Lebanon is presented with the most serious challenges it has faced in the past decade. The economy is struggling, the internal security situation deteriorating and the country’s neighbors pose real threats. But amidst everything, there are opportunities — not just in newfound offshore oil and gas but also within the country’s ingenious population.

As we head into 2013, what can be done to help the country unite, to overcome its challenges and ultimately to grow? Over the course of this week, eight influential figures will address seven important topics, each suggesting one proposal to help the country move forward. 

Today, Sami Atallah makes the case for regional councils.

To improve Lebanon’s democracy, we need to rethink our system of devolved government. Right now we have regional municipalities and municipal unions, but neither of them function properly. Instead I propose the introduction of regional councils to connect the country along non-sectarian lines and help it grow.

Municipalities and municipal unions: Failing us all.

Since municipal elections were reinstalled in 1998, they have no doubt reinvigorated local democracy, and provided an impetus for decentralization. However, municipalities remain administratively and fiscally constrained, limiting their service delivery to a fraction of their supposed responsibilities. The number of municipalities in Lebanon, which has mushroomed from 718 in 1998 to 985 in 2012, is too high for 4.5 million people in a tiny country. Croatia, for example, has the same population as Lebanon but five times the surface area, yet it only needs 429 municipalities.

Furthermore, 70 percent of Lebanese municipalities have a registered population of less than 4,000. Almost 400 municipalities do not have a single employee and another 400 have very weak municipal administration. The few municipalities that have the fiscal resources to hire qualified staff face bureaucratic hurdles in their hiring procedures. For instance, it took the municipality of Ba’aklin three years, 73 referrals, and up to 15 signatures to hire a treasurer.

On top of this, they simply do not have the financial ability to do their jobs. The total amount of spending by the municipal sector amounted 6.3 percent of central government expenditure (excluding debt), while their revenue was almost 9 percent. Both of these are significantly lower than the 12 to 15 percent found in many comparable countries.

In effect, municipalities have fallen into a vicious cycle: many of them have no staff to collect fees and taxes and without municipal revenue they are unable to hire staff. Consequently, many are unable to provide services despite the wide range of competencies given to them by law.

On top of these, there are municipal unions, which have become important stakeholders in the context of decentralization. Today, there are 48 unions, of which 35 were established in the last decade. These unions include a total of 680 municipalities as members and are responsible for two-thirds of the population of the country.

Municipal unions are supposed to provide public projects of common interest including roads, sewerage, garbage, slaughterhouses,firefighting, organization of transportation, co-operatives, and markets. Although some have been able to provide services and undertake development projects, their work is constrained by overlapping competencies between municipalities and unions, weak administrative capabilities, excessive procedures to hire municipal staff, and low fiscal resources to undertake developmental projects.

Time for a rethink

I believe it is time to rethink our system of local government. There is a need to redesign the system in an integrated way — helping poorer areas become better-linked to richer ones. This requires a new tier of government on a regional level.

Under such a plan, the central government would be responsible for functions of national concern — such as trade, defense, foreign affairs, criminal and civil law, and industrial policy — while municipalities would focus on hyper-local issues such as street-cleaning and garbage collection. In between, the newly-formed regional administrations would help ensure integrated development.

These councils would be given the responsibility for applying national laws to the regions, thus redistributing the competencies and responsibilities of municipalities, unions, regional councils, and the central government.

More importantly, these councils should be directly elected by citizens. This would enhance democracy, help us move away from sectarianism and break the stranglehold on power of the traditional political groups.

One of the major problems in Lebanon is the inability to directly elect the head of the major political institutions, meaning deals are made behind closed doors. If the heads of these councils were directly elected along non-sectarian lines, they would have a mandate to bring about change.

For these new councils to be effective, they must have the fiscal authority to set the tax rate as well as collect it. Hence there is a need to reallocate some of the taxes and fees currently collected directly by municipalities to regional councils where economies of scale are possible. Regional councils must be endowed with the tax administration to ef?ciently and effectively collect these taxes.

Although direct taxes and fees ensure a degree of ?scal independence, they are unlikely to cover the spending needed for regional administrations. Two additional sources of revenues must be channeled towards them: the first is from the Independent Municipal Fund (composed of 11 taxes which are used to finance municipalities) where a significant portion of its revenue could be transferred to regional administrations rather than spent by the central government on items that do not benefit smaller regions of the country. Second, there is estimated to be at least $1 billion in revenues collected over the years by the Ministry of Telecommunication that was not distributed to municipalities.

Although direct taxes and fees ensure a degree of fiscal independence, they will unlikely cover the spending needed for regional administrations. Two additional sources of revenues must be channeled towards them: The first is from the Independent Municipal Fund (composed of 11 taxes which are used to finance municipalities) where a significant portion of its revenue could be transferred to regional administrations rather than spent by the central government on items that do not benefit smaller regions of the country. Second, there is at least an estimated $1 billion of revenues collected over the years by the Ministry of Telecommunication that was not distributed to municipalities.

The Lebanese often bemoan the state of their democracy, but many feel powerless to help change it. These proposals could make a real difference to all our lives.

Sami Atallah is Director of the Lebanese Center for Policy Studies

Lebanon is presented with the most serious challenges it has faced in the past decade. The economy is struggling, the internal security situation deteriorating and the country’s neighbors pose real threats. But amidst everything, there are opportunities — not just in newfound offshore oil and gas but also within the country’s ingenious population.

As we head into 2013, what can be done to help the country unite, to overcome its challenges and ultimately to grow? Over the course of this week, eight influential figures will address seven important topics, each suggesting one proposal to help the country move forward. 

Today, Nada Zaarour makes the case for taking the environment more seriously.

A decade into the 21^st century, it is about time our citizens and politicians realized the economic, environmental and social benefits to be achieved from moving towards a low-carbon future.

Just mentioning the word ‘green’ brings to the minds of many Lebanese mistaken clichés of tree huggers, reduced economic growth, expensive products and unfeasible styles of living. But to meet the needs of the new technology-driven world, Lebanon has little option but to transform its economy and society into a green one.

It is increasingly clear that escalating climate change is destroying the globe’s natural ecosystem, with forests ravaged and rivers poisoned. Exacerbating the crisis, especially in cities like Beirut, is rapid population growth — not merely in terms of resource use, but also in terms of services and infrastructure. It is hard to avoid the basic conclusion that the ecosystem which underpins the Lebanese economy is shrinking at a rapid pace, leaving the poor particularly vulnerable.

Eventually, Lebanon’s economic development requires a list of financial and government policy-guiding mechanisms to ensure that ample investments are made into crucial areas. These would be tailored to embellish existing natural capital while simultaneously minimizing environmental risks. For these changes to happen, Lebanon will undoubtedly need fundamental reform, and I believe that there are four main steps to doing so.

See also:

Former Labor Minister Charbel Nahas on rethinking the economy

Roudi Baroudi on the country’s oil and gas

British Ambassador Tom Fletcher on foreign interference

Hicham Safieddine on the Syria spillover

Saleh Machnouk on disarming Hezbollah

First, we must develop and promote an efficient and fair transition to a green economy, including establishing fully-fledged fiscal and economic policy measures where market infrastructures encourage new investment. Second, tax reforms that encourage environmental sustainability should be proposed, along with a definite revision of the current inflated taxing measures. Third, we must drive market change through public expenditure, including at an individual level spending our money on environmentally friendly goods, and at a larger level encouraging the government to invest in cleaner infrastructure provisions and sustainable procurement.

Finally, and crucially, we need to foster a new awareness that while reforming the country’s unsustainable economic activity might be politically difficult in the short-term, moving towards a green economy in the longer-term is fiscally advantageous in every way.

Such moves require serious changes to the decision-making processes within institutions like the Ministry of Finance. The many governments that we have had in Lebanon since the civil war have tended to favor short-term, financial crisis strategies, supporting non-renewable energy at the expense of other sectors while continuing to exploit our natural capital. Yet the upcoming challenges are far too big to be dealt with by such short-sighted strategies and we must consider beyond the next few years.

There are benefits to be made as well. Globally, renewable energy investments are expected to reach $630 billion by 2030, up from $162 billion in 2009, and are expected to create an additional 20 million jobs worldwide. What might seem surprising is that many emerging and developing economies are already reaping the benefits of moving towards a green economy. One example, which demonstrates the multiple benefits that can be realized from promoting new green sectors — in addition to greening the traditional brown sectors — is the expected growth of certified biodiversity-friendly agricultural products from $40 billion in 2008 to $21 billion by 2020.

Lebanon must accelerate efforts to shift from this unsustainable ‘brown’ economic system to a low-carbon, resource-rich green economy. A country like Lebanon, blessed with the natural resources of wind and water, could easily lessen excessive dependence on fossil fuels, such as oil, gas and coal. We must not use the very new findings of offshore oil and gas to ignore this issue, as if we do, later generations will have no choices left.

Nada Zaarour is the vice-president of Lebanon’s Green Party

The opinions expressed in this article are the views of the author and not of Executive Magazine

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