Supporters of former prime minister Saad Hariri burn tyres to block a main road in Beirut. AP
Supporters of former prime minister Saad Hariri burn tyres to block a main road in Beirut. AP
Supporters of former prime minister Saad Hariri burn tyres to block a main road in Beirut. AP
Supporters of former prime minister Saad Hariri burn tyres to block a main road in Beirut. AP

Fears grow over Lebanon elections as politicians deny postponement


Sunniva Rose
  • English
  • Arabic

Fears are growing that Lebanese politicians will find excuses to postpone a coming parliamentary election, foreign diplomats and analysts have told The National.

Politicians have maintained the elections will be held on time on May 15 amid the country’s worst economic meltdown.

The international community views the elections as essential if discussions over substantial loans from the International Monetary Fund and the World Bank are to continue in a bid to try to salvage Lebanon’s crumbling infrastructure and financial sector.

The US ambassador to Lebanon issued a warning earlier this month that there was “no wriggle room” on the country holding the elections on time. The EU announced on Wednesday that an election observation mission will be sent to the country at the end of next month.

“The EU encourages all political forces to participate in the coming elections and reiterates the importance for the elections to take place, as decided, in mid-May and for them to be inclusive and transparent,” Peter Stano, lead spokesman for external EU affairs, told The National.

The country’s top politicians have repeatedly promised that the elections will take place on time, while at the same time hinting at possible reasons for postponement, such as financing issues or security risks.

In May 2013, the Lebanese parliament pushed back elections a few weeks before they were scheduled.

Some diplomats are cautiously discussing the possibility of EU sanctions, although it remains unclear whether all member states would be in favour. In July, the EU adopted a framework for targeted sanctions, which includes the obstruction of elections as a possible reason.

“There are already strong indications that these elections will not be taking place. There is no interest by those in charge of holding them,” said a senior western diplomat.

“Lebanese politicians currently want it to look like they are doing their best by running on two tracks. One towards May 15, yet at the same time they bring all kinds of excuses into the debate.”

'Suicide' to cancel vote

The National spoke to two MPs, Elie Ferzli, deputy speaker of parliament, and Alain Aoun, a member of the parliament’s largest bloc. Both said there was no doubt that the elections should take place.

“We are in a situation where we need to regain the confidence of the international community and of the Lebanese public,” said Mr Aoun. “It would be suicide to cancel such an important vote.”

However, Mr Ferzli expressed some reservations.

“The only thing that can make elections impossible would be either linked to security [issues] or [anything that can] affect stability in Lebanon. I can’t imagine what, but for example, imagine the Sunni [Muslims] decided to not to be involved in the elections,” he said.

The Lebanese elite that pillaged the country and brought its population to the current catastrophe must be punished
Salima Yenbou,
member of the European Parliament

Mr Ferzli seemed unconvinced by statements made by Prime Minister Najib Mikati, who is a Sunni, and the country's grand mufti, who both stated they would not call for a boycott of the elections.

The Sunni community’s leader Saad Hariri retired from politics in late January, sparking concern that the country’s sectarian balance would not be respected this year. Sunni voters in Lebanon previously told The National they would abstain from voting in Mr Hariri’s absence.

In a speech on Wednesday, former prime minister Fouad Siniora called on the country's Sunni Muslims to participate in the elections.

“I want to tell all Muslims, and particularly Sunnis, that this is not a crisis of the Sunni community, but rather a national crisis,” he said.

The only time one of the country’s religious communities boycotted a parliamentary election was during the first postwar elections in 1992. Less than a quarter of Lebanon’s Christians, whose leaders had fled or were in hiding, participated.

“You should remember that the Syrians were here and kept stability,” said Mr Ferzli, who is pro-Syrian. Asked what would have happened without Syrian troops, which stayed until 2005, he said: “Civil war. This is Lebanon. It is very delicate.”

Postwar elections held under Syrian occupation were characterised by “gerrymandering, or the redrawing of electoral district boundaries, to ensure the election of pro-Syrian Lebanese candidates”, said Amal Hamdan, an electoral systems and legal frameworks expert.

Ms Hamdan said Lebanese politicians routinely fall back on threats of a civil war as soon as they feel threatened.

Opinions are divided on whether the coming elections represent a real risk to the country's political establishment. Some believe that reformist groups may capitalise on discontent caused by the country's economic crisis, while others, including Mr Ferzli, have issued warnings that traditional parties will remain strongly in place.

“Political parties could come back with a vengeance, knowing that the electoral law is biased in their favour,” said Karim Bitar, a professor at Saint Joseph University in Beirut.

With little hope of real change, voter apathy across all communities is expected to be high. Only 50 per cent of the Lebanese intend to vote, according to a recent poll conducted by the Konrad Adenauer Stiftung foundation.

The Economist Intelligence Unit recently downgraded Lebanon to an “authoritarian regime,” meaning, among other things, its elections are not free and fair.

Millions spent on electoral materials

The international community is providing substantial technical support to the elections in an attempt to make sure they go ahead. The EU has donated $6.6 million while the US gave $2 million via the UN.

Most of this is toward the purchase of electoral materials such as 25,000 bottles of indelible ink, 20,000 voting booths and 10,000 Covid-19 protective kits.

“The process is ongoing and the materials are expected to be received in due time for the organisation of the elections,” said the UN Development Programme.

The total amount of money allocated this year to organise elections is deemed to be enough — as long as the funds are distributed properly.

The Interior Ministry is set to receive $18 million, yet local media report that so far less than $2 million, or 40 billion Lebanese pounds, has been unlocked. The Interior Ministry did not answer a request for comment.

The $3 million meant for the Foreign Affairs Ministry to organise elections for the diaspora has yet to be disbursed, said diplomats. They pointed to the minister, Abdallah Bou Habib, asking for help to pay for DHL services to send ballot boxes back to Lebanon for counting. This is estimated to cost $900,000. Mr Bou Habib's press advisor told The National he was too busy for an interview.

Possible sanctions

Diplomats say they sense worry among Lebanese leaders that they could be the target of EU sanctions over their role in undermining their country’s democratic process. The possibility of sanctions made headlines last September when the EU Parliament urged sanctions on Lebanese officials.

“We saw quite a few people trying to hedge their bets by spreading their money around to different accounts,” said the western diplomat.

Politicians refused to link elections to sanctions.

“We hear talk about sanctions but they have never been discussed in the sense that elections are being held because of fears of sanctions,” said Mr Aoun, a member of the president’s political party, the Free Patriotic Movement.

The EU delegation in Beirut declined to talk about the topic of sanctions. MEP Isabel Santos, who headed an EU delegation during a visit to Beirut in November, was cautious in discussing them.

“Power needs to be legitimated by the vote of the people,” she said. “We need to see how things go with the electoral process.”

MEP Salima Yenbou, who participated in the November visit, said it was “unfortunate” that sanctions had not yet been put into effect.

“What more needs to happen in Lebanon for the European Council to decide that sanctions should be applied?” she asked, pointing to the lack of accountability after the devastating Beirut port blast in August 2020.

“The Lebanese elite that pillaged the country and brought its population to the current catastrophe must be punished,” she said.

Tips on buying property during a pandemic

Islay Robinson, group chief executive of mortgage broker Enness Global, offers his advice on buying property in today's market.

While many have been quick to call a market collapse, this simply isn’t what we’re seeing on the ground. Many pockets of the global property market, including London and the UAE, continue to be compelling locations to invest in real estate.

While an air of uncertainty remains, the outlook is far better than anyone could have predicted. However, it is still important to consider the wider threat posed by Covid-19 when buying bricks and mortar. 

Anything with outside space, gardens and private entrances is a must and these property features will see your investment keep its value should the pandemic drag on. In contrast, flats and particularly high-rise developments are falling in popularity and investors should avoid them at all costs.

Attractive investment property can be hard to find amid strong demand and heightened buyer activity. When you do find one, be prepared to move hard and fast to secure it. If you have your finances in order, this shouldn’t be an issue.

Lenders continue to lend and rates remain at an all-time low, so utilise this. There is no point in tying up cash when you can keep this liquidity to maximise other opportunities. 

Keep your head and, as always when investing, take the long-term view. External factors such as coronavirus or Brexit will present challenges in the short-term, but the long-term outlook remains strong. 

Finally, keep an eye on your currency. Whenever currency fluctuations favour foreign buyers, you can bet that demand will increase, as they act to secure what is essentially a discounted property.

GIANT REVIEW

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Rating: 4/5

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6.30pm: Maiden Dh165,000 2,000m - Winner: Powderhouse, Sam Hitchcott (jockey), Doug Watson (trainer)

7.05pm: Handicap Dh165,000 2,200m - Winner: Heraldic, Richard Mullen, Satish Seemar

7.40pm: Conditions Dh240,000 1,600m - Winner: Walking Thunder, Connor Beasley, Ahmed bin Harmash

8.15pm: Handicap Dh190,000 2,000m - Winner: Key Bid, Fernando Jara, Ali Rashid Al Raihe

8.50pm: The Garhoud Sprint Listed Dh265,000 1,200m - Winner: Drafted, Sam Hitchcott, Doug Watson

9.25pm: Handicap Dh170,000 1,600m - Winner: Cachao, Tadhg O’Shea, Satish Seemar

10pm: Handicap Dh190,000 1,400m - Winner: Rodaini, Connor Beasley, Ahmed bin Harmash

UAE currency: the story behind the money in your pockets

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.”

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Updated: February 24, 2022, 12:17 PM