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Graduated to Middle-Income? Now Take Care of Yourself

December 2, 2012

There are two strings of research which try to estimate where poor people will live and their findings are somehow contradictory: one estimates that four fifths of those living on less than $2 per day will live in middle income countries[1]. The other argues that poor people will live in fragile states and these fragile states, regardless of their income level, cannot afford to help their poor because they can barely dodge crisis (think about Pakistan or Iraq). One string of research focuses on the level of income and tell us that foreign aid should be allocated to those countries which are below a certain income threshold: if a country graduates to the status of middle income country, it should take care of its poor by itself. The other string of research focuses on the institutional fragility of a country and its capacity to ensure stability: foreign aid for them should prioritize those states prone to crisis, regardless of their level of income. At first sight, these approaches seem contradictory and the income approach has for the moment the upper hand. This post will look at what happen when a country is both high middle income and fragile. The country in question is Lebanon and its case will show why telling high middle income countries to take care of themselves is a non sense and why fragility and poverty are entangled realities whose combination cannot put aside.

Democracy of Violence. In early November 2012 violent clashes took place in the southern city of Saida between Sunni extremist and Hezbollah ( a political party from the prevalently Shia South) supporters. The clashes left 3 people dead and 5 wounded and paralyzed the city as both factions were heavily armed[2]. The violent clashes in Saida were not an isolated episode in Lebanon: early this year the arrest of a young Islamist in the northern city of Tripoli for its alleged links to Al Qaeda prompted the protests of Salafist and Islamist groups in Tripoli demanding his release. The protests escalated when these groups, close to the Syrian opposition, clashed with Alawi groups in Tripoli, supporters of the Syrian regime.

The lesson one can take out from these episodes is straightforward: the state in Lebanon lack the minimal attribute of a functioning state i.e. the monopoly of violence. On the contrary, one could say Lebanon has a democracy a violence, hardly a democracy a country strives for. Given that Lebanon is classified as high middle income country, this same state, which hardly can clamp down on armed protesters in two of the biggest cities in the country, is asked to implement some of the hardest reforms for a state i.e. raising tax revenues and/or reviewing the expenditure allocation. Because when donors tell countries which graduated to the middle income level take care of your poor by yourself this is what they are saying: raise taxes on the better off and/or allocate more of the money you spent on the poor.  Needless to say, this is not an easy task. Incidentally, the problem is compounded by the single most important determinant of poverty in Lebanon: poor in Lebanon live mostly in marginal regions. So when one asks the state to take care of its poor one is asking not only to raise taxes but also to create services (schools, clinics), in most cases ex novo, in regions where historically the states has not been present. When cast in this light, the expectation that a middle income country will take care of its poor because now it has enough money is nothing short of wishful thinking.

The Cliff After Graduation (source

The Cliff After Graduation (source

The Greatest Crisis Since the Last Greatest Crisis[3]. A fragile state is defined as a state that is particularly vulnerable to internal and external shocks and domestic and international conflicts [4].  Lebanon falls within this category because of its institutional arrangement which embodies and preserves the conditions of crisis: it does so by entrenching an extreme factionalism of which the democracy of violence is only one manifestation. The fragility of Lebanon is in front of the eyes of anyone who wants to see: not to go too far, in 2006 Israel bombed Lebanon causing 1,300 deaths in a military action which ensued the abduction of 3 Israeli soldiers by a political party (Hezbollah); in 2008, 80 were killed in the clashes between pro-Syrian Hezbollah and Gulf-funded Sunni parties when the government headed by the latter attempted to dismantle the security apparatus of the former. Today in 2012, the Syrian conflict is spilling over in Lebanon with pro and anti Syrian regime parties clashing in Lebanon for a conflict which did not originate in Lebanon. The different factions which make up the political landscape in Lebanon and are entrenched by the institutional arrangements draw their survival from the support of external forces: they are to a considerable extent proxies of others and to the measure this is true they are not able to isolate Lebanon from external shock (e.g. the Syrian conflict). This fragility of the Lebanese state does not belong exclusively to the realm of politics; it has impact on poverty too.

Fragile so/or/and Poor?  Take for example the consequences of the Syrian conflict. Many Syrians have fled from the bloodshed in Syria making Lebanon the largest recipient of Syrian refugees in the region[5]. Many of these Syrians have settled in those regions which happen to be also the poorest one. Already poor, Lebanese in those regions have felt the pinch[6]: many are facing increased expenditures caused by the closure of the border and the inaccessibility to Syrian cheap goods. Concomitantly, many face a drop in their income, the result of increased competitions by Syrian workers, a deteriorating security situation which hampers smuggling and trade both within Lebanon and across the border and landmines which reduce the access to agricultural lands.

Most tellingly, when asked about measures to improve their status, respondents put the enhancement of security on the top of the list followed by the creation of jobs: it looks like poor care about fragility and security as much as they do about income. The lesson one has to keep in mind is that fragile states are unable to shield themselves from conflict: they will leap from crisis to crisis and every time they will do so the poor will suffer. They will because they are less secure and because insecurity feeds poverty. From this angle, it is not a matter of deciding whether stability matters more than income: it is a matter of recognizing how much the two are entangled. The sooner the international community will recognize this, the sooner it will move away from the false dichotomy of politics vs. poverty and the sooner one will be able to more meaningfully engage with countries which are yes high middle income but at the same time fragile.

[1] According to the World Bank definition, middle income countries are those countries which have GNI per capita per year which goes from $1,026 to $12,475.

[2] In the words of an eyewitness “ they didn’t have sticks, they had weapons

[4] The definition is taken by the Crisis State Research Centre at LSE.

[5] According to UNHCR data.

[6] Rapid Assessment of the Impact of Syrian Crisis on Socio-Economic Situation in North and Bekaa, UNDP Lebanon

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