News of a massive explosion in Beirut, the capital city of Lebanon, spread quickly around the world mere weeks ago, as millions of people viewed videos of blown-out windows and citizens running for cover from a massive cloud of smoke. The blast that originated from a stockpile of ammonium nitrate decimated a large swathe of downtown Beirut, killing more than two hundred and rendering thousands of others injured or homeless. The few hospitals in the city left intact, already burdened with COVID-19 patients, have been strained beyond their limits by the influx of those newly injured. Moreover, the explosion threatens the country’s already tenuous supply of food and goods, given that it occurred at a major port crucial to imports, and silos that stored 85% of the country’s grain were among the other structures damaged or destroyed.
Less than a week after the explosion, the cabinet of the Lebanese government resigned on the heels of wide-reaching demonstrations by citizens protesting many years of government failure and corruption. Lebanese activists blame the explosion on this breed of incompetence that allowed a dangerous chemical to be mishandled. In the coming months, the Lebanese parliament will have to choose a new prime minister, a process sure to be made difficult as the country faces large-scale rebuilding and recovery.
The explosion and its immediate aftermath have been devastating, yet they both compound upon the simmering economic disaster that has already been burdening Lebanon for the past year. For months now, Lebanese citizens have been facing a massive debt crisis due to hyperinflation of their currency, the lira. Rising levels of famine and crime have overtaken the middle class, scourges sure to grow following the devastation of the recent explosion. To trace the roots of this long-term crisis, it is necessary to closely examine Lebanon’s history and the institutions that have primed it for economic collapse.
Many Lebanese citizens point their finger at the structure of their country’s government as a root cause for many of its ills. Lebanon is a parliamentary democracy that functions under confessionalism, a process by which high offices of government are apportioned to particular religious groups. Seats in its parliament, for instance, are split among eighteen different denominations. Although these measures are intended to fairly protect and represent Lebanon’s diverse religious communities, many now pinpoint them as pathways which easily lead to corruption. Opponents of political sectarianism argue that it fractures the country’s power, incentivizing government factions to only provide for themselves and their followers. Patronage networks and nepotism run deep in this system, acting against democratic representation and equal treatment of citizens.
This structure of division has also historically left the Lebanese government an easy target for interference by foreign powers. Countries including Syria, Iran, and Israel have sought to interfere with Lebanon’s power-sharing agreement in government over the years. Moreover, the political party and militant group Hezbollah, largely backed by Iran, has a firmly entrenched position in Lebanese government, though deemed a terrorist group by the United States and other western powers. Hezbollah has been accused of poisoning the political sphere through corruption and illicit financial activity, while simultaneously representing the politics of Syria and Iran, not merely those of Lebanon.
The Lebanese economy has provided a backdrop for oligarchs to accumulate power and wealth on the backs of ordinary citizens, given its unique structure. Acting on a large trade deficit, the economy relies largely on infusions of foreign currency from the country’s huge diaspora, as well as from the tourism industry. Citizens accuse the government of having engaged in massive overspending for many years, leading to rapid growth of the national debt. These actions amounted to what was effectively a government-led and regulated Ponzi scheme, as the banks took in foreign currency deposits from citizens and the diaspora. The government used these deposits to pay for imports, creating an enterprise that depended on regular infusions of foreign dollars to mask the unsustainability of the debt. These dangerous and long-persisting trends of economic mismanagement set the stage for a profound national crisis, which ultimately unfolded late last year.
Social discontent rose profoundly late last year, as the government-led Ponzi scheme began to collapse. In October 2019, foreign currency abruptly stopped entering the country, due to suspicion on behalf of new depositors that the situation was untenable. The lira began to rapidly devalue against the dollar on a newly formed black market, ultimately losing about 80% of its value. When the government announced a plan to tax WhatsApp calls in mid-October, public discontent boiled over in the form of mass protests, leading the government at that time to resign.
Another crisis soon followed—the global outbreak of the novel coronavirus, with the accompanying lockdown only serving to exacerbate the economic crisis. Discontent among citizens rose as many were laid off work and they were confronted with the perils of Lebanon’s weak welfare system. The value of the lira continued to fall, with banks enacting increasingly stringent capital controls, leading citizens to discover that their hard-earned savings had seemingly vanished overnight, or now held little value. In March, the new government defaulted on a payment for foreign bonds for the first time in its history.
Continuing to the present, skyrocketing inflation has caused the price of goods to climb exponentially, leaving citizens unable to obtain basic necessities, including food and clean drinking water. Government inability to pay for imports such as medicine and other food products has also brought shortages of these crucial goods. Meanwhile, widespread famine has incentivized crime, threatening the day-to-day lives of Lebanese citizens. The large number of refugees living in the country face particular humanitarian challenges, as their relative poverty and unreliable employment render them particularly susceptible to famine and unemployment. This population hails from neighboring Syria, comprising about 1 in 5 members of the larger Lebanese population.
Even infrastructure such as reliable internet access and electricity have become unreliable, as the country receives only a couple of hours of electricity a day, leaving hospitals woefully unable to treat patients. Much of the middle class is expected to be forced into poverty, crippling Lebanon’s ability to rebuild itself.
Lebanon’s future remains uncertain on the heels of crisis after crisis, each pushing the country closer to utter economic collapse.
In the months preceding the explosion, the government of Lebanon had engaged in talks with the International Monetary Fund, an international organization that aims to ensure economic stability among its members. Though the government sought to secure a $10 billion loan, negotiations stalled after the two parties disagreed over the scale of the economic damage. Moreover, the recently resigned Lebanese government hesitated to implement significant reforms and face the outside scrutiny necessary for a complete overhaul of the Lebanese economy and banking system.
A number of countries led by France, including the US, Germany, and Britain, have vowed to send humanitarian aid toward Lebanon following the explosion. Though their efforts will undoubtedly provide a tenuous lifeline to Lebanon in the short term, the country ultimately will have to reckon with the institutions it holds that so deeply incentivize and encourage corruption. Anti-government protests, drawing swathes of citizens across partisan lines, have illustrated the population’s ability to collectively take action against what they view as an unjust ruling system. Perhaps this impetus will allow Lebanon to forge a future free from sectarianism and political instability; the alternative would be unthinkable civil war or total economic collapse.
The image featured in this article is licensed for reuse under the Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic License. No changes were made to the original image, which was taken by Bernard Khalil and can be found here.