Lebanonwire, December 31, 2002

The Daily Star

Hussain Abdul-Hussain
Daily Star staff

Chouf MP Walid Jumblatt’s visit to Prime Minister Rafik Hariri on Sunday signaled a basic understanding between the two and the beginning of a compromise on the Druze leader’s stance regarding the 2003 budget.
Sources close to both parties told The Daily Star that the two leaders were determined to come to terms at their Koraytem meeting.
“Hariri can handle Jumblatt’s overt opposition to privatization and the issue of seafront properties, since the premier does not view himself as the sole person responsible for resolving these matters,” said a source close to Jumblatt, the head of the Progressive Socialist Party.
But when it comes to the budget, the sources added, Hariri cannot afford any opposition ­ especially from his allies ­ to what he has been working for, namely a plan to guide the country out of its economic troubles.
Although Speaker Nabih Berri is out of the country, a leading labor official from his Amal Movement urged MPs and unions Friday to confront the taxes introduced in the budget draft.
Bassam Tleis, the vice-president of the General Labor Confederation, issued a statement saying that a unified labor stance and support from MPs were needed to stop the government from carrying through with policies that hurt social security and impose new taxes and fees.
Hariri and Finance Minister Fouad Siniora have often expressed their resolve to minimize the state’s expenditures and increase its income.
Siniora has said repeatedly that the Treasury is facing a growing number of retired state employees whose after-service indemnities are adding to the already burdened budget.
In the 2003 budget draft, Siniora attempted to lower the government’s contribution to social welfare by increasing the tax on after-service indemnities and on retirement deductions for wages over LL1 million ($650).
Siniora also said government measures for economic recovery are a single package that should be accepted without modifications. He predicted that by lowering the budget deficit to 24 percent, an increase in the budget’s surplus would contribute to controlling debt service.
“As much as Walid Beyk approves of the principle of increasing income and decreasing expenditures,” said a source from Jumblatt’s Democratic Gathering bloc, “he doesn’t think that such measures can come through increasing taxes and cutting social welfare expenses.”
The source also said Jumblatt has an electoral constituency to look after.
“What would he say to public school teachers in Mount Lebanon? How would he explain to Chouf olive farmers the decrease in the Agriculture Ministry’s budget while taxes are increased?” the source added.
Jumblatt expressed his fears before Hariri on Sunday and offered alternative means for increasing the state’s revenues while sparing low-income citizens.
“The two men realize that their political alliance should not be jeopardized under any circumstances,” said a source close to the prime minister.
“On Sunday, they surveyed means that would safeguard their interests without altering Hariri’s plan or infuriating Jumblatt’s supporters,” the Hariri source said.
Hariri and Jumblatt discussed a number of compromises, the sources said. Hariri told his visitors that despite a decrease in the budget of the Agriculture Ministry, the Cabinet will approve funds, not allocated in the budget, for the purchase of considerable amounts of olive oil, one of the main products of the Chouf area.
The sources said Hariri would make the increased taxes on end-of-service indemnities for civil servants and teachers a type of progressive tax, by increasing the rates on bigger indemnity packages.
A 2 percent increase on retirement deductions, Hariri reportedly said, would mainly go to improving the services of the State Employees Cooperative.
There were no reports about compromises on lowering subsidies on wheat imports, which Jumblatt opposes.
“The 90-minute meeting did not solve all points of disagreement,” a Hariri source said. “But it reaffirmed the good relations between the premier and the Chouf MP.”
Other issues debated but not resolved included unregulated and untaxed seafront properties, and the increase in working hours for civil servants from 32 to 40 hours per week.
The Democratic Gathering bloc will hold a meeting Thursday to discuss the 2003 budget. The bloc hopes Parliament’s Finance and Budget Committee will amend, in its Jan. 7 meeting, items of the budget draft taking into consideration the bloc’s concerns.

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