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How Lebanon's elites abuse the state to get re-elected

Wassim Maktabi

That Lebanon’s traditional political parties would get re-elected in 2022 was never doubtful. Even amid a deep financial crisis and a wave of political mobilizations, few could bet against the regime in the race for political power. Certainly, the regime’s parties have many advantages compared to emerging ones. They are larger, wealthier, and more experienced. But what gives these parties particular dominance is their protracted control over the state’s political and economic functions.

This grip of political power allowed Lebanon’s political elites to dictate policymaking in the country for decades. For elections, the rules of the game became tipped in favor of traditional incumbent parties. The 2017 electoral law, for instance, serves as an illustrative example of why it matters for elites to retain this type of policymaking discretion. While the law is more inclusive than its predecessor, it was still designed by elites to fit their parties across electoral districts.1

The pervasive control over the performance of key political and economic state institutions has large implications during election periods. While it is not uncommon for incumbent parties seeking re-election to direct their policy attention to issues that have a higher electoral yield,2 the implications and magnitude of this shift in Lebanon’s present-day context are quite significant.

Indeed, between October 19, 2021—the date on which politicians agreed to hold elections— 3and election day, Lebanon’s political elites rendered their re-election fertile by altering the performance of parliament, government, and central bank. Compared to the year prior, the government increased the issuance of particularistic, service-based, legislation, parliament provided major assistance to the public and private sectors, and the central bank invested heavily from its foreign reserves to artificially stabilize the currency.

What have ministers paid attention to?
The legislative performance of the government was administrative in both timeframes (86% election period, 83% baseline), focusing on rudimentary day-to-day affairs.4 The election period, however, saw ministers increase their policy attention toward individualistic, or clientelist, legislation by around 20%. These include legislation concerned with the provision of services to specific people or businesses, such as the issuance of licenses, the approval of citizenship requests, and the establishment of associations. The increase in attention to clientelist legislation was mostly driven by the issuance of licenses, which saw a two-fold increase compared to the baseline period, followed by the establishment of associations, which increased by 10%, while the approval of citizenship and naturalizations requests decreased significantly by 65%.

The election period also saw the executive branch provide substantive social contributions to workers in the public sector. In February 2022, the government provided public sector workers with a 50% top-up to their salaries every month until the issuance of the 2022 budget law.

What has parliament paid attention to?
While parliament’s legislative productivity increased threefold compared to the baseline period, this did not translate into any of the economic, judicial, or social reforms that the country is in dire need of. The function of parliament in that period was to appease constituents in the public and private sectors. 

For the public sector, members of parliament opened a credit line worth LBP 1.2 trillion, most of which was to provide assistance to workers, and passed three laws that served to improve the working conditions of officials in Lebanon’s State Security and Internal Security Forces.

For the broader society, parliament finally ratified the final version of the Emergency Social Safety Net (ESSN) law in December 2021. The ESSN, a World Bank-funded social safety net program, was supposed to launch almost two years prior, but was stalled following political elites’ failed attempts to capture it under the veil of “administrative blunders”. 5 

What has the central bank done?
With a political consensus in hand, the central bank aggressively intervened in the currency market to artificially stabilize the local currency. More so, Banque du Liban requested commercial banks to conduct currency exchange operations without limits.

This maneuver exhausted nearly $2 billion from the country’s foreign reserves to appreciate the Lebanese lira momentarily from USD/LBP 31,500 on January 10, 2022 to around USD/LBP 27,000 during election week. It is also estimated that, due to the fluctuating spread between the Sayrafa and market rates, more than $800 million were lost by the central bank in the form of arbitrage.6

The proximity of the intervention to the parliamentary elections, and the fact that it was not linked to a broader macroeconomic recovery framework, strongly indicates that it was politically motivated to appease the public and stave off possible protests.

Overall, during election periods, Lebanon’s political elites behave like despotic rulers who rely on the support of the masses to stay in power.7 Driven by electoral incentives, traditional parties, through their control of parliament and the government, increased their policy attention towards particularistic legislation that carry a higher electoral yield. These parties also held off on passing significant reforms, such as the 2022 budget, which could trigger uproar due to anticipated austerity measures, and invested heavily in short-term currency stability to appease low and middle-income constituents.

1. El-Ghossain, A. July 2017. “One Step Forward for Lebanon’s Elections.” Carnegie Endowment for International Peace.

2. Motolinia, L. 2021. “Electoral Accountability and Particularistic Legislation: Evidence from an Electoral Reform in Mexico.” American Political Science Review.

3. Chehayeb, K. October 2021. “Lebanon sets March date for parliamentary election.” Al-Jazeera. Note that in December 2021 the date of the elections was changed to May 15, 2022.

[4. These include legislations that do not amend or introduce new rules, such as appointments, financial transfers, approval of contributions, licenses, postal service, and registrations, among others.

5. Sewell, A. and O. Tamo. June 2021. “How the government fumbled a $246 million World Bank loan to help Lebanon’s poorest families.” L’Orient Today.; The Policy Initiative (forthcoming).

6. Calculation based on volume of Sayrafa transactions, Sayrafa rate, and daily market rate. The Policy Initaitive (forthcoming).

7. Dadlova, M. and V. Lucas. 2021. “Regime security and taxation in autocracies: Who is taxed and how?” European Journal of Political Economy.

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