American University of Beirut

Lebanon has a new government. Now what?

​​September 27, 2021​​

This government formation took over a year. Do you have hope this government will succeed? 

I believe if Lebanon is to survive in the years to come, it must pursue the best of social peace, inclusion, and prosperity. A fully independent, democratic government, empowered with exceptional legislative power, can lift the country out of the disastrous economic and financial situation toward a new election next year. Lebanon must begin significant fiscal and monetary adjustment, structural reforms to contain the public debt and raise economic growth. Serious structural reforms are the only path out of Lebanon's current situation.  

People in Lebanon are suffering from shortages in fuel and medications, massive loss of buying power, and up to two-thirds living in poverty. How can this government make life better for the Lebanese?

Lebanon has been for almost two years in situation of sudden stop. It is facing a deep accumulation of interrelated political, social, economic, financial, and environmental crises, mutually feeding on each other at different levelsThe new government should immediately start discussions and agree with the IMF on a financial support package addressing macroeconomic imbalances. While safeguarding the most vulnerable groupsLebanon needs to enhance tax compliance and remove banking secrecy laws. This is necessary since many professional classes do not pay or under report their tax. You cannot work only on the fiscal side but also on the social side to strike a better balance. Fiscal discipline must be accompanied by economic and social reforms. A better balance must be struck between fiscal reforms and sector investment in growth and jobs.  Fiscal reform is not viable without social justice. Tackling youth unemployment must be the priority. But such a program needs to be supplemented by considerable financial support from the international community for Lebanon to stand on its feet again. A capital control program with a clear economic plan should also be enacted to rebuild sustainable economic and financial conditions. 

We also need to bring back the remittances to Lebanon. There used to be around $9.5 billion in remittances each year. Last year, there was $7 billion, and this year there may be about $5 or $6 billion.  

The final vital piece is the energy sector. It needs to be at the core of the reform program. Only 64 percent of Électricité du Liban bills are being paid, accounting for over 50 percent of the budgetary deficit. At the same time, people receive only one or two hours of electricity per day. This is disastrous. This sector costs a considerable amount to the taxpayers and yet does not deliver. It impacts growth, productivity, healththe environment, and job creation. Therefore, we must rethink the sector by decentralizing it or unbundling it 

The promise of foreign aid for Lebanon is on the condition that the government introduces reforms. Do you think that this government will be able to make those reforms? 

This government has a one-year lifespanThe first few months will lay down the groundwork for reform, and the last few months will be to prepare for elections. I do not think they will be able to make significant structural changes. However, it will be a step in the right direction if they produce the right plan and admit what needs to be done, how it should be done, agree on the necessary priorities, and start implementing few reforms such as capital control, energy reform, etc., and a social safety netA reform program to bring Lebanon back on healthy economic footing will take at least five years.  

What can we expect from the May elections: something radically different or more of the same? 

I don't think we will see radical change, but at the same time, the Lebanese people are desperate for change. How this will be reflected in the election is yet to be seen. We are talking about over 35 years of the same people, the same politicians, the same talk. After what we have seen in the last six months to two years, you would expect the Lebanese people are fed up to the point where they will ask for a complete change. But I doubt you will have a complete transformation. However, introducing 20 to 25 percent new blood into the parliament will trigger change for years to come.  

We've seen a lot of activism in the streets, demanding change from Lebanon's political systems. How do you see the new government handling Lebanon's social movements? 

It's normal to have those voices, but they need to be heard. Undoubtedly, the mobilization has lost some interest for different reasons, a mixture of security issues, personal issues, and people leaving. I think social media pressure should keep the pressure and keep on disturbing some "normal things" that are not normal. Activists should keep asking lots of questions, but most of all they should organize themselves to take action and be represented in the parliament.  

If you ask me right now what I would do as the government, I would ask for few town hall meetings in the Serail, calling all those concerned to come to the prime minister's office to exchange with him and members of the cabinet. would listen to these people directly as prime minister and as minister. Listen to them, talk to them, exchange with them, have a dialogue with them. You don't necessarily have to accept it all, but you at least have to listen to what they have to say directly from them. 

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