Often on brink, Lebanon headed towards collapse

Beirut: Power cuts that last up to 20 hours a day. Mountains of trash spilling into streets. Long lines at gas stations.

It may seem like a standard summer in Lebanon, a country used to wrestling with crumbling infrastructure as it vaults from one disaster to another.

Only this time, it’s different, Every day brings darker signs Lebanon has rarely seen in past crises: Mass layoffs, hospitals threatened with closure, shuttered shops and restaurants, crimes driven by desperation, a military that can no longer afford to feed its soldiers meat and warehouses that sell expired poultry.

Lebanon is hurtling towards a tipping point at an alarming speed, driven by financial ruin, collapsing institutions, hyperinflation and rapidly rising poverty - with a pandemic on top of that.

The collapse threatens to break a nation seen as a model of diversity and resilience in the Arab world and potentially open the door to chaos. Lebanese worry about a decline so steep it would forever alter the small Mediterranean country’s cultural diversity and entrepreneurial spirit, unparalleled in the Middle East.

In the past, Lebanon has been able to in part blame its turmoil on outsiders. With 18 religious sects, a weak central government and far more powerful neighbours, it has always been caught in regional rivalries leading to political paralysis, violence or both. Its 1975-90 civil war made the word “Beirut” synonymous with war’s devastation and produced a generation of warlords-turned-politicians that Lebanon hasn’t been able to shake off to this day.

Since the war ended, the country has suffered a Syrian occupation, repeated conflict with Israel, bouts of sectarian fighting, political assassinations and various economic crises, as well as an influx of more than a million refugees from neighbouring Syria’s civil war. The presence of the powerful Shiite group Hezbollah - a proxy army for Iran created in the 1980s to fight Israel’s occupation - ensures the country is always caught up in the struggle for supremacy by regional superpowers Iran and Saudi Arabia.

But the current crisis is largely of Lebanon’s own making - a culmination of decades of corruption and greed by a political class that pillaged nearly every sector of the economy.

For years, the country drifted along, miraculously avoiding collapse even as it accumulated one of the world’s heaviest public debt burdens. The sectarian power-sharing system allotted top posts according to sect rather than qualifications, which in turn allowed politicians to survive by engaging in cronyism and patronage for their communities.

“One of the problems in Lebanon is that corruption has been democratised, it’s not sitting centrally with one man. It’s all over,” says Marwan Muasher, vice president for studies at the Carnegie Endowment for International Peace.

“Every sect has a sector of the economy that it controls and draws money from, so that it can keep their sect happy,” he said in a recent talk organized by the Centre for Global Policy.

The troubles came to a head in late 2019, when nationwide protests erupted over the government’s intention to levy a tax on the WhatsApp messaging app, seen as the final straw for people fed up with their politicians. The protests touched off a two-week bank closure followed by a run on the banks and then informal capital controls that limited dollar currency withdrawals or transfers.

Amid a shortage in foreign currency, the Lebanese pound has shed 80 per cent of its value on the black market, and prices for basic food items and other goods have seen a meteoric rise. Savings have evaporated, plunging many into sudden poverty.

Lebanon’s fall “represents an epic collapse with a generational impact,” wrote Maha Yehia, director of the Carnegie Middle East Centre.

The pillars that long sustained Lebanon are crumbling, including its trademark freedoms and role as a tourism and financial services hub, and wiping out its middle class, she wrote in a recent analysis.

Left on its own, Lebanon could within months reach a point where it can no longer secure needs for its citizens like fuel, electricity, internet or even basic food.

Already, there are signs of the country being pushed towards a hunger crisis. Fears of a breakdown in security are real. The purchasing power of an ordinary soldiers’ salary has declined in dollar terms from around $900 to $150 a month. Public sector employees have similarly seen their salaries wiped out.

Unlike in previous crises when oil-rich Arab nations and international donors came to the rescue, Lebanon this time stands very much alone.

Not only is the world preoccupied with their own economic crises, traditional friends of Lebanon are no longer willing to help a country so steeped in corruption, particularly after the state defaulted on its debt in April. Moreover, the country is led by a Hezbollah-supported government, making it even more unlikely that Gulf countries would come to the rescue.

Lebanon’s only hope is an IMF bailout, but months of negotiations have led nowhere.

The French foreign minister, on a recent trip to Beirut, could not have been clearer that there would be no assistance for Lebanon before credible reform measures are taken. “Help us to help you!” he repeated.

The words appear to have fallen largely on deaf ears. Lebanese politicians can’t agree on the size of the government’s losses, much less carry out reforms to end the corruption from which they profit.

A complete breakdown of Lebanon threatens the wider region, potentially leading to security vacuums that could be exploited by extremists.

Writing in Washington-based The Hill newspaper, Mona Yaacoubian, senior adviser to the vice president for Middle East and Africa at the US Institute of Peace, said a total meltdown in Lebanon could also provoke new refugee flows to Europe and add yet more turmoil to the arc of instability stretching from Syria through Iraq, with negative implications for US allies in the region.

Given the stakes, the United States cannot afford to ignore Lebanon’s impending collapse, she argues.

“Lebanon is rapidly spiralling towards the worst-case scenario: a failed state on the eastern Mediterranean.”