Lebanon on Edge as Time, Money Run Out

FILE PHOTO: A man counts Lebanese pounds at a currency exchange shop in Beirut, Lebanon October 1, 2020. REUTERS/Mohamed Azakir
FILE PHOTO: A man counts Lebanese pounds at a currency exchange shop in Beirut, Lebanon October 1, 2020. REUTERS/Mohamed Azakir
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Lebanon on Edge as Time, Money Run Out

FILE PHOTO: A man counts Lebanese pounds at a currency exchange shop in Beirut, Lebanon October 1, 2020. REUTERS/Mohamed Azakir
FILE PHOTO: A man counts Lebanese pounds at a currency exchange shop in Beirut, Lebanon October 1, 2020. REUTERS/Mohamed Azakir

Fouad Khamasi fills his taxi every day with about 40,000 Lebanese pounds' worth of fuel. It could cost at least four times that much if subsidies come to an end.

The Beirut cab driver, 53, can just about afford to buy fuel and feed his kids. He worries the price of subsidized foods and key imports - wheat, fuel, medicine - will skyrocket.

"These are the toughest days I've ever seen," Reuters quoted him as saying. "Some days, you stick your hand in your pocket and find nothing ... I leave the house and just pray. Whatever I make, it does nothing. It's a joke."

Time and money are running out for Lebanon.

Foreign reserves have dropped far below what the state already deemed "dangerous levels" when it defaulted on its huge debt in March, meaning it cannot afford to keep subsidies for long.

Leaders in power for decades have yet to enact a financial rescue plan, a year after huge protests against them swept the country, and they have failed to secure aid from foreign donors.

Talks with the International Monetary Fund (IMF) stalled earlier this year when Lebanese government officials, bankers and political parties could not agree over how big the losses were in the financial system and who should bear them.

After a massive explosion at Beirut's port in August that killed nearly 200 people and caused billions of dollars worth of damage, France stepped in.

But rival sectarian politicians could not get past the first hurdle on the French roadmap towards financial aid: naming a new cabinet quickly.

The currency, which has lost more than 80% of its value against the US dollar since last autumn, weakened after the French effort faltered.

Meanwhile, comments from officials indicating an end to some subsidies within months have triggered panic buying, raising the specter of food shortages and a more dramatic crash in the currency.

In the nation of some six million people, more than 55% of whom are below the poverty line, many are bracing for hunger and cold as winter looms.

"Everything that happened since last October could have been avoidable," Nasser Saidi, a former vice central bank governor, told Reuters.

He said targeted aid to the poorest Lebanese would be more effective than subsidies across the board, which had benefited smugglers taking goods into Syria.

"It's all kicking the can down the road. What should have been done is a full economic and financial plan," Saidi said.

Importers of key commodities said they had not been given a timeline to plan for how long subsidies could last.

Central Bank Governor Riad Salameh has said the bank could not finance trade indefinitely, although he gave no timeframe.

President Michel Aoun said recently of reserves: "The money will run out. What can we say?"

An official source close to the government told Reuters the money left for subsidies would last six more months by cutting support for some goods.

The state, which critics say is mired in corruption, and the paralyzed banking sector, its biggest creditor, have traded blame for the crisis.

Meanwhile, the wealth gap, already one of the region's largest, widens. In a country that relies heavily on imports and produces little, prices for many items including diapers have tripled.

In Beirut, men and women, some with young children, can often be seen digging for food in dumpsters near city intersections.

Two months after the port blast, Lebanese expect life to get even harder.

Many families now rely on charity. The meltdown could render people more dependent on political factions for aid and security, in a throwback to the militia days of the civil war.

Some analysts have warned that security forces, their wages fast losing value, would not be able to contain rising unrest. Hospitals fighting a surge in COVID-19 cases are overstretched. Fuel shortages have left city streets dark. Cars line up at petrol stations for rationed fuel.

"We're scared we won't be able to go on," said Siham Itani, a pharmacist who fears price hikes and being robbed. She said supplies of insulin and blood pressure medication had dwindled.

Another pharmacist said a masked man had held her up at gunpoint, asking for baby food.

Mostafa al-Mohalhal, who at 62 suffers from diabetes, stored four insulin vials in his fridge, but the daily power cuts spoiled them.

"If the price rises, how will I pay for them?" he said. "People will die in the streets."



Iran's Businesses Bear Brunt of Daily Power Blackouts

Repeated power cuts have angered Iranians in recent years, especially during the hot summer months - AFP
Repeated power cuts have angered Iranians in recent years, especially during the hot summer months - AFP
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Iran's Businesses Bear Brunt of Daily Power Blackouts

Repeated power cuts have angered Iranians in recent years, especially during the hot summer months - AFP
Repeated power cuts have angered Iranians in recent years, especially during the hot summer months - AFP

Baristas and servers linger outside a cafe in Tehran, smoking and chatting, as scheduled daytime power cuts due to energy shortages plunge businesses in Iran's capital into the dark.

"When the power is out, we are almost completely out of service," said Ali, a 30-year-old employee, of the nationwide rolling electricity outages imposed daily since November 11.

"We use mostly electrical equipment here in the cafe such as an electric oven and espresso machine," he told AFP, asking that only his first name be used.
Years of Western sanctions and a lack of investment in infrastructure have exacerbated the situation, especially during peak consumption months in summer and winter.

To deal with the shortages, the government has introduced two-hour blackouts, which rotate between various neighbourhoods in cities between 9:00 am and 5:00 pm.

President Masoud Pezeshkian attributed the decision to "low fuel reserves", saying Iran must "adjust the fuel for power plants so that we do not face problems in winter".

- 'Poison' -

Fatemeh Mohajerani, government spokeswoman, said power cuts were necessary to cut down on a relatively cheap low-quality fuel -- known as mazout -- used at some older-generation power plants.

The heavy fuel oil has been used for years to address power shortages despite its emissions causing heavy air pollution.

She said the public would need to deal with blackouts for a limited time, to find an alternative to what she described as "poison".

"It is unfair that part of the society should pay with their lives for the production of electricity," she added.

But for Mona, another employee at the cafe in Tehran -- home to about 10 million people -- it isn't worth the cost.

"The government says it has stopped burning mazut in a number of power plants in other cities, but we need to pay for that in Tehran," the 36-year-old told AFP.

Repeated power cuts have angered citizens of the Islamic republic in recent years, especially during the hot summer months.

In July, the authorities ordered the working hours of civil servants to be halved for several days in an attempt to save energy.

But energy shortages go beyond just electricity in Iran.

On November 12, National Iranian Gas Company announced daily gas consumption in the country had set a new record of 794 million cubic metres.

Economic expert Hassan Forouzanfard cited poor infrastructure, mismanagement and in particular Western sanctions as responsible for Iran's energy problems.

"Sanctions and the cutting of the ties with international energy companies have deprived us of both the necessary technology and investment to develop our oil and gas sectors," he told AFP.

- 'Warm clothes' -

"If we have a cold winter this year, we will have to collectively deal with both gas and electricity problems in the country," Forouzanfard said.
Iran, despite holding some of the world's largest natural gas and oil reserves, has grappled with massive energy shortages in recent months

"I do not think that the government would be able to either control the negative effects of the pollution or to resolve the energy imbalances in a reasonable and serious way in the short term," he added.

But Tehran says consumers must do their part to conserve energy.

"We have no choice but to consume energy economically, especially gas, in the current conditions and the cold weather," said Pezeshkian.

"I myself use warm clothes at home, others can do the same," the president added.

During one of the scheduled power cuts, a queue formed outside a supermarket in Tehran.

"Since it is dark inside and our CCTVs are offline, we allow just one customer at a time so we can better handle them," said Sina, a 24-year-old employee, who did not want to give his full name.

"We are afraid that in the dark and without the help of surveillance cameras, we can't figure out if an item goes missing," he said, arguing that the power cuts are hurting the small business.