People are not fooled: The Lebanese government’s reforms are not the solution
The government’s decision on October 17 to increase taxes and impose a fee on WhatsApp sparked unprecedented protests across Lebanon. These are not the first protests in the country – but this instance is different.
Firstly, the protests are spontaneous and leaderless, as people took themselves to the streets on a Thursday night. Secondly, the protests are not Beirut-centric: They are truly nationwide, including in political party strongholds usually immune to such movements. Thirdly, unlike the 2005 protests following the assassination of former Prime Minister Rafic Hariri, those of 2011 against the sectarian system, or those of 2015 which were was triggered by the garbage crisis, this movement is primarily a socio-economic revolt triggered by tax.
Taken aback, politicians had to quickly acknowledge the grievances of an estimated one million protesters across the country. But they failed to understand how deep the discontent is. Prime Minister Saad Hariri came out with a 72-hour ultimatum to his coalition members. When it came on Monday, October 21, he announced a list of 25 policy measures to address the socio-economic crisis – most of these measures had already been proposed in the CEDRE conference back in April 2018.
It is striking how popular pressure suddenly sped up the government’s ability to act. In three days and one governmental session, it passed measures and bills which far exceeded the two bills - electricity in April 2019 and the Budget Law 2019 in July - that took more than 35 sessions held between February and last week.
Some of these key measures would be welcome: a reduction of the deficit, a commitment to no additional taxes on the people, the adoption of a pension law, and a pledge to fight corruption. However, many of the measures seem unrealistic and fall short of people’s expectations.
The reforms are too little, too late, and there are several concerns.
It is unclear how the government will reduce the deficit from more than 7 percent to almost 0.6 percent of GDP in one year. The task to cut $5 billion is monumental. The government’s claim that it found a way in just three days to achieve this cut, after more than 30 years of chronic budget deficit and without major tax reforms, is suspicious. A roadmap for implementing the plan and putting in place a sustainable and fair public finance framework is missing.
Reducing the deficit without taxing the people reveals how arrogant and greedy the political elites have been. They have consistently taxed working people and made them disproportionately carry the tax burden while arguing that there were no other options. The government only backtracked when the unfair tax system triggered this revolt.
The government’s plan to fight corruption – adopted from an existing government strategy – is ridiculous and is merely an attempt to appease donors and suggest it is taking action.
This time, people will have none of that.
If it were serious about reforms, the government would have prepared or even adopted the draft law to make the judiciary independent. It would have also strengthened the oversight agencies including the procurement office. These are crucial elements to fight corruption but the government has been silent on them.
Tellingly, it seems even the prime minister is not convinced of his own plan. He stated that in order to avoid corruption in state contracts, capital investment from taxpayers’ money - a key part of growth - will be zero. To state that the foreign-funded capital investment will be free of corruption is to admit that all publicly contracted projects are already infested with corruption. If this is the case, he should be setting up an independent committee to review all these contracts.
Likewise, Hariri provided few details on how pension reforms could work or be funded, and the policy seems to be merely another attempt to appease protesters.
The prime minister also repeated one of the demonstrators’ demands – to give back “stolen money.” But he clearly has neither the intention nor the means to implement a solution. How could he, when many of those who have contributed to public theft are either politicians, or have strong connections to them?
The timeline of the program is also unfeasible, considering how the Lebanese government works. All the proposed policy measures lack credibility, and they hollow out the state rather than build an effective one. There has been a deep failure in governance, and these policy measures cannot and will not be implemented without effective and sustained pressure.
There is a chance that Hariri has used the protests to pass measures which had been previously obstructed by his coalition partners to appease donors and gain access to CEDRE money.
But this is not what the country needs.
We need an effective state that works for the people, an accountable government that we can trust which listens to people’s needs, and a social contract where rights are protected and taxes are fairly allocated. None of this has been offered, and people are not fooled.
The protesters have made key gains. Not only have they forced the government to cancel its plans to tax working people, but they have imposed their agenda and are shaping political discourse in the country. They are breaking down the limits of possibility defined by the political elite and are drawing up their own set of rules. This is how fair, democratic, and accountable systems emerge.
Sami Atallah is the executive director of the Lebanese Center for Policy Studies (LCPS). He leads several policy studies on subjects including political and social sectarianism, electoral behavior, and governance of the oil and gas sector. He is currently completing his PhD in Politics at New York University.