Lebanon: The economic implosion is over and done, the established oligarchy tries to save its privileges in front of a weary population 1
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Janos Fernandez
Monday 27 July 2020 Last update on Monday, July 27, 2020 At 9:27 AM

Since the Cedre conference (Economic conference for the development of Lebanon through reforms with companies) organized in 2018 and whose aid has never been released due to the lack of reforms necessary for financing, the country has plunged into an economic and social slump rooted into the financial practices of an oligarchy adept at exploiting a system marked by corruption and small arrangements between friends.

 
 
At the origin of the current situation, the debt resulting from the reconstruction after the 1975-1990 civil war.
 
To revitalize an economy ravaged by the conflict, Lebanon has focused on tourism and investments from Gulf countries, themselves dependent on the oil markets, a sector notoriously permeable to the international political and security context. Exacerbated by patronage and endemic corruption, the reconstruction resulted in decaying public services (electricity thus engulfed half of the debt between 2008 and 2017 according to the World Bank) and in public debt reaching 170% of GDP at the time these lines are written.
 
To this must be added an indexation to the dollar maintained since 1997 at 1,507 pounds per dollar. However since 2019 the shortage of dollars and restrictions on banking operations have only depreciated the Lebanese pound which finally reached on the parallel market a rate of 4000 for 1 in April 2020.
 
To this artificial and largely gangrenous system have been added political crises in rapid succession since 2005: assassination of President Rafic Hariri, division between two pro or anti-Syria camps and Hezbollah, leading to attacks and a presidential vacancy between 2014 and 2016.
 
The consequences for the Lebanese people are of course dramatic, incessant flood of layoffs, store closings, unmanageable inflation on daily products … Currently more than half of the population lives below the poverty line and has expressed their dissatisfaction in the street since September 2019, demanding the departure of the ruling class.
 
But even there, the breathlessness is felt and the Lebanese no longer perceive solutions to their situation.
 
The last possible recourse is the establishment of an agreement with the IMF.
 
But here again nothing is simple, because international intervention is only possible at the cost of a structural reorganization of the country. However, the oligarchy in place is doing everything possible to slow down and block the process in order to keep its hard-stolen privileges …
 
Thus the sums “disappeared” from the banking system are estimated at $ 85 billion, a figure which is vehemently contested by the Central Bank of Lebanon. The banking association has also refused the financial restructuring proposed by the IMF and the state. Furthermore, the envisaged reforms require a vote by the Parliament, which should take place in the coming days.
 
But then again, the political situation should complicate the progress of the reforms, knowing that the current government is supported by the Hezbollah camp but enjoys no real popular support. Daunting task then to unite the factions around the interest of the nation …
 
However, $ 20 billion from the IMF are at stake, but even the representatives of this institution, however known for its reserve, have already expressed their weariness. Director Kristalina Georgieva said that no progress in the negotiations had been recorded. Two Lebanese negotiators abandoned talks, the country’s chief financial officer resigned in late June.
 
In the front line of the dossier for France, whose influence is lessened by the crisis, the Minister of Foreign Affairs Jean-Yves Le Drian must go to Lebanon to formalize financial aid for French-speaking schools, traditional support for the influence of France In the region.
 
We remember that the latter addressed Lebanese leaders on July 8 with these words spoken in the Senate: “Help us help you, damn it! “. This sentence expresses the level of tension and dismay that the situation is causing internationally.
 
As for the Lebanese themselves, they seem to have run out of strength, the protest on the street is dwindling more and more, as are their hopes and their food, while their leaders try to keep the best share of a cake which has been feeding the same guests for over twenty years.