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Saudi Arabia

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With tensions between Lebanon and GCC countries rising everyday, it is essential to examine how Lebanon’s economy has become dependent on oil-producing states and the man who helped make it happen. Paul Cochrane reviews the latest biography on arguably the most powerful Prime Minister Lebanon has ever seen.   

 

By Paul Cochrane 

Academic Hannes Baumann notes early on in Citizen Hariri: Lebanon’s Neoliberal Reconstruction (Hurst, 2017), that “Rafik Hariri became even more politicized in death than in life”. This is especially true when it comes to powerful political figures with sizable organizations behind them that want to capitalize on assassination.

Posters of Hariri, like so many other slain Lebanese politicians still adorn billboards 12 years later, while for years outside the Mustaqbal TV building in Kantari there has been a billboard demanding al haqiqa (the truth, about his assassination) with an electronic ticker beneath showing the number of days since Hariri was killed in a macabre blast outside the St. George’s Hotel on Beirut’s Corniche.

The son of a Saida fruit-picker, Rafiq Hariri in some sense bucked the historical trend, having been neither a militia leader nor one of the  established zu’ama. While a ‘self-made man’, Hariri was nonetheless politically assisted to be twice prime minister and a driving force in the country’s post Civil War political-economy landscape.

Like F. Scott Fitzgerald’s The Great Gatsby, who inherited tremendous wealth from a benefactor, Hariri benefited from the largess of the Saudi royal family, initially with construction deals and later as an interlocutor for the House of Saud in Lebanon during the civil war.

Hariri emerged, like Najib Mikati and others, onto the Lebanese political scene as the result of petro-dollar contracting fortunes initially made in the Gulf, crucial to understanding Lebanon’s post civil war environment. This is why Baumann, a German academic currently teaching at Liverpool University, opted to use an individual biography – Hariri’s – to explain social, political and economic change in Lebanon.

Neoliberal Lebanon

While there was little inkling in the 1980s that Hariri would rise to such political prominence, he certainly had business interests in the ‘old country’. In 1983, Hariri took control of top positions of Banque Mediterranee (BankMed, now 100% owned by the Hariri family), and in the same year drew up plans to reconstruct downtown Beirut. As Baumann put it, “it is hardly surprising that a contractor such as Hariri would regard a real estate project [Solidere] as his country’s salvation”.

Preliminary work began that year via Hariri-owned Oger painting the facades of buildings in the Mara’ad area and building a prototype block of houses in Suq Tawil, while the army, backed by the Lebanese Forces, fought an eight hour battle to evict the war-displaced squatters from Wadi Abu Jamil. Such moves reflected Hariri’s ability to wheel-and-deal to get projects off the ground, working with President Amin Gemayel to develop downtown, the littoral north of Beirut (around Dbayeh), and the southern suburbs.

Yet while Hariri had Gemayel’s backing (but not political support, at least to be appointed prime minister as the Saudis wanted) it did not allow him to develop the southern Beirut shoreline into high-end tourism and luxury residences: “The predominantly Shia inhabitants of the area interpreted the resettlement plans by the Maronite president and the Sunni contractor as an attack on their community,” writes Baumann.

Baumann’s text, emphasized in the subtitle Lebanon’s Neoliberal Reconstruction, is particularly adept at explaining how Hariri brought the global economic zeitgeist of the post-cold war era – neoliberalism – to the country and gave it a local twist.

As Baumann observes, “Hariri and his technocrats were importing global templates of neoliberal urbanism, currency management and privatization, but regional and domestic factors were setting the limits of Lebanese neoliberalism.”

Neoliberalism is one of those sticky terms that is hard to exactly define, as Baumann explains. He defines it as both an economic orthodoxy and a class project that restructures the state, emphasizing these inherent contradictions of “illiberal and monopolistic practices with free-market rhetoric.”

Privatization for example is a top goal of neoliberal doctrine, but Lebanon’s clientelist structure prevented the selling-off of state utilities and assets, as politicians wanted to keep hold of ministries and, importantly, retain jobs for their constituencies.

“Hariri’s policies concentrated wealth, resulting in high unemployment and continued poverty, while most Lebanese remained dependent on politicians for the provision of jobs, education or health care. This was the economic basis of clientalism. Inequality and a lack of public services were a direct result of Rafiq Hariri’s neoliberal economic policies.Neoliberalism thus reproduces the political economy of sectarianism,” writes Baumann.

Solidere

When it comes to Solidere, the company created in 1994 to reconstruct downtown, Hariri used the neoliberal logic of the state playing a major role in extracting value from the city at the expense of the populace. This included signing over the land reclaimed from the Normandy landfill to Solidere, tax breaks for 10 years and not properly compensating many of downtown’s original property owners (a point still made in big letters on the side of the St. George’s Hotel: ‘Stop Solidere’).

As Baumman observes, “the mechanism by which property was expropriated illustrates one of the contradictions between neoliberal orthodoxy and practice: while one of the main functions of the liberal state is to defend property rights, Solidere represented an enforced, rather than a voluntary, transfer of such rights. The interventionist neoliberal state enables new forms of accumulation by dispossession.” Hariri’s real estate obsession as a core economic driver has also had long lasting negative ramifications: a building bonanza that has squeezed the less well-off out of the capital, cemented over archaeological sites, and privatized the few remaining public spaces, including beaches.

Hariri’s plan for economic reconstruction being based on physical infrastructure was a “fallacy”, writes Baumann, as instead the Lebanese economy was absorbed into the rentier system of the Gulf oil states and as an outlet for Gulf capital (by rentier he means an economy which derives all or much of its income from resources, such as hydrocarbons, while another definition is an economy deriving income from property or securities – so not industry or manufacturing). Without the Gulf and its petrodollars, argues Baumann, Lebanon would be on a slippery downward economic slope.

Indeed, Solidere gives an indication at the micro level of how the whole country could be in economic dire straits if the Gulf connection sours. For several years downtown (Beirut Souks excepted) has been a ghost town with restaurants shuttered, and stores having moved out due to the drop in Gulf tourism. As of August 2017, 18.7 percent, or 250, of all residential apartments in downtown have not be sold, worth $750 million (the average value per apartment is $3.1 million), according to RAMCO figures.

The current malaise in much of downtown is indicative of one the problems of utilizing a neoliberal urban model in a not very stable part of the world: the Arab-Israeli conflict and its ramifications for Lebanon; Syria; and regional and global powers’ involvement in Lebanon and the wider Middle East.

Baumann links Hariri’s Solidere plans to his technocrats, supposedly apolitical globalization experts that were above Lebanon’s political sectarian fray, who developed Solidere and then joined his government. “They spoke the language of neoliberalism as an economic orthodoxy. They had allied themselves with the Gulf capitalist Rafiq Hariri, who was using neoliberalism to assert the power of this faction of capital in the Lebanese economy”, colonizing “state institutions and repurposing them to serve their goals”.

But these ‘apolitical technocrats’ got caught up in sectarian politics, not just by virtue of being connected to Hariri, while Hariri himself had to increasingly play the sectarian card in his own politics, especially from 1998 onwards among his Sunni constituency to get his party elected.

Hariri began “to pose as the main defender of his community’s political interest, and his philanthropy allowed him to claim Sunni leadership in Beirut by neutralising the Maqasid association – thus political damaging Tammam Salam – and expanding Hariri Foundation health centres”.

It was a strategy however that did not always work. As Baumann observes, in 2004, Hariri was far from popular among his Sunni constituency, including in his hometown of Saida – “a list backed by Nasserite MP Musata Sa’d won all 21 seats on the council, defeating Hariri’s list”. In Beirut, the Unity List won all 24 seats, “but a low turnout of only 23 percent undermined the image of victory”.

As Baumann observes, politicians were willing to play along with neoliberalism when it suited them, but not when it would challenge their power base.

Banks, Debt and High Interest

It was Hariri’s meddling with fiscal policy however that had major ramifications for the country, which continue to hang like a Damocles Sword over all Lebanese heads. Hariri made the decision to peg the Lira to the US greenback and seriously ramp up debt to fund reconstruction.

This led to a ‘merry go-round’ of government borrowing at high interest rates and Lebanese commercial banks overwhelming financing that debt. On the one hand this has caused Lebanon to have one of the highest debt to GDP ratios in the world, while secondly has enriched the elite and the banks. As AUB’s Jad Chaaban has noted, some 5 percent of the population control over 70 percent of the wealth in the banks.

Equally devastating for the economy, and where Hariri’s neoliberal agenda differed from elsewhere, was that high interest rates discouraged the banks and the wealthy from investing in new businesses or the Beirut Stock Exchange (which has just 15 listed companies, including Solidere). Indeed, why would you, when you could get around 15 percent during the early Hariri years, and today, 6 percent or more on the Lira.

As Freddie Baz, chief financial officer at Bank Audi, said in 2010, “Today it is a rentier economy; if I can still get 6 to 8 percent interest, why should I understand (invest in) the stock market?”

Billions of dollars in profits have been made from the debt, and in typically neoliberal outcome, little has been given back, while banks are strongly linked to politicians.

As Baumman notes, “lending to the Lebanese government remains the backbone of the banks’ business. In October 2015, claims on the public sector accounted for 20.6 percent of total assets of Lebanese commercial banks, while 38.1 percent were deposited with the central bank.”

A vessel for Gulf investment

Baumann ends his book on a negative note on the country’s contemporary situation. He argues, as have others, that Lebanon could very well be banking on magic, given the high debt-to-GDP ratio, the weak economy, minimal foreign direct investment, and the lack of a comprehensive economic policy.

Furthermore, the local economy is overly dependent on Gulf petrodollars, be it in terms of remittances from Lebanese working in the Gulf (two-thirds of all remittances), to Gulf investment, capital and tourism. The latter has largely dried up due to the Syria conflict, and the Gulf’s economic fortunes are looking less rosy than they have been in decades, due to low oil prices and economic diversification moving at a snail’s pace.

“Lebanon has become a vessel for Gulf investment, and is now almost completely dependent on the oil monarchies. Rafiq Hariri was the chief architect of this dependence…Lebanon is tied to cycles of boom and bust in the Gulf,” writes Baumann.

The Gulf states have left it too late to wean themselves off oil, and Lebanon has left it too late to wean itself off the Gulf. As Baumann acerbically concludes, “Lebanon still has little to offer beyond mountains, beaches, a pleasant climate and clever bankers. Rafiq Hariri took no steps to transform the Lebanese economy to a more sustainable model. His political rivals – mainly former militia leaders – have no workable model of economic development beyond predatory rent-seeking through state largess.”

While Hariri’s political-economic legacy negatively impacted the majority of Lebanese and has saddled the public with a gargantuan debt, even his actual death has cost the Lebanese a pretty penny. The Special Tribunal For Lebanon (STL), set up to investigate his assassination, has already cost north of $325 million, with 51% coming from UN member states, the remaining 49% from Lebanon.

Paul Cochrane is an independent journalist based in Beirut, covering the Middle East and Central Asia. His work has been featured in over 80 publications, including Reuters, Money Laundering Bulletin, Middle East Eye, Petroleum Review and Jane’s. You can find his work at www.backinbeirut.blogspot.com

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Keep your friends close, but keep your enemies closer. I’m not a fan of quoting cliches, but in these Machiavellian times, few phrases seem to articulate the situation better. Take the case of the recent media campaign praising Saad Hariri, Lebanon’s recently resigned prime minister.

Now it’s very normal to see posters praising politicians hastily strung up on light posts across Beirut. As you would expect, these are usually produced by a PR company or low budget design shop associated with the politician in question and hung up haphazardly by his supporters, illegally, often under the cover of night.

But what if the group putting up the billboards is not loyal to the politician in question, but actually allied with his enemies?

I began to wonder about this when I saw a Facebook post revealing Hariri billboards in or around neighborhoods loyal to his rivals, Hezbollah and Amal.

Mar Elias, photo: Dina J. Salem

The next day on my way to work, I noticed more of the same posters with the same font and message “#We are with you” plastered across many parts of Beirut.

From downtown:

To the corniche:

Bliss street:

And Hamra:

On nearly every light post, as far as the eye could see:

Yet the last few locations are not known to be strongholds of Hariri, but of other parties such as Amal and the SSNP. This was made abundantly clear during the clashes of 2008, when militants from these parties took over the streets fairly easily and strung their flags across these locations.

In the decade since, SSNP flags have appeared regularly across Hamra street and the party’s annual march turned into a military-style parade a few weeks ago that saw hundreds of party faithful take over the entire of Hamra street:

SSNP march, Hamra street, Beirut, Sept. 2017
SSNP march, Hamra street, Beirut, Sept. 2017

I thought about all this when I looked up at one of the posters, which had been put up so shoddily, it appeared to give Hariri a grimacing look:

 

I asked some tough-looking middle aged men sitting in plastic chairs below the posters if they knew who had put them up. At first one of them, a burly man in his late 40s, answered by saying “the Lebanese people put these posters up” and “it’s natural for a people to support their prime minister.”  Sure, I replied,  there is public support and then there are printing companies that print hundreds of these and distribute them in trucks. He smiled and vaguely suggested it was “political parties… all the parties,” that worked together to install the posters in their respective neighborhoods.

But I pressed him further: “But only certain parties can do that in Hamra.” Finally he conceded. “Yes we are the ones who put those up. The Hezb, the Harake and the Oumi Souryi.” This is shorthand for Hezbollah, Amal and the SSNP.

That’s a pretty savvy, next-level media strategy isn’t it, I replied. “Well the Saudis are donkeys,” he said nonchalantly.

“And what about this one,” I continued, pointing to the grimacing Hariri. What happened there? The man motioned to one of his cohort sitting in a chair behind us. “That’s Ali’s fault, I told him to fix it, he didn’t know what he was doing.” Then Ali shrugged and shot back: “You didn’t give me enough wood to put it up properly.”

I left the bickering men and tried to corroborate the story elsewhere on the block. But most people said they had not seen who had put the posters up because they found them in the morning when they opened their shops. So apparently the operation had happened overnight. But another group of men admitted laughingly that it was indeed the “Hezb, Harake and Oumi.” And they thought it was pretty hilarious too.

If this is true, could the Saudis have ever imagined this outcome? Were they assuming that Hariri’s resignation would have been taken at face value and that his opponents would have simply said good riddance, creating greater division in the country? Could the Saudis have imagined that Hariri’s opponents would be demanding his return even more vociferously than his allies?

Of course this goes beyond billboards: the President of Lebanon and the leader of Hezbollah-traditional opponents of Hariri–have been demanding his return on a near daily basis.  Even the leader of the Catholic church in Lebanon, Cardinal Bechara Rai has demanded his return, making an unprecedented visit to the Wahhabist state.

This spawned some interesting memes. Here the two are speaking in code:

The highlighted letters in the Hariri caption say: “I’m being detained” to which Rai replies: “We all know.”

Perhaps the Saudis had imagined the Lebanese would react in a simplistic “sectarian fashion” where politicians or crown princes prioritize their own sect above all others. I wonder where they got that idea?

Suffice to say, Hariri’s opponents and even internet trolls have successfully thrown the ball back into Saudi Arabia’s court and the Saudi leadership probably didn’t see this coming. But since the Saudi royal court (or whatever is left of it) has effectively declared that Lebanon is at war with them, we can only hope the disintegration of their media strategy will give them pause before pursuing further actions on the ground.

Wouldn’t it be great if all wars were limited to creative media messaging, and the winner could be decided with likes and retweets instead of missiles and bullets?

Via: Abbas Hamideh

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Hariri meets Velayati at his office in Beirut. Source: Mehr News

“We praise Hariri, the government and the people for the recent victories in the face of terrorist forces.”

Today this quote may sound like it came from Saudi Arabia, where Saad Hariri, Lebanon’s former prime minister, is supposedly taking refugee due to what he says is a threat against his life from Iran. But would it surprise you if this flattering quote came from none other than an advisor to Iran’s supreme leader who visited Hariri just one day before he departed and announced his resignation from Saudi Arabia?

The advisor, Ali Akbar Velayati visited Hariri last Friday and added: “The formation of a coalition government between March 8 (Hezbollah-led coalition) and March 14 (Hariri-led coalition) is a victory, a great success and a blessing for the Lebanese people.”

“We had a good, positive, constructive and practical meeting with Prime Minister Hariri, especially since the Iranian -Lebanese relations are always constructive and Iran always supports and protects Lebanon’s independence…” 

Does this sound like an Iran that is threatening Hariri or congratulating him?

But you might say, hold on, wait a minute- this must be some sort of Iranian propaganda. Hariri would never endorse this speech, which is a total lie.

Actually not only did Hariri endorse this speech, he sent it out through his email list to hundreds of journalists on Friday, shortly after the meeting. In fact Hariri sends an email almost every day about his speeches and those that visit him. Surely his staff would not have broadcast a message Hariri believed to be harmful propaganda?

Also have a look at the pictures. Hariri seems to be smiling and very at ease in both shots:

 

Of course this does not substitute for an actual transcript of the meeting and we may never know what all was said. But it does seem odd that Hariri would be distributing a speech by someone who apparently just threatened his life.

I’m posting this because you won’t hear this narrative in much of the US mainstream media coverage, which is reporting Hariri’s story with little question, while demonizing Iran as usual and touting Saudi Arabia’s so-called “crackdown” against corruption, also without question:

An alternate narrative circulating in Beirut is that Hariri’s life was not threatened (the Lebanese army and police both denied having any intel on this), but that he resigned out of fear of upsetting Saudi Arabia, where he and his family have huge amounts of financial assets.

What’s also interesting is that the Saudi-led blockade against Qatar also began after a warming of relations between the gulf state and Iran. In that case, Saudi Arabia couched the move as part of the war on terrorism. So is the war on corruption just the latest pretext to consolidate power? Can Saudi Arabia simply not tolerate any cracks in its campaign against Iran?

Like Qatar, Hariri also seemed to be warming up to Iran and its allies in Lebanon over recent months, speaking frequently about the need for dialogue and compromises, working on joint legislation with pro-Hezbollah MPs on such issues as a raise for civil servants and electoral reform. That’s what was so surprising about his resignation-things actually seemed to be going relatively well in Lebanese politics ( a sentiment confirmed by the leader of Hezbollah) and elections were finally expected this year.

Here is the full email as sent by Hariri’s office. Notice that Hariri had other meetings that day, including one with the head of a television network in an effort to combat intellectual piracy and stolen cable channels. It seems like a mundane issue and an odd way to end a day marked by fear.

Full email below:

 

Press Office of the President of the Council of Ministers Saad Hariri

03- 11– 2017

Hariri receives Velayati

 

The President of the Council of Minister Saad Hariri received today at the Grand Serail the senior adviser to Iran’s Supreme Leader, Ali Akbar Velayati, accompanied by the Iranian Ambassador to Lebanon Mohamed Fathali and a delegation, in the presence of Hariri’s chief of staff Nader Hariri.

After the meeting, Velayati said: “We had a good, positive, constructive and practical meeting with Prime Minister Hariri, especially since the Iranian-Lebanese relations are always constructive and Iran always supports and protects Lebanon’s independence, force and government.

We praise Prime Minister Hariri, the government and the people for the recent victories in the face of the terrorist forces and we hope to see more success. The formation of a coalition government between March 14 and March 8 is a victory, a great success and a blessing for the Lebanese people.

The victory against terrorists represents the victory of all of us against terrorism, and what has been achieved on the Syrian arena, as well as the victory of the Syrian government and people against terrorism, is our victory and our success. We know that these terrorists are supported by the Zionists and by the Americans. Defeating them means defeating the Zionist and American conspiracies against us. The victory of the Iraqi government and people against the separatist movement is also another form of those victories. In conclusion, the Lebanese victory against the terrorists and the Syrian and Iraqi victories represents the victory of the resistance axis at the level of the region and this is the victory of us all. We listened to Prime Minister Hariri regarding the actions taken at the regional level and we support them for the interest of the region.”

 

Electoral law Committee

Prime Minister Hariri headed at the Center House a meeting of the Ministerial Committee for the Implementation of the Electoral Law, attended by ministers Ali Hassan Khalil, Mohammed Fneish, Nouhad Al-Machnouk, Gebran Bassil, Talal Arslan, Ayman Choucair, Youssef Finianos, Ali Kanso and Pierre Bou Asi and the Secretary General of the Council of Ministers Fouad Fleifel.

 

OSN

Premier Hariri met with the CEO of OSN network, Martin Stewart, who said that he discussed with Prime Minister Hariri the participation of the network in the conference to protect the media creativity from piracy and the need to protect intellectual property in Lebanon, thus preserving the Lebanese economy and creativity.

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In the video above, LBC TV show host Joe Maalouf takes multiple shots a Saudi Prince Alwaleed Bin Talal, one the world’s richest men, who also owns significant stakes in LBC. Maalouf accuses the prince of laying off some 400 LBC employees without compensation when he bought a majority share in the TV corporation- one of the region’s most popular- in 2012.  Maalouf begins by airing a sarcastic montage of the prince’s charity work and the ubiquitous philanthropy of his Lebanese aunt Leila Solh (who is on Lebanese TV almost every night helping the poor and accepting awards). Maalouf then ends by airing a parody skit of the Prince and quoting a New York Times piece that linked him and other Saudi princes to reported support for Al Qaeda.

“400 Lebanese families have been asking for their compensation for over three years… and the prince is funding terrorism,” Maalouf says.

Maalouf goes on to claim that the families’ compensation claims are known by Lebanese politicians but none have acted, he concludes, because “even dignity is for sale.”

It’s not very often that you see Saudi Princes mocked on Arab TV, much less when the Prince in question owns a significant chunk of said TV channel. LBC had previously raised the issue last year.

Initially the LBC buyout by Prince Alwaleed was hailed as great news for LBC’s expansion plans, but subsequent articles revealed growing tensions over a merger with Bin Talal’s Rotana entertainment group and the reported split of the local LBC channel from its production company and international affiliates.

It’s not clear to what extent Alwaleed has influence over the local broadcaster or how long he will tolerate its attacks, which seem unprecedented in a region where royalty is rarely questioned, particularly its financial assets and dealings. In other words, I would be surprised if this video doesn’t remain online for very long, so you might want to save it or have a look soonish.

UPDATE:

All this comes on the heels of yesterday’s reported “permanent” closure of Alwaleed’s Al Arab news channel. Why is the prince suddenly under attack from all fronts?

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I’ve seen this Ferrari before. It is always parked in front of the plastic surgery clinic of Dr. Nader Saab, as indicated in the Arabic lettering on the window behind it.

But this is no ordinary quarter of a million dollar sports car. Have a closer look and you’ll notice that the license plate is not even Lebanese, it is Saudi Arabian as indicated by the “KSA” on the right corner. The plate number is “1”

IMG_5163

So why does a Lebanese plastic surgeon have the seemingly most important license plate number in Saudi Arabia? Suggestions welcome!

According to his website, Saab’s clinic is “the first and only private esthetic surgery clinic in the world” offering “full service 5-star luxury in catering to the esthetic desires of its clientele.”