And they are wasted investments

In light of the serious economic crisis that Lebanon is going through today, it is necessary to delve into its roots in search of sustainable solutions that are applied in the medium and long term. However, when this crisis is compounded by the fragmentation of political life, as has been the case since 2005, it becomes difficult to identify the roots, even if they are clear. Rather, defining the policies that led to the deterioration of the economic situation becomes the core of political competition, and responsibilities for it become a scoring material between political forces. And not to a starting point to reverse the course of things. Therefore, there is the belief that talking about sustainable solutions is not on the table with the transformation of economic discussions in the public sphere into useless debates between the different powers. So far, the focus of discussions has been to ignore or defend those responsible for the economic policy of the last three decades, rather than attacking them, albeit shyly. The most prominent excuses present in the defenders’ literature is the argument of “squandering investments” granted to Lebanon since after 1992 by waging conflicts and wars and pushing towards security and political instability.

This argument, in particular, shows the greatest weakness in the approach that has shaped economic policies over the past three decades. The term “investments”, which has been inundated by local media since the early 1990s, was not used in its correct location. An investment is an asset or item purchased for the purpose of generating income or increasing its price. In this sense, a price increase indicates an increase in the value of the asset over time. When an individual buys a commodity as an investment, he does not intend to consume it, but rather to use it in the future to create wealth. When a person invests in an asset, the goal is to increase its value. In short, investing always revolves around spending some other asset in the immediate moment (time, money, or effort) in the hope of achieving a future return greater than what you invested in the “asset.” Therefore, investing is about achieving added value through the ownership, use and development of assets. In general, any action taken in the hope of increasing future value added can also be considered an investment.

Neoliberalism and investment
The neoliberal wave that has swept the world since the mid-1980s has narrowed the limits of the definition of investment. The neoliberals popularized the diagnosis that social spending and state intervention are incompatible with economic prosperity, even if this spending increases the level of education and raises the health conditions of the population, with all the added value that these two factors contribute. to economic production. Thus, the state has been described as a source of trouble in many countries, according to Jane Jenson in a study titled “Spreading Post-Neoliberal Ideas.” Neoliberals, at the international and local levels, underestimated the role of the state and promoted “structural adjustments” that would distribute wealth through market forces, hold families accountable for their own opportunities for success and well-being, and place the responsibility to secure social safety nets on the shoulders of society.
As part of the neoliberal reform agenda, citizenship began to be understood and promoted as a mere individual market integration. At the same time, as part of the process of “structural adjustments”, the unified rights guaranteed by state investments in society are gradually withdrawn from the workers and the poor classes, and replaced by charitable projects provided by third parties other than the forces of the government. market and the state.

Postwar investment model
In Lebanon, when advocates of economic policies in the last three decades speak of investments, they are generally referring to post-civil war reconstruction funds, donor conference funds (Paris one, two and three), and the CEDRE conference. (The great missed opportunity !!). It soon turns out that his definition of investment derives its legitimacy from the neoliberal roots of Prime Minister Rafic Hariri’s project. It is a definition that excludes spending in sectors of a social nature, although they have the opportunity to generate added economic value, such as education and health, for example, which are systematically excluded from the bill on public spending. Even with such exclusion, what these policies achieved had no real investment value.
In a study entitled “Foreign Aid and Economic Development in Post-War Lebanon”, Ghassan Dibeh says that foreign aid to post-war Lebanon can be divided into two phases, each of which presents different characteristics with far-reaching implications. scope for the development of economic roads after the civil war. In the first phase, which lasted between 1992 and 1997, foreign aid was mainly directed at providing resources for post-war reconstruction projects. While the second phase, which started in 1997, witnessed a qualitative change in the way foreign aid was used. The flow of funds went from satisfying the reconstruction needs to satisfying the needs to guarantee financial stability and the needs to guarantee a balance of payments balance. This change allowed the government to intervene in the foreign exchange market and maintain balance of payments surpluses during this period, which lowered interest rates on public debt instruments and provided the liquidity and confidence necessary for the government to continue borrowing. to local commercial banks and foreign investors. More importantly, Dibeh adds: “This change in the direction of foreign aid flows allowed the government to avoid financial and monetary crises in 2002. However, the cost of this qualitative transformation was great in terms of financial management, the transfer of reconstruction funds and an increased dependence of the Lebanese economy on foreign aid. In order to guarantee financial and monetary stability ”.

Most of what is described as an investment is nothing more than financing for EDL’s deficit resulting from the consumption of fuel to operate power plants. The cost of this large deficit is due to the maintenance of a high exchange rate of the Lebanese pound against the dollar. Although investment in the development of networks and laboratories was very limited

In practice, none of the phases of the flow of aid funds to Lebanon can be described as investments by the traditional definition. Financing for reconstruction has not resulted in actual financing for the development of infrastructure in Lebanon. In fact, the figures show that what is injected into the infrastructure and services networks is modest in relation to the size of public spending in the country. For example, the amount that is discarded for investments placed in electricity was not for actual investments, but for operating costs. Most of what is described as an investment is nothing more than financing for EDL’s deficit resulting from the consumption of fuel to operate power plants. The cost of this large deficit is due to the maintenance of a high exchange rate of the Lebanese pound against the dollar. While investment in the development of networks and laboratories was very limited. As for the second stage of the aid flow, it was never reversed if we approved Deba’s description of the investment definition, but instead was put at the service of the fraudulent pyramid scheme (Ponzi) applied by those in charge of managing the Lebanese economy with the in order to maintain a high exchange rate for the Lebanese pound and create an inflated consumption capacity for residents that paints a picture. An imaginary boom in an economy whose productive sectors are systematically destroyed. On the other hand, economic policy makers have deprived all Lebanese of basic social services (such as free education and medicine at a minimum), which can be classified as investments. This was taking place under various neoliberal headings that serve the objective of classifying investments in these sectors as overspending that hurts public finances, especially after 2001, when Lebanon is about to enter a crisis similar to the current one.
So where are the investments that have been squandered in the furnace of conflict and instability? In fact, it is not correct to allocate investments to money spent. The goal of the financial flow after the civil war cannot be described as the creation of added value in the Lebanese economy. On the other hand, what happened can be explained, given that the United States (the central state in the global economic system) and its regional allies sponsored the injection of money after the civil war to ensure the construction of a financial and economic system that confirmed the shape of the settlement that ruled Lebanon after Taif in a neoliberal context. Therefore, no one has invested in the development of Lebanon and its people, not the donor countries, the creditors, or the curators of Lebanon in the design and implementation of financial and economic policies. It can be said that no investments have been wasted. In proposing sustainable solutions, it must be born from the womb of studying the path of failure of the policies that were followed after 1992, and the most important study of its organic relationship with Lebanon’s ties with the countries that secured the money and supervised its spending.

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