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Lebanon siege hits Swiss business interests

Infrastructure in Lebanon has been severely damaged

(Keystone)

Several Swiss companies are counting the cost of Israel's ongoing military assault in Lebanon that has stopped or severely disrupted business in the country.

Supply lines have been hit by the closure of Beirut's airport and a blockade of the capital's port while bridges, roads and other infrastructure have been destroyed in a bombing campaign.

The conflict has been raging for two weeks after Islamic militant group Hezbollah captured two Israeli soldiers in a cross-border raid on July 12.

Swiss exports to Lebanon last year were valued at around SFr300 million ($241 million), while imports were worth SFr241 million. Several Swiss businesses, including Credit Suisse, Roche, Holcim, Nestlé, Schindler, Mövenpick and Sika have operations in the Middle East country.

None has so far reported casualties among their staff, but many have been forced to shut down or limit their operations.

Pharmaceutical giant Roche has closed its small laboratory in Beirut after it became too dangerous for staff to carry out their normal duties.

"They have instead been working with distributors to help with the supply of life saving drugs, and have been advising healthcare professionals," Roche spokesman Daniel Piller told swissinfo.

Evacuations

Food multi-national Nestlé has evacuated about 180 of its 500 workers from two subsidiaries in and around Beirut, including the country's largest water-bottling plant.

"Our trucks are not driving any more because it is too dangerous. We can only wait and hope," said spokesman François-Xavier Perroud.

Cement manufacturer Holcim, industrial adhesives firm Sika and industrial inspection company Société Générale de Surveillance (SGS) have all reported that they have ceased operations in Beirut.

Holcim, which has been present in Lebanon since the 1920s, will continue to run its production line in the north of the country until silos are full. But the company has been unable to distribute cement or export to its main trading partners Syria and Cyprus.

Spokesman Roland Walker told swissinfo that the impact on Holcim group results would not be material as Lebanon was one small operation amongst 100 worldwide.

"At the moment we are losing sales because construction work in Lebanon has halted, but reconstruction will have to start at some point and that will obviously have an impact on cement and concrete sales.

"We will always be able to sell cement in Lebanon and the only question is how long it will be before normality returns," Walker said.

Switzerland's second largest bank, Credit Suisse, has also closed its Beirut office and evacuated all staff from the city. But spokeswoman Monika Sasse said the bank hopes to restart its operations in Lebanon as soon as possible.

Export risk

Some companies will be able to claim back losses from the state-supported insurance organisation Export Credit Agency. It has been in operation since 1934 with the objective of stimulating Swiss foreign trade by underwriting export activity to countries with uncertain political or economic conditions.

The agency has a SFr44.8 million exposure in Lebanon and is expecting a number of claims in the near future.

Lebanon attracted some of the highest premiums as the country was in the highest risk category even before the conflict. CEO Christoph Sievers is confident that the anticipated payouts will not adversely affect the enterprise.

"We are not especially worried as we do not have much exposure in Lebanon in relation to our total SFr8.5 billion commitment," he told swissinfo.

"Our premiums are driven by the assessment of each country by the Organisation for Economic Co-operation and Development. This risk assessment has not changed a lot since before the conflict."

swissinfo, Matthew Allen and agencies

In brief

Until two weeks ago, Lebanon had been slowly rebuilding its economy after the end of a 14-year civil war in 1989.

The majority of Swiss exports to Lebanon are industrial chemicals, watches and jewellery, and precision machinery.

A trade deal between Switzerland and Lebanon has been in force since 2001. A free trade deal between Lebanon and countries of the European Free Trade Association, of which Switzerland is a member, was signed in 2004.

Lebanon has also signed a preliminary agreement with the European Union with a view to becoming a free trade partner.

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