Lebanon. The Political Class Saved (provisionally?) by Covid-19

Even before the Covid-19 lockdown, Lebanon was in the grip of a severe economic, financial and social crisis. If the spread of the epidemic seems to be under control, it is to be expected, after the country’s recovery, that there will be a tsunami of unemployment and poverty, the consequences of which will undoubtedly be disastrous.

Tripoli, April 17, 2020. — Several hundred people protest, despite the country’s coronavirus lockdown
Ibrahim Chalhoub/AFP

In these extraordinary times, Beirut probably looks like almost any other city in the world today. Streets that are normally jammed with hooting vehicles and jostling pedestrians are eerily deserted. A few masked citizens skirt one another warily like survivors from some great toxic disaster. Like everywhere, people are wondering how much their lives will have changed when the crisis has passed. But the Lebanese know for sure that they will be facing an even bigger crisis, and many fear that the country they know will be swept away when the dam is demolished.

The government formed by Hassan Diab in February following the resignation of Saad Hariri in October after the eruption of the nationwide “revolution” was swift to impose tight control measures when Covid-19 began to threaten. And the rules were enforced, somewhat of a novelty in a country with a laisser-faire attitude to life. The results have been medically encouraging. Despite the country’s general openness to the world, at the time of writing there were only about 640 confirmed cases, rising at the rate of around a dozen a day, with 21 fatalities. The government in general was given high marks for its handling of the emergency, especially the ministry of health, which launched an effective public information campaign via mobile phone messaging.

Fingers were being crossed that the virus did not make its way into the country’s refugee camps and “informal settlements” housing Palestinians since 1948 and Syrians since 2011. Conditions there would be perfect for a viral explosion. There are around 200,000 Palestinians remaining in squalid camps. There are estimated to be around 1.5 m Syrians in Lebanon, but only some 20% of them are in settlements, though the conditions of some of the others crowded in rented flats would be almost as challenging. NGOs administering the refugees have distributed hygiene kits and information leaflets, but have minimised site visits in order to reduce the chances of spreading contagion.

“It’s a time bomb”

Behind the semblance of calm and control, the pressures are building up. When the virus struck and the lockdown was ordered, the country was already facing its worst economic crisis ever. Months before Covid-19 raised its head, the World Bank was warning that the proportion of Lebanese living below the poverty line would rise from 30% to 50% in 2020. The impact of the lockdown may make that forecast look optimistic.

“The real crisis will begin as soon as the corona screen is lifted”, said a long-term Lebanese observer deeply involved in humanitarian relief. “The economy was already dying, corona will finish it off.”

“There is poverty and a feeling of injustice”, said an activist in Tripoli, the city in north Lebanon which has been one of the powerhouses of the October 17 “revolution”. “People want work. So far, violence is low given the seriousness of the situation. Why are people not breaking into houses? It’s a time bomb and I don’t know when it will explode.”

Amidst widespread predictions of social turbulence when the lockdown is lifted, the government has launched a programme to give the equivalent of around $250 in aid to the neediest Lebanese families to tide them through the closure. Not much of it seems to have reached the grassroots so far, and there are questions about how equitable the distribution will be, given that it is supposed to go through local municipalities and mayors, most of whom are tied to one or other of the sectarian political parties whose depredations are universally blamed for the economic crisis.

In some places, families linked to the parties have received several aid parcels, while those without affiliations have been given nothing. The central bank (Banque du Liban, BdL) also authorised the commercial banks to extend interest-free loans to companies in a bid to stave off unemployment, though some businesses were reluctant to take on more debt.

World Bank to the rescue

Aware of the obvious dangers, the World Bank has been working with the government to finalise a two-year, $500 m-dollar “social safety net” whereby an estimated 200,000 of the most vulnerable Lebanese families would be given the same kind of rechargeable credit cards that were given to Syrian refugees. But it may be a race against time. The scheme will take at least another two or three months to activate—it needs approval by the government, the World Bank Board, and finally the Lebanese parliament. And the funding is not yet fully agreed. Half is supposed to come from bilateral donors and half from World Bank soft loans.

Such a safety net will clearly be vital given the certainty of mass unemployment and inflation, with prices already soaring because of the de facto devaluation of the Lebanese currency by 50%. It will be all the more necessary if the government is able to press ahead with its proposed and long-awaited “Reform Program,” the 41st draught of which was leaked on 7 April. While avowedly a Lebanese document, it was clearly constructed with the IMF and other international financial institutions in mind, because the country desperately needs a $10-$15 bn foreign cash injection over the next five years if its financial system is not to collapse completely. Reforms mean pain and the poor would be the first to feel it.

A recession of at least 14% in 2020

And pain is certainly on the way. The reform plan foresees for 2020 recession of at least 14% and inflation of 25%, and those figures may well be optimistic. “The Lebanese people are faced with several years of economic hardships”, the plan comments drily, prescribing a five-year freeze on state salaries and reform of the generous pension schemes enjoyed by military and political retirees, among other drastic steps, including restructuring the banking sector and a “transitory exceptional contribution from large depositors”—in other words, a haircut for the big account holders, sparing the 90% of depositors with smaller holdings.

“Reform plans are never popular, but the process has to be gone through, the level of debt is so high”, World Bank regional director Saroj Kumar Jha told Orient XXI. Lebanon’s debts had reached a world-beating 176% of GDP by the end of 2019. “Poverty will go up, imports and exports down, jobs will be lost. What’s the alternative? There has to be a credible, comprehensive, realistic plan. We welcome the plan that was leaked. It has all the elements of a good plan. It’s a good initiative, to build consensus.”

But if there was a near-consensus among the political class of sectarian leaders whose competitive greed and corruption have bankrupted the country, it was that the reform plan was monstrous and would not pass. Former Prime Minister Saad Hariri, the Sunni leader who resigned just 12 days into the October “revolution” and refused to designate participants in the new government, called it an “economic suicide plan”. The speaker of Parliament, Shiite leader Nabih Berri, declared that “the appropriation of people’s deposits shall not pass”. President Michel Aoun and Samir Geagea of the Lebanese Forces party, both Maronite Christian leaders, were equally adamant in rejection, as was the Druze chief Walid Joumblatt.

Lebanese failures and debt restructuring

The BdL and the commercial banks, collectively discredited and blamed for the financial crisis for which ultimate responsibility lay with the voracious and incompetent politicians, were also dismayed at what they saw as a further blow to Lebanon once-sacrosanct spinal cord. Already, the government’s decision, announced on 7 April, to default on its $1.2 bn Eurobond commitment—for the first time ever—had caused huge reputational damage to the banking sector, and that was followed by a decision to default and seek restructuring on all its external debts, amounting to some $31 bn.

The BdL was aghast at these “hard defaults”: it had the cash, and had long planned to meet all its debt obligations. “Countries which default without having a convincing programme go into very, very bad experiences”, said one senior official. The decision seems to have been taken for largely populist reasons, though dark suspicions were voiced by some activists that the Iranian-backed Shiite movement Hezbollah, which along with its allies nominated the “technocrat” ministers in the new government, wanted to cripple a financial system that has bowed to US pressures to curb its financial activities.

So the government found itself apparently up against a brick wall in formulating a reform plan without which IMF sign-off and desperately needed international funding would simply not happen. And with or without a plan, there was some question about whether the Americans would back financial aid to a government they regard as dominated by Hezbollah.

What about the revolution?

All of this underscores the fact that the sectarian powers-that-be who brought about the crisis through decades of corruption and heedless incompetence remain the powers-that-be. When the “revolution” erupted in October, it swiftly adopted the slogan “kullun yaani kullun”—everybody means everybody, you all have to go. But in the event, only Saad Hariri’s government stood down. This left in place the Maronite President Michel Aoun, whose son-in-law Jebran Bassil, head of Aoun’s Free Patriotic Movement, is the most influential string-puller in the land; and the parliament under Nabih Berri, for many the country’s most toxic symbol of corruption. This ensured that the new “technocrat” government could achieve nothing without a near-consensus of all the sectarian chiefs, including Hariri, who remains the pre-eminent Sunni leader in the sectarian fray.

The early phases of the revolution—a massive and impressive, spontaneous across-the board uprising—put these leaders on the back foot. For the first time, they were being publicly named and called out. Red lines had been crossed. Nothing was sacred any more.

Even Hezbollah was bewildered. Fighting Israel was one thing, but facing angry masses whose slogans struck a chord among its own historically deprived constituency was something else. It badly damaged its image by allowing followers to go to the protest camp in downtown Beirut, along with fellow-Shiite adherents of Nabih Berri, to beat up demonstrators and set fire to their tents. Hezbollah was against the revolution because it threatened its controlling stake in the sectarian power-sharing deal. It saw it as part of a US-inspired regional pushback against Iranian influence. It wanted Hariri to stay. But he went.

But by the time the coronavirus lockdown came in March, the revolution had dwindled to a hard core. Its goals and grievances continued to command theoretical support from a broad section of the populace, but few now joined demonstrations which earlier had brought hundreds of thousands onto the streets in a joyful celebration of non-sectarian togetherness. By now, many were plunged into financial worry, spending hours queueing in banks to withdraw only a small amount of cash from their own accounts to meet their monthly bills. Others were put off by the mounting violence, with banks being attacked, and riot police resorting increasingly to tear gas, rubber bullets and water cannons to disperse protestors. Many also believed that “kullun yaani kullun” was unrealistic, and that the new government should at least be given a chance.

Powers that regroup

The lockdown provided the government with a political breathing space and an opportunity to show assertive, authoritative leadership. But for the “revolution” it was a disaster—and a godsend for the sectarian leaders it denounced.

The lockdown meant no more rallies, demonstrations, protests outside ministries or other targets, or physical planning meetings. The thawra (revolution) kept up a token presence at its downtown protest camp in Martyr’s Square, Beirut, with well-spaced and sparsely occupied tents. But on the evening of 27 March the police moved in, with orders not to disband but to destroy the structures. On 7th April the army and intelligence did the same thing at midnight in Nour Square, the protest centre in Tripoli. “They’re using the corona curfew as cover, said an activist. Nobody was moving anyway so I don’t see how destroying the tents helps, there was no activity.”

The actions implied that the powers-that-be had caught their breath and regrouped after being thrown off balance by the thawra. “It seems as though the political class has seen the coronavirus as a kind of saviour for them, said Nasser Yassin, acting director of the Issam Faris Institute at the American University of Beirut. The government are trying to act as technocrats, but those behind them, the people holding the strings of power, are acting as though it’s business as usual.”

And indeed, in many parts of the country, the established sectarian parties were out reasserting themselves after their temporary setback. Given the state’s historic deficiencies, there was ample scope for the parties to fill the vacuum, organising and distributing aid, sanitising streets and facilities, setting up Covid clinics, etc. Hezbollah, well versed in the arts of winning hearts and minds, was very much to the fore, deploying a 25,000 strong volunteer force, doubtless with an eye to repairing the PR damage done by its followers’ behaviour towards the protestors. In the Shouf mountains, Walid Joumblatt’s Progressive Socialist Party resurged; he even spoke of buying tractors so the area could become self-sufficient.

A Christian TV station reported that no fewer than 84 Covid quarantine centres had been set up and financed by the political parties.

So the thawra will have a mountain to climb when the lockdown is finally lifted. Its activists have not been idle. They have been engaged in numerous on-line discussion and planning groups, and in some areas, like the southern city of Sidon, they have been able to help coordinate relief activities.

The momentum they have lost could be hugely boosted by a new wave of angry and impoverished unemployed when the restrictions end—or people might be so overwhelmed by the struggle for daily survival that they will have no time and energy for revolt.

“I fear the after will be terrible, said Ghassan Salhab, film-maker turned activist. But then, who foresaw the 17th of October?”