A year ago, a devastating explosion of a stockpile of ammonium nitrate fertilizer randomly stored in the Port of Beirut killed more than 200 people and left much of it looking like a war zone . The explosion, for which no one has been held responsible, and the effects of the Covid-19 pandemic, have inflicted terrible killing blows on an economy that is already sinking into what the World Bank describes as the third most serious economic crisis in the world since the mid-19th century.
Lebanon’s per capita GDP fell by 40%, pushing nearly half of the population below the poverty line and unemployed. The currency collapse to 90 percent also saw wage values plummet and eat away at a lifetime’s savings. No wonder thousands have taken to the streets in what is becoming a failed and ungovernable state. Dozens of people were injured on Wednesday as police clashed with protesters demanding accountability for the explosion.
At the root of the crisis is the collapsing banking system that was once admired. Along with the Banque du Liban, the central bank of Lebanon, the commercial banks engaged in what was in effect a national Ponzi scheme that left an $ 80 billion public debt hole in the country’s finances. Eight families control 29% of banking sector assets, headed by the family of former Prime Minister Saad Hariri.
The appointment Monday after a nine-month political stalemate of billionaire businessman and ex-Prime Minister Najib Mikati as Lebanon’s new prime minister-designate is hardly reassuring. Despite pressure from international financial institutions, the EU and the United States for far-reaching reform and restructuring, Mikati is an integral part of what the World Bank calls “elite capture” and “political consensus. for the defense of a bankrupt economic system, which has benefited a few for so long ”. He characterized the crisis as a “deliberate depression”, fueled by this elite.
This “elite capture” was made possible by a political system based on a forced sharing of power which, instead of allaying community tensions, exacerbates and entrench them.