Beirut, Lebanon – As representatives from a host of nations called on Lebanon on Wednesday to form a new government and enact reforms to unlock billions of dollars in aid, protestors took to the streets of Paris and Beirut demanding an overhaul of Lebanon’s political system to pull the country out of its worst economic crisis in a generation.
Members of the International Support Group for Lebanon (ISGL) co-chaired by France and the United Nations, gathered behind closed doors in Paris on Wednesday to discuss how to help Lebanon avoid a financial collapse and set it on the path of recovery.
Keep readinglist of 4 items
The group, which brought together representatives from Arab Gulf nations, the United States, China, Russia, Germany, Italy, the United Kingdom and the European Union, warned in a post-meeting statement that Lebanon’s stability and security depends on the rapid formation of a government with the “capacity and credibility to implement a package of economic reforms,” and take “decisive measures.”
Lebanon has been without a fully functioning government for six weeks following the resignation of Prime Minister Saad Hariri amid unprecedented nationwide protests demanding the overthrow of the country’s ruling class.
The international community had pledged some $11bn in grants and so-called “soft” loans with terms very favourable to Lebanon at a conference more than a year and a half ago. But Hariri’s government failed to carry out the reforms that were a pre-condition for unlocking those funds.
The group of nations said the aid pledges are still valid, but Lebanon must tackle corruption, create regulatory authorities and implement a plan to overhaul the crippled electricity sector that saps nearly a two billion dollars a year from the country’s coffers.
The ISGL statement also advised Lebanon to seek the help of international financial institutions. Caretaker Labour Minister Camille Abousleiman told Al Jazeera that was “code for heading to the International Monetary Fund to discuss a potential rescue package.”
Lebanon must also restore confidence in its monetary system, the ISGL said.
Lebanon relies heavily on remittances for foreign exchange. But transfers of money from abroad have dried up, leading to a shortage of dollars that in turn has hammered the Lebanese pound, which has lost roughly 30 percent of its value on the black market.
Banks have effectively imposed capital controls limiting the amount of US dollars customers can withdraw or transfer out of the country. Citizens are struggling to pay their bills and business are laying off workers and cutting salaries.
They have basically told us, 'we still have you in mind, but please for heaven's sake let us help you by you helping yourselves'
Growing signs of collapse
MP Yassine Jaber, the head of the Lebanese parliament’s foreign affairs committee said Wednesday’s conference delivered a clear message.
“They have basically told us, ‘we still have you in mind, but please, for heaven’s sake, let us help you by you helping yourselves,'” Jaber told Al Jazeera.
Jaber added that Lebanon is at a critical point where its politicians must regain the confidence of the people, bank depositors, investors and the international community, or the “uprising will become a revolution of the hungry and the unemployed, and they won’t leave anything untouched.”
Signs of such a scenario are surfacing. A standard bag of Arabic bread, which sells for 1,500 pounds – about $0.70 at black market rates – was reduced from one kilo to 900 grammes this week. The union of bakery owners said the move was necessary because the US dollar shortage has made it difficult to import wheat.
Abousleiman noted more than 70 businesses had asked to lay off all their employees in the past 10 days alone. Owners of private sector companies and their employees Wednesday held a large gathering in downtown Beirut where they warned 200,000 jobs could be lost by the end of next year if the situation remained unchanged.
Meanwhile, caretaker Economy Minister Mansour Bteich said during an interview with broadcaster MTV on Wednesday that the wave of unrest has caused the government to lose between $70m – $80m a day in revenue- or roughly half of its pre-unrest take.
Lebanon is already heavily indebted with the third highest debt to GDP ratio in the world.
While the 2019 budget had forecast a deficit of 7.6 percent of GDP, state revenues in the past three months have been 40 percent less than forecast, meaning the deficit will be “much larger than expected”, caretaker Finance Minister Ali Hasan Khalil said on Wednesday.
Khalil said the government would pay state salaries this month as scheduled, “despite real difficulties in financing the state”.
Everyone always says that we need politicians like Hariri because of their international relations to get us money. But what use is it when they steal all of the money that they bring from outside?
‘Stop funding our politicians’
As the ISGL conference was underway on Wednesday, small demonstrations were held both in Paris and Lebanon. Protesters called on the international community to hold Lebanese politicians accountable for losing hundreds of millions of dollars over the last decade to what many feel was poor management and crony capitalism.
In the years before the 2018 aid conference, three donor conferences were held in Paris during which hundreds of millions of dollars in grants and soft loans were pledged and eventually provided to Lebanon by nations and international organizations.
Protesters allege these funds were mismanaged or effectively stolen through shady deals.
“Our politicians are corrupt,” read a sign held by a protester in Paris, near the site of the conference.
In Beirut at the French Embassy, protesters said the international community was inadvertently propping up politicians that thousands of Lebanese have sought to remove during the nationwide uprising.
Despite resigning at the behest of protestors, Hariri appears poised to return to power, with many parties arguing he alone has the international standing to steer Lebanon through the crisis it faces.
“Everyone always says that we need politicians like Hariri because of their international relations to get us money. But what use is it when they steal all of the money that they bring from outside?” Samer, who asked to be identified only by his first name, told Al Jazeera from outside the embassy.
“We tell the embassy and the entire international community very clearly: Stop funding our politicians.”
The system is the problem
Rather than rely on the old model of international support for Lebanon, protesters called for the formation of a government of independent experts to shepherd the country through the economic and financial crisis, and hold early elections based on a new, non-sectarian law.
They blame the post-civil war system of power-sharing between sectarian leaders for rampant mismanagement and corruption in the country.
Jaber, who caucuses in a bloc with one of those sectarian parties but is not a member of the party itself, said that it was true the system was flawed and that the constitution needed to be revisited.
But for him addressing the immediate crisis takes precedent. “If a patient comes to the emergency room bleeding heavily and he also has a temperature, cholesterol and diabetes, you start with stabilizing the patient and stopping the blood flow so you can then treat the other issues,” he said.
“Right now we’re going downhill so fast, and there are no brakes.”