Lebanon’s prime minister, Najib Mikati, did everything a good leader should do when taking over a country in a practically unparalleled state of economic collapse. The economic morass in which Lebanon is embroiled has few peers in the last century and a half.
Announcing on Friday that he had formed a cabinet after protracted negotiations, his eyes welled up with tears and his voice broke as he described the hardship the Lebanese have been experiencing. “The situation is very difficult,” Mikati said, followed by an appropriate note of hope and optimism: “We are all going to work together, united with hope and determination.”
Who am I to question his sincerity? But as a billionaire businessman, we can be confident that Mikati himself isn’t suffering personally and may not have gone out into the street to see firsthand the pain of others. And, whatever empathy he might have is likely to be constrained by the fact that he is part of the country’s corrupt and self-serving political elite – the ones who have happily let the economy’s troubles fester for years without lifting a finger.
It’s hard to believe there really are any optimists out there, but somehow the pound strengthened on news of the new government, reaching 15,000 to the dollar, its highest in four months. Optimists can point to two positive developments: 1) After 13 months in limbo, Lebanon finally has a government that in theory is empowered to tackle the crisis, and 2) Mikati’s cabinet is manned by technocrats – men and women with the skills needed to run the country, rather the career politicians.
But the optimism rests on fake news.
Whatever official powers the government has is overshadowed by the fact that Lebanon is due to hold parliamentary elections in May. Nobody, including the countries that have been pressing Lebanon to implement badly needed reforms, is suggesting they be put off. The Mikati government may produce some Potemkin reforms to please potential donors and sweeten voters before the elections, but it will have neither the time nor the inclination to do what’s really needed.
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In any case, the ministers are technocrats only in name. Really, they are frontmen and women for the political elite, with the academic degrees and work experience to do their jobs but beholden to the politicians who named them. They are not above the system. They are a part of it.
Take Youssef Khalil, who holds the key job of finance minister. On paper, Khalil is a technocrat par excellence – a Ph.D. economist on the faculty of the American University of Beirut and the holder of senior roles at a clutch of nongovernmental organizations.
But his main job in recent years has been head of the financial operations department of Lebanon’s central bank, i.e., a key player in the financial engineering of the Lebanese pound’s exchange rate that contributed to the economy’s downfall. He is reportedly close to Riad Salameh, who masterminded that feat of disastrous engineering and remains at his job despite that.
Khalil is also a nephew of the late Ali El-Khalil, who served as finance minister on several occasions between 1979 to 1992. Khalil was nominated for the job by Nabil Berri, the leader of the Shiite Amal movement.
Even if the inner technocrat of Kahlil and his fellow ministers were to somehow emerge and defy their political masters, Lebanon’s problems are too deep and too intractable for the Mikati government to begin to address them.
The World Bank estimates that Lebanon’s gross domestic product contracted 6.7 percent in 2019 and another 20.3 percent in 2020 during the worst of the COVID pandemic and the Beirut port explosion.
This year, in lieu of any effort on the part of the caretaker government to act, the economy will probably shrink another 9.5 percent. The pound has lost 90 percent of its value in the past year, and inflation reached 80 percent last year and will probably exceed that rate this year.
If it were simply a matter of bringing a team of economists together to draw up and implement a plan, even a disaster of this magnitude could be dealt with – assuming that the international community came up with the money to help the country. The to-do list is pretty straightforward and includes debt restructuring, an overhaul of the bloated financial sector and public sector reforms.
But none of this can happen without many heads rolling and without an assault on the interests of Lebanon’s ruling elite. There’s no point in giving Lebanon money to tide it over while it gets its house in order if there’s no plan to get the house in order to begin with.
But it seems that the powers that be in Lebanon hope somehow to pull it off, either by guilt-tripping donor nations over the country’s real distress or by fanning on fears that it will fall into the hands of Iran. Tehran’s oil deliveries to Lebanon are designed by Hezbollah to portray itself and its Iranian patron as Lebanon’s savior in its hour of need. But no doubt the rest of Lebanon’s corrupt elite see some political benefit for themselves from the oil shipments by scaring the West and Gulf oil powers, too.
The donor countries and international institutions shouldn’t fall for this. The fact that the International Monetary Fund agreed on Monday to supply Lebanon with $1.135 billion in special drawing rights is a worrying sign that they may do just that.
But without reform, Hezbollah will remain the dominant power in Lebanon – it’s as much a part of the corrupt system as the other political parties. Providing aid will only cement their control. It’s a pity the Lebanese will have to suffer, but that it’s their own leaders who have decreed that.