(Updates with comment by security forces in 16th paragraph.)
Jan. 9 (Bloomberg) -- When Omar Jabaly plans an outing in Beirut these days his main concern is finding the least likely place to be targeted by car bombers.
“A sidewalk cafe is more risky than a mall,” said Jabaly, 39, an engineer for a local telecommunications company in the Lebanese capital. “There’s security at mall entrances while a suicide bomber can blow himself up in front of a cafe.”
The wave of car explosions started in July with a suicide bombing in Hezbollah’s south Beirut stronghold and spread across Sunni and Shiite Muslim communities as Lebanon gets mired even deeper in the sectarian nature of the Syrian conflict next door. The attacks intensified in recent weeks, with one that killed former Finance Minister Mohamad Chatah, a senior Sunni Muslim figure, in December followed by another in a Shiite area of the capital that left at least five people dead last week.
Security will only deteriorate further as long as the almost three-year-old Syrian civil war lasts, said Hassan Mneimmneh, senior fellow at the Washington-based German Marshall Fund of the United States, a research organization.
“We have ahead of us many years of serious difficulties,” Mneimmneh said. “Lebanon has become part and parcel of the Syrian conflict. It’s an open field for any action against a Lebanese party, such as Hezbollah, or, for the passing of a message from one security service to another.”
The heightened state of alert is reflected on the streets of Beirut, synonymous with violence and car bombings throughout the 1980s as Lebanon endured its own 15-year civil war.
Many Lebanese are adjusting their daily routines, staying away from crowded places, avoiding social visits and keeping track of who parks on their street. A billboard advertises 3M Co.’s blast protection film for windows.
“Thank God my two children live abroad,” said Dunia al- Awar, 55, as she shopped for vegetables. “When I leave home these days, I never know if I will return.”
Until July, the spillover from Syria’s crisis was mostly confined to the northern city of Tripoli, where groups behind or against Syrian President Bashar al-Assad faced off. The violence surged after the Iranian-backed, Shiite Hezbollah group declared it was fighting alongside troops loyal to Assad to quash the mostly Sunni insurgency against his rule.
Nader Omari, 35, who sells T-shirts and balloons with imprints of pictures of them, said he’s not leaving anything to chance. Since the latest bombings, he makes sure that cars parked outside his store on a narrow street off Beirut’s Hamra shopping thoroughfare belong to people he knows.
Just around the corner is the home of an anti-Syria former prime minister while the Saudi embassy is less than 500 meters away. Saudi Arabia provided support to the rebels trying to oust Assad in Syria since March 2011.
“A lot of convoys use this street and I want to make sure there’s no car bomb waiting for them,” said Omari. “It’s scary just being on the streets these days.”
Amid the violence and tension, Lebanon’s economy has suffered, with gross domestic product expected to maintain the same rate of 1.5 percent growth it has had since the Syrian uprising began, according to estimates by the International Monetary Fund. That compares with 9 percent in 2009 and 7 percent in 2010, according to the IMF.
Interior Minister Marwan Charbel said the government is concerned about more violence, though warned against causing alarm with repeated reports of bomb plots.
“We’re following the security situation with great concern, but this shouldn’t justify the panic the rumors have caused,” Charbel said in remarks published in the Al-Joumhouria newspaper yesterday.
The country’s Internal Security Forces told people via Twitter to disregard the rumors and said “those behind such reports aim at creating chaos and spread fear.”
For their part, investors are less concerned and the bond market hasn’t reflected the mix of economic, security and political travails in a country whose government resigned 10 months ago and is still without a permanent replacement.
Lebanon’s 8.25 percent dollar bonds maturing in April 2021 have rallied, their yield declining 62 basis points during the past three months to 6.31 percent yesterday. They were little changed from 6.26 percent on Dec. 27, when a car bomb killed the former finance minister. The cost of insuring Lebanon’s debt with five-year credit default swaps dropped 13 basis points to 387 in the same period, according to data compiled by Bloomberg.
“As irrational as it might sound, confidence of local investors in Lebanon is still very high and this leads to relatively sticky and rock solid valuations,” said Sergey Dergachev, who helps oversee about $9 billion as a fund manager at Union Investment Privatfonds in Frankfurt. That would change “should the security situation get to a point outside of the corridor of investor tolerance,” he said.
Lebanon is not on the brink of civil war because the dynamics for one are not there, said Paul Salem, vice president of the Washington-based Middle East Institute.
“The pattern this year will probably be a continued gradual decline in security and we are likely to see more unfortunate incidents of this kind,” he said. “But this is not likely to lead to a complete collapse of security.”
Meanwhile, Lebanese anxiety is compounded by everything from local news reports of an imminent bloodbath and warnings by embassies -- the U.S. has urged its citizens to avoid hotels and western-style shopping centers -- to predictions by self-styled psychics who make annual televised appearances on Dec. 31.
On broadcaster LBCI, Leila Abdel Latif divined that suicide bombings won’t end and political figures will be assassinated. Her rival, Michel Hayek, said he sees United Nations troops grappling with a tragedy and, separately, a terrorist attack that will include hostage-taking.
Jabaly, the phone engineer in Beirut, particularly worries when he’s stuck in traffic next to parked cars. He still goes out for coffee, though, “because life has to go on,” he said. “But I do feel nervous.”
--Editor: Rodney Jefferson