August 15, 2022

Lebanon Faces Dire Crisis After the Elite Plundered the State for Decades, Exacerbating Inequality

8 min read

This is a rush transcript. Copy may not be in its final form.AMY GOODMAN: This is Democracy Now!,, The War and Peace Report.
Lebanon’s caretaker prime minister is warning the country is days away from a “social explosion” as the country confronts what the World Bank has described as one of the worst economic depressions in modern history. Prime Minister Hassan Diab made the comment in a meeting with ambassadors earlier this week in Beirut.

PRIME MINISTER HASSAN DIAB: [translated] I call on the United Nations, all international agencies, the international community and worldwide public opinion to help save the Lebanese people from dying and prevent the demise of Lebanon. Lebanon is a few days away from the social explosion. The Lebanese are facing this dark fate alone.

AMY GOODMAN: The impact of Lebanon’s economic crisis has been staggering. The country’s currency has lost more than 90% of its value. Unemployment has skyrocketed. Fuel prices have soared. Most homes and businesses, and even hospitals, only have power for a few hours each day. Pharmacies are running low on medicine. The U.N. has warned over three-quarters of households in Lebanon don’t have enough food or money to buy food.
Lebanon is also facing a massive political crisis following the devastating explosion at the Port of Beirut last August. The explosion killed over 200 people, injured 7,000 and left more than a quarter-million Beirut residents homeless. Prime Minister Hassan Diab and his Cabinet resigned after the blast, but Lebanese politicians have failed to form a new government, leaving Diab and his Cabinet in power, but in a limited caretaker capacity.
Joining us now from Beirut is Nisreen Salti, an economics professor at the American University of Beirut. We’re also joined by Ziad Abu-Rish, the director of the MA program in human rights and the arts at Bard College, also a board member of the Lebanese Studies Association and the co-editor of Jadaliyya e-zine. He’s joining us from Seattle, Washington.
Professor Nisreen Salti, let’s begin with you. Explain the scope of what is happening in Lebanon right now.
NISREEN SALTI: So, to understand the nature of the crisis, it’s perhaps useful to go back a little bit in time to see what setup led to the conditions that led to collapse. What we have is an economic system that was set up in the mid-1990s after the civil war and that instituted macroeconomic policies that put in place all sorts of economic ailments, almost structurally, in the system. So we ended up with an economy that is heavily reliant on imports for the bulk of its needs, for its consumption, and very low or discouraged local production. And this combination of two structural factors led to an unhealthy dependence on foreign currency inflows — in particular, dollar inflows. This setup privileged a very small class of business interests, namely import cartels and bank owners and real estate agents — sorry, real estate developers, and they were closely connected to a political class. And together, these two groups amassed enormous profits to the detriment of the local productive sector, of job creation, of diversification. And that gradually resulted in two things: growing inequality, income inequality, over almost two-and-a-half decades, which is one of the symptoms that was already heralding an impending collapse, and then also the conditions that today led to the crisis, which is that we became extremely dependent on these dollar inflows. And the minute the dollar inflows stopped, which is what happened in the fall of 2019 when the crisis started, the entire system crumbled.
So, what is the scope of this type of collapse? Well, as you described, the poverty rate has more than doubled in 18 months. We have seen rates of food insecurity that are unprecedented for the country. Unemployment has soared. The rate of migration of students from private to public schools, because they can no longer afford private schools, is ever growing. There’s been a shortage of basic life essentials, of fuel for electricity, for transport, but also medicines, baby formula. This is, after all, a crisis that the World Bank is describing now as one of the three worst in the last century and half. So, the economy has shrunk very, very rapidly. So the little that was left of the middle class before the crisis began is now being pushed into poverty, because there are very few jobs, very few economic opportunities, also because those that still have jobs have seen their incomes lose purchasing power daily because of the hyperinflation that the country is experiencing, and then, finally, because the banking crisis has meant that savings, for most of society, have been decimated, again because of the currency and banking crises. So, we have a middle class and poorer classes that are choked from all the standard sources of livelihood, all the standard sources of incomes. Meanwhile, the business and political class that benefited from the system was able to plunder the economy for 20-odd years, 20-plus years, and now has safely stowed its wealth abroad, outside of the country, so safe from the collapse. And many actually even continue to profiteer from the downfall through classic predatory tactics like hoarding or smuggling or extortion. So, yes, the crisis has made a very highly unequal society even more economically polarized today.
AMY GOODMAN: Ziad Abu-Rish, if you can also now put this in the context of the explosion that took place almost a year ago, last August? It seemed to have also exploded the government, but the government actually remains. Hassan Diab is still the acting prime minister. Can you talk about the judge investigating this huge explosion at the Port of Beirut and now seeking to summon a range of powerful politicians and businesspeople and could criminally charge them, and how this fits into this enormous economic crisis?
ZIAD ABU-RISH: Absolutely, Amy. Well, for the listeners that might not be aware, the investigating judge, Tarek Bitar, recently submitted a formal request to lift immunity from those politicians that have immunity and to be able to bring them in for formal questioning and potentially file charges against them. This includes former ministers of finance, former ministers of interior, former ministers of public works, the former head of the army, the former head military intelligence, as well as the current heads of general security and state security. These positions also reflect a diverse array of political parties across the kind of major divide in the Lebanese political system. But we are yet to see whether this immunity is going to be lifted and what possibilities might actually result from this initial attempt.
We should remember also that —
AMY GOODMAN: Ziad, we have —
ZIAD ABU-RISH: — he replaced a previous judge, who was removed from his position when he initiated such proceedings. So, while there are important developments with this investigation, we need to see if they’re going to hit the same dead end as the previous judge did or if they’re going to move forward. I would just like to draw —
AMY GOODMAN: He’s also seeking to question the acting prime minister?
ZIAD ABU-RISH: Yes, yes, it includes the current acting prime minister, Hassan Diab, who is in the caretaker government, as you suggested.
I just want to point out, to link the Beirut port explosion of August 4th with the economic crisis that Dr. Salti so eloquently explained, part of the problem is the total lack of accountability. We are almost one year from the first-year anniversary — sorry, we are almost one month from the first-year anniversary of the Beirut explosion, and there have been no major prosecutions yet, no major accountability. We are months and years now into this financial crisis. And as you quoted Hassan Diab initially at the beginning of the segment, he is pleading with the international community to come and save Lebanon, ignoring the fact that he and his allies and the entire political class in Lebanon are responsible for the economic collapse of Lebanon as much as they are responsible for the Beirut port explosion. And the very international community that he is begging, literally, to help save Lebanon aided and abetted this entire political class for the last 30 years in bringing Lebanon to this point, with the Beirut port explosion and the financial crisis.
AMY GOODMAN: Given what has happened, Professor Nisreen Salti in Beirut, it is surprising there isn’t more protest in the street. I mean, the currency devalued at 90%, the enormous pressure on people. What do you think needs to happen right now?
NISREEN SALTI: It’s a very difficult question. People, I think, have been bogged down by the impossibility of keeping their life together, at a very daily, basic level, which may explain why there hasn’t been massive protests, although you will see that there are flare-ups of protests here and there. People are quite destitute and are literally trying to find their livelihood in any way that they can. There’s also been a history, maybe, before the pandemic was at its height, of very violent repression of protests when they have taken place, so there is the wound also from that experience that people still carry today.
What needs to happen, in my opinion, is — it’s clear that setting it up as a question of forming a new government and returning to the table of negotiations with the IMF, which is the way out as cast often in mainstream media, is really not a way out, but a return to the status quo ante. In my opinion, what needs to happen is a deep overhaul of the current system. What needs to happen is a change in the very nature of the relationship between the state and its citizens, to transform it into a civil state that doesn’t mediate its relationship to citizens through religious communities, a new vision for an economy that is productive rather than precarious en entier and captured by a small group of coalesced interests, and a state with some at least minimal notion of social justice, which today our current reality completely eschews.
So, that, I think, is what really needs to happen in order to come out of this. Is there any chance of this? There are small signs of hope. In the face of the impossibility of daily life that our current reality has become in the economic free fall, there are a few committed groups, vocal activists and people on the ground who are organizing, who are coalescing around these very transformative goals.
AMY GOODMAN: Well, I want to thank you both for being with us, and, of course, we’re going to continue to follow this closely. Nisreen Salti, economics professor at the American University of Beirut, we’re going to link to your piece that you wrote back in 2019, “No Country for Poor Men: How Lebanon’s Debt Has Exacerbated Inequality.” And, Ziad Abu-Rish, I want to thank you for being with us, director of the MA program in human rights and the arts at Bard College, also a board member of the Lebanese Studies Association and the co-editor of Jadaliyya e-zine.
That does it for our show. Democracy Now! is produced with Renée Feltz, Mike Burke, Deena Guzder, Messiah Rhodes, Nermeen Shaikh, María Taracena, Tami Woronoff, Charina Nadura, Sam Alcoff, Tey-Marie Astudillo, John Hamilton, Robby Karran, Hany Massoud and Adriano Contreras. Our general manager is Julie Crosby. Special thanks to Becca Staley, Miriam Barnard, Paul Powell, Mike DiFilippo, Miguel Nogueira, Hugh Gran, Denis Moynihan. I’m Amy Goodman. This is Democracy Now!