Lebanon Crisis falls into “Deliberate Depression.”

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Lebanon has been going through an intense economic crisis in its country’s history. The way forward lies in removing internal obstacles along with foreign influences that are profoundly suitable to obstruct the much-needed transformation in Lebanon. The UN projected that in the year 2021, one-fourth of the country’s population would be struggling with some kind of food insecurity. According to recent estimates, almost 75% of the population is unable to put food on the table for itself.

Lebanon: An economic crisis and the aftermath of the Beirut port explosion | DW Documentary

Because of consistent governmental paralysis as well as ongoing political strife inside the country that is both debilitating and counterproductive, the World Bank has classified the country’s economic downfall as a “deliberate depression.” Sectarianism has been the dominant force in the ongoing Lebanese political situation. The most influential posts in the country’s government are held by members of the many main religious groups. This has resulted in the rise of a corrupt political system in Lebanon that is centered on patronage provided by the established government, which has ruled the provision of services and employment to their respective sectarian bases.

The fact that Hezbollah and its alliance failed to maintain their parliamentary majority is a major reason, among other reasons, why some analysts see the election results as a cause for optimism. In April, the authorities in Lebanon and the IMF reached an agreement on a reform plan that would increase governance and transparency while also helping to restore the economy. To confront the essential pillars of transformation that are necessary to get IMF financing, it will be necessary for the conventional political parties to abandon their established methods of working.

Lebanon, which is known as the Switzerland of the Middle East, has to embark on a certain vision to avoid a sectarian elite by borrowing a few restraints. This country’s financial collapse in 2019 began with mismanagement of the system. Some financial experts have likened the economic structure of Lebanon to a nationally controlled Ponzi scheme. In this kind of plan, fresh money is borrowed in order to pay off old debts. It continues to function until there is no more new money.

After the civil war, Lebanon was able to bring its accounts back into balance with the help of tourist revenues, foreign assistance, profits from its banking sector, and the charity of Gulf Arab governments, who bankrolled the state by strengthening central bank reserves.

Remittances sent back by the out-migrated populace who have found employment outside the country has been one of the country’s most dependable sources of foreign currency. They continued to send money back home even throughout the global financial crisis of 2008. However, a decline in remittances began around the year 2011, when sectarian strife in Lebanon contributed to further governmental paralysis, and a large portion of the Middle East, including the country that borders Lebanon, plunged into anarchy.

Because of Iran’s growing influence in Lebanon via Hezbollah, a strongly armed Shi’ite militia in Lebanon whose political authority has increased, Sunni Muslim Gulf monarchies, who were formerly faithful patrons, began pulling away. The consequences were noticeable in the failure of transfers to keep up with increasing imports of basic necessities to luxury automobiles. As a result, the budget deficit shot up, and the BOP crisis arrived.

In the Pre 2018 election period, state officials splurged on a pay raise for the public sector, despite the state needing to reel down its expenditures. Because the government was unable to deliver on its promise to implement changes, international donors withheld the billions of dollars in help that they had previously committed.

The last thing that set off the turmoil in the year 2019 was October when a proposal to charge for calls was made on WhatsApp. The imposition of a levy on a method that many people in Lebanon used to stay in contact with was a bad idea since the country has a huge diaspora and a tax system that gives tax breaks to the wealthy. Rallies on a massive scale broke out against the political elite, which included elderly militia commanders who prospered while others suffered. These protests were spurred by disillusioned young people who demanded sweeping reform.

Foreign currency inflows came to a halt, and money began to leave Lebanon. Because banks had run out of cash and were unable to pay depositors waiting outside, they were forced to close their doors. Additionally, the government left unpayable its obligations to international creditors. The currency’s value plummeted, going from 1,500 to the dollar at rate of reaching a high of 34,000 as of now.

The UN has issued a warning that Lebanon is now experiencing a state of emergency, with millions of people currently unemployed and suffering from shortages of food, medication, gasoline, and other necessities. Skyrocketing food costs are causing 90% of Lebanese households to either intake less costly food or cut down on the number of meals they eat. The report warns that rising crude oil costs might push thousands of people over the brink. This leads to increased malnutrition, food insecurity, and starvation.

The Ukrainian crisis has further exacerbated the country’s socio-economic downfall in Lebanon. It is mostly represented in the shortage of wheat stocks and the soaring cost of fossil fuels, both of which are contributing to dramatic rises in the bread’s price and endangering Lebanon’s ability to maintain adequate levels of food supply.


Sociologist, Engineer, and Content writer

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