Lebanon 2021 – Déjà vu

Wednesday, January 27, 2021

So far, Lebanon 2021 has been an extension of 2020 – a flailing and failing economy and financial system, political leaders unconcerned with the need to provide critical and workable solutions, and a population falling desperately into despair and disgust with the leadership.

Events this weekend are emblematic of the ruinous state of affairs. Demonstrations protesting the absolute decline in living conditions erupted in Sidon, Tyre, and Beirut – from the north to the south of the country, making clear that the Lebanese people cannot endure the disastrous state of the economy, hunger, and tension for much longer. What was once a country with a large and dynamic middle class is losing many of its professionals and skilled workforce to emigration, intent on finding opportunities abroad. Efforts by civil society organizations and NGOs to provide some degree of hope and recovery are stymied by the lack of funds, the explosion in the rate of poverty, and the abysmal state of public services that have not recovered from the overlapping disasters of the economy and financial system, the pandemic, and the Beirut blast.

The latest round of demonstrations was set off by the government’s decision to extend a national lockdown to try and control the escalating COVID infections and deaths. Tickets have been issued for curfew violations and fistfights are reported between people and the security police trying to do their jobs. At the same time, the sick are being turned away at hospitals and public health facilities as the demand for beds, ventilators, medications, and staff has overwhelmed facilities and health personnel, some 40% of whom are unable to continue working fulltime. Lebanon is not providing needed financial assistance to people and small businesses to help them cope with the lockdown.

The lack of a credible and transparent investigation into the Beirut port blast and the request by Swiss authorities to question the Governor of the Central Bank regarding large fund transfers into personal accounts are further eroding what little trust there might be in the authorities, especially for the families of the deceased and the large number of Lebanese demanding a fiscal accounting of funds believed to be illegally transferred outside of the country.

A Voice of America report on Lebanon quoted numerous sources about the dire conditions in the country. None were optimistic that conditions would improve in the near future. Nasser Saidi, former minister of economy and trade pointed out that Lebanon has the third-highest debt-to-gross-domestic-product ratio in the world and is in need of extensive economic restructuring, a condition emphasized by international donors and the French proposal currently on the table. In the past two years, real GDP has declined some 30% and the economy is both in depression and suffering hyperinflation.

Sounding a theme heard throughout Lebanon, “Saidi says billions of dollars of Lebanon’s stolen assets need to be recovered. Sanctions, such as those under the Magnitsky Act, can help, particularly if the US and European Union coordinate their efforts to get Lebanon back on track. Saidi says Lebanon’s corrupt politicians and business elite ‘need to be held accountable for what they’ve done’ to bring the country into such a dire situation.”

Saidi called out the political leadership, saying, “They’ve effectively destroyed Lebanon. They’re now holding Lebanon hostage.” Lydia Assouad of the Paris School of Economics agreed with that assessment noting, “Lebanon’s political and business elites have divided the country’s public and private sectors between themselves, creating a system in which they can extract rent on virtually any economic activity…the richest 10% owns nearly 70% of total wealth, while the middle class and poor have little chance of upward mobility.”

Nor are these isolated voices. In his Sunday sermon, Maronite Patriarch Bechara Boutros Al-Rai denounced those who were blocking the reform process, painting a grim picture of how Lebanon was struggling during the pandemic and a financial crisis. “The economy is fading away, agricultural production is destroyed, people are standing at the doors of banks hopelessly begging for their money, the major military, financial, and judicial state institutions are hit in their prestige, morale, and officials due to programmed campaigns and malicious rumors.”

Pointing out the fragility of the state, Al-Rai noted that smuggling was rampant as there was no control of the borders: “sovereignty was incomplete, independence was suspended, corruption was rampant, and unemployment and poverty affected more than half of the population.” He added. “The capital is afflicted, the port is destroyed, the wealth of oil and gas is seized, and the country [has] entered the orbit of final collapse.”

Without a political breakthrough in forming a government of experts to implement reforms, or if, more perilously, there is a breakdown in civil order, Lebanon will become a tragic example of how a corrupt elite can destroy a country to protect their narrow interests rather than serve the national good.

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.