Lebanese are doing the inevitable: holding up banks to get their funds. In the latest of eight incidents, the person is now on strike within the bank branch having turned in his weapon. The story is a familiar one. With the onset of the current financial crisis in 2019, banks issued informal capital controls to limit the depositors’ access to their dollar accounts. Withdrawals in dollars or Lebanese currency are limited, which effectively means that as the devaluation of the Lebanese currency continues, the depositor gets a free haircut that is not so free considering there are few constraints on how the banks act. A haircut refers to the depreciation in the value of the money being held due to a loss of value in the currency.

Although this is part of the larger issue of the national debt crisis, the lack of a capital controls law has disabled options for those whose savings are in the banks. Legal recourses do not exist. The banking association has not faced up to the reality that its sector is broken. And the depositors are forming organizations to fight for their access.

This has led to another unfair situation where bank employees are put at risk because neither the government authorities nor the banks have alternatives that enable withdrawals to meet people with dire needs somewhere in the middle, although the banks claim that they allow exemptions for medical emergencies. What this portends is additional clashes between the authorities and citizens who are simply acting out their frustrations. By prolonging this stress on the financial system, options such as a currency board, with its own limitations, are no longer effective with the tremendous drop in the value of the Lebanese currency, the pound or lira.

Another dangerous liability is that there is the real danger of robberies occurring under the guise of the depositors’ protests as has already occurred. This puts both customers and bank employees at risk, and makes the work of security forces, whether private or governmental, more dangerous and challenging.

Aside from implementing the already passed yet flawed capital controls law, there are no straightforward solutions absent an overhaul of the current bank/depositor relationship. As the government struggles to meet the IMF requirements for funds needed to begin the economic recovery process, the absence of good faith between the bank’s depositors and its owners only means these security issues will continue.

As the depositors’ rights groups continue to grow and become more aggressive, the banks in turn, never known for their largess, will mobilize even more tools within a system that already favors shareholders and owners over depositors. It is a conflict that neither side had anticipated or wanted and has now become the recurring tableau in Lebanon – leaving resolutions until fair options have expired and tensions are peaking.

The bank employees union has already called for a three-day strike to emphasize the need for increased safety. Banks routinely close their doors to avoid confrontation, but Lebanon is now in another mess entirely – and of its own making – as Parliament continues is dismal record of debates that resolve little and impede much progress on vital reform issues. Without an arbiter that has the power to resolve differences and a government that supports solutions, and an unclear Presidential succession, the confrontations will continue.

With the continued stalemate on forming a government, the continued depreciation of the pound, and the erosion of the subsidies regime to protect the diminishing foreign reserves, the country is in a quandary. Even if the IMF reform package is completed within six months, the election of a consensus presidential candidate moves forward, the electricity sector finally moves ahead with the importation packages from Iraq, Egypt, and Jordan secured, it may still be too late. Lebanon may have already run out of time to avoid the economic and humanitarian catastrophes that continue to unfold. As my colleagues in the Lebanon Working Group have argued, the next six weeks will shape the next six months and beyond in Lebanon. The Lebanese are no longer resilient, they are angry and depressed.