BEIRUT (Reuters) – Lebanon’s financial collapse is driving the country into chaos at an accelerating pace, forcing its conflicting leaders to face a choice between finally doing something about the crisis or risking even more chaos and destruction insecurity.
The economic collapse that caused increasing hardship in Lebanon for two years reached a critical point this month with fuel shortages crippling even essential services and long lines of miles forming at gas stations. with little or no gasoline for sale.
The fuel rush sparked lawless scenes that bankrupt state security forces struggled to contain. Soldiers were shot at times while trying to maintain order.
The country is running out of essential medicines and the UN warns of a looming water crisis, but meanwhile the ruling elite are feuding over the seats of a new government.
The recent decision of the Shiite group Hezbollah to go it alone and import Iranian fuel https://www.reuters.com/world/middle-east/hezbollah-organised-fuel-lebanon-set-sail-group-says- 2021-08-19 added a new element to the crisis.
Long a member of the system in power in Lebanon, the heavily armed group designated as terrorist by the United States says it only wants to alleviate shortages.
But critics say it aims to expand its already deep influence and drag Lebanon deeper into Iran’s orbit, complicating the way forward for a state hoping for Western aid and dealing another blow to Iran. his authority diminished.
The collapse, resulting from decades of state corruption and unsustainable funding, has already plunged more than half of the population of some 6 million people into poverty and reduced the value of the currency by 90% .
Lebanon took a step forward on August 11 when the central bank said it could no longer finance fuel imports https://www.reuters.com/world/middle-east/lebanons-aoun-summons-cbank- governor-after-decision- end-fuel-subsidy-2021-08-12 at subsidized exchange rates because its dollar reserves had been so depleted.
The interim administration then decided on Saturday to increase fuel prices. But even the new higher prices are still only a fraction of the real price, with new borrowing from the central bank until the end of September making up the difference.
Economists say the move is not a solution, as it leaves open a huge incentive for smuggling and hoarding.
A possible rise in market prices seems inevitable as the dollars run out. In the meantime, a black market has flourished where gasoline is sold in plastic bottles at extremely inflated prices.
Security incidents, including hijackings of fuel tankers, have become daily. Last week at least 28 people were killed in northern Lebanon when a fuel tank exploded https://www.reuters.com/world/middle-east/least-20-killed-lebanon-fuel- tank-explosion-mtv-news -2021-08-15 during a rush for its gasoline.
“There are a lot of small groups that have started to realize that they can seize any tanker on the road by force,” a security official said speaking anonymously. There have been at least eight incidents a day at gas stations or targeting tankers, the official said.
An international support group comprising France and the United States said on Friday that “the rapidly accelerating crisis underscores the greatest urgency to form a government capable of taking charge of the situation.”
“How much worse can it be?” All we can do is pray, ”said Jihad Fakher Eddine after waiting seven hours for gas.
GOVERNMENT COMING SOON?
The state’s failure was summed up in a public feud between the president and the central bank over fuel subsidies, with bank governor Riad Salameh saying no one was running Lebanon, where many politicians today ‘hui were warlords during the 1975-90 civil war.
President Michel Aoun, Christian Maronite Head of State, and Sunni Muslim Prime Minister-designate Najib Mikati have yet to reach an agreement on the government to replace the administration that resigned after the Beirut port explosion one year ago.
The delay is on a few names, according to political sources, more than enough to mess up the process in a system where ministerial agreements are likely to be derailed by factional interests.
Alain Aoun, a senior official of the political party founded by the president and his nephew, said he believed a government would soon be formed. “The price of failure – a rapid descent into more chaos – is too high,” he told Reuters.
If a government agrees, Mikati plans to resume talks with the International Monetary Fund, which wants to see reforms such as fiscal consolidation, banking system rehabilitation and public debt restructuring.
The ruling elite believe that around $ 860 million in new IMF reserves should provide some breathing space.
But reforms are vital, and some doubt that a new government can succeed where the outgoing cabinet has failed.
Elections are scheduled for next spring, followed by a whole new round of government formation negotiations.
“Will there be the courage to undertake these reforms? I doubt. Policymakers seem interested in fixing things and kicking the box around until next year’s elections, ”said Nasser Saidi, former economy minister and vice-governor of the central bank.
“You need immediate reforms. You need shock therapy to restore confidence, ”he said.
Meanwhile, if Hezbollah can provide a steady supply of Iranian fuel, the situation will become even more complex. Its opponents say the move could expose Lebanon to US sanctions.
“Although what they are doing now is symbolic with this diesel barge, it could be a starting point for something bigger,” said Ghassan Hasbani, former deputy prime minister and member of the Lebanese Christian Forces party. .
“If this persists and they can continue to do it on a larger scale, then we would see a start of trying to fragment the country,” he told Reuters.
Hezbollah chief Sayyed Hassan Nasrallah said on Sunday that the group was not trying to replace the state and that a second shipment of Iranian fuel would leave in the coming days.
(Additional reporting by Issam Abdallah; Editing by Frances Kerry and Hugh Lawson)