EntrepreneurshipEntrepreneurship 2019fintechSpecial Report

Lebanon needs fintech regulation to keep up with regional growth

by Lauren Holtmeier
written by Lauren Holtmeier
  • Lacking regulation or access to licensing, fintech in Lebanon proves challenging.
  • While there are fintech-adjacent paths entrepreneurs can pursue, these require partnering with licensed entities, such as banks and financial institutions, which are limited in the number of partnerships they can undertake.
  • Other countries in the region have opened up regulation and created regulatory testing sandboxes to encourage fintech.

Entrepreneurs in Lebanon seem to have a certain resilience within them. “If you can make it work in Lebanon, you can make it work anywhere,” is a mantra often heard by Executive. For one sector, however, making it in Lebanon proves particularly challenging—especially for late comers. Fintech entrepreneurs in Lebanon are faced with the lack of access to licensing and the lack of regulatory or technical sandboxes—usually established by a government or central bank—making it hard for fintech startups to operate or test their products. As a result, many fintechs find themselves turning to regional markets earlier in their lifecycle than startups in other sectors—in some cases before testing or marketing their products.

Globally, the fintech market took off around 2015. Market size will reach $305.7 billion by 2023, according to international consultancy firm Kenneth Research. Other predictions by the firm include the payment/billing services sub-market segment generating $207.11 billion in revenue by 2023, with significant growth in artificial intelligence and blockchain, and North America leading globally in expected growth, but Asia-Pacific anticipated to grow faster than other regions. 

In the MENA region, fintech is growing, albeit behind global rates. A report from Magnitt, a Dubai-based entrepreneurs’ network, found that in 2018, fintech attracted the most investment by sector in the region—at 12 percent of investment overall. Annual growth is expected to reach $125 million by 2022, according to a 2018 research by Beirut-based MENA Research Partners. The number of fintechs in the MENA region has more than doubled in the past two years—to more than 240 companies—according to research from Fintech Galaxy, a Dubai-based company. 

Regulatory desert

Fintech in Lebanon is challenging, but success stories do exist. A 2019 Arabnet article cited16 fintechs in Lebanon, with the country ranking third in number of fintechs hosted regionally. From the commercial bank side, in 2018 Bank Audi ran a hackathon where it invited five startups to test their products in a sandbox they had created. A new white paper by MEVP from 2019 titled “Evolving MENA Fintech Landscape” notes the importance of such a sandbox in a fintech ecosystem: “The virtual space created by such a framework provides a restricted area in which FinTech businesses (both established and start-ups) can test and refine their technology-based innovative products, services, and platforms without being immediately burdened by the usual regulatory and financial requirements which would otherwise apply to their activities.” Sandboxes are especially important for those entrepreneurs who wish to develop payment, wallet, digital banking, loan, and microloan solutions.

The number of fintechs in the MENA region has more than doubled in the past two years—to more than 240.

Another positive signal for fintech in Lebanon is that banks are looking to collaborate with startups, founder and CEO of Fintech Galaxy Mirna Sleiman says. One successful example is that of Tycron, whose product gives banks a real-time overview of their local and overseas accounts, now in use by SGBL. The Investment Development Authority of Lebanon’s Fintech Sector in Lebanon 2018 Factbook points to seven Lebanese fintechs that have grown into regional and international players in the last five years, as well as identifying Lebanese fintech market opportunities in insurtech and e-payment with “12 payment providers offering fast and innovative payment methods which enables fintech start-ups to bring new techniques.” 

Lack of regulation, however, remains a major challenge. Back in June this year, Riad Salameh, the governor of Banque du Liban (BDL), Lebanon’s central bank, released a statement saying: “Our intention is to regulate and supervise fintech companies, by imposing their licensing by Banque du Liban.” To Executive’s knowledge, no progress was made on this front. (Pinpay, an electronic money transfer service is the only Lebanese fintech to acquire licensing to operate from the central bank. Its shareholders are BankMed, Bank Audi, Fransabank, and Middle East Venture Partners.) 

David Norman, co-founder of Juno, a digital solution for unbanked populations, tells Executive that in June he and his co-founder Alexander Axiotiadis were in talks with Prime Minister Saad Hariri’s office. “They were looking at how to do a regulatory sandbox, but now because of the economic crisis, they dropped it,” he says. BDL’s willingness to consider fintech and other digital solutions and cryptocurrency has accelerated in the last couple years, which is a positive signal for the eventual future of fintech in Lebanon. However, recent political and economic developments in the country leave the future on a lot of fronts, fintech included, looking uncertain.

There are other options for those who wish to pursue fintech in Lebanon, such as channeling efforts into solutions that do not require a license to operate. However, some entrepreneurs following these routes are still required to partner with banks because they need a licensed party to operate with.

“Blockchain and AI, customer experience, that is technology that is useable. AI companies should be flourishing in Lebanon, but still they don’t survive,” Sleiman says. “Part of it is lack of awareness and ignorance on a banking level.”

For those who are newer to the scene, finding partner banks appears challenging. Two new Lebanese fintech startups Anachron, a robo advisory tool, and Juno that Executive spoke with (and previously profiled) cited the lack of regulation, lack of a sandbox, and inability to locate a partner bank as the main drivers behind their decision to move their focus out of Lebanon. 

Both Anachron and Juno have looked for but failed to find a licensed partner, e.g. a bank or other financial institution, to operate under. “I’ve spoken with Blom Bank, Sarander, Audi, and Cedrus, and all have said no for different reasons,” Norman says. “Some are afraid of the tech, some don’t understand what you’re trying to do. The usual excuse is that ‘It’s not within our strategy.’”

The all-new Smart ESA // Photo by Greg Demarque | Executive

Juno, because of their unbanked target market, are primarily considering Egypt (2017 World Bank numbers estimate that 33 percent of adults own a bank account) and Jordan (World Bank data states only 42 percent had a bank account in 2017). Anachron is considering Bahrain, which has a sandbox and legislation for fintech, co-founder and managing partner Wael Khattar tells Executive. “So far our market [in Lebanon] seems to be non-existent, not just because of the banks, but because of how our product matches the current economy in Lebanon,” Khattar says. Anachron is used by investment advisers and asset managers in banking to increase efficiency of client interaction—it is a difficult time to offer such a product due to the current economic situation.

Even with modest progress, Lebanon lags behind the region significantly when it comes to offering an attractive environment for fintech. “Fintech requires regulatory support. Full stop,” Galaxy’s Sleiman says. “When it comes to fintech, you can easily set up a company, burn so much cash throughout your lifecycle, reach a deadlock where regulations are not helping you, and then you can go to the graveyard without anyone noticing you were a startup.”

Regional outlook

According to the MEVP white paper, Bahrain was one of the first to launch a sandbox in 2017, just one year after Abu Dhabi. Bahrain’s sandbox has incubated more than 35 startups and Bahrain’s  central bank has helped integrate fintech solutions into 11 banks. Today, despite its small market size, it remains an attractive option for fintech in the region, Sleiman says.

“Some are afraid of the tech, some don’t understand what you are trying to do. The usual excuse is that ‘It’s not within our strategy.’”

Other countries, like the UAE and Egypt have taken strides forward to make their markets attractive to players in the fintech field by introducing sandboxes and designing innovation-friendly legislation. Bahrain, UAE, Egypt, Saudi Arabia, Jordan, and Oman have all introduced regulatory sandboxes beginning in 2016.

Dubai and Abu Dhabi are also attractive options for those in fintech because of testing environments, but one thing they still lack is the involvement of the central bank, says Sleiman. In 2017, the Dubai Financial Services Authority introduced the Innovation Testing License that allows fintech firms to develop and test concepts within the Dubai International Financial Centre without being subject to regulatory requirements that typically apply, according to the MEVP white paper.

Egypt is another up and coming market, and in Sleiman’s opinion, has the chance to be at the forefront of fintech in the region. In 2019, Egypt’s central bank established a $58 million fund to invest in fintech startups and also introduced a regulatory sandbox. The first pilot cohort gained access to the sandbox in June 2019 according to a report by Daily News Egypt, and have been focusing on digital know-your-customer  applications.

The region has made rapid progress in the last two years, but the modest developments from Lebanon are not enough to keep Lebanese fintechs in the country. Even with some fintech finding success, regulation from the government and central bank must catch up.

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EntrepreneurshipEntrepreneurship 2019Special Report

Houmal Technology Park

by Thomas Schellen
written by Thomas Schellen
  • Houmal Technology Park (HTP) can be an example of tech manufacture and fruitful entrepreneurialism.
  • Export orientation of tech companies can be realized independently from the Lebanese entrepreneurship ecosystem that relies on Circular 331.
  • First-mover disadvantages of pioneering tech companies need to be compensated by state and municipal partners for creation of productive clusters.
  • Risks pertaining to the structural deficiencies in the legal and administrative infrastructure and risks linked to the recent changes in the financial and economic environment urgently need to be overcome.

Digital infrastructure of data centers is an easily overlooked growth industry in tech when compared to the exotic spheres of blockchain-based banking and finance, the internet of everything, or development hotspots from health and virtual reality gaming to artificial intelligence. And the project of a first national data center realized in Lebanon as a public-private partnership (PPP) frankly looks today even more utopian than at the beginning of this year, partly for reasons of uncertainty added by the October protests and partly because of the irrational political miscalculations that the PPP project has evidently been facing for over a year (and that contributed to the atmosphere of despondency that set the stage for October 17). But despite no rational line of vision on a national data center to be built as a PPP in the coming years, a new industrial campus on a hilltop a few miles southeast of Beirut provides its visitors with a strong impression of this important information technology (IT) growth sector’s potential for Lebanon. This industrial site goes by the name of Houmal Technology Park (HTP). 

Talking with Fadi Daou, HTP’s mastermind and owner, Executive corroborated the following: It is possible for a young enterprise from Lebanon to have innovative manufacturing with a complete focus on export markets, job creation through such a venture could alter and upgrade the economic and social fortunes of the communities in which it exists, and HTP’s biggest struggle has been finding the full institutional support that it needs.

Daou’s company, Multilane, produces equipment for data center infrastructure. The international market for which is currently worth $100 billion, he explained in an early October presentation on his project to students. The market, the presentation continued, has seen a 25 percent annual growth over the last five years, with this level of growth forecasted to continue. This is due to continuously rising data volumes and transmission speeds in the IT realm that still functions in line with Moore’s law (that processor speeds, or overall processing power for computers will double every two years).

Daou tells Executive that he just has passed the half-way mark in investing $15 million into the development of HTP, and that he aims to at least triple his workforce between 2020 and 2022. “The business we are in is the business of big data infrastructure, and as a company, we are young and growing,” he says. “We are now in the early days of [transmission] standards of 400 gigabits (Gbit) per second per node, from the top-of-the-rack down. As Multilane we are in a leadership position in the 400 Gbit market—we are first to market in that area and believe that this market is going to start growing in 2020 with a five-year growth cycle. [We believe that this market] will carry the growth of the company for the next few years. This is fundamental.

Optimistic outlook

“All our development is done in Lebanon—the conception, realization, testing, qualification and support are initially done in Lebanon, but eventually we are outsourcing go-to-market with our partners—subassembly is done with our contract manufacturers in China, Malaysia, and Taiwan, and the final assembly, programing, and calibration is done here.”

Optimism over global market positions of Lebanese companies is not a message one hears every day. But what one hears even less is companies confident about their job creation potential in Lebanon. Daou is not merely confident of this in an abstract sense; he has a job creation agenda that is currently in the warm-up round, with an emerging tech academy and discussions or agreements for collaboration with several universities.

“We expect to train upwards of 100 students per year, perhaps one to two hundred. We expect the headcount of the company to grow by at least 50 percent annually for the next three years,” he explains. Transferring this to a numerical example, Daou confirms that this target growth implies moving from a headcount of 100 today to 150 in year one, 225 in year two, and about 340 or 350 in year three.

Daou concurs that the HTP vision not only had many mental barriers, bureaucratic obstacles, or even demands for “soft fees” to conquer over the past decade before it reached today’s status—near-readiness for full migration of the Multilane enterprise and its attached academy. Attesting to having encountered distinct first-mover disadvantages, he says, “The problem is not necessarily the money, but the delays that we encounter with bureaucracy under the existing system. Delays impact us in a very negative way. The world that we work in relies tremendously on time to market, and if we are delayed in any project, our customers are not going to wait for us next time. They are going to use our competitors. We need to remain competitive not only on price, value, [and] performance, but also on turn-around time.”

In his perspectives on what can work in improving the industrial tech sector in Lebanon, Daou sees the path of attracting dynamic multinational companies to Lebanon as preferable over efforts to foster local formations of tech companies and take them from startup to international exit.

“The problem is not necessarily the money, but the delays that we encounter with bureaucracy under the existing system.

In this sense, what sets HTP apart from other initiatives in the entrepreneurship ecosystem of Lebanon is that it is not a story of the monetary stimulus engendered by Banque du Liban’s (BDL), Lebanon’s central bank, Circular 331 and crystallized around the Beirut Digital District (BDD). Not being part of the entrepreneurship ecosystem of BDL-inseminated tech embryos nurtured in BDD breeding boxes on lifelines of banking-infused funds that are administered by VC nurses, the HTP campus feels more like the founding cell of its own ecosystem.

In the context of seeking to test the mutual influence and development potentials between Lebanon as location of an innovative manufacturing project and such an enterprise, Daou is now facing uncharted territory and risk scenarios. Talking after recent changes in the banking sector practices and before the protests, he notes new risk potentials that are rising in Lebanon’s economic framework. “If the cash flow barrier becomes prohibitive for us, we would reach a point where we would need to mitigate this risk by adopting a different operations model where we can function without operating out of Lebanon,” he says. “Another risk which we are afraid of facing is the fact that we have employees at subsidiaries and offices in Germany, the US, and Taiwan. If we get to a point where we can no longer transfer money, hard currency, to compensate them, we would not be able to keep these offices open or keep our customers satisfied. This is the risk that we face as an indirect or secondary monetary effect.”

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agro-industryEntrepreneurshipSpecial Report

Technology and agriculture meet in Agrytech

by Nabila Rahhal
written by Nabila Rahhal
  • There is a need for innovation and R&D in the agro-industry sector in Lebanon and the region.
  • Agrytech, a program by Berytech focusing on innovations in agriculture, was created to address this need. It has four major pillars including an accelerator program and an agri-food innovation cluster.
  • Agrytech was promoted to university students and graduates through various activities and interest in the accelerator program, now in its third year, has risen slowly and steadily.
  • Agrytech received its second round of three-year funding from the Foreign Ministry of The Netherlands this August 2019.

At the time of writing, Lebanon is over a week into nationwide protests which were, to a large extent, fueled by the miserable economic situation the country is facing. Now more than ever, we are reminded of the importance of high performing productive sectors, namely industry and agriculture, in a country’s economy. In a 2018 article published in Executive’s end of year issue, Cristiano Pasini, representative and director of the United Nations Industrial Development Organization (UNIDO) for Lebanon, Jordan, and Syria, wrote that a strong industrial sector, which benefits from technological advancements and innovation, is a driving force behind national economic growth. 

Among the industry subsectors in Lebanon, it is agro-industry that shows the most potential for being a driver of economic growth. “There are around 960 companies working with food products in Lebanon. [Agro-industry] is the second [largest] subsector in terms of exports, and the first in terms of added value, since the raw material used is grown or found in Lebanon,” Mounir Bissat, the secretary of the Syndicate of Lebanese Food Industries told Executive in a December 2017 interview. According to the Food and Agriculture Organization of the United Nations, agro-industry contributes 5 percent to GDP (as does agriculture)  and “constitutes a major and growing employer in the economy.”

However, one of the reasons the agriculture and agro-industry sectors are not living up to their full potential is the lack of investment in research and development (R&D) and innovation. In the same interview with Executive, Bissat explained that almost 90 percent of the companies in agro-industry are family-run small- and medium-sized enterprises (SMEs) with limited budgets, making it difficult for them to invest in modernizing traditional recipes or innovate design or food production techniques. 

Lack of R&D investment is preventing the agriculture and agro-industry sectors from reaching full potential.

According to Ramy Boujawdeh, deputy general manager at Berytech—an ecosystem that fosters innovation technology and entrepreneurship, initiated in 2002 by Université Saint-Joseph—the agriculture sector in Lebanon and the region faces many challenges that could be addressed through innovation, yet are not. “We see Lebanon as one of many countries around the MENA area that have major issues in innovation in their food sector,” he says. “The main issue is that we are really dependent on the import of food, which, in turn, goes back to our lack of connected agricultural value chains, water security issues … there are lots of opportunities and systems across value chains that could be improved through innovation.” 

It is within these dynamics that Berytech launched Agrytech in January 2017. Boujawdeh says Agrytech, an agri-food innovation hub, was “designed and branded to attract people that are interested in reviving and improving the agricultural sector in Lebanon.”

The program has four pillars, the first of which is an acceleration program designed to support entrepreneurship in agri-food. Second is an agri-food innovation cluster focused on SMEs and large businesses. Third is an online resource platform designed for those with an engineering or tech background who want to get insights on the challenges facing agriculture in Lebanese and regional markets to identify opportunities where they could make a difference. The last pillar is a digital fabrication lab, which is accessible to Agrytech through the funding of Berytech and is open for all at varying costs (depending on whether it is individuals, startups, or established companies). In the Fab Lab, people can prototype their hardware solution or scale their minimal viable product to take to investors and show them how it works.

Agrytech receives 90 percent of its funding from the Ministry of Foriegn Affairs of the Netherlands,  and Boujawdeh says they raise the remaining 10 percent through a variety of channels including sponsorship opportunities for various activities at Agrytech. He says that getting noteworthy sponsors such as banks and agricultural companies sends a positive message that their program has weight and that a number of people believe in it. 

Photo by Greg Demarque | Executive

This past August marked the end of the first three-year period of funding for Agrytech, at an amount of $3.3 million. The program has now entered into a second three-year round of funding, with the Dutch again covering 90 percent. The fund for the coming three years is $6 million to be split in half between Agrytech and a new program by Berytech called Cleantech (see story page 66 for more details). However, Agrytech does not plan on sustaining itself indefinitely based on external funding and support. Boujawdeh says they are looking to move into an equity-based accelerator model in the coming years, now that they have built up their expertise and know-how and have several solid success stories. They are also looking at how such a model can be exported to the region and drive innovation in the agriculture sector outside Lebanon as well. 

Setting the wrong foot right

In its third batch of startups, Agrytech is now well-established, but things did not run smoothly at first. As Boujawdeh recalls, the initial thought was that by simply launching the program and opening the call for applications to the acceleration program, they would be flooded with applicants—this was not the case. “We thought we had a problem of youth without jobs so they would be happy to find job opportunities [through the program] and they would immediately relate to the sector and our work would be done,” he says. “But we quickly realized that there needs to be an educational component whereby they can learn about the sector before they get excited about it.”

Boujawdeh says that this is because the agriculture and agri-food sectors are generally not perceived as providing attractive job opportunities. Many people in Lebanon and the region still perceive agriculture as the rural farmer on his donkey tending to goats and sheep or toiling away on the land with little reward. As such, Agrytech had its work cut out for it in attracting tech-minded people to its program and exposing them to the challenges in the agri-food sector. 

To achieve this, Boujawdeh says Agrytech focused on university students and targeted them through several channels. During the winter and spring seasons, prior to the launch of the accelerator program in the fall, they organized a series of two-day startup weekends, ideathons, and hackathons. During those events, Boujaweh says, teams or individuals propose a problem and spend a few days with experts, mentors, and coaches discussing it and learning the thought process involved in developing viable solutions. On the last day of the event, they pitch their solutions in front of a jury and three winners are announced; winners receive cash rewards of varying amounts depending on the event. 

Efforts to familiarize the market with Agrytech is slowly but surely paying off, with increasing applicant numbers.

Another way Agrytech spread the word for its program was through reaching out to university professors and asking them for their support. “The word is getting out and so we have university professors in engineering pushing their students to look at agriculture as an opportunity or connecting with a colleague in the faculty of agriculture and getting their students to meet him or interview him,” Boujawdeh says. “We are seeing more final year projects that are in the engineering field focusing on applications in agriculture.” 

Those who have been working in the agriculture sector for several years and were familiar with its challenges were also interested in Agrytech’s accelerator program, he says. To them, they had a potential solution for a certain challenge but were afraid to take the risk of leaving their jobs and so they tested their idea with Agrytech.  

Their efforts to familiarize the market with their program is slowly but surely paying off, according to Boujawdeh. Agrytech had 65 to 70 applicants for their first accelerator batch in 2017, 80 applicants for the second batch in 2018, and 110 applicants for the third batch that was launched in October 16 of this year. Boujawdeh says that not only has the quantity of applicants increased, but so has their quality and maturity level: “People in the first batch were looking at the downstream side of agri-food production—the post-harvest aspects that include everything between food processing and the end product that reaches consumers. With the second and third batch, we have more people looking at the entire value chain and focusing on the upstream side of production—the pre-harvest aspects from the sourcing of fertilizers, seeds, and equipment through farming until you produce and harvest. This is super exciting because most of the problems lie in this upper chain.” 

Accelerator breakdown

From the 110 applicants for the third year of Agrytech’s accelerator program, 24 were selected and were due to begin their 11-month journey with the program on October 16. Teams can be made from individuals with a variety of backgrounds but there has to be members with experience in science or technology.

Photo by Greg Demarque | Executive

The program is divided into three phases, the first of which is a two-month validation phase where Agrytech works with the startups to make sure the problem tackled is big enough to have a market share and be investable. Only 12 participants make it to phase two of the program, and here they go from a well-developed idea to a minimum viable product that is piloted or tested among users. The third and final phase sees eight shortlisted startups learn to become “investment ready” by practicing pitching to investors and by identifying potential clients. 

Startups get a cash injection at each stage: $2,000 in the first phase, $15,000 in the second, and up to $20,000 that they need to match in the final stage—they do so either through personal funds or by different competitions such as Arabnet, for which Agrytech helps them pitch. Boujawdeh explains that they give participants cash instead of procuring the needed materials themselves because they want them to learn how to invest their money in the best interest of their business. How this money is spent, however, is monitored and regulated. Agrytech also run audits on what they do to make sure everything is above board. 

Post accelerator program, Agrytech maintains a soft follow up on their graduates and invites them back to speak to the new batch and share their success stories. Boujawdeh says any startup that has been through the program and that raises funds in the year following the program is committed to pay up to 5 percent of any equity they raise up to a million dollars, so up to $50,000. “It is a way for them to pay it forward for others in the program,” he explains, adding that the money raised goes into funding the accelerator program.

Together we are better

Another major component of Agrytech’s program is an agri-food innovation cluster called Qoot—from the Arabic word for a farmer’s daily snack—that was launched in February 2019. The cluster is made up of 35 companies that either work directly in the agro-industry by producing foods or indirectly by developing packaging or printing machinery. The idea behind the cluster, according to Boujawdeh, is to have these companies—and others who will join down the line as Boujawdeh hopes to reach 100 companies by the end of 2020—support and source material from each other and work together to improve the agriculture value chain. Boujawdeh compares Qoot to a cluster of grapes, whereby each individual grape has its own identity, but since it is connected to the other grapes, it can grow better and faster. 

Many aspects of what we consider normal in modern daily life in Lebanon and the region are thanks to innovative entrepreneurs.

Annual membership fees for Qoot range from $250 for companies with less than 10 employees to $800 for large companies (more than 50 employees). Boujawdeh says they are selective regarding admittance to Qoot, with two main criteria being that companies show an interest in innovation—through their business model, product, or service—and are willing to share and collaborate with others in cluster. Agrytech provides Qoot members with training and talks on innovation on a regular basis, and supports them in connecting to new markets.

Qoot provides a network of support for the startups in Agrytech’s accelerator program in that a number of its members mentor, coach, and test or buy some of the startup’s solutions. Meanwhile, many of the startups that graduate join Qoot to have a network of peers and professionals whom they could benefit from or support, Boujawdeh says. During the next three years, Agrytech will be scaling up Qoot and through it will be doing some advocacy and lobbying.

Many aspects of what we consider normal in modern daily life in Lebanon and the region are thanks to innovative entrepreneurs. It is high time that these innovations are directed toward agriculture and agro-industry, two sectors that literally feed us. Agrytech is the first bud of this plant bed, the hope is for the growth of more similar initiatives down the line. 

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EntrepreneurshipEntrepreneurship 2019OverviewSpecial Report

Entrepreneurship in times of systemic change

by Thomas Schellen
written by Thomas Schellen
  • October 2019 events have hallmarks of systemic shocks.
  • Risks are unfathomable and early economic impact evaluations are necessarily inadequate.
  • The future may depend on extraordinary courage, discipline, and daring visions.
  • Entrepreneurship has the potential to be a key ingredient in building national prosperity.

These are times when a discussion of entrepreneurship—Executive’s traditional focus in the November issue—could be almost a crime, as it would ignore the nation’s stories of courage in choosing a new destiny, of valor and compassion, of united wills, of exuberance, and of concerns.

The events of last month, to the mind of this observer, were undeniably a dual positive shock to Lebanon. The first positive shock was that the protests represented a genuine outpouring of popular will and desire for self-determination as a nation with a shared identity. A sort of Lebanese political enlightenment and break with the long narrative of self-induced or self-incurred tutelage that Immanuel Kant talked about in his Enlightenment definition 235 years ago.

Outside of this sociopolitical frame, the second positive shock sparked by the protests and related developments during this fateful October carried all the hallmarks of a systemic economic shock. Seen in the context of 27 years of systemic economic deficiencies—the emphasis on accommodation of investors and financial inflows at the expense of redistributive and bottom-up economic growth—these calls for change are both radical and necessary.

At the beginning of Lebanon’s post-conflict reconstruction and development in the early 1990s, there were understandable and initially rational preferences toward rebuilding the country from its urban center and revamping profit-generating economic frameworks in communication, transport, trade, and tourism. It was the Rafik Hariri era; during which GSM mobile networks were rolled out under build-operate-transfer contracts from 1994, the airport was rehabilitated, the airport-to-city highway was constructed, and there were decades-long development efforts undertaken in Beirut Central District—the capital’s downtown and country’s showcase.
These investment concentrations gave the appearance of efforts calculated to benefit the economy from the top of the pyramid. For some years through the mid-1990s, these approaches worked in important ways, especially as long as they coincided with hopeful regional vibes such as optimism over ending the conflict in Palestine.

At other times, however, and increasingly after the late Prime Minister Rafik Hariri’s assassination and in the more recent post-Hariri years, the international investment, debt-financing, monetary and narrow property imperatives of the Lebanese economy’s orientation were either not working at all or benefited only the very few at the top. The economic system increasingly nurtured inequality.

With even more passing years and vacillating economic cycles with frequent downturns—which in the current decade were exacerbated by the impact of a persistent regional and humanitarian crises—the perception of a seemingly unstoppable drift into corruption and increasing inefficiency has been feeding not just inequality, but spiraling popular rage at economic immorality and unfairness. The people are now demanding an end to this spiral of inequality and poverty—and the end of this post-conflict economic system.

Plethora of uncertainties

Juxtaposed with these two positive and hugely important shocks of rescinding political and economic systems that have become counterproductive for Lebanon’s society, however, weigh risks and uncertainties, some unfathomable, on the counter side of the sociopolitical and socioeconomic scales of the October developments.

These serious downside potentials entail political and societal risks, such as the possibility of internal clashes between would-be system changers and system defenders. Another juxtaposition with explosive potential is grounded in the strength and deep-rootedness of the existing societal system with its communal allegiances, religious belonging-based political privileges, and forceful political consociationalism. Dismantling or abolishing this social construct is a declared aim of those who oppose it on the street all over Lebanon, but their opposition suffers from the absence of fully formulated systemic alternatives. This experiment is thus fraught with unpredictable social outcomes and risks of removing the system without having the ability to put a newer, fairer system in its place.

Also not to be neglected in this systemic political context are risks of mass proliferation of counterproductive human behavior patterns. Fears of a rise of ethically deficient political behaviors in Lebanon are supported, for example, by the track record of alternative parties and organizations in the past three years when several organizations with loud calls for change in the political establishment revealed themselves within a relatively short time to be dominated by aspiring political players that were just as power hungry and conspiratorially minded as any politico of the old guard (see Executive’s pre-election coverage of 2017/18).

Lastly, considering Lebanon’s precarious geopolitical location and weak position in global power games, it might be perilous for this country to forget timeless patterns of international power politics over all the excitement of the rising new national self-awareness of the Lebanese people. These age-old international patterns show small countries’ decreasing ability to preserve or politically defend their interests against rising external military or economic pressures. Such has been manifested time and again when a fragile polity’s attempts of internal systemic change and self-definition were taken as invitations by malignant neighbors, expansionary empires, or simply self-interested powers who would happily exploit soft-target societies and weak countries for their gain.

Barrage of economic risks

In terms of uncertainties and sadly predictable human behavioral risks in the crucially important realm of Lebanon’s economic fortunes, any new development aspiration for 2020 and beyond is, since the October events, faced with a barrage of very justified concerns over ill-advised economic herd behaviors, such as capital flight and runs on banks in the immediate term, and over the implications of Lebanon’s indebtedness in international financial markets in the middle to long term.

It does not need to be explained here why panicky capital flight would be a bane for the Lebanese economy. With regard to financial scenarios under no-longer-functional debt equilibriums, cautionary examples of the mercilessness of markets and international financial institutions abound and tell their tale that the best foreign intervention inflicts traumas since the establishment of the Bretton Woods System that can only be averted by a country’s significant own constructive policies and extreme financial self-discipline.

Also worrisome for the economic future of Lebanon is the entrenchment of national patterns of favoring consumption with preference for imported goods, combined with an expensive and wasteful addiction to show off behavior in parts of society. Behavior change of such magnitude as a shift to increased local consumption and public pride in economic modesty needs institutional infrastructures, rational awareness, and more courage than a month of demonstrations.

A not-so-much behavioral but structural worry is also warranted by the status quo of Lebanon’s national economic organization, with its lopsided growth drivers that for too long has benefited narrow elites but has stifled the building of export capacities, harmed total factor productivity, and has driven down investment in industry that could have led to healthier capital stock if addressed at earlier points in the past 15 years.

Instead of speculating on positive and lasting insistences of the popular will, it can easily be argued that the Lebanese business community, financial community, and households were somewhat complicit with their—after all, elected—governments. Such conclusions derive from the fact that urgently required investments into productivity and competitive industries in Lebanon were substituted by societal stakeholders with imports of money and imports of goods.

In the increasingly debt-dependent public and consumption-happy private sectors, there was relentless channeling of hard currency inflows into servicing of public debts and on the private side—from the remittances of the diaspora—into consumption (of daily foodstuffs, other fast moving consumer goods, and social events from dinners to weddings), consumption (of household investment goods such as cars and non-productive real estate), and consumption (of education and health services that would not increase productivity in the short run in the first case, or quality of living in the second—unless embedded in smart public investment and job creation programs, which they were not).

Which way is forward?

The protestors’ denials of the economic status quo and calls for instantaneous abolition of the entrenched system of many flaws cannot mitigate the plethora of national economic concerns—and in some cases, like fears for the banking sector’s liquidity levels, seem to exacerbate the problems. Given the precarious juxtaposition of positive shocks and self-destructive triggers in Lebanon in Q4 2019, the October developments and Lebanese Enlightenment appear, therefore, to be in deep need of economic answers that transcend the wisdoms and mental range of business-school orthodoxies and utterances by economists who adhere to the run-of-the-mill perspectives. It is a time of big risks that are not to be denied but might be soluble with courage and strength that arises from united wills and daring visions.

In economic and philosophical literature it is uncommon to find visions that are not just utopian thought experiments or disruptive to a point where their implementation would preserve nothing worth calling an economy, but some might exist outside of the realms of first-world schools of economic thought.

That this is a time of big risks is undeniable, but these can be faced with courage and strength through united visions and wills.

The level of daringness that the current problems of Lebanon require in addressing might, for example, be connected to alternative pathways that divert from the often tried and always imperfect solutions that are in line with agendas of austerity, draconian deficit cutting, and internationally directed debt reforms. The weaknesses of such approaches, which have been associated with the Bretton Woods System, have been pointed out in the context of the Greek and southern European but also various Latin American crises. A few years ago, in the late 2000s, an economic critique of globalization and first-world recipes on how aspirational developing countries should manage their economies was formulated in a theorem of “bad Samaritans” by Korean-born development economist Ha-Joon Chang.
In Chang’s perspective, today’s rich countries—above all the US—and the international financial institutions aligned with the interests of the most powerful economies have historically tended to elevate their economic performances by practicing methods, such as unfair subsidies, self-serving (albeit somewhat limited) inward trade protectionism, coupled with outbound trade imperialism, and blatant re-engineering of important new tech products (e.g. rail technology in the 19th century), while they were themselves still economic underdogs in comparison to other countries. Once they are occupants of top economic rankings, however, the so-risen powers habitually kick away the very ladders that fostered their economic advancement from beneath developing economies under the guise of neo-liberal paradigms, such as free trade and strict intellectual property protection.

Such points seem debate-worthy as Lebanon is in need of rescue from falling under even worse international economic domination. However, what might even be more pertinent in the context of Lebanon’s situation and need for strong home-grown economic visions today, could be in emulating a national entrepreneurial mindset for which Chang provides a hypothetical example—with 50-year-forward vision of an economic miracle in the world’s poorest country by GDP in 1995 (Mozambique)—and a historic case from the background of personal life experience as a Korean native who grew up in lockstep with South Korea’s economy rising from abject poverty—a per-capita GDP half that of Ghana at time of Chang’s birth in 1963—to being included in the top tier of global economic influencers—the OECD and the G20—from the late 1990s.

Chang’s noteworthy messages could be read in the current Lebanese state to say that underdog countries can find their prosperity and that there is no foretelling of the future potential for exorbitant economic growth that a combination of new tech and inspired entrepreneurialism can create for a country—even one in a situation such as Lebanon finds itself.

There is no immutable mentality in any society that would mandate a culture of economic underperformance.

However, an even more potent and more hopeful self-perception and vision in future-oriented Lebanese thinking could perhaps grow from a combined development of entrepreneurialism as the implementation of an economic vision without regard to the risks, with a focus on manufacturing, and creating supportive and efficient—and digital—institutions. This constructive design thinking would necessitate a forward-looking thought culture and a departure from currently popular obsessions with perceiving everything and everyone dealing with money and development a priori as corrupt.

A new and futuristic national mindset coincidentally also might be a nice organic fit with a more self-asserted polity that is convinced of its national belonging and common purpose. But besides the emphasis on entrepreneurial virtues that the Lebanese claim to possess to a very high degree, it is unlikely to work without prioritization of manufacturing (noted not only in Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism as “the most important, though not the only route to prosperity” for aspiring countries) and a focus on reshaping a national determination and culture that perceives economic growth as achievable and provides entrepreneurial initiatives with structured administrative, policy, and institutional support.

A truth quite frequently ignored in local debates is that there exists no immutable mentality in any society that would mandate a culture of economic underperformance or backwardness. But new paths by definition are the paths that need to be discovered and trails that need to be blazed—and this is exactly where the practical virtues of entrepreneurship come into play. Entrepreneurship, which appears to exist in Lebanon indeed in relative abundance now even in form of producing impactful societal movements, is one of the factors that can make economic hopes work and that can generate jobs—especially in entrepreneurship of the export-oriented manufacturing kind.

Still, constructing a successful economic development mosaic of Lebanon will require adding further pieces. As another noted development economist, Briton Paul Collier, recently emphasized in musings on the future of capitalism, disadvantaged economic locales such as provincial cities that have been left behind, fallen off, or never embarked on the economic development train can be vitalized by the creation of new economic clusters. “Broken cities need to attract firms that are dynamic enough to start a new cluster in their wake,” writes Collier, but he admonishes that such dynamic firms and entrepreneurs need to be institutionally supported and protected against the first-mover disadvantage of nesting in a broken city (the same presumably applies to a small country with backward infrastructure).

This is where the circle between Lebanon’s systemic change impulses and Executive’s self-chosen focus on entrepreneurship as the regular coverage pillar and main topic in the November issue actually closes, at least in some sense. Before the events in the middle of October, Executive editors were investigating examples of Lebanese entrepreneurship and potential job creation from the growing ranks of accelerators and incubators linked to the tech entrepreneurship ecosystem at and around the Beirut Digital District (see page 60) and Agrytech acceleration (see story page 56) to a manufacturing-based and very entrepreneurial initiative called Houmal Technology Park (HTP) in a semi-rural hillside community 20 minutes away from the Lebanese capital.

To recall how Kant defined Enlightenment while it was in full swing, his essay says that tutelage is man’s inability to use his cognitive facilities without another man’s direction and stipulated that this tutelage is self-incurred if it is not because of complete ignorance or weakness of said cognitive facilities but where tutelage is based on lack of resolution and courage to think and act for oneself. In regard to Lebanon’s exit from tutelage in conjunction with its emerging and not yet fully visible new sociopolitical and economic realities, it seems that old Enlightenment philosophers, modern development economics, and practical entrepreneurial experience all point toward a need for a genuine and well-structured social contract that is based on original thinking and true—meaning practical and interconnected—self-interests of the polity that has shaken this country up with the effect of opening so many new and positive futures.

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Lebanon UprisingQuotes

Lebanon Uprising: Quotes

by Executive Editors
written by Executive Editors

What are the next steps for Lebanon? Between now and year’s end, what do you propose stakeholders in your field should be doing? 

“Lebanon should, at long last, find its bearings politically, financially, and economically. A credible and technocratic government should be installed to restore confidence and kickstart the institutional process. The country’s finances should be pulled back from the brink by shrinking the public sector and fighting corruption, smuggling, and tax evasion. The private sector should be empowered and incentivized to ignite economic growth through investment and consumption. And time is very much of the essence.”

Nicolas Chammas, president of the Beirut Traders Association

“An immediate step should be capital and exchange controls, for a few months, until tensions subside. A vision, principles, and strategy for Lebanon should be defined, shared, and adhered to by the majority of Lebanese. Stakeholders in our field should join forces to alleviate the difficulties and prepare for the end of the crisis.”

Riad Obegi, chairman and general manager of Banque BEMO 

Photo by Greg Demarque | Executive

“In the short term, the urgency is for the formation of a government of independent specialists and activists with a political vision aiming to unify all dwellers in Lebanon as citizens of a democratic state led by principles of social justice and environmental protection. In the medium term, we ought to work toward producing a de-sectarianized political system, with an independent judiciary, in application of the Lebanese Constitution, through anticipated parliamentary elections according to a new, non-sectarian electoral law. In my field, stakeholders should aim for the urgent implementation of the Council of Development and Reconstruction’s Lebanese national land use plan, approved in 2009, through the establishment of a Ministry of Planning and the elaboration of metropolitan and regional strategic plans that can enable decentralized planning and local economic development.”


Mona Harb, associate professor of urban studies and politics at the American University of Beirut

Photo by Greg Demarque | Executive

“The main priorities in the coming months should include the institution of transparent mechanisms of public tendering and processes of accountability to secure their proper implementation. The selection of projects should prioritize large-scale interventions that respond simultaneously to economic, social, and environmental emergencies, such as public transport networks at the scale of greater urban areas. Within cities and towns, the ongoing public debates in open squares should be fostered and enhanced to allow for the consolidation of bottom-up practices of citizen engagement, likely the most important achievement of the two weeks that could lead to enduring systemic change.”

Mona Fawaz, professor of urban studies and planning at the American University of Beirut

“We are currently in a very delicate situation. Time is of the essence. We can no longer afford the usual procrastination. We need to apply immediate emergency measures, such as (centralized) capital controls and not these half-assed measures [of] allowing each bank to set its own policies. This will deflect the anger of the masses from the banks. It would also protect banks and bankers, who will undoubtedly allow exceptions on withdrawals from wealthier clients, leaving the brunt of the unavoidable future measures to be borne by the middle class. This would be catastrophic and would eventually come out, because every transaction is tracked, with the names of the client, bank, banker, and senior banker (who approved the exemption), which will subject them to the wrath of the masses.”

Dan Azzi, former CEO and chairman of Standard Chartered Bank in Lebanon, and current Harvard fello

Photo by Greg Demarque | Executive

“I think the role of policy institutes specifically like ours, the Issam Fares Institute (IFI), is to pose some solutions and roadmaps around the different issues we work on, whether it’s youth and education, refugee policy, energy policy, or climate change and the environment. These are all critical issues that have been raised by the protesters. These are demands of the people for the government to do a better job, and we’ve been working on these issues for years. We have a particular role now to propose workable solutions around all the sectoral policy issues we work on. We have a convening power here at the institute to bring stakeholders together to have discussions about the next steps for Lebanon. At IFI, we’re able to bring in experts, professors, activists, and civil society players for discussions, and they’re all critical players in next phase to formulate workable solutions that will be the responsibility of the next government to resolve.”

Rayan al-Amine, assistant director at the Issam Fares Institute for Public Policy and International Affairs at the American University of Beirut

“One word summarizes what Lebanon needs next: trust. Citizens and the international community need to trust the next government as a prerequisite to shift the economic and financial crisis. No one trusts the current political elite so independent competent ministers are a first step toward that. And early elections to have a Parliament that is worth the trust and eventually electing a new president to have a trustworthy elite.”

Gilbert Doumit, founder and managing partner at Beyond Reform and Development

Photo by Greg Demarque | Executive

“Establish consensus on an apolitical government with a mandate to immediately implement fiscal and monetary reform, where the main objective is to cut the fiscal deficit through cuts in wages and subsidies. Restoring services in power, water, and transportation within 12 months should be the first priority. A plan should be prepared for full reform in the political, economic, and social system within six months in collaboration with NGOs and local representatives.”

Mounir Rached, former IMF economist and current president of the Lebanese Economic Association

“The ultimate goal would be reaching a civil state that ensures the rights of citizens, but until then we are looking toward forming a new cabinet able to respond to the demands of people asking for economic and political reforms. During this revolution, the media has been giving people a voice, we are looking forward to the next phase, for a media that focuses on monitoring of policies and performance of decision-makers with more in depth investigative reports that unveil all hidden truths and inform the public. We also aspire to keep the ability of freedom of expression and criticizing public figures without the fear of arbitrary arrests.”

Roula Mikhael, executive director of Maharat Foundation

Photo by Greg Demarque | Executive

“Overworked judges with mountains of cases, red tape that can wrap around the earth twice, and delays in the legal process make the job of lawyers more difficult, in some cases impossible. The full backing of a reinvigorated executive branch of the government, with the unwavering support of legal enforcement, is the only legitimate, economical, and just way forward.”

Jamil Chaya, assistant professor of finance and economics at Rafik Hariri University

“Our ultimate chance to overcome this dramatic turmoil is through the support of the international community, which should be divided into three stages. Therefore, I urge the international donors in the immediate term: to inject liquidity and currencies in the market as soon as possible, to create an international support fund to bear partially the currency risk, to ease the transactions between the local traders and international suppliers, and to benefit from subsidized interest rates from the European Investment Bank to reduce interest rates on the local businesses. In the medium term: to form an international strategic committee with various international and local stakeholders to implement and follow up on the international rescue economic emergency plan and strategy, and to monitor the disbursement of injected funds. In the long term: to support a privatization strategy that will be needed to reduce operating costs in the public sector, improve efficiency and productivity, and to serve citizens.”

Fouad Zmokhol, president of the Association of Lebanese Business People in the World

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CommentLebanon Uprising

Reimagining an alternative Lebanon

by Bassel F. Salloukh
written by Bassel F. Salloukh

The unthinkable has finally happened. A stubborn sectarian system, undergirded by a peculiar postwar political economy, and sustained by institutional and disciplinary practices geared toward reproducing sectarian modes of identification and mobilization, has finally given way.

This is a story that can be traced back to the mid-19th century, when the dislocations created by overlapping socioeconomic transformations, Ottoman reforms, and colonial penetration exploded in the kind of violence that helped institutionalize a new sectarian order in Mount Lebanon. Previously a fluid social terrain, where religious identities coexisted and cross-cut with an array of alternative socioeconomic, kin, and local identities began to solidify around mainly sectarian identities. The post-1861 Mount Lebanon order structured political incentives along mostly sectarian lines. It was later reproduced in independent Lebanon, and then consolidated in postwar Lebanon. The latter’s recycled corporate consociational power-sharing arrangement redistributed political offices within an expanded but predetermined sectarian quota, further entrenching sectarian identities and modes of political mobilization.

This political system was coupled with a rentier political economy serving the sectarian political elite’s clientelist and private interests. A ballooning public sector played an instrumental role in this postwar political economy, but so did corruption and lawlessness. All this was meant to preclude any kind of meaningful political mobilization and affiliation outside sectarian straightjackets. Sectarianism was in fact the fig leaf camouflaging otherwise political and class battles. Genuine postwar peace and reconciliation among the different Lebanese communities was a prime casualty of this postwar order.

For this postwar political economy of sectarianism to function smoothly and reproduce docile sectarian subjects entailed continuous capital inflows to finance the country’s trade and fiscal deficits, and hence pay the price of a galloping public debt created in large measure by the archipelago of clientelist networks embedded inside and outside state institutions. This was achieved, but only with the help of successive donor conferences. Between 2006 and 2010, the balance of payments recorded a cumulative surplus of $19.5 billion. By 2011, however, this balance turned negative, reaching a cumulative deficit of $18.5 billion by end July this year. It is this structural fracture that created the economic grievances that exploded on October 17,  and later developed into a cross-sectarian, cross-class, and cross-regional anti-sectarian revolution.

What we are witnessing, then, is the birth of a new “imagined community,” one that travels across regions, classes, genders, and sects.

It is a revolution that has already achieved so much in so little time. It has allowed for a reimagining of the Lebanese nation beyond top-down imposed narrow sectarian affiliations. With this comes a shift in how people define themselves as agents: not as sectarian subjects in a political order cut along sectarian and religious lines, but rather as anti- and trans-sectarian citizens operating in a polyphonic and democratic civic space, one where alternative class, gender, and environmental interests drive political action. Moreover, the October 17 revolution marks the definitive end of the civil war, and a genuine bottom-up reconciliation between one-time warring communities. This reconciliation is the beginning of elusive postwar peace and collective healing, the real bulwark against future attempts to instrumentalize sectarianism by the political economic elite for local or geopolitical purposes. What we are witnessing, then, is the birth of a new “imagined community,” to borrow Irish political scientist Benedict Anderson’s term, one that travels across regions, classes, genders, and sects. That is the greatest and undeniable achievement of this moment, one that no matter the short-term outcome, can never be reversed.

This does not mean that those sectarian communities laboriously assembled by the ideological, material, and institutional practices of the sectarian system will wither away anytime soon—despite the drying up of the clientelist swamps. They are numbed by the ideological hegemony of the sectarian system and nourished on the demonizing discourse of sectarian entrepreneurs. They are also scared lest they lose whatever material interests remain vested in the sectarian system. But they are undeniably running against the long play
of history. 

Ultimately, and despite the inescapable violence exercised against them, it is this nascent anti-sectarian community composed principally of Generation Zs who will, by peaceful and democratic practice, demonstrate to those lingering sectarian communities that, to borrow from  French poet and politician Aimé Césaire, there is “a place for all at the rendezvous of victory” in the long battle for an alternative Lebanon.

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Lebanon UprisingReforms

A perspective on the solutions offered in last-ditch efforts of old government

by Thomas Schellen
written by Thomas Schellen

  • The government’s economic rescue plan has been rendered theoretical.
  • The political context of its presentation reveals real dimension of governance failings in the past two years.
  • Analysis of the plan’s composition shows it to be disparate and desperate.
  • Economic reality will require huge efforts beyond the scope of the last plan.

What to do with the political products of October 2019, most prominently the 2020 budget draft approved on October 21, and the economic rescue plan that then-Prime Minister Saad Hariri presented on the same day? Having arrived alongside the total novelty of a budget draft that was completed and properly signed within the constitutional time frame, the plan for national economic rescue efforts by the cabinet miraculously appeared after a mere 72 hours of negotiation.

However, just over a week later the plan was pulled with the cabinet’s resignation. Is it now a curio for academic study on whether it could have worked? Or, on the basis—by no means certain—that there will be a near-term formation of a new, more ethical, and more technocratic government, could the plan assist in and speed up the desperate search for necessary economic solutions?

The first thing that becomes obvious from examining this plan is that it was not an instantaneous creation. Many of its components are awfully familiar as either proposals that have their roots in the early Hariri era—over two decades ago—or as cabinet projects that have been negotiated back and forth at the Grand Serail in the past two years, falling victim to obstructionism. But as comforting as it is that these ideas were not just pulled out of thin air, the downside is that this is irrefutable evidence that political factors allowed the economy to worsen over the past two years.

Beyond endurance

While everyone was paying lip service at the bedside of the ailing Lebanese economy it was edging nearer to total monetary paralysis and asphyxiation that could have been prevented through concerted resuscitation measures by politicians. The demand for a rescue agreement and its last-hour presentation points to the reasons for the underlying and maddening inertia of the now resigned government.

To quote Hariri’s speech on October 18: “I have been trying for three years to treat its reasons and find real solutions. For more than three years, I told all our partners in Lebanon that our country has been exposed to circumstances beyond its will and is spending, year after year, more than its income. The debt has become so great that we can no longer endure.”

The existence of political obstructionism in this government was no secret, and Hariri previously publicly expressed that he would be able to achieve wonders if crucial initiatives only could proceed unimpeded. It was also obvious that his purported unity government was an arena of badly conflicting interests. But it was still shocking to confirm the utter lack of rational self-interest in the ruling class. Learning that zero trust was the only thing that this government deserved—from beginning to end—adds more pain to having seen Lebanon stumble so deliriously through the last 17 months.

Secondly, while Hariri has throughout his political career raised the eyebrows of both opponents and non-partisan observers through his actions and indecisions, his last ditch efforts to produce an economic plan and his speech announcing his intention to resign showed a strength of character often criticized as lacking. But still it seems he was not able to acquire all of the requisite strength and decisiveness needed to lead in the Lebanese arena of never-ending political conflicts.

He noted in his October 18 speech: “As I tried to implement [CEDRE], I encountered all types of obstacles, starting from the formation of government that took weeks, months, and seasons!” Referencing obstructionism three separate times, Hariri said that at the end of efforts to reach an agreement on approaches to the electricity file, deficit reduction, and reform of administrative bodies, each time “someone came and said: ‘This cannot work.’”

Thus, context-wise, the October 18 speech demonstrates both the lack of any sense of national responsibility among an unknown number—likely an absolute majority—of the ruling class, and weaknesses in leadership that did not allow for success despite intense and sincere efforts. Content-wise, however, the question remains if the plan could be used as a blueprint for the next government as a last, post-post deadline effort to pull the economy out of its desperate situation.

The topline impression of the list of measures presented by Hariri on October 21 is not one of a strategically focused plan, but a garage sale of reform, revenue, and cost-cutting propositions. In Hariri’s own description, what he presented was not an economic plan, but an agreement with his partners in government on the “minimum necessary actions” that have been needed these past two years.

Counter-intuitive

The list that Hariri read out entails 17 points, the first of which directly gives the appearance of insincere grandstanding by trumpeting two counter-intuitive messages—that there will be no new taxes but a fantastic numerical reduction in the deficit to 0.6 percent. This means a target of wanting to almost eliminate the deficit in a single leap by an even larger margin—some 700 basis points from 7.6 to 0.6 percent than in the 2019 budget, where the target of deficit reduction by around 400 basis points was met with disbelief by the international financial community. Notably here, the CEDRE agreement stipulated a commitment to a—regarded then as difficult but doable—reduction of 100 basis points per year.

In the further array of budgetary and non-budgetary measures that Hariri presented, one cost reduction target referred to lowering the EDL-related deficit by a LL1 trillion (over $660 million). Three additional points in the list relate to cost cutting, most eye-catchingly via a 50 percent reduction in salaries and retirement benefits of top-tier public servants, but also through 70 percent reduction of allocations to institutions such as the Council for Development and Reconstruction, the Central Fund for the Displaced, and the Council for the South, plus the abolition of superfluous public sector institutions, beginning with the Ministry of Information.

On the revenue and investment side, the most prominent point high up in the list refers to financial sector contributions and support for the state finances to the tune of $3.3 billion, besides allusions to activation of the first phase of CEDRE disbursements, foreign investment, and social loans, as well as laws that will facilitate recouping looted public funds. The feasibility of the core revenue proposition involving the central bank and the commercial banking sector is an invitation for comments (most of which would have yet to be made) ranging from technical and legal questions to discussions of ethics, fairness, and economic effectiveness.

The list that Hariri read out entails 17 points, the first of which directly gives the appearance of insincere grandstanding by trumpeting two counter-intuitive messages.

Two other points in the list point to projects that imply cost reductions and revenue increases with somewhat delayed impact, but also appear to require immediate funding—namely speeding up tenders for the construction of power plants and installing border scanners to combat smuggling and improve customs revenues.


There are also mentions of popular legislative projects such as the amnesty law, the afore cited draft law for recovery of looted money, a law to establish the national anti-corruption commission in the near future (it was passed by Parliament in July but was returned by President Aoun with 11 objections), and an agreement on enabling independent regulatory authorities by appointing their boards. Social measures in the list entail an allocation of $160 million in support of housing loans, the institution of a pension fund, and the allocation of LL20 billion and a World Bank concessional loan of $100 million to the National Poverty Targeting Program.

The final numbered point in the 17-point list mysteriously resurrects project names Linord and Elyssar. These were two large urban development and housing projects that were once introduced by Rafik Hariri (and were alluded to by Saad Hariri in an investment forum at the end of 2018) but have long vanished from research focuses and have not recently appeared in concepts like the McKinsey Lebanon Economic Vision, an October 2019 whitepaper by the Lebanese International Financial Executives, nor mentioned by civil society and economic stakeholders in their comments on Executive’s Economic Roadmap project.

Hariri concluded his presentation with a reference to the intention to privatize the mobile communications operators Mic 1 and Mic 2, and an assertion that there is “a complete change of mentality in this budget. Investment spending from the budget is almost zero, thus closing the door on squander and corruption because the government does not spend a penny. The entire expenditure is from foreign investment.”

Notably, measures discussed in the final weeks of this cabinet went beyond the points that Hariri touched upon on October 21. If the analysis is widened to cabinet statements circulated by the prime minister’s press office on October 16, 17, and 18, measures communicated then to the media by Minister of Information Jamal Jarrah, the list of measures and propositions extends first of all to the infamous Voice over Internet Protocol (VoIP) fee proposal, dubbed the WhatsApp tax and referred to on October 17 as having a projected revenue potential of $250 million annually. This VoIP fee was renounced the same day protests began, but sparked protests that ended up damaging and depriving the Lebanese economy of revenues to the magnitude of more than a billion dollars (some unconfirmed estimates said $100 million a day).

A bit less spectacular, but not entirely free of problems were the measures Jarrah announced on October 16, namely a decision by the Ministry of Finance to increase fees on tobacco products, the above mentioned installation of scanners at border points, a decision for all investment decisions by public institutions and utilities to need cabinet approval, and an agreement on “the principle of corporatization” for the Port of Beirut and other, not specified institutions. He also reported on cabinet discussions that were related to taking an inventory of state-owned real estate, a three-year investment program related to CEDRE and the Capital Investments Plan, the pension law (as referenced by Hariri on October 21), and a proposed 5 percent subsidy to industrial exporters that would be paid on the amount by which they increased their exports from year to year.

Too many unknowns

In the October 18 speech, in which Hariri gave his government colleagues 72 hours to come up with solutions, the prime minister explicitly referred again to the need to alleviate the burden of electricity subsidies, and implement the electricity plan and CEDRE process. On that day, and again on October 21, Hariri’s list was high-level and broad, factors that do not favor a quick analysis of its diverse content—the same is true for some of the measures announced previously by Jarrah. Yet, it is difficult to shake the impression that the government’s search for solutions since days before and throughout the protests was frantic, but not ordered strategically.
It remains at the end of a brief review of the government’s October reform deliberations unknown whether the debt, the entrenched high trade deficit, underdeveloped industrial productivity, shortfalls in international competitiveness, insufficient capital markets, poor financial inclusion, growing economic informality, weakness of redistributive justice and direct taxation and plutocratic patterns that are as bad as those in the most capitalist countries could be cut if only the iron bonds around the knot, the systemic bonds of clientelism, sectarianism, and corruption, are broken.

It is difficult to shake the impression that the government’s search for solutions since days before and throughout the protests was frantic, but not ordered strategically.

In recent months, there have been other narratives put on the table than the narratives of austerity, increased taxation of functioning and fiscally more transparent sectors, notably banking, and total abstinence from own investment risk by the government. There has been some progress but no results yet in areas of privatization, public-private partnerships, and activation of capital markets. The concept of an Electronic Trading Platform and invigoration of capital markets has excessively been referenced as crucial means to improve the transfer of private and non-productive savings into hitherto state-owned and affiliate enterprises, such as the flag carrier Middle East Airlines and the telecommunications sector (where privatization and license auction concepts have been tossed around for two decades). Banking leaders have presented their views on the importance of banks’ ability to finance private and public sectors by not being unfairly taxed. There has been enough said to provide a platform for serious, non-ideological discussion that is neither sectarian nor ignorant nor based on obviously partisan and self-interest narratives of self-righteous and narrow interest groups—communal, sectarian, economic, political, or civil society.

Despite all new or previous economic planning, up to the Hariri economic rescue plan from October 21, it remains uncertain what way will work best out of this incredibly deep mess, and it is an equally open critical question if the economy of Lebanon can be rescued by an immediate switch to governance by persons with peak theoretical knowledge and expertise but no wide political experience, or people of great technical training who did not have to previously face the opportunity and temptation to become corrupt.

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Lebanon UprisingPhoto blog

Uprising

by Greg Demarque & Nabila Rahhal
written by Greg Demarque & Nabila Rahhal

October 17: Protesters set fire in Downtown on Thursday on the first day of the revolts.
October 18: Demonstrations continued with protestors closing roads in downtown.
October 20: Sunday’s protest was the largest gathering in Downtown since February 2005.
October 22: This photo depicts elements of an open air carnival in Riad el-Solh.
October 23: Protestors in Jal el-Dib blocked the highway on both sides and the Lebanese Army was deployed to open the road but was unsuccessful.
October 23. Remains from a shop front window which protesters broke on the first day of the protests.
October 23: Protesters sing the national anthem in Martyr’s Square.
October 27: Lebanese form a human chain from Tripoli to Sour (Source AFP).
October 29: An eldery protestor is rescued by his fellow activists after being attacked on Fouad Chehab bridge.
October 29: Security forces attempt to contain the violence in Martyr’s Square.
October 29: A protester in Riad el-Solh surveys the damage done by Hezbollah and Amal supporters who destroyed tents in the area.
October 29: Protesters refuse to be intimidated and instead make a sculpture out of the ruined tents and continue their demonstrations.

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ExplainerLebanon Uprising

Collective actions in Lebanon from November 2017 to October 25, 2019

by Lebanon Support
written by Lebanon Support

The infographic below is based on data from the Map of Collective Actions that tracks mobilizations by groups of people across Lebanon whose goal is to achieve a common objective. The map is a project by Lebanon Support, a local non-profit research center for and about civil society.

This visual looks into the build- up of mobilizations from November 2017 (when data collection started) until October 25, highlighting the focus of protests on access to socio-economic rights (mobilizations related to a lack of protection and rights, inefficiency of the justice system, and persisting social and economic vulnerabilities) over the years and leading up to the October demands for change.

The infographic shows that these ongoing nationwide protests are not new—various groups have been mobilizing for years, notably around social and economic demands. This year, up until October 16, 200 collective actions were mapped; there were 188 in 2018 and 96 in 2017. The main demands, across all three years, were focused on wages and the salary scale, the new rent law, and increasing prices and inflation—illustrating the socioeconomic difficulties faced by the people. Of the collective actions mapped this year, 89 percent (508 collective actions) were linked to access to socioeconomic rights. Collective actions linked to socioeconomic grievances have increased steadily and exponentially from 2017 until October 25 this year (the cut-off point for the infographic). The October 17 to 25 period highlighted below saw a sudden peak in collective actions seeking radical change on the level of society or the political system.

The 308 collective actions mapped between October 17 and 25 are all linked to socioeconomic grievances and policy grievances (mobilizations around political decisions on matters of public concern), and constitute 60 percent of the total number of collective actions mapped since the beginning of the year. Bearing in mind that protesters often employed more than one mode of action during the same mobilization, the main modes of action in this period consisted of: roadblocks (76 percent), tire burning (68 percent), demonstrations (60 percent), and sit-ins (38 percent).

Observing and mapping collective actions over a longer period allows Lebanon Support to deconstruct generalizations in the media, academia, and elsewhere on Lebanon’s social mobilizations and show that people in Lebanon are continuously mobilizing, using various modes of action, and in response to a diversity of grievances not merely limited to partisan and/or confessional affiliations.

Based on Lebanon Support’s ongoing monitoring of collective actions, this infographic contributes to show the accumulation of successive movements over time, thus steering away from normative and linear perspectives on these mobilizations and predictions or expectations on the outcomes of protests. So far, one of the main outcomes and breakthroughs of this latest mobilization is that it has contributed to breaking the boundaries of fear and clientelistic and patronage relations with traditional sectarian and political leaders, notably outside of the capital (in Tripoli and Sour, for example).

Ultimately, it is the view of Lebanon Support that all these street mobilizations underline the urgency of a new social contract whereby citizens reclaim the Lebanese state. One that is based on social justice, redistributive policies, and progressive taxes.

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Lebanon UprisingTimeline

The first 13 days

by Executive Editors
written by Executive Editors

Day 1: Thursday, October 17

Protests erupt across the country

Protests begin in Downtown Beirut around 6 p.m., triggered by media reports earlier Thursday that cabinet had agreed on new taxes for the 2020 budget, including a tax on Voice over Internet Protocols (VoIP) that would have cost up to $6 per month for those using WhatApp calls or other VoIP apps. 

Initially, a few hundred protesters march from Downtown to Hamra and back to Riad el-Solh. As the news spreads, their numbers swell into the thousands. Clashes between protesters and bodyguards of Minister of Education and Higher Education Akram Chehayeb break out in front of Bank Audi in Downtown, with the bodyguards firing shots into the air. The photo that becomes the first icon of the protests is taken as protester Malak Alaywe kicks one of Chehayeb’s armed bodyguards in the groin. 

Reports begin to come in of spontaneous protests breaking out across the country, from Tripoli in the north to Sour in the south. Protesters burn tires, create bonfires, and block roads. Two Syrian migrant workers are killed after the Downtown Beirut building they are in is set alight. The government reverses their decision on theVoIP tax, but this response does not quell the protests. Progressive Socialist Party head Walid Jumblatt tells local media he would prefer to quit the government with Prime Minister Saad Hariri. 

Protests continue until the early hours of Friday morning when security forces start firing tear gas and protesters move out of Riad el-Solh and Martyr’s Square.

Protests and roadblocks in: Beirut (BCD), Tripoli (Tripoli), Saida (Saida), Zahle (Zahle, Chtaura,Taalabaya), Jbeil (Jbeil), Keserwan (Zouk Mosbeh), Baalbek (Baalbek), Sour (Sour), Nabatieh (Nabatieh el-Faouqa)*

Day 2: Friday, October 18

Protests shut down Lebanon, Hariri announces 72-hour deadline for reforms

Just after midnight, the education minister orders all schools and universities to close Friday. Lebanese wake up to find roadblocks paralyzing movement across the country and all banks closed. The airport highway is blocked by protesters, and travelers hitch rides into the city on the back of scooters or in army trucks. Activists call for a general strike. 

Both Jumblatt and Lebanese Forces leader Samir Geagea call on Hariri to resign. A cabinet meeting planned for the afternoon is canceled. Gebran Bassil, leader of the Free Patriotic Movement (FPM) and foreign minister, speaks in advance of Hariri, says that the choice is chaos or reforms. Hariri speaks around 6:40 p.m. amid rumors circulating social media that he might resign. Instead he sets a 72-hour deadline for his political partners to convince him, the Lebanese, and the international community of reforms. Hariri warns that if there are no agreed upon reforms by the deadline he will take a different approach. 

Protests continue to intensify across the country. In Tripoli, local media reports two dead and others are wounded after bodyguards of former MP Misbah al-Ahdab shot into the crowd. Ahdab had tried to join the protests but had been pelted by water bottles from the crowd. In the south, there are chants, unprecedented in the region, calling Speaker Nabih Berri a thief. 

Security forces clear Riad el-Solh much earlier than on the previous day, around 11 p.m. Copious amounts of tear gas are used in the square, with women, children, and peaceful protesters still there. Reports say that the Lebanese Army and Internal Security Forces (ISF) use force against protesters and arrest dozens. A concertina wire fence is put up blocking the Grand Serail from Riad el-Solh. It is announced that banks are to remain closed Saturday.

Protests and roadblocks in: Beirut (BCD),Tripoli (Tripoli), Metn (Daoura, Sin el-Fil), Zahle (Chtaura, Zahle), Jbeil (Jbeil), Keserwan (Aqaybe, Zouk Mosbeh),Saida (Saida), Baalbek (Baalbek, Britel, Rayak), Nabatieh (Nabatieh el-Faouqa), Aley (Bhamdoun el-Mhatta, Masnaa), Shouf (Jiyeh) 

Day 3 Saturday, October 19

Protests continue to grow, with violence in Sour; Nasrallah backs cabinet

n Beirut to clean up damage caused by rioting the evening before. Reports come in that armed Amal supporters are violently attacking protesters in Sour, in response to anti-Berri chants and protests at the office of two Amal MPs. Al-Jadeed TV receives direct threats. In Tripoli, protesters begin chanting in solidarity with protesters down south. 

Hezbollah Secretary General Hassan Nashrallah addresses his followers and those out protesting. He warns against the resignation of the government and says that reforms must be made by the current government as Lebanon cannot afford the time to form a new one. He also says if Hezbollah were to join the protests they would be forced to stay until all their demands are met. Responding to his speech, protesters in Riad el-Solh begin chanting, “All of them means all of them, and Nasrallah is one of them.”

Lebanese Forces announces the resignation of its four ministers, marking the first tangible success of protesters’ demands. 

In Beirut, the atmosphere of protests shifts as families increasingly join in the crowd, tents and food stands are set up in Martyr’s Square, and DJs play techno sets.  

Protests and roadblocks in: Beirut (BCD), Tripoli (Tripoli, Mina), Metn (Daoura, Sin el-Fil, Jal el-Dib), Saida (Saida, Zahrani), Jbeil (Jbeil), Keserwan (Adonis Keserwan), Sour (Sour), Nabatieh (Nabatieh el-Faouqa, Nabatieh el-Tahta, Habbouch, Kfar Roummane), Aley (Khalde, Aramoun, Bchamoun, Qubbat Choueifat, Kahaleh), Shouf (Deir el-Qamar, Jiyeh, Ketermaya), Zahle (Chtaura), Batroun (Batroun, Chekka, Hamat), Akkar (Halba), Marjaayoun (Marjaayoun), Zgharta (Zgharta), Baabda (Ouzai, Chiyeh), Koura (Kousba, Anfeh, Dahr al-Ain, Kfar Hazir, Amioun), Hasbaya (Hasbaya), Hermel (Hermel) 

Day 4: Sunday, October 20

Huge turnout for protests as more families head to the streets

Hundreds of thousands of protesters across the country express their will and frustration on the streets and major squares in various cities; some media estimates put the overall number at close to 1 million. This is the largest day so far for these protests, which maintain a national, non-sectarian character—only Lebanese flags are waved. 

Some of the largest crowds, found in Martyr’s Square and Riad el-Solh, are compared to the March 2005 protests in which protesters called for the end of Syrian presence in Lebanon. In Tripoli, thousands flock to Nour Square, where Lebanese singer Marcel Khalife joins protesters in singing some of his songs. Buses transport protesters from the Bekaa to Beirut. In Jal el-Dib, hundreds of protesters begin to gather on the main highway and the overpass, with the crowd swelling throughout the day. 

Roadblocks are maintained across the country. 

Protests and roadblocks in: Beirut (BCD, Ashrafieh), Tripoli (Tripoli), Metn (Jal el-Dib), Saida (Maghdousheh, Saida, Zahrani), Zahle (Zahle, Rayak), Keserwan (Adonis Keserwan, Ghazir), Baalbek (Nabi Osamane), Sour (Sour, Abbassieh), Nabatieh (Kfar Roummane, Nabatieh el-Tahta), Shouf (Jiyeh, Deir el-Qamar, Baakline, Kfar Him), Batroun (Chekka), Akkar (Halba, Zouk el-Hosniye), Marjaayoun (Deir Mimas), Koura (Kousba, Kfar Hazir, Bsarma, Kfar Aaqqa), Minieh-Danieh (Beddawi) 

Day 5: Monday, October 21

Hariri announces reforms, protests and roadblocks continue

The first day of reckoning for the political establishment arrives, as Hariri’s 72-hour deadline draws to a close. Early in the morning, protesters once again return to Downtown Beirut to clean up from the night before. Protests throughout the weekend had drawn large crowds, but numbers in Beirut on Monday do not pick up until after 5 p.m., in spite of renewed calls for a general strike. Access to Beirut via main highways is severely restricted as roadblocks continue. 

Around 3 p.m., Hariri announces a list of 17 reforms approved by cabinet that propose to cut the deficit and expedite long overdue administrative reforms without increasing taxes on the people. Protesters, who had called for Hariri’s resignation, are unconvinced, and demonstrations swell in size across Lebanon following Hariri’s speech.

In the evening, a convoy of men on mopeds carrying Amal and Hezbollah flags make their way toward Downtown but are prevented from reaching the protests by the Lebanese Army. Both Amal and Hezbollah later deny having any involvement.

Protests and roadblocks in: Beirut (BCD, Saifi), Tripoli (Tripoli), Metn (Sin el-Fil, Jal el-Dib), Saida (Ghaziyeh, Saida, Zahrani), Zahle (Rayak, Zahle el-Midan), Jbeil (Jbeil), Keserwan (Jeita, Achkout, Zouk Mosbeh, Bouar), Baalbek (Douris), Nabatieh (Kfar Roummane, Habbouch), Aley (Choueifat Qubbat, Bchamoun, Aramoun), Shouf (Jiyeh), Batroun (Chekka, Batroun), Akkar (Halba), Marjaayoun (Deir Mimas, Marjaayoun), Zgharta (Zgharta), Baabda (Bir Hassan), Koura (Kfar Hazir, Anfe), Hasbaiya (Hasbaiya), Rachaya (Rachaya el-Wadi, Deir el-Ahmar), Minieh-Dinieh (Minieh)

Day 6: Tuesday, October 22

Slow start but protests pick up, Tele Liban stormed, NNA head fired

Protests are slow to start, but pick up in the evening as people got off work and hit the streets. As the day goes on, hundreds block the street facing Banque du Liban (BDL), Lebanon’s central bank, chanting that Central Bank Governor Riad Salameh is a thief; similar protests are staged in front of Tripoli’s central bank branch. A group of actors and artists storm the Tele Liban building, saying the station had failed to cover the demonstrations. 

The National News Agency (NNA) Director Laure Sleiman, who headed the NNA for 11 years, is dismissed. Minister of Information Jamal Jarrah appoints Ziad Harfoush as the new director of the NNA. The Ministry of Information, which the NNA falls under, is set to be abolished per Hariri’s basket of reforms. 

Protests and roadblocks in: Beirut (BCD, Mazraa, Hamra),Tripoli (Tripoli), Metn (Jal el-Dib, Dbayeh), Saida (Saida), Zahle (Zahle el-Midan, Masnaa), Keserwan (Nahr el-Kalb, Jounieh Kaslik, Ghazir, Safra, Zouk Mkayel, Aachqout, Jeita), Nabatieh (Kfar Roummane), Aley (Aley, Bhamdoun el-Mhatta, Sofar, Bhamdoun), Shouf (Jiyeh, Barja, Naame, Aalma el-Shouf), Batroun (Batroun, Chekka), Akkar (Halba), Koura (Majdel Koura, Anfe, Kousba), Sour (Sour), Hermel (Hermel), Minieh-Dinieh (Beddawi, Minieh) 

Day 7: Wednesday, October 23

Protests in Nabatieh turn violent

As their first week draws to its close, protests do not abate, and in Nabatieh turn violent, leaving 15 injured; one is taken to the intensive care unit. Amal denies any involvement in the clashes. In Beirut, protests in front of the central bank continue. 

Separately, Mount Lebanon State Prosecutor Ghada Aoun files an “illegitimate enrichment through subsidized housing loans” lawsuit against Bank Audi and former Prime Minister Najib Mikati, his son Maher, and his nephew Azmi, saying that she had the file prepared beforehand and that this move was not politically motivated. Mikati and Bank Audi deny “illegitimate enrichment” allegations against them.

Meanwhile, Hariri meets with Salameh over the financial and economic situation. Hariri also chairs a meeting of the ministerial committee in charge of financial and economic reforms. The committee studies a draft law on the recovery of looted public money and decides to request suggestions on this matter from the Supreme Judicial Council within a period of 10 days, NNA reported. 

Protests and roadblocks in: Beirut (BCD, Hamra, Ashrafieh), Metn (Sin el-Fil, Dbayeh, Jal el-Dib), Saida (Saida), Zahle (Zahle), Jbeil (Jbeil), Keserwan (Jounieh Kaslik, Jeita, Nahr el-Kalb, Bouar, Safra, Aachqout, Zouk Mkayel), Baalbek (Baalbek), Sour (Sour), Nabatieh (Habbouch), Aley (Aley, Bhamdoun al-Dayaa, Bchamoun, Choueifat, Khalde), Shouf (Naame, Jiyeh, Bhamdoun), Batroun (Heri, Chekka), Akkar (Halba), Zgharta (Zgharta), Baabda (Furn el-Chebbak), Koura (Kousba, Anfe, Kfar Hazir), Hermel (Hermel), Minieh-Dinieh (Minieh, Kharroub) 

Day 8: Thursday, October 24

Aoun addresses the nation

Having been silent for the first week of protests, President Michel Aoun addresses the nation, announcing that he will hold everyone who embezzled public funds accountable and that economic reform will save Lebanon. He also says that he is ready for “constructive dialogue” with representatives from the protest movement, which remains leaderless. His speech, which was pre-recorded, falls on deaf ears as protesters continue to occupy the streets. Key thoroughfares in and outside of Beirut remain closed, despite some scuffles between the army and protesters as the former attempts to reopen them. Videos of soldiers crying in Jal el-Dib circulate on social media. 

In Riad el-Solh, six protesters are taken to the hospital following clashes between members of a pro-Hezbollah group and anti-government protesters, according to the Lebanese Red Cross. 

The Association of Lebanese Banks (ABL) announces that banks will reopen as soon as the situation stabilizes. Schools and universities remain closed; some professors teach classes in public spaces. 

Following the Wednesday clashes between protesters and Nabatieh municipal police, five members of the Nabatieh Municipal Council announce their resignation. One member, Abbas Wehbi, says in a statement that he is against the “inhumane treatment of protesters.”

Protests and roadblocks in: Beirut (BCD, Ashrafieh, Mazraa, Ras el-Nabaa, Hamra, Ain el-Tineh), Tripoli (Tripoli), Saida (Saida), Metn (Jal el-Dib, Mkalles, Dbayeh), Zahle (Bar Elias, Saadneyel, Jdita), Keserwan (Zouk Mosbeh, Ghazir, Safra, Aqaybeh, Bouar), Sour (Sour), Nabatieh (Nabatieh el-Faouqa, Habboush), Aley (Sofar, Mansourieh, Khalde), Shouf (Barja, Jiye, Kfar Him, Beittdine, Naame), Batroun (Batroun), Baabda (Furn el-Chebbak, Aabadiyeh, Dahr el-Baidar), Minieh-Dinieh (Beddawi, Minieh)

Day 9: Friday, October 25

Nasrallah speaks for a second time, questions protesters’ motives

As protests continue across the country, Nasrallah speaks again, saying he refuses to accept the resignation of the government. In his speech, Nasrallah warns the country of a civil war and claims his intelligence services found evidence that the protests were being orchestrated and funded by certain embassies with hidden agendas. 

Hariri meets with Aoun and tweets: “I called the president of the republic and welcomed his call for the need to reconsider the current government situation through the constitutional mechanisms.”

Nasrallah calls for roads to be unblocked, but protesters are not swayed and remain in the streets despite aggression from Hezbollah supporters in areas including Sour, Nabatieh, and Riad el-Solh prior to Nasrallah’s speech. Chants in Hermel in the north demonstrate solidarity with their fellow Lebanese in the south. Meanwhile, supporters of FPM chief Bassil and President Aoun gather in Batroun amid army and security forces’ deployment and call for restoration of looted public funds. In Al-Fakiha in Lebanon’s east, protesters square off with Hezbollah supporters before riot police intervene.

Boxes are set up by civil society groups and some media outlets at protest sights for people to write down their demands. The Standard & Poor’s ratings agency puts Lebanon on “CreditWatch negative” warning that decline in foreign currency inflows “could exacerbate fiscal and monetary pressures.”

Protests and roadblocks in: Beirut (Ashrafieh, BCD, Hamra, Saifi), Metn (Jal el-Dib), Mazraat Yachouh), Saida (Saida, Zahrani), Zahle (Zahle, Bar Elias, Saadnayel, Jdita), Keserwan (Zouk Mkayel, Safra, Bouar), Baalbek (Douris), Sour (Sour), Akkar (Halba), Nabatieh (Habbouch, Kfar Roummane, Nabatieh el-Faouqa), Aley (Choueifat, Aley, Khalde, Aramoun),Shouf (Jiyeh, Naame, Barja, Sibline), Batroun (Batroun, Chekka), Zgharta (Zgharta), Baabda (Furn el-Chebbak, Dahr el-Baidar, Aabadiyeh), Minieh-Dinieh (Minieh, Beddawi)

Day 11: Sunday, October 27

Lebanese form a human chain across the country

A 171-kilometer “Lebanese Human Chain” is formed across the country, from north to south, by tens of thousands of Lebanese in an expressed manifestation of national unity. By around 3 p.m., the chain is complete, and despite some gaps, pictures of a manoushe that made it from north to south circulate on social media. Protesters move toward the public squares in Beirut, Tripoli, Saida, Sour, Nabatieh, Jal el-Dib, and Zouk Mosbeh, as well as in the Bekaa Valley and other areas across the country. Hundreds of Lebanese diaspora gather in cities like Sydney, London, and Montreal to show solidarity with the uprisings in their home areas. 

Sunday evening sees the closure of the ring again, this time with protesters bringing in couches, rugs, a refrigerator, and a desk to set up camp.

Lebanon’s Public Prosecutor Judge Ghassan Ouiedat issues an order banning traders and money exchangers from transporting significant amounts of dollars across borders out of Lebanon.

Protests and roadblocks in: Beirut (Ashrafieh, BCD, Hamra, Corniche el-Nahr), Tripoli (Tripoli), Metn (Jal el-Dib, Dbayeh, Sin el-Fil), Saida (Saida), Zahle (Jdita), Jbeil (Jbeil, Nahr Ibrahim), Keserwan (Safra, Ghazir, Aaqaybe, Zouq Mkayel, Nahr el-Kalb, Jounieh Kaslik), Nabatieh (Kfar Roummane), Aley (Aley), Shouf (Barja, Naame), Batroun (Batroun, Chekka, Kfar Aabida), Akkar (Halba, Abde), Baabda (Tahouita, Aabadiyeh), Koura (Kfar Hazir, Kfar Aaqqa), Hasbaiya (Hasbaiya), Minieh-Dinieh (Beddawi), Jezzine (Aarqoub), Bint Jbeil (Bint Jbeil)

Day 12: Monday, October 28

Rain does not quell protests, Jal el-Dib highway blocked by cars

With storms across Lebanon, protest turnouts are smaller than they had been previously when weather conditions had been mostly sunny, however, significant numbers are still out braving the storm. In Riad el-Solh, a group of protesters in ponchos dance the dabke in the downpour. A small group of protesters crosses the barrier of barbed wire that separates Riad el-Solh from the Grand Serail; they quickly return to the main square. 

Riot police are more heavily deployed to the area, and more protesters show up in the square later in the day. 

Roads throughout the country remain blocked with cars, tires, and protesters holding intersections. An image circulated on social media and in WhatsApp groups encouraging people to use their cars to block roads after increased efforts from security forces to keep them open. The furniture blockade on the ring continues, with protesters diverting traffic toward Ashrafieh off the bridge. Police presence remains heavy in Downtown.

The lift on banking secrecy of FPM ministers and MPs is implemented.

Protests and roadblocks in: Beirut (Hamra, BCD, Saifi, Ashrafieh), Tripoli (Tripoli), Metn (Jal el-Dib, Dbayeh) , Saida (Saida), Zahle (Saadnayel, Zahle), Keserwan (Zouk Mosbeh, Ghazir), Baalbek (Baalbek), Nabatieh (Nabatieh), Aley (Khalde), Shouf (Jiyeh, Naameh, Deir el-Qamar), Batroun (Chekka, Batroun), Akkar (Halba), Baabda (Furn el-Chebbak), Koura (Kfar Hazir), Minieh-Dennieh (Minieh)

Day 13: Tuesday, October 29

Hariri resigns “in response to the will and demand of the thousands of Lebanese demanding change;” violence on the ring and in Downtown

The prime minister’s office of announces that Hariri will deliver a statement at 4 pm. An hour ahead of the address, Hezbollah and Amal affiliates incite unprovoked violent clashes against protesters. Their aggressions target foreign and local journalists and camera crews. Journalists and photographers covering the events say that riot police and army intervened only with delay to separate the attackers and protesters. The group of attackers, shouting slogans that identify them as Hezbollah and Amal supporters, moves on to Riad el-Solh and Martyr’s Square, attacking people with sticks and pipes and destroying the tents and infrastructure that protesters had set up, while security forces watch but do not intervene. When police and military later establish commanding presence and disperse the anti-protest group under use of tear gas, protesters return to clean up tents, and one group sets up a table to hand out food to those working to rebuild the protest camp. 

Just after 4 p.m., nearly two weeks into protests that have gripped the entire nation, Hariri announces his resignation in a live address; under the Lebanese constitution this means the resignation of the entire cabinet. He quotes his father, the late Prime Minister Rafik Hariri by saying, “No one is above his nation.” Afterwards he heads to Baabda Place and hands his written resignation to President Aoun, who accepts and the next day issues a decree to keep the government on in a caretaker capacity until a new government is formed. Under the constitution, parliamentary consultations are to be held to nominate a new prime minister, who will then be responsible for forming a new cabinet. Protesters have called in the past two weeks for a cabinet of technocrats and are seeking early elections under a new, nonsectarian electoral law that they say should be held within six months. 

Protests and roadblocks in: Beirut (BCD, Ashrafieh,Hamra), Tripoli (Tripoli, Bahsas), Saida (Saida), Zahle (Zahle, Qab Elias, Jdita, Saadnayel), Jbeil (Jbeil), Keserwan (Ghazir, Bouar, Aaqaybe Keserwan, Safra, Zouk Mkayel), Sour (Sour), Aley (Sofar, Aley, Khalde, Mansourieh), Shouf (Barja, Sirjbal, Naame), Batroun (Batroun), Baabda (Tahwita, Aabadiyeh, Chouit, Cite Sportive), Koura (Kfar Hazir), Minieh-Dinieh (Minieh, Beddawi)

*Protests and roadblocks list is structured by caza, and the locations in caza are shown in brackets. Locations in bold indicate first protest in a city from day two. Source of data: Lebanon Support.

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