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An Economic and Political ‘Corona’ in Lebanon?

An Economic and Political ‘Corona’ in Lebanon?

Saturday, 8 February, 2020 - 12:15

Weeks ago, the French Foreign Minister gave what seemed to be an obituary to Lebanon in light of its ongoing political and economic disarray. Worst of all, those in power are dealing with the revolution that broke out in every city in the country and reached 26 countries through Lebanese expats, as though it were merely a storm or a passing crisis!

When, immediately after the formation of the single-sided government led by Hassan Diab with no support from the Sunnis - as shown by the fact that he has not visited Mufti Darian - Jean-Yves Le Drian says: “The new government must put all of its effort behind implementing reforms that are needed if Lebanon is to survive, because this is the degree of the difficulty of the situation”, this simply means that Lebanon’s survival is on the line and that there is no alternative to real, radical and responsible reform if we are to avoid the danger of total collapse.

But the constant miserable question posed by the Lebanese is: Who will carry out these reforms, if decisions are taken by the politicians, who have gone about, for years, creating the dangerous crisis that is now threatening Lebanon’s survival. In other words, how could the disease become the cure, especially with a government that has a totally clear political direction; it came out of the womb of Hezbollah, which it says is a "salvation government." However, two weeks after its formation, it is clear it will not be able to save anything.

Two days ago, Assistant US Secretary of State for Near Eastern Affairs David Schenker, who is well aware of the realities in Lebanon, said: “The Lebanese economy is in a worse position than some think, and we believe that its foreign reserves are much less than what is reported.”

This comes amid two crises: the banking crisis, which has led to strict controls on deposits and is expected to get worse, and a debt crisis, as $1.2 billion Eurobond is due to mature in March. What makes matters worse is that the sum required of the Lebanese state that is mired with corruption will eventually be paid by the central bank, which means, in practice, by Lebanese depositors and not the state itself. Former Minister of Finance Ali Hassan Al-Khalil has previously announced on TV that there is no money in the treasury: not a Lira!

Because Schenker’s statement was issued in Tel Aviv, many were quick to link his statement to the naturalization of Palestinians as part of the “deal of the century”. However, regardless of the deal, the financial crisis that Lebanon is suffering from is fatal, and Secretary of State Mike Pompeo stated two weeks ago that "Lebanon will face a terrible financial crisis in the coming weeks".

All of this comes as no surprise and adds nothing to what we know of this miserable situation threatening to put Lebanon in the list of failed countries. Officials in Beirut admit as much. The resigned government confronted the revolution against corruption and theft with an honest admission that the situation is geared towards disaster. That is, especially that the government’s revenues have receded by 40 percent in the last three months and that catastrophic numbers have precipitated to the surface with the money meant for officials and salaries paid by this farm state to more than 300,000 employees, in addition to the public debt servicing, reaching 106 percent of revenues. This means that the electricity, healthcare, industry, import and food industries will not receive a single dollar from these massive sums of money that the central bank is asking to be secured, i.e., from the peoples’ money.

The government announced bankruptcy and is headed towards a disaster. Hassan Diab did not hesitate to say, “We are confronting an economic crisis”! Minister of Finance Ghazi Wazni also rushed to say, “If the situation continues as it is, we are walking towards collapse”.

However, what is needed is not for the Lebanese to hear this eulogy, what is required is that Diab delineates in his government’s statement what he will do to confront this disaster and that Wazni and other ministers announce how they will act to stop it.

What has been leaked from the government’s statement is mournful, for example, when it says, “In the last years Lebanon has gone through enormous crises and challenges that have accumulated and culminated in an existential one”. What an outstanding discovery! It also talks about “activating the role of the judiciary in the war on corruption”, following President Michel Aoun’s statement that “We are continuing the war on corruption”. However, up until now, there has been no such war in Lebanon, not even on a single one of the corrupt people who looted public funds.

The reality is that nobody is afraid anymore; Lebanon is in a catastrophic economic crisis, and what’s worse is that it is shut off from any possible foreign aids. It is confronting Gulf countries with a one-sided government, so it was not surprising when all indicators and communications say that it is not possible to rely on aid from Gulf countries facing accusations from a country that speaks of neutralizing itself and then enrolls in a camp that is hostile towards the Gulf.

It is no secret, and is quite clear, western statements, whether by the United Nations through its representative in Beirut, Jan Kubis that the solution is “reform reform reform”, and by US officials and countries that pledged aid in the CEDRE Conference that Lebanon cannot receive a single cent without a real and serious reform that stops this monstrous corruption and looting of public funds. This is clearly not possible without throwing the corrupt in prison or holding them accountable.

This seems impossible for two reasons: First because the decision is in the hands of a few people who benefited from corruption for a very long time. Second, because sectarianism quickly precipitates and halts any real reform process. This is what President Charles Helou faced in 1964 and Prime Minister Rafik Hariri after him in 1994, whom I remember personally telling me that day that how are we to lead to any reform when every sect believes that purging any corrupt individual belonging to it is an insult and attack against it?

Returning to the present, it is clear that Lebanon is facing two types of lethal epidemics: an economic “Corona” and a political one. The former will push the country towards bankruptcy, while the latter prevents it from undergoing any real reform process. Everything we hear about fighting corruption is impossible, such as the illusion of restoring looted money, precisely because he who looted will not restore what has been stolen.

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