute to this business, the response will be positive and there will certainly be cooperation.