Ghassan Moukheiber for “Executive” magazine: we need to reach the point where we complete the structure of an incomplete state

Ghassan Moukheiber, 50, has been a member of the Parliament since 2002 and is a Harvard Law graduate. He is also a member of the Parliamentary Finance Committee and spokesperson for the Parliamentary Human Rights Committee. Mr. Moukheiber is running with the Change and Reform Bloc for the Greek Orthodox seat in the Metn electoral district.

E What initiatives will you take to decrease Lebanon’s risk factor with respect to investment and encourage Foreign Direct Investment (FDI)?

In Lebanon there cannot be any sustainable economic development without sustainable state institution building, which is a political development. We need to reach the point where we complete the structure of an incomplete state because I think we are in an incomplete state. This pertains not only to matters of security, but also to matters of constitutional construction, decentralization, effective controls of the legislative over the executive and the development of the judicial branch, in terms of an effective and independent judiciary. We have neither a truly independent or effective judiciary. I believe that this is where my input as a member of parliament currently and hopefully later on– but also as a lawyer that has spent most of my time developing areas of public governance, appropriate electoral systems, decentralization, fighting corruption, developing effective constitutional bodies including a parliament that is effective and meets effectively, controlling the executive effectively and developing within parliament a parliamentary budget office. Parliament has no capacity in developing economic or financial issues, no capacity whatsoever– including myself– in understanding the intricacies of our public debt or understanding the intricacies of the budget and how it is implemented. Without achieving true state building, good governance in the main areas that I have mentioned I think that we will still have problems with regard to development in Lebanon.

E Do you think governance is the number one issue that needs to be dealt with?

In my opinion governance is the number one issue. This is part of what an investor will look for in an environment. That and legal as well as constitutional structures to support these. All of these core political issues are essential for appropriate and sustainable financial development in Lebanon.

Also, it is also important to balance out constitutional powers. If we do not have an appropriate and effective constitutional court, no one will be guaranteed that the laws enacted by parliament will abide by constitutional principles. That’s one simple example.

Another area that I consider basic is the issue of the effectiveness of government. Look what happened in the past three years: conflicts over power sharing have caused stalemates and I think that many Lebanese, let alone the investors, have fled the country [as a result]. What we need to do is say ‘never again,’ and to do that we need to come up with an appropriate electoral law. We have an improvement but not the required electoral system that will provide for true and effective representation of the people.

We need to develop a working relationship within the executive: understanding how the executive functions, talk about the [blocking] third and talk about what an effective executive is. I am one of those who consider that there has always been an imbalance between the executive and the legislative branches. Parliament has been frozen, not only because there was a blockage resulting from the sit-in, but because parliament is ineffective. The oversight functions of parliament are so limited in Lebanon and there is such an imbalance between the executive and the legislative [arms of government,] and this has resulted in a dysfunctional state.

If we do not develop, over and above, a policy to fight corruption and to make our civil servants more effective and less corrupt, I think we will achieve nothing in terms of economic development. Heightened corruption can only be addressed through a series of systemic reforms which we have only started doing. Recently I– with a group of parliamentarians against corruption– tabled a bill on access to information laws. We will be tabling another bill on whistleblower protection, basic issues that are not yet there– a law on the reform of the civil service which is overstaffed, ineffective and costly. All of that is part of the constitutional and legal structure, and we still have not spoken about security that is also related to political decision making.

We need not separate economic development from political development. There was a time in Lebanon when people thought this was possible and it is not. We live in a system that is based on free trade and free markets.  Free markets cannot survive if there are no such political incentives and political development is tantamount to economic development.

All of those are the basics. They stabilize the relationship between religious communities and groups that feel threatened otherwise. This is going to be the challenge of the next legislature for politicians: How to develop the most effective ‘consortative’ government meaning: How can we strike out the balances that make decision making effective and yet protect the interests of minorities and all political groups. Consortative does not mean consensual; you don’t always require consensus. Consortative means you have different levels on consensus in or importance in decision making.

E The March 14 collation has stated that they will not participate in a national unity government and will go into the opposition which in turn increases the risk factor. What will you do if this happens to bring down risk?

The way out is good governance which includes increasing the capacity of parliament. We have been in the opposition and we felt the dangers of an ineffective parliament. If [March 14] decides to be an effective opposition then we need an effective parliament.

E The United Nations estimates that 28.5% of Lebanon’s population lives below the poverty line and 300 thousand people live in extreme poverty. What will you do to elevate the poverty situation?

Poverty can be addressed through simple ‘band-aid’ solutions that have not been appropriately implanted in Lebanon apart from some private efforts. In terms of the micromanagement of poverty, microcredit and the widespread development of microcredit is important to fight poverty. Development in rural areas is important to fighting poverty including providing decentralized municipalities and regions with the means for their development. We need to push development back into rural areas and develop jobs. We need to develop the service sector but also, the agricultural and industrial [sectors] in those rural areas which will help maintain the implantation of the people in their areas, provide development and not clog up cities and their surrounding areas. This happens through public investment but essentially through decentralization, financing that decentralization, offering ideas and developing jobs in those regions, particularly jobs that maintain the environment such as agriculture. Agriculture has an added value it’s not only an economic activity but it is an activity that also protects the environment which also preserves eco-tourism. Developing eco-tourism, capacity in rural areas and maintaining people in the rural areas is essential so we do not get into the phenomena of slums. Also, we need to develop the public system of education because education is a first step towards the eradication of poverty.

E Électricité du Liban (EDL) has been a drain on the budget for over a decade; what will you do to decrease expenditure and improve efficiency?

It is a huge problem that is putting a huge weight of debt on our public finances. Ultimately, we need to get to a point where we introduce partial privatization of the sector, a public private partnership. We are not there and we need to prepare the sector to get to that point and we have problems at all levels. We have problems at the level of electricity generation. Generating electricity will force us to develop our existing capacity which is very bad. We need to build very quickly new industrial electricity generation plants and this can be done in partnership with the private sector. It does not necessarily have to be only in the hands of the public sector. Collection and the transport of power are all problems.

We need to implement the law as it was voted [for by the parliament]. We cannot afford to just lay back and wait for something to happen. We also need to finalize the loop of the ‘eight country connection’ which will allow Lebanon to import cheaper electricity from the region and manage shortages better. All of these can only happen if we have an agreement over a master plan which so far we have failed to do.

This goes back to the issue of governance. Every minister comes to his ministry and comes up with a plan which is replaced by the next minister and so on. In terms of the governance of the sector we need to have a document that is validated by experts, particularly through the World Bank. This has to be voted on, applied and adopted by the ministry and the government in collaboration with the parliament. It is the combination of all the factors affecting the sector that is unclear. Definitely we need to corporatize the sector but in which form and at what levels? At all levels? Do we create a multiplicity of companies? How do you divide those companies amongst Lebanon? Or is it by sector activity? Is it privatization of production, transportation and of collection? It is the combination it is unclear. As a lawyer just looking at the sector, I do not believe that I was offered a credible document that explains to me all the options and the real decisions that have to be taken. We have always had issues of governance that were delaying real decision making, plus corruption because it is a corrupt sector.

E In order to service Lebanon’s mountain of debt, policy has always been enacted to tax the private sector. Will this continue to be the basis of the government under your party and what will you do to spur on private sector growth?

A country such as Lebanon can count on an extremely vibrant and dynamic private sector. But that private sector cannot survive in an environment that is unsafe in terms of security, unstable constitutionally and ineffective and corrupt. It is our responsibility and duty as politicians to provide the business community with a good investment environment. This is where we need to get into some detailed recommendations but essential a good political environment without which there can be no effective investment or appropriate investment. We need to get into a very serious and thorough review of our legal and taxation structure that forms the investment and business operating environment in Lebanon. There is such a draft for a master-plan of legal reform but that has unfortunately been halted. It was started by the late Bassel Fleihan and I had participated in some of the meetings. There are a series of recommendations that need to be implemented.

As far as the agency law is concerned, we can reform the agency law if we introduce three bills on anti-trust, anti-dumping and on revising custom tariffs to protect local production and provide Lebanese industries with incentives so [they] become more competitive. Also, we have to be clearer on Lebanon’s ascension to the WTO. So far, none of these are linked in the minds of any of the politicians. I believe that if we start acting– and we need to start very quickly– on this investment environment we can improve on Lebanon’s standing and competitiveness within the region.

E The servicing of Lebanon’s debt is weighing down heavily on Lebanon, how will you reallocate inflows and payments to service this debt while still maintaining public services and decrease the budget deficit?

The first thing I think about is establishing, in parliament, a parliamentary budget office. It would be an office of experts in finance that will be staffed with auditors and economists that would increase the level of understanding of our politicians in economic and financial issues which so far, we don’t have. Many mistakes are committed which results in the faulty management our debt and faulty oversight in the way that public funds are levied and expended. We have very bad visibility on public finances because most of the income that goes into the development of the private and public sectors is financed through loans and through donations that are off-budget line-items. Therefore, there is no real visibility in parliament of what happens. This leads to a lot of negotiations and ‘bazaars’ where parliamentarians say: ‘You give me this money for my region and I give you [money] there.’ This has led to extremely ineffective financial management both of our debt and of public finances.

I believe that developing parliament’s capacity, because we are in the context of parliamentary elections, to understand economics and finance through this parliamentary budget office would also serve as a tool for the better management of our debt. We are in a deep crisis, we have probably the highest ratio of debt to Gross Domestic Product (GDP) in the world and I don’t think that there is a magical solution to that. It is going to be extremely painful and take an extremely long to time manage it. Therefore, I believe, because I am not an expert– I would like to listen to experts. We need to interact with experts in parliament. The only way to do so– and this is priority number one– is a parliamentary budget office and this has been one of the targets during my mandate as a member of the [Parliamentary] finance committee and the Parliamentary Network on the World Bank (PNoWB) which is a network of parliamentarians that try to develop preferred relationships with the World Bank and the IFC (International Finance Corporation) and with other international donors. I believe that if one does not have good visibility and a good understanding between the executive and the legislative we will always be quarreling over how to manage public funds and end up getting the bad results we have been seeing.

E Recently the ILO reported that 22,000 students dropped out of schools in Lebanon. What will you do to curb this phenomenon and to facilitate human development in Lebanon?

Sustainable human development is not only about education, but education is at the core. We have a problem with illiteracy in the most remote areas and we need to get to the point of zero illiteracy in Lebanon and develop technical vocational training schools. We need a teaching and educational system that is linked and adapted to the market, whether in Lebanon or abroad.

I am not an expert but I know that many of my friends that are experts tell me that there is not that much of a link– especially in vocational training and technical education– between the educational system and the market.

When one speaks of sustainable human development one also needs to talk about the environment. We need to protect our environment which is a disaster. It is part of developing our leading edge in eco-tourism, but also tourism [generally] through the management of our beaches and our quarries.  You will find that I have adopted the agenda of the green party when it comes to priorities I the management of or environment. Prioritizing the management of our environment is part of sustainable development by developing jobs in Lebanon in the sectors that are so far underdeveloped like the agriculture, industry and the knowledge industry. This would transform Lebanon into a hub of production in knowledge based industries. It is going to be a challenge as this is the industry of the next century; we need to develop that as a priority. That brings you to the introduction of simple things such as broadband for internet access in Lebanon. If you don’t develop that how can we be on the competitive edge in Information Technology (IT) and IT systems?

It’s not only about education. It’s a continuum of reforms and actions that fit into sustainable development that are broader than education, but are not only investor driven. There should be a political will to invest in areas that are too expensive. For instance, helping in agriculture is not that cost beneficial but it is important in maintaining the balance of our ecology. An ecological and environmental balance is required but it can only be achieved through some protection of whatever is left of our forests and the development of agriculture in rural areas where it is probably cheaper and more advantageous to knock down terraces that are centuries old which our grandfather’s built and put in a building.

E Électricité du Liban (EDL) has been a drain on the budget for over a decade. What will you do to decrease expenditure and improve efficiency?

It is a huge problem that is putting a huge weight of debt on our public finances. Ultimately, we need to get to a point where we introduce partial privatization of the sector, a public- private-partnership.

[This] can only happen if we have an agreement over a master plan which so far we have failed to do. This goes back to the issue of governance. Every minister comes to his ministry and comes up with a plan which is replaced by the next minister. We need to have a document that is validated by experts and particularly through the World Bank. This has to be voted on, applied and adopted by the ministry and the government in collaboration with the parliament.

E Privatization of the telecom industry has been stifled by politics and market conditions. How will you encourage competition and root out bad governance in the sector?

The telecom sector is essential but unfortunately it is looked at as a cash cow for the Lebanese government which is sad. Development is not being looked at in other sectors so the only source of income for the state is the telecom industry and we need to work towards less emphasis on that. This would liberate the sector and enable it to become cheaper, leaner and more effective, leading up to the proper implementation of the law and the role to be truly played by the overseeing authority which is the Telecom Regulatory Authority (TRA).

The sector must be handed over to the TRA. They must regulate the privatization. Privatization is a good thing but not at any cost. We need to privatize, but not only to maximize public funds of Lebanon, which is the wrong approach. One cannot privatize if you do not create incentives for the stock exchange market. We have finances that are walking on one leg; the other leg, which is the stock exchange market, is extremely weak. There haven’t been serious attempts at broadening the base of private investment into public companies that are listed on the stock exchange market. Companies must be linked, in a minimum number of stock percentages, to the stock exchange market. Proper management of the sector through the TRA is essential, limiting the greed and reliance upon the telecom industry so it becomes one of the sectors [that adds value]. That coupled with the development of the IT industry and with broadband which I still don’t understand why it is not in place.

E Your coalition allies, Hizbullah, have said that they are against the privatization of the telecommunications sector. How do you unite these two visions to get something done?

There are electoral alliances that don’t get to political issues. In Lebanon there are no ‘issue politics.’ There is no real discussion of issues. This is where we definitely differ with Hizbullah. The current telecom minister, who is a member of the Free Patriotic Movement, my allies, says that he is for privatization.

E In a minority form or a majority form?

Irrespective. We need to look at the best option for privatization. One of the options is to privatize through a public placement of shares, having a core investor, with the majority of shares being held by the general public through the stock exchange market. This will develop the stock exchange market and broaden the base of investors and bring in experts to manage one or more of the areas that are required to properly manage the sector of the telecom industry.

So you develop the stock exchange market, you broaden the base of the investors and you bring in experts to manage one or more of the areas that are required to properly manage the sector. When do you do that? At which point in time is it most effective to bring in a core investor or to place your stock on the stock exchange market are technical issues to be handled by technicians. But in general I think that I support the privatization of the sector and it needs to be done properly, with appropriate timing and in the most effective manner possible along the lines of what I personally believe is necessary. However, decision making should rest with the TRA and they need to be much more empowered and in charge of the sector.

E The balance of payments remains in the black but is dragged down by the balance of trade; what will you do to increase trade efficiency and volume and maintain a positive balance of payments?

Economic development of Lebanon will require the development of our production capacity. Not only of services, but of the knowledge industry which Lebanon is well placed to play a pivotal role. I believe that there is a third sector as well. Good development of our tourism and agriculture sectors would enable, in time to change the balance of trade.

We need to produce more so that we create more jobs. People will necessarily have to leave the country to find jobs elsewhere but what I would truly hate them to do is to leave for political reasons. It’s fine if they leave because the world is turning into a global village. But, I think they shouldn’t leave for political reasons and they shouldn’t feel persecuted or threatened by their security.

Something else that is on my agenda is finalizing a national action plan for human rights. I think that it is through such areas and initiatives. We have a responsibility as politicians to be better managers of the country and stop quarrelling amongst each other. In order to do so we need effective institutions which we do not have. It’s a matter of life and death, not only for the economy of Lebanon, but for Lebanon as a whole. This is truly the next challenge. If we succeed in doing that I think the rest of the puzzle will fall in place. The assumption is that if you have good working institutions then the right decisions will be made.