Lebanon: Week of protests and unrest as currency falls to record low
Protests have swept Lebanon over the past week after the local currency fell to a historic low, adding to the woes of a country already in the midst of a catastrophic economic and political crisis.
On Wednesday, the Lebanese lira dropped to a near record-breaking 10,750LL to the US dollar, effectively losing about 85 percent of its value since October 2019.
“People don’t have any more money,” 24-year-old Beirut protester Layal Seblani told Middle East Eye. “It’s a lot of things that have accumulated over time, and then the lira hit 10,000LL [to the dollar].”
Already in May, more than half of the country’s population was living in poverty, according to the United Nations.
Then in January, cash-strapped Lebanon - which hasn’t had a fully functioning government for seven months - was plunged deeper into economic misery by new Covid-19 lockdown measures.
That month, protesters in Tripoli scuffled with security forces, some of whom used live ammunition. One protester was killed and hundreds were wounded.
In February, the judge heading the Beirut port explosion probe was dismissed over claims of bias after charging and summoning caretaker Prime Minister Hasan Diab and three ex-ministers, while over a dozen MPs side-stepped regulations and jumped the queue to get the Covid-19 vaccine.
Roadblocks and rumours
Over the past week, angry protesters have blocked roads and highways across the country with cars, burning tyres and rubbish bins, facing occasional repression from the Lebanese army and security forces.
Protests have reached as far north as Akkar and as far south as Sour, with major roads to Beirut being intermittently blocked off.
Protesters chanted against President Michel Aoun and Central Bank Governor Riad Salameh, and called for an end to Lebanon’s rampant economic corruption.
Rumours circulated on social media that many of the protesters were partisans of political parties critical of Aoun and his allies, notably Hezbollah.
Billionaire Bahaa Hariri - the older brother of prime minister-elect Saad Hariri - and Lebanese Forces leader Samir Geagea both publicly denied these allegations.
But Seblani, the protester, told MEE that many party supporters were present - in contrast with 2019 protests, which were largely composed of unaffiliated Lebanese who denounced the country’s ruling political parties across the board.
“[Non-partisan] people who aren’t protesting have given space in the squares for people affiliated with political parties,” said Seblani, adding that she was concerned about the need for independent groups to be present to push for even-handed solutions. “Everyone needs to be there.”
Seblani says that, either way, she will continue protesting.
Lebanese authorities have shown little tolerance to the increasing mobilisation. The military tribunal brought terrorism charges against 35 protesters in Tripoli in late February.
Aoun’s office issued a statement last week saying he had asked Salameh about the deterioration of the lira. He added on Monday: “Setting up roadblocks goes beyond freedom of expression to an organised act of sabotage with an aim to shake stability.
"The security services and the military must therefore fully carry out their duties to implement the law without hesitation.”
The president also cautioned protesters against chanting slogans that “harm national unity, stir up discord, and undermine the state and its symbols”.
The Lebanese army deployed soldiers early on Wednesday morning to forcefully reopen roads.
But roadblocks were erected again only hours later, notably in Hay el-Sellom in Beirut’s southern suburbs.
Seblani admitted that she worried protests could take a turn for the worse as the current crisis continues. “I do fear things will be a bit more violent going forward,” she said.
'Black market rate'
Ever since the value of the lira started to wobble in late 2019, checking mobile apps and websites for the value of the national currency has become part of the daily routine for many Lebanese people.
Finance expert and postdoctoral researcher at the University College Dublin, Mohamad Faour, tells MEE that the so-called “black market rate” is the most accurate, “even though it’s not transparent, and subject to speculation and manipulation”.
The official rate - artificially fixed at 1,507LL to the US dollar since the late 1990s - has been rendered futile, while the commercial banks’ 3,900LL rate never caught on in the rest of the Lebanese market.
After an emergency meeting earlier this week, Lebanese authorities called for digital platforms to be shut down and a crackdown on official and informal money exchangers using the black market rate.
The judiciary reportedly closed two exchange rate websites on Wednesday.
Mike Azar, an analyst and former lecturer at Johns Hopkins School of Advanced International Studies, says that this strategy was not just ineffective, but could also harm much of Lebanon’s already struggling population.
“I think [the authorities] don’t want to take responsibility for the rising exchange rate, so it’s easier for them to put the blame on apps and exchangers,” Azar told MEE. “But by criminalising it, they just push it deeper underground, and allow for higher profits for exchangers - who continue to operate despite the law.”
Azar fears that further shortage of dollars could economically cripple consumers, currency exchangers and business owners. “If these businesses cannot find the dollars they need to operate,” he said, “they may shut down, and shelves may become empty.”
Lebanese authorities, including Salameh, have - to varying degrees - blamed the plummeting currency on Lebanese households hoarding US dollars.
In late 2019, people panicked and rushed to the banks to withdraw as much of their money as possible. Life savings vanished.
Economists and policy experts have dismissed this as a significant driver of the crisis.
“Individuals may be hoarding dollars, but it’s because reforms are not happening, and they’re seeing their life savings disappear,” Azar said.
Political paralysis
Despite the collapsing lira, Lebanon is unable to implement reforms and restructure its economy.
Incoming Prime Minister Saad Hariri and President Michel Aoun are at extreme odds, while Diab’s caretaker government can only function in an extremely limited capacity, as per the country’s constitution.
'The consequences of leaving the economy to auto-adjust and auto-correct are brutal'
- Mohamad Faour, researcher
On Friday, Parliament will meet only for the second time this year.
For Faour, any discussions of policy solutions are now a “mere academic exercise”.
“The Lebanese government’s policy is inaction,” he said. “The consequences of leaving the economy to auto-adjust and auto-correct are brutal - it’s basically letting things adjust in a Darwinian manner.”
Supermarket shelves are emptying, while people fight over subsidised commodities like baby formula and olive oil.
Others are panic-buying, fearing a new price hike.
The international community has withheld developmental aid and loans until a new cabinet is formed and a new economic recovery plan implemented.
But, with no government since August and a rising rate of Covid-19 infections, neither appear imminent.
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