Will Lebanon Survive the Winter?
Even with the possibility of the stabilization of energy prices, the value of the lira, and sources of fuel for heating and transportation, there will definitely be a surge in demand as the weather turns cooler, making heat and travel even more expensive for the already desperate Lebanese. The economy is currently buoyed by tourism dollars and remittances from Lebanese visiting families and friends. This will come to an end during the fall.
Out of all the scenarios facing the country, total collapse to a beggar state is one that is increasingly likely given the government’s inability to pass legislation needed to advance the reforms called for by the IMF staff-level agreement.
According to a reliable source close to the Mikati government, three pieces of legislation that are already passed but not implemented – namely, the 2022 National Budget, a Capital Controls Law, and Banking Reform – are awaiting signatures and steps needed to secure their enactment. Still on the table is a Banking Restructuring Law that is being held up by objections from the Central Bank. Given that its Governor is opposed to the IMF package altogether, and that his reappointment in 2023 is bound to be hotly contested among the elites, any progressive legislation is due to generate heated debate. The recent referral of amendments to the Banking Secrecy Law to a subcommittee seems to show that certain quarters fear the reforms would expose some of the system’s corruption as well as its beneficiaries. But the referral itself is a long-standing parliamentary practice to fast-track the amendments.
Spending foreign reserves at a rate of $25 million a day, it won’t be long before Lebanon is officially bankrupt with few optionsleft, if any. Since these monies are drawn from the depositors’ accounts, there is further debate about how to best prepare for the eventual demise of the lira if no remedial action is taken to stabilize the currency.
Some alternatives already being implemented across Lebanon are sustainable grassroots development projects, mostly in revitalizing agriculture, producing energy from renewable resources, reviving small businesses, and promoting recycling. While these are small steps, and quite decentralized at this time, they could lead to a more effective, decentralization strategy that the new Parliament could embrace, making it more cumbersome for Lebanon’s political fiefdoms to pursue their objectives and maintain control. This makes next April’s municipal elections are even more noteworthy, as there is no guarantee that a “deal” for naming the new President will be emerge by the deadline in October. In that case, the Council of Ministers incorporates the Executive functions to a degree and works with Parliament to pass needed legislation in certain categories.
Although stories have been written about the move toward a more decentralized country, commentators note that the biggest obstacle to this alternative structure, other than the usual political machinations of the elites, is lack of needed legislation to create programs that enable small businesses to acquire the resources needed to access energy, financing, and equipment. A key metric is the coordination and cooperation among the central government and the municipalities to, “find local solutions to best support small businesses that can play a role in entrepreneurial survival and recovery,” according to a recent paper from the Lebanese Center for Policy Studies.
Another factor affecting the likely success or failure of local efforts mentioned in a Frederick Naumann Foundation paper is that, “weak local financial institutions jeopardize the accessibility of the rural community to financial resources, in addition to creating wealth inequality. These factors can create an adverse entrepreneurial culture, the constraint that rural areas in Lebanon are confronting, and there is a need today to shift to non-conventional financing models.’
While I will continue to write about decentralization in a future blog, it is critical to understand how rural and small communities can be supported as they work to achieve self-sufficiency, create income producing projects, and achieve results that can be replicated in other communities. One such project I visited is Alzourou3, which is an agricultural whole-of-community approach pioneered by Jessica Hokayem. She has created items refashioned from recycled materials, food items, and other homemade products for sale that illustrate what small communities can do to sustain themselves.
Most importantly, as a young university graduate, she has mastered the use of social media to promote her efforts and products. Imagine linking dozens of communities where similar projects are based and benefiting from access to overseas markets made possible by Fair Trade Lebanon and other NGOs that help promote local products in overseas markets for fresh dollars.
Giving hope and means to villages and small communities in Lebanon is not a heavy lift for Parliament. For example, the production of electricity through renewable energy, such as solar panels, is being pioneered by Rotary International. Several other community and agriculturally-focused projects supported by USAID in addition to itsINAL solar power initiative. Maybe it’s time for Parliament to consider depoliticizing local development so that adequate sums can be allocated to support sustainable projects while Parliamentarians debate over Lebanon’s future. Free the people to help themselves through sustainable projects!
Disclaimer: The views and opinions expressed in these articles are those of the author and do not necessarily reflect the position of the American Task Force on Lebanon, a non-profit, nonpartisan leadership organization of Lebanese-Americans.