Lebanon, between political stalemate and economic deterioration
Ancient
doctrines perceive life as a wide agitated ocean. Man is the commander of his
own destiny: his ship. Even if the circumstances at hand seem to be difficult,
any man of free will knows that he will meet his maker as soon as he ceases to
command. This metaphor reminds me of a nice quotation by Einstein: “Life is
like riding a bicycle. To keep your balance, you must keep moving!”
If we take a look at Lebanon’s destiny, we see constantly-worsening agitation in its events occurring for some time now. Shock after shock, these vexations remain in line with one unique dynamic: decline. The interdependence of politics and the economy is the rule. It puts Lebanon and its people at a dead-end that seems to be lasting.
Lebanon is going through its fair share of crises: a severe economic crisis with a spectacular inflation rate. Inflation Specialist Steve Hanke puts Lebanon only two ranks behind Venezuela! Add to that an unprecedented financial crisis that shook the markets’ trust. Lebanon has officially declared its incapacity to meet the settlement date of its 35.1 billion debt in foreign currency (until August 2020), which engulfs the country in a liquidity crisis, considering the limited reserves of the Central Bank, as well as the lack of US dollars in a “dollarized” market. Therefore, the purchasing power of the Lebanese is free-falling in parallel to an unreasonable rise in prices. Making matters worse is the cost of the apocalyptic explosion of August 4 that has caused an unmatched national trauma, not only for the Beirutis, but for all the Lebanese.
In an interview with Jihad Azour, the Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), published in L’Orient-Le Jour on October 20, 2020, we learn that the economic contraction rate in Lebanon can be compared to that of Venezuela for the current year. In fact, Lebanon’s GDP will fall from 52.5 billion dollars in 2019 to 18.7 billion dollars in 2020, thus matching Venezuela’s 25% contraction. According to the same sources, the contraction rate has been multiplied threefold in one year, with a predicted growth of -6.9% by the end of 2020. To better place Lebanon against this backdrop, the world is expecting a contraction rate of 7% in 2020, and a growth rate of 4% for the same year. The comparison is tragic. During my research work, I found no study based on a five-year economic projection (2021-2025). The economic uncertainty in Lebanon is hindering financial projections! Jihad Azour noted an improvement in public deficit: from 27.4% in 2019 to 16.3% in 2020. One would think that there is no money left to steal!
The infernal and vicious cycle of corruption in Lebanon is the result of a dispersed and strongly consensual political power, created by the Taef Agreements, with largely centralized executive and administrative powers, in spite of a codified hint to decentralization in the Agreements. This governance mechanism has invaded the public order by annihilating the citizen’s interests through mafia-like employment, fed by conflicts of interest and impunity, along with a generalized waste of public funds. The political class became a political and financial oligarchy that, in order to install a sustainable hegemony, diverts national resources to finance clientelism and political conformity. Those control more than half the population. However, the other half dared to say “enough” on October 17, 2020.
In an article published by “Le Monde” on December 1, 2020, journalist Benjamin Barthe discussed the scope and reach of the forensic audit that the Lebanese Minister of Finance decided to implement on all ministerial and State organisms accounts at the Central Bank level. For that end, he signed an agreement with the firm Alvarez & Marsal. Barthe highlights the importance of that operation for the quest of truth and justice in Lebanon, which is the starting point of a long journey of fighting corruption. He recounts the truths about French president Macron’s vision and underlines his disappointment regarding the irresponsible and manipulative attitude of the Lebanese political class when it comes to forming a “mission government”. Despite the passing of six weeks leading to Macron’s deadline, the new government hasn’t seen the light yet, even when parliamentary consultations had led to the nomination of Saad Hariri as new prime minister. We should note that the auditing process was the first condition set by the IMF at the beginning of their negotiations with the Lebanese State. Today, one week after the withdrawal of Alvarez & Marsal because the Central Bank had only provided them with 40% of the needed data, citing banking secrecy, the link between political affairs and the economy feeds the fear of the worst.
If we take the word of John Perkins in his book “Confessions of an Economic Hit Man”, the United States know how to navigate between economic measures and political forcing. The political goals of the US are well-known: they focus on one major prey, Hezbollah, and implement all the measures that help besiege it. Recently, through a sanction strategy, the Trump administration stood firm by inflicting sanctions on main figures in the political arena, such as Gebran Bassil, the leader of the biggest parliamentary group and indisputable Christian ally of Hezbollah (currently with 25 seats out of 128). The US also wants to widen the scope of the UNIFIL mission (United Nations Interim Force in Lebanon) as a sine qua non condition for the renewal of their mandate. They want to allow the UNIFIL to inspect the region beyond the Blue Line, with one goal in mind: Hezbollah’s long-range missiles, hidden in bordering Lebanese villages to the North of Israel. Hezbollah is also a thorn in the side of Gulf countries. They see in it a proxy of an enemy Iran that is starting to weigh heavy on them. That is why neither the US nor Golf countries are in a hurry to get their checkbooks, to allow the influx of “fresh money” to the Central Bank. American and Arab interests therefore meet. All is fair to make Lebanon and Hezbollah give them what they claim: a quick outlining of the maritime borders (equivalent to an informal recognition of the State of Israel) under the oil conflict over a disputed 860 km2 band between the two countries, as well as a terrestrial outlining of borders between Lebanon and Syria to limit the free movement of Hezbollah and his interference in Arab internal affairs, the signature of oil and gas contracts that take into consideration the US’s strategic interests, and the acceleration of potential global peace negotiations between Lebanon and Syria on one hand, and Israel on the other.
Hikmat Abou Zeid
3/12/2020
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