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Month: April 2019

What is coming for Christians and other Minorities in Lebanon and the Levant?

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Ambassador Ed Gabriel (ret), President and CEO of the American Task Force on Lebanon (ATFL), recently gave his annual presentation on the Middle East to an audience at Christ Church, an Episcopal Church in Easton, MD. For this year’s topic, he chose to speak about Christians in the Middle East. I spoke with the Ambassador about his presentation and why he chose to focus on the Christian populations when so many other topics were in the news such as the fate of Syrian refugees, the uncertainty of US policy in the region, instability as a result of weak economies and institutions, tensions with Iran and between Iran and many of the Gulf Arab states, and others.

He said that he wanted his audience to understand that the continued decline of Christians, who have historically played a key role in the multicultural richness of region, is emblematic of the need to take action to protect and enable all minorities to co-exist in dignity. Without a rigorous intervention, the Levant will lose its identity as a mosaic of cultures, religions, traditions, and ethnic groups. Given current efforts to pass a Congressional resolution condemning the Armenian genocide in Ottoman Turkey, it is appropriate to remember in some way that Christianity began in the Holy Land and the Levant is home to the world’s oldest churches and communities.

 

The table shows the decline of Christian populations during the last century. The loss has been accelerated by the rise of ISIS and al-Qaeda in Iraq and Syria, and by economic and social challenges in Lebanon, Palestine, and Jordan. Once, they were vital to the region’s commerce, industry, and economic development, and made valuable contributions in education, health, public administration, and social services. Today, through institutions such as the American Universities in Cairo and Beirut, and NGOs including ANERA and AMIDEAST, CNEWA and CRS, and important networks of K-12 schools, vital work across all segments of society continues despite social and economic instability and growing pressure from extremists.

When asked about what the status of Christian and other minorities might be in 10 years, Gabriel was not optimistic. He believes that the increase in political tensions within countries will put pressure on Christians and others to choose sides, which has an impact on emigration, especially for young people anxious to get an education and enter the job market. With majority populations in the Levant under the age of 35, slow growth rates, inadequate public education, and the overall lack of political stability in the region, it is difficult for youth to imagine a future in their home countries. More than 70% of them believe that they will have to leave in order to find adequate employment – not an optimistic assessment.

So what can be done to maintain safety and dignity for Christians and other minorities in the Levant, and provide opportunities for futures that are less bleak while maintaining the multicultural richness that has made the region a home for so many?

I put this question to Amb. Gabriel by asking what the US can do to support and encourage coexistence in Lebanon and the broader Levant. He proposed several actions and had very specific recommendations.

First of all, the US cannot be passive in light of the continued loss of historic communities in the region through persecution, emigration, and loss of opportunities. For example, the US can encourage Lebanon to seriously address badly needed reforms, as called for by the CEDRE donors, and, as they are adopted, promote Lebanon as a viable destination for US investments in Lebanon. In this way, jobs will be created, youth will be able to stay in the country, make a contribution, and build lives that sustain stability and the multicultural character of the country. Elsewhere in the Levant, and particularly in Iraq, Syria, and Palestine, if the situation doesn’t improve, it will be important vital to grant religious minorities fleeing persecution priority status so they can apply directly to the US resettlement programs.

He went on to note that it is key to “Insist in every aspect of diplomacy concerning Syria’s future that Christians, other minorities, and all Syrian people enjoy security, equality of citizenship, and the ability to practice their faith openly and in peace. Also, work with Syria’s religious minorities and other key elements of civil society to develop a set of principles necessary for the achievement of a new Syria that guarantees not only the survival and security of Christians and other religious minorities.

Focusing on political, social, and economic inclusiveness will break down barriers among the various groups, provide a sense of investment in the future of their societies, and provide a degree of stability that has been missing from the region for far too long.

Disappointing Rankings Indicate Tough Road Ahead for Lebanon’s Economy

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A recent report from the International Monetary Fund (IMF) projects Lebanon’s 2019 real GDP growth at 1.3%. Although this is an improvement over the October 2018 forecast of 1% and the country’s growth rate of 0.2% in 2018, Lebanon lags behind the projected 5% growth rate for the Mashreq economies. According to an analysis of IMF data by the Byblos Bank’s Economic Research and Analysis Department, Lebanon’s projected 2019 rate “would make it the second slowest-growing economy among 18 MENA countries with positive economic growth.” While the IMF was unable to factor in the impact of the potential CEDRE reforms, such as the recent electricity plan going before parliament, the rate is far below the 6-7% needed to rebuild economic activity to a level that generates jobs for the Lebanese, reduces the burden of subsidies and grants, and provides revenues to the government to offset the need for borrowing.

On the bright side, Lebanon’s inflation rate is projected to remain low at 2% compared to the overall MENA rate of 10% and 13% for the Mashreq. Lebanon’s fiscal deficit will grow incrementally from 11% of GDP in 2018 to 11.7% in 2019, reflecting a projected rise in public spending to 33.5% in 2019 versus 31.6% in 2018. Overall, it is anticipated that the primary budget deficit, the difference between current government spending on goods and services and total current revenue from all types of taxes net of transfer payments, will narrow slightly from 1.3% in 2018 to 1.2% of GDP in 2019. In other words, Lebanon will continue to have a negative gap between spending and income for quite some time.

The nagging concern is that Lebanon’s underperforming economy has a cumulative effect that dampens investments in Lebanon, raises borrowing costs, hobbles the banking system in terms of liquidity in support of government bond issues, and undermines the country’s currency, all factors that lead to economic instability. The pace and impact of the CEDRE reforms are an essential antidote to these deficiencies, as well as to the low projected growth rate of 2% for 2020, far below the 3.2% MENA average.

The need for leadership from the government and parliament is a serious challenge. Will reforms hit a roadblock once attention is paid to highly visible distortions such as electricity rates and production, and then fail when it comes to reductions in public spending for jobs, salaries, and select constituencies? Or will there be a consistent movement forward to implement the National Industrial Plan (NIP) designed to bring inclusive economic development to the country? Will the government have the capability to adjust priorities based on new and renewable technologies or will it seek to do more of what is already inadequate to meet Lebanon’s needs since it contributes to advancing their narrow interests?

Another set of dispiriting statistics was released by the recent Purchasing Managers’ Index (PMI), a globally-used monthly indicator that measures economic growth in the private sector based on new orders, output, employment, suppliers’ delivery times, and stocks of purchases. Lebanon’s index dropped from 46.3 in March, down from 46.9 in February. As noted by Byblos Bank’s Economic Research and Analysis Department, “a score that exceeds 50 signals positive business activity, while a score that falls below 50 shows a deterioration in activity.” While this do not seem to be a significant gap, when a country continues to have a below 50 score for consecutive periods, as Lebanon has since 2016, it indicates an underperforming economy.

Overall, respondents to the survey of companies indicated that contractions in new export orders was due to regional instability that reduced demand, while political uncertainties negatively affected company decision-making related to investments, hiring, and purchases.

Talking about Lebanon: Electricity Plan Passed by Cabinet – On to Parliament; Russia Plays Multiple

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The biggest political news this past week was the approval by the council of ministers of a plan to restructure the electricity sector. The plan has a number of moving parts, from pricing to infrastructure and priorities for phasing in government-approved sources and phasing out the generator cabal who have been supplying power in place of the government.

It also includes the restructuring of the state power company with the aim of eliminating its more than $2 billion annual subsidy for fuel and maintenance. In addition to the eventual return of 24/7 power to all of Lebanon, the plan also meets one of the reform conditions of the CEDRE donors. Despite the enthusiastic reports, some were skeptical that the reform will actually be implemented on time and in the scope required, noting that both sides need a win at this point – the Lebanese government to show that it can undertake reforms, and the lenders, led by the World Bank, who are anxious to check a box that shows progress.

Several analysts expressed reservations about additional reforms and changes to the current system of distributing benefits by political elites noting, for example, “However, deeper reforms, able to address the extreme levels of inequality that Lebanon is experiencing or the rampant corruption of its institutions, are unlikely. The country’s political and economic elites haven’t changed, nor have their interests.”

Last minute concerns expressed by the Free Patriotic Movement to ensure that the tendering process would be transparent and not sidetracked by red tape and diversionary tactics were accommodated in the final draft. Defense Minister Elias Bou Saab noted that a ministerial panel has been tasked with following up on the implementation of the plan in order to prevent any obstruction. “The electricity plan is an achievement for all political parties,” Prime Minister Saad Hariri announced at a press conference after the session.

“The electricity plan is an achievement for Lebanon and no one will obstruct it,” Hariri added, pointing out that the Public Procurement Management Administration and a technical panel from the Energy Ministry will be in charge of the tendering process. The plan still needs to be approved by parliament. A Naharnet article pointed out that “A dated electricity grid, rampant corruption, and lack of reform has left power supply lagging way behind rising demand since Lebanon’s 1975-1990 civil war. According to the McKinsey & Company consulting firm, the quality of Lebanon’s electricity supply in 2017-2018 was the fourth worst in the world after Haiti, Nigeria, and Yemen.”

Russia’s regional plans are the subject of much speculation as all of the region’s leadership has managed to visit President Putin in the last year, including newly-minted Israeli Prime Minister Netanyahu who came right before the election. It is remarkable that Putin has managed to virtually erase America’s once-dominant role in the region while avoiding key issues such as the future of Hezbollah and Trump’s order recognizing Israel’s annexation of the Golan Heights.

By visiting Russia a scant five days before the elections, Netanyahu accomplished three goals: demonstrating to the Russian-Jewish population in Israel his close ties with Putin; being able to carry his anti-Iran message to Putin without obvious controversy; and burnishing his credentials as someone with significant ties to both Russia and the US. How this translates into Russia’s policies in Syria, Turkey, and Iran have yet to be clearly demonstrated, but for now the Russian bear’s shadow has definitely dimmed the US status in the region.

On the other hand, the US continues to take a hardline on Hezbollah that may, in fact, be counterproductive. On his trip to Lebanon and in Congressional testimony following his trip, Secretary of State Pompeo clearly stated the US view that Hezbollah was a threat to Lebanon as well as to America’s ally Israel. By stating that Lebanon not reining in Hezbollah could lead to onerous consequences, he raised concerns that were a central issue for the delegation of Lebanese cabinet officials and parliamentarians who visited Washington last week.

Although the delegation came away with a perception that the US is aware of the limitations faced by the government in confronting Hezbollah, there were no assurances that “unintended consequences” might arise from provocations in the south of Lebanon. The threat of sanctions on “particular individuals,” organizations, and institutions in Lebanon remain a possibility due to the wide-ranging definitions in the “Hizballah International Financing Prevention Act,” which, critics argue, could apply to Amal and the Free Patriotic Movement because of their political collaboration with Hezbollah. In this context, it could undermine support for the US among important groups in Lebanon who currently share US values and are sanguine about having to live with the reality of Hezbollah’s role.

Corruption continues to be in the news, most recently in an article in Transparency International, which commented that “According to the latest Corruption Perceptions Index (CPI), which measures public sector corruption in 180 countries and territories around the world, Lebanon scores a pitiful 28 out of 100 for the sixth consecutive year. This is well below the regional average of 39 out of 100 for the Middle East and Northern Africa (MENA) region. In addition, according to the 2016 Global Corruption Barometer, which surveyed more than 10,000 citizens in nine countries and territories in the MENA region, 92 per cent of Lebanese citizens think corruption has increased in their country.”

While the survey was conducted before the elections this past May, there is still little regard for the willingness of the country’s elites to seriously engage corruption at all levels. “More than three-quarters of Lebanese respondents think the government is doing a poor job in fighting corruption. Unfortunately, despite this, only about half of citizens that think ordinary people can make a difference in the fight against corruption.”

Given the renewed emphasis in combating corruption through a series of new laws, draft laws, and setting up a national commission to track, monitor, and shed light on incidents of corruption, the Lebanese government has set a path for taking concrete actions in the right direction. What is needed is political will and less obfuscation.

What’s going on in Lebanon besides CEDRE Reforms and Syrian Refugees?

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The more than 200 agenda items for the first three meetings of the Council of Ministers demonstrate that business as usual is just not going to suffice. In addition to the reforms and regulations related to qualifying for the CEDRE loans, grants, and guarantees, there were quite a few internal administrative items. These covered a variety of issues, from travel abroad to subsidies and protection for consumer-related concerns that ranged from healthcare to certain agricultural products.

The devolved powers that accrued to the council of ministers under the Taif Agreement’s recalibration of the country’s power-sharing make it critical that there be a robust bureaucracy in place with authority to implement approved policies. However, Lebanon’s culture of micromanagement to ensure the appropriate allocation of government resources (spoils, would be more accurate) means continued bottlenecks until a more neutral and fact-based decision-making process is adopted.

Most recently, the LAF received another shipment of equipment from the US. This time it was an $11 million package of six drones, which follows up an earlier shipment this year of $16 million worth of laser-guided smart missiles. This continuation of the strong ties between the US and Lebanon is facing pressure from Russia, which is lobbying Lebanon to have a higher profile in their bilateral military and economic affairs.

Russian Ambassador Alexander Zasypkin recently spoke at LAU and mentioned that “his country was interested in building new power plants in Lebanon,” and offered “his country’s readiness to help Lebanon in solving the electricity crisis through building modern power stations.” His statement comes amid ongoing Lebanese government meetings with the Prime Minister to discuss how to best solve the energy crisis. There are several layers of challenges: the regulatory environment, clarity about fees and charges, the need for transparent bidding processes, timeframe and financing of infrastructure, and how to deal with the current producers, either off-shore barges or the unlicensed generator operators. It is anticipated that the relevant parliamentary committees will receive a plan for approval by the end of April.

While he was in Moscow, President Michel Aoun discussed his support for Russia’s resettlement initiative for the return of Syrian refugees. The plan is floundering at present due to suspicions that Russia wants to establish mechanisms that trade reconstruction dollars from the West for incremental resettlement of Syrian refugees in areas controlled and dictated by the Assad regime. Despite Russian claims that it will engage with the international community in the effort, so far there has been little revealed of how it would actually work, and especially since the Syrian regime has not given its blessing to the initiative.

A group of Lebanese government officials and parliamentarians are on their way to the US to participate in the annual World Bank/IMF meetings. The delegation will also meet with US government officials and attend the American Task Force for Lebanon Gala, which is honoring four prominent Lebanese-Americans: the Hon. Alex M. Azar II, US Secretary of Health and Human Services; The Hon. Darin LaHood, Representative from Illinois; Peter Rahal, CEO and co-founder of RXBAR; and David Yazbek, noted writer, composer, and Broadway producer.

Among the visiting Lebanese dignitaries is H.E. Yassine Jaber, head of Parliament’s committee on Foreign Affairs and Expatriates. He noted in an interview with Asharq Al-Awsat that the delegation would take the opportunity to hold meetings with US officials “to explain the Lebanese situation and review regional developments…” He also “stressed that Washington supported the Lebanese army and institutions, pointing out that the country needed this material and moral support in light of the current economic crisis and the difficulties and challenges it faces at all levels.”

This concern with challenges faced by Lebanon brings up the issue of the US government’s position on Hezbollah as a terrorist organization and how the delegation might respond if the issue is raised. In an attempt to shore up the distinction between Amal as a political party and Hezbollah, Nabih Berri, speaker of the Lebanese parliament, recently met with Grand Ayatollah Ali Sistani in Iraq. Sistani is regarded as a Shiite leader who promoted cooperation and moderation among communities in Iraq and is unsettled by Iran’s interference in the country.

According to the news report, Sistani told Berri, “It’s important for everyone to work on establishing values of peaceful coexistence based on protection of rights and mutual respect between the different religious and ethnic components in our region, to provide security, stability, progress and prosperity for its peoples.”

It seems Berri, during his visit to Iraq, wanted to send the message that his Amal Movement is different from Hezbollah, and gain Sistani’s support against any possible sanctions. How this will play out among US officials is unknown although the US has cooperated with Sistani in Iraq in the past in seeking to defuse tensions with the Sunni and Kurdish communities.