Q & A Interview with Jihad Azour Ex-Minister of Finance, Lebanon (2005-2008)

Interviewed by Rami G. Khouri

(Editor’s Note: This interview was conducted in two sessions, the first in December 2007 when Azour was minister of finance, the second in September 2008 just after he had left the government.)

Q. When you first personally became involved in reform issues—administrative, public sector, financial reform issues in Lebanon—what was the first involvement that you had and in which capacity? A. I started in 1999 as the project director for reforms at the Ministry of Finance. In fact, the project I was leading at the time was in charge of policy advice and support, and reform implementation; also reform design and strategic thinking, for the Ministry and also for the government’s financial and economic policies. This was one of the key factors for success. On the one hand, I was dealing with policy support and policy issues, linked to the highest levels at the ministry; and also, linking the reforms with certain objectives. It’s not automation for the purpose of automation. It’s automation for the creation of a modern administration that is able, for example, to plan differently, to improve services –to do all these things at once. Therefore I was able to understand these linkages, to start the process of transformation.

I started in 1999 in something that had started as a transformation in 1993. Therefore, I took the position that was filled by, God bless his soul, Bassel Fuleihan. In fact, this tells you that to succeed in reforms you need to have consistency and sustainability. Secondly, you need to have a clear vision and leadership. The issue of reform is not only something you can only present and explain; you have to fight for it. You have to really integrate it in your functioning and your decision-making process. Thirdly, you have to have the right mix of talents to do it. When you have all these elements, it becomes much easier to succeed at reforms. This is why, when you look backwards, the Ministry of Finance in Lebanon has succeeded in a major transformation. Who is the owner? It’s not only one person –and this is it. When there’s only one person, reform cannot succeed or it is not sustainable. I think this is one of the experiences that one can document. The UNDP documented what we did. They did it for the Ministry of Finance in Lebanon, and they compared three institutions: the Ministry of Economy at the time, OMSAR [Office of the Minister of State for Administrative Reforms], and the Ministry of Finance. What differentiated the Ministry of Finance is that we had continuation, despite a change in government. We had strong belief and leadership. And also, we had the right mix for reforms: Those who were implementing were also involved in the design, in the ultimate objective of reform.

Q. This wasn’t the case before? A. It was, but maybe it wasn’t the case in other administrations in Lebanon. And this is maybe why the Ministry of Finance was able to achieve what others didn’t. Despite change in government, despite change in political directions, the process of reform

1 continued; of course not at the same speed, maybe with some turbulence, but at the end of the day, there was a great deal of consistency and continuity.

Q. You had this tense political situation in Lebanon – this blockage – and the war. You had two huge external shock factors, other than changes of government. How has the reform process dealt with these two huge issues? A. First of all, you can continue in your reform track even in this kind of environment. We had maybe the most difficult two years in Lebanese history since the end of the [civil] war. In the past two years, we were faced with continuous political tension that translated sometimes into security issues, sometimes into war, sometimes into total blockage. Still, one can do reform. To give you a few examples: we were able to keep people focused on reform while we are under so much pressure. Currently, we are finalizing the reform program for 2007-2009. It is a report that has been done in a bottom-up approach, whereby all the administrations of the Ministry of Finance were working on designing the agenda for the next two years. When I started it, I started it in fact only to achieve one objective: to keep people busy, thinking about improving reforms, modernization, creating a new environment. And it worked. And now, we will be presenting it, while political pressures are increasing.

The second example is, we were able last year to file for a UN award –a UN public sector award, considered one of the most prestigious awards for the public sector. When we were working on preparing our case, it was during August of 2006. During that month of August, we were in war. We were fully-motivated; the reform team, the public administration, all of us were mobilized to achieve. This is a second example of how you can keep the momentum of reform even in difficult circumstances or environments. The third is: we were able to make a lot of changes.

Q. You were given this award? A. Yes, we got it, for 2007. Q. For improving the quality of services? A. We were able to prepare for it, to prepare our case. We were also able to change a lot of things. In the last two years, we completed what others had started before us. This is one of the most important elements, I think: to accept that we are not here to reinvent the wheel, or to start from scratch. What we did is we preserved what had been prepared before.

Second, we developed new concepts. For example, the Ministry of Finance has done a lot of reforms in the past 15 years on several issues in various administrations. The basic infrastructure for reform is this: automation, re-design of procedures and processes, development of reform units, change in management, and a training center that is in charge of creating a new culture. We were able to, in fact, go to a new dimension whereby we left the infrastructure for the hardware to the software, i.e., we shifted our attention to things like improving the quality of services, like improving the dialogue with the private sector, like fighting corruption. We were able to say the words ‘fighting corruption,’ which is very difficult. In different parts of the administration, now, the culture is there. The middle-managers or the young staff, or even the directors, they speak

2 the right language. They are now convinced about improving services –it’s not imposed by a leader. It’s becoming part of their day-to-day management, part of their culture.

Q. And you’re talking about the Ministry of Finance – this hasn’t been a government- wide process yet? A. We started it at the Ministry of Finance. In fact, we believe that first you have to do it yourself; and then, you have to extend it. Despite all these difficulties, yes, you can continue, and even if Parliament is not functioning, you can find ways of implementing reforms.

The third example is at the government level. As you know, Lebanon had in January of this year (2007) an international conference to support Lebanon, and it was a big challenge to prepare it, to convince the international community, and to succeed in it. And we had, in fact, good preparation that translated into a conference where we had more than 40 countries and institutions represented at the highest level. We had $7.6 billion of commitments. One of the main issues we used to face in the past in Lebanon is to translate a reform program into an action plan, and this was our challenge. The challenge since January 25th of 2007 has been to institutionalize the reform process. And for that purpose, at the request of the Ministry of Finance, the government took the initiative to organize a reform coordination office that is in charge of coordinating the administration of reforms.

Q. For the whole government? A. Yes, translating the past three reform programs into an action plan; translating the reforms into initiatives, and initiatives into action, and action into key performance indicators, and these into a program of implementation. All along the ministries –twelve different stakeholders– we’ve created small units in charge of following up on the implementation of the program.

Q. In 12 ministries? A. In 12 ministries and agencies. We have also created three inter-ministerial committees that are in charge of coordinating the work, because one of the difficult things we used to face in the past is inter-ministerial coordination. And this structure is working, despite the fact that since January, the political situation didn’t improve. On the contrary, it deteriorated. We were able to translate this agenda into actions. Now, we have more than 300 hundred different initiatives, grouped: 40% social, 36% economic and financial, and the rest are infrastructure and privatization. We have the working groups now in place. Soon we will be having the second inter-ministerial committee where each ministry will sign a reform agreement with the government, with the Prime Minister, in order to commit to those reforms –while we are in political transition.

The objective was to anchor the reform process in a structured way, not in an ad-hoc manner, in government; to change the way the government is functioning when it comes to reform implementation; and to have something that will transcend this kind of government. Paris III is a medium-term reform agenda; it’s not something to be implemented in only six months. In all these aspects – we started having political

3 difficulties, parliament not functioning, cabinet weakening because some ministers are not there, overall political environment was not conducive – we were able to do it. It shows that you can do reforms even if conditions are not the best.

Q. You mentioned sustainability, team-work, translating reforms…What are the biggest constraints that you have faced, and is there a limit to this kind of reform in this kind of context? If you look back, going back even five or six years, what are the biggest constraints that have slowed you down? A. There is more than one aspect. To list them, maybe not in the right ranking: one issue is the problem of accountability. If you don't have an internal drive, accountability is a very good drive, because when you commit to something and people are evaluating you by what you have achieved, it’s a very good drive. It's a drive that applies for ministers, for prime ministers, for directors, and for civil servants.

Q. Accountability to whom? A. Accountability to the system. If you are a government, accountability to the parliament, because in your declaration you promised something; accountability when you are a director and you have to lead your administration, you have accountability to your institution; accountability of the civil servant to his authority. This is something that is important to have because it gives you an additional drive; and it can help you, because people feel that they have not only the will but also the push. Second is the lack of adequate resources sometimes. In Lebanon, one of the issues faced by the Lebanese administration due to the civil war is that the backbone of the administration, which are the middle managers, are lacking. The third element is the legislative process: laws take time to be approved by parliament, and some time there is a certain aspect in which they are altered because of certain compromises. Another element is a cultural issue: the way people think and behave. You have a lot of creativity, but this also means a lack of some kind of discipline in implementation. You have a great sense of achieving against a lot of constraints, but you fail in the follow-up – the maintenance. For a reform to succeed, you don't have to just do it; you have to reap the benefit, and reaping the benefit means doing the maintenance work, improving it continuously, using it as a stepping-stone for higher-level reform. This is the difficulty you have in a country like Lebanon. But, one has to see those weaknesses and try to work around them. Also some staff lag behind others in adopting a reform and change mentality. Reforms that needed coordination among several ministries were difficult to achieve in some cases, i.e., when ownership of the process was not clear to all, or leadership was not explicit among equals. Another weakness was the inconsistent enforcement of discipline in cases when rent-seeking political behavior made it hard to apply the law. Having said that, I think what has been done at the level of the Ministry of Finance throughout the last 15 years is a good model -- not to follow, but to at least study and to see how things were able to move in one of the most difficult ministries, one of the ministries that are most highly unpopular. There are successes and there are failures; one can learn from both. At the end of the day, what is behind all these reforms is a real commitment -- a real commitment that translates into day-to-day actions, that may not be

4 visible immediately. You have to have the modesty to accept what others have started before. You also have to have the creativity to find solutions for issues that you cannot address head-on. And you have to always have a bigger ambition; otherwise, it will become process-redesign and changing some procedures. If you don't understand the reason behind automation or redesigning processes, or reorganizing institutions, because this is not reform -- those are the tools to achieve reform. Reform is to improve the way you deal with your customers, to make your institution more effective, to invest in human resources, to create internal culture that makes your people feel that they are agents for change, that they are leaders. This is something that is very important: when you have the right people, the other aspects will become much easier. And also to fight against, as I said, a certain practice where accountability is limited and therefore the mentality that asks, 'why to do more when, when you do less it's accepted?'

Q. You have two key audiences. One is the public, and trying to make the public a player in the reform process to put pressure on the system to deliver better services. The second element is the staff –and you mentioned that you have to develop your own people. Did you look at the public as an ally, in a way, to try to raise expectations and to get the public itself to be a player in this process? A. In Lebanon, people are always putting pressure. Maybe it's not the right pressure, but they're always putting pressure on us to move on. What I tried to do since I became Minister is in fact something we tried before but something we didn't institutionalize: to develop a partnership approach. We have created for all reforms we've introduced a partnership. In addition to this, we've also created at the Ministry of Finance a joint- committee between us and the private sector in order to discuss various issues and problems faced by them; and try to develop the solution in a joint force. For example, we've created an ad hoc committee from the business community and from the Ministry of Finance in certain departments, headed by somebody from the private sector as a representative of the Minister in this committee. The role was to review a certain number of problems faced by the private sector in the Ministry of Finance. They worked together and identified 84 different issues; among the 84, we had 12 that were not related to the Ministry of Finance so we took them away. We've developed solutions together for 72 of the issues. We've drafted laws, we've created legislation, we've found the solutions together.

In parallel to this, I've created joint regular committees with the various stakeholders: with the business community, with professionals, with NGO's. In order to initiate dialogue when you have reform, you have to understand the views of the other party and vice versa. And now I'm encouraging the regional managers to create the same in the region. We have a big gap between the state and the society. This was a way to fill the gap in a cooperative manner whereby we are partners, instead of being adversaries. On the other hand, we worked with several NGO's and I created certain initiatives. I just met with the first group of trainees that worked with the Ministry of Finance; but we didn’t bring them without preparation. We sent them to the Finance Institute, the training center of the Ministry, for three weeks: training about the Ministry of Finance, public finance, etc.

5 Q. These are your employees? A. No, students, interns, who then have two months of internships at the Ministry. We did the same thing with a group of NGO's represented by students: the Lebanese Youth Economic Forum. These different initiatives created between us and a certain number of our partners a direct relationship. In parallel, we've commissioned a consulting firm to do customer service for us, for different departments, with the idea of translating it into a service contract. We use this as an approach to bridge the gap between us and our customers. And we felt that this is something we were doing, but in an ad hoc way. We've tried it at several steps. When we introduced the Value-Added Tax, we did it; we did a large communication campaign, with town-hall meetings, ads, visits to the Ministry of Finance. We did it when we were preparing the Paris III conference, with TV ads and all means for communication. The problem we have is we still do it on a case-by-case basis; it is not a continuous process, and this is difficult, especially in a country where political issues are hijacking all other issues. Today, if I bring a $10 billion grant from wherever, it will appear at best 15 minutes after the beginning of the TV newscast, because they are focusing on political issues. We still need to do some more communication, mainly to focus more on explaining to people where their money is going and how it is being spent; what does public finance mean for them; to make them become more sensitive to the issues we're trying to work on.

I just got this from my colleague in Egypt: he did a very good ad campaign for taxes, and I was reviewing it –it's very powerful, because it's very simple yet it explains things. Therefore, I agree with you: the difficulty for us is, maybe we did it, we have good progress with working with various stakeholders; but with the public at large, we still function on a case-by-case basis. Internally, to the contrary, we have a different approach. We have our training center that is also working as our internal think tank; our internal communication; we have an internal newsletter; we do regular training and seminars internally; and we have a very well-structured human resource management that helps us, especially with the young generation. It is more difficult with those who have 20 and more years of experience; I'm not saying it's not functioning, but they are more resistant to change. With the youth, it functions very well.

Q. What would you describe as the single most powerful motivating force for this whole reform process in the Ministry? A. I think it has shifted. In the beginning, when the reform process started, people were not understanding what was happening. In the beginning, it was the vision of a man who was a reformer. Fouad Siniora was a reformer. Q. He started the reform process? A. Yes. He was, and he still is, somebody who really believed in model governance. He believed in building institutions where the people are the key factors for success; this is why he created the training institute, the Finance Institute. In fact, he put in place the engine for reform, which was the UNDP project I was leading before he left. It is a group of young Lebanese who are working in the Ministry and with the Ministry. Therefore, at the beginning, it was the vision of a man and his obstinacy, because it took years and it took a lot of energy to succeed.

6 Then the process continued after him, and then he came back to the Ministry, and he reactivated it. In the beginning, we had a very clear vision of somebody who believed in modernization, not in only reform. He was somebody who believed in modern things: modern systems, modern technology, modern learning processes, and he designed an engine to implement all these things. Then, progressively, successes fueled additional belief: a new generation of civil servants, the need for the Ministry of Finance to make a quantum leap in terms of reforming itself. Those were, and are still, the drivers of reform. Now it's easier for me to continue work, because the drivers are there. It's like you are building a high-rise building: in the beginning you spend a lot of energy on the foundations, but those foundations aren't visible to the people – to the outside. And you have to have the design of the building in your memory, in your head, and you explain things to people who don't see it. And then progressively, when you see the building rising up on top of its foundation, you discover if you built the right building or the wrong building; if what you have built is stable or not.

Now we are in the second or third revel of reform. That makes things different, and the focus is now different. Now, I have a larger group of reformers at the Ministry of Finance. I have good infrastructure for reform, I have the right tools. I have credibility that was built at the Ministry of Finance throughout the years. Therefore, my job at the Ministry of Finance today is in fact to move up in the ambition, to go into new territories. As I said, now we're working on customer service. Ten years ago, that wasn't possible because we didn't know our customer. We had to build all these databases, and all these systems. Now we can develop phone and electronic services –all kinds of electronic things, because we have the systems in place. People are able to do it. My job now is to think bigger; to create new ambitions for the Ministry.

Q. What about moving horizontally into other Ministries? How much can you impact the others, and is there a danger that you may get ahead of the rest of the country? A. When you are at the Ministry of Finance, you have a de facto link for interaction with other ministries. But here, it varies from country to another because it depends on how the government is functioning. Do you have strong inter-ministerial coordination? Do you have a Ministry of Finance oversight on others? Which is not the case in Lebanon, so you have to do it differently. This is why I said, as Paris III shows, we had to create an institutional structure for implementing reforms. This is very useful for us because this structure is helping us to move on the reform agenda, because we're not only caring and in charge of the reform agenda of the Ministry. We also have a broader reform agenda to care about. But we had to create a structure that is not at the Ministry of Finance –it's at the level of the Prime Minister’s office. This is the higher authority that can coordinate among various Ministries. We didn't put the Paris III reform implementation at the Ministry of Finance; we put it somewhere else, in order to make sure that it will succeed. This is why now, horizontally-speaking, what we need to create is strong coordination among various ministries and agencies.

Second is to create deadlines, benchmarks, KPIs, at the ministries, to benchmark their work against certain objectives and to make sure they are moving along the line set for that. We also must create, in-house, a nucleus of reformists in the various ministries and

7 agencies. This is very important because at least you will expand those who speak your language. Electronic-integration is one example. Now, we are electronically integrating all ministries with the budget department at the Ministry of Finance. We are integrating the Ministry of Finance with the Central Bank when it comes to payments. We are integrating with other agencies when it comes to tax administration and customs administration. Q. Electronically? A. Yes. Now, all our payments are done electronically. We receive all our tax filings through banks, electronically or by mail, but there is no interface with civil servants. Our ambition is, in the next three years, to give any citizen the ability to do all the transactions at the Ministry of Finance electronically. This is also a lot of savings for us. We will save money, resources, rent, we will save time for people.

Q. How much have you been able to learn from other Arab countries? A. A lot. In fact, we've learned from others and we've helped others. We helped several countries, Gulf countries and other Arab countries: Egypt, Morocco, Jordan. We're helping Jordan establish a training center like the Finance Institute at the Ministry here. Also, we helped the Egyptians, for example, in their tax administration reform, and now they are going to send us a team for the land registry and cadastre system because we have a fully-automated one. We're getting help from others too. Egypt, as I said, we're trying to learn from their presentation. Jordan, we're trying to learn from their pension reform. Morocco, we have an agreement now to exchange experience on several things.

Q. Inter-Arab collaboration among reformers is probably a new frontier? A. We started it in 2004. We organized a conference here in Beirut for the Ministers of Finance of the Middle East. We hosted more than 12 ministries, and the topic was to discuss and coordinate reforms. This is something we have started. With the same approach, the International Monetary Fund created the Technical Assistance Center. This is something we fought for at the Ministry of Finance here in Lebanon. We also gave it a lot of support; they are located at the Ministry, and we are contributing to their budget. The objective is to create a new culture for reform to have the various ministries converging by creating similar policies. It is very important.

Q. How much of a set-back was the war last year for the reform process itself? Obviously the fiscal and growth situation for the year was set back, but did it detract from the process? A. Partially, yes. But, in fact, as I said, we had to internally –at the level of the Ministry and the government- we had to reactivate it. At the level of the government, we reactivated it through the Paris III process –even during the war. During the war, we started three things: to update the reform program; to conduct an economic and social assessment of the war –which we did with the World Bank– to see what it triggers in terms of reform needed. We did it at 17 ministries and agencies, whereby we went over all the issue and updated our sectoral reforms. It was very useful because nine agencies and ministries were involved. The third thing we started is that we launched new thinking about the future of the Lebanese economy in 2015: what should the Lebanese economy be doing in 2015, and what should the government be doing for the economy in order to

8 achieve that? This was launched during the war. This was one of the best things we did during the war: we decided that the best way to resist is to start thinking about the future.

This is at the level of the government and it translated immediately into reviving the reform program. Almost a month after the end of the war we were in Singapore, during the annual meetings of the IMF and the World Bank, and we gathered the group of countries that participated in the International Conference for Lebanon. We presented them our new reform program, revised after the war. At the level of the Ministry, the concept was different: the issue was to create internal motivation for people to get back on track. We had a series of internal seminars, whereby people were brought in to reflect on the reforms. The idea was only to bring people back together, and bring them back to work. And filing for this international award by the UN was another trigger to reactivate the reform spirit at the Ministry. It wasn't easy because the impact of the war was huge, psychologically.

Q. The Paris III process –everybody's question is how realistic is economic reform, structural reform, debt-management, and fiscal policy in the context of political stalemate? At what point does the reform process stop, in terms of hitting a wall in society? You're doing a lot of things inside the Ministry, for instance, but you need Parliament to pass laws. How big of a problem is that now, without Parliament? A. First of all, when it comes to Paris III, the difficulty on that front is that if you do less, you will be accused: 'what is this reform program?' and 'what is this ambition? It's not enough for what the country needs.' If you have an ambitious and comprehensive program, the criticism will be: 'but how feasible is your program given the current political standing?' I think the issue is the following today: the program has to be ambitious, because the issues we are facing are substantial and they are not improving with the current political situation. And, we need to understand, more and more, that policies are integrated and you cannot do public finance while you're not taking into consideration growth or other economic realities. You cannot address social issues if you have a fiscal imbalance. Therefore, all policies have to be part of one, integrated program; otherwise, you will miss it, or it will be weak somewhere. Yes, the program has to be globally-integrated and comprehensive. You have to be realistic in a sense; to take into consideration what works and what doesn't, and to try to circumvent issues and to find solutions for problems.

When we were preparing Paris III, we were not expecting that the Parliament would be blocked. When we came from Paris III, we started a re-phasing on the various initiatives in order to move on those that didn't need Parliament. As I said, in a country like Lebanon, you always have all kinds of excuses for not doing things. But the cost of not doing things is still higher than the cost of doing things and not seeing them achieved. Why? Because you will be losing time, and because you will be completely outdated. What you're doing may not be achieved during your tenure, but at least you will give it a greater chance to succeed –even if it's done by somebody else. What we are trying to do today is, while we're preparing to hand over in the coming months or two, is to prepare the maximum for the coming government in terms of reforms, initiatives preformed, draft laws; all kinds of things for the coming government to be able to move fast. In fact, the

9 current motto is: Be ready, even if it’s for others. Otherwise, we could have spent seven months doing nothing, and we have a valid excuse. Yes, some of what we are doing is not visible because it's not yet translated into laws. Some of what we are doing is work-in- progress. Some of what we are doing requires some political consensus. But still, you need to always be alert and to move on.

Q. One of the potential dangers that people talk about is exchange-rate instability, or the currency being hurt by this stalemate. What's your sense of how you've been able to deal with that? And how much is the reform process structurally linked to this short-term maintenance of the stability of the economy? A. In fact, we were –and we still are– moving on one track, and they are linked. One track is doing reforms: economic, fiscal, financial. Another track is to continue building a 21st century administration. And the third track is to maintain financial stability in a very unstable environment. As I said earlier, we went through the most difficult two years since the end of the war. Since the formation of the government, at the end of July, the political situation didn't give more than one or two months of stability. Since October 2005, we keep moving from political tension and one security problem to another. And always people were questioning our ability to maintain the financial stability. We went through a war, we went through a political stalemate, we went through security issues, we went through all kinds of problems that put pressure on us. We were able to maintain financial stability; we were able to maintain interest rates; the functioning of the state was normal, even during the war. We are currently going through one of the most difficult periods, also, which is the presidential election. While we're doing this, we were able to reduce our debt to the Central Bank by $3 billion; we were able to roll over more than $7 billion of foreign debt last year, without any difficult, and the big majority was during the summer of 2006.

Q. You reduced debt by $3 billion? A. We reduced debt by $1 billion. We reduced debt to the Central Bank by $3 billion, and the overall stock of debt by $1 billion. Our policy at the Ministry of Finance on that issue was that we knew we were in a transition period, and that this transition period could lead us to political tension. Therefore, what we did was to have proactive and preventive actions; proactive in a way that always addresses issues before they become problematic. For example, in 2006, we did a mega exchange for debt in order to reduce our roll-over risk. We kept the treasury very liquid, i.e., we tried to contain our spending, keep primary surplus in the budget. Why? Because we knew the situation may not be always politically stable, and your ability to contain expenditure is much less, or you cannot adjust your expenditure to the roof of your revenues, and therefore we kept the system under control, we kept the treasury liquid, and we introduced a certain number of mechanisms to monitor the overall public finance management.

During the war, for example, we were able to relocate our entire customs department. We were functioning seven days a week, 24 hours. The port was attacked, the airport was attacked; the customs maintained their activity. We were able to pay the salaries of all the public sector employees while the ministries were not functioning. Why? Because in the first day of the war, we took a certain number of measures in order to address security

10 issues. This is a policy we keep, and despite the political tension today, we are going to go through 2007 without major pressure. Despite difficulties the public finance of the government was under, we were able to give a certain number of incentives and support trying to help. Therefore, why were we able to do this? Because we were planning, we were monitoring, and we were internalizing a kind of action plan that is ready to face all kinds of problems.

Q. Is this a capacity that you attribute to any changes that were made in the Ministry in the past few years, or simply people learning to react to crises, wars, and difficulties? Is there a link to reform? A. Of course. The development of a treasury management system, the automation of taxes, the automation of customs, made it much easier for us. We were able, through the system, to project and to do scenario-analysis, and to think of contingency plans for the various services. Because of all the various reforms we were doing, systems were automated, employees were able to work on a remote basis, and the system was simply filed in a way that even if you are not somebody who has strong experience, you are able to function certain services. Without this, we would not be able, in fact, to take the right measures on time. To give you an example: because we have automated all the salaries and pensions, we were able to make all the payments through banks, even if the various ministries are not functioning. If we were in 2002, that would have been impossible. Some public sector staff was not able to get their paycheck at the end of the month. The same goes for customs. We were not able to plan for certain measures to improve liquidity management and treasury management, if we didn't have enough information, if we didn't have a direct and strong coordination with the Central Bank.

Q. There's a couple of big issues now that are going to come up that are sort of strategic issues, in terms of privatization, deregulation of some sectors. We are getting to a moment in Lebanon's reform program which is now organically linked with the Paris III, so what started out as a reform program within the Finance Ministry is now spreading to sectors of government through Paris III. You're getting big issues coming up. Do you expect political resistance to any of these issues, and how would you overcome that? A. When you do change, you are always faced with resistance. I think what is the most important is to communicate, communicate, communicate. Explain to people why this is important to them. Let's take privatization. Privatization will create new jobs. Privatization will give new growth dimensions to the Lebanese economy. Privatization will improve the quality of services. Privatization will reduce corruption, because it will reduce all kinds of interaction between public and private. Privatization will improve the quality of services delivered to citizens. Privatization will reduce confessionalism, because people will be grouped according to their merits and not their affiliations or allegiances. But you need to explain this to people. And you need to do it well: you need to show people you are doing it in a transparent way; that it is not going to be for a happy few, but would send a large number of shares to the Lebanese citizen. And also people should see that it is not a transfer of monopoly, which is why you need to privatize and deregulate at the same time to open up the market. But, as I said, the challenge today is to communicate to people why privatization is very important to them –not only to Paris III, to the treasury, or the government– but to their own interests.

11 Q. Your previous experience in the reform program has not required such a big public communication campaign, but the things that are coming up now might possibly require that, a different scale of communication. A. As I said, one of our weaknesses is communication. I think this is one of the difficulties in the whole region: how to communicate reform, and how to do proper communication, not the traditional selling of things –these arguments that need to be more specific, to tell people that it effects their own life; to show people why this is important for the future of their kids; and why by doing so Lebanon will be better. It's not an easy challenge to translate it into things that are concrete and not only theoretical or conceptual. Once government employees grasp the value of the reforms, they become the guardians of the reform process. They make it work. They make sure it endures. Nothing cannot be undone, including successful public sector reforms. The best way to ensure that reforms continue to achieve their goals – such as efficiency, equity, better service, economic prosperity, less corruption – is to anchor the process in strong institutional mechanisms. Awareness by employees generates buy-ins; when they feel they own the process, they will protect it.

Q. I wanted to ask you about two constituencies: one is the Parliament, and one is the international community. If you look at Parliament, going back four or five years before the current blockage, retrospectively, how important were Parliamentarians for you, and how easy was it for you to deal with them? A. All parliamentarians are very important, and the work with Parliament can be improved. The Ministry has done a certain number of initiatives to work with Parliament, especially with specialized committees, the Finance Committee and the Law Committee. But I think it can be done in a more structural, institutional way, to work with the parliamentarians in order to involve them in the making of the reforms –prior to sending them as draft laws. The second is to be more transparent to them, not only by providing them with information, but also by providing them with analytical elements; because not all Parliamentarians have time to read, or spend time following up on specific things like public finance. Yes, of course, I think this is very important as part of the work of any minister or any program you need to invoke.

Q. Where there any problems? Did they block some of the reforms? And were you able to overcome this? A. Of course. There are two levels: the convincing level, which comes with the regular work, and the political level. Sometimes the opposition is not motivated by opposition to the reform itself, but because the party you are representing is against what the government is doing. Q. Technically, you can get through it by talking to them? A. Some, you can get through it by explaining the policies and reasons behind it; and some is because of the political balance-of-power.

Q. And how about the international community? A. With the international community, we have done a lot in terms of keeping the dialogue open. We have created what we call the Core Group for Process Preparation for

12 Paris III. We're providing them with information on a regular basis. We're holding quarterly meetings to explain the progress of the reform agenda, as well as also the implementation of Paris III. We have very active communication channels with various donors. Now, we are creating a new financial management tool in order to coordinate and to follow up on all the grants, loans, and all kinds of assistance that Lebanon is getting after the Paris III and after the war. We need this to give the full picture and to be able to audit all the financial information and to increase not only the level of accountability but also the respectability of what we are doing on this front.

Q. These links with foreign governments and donors –given the criticism out there, and given that this technical process has turned essentially into a political process– are they a constraint on the reform process? A. First of all, on the economic issues there is very much convergence among on the various political parties, and it was proven recently by the EU where representatives of various political parties met for two days to discuss economic policy issues. And they came up with certain policy recommendations that are very close to what is in Paris III. On the policy level, I don't see the divide I see in politics. Sometimes the opposition, or the attacks, are politically motivated. You cannot address them by explaining additionally, because you aggravate them further.

Having said that, this label of externally-imposed policies, it's wrong. This is the first time Lebanon has imposed its own economic program, and this program has been accepted by various international organizations and countries. Yes, of course, we learn from other experiences, and it will be a mistake not to learn from other experiences. It also would have been a mistake not to get the best of what has been done by others, and this is why some of the best reports on Paris III have been presented by various political groups, including those who are in the opposition. We have no problem with that. On the contrary, what we believe is good policy we will implement and endorse. In fact, I don't see serious criticism on the economic front that is really technically solid. All what I see is politically-motivated in order to fill in the general criticism, the gap that is related to the economic part.

Q. Are there any other elements that you'd like to touch on, looking back at the reform process, in terms of major lessons you've learned? A. The lessons learned are several. To succeed in any reform agenda you need to have certain ingredients. One is real commitment; it's even more important than the pure vision. Second, you have to have the right people, and you have to invest in people. Third is continuity. Reform has to be introduced; the process takes time. It's like farming: it's daily work and it's an endless process. Otherwise, you will fail. It never ends. And you have to go from one project to another, from one idea to another. You have to learn from what others are doing. You have to have it. This is something that is very exciting. At the end, what you do is big change.

Q. What you're trying to do is really ambitious, trying to transform many antiquated systems all at once. A. But it can work. It's not something that is difficult to achieve.

13 Q. Of course it can be done. Look at Ireland, Singapore. A. Dubai, Jordan, Egypt, too. You have many examples in our region now, you don't have to go far. ###

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