It should come as no surprise to learn that Hizbollah, the militant Shiite party with an armed wing better equipped that most regional armies, gets a mention in the Panama Papers. The Iran-backed party has long been accused of using the Mexican drug trade and Lebanon's famous banking secrecy to fund its operations. Newsweek recently estimated that Beirut's offshore financial services sector has grown by 12 per cent per year since 2006, with banking deposits estimated at US$175 billion. No surprise then that the US government is using the 2010 Foreign Account Tax Compliance Act, or Fatca, as a stick with which to convince the Lebanese Central Bank to get its house in order.
Fatca is well known to Lebanese with dual-US nationality. It requires them, including those living outside the US, to file yearly reports on their non-US finances. It also insists, and this is crucial, that all foreign financial institutions disclose the identities and assets of US citizens and their spouses (even if the latter are not US citizens). Ouch.
A friend, who had been “looking after” funds on behalf of an uncle, took the extraordinary step of surrendering his US citizenship rather that face further scrutiny and the very real possibility of a ruinous financial penalty. Let’s face it; the Lebanese may covet a foreign passport – the American one having understandable cachet – but they clearly value their financial privacy.
I guess it’s a Phoenician thing. A British publisher with close connections to the Middle East told me over lunch in London last week that every deal he has made with the Lebanese has left him breathless with grudging admiration at how they always seemed to leave him feeling, in the nicest possible way, that he’s been well and truly done. “Don’t worry,” I reassured him. “I never inherited any of that DNA. I also get shortchanged.” He shook his head, momentarily choking on his lamb’s kidneys. “But that’s what they all say.”
We did, however, agree that criticism of the British prime minister David Cameron taking his time to reveal that he had held shares in an offshore fund established by his late father would leave most Lebanese unable to see what the problem was. The late Cameron senior, who we must remember had not broken the law, would have been hailed as a smart guy – or zakki. As for the £19,000 (Dh99,032) profit Mr Cameron made when he sold the shares in 2010 before becoming prime minister … seriously?
I met “Dodgy Dave” a few times in the late 1980s, when he was (and still is) the best buddy of a university chum. I must confess I didn’t really warm to him. The Etonian coolness can come across as high-octane arrogance, but even so it was clear he was destined for greatness, and I was not surprised when in 2006, while stuck in Beirut traffic listening to the BBC World Service, I heard his impressive debut as the youthful leader of the opposition, famously giving the prime minister at the time Tony Blair a hard time in the house of commons.
Since then, the usual British disease of toff-bashing has crept in. But in reality, we (I’m wearing my British hat now) really don’t know how lucky we are.
The Lebanese can only dream of living under the rule of law, with access to free education and health care; plentiful and safe water; 24-hour electricity; good roads; public transport; a local council that doesn’t function on bribes; an effective police force; enlightened urban planners and accountable public servants.
As it is, they are caught in a mini Cold War between the Arabian Gulf nations and Iran as the GCC applies economic pressure on the Lebanese state to rein in Hizbollah, which has entered into wars in Syria and Yemen.
The economy is in tatters, groaning under the weight of about 2 million refugees, while for the fifth consecutive year the Lebanese hospitality sector faces a barren summer tourist season. Beirut residents would moan about the annual invasion of Lebanese expatriates and Arab tourists, but the hospitality and service sectors wait impatiently for their arrival in the same way farmers pray for rain.
Or as one Beirut taxi driver told me while driving me to the airport last week: “The roads are gridlocked but no one is here.”
Michael Karam is a freelance writer who lives between Beirut and Brighton.
business@thenational.ae
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