On June 20, Lebanon’s caretaker prime minister, Najib Mikati, said Lebanon’s severe economic crisis means setting priorities, especially on providing public services for the many needy.
His comments, which coincided with World Refugee Day, came at a meeting to launch the Lebanon Crisis Response Plan for 2022-2023, part of an ongoing multi-billion dollar effort to help Lebanese in need and the country’s 1.7 million Palestinian and Syrian refugees.
Mikati called on the international community to help Lebanon return Syrians to their home country, warning that Lebanon will otherwise have to send them back “through legal means.”
“We are going through one of the toughest economic, financial, political and social crises in the world,” he said, “which means Lebanon cannot handle this burden [refugees] anymore, 11 years after the Syrian crisis.”
Trouble is, refugees aren’t the biggest problem for Lebanon’s economy. Corruption and politics are.
The United Nations refugee agency (UNHCR) says Lebanon hosts more refugees per capita than any country. Nine out of 10 live in extreme poverty, COVID-19 and economic aftereffects from the massive 2020 Beirut port explosion. Since 2015, Lebanon has accepted $9 billion in humanitarian aid.
The watchdog group Transparency International gives Lebanon one of the worst corruption scores in the world – only 24 on a scale in which 100 is best.
“In the wake of the Beirut blast, Lebanon sunk into economic collapse and political instability, going without a government for a 13-month period,” the group said in January 2022.
“Widespread protests by Lebanese citizens against political corruption and the economic meltdown were met with persecution and harsh suppression of basic rights by the authorities, even as the Lebanese political class failed to address the unfolding crises.”
Many of the country’s wealthy elites were among those identified holding billions in offshore accounts in the 2021 Pandora Papers investigation by a consortium of news organizations.
Who's to blame? Refugees have long been the target.
In 2019, Beirut Today, a Lebanon-based independent media platform, reported that politicians were stirring resentment and discrimination against refugees. The paper cited reports of torture, death in detention, forced return, curfews and mass evacuations.
The outlet said the government had adopted harsh measures to deter refugees from entering the country, including strict work and residency rules and limiting sectors in which refugees could work to agriculture, construction and waste management.
Fast forward to April, when Reuters reported that Lebanon’s poverty rates are soaring, with 80% of its population classified as poor. The Lebanese pound had lost 90% of its value, driving inflation. According to the news agency, savers lost more than 80% of the value in frozen dollar accounts, sparking the largest exodus from the country since its 1975-90 civil war.
Lebanon’s ruling elite has controlled the country since the end of the civil war. The government is based on a sectarian power-sharing system that allocates posts among the country’s religious or ethnic groups. The president is a Christian Maronite, the prime minister is a Sunni Muslim, the speaker of the parliament is a Shia Muslim. Lower positions are similarly allocated.
It’s a system that invites corruption, academics John Nagle and Tamirace Fakhoury wrote in The Conversation after the Pandora leaks became public.
“In seeking health care, food and other basic services, Lebanese citizens often need to go to their communal leaders rather than to the state,” they wrote. “Political leaders who distribute these services expect their communities to reciprocate by giving their support at the ballot box.
“Corruption is thus central to the survival of sectarian politics.”
In an analysis for the Middle East Institute, economists Amer Bisat, Marcel Cassard and Ishac Diwan wrote that Lebanon’s economic failure was predictable.
In 2019, people took to the streets to protest government policies and the ruling elites’ opposition to reform. The government quit, creating a political crisis, which in turn halted capital flows and squeezed banks. Then came COVID-19 and the Beirut blast.
“There was no president between 2014 and 2016, there were multiple and lengthy delays in cabinet formation, and the 2018 parliamentary elections took place but only after a five-year delay,” the three wrote.
“The [former Prime Minister Rafik] Hariri government that was in place when the crisis hit in 2019 became impotent to such an extent that it lacked the power to deliver on any of the reforms required as a condition for foreign support.”
Lebanon failed to meet the International Monetary Fund’s conditions for a financial bailout, including reforming banking secrecy laws, Reuters reported.
The Pandora Papers revealed that Lebanese officials had transferred billions of dollars offshore as ordinary people suffered. The papers named Mikati among them.
With a worth of more than $2 billion, he and his family own a satellite phone company and a Monaco-based management company, plus Panama-based Hessville Investment Inc., which “helped facilitate operations of the offshore company,” journalists reported.
Mikati issued a statement at the time saying his holdings were legal and had been disclosed to Lebanese regulators. “Wealth is not necessarily accumulated at the expense of public interest and the needy,” the statement said.
On January 25, the World Bank accused members of Lebanon’s ruling elite of abusing their positions and creating a “Zombie-like economy.”
“Lebanon’s deliberate depression is orchestrated by the country’s elite that has long captured the state and lived off its economic rents,” the bank said in a news release. “This capture persists despite the severity of the crisis – one of the top 10, possibly top three most severe economic collapses worldwide since the 1850s.”
The headline for the article: “Great Denial in the Deliberate Depression.”
“The poor and the middle class, who were never well served under this model in the first place, are carrying the main burden of the crisis,” the bank wrote.