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Lebanon: Total Loss of Trust in the Banking Sector

Lebanon: Total Loss of Trust in the Banking Sector

Thursday, 9 July, 2020 - 11:00
Hussein Shobokshi
Saudi journalist and businessman. He is also a member of the Board of Directors of the Shobokshi Company for Development and Trade.

Among the most important reasons why Lebanon was called the Switzerland of the East was the picturesque nature that made it a distinguished and exceptional tourist destination, the atmosphere of freedoms that made it a center for artistic, journalistic and literary creativity, and a developed banking system that was safeguarded by the law and guaranteed secrecy and financial oversight.

Today, this tourism sector is collapsing, with services deteriorating, capital flight, and freedoms being restricted to an unprecedented degree that is not typical for the nature of Lebanon. The collapse of the banking system in Lebanon, today, is only a matter of time and the issue here is not only banks going bankrupt but a total loss of trust in the banking system.

A few days ago, a well known Jordanian businessman, Talal Abu-Ghazaleh sued one of the largest Lebanese banks for money wasting and fraud — a dangerous precedent. This is neither the first nor the last case of this kind, and there will probably be a flood of cases of the same nature filed by those harmed. This is not the first crisis that the Lebanese banking sector has faced; there was a months-long crisis related to Intra Bank and its founder, Palestinian banker Yousef Beidas. This crisis continued with Roger Tamraz and it has been extensively dealt with in two books by Canadian-Lebanese writer Kamal Dib.

Lebanese banks played a very controversial role during the bloody civil war that went on for more than two decades, acting as a tool that enabled warlords, heads of sects, and those in power. With that, Lebanon’s status as a center for the production of banks in the Middle East was lost, pushing international banks to move from Beirut to Bahrain that had provided an alternative system that was supported by a strong banking law and a stable central bank.

After the civil war, the banking sector in Lebanon was more dangerously and severely infiltrated, with many of them turning into containers for suspicious and dirty money for the terrorist organization Hezbollah and the Assad regime and its agents. This opened the way for funding drug deals and smuggling, as well as arms deals, chemical waste deals, and other corrupt deals, leading to the collapse of many banks, such as the Medina Bank and the Lebanese Canadian Bank, among others. The Lebanese banking sector did not only turn a blind eye to suspicious accounts but also to bank accounts affiliated with well known and very large companies that were known to be fronts for Hezbollah's money laundering from West Africa, Iran, and Latin America through a complicated network of supporters and affiliates of the terrorist group.

This total loss of trust in the Lebanese banking sector, one of the most important soft elements of Lebanese power, is a very grave loss that will be difficult to compensate after years of strengthening and construction. Hence, the propositions by Hezbollah leader, Hassan Nasrallah, on economic and financial solutions is comical. However, Nasrallah is walking down the same path that he had since his first day: Destroying the Lebanese model in all its features and characteristics only to replace it with an ugly mutant that looks nothing like Lebanon.

The banking sector is strong, and it is one of the most important pillars of the modern state, the most important element of which is trust in the system, which has quite obviously evaporated. The collapse of the economic and financial excellence in Lebanon is not a coincidence, and impoverishing people was an inevitable, natural, and expected result of this malicious project that was promoted by the terrorist organization, Hezbollah, since its conception, only those in denial would be surprised.

The Lebanese scene and its implications that are expected to become worse will not change unless the roots of the problem are addressed and Lebanon returns to what it was because Switzerland itself did not reach glory under the leadership of the head of a terrorist organization.

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