The previous sections described mechanisms through which the consociational structures of Lebanon and Iraq have survived without producing much by way of positive governance results. Despite recurring discontent, for many both systems have remained relevant. This time around, however, things seem different. Both countries are facing convergent budgetary, political and security crises that are shaking their sectarian structures to the core. The compounded nature of their current crises limits the financial and political means available to elites to absorb their impact and respond adequately as socioeconomic conditions deteriorate rapidly.

The sectarian power-sharing systems of both Lebanon and Iraq generate a weak civil society and inadequate security. Social conditions are harsh and both countries’ economies are imploding. Inefficient electoral processes and limited space for political activism discourage political competition. The oligarchy of power results in state capture and high corruption rates. Both countries are ranked among the most corrupt in the region by Transparency International, with Iraq listed as the 12^th most corrupt in the world.[54] Poor public service delivery and the proliferation of informal governance systems make citizens more vulnerable as socioeconomic conditions deteriorate, poverty increases, unemployment grows, and access to basic services is limited. Both governments continue to finance corruption by accumulating public debt, with Lebanon’s deficit exceeding 150 per cent of GDP and Iraq facing a 25 per cent fiscal deficit in its 2020 budget.[55] Table 1 below shows the major similarities and differences between the political economies of Lebanon and Iraq.

The indicators depicted in Figure 1 (below) suggest that the economic situation in both countries is also similar. Despite Iraq faring better in a number of dimensions like inflation, poverty, and unemployment – largely due to its oil revenues – its revenue streams are volatile and not sufficient to finance Iraq’s growing public sector payroll, debt level and corruption. In fact, Iraq faces a perfect financial storm in the longer term that shows similarities with Lebanon’s economic situation between the 1990s and its current crash.[57] A predicament about 100 years in the making, Lebanon offers a cautionary tale for Iraq’s adolescent democracy. It illustrates how sect-based elitism and corruption can institutionalise over time and how hard it is to reverse this process. In the meantime, Iraq still has opportunities to salvage its state institutions, revive its economy, and improve its state of operation. With a gradual recovery of oil prices, Iraq’s treasury will again have the financial room for manoeuvre to improve public services and stimulate economic diversification in response to protestors’ frustrations. In addition, Iraq’s majority Shi’a demographic produces greater incentives for intra-sectarian competition, reducing sectarianism in the process. In a recent interview, Iraq’s deputy Prime Minister and Minister of Finance, Ali Allawi, stated that Iraq is at a crossroads: ‘These are difficult times, trying times. They can become the worst of times but also the best of times. The next few years are decisive as to whether Iraq goes towards great expectations or bleak times.’[58]

Source: World Bank, 2019. ‘Central Government debt, total (% of GDP)’ link (accessed 10 November 2020); Transparency International, 2019. ‘Corruption Perception Index’ link (accessed 10 November 2020); Central Bank of Iraq, 2019. ‘CPI and Inflation’ link (accessed 10 November 2020); Central Administration of Statistics, 2020. ‘Inflation rate’ link (accessed 10 November 2020); Central Bank of Lebanon, 2020. Lebanon Foreign Exchange Reserves link (accessed 10 November 2020).