Material World – Economic meltdown in Lebanon

Lebanon, a small nation of six million, the host to Palestinian and Syrian refugees, as well as numerous migrant workers, has had an ongoing financial crisis since late 2019. According to the World Bank, Lebanon’s economic and financial condition ranks in the top ten, possibly top three, most severe crisis episodes globally since the mid-nineteenth century. The country is one of the most indebted in the world. In the 2016 budget, interest payments accounted for almost half of all government spending.

The Lebanese lira has lost 90 percent of its value against the dollar over the past two years. Political inaction to halt the devaluation of Lebanon’s currency has contributed to an ever-growing wave of discontent and desperation. Protests have been driven by anger towards the country’s sectarian politicians and the endemic corruption and cronyism. Government officials are perceived to be acting to save the oligarchs (according to the World Inequality Database, in 2020 half of Lebanon’s population held less wealth that the top 1 percent). An assortment of religious and political factions have captured the State machine and govern almost entirely in their own interests, through a system of patronage, leaving public services to crumble.

It has become very much harder for the Lebanese to buy basic food and supplies or access public services. The crash of Lebanon’s national currency sent food prices soaring. Lebanon has seen a long series of large demonstrations. Everyone is fed up with power cuts caused by fuel shortages with electricity in most places available just an hour or two a day, the sky-high unemployment, the rampant poverty, the missing social safety net, and lack of healthcare. Then there is the cost of living rises because of black-market prices. Food is about five times as expensive as it was in 2019.

Millions of people have been locked out of their savings as the country’s banks place the burden of the crisis onto small depositors who cannot withdraw their wages and pensions. ATMs and bank buildings have been attacked.

Protests have erupted everywhere across Lebanon, with the unrest mounting as the protesters come together, independent of their religious origins and turning away from the sectarianism that politicians have used to divide the population.

Lebanon’s economy is in free-fall. According to the UN, ‘almost three-quarters of the population are living in poverty.’ Almost a quarter of the population was not able to meet their ‘dietary needs’ by the end of last year. The World Food Programme now provides food assistance to one in four people in the country.

United Nations Resident and Humanitarian Coordinator for Lebanon Najat Rochdi said, ‘The situation remains a living nightmare for ordinary people, causing unspeakable suffering and distress for the most vulnerable. Starvation has become a growing reality for thousands of people. Today, we estimate that more than one million Lebanese need relief assistance to cover their basic needs, including food.’

Three quarters of the total population live in poverty according to the Multidimensional Poverty in Lebanon: Painful Reality and Uncertain Prospects report by the United Nations Economic and Social Commission for Western Asia (ESCWA). An even higher figure of 82 percent lives in multidimensional poverty, which takes into account factors other than income, such as access to health, education and public utilities.

UNICEF said that ‘more than four million people face the prospect of critical water shortages or being completely cut off from safe water supply in the coming days’. The reason for such a water shortage is that there is not enough power to operate Lebanon’s pumping stations and wells.

ESCWA last year suggested that the richest 10 percent in Lebanon, who held nearly $91 billion of wealth at the time, should fund the gap for poverty eradication by making annual contributions of 1 percent of their net wealth.

Alas, a forlorn hope. Instead, the export of capital by the wealthy is prevalent. The banks, the politicians and high-level civil servants are accused of facilitating the transfer of colossal amounts abroad.

Lebanon’s president Michel Aoun observed that ‘The foiling of every plan proposed for financial and economic recovery, or the failure to devise it in the first place, means one thing, which is that the corrupt system that is still controlling the country and the people fears accountability and penalization’.

The president added, ‘the people are robbed and are being robbed on a daily basis’.

As if working people all around the world didn’t know.

ALJO