It’s already evident, barring a miracle, that there will be no “Beirut I”, let alone a “Paris-II”, conference this February to help Lebanon face its increasingly ominous economic tribulations. In fact, amid the political schisms of the past six weeks, so little attention has been paid to the country’s financial situation, that Finance Minister Jihad Azour had to sound the alarm in late January, declaring: “We have succeeded, within our capacities, to limit the damage, even to improve the [economic] situation; but this cannot last indefinitely in this unstable context.”
Azour was right, but what no official will publicly admit is that there is no common vision in Lebanon today on what type of capitalist culture must guide economic reform. The country is broadly split between a parliamentary majority that tends to subscribe to a liberal, private-sector propelled ideal peddled by the late Rafik Hariri and his successors; and a Hizbullah-dominated camp generally uncomfortable with privatization of public utilities, whose electorate sees little that is advantageous to them in the Hariri scheme. There are surely exceptions to this sweeping characterization, but in shaping future economic policy, the government will have to address, very simply, the yawning Hizbullah-Hariri divide.
This is easier said than done, given that the government today happens to be the primary victim of that divide. Absent a political consensus, there will be no agreement over economic reform. But perhaps most interesting from a cultural perspective is that, for the first time since the end of the war in 1990, the uneasy compromise that Syria imposed on an economic vision for Lebanon – between the business-centered Hariri perspective on the one hand, and the one supported by the Shiite parties, geared toward a poorer, often rural electorate – is seriously fraying. Just as Hizbullah and Amal are today challenging the parliamentary majority on its political ambitions for Lebanon’s future, so too might they choose to lodge a protest at the direction the country is taking economically.
In a more historical perspective, the Hariri vision was always an updated, if flawed, version of the economic model prevailing around the time of independence, whose most eloquent spokesman was the banker and journalist Michel Chiha. Emphasizing free markets and uninhibited exchanges, a fairly small state, and openness to both East and West, Chiha’s paradigm was never seriously challenged in Lebanon, even as the society threw up myriad exceptions to it, and even as the country’s growing complexities imposed an overhaul of such a liberal model.
Precipice of bankruptcy?
Hariri may have reaffirmed what Chiha outlined, but he did not overhaul it. Throughout the postwar years, Hariri’s plans dominated, and in many ways came to define and propel, reconstruction. The late prime minister put most of his chips on promoting free-trade and financial services, which mainly meant revitalization of infrastructure and communications, and led to rapid expansion of the property market. Of far less concern to him was industry, let alone the largest sectoral employer: agriculture.
In exchange for helping advance his own projects, Hariri gave such postwar partners as Hizbullah and Amal wider latitude to integrate their supporters into state institutions – the very institutions he early on tried to circumvent by concentrating power in the prime minister’s office. That’s not to say that both political parties, or their officials, did not benefit from reconstruction, because they did; but rather, that their constituencies were on a very different wavelength than the one Hariri had adjusted to.
That duality, and equilibrium, was sustainable while the Syrians ran Lebanon. However, today, the contradictions between the two outlooks are more evident than ever, and are feeding into a political struggle for power. This may have always been predictable, but the question is whether the country can afford discord on economic basics when the financial situation is so grave. Isn’t this a case of two people wrestling with one another while rolling over into the precipice – a precipice of bankruptcy?
The difficulty is that there seems to be no ready solution to the dilemma. In the present environment, the government can, at best, introduce partial reforms in certain sectors to persuade potential foreign donors that it is serious about its fiscal responsibilities. That means that, at best, the country can buy time while political coalitions decide which vast economic project they can agree on. But time is short, and nothing suggests that Lebanese leaders are aware of just how short.