The central bank of Lebanon recently made an announcement that seemed to hit the final nail on the country’s waning economy. For a while, subsidized fuel imports have been a lifesaver for the people and the economy. But now, as imports are halted, Beirut has plunged into darkness.
Just as experts predicted, fuel prices have increased dramatically. Today, a liter of 95 octane gasoline is going for 71,600 pounds which is about $47. As a result, the inflationary shock has rippled through the country, which has sparked soaring poverty levels.
The country’s electricity supply has dwindled, leaving Lebanon to endure 22-hour long power cuts, making daily activities difficult. Businesses, along with the country’s healthcare system, are crumbling, leaving many struggling to make ends meet.
For the majority of the population, electricity, driving and even basic transportation have become unattainable luxuries. Indeed, the crisis has seen the price of donkeys triple as the majority of the population switch to cheaper modes of transport.
The residents of Lebanon have been bracing themselves for the announcement made by the central bank since the beginning of the economic crisis in 2019. Officials raised the alarm that the subsidies, which aimed to shield the people of Lebanon from the crisis, were not sustainable. The World Bank called the poor management of the financial collapse a “deliberate depression”. Indeed, Beirut is hardly prepared for the consequences brought about by the liberation of fuel prices.
The central bank stood firmly by its decision, stating that the subsidies were being exploited by businesses. A state of panic commenced right after the announcement. This saw motorists camping in mile-long queues in their vehicles at pumps ahead of the dreaded price hike. The announcement also saw distributors scale down on their supply.
The ongoing economic crisis has nearly devalued Lebanon’s currency stripping it of 90 percent of its value. Four out of five Lebanese are left languishing below the poverty line. Alarmingly, the country is running out of everything that facilitates decent living, from medicine in pharmacies to bread.
Samir Geagea, the leader of the Lebanese forces party, while in his heavily secure compound in the town of Maarab, Mount Lebanon, admitted that the country has indeed hit rock bottom due to the downward spiral of the economy. Geagea also cautioned against re-introducing similar policies to the civil war era and instead is calling for early elections.
While Geagea believes that the possibility of a reoccurring war is unlikely, civil unrest is likely to arise given the ongoing political paralysis and rising level of distrust in the community.
What’s more, Lebanon’s crises have revealed fractures in Hezbollah, a designated terrorist organization that holds significant power in the Lebanese government.
When asked about Hezbollah’s rejection of holding early elections and its political dominance in Beirut, Mr. Geagea said that the militant group has faced unforeseen challenges and is showing many cracks and vulnerabilities. Angered residents of the southern town of Shwaya have this month seized one of Hezbollah’s rocket launching vehicles as it was trying to engage in cross-border attacks on Israel. This is particularly interesting given that for decades the local population often turned a blind eye and did not challenge Hezbollah’s attacks on Israel.
What’s more, Hassan Nasrallah, the leader of Hezbollah has purchased Iranian oil which, in his opinion, will ease the crippling shortages in Lebanon. Hezbollah has been warned if it proceeds with the purchase, stating that they are risking sanctions on a country whose economy has been in ruins for two years. This would, indeed, push Lebanon further into disarray, exacerbating the country’s already struggling economy.
In an interview on Friday, Najib Mikati, prime minister-designate, said that he was against anything that would harm Lebanon’s interests, but also asked the ones critiquing purchases of Iranian oil to help with the fuel crisis so that the country does not have to resort to using Iranian oil.
Indeed, the steep decline in basic services within Lebanon is set to have long-term implications that include displacement, low levels of education, poor health, and rampant poverty. Permanent damage to human capital would be nearly impossible to recover. What’s more, the current crisis in Lebanon is creating immense vulnerabilities within Hezbollah. As the Lebanese community becomes increasingly indignant with Hezbollah, the terrorist organization is losing support and power, which could result in the toppling of the influential organization.
Author: Steven Friedman
He is an American-Israeli citizen, former business consultant, and now writer. He focuses on topics that address anti-Semitism and Israel-Diaspora relations.