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Monday, 10 August 2020

Economic conditions likely to prompt second wave of protests in Lebanon

Bassem Aly , Thursday 11 Jun 2020
Lebanon
Demonstrators gather during a protest against the government performance and worsening economic conditions, in Beirut, Lebanon June 6, 2020 (Photo: Reuters)
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In October last year, protesters took to the streets in Lebanon to demonstrate against Saad Al-Hariri and his ruling coalition. Saturday saw similar demonstrations. In fact, they had not completely stopped since last year. Nonetheless, social and economic conditions, in addition to demands for political reforms, have pushed many Lebanese to resort once again to street action.

Saturday’s protests involved clashes between security forces, who fired tear gas and used rubber bullets, and hundreds of protesters who threw rocks and destroyed shops in the capital, Beirut. Moreover, supporters of Hezbollah clashed with some demonstrators, as the latter called for the disarmament of the Shia group. Only an intervention by military forces ended the fight.

The Lebanese economy has been suffering for some time, and the coronavirus pandemic has worsened the crisis. The Lebanese pound has lost about 60 percent of its value against the dollar and the country has a debt-to-GDP ratio of more than 150 percent. Thousands of businessowners are suffering in the import-based economy and more than a third of the population of 6 million are out of work.

The first line in an article written by Prime Minister Hassan Diab for the Washington Post in May warns that Lebanon is “facing a dramatic challenge that seemed unimaginable a decade ago: the risk of a major food crisis.” Diab stressed that “many Lebanese have already stopped buying meat, fruits, and vegetables, and may soon find it difficult to afford even bread.”

He noted that the coronavirus has significantly harmed the country’s food imports, referring to the example of wheat, 80 percent of which Lebanon gets from Ukraine and Russia. COVID-19, Diab said, has pushed Russia to suspend wheat exports and Ukraine to consider taking a similar measure.

“The United States and the European Union should establish a dedicated emergency fund to help the Middle East avoid a severe food crisis; otherwise, starvation may spark a new migration flow to Europe and further destabilize the region,” Diab wrote.

Lebanon is also seeing a $10 billion loan from the International Monetary Fund (IMF), and both parties are in talks to finalise the deal. Yet, regardless of the terms of the agreement, Lebanon will have to take some painful economic decisions.

Earlier this month, George Chalhoub, Diab’s advisor on financial affairs, told CNBC that the government in Lebanon is “not under any illusion that the coming months are going to be easy for anybody.”

“Negotiations have been very open, very candid. And I would say probably there is a certain sense of cautious optimism on our part. It seems like there is a little bit of give-and-take between the negotiating team in Lebanon and the IMF team,” stated Chalhoub.

Ghazi Wazni, the finance minister, took it even further by revealing that Lebanon is ready to float the pound once an agreement with the IMF is finalised. The IMF, Wazni said, “always asks” for a liberalisation of the exchange rate. The good news is that Wazni said that the government had requested a transitional period ahead of a flotation.

These developments explain a huge part of the public anger in Lebanon, as well as the people’s motives to keep protesting. But there are differences between last year’s demonstrations and this year’s “imminent” ones, said Sarah El-Richani, assistant professor of mass communications at the American University in Cairo.

El-Richani agrees that the government’s “slow response” to rising unemployment and poverty rates and soaring food prices serves as “the primary reason behind any protests.”

“However, in light of the nature of the current council of ministers, the traditional political rivalry between March 14 and March 8 may also rear its head in forthcoming protests,” El-Richani added.

“In October, the cabinet was a grand coalition government with most political actors represented; currently the cabinet, though purportedly a technocratic government, represents one political pole (the so-called March 8 coalition). Protests therefore would include March 14 partisans and would see a return to the traditional political and sectarian divide,” she said.

The 2019 protests in Lebanon led then-prime minister Saad Al-Hariri to resign, a move that led to the collapse of the whole coalition government. The country went almost three months without a new government; it was not an easy mission to find a quick replacement for the Sunni leader.

Diab had the support of the Iran-backed Hezbollah movement and its allies, such as President Michel Aoun, for the premiership. Al-Hariri and his Future movement decided to not join the government. The same position was adopted by the anti-Hezbollah Christian Lebanese Forces party and Druze leader Walid Jumblatt’s Progressive Socialist Party.

Economic reforms have been on Diab’s agenda since day one, as he believes that Lebanon is in need of foreign aid to end the “begging for dollars” that currently takes place at Lebanese banks. The impact of potentially new, large-scale protests on the government’s future is therefore something many in the country and the wider region will be keeping a close eye on. 

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