Joseph Haboush – The Daily Star
There is no more confidence in the ruling elite, but they are still required to come up with a plan to prevent an all-out economic collapse. To some it feels as if Lebanon was always on the brink of an economic crisis, but this time around it’s real.
Banks are implementing capital controls, albeit illegally, as this isn’t permissible without legislation. Buyers are in danger of not being able to purchase basic commodities as a result of the shortage of U.S. dollars in the market: more than just simple goods and snacks at minimarkets. Wheat, fuel oil and medicine are among these.
Major suppliers and businesses are unable to pay for their stocks and more importantly, credit cards are now limited.
And another issue for Lebanon is that there is no foreign country willing to come to the rescue this time around. “Saudi Arabia and other Gulf countries have no interest, European countries are simply unable and the U.S. has just put a freeze on aid to Lebanon,” a diplomatic source told The Daily Star.
The Daily Star spoke to four different residents that traveled or were planning to do so this week. Two residents were unable to withdraw more than $300 in cash and the other two were allowed $1,000. For a trip abroad, this sum will not suffice for many and all four residents have credit cards that had their limit reduced by their respective banks. To put it in perspective, a round-trip plane ticket to Europe costs no less than $300. This is without food and transportation. One resident said one of the alpha banks in the country refused to give him a checkbook when requested two weeks ago.
Domestically, many tenants are being asked to pay in U.S. dollars while a majority of locals are paid – if paid – their salaries in Lebanese liras. These are a few examples of just how bad the situation has become.
While the squabbling between politicians can be described at best as childish, this needs to be separated from their responsibility to take action to sort the economic situation.
If a government is formed in the next few days, Lebanon will need years to get out of the crisis it has plunged into. This is a major concern not only for locals, but for the international community and investors.
One senior banking source said Lebanon’s growth reached minus 0.2 percent in 2019.
While many may claim that Lebanon has hit rock-bottom, this is not entirely accurate. But in a few weeks’ time, if politicians don’t get their act together to convene for an economic plan, it will.
This would require the president and caretaker prime minister to call for the government to meet as well.
Rather than focusing on the controversial amnesty law which protesters say will be an attempt for politicians to save each other from prosecution (including freeing terrorists and drug dealers from their own constituents), efforts should be geared toward an emergency economic plan. This includes looking at ways to pay for basic goods and commodities to enter the country as well as ensuring banks function in a legal and proper manner.
Reports have surfaced over the last few days of lawsuits being filed abroad against Lebanese banks for enforcing their own sets of capital controls.
And Association of Banks in Lebanon head Salim Sfeir said Wednesday that the “positivity” of these controls should motivate politicians to come up with a political equation that satisfies protesters’ demands. Sfeir also said these controls would alleviate pressure toward “the withdrawal of deposits that are being placed at home.”
But as Lebanon faces its worst economic crisis since the 15-year-long Civil War, and the international community asking what it can or should do, the answer is pressing for an economic plan that will prevent an all-out economic collapse that may lead to an all-out security collapse, i.e. war.