From gas lines to medicine shortages, Lebanon is suffering the fallout of years of political and financial corruption.
Left Beirut on the anniversary of the explosion that tore a giant gash through the center of the city, killing hundreds of people and shattering Lebanon’s often-tested faith in itself. The third-largest explosion ever recorded (exceeded only by the bombs dropped on Hiroshima and Nagasaki) was the outcome not of enemy action but of sheer administrative incompetence. Despite all the warnings of port inspectors, those in positions of authority had allowed thousands of tons of abandoned, unstable, and highly explosive ammonium nitrate to deteriorate for years in a warehouse in the middle of Beirut, until the fire that set it off. Not a single official has yet been held accountable.
The port explosion was a self-inflic
ted wound resulting from—and capturing the essence of—the years of political and financial corruption that have come to saturate Lebanese life. That is why, even in a country long accustomed to violence, it was the last straw for so many. War is one thing; devastation carelessly inflicted by a collection of morally bankrupt politicians feeding insatiably on the wrecked carcass of the nation is quite another. The customs officer at Beirut airport asked me the same forlorn question he no doubt asks everyone whose Lebanese passport goes through his hands these days: Are you emigrating, too?
When I was a child growing up in Beirut in the 1970s, it took just three Lebanese liras to buy one US dollar. During my visit this summer, the lira sank at one point to 24,000 to the dollar. This depreciation sums up at least one aspect of the current crisis: The result of years of past malfeasance, it sets the stage for new suffering in the present and into the future.
For years after the lira’s postwar depreciation, the Lebanese central bank stubbornly held the currency to a level of 1507 to the dollar by artificially boosting demand: It sold dollars to buy liras on the currency market. It thereby sustained the illusion of Lebanon’s (apparently) enviable lifestyle by keeping imports much less expensive than they ought to have been had the lira been allowed to lose its value. At first, these dollars came from the central bank’s own foreign currency reserves. But those reserves were gradually depleted, both by this practice and by the government’s neoliberal economic policies and heavy borrowing (much of which was diverted from various state projects and into the pockets of the aforementioned venal politicians and their business associates). The central bank governor turned to more creative schemes of financial engineering, offering ever higher interest rates to entice Lebanese commercial banks to lend dollars to the central bank; in turn, the commercial banks obtained these dollars by offering high interest rates to individual depositors. The dollars flowed in, not only from locals but ultimately from the far-flung and wealthy Lebanese diaspora.
At a time when I was earning a quarter of a percent in my US savings account, I could have shifted some dollars to a Lebanese bank and made a solid 8 percent on a humble savings account that, like all savings accounts, ought to have been safe compared to the ups and downs of the stock market. Right? Wrong. In 2019, the Lebanese government defaulted on one of its debts for the first time in the country’s history; the rest of its debts were downgraded to junk bond status and the ensuing panic spread through the market all the way down to the small depositors who ran to their banks to retrieve their dollars.
But their dollars were gone: The now-barricaded banks had lent them to the central bank, and the central bank had spent them over the years, buying liras to prop up an artificially inflated exchange rate. The institution that was supposed to have been the nation’s lender of last resort had turned into something more akin to a shell company running a collapsing Ponzi scheme out of an abandoned warehouse in an insalubrious part of town. A hundred and 30 billion dollars’ worth of deposits had vanished into thin air.
Well, technically the money didn’t vanish: It still exists on balance statements, but depositors can access only 200 of their dollars a month, and then only in liras and at an official exchange rate nowhere near the rate at which liras actually change hands for dollars in the real world. During a period in late 2019 in which the commercial banks—not the government—had illegally imposed capital controls, an estimated $20 billion to $30 billion surreptitiously left Lebanon. The big politicians and businessmen, of course, and no doubt most of the bank owners as well, were able to transfer their own money to the safety of overseas accounts. Everyone else was told to expect some kind of “haircut” on what was left.
The loss of family savings accounts was bad enough, but the damage to the whole economy was worse still. Instead of depreciating over time, allowing people to adjust and encouraging domestic production rather than imports, the lira collapsed and took the already struggling economy with it. As it started to fall through 5,000 and 10,000 to the dollar and on to the high teens and low twenties, everything that had to be imported into Lebanon—and Lebanon imports just about everything it needs other than fruits and vegetables—became more and more expensive. Every dollar that had to be paid to a foreign supplier took more and more liras to provide, and prices followed suit, doubling and even tripling over the past year. In fact, inflation is now best measured in months, not years. One recent report found that the cost of basic food items increased by 50 percent just in the first half of July; a month’s worth of food now costs an average family five times the monthly minimum wage. And that’s not to mention fuel, water, medicine, and electricity, all of which have to be paid for as well.
Meanwhile, as prices keep rising, people’s incomes remain the same, which is to say that everything becomes increasingly unaffordable to them. A university professor who had once earned the equivalent of $80,000 now earns the equivalent of $6,000; a government clerk who had once been able to support a family now makes the equivalent of $100 a month; a policeman even less.
For years, the Lebanese government had subsidized the cost of imported essentials, such as wheat, fuel, and hundreds of essential medicines, to keep them affordable to ordinary people. As the dollars dwindled away and imports became more expensive, the subsidies in turn started to be lifted, and the prices, again, followed suit—or else the imported items disappeared altogether. Many medicines, including even paracetamol to relieve Lebanon’s many headaches—are altogether unavailable now. When my son developed a stomach bug this summer, I had to go on a tour of a dozen local pharmacies to track down the very basic medications he needed, and even then with only partial success. The gradual disappearance of tampons and pads is leading to a kind of period poverty. A girl died of a scorpion sting last week because there was simply no dose of anti-venom to be found.
When I arrived in Lebanon earlier this summer, the standard 20-liter “tank” of gasoline cost 40,000 liras; when I left, it was past 75,000 liras and still climbing. As shortages (made worse by hoarding, or by smugglers’ taking advantage of the remaining government subsidies and running fuel intended for Lebanese cars over the border into Syria, where it could fetch three times the price) began to take hold, people had to start queuing up for hours to buy a meager ration of gasoline. Often there was no gasoline to be had in any case. And just this week, it was announced that the fuel subsidy would be lifted altogether, sending the price of 20 liters up almost five times, to 336,000 liras. Filling a car up all the way, to 12 gallons or so, will now require the equivalent of the minimum wage for an entire month.
In a country without a public transportation system, that’s bad news; worse still is the shortage of diesel fuel, which is used to run private generators. Over the years since the civil war, a veritable mafia of generator operators had set up a shadow electrical system to make up for the persistent outages in the state-run electrical grid. As imported diesel started to become scarcer and more expensive, the generator mafia started demanding more and more money from their captive subscribers, while supplying less and less electricity each day. Even with access to a generator subscription, it’s not unusual to have power cuts amounting to several hours a day. The cost of a five-ampere subscription—enough to power a few lights and maybe a fan—hit 1 million liras this summer, almost double the monthly minimum wage. When I left, a 10-ampere subscription was going for 4 million liras: That’s a significant chunk of even a solidly upper-middle-class income. If you don’t like—or simply can no longer afford—such a subscription, your only resort is to fall back on the government electricity supply, which covers two or perhaps three hours a day in Beirut. Even battered and besieged Gaza receives up to eight hours a day (which is already disastrous enough).
Of course, Lebanon’s electrical grid, like the rest of the country’s essential infrastructure, has been repeatedly bombed by the Israelis (who make no secret of their intentional targeting of such civilian objects, in grotesque violation of international law). But, despite the Israelis, billions of dollars have been allocated over the years to repair or rebuild Lebanon’s electrical capacity, and yet there is little to show for it. The money found its way, like so much of the nation’s wealth, into the pockets of the politicians and their contracting friends. One newspaper recently found that Turkish generator barges that had been moored offshore and plugged into the grid as a stopgap measure had already cost $1.5 billion—money that could have been used to build two or three permanent power stations in the meantime.
And the Turks unplug their barges any time there’s a delay in payment from the state.
As people gather to mourn the devastation inflicted on Beirut a year ago, their sources of hope are dwindling even more rapidly than their material circumstances are deteriorating. It’s true that Lebanon remains afflicted by what a friend of mine once referred to as the tyranny of geopolitics. Having Israel on your southern border is like having a heavily-armed neighbor prone to berserk fits. The Saudi-Iran struggle for regional hegemony is played out partly in Lebanon, and meanwhile the Turks and the Gulf princelings are idly playing games with various Lebanese factions, trying to set one against another. The United States, as ever at the behest of the Israelis, is tightening the screws of a financial embargo that, as with all American embargoes, never really hurts its supposedly intended target, in this case Hezbollah.
But the burden that Lebanon’s people feel the hardest is the one imposed on them not by foreign powers but by their own politicians, who maintain their grip on power partly as a result of the deadlock in regional power dynamics, and whose only motivation is self-enrichment at any cost. The spectacle of the rich getting richer at the expense of the poor is hardly unique to Lebanon, but in a small country the rich have more presence and clout than in a large one, their private wealth amounting to a significant percentage of the country’s GDP. And while kickbacks and other forms of corruption are, again, not restricted to Lebanon, there isn’t even a revolving door between the worlds of government and investment. The government and the private tycoons are one and the same: With few exceptions, the decisions they make as politicians benefit them directly as businessmen.
As a matter of fact, there has been no government in Beirut for the year since the port explosion—a caretaker administration has been in charge instead. The previous prime minister designate was the witless son of the tycoon prime minister who had opened the door for the country’s plunge into its debt crisis in the first place; the current candidate for prime minister is another billionaire who made much of his fortune from the privatization of the country’s public assets. It’s as if a mugging victim calls for medical assistance only to find the mugger himself driving the ambulance, with a big grin on his face.
Lebanon is blessed with mountains and beaches that were (and ought to be) the pride of the Mediterranean; its cultural ancestry encompasses the Phoenicians, the Greeks, the Romans, the Crusaders, all of whom have left astounding archaeological remains that were (and could still be) the foundation of a thriving tourist industry to help sustain the economy; it has a highly educated, skilled, trilingual, and endlessly inventive population; its problems are all easy to identify and, at least in principle, easy to address. But, as Oliver Goldsmith once warned in a not entirely dissimilar context in his poem “The Deserted Village,” once the people lose hope, there’s not much left to go on.
Saree Makdisi is a professor of English and comparative literature at UCLA and the author of, among other books, Tolerance is a Wasteland: Palestine and the Culture of Denial, forthcoming from the University of California Press. You can follow him @sareemakdisi.
Originally published in the Nation