To give you an idea of just how quickly
Lebanon is collapsing, you have to
realize that it's even worse than
Venezuela - a poster child of devastated
economies.
After years
of corruption, mismanagement and
dysfunctional politics, Lebanon's dealing
with a huge currency crisis,
and that's at the root of so many other
problems right now.
So
here's what's going on. In the late 1990s
the Lebanese pound was pegged to the U.S.
dollar. The exchange rate was fixed at
1500 pounds for one dollar. Now the
problem with that is Lebanon's economy
wasn't strong enough to really justify
that value. It was sort of artificial. For
a long time, the government and banks
managed to prop up the currency to
maintain that peg. But now, they're at a
point where they just can't do that
anymore. And so the currency has crashed,
losing up to 90 percent of its value in
the last two years. And that means
people's savings and salaries have
tanked.
If your currency is worth less, it
makes importing things much more
expensive. For Lebanon, that's a massive
deal because it imports nearly
everything. Including all its fuel. So now
on top of the currency crisis, there's a
fuel crisis.
The government simply can't afford to
buy enough and it's abandoned some of
the fuel subsidies that helped make fuel
affordable for ordinary people. So now
you've got both shortages, and super high
prices.
So the fuel crisis is creating a domino
Effect. Drinking water now costs four
times what it used to, and the lights are
literally going out because there's no
fuel for generators.
So
it only gets worse - because now you've
got a health crisis too. Hospitals are
struggling, the U.N. has got involved - even
supplying fuel to help keep generators
running. And like other imports, medicine
has become too expensive or hard to find.
Even ordinary drugs like paracetamol, let
alone life-saving ones for diabetics or
cancer patients.
So people like marina are stepping in.
She set up a charity to coordinate
donations of medicine from abroad.
That idea that the state is missing in
action, well that's why things have
become so desperate.
And this isn't
exactly new. It's almost as if Lebanon is
in a permanent state of political crisis,
and critics say part of the problem is
the system itself.
Now the way it works is that the three
biggest sects are guaranteed
representation. That was the deal to keep
the peace after the civil war. So for
example, the president is always a
Maronite Christian, the prime minister is
always Sunni and the speaker of
parliament is Shia. But in reality it's
led to political gridlock, infighting and
nothing really gets done.
You end up with a lot of
corruption and accusations that
politicians are only serving their own
interests, not working for the good of
the country.
A couple of years ago, hundreds of
thousands of people protested to say as
much.
And after the horrific explosion in
Beirut last year, there was outrage
directed at politicians. And so far no
one's been held to account.
What's happened recently, is that the
political parties have finally agreed on
a new government after 13 months.
Like billionaire Prime Minister,
Najib Mikati - who's had the job twice
already.
He's trying to manage expectations, but
they're already rock bottom.
And there's a
lot that needs doing. Priority number one,
is to get cash into the country. And the
government's best bet is to secure a
bailout from the IMF. It's now planning
to reopen talks with them after the last
ones stalled in 2020. But if the
government wants money, it will also need
to present a recovery plan that includes
a bunch of reforms.
If there's any chance of that happening,
it could start with parliamentary
elections coming up in May. But that's a
big if.
Just like fuel and medicine,
hope that politicians will actually
change things is in seriously short
supply.
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