In early September, the daily Al-Anwar, citing “financial circles,” wrote that investigators looking into the accounts of the four generals arrested on the recommendation of United Nations investigator Detlev Mehlis, had found that, together, they held some half a billion dollars in liquidity. Nor was this necessarily everything they own. Very soon afterwards, the Lebanese began calculating what that came out to in monthly, weekly and daily revenues, and generally agreed the generals had lived well. The money incident provokes sundry thoughts related to Lebanon’s embrace of a capitalist culture, one characterized by free minds and free markets. More importantly, it prompts a warning: in acting against its financial abusers, the state should not go too far in limiting freedom.
Most people hardly blinked as investigators pushed aside Lebanon’s banking secrecy laws to delve into the generals’ accounts. The debate over financial transparency has been a sustained one in recent years, as international financial actors, particularly the United States government, have sought to do away with banking secrecy, mainly to curb crime, terrorist transactions and the stashing away of illicit money. Lebanon has resisted this for pragmatic reasons, believing that concealment encourages more depositors to use Lebanese banks. The free marketers have elevated defending banking secrecy to a matter of principle, arguing that complete financial transparency allows the routine invasion of privacy.
The Mehlis precedent is interesting, because it’s unclear what message it sends to the banking system: supporters of intrusive financial policies will say the matter of the four generals proved that banking secrecy only protects money illegally earned, so that the system must be overhauled and cracked wide open. Defenders say that because the investigators were (and presumably will again be) able to access the accounts of criminals on an ad hoc basis as happened in the generals’ case, there is little impetus to so fundamentally change a system where most depositors are not crooks. The balance will probably tilt decisively in the way of the opponents of secrecy, however, since that’s the direction in which the world’s financial community is firmly going; and Lebanon, as the Mehlis investigation has underlined, is in no position to stand up to an international consensus.
The disappointed can yet take heart, however, if their interest is in a more open system of political and economic freedoms. The Mehlis report will lead to a fundamental revamping of the security apparatus, probably for the better. Corruption will continue, but the Syrian departure and the breakdown of the previously institutionalized system of theft, of which the intelligence chiefs were a central motor, will mean change, particularly if the security services prevent crime rather than promote it.
Lining their pockets
And yet one pauses to reflect on what remarkable entrepreneurial capitalists the four generals must have been, if the figures for their fortunes are true. They must have been devoted to the art of making money; inveterate middlemen, fixers, whose daily duty, when it didn’t involve intimidating and spending the fruit of their labors, centered on planning and implementing business bonanzas where their cut was in inverse proportion to effort. If this magazine gave out prizes on the basis of profit margins, the four would surely merit taking the podium together amid the applause of their fellow inmates.
But when the kudos dissipates, the state will have to decide how far it intends to go to regulate the purged economic environment. Naturally, there will be those who will present the authorities with a formidable laundry list of reform demands that, while their rationale may be justifiable, will likely lead to institutional overkill and stifle investment. There is no doubt the post-Syria state must set the foundations of an equitable free market, free of monopolies and oligopolies, but as Prime Minister Fouad Siniora surely knows better than most, getting the state too involved in economic life merely means increasing costs all around.
The problem with economic reform and the return or introduction of the rule of law is that the state creates providential hopes it can rarely satisfy. The legitimate view today is that the state, thanks to the four generals and countless others – many still in power – is in urgent need of radical, state-induced shock therapy. The state does have a role to play, but mainly to ensure the private sector stays honest and free. After all, what the generals really embodied was the perversity of the state’s hijacking of the economy.