Lebanon’s elections offer little hope of economic change
Energised by a new electoral system of proportional representation, Lebanon continues to push towards its parliamentary elections in May. However, weighed down by a bloated public sector and an economic system that prioritises tourism and services at the expense of the wider economy, electoral reform is unlikely to have much of an effect on a struggling economy.
The three international donor conferences scheduled for this year appear to promise only further criticism of Lebanon’s economy rather than substantial change.
Lebanon’s debt-to-GDP ratio was 155% at the end of 2017, one of the highest in the world, the World Bank reported. A large part of that debt comes from the country’s towering public wage bill.
“There is a huge waste; there is overstaffing,” Nassib Ghobril, chief economist at Lebanon’s Byblos Bank, told Reuters.
Public spending in Lebanon climbed from $6.5 billion in 2005 to $16 billion in 2016.
Evidence of overstaffing is clear throughout the country, with a sprawling transport authority charged with overseeing the operation of just 40 buses for a population of 6 million and a rail service whose stock lies rusting and confined to its yards.
The transport authority is one example among many. Lebanon’s Elissar agency was established to develop Beirut’s south-western suburbs. Despite work halting in 1997 because of Lebanon’s endless political squabbles, the agency still retains its budget, reported by the Lebanese consultancy Information International to stand at $2.25 million annually, and employs about 40 people.
The same group said sectarian divisions in the government extend to appointments in the public sector, strangling efforts to curtail staffing numbers at birth.
“Each of these administrations has a general director and employees and abolishing [the power-sharing system] means infringing the rights of the sects to which these civil servants belong,” Mohammed Shamseddine, a senior researcher with Beirut-based Information International, told Reuters.
Excluded from public service are tens of thousands of young Lebanese who have been unable to secure work in the country. The overall unemployment rate in Lebanon stands at 25%, with unemployment among those under 25 at 37%, Lebanese Labour Minister Mohammad Kabbara said in August.
“We have approximately 30,000-35,000 young people who graduate from university every year and only 5,000 jobs are offered annually, which leaves some 30,000 without jobs,” he said.
To even the casual observer, the problems with Lebanon’s ailing infrastructure are apparent. It is a situation exacerbated by the presence of approximately 1.5 million Syrian refugees within Lebanon’s borders, all seeking equal access to the country’s resources and all deserving of its care.
Along with the uncollected refuse that continues to clog Beirut’s arteries is the struggling power sector that squanders an estimated $2 billion annually on leasing floating generators, rather than addressing the sector’s deficiencies head-on.
Some hope is offered by the auctioning off of exploration rights to the country’s oil and gas reserves. Under the terms of the exploration agreement, any company awarded drilling rights must pay royalties to the state equal to 4% of gas produced and a varying percentage (5-12%) of any oil produced.
However, given the history of similar projects and despite the efforts of non-government organisations such as the Lebanon Oil and Gas Initiative (LOGI) to promote transparency, there is little public hope that any revenues will be spread beyond the government’s patronage systems.
Unless Lebanon’s authorities decide to categorically fight corruption, increase transparency and indulge in an all-encompassing reform plan, little is expected to change in the country.