Rafik Hariri’s catalogue of virtues was much trumpeted in the wake of his killing, but his most potent skill lay in his ability to initiate dialogue with key economic agents in the region. As The Independent’s Robert Fisk put it, he had become “Mr. Lebanon”, an oversized and overqualified salesman for Lebanon’s reconstruction.
The relevance of Hariri and his transformation from a mere mortal to an indispensable magnet to foreign investment will be clearer as the void his assassination is felt in the coming months. His function as a portal for many Western leaders and his ability to cajole them into accepting the new Lebanon cannot underestimated and his death will have a direct impact on the way Lebanon is perceived by the Gulf investment community. The Saudis in particular saw his presence, even outside government, as a safety valve of sorts.
Hariri came from the Gulf, and derived a lot of his influence from the contacts he accumulated there. While common perceptions was that he was a friend of the Royal Family, his real importance was in the message and image he projected vis-à-vis the broader spectrum of business people and key decision makers, not merely with the King and his entourage. He knew the Gulf well and spoke the language of business that appeals to local wealthy investors. He understood that there were two magnets that would attract them to Lebanon.
The first was that there was a whole generation of Saudis who had direct ties to Lebanon in the past and he knew how to convert the nostalgia of the past into a commitment to rebuilding Lebanon and actively participating in the rebirth of its once vibrant capital. More importantly, he single handedly convinced many large depositors to make concrete pledges early on to stabilize and rejuvenate the banking sector.
The second stemmed from his deep conviction that the ability of Lebanon to attract and keep Gulf investors rested on creating a harmony among the Lebanese communities and approaching the inner fabric of Lebanon with a non-sectarian economic imperative. My encounters with key players in Saudi Arabia over the last three years confirmed to me the notion that the Hariri factor was more than a psychological support system for them. A few years back, a Riyadh based investor showed me the blue prints of a large tourist project which he was contemplating in Lebanon, a sort of high end spa, if you will. He proudly told me that it would be the luxury resort of the Middle East.
When I asked him why he and his consortium of investors had shelved such a magnificent project, he told me that all the financiers involved had pulled out when Hariri left in 1998. A multi million-dollar project had been abandoned due to the absence of Hariri as a safety valve. Another Saudi who was present during the meeting then went on to say something very revealing about the way Gulf players see Lebanon and Hariri.
He asked me to think of Lebanon as a small company, which I gladly did, since it allowed us to simplify the debate. “Why would a small company which is in dire need of a sharp CEO like Hariri to advance its cause, keep him out of power”.
Hariri had become sucked into local micro politics, he had ceased to be Mr. Lebanon. For most in Saudi Arabia, not only was he “one of them”, but he also spoke a language which they understood and which represented a hedge against the decaying political and social fabric of Lebanon.
While Hariri may have created controversy with his priorities for Lebanon, as far as Gulf and most importantly Kuwaiti and Saudi money, his priorities were very appealing. Infrastructure, modernity and re-positioning Lebanon as an investment and tourist destination were the safety valve. They knew that Hariri would find a way to circumvent local political issues to keep the flow of money into Lebanon. The money flowing into the banking system essentially mean that the project of reconstruction could be financed. Without it, and without the strengthening banking system, one is hard pressed to see how the reconstruction effort could have been financed. So Hariri strengthened the banking system, which created a financing conduit for government.
Hariri also understood that Lebanon would not only need to gather money from the Gulf, but also create an environment conducive to tourism and to Lebanon becoming a second home for Gulf Arabs. In many respects, Hariri’s aspirations were aided by the events of September 11th, 2001. As many Saudis sought closer destinations for their families and their cash, he was there to provide the security and the climate necessary for them. Relentless and global, Hariri’s energy to position Lebanon as a place to spend the scorching Gulf summers, and a place to invest money were a key feature of his grand design.
What I found astounding about Rafic Hariri, is that his name had become a trademark synonymous with business. His presence meant that Gulf Arabs had a sort of “recourse”. Though many had rightly shunned Lebanon for its opaque judicial system and its chaotic bureaucracy, they were willing to back projects in Lebanon as long as “Sheikh Rafic” was somewhere in the sphere of influence, even outside government. Hariri’s pro-business approach was a factor, but his belief in Lebanon as an open society with good relations with the West was, in my opinion, the tie breaker for many Gulf investors. They knew that the trajectory of Hariri was toward more openness and eventually more multinational presence in Lebanon, and this was a comforting factor.
Hariri was often criticized as being too focused on business and worse some ill informed pundits accused him of being self-serving, wanting to “fill his pockets.” There isn’t enough paper in this magazine to expand on the lunacy of these arguments. While there were some thieves in his orbit, probably without his knowledge, the most telling factor was that Hariri put his money where his mouth was. From the outset he invested his own money in the country, and that is the mark of a committed and convinced businessman. Perhaps the most crucial aspect of the Hariri platform was that money would come flowing into Lebanon once regional peace was achieved.
Hariri may have made an excessive bet in the mid 1990s on this outcome, but still, the inevitability of regional peace and its impact on Lebanon motivated him. And the Gulf Arabs understood this. ut recently there was concern, even fear about the isolation of Rafic Hariri. Barely 24 hours prior to his brutal assassination, I asked a leading Riyadh banker how he saw the investment climate in Lebanon. After a discussion about the red hot property prices, the man said to me “if Hariri stays out for too long, many Gulf Arabs will begin to lose patience.” A tough fiscal situation and complete Syrian hegemony over the minutest detail in Lebanese politics was raising concerns.
Now that he is gone, the vacuum left will mean that Gulf investors will move extremely cautiously on Lebanon. Sure, much of the dynamics in the real estate sector remain relatively positive and the banking system sound and highly liquid, but the confidence fracture caused by his killing, and the message it sends, has reverberated throughout the Gulf and could be a stark reminder that he truly was Mr. Lebanon, when it came to inciting them to shift money to Lebanon.
It is inconceivable that post Hariri Lebanon will be as attractive to Gulf investors, at least not in the immediate future. He carried the right message and was driven by the economic imperative. He understood that prosperity was the best antidote against trouble, and with his killing, the perpetrators have highlighted that the prosperity of the country was epitomized by this man. The loss of Hariri will most likely mean trepidation and hesitation by Gulf Arabs, and this will be tough to overcome, as there is no real substitute.
