On August 4, 2020, a huge explosion in the port of Beirut flattened everything around it. 218 people were killed, over 7,500 were injured and 300,000 homes were damaged or destroyed. A week later, the Lebanese government resigned and the land of cedars entered an even more acute political crisis than it was in.
– jane $ 11 (@nellesaac) August 4, 2020
In an article from just a month ago, I detailed the causes of the crisis, as reflected in the reports of international economic organizations: Raising mass debt for inefficient and corrupt public projects at worst led Lebanon to go bankrupt in 2019 and declare it could not repay its debts.
Since it could not repay debts, its main source of funding from abroad was blocked, and the expected shortage of dollars led to widespread loss of confidence in the Lebanese pound: the price of the dollar relative to the pound is allegedly monitored by the Lebanese government. To $ 14,000 a month ago, and over $ 21,000 today.The banks could not convert the pounds into dollars at official prices, and a “run to the banks” led to the collapse of the banking system in Lebanon and the expulsion of people from their bank accounts.
The subsidy of basic products in Lebanon led to over.demand, and the soaring inflation against the dollar prevented imports that could compensate for this. The result: real shortages in all basic products. From fuel, which finally ran out in the last month and led to battles with firearms on the remnants of what we were in the movie “Mad Max,” to food and medicine.
Lebanese hospitals stop surgery because there is not enough anesthetic, and Lebanese abroad load their suitcases with basic drugs like aspirin and asthma inhalers that their families in Lebanon are unable to obtain. Suffering from summer heat without the ability to turn on an air conditioner, or even a lamp at night.
The unemployment rate in Lebanon has soared to 40%, and many fear they will not be able to get enough food for themselves and their families. The World Bank has already described the economic crisis in Lebanon as “the worst in its history” and a contract that will take it between 12 and 19 years to recover from. This is, of course, if recovery can begin soon. Of course, there are many regional and geopolitical effects on the situation, but now it seems that even if these disappear – Lebanon is in an economic spin that will be difficult for it to get out of.
There is no fuel, so donkey prices are climbing
The economic situation has led to some particularly bizarre situations, such as rising donkey prices due to fuel shortages for vehicles, and tours of Lebanese skies by military helicopter to anyone who can bring in dollars from somewhere. But despite the economic collapse, Lebanon’s complex ethnic structure continues to thwart the formation of an emergency government.
The families of the victims of the explosion at the port gathered this week for a huge protest with their supporters, but even the most painful protest seems unable to move the fixation of the political system in Lebanon, which has ruled the dome since the end of the civil war some 30 years ago.
Now, the situation is escalating further: Mutual assassinations between Sunnis and Shiites are reopening the ethnic divide in the country, and in this context one can also understand the rocket fire from southern Lebanon to the Upper Galilee: it is either an attempt to draw attention to the rapidly deteriorating situation. In southern Lebanon, prevent the Palestinian factions from doing whatever they please. The IDF responded with artillery fire that created several fires, and the first air shelling in Lebanon since 2014. But the Israeli response is also limited, perhaps so as not to give Hezbollah the reward of drawing attention to Israel instead of their internal problems.
U.S. President Joe Biden has offered a $ 100 million aid package to Lebanon, and many countries are sending money and basic goods to the Lebanese army to prevent it from collapsing – which could degenerate Lebanon into a third civil war.
Without a strong reform government that fundamentally breaks the rotten economic system in Lebanon, opens it up to free imports, stops subsidizing products and allows the manufacturing sectors in Lebanon to export their wares – it is hard to believe that the crisis will end soon. This would require putting all political and ethnic controversies aside, and at the moment it seems impossible. But the other possibility, of continuing the downward spiral at the economic and political level – is much worse.