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What’s fueling Lebanon’s recent antiestablishment protest movement?
Since Lebanon’s 1943 inception, powerful and corrupt sectarian elites have monopolized political power and a disproportionate share of the economic pie, using patronage networks to maintain followers. Beirut’s political system apportions positions and power based on sectarian affiliation, and the inability of leaders from different sects to come to a consensus hurts the government’s ability to address challenges.
Today, the Lebanese suffer from many afflictions: an insufficient voice in government, a lack of government transparency, limited economic opportunities, corruption, nepotism, and poor quality of life. Lebanon’s infrastructure is crumbling, and the Lebanese experience daily electricity outages, garbage piled up in the streets, sporadic water cuts, and environmental degradation. Since October 2019, protesters have taken to the streets to blame the sectarian political system for their economic plight and demand a complete replacement of Lebanon’s political system and leadership.
The protests ceased as the country went into lockdown over the pandemic of a novel coronavirus disease, COVID-19, but difficult living conditions exacerbated by the COVID-19 response reignited the protests in late April. Lebanon is suffering what is likely its worst-ever financial crisis. There is a dollar shortage, which in turn has seen the Lebanese pound lose more than 50 percent of its value on parallel markets in the past six months. In that time, banks—some of which are on the verge of collapse—have limited withdrawals of the Lebanese pound and entirely phased out withdrawals in the foreign currencies the Lebanese use to pay a variety of obligations, such as mortgages and tuition.
Coronavirus-related restrictions have added to systemic economic problems, pushing the unemployment rate to over 30 percent and reducing incomes and economic activity. Multiple humanitarian organizations have warned of food insecurity.
How has the new government attempted to address grievances?
After months of demonstrations but before the worst effects of the coronavirus response, the government resigned and a new one was formed. The new government—led by Prime Minister Hassan Diab—was selected, without even the cover of an election, by the same sectarian power brokers that have long determined the composition of Lebanese central governments. The mixture of policy experts and political appointees has failed to gain public confidence or head off further economic damage.
The new government had done little to respond to the debt and currency crises before being distracted by the coronavirus. It defaulted on Eurobond debt in March and announced its intention to default on more debt and seek to restructure it. Additionally, it looked to the international community, including the International Monetary Fund (IMF), for emergency funding and technical assistance. Finance Minister Ghazi Wazni announced that the country needs $25 billion to $30 billion in assistance over the next five years. Lebanese leaders also began discussing a plan to restructure the overall economy to diversify its sources of revenue.
With demonstrators back in the streets despite COVID-19 restrictions, it is evident that the public has little faith in the government’s ability to manage the country’s financial crises or reform itself. It remains to be seen how much more pressure ordinary Lebanese can apply to the government, and how much more hurt they can endure as the government attempts to reach a consensus on the painful steps needed to put the economy on a more solid footing.
Can Lebanon solve these problems on its own?
Lebanon’s draft rescue plan acknowledges that “it is difficult to imagine Lebanon coming out of such a deep crisis without the support of the international community.” Beirut lacks foreign reserves to back up its extensive debt and historically has lacked the strong leadership capable of imposing austerity and reforms, such as an official devaluation of the local currency, a tax hike or a reduction in subsidies, and a restructuring of the bloated public sector. Moreover, given the debt default and Lebanon’s record of corruption, Western states and private creditors likely are understandably reluctant to invest in the country. Gulf Arab states that historically supported Lebanon have withdrawn their support because they oppose the regional behavior of Lebanon-based Hezbollah, the Iran-aligned Shiite Muslim militant group and political party, and they are unlikely to restore it in the near term.
The country’s postwar economic record is instructive. Lebanon maintained an uneasy equilibrium between the sectarian factions that fought the country’s bitter civil war (1975–91), and this balance required graft, remittances from abroad, and a semblance of economic growth to survive. Remittances pay for the pound’s peg to the dollar, which was initially put in place in 1997 to provide currency stability while the government enacted economic reforms. But instead of following through on reforms, the Beirut government “financed artificially inflated salaries and lifestyles for over twenty years.”
Lebanon’s only answer is to commit to restructuring—irrespective of the pain it causes to the general public and to many stakeholders, particularly overindulged politicians—as a precondition for receiving the external funding it so desperately needs to stabilize the economy.
There is some uncertainty, however, about whether Lebanese leaders can make the difficult decisions necessary. Hezbollah reportedly opposes IMF programs and, with the crisis in full bloom by March, Wazni also seemed doubtful of whether Lebanon would accept standard IMF terms for a deal and whether Lebanese political consensus could be reached.
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