Medidas de protección de terceros y herederos del acreedor

Neoliberalism can be framed as a question about the “right policies”. The question why Lebanon failed to achieve sustained economic growth and social development after 1990 would then alternatively be answered by saying that there was “too much”

or “too little” neoliberalism, as embodied in the ten Washington Consensus policies, which became the cornerstone of neoliberal policy advice (Williamson, 2004). As argued above, neoliberalism is more than just a debate about the “correct” economic policies, it is also a political project to appropriate the rent created by neoliberal restructuring, especially through financialisation. The questions that need to be answered then are the following: How do neoliberal rent-creation mechanisms work?

Who appropriates rent? How is rent appropriated, i.e. what institutions are involved in rent-creation and who controls them? A few terms need to be clarified to place this methodology into the context of social theory: profit, surplus, and rent. The definitions of these terms go to the heart of the meaning of political economy. Neo-classical economic theory has a very limited conception of rents, which are simply defined as excessive profits earned from government intervention in the market.¹¹ Further costs arise because firms invest in rent-seeking rather than production (Krueger, 1974;

Mueller, 1989). Yet this conception of rent as excessive profit is based on the ideal of the perfectly functioning market. Since this ideal is never achieved, rents are

ubiquitous in actually existing markets, especially during the process of development

10 Najib Miqati, another new contractor, only became prime minister after Hariri’s death in 2005.

11 Rent did play a crucial role in the theories of classical economists such as David Ricardo who used it to describe the differences in the agricultural productivity of land (Ricardo, 2001 pp. 39-50).

when property rights are being reassigned to enable capitalist accumulation (Khan, 2000). Furthermore, if markets are regarded as social relations rather than just neutral reflections of the impersonal forces of demand and supply, rents assume an

increasingly important role in distributive conflicts (Swedberg, 2003 p. 108).

The most interesting aspect of Marxist political analysis is the ways in which capitalists appropriate surplus and rent. One of the most dynamic aspects of neoliberal capitalism has been the creation of “fictitious money” delinked from industrial production:

“Thus, when we examine the growth of so-called ‘global capital markets’, we will find that much of their activity is not about the supply of capital for productive activity. It is about trading in royalties on future production in different parts of the world or about businesses engaging in various kinds of insurance against risks. And the trend in the organisation of the flows of finance has been increasingly one which privileges the interests of rentiers and

speculators over the functional requirements of productive investment.”

(Gowan, 1999 p. 12).

Financialisation is a symptom of a wider crisis of capitalist accumulation, where “the rate of investment tends to exceed the growth of final demand”.¹² The rents of financialisation are created and appropriated not by the owners of the means of producing money: central bankers, the financial sector, finance ministries, and international financial institutions such as the IMF. It is exactly this complex of institutions which Hariri managed to control in Lebanon. This is why the terms rent, rent-seeking, rent-creation, and rent-appropriation are central to the analysis of Hariri’s neoliberal project (Khan, 2000 p. 24).

How did rent creation mechanisms in post-civil war Lebanon work? Some conformed to neoliberal logic, others defied neoliberal logic. Firstly, Rafiq Hariri pushed through the project of reconstructing Beirut’s city centre. By transferring property rights from the pre-war owners to a single private development company called Solidere, private investors from the new contractor bourgeoisie or the Gulf were able to appropriate land rent. Secondly, government over-borrowing beyond what was required to finance the budget deficit created artificial demand for Lebanese pounds, thus stabilising the

12 Soederbergh (2004, p. 12) quoting Magdoff.

currency. However, it also inflated interest rates, led to skyrocketing public debt, and created rents for the government’s creditors: Lebanese commercial banks and their depositors. Thirdly, privatisation was an aspiration for Hariri and his technocrats but the main targets – telecommunications, Middle East Airlines, electricity and water – remained under various forms of state control. Private investors hoped to reap monopoly rents from some of these sectors. Meanwhile, Hariri’s rivals were keen to maintain such state control in order to provide jobs as patronage or to deny Hariri control over particular economic sectors. Reconstruction, government debt

management, and privatisation were justified using the language of neoliberalism:

making Lebanon “competitive”, achieving macro-economic stabilisation, and privatising inefficient state enterprises. In contrast, welfare spending on “service ministries” such as health, education, or specialised agencies such as the Council of the South or the Ministry of the Displaced ran counter to neoliberal concerns with cutting back the welfare state and emphasising individual responsibility. However, the post-civil war years saw continuously high expenditure on these ministries which often functioned as patronage resources for former militia leaders. The power of these rivals to Hariri allowed them to defy his neoliberal agenda and his efforts to cut welfare spending. Finally, market regulation or the lack thereof benefited a variety of elites.

For instance, Lebanon’s pre-war bourgeois families continued to benefit from licenses for “exclusive representation” of Western companies in Lebanon. This created a form of monopoly rent. Hariri sought to abolish these privileges but failed.

Rent-seeking is analytically distinct from corruption. Definitions of corruption tend to centre on illegality (Khan and Jomo, 2000 p. 8). Corruption is commonly defined as

“the abuse of public office for private gain” (World Bank, 1997 p. 8; Leenders, 2003 p.

305). In his unpublished PhD thesis, Leenders (2004b pp. 264-269) argues that the central bank of Lebanon was not corrupt because it did nothing illegal. Moreover, it was able to provide a “public good”, namely currency stability, because it was more insulated from social pressures than other bureaucratic institutions in Lebanon, which did not approximate the Weberian bureaucratic ideal. Yet as we have seen, the exchange rate was stabilised by government over-borrowing. Currency stability was thus achieved at the cost of enormous government debt, while wealth was transferred

to depositors and bank owners – including Hariri. Nor is the central bank as insulated from society as Leenders claims: the governor put in place in 1993 used to manage Rafiq Hariri’s portfolio at Merrill Lynch and is widely considered a Hariri protégé. ¹³ So surely, this process of rent-creation benefited Rafiq Hariri privately. Whether it was legal or not is of secondary importance if we are trying to understand the political economy of post-war Lebanon. Hariri’s economic policies have also been analysed in terms of “corruption”. Neal and Tansey regard Hariri’s leadership as “corrupt” but

“effective” because he rebuilt the city centre and opened Lebanon to foreign capital (Neal and Tansey, 2010). Again, it is more fruitful to closely analyse the politics of rent-creation and rent-appropriation than hailing the “effectiveness” of Hariri’s policies – not least because, as argued in chapters 3 and 4, their effects were a lot more detrimental than Neal and Tansey think.

After establishing how rent creation mechanisms worked, it is time to consider who appropriated rent. In Marxist theory, classes appropriate surplus. As explained in the previous section of this chapter, it is more useful to focus on elites rather than classes in order to see how classes organise and how neoliberalisation occurs in a social space which is not determined by the economic “in the last instance”. Hariri and other new contractors tended to be the main beneficiaries of rent-creation mechanisms that followed a neoliberal logic: the reconstruction of Beirut’s city centre, government over-borrowing, and potentially from privatisation. In contrast, former militia leaders sought to control service ministries and state-owned enterprises as patronage

instruments. The different types of elites followed different economic logics – opening up new investment opportunities or seeking resources for patronage. A useful

category to complement the analysis of elites is the network. Hariri built up a network of clients around himself, which included the technocrats he put in charge of

government ministries and agencies concerned with reconstruction and government finance. The Hariri network was able to utilise the different forms of economic and cultural “capital” of the different types of elites drawn into it: Hariri brought the financial capital to the table, his technocrats the cultural capital to realise their neoliberal project. From about 1996 onwards Hariri also drew experts in sectarian

13 Middle East Economic Digest (MEED), 4^th June 1993, p. 27.

clientelism into his network to build up grassroots support among Sunni Muslim

voters. Similarly, Hariri’s rivals had access to elites with various types of capital through their varied networks. Networks have become an increasingly popular category for the analysis of Middle Eastern political economy (Heydemann, 2004). However, the use of networks has also been criticised for being too fluid a concept compared to class or elite, the difficulty of mapping networks, of determining resource flows within them, and establishing who initiated policies (Kienle, 2004 p. 282). The concept of the network is here used to complement rather than replace elites or classes. The Hariri network is described qualitatively and it is made up of allies to Hariri.¹⁴ In interviews with the author, members or former members of the network often pointed out the origin of policy initiatives. Resource flows within the network can indeed not

necessarily be proven – although there are many rumours of Hariri keeping his

technocrats on his payroll – but that’s not strictly necessary. What is more important is that the Hariri network (or rival ones) acted coherently in pursuit of a particular

political or economic project. The contention here is that Hariri’s project was a neoliberal one, with all the contradictions that come with this designation. By looking at his network, the types of elites he drew in at different times, and the types of capital these elites possessed and brought to the political field, tell us something about the nature of neoliberal politics in Lebanon. Rafiq Hariri’s network is therefore an artefact of neoliberal mobilisation in Lebanon.

After establishing how rent-creation works and who appropriates rent, it is important to bring the two together: did those who appropriated the rent actually create it? It is not enough to show who gains in order to establish agency in the creation of rent. It is also necessary to show how groups – for instance the Hariri network – gained access to centres of decision-making (Haggard, 1990 p. 34). Hariri used the network of

technocrats allied to him to control government institutions that put in place and managed specific rent-creation mechanisms: the finance ministry and the central bank were in charge of government over-borrowing, the Council for Development and Reconstruction (CDR) oversaw reconstruction spending and the project for central

14 This qualitative mapping stands in contrast to the quantitative mapping of formal network analysis, for instance studies that track “interlocking directorships” described in (Scott, 1990b).

Beirut. These rent-creation mechanisms followed a neoliberal logic. Government over-borrowing was designed to stabilise the currency, while reconstruction was supposed to give Lebanon the infrastructure to make it “competitive” in the regional and global economy. Common forms of neoliberal restructuring of the economy and the state were being reproduced in Lebanon. Hariri and his technocrats were in charge of the the agencies concerned with economics and finance. These latter agencies included the “service ministries” such as education, social affairs, or health. They tended to be controlled by former militia leaders or close allies of Syria who used them as patronage instruments. This explains the specific patterns of Lebanon’s neoliberalisation: the low inflation and currency stability, the high debt burden, and the continued welfare expenditure. Other rent-creation mechanisms – the patchy privatisation, market regulation – can also be analysed this way. Many analyses reduce the competition between Hariri and rival elites to differences over Syria’s role in Lebanon or to

sectarian divisions. However, this competition was also a struggle over the neoliberal restructuring of the Lebanese state.

The focus of this study is very much on elite politics but the popular resistance that neoliberalism engenders does require some analysis too, not least because Lebanon’s political elites managed to co-opt the protest movements for their purposes. Since neoliberalism is a global economic, political, cultural and imperial project, resistance to it can take a variety of forms. It can be local or part of global efforts, it can be class based or identity based, and it can engender resistance to the projects of global or regional superpowers. What kind of politics of resistance did neoliberalism produce in Lebanon? And how effective was this resistance? The answer to this question fits into the wider debate about the way social movements resist neoliberal globalisation.

Authors on the left tend to write about resistance to neoliberal globalisation in highly normative terms. Evans argues it needs to be global rather than just local (Evans, 2008). Hardt and Negri find that resistance to the “biopolitical machine” of “Empire”

can involve both identity-based and class-based forms and is likely to coagulate into a coherent “multitude” that will eventually challenge “Empire” (Hardt and Negri, 2000).

Other authors are more cautious and find that not all resistance is necessarily progressive. Especially identity-based resistance can slip into racism, xenophobia, or

authoritarian rule rather than opening up democratic space (Evans, 2008 pp. 285-286;

Harvey, 2003 pp. 166-178). Islamism, for instance, is often taken as an ineffective and reactionary form of resisting neoliberalism and empire (Amin, 2007).

How was neoliberalism resisted in Lebanon? The neoliberal rent-creation mechanisms put in place by Hariri and his technocrats created many losers. Government over-borrowing led to “crowding out” and slow job creation. Unemployment and poverty remained high, especially because the productive sectors agriculture and industry attracted too little investment. Social indicators improved only slowly. Especially in areas such as health and education inequality remains extremely high, leaving large parts of the Lebanese population reliant on elite patronage for access to services. In chapter 4 three instances of resistance to rent-creation mechanisms put in place by Hariri and his technocrats will be analysed by looking at the interests, the discourses, and the effectiveness of the protests. The first instance involves the various forms of opposition to Solidere, the private development company in charge of reconstructing Beirut’s city centre. Opposition to the Solidere project came from several groups. Their interests, their discursive strategies and the extent of cooperation and competition among them shows how class and confessional identity interacted in opposition to Hariri’s reconstruction plan in the city centre. A second instance of resistance consisted of protests by the trade unions in the mid-1990s. Despite their inherent weakness in a service-based economy, the trade unions appeared as the

best-organised opposition to Hariri’s economic policies between 1993 and 1997. Thirdly, the year 1997 saw social protests by agriculturalists in Ba’lbak-Hirmil, dubbed the

“revolution of the hungry”, led by the Shi’i cleric Shaykh Subhi al-Tufayli.

In summary, then: the question why Lebanon failed to achieve sustained economic growth and social development in the post-civil war era is explained with reference to the specific economic and political patterns of neoliberalism in Lebanon. The inquiry into how rent-creation mechanisms worked, who benefited from them, and how rent was created shows that the answer to the question lies in the patterns of conflict and cooperation between different types of elites over the direction of the economy. While

Hariri and his technocrats put in place rent-creation mechanisms that followed a neoliberal logic, rival elites tried to secure a share of the pie and they strengthened forms of rent-creation which defied neoliberal logics. Popular opposition to Hariri’s neoliberal policies were co-opted by his rivals.

1.2.3. Does neoliberalism help or hinder the reproduction of Lebanese