BEIRUT: The Lebanese pound’s dramatic and unchecked nosedive against the US dollar is threatening to plunge the crises-stricken country into total chaos and security risks that would further add to the misery of the Lebanese who are facing poverty as a result of an unprecedented financial downturn.
In response to the crashing pound, which hit an all-time low record Tuesday, trading for over LL15,000 against the dollar on the black market, angry protesters took to the streets for the second week in a row blocking main roads in parts of Beirut and other cities, including the main highway to the south, main roads in east and north of the country with burning tires, trash bins and rocks.
The economic crisis is posing the biggest threat to the country’s stability since the 1975-90 Civil War, wiping out jobs, locking people out of their bank deposits and with a soaring inflation rate estimated at 85 percent for 2020.
The crashing pound, which has already lost more than 90 percent of its value since 2019, has led to prices of foodstuffs and other basic items skyrocketing and driven half of Lebanon’s 6 million population below the poverty line.
Officials from across the political divide have warned of an imminent “social explosion,” a rising crime rate and a subsequent security flare-up in the troubled country if a new government was not formed quickly to remedy the situation by enacting a string of economic and administrative reforms outlined in the French initiative designed to rescue Lebanon.
“We might witness a breakdown, probably a security breakdown. Without a clear horizon and the formation of a government, chaos will strike,” Progressive Socialist Party leader Walid Joumblatt said in a statement Tuesday. He repeated his call for a “compromise” to break the Cabinet formation impasse.
Fueling the economic meltdown is the fact that Lebanon has been left without a fully functioning government for more than seven months since Prime Minister Hassan Diab’s Cabinet resigned on Aug. 10 in the aftermath of the massive Beirut Port explosion, even though it has been serving in a caretaker capacity.
Politicians and economists have long asserted that the first major step toward easing the economic crisis and halting the collapse of the pound begins with forming a new government to embark on essential reforms that would encourage the international community to come forward with its promised aid to Lebanon.
Lebanon began talks with the International Monetary Fund on a $10 billion bailout package in May 2020, but the negotiations have been stalled by a dispute between different interest groups representing Lebanese banks and the government over the size of losses in the Central Bank.
While the Cabinet formation process remains at a dead end, local and international appeals to Lebanon’s rival leaders to agree on the swift formation of a new government to implement reforms aimed at averting a total economic collapse have fallen on deaf fears.
Asked whether the collapsing pound and fears of a possible social explosion would prompt leaders to agree on the formation of a new government to rescue the country, an official source familiar with the matter told The Daily Star Tuesday: “With regard to the Cabinet situation, there is nothing new. There are attempts to reactivate the [Cabinet formation] file, but these attempts have not yielded any practical results. In reality, things are still the same.”
Caretaker Interior Minister Mohammad Fahmy warned last week that the security situation has broken down because of the deteriorating economic conditions and warned of a new wave of assassination. He said security forces were drained and unable to fulfill their duties as a financial meltdown and political deadlock bite.
Fahmy's comments come two days after Lebanese Army commander Gen. Joseph Aoun chided politicians, saying that soldiers were going hungry like the rest of the nation.
A Future Movement MP warned of a social implosion and possible security risks motivated by the economic crisis if a new government was not formed to remedy the situation.
MP Mohammad Hajjar denied that Prime Minister-designate Saad Hariri had rejected Parliament Speaker Nabih Berri’s initiative aimed at breaking the Cabinet impasse, but insisted that the premier-designate would not form a government that would grant veto power to any party.
Hajjar accused President Michel Aoun and his son-in-law, MP Gebran Bassil, head of the Free Patriotic Movement, of blocking the government formation with their insistence on acquiring veto power and blaming them for any much-feared economic collapse and social implosion that might occur.
“Prime Minister Saad Hariri refuses to form any government in which any party has a blocking third [veto power]. The Michel Aoun-Gebran Bassil team has insisted and is still insisting in all initiatives to acquire a blocking third contrary to what they say,” Hajjar told The Daily Star.
“They [Aoun and Bassil] insist on acquiring a blocking third in any government. With this, they are holding up the Cabinet formation decrees, and subsequently they and their allies alone are responsible for the comprehensive economic collapse and social implosion, and probably more than that,” he said, referring to possible security risks.
Asked whether Hariri rejected Berri’s initiative, Hajjar said: “The allegation that Prime Minister Hariri has rejected Parliament Speaker Berri’s initiative to form a government without a blocking third to any party is not true, not to say more.”
There was no comment from Aoun on Berri’s proposal which reportedly called for the formation of a 20-member Cabinet in which no party would be granted veto power, with the Interior Ministry part of Hariri’s share and the Justice Ministry part of Aoun’s share. The name of the second Druze minister would be chosen in agreement between Joumblatt and his Druze rival, MP Talal Arslan, head of the Lebanese Democratic Party, an ally of the FPM.
Meanwhile, the Higher Islamic Religious Council, which met under Grand Mufti Sheikh Abdul-Latif Derian at Dar al-Fatwa Tuesday, warned that Lebanon’s existence and future were in jeopardy and urged political leaders to act to form a government of nonpartisan specialists to rescue the country.
“The Higher Islamic Religious Council stresses the responsibility of political leaders for putting an end to the chaos and uncertainty prevailing in the country as a result of the failure to form a government that has brought the country to a state of complete collapse at the economic, financial, social, living and security levels and their reluctance to shoulder their responsibilities,” said a statement issued after the council’s meeting.
The statement urged those in power and running the state to carry out the “comprehensive essential reforms to bring Lebanon out of the state of deterioration and complete collapse.”
“All officials must make up their minds and act immediately to form a government of independent, nonpartisan and experienced specialists in accordance with the Constitution to revitalize the country,” it added.