In Lebanon the lights are dimming with each passing day. Amid the worst economic crisis in the country’s history, the government is failing to supply electricity, the health system is collapsing, there are massive queues at the petrol stations, hyperinflation has wiped out savings, and many banks are closed. All the while the sectarian-based political system continues to do everything to protect its corrupt riches, but nothing for the people. The danger is of Lebanon collapsing and once again becoming a battlefield and a proxy war for outside actors.
This week Qatar said it will provide 70 tonnes of food to feed the Lebanese military and will help supply it with fuel. It’s a humiliating blow to the morale of soldiers, many of whom, if their loyalty was tested, would side with their religious communities ahead of the unity of the state. How did the “Switzerland of the Middle East” fall so far so quickly? The roots are in the foundation of the country, and the grifters masquerading as politicians who have been in charge since the end of the civil war.
Power in Lebanon is divided between parties representing the country’s 18 religious sects, the three largest being the Christian Maronites, Sunni Muslims and Shiite Muslims. The president is always a Maronite, the prime minister a Sunni, and the speaker of parliament a Shia. Politicians have often tended to use their positions to advance only the interests of their sect, and their own bank balances, usually at the expense of other groups and the national interest.
After the 1975-1990 civil war the country was rebuilt with money from tourism, financial services, foreign aid, and the largesse of the Gulf Arab governments. However, the political class squirrelled away huge sums of money for themselves, and in recent years, as the budget deficit rocketed, spent money they didn’t have on public sector pay rises.
The lack of reforms led foreign donors to withhold billions in pledged aid. This was at the same time as the Sunni Gulf states lost patience with the inability of the Lebanese state to control the Shia Hezbollah movement which is backed by Iran. Gulf money began to dry up, so the government hit upon what looks like a state regulated Ponzi scheme. The Central Bank, and others, began offering extraordinarily generous interest rates for anyone prepared to deposit large sums of dollars. The inflow of cash was used to service Lebanon’s debt, which at this point was a third of budget spending, and to keep paying the public sector outlays.
Investors eventually realised the magic money tree was rootless. The dollar inflow reversed to the extent that the banks no longer had enough dollars to pay back the deposits. Inflation soared out of control amid social unrest. Then came the Beirut port explosion of 2020 which killed 207 people and blew away any façade that many of the people in top positions were anything other than charlatans.
The World Bank says the current economic crisis could rank as one of the three most severe the world has seen since the mid-19th century and in a hard-hitting report accused Lebanon’s political authority of deliberately failing to respond. This inaction, it says, is because the elite defends “a bankrupt economic system, which benefited a few for so long”. That was a veiled acknowledgment that the real problem is a political one.
So now what? The Gulf states, especially the Saudis, are lukewarm about continuing to bail out a country they believe is led by people who have allowed Hezbollah to become its most powerful entity. The caretaker government says it is reluctant to negotiate with the International Monetary Fund about a recovery plan because it entails obligations the next government may not support. This is akin to the crew of a sinking ship refusing to bail out water in case a replacement crew doesn’t like the way it was done. The parliamentary election is due next spring.
Other countries, led by France, are demanding tough and transparent economic reforms before they throw yet more money at the same people who have squandered so much of previous bail outs. They are also losing patience, and not just in private. In May the French Foreign Minister Jean-Yves Le Drian compared Lebanon to “the Titanic minus the orchestra”, and this week the French embassy circulated comments made by Ambassador Anne Grillo. Caretaker Prime Minister Hassan Diab had summoned ambassadors to a meeting expecting them to come up with fresh proposals on assistance. Unfortunately, in a speech a few days earlier he had said, “The Lebanese are facing this dark fate alone.” Grillo was not impressed and told him that the collapse “is the deliberate result of mismanagement and inaction for years. It is not the result of an external siege. It is the result of your own responsibilities, all of you, in the political class”. She reminded him that France had organised two conferences on Lebanon in the last two years and was working on a third and added that last year Paris had given $100 million in direct assistance to the Lebanese people.
There’s something of a poker game going on here. The political class is gambling that the outside world is so nervous of Lebanon becoming a failed state that it will not allow it to collapse. They also fear they may take a beating in next year’s elections from an electorate which knows it has been cheated for decades. The chips they are playing with are the lives of people. But the chips are down, they’re as mad as hell, and they may not take it anymore. The danger is, though, that amid the chaos the myriad communities would retreat into their identities and neighbourhoods. It wouldn’t be the first time.