Cost Of Sectarianism In Lebanon

Cost of Sectarianism in Lebanon

On April 12, 2011, the Human Rights and Peace Club and the Secular Club at the American University of Beirut hosted a lecture by economist Dr. Jad Chaaban entitled “The Cost of the Sectarian System”.

The importance of the lecture lies in the fact that it’s the first to study sectarianism from an economic perspective, examining the sectarian regime’s costs and burdens that Lebanese citizens incur from birth through old age. Below is a summary of Dr. Chaaban’s paper.

Birth

Lebanon’s sectarian system doesn’t recognize the place of residence as a primary citizenship status. For people residing outside their place of registry, the cost of registering a newborn in their place of registry instead of their place of residence is $50 on average to transfer the birth certificates from the place of birth to the place of registry. For newborns in the Greater Beirut area, this amounts to $460,000 per year. This additional burden is equivalent to the budget necessary to vaccinate all newborns in Lebanon for basic immunization.

Schooling and Work

According to Dr. Chaaban, if we were to have a fully secular public education in Lebanon, then we could replace religious classes in schools with math courses, which are said to improve students’ qualifications. This would increase earnings for young people by an average of 6%. The lifetime increase in income using a conservative assumption would be on average $6,000 per person. The prevalence of confessionalism in the Lebanese school system results in an opportunity cost of almost $240 million every year. This is 50% more than the total yearly budget of the public Lebanese University.

Marriage

Christians in Beirut pay roughly $2,500 to rent a church for their wedding. Muslims pay about $200 for a religious wedding. What if there was in Lebanon an obligatory civil ceremony that was sufficient to have a legal transition into marriage? Supposing such a ceremony would cost at most $100 (comparable with other countries), then each couple would save on average $160 in marriage costs, according to Dr. Chaaban. For a total of 35,000 marriages every year (CAS, 2008), having a civil marriage in the country would save society $5.6 million yearly. This is three times higher than what the government spends on forests rehabilitation per year.

Sectarianism by the Numbers

> The prevalence of confessionalism in the Lebanese school system results in an opportunity cost of almost $240M/year.

> Civil marriage in the country would save society $5.6M/year.

> The estimated total cost of confessional residential segregation in 2010 is $800M.

> The total cost of excessive public sector employment due to sectarianism reaches $396M/year.

> The total yearly cost of sectarianism is almost $3B.

> Every person born in Lebanon today would have to incur at least $114,000 over their lifetime due to sectarianism.

Housing

Dr. Chaaban estimates that the total cost of confessional residential segregation in 2010 to be $800 million. From an individual perspective, if someone wants to buy a 200-sqm apartment in a “cheap” area of Beirut, and if the average price per sqm is around $2,000, then one must pay $400,000. According to Dr. Chaaban, 11% of this price is a “confessional segregation premium”, i.e. $40,000. Supposing this person wants to finance their apartment with a loan over 20 years for up to 75% of the amount at a 5% interest rate, the total cost (present value) due to confessional segregation would be $88,000.

Public Services

How much of the excessive public employment is due to equal confessional representation? Studies show that the figure is close to 6 per 1,000 civil servants. Applying this to Lebanon, Dr. Chaaban finds that almost 16% of public employees are an added burden due to sectarianism. The total cost of excessive public sector employment reaches $396 million per year. Revenue collection losses for public utilities are imposed by politicians using confessional pressures to allow their followers not to pay service charges. For this, the water sector loses $67.5 million every year, while the electricity sector loses $150 million yearly due to sectarianism.

Cost of Living

An exclusive agency law protects the interests of most big businesses, and most representation contracts are allocated on a confessional basis. Studies show that abolishing exclusive agencies in the country would contribute to a 2.5% increase in GDP. The added economic burden of excessive market concentration in the hands of confessional leaders is $850 million per year.

Old Age

Having an inefficient and fragmented elderly support system is costing the Lebanese society $420 million every year.

Conclusion

Dr. Chaaban estimates the economic costs of sectarianism, based on a lifetime approach. The total yearly costs incurred by the Lebanese society amount to almost $3 billion, or 9% of the GDP. This is equivalent to about $2 per person per day, paid as an opportunity cost of sectarianism. Knowing that 200,000 people live in extreme poverty in the country on less than $2/day, reducing the burden of sectarianism could also reduce poverty on the long run. On an individual level, every person born in Lebanon today would have to incur at least $114,000 over their lifetime due to sectarianism. Dr. Chaaban warns that these costs are very conservative, as they do not factor in for instance, wasteful investment spending due to the duplication of projects to maintain the confessional balance.

 

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