By Karen Bachour
Lebanese protests against corruption, Martyrs Square - Nov 3, 2019
“Democracy aims essentially to preserve and promote the dignity and fundamental rights of the individual, to achieve social justice, foster the economic and social development of the community, strengthen the cohesion of society and enhance national tranquility, as well as to create a climate that is favorable for international peace.”
(Inter-Parliamentary Council, 1997)
It seems like the Lebanese government didn’t get the memo.
The Lebanese people have been ruled by the same powers for three decades, ever since the end of the civil war in 1990. Warlords reemerged as heads of the country’s main political parties, so there is little surprise the post-war years have been rife with crisis after crisis, the most recent being the Beirut Port Explosion on 4 August 2020.
Lebanon’s political framework follows a confessional system that provides political representation of all 18 recognized religious sects in Lebanon. Thus, the president is always a Maronite Christian, the Prime Minister is Sunni, and the Speaker of parliament Shia. This system was established to enforce a peaceful co-existence of the different ethnic communities in Lebanon. However, in reality, it only served to deepen the divisions between the sects: each political representative worked to serve his own sect rather than national interest. In return, political leaders were happy to keep the people divided and dependent in order to exploit their networks of patronage and clientelism. The sectarian system has therefore become a tool that people in power use for their own corrupt ends.[1]
Beirut port explosion - August 4, 2020
“Today Beirut is a crime scene”, says ex-deputy Elias Hankach, “This was not an explosion, this was a criminal act that targeted the citizens of Lebanon. 200 people died, 6,000 people were injured, 55,000 households and companies were destroyed… and so far, the local investigation committee has not provided any feedback.”
Elias Hankach is a member of the Christian opposition party The Phalanges, or Kataeb in Arabic. This center-right political party saw its three deputies resign 4 days after the explosion in protest over government negligence. Hankach revealed that another reason for their resignation was their inability to make a change from the inside as MPs: “We were in deadlock. During each session, different political parties ally on every critical or major decision that fits their personal interests, and we cannot confront or oppose them since the numbers are on their side. That’s why we resigned.” This statement is coherent with the party’s traditional stand in opposition ever since it was founded in 1936.[2]
Hankach was also a member of the Supreme Council for the Trial of Heads of State and Ministers from March 6th, 2019 till his resignation. “From day one, I realized that questioning a minister or a president would be impossible since this action requires a two-thirds vote from the parliament.” Hankach pointed out that he tried to make a change by decreasing this number to 50%, but when he went to collect the ten necessary signatures from different deputies in order to accomplish that, they gave “unacceptable” excuses not to sign, and there is “no serous intention for accountability”.[3] This council is supposed to be composed of 7 parliament-elected MPs and 8 judges, but to this date, the judges have not been appointed. “I raised the question of the judges twice in session and I addressed an official letter to the Minister of Justice, to no avail”, he added. Now Elias Hankach feels that the next move will have to come from people in the streets and that no concrete change will take place without new elections.
One year ago, on October 17, 2019, protestors took to the streets to condemn the sectarian rule, hold corrupt individuals accountable, and demand independent specialists as ministers. These protests resulted in the resignation of then-PM Saad Hariri. Yet today, corruption is still at an all-time high with as much as $100 billion missing from the system, a third of the country unemployed, and 45% of the population living below the poverty line.
Amid growing concerns that the Lebanese government would default on maturing debt obligations, a shortage of foreign currency in August 2019 led to the Lebanese Pound losing value against the dollar. US sanctions targeting the Syrian government and Hezbollah made it worse, and now, Lebanon is facing the worst economic crisis that the nation has ever seen.
The Lebanese pound has lost 80% of its value, the price of commodities is skyrocketing and many businesses are closing. As Lebanese people rushed to the banks to withdraw what deposits they had in USD, banks enforced capital controls and limited withdrawals.[4]
Riad Salameh, the Central Bank governor, declared on October 1st this year that “the severe crisis is now behind us”.[5] This statement was seen as a blatant lie by many as they accused Salameh of hiding the truth.
Lebanese economist and Central Bank employee Ali Chreif gives us some insight into the current situation of the Lebanese economy: “In financial and economic perspectives, we have passed the worst part and the peak of the economic shock, and that means that now the situation can start to improve.”
Chreif considers that since the people and the market have adapted and adjusted to the situation, and since a management system of the existing liquidity has been put in place by different sectors, “the phase of severe liquidity withdrawal from bank accounts is over”. A new Central Bank policy will allow some relief for Lebanese citizens; “A grace period has been given to commercial banks to increase their capital by the end of 2020. This policy will force these banks to bring in money that they stored in accounts outside Lebanon, so that will provide more liquidity to the country.” He adds “in the long run there will be mergers among banks and therefore some increase in their capital, which will soften the crisis."
But it is not over yet, particularly for depositors who won’t be able to withdraw their savings for a while. “If this crisis continues to be managed as it is now, there is a chance that the depositors’ loss will be minimal. In 2 to 3 years, the banking sector will return to its previous state and bank-customer relationships will be restored.” However, he raises a very important concern: “If the approach for a solution becomes political and if it does not rely on financial, economic and monetary principles, it is anyone’s guess as to what will happen, and there will be a big risk for the Lebanese people.”
Ali Chreif affirms that there is no direct obvious link between the management of commercial banks in Lebanon and corruption. “The banking sector in Lebanon is managed in compliance with all international standards when it comes to governance, transparency, fighting money laundering, combating financial terrorism… so the system is actually managed properly.” However, he said that we could ask ourselves if there is an indirect link between the wealth generated from corruption and how it’s invested in banks by bank owners. “Investigating the source of the money could help find traces of corruption, but the management of the money is completely legal”.
Despite this, national and international trust in the Lebanese fiscal management is practically nonexistent. Central Bank governor Riad Salameh has been accused of engineering the financial crisis by Caretaker Prime Minister Hassan Diab, and of running the Lebanese banks in a corrupt state-sponsored Ponzi-scheme while siphoning the money of depositors. On June 20, 2020, a Lebanese court ordered the seizure of Riad Salameh’s assets. However, this decision had no legal basis and was therefore disregarded.[6]
Following the Beirut port explosion, when heads of states worldwide announced aid and assistance for Lebanon they refused to hand this funding to the Lebanese government preferring instead to donate it to trusted partners and NGOs such as the Lebanese Red Cross. An international summit presided by French President Emmanuel Macron pledged about $300 million in aid for Lebanon 5 days after the explosion, and world leaders are demanding that the Lebanese authorities carry out political reforms and start adhering to the Lebanese people’s demands. But so far, no steps have been taken to achieve any reforms. Elias Hankach expressed concerns about this to The Washington Post: “ [The government is] known to give empty promises whether to their people or the international community… regrettably maybe President Macron does not know whom he is dealing with.”
Multiple attempts have been made to contact a spokesperson from the Free Patriotic Movement, founded by the current Lebanese President Michel Aoun. So far to no avail. The FPM has a majority of 18 seats in Parliament. But although the party seems to enjoy widespread national support, it is also often accused of corruption. For instance, Gebran Bassil, president of the FPM and son-in-law to Michel Aoun, has been accused by former justice minister Major General Ashraf Rifi, of “being the most corrupt person in the Lebanese Republic”.[7] What’s more, for over 12 years, every Energy minister (except one) has been a member of the FPM, and therefore in charge of Electricité du Liban (EDL) which is said to be one of the most corrupt sectors in the country and responsible for a huge part of Lebanon’s financial deficit ($26 billion).
The most pressing concern for Lebanon is to form a new government. Mustapha Adib, a diplomat who was named prime minister-designate following the Beirut port explosion on 30 August, resigned after barely a month on 26 September 2020, due to an impasse in forming a government. On 15 October 2020, president Michel Aoun postponed consultations on the nomination of a new prime minister amid parliamentary concerns in contradiction to his announcement on 21 September that the country would go “to hell” if a government was not formed soon. On October 22, 2020, former PM Saad Hariri was tasked – by unpopular demand, to form a new government. He received 65 out of 118 votes, a slim majority; having failed to win the backing of the two main Christian parties: the FPM and the Lebanese Forces. Needless to say, the hundreds of thousands of Lebanese who took to the streets during the October protests were not happy to welcome him back.[8] Hariri promises that the new cabinet will only consist of non-partisan experts to tackle the economic crisis. However, an exchange with Gebran Bassil suggests otherwise: the latter officially opposes Hariri and calls for a techno-political government with both independent specialists and political figures.[9] To further complicate the cabinet’s formation, the Trump administration imposed sanctions on Bassil on November 7, 2020, accusing him of corruption and of assisting Hezbollah.
The challenge is now to form a government that will both garner necessary support from parliament and earn the trust of the Lebanese people. Outrage at the designation of Hariri has shown that accomplishing this may well be impossible. Meanwhile, Lebanon is in desperate need of a government.
[1] “How Sectarianism Helped Destroy Lebanon’s Economy”, Foreign Policy [2] To learn more: “Political Parties in Postwar Lebanon: Parties in Search of Partisans”, Farid El Khazen. [3]“Hankash: the Supreme Council for the Trial of Heads of State and Ministers is crippled and a sham”, Al Markaziyah (in Arabic) [4] “The lights go out on Lebanon’s economy as financial collapse accelerates”, The Washington Post [5] “Riad Salameh Claims Lebanon’s Severe Crisis Is Over”, The961 [6] “A judicial source for Al-Jadeed: According to Law 156/2020 issued in May, a common right lawsuit against an employee cannot be initiated without the Public Prosecution claim ...”, Al Jadeed [7] “Rifi says Bassil is the most corrupt in the Lebanese Republic”, LBC [8]“Hariri Returns as Premier in ‘Last Chance’ to Save Lebanon”, Bloomberg [9] “Hariri pledges to form govt of specialists in accordance with French initiative”, Daily Star
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