Lebanon Held Hostage as It Hurtles Towards Collapse

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Lebanon Held Hostage as It Hurtles Towards Collapse

In October 2019, a civic uprising against Lebanon’s entire political class brought down the government. Last August, a cataclysmic chemical blast destroyed the port of Beirut, devastated whole districts of the capital and toppled its successor. After seven months of bickering, a bankrupt country is still without a government, spiralling downwards in a collision of crises. Instead of statesmen taking full measure of this national emergency, Lebanon is plagued by political vultures feeding rapaciously on its carcass.

More than three decades after the 1975-90 civil war, the Lebanese are being held hostage by sectarian cliques of warlords in suits, with Hizbollah, the Iran-backed Shia paramilitary movement that has become a state-above-the-state, clasping the master keys.

It is hard to overstate the plight of Lebanon, as it hurtles towards collapse. Already prostrated by a compounded financial, fiscal, debt and banking crisis, the coronavirus pandemic and port blast squeezed any remaining life out of the economy. The local currency has lost almost 90 per cent of its value.

As businesses fail, joblessness and hunger abound, along with the spread of begging and barter. Lebanon’s fabled banks, having lent 70 per cent of their assets to an insolvent state and central bank, are essentially bankrupt, and have locked most depositors out of their savings. A deadline for recapitalising the banks has passed, with only a pretence of restructuring. A caretaker government limps on. There is no budget and there will soon be no hard currency to pay for imports, while the central bank prints increasingly worthless money and fuels hyperinflation.

No one can be sure where Lebanon’s breaking point is; the country has survived wars, invasions, occupations and serial assassinations. But Lebanon is running out of dollars to subsidise imports of wheat, medicine and fuel — items the finance ministry estimated last year already accounted for 60 per cent of the average household budget.

Lebanon’s power-brokers refuse to engage seriously with IMF bailout plans. Donors led by the US, France and the UK stand ready to support a capable government committed to reform but the political class refuses to form one. Its members are all complicit.

The largest Christian party of President Michel Aoun, backed by Hizbollah, insists on an unwieldy cabinet of placemen rather than technocrats, in which they would have veto rights. There is jockeying for the formerly lucrative energy and finance ministries. But the real blockages are even harder to surmount.

Among many preconditions for any bailout is a forensic audit of the central bank and state finances. The Banque du Liban is resisting, on spurious grounds of banking secrecy laws. These were not designed to hide bankruptcy and massive peculation, which could be what an audit would reveal.

Hizbollah and the pro-Tehran bloc want to bide their time and see what emerges from the Biden administration’s attempt to re-engage with Iran. It does not want to risk its valuable Christian alliance, which it sees as a source of national legitimacy, or run any risk to its power.

There are voices of alarm. Gen Joseph Aoun, the Christian army commander, last week all but ignored President Aoun’s (no relation) order to clear the roads of protesters and barricades, asking instead where the political class was taking the country. The answer is not encouraging. In their refusal to permit accountable government while pretending to negotiate with each other they are leading Lebanon, historically a strategic east-west crossroads on the Mediterranean, to failure as a state.


Source: Financial Times