Lebanon’s postwar rebuilding has valuable lessons for Syria


Michael Young
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A legitimate criticism levelled against many countries that have supported the Syrian opposition is that they have sought to shape the political aftermath in Syria even before they ensured that President Bashar Al Assad would be removed from power.

Such an approach has proven to be premature and detrimental. But in one specific case, that of post-war planning and reconstruction, thinking ahead would help define what kind of country Syria becomes. When the war ends, who comes out on top and what Syria’s political future holds are all questions impossible to answer today. However, whoever controls post-war reconstruction will have great influence over the possible outcomes.

The most illustrious case is the Marshall Plan after the Second World War. At the time, the United States offered economic aid to European countries ravaged by war, including former wartime rivals, the objective being to contain the spread of communism. This helped spur rapid economic growth on the continent starting in the 1950s, and ultimately helped provide an impetus for European integration.

In the Middle East, the case of Lebanon after 1990 is equally instructive. The Lebanese conflict of 1975-1990 was ended through the defeat of Michel Aoun's military government and the implementation of the so-called Taif accord – effectively a Saudi-Syrian deal over Lebanon sponsored by the United States.

It was not until 1992 that former prime minister Rafik Hariri, who was the Saudis’ man in Lebanon, began implementing his reconstruction programme. Though Syria dominated Lebanon militarily, Hariri’s control over Lebanon’s reconstruction gave him and the Saudis substantial leverage in national politics, a fact with which the Syrians were never comfortable because it eroded their power.

Hariri had two primary instruments: the confidence he elicited abroad, which allowed him to attract money and investments to Lebanon, from Lebanese and foreign institutions alike; and his plan for the rehabilitation of Lebanon’s devastated infrastructure, at the centre of which was a scheme to rebuild the destroyed downtown area, the jewel in the crown of the reconstruction effort.

The first, the ability to bring in money, gave him considerable political clout, as it stabilised the economy and permitted Hariri to be seen as indispensable to Lebanon’s economic revival. The second, his authority over major infrastructure contracts, gave him considerable patronage power, as both the Syrians and Lebanese politicians benefited in one way or another from what was going on.

The Syrians enjoyed the financial advantages of their leverage in Lebanon, made possible by the post-war confidence that only Hariri’s presence made possible. But their relations with the prime minister were always tense as they sought ways to contain his power. Their most decisive step in that direction came in 1998, when they decided that the former army commander, Emile Lahoud, would be president, with one of his principle tasks being to inhibit Hariri.

Syria’s obsession with Hariri ultimately led to the collapse of Syrian power in Lebanon when, in 2004, the former prime minister opposed a Syrian-led extension of Mr Lahoud’s mandate. Under Syrian pressure he was later forced to endorse it, but by then it was clear that Hariri intended to challenge the Syrians in the parliamentary elections of summer 2005. This is probably the reason why Hariri was assassinated in February of that year.

With respect to post-war Syria, the results will almost certainly be much more complicated than in Lebanon. If Mr Al Assad stays in office, the hostility he has aroused may mean that capacity to secure foreign assistance will be hindered, even if the Gulf states sign on to a peace deal. If the opposition wins militarily, the aftermath may be as uncertain, as this may be followed by a prolonged period of instability that postpones reconstruction.

Because the devastation in Syria is so widespread and many regional countries are looking for a say in what comes afterward, there is likely to be a division of the reconstruction pie. Unlike Lebanon, where the worst destruction was concentrated in Beirut, many Syrian cities will have to be rebuilt. Politically, a Balkanised reconstruction project may exacerbate inter-Syrian divisions, as specific countries focus on helping those areas where they can advance their political agendas.

This would defeat the primary aim of reconstruction, which is to act as a lever for national reconciliation. That is why any broad political resolution agreed must be accompanied by a reconstruction plan that underpins the political process. This could be tricky, however, as those who would assure such a direction both regionally and internationally have remained divided over Syria.

So too have Syrian politicians and factions, all of whom have an interest in becoming channels for post-war foreign assistance, and will seek to transform this into political power. As things stand today, what comes after the conflict may well, worryingly, reflect what we are witnessing during the conflict – namely chaotic, fragmented, self-interested efforts to shape political endgames, in which Syrians in general will have relatively little say. This may be the situation whether Mr Al Assad stays in office or whether he is removed from office.

More advisable would be an international committee tasked with overseeing the reconstruction of Syria, which could draft a coordinated national master plan in which Syrian representatives would have a voice. It could be placed under UN authority and establish, even manage, a transparent contract allocation system.

Even while the Syrian war continues, more thinking must be put into a post-war plan and creating safeguards to ensure it will not be hijacked for political purposes. This will be difficult, given the high stakes in manipulating post-war reconstruction. If anything, reconstruction can frequently be war by other means.

Michael Young is opinion editor of The Daily Star newspaper in Beirut

On Twitter: @BeirutCalling

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”