Adonis Diaries

Posts Tagged ‘Issam Fares

Typical modern Contractor class in Lebanon political/social structure

You may refer to a previous article on modern Neoliberal Expatriate Contractor class in Lebanon that added a new social/political divide in the community structure https://adonis49.wordpress.com/2013/02/11/complicating-the-class-divide-new-contractor-bourgeoisie-in-lebanon-politics/

The biography of how four of them have accumulated so much wealth is developed in this article:

1. Late Rafik Hariri PM left the city of Saida for Saudi Arabia in 1964. He suffered a few bankruptcies in his civil work contracts. During the oil boom that started in the early 70’s in the Arab Gulf Emirates, Hariri struck gold in 1976 by teaming up with Nasr al Rashid.

Nasr was a Saudi engineer from a prominent family. Al Rashid relied increasingly on Rafik’s ingenuity for fulfilling highly complex public civil work contracts in Saudi Arabia.

The Saudi “rentier or renter State” was an important catalyst for quickly amassing wealth once the proper contacts and connections were established.

In early 1980,Rafik acquired a private plane and the fleet increased in varieties, cost, a luxury.

In 1982, Hariri connected directly with King Fahd after Israel preempted another war on Lebanon and entered the Capital Beirut. King Fahd took over the “cleaning-up” of Beirut city center (the demarcation line among the warring factions in the civil war) and extended to Rafik the necessary checkbook diplomacy to carry out reconciliation in the Chouf war of 1983.

The checkbook was ready in the Geneva and Lausanne (Switzerland) meetings in 1983 and 84. And the diplomacy disbursement resumed in the militia agreement in 1985, to be followed by the Taif agreement on a new Constitution for Lebanon in 1989.

In the early 1980, Rafik acquired Bank Mediterranean, and King Fahd disposed of $2 bn between 1983-96 for a student loan program so that strapped Lebanese could continue education overseas. Over 32, 000 students benefited from this program, and most of them were Sunni Moslems.

In 1991, Rafik Hariri was positioned to be assigned Prime Minister

As Rafik was assassinated in 2004, it turned out that his wealth amounted to $14 bn, and Seniora PM made sure to tax this fortune at $2 million, instead of the regulation 10%.

2. The wealth of the brothers Mikati (Taha and Najib) derives from the Arabian Construction Company, founded in 1967 in Abu Dhabi.

At some points, Taha subcontracted from Rafik Hariri.

In 1982, they founded a telecom company Investcom, which penetrated Sudan, Liberia, and Yemen. It ran an analogue mobile phone network during the civil war in Lebanon.

The Invest company M1 Group owns real estates in New York and London, and the French fashion Faconnable, and interests in oil explorations in Latin Columbia State.

In 1983, the Mikati brothers bought the licence for the British Bank of Lebanon.

In 1988, they created the Azm was Saade Foundation, which provided health and social services, mostly in Tripoli.

In 1994, the mobile Cellis had won a “Build-Operate-Transfer” (BOT) project and the brothers owned one third of the shares. The political gimmicks to extend the BOT from 10 to 20 years failed to materialize, as the President Lahoud was steadfast in retaining this State-controlled communication entity, and Najib Mikati PM allocated to himself $60 million in compensation.

3. Issam Fares, a Greek Orthodox from the district of Akkar, by the Syrian border, started as a merchant in the Lebanese-based Abela Group with vast food trading in Saudi Arabia.

Fares owned a controlling interest in Netherlands-based Balast Nedam and his civil work activities skyrocketed. This company secured lucrative contracts, such as building the bridge linking Saudi Arabia to Bahrain.

Fares created the holding company Wedge Group and opened Wedge Bank in Lebanon in 1983.

The Issam Fares Foundation was established in 1987.

4. Muhammad Safadi (current minister of finance and deputy to the Parliament) hails from a Tripoli established trading family. He migrated to Saudi Arabia in 1975.

Safadi established close relations with the head of Saudi air force Prince Turk al Nasr. He became rich building residential compounds.

In 2000, Safadi was elected deputy and also instituted the Safadi Foundation that offers health, educational, and social services in Tripoli.

Consequently, as a new wealthy Contractor who struck gold in Saudi Arabia, he allied with the March 14 movement against Syria occupation of Lebanon, after the assassination of Rafik Hariri. Seniora PM appointed Safadi minister of public work in 2005.

In 2008, Mikati PM extended to Safadi he portfolio of minister of economy and trade, and then minister of finance in 2011.

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

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