Beginning of the End
The so-called Switzerland of the Middle East is having a deep crisis by all accounts, which made the economy collapse and led it to a debt default. The situation has escalated since the financial crisis of 2019, for the consequences were serious, namely; the collapse of the Lebanese currency -pound- against dollar appreciation losing 90% of its value, restrictions on the withdrawal process from the banks, in addition to implementing austerity measures on electricity and gas usage. This has led the Lebanese Economy to shrink, impoverished people, and lots of them suffer from unemployment.
Lebanon needs to sound the alarm, hence after being stable and autonomous to some degree, it became the world champion of crisis, starting from corona pandemic, up to Beirut Port explosion, the straw that broke the camel’s back. Yet the special authorities are still rejecting the calls to explain the circumstances of that crime, they have previously claimed-according to Lebanese news channels that the detonation of 1700 tones of ammonium nitrate, was due to improper storage; stocked in one port warehouse for over five years without a minimal respect of safety conditions, leaving behind more than 190 deaths, 6500 wounded and hundreds of families without shelters, “this has increased the rate of poverty from 25% on 2019 to 75% on 2021”[1].
The enigma behind those consequences is what’s known as “Successive Governments”, because just post-civil-war of 15 years between different sects and doctrines, Lebanon has been ruled by governmental structures aiming to work on peacekeeping, but the inverse has happened; the tax system has been cancelled in purpose of withdrawing funds inside, however the focus was oriented only towards banking activation, along with real estate sector and financing both within the framework of the rebuilding project, so all the governments took the same path neglecting the agriculture sector totally, with paying less attention to industry, which has led to a trade deficit in the balance of imports and exports. A country where the exports are way over imports is doomed.
In a TV interview, Doctor Ali Mahmud condemned this system and on the top of it the Lebanese central bank governor Riyadh Salameh: “he is the joker of a corrupt system that has embezzled Lebanon since the nineties until now, he imposed reckless policies such as fixing the exchange rate, the support topic that wasted lots of public money, in addition to debts rising to 97 billion dollar”.
Previously, the Swiss newspaper Le Temp has published an important report, arguing that the IMF has deleted 14 pages after studying and evaluating the financial situation of the central bank as a response to Riyadh Salameh for keeping peace in the country in case the financial market would destabilize, Samia Nakhoul claims:
” Lebanon’s central bank had a $4.7 billion hole in its reserves by the end of 2015 that was not disclosed to the public “[2].
Hiding this information for years did not prevent it from going public; the default reserve with this amount remained a dilemma to the banking sector, after long cajoling and bullying between the parties, they finally reached a plan B and named it “Financial Engineering” in order to have the situation under control again by allowing cash flows from capitals outside the country. So far, the government seems to aim at establishing a reform to support its economy by maintaining the Lebanese pound appreciation, but the truth is entirely different, because attempting to inflate the incomes of the Central Bank for the sake of governors and financing their projects is the real reason behind coming up with this plan, how was it made?
The central bank had asked other commercial banks to attract the clients to deposit their money in foreign currency, and to offer high prices on interests, in order to allocate those revenues to pay the creditors, but with the increasing interests level comparing to the limited rate of foreign currency entering the country naturally, the expected has happened and things went wrong i.e. banks failed to pay their clients’ money because of putting most of their reserves in the central bank, and this was the core of 2019 crisis. Hence those banks had put restrictions on money withdrawal operations which created chaos, for instance, recently a Lebanese girl had broken into a bank with a fake gun to access her savings, and on the next day authorities had recorded at least five other robbery attempts. Later on, it was decided to close the banks for three days to avoid any possible repercussions.
Sectarian quota is not innocent regarding what is happening inside Lebanon, for the record, 18 sects living in one place makes it have the most prominent culture and civilization, and makes the idea of religions coexistence within that range intellectually interesting. But the dark side to this view may not be seen by everyone. Following the independence from France, Lebanon had held a National Pact, providing for power-sharing between sects, and the co-management of the system. Yet this settlement does not prioritize competence principle, but instead, it entrenches self-interests, and gaining much more privileges.
There is no doubt that settling the culture of coexistence between sects may prevent inner conflicts, and eventually maintain the national sovereignty and unity, but rather, this culture became a weakness represented in fight for gaining legitimacy to rule. However the same thing applies to all political parties revealing another side of sectarian dictatorship, through controlling the other, yet this has reached an alarming proportions; either by asking foreign parties to interfere internal issues and political assassination, or even by taking up arms and rebellion. For loyalty to sects is one of the major aspects to political instability.
Official authorities in Lebanon hasn’t carried out any demographic statistics based on ethnicity since 1932, this stems from the fact that the ethno-religious mixture is quite sensitive, and particularly vulnerable to internal influences, besides, it will be expected that some parties would take action as soon as a remarkable demographic shift occurred. Recently, the CIA World Factbook published on its platform that Lebanese population was approximately estimated at 5.5 million citizens; Muslims constitute 67.8% (31.9% are Sunnis, 31.2% are Shiites, and a small percentages of Alawites and Ismailis), while Christians constitute 32.4% (Maronite Catholics are the largest Christian sect), followed by 4.5% of Druze and few numbers of Jews, Baha’is, Buthists, and Hindus.[3]
Political systems generally lose their integrity once they fail to contain pluralism; feeling insecure drives directly to taking up arms under the pretense of self-protection. Inspite of calls to cancel political sectarianism and issuing pacts for this, going into effect is actually hard to get, not to say impossible. In fact, the change should start from the administrative sector, for instance modifying the personal status law, and cancelling the section of the citizen’s sect; this will enhance the feeling of citizenship and satisfy his/her inner need to belong.
While parties continue to ponder and divide loots by virtue of belonging to the same beliefs, people keep suffering from crisis weighing on them. The situation has even escalated when people started to migrate illegally in the so-called “death boats” fleeing from a miserable situations. Previously on 09/22/2022, a video posted by a Syrian girl living on the coast went viral especially on Facebook, the video showed a group of people in the middle of the sea, social networks users thought it was some kind of a manifestation, but later on, they found out that the boat had sailed from Lebanon carrying about 170 illegal migrants from different nationalities including; Lebanese, Syrian and Palestinian, heading to Greece. Unfortunately, the boat sank off the Syrian coast by Arwad Island due to the heavy load. About 94 bodies were pulled from the water.
Running from a bitter truth led them directly to death, when the citizen loses his/her simplest rights; he/she won’t hesitate to gamble with their lives, but what is their excuse to putting their family’s life on the stake and seeing them sink in front of their eyes? The government limits electricity consumption, people have suffered from frequent blackouts, and this crisis goes back to a long time, for the electricity infrastructure is vulnerable since the nineties. Obviously alternating power supply is inevitable, parallel to the financial crisis in the country, it became impossible to put a budget to supply energy plants with enough fuel, and bring specialized teams for maintenance because of recurrent malfunctions happening due to bad quality of the raw materials used in the equipment on one hand, and the continuous Israeli air raids on power plants on the other hand. This may be considered another failure of the successive governments, which could not come up with an inclusive plan for the required reforms, and prevent the depletion of funds remaining in the treasury, by making agreements with the neighboring countries to finish the projects of gas pipes extensions and generating electricity.
Lebanon now is on the point of collapse, for the crisis is enrooted because of numerous accumulations through the years without any reforms of whatsoever, while putting merely temporary solutions. The dilemma goes beyond financial budget repercussions but it is embedded in the depth of the system which has acquired the government rule, and which only seeks making deals in both legal and illegal ways, as it is the strongest party in the game of “cajole and bully”.
[1] – Joseph DAHER, Lebanon: How the War’s Political Economy Led to the Current Economic and Social Crisis, Research Project Report, Publications Office of the European Nation, 2022.
[2] – Samia NAKHOUL, before Lebanon’s current financial crisis, central bank faced a $4.7 billion hole in reserves- IMF memo, Reuters, NewYork, 2021.
[3] – The World Factbook, https://www.cia.gov/the-world-factbook/countries/lebanon.