Al-Ahram Weekly On-line 2 - 8 November 2000 Issue No. 506
Published in Cairo by AL-AHRAM established in 1875

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Back in business

By Dalal Saoud

Nearly two years after leaving his post as prime minister following a harsh campaign accusing his government of corruption, Lebanese tycoon Rafiq Hariri is back on top having formed a 30-member cabinet.

This time, as in 1992 when he was first appointed as prime minister, Hariri has promoted himself as the man capable of pulling Lebanon out of its acute economic crisis amid an explosive situation in the Middle East.

Whether he will be able to achieve his goal is an open question as observers suggest that the tiny Arab country is nearing the brink of economic collapse. Both the national debt and unemployment are on the rise in Lebanon which has been left to cope with these problems without assistance from either Arab or Western countries.

The wave of support that brought Hariri to office may cause him problems in the future, suggests Talal Salman, columnist and publisher of the Beirut daily As Safir. "He returned to power victorious, backed by unprecedented popular confidence. This has raised hopes that even the big powers have failed to fulfil." If economic conditions continue to deteriorate, wrote Salman, Hariri will be blamed. However, if they improve, he added, others will share the credit.

Hariri, a 56-year-old self-made billionaire who served as prime minister from 1992 to 1998, received overwhelming support from the 128-member parliament, in which 107 deputies supported his new cabinet after his resounding victory in this summer's general elections. Even some of his long-time detractors, such as former Prime Minister Omar Karami, backed Hariri's nomination for the premiership, arguing that they respect the "people's choice."

By securing the appointment of seven of his closest aides, three of whom took the key portfolios of finance, justice and the economy, Hariri succeeded in his first test regarding his ability to "co-exist" with President Emile Lahoud. Particularly noteworthy among these appointments was that of Fouad Seniora as finance minister. Seniora, who served as minister of state for financial affairs during Hariri's previous cabinets, has been linked to financial irregularities in a case that is still under investigation.

Hariri and Lahoud have had an uneasy relationship since the latter became president in 1998. At that time Hariri refused to form the government saying that Lahoud's nomination by only 20 parliamentarians made his tenure unconstitutional.

Their relations further deteriorated, reaching a low point with a government campaign accusing Hariri of corruption. While prime minister, Hariri launched an ambitious post-war reconstruction programme. Detractors accuse him of bankrupting the country, widespread corruption, as well as being behind "suspicious political projects" such as the settling of Palestinian refugees in Lebanon.

In response, Hariri argued that most of the country's $23 billion-debt was accumulated during the 17-year-long civil war with reconstruction projects costing only $5 billion.

Comprised of equal numbers of Christians and Muslims, Hariri's government includes 15 first-time ministers. Among the newcomers are billionaire Issam Fares, as deputy prime minister; Mahmoud Hammoud, minister of foreign affairs; Ghassan Salame, minister of culture; Bassel Fleihan, minister of economy, and Elias Murr, minister of interior.

The appointment of Murr, who is the son of former Interior Minister Michel Murr and the son-in-law of President Lahoud, was widely criticised as the first time in Lebanon's political history that a son steps into a ministerial post just vacated by his father.

Four ministers from the outgoing government of Prime Minister Selim Hoss joined the new government. Two long-time figures in Lebanese politics, namely, former House Speaker Nabih Berri, who also heads the pro-Syrian Shi'ite Amal movement, and Walid Jumblat, Druze leader of the Progressive Socialist Party, took up posts in the new administration.

The new cabinet also includes two politically moderate Christians, Pierre Helou and George Fram, who are, like Hariri, wealthy businessmen.

Drawing representatives from a wide array of political leanings, the new cabinet witnessed the return of representatives from the Baath Party and the National Syrian Socialist Party. One party that does not have a representative in the cabinet, however, is Hizbullah.

Hizbullah refused to take part, arguing that it prefers to remain part of the opposition to monitor the government's performance. But observers also attributed Hizbullah's abstention to its "lack of confidence" in Hariri and his policies in the economic and political spheres.

Admitting that the internal and regional challenges confronting Lebanon will require an "exceptional effort" by the new government, Hariri emphasised national reconciliation, calling on all parties to cooperate. Internally, efforts will concentrate on "reactivating development and production and continuing the process of reconstruction," said Hariri.

Hariri emphasised that his government will continue efforts to complete the liberation of south Lebanon, referring to the Shebaa Farms. Israel has continued to hold this territory located in the south-east corner of Lebanon following its withdrawal from the south on 24 May, which ended 22 years of occupation.

Among Hariri's main challenges will be restoring confidence in Lebanon among potential foreign investors. Hariri is hoping that his contacts in the Arab Gulf will funnel investment towards his country.

"The name 'Hariri' alone should impress Gulf investors," said Adnan Al-Hajj, an economic analyst. "He himself is a businessman who knows how to deal with businessmen." Al-Hajj said Hariri will probably focus on economic growth, having completed the first phase of reconstruction and development projects while in power in the 1990s.

"He will try to initiate projects in sectors believed to be productive such as tourism which is expected to grow by 20 per cent during the next year," he said. However, Hariri will come up against serious financial constraints since 85 per cent of the annual budget is already earmarked for overhead, such as salaries, leaving only 15 per cent for investment.

Given such constraints, Hariri's government is expected to accelerate the privatisation of some public utilities, such as the mobile and regular phone networks. By selling these, the state is expected to secure $3-4 billion, which it would probably use "to pay interest on the national debt and reduce the principal," according to Al-Hajj. "The main challenge [Hariri faces] is how to increase revenue, achieve economic growth without increasing taxes, and at the same time attract investment," he said.

But careful management of the economy is not the only factor governing its success or failure. "It seems unlikely that substantial investment would return to Lebanon if peace is not achieved in the region," said one Lebanese political analyst. "Despite precarious calm in south Lebanon, investors are still not encouraged."

The analyst also noted insinuations by Western countries that promised assistance for the reconstruction of the south would be withheld so as to force Lebanon to deploy its army along the border and prevent Hizbullah from resuming its resistance activities against Israel.

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'Those times are over'
Snipers, gunships and now death squads
'Our blood is sacred too'
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It's war -- virtually
Arab journalists join the fray
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Also see Focus on Intifada 26 Oct. - 1 Nov. 2000
and Focus on Intifada 19 - 25 October 2000

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