12/21/2014

How to get out of trouble

We have recently heard that some representatives of Lebanon's main political groups intend to meet in order to discuss the worsening economic and social conditions prevailing in Lebanon and the long political stalemate that has begun endangering the country's internal stability. Ahead of this expected "national dialogue", I believe it worthwhile considering what are the chances of success of this long awaited for initiative.

Citizens in Lebanon react differently when faced with the fact that social, economic, and financial problems in Lebanon are growing at an alarming rate. Some of these problems are so large that they have even begun to threaten the country’s stability. So, how do these citizens react when they listen to the news on TV or read their daily newspaper about water and food pollution, spreading corruption, the phenomenal increase in the cost of living, electricity shortages, traffic jams, security incidents, and, to make it worse, the glaring ineffectiveness of the State Authorities to deal with these issues?

I have listed below some specimen reactions:

·          “Sense of revolt”: “the problem is caused by the bad guys. So let’s get rid of them, first, and things will turn out all right afterward”.

 Notwithstanding the fact that such an attitude is seldom possible or effective, one has seen its consequences in Syria, Iraq or Libya, where the citizens bore arms against their tyrants and their supporters and ended up destroying the entire country.

·         “Let’s change the system”: Others would answer you: the problem resides with our electoral confessional system. It allows for the same types of guys to accede to power. Let’s change the system and the electoral law and everything will be fine afterwards.

This simplified reasoning has, so far consistently proven wrong. Three times we changed the Constitution in Lebanon to try and give more power to one community at the expense of another. We have seen the results, so far.

·         “Let’s ignore it”: Others follow a simpler reasoning that goes like this: “well, we have managed in this way for seventy years, so why worry? Things will get settled in the end. Anyway, it’s none of my business.

Besides being not the least constructive, citizens who think this way acknowledge, from the start, that they do not want to be involved and prefer to stay prudently out of trouble and let others worry, even though, deep inside, they realize that things are seriously wrong in the “kingdom of Denmark”.

·         “It’s a foreign plot”: There is a fourth category of people, maybe the worst one, who sincerely believe that everything that goes wrong in our country is the result of a foreign political conspiracy that we shall never be able to defeat.

Some would put the finger on a Saudi/US plot, others to Iran or Israel, but all will give you the same advice: “Don’t worry your pretty head. There is absolutely nothing that one can do about it. It is way above our heads and the heads of our leaders”.

In all these cases, we notice that most citizens refuse to face reality and decide to get out of the game before it really starts. They do not want to fight the obstacles and prefer to prudently stay out of trouble, though they may admit that, sooner or later, trouble will meet with them or their family, or their descendants, in one way or another.

In fact some of these citizens are intelligent enough to perceive and realize that, unless we do something, sooner or later, our country is heading toward a huge financial crisis. When that happens, Lebanon is bound to meet the same fate, or worse, as Cyprus, Greece, Spain, Portugal, or Venezuela, where the citizens, for a long time, lived in dreamland, but were eventually forced to face the harsh realities of life to avoid national bankruptcy. They had to accept to bear huge taxes and a twenty or twenty five per cent unemployment rate to avoid national bankruptcy. This is probably what will face us if not worse, unless every citizen in this country “grows up” and realizes that, adopting an unconcerned attitude or considering violent reactions would surely draw us all to doomsday.

At this stage, some readers would ask me: “so what is the solution? Should we contemplate leaving the country and emigrating, or is there anything that can be done to make life better in Lebanon?

Before answering that question, allow me to start with a riddle. What do a doctor, an engineer, an architect, a lawyer, a mechanic, a scientist, and a teacher have in common?

The answer would be that, in order to amend a wrong (solve a law case, repair a car, cure an illness) or create something new (design a skyscraper, teach youth, build a road, or invent a new product) they all proceed in the same manner. They all move from effect (what currently exists and needs improvement) to what caused this situation, in the first place.

It is my contention that, adopting the same approach could serve us to resolve our national issues.

A.-  Let us look at the EFFECTS first. What do we see?

1. The majority of citizens (maybe as much as 95%) complain that they cannot keep up with the high cost of living and the poor and unsanitary living conditions they have to put up with.
2. The government is struggling, without success, to find enough money to:
•  Provide the citizens, at a reasonable cost, the minimum facilities in education, health, social security, and social services,
• Maintain and expand the infrastructure: electricity, water, roads, transport, environment, oil & gas.
• Support and enhance the different sectors of the economy (agriculture, industry, tourism, telecoms)
• Improve the relationship and strengthen the bonds with our Diaspora,

Unfortunately, none of these goals have been achieved and, instead, the burden of the public Debt keeps growing at a menacing compound rate. So, in a nutshell, there is no money in the citizens’ pockets, no money in the public coffers, and worse still, the government owes, to date, some $75 billion dollars, maybe one of the highest ratio of public debt to GDP in the world.

 B.- OK, now let us look at the CAUSE.

What was the cause of this situation and how can one improve upon it? Here, you will allow me to share with you the results of ten years of hard study and researches, done, most of the times, against the efforts of the Authorities to prevent me from pursuing them. Though, I must admit, some public officials sincerely and honestly tried to steer me in the right direction, most others did just the opposite and persistently ignored my demands, my questions as well as my suggestions to solve the “wrongs” and get to the “rights”. I do not really blame them. They were simply following orders received from “high” above. But, let’s get down to brass tacks. Why there is no money in the till, and WHY do we owe $75 billion dollars?

To get the answers to these two questions, one would have to go back to 1993, when the country’s Debt did not exceed two billion US dollars, even after eighteen years of Civil War. The researches that I have gone through have provided me with the following answers:

·         Why do we owe $75 billion dollars? The Debt of $75 billion is purely and exclusively the result of compound interest accruing every year, and constantly remaining unpaid, to accrue at a compound rate that was initially very high, then gradually subsided to reach the present average of some 6.50% which has been roughly the same over the past ten years.

·         Why there is no money in the till? This is because the government is regularly dilapidating every year, at least some four billion US dollars in the following areas:

1)      Two billion US dollars in unnecessary energy costs: a)$1.5 billion of high fuel costs that could be saved through gas operated turbines, and b) $0.5 of dilapidations of funds at EDL.

2)      $1.7 billion US dollars are dilapidated through undervaluation of real estate properties for the purpose of calculating the 6% RERF (Real Estate registration fees).

3)      $300 million US dollars of sundry dilapidations of public funds that would be too long to enumerate.

So, my friends, how can we resolve that lamentable situation and maintain a reasonable balance between expenditure and revenue??

C.- The Solution

Before electing a new President and/or holding parliamentary elections, the current political parties in Lebanon ought to start by agreeing upon the following program:

1.- To solve the problem of the Debt and refund the bondholders, convince them to agree to cut down the rate of interest by 2%, and reduce it from the current 6.5% down to a more reasonable 4.5%. This reduction, provided it is granted, would save our country’s Treasury $114 billions in 20 years. But it would also make it possible for the bondholders to recuperate their money entirely within twenty years.

2.- To undertake the reform measures recommended in 1) to 3) above, get the leaders of the political parties to agree to implement these reforms, and thus, allow the Authorities to save up to $80 billions in 20 years.

Provided these approaches are approved by the majority of the attendants, the National Dialogue will be successful and the presidential and parliamentary elections that will follow will provide a popular confirmation and support to that program. It will also be a true manifestation of the will and the determination of the Lebanese people to solve their problems by themselves, without foreign intervention.

In my considered opinion, contrary to the issues of Hezbollah’s arms, its involvement in Syria, or its relationship with Iran, the issues of the Debt and the necessity of imposing strict public budgetary controls, should not be a major cause of dissent among the two main political blocs. I believe that, provided a substantial majority of the delegates to the National Dialogue approves the above two resolutions, holding the two elections will proceed satisfactorily for the benefit of all the Lebanese citizens.