1. Business Week: Is the debt an insurmountable problem and what is the strategy that should be followed to address it?

Deputy Prime Minister Fares: We are trying to manage the debt through a number of initiatives that aim to enhance revenues and reduce expenses. With regard to enhancing revenues, we introduced a Value Added Tax in February of this year; we are moving ahead vigorously with the privatization of various sectors such as electricity, water, and telephones; and there has been a dramatic improvement in revenue collection effected by the Ministry of Finance. In addition, we are reinvigorating contacts with our Arab brethren to urge them to make good on their previous commitments to provide more financial assistance to Lebanon, a country that paid a heavy price in the Arab-Israeli conflict and that has had to rely largely on its own resources to undertake its reconstruction and rehabilitation.
With regard to reducing expenditures, we are implementing the following measures:

- reducing the overall number of civil servants and merging several ministries and government agencies,
- reducing public sector expenditures across the board,
- introducing strict new controls on government contracting in order to eliminate waste,
- and carefully prioritizing government projects and expenditures to focus only on essential projects.

However, part of our debt problem is related to regional variables that are not under our control. Lebanon’s growth depends on its ability to secure a role for itself as a regional center for trade, banking, tourism, education, hospital care, and other services. The flourishing of this role depends on the development of a comprehensive and just peace in the region that would inspire confidence in Arab and foreign investors alike.

1. Many investors complain about excessive red tape and corruption. How in your view can these be faced?

Mr. Fares: Keeping in mind that Lebanon passed through a decade and a half of bitter warfare in which state institutions were virtually non-existent, one can appreciate the distance that we have traveled in rebuilding virtually all the institutions of the state since the end of the war in 1990. Definitely, we still have a way to go in streamlining operations, especially for foreign investors, and in enhancing public sector efficiency and fighting corruption. We have set up a special ministry for administrative rehabilitation and reform which focuses exclusively on this problem. We have already made considerable progress in creating an efficient and transparent business environment, but we will continue to work vigorously in that direction until we, and the international business community, is satisfied.

2. There is much discussion about the stability or devaluation of the Lebanese currency. What is your position with regard to this issue?

Mr. Fares: This issue is very overblown. Our national currency is stable and not subject to unmanageable pressures. Keeping the currency stable is a key policy of our government, as well as previous ones. We believe it is a cornerstone of investor confidence and sustainable growth, and we are strongly committed to preserving this stability. Unlike other high-debt countries, Lebanon has maintained a positive balance of payments and a very high ratio of in-country deposits to debt. We have a clean record of debt repayment that we are very proud of and which we aim to preserve. We are also turning over our high-interest debt in Lebanese currency to lower interest debt in foreign currencies, which will ease our debt servicing pressures considerably.

3. What are your priorities with regard to judicial reform?

Mr. Fares: A strong and independent judiciary is a basic tenet of our constitution as well as an essential element of civic life and the free market. Every citizen and guest, every company and firm, must feel that there is a strong, fair, and efficient judiciary to protect its rights and resolve any disputes. Within a decade, we have come a very long way from a condition of near lawlessness during the war, to a robust and effective judiciary. Our judges have always enjoyed a high level of integrity and although the war impacted negatively on the judicial branch, the majority of our judges emerged from the war steadfast and rose to the challenge of handling the massive case load that had accumulated during the war and training new cadres of committed judges. We still have a way to go, however, in raising the number and living standards of our judges, strengthening judicial training and education, modernizing our case management systems, and strengthening judicial inspection controls. During Roman times, Beirut housed the empire’s main law school; we are proud of that heritage, and we are committed to maintaining Lebanon as an example of judicial effectiveness.

4. As relates to refugees in Lebanon and around the world, many of their needs are not acknowledged legally; for example, their inability to work or to receive loans. Do you think that Lebanon should make an effort in order to change this legal situation?

Mr. Fares: Both the Lebanese people and the Palestinian refugees agree that the solution to their predicament is through the implementation of UN Security Council Resolution 194 that expressly states the right of Palestinian refugees to return to their homeland and not be refugees in any country. Israel has consistently refused to implement this Resolution or to recognize the right of Palestinians to return to their homes and villages or to a new smaller Palestinian state. The right of return of Palestinian refugees is a main component of our policy toward Israel, and until this right is acknowledged and addressed, there can be no real progress in the regional peace process. In addition, there is a fear among Lebanese and Palestinians that Israel and the international community wants to sidestep the refugee issue by implanting the Palestinian refugees permanently in Lebanon. This is something that both our peoples refuse, and it is ruled out in the preamble to our postwar constitution. We are aware of the difficult social and economic conditions that they face as a result of their exile from their homes and villages, and we, as well as UNRWA, are concerned about their welfare until such time as they can exercise their right of return to their homeland.

5. Do you feel, like others in the middle east, pessimistic about finding a resolution between the Palestinians and Israelis and what do you think needs to be done from the two parties.

Mr. Fares: The conflict is not simply between Palestinians and Israelis but also involves Syria and Lebanon and other Arab countries; the resolution therefore must be a comprehensive one. This resolution is present in U.N. Security Council Resolutions 242, 338, 425 and 194. The Arabs are ready to abide by these resolutions, whereas Israel is still trying to get around them. We expect a more effective leadership role from the United States, while we also hope that Europe and the United Nations play a strong supportive role. It is important, especially after the events of September 11, to reach a just and comprehensive peace that will transform the Middle East into an area of security and prosperity and enable the governments of the region to focus on the tasks of development and building a safe and prosperous future for the long-suffering populations of this region.

1. What are the priorities of the Fares Foundation for 2002 and where do you find the best use of its grants?

Mr. Fares: The Fares Foundation has a broad developmental agenda that encompasses educational, health, social, cultural and economic issues. During the war, of course, it focused on immediate humanitarian needs; since the war ended, however, we have focused on promoting sustainable development, particularly in underprivileged rural areas of Lebanon. We have participated in building schools, universities, hospitals, municipalities, agricultural infrastructure, and the like. We also provide support for needy students, local NGOs, and organizations that work with underprivileged or marginalized groups. Increasingly, we are building partnerships with regional and international organizations, such as the UN Development Program, the World Bank, and others to help create links between global resources and local capacities.