• Elections
    Sep 02, 2020

    Beirut Port: A History of Political Wrangling and Institutional Failure

    • Reinoud Leenders
    Interview with Reinoud Leenders, Reader in International Relations and Middle East Studies in the War Studies Department at King's College London, and LCPS senior fellow

    On August 4, 2020, a huge explosion at the Beirut port took the lives of more than 200 people, injured 7,000, and destroyed public and private properties. Although it is not clear what triggered the explosion, it is attributed to the 2,750 metric tons of ammonium nitrate that have been stored in the port since 2014. Since then, political, administrative, and legal bickering surfaced to the public on who was responsible for the deadly explosion.
    In light of this, LCPS spoke to Dr. Reinoud Leenders, a Professor at King’s College London and also a Senior Fellow at LCPS, about the port that he tackled in his book Spoils of Truce: Corruption and State-Building in Post War Lebanon published by Cornell University Press in 2012.
    In 1990, the private concession led by the joint stock “Compagnie d’Exploitation et de Gestion du Port du Beyrouth” which managed the port since 1960 came to an end. In anticipation of this, what did successive Lebanese governments do to integrate the port into the public sector?
    Very little actually. Numerous efforts were made to get quite the opposite accomplished: The privatization of the port. Especially late Prime Minister Rafic Hariri was behind such efforts. Yet, they all failed due to fierce opposition of other politicians in alliance with some private companies—most of them linked to these same politicians—who kept being hired to carry out logistical and shipping tasks, at very high costs. Politicians other than Hariri didn’t necessarily reject privatization as a matter of principle, although they were quick to frame it that way to mobilize the port’s union if the proposed terms of privatization—or quasi-privatization—didn’t favor them. They were essentially haggling to get their piece of the cake, and when they weren’t granted it, they sabotaged further steps toward privatization. Meanwhile, the port remained being governed by a messy and ambiguous arrangement that was meant to be only temporary. Against this background, integration into the public sector failed to take place and the port’s considerable revenues were kept for long in a private bank account to which the state’s watchdogs—such as the Court of Accounts and the Central Inspection Board—had no access.   
    How was the port governed in terms of procedures, regulations, and revenue management? What was the implication or outcome of this?
    After the private concession for the port came to an end, with no political consensus found on the terms of privatizing the port, it became administered by a range of ‘temporary’ boards. Lebanon’s politicians staffed those boards with their appointees to make sure they retained influence on port developments. Even these ‘temporary’ or ‘provisional’ boards were often headed by caretaker chairmen when key politicians—especially the ‘troika’ (the president, the prime minister and the speaker of Parliament)—failed to agree on a candidate to replace a retiring chairman. Meanwhile, and because the port’s institutional status remained undetermined, the port’s finances stayed largely unchecked as only internal audits took place, which were scrutinized by the ‘temporary’ board only. In addition, the port failed to be on the state’s watchdogs’ list of public sector entities. The staff was hired and fired at will as none of the regulations for public sector employment were applied. Essentially, the port’s administration maneuvered in a legal and institutional no man’s land, as politicians kept bickering about what to do with it. I argued in my book that such a messy and ambiguous institutional environment sets the doors wide open for political meddling, lack of transparency, no or little accountability, and—ultimately—administrative wrongdoing and corruption.  
    How did the privatization of the port become an option and why did it fail?
    From the start, when the port’s private concession expired in 1990, privatization was discussed. Rafic Hariri was a strong proponent of privatization, but other politicians suspected that this was largely to serve his own financial gain, or that of his allies in the private sector, at their expense. For a long time some 30 Lebanese companies, linked to political leaders, monopolized lifting and logistical works in the port; they fiercely opposed privatization when they couldn’t meet the financial terms set for several tenders designed toward that end. What followed was endless bickering over how privatization could or should be implemented. Hariri resorted to partial or quasi-privatization schemes, by subjecting some of the port’s container terminals to contracts of a limited duration granted to foreign companies, only to see other politicians linked to the 30 or so Lebanese companies step up their resistance. In 2004-5 the port’s main container terminal operations were outsourced this way, but a foreign joint venture that won the contract could only go ahead after it was forced to partner up with the Lebanese companies that had benefitted from port contracts for decades. All the same, the port as a whole and its administration kept muddling through without a clear institutional framework, or as one Lebanese journalist aptly put it, it was like the port had become “the illegitimate son of the state”.[1]        
    What prevented the port from being properly administered? How did the politics of muhassassa [quotas] hinder the bureaucratic development of the state?
    Foreign donors, the World Bank, and international private consultancy firms have issued numerous reports on the administrative mess the port has been in.[2] These reports were cast in managerial terms and all proposed excellent solutions drawing on insights in public administration and management. Yet what they consistently ignored was that many of Lebanon’s public institutions have failed to live up to basic standards of transparency and accountability not because of the lack of technical or managerial insights or expertise. It was rather because of politics, and more precisely, the way in which the rules of political decision-making have been set and applied since the Ta’if Accord; something I call the country’s ‘political settlement’. Combine these cumbersome rules of decision-making, which are excessively pinched on consensus and serving all stakeholders equally, with strong private interests aggressively pursued by politicians, and you get perpetual gridlock. This stood in the way of clear political decisions to resolve the port’s institutional ambiguity. Instead, politicians essentially agreed on divvying out ‘shares’ of the cake among themselves, allowing each of them to retain a ‘share’ (hissa)—in terms of appointments in the port’s administration, what ministry was supposed to exercise ‘tutelage’ over the port, and when or how some assets of the port were being privatized. The port showcases the chronic inability of the country’s political settlement to generate sound policies, including steps toward building a bureaucracy and solid state institutions.      
    How does the case of the port inform us about the ability of political leaders and parties to build a state?
    The last 30 years have seen Lebanon’s political elites climbing over one another to prevail, in terms of preserving their own political careers, gaining access to lucrative contracts and financial resources, and serving their allies and, when they needed them to be voted back into office, their own narrow constituencies. The port of Beirut is only one domain among many where this resulted in utter failure to build a state. The post-Ta’if political settlement has been unsuccessful in managing this unruly competition among elites in a way that a strong administration for the port, and for most state institutions for that matter, could emerge. Meanwhile, politicians and their private sector allies have built strong vested interests in this state of affairs, adding to the many obstacles to do things differently, or embark on reforms. The country’s current financial and economic crisis can be viewed as a direct consequence of this failure to build a state and uphold any sense of the collective good, and of how political elites came to benefit from the institutional disarray that emerged in its stead. Incompetent governance, corruption, the privatization of state violence, foreign meddling, and instability thrive in this context, and since the port blast, we know this could lead to catastrophe. All this constitutes sufficient evidence of the current political class’ incapacity to build a state.
    How can the institutional and political problems involving the port be viewed as relevant to the events that led to the blast?
    Of course, one can strongly suspect that the port’s lack of institutional framework and the constant political bickering underlying it caused the chain of events that led to the blast to go unchecked. Reports of port officials, key politicians, and judges pulling off their hands from 2,750 metric tons of ammonium nitrate stored nearby densely populated areas, and passing on the envelope to others, all sound like a familiar story. For instance, a somewhat similar dynamic evolved in the 1990s when a foreign company was hired to remove shipwrecks in the port.[3] It set off a fierce struggle over who was in charge, not in the least because in the context of the port’s diffuse system of authority the contract presented an opportunity to solicit bribes. A plethora of ministers, port—and other—officials, and judges kept haggling with one another for years on end, leaving the shipwrecks exactly where they were. That time round, a foreign company incurred financial losses; now, the inhabitants of Beirut are paying a much higher price. Having said this, we cannot isolate the port and its problems from the outside world. After all, it plays a key role in international shipping—a world not without its own serious flaws and greed-driven disregard for safety and accountability. What’s more, Lebanon’s foreign relations are turbulent to say the least, and in this context Hezbollah’s presence in the port cannot be dismissed as insignificant if one is to patch together the story behind the Beirut blast. I am not privy to any secrets in this regard nor do I buy into all sorts of conspiracy theories. What I am saying is that Lebanon’s many problems tend to cluster, and while the port’s institutional shortcomings and incompetence certainly have played a role in the blast, I suspect that this may only be one part of the story.

    [1] Reinoud Leenders, Spoils of Truce: Corruption and State-Building in Post War Lebanon, (Cornell University Press, 2012), p. 95.
    [2] Ibid., 91-94.
    [3] Ibid., pp. 37-40.
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