By Annabelle Saba
MENA Analyst
When the port of Beirut exploded in August 2020, the entire world turned its attention to the city and mourned its destruction. A month later, Lebanon disappeared from major news outlets’ headlines.
In the meantime, however, Lebanon has lived a deepening crisis of bigger consequences and proportions than the 2020 port explosion: an economic and humanitarian catastrophe.
The country’s economic collapse is so severe that the World Bank ranks it among the three most severe on record since the mid-19th century, figures that demonstrate the scale of the humanitarian disaster.
According to the World Bank, Lebanon’s GDP is predicted to decline 9.5% this year. In 2020, it had already decreased by 20%. The Lebanese Lira lost 90% of its value in comparison with the dollar in less than two years and food prices have sky rocketed whilst salaries have stagnated. As a consequence, more than half of the Lebanese population now lives under the poverty line, whilst the official unemployment rate has increased by 35%. And as if the situation weren’t bad enough, the state’s political leaders have still failed to form a coalition government.
The immediate causes of this situation are the banking crisis of 2019, worsened by the Covid pandemic. However, political sectarianism and neoliberalism can provide us with a better understanding on the nature of Lebanon’s economic crisis.
The notion of political sectarianism refers to “the system of power sharing in force in Lebanon, a system reinvented after the civil war of 1975-1990”. The supposed aim of power sharing is to secure seats in government for the representatives of the state’s 18 main religious communities. Power sharing is therefore purportedly in place to guarantee that no religious group can dominate the state to the marginalisation of others.
This system has ensued in a situation in which a group of magnates have used their position as elected community leaders to take over the economic institutions of the state. These personalities draw on the public capital to enrich their own fortunes. According to Corruption Perceptions Index 2020, Lebanon classes among the most corrupt states in the world.
These community leaders then use these reserves to buy political backing. Basic services such as healthcare, electricity and gas are monopolised by private community parties, and in turn are distributed to members of their communities on the condition that they give their vote to the leaders. This organism makes many peoples reliant on on factions for their daily survival.
This is where Lebanon’s political sectarianism takes advantage of neoliberal policies, whereby state cost-cutting, denationalization, tax cuts, and the subcontracting of public works and services to private companies benefits magnates rather than the Lebanese population. Post-war Lebanon provides the best example of this: rather than developing public services to nurture inclusive citizenship and the legitimacy of power, elites have worn the key institutions that are the main elements of stability.
The World Bank cautioned that “the sharp and rapid contraction of the Lebanese economy is generally associated with conflicts or wars. The 15-year civil war in Lebanon has left more than 150,000 dead and one million displaced”. A reversion into this type of civil war however is very unlikely.
On the other hand, a new wave of social unrest is more likely. Demonstrations have become an everyday form of opposition and disapproval to fraudulent community leaders in Lebanon.
In 2019, as the banking crisis materialised and retributive taxes were announced, the Lebanese population took to the streets. Whilst community leaders deployed violence against the protestors, it was impossible to maintain the same government in power, in light of such a deepening crisis.
The latest nomination of Najib Mikati as Prime Minister will serve the purpose of creating a new government to resolve Lebanon’s long-lasting financial crisis. As a reformer, Mikati is expected to be satisfied by making minor changes to the system, rather than consider substantial changes of the community system that is needed.
The West has conventionally tried to support Lebanon’s weakening political system, and today, it sees Lebanon as an important player in the international refugee regime. In addition to thousands of displaced Palestinians living within the country’s borders, Lebanon today masses around 1 million refugees who escaped the civil war in nearby Syria.
France presented a package of financial and structural reforms in 2020, aimed at reconstructing a power-sharing government. The initiative provides for the formation of a government to carry out reforms under the direction of the International Monetary Fund.
But this package to ensure the persistence of the regime go against the wishes of many Lebanese citizens: they see no value in reverting to an inoperative system incapable to provide basic services, jobs and minimum standards of living.
References:
World Bank, “Lebanon Sinking into One of the Most Severe Global Crises Episodes, Amidst Deliberate Inaction”, June 1, 2021. https://www.worldbank.org/en/news/press-release/2021/05/01/lebanon-sinking-into-one-of-the-most-severe-global-crises-episodes
The Independent, “Lebanon Raises Price of Bread Amid Crippling Economic Crisis”, June 22, 2021. https://www.independent.co.uk/news/lebanon-raises-price-of-bread-amid-crippling-economic-crisis-lebanon-beirut-world-bank-b1870461.html
The Conversation, “Lebanon: One Year After Beirut Explosion, Failing State Struggles Amid Poverty and Sectarianism”, August 3, 2021. https://theconversation.com/lebanon-one-year-after-beirut-explosion-failing-state-struggles-amid-poverty-and-sectarianism-165543
France24, “Lebanese Billionaire Najib Mikati Picked as New PM-Designate”, July 26, 2021. https://www.france24.com/en/live-news/20210726-lebanese-mps-pick-najib-mikati-as-new-prime-minister
Washington Institute, “A Mikati Government Will Not Save Lebanon”, July 28, 2021. https://www.washingtoninstitute.org/policy-analysis/mikati-government-will-not-save-lebanon
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