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
TT

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 Opts for Dialogue with Europe ahead of Trump's Return to Office

President Donald Trump shows a signed Presidential Memorandum after delivering a statement on the Iran nuclear deal from the Diplomatic Reception Room of the White House, Tuesday, May 8, 2018, in Washington. (AP)
President Donald Trump shows a signed Presidential Memorandum after delivering a statement on the Iran nuclear deal from the Diplomatic Reception Room of the White House, Tuesday, May 8, 2018, in Washington. (AP)
TT

Iran Opts for Dialogue with Europe ahead of Trump's Return to Office

President Donald Trump shows a signed Presidential Memorandum after delivering a statement on the Iran nuclear deal from the Diplomatic Reception Room of the White House, Tuesday, May 8, 2018, in Washington. (AP)
President Donald Trump shows a signed Presidential Memorandum after delivering a statement on the Iran nuclear deal from the Diplomatic Reception Room of the White House, Tuesday, May 8, 2018, in Washington. (AP)

It is difficult to predict what the outcomes will be of the discussions between Iran, France, Britain and Germany about Tehran’s nuclear program in Geneva on Friday.

Last week, the UN atomic watchdog's 35-nation Board of Governors passed a resolution again ordering Iran to urgently improve cooperation with the agency and requesting a "comprehensive" report aimed at pressuring Iran into fresh nuclear talks.

Britain, France, Germany and the United States, which proposed the resolution, dismissed as insufficient and insincere a last-minute Iranian move to cap its stock of uranium that is close to weapons-grade. Diplomats said Iran's move was conditional on scrapping the resolution.

Iran has been weighing its response to the censure, debating whether to increase uranium enrichment or by being open to the proposals expected at the Geneva talks.

The discussions may seek a new nuclear deal instead of the 2015 one with Tehran that is in tatters.

As it stands, Iran is likely to opt for negotiations instead of escalation due to a number of internal, regional and international reasons.

Diplomatic sources in Paris noted US President-elect Donald Trump’s appointments of officials handling Middle East affairs, underscoring their unreserved support to Israel and clear hostility to Iran.

These appointments may lead Iran to think twice before resorting to any escalation.

Even before Trump has taken office, his circles have said that the new president will take “several executive decisions related to Iran and that will be declared on his first day in office.” The decisions will be binding and do not need Congress’ approval.

However, Trump is unpredictable and the sources did not rule out the surprise possibility of him striking a deal with Iran related to its nuclear program and behavior in the Middle East. This means that Tehran will have to make major concessions, including abandoning its policy of “exporting the revolution”.

This remains a far-fatched possibility, however. In all likelihood, Washington under Trump will return to his “maximum pressure” policy against Iran on political, diplomatic and economic levels to make it return to the negotiations table and agree on a deal that completely ends its nuclear ambitions.

So, at the Geneva meeting on Friday, Tehran will seek to achieve two main goals: a nuclear breakthrough during what remains of US President Joe Biden’s time in office, and attempt to lure the European powers away from Trump.

The truth is that Tehran is wading in the unknown. One only has to go back to Trump’s past statements about how Israel should have struck Iran’s nuclear facilities during its October 26 attack on the country.

Trump has already shown Iran his hardline stance when he ordered the assassination of Quds Forces leader Qassem Soleimani near Baghdad airport in January 2020.

Based on this, Tehran is scrambling to avert a joint American-Israeli strike that Israeli Prime Minister Benjamin Netanyahu has been dreaming of.

Iran is vulnerable now due to two main reasons: the Israeli strike in October weakened Iran’s air defenses and Netanyahu has said that Israeli jets can now run rampant over Iran without any worries.

And Tehran can no longer rely on its allied militias to threaten Israel with all-out war. Hamas in Gaza is no longer in a position to threaten Israel and neither is Hezbollah in Lebanon.

So, Iran now finds itself exposed and would rather turn to negotiations with Europe than risk escalation that would cost it dearly with Israel now that it can no longer rely on Hamas and Hezbollah.