10 Ways to Save Lebanon

Our economic manifesto to put the country back on track

Real change is possible

At the start of 2014, Lebanon faces two existential crises so severe that they threaten the very functioning of the state. The first is an onslaught against internal peace and the security of every citizen through terrorism and violence. The second is the growing risk of a socioeconomic meltdown under the weight of decades of ineffective politics, along with the pressures of an imported but inescapable refugee crisis.

In this dire context, the political response has been to divide, rather than unite. Until last month, infighting saw the country go nearly a year without a government. Every single challenge the country faced was made worse by this collective failure of duty from the political class.

The formation, then, of a new national unity government is to be applauded. Yet what matters now is whether this Cabinet is braver than its predecessors. Will they think first of the wellbeing of Lebanon and try to design practical solutions to the country’s problems? Or will they continue to neglect the public interest and work for their regional and global patrons? So far, the signs are not positive — several key appointments appear to be the result of political bargaining, rather than being based on merit.

But if, by chance, this government is open to real change and meaningful reform, Executive has sought to make it easy for them. What we are presenting online over the coming days online are ten major policy changes that could save the country’s economy from collapse and in the long run facilitate meaningful, sustainable growth. This will inevitably involve a reorientation of the economy away from speculative sectors toward real growth and a fairer distribution of resources — a new deal for Lebanon.

They are range in urgency and scope — from the most pressing issues to the equally significant but secondary targets. Sadly, for what is ostensibly an economic manifesto, it starts by looking at security. No matter what other reforms are done, the country cannot grow unless it cracks down on the surge in violence that has wrecked havoc on people’s lives, while economically destroying thousands of businesses and scaring away investors.

To do this the political classes need to get behind the military, the one truly popular institution in the country. This should involve increased financial support and new strategies to control the country’s porous border with Syria (see article).

Engaging better with society

On the related topic of Syria, the previous government’s attempts to deal with the Syrian refugee crisis and its impact on society were little short of woeful. While there were some notable exceptions — new health minister Wael Abou Faour did, for example, an honorable job as Minister of Social Affairs — there was no collective response to the crisis. Too often ministries worked against each other rather than for the common cause. As Ninette Kelley, the head of UNHCR in Lebanon, argues this must change.

Our third point may initially appear incongruous; to make the argument for a new census right now might seem ludicrous when, for political reasons, the country has not had one since 1932.  But, as leading pollster Kamal Hamdan argues, the country can no longer continue to stagger forward. It is impossible to do even the most basic planning without better statistics. If a full census is politically impossible, then improving the country’s statistical base would be a very good start.

Once there is more information about who the Lebanese really are, it becomes possible to better engage them in society. One easy way to do so would be through the tax system. As the American University of Beirut’s economics professor Jad Chaaban argues, Lebanon’s tax regime is fundamentally unfair — a system designed by those in power to benefit themselves. To make people feel more engaged in Lebanon, they need to have the impression they are getting a fair deal. This need for fairness extends beyond merely taxes into all areas of society. As Zafiris Tzannatos, senior advisor to the International Labour Organization, and regional pensions expert Ibrahim Muhanna, argue (here and here) the need to develop a new deal for the Lebanese people is great.

Taking the country forward

Beyond this, perhaps the best way for those in power to fundamentally change their relationship with the people they claim to serve would be a newfound honesty and transparency. It is little surprise that the country’s political classes are so widely reviled when they have such a long record of wasting (and often pillaging) public coffers. In this vein, it is important that the concept of truly independent regulatory authorities is introduced in the country (read the article here). These bodies could work in conjunction with new public-private partnership funding mechanisms to revitalize the country’s infrastructure. Ziad Hayek, secretary general of the Higher Council for Privatization, makes the case for these reforms.

Whether it be electricity, water or any other crisis to which the Lebanese are subject, the cures for so many of the country’s woes are not beyond us. With sensible, planned development, the country could move forward rapidly. Yet for decades, a lack of willingness to tackle political interests has held back the forces of reform.

This leads us to the most potentially exciting issue on the list: the nascent offshore oil and gas sector. These resources have the capacity to transform the country over the coming decades, allowing governments to offer the services citizens deserve. But they could just as easily get lost in corruption, and many politicians are secretly looking to the country’s hydrocarbons as an opportunity to maintain the status quo. A fundamentally bankrupt system can, they reason, be held up by petrodollars.

But as Sami Atallah, director of the Lebanese Center for Policy Studies, argues, it is vital that these resources are used in the right way to facilitate growth. This requires the same principles as all sectors of the economy: sensible planning, honesty and transparency. These alone can ensure the country’s offshore wealth is not squandered away by corrupt politicians.

Perhaps all these arguments lead to one conclusion — Lebanon needs a new way of doing politics and a new deal for its people. The system is broken and the chances of fixing it are slim. As former Tripoli MP Misbah Ahdab argues, too many of Lebanon’s actors take their orders from outsiders. What the country really needs is a powerful independent movement, pushing forward moderation and unity across all segments of society. This may be beyond the remit of this current compromise government, but it is a hope for the coming years. With new parliamentary elections due by the end of the year, the chance to build new coalitions is real.

No Lebanese government in the past two decades has successfully managed to implement real, transformative reforms of the kind outlined in these pages. Economic growth has often come in spite of the government, rather than because of it. The changes presented in this manifesto, if implemented, would change the country’s economy and its future. Now it’s over to the politicians to do it.

Joe Dyke

Joe has extensive experience covering the Syrian crisis, oil and gas, and Lebanese government and regulatory authorities, among other topics. He was Executive's online editor from 2012 to 2014, and led the Economics & Policy section from 2013 to 2014.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years.

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