Lebanon needs to offer more in return for foreign investments
Prime minister Saad Hariri should take a leaf out of his father Rafik Hariri's investment strategy
Maybe it was the collective madness that the holiday season can bring on, or simply that prime minister Saad Hariri had perhaps been subjected to too much Boney M during his festive shopping. In a stunning example of hot air delivery, not to mention short-term memory loss, Lebanon’s embattled leader last week urged Lebanese at home and abroad to once again plough money into the country. He declares this is the best time to invest in his country.
If he meant the “best” time because Lebanon is teetering on the edge of economic collapse and needs all the help it can get, then his pleas are timely. I feel however, that they have fallen on deaf ears; Lebanon is hardly a mouth-watering investment prospect at the moment. Everyone from the IMF to the various ratings agencies knows that the country is crippled by an external funding deficit of roughly 20 per cent of GDP and a government debt running at 150 per cent of GDP.
Another dispiriting factor is that Lebanon relies heavily on remittances – worth 16 per cent of GDP annually, according to the World Bank – which help sustain a Lebanese pound that has been pegged at 1,500 pound to a US dollar since October 1992. If for some reason these remittances begin to dry up then the country whose resilience has till now confounded economists, may run out of luck.
Mr Hariri should take a page out of his late father’s book and give the people he is trying to woo something worth investing in. Rafik Hariri rebuilt the whole of central Beirut into what he believed would be a retail, tourism and commercial hub.
“Build it and they will come” was his gamble, and for a while it worked, especially in the wake of the 9/11 attacks. At a time when Arabs were temporarily “personae non grata” in the West; Beirut welcomed them with open arms. But today, the Beirut Central District lies largely deserted, a symbol of what happens when regional politics trumps business ambition.
If Hariri senior had not been killed in a car bomb outside St Georges Hotel nearly 13 years ago, he would no doubt have continued to navigate Lebanon’s precarious sectarian alleyways with the skill and guile he used when he was alive.
“More a corrupter than corrupt,” to paraphrase a former associate quoted in Nicholas Blanford’s brilliant book Killing Mr Lebanon. “H” as Hariri senior was known to some of foreign press corps, knew how to build alliances and bring his “enemies” onside.
When he rebuilt the BCD, Hariri had to contend with Syrian hegemony and a Hezbollah that still enjoyed the moral high ground though its perceived martial purity. The bombed out city center was the biggest building site in the world at one point, and it did get us into debt. But Hariri was confident that the money would come in and that the country, which he was essentially running like a business, would have a healthy cash flow.
In this respect he was quite “Trumpian”.
It is hard to believe now, but at the end of the 20th century, when the new city centre was unveiled, there was a genuine mood of optimism. The area was buzzing. Beirutis would flock to the newly built downtown.
The key point is that the initiative was government-led, forming part of Hariri’s Lebanon 2000 vision, which he unveiled in the mid-90s. If only someone would give us similar hope, the business community might get behind his son. Give the private sector enough electricity, adequate clean water and decent broadband, and it will perform miracles. And it could all be paid for with the oil and that gas that in all likelihood sits under the Lebanese coast.
I have difficulty however, imagining that the cheque books will open with any kind of flourish; there has been no real tangible progress on infrastructure development in the past three decades, despite the most recent pledge, made almost exactly a year ago by the new government, to sort out economic progress.
One year on, that very same administration is hanging on by a thread, led by a man who last month stunned the country with his abrupt resignation, only to return to the country weeks later to resume his duties.
I think I’d need a bit more convincing if I were to put any of my money into Lebanon.
So Mr Hariri if you are reading this, here’s my policy advice for 2018. Meet us halfway. Give us something to work with. It’s that simple.
Michael Karam is a freelance writer who lives between Beirut and Brighton
Updated: December 27, 2017 08:28 PM