Lebanon’s Political Honeypot: What’s Behind the Telecoms Spat

Posted by Qifa Nabki

The following commentary is by a well-informed reader of this blog who goes by the pseudonym “Charles”. He was one of the authors of the excellent Lebanese Political Journal blog (largely defunct since about 2007, but a must-read during the post-Hariri assassination years), and his intervention provides some much-needed context on the larger issues behind the telecoms showdown in Lebanon.

Reader Commentary by “Charles”

It appears that the basic problem is a lack of state accountability. Two oligarchic factions are standing off against one another.
The discussion to privatize Ogero goes back to the days of Prime Minister Rafiq Hariri (and Finance Minister Fouad Siniora) who had the political and economic clout to privatize Ogero and make it his own. From 2003-4, the Syrians severely limited Hariri’s privatizations, which resulted in Moody’s downgrading Lebanon’s bond rating, as the government was not following its own debt restructuring program according to the guidelines set out in Paris II, which included promises to privatize the telecommunications network, the electrical grid, MEA, amongst other things.

Of course, the re-election of Lahoud and the removal of Hariri put everything else on hold, but Hariri’s men remained in their positions in the ministries waiting for their leader to return to power. Omar Karami’s (and Finance Minister Elias Saliba’s) failures alongside Syrian heavy handedness almost guaranteed Hariri’s return to power and a return to privatizations.

When M14 won the 2005 elections and then negotiated Paris III, the privatizations were supposed to continue, but did not because of opposition from Jumblatt, Berri, and Hezbollah, who humiliated Hariri and Siniora by rudely making their opposition to privatization known during the PM and Finance Minister’s meetings in New York and DC (something we saw them do once again to topple Hariri’s gov’t in 2011).

The telecoms privatization continued to fester under Marwan Hamade who, despite his affiliation with the March 14th coalition (M14), also had problems with Abdel Monem Youssef who was still waiting to become the director of the newly privatized Ogero and make his millions. The M14 appointed and affiliated director of the Telecommunications Regulatory Authority (TRA) Kamal Shehadeh had major problems with both Hamade and Youssef.

The transfer of telecoms to Gebran Bassile was a remarkably intelligent move by Michel Aoun. Without a financial power base of his own, Aoun needed a source of wealth to finance his politics, and he went to the same sources of money that finance a huge portion of Lebanese government operating costs: (1) foreign backers; (2) and the government owned telecommunications networks that allow Lebanese to do what we do best: talk on cell phones.

Since then, both specific interests within the Future Movement (not the entire party, and definitely not all of M14) and specific interests within the FPM (not the entire party, and definitely not all of the March 8th coalition [M8]) have determined the debate over telecommunications. This debate went from being nasty under Gebran Bassile to being an all out war under Charbel Nahhas, under whose tenure the esteemed technocratic TRA head Shehadeh resigned in disgust (Shehadeh’s personality and political disposition is remarkably similar to Ziad Baroud).

Hariri/Siniora provide political backing and will reap the profit; Rifi provides enforcement; and Youssef holds the fort. Aoun/Bassile provide the political backing and will reap the profit; Nahhas, OTV, and the ISF Embassy division (this division swears allegiance to the FPM?) provides the enforcement; and Aoun holds the fort through tedious negotiations over cabinet formations.

In the mean time, Hezbollah established their own network, thus by-passing the squabbling over privatizations, making millions (if not billions) using its own telecommunications network, weakened the Lebanese government through depriving it of one of its greatest sources of revenue (receipts from telecommunications traffic), provided cheaper and better communications for its partisans and others, and defending its own interests with its weapons.
Sure, there is espionage stuff going on – which Future, the FPM, Hezbollah, Israel, etc. like to play up because once it is brought up Lebanese brains stop behaving rationally, but its really about who reaps the spoils from the biggest honey pot in the country.

The current squabble is over the privatization of Ogero and the possible creation of a third mobile network. Aoun and Bassile refused to play the Lebanese political game in which they would have made a deal with Hariri and received a cut (Lebanon’s system of creating consensus), and have been trying to take the candy away from Hariri/Youssef for years. Nahhas has been the most effective at dismantling the Hariri/Youssef network, which is why the relationship between the two factions has become so nasty. They don’t understand why Aoun isn’t playing by the corrupt rules of Lebanese politics with them, even though he does with almost every other faction.

Youssef hunkering down created a stalemate to be resolved in the future. Nahhas is trying to resolve the situation now, because…

Enter Najib Miqati, and the situation becomes an emergency for both FM and FPM, which is why they are behaving so badly at this precise moment. The Miqati billions were created through telecommunications. Taha Miqati was a small time construction contractor in Khaleej until he established his satellite communications up link, which created enough profit for the Miqati brothers to make their billions. Their business relationships with the Assad regime (and more specifically with Rami Makhlouf) involve telecommunications.

If Miqati gets the telecoms portfolio in the next government, Hariri will cut a deal and Youssef will get his pay out (and he’s been waiting a long, long time). Aoun and Bassile get screwed. However, Hariri has a much worse hand with which to negotiate if Youssef doesn’t have a full network and doesn’t have a large base of operations that he controls.

Miqati has the political might to privatize the telecoms networks, or at least upgrade them, but he will have to cut deals all around, including with HA, Berri, and Jumblatt. Hariri is in a much better position if Youssef is in a dominant position. Youssef can throw a wrench in the works of any future privatization deal.

Nahhas technically had the right to take his action with the equipment, but the FPM isn’t following the “no victor, no vanquished” consensus model of Lebanese politics. They made it personal, and Future is responding in a surprisingly immature manner given how much they have to lose in this.

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