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Future Movement – March 14 Coalition

Ghazi Youssef (Q&A)

by Executive Staff

Ghazi Youssef, 55, has been a Member of Parliament since 2005 and held several posts in the Lebanese government. He has served as an advisor to the late Prime Minister Rafiq Hariri and the secretary general of the Higher Council for Privatization. Mr. Youssef is part of the Future Movement and is running for the Shiite seat in the Beirut 3 electoral district.

E Lebanon’s electricity sector has been a drain on the budget for over a decade. What initiatives will you adopt to decrease expenditure and improve efficiency?
In 2001, Prime Minister Rafiq Hariri had a plan to introduce private sector involvement to provide electricity to Lebanon. Detailed studies were made by the Higher Council for Privatization (HCP) on trying to separate the three tasks of providing electricity between transmission, production and distribution. We see that the private sector can play an effective role in production.
Therefore, this plan was adopted later on even by Minister [Mohammad] Fneish, who is a Hizbullah representative, and was the Minister of Energy. He looked at that plan specifically, which would have opened up the way for private sector involvement. There was a small amendment to the Law 462, which is the electricity law that would give the right to private producers to be involved in production.
So, we look at the problem first in terms of costs. We have a couple of generating plants that need a major re-haul — the Zouk and Jiyeh plants. You have to offer the private sector a license to produce using natural gas in the north of Lebanon. You have to allow some of the concessions that exist like Zahle to be not only a distribution concession, but to become a producer.
That being said, we also would like as a priority to have a regulatory authority in place that would handle the transmission. We would make it a point whereby competitive producers would have equal access to the lines that would be owned by government — the backbone — to transmit this electricity. We have to look at the partnership and the role of the government through the regulator as being really the orchestrator of free play.

E The servicing of Lebanon’s debt has been partially paid by taxes on the private sector. Will this continue under your party and how will you deal with exclusive agents and monopolies in the private sector?
We all know of the constraint that we have in Lebanon in terms of the public debt and fiscal deficit that it is imposing on Lebanon. We have had a specific reform plan for the Ministry of Finance, for the way it looks at taxation in general. We have a couple of laws that are still hanging around parliament. One of them uses the global income tax approach.
One cannot really impose a comprehensive direct income tax, especially when it comes to the progressivity of the tax. Progressive income tax is a fair tax, taking from the rich in relative terms more than it does from the poor. But one cannot impose that in a country like Lebanon were you have a system based on specific income taxes.
We treat taxes from wages and salaries different than we treat it from profits or capital gains. Unless we get that law passed, whereby people are taxed according to their global income, from all sources, then we cannot really impose this progressive tax.
We also have to rethink our indirect taxes. There are a lot of taxes that are imposed in the form of fees on various activities such as customs, which are a form of indirect tax. All of those have to be rethought to have one sort of indirect tax, which is the VAT. One has to rethink the rate of that tax for it to be in line with the progressive income tax. We do have a specific reform plan in terms of taxation.
Secondly, we have a reform plan in terms of the administration that handles that. That has to be implemented. One cannot really accept the farming process that exists today in the Ministry of Finance in terms of the tax inspectors, how they impose taxes, what they do and their relationship with the taxpayer.

E What are the basic tenants of this reform plan?
First, governance. Secondly, we have passed a law that has to do with the tax mechanisms, whereby it provides governance and [protects] the taxpayer so that their rights are not abused by fiscal authorities. This is something that we want implemented.
Apart from that, we know that the deficit weighs heavily on Lebanon. We do support the call for closing a lot of the so-called political funds that have been created in the early ‘90s, and some even earlier like the fund for the south, the fund for the displaced; these ought to be closed. We want them closed and will continue to ask for that.
We want to redirect expenditures to these to be properly done through the ministries or through Council for Development and Reconstruction. These have to be planned. We know that a problem exists in terms of generating income for the Lebanese economy and the Lebanese government, and that it will not only be done through higher business activity or economic activity but by productive sectors.
Whether in tourism, agriculture, industry or information technology, all of those obstacles have to be removed. We see that the private sector in Lebanon has always been the basic locomotive for growth, and unless you have growth in Lebanon you cannot really face the problem of deficit and debt.

E What are you going to do to reform the telecom sector and to bring about the corporatization and privatization?
First you need commitment from the government. I have lived this sector for quite a while now and I have seen ministers come and go, that were not really committed towards releasing their hold over the sector to the private sector. The latest is Minster Bassil who has been doing things that are quite contrary to what one would think of as reform. He has not done anything in terms of giving [Telecom Regulatory Authority (TRA) director] Kamal Shehadi and the TRA the powers that they ought to have.
Mr. Shehadi has been committed to opening up and reforming the sector. He knows about the constraints that exist in terms of privatizing the cellular network. He knows that the market at this point in time will not be as favorable as it was a few months ago. He knows the political constraints of the upcoming elections and therefore [as a result of the elections] this [issue] has been put on a backburner.
We have seen lip service been given to the current minister and the previous minister towards the need to privatize the sector and liberalize it. But there are other things that Mr. Shehadi ought to be doing, for example, frequencies. This is a job that the TRA ought to be regulating and we see it still in the hands of the minister and the director general. We talk about the DSL internet high speed and anything that has to do with the backbone in terms of broadband, licensing and opening up to the private sector to bring in more capacity; all of that has been stopped by the Ministry.
Again this cannot and should not be allowed to happen, and I believe that part of our program is to have full-fledged support for the TRA to do what they ought to do. To make sure that the sector is liberalized, to make sure that there is a level playing field for all participants, whether it is government or Liban Telecom and through governance. How can we still accept to have a director general [in the Ministry of Telecommunication] who at the same time directs OGERO?
I know that the problem of high speed internet is tragic. You can’t get anything unless you go through OGERO. The private sector and private providers are being strangled. We do have this plan in mind that this sector ought to be a leading sector and it ought to be liberalized and governed properly. It has to attract the proper investment and to do so one has to remove all these snags that don’t make any sense.

E The decision to appoint the same person general director [at the Ministry of Telecommunication], and general manager of OGERO was made by MP Marwan Hamade when he was Minister of Telecommunications. He’s also part of your coalition, so the problem really exists across party lines, doesn’t it?
Absolutely. This was a temporary decision but temporary in Lebanon takes a monstrous form on its own and becomes permanent. It has been like this for three or four years.

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