Local Business, Local Peace? Intergroup and Economic Dynamics

Abstract

The escalating conflict in Lebanon since September 2024 has triggered a humanitarian and economic crisis, displacing over 1 million people, approximately 20% of the population. The conflict is projected to contract the economy by 10% to 25%, exacerbated by severe damage to key sectors such as agriculture, tourism, and infrastructure. Inflation has resurfaced as the Lebanese pound destabilizes, while vital industries like tourism and agriculture report catastrophic revenue losses and damages. Business sentiment has deteriorated, with investment stagnation and a critical energy crisis further complicating recovery efforts. This policy brief emphasizes the necessity of immediate and long-term measures to address these challenges. Recommendations prioritize leveraging Micro and Small Enterprises (MSEs) for peacebuilding, reducing economic inequalities, fostering job creation, and encouraging social cohesion. Strategies include formalizing informal economies, enhancing government transparency, addressing corruption, and promoting cooperative business practices to strengthen community ties. The brief underscores the importance of integrating economic development with peacebuilding to mitigate tensions, support recovery, and ensure sustainable development amidst Lebanon's ongoing crisis.