Lebanon’s Governance Crisis: What Lies Ahead for the Future?
By JHANVI MEHTA
Lebanese politics has been marred with dysfunction and corruption in recent years. This raises the question of if Lebanon remains a viable state with its refusal to reform. The nation may not have been in the media limelight recently, eclipsed by the focus of the ongoing pandemic, but its governance crisis bears no irrelevance to Lebanese livelihoods. Facing hyperinflation, food insecurity, shortages of fuel and medical supplies, and severe underfunding of basic public services, the people of Lebanon have responded to worsening living conditions with unrest and protest.
The list of grievances in the nation feel endless, stemming from the disintegrating political system, which has tainted the environment and infrastructure. Hyperinflation has meant that only those that can afford fuel refills and electricity can access basic utilities, and savings have been obliterated. The scarcity of fuel has established top-up limits to no more than 20 litres, accompanied by long queuing.
But how did Lebanon’s crisis start? The mismanagement of the nation has political and economic dimensions which have led to the accumulation of crises, leaving Lebanese citizens uncertain of the future that lies ahead. Protests have been ongoing since October 2019, which is also locally regarded as the 'October Revolution', following rising tax proposals on tobacco, gas, and VoIP (voice over IP) calls on platforms such as WhatsApp. Tax proposals, however, didn’t bear the bone of triggering mass protests. Lebanon is a classic depiction of inadequate governance, with anger intensifying over decades. Even now, almost a year since the Beirut port blast, there has been little attempt to form a government and recover.
In 2019, the nation was estimated to spend 4% of its annual GDP ($2bn) on subsidising a power company that was unable to make electricity available 24 hours a day. Lebanese citizens, at least those who can afford it, have largely had to rely on private companies to obtain safe drinking water since the Lebanese civil war that occurred between 1975 and 1990. Internet connection is incredibly slow and expensive, and the 2017 report from Lebanon’s economic ministry included the conclusion that local calls are five times more expensive than in Jordan. Additionally, the country faces a grave inadequacy in managing sewage and sanitation, which produced a garbage crisis in 2015 after rubbish piled up on streets before companies began dumping it into the sea. The governance of vital services is wholly inefficient, and in addition to this, the environment is in peril, with spoiled beaches, greenery, and wildfires in Chouf that have displaced many.
The reason for the spark in protests is simple: a lack of proper governance. A failure to address rising rates of unemployment, poverty, and inflation indicate that Lebanon’s government is hardly trying to reform itself and find an end to this crisis. Economic mismanagement, for instance through subsidising inefficient providers of contraband gasoline generators and internet service, whilst servicing debt over 150%, has accelerated the economic crisis further and broken public services.
Weak growth and US dollar shortages, to which the Lebanese pound is pegged, have increased borrowing costs, and central bank intervention to prevent shortages of basic necessities have resulted in chaos. This has impacted the economy by making it difficult for import businesses and citizens to acquire dollars at official rates. Lebanon’s liquidity crisis is the result of an economic downturn, as an import-dependent nation with a continuity of the dollar-peg that increased the budget deficit, and a large over-reliance on foreign exchange reserves from the central bank, in order to maintain the currency peg. The currency’s value has declined by almost 95% last year, and according to the UN, over 75% of the country cannot access money to buy food or do not have food. By 2019, Lebanon’s debt-to-GDP ratio reached 151%.
However, Lebanon’s politicians have been intent on preserving a patronage system led under sectarian lines rather than leading with competence and reforming. The Taif accord, which led to the culmination of the civil war in 1990, established a sectarian power-sharing agreement that persists to the present day. Sectarian leaders and warlords became politicians, leading to the current internal rottenness of the political system, with politicians’ greed growing while delivering little, if nothing, for their own people. Contrasted to other leaders, Saad Hariri, Lebanon’s former Prime Minister, can be commended for unifying a divisive nation in their fight against a directionless path, that is, until his resignation in January 2020. Unrest in recent years has prompted the eagerness of Lebanese citizens to challenge the political system; this civilian opposition towards the government has been markedly non-sectarian.
The unwillingness of the government to foster development for its citizens is underpinned by corruption in government circles. Widespread corruption has ensured that essential contracts for the country, including fuel, telecommunications, electricity, and passports, have allowed politicians to gain extra cash bonuses.
What is the way out of this crisis? France, a long-time financial supporter of Lebanon, insists that the country can only be a benefactor of aid in the future if it takes initiative to reform and is clear on policy. However, reform seems unlikely at present due to an excess of corrupt politicians and the reserves in the central bank plummeting to precarious levels. Lebanon’s political quagmire is the culmination of a multitude of complex issues, which the government refuses to solve in a competent manner. An IMF bailout, as well as international aid, are contingent on the formation of a new government and new reforms. However, the nation’s profoundly ruptured political elite have failed to agree on a new cabinet, in spite of the urgent need to break the political deadlock as the economy continues to worsen.
By stepping down and failing to form a government, Hariri has left Lebanon without proper political direction for almost a year, and has plunged the nation into a deeper crisis, leaving the question open of where Lebanon is headed. The crushing poverty and daily hyperinflation currently being witnessed may exacerbate sectarian tensions and cause a social explosion that could elicit a civil war. If no political action is taken swiftly, it is only a matter of time before this occurs.
Image: Unsplash (Charbel Karam)