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Lebanon: Is Real Reform Possible?

March 10, 2010 // 10:00am11:00am
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Despite a political system and social structure in which sectarianism shows few signs of dissipating, genuine reform can still occur in Lebanon that not only drives growth, but also creates political momentum for reform and has a significant economic and social impact on Lebanese society.

This was the focus of Mohammad A. Safadi, Minister of Economy and Trade and Member of Parliament in Lebanon, when he spoke on the prospects for reform in Lebanon at the Woodrow Wilson Center on March 10, 2010. Executive Vice President of the Woodrow Wilson Center, Michael Van Dusen, moderated the event.

Mr. Safadi acknowledged that there are many impediments to reform within the current political system: Government coalitions based on compromise are hamstrung in their ability to pass far-reaching reform; and internal and external conflicts have led to a severely damaged physical infrastructure, resulting in economic productivity today that is 25 percent lower than its level before the beginning of Lebanon's civil war in 1975. Even though Lebanon and Syria have diplomatic relations now with embassies in each other's countries, Syria still has the ability to influence Lebanon's trade by placing restrictions on Lebanese imports and exports. Further, Minister Safadi said Hizbollah maintains a substantial ability to influence political reform. It has, with the financial support of Iran, built hospitals, schools, and improved water and sewage systems, while maintaining the largest armed faction in the country.

There are two projects that could facilitate greater economic growth, while evading these impediments, Mr. Safadi said. First, reforming the education system by improving standards and the quality of education in public schools will make Lebanese society more competitive. Second, construction of a modern, high-speed railway along the coast with feeder highways into the mountains will allow individuals to move more easily around the country, while allowing businesses to transport merchandise more efficiently, leading to increased investment in the regions outside the capital. A good portion of the coastal track system that exited before the civil war remains and could facilitate this project.

Mr. Safadi emphasized that a key component in Lebanon's development is the ability to cultivate linkages between citizens and the state. Lebanon's per capita income is the highest of all non-oil driven economies in the region, however there are still wide gaps in the distribution of wealth. One of the ways to create these linkages is through public-private partnerships (PPPs). Mr. Safadi envisions the construction of the rail line as an opportune example for PPPs. He reminded the audience that prior to the Lebanese civil war, most of Lebanon's energy sector was privatized. Today's current situation in which most of the energy sector is run by the public sector is inefficient and unsustainable. Those parts of the sector only partially managed or not managed at all by the public sector are making profits.

This past year saw Lebanon follow a year of 8 percent growth with a year of nine percent growth. Mr. Safadi said the financial crisis that has engulfed most of the world's economies has had little, if any, effect on Lebanon's. However, growth will not continue indefinitely without reforms, maintained Mr. Safadi. Lebanon has long had to import its energy and only recently did north Lebanon begin to receive natural gas from a pipeline from Egypt. Further, tourism, which has been a main driver of growth, will not continue if the country cannot modernize its infrastructure. Moreover, the Lebanese government and private industry must work together to create opportunities for Lebanon's educated youth to find jobs within the country. Without these opportunities, Lebanon's promising generation of youth are bound to immigrate elsewhere in search of work.

In closing, Mr. Safadi reiterated that these reforms are quite possible. They benefit all of the people of Lebanon and need only the will power, dedication, and funding from other members of the government. He indicated he is laying the groundwork for both reform agendas.

By Joshua Reiman on behalf of the Middle East Program

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