Lebanon was Already in Crisis

Please Note: This piece was written prior to the August 4th explosion. Since then, the crisis in Lebanon has only worsened. Protests are re-invigorated, and the cabinet resigned.

Lebanon is at a critical juncture. Its economy is in shambles and many of its inhabitants are impoverished, unemployed, and/or hungry. In October 2019, a protest movement emerged in Lebanon, calling for the implementation of social and political reforms. The movement has achieved little success and, unfortunately, the crisis has only worsened in recent months. 

In light of this situation, the Middle East Institute (MEI) and the American Task Force for Lebanon (ATFL) launched a joint study outlining the necessary steps that both Lebanon and the United States must take to resolve the crisis. The two published a policy paper, Recommendations for a Stable Bilateral Relationship, in July. On July 14, MEI and the ATFL convened a panel to discuss their findings. Speakers and their affiliations are listed below.

Jean AbiNader: Policy Director, American Task Force for Lebanon

Congressman Darin LaHood: Congressman, Illinois’ 18th District

Paul Raphael: Founding Chair, Lebanese International Finance Executives

Mona Yacoubian: Senior Advisor to the Vice President for Middle East & Africa, U.S. Institute of Peace

Amb. Ed Gabriel: President & CEO, American Task Force for Lebanon

Paul Salem: President, Middle East Institute

Lebanon at a Crossroads
MEI President Paul Salem believes that the crisis in Lebanon is the result of decades of poor governance, characterized by fiscal mismanagement, debt accumulation, and severe budget deficits. Since the ratification of the Taif Agreement in 1989, Lebanese politics have been elite-dominated. Salem argues that Lebanon’s governing elites are responsible for the establishment of patronage systems and other corrupt networks, which have nearly bankrupted the country. 

The present crisis is multi-dimensional, encompassing economic, social, and political issues. In brief, the national economy is contracting and the currency is deflating. Poverty, unemployment, and hunger are ubiquitous. The Lebanese government is increasingly unstable. Finally, there have been protests since October 2019. Salem believes that the protest movement holds promise, though the challenges it faces are immense. It must build consensus around one vision in order to more effectively advocate for change. 

The situation has only been compounded by the COVID-19 pandemic. Lebanon’s currency, the Lebanese pound, experienced devaluation by more than 80% since October 2019. The inflation rate is approximately 55%, though some prices of food items has risen by 200%. The unemployment rate is 40%. Lebanon’s once-robust middle class is dwindling, and many Lebanese citizens have been thrust into poverty. Hunger is widespread, and acts of desperation, including suicide and lawlessness, are increasingly common. In Yacoubian’s words, Lebanon is “hurtling toward becoming a failed state.”

Under Prime Minister Hassan Diab, Paul Raphael feels that the government’s response has been “irresponsible and disturbing.” It has promised a great deal and done very little. Salem believes this is due to its relative lack of power and inability to execute reforms. Many panel-members thus question whether the current government has staying power. It may soon be replaced by a new, more legitimate government, one that will take a more serious approach to the crisis. 

Lebanon’s Future
Without deliberate action to ameliorate the economic and social issues, there is a significant risk of state collapse. Lebanon’s stability has been guaranteed by its army and internal security forces. As salaries for soldiers and security officers dwindle, Salem fears that individuals will no longer be willing to work. If this occurs, Lebanon will again be dominated by militias, and that cantons will become the basis of political organization. 

A failed state in the Eastern Mediterranean would be disastrous. Militant groups would likely enter its territory, threatening regional peace and stability. Collapse could trigger a large-scale refugee crisis. Lebanon already hosts more refugees per capita than any other state. In so doing, Yacoubian asserts, it provides “an international public good.” If refugees are forced to leave Lebanon, there will be a humanitarian crisis. 

Even so, in the eyes of Representative Darin LaHood, the crisis in Lebanon is also “a moment of opportunity.” The United States can engage Lebanon and, in so doing, prevent state collapse. Before this can occur, the panel recommends that Lebanon’s government demonstrate a credible commitment to action and reform. Once these conditions are met, the United States can work with the United Nations’ International Support Group for Lebanon to strengthen the country’s social safety net and inject liquidity into the banking system. 

To watch the event in full: