By Abby Sewell Contributor
BEIRUT — MARIO ABDEL Massih understands the growing frustrations of many Lebanese citizens. He and his brother own a small automotive locksmith business in Beirut that employs 10 people.
“The work we have has gone down by about 55 percent from last year,” says Abdel Massih, adding that his business activity has dropped by about 70 percent in the past three years. “It’s not just me … There are many companies that have gotten so in debt that they are going bankrupt. They’re firing their employees and the employees are sitting in their houses without work.”
Contributing to the country’s economic doldrums and the downturn for Abdel Massih’s business: An eight-month-long political gridlock that has blocked the ability to form a functioning government.
Last May, Lebanese voters headed to the polls in what, for some, marked a rare moment of optimism in the country’s fractured political landscape.
It was the first time in nine years that the country had held a parliamentary election, and although few expected a major change in the balance of power, the fact that it even occurred seemed to mark progress toward greater political stability.
But since then, the mood of optimism has dissolved. Eight months later, as they jockey for power, political factions have not been able to agree on a cabinet. The lengthy delay in a government formation has threatened the country’s access to international funds at the same time as the economy appears to be on an escalating downward spiral.
Some fear that an extended political stalemate combined with a deteriorating economy could threaten the fragile political stability that the country has maintained even as neighboring Syria fell into an extended civil war, sending more than 1 million Syrians fleeing to Lebanon. The tiny country is now hosting the highest number of refugees per capita of any country in the world.
Seeking to express his discontent with the status quo, Abdel Massih joined a general strike organized on Jan. 4 by a coalition of labor groups and political activists, to call for immediate formation of a cabinet.
“The government, whether it’s formed or isn’t formed, it’s basically a corrupt regime,” he says. “But the government helps a bit for investors to bring money to the country and move the economy. The economy now is below zero.”
Economists agree with Abdel Massih’s pessimistic assessment. A recently released consultant report notes that from an average of 9.2 percent economic growth from 2006 to 2010 – before the war in Syria – Lebanon’s growth rate dropped to an average of 1.3 percent between 2010 and 2017. In the same period, foreign direct investments fell from $3.9 to $2.8 billion. The country’s debt-to-GDP ratio, at 149 percent, is the third-highest in the world.
Given its own history of internal conflict and as a proxy in regional conflicts, Lebanon’s avoidance of political and economic collapse amid the war in Syria has been regarded as a miracle of sorts. But its stability has been propped up by substantial international aid, as well by a steady flow of remittances from Lebanese working abroad — which totaled $6.9 billion in 2016.
“Lebanon has resilience,” says Jamal Saghir, a former World Bank director and currently professor at McGill University’s Institute for the Study of International Development, who is also Lebanese. “How far can this resilience continue to make this miracle work?”
International players have shown anxiety over the extended standoff, with officials from the European Union and the World Bank and political leaders such as French President Emmanuel Macron calling on Lebanon to form a government as soon as possible.
Ratings agencies Moody’s and Fitch both downgraded the country’s credit rating last month, with Moody’s citing “an increase in domestic and geopolitical tensions that is hindering the authorities’ capacity to halt the widening of fiscal and external imbalances.”
International and domestic observers have voiced fears that an ongoing delay in government formation could lead to the loss of a package of $11 billion in international development money that was promised to the country last April at the CEDRE conference in Paris.
“Of course (international donors) are committed to support Lebanon for many reasons,” says Nasser Yassin, director of research at the American University of Beirut’s Issam Fares Institute for Public Policy and International Affairs. But, he adds, donors also have other priorities. “They cannot just wait forever for Lebanon.”
All factions in the government have blamed each other for the failure of negotiations to date.
There have been a series of snags: a standoff between rival Christian parties over their respective shares in the cabinet; disputes over the representation of the small but influential Druze sect; and an ongoing stalemate over the demand of a group of Sunni legislators who are opposed to Sunni Prime Minister Saad al-Hariri and aligned with his rival, the Iranian-backed Shia party and militia Hezbollah, to name a minister of their own. (Last year’s election strengthened Hezbollah’s position in the parliament while weakening Hariri’s Future Movement.)
The week before Christmas, political leaders announced that a deal was on the verge of being reached, but it then fell apart.
Public frustrations are rising. The Sunday before Christmas saw mass protests in downtown Beirut over the government stalemate and deteriorating public services. Security forces clashed with protesters, including pummeling a news photographer.
The action was followed by a series of smaller protests and general strike organized by the newly formed non-sectarian political party Sabaa and a number of public and private labor groups.
“Either they are really not giving importance to anything other than their shares in the government, or they are afraid to carry responsibility for the economic situation and want to escape from this responsibility – or they are actually dependent on outside states and waiting to get a green light from them,” says Victoria el-Khoury Zwein, an activist and one of Sabaa’s co-founders.
Some observers suggested that the expected pre-Christmas deal had fallen through as a result of U.S. President Donald Trump’s announcement that the U.S. would pull its troops out of Syria, a move seen as strengthening the hand of the Syrian regime’s ally, Hezbollah.
AUB professor Yassin largely discounted the theories of foreign interference, saying domestic issues and jockeying for power are to blame for the stalemate. And in spite of his fears of an economic crisis, he says he does not see a serious threat to the country’s political stability.
“I think that when things come to the brink of certain fall or collapse, they will come together and someone will give something, some compromise,” he says. “This is the politics of brinkmanship.”
But the longer the stalemate continues, observers say, the more dangerous the situation will become.
“How long can you continue sustaining?” asks Saghir. “Are we in the last mile of this? That’s the biggest question that we have to ask ourselves at this stage.”
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