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French Version

Can social, economic reform come in from the cold while talks continue ?

The national dialogue is in a state of flux. Some important breakthroughs have been achieved in recent weeks; other differences seem intractable. This reality reinforces the urgent need for the political elite to turn its attention to the long-awaited social and economic reforms, irrespective of the political fluctuations that have hindered development in Lebanon before.

Indeed, the recent outcry of the commercial and financial sectors and the attempt by the finance minister of to introduce economic reform to the national dialogue agenda are laudable reminders to politicians of their responsibility toward jumpstarting the economy and addressing pending social woes.

Some observers link the social and economic reform dialogue purely to the modalities of the donors' conference. However, Lebanon needs to undergo this reform process for its own sake, for the sake of its young generation, not for the sake of the international community. Indeed, the ultimate challenge for Lebanon is to keep its young, talented and entrepreneurial workforce at home rather than export them in return for remittances used for consumption. The challenge is to give them hope and provide for them the opportunities to build Lebanon and propel it into one of the strongest emerging economies with unique Lebanese branding which is hard to beat.

All this requires reform. "Reform talk" can get too esoteric, too removed, with much too much technical jargon: debt to GDP, primary surpluses or deficits, levels of reserve, etc. These are all very important measures of inherent strengths or weaknesses in any economy. They signal deferred costs to society and short- and medium-term risks. But underlying these esoteric measures are real problems experienced by citizens every day. Focusing on these issues would demystify what is meant by "reform" and help build national support for it.

Take the power sector for example. It is responsible for many of Lebanon's economic, fiscal, environmental and social woes (I prefer ills). It also has become a symptom of the inability of the successive governments to address a glaring example of public-sector failure. EDL is costing the country over $2 million per day in subsidies, while charging the consumer the highest tariffs in the region. A recent World Bank survey of businesses (still unpublished) reveals that 94 percent of businesses with over 10 employees have parallel power generation to supplement EDL supply (which was interrupted 220 times last year by their estimate)!

The necessary steps for reforming the power sector are pretty obvious. Indeed, the last three governments came up with very similar solutions, differing only in minor details. Most recently, the Water and Energy Ministry went further to develop a detailed action plan and a timetable for implementation. There is agreement that EDL needs to be corporatized under the Commercial Code; that a new board of directors be appointed and composed of members of high caliber and integrity; and that management capacity be enhanced through management or service contracts of specific operation and maintenance functions- including bill collection and loss reduction, towards the ultimate privatization of EDL. There might be other legitimate questions as to the scope and speed of private-sector participation in such a process. These are not ideological, but rather empirical questions requiring immediate work on EDL's operations, and testing the market's appetite for various forms of private participation.

Launching this process should not await either further breakthroughs in the political dialogue or the convening of the donors' conference. The Lebanese people are paying daily - and dearly - for the cost of the delay, through added national debt, power outages, less competitive exports, lost jobs and a worsening environment.

The power sector is perhaps the most egregious, but not the only sector badly in need of reform. The state of national health, education, solid waste, social security, pension, tax, business procedures, justice, etc. are all far from what Lebanon aspires for and deserves. Efforts by individual ministries can be heroic, but they frequently lack the national cover needed for passing new laws, reforming procedures, selecting qualified personnel and pushing through with implementation.

Now that it is clear to all parties that the political dialogue is not likely to resolve all pending issues quickly, it is time to bring social and economic dialogue in from the cold and move into tangible action that injects hope into young Lebanese men and women pondering to leave their beloved country, perhaps for ever.

Beirut 27-03-2006
Omar Razzaz
The Daily Star

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