Lebanon marked its centenary on 1 September last year amid continuing upheaval and distress. In addition to the explosions that took place at the Beirut Port on 4 August last year, there has also been the country's worst and by far the most dangerous financial meltdown with the collapse of the national currency, the lira. Today, this crunch is an existential threat to many Lebanese and even to Lebanon's continuing existence as a country. Lebanon has witnessed bad times before in its history, such as when domestic political divisions interweaved with foreign interference to create crises like those of 1958 and the civil war that started in 1975. But the results of these catastrophes were not as great as the crisis confronting the country now, which can only be compared to the famine that took place in what was then Mount Lebanon during World War I. Between 1915 and 1918, half of the population of the Mount Lebanon mutasarrifate, a semi-autonomous subdivision of the Ottoman Empire and the precursor of modern-day Lebanon, starved to death when Allied forces blockaded the Eastern Mediterranean and the Ottomans barred crops from neighbouring Syria from entering Mount Lebanon. As if this was not enough, swarms of locusts devoured any remaining crops. An estimated 400,000 people died. Today, following the concentration of power in the Taif Agreement signed in Saudi Arabia to end the Lebanese Civil War in the hands of parties that took part in the war, the country has seen years of rampant corruption and clientalism in governance. Lebanon now suffers from internal political rifts between partisan groups and regional and international conflicts whose repercussions spill out over the country. The aftermath of the Beirut Port blasts and the Covid-19 pandemic are wreaking havoc. Many observers believe that the present state of near-collapse is the inevitable result of policies adopted in the 1990s along with regional and internal political conflicts. They say the country's ruling class could have prevented the present catastrophes by implementing reforms that the International Monetary Fund (IMF) has been calling for in Lebanon. In the absence of the country's ruling elite taking measures to fix Lebanon's economy it has been impossible to untangle all these crises and embark on reforms. But that elite has been so entrenched in power that it has refused to give up on corruption, favouritism and appeasing loyalists. Adding to the tragedy of the Lebanese people has been the powerful alliance between the political forces and the banking system. The latter, one of the foundations of Lebanon's prosperity after its independence from France, has now turned into a heavy burden on the country's economy. Interest rates have skyrocketed, and the economy as a whole has become something like a giant Ponzi scheme adopted to conceal the system's deficiencies. There was nothing left for the politicians involved in this system but to freeze it during the October 2020 uprising in Lebanon and prevent any attempt by the country's parliament to apply capital controls. The recommendations of the France-sponsored Cedar Conference for the reform of the country evaporated, and so did the reform plans the government tried to adopt that were based on assessments of the banking system's losses. Plans to install US investment bank Lazard's as a financial adviser on debt restructuring were pushed aside, as was a planned investigative audit. In addition to the economic factors, the societal deterioration in Lebanon is putting its people at risk. Many regional and international powers, prime among them Egypt and France, are working to bring about stability in Lebanon, setting red lines before the collapse of state institutions, at the forefront of which is the army, the guarantor of peace and security. However, at present the Lebanese people have been impoverished by the collapse of the country's currency, and a large proportion of the population is on the brink of hunger following the proliferation of poverty and the shrinkage of the middle class, already diminished after the civil war. The port explosions destroyed the lives of many poor and middle-income families, creating a new wave of displacement. Many experts on Lebanese affairs believe reforms may still put Lebanon back on the right path, in addition to attracting international economic organisations such as the World Bank and friendly donor countries. It is necessary to look at productive projects and to support them in the short term and to help larger projects in the medium and longer terms, in conjunction with fighting rampant corruption in the administration and boost accountability, giving the judiciary the power to try the bigger fish before apprehending smaller figures. It is also vital that immunity be withdrawn in corruption cases, that the exorbitantly high salaries of officials in the public sector are reconsidered, that tax evasion is dealt with, and that the state's assets are restored after having been lost in corrupt deals. Next comes the restructuring of the public debt, limiting increases in the cost of servicing it and committing to using the debt according to what it was originally allocated for. In the electricity sector, it is necessary to start rebuilding power stations. The judiciary should work to recover looted funds and return funds smuggled out to foreign banks. As far as the banking system is concerned, a step of great importance to all Lebanese citizens is restoring confidence along with reconsidering interest rates and giving small depositors the right to their money. Incentives should be introduced to grant personal and housing loans and loans for larger projects. The last and most important step that should be taken is to effect a fundamental change in the macroeconomic system in Lebanon and transform the country into a productive economy, and not one based mostly on finance, increasing support for the agricultural, industrial, tourism and commercial sectors. The Lebanese people have always exhibited a great deal of flexibility during crises, which is why the nation strongly hopes that the rebuilding of the country will be successful. While the latest government negotiations and the retreat from a further deterioration in the exchange rate are raising hopes for a better tomorrow, the most important thing today is the comprehensive re-establishment of proper economic and financial policies and the political system. If the same people now reintroduce themselves into government and do not face accountability, the Lebanese people will be doomed to a cruel fate indeed. The writer is a professor of Law in the University of Lebanon. *A version of this article appears in print in the 5 August, 2021 edition of Al-Ahram Weekly
