Talking about Lebanon: Electricity Plan Passed by Cabinet – On to Parliament; Russia Plays Multiple Hands in the Region; Questions Remain about Commitment to Reduce Corruption

April 15, 2019

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.


 

 



 

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