The uprising of Oct. 17 is only a year old. But by now, everyone understands that the old Lebanon is dead: that its political system has reached a dead end, and that its artificial economic miracle cannot be resuscitated. For its second century, Lebanon will have to be reinvented.
Now that the house of cards has collapsed, it is becoming painfully clear that unless we rapidly imagine a way out, Lebanon will end up a failed state. But while economic proposals are debated, and political combinations tried, nothing has worked so far that gets us closer to a resolution of the deeply divisive political and economic crises that are impoverishing the population with no end in sight.
If anything, the trap is only growing deeper. The economic collapse is making political progress nearly impossible, as every party focuses on self-preservation. But the hardening of politics is complicating the process of solving the country's economic problems, especially how to divide up the burden of the necessary reforms.
Countries that fail tend to get stuck in failure for decades — social, business, institutional and reputational capital gets destroyed in ways that make it almost impossible to reconstruct. The notion that the country has to collapse before it can get rebuilt is a recipe for disaster.
To get out of this trap, there is now a need to focus first on the economy. Of course, the survival of the old political system is a concern, but in the long run we can dispel this fear: People have, by now, understood its destructiveness, and the economic reforms to come will only make its failure clearer. And it will not be able, this time around, to misuse external support to reproduce itself. There are no more external rents to irrigate its clientelism — even gas wealth is at best a long-term prospect.
Political change has become inevitable, but a better political system will not emerge overnight. The opposition needs to get organized for the next elections. If it becomes a credible force, it can take over, if not at the next election, then at the following one.
But rebuilding Beirut, managing the pandemic, stopping hyperinflation, reopening the banking sector — all need immediate and urgent attention. These are priorities where progress can be achieved. If the economy is stabilized, there will be light at the end of the tunnel. The road ahead to build prosperity will remain a long one, and will depend on how the polity gets fixed. Winning the battle against collapse is just the beginning of the war for a better Lebanon.
The political class cannot be trusted with fixing what it itself broke, for the same reasons that it could not halt a predictable collapse. When everything gets politicized, and politics are as polarized as they are, divided oligarchs with veto power are unable to agree on the difficult reforms needed to save the economy.
On the economic front, the main challenge is to divide up the losses accumulated by the state, the banking sector and Banque du Liban. Without a definitive and clear distribution of losses, it will not be possible to reopen the banking sector, stabilize the lira and make the state solvent again. But distributing over $50 billion of losses, or close to twice current GDP, is extremely difficult politically. Positions have become polarized: Each politician is driven to protect his supporters; the street hopes that the losses can be paid by returning all “stolen wealth,” which is not a realistic prospect in the short term; and the banks want to preserve their capital and their large depositors by pushing for the privatization of all state assets, which is a socially unfair resolution.
In the end, a resolution of the crisis needs to find a pragmatic compromise that divides losses in a manner that is both socially fair, so that national solidarity is regained, and that preserves the country’s growth potential by not unduly expropriating productive capital. But such a compromise cannot be left to a political cabinet, which would elicit fears that the dice would end up loaded.
The street did provide, early on, the solution to the current logjam. All French President Emmanuel Macron did was to add structure to the idea: Start with a government with the sole mission of saving the economy, and leave political progress for later, after the coming elections. It is in everyone's interest to fix the house first — the current political class and its constituency, and the democratic opposition.
A “mission government” will need to be in charge of saving the economy from collapsing. The challenge is to be able to put divisions to the side, commit to finding balanced solutions, and not politicize and block the implementation of reforms.
Lebanon is not unique in its political fragmentation. Italy had a series of mission governments before to respond to their economic crisis, and Sudan has one now in charge of implementing a program of economic salvation negotiated between the revolutionaries and the army. Ideally, a mission cabinet would get extraordinary powers from Parliament to do the job. There are many precedents for this, before Taif, that contributed to finding solutions when political parties were too divided to address urgent issues.
Highly divisive political issues will remain, but to save the economy, they should not interfere with the work of the mission cabinet. This requires other mechanisms outside government to figure out how to manage that which divides: Hezbollah’s weapons, border delineation, relations with Syria and other issues as they may arise. Some mechanism, yet to be invented, needs to play that role.
The October revolution was a moment of truth. It is time for the revolution to grow wiser and to develop a sense of collective responsibility, so that the voyage to rebuild the nation’s economy and polity starts in earnest. To reach this destination, the only guarantee is revolutionary anger. But increasingly, this creative anger has to be channeled into constructive pressure to get things done, starting with a socially fair stabilization of the economy, then moving on to fair and free elections, and finally to getting organized to win them.
This opinion article was originally published in French in L'Orient-Le Jour.
The uprising of Oct. 17 is only a year old. But by now, everyone understands that the old Lebanon is dead: that its political system has reached a dead end, and that its artificial economic miracle cannot be resuscitated. For its second century, Lebanon will have to be reinvented.Now that the house of cards has collapsed, it is becoming painfully clear that unless we rapidly imagine a way out,...