Tuesday, January 21, 2020

Analyzing the protests in Algeria, Iraq, and Lebanon to uncover similarities useful for finding possible  beneficial results such as greater power-sharing, more transparency in public transactions, a stronger commitment to rule of law, and concrete steps to promote inclusive economic prosperity leaves one dispirited. Sometimes analysis is just that – we can see what’s going on, we can describe the dynamics, draw conclusions, and outline scenarios – but offer few remedies as analysts seldom have the agency to effect or even influence change.

This is the hard lesson in all three cases, and most extremely in Lebanon, which, like the others, has come through a civil war, is riven with identity politics that frame negotiating positions, and has been unable to articulate a way forward despite the...

Monday, January 13, 2020

There have been many useful analyses of Lebanon’s current economic demise brought on by years of fiscal mismanagement, corruption, misappropriated funds, diversion of public finances, deficit spending, gross expansion of public service jobs, and other activities that drained the financial system of its integrity and hobbled the private banking system. The solutions proposed consistently call for the installation of a reform government empowered to make immediate and medium term changes in everyday activities, from capital controls of funds transfers to supporting the Lebanese pound to lessen the harsh depreciation in people’s incomes and quality of life.

Regardless of the recommendations, be it introducing a fair and robust tax system or installing regulatory bodies to supervise privatizati...

Thursday, January 2, 2020

It’s hard to fathom the levels of poverty that now exist in Lebanon, particularly in the less fortunate areas in towns and villages surrounding larger municipalities. After years of government mismanagement of the country’s finances, there are no short-term solutions to relieve the pressure on the lower and middle classes as the Lebanese currency has lost over one-third of its value in recent weeks. Dollar accounts are frozen, businesses are closed, and store shelves are showing fewer goods. There are stories of rising suicide rates, doctors personally purchasing medicines unavailable in government dispensaries, and deteriorating health, education, and social services across the country. And this does not include the impact on the hundreds of thousands of Syrian refugees miserable in makes...

Tuesday, December 17, 2019

When discussing Lebanon with those who only follow the general contours of what’s going on, you often hear the questions: what went wrong, how long have there been problems, and why weren’t they resolved before? In light of the weeks of demonstrations, now turning violent; the inability of President and Parliament to name a new Prime Minister; and the continued lack of a meaningful dialogue to repair Lebanon’s dislocated economy and political system, recent statements and reports clearly point out additional support for the negative public perceptions of the government held by the Lebanese people, well in advance of the October 17 people’s revolution.

The statement by the International Support Group for Lebanon reinforced messages that have been evident since the Arab Barometer reflected di...

Wednesday, December 4, 2019

The saga of Lebanon’s economic derailment is well known, having achieved global prominence both because of the extent and quality of the national demonstrations and intense expressions of concern from the international community. A recent policy paper called the government’s policy of financial engineering a “Ponzi scheme,” and critics are now focusing much of their ire on the Central Bank as access to their accounts are severely constrained and businesses are closing because they cannot secure enough US dollars to keep operating.

Word came yesterday that some progress is being made on the issue of a “clean” government, one that does not include political figures. According to a Reuters story, the caretaker Prime Minister Saad Hariri has nominated Lebanese businessman Samir al-Khatib to hea...

Thursday, November 21, 2019

In the midst of the daily convulsions that now characterize political life in Lebanon, it’s refreshing and somewhat disheartening to enjoy a bit of cynical comedy brought to you by leaders who are considered by many to be part of the problem. Take, for example, the notion of corruption and misuse of public funds. While many on the outside see the misappropriation of government money and sinecures as criminal, it is common practice among the political groups in Lebanon to count on a certain percentage of government jobs as literally legal tender for securing benefits for their constituencies. This dependency is part of the fabric these patriarchs are counting on to sap the revolution of its energy as people start to realize that their livelihoods are part of the system sustaining a corrupt...

Friday, November 15, 2019

Some critics say that the country is already dysfunctional, fragile, and the government immobile. While the political chieftains dither over how to retain their prerogatives, international bodies, financial and political, are readying near-death announcements. This past week, Moody’s and S&P Global reflected on the demise of the financial engineering that had propped up the Lebanese pound and ranked the country and its banks to even lower levels of junk status. With payment coming due on about $1.5 billion worth of internationally-held bonds, the Central Bank, with no formal decree on capital controls, in fact allows private banks’ largest clients to continue to move their assets out of the country. So how long can Lebanon continue its financial fast shuffle that has now slowed to a geriat...

Friday, November 8, 2019

The news is not good, and more than marginally bad…Lebanon’s financial engineering seems to have reached its limit in sustaining an artificial peg between the Lebanese pound/lira and the US dollar. The only short-term remedy is an immediate infusion of capital to support the lira. Otherwise, Lebanon simply does not have the reserves to protect the lira from devaluation that will strike the pocketbooks of the middle and lower classes hardest. And then the protestors will be really unhappy and likely take their displeasure more aggressively to the streets. 

As Maha Yahya of the Carnegie Middle East Center in Beirut recently wrote, “Lebanon’s economic crisis has reached a breaking point. Public debt is estimated at 150 percent of GDP, economic growth is negative, the dollar peg for the Lebanes...