Worst Crisis Since 1800s, World Bank Warns

Beirut was once the Paris of the Middle East, but not anymore. The 1975-1990 civil war brought Lebanon to its knees, and the country never regained its wealth and splendor. Since 2019, a devastating economic crisis has affected the country and impacted all aspects of the lives of its citizens. The World Bank has ranked the current Lebanese crisis among the worst since the 1800s in terms of its effects on living standards.

Lebanon’s economy began to deteriorate when it became clear that the government lacked the capacity to fund its debts, and the national currency quickly lost value. Lebanon’s GDP shrank by 21.4% in 2020, by 10.5% in 2021 and is expected to fall another 6.5% in 2022, according to the World Bank. The Lebanese pound has lost 90% of its value. This year, the war in Ukraine has aggravated the situation, as most Lebanese imports of wheat and oil come exclusively from Russia and Ukraine.

A recent wave of crimes in the country is the simple by-product of the frustration and desperation of the Lebanese people. The NY Times reported that last Friday at least five banks were attacked by customers, armed with real or toy weapons and demanding access to their own savings. People are forced to resort to such extreme measures to cope with expensive medical care or other emergency payments: for the past three years, banks have only allowed customers to withdraw a small sum of money, insufficient to cover all expenses. These bank robberies have therefore become increasingly frequent, and Interior Minister Bassam al-Mawlawi has warned that they are “destructive orders”. Lebanese citizens, however, do not seem to share this view, as crowds gather outside banks in support of the bandits. The Association of Lebanese Banks, following recent news, announced a three-day closure of all branches both for security reasons and in protest. Until an economic recovery plan is agreed, the situation will not improve and liquidity problems will persist.

One of the subsets of the wider economic crisis is the electricity crisis, which has a direct impact on people’s lives – especially for those who belong to the middle or lower class. Lebanon has experienced major power cuts since the outbreak of the crisis, but the situation has worsened over the past year: the state only provides electricity for one or two hours a day , without a fixed schedule, leaving people in a permanent wait for the light to be turned on. Those who can afford it (few) own private diesel-powered backup generators, which are still often insufficient to supply an entire household with electricity.

The telecommunications sector, which was once Lebanon’s main source of income, has also been hit hard by the crisis. In July, due to rising operating costs, the Ministry of Telecommunications increased all prices for mobile phone services. While internet service is described by the UN as a human right, poor Lebanese have been forced to simply give up using their mobile devices – with a devastating effect on both their personal lives and their living conditions. of life. The lack of telephone and Internet services has, in fact, made people unable to access humanitarian aid, as shown by the drop in the number of calls recorded by NGOs and aid agencies. Communication is not easy even for those who own a telephone: in September, several strikes by employees of the national telephone companies Touch and Alfa led to disruptions in Internet and cellular data communications, leaving some areas completely isolated.

Also, the Norwegian Refugee Council recently conducted research on the housing crisis in Lebanon, and the results are appalling. Families are at risk of being evicted for not being able to pay their rent at the end of the month – which is not surprising, given that the average rent has increased by 100% in some areas, while wages have remained the same.

According to the UN, 82% of the population lives in poverty, and of the hundreds of thousands of Palestinian and Syrian refugees hosted in Lebanon, 88% live in minimal survival conditions. It is therefore not surprising that so many people try to flee the country. In fact, according to Information International, a Lebanese research and consultancy firm, 79,000 Lebanese moved abroad in 2021, and the numbers are expected to rise. Mercy Corps’ latest report highlighted the number of residents and citizens choosing to migrate by boat, with high safety and security risks and no guarantee of a better future.

At the heart of the Lebanese crisis was – and still is – a political system of impunity, corruption and structural inequality. Investigations have shown that political ties to the banking system are pervasive and that the political establishment, aware of the coming catastrophe, has only protected its own interests. Modern Lebanese politics operates with a corrupt political system based on clientelism and centered on sectarianism. The highest leadership positions are divided among the main religious sects, with the speaker of parliament being Shia, the prime minister Sunni and the presidency Christian. In the last elections, held on May 15, Hezbollah and its allies lost their parliamentary majority, offering a glimmer of hope for change. However, a new government has still not been formed, with President Michel Aoun and Prime Minister Najib Mikati failing to find a compromise on the composition of the cabinet.

The only way out of the economic crisis is with the help of the International Monetary Fund (IMF) and the international community, but an agreement can only be reached if Beirut makes progress on the reforms necessary to meet the IMF criteria. A new functioning government is therefore absolutely essential at this time, otherwise Lebanon will remain the “failed state” that UN expert Oliver De Schutter has described as.

Aubrey L. Morgan