The bankrupt state of Lebanon


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This article was originally published by H-Alter AND the author Demian Vokši


Fawwaz Traboulsi, Lebanese historian and author: "Technically Lebanon should be bankrupt but you don't bankrupt it because you can't get anything in return. World Bank has loaded us with a concept which is empty. What is corruption? For them it is a sign that you have an overloaded public sector which you should reduce and a heavy budget which you should reduce. That doesn't change anything in how people benefit from public money. This is why you never get a solution for something called corruption - because it means the corrupt are the politicians, and business is moral".

Fawwaz Traboulsi is a Lebanese historian and an Associate Professor of History and Politics at the American University of Beirut (AUB). Traboulsi has written on Arab history, politics, social movements and popular culture. He has published extensively and translated several books into Arabic, including works by Edward SaidKarl MarxJohn ReedAntonio GramsciEtel Adnan and Saidi Yusuf. Some of his recent books include A History of Modern Lebanon (2007) and Democracy is Revolution (2012). Traboulsi is also the editor in chief of the pan-Arab political-cultural quarterly Bidayat, published in Beirut.

Traboulsi was a guest of Review of Small Literatures - United States of Levant, which took place in Zagreb, Rijeka, Dubrovnik, Osijek and Vukovar, from 5th to 9th of December.


You work as a historian and a professor of history in Lebanon, and you have been living in there all of your life. Could you tell us something about the self-perception of the Lebanese national identity. How did the Lebanese people perceive Lebanon in the 50's, in the 70's, during the war and now? What is a marker of Lebanese national identity?


That is difficult to talk about - Lebanese people. So what we can talk about is - if there is a dominant vision of Lebanon? Identity, I don't like identity. World Bank has loaded us with a concept which is empty. What is corruption? For them corruption is a sign that you have an overloaded public sector which you should reduce and that you have a heavy budget which you should reduce. That doesn't change anything in how people benefit from public money. So this is why you never get a solution for something called corruption


You don't like identity?


No, not at all. Identity is trying to fix a whole community, at times a whole people, in one characteristic, which is most of the time uncapable of being proven or shown. Identity is always about differences. I have approached the issue since I have written about Lebanese ideology - the dominant Lebanese ideology. Lebanon is a new product, a product of colonialism and the partition of the region and during the First World War. One of the first markers is a very intricate correlation between economic interests and communal interests, especially viewed from the perspective of the French.


If I'm not mistaken, the French were very interested in the area which later became Lebanon from early on, not only because of the connections with the Christian community there, but also because of the silk trade?


Absolutely, but we're not talking about Lebanon we know now, we are talking about Mount Lebanon and Beirut. So, Syria as a land and as an entity was from the beginning of the 19th century of great interest to the French mainly after the British took over the Suez canal and Egypt because their main interest in that time was to control Egypt and the route to India.

Once the British were more influential in Egypt, the French said "We want Syria". Those were commercial interests, and there was an importance of ports, the port of Beirut, which by that time had become an axis of what you could call colonial trade. Damascus, Beirut, Europe, compared to Asia, Persia, Aleppo, Alexandretta. The latter one is the old sea route to Europe. Now you have a modern one which exports natural products like Syrian cotton or Lebanese silk. So that axis of Beirut and Damascus - around it was built this whole idea of Greater Syria.


And didn't Beirut, somewhere in the 20th century, become an important port for Gulf oil?


No, Beirut was never a port for oil. You had two oil refineries for Gulf oil on the coast of Lebanon - one was Tripoli, the other one was Saida. One was Iraqi oil, 1934, the other was Saudi oil from early 50's. Beirut got a banking sector from the 50's which focused on oil money.  The first petrodollars that went out of the Gulf, and the Gulf then meant Saudi Arabia, went first into Lebanese banks and then through Lebanese banks into European and American investments.


When I first went to Lebanon I noticed a huge number of banks there. Could this what you just said be the reason of such a big and strong banking sector in Lebanon?


Exactly because of this, yes. And it has happened in two main ways. One was in the 50's when oil money was simply moving out, and then in the 70's when you had the oil boom plus, and that's important, the revenues from the remittances of the Lebanese who were working outside of the country which amounted to around 12 billion dollars per year. A lot of economic activities depend on the influx of this capital, and all of this was taken over by the banks, and the banks have surplus money also because of the Syrian capital invested in them.

This huge surplus is being lent to personal accounts and has little to do with development. 1.5 percent of the bank loans go to the agricultural sector, 7 percent goes to the industry, a third of the bank loans go to the Lebanese government. The whole economy runs around a huge debt. Lebanon has one of the biggest debts in the world. Beirut got a banking sector from the 50's which focused on oil money. The first petrodollars that went out of the Gulf, and the Gulf then meant Saudi Arabia, went first into Lebanese banks and then through Lebanese banks into European and American investments

Really?

Yes. Technically Lebanon should be bankrupt but you don't bankrupt it because you can't get anything in return. You can't sell islands like Greece. (laughter) So yes, this explains a dominant sector of the economy -  the financial sector.

And we've seen the cooperation of the financial sector with the real estate development sector when Rafik Hariri came to the political scene in the 90's with the Solidere project. A similar situation can be found in south Beirut where Hezbollah is partnered with the Al Inmaa building company, kind of in line with you material view of Lebanon. One can see the same lines of corruption or maybe Wasta all over Lebanon.

Well, we are under the domination of the oligarchy of importers, real estate contractors and banks. They dominate the economy, they dominate the social life and they dominate politics. Now is that called Wasta? It is a clear form of capitalist exploitation. The old concepts of clientelism pertain first to politics, they don't pertain to the economy. And they pertain to the very antiquated idea by virtue of which we had individual landed property (Zaim) who dispensed some favours for political loyalty. And now we are ruled by militiamen, warlords, parties. There are no Zaims. The old Zaims are militias basically. So one thing to warn against is the use of this antiquated language which at time had some meaning in a totally different situation.Once the British were more influential in Egypt, the French said "We want Syria". Those were commercial interests, and there was an importance of ports, the port of Beirut, which by that time had become an axis of what you could call colonial trade

And Wasta is a name for the intricate relations within the administration by clientelism or corruption. I think the World Bank has loaded us with a concept which is empty. What is corruption? For them corruption is a sign that you have an overloaded public sector which you should reduce and that you have a heavy budget which you should reduce. That doesn't change anything in how people benefit from public money. So this is why you never get a solution for something called corruption. It is becoming ideological, because first that means the corrupt are the politicians, and business is moral. But what do you do with politicians? You don't do anything. Or you talk about raising awareness which doesn't raise awareness. (laughter)


What are the real questions then?


Everybody knows that there is misuse of public money. But the question is who misuses it. You can get a corrupt administrative official who will give you a license to bild abuilding and take 10 000 dollars for that, but you also have businessmen who became politicians and who make billions out of government expenditure. This presupposes that government expenditure is the biggest bulk of movement money in the society or the economy. We are in a bankrupt state, so what the Lebanese state can spend in total is insignificant compared to the total volume of money in society, and that is the private sector, the business sector.Well, we are under the domination of the oligarchy of importers, real estate contractors and banks. They dominate the economy, they dominate the social life and they dominate politics. Now is that called Wasta? It is a clear form of capitalist exploitation

So the term "corruption" lays the blame on politicians and at the same time does not touch the workings of the real economy, just the government. The government expenditures are 6-8 billion dollars while the whole movement of the economy is in the 50 and 60 of billions of dollars. What does corruption have to do with the fact that the merchants raise the price of goods whenever they want? There is absolutely no control of that. How does that affect wages? How does that affect the poverty of the country? Where is corruption? Those are the uneven workings of the economy. You might tell me this is all linked to political power, yes, but it is linked to class power, not to an abstract political power.


What about Hezbollah?


When you are talking about Hezbollah, that is a private sector economy. They are giving money for political loyalty too, yes, but they are not based on clientelism. Clientelism presupposes election. We don't have elections! We have a parliament which has been extending itself for years. So this is the issue. Hezbollah is important, it dispenses a lot of social services like all Lebanese political parties with the difference that Hezbollah is richer. But Catholic schools, for example, are more important than Hezbollah schools because they are all over the country and they are comprised of non-Catholics too. They teach more non-Christians than Christians.

So just to say, those concepts which are journalistic and academic ones, don't fit the post-war Lebanese economy. You had a totally different configuration of people, including businessmen. Hariri is not the only one. We had very rich Saudi men in the 50's, but with Hariri the fusion of political power and business became very, very developed. That's very important.


And the influence of business on politics became more important in recent years?


Yes, especially because they make money out of governmental debt. They lend money to the government which has no choice but to repay the debt with the money of the people. We are in a bankrupt state, so what the Lebanese state can spend in total is insignificant compared to the total volume of money in society, and that is the private sector, the business sector


While we are on the topic of Hariri, how would you comment the detention, let's call it like that, of Saad Hariri in Saudi Arabia?


It was very much overinflated in the sense that immediately there were thoughts of war with Israel. I never thought that the Israelis would wage war to benefit the Saudis. But definitely, the man was abducted one way or another and the resignation he gave was imposed on him. But then enters president Macronwho said "I'll take charge of the man and try to reintroduce some of your interests in Lebanese politics".


So the French are still in a way important in Lebanon?


This is what they want to prove, yes. And the reasons that are given for his resignation have nothing to do with the way the man came back. What are his conditions?  I see no basic difference in renewing his compromise with Hezbollah and president Aoun because the two burning issues are not even mentioned. One is Syria, and the other is the arms of Hezbollah. Obviously, the second one is not important anymore because if you want to disarm Hezbollah, you need a force stronger than Hezbollah. You stop talking then, bye bye. That's one thing.Those concepts which are journalistic and academic ones, don't fit the post-war Lebanese economy. You had a totally different configuration of people, including businessmen. Hariri is not the only one. We had very rich Saudi men in the 50's, but with Hariri the fusion of political power and business became very, very developed

But the other issue, the intervention in Syria - Saudi Arabia is now more interested in the intervention in Yemen than in the intervention in Syria. Hezbollah is not a major power in Yemen.  Actually the killers in Yemen are the Saudis who are bombarding the country. There are, I don't know, a thousand Hezbollah experts? So rather than hit at the Iranians who are their real adversaries, now they want the Lebanese to convince Hezbollah to withdraw from Yemen. I don't know how that will end, I haven't been following it that closely, but I don't see anything dramatic happening.


And the last question we'd have to talk about is regarding Trump's move of  the US embassy to Jerusalem. How do you think it will play out in Israel and Palestine, and do you think it will play out in any way in Lebanon regarding Hezbollah? 


First, I want to emphasize that this is the decision of the United States Congress and its two Houses, since the 90's. So what Trump has done is that he lifted the presidential decision to deffer from the move which has to be made every six months. I see it in the light of an obvious attempt of the American administration and Netanyahu. First, it is a big gift to Netanyahu in return for engaging with Saudi Arabia in the battle against Iran. And how that will be resisted is a big question you can't say much about in advance.