Lebanon, one step away from bankruptcy

Lebanon, one step away from bankruptcy

In August, in Beirut, the weather is hot and sweltering. The inhabitants are forced to sleep on the balconies, because they cannot use the air conditioning. There is no electricity and water, so even the equipment of the hospitals and those of many shops are forced to close. In Lebanon, in order to have electricity is necessary to use generators, that run on diesel fuel.

A full tank of petrol is a forbidden dream. After the Central Bank stopped subsidies for fuel imports, the oil’s price, when possible to find, after kilometers of queues in front of the pumps, has increased by seventy percent.

Public services are now reduced to a minimum. Hospitals and other businesses have been forced to downsize operations or close.

In early August, a tragic accident occurred in Tleil, in the northern region of Akkar, when a fuel tank seized by the army exploded, while about 200 people gathered to supply themselves with gasoline. More than 28 people were killed and nearly 80 were injured, many of whom sustained severe burns. The next day, an angry mob set fire to the house of the warehouse owner where the explosion occurred.

The country’s economic situation is one step away from bankruptcy with a GDP that has dropped by 20 percent (with a loss of 55 billion dollars) and inflation that has risen above 80 percent, pulverizing the wages and savings of the Lebanese .

According to the UN, more than half of the population has slipped below the poverty line and in Lebanon it is now a problem to even put a decent meal together.

It is also estimated that 1,200 children have had to drop out of school, given that in Lebanon the public system covers only 30% of education and private schools have been overwhelmed by the crisis.

According to many analysts, Lebanon is a country that has already failed. For others, the crack is very close. What is certain is that the country is undergoing a severe and prolonged economic depression. According to the latest World Bank report published in June, the economic and financial crisis in the country of the cedars is among the worst ever in history, even since the mid-1800s.

The explosion of the port of Beirut, which killed 214 people, injured seven thousand and left three hundred thousand homeless on August 4 a year ago, was just the latest act of a perfect storm that united the pandemic, the economic crisis, the blockade of tourism, the effects of the Syrian war on corruption and the instability of an inefficient political system.

Despite the tense climate, Hassan Nasrallah, leader of Hezbollah, in a televised speech, decided to attack the investigating judge Tarek Bitar, in charge of investigating the deadly explosion, regarding the investigation into the explosion of the port. “The investigation is politicized,” he declared. “Either he has to work … clearly, or justice has to find another judge.”

Hassan Nasrallah’s words created further frustration for the families of the victims. Various rumors speak of Hezbollah’s involvement in the storage of ammonium nitrate, the source of the explosions at the port. According to the Lebanese media, several personalities who have relations with Hezbollah are in the crosshairs of justice.

Reading again the report of the World Bank it is reported:

“In the face of colossal challenges, persistent political inaction and the absence of a fully functioning government continue to aggravate already disastrous socio-economic conditions and a fragile social peace with no clear turning point on the horizon.”

For almost a year, Lebanon has been in the hands of a provisional government with limited powers and the parties are unable to find an agreement to create an executive that can intervene in the country’s crisis.

A month ago, after several failed attempts by Saad Hariri, the Sunni businessman Najib Mikati, the richest man in the country, was appointed. But parliamentary negotiations are still on the high seas.

Mikati is still trying to find an acceptable formula for all parties to pave the way for a new government. He has held 11 meetings with the president, Michel Aoun, since he was appointed head of the new government on July 26.

But despite this still nothing concrete.

If a government succeeds in being formed, Mikati will have to start talks with the International Monetary Fund regarding a loan of approximately $ 860 million.

But to get this loan, reforms will be needed, about the feasibility of which many Lebanese analysts are perplexed.

The Lebanese political system, characterized by corruption and ethnic-religious community dynamics, is in particular hostage to the pro-Iranian Hezbollah party which blocks any kind of reformist evolution and renewal.

In the hands of the Shiite party there are its parliamentary representation, the President of the Republic Michel Aoun, its deep-rooted presence in the Lebanese society and, above all, the strength of its armed militias with which it threatens political opponents in times of crisis.

Hassan Nasrallah, worried about the reaction of his followers, also urged the formation of a new government.

But he didn’t just do that. In the midst of a dramatic situation like the current one, Hezbollah does not find anything better than launching missiles at Israel and threatening the Tel Aviv government with a new war, opening the cracks of the crisis even more.

The move is likely to take attention not only from the difficulties facing the party, but also from the tension and criticism linked to the investigation into the explosion at the port of Beirut.

Meanwhile, the leader Hassan Nasrallah announces that an oil tanker loaded will sail from Iran to Beirut to supply the country with fuel. An open challenge to the international sanctions in place against the Tehran government.

Saroj Kumar Jha, regional director of the Mashreq for the World Bank says: “Only a reformist government, which embarks on a credible path of economic and financial recovery, and which works closely with all interested parties, can reverse the course of a further fall and prevent greater national fragmentation ”.

But this, of all the dreams Lebanon has today, is perhaps the most difficult to achieve.