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New Texts Out Now: Hannes Baumann, Citizen Hariri: Lebanon's Neoliberal Reconstruction

Hannes Baumann, Citizen Hariri: Lebanon’s Neoliberal Reconstruction. Hurst: London, 2016.

Jadaliyya (J): What made you write this book?

Hannes Bauman (HB): On 14 February 2005 I was preparing my PhD proposal in the library of IFEAD, the French research institute in Damascus. During a break I noticed that people were huddling around a portable TV in the lobby, transmitting grainy images of a bomb explosion. It was the Beirut blast that killed former billionaire-prime minister Rafiq Hariri. A month later, on 14 March I witnessed the Beirut rally calling for a withdrawal of Syrian troops, which later gave its name to the “March 14” coalition led by Sa’d Hariri.

Protestors demanded the truth about Hariri’s killers. The UN established an investigation and a mixed Lebanese-international tribunal try the assassins. However, what intrigued me about Rafiq Hariri was not the manner of his death – although that is of course an important question. I was more interested in what Hariri’s life tells us about Lebanese politics. Hariri was neither a militia leader during the civil war of 1975 to 1990, nor was he from one of the elite families who had dominated pre-war Lebanese politics. He was the son of a smallholder in southern Lebanon. He grew rich as a contractor in Saudi Arabia during the 1970s oil boom. He then returned to Lebanon as an investor and Saudi mediator in the 1980s and later prime minister in the 1990s. He shaped Lebanon’s post-war reconstruction like no other. What does the rise of a political outsider tell us about Lebanese politics?

J: What particular topics, issues, and literatures does the book address?

HB: I am using what sociologist C Wright Mills called “the sociological imagination” – using individual biography to explain social, economic, and political change. This also means that this is no conventional biography. I do not inquire into my subject’s personality, emotions, or motives. This is not the story of a great man shaping history, but what the political biography of the man tells us about Lebanese history. It is a study of the society that enabled Rafiq Hariri’s politics. Nor does Hariri act alone. He built his own network of employees and collaborators, and he is in conflict and cooperation with militia leaders and the Syrian regime and other elites.

I learned two main things: Firstly, Rafiq Hariri epitomized the rise of Gulf capital in Lebanon’s political economy and the decline of Lebanon’s pre-war bourgeoisie. Hariri’s economic policies made Lebanon an outlet for Gulf capital, exposing the country to the vagaries of oil-induced boom and bust. Secondly, the most useful lens to analyze Hariri’s reconstruction of the Lebanese economy was neoliberalism.

Hariri’s policies throw up a research puzzle that is central to understanding the nature of neoliberal capitalism. Hariri’s two signature policies were the reconstruction of central Beirut through private developer Solidere, and anchoring the Lebanese pound to the US dollar. Hariri argued that the successful pre-war economy had been disrupted by the civil war. He promised to return Lebanon to the world. Beirut’s city center, reconstructed with world class infrastructure, was to be Lebanon’s business card, an advertisement to draw in foreign investors. A currency anchor was to inspire investor confidence. Lebanon’s return to the world economy was to be driven by the private sector. Hariri justified his policies with liberal rhetoric.

And yet these very policies were deeply illiberal. Even during the days of the militia economy, Lebanon was not a closed economy. In the Beirut city center Hariri mobilized the state to reassign property rights from tens of thousands of owners to development company Solidere. Secondly, Lebanon had a floating exchange rate and free capital movement since 1952. Hariri ended the float and anchored the currency on the US dollar. Interest rates had to remain high to sustain the anchor. While this was costly for the treasury, it was highly lucrative for Lebanese commercial banks who hold most of the debt. Rafiq Hariri owned one of them. Some commentators have therefore argued that Hariri made Lebanon less liberal than it was during the pre-war era, when the freewheeling country was known as the “merchant republic”.

With Hariri we have liberal talk and illiberal walk. This contradiction is not unique to Hariri but goes to the heart of neoliberalism. Neoliberalism is not a defined set of policies but a jumble of contradictory projects: An ideological project which says that markets allocate resources more efficiently than the government, and a political project which favors capital over labor. Neoliberalism requires the rollback of the state through privatization or welfare cuts, but it also requires strong state action to build markets and to ensure capital accumulation. Lebanese neoliberalism was first and foremost a project defined by the interests of Gulf contractor Rafiq Hariri and his business partners.

The book has six chapters. The first introduces the main themes. The second chapter explains Hariri’s rise from outsider to key politician. During the civil war Lebanon lost its role as trade and financial intermediary between Arab East and Western industrialized countries. Lebanon’s pre-war bourgeoisie declined in political and economic importance, opening the way not only for militia-associated business cronies but also Lebanese emigres such as Hariri who had grown rich in the Gulf during the 1970s oil boom. Hariri became the politically most successful of this crop of emigres because he came to act as a Saudi representative in civil war diplomacy. In chapter 3 I analyze key rent key rent-creation mechanisms that Hariri put in place: Solidere and the currency anchor. Hariri’s network of technocrats and former employees took charge of key state institutions. Lebanon subsequently became an outlet for Gulf capital. Chapter 4 enquires into Hariri’s relationship with Lebanon’s sectarian system. While he initially showed little interest in building a following within his own Sunni community, he came to act like a more traditional Lebanese za’im (political boss) in the late 1990s for electoral reasons. I show how he politically neutralized Beirut’s Maqasid association and provided health and education services through his own Hariri Foundation. Maqasid has been a power base for Beirut’s Salam family and symbolized the philanthropic muscle of the capital’s traditional Sunni bourgeoisie. The rise of the Hariri Foundation and the relative decline of Maqasid thus epitomized the eclipse of Lebanon’s pre-war bourgeoisie by the new Gulf contractor. Furthermore, I show that Hariri’s economic policies reproduced the economic inequality that underpins Lebanese confessional clientelism. The businessman was disciplined into behaving like a traditional Lebanese politician. Chapter 5 deals with the political crisis after 2000 which led up to Hariri’s assassination. While international factors were dominant in this period, I look at the way that Hariri used privatisation to undermine rival elites and how he called on Saudi support to avert financial collapse. A final chapter concludes.

J: How does this book connect to and/or depart from your previous work?

HB: This was my PhD research, so it was not much of a departure but the book did push me in a novel direction: the international political economy of the Middle East. I was trained as a historian and comparative political scientist. Researching Rafiq Hariri made me realize that the IR sub-discipline of international political economy (IPE) ignores the Middle East.

J: Who do you hope will read this book, and what sort of impact would you like it to have?

HB: The book is primarily aimed at people who want to understand Lebanon’s political economy. There are a few other excellent treatises on post-war political economy, but the bulk of the literature deals with sectarianism, foreign meddling, and Islamist violence. By looking at Rafiq Hariri, I was trying to bring the political economy back into the study of Lebanese politics and to show how it relates to these other themes.

The book is also aimed at anyone who wants to learn about Middle East political economy. It is a case study of the influence of Gulf capital, the corporations, tycoons, and sovereign wealth funds that have invested heavily in the wider Arab world in recent years. These investments have had profound economic and political effects and Citizen Hariri is an effort at understanding these effects in Lebanon.

Finally, Citizen Hariri provides a case study of a businessman running the government. The tycoon-as-politician has become a type. Donald Trump is only the latest addition to this club. Silvio Berlusconi in Italy, or Thaksin Shinawatra in Thailand, are other examples. They all share similarities: They run as insurgents against ossified political systems, they try to run government as businesses, but do so in a highly personalized style that is anathema to democratic politics, and they often end up being highly polarizing figures.

J: What other projects are you working on now?

HB: Studying Rafiq Hariri led to interest in the wider economic and political effects of Gulf investment in nonoil Arab states. My current three-year project funded by the Leverhulme Trust is the first comparative study of such investment. I compare the politics of four Gulf-funded urban development projects: Solidere in Beirut, ‘Abdali in Amman, Rawabi in Palestine, and Bouregreg in Rabat. I use Peter Evans’ concept of the “triple alliance” between foreign (Gulf) investor, recipient state, and domestic capital to model the politics of these projects. While they all reproduce a template of neoliberal urban governance and accumulation, they also differ according to specific local political conditions. The project is set to turn into a second book. 

Excerpt from the Introduction:

Biography and ‘actually existing neoliberalism’

The puzzle of post-war economic policy is the contrast between Hariri’s liberal rhetoric and his illiberal economic management. Hariri’s partisans argue that political opponents, such as the Syrian regime and former militia leaders, were forcing the billionaire prime minister to compromise his free market principles. However, this does not explain why the centrepiece of Hariri’s reconstruction – rebuilding central Beirut and currency stabilisation – had strongly illiberal elements. No one had forced these policies on Hariri. The contradiction becomes analytically less troubling once we acknowledge that it lies at the heart of neoliberalism. Neoliberalism is a contested concept, rarely defined, and almost always used pejoratively as an ‘anti-liberal slogan’ and ‘an intellectual swearword’. I will therefore now define the term neoliberalism to show its usefulness for analysing Hariri’s post-war reconstruction.

Neoliberalism is an economic orthodoxy, a ‘utopian project ... for the reorganisation of international capitalism’ based on the premise that the market is a superior mechanism for the allocation of resources. This is the first facet of its definition and it chimes with classical liberalism and neoclassical economic theory. Where classical liberalism often invoked the laissez faire economy and the minimal nightwatchman state, neoliberalism seeks an interventionist state that clears the way of any impediments of the market mechanism. Where there is no market to solve societal problems – say to tackle global warming – the state creates markets – for instance emission trading. Neoliberalism therefore ‘rolls back’ the state in some respects, for instance through privatisation and deregulation, but it also reregulates. This includes the marketisation of the rump state itself as expressed in ‘new public management’ where public agencies emulate private firms. Pierre Bourdieu points out that neoliberalism weakens the ‘left hand’ of the state, concerned with welfare, but strengthens the ‘right hand’, concerned with economic management. This has opened up what Brenner called ‘new state spaces’ both of supra-national governance, such as the European Union, but also sub-national governance, such as urban governance.

The policies which arise from this economic ideology are not politically neutral. Through various mechanisms, such as wage repression or financialisation, the neoliberal restructuring of state and economy has increased profits and reduced wages, thus reversing the cooperative relationship between capital and labour that had marked the previous phase of ‘embedded liberalism’ from the 1950s to the 1970s. Neoliberalism is thus not just political because it restructures the state, but also ‘a political project to re-establish the conditions for capital accumulation and to restore the power of economic elites’. The neoliberal economy is deeply political because it involves class struggle. Neoliberalism’s twin nature as both an economic orthodoxy and a political project are the source of its contradictions, making it possible to justify illiberal and monopolistic practices with free-market rhetoric.

[…]

Neoliberal discourses and practices ‘travel’ but they are also always embedded in local politics. ‘Actually existing neoliberalism’ therefore requires ‘a careful mapping of the neoliberal offensive’ at local sites:

This means walking a line of sorts between producing, on the one hand, over-generalised accounts of a monolithic and omnipresent neoliberalism, which tend to be insufficiently sensitive to its local variability and complex internal constitution, and on the other hand, excessively concrete and contingent analyses of (local) neoliberal strategies, which are inadequately attentive to the substantial connections and necessary characteristics of neoliberalism as an extra-local project.

The nation-state remains the agent and the terrain of struggle for the neoliberalisation of politics, economy, and culture and local elites shape the scope, extent, and limits of neoliberal globalisation. Neoliberalism plays out within ‘a whole complex of political models, vocabularies, organisations and techniques’, which constitutes a political field of ‘organisation, mobilisation, agitation and struggle’ specific to a country.

 […]

How does Hariri fit into Lebanon’s political field? If neoliberalism is a class project, then what class was pushing it in Lebanon? Hariri was a representative of Gulf capital, which had accumulated during the oil boom of the 1970s. This background conditioned his ‘vision’ of reconstructing Lebanon. It is hardly surprising that a Gulf contractor would regard an urban megaproject as the key to economic success. Classes are social relations, not merely quantifiable and static groups, and as processes of accumulation change, social relations change. What we need, then, is not a neat locational map of specific classes ‘objectively’ identified through consumption patterns, household income, or vocational background – none of these choices being neutral for the nature of the analysis – but a focus on the process of accumulation. Hanieh has used this perspective on class to trace the accumulation and internationalisation of Gulf capital within the different ‘circuits’ of capital. Bogaert is looking at neoliberal class politics from a ‘socio-spatial’ perspective, examining the processes and contestation through which urban space is being produced through urban megaprojects and the provision of social housing in Morocco. Global neoliberalism provides actors with a set of practices and discourses, the reproduction of which provides the process by which we can then trace class politics. These processes can include privatisation, financialisation, fiscal austerity, urban redevelopment, public sector reform etc.

Hariri imported several of these templates to Lebanon. The most important ones were the Solidere mega project to reconstruct central Beirut, and the anchoring of the Lebanese pound to the US dollar. These processes created rents. For instance, property rights were reassigned to Solidere and luxury real estate was developed on the site. This resulted in land rent appropriated by developers. Rent is a useful concept for coming to grips with class politics. Rent as ‘super-profits’ is here not understood as an unfortunate aberration of capitalism brought about by malfunctioning markets, but as ubiquitous in the politicised spaces that are markets. Rent stands in for – and is analytically akin to – the Marxist concept of surplus, which capitalists appropriate. Lebanese Marxist Fawwaz Traboulsi advocates a definition of class centred on the appropriation of ‘social surplus’. Rent appropriation is here used as an approximation. I look at how rent is being created, who appropriates it, and how it is appropriated, i.e. through which institutional mechanisms.

Hariri was in charge of rent-creation mechanisms which conformed with a neoliberal logic: Reconstruction and currency stability. He placed allied technocrats at the helm of institutions such as reconstruction agencies, the central bank and the finance ministry. He thus effectively controlled those state institutions in charge of economic management. Rival political elites, such as former militia leaders, were appropriating rent by using the Lebanese state’s welfare agencies as patronage instruments. They put their personnel in charge of ‘service ministries’ such as health or social affairs. Gulf contractor Rafiq Hariri was pursuing a very different economic logic than his rivals among former militia leaders. These competing logics – creating investment opportunities for large corporations or state welfare as a patronage instrument – embody class struggles as mediated by the Lebanese political elite.

[Excerpted from Citizen Hariri: Lebanon's Neoliberal Reconstruction by Hannes Bauman, with author permission. © 2016] 

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