Lebanon ’s latest support reform plan

The emergency rescue plan announced by Lebanese Prime Minister Hassan Diab on April 30 aimed to comprehensively resolve the economic collapse of Lebanon. Although worsened by the impact of coronaviruses at a more desperate moment, the plan dusted Lebanon ’s earlier major efforts to attract external support: Lebanon will carry out extensive internal reforms and fight corruption, and external actors will make Respond. financial problem.

This plan differs from the previous reform plan in that the government only lives with the support of Hezbollah and its allies, one of the political parties in Lebanon. The support package previously proposed for Lebanon is implicitly (usually not so implicitly) aimed at strengthening the legitimate state institutions relative to non-state actors (especially Hezbollah). Since the current government only relies on Hezbollah and its allies to provide parliamentary support, traditional reasons for external assistance are no longer valid. The challenge for Diab will be to convince donors that the plan will not consolidate Hezbollah's dominance in a country that is increasingly broken and dysfunctional (or even non-existent).

Wishful thinking

The plan is more ambitious than its predecessor, which has been implemented. It called on the International Monetary Fund (IMF) to implement a plan that the previous government had excluded, fearing that the intervention of the plan would expose potential sources of corruption in Lebanon. The document outlining the government plan includes a large amount of statistics demonstrating how the situation has deteriorated: this year ’s inflation rate is 53%, the already poor population is 48%, and external balance of payments financing of $ 28 billion is required by 2024, while the industrial base For example, GDP accounts for 8% of GDP.

In the "everything outside the kitchen sinks" method, it involves issues ranging from external debt burden to abnormal power generation to agricultural production and environmental protection. The document clearly stated in the words of capable and technical bureaucrats that all Lebanese should expect some kind of economic and financial "cutting" to achieve a turnaround. Considering that austerity belts have triggered violent protests, “restricting domestic demand by cutting government spending, reducing wages and benefits will have an impact on private consumption and investment, thereby reducing demand for imports”.

However, despite a detailed and sensible analysis, the proposal is based on wishful thinking that Lebanon ’s traditional external partners are willing to intervene when focusing on their own strategies for mitigating coronavirus and economic recovery. Moreover, even if the authors of the plan (according to the advice of the consultant of the international company Lazard Freres) initially benefited from the suspicion of the declaration in good faith, the problem remains that even technical experts adopt this "single color" With the support of its allies, the Lebanese government has the ability to clean houses in a transparent, non-partisan way to promote a sustainable, private sector-led economic recovery in a country that exists only in its name.

Some people worry that in the sense of reform, this reform plan will face one of two unfortunate destinies: either like many of its predecessors in Lebanon, or it will never be put into practice; or-given that Hezbollah and Unprecedented advantage of its allies-even if Diab and his ministers did not intend to do that, it would be implemented in a twisted, partisan way. In both cases, any interest from outside donors in helping out is gone.

Surprisingly, expanded external assistance is often needed. Two sentences are illustrative: "Providing international financial assistance on preferential terms to bridge the huge external financing gap and financing the development of infrastructure … is necessary to support economic growth"; and "will be in development partners’ With assistance, establish an extensive social safety net to provide income support until Lebanon resumes steady growth and most of its population exceeds the poverty line. "To some extent, this emphasis on external actors may be directed at Lebanon Skeptics-Hezbollah leader Hassan Nasrallah looks at you-about the International Monetary Fund. However, if the envisaged geyser does not provide foreign aid, then if the donor does not pass, relying heavily on a large amount of external support can also provide a ready-made excuse for the government to claim "not our fault." .

Relying heavily on a lot of external support also provides a ready excuse for the government. If the donor fails, the government claims "it's not our fault."

The financial sector [19659004] used language that would surely appeal to street protesters last year. The document responds positively to problems in the banking sector dominated by the Lebanese private sector.

As capital inflows to Lebanon slowed, even currencies paid by high-interest-rate banks that foreigners could not afford proved to be unable to prevent capital flight. In the absence of national regulations, at the end of 2019, banks began to implement the so-called "de facto" or "informal" capital controls in the document. According to the government ’s plan, in a visually shocking description, the government will “recover the money illegally fleeing the country” and the excessive interest rate on the US dollar account will also “recover”.

But this caused a problem. Q: Given that the Central Bank of Lebanon has not implemented unified capital controls across the country, is it really a crime to send money abroad at the end of 2019, or is it just not patriotic? Did bank depositors, including foreign business and personal depositors, seize a completely legal opportunity at the time, or did they recall the crime of accepting high interest rates? As a party that only supports the government, following only certain customers may have the potential to generate political scores.

The document also discusses the issue of voluntary or forced mergers, mergers and sale of equity. Transfer to foreign partners in Lebanese banks. Although there is no doubt that banking reforms and mergers are needed, this process may be distorted. No matter what irresponsible banks take, they have cleaned up their Hezbollah books under American pressure to avoid sanctions from the United States. Private sector-led banks provide Hezbollah with a certain balance within the Lebanese system, because no one wants to see the collapse of collective banks.

The forces behind the current government have no interest in maintaining the independence of the banking industry. Even with the anticipated participation of international experts, the state ’s oversight of basic financial reforms may evolve into state control of a sector once proud of the Lebanese economy led by Hezbollah. If Hezbollah is determined to force banks to learn the lessons of Hezbollah, then international supervisors will have no right to stop Hezbollah ’s infringement of the financial sector, because Hezbollah has now been condemned by the irritating public who cannot access its accounts, and is no longer sacred Violation. Terms.

A ridiculous but unrealistic anti-corruption goal

The much-needed anti-corruption struggle is also an understandable requirement of street protesters before the coronavirus outbreak, and it can easily evolve into a guerrilla attack by Hezbollah and its allies. Tools to hunt down their political enemies. The financial situation of some public figures can be traced back to 30 years ago. The government ’s political supporters will want the investigation to target those who oppose the Hezbollah-Damascus-Tehran axis, although corruption is a more widespread problem in Lebanon. Can Diab and his ministers be able to withstand pressure from Hezbollah and former Foreign Secretary Gebran Bassil to selectively examine corruption allegations politically? Or, will corruption investigations become a means of removing anti-Hezbullah political and economic actors from public squares, thereby finally completing the terrorist movement ’s takeover of the Lebanese state and economy?

Political supporters of this administration will want to investigate those who oppose the Hezbollah-Damascus-Tehran axis, although corruption is more prevalent in Lebanon.

Although the outlined anti-corruption mechanism includes "combating smuggling at all points of entry," the government will certainly look for another way of Hezbollah smuggling and illegal economic activity. Hezbollah demonstrated how to deal with a government that tried to force Hezbollah to comply with the law in May 2008: In the face of the government ’s decision to evacuate Hezbollah ’s corrupt airport officials and demolish its illegal telecommunications system, Hezbollah occupied part of Beirut by force area. It is worth noting that the anti-corruption plan also does not mention fuel imports, power generation at sea and smuggling of fuel into Syria, all the shady practices related to Basil ’s allies, the son of President Michelle Orne, and possible successors, and Architect that Allen and Hezbollah allied. (One esoteric mystery about Basil is his ability to be immune to any US sanctions, although he has played a personal role in expanding Hezbollah ’s control of Lebanon by giving cover to Christian organizations and acting as a Hezbollah defender. For focusing on Iran That ’s why the U.S. government, Basil, especially now that he has stepped down as minister, should become an obvious goal.]

The plan also envisages the establishment of entities to manage state-owned assets and “recover from corruption, capital” "Outflow of funds and excessive interest expenditure. It is expected that these entities will be composed of international experts and Lebanese from the government, private sector and civil society. On the surface, this may be a kind of ultimate control of certain state property, monopoly , Import permits and other factual control methods. These controls consist of the current sectarian distribution. Traditionally, these distributions allow Lebanese politicians to provide sponsorship to maintain their property in addition to allowing themselves to be enriched. State. However, people hope , Lebanon that went out last year to condemn the sectarian system The people themselves will examine very carefully how to appoint these proposed entities so as not to replace them with a new abstention system.

The plan and its annexes also provide detailed information on job creation and growth, some of which are better than others More realistic. Double the number of high-end tourists seems to be a daydream: just after the collapse of coronavirus and oil prices, the Gulf Arabs are still free to consume, they are unlikely to return to a country that is increasingly dominated by Iran Supporting the militia and Christian allies like Basil, they cited "Sunni population threats" and "Sunni terrorists" to prove their loyalty to Hezbollah. As Germany and the United Kingdom declared Hezbollah a terrorist organization, "High-end" Europeans may also remain vigilant.

This shows that the plan ignores a functioning democratic institution in Lebanon.

Curiously, the plan is aimed at reviving the old system and revolutionizing the Lebanese economy. The formulation of has been fleeting. The document states that some aspects of the plan may require new laws , But despite the fundamental changes in the envisioned Lebanese system, the parliament ’s debate on the overall plan does not seem to be part of the plan. Although Lebanon ’s electoral democracy and parliamentary democracy are flawed, it shows that the plan ignores a Lebanese operation Normal democratic institutions. Considering the degree of division of the parliament, bypassing the parliament may be a sign that the De Beer government is vulnerable, or just another signal that Hezbollah does not tolerate transparency and democratic accountability. Presumably the Lebanese have used this street Expressed disdain and mistrust of all political leaders who will insist on more open debates.

Providing hope for an international response

Regardless of the flaws in the plan and the potential misuse of partisan mischief, the bottom line is the Lebanese economy No more benefits for its citizens. Remittances and high-yield capital inflows have delayed the collapse of Lebanon for several years, and this will not magically return. Diab believes that fundamental changes are now under way The right time, and Lebanon for external assistance is real (and rigorously reviewed) The basic trade-off leather is the right approach, that's right. As the document itself emphasizes, there is no better option.

But the difficult question is whether anyone outside Lebanon is now willing to show leadership skills in a variety of ways to bring together the external financial plans needed to deal with the Diab plan. International partners are distracted by their economic concerns about coronaviruses, and multilateral efforts may focus more broadly on how to deal with the economy that has suffered the most damage from coronaviruses (at least not including Lebanon so far).

In addition, given the previous promises of reform, external players concerned about Lebanon have reason to doubt it. In addition, external supporters should not be tempted to provide Hezbollah and Basil with economic means to catch up with their domestic enemies in the name of reform, or to provide dollars to Syria and Iran. Indeed, the Lebanese media quoted Assistant Secretary of State for the East, David Schenkel, stressing the need for Lebanon to first prove that it can implement reforms before discussing support with external participants.

The sensible response comes from Lebanon. Then, international partners will say: "Okay, we have read your plan, and we are now working to organize the package to provide support." However, according to the best practices of international financial institutions , Any disbursement of aid will be incremental and will depend strictly on the situation. The conditions must be economic and political.

In order to prevent external support from inadvertently enhancing the interests of Hezbollah-Syria-Iran in Lebanon, donors will need to specify that implementation requires a broad consensus of Lebanese political forces rather than a consensus of Lebanese political forces to support Diab ’s government. If these conditions are met, strong leadership from Americans and / or France will be required to form a support alliance willing to expand the IMF and International Bank for Reconstruction and Development (IBRD) programs. If the violent street protests in Lebanon worsen because of the economic downturn and even increased hunger, there will be pressure to take more prompt action to ease the situation. Therefore, for potential supporters, it is better to act now to take immediate action, clearly define the conditions, and collect support for effective reforms and social safety net measures that will take Lebanon and provide incentives.

All of this assumes that Lebanon can still implement the programme, and the international community can still unite to prevent the desperate situation from deteriorating (in terms of general suffering and Hezbollah ’s aggression).

One last point: of all the crises facing Lebanon, solid waste management remains one of the most confusing issues. How can the successive governments of a country with a population of only 5 million (including refugees) with limited geographic coverage fail to collect garbage? Since 2015, a large amount of garbage has stirred up protests in Lebanon. In Diab ’s new reform plan, the Lebanese government learned a lesson from President Trump ’s method of coronavirus testing: “The responsibility for solid waste management will be delegated to municipalities.”

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