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There are recurring aspects to these perennial recovery plans, from the disastrous era of the Hassan Diab government to the equally harmful one of Saadeh Chami.
The first aspect is that these plans do not “recover” anything at all. It is simply an abuse of language. Prominent economists on this site and elsewhere have already expressed this view. Therefore, we won’t be revisiting it.
However, there is another dimension that seems to escape analysis: the immediate nature of these plans. They seek to eliminate some banking institutions upfront, as well as deposits and investor-depositors who were foolish enough to trust this pseudo-state and, what a shame, to have received interest.
At the same time, all commitments of the Central Bank (BDL) toward banks and therefore depositors, amounting to tens of billions of dollars, must be immediately eliminated. This is how they intend to absorb the “losses of the financial system,” as the state’s poor terminology puts it, even though it primarily concerns the debt of a state that refuses to honor its obligations.
Even the IMF and the World Bank have joined in, advocating for an immediate treatment of all these losses, wiping the slate clean right away and being done with it. There are other fish to fry.
All of this leads us to a central idea, the original sin: we are deliberately making only one generation—the present generation of unfortunate citizens (depositors and non-depositors)—bear all the consequences of the crisis. Whereas, regardless of the method of “loss allocation,” in the end, there is no chance that a single generation can humanly bear the burden.
Hence, our main proposition in this discourse is that the sacrifice must be spread across several generations to become bearable. The proposal to tap into state assets and exploit them according to optimal formulas falls within this framework.
These assets do not truly belong to the state; they were acquired with the money of citizens from the past three or four generations. Some assets date back to the Ottoman era, others to the period of independence, or to the French mandate.
Next, it would be necessary to simultaneously spread the sacrifices to the future generation, even if they have done nothing except be born in this country. Nonetheless, they are already suffering the consequences, just from the difficulty they face in acquiring a good education.
In essence, assuming we have good governance—which is quite a far-fetched idea, I know—this “financial hole” could become tolerable if we distribute it over six generations: the four preceding ones that accumulated state assets, the present one, and the future one. Other countries have already more or less implemented this distribution, precisely because the losses were colossal.
Obviously, this idea doesn’t even cross the minds of those in power, simply because all their thoughts are currently focused on one ambition: securing their position in the new mandate, if and when…
Just follow their daily itinerary to be convinced. The Prime Minister is tirelessly working everywhere to ensure the continuity of his seat, preferably under Sleiman Frangieh. The Minister of Economy sees himself as the caliph in place of the caliph (since he has a prime ministerial name!). Several others are already competing for the legacy of the parliamentary perch… In fact, there’s no need to list them all, as there are Iznogouds at every level.
Their favorite argument is to flaunt what they improperly call “achievements” every day, which are actually a few aids that donors have been kind enough to grant us for urgent needs, and the begging ministers are very proud of them.
But what did you expect? Power tends to corrupt. And, as the saying goes, absolute power corrupts absolutely.
