As far as allegories to dance movements go, the Paris III conference was a grand ballet. President Jacques Chirac pirouetted as leading man and the 37 assembled nations and multilateral institutions performed their numbers for the guests of the hour, namely the Lebanese delegation of Prime Minister Fuad Seniora and his cabinet confidantes. By the evening of Jan. 25, the meeting had it all: grants, project-tied aid for social, educational, and infrastructure projects, and soft loans at advantageous conditions.
Ranging in size from $1 million donations by Latin American, Eastern European, Asian, and Arab countries to a $1.1 billion commitment by Saudi Arabia, the total result of the aid meet was amazingly close to the $8 billion need estimate that government economists in Beirut had circulated several months ago when the Paris III preparations were starting to take shape.
The commitments flowed with ease and elegance. Speakers from countries around the world followed one another in short succession and presentations were astoundingly succinct. There even was a bit of amicable cultural alignment when the host asked for French timing on the lunch break but seemed happy enough to go with the Middle Eastern late break instead.
The details of some interest rates, disbursement conditions, and repayment schedules were admittedly hazy during the conference itself (and not available in detail when Executive went to print) but with total international pledges of $7.6 billion and a paper full of Lebanese commitments to fiscal improvements, privatization, social measures and overall reforms, satisfaction ruled all around. Conference participants assured the media in the closing press conference that they were fully aware of the political problems faced by Lebanon and the deplorable street fighting that had erupted in Beirut on the actual of the Paris III, but reiterated their confidence that the country would achieve new internal calm.
In this regard, the convening of Paris III was a success in itself. In late December, there were enough reasons for local and international experts to seriously question the likelihood of the conference even happening. The confrontational positions of the opposition—Hizbullah, Amal, Michel Aoun’s Free Patriotic Movement and their allies—and the March 14 forces of Saad Hariri’s Future Movement, Walid Jumblatt, and assembled Christian groups on the other side, displayed the kind of intransigence that required doubt over the mutual will for communication in the two camps. The likely outcome of such mental conflicts and spiritual warfare is physical escalation, as happened in the conference week. But the key conference parties, comprising the French host, the Europeans, the United States, the Arab League and most Arab countries, stayed committed.
Paris III was set up and implemented along a formula similar to the one used to rally international powers to Lebanon’s support in the Paris II conference. That conference benefited from the friendship between Lebanon’s then prime minister, the late Rafik Hariri, and President Chirac, whose term in office ends this spring. In closing the Paris III press conference, Chirac paid tribute to Hariri as a “man of peace” and “the cause and author of Paris I and II.” It was Rafik Hariri who had traveled to the capitals of the West and the Arab world in preparation for Paris II, and Seniora has now retraced his footsteps.
But was Paris III the final chance to tango with international aid givers in exchange for reforms?
What makes this question inevitable is the fact that Lebanon’s government has failed in its obligations to live up to the privatization and reform promises made in November 2002. Paris II was hailed as a big success at the time, one that would not be followed by another conference of the same cut.
The disarmingly simple argument presented by Seniora in asking funds at Paris III was that this will cost money now, but it will cost more if the problem is left to be addressed later. That is correct, but only when adding that, in the end, it will be three times as expensive if a solution cannot be found now.
Many concerns about Paris III
Some economists cautioned that Paris III could go the way of Paris II with only half of the promised funds making it to Beirut and financial support getting lost in the inefficiencies of implementation. However, predicting an automatic repeat of this pattern is unproductive, and the lesson of Paris II should be to eliminate the reasons which international donors cited for cutting the funds.
Other concerns are technical. Besides following the process of Paris II, a number of the reforms proposed by Seniora’s team for Paris III were adopted from the plans that have been around since the start of the millennium. While the fiscal and macroeconomic logic of handing the phone networks over to the private sector and getting rid of Electricite du Liban as fast as possible is as valid today as it was five or six years ago, the lack of new ideas and concrete development concepts for economically underprivileged areas are grounds enough to call for further deliberations. Also, the proposed fiscal measures and debt reduction mechanisms made some competent analysts comment that things are not as simple as they appear in the Lebanese government’s paper.
But the main issue of 2007 is political consensus. It was not achieved in 2003, and it seems out of sight today. To stay in step with the dance, the biggest question forcing itself on the evaluation of Paris III is how can people tango when they are locked in political fights? It takes two, but conditions in Beirut leave no doubt that a whole dance-athon of serial political tangos would be needed to create the kind of agreement needed for implementation and probably expansion of the reform platform and a new start in Lebanon.
Seniora and his cabinet members have said often enough they want to invite all groups in the national spectrum to present their proposals for upgrading the reform project that is Lebanon 2007—but could Seniora and the many heads of opposition interests ever see eye to eye (or, to stay with the dance motif, dance in step)?
The reaction from Lebanon immediately following the conference was ambiguous. Some was exuberant, some cautious, some undecided and some simply mistrustful of the government’s reasons for holding the event in the first place.
In its more tangible way, the Beirut Stock Exchange gave off mixed reactions. The BLOM shares index climbed above 1,200 points for the first time in more than a month, as Solidere shares appreciated by 4.4% and moved close to $17 with some of the strongest trading volume in the stock since before the start of anti-government demonstrations in the Beirut central district.
Banking sector sticks its neck out again
Brokers and investment advisors for local financial firms were quick to say that Solidere’s momentary gains were related to the good numbers from Paris, but by the following Monday, the mini-surge abated as quickly as it began. Furthermore, in the banking sector, shares of Byblos, Audi, and BLOM dropped between 1 and 2.5% on January 26. That and the following trading day suggested no new wave of investor enthusiasm.
For the banking sector, the danger of a failure in Lebanon’s recovery looms large because exposure of commercial banks to government debt is still immense. Thus it is no wonder that, as ABL chairman Francois Bassil confirmed to Executive, the banking industry is willing to play an active role in the reform process through financing infrastructure reconstruction and by finding investors for government projects.
However, as Bassil also made clear, banks would not agree to providing funds to the state through zero-coupon treasury bills again as they did after the Paris II conference, following a request from the Lebanese government. Bassil conceded that the banking sector will be affected if fiscal reform is not accomplished, because it is a main lender to the government.
The challenge of Paris III is assuring that this conference, in which a vast range of international and Arab governments showed massive support for Lebanon and—there can be no uncertainty about this—its current cabinet will be part of a formula for national benefit. Cash and projects are necessary for Lebanon’s future, but they alone will not suffice.
The violent demos of Jan. 23 and the all out street fighting of Jan. 25, both the result of weeks of worsening relations among the divided Lebanese political factions and religious communities, illuminated with stellar intensity one fact already known by the Lebanese people: that pushing divisions, emphasizing differences, and maximizing irreconcilable demands into shapes of belligerent political positions is a poison that can kill Lebanon.
It is a fundamental rule that when governments or religions fail to practice good governance, people suffer and prosperity declines. Where the Cold War between the East and West was a precarious balance that could function on the military basis of Mutually Assured Destruction (MAD, as it were), the closeness of coexistence among Lebanon’s familial, tribal, religious, and political communities does not allow for a balance of destructive potentials. Instead, it requires a balance based on finding commonalities and emphasizing shared denominators, of which many potent ones can be found—given that the searching parties are willing.
Huge need for understanding
It is said the there is a huge need in this world to repair not only the relations between nations and religions but also between spiritual values and principles on the one hand and governments on the other hand. That means new openness must be cultivated between religious communities and within them, among their leaders and members.
Lebanon is a case study for this mandate of the 21st century. The capacity for peaceful coexistence among the Lebanese is a proven reality. Whatever their political side and religious background, the opposition and the March 14 leaders have said and shown that they disavow the use of violence for gaining the upper hand.
But still the danger remains that the forces unleashed in their power struggles may break out of their control, with momentous consequences. Political and religious leaders barreling down the road of political confrontation and vitriolic propaganda against one another in Lebanon’s tight mosaic of communities, to the point of more open violence will inevitably lead to Mutually Assured Self-Destruction.
On the side of hope, Paris III added to an already astounding level of financial commitment to Lebanon’s future that now reaches beyond $10 billion. The total includes the more than $900 million pledged in the emergency recovery conference at the end of last August in Stockholm and additional funding worth $1.5 billion provided by Saudi Arabia and Kuwait, as well as funding that Hizbullah provided in emergency relief from its sources.
Also not to be forgotten are the donations that Lebanese overseas communities and individuals wired to the aid account of the Ministry of Finance in Beirut, and projects such as the distribution of medicine and milk and the rebuilding of homes and communal centers, which are financed and carried out by civil society, NGO aid initiatives and local businesses, often without much ado.
These are massive signs of trust in Lebanon, and the business community has every reason to be emboldened by its will to succeed in private sector initiatives as by the outcome of Paris III.
Equitable economic development is a clear priority in reducing the potential for further unrest; thus, good business sense and private sector initiative are crucial for the equation that will return Lebanon to a path of growth, provided that the political parties and religious communities and their leaders are willing to dance.
To be successful, this collaboration has to involve all parties, not by the status quo-return of saying “no victor, no vanquished,” but by discovering the ultimate value of a dance that many can share. Nay to the need for tango. The Lebanese dance, after all, is the dabke.