The Lebanese pound continued to plummet on the international exchanges this week, and it is now selling at 7,000 to the dollar after having stood at 1,500 to the dollar before the present crisis in the country started.
However, the fortunes of its national currency are only one of the problems facing Lebanon, with many saying that the country is at the edge of an abyss amid fears of possible famine.
The US newspaper The Washington Post cited sources this week as saying it was unlikely that the International Monetary Fund (IMF) would approve the $10 billion loan Beirut requested in February because of what it said was the Lebanese government’s failure to present a genuine programme of reforms against a background of deepening political divisions.
The reforms the government promised were “impractical” and would be impossible to put into practice owing to the lack of political agreement in the country, the sources, who spoke on condition of anonymity, said.
Meanwhile, many Lebanese are changing their pounds into dollars, eager to salvage what they can from the further depreciation of the national currency.
The pound has lost 78 per cent of its value since October, when the banks put a cap on withdrawing dollars, the main foreign currency used in Lebanon. Soon afterwards, they closed for several weeks in the first sign that the country was running out of foreign currency and the economy was plunging into a crisis.
Lebanon then went into lockdown for seven weeks in a bid to curb the spread of the coronavirus, complicating matters further. Reopening the country later put the brake on the rush towards an economic collapse that would threaten the stability of the troubled region.
Banks in Lebanon have now set the exchange rate of the pound at five different prices, including that used on the black market, considered the most accurate indicator of the true value of the national currency.
In the absence of a clear political path to the future and a sharply depreciated Lebanese pound, the public have lost their trust in the banking system of the country, with some retail outlets now accepting only dollars, said Nasser Al-Saidi, a former Lebanese finance minister now working as a financial adviser in Dubai.
The US and European sanctions against Syria have also deprived Lebanon’s neighbour of dollars, making Beirut the prime destination for Syrians seeking to pay for imports and adding more pressure on the demand for dollars in Lebanon.
“Government revenues came to a halt due to the lockdown and the economic downturn, forcing the Central Bank to print money to finance government expenditure, including inflated civil service salaries,” Al-Saidi said, adding that “the pound has lost its value, and we are entering into a tunnel with no clear exit.”
Lebanon imports more than 80 per cent of what it consumes, particularly of food items, the cost of which have almost doubled during the past year, according to government figures.
This situation has increased the threat of widespread famine. Even people who previously were well off are now striving to buy food after the pound lost 80 per cent of its value and food items became unaffordable.
Bread distributors in Lebanon decided to stop delivering to store owners on Saturday, driving people to head to central bakeries. Photographs of people cramming into bakeries in an attempt to buy bread circulated in the news and on social media.
Social media activists said that a loaf of bread could now reach 2,500 pounds, up from 1,500 pounds earlier.
The photographs of people crowding around bakeries brought to mind scenes from the country’s civil war, when Lebanese people lined up in queues for hours to buy a loaf of bread.
The situation has been made worse by the hegemony the Shia group Hizbullah and the Aounist Party associated with Lebanese President Michael Aoun have imposed on the government.
It is not expected that Arab and Western countries will extend a helping hand to Lebanon at a time when the Aounist Party controls the government, even if that government describes itself as technocratic.
At the same time, it appears the party’s attempts to appease the opposition are not paying off, and a national meeting of all the country’s political parties called by Aoun at the presidential palace in Baabda last week failed to lead to a breakthrough.
The majority of the political forces did not show up for the meeting, while Hizbullah and its allies were left alone in the face of the crisis. Jibran Bassil, head of the Free Patriotic Movement and son-in-law of Aoun, is being pushed to the fore amid talk of disagreements between Bassil and Hizbullah over the way out of the crisis.
In the middle of this tense atmosphere, the news broke of an explosion targeting the convoy of former Lebanese prime minister Saad Al-Hariri 11 days earlier. Al-Hariri’s office said on Monday that the Lebanese security forces were investigating the attack on the convoy that took place during Al-Hariri’s tour of the Bekaa Valley. There were no injuries.
The prime minister’s office said it had been Al-Hariri’s decision not to publish news of the attack due to the “tense atmosphere. Since there were no casualties, the prime minister preferred to wait for the results of the security investigation.”
Another incident that bodes ill for Lebanon is the court order banning US Ambassador in Lebanon Dorothy Shea from giving statements to the media after she said that Hizbullah was “obstructing” efforts to deal adequately with the economic crisis.
A judge in Tyre, a city with a Shia majority, said Shea’s statements had given “rise to sectarian, ethnic and political strife.” He ruled against any Lebanese or foreign media functioning in Lebanon interviewing Shea, setting the penalty for doing so at a “one-year ban from broadcasting and a $200,000 fine.”
The government rejected the court order, but at the same time criticised Shea’s statements.
Lebanese Minister of Information Manal Abdel-Samad tweeted that “I understand the keen concern of the judiciary with regard to the interference of some diplomats in the country’s internal affairs. But no one has the right to prevent the media from reporting the news and limiting media freedom.”
Shea told the Lebanese MTV channel that a senior official had assured her that the court did not have the authority to issue the ban and that the government would move to reverse the verdict.
The court ruling was a “sad attempt” to silence the media, Shea said, adding that the government should focus “on economic reform, [and] I hope everyone will get over this situation.”
*A version of this article appears in print in the 2 July, 2020 edition of Al-Ahram Weekly