Traboulsi: Wealthy elites directly control government, indebted the state to
their own banks
PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I’m Paul Jay, and we’re coming from Beirut. Now joining us is Professor Fawwaz Traboulsi. Thanks for joining us, Professor.
FAWWAZ TRABOULSI, PROFESSOR OF POLITICAL SCIENCE AND HISTORY, LAU: Thank you.
JAY: So let me just let people know you’re a political activist, you’re a prolific writer. Your most recent book is A History of Modern Lebanon. So when I drive around Beirutï¿½it’s new to me; I haven’t been here before. And I was a little astounded at not just the modernity of it, but the appearance of the wealth of it, driving down, these enormous billboards selling the most expensive designer clothing and the most highest priced cars. And then you get into downtown Beirut and you see bank tower after bank tower. And the image we have of Lebanon is Hezbollah at war with Israel. So this is a very complex country. Give us some idea what’s going on here.
TRABOULSI: Well, it’s both, actually, but there’s, in between, a lot, a lot in between. We are a country of many rich people, but we are a very poor country in the sense that we are highly indebtedï¿½we are $50 billion in debt. I can’t say we’re a poor country in the sense that you’d say about a poor country, but we’re a country with very strong social contrasts.
JAY: And just to put that debt into context, you mentioned to me before, this is almost the same size as the debt of Egypt, which is obviously a far bigger country.
TRABOULSI: Definitely. Definitely. So it is a big burden on the lives of the Lebanese, and each Lebanese is indebted up toï¿½what?ï¿½$9,000, $10,000.
JAY: And indebted to who?
TRABOULSI: Well, indebted mainly to our own banks, which is also very peculiar because after the end of the Civil War, 1990, there was this choice of reconstructing the country by attracting big money through government bonds, and I think Lebanon put the highest percentage of government bonds rates and interest. We shot up to 42-47 percent.
JAY: Paying 42 percent interest?
TRABOULSI: Yes, yes, yes.
JAY: Which is astounding.
TRABOULSI: Of course, that was on the assumption that Middle Eastern peace is coming, and then the rewards would be enormous. It was based on a very bad calculation, and there was no Middle East peace coming. And so we did build a huge Beirut city center [inaudible] of one million square meters of office space. A lot of it is still not occupied, and it did cost a tremendous amount of money.
JAY: So to understand the transaction, you have privately owned Lebanese banks, on behalf of the government, selling these bonds at 49 percent. The money is then owedï¿½this is foreign money? Or it’s Lebanese money that’s loaned to the banks?
TRABOULSI: No. It’sï¿½I mean, it’s everything. But now I should say that now it’s 17.5 percent, the interest rate on government bonds.
JAY: Given, at a time when rates in the US are practically zero.
TRABOULSI: Yup. And at that time in the ’90s you had an inflow of international capital, Arab capital, attracted by the huge [inaudible] profits that you can imagine. But a few years, when the rates came down, most of those sold their government bonds. So now we haveï¿½actually, 40 percent is foreign debt, and 60 percent is mainly our local banks. Now, when we say Lebanese banks, we meanï¿½it’s not always necessary to mean that the Lebanese own the majority of those banks. Usually you have oil money invested in it.
JAY: And by oil money you mean Arab oil money?
TRABOULSI: Arab oil money, Arab oil money. And for a time, American banks had a strong hold on Lebanese banks, especially before the war. But you still have a good chunk of non-Arab shares in our banks.
JAY: Is a significant amount of the money Saudi money?
TRABOULSI: Yeah, definitely, definitely. Saudi, Khaleejiï¿½Kuwait, Bahrain, the whole lot.
JAY: Now, many of the people or families that own these banks are also running the Lebanese government. Is that correct?
TRABOULSI: In a sense, yes, and that’s the paradoxical situation. And Lebanon, now, you tell me you seeï¿½people see Lebanon as Hezbollah, but, I mean, the overall impression is that Lebanon is a country of sects and ethnicities, and politics is seen as being the politics of ethnicity. So a lot of economic power is very much camouflaged, whereas we are run by a party of bank owners, importers, and of course contractors. Those three effectively run both the state, the economy, and are the greatest influence, let’s say, over the political bosses, who are not necessarily the same people, but who are very much related to the banks.
JAY: In terms of the Hariri â€‹family, there you have a direct connection, you know, between a family that owns banks and many other things and also [inaudible]
TRABOULSI: That’s not the only link. I mean, the owner of the biggest bank is also a minister. You have three billionaires representing the city of Tripoli who are MPs. Well, one thing is obvious, and that is the rich peopleï¿½but more precisely the capitalist rich people, not the landed propertyï¿½are now a high percentage of people in power directly. Before, it was political bosses who catered for economic powers. Now those who hold economic power, especially after 1990, after the war, and with the advent of the late prime minister Hariri, they are more directly represented in the organs of power.
JAY: And in the cabinet [inaudible]
JAY: So if you have this elite running the banks, and many of them own big hotelsï¿½’cause tourism is a big deal here as wellï¿½what is that relationship of that elite to Hezbollah?
TRABOULSI: Well, to jump to Hezbollah, you have to introduce the long conflict between Lebanon, the Lebanese people, and the state of Israel, which started in ’68 with the beginning of the operations of the PLO organizations, but perhaps the watershed was the Israeli invasion of 1982. The generation of the fighters of Hezbollah were the children who witnessed, if you want, the 1982 occupation. And that 1982 occupation, which lasted to the year 2000, spurred two kinds, actually, of resistance. The first resistance was a leftist resistance. Three Marxist parties in 1982, September 1982, declared something called the Lebanese Front for National Resistance. They were followed two or three years laterï¿½actually, one year later, by the Islamic resistance of Hezbollah. And for a long time you had a secular resistance and an Islamic resistance. Actually, for many reasons, the leftist resistance was blocked and it was very much weakened, let’s say, by the Civil War. Hezbollah was not [inaudible] And by the ’90s it was Hezbollah mainly that was the official resistance movement, with great successes, culminating in the year 2000 with the withdrawalï¿½let’s say the eviction of the Israeli troops from Lebanese territory. So resistance produced real liberation of 10 percent of the Lebanese territory that was occupied by Israel and its surrogate army, the Army of Southern Lebanon. So that’s very quickly the story of Hezbollah. Now, Hezbollah is also a party that represents a sect, and that’s the Shiite sect. Let’s say it’s the strongest party representing Shiite sect, exclusively [inaudible] membership of it. And after liberation, Hezbollah is part, if you want, of the political setup of the country, where the political system is based on the representation, the political representation, of sects. And so Hezbollah is part of the share of the Shiites in the Parliament, in the cabinet, and of course is the only Irani Lebanese party which is officially armed. Now, of course, as a result of mainly the lost Israeli aggression of July 2006, Lebanon has become an integral part of the Arab-Israeli conflict. Lebanon now objectively [inaudible] and has two armiesï¿½an official army, which in 1982 was not allowed to resist the Israeli occupation, by political power, by those in power; a resistance movement which now is a very strong army, it’s a very strong army with formidable missile power, not to speak of [inaudible] very well trained, hardened, and well-equipped fighters, a few thousands of them, who [inaudible] proved that they could repel, at least, or defeat attempts by Israel to take over land in the year 2006.
JAY: Well, in the next segment of our interview, let’s talk further about Hezbollah and Israel, and Hezbollah and Lebanese bankers. So please join us for the next segment of our interview with Fawwaz Traboulsi.
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