No one is sure when Lebanon will compound financial, fiscal, debt, banking and economic crises, Described by the World Bank As one of the three worst depressions in the world since the mid-19th century, this month finally bottomed out.
After the coronavirus pandemic and the disaster of last August Beirut explosionIn addition, given that corrupt dynasty elites are unwilling to Agree to form a government, Not to mention important reforms.
“It is clear that the political class has no incentive to cooperate and put their country first,” said a top Lebanese observer in Washington. “They killed the economy.”
The sectarian mafia that ruled Lebanon was spared the suffering and hunger of the poor because of its billions of ill-gotten wealth, or the confiscated middle class whose bank deposits were confiscated for most practical purposes.
Since October 2019, the local currency has depreciated by 90%. U.S. dollar depositors are locked out of their accounts by the insolvent banking system, which lends foreign currency to bankrupt countries and central banks that cannot be repaid. According to the World Bank, the size of the economy has shrunk from US$55 billion in 2018 to US$33 billion last year, and it is estimated that 55% of the population is below the poverty line. This year’s output may shrink by a further 10%, but the economic contraction is too fast to know.
Since October 2019, many depositors have lost their savings in a zombie banking system that was closed to them. Civil uprising Begin to oppose the entire political system and overthrow a government.After the other was overthrown Last summer’s explosion, Destroyed the entire area of ??downtown Beirut.
Bankers and politicians at almost all major banks have become very wealthy at double-digit interest rates, thanks to a compliant central bank. While the banking world elsewhere is trying to get rid of the impact of negative interest rates, Lebanese bankers are avoiding suspicious windfall profits.They lent 70% of their assets to the bankrupt country-leaving a loophole in the banking system, the government calculated $ 83 billion last year-they still Claim to be a solvent.
In addition, international estimates say that there will be US$17 billion in outflows from Lebanon in 2020, while Lebanese officials say that there will be about US$16 billion in outflows in the second half of 2019—despite the fact that capital controls are imposed on most deposits.
Lebanon’s daily political stalemate-no government since the port of Beirut Burst in a mushroom cloud 11 months ago-this is the latest chapter in Sunni and Shiite Muslims, Christians and Druze seeking advantages among the country’s 18 recognized denominations and countless political parties.
The most important is Hezbollah, the Shia paramilitary movement supported by Iran.It was allied with Amal, the former militia was transformed into a Shia mass movement, and it was allied with Christians Free patriotic movement His puppet, former general Michel Aoun, assumes the presidency. Hezbollah has also gained a firm foothold in the security forces and the military, controlling the majority of seats in the parliament, and having veto power over cabinet appointments.Determined not to risk its precious Christian Union, it now serves as a Shield of Rogue Rule This brought Lebanon to its knees.
These political and financial families pretend to cooperate with international donors and the International Monetary Fund while delaying attempts to get Lebanon and its banks out of debt-at the cost of putting everyone but the wealthy Lebanese into poverty. Local and international officials said that in April last year, the government proposed a rescue plan that would protect 90% of savers. Banker, politician, and central bank governor Riad Salame rejected this, and a December report from the World Bank called it “Deliberately depressed“.
Diplomats and insiders say that there is almost no discussion about the crisis now, and all factions are focused on the next election and extending their power.
Lebanon and abroad increasingly believe that elites will only start bargaining when their bank accounts and property assets (mainly held abroad) are hit and they are banned from traveling.Europeans now Prepare sanctions For those who obstruct the formation of the government and participate in corruption.
The EU as a whole may be hindered by countries such as Viktor Orban’s Hungary. But nothing can stop individual European countries from taking action. France is already investigating Salame, Who is Broken heart. Afterwards may be non-EU Switzerland with Maybe britain.
The United States has two views on the central bank governor, who has long been regarded as the key to stability. “We don’t know if he is a safety pin or a grenade on the table,” an official said.But Washington started Targeting major politicians last year.Nothing else worked, Lebanon is very close Bottom out.