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Lebanon, COVID 19 and the Arrival of the IMF

Protesters in Lebanon have plenty of reason to bemoan the autocratic response of the government — and its inability to deal with the economic crisis

By: EBR - Posted: Thursday, May 7, 2020

The IMF’s orthodox approach and the reforms it is likely to impose in Lebanon in exchange for financial support will likely hurt the most economically vulnerable among the Lebanese.
The IMF’s orthodox approach and the reforms it is likely to impose in Lebanon in exchange for financial support will likely hurt the most economically vulnerable among the Lebanese.

by Benjamin MacShane*

The arrival of COVID 19 in Lebanon could not have come at a worse time. The tensions between health security and economic stability are fraught in any nation. They are particularly fraught in inflation-stricken Lebanon.

Prior to the lockdown which started on March 16, the U.S. dollar-Lebanese pound exchange rate had already doubled, requiring 3,000 Lebanese pounds to buy one U.S. dollar. Today, it takes 4,000 Lebanese pounds.

A refugee haven

Even though Lebanon has long been on the ropes politically because of gravely rising domestic inequities, the country is host to 174,000 Palestinian and 1.5 million Syrian refugees.

Their living conditions and their lack of access to a proper health infrastructure makes them particularly vulnerable to the cruelties of a pandemic that thrives in poor public health systems.

As of late April, the country as a whole, according to official figures, had 677 confirmed cases of the virus and just 21 deaths.

While these figures compare relatively well to neighboring countries, the effects of the lockdown have not just increased the level of inflation.

30% live below the poverty line

The sheer despair among the refugees and – crucially — among the poor of Lebanon’s 6.8 million population, had a predictable result.

By the end of April, despite the government’s best efforts to keep things under wraps, all that pent-up tension finally exploded.

That was when Tripoli, Lebanon’s second-biggest city and the entry point to one of Lebanon’s poorest regions, Aakkar, erupted into protests to denounce the economic crisis.

There is a lot of steam in the pressure cooker: An estimated 30% of Lebanese live below the poverty line.

Fawaz Fouad al-Samman became the first martyr of the renewed wave of protests.

When authorities shot the 26-year-old man ignoring the government advice on the lockdown, thousands defied the strict coronavirus lockdown rules.

They went out for protests across Lebanon on Sunday, May 3, denouncing both the autocratic response of the government and the worsening economic crisis.

Smart protest movement…

Indeed, the scale and severity of COVID 19 make the October 2019 protest movement appear faint in memory. And yet, what swept across Lebanon at the time was rightfully heralded as an unprecedented historical moment.

The decentralized and leaderless form of the protest chosen at the time seriously challenged the heavy-handed Lebanese government, which is stuck in a completely outdated socio-confessional system.

…Vs. clueless government

Not only does it not do anything to address the dire state of the economy, poverty and most inequalities. Because of its internal structure, it is simply incapable of doing anything useful.

And, its well-honed inclination to serve the interests of the powerful insiders of the governing coalition, only make matters worse.

In January, the powers that be tried to demonstrate progress and responsiveness by appointing Hassan Diab, the 61-year-old former education minister, as prime minister.

The technocrat was deemed as the most acceptable face of a despised political elite.

The move was intended as an indication of a general willingness to reform and to pacify the most ardent members of the thawra (revolution).

However, since the move was made without any electoral process, its effect was very limited.

The IMF enters into the drama

Diab took one big decision — which was to default on Lebanon’s debts. In doing so, he appealed to the International Monetary Fund for help.

However, the introduction of the IMF into Lebanon’s complicated picture at this stage may lead to more problems than answers.

Prior to the March decision to default, Lebanon had always been considered able to deliver on the international loans it secured over the decades.

While the purchasing power of all Lebanese without foreign currency accounts is being destroyed, it is unlikely that the type of economic justice demanded by those protesting on Sunday will be provided by the IMF.

The IMF’s orthodox approach and the reforms it is likely to impose in Lebanon in exchange for financial support will likely hurt the most economically vulnerable among the Lebanese.

Complicating the picture for the IMF is how it intends to deal with the delicately balanced tapestry of Lebanon’s political-confessional system. The eruption of the thawra in October 2019 underscores the immense pressures that system is now under.

The IMF vs. Hezbollah/Iran

As the outsiders want it toppled for very understandable reasons, the insiders (=beneficiaries) want it upheld at all cost. Amidst all this, the very unsubtle specter of Hezbollah looms large.

This politically powerful quasi sub-state acting under Iran’s control is committed to the continuation of the corrupt socio-political status quo.

The reason why the appointment of Hassan Diab as Prime Minister is not seen as any step toward reform is that could not have happened without the cooperation of Iran-backed Hezbollah.

While its political allies hold the majority in Lebanon’s parliament, Hezbollah opposed the democratic demands of the thawra in rhetoric and action.

True to form, it sent in shebab (youth) squads to smash up the centers of protest in each city.

Is there a way out?

As the world slowly and cautiously begins to the see the light at the end of the pandemic tunnel, those who care about Lebanon basically see no light.

Under the prevailing power structure and distribution, there basically is no way to avoid the precipice of economic collapse and the further escalation of violent tensions.

However, from all perspectives the arrival of the IMF will be unwelcome. The Lebanese elites’ appeal to the IMF is an explicit admission of their overall failure.

And calling in the IMF also makes plain that the utter failure of the constitutionally enshrined sectarian system that was established after the end of the civil war via the Taif Agreement in 1989.

It may have been useful politically, but is a disaster economically.

The Hezbollah dimension

Hezbollah’s strong man Hassan Nasrallah will likely treat the IMF as the conspiratorial front runner of a global order that acts on the orders of Washington.

Meanwhile, for the protesters in Lebanon, desperate for economic recovery and hopeful for systemic reform, the IMF represents the arrival of a likely austerity model.

All are now asking whether the cry for democracy that was maintained over months of the 2019 thawra when many especially young people in Lebanon felt invigorated by the power of collective action and protest has any relevance.

They clearly do not see the arrival of the IMF as the answer. It basically cannot do anything to topple Lebanon’s corrupt, unreformable professional politicians.

In the end, all hope for what was once the jewel of the east Mediterranean region may well be extinguished.

*researcher and writer on Middle East and Arab politics
**first published in: www.theglobalist.com

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