December 13, 2022

Prospects For Lebanon: Open-Ended Uncertainty And Steady Erosion

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by Habib Malik, Senior Research Fellow

In the space of just under a year, from the fall of 2019 to the 4th of August 2020, Lebanon was dealt successive, unprecedented, and crippling blows that have left it a failed state in everything but name.

The pervasive financial collapse, itself in slow gestation for years, bubbled to the surface with a bang in October 2019 when people suddenly discovered they could no longer have access to their bank accounts and savings in what was assumed to be a free capitalist financial system.  Soon thereafter, the country’s currency went into freefall as it transpired that the banks did not possess liquidity in hard cash, namely in US dollars.  Rioters burst into the streets for weeks on end as the magnitude of the horrific Ponzi scheme to defraud an entire nation came to light.  A cartel composed of the corrupt ruling-class mafia and the armed pro-Iran militia, Hezbollah, that is protecting this mafia had methodically plundered the country plunging its already ailing economy along with the entire population into abject ruin.  Then, in early 2020, the Covid pandemic hit forcing lockdowns for months, only to be followed on August 4 of that year by a massive explosion of ammonium nitrate stored illegally by Hezbollah at the Beirut Port.  The blast destroyed not only the maritime facility but a predominantly Christian third of residential Beirut overlooking the port area.  No war was necessary to send Lebanon back to the proverbial stone age, as Israel had repeatedly threatened; Lebanese warlords and Iran’s local minions had achieved this by themselves…