Cocoa and Cashew Nuts: Lebanon's Long Subsidy List Is Costing it Dear

People shop at a supermarket ahead of a tightened lockdown and a 24-hour curfew to curb the spread of COVID-19 in Beirut on January 13, 2021. (Reuters)
People shop at a supermarket ahead of a tightened lockdown and a 24-hour curfew to curb the spread of COVID-19 in Beirut on January 13, 2021. (Reuters)
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Cocoa and Cashew Nuts: Lebanon's Long Subsidy List Is Costing it Dear

People shop at a supermarket ahead of a tightened lockdown and a 24-hour curfew to curb the spread of COVID-19 in Beirut on January 13, 2021. (Reuters)
People shop at a supermarket ahead of a tightened lockdown and a 24-hour curfew to curb the spread of COVID-19 in Beirut on January 13, 2021. (Reuters)

As Lebanon's hard currency reserves dropped alarmingly last year, its subsidy program expanded to include cocoa powder, cashew nuts and saffron.

The move was designed to support local producers who either made the goods or used them as ingredients, and to complement price support for core items like fuel and wheat aimed at ordinary people caught up in a spiraling financial crisis.

But for critics of the government, the additions were a sign of a bloated and poorly managed subsidy system that did not always reach the people it was meant to, encouraged smuggling and wasted precious reserves.

"Subsidies should be to subsidize basic things, not an entire industry," Hani Bohsali, head of the Syndicate of Importers of Foodstuffs, Consumer Products and Drinks, said of the expanded list.

"Do you really need to subsidize cocoa powder and cake-making?"

Around 300 items such as cashew nuts and canned mushrooms were added. The list has now been reduced to around 150 items - still far too many, according to Bohsali.

Asked why so many goods were still on the list, caretaker economy minister Raoul Nehme told Reuters that the government had hoped to move quickly to a new program directly subsidizing families with cash.

He also said that any subsidy system was open to smuggling, and that when it was introduced a year ago it was only meant to last a few months.

Lebanon, which is in political paralysis, deeply indebted and struggling to raise funds from potential donor states and institutions, spends about $6 billion a year on subsidies.

Central bank reserves stood at just over $15 billion in March, compared with more than $30 billion before the economic crisis hit in 2019. The central bank did not give more recent figures.

The caretaker government has said money for subsidies could run out as soon as the end of May, in what would be a major blow to a population more than a half of which lives in poverty.

Caretaker energy minister Raymond Ghajar warned that Lebanon could be plunged into darkness and the head of the pharmacists' syndicate said the country was running short of medicine.

Government seeks change
Under the current system, the central bank provides hard currency to importers at the old currency peg of 1,515 Lebanese pounds to the dollar for fuel, wheat and medicine and at 3,900 to the dollar for a basket of basic items.

With reserves depleted, the government has said subsidies needed reining in, but it has stopped short of ending them until an alternative cash subsidy system is approved by parliament.

Meanwhile, some of those who most need access to cheap goods struggle to get it. A regulation that stipulates subsidized food items go straight from importer to retailer, for example, can cut out wholesalers who reach smaller outlets and remote areas.

Shoppers can buy expensive French butter at a fifth of its value at upscale Beirut supermarkets, while others are left brawling over subsidized cooking oil elsewhere.

Items with Lebanese subsidy stickers have also shown up in far-flung markets in Europe and Africa.

"From Africa with love" one twitter user wrote with an image of subsidized coffee showing up in her local store in Benin.

Smuggling on a larger scale involves more basic items, including livestock, wheat and fuel.

Fuel leaks into Syria
Hatem Aboualshra, a livestock trader in the northern city of Tripoli, said big profits could be made by purchasing animals from abroad with subsidized dollars and then smuggling them to a third country illegally at a healthy profit.

Sheep imported from Armenia for around $100 a head, for example, can sell in the Gulf at over $200, he added.

"If they just stop this subsidy the meat will become cheaper because the original traders will start normal work again."

By far the biggest outlay for the government is subsidies on fuel, which account for around half of the annual bill, or $3 billion.

Many petrol stations are closed because they have nothing to sell, and those that are open attract long queues of cars.

"In all of Beirut I couldn't find any gas stations ... this is the first one I find that is working," said Mohamed Maktabi, an engineer back home from abroad for the recent Muslim Eid al-Fitr holidays. He had been waiting more than 20 minutes in line.

Minister Ghajar said in mid-April that fuel smuggling into neighboring Syria, where it can be sold for 10 times the price, was the main reason for shortages.

Small villages like al Qasr, in Lebanon's Baalbek and Hermel region on the border with Syria, are ideally located for the illicit trade.

Villagers living meters from Syria move freely between checkpoints, and small fuel containers are carried on scooters across the border for profit.

A Lebanese army officer involved in patrolling the border said fuel and wheat were being smuggled into Syria, along with clothes, cigarettes and other food items.

"We have managed to stop a large portion of this," added the officer.

The army has set up checkpoints and surveillance towers on top of the eastern mountains that separate the two countries.



Doctors and Moms Say Babies in Gaza May Die without More Formula, Blame Israel’s Blockade

 Seham Fawzy Khodeir watches her son, Hisham, who is just days old and was born prematurely, lying in an incubator at the neonatal intensive care unit of Nasser Hospital in Khan Younis, southern Gaza Strip, Thursday, June 19, 2025. (AP)
Seham Fawzy Khodeir watches her son, Hisham, who is just days old and was born prematurely, lying in an incubator at the neonatal intensive care unit of Nasser Hospital in Khan Younis, southern Gaza Strip, Thursday, June 19, 2025. (AP)
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Doctors and Moms Say Babies in Gaza May Die without More Formula, Blame Israel’s Blockade

 Seham Fawzy Khodeir watches her son, Hisham, who is just days old and was born prematurely, lying in an incubator at the neonatal intensive care unit of Nasser Hospital in Khan Younis, southern Gaza Strip, Thursday, June 19, 2025. (AP)
Seham Fawzy Khodeir watches her son, Hisham, who is just days old and was born prematurely, lying in an incubator at the neonatal intensive care unit of Nasser Hospital in Khan Younis, southern Gaza Strip, Thursday, June 19, 2025. (AP)

Seham Fawzy Khodeir watches as her son lies inside a dilapidated incubator and listens to his faint cry, mixed with the muted sound of the equipment.

The mother of six is increasingly concerned about the survival of Hisham al-Lahham, who was just days old, breathing with the help of equipment and being fed through a tube in his tiny nose.

Most alarming is that the medical-grade formula he needs to survive is running out.

"There is no milk," the 24-year-old mother told The Associated Press. He needs it to "to get better, to live and to see life."

Hisham is among 580 premature babies at risk of death from starvation across the war-battered Gaza Strip, according to the Gaza Health Ministry. Khodeir and others blame Israel’s blockade for the plight of their children. Doctors say that although some formula has been delivered, the situation is dire. Their desperation comes as the war in Gaza has been overshadowed by the Israel-Iran war.

"These babies have no time ... and no voice," said Dr. Ahmed al-Farah, head of the pediatrics and obstetrics department at Nasser Hospital, the main medical facility still partially functional in southern Gaza.

'An avoidable disaster'

Khodeir's son is one of 10 babies in incubators at Nasser's neonatal intensive care unit. Last week, al-Farah rang the alarm, saying the hospital’s stock of medical-grade formula was "completely depleted."

He said the tiny babies who relied on it would face "an avoidable disaster" in two to three days.

His pleas were answered, in part, by the delivery of 20 boxes of formula sent over the weekend by a US aid group, Rahma Worldwide. The new delivery is enough to cover the needs for the 10 infants for up to two weeks, al-Farah said.

Al-Farah, however, expressed concern about future deliveries, saying that it wasn’t guaranteed that more formula would be allowed into Gaza.

"This is not enough at all," he said. "It solved the problem temporarily, but what we need is a permeant solution: Lift the siege."

Meanwhile, fortified formula required for newborns is already out of stock at Al-Rantisi Hospital in Gaza City, its director, Dr. Jamil Suliman, said.

"Many mothers are unable to breastfeed due to severe malnutrition," he said, warning of a looming crisis.

Infants are among the hardest hit by Israel’s blockade, which started on March 2 with the complete ban of any food, water, shelter or medication.

Under mounting international pressure and repeated warnings of famine from the United Nations, Israel began allowing what Prime Minister Benjamin Netanyahu called "minimal" aid, starting May 19.

Since then, more than 1,000 tons of baby food, including formula, have entered Gaza, according to COGAT, the Israeli defense agency in charge of aid coordination in the Palestinian territory.

"Food for babies is certainly entering (the Gaza Strip), as the organizations are requesting it, we are approving it, and there is no withholding of food for babies," a COGAT spokesperson said.

But Gaza’s health officials say that for these babies, that aid hasn't included enough critical medicine, formula, medical equipment, and spare parts to keep the existing equipment operational.

The Palestinian Center for Human Rights said in a report Monday that fortified infant formula was nearly depleted from local markets, with several types already completely out of stock.

"Any limited quantities available in some pharmacies are being sold at skyrocketing prices, far beyond the purchasing power of most families," it said.

COGAT said the baby food is being distributed mostly through international organizations — not via the Gaza Humanitarian Foundation, an Israeli-backed private contractor that has drawn criticism from other groups. Palestinian witnesses and health officials say Israeli forces have opened fire on crowds heading to GHF sites. The Israeli military says it has fired warning shots.

Israel has defended its blockade

Israel has said the blockade aims to pressure Hamas into releasing the 50 hostages it still holds from its Oct. 7, 2023, attack on southern Israel that sparked the war. Fewer than half are still believed to be alive.

Israel has accused Hamas of siphoning aid, without providing evidence. The United Nations says there's been no significant diversion of aid.

Gunmen killed around 1,200 people, mostly civilians, and took 251 hostage on Oct. 7. Most of the hostages have been released by ceasefire agreements.

The war has unleashed unrelenting destruction, with more than 56,000 Palestinians killed and more than 131,00 wounded in Israel's offensive, according to Gaza health officials. The officials don't distinguish between combatants and civilians but say more than half the casualties are women and children.

The war and the blockade have sparked a humanitarian crisis, creating shortages of the most basic necessities and pushing Gaza’s health care system to the brink of collapse.

Seventeen of the enclave's 36 hospitals remain partially functioning, providing health care to more than 2 million people amid bombings, rising malnutrition rates and dwindling medical supplies.

"Starvation is increasing," said Jonathan Whittall, head of the UN's humanitarian affairs office for the occupied Palestinian territories. More than 110 children have been admitted for treatment for malnutrition every day since the start of this year, he said.

"Our warehouses stand empty while Israel restricts shipments to minimal quantities of mainly medical supplies and food," Whittall added.

A crisis at Gaza's hospitals

Human Rights Watch said in a recent report that all medical facilities in Gaza are operating in unsanitary and overcrowded conditions and have serious shortages of essential health care goods, including medicine and vaccines.

"Since the start of the hostilities in Gaza, women and girls are going through pregnancy lacking basic health care, sanitation, water, and food," said Belkis Wille, associate crisis, conflict and arms director at Human Rights Watch. "They and their newborns are at constant risk of preventable death."

The Health Ministry has repeatedly warned that medical supplies and fuel were running out at hospitals, which use fuel-powered generators amid crippling power outages.

Whittall said hospitals were forced to ration the little fuel they have "to prevent a complete shutdown of more life-saving services."

"Unless the total blockade on fuel entering Gaza is lifted, we will face more senseless and preventable death," he said.

Nasser Hospital was forced to cut off electricity for some departments, despite the nonstop flow of patients, as part of a plan to save fuel, said Ismail Abu-Nimer, head of engineering and maintenance.

Supplies have been running out amid the influx of wounded people, many coming from areas close to aid distribution centers, said Dr. Mohammad Saqer, Nasser's director of nursing.

"The situation here is terrifying, immoral, and inhumane," he said.