The situation may change, but trusted relations remain. Lebanon’s economy today needs honest interaction and connectivity to long-standing partners more than ever before in the history of this state. The United Kingdom is a partner country at the (from Lebanese geographic perspective) far end of Europe that has had engaged with Lebanon in significant ways for a century and that in the 21st century to date has specifically developed natural touch points of economic, financial, and entrepreneurship importance. Executive, which conducted interviews with ambassadors Tom Fletcher and Hugo Shorter in the past, sat down with Ambassador Christopher Maxwell Rampling MBE to inquire about his assessments and the most productive way forward for the vital bilateral relationship between the UK and Lebanon.
The World Bank has just released its report on Global Economic Prospects in 2020 and 2021, which are probably the most divergent forecasts ever from the projections made in the previous report in January 2020. For the Euro area, the forecast is a 9.1 percent contraction of real GDP in 2020 and a 4.5 percent growth in 2021, suggesting a steep decline and significantly slower recovery for the Eurozone. How does the United Kingdom perceive the outlook for the coming two years and its relations to Europe as Brexit at long last is moving toward full implementation?
What we have seen over the last three or four months has been the most profound economic shock of our lifetimes and the kind of numbers that you were talking about tell the story. We too in the United Kingdom will obviously have to deal with that shock and when you look at the amount and the extent by which the treasury and the finance ministry have been supporting our businesses, our citizens, and elsewhere, this is obviously going to be a significant burden. I would distinguish this very clearly from our exit from the European Union. We have now left the European Union and, as everyone knows, we are now negotiating the future arrangement. For this year, throughout the implementation period we will continue to have all the rules that were in place before [Brexit], and this is also the case here in Lebanon. We have agreed on a new trade agreement with Lebanon which I can talk about a little bit, but in terms of the UK at home we are negotiating a new deal [with the EU], but those are going to be difficult negotiations. I spent five years of my life in Brussels, four years at the representation of the UK to the EU during the period of the referendum and I know that those kind of negotiations are always difficult. But I am absolutely convinced that, whatever happens, that we will have a close relationship with Europe going forward and that we will not extend the implementation period. One of the key elements of the referendum in 2016 was a very important principle of taking back control and that is something we remain firmly wedded to.
Trade is one of the big concerns of Lebanon, not only in light of the de-dollarization of the economy but also because of the many needs for importation that have been reflected over the very long term in the strongly negative Lebanese balance of trade. Going forward, how do you see the UK and Lebanon relate in terms of trade?
I started [serving as ambassador to Lebanon] in Beirut in September 2018 and believed and still believe very strongly that the nature and depth of the trading relationship and the investment relationship between our countries is not as strong as it should be. Within a few months [of my arrival] we had a very important investor forum in London with the [then] Prime Minister [Saad] Hariri, we had the largest-ever bilateral trade deal struck between Rolls Royce and MEA and I still think that we will ultimately be able to do more together. Clearly, when you see the economic crisis that is taking place in Lebanon, trade and investment is seriously challenged at the moment. If we put the global context that you were referring to on top of that, this adds to the challenge. But I would say and I do believe that there is much that we can be doing together. The Lebanese government needs to work through what its future vision will be and what the structure of its economy will be and what sectors it might chase [for development]. If you look at the McKinsey [Lebanon Economic Vision] report, there are many sectors that the UK can be very positive in, the knowledge economy, tourism, agro-food—lots of areas where we can work together. I think that the trade agreement that we struck last year, which was [our] first bilateral trade agreement ever, can be a very good basis for developing in that area. But let’s be very honest, that is not going to happen quickly.
Would there be an option from the UK side to support Lebanon with a sort of trade facilitation framework for credit and financial transfers?
Moving onto how one can help in detail with the economic crisis, there are a number of ideas out there at the moment. We already have programs of technical assistance and other programs of support for small businesses and have put tens of million into that. I think this, which is called the Lebanon Enterprise and Employment Programme (LEEP), has been a success. There are further areas that we are supporting, services etcetera. The focus of the [Lebanese] government at the moment is clearly, as it should be, to see how the discussions with the International Monetary Fund (IMF) can move forward. Within that context, we are very happy to look at different options but that is where the focus needs to be.
Obviously, the large commitments of support for their domestic economies and international trade positions—worth $9 trillion by mid-May 2020 according to an IMF blog entry—that G20 countries have been pursuing and are continuing to expand is something that no other block of economies or individual country can even come close to providing. In Lebanon, we have the additional scenario that the Lebanese government is not cash-rich at the moment, to put it very mildly. Noting that your government is one that has committed itself very strongly, with a very large amount, to the support of its people and domestic recovery in the UK, what kind of advice can you give to the Lebanese government in this regard?
We are strong supporters of Lebanon and have been supporting Lebanon for many, many years. Last year we spent about $200 million on this country in lots of different areas, army, education, police, and lots of other sectors. I am not going to give advice but the things that the government needs to be cracking on with and needs to be focusing on are in many ways the things that the government has been talking about. But it needs to get on with them. [By this I mean] reform of the system that they have got here, particularly reform that they have been talking about for a long time. Above everything else, the inability to deliver those things as well as living in a current account deficit has hit credibility in this country. There are other structural problems of course, the debt and other structural elements. So these things just need to be tackled. I know that this is easy to say and very difficult to do but that would be the advice. There no longer is time. The only alternative to doing these things is to watch the country steadily deteriorate, and that is no alternative for anyone.
As you mentioned, investment interaction and financial interaction between Lebanon and the UK has been very intensive, with one of its aspects that the Lebanese diaspora in London and the investment community in the City was often the first port of call for Lebanese officials when presenting investment prospects and talking to potential equity funders and such. On the side of investments, banking relations and financial cooperation between UK and Lebanon, how do you see things going forward?
In particular with regard to financial cooperation, we could do a lot more together and are open to doing that. One of the things we were over recent years vaguely thinking about working in has been in working to develop capital markets. There is plenty of expertise and experience in that which we can provide from the UK.
Would that be cooperation on capital markets development by providing expertise from the private sector or the public sector?
These would be details and we have not really gotten yet into the details. I think the challenge now would be that the Lebanese government and the authorities need to work through what will be the future vision for the economy going forward. Once it has defined that, has a plan and is implementing that plan, we will be very strong supporters and not just supporters but partners. Like I said and want to come back to, I think there is significantly more in this space that we can do together than we have done in the past. But I think the Lebanese side has to decide ultimately what their vision is.
Taking the linkage between Lebanon and the UK from the financial sphere to the physical, over the past decades the air travel links between Beirut and London had been vulnerable to severe temporary disruptions and economic changes, such as experienced in the mid-2000s by UK-based airlines. How much can we expect from the British side in terms of future air connectivity and regular travel, visa policies, and tourism facilitation including quarantine requirements in the remainder of this year? What is the outlook for hopping over to London for a quick weekend of fun, for example, given that the current requirement is for a two-week quarantine?
The short-term outlook is that it is difficult to move, almost no matter what two countries in the world you are talking about. You are absolutely right in saying that we for now have a two week quarantine when you land in the UK. The number of exemptions to that are extremely small. But to be fair, that is exactly what happens here, too, and in plenty of other countries. Two, as of now, there is very few flights as we all know. In the very short term, clearly all this is on hold. I think that in the slightly longer term, I will say that our visa policy is clear and not currently shifting. We will have to see how this develops over coming months but as of now our policies are stable. I am also confident that there will continue to be direct flights between London and Beirut and commitment to assure that there will be direct flights between London and Beirut. One thing that I think is relevant to this, [is that] the people to people links between our countries have gone up dramatically over the last ten years. The latest figure that I have—which by now may be a few years old—was that the number of Lebanese students going to the UK for higher education was going up year-on-year and has gone up by something like 80 percent over six years and something like 9 percent in the last year. To date, we have over 200 Lebanese future leaders who have pursued their Masters degrees at the best UK universities, through the British Government’s Chevening Scholarships Programme and over 300 Lebanese graduates of UK Universities across Lebanon that have joined our overall growing alumni network. The regularity of traffic has been going up quite significantly, and that is a good thing. I am the British ambassador to Lebanon and I want that. I want more people to be going in both directions.
Could the increase in terms of education-related travel of Lebanese students to the UK also extend to the virtual sphere of distance learning and online enrollment in UK universities?
Of course it could. You have taken us neatly into the education sector, which is a sector that we have invested a great deal in in Lebanon. We think it is extremely important. What we have been able to support on both the formal side and the non-formal side in the education sector has delivered an enormous amount, with strong Lebanese partnership. And in particular, we have been exploring, even [motivated by] COVID-19, what more we can do in terms of the kind of modern technology-side of education. [UK-based knowledge economy tech startup] Century Tech recently signed an agreement with the Ministry of Education and Higher Education to provide some artificial intelligence software that supports schools. I have also no doubt that if people are up for distance learning—that will be doable too. It is an exciting sector that I want to do more in. I recognize that the education sector is deeply challenged here in Lebanon at the moment but I think that by working more closely together, we will be able to help.
Could there be British government-led intermediation between academic institutions of higher learning in the UK and in Lebanon?
The [academic institutions] have their own links. We already have a few universities with direct hookups, [such as] Cardiff Metropolitan University and MUBS (the Modern University of Business and Science), the University of Aberdeen and the American University of Technology, and the Open University UK and the Arab Open University. At the same time, the British Council is very active here and is able to facilitate some of that [collaboration].
And the British Council will continue to be active in Lebanon in the future?
For the record, yes!
In terms of one particular education support project that the UK has been engaged with in Lebanon, your government has reported that the UK has committed £93 million to the refugee education program with the unfortunate acronym RACE, of which you have deployed about 80 percent, fully in line with the program’s five year duration and scheduled for conclusion in March 2021. Given the current dismal outlook for education finance in Lebanon, not only in refugee-related areas but in schooling anywhere in Lebanon, is there any possibility that you might think about an extension, increase, or shifting to digital of this program?
Education has been a cornerstone of our support for Lebanon for years and should continue to be so. I think ultimately the ministry needs to work through what its plan is and then we will be very happy to have a conversation with them about this. But I think it is fair to say that a lot of international [actors] who have been actively supporting the education sector are focused not only on today, which is very important, and on tomorrow, [meaning] the beginning of the next financial year and how that works, but also on how education provision in this country becomes sustainable.
In terms of the knowledge economy we want to know what is in the cards for the UK Lebanon Tech Hub (UKLTH). What is its outlook?
[Engages in a short discussion with an aide about an upcoming announcement on UKLTH]. The prospects for the UK Lebanon Tech Hub are very positive. I think we will be able to demonstrate that this has been a real success story. It came very obviously out of [Circular] 331 and out of the central bank and there is a very serious prospect of graduation, which I think will be very good.
Since you mentioned Circular 331, would there in this context be a possibility to substitute the central bank guarantees for venture capital funding in the Lebanese entrepreneurship ecosystem with more direct involvement of, for example, UK-based financial institutions and lenders, including their setting up shop in the Beirut Digital District (BDD) to open new access to finance pathways to the young companies at BDD?
The best people to talk to about the way forward is the Tech Hub themselves but I think it is fair to say that we have all been keen that the Tech Hub and its services can stand alone. This is obviously the best way forward and I think we will see some really good, positive news on that. I am actually quite optimistic about what they can do because I think that there are ways by which they can use the existing networks they’ve got, the existing programs and connectivity that they have got, both with academic institutions and very much in the UK, to work both for Lebanon but maybe also for elsewhere in the region. One of things that we announced in September, the same day that we signed the trade deal, was that UK Lebanon Tech Hub would also be the mechanism for the UK government’s Department for [Digital], Culture, Media and Sport to run a program in the Middle East and North Africa. This has not been able to make an enormous amount of progress in recent months, for obvious reasons, but is still an ambition and a good opportunity. That is another reason why I think that the prospects for us being able to work together are very strong but in a very difficult economic climate.
Are there specific humanitarian programs for this period of economic difficulty in Lebanon that you are preparing or would want to report on?
We have been supporting the most vulnerable in this country for years and years, obviously particularly Syrian and Palestinian refugees but we are all looking at the increasing—and you saw it when you look at the recent UN report and the UN appeal recently—demand for support for the most vulnerable Lebanese. We do that quite a lot already through services and in other areas but we will continue to be looking at options.
Doing it through the host communities program?
You are extremely well-researched. The Lebanese Host Communities Support Program is a great program and we put in, I think, $100 million over recent years. It is not about the inputs. It is about the outputs and in terms of outputs we have, with UNDP, with the Ministry of Social Affairs, and with others, [seen outcomes such as] apple factories, ports for fishermen, [and] markets. It is fantastic stuff that has been done. What I love about the program is that you go to local communities and say, “what do you like” and then you go to provide it.
The International Support Group for Lebanon, ISG, plays an important role for this country not only in economic terms but in political monitoring and advisory and everything that concerns Lebanon’s future. Will the UK’s role in the ISG change going forward, will the contribution of the UK increase, where are you seeing your participation and input going considering your standing against some very influential powers in this region?
[Laughs] You slightly obscured the question.
But you understand the question perfectly.
Look, the UK supports Lebanon and we support the Lebanese people. You are absolutely right that we have strong political views, in particular—which you didn’t mention but I will—about Hezbollah. Last year we extended the listing [of terrorist organizations] to include the political wing [of Hezbollah]. That is an important part of our policy. One of the reasons for the decision we made last year was because we saw that for a period of years they have been working across the region, in direct contravention of the policy of disassociation, and [have been] destabilizing the region. This destabilizes the country too.
We work very closely with our allies, as you would expect we work closely with our allies locally, including the Europeans and the European Union, despite the fact that we have now left, and obviously including the US, Canada, and other members of the G7. We have lots of different formats [for international coordination on Lebanon]—in some areas through the ISG, in some areas through the G7, in some areas with the GCFF countries [invested in the World Bank’s Global Concessional Financing Facility], in some areas with a kind of particular New York-based group. There are plenty of different formulations that we work in.
Is this easy to coordinate the cooperation across all these international entities?
It is fine. This is my fifth Arab country. Coordination here is as good as it is elsewhere.
With regard to the new Caesar sanctions, how will those sanctions for example impact activities such as the UK Lebanon Tech Hub being active regionally?
I will [not answer] this question because I am not a great expert on the Caesar Act. I am working through the implications of it. As it stands at the moment, we will see, and there are still details to be worked out.
We are trying to understand what the act’s implications for Lebanon are. Do you have any tips for us?
With all new internal and external obstacles that one might see, what lies ahead for Lebanon?
I arrived in September ’18 and we are clearly in a significantly worse period now than we were then if we look at the amount of jobs that were lost and the eye-watering figures of [GDP] contraction, at the inflation, [and] devaluation of the [Lebanese] pound. Times ahead look tough and that brings us back to where I was at the beginning—which I know I say all the time and everyone finds a bit boring but it is true—that the government needs to get on with these things and the political forces need to come together. Fundamentally this country and the authorities in this country need to recognize that they need to be operating in the national interest. The political forces need to recognize this.