Written by Noor Allawi, Intern at the Issam Fares Institute’s communications office
The AUB Issam Fares Institute for Public Policy and International Affairs (IFI), in collaboration with L'Orient le Jour and le Commerce du Levant, hosted an online panel to launch its newest report titled “Privatization of Lebanon’s public assets: No miracle solution to the crisis” on February 26.
Moderated by Sahar Al-Attar, Editor in Chief at Le Commerce du Levant, the webinar brought together Albert Kostanian, the lead author of the publication and Senior Policy Fellow of Economics at IFI; Toufic Gaspard, economist; and Ishac Diwan, professor of economics at the Paris Sciences et Lettres and École Normale Supérieure.
Albert Kostanian started the Webinar by presenting the paper’s main findings. “Privatization of Lebanon’s public assets: No miracle solution to the crisis” discusses the potential that many public held assets have if they were privatized. Kostanian considers that many resources are not being used to their full potential, such as the oil reserves. The study thus, aims to highlight the tangible assets and public utilities that when privatized, could generate more revenues including: Casino du Liban, which is state-owned despite the fact that it has no strategic interests and can have more potential if privatized; the telecom sector, which should be privatized as it is unusual for a government to run a telecom agency; and Électricité du Liban.
Nonetheless, while privatization can theoretically alleviate losses borne by the economic crisis, any decision to sell state assets must be weighed based on economic and social criteria in aim of contributing to the long-term objective of improving the population’s overall welfare in a sustainable manner. PHAs however, are in most cases treated superficially.
Kostanian presented privatization as a sectorial discussion instead of a dogma. He considered that local stakeholders introduce the topic to the public as a mean to remediate losses of the country’s financial model, which is not necessarily true because privatization cannot be reduced to a loss strategy.
Gaspard on the other hand praised the study and considered it to be “the basis for any privatization debate in Lebanon. “Moreover, Gaspard addressed the issue of theft and the inefficiencies of public assets in Lebanon and acknowledged privatization as a possible solution to increase revenues. The speaker also acknowledged the influence of regional and foreign powers on the Lebanese economy, mainly the institutional corruption within the state that stems out of the Iranian influence on the region as a whole.
Gaspard also explained that the future revenue stream of any public asset will depend on two factors: One, a general economic reform program that includes conditions set by the international monetary fund (IMF), which will probably be influenced by regional and international politics; two, the need to save Lebanon from its current economic and political crises.
Diwan praised the report for giving a comprehensive overview of the governmental public assets and how they are run. Diwan also stressed on the risks that might emerge as a result of privatization as “these public assets are monopolies in their essence, once privatized they remain a monopoly with possible corruption. And thus, the only way to avoid the risks is to enforce regulations that foster competitivity Other risks relate to selling public assets during times of crisis and mismanaging the privatization process, among many others.
To reinforce the risks mentioned by Diwann, Kostanian warned against privatization in the current state and the political status of the country. Successful privatization requires laws, regulations, and functioning capital markets.
Gaspard also stressed on the need for a stronger executive body that will implement the needed laws and regulations.
To (re)watch the webinar, here.