Lebanese Economic Tag Team Of El Hassan And Salameh: Can They Ever Be Candid?


By Ghassan Karam, Special to Ya Libnan

Arguably one of the most productive and positive attribute of a free democratic society is the free exchange of ideas that it promotes. This is the exact opposite of what prevails under authoritarian systems where all players will have to stick to the dogma that has earned the blessing of the person at the top of the pyramid. Dissent is not tolerated and those who dare question authority get their comeuppance rather swiftly. Obviously the latter tends to stifle creativity and innovation.

It is essentially the strong belief in the important role that free and open exchange of ideas play in a vibrant society that has led to the promotion of transparency as a basic principle to guide governmental operations at all levels. Transparency will make governmental officials more accountable and will allow the press and the general public access to all pertinent information so that participative democracy can flourish.

Unfortunately it appears that most of the officials in the current Lebanese government have never heard of transparency and insist on promoting their narrow perceptions even at the expense of telling untruths. Rational, responsible individuals can disagree on the fundamental principles of what is a beneficial policy and what is a destructive one. No one would ever want to deny any official that essential freedom. But the right to adopt a particular ideology and be a firm believer in the appropriateness of the teachings of some schools of thought ought not to be confused with the promotion of faulty, illogical untruths. No one has the right to promote what is established to be incredible and wrong.

Once we apply the above criteria to the recent public statements of our most important two official for economic affairs then the sad fact of the matter is that both of Finance Minister Raya El Hassan and Bank of Lebanon Chief, Riad Salameh, come out very lacking and possibly disingenuous.

The whole world has been fixated on the problems of the government of Greece with its sovereign debt. The potential negative concerns of the ability of Greece to take the bitter medicine have been so great that it has affected the exchange value of the Euro. But at the eleventh hour a deal was struck which enabled Greece to float a Eurobond that was oversubscribes by three folds but only as a result of a hefty interest rate premium to the going rate. No one looked at this as being a healthy sign of the Greek economy. Just the opposite this round of financing raised in the minds of many the very high price that Greece and eventually PIIGS (Portugal, Italy, Ireland and Spain) will have to pay to avoid even bigger financial problems. Ironically Lebanon was able to ride on the coattails of the temporary relief in the international money markets that the Greek deal brought about and so Lebanon was able to issue $1.2 billion Eurodollars for 10 years at an interest rate of 6.35 and the issue was oversubscribed by a factor of three.  But our Finance Minister holds press conferences issues statements and goes on local TV shows to trumpet the “great confidence” that the international community has given Lebanon. What confidence? , what financial health is she talking about? Lebanon has a credit rating that is below that of Greece, was able to float a $1.2 billion Eurodollar at very high prices and will have top come back to the money markets again and again. Does Minister Raya El Hassan understand that there is a price at which most things, even junk, will sell? I am sure that she does but unfortunately she has chosen again to keep the truth from the public. What she should have said is that Lebanon has been able to issue a Eurobond at a rate of interest that is greatly over the prevailing rates in the international markets as a result of our poor credit rating and that if we wish to do better in the future then we have to bite the bullet and endorse the required reforms. But the minister apparently is not a believer in transparency since she believes that the truth is something that the public cannot handle.

Riad Salameh on the other hand was at least as equally disingenuous with the Lebanese people. He was promoting the absolutely mind boggling idea that drinking bottled water was good for the Lebanese GDP and consequently ought to be promoted. That is heresy and the head of the central bank should know better. Maybe for his next publicity round Mr. Salameh should endorse smoking two packs a day by each Lebanese since that will increase the incidence of lung cancer and will generate ample business to hospitals and health providers. This thinking was last endorsed by the French revolution that used to hire two work gangs, one to dig a ditch and the other to refill it. Mr. Salameh ought to be ashamed of his suggestion and must apologize to the Lebanese people. He acts as if he has not even heard of the latest report by the Sarkozy commission about the need to avoid “GDP fetishism”.

A free society needs a free, responsible and a vibrant press whose job is to keep officialdom honest. Where is our press, or should I even wonder whether there is one.