Lebanon’s schizophrenic show of social inequality

Bustling cafes misrepresent plight

This reveals how the bustle in Beirut's cafes, bars, and restaurants is a misrepresentation of the true state of Lebanon's economy and its social situation.

A more nuanced picture emerges from watching the sombre crowds at Beirut airport.

People are returning to their countries of displacement after the recent Easter and Eid al-Fitr holidays, moving away from the unprecedented and complex crisis over the economy and standards of living in the place they once called home.

Even so, some residents still hold onto the hope that the country's economic woes can be helped via the use of new bank accounts opened recently in place of previous ones suspended or depleted since October 2019.

But despite the hopes pinned on these "fresh dollar" or "cash" accounts, the financial system, characterised by experts and journalists as "zombie banks", is awaiting dissolution.

The people of Lebanon continue to endure humiliation, pain, hunger, and oppression, with some achieving success while others struggle to make ends meet. 

In Lebanon, numbers have historically been a matter of interpretation and subjectivity. Accordingly, approaching the country's economic predicament from a data-led perspective is short-sighted.

This is an interlocking set of threefold crises: financial instability, liquidity shortages, and a malfunctioning banking system including the misappropriation of people's deposits.

It is truly disheartening to hear a group of supposed economists raving and spewing imported theories and analyses on political, financial, and social matters that seem detached from reality.

As they do so, the majority of Lebanese citizens must resort to trading currencies and scurrying between shops and fuel stations, with no option but to pay the exorbitant monthly electricity fee to the generator owner – be it the high commissioner of the political leader in the area and/or the local militia, under the watchful eye of the ruling party coordinator.

The dollar disparity in incomes and salaries

It is absurd to defer to any kind of statistical analysis when the people of Lebanon are so divided in terms of their financial situation.

Some are barely scraping by on meagre salaries denominated in the Lebanese pound, pegged to the so-called "Sayrafa" platform, which provides one of several exchange rates in common use, while they have had their lifelong savings confiscated. 

Others rely on income in US dollars from expatriate family members, while few are fortunate enough to have external income in dollars.

And then there are the privileged few, usually loyal to sect leaders — particularly Hezbollah — who enjoy the stability of income in dollars, the currency of a country the group has called the "Greatest Satan".

Despite such privilege, the influence of the governing Axis of Resistance seems limited. All their calls for growing mint and radishes on balconies for export to the east have fallen on deaf ears.

Adding to all that, a driver or a neighbour may tell you with astonishment, or admiration, that members of the Lebanese army and Internal Security Forces receive a monthly stipend of around $100 from the United States, in cooperation with the United Nations Development Programme (UNDP). 

This is worth much more than their salaries in local currency.  All the while, working hours in ministries and official departments barely exceed three days a week.

A surrealist masterpiece

While reliable data is lacking, it is quite possible that the percentage of money circulating in Lebanon outside its official banking system has exceeded 90%,  similar to the proportion in Sudan, even before the recent eruption of conflict there.

The scene is a surrealist masterpiece. The highest banknote in circulation denominated in Lebanese pounds is 100,000. That is equivalent to a single dollar.

Current prices of basic necessities ­­– including fuel, bread, medicine, and healthcare – all imply that banknotes for 500,000 and 1 million Lebanese pounds will need to be printed.

Such a move will only exacerbate inflation and further increase the amount of cash in circulation to approximately 100 trillion Lebanese pounds – a colossal jump from 6 trillion before the fateful collapse in October 2019.

Lebanon's soaring inflation rates rival Zimbabwe's. And so, it has fully implemented a dollarisation policy.

The latest figures from the Lebanese Central Bank indicate that the inflation rate and price hikes in March have surged to a staggering 264%, with the health sector bearing the brunt of the increase at a startling 374%. Such unaffordable healthcare costs may help explain the spike in deaths in the country. 

Supermarkets and gas stations now price their goods in dollars, with the backing of the Ministry of Economy in a Lebanon, that is ironically part of the Axis of Resistance.

Meanwhile, generator owners collect a monthly electricity fee of no less than $100 for every 5 amps, with only 15 hours of power distributed throughout the day.

Towering fences are going up around banks' buildings as they fortify their offices, even as their branches regularly close as the official financial services sector contracts, making way for unofficial moneylenders to take their place. 

In pictures: Lebanese depositors smash up, burn Beirut banks as pound hits new record low

Banks are already operating sporadically, going on strike whenever they receive unfavourable court rulings or face European litigations against them and the Central Bank Governor.

Banks are also under constant threat of vandalism, with branches and ATMs prime targets for individuals driven by desperation, impulsiveness, or a simple need for ever-larger amounts of cash.

Dire warnings and deaf ears

The fourth year of Lebanon's most severe economic crisis since the 19th century is unfolding one year after an initial rescue deal was agreed with the International Monetary Fund.

It failed to arrive. Instead, the IMF and various other international institutions, including the World Bank, have been issuing increasingly stark warnings.

Delays to economic reform in Beirut – and the knock-on impact on the Lebanese people – were the subject of a joint warning from ambassadors in Beirut representing France, Germany, Italy, the United Kingdom, the US, Canada, Japan, and the EU.

They called for swift and decisive action, saying failure to act promptly will lead to Lebanon's crisis, already one of the most severe in modern history, running the risk of becoming worse and potentially endless.

This international concern is unlikely to yield any fresh hope.

Lebanon's parliament, government and key decision-makers — namely Hezbollah — have a history of evading solutions and hiding behind baseless pretexts. It is a track record unlike any other country grappling with economic hardship.

Even the looming presidential election is unlikely to bring about any meaningful change, except perhaps in reserving some positions of influence for members of the Maronite Christian sect who remain loyal to the ruling elite. This may include the imminent vacancy of the Governor of the Central Bank in July.

In time, economic history will show the world that Lebanon and its  people have been subjected to orchestrated theft.

For almost four years, banks have been drained of depositors' funds, the central bank's foreign currency reserves have been depleted and, all the while, there has been a lack of national responsibility taken throughout the crisis.

It has amounted to a heinous and serial financial crime, and it has been running continuously.

Alarm bells have been sounding throughout – ringing far and wide and heralding the death of the nation's finances. And yet internationally and at home, this tolling has fallen on deaf ears and for too long has remained unheeded.