Lebanon

In the chokehold of interests

The Friedrich Naumann Foundation for Freedom has been active in Lebanon for three decades. Just a few years after the end of the fifteen-year civil war in 1990, Lebanon was included as a project country. For over a decade now, the Foundation has maintained a permanent office in Beirut. On this occasion, the Foundation’s Chairman, Professor Paqué, traveled to this fascinating country — one that, for decades, has lurched from one crisis to the next and failed to fully seize its economic potential. In the following, he writes about the reasons behind this. There is finally hope that the situation might take a turn for the better — though for now, it remains little more than hope.

Anyone arriving in Beirut can hardly escape the charm of the city. It used to be called the Paris of the East, and even after decades of war and terror, it still has the character of an attractive mix of a Mediterranean, French-influenced atmosphere and the spirit of the Arab world. Its old magic is still present and felt till today. In addition to the magnificent Mediterranean coastline, this is thanks to the reconstruction of the city center, which was carried out after the end of the fifteen-year civil war in 1990, as a large-scale project of international scope with the participation of world-renowned architects.

The city has largely removed the physical traces of the war, but not its political and economic heritage, which affected the whole country until the most recent past. If you talk to liberal-oriented politicians and observers, a very clear diagnosis emerges for Lebanon. For almost everyone, the new constellation with two rather technocratic state leaders - the Maronite-Christian President Joseph Aoun, a widely respected military man, and the Sunni Islamic Prime Minister Nawaf Salam, a reputable international lawyer - is an opportunity to limit the political conflict arising from the country's traditional religious diversity and to turn this diversity into economic dynamism. For this to succeed, however, three fundamental - and extremely difficult - political tasks need to be solved.

Firstly, the terrorist organization Hezbollah - which is supported by Iran - must be completely disarmed. Above all, this requires a drastic strengthening of the Lebanese army, which will have to carry out this disarmament. In terms of foreign policy, a degree of normalization of relations with Israel, Hezbollah's declared enemy, is needed as soon as possible. And finally, the Shiite ethnic group - especially in the south of the country, where support for Hezbollah is strong - must be convinced that the social and economic support they currently receive from Hezbollah will in future be reliably provided by a - finally functioning - central state. These are all enormous tasks. Without solving them, a sustainable improvement of the situation will remain an illusion.

Secondly - and even more fundamentally, yet rather in the long term - the state in general must be strengthened in its reliable ability to act. Governance must work. This will probably require a fundamental reform process, possibly including a constitutional reform that overcomes the pitfalls in the system of political confessionalism - as prescribed by the so-called National Pact of Lebanon since 1943. To be sure, this must be done cautiously, without sacrificing the political participation of minorities. As in Lebanon - often incomprehensible to Western observers - it is not the economic and social differences that are the reason for contention, but all too often the particular interests of the individual confessional ethnic groups. However, in order to strengthen trust in the state, there is no way around a certain degree of centralization, which is also a painful insight for liberals who like bottom-up more than top-down solutions.

Thirdly, economic prosperity is of paramount importance for the future of the country. It had already been achieved by the early 1970s, thanks in particular to trade and banking, which made the country a hub between Europe and the Arab world. Even after the war from 1975-90, there were again decades of upswing. The growth collapsed with the banking crisis that gripped Lebanon a few years ago and did not let the country out of its grip until today. So far, any attempt at “cleaning up of bank balance sheets” has failed due to private interests, as no one is prepared to accept the haircut of writing off assets on a massive scale - and the (weak) state has no leverage to enforce it. Support from the International Monetary Fund will only come if there is progress in this crucial respect. And only with the IMF’s help can the country regain the necessary creditworthiness and reputation in international capital markets that make it attractive to foreign investment.

Conclusion: a huge range of tasks for a “technocratic” leadership. Hardly manageable, but perhaps - as in the case of Argentina - after years of decline, the population is realizing that fundamental changes are needed. It would be desirable for the country - and for the entire Arab region. After all, Lebanon is and remains a country with many well-educated people, a liberal atmosphere in culture and media as well as an outstanding academic landscape with top universities in the region such as the traditional American University of Beirut and Université Saint Joseph. If growth and prosperity without oil and gas reserves cannot be achieved in this small country, where else in the Arab world?