Lebanon:
The Population Is Victim of the Government, the Banks, and Speculators

Mar 29, 2021

Translated from Lutte Ouvrière (Workers’ Struggle), the newspaper of the revolutionary workers’ group active in France.

Days of protest follow one after another in Lebanon, especially with protestors blocking roads. At the same time the country continues to sink deeper into crisis, with serious consequences for the population.

Early in March, the currency was devalued even more than previously. The exchange rate crossed the symbolic threshold of 10,000 Lebanese lira to the dollar. This exacerbated poverty, which has risen for over a year.

The devaluation is a result of the soaring public debt. The rising debt was driven by the looting of the budget by the political and business clans which have governed the country for many years, and also by the banks. The national Bank of Lebanon paid astronomical interest rates to lenders in order to attract the U.S. dollars it needed to try to stabilize the lira.

Capital is now seeking to reinvest outside the country, what with the loss of confidence in Lebanon’s ability to repay its debt. But all that capital flowing out is causing a shortage of dollars, including in the central bank’s reserves.

So, after having maintained the exchange rate of 1,507 lira to the dollar for a long time, starting at the end of 2019 the lira began its rapid devaluation, reaching more than 8,000 lira to the dollar at the end of 2020. This caused a surge in prices. Lebanon’s economy cannot function without imports. To limit the impact on the population, the central bank had to subsidize imported basic necessities, such as wheat, fuel and medicine.

Wages are usually paid in lira and have seen their real value melt away. The minimum wage is now equivalent to 70 dollars a month, down from 450 dollars a month before the crisis. Mutual aid and the assistance provided by charities are less and less successful in limiting the disaster hitting the neediest families. And those who are paid their wage in dollars may only withdraw it in lira, at the much lower exchange rate of 3,900 lira to the dollar. In this way the banks keep control over the dollars—and over half the value of wages—in order to compensate for the flight of big capital abroad. Migrant workers can no longer remit their wages to feed their families back in their countries of origin, like Ethiopia and Bangladesh. Most of them lost their jobs and were forced to leave Lebanon.

The price increases are starting to affect products subsidized by the central bank. The price of bread has increased by half, with the authorities claiming that the price of flour on the world market has risen. But at the same time, merchants who receive government subsidies still raise prices, sometimes with the complicity of the same authorities. Some traders divert merchandise to sell it at a better price in other countries. Or they hoard goods in anticipation of subsidies ending, since the central bank floats that possibility given the steady depletion of its foreign reserves. Faced with shortages, recent days have seen instances of mobs and fights in supermarkets to obtain subsidized products. And in addition to the lack of intensive care space in hospitals to accommodate patients with Covid-19, there is a growing inability to pay hospital fees that private hospitals charge patients.

In January protests erupted in the country’s poorest city, Tripoli. Protesters stormed the homes of city officials, including billionaire and former prime minister Najib Mikati. The army was deployed to protect the officials. The army fired, killing one protestor and injuring more than 300 others. Adding to the crackdown was the arrest of 35 people on charges of terrorism, which carries the death penalty.

The political situation remains deadlocked six months after the administration resigned following a deadly explosion at the port of Beirut, which was the consequence of official negligence. Nothing has changed in the behavior of the political leaders. Their various clans continue bartering to assign seats in a future administration, as they always have done.

So protests continue in the form of blockades, to resist this situation in which the majority of the population sinks into poverty. But more than just the corrupt political class must be brought down. The whole capitalist class of speculators, bankers, and profiteers has to go!