Pity the ruined nation of Lebanon

The fall of the Lebanese government, after the cataclysmic explosion that obliterated the port of Beirut last week, might be seen in ordinary countries as the necessary prelude to a new start. It is nothing of the sort. In the aftermath of the disaster, I have met no sentient citizen of this stricken nation deluded enough to suggest it might be.

The dynastic elites of Lebanon’s myriad Christian and Muslim sects remain in charge, warlords who survived the 1975-90 civil war and interlocked with oligarchs the better to pillage the state for three decades. These same clans of power brokers handpicked this government anyway, after its predecessor — a coalition based on sharing spoils — was brought down by a civic uprising against the entire political class last October.

Beirut came almost literally unhinged on August 4, when what the authorities say was 2,750 tonnes of ammonium nitrate stored in a port warehouse erupted in a blast that razed huge swaths of downtown, waterfront and east-central Beirut. The explosion killed some 170 people (with scores still missing), injured 6,000 and made 300,000 homeless.

The chemicals, used in fertiliser and explosives, had been kept there like a ticking bomb for six years. President Michel Aoun, and Hassan Diab, the resigning prime minister plucked from obscurity nine months ago by the Lebanese nomenklatura, were warned of the danger by the state security directorate a fortnight before the disaster.

But the elites are already busy trying to repeat the trick of conjuring up a new government and — no easy task, in the face of popular rage in the streets — to change the subject. They are as determined to avoid any investigation of this tragedy by outside experts as they are to prevent an audit of the central bank. That might reveal the heterodox accounting and surreptitious transfers abroad of billions of dollars that has helped to bankrupt Lebanon.

Before this disaster, Lebanon was well on course to becoming a failed state. Its economy is collapsing amid a combined debt, budget, currency and banking crisis. Institutions are imploding as Hizbollah, the Iran-backed Shia paramilitary group, tightens its grip on the country with allies such as Mr Aoun, of the largest Christian party. Lebanon is home to about 1.5m Syrian refugees, roughly a quarter of the population. The coronavirus pandemic has squeezed any remaining life out of the economy. What happened last week in Beirut felt to many here like a visit from the fifth horseman of the apocalypse.

The damage, estimated at up to $15bn, may be of a similar order to the wreckage from Hizbollah’s last war with Israel in 2006. Then, Europe and the Gulf rallied behind Lebanon to finance its reconstruction. Now, as President made clear on a visit here, there will be humanitarian aid, but reforms are essential. Endemic clientelism and corruption must be rooted out. A deal with the IMF, including restructuring of debt and the banks, and an audit of the central bank, is necessary. In politics, nation must come before sect. Is this likely?

Ghazi Wazni, the outgoing finance minister, who did genuinely seek an IMF deal, published a recovery plan in April that estimated total bank losses at $83bn and a hole in the central bank of about $50bn — together, over twice last year’s economic output. Insouciant politicians, allied with insolent bankers, are having none of it. They want to inflate their way out of debt, pushing the middle class into poverty and the poor into destitution.

The banks claim to have been in profit from 2000-18, but shut depositors out of their accounts by the autumn of 2019. Having lent 70 per cent of their assets to an insolvent state at interest rates inflated by the central bank, they did well but cannot look after their depositors. They simply don’t have the money — and neither does Lebanon.

The outgoing government was set up to fail by the sectarian power brokers who appointed it. They sided with the banks, in which they almost all have an interest, to oppose that government’s IMF-backed recovery plan. Lebanon broke last week. But the sectarian nomenklatura is still at it. Gebran Khalil Gebran, Lebanon’s iconic poet, said it all a long time ago: “pity the nation”.

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