An untraveled road

Saad Hariri may promise reform, but there is little chance of corruption will end

Reading Time: 5 minutes

With Lebanon’s parliamentary elections having recently provoked so much controversy for reasons of sectarian representation, little attention has been devoted to how the new Parliament might address urgent economic issues, security, corruption, as well as long-dormant issues directly or indirectly related to development, such as administrative decentralization and a new election law. A preliminary assessment suggests that what might ensue is a mixed bag in terms of economic confidence.

There is a general consensus that the 2000 electoral law will recreate the large parliamentary blocs that existed in the previous Parliament, and will in fact go beyond that in favor, specifically, of the blocs headed by Saadeddine Hariri and Hizbullah, which are bound to expand . Indeed, pro-Hariri parliamentarians will very likely form the largest single group in the legislature, and estimates are that once combined with its allies in the Jumblatt bloc, both will control around 80-90 seats. If nothing else, this will, right from the start, give Hariri and his allies considerable control over the formulation and passage by Parliament of economic policy.
The kingdom comes

There will also be expectations that the Saadeddine Hariri “project”, which Saudi Arabia’s Crown Prince Abdullah was so keen to set afloat in May, will be, indeed must be, accompanied by financial aid, perhaps most spectacularly in the form of cash placements at the Lebanese central bank, as the Saudis previously did. Indeed, beyond politics, Abdullah’s support for Hariri has a pragmatic rationale: to protect the substantial Saudi investments in Lebanon.

However, there are two potential unknowns in such a scenario: the choice of the future prime minister and the fate of President Emile Lahoud. According to people in the Hariri camp, Saadeddine Hariri will sit out the next term as prime minister. One would be entitled to believe this when actually seeing it, since it would look odd indeed for Hariri to be a mere MP while one of his functionaries is the third-highest official in the land, but it does suggest that Najib Mikati may return to office. Mikati may be willing to toe the Hariri line on economic policy. However, the power of office changes people, and how Mikati would behave, if he remains at his post, once the legitimacy of a second term is bestowed on him is uncertain.

A more ominous obstacle will be Lahoud. While the removal of the president is high on the agenda of Saadeddine Hariri and Walid Jumblatt, and perhaps looks increasingly certain by the day, the constitutional procedure allowing this, according to lawyer Chibli Mallat, “is complicated and gives the president the means to delay implementation.” Moreover, with Maronite Patriarch Nasrallah Sfeir uneager, for the moment at least, to sanction Lahoud’s removal, one could conceivably see a variation on the theme existing last year as Lahoud and Rafik Hariri sparred: that of a president who, thanks to his partial control of the Cabinet, turns economic considerations into implements to help him fight for political survival.

Making matters particularly worrisome, this tension between Lahoud on the one hand, and his parliamentary opponents on the other, has the potential to become sectarian, so that Lebanon’s obvious economic priorities vanish into a giant vat of communal disgruntlement. While this is a worst-case scenario, and may well be avoided if some kind of consensus is reached on the president’s future, Lahoud will fight tooth and nail, and that includes using sectarian tensions in his favor, to ensure that he’s not ousted from Baabda.

The party isn’t over

In parallel, economic confidence will be linked to what happens to Hizbullah. The new election law virtually ensures that the party will expand its bloc in Parliament, perhaps to 15 members, giving it substantial leverage over key legislative issues. This and the legitimacy of an electoral victory will steel Hizbullah for an anticipated confrontation with the United Nations.

However, if Hizbullah continues to pursue military operations in the south, investor confidence that previously anticipated a change in what had been the old Syrian order, will take a hit. In order to counter this, Hizbullah will almost certainly seek to maintain contacts with all political groups in Lebanon, to protect itself behind a wall of national consensus. Among the key electoral alliances the party formed was that with the Hariri bloc, and one thing to watch for is whether this will have an impact on how legislation related to economic reform will pass through Parliament. This might prove tough for a party that, in last month’s Executive, went on record as saying it had no serious economic vision.

There are potentially serious contradictions between the economic reform package favored by Rafik Hariri (and presumably by his son) and advocated by international financial institutions – the privatization of public utilities, the layoff of redundant civil servants, cuts in government spending, and the rationalization of revenue collection – and the interests of Hizbullah’s relatively poor electorate, as well as that of its allied Amal movement. How both sides address this in the context of a new government, not to mention a new Parliament, over which it is probable a new speaker will preside (pro-Hariri parliamentarians Mohsen Dalloul and Bassem al-Sabaa are touted as favorites), can only be guessed at this stage. But Hizbullah will have to juggle its desire to build a national consensus around the party with defense of its supporters in the face of far-reaching economic change.

If Lebanon’s poor are anxious about the tightening of economic policy, most Lebanese, poor and rich, are no less disturbed by what the 2000 law will mean for corruption in the future. The clear tendency is to assume that much as certain members of the political elite – whom Michel Aoun has called the “conservatives”, seeking to conserve the system of spoils existing under Syrian tutelage – made a deal on passing the election law, so too will they divvy up the national pie once the voting is over.

Certainly, there is reason to believe that Parliament will prove as ineffective an oversight body as it was during the past 13 years since the 1992 elections. After all, the large blocs, perhaps with the arguable exception of Hizbullah, have been too involved in financial deal-making in the last decade and more to arouse much public confidence. However, three things may change this ambient mood: first, with Syria gone, the previous levels of corruption will almost certainly go down, though whether this means to vaguely “desirable” levels is another question altogether. Second, the Lebanese public, particularly youths, are increasingly impatient with what they perceive as the pervasive dishonesty of the political class. This will have political repercussions in the future, as new political organizations form and new elections loom.

Third, and perhaps most significant today, international financial organizations, particularly the World Bank, have Lebanon squarely on their radar screens, so that abuse, or certain levels of abuse, will necessarily be more difficult to conceal. Much the same goes for the United States, which has promised aid to Lebanon and considers the country a showpiece for peaceful transformation in the Middle East, but which will also be very keen to see how political and economic changes affect such ambitions. If corruption destabilizes the political system, Washington, but also the European Union, will make their displeasure known.

So what can we expect? A Hariri victory should not harm investor confidence in the immediate term.However, this optimism could be fleeting if the new government fails to rapidly introduce needed reform, and if the divisions created by the 2000 law are not bridged very quickly. The probable harmony in Parliament could be used to advance a reform program urgently, but the potential contradictions inside the leading parliamentary blocs, not to mention the fact that Parliament will very likely turn its attention to deciding what happens to Emile Lahoud, means that there will almost surely be obstacles, and a delay, in taking far-reaching economic measures.

Thomas Schellen

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