The official recognition of the magnitude of losses is the first step to exit the crisis
Lebanon’s economic revival rests on the conditions of establishing a new social contract and freeing the economic/political system from patronage politics
Taxpayers should not bear the burden of compensating financial losses: no to selling state assets
The government’s draft reform paper is an official recognition of the losses facing Lebanon’s financial system, and a first step in managing the crisis. The diagnosis revealed in the paper should be followed by clear accountability; it has become obvious that there can be no emerging from the crisis without a political transition that leads to structural changes to the failed system which led to this collapse.
The first step is an acknowledgement of the magnitude of losses and an honest communication with citizens.
The magnitude of losses facing Lebanon is one of unparalleled historical proportions by international standards. The paper has officially confirmed what Kulluna Irada and numerous experts have been warning about for the past years. The reality will prove to be harsh and bitter. Lebanese citizens have a right to know the scale of losses in full transparency and objectivity. It is now time to end the denial surrounding our financial situation, a denial which prevented appropriate decision-making and exacerbated the level of losses. Every day that passes without action exacerbates the crisis and increases our losses.
These losses are due to multiple crises in Lebanon’s financial and economic systems, which resulted from years of mismanagement of public funds and accumulation of losses, in addition to an unparalleled hole in BDL’s balance sheet that was masked for years. BDL’s losses account for over 40 billion dollars - a figure that exceeds the size of Lebanon’s GDP - without any oversight attempts to question monetary decisions and hold BDL to account by successive Ministers of Finance, cabinets and parliaments.
Emerging from the crisis will require restoring confidence in the system by defining responsibilities, notably through an independent audit of BDL and other public accounts, as well as reforming the Lebanese power structure and current way of doing politics.
The draft paper has come as a shock to Lebanese citizens, many of whom are still coming to terms with the loss of income and wealth and lifestyle deterioration. Confidence is lost, and anger is only held back by the vital need to respect confinement measures in the face of the coronavirus outbreak. There is a need to rebuild confidence and transition towards accepting the sacrifices that will be required, for the sake of state building. To do so, we must build a new social contract for Lebanon based on durable and just pillars.
The diagnosis outlined in the leaked paper, which classifies the crisis facing the country as one not caused by foreign factors but rather as a homegrown one, cannot be followed by a reform plan without clearly defining the beneficiaries of the current financial, economic, and political systems, who saw societal wealth transferred to their benefit, leading us to the current crisis. This process must be followed by placing responsibilities and subsequently ensuring accountability measures; this process must be launched by an audit of BDL’s accounts and those of all public institutions.
Three months after its formation, the Cabinet must take bold and decisive measures that demonstrate its ability to enact real and effective structural change to free Lebanon’s political, financial, and economic system from the old way of doing politics, thus restoring confidence in the State and its institutions.
We call on the government to use the draft paper as a framework to develop a comprehensive rescue plan, with the end-goal of establishing the foundations of a strong and just civil state.
Kulluna Irada calls on the government to rapidly begin work on and adopt a multi-pillared rescue plan in line with the diagnosis and general directions of the draft paper. While we have many technical comments which we will publish at a later stage, we believe it is important to first outline the basic principles on which this plan should be built: