Lebanon must unite factions to withstand its economic situation

Thursday, November 29, 2018
The Hill

It is more than six months since the Lebanese parliament was elected and the leadership of the caretaker government has faced many challenges in attempting to form a government. Made up of the 18 diverse religious sects — including Christians, Druze and Sunni and Shiite Muslims — the government, most analysts believe, cannot withstand much more inaction and quarreling among the factions without irreparably damaging the country’s future.

It is as if a house is burning and five fire trucks show up to put out the fire — but rather than working together to extinguish the blaze, they quarrel about in which part of the house the flames should be extinguished first, who should hold each truck’s hose, and who is in control of the hose in the first place. The fire rages out of control, maybe to the point of no return.

The World Bank in its Fall 2018 report has downgraded Lebanon’s gross national product growth to 1 percent, a devastating growth rate for a country in desperate need of a functioning economy.  Foreign receipts are down as well, which puts the Central Bank in the position of having to beef up “its stock of foreign exchange reserves, lengthening the maturity of deposits and limiting the liquidity available, thereby inhibiting speculation against the Lebanese pound,” which is an “unsustainable path,” according to the bank.

Lebanon has the third-largest debt to gross domestic product ratio in the world; poverty is expected to rise; and the fiscal deficit is expected to rise from 6.6 percent to 8.3 percent.

The international community has done all it can to help and it’s now time for the Lebanese to act. Three international donor conferences have been held this year. In March, some 40 countries participated in a meeting, along with United Nations Secretary General Antonio Guterres and Lebanese Prime Minister Saad Hariri, “to reaffirm their commitment to the stability, security, sovereignty and political independence of Lebanon, offering hundreds of million dollars in military and security aid.” This is in addition to the more than $100 million a year in U.S. aid to the Lebanese Armed Forces.

At the Friends of Syria donor conference in Brussels in May, donor countries pledged $4.4 billion in refugee humanitarian support to Lebanon, Syria and other neighboring refugee-hosting countries. Most importantly, Lebanon won aid pledges exceeding $11 billion in April at a Paris CEDRE conference aimed at rallying international support for an investment program to boost its economy. The CEDRE project, plus the privatization of some government entities, seems to be the only answer to Lebanon’s economic downturn.

Most of the aid, however, is conditioned on a new government instituting policies that deal with privatization and economic reforms in a transparent process, as well as other guarantees in line with international norms. When Africa Ferid Belhaj, the World Bank Group vice president for Middle East and North Africa, visited Lebanon recently, he warned that Lebanon “might lose the loans and grants promised during the CEDRE conference, should the cabinet formation get further delayed.” The message was clear: Your economy is in danger and the loans decided for Lebanon could be given to other states.

The struggle to form a government remains the same: Anti- and pro-Hezbollah elements struggle over the makeup that Hezbollah and its allies will end up with. The United States has warned clearly that U.S. aid could be in jeopardy if Hezbollah increases its influence in the government, particularly if it controls a service ministry such as the Health Ministry, where services and favors can be doled out at the local level, thus increasing its influence and popularity.

As the designated prime minister, Hariri is struggling with this latest stalemate engineered by Hezbollah to balance international aid agencies’ requirements with the need to form a government without creating a situation that could prompt another civil war among the factions.

All of this goes on while the “house of Lebanon” burns. It is up to the Lebanese people to demand their government take back its responsibility to govern, protect its sovereignty, and push back against elements inside the country who care more about sectarian interests than the national interests of Lebanon.

Edward Gabriel is president of the American Task Force for Lebanon and a former U.S. ambassador to Morocco (1997-2001).