Over a month after the outbreak of mass street protests in Lebanon and three weeks after the resignation of Prime Minister Sa‘d al-Hariri, Lebanon remains mired in political deadlock. The political elite continues to behave as if it were business as usual, engaging in behind-the-scenes horse trading over a new government as politicians try to maintain influence. This comes as Lebanon nears an economic and financial free fall, with catastrophic effects for the population.
State coffers are unable to service the $86 billion public debt. Lebanon’s central bank does not have the ability to produce the $4 billion in annual interest it owes commercial banks for the $60 billion in deposits. Remittances from Lebanese expatriates as well as Foreign Direct Investment have dropped significantly due to declining confidence in the country as well as a global financial downturn and a drop in oil prices. Meanwhile, the state is spending more than it is taking in. In 2018, income from taxes and other revenue sources amounted to $11.5 billion, while expenditures were $17.7 billion. Around 36 percent of these expenditures went to debt servicing, while another 11 percent went to financing the inefficient national electricity utility, Electricité du Liban.
The net result is calamitous for the Lebanese. The country’s economic and financial management is adrift. Banks are strapped for cash and the demand for dollars far outstrips supply. Banks are implementing capital controls on transfers outside the country, though on a selective basis. They have also reduced credit limits for businesses. This in turn spells trouble for an economy that relies heavily on imports. As a result, businesses are shutting down, employees are either being laid off or are receiving reduced salaries. Meanwhile, the cost of basic goods has increased anywhere between 5–15 percent in the past month and shortages are expected.
While, officially, the central bank continues to maintain the currency peg at LL1,507 to $1, a depreciation of the Lebanese pound has already started, with money changers—the only source of dollars—charging LL1,900 to the $1. As per World Bank estimates, a 30 percent decrease in the value of the pound with regard to the U.S. dollar would drive the poverty rate to over 50 percent of the population. This would in part be a result of the ensuing inflation and the erosion in the value of salaries and pensions.
The question for Lebanon’s political elite is who will foot the political and economic bill for the colossal mismanagement of the country? Politically, the challenge for Lebanon’s leading political forces is existential. All parties are defined more by identity issues than ideas. Lebanon’s political class has reduced the complex calculus of politics to a simple question of survival.
Today, Lebanon’s politicians fear that the demographic and social tide is turning against them. And when the country’s political forces that have exercised power for a long time come to believe that their eclipse is inevitable, they will fight to preserve the privileges they have acquired, at whatever the cost. This could include resorting to violence in any form necessary.
In this context, the temptation to call on external powers for support—a well-tried Lebanese tradition—is all too great. Both Russia and Iran have voiced unequivocal support for the status quo as exemplified in the alliance between Hezbollah and the Free Patriotic Movement. While Iran’s supreme leader, Ayatollah ‘Ali Khamenei, has blamed Lebanon’s protests on foreign powers, Russian Deputy Foreign Minister Mikhail Bogdanov and the Kremlin’s special envoy for the Middle East released a statement that Russia considered any external influence in Lebanon unacceptable. Bogdanov’s statement followed his meeting with President Michel Aoun’s advisor Amal Abu Zeid. State Department spokesperson Morgan Ortagus was quick to respond by affirming the United States’ longstanding support for Lebanon. And in mid-November France sent an envoy to Beirut to back a dialogue between the Lebanese.
For the political class to rely on external backing to maintain things as they are risks transforming Lebanon into the focal point of a geopolitical showdown between the United States, Iran, and Russia. That would be disastrous for the Lebanese. The situation in Lebanon is such today that even the deployment of limited acts of violence would quickly destabilize the country. And while the developing sense of national awakening may still be in its infancy, the political maturity demonstrated by the youth in the streets shows that efforts to push against demands for change are really efforts to turn back the tide of history. It will only delay the inevitable and could destroy the country.
The political class needs to avoid a crash landing that would be catastrophic for Lebanon and the Lebanese, including followers of the political parties. It must also bridge the trust gap between the government and its people, as well as with the international community. That is why it is imperative that it move forward on naming a prime minister. That person must be allowed to form a cabinet of independents, experts in their respective fields, with the moral integrity and courage to carry out difficult decisions.
The mandate of this cabinet would be, strictly, to focus on an economic emergency recovery plan, bolstering oversight institutions and a new election law. The economic plan would include immediate budgetary support, likely to come from the international community or international financial institutions. It would also include structural reform options, a debt restructuring plan that allows equitable burden sharing and social protections that would cushion the economic effects on the Lebanese, including its most vulnerable populations.
The electoral law would have to take into consideration Lebanon’s new sociopolitical realities. This includes lowering the voting age to eighteen to allow the young to vote, while also creating a fairer playing field for newly-established political parties and independent candidates, so that they can compete with the established political parties and politicians. Otherwise, protesters have made it clear they would continue to insist on taking the reins of their own future.
Lebanon’s current political leaders, most of them key actors in the civil war, could also consider taking an alternative path. As unlikely as this may sound, they could acknowledge that the time for identity-based politics and crony capitalism is fading. To survive, they need to consider how to transform themselves, broaden their base, and move toward politics based on ideas that can garner popular support.
While this may seem to represent suicide for the political forces, it may actually be the key to their long-term survival. As demonstrated over the last month, the Lebanese for the most part are seeking a new social contract with their state, embodied by a governance system that recognizes their rights and responsibilities as equal citizens. They would like to debate and be defined by ideas, not by religious beliefs or ideologies. And they want those ideas to help shape discussions over what a future Lebanon should look like. Political parties will need to heed this call if they wish to remain relevant.