In the lore of the Eastern Mediterranean, there is a saying (sometimes attributed to Jesus) that goes like this: ‘Things are treated with salt to prevent them from decaying. But if the salt is spoiled, there is no other remedy.’ In Lebanon, this adage has been proven both right and wrong. The current economic crisis was caused by endemic corruption; yet endemic corruption seems to be its only cure. Go figure!
What Lebanon has been experiencing since October 2019 is nothing short of a catastrophe. The country’s economic slump was first met with a great dose of aspiration, when large crowds converged on the main downtown square demanding accountability and reform. Yet, lacking a unified vision, after a few weeks this movement faded into pessimism and desperation. The crisis was then accelerated by the extortionary, vigilante embargo imposed by the US Treasury and State Department. The value of the Lebanese currency fell precipitously, the pandemic raged and unemployment rose. All of this was topped by the massive explosion in the port of Beirut on 4 August 2020 that left around 200 dead, 8,000 wounded and tens of thousands homeless (not to mention the attendant psychological and environmental damage).
The calamity that Lebanon now faces has its roots in decades of high-level mismanagement. The Taif peace agreement of 1989, which put an end to the Lebanese Civil War in 1990, promised a restructuring of the Lebanese political system and economy. However, the work centred around a delusional plan to revive Lebanon’s pre-Civil War role as a financial and service hub for the Middle East. The architect of this vision, the late Prime Minister Rafic Hariri, knew full well that realities on the ground would impede its realization: the geopolitical conditions that had permitted Lebanon to play such a role in the 60s and early 70s were not present in the 90s. Yet he moved forward unfazed, bribing the country to dance to his tune. Cash payments and other grand favours were doled out to key politicians, financiers, security officials, religious clerics and the media. Hariri surrounded himself with an army of ‘advisors’ from varying ideological persuasions and religious backgrounds so as to diffuse any serious resistance.
For some time, it seemed that Hariri’s dream was likely to prevail. The economy stabilized, the currency regained its footing and employment soared. The relentless drive to clean and renovate downtown Beirut brought back exuberant memories, tears of joy, and widespread elation that the ‘Paris of the Orient’ had returned. People flocked to places they hadn’t seen since 1975, reminiscing about old cafés and famous juice bars, or wandering in ancient alleyways once congested with merchants and shoppers. After sixteen years of Civil War, they were eager (to pretend) to put everything behind them and look to a promising future. Unfortunately, they were only looking at a choreographed past cleansed of its many miseries, and were determined not to confront the true cost of the Hariri project.
Like many Lebanese who left for the Gulf in the 1960s in search of wealth and opportunities, Hariri made his fortune as a front for several members of the Saudi Royal family, especially Prince Fahd before he became King. Fahd wanted a confidant to syphon millions of dollars from the Saudi treasury into his own pocket. Hariri obliged and launched a business empire that made billions for the duo. His international ambitions meanwhile spurred him to cultivate promising politicians in the West; the most successful case was Jacques Chirac, then the new and energetic Mayor of Paris. When Chirac became President in 1995, Hariri had a staunch Western ally who could open any door for him across the globe. Anchored by these two giants – Fahd and Chirac – Hariri was able to secure enough investments in the Lebanese economy to fund new projects: renovating the international airport, opening highways and shopping malls, constructing sports stadiums and so on.
Yet in 2000 Bashar al-Assad inherited the throne in Damascus. Assad had a personal dislike for Hariri and was determined to torpedo the savvy businessman’s political and financial ambitions, aided by some Lebanese proxies. Simultaneously, the unleashing of the US war machine following the 9/11 attacks transformed the region into a powder keg. Hariri’s assassination in 2005 dealt a major blow to the Lebanese economy, as the sole guarantor of Hariri’s modernizing vision was Hariri himself. Shortly after his demise, the focus of the domestic political class shifted to dividing the cake of corruption. Hariri’s son Saad, who became PM in 2009, was too incompetent to run the political circus, and proved an unmitigated failure at the financial level. Whereas Rafic had the will to mobilize his wealth and connections to achieve his national vision (however unpalatable it may have been), Saad had neither a coherent vision nor an overseas cachet, and squandered much of his inherited fortune through mismanagement. His entire political philosophy revolved around 1) harnessing the legacy of his father in order to assure that he was the only viable Sunni leader in Lebanon, and 2) replenishing his depleted coffers from the Lebanese treasury. The country therefore moved from dancing to Hariri’s tune, to watching his son dance to the tune of an increasingly bloated and self-serving establishment.
Under Hariri junior, the mushrooming national debt turned into a runaway train – dragging the country and everyone in it towards assured disaster. External investment stopped flowing in at the rate needed to service the country’s vast corruption networks. The Central Bank resorted to a Ponzi scheme: borrowing more in order to meet its most pressing obligations, while continuing to feed the beast by channelling money into the pockets of politicians and financiers – fearful that the end of the patronage system would spell political ruin. High interest rates lured most Lebanese into keeping their deposits in the country, even though they knew it would all come crashing down someday. National debt surpassed $85 billion in September 2019. By that time local banks had invested a large portion of their clients’ deposits (especially those in US Dollars) in the Central Bank’s treasury bills, and could no longer get them back.
The dynamics of Lebanese corruption are perfectly illustrated by the electricity system, which is controlled by the Minister of Energy and plagued by regular outages and rationing. (Most people are forced to purchase electricity for a few hours a day from ‘protected’ private contractors who own and operate generators in different neighbourhoods across the country). Between 2000 and 2018, the Lebanese government spent around $2 billion per year to run the two large power plants and maintain basic services. On top of outright embezzlement, the system of corruption involves supplying deficient fuel to electric plants at inflated prices, fraudulent contracts and overbilling for maintenance, employment of political supporters in the Energy Ministry, renting floating power plants from Turkey and securing luxurious commissions. It is estimated that an investment of $2 billion would have resolved the power shortages and slashed the yearly cost of electricity by 50 per cent. Several international governments, including Germany and Qatar, have supplied the Lebanese state with viable plans to resolve the issue – yet their recommendations have been rejected wholesale.
Thanks to such wilful acts of sabotage, in October 2019 the Central Bank finally ran short of foreign currency reserves, and could not pay back private banks or international investors. The mounting financial crisis was now fully exposed. Unable to honour their clients’ withdrawal requests, banks decided to halt cash payments altogether except for very small amounts (especially if the accounts were in US Dollars). In the meantime, a number of wealthy Lebanese managed to smuggle large chunks of their deposits into accounts in Europe (the figure is estimated at around $4 billion since Autumn 2019). One of those implicated in this offshore smuggling was the Governor of the Lebanese Central Bank, Riad Salamé, who is currently under investigation by the Attorney General of Switzerland for allegedly laundering a sum in the tens or hundreds of millions of dollars.
When people took to the streets on 17 October 2019, their immediate complaint was the ‘WhatsApp tax’ that the government wanted to impose in order to levy more revenues amid the squeeze on poorer citizens. They also called for the ousting of the corrupt political class, especially Gebran Bassil, son-in-law and heir apparent of president Michel Aoun. Aoun’s outright refusal to rein in Bassil worsened the situation. The movement snowballed, and protests escalated. Within two weeks Prime Minister Hariri had resigned, causing a political crisis. The demonstrators proposed a remedy: a technocratic government. But in Lebanon, clean and efficient technocrats are an endangered species; it is hard to find qualified people who are actually capable of steering the country in the right direction, and not simply waiting for their piece of the pie. The government that was formed proved disastrously incapable on every level. Covid-19 and the explosion of an enormous quantity of ammonium nitrate at the port of Beirut (the original cargo measured 2,750 tons) completed the perfect storm: political deadlock, financial crisis, pandemic, and humanitarian-environmental disaster. Many were now no longer willing to tolerate Lebanon’s endemic corruption – or so they proclaimed.
Yet if the Lebanese are victims of corruption, they are also its enablers. The characteristics known as Shatara and Harba’a are part of our DNA. Shatara refers to cleverness and craftiness; Harba’a comes from the Arabic word for chameleon: someone able to change colours as the situation demands. These are trademark features of the elite hustlers who have sent Lebanon’s economy into a tailspin. Ironically, they are also the only lifelines for many ordinary citizens, who have to rely on informal processes and low-level corruption to get by as the country teeters on the edge of abyss. Many of those who turned out to protest against political and financial malfeasance are themselves invested in the institution of corruption, albeit on a smaller scale.
Shatara and Harba’a are manifest at every level. Employees, especially in the public sector, typically supplement their income with kickbacks. For example, a bribe is required to get a driving permit renewed. This is often done through a ‘facilitator’ who takes the application and goes through the agency’s offices to get the necessary approvals and signatures. The applicant pays the facilitator, who takes a cut and gives the rest to the employees. (If one insists on doing the process oneself, the application will invariably be deemed incomplete or delayed until a facilitator is found.) Similarly, building inspectors – who are often police officers – demand outright bribes before they issue clearances. Knowing that each contractor breaks the rules to augment their profits, the inspector’s kickback is expected to match the scale of the violation. We call such payoffs a ‘sweet treat’ (hilwayni). The legal system, too, is plagued by hilwayni – often used to initiate an investigation, release an inmate, etc. – with bribes adjusted according to the office of the recipient. Lesser forms of corruption include the custom – in banks, supermarkets and other shops – not to return small change for transactions, with the employee pocketing them instead. Given close family bonds, these payments usually trickle down to a wide network of beneficiaries.
Corruption is also manifest in the sectarian system. Hezbollah, for instance, shields most of the vulnerable members of the Shi‘i community from the impacts of the multi-level crisis. For several years it has been running a parallel financial system that bypasses traditional banks and financial institutions. Thanks to the millions of dollars it brings into the country – invariably in cash – Hezbollah injects desperately needed hard currency that keeps the situation from deteriorating further. The party also has a large network of schools and clinics, as well as organizations that provide higher education scholarships.
The second Shi‘i power, the Amal Party led by Nabih Berri (Speaker of the Lebanese Parliament), has since the 1990s pursued a strategy of employing large numbers of Shi‘i supporters in all types of governmental agencies: a practice which has been critical for maintaining a bare minimum living standard for many families. The main Druze party, led by Walid Jumblatt, has likewise organized a huge machine of volunteers to distribute food and heating fuel to families in need. His constituencies have their own networks of schools and hospitals, and pretty much every Druze supporter who needs a scholarship to attend university can get one through the organizations controlled by Jumblatt and wealthy Druze entrepreneurs. The Maronite Church, with its immense treasures and connections, does the same for its community. In fact, the Sunnis are the sole demographic without an effective leader to advocate for their needs. This is due to various factors: the weakness of Saad Hariri, the vindictive measures taken by the Saudi Crown Prince to punish the Sunnis of Lebanon, the economic repercussions of disastrous US interference in the Middle East and so on. Poor Sunnis, especially in and around Tripoli, often resort to violent clashes with security services – a pattern that rarely plays out with other sectarian groupings.
Life in Lebanon has been such that since the 1990s, around half a million Lebanese have moved abroad to seek financial opportunities, sending large sums of money back to their parents and relatives. Remittances, which almost reached $6 billion per year in the 2000s, have dwindled a little, but they are still estimated at several million per day. Swathes of people are now leaving the country, provided they have a foreign passport or valid visa. Among them are some recent returnees, including second or third generation descendants of Lebanese immigrants who came back to Lebanon in the last few years to escape hardships in their country of residence. Many Venezuelans of Lebanese origin returned to their homeland seeking relief from the ruthless American embargo – but their wager did not pay off. Added to that, the UN-funded program for Syrian refugees in Lebanon brings in badly needed hard currency; the World Bank has approved a loan of $246 million, boosting the Lebanese government’s ability to continue funding public sector salaries and some education services; and countless NGOs continue to distribute aid. Knowing how to exploit these philanthropic schemes is an important aspect of Shatara and Harba’a, by which many stave off destitution.
Lebanon’s unfolding crisis will not be remedied by temporary fixes, which only treat its symptoms rather than its causes. The Lebanese (a few exceptions notwithstanding) are used to dancing on the razor’s edge, and are willing to hurt their feet if it means they can preserve their cherished sectarian system. But one thing is certain: these temporary solutions will not hold if foreign powers decide (as they have done many times before) to drag the country into a new regional conflict – such as war with Iran. Should that happen, a reckoning with the culture of ‘graft’ may be in order. Yet in the absence of outside intervention (which may or may not make things better), the current situation will probably persist for many years to come – or, as the Lebanese would say, until God relieves it.
Suleiman Mourad’s The Mosaic of Islam is out now from Verso.