Lebanon’s crisis has gone from bad to worse. But is anyone listening?

Tony Walker, La Trobe UniversityIn the midst of a pandemic that has wrenched the world off its axis, Lebanon’s precipitous decline has not received the attention it deserves given the country’s strategic importance.

Bordering Syria to its north and east, and Israel to its south, Lebanon occupies a critical space in the Eastern Mediterranean. Its collapse would risk spilling over into surrounding areas.

The country is sagging under the weight of a vast refugee population from neighbouring Syria and a permanent Palestinian refugee presence. It certainly qualifies as a “crisis state”, which the London School of Economics defines as one in “acute stress”.

The question is whether the “crisis state” becomes, to all intents and purposes, a “failed state” under the LSE definition of one that “can no longer perform its basic security and development functions”.

Lebanon, which has taken more than a year to form a new government after an ammonium nitrate explosion ripped through its port area and forced the resignation of the government of the day, is again teetering on the brink.

Fuel shortages, which this week shut down its main power stations, have drawn the world’s attention to Lebanon’s continuing slide towards outright ruin.

An ammonium nitrate explosion ripped through Beirut’s port in August 2020, killing at least 216 people.
Hassan Ammar/AP/AAP

The emergence last month of a new prime minister after months of wrangling over power sharing among the country’s confessional groups hardly engendered confidence in the new government’s ability to get on top of Lebanon’s problems.

Fuel shortages caused by a foreign exchange crisis in which the country is effectively bankrupt is merely one of a series of cascading problems that has prompted the World Bank to describe the situation as one the world’s top-10 “most severe crises since the mid-nineteenth century”.

The World Bank speculates that Lebanon’s crisis may well rank in the “top 3”. This includes the Great Depression of the 1930s.

In a report issued in June by its Beirut office before the formation of the new government, the bank said Lebanon faced

[…] colossal challenges [that] threaten already dire socio-economic conditions and a fragile social peace with no clear turning point on the horizon.

The installation of Najib Mikati, a billionaire telecommunications tycoon, as prime minister has coincided with a further step down in Lebanon’s fortunes to the point where its ability to arrest its slide now depends on outside help. But that’s the problem.

New Lebanese Prime Minister Najib Mikati faces several critical and cascading problems in his country.
Bilal Hussein/AP/AAP

Potential international donors, led by France with its traditional ties to the country, are fed up with Lebanon’s inability to get its house in order and its endemic corruption, and fear external assistance will merely strengthen the radical Shi’ite Hezbollah’s grip on the country.

With Iran’s backing, Hezbollah has been portraying itself as Lebanon’s saviour. Iranian-supplied fuel has been shipped into Lebanon by truck from the Syrian port of Baniyas to circumvent US-imposed sanctions.

Since its emergence at the height of Lebanon’s civil war, which lasted from 1975-1990, Hezbollah has gradually strengthened its position as the dominant player in the country’s complex political make-up.

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This divides power between Christian and Muslim confessional groups under a power-sharing arrangement brokered by France in 1943. A Saudi-mediated deal, known as the Ta’if agreement to end the civil war, acknowledged Hezbollah’s role.

Hezbollah is designated as a terrorist organisation by the United States and other countries.

In the three decades since Ta’if, Lebanon has got itself back on its feet under various administrations only to slide back again, and now disastrously.

The reasonable question in all of this, given its intense internal problems overlaid by a governance structure that is clearly outmoded, is whether Lebanon is ungovernable in its present form and risks breaking apart.

In an assessment of Lebanon’s status as a potential failed state the Council on Foreign Relations nominated the following criteria. These included the 75% (at least) of Lebanese living below the poverty line, the 1.7 million refugees whose plight is even worse than that of Lebanese nationals, the duration of power blackouts of 22 hours a day, and public debt of 175% of GDP.

Since that assessment in September last year the situation has got much worse, if that’s possible. The Lebanese pound is virtually valueless, having lost 90% of its value against the dollar in the past several years. The country is beset by hyperinflation with price rises of more than 400% putting basic foodstuffs beyond the reach of many. Lebanon’s economy contracted by more than 20% in 2020.

One-third of Lebanese people are now living in ‘extreme poverty’.
Hassan Ammar/AP/AAP

One-third of Lebanese are living in “extreme poverty”, according to the United Nations.

Not least of Lebanon’s problems is its huge refugee burden. The United Nations High Commissioner for Refugees (UNHCR) reports the country has 865,530 registered Syrian refugees among an estimated 1.5 million Syrians in Lebanon.

On top of the Syrian presence, there are some 190,000 Palestinians in Lebanon, many in refugee camps. The Palestinians are effectively stateless and even more vulnerable to a deteriorating economy than the impoverished Lebanese.

Lebanon’s population, including refugees, stands at around 6.8 million.

Compounding Lebanon’s problems is an acute foreign exchange crisis. It is to all intents and purposes broke, and therefore unable to continue to subsidise imports of vital commodities, including food and medicine.

This has pushed prices through the roof.

Embattled Mikati put it bluntly after his swearing in.

Where are we going to get dollars to subsidise? We are dry. We don’t have any reserves or money that allows us to help.

Meanwhile, billions of dollars have flowed out of the country as wealthy Lebanese and corrupt officials have sought to shelter their assets given the collapse of the country ‘s banking system.

Banks have become insolvent. Thousands of Lebanese have lost their life savings. In the midst of this, they would have reason to be dismayed by revelations in the leaked Pandora Papers that prominent figures in government and the bureaucracy had been siphoning funds out of the country for years.

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Pandora papers: as ordinary Lebanese suffer, elite secretly drain off billions

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Among those identified as having shifted funds abroad is Riad Salameh, Lebanon’s long-standing central bank governor. He is the sole director of a British Virgin Islands company established in 2007.

Salameh is under investigation in Switzerland and France for potential money laundering and embezzlement. He has been accused in local Lebanese media of shifting funds abroad in violation of regulations. He denies having made any such transfers.

However, what is not in doubt is that Lebanon is one of the world’s most corrupt jurisdictions. This is contributing to its inability to put its house in order.

In the global Corruption Perception Index, recognised as the most credible assessment of global corrupt practices, Lebanon rates 137 on a list of 180 countries along with Russia, Papua New Guinea and the Democratic Republic of Congo.

On the Fragile States Index compiled by the Fund for Peace in collaboration with Foreign Policy magazine, Lebanon ranked 34 in 2020, down from 40 in 2019. Given its accelerating decline over the past 12 months, its 2021 rating may well rival that of failing states like Yemen, Somalia and Syria.

If Lebanon is not a failed state now it is certainly one in the making. This is barring a substantial intervention by reluctant international lending institutions and western governments concerned about its further slide towards an Iran-led “axis of resistance”.

Tony Walker, Vice-chancellor’s fellow, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Beirut a Year On

Lebanon: Beirut Disaster

After the Beirut blast, the international community must stop propping up Lebanon’s broken political system

Tamirace Fakhoury, Lebanese American University and John Nagle, Queen’s University Belfast

The finger of blame for the Beirut explosion is pointing at Lebanon’s corrupt and criminally negligent political leadership. Amid continuing protests, the government of prime minister Hassan Diab resigned on August 10, though ministers will stay on in a caretaker role until a new cabinet is formed.

The international community has pledged aid to Lebanon’s government in exchange for political reform. But this stance requires a reversal of the international community’s existing role in Lebanon – and its complicity in the survival of the regime.

Lebanon’s power-sharing system, which sustains sectarianism and thrives on corruption, is propped up by international powers. Rather than promote meaningful reform, countries such as France, the US and the UK have historically viewed power-sharing as a stabilising force.

Based on a 1943 National Pact, Lebanon’s power-sharing formula allocates political offices along sectarian lines, including between Christian, Druze, Sunni and Shia factions. This undermines meritocracy and encourages polarisation.

Still, power-sharing in Lebanon is not a reflection of ancient sectarian hatreds. It is largely the product of the French Mandate between 1923 and 1943, which cemented sectarianism in public life. So it was ironic that when the French president, Emmanuel Macron, arrived in Beirut in the aftermath of the explosions, he called for a new pact for Lebanon in the guise of a National Unity Government.

When Lebanese power-sharing was revised to end the civil war in 1989, international actors were again involved. As a reward for joining an anti-Iraqi coalition led by the US, the international community gave Syria the green light to act as Lebanon’s guardian.

Myths of stabilisation and resilience

Lebanon is inappropriately imagined as the Switzerland of the Middle East, a place where multiple religious groups coexist and a veneer of cosmopolitanism reigns. Any attempt to transform power-sharing is resisted by warlord elites. Reforms such as phasing out sectarian appointments have been frowned upon by political leaders on the basis that they would lead to the terrifying violence seen in neighbouring countries.

The international community often frames Lebanon’s political system as the lesser evil in the context of autocratic fortresses in the neighbourhood. Rather than helping the country move to end political sectarianism, as Lebanon’s post-war peace accord stipulates, power-sharing has become an invasive species, colonising the state.

In an attempt to shield itself from the blowback effects of the Arab Spring, the international community has shifted away from policies aimed at deepening democracy in the Middle East to those of pragmatic realism. Stabilisation rather than change is the goal.

Meanwhile, Lebanon has received more than a million displaced Syrians since the civil war began in 2011. While Lebanon initially adopted an open-border policy towards Syrians fleeing violence, it closed its borders in 2014, cracking down on the livelihoods and rights of displaced people. Yet the international community has lauded Lebanon’s so-called hospitality, portraying it as a pivotal actor in the international refugee regime.

Lebanese politicians leverage the state’s value as a refugee host, warning that any destabilisation of Lebanon would trigger waves of refugees to Europe. The EU has closely cooperated with Lebanon’s governing elite since 2012 to build resilience, in programmes aimed at empowering refugee and host communities.

But the EU’s resilience-building rhetoric conceals accumulated vulnerabilities, injustices and political abnormalities. In response, civil society activists and analysts have cautioned against the EU’s cooperation with Lebanon’s corrupt elite. The false allure of regional stabilisation only consolidates elite power, rather than addressing the needs of citizens and refugees.

Empowering elites

Lebanon’s crises have multiplied in recent years. In 2015, a massive garbage crisis epitomised the decline of public services and rising corruption. Yet, in April 2018, the international community used the Cedre Conference to pledge more than US$11 billion to strengthen and develop the Lebanese state.

Back then, the Lebanese government presented “a vision for stabilisation, growth and employment”. In return, the international community called for a follow-up mechanism to track reforms as a condition to unlock pledged grants and loans. Yet, the international community’s call for reforms remained ineffectual and couched in vague terms – and the follow-up mechanism never materialised.

In October 2019, Lebanon’s political leaders faced unprecedented protests demanding the dismantling of sectarian institutions. International powers vowed not to funnel aid to the Lebanese government unless it embarked on radical reforms.

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As protests continue, Lebanon’s sectarian power-sharing stalemate must end

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The August 4 blast, however, imposed new realities in the architecture of international aid to Lebanon. Transformed into a site for post-disaster restructuring, Lebanon needs urgent aid. On August 9, France co-hosted an international conference that pledged US$300 million for humanitarian relief and reconstruction.

A new chance

The international community must ensure that this aid does not prop up defunct institutions and inept sectarian leaders.

Myths of stabilisation and resilience-building during overlapping crises have double-edged consequences for Lebanon. By not engaging with the roots of dispossession and conflicts, international powers promote short-term versions of resilience, stability and humanitarian protection. This papers over dysfunctional institutions and deteriorating livelihoods.

Such recipes are counterproductive. Rather than encouraging citizen resilience, they consolidate the robustness of political leaders who feel empowered enough to tread on their citizens’ suffering and hopes.

Only the Lebanese can cast off their own warlords and kleptocrats through new elections and a homegrown political system that strengthens the rule of law and weakens the grip of patronage and sectarian identities on state institutions. Yet the international community can help – by refraining from bolstering and legitimising their rule.

Tamirace Fakhoury, Associate Professor in Political Science and International Affairs, Lebanese American University and John Nagle, Professor in Sociology, Queen’s University Belfast

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Lebanon: Beirut Disaster

Lebanon: Beirut Disaster

Lebanon: Beirut Disaster

How Beirut’s port explosion exacerbates Lebanon’s economic crisis

Hannes Baumann, University of Liverpool

The explosion that tore through Beirut on Tuesday August 4 was so strong that shockwaves were felt on the island of Cyprus, over 200 kilometres away. At least 135 people were killed and 5,000 injured in the blast. Such devastation would be difficult to deal with at the best of times but it hit the Lebanese capital in the midst of a severe economic crisis that has only been compounded by the COVID-19 pandemic.

Before the blast, Lebanon’s currency had plummeted to record lows, losing more than 80% of its value since October 2019. The Lebanese pound has been officially pegged to the US dollar since 1997 at the rate of L£1,500 to US$1, with the two currencies largely used interchangeably. But this exchange rate has long been untenable.

This is because the nation’s government debt levels have for years been among the highest in the world, as were current account deficits (the difference between a country’s imports of goods and services and exports). Lebanon produces little and depends heavily on imports, including most of its food. It was borrowing heavily to pay for these imports.

This would usually prompt capital to leave the country, making the value of the currency fall. For years, however, the country avoided this fate. Local banks were happy to lend to the government because they were receiving exorbitantly high interest rates. The fact that many politicians held stakes in the banks cemented this cosy relationship between government and finance. Meanwhile, the country’s large diaspora was happy to deposit US dollars they had earned elsewhere in Lebanese banks. Friendly Gulf governments also provided financial assistance.

Yet by 2016, even the country’s loyal diaspora started getting cold feet about depositing money back in Lebanon and relations with the Gulf grew frostier. Capital flows into Lebanon slowed down. To try and keep money flowing in, the central bank then engaged in complex borrowing arrangements with local banks which it described as “financial engineering” but critics have labelled a Ponzi scheme.

But economic confidence was not restored and by September 2019 the central bank could no longer stem the flow of money leaving the country. With capital flight in full swing, banks started rationing the amount of dollars that people could withdraw from their accounts. The prospect that Lebanese savers would be unable to access hard-earned dollars or that their Lebanese pounds would lose value led to rising panic.

To raise revenues and present a picture of greater fiscal probity, the government then proposed new taxes on tobacco, petrol and voice calls via messaging services like WhatsApp. This was the straw that broke the camel’s back. Thousands of people took to the streets to protest the tax along with wider issues of corruption, forcing the government to resign. But the currency plummeted as the new government under the next prime minister, Hassan Diab failed to develop a coherent strategy to tackle the country’s problems.

The collapse of the Lebanese pound means imports have become very expensive. Inflation is skyrocketing, causing unprecedented levels of economic hardship for Lebanese families. World Bank estimates from before coronavirus and the latest tragedy suggested poverty could rocket from a third to 50% of the population.

Wider failures

The collapse of Lebanon’s financial system is symptomatic of a wider failure of governance which goes back to the policies adopted after the end of the country’s civil war in 1990. Lebanon’s political class recruits itself from a narrow pool of families, many of whom have been in power for decades.

They claim to represent Lebanon’s many sects and government posts are shared according to a rigid formula based on the country’s religious communities. This system enables politicians to divide up economic spoils and enrich themselves – just as they did with the profits from banks they held stakes in.

Foreign powers from Iran and Saudi Arabia to the US and France have long indulged Lebanon’s leaders. They hoped that aid would gain them influence in this strategically important country.

The explosion of the port fits into the pattern of failed governance in Lebanon. Initial reports suggest that port officials were aware of the dangers posed by the store of ammonium nitrate that caused the explosion. Only an impartial investigation could uncover full culpability. The neglect and incompetence at the centre of this disaster are typical of the myriad failures replicated across the state.

Solutions may emerge as many Lebanese look beyond their failing state and corrupt politicians. The day after the explosion, Beirut’s streets were filled with the sound of glass being swept up as thousands of people worked together without much support from official agencies in sight.

But destruction is widespread. Dwellings are damaged within a six-mile radius and initial estimates suggest 300,000 are homeless. Hospitals that were already struggling to cope with the first wave of COVID-19 cases, are stretched beyond capacity.

There are concerns over food supplies as the national wheat silo was hit and Beirut’s port damaged, which will further curtail the government’s ability to import food. A humanitarian crisis would also affect Lebanon’s estimated 1.5 million Syrian refugees and 270,000 Palestinian refugees.

Various European and Arab governments have rushed emergency aid to Beirut for immediate recovery. A possible rescue package from the International Monetary Fund promises much needed funds but would also impose austerity and privatisation. The latest negotiations with the fund recently broke down over the inability of Lebanese politicians to present a united front.

The immediate future looks bleak and will likely see large-scale emigration. The explosion erodes what little trust citizens may still have had in their political class and long-term solutions require nothing short of fundamental political change.

Hannes Baumann, Senior Lecturer, Politics, University of Liverpool

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Lebanon: Beirut Explosion

I’m devastated for Beirut – a city I thought I hated

Rola El-Husseini, Lund University

Since the explosion in Beirut I’ve listened repeatedly to the song Ya Beirut (Oh Beirut) by the Lebanese diva Majida al-Roumi, while obsessively reading the news and checking on extended family members – like any other expatriate Lebanese.

The song, which was originally a poem by the Syrian poet Nizar Qabbani, describes the city as it emerged from the civil war. The poet/singer apologises to the city for misunderstanding it, for maltreating it and calls on Beirut to “rise from beneath the rubble”. Yet the line that struck me the most, that echoed within me was “we now know that your roots are deep within us”. That was an epiphany, as I always thought I hated Beirut.

I first came to know Beirut in the fall of 1988 as a student at the American University of Beirut (AUB). I had not turned 18 yet and came to study English literature as books had been my only friends growing up. They offered me an escape from the realities of the civil war. Jane Austen, Honoré de Balzac, Fyodor Dostoyevsky and others gave me a window into other worlds when bombs fell and bullets sang around us. I was excited to start a new life in a city where I could reinvent myself. Beirut destroyed all my dreams.

Soon after the end of my first semester at AUB in 1989, Michel Aoun, the current president of Lebanon, then head of a military government, began his “war of liberation” against Syria. The western side of Beirut where the university is located was shelled and we were forced to evacuate.

Upon our return following the Ta’if agreement which ended the civil war and sent Aoun into exile in Paris, we resumed our studies. The spring semester of 1990 was crammed into the next academic year, and we undertook an intensive course of study to graduate on time.

I came to hate with passion every moment I spent on the AUB campus and could not wait to leave Beirut, a city I had come to revile after all the years of turmoil. My acceptance for an MA in English literature at the University of London was the initial step in a long trajectory that took me to Paris, Berlin, the US and now Sweden.

Over the following decades, I switched from studying literature to Middle Eastern politics. After growing up in Lebanon during the civil war, I needed to tease apart in an intellectual and systematic manner the events that I sleepwalked through using literature as a crutch. The resulting book Pax Syriana allowed me to clarify (if only in my own mind) the role of political elites not only in the war, but also in the postwar era.

These political elites were mainly warlords who “recycled themselves” as politicians. They were rich tycoons who had made their money abroad, military men and members of the militant group Hezbollah. Lebanon, and specifically Beirut, was a virgin territory where these people could enrich themselves and their cronies.

Clientelism has always been a characteristic of Lebanese politics but it evolved into grand corruption in the postwar period. Graft was rampant in key sectors of the economy, including transport, healthcare, energy, natural resources, construction, waste management and social assistance programmes.

Uprising thwarted by tragedy

The Lebanese rose up in October 2019 against this political malfeasance, demanding the fall of the sectarian regime. They called for the removal of Michael Aoun, who had returned to Lebanon in 2005 after his exile in France and became president in 2016.

The coronavirus pandemic put a stop to the marches and sit-ins on the streets of Beirut and other Lebanese cities. Soon thereafter, the economic freefall predicted by analysts took place.

The economy decimated, Lebanon was falling apart at the seams. Then came the August 4 explosion in the Beirut port, and the medical, economic and social catastrophe took on gargantuan proportions. The dead have not been counted yet, as many are still under the rubble, but over 5,000 are wounded. More than 300,000 are said to be homeless.

The explosion is said to be due to 2,750 tons of ammonium nitrate confiscated in 2013 and improperly stored since then in the port. The chemical was to be auctioned or somehow disposed of, but that never happened. Its storage near residential areas was a disaster in waiting.

The Beirut port is a key node in the Lebanese transport sector and the import-dependent economy moves most of its imports through it, including the majority of foodstuffs. However, as a port employee has noted, “corruption at the port is a rule” and while Hezbollah controls it, all Lebanese politicians have interests in this crucial transportation hub. This therefore appears to be a case of criminal negligence on the part of every single Lebanese politician, but especially all the governments that have been in power since 2013.

While writing these words, I find myself choking with a strange mixture of relief and pain. The relief is the knowledge that I have escaped Lebanon – that I saw through the mirage of the postwar period and refused to go back to a failing state. I feel strangely justified in every single decision I took in the past decades.

But my heart is also bleeding for a city I thought I hated. I hurt for the youth of Lebanon stuck in a hell without hope of escape. I read the words that Hamed Sinno, the lead singer of the Lebanese band Mashrou’ Leila, posted on his Facebook page and I weep:

Beirut I hate you so much for making me leave. I hate you for everything you’ve taken from me … I hate you so much for finding a way to punish me when I’m not even there. Beirut I hate you as much as I hate myself for still belonging to you.

I have an inkling what this feeling stuck in my craw is: it is survivor guilt. I survived Lebanon and Beirut but my roots are still there.

Rola El-Husseini, Associate Professor, Director of Studies, Centre for Middle Eastern Studies, Lund University

This article is republished from The Conversation under a Creative Commons license. Read the original article.