Lebanon: A Choice Between Bad and Worse
Lebanon: A Choice Between Bad and Worse
It’s been four weeks now and the jolly Lebanese government was not able to take a decision on the issue its finance minister called “a choice between the bad and the worse”. Prime Minister Hassan Diab has said that this government came into being as a result of the October 17 revolution and raised the slogan of salvation from the corrupt political class that led the country to starvation and poverty because of its monstrous and unprecedented corruption and theft.
The “bad”, here, is not that this bulky state is totally bankrupt, with former finance minister Ali Hassan Khalil having declared, on television, that the treasury was empty, “not a pound”. Making matters worse, its revenues have declined 40 percent in the last three months. The bad does not end here and not even with what it practically implicates through the public and repeated confirmations of most ministers, deputies, and officials that it is “a state of looting” as they have done in their parliamentary discussions.
Neither is the “bad”, sir, a fact that this state is now required to pay a series of sequential and time-bound debts and that the public debt is close to one hundred billion dollars, nor is the “bad” fact that it is faced with a seemingly dire dilemma over a payment although it has known about it for a long time, namely what it will do about the payment of one billion 200 million dollars on Eurobonds it had issued, due to be paid on Monday.
The bad thing here: the dilemma of whether to pay this amount through the central bank, i.e. from the deposits of the people who are being subjected to arbitrary capital controls that force them queue line to beg their money from banks, money which the state constantly steals in order to pay its debts; this leaves the country unable to import medicine and wheat, pay hospital dues, medical supplies, fuel, raw materials necessary for industrial sector. In other words, using peoples' money repeatedly in a manner that will strangle them.
However, what would be worse, some believe, is not paying, as this would harm Lebanon's reputation in global financial markets and could lead to the imposition of sanctions and the seizure of state institutions and properties.
But it is well known that there is always a way to navigate between the bad and the worse, i.e. trying to reschedule the debt through an agreement with the lenders and the Eurobond holders, to pay part of it and postpone a part. This, however, requires that Lebanon convince the lenders that, this time, in contrast with its bad behavior in the past, it will initiate a reform process that helps to improve its financial and economic standing, thereby allowing it to meet its obligations in the future.
As soon as the government was formed, its prime minister announced from Baada: “We are steering towards disaster and we must resolve the issue”. However, as of Friday night, the government has yet to announce its decision regarding the choice between the bad and the worse, which it must inform the market about by Monday.
Worst of all, it is said that the ministers of the government of specialists fell into a farcical and tragic dispute after it had decided to seek the help of international specialists to help it make the decision. After two long negotiation sessions, two out of eight companies were chosen. Lazard was chosen for financial matters and Hamilton for legal matters, but a dispute quickly emerged because Israelis and experts working in Israel were employed by the companies or the two companies have branches in Israel.
Amid some fears that Lebanon would be forced to resort to the World Bank for assistance, as had happened in other countries, fears stemming the clear and strict reform policies that are requisites for the provision of assistance, Hezbollah leaped to announce that it would refuse to "submit to global arrogance", which, of course, increased the wariness of "Eurobonds" holders with whom restructuring is being discussed.
It is not interesting, of course, that this was done by the “government of specialists” which was formed by the Shiite duo, in collaboration with its ally president Michelle Aoun and his party, a government of one political color, inevitably leading to Arab, European, and American doors being closed to it. What is interesting is that they had not looked into the identities of these companies properly before deciding to hire them although they could have entered their names into google and known their backgrounds found out who owns them. What is even more ridiculous is that Lebanon’s debts are not classified; they are public and widely discussed among financial companies and experts who know much more about them than the government. Nevertheless, there are - strangely enough - those who are suddenly fearful that the Israeli enemy will know about Lebanon's financial situation which is very much familiar to international economic circles.
Because we are on a tight schedule, the Shiite duo acquiesced to the idea of working with the two companies. They had a series of intensive meetings, which will lead, as was said, to the state's announcement of the Lebanese, either Friday night or Saturday (today), of its decision to pay or restructure, which is more likely. Other things are more important to Lebanese citizens. The economic and financial crisis is suffocating them; it has raised the unemployment rate to over 50 percent and has led to the closure of hundreds of factories, restaurants, and institutions, at a time when public movement is paralyzed by the spread of the Coronavirus. Despite this the Lebanese and Arabs listened to a strange press conference where the Lebanese health and tourism ministers called for the revitalization of medical tourism in Lebanon, a country trembling in fear because its airspace remains open to counties countries, particularly Iran but Italy as well, where the virus has spread and amid deep skepticism around the preventive measures being taken by the government in air and land crossings!
What is interesting is that, in the midst of an urgency to address the situation financially and economically, Diab chooses to hurl accusations that seemed more offensive to Arab countries than his opponents, especially when he says: “There is an orchestra working against the country, playing games, and attempting to distort facts, committing forgery by inventing lies, hurling accusations ... and inciting countries against Lebanon to prevent their provision of financial assistance!”
Many in Beirut and throughout the Arab world believe that this kind of rhetoric is offensive to the Arab states that Diab wants help from because their relationship with Lebanon is a historic one. This relation did not rely on orchestras and distortions but on a clear and well-known strategy based on the fact that Lebanon is considered a dear and brotherly Arab country that deserves support and assistance, as had been demonstrated by many different situations.
Furthermore, Arab states do not take position and pursue policies based on things said here and there but through a strategy that seeks to maintain Lebanon's position as brotherly country in the Arab family or that it at least isolate itself, as it declares, from the region's conflict and prevent its transformation into podium from which it disavows its Arabism. This is especially needed after Iranian officials repeatedly claimed that Iran controls Beirut, to which no official belonging to the political environment that brought Diab to power objected, nor did anyone among them respond to these insults to Lebanon's sovereignty and independence.