As the Lebanese economic situation continues to deteriorate and shortages become increasingly threatening due to the imminent end of the Bank of Lebanon’s subsidy program due to financial reserves now almost exhausted, the Lebanese population is now fearful. power cuts including private generators, telephone services and even the Internet, without obviously mentioning the difficulties of supplying drugs and in particular those intended for people suffering from chronic diseases.
Thus, if even the deterioration of the value of the Lebanese Pound was expected, it would now reach more than 90% in just 2 years, leading to a sharp drop in the purchasing power of the population, the worst is yet to come.
The news is meant to be maddening and for good reason … even public administrations and even hospitals go so far as to lack one essential thing, namely simply paper to print forms or test results not to mention the supply of drugs and other medical supplies and even spare parts.
Traffic jams are increasing due to the lack of gasoline. To the lines of cars in front of gas stations, clashes between motorists are added. Gasoline or fuel, essential to many utilities, runs out with threats that the generators in turn cut off the electricity supply after an already failing utility. The shutdown of EDL distribution also threatens, as a domino effect, the supply of pumps to the water distribution network or the operation of telephone exchanges whose services are nevertheless necessary in the event of a vital emergency. Last but not least, the Internet could then be cut off.
The common element to all this is the crying lack of liquidity in foreign currencies of the Bank of Lebanon which financed during 25 years, a mess without any name and which nobody wanted to see, as long as it was going well. The Lebanese were like cicadas, sunbathing in the summer, living beyond the means of their economy, with a GDP per capita of $ 7,500 in 2019 according to the World Bank and which suddenly collapsed, now reaching a little more of 2,500 USD per capita according to current estimates, almost at the same level as Nepal or Western Sahara and being overtaken by Syria.
This rapid deterioration in per capita GDP has itself led to a rapid deterioration in purchasing power which was foreseeable because of the bad policies implemented in recent years and in particular the increase in wages without productivity gains. Purchasing power had to be increased without increasing wages by cutting importers’ margins, something that requires courage until today despite the urgency of the situation.
Jean-Yves le Drian was wrong when he said that Lebanon was the Titanic without the orchestra. It is enough to see the denial of some, one way or another.
Some people continue to live in denial, demanding a new government, as if there was still time. The red lines were crossed 3 months ago without anyone being moved at the time. Others still demand to find their funds without realizing that there is more. They imported, for 25 years, consumed, without producing wealth. On the contrary, it was necessary to invest in the economy, to produce added value, to produce jobs and not to produce debt, whether it is directly public via Eurobonds and Lebanese bonds or indirectly via certificates of deposits subscribed by private banks with depositors’ money with the Banque du Liban which, in turn, lent to the state. As for those in power for 25 years, it was in their interest, both literally and figuratively, to indebt the state. With a political class holding 43% of bank shares and therefore receiving significant dividends linked to this public debt. Finally, the clientelism of these same men who can no longer be described as political, leading to hire in public administrations, incompetent and incompetent.
Today, Lebanon is undeniably in financial bankruptcy, despite the claims of some. But this bankruptcy comes on top of several other bankruptcies, that of a political bankruptcy on the one hand and a functional bankruptcy at several levels. In the end, Lebanon after the civil war only lived under the illusion of a peaceful coexistence bought with international aid and the squandering of people’s deposits. A mirage to avoid conflicts like those we know today. with the hints of the functional confessionalism of the institutions made sacred by the Taëf agreements. It is hard for people to see that despite a significant number of governments over the past 25 years, nothing has changed. Always the same economic or financial policy was carried out. And for good reason, the ministers come and go but remain the real decision-makers, namely first-class officials such as the governor of the Banque du Liban, himself, Riad Salamé. The overhaul of the state does not pass through a new government in the end but through an administrative change no longer in form only but in substance.
The other denial is that of those who still have sufficient liquidity to continue “as if nothing had happened”, ignoring this crisis which affects others, this distress which does not affect them, to the point of lacking empathy for the suffering of others. Rats are the first to ultimately leave the ship once bad weather sets in and shortages become more frequent that even their money won’t be enough to fill.
Ultimately today we see a scene similar to the Titanic drama, with its orchestra continuing to play until the waters engulf the ship. Some pretend that the situation is not serious enough already, denying day after day the gravity of a crisis and of a situation which can only get worse.
