-
Lebanon’s Banking Crisis
When one thinks about Lebanon’s banking crisis it would be too easy to associate it with the financial crisis that the country is enduring that has seen the currency collapse and poverty rates soar. People would imagine the crisis is centred around the Ponzi like scheme that has slashed Lebanon’s gross domestic product (GDP) by 58.1% since 2019, plummeting to an estimated $21.8bn in 2021 and annual inflation has been above 100% for the past 26 months in a row.
Yet what is perhaps the world’s worst modern economic crisis is showing itself in a myriad of different ways in the country. One of the most bizarre is bank robbery seemingly becoming legal. Such a sentence needs lots of caveats. What has happened in recent months is desperate Lebanese resorting to desperate means to withdraw their own money from Lebanese banks who may be essentially bankrupt themselves.
The cratering of the economy and the national currency has seen banks limit how much people can withdraw. Since 2019 Banks have been applying random caps on weekly cash withdrawals, varying between $100 to $500. Last week Lebanese unanimously decided to close their doors to clients indefinitely after a series of holdups by depositors, something they did for a week in September under similar circumstances. A particularly high-profile example of this was when Sali Hafez walked into a Beirut bank with a fake pistol and demanded a teller hand over $12,000. Not long after, the novice bank robber reportedly walked from a court to the acclaim of supporters and even to smiles of apparent admiration from court officials and police.
In the past two months alone, more than a dozen bank “robberies” have taken place across the country. Some have extracted their savings through different means, such as organising sit ins linked specifically to money needed to pay for medical treatment. IMF negotiations around a ‘bail out’ for the country that would reset its economy are stalled. The reforms and restructures needed perhaps are too radical for a weak Lebanese government to countenance. Caught between the devil of the continuing economic collapse and the deep blue sea as to the bitter medicine that an IMF deal would entail, ordinary Lebanese are struggling to keep themselves afloat.
Public services have unsurprisingly ground to a halt and the start of the school year for Lebanon’s children has been delayed by striking teachers who argue they can barely afford to pay to get to work such are the economic conditions. Several incidents of boatloads of Lebanese sinking whilst trying to flee the country have been recorded and the latest grim news is that cases of cholera have been reported in the country for the first time in two decades. Wider concerns are that sewage treatment will worsen leading to more waterborne diseases and patients flocked to a healthcare system that already can’t cope.
Yet Lebanon’s crisis is almost too insidious and expensive to warrant the attention given to other urgent issues on the agenda of a busy and distracted world. Regional powers such as Syria and Saudi Arabia have traditionally played major roles in the country but are distracted by civil war and a radically different domestic agenda respectively. The Ukraine war is dominating the bandwidth of Europe and the US, whilst the hunger crisis in the Horn of Africa, another slow burn issue, is barely getting a look in.
One of the few things Lebanon still has remaining is its stability. Unlike the civil war years, the economic crisis is so vast to be universally hurting most of the population in the same way. There is perhaps a solidarity in this collective tragedy that may go to explain the leniency given to the bank robbers who are trying so hard to get access to their own money. However, if the rule of law becomes more theoretical than a lived reality, then notions of reaching an IMF deal that could be operationalised would seem more unlikely than ever.
Meanwhile Lebanon’s search for a new President continues as the current incumbent, Michel Aoun, nears the end of his term. Could new leadership from this office be a catalyst that can redress the decline and turn the country in a different direction? Cynics would justifiably argue that the track record of much of the country’s leadership shows evidence of more narrow-minded vision than the kind of character and skillset needed to chart the turbulent waters the country is in. Yet, there is always hope.
BY: James Denselow
