But while Syria no longer has a military presence, it has retained political influence through its relationship with Hezbollah. Growing economic hardship triggered fresh unrest. Symbolising the polarisation is the fact that the president is pro-Syrian and the prime minister anti-Syrian. BEIRUT (Reuters) - Lebanon is grappling with a deep economic crisis after successive governments piled up debt following the 1975-1990 civil war with little to show for their spending binge. Clashes between the Lebanese army and a shadowy group called Fatah al-Islam, based in a Palestinian refugee camp near Tripoli, have left dozens dead. Controversy around Ethiopia's Nile River dam project explained. Airlines pause flights while others divert them amid a surge in hostilities in Israel and Gaza. A community dedicated to Bitcoin, the currency of the Internet. The first is a loose alliance of Sunnis, Christians and Druze (a heterodox offshoot of Islam) and enjoys the support of the United States. Updated 1646 GMT (0046 HKT) July 13, 2020 . Introduction. Many Lebanese hold Syria responsible for the assassination - something Damascus staunchly denies. How did Lebanon get into such a deep crisis? People have taken to the streets again, and there have been clashes between protesters and police. lebanon economic crisis – explained! Its public debt-to-gross domestic product (what a country owes compared to what it produces) was the third highest in the world; unemployment stood at 25%; and nearly a third of the population was living below the poverty line. The government's plans to investigate the cause of the explosion were not enough for most people, who have lost all faith in the political elite. Lebanon has been in economic and financial crisis since last year. As the financial crisis reaches the abyss, many Lebanese have resorted to the ancient barter system, especially on Facebook groups. Tens of thousands of Lebanese took to the streets, leading to the resignation of Western-backed Prime Minister Saad Hariri and his unity government. Of the three, the economic crisis has had by far the largest (and most persistent) negative impact. 29 Apr 2020 The policy of relying too much on debt to fund the budget has created problems for the young government of Prime Minister Hassan Diab. This essay deciphers the crisis’s origin, describes the current juncture, and reflects on the likely outcomes in the proximate future. Coronavirus had curbed the protests, but the financial situation continued to worsen and last week's deadly explosion was seen by many as the deadly result of years of corruption and mismanagement. Anyone worried about Hezbollah’s powerful arsenal should be even more scared by the deep economic crisis that could very well strengthen the movement's ability to rule Lebanon. Lebanon’s ability to handle a civil revolt over poor economic conditions that could then be exploited for political and military purposes are under question. The intervention lasted for around three months until President Camille Chamoun, who had requested the assistance, completed his term as president of Lebanon. Austerity measures have triggered countrywide unrest in Lebanon. In the aftermath of the war, the country began the task of physical reconstruction - but was still plagued by its old divisions. 56,514 people are reading stories on the site right now. The country's proximity to Israel - and the presence of a large number of Palestinian refugees on its soil - mean it is also intimately tied to the Arab-Israeli dispute. By the time the crisis erupted in October 2019, the economy was facing four extraordinary challenges. Most Popular Now | 56,514 people are reading stories on the site right now. Do India reinfections pose a challenge to vaccines? The price of food has … At the same time, people were getting increasingly angry and frustrated about the government's failure to provide even basic services. Then, unprecedented wildfires in the country's western mountains highlighted how underfunded and underequipped the fire service was. Lebanon's Prime Minister Saad Hariri has said he is resigning, amid protests that have gripped the country for almost two weeks. When importers of wheat and fuel demanded to be paid in dollars, unions called strikes. Before the cabinet's resignation, a number of ministers had offered to step down. Even before the coronavirus pandemic at the start of this year, Lebanon seemed to be headed for a crash. The civil war also drew in Iran to fight Israel and support the Lebanese Shia. The Lebanese Civil War (Arabic: الحرب الأهلية اللبنانية , romanized: Al-Ḥarb al-Ahliyyah al-Libnāniyyah) was a multifaceted civil war in Lebanon, lasting from 1975 to 1990 and resulting in an estimated 120,000 fatalities. Prices of basic necessities, have risen dramatically since October 2019, while … The Lebanese government sees the hand of Syria behind Fatah al-Islam. As of 2012, approximately 76,000 people remain displaced within Lebanon. Now, with at least … The Lebanese government has resigned amid growing public anger following a devastating explosion in Beirut on 4 August that killed at least 200 people and injured about 5,000 others. Tiny Lebanon baffles outsiders. Many blamed the ruling elite who have dominated politics for years and amassed their own wealth while failing to carry out the sweeping reforms necessary to solve the country's problems. The ratio is projected to shoot to 185 percent by 2024. © 2021 BBC. Gym equipment is being exchanged for … It has 18 officially recognised religious sects and sharing power between them has always been a complicated game. It is against this backdrop of conflict and polarisation that the war on the Lebanese-Israeli border unfolded during the summer. Lebanese Muslims have tended to look east for support from the other Arab states and from Iran. The government is badly split between anti-Syrian and pro-Syrian factions. At the start of October 2019, a shortage of foreign currency led to the Lebanese pound losing value against the dollar on a newly emerged black market for the first time in two decades. By Roger Hardy. The disaster came on the heels of the country's worst financial crunch in decades, which had already seen tens of thousands lose their jobs or much of their income, even as the novel coronavirus pandemic hit. The Lebanese crisis explained. The three main political offices - president, speaker of parliament and prime minister - are divided among the three biggest communities (Maronite Christian; Shia Muslim; and Sunni Muslim, respectively) under an agreement dating back to 1943. The 1958 Lebanon crisis was a Lebanese political crisis caused by political and religious tensions in the country that included a United States military intervention. In this Q&A, Crisis Group expert Heiko Wimmen says the prime minister’s emergency measures may be too little, too late. By the time the coronavirus restrictions began to be lifted in May, the prices of some foodstuffs had doubled and Mr Diab warned that Lebanon was at risk of a "major food crisis". Lebanon's economic and political crisis deepened on August 4 when a massive blast at Beirut's port killed 181 people, wounded thousands and ravaged huge areas of the capital. BBC Middle East analyst. Hezbollah claimed it had won a "divine victory". Eighteen religions are officially recognised by the Lebanese state. It is this religious diversity that makes the country an easy target for interference by external powers, as seen with Iran's backing of the Shia Hezbollah movement, widely seen as the most powerful military and political group in Lebanon. Lebanon's financial situation is deteriorating amid a rising political divide. The second is an essentially Shia grouping dominated by Hezbollah, with the backing of Syria and Iran. Israel has repeatedly intervened in Lebanon to protect its northern border. Late last year also saw the unravelling of what analysts said was effectively a state-sponsored pyramid, or Ponzi, scheme run by the central bank, which was borrowing from commercial banks at above-market interest rates to pay back its debts and maintain the Lebanese pound's fixed exchange rate with the US dollar. Lebanon's economic crisis has fueled unrest and threatens to destabilize the country indefinitely As a result, it has become harder for Lebanese to … The blast came at a difficult time for Lebanon, which is not only trying to curb the spread of the coronavirus but is also mired in an unprecedented economic crisis. But the end of this government does not necessarily mean an end to the anger. Read about our approach to external linking. They were having to deal with daily power cuts, a lack of safe drinking water, limited public healthcare, and some of the world's worst internet connections. The government, meanwhile, finally approved a recovery plan that it hoped would end the economic crisis and win support from the International Monetary Fund (IMF) for a bailout package worth $10bn. The economic situation has pushed tens of thousands people into poverty and triggered large anti-government protests. In his strongly worded speech on Monday, Mr Diab blamed "a system of corruption... deeply-rooted in all the functions of the state". The Lebanese government has resigned amid growing public anger following a devastating explosion in Beirut on 4 August that killed at least 200 people and injured about 5,000 others. Lebanon ranked 137th out of 180 countries (180 being the worst) on Transparency International's 2019 Corruption Perceptions Index. By Tamara Qiblawi, CNN. How did we get here? Fear grips Israel and Gaza as violence worsens, The race against the variants. In mid-October, the government proposed new taxes on tobacco, petrol, and voice calls via messaging services such as WhatsApp to drum up more revenue, but a backlash forced it to cancel the plans. Lebanon’s debt-to-GDP ratio was 155 percent by the end of 2019 (up from 141 percent in 2016). Actress Gal Gadot criticised over Middle East tweet, Chrissy Teigen sorry for bullying teen star online, Spooky 'Finding Nemo' fish washes up on US beach, Ellen reveals why she is ending her talk show, Tesla will no longer accept Bitcoin, says Elon Musk, Woman charged after posing as US school student, US releases climate report delayed by Trump, what analysts said was effectively a state-sponsored pyramid, or Ponzi, scheme, How Lebanon became the third most indebted nation, voice calls via messaging services such as WhatsApp, a young man was shot dead by soldiers during a violent protest in Tripoli, Lebanon ranked 137th out of 180 countries. Lebanon’s perpetual garbage crisis is just one example of the country’s dysfunction. Lebanon, the size of Connecticut, was under threat by the Soviet Union. In the wake of the first Covid-19 deaths and a surge in infections, a lockdown was imposed in mid-March to curb the spread of the disease. Lebanon is … Lebanon is the most politically complex and religiously divided country in the Middle East, which is what makes it such a potentially explosive factor in an unstable region. Bitcoins are issued and managed without any central authority whatsoever: there is no government, company, or bank in charge of Bitcoin. For nearly 18 months now, Lebanon has been assailed by compounded crises—specifically, an economic and financial crisis, followed by COVID-19 and, lastly, the explosion at the Port of Beirut on August 4, 2020. Lebanon's economic crisis, coupled with the impact of the coronavirus pandemic that shut the country down, could lead to a famine. Lebanon in a sink or swim situation, just got a dose of temporary relief, but could there be a practical 2-step solution out of the crisis? Many business were forced to lay off staff or put them on furlough without pay; the gap between the Lebanese pound's value on the official and black-market exchange rates widened; and banks tightened capital controls. Read about our approach to external linking. Protests cut across sectarian lines - a rare phenomenon since the country's devastating 1975-1989 civil war ended - and brought the country to a virtual standstill. The outbreak of fighting in the north of the country on 20 May has added a new twist to Lebanon's problems. The capture of two Israeli soldiers by Hezbollah provoked a month-long Israeli onslaught. Demonstrations have convulsed Beirut and other cities across Lebanon since mid-October, forcing the prime minister to resign and shaking confidence in an economy that was already in crisis. Others see a different but no less worrying possibility - that radical Islamists of the al-Qaeda type now see Lebanon, like other failing states, as attractive terrain in which to establish a foothold. Excessive fiscal and external imbalances, financed through debt for decades under a fixed exchange rate regime, weakened the balance sheets of the sovereign, banks and the central bank, and led to a sudden stop of capital that precipitated a debt, banking and currency crisis. The Christians have tended to look west to Europe and the United States. American and Lebanese government forces successfully occupied the Port of … The UN Security Council has indicated that, if Lebanese politicians are too divided to agree on the setting up of a tribunal, it will become the UN's task to do so. The only two countries to surpass Lebanon on this measure are Greece and Japan. The watchdog says corruption "permeates all levels of society" in Lebanon, with political parties, parliament and the police perceived as "the most corrupt institutions of the country". "Many Lebanese have already stopped buying meat, fruits and vegetables, and may soon find it difficult to afford even bread," he wrote in the Washington Post. On the one hand, it forced anti-government protesters off the streets, but on the other, it made the economic crisis much worse and exposed the inadequacies of Lebanon's social welfare system. While Lebanon has plenty of problems of its own, it has also become the arena where many of the region's conflicts and rivalries are played out. Announcing the move on Monday, outgoing Prime Minister Hassan Diab said his government was taking "a step back... to stand with the people, in order to wage the battle of change with them". Discontent in Lebanon has been brewing for years. But with stringent withdrawal limits imposed across much of the country’s banking sector that are now confining customers to just a few hundred dollars per week, Lebanon’s worst financial crisis since the days of its civil war has left much of the country strapped for cash. Parliament's 128 seats are also divided evenly between Christians and Muslims (including Druze). Set up by France after World War I as a predominantly Christian state, Lebanon is now about 60% Muslim, 40% Christian. Just as the Soviets had taken over Czechoslovakia and China, they threatened Lebanon. According to my research on the current economic crisis, Lebanon’s unproductive rentier economy revolves around banking and real estate, which creates, as a result, great income inequality. Lebanon protests escalate as currency dives, 'Now there is nothing' - Lebanon pushed to brink, Lebanon begins 'total' shutdown as cases increase, Coronavirus stokes Middle East boiling points, Lebanon crisis: 'The country needs our energy', The country where electricity is stolen to survive. Most protesters appear bent on the government’s resignation … Last year's protests led to the formation of the government which has now been forced to step down over the same accusations of corruption. In April a young man was shot dead by soldiers during a violent protest in Tripoli and several banks were set ablaze. For hundreds of thousands of Muslim households in Lebanon, the country's financial crisis means the Ramadan Iftar is a stripped down affair, with families who have come together to … Israeli forces eventually withdrew in 2000 and Syrian forces in 2005. How 'cocaine of the sea' imperils rare porpoise, I love being a mogul: Hollywood stars go into business, Actress Gal Gadot criticised over Middle East tweet1, Chrissy Teigen sorry for bullying teen star online2, The strength and limitations of Hamas's arsenal3, Spooky 'Finding Nemo' fish washes up on US beach4, Fear grips Israel and Gaza as violence worsens5, Ellen reveals why she is ending her talk show6, Tesla will no longer accept Bitcoin, says Elon Musk7, Woman charged after posing as US school student8, US releases climate report delayed by Trump9, The story of Arizona's 'ridiculous' election recount10. Bitcoin is a distributed, worldwide, decentralized digital money. ... but the crisis … It says it is the very system of sectarian power-sharing which is fuelling these patronage networks and hindering Lebanon's system of governance. Newly appointed Prime Minister Hassan Diab subsequently announced that Lebanon would default on its foreign debt for the first time in its history, saying its foreign currency reserves had hit a "critical and dangerous" level and that those remaining were needed to pay for vital imports. Mr Hariri said Lebanon had reached a deadlock and needed a … Some think that if Lebanon announces bankruptcy, it will wipe out its debt obligations and relieve the country form $85bn it owes and $6bn in debt servicing For the past 18 months, Lebanon has been reeling from a wrenching economic crisis. Most analysts point to one key factor: political sectarianism, or groups looking after their own interests. With hindsight, Lebanon’s economic crisis was predictable. Lebanon's woes laid bare as crisis deepens . As prices rose further, many families were unable to buy even basic necessities. Before a deadly blast rocked Lebanon’s capital on Tuesday, the country’s economy was already on a Venezuela-like trajectory. VideoThe race against the variants, The strength and limitations of Hamas's arsenal, Uyghur imams targeted in China's Xinjiang crackdown, The story of Arizona's 'ridiculous' election recount, Cold welcome for migrant influx at gateway to Europe. Lebanon, mired in its worst economic crisis since the 1975-1990 civil war, is looking to settle the maritime border dispute so it can press on with its offshore quest for oil and gas. Lebanon is in the midst of a dangerous multifaceted crisis: an economic, financial, and socio-political one. Relations with Syria are complicated by ongoing efforts to establish an international tribunal to investigate the killing of the former Lebanese prime minister Rafiq Hariri in 2005. Since the end of the civil war, political leaders from each sect have maintained their power and influence through a system of patronage networks - protecting the interests of the religious communities they represent, and offering - both legal and illegal - financial incentives. "; Eighteen religions are officially recognised by the Lebanese state, Lebanese politics have resulted in a succession of wars and atrocities, Massive demonstrations have pressed both sides' claims, The BBC is not responsible for the content of external internet sites, How the world's oldest clove tree defied an empire, Why Royal Ballet principal Sergei Polunin quit, BBC News Updated every minute of every day, High turnout in crucial Lebanon elections, Rafik Hariri's son Saad faces a daunting task as prime minister, writes Natalia Antelava, Tourists flock to 'Jesus's tomb' in Kashmir. Lebanon officially recognises 18 religious communities - four Muslim, 12 Christian, the Druze sect and Judaism. However, the debacle unleashed a surge of discontent that had been simmering in Lebanon for years. Israel-Gaza: Planes diverted amid rocket threat. Several factors have led to Lebanon’s current quagmire, but few have been more impactful than the country’s rather bemusing … The political deadlock has persisted into 2007, defying the mediation efforts of various Arab states. It left Lebanon firmly under Syria's thumb, and with a southern strip of territory occupied by Israel as a buffer zone. And the crisis has left Lebanon, a strategic country regionally, open to intervention from other countries as a bailout from the International Monetary Fund grows more unlikely. In late 2019, a plan to tax Whatsapp calls spilled over into mass protests against economic turmoil and corruption, which eventually led to the then government's resignation. What’s behind Lebanon's economic crisis? The long conflict which ravaged the country from 1975 until 1990 was both a civil war and a regional war. In 1982, with Iranian help, the Shia created Hezbollah, the Party of God, which has evolved into a major player in Lebanese politics and an important ally of Iran and Syria. This is an enormous debt relative to Lebanon’s GDP. According to … As Lebanon’s economy and currency collapse, foreign domestic workers struggle to make ends meet, prompting many to consider returning home. "One of the many examples of corruption exploded in the port of Beirut, and the calamity befell Lebanon," he said. "But corruption cases are widespread in the country's political and administrative landscape; other calamities hiding in many minds and warehouses, and which pose a great threat, are protected by the class that controls the fate of the country.". In the ongoing protests in Lebanon, people have focused their anger on one particular target: banks. 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