On April 18, 2023, Lebanon’s parliament voted to postpone municipal elections for up to one year, less than one month before they were set to take place, citing the inability to secure the needed funding in time as a reason. Though an exact date for the postponed elections remains unknown, it is still important to reflect on the positioning of municipalities in Lebanese society today.
After enduring over three years of a fiscal and institutional crisis, Lebanese municipalities find themselves devoid of a well-defined economic identity, and lack in resources and the strategic foresight necessary for comprehensive development. Yet, decentralization is still discussed as a policy prescription for Lebanon’s socio-economic woes. In light of this ongoing discourse, it is crucial to examine the current landscape of local politics in Lebanon and delve into the question: What sort of identity do municipalities, the country’s most decentralized government units, continue to hold today, and what is its origins?
Decentralization has the ability to ensure more targeted and effective community development. By definition, this process can assign the most qualified government unit such as a municipality to address the unique social and economic characteristics of a specific region. This fact is echoed by geographer Wallace Oates, who acknowledges that central governments—as opposed to local administrations—fail to consider local nuances and are thus not fit to deal with development planning in regional contexts.
But in Lebanon, a country with a defunct banking sector, eroded public administrations amid currency failure and triple-digit inflation, a dysfunctional central government, and an impoverished society, the potential gains from decentralized governance must be put into question.
The basics of municipal life in Lebanon
The ‘municipalization’ of Lebanon is not a new phenomenon. In 1958, the country had 400 municipalities—a figure that shot up following the 1963 Municipal Law, which was designed to simplify the process of forming municipalities. Today, Lebanon houses more than 1,000 municipalities, nearly 10 times that of Jordan and triple that of Tunisia, distributed across 26 districts and eight governorates. According to the Municipal Act of 1977, each municipality has the authority to set and balance its budget, collect certain municipal fees and taxes, manage local assets, deliver basic utilities, and enhance infrastructure such as health and education facilities, wastewater networks, local transportation, streets, and other public spaces. Yet, this seemingly expansive authority is largely limited in practice and is subject to centralized supervision, giving rise to a process of ‘faux decentralization,’ a false sense of decentralization.
While municipalities are granted some level of authority, there are significant limitations placed on their ability to exercise those powers autonomously. Centralized oversight and interference, such as by the district commissioner, the minister of interior and municipalities, or central government-appointed governors, often undermine the true spirit of decentralization, rendering it more symbolic than substantive. This lack of genuine decentralization in Lebanon results in municipalities being unable to fully determine their own fate and address the unique needs of their local communities. In this vein, the potential benefits associated with decentralization, such as improved local governance, tailored policy-making, and enhanced service delivery, remain largely unrealized within the Lebanese municipal system.
This is a system that has become unsustainable and largely inefficient. One symptom, for example, is the proliferation of municipalities without any development objectives. For example, most municipalities under the current decentralization framework are quite small: close to 70 percent of them have less than 4,000 registered individuals. This means that many have a minuscule tax base which hinders their ability to generate sufficient revenues, provide services, or function as agents for regional development.
Another major challenge facing municipalities is their poor financial management. While municipalities can collect a total of 36 taxes and fees, the lion’s share of their revenues—around 85%—comes from three sources only: the rental value fee, the sewage fee, and the building permits fee. This low level of tax collection can be attributed to several factors ranging from weak administrative capacity, unequipped human resources and IT systems, cultural specificities, lack of legal enforcement, and the ad-hoc assessment of the fee rates. Additionally, municipalities significantly rely on central government transfers, also known as the Independent Municipal Fund. This heavy reliance on this fund poses a significant risk to local development by fostering a veneer of fiscal security among both authorities and taxpayers.
Across time, municipalities have developed a misguided belief that the Independent Municipal Fund will consistently provide them with financial support, causing them to overlook the long-term costs and sustainability of the services they provide to their constituents.
Across time, municipalities have developed a misguided belief that the Independent Municipal Fund will consistently provide them with financial support, causing them to overlook the long-term costs and sustainability of the services they provide to their constituents. This mindset has hindered prudent financial planning and jeopardized local growth. Similarly, taxpayers generally do not have proper awareness of the actual cost of municipal services, assuming that the the Independent Municipal Fund covers most expenses, and thereby underestimating the importance of their own tax contributions.
Furthermore, an excessive dependence on the Independent Municipal Fund has stifled municipalities’ motivation to explore alternative revenue streams or design policies tailored to the unique needs of their communities. This reliance automatically diluted their autonomy and hampered their ability to adapt and innovate in response to local challenges and priorities, making them dependent on national political and economic arrangements and priorities.
Forced onto municipalities by political parties and elected officials, this model of decentralization can be better understood when examining the broader context of national power-sharing agreements. Through this lens, one can understand the underlying dynamics that perpetuate the limited autonomy and fiscal struggles experienced by municipalities today.
Power-sharing agreements and corporatizing local governance
The end of the civil war was marked with a power-sharing agreement amongst the country’s political parties that largely affected local politics. Since then, the same political leaders made it a point to put forth a “localization” agenda, in the pursuit of development, prosperity, and stability. In reality, however, they saw municipalities as avenues to strengthen their power and capture local resources for their own benefits.
To establish this model, municipalities underwent a process of ‘corporatization’ and clientelism, relying on private funds and investments or politically connected individuals to sustain their basic operations. This trend is illustrated by the actions of Rafik Hariri, who served as Lebanon’s prime minister from 1992 to 1998 and again from 2000 to 2004, before his assassination in February 2005. Hariri’s policies revolved around market-oriented reform and privatization, aiming to achieve economic liberalization at the time. Before his national political career, Hariri exerted influence over municipal affairs by personally financing reconstruction in Saida, a city in South Lebanon where is from, after the 1982 Israeli invasion. Through strategic planning and support for economic projects using his own private capital, Hariri undermined the democratic and participatory aspects of municipal work, treating service provision as a corporate venture. This approach was similarly observed in Tyre, another city in South Lebanon, where the Amal Movement, one of the current main Shia political parties, established the Committee for the Development of Sour (Tyre) to fund infrastructure projects following the Israeli incursion in 1985.
In the absence of external and private capital, municipalities are left devoid of any capacities to operate and pursue development planning themselves.
It is essential to recognize that this form of political and private co-optation of local governance has only weakened municipalities today, transforming them into vehicles for resource capture. By treating municipalities as intermediaries tasked with delivering final products to local communities, the political and business elites have trivialized the democratic and social dimensions of municipalities’ work. In the absence of external and private capital, municipalities are left devoid of any capacities to operate and pursue development planning themselves. This serves as an explanation to the state of helplessness which municipalities often present themselves with, even well before the country’s financial crisis.
Local extraction and the heavy price of non-alliance
Another form of control at the central level exerted by the ruling elites on municipalities is through rent extraction and fostering clientelism. If a certain municipality fails to ally itself with a particular political party or ideology, it can be punished by having its resources restricted or project contracts withheld. This type of favoritism has fueled regional inequalities for years, inflating the wealth of politically connected municipalities while sidelining others.
The municipality of Saida is a case in point. In the mid 2000s, the city was facing a waste management crisis, which culminated in the piling up of waste by its coast. The municipal council, led by an opponent of the Hariri family, attempted to address the issue by planning the construction of a new waste treatment facility, which was blocked for years due to political bickering at the national level. After the 2010 municipal elections, a new mayor aligned with the Hariri family entered office and raised the contract price for the waste treatment facility and subsequently awarded the tender to a company allegedly connected to the Hariri family. This instance illustrates how the culture of corporatization has normalized questionable practices within municipalities, consequently diminishing the significance of efficient and credible development processes.
Re-imagining municipal politics in Lebanon
The municipal elections in Lebanon, whenever they do take place, offer an excellent opportunity to reflect on the positioning of municipalities in a crisis-torn Lebanon. The potential benefits of decentralized governance are clear: municipalities that are fiscally autonomous are often best positioned to efficiently allocate their own resources in favor of service delivery and social welfare. However, present power-sharing agreements and the evident trend of corporatization have only weakened municipalities and treated them as avenues for clientelism and resource capture.
Any form of decentralization must be coupled with transparency and accountability mechanisms to ensure that the power of the ruling elite is not simply transferred to local elites.
As such, there is a crucial need to re-imagine the role of municipalities and give them a greater voice in policymaking to conduct local economic development, which entails an intersectional approach—bringing the private sector, civil society, and local communities together for inclusive and sustainable development programming. Any form of decentralization must be coupled with transparency and accountability mechanisms to ensure that the power of the ruling elite is not simply transferred to local elites. Until then, the international community needs to be well aware that calls for decentralization need to be grounded in these realities. Otherwise, Lebanon will end up with unfunded local mandates, whereby the cost will be largely borne by the majority of society.
To ensure a more sustainable and prosperous future, municipalities must seek a balance between external financial support and their own revenue generation. By reducing their reliance on the Independent Municipal Fund, municipalities can foster financial resilience, promote local development initiatives, and align their resources with the specific needs and aspirations of their communities. Overcoming this financial dependency on the fund and striking a balance between external support and local revenue generation are crucial steps toward fostering sustainable growth and empowering municipalities to address the unique needs of their communities.
Hussein Cheaito is a Nonresident Fellow at TIMEP focusing on governance and economic development in Lebanon, and is a researcher at the Beirut-based think tank The Policy Initiative (TPI). For more analysis on the topic of municipalities and decentralization, follow the extensive work on the matter done by Hussein and his colleagues at TPI.