The world is witnessing the worst economic collapse since the 1850s as an intensifying currency crisis and civil unrest are crippling Lebanon. The Middle Eastern nation had been enduring deteriorating financial conditions before the coronavirus pandemic, but the once-in-a-century public health crisis further exacerbated the country’s plight. From a corrupt regime to inept management of the economy, the Lebanese people are languishing – and there may be no going back at this point. Can Beirut turn the sinking ship around, or is the so-called Pearl of the Middle East sailing toward a fiscal cliff?
Is Lebanon Going to Hell in a Handbasket?
Since the fall of 2019, Lebanon has faced numerous challenges that eventually blossomed into the dilapidated state it is in today. As Liberty Nation reported last year, Lebanon had been grappling with anti-government demonstrations, President Michel Aoun defaulting on tens of billions of debt, the Lebanese pound losing almost all of its value, and price inflation spiking as much as 200%. These ingredients cooked up a recipe of shortages of everything, from common household goods to fuel to essential medicines for chemotherapy patients. Rolling blackouts, sometimes lasting 12 hours a day, are the latest battle scars in this turmoil. Price controls, including a double-digit increase in energy and bread prices, are the other torturous measures being inflicted on the public at large.
The Lebanese pound recently plummeted to a record low against the U.S. dollar on the black market. Reports suggest that the pound was trading 17,500 to the dollar on the black market, and some people on social media have said it climbed as high as 18,000. This is the second time in a month that the currency has recorded a fresh low against its greenback counterpart. The crash in the pound led to protesters trying to storm banks in several cities, resulting in security forces being sent to these urban centers and clashing with the demonstrators.
According to a recent report from the World Bank, Lebanon’s dire circumstances and colossal challenges have initiated the globe’s worst economic downturn since the 1850s. Officials noted that this likely ranks in the top three of “most severe crises episodes globally since the mid-nineteenth century.” Last year, the economy cratered more than 20%, and experts are forecasting that the gross domestic product will plunge 9.5% this year.
Should the government move ahead with stimulus, it would not have the resources, human capital, and finances to pull the interventionist trigger. That said, policymakers could not even act if they wished, whether moving on from the coronavirus pandemic or resolving the non-nuclear explosion at a Beirut port. The problem is that President Aoun and Prime Minister-designate Saad Hariri have yet to form a working government.
The international financial institution is looking to bring calm to the chaos. Ferid Belhaj, the World Bank’s vice president for the Middle East and North Africa, and Merza Hussain Hasan, the executive director, are scheduled to arrive in Lebanon to meet with the leadership. They are hoping to push the president and prime minister-designate to address the calamity “with urgency.”
The military is also pleading for aid as soldiers are facing “economic woes,” notes army chief General Joseph Aoun. The nation’s military apparatus has seen its budget slashed, soldiers’ pay reduced, food scraps served, and equipment eroded from a lack of maintenance. Since many in government leadership have been militia members and rebels, perhaps this will force officials to respond.
Countries are responding to the destruction. Egypt, France, Iraq, Spain, the United Arab Emirates, and Turkey are donating food and medical assistance. The U.S. government has increased its funding for Lebanon by $15 million to $120 million this fiscal year. Will this be enough, or will it be squandered?
Life in Lebanon
Lebanon is being bombarded with multiple crises simultaneously: inflation, currency, jobs, and the economy. This is life in Lebanon, and nobody knows how much worse it is going to get. For now, the streets of Beirut, Tripoli, Tyre, Sidon, and Nabatieh are paved with misery, suffering, and unhappiness for the Lebanese population. It would be challenging to believe the public will be resurrected from the ashes of ruin anytime soon.
Read more from Andrew Moran.