USCFL - Lebanon: Soul on Ice

Visiting Beirut for the first time in 16 years, I was asked by Lebanese friends what my impression was. Two things stand out – one new and exciting, the other new and troubling.

What is new is the hardware – the degree to which Lebanon has been rebuilt since the civil war ended in 1989. Wow! A new airport, new highways, new bridges, new offices.

What is troubling is on the software side. Something has been lost. The fast, freewheeling, entrepreneurial Lebanese spirit, which sustained this country in time of war and brought people back as son as it was over, is deteriorating. Lebanon has always been a country whose greatest natural export was its people. But the Lebanese who tended to leave before were skilled workers and merchants who went to the Persian Gulf or Africa to make money and return. Now, Lebanon’s brightest are leaving for good to the West or Australia – driven out by a sense that, as a friend’s 14 year old son put it, “Lebanon is a place to grow up, but not to stay.” How will investors come when Lebanese won’t stay?

What’s deteriorating Lebanon’s software is the combination of a dead-handed Syrian occupation, continued Lebanese-Lebanese divisions that make merit-based governance impossible, and a government leadership that lacks any strategy for bringing Lebanon into the 21^st century. Last week the government tried to raise taxes on FedEx and DHL to the point that they were nearly ready to leave Lebanon; if someone sends you a CD here you have to go to customs personally to sign for it; last year computer imports worth $2 million were held up because they contained chips from Intel, which has a factory in Israel. All this in a country that lives on selling services and brain power.

Sixteen years ago the Syrian occupation was on the streets – Syrian checkpoints, soldiers and tanks. That has largely disappeared. But that’s because the Syrian occupation has moved from the streets into the heads of the Lebanese. As the world has looked away, Lebanon has increasingly become a Syrian province. Result: less political and press freedom and no major decisions made without clearance from the Syrians. The number of Lebanese politicians, statesmen or writers today who will dare to articulate a distinctly Lebanese national interest, position or vision of the future – independent of Syrian interests – is lower than ever. For all their individual brilliance, Lebanese still have not coalesced into a society that can produce a coherent modern state and judiciary. They are still hobbled by religious divides and feudal politics.

In the 1950’s and 60’s, Lebanon played a unique role in the Arab East. Lebanon’s fast and entrepreneurial software served as a critical bridge between the Arabs and the world. But in the age of globalization just being fast isn’t enough. You also need good governance, rules and the confidence of investors in order to thrive. That’s why Dubai is replacing Beirut.

“Lebanon is like a guy who sold bottled water in the desert for many years”, said a former minister. It was a great business. Then the years passed, and Lebanon continued trying to sell bottled water, only it found itself competing with full-service supermarkets in every oasis.

One of the biggest victims of the deterioration of Lebanon’s software could turn out to be Syria’s new president, Bashar al –Assad. Syria is desperately in need of a bridge into globalization. It has no modern banking system or service sector. Lebanon is Syria’s natural bridge. But that bridge is eroding.

The word on the street is that Bashar wants to follow the “Chinese model” – keep tight political control while slowly liberalizing the Syrian economy. Guess what? There is no Chinese model. There is only a Chinese bargain. The Chinese leadership said to its people, “We will let you get prosperous and you will let us stay in power.” But this deal breaks down if incomes don’t rise.

With half of Syria on the state payroll and 700,000 unemployed, the only way Syria is going to be China is if Lebanon is Hong Kong. Syria needs to let, and help, that happen. Hafez al Assad thought he had to occupy freewheeling Lebanon to maintain Syria’s stability. Bashar, his son, will have to unoccupy Lebanon if he wants to maintain Syria’s stability.

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Article:	Lebanon: Soul on Ice
Author:	Thomas Friedman
Date:	July 2000