In the first exclusive, LIMS explained that OTT is a service that allows users to access TV shows, movies, music, and other content, directly over the internet, bypassing the need for traditional cable or satellite subscriptions. The Ministry of Telecom opted to grant a monopoly on the service to a pre-selected company, sidestepping competition and established legal tendering processes. To legitimize this monopoly, the minister intertwined Ogero, the national telecom company, and masqueraded the contract as a Public Private Partnership (PPP). LIMS' analysis uncovered that Ogero would receive 25% of the revenues with minimal reciprocal offerings, characterizing this income as pure monopoly rent extracted from the Lebanese population. Moreover, circumventing public procurement laws under the guise of a PPP poses even graver issues, as PPPs necessitate procedural steps that are currently unfeasible.

Similarly, the same ministry is pushing to engage "Seoul" company to provide e-Wallet services through Alpha, one of Lebanon's two mobile networks, without adhering to a proper tendering process. The purported lack of bidders was presented as an excuse, despite the fact that the other mobile network company, Touch, managed to attract several interested firms. Parallel to the OTT scenario, the ministry seeks to circumvent public procurement laws in e-Wallets and favor one service provider. This monopoly approach would result in lower quality services and higher prices, as it sidesteps a competitive process. Open competition among providers of e-wallets and respecting the law when engaging in public contract could optimize revenue, safeguard data, and bolster public trust, diverging significantly from the current opaque outsourcing approach to a single company adopted by the ministry.

Suspicions of favoritism also plague various services at Beirut airport, including parking, duty-free, restaurants, cafeterias, food, and airplane fuel supply. These services are contracted by the Ministry of Public Works and Transportation without requisite studies. The auction pricing mechanism is cause for serious concern, as it typically commences with an exceedingly low price, encouraging collusion among bidders to offer below-market prices. The auction winner then substantially increases the bid while remaining below a fair market price. LIMS advocates for the proper conduct of auctions and, more critically, urges the introduction of competition in these facilities. For instance, the duty-free area could be divided among different companies to stimulate competition. Such reforms are imperative to ensure competitive prices and good quality service for travelers, maximize returns on public assets, and prevent cronyism from capturing public resources.

On a less optimistic note, the war in Gaza cast a pall over Lebanon in the waning months of 2023, particularly impacting sectors such as tourism and commercial activities. The repercussions of this war will endure into 2024 if the conflict persists. In the case of a wider conflict, the astronomical costs in term of human lives and infrastructure damage could irreversibly cripple Lebanon's prospects of recovery. Concurrently, the failure to discover offshore resources post-drilling, despite premature political proclamations, added to the string of setbacks.

On another side, Moody's maintained Lebanon’s credit rating at C and the outlook has been revised from negative to stable. LIMS explained that the C rating given to Lebanon by Moody's is the lowest possible for a borrower and means the probability of lenders recovering their debts to the Lebanese state is very low. The persistent lack of reforms and the government's inability to achieve a balanced budget undermines Lebanon’s capacity to service debts. The ongoing instability, including the prevailing war and economic pressures, casts a shadow over any imminent improvements in Lebanon's credit rating.

Amidst a deepening economic crisis, Lebanon's capital control law languishes in uncertainty. Originally expected by October 2019, the stalled law raises fears it won't meet the International Monetary Fund's (IMF) conditions or address Lebanon's growing banking sector challenges. This delay has led to foreign currency reserves plummeting from $33 billion to a mere $9 billion in less than three years, threatening Lebanon's economic future.

LIMS explained that various unconvincing excuses have delayed passing a capital control law over the years. If capital controls were implemented at the onset of the crisis, such measures could have effectively preserved Lebanon's foreign exchange reserves. However, the continual wrangling among decision-makers, driven by a desire to tap into these reserves, has rendered the discourse on capital controls an empty slogan.

LIMS argued that, in the present circumstances, capital controls could impede growth by restricting the inflow of capital into the country. The apprehension among potential investors about the limitations on the free transfer of funds out of Lebanon diminishes the attractiveness of the nation as an investment destination. Consequently, this situation not only hampers investments but also exacerbates the challenges associated with economic recovery.

LIMS advocated for a strategic shift, suggesting the abandonment of the Capital Controls proposal in favor of a more nuanced approach— the introduction of limits on old dollars. This alternative framework would exclusively target old dollar deposits, imposing monthly withdrawal limits until a comprehensive bank resolution strategy is implemented. Importantly, this proposal ensures that fresh dollar flows remain unrestricted. Such a solution would be not only more straightforward to implement but also more conducive to fostering economic growth.
 

During his address, Dr. Mardini presented a comprehensive classification of countries in the region based on their prevailing political systems. Firstly, he discussed military-backed regimes found in Syria, Libya, Iraq, and Yemen, characterized by socialism, secularism, and authoritarianism. These regimes often culminated in civil wars, fostering an environment conducive to the rise of extremism as seen with the rise of groups like ISIS. Secondly, theocracies, reliant on natural resource exports, were noted for opposing socialism due to its secular nature. However, on the economic front, they embraced socialist policies, including large government, high regulations, and central planning. Thirdly, monarchies, whether absolute or constitutional, traditionally conservative, were highlighted as undergoing a shift toward tolerance. Those adopting low taxes and a free-market approach, exemplified by Dubai, experienced prosperity. Meanwhile, those adopting socialist policies, as observed in instances in Morocco, achieved less effective results. Lastly, democracies were discussed for their flexibility to switch between socialism and free-market policies based on election outcomes, allowing exploration of the best system through trial and error. Instances of socialist policies led to poverty, exemplified by Tunisia post-revolution, while free-market approaches sparked prosperity, as seen in Lebanon in the 40s and 50s.

Dr. Mardini also delved into the connection between authoritarian regimes and socialism. He outlined how these regimes embrace socialism to concentrate power through central planning, control citizens via large government structures, appropriate wealth under the guise of redistribution, suppress dissent in the name of public safety, and gain popular appeal by professing a commitment to reducing poverty.

Corruption in Public Contracts in Lebanon: A Smoking Gun

• Exclusive www.limslb.com: Beirut Airport Regulations: Contravening laws And Reinforcing Monopolies, Leaving The Traveler To Bear The Cost, December 1, 2023: Limslb, Article AR
• Exclusive www.limslb.com: The Ministry Of Communications Hides Behind OGERO To Grant the monopoly of OTT service to a Private Company, In A Contract Reeking Of Favoritism, December 14, 2023: Limslb, Article AR
• Exclusive www.limslb.com: "The Electronic Wallet" Is A New Service Subjected To Regulation By Mutual Consent Away From Transparent Competition, December 28, 2023: Limslb, Article AR

Analysis of 2023 and Outlook for 2024

• Fears of the expansion of the security crisis and its potential negative impact on the Lebanese economy, December 4, 2023: Janoubia, TV Interview AR
• Approval Of Daily Financial Incentives For Public Sector Employees And Two Additional Salaries, December 6, 2023: VDL, TV Interview AR
• Do strikes in solidarity with Gaza affect the economy? December 12, 2023: Al Jadeed, TV Interview AR
• Why Does Lebanon Remain at the Bottom of Moody's Credit Ratings? December 19, 2023: VDL, Radio Interview AR
• Mad Is He Who Does Not Acknowledge... Lebanon Will Not Rise From The Comprehensive War, December 21, 2023: Lebanese Forces, Article AR
• The Most Prominent Challenges Faced By The Lebanese Economy In 2023 And The Repercussions Of The War In The South And Its Impact On The Dollar, December 28, 2023: Lebnan News, TV Interview AR 
• Path Of the Lebanese Pound: How Did The Currency Decline By 30% In 2023 And Has Stability Begun? December 29, 2023: VDL, Radio Interview AR

• A Loose Law... And Recovery Chances Are Nonexistent! December 18, 2023: Lebanon Debate, Article AR