Lebanon On The Brink Of Economic Collapse
Lebanon is a few days away from a social explosion, the caretaker Prime Minister Hassan Diab said on Sunday, calling on the international community to act immediately.
The World Bank has described the situation in Lebanon as one of the “worst depressions” of modern history. Earlier this year, the Lebanese currency had lost 90% of its value. On top of that, a large portion of the population is reeling from extreme poverty.
“The Lebanese are facing this dark fate alone,” Diab said in a speech at a meeting with ambassadors and representatives of diplomatic missions in Beirut.
It is noteworthy that Lebanon is crippled by political paralysis, sectarian divisions, and economic downturns since the Beirut port explosion last August.
The European Union (EU) has repeatedly slammed the Lebanese officials for obstructing steps to form a new government.
Now, the Lebanese officials are grappling with the reality that if they fail to form a new government, they will not be able to ask for international assistance.
Beirut explosion exposed the growing corruption
It is worth mentioning, though, that Lebanon is reeling from deep corruption even before the Beirut explosion.
In June 2019, Lebanese protestors took to the streets of Beirut, calling for an end to corruption.
Ostensibly, the protestors were in control, prompting Al-Hariri to resign. Yet, the situation kept deteriorating.
Regarding the situation prior to the Beirut explosion, Amer Bisat, Managing Director and Head of Sovereign and Emerging Markets (Alpha) investments at BlackRoc, writes: “First, public sector debt had reached such elevated levels that a default had become a question of when, not if. Second, the banking sector, having lent three-quarters of deposits to the government, had become functionally bankrupt and increasingly illiquid.”
“Third, the productive economy had experienced virtually no growth for an entire decade — a development with acute socio-political implications,” Bisat added.
Where is Lebanon heading to?
Frankly, Lebanon, which was one day described as Switzerland of the region, is moving towards chaos. After 20 months of suffering, the Lebanese are lacking the very basic needs — from spare parts for cars to medicine.
Now, the International Monetary Fund (IMF) will not be able to continue its support for Lebanon unless a new government is formed.
Truth to be said, economic stability is a long way off. Now with the economy in shambles and the political elites failing to form a coalition government, foreign powers are ramping up their efforts to exploit the country.
The visit of Emmanuel Macron to Lebanon last year was not driven by moral concerns. Instead, it was an attempt to preserve France’s influence in Lebanon.
Ostensibly, the international community is offering generous help to Lebanon. But in reality, they are placing a noose around Beirut’s neck. And the Lebanese people are paying the price.