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Lebanon is Collapsing Under a Corruption-fuelled Crisis, Currency Down 90%

By: News Desk

Agencies

Last Updated: August 17, 2021, 21:59 IST

Beirut

Motorbike drivers wait to get fuel at a gas station in the suburbs of Beirut, Lebanon. (REUTERS)

Motorbike drivers wait to get fuel at a gas station in the suburbs of Beirut, Lebanon. (REUTERS)

The crisis in Lebanon worsened last week after its central bank said it would no longer finance fuel imports at subsidised exchange rates.

Severe fuel shortages and wide power cuts have paralysed the tiny nation of Lebanon, with some businesses being forced to temporarily closing down.

Lebanese President Michel Aoun said he hoped a new Lebanese government would be formed within the next couple of days, as efforts to agree on one were spurred on by a fuel crisis that has brought much of the country to a standstill and sparked warnings of anarchy.

Covid and economic crisis

A top medical centre and one of Lebanon’s oldest and most prestigious university hospitals, the American University of Beirut Medical Center, has also warned that it may be forced to shut down soon due to fuel shortages, which would threaten the lives of its critically ill patients.

It said 55 patients dependent on respirators, including 15 children, and more than 100 people with renal failure who are on dialysis would be immediately threatened.

The sombre statement underscored the severity of Lebanon’s economic crisis, which has paralyzed the country. Fuel shortages have prompted many owners of large private generators to turn off the machines.

Power struggles

The steadily worsening fuel crisis has marked a crunch point in Lebanon’s two-year-long financial meltdown, with shortages of imported fuel forcing hospitals, bakeries and businesses to scale back or shut down in the last week or so.

At least 28 people were killed over the weekend when a fuel tanker exploded as people desperate for gasoline scrambled to get a share.

After meeting Aoun, Prime Minister-designate Najib Mikati said it was still possible for a government to be formed in the next two days. The issues were being tackled one by one, he said, though he did not know how the last would be resolved.

Ahead of his meeting with Mikati, Aoun indicated a deal was close, saying “we are about to form a government”, specifying later it would be “within a couple of days, God willing”.

Sayyed Hassan Nasrallah, the leader of the heavily armed, Iran-backed Shi’ite group Hezbollah, on Sunday urged the government to be formed in two or three days, saying this was the only way to prevent anarchy which had already begun.

He also said Hezbollah would begin bringing diesel and gasoline from Iran with delivery dates to be announced soon.

Corruption and crisis

The culmination of decades of state corruption and mismanagement, the crisis entered a new phase last week when the central bank said it would no longer finance fuel imports at subsidised exchange rates.

With its currency reserves depleted, the bank has said new legislation is needed to allow the use of the mandatory foreign reserve for such imports.

The government demanded prices be left unchanged. There has been no resolution to the stand-off.

Economy down in the dumps

The ongoing crisis has sunk the currency by more than 90% and sent more than half the population into poverty.

The Lebanese pound has strengthened since Aoun first signalled optimism on Sunday about the formation of a government.

The ruling elite has failed to agree to a rescue plan, or to form a new government since Prime Minister Hassan Diab’s cabinet quit last August after the Beirut port explosion.

Mikati, a businessman-politician, was designated to form the government after Sunni leader Saad al-Hariri abandoned his attempts, saying he could not agree with Aoun. Each blamed the other.

(With agency inputs)

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first published:August 17, 2021, 19:31 IST
last updated:August 17, 2021, 21:59 IST