Back in September 2005, this magazine published an article about the possibility of holding a donors’ conference in Beirut in December 2005. In the same article, the magazine expressed serious doubts as to the conference taking place in the medium-term, let alone in 2005. The main reasons for these doubts were built on the fact that as long as there were paramilitary organizations in Lebanon, and as long as the various UN resolutions (particularly 1559) were not implemented, a donors conference would remain a vivid fantasy.
Indeed, it is becoming increasingly apparent that potential donors, led by the United States, are insisting that not a single penny will be disbursed to Lebanon as long as weapons are still held by organisations other than the Lebanese army, UN resolutions are not fully implemented, and economic reforms, particularly privatisation, are not put into practice.
Donors have been burnt before in Lebanon with both the Paris I and II conferences, where much had been promised by Lebanon. These promises were not delivered, mainly due to political squabbles between the late former Prime Minister Rafik Hariri and President Emile Lahoud. At Paris II, there was no insistence on the part of the donors (which included France and the European Union), and supranational entities (such as the IMF and the World Bank) for arms held by Hizbullah and Palestinian groups to be surrendered to the army.
Missed the boat
It is clear then that Lebanon, by failing to deliver on privatisation, has missed the boat and burnt its bridges with international donors. Conditions for lending or donating much needed funds are now tougher, and require serious political commitments from the current Lebanese government. The political situation is also less straightforward than what it was back in November 2002, with brinkmanship being the name of the game today among the various political and religious groups. While the Seniora government is hoping it can kick start privatisation as soon as possible, other groups are blocking the way by using their seats in Parliament. In other words, the Lebanese economy is tied in a Gordian knot, whose disentanglement will be key to future economic prosperity.
The Lebanese government now has to show significant good faith by announcing with convincing commitment the resumption of the privatisation program. It has to take the bull by the horns and start with its privatisation program even if there is no clear sign that a donors’ conference is going to be held. This time, the Lebanese government has to take the first step and deliver before getting any funding from international donors and lenders. The government will have to convince the various political protagonists that privatisation is an urgent necessity and that its resumption is the first sign that Lebanon is in the right step to sort out its political and economic mess.
What the various quarrelling factions will have to understand is that the country won’t be able to get much needed cheap funding without a minimum effort from their part, which is summed up in the resumption of privatisation. Surrendering arms and implementing UN resolutions are also key conditions, but they can be smoothed up over time if the government shows a strong will to privatise inefficient public institutions.
Talking about inefficiency, Lebanese public utilities and other companies are high on the world’s shame list of badly managed government organisations. Their transfer to competent private hands, who would come in the form of strategic institutional investors and a demanding retail investor base, would transform the Lebanese economy beyond any current politician’s wildest imagination.
It is unacceptable that a company such as EDL remains in the hands of Lebanese politicians. It is indeed, mind-boggling that a majority of the population is still going through electricity rationing for the greater part of the day while paying outrageous bills. Other public companies are equally inefficient and need to finally deliver decent service to a long-suffering population. Enough said. Privatisation is long overdue.