Month: January 2023

The US and International partners invested in the Lebanon file are frequently frustrated by two entwined challenges: where to begin with corruption and how to deal with Hezbollah. Perhaps part of the difficulty is trying to find separate solutions for these problems. We have the IMF package of reforms, which can’t pass through Parliament without the Speaker’s active blessing, on the one hand, and we have the lack of a way forward regarding Hezbollah without a functioning government to be a party to an agreement.

So it comes back to the same reality. As stated by a candidate for President, recently in the US, “Hezbollah took advantage of the corruption in Lebanon to build themselves into a political and military force.” So let’s reframe the approach and think of solutions that will work on both the issue of government reform and Hezbollah’s militarism simultaneously. Any clear analyst will then lay the challenge at­­­ Parliament’s leadership given their pivotal role, but then again, reality intervenes and reminds us that it was the agreement with the FPM that solidified Hezbollah’s legitimacy in the Lebanese government. So where do we look for solutions?

A friend in Lebanon with close ties to civil society points to these possible signposts. The Constitution as amended by the Taif Agreement has most of the steps required to reset the governing formula: two houses of Parliament, with open elections for the lower house and a sectarian upper house; decentralization of power between a centralized government with extensive, effective decentralization to the municipalities; an independent judiciary with appointments recommended to the president by an impartial board; appointments to merit-based senior civil service posts; and appointments to ministers who meet relevant professional criteria including knowledge and expertise in the ministry’s particular functions. He recommends that Lebanon start by implementing Taif and the constitution. No debate needed. They are already law.

A major conundrum is incentivizing the political leadership to take a radically different approach to governance which depends on the willingness of the international community to be proactive with its sticks (sanctions, etc.) and carrots. Civil society has the strength to pressure Parliament. The upcoming May Municipal elections are a start. Again, Parliament has passed most of the legislation needed to deal with corruption, from a whistle-blower protection law to lifting banking secrecy for investigations and a process for monitoring and auditing government spending. All of the tools are actually there, ready for an empowered Parliament. So why are they not employed?

The answer appears obvious. Iran is the catalyst for the erosion of democracy in Lebanon. Once it joined the great game through the penetration of God’s party (Hezb’ Allah) by the IRGC in the 80s, Hezbollah has become a convenient pawn in Iran’s power projection in the wider region. Strengthening its military capabilities fighting Israel and proving to be an extremely capable armed force in Syria – even accused of extending its reach into Asia, the Americas, Africa, and Yemen.

So is it possible, the argument goes, for the international community to close ranks and negotiate with Iran on its dramatically reducing its support for malign actors, rather than its nuclear development– something that does not threaten the national pride of the Iranian government? These friends of Lebanon should insist on two conditions: closing the borders to smuggling and ending armed provocations. The LAF on numerous occasions has identified the transit points for drugs and how they can be interdicted. Successful negotiating with Iran can remove the bulk of Hezbollah’s financial support, while also cutting out smuggling and drug trafficking internationally. Working with countries in Africa and Latin America, the drug trade can be halted and millions of dollars in illicit money can be erased from Hezbollah’s treasury.

Over time, this can also set a pattern for resolving issues with Iraq and Syria, even if the Assad regime prefers coercion rather than compromise. Assad relies on Russia and Iran for his survival, so all regional actors will likely remain involved, including Turkey. Its presence in Syria along its Southeastern border along with the 3.5 million Syrian refugees make Ankara a significant stakeholder in changing regional dynamics.

In this scenario of bypassing Hezbollah and negotiating with Iran, ratcheting up effective counter-smuggling on Lebanon’s borders, the seeds can be planted for more intense negotiations for repatriation of Syrian refugees to safe zones that can overlap with investment parks that rebuild refugees’ lives and not Assad’s brutal regime, it is proposed.

In the meantime, emphasizing decentralization can have several blessings if it’s navigated properly. New political leadership may emerge to challenge the current narrative of clientelism in Parliament. Services can be restored as local co-ops form to provide energy, water, waste treatment, and health services. The tax base of Lebanon will be based on actual, factual, and measurable monies, and employment will spread broadly through the population to include youth, women, and those who need upskilling.

This scenario is not a fantasy. It is an achievable reality. The task as defined requires a rethink of the US and international policy vis-a-vis Iran, and may set guidelines for dealing with Russia once the destructive encounter with Ukraine has ended. It is within the grasp of all actors. The major powers get satisfaction and Lebanon as well as the region get another chance at peace and prosperity.

Trying to fathom the exchange rate universe in Lebanon is simply a nightmare. This LBC International articleoutlines the five different exchange rates that the consumer faces every day. And this doesn’t include the array of black market rates reflecting the latest subsidies — or lack thereof – provided by the government. The most obvious impact has been on the cost of living where shoppers and merchants alike pine for the old days of 8 Lira to 1 USD. Beirut has the official honor of being the most expensive city in the Arab world, over 150 points higher than Dubai.

Hold your breath. The rate is at 40,000:1. Now exhale, it’s at 50,000:1. Better pay for education and health services in advance of the next shake up in the rate. According to Numbeo, which compiled the global cost of living index, the cost of living in Beirut is higher than in about 91% of the cities covered. The index is an indicator of the prices of consumer goods, transportation, and utilities. New York City is the baseline for the index, and the cost of consumer goods in Beirut is 19.7% lower than in NYC, taking into account groceries, meals, and drinks. Only the Gulf States have higher rent costs in the Middle East. Groceries are slightly less expensive than New York, but that’s when you exclude transportation. Only the UAE and Qatar are more expensive when it comes to meals and drinks.

For those living in poverty, these number have little meaning as over half of the population in Lebanon struggles to feed their families and travel to work, let alone afford shelter. What these numbers point to, however, is the inability of the government to meet the needs of the people, as even the recently adopted national budget uses several different exchange rates – none of which hold up to scrutiny. For those who have managed to hold on to their savings, the BdL has made it even more confusing to withdraw money with their mystifying circulars scrambling the options even further. Limits are set for monthly withdrawals in either Dollars or Lira, and then changed. Rates for old Dollars (Bollars) and fresh Dollars (Lollars) are at the mercy of the government, banks, and big business.

Meanwhile, brain drain and irregular immigration (via boats, mainly) continue to increase exponentially as people are left increasingly tired and fed up. According to the Byblos Bank Economic Research and Analysis group, the Consumer Price Index (CPI) increased by 179.8% in the first 11 months of 2022 compared to the same period in 2021 –starkly up 142% year to year in November alone – which is the 29^th triple-digit increase since July 2020.

There are a number of factors driving the increase in the cost of living on top of the exchange rates, which are invisible taxes on the consumer. Furnishings and household equipment lead the list followed by foodstuffs and transportation. Those who were least affected lived in the Bekaa between October and November 2022.

With this disarray in the currency value and the continued inflation, it is no surprise that migration is increasing. The Jerusalem Post opines, ‘Financial collapse has caused the number of emigrants to increase by 450% in just one year, with many professionals and young people hoping for a better life elsewhere.” This is across all sectors, relevant to both private and public employees. The Arab Youth Report notes that 90% of Lebanon’s young people have indicated that they have thought about or are actively seeking immigration, the highest ratio in the Arab world. Similarly, a Gallup poll from December 2021 found that 63% of Lebanese still in the country say they want to leave forever.

The Post article further points out that “Lebanon is already one of the countries that is home to the highest proportion of elderly in the region. This new exodus will lower the birth rate and raise the average age of the population even more while falling productivity and job options impact the economy.”

It is difficult to project how this exodus will affect the future prospects for Lebanon’s recovery and revival. With a government structure unable to make efforts to reform internally and few outlets for constructive interaction with the Lebanese people, tinkering will hardly make a difference. It’s now time to embrace a radical shift in the governing equation based on a national commitment to dignity, justice, and freedom.

On January 11^th, former Lebanese parliament speaker Hussein Al Husseini died of severe influenza at age 86 in Beirut. Without exaggeration, his political life and career were impressive in their effect on the country’s future. When informing the public of Mr. Husseini’s death, Caretaker Prime Minister, Najib Mikati, declared “today Lebanon has lost an authentic national and constitutional figure,” announcing three days of national mourning. His successor, Speaker Nabih Berri has suspended a convening of parliament on the presidential election Jan 19.

During his premiership, he contributed heavily in brokering an end to the bloodshed between Lebanese through the much debated Taif Agreement, giving him the nickname in some circles, the “godfather” of Taif. It was secured in 1990 by all the major warlords of the conflict in Taif in Saudi Arabia.

Husseini himself entered national politics at 35 when he was elected to parliament in 1972. Before that, he was elected mayor of his hometown of Shmistar in the Bekaa Valley at 18. What really made him a household name for many Lebanese was his involvement with the predominantly Shia political party Amal (hope). In 1973, he co-founded the Amal Movement alongside the scholar and charismatic figure Imam Musa Sadr, who was its first leader. Eventually, Husseini took up the helm of Amal after the disappearance of Imam Sadr and his comrades, Sheikh Muhammad Yaacoub and journalist Abbas Badreddine, when they traveled to Libya in 1978 to meet with then Colonel Muammar Gaddafi. No conclusion was ever formalized as to their ends. However, it is generally accepted the late Libyan dictator ordered their deaths.

By this time, Lebanon’s civil war was still ravaging the country and Husseini was Secretary General of Amal. His refusal to immerse the party in the bloodshed between fellow Lebanese forced him to resign from the position in 1980. Without him as head, Amal joined the war alongside other militias, including the Palestinian Liberation Organization (PLO). He was replaced by Nabih Berri as the party’s top leader. Husseini would later be elected as speaker of the parliament in October 1984, a position reserved for the Lebanese Shia sect in the power sharing model agreed upon by its founders in 1943 through the unwritten “national pact.” He remained in the role of speaker until October 1992. Once again, he was replaced by Nabih Berri, a favorite of Syria, who by this time, possessed tens of thousands of soldiers in Lebanon with the legal cover of the Taif Agreement. Husseini was under significant pressure to permit then Saudi sponsored Prime Minister-elect Rafik Hariri to expropriate private property in downtown Beirut from Lebanese citizens for his (Solidere) reconstruction efforts. Husseini refused, thus reducing his role in public life, it wasn’t his final stance. In 2008, he resigned from his seat in parliament in objection to the Doha agreement that forced all parties to form a National Unity government which he lacked confidence it would satisfy the required needs to rescue Lebanon from corruption and sectarianism.

His political life was over. Still, he remained a voice calling for democracy and transparency in Lebanon. He was a man who stood on principle and sacrificed personal gain for his country. Something most Lebanese are unfamiliar with in the current political atmosphere. Husseini detested compromises at the expense of Lebanese independence and sovereignty. He possessed qualities of a natural almost idealist. Lebanese presidential candidate, Tracy Chamoun, described him as a man who belonged to an era of statesmen who had a vision and passion for Lebanon and who acted with integrity. The former speaker’s courage and honest nature gave him many admirers across Lebanon. His legacy is that of a true patriot on par with other historical Lebanese figures like Fouad Chehab, Gebran Tueni, and Charles Malik.

Although there is no formal executive power and despite repeated warnings of imminent collapse, Lebanon continues into 2023 much as it departed last year. There are some hopeful signs, though. A reorganization of the exchange rate approaching reality, the impending investigation of several leaders for corruption, the continuation of humanitarian aid programs by international donors, and human-scale actions by Lebanese at home and abroad are all incremental albeit decisive signs that the Lebanese are not willing to agree to just fold up.

Although communities have yet to form a united front and a national vision, from the caretaker PM to the heads of the religious communities, there is an emerging consensus on adopting the reforms needed to free up the economy and enable some sense of normalcy to reemerge. The challenges remain and the willingness to mobilize remedies to reduce the hollowness of the state and its institutions are growing.

The Levantine Energy deal, the maritime demarcation agreement, the renewal of the Iraq oil exchange, and the posting of notices to engage professional supervision for the energy sector all point to some relief in the first quarter of the year. On the banking side, banks welcomed the freeing up of dollar to lira restrictions that allow a fairer exchange under less restrictive conditions. Perhaps this will enable the sector to become more service-oriented and less confrontational in dealing with the Central Bank’s dictums for depositors.

Overall, remittances are holding steady if not increasing marginally, signaling that expatriates are still supporting their families and maintaining their interests in the country. A story in the Arab News captures the mood of those who have had enough and don’t see any way out unless leadership, both in the government and in the private sector, can find a way to commit their energies to what’s best for the people.

On the other hand, the story of Lebanon rebuilding through meticulous steps with international partners, both raising a new generation of crafts people and symbolizing a rejection of cynicism, is one that well captures a physical restoration that lifts one’s spirit and hopes for the rest of 2023.

As we pointed out in our recent commentary on This Week In Lebanon, the scheduling of municipal elections for May 31 gives grassroots democracy another opportunity to show that ‘all politics is local,’ and that when faced with making the right choices about what can be effected on the local level, the Lebanese ought to think beyond individual interests. Decentralization can be a reality in Lebanon, if they want it and if they want to make it work through transparent, community-wide programs.

We were pleased to hear from Amazon that Nancy Zakhour’s new book, Elissa and the World of Olives, was added over the holidays. This follow her initial book “Elissa discovers…the Origin of the Alphabet” that we wrote about last year. At 24 pages, it’s about what I can handle at this time of year!

While Lebanon has yet to elect a President or adopt the IMF reforms, the institutions are still functioning although on a scale that does not yet point to recovery. Mobilizing the political will to take the necessary steps is a fully Lebanese decision. Its friends are willing to help but not without the buy in and leadership of the Lebanese themselves. As the ambassadors of the Group of Seven (Friends of Lebanon) remarked, “The unprecedented financial crisis and economic deterioration the country has experiences over the past three years raise serious questions as to the performance and commitment of decisions-makers to effect change.”

We are hopeful.

Disclaimer: The views and opinions expressed in these articles are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon, a non-profit, nonpartisan leadership organization of Lebanese-Americans.