As the opposition shifts its protest campaign to "Plan B", the pro-Western government's economic plans are the latest focus of dispute, reports Lucy Fielder from Beirut
Beirut's immaculately rebuilt Downtown was the centrepiece of assassinated former prime minister Rafik Al-Hariri's neo-liberal economic policies. Now, a projector beaming slogans on the wall of a central building housing the posh Buddha Bar sums up the protest against them. "The government o f VAT, the government of public debt, the government of corruption," they read. Below them in Riad Al-Solh Square, youths mill around in the encampment that has mushroomed over the last month. Some dance the traditional dabke while others smoke water pipes. Many have never set foot in Downtown Beirut before, let alone hung around there on a Friday night.
Economic reform plans unveiled by Prime Minister Fouad Al-Siniora at the start of the month have become a new rallying point for the opposition, led by Shia group Hizbullah, along with popular Maronite Christian leader Michel Aoun, and smaller Druze, Sunni and leftist parties. Having achieved no concrete gains in their campaign for a unity government that would give them the right of veto, the opposition looked to be losing momentum. But although the protests outside government offices last week fell flat, with only a few hundred turning up, the debate is now focussing on the neo-liberal economic policy of the government that is holed up on the hill above, in the Grand Serail.
"O Siniora, listen, listen, this country is not for sale," crowds chanted at a protest outside the VAT office called by the General Labour Federation and joined by the opposition. One man held a placard saying, "Where are development, agriculture and industry in Siniora's paper?"
Saad Al-Hariri, head of the parliamentary majority, has called the opposition protests "political and intellectual terrorism" aimed at hurting the economy.
Siniora's paper promising reforms aims to secure foreign aid for Lebanon at a meeting dubbed Paris III in the French capital, due to be held on 25 January. Over and above reconstruction after Israel's war on Lebanon last summer, the aid will be used to exchange Lebanon's expensive debt for cheaper loans, proponents say. The country of four million people struggles beneath a debt burden of $41 billion, one of the world's largest per capita.
Siniora toured Egypt, Saudi Arabia, Oman and Kuwait in the weekend to garner support for the conference. Most of the expected assistance will come from Arab countries, not the West. Saad Al-Hariri said, after a meeting with French President Jacques Chirac, that Paris III was not exclusively for his 14 March camp or the opposition. "The conference represents the hopes of the Lebanese youth and the rights of every Lebanese citizen who wants Lebanon's economy to develop and advance," he said.
The reforms outlined are vague, but include, most controversially, raising VAT by two per cent next year and later up to five per cent, along with privatisation and "corporatisation" of state-owned enterprises, particularly the wasteful Electricite du Liban, estimated to cost the government about $1 billion a year. With the flat rate of income tax expected to remain unchanged at 10 per cent, regardless of earnings, the plan's detractors claim that the government's indirect taxes -- through VAT that will raise already inflated prices up by14 per cent -- will hurt the working class, and prise ever wider the gap between rich and poor.
Hizbullah Secretary-General Hassan Nasrallah told the Kuwaiti daily Al-Anbaa that the government proposals would lead to "more debt, taxes and corruption". In an interview, parts of which were carried in Lebanon's Daily Star, he said that two-thirds of the Lebanese currently live on, or below, the poverty line and so cannot support a rise in taxes. "When it comes to taxes, the paper outlines set agendas and schedules, timetables, numbers and percentages. However, all those numbers disappear when it comes to social services."
Nasrallah said the government should have consulted the opposition on the proposals. Echoing other critics, he stressed that he took issue with the document, not the Paris III conference. Without opposition agreement, reform plans are a pipedream, observers say. Siniora's detractors point out that when he was finance minister under Rafik Hariri, during much of the era of rebuilding following the 1975- 1990 Civil War, Siniora oversaw Lebanon's debt accumulation.
A middle-aged woman, who gave her name as Souad, came from the remote, deprived Hermel region to demonstrate outside the tax office. "The Lebanese people are poor, and the taxes are already too high. We can't afford to pay them. I've got four sons and only one of them is working. I came all the way from Hermel hoping that Siniora would hear my voice. We are Lebanese citizens and we have nothing to live on," she said.
Banks and businesses, which are generally pro-government, have largely welcomed Siniora's plan. One Western economic affairs attaché said that the government has requested $5-8 billion in grants, but will probably get between $2-5 billion in a mixture of grants and soft loans from Arab Gulf countries. "It's not a bad plan, in theory, but it's not been explained very well to the Lebanese," he said.
Promised reforms were a tall order with Lebanon so polarised, however. "The conference should really have been postponed, but it's become a political issue about showing support for Siniora," the attaché said. One of the ruling coalition's main justifications for staying on has been Siniora's ability to win assistance at Paris III.
The protests, added military and police costs in the heavily guarded capital, loss of tourism, and investment and loss of earnings in the Downtown area where the protesters have set up camp have taken their economic toll. Lebanon's economy is haemorrhaging $20-30 million a day, the attaché said. Without urgent consensus on reform, "Paris III will be a sticking plaster on a gaping wound."
Fady Abboud, head of the Association of Lebanese Industrialists, said that while he welcomed the Paris III conference, the reform paper was another matter. "The only thing that's very clear in the paper is the increase in taxes -- that is as clear as the sun. But when it comes to reform, it hides behind question marks," he said.
"Our [the industrial sector's] direct losses due to the war were more than $200 million and here comes a paper not addressing this at all. There is no talk of compensation for the factories Israel destroyed," he said. "At the end of the day we don't want to be a society where you have to sell the house the government rebuilt for you in order to be able to live. Creating jobs is as important as rebuilding houses."
Joseph Samaha, editor-in-chief of the pro-opposition Al-Akhbar newspaper, wrote last week that while some circles have started to question the "neo-liberal" economic policies of the International Monetary Fund, seen by many in Lebanon as having at least a hand in the government proposals, Lebanon's "clock stopped" at the crest of the wave. Siniora, he wrote, has a "mystical belief in the magic of the market". For him, "it's enough for privatisation to have happened 'over there' for it to be necessary here. That's the first thing. Secondly, that it is positive is above discussion."
Economic reform has proceeded at a snail's pace for years, paralysed first by a dispute between Rafik Hariri and President Emile Lahoud, then by a rift in the country since he was assassinated. Since Israel's aggressive war last year, which Washington supported, the chasm between the pro-US government and its opponents has gaped wider.
Another Arab initiative to resolve the political crisis appeared to be in the offing at the time of writing, with talk of an imminent visit by Arab League Secretary-General Amr Moussa to Beirut. Moussa's last initiative, in December, made little headway. -- Yoshie <http://montages.blogspot.com/> <http://mrzine.org> <http://monthlyreview.org/>