Debating Hariri’s economic policy

And the question of Lebanese corruptive and monopoly practices

We’ve started a debate around political economy issues in a previous post. So please stop commenting in the previous post and start commenting here. I just copy-pasted the last entries in the comment section. I will be soon answering and I encourage everyone to contribute by commenting here.

As a summary:

We are assessing of the economic ‘policies’ or broad rationale followed by the various Hariri cabinets since the inception of his first term. through an assessment of:

1- Interest rate politics followed
2- Reconstruction of downtown and some infrastructure
3- General economic (or business) visions
4- Other economic and social practices

Hussein proposes what I would call the “security threat” argument, where Hariri had to hike interest rates because investment climate was bad supposedly due to the war in the south.
I will soon show that this argument is untenable.
Another argument dear to the Harirists are the “service economy” argument. Although Hussein says he is against I want to show how this argument is at the core of Hariri’s policies and political interests and ultimately (and among other things) serves to keep the confessional system well entrenched, and the constituencies pretty much dormant (in terms of social assertiveness) and divided.

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12 thoughts on “Debating Hariri’s economic policy

  1. Anonymous said…

    seriously, tayyeb, how about the Corm-Hoss government. Why didn’t Corm devaluate?
    And again, just let me know which country can pick up economically with a 7-year war in its south that occasionally stretched to cover the whole of the country. How many times were electricity factories and bridges hit and reconstructed? Any cost there?
    As for where was Hariri allowed to reconstruct, remember when Hani Hammoud was beaten up when he showed up in Ouzaii for the reconstruction plan? Do you know how much money the army cost the treasury a year (20%) for what? For drivers of officers and army clubs renovation? How about the Council of the South or Ministry of the Displaced? And by the way, the south down to Tyre got a new highway, and so did the Bekaa (but these were not Hariri’s initatives and I’m not opposed to them, only to show that money was spread in all directions). Again, Solidere did not cost the treasury (save for the Abou Jmeel evacuation).
    Again, in 24 months, how did Corm behave? Growth went to negative. But on July 11, 2006, growth was projected at 5 percent despite all the trouble. Whose policies were at play then? Lebanon crossed the one million tourist per season. This all mean more money for the country, which I believe you can use to encourage other sectors and diversify. But again, Syria did not let growth go without a useless war.
    You cannot be blamed for running a country that has the upper say in Damascus and an armed militia that decides wars whenever it pleases. These do not look like normal conditions for managing the economy. Do they look normal to you Bech?

  2. moun said…

    ust a few point in reaction to “anonymous” ‘ post:

    – the debt was 2b$ in 1993. 7b$ dollars of reconstruction expenses were engaged between 1993 and 1998. the 20b$ that are left, were due for interests. this is massive robbery by the banks in a country that was helped by almost all countries in the world and had political stability because of the Hariri-Hraoui-Berry-Hezbollah-Syria leadership.

    – debt service concentrate 80% of public dubget. no need to say that it is nonesens

    – interest rates beagn to slower down in 1998 after hariri left governement

    – the process well described by Bech is even very dangerous for the lebanese banking sector: one day it will collapse, it is not sustainable on the ong run. Hariri tried as hard as he could to put the system in danger between 1998-1999, with massive media desinformation. however the slowering down of interest rates and the issuance of bonds suscribed by foreign banks, permitted to releive the burden and restrein the negative influence of lebanese banks on the state tresory. Moreover, we can guess that without the introduction of VAT, prepared by the Hoss governement (it is very complicated technicly and I think nobody in hariri’s courtyard has the competence for that), and then implemented by hariri, lebanon would never have been able to pay in due time. as bech said, they were in panic and thus accepeted that lowering interest rates and putting some money back (VAT) was invitable.

    – devaluation is not an option. why ? because all lebanese that do not hold dollars would be ruined.

    – everything was not changed between 1998 and 2000. You should remerber that all medias and most politicians (hariri, joumblatt) where against that governement. I remerber joumblatt accusassion in parliament : “this is a pro-american government, and anti-syrian” (nothing to do with our business, quite funny though). Moreover, in this kind of context you cannot just change everything in one shot. you have firstofall to avoid panic, for the pound not to collapse, and thus you must be carefull. anyway. hariri’s era was 10 years, the hoss government was two.

    – about solidere and hariri’s honesty, you’re being to naive. there’s plenty of literrature on it, have a look on it.

    – by th way, electricity factories did not cost a penny to the lebanese state, the european union always paid them

  3. alhaqid said…

    Ok, I read the articles and I got pretty disappointed.
    I tend to be more comprehensive to people than they deserve, sometimes, and this time was one of them. I expected, learning that hussain is an ex-leftist, to read at least leftist “literature” distorted. But I find one cheap piece of propaganda that doesn’t show anything apart that the guy in question is a complete traditional zelm.
    How could anyone go through an elitist process, studying and playing leftism in AUB and turn to be that much of a zelm!?? I mean one could go back to pure Marxist social interpretation and say that money defines it all. What else could explain such sophism like:
    “The country needs to start generating wealth” or “And welfare follows capital not accompanies it.”
    These dumb chrono-logical statements that only serve dumb economic schemes that suits best those that are meant by the “country” in the first statement, regardless of any logic, which is the haririst fucks (or exploiters).
    Or that economy is a “matter of views”, yes, Marx who spent his life proving what nonsense this phrase meant would have danced in his grave, if reading such “leftist” crap.
    One of the attrays of “economic” discussion for dumbasses is that they put together a mathematical scheme, which have been circulated enough in pseudo scientific revues and books and thus “reasonably” passes as a decent paradigm of discussion, about money coming and going and trying to be smart showing that in one point or the other, Hariri, or whomever they defend, was just following “indicators” (like the dumbest one in this case mentioned, “growth”) while Hoss and Corm couldn’t prevent decline of growth. And choose, whenever they decide suitable, to get something outside the monetary mathematical scheme, like Hezbollah’s wars for example, to justify their failures.
    This is Doxa, in the bouridieusian sense, exposed. Paradigm, arguments, the whole logic of a debate (right to the most historically absurd arguments because they were taken out of their history), all working magically for the dumb discussion to actually take place, and exist, and thus declare its immoral beholder as a decent interlocutor.
    I mean, how else could and argument like “people like Nasser kandil” work, by itself, as it was even to resume something.
    Ya habibi, the biggest manyouk here is not Najah Wakim nor Kandil nor Kanso as the numbers and history shows. You’ve got it all wrong!

    SOLIDERE was taken by force (I mean the lands) to more than a hundred thousand families, NOW THAT IS ECONOMY. And the dude Moun had to remind you, o leftist one, that devaluation RUINS PEOPLE. The total price of lands in downtown Beirut – I will take my time to say it for there are people that have been mislead by a powerful media establishment – was evaluated by corporate friends of the martyr prime minister to a mediocre amount and they were given mediocre shares to that amount, thus giving them mediocre benefits to that amount – THAT IS CALLED THEFT -When their lands actually worth much more than that in estimates, and you know that real estate economy works with “estimates” and “propaganda”.

    Honest is too much of a word for a guy that was everything BUT a smart economist. Talking “economy” in the case of Hariri, as the examples shown by bech and moun indicate, is non-sense. He and his equipe are not even worthy of being compared to “conservative revolution” phenomenon we saw in the west with Thatcherism, Reaganism and lately Sarkozysm. Hell, one could’nt even call harirists an “equipe”, the best word for those that like to kiss hands and feel touched about it is zelm, or lackeys.

    As for the economic logic we were trying to apply here to the Lebanese case, apart from who was responsible for consolidating and PROMOTING the ruling class that followed the 1992 elections, and who obstructed the functioning of the “taftich el markaziy” and the “majliss al khidmah el madaniyyah”, and who deployed the army on the streets of Beirut to ban the union’s protest (remember on who’s side you are siding o leftist one), and supposing it worked:
    Hariri’s accomplishments are only measured by the numbers of the working class population that left the country from 1992 till… NOW (“growth” was going OK till 1998).
    This is harirism.

  4. moun has left a new comment on your post “Hussain’s answer”:

    Anonymous,

    – when i said electricity factories were paid by the european union it was in reaction at your argument that israelis always destroyed them and that it costed a lot. reconstruction of those factories did not cost a penny (thanks to EU). as far as electricity production is concerned, of course it costed a lot, that is obvious. the true reasons are first : massive corruption by all traditionnal leader (berry, hraoui, joumblatt, etc. and certainly not Hoss), and more, about non paid bills, you should know that what cost most is not southern inhabitants that “cheated” on it, yet some ambassies (germany for example) that never paid the bills. and they consumed much more than people in southern lebanon, or southern beirut. hariri’s never demanded those bills to be paid, however, hoss did.

    – about inflation and interest rates: when, as in 1993, you have so little debt (2b$) that the pound have been stabilised (you must admit that it was hariri that put pressure on it in 1992 to undermine Karame’s government), and you have a programme of investment that is only about 5b$, you don’t need important interetst rate. the link between interest rates and inflation is important but it has also to do with your solvability. your simplistic manner to explain that it was normal that the lebanses state pays so much interest for so little endebtment, is rethorical and is usually argument for pure montarist. i can read you’re “leftist” (to the extend it means something), i don’t understant.

    – in 2006, the lebanese debt was 61bLL, 40bLL for debt service (2/3 of it). what has been reconstructed in lebanon ? lets take the eras that were almost never hit by israelis (beyrouth, northern lebanon, jabal loubnan): an airport that has the capacity of Orly airport in paris, whereas traffic is so much less, a gigantic port whereas beirut will never be the center city for ship trade in the mediterranean, a ring betwwen east and west beirut, some tunels in beirut, the southern highway. the whole costed 6b$. that’s almost all. there is abslutly no infrastructure at all in lebanon, all development has been concentrated in beirut, there is no productive economy, only luxury and chiha’s style restaurant and casinos. we have all this debt for so little. i mean come on, how can you defend a guy that destroyed our economic capacities for decades by ruining the country. the theoric debt without debt service was in 2006 of 12bLL.

    – i think you know that syrian power was not monolithic. between the former vice-president and the actual president, you know there was some trouble. you also understant that one part was allied to saoudis and americans, and in lebanon with hariri. you cannot just say that hoss goverment was syrian and that hariri was weak in front of him. it is completly unsincere. by the way, the composition of hoss goverment was the less “syrian” of that time (i admit there was obvious and major mistakes as Murr and co). was hariri forced by syrians when he ordered shootings on demonstrators in 1992 ? when he accepeted elections of 1996 and 2000 that were all massively corrupted ?? surprisingly, he always won those elections. if we he was censored by syrians, and he was a true man of state, he would have resigned in 1992, and had left lebanon.

    – secondly, you cannot ignore that hariri owned directly or inderectly most lebanese medias.

    – if you’re point was to say that hariri is not the only corrupted man in lebanon, i defintly agree. all his allies of the time were too: berry, joumblatt, hraoui etc. etc. and there were all allied to syrians.

    – if you’re point is that he was a competent and honest man, and that people like Hoss were uncompetent and understood nothing in economy, then i this debate has no sense at all. whatever is your point, you cannot rewrite history like that.

  5. moun has left a new comment on your post “Hussain’s answer”:

    sorry, just about military operations and risk and interest rates…this is really weak and unsincere. it was low scale intensity military operations, and most people in lebanon and in the world (and i premuse you also) were definitly sure that hariri’s program was going to install lebanon in prosperity and progress. the country and the government was supported by the saoudis, the americans, france, and syria. then, all these conterbalanced largely low scale operations most of the time limited to the south. the country economic solvability and risk were well rated.

  6. Hussein is just another cocky ill-informed vulgar apologetic of Haririslam who knows a thing (or 1.5 things) about economy and social policies and is eager an willing to form long sentences punctuated with ‘savant’ words that he doesn’t clearly understand to start with, just to serve and get paid, or maybe answer some innate sectarian sentiments that could only be satisfied through blind worship of his favorite Za’im…

    Haririans theorize while their head is burried deep into their butt! They love life and Az’our and Sami Hadda and Sanioura and Marwan Hemade and all the disgusting and merry men of the square table… And see nothing wrong with one person and his party monopolizing power for 15 years and failing on all their own set goals (not that we agree on them)…

    For Hariri apologetics, it’s always the fault of the people who didn’t let him do it?? why was he so attached to it then? Why didn’t he flipping get lost in his retarded business empire that the sun doesn’t set over and let somebody else fail at his place?!

    Ah I know, he’s such a patriotic and didn’t wanna leave the motherland to its fate!

  7. Anonymous has left a new comment on your post “Hussain’s answer”:

    I think we are moving in circles in this debate. Alhaqid, I think you are just like Wakim and Co., cannot argue without foul language. Ya3tik il 3afieh.
    Moun, how many tourists did you expect in Lebanon between 1993 and 2000? How many investments? Military operations were not low scale and often Israeli jest would hit Sidon, or na3meh or anywhere.
    Finally, let’s clear this once and for all: The US gave Syria Lebanon in 1990. Syria had the upperhand in everything. Its allies Jumblatt, Berri and the rest won everything. Syria kicked out Maronite leaders and took in Hariri, but with restrictions. First, Hariri is Sunni and his leadership poses threat domestically for Syria. Second, Hariri is a Saudi-sponsored politician. So Hariri, even though he got along with Syria, he played by the rules but he was never Syria’s favorite. When you talk about whatever happened under his rule, like shooting at demo in 93 or GLC strike in 1996, you should look at the minister in charge. In both cases, the defense and interior ministers (and Army Commandor Lahoud who imposed the curfew in 1996) were never Hariri’s people but took orders from Syria. The conclusion: Hariri was never Syria’s favorite but was given some leeway in governance.
    This leeway included economics. But due to war and the corruption he could not stop (or perhaps his men even participated in), no serious solution of his could work.
    So, in my opinion, Hariri was never given a chance to implement his program. The bits he implemented, like some highways, were adopted to the Lebanese situation and came at a very high cost. Even the Labor Unions, which Hariri of course hate, he couldnt control or confront. These were taken from actual labor leaders and leftists into the hands of the Syrian intelligence and they were used against Hariri for political not labor reasons. Mehlis report talks partially about this.
    Anyway, the story is long. My last tip here, is to deal with it this way: Whenever an action happened in Lebanon, try to trace who was behind it and not say Hariri outright (who was the minister, who gave the order…) When judging Hariri’s action (the orders he did give especially in econonomics), try to be in his shoes and see what could have been done better and in what way (given what was at hand). I’m not saying Hariri never erred, but he should not be blamed for a country he was never able to rule and in which he was killed.
    And btw, leftism does not have one single perspective. Here is an article on some leftism:
    http://www.alhayat.com/business/06-2007/Item-20070624-5ee78cda-c0a8-10ed-0082-a4949a10194f/story.html

  8. i will point out for some little things and let the discussion develop a little more before i answer with more details. (OK, i dont have internet so i am always brief)

    — defense minister in 1993 was hariri watchdog Mouhsen dalloul.

    — lahoud obeyed cabinet’s orders when imposing the curfew, a cabinet presided by hariri.

    — hariri was syria’s favorite in 1992, that we know for sure. That have changed later for many reason but the crimes of the first period were all implemented in a favorable context to hariri.

    — and contrary to what you objected to moun, military operations were low scale ones (except for 1993 and 1996 operations) and it was in that context that hariri asked for a ful; hand on the economy. I accept arguing the corruption arguments with more elaborations but this one doesnt hold for a sec. this is a false reproduction of history as perceived by everyone at that time: HOW THEN WAS THE BALAD MACHI WEL CHOGHOL MACHI in the stupid tv advertising!

    On that same historical false reproduction, and to add to your scheme of analyses that you proposed at the end of your post, ok, we should look at hariri in his context, and we should grant the other actors that privilige too. You see, the argument about the labor union infested with politically oriented parties doesnt count as one. All unions in the world have their actions oriented in paralel with politics. And corrupted political parties invest in that. There’s a big deference between that explanation, and the one that reduces a whole sector of activity (the unions), with people like Abu Rizk (emprisonned becos “holding false accusations of corruption” against the hariri goverment may i remind you) giving a whole lifetime in a career for union activity to one “essentialized” entity (sorry to be rough wiz ya but i should point out to that tendency when it occurs).
    other political actors have the same right of de-essentialisation than dumbo the prime minister. And that exception is one extra trap of the Doxa: one model of selective essentialization generalized.
    And that explanation puts more precisely hariri in his true context.

    and i will add one more trap of social interpretation. Hariri as an actor my have actually perceived the unions as one monolithic enemy, but this is HIS ERROR and we shouldnt confuse between the actor’s system of representations and OURS. In the case of hariri, the confusion is made easy by the fact that he who holds the media these days (to be simplist and brief) holds the tools of representation, the dominant vision of the world, more likely to affect us than others. See what i mean by ” acting like najah wakim” not holding as an argument! hell, for me wakim is the honorable man in that story! its becos haririst media focused on reducing him to an “ugly stereotype” that he is labeled by you, as wakin AND CO. and works as an argument of yours against little boumb.

    one more thing, couldnt open the link you posted, its not entirely posted. but i bet its a hazem saghieh article.

  9. ya ustaz alhaqid,
    Dalloul is a politician with links to Syria before Hariri was born. Despite the family links between them, Dalloul has always had his independent status. Anyway, in 1993 the shooting on a demo against Oslo, Besahra Merhej (Syria) was interior minister. It was a Syrian message to Hezbollah. Just like the crackdown on MTV and Aounists in front of Justice Palace, Hariri was there, but Sayyed gave orders without him.
    Lahoud gave Sayyed a promotion, when Hariri objected, Sayyed got the promotion anyway. So Lahoud never took orders from the cabinet. We have so many examples about how Hariri was never in charge of security (until post-2005 cabinets).
    As for the labor unions, just recount the labor ministers since Hariri’s first cabinet and you’ll see what I mean. The minister overlooks the Itihad Ommali 3am and most importantly, the Daman Watani Ijtima3i (which is a welfare facililty which was never under a Hariri minister). Syrian ministers simply divided the itihad 3ommali by creating the biggest number of unions that support them and the itihad moved from the leftist/Christian grip to Syrian intelligence/Shiite grip. No problem if the union deals with politics. The problem is that it never acted unless Syria and allies wanted to settle scores with Hariri. It never acted out of labor concerns.
    Anyway, let’s make this easier. Count the ministers that were pro-Hariri in all of his cabinets. Other than the communication ministry which was under him for one term, I don’t recall Hariri’s ministers taking any service cabinets. They had mostly Finance, Economy, sometimes Foreign Ministry and Justice. Even in justice, they didnt have a full say. No one thinks that Hariri was the one behind the imprisonment of Geagea or the exile of Aoun.
    Interior, Defense, Electricity, Labor were never under him. And parallel to today’s disagreement, he never commanded more than 2/3 of the cabinet or a majority in parliament.
    I will leave it here for now.

  10. Hussein you read history with the gaze of the present political configuration.

    The political relation between Hariri and the various Lebanese as well as Syrian protagonists have changed drastically overtime.

    Hariri was never against someone or for someone. He just buys them when he can and/or co-opt political actors in order for it to fit his political agendas.

    This means actually that Hariri sometimes benefited politically from Hizbullah and benefited politically from the security system in place. We should stop reading Hariri’s “legacy” as the story of this rich ‘successful’ investor who came to spread ‘development’ in Lebanon and who got paralyzed by the ugly Syrians and security bureaucrats.

    A note on the side: the security system represents 10 percent of the total budget (yaaneh military police, etc.), one of the lowest ratio in any country. And electricity is even less (where ugly poor people are supposedly stealing away thus stifling development). The main problem that drains the country’s resource is the debt. who is eating the debt? the banks. But will right more on all these stupid stereotypes.

  11. bech,
    I’d check previous budgets if I were you. Military was 20% until recently. And Nasrallah on Zahi Wehbeh said they were never friends with Hariri until a later time. Why would Hariri need such friends anyway? How do they fit in his agenda?
    Anyway, like I said before, please be focused a bit, and try to answer these ideas I posted here before:

    Count the ministers that were pro-Hariri in all of his cabinets. Other than the communication ministry which was under him for one term, I don’t recall Hariri’s ministers taking any service cabinets. They had mostly Finance, Economy, sometimes Foreign Ministry and Justice. Even in justice, they didnt have a full say. No one thinks that Hariri was the one behind the imprisonment of Geagea or the exile of Aoun.
    Interior, Defense, Electricity, Labor were never under him. And parallel to today’s disagreement, he never commanded more than 2/3 of the cabinet or a majority in parliament.

  12. Hussein,
    Let’s say you are right, 20 percent is still nothing! The military is usually 40 if not 50 percent of total budget especially in a country with the security conditions we have. Check other countries if you want. Even if you slash these 20 percent down to zero you would have saved peanuts for public finances purposes.

    please stop looking for the needle when the fu**in elephant is right in front of you: Servicing the debt and the crumbling economic system because of our Banks policies that obeyed the Hariri political economic policy of rentier economy. this is what is puttig a strain on everything.

    The Haririst want to change all the little annoying things that any country has at a tolerable level and voice it forcefully in their media so that we think it is a big deal, when in fact the real problem is the stuff they don’t mention and that no country, even the most divided and stateless African country, has.

    As for the Hariri/Hizbullah link, you misunderstood what I was saying. Again: nobody is “friends” with anybody. You think Hizbullah and Syrians are “friends”? Of course not, remember that in the early 90s Hizbullah clashed with the Syrians and Hariri may not have been very sad that the Syrians were there to keep Hizbullah in check. This is but one example of the ambiguity of the political alliances of the system. Hariri benefited from the Syrians at the very least because they were giving him a ‘stable’ political environment in which he could ‘accumulate capital’. Even before the war he was diligently working for that. Anyway, more on that later.

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