The financial crisis has triggered a political uprising. A popular revolutionary movement has taken to the streets to reject sectarianism and demand an end to corruption. Nonetheless, the regime's responses to Lebanon's economic problems have so far overwhelmingly favoured the elites, suggesting that the crisis could end up being "resolved" on the backs of the poor and the middle class and in a way that further consolidates sectarian politics.
Penalising ordinary citizens
For example, the state has refused to introduce capital controls, leaving it to each bank – whose major shareholders include ruling politicians – to decide how to ration cash withdrawals. In practice, this has allowed elites to shift their capital abroad while average citizens struggle to access their deposits.
A revolutionary manifesto
The new republic being promoted by the revolutionaries, by contrast, would take a radically different approach. The revolutionaries want to improve Lebanon, not abandon it. They believe that it is performing far below potential and that performance, meritocracy and social justice should replace corruption, cronyism and inequality. They want to build vibrant high-tech industries, make agriculture more environmentally sustainable, position the country as a cultural powerhouse and create more synergies with the diaspora.
To achieve these goals, the reform movement wants to pursue an orderly reduction of public debt, which would be underwritten with bank equity and to force haircuts on the 1% of depositors who account for more than 50% of all deposits. They support a moderate currency devaluation and radical improvement in the business climate to boost export competitiveness. And they would pursue deep fiscal restructuring, emphasising the elimination of corrupt practices and higher spending on social programmes and infrastructure. The inevitable recession would be softened with support from the international community, including the International Monetary Fund.
Today's infighting over the composition of the country's next cabinet is part of a larger battle for a new political settlement. The financial crisis poses a mortal danger to the country; but it also represents an opportunity for political change. Lebanon's future hangs in the balance.
Ishac Diwan holds the Chaire d’Excellence Monde Arabe at Paris Sciences et Lettres and is a professor at the Ecole Normale Superieure, Paris.