When World Bank President James Wolfensohn opened the annual meetings of the World Bank and International Monetary Fund last month in Dubai, he said the world was out of balance, with one sixth of the global population controlling 80% of global GDP and the divide between rich and poor nations ever increasing. The head of the cornerstone institution for global finance felt the need to remind the assembled central bank governors and officials that world leaders had agreed to the goals of the United Nations’ Millennium Declaration in 2000 in order to address the world’s most pressing inequalities. UN member nations committed themselves to targets on improving provisions for health, education, equal opportunities for women and to cutting global poverty in half by 2015. To do so, developed countries pledged to open markets and increase aid, Wolfensohn said, while “developing countries promised to strengthen governance; create a positive investment climate; build transparent legal and financial systems; and fight corruption.”

When asking why many developing countries are not on track towards fulfilling the goals of the UN’s Millennium Declaration, Wolfensohn gave the answer himself. “Part of the reason is that reform is not happening fast enough in the developing nations,” he said. “There is still too much cronyism and corruption. In nearly every country, it is a matter of common knowledge where the problems are and who is responsible. Frankly, there is not enough bold and consistent action against corruption, particularly at the higher levels of influence.”

The reminder could not have been timelier for Lebanon. Over the past two months there has been much talk over several highly publicized cases involving corruption. The Al Madina banking scandal, the judicial investigation of former agriculture minister Ali Abdallah, and the outcry over funds that have disappeared at Electricite du Liban. Each charge involved allegations of corruption at high levels of influence. On the sidelines, the arrest and temporary detention of lawyer Mohammed Mugraby in August was decried by his supporters as an attempt to stop Mugraby from fighting corruption in the Lebanese legal community.

The standard definition of corruption is the abuse of public trust for illicit private or personal gain. This implies that the problem tends to manifest itself where the interaction of a public official with an enterprise or citizen opens the opportunity for improper conduct and illegal financial gain. As a rule, corrupt deals between the private sector and public servants involve a bribe giver and bribe taker. The initiative to embark on such criminal activity can originate from either side. Demand driven Ð the official whose responsibility it is to issue a permit or evaluate a project bid presents himself as unresponsive or slow, until his abilities are boosted with a bit of monetary medicine. In the most obvious and blatant cases, the bribe demand is blunt and explicit. On the other hand, the corrupting process may originate from the business end of the relationship. The corporation bent on acquiring a lucrative public project uses bribery, as a means to get a contract it might not win in fair and square bidding. In this example of supply-driven corruption, the criminal enterprise may explore the possibility of soliciting a public official by shelling out innocent gifts, which over time evolve into more and more lavish and potentially compromising favors that establish ties of complicity.

Beyond small-scale bribes there is of course high-level corruption, which can seriously damage a nation’s reputation, development and fiscal balance. Take for example Ferdinand and Imelda Marcos who plundered the Philippines; Nigeria’s Abacha regime which stole billions of dollars from the people of Nigeria; and Peru’s former president Alberto Fujimori who is wanted by his country’s prosecutors who claim he enriched himself from weapons deals and aid contributions while in office until 2000.

In these cases the sums of money in question are often hard to quantify. A declaration by African anti-corruption activists in 2001, estimated that corruption damages in Africa amount to anywhere between $20 billion and $40 billion. The Nyanga Declaration stated that this figure had “over the decades been illegally and corruptly appropriated from some of the world’s poorest countries, most of them in Africa, by politicians, soldiers, businesspersons and other leaders.” The declaration has since been quoted by a UN global study on illegal transfers.

The UN study, prepared at the beginning of 2003 for the committee deliberating on the world body’s impending Convention Against Corruption, listed some of the heads of governments and their families who plundered national resources, investing the money abroad. Mobuto Sese Seko pilfered $5.5 billion as president of Zaire, outdoing the Abacha regime’s estimated siege of over $2 billion; HaitiÕs Jean-Claude Duvalier transferred more than $120 million in presidentially embezzled funds out of the country, which is one of the poorest in the world. $227 million went amiss under Peru’s Fujimori government; the brother of former Mexican president Carlos Salinas raked in a fortune of $120 million as result of corruption, while Argentina’s Carlos Menem, left his country owing $90 billion.
 

Other reports on corruption in Africa suggest that, as a rough rule of thumb, a 5% bribe of a $200 million contract would get the personal attention of a head of state, while a government minister would be in the game at about one tenth of that. Nigeria’s problem is so chronic that the international community has suspended loans to the West African state.

These amounts are sharply set apart from the pots of petty corruption in the lower half of the corruption sphere. Here, you may be talking as little as a $1 bribe for a village official in an impoverished nation, or as much as $1,000 in exchange for gaining a contract to haul a company’s garbage or landscape the city parks in a G7 country. This realm includes anything from slipping a traffic cop a $20 bill rather than paying the $150 speeding fine, buying the city inspector a cozy lunch while the building crew pours that slightly doubtful looking concrete, the police detective enjoying himself “on the house” with the escort service – to a price fixing deal between the supplier of medical syringes and the purchasing manager in a public or private hospital.

In addition to dissecting these universally present layers of what has been called the “culture of corruption,Ó international corruption fighters Ð most vociferous among them the non-governmental watchdog organization, Transparency International (TI) Ð have been attacking specific cases of corruption such as that found in the global diamond trade, party financing, and money laundering. There is no indication that this web of grand and petty corruption, bribery, graft, and criminal egotism will shrivel up anytime soon, or that some countries and institutions are immune to the plague. The European Union, where six of the world’s ten least corrupt countries are located, has just been embattled by a $6 million corruption scandal at the Eurostat statistics institution and allegations of corruption in other departments. A glance into the pages of any respectable newspaper proves that corruption is one of the most frequently exposed evils to surface in media reports between Beijing and Cape Town, from Munich to Miami. The Enron scandal, showed that investor confidence can be maintained if corruption is dealt with immediately and swiftly.

In Lebanon, the general awareness of the existence of corruption appears to be nothing short of pervasive. “Corruption definitely exists in this country,” said a member of parliament who won his seat as an independent. “Even more, it is a requirement. The system here will reject anyone who doesn’t agree to be involved in a network of corruption.” As many local politicians will point out, corruption is found anywhere, said Yehya Sadowski, a political science professor at AUB. “The difference is that in most countries, you can reap revenue from corruption but you still have to deliver something. In many Middle Eastern countries, it is often a transfer of income without the bribe taker having to deliver anything,” he said.

From business leaders, journalists and consultants to financiers Ð Executive encountered no one who would deny the existence of corruption in Lebanon. The question, “does corruption exist in Lebanon” typically led to one of two initial responses; laughter, or a resounding “No!” of the type that a grownup would answer a five-year-old who asked: “Didn’t Santa Claus look just like uncle Joseph in Santa’s suit this year?”

The harder question is how prevalent corruption is in this country. Pundits claimed that the former minister of agriculture, Ali Abdallah, is being investigated for embezzlement of agricultural aid funds because his greed became too excessive, eventually grating the political circles that had previously tolerated his activities.

In the course of the Al Madina banking scandal, allegations of money laundering piled up on accusations of embezzlement and check fraud, standard financial crimes which the country’s financial and judicial authorities are usually more than keen to prosecute. As the Al Madina case dragged on for the better part of the past year, observers have repeatedly crowed that Lebanon’s central bank should have stepped in much earlier, and hinted at political interference in the investigation.

In the often-murky reports of the daily press, the case against Al Madina was supposedly even about to be suspended at one point this summer because the financial damage had been contained, and the file sent back to the Special Investigation Commission at the central bank. Amid the outrage, the central bank quickly clarified that it was only updating the information for the prosecutor’s office, and the office confirmed that the investigation into the criminal offenses was continuing.

Undeniably, the current policies and practices on informing the Lebanese public about cases of alleged or proven corruption, leave much to be desired. Accountable and transparent procedures in addressing the issue of corruption, evaluating its extent and exposing individual cases are imperative for improving the public perception that corruption is being fought. But Lebanon is at least not the last country to be in the dark. On a global scale, the fight against corruption is a recent one. Measuring and comparing the infestation of corruption country by country as a tool to strengthen the fight against this scourge has been a project that TI initiated first in 1995. By introducing the Corruption Perception Index (CPI), TI has significantly increased awareness of the issue and countries with a low score for good practice, such as Nigeria, have become bywords for countries that are bad for business. In many nations, TI’s CPI has become a widely used instrument of alarm that helps responsible officials and civil society groups in their fight against the syndrome. However, Lebanon until now had not ranked in the CPI, leaving it up to every person to guess where the country might stand in the global ranking. Lebanon’s corruption is of “Nigerian proportions,” suggested Sadowski, and the country should set itself a goal to reach the standard of China for its level of corruption in global comparison.

Here comes the good news. Starting this year, Lebanon will be included in the CPI, and there will be no more guessing about how the country is being perceived, based on the compounded findings from at least four studies sponsored by international agencies and independent consultants. TI set the release date for the 2003 CPI, rating 133 countries including Lebanon, for October 7. Although the exact ranking for Lebanon was not available at time of going to print, Executive learned that Lebanon will not score the lowest.

Whatever the score, some people will certainly be disappointed.

On September 30, Ayoub Humayed met with Executive for a political reality check on EDL, during which he answered questions on recent accusations leveled at EDL over corruption and criminal waste of public funds. In doing so, minister Humayed provided Executive with much anticipated answers on the issues of graft and transparency at EDL.

E: EDL has been specifically named in recent allegations of disappeared funds and inefficient management. Can you provide us with a precise figure on the cost of corruption at EDL?

AH: Lebanon is not an exception in the world. Corruption does not only affect developing economies. We should differentiate by looking at the causes of corruption. One cause of corruption is the lack of sustained and continuous supervision and accountability. Another factor is the lack of fair compensation that forces many EDL employees to supplement their salaries. Since I took office EDL and the water authorities have agreed to full transparency in any investigation. I am committed to facilitating the job of the investigative authorities in apprehending those who have abused the trust placed in them. The recent EDL crisis was purely financial. We needed money to buy fuel in the face of a global price hike. However, the debate became muddied by unhelpful side issues. [The minister then detailed how several measures were tried and abandoned until an agreement was reached under which $200 million could be borrowed from the central bank for the purchase of fuel.] In the course of these developments, the debate focused to the corruption and wastefulness that contaminated EDL in the past. Even though the director general of EDL and I have vowed to forward any information on irregularities we uncover, the ministry and EDL have no part in determining the direction of any investigation. Files on all previous activities at EDL have been made and are being investigated.

E: What about the stories that corruption was proven in these files?

AH: This issue does not concern us. A lot of noise has been made saying there is corruption, with people asking where the money went, and where wastefulness occurred. These questions have nothing to do with our present concern of finding money to buy fuel. These questions concern the past.

E: But the situation has become very heated and many people are stressing on the issue of corruption at EDL.

AH: Yes. Why we didn’t switch our power plants from oil to gas? Why are our networks and the tertiary links incomplete? Why can’t we erect power lines that would save millions? These are all legitimate questions, but some might have political reasons for raising these issues. Their motives may not be innocent. Today, these issues are in the hands of the judiciary whose responsibility it is to deal with any past irregularities. I am not in a position to pass judgment.

E: Could we talk about the underlying causes of the problems that are reflected in the situation of EDL. When did the problems start, and what was their effect on the plants, the networks, the grid, and power lines?

AH: We have a general problem in that there is too much ad hoc implementation of works with no proper planning. This is the main reason for irregularities in the public administration. This problem surfaces in every nook and cranny of our administration. You see a network of sewage pipes and no wastewater treatment plant and ask why do we need sewage pipes if we don’t have a treatment plant? I am not condemning nor am I excusing anyone. I am just not in the position to judge.

E: But we don’t want judgments.

AH: There are irregularities. I am not in a position to justify irregularities and mistakes. The issue of why there was an accumulation of factors that brought us to this explosive reality has aspects one cannot fathom with total objectivity and without bias or prejudice.

E: What is being done to remedy the problems at EDL?

AH: There are a lot of aspects to this topic. When EDL is suffering from the inner burnout of its administrative body and when one considers that there are 2,400 employees with an average age of 57 years, one can see that EDL cannot deliver what is required. For that reason, I said before that there are two sides to this issue. On the one side is the need to pump new blood into EDL through the activation of its human resources department. On the other side it is necessary to compensate employees fairly and give them incentives to work professionally.The reinforcement of human resources will mean that the administrative situation will improve, and so will the supervisory situation. It will also save money when compared to procedures currently used at EDL. It would bring great benefits if EDL can implement a system of bill collections, advanced meter readings and even prepaid cards. Completion of the 220 KV network and its connection to a six nation regional network should also provide energy at a lower cost.

E: Why weren’t these steps taken in 1994? What were the obstacles at the time?

AH: I cannot answer that. What I can say is that the funds that were received were destined for the reconstruction and rehabilitation of the power plants. These plants were destroyed more than once during the Israeli aggression, and the costs were prohibitive. If there had been no Israeli aggression, a lot of money would have been saved. Before the civil war and the Israeli aggression, EDL was profitable and productive. It is important to evaluate the entire set of circumstances in order to remedy the situation and not look back to the past and bring up corruption and waste. Our focus is the current operations at EDL, which are being handled in a scientific and practical manner to achieve a better future.

E: As many people feel no remorse over tapping into electricity lines or not paying their bills, how are you going to change the perception of EDL and produce an image of transparency?

AH: I already answered that in part. We always say that two matters go hand-in-hand. The first is the right of EDL to collect its dues, either from the citizen or from other administrative and public institutions. Secondly, EDL has to offer the citizen continuous electricity at reasonable rates. I gave directions and issued many statements to EDL staff that stressed an ethical interaction with customers. This very important at a time when the public sees EDL as corrupt and unable to provide a value for money.

E: If today there were no more theft at EDL, would the utility be working normally?

AH: When Italy’s power supply broke down the other day, the reason was traced to a power line between Italy and France that had become neglected. When electricity networks broke down in the US, it was also due to the age of the system. These are giant developed nations. It is easy to pass judgment in Lebanon but we have to be objective. We have to look at the circumstances that EDL is working under and consider the past.Due to severe space restraints in the magazine, Executive had to edit portions of minister Humayed’s sweeping answers. The Executive team made every effort to ascertain that no loss in content occurred as result of the editorial cuts and that the integrity of the answers was preserved to entirety.
 

Last month, Condoleezza Rice, Bush’s national security advisor, compared the present post-Iraq war situation in the Middle East to post World War II Europe. “America,” wrote Rice in her August 7 editorial published in the Washington Post, “committed itself to the long-term transformation of Europe.” She goes on to say: “…our policymakers set out to work for a Europe where another war was unthinkable.”

Her views – and quite naturally one would assume those of her boss – on the administration’s guidelines upon which to build peace and democracy in the Middle East, contain the thesis of the Bush administration’s manifesto regarding the future of the Middle East. It will most likely not work.

Rice advocates working with those in the Middle East who “seek progress toward greater democracy, tolerance, prosperity and freedom,” and advocates copying the European experiment and applying it to the Middle East.

While indeed a noble concept, Bush’s plan for spoon-feeding democracy and prosperity to the Middle East remains, nevertheless, one with great many shortfalls. The Bush administration may well find many similarities in post-WWII Europe and today’s Levant, but in truth, it’s the dissimilarities that abound.

Undeniably, the United States played an important role in guaranteeing the stability, and particularly the security, of Western Europe all throughout the long years of the Cold War. But one must not ignore the fact that a stable Europe would have never been a possibility without, first and foremost, the strong desire of the Europeans themselves to place conflict behind them. After two devastating world wars and economic disasters that ravaged the continent, the Europeans finally realized it was time to look ahead.

“In an inherently unstable world, only the primacy of law and stable institutions can guarantee co-operation among nations and hence peace,” declared Jacques Delors, a former European Commissioner and finance minister in Francois Mitterrand’s first government in 1981, during a speech delivered in 1997 on the history of building a unified Europe.

Finding leaders who sought progress, democracy and freedom in Europe in 1945 was not difficult. Alas, that is hardly the case in most of the Middle East today. Granted, there are many people of goodwill across the region with a strong desire for peace and who wish to see true democracy implemented. But how many of those in a position of leadership in the Arab world would willingly allow free elections without fear of losing their grip on power?

“Muslim leaders are failing, first, to provide justice (adl) and, second, to create the conditions for the existence of compassion and balance (ihsan) or knowledge (ilm) in their societies,” wrote Akbar S. Ahmed, the Ibn Khaldun Chair of Islamic Studies at the American University in Washington, DC, in his book, Islam Under Siege. The US had hoped that the fall of Saddam would accentuate the drive for democracy. Instead, it appears to have crystallized anti-American feelings across the region. Jihadi Islamist fundamentalists are reported heading to Iraq for a chance to fight American soldiers. Two recent attacks against the Jordanian diplomatic mission and the UN headquarters in Baghdad, which killed representative Sergio Vieira de Mello and at least 20 others, reinforce the belief that the US is far from controlling the situation on the ground.

Following the capitulation of Nazi Germany in 1945, the old continent was ripe for a new start. Realization set in across Europe that war was not about to advance them, but rather regress socio-economic reforms. Western Europe came together in the face of a new threat – communism. “The memory of the failures of the inter-war years was still in the minds of everyone,” said Delors.

In Iraq, however, the enemy – extremist violence – comes from within. Additionally, the reconstruction of Germany was carried out mostly by local contractors, whereas in Iraq, the lucrative business deals are mostly being granted to US corporations.

Leaders such as Winston Churchill, who as early as September 1946 proposed establishing a United States of Europe, and West Germany’s Chancellor Konrad Adenauer emerged to rebuild the continent. But, perhaps, more importantly, visionaries such as Jean Monet and Robert Schuman – the instigators of a united Europe and the fathers of the modern-day European Community – were able to look into the future and envision a united Europe. “That is why the initiators of the community model, which gradually came into being with the treaties of Paris (1950) and Rome (1957) made a point of thinking creatively,” said Delors. “There was a new element at work this time around in that the idea was championed by statesmen. In other words, the ideal of transforming Europe had emerged out of the intellectual arena, as a political necessity of the utmost urgency,” said Delors.

That, regrettably, is far from being the case in the present-day Middle East, a region that until now has only spawned more iron-fisted despots or violent revolutions, than Adenauers or Schumans. Additionally, post-WWII Europe had managed to place aside its past differences, building together in unity. The ongoing Arab-Israeli dispute – seen by many as the nucleus of all continued unsettlement in the area – does not allow for a peaceful building process, yet. Neither does the education system in place in some Arab states, such as the Wahhabi-funded madrassas that fail to establish an educated elite needed to construct a brighter future for the region.

The first logical step, therefore, would be to address the leitmotif of Arab discontent and excuse for continued war footing that persists in some Arab states. It is important to point out that once the Arab-Israeli dispute is peacefully resolved, and the reason for maintaining a war stance dissipated, it will only be a matter of time before the urge for greater democratic reforms begins to be heard.

Which is what Bush hopes the “road map” will achieve by 2005. By then, the plan calls for a Palestinian and Jewish state living side-by-side in peace. It is also what they hoped jump-starting Iraqi democracy would accomplish. But don’t hold your breath. Road bumps such as the massive bus bomb that killed no less than 20 people in Jerusalem in mid-August and wounded another 100 are not about to make things easier for the peace process.

Rice talks about America’s long-term commitment to transform the region, but the Arabs are still far from convinced of two things that remain paramount before they can accept America as a full-fledged partner in the peace-building process. America and Western Europe – despite their differences – saw eye-to-eye on most major issues relating to the defense of the continent in the face of Soviet expansionism. Such is not the case in the Middle East, where the Arabs and the US greatly diverge on the Palestine/Israel issue.

Additionally, America must clearly demonstrate that it is indeed committed and here to stay (at least politically), as was the case in Europe. When the end of hostilities was announced on May 8th, 1945, aggression against US troops ceased. In contrast, in Iraq, over 140 US soldiers have lost their lives since Bush declared the end of major combat operations on May 1st. While no exact figures are available, some estimates place the number of Iraqis killed during the same period in the thousands. Many will argue that the situation for the average Iraqi today is much worse than it was before the war.

US troops were greeted throughout Europe as liberators. That is far from being the case in Iraq today, where anti-American sentiment appears to be on the increase and the security situation getting worse.Iraq, sitting on the world’s second-largest oil reserves, is only producing 750,000 barrels of oil per day, down from a pre-war mark that hovered around a million bpd. And that figure is down from 900,000 in June due to continued power cuts and acts of sabotage. As a result, Iraq is forced to import fuel for domestic consumption. Iraqis consume about 15 million liters (3.9 million gallons) of gasoline a day. The country can barely meet that need with domestic production. They use about 17 million liters of diesel, mostly for trucks. Currently, Iraqi refineries are producing only half that amount, according to U.S. military estimates. Ironically, oil is being imported from Kuwait and other countries to help cover the gap. Meanwhile, Iraqis blame the Americans for their ills. The hearts and minds of the Arab world the US had set out to conquer are being lost.

Yes, quite possibly, Bush, in his heart of hearts, is devoted to pursuing the “road map” to peace. Quite possibly, he believes that he can keep pushing the reluctant participants, prodding some here, coaxing others there, or even threatening some when needed. But, and here is the breaker, how committed would his successor be? Let’s assume the following scenario, just for the sake of argument. The situation in Iraq continues as it is for the next few years with a low-grade war of attrition being waged against US troops, who are forced to remain there. One American killed today, two more wounded tomorrow, another one or two killed the following day. Over two or three years, the casualties begin to add up and the electorate back home starts to get nervous. Not to mention the economic impact the continued occupation weighs on the American economy. (See Executive, August 2003)

Bush père found himself in a quite similar situation at the close of the first Gulf War in 1991. He had won a quick victory over Saddam Hussein, liberated Kuwait, freed the oil wells, defeated the Iraqi military and, for a short while, appeared to be a hero. But the domestic economic situation was suffering and that is what lost him the election to Bill Clinton. Bush junior could well find himself facing a similar conundrum.

Bush, meanwhile, remains committed. But if he looses the election in 2004 and his successor, possibly under electorate pressure, decides to bring the boys home and pull out of Iraq. Then what? American foreign policy has been known to suffer from severe attention deficit disorder in the past. Look at Lebanon; look at Somalia.

Secondly, the United States’ lack of objectivity in the Arab-Israeli conflict is another mark against it in trying to evenly mediate with both sides. There was no thorny issue comparable to the Palestinian-Israel one in post WWII Europe, and this made it easier for the US to be accepted as an equal partner in shaping the continent. Neither was there an issue of religion, which exists in the present context. Most of the Arab world continues to view the US war in Iraq as one of occupation and not as a war of liberation. Not to mention those who see it as a clash of civilization, as pointed out by Samuel Huntington.

This is where Europe (and the United Nations) can play a greater role in the peace building process. Europe is seen by Arabs as being friendlier to their cause, and naturally, they tend to trust Europeans more than they do the US. Rice, in her exposé, stresses the importance of including Europe and all free nations, “working in full partnership with those in the region who share our belief in the power of human freedom.”

But will the US accept to take a back seat now in the rebuilding of Iraq and allow Europe – including France and Germany, who opposed the war and were labeled “old Europe” by Donald Rumsfeld – to become engaged in Iraq? The answer to Bush’s manifesto for peace in the Middle East may lie in the answer to that question. Much as the US may dislike the idea, international participation may be the key to success.