This article originally appeared on December 02, 2013 on CNN.com Blogs – Global Public Square.
[…] Geopolitical, governance, economic and social issues are interconnected in Lebanon. But at least attempting to separate them can help avoid the complete political and economic paralysis that Lebanon is experiencing today.
Meanwhile, focusing on common economic and social goals will allow a new government to address fundamental quality of life issues, including traffic congestion, education and healthcare, electricity shortages and building Lebanon’s oil and gas industry.
Changing the Lebanese political narrative from a “geopolitics first” to an “economics first” focus requires three key elements: leadership, compromise, and expert public policy analysis.
[…] Lebanon can ease its people’s daily struggles regardless of geopolitical developments. If politicians are unable to take new approaches to leadership and compromise, then citizens will have to mobilize, take to the streets – do whatever it takes to ensure their day to day lives are not held hostage to the unpredictable fortunes of the region.
Lebanese elections are postponed which means that time is available to rethink electoral reform and better position moderate and independent political candidates.
One of the major issues distorting Lebanon’s political process has been foreign financing of political campaigns. Corruption and vote-buying has become the norm, independent and moderate candidates are out-competed, and the public interest is rarely served.
Taming big money in Lebanese politics can be addressed on two fronts.
The first one is through campaign financing regulations and oversight mechanisms. The goal is to ensure transparent disclosure and monitoring of political finances. Efforts are focused around finding the proper regulation design and more importantly on its implementation and enforcement.
Relative to past Lebanese electoral practices progress is being made on a political finance framework and should be seriously considered in future electoral reform debates.
Crowd funding tools can be game-changing and enable a true independent political movement in Lebanon.Georges Sassine
While pessimists doubt significant progress on that front in the near-term, a second measure could have more immediate results. Crowd funding is changing politics in the United States and it is time it is adopted in Lebanon.
Collecting small donations from Lebanese residents and expatriates through social networks and allowing them to transparently track how their contributions are spent could potentially raise significant amounts of funding. With tens of millions of Lebanese across the globe the potential is enormous. If only 1 percent of the Lebanese community donated just $9 a month for a year, more than ten million dollars could be raised.
Crowd funding tools can be game-changing and enable the formation of a true independent and national movement in Lebanon. It will level the playing field and enable independent candidates to compete for political office. The source of funding will also impact the credibility of candidates, increase voter turnouts, and empower citizens to hold elected officials accountable.
In short, money has changed politics in Lebanon to the worse. Maybe political finance regulations and crowd-funding tools can reverse this trend and money can change politics in Lebanon to the better.
This article originally appeared on August 01, 2013 in the print edition of the Financial Times.
Looking back at the past two years and a half, Arab countries have been slow at advancing effective economic reforms.
While countries face different economic challenges one common theme is emerging across the Middle East: local decision makers are constrained by tough choices of reform versus social discontent.
With very few levers at their disposal one way to shake out of economic stagnation is for Middle Eastern countries to go beyond their domestic focus and co-operate economically with each other. Regional economic integration could be a practical solution that Arab leaders should consider seriously.
Multinational organisations including the World Bank and the African Development Bank are advocating economic integration in order to create growth, generate employment and reduce poverty. They highlight that the Mena region is one of the least integrated in the world. From 2008 to 2010 less than 8 per cent of Arab exports were among themselves, compared with 25 per cent in the Association of Southeast Asian Nations (Asean) and 66 per cent in the EU.
If Arab leaders realise that their political survival relies on their ability to drive economic growth and that alone they are constrained to do so, then the situation is ripe for fresh and bold thinking.Georges Pierre Sassine
However, such initiatives are not new to the region. The Arab League was initially founded in 1945 with the goal of intensifying regional trade. Several regional trade agreements were implemented across the Middle East.
While progress is being made, Mena regional economic integration initiatives have been fragmented and slow. They were never fully implemented and have been ineffective so far.
The main challenges have been economics and politics.
From a purely economic standpoint, resource rich countries have no strong incentive for deeper preferential regional integration. They would have to substitute cheaper imports from the rest of the world and give preference to goods produced by less efficient regional firms. Countries such as Morocco, Lebanon and Tunisia have been benefiting from regional trade agreements, while resource rich countries such as Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates have suffered trade diversion.
Another reason could also be the low degree of complementarity between countries. Regional trade blocs have similar resource endowments and production capabilities which make it difficult to increase intra-trade flows.
However, politics has been the main barrier to deeper Mena regional integration. The lack of political will has been driven by concerns about which nations would benefit most from these schemes and the impact it would have on regional leadership. Aligning foreign policy objectives with economic imperatives is a crucial requirement to implement these agreements.
Going forward, success requires a focus on three main goals: restore the credibility of renewed efforts, emphasise complementary strength and weaknesses across countries, and bolster political commitment.
The first step is to build the credibility of new efforts. All current bilateral agreements should be dissolved into a single framework, preferably an existing and functioning one, such as the Gafta international trade association. Institutions should be strengthened and an effective dispute settlement mechanism should be established to oversee that agreements are enforced. The objective is to signal that commitments are meaningful and serious.
The second goal requires a rethinking of the integration model. Traditionally, economic co-operation in the Middle East has focused on liberalising trade in goods. However, renewed efforts should shift to opening up cross-border investments and trade in service sectors, including banking, telecommunications, logistics, land, marine and air transportation. According to the World Bank, these service sectors have significant room for improvement in the Middle East and will be critical to create jobs and reduce unemployment. If not designed and implemented carefully such policies can do more harm than good. This is why the sequence and timing of policies should take into account each country’s circumstances and balance strengths and weaknesses across the region.
This being said, political commitment and leadership remain the critical factor that will make or break economic integration. As it stands today deeper economic integration is very unlikely in the Middle East. But if Arab leaders realise that their political survival relies on their ability to drive economic growth and that alone they are constrained to do so, then the situation is ripe for fresh and bold thinking.
Economic co-operation could be the way out for the Middle East.
Georges Pierre Sassine is a public policy expert and holds a master’s degree in public policy from Harvard University’s John F. Kennedy School of Government.
Today, June 16, 2013, parliamentary elections were supposed to be held in Lebanon. Instead, after political parties failed to reach an agreement on an electoral law, they were postponed for 17 months under the pretext of avoiding a political vacuum.
Lebanese decision makers favored a fake sense of stability over democracy. The current “wait and see” policy until a Syria resolution is reached will only exacerbate Lebanon’s fragile position. The inflow of refugees to Lebanon will increase, economic conditions will worsen, the security landscape will deteriorate, and political gridlock will persist.
This is why it is urgent that Lebanese, leaders and citizens, actively think of ways to shield Lebanon from the Syrian crisis.
The future of Lebanon depends on the ability of Lebanese to compromise and reach an agreement to safeguard the country during this critical phase.
There are three ways to enable compromise and build consensus in Lebanon.
The first option is a foreign-brokered compromise. Foreign countries, such as the United States, France, Saudi Arabia or others could sponsor an agreement around elections and stability. This would be similar to the foreign backed 1989 Taef Agreement, which ended the fifteen year Lebanese civil war, and the 2008 Doha Agreement, which ended an eighteen month political crisis.
Unfortunately, Lebanon’s stability does not seem to be a top priority for international powers. They seem to tie Lebanon’s future directly to the success of their resolution efforts in Syria. In this circumstance, enlisting the help of foreign mediators will require local politicians to actively pursue diplomatic channels and plead their help to shield Lebanon from regional developments.
Geopolitics and external forces are key determinants of internal Lebanese dynamics. However, there are domestic driving factors that should not be underestimated.
The second option is a grass-root driven compromise. Imagine a true national public movement pressuring politicians to come together. It would be a grass-root, all citizens-included movement forcing the political class to bridge party and sectarian lines and meet their responsibility to protect Lebanon. Lebanese citizens who traditionally have taken on the role of followers have the opportunity to be leaders and shape a new political narrative.
Citizens and civil society will need to mobilize, organize and break from traditional political patterns. They should shift the Lebanese political debate from the anti-Assad March 14 coalition versus the pro-Assad March 8 coalition to a choice between conflict and stability; auto-destruction and survival.
The third option is a voluntary national reconciliation approach. The national dialogue roundtable called by caretaker Prime Minister Najib Mikati could provide the right platform for such an initiative. But in order for it to succeed and avoid the failure of the dozens of national roundtables Lebanon witnessed in the past eight years there is merit in considering new methods to facilitate dialogue.
According to Donna Hicks, a conflict-resolution specialist at the Weatherhead Center for International Affairs at Harvard University, the biggest barrier to resolving conflicts is anchored in an emotional undercurrent to any political conversation that is so powerful it derails all productive solutions. Each party considers its dignity violated by others which hijacks most political dialogues.
In the Lebanese context, the Christian community feels marginalized. Shiites have long felt neglected during Lebanon’s civil war and Israel’s occupation of the South of Lebanon. The Sunni community has been feeling targeted since the assassination of several of its leaders starting in 2005. And the list goes on, and the nuances are stark amongst political parties and individuals.
All Lebanese factions need to move away from auto-victimization tendencies and self-centered points of views and take into account the perspective of others.
This is why incorporating Donna Hick’s approach to dignity should be a preliminary requirement to the national dialogue roundtable called by Najib Mikati. It involves Muslims and Christians, March 14 and March 8, old and new rivals to start acknowledging their respective mistakes towards each other and genuinely commit to mutual change.
While idealistic and unlikely to some, this remains a realistic option to achieve a productive outcome out of the national dialogue roundtable.
In summary, a foreign-brokered agreement, a grass-root movement calling for compromise, and a national dialogue roundtable facilitated by effective conflict resolution methods are all suggestions that hopefully provoke a constructive debate on how to protect Lebanon from the conflict in Syria and the wider region. A strategy pursuing all three paths at once may be Lebanon’s best bet.
Responsibility for change in Lebanon lies first and foremost in the hands of its citizens and politicians. Now is the opportunity for Lebanese to pursue their collective interest and set an example to the rest of the Arab world.
Georges Pierre Sassine is a Harvard Kennedy School alumnus. He is a political activist and writes about Lebanon’s public policy issues at www.georgessassine.com.
Fundamental social, economic and political change is urgently needed to improve the life of Lebanese citizens and strengthen our nation’s governance.
Many Lebanese debate various ways to bring about change and reform in Lebanon. However, most of the suggested policies only focus on tackling technical issues and fail to address how to implement them and help people adapt to new rules.
Take for example the numerous times enforcement of traffic laws was attempted in Lebanon. Millions of dollars were invested in mounting cameras at traffic lights; radars were installed to track speed limits; and police personnel were deployed to penalize parking and seat belt violations. All these measures were technical by nature and were never successfully implemented for more than a few months, at best. The common explanations are the lack of political commitment, or the ineffectiveness of enforcement agencies.
Behavioral science could inform the design of reforms in Lebanon.Georges Sassine
However, an important part that is often ignored is the fact that “illegal” driving has become a habit of many Lebanese citizens. It has almost become a cultural trait. In this case technical solutions will continue on failing. Instead what is needed are ways to help Lebanese drivers adapt to new laws, and change their bad driving habits.
Studying human behavioral science might prove useful and inform the design of reforms in Lebanon.
In his book “The Power of Habit“ New York Times reporter, Charles Duhigg, investigated how to diagnose habits and change them among individuals, companies and societies. He found that you cannot extinguish a bad habit, you can only change it.
He quotes researchers from the Massachusetts Institute of Technology (MIT) who suggest a basic three stage formula at the core of each habit: a signal, a routine, and a reward. They found that each habit is triggered by a signal. It could be a certain time, location, or emotion which then activates a routine. Once completed, this routine provides a certain sense of reward and satisfaction.
In order to replace bad habits, Duhigg argues that the same signals and rewards must be kept but a new routine has to be inserted.
In Lebanon, for example, in the early 1970s low income communities gathered every Sunday along the streets leading to the national airport. They barbecued and held festive lunches along road medians – the narrow and long area planted with grass and trees separating opposing traffic lanes. While peaceful by nature these large get-togethers attracted the criticism of many local communities and tourists witnessing these scenes at the airport’s exit. After the failure of several negotiations to stop these gatherings, the Lebanese armed forces were sent to clear public spaces. This led to violent clashes and cascaded into prolonged and politicized protests.
The Minister of Tourism quickly realized that confrontational measures will not resolve the issue. Instead he ordered firefighters to heavily water green areas in these specific road medians every Saturday evening for several weeks. Come Sunday these public spaces were muddy and uncomfortable and ended the crowd turnout.
Applying Duhigg’s three step framework, the signal is Sunday mornings when these communities engaged in the routine of gathering and eating in public spaces. The reward is the sense of community and satisfaction they get at the end. Keeping that same signal and reward, the Minister of Tourism enabled them to replace that particular habit with other Sunday afternoon activities that still fulfilled their craving.
Similar to this case, current Lebanese decision makers could use the signal, routine, reward framework for fresh insights as they deal with situations requiring behavioral change.
Innovation and creativity is the only way to approach Lebanon’s challenges … focusing on changing habits and helping people adapt could be the cornerstone of leadership in Lebanon.Georges Sassine
Another noteworthy concept introduced by Duhigg is that some habits – called ‘Keystone Habits’ – can start a chain reaction and change several other behaviors. He uses the example of Alcoa, a major aluminum company struggling in the 1980s. Instead of introducing traditional cost reduction measures the new CEO focused on one priority within the company: improving workers safety. As new routines moved through the organization, costs came down, quality went up, productivity skyrocketed and within two years Alcoa was the top performer in the Dow Jones Industrial Average.
The lesson is that patterns across organizations and societies can be changed if we prioritize these keystone habits. However, identifying them is tricky and requires a bit of ingenuity.
In Lebanon, these two main concepts can be used to improve driving patterns. One interpretation suggests that the signal is when a driver sees a red traffic light. It triggers his routine of speeding, burning the light, and provides the reward of feeling important and some sense of satisfaction that he is smarter than other drivers who have stopped.
As we look closer one can’t help but notice that some Lebanese not respecting laws or order is not limited to traffic lights. It could be argued that it is a widespread phenomenon across many other situations such as cutting lines, evading business laws, disregarding the non-smoking policy, and cutting corners in many mundane aspects of daily life. Wanting to outwit the system has become ingrained in Lebanese culture. Therefore, a better way to resolve the driving issues in Lebanon could be to think about that broader social habit instead of only focusing on bad driving in itself.
Concentrating on keystone habits could be the better approach in this case.
We have to acknowledge that many Lebanese citizens operate within a frustrating environment. These habits are nurtured in an unstable and uncertain economic, security, and political context which they’ve been subjected to most of their lives. These could be guiding insights to identify the right keystone habits to focus on.
The priority should be on securing financial stability and family security for Lebanese. If the government is absolutely dedicated to achieve these two goals, similar to Alcoa’s example, a chain reaction could start and change other behaviors including driving patterns.
There is no doubt that these issues deserve more in-depth thought. But Lebanese politicians and citizens need to recognize that innovation and creativity should be the way to approach our country’s challenges. The science of human habits and behavioral change could provide a useful framework to think through reform initiatives in Lebanon.
A version of this article appeared in the March 2013 online edition of Executive Magazine.
Lebanon is making progress in developing its oil and gas resources. Offshore seismic surveys are completed, the Petroleum Administration is finally formed and the licensing round for oil companies to bid on offshore exploration has been launched.
The Lebanese government is rightly focusing on developing petroleum resources in its direct waters. However, Lebanon has yet to fully demarcate its maritime borders with Cyprus, Syria and Israel. Petroleum discovered in contested areas could prevent Lebanon from extracting parts of its resources and risk to pose a serious security threat.
The focus so far has been on the border dispute with Israel. Traditional resolution strategies of maritime border disputes are not easily applicable to the Lebanese-Israeli case.Georges Sassine
The focus so far has been on the border dispute with Israel. Traditional resolution strategies of maritime border disputes are not easily applicable to the Lebanese-Israeli case.
Direct negotiations between the two countries or joint development agreements – where Israel and Lebanon cooperate to access hydrocarbons instead of dividing the territory – are not applicable. The countries are at war and will not negotiate face to face.
Another option is to resolve the dispute through formal legal proceedings. The International Court of Justice, the International Tribunal for the Law of the Sea and the Permanent Court of Arbitration are all different platforms that could resolve the dispute.
However, Israel has not signed or ratified the United Nations Convention on the Law of the Sea (UNCLOS), which means that Lebanon cannot force Israel to court. Lebanon could pursue an international media and diplomatic campaign to get Israel to sign the UNCLOS, enabling Beirut to bring Tel Aviv before a binding judicial tribunal or panel of arbitrators. But this remains a challenging path to undertake given that Lebanon does not acknowledge the existence of the state of Israel, and political resistance is to be expected as part of Lebanese public opinion perceives international courts to be biased towards Israel.
Searching for a settlement
As such, the most realistic proposal may be for some kind of indirectly negotiated settlement, though any such process will be lengthy and complex.
It is not unlikely that a new oil and gas field will be found in disputed Lebanese-Israeli waters while at the same time extending into Cypriot waters.Georges Sassine
As exploration in the Eastern Mediterranean continues it is not unlikely that a new oil and gas field will be found in disputed Lebanese-Israeli waters while at the same time extending into Cypriot waters. Cyprus is divided into two main parts: the Republic of Cyprus – a member state of the European Union – and the Turkish controlled area in the north. This is likely to pull both the European Union and Turkey into the fray.
Lebanon could then find itself in a scenario where instead of dealing only with Israel it is drawn into a multi-stakeholder dispute directly involving Cyprus, Turkey, the EU and probably the United States as a broker.
Such a scenario has been studied by Harvard Professor, Meghan O’Sullivan, and several students from Harvard University and the Massachusetts Institute of Technology (MIT) in a Geopolitics of Energy competition. In looking for ways to avoid a conflict, two broadly different approaches have been suggested.
The first is the ‘politics before economics’ pathway, which suggests that a complete political resolution of conflicts between Lebanon and Israel on one hand, and Turkey and Cyprus on the other hand need to be resolved before the gas can be developed. The development of eastern Mediterranean gas would be included in a comprehensive regional peace initiative. Until then, petroleum resources in disputed areas would remain untapped and conflict avoided. However, immediate prospects for such a regional agreement are slim at best.
The second proposal suggests the development of disputed oil and gas fields while waiting for a final political resolution of territorial disputes. In this case, Lebanon and Israel as well as Cyprus and Turkey would agree to disagree. Each side would hold on to its claims but agree to a third party developing disputed oil resources until big political issues are resolved. Revenues could be split or frozen in foreign accounts and by the time a political resolution of disputed areas is reached revenues would then be distributed according to each country’s respective share.
Such a model has its challenges as well but nevertheless has been proven viable. In the 1940s Saudi Arabia and Kuwait both claimed a 5,770 square kilometer area along their borders and as such created a neutral zone. They shared equal rights to oil concessions until they reached an agreement to formally divide the territory in the mid-1960s. Australia and East Timor provide a similar case in 2003 as they postponed the settlement of their boundaries for 50 years and pursued the development of common resources under agreed guidelines.
There is no doubt that potential oil and gas resources in contested waters provide serious risks to Lebanon. While the current unspoken agreement seems to be that both Lebanon and Israel will not explore in the conflict area, Lebanese remain nervous that Israel would decide to unilaterally develop these fields and provoke retaliation from the Lebanese Armed Forces or Hezbollah. Any option to avoid this issue will prove complex. This is why as the Lebanese government accelerates the exploitation of undisputed areas it should in parallel devote time and resources to manage risks on its maritime borders. A team of legal, diplomatic, military and political experts should plan and prepare for Lebanon to successfully defend its rights, develop its entitled resources and avoid conflict.
Georges Pierre Sassine holds a master’s degree in public policy from Harvard University’s John F. Kennedy School of Government. He writes about Lebanon’s public policy issues at www.georgessassine.com
A version of this article appeared in the March 2013 print edition of Executive Magazine.
In the past five years, Lebanon has attracted an average of $4.5 billion per year in foreign direct investments (FDI). But as the uncertain political environment causes FDI levels to decline and economic growth to plummet, Lebanon could tap into a new source of financing called “diaspora bonds”, financial instruments sold only to expatriate communities.
In 2012, Lebanese emigrants sent more than $7.6 billion to their families, for the purpose of supporting their parents, putting relatives through school and other personal investments. Their impact on Lebanon’s development can be significantly increased if parts of their funds are mobilized for local investments, such as infrastructure, schools and hospitals.
Between roughly 4 and 15 million Lebanese live abroad, so if one in every 10 members could be persuaded to invest only $1,000, Lebanon could raise on average more than $1 billion a year. Diaspora bonds raise capital by providing emigrants advantageous interest rates, deposit guarantee schemes and other unique incentives. Israel raised $31 billion through diaspora bonds, and India raised more than $11 billion. Yet, there are also cases of failure, such as Ethiopia, which raised only $200,000.
Examining the lessons learned from other countries, the success and failure of diaspora bonds can be linked to three key drivers. The first one is the profile of the country’s diaspora network, its size and wealth, how well organized it is and how easily it can be tapped into. The second is the relationship between the diaspora and its home government. And the third is patriotism — the emotional tie to the homeland and national identity.
Lebanon scores differently across these metrics. It enjoys a large and relatively well-off expat community linked through various political, religious and business organizations. Yet both its relationship with the Lebanese government and its sense of patriotism could vary widely. Many could perceive the government to be corrupt and only have a handful of trustworthy institutions. And some expatriate communities, similar to the local Lebanese population, could be fragmented by a weak national identity.
Lebanon can benefit from the issuance of diaspora bonds only if they are designed to circumvent the country’s weaknesses and obstacles. For example, lack of trust in a corrupt Lebanese government would negatively impact the diaspora’s willingness to invest in diaspora bonds. For this reason, the government should be limited to setting the overall vision and creating incentives for the private sector to lead this initiative.
Another difficulty is the fragmented nature of the Lebanese diaspora, which might prove challenging to engage. The solution lies in ensuring that investments benefit the whole society without preference to specific regions or religious groups. For instance, national infrastructure projects such as a railway connecting north to south, or refineries to build Lebanon’s oil and gas industry, are possible uniting projects.
In order to strengthen the diaspora’s link to Lebanon, the single most effective tool available to the Lebanese government is to grant expats voting rights and encourage civic participation. About 10,000 Lebanese expatriates are registered to vote for the upcoming parliamentary elections. While the low turnout is a disappointment to many, others consider it a significant step toward larger diaspora participation next time around.
Until then, Lebanon should start laying the ground work to issue diaspora bonds. It first needs to gather better statistics on the volume, wealth and location of its citizens abroad. The Lebanese government also needs to establish institutions focused on government-diaspora liaison through and beyond embassies and consulates. It needs to build alliances with diaspora networks including professional organizations like the American-Lebanese Chamber of Commerce, and academic organizations including university alumni chapters. It would also need to start negotiating with foreign countries to grant tax exemptions to Lebanese nationals investing in diaspora bonds, which would require identifying the right local projects to be invested in.
There is no doubt that diaspora bonds will face obstacles in a country like Lebanon. But with the right design and the political will to carry it through, Lebanon can put its diaspora at the forefront of its economic and political development.
Georges Pierre Sassine holds a master’s degree in public policy from Harvard University’s John F. Kennedy School of Government. He writes about Lebanon’s public policy issues at www.georgessassine.com
A version of this article appeared in the March 2013 print edition of Executive Magazine.
(Executive Magazine: a leading business, economics and policy magazine in Lebanon and the Middle East)
On February 15, 2013 the Lebanese Minister of Energy and Water held a press conference launching the pre-qualification process for oil companies to bid on offshore oil and gas exploration. The Minister outlined the timeline and next steps in Lebanon’s offshore oil and gas sector.
The licensing and bidding phase is expected to take a year to complete. Contracts are expected to be signed with winning international oil companies in February 2014, according to the Minister of Energy and Water.
The exploration for oil and gas will then start immediately and be completed in 18-24 months. The development phase can then take its course in 2016 before full oil and gas production and revenues start flowing to the Lebanese government.
The first oil and gas commercially extracted is expected in 2017-2018 – assuming no technical or political delays.
The announcement only focused on Lebanon’s offshore licensing, exploration and production phases. No announcements have been made on next steps regarding the establishment of a sovereign wealth fund and the management of oil and gas revenues; nor the development of Lebanon’s onshore oil and gas resources besides the launch of onshore seismic surveys.
Additional resources and details on Lebanon’s first offshore licensing round:
