As Lebanon Reforms Go Slowly, Protests Suggest Widening Anger
In a country fractured along sectarian lines, the unusually wide geographic reach of protests over Lebanon’s dire economy on Sunday suggests deepening anger with an entire class of politicians who have jointly led it into crisis.
While the protests were not big - Lebanon’s divisions make large demonstrations rare - they erupted from Beirut to the Bekaa Valley and from Sidon in the south to Tripoli in the north.
Lebanese leaders have said little about Sunday’s protests. For the coalition government led by Prime Minister Saad Hariri, the focus remains reviving the economy through long-delayed reforms, such as fixing the power sector that bleeds public funds while failing to meet Lebanon’s power needs.
In the process, Lebanon hopes for an international seal of approval that will unlock billions in finance for investment.
But Jalal Salma, who protested in Tripoli on Sunday, has more immediate worries. “There is real hunger and we can’t see a solution on the horizon. On the contrary, we see a dark future ahead,” he said, according to Reuters.
Lebanon’s economic problems have been building for years.
Shattered by war between 1975 and 1990, Lebanon has one of the world’s highest debt burdens as a share of its economy. Economic growth has been hit by regional conflict and instability. Unemployment for the under 35s runs at 37 percent.
The balance of payments has been negative for years, meaning more money leaves the country than enters it. This financial crunch has added to the impetus for reform.
Foreign allies are not yet fully convinced by the pace of change. Some $11 billion pledged 18 months ago in France, conditional on reform, has yet to flow into the economy.
“We stressed the importance of delivering on reforms rather than announcing reforms, and of delivering the 2020 budget on time,” Philippe Lazzarini, a top UN official in Lebanon, said on Tuesday after meeting Hariri.
“Carving up the cake”
The kind of steps needed to fix the national finances have long proven elusive. Sectarian politicians, many of them civil war veterans, have long used state resources for their own political benefit and are reluctant to cede prerogatives.
Many of them are millionaires. Some are billionaires.
Lebanon ranked 138 of 180 countries in Transparency International’s 2018 corruption perceptions index.
“The politicians have always been in conflict on how to carve up the cake. This obstructs any reforms and reveals them as a bunch of liars to international opinion,” said Mahmoud Faqih, a veteran campaigner who protested in Beirut.
“The wide scope of these protests is evidence of the buildup of the crisis and that it is rubbing salt in the citizens’ wounds,” said Faqih, 35, a journalist.
Public concerns have been intensified by the emergence of a black market where dollars cost more than the pegged exchange rate. The central bank introduced new steps on Tuesday to organize the provision of dollars for key imports.
The government has vowed to maintain the peg.
Maha Yahya, director of the Carnegie Middle East Center, said concern over the currency had “become a daily topic of conversation” and Sunday’s protests reflected that.
“What is very frustrating for many is that there doesn’t seem to be a horizon. It’s not like we have a plan - that we can grit our teeth and bear it for the next six months - and everything will be okay,” she said.
More urgency seen
The government has won some praise for efforts to reduce this year’s deficit and its plan to fix the power sector - moves the IMF called “very welcome first steps on a long road”.
The 2019 budget included politically difficult moves, notably a three-year state hiring freeze. But proposals for a temporary public sector pay cut were torpedoed.
Knowing more must be done, politicians aim to further cut the deficit in the 2020 budget but without raising new taxes.
“Obviously the speed at which decisions are being made is not very promising, and the government and the political parties have to move much faster,” Nadim Munla, Hariri’s senior adviser, told Reuters. But “we have noticed that in the last few weeks that there is convergence on the urgency to move forward.”
In an interview on Monday, he also expressed hope that upcoming trips by Hariri to the United Arab Emirates and Saudi Arabia would yield “something concrete” after “encouraging signs” of a Gulf Arab readiness to deposit funds in Lebanon.
A recent trip by Hariri to France had also been a success, he said, citing agreement on a donor state follow-up mechanism for Lebanon, the scheduling of a high-level meeting next month, and French investment interest.
MP Alain Aoun of the Free Patriotic Movement said the budget was a new test “for the government and parliament to prove they have the ability” to take Lebanon out of the crisis.
“People have the right to protest and no one should blame them for that. Rather than looking for excuses, the political class has to take the necessary courageous measures and reforms to restore confidence that it lost in the public opinion and in the international community,” he told Reuters.