Lebanon, Inc. III: Bulls in a Bear Market
By: Jamal Ghosn
Published Thursday, January 26, 2012
One year after the fall of Saad Hariri’s government his team’s economic legacy is still intact, albeit under new management. An alliance of former Taif signatories, along with a team of billionaires, are the caretakers of an establishment that continues to prove it is immune to change. The opposition, now lead by Hariri, has not been bothered much by the new leadership as their interests remain protected. The security team seems for the most part content, as long as those managing the economy of Lebanon do not conspire against the resistance. The final part of this series looks at how one member of the Cabinet attempted to rattle the establishment that is eternally “on the verge” of crumbling.
The Telecom Era
The government and public have lauded the Lebanese authorities for breaking up networks that were spying for Israel. A good number of those people nabbed worked in the telecommunications sector. Intelligence gathered from the mobile network databases would later be a major part of the case against the alleged assassins of Rafik Hariri.
Telecommunications Minister Charbel Nahas highlighted the extent to which the telecommunication networks were undermined. Machines installed within the Lebanese cellular network were relaying data directly into Israeli territory.
In November 2010, a vociferous confrontation took place in a Cabinet meeting between Nahas and Saad Hariri. Nahas accused Hariri of being subject to external pressure. Hariri pledged that Nahas would pay for that accusation.
The boiling point between the two men was reached over the issue of the Special Tribunal for Lebanon, but the relationship had been simmering for a while. A number of Hariri loyalists had called Nahas a “Marxist”, an insult in Lebanon's ultra-capitalistic post-Taif economic lexicon. Suleiman Frangieh, an ally of Michel Aoun and a main player in the Taif establishment, would used the same word to describe Nahas.
The privatization of the mobile service providers was high on the list of priorities for consecutive governments headed by the Hariris, father and son, and their trusted Siniora. This was something Nahas vowed would never happen under his watch.
The incident that ultimately summed up the telecommunication ministry stand off between Saad Hariri and Nahas came after the Hariri Cabinet crumbled. As a caretaker minister, Nahas was pushing to pass the bid for the implementation of 3G mobile Internet technology. Hariri was trying to stall it, hoping the next Cabinet would set up a more favorable environment at the ministry.
On 18 January 2011, the “black shirts” incident was credited with blocking the return of Hariri to power. A mysterious unarmed show of force by Hezbollah was interpreted as the message that secured the number of votes necessary to oust Hariri. That evening, Hariri's Future TV led the evening news with a 3 minute report on the black shirts incident. What followed was a 20 minute attack on Charbel Nahas.
The security incident was significant, but it fell within the established balance of powers. Hariri felt more threatened by the encroachment of Nahas on the economy, which he saw as a game-changer. After nearly 2 decades of monopolizing economic decision making, there was a crack.
Najib Mikati's Cabinet, which was finalized in June 2011, maintained the balance of power between the post-Taif economic establishment and military strategy. The March dated labels for the teams became obsolete as political leaders reverted to their pre-2005 trenches. There was a leadership vacancy atop the economic team that Mikati was trying to fill with direct competition from allies within his Cabinet and former allies in the form of the Saad Hariri led opposition. Charbel Nahas was assigned the Labor ministry.
As with the previous Cabinet, Nahas was considered part of the quota assigned to Michel Aoun's Free Patriotic Movement (FPM). Nahas was never officially a member of Aoun's political organization. Also the positions adopted by Nahas do not resemble previous economic strategies proposed by the FPM nor do they represent a unified economic strategy of the movement. In fact, many members and allies of the FPM have openly expressed their opposition to Nahas's economic policies.
The choice of Nahas seems to be an accident rather than a strategic coup by the FPM. His history of opposition to Hariri's policies might have made him a viable option for the time. He certainly does not have the full support of the security team, even though his stances seem to undermine economic hegemony in Lebanon more than any previous attempts by the security team.
The minimum wage increase dispute exposed the security team's lack of economic vision. It's main political player, Hezbollah, disregarded the proposed bill by Nahas and voted in favor of a bill agreed on by Mikati and Hariri-installed leaders of labor and trade organizations. This further fuels the hypothesis that the actions by Nahas are individual. Hezbollah would later call for a protest against their own decision in what was the first installment in a series of surreal events.
The most absurd stance in the wage increase saga has to be the position of the General Labor Confederation, which is continuously pushing the Labor minister to make concessions on behalf of business owners. Hariri's political role might have been reduced to twitter gaffes, but the guardians of Harirism still reign, gladly letting the deposed rookie unwittingly assume the scapegoat role.
Nahas had bigger plans. The wage increase battle was just a test run. He had hinted at his next quest: universal health care. If he is able to accomplish this (an unlikely event given the latest developments), it would be considered a major feat. Not only would universal health care give the state something to provide its citizens, it will also pull the plug on the alternate health care network operated by the lords of the Taif establishment.
The type of environment Nahas is operating in is hostile to say the least. His tactics can be compared to early stages of guerrilla warfare: striking on a front at the right time and retreating to plan the next hit. These tactics might change the rules of the game, but they need time.
There are no indications that any major political players will go as far as fully adopting the Nahas economic plan, or any alternative economic strategy for that matter. A sense of urgency over economic matters is absent at the decision making level. This raises the question of how long the status quo of detachment, between the ruling melange of powers and the economic woes of the country, can go on.
The latest numbers put the Lebanese national debt at $55 billion. The biggest expense items on the yearly state budget are the servicing of the debt and public employees' salaries. Other expenditures and investments will have to be off the state’s books as it cannot afford it. The private pockets of the Taif establishment will undoubtedly seize every opportunity to run an alternate authority alongside the official government that they themselves are running into the ground.
Hariri or no Hariri, the direction continues to be the same. The erosion of the state continues in favor of the business of a country. The measurable indicators point to a rapidly vanishing state. That is unless certain policies, accidentally, make it through to temporarily hold together the stilts on which the Lebanese state stands.