Adonis Diaries

Posts Tagged ‘management of government debt

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…


adonis49

adonis49

adonis49

December 2020
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