How Lebanon sank so deep...

Financial, political, economic, cultural and enviromental crises: it is the collapse of a house of cards that we wanted to see, despite all its weaknesses and flaws, as an unsinkable boat.

How Lebanon sank so deep...

Demonstrators set garbage bins on fire, blocking a road, during a protest over deteriorating living conditions and after the Lebanese government raised subsidised bread prices, in Beirut, lebanon June 30, 2020. REUTERS/Mohamed Azakir

What a terrible feeling to witness, from the front row, the collapse of a country. Although we knew that we were going to hit the wall head-on, that the shock was going to be of incredible violence and that there would be no much left of post-war Lebanon at the end, the feelings these events arouse when they occur are no less powerful. Whatever you say, you are never really prepared for the worst.

A Lebanon is dying before our eyes without us being able to do anything about it. The population is getting poorer. The country is going to be downgraded. Schools are in danger. Businesses are closing. Young people, who can, are leaving. The "Lebanese-style" way of living is threatened, as it had never been before, even during the war.

What we are witnessing, in this year of the centenary of Greater Lebanon, is not just an economic crisis, nor yet another political debacle: it is the collapse of a house of cards that we wanted to see, despite all its weaknesses and flaws, as an unsinkable boat.

When everything collapses, we look for the culprits. Everyone has their own theory, depending on their political beliefs. Hezbollah, guilty of wanting to break free from the rules of the state while taking the same state hostage to its interests. The "Harirism," guilty of promoting a neoliberal vision of the state and for not breaking with the clientelistic tradition. The political class as a whole, guilty of using the state instead of serving it. The governor of the central bank, Riad Salameh, guilty of fueling a financial abyss while continuing to trumpet to anyone who wanted to hear it that "everything is just fine." The banks, guilty of enriching themselves by financing a completely dysfunctional state.

All, including the population or at least part of it, are responsible for the current situation, albeit to varying degrees. First of all the Lebanese blindly elected for decades, out of conviction and/or interest, the same politicians for decades, without ever demanding accountability. Secondly, and this doesn’t necessarily apply to the previous segment of the population, it is a common affair in Lebanese society to make material possession the only criterion of social distinction, for the Lebanese to live beyond their means and take advantage of deposit interest rates 4 to 5 times higher than the norm.

Thirdly, it has been common practice for the Lebanese to benefit from the absence of state and clientelism, who favored sectarian logic over the national spirit, who participated in the destruction of the landscape and the cement bubble.

The idea here is not to put everyone in the same boat or throw the baby out with the bathwater. It is just to remember that bankruptcy is collective. We have either participated in the political, economic, cultural and environmental destruction of the country, or we have not done enough to prevent it. But overall we were lulled by the illusion that a country could function without a state, that an economy could hold on without producing anything, that a society could accept everything to preserve civil peace. Lebanese "resilience" justified everything: that was the right argument for all those who did not want to change anything and for all those who considered that nothing could be changed.

In a way, they were not wrong. It is almost miraculous that Lebanon has resisted for so long, even if we can counter-argue that the bill will be all the more painful.

Clan Confederation

What country in the world can stand on its own two feet with so many structural deficiencies and cyclical challenges? It is very presumptuous to want to be the Switzerland of the Middle East when sectarian reason prevails over the national spirit, when our neighbors are the Syria of Bashar Assad and the Israel of Benjamin Netanyahu, and the country is taken hostage, with the victim's consent, by the regional tug of war between Iran and Saudi Arabia. But the Lebanese debacle is above all the result of our own mistakes. The Lebanese shipwreck deserves an analysis as it is rich in lessons which should not be reproduced. There are many examples, but three of them deserve special attention.

First ineptitude: an inescapable political authority yet without power. The so-called political class has its hands everywhere - in the judiciary, in the administration, in the banking sector, in the media, etc.- and is nevertheless unable to make a fundamental decision about the country's policy. Consensualism on the lowest common denominator is the only mode of governance it knows. The result is endless negotiations on minor issues and deadlocks which become taboos on major issues. The people who take to the street rightly accuses this political class of being corrupt and incompetent. But the real problem is even deeper. If Lebanon has been unable for years to clearly define its foreign or economic policy, it is not because of the incompetence or corruption of its ruling class, but because of a model of governance where everyone has legal authority, which results in no one really having it. At least since the assassination of Rafik Hariri, no Lebanese politician has an enough solid base to make a major decision involving the entire country. Everyone tries to steer the boat, but no one is able to hold the rudder. Politicians have fought, and continue to do so, to save this model, officially to preserve civil peace, but in reality because it is the only one that can enable them to ensure their survival. They are just clan leaders who use the state to feed their sect and/or region, and who transform Lebanon into a clan confederation with no other common project than that of sharing the cake.

Second ineptitude: the presence of a foreign-funded, trained and armed militia within a state that is supposed to, at the very least, distance the pillar of its foreign policy in a bubbling regional environment. Because it can decide on peace or war regardless of Lebanon's interests; because it uses, whenever it sees fit, the threat of arms to guide the decisions of the state in its favor and to exempt itself from common rules; because it intervened in Syria to rescue a regime that has constantly trampled on Lebanon; because its leader Hassan Nasrallah is violently attacking the Gulf states on which the Lebanese economy depends, Hezbollah is the most fundamental problem for Lebanon and the most difficult to solve. But it also serves as a cover, a perfect excuse, for its enemies who accuse it of all evils while forgetting that they too are part of the problem. The very presence of the Iranian-obligated party - if it does not complete its process of Lebanization that has already started - is antinomic with the creation of a new Lebanon that is to be stable, prosperous and based on the rule of law. But even if the Hezbollah issue were resolved, which requires regional upheaval and greater integration of Lebanese Shiites, Lebanon would be very far from being a safe haven. It would remain a bankrupt country in constant decline for decades.

The Whole Building Is Collapsing

Third ineptitude: an economic model that is both savage and ineffective, which at the same time relies on the worst of neoliberalism and on a clientelistic logic pushed to its climax. Public services are weak, but public spending is exorbitant. The country produces almost nothing and relies on the tertiary sector. But there is no serious policy to accompany this choice. Lebanon could have been a must-see tourist destination. But how can we attract visitors with polluted beaches, a ransacked environment, unguaranteed electricity, and all this without being cheap?

No economic model would have worked in such a political environment. But was this a reason for the economy to become like the failing politics? Because the population was attached to a certain way of living, the country needed a strong currency to import its consumer goods. Because politicians used public money to distribute annuities to their clients, we had to find a way to finance the whole process. The banking sector was the key. Banking secrecy and the ease of converting pounds into foreign exchange made the country, with higher than average interest rates, particularly attractive, especially for the Lebanese diaspora.

The new deposits were used to pay the interest promised to the old ones. But the shaky system stalls as public spending increases, external aid dries up, structural reforms - electricity in the lead - are not implemented, and cyclical factors, particularly the war in Syria, contributed to the problem. Then, it is a vicious circle. To attract new depositors, you have to offer even more attractive interest rates, which leads to the killing of the real economy and deepening an already abysmal debt further. The Bank of Lebanon (BOL) funded a vampire state. The banks financed a BOL that helped the state dig its grave. Everyone gets something, from the depositors to the politicians. Until the whole building collapsed.

Revolution Against Themselves

People are taking to the street shouting their anger, and it is more legitimate than ever. It is rising from deep inside. From the hungry belly and a feeling of violated dignity. The revolution is underway, but the process could be very long. October 17 is the founding date of the new Lebanon to which the population aspires. This is the day when this country, in all its components, became a nation. The day its people decided that the future mattered more than the past.

At the end of this revolutionary path lies the hope of rebuilding a country on new foundations, at all levels. But this requires, first of all, to accept that the path may be long and painful, and that it will be necessary to put on the table all the divisive subjects in order to invent a new social contract. The political class will do nothing and will prefer to sink with the boat than accept new rules that would automatically put it out of play. Society, for its part, cannot simply boo the political class without making its own self-criticism. It is a revolution against a part of them that the Lebanese must make.

Part of the protestors is now fueling the fantasy of a quick recapture of the "stolen money" which supposedly is to resolve the situation. However, the return of these sums to the Lebanese coffers, if it happens, should take years, and nothing indicates that these sums would be sufficient to fill the abysmal holes in the public accounts. Part of the political class continues to project the illusion of new external aid. But no country, all the more so after the Covid-19 crisis, seems interested in saving a Lebanon that refuses to save itself.

The International Monetary Fund (IMF) is the only way, even if it is not gratifying. But this implies accepting the sinking reality. The pound will not return to its original value. Part of the deposits may be subject to a haircut or bail-in. Public spending will have to be reduced, which could result in lower salaries in the public sector or even a cut in the workforce. At best, Lebanon will go through several difficult years before getting back on its feet. And its fundamental problems, be it the status of Hezbollah, the impossible governance or the absence of a social contract other than clientelism, will not necessarily be solved. In the worst case scenario, the crisis will awaken sectarian reflexes and the specter of civil war. And a few years will not be enough to see the end of the tunnel.

(This article was originally published in French in L'Orient-Le Jour on the 27th of June)

What a terrible feeling to witness, from the front row, the collapse of a country. Although we knew that we were going to hit the wall head-on, that the shock was going to be of incredible violence and that there would be no much left of post-war Lebanon at the end, the feelings these events arouse when they occur are no less powerful. Whatever you say, you are never really prepared for the...

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