Lebanon needs an emergency reform kit

A law for public bids should be passed to increase transparency and break the hegemony of the cartels that clinch most state contracts.
Sunday 10/11/2019
An anti-government protester walks in front of a shop damaged by protesters in Beirut, October 21.      (AP)
Limited options. An anti-government protester walks in front of a shop damaged by protesters in Beirut, October 21. (AP)

Nearly a month has elapsed since the outbreak of the Lebanese Revolution, which took millions across Lebanon and the diaspora to revolt against a political class that they supported and repeatedly voted into office.

The political and economic shutdown in Lebanon, however, led many demonstrators to reconsider their choices and heed threats of the ruling elite whose scare tactics include violent intimidation and warnings of economic ruin.

Lebanon’s economy has seen better days but years of imprudent economic policies, coupled with a hysterical clientelist system and bad governance, led the state to the brink of bankruptcy. The Lebanese political class has shown an unwillingness to admit that the impasse is not merely an economic crisis but a problem that speaks to the crux of the Lebanese political system, which, to most Lebanese, has simply expired.

Adding insult to injury, a few days before resigning, Lebanese Prime Minister Saad Hariri introduced his government’s economic reform plan, which was utterly rejected by the Lebanese because it refrained from including real political reforms and merely proposed to spend more money to — hopefully — jump-start the ailing economy.

The audacity of the politicians is fathomless as they claim that they can consider $7 billion of electricity sector projects, in merely two weeks and with two days to report it to cabinet — something experts assert is impossible.

If this was not enough, project bids would be supervised by the Public Procurement Management Administration and with a tender document drafted by the Ministry of Energy and Water while the consultant is appointed by a grant given by one of the expected bidders, all flagrant breaches of government operating procedures.

The ruling establishment wants to use the revolt and the fear of economic collapse to make themselves richer and channel the $11 billion from the CEDRE aid conference to their own coffers. The people on the streets and those watching the revolt at home know that the people in power are incapable and unwilling to reform their ways and thus this standoff will not end soon.

Faced with this predicament, the only way to prevent the looming meltdown of the Lebanese economy is for street demonstrators to stand strong, not falter and to refuse to negotiate with any form of authority unless the ruling elite introduces required economic and political reforms.

Judicial reform should be at the top of any government platform. The Lebanese state disregards the sacred constitutional principle of separation of powers. The judiciary should appoint its own judges and the executive branch must refrain from meddling in the justice system.

Reform should also reach the security and law enforcement sectors, which should be purged from the clientelist appointment system that prevents their neutrality and makes them tools of the establishment, rather than guardians of the constitution.

Anti-corruption legislation should be enacted to protect whistle-blowers and set a mechanism for the recovery of stolen assets and, more important, amend laws to allow cabinet ministers to face the regular justice system rather than extraordinary tribunals, which do not ensure justice and accountability.

On the more practical economic level, simple emergency measures are urgently needed to alleviate rather than salvage the situation.

There should be the implementation of temporary capital controls on money transfers. While capital control might be a departure from Lebanon’s liberal economy, it is a bitter pill the Lebanese must swallow — and fast.

Second, negotiate with the Lebanese banks that own the majority (53.8%) of total debt and convince them to lower interest rates and to restructure the debts. Lebanese banks must accept an increase in taxes over their profits. The tax stands at 10% and must be increased to allow the state more revenues and to avoid passing more direct taxes on to the less-privileged classes.

Third, there should be negotiations with the Lebanese armed forces over Regulation 3, which multiplies military service years and thus costs the Lebanese billions of dollars in end-of-service pensions.

Fourth, a law for public bids should be passed to increase transparency and break the hegemony of the cartels that clinch most state contracts.

These measures might fall short of the more ambitious aspirations of the Lebanese uprising but, for the immediate future, this emergency kit could give Lebanon a fighting chance and perhaps place Lebanon closer to recovery.