On 4th August 2020, Lebanon’s capital faced a distressing event; the blast on the Port of Beirut. A warehouse containing thousands of tonnes of ammonium nitrate caught fire, which left a significant part of Beirut damaged, looking like a warzone. We discussed in our previous article, the Economic and Political state of Lebanon before and after the Beirut Blast and the ensuing protests, but months on, there’s more to the aftermath.
The Economy
Lebanon exports little and imports heavily, while its economy is choked by one of the world’s largest debt burdens as a result of years of inefficiency, waste and corruption.
Economic growth, which has been stuck between 1-2% for several years, has fallen to zero this year. Yet, the government continues to borrow. While GDP stands at $55 billion, the national debt is around 150% of GDP, or $85 billion.
With few sources of foreign exchange, Lebanon depends on its diaspora to remit cash to the banking system, which is then recycled to finance imports and the state deficit.
The 15-year civil war caused a contraction in the economy, falling exchange rate, and hyper-inflation to sweep across the country, rendering one-third of Lebanon’s population unemployed. The worsening unemployment during COVID-19, followed by the damage to the capital’s infrastructure has led to a significant rise in crime rates and illegal trade. The blast was a downfall for Lebanon’s already devastated economy. Unemployment among under 35s runs at 37%.
Despite years of warnings about the need to reform and rein in the deficit, governments have failed to act.
Role of Politics
Things haven’t been looking up since the resignation of the ministry, the reason the elites are difficult to replace is because unlike many Arab countries, Lebanon is not dominated by one strong ruler but has a number of leaders and parties with sway over the country’s various sectarian groups. Positions are apportioned by quotas among 18 officially recognized sects. Parliament is half Christian and half Muslim. The prime minister must be a Sunni Muslim, the president a Maronite Christian and the speaker of parliament a Shi’ite.
Critics say the system has kept the ruling caste in power indefinitely and allowed politicians to put their own interests above those of the state. The protesters’ demands include not only removing the elite, but also overhauling the system. Lebanon’s fractured politics is also vulnerable to foreign interference that has long fueled domestic crises.
Since Syrian troops left in Lebanon in 2005, many of its political conflicts have reflected tensions between Iran, which backs the Shi’ite group Hezbollah, on the one hand, and U.S.-allied Gulf Arab states, which have backed Hariri, on the other. Hezbollah is heavily armed and designated a terrorist group by the United States.
What does the future hold?
Because the protests have no leader and encapsulate a wide-range of demands, responding to them is not easy. One idea is for a new cabinet at least partially made up of technocrats who can win public trust and press on with reform.
“If this mood prevails and protests continue at the current pace and scale, the country may be in for a prolonged period of unrest,” International Crisis Group analyst Heiko Wimmen wrote in a recent analysis. “No alternative political leadership or real opposition to the ruling parties exists.” Further economic deterioration, including the risk of a sharp currency devaluation, would increase social tensions. Protesters are demanding a complete government overhaul and new elections will be disbanded with the presence of any of the old cabinet. Political leaders have been holding closed-door discussions over a new government. One idea is for a new cabinet at least partially made up of technocrats who can win public trust and press on with reform. But that too seems idealistic at this point.
“This is a society that had a civil war only 30 years ago,” said Hage Ali, “We’ve been to dark places in this country before, and I don’t see a way to avoid something like that.”
Sources:
BBC
Al Jazeera
Reuters
~ Ilham Fatima Fazalbhoy
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