Month: January 2020

Now that the new Diab-led government has been installed and preliminary approval given to the previously drafted national budget that has some reform features, there are contending scenarios for what may happen next. There is a consensus on the need to prioritize economic issues, especially those affecting the overall fiscal integrity of the country and the resulting decline in purchasing power for the majority of the Lebanese people. However, there are sharp divisions about what is possible in the coming months or even before the 2022 elections.

Some believe that this government will fail as the sectarian leaders who came together under Hezbollah’s prodding to assemble the new council of ministers will not allow critical reforms and austerity measures that would strike at their ability to appropriate and distribute government resources. Others believe that incremental steps – such as resolving the failed electricity sector and privatizing state assets like telecommunications – will alleviate short-term pressures to repay interest on international bonds and reduce the budget deficit, and possibly lead to some external funding.

In any case, there are no prognosticators who think that the new government will somehow courageously bypass its progenitors and create a highly functioning crisis team that does not require the approval of parliament to enact and implement reforms that accomplish key objectives well enumerated by multiple analysts. At the outset, in addition to fiscal reforms, there is a dire need to strengthen the social safety net and restore some semblance of purchasing power to the middle and lower classes. Whether or not this can be done without infusions from the international community is the challenge immediately confronting the government.

Then there is the political agenda…

This may be even more difficult to address than the economic issues, and maybe that’s what the political elites are counting on: that if people are focused on the economy, their demand for the upheaval of the ruling class will be dampened. This may be wishful thinking. While the spike in violence these past two weeks from a small number of protestors has muted some of the critics of the political elites, the anger and frustration remain.

The bishops and sheikhs and other eminences in the country’s leadership are counseling a wait-and-see attitude. The LAF and ISF are on standby to prevent additional damage to public and private institutions. And many of the demonstrators and their supporters are caught between supporting the people and opposing violence.

As one commentator wrote, “But how will destroying public and private property set the country on a path towards a brighter future? Will it solve the problem of continuing electricity and water shortages, rampant poverty, pollution, and high unemployment? Will it stem the rapidly devaluing Lebanese currency, alleviate a crippling national debt or lift capital controls issued by local banks that have prevented the average citizen from withdrawing more than a few hundred dollars per month?”

How does one convince the non-violent demonstrators on the streets to organize, generate an agenda, and take back the movement from those resorting to violence? There is no assurance that they will be any more successful in dealing with the status quo, but at least they stand for Lebanon against those in power and those who support violence as another way forward.

Another commentator noted that the recurring nature of crises in Lebanon since the end of the civil war is akin to the movie “Groundhog Day” where the protagonist relives the same experience time and time again. He points out that dissatisfaction with the status quo is a consistent feature of Lebanese politics, yet nothing changes, as was the outcome of the garbage crisis. People are too wedded to a system that awards affiliation rather than merit.

This may explain why even after a month of demonstrations, Hezbollah still maintained the support of some 90% of Shia surveyed. Ironically, “On the internal issues behind the current mass protests, however, Lebanon’s three major communities are practically united. At least 90% or more in every group say their government is doing too little about each one of the following problems: reducing the level of corruption in economic and political life; dealing with growing economic problems and people’s daily hardships; and sharing the burden of taxes and other obligations to the government in a fair manner.”

And this hits at the kernel of the debate about why and how to save Lebanon from itself that is troubling the Lebanese expatriate communities. Why can’t Lebanon fix itself? Why do the voters keep returning the same people to power despite vilifying them in the demonstrations? Civil society was unable to organize for the 2018 elections despite electrifying mobilization on the streets of Beirut during the garbage crisis. The recent demonstrations are much broader and deeper, attracting people of all sects and regions unified around the need for a better, cleaner, more efficient, and transparent Lebanon. Will the Lebanese persevere through another failure of governance without overturning the status quo?

The call for early elections before 2022 may be the best road to resurrecting Lebanon, IF the demonstrators can move beyond the street and organize effectively around political platforms that resonate with the Lebanese people fed up with the status quo. The opportunity is theirs. If the demonstrators can mobilize around new elections as a priority, it will be hard for the new government to resist. If the political elites are then willing to gamble that they can retain control without reversing the country’s economic and humanitarian crises, it is theirs to lose.

Analyzing the protests in Algeria, Iraq, and Lebanon to uncover similarities useful for finding possible beneficial results such as greater power-sharing, more transparency in public transactions, a stronger commitment to rule of law, and concrete steps to promote inclusive economic prosperity leaves one dispirited. Sometimes analysis is just that – we can see what’s going on, we can describe the dynamics, draw conclusions, and outline scenarios – but offer few remedies as analysts seldom have the agency to effect or even influence change.

This is the hard lesson in all three cases, and most extremely in Lebanon, which, like the others, has come through a civil war, is riven with identity politics that frame negotiating positions, and has been unable to articulate a way forward despite the increasing costs of not acting.

There are many useful analyses available of the economic crisis in Lebanon, which is increasingly compounded by the unfathomable inability of the current leadership to take steps necessary to stop its slide into the abyss of failure and insolvency. As the once peaceful protests have turned increasingly hostile, whether by intention or conspiracy, Lebanon once again is set upon a path of self-destruction that will have far more ramifications than the enfeebled state created by the Taif Agreement, still waiting to be implemented fully.

How can the elites believe that Lebanon is too “what” to fail? Are they waiting for the latest version of the Syrian occupation to maintain their hold on power? Are they really willing to give the country over to Iran through its proxy Hezbollah? How can Hezbollah both support the demonstrators’ issues and rally against their ability to protest and call the government to task? And what will it take to bring civility back to the streets? The security forces are caught in a dilemma: they must take steps to ensure public safely while their salaries, savings, and personal security are all being diminished by the current fiscal crisis and the reactions of the crowds.

Banks have become the latest flashpoint as demonstrators believe the banking community enabled the government to ruin the fiscal stability of the country by funding deficit spending for over 20 years. People point to schemes that saw dollar assets from abroad invested in Ponzi-type funds rather than productive investments, and capital controls that enable the rich to send their funds overseas while everyone else’s access to their savings is significantly curtailed.

The results this past week have been a disaster for both the parties. According to the Independent, “Nearly 300 banks and ATMs were targeted during demonstrations across the country, according to police.…Some 352 people were arrested during the disturbances, before eventually being released following protests outside police stations.” It was reported by Reuters that “The Lebanese Red Cross said it had treated 220 people who were wounded on both sides on Saturday night, taking 80 of them to hospital. The Civil Defense said it had helped 114 others.” The AP noted that “Lebanon’s Internal Security Forces said 142 of its members were injured, including 7 officers, some with serious concussions.”

Despite calls from former Prime Minister Hariri, threats from Hezbollah’s Secretary General Hassan Nasrallah, and tweets from the acting Interior Minister Raya el-Hassan, there is very little to persuade the demonstrators to abandon the latest assaults on the banks, other buildings, and the security forces. They simply don’t believe that PM Designate Hassan Diab will be able to form a government of independent professionals: announcements of members are delayed; political parties complain that either they are underrepresented or others are overrepresented – in a proposed cabinet of supposed independent technocrats; and the financial situation continues to deteriorate, wiping out the savings of most of the people.

In Algeria, the military has pulled together a political bandage buying time to introduce measures designed to sidetrack hirak, the “movement,” by holding an election for a new president. So far, Lebanon’s security forces have abstained from taking a political role to ameliorate the crisis. In Iraq, demonstrators face forces that include proxy militias for Iran, while the Iraqi Army is caught in a dilemma of who is the master in Iraq. Is this the scenario awaiting Lebanon? There are only questions as Lebanon moves closer to the edge of financial collapse and uncertain outcomes to its political turmoil.

There have been many useful analyses of Lebanon’s current economic demise brought on by years of fiscal mismanagement, corruption, misappropriated funds, diversion of public finances, deficit spending, gross expansion of public service jobs, and other activities that drained the financial system of its integrity and hobbled the private banking system. The solutions proposed consistently call for the installation of a reform government empowered to make immediate and medium term changes in everyday activities, from capital controls of funds transfers to supporting the Lebanese pound to lessen the harsh depreciation in people’s incomes and quality of life.

Regardless of the recommendations, be it introducing a fair and robust tax system or installing regulatory bodies to supervise privatization of sectors draining the national budget, what is evident is that succeed or fail, Lebanon will never be the same. On the political front, the coalescing of a national dialogue and demonstrations across sectarian, regional, and political boundaries portends the start of a movement to change the political calculus of a country long beholden to sectarian elites. While today’s demonstrators may lack a central leadership, their agenda of kullon ya’nah kullon, “when we say all, we mean all,” is common to the people calling for the end to the political dynasties that have fathered this crisis.

Tales of poverty, disillusionment, lack of funds to access education and health services, and a rapidly disappearing middle class, with poverty reaching close to 50% of the people, frame the question, can Lebanon recover? Can it retain its legacy as a haven for intellectual, cultural, and educational expression? Will it find its future mortgaged by a lack of international support contingent on cleaning house when there is no broom acceptable to the current leadership and their proxies?

And those studying the economic crisis, which dominates the news, have not even scratched the surface of the seismic political changes that may occur, leaving Lebanon a shell of its reputation as a spirited forum for debate and disputation. This is clearly one of the likely outcomes if its political leadership loses all dignity and acquiesces to the demands to retain under some guise the sectarian spoils system that is at the heart of the economic failure. This will strengthen Hezbollah by aggregating even more government institutions under its influence and lead it to believe it can restructure the security services to its liking, as it did with the government after the 2008 siege of downtown Beirut.

Hezbollah’s reaction to the assassination of Qassim Soleimani, essentially calling to avenge his death by attacking US military targets throughout the region, surprised no one except those who still believe that the “resistance” that Hezbollah represents is still in Lebanon’s interests. While there are no expectations that Israel will be in the crosshairs as this is an Iranian-US dispute, the inflammatory language and the likely gap in rebuilding IRGC sway over Hezbollah increases the likelihood of “unintended consequences.”

So Lebanon is in a dilemma, caught between the dramatic necessity for reform and a leadershi

p that is unwilling to relinquish their current power without an onerous tradeoff, at least in terms of the integrity of Lebanon’s institutions. Meanwhile, the middle and lower classes in Lebanon are rapidly being suffocated by a dysfunctional economy and political system that provide neither support nor hope. Even the diaspora, which for so many years has been the knight to the rescue of the financial system, are avoiding the mess that the financial sector has become.

Cynics can say that it’s the fault of the Lebanese who for 30 years have continued to support their sectarian leaders due in large part to the spoils they were able to provide. Now the bill has come due, and only those who lack the resources to seek safe havens overseas, most Lebanese, are paying the awful price. And the Lebanese are waiting to see if a new government is introduced this week…will it be more of the same or a real opportunity for Lebanon to reemerge from its failed state?

It’s hard to fathom the levels of poverty that now exist in Lebanon, particularly in the less fortunate areas in towns and villages surrounding larger municipalities. After years of government mismanagement of the country’s finances, there are no short-term solutions to relieve the pressure on the lower and middle classes as the Lebanese currency has lost over one-third of its value in recent weeks. Dollar accounts are frozen, businesses are closed, and store shelves are showing fewer goods. There are stories of rising suicide rates, doctors personally purchasing medicines unavailable in government dispensaries, and deteriorating health, education, and social services across the country. And this does not include the impact on the hundreds of thousands of Syrian refugees miserable in makeshift tent camps.

The government shows no signs of coming together around a team of competent technocrats who can implement the rigorous program needed to convince donors that Lebanon can recover transparently and effectively, eschewing the usual genuflections towards the sectarian spoils system. Immediate and medium term steps to unify, rebuild, and invigorate the country and the economy are immense challenges. According to the Corruption Perceptions Index, Lebanon’s corruption reached a record high ranking of 143 out of 175 in 2017, a stark drop from its 2006 score of 63. So the erosion of its economic health is not a recent phenomenon. It is a burden that is driving the country from being a fragile state to one that is failed and broken.

As a recent Carnegie Middle East article noted, “An increasing number of businesses are closing their doors. In 2019,265 restaurants have shut down; over 10 % of Lebanese companies are believed to have gone out of business and over 22% have reduced staff levels by 60%. In addition, business owners are reportedly cutting salaries by half,” and this was in early December. Social media from Lebanon frequently carry stories that detail the suffering and privations of the people and the outreach by the demonstrators to assist those in need.

A story in the Jordan Times related that “Across the country, protest encampments are bustling with volunteers trying to fill in for an absent state and cash-strapped charities that have closed their doors or reduced their activities in recent months due to deteriorating economic conditions.” It noted that “With volunteer kitchens, makeshift clinics, and donation centers, Lebanon’s protesters are helping their compatriots survive the worst economic crisis since the civil war by offering services many can no longer afford.”

The article mentioned efforts in Sidon and well as Beirut’s main protest camp, where “volunteers dressed in neon-yellow vests pack the back of a truck with piles of donated food.Near the main central bank building in the capital, cardboard boxes and rubbish bags filled with donations line the sidewalk…“It is our national duty to mobilize and help each other,” said a volunteer.“’We have no other solution.’”

Another article provided statistics on the dire situation. According to Mohammad Chamseddine, a researcher at the consultancy firm International Information, 55%of the Lebanese people are poor.One quarter of the Lebanese population cannot secure their food needs while 30% can secure their food needs only without any other additional expense such as hospitalization, adding that more than 25% of the Lebanese are unemployed.

Former education minister Hassan Diab, who has been tasked by some of the political elites with forming the technocratic government demanded by the protestors and international donors, continues his efforts this week but has yet to show that those in power will step aside to empower a new government. With winter already causing flooding and snow, Lebanese of limited means are desperate as many can no longer afford to purchase power from private suppliers that the government is unable to provide. Winter was once a joyous time for holidays and skiing in Lebanon. This year the bottom line is misery for many and escape for the well off. The famous Lebanese resilience seems a distant dream for the starving, cold, and poor.