The Lebanese cannot be blamed if they feel that they have been receiving blows and disasters from all over the place. They did not need this coronavirus mess to be certain of that. The relatively few cases of coronavirus that they've had are perhaps a less substantial problem than the major hits that struck the Lebanese social structure and economy, causing the major disruption to the country’s political functioning.
The least one can say is that this country has bad luck, but luck cannot be held responsible here despite the role it has played in other disasters. The situation in Lebanon has become tragic on every level, and only minimal political sense and economic understanding were needed to predict this outcome. It is a country that splurges as if money fell from the sky. The English saying goes: Money does not grow on trees. However, Lebanon has never heard this saying; perhaps they have even heard the opposite and acted accordingly, and when there was no money left on the trees they found themselves in total collapse, at the doorstep of poverty, the threat of which looms over more than two thirds the population.
This is a country that plans for nothing, neither in politics, expenditure, or running public institutions. Wherever there is a public employee you can be sure there is bribery and corruption, as stealing public funds is permitted. A public servant who does not leave his job, however humble, loaded with money, becomes the laughing stock of the neighborhood. The Lebanese have finally awakened to the "Retrieved looted money" mantra, even though everybody knows how this money was looted and where it has gone. An accumulation of mistakes and mismanagement inevitably culminated in this situation, and it would have continued to operate in the same way had the lenders not knocked on its doors. The Lebanese realized that their money was not theirs and that the money that they had borrowed was to be returned to its lenders at some point. Just like anyone who cannot pay their debt, they started begging for a rescue plan to take them out of this crisis, or more so, this unprecedented scandal.
As need leads to disputes, everybody started to make accusations: politicians, bankers, and financial experts, everybody throws the blame on the other in a country where devastated citizens find it difficult to find any truth. The Lebanese media is a mouthpiece for parties and politicians and frame their rhetoric to please their supporters. As a result, the truth is lost in a debate that leads nowhere, sustains the crisis, and prevents the formulation of a solution.
There is no solution within the borders. For the treasury is bankrupt and banks are no longer capable of funding it after the debts due on the state and banks have reached 93 billion US dollars while the depositors' money is nowhere to be found. There is no certainty as to whether or not they will be lucky enough to get it back, with most of it being the fruit of a lifetime of labor.
It was, therefore, necessary to look for salvation outside the borders. The government has looked for solutions and could not find but the worst choice possible: The International Monetary Fund (IMF). The decision was not easy but it was the only one available to Prime Minister Hassan Diab. A government that has political cover from Hezbollah and can, therefore, overcome the reservations that the latter would have had if the request had come from another government, headed by someone like Saad Hariri. In that case, it would have been said that the government is leaving the country “hostage to American whims”, a mantra constantly repeated by Hezbollah and its media.
Although President Michel Aoun and the government believe the country is now on the “right track”, to the point that Aoun described the day the economic plan was set as a “historic day”, the plan proposed by the government to ask for aid from the IMF will face many obstacles from the inside and outside.
First, on the inside, the Bankers Association raised its voice very loudly, claiming that the government had ignored it during the discussions that preceded the plan, considering that it is one of the main parties that will be involved in adequately implementing it, especially since the plan involves restructuring the banking sector. Bankers said that the government’s plan is ambiguous and lacks an accurate timetable for the reforms that it stipulates.
Before the Bankers Association criticized the plan, there was an extraordinary confrontation between the Prime Minister and the Governor of the Central Bank Riad Salameh. After the former accused the latter of “suspicious ambiguity” over his role in the devaluation of the Lebanese pound and the implications that this had on purchasing power, Salameh responded with numbers and facts that he used to defend his monetary policies and asked those in power to reveal what happened to the money that the Central Bank had lent to the government, tens of billions of US dollars.
On top of that, the political controversy that Diab started around responsibility for the economic collapse and the rise in public debt led to angry reactions from Saad Hariri and his party. All of this is happening while the country needs the highest possible levels of national solidarity to overcome this exceptional crisis.
In this climate, Lebanon reaches out to the IMF for help.
The internal political disintegration was not ameliorated by the planned talks that President Michel Aoun called for and named “The National Meeting”, a meeting that was boycotted by most of the opposition with only the President of the Lebanese Forces attending, albeit only to criticize the government’s rescue plan.
Also, a dispute between the government and the Central Bank and other financial institutions will affect the IMF’s decision to provide aid, considering that cooperation by the banks is fundamental to a financial reform process. Also, local and international trust in this sector is fundamental for economic advancement.
There are also international doubts over the government’s ability to make the necessary reforms, especially given the massively inflated size of the unproductive Lebanese public sector, over the government’s ability to impose widespread privatization of many public institutions, particularly Electricité du Liban.
There is also an Arab and international concern around providing aid to a government that is known for being close to Hezbollah in an international climate that is hostile to all of Hezbollah’s foreign operations.
Most importantly, the IMF also has conditions for providing aid. This is the case with every country that the IMF provides aid to, most prominently Mexico and Greece. The IMF deals with bankrupt countries like they had been running their affairs incompetently; since, otherwise, they would not have reached the position they found themselves in. Consequently, monitoring internal expenditure is at the core of the IMF’s role in providing stimuli to the economy.
The sweetest of these choices is bitter, but Lebanon has no other choice.
