Levant

Future Movement – March 14 Coalition

by Executive Staff
written 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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Damascus‘ dove dying in Israel

by Nicholas Blanford
written by Nicholas Blanford

Any hopes Syria attached to a swift resumption of peace talks with Israel — brokered by the new administration of US President Barack Obama — appear to have been undermined by the reluctance of the Israelis and the hesitancy of the Americans.
The election of Binyamin Netanyahu at the head of a right-wing government in Israel and the cautious pace of US re-engagement with Syria suggests that there will be little movement in the immediate future.
During his electoral campaign, Netanyahu declared that he would not return the Golan Heights to Syria in exchange for peace. While his comments smacked more of electioneering than intent, Netanyahu appears to be in no rush to resume the Turkey-brokered indirect peace talks with Syria. The talks stalled in December when Syria pulled out in protest at the Israeli offensive on Gaza.
The new Israeli government, like the Obama administration, is still formulating its policies toward Middle East peace. Israeli officials say that decisions should have been made by the time Netanyahu makes his first visit to Washington as prime minister in late May.
Ehud Barak, the Israeli defense minister, backed by senior Israeli army commanders, favors pursuing peace talks with Syria. He is of the view that returning the Golan Heights to Syria in exchange for peace is a worthwhile price to pay. Barak’s rationale is that peace will help break up the anti-Israel alliance formed of Iran, Syria, Hizbullah and Hamas, thus helping secure Israel’s northern front.
Israeli officials appear to understand that there will be no severance of ties between Syria and Iran, but expect that a peace treaty would end Syria’s military relationships with Iran and Hizbullah.
Even if the Netanyahu government agrees to negotiate, any peace deal with Syria has to be put to a national referendum. And Israeli polls show that more than two-thirds of the Israeli public are against handing back the strategic heights. Thus, Netanyahu may prefer to immerse himself in negotiations with a deeply divided Palestinian entity, knowing that success is unlikely, and allowing him to wail that there is no Palestinian partner for peace. Better that, he may calculate, than engage in the seemingly simpler negotiations with Syria where he may end up having to make the major — and unpopular — concession of handing back the Golan.
Certainly, the Syrians are skeptical that the indirect peace talks will resume, let alone full-fledged US-brokered face-to-face negotiations. Syrian officials are concerned less at the tone of the new Israeli government but more with how its composition reflects a right-ward shift in Israeli public attitudes toward peace with the Arabs.
The arrival of the Netanyahu government has dampened the tentative gains of the past year during the indirect peace talks in Turkey. According to a source familiar with the negotiations, the Syrian and Israeli delegations were based in separate hotels in Istanbul during the first round, with their Turkish hosts staying in a third and shuttling in-between. During the second and third rounds, the Turkish mediators stayed alternatively with the Syrian and Israeli delegations. By the time of the fifth and final session in December, the delegations were in the same hotel.
Recep Tayyip Erdogan, the Turkish prime minister, relayed messages between his Israeli counterpart Ehud Olmert and Syrian Foreign Minister Walid Muallem, who were in separate rooms, and by phone to Syrian President Bashar al-Assad in Damascus.
It is unclear how much was agreed upon during last year’s talks. Still, perhaps the main significance of the Turkish-brokered negotiations was in keeping the notion of peace alive, given the Bush administration’s lack of enthusiasm for promoting the Israeli-Syrian track during its final months in office.
The Obama administration is taking time to formulate its own policy toward the Mideast and appears to be in no rush to help catalyze a fresh round of peace talks between Syria and Israel. The appointment of George Mitchell as Middle East envoy is a positive step, given his past history of negotiating in complex theaters, specifically Northern Ireland. A recent appointee to Obama’s Syria team is Fred Hof, an expert on the borders of Lebanon and Syria and author of a useful paper, published recently by the United States Institute of Peace, which expanded further on the concept of peace parks on the Golan as part of the confidence building mechanism during the implementation period of a Syrian-Israeli peace.
US officials say that Obama is serious about facilitating Middle East peace, but warn that his patience and time is finite. Indeed, his attention is being drawn away from the Middle East altogether, given the growing problems in Afghanistan and the global financial crisis.
Obama has no shortage of advisors whispering into his ear that he should forget the intricacies of Middle East peace and concentrate on domestic economic concerns. If either the Israelis or Syrians, or both, show signs of prevarication or obduracy, Obama may simply wash his hands of the affair and leave them to stew.

Nicholas Blanford is a Beirut-based correspondent for The Christian Science Monitor and The Times of London.

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Levant

Change & Reform Bloc – Opposition

by Executive Staff
written by Executive Staff

Farid el-Khazen, 49, has been a Member of Parliament since 2005 and is the author of The Breakdown of the State in Lebanon. He is also a professor of political science and former chairperson of the department of political studies and public administration at the American University of Beirut. Mr. Khazen is running with the Change and Reform bloc for the Maronite seat in the Kesrouan electoral district. 

E The United Nations estimates that 28.5 percent of Lebanon’s population lives below the poverty line and 300,000 people live in extreme poverty. What will you do to elevate the poverty situation?
Poverty in Lebanon is the result of a lack of policies to deal with this problem, and as you know the priorities of the government have been elsewhere since the end of the war in 1990. This is not an issue that was given sufficient attention. There has been attention or concern or interest by international organizations that dealt with this issue in Lebanon, but not much has been done when it comes to government and I think this has to go by sectors.
For instance, on the issue of hunger and households — I am not an expert on this issue but I assume that it has to go by age group, by gender and by region. The policy of simply giving aid, which is the classical approach, may be needed for the very poor, but beyond that I think that one should create security and jobs and provide an opportunity for these people to work. This is one effective way to elevate poverty.
Some regions are definitely poorer than others but there are also needy sectors or sectors that need development all over Lebanon, not only one region or another. This does not apply only to poverty; it applies to other areas.
In the region that I represent, Kesrouan, public schools are in very bad shape, while in other regions public schools are much better. I would not [just] go by region, I would go by where there is poverty and where there is need for infrastructure and the need for human development. Definitely there are more poor people in some regions than in others.

E EDL has been a drain on the budget for more than a decade now; what would you do to decrease expenditure and improve efficiency?
The debt that Lebanon has is partly due to this problem, the funding of EDL. This is a monumental factor; it is the worst and the most costly problem in the country and it’s been going on since the end of the war — almost 20 years now and nothing has been done.
This is not a problem that surfaced last year or a few months ago. This is due to mismanagement, corruption and a variety of factors that all converge on one thing, the policy of the so called muhasasa [a situation by which parts of a whole are split up amongst stakeholders].
Over the years, the money that has been spent to subsidize the EDL could have been used in a different way and then used to build new plants. So what is the best approach today? We are still waiting to produce electricity by gas that we don’t have and we don’t have the proper infrastructure for it. It’s a vicious circle and in my view that should be given top priority. First we need to deal with the immediate problem and find ways to produce electricity at a lower price and again I am not an expert. I am not familiar with the proposals to comment whether it is a proposal by Mr.A or Mr.B.

E In order to service Lebanon’s mountain of debt, policy has always been enacted to tax the private sector. Will this continue to be the basis of the government under your party and what will you do to spur on private sector growth?
The private sector at some point in the ‘90s had been given incentives, but with the overall policy, the political process was not at all favorable for the public sector to flourish.
You say you lower taxes or eliminate taxation or whatever, but it is still uneven and there is no long term vision. You may support the private sector through certain policies, but there is an overall political situation that is really counter to that support, and there is also this problem of corruption which does not at all go well with the private sector and how it should operate.
The private sector — especially when you are dealing with exports — it’s not simply the issue of taxation. I don’t know what the tax rate is here in comparison with other neighboring countries, say Jordan or the Gulf, but definitely it’s a package of taxes and proper administrative procedures and the overall political situation. The package in Lebanon is not competitive. You have to make it competitive so that Lebanon can really become, once again, the business center of the region that it was before the war.

E Recently the ILO reported that 22,000 students dropped out of schools in Lebanon. What will you do to curb this phenomena and to facilitate human development in Lebanon?
We have other problems in the region, mainly infrastructure and the absence of any sewage system, water pollution and waste water treatment plants. This is a major problem in the region.
When it comes to schools, I mean public schools. Public schools cost [money]. The average student in a public school would cost more than in a private school and therefore there is a huge problem; it should cost less. Plus the level of education is not as good or comparable to that of private schools. Had it been better, more parents would have been likely to send their kids to public schools.
It’s not simply schools, it’s also universities and in recent years. In the last 10 years or so, the government or the Ministry of Education have given licenses to several institutions which are not qualified to become universities and today are called universities. Students will graduate from a so-called university; they have a diploma and they think they can work with this diploma when in fact they cannot. They cannot compete with the students graduating from the established universities in the country. We have so many engineering schools, so many businesses [schools], so many medical [schools] — its total chaos.
We are a small country and already we have more than 40 so- called universities and more to come. They keep on presenting proposals for licenses and there is no policy on this. There is a lack of enforcement and this started in the ‘90s and then became chaotic, and you have political interest at stake sometimes, sometimes clientelism, sometimes nepotism, all the ills of society are there so this is an issue that needs to be addressed first.

E Telecommunications privatization has been stifled by politics and market conditions. How will you encourage competition and root out bad governance in the sector?
There is bad governance in all sectors, in all of the above. The current minister has done something that is a great achievement by lowering prices. This is a major achievement and I don’t know why this was not done before Minister Bassil came to office. The minute this service started in the mid-90s, corruption started there.
When it comes to privatization, in this sector or in any other sector, it cannot be simply privatization by the norms that apply in a number of developing countries where privatization meant private property not [real] privatization. We have seen this in a number of countries in the Middle East and elsewhere. If it is privatization by the norms that apply in Europe or developed markets where there is transparency, then yes [we agree]. Otherwise privatization becomes synonymous with private business. Under the label of privatization we can get into a very bad situation in all sectors. So we are for privatization and we support privatization, but again it should not be politicized; it should be totally transparent and it should go by the rules and the norms that are in application in other countries. We opt for privatization when we know that we can assure that we can abide by these laws. Otherwise it’s not simply the rush for privatization. Privatization, if not applied properly, is not a recipe for reform. It becomes a recipe for corruption. [I support] no politicization, transparency and the norms that are in application — the best practices.

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Ahoy ye high seas hypocrisy!

by Paul Cochrane
written by Paul Cochrane

Piracy off the coast of Somalia has become another ‘global crisis’. It took the hijacking of a US ship last month and the media hyped antics of the US Navy in ‘neutralizing’ the rogue elements — three shots, three dead pirates — to make it onto the crisis list.
Yet piracy has been a problem off Somalia for as long as this East African country has been in a state of crisis, since 1991. And it is not a clear-cut case of the good guys — merchant seamen — versus the baddies — Somali pirates.
The dire situation in Somalia is what triggered a surge in piracy that has, like the conflict itself, many regional and international players involved. As an essentially failed state, there are no means for patrolling Somalia’s coastline. This has been a scourge for the Somalis as well as the 33,000 ships a year that sail either side of the Horn of Africa. With no regulation, the seas were a free-for-all and the area became a rich source for unscrupulous seafarers.
In the year subsequent to the overthrow of the Union of Islamic Courts by US-backed Ethiopian troops in December 2006, there were 31 attacks on ships. As the conflict in Somalia heated up in 2008, the number of attacks spiked to 122, while in the four months of this year there have been 79 attacks. [As Executive went to print, pirates were holding 280 crewmen on 14 ships for ransom.]
But while pirates demand millions of dollars to release hijacked ships, Somalis and the UN have claimed that foreign ships, primarily European, have been dumping toxic and nuclear waste off the coast to avoid high waste disposal costs elsewhere. When some of this toxic waste washed ashore, more than 300 people died from radiation sickness, according to news reports.
Illegal fishing has also taken its toll, with an estimated $300 million worth of fish trawled every year. Stocks are running so low that coastal Somalis are struggling to survive. Vigilante justice ensued when local fishermen took to the seas to levy ‘taxes’ and seize ships suspected of dumping and illegal fishing, calling themselves the Volunteer Coastguard of Somalia.
It was a measure that has popular backing in Somalia, as has actual piracy. According to an editorial on Somali news site WardheerNews, 70 percent of those polled “strongly viewed the piracy as a form of crude, primitive, if you will, national defense of the country’s territorial waters.”
It is a bit of a stretch however to say a ship hijacked up to 900 nautical miles off the coast is national defense, particularly with the ransoms paid out funding militias in Somalia. But such piracy could be viewed like the folkloric hero Robin Hood, robbing the rich to feed (and arm) the poor. After all, whether someone is referred to as a pirate depends on how they are regarded, similar to the way ‘one man’s terrorist is another man’s freedom fighter’.
Take Captain Morgan of Jamaican rum fame, who was a privateer in the service of the British navy in the Caribbean in the late 1600s, attacking Spanish flotillas laden with booty. Morgan and his ilk — what we might now refer to as maritime mercenaries — served a foreign policy objective by pillaging from the Spanish, but crucially set the course for Britain to become an empire through its domination of the seas. Piracy had its uses, and for his efforts Morgan was made the Lieutenant Governor of Jamaica. The founder of New Orleans was also a pirate and during the American Revolution, George Washington— lacking a navy— paid pirates to patrol the coast.
Piracy could also be considered a policy common to the financial world, whether it’s offshore banking havens that launder dirty money or of the more cutthroat capitalist variety. There was even a recent posting on the Wall Street Journal’s blog on “Piracy vs. Private Equity: A Comparison.” Similarities were the seizing of assets and adopting a “all for one, one for all” partnership model. But where piracy demands a ransom to divide among the pirates, PE has a dividend recap, then sale or initial public offering.
And just as tighter regulations of the free market are being sought, amid the global financial crisis, NATO is debating whether to provide armed convoys for ships plying Somalia’s waters. But despite the 15 to 20 warships under UN auspices currently off the coast, Somalis claim navy vessels are protecting illegal trawlers that were initially scared off by its volunteer coastguard.
While some temporary measures are needed to protect shipping routes, the real solution to the crisis lies on land. With stability, Somalia would have less need to resort to piracy — defensive or offensive — and its natural resources could be better protected. If one good thing can be said of the ‘piracy crisis’, it is bringing attention to the ramifications of a failed state.

PAUL COCHRANE is a Beirut-based journalist  

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Levant

Kataeb – March 14 Coalition

by Executive Staff
written by Executive Staff

Samy Gemayel, 29, is currently the General Coordinator of the Central Committee of the Kataeb (Phalanges) Party. He is also the son of former Lebanese President and current Kataeb Party leader Amine Gemayel. Samy Gemayel is running for the Maronite seat in the Metn electoral district.

E The United Nations estimates that 28.5 percent of Lebanon’s population lives below the poverty line and 300,000 people live in extreme poverty. What will you do to elevate the poverty situation?
The whole economy should be more organized. You have to make structural changes.
First of all we think that the lack of stability is the main cause of economic problems in Lebanon. A good economy needs investment and investment need stability… Investments will create jobs. Jobs will create income and that income will help consumers to be more active. It’s the whole process of the economy that starts with investment… If you don’t have investment you don’t have any economy.
With regards to poverty, first we have to create jobs. In order to create jobs, we need an institution that helps people create jobs. That’s why we have a project to create something like NPE [“Nouvelles Politiques de L’emploie – New Politics of Employment”], like in France. It’s a public institution that consolidates all the offers and the demands on jobs in order to link people. We need to create this institution and it’s not present. If people work they will have an income and the poverty problem will be solved.
Also, the personal income tax should be progressive. This is a very important point because you cannot use the same taxes on all people. Actually, you have today taxation on luxury products; we put taxes on them but this is not sufficient. Maybe we can make more money with the cigarettes. The cost of cigarettes in Lebanon is too low. By increasing the cost of a pack of cigarettes, you can use the money to invest in medical research, hospitals and medical care and help the poverty situation.

E EDL has been a drain on the budget for over a decade. What will you do to decrease expenditure, improve efficiency and take the industry forward?
We think that some sides of EDL should be subject to privatization. The distribution should be privatized and the collection of bills should also be privatized. The problem of EDL is that today only 60 percent of the production of EDL is being billed. We don’t know where 40 percent of the production is going.
First, you have to bring someone from the outside to put their hands on EDL because corruption is the main problem. The second problem is that the 60 percent that is billed, only 60 percent of that [initial] 60 percent is being paid for. That’s why we have a problem with EDL and it is the main cause of the debt.
In order to stop that we have to understand that this is the main cause of the economic problem and we have to bring consultants and find a way to stop this wastefulness. The way to stop that is to privatize some of the sections of EDL, not all. Just the collection, distribution and the billing processes.

E In order to service Lebanon’s mountain of debt, policy has always been enacted to tax the private sector. Will this continue under your party and what will you do to spur on private sector growth?
Firstly, there are public institutions that should be privatized. Then, you need to have laws organizing the relations between the public and the private sector. Public private partnership is a very important point for us, in terms of economics, in order to make the private sector more efficient and more attractive. We think the service sector should not be the main focus of the economy because it is too influenced by the stability of the country. Agriculture and industry are less affected by economic problems related to stability and they create jobs, more jobs than the service sector. We think, especially for young people, that there should be no tax on initiatives taken by young people who create companies, new industries or inventions in order to encourage the new generation to invest in Lebanon and to encourage creativity for everyone.

E The debt servicing is also weighing heavily on Lebanon. How will you reallocate inflows and payments to service this debt while still maintaining public services and decrease the budget deficit?
The first thing is to stop corruption because if the money you inject into the Lebanese economy goes into corruption, there is no way that this economy will stand up even if you do Paris I, Paris II and Paris III. If this money is not well invested or reserved; there is no chance that this economy will stand up anyway. We don’t think that adding more and more debt on Lebanon will help in any way. I think that the first thing to do is to stop corruption before bringing more money in, because otherwise it’s like a pocket with a hole in it.

E What mechanism would you propose to deal with the issue of corruption?
I think that first we should privatize. The best way to stop corruption is to privatize, to organize and to create a central agency to fight corruption.

E What initiatives will you take to decrease Lebanon’s risk factor with respect to investment, encouraging competition and diffuse political elements that increase the risk factor?
You need a strong state and no weapons outside of Lebanese jurisdiction.

E Do you mean weapons entering the country?
Not only the weapons entering the country. We have to get rid of the weapons that are inside the country today, with the Palestinians and with Hizbullah. Once we have a state acting with full sovereignty in all of its territories, then it will be easier for us to impose stability and to impose a viable state that will, for sure, bring a lot of investments to Lebanon.

E Will you be talking with the Palestinians and Hizbullah about the best way to move forward?
We are talking about the Lebanese government, which will have this role or principle as a main target, to impose the sovereignty or order of the law on all the Lebanese territories in order to have stability.

E Recently the ILO reported that 22,000 students dropped out of schools in Lebanon. What will you do to keep children in school?
In all civilized and modern countries every person under 18 years old should be in school. It’s not a right; it’s an obligation. We will promote free and obligatory schooling for all people under 18. When I lived in France, I was once arrested in the street at 9 a.m. because I didn’t go to school in the morning. If you want any development you need all the people to be educated, to be in school and have a minimum [level of] education.

E The balance of payments remains in the black but is dragged down by the balance of trade. What will you do to increase trade efficiency and volume and maintain a positive balance of payments?
The balance of trade is related to the situation of the economy in general. If the economy stands up and that state makes a good plan to reactivate all the sectors of the economy, as we planned before, then I think the whole balance will be up again [sic].

E Privatization of the telecom industry has been stifled by politics and market conditions. How will you encourage competition and root out bad governance in the sector?
In all the countries in the world when they have a big problem like that, they bring in consultants. I don’t know why Lebanon doesn’t believe in consultants even if it is the most efficient way to improve [the situation]. It is not normal, in Lebanon, to have only two companies having a duopoly on the mobile telecom industry. There should be many more companies competing between each other in the interest of the people. When you compete prices go down so for sure you have to privatize [the industry].

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Jordan’s barter

by Riad Al-Khouri
written by Riad Al-Khouri

The setting up of the World Trade Organization (WTO) in the mid-1990s was supposed to have put the world economy on the path to multilateral trade liberalization. Yet, bilateral and regional free trade agreements (FTAs) have proliferated over the last decade or so.
In the 1990s, the European Union (EU) was a main proponent of bilateral accords. With the start of the Doha Round in 2001, however, the Europeans focused on the multilateral level, whereas the United States embarked on a major drive for regional and bilateral FTAs. Yet in 2006, with the Doha talks stalling, the EU developed a new strategy emphasizing bilateral free trade accords. While the EU and the US are among the more active players in this process of making trade agreements, others are similarly engaged.
Jordan provides the leading example of bilateral and regional trade liberalization since the late 1990s. Regarding trade agreements with the West, Jordan is the most heavily involved country in the Arab region. The US-Jordan FTA entered into force in December 2001. Previously, the two parties had also signed a Qualifying Industrial Zones (QIZ) trade agreement.
Relations between the EU and Jordan are governed by an Association Agreement signed in 1997 and implemented in 2002; and Jordan is a member of the ancillary Agadir Agreement with Egypt, Morocco and Tunisia. The kingdom is also part of the Arab Free Trade Area.
Bilateral FTAs with other countries have also been concluded or are being negotiated, notably with Canada, Israel and Singapore. Jordan’s trade liberalization has contributed to growing exports, including QIZ clothing sold to the US.
Jordan today is a highly open economy with diversified trade. The kingdom has undergone major economic reforms since the early 1990s, including rationalization of its fiscal policy, liberalizing trade, privatizing most state-owned enterprises and reforming customs, as well as other parts of the state administration.
Exports as well as imports have risen much faster than gross domestic product (GDP): the merchandise trade to GDP ratio reached 120 percent in 2008 (up from 82 percent in 1997) amounting to a staggering $9.1 billion.
Jordan’s National Agenda for 2006 to 2015 spelled out ambitious goals, including a cut in the net trade imbalance to $1.7 billion by 2012, and $900 million by 2017. This shortfall is financed by remittances, inflows of private capital, aid and some services income, such as that from tourism, which earned Jordan $2 billion last year. So the current external balance is not precarious: on the positive side, hard currency reserves in early 2009 stood at $8.3 billion, while foreign debt shrank. Expatriate remittances are estimated at $2.4 billion for 2008.
But the trend for the past few years has been for imports to rise faster than exports. The export to GDP ratio increased from 25 percent in 1997 to 35 percent today, while the comparable import ratio rose from 57 percent to 85 percent over the same period.
The structural characteristics of Jordan’s exports thus warrant attention. In 1997-2008, the kingdom’s total exports grew more than threefold, faster than global trade. Much of this growth is accounted for by exports to the US. The share of total Jordanian exports destined for the US increased from less than one percent in 1997 to more than 25 percent in 2008.
But the kingdom’s sales to America, heavily dominated by apparel, may decrease as Jordanian preferences in terms of US market access gradually erode. Jordan will thus need to diversify its exports to the US in order to compensate for flat or falling apparel figures.
Following a major liberalization effort in the context of its accession to the WTO in 2000, Jordan now has relatively low tariffs. Although the kingdom accepted and implemented the multilateral principles of the WTO, Jordan continues to support its external policies with a complex tissue of bilateral trade agreements.
Trade reforms have been implemented gradually since 1996 as governmental efforts addressed unilateral trade-related legislative adjustments in customs and taxes, as well as patent, copyright and trademark protection. Once full membership in the WTO was successfully reached in April 2000, Jordan agreed to assume all its market access commitments on goods. As for services, Jordan committed to removing 139 measures excluding market access, and 79 measures granting national treatment. The majority of commitments regard business services, transport, financial services and tourism, which are strategic to supporting the diversification of the kingdom’s economic structure.
Bilateral accords have also been important for Jordan in recent years. Since 1995, Jordan signed over two dozen bilateral agreements.
In conclusion, Jordan has moved over the past decade from being a closed economy to one that is very much in tune with the realities of globalized international trade. Yet, the results of this process have not always been positive, and the country still has some way to go in its quest to become a serious exporter.

Riad al Khouri is a Senior Associate Consultant, William Davidson Institute University of Michigan, Ann Arbor

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Change and Reform bloc – Opposition

by Executive Staff
written by Executive Staff

Farid el-Khazen, 49, has been a Member of Parliament since 2005 and is the author of The Breakdown of the State in Lebanon. He is also a professor of political science and former chairperson of the department of political studies and public administration at the American University of Beirut. Mr. Khazen is running with the Change and Reform bloc for the Maronite seat in the Kesrouan electoral district. 

E The United Nations estimates that 28.5 percent of Lebanon’s population lives below the poverty line and 300,000 people live in extreme poverty. What will you do to elevate the poverty situation?
Poverty in Lebanon is the result of a lack of policies to deal with this problem, and as you know the priorities of the government have been elsewhere since the end of the war in 1990. This is not an issue that was given sufficient attention. There has been attention or concern or interest by international organizations that dealt with this issue in Lebanon, but not much has been done when it comes to government and I think this has to go by sectors.
For instance, on the issue of hunger and households — I am not an expert on this issue but I assume that it has to go by age group, by gender and by region. The policy of simply giving aid, which is the classical approach, may be needed for the very poor, but beyond that I think that one should create security and jobs and provide an opportunity for these people to work. This is one effective way to elevate poverty.
Some regions are definitely poorer than others but there are also needy sectors or sectors that need development all over Lebanon, not only one region or another. This does not apply only to poverty; it applies to other areas.
In the region that I represent, Kesrouan, public schools are in very bad shape, while in other regions public schools are much better. I would not [just] go by region, I would go by where there is poverty and where there is need for infrastructure and the need for human development. Definitely there are more poor people in some regions than in others.

E EDL has been a drain on the budget for more than a decade now; what would you do to decrease expenditure and improve efficiency?
The debt that Lebanon has is partly due to this problem, the funding of EDL. This is a monumental factor; it is the worst and the most costly problem in the country and it’s been going on since the end of the war — almost 20 years now and nothing has been done.
This is not a problem that surfaced last year or a few months ago. This is due to mismanagement, corruption and a variety of factors that all converge on one thing, the policy of the so called muhasasa [a situation by which parts of a whole are split up amongst stakeholders].
Over the years, the money that has been spent to subsidize the EDL could have been used in a different way and then used to build new plants. So what is the best approach today? We are still waiting to produce electricity by gas that we don’t have and we don’t have the proper infrastructure for it. It’s a vicious circle and in my view that should be given top priority. First we need to deal with the immediate problem and find ways to produce electricity at a lower price and again I am not an expert. I am not familiar with the proposals to comment whether it is a proposal by Mr.A or Mr.B.

E In order to service Lebanon’s mountain of debt, policy has always been enacted to tax the private sector. Will this continue to be the basis of the government under your party and what will you do to spur on private sector growth?
The private sector at some point in the ‘90s had been given incentives, but with the overall policy, the political process was not at all favorable for the public sector to flourish.
You say you lower taxes or eliminate taxation or whatever, but it is still uneven and there is no long term vision. You may support the private sector through certain policies, but there is an overall political situation that is really counter to that support, and there is also this problem of corruption which does not at all go well with the private sector and how it should operate.
The private sector — especially when you are dealing with exports — it’s not simply the issue of taxation. I don’t know what the tax rate is here in comparison with other neighboring countries, say Jordan or the Gulf, but definitely it’s a package of taxes and proper administrative procedures and the overall political situation. The package in Lebanon is not competitive. You have to make it competitive so that Lebanon can really become, once again, the business center of the region that it was before the war.

E Recently the ILO reported that 22,000 students dropped out of schools in Lebanon. What will you do to curb this phenomena and to facilitate human development in Lebanon?
We have other problems in the region, mainly infrastructure and the absence of any sewage system, water pollution and waste water treatment plants. This is a major problem in the region.
When it comes to schools, I mean public schools. Public schools cost [money]. The average student in a public school would cost more than in a private school and therefore there is a huge problem; it should cost less. Plus the level of education is not as good or comparable to that of private schools. Had it been better, more parents would have been likely to send their kids to public schools.
It’s not simply schools, it’s also universities and in recent years. In the last 10 years or so, the government or the Ministry of Education have given licenses to several institutions which are not qualified to become universities and today are called universities. Students will graduate from a so-called university; they have a diploma and they think they can work with this diploma when in fact they cannot. They cannot compete with the students graduating from the established universities in the country. We have so many engineering schools, so many businesses [schools], so many medical [schools] — its total chaos.
We are a small country and already we have more than 40 so- called universities and more to come. They keep on presenting proposals for licenses and there is no policy on this. There is a lack of enforcement and this started in the ‘90s and then became chaotic, and you have political interest at stake sometimes, sometimes clientelism, sometimes nepotism, all the ills of society are there so this is an issue that needs to be addressed first.

E Telecommunications privatization has been stifled by politics and market conditions. How will you encourage competition and root out bad governance in the sector?
There is bad governance in all sectors, in all of the above. The current minister has done something that is a great achievement by lowering prices. This is a major achievement and I don’t know why this was not done before Minister Bassil came to office. The minute this service started in the mid-90s, corruption started there.
When it comes to privatization, in this sector or in any other sector, it cannot be simply privatization by the norms that apply in a number of developing countries where privatization meant private property not [real] privatization. We have seen this in a number of countries in the Middle East and elsewhere. If it is privatization by the norms that apply in Europe or developed markets where there is transparency, then yes [we agree]. Otherwise privatization becomes synonymous with private business. Under the label of privatization we can get into a very bad situation in all sectors. So we are for privatization and we support privatization, but again it should not be politicized; it should be totally transparent and it should go by the rules and the norms that are in application in other countries. We opt for privatization when we know that we can assure that we can abide by these laws. Otherwise it’s not simply the rush for privatization. Privatization, if not applied properly, is not a recipe for reform. It becomes a recipe for corruption. [I support] no politicization, transparency and the norms that are in application — the best practices.

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The capitalist mea culpa

by Peter Speetjens
written by Peter Speetjens

If the G-20 April meeting in London could be summarized in two words, they are regulation and internationalization.
“Major failures in financial regulation and supervision were fundamental causes of the crisis,” stated the G-20’s final communiqué, which promised to build “a stronger, more globally consistent, supervisory and regulatory framework.”
A key element of that framework will be the establishment of a new global watchdog, the Financial Stability Board, which is to closely cooperate with the International Monetary Fund (IMF). The latter, in turn, has been bolstered by a major cash injection. While the G-20 summit was arguably not the “new Bretton Woods,” as some politicians euphorically claimed, it did change its tune.
“We are for open economies and open markets, but open economies and open markets have to respect some rules,” said European Commission President Jose Manuel Baroso. According to French President Nicolas Sarkozy, the world had turned the page on the Anglo-Saxon model of free markets.
Significantly, it has not just been politicians who signaled a paradigm shift. “This is a reversal of the ideology of the 1990s, and at a very official level, a rejection of the ideas pushed by the US and others,” said Joseph Stiglitz, the World Bank’s former chief economist. “It’s a historic moment when the world came together and said we were wrong to push deregulation.”
In addition to the call for regulation, the summit agreed to increase the IMF’s cash reserves from $250 billion to $750 billion and issue $250 billion in Special Drawing Rights, the fund’s artificial currency that, based on a basket of currencies, is used to settle accounts among IMF member states.
“The IMF is back,” said the fund’s managing director, Dominique Strauss-Kahn, in reaction to the G-20’s decision. It should be noted however, that only half of the $500 billion increase is immediately available in the form of bilateral agreements with Japan, the EU, China and the US, while it is not clear yet where the other half will come from. Nevertheless, no one can deny that the London summit has been a real boost for the IMF.
Having witnessed the recent wave of multi-billion dollar bail-outs for banks, insurance companies and car manufacturers in response to the global financial meltdown, the G-20’s call for a stronger role of the IMF must have left a bit of a sour taste in the mouths of the inhabitants of countries like Argentina, Ecuador and Tanzania.
After all, when they went through a financial crisis in the 1980s, the IMF offered them a loan on the absolute condition that they did the exact opposite of what the world’s leading economies are doing today. They were told to liberalize, privatize, cut government spending and deregulate (financial) markets.
The IMF’s so called Structural Adjustment Programs prompted Stiglitz in 2000 to resign from the World Bank. A year onward he was awarded the Nobel Memorial Prize in Economic Sciences, while in 2002 he published his bestselling book Globalization and its Discontents, which severely criticized IMF and World Bank policies.
In response to Stiglitz and other critics, IMF managing director Strauss-Kahn announced in late March an “overhaul” of the IMF’s lending practices. Firstly, conditions associated with future IMF lending will be better tailored to each country’s specific circumstances. The new Flexible Credit Line makes high-volume financing available without conditions attached. But to qualify, countries must have relatively sound economies.
Most observers believe the option has mainly been created to serve the needs of countries such as Iceland, Hungary and other East European economies. For the countries that do not qualify, conditionality will be focused on core areas, while “structural conditions will be judged in a less formalistic manner.”
Also, for countries that do not meet the Flexible Credit Line standards, the IMF’s “Stand-By Arrangement” will be made more flexible to allow for higher financial access even before a crisis materializes. As well, the amount of lending available from the IMF is being raised substantially.
In a kind of soft-toned mea culpa, Strauss-Kahn wrote: “These steps address the core problems — the stigma associated in the past with IMF conditionality, the availability of early pre-crisis financing and the overall size of rescue packages — that have sometimes diminished the effectiveness of the Fund’s role as a crisis lender.”
Now, it remains to be seen to what extent the G-20’s call for regulation and a greater, if modified role for international institutions, will be put into practice. Still, the current debate must come as a cold shower for the followers of such free market prophets as Francis Fukuyama and Thomas Friedman.
Two decades after the victory of capitalism over communism, history has not ended, as Fukuyama once claimed, but just made a gigantic U-turn. Suddenly, the neo-cons’ ultra-liberal agenda seems a thing from the past, while John Maynard Keynes is firmly back from the dead. 

Peter Speetjens is a Beirut-based journalist

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Levant

Independent

by Executive Staff
written by Executive Staff

Nayla Tueni, 26, is currently the deputy general manager and member of the board at An-Nahar newspaper. She is also the daughter of former An-Nahar managing editor Gebran Tueni, who was assassinated in a car bombing in 2005. Ms. Tueni is an independent and running for the Greek Orthodox seat in the Beirut 1 electoral district.Note: Ms. Tueni preferred to reply to our questions by email and not to sit for a one-on-one interview with Executive.

E The United Nations estimates that 28.5 percent of Lebanon’s population lives below the poverty line and 300,000 people live in extreme poverty. What will you do to alleviate the poverty situation?
To alleviate poverty, you want to give the poor the tools to help themselves. It is not by throwing money at the problem that it will eventually go away. By raising awareness on the importance of education and how it is a weapon against poverty and facilitating access to it, we would be taking our first steps towards winning the war against poverty. Creating more job opportunities will be a step towards alleviating poverty. There should also be a fair distribution for development programs across the capital.
As a parliament representative of Ashrafieh, Saifi and Rmeil, I will focus my efforts on developing these regions.

E Lebanon’s electricity sector has been a drain on the budget for more than a decade. What will you do to decrease expenditure and improve efficiency? We know that among the possible options is privatization, but this has been stifled by politics and market conditions. How will you encourage competition and root out bad governance in the sector?
When talking about Électricité du Liban and the telecom industries, one word comes to mind: privatization. It is only by privatizing these two industries that we — as government, citizens and service providers — will be able to reap the benefits. These three players, by working together to institutionalize effective regulatory frameworks and practices — which will help increase investment and innovation — will lead to a higher contribution from the two sectors to the country’s overall economic and social development. Ultimately it is the end user who will benefit from the privatization of the telecom sector, since there will be an increased choice of service providers and services. This induces competition between operators, resulting in lower prices for the consumers, more advanced technologies and greater service variety.

E What initiatives will you take to decrease Lebanon’s risk factor with respect to investment and encourage Foreign Direct Investment?
The only way to address the risk factor issue is to have the parliament play its role in setting regulatory laws governing the investment climate. Moreover, committees need to follow up on the implementation of these laws in order to encourage Foreign Direct Investment and inspire faith in our economic system. As we know, lately there have been several proposed laws by the government that are aimed at stabilizing the investment climate; however, they are still pending in the parliament. The parliament should be encouraging the passing of these bills in order to attract foreign investments. By doing so, we will be promoting stability, and reinforcing investor’s confidence and trust.

E Recently the ILO reported that 22,000 students dropped out of schools in Lebanon which is indicative of a wider problem with regards to human development in Lebanon. What will you do to encourage human development in both the public and private sectors?
First off, there should be an investigation as to why 22,000 students dropped out of schools; we can not go about making assumptions on how to fix it if we don’t know the root of the problem. For example, if the majority is dropping out for financial reasons, then the problem should be addressed by encouraging scholarship programs and facilitating credit payments for the parents.
However, if the reason behind this rate is that the majority of students are dropping out because they are finding it more appealing to kick off their careers instead of pursuing their studies, then raising awareness on the importance and the benefits of education would be our main concern. After all we should be focusing on empowering the youth, and by educating them we will be giving them the most important tool they will need to build their futures.

E In an interview with NOW Lebanon you stated your opposition to a quota for women in the Lebanese Parliament because it “could be limiting.” Do you still stand by this statement?
I strongly stand by my position on [a] women’s quota in the parliament. The quota is limiting to women’s potential influence in the parliament. Women are the backbone of our society; they are equal to men and should be treated as such. They should be able to participate in shaping the society they live in through the parliament and they should be able to have their mark on the political scene. By imposing a quota for women in the parliament, first off there would be a discrimination against them on the basis of sexes. Moreover, there will not be as much diversification of opinions as there would be.
I am a firm believer in the free market economic system. As members of parliament, it is our duty to set regulations favorable to this system, which help maintain it a well-oiled machine. Moreover, the private sector should be encouraged and nurtured since it is a vital player in the economic sector.

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Vietnam then, Afghanistan now

by Claude Salhani
written by Claude Salhani

In late March President Barack Obama unveiled his new policy for dealing with the war in Afghanistan, a conflict that is escalating and drawing the United States into deeper involvement in Central Asia.  There was something of an eerie déjà vu to the president’s new policy. It was reminiscent of a previous policy put forward by a former US president in another conflict: President Lyndon B. Johnson’s 1965 decision to dispatch thousands of additional combat troops and civilian advisers to Vietnam — a major step in the escalation of the war.

In his speech to the nation, President Obama said that sending civilian advisers to Afghanistan was paramount to winning the war. In 1964, the US had 23,300 civilian advisers in Southeast Asia, and we know the outcome of that war. US policymakers in the mid-1960s feared that if Vietnam fell to the communists, it would only be a matter of time before the region would be engulfed by the Reds. This was called the “domino” theory.

More than 40 years later the threat of communism is no longer a reality, having all but disappeared from the geopolitical map of the world — Cuba and North Korea being the exception. Today the enemy has changed; communism was replaced by a more potent enemy given that philosophy has been replaced by theology. Bringing God into the picture has always been a powerful ingredient to raise the level of violence and hate.

This new threat is often referred to in the West as Islamist; a more politically correct term would be Salafist or Takfiri. Regardless of what you call them, the fear of the domino effect persists.

History has shown the war in Vietnam could not be won by sending more civilian advisers or combat troops.  The same applies in Afghanistan. In recent history the British tried, as did the Soviets. Both failed.

While one may draw many similarities between the wars in Vietnam and Afghanistan, there are important differences to bear in mind when considering why Western involvement in Afghanistan is important.

The Vietnamese fought to liberate their land. They had no intention of supporting or exporting terrorism.  They did not attack targets in the United States, Europe or in the Arab and Islamic world. Al Qaeda and other Takfiri groups on the other hand have proven otherwise.

Obama’s new policy may not be the most brilliant, and may draw the US into an open-ended conflict, but the administration has little choice. The situation in Afghanistan represents a real danger to the security of Western nations. Much time was wasted by an unnecessary war in Iraq.

An important distinction from the previous administration’s Afghan policy is the inclusion of Pakistan as part of the problem, and therefore part of the solution. Pakistan is to the war in Afghanistan what Cambodia was to Vietnam.

Successful engagement in Vietnam, it was believed, necessitated expanding the conflict into Cambodia, and today, similarly, the success of the Afghan campaign requires extending military operations into Pakistan.

Pakistan and Afghanistan are intricately connected. Neither country’s problems can be solved so long as the Taliban enjoy rear bases in the Pakistani border areas. And as long as Afghanistan remains unstable and insecure, it accentuates the risk of the conflict expanding and engulfing other countries in the region.

While Obama’s new policy was welcomed in both Pakistan and Afghanistan, some Afghan diplomats remain skeptical, as elements in the Pakistani leadership, especially in the military, continue to profit from what one diplomat termed “the AAA of Pakistan.” The diplomat explained: “Allah, army and America.”

For some members of Pakistan’s military intelligence branch, the ISI, the AAA has turned into a lucrative business. While the problem of the jihadist Taliban and al-Qaeda (fighters in the name of Allah) continues, America — the first ‘A’ — will continue to send funding to Pakistan and to support the country’s military with weapons and money, thus keeping the army — the second ‘A’ — in business. There is however a new twist in this tale. While America’s European allies may be reluctant to contribute more troops to the Afghan war effort, help may come from an unexpected source: Russia.

The Russians know only too well the problem in Afghanistan, and Moscow has indicated its willingness to help out. Despite recent tensions between the Russians and the West over the war in Georgia and the U.S. plan to position an anti-missile defense system in Eastern Europe, Moscow is aware that a Taliban-ruled Afghanistan would threaten its national security.

Speaking to the BBC, Russian President Dmitri Medvedev said Moscow “was ready to participate in the efforts directed at putting things in order” in Afghanistan. This is an offer Washington cannot and should not refuse.

Despite the analogies made to Vietnam and Cambodia, the final chapters of US involvement in Afghanistan and Pakistan do not have to match those of Southeast Asia. Having Russia as an ally in this war can make all the difference and set the tone for a positive epilogue.

As mentioned earlier, this war will not be won through military force alone. Winning the war in Afghanistan will necessitate covert operations. Successful covert operations sometimes require the use of unorthodox methods, which is a domain where the Russians may prove very helpful.

Claude Salhani is editor of the Middle East Times and a political editor in Washington, DC

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