How Bad Is Lebanon’s Economic Meltdown?

Men fill a private generator, which provide electricity with diesel oil in Beirut, Lebanon January 21, 2022. (Reuters)
Men fill a private generator, which provide electricity with diesel oil in Beirut, Lebanon January 21, 2022. (Reuters)
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How Bad Is Lebanon’s Economic Meltdown?

Men fill a private generator, which provide electricity with diesel oil in Beirut, Lebanon January 21, 2022. (Reuters)
Men fill a private generator, which provide electricity with diesel oil in Beirut, Lebanon January 21, 2022. (Reuters)

Lebanon is suffering an economic meltdown that began in 2019 when the financial system collapsed under colossal state debts and the unsustainable way they were funded, while politicians have yet to come up with a rescue plan.

Just how bad is the situation?

- Gross domestic product has plunged to an estimated $20.5 billion in 2021 from about $55 billion in 2018, the kind of contraction usually associated with wars, the World Bank says, ranking the collapse as one of the worst globally since the mid-19th century.

- The Lebanese pound has lost more than 90% of its value, driving up the cost of almost everything in a country reliant on imports, and demolishing purchasing power. A soldier's monthly wage, once the equivalent of $900, is now worth about $50.

- Poverty rates are sky-rocketing in the population of about 6.5 million, with around 80% of people classed as poor, the UN agency ESCWA says. The situation is worsening. In September, more than half of families had at least one child who skipped a meal, UNICEF has said, compared with just over a third in April.

- The financial system has suffered eye-watering losses, including about $44 billion at the central bank related to failed efforts to prop up the currency, according to 2020 government figures, a level that is roughly twice the size of economic output. Overall losses, including anticipated sovereign debt write-downs, are even bigger.

- Lebanon's banks are paralyzed. Savers have been frozen out of US dollar accounts. Withdrawals in local currency apply exchange rates that erase up to 80% of the value. During an October visit to Beirut, US official Victoria Nuland said the Lebanese people deserved to know where their money had gone.

- Reliant on imported fuel, Lebanon is facing an energy crunch. Even before the crisis, power supplies were in short supply, including in the capital. Now households are lucky to receive more than an hour or so a day. Fuel prices have soared. A ride in a shared taxi, a popular form of transport, cost 2,000 pounds before the crisis but now costs about 30,000 pounds.

- Lebanese are emigrating in the most significant exodus since the 1975-90 civil war. Believing their savings are lost, many Lebanese have no plans to return this time as they start over again.

- Among those leaving are doctors. The World Health Organization has said most hospitals are operating at 50% capacity with around 40% of doctors, mostly specialists, permanently emigrating or working part-time abroad.

- Officials and the media talk of Lebanon becoming a "failed state". Michel Aoun, the president, warned in December that the state was "falling apart". Lebanon's top Sunni cleric said after unrest over fuel shortages in August that the country risked complete collapse unless there was action.



The Rafah Crossing Is Gaza’s Lifeline to the World and Could Open Soon

This picture taken on August 27, 2023 shows a view of the entrance of the Rafah border crossing with Egypt in the southern Gaza Strip. (AFP)
This picture taken on August 27, 2023 shows a view of the entrance of the Rafah border crossing with Egypt in the southern Gaza Strip. (AFP)
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The Rafah Crossing Is Gaza’s Lifeline to the World and Could Open Soon

This picture taken on August 27, 2023 shows a view of the entrance of the Rafah border crossing with Egypt in the southern Gaza Strip. (AFP)
This picture taken on August 27, 2023 shows a view of the entrance of the Rafah border crossing with Egypt in the southern Gaza Strip. (AFP)

Palestinians are eagerly awaiting the reopening of the Rafah border crossing, which is Gaza’s lifeline and only gateway to the outside world that wasn’t controlled by Israel before the war.

The opening is expected after Israel on Monday announced that the remains of the final hostage in Gaza, Ran Gvili, had been recovered. Hours earlier, Israel had said it would open the Rafah crossing with limitations once the search operation for Gvili was complete.

The opening of the crossing between Gaza and Egypt, which was controlled by Egypt before the war, is seen as ushering in the second phase of the US-brokered ceasefire, though its opening had been called for as part of the first phase.

Here’s why the crossing is so vital.

What comes next

It is not immediately clear when the crossing will open and whether it will allow the flow of goods and people both into and out of the war-shattered territory. Prime Minister Benjamin Netanyahu’s office late Sunday said Israel had agreed to a reopening “for pedestrian passage only, subject to a full Israeli inspection mechanism.”

Hamas in a statement Monday called on Israel to open the Rafah crossing in both directions “without restrictions.” Ali Shaath, head of the new Palestinian committee administering Gaza’s daily affairs, last week said the crossing would be opened this week to facilitate movement to and from the enclave.

A reopened Rafah crossing would make it easier for Gazans to seek medical treatment, travel internationally or visit family in Egypt, which is home to tens of thousands of Palestinians. It would also help Gaza’s devastated economy, as Palestinian-made olive oil and other products are widely sold in Egypt and throughout the Arab world.

“We hope this will close off Israel’s pretexts and open the crossing,” said Abdel-Rahman Radwan, a Gaza City resident whose mother is a cancer patient and requires treatment outside Gaza.

Israel also has said Palestinians wanting to leave Gaza will have to get Israeli and Egyptian security approval. Egypt says it wants the crossing immediately opened in both directions, so Palestinians in Egypt can enter Gaza. Egypt has been opposed to Palestinian refugees permanently resettling in that country.

A lifeline for Gaza

With much of Gaza turned to rubble, the United Nations has said the territory’s population of over 2 million people needs a massive influx of fuel, food, medicine and tents. While some aid has entered via the crossing, trucks have been lined up outside it for months while waiting for the chance to enter.

Before the war, the Rafah crossing bustled with goods and people. Although Gaza has four other border crossings, they are shared with Israel, and only Rafah links the territory with another neighboring country.

After Hamas-led fighters sparked the war by attacking southern Israel on Oct. 7, 2023, Egypt tightened its restrictions on traffic through the Rafah crossing. Israel took control of the Gaza side in May 2024 as part of its offensive and closed the crossing except to the occasional medical evacuation.

Questions about the future

The Gaza side of the Rafah crossing was heavily damaged during the war. Once it does reopen, Israel has agreed to adhere to the humanitarian terms put in place for the previous ceasefire that took effect in January 2025, including allowing a certain number of truckloads of aid per day into Gaza.

With the current ceasefire deal calling for Hamas to have no role in running Gaza, it’s unclear who will operate the territory’s side of the Rafah crossing once the war ends.

The crossing also will be central to Gaza's reconstruction. Last week, US President Donald Trump’s son-in-law and Middle East adviser Jared Kushner said postwar construction would first focus on building “workforce housing” in Rafah, the nearby southern city currently controlled by Israeli troops.

But Netanyahu on Monday told Israel's parliament, the Knesset: “We are at the start of the next (ceasefire) phase. What is the next phase? The next phase is disarming Hamas and demilitarizing the Gaza Strip. The next phase is not reconstruction.”

Meanwhile, humanitarian supplies inch forward. On Monday, the Egyptian Red Crescent facilitated the entry of a convoy carrying over 7,060 tons of food and medical aid through the Egyptian side of the Rafah crossing en route to Israeli inspection at Kerem Shalom before it potentially heads into Gaza, according to Egypt’s State Information Service.


Behind Israel’s Recovery of Last Hostage Body in Gaza

Israeli police officer Ran Gvili (Bring Them Home Now/Handout via REUTERS)
Israeli police officer Ran Gvili (Bring Them Home Now/Handout via REUTERS)
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Behind Israel’s Recovery of Last Hostage Body in Gaza

Israeli police officer Ran Gvili (Bring Them Home Now/Handout via REUTERS)
Israeli police officer Ran Gvili (Bring Them Home Now/Handout via REUTERS)

In an unexpected move, Israeli forces carried out a direct search operation to recover the body of the last Israeli hostage in Gaza, police officer Ran Gvili.

The Israeli military said on Monday it had recovered Gvili’s remains, adding that the retrieval of all hostages, living and dead, from Gaza completes a core provision of the first phase of US President Donald Trump’s plan to end the war in the enclave.

Under heavy air and artillery fire, and amid gunfire from Israeli vehicles and drones, several military bulldozers, accompanied by booby-trapped vehicles, advanced shortly after midnight between Saturday and Sunday to the west of the so-called Yellow Line, areas under Hamas control, in the al-Tuffah neighbourhood east of Gaza City.

According to eyewitnesses and field sources cited by Asharq Al-Awsat, the bulldozers later withdrew east of the Yellow Line, areas under Israeli control. Shortly afterward, three booby-trapped vehicles exploded, with the blasts heard across wide parts of the Gaza Strip.

The sources said that soon after the explosions, tanks, armoured vehicles and bulldozers, accompanied by excavation equipment, moved back into the area, specifically toward al-Batsh cemetery in al-Tuffah, west of the Yellow Line.

Sustained shelling and gunfire from vehicles and drones killed at least two Palestinians and wounded more than 25 others at different times, some critically, according to the sources.

Gaza’s civil defense has indicated that there may be additional casualties but access to them is prevented by Israeli forces.

 

Map showing the phases of withdrawal from Gaza under Trump’s plan (White House)

 

Not an Ordinary operation

Initial assessments suggested the move was a routine operation to expand the Yellow Line, similar to actions carried out in eastern Gaza City. It later emerged, however, from a statement issued by Abu Ubaida, spokesperson for the Izz ad-Din al-Qassam Brigades, Hamas’s armed wing, that the Israeli army was conducting the operation to search for the body of the last Israeli hostage, police officer Ran Gvili. This was later confirmed by the Israeli military spokesperson and by the office of Prime Minister Benjamin Netanyahu.

The announcement raised questions about the apparent shift in how Israel handled the recovery of hostages’ bodies. In previous cases, the al-Qassam Brigades had overseen such operations, including inside areas designated as Yellow Line zones and under Israeli control, in coordination with the International Committee of the Red Cross, following prior arrangements involving Hamas, mediators and Israel.

Israeli soldiers stand at the entrance of a tunnel in Rafah, Gaza Strip, December 8, 2025 (AP)

Israeli objection to al-Qassam Brigades' involvement

Field sources from Hamas told Asharq Al-Awsat that al-Qassam team, accompanied by the Red Cross, had been expected to carry out the operation. Israel, however, objected and demanded the handover of coordinates for the area where the body was believed to be located. The information was relayed through mediators, after which the Israeli operation began.

A senior political source involved in the ceasefire negotiations confirmed this information, saying Israel insisted on carrying out the operation itself. Israel cited reasons including the speed of the search, its technical capabilities to identify remains, and its ability to verify identity on site rather than recover the body for examination elsewhere.

The source said mediators supported the expedited approach that allowed Israel to extract the body directly.

According to the sources, Hamas did not have precise information on the body’s location but indicated al-Batsh cemetery, between the al-Tuffah and Shuja’iyya neighbourhoods.

This marked the second Israeli operation inside al-Batsh cemetery since the start of the Gaza war. Sources said it was the third operation to affect the site overall, where no Israeli bodies had previously been found.

Near Khalil al-Hayya’s Home

Footage released by Israeli media, taken by Israeli drones, showed machinery excavating most of the graves at the cemetery through Monday morning. Israeli army radio said more than 250 Palestinian graves had been exhumed.

The cemetery lies about 500 metres from the original Yellow Line, but successive expansions have left it only metres from the updated boundary.

Field sources told Asharq Al-Awsat that the area searched for the hostage’s body was about 30 metres from Khalil al-Hayya Street, named after the home of Hamas’s Gaza-based political leader, who is leading ceasefire negotiations. Tanks were deployed along the street and in surrounding areas to secure the forces operating at the cemetery.

How Was the Location Identified?

Previous searches for Gvili’s body, focused on the al-Zeitoun and Shuja’iyya areas, had failed. On why the search was focused on al-Tuffah, Hamas field and political sources said some fighters with indirect knowledge of the case had provided information indicating the body had, at one point, been buried in that cemetery.

They said the information could not be confirmed with high confidence because those directly involved had been killed or targeted in separate attacks or clashes during the war.

The sources suggested the information may have matched intelligence obtained by Israel’s Shin Bet security service from a Palestinian Islamic Jihad operative abducted about a month ago from Gaza City, who had links to the abduction of the Israeli police officer and the handling of his body.

The sources said Israel appeared to have information pointing to the cemetery even before Hamas relayed its own coordinates, linking the timing of the search to a decision to open the Rafah crossing, expected on Tuesday or, at the latest, Thursday.

 

Israeli soldiers in a tunnel that the army says Hamas militants used to attack the Erez crossing in northern Gaza, December 15, 2023 (AP)

Hamas Calls for Enforcement of the Agreement

Hamas spokesperson Hazem Qasim said in a statement that the recovery of the body of the last Israeli hostage in Gaza “confirms the movement’s commitment to all requirements of the ceasefire agreement, including the exchange track and its full completion in accordance with the deal.”

He reaffirmed Hamas’s commitment to all aspects of the agreement, including facilitating the work of the national committee tasked with administering Gaza, and called on mediators and the United States to compel Israel to halt violations of the agreement and implement its outstanding obligations.


Trump’s Greenland Ambitions Strain MAGA Ties with Europe’s Far-Right

 Sunlight reflects off the windows of homes set against snow covered mountains in Nuuk, Greenland, on January 24, 2026. (AFP)
Sunlight reflects off the windows of homes set against snow covered mountains in Nuuk, Greenland, on January 24, 2026. (AFP)
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Trump’s Greenland Ambitions Strain MAGA Ties with Europe’s Far-Right

 Sunlight reflects off the windows of homes set against snow covered mountains in Nuuk, Greenland, on January 24, 2026. (AFP)
Sunlight reflects off the windows of homes set against snow covered mountains in Nuuk, Greenland, on January 24, 2026. (AFP)

Tensions over US President Donald Trump's plans to take control of Greenland have driven a wedge in the once iron-clad link between MAGA and Europe's far-right.

The rift seems to signal that ideological alignment alone may not be enough to temper worries among European nationalists over Trump's interventionism abroad.

Far-right leaders in Germany, Italy and France have strongly criticized Trump's Greenland plans. Even Nigel Farage, a longtime ally of Trump and head of the Reform UK nationalist party, called Trump's Greenland moves “a very hostile act.”

During a debate Tuesday in the European Parliament, far-right lawmakers typically aligned with Trump overwhelmingly supported halting a EU-US trade pact over their uneasiness with his threats, calling them “coercion” and “threats to sovereignty."

MAGA's trans-Atlantic partners

Such a divergence between Trump and his European acolytes came as some surprise.

Far-right parties surged to power in 2024 across the European Union, rattling the traditional powers across the bloc’s 27 nations from Spain to Sweden. Their political groupings now hold 26% of the seats in the European Parliament, according to the German Institute for International and Security Affairs.

Less than a year ago, Europe's far-right parties gathered in Madrid to applauded Trump's election under the banner “Make Europe Great Again,” while Elon Musk, before his fall from Trump’s graces, had boosted European far-right influencers and figures on X, including Germany’s radical right Alternative for Germany party.

US Vice President JD Vance drew scorn from within Germany and across Europe after he met with AfD leader Alice Weidel during elections in February. The party, with which mainstream parties refuse to work, upset German politics by doubling its presence in the Bundestag to become the nation's second-largest party.

Yet deep divisions within MAGA itself over Trump’s approach to foreign affairs has reverberated in Europe, with his actions over Greenland, Venezuela and Iran forcing his political allies to favor their ideological convictions over their deference to the US president.

Sovereignty trumps shared values

France’s far-right National Rally has at times vaunted its ideological closeness to Trump, particularly on immigration.

A year ago, the party sent one of its senior figures, Louis Aliot, to attend Trump’s inauguration. In turn, Trump has staunchly defended party leader Marine Le Pen, describing her conviction for embezzling EU funds as a “witch hunt.”

Jordan Bardella, the 30-year-old National Rally’s president and a MEP, has praised Trump’s nationalist views, saying to the BBC last month that a “wind of freedom, of national pride” was blowing across Western democracies.

In recent days, however, Bardella has appeared to distance himself from the US administration. In his New Year’s address, he criticized US military intervention in Venezuela aimed at capturing then-President Nicolás Maduro, calling it “foreign interference” designed to serve “the economic interests of American oil companies.”

Going further, Bardella on Tuesday denounced Trump’s “commercial blackmail” over Greenland.

“Our subjugation would be a historic mistake,” Bardella said.

Another Trump ally, Italian Prime Minister Giorgia Meloni, echoed this sentiment. In an interview on Rai television Wednesday, she said that she told Trump during a call that his tariffs threat over Greenland was “a mistake.”

Reluctance to criticize on the EU's eastern flank

Yet the reactions among European right-wing leaders has not been lockstep. Hungarian Prime Minister Viktor Orbán, widely regarded as the trailblazer of Trump’s brand of illiberal populism, has been careful to avoid even the slightest criticism of the US president.

Facing what is likely to be the toughest election of his 16 years in power in April, Orbán has built his political identity around his affinity with Trump, promising voters that his close relationship with the president will pay hefty dividends.

Trump, Orbán has insisted, is Europe’s only hope for peace amid the war in Ukraine and a guarantor of national sovereignty.

Orbán has sought to cast Trump's threats on Greenland and capture of Maduro either as beneficial for Hungary, or none of its business.

“It’s an in-house issue ... It’s a NATO issue,” Orbán said of Trump’s plans for Greenland during a news conference earlier this month, adding that any proposed change to Greenland's sovereignty can be discussed within NATO.

Despite his staunch advocacy of national sovereignty, Orbán also praised the US action in Venezuela, calling the country a “narco state” and suggesting Maduro’s ouster could benefit Hungary through future cheaper oil prices on world markets.

Hungary’s reluctance to push back on Trump’s actions reflected similar positions among far-right leaders in the EU’s eastern flank.

Polish President Karol Nawrocki, seen as an ally of both Orbán and Trump, said in Davos this week that the tensions over Greenland should be solved “in a diplomatic way” between Washington and Copenhagen — not a broader European coalition. He called on Western European leaders to tone down their objections to Trump’s conduct.

In the neighboring Czech Republic, prime minister and Trump ally Andrej Babis has declined to speak out against the US threats to Greenland, and warned against the EU allowing the issue to cause a conflict with Trump.

In Slovakia, Prime Minister Robert Fico has remained silent on Trump’s Greenland designs, even as he met with the president in his Mar-a-Lago resort last week.

Still, Trump’s deposing of Maduro led Fico to “unequivocally condemn” the action, calling it a “kidnapping” and the “latest American oil adventure.”

Disruption or division ahead

The ideology linking MAGA and its European allies might survive recent disagreements by doubling down on old, shared grievances, said Daniel Hegedüs, Central Europe director of the German Marshall Fund.

He pointed to recent votes against Brussels’ leadership in European Parliament by far-right European lawmakers on the EU migration pact and halting the massive trade deal with the Mercosur bloc of five South American nations.

“If Trump continues that way, posing a threat to the sovereignty of European countries, then of course that will divide the European radical right,” he said.

“We don’t know whether this division will stay with us or whether they can again unite forces around issues where they can cooperate. Those issues can be damaging enough for the European Union.”