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A few days ago, French President Emmanuel Macron invited – for the 6th year in a row – the CEOs of some of the world’s top firms. More than 200 of these answered the call. The topic is self-explanatory, in and by itself: “Choose France”. In other words, choose France for your next investment.
Industry will be the main focus, but not only. State-of-the-art technology and services will be covered, too, with the participation of none other than the highly coveted Elon Musk, who will attend the conference after a private audience at the Elysée. Needless to say, France is the biggest investment country in Europe.
We, in Lebanon, are lightyears away from all this. Who are we to compare ourselves to France in terms of governance? Still, that is not the question. Here, one must simply assert the importance of foreign investments for a country’s economy. And Lebanon has, indeed, attracted such investments in the past. In fact, it has often been a close runner-up behind the Gulf nations and Egypt. Everything fell apart later on: in 2022, only one foreign investment was made – probably by an expatriate – shy of 500 000 Dollars.
The reasons behind all this are too clear to be pondered. One need only realize that Lebanon is in the bottom 25% worldwide in terms of corruption, infrastructure, public service efficiency, the rule of law, and the judiciary. And now banks have been added to the equation. This issue could, perhaps, be solved by drafting a law that allows investors to take back their profits or capital and send them abroad at any moment. But the question remains: who is willing to do such a thing?
As all this is a secret to no one, let’s now move on to a more specific aspect: the reluctance of foreign companies to take on a state project. A significant example that seems to go unnoticed by everyone: the tender for gas exploration in the remaining eight blocks, extended for the fifth time, has yielded no results so far. No company has shown any interest whatsoever. A unique case in the history of the world’s oil industry.
Let’s set aside the geopolitical aspect of this case, which might frighten some, and broaden the scope to other areas. In addition to the deterrent factors for any potential investor mentioned above, there is a phenomenon that few people are aware of. These are the disputes that have accompanied almost every exploitation project entrusted by the state to a foreign company. Let’s randomly select a few examples spanning 30 years.
In the 1990s, two German companies were tasked with studying, constructing, and operating a toll highway network throughout the country. A team of German expatriates, stationed in Beirut for months, concluded that for the project to be viable, they should start with the Northern highway, followed by the one leading East towards Damascus, as they were the busiest routes. However, speaker of parliament Nabih Berry objected, insisting on the priority of a highway leading to the South. Subsequently, the project was aborted, and the ensuing dispute cost the state millions of dollars.
Around the same time, a Canadian company signed a contract for the management and development of the postal service, now known as Liban Post. From the preparation phase onwards, the authorities and their cronies started imposing prohibitive conditions that went beyond the contract’s provisions. SNC-Lavalin promptly withdrew, leaving behind a legal dispute.
Also in the 1990s, the cellular network was established by two companies, Cellis and Libancell, with partner operators being France Telecom and Finland Telecom, respectively. However, a decade later, internal political maneuvering led the government to nationalize the networks. An international arbitration forced us to pay tens of millions of dollars in damages.
During the construction of the airport, a Kuwaiti company was entrusted with the development and operation of the parking facility. Among the rights and obligations, the authorities were supposed to prohibit parking outside of this facility, which was never enforced. The dispute ended with millions of dollars in damages and interest.
In Tripoli, in the early 2000’s, a French company took charge of the development and management of the water network, ensuring continuous supply to the city. However, the company Ondeo withdrew a few years later, ousted by a government that did not fulfill its promises and local politicians with ulterior motives.
In the early 2010s, a Greek-Cypriot company won a tender to construct a large power generation plant for $500 million in Deir Ammar. However, shortly after the start of the project, the Minister of Finance, Ali Hassan Khalil, refused to pay, claiming that the value-added tax (VAT) was not included. This led to a years-long legal and political entanglement, as we often witness in such cases.
To avoid damaging international arbitration, the government proposed to the company to transform the construction contract into a build, operate, transfer (BOT) agreement, which was accepted. However, the obstacles did not cease, and the power plant has still not been built 13 years later.
The Turkish Powership barges, brought by Gebran Bassil to supply electricity to the country, were at the center of an ongoing controversy tainted with suspicions of corruption, given the evident mismanagement of public funds. The barges departed in 2021, followed by a series of prosecutor’s mandates.
The Algerian state-owned company Sonatrach, which provided us with fuel under favorable conditions for years, was accused of product fraud and publicly and judicially lynched. Since then, the current minister has been trying to reestablish contact. However, Algerians no longer want to have anything to do with an unreliable country.
The vehicle mechanical inspection was entrusted to a Saudi Arabian company, which operated to some extent for years despite continuous interventions by local politicians. However, the operations came to a complete halt, and the operator faced a lawsuit for raising fees without prior agreement. The fee, which was around 30,000 LL, was equivalent to 20 dollars. In 2022, it was worth 1 dollar, but “the company had to continue to comply with the terms of the contract, pending an agreement with the Administration.”
If you haven’t been nauseated yet, we have plenty of similar cases. One could suspect that the whole world has formed a syndicate of wrongdoers tasked with fleecing us, poor unsuspecting individuals. But there is little chance that anyone would believe you.
