Saint Petersburg International Economic Forum 2013Roundtable Discussion: Effective Responses to Crisis-Hit Territories- June 21, 2013t
In my experience both as Minister of Finance and Prime Minister, I actually had to deal with all three elements of crisis, conflicts and wars that you mention in the introductory remarks: the communal conflict, the wars launched by outside powers, and the terrorist attacks and activities. Of course, often, these various types of conflict fed on one another.
I- Dealing with the crises that ensued because of the Communal Conflict:
In 1992 as Minister of Finance, I had to oversee the implementation of the ambitious reconstruction and stabilization program that was put forward by the visionary late Prime Minister Rafic Hariri, in the wake of the 15-years civil war, which falls under the category of communal conflict. In my opinion, the two essential achievements of this program were: First, the rehabilitation of the Lebanese infrastructure including in particular the reconstruction of the Beirut Central District (Downtown Beirut) which was transformed from what was known as the green line separating the two divided parts of Beirut (East and West) to a beautiful state-of-the-art area where all Lebanese come and meet to interact and to get to know each other since the area has no sectarian connotation.
The second achievement was the rehabilitation of the Lebanese middle class, through the empowerment of the private sector and also through a fiscal and monetary policy mix that stabilized the exchange rate thereby ending hyper-inflation and speculation, and transformed the tax system towards a more equitable one. I am underlying these two achievements because they are specifically the type of economic initiative that don’t just help the promotion of conflict resolution but also help in the prevention of the reoccurrence of these conflicts.
II- Dealing with the crises that ensued because of the sixth Israeli war on Lebanon:
Later as a Prime Minister, I had to deal with the massive destruction inflicted by the sixth Israeli war on Lebanon. The infamous July war that lasted over 40 days did not even spare a bridge and caused massive human and substantial infrastructure damage. Yet, with a creative out-of-the-box approach to reconstruction and rehabilitation that allowed all donors to participate directly and indirectly, in the way they saw fit that adapts with their own standards and rules, we managed to achieve a speedy recovery. The war took place in July and ended in August, but by October, all schools in the country were open and all those communities who were displaced were back to their towns and villages. The speed of recovery was lauded by the international community and was considered “exemplary” by the United Nations. Particularly that the reconstruction and rehabilitation of over ninety bridges, over 150 thousands housing units, several hundred schools and mosques and road. After recording a growth rate of 0.6% in 2006, the economy went afterwards on a high growth spree for four years recording an average real economic growth rate of 8.5% over the period 2007-2010, while achieving record surpluses in the balance of payments and the primary balance. The policies undertaken during and after the war, and the way the conflict was responded to, and especially the two donors conference that were launched in Stockholm and then in Paris, all managed to instill and foster confidence, which in a country like Lebanon is the most important factor.
III- Dealing with the crises that ensued because of the terrorist attack on Nahr El-Barid Camp:
The third experience I would like to share with you is also the response of the Lebanese government when I was Prime Minister to the terrorist attack by the Fath Al-Islam group on the Lebanese army and their taking refuge in the Palestinian camp of Nahr Al-Bared. The camps were previously considered red lines as far as Lebanese security agencies were concerned, and Hezbollah leaders were very keen on reminding us of these red lines. Still, we broke the redline, and the government then transformed the challenge into an opportunity to unify the various Lebanese factions around the State and the army. As a result, the Lebanese army entered the camp and embarked on a massive campaign to hunt down the terrorists which we won. In parallel, we were planning for the reconstruction of the camp, and a slogan was raised immediately stating to our Palestinian brothers and sisters: “the reconstruction of the camp is certain and your return to the camp is guaranteed”. We launched the Vienna donor conference and managed to mobilize the international community. We have managed to absorb the shock, and again the adopted discourse and policies generated an economic growth rate of 7.5% during the year 2007 despite the events of Nahr Al Bared and the strong political divisions in the country.
In all these three responses to crisis and conflict that I have mentioned, the common elements that guaranteed their success are the following:
1- Government thinking was always new and out of the box;
2- Clarity of objective and sense of direction that transforms challenges into opportunities;
3- The government programs were always implemented with great determination;
4- Targeted message that ensure broad consensus by the various constituents of the Lebanese society and a broad sense of ownership of the reform initiative;
5- Engaging donors by giving them a sense of ownership and responsibility.
These five elements managed to reinforce the confidence in the State and its leadership and were translated as mentioned, into good economic results.
These are all success stories, but I would have to accept, that as Lebanese government we have also failed on other fronts, and the proof is that today, Lebanon is again in the danger zone as we are witnessing by the moving breach of security between the North, the Beqaa and the South.
Of course the reasons behind these breaches of security are exogenous, like the continuation of Israeli occupation and the interferences of Iran and Syria in the domestic affairs of Lebanon. Furthermore, it would be very optimistic to expect stability in Lebanon when you have a war next door like the one happening in Syria. If Lebanon was immune, strong and unified, it could have turned the events in Syria into an opportunity, like a strong and unified Syria when it turned the war in Iraq back in 2003 from a challenge into an opportunity and generated high growth rates by providing refuge and investment opportunities for Iraqis fleeing the conflict.
At the present, Lebanon could have benefited greatly from Syria, to the advantage of both the Lebanese and the Syrians. But Lebanon is neither strong nor unified at the present. And the truth of the matter, Lebanon is not allowed to be strong and immune by the same group that has now decided to enter into the Syrian war, ignoring the will of the Lebanese State and the majority of the Lebanese people: that group is Hezbollah which is directed by Iranian revolution guard.
The same group has directly or indirectly impaired our efforts through the last two decades to go beyond the infrastructure planning and into a broader vision of economic development that empowers economically the regions outside the central Beirut-Mount Lebanon area. Both the late PM Rafic Hariri and myself, have launched so many initiatives that help in the development of the North, South and Beqaa regions of Lebanon in a way that effectively reduce poverty through the creation of employment opportunities. To list just few initiatives: PM Hariri was behind a law (Law 360) that was passed in the mid-nineties and gave very generous incentives for investments in these regions and created IDAL, the Lebanese Agency for Investment and Development; There were other initiatives to develop the Northern and Southern suburbs of Beirut through the very visionary Linord and Elissar projects; Another initiative was undertaken by my second government in 2008 through developing a regional economic development plan that was passed by a decree from the National Unity government.
But none of these initiatives managed to really take off mainly because the other two essential elements, which are security and the rule of law remained significantly incomplete together with the sovereignty of the State, as the presence of an armed group with linkages to foreign forces compromised the power and the authority of the central state.
As a result, poverty and youth unemployment increased many areas in the country particularly in the north and the east, fertilizing further the ground for Hezbollah to recruit and to encourage indirectly (and sometimes directly) the rise of other radical groups on the other side.
Where do we go from here?
The main challenge for us in the period ahead is to empower and strengthen the authority of the Lebanese State and its ability to enforce law and order over all its territories. This is essential for our country to regain growth and to rise and be up to the serious challenges ahead of us. Without this, it will be difficult to generate the economic development that can promote through economic empowerment the sustainable and equitable growth that we need.
And to end my remarks on a positive note, the rebuilding and reconstruction of Syria when the war ends, and it will end one day, hopefully soon, will provide a great opportunity for the Lebanese companies, banks and private sector professionals to actively participate in this noble task, after having accumulated vast experience in rebuilding Lebanon over the last decades. This noble objective could be the Lebanese message over the next decades and will strengthen stability and economic development and hopefully will prevent conflicts in Syria and Lebanon.