Although experts see privatisation as the only answer to Lebanon’s economic mire, sales of state enterprises have stalled, forcing Hariri to announce a higher than anticipated budget deficit for next year.
Without privatisation, the budget deficit will climb to 30.8% of gross domestic product – or $6.16 billion – compared to an estimated 27.7% if certain industries are sold off.
On Saturday, Lahoud, Lebanon’s self-styled protector of public assets and fierce opponent of privatisation, lashed at Hariri, its fierce defender.
“The time when you can help yourself to this or that sector is over forever,” Lahoud said in a riposte to comments from Hariri.
“Advancing concerns about wanting to preserve public assets can contribute to misappropriation,” the prime minister had said the previous day, referring to a cash-strapped 2004 budget which is floundering amid a lack of tax revenues.
Emile Lahoud (L) is against the
The two men embody starkly different ideologies. At stake is the future of an economy once lauded as the Switzerland of the Middle East before a devastating civil war which lasted 15 years until 1990.
Lahoud, a former head of the army who has close relations with Syria, the dominant power in Lebanon, believes in placing the interests of the state above all else.
His answer to persistent and crippling budget deficits is to reinforce state revenue by controlling the management of public services and preventing waste.
In attacking Hariri, he points to the takeover by the state of Lebanon’s two mobile telephone networks, “which has brought in extra revenue, which was not the case before”.
The charge is unfortunate for Hariri. Mobile communications have proved his Achilles heel, as close associates have direct interests in the sector.
In June 2002, the government cancelled the licences under which LibanCell and Cellis – the latter 67% owned by France Telecom – were operating in order to hold a public tender on re-awarding them.
The two have been operating under temporary licences on behalf of the state since then but the re-privatisation process has just been postponed for another four months, until February 2004.
Privatisation, ‘sooner or later’
Lebanon will be going to the polls
But Hariri has reiterated constantly that privatisation is inescapable, citing Lebanon’s need to fulfil its commitments to the international donors who promised Beirut $4.4 billion in Paris last November on condition that it plough ahead with reforms, including privatisation.
On Friday he charged again that it would happen “sooner or later”.
But the friction between the two Lebanese leaders, which has deep roots, has also to do with the upcoming November 2004 presidential election.
Most analysts believe Lahoud is petitioning Damascus, which dominates its smaller neighbour, to “remove the Hariri obstacle” to his re-election.
Political fight ahead
While the head of state has not yet declared his intention to run for a second term of office, which would require a change to the constitution, Hariri is fighting to limit Lahoud’s chances of success.
Lahoud sacked Hariri when he became president in 1998, but his foe stormed back after winning general elections two years later. Hariri is unable to stand for president himself because under Lebanon’s sectarian constitution the post is reserved for a Christian.
Christian Maronite Cardinal Nasr Allah Sfeir, who wants to see Syrian forces out of Lebanon, is opposed to a change in the constitution to allow Lahoud to run again.