Neoliberalism and Investment
The neoliberal wave that has ravaged the world since the mid-1980s has narrowed the boundaries of the definition of investment. Neoliberals have popularized the diagnosis that social spending and state intervention are incompatible with economic prosperity, even if this spending increases the level of education and raises the health conditions of the population, with all the added value that these two factors bring to economic production. Thus, the state has been described as a source of problems in many countries, according to Jane Jenson in a study titled “Spreading Post-Neoliberal Ideas.” The neoliberals, at the international and local levels, underestimated the role of the state and promoted “structural adjustments” that would make the distribution of wealth through market forces, make families responsible for their own opportunities for success and achieve prosperity, and place the responsibility for securing social safety nets on the shoulders of society.
As part of the neoliberal reform agenda, citizenship began to be understood and promoted as merely individual market integration. At the same time, as part of the process of “structural adjustments”, the unified rights secured by the state’s investments in society are gradually withdrawn from workers and the poor classes, and replaced by charitable projects provided by third parties other than market forces and the state.
Post-war investment model
In Lebanon, when the defenders of economic policies in the past three decades talk about investments, they usually mean reconstruction funds after the civil war, and donor conference funds (Paris one, two and three) and the CEDRE conference (the great missed opportunity !!). It soon turns out that their definition of investment derives its legitimacy from the neoliberal roots of Prime Minister Rafic Hariri’s project. It is a definition that excludes spending on sectors of a social nature, even though they contain an opportunity to create added economic value, such as education and health, for example, which are systematically excluded from the public spending bill. Even with such exclusion, what these policies achieved had no real investment value.
In a study titled “Foreign Aid and Economic Development in Post-War Lebanon,” Ghassan Dibeh says that foreign aid in post-war Lebanon can be divided into two phases, each of which bears distinct features with far-reaching implications for the development of economic paths after the civil war. In the first phase, which lasted between 1992 and 1997, foreign aid was directed mainly towards providing resources for post-war reconstruction projects. On the other hand, the second phase, starting from 1997, witnessed a qualitative shift in the way foreign aid was used. The flow of funds shifted from meeting the needs of reconstruction to meeting the needs of ensuring financial stability and the needs of ensuring a balance in the balance of payments. This shift allowed the government to intervene in the foreign exchange market, and to maintain balance of payments surpluses during this period, which reduced interest rates on public debt instruments, and provided the liquidity and confidence required for the government to continue borrowing money from local commercial banks and foreign investors. More importantly, Dibeh adds: “This shift in the direction of foreign aid flows allowed the government to avoid financial and monetary crises in 2002. However, the cost of this qualitative transformation was great in terms of financial management, the transfer of funds from reconstruction, and an increase in the dependence of the Lebanese economy on foreign aid. For the purposes of securing financial and monetary stability ».
Most of what is described as an investment is nothing but financing for the EDL deficit resulting from the consumption of fuel to operate the electricity plants. The cost of this high deficit is due to maintaining a high exchange rate of the Lebanese pound against the dollar. While investment in developing networks and laboratories was very limited
In practice, neither phase of the flow of aid funds into Lebanon can be described as investments according to the traditional definition. Funding for reconstruction has not resulted in real financing for the development of infrastructure in Lebanon. Indeed, the figures show that what is pumped into the infrastructure and services networks is modest in relation to the size of public spending in the country. For example, the number that is thrown out for investments placed in electricity was not for real investments, but rather for operating costs. Most of what is described as an investment is nothing but financing for the EDL deficit resulting from the consumption of fuel to operate the electricity plants. The cost of this high deficit is due to maintaining a high exchange rate of the Lebanese pound against the dollar. While investment in developing networks and laboratories was very limited. As for the second stage of the flow of aid, it was never invested if we approved Deba’s description of the definition of investment. Rather, it was put in the service of the fraudulent pyramid scheme (Ponzi) applied by those in charge of managing the Lebanese economy in order to maintain a high exchange rate for the Lebanese pound and create inflated consumption capacity for residents that paints a picture An imaginary boom in an economy whose productive sectors are being systematically destroyed. In contrast, economic policy makers have deprived all Lebanese of basic social services (such as free education and medicine at the very least), which can be classified as investments. This was taking place under various neoliberal titles that serve the goal of classifying investments in these sectors as excessive expenditures that harm public finances, especially after 2001, when Lebanon is about to enter into a crisis similar to the one today.
So where are the investments that have been squandered in the furnace of conflict and instability? In fact, it is not correct to attribute the investments to the money spent. The goal of the financial flow after the civil war cannot be described as creating added value in the Lebanese economy. On the other hand, what happened can be explained, given that the United States (the central state in the global economic system) and its regional allies sponsored the injection of money after the civil war to ensure the building of a financial and economic system that would confirm the form of the settlement that ruled Lebanon after Taif within a neoliberal context. Therefore, no one has invested in the development of Lebanon and its people, neither the donor countries, the creditors, nor the curators in Lebanon in designing and implementing financial and economic policies. It can be said that no investments have been wasted. While proposing sustainable solutions should be born from the womb of studying the path of failure of the policies that were followed after 1992, and the most important study of its organic relationship with Lebanon’s links to the countries that secured the money and supervised its spending.
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