Lebanon's election-time blues: breaking the corruption loop is doable!

Like in most closed loops, there is little that can change our corrupt system from outside it, while within, the cosy, incestuous and interdependent set of relationships continue to function as per usual, despite loud and broad popular outcry. Corruption is an automated system that is regulated by feedback, and feedback from within the closed system at that. Most Lebanese are unknowingly or knowingly part of this system and help preserve it by voting back into office the same old failures, or failing to vote at all, which is as bad as voting for the wrong people. But most people are good people. Yes, even in Lebanon, most people are good. But they are powerless and generally clueless about their own latent power to change the status quo, which makes them easy prey for the scheming and well-experienced political legacy parties.

It is the mercantilist mindset that founded and sustains most Lebanese political parties today. They are essentially businesses selling dreams of better times just around the corner, better times that never seem to materialize. 

For most people earning Lira salaries today, the best they can hope for is to be able to buy enough food to feed their families, pay the generator bill, put enough petrol in their car to get them to work and back. Few Lebanese, barely 20 percent, most of whom earn salaries from abroad working remotely, can afford luxuries like school fees and medical expenses, not to mention fix their car when it break down or eat at a restaurant on the weekend. A salaried population that once planned trips abroad in summer, sometimes twice a year for those earning big salaries, are reduced today to subsisting on meagre rations of dollars from their life savings and Lira salaries once worth a couple thousand dollars, now worth $150! People are justifiably angry.

But, it is this anger that legacy parties use and manipulate to serve their electioneering interests, by using the news media and their own propaganda machines to direct popular anger away from them and towards everyone's favorite villains: the banks, the central banker and the chairmen/owners/shareholders in banks. Essentially, its all the banks' fault. Sure, banks bear a great deal of the responsibility, if only for lending a corrupt system money they must have known deep down they were never going to get back. It is overexposure to the sovereign that wrecked the banking system and with it the once vibrant and financially flush Lebanese. 

But, even in the good times there was a wide disparity between middle class and the poorer Lebanese on limited incomes, between returning expatriates who deposited their life savings in Lebanese banks and opened a business in Lebanon, and their staff who earned decent wages but had insufficient medical coverage, and paid excessively for electrical power, paying the state utility as well and private generator businesses for heavily rationed power, all of which comes out of their meager salaries. 

Lebanese before their 1975-90 civil war were thrifty and built up considerable savings. Even before our financial collapse in October 2019, even those who earned good salaries couldn't save as their parents or grandparents did. In fact, most were in debt, paying off a car loan, or travel loan, or plastic surgery loan of all things! In short, Lebanese society lived way beyond its meager means.

In hard times, legacy political parties are also smart about helping out the impoverished families whose votes they need. Many pay for their constituents to undergo medical procedures, pay for children's schools, even food care packages are distributed to families in certain districts. The help people should be getting through a state welfare system, they get from political parties who they remain justifiably loyal to, these parties have taken over the role of the state. But it is these same parties who's elected members in parliament failed to build a functioning state and economy.

The failures in power today failed above all in building a robust, productive, and export oriented economy. The money in our banks up till late 2019 did not come from exports of finished value-added goods or services, nor from exports of raw materials, it came from the hard earned savings of our expatriate population which far outnumbers the locally resident Lebanese. It was money that banks willingly lent to the sovereign in collaboration with the government and the central bank in return for high interest rates. They must have all known that the end of this rentier economy was near. 

As the crisis deepened and the cost of borrowing grew, so did the public debt and the country's risk profile, but for most depositors the party wasn't over yet, they were raking in the interest on their eurobond-linked deposits. Few recognized the signs of impending doom and started taking their money out of the Lebanese banking system, and right they should have! Good for them. If I knew or believed what was about to happen, I would have got my money out too! There is no crime in that, let us be very clear!

In pre-capital control law Lebanon it is perfectly legal to move your money as you please. But, as more people began withdrawing their deposits, bankers felt the crisis nearing its crescendo and slyly used the October 17, 2019 revolution to close all banks in Lebanon citing security concerns. The banks reopened, but access to our full deposits was now restricted. The loss of confidence that began in late 2018 and early 2019 as a hushed whisper had now reached the panic stage, and as anyone knows, no banking system can pay back all deposits in full at the same time. 

Now we come to electioneering mumbo jumbo, the promise by some parties to return the "stolen money", confusing the proceeds from corruption and corrupt business deals with our locked deposits in banks, giving their followers the impression that somewhere in a Swiss town there is a locked vault with our dollars inside them. Of course, it's a simple and misleading message directed at simple unsophisticated minds, and it has its core believers.

The blame-the-banks posture while ignoring the responsibility of the state not just to guarantee deposits but to pay its debts both foreign and domestic, is myopic. Declaring the state bankrupt, as if the state is a person sitting on the sidewalk in torn dirty clothes begging for alms, is ludicrous. However, again there are those who believe this image that politicos are creating in our minds. The "poor state" image, next thing you know they'll be saying "those poor MPs"! The state has assets and they are considerable and largely untouched, large tracts of land, the real wealth, that are unused and unproductive, and I'm not just talking about farming either. 

To say the government is bankrupt is fine, both morally and financially, but the state has assets that can repay its debts and then some. The only problem remains one of confidence: loss of confidence in the banking sector and loss of investor confidence in the Lebanese legislative and judicial ecosystem, which keeps many eager investors away out of sheer fear they would lose their money and never get their projects of the ground.

So, Lebanon is not hopeless, but your old parties have bread hopelessness in your minds to stop you from rationally understanding the scope of the problem and its very clear solutions, and instead making you swallow their own political narrative hook line and sinker and telling you that only they can save the country. Don't believe or trust them.

There is hope, now more than ever before, hope in recovering the Lebanon we dream of and deserve, the one that in the 1960s was described as the Paris or was it Switzerland of the East, whose GDP was similar to Ireland's and Portugal's, a Westernized democracy with an Arab identity that wasn't ruled by a dictator or a monarch, which made us unique and ironically more eligible for EU membership, had the EU existed in the 60s, than many EU countries in the South and East of Europe are today! 

Ours in a rich country still, rich in natural resources, rich in our skilled and educated population, rich in business knowhow and experience. We are not a failed state, nor are we an endemically impoverished third world country, all we need is to fix our corruption problem and rise to meet our full potential. So, don't forget to vote, it is your right and your duty! Kick the mercantilist robber barons out of power once and for all!