Sorting Out Hezbollah’s Plans for Lebanon’s Double Crises

It is a lesson in Lebanese politics to track Hezbollah’s multiple layers of tactics and strategies focused on one goal – preventing the Lebanese state from undertaking actions that challenge its interests. Among the sectarian groups in Lebanon, Hezbollah stands out as the most consistent and rigorous adherent of maintaining its influence over the others whether by rallying its allies in Parliament to control legislation and government initiatives, bringing its thugs out into the streets to combat demonstrators, or simply reminding opponents of the fate of previous leaders perceived as obstacles to their leadership.

While the list of its contributions are often referenced by its non-Shia supporters, for example, protecting Christian villages in Syria against ISIS, providing basic services to underserved communities in the south and the southern suburbs of Beirut, and repeating popular slogans against corruption and malfeasance, Hezbollah still operates through mechanism neither mandated by or under the control of the government, even if it still points to its legitimacy as the face of the “resistance.” Its commitment to reform is undermined by its opposition to an IMF bailout which would expose its dealings and manipulations of the economy along with those of their allies.

Lately, there have been reports from various sources in the US and Lebanon that even after Beirut International Airport was closed, flights from Iran were permitted in carrying both Iranians and Lebanese who had been in Iran, many to the holy city of Qom, the epicenter of the COVID-19 pandemic. The most recent numbers in Iran are 2,640 amid 38,309 confirmed cases as of March 28. This is one of the highest mortality rates worldwide.

It is ironic that in the last two governments, Hezbollah has insisted on naming the Minister of Health, which could be both a liability and a shrewd move if the government moves effectively to assist the country as opposed to serving only select constituencies. Health officials warned that “Lebanon’s confirmed coronavirus disease (COVID-19) tally jumped to 412 on March 28, [with 21 deaths] prompting one medical expert to warn the country faces its peak infection rate next week.” At that time, “398 suspected coronavirus cases have been transferred to the hospital and 995 cases remain in quarantine.”

So far, the government is emphasizing home quarantine as the first line of defense, based on the results in other countries. The LAF and security services are enforcing a 7pm – 5am curfew and are issuing public warnings against any gatherings. The UNHCR has asked Syrian refugees to stay in their homes and that it will “cover the treatment of any Syrian who is infected.” Industry Minister Imad Hoballah said that factories making medicines, food and basic materials can work at full capacity beginning March 30 to help meet the demand for essential consumer goods.

According to Sayyed Hashem Safieddine, head of the Shi’ite group’s executive council, it is deploying 1,500 doctors, 3,000 nurses and paramedics, and 20,000 more volunteers in itsresponse to the pandemic. Hezbollah has mobilized its resources to “complement the government apparatus and not to stand in its place,” he said, adding that Hezbollah had dedicated a Beirut hospital it owns to treating coronavirus patients, rented four disused hospitals, prepared 32 medical centers across Lebanon and laid plans for three field hospitals if needed. It has also rented hotels to be used for quarantine.

Given its mobilization efforts and its effective control over the Ministry of Health, one has to wonder how public health services will be allocated to the rest of the population in areas beyond Hezbollah’s control. Without a central authority to rationalize and allocate resources and facilities across the country, existing shortages of supplies, equipment, and personnel will only become more severe and damaging to the country writ large and erode further the central government’s credibility. It is another challenge on top of the economic, fiscal, and political issues that PM Diab and his team will have to manage effectively if the government is to survive the economic meltdown and the pandemic.

New US Ambassador to Lebanon Meets with Leadership, Stresses Need for Reforms and Protection of Prot

Following her meetings with Lebanon’s current top leadership, newly appointed US Ambassador Dorothy Shea issued a statement that emphasized that “The people of Lebanon have rightly called for reform, an end to corruption, and the imposition of effective policies necessary to extricate Lebanon from its an unprecedented economic crisis. The United States continues to back the protesters’ legitimate demands for economic opportunity, accountability, and transparency. Only by meeting those demands can Lebanon initiate the difficult process of restoring international confidence.”

She went on to say that “The United States is proud to have been a committed partner to Lebanon since the 1800s. We have deep ties in education, in business, in security, and in people-to-people and family relationships, including my own, that touch all walks of life. We seek a bright future for the Lebanese people, who deserve a stable, secure, sovereign, and prosperous country. We stand with the Lebanese people in encouraging their government to effect real change in its policies, and to chart a course that will earn the confidence of those it means to govern – and, in doing so, secure the support of the international community.”

While there was no direct mention of complications caused by Iran’s dominant influence in the political landscape through its proxy Hezbollah, or of the specific expectations of US policy makers, Ambassador Shea noted that her discussions focused on the “strength and potential of the U.S. partnership with Lebanon, and our shared stake in a Lebanon that is stable, secure, and sovereign. This is a partnership that is vitally important not only to both of our countries, but to all of the countries in the region.”

How Lebanon will cope with its existing economic disaster compounded by the spread of the COVID-19 virus that is crippling businesses, overwhelming health facilities, and draining resources already in short supply, is a draconian test for the Diab government.

That there are no linear solutions was stressed by Jan Kubis, the UN envoy to Lebanon in his latest meetings with the current leadership. After meeting with President Aoun, Kubis noted that “The government is working at a rapid pace to implement the reform plan that deals with debt restructuring, banks, financial and administrative reform, in addition to the social and economic plan”and reiterated that the government must take its own steps to mitigate the economic crisis before any outside help. He summed up the international position as “the conditions are reforms, reforms, reforms.The new government will come with a clear action plan with deadlines, and then, we will try to help, but it must start with the work of the government.”

Kubis noted that the government’s pledge to accelerate the economic reform process after suspending payment of its Eurobond debt due March 9 was a step in the right direction. “The Honest statement of PM @Hassan Diab about the failure of the previous economic model opens the way out of the crisis. I encourage creditors to work with the government to avoid disorderly default following the suspension of the 9 March Eurobonds payment dictated by the critical situation of the country.”

An issue that was not reported in the meetings between Shea and Lebanese leaders was the US position on the Syrian refugees. However, on the 9th anniversary of the beginning of the uprising in Syria the US State Department issued a statement that said, “We encourage the international community to continue to provide assistance to Syria’s neighbors to share the costs of Syria’s refugee crisis. Displaced Syrians must be allowed to return voluntarily and safely to their homes, without fear of arbitrary detention, violation of rights and forced conscription. Yet, the Syrian regime continues to prevent them from doing so.” With the continued stalemate in both northwestern and northeastern Syria, there doesn’t seem to be any movement on refugee resettlement in the short term.

For readers who want a deeper dive on the economy and options for actions, I recommend two sources. The first is a paper produced by LIFE (Lebanese International Financial Executives) that focuses on “Saving the Lebanese Financial Sector: Issues and Recommendations,” and argues that “In order to restore confidence in the banking sector, the government and the Banque du Liban (BDL) need a comprehensive stabilization plan for the economy as a whole including substantial fiscal consolidation measures, external liquidity injection from multi-national donors, debt restructuring and a banking sector recapitalization plan.” The paper is available here.

A very valuable overview is the latest blog from the Lebanese Center for Policy Studies that you can find here. It posits that “A durable solution will require an all-hands-on-deck approach, involving negotiations with multiple stakeholders from whom enormous sacrifices will be asked. Recovering from the crisis will involve three separate yet complementary negotiating vectors.” They identify these as negotiations with private creditors, banking sector, and “the formulation of a strong and credible economic recovery program for which, realistically, an IMF arrangement backed financially by foreign donors will have to be made.” The last point is the subject of wide debate among the leadership who are reluctant to allow their interests to be exposed to reform measures.

Critical Mass Destruction – An Economy in Disarray

In these times of great confusion and bewilderment, I felt compelled after much reflection to get clarity over the financial conundrum we are facing, which is characterized by deliberate obscurantism to say the least. I also wanted to reflect on some constructive ideas about this very difficult subject.

By nature I am compelled to seek the crux of a problem and think only in terms of solutions. I also wanted to understand how this affliction came about.

I tend to look at situations in a holistic manner beyond the outward manifestations of symptoms, which in this case are the bankruptcy of the financial institutions and the failed state of Lebanon.

The deeper underlying cause can be summed up by saying that extreme negligence, recklessness and self-serving narrow public policies driven by private big money agendas have contaminated our country for decades, and that the current crisis conditions are the product of policy and not of circumstance.

They are the joint product of long-standing monetary policies by The Central Bank, and fiscal policies by successive Lebanese Governments who were responsible for budgets and government expenditures in particular.

The reality that we must now face is that the Lebanese government, the commercial banks and The Central Bank are all insolvent and worse still, The Central Bank has negative net reserves, i.e. more foreign exchange liabilities than foreign exchange reserve assets, even after accounting for the gold assets.

Today The Central Bank’s debt is the money that it needs to pay back to depositor’s and to the local banks. The Central Bank governor claims that the reserves are now down to less than 30 billion dollars, though this number is anyone’s guess, since it is shrouded in (unlawful) secrecy and it is estimated more realistically, that it is in the region of 5 billion dollars, which is set against the more-than 110 billion in dollar deposits.

All the stakeholders, the depositors, the banks, and the government, need to be paid out of that unknown small amount remaining, including the servicing of the debt. There is a large 1.2 billion dollar bond interest payment due also by the government, (which it has decided not to pay), followed by another payment to service the debt in June of this year.

These bonds have tumbled below $17.5 cents on the dollar as worries about a protracted dispute with the creditors is feared. The Central Bank, owns about $5.5 billion of this debt. The local banks, hold almost $14 billion of the notes, and this decision to default could put Lebanon on a course for a sovereign default, which will inevitably place all the national assets at risk, force hefty losses on the banks, and even risk rendering some of them insolvent. It will also do irreparable damage to the reputation of the once lauded Lebanon banking sector and to its capital for decades.

Nevertheless, with not enough dollars to pay all those obligations, whatever policy is adopted to handle this situation, it must take into account the need to set aside a portion of the few dollars reserves that are left for critical imports, like wheat, fuel, and urgent medical supplies.

A priority should be to set up an “Emergency Fund” for these basic needs and to work urgently on getting international support and aid for this fund, so that Lebanon does not plunge into chaos as the country heads towards extreme poverty and dangerous food shortages and even hunger.

Based on my analysis of the situation, and for people like me who are not financial experts I am offering a general history of how Lebanon arrived at this situation after the civil war.

My conclusion is that the present crisis conditions are essentially due to mismanagement by the present governor of The Central Bank and the political directives which protected, covered up and sanctioned his activities and which led to the collapse that characterizes Lebanon’s economy today.

The problems stemming from the policies of The Central bank are:

  • The mismanagement of The Governor of the Central Bank and his political immunity form accountability by the ruling class.

  • No oversight by the government of his monetary policies.

  • The practice of unregulated renegade governance.

  • No accountability of the actions of the governor of The Central Bank and no checks and balances.

  • Lack of transparency as The Central Bank does not publish any data on $-deposits it receives from banks, which take the form of $-CDs or various short and long-term deposits, nor on the interest rates it offers on these deposits.

  • Extreme secrecy of the governor’s operations with local banks, particularly $-operations. The pricing of these operations, and losses, are handled in secrecy and are not available to the public.

  • The Governor has engineered dangerous and unregulated interest rate policies and hikes – The Central Bank’s high interest rates paid to banks for their $-deposits, significantly exceeded the international interest rates it received when placing the $-funds received from banks and this resulted in mounting losses incurred by The Central Bank.

  • Non-disclosure of the Central Bank’s losses. These continuous losses are the reason for the Central banks discontinuing the publication of its Annual Report since 2003.

  • The lack of publication of the mandatory Annual Report, since its first publication in 1964, and which includes The Central Bank’s Profit & Loss statement leading to a total lack of disclosure of full balance sheet by the central Bank.

  • Lack of transparency about The Central Bank activities and “financial engineering” strategies.

  • Conducting “financial engineering” motivated by political cronyism. In 2016 The Central Bank opted to bail out two banks which were struggling with bad investments, namely Bank Med and Audi. The Central Bank injected more than $5 billion into their capital not through loans, nor against a share in the banks’ capital as standard practice requires, but just ex nihilo as pure profits given to select banks. This $5 billion corresponds to about 10% of GDP or 30% of all the banks’ combined capital.

The problems stemming from the policies of the government are:

  • The lack of regulation of The Central Bank even though the technical and legal structure is in place to do so.

  • The mismanagement by the government of its fiscal and monetary responsibilities. There is no adequate fiscal policy and no enforcement thereof.

  • Rising fiscal deficits and government debt resulting from unrestrained spending by government on current items (interest on debt, wages and various transfers) rather than on capital projects.

  • The lack of an operational national budget for 15 years and the irresponsible re-approving of last years’ budget without the necessary adjustments in the light of the present financial crisis.

  • The politicization of the public sector and the over inflation of the size its employees, including the 5000 employees that were injected for political reasons after the 2018 elections.

  • The mismanagement of the electricity sector and the cost of servicing that deficit.

  • The lack of policies regarding trade and the balance of trade.

  • The lack of control over the collection of taxes and duty from the ports of entry and the loss of that large national income due to illegal trade.

  • The lack of policies regarding the development of productive sectors such as Industry, agriculture and Services.

In the light of these grave difficulties I have ventured to put some ideas forward, as this should be a time of swift action and not delays, and of radical solutions and not the deferment of problems, which is the standard practice to-date.

These are my recommendations and a few action points:

For The Central Bank and its Governor:

  • The Central Bank policy should be closely investigated and not eschewed under the outrageous pretext that the governor is “protected by a foreign nation”.

  • Place The Central Bank under a separate auditing jurisdiction.

  • Do a forensic audit of The Central Bank to establish exactly the reserves available

  • The standard regulatory processes of the government and parliament should be activated to restrain The Central Bank’s unaccountable behavior.

  • Calling to account The Central Bank’s policy, as required by law concerning its interest rate policy, because presently The Central Bank does not publish data on the amounts of its deposits or on the interest rates it pays

  • Holding the governor accountable for the mismanagement and endangerment of national funds.

For The Government:

  • Find a way to appease the creditors and restructure the interest payment debt, as soon as possible, while deferring these payments with a realistic and realizable schedule.

  • Revising the national budget completely based on the present economic situation.

  • Defining the emergency requirements of the country over the next three years and setting aside an emergency fund for fuel, wheat, gasoline, and medical needs.

  • Providing an announcement by the Council of Ministers of a revised fiscal plan over a number of years to give the IMF and local and international markets confidence in the future financial situation in Lebanon.

  • Re-incentivizing growth in the sectors of industry agriculture and services.

  • Offering immediate tax benefits to foreign private sector investors to enter the present economy.

  • Opening up tenders for development projects including waste management and a variety of national projects.

  • Revising a national agricultural strategy geared towards self-sufficiency and sustainability to combat food shortages.

  • Stop the volume of illegal trade, and the tax and duty fraud at the points of entry into the country.

The following is a simple historical analysis of the financial sector collapse for people like me who are not financial experts:

Since the beginning of independence, Lebanon had a very long tradition of having a floating exchange rate, but then in the early 1990’s, when the civil war ended after 15 years of struggle, and Prime Minister Rafic Hariri, who had made his fortune in construction in the Gulf came to power, he implemented an economic plan that was essentially centered on brick and mortar and less on creating solid infrastructure and economic development.

The jewel in the crown of Hariri’s plan, was to seize land in the center of Beirut and rebuild the city center by giving it a new development corporation named Solidère. It was a complicated public/private entity that became dependent on huge infusions of state capital and public revenues, which might have otherwise have serviced other sectors of the economy.

In 1993, Prime Minister Hariri appointed Riad Salameh as the Governor of Lebanon’s Central Bank, where for the last 27 years he has concocted single-handedly all the monetary policies of the country. Together, their primary objective was to attract big foreign investment to Lebanon, and in the process, they landed the country with debts of around 38$ billion which was 184% of GDP making Lebanon one of the most indebted countries in the world.

In this climate of rampant capitalism, it became necessary to reduce the risk to foreign investors. Hariri and his newly appointed governor of The Central Bank decided to peg the lira to the dollar and to fix the exchange rate against the US dollar at about 1500, where it has remained until the recent collapse. This policy is where the current crisis finds its origin.

From that point on there was a lot of foreign investment in Lebanon and the US dollar became the coveted currency for a Central Bank that built its entire monetary policy on an insatiable hunger for attracting US dollars by any means.

While Rafic Hariri was still alive, Lebanon received a lot of help from the Gulf Arab countries who would make big deposits into the Lebanese banking system, in addition to which, many wealthy donor nations would bail Lebanon out with development projects loans. These unfortunately did not help the economy since no reforms were adopted by the Lebanese government which was also characterized by excessive corruption and greed.

Having pegged the currency to the US dollar, Lebanon was therefor always in need of dollars. The local currency and the dollar became interchangeable and because Lebanon is a big importing country with very little domestic product to export – 80% of goods are imported, the main currency needed for importing goods was the dollar, so the central bank was always on a mission to expand its dollar reserves to be able to meet that demand. In addition, most big investments which relied on imported raw materials were also transacted in dollars.

Luckily for Lebanon a few things played into its favor until recently. Lebanon has a very large and successful diaspora living abroad including in the Gulf, the Americas, Canada, Australia and Europe and they tend to be very successful and very attached to their country. They send money to Lebanon to support their families and opened accounts in Lebanese banks which were offering relatively high interest rates of between 5 and 7 % on savings in Lebanon versus in the last few years the less than 1% that the US and Europe were offering.

These dollars filled the coffers of The Central Bank and helped it maintain the fixed exchange rate. Then importantly, in 2008 after the global financial crisis caused by the overexposure of banks to derivatives – From which Lebanon was insulated because its banks were not exposed to investments outside the country – people lost their trust in western banks and many ended up taking their money out of foreign banks and sending it to Lebanese banks, which they thought were safe.

In 2008, millions of dollars flowed into the country and this artificially inflated the economy. However, this did not benefit Lebanon fundamentally because the abundance of dollars induced inertia in the government which did not implement any economic reforms. Equally, the pegging of the Lebanese pound to the dollar caused the currency to be artificially strong. This made local goods less competitive compared to foreign goods. It also made our exports less competitive with cheaper foreign goods.

As a result, after 2008, imports increased exponentially and so did our current account deficit which is around 25% of GDP. (Countries which have a 6 to 10% current account deficit are considered to be in crisis territory, and Lebanon was already at 25%).

Lebanon was only able to sustain this level of deficit because there were so many dollars flowing into the country from the Lebanese diaspora, which ultimately served to sustain the import habit.

A few years later, the tide began to turn for Lebanon and by 2010. The global economy recovered and interest rates in the US started going back up and oil prices came down. Oil prices collapsed from the July 2008 high of $147 to a December 2008 low of $32. (They still never recovered their highs).

In parallel, the political landscape of the region became compromised with the rise of the so-called “Arab Spring”, the civil war in Syria began, Isis took hold, and the war in Yemen was launched and as a result the economies of the Gulf became much weaker and they stopped being able to support Lebanon.

The cost of all these wars, as well as, the US imposition of sanctions on some Lebanese banks, and the legal entanglements of a large number of the banks in the court system in the USA, as well as, the physical closure of Syria’s border with its neighboring countries which blocked traditional trade routes, followed by the ban on working with Syria, all began to extract a huge toll on the state of the Lebanese economy and the flow of dollars to and from Lebanon.

In addition, the conflict between Iran and Saudi Arabia also exacerbated the economic conditions in Lebanon and for political reasons related to Hezbollah, Saudi and Emirati dollars stopped flowing into The Central Bank. This was accompanied by travel bans imposed on their nationals leading to an overall drop in tourism.

At that time, Lebanon also witnessed unprecedented hostility towards the Lebanese government with the attempted forced resignation of the Lebanese Prime Minister which, shook the stability of the currency and the banking system.

All these factors combined to create the perfect storm, and the flight of the dollar began out of the country, with no indication for any possible remedy in sight. The final blow was dealt when the house of cards came tumbling down after the October 2019 revolt when people scrambled to recover their deposits, only to find that the banks had closed their doors in their faces and their money was no longer their own.

Instead of launching a broad economic reform plan for Lebanon to reduce its reliance on imports and tourism by increasing exports and building an infrastructure with power and connectivity which could encourage foreign investment and get the economy into a sustainable position, the government did nothing.

With this sudden reversal of fortune over the last 4 years which caused the access to dollars to cease, and with no alternative policies, the governor of The Central Bank was forced to adopt drastic measures to get more depositors to send their money to Lebanon.

Aiming to secure this dollar inflow, The Central Bank and the state (through the Ministry of Finance) offered interest rates well above international market rates to local banks in return for the banks’ investment in government debt and to cover interest payments on the public debt.

These high interests rate had a very adverse effect on the economy and instead of providing a stimulus they increased the inertia. Local banks who would get dollars from abroad would deposit these with The Central Bank to benefit from the high interest rate, and to effortlessly improve their bottom line, instead of using that money to invest in the country, in the private sector and to extend loans.

In addition, the final blow to the stability of the reserves was in 2016 when the governor of The Central Bank conducted a “financial engineering” operation which was initially motivated by political cronyism, in order to bail out two banks, namely Bank Med and Audi who had made bad investments abroad. They received an infusion of 5 Billion dollars. This operation vastly increased the country’s exposure to debt and was not meant to become public. After this daring operation, interest rates were out of control and were determined on a random case by case basis by the governor, and they climbed higher and higher sometimes reaching 25%.

To top it all off, the country also faced “terrible” mismanagement in the public sector because of the easy, unregulated spending and financing of The Central Bank.

The government had been functioning for 15 years without a budget or a record of government spending. The state spends considerably more than it receives in revenues from taxes and other income. In 2018, the state revenue amounted to the Lira equivalent of $11.5 billion—around two thirds of its total expenditures ($17.73 billion equivalent). Apart from the debt, the state’s main expenditure includes personnel costs of $6.44 billion equivalent, and the state-run Electricite du Liban which cost the government $1.76 billion equal to 11% of its budget.

Even in 2017, the state budget had ordered a hiring freeze in public institutions, yet it was revealed that around 5,000 people were hired in the run-up to the 2018 elections. An estimated 35 percent of the budget goes toward public sector salaries which at that level had become a liability for the economy.

Coupled with this situation was very little to no economic growth, no job creation, and a huge twin deficit (fiscal and current account) due to tax evasion, which is estimated to cost Lebanon about $4.8 billion per year.

There has also been a balance of payments problem and The Central Bank had to hold dollars in reserve to pay for the import of vital goods such as fuel, medication, and wheat, and to maintain the peg, all of which had to be purchased in foreign currency.

The Central Bank also has to pay high interest rates on those billions of dollar deposits for the local banks. The only viable way it could do this without other income was by obtaining more dollar deposits to pay the interest on the old dollar deposits.

This, along with all the other factors is how the Lebanese banking system became a very clear Ponzi scheme, especially once the dollars stopped flowing into the country and the massive dollar interest costs on the deposits were being paid from the reserves until these became depleted. They say that the governor had been banking on the yield of the oil and gas sector to supplement the reserves, but also for political reasons and corrupt motives, this took much longer to manifest and the Ponzi scheme ran out of money leading to the present desperate insolvency of the country.

H.E. Tracy Chamoun is the Lebanese Ambassador to the Hashemite Kingdom of Jordan.

Crosspost from:

Combatting Growing Poverty in Lebanon – Recent Updates

It is increasingly difficult to ignore the factors forcing the Lebanese deeper into poverty. For example, one unintended impact of US policy towards Iran is that while it effectively squeezes the economic performance of the regime, it also reduces resources for the Lebanese Shia community. At a recent session sponsored by Al-Monitor, Brian Hook, the US special representative for Iran and senior policy adviser to Secretary of State Mike Pompeo, noted that the maximum pressure campaign being coordinated by the US has had a significant impact on Iran and its ability to support its proxy militias, including Hezbollah.

While on the macro level, this may be true, it is also clear that Iran, despite the expansion of US sanctions on individuals as well as entities, continues to provide its constituents in Lebanon with cash to purchase needed goods, although at reduced levels. It is trucking in Iraqi products, flooding local markets and adding to Hezbollah’s leverage. Whether or not its allies in the broader Shia and Christian communities are also benefiting is not clear. The bottom line is that on a whole, the failure of the government to effectively manage the financial crisis and the increasing resilience of Hezbollah’s supporters are exacerbating the country’s economic and social services decline.

This week, Prime Minister Diab acknowledged that “The state is no longer capable of protecting the Lebanese people…this government has lost the trust of the people…and the Cabinet is shackled with sectarian restrictions and chains of corruption.” This is hardly a vote of confidence in the government’s capacity to adopt serious reforms and re-energize the economy, let alone reduce the influence of the ruling elites to allow for more political and economic transparency.

A major stumbling block to reform is Hezbollah’s adamant opposition to an IMF-structured and led rescue plan that would impose restrictions and transparency on how the sectarian leadership controls the financial system and government spending policies. This stance is echoed by the Speaker of the Parliament and Shia leader Nabih Berri who welcomes the IMF advice as a necessary ingredient to reviving investor confidence in Lebanon, but not its conditions for implementation. Others wonder if austerity programs such as those called for under previous IMF consultations would have disproportionate consequences on those least able to sustain the cuts.

The situation is getting even more dire as bank liquidity dries up, there are investigations into capital flight even as controls were supposedly put in place, and there are no prognosticators who believe that Lebanon can weather these multiples crises without significant reforms lasting several years.

On the humanitarian relief file, ATFL recently published a listing of organizations and agencies that are providing support to the marginalized, disadvantaged, and poor Lebanese. While support for the Syrian refugees is well documented, there has been little acknowledgement of what is being done for the Lebanese people. The summary is worth reviewing as it details how the international community is responding to the crisis despite the gridlock in the Lebanese government’s plans.

Leading the list is the US government, which, since 2005, has pledged more than $3.5 billion, none of which flows directly through the Lebanese government. Current funding is used to support the activities of Lebanese NGOs engaged in rural and municipal development programs nationwide, to improve the capacity of the public sector in providing transparent, quality services, to strengthen the Lebanese security services, and to reduce deep pockets of poverty. The US also supports humanitarian demining programs.

In addition to its work with the refugee populations, the World Food Program supports more than 13,000 Lebanese families, reaching some 115,000 beneficiaries with cash based assistance. Details are available at the WFP Lebanon Country Brief. Its digital literacy program strives to improve the lives of its beneficiaries by teaching them skills needed to utilize technology for development projects.

Helping Lebanese families and refugees cope with winter conditions, UNICEF and UNHCR partnered on Together We Give Warmth, supporting some 20,000 vulnerable Lebanese families with cash or fuel cards. UNHCR also helps host communities with projects like water reservoirs and repair of schools, and provides general support to improve response services such as for child protection, gender-based violence response, and mental health, among other services. More information is at

Among other groups in the study are: Save the Children, UNICEF, Mercy Corps, Doctors without Borders, Solidarity Box, and the Rene Moawad Foundation, whose founder, H.E. Nayla Moawad, will be honored at this year’s ATFL Annual Dinner.

In all of Lebanon’s troubles with the Syrian refugee crisis, little attention has been paid to the status of the much longer Palestinian refugee crisis. Arab News reports that “According to a population census conducted in 2017 by the Central Administration of Statistics in Lebanon, in coordination with the Palestinian Central Bureau of Statistics (PCBS), there are 174,422 Palestinian refugees in Lebanon spread across 12 camps and nearby compounds.” However, the UN Relief and Works Agency (UNRWA) estimates that there are 459,292 refugees in the country.

Caught between US defunding of UNRWA and the proposed Deal of the Century, Palestinians have seen dramatic erosion in their options. This concerns Lebanon since the deal includes the elimination of the refugee issue by settling them in the host communities, something far beyond the capacity of the Lebanese state despite promises of billions of dollars. According to Fathi Abu Al-Ardat, secretary of PLO factions in Lebanon, “urgent measures are being put into place to try and stop the crisis situation getting out of control. Conditions in Palestinian refugee camps in Lebanon are very difficult due to the economic crisis facing the country, and we are trying to delay a social explosion in the camps and working on stopgap solutions.”