A million plus Lebanese first thronged the streets in October 2019 and demanded an overhaul of a sect-based power sharing system, an end to corruption, and the removal of the ruling elite. Almost nine months later, the devaluation of the local currency has accelerated, unemployment has risen, and the coronavirus lockdown exacerbated the free-fall of Lebanon’s economy. Moreover, the ever-looming threat of the return of sectarian clashes seems more urgent now than at any other time since the civil-war ended.
Lebanon’s government asked for a $10 billion USD loan from the IMF and the country’s Prime Minister pleaded to the global community to set-up a food security fund.
Pegged to the dollar at a fixed exchange rate of 1,500 LBP to $1 USD back in 1997, the Lebanese pound tumbled to 8,000 in recent weeks. The situation led to hunger riots in the north of Lebanon as peoples’ purchasing power has crashed along with the currency and they are struggling to feed their families. Lebanon’s government asked for a $10 billion USD loan from the International Monetary Fund (IMF) and the country’s Prime Minister, Hassan Diab, pleaded to the global community to set-up a food security fund for Lebanon to avoid mass starvation and immigration to the West.
In the poorest areas of the country, charitable organizations are running soup kitchens and going door-to-door to donate bread. Basma Sayeed, an activist at an NGO called Sanabal Nour in the northern city of Tripoli, says they offer packed meals for free to hundreds every day. “Just yesterday a haggard man cried, ‘Give me milk for my child,’” Sayeed recounted. “There are no jobs, people have no money. It is heartbreaking to see,” she deplored.
As the lockdown lifted, the protestors reappeared on the streets. But this time, they added another demand to their list: Stop the smuggling of goods to and from neighboring Syria.
In January, the controversial governor of Lebanon’s Central bank, Riad Salameh, indicated that the state had spent more than it needed, around $20 billion USD’s worth – between 2015 and 2019. He said that Lebanon’s annual external financing needs could decline due to a drop in imports, potentially saving $4 to $5 billion USD a year.
Lebanon was subsidizing more fuel and wheat than the country needed and the surplus was being smuggled to Syria openly.
But what Salameh did not say, and analysts spelled out, was that Lebanon was subsidizing more fuel and wheat than the country needed and the surplus was being smuggled to Syria openly. Lebanon shares a 364 km-long and largely porous border with Syria which is hard to control. Nonetheless, some citizens’ groups have formed small teams and deputed them near the four official border crossings to stop Syria-bound trucks. At the same time, the outrage over smuggling has built pressure on the Lebanese army to double up efforts to contain it.
Twenty-one-year-old Karl, a computer engineering student at the American University of Beirut, was outside the Ministry of Justice on the day the coronavirus lockdown was eased and among those who protested against the illicit trade with Syria. Karl said that it would be near impossible for him to finish his studies and find a job in the current circumstances, and yet he did not want an IMF loan to stabilize the country. He argued if the government stopped the smuggling of subsidized goods to Syria, it could save enough money to not require an IMF bailout.
“The IMF will give them a terrible deal and we will end up suffering more while these politicians will embezzle those funds too,” said Karl. “I want them to stop subsidized fuel and wheat from going to Syria first, and save our money.”
Even those who welcome an IMF bailout demand an urgent stop to smuggling to Syria. Lina Hamdan, one of the organizers of the protests, backed an IMF loan and said that in fact the IMF should make its loan conditional on stringent border security. She added that Lebanon can brave the austerity measures that the IMF is expected to impose, including cuts in electricity and fuel subsidies, as long as it is balanced out by the money saved by stopping the smuggling of goods to and from Syria.
Sami Nader, a renowned Lebanese political analyst, said it may not be that easy.
“Some political parties want Lebanon to increase trade with Syria and Iraq,” said Nader. “In my view that is nonsense,” Nader went on. “If we count on trade with Syria and Iraq, which are in a very bad shape and collapsing too, it will not help us. It will be the alliance of failed states,” he argued.
“An IMF loan is a tool for the Americans to halt the supply of arms and to weaken Hezbollah in Lebanon for the benefit of the Israelis.”
The Lebanese say they are being squeezed from both sides and that an IMF loan is a tool for the Americans – the biggest patrons of the IMF – to halt the supply of arms and to weaken Hezbollah in Lebanon for the benefit of the Israelis. David Schenker, US Assistant Secretary for Near East Affairs, has said that money provided by the IMF is not aid but conditional on reforms that maximize state returns and give the IMF the control over the state’s economy.
Schenker has also indicated that border security and tighter customs checks would be a part of the IMF’s conditions. He told the local press that it remains to be seen, “whether this government, of which Hezbollah is part of,” will commit to reforms, “since it depends on illegal financing and corruption and avoids paying its dues to the state, such as customs and taxes.” It is hard to believe an IMF loan will materialize unless the US is sure it can achieve its goals and harder to imagine Hezbollah giving in.
However, Hassan Nasrallah, the General Secretary of Hezbollah, sees it as an American conspiracy to install the United Nations’ forces on Lebanon’s borders with Syria and make it easier for Israel to invade the country. “The financial and economic situation is the number one concern for the Lebanese people and restoring ties with Syria is the only way to solve major problems including the economic ones,” said Nasrallah in a televised speech. “Smuggling between Lebanon and Syria is one of the major problems that can’t be solved without coordination with the Syrian state.”
Syria itself is reeling under a severe economic crisis and is desperate for smuggled fuel and wheat. It can hardly be expected to shun goods its survival depends on.