No end in sight to Lebanon’s misery

Coronavirus pandemic has only exacerbated country’s economic crisis

These are very worrying times in Lebanon as the nation struggles to emerge from the coronavirus pandemic. The country is wrecked by political and social divisions and faces a very uncertain economic future. In the past week alone, the economic malaise and sense of drift has resulted in Lebanon’s currency depreciated by some 320 per cent in value. In mid-June, $1 would equate to some 6,000 Lebanese pounds, now more than 9,000 pounds are needed to buy that dollar.

Since late last year, the currency has lost some 80 per cent of its value, effectively wiping out the amassed savings of many, and for too many Lebanese now, the only way forward seems to be seeking a future elsewhere, leaving the nation at its time of great economic crisis since the end of its civil war three decades ago. The currency crisis has led Lebanon’s Prime Minister Hassan Diab to urge citizens living beyond its borders to return home and bring dollars. Many are staying away.

The depreciation in Lebanon’s currency is but one facet of a nation trying to come to grips with its depressing economic performance and a combined fiscal train wreck that has been years in the making. Its population of 5.4 million has long endured the spillover effects from conflicts within its borders and across the Levant, with an influx of some two million refugees undermining its weak economic structures and reinforcing the black economy there. A succession of weak governments and an unwillingness to execute necessary fiscal reforms have exacerbated its debt levels, making the nation the third-most indebted state globally.

Since last autumn, a series of widespread street protests has highlighted the successive failures of the government there to tackle Lebanon’s economy. But politics too is adding to Lebanon’s plight – with the government in Beirut beholden to Hezbollah from its base in the south of the city and beyond, and to that group’s political and ideological masters in Tehran. In effect, Iran’s proxy operates an army within Lebanon’s borders, making any determined action to tackle Beirut’s economic crisis through serious reforms a non-starter.

The reality is as Dr Anwar Gargash, the UAE’s Minister of State for Foreign Affairs, has noted, Lebanon is responsible for the deterioration of its Arab relations and those with Gulf States over the past decade. And that holds true for its economic situation at present too.