Ever since the October 17th protests last year and the subsequent resignation of the last Hariri government, Lebanon has been going through one economic and financial crisis after the other. Be it a deep economic recession that was followed by an even worse banking liquidity crisis that culminated in Lebanon’s first ever default on its sovereign debt obligations and ensuing devaluation of the local currency to levels that have been far worse than any level seen during the depth of the civil war. All of this amid a global pandemic that ravaged the local economy. In short, Lebanon economically imploded in 2020.
If that was not enough, on August 4th, its capital Beirut suffered one of the worst explosions in history bringing about death, destruction, and even more economic ruin to the entire nation.
Many Lebanese activists have been calling for a new clean slate of independent politicians to take over governing the country. Ones who are not tarnished by corruption, are not sectarian-driven, and just as importantly, are competent. While these are noble goals, the reality is none of the current ruling elites is willing to cede an inch of power. Why would they? There is really no incentive for them to do so.
It is important to identify who these elites are. Essentially, they are the group of war lords and politicians who were active during the civil war who entered government in the early nineties and quickly amassed considerable wealth during their ‘public service’. In 2005, after the withdrawal of the Syrian regime from Lebanon, the pie was re-divided with the sizable share of illicit gains that went to the Syrian military and security entities redistributed to existing and new players who joined the ‘club’.
Basically, the current set of politicians have been sucking the country dry for the last 15 years. Unfortunately for them, and for the ordinary Lebanese, there is not much else left to siphon off. The tap has run dry. The golden goose that was the Lebanese government is in the last stages of its economic life. The international debt markets and foreign currency deposits in Lebanese banks that were the fuel that powered the engines of State corruption are no more. Banks are out of foreign currency and international funding markets have been shut for Lebanon even before the government defaulted on its obligations in March. The pie has shrunk considerably and there is literally nothing left to pilfer. They are shareholders of a bankrupt business – and business is what it is to them. They run an insolvent company that cannot pay its employees (mostly their cronies) a living wage. The fat lady is singing very loudly indeed.
Enter French President Macron. He reportedly visited Beirut bringing with him a 3-point deal – 1) a national unity government that implements badly needed financial reforms and 2) prepares for more representative parliamentary elections with 3) the reward being massive international aid. In basketball terms, this is a layup. A carrot with no stick. It really is a win-win for the ruling elites. But even without any promises for international aid, financial reform is really the only way for the ruling elite to continue their dominance.
Reverse Muhasasa
If the system of dividing the State’s spoils among the elites along sectarian lines is referred to as muhasasa in Arabic, then what is needed, as a starting point, to get out of this economic depression is reverse-muhasasa. Essentially, dividing the reforms among sectarian lines and political parties. This is something that must get buy-in from all political parties. They all must agree that this is the way out. I hope this is what the conversation was about between Macron and the leaders he rounded up for talks wile he was in Beirut. If that is the starting point then there is no way it can be achieved without a national unity government. One of the main reasons that the Diab government failed was that there was no buy-in about any reforms by all parties. It was a one-sided government that decided to take on reforms without a full political cover. If you try to harm economic interests of some parties, you will get push back and obstruction that will lead to paralysis. This is the unfortunate reality of the current political system.
The low hanging fruit of reforms is the electricity sector. Besides being the area that has the most populist appeal and a great impact on Lebanon’s economy, it is one of the few areas where pretty much all political parties are in bed together when it comes to corruption. It is said that the elites are involved in every aspect of electricity production. No wonder then that this sector alone is estimated to be responsible for up to half of the national debt.
What is needed now:
Given the above, what is needed is simply an agreement among those elites to proportionally split those reforms amongst themselves. An agreement should be made as to the size, extent, and limits of reforms they are willing to bear with a clearly detailed road map for the next government to implement. Who leads the next government is less important once this is agreed on. My personal preference is for a Prime Minister with financial credentials rather than political ones since Lebanon needs the first skill while the latter will be dictated by the elites. A small group of capable technocrats will excel at this so long they are approved by all the elites.
This is not only good for the country, albeit a small step forward, but it is one of the few ways for the elites to insure that they have a high probability of continuing to be able to split the State’s spoils in the future. Interestingly, Macron and the international community really turned a blind eye to Hizbullah’s arms and it is not something that the government is being asked to deal with. This should reassure Hizbullah to the point of being comfortable in ‘officially’ sitting out the next government and not be represented in it. With the Hariri verdict looming on August 18 and the likely implication of Hizbullah members in the assassination of the former Prime Minister, sitting out the next government is the best thing that the party can do in order to insure maximum international aide and to avoid complications any new government has with the new American sanctions on Syria imposed under the Caesar Syria Civilian Protection Act.
This might read like a defeatist approach that puts aside the people’s uprising since October. It is not. It is a pragmatic approach that aligns the goals of the elites and the people. Any reform is a win-win for the people and the elites. The key point going forward is keeping the pressure on the government to continue with reforms and more importantly, in holding fair and more representative parliamentary elections. At the same time, putting pressure on the international community to condition any aid on the government and parliament proposing a more representative electoral law. More representative elections are the only way solve Lebanon’s chronic problems. Change can happen either suddenly and totally via a Tunisia-style uprising – to use a more recent example – or slowly through elections. I don’t foresee the first case for Lebanon since the armed forces are solidly in the grips of the elites, and for good measure, there is an armed militia, Hizbullah, that is ready to quell any popular uprising that may endanger the current system that it so thrives in. The only way for change is through fair elections that will make a material impact on the representation of the elites in government and will slowly delegitimize the arms of Hizbullah. The alternative is civil war as Nasrallah reminded us recently or the total physical destruction of Lebanon if foreign armies interfered – a repeat of the 2006 war but on a wider scale.
It is time for elites to recognize that there is no other way than to implement reforms. Civil society has to continue on putting pressure on the elites and on the international community to implement a more representative elections law (which I will discuss in my next article).