Lebanon was once famous for its large middle class, which after the end of the country’s civil war was well known for its habit of eating in fancy restaurants, embarking on skiing trips and buying clothes from major brands.
In 1997, the Lebanese lira was fixed at 1,500 to the US dollar, boosting investor confidence in the country’s financial institutions and making a middle-class lifestyle affordable for many.
Unhappily, this prosperity has now disappeared, and over the past three months two-thirds of Lebanon’s GDP has vanished as a result of the depreciation of the currency by 60 per cent. Lebanon’s financial system, once a pillar of the country’s economy, now lies in ruins.
Today, Lebanon has debts on a major scale, and a financial crisis reared its ugly head in late 2019 when the country’s banks capped withdrawals, giving rise to nationwide anti-government protests and a severe shortage of dollars.
A large section of the country’s population is now on the edge of food insecurity or even famine, with some middle-class groups in danger of joining it beneath the food poverty line.
Country director and representative of the UN World Food Programme (WFP) in Lebanon Abdallah Al-Wardat has warned that a million Lebanese are in danger of dropping under the food poverty line in 2020, with the WFP preparing emergency food aid in support of some 50,000 Lebanese families suffering from the economic crisis.
“Based on negative GDP per capita growth projections for 2020, the World Bank estimates the prevalence of poverty in Lebanon will rise to 45 per cent in 2020 from 37 per cent in 2019. Likewise, extreme poverty (also known as food poverty) is expected to affect 22 per cent of the population, up from 16 per cent in 2019,” Al-Wardat said.
“According to these estimates, Lebanon could count as many as 335,000 poor households in 2020 (out of four million residents), including 163,000 households (close to one million individuals) under the food poverty line,” he added.
Al-Wardat’s warning words were mild compared with those of the country’s Prime Minister Hassan Diab, however.
In an article in The Washington Post on 20 May, Diab said that Lebanon was on the verge of a food crisis and that many Lebanese had already stopped buying meat, fruit and vegetables and may soon find it difficult to afford bread.
“The price of imported food has more than doubled since the start of the year,” Diab wrote, and “more than half of Lebanese food is imported.”
“Eighty per cent of our wheat has been coming from Ukraine and Russia. Last month, Russia suspended wheat export as a result of Covid-19, while Ukraine is considering a similar move,” he added.
Lebanon’s mountainous terrain makes it difficult to grow wheat domestically, unlike in neighbouring Syria.
Diab warned that the food crisis in Lebanon could spread to other countries in the region and called for attempts at restricting food imports to be resisted. He demanded that the US and EU set up an exceptional fund to help the Middle East as a whole avoid an acute food-related crisis.
The Lebanese government has been unable to curb the rising prices of food commodities. Many merchants are protected by their sectarian leaders, and the rising prices reflect the collapse of the national currency.
Officials say that local food production is minimal, and what manufacturing there is relies on imports of raw materials. “As a result of decades of political mismanagement and corruption, there has been a dramatic lack of investment in our agricultural sector,” Diab said.
“Because of Lebanon’s financial setup, it was cheaper to import food than to produce it locally, although our country is blessed with water, sun, a rich soil and talented farmers. More than half of Lebanese food is imported, which seriously endangers our food security.”
Lebanon’s financial policies following the civil war weakened the country’s agricultural and industrial production, raised wages and reduced the competitive edge of domestic products, contributing to decreasing exports and encouraging more imports.
The process was financed through increasing the interest rates offered by Lebanese banks, with these attracting foreign deposits and then lending them to the government at high rates of interest, resulting in the accumulation of public debt.
Despite the country’s abundant water, the high costs of labour and the focus on the services and tourism sectors make Lebanese agriculture uncompetitive. However, there have been attempts to revive the agricultural and industrial sectors.
A number of non-governmental initiatives have been launched, such as the Habq Movement which encourages a sustainable economy and the cultivation of crops. More than 100,000 hectares of land in Lebanon have not been tilled for 20 years, according to a study by the country’s National Civil Energy Organisation.
The government’s role in this area is almost non-existent, however, with Agriculture Minister Abbas Mortada saying only that he intends to introduce a bill in the Lebanese parliament to impose taxes on non-cultivated land.
But this is unlikely to solve the problem of the lack of domestic agricultural capacity and Lebanon’s reliance on imported food in the absence of other measures.
*A version of this article appears in print in the 4 June, 2020 edition of Al-Ahram Weekly