May 11, 2003 | The Weekly Standard
Mr. Hariri Goes to Washington
By Amb. Richard Carlson
According to the Washington Post, a fellow you've probably never heard of named Rafik Hariri wants to build a $25 million house in Washington, D.C., a Kennedy Center-scale monument better suited to the banks of the Tigris River. Why did Hariri pay $13 million for the property on Foxhall Road back in 1987? Why does he want to pay $25 million or more to build a 103,667 square-foot house on it now? The answer, self-evidently, is he's a very rich and very conspicuous consumer, who, in this instance, runs a foreign government as if it were his own personal real estate office.
Rafik Hariri is the prime minister of war-torn Lebanon, and, according to Forbes, has a personal fortune of about $3.8 billion. “This is a guy who treats all of Lebanon like he owns it personally, his own plaything,” says Tony Haddad, president of the Lebanese-American Council for Democracy.
Picture Lebanon and you likely conjure images of barbed wire and machine gun emplacements, with a downtown Beirut of collapsed buildings, dust, and the corpses of dogs. No more. Since Hariri took over as prime minister in 1992, he has rebuilt hundreds of acres of central Beirut, although his massive new construction won't benefit the average Lebanese family–they make around $200 a month and couldn't afford the paving stones they'd walk on. It is for Hariri's rich friends and fellow social travelers throughout the Arab world and Old Europe, who might covet the downtown condos facing the sea that sell for $5 million each. Another 150 acres of downtown Beirut waterfront is now being created on landfill atop a former garbage dump by Hariri and his private construction company, Solidere.
The deserted, gutted buildings in central Beirut are about gone, and the rubble has been mostly cleared away. This was done by Hariri and Solidere, which owns, or has owned, almost all of the central district. Hariri seems to have a financial interest in anything that generates a profit in Lebanon, extending even to ownership of the trash collection business and waste containers along the downtown sidewalks. And how did he get his hands around all of downtown Beirut? He took it, some 230 acres, worth close to $2 billion. Actually, the government seized it for him when he became prime minister, taking it away from its many owners by the power of eminent domain, and then handing it over to Hariri's company to develop. It was one of the most valuable land grabs in history.
Hariri tore down hundreds of beautiful but damaged historic buildings, making way for high rises to house the likes of Merrill Lynch (though he did save and rehabilitate a few old jewels). Even a 500-yacht marina, whose ownership was strongly contested, was handed over to Solidere by Hariri's government. Solidere has sold downtown land for hundreds of millions of dollars to European, Kuwaiti, and Saudi investors to build hotels and apartments. Solidere's master plan for downtown Beirut calls for gleaming Riyadh-like offices and condominiums, replacing the Ottoman charm of old Beirut at prices comparable to New York or Cannes, and available only to the very rich. But while Hariri has succeeded in, and has been widely praised for, transforming the bombed-out downtown, he has also saddled Lebanese taxpayers of this and future generations with an enormous, burdensome debt. Much of the borrowed money pays lenders back at very high interest rates. The country's debt by year's end will be $31 billion. The debt service is a staggering $3 billion a year.
One of Hariri's flamboyantly self-promotional websites (he maintains three: www.rhariri.com, www.rafik-hariri.org, and www.hariri-foundation.org.lb, all with numerous photos of Hariri, a bear-like man with eyebrows like summer caterpillars) has a flashing opening line that states, “Together For A Better Future.” The together part presumably refers to his involuntary partners, the common folk of Lebanon, who will pay down the debt without sharing the profits. A poll from the Lebanese Information Center (LIC) found that more than 40 percent of the Lebanese population would leave the country if they could. Dr. Joseph Gebeily, president of the LIC, says this reflects the widespread and bitter popular resentment of the Hariri government.
In the dozen years since Hariri became prime minister, according to media reports, he has personally profited by $100 million from the redevelopment of downtown Beirut mandated by the government he runs. Astonishingly, U.S. taxpayers have also modestly pitched in. Last month Solidere received a $450,000 federal grant as half payment for a “feasibility study” of possible earthquake problems on the reclaimed waterfront land. U.S. Ambassador Vincent Battle signed the agreement. The grant–from the obscure U.S. Trade and Development Agency–was made to Solidere, although the cash itself was paid to the American company that did the work.
An “independent federal agency” with about 50 employees and a $50 million budget, USTDA has a delicately bureaucratic way of describing why Solidere gets to keep the reclaimed land along the downtown Beirut waterfront. Says a USTDA press release, “In exchange for taking responsibility for all infrastructure requirements within the renewed city center of Beirut, the Lebanese government has granted to Solidere ownership of land it reclaims from the sea.” Solidere's 1998 contract for that landfill work–a $53 million job–went to an American company, Radian International of Bethesda, Md., after then USTDA director Joseph Grandmaison, officials of the Overseas Private Investment Corporation (OPIC), and Bill Clinton's Commerce Secretary Bill Daley personally lobbied Rafik Hariri. USTDA threw in some more grant money to Solidere at the same time, about $220,000, “as a condition that they select the American company,” said Henry Steingass, USTDA regional director for Africa and the Middle East.
Steingass defended the two U.S. grants as useful both to economic development in Lebanon and to U.S. companies seeking contracts, although he did allow, when asked about Hariri's conflicts of interest in profiting from Lebanon development, that this is “something we should take a look at.” Steingass said he had recently read about the prime minister's proposed Washington palace construction, and it gave him “pause.” He said, “I thought, this is not the first foreign leader who doesn't distinguish between public duty and private sector enrichment. He needs to be watched. We should be careful of what we do” with Lebanon.
Cybill Sigler, USTDA's “country officer” for Lebanon, who reports to Steingass, said she had never heard of Hariri's ownership interest in Solidere, or the $25 million house in Washington. “All news to me,” she said. “We relied on the U.S. embassy in Beirut for our due diligence, and they never said anything negative.” A joke at the World Bank in Washington (but not, apparently, at the U.S. embassy in Lebanon), according to an English banker, is that “Rafik Hariri doesn't run a country, he runs a personal business. He doesn't have a parliament, he has a board of directors–and they're over the border in Syria.”
RAFIK HARIRI, 59, is the son of poor Sunni Muslim citrus farmers in the southern Lebanon port city of Sidon. He went to Saudi Arabia at age 21 as a $120-a-month accountant. Somehow, he insinuated himself into the good graces of the Saudi royal family and became a Saudi citizen (no easy feat). He soon made millions in construction, after contracts were passed to him by King Fahd. Not unlike the fortune Osama bin Laden's family made in construction, the money flowed from Saudi public works projects to build roads, bridges, hospitals, palaces, and hotels, with consistent but unproven allegations of big payoffs to Saudi princes trailing in the energetic Hariri's wake. Hariri's company is now run by his son Saad, a 32-year-old Georgetown University graduate who wears a ponytail and, according to Forbes magazine, has invested more than $1 billion of his father's money in telecom companies.
Hariri père has spread money widely. He has engaged in considerable Huey Long-style philanthropy for the Lebanese. He rebuilds schools and renames them after himself, and gives scholarships to Lebanese students, helping place more than 3,000 of them in U.S. colleges and universities through his Hariri Foundation. (This was founded by Hariri in 1979 and originally titled the Islamic Institute for Culture and Higher Education, with offices in Tripoli, the Bekaa Valley, Paris, London, and Washington.) Less philanthropically, the prime minister owns the Banque de la Méditerranée and a lot of the Banque Française de l'Orient, the Arab Bank, Ltd., and the IndoSuez Bank, plus considerable real estate in France, Monaco, Saudi Arabia, and America, including, according to news reports, Houston's $300 million Texas Tower, the tallest building in the city, generating a yearly rental income–75 floors, 1,700,000 square feet of office space–approaching $50 million.
Cash appears to flow in and out of the prime minister's pockets, and in and out of Lebanon, in remarkably large volume. The U.S. Committee for a Free Lebanon (USCFL) tracks money laundering in Lebanon and says that the Medina Bank in Lebanon, in concert with the Syrian government, laundered huge amounts of cash for Saddam Hussein, his family, and the Iraqi government over the past three years, using it to buy real estate and fund building projects in northern Lebanon. They say that Rafik Hariri's Banque de la Méditerranée is “also involved in these large operations.” USCFL says that a massive hotel planned for the Lebanon coast, sited to overlook the Mediterranean, is owned by Saddam's crazed (and perhaps late) son Uday.
Hariri's money–or perhaps just his winning personality–has gained him lots of prominent friends, including a long and close relationship with French president Jacques Chirac and his wife Bernadette. They dine together and travel together. A few months ago Hariri visited with the Chiracs one day in Paris and two days later flew to Rome for a personal meeting with the pope. Earlier that same week, Hariri spent two hours with Brigadier Rustom Ghazalead, a Syrian intelligence operative.
The friendship with Chirac paid significant dividends to Hariri last fall. Lebanon was facing financial collapse because of its staggering debt, when Chirac called a meeting of “key donors” at the Elysée Palace in Paris on November 23. Led by Hariri's friends in Saudi Arabia, which kicked in $700 million, the meeting raised over $4 billion in cash, loans, and grants for Lebanon's coffers. Jacques Chirac put the French taxpayers in for $500 million, a sum matched by the European Investment Bank, the Investment Bank of Kuwait, and the Arab Development Fund. The Emir of Kuwait, the United Arab Emirates, and Malaysia all pledged $300 million; Italy, Canada, and Bahrain went in for $200 million each; Japan and the Arab Monetary Fund gave $100 million apiece; Belgium gave $70 million; and the Sultan of Oman got away with a $50 million contribution. The United States, Britain, Germany, and Spain took a pass, even though Hariri had flown to Washington and lobbied President Bush for a contribution. Maybe Mr. Bush had heard of the new house Mr. Hariri is planning for Foxhall Road.
Perhaps unsurprisingly for the prime minister of a country that has been under Syrian occupation for a decade and a half, Hariri is said to have very close ties to Syrian intelligence. “Mukhabarat,” military intelligence operatives, are believed to be all over Lebanon, and have control of the country's political and, to some extent, its social and financial life. The Lebanese government suppresses civil liberties like freedom of assembly and speech and the right to form political associations. It controls the media (Hariri personally owns newspapers and TV in Lebanon) and uses widespread wiretapping and surveillance, illegal detention, torture, and death under torture to keep the public in line. When he was appointed prime minister in 1992, the decision had to be approved by Damascus, then in the grip of the wily and dangerous Hafez Assad (whose more effete son, an eye doctor named Bashar Assad, has now inherited his father's throne). Syria was the first nation to be listed by the U.S. State Department as a state sponsor of terrorism and as “a safe haven for terrorist groups.”
To vet his appointment as prime minister in 1992, Hariri met with Syrian general Ghazi Kenaan, the sinister chief of intelligence, and his Lebanese counterpart General Jamil el-Sayed, head of the General Security Department, who signed off on his new job. The U.S. Committee for a Free Lebanon this week accused el-Sayed of arranging for Lebanese passports for some Iraqi officials who have fled ahead of U.S. troops and are hiding in Lebanon. The committee says this move by Lebanon came after the United States put pressure on Syria, which had itself been issuing passports to Iraq's fleeing Baath party officials.
Aside from lip service, critics say that Hariri has done little or nothing to dislodge the terrorist flora and fauna that thrive in Lebanon–the Palestinian Islamic Jihad, Hamas, Osbat el-Ansar (which is linked to al Qaeda), the PLP-General Command, and the Hezbollah organization, a favorite of Damascus and comfortably at home in both Lebanon and Syria. A large flashing neon sign in the Lebanese town of Bint Jbail says, “Hezbollah, you honor us throughout the generations.”
While Hariri squeezes new personal profits from his job as prime minister, terrorists base themselves in his country with impunity. Prime Minister Hariri is under the sheets with the Syrians, who have long shared their bed with terrorists without the protection of a bundling board.
Here is an idea: Until Lebanon's terrorist havens are cleaned out, Hariri's application to build the $25 million house on the $13 million piece of land in Washington should be put on hold and the land frozen for sale by the federal government. The Bush administration should apply the Patriot Act provision that allows the United States to confiscate assets belonging to foreign countries that aid our enemies to all of Hariri's property, including his luxurious Texas Tower, his fancy new offices in Bethesda, Maryland, and all the other property he has here in America. Let the Justice Department, including the tenacious Ted Greenberg who runs the DOJ money-laundering section, investigate Hariri and his Forbes List fortune and how exactly he fell into it.
If Hariri is clean, then let him build his tacky manse in Washington. I'll even send a house-warming gift. If not, grab all his assets in America, sell them, and give the money to the families of victims of terrorism, starting with the families of the U.S. Marines murdered in predevelopment Beirut in October 1983.
Richard W. Carlson is vice chairman of the Foundation for the Defense of Democracies, a Washington think tank concerned with terrorism. He is a former director-general of the Voice of America.