As Beirut residents confront their ruined city, it’s reckoning time for Lebanon’s parasitical and corrupt elite and their foreign backers, writes Susan Ram

Anger, along with shock and grief, reigns in Beirut following the colossal explosion that blew the city apart early in the evening of August 4, 2020.

With the death toll mounting (135+ at the time of writing), thousands injured and unknown numbers of people lying dead or injured beneath the rubble, residents of the port city now confront the devastating consequences of the detonation of 2,750 tonnes of ammonium nitrate, illegally stashed away in a sea-front hangar since 2013. 

Perhaps no event could symbolise more graphically the destruction, degradation and naked pillage to which Lebanon has been subjected by a parasitical and corrupt elite and its foreign backers. 

“This is a catastrophic regulatory failure because regulations on the storage of ammonium nitrate are typically very clear,” notes Andrea Sella, Professor of Inorganic Chemistry at UCL “The idea that such a quantity would have been left unattended for six years beggars belief and was an accident waiting to happen.” 

It takes but a moment to set off a concentration of highly combustible chemicals. Those who have brought about Lebanon’s economic and social implosion have done so, steadily and methodically, over a quarter of a century. On the day the deadly chemicals blew Beirut apart, Lebanon was already well down the road to economic and social collapse.  

Meltdown

Hyperinflation of eye-watering proportions is one dimension of the meltdown. Since September 2019, Lebanon’s national currency, the lira, has lost between 80 percent and 90 percent of its value, with the acutest phase occurring in the month preceding the explosion. The consequences can be summed up by a simple example; if your salary last month amounted to the lira equivalent of US$ 500, today your earnings have plummeted to the equivalent of US$ 75. 

Prices of basic commodities are soaring: meat which last month could be purchased for $9 per kilo now sells at $42 per kilo. Currency collapse has led to severe shortages of basic food, much of which is imported through the port at Beirut (Lebanon imports more than 80 per cent of its daily needs). Stocks of wheat held in warehouses have been wiped out by the detonation, intensifying the food crisis. Bread queues have appeared in Tripoli and other urban centres.  

A banking system in free fall is another element of the nightmare. Citizens who have saved money in lira in banks have seen a lifetime’s savings wiped out. Access even to those depleted resources has been severely curtailed, with only those possessing dollar accounts permitted to withdraw funds.  

The impact on the country’s infrastructure has catastrophic. A crisis in electricity generation has resulted in most parts of the country receiving only two to three hours’ supply per day — in the unimaginably fierce heat of summer. The health system, too, lies broken, with even private sector hospitals closing doors. 

The arrival of Covid-19 could only exacerbate this pre-existing crisis. Although official statistics point to a relatively limited number of cases (5,417) and deaths (68), the lockdown which ran from mid-March to the beginning of June resulted in hundreds of thousands of workers losing their jobs. Currently, the national unemployment rate stands at 35 per cent. Hardship has been intensified by the fall-off in remittances from the Lebanese diaspora, whose jobs and wages have been affected by international lockdowns and economic slumps. 

Beyond those at the top — financiers, bankers, bureaucrats, snout-in-the-trough politicians — almost everyone in Lebanon has been caught up in the maelstrom. By some estimates 75 per cent of the population now need aid; people are to be seen begging on the streets, bartering goods, and scavenging in garbage dumps. Among the most vulnerable are the nearly two million Syrian and Palestinian refugees who survive in Lebanese camps. Domestic workers from Africa and Asia, estimated to number 250,000, constitute another highly vulnerable community. 

A new element is the way in which Lebanon’s formerly prosperous middle classes have become sucked into the downward spiral. This is fuelling an exodus from the country by those still able to access funds.  

Debt–induced corruption

It’s important to understand the role played by chronic debt in Lebanon’s economic collapse. In Lebanon, one of the world’s most indebted nations, corruption induced by debt has reached gigantic proportions, and constitutes the primary source of ‘lawful’ enrichment. 

As the historian Hicham Safieddine points out, there’s nothing new about using public debt as a means to corrupt governmental administration, avoid taxing the rich and drain the public purse: 

“In the 20^th century, international financial institutions took the lead role in imposing austerity conditions on Global south countries in return for securing loans. These conditions followed a basic logic: cut down on government spending in order to keep servicing the debt… Exorbitant debt payments would lead to reduced public investment, social turmoil, de-development, and increased vulnerability to foreign interference.” 

Since the end of the country’s civil war in 1990, Lebanese rulers have relied on internal debt – held by local private banks in two currencies: the lira and the US dollar – to finance real estate booms and infrastructure. At the turn of the century, the government reached out to international markets and began borrowing in dollars (Eurobonds) under French political patronage. 

The denomination of a good chunk of Lebanon’s public debt in a foreign currency means that any devaluation of the local currency would cause the dollar portion to skyrocket.  In short, catastrophic collapse has been waiting in the wings. In March 2020, the current Lebanese government defaulted on a $1.2 billion Eurobond to shore up its dwindling foreign currency reserves.

Lebanon’s debt currently stands at around US$ 90 billion: roughly 170 percent of GDP. 

Fighting back

In October 2019, hundreds of thousands of people across Lebanon took to the streets in protests that eventually swept the then government from power. 

At the start of June this year, following the lifting of lockdown, thousands were back on the streets. Given the multiple ways in which Lebanon’s banks have contributed to the crisis, it was not surprising to find them singled out by protesters, some armed with firebombs. Demonstrators burned tyres and dumpsters and blocked arterial roads. In the southern city of Sidon, protestors vented their anger on the director of Lebanon’s central bank, Riad Salameh: a long-term player with close ties to Washington. 

In the wake of the cataclysmic events in Beirut, as reports of wanton negligence, of warnings missed or simply shrugged away mount by the day, anger is the order of the day for people the length and breadth of Lebanon. For millions who have nothing left to lose, this is the hour of reckoning.