Lebanon: Specter of civil conflict looms as economic meltdown gives way to

But on Lebanon’s streets, that same political elite is overwhelmingly unpopular. Even ardent supporters of mainstream parties call for an overhaul of the country’s confessional power sharing system, which allots seats by sectarian group. MPs publicly admit their failures, and some of them say that they, too, ought to step down. Leftist groups, such as the communist party, have called for an “escalation” in the country’s popular uprising, which began in October 2019 with the aim of overthrowing the ruling class.

The report details exactly what that means: A rapid deceleration of economic growth, a tanking currency, small depositors bearing the lion’s share of economic losses, a stunning depletion of the country’s resources including its human capital, and a poverty rate surpassing 50% in 2021.

The catastrophe could have been largely avoided, the World Bank says. Lebanon’s leaders have — to the shock of even some of the most cynical observers — steered clear of enacting policies that could mitigate the financial decline.

The state has done little to nothing to alleviate poverty. Formal capital controls have not been implemented, nearly a year and a half after banks began to limit cash withdrawals to depositors on a discretionary basis. That practice prompted the capital flight of the super-rich, while the working and middle classes helplessly watched their deposits lose most of their real value.

The country also does not have an official exchange rate platform, leaving the plummeting lira at the mercy of shadowy black markets and the ever-present possibility of currency manipulation.

The economic outlook gets bleaker on a nearly daily basis. The country’s currency on the black market has now lost 90% of its October 2019 value. As Lebanon burns through its foreign reserves, caretaker energy minister Raymond Ghajar raised the possibility of 24/7 power cuts during a presser this month, immersing the country in “total darkness.”