Subsidies Mean Survival for the Majority of Lebanese

In his latest message to the Parliament, Caretaker Prime Minister Diab emphasized the imminent danger facing Lebanon due to the lack of funds to sustain subsidies. While the Parliament sought to hobble the requirements of the $256 million pledged by the World Bank to benefit their interests and obscure distribution accountability, the lira continued to plunge in value. Now hyperinflation has set in, and the number of poor has skyrocketed.

While Hezbollah is well placed to care for many of the basic needs of its constituents, there is an overall deficit in social, health, fuel, and food for most Lebanese regardless of sect. One story reported that “Lebanon has been spending up to $7 billion a year on subsidies, including a total of $5 billion spent on subsidizing goods that benefit Lebanese families [and that] the government was looking to lower that number to $1.2 billion for subsidies.”

There are three types of subsidies in the Lebanese system. The largest by far is to the electricity company, at around $1.5-2 billion a year for the purchase of generator fuels. After this comes a list of some 300-400 (down from 600) essential food and living supplies for the people through subsidized imports. Finally, there are payments under the social security system for those who have paid into the government program.

What boggles the mind is that about 75% of the Lebanese population is now in need of financial assistance to cope with the economic catastrophe. This represents some 750,000-800,000 FAMILIES in dire straits.

The Caretaker Prime Minister’s goal is clear: “As I have mentioned, Lebanon would be cutting our spending on goods by $3.8 billion. Moreover, the money that Lebanon was depleting on subsidies and imports will be put back in the economy inside the country via the ration card as nearly 3 million Lebanese will be benefiting from it to buy goods and other material from the internal market.”

He added, “Without a government that can implement reforms, the future looks bleak. It is unacceptable to be in a political deadlock at a time when Lebanon is going through social, economic, and financial crises.”

The scope and severity of the poverty may be news, but the reality of subsidies ending this month has been known since at least early April. Caretaker Finance Minister Ghazi Wazni said he was informed at that time by the Central Bank Governor that “Lebanon’s mandatory reserves to fund basic imports” would run out by the end of May. He also warned that “delays in launching a plan to reduce subsidies are costing the country $500 million a month.”

A group of ministers, prominent business people, and economists has presented a plan to President Aoun that would eliminate general subsidies and replace them with cash cards to be targeted to specific families based on transparent criteria. According to Aoun’s media office, the paper suggested two strategies. It said the government should “enforce a number of urgent measures for 12 months, addressing gasoline, fuel oil, gas, medicine, wheat, electricity, and the rest of products; as well as working on reducing the public sector’s expenditures in dollars and shifting the current subsidy policy into providing direct cash assistance, in line with the measures to gradually lift subsidies.” They said that if subsidies are lifted and the ration cards adopted, $6 billion will be saved from the annual expenditure.

What is quite sad is that under the formula being proposed, which deviates a bit from the World Bank estimates, is that the annual subsidy for a family of four is $1645, hardly a significant amount, which is indicative of the disastrous condition of the economy. The ration card is considered an alternative to the subsidies for basic commodities that the Central Bank provides today.

Diab has asked that the Central Bank or the Parliament fund the rationing card project rather than going through the government as printing more money would add to inflationary pressures since the lira lacks a fixed value. Another consequential factor is that the Ministry of Social Affairs has yet to develop a database of potential recipients, meaning that many people will not receive the card at all.

It’s time for the Parliament to recall that next spring there will be an election, and people will remember who came to their aid at the most depressing period in their lives.

The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.

The Future of the Bekaa Valley, Up and Coming CBD Capital

https://upload.wikimedia.org/wikipedia/commons/9/90/Beqaa_valley_12.jpg

A recent special by VICE News highlighted the potential future of cannabis production in Lebanon. Anyone who visited the Bekaa Valley before the Civil War quickly discovered that hashish, an Arabic word, was liberally handed out to sample as you walked in the area. It was 1972 with my brother Roger and we couldn’t turn a corner without someone saying, “You Amreekee? Want some really good bad stuff? Try, free, come back when you are ready to buy, cheap…”

Since then, these mom and pop (and uncles and cousins) shops have morphed into around a dozen family-based mafias who harvest and export the hash throughout the region and beyond. If you use the metric of illegal drugs confiscated by governments around the world, “Morocco remains the country most reported by governments as the source of seized ‘cannabis resin’ (hashish), followed by Afghanistan and, more distantly, by Lebanon, India, and Pakistan.” So as the world’s third largest producer, Lebanon is slowly shifting its business model to one based on production for CBD medicinal-quality products. From drops and gummies to pills and sachets to ease pain, relieve stress, and promote a general sense of well-being – all this without even having to smoke something and worry about that distinctive odor.

This past year, Parliament finally passed legislation legalizing cannabis for medical purposes, which means most anything except resin and grass for smoking. The industry is projected to grow with “the global market for cannabidiol (CBD), valued at $9.3 billion in 2020 and forecasted to reach $23.6 billion in revenue by 2025. With an expected compound annual growth rate of 22.2% from 2019 to 2025, the future is looking incredibly promising for businesses tapping into CBD’s explosive popularity.”

It is this angle that is at the center of the VICE report. VICE follows a Lebanese-American entrepreneur to a meeting with one of the main family producers in the Bekaa to make the business case for shifting from exporting the base commodity of grass to refined oil that has a much higher, more lucrative, and legal future. Along the way, near the Syrian border, they also encounter smugglers, check points (both legal and local), and indicators of the vast wealth disparity between these rural areas and their overlords.

The story is engaging from a number of perspectives. First of all, the family spokesperson is young, firmly against the government interference in their business, and quite articulate about how their operations benefit the local people. Contrary to the usual image of the Bekaa, he repeats the claim that nothing of value can grow in the area except hashish, or as Ben Hubbard in the New York Times reported, “In a Lebanese farming village of rocky soil and stone villas, cannabis grows everywhere.” But the industry has fallen on bad times as part of the overall decline of Lebanon’s economy. “The costs of imported fuel and fertilizer needed to grow the crop have soared, while the Lebanese pounds that growers earn by selling their hash are worth less and less,” according to Hubbard.

To the locals, the passage of the recent law means government overreach into their lives and livelihood to enrich corrupt officials and their cronies rather than benefit the people. They claim that the government has done nothing in concrete terms to provide legal farming options despite government reports to the contrary. When the government has stepped in, the result has usually been the destruction of crops to extort money from the farmers, reported Hubbard. And it is to the cartels that the farmers turn to for relief.

As a recent Brookings article reported, “Lebanon legalized the cultivation of medical cannabis production (though not any form of consumption) in the spring of 2020. Legalization proposals languished for years, caught up in tensions between the two main Shia forces, Hezbollah and Amal, over the design of any legal regulation and, especially, the control of production.” On a national level, more than 40 warrants have been issued for leaders of the families, despite the promise of an amnesty some 20 years ago. It is this lack of a carrot and stick approach that most upsets the young producer who cannot even consider switching to legal hashish pursuits with a warrant hanging over him.

So the future remains unclear. With cannabis a main source of revenue for Hezbollah and Amal, and the continuing efforts to turn this into an industry that can contribute directly to Lebanon’s economy, the resolution will be another test of the country’s capacity to seize opportunities for growth that genuinely make a difference is the lives of the people in the poor part of the Bekaa.

The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.

Tracking Volatility – Is Lebanon’s Collapse Inevitable?

Well, I suppose it depends on who you listen to. From the State Department, the word is that it’s getting worse. From a panel at Haigazian University the same day, there was optimism that the phoenix will rise, resilience will win out, reforms will come incrementally but in time to save the country. From here in Washington, DC, looking at the region and the priorities of the Biden administration it is a challenge to make predictions. The leading decision-makers know Lebanon and have compassion for the Lebanese people and Syrian refugees, but there is no sympathy for the leadership who are content to watch the country collapse. It’s hard to understand the gap between what ought to be done to move in the right direction, and the virtual nothing that is being done besides a bit of angst about subsidies. But since it doesn’t affect the officials, they can continue to hold off the World Bank and the international community.

The latest dose of bad news is that the State Department on April 21 issued a Level 4 travel advisory for Lebanon – DO NOT TRAVEL. The statement said, “Do not travel to Lebanon due to COVID-19. Reconsider travel to Lebanon due to crime, terrorism, armed conflict, civil unrest, kidnapping and Embassy Beirut’s limited capacity to provide support to US citizens. Some areas have increased risk.” It went on to detail specific restrictions and possible risks to US travelers, emphasizing that the US Embassy may not be able to provide any assistance. Considering that it’s very difficult to even get an appointment to visit the Embassy, that’s an understatement.

Of course the border areas are mentioned as areas to avoid, and the streets, and driving, and visiting, and… You can’t blame the US Government. It’s their job to give us their best advice, even if it’s not what we want to hear. I remember the last travel ban on Lebanon. It was a major campaign issue for ATFL in its formative years and a great achievement when it was lifted by then Secretary of State Madeline Albright. This time around, not even loquacious Lebanese Americans can gloss over what’s going on in Lebanon, and it hurts us deeply.

On April 13, the US Intelligence Community released its Annual Threat Assessment, which gives us some insights into how the Administration identifies conditions around the globe that threaten US interests and stability in general. According to a regional summary in Al-Monitor, “In addition to vaccinating their populations, the immediate priorities for post-COVID economies should be expanding social and public health infrastructure to mitigate the impact of the pandemic and future crisis, and doing so while pursuing reforms which create jobs, reduce poverty, attract foreign investment and reduce government debt.”

Once again, the deficiencies apply to Lebanon, without even pointing the finger: adequate vaccination programs, expanding infrastructure to serve the needs of the people, and undertaking reforms to fix their economies. As the Al-Monitor article when on, “More broadly, the Annual Threat Assessment of the US Intelligence Community notes that throughout the region “domestic volatility will persist as popular discontent and socioeconomic grievances continue to rise … and its leaders struggle to meet public expectations for political and economic reform. … As a result, some states are likely to experience destabilizing conditions that may push them close to collapse.”

So where is the hope? Always in the people, in civil society, in NGOs, among the young and old who refuse to accept that their country is being snatched from them and auctioned off to non-Lebanese interests and their corrupt local partners. It’s what we must believe if we are to continue, each in our own way, to work for Lebanon’s recovery. It will take time. But in this 100th anniversary year of Lebanon’s emergence as a country, we can remind US decision-makers that Lebanon is worth the investment. And, our support for those who will bring change is the key to the country’s survival and resurrection.

The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.

Let’s Imagine – A Fantasy about Lebanon’s Resurrection 1.0

Broadcaster:

We are coming to you tonight from Beirut, Lebanon, a country that was once the Nigeria of the Levant. We are talking with people on the street, actually Hamra Street, about the shocking news released today. What we want to know is:

What does Lebanon need to recover its former glory?

What kind of leader will have the experience to overcome government mismanagement and bring new standards of efficiency and effectiveness?

How will any leader manage the quagmire of Lebanon’s domestic and regional political challenges?

Who is this leader – a visionary, wizard, competitor, and deal-maker par excellence? The world wants to know…

BREAKING NEWS:

Press Release
(Sin el Fil) From the Headquarters of the Free Patriotic Movement (FPM)

After more than 15 years of great success as the leading Christian party and coalition builder in Lebanon, the FPM finds itself in distress. The elections are only a year away, and the polls are showing erosion of support for the party. Even the esteemed founders and leaders are facing challenges in their districts.

Aware that when His August General Michel Aoun founded this party in 2005, our success was due to a detailed political program of economic and political reform plans, none of which has been realized. So rather than repeat these promises, we need a new formula for success – more promises, more tahini, more khobz in every furn, and less discussion about human rights and bank transfers.

Today the world is different, there are fewer Lebanese Christians voting here and overseas. We don’t know their problems, so what can we do? WE WILL STOP DEPENDING ON OTHERS TO SOLVE OUR PROBLEMS!

We have reached deep into the heart of Lebanon for answers and today are pleased to announce a new leader for the FPM, Carlos Ghosn, well-known to all of you as a great business leader, innovator, escape artist, and true Lebanese with a global stature who commands the attention of authorities all over the world.

We are so excited by his agreement, that we are petitioning the current president to step down so that Parliament can elect Mr. Ghosn immediately to replace him. Who better understands the demands of building a successful entity? Who has more experience in building mergers and partnerships among competitors? Who is a mastermind of financial transactions that protect one’s wealth while serving a bottom line?

CARLOS GHOSN, that’s who. HE is Lebanon’s future, not part of its past. Just as Rafic Hariri presided over Lebanon’s first renaissance, President Ghosn, with his partners, the Prime Minister and Speaker, will bring Lebanon from one brink, of despair, to another brink, of success. That’s his promise. And you can take that to the bank…

And, as President, he will have immunity while in office…which could be a very long time.

Viva Lebanon.

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The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.

No Government, No Reforms, No Recovery for Lebanon

As Jihad Azour, director of the IMF’s Middle East and Central Asia Department told Reuters last week, “The change of direction [in Lebanon] cannot be done on a piecemeal basis. It requires a comprehensive approach.” He added that, “Reforms should focus on the financial sector, public finance, governance, corruption, and loss-making utilities that have contributed to a surge in debt.” His point was recently reinforced by the Lebanese International Finance Executives (LIFE) in a joint paper with MEI and ATFL to the Biden Administration, that a forensic audit of the Central Bank, obstructed by various Lebanese power centers, is required before IMF negotiations can begin.

This sequence is critical because it short-circuits ploys by the political elite to make minimal efforts at reform, say at the electricity company, betting that international assistance will begin. Lebanon lost that option some time ago when the oligarchy passed face-saving legislation or made commitments that were never implemented. Lacking credibility, the government cannot now go back to its smoke and mirrors policy-making and assume international acquiesce. The Middle East is full of hardship cases – the Syrian people next door and Yemen can also legitimately call for support, but the answer is the same: put in a reform government that has the power to implement changes; revise how the government operates, transparently and away from expanding national debt; and make rigorous efforts to support an expanded social safety net that targets poor families and the failing economy.

Not one policy maker or international NGO has said that the international community wants Lebanon to fail. Rather, as has been stated time and again, Lebanon must begin the process of recovery by making the necessary reforms. Ironically, the fault is not the caretaker government which has several well-qualified ministers. It is the same cadre of power brokers that is either actively stripping Lebanon of its dignity or acquiescing to arrangements that favor the few over the people. Parliament’s handicaps are obvious.

An eloquent voice who knows the political oligarchy in Lebanon well is Tracy Chamoun (yes that Chamoun family) who resigned as Lebanon’s ambassador to Jordan to protest the government’s failure to deal with the consequences of the August 4th Beirut Port explosions. In her latest blog, she notes that “Lebanon needs other rich nations to step in with aid and loans. We cannot do this on our own anymore. For this to happen, certain politically ambitious people must move out of the way to enable the formation of a respectable government. This will give Lebanon back its international credibility, and allow the country to re-enter into negotiations with the IMF and The World Bank, and to secure lasting solutions.”

But the international community and the International Financial Institutions (IFIs) including the World Bank Group will not be satisfied with fresh faces if they do not carry out the forensic audit of the Central Bank to determine the actual status of government debt and the banking sector. Think of it this way – if you want a mortgage on your home, the bank starts by determining what you can afford to pay, not what you claim you can handle, or your good intentions, or your pretty eyes. Believe me, I have tried it…doesn’t work.

The truth is that the banks in Lebanon hold Lebanese bank bonds that they received from the Central Bank in exchange for their foreign currency. This means that the Central Bank owes Lebanese banks hundreds of millions of dollars that it cannot repay because it has been funding government deficits. So the banks will not give up what they have on hand to their depositors and risk insolvency. Vicious circle.

Chamoun goes on to say, “The bottom line is that, this obstinate and power hoarding leadership will not provide a solution for the salvation of this nation while they still have this remaining $15 Billion [mandatory reserve] to spend. They will not agree to a new Government and they will very comfortably burn through the remaining reserves to stay in power and all the while they will let the Lebanese people be damned.”

Can the Lebanese people hold on until the new elections in Spring 2022? Will the opposition develop alternative voices who can appeal to voters to change their habit of voting along confessional lines? Or will Lebanon collapse under the burden of inaction imposed by its leaders? Even Hezbollah is calling for a new government, whatever that means to them…while they open supermarkets and issue cash cards to their constituents to have access to essential products brought in from Iran (wonder if they paid custom duties?) and Syria. Hezbollah understands constituent services and how to count votes.

Seems the majority of the Lebanese people are still waiting for their leaders to restrain their greedy interests and reclaim credibility by letting a new empowered coalition take over in Lebanon to move it to recovery. There is no time to wait any longer. The forensic audit is on the table, ready to go. Time to start to free Lebanon from its historic burden of power sharing that only takes power from the people.

The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.

American Values Shine Brightly in Lebanon

On March 30, Edward Gabriel, President/CEO of ATFL, hosted Fadlo R. Khuri, M.D., President of the American University of Beirut (AUB), and Michel E. Mawad, M.D., President of Lebanese American University (LAU) to discuss “What is the Value of an American-Style Education in Lebanon?” Their discussion covered how the multiple crises in the country have affected the universities, and the broader issue of the benefits of having US-style educational institutions in the Middle East.

Both schools have their roots in American missionary activities in Lebanon. In AUB’s case, it was founded as Syrian Protestant College which opened with its first class of 16 students on December 3, 1866. It was a time when American values were identified with the need to spread American higher education and professional skills throughout the world, and similar institutions were started in Turkey and Egypt. This link between the US and the region was in part romanticized by the proximity to the Holy Land and commercial ties soon followed. While the political and diplomatic currents of the region have been uneven at times, in any assessment, the educational, cultural, intellectual, and social links have survived and become beacons of stability and innovation for the region and internationally. In fact, Lebanese graduates who have emigrated from their home country excel across a broad range of professions including medicine, research in numerous fields, IT, entertainment, education, and public service in numerous countries including the US.

Both Presidents are medical doctors with storied careers in the US and overseas. They are well aware of the importance of keeping up ties with the US by maintaining accreditation for students who want to pursue advanced degrees abroad while sustaining a curriculum that encourage critical thinking that drives so much innovation and progress in Lebanon and abroad. When asked to summarize why the US should continue to support these universities, Dr. Mawad replied without hesitation that they are based on shared humanitarian and democratic values. He said, “Our institutions are on the frontlines in the battle for hearts and minds in the region.”

Since the economic crisis accelerated in the fall of 2019, LAU has faced the pandemic, government failure, the August 4th explosion, a faculty, student, and alumni brain drain, and the need to allocate $100M from its endowment funds to support students, and there is no relief in sight. He pointed out that an LAU education is becoming very expensive for Lebanese students who have always been drawn from the middle class. Now, everyone has suffered significant decreases in income so financial assistance is required at all levels. LAU’s medical school and hospitals depend on US equipment and it is a challenge to retain their top, and US-educated, faculty.

Dr. Khuri added that the existence and impact of the universities was for the US the best manifestation of public diplomacy because it speaks to people’s aspirations, as students, parents, citizens. He said that is it a long term investment and pays many benefits. For example, a number of the leaders in the surrounding countries have attended AUB and LAU. In fact, the lead negotiators on both sides of the Afghanistan talks attended AUB. It is not far-fetched to claim that banking, finance, agriculture, manufacturing, telecommunications, and other sectors throughout the region have relied on graduates from these schools since the early 60s.

Additional benefits include the diverse student community, encountering other cultures and values, negotiating differences, and witnessing the values of inclusiveness and inquiry. “This year, AUB is celebrating its 100th year of co-education of women and men, long before some of the prestigious ‘ivies’ in the US,” Dr. Khuri said. Support from the US government and diaspora is much appreciated as it contributes to Lebanon’s survival as the only “consensual democracy” in the region, while hosting an unprecedented refugee population.

When asked what the US should continue to do for the schools, Dr. Khuri asked for steady pressure on Lebanon’s leaders to implement financial restructuring and support the education and healthcare infrastructures. He said that “As the US continues to partner with us in public diplomacy,we will respond with our best efforts.” Dr. Mawad reiterated the need to “Continue to help us foster the democratic values that we have learned in the US, including gender equity, transparency, and anti-corruption reforms, and other good governance structures.” He concluded that US taxpayer funds spent over the years on scholarships and partnerships have spurred much progress and we need to continue to provide them.

Viewers could not help but be impressed with the commitment and steadfastness of these two university presidents who themselves embody the spirit of service, excellence, integrity, and vision – qualities that will enable the schools to survive the tremendous tumult in Lebanon.

The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.

The wheels have fallen off Lebanon

The value of the Lebanese currency is approaching zero. The cost of living is soaring, as are homicide and burglary rates. The private sector has had to step in to secure enough vaccines to immunize the adult population, while the government projects bankruptcy by the end of spring. The storyline in Lebanon has not improved since the Beirut blast on August 4, and the Speaker of Parliament, Nabih Berri, has now taken up the crusade of saving the country after having successfully blocked the IMF recovery plan, the adoption of any reform legislation, rejiggering the World Bank loan of $246 million to favor the banks and the government, and stifling efforts to form a new government of experts with executive powers.

Where has Berri been since August 4? Obviously he is one of the government leaders who was absent from touring the blast site and talking with the victims. He and his party, Amal, in line with its partners Hezbollah and the Free Patriotic Movement of President Aoun, have done little to make it possible for Lebanon to survive as an independent and functioning country. Only the need for an expensive band-aid that serves his constituencies brought him to marginally respond to the multiple crises facing the country.

In a much reported speech carried by the international media, he opened the Parliamentary session on March 29 saying, “The whole country is in danger, the whole country is the Titanic. It’s time we all woke up because in the end, if the ship sinks, there’ll be no one left.” These comments could have been made at any time since the end of 2020 but for some reason, there was no call for urgency from Parliament’s leader until now, and only because of the need to provide an advance of $200 million to the electricity company to pay for fuel for the next 2 ½ months. And of course the first power plant to shut down was the one that served the southern regions of Lebanon, prime Shiite territory.

As another indication of the lack of concern by the political bosses, the Parliament also passed a law to recover stolen public funds, a prime demand of protestors. Yet, even Jamil al-Sayyed, a Hezbollah-affiliated member of Parliament remarked, “Effectively, all these texts cannot be implemented. What’s happening is a charade… We’re lying to you.”

No wonder the international community, led by the French, continues to condemn the lack of action by Lebanon’s leaders. The French Foreign Minister, Jean-Yves Le Drian, made personal phone calls to President Aoun, Prime Minister designate Saad Hariri, and parliament speaker Nabih Berri, “urging them for an immediate halt to what he called ‘deliberate obstruction’ that is driving the country towards collapse.” His description echoes the World Bank charge that Lebanon’s deterioration is a “deliberate depression” because the remedies are known but not enacted due to the obstructions of the leadership.

He added “The deliberate obstruction of any prospect of an exit from the crisis … by demands that are unreasonable and out-of-date must immediately halt,” a statement from his office reported. “The time has come to strengthen pressure “to end the blockage,” a point also made by the recent ATFL-MEI policy brief to the Biden administration. In it, the organizations called for a senior-level diplomatic demarche from the US, France, and key powers, to give the government an ultimatum for adopting a government with power to make critical reforms. Otherwise, an international effort would be launched to provide humanitarian and reconstruction assistance directly to the Lebanese people, without involving the government.

The US Ambassador to Lebanon, Dorothy Shea, weighed in with the US government’s concern, in a meeting with President Aoun on March 25, saying later, “Now that we are almost eight months without a fully-empowered government, isn’t now the time to let go of those demands? To begin compromising?” She added, “Right now, there is a need for courageous leaders, who are ready to put aside their partisan differences and work together to rescue the country from the multiple crises and self-inflected wounds it is facing.”

Whether or not this international pressure will make a difference is hard to tell. When Berri acknowledges the gravity of the catastrophe but doesn’t propose reform solutions, it just adds to the wreckage. If, on the other hand, he wants to leave Lebanon with a valued legacy, he can assert his leadership and move Lebanon away from the abyss and forward towards recovery.

The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.

No One Left in Lebanon but the Wicked and the Weary

It is no surprise to those who read my blogs to note that from time to time I make references to my family, especially the wisdom of my parents. These days, thinking of Lebanon, two expressions from my mother seem appropriate: “There is no rest for the wicked,” and, “There is no rest for the weary.” Today, in my mind, they both apply to Lebanon, but at opposite ends of society.

The expressions have similar origins. According to one source, “No rest for the wicked begins as no peace for the wicked in a 1425 rendering of the Old Testament’s Book of Isaiah 48:2: ‘The Lord God said, peace is not to wicked men.’ The sentiment is echoed in Isaiah 57:20, which in the King James Version reads: ‘But the wicked are like the troubled sea, when it cannot rest.’” No rest for the weary is rooted in a proverb that implies resignation and perseverance, accepting to continue to slog along despite being downtrodden. And so we have the status of Lebanon reduced to two simple expressions…thanks Libby.

Some may take umbrage at referring to Lebanon’s leaders as the wicked, but how else to explain their lack of remorse when it comes to rescuing the “weary,” the Lebanese whose desperation is due largely to the politicians’ mismanagement and venality? Karim Emile Bitar, head of the Institute of Political Science at Saint Joseph University in Beirut, has remarked, “Lebanon’s political class continues its long habit of bickering and fighting for resources, but – with hyper-inflation and rampant poverty – it’s like they’re squabbling over a field of ruins, where there isn’t much left to divvy up or to steal.”

The recent threats by major EU powers to sanction Lebanon’s leaders indicate the frustration of the international community with business as usual by the ruling elites. “Lebanon’s political class – which is totally incompetent when it comes to governing but very effective at staying in power – was playing a game in which it pretended to listen to Macron while in the glare of the world’s attention after the Beirut blast, without actually doing anything to follow through,” Bitar said. The oligarchs are even second-guessing the Biden administration, hoping that détente with Iran will give them a lifeline to continue their avarice and gradually cede even more power to Hezbollah.

Left in limbo are the investigations into the blast at the Beirut Port, the assassination of Lukman Slim, and violations of human rights by some security forces. With the economy in freefall, the “weary” find themselves without funds to purchase essential supplies while the cost of living is up over 146%. The Parliament has not acted on bills submitted that would incrementally move towards reforms, causing the caretaker Prime Minister Diab to attempt to leave his position. Bitar said, “It’s a surreal situation. Diab’s government has admitted that it’s totally impotent – with an energy minister who announces that the electricity will be cut in a fortnight, an interior minister who says security forces are no longer able to ensure people’s safety, and a prime minister who has handed in his resignation and doesn’t want to be doing the job.”

In the street the people are seething, fighting the government and demanding change; and fighting among themselves for scarce commodities. As CNN reported, “The loss of subsidies could be the watershed moment that threatens to tip Lebanon over to Venezuela-like scenarios, exacerbating the existing food, fuel, and medical shortages.” It continued, “Families living on a minimum wage — now less than $50 a month — will be unable to afford basic food staples as inflation skyrockets. Already strained security forces, which must contend with the frustrations of its newly pauperized rank and file, will have to deal with growing crime rates and the possibility of long-simmering political tensions coming to a head.” There is talk that civil conflict in inevitable without a breakthrough to reset the economy.

The tension is spiraling upwards as Hezbollah and the Maronite Catholic Church squared off about the need to move ahead by enlisting the international community’s support. Sayed Nasrallah, the Secretary General of Hezbollah, walked back his support for a government of specialists to implement reforms, claiming that relying on the IMF restructuring was an American-Israeli plot. No one escaped his ire. He called out the Patriarch, the head of the Maronite Church; PM designate Saad Hariri who is unable to form a new government as the power brokers want to retain their prerogatives; the governor of the Central Bank; and the caretaker prime minister whom he urged to be ready for Plan B – to retake the reins of government with no assurances that the results would now be different; saving some vitriol for people demonstrating against the government for relief.

The famed resilience of the Lebanese is fading rapidly as the street is becoming more militant. There are only two classes left, the wicked and the weary. Tempers are rising; security less sure; and no one stepping forward with solutions acceptable to politicians who resent a diminishing of their powers. With Lebanon quickly approaching the abyss, fear is growing that the country will not survive as an independent, secure, and stable democracy. My parents would not be amused.

The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.

Status Update on the Syrian Refugees in Lebanon

Two recent stories reminded us that the status of the Syrian refugees in the Levant has gone largely underreported in media perspectives on challenges for the Biden Administration’s foreign policy in the Middle East. Dispersed primarily in Turkey, Lebanon, and Jordan, with another 6 million internally displaced in Syria, tens of thousands have emigrated out of the region, and the future of those left behind has become a chess piece in international politics.

This was made quite clear in the story about the meeting between Syrian Foreign Minister Faysal Mikdad and Lebanese Minister of Tourism and Social Affairs Ramzi Moucharafieh to discuss the refugees. In addition to pledging to work for the quick return of the refugees to Syria, both ministers called on international organizations not to create obstacles for the return of Syrians home. This was a not-so-veiled reference to existing standards that conditions of safety and dignity must be in place before any repatriation process. These pre-conditions for return have been stymied by Russia which uses its votes in the UN Security Council to dismiss efforts to provide humanitarian relief and assist the refugee resettlement process.

The hypocrisy of the Assad regime in this regard is evident in its efforts to replace refugees by transplanting communities, transferring housing vacated by the refugees to its supporters, and passing laws that create obstacles to the return of vacated property, dismissing obligations to serve in the military, and similar hurdles. Meanwhile, Mikdad insisted that Syria welcomes the return of all displaced Syrians to their homeland. The government, he said, will take all measures necessary to guarantee their safe return and provide them with good living conditions. None of this has been validated by the more than 10,000 refugees from Lebanon who have returned over the past two years.

The validation of the desperate lives of the Syrian refugees has been recorded a recently released study by Save the Children called “Anywhere but Syria.” The study was conducted in Jordan, Lebanon, Turkey, and the Netherlands, and the statistics from Lebanon are quite startling. According to the United Nations, the number of Syrian refugees in Lebanon living below the poverty line increased from 55 percent in 2019 to 89 percent in 2020. In a commentary on the report, Relief Web International noted that “The protracted hosting of large refugee populations has placed additional strains on a middle-income country like Lebanon with ongoing political turmoil, unstable economic situation, and a fragmented, highly privatized, and under-resourced health care system.”

“The compilers of the report spoke to 1,900 displaced Syrian children in Jordan, Lebanon, Turkey, the Netherlands, and opposition-held areas of Syria. 86% of them said that they would not return to Syria and cannot imagine a future there, while a third said that they would rather live in another country. Only 29% of the children in Lebanon, 3% in Turkey, and 9% in Jordan and the Netherlands said that they would return to Syria.” Among the key reasons cited is the desire for education, freedom of expression, and having a say in their lives. “Lebanon, especially, was said to be one of the most difficult of the host countries, as it is gripped by an economic crisis and political instability.”

Other results are that some 79% of children said that after two years, they expect to find themselves somewhere other than Syria. Just 42% of internally displaced Syrian children said that they thought they would be able to realize their wish, significantly less than those in any other country.

If their dreams are realized, Assad will have achieved his goal of remaking Syria into a safe haven for himself, his community, and his allies, not to mention the Russians and Iranians.

Dr. Nana Ndeda, who is the policy advocacy and communications director for Save the Children’s Lebanon office told Arab News: “Lebanon presents a distinct context for Syrian refugees. We are now in a state of affairs where we are extremely worried about the plight of refugees in the midst of an entire population that is going down a steep decline in access to basic services or increased fragility.”

She mentioned that due to the severe economic crisis, there are increased incidents of violence and shortages of food, medicine, and other basics. “This makes the condition for refugees even worse. In the last couple of weeks, the situation has deteriorated rapidly, with increasing levels of poverty.” Ndeda added: “Refugees in Lebanon are now twice as poor as they were a year ago. The coronavirus disease pandemic has not made it any easier. There has been more than a year’s disruption in education services, which is leading to an increase of protection challenges, such as child marriage, other abuse, and increasing child labor.”

After 10 years of conflict in Syria, it is sobering to consider the prospects for the lost generation of youth and their families who have been living in camps outside and inside Syria. Deprived of their homes, communities, and essential services, the refugees can only dream of their futures, one without violence, in their own homes, investing in building new lives.

The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.

A New Milestone or Maybe a Tombstone – 10,000 Lira to the Dollar

On Tuesday, March 2, the Lebanese pound or lira eroded even further into becoming a failed currency, if there is such a thing. From an official exchange rate of 3,900:1, “The cost of scarce dollars hit 10,000 Lebanese pounds on Tuesday, said three currency dealers on the informal market, a main source of cash since banks stopped dispensing dollars.” A note from a Lebanese on WhatsApp best sums it up: “We are dying, 10,000:1, people are crying in the streets.” Lebanese television carried stories about the pain caused by another decline in the currency’s value – about people who can no longer afford to buy food and those who are just trying to get together enough money to leave the country.

Towards the end of last year, many demanded on social media that the government use the gold reserves at the Central Bank (BdL) to inject more liquidity into the monetary system. While this would have stripped Lebanon of its last bunker of fiscal security, the BdL proceeded to print even more pounds, giving credence to the expression “good money after bad,” except that it’s all bad. The good money in Lebanon can’t be accessed by depositors due to informal capital controls and the dwindling foreign currency reserves, being squeezed to pay subsidies on basic products.

While “fresh money” or new dollar deposits from overseas can be withdrawn for a full range of banking operations, such as foreign currency cash deposits and withdrawals, issuance of banker’s checks, local and international transfers, letters of credit, and commercial transactions in US dollars, Euros, and other major currencies, this has not relieved the pressure on consumers facing dramatic increases in the cost of living. The most recent currency drop means that effectively, the average monthly wage in Lebanon is equal to $68, lowest in the Arab world, even below Syria’s $100 per month.

According to a recent Bloomberg survey, consumer prices jumped 145.8% in December versus the same month of 2019. This was most painful in food, rising more than 400% from a year ago, with clothing (560%), restaurant and hotels (609%), and furnishing and maintenance up 655.1%. Food security has become the most critical issue in the country, surpassing concerns with securing vaccines. While the recent snow in Lebanon made for great pictures, it exacerbated heating fuel issues and the difficulty of navigating muddy fields and tent cities that the refugees endure.

A number of “fixes” are being floated to re-establish the value of the lira, from a currency board that would stabilize the lira by setting a fixed exchange rate with a foreign currency, to dollarization, replacing the lira completely for transactions with a foreign currency. Any solutions must deal in the immediate term with two basic challenges – enabling a transparently functioning BdL and restraining government expenditures while creating an economy attractive to international investors. There are many specialists who claim that properly constituting the Central Bank and preventing it from funding government expenditures are the most impactful actions that can be taken and the quickest route to domestic and international credibility and trust. Dealing with the massive core liability of the national debt as a result of years of mismanagement and corruption will take more years and require painful adjustments from public sector employees and local banks holding Lebanese government bonds.

The complexity of finding the “right” solutions is highlighted in the BdL report that at the end of February 2021, foreign currency assets fell by 41% from February 2020. This was largely due, among other reasons, to the financing of subsidies for essential consumer items including imports of fuels, wheat, medicine, medical equipment, a basket of around 300 food and non-food items, and raw materials for agriculture and industry.

While the subsidies have been helpful, the most recent review by the caretaker Minister of Economy and Trade, Raoul Nehme, and his Economic Adviser, Dr. Leila Dagher, noted that, “In summary, the current scheme is unaffordable, inequitable, and inefficient as a policy instrument to help the poor and vulnerable but was necessary as a quick fix until a full-fledged program is designed and implemented.” They point out that, “It is estimated that the central bank’s current foreign exchange subsidy scheme will deplete its reserves by approximately $7 billion in 2021 if no changes are implemented.”

Without a significant, immediate, and transparent set of solutions to alter the downward trajectory of the fiscal and banking regimes in Lebanon, the country faces a bleak spring. This is due in large part to a leadership that prefers to let the country fall into the abyss while counting on the international community to come to the rescue. The oligarchy will be disappointed. The message from abroad is clear: implement reforms and funds will come. Without a commitment and action from the government, Lebanon will soon drown in its financial excess and humanitarian tragedy.

The views and opinions expressed here are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon.