Following the recent explosion in Beirut, as well as the country’s economic collapse, many Lebanese citizens have taken to the streets to demand an end to their current government. This discontent has been capitalized upon by countries such as France, the United States, and Israel, who see it as an opportunity for the Hezbollah-dominated regime to be ousted from power and for the process of economic reform to commence.
Hostility towards the regime has been exacerbated in the aftermath of the Beirut explosion, which many Lebanese citizens see as a product of the same government corruption and mismanagement that caused Lebanon’s economic crisis. The blast is estimated to have killed 157 civilians, while injuring over 5,000 and leaving 300,000 homeless. It also caused significant damage to the city’s infrastructure, namely the Port of Beirut, where most of Lebanon’s international trade takes place.
This disaster has deepened the country’s economic crisis, as the Lebanese people have been further cut off from the world economy. The process of economic collapse began when the government’s default on its extraordinary levels of debt caused the Lebanese pound to plummet, losing 80% of its value against the dollar. The country has subsequently suffered huge shortages in hard currency reserves, particularly U.S. Dollars, which they have been cut off from. Additionally, through the Caesar Act that came into effect in June, the U.S. government has imposed crippling sanctions on private firms aligned with the current government.
To make matters worse, the COVID-19 crisis has caused unemployment to skyrocket to include up to a third of the country’s workforce, while also causing the suspension and closure of one-fifth of Lebanon’s businesses. In recent years, the country has taken in over 1.5 million Syrian refugees, the most of any country in the world. This population influx has further put significant strain on Lebanon’s limited resources.
French President Emmanuel Macron organized an online donor summit in which he raised over $250 million euros from the E.U., the U.K., the U.S., Germany, Spain, and Switzerland, to donate to Lebanon. However, in his visit to Beirut, President Macron explicitly mentioned that any money going to the country must come with what he called “a new political order” to replace the current “system that no longer has the trust of its people.” These calls for regime change have been supported by other countries including the United States and Israel, who have long been opposed to the current political system in Lebanon that has been dominated by Hezbollah ever since the end of the Israeli occupation of the country in 1985.
The U.S. Embassy in Beirut released an official statement in which it claimed that “the Lebanese people have suffered too much and deserve to have leaders who listen to them and change course to respond to popular demands for transparency and accountability.”
Organizations such as the International Monetary Fund (IMF) have called for these political reforms to be accompanied by major economic reforms that would impose austerity measures in the country, including cuts to government spending and the privatization of state-owned enterprises. The IMF has made its $10 billion recovery package contingent on these conditions, which have still not been accepted by Lebanon’s current government. Yet, with the current economic turmoil continuing to worsen, it seems more likely than ever that the government will have to succumb to the terms of the deal.
Although Lebanon is in desperate need of this type of capital influx, there is still widespread opposition to the types of economic reforms it would be accompanied by. Similar types of austerity measures were previously implemented during the reconstruction of Lebanon in the early 1990s, and they were widely criticized for privatizing public functions in order to benefit the political elite, whose notorious corruption has got Lebanon into the situation it is in today. Throughout the last 30 years, Lebanon’s privatized banking system has charged roughly five to ten times the prevailing world interest rates on government bonds. This has caused the state’s debt to the private banking sector to be nearly double that of the country’s yearly GDP, which has led to the current debt crisis in the country.
These types of neoliberal reforms were also put in place after the 2006 Lebanon War, when thirty wealthy nations raised $7.6 billion in loans for reconstruction that were contingent on the privatizations of the telecommunications and electricity industries, price increases on fuel, and cuts to public spending. Lebanon accepted these measures, although they were criticized for leaving behind most of the country’s population, who ultimately saw a 15% increase in their household expenditures on account of the reforms. The aid also ended up being predominantly used to pay private firms to rebuild wealthy areas of downtown Beirut, while the rest of the city was still in chaos. This made much of the population reliant on the influence of Hezbollah, which gave out direct cash payments to displaced families whose needs weren’t addressed by the government.
If the current government is ousted from power, the Lebanese people hope that it can be replaced by new leaders who will not be prone to the same type of corruption that has plagued the country for so long. Yet, with these same types of austerity measures being proposed for the country once again, the future for the Lebanese people remains uncertain.
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