The Global Financial Crisis: Impact on Lebanese Expatriates in the Gulf

Introduction

The world is exposed to the most severe economic crisis that has been known for decades. Recent global financial crisis affected families and communities around the world. This results in paralysis of the global financial system that calls for duplication of national and international effort in order to restore stability, confidence and economic growth. Countries in the Middle East and North Africa are dealing with the effects of the global financial crisis through a variety of mechanisms and policies of the treatment (Cooper, 74).

Lebanon's prosperity and position as the Middle East's leading centre for trade and financial services were blighted by the recent financial crises in the Middle East countries that erupted in early 2007 and the ensuing regional political and economic ramifications (Felton, 46). Prospects of an economic revival were raised after the recession ended in 2009, paving the way for sustained reconstruction based on foreign aid (Dent, 56). Middle East financial crises directly impacted the Lebanese expatriates present in the gulf region, which contributed to a decline in remittances and expatriation of funds from Lebanese living in gulf countries to Lebanon. This paper discusses how does recent global financial crises affected the Middle-East (Gulf) Countries. It also explores how Lebanon was affected by the international crises, indirectly by the effect of crisis on the Lebanese expatriates in gulf countries.

Global Financial Crises: Fundamental Factors and Middle-East Countries

The 2008 'sub-prime' meltdown was remarkable in its scale and scope in that it affected securities firms, investment banks, mutual and retail banks, hospitality sector, industrialist, and tourism industry in Middle East. Arguably, this had been made possible by 2006s changes to regulations that had the effect of blurring traditional boundaries within economic growth of gulf countries. Without such changes, the 2008 crisis might have been labeled as another savings and loan disaster. In a paper delivered in Hong Kong, and intriguingly entitled “The $100 Billion Question”, Andrew Haldane, Executive Director of the Financial Stability group at the Bank of England, approached the topic of systemic risk in the banking sector (Hourani, 7). He asserted that banking sector of Middle-east benefits those producing and consuming financial services, but it also risks endangering innocent bystanders within the wider economy—the social costs to the general public from banking crises. He addressed the social costs of systemic risk, which, at its lowest estimate, has resulted in wealth transfer from the government to the banks as a result of the bailout. However, such costs are almost certainly an underestimate of the damage to the wider economy. Haldane (2009) argued that this could be between $60,000 billion to $200,000 billion for the world economy. As to the roots of the crisis, the too-big-to-fail problem results in a real and on-going cost to the taxpayer and a real and on-going windfall for the expatriates living in different countries (Baba, 18).

In Dubai, investment banks' income, dominated by foreign players, fell to $48.8 million in the first three months of recession; ...