In Lebanon the most serious economic crisis in the world of the last 70 years
More serious than that of Argentina and that of Russia’s currency: the economic crisis that is taking place in Lebanon is the worst in world history in the last 70 years. Yet the stories of Lebanese citizens, forced to live with a devaluation of the currency that reached 90% and an inflation of more than 80%, did not conquer the pages of newspapers or TV reports, at least until the prime minister , Hassan Diab, did not begin to speak openly about the risk of a “social explosion”.
The images coming from Beirut show a country with exhausted citizens, forced to long lines to be able to buy diesel, a country in which over 70% of families do not have enough food and where medicines are also scarce today. To suffer a 90% devaluation means to lose practically everything.
This is a crisis that has origins far and near in time. Lebanon is now experiencing the consequences of a process that began almost ten years ago, after a period of very strong economic growth that had led the country to double its GDP per capita from 2000 to 2010.
Subsequently, various macroeconomic and political factors contributed to reversing the trend, leading to a drastic collapse of the Gross Domestic Product and hyperinflation. Among these factors, the reduced industrial capacity, corruption, some external events (such as the war in Syria and the difficult management of over 3 million refugees), the conflict with Israel (with relative geopolitical pressure) and, finally, the explosion in the port of Beirut and Covid-19.
A drama that the citizens of the country are experiencing but also the more than 4 million Lebanese living abroad (a population greater than that of origin), forced to live with the drama of a monetary devaluation that destroys purchasing power at home and abroad.
Lebanon crisis: freezing of current accounts and political instability
In October 2020, the government imposed capital control, or the blocking of bank flows. Translated: money in banks does not move and does not touch. The aim is to reduce capital flight, as happened during the crises in Argentina or the banking crisis in Cyprus of 2012.
The support of the International Monetary Fund (IMF) and that of friendly countries is also sought, in a condition of political instability dictated by the fact that Prime Minister Diab was at the head of an interim government for ten months, following the explosion. at the port of Beirut, for which he was accused of negligence and political and personal responsibility.
At the moment the hypothesis of a new government seems to be making its way, headed by the former premier Saad Hariri, son of the historic former prime minister Rafic Hariri, but the road is all uphill. To weigh are the non-idyllic relationship with the President of the Republic and not very solid relations with Saudi Arabia, the most sought after partner for economic revival.
A glorious past, a more uncertain future
A country that was used to growing, being at the center of the international scene and having economic policies respected all over the world is now facing an economic crisis worsened by the current health condition and political instability.
The history of Lebanon, however, is full of episodes of rebirth and resilience. A rebirth that the Lebanese people, who took to the streets to ask for an end to corruption and start a new political phase, are not ceasing to seek.