Effects of Instability Spill Over to Syria's Neighbors BEIRUT - As the bloody conflict in Syria enters its second year, it is inflicting economic stresses and uncertainties on the country's neighbors. In Lebanon and Jordan, which have absorbed thousands of Syrian refugees and where the extent of the spillover from the crisis remains unclear, uneasiness about the future has taken a heavy toll on business confidence. "If you want to put together the economic and political, definitely Lebanon is the country most affected," said Nassib Ghobril, head of economic research and analysis at the Lebanon-based Byblos Bank. Definitely there is an impact on investor sentiment. We are not seeing new big projects being announced in Lebanon. There are also fears that the crisis next door could reignite armed conflict in Lebanon, where ties to Syria run deep. Despite calls for restraint by many politicians, there are regular demonstrations for and against the Syrian president, Bashar al-Assad. These fears, with the compounded effect of the collapse of the Lebanese government in January 2011, a subsequent five-month government vacuum and continuing internal instability and tension, have contributed to a deterioration of the economy over the past year. After an average gross domestic product growth rate of about 8 percent from 2007 to 2010, last year the figure plunged to 1.5 percent. The outlook for this year does not look any better. In Lebanon, the most visible economic impact of the crisis in Syria has been the lack of tourists. In 2009, Beirut was named the top destination in the world to visit by The New York Times and tourist arrivals hit an all-time high, only to be surpassed in 2010. But in 2011, tourist arrivals dropped by more than 24 percent, according to preliminary numbers from the United Nations World Tourism Organization. Such a drop represents a significant loss for an industry that, according to the country's tourism minister and analysts, indirectly accounted for more than 20 percent of the country's gross domestic product. Jordan, already struggling with rising unemployment rates and a large national deficit, is also wrestling with a decline in tourist numbers since unrest began in the Arab world last year. The country has also witnessed its own protests, primarily demanding political and economic changes. Other nations are feeling the effects of the Syrian conflict, all the more that Syria occupies a strategic trade location in the region. "Turkey is impacted not only because exports rose to Syria in recent years but because it is also a transit route for Turkish exports to Saudi Arabia," said Jihad Yazigi, a Syrian economist and editor of The Syria Report. For Lebanon, too, Syria is a trade route to the Gulf, which is by far the largest market in the region. For Lebanon, bordered by Israel, Syria and the Mediterranean, there is only one land route for goods to come and in and out. If the situation in Syria deteriorates further and routes through the country or the border areas are no longer usable or too costly, Lebanon's trade could be more significantly affected. The trade ties between Syria and its neighbors have also made it difficult for the Arab League to present a unified front concerning sanctions on Syria, undercutting diplomatic efforts. While most Arab League members approved a set of vague sanctions on Syria in late November, some of Syria's neighbors resisted the motion. Jordan, a country that has never been regarded as friends of the regime in Damascus, was one of the earliest voices against Mr. Assad after the uprisings began. But while Jordan, which had built strong trade ties with Syria over the years, initially backed the sanctions, it then distanced itself from the decision. Ibrahim Saif, an economist and resident scholar with the Carnegie Middle East Center, said, "For Jordan, the business interest definitely took the primacy given the difficult economic situation" there. Trade between Syria and Jordan reached over $600 million in 2011, according to Jordan's Department of Statistics. Iraq, recipient of about a third of all Syrian exports, making it the main foreign destination for Syrian products, abstained from the vote, citing business ties. Bilateral trade between the two countries was valued at $5.9 billion in 2010 according to the International Monetary Fund. Also abstaining, unsurprisingly, was Lebanon, in line with the country's official stance of disassociating itself with the conflict. "It is not clear who is implementing what sanctions, to be honest," Mr. Ghobril said. And the Arab League cannot impose on countries to implement sanctions. It has to be an individual sovereign decision by each government.