Lebanon: a new race of leaders
To understand the events in Lebanon that have taken place over the last month, it is vital to have an idea of the country’s debt structure. In other words: the analysis of Lebanon’s public and private debt allows us to better understand this socioeconomic crisis. In fact, Lebanon is renowned for distinguishing itself from the other so-called “emerging” countries in that at least half its public debt (whether in dollars or in Lebanese pounds) is held by domestic creditors, namely the nation’s banks. However, Lebanon –an educated country admittedly – nevertheless has no industry or service that generates liquidity via exports and therefore, towards the end of the 1990s, turned to international markets to continue financing its lifestyle and make sterile real estate projects proliferate, disfiguring the country in the process. This is how innumerable issuances of Eurobonds have seen the light of day since this era – with the blessing and support of France –which were offered up, hence inducing a fundamental change in the nature of Lebanon’s public debt increasingly held by foreign creditors. The last rescue ship (in April 2018) called “CEDRE”, involving the subsidisation of the country in the way of 11 billion extra dollars, is also the last jewel to crown this dangerous debt transition of a country that still owes more abroad and in a money that is not its own i.e. the dollar.
The level the Lebanese pound is at is therefore vitally significant for the country as any devaluation would cause a chain reaction, set in motion by a staggering increase in public debt in dollars via the transmission belt of the $/LL exchange rate that would reach dizzying heights. Today, there is good reason to fear – and it’s almost a certainty – that a pound whose exchange rate would fluctuate and that would no longer be controlled by the central bank would collapse immediately by 50% against the dollar, thus systematically leading to Lebanon’s debt ratio going from 150 to some 175% of GDP, perhaps even more. This hellish spiral – that the Lebanese bankers are perfectly aware of – has of course brought on excesses on the rates being paid out on deposits in dollars and in pounds placed in the country, bringing in up to 15 and even 20% in interest, deeply and predictably harming the private sector. In fact, why would a Lebanese saver or investor bother to take any risk in launching a business when they could earn a decent living by placing their savings in the bank?
However, such an enormous level of debt –currently the second or third highest in the world –never happens by chance, even less so following calamitous government (mis)management. It is the natural consequence of a decadent body politic, a deficient and even non-existent tax system, and of a confiscation of wealth for the benefit of a tiny minority. This gangrenous Lebanese corruption – that has reached the stage of putrefaction – is having social repercussions likely to plunge the country back into a danger equivalent to the civil war that went on for 15 years. As particular as the Lebanese situation is, it is still not immune to our time’s great tendencies of social and popular unrest that are taking place throughout the world, and that are first and foremost the result of the collapse of political representation, of identity, and of the public’s trust in its leaders. Admittedly, the movements that are today expressing discontent across the globe are fragmented, abhorring all form of leadership, reviling sometimes violently all hierarchy. However, the Lebanese “revolutionaries” owe it to themselves – and to their country – to urgently adopt a form of governance that capitalises on the currently strong mobilisation of the people of all different religions, in order to transform this energy into a coherent strategy.
It is in fact not enough, like the current movements (the gilets jaunes in France), those of the recent past (You Stink), and others across the globe to call for them “to clear off”, and it is not enough to bring down a Prime Minister (M. Hariri) and to prevent the nomination of another (M. Safadi). It is imperative though for the proper credibility of the discontent masses to establish a rigorous breakdown of the country’s economic, political and social situation and to propose concrete – and above all realistic – measures to remedy it. To do this, I am sorry to break with this great consensus that reigns today among the protesters drunk on hierarchical equality, but it will be vital in the very near future to designate legitimate leaders via the strength and determination of the streets, and who will not just recycle the old repeated neoliberal recipes that have systematically benefited the leaders. But let us not be naive enough to imagine for an instant that the Lebanese – a hyper-politicised people –are ready to break with the religious system that structures their daily life, even if one of the protestors’ slogans is to be done with this confessionalism that is nevertheless there to stay, it being an integral part of the Lebanese identity. The government of “technocrats” too having violent and vociferous demands made it of lies within the realms of mythology because, despite the fact that many of the outgoing ministers are already experts in their fields, it is impossible – in a country like Lebanon – to make decisions without this political consensus that constitutes one of the nation’s building blocks.
The question of all questions, that is being asked for Lebanon but that is the basic necessity for any executive throughout the world to act, remains that of confidence. The Lebanese must – not only introduce the forced retirement of their current leaders that are now in a deep coma – but also urgently choose a new “race” of leaders that they will bring to power and who will finally behave as responsible and respectable men and women of the State. Once this indispensable confidence –which is necessarily of a political nature – is restored, the pound will be stabilised again, the influx of currency from the rich diaspora will come back, and the poltergeist of deposit confiscation (the “haircut”) and other CEDRE programmes (that are like a stranglehold of international finance over Lebanon) will disappear.