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Lebanon Besieged By Bread, Medicine, Fuel Crises

Lebanon Besieged By Bread, Medicine, Fuel Crises

Saturday, 5 October, 2019 - 08:30
A gas station closes during a protest against tight supply of dollars in Beirut, Lebanon September 18, 2019. REUTERS/Mohamed Azakir/File Photo

While three decades have passed since the end of the civil war in Lebanon, the country still suffers major crises resulting from the lack of proper infrastructure for electricity, communications, water, waste, and transport.

But the current severe financial and economic deterioration has put Lebanon on the edge of an abyss.

As usual, the state resorts to temporary and “patchwork” solutions, which anesthetize the situation for a few months, before a new problem emerges elsewhere.

Today, three major crises are menacing the Lebanese people’s living conditions. The fuel, with calls for an open-ended strike by owners of fuel stations as of next week; the possible halt of operation at bakeries, and a very dangerous problem threatening the import of medicine.

The crises are all linked to the rise in the value of the US dollar against the national currency, because traders buy the goods in USD and sell them to the consumers in Lebanese pounds, amid the Central Bank’s inability to control the game.

The union for fuel distributors and gas stations in Lebanon decided to hold an open-ended strike as of next Monday unless the ongoing communications result in solutions that satisfy the sector.

The Union members met on Friday in Beirut and decided to give the government a deadline of 48 hours, ahead of a warning strike on Monday.

In remarks to Asharq Al-Awsat, Sami Brax, the head of the Syndicates of Gas Station Owners, said: “Companies will stop Monday distributing fuel to gas stations, which will deprive them of a single drop of gasoline.”

“The union exerted mighty efforts with Prime Minister Saad Hariri to reach a solution, and to convince the distributing companies to pay the price of fuel in Lebanese pounds,” he noted. “We will not accept to continue to buy fuel in dollars and sell it to consumers in Lebanese pounds at the fixed price determined by the Ministry of Energy.”

The curse of the dollar exchange rate against the Lebanese pound was not only limited to fuel but also reached bakeries, portending a bread crisis.

“The current economic situation, especially the monetary situation, has negatively affected the work of bakeries. It has become difficult for the owners of these institutions to pay their dues in US dollars because of the lack of this currency in the markets,” Kazem Ibrahim, the head of the Union of Bakeries, complained.

In a statement, he said that bakeries were selling bread and its derivatives in the Lebanese pound, while they must pay for the flour and other substances in USD.

“Importers deal with foreign currency only, which causes major losses incurred by owners of bakeries due to the conversion from LBP to USD,” he explained.

“The Union warns all officials that the bakeries’ owners might be compelled to cease work,” he affirmed.

Economic Expert Dr. Elie Yachoui said that the circular issued by the Governor of the Banque du Liban, Riad Salameh, in terms of securing financing in dollars for three basic commodities - fuel, medicine, and flour - was not commensurate with the nature of the work of importers.

He told Asharq Al-Awsat that the circular “requires the importer to declare all the goods he wants to import, while the importer secures his orders from abroad in installments.”

“The circular of the central bank is an explicit recognition of the fall of the lira exchange rate” against the USD, he remarked.

The ongoing crisis was the focus of a recent meeting between Industry Minister Wael Bou Faour and the head of Beirut Traders Association Nicolas Chammas.

“The way out of the crisis is through economic dialogue… The current economic approach cannot be sustained. We need a radical change in the approach,” Bou Faour said.

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