After the Beirut Explosion, Disaster Capitalism Has Lebanon in Its Sights

By Joseph Daher, Jacobin

24 August 20

The explosion that devastated Beirut was an indictment of the parties that have misruled Lebanon for decades. Now, however, those parties are using the disaster as a pretext to deepen neoliberal policies, with French leader Emmanuel Macron and the IMF egging them on.

n August 4, 2020, an explosion of unprecedented magnitude in Lebanon’s history occurred in the port of Beirut. It left more than 180 people dead, including Lebanese, Syrians, and other nationalities; more than 6,500 injured and 300,000 homeless. Dozens of people also remain missing, and entire districts of the Lebanese capital have been devastated.

The explosion devastated large parts of the port of Beirut, which received more than 70 percent of the value of the country’s imported goods in 2019. It also destroyed Lebanon’s strategic grain reserve. The material damage amounts to billions of dollars: the Lebanese authorities have put forward an estimate of $15 billion.

A Deepening Crisis

The explosion has made an already dire socio-economic situation unimaginably worse, after the economic crisis which developed in October 2019 and the effects of the pandemic. The pandemic drove the poverty rate to around 55 percent and increased unemployment to over 35 percent.

At the same time, the value of the Lebanese currency has been in free fall for several months, leading to inflation of over 400 percent. The purchasing power of the popular working classes has diminished massively.

The depreciation of the currency hit especially hard in a country that imports much of what it consumes from abroad: in 2019, Lebanon’s trade deficit was in excess of $16 billion, with imports more than five times greater than exports. Prices have been soaring and goods disappearing.

Many international and regional heads of state announced their support for the Lebanese people following the August 4 criminal accident. However, as we know from previous crises, states and international financial institutions (IFIs) see these moments as an opportunity to promote and deepen neoliberalism, including the extension of the market economy to various economic sectors hitherto dominated by the state.

Macron’s Shock Doctrine

A videoconference on Lebanon was held a few days after the explosion at the initiative of French president Emmanuel Macron. It brought together representatives of around thirty countries, Western and Arab, and officials of the International Monetary Fund (IMF), the World Bank, the International Committee of the Red Cross, and the European Investment Bank.

They agreed to provide emergency assistance to Lebanon for a total of €252.7 million. The same actors also promised billions of dollars of financial support, but on the condition that Lebanon implement “institutional reforms.”

Macron, who made a high-profile visit to Lebanon a few hours after the tragedy, has insisted on the formation of a government capable of carrying out “reforms.” The managing director of the IMF, Kristalina Georgieva, declared that it was “essential” to “break the deadlock” over discussions between Lebanon and the IMF, which began several months ago, through the implementation of “reforms.”

The IMF made implementation of these “reforms” a prerequisite for any release of financial aid. So did the participants in the Paris conference held in April 2018 — “Conférence économique pour le développement, par les réformes et avec les entreprises,” known as the CEDRE — which pledged more than $11 billion in loans and grants for Lebanon. In return for these funds, the Lebanese government must commit to developing public-private partnerships, reducing debt levels, and imposing austerity measures.

The dominant sectarian and bourgeois political parties agree with these measures, despite their rivalries. The Lebanese national unity government was composed of all these parties and led by former prime minister Saad Hariri, before his resignation following the outbreak of the protest movement in October 2019.

Its 2020 budget plan included the merging or abolition of several public institutions and the privatization of the state-run power sector, all of which met the requirements of the World Bank, the IMF, and the CEDRE agreement. Such policies will merely exacerbate the neoliberal disaster into which Lebanon has been plunged since the 1990s and the end of the country’s civil war.

Neoliberalism and the Middle East

After the Lebanese civil war, the country embarked on the path of economic liberalization that had been pursued elsewhere in the Middle East since the 1980s, with an emphasis on deeper integration into the global economy and private-sector growth. These neoliberal policies strengthened the long-established characteristics of the Lebanese economy: a development model oriented to finance and services, in which social inequalities and regional disparities were very pronounced.

Lebanon has one of the most unequal wealth distributions in the region and the world, and one of the highest concentrations of billionaires per capita. In 2019, the top 10 percent of adults owned 70.6 percent of the country’s wealth.

In the MENA (Middle East and North Africa) region, the privatization of public goods began with the neoliberal policies of the early 1990s — mainly in the industrial, real estate and financial sectors. In recent years, the IFIs have promoted public-private partnerships (PPPs) around the world as a new tool for privatization and the management of public goods by private entities. The MENA region is no exception.

A clear example is the activity of the European Bank for Reconstruction and Development (EBRD) after the beginning of the Arab popular uprisings in 2011. One of the EBRD’s main objectives has been the promotion of infrastructure PPPs. PPP models aim in particular to foster private management of public infrastructure (especially in the fields of telecommunications, electricity, and health). IFIs such as the EBRD have very often insisted on the necessity of privatizing such infrastructure as a condition for the provision of loans.

“Saudi Thatcherism”

At the same time, several Middle Eastern countries have adopted PPP legislation in order to double down on privatizations of public services and state infrastructure. In Saudi Arabia, PPPs have become a fundamental element in the economic and political strategy of Vision 2030 promoted by Prince Mohammad Bin Salman. The 2020 National Transformation Program, presented after the 2030 Vision, details the economic policies of the new Saudi leadership team and places private capital at the center of the future Saudi economy.

The Saudi government has stated its plans to organize PPPs for many government services, including sectors such as education, housing, and health. The Financial Times described the plans as “Saudi Thatcherism.”

The Saudi kingdom has also used the COVID-19 crisis to impose cuts in subsidies, with the elimination of the cost-of-living allowance, and a sharp increase in VAT from 5 to 15 percent. Meanwhile, the kingdom’s sovereign wealth fund has invested more than $8 billion since the start of the pandemic in behemoths of the global economy such as Boeing and Facebook.

In similar fashion, the Syrian regime accelerated its neoliberal policies following the 2011 uprising and the increasing militarization of the conflict from 2012 onwards. It passed a PPP law in January 2016, six years after the law had first been drafted. The legislation authorizes the private sector to manage and develop state assets in all sectors of the economy, with the exception of oil. The “new economic strategy” known as the National Partnership, launched a month later in February 2016, cited the PPP law as a reference point.

These regional dynamics have unfolded in times of economic crisis, war, and now during the current pandemic. They are not pragmatic or “technocratic” measures, as the regimes enacting them have often claimed. Rather, they should be seen as a way to transform the general conditions for capital accumulation and empower economic networks linked to these regimes.

The Cost of the Crisis

The main Lebanese parties and different fractions of the bourgeoisie have exploited privatization schemes and their domination of ministries to strengthen networks of patronage, nepotism, and corruption, while the majority of Lebanon’s population, both foreign and native-born, has suffered poverty and indignity. Although the parties all agree on the IMF and CEDRE conference measures discussed above, there is a dispute between them arising from the economic crisis of October 2019.

That dispute concerns the scale of the losses that should be taken into account as a basis for restructuring the public debt, which amounted to $93.1 billion at the end of May 2020 (more than 180 percent of Lebanese GDP). The Lebanese banks have been running a kind of Ponzi scheme since the early 1990s, offering high interest rates to attract US dollar deposits and then lending the money to the government — until the deposits ran out. However, the banks and the Central Bank of Lebanon (CBL) now do not want to take any responsibility for the losses assigned to them by the economic recovery plan of Hassan Diab’s government.

They are supported in this position by parties like the Future Movement of Saad Hariri (who is also the owner of a bank), and Nabih Berri’s Amal party. Under the government plan, the capital of Lebanon’s banking sector would be written off, with a full bail in of shareholders. The plan calls for bank recapitalization; institutions that are unable to raise fresh capital could be forced out of business.

The banks also reject the proposal for a forensic audit of the CBL’s accounts, which would trace the source of transactions recorded on its balance sheets, or the adoption of a law formalizing the de facto capital controls that have been imposed by banks on account holders for almost a year.

With support from some politicians, Lebanon’s banking elite is resisting any such law. Wealthy Lebanese citizens have continued to shift their assets offshore, while the majority of the country’s people face restrictions on how much they can withdraw from their bank accounts.

The banks and their political allies also refused to allow the previous government to default on its debt in Lebanese pounds, as recommended by the IMF. Lebanese banks hold 28.8 percent of total public debt, which is equivalent to $16.3 billion in US treasury bills and $10.5 billion in Eurobonds (debt securities denominated in foreign currencies).

Lebanon’s bankers have rejected any responsibility for their major role in the country’s economic crisis. In response, protesters have targeted financial institutions over the past few months, ransacking head offices and bank branches in different regions of the country. But the appointment of a new government of national unity in the near future, especially one which might be headed by Saad Hariri, would strengthen the position of the banks.

“All Means All!”

In this framework, Emmanuel Macron’s call for a united national government bringing together all the dominant political forces can only help preserve the existing sectarian and neoliberal political system, and the social status of its elites. This solution has the support of many countries in the region and the wider world, and would allow for the deepening of neoliberal “reforms.”

This political formula is also the option of choice for the sectarian, bourgeois parties after the resignation of Hassan Diab’s government on August 10 in response to massive popular protests. Some of these parties are also calling for legislative elections within the established sectarian political system.

In this context, the call for early elections within that framework is a trap for popular forces demanding radical change and for the protest movement more generally. The parties of the sectarian old guard are the best organized forces, and the ones most deeply entrenched within state institutions and Lebanese society.

Some of these parties have also received massive support from foreign powers: Hezbollah from Iran, the Future Movement and (to a lesser extent) the Lebanese Forces from the Saudis. They are clearly in the best position to win new legislative elections if the protest movement does not become more structured, and if a left-wing, progressive force is not able to offer an alternative to the popular classes in Lebanon.

Along with these sectarian parties in Lebanon itself, the imperialist powers, regional states, and international financial institutions pose a major threat to the Lebanese people through their efforts to take advantage of the latest crisis. They are all enemies of the Lebanese protest movement: as the uprising’s main slogan puts it, “all means all!”

Why Is It Always the Wrong Time to Criticize Democrats From the Left?

By David Sirota, Jacobin

24 August 20

Progressives are being told by the Democratic Party to shut up until after the election. Meanwhile, corporate Democrats are trumpeting how far right they are — a message that could demoralize Democratic voters and depress turnout.

o doubt, you have been told to keep quiet. Just put on your big boy pants, they say, and find the impulse control to at least muzzle yourself for the next seventy-one days until the election happens. After that, fine — then and only then will you maybe be permitted to speak your mind and politely ask the Democratic Party to match its rhetoric with its policy agenda.

But until then, you are told to “shut the hell up and grow up,” as former Barack Obama and Mike Bloomberg pollster Cornell Belcher put it during an emblematic MSNBC segment berating progressives.

This kind of hectoring has become a defining part of the Democratic Party’s culture. As the late great journalist Bill Greider lamented in this must-watch clip: “The way the Democratic Party is run now for quite a number of presidential cycles is they pick a nominee in a kind of half-assed process that doesn’t really represent much of anybody, and then they tell everybody to just shut up — don’t bring up anything that will complicate life for your nominee .?.?. shut up, turn off your brains.”

There’s a superficial logic to this call for omertà — after all, Donald Trump is destroying everything and he must be defeated. But here’s the problem: the demand to shut up is only being aimed at the progressive base of the party, while the corporate wing floods the zone with rhetoric that could de-motivate voters.

Indeed, at the very moment many good progressives are blunting their criticism and making clear that defeating Trump is of utmost importance, corporate Democrats aren’t being asked to wait or hold their tongues. In fact, they are doing the opposite: Rahm Emanuel — who has been advising Joe Biden — just went on television to show that the corporate wing of the party is intent on using the stretch run of the Most Important Election of Our Lifetime™ not to doggedly focus on actually winning the election, but to instead try to predetermine postelection policy outcomes.

Emanuel and his ilk depict themselves as evincing a nonideological “just win, baby” attitude. But they are most decidedly pushing a very clear corporate ideology — and they are doing so in dangerously divisive ways that could depress the big turnout that’s desperately needed to defeat Trump.

“There’s No New Green Deal, There’s No Medicare For All”

The larger dynamic at play was exemplified by Emanuel’s television appearance on a CNBC segment dubbed “Democrats’ 2020 Agenda: What’s at stake for business?” As progressives are being told to keep quiet and not even so much as tweet their concerns, Emanuel used the platform to demand that during this health care and climate emergency, a prospective Biden administration must reject the two major initiatives that polls show are popular.

“Two things I would say if I was advising an administration,” said Emanuel, who left the Chicago mayoralty in disgrace after his city officials suppressed a video of the police murder of a teenager. “One is there’s no new Green Deal, there’s no Medicare For All, probably the single two topics that were discussed the most. That’s not even in the platform.”

Emanuel is hardly a disinterested observer here. As Obama’s chief of staff, Emanuel helped kill the idea of a public health insurance option. Now, he works for a Wall Street firm that advises big health care and fossil fuel companies on mergers, acquisitions, and bankruptcy restructuring. Earlier this year, Emanuel was set to be part of the featured entertainment at an oil lobbying group’s annual meeting, during a $125-per-plate luncheon with GOP strategist Karl Rove, before the event was canceled due to COVID-19.

Emanuel also isn’t just some random blowhard pundit spewing a corporate line. The Chicago Tribune in May reported that “Emanuel is having regular conversations with presumptive Democratic presidential nominee Joe Biden and his top advisers about economic policy.”

So when Emanuel is refusing to self-censor in the name of “unity” and making these kinds of divisive declarations that stomp on progressive voters, he’s speaking from a position of real power. And he’s not just tweeting these comments, which could depress voter enthusiasm. He’s making them to a giant national television audience.

Corporate Democrats Are Not Holding Their Tongues

Now sure, you could try to write off Emanuel’s rhetoric as just the anomalous bloviations of a notorious super-villain who pushed NAFTA and anti-immigration policies and who famously called progressives “F–ing retarded.” But sorry, this isn’t a one-off — this is part of a larger pattern over the last few weeks and months.

As progressives are told to keep quiet, Democratic Party officials engineered a convention light on policy proposals, but one that gave prime convention speaking slots to the anti-climate-science, anti-union former Republican governor John Kasich of Ohio and to Colin Powell, who lied America into a war that killed hundreds of thousands of people. In his CNBC interview, Emanuel said, “This will be the year of the Biden Republican” — and he noted that promoting these figures was designed to help Biden deliberately send an anti-progressive message to voters because “John Kasich and Colin Powell don’t exactly endorse (or) support big-P progressive policies.”

This is the kind of move that is potentially disillusioning for Democratic voters who were previously told that a Democratic victory isn’t just a return to the status quo — but a step forward in strengthening the movements for climate action, workers’ rights, and a more sane foreign policy.

Similarly, as progressives are told to shut the hell up, Democratic aides on Capitol Hill leaked word that the party’s lawmakers may immediately replay the 2009 debacle and block a public health insurance option after the election — a move that is potentially de-motivating for millions of Americans currently losing their private health insurance.

As progressives are told to mute themselves, Team Biden last week publicly signaled that a new Democratic president might prioritize deficit reduction and budget austerity in the middle of an economic crisis — a move that is potentially deflating for millions of voters who have previously been told that President Biden’s agenda makes him the next FDR.

As progressives are told to keep quiet, Biden’s campaign leaks to Politico that the transition team building Biden’s prospective administration is being advised by Wall Street pal Larry Summers and former corporate super-lobbyist Steve Ricchetti.

And as progressives are told to muzzle themselves, corporate Democrats went scorched earth and spent $15 million to intervene in primaries, stymie progressive Democratic candidates, and tilt intraparty contests to business-friendly candidates. Meanwhile, House speaker Nancy Pelosi works to unseat Democratic senator Ed Markey, one of the Senate’s few progressive lawmakers, and to crush a spirited primary challenge to Rep. Richard Neal, who has used his committee chairmanship to block even modest health care reforms.

“Hold the Line. Win. Lead.”

Clearly, this is a coordinated campaign by the right wing of the Democratic Party to prioritize its policy goals above everything — even motivating core Democratic voters to turn out in record numbers during the general election.

The best response to such an onslaught isn’t to ignore it or succumb to dishonest unity-themed demands for silence and fealty. After all, the folks making those demands don’t actually want unity — they are aiming for corporate victory at all costs, even if waging a war for that intraparty win could depress enthusiasm for the Democratic ticket.

The smarter response is to follow the lead of Democratic Rep. Alexandria Ocasio-Cortez, who last week pushed back against the corporate Democrats’ attempt to resurrect GOP-style austerity politics. Rather than just sitting there and staying silent, she declared that if the party wins in November, it must make “massive investment in our country or it will fall apart. This is not a joke. To adopt GOP deficit-hawking now, when millions of lives are at stake, is utterly irresponsible. Hold the line. Win. Lead.”

The brilliance of this kind of response is that it accomplishes two objectives: it stands up for real change, and it reassures Democratic voters that there are at least some people who are serious about going to Washington and fighting for what the party purports to believe in.

Put another way, it fortifies the progressive agenda, and it helps energize Democratic voters to turn out, because it casts the election not just as a meaningless charade that won’t matter after November because everyone will sell out anyway. It instead depicts the election as an event with high stakes beyond Trump — a turning point that can create new policies that will actually matter in people’s lived experiences.

This is how you avoid the 1988 Dukakis collapse debacle and motivate the big turnout that can defeat Trump.

You don’t tell voters that “nothing would fundamentally change.”

You don’t blast out a story about how the Democratic presidential nominee told his Wall Street donors that he isn’t proposing new legislation to change corporate behavior.

You don’t turn your party convention into a pageant for Republican icons.

You don’t have the disgraced-mayor-turned-Wall-Street-guy advise your presidential candidate — or have him go on corporate America’s favorite television station during a health care emergency and a climate crisis to effectively laugh at progressives who are pushing Medicare for All and a Green New Deal.

To paraphrase one of the best tweets in history, you don’t try to turn the election into a centrist rally for the idea that better things aren’t possible — and you sure as hell don’t ask progressives to shut up.

You instead focus intently on telling your party’s voters how the election will materially improve their lives.

Of course, the Democratic Party machine and the Biden campaign aren’t really interested in doing that right now. They want to run an anti-Trump campaign, and nothing else.

In light of that, progressives shouldn’t unilaterally disarm and stay silent when corporate Democrats are getting bolder and more brazen about using this preelection period to push their depressing, better-things-aren’t-possible policy agenda.

Staying quiet in the face of that pablum doesn’t help. The real way to help boost turnout and energize voters is for progressives to push back against the corporate propaganda and make clear that, whether the establishment likes it or not, this election can and will offer the opportunity to achieve something even bigger than just getting rid of Trump.