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Saturday 9 September 2023

Understanding Lebanon's Economic crisis

Saleem Zahid. 

Lebanon, a nation historically known for its rich culture, scenic landscapes, and resilient people, finds itself trapped in the clutches of an unprecedented and protracted economic crisis. This crisis, which has stretched over several years, has seamlessly morphed into a severe political quagmire, pushing the country and its people to the brink. Despite the efforts of international donors offering assistance, the road to recovery remains fraught with challenges, primarily due to the reluctance of Lebanese political leaders to undertake the essential economic and political reforms demanded.

The Unfolding Economic Catastrophe 

To comprehend the gravity of Lebanon's current predicament, we must first rewind to 2019. Before the crisis took hold, Lebanon was already grappling with economic challenges. Negative economic growth had become the norm, driven in part by the spillover effects of the ongoing Syrian conflict and the significant influx of refugees. These challenges fueled mounting discontent, with citizens taking to the streets to protest not only their economic grievances but also the broader political landscape.

These initial protests marked the beginning of a chain reaction that would eventually engulf the nation in a profound and enduring crisis. Today, Lebanon stands at the precipice of economic instability, marked by a vacuum of leadership and the disintegration of essential public services. The country's woes have spiraled into a catastrophic economic collapse, with economic contraction of almost 40%. Meanwhile, the Lebanese pound has shed almost 90% of its value, causing hyperinflation and shattering the economic prospects of its citizens. The consequences of this spiral have been dire, with basic services such as education, healthcare, and electricity teetering on the edge of collapse.

Navigating Lebanon's Complex Political Terrain 

Lebanon's political landscape is a labyrinthine maze, where democratic principles coexist with a fractured political system, a multitude of leaders, and a deeply ingrained confessional structure. This complex mix makes the prospect of initiating change through elections a Sisyphean task. Even more daunting are the lingering memories of Lebanon's prolonged and devastating civil war, which haunt the collective consciousness of the nation. The fear of reigniting conflict casts a long shadow over any efforts to push for political reform.

This wariness is not without reason, as the Syrian conflict looms large just across the border. The Syrian war serves as a stark reminder of the catastrophic consequences of prolonged conflict, destruction, and loss. Given this recent history, many Lebanese citizens are understandably cautious about pursuing political change. The absence of a unified opposition and a credible alternative further dims the prospects for substantial reform.

The Role of Civil Society: A Double-Edged Sword 

Lebanon boasts a vibrant civil society and an independent media landscape, often regarded as a bastion of democratic values within the region. However, this vibrancy has been marred by the co-optation of certain segments by the political elite. Non-governmental organizations (NGOs) closely aligned with political interests have eroded trust and hindered collective action, leaving the populace disillusioned.

Despite these challenges, Lebanon's free press and the influence of social media remain essential outlets for expressing dissent and mobilizing public opinion. However, these channels have yet to translate into significant political change. The barriers to transformation run deep, rooted in the entrenched interests of the political elite.

The Sectarian System's Stranglehold 

At the core of Lebanon's political quagmire lies its confessional system, a framework that divides power along religious lines. While it may have initially been designed to foster representation, it has become a breeding ground for political elite who prioritize their interests over the welfare of the broader population. This entrenched system has resisted change despite the mounting demands of citizens for reform.

The World Bank's Potential Contributions 

Amidst Lebanon's crisis, the World Bank emerges as a beacon of hope. Beyond offering financial aid, the World Bank can provide vital technical assistance and expertise necessary for implementing the essential reforms. Initiatives to enhance tax collection, reform customs administration, and address the humanitarian crisis can be instrumental in stabilizing Lebanon's precarious situation.

The Challenging Path Ahead 

Regrettably, the near-term outlook for Lebanon remains grim. The economic crisis is expected to deteriorate further, compounded by the entrenched resistance to reform within the political elite. However, there exists a glimmer of hope in the continued attention and support from the international community.

As Lebanon grapples with one of its most severe crises in recent history, the ultimate hope lies in concerted efforts from both the international community and the Lebanese people themselves. Together, they can illuminate the path toward a brighter future. Lebanon's citizens, who have borne the brunt of this crisis, deserve nothing less.

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