Government Structure and Politics

Politics in Lebanon: Government Structure as a Political Risk Factor

November 14, 2015

I. Jamie Arabi – Leader of the Lebanon Risk Assessment Team

Edited by Michael Beatty – Graduate Researcher

Keywords: Lebanon, political risk, confessionalism, Lebanese Civil War, March 14 Coalition, March 8 Coalition, Hezbollah, energy investment, Syrian Civil War, foreign direct investment

Lebanon’s regime type is called confessionalism.  Confessionalism is a form of power-sharing whereby positions of political power are distributed based on confession, or religious sect.  This unique democratic system’s origins can be traced to the nineteenth century when France and Great Britain established links with Maronite Christian and Druze communities, respectively.  Those relationships were solidified throughout the early twentieth century, namely during France’s 1923-1943 mandate of Lebanon.  Under the mandate, the relationship between Muslims and Christians in political life became one of bipolarity – which consequently led to the loose formation of Lebanon’s confessional political system in order to settle political tensions.  The termination of the French mandate in Lebanon in 1943 led to the full autonomy of the state as well as the legal entrenchment of confessionalism vis-a-vis the Lebanese National Pact.

The Lebanese National Pact holds that based on the demographics of the Lebanese population, a Maronite Christian is to hold the presidency, a Sunni Muslim is to hold the premiership, and a Shi’ite Muslim is to hold the Speaker of the Chamber of Deputies Chair.  Furthermore, the Lebanese Constitution maintains that the Chamber of Deputies (the Lebanese parliament) must consist of equal representation between Christians and Muslims (as per Article 24 and amended by the constitutional law of 21 September 1990).  Although this regime type continues to act as a barrier to Lebanese unification, it has allowed the country to maintain its relative domestic peace.

Though equal representation was implemented in 1990, many negative structural factors plague Lebanon’s political, economic, and social systems.  This has played a tremendous role in Lebanon’s small-scale, perpetual conflict.  Outside of the political sphere, most religious communities live harmoniously.  However, the inherent divisiveness of confessionalism continues to hinder the unification of the 18 recognized sects during times of domestic and regional unrest. 

For instance, the Lebanese Civil War (1975-1990), which was fought along religious lines, brought paralysis to businesses and halted operations at the Beirut Port.  Furthermore, external confidence was heavily damaged as foreign investment in Beirut, a Middle Eastern financial hub, was stifled.  Foreign businesses withdrew their locations in the capitol city.  Expansion projects which were intended to take place in Lebanon were reconsidered and eventually carried out in other Middle Eastern capitols such as Cairo, Amman, and Tehran.  Although a conflict of this magnitude is unlikely to occur within the near future, it illustrates the peak of the country’s general volatility.

Today, all aspects of life in Lebanon, from political to social, are feeling the harsh structural implications of confessionalism and its by-product: hegemonic political blocs.  Its divisiveness has weakened the ability for parliament and key political figures to come to consensuses on core issues such as new election laws.  Consequently, this has had the effect of producing the longest political deadlock in Lebanon’s history.  This is hurting the Lebanese economy, and subsequently, external confidence, significantly.  Parliament, being completely stagnant, is not able to pass laws concerning future development loans, and debt issuance.  Resulting, in part, is Lebanon’s expected economic growth of 0 per cent for 2015. Confessional politics in this situation, as opposed to the Civil War, plays a small role in the current political predicament.  Instead, two factors have proven to play a large role in the deadlock: “big boss” politicians illegally extending their terms, and the proportional representation (PR) electoral system. 

Within Lebanon, the illegal extension of politicians’ terms has been favourable to private businesses, as it has eased the start-up process for wealthy businessmen, the Lebanese elite, and of course, the politicians themselves.  Unfortunately, however, this is an indicator of a state that lacks functional institutions and a free and fair market.  Furthermore, foreign investors might have a tougher time than local politicians in exploiting the benefits of corruption. 

Political success within Lebanon’s PR system, much like other states’ PR systems, relies on the creation of coalitions to establish a majority.  Since the 2005 Cedar Revolution, Lebanon’s major parties formed two coalitions, which has led to years of political stalemate.  The March 8th Alliance is composed of parties that support Syrian interference in Lebanese affairs such as Hezbollah.  The March 14th Alliance, on the other hand, is composed of parties that oppose Syrian interference such as the Future Movement, a Sunni Muslim party.  For the past few years, parliament has been used as a battleground in order to settle the issue of the country’s role in the Syrian Civil War, among other major policy issues.  As opposed to foreign investment, domestic investment has been, and will continue to be, affected by this issue.  A representative example of this problem is the rubbish crisis, where recently, parliament could not agree on a solution for dealing with Beirut’s private waste collection contract when it ended.  This led to mountains of rubbish on Beirut’s streets. Decisions on important policy matters, such as the budget, are also hindered by the requirement of unanimity by the entire 24-member Lebanese cabinet.  This is especially problematic during the current situation where political divisiveness is the norm.  As a result, the current government is not able to support large infrastructure investments or investments in the energy sector.

The aforementioned issues illustrate how confessional politics can lead to, or factor into, domestic instability.  The regime structure itself is not particularly a barrier to foreign investment, as it is recognized as a functioning democracy with no legislative/legal obstacles to trade with most states.  Nonetheless, the regime type clearly has the ability to be used as a tool to polarize turmoil and its institutions as battlegrounds to settle political scores.  This causal chain can sometimes, as it did severely during the Civil War, lead to declines in foreign direct investment and domestic investment projects.  This factor should be taken into consideration by prospective investors abroad. 

The subsequent assessment reports by our Lebanon team will go into-depth on specific elements of political risk, with a particular focus on the country’s energy sector.  The researchers will discuss the implications of domestic political issues/events as well as the country’s relationship with foreign states and international organizations in order to provide a well-rounded guide for prospective investors.