Protests indicate significant — but difficult — change is coming to Lebanon

Protests indicate significant — but difficult — change is coming to Lebanon
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Political corruption has unified the people of Lebanon and will catalyze significant change. Bounded by the Mediterranean sea, Syria and Israel, Lebanon might be described as having a cocktail of religious sects capable of propagating anything from a 1975-90 civil war to a potential ground zero for a wider regional Sunni/Shia conflict as the final piece in an Iranian land corridor

The ongoing protests are, however, unifying the formerly sectarian population against all incumbent political factions, and Lebanon will change. The grassroots protest movement is born from the endemic corruption that characterizes the unwieldy nine-party government, which,  together with the destabilizing force of the ongoing Syrian conflict, has led to a mass influx of refugees that peaked at 1.5 million people.

The massive street protests are not only a youth movement dissatisfied with economic circumstances but also the act of a connected, aware and dissatisfied population.

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Lebanon has a 94 percent adult literacy rate. Social mobility is low; the same economic and political families have been in control for several generations. There are numerous former warlords now in senior political positions following the lengthy civil war. Gross domestic product (GDP) per capita stands at $12,000. Wealth inequality is one of the highest in the world; a quarter of the population lives in poverty. The richest 0.1 percent of the population earns 10 percent of national income, equivalent to the bottom 50 percent.

National debt stands at 150 percent of GDP; interest payments consume almost half of government revenues, primarily as a consequence of civil war reconstruction costs and significantly diminished GDP growth since the onset of the Syrian war. The current account deficit stands at a mind-blowing 25 percent of GDP. Government mismanagement has focused attention on the continued illegal misappropriation of state funds by members of the government.

The Lebanese population is two-thirds Muslim; Shia represent one-third of the population, and another third is an array of Christian religions. Hezbollah, a Shia political and military force, was born from the sectarian civil war and ensuing 1982 Israeli invasion. The only faction not to lay down its weapons at the conclusion of the civil war, Hezbollah resisted the Israeli occupation of southern Lebanon until 2000. The group is financed by Iran and backed by Syria.

The unusual confessional Constitution of the Lebanese Republic is based on the French Third Republic and, more interestingly, France’s 1789 Declaration of the Rights of Man. The government is a presidential parliamentary republic, with a president, prime minister, cabinet, unicameral legislature and judiciary. Laws are derived from Ottoman and French rule, as well as Islam. At the time of independence in 1943, an unwritten national pact split power by religion, as the population at the time was majority Christian denominations; the president is Maronite, the prime minister is Sunni and the speaker, Shia. The prime minister became accountable to the legislature, rather than the president, after the 1989 Taif Agreement, the most recent constitutional amendment.

Lebanon’s electricity grid is subject to daily blackouts despite high energy prices and in need of urgent overhaul. Meddling by Syria has stopped Jordan from selling excess energy to Lebanon to alleviate the brownouts. The discovery of promising Lebanese oil and gas fields indicates a potential longer-term solution to the country’s woes, but the people of Lebanon have understood that the political incumbents are not suitable to manage future revenues. The ongoing attempt to meet France’s CEDRE loan agreement proposals — austerity, foreign investment and privatization — do not appear to be a solution welcomed by the people who depend on a social security safety net.

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The protesters are chanting: “All of them means all of them.” The political and economic elite are unclear about how to respond. There is no path to reverse the public mood that has surpassed sectarian differences. Sectarian leaders have lost their cause celebre and their political power has dissipated. The use of force is an option, but it is no useful option against a united people; it would undermine the very reason for the aggressor’s existence.

The Lebanese Armed Forces (LAF), one of the few institutions with public support, has been wisely instructed by just-resigned Prime Minister Saad Hariri to uphold the right to protest while they attempt to unblock gridlocked roads. Hariri had fast-tracked a radical 2020 budget that had been prepared for CEDRE, but delayed, and proposed a government reshuffle. President Michel Aoun has sent back draft anti-corruption legislation for revision by the Parliament — it is an opportune moment for reflection on the proposed law.

These significant, albeit unfinished, political gestures are unlikely to stop the protests since the people seek a solution to the status quo itself. The ending of sectarianism is the next step.

President Aoun should replace the entire cabinet with highly educated, young Lebanese technocrats who will have little interest in Lebanon’s sectarian past. The new cabinet should immediately move to resolve the fiscal debt crisis and develop Mediterranean gas fields, electricity and mobile internet. 

Hezbollah should release any intelligence it has on foreign involvement in the protests. The people appear also to be rebelling against the pluralistic proxy state management of Lebanon, so any local sectarian states’ involvement should be aired and then would cease.

An international team of Swiss and Canadian forensic accountants should be brought in to examine all government accounts for the past five years and identify the sources and scale of the evidently widespread corruption. Lebanese anti-corruption legislation should provide an anonymizing disclosure facility for those who return more than two-thirds of funds stolen prior to the appointment of the international audit team.

The Lebanese banking system should terminate client secrecy and harmonize regulations with Financial Action Task Force (FATF) recommendations to increase coordination with overseas banks, which will facilitate foreign investment in Lebanon.

Confessionalism should be replaced by a new secular constitution, perhaps modeled on the U.S. Constitution that has proved resilient to an ever-changing world — see the Federalist Papers. A cross-party, cross-denominational convention thereafter should be convened and the constitution confirmed by plebiscite.

The United States is likely to be impressed by such political changes and surely would work to assist a nation upholding similar rights to its own. Israel would be encouraged to resolve the Shebaa Farms territorial dispute, so that Hezbollah might finally lay down its weapons, as Lebanese territorial integrity would be entirely restored, in conclusion of the Taif agreement.

Termination of the USD peg would be inflationary but would result in an implicit debt restructuring. A national infrastructure bill then could be legislated, possibly with alternate guarantees, so that the country could benefit from a rapid recovery, while simultaneously developing its offshore gas reserves with the assistance of the guarantors.

We wish all the people of Lebanon well in what will be a lengthy resolution process.

Christopher Nixon Cox is a member of the board of directors of the Richard Nixon Foundation and a non-resident fellow at Princeton’s Liechtenstein Institute on Self-Determination.

James Arnold is a British financier and geopolitical strategist.