Lebanon is mired in the economic and political crisis

“With a structural inertia of the Lebanese system, nothing seems possible without a profound reform”

Once considered the Switzerland of the Middle East, Lebanon is now close to collapse and has been experiencing one of the worst economic crises on the planet since 2019. The debt today reaches between 150 and 170% of the national GDP, and Lebanon imports about 4/5 of what it consumes, which reflects serious shortcomings of the productive apparatus. In a context of high inflation and trade deficit, one of the only positive points remains the tourism sector. Covid-19 has accentuated the crisis and the Lebanese pound has reached its lowest level ever, with a loss of 95% in 2 years. Bank customers can no longer withdraw their money in dollars and the poverty rate explodes to 80%, according to the United Nations.

The current GDP of the Land of the Cedars has become like that of Iraq or Jamaica, and the end of subsidies to fuel and basic necessities has accelerated the impoverishment of the population. Despite the chaos, the ruling class refuses to implement reforms that would be essential to give the country credibility in the eyes of potential investors.

More dependent than ever on loans from the International Monetary Fund (IMF), Thibault de la Barronière, head of investments at the Arcange group, says that “the country’s economic prospects are zero”.

“We often talk about people who have robbed banks since the year 2022, but we talk less about those who have robbed directly from bank accounts by withdrawing billions of dollars and sending them abroad,” he said adding that it takes 8 and a half years to withdraw 3,000. dollars from a bank account in Lebanon.

The investor pointed the finger at a political chessboard “verified by a Hezbollah that feeds on this instability” and “the inability of politicians to unite due to very divergent interests”.

Hezbollah, a major obstacle to Lebanon’s recovery

Lebanon, formerly known as the junction point between the Middle East and Europe that allows the coexistence of three religious communities, sees the Shiite movement develop with the emergence of Hezbollah which brings a profound imbalance.

“The long descent of Lebanon has been accompanied by a change in the Middle East, the money has gone elsewhere, in particular to Dubai, and the Lebanese have great difficulty in finding it”, underlines General Dominique Trinquand, specialist in international relations.

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For the general, Hezbollah represents a “big obstacle because it is a political party with strong ties abroad, particularly Iran, whose interest is to put pressure on Israel”. While the Abraham Agreements have resulted in many deals and juicy economic contracts, Lebanon refuses to join and still claims to be at war with the Jewish state.

Despite Emmanuel Macron’s trip, which did not lead to any prospects, France today seems powerless to help its friendly country. With a structural inertia of the Lebanese system, nothing seems possible without a thorough reform of the government.

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