U.S. ambassador blames politicians for economic woes

Connelly: “I understand that Lebanese politicians have a lot on their plate these days.” (The Daily Star/Hasan Shaaban)

BEIRUT: The U.S. ambassador to Lebanon lashed out at the government Wednesday and urged politicians to put aside political differences in order to revive long-stalled economic reforms that are necessary for accession to the World Trade Organization.

In a speech at Lebanese American University Wednesday, Ambassador Maura Connelly faulted the Lebanese government for using security and political instability as an excuse to delay implementing laws that would spur economic growth.

“I understand that it’s hard to think about economic reform when you’re dealing with assassination plots, street fighting and border incursions,” Connelly said. “Sometimes, though, the reasons for failing to move forward on key reforms have less to do with security than with the vested interests, or the political rivalries, that keep the government from doing what it should to develop the economy for the betterment of the Lebanese.”

Connelly first took aim at the state of the Telecommunications sector in Lebanon, which contributes $1.4 billion in revenue to the government annually, yet remains the least competitive of the MENA region save for Libya and has telephone rates 10 times more expensive than in France.

Following Fouad Siniora’s pledge to liberalize the sector at the Paris III Donor’s Conference in 2006, technical assistants from the U.S. worked with the Lebanese government to form a Telecommunications Regulatory Authority, draft and pass laws, and prepare to auction the country’s two mobile licenses, Connelly said.

“In the end, however, successive telecommunications ministers in the Lebanese government refused to push the button on telecoms liberalization – forfeiting nearly $80 million in U.S. government assistance that was contingent on Lebanon’s meeting its Paris III commitments,” Connelly said. “Today, telecommunications and Internet – and the associated revenues – remain firmly under the control of the Lebanese government.”

Despite Lebanon’s connection to the massive undersea India Middle East Western Europe cable system, the country’s download speed ranks 147th out of 180 countries, Connelly said.

“I understand that a political dispute is a major factor holding up the country’s ability to flip a switch and exploit its access to the IMEWE system,” she said. “To those who say the government is better suited to manage these developments, I ask if private industry with its drive for profits and efficiency were the gatekeepers of the country’s infrastructure would a dispute like this really be able to hold up the country’s development?”

Next, she targeted the Economy and Trade Ministry for not taking steps to pass nine major laws that U.S. technical experts assisted in drafting over the course of 12 years to bring the country into compliance with WTO standards.

According to a regulatory impact analysis commissioned as part of the American WTO assistance package, the passage of the competition policy law alone would effectively double the size of the economy in just seven years.

“Yet for years those laws that were fully prepared and exhaustively studied have sat collecting dust on someone’s desk waiting for someone else to pick them up again,” Connelly said.

“I understand that Lebanese politicians have a lot on their plate these days. But the WTO competition law is a law that has already been prepared and sent to Parliament. All it needs is its day on the floor so it can be debated and passed. At a time when Lebanon is facing unprecedented challenges to the economy the prospect of an extra 10 .7 percent of GDP growth every year for 10 years is a debate worth having.”

Though Connelly said she was impressed by the Petroleum Regulatory Authority, she warned that while oil and gas revenues have the potential to create greater wealth for citizens, if handled poorly they can further entrench corruption, poor governance and economic inequality.

“For Lebanon to seize its economic advantages, we would like to see a new approach,” Connelly said. “An approach that understands it is in the best interests of all of Lebanon’s religious and ethnic communities to put the needs of the entire nation above those of any one specific leader or community.”

A version of this article appeared in the print edition of The Daily Star on February 21, 2013, on page 5.




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