Baumann, Hannes (2012) Citizen Hariri and Neoliberal Politics in Postwar Lebanon
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Baumann, Hannes (2012) Citizen Hariri and neoliberal politics in postwar Lebanon. PhD Thesis. SOAS, University of London http://eprints.soas.ac.uk/14240 Copyright © and Moral Rights for this thesis are retained by the author and/or other copyright owners. A copy can be downloaded for personal non‐commercial research or study, without prior permission or charge. This thesis cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder/s. The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders. When referring to this thesis, full bibliographic details including the author, title, awarding institution and date of the thesis must be given e.g. AUTHOR (year of submission) "Full thesis title", name of the School or Department, PhD Thesis, pagination. Citizen Hariri and neoliberal politics in post- war Lebanon ________________________________________________________________ Thesis Submitted for the Degree of Doctor of Philosophy By Hannes Baumann Department of Politics and International Studies School of Oriental and African Studies University of London _____________ January 2012 1 Statement of Original Work I certify that this thesis is the result of my own research and that it contains no material which has been accepted for the award of any other degree or diploma in any university or tertiary institution and, to the best of my knowledge and belief, contains no material previously published, written or produced by any other person except where due reference is made in the text. I give consent to copies of this thesis, when deposited in the University Library, being available for loan and photocopying. 2 Abstract The biography of the Lebanese businessman-politician Rafiq Hariri explores the different economic, political, cultural, and “imperial” projects contained in neoliberalism. Rafiq Hariri (1944-2005) accumulated great wealth as a contractor in Saudi Arabia during the Lebanese civil war (1975-1990), served as Lebanese prime minister (1992-1998, 2000-2004), and pushed through a neoliberal reconstruction programme. In February 2005 he was assassinated, prompting a UN investigation. Hariri belonged to the “transnational capitalist class” but his rise is not just due to the impersonal dynamics of global capitalism, it must also be placed within the specific historical sociology of Lebanon: the production and reproduction of classes, elites, networks, and the culture of sectarianism. Rafiq Hariri’s rise is due to changes in Lebanon’s role in the world economy and in its class structure. Thanks to Saudi support, Hariri was the most successful member of a “new contractor bourgeoisie” of Lebanese who had grown wealthy in the Gulf and pursued a neoliberal project in post-war Lebanon. Hariri and allied technocrats put in place two neoliberal rent-creation mechanisms: reconstruction of Beirut’s city centre and financialisation through government over-borrowing. Former militia leaders prevented further neoliberal reforms: privatisation and cutting welfare spending, which was a patronage resource. Class interest was mediated by elites, which is a more open category than class, not least because it incorporates sectarian identity. Hariri transformed himself from a “national” leader to a specifically “Sunni” leader from the mid-1990s onwards. His sectarian provision of health and education services was a response to pressure from rival elites on his neoliberal project. His philanthropy reproduced the culture of sectarianism. Changes in US imperial strategy from the 1980s to 2005 affected Hariri’s relationship with Damascus. US-Syrian conflict led to Saudi-Syrian tension and curtailed Hariri’s room for manoeuvre in Lebanon. Hariri’s network of technocrats, experts in sectarian mobilisation, Syrian regime members, etc. is an artefact that allows his biographer to locate agency in neoliberal globalisation. 3 Table of contents 1. Introduction 10 1.1. Neoliberalism 13 1.2. Neoliberal politics in Lebanon 25 1.2.1. What explains Rafiq Hariri’s rise from political outsider to prime minister? 25 1.2.2. Why did Lebanon fail to achieve sustained economic growth and social development after 1990? 33 1.2.3. Does neoliberalism help or hinder the reproduction of Lebanese sectarianism? 40 1.2.4. Did the United States use neoliberalism to project their power into Lebanon? 44 1.3. Methodology, sources, and outline of the thesis 47 2. The rise of Rafiq Hariri 1976-1990 51 2.1. From pre-war “merchant republic” to civil war economy: 1943-1982 53 2.2. Rafiq Hariri in Saudi Arabia and early stages of return to Lebanon 1964-1982 63 2.3. Rafiq Hariri and the clean-up of Beirut in 1982 67 2.4. Support for the Gemayel project 1982-1984 71 2.5. Accepting Syrian dominance 1985-1990 79 2.5.1. International politics 1985-1990 79 2.5.2. Political economy 1985-1990 85 2.6. Hariri’s philanthropy 91 2.7. What explains Rafiq Hariri’s rise from political outsider to prime minister? 103 3. Reconstruction 1992-1998 104 3.1. How post-war rent-creation mechanisms worked 106 3.1.1. Rent-creation mechanism I: Reconstruction 106 3.1.2. Rent-creation mechanism II: Government over-borrowing from commercial banks 110 3.1.3. Rent-creation mechanism III: Service ministries 115 3.1.4. Rent-creation mechanism IV: Regulation and the lack thereof 118 3.2. Who appropriated rent and how: elites and institutions 119 3.2.1. Institutions in charge of reconstruction 120 3.2.2. Institutions in charge of over-borrowing 129 3.2.3. Service ministries as patronage instruments 138 3.2.4. Institutions in charge of regulation 141 3.3. The political sociology of neoliberal rent-creation 144 3.4. Why did Lebanon fail to achieve sustained economic growth after 1990? 151 4 4. Social crisis and resistance to neoliberalism 1992-1998 153 4.1. Social crisis in Lebanon 154 4.2. Resistance to neoliberalism 1992-2000 162 4.2.1. Opposition to Solidere 163 4.2.2. The trade unions 169 4.2.3. The revolt of the hungry 179 4.2.4. Conclusions 182 5. Out of office 1998-2000: Hariri’s sectarian turn and neoliberal populism 185 5.1. Hariri hemmed in 185 5.2. Maqasid as a “bank of political resources” 189 5.3. Hariri becomes a “Sunni leader” 1998-2000 194 5.4. Did neoliberalism help or hinder the reproduction of Lebanese sectarianism? 206 6. Return to political crisis and assassination 2000-2005 209 6.1. The US-Syrian rift and its effect on Lebanese politics 211 6.1.1. The US-Syrian rift as a result of a shift in US hegemonic strategy 211 6.1.2. Lebanese politics 2000-2004: Rising opposition and Syrian reassertion 216 6.2. “A very political economy”: Hariri’s second neoliberalisation drive 225 6.2.1. Rent-creation mechanisms that Hariri salvaged 226 6.2.2. Rent-creation mechanisms that Hariri attacked 241 6.2.3. Persistent poverty and deprivation 251 6.3. The political sociology of rent-creation 2000-2004 253 6.4. Assassination 261 6.5. Did the United States use neoliberalism to project their power into Lebanon? 269 7. Conclusions 272 8. Appendices 283 Appendix 1 Lebanese balance of payments statistics: 1951-2002 283 Appendix 2: Types of political elites 284 Appendix 3: Interest rates on T-bills (24-month) and LL-denominated deposits: 1992-1998 285 Appendix 4: Debt projections in Horizon 2000 and actual debt: 1995-2004 286 5 Appendix 5: Some examples of first generation Hariri technocrats (ranked by seniority of position in government) 287 Appendix 6: Did government over-borrowing cause “crowding out”? 288 Appendix 7: Sources of household incomes (as % of total household income): 1997 291 Appendix 8: Value of treasury bills held by the Central Bank as a percentage of the total value of treasury bills: 1993 – 2007 292 Appendix 9: T-bills and “other government bills” held by Lebanese commercial banks: 1997-2005 293 Appendix 10: Ways in which Lebanese government debt-management became intransparent 294 Appendix 11: Interest rates on treasury bills of various maturities: 1990-2006 296 Appendix 12: The four relationships that determined the outcome of Paris II 297 Appendix 13: Pledges at Paris II by country/agency 298 Appendix 14: The Bank al-Madina scandal 299 Appendix 15 The second generation of Hariri technocrats 301 9. Bibliography 303 6 Note on Transliteration Throughout this thesis I used a simplified version of the International Journal of Middle East Studies (IJMES) transliteration from Modern Standard Arabic guidelines. I use the diacritic ‘ for the glottal stop hamza and for the consonant ayn. To facilitate readability, I use the most common English spelling names for personal or place names (example Gemayel, Sidon). 7 Acknowledgements When I first registered at SOAS as a part-time PhD student in September 2005 the registrar said: “Part-time? Excellent, you’ll be with us till 2011!” I recoiled in horror at the thought of my PhD dragging on for so long and promised myself I would do it more quickly. Alas, it is 2012. In over six years of researching, and writing, one accumulates a lot of debt to very generous and supportive people. The first person to mention is my supervisor Charles Tripp whose enthusiasm never failed to energise me. He applied just the right mix of letting me get on with it and firm intervention when passages of my PhD were not up to the expected standard. I am also deeply indebted to Charles for letting me teach his undergraduate Middle East politics course and for the dozens of references he has written, often at short notice. I cannot thank him enough for his calm, generous, and extremely good-humoured support over more than six years.