LEBANON.docx

LEBANON
A Shattered Country

Myths and Realities of the Wars in Lebanon

ELIZABETH PICARD
translated from the French by Franklin Philip

HM HOLMES & MEIER
New York / London

4
The Merchant City

DID France's disputed and imposed decision to make Greater Lebanon independent of Syria lead to the creation of a new "national" market with a balanced infrastructure and channels for production and distribution, and thus make possible the formation of social strata on which the new nation could count? What was France's colonial plan in this regard; how did it intervene and what were its achievements? Next, to understand the Lebanese economy's very distinctive structure and identify the dominant social groups, we shall look at the major sectors of production. This view of Lebanon pertains to the nation's long formative period from 1920—when the French Mandate first went into effect—to the mid-1950s, when the fragile Lebanese prosperity took on a new dimension. While adopting an extended perspective, this view takes account of the state of the economy, particularly the worldwide economic depression from 1929 to 1935, the instituting of a war economy from 1940 to 1945, and the course set by the country's leaders once it gained independence in 1943.

Mandate as Market

The first high commissioner at Beirut, General Henri Gouraud, wrote that military control of the Levant opened the way for French capital. In reality, this control merely broadened and smoothed an already well-traveled highway. Even by the end of the Ottoman Empire, the Lebanese economy had joined the world capitalistic system through the export of silk and primary agricultural foodstuffs; local markets had been opened to products manufactured in Europe, and capital had been invested on a massive scale by

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the major industrial countries. The French intervention accelerated these phenomena and accentuated the imbalances among sectors of production, if only by encouraging foreign trade based on unequal exchange: thus the export/import ratio—the imports coming chiefly from France—fell from 60 percent at the end of the nineteenth century to 50 percent in 1920 to around 30 percent at the start of the 1930s. 1 In addition, French capital was preferentially invested in the most profitable sectors: banks (the Banque de Syrie et du Liban), public utilities (the Electricité de Beyrouth, the Compagnie du port, and the Société des Grands Hotels); communication networks (the Société des Chemins de Fer, Damas Hama et Prolongements), thereafter superseding the interests of the rival European countries.

The accomplishments of the French Mandate regarding infrastructure, administrative reform, and organization have been rightly hailed by historians of the period, eager to moderate the censorious uproar unleashed upon decolonization: the customs service, the chamber of commerce, the rationalization of foreign trade, especially the introduction of the metric system, the modernizing of the ports and the postal service, the creation of a telephone network, sanitary and hospital services, technical improvements in farming, and so on. One of the most outstanding accomplishments was the laying out of a road network crisscrossing the country from north to south and from the sea to the interior, with Beirut at the hub; from 300 miles in 1920, this network spanned 1,500 miles by 1943. 2 Many of the measures taken, however, had destabilizing and even counterproductive effects, such as the decline in traditional crafts. Thus, the introduction of a survey of land ownership for tax purposes to replace the Ottoman tapu and, in 1930, that of a new real estate code, eventually favored the registering of collective lands in Lebanon's outlying areas, particularly in the Bikaa Valley, Hermil, and Akkar, solely in the name of the head of a clan or prominent family. Rather than redistribute farm property, the effect was to concentrate it.

Another negative aspect of the French Mandate's implementation was the discrepancy between a large repressive apparatus and a fairly rudimentary civil administration—the tool for modernizing the state. 3 The Army of the Levant applied a heavy hand. Tens of thousands of soldiers were stationed in Lebanon, and their numbers mounted during the revolt of 1925 to 1927, which started in the Jebel Druze in Syria and spread to the Shuf and Jabal Amil. In 1921, the European contingent was being supplemented by locally recruited troops: gendarmes, Lebanese chasseurs, and eventually police, totaling several more tens of thousands. Far from decreasing, this number rose beyond 100,000 with the outbreak of World War II. Until independence, the exclusion of the Lebanese from positions of command and the presence of Senegalese and Madagascan units were seen as humiliating; the financial burden posed by this army's upkeep helped transform a mandate

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"respectful of the populations' wishes" into a colonial occupation whose end was awaited with impatience.

On the other hand, administrative services were cut to a minimum for the sake of economy, leaving most of the medical, educational, and social services to the communal organizations. In 1933, the country had just 3,600 civil servants for a population of 850,000. Five years later, only 5 percent of the secondary school pupils went to public schools. 4 One major reason for this inadequacy was the meager finances of the state itself, which were only slightly remedied by tax reform, while in Paris the members of the National Assembly regularly complained about the financial burden of the Mandate. Consistent with the recommendations of the League of Nations—and with the interests of French business—customs tariffs remained low and controls flexible. And while France's effort to equip the country remained limited, some of the Lebanese landowners, traders, and bankers with connections to French capitalism profited from closer relations with France and enjoyed an undeniable prosperity. The tradition of a liberal state with modest financial resources and power of intervention was thus inscribed in Lebanon's history during the Mandate, and from then on, this tradition carried great weight in the country's political economy.

Marginal Agriculture

Lebanon has a highly distinctive and peculiarly unbalanced economic structure that has nothing to do with natural circumstances and still less with coincidence. The production of its primary sector is unrelated to the country's potentialities and above all its needs. Nevertheless, one of the stated goals of the backers of a nation enlarged to the dimensions of Greater Lebanon—that is, annexing the coastal sahels and the interior agricultural plains— was precisely to end the Mountain's severe food shortage, and it is well known that the emirs of Mount Lebanon had always sought control of the surrounding grain-producing regions. The trauma of World War I, when the Allied blockade, requisitions by the Ottoman army, and the unbridled speculation by Beirut businessmen caused acute scarcity, intensified the sense of destitution to the point that, reacting to a dramatic rise in the price of agricultural products, rich merchants from Beirut and Tripoli began forming agricultural estates in the Bikaa Valley. Two priorities for the new nation then emerged: to meet the need for agricultural foodstuffs by enlarging the areas of production; and, because the 1920 borders of Lebanon encompassed a population two-thirds of whom lived on agricultural incomes, to improve the economic and social conditions of the rural areas.

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Enlarging Lebanon's supply of cultivable land was basic: to the Mountain's nearly 200,000 acres were added a further 346,000—that is, 64 percent of the new nation's agricultural area. 5 Despite this, the country's grain supply, which was extremely inadequate in the early years of the Mandate, was still only 30 percent of what was required in 1946, and 37 percent in 1953. 6 Lebanon's agricultural yields remained poor, much inferior to those of the major agricultural countries, owing to the poor quality of technical improvements and the dearth of investments. As long as agricultural production was devoted mainly to food crops, it stimulated no investor interest or effort to modernize that could advance it beyond the dominant precapitalist mode of production.

Except for certain valleys where fruit growing was gradually replacing the waning sericulture, and especially in the coastal region where large citrus orchards were planted, unrational production and commercialization methods limited the profitabilities of agriculture. The achievements of Lebanon's primary sector remained paltry. By the end of the 1940s, agriculture, which occupied some 45 percent of the population, supplied only 15 to 20 percent of Lebanon's income. Later, its backwardness relative to other sectors of the economy only increased along with the country's dependence on imported foodstuffs.

True to their laissez-faire policy, the Mandate authorities and later the republic took only limited technical measures and did not always pay attention to any negative effects. Thus, working from studies made during the Mandate, the government succeeded in doubling the amount of irrigated land in Akkar, the Batrun plain, and especially south of the Bikaa Valley around Lake Qaraoun. With the granting of agricultural credits and a new survey of land ownership, these steps had the effect of highlighting the critical flaw in Lebanese agriculture: the deeply inegalitarian structure of rural property. The irrigation networks were laid out for the benefit first and foremost of the great local landowners, who also controlled elections. The indebted farmers did not resist the influx of urban capital lured by profits from the production and commercialization of fruits and vegetables, and in 1950, alongside a dwarf and smallholding sector (from 12 to 125 acres), the great landed estates (more than 250 acres) represented more than 10 percent of the country's cultivated land. More serious was the fact that these large agricultural estates—grain fields in Akkar, Hermil, and the Bikaa, olive groves in Jabal Amil, orchards between Sidon and Tyre—were cultivated by tenant farmers and wage earners whose disparity in income from that of the great absentee landlords was becoming more and more acute.

Thus Lebanon had, on the one hand, an antiquated and underproductive agriculture; on the other, it exhibited some of the greatest disparities in living standards in the world. The social and political consequences of the

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country's neglect of its primary sectors were enormous: class inequalities were accentuated by regional inequalities, mainly between the central, more urbanized section and the underdeveloped countryside on the nation's periphery. The ensuing huge rural exodus mightily disrupted ecological and cultural balances—by the early 1970s more than 60 percent of the country's population was urban—and left a serious shortage of agricultural manpower. On the other hand, the government's agricultural policy buttressed the class position of the great quasi-feudal landowners dominating the peasantry. Their wealth assured even the ones from the underdeveloped areas a central place in the Lebanese political system; as a group, they made up a fourth of the parliament after independence. 7 What's more, some of them transferred a part of their landowning capital into the burgeoning commercial and service sector, changing from traditional elites into modern ones and thus reinforcing their hegemonic position in the "power bloc."

Neglected Industry

Why wasn't it the same with owners of industrial companies? Here, too, the Mandate policy on crafts and manufacturing in Lebanon and the provinces of Syria controlled by France after 1920 represented a choice whose consequences were to be felt for a long time. Upon the creation of the state of Lebanon, the country's industries were in a growth phase, employing some 15 to 20 percent of the work force and providing higher earnings than other sectors of the economy. These industries, however, must be called traditional: the tobacco industry, food industries, tanneries, and even silk mills were merely huge unmechanized workshops using unskilled labor. One might as well say, wrote the rapporteur of a French investigative team in 1919, that industry as such did not exist in Syria or Lebanon. 8 This assessment went further: not only was Lebanon (like Syria) not industrialized, but its shortage of raw materials and its low level of human skills were a handicap, as spelled out in the French report of 1929 to the League of Nations: "One should not overestimate prospects for the creation of modern industry in the nations under the French Mandate. While a fair amount of inexpensive manpower exists in Syria and Lebanon, these countries do not offer the conditions necessary for large-scale industrial development." 9 The logic of the Mandate's functionaries and the French entrepreneurs in this new territory of Lebanon was in fact that of a trading economy: privileged capital investments in the immediately profitable sectors, and the opening up of the local market to French-manufactured products from whose influx local production was minimally protected. 10

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Lebanese crafts, which the French observer regarded with some derision, remained very much alive. Despite problems in commercialization, they continued long after independence and in 1971 still provided a third of the country's total production and employed close to 40 percent of its industrial wage earners. 11 Lebanon's industrial sector exibited a dualistic structure, 12 for several thousand small workshops with fewer than five employees each coexisted with a modest number of large enterprises that tended to become concentrated: the Asseily textile mills, the Ghandour food products factories, and the Chekka cement works represented examples of successful capitalism in the final decade of the Mandate.

In 1949, despite its structural flaws, industry supported about 10 percent of the population, and its share (14 percent) in the national income was close to that of agriculture. 13 Although limited by the modest size of the national market, it compared favorably in quality to the industries of Palestine and Egypt. Two factors contributed to this relative success. First, the infusion of capital repatriated by Lebanese emigrants during the Depression. Nearly a fourth of the population of Mount Lebanon had emigrated during World War I, and the process continued apace under the Mandate: between 1921 and 1938 nearly 80,000 people left the country. 14 Money from the emigrés was invested mainly in the modern industrial sector, of which some of them had gained experience in America or Africa and which in 1929 commenced vigorous growth, particularly in the food and textile industries and also construction materials. For example, the Arida brothers' cotton-spinning mills in Tripoli just before the war supplied 12 percent of Syrian and Lebanese consumption. 15

Later, owing to the British and Free French forces' conquest of the Levant in 1941, the war gave a new boost to modern industry. Not only did the Allies place orders with local producers, but the domestic demand could no longer be met by the now-scarce imports from Europe. In certain sectors, domestic production succeeded for a few years in supplanting those imports. Although several firms reaped substantial profits, they neglected to bother about the investment and rationalization that would have enabled them to meet the onslaught of the "liberal" businessmen when the country gained its independence.

When the French troops pulled out in 1946, Lebanon found itself at an economic crossroads: Should it take advantage of the war's boost to its own industrial and even agricultural production, or exploit further its Mandate‐ assigned role of entrepôt and middleman? Relatedly, should the country retain its financial and commercial ties to France, or choose, in concert with Syria, to set up an autonomous and coherent economic sphere?

Nineteen forty-seven saw a lively debate between the advocates of economic liberalism, a free market, and Lebanon's isolation from the other Near

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Eastern countries versus the partisans of state intervention, protectionism, and Arab solidarity. 16 The former, dominated by the great merchants and Christian bankers of Beirut, were called the New Phoenicians, in allusion to the prosperous city-states of antiquity, because they extolled the laissez-faire capitalist. They argued that Lebanese industry was incapable of turning out products in sufficient numbers to meet domestic demand or, above all, of guaranteeing their quality and profitability. So it would be better to import, favoring commerce and services. Their opponents comprised industrialists, Arab nationalists, and reform-minded technocrats. To protect the recent and insecure progress of industry, they called for customs barriers, import quotas, and state aid.

Three issues fueled the debate: monetary problems, foreign trade, and Syrian-Lebanese economic unity. In 1948, Lebanon and France signed an agreement connecting the former with the "franc zone," unlike Syria which chose monetary independence. Later, to cope with inflation, Lebanon preferred encouraging imports rather than resorting to devaluation: between 1949 and 1952 most customs restrictions were lifted and industry's requests for credits denied. Finally, the stakes were sizable in the negotiations with Syria about the customs union, the chief element in the economic and financial "common interests" established by the Mandate: because of the creation of Israel and the ensuing war, Lebanon had just lost the Palestinian market, and because it depended on imports from Syria for its grains and meat, a break with Damascus would be all the more calamitous. The advocates of a liberal economy, however, were fearful of Syria's economic nationalism and the dirigisme of its new military government in power since 1949; some of them even feared an alliance between the two countries' employer classes and between their workers' organizations, which would lead to the two countries' political unification and attenuate Lebanon's ties with the West. That is why, following Beirut's refusal to comply with Damascus's urgent request to coordinate the two nations' political economies, the customs union broke up in March 1950 and trade was halted for several months. The most acutely disturbed sector in Lebanon was of course industry, for 60 percent of its production went to its neighbor, 17 and it imported raw materials like cotton from Syria as well.

The battle between the free-marketeers and the dirigistes thus culminated in the victory of the former. The government's decision struck a hard blow at Lebanon's industries, which were already impaired by the unequal nature of their employment structure, 18 which suffered from huge disparities in qualifications and salaries between a minority of workers and skilled craftsmen on the one hand, and the mass of unskilled labor on the other. In the year following the break with Syria, the total value of textile imports rose to two and a half times what it had been during the war, and 56 percent of all

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Lebanon's imports came from the United States and the industrialized countries of Europe. These imported goods—cheaper, higher-quality, and more appealing to the Westernized elites—wrecked the prospects for industrial growth. On the other hand, they brought in a fortune for the merchants.

The industrial sector's relative decline during the early years of independence noticeably affected the Lebanese social structure and hence the class system and general orientation of the state. It slowed down the formation of a working class already hampered by the conflicting interests of, and cultural differences between, the craftsmen and the workers in large industry. The craftsmen remained tied to their village community of origin, very often bound by a personal relationship to their employer, and were strangers to proletarian ideology. For their part, the workers in large industry, who succeeded in establishing the first Federation of Unions in 1945 19 and obtained the promulgation of a Work Code in 1946, were weakened by the unemployment resulting from the industrial recession, as well as by the managerial repression and the encouragement of reformist or corporatist unions by politicians close to the authorities like Henri Pharaon. On the other hand, this decline deprived the secondary-sector entrepreneurs of getting a hearing by the government. Certainly, there were great successes, like that of Emile Bustani who managed to get elected deputy, as did his daughter after him. The heads of industry in the parliament, however, were much less numerous or influential than the merchants: four as against eighteen in 1964, and only three as against nineteen in 1968. 20 While the industrialists included a high proportion of Muslims, the great majority of the merchants were Christians.

The Triumph of the Merchants

In the end, Lebanese prosperity depended mainly on the service industries, whose importance is shown in just two numbers: by the mid-1950s it supported half the country's population and supplied nearly two-thirds of its income. The country's singular economic structure fitted the role that the industrial West, France in particular, assigned it in 1860: a channel of penetration, a relay station between France and the Arab interior. Ensuring the circulation of people, commodities, and capital between these two poles, Lebanese tradesmen and intermediaries built up the occupations connected with this circulation and, in the process, deducted their share of the profits. 21 The development of the service sector in the Lebanese economy was originally the product of a deliberate Mandatory policy from 1925. France became Lebanon's primary supplier of foreign goods, while Lebanon's exports to France covered only a fourth of the cost of its imports. France held on to this position until the start of World War II during which it was reduced to

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third place, which it occupied from then on, below Great...