1. The Disaster in Lebanon and Challenge for the Biden Administration
- Author:
- Edward M. Gabriel
- Publication Date:
- 09-2020
- Content Type:
- Journal Article
- Journal:
- The Ambassadors Review
- Institution:
- Council of American Ambassadors
- Abstract:
- The disastrous state of affairs in Lebanon is mainly a result of failed governance for the past several decades. The 1989 Taif Agreement that defined peace after Lebanon’s civil war created a balancing act among various warlords and political figures who divvied up the government by sectarian affiliation. Since then, government institutions have been weakened, public employment has become a function of constituent services, contracts and social services have been doled out without any transparent process and necessary reforms have been ignored. Humanitarian consequences of this mismanagement are widespread. Social services are lacking. Public schools, health and social services, a pension system and labor laws are inadequate; and there is little protection for civil and human rights and environmental protection. In addition, there are more than 1 million Palestinian, Syrian and other refugees in the country, exerting extreme pressure on the country’s socioeconomic requirements and infrastructure. Infrastructure investment has been ignored, and 80% of hospitals and 70% of schools are run by the private sector. The economy has been running disproportionately on remittances from Lebanese emigres and tourism. The banking system, which was highly praised until a year ago, attracted hard currency and euro-bonds by offering high interest rates in order to feed a deficit-spending government, only to default when the government failed to honor the bonds due. In October 2019, the government blundered by imposing a tax on the popular, free telecom app, WhatsApp, to pay for increasing public deficits of its own making. The people had enough; they were outraged. They lost what remaining faith they had in the government, and on October 17 demonstrations erupted across the country, across all sects, generations and political persuasions. The people were upset as they experienced an increasingly poorer quality of life, especially after the Lebanese lira rapidly declined in value due to the lack of stable reserves to support the currency. In 2019, Lebanon had the third-highest debt-to-GDP ratio in the world, and its bonds are now “junk” on the international markets. It imports 80% of what it consumes. The country is broke, with little support from expatriates and allies and a ruling class that shows no willingness to reform. In 2018, the international donor community, in an effort called the CEDRE program, agreed to support Lebanon once it undertook systematic reforms. These have been neither instituted nor implemented, leaving $11 billion in international aid on the table. Subsidies on food, fuel and medicine are set to stop in December due to a lack of government reserves. Inflation is well over 200% for food items, over-the-counter medicines are almost non-existent due to hoarding and the middle class is rapidly disappearing. Banking-sector capital controls make it almost impossible for depositors to have access to their funds, and the failing exchange rate means that people who withdraw their lira face an immediate decline in purchasing power. The demonstrations were remarkable in their intensity and breadth; and it was only a matter of time before their concerns had to be addressed. The first casualty was the then- (and now again) Prime Minister Saad Hariri, who resigned, along with several of his ministers and Members of Parliament.
- Topic:
- Foreign Policy, Conflict, Peace, and Disaster Management
- Political Geography:
- Middle East, Lebanon, North America, and United States of America