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Diab’s government is not what Lebanon needs

Op-ed
Nizar HASSAN | OLJ
20/02/2020

From the way it was formed, to the way it dealt with the budget, to its policy statement and the very controversial way of getting confidence from Parliament last week, the new government is definitely not in line with people’s aspirations and their pressing needs.

Since Hassan Diab’s government was in the early formation process, we knew that it looked nothing like what the people had been demanding in the streets. The government was formed in the traditional “muhasasa” manner, where the ruling sectarian parties form the Council of Ministers by agreeing on their respective shares. But the problem was not only in the representation of sectarian parties, but also of the commercial banks, with the economy ministry handed to the executive manager of Bankmed Raul Nehme, and the interior ministry to the security advisor of Blom Bank, retired army general Mohammad Fehmi. This was a red flag given that we are in a time of serious economic conflict between the banks and their shareholders and millionaire depositors on one hand, and the 99% of the population on the other.

After it was formed, and before even gaining confidence, the new cabinet accepted its predecessor’s budget bill with only minor modifications, which directly contrasts both what people demanded in the streets, and what Diab promised. The new prime minister described his government as a victory for the october 17 uprising. How is it acceptable for a post-uprising government to approve the budget of the cabinet that was overthrown by the uprising itself? It shows that Diab does not possess enough political leverage to impose a new paradigm on the forces that have the votes in Parliament. There are two types of mandates that can empower a prime minister in a time of popular uprising. Either a mandate directly from the people and their uprising, or one from their representatives in parliament elected before the uprising started. Diab’s government seems to lack both mandates. Its handling of the budget bill makes clear that it does not enjoy a mandate that offers the margin of policy space that a cabinet needs in times of existential economic crisis. And more recently, the environment in which it was able to gain the Parliament’s confidence vote demonstrates that it is far from enjoying a popular mandate.


Nasty political tactic

The scenes from the streets of downtown Beirut on Tuesday were disgraceful to say the least. For weeks now, authorities have been installing all kinds of intimidating obstacles to block protesters’ way to parliament, including giant concrete blocs known by protesters as the “walls of shame”. On the morning of the confidence vote, new walls were erected on roads leading to parliament, including near An-Nahar newspaper. But this was not enough. The confidence vote was only possible thanks to the mobilization of the Lebanese Army’s most prestigious regiments and swat teams to ensure the suppression of protesters’ attempts to prevent MPs from reaching Parliament. Many of us were asphyxiated by excessive amounts of tear gas, seven were arrested and a total of nearly 400 people were injured on that day alone. Army troops were spread across the entrances to the Parliament and nearby roads, often with assault weapons, and were for the first time directly tasked with confronting protesters and suppressing their movement. Pitting the army against protesters was not simply to support the riot police forces and their limited capacities. It should be seen as a nasty political tactic to incite members of the public who view the army favourably, as well as members of the army itself, against the rebels.

Given the overwhelmingly nonviolent attitude of protesters towards the Army troops, I would say that this strategy failed. What also failed were the attempts to portray the Future Movement, the Progressive Socialist Party and the Lebanese Forces as part of a political opposition. Instead of blocking the quorum by standing with protesters, some of these parties’ MPs attended and made the vote possible. They are thus exposed among their own supporters and to the public : they are not really in opposition or in support of the uprising.


Contradicting messages

Moreover, what was much more critical for Diab’s government than gaining the number of seats in Parliament, was the need to send signals that can improve general confidence in the economy. There is no graver source of anxiety for people in Lebanon today than the economy. Yet what the economy needs more than anything, is a government that can restore confidence, and what we witnessed on 11 february is far from reassuring to anyone. It does not help imagining a more position situation in the near or long future.

Beyond all, what matters is whose interests this government represents, and whose interests its policies will benefit. Although its formation process and behaviour indicates that it perpetuates an alliance between politicians, bankers and the security apparatus, its actions concerning fiscal and financial affairs will be the biggest indicator. Let’s start by saying it is too early to tell what the government’s actual policies will be about. Whoever looks at the policy statement sees a laundry list of numerous reforms that have been advanced by civil society over the years, especially when it comes to governance and corruption. Even when it comes to fiscal policy, the policy statement seems to send contradicting messages about what the path forward it prefers is. It does mention reforming the tax system to increase income taxes on the top earners (currently at 25%). This is good news, as this is indeed a needed reform, but only if it applies to banks and financial companies too, instead of them paying a flat rate of 17% regardless of earnings, which the law currently stipulates. Will Diab’s government take this direction? That would be highly unlikely. Will it impose a haircut on the top 1% of bank account holders who own over 50% of the total deposits in banks? We can hope, but not expect. Will it take action concerning the enormous profits made by commercial banks thanks to the central bank’s financial engineering? It doesn’t seem to be the case.

Another central question today is whether to seek an International Monetary Fund bailout deal, which part of the ruling elite seems excited for. Will the cabinet seek an bailout with openness to to give up the monetary peg in favour of a flexible exchange rate regime as advocated by the IMF, according to the words of former Prime Minister Saad Hariri in an interview given on 4 September to the American channel CNBC? And despite the fact that it will increase economic inequality and reduce purchasing power? Will it accept the austerity measures that are typically imposed by the IMF as conditions for its bailouts? Will it increase the VAT as the IMF has also recommended, thus making the middle and poor classes poorer? Will it increase electricity bills before ensuring uninterrupted flow to households, thus increasing livelihood costs without improved services? Will it seek a comprehensive restructuring of the public debt, an inevitable measure according to virtually all economists familiar with Lebanese affairs? All these questions remain unanswered in this policy statement, while the country cannot be more desperate for answers.


Regenerate the status quo

On the other hand, the political group LiHaqqi has presented the previous week what it called an “alternative policy statement” that describes in detail which policies should be implemented by this temporary government before the demanded early parliamentary elections, laying out specific policies in the economic, political and social spheres. These measures are clearly oriented, and we assume it in the interests of the vast majority of the population, rather than serving "the 1%" who benefited from the economic model that caused the crisis. This statement demands a fundamental reform in the tax code to make it more progressive, a tax on wealth, another tax on real estate speculation, and a one-time tax on the largest bank accounts to deduct some of the wealth accumulated over the last decades due to the immorally high interest rates. The policies also include a restructuring of both the public debt and the banking sector, and a replacement of the commercial banks’ humiliating capital control measures with a law that lifts control off small accounts and regulates transfers and withdrawals according to personal and economic needs. The statement also rejects the austerity paradigm and calls for further investment in health, education, and public services.

Beyond the economic sphere, it calls for fundamental changes in the political system away from sectarianism, through a new electoral and personal status laws that re-organize the relationship between people and the state to be one based on citizenship, not sectarian affiliation. The cabinet’s policy statement, on the other hand, did not propose any concrete and serious measures to change the sectarian nature of the system, which allows the widespread corruption and strangles any possibility for a politics based on the real interests of various social groups, rather than the illusion of sectarian interests.

It is disappointing that Diab could not propose an agenda similar in specificity and clarity. It is even more disappointing that his government’s policy statement fell short of meeting the aspirations of a revolting people in this historic moment of the country’s history. More importantly, it is clear that while Diab claims to represent the October 17 revolution’s demands, his government is here to maintain the status quo, or to regenerate it. It is a government formed by the oligarchs, for the oligarchs.


Nizar Hassan is a member and co-founder of the political movement LiHaqqi.


(This op-ed was originally published in French in L'Orient-Le Jour on the 14th of February)



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