The Government Monitor No. 15 - Parliament is Stifling Reform

June 05, 2020
The Government Monitor No. 15 - Parliament is Stifling Reform

What’s the Issue at Hand?
The government took office on February 11, 2020, with a mission to ‘rescue’ the country from its financial and economic crisis through key reforms.1 Since then, and after a five week suspension of legislative sessions due to COVID-19 concerns, Parliament convened during the weeks of April 20 and May 25 for two legislative sessions to respond to the repercussions of the pandemic and the worsening financial crisis. A total of 103 law proposals were presented in the meetings covering a range of issues, including judicial procedures, healthcare, governance, and banking, among others.2 Both legislative sessions were halted due to political bickering and a failure to reach consensus, indicating an evident resistance to reform from political groups. A closer look at the nature of the discussed laws reveals that only 15 (17%) carried a reform element, of which only six passed. Other than an aid plan targeting low-income households and the six mentioned reforms, the 25 laws that passed were day-to-day administrative procedures, while the remaining 62 were shelved—26 of which were undiscussed.

1. Reform Proposals

Only six of the 15 reform proposals passed

Establishing the National Anti-Corruption Commission (NACC): The law defines what is considered an act of corruption (such as bribing officials and mismanaging or embezzling public funds), and outlines the qualifications to be appointed in the commission. While the law is an important step to prosecute malpractices in the public sector, the measure originally dates back to the 2018 CEDRE reform plan.
Amending the personnel law: The amendment compels public administrations to respond within a 15-day period to requests from the Public Prosecution to prosecute public sector employees. If they do not answer within the deadline, permission to prosecute is deemed granted. This, however, only partially enhances the effectiveness of prosecuting public officials, as the amendment does not apply to high-ranking officials that are protected by constitutional immunity.
Banking secrecy: While the law presented on April 21 that aimed to permanently annul banking secrecy on all accounts failed, an amended version of it, which dilutes its scope and effectiveness by restricting it to the Special Investigation Committee and the NACC,3 was passed during the May 28 session.
Determining the appointment mechanism in the first category of public administrations: The law serves to promote transparency within bureaucratic procedures leading to merit-based appointment in high-ranking public administrations.
Legalizing the cultivation of cannabis for medical use: The law allows the cultivation of a specific cannabis strain called hemp exclusively for medical use, thus limiting its potential economic benefits for farmers. The law also presents an overly optimistic estimation of revenues given its restrictive nature.4
Protecting those who uncover evidence of corruption: The law ultimately aims to incentivize the reporting of corruption and other malpractices in the public sector by offering people legal protection.

Nine reform proposals failed to pass

Setting limits on bank transfers: While Lebanese banks have de facto set capital controls since September 2019,5 the law would have formalized the measure and put an end to the discretionary limits on withdrawals.
General amnesty: Political disputes continued to arise upon discussing this topic and its amendments. Backers of the law looked to reduce prison overcrowding by capitalizing on the virus outbreak, though it was ultimately rejected as those opposed to it believed the social costs would outweigh the benefits and that pardoning crimes would go against principles of justice.
Amending illegal enrichment law: The objective of the amendment was to outline and facilitate the prosecution of embezzlement in the public sector.
Lifting immunities on ministers: The law did not pass, as it requires an amendment to the constitution.6
Amending the prosecution of the President and Prime Minister: This proposal did not pass as it also requires an amendment to the constitution.7
Dissolving the ministry of the displaced: The law set to merge the ministry with the Public Corporation for Housing.
Preserving the rights of employees upon mergers of public institutions: The law was restricted to safeguarding the rights and retaining the jobs of high-ranking personnel.
Increasing deposit guarantee: As an attempt to cushion the repercussions of the economic and financial crisis, especially on the private sector, the law aimed to increase deposit insurance from LBP 75 million to LBP 150 million.
Prohibiting the selling of Eurobonds to foreign investors: Given that debt restructuring would occur with favorable terms if bond holders were locals,8 the law would have forbidden this ongoing practice.9

2. Remaining Proposals

26 of the remaining 62 agenda items passed. These include:

The aid plan, worth LBP 1.2 trillion, targeting low-income households and some private businesses impacted by the repercussions of the pandemic was finally passed on May 28, after quorum had been lost upon presenting this law during Parliament’s session on April 22.
Exempting grants that aim to support the fight against COVID-19 from taxes.
Changing the names of two villages.
Allowing municipalities and other public institutions to exceptionally make donations in order to mitigate the effects of the pandemic.
Establishing two nature reserves.
Suspending legal and contractual deadlines.

The remaining 36 did not pass. Some of the notable ones include:

Ceasing all works on the Bisri dam project.
Registering in the International Organization for Migration.
Shortening the mandate of Parliament and holding early elections.
Banning the placement of posters displaying political figures in public spaces.

Why is this Important?
The legislative sessions that took place exceptionally in the UNESCO Palace during the weeks of April 20 and May 25 came in urgent response to the intensifying financial crisis. As Lebanon faces two aggregate shocks resulting from the financial crisis and the COVID-19 pandemic, serious leadership and reform are beyond necessary for mitigating people’s grievances. However, political elites—represented in both Parliament and government—continue to prove that they are inept in navigating the country through these crises by adopting a reform agenda, leaving Lebanon’s recovery prospects grim.

Background
In light of the COVID-19 outbreak, parliamentary activities were suspended on March 10, 2020. Since then, the magnitude of Lebanon’s financial crisis, coupled with business closures due to the pandemic, further contracted the economy threatening with it the livelihoods of households. Parliament speaker called for urgent legislative sessions five weeks later in an attempt to enact laws that would undertake reforms and enhance welfare.

1 A reform entails a significant change in policy environment that goes beyond day-to-day procedures.
2 Legal Agenda. April 25, 2020. 'The Results of the April 2020 Legislative Session.'
3 Al-Akhbar. May 29, 2020. ‘Banking Secrecy is Firm.’
4 Al-Jazeera. April 25, 2020. ‘What Are the Reasons for Parliament’s Approval of Cannabis Cultivation?’
5 Arnold, T. November 13, 2019. ‘Breakdown of Trust in Financial System Deepens Crisis in Lebanon.’ Reuters.
6 Annahar. April 22, 2020. ‘No Shortening Parliament’s Mandate Nor Lifting Ministers’ Immunities.’
7 Ibid.
8 Azzi, D. February 21, 2020. ‘Should Lebanon Default?’ The Lebanese Center for Policy Studies.
9 Zouk, N. February 6, 2020. 'Eurobonds: Not an Internal Affair anymore.' Finance 4 Lebanon.