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Posts Tagged ‘Hannes Baumann

How Neoliberal expatriate Contractor Class is managing the contracted national debt in Lebanon?

How neoliberalism is applied in your country?

Neoliberalism is not a difficult concept to comprehand: Just observe its applications and consequences on your survival instinct.

The best way to understand neolibralism in the western developed nations is to witness how developing States are applying it.

Particularly, new small States recognized in the UN that were under direct mandated powers for many decades, and now are appeasing their former “masters” in order to enrich the oligarchy ruling class these under-developped “nations” are sustaining.

How neoliberalism is applied in Lebanon?

Together with the governor of the Central Bank and the Prime Minister, the minister of Finance is a crucial player in the management of government debt.

From 1992, late Rafik Hariri PM, and later the Hariri clan hoarded the control of these three institutions.

The policy adopted in 1993 pegged the Lebanese currency to the US dollar. What that means?

The State borrows on behalf of the government large sums of loans that are not needed to finance the deficit.

The borrowing mechanism is basically a political decision to get the State tightly linked to outside multinational financial institutions… Institutions that the ruling class has invested in and wants to generate quick profit in this globalization era… at the expense of the people they claim to work for their benefit…

This scheme drove up the demand for the Lebanese currency, raised the interest rates on government debt, and high interest returns for depositors (reaching 30% at determined periods as the Future Movement spread the words among its elite class to deposit) and the new expatriate Contractor wealthy class of billionnaires…

Leading the country into a dept trap.

A debt ever increasing ($60 bn) and absorbing a third of the government budget, every year since 1992.

Servicing the interest of the debt has one purpose: Keeping the new neoliberal Contractors class in control of the management of the financial and economic institutions.

The main benefiaciaries were commercial banks and their wealthy depositors: Lebanon financial and economic elite classes (new expatriate contractors, warlords, oligarchic politicians…) have the necessary savings to invest in government debt instruments.

The notion of neoliberalism is that, as long as the government maintains the confidence of the elite classes in the soundness of the financial policy, the situation can remain in control, precariously in control, and relying mainly on foreign support for the policy.

The IMF working paper from 2008 mentions that the continuous rollover of Lebanon debt depends on an “implicit guarantor” from donors and international financial institutions.

And who is the main donor guarantor? It is Saudi Arabia absolute wahhabi monarchy.

This Saudi Kingdom

1.  Bought up Lebanon government bonds when investors refused to buy the bonds

2. It provided the largest chunk of concessionary loans at Paris 2 donor conference in 2002, and Paris 3 in 2007

3. It transfered One $bn to the central bank during Israel preemptive war in June 2006.

Consequently, the governor of the central bank, PM and finance minister must satisfy Saudi Arabia confidence!

The Hariri clan main objective was to deepen neoliberal economic “reforms”.

Former Fouad Seniora PM reiterated the neoliberal program, including privatization of State-controlled entities, welfare “reforms“, politically aimed at curtailing patronage opportunities of political rivals to the Future Movement…

However, Seniora could not pull off his wishes of abolishing the Council of the South (a Box of money controlled by Parliament chairman and worlord Nabih Berri) or the Central Fund for the Displaced “sandouk al mouhajjareen” (controlled by the Druze warlord Walid Jumblatt)

For over two decades, the Hariri clan attached a dozen public institutions to the Prime Minister, controlled the municipality of Beirut, extendit building permits to its elites and the foreign investors and dropping any resistrictions when convenient, assigning public contracts to the “Future Elite contractors” and entrepreneurs at manyfold the proper cost, extending their hold on Solidere for 75 years, never accounting for the bids on Sukleen which collect waste in Beirut at $100 per ton while costing $30 in Zahle for example…

The current “national debt” has skyrocketed to reach $70 bn, even after 2 decades of paying high interest rates. In addition to funding the warlord “reconstruction chests”, part of the loans were used to paying the tribute to the Syrian oligarchy, since lebanon was under Syria mandated power till 2005.

Mind you that Syria, after 2001, began a neoliberal policy for its oligarchic elite class, and privatizing new public institutions such as the mobile telecommunication and oil extraction and grandiose Real Estates development in Aleppo, Homs and Damascus…

Note 1: The oil boom increased the number of Lebanese workers in the Arab Gulf Emirates and Saudi Arabia within a decade from just 50,000 in 1970 to well over 210,000 in 1980, or one third of Lebanon work force.

Note 2: Post inspired from two chapters written by Fabrice Balanche and Hannes Baumann in the book “Lebanon after the Cedar Revolution

Note 3: A wealthy international neoliberal club requires from its members to extract profit from their own country, as a proof of allegiance to global neoliberalism, in order to facilitate the infusion of unwarrented loans to their corresponding State.

Have you witnessed that almost all current prime ministers, finance ministers and governors of central banks in Europe, the USA and many other countries were “employees” at the IMF, the World Bank , World Commerce institutions and international financial corporations?

Note 4: Basically, the expatriate billionnaire contractors initially got the blessing of the former civil war warlords (Nabih Berri, Walid Jumblatt, Samir Jagea… supported by Syria, Saudi Arabia and the US neoliberal financial institutions) who were brought back to power, and then managed their financial porfolio and financed the election campaigns as political allies…

Complicating the Class-Divide: New Contractor Bourgeoisie in Lebanon Politics: Rafik Hariri clan, Najib Mikati, Muhammad Safadi, and Issam Fares…

Before the civil war (1975-1989), Lebanon was ruled and controlled by the “comprador” bourgeoisie class (importing from developed nations and selling to the regional States) and their attached commercial/financial banks who manipulated the feudal/tribal/sectarian structure of Lebanon political.social landscape.

During the civil war, Lebanese immigrated in trove to greener pastures and left the space to the sectarian warlords militias leaders. The warlord leaders split the country into sectarian cantons, displacing, transferring and remodeling the mixed communities into “cleansing” de facto closed societies.

The moslem Sunnis preferred to migrate to the new Arab Gulf Emirates and Saudi Arabia. A third of Lebanon work force migrated there within a decade: from 50,000 in 1970 to over 210,000 in 1980. Those struck wealth were in contracting civil work, basically working as subcontractors to Emirs and princes who had the proper connections.

Late Rafik Hariri PM, Najib Mikati PM, finance minister Muhammad Safadi, and vice PM Issam Fares were among these new contractor bourgeois…

The Moslem Shia migrated mostly to west Africa where they joined relatives and struck wealth through adventurous trade deals.

The Christians immigrated to the US and Europe for higher education, and most of them never contemplated to return home to settle. Why?

Most opportunities after the war were allocated to the Moslems, particularly the educated Sunnis who filled the vacant institutions, managed and administered foundations of the new breed of contractors, public civil work, and controlled side institutions attached to the Sunni prime minister

For example, the Council for Development and Reconstruction (CDR),  communication ministry, internal police force in Beirut, internal intelligence gathering section, Solidere, Sukleen, appointing the governor of the Central Bank and the minister of finance…

This new landscape was an immediate result of the Taif Constitution that expanded the political strength of the Prime Minister at the expense of the President of the Republic.

The business-politicians and neoliberal technocrats in the Future movement network of Rafik Hariri constituted a force for neoliberal “reforms” that appeased the US administration as to the financial policy direction of  the State of Lebanon.

The Hariri clan network had three main purposes:

1. Privatizing State-controlled entities by acquiring them for cheap since they had the liquidity and were backed by Saudi Arabia, and

2. Pegging the Lebanese currency to the US dollar in order to incur far more debt than necessary on the government and insuring total control of the financial condition, mainly to blackmail their rival political leaders into  difficult situation that only the Future movement of Hariri can untangle this volatile condition… (More details in a follow-up article “Applying neoliberal mechanism on Lebanon”)

3. Controlling the city center of Beirut through the chartered company Solidere

For over 2 decades, the Hariri clan were given the financial responsibilities through appointing the governor of the Central Bank, the minister of finance, and controlling the municipality of the Capital Beirut.

After the civil war, Rafik Hariri filled the vacuum of the Sunni leadership, thanks to the total backing of Saudi Arabia, which was the main loan guarantor for the infusion of international lending multinationals. The Hariri network of clientelists and media empires (TV and dailies) strengthened their electoral votes in the Sunni communities.

The Hariri clan was successful in 3 dimensions:

1. Reaching political offices like Prime minister, ministers, deputies, governors of public institutions…

2. Gaining control of public institutions to further their economic agenda, especially creating and controlling side institutions directly linked and attached to the PM

3. Gathering popular following, particularly among the Sunni community, the Druze and a few Christian parties

Saad Hariri, son of Rafik, monopolized the Sunni political leadership and contributed to the widening rift between Sunnis and Shiaas.

Najib Mikati PM and Muhammad Safadi had to climb a stiff road for claiming a political representation of the Sunni communities. Particularly, that the Future movement allied with the Sunni conservative and extremist Moslems like Lebanese Moslem Brotherhood, the extremist jihaddist wahhabi, the A7bash, the Jund al Sham, the Jamaa al Islamiyya

In fact, it was the Future party that financed and covered the many “terrorist” activities of these fringe Sunni organizations, such as in the Sirat Donnieh, the Palestinian camp of Ain Bared, the massacre committed in Halba, and lately what is happening in the large town of Ersal, confronting the army.

The new neoliberal Contractor class is a level added in class interpretation of Lebanon political structure.

How this new Contractor class acquired its wealth in the billion? (To be followed)

Note: From a chapter by Hannes Baumann in “Lebanon after the Cedar Revolution” by Are Knudsen and Michael Kerr.


adonis49

adonis49

adonis49

August 2020
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