image Photo: Reuters

 Lebanon Mired in Economic Protests despite Reforms

Mass protests in Lebanon over government economic mismanagement continue nationwide, in what have been the greatest public dissent against the ruling elite in decades. The demonstrations were initially sparked over a tax on WhatsApp voice calls which was quickly abandoned by the government; but spiraled into an outpouring of anger by a population malcontented by chronic economic stagnation, endemic corruption and a lack of basic public services.

Hundreds of thousands of enraged citizens flooded the streets again last night as they have since Thursday, furious at a political class they accuse of pushing the economy to the point of collapse. The Lebanese army was deployed to keep the peace during an anti-government protest in downtown Beirut, with soldiers barricading the paths to parliament. Roads were blocked for a fifth day across the country.

The rallies came in spite of the promised implementation of new measures aimed at easing hardship in a televised speech by Prime Minister Saad al-Hariri earlier in the day. The 49-year-old leader acknowledged the new measures might not be enough to meet the protesters’ demands, but maintained they marked the start towards achieving some of them.

The Lebanese Premier leads a coalition mired in sectarian and political rivalries. Under rising pressure and a veiled-warning he could otherwise resign, Hariri set a 72-hour deadline for his cabinet to agree on reform plans that began this past Friday (October 18). “I gave this deadline to our partners in government to carry out the minimum of the measures that were necessary for in the last two years,” said Hariri.

Over the weekend by Hariri and other top officials drew up a package of steps seen as vital to reviving confidence hoped to alleviate strains in Lebanon’s financial system. Just hours ahead of the expiration of the Monday evening deadline, the cabinet approved an emergency reform package following a debate chaired at the Baabda palace by President Michel Aoun.

During his news conference, Hariri said the package includes a symbolic 50% cut in the salaries of current and former presidents, ministers and lawmakers, as well as cuts in benefits for state institutions and officials. In addition, “the banking sector and the central bank will participate in reducing the deficit by an amount of 5.1 trillion Lebanese pounds ($3.4 billion USD) including increase in tax on bank profits,” said the Lebanese Premier; entailing contribution of these funds by the central bank and private banks to achieve “a deficit of 0.6 percent {in the 2020 budget) with no additional taxes”

Other plans aimed at implementing long-delayed measures seen as vital to putting Lebanon’s public finances on a sustainable path will include the privatization of the telecommunications sector and overhaul of the costly and crumbling electricity sector – both of which pose major strains on Lebanon’s finances.  Hariri vowed that the “process of approving permissions to privatize electricity providing factories” would be accelerated to take place “within four months.”

Moreover, the Lebanese Prime Minister also announced “a reduction in the budget of the Development and Reconstruction Committee, The Fund for the Displaced and the Committee of the South by 70 percent;” approval of “the law for general amnesty by the end of the year,” and the “cancelling the Ministry of Information and a number of institutions immediately and placing an immediate plan to merge or eliminate institutions that have no use.”

Hariri admitted the government must work to regain the people’s trust. “These decisions are not for bartering, they are not to ask you to stop protesting or expressing anger, this is something that you decide. And we are not giving you a deadline, and I will not allow anyone to threaten or intimidate you,” he said during the address.

After underscoring to his constituency that “You have to know your voice is being heard,” Hariri threw out the possibility of an early dissolution of his government. “and if early elections are something that you want in order to make sure that your voice is being heard,” he said, “then I Saad al Hariri, will personally support you in this.”

He closed his speech by praising the public, saying “You have put the Lebanese national identity back in its place above all sectarian or religious identity and this is the biggest national victory.”

None of the leader’s statements or proposals appear to have defused demonstrators’ wrath, or convince them to stay off the streets. Protesters in Beirut, Tripoli, Beirut, Jal El Dib and Sidon told Reuters that the package ‘would not be enough to send them home,’ as they continued to demand the end of a political elite they accuse of rampant corruption. Many sang into the night at a mass rally in Beirut’s central Martyrs Square, where others donned Guy Fawkes masks, or performed the traditional Dabke dance. One dressed as a clown amid chants of a common refrain by the flag-waving crowd in Arabic of ”All of them means all of them!” meaning the removal of all the country’s political leaders.  Another activist held a banner aloft, reading: ”I want my brother to come back from Canada.”

Activist Dany Mourtada said, ”Protesters, we are everywhere. We want action on the ground. Not just talk. We want people to go back home having achieved something solid.” University Professor Jeeda Rabah said, ”We are all united today against the oppression, no jobs, no pensions, they stole the funds for housing loans.”  Assad Thebian said that due to Lebanon’s lack of a public transportation system, “I don’t know which of the options for transport to take back home today, whether it’s the tramway or the train.” In a scathing rebuke, he continued “We are used to Hariri’s promises – before the elections he promised 900,000 jobs, they all promised reforms and to fight corruption; and here were are a year and a half later, what a lie, they claim to change and they are the ones who are corrupt themselves.”

In Tripoli, demonstrators chanted “Revolution!” and held banners reading “’CORRUPT CORRUPT POLITICAL CLASS.” After watching Prime Minister Hariri’s speech on his mobile phone, one activist named Bariha al-Hilal showed some conciliation, commenting “The clauses that were put are very good. I am one of those who are going to the protests, right, but I am against destroying the non-functional house – we can’t destroy it and demand everything at once, we need to fix it slowly. The reforms he (referring to Prime Minister Saad al-Hariri) outlined are very good. I wish they will be implemented.

Hamad Taleb voiced suspicion, saying “They are trying to fool us, they think we are a bunch of sheep. It is enough, let them leave us alone, we need a new life.”

In an op-ed entitled “Lebanese Tragedy” by Sever Plotzker, the Chief Economic Editor of Israel’s Yedioth Ahronoth daily newspaper, nothing will end the financial landslide “as long as (Hezbollah Chief Hassan) Nasrallah continues to hold Lebanon by the throat.” Sever, who is also a leading commentator and member of Yedioth’s Editorial Board, points out that more than half of Lebanon’s economic activity is “unreported;” with “no report on the billions that Hezbollah diverted from investing in new power plants to investing in a missile array (for use) against Israel.” “The high cost of the organization’s operations in Syria is not reported,” Sever writes, adding that “Easy and unreported spending on Lebanese and Hezbollah military spending” plays a central role “in the deterioration of the Lebanese economy.”

According to the data, overall unemployment in Lebanon is around 20%, while it rises as high as at least 30% among young workers. According to Sever, “the Lebanese government hides the information as it hides all demographics. The protests are an outburst of anger over the lost decade, completely lost, to the economy and society in Lebanon.” Backing his analysis, Sever details that the “severe and pessimistic review” released by the IMF last week “describes a country that has fallen off the rails and is unlikely to surpass them. The Lebanese economy has not been growing for six or seven years. The annual deficit in the government budget exceeds 10% of GDP. The deficit in the international balance of payments exceeds 25% of GDP. Lebanon needs $100 billion a year in the coming years just to avoid default. It won’t avoid that fate, in fact, the country has nearly reached that point already.”

In his call for a far more comprehensive economic recovery plan, the Israeli economist advocates a spike in value-added tax on all goods and services in Lebanon from 11% to 20%, a 30% increase of gas, and immediate freeze and then reduction of all those working in both the public and private sectors, including Hezbollah employees. He also demands an end of the “an insane 18% interest rate” paid by the Lebanese Central Bank to foreign depositors and an end to its practice of opening secret accounts. Moreover, Sever calls for a deprecition of the local currency from 30% to 40%, that the current 7% capital gains and interest be doubled, and that “a war against corruption should be launched because, according to international indices, only Yemen is more corrupt than Lebanon in the Middle East.”

So far, Hariri’s moves have not only failed to placate the public, but to dissuade investors to halt a plunge in the bond market. Foreign investors say the reforms did not go far enough, and that the turmoil on the streets is a visible sign of time running out for Lebanon to fix its economic crisis. Lebanon’s dollar-denominated bounds suffered hefty losses on Monday following sharp drops on Friday, with some sinking to record lows.

Schools, universities and businesses are expected to remain closed on Tuesday. The protests are considered extraordinary due to their expanse and geographic reach – by overcoming traditional divisions along sectarian lines to draw nationwide appeal for a unifying cause.

-By Erin Viner