Burning cedars

Lebanon's once-thriving economy is days away from a complete collapse

From being the Middle East’s intellectual, cultural, and financial hub, Lebanon is now anything but. The once-thriving economy is days away from a complete collapse. Banks are freezing withdrawals. Pharmacies are running out of medicines. Electricity blackouts and fuel shortages have driven the country to the edge. Routine errands such as picking up groceries have turned into nightmares for Lebanon’s populace. Young children are being forced onto the streets to sell contraband gasoline.

The World Bank has already called Lebanon’s crisis “one of the worst depressions of modern history”. Since 2020, the lira has lost more than 90% of its value. The black-market exchange rate is 17,000 lira to a dollar, although it is still pegged at 1,500 officially. The outbreak of the coronavirus pandemic followed by the Beirut port explosion added to the annihilation, social tensions, and economic anxiety. Food prices have increased fourfold since last year. The United Nations has warned that nearly 80% of families are embroiled in food insecurity. For Syrian refugees — which make up almost 30% of Lebanon’s population — this figure reaches 99%.

It goes without saying that every country’s governance and economic performance are interlinked. The present crisis is a result of extreme over-spending and unsustainable monetary policies by the government, which left banks generally insolvent and the country deeply in debt. The roots of Lebanon’s crisis also include the country’s fragmented political system which has so far only offered superficial solutions aimed at stifling whatever appears to be the most immediate problem albeit temporarily. The most recent illustration of this is a law passed by parliament to spend $556 million on food stamps for poor families although how the state is expected to pay for this remains a mystery.

The status of the existing government is also a rejoinder of the ludicrousness of the situation. The current cabinet which resigned in the aftermath of the Beirut port explosion continues to serve in a caretaker capacity. Cabinet members state that their status does not provide them with adequate authority to make comprehensive policy decisions. Meanwhile, the various parties continue to wrangle each other over the makeup of a new government.

Fragmentation within the political system is mostly on sectarian divides. Over the years, leaders have used peace agreements to consolidate their positions of power and have thus given rise to the prevailing partisanship. A case in point being the 1989 Taif Agreement, which altered the country’s quota system which has existed in the country since its independence and has effectually impeded effective governance and obstructed construction towards the building of national identity.

Recently, caretaker Prime Minister Hassan Diab warned that the country was days away from a ‘social explosion’. Passing mere statements, laying the blame elsewhere, or throwing up all hands in the air will get Lebanon’s leaders nowhere. For any reform to take place, be it political or economic, the leaders need to recognise the gravity of the situation at hand. While solutions to the multitude of problems are not immediately clear, there is too much at stake for all parties to simply be spectators. Perhaps it would be wise for all stakeholders to focus on dealing with one problem at a time in a sustainable way. As a start, short-term steps towards strengthening transparency can be the first critical step leading to long-term permanency in the other branches of the crisis at hand.

Even though countries are (rightfully) wary of sending aid to Lebanon given the deep-seated corruption, the West especially has a broader, historic obligation towards uplifting effective governance systems in Lebanon as well as in the rest of the Middle East.

Unquestionably, a stable Lebanon is a prerequisite for stability in the region.

Published in The Express Tribune, July 14^th, 2021.

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