The Lebanese public has fallen victim to what could be described as the greatest theft in human history. The amount of stolen funds tied to corrupt practices committed by Lebanese politicians and their business partners since 1990 is estimated to be in the hundreds of billions of dollars. Narrower estimates point to a figure of around $80bn (not to be confused with the separate but … Continue reading The greatest theft in history
While much of Lebanese society has a general idea of who stole the money, though judicial accountability is still pending, it is less frequently discussed the reasons why the money was stolen. Corruption has been present as far back as the Ottoman era, although it was taken to extravangant heights under the rule of the cartel for the past 30 years. One could go by … Continue reading Why corruption occurs
One of the top 3 worst economic crises of the last 200 years, the 3rd largest non-nuclear explosion in history, a worldwide pandemic. One could say that the Lebanese suffered one of the worst humanitarian disasters in history. Most countries in the world rarely see more then 3 months of negotiations for coalition governments to be formed. And yet, despite the current conditions, it took … Continue reading Critical Juncture
As the Central Bank of Lebanon, BdL has been a key actor in the unfolding of the crisis, by funding an insolvent state, trapping depositor reserves and enabling an unsustainable Ponzi scheme. While the Parliament is empowered to determine the official Lira rate (Code of Money and Credit (CMC) Articles 2 & 9), the BdL is entrusted to ensure monetary stability and has the right … Continue reading Fundamentals of the Crisis 5) BDL
Lebanon’s economy was a Ponzi scheme. Such schemes can last a long time and even be made to appear legal when state-sponsored, like in Lebanon’s case. These are based on their participants’ confidence in the solvency and liquidity of the scheme. Inevitably, when one of those pillars breaks down, the system collapses. Behind the Lebanese Ponzi scheme, commercial banks played a key role. From lending … Continue reading Fundamentals of the Crisis 4) The Banking Sector
Banks have announced they will be allowing depositors with accounts less than 50k, to withdraw half their savings in dollars, and half in liras at the market rate. This operation is expected to help reimburse about 1 million Lebanese, and cost about $13bn. It remains unclear how the operation will be funded. BdL recently insisted that banks had successfully complied with Circular 154, launched last … Continue reading Bank Withdrawals
After over a year and a half of subsiding goods (Circulars 530 and 535) to fight inflation after the Lira rate fell, the BdL has changed course on its approach to subsidies by introducing ration cards. The caretaker cabinet has submitted a law that will open the door for ration cards to the poor, providing $137 per household, by targeting 750,000 to 800,000 individuals within … Continue reading Dollar Rationing
There is nothing more symbolic about Lebanon than its predicament in the energy industry. The country possesses great amounts of estimated offshore reserves of natural gas. It will not be the savior-for-all, but by 2028, Lebanon could start generating an estimated $1.5-2bn in revenues per year to the state’s coffers. The government’s lack of responsibility and sovereignty means Lebanon is behind in development and unable … Continue reading A Failed State, Not a Bankrupt One
Rentier economic value describes value derived from the scarcity, rather than innovation, of supply. This scarcity is also often called “rent”, and is the product of monopolistic behaviors or the inherent nature of certain commodities and services. Nicknamed “the Merchant Republic”, Lebanon has enjoyed a services-oriented economy since its earliest days, reliant on finance, trade, real estate and tourism. The dominance of these industries often … Continue reading Fundamentals of the Crisis 3) The Rentier Economy
The Lira exchange rate has been fixed since 1997, when BDL decided to adopt an official fixed rate of LL1507/dollar. The goal was to stabilize the currency after periods of heavy Lira depreciations and inflation suffered from the second half of the mid 80s until 1992. The policy has been criticized for keeping the same rate to the dollar for so long, given that it … Continue reading Fundamentals of the Crisis 2) The Lira Rate
