Democracy and Socio-economic Revival

 Economic and social growth remains firmly linked to political matters. The world has entered a stage where it has become difficult to adopt economic programs that do not take political reality into account. Advanced countries realize that one of the corner stones of a successful investment environment is the rule of law, legislative stability and the respect of public freedoms, private initiative and the complete independence of the judiciary from all kinds of political pressures. All these are basic factors for setting off and developing human potentials.

 A free-market economy is the right system for Lebanon. In saying this, we assert Lebanon’s economic identity and a philosophy that is rooted in Lebanese consensus. This economic system enhances the competitive characteristics of the Lebanese economy and asserts those basic characteristics and the possibility of future development.

 It goes without saying that natural resources alone no longer determine the economy of any country as many countries are now capable of developing new competitive characteristics. Small countries with limited natural resources like Lebanon now have big opportunities to grow by developing knowledge-based economies. For Lebanon to develop such an economy, it has to develop intellectual work by reconsidering educational systems and programs. Educational institutions should be rehabilitated to prepare the Lebanese to capitalize on their openness to technological and communication revolutions and their ability to assume a pioneering role in these domains in the Arab region. To put the Lebanese economy on this track, new challenges must be transformed into real opportunities on national and economic levels.

 The great challenge that faces Lebanon in the future is to develop its economy into a competitive system capable of advancing the potentials and capabilities of the Lebanese according to new economic trends, creating new job opportunities and improving living standards via a comprehensive and balanced development plan.

 The realization of these objectives depends on:

I-    Consolidating democracy, freedoms, the rule of law and the independence of the judiciary, and developing the foundations of justice in the state.

II-   Renewing confidence in the Lebanese economy and polishing Lebanon’s distinctive economic characteristics.

III-   Activating an economically rewarding foreign policy.

IV-  Resolving the public financial situation.

V-   Reducing production cost by

1-     Privatization

2-     Encouraging productive sectors

VI-  Capitalizing on human resources, developing their qualities, encouraging their productivity, and establishing an accountability system according to the level of productivity and the quality of performance.

VII-  Enhancing and activating social services and improving their returns.

VIII- Emphasizing the importance of legislative stability.

I-      Consolidating democracy, freedoms, the rule of law and the independence of the judiciary, and developing the foundations of justice in the state:

Economic revival requires several conditions, including the establishment of the rule of law, respect for individual freedoms of thought and of expression, and the independence of civil and administrative courts from any pressure by the political authority.

Lebanon has every reason to learn from the experiences of many countries in the world that used the judiciary to suppress individual and public freedoms. The result was violent political and economic turbulence that reversed the balances of power in the world. The same countries reproduced democratic systems over the rubbles of systems that prevailed for more than half a century. An example is the upheaval that rocked East Europe in the early 1990s.

Justice in implementing the law is part of the parliamentary democratic formula; it constitutes the major source of power of the Lebanese political experience, its first and last guarantee.

II-  Renewing confidence in the Lebanese economy and polishing Lebanon’s distinctive economic characteristics:

Enhancing the competitive characteristics of the Lebanese economy is realized through the reaffirmation of Lebanon’s economic identity that has been advocated by the majority of Lebanese people since independence. Any call or action that contradicts this identity should be avoided as it may discourage Lebanese, Arab and foreign investment and the inflow of capital. In this respect we have to reconfirm the basic characteristics of the Lebanese economy:

• Encouraging individual initiative.

• Safeguarding private ownership.

• Free movement of capital.

• Freedom of transfers.

• Legislative and taxation stability.

• Banking secrecy.

• Market economy.

Encouraging tendencies to adopt a knowledge-based economy. This requires reviewing educational systems and curricula to provide advanced human and material infrastructure that supports the growth and continuity of these tendencies.

Broadening the market base through economic openness, forging additional economic agreements with other Arab countries, proceeding with the Euro-Med Partnership talks and joining the World Trade Organization.

To realize this, it will be crucial is to determine Lebanon’s economic vision and adopt clear policies that develop people’s abilities and broadens the horizons of the economy. In turn, this will require a system of taxation that encourages growth and investments, protects the interests of low-wage earners, re-establishes the middle class, provides increasing job opportunities for the young and encourages qualified emigrants to return. The taxation system should also stimulate the private sector by boosting incentives and creating an atmosphere conducive to development.

III-           Activating an economically rewarding foreign policy:

Recent world economic developments have increased the degree of economic competition among countries. As a result, foreign policy has been transformed into an effective tool in boosting economic competitiveness, finding markets for products and services, attracting foreign investments, and raising grants and soft loans. Small countries, such as Lebanon, can no longer neglect the potential of diplomacy and foreign policy in securing new markets. An effective foreign policy should be able to cope with current economic developments and place its qualifications and experiences at the service of the national economy. In this respect, Lebanon can rely on the support of Lebanese communities in the rest of the world, sisterly Arab states and other friendly countries. It is certain that Lebanon urgently need to enhance its diplomatic capabilities and technical assets and improve the administration of its foreign policy. If foreign policy is to generate economic revenue, it must be kept active, dynamic, sensitive and capable of adapting to political and economic changes. Developing foreign relations and friendships, opening new markets and concluding agreements of economic co-operation are fundamental responsibilities of state officials. These tasks play a major role in the development of Lebanon’s ability to provide markets for its products, encourage foreign investment, and raise grants and soft loans.

IV-           Resolving the public financial situation:

Resolving the financial situation requires the adoption of policies that support economic activity and growth and encourage capital inflow to boost liquidity and trigger a gradual decrease in interest rates. Consequently, economic growth will be encouraged, the cost of servicing the public debt will decrease, and new jobs will become available and it will be easier to curb the budget deficit and any inflation trends.

Economic growth is the best means of solving the deficit problem. It enables the state to reduce its share of the national income without affecting the income levels of the population.

Lebanon needs to maintain its efforts to modernize its infrastructure, enhance the confidence of the Lebanese and the world in its economy, stabilize public spending, and activate the private sector. It also needs to develop and modernize the performance of the public sector, rid it of dead weight and modernize its techniques. These measures are essential if we are to increase the rate of economic growth and boost capital inflow, decrease interest rates without harming monetary stability, increase the states’ share of the national economy, provide new job opportunities for the young, and eventually introduce a gradual solution to the budget deficit and the national debt.

V-   Reducing production cost:

Stimulating economic growth requires the reduction of production cost. This process requires the following policies:

1-      Privatization:

Adopting a privatization policy – or allowing the private sector to be a partner in owning and managing some public utilities, services and institutions – should be a complementary factor in financial rectification policies that seek to boost economic growth. It must not be the main factor for breaking the vicious circle of the budget deficit and public indebtedness.

For privatization to succeed, it is necessary to put together a proper framework to prevent monopolies and create an effective mechanism to monitor the privatized facilities. It is equally important to promulgate laws that liberate the market to enable it to adapt to geo-economic change. It is also necessary to create an environment conducive to and supportive of investment in the privatized sectors. This will afford the state a better chance to use its limited material and administrative resources more wisely and direct these resources towards socio-economic, and national needs.

2-      Encouraging productive sectors:

There is a broad spectrum of means to enhance economic growth in all sectors and create new jobs that can accommodate the young. However, all these means require adapting to the economic developments that have taken place in the region during the past two decades.

These include:

I-          Improving and encouraging the development of a service sector based on knowledge, intellectual capabilities, and distinguished skills stemming from Lebanon’s unique experience. Lebanese service industries benefit from Lebanon’s geographic and demographic location, factors re-enforced by their rich heritage at the heart of civilization. For these important reasons, Lebanon has to capitalize on its tourist sector and preserve its integral tourist and environmental wealth by adopting the following policies:

• Activating tourist media outside Lebanon and expanding the tourist market to the Far East and developing countries.

• Establishing tourist offices inside and outside of Lebanon.

• Developing the standard, service and quality of the tourist sector’s personnel by intensifying and widening technical and professional training. Concentrating on meeting all modern industrial and tourist requirements.

• Preserving our natural environment, one of the most important and fragile of our many tourist attractions.

• Improving our means of overland communication and re-vitalizing the public transport sector; expanding air transport services and developing commercial and tourist seaports; improving the road network that link Lebanon to Syria and the rest of the Arab World.

II-       Enhancing Lebanon’s competitive edge in the information technology sector by reviewing and improving present regulations. Adapting them to international standards and modernize, developing the communication and information infrastructure, and reviewing its fees to allow Lebanon to become prominent center of information in the Middle East. In this respect, the state can create “technology parks” to display modern technologies. To attract qualified human resources, these parks must enjoy tax exemptions, have the necessary infrastructure, and operate under advanced laws. The state must also encourage the establishment of “incubators” for new, innovative economic works and creative projects. Furthermore, Lebanon is required to boost its commitment to the principles of intellectual property protection in order to attract qualified people and become a threshold for all markets in the region.

The satellite transmission sector, public relations, and advertising have taken great leaps forward towards expanding Lebanon’s role in this globally growing industry. It is important to give this sector more attention, encourage a mechanism that brings about its success, provide it with enough freedom of operation, and avoid any element that may limit its speedy development or curb its growing portion of the Arab and international markets.

-             Keeping track of scientific developments in the world, encouraging scientific research and rewarding creative writers and intellectuals.

-         Co-operating with various productive sectors in small and medium sized institutions either through the Authority for Guaranteeing Credits or through service centers that provide these institutions with services like business management, public relations, accounting, and economic feasibility studies. It is also useful to encourage small and middle-sized institutions to form associations that can facilitate the creation of joint projects and close co-operation with similar associations in Arab and foreign countries.

III-    Parts of modern agricultural and industrial systems of production are no longer based on mass production. Rather, they reliy on the quality of production and niche markets. Thus, it is possible to activate both sectors by encouraging their restructuring to attract new investment and introduce modern technology. Agriculture and industry should be able to mobilize the non-financial service sector to pack, market, and export Lebanese industrial and agricultural products. A competitive edge needs to be introduced to these products with the help of Lebanese expertise in the domains of public relations, marketing and advertisement. It is useful to speed up the establishment of industrial zones with an advanced infrastructure and appropriate laws. These zones must create their own social security mechanisms and private retirement funds to contribute to reducing overall production cost, improve the competitiveness of productive institutions, and encourage the creation of new and productive job opportunities.

IV-    Transferring agricultural subsidies gradually from direct support for some agricultural produce to indirect support for the creation of new jobs to limit migration from the countryside to the cities. In addition, we need to invest in irrigation projects, modernize and expand agricultural processes, enhance agricultural guidance in all areas with joint projects between the Agriculture Ministry and faculties of agriculture. It is equally important to develop established crops and introduce new produce that has a large and growing value.

V-       Encouraging the export of industrial and agricultural products by signing commercial agreements with other countries and creating incentives for exporting these products to foreign markets.

VI-    Continuing the process of activating Lebanon’s financial sector, which already benefits from unique characteristics. It is equally important to maintain the consolidation of the insurance sector on a sound basis. This sector has the potential to grow, create new job opportunities and provide valuable services to Lebanon and the Arab World.

VI-           Capitalizing on human resources, developing their qualities, encouraging their productivity and establishing a system of accountability, according to levels of productivity and quality of performance:

Lebanon will not rise to the challenges of the new century without clear policies for re-engineering the country’s human resources and developing their capabilities on all levels of work and creativity, politics, culture, economy and learning. Lebanon must also curb people’s interest in emigration, especially as recent waves of emigration have tended to be more permanent than earlier ones, particularly in the case of highly qualified and skilled emigrants.

One of the gravest losses that Lebanon has sustained during the past two decades may be the fact that the war stalled efforts to develop human resources inside the country. This situation has forced qualified people either to isolate themselves or emigrate; it also prevented qualified emigrants from interacting with each other and playing a positive role in Lebanon’s domestic reconstruction.

“Lebanon’s wealth” came into being during the second half of the past century as the country was an exporter of education, culture, freedoms and journalism. It was also the hospital, the press, the university, the park and the refuge of the Arabs and had many other aspects of political and social growth and progress. This “wealth” is still latent in the Lebanese society; it can, undoubtedly, renew itself in other forms in parallel to the changes that have taken place in Lebanon and the Arab region.

The “progress” achieved by other sister countries in the realms of democratic, cultural, human and economic domains cannot be a reason for the Lebanese to retreat and avoid playing their renowned roles. On the contrary, Arab and international progress should be the essence of the challenge that the Lebanese face and a threshold to the 21^st century that will bring back the significance of a distinguished Lebanese human resources.

The successive generations of Lebanese emigrants have established themselves in prominent positions in various countries of the world and made significant fortunes. Yet many emigrants did not lose their affiliation for their homeland, nor did they relinquish their interest in contributing to Lebanon’s welfare. That is why propelling the economic process requires the establishment of institutions and the adoption of policies that will both encourage the return of highly-experienced emigrants and aid them in investing in Lebanon. This two track policy can no longer succeed under present international circumstances unless it reinforces democratic institutions and respects basic political and economic freedoms.

A basic and direct national goal in the forthcoming period is to activate the education sector, especially its vocational and technical branch. This also applies to enhancing education’s credibility and its social role and activating educational domains that relate to modern technologies and knowledge that suit the needs of the economy and incite its movement and growth. In addition to developing other educational fields in which Lebanon has made great advances, Lebanon will be able to bridge the time and development gap that was a consequence of the war and will be able to achieve equal standing with other countries.

Enhancing the educational sector requires a clear vision of a long-term educational program that gives all social groups equal access to it. There should also be a parallel plan that attempts to create an advanced elite in the fields of technology and scientific research. Democracy in education is an important criterion, but its quality is no less important. Therefore, the state is obliged to encourage close co-operation between public and private institutions of education, (schools, technical institutes and universities) and the labor market. Educational institutions must link their programs with the future needs of the labor market and orient the young to specialize in fields that correspond with economic growth and arising Arab and international economic trends that advocate knowledge-based economies. Moreover, public and private institutions have to be established (in co-operation with developed countries whenever needed) that would look after ambitious and qualified young people who can help Lebanon achieve the qualitative technical leap that it needs to provide new jobs. Lebanon also needs to encourage scientific research and allocate funds to enhance its progress and reward its staff.

It is clear that the strength of Lebanon’s resources lies in the way these resources – being touristic, economic, natural, human, democratic, intellectual or cultural – are being capitalized on and rebuilt.

VII-        Enhancing and activating social services and improving their returns:

It is high time for Lebanon to concentrate on the social sector, improve its programs and better its results. Basic skills must be directed towards introducing additional coherence and effectiveness, as well as practical and modern measures, in healthcare and education. It is not enough to just increase the funds allocated to these sectors on a regular basis without a management plan.

In this respect, we believe that local authorities, municipalities, and all other civil institutions have a wider role to play in administrating public schools and hospitals, as well as centers of human and social services and environmental awareness. The central government administration should restrict itself to supervising these facilities to ensure quality and respect of standards.

There is a need to achieve the effective and real participation of society in social services. Municipalities in Lebanon, with around one million taxpayers, can bear a larger responsibility for administering public affairs in this domain that relates to the daily life of the citizens.

An administrative decentralization law has to take into account the role of the municipalities in comprehensive development, administration of public affairs, and reducing the daily living costs that burden the citizens. Municipal laws in Lebanon have to be reviewed and developed to allow for the gradual rehabilitation of the municipalities, to empower them with the ability to shoulder their responsibilities in social service programs.

In this respect, the major challenges that confront Lebanese citizens include the cost of education, healthcare, housing and social security, in addition to electricity, water and telephone expenses. It is certain that allowing the private sector to take part in the provision of electricity, water, and telephone services should be accompanied by cost reductions. One of the major goals of privatizing these sectors is to improve the quality and standard of these services or reducing their fees.

With regard to the sectors of education, medicine, human and social services, elevating their standards and expanding their scopes requires, as mentioned above, the co-operation of local authorities, municipalities, civil society institutions, and central government. Central government has to continue building public schools, improving education programs, and supervising the level of schools, whether public or private. It also has to expand health insurance and social security programs by reviewing the mechanisms of operation in public institutions that provide such services and have to cooperate with private insurance companies to decrease the cost of their programs and enhance their quality.

Finally, the government must expand the scope of housing loans and its subsidization of the cost of interest. This should be done through the Public Housing Establishment. It is also possible to link housing loans to public and private retirement funds by establishing a mechanism that relates housing loans to end-of-service indemnities.

VIII-    Emphasizing the importance of legislative stability:

One of the most important factors that attracts investment in any country is its degree of legislative stability. Citizens as well as foreign investors do not feel secure if the investment climate is subject to abrupt political changes and whims. Also, investors are discouraged by radical changes in legislation policies and the interpretation of laws and regulations. Key countries have adopted the policy of legislative stability. They also honor their commitments, whether to their citizens or to foreign investors. Lebanon should address this matter. It has always stressed the importance of legislative stability and the respect of commitments. Therefore, it has to reaffirm its adherence to this policy, which plays a major role in attracting investments and makes citizens and investors feel secure.

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