As if the deepening political deadlock as well as rapidly worsening living standards were not enough for the small yet once thriving Mediterranean country now facing an economic meltdown, rising tension in Lebanon took on an even worse new dimension this week. The increased problems started after a fresh row with Trump’s ambassador to Beirut, which became embroiled in a diplomatic spat with the United States over the weekend after a Lebanese judge banned local and foreign media outlets from interviewing the US ambassador to Lebanon Dorothy Shea.
The controversial step followed Shea’s intensive and provocative media statements which were widely regarded as direct meddling in Lebanon’s internal affairs. This was interpreted as being in breach of the Vienna Treaty governing the activities and parameters of diplomatic missions worldwide. Judge Mohamed Mazeh issued his order regarding the US ambassador soon after her statement that “US sanctions will only aim to put pressure on Hezbollah and its supporters” was made during an interview with Lebanese media Friday. The row was later resolved as Lebanon’s Justice Minister received the US ambassador, explaining the reasons and sensitivities behind the judge’s decision. Mazeh, as a result of the consequent overruling of his decision regarding ambassador Shea, submitted his resignation Tuesday.
With No Breakthrough in Negotiations, IMF Withholds Financial Aid to Lebanon
Badly-needed financial aid packages by the International Monetary Fund have been put on hold this week, after negotiations with the Lebanese government officials failed to reach an agreement on terms and conditions regarding helping Lebanon out of its worst chronic economic crisis in decades. IMF’s Managing Director Kristalina Georgieva said Friday she does not yet have reason to see a breakthrough in negotiations with Lebanon to help resolve the country’s economic crisis.
An ongoing dispute between Lebanon’s Central Bank and Hassan Diab’s government have further complicated the country’s hope for a quick rescue deal that could potentially bail Lebanon out of utter economic collapse. IMF requires unity among Lebanon’s leaders, stakeholders and society over reforms it deems imperative for the stabilization of economy as well as a return to its growth path. The Lebanese Pound (Lira) has lost over 75% of its value since October 2019. “The core of the issue is whether there can be a unity of purpose in the country that can then carry forward a set of very tough but necessary measures,” Georgieva said. “All I can say is that we are putting our best people to work with Lebanon, but we do not yet have a reason to say there is a breakthrough.” Lebanon’s situation “breaks my heart,” Georgieva added.
Broken Hearts and Empty Pockets
Thousands of Lebanese protesters have again taken to streets across the country as their national currency, the Lira, maintained its steep decline against the dollar, hitting record low in black-market dealings. Before the recent crisis, the Lebanese Lira has preserved its stature against the dollar for over a couple of decades following the end of the civil war in 1990, exchanging for 1,500 Liras against the US dollar. Nowadays, the rate has plummeted to around 6000-7000 Liras per dollar. Lebanon has been going through its worst economic months for decades, with riots and anti-corruption protests ravaging the country which has entered a virtual meltdown.
The spike in coronavirus with over 35 new cases registered on Friday, pose additional burden on the trouble-laden new government headed by reformist Prime Minister Hassan Diab, and threaten its ultimate survivability. Many of the protesters and road-blockers on Lebanon’s streets are supporters of Diab’s predecessor Saad Hariri who resigned the post under wide-spread popular pressure 8 months ago. In comments published by Al-Jumhuriya Saturday, former Prime Minister Hariri said that Diab’s government was a “corpse waiting for someone to come replace it”.
Could Reopening the Airport and Borders with Syria Salvage Lebanon’s Economy?
Desperate for foreign cash generated in the past by millions of tourists and expats who used to flock into the country, once nicknamed “Switzerland of the East” during the busy summer season, Lebanon has announced the partial reopening of Beirut’s Rafik al Hariri International Airport on July 1. The reopening will reportedly happen regardless of the COVID-19 despite the pandemic’s worsening situation. Unconfirmed reports of Lebanon’s intention to reopen its borders with neighboring Syria — its only land lifeline — have been circulating this week. Tens of thousands of Syrian expats stranded worldwide, are also expected to take the Beirut route back home, in view of the aviation restrictions and sanctions imposed on Damascus.
However, given its ongoing political and economic dire straits as well as rising tension among its neighbors, Lebanon seems set for more doom and gloom for some time to come. With no end in sight, the country’s economic nosedive is set to continue with potential catastrophic ramifications on the already collapsing economy. The worst-case scenario is that there will be a new civil, sectarian or ethnic conflict in the country, which would pose a genuine and devastating threat.