Академія Публічно-Приватного Партнерства

Lebanon: Prospects for Rebuilding the Country, Look from Inside

Lebanon: Prospects for Rebuilding the Country, Look from Inside

The disaster that took place in the port of Beirut on the evening of August 4, 2020, divided the life of Lebanon into before and after. Today, this country that has recently been very attractive for living is thinking about whether it will be able to survive in the current conditions, and in fact is at a crossroads. And it is not only because of the explosion in the port. Nobody knows whether it was accidental or provoked, but the catastrophe that happened was largely due to the dynamics of the country's development in recent years. Unfortunately, the situation in Lebanon turned out to be favorable for such "accidents".

Fortunately, we are still bypassed by such disasters. But in some ways the situation that has developed in Ukraine today is similar to the one that has formed in this country in recent years. In this regard, we would like to share with you the opinion of our colleague and partner from Lebanon Ziad Alexandre Hayek on the causes of the problems faced by Lebanon and his vision of the prospects for the development of his country, coming out of the current situation.

Listening to Ziad's answers, we always had parallels with what is happening in Ukraine. Interestingly, is it just us, or will our readers feel the same?

In any case, it seems to us that Ziad's thoughts will be useful and interesting for our politicians, managers, and ordinary citizens. Below is an interview with Ziad Alexander Hayek.

Ziad Alexandre Hayek – a citizen of the US, the UK and Lebanon, made Officer of the National Order of the Cedar, the highest state order of Lebanon, Secretary General of the Republic of Lebanon's High Council for Privatization and PPP from 2006 until he was nominated to be President of the World Bank in February 2019 (in March the Government of Lebanon withdrew Hayek's nomination due to external pressure). Before moving back to Lebanon in June 2006, Hayek was President of Banque Indosuez Mexico, S.A.; Vice President at Salomon Brothers in charge of investment banking for northern Latin America (New York); and Vice President of Citibank, NA (New York). Speaks 11 languages: fluent in Arabic, English, French, Spanish, Portuguese and familiar with Italian, Persian, German, Russian, Hebrew and Aramaic. He has been a resident of Lebanon, Mexico, the US, Bahrain, Gabon and the UK.  Hayek is currently Vice Chair of the Bureau of the United Nations Economic Commission for Europe Working Party on PPP, Head of the International Center of Excellence in PPP for Ports and President of the World Association of PPP Units & Professionals.

Ziad, do you see the current situation in Lebanon as hopeless? How is that and why?

In the short- to medium term, yes, unfortunately, I do, for many reasons. I will cite here some of those reasons, not all of them.

Gross Incompetence: The main objective of Lebanese politicians is to be elected and to be revered. They generally have no intellectual curiosity, or interest in rigorous analysis that leads to policy formulation. When they take the reins of power, therefore, they are grossly unprepared for exercising it. Ministers are appointed who neither know much about the sector they are to oversee nor necessarily have any senior management experience. The ministerial committee in charge of dealing with our current financial crisis, for instance, has only one minister with a financial background, and even he has never had any experience in sectoral policy making, let alone in managing financial crises. Parliament is even worse. Witness the passage of a law recently to build a US$4 to 5 billion tunnel from Beirut to the Beqaa – a project which could never pass any financial feasibility assessment in the best of times, let alone during a financial crisis. The incompetence and negligence of the decision makers at all levels of government, that has led to the Beirut explosion will provide ample material for many case studies in the future.

Sclerotic Decision-making: Our national governance model is flawed on multiple levels. It hampers decision making by design. We do not have a CEO. There is no orchestra conductor to create music out of the cacophony of sounds. The powers of the President were delegated to the Council of Ministers. You could not run a benevolent association by a three-member board, let alone running a country by a thirty-member council. Ministry director generals have been stripped of their Ministry CEO status. Ministers have appropriated the role of both chairman and CEO, and have been granted immunity, making them responsible to no one. Inter-ministerial cooperation is the exception rather than the rule. Decisions that require the support of other ministries go largely unexecuted, if not outright impeded. One of the foundational principles of good governance is the delegation of authority, coupled with a commensurate delegation of responsibility. Centralizing decision-making is a grave mistake. Again, the Beirut explosion provides a textbook example of a failure in governance. Those in lower echelons, not being able to make a decision to move the explosive ammonium nitrate on their own, had to seek a decision much higher up, where the urgency of the matter was not well appreciated.

Lack of Trust: The lack of trust is pervasive. People do not trust the political leadership, and despite perfunctory pledges of trust in the Army or in the judicial system, reality is that the Lebanese citizens trust neither their politicians nor their institutions. Neither parties in power nor groups in the Thawra trust even each other. Depositors trust neither the banks nor the central bank.

A Culture Unaccustomed to the Carrying the Weight of Responsibility: It is not only the politicians; it is also the Lebanese themselves. If they miss an exit on the highway, they are not willing to bear the burden of driving on to the next exit. They put their car in reverse to go back to the exit they missed, not caring about the congestion they cause. If there is no parking spot in front of the building they are visiting, they double park and cause congestion, rather than parking 300m away and walking to their destination. The examples are infinite. Our people lack spine. They have not been taught the concept of “stiff upper lip”, which is indispensable in times of social crises.

Multiple Crises: For the above reasons, we are not able to deal decisively with one crisis, let alone confronting the multiple political, economic, financial, social, health, the Beirut explosion, and maybe soon, security crises.

Do you think that steps can still be taken to save the day financially, economically, and therefore socially or is it too late? From where should we start?

Unlike companies, countries do not go bankrupt in the sense of ceasing to exist. So, it is never too late to implement the steps necessary to restore prosperity. Key to this is the restoration of Trust. First, trust in the banking system, which would result from implementing a proper financial rescue plan such as the one that Gerard Charvet and I recommended  (www.hayekassociates.com/LebanonFinancialRescuePlan20200526.pdf). Second, trust in the political system, which will require the many reforms voiced by the Thawra, including reforms to our governance model and our judicial system. Finally, third, trust of the international community in the State of Lebanon, which will require the disarmament of Hizballah and its retirement from regional conflicts. This last condition may seem unachievable today but, to quote Robert Schuller, “The only place where your dream becomes impossible is in your own thinking.”

What are the major ideas and suggestions that can be translated into a forward-looking rescue plan? Is it possible to develop small ideas and steps that would help the Lebanese survive these hard times? Would you please name some of these ideas?

Small ideas and small steps, ranging from personal frugality maybe to starting business activities that replace expensive imports, can help an individual or a family, and even then, likely for a short period of time only. They can neither help society as a whole nor alter the situation.

Do you advise the Lebanese youth to stay in their country and withstand the storm or to start considering emigration that would allow them to build a better future? In your opinion, what role can the Lebanese youth play now and in the near and far future?

Emigrating willy-nilly in disgust is dangerous to the emigrant and to our society. Those who emigrate must have a purpose. If they do, they can shine and make Lebanon shine with them. I advise the Lebanese youth to emigrate but return. I am not saying this only in part because the situation is difficult and those young people with enough ambition who can still build a future for themselves and their family have a duty to do so. I am saying it also because, as someone who has spent 30 years abroad, I know that emigrants love Lebanon and appreciate it much more than those who stay. In addition, those who emigrate and live in civilized societies, return with a more enhanced civic sense. Finally, we should not underestimate the importance of remittances to our national survival and prosperity. If Lebanon were to harness the power and potential of its diaspora, it can become one of the most influential countries in the world… Emigrate, have a purpose, love Lebanon, and return, the sooner the better – this is my formula.

Does the geographic factor play a role in the successes in the world of business and technology and in overcoming barriers? Is it possible then to create a global Lebanese citizen inside Lebanon? What does it take to achieve this?

Ours is the most cosmopolitan society on planet Earth. No other society, not even that of the Jewish diaspora comes close. We are the epitome of globalization. We should embrace it and lead it. We need to be careful not to lose this distinction. To do this, we need to emphasize the quality of our education. Today, education is the only barrier. With the advent of the internet and other means of global communication and transportation, no geography is a barrier, and even less so our own, here, on the crossroads of continents.

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