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Currency values are plummeting. Beirut’s port is still in ruins. Lebanese are enraged and worry that ‘we haven’t seen anything yet’

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Faysa Saadeh and her husband Bassam Samadi spend time with their two-year-old daughter, Mira, 2, in their living room in Tripoli, Lebanon. When Mira had an infection, the family searched for two days to find antibiotics that weren't in stock at the city's pharmacies.Photography by Rafael Yaghobzadeh/The Globe and Mail

Bassam Samadi had reached his limit. His two-year-old daughter Mira was ill, and none of the pharmacies in Lebanon’s second-biggest city had the medicine needed to treat the intestinal infection that was keeping her up crying all night.

After being told there was no Metrolag, an antibiotic, even at the largest pharmacy in Tripoli, Mr. Samadi pulled his white Suzuki across two lanes so that it blocked traffic in the city centre. He got out of the car and began screaming his frustration at anyone who would listen. “My daughter has had a temperature of 40 C for six days!” he yelled as a crowd gathered around him. “I need medicine! You need medicine! We all need medicine!”

It was a shout at the sky that captured the furious mood of a country that’s in the midst of a stunning and accelerating collapse. Within days, a video of Mr. Samadi made by one of those stuck in the traffic jam he created had been watched almost two million times.

The father’s appeal for something as simple as antibiotics for a child struck a chord among Lebanese shocked by how far and how fast their standards of living have fallen over the past two years. Although Lebanon was once one of the most affluent countries in the Middle East, a financial crisis – created by a corruption-fuelled borrowing spree that economists have compared to a national Ponzi scheme – has led to shortages of fuel, electricity, and medicines. The prices of what can still be found in stores have skyrocketed, as the Lebanese pound has lost more than 90 per cent of its value in less than two years.

Rather than being angry at Mr. Samadi for blocking the road, the crowd in Tripoli surged forward to attack the pharmacy. It was Mr. Samadi who held them back. “It’s not the fault of the people inside! It’s the fault of the state!” he shouted, his voice hoarse and breaking with emotion.

Eventually, after two days of hunting, the family found some Metrolag and then – after another long search – a hospital that had space for Mira, who was by then also suffering from a tonsil infection. But like many Lebanese, they’re still seething at what’s become of their lives and their country.

“We haven’t seen anything yet. We’re going to hear more about people killing, smashing and stealing things,” Mr. Samadi’s wife, Faysa Saadeh, said on the day she and Mira returned home after a four-day stay in hospital. “We were very polite [in our protest], but other people won’t be.”

Anger is building even at Tripoli’s serene-looking fishing harbour, where quiet hung over the sapphire waters on a recent Friday morning. The entire local fleet of blue-and-white fishing boats was lashed to the shore. Instead of hopefully casting their nets into the Mediterranean Sea, the city’s fishermen were standing in a sweaty and frustrated line for an even more precious resource: fuel.

A stillness has fallen across Lebanon’s entire economy, where hyperinflation (food prices are up more than 200 per cent from a year ago) has led some here to make bitter jokes about living in “Lebazuela.” At night, the entire country is blanketed in a darkness illuminated only by the lights of homes and businesses affluent enough to fill and run their own electricity generators.

In a country that still bears the scars of a civil war that killed more than 120,000 people between 1975 and 1990, there are worries that another round of violence may lie ahead. “Even in the civil war, there was nothing so bad as this,” said Mohammed Ali Haji, a 57-year-old fisherman and father of 12 who was waiting in an hours-long line for his turn to pay for two small jugs of fuel – which he predicted would cost more than whatever he could make selling his day’s catch. “We should throw out this garbage gang that are ruling the country and everything will be better.”

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Lining up for necessities: At top, people in Tripoli distribute food at an event organized by a Lebanese NGO, and at bottom, motorists wait at a fuel station in Beirut. Lebanese people will sometimes queue for gas with no guarantee that there will be any left when their turn comes.

Lebanon’s descent is happening so swiftly that it’s possible to watch it happen in real time. When The Globe arrived in Beirut on a Sunday, it cost just more than 17,000 Lebanese pounds to buy one U.S. dollar. By that Friday, the black-market exchange rate was almost 20,000. When trading paused this week for the Eid al-Adha holiday, it was 21,500 to the dollar. Prices are written on chalkboards, or on websites, so that merchants can adjust them to keep up with the rapidly changing situation. “Amounts on the pricetags are not the sale prices,” reads a sign hanging in one Beirut souvenir shop that instead haggles with its remaining trickle of customers over what they can afford to pay.

As queues at gas stations grow daily, drivers regularly sit in line for hours only to be told there’s no fuel left – not until the next day’s delivery – when they finally get to the pumps. As the state’s ability to provide electricity dwindles, many towns in this mountainous country have been left without running water, since there’s no power to pump the water uphill.

People are so preoccupied with other miseries that the pandemic is hardly discussed here – despite a recent spike in cases that doctors believe indicates a Delta-variant-driven third wave.

To help finance the rebuilding of the country after its civil war, the Central Bank pegged the currency in 1997 at 1,500 Lebanese pounds to the U.S. dollar – an artificially low rate that officially remains in place even today. That encouraged a borrowing and spending spree that saw the Central Bank lend money to the government until it ran out of dollars. The Central Bank then turned to the private banks, who floated the institution until they too ran out of hard currency, as a series of political shocks scared foreign investors away. The hole in the Central Bank’s balance sheet is estimated to be upwards of US$60-billion.

And Lebanon has little to show for it all. While Beirut was given an impressive facelift after the civil war, the country has no public transportation system, and the disastrous state of the electricity grid and other public services is now painfully apparent. Most Lebanese believe that their nation’s wealth was stolen from them by their political leaders.

Alia Moubayed, who worked for the Central Bank before she got frustrated by the corruption and nepotism inside the institution, saw the disaster coming.

In February of last year, she and a colleague wrote a research paper warning that Lebanon was already in an “extremely acute” crisis that demanded “immediate action” before things got dramatically worse.

“Lebanon has been living above its means for decades,” reads a bolded line in the research paper. But nothing was done to change course. The country’s squabbling political factions have been unable even to agree on the formation of a technocratic government – a key condition set by the International Monetary Fund before it will provide any kind of bailout.

In an interview, Ms. Moubayed, now managing director at Jeffries Group, an investment bank, said the reforms demanded by the IMF would have meant “that some powerful interest groups would have to lose a lot of their privileges.” That is something the ruling clique – including many of the same warlords who fought each other during the civil war – have so far decided they’re not interested in doing.

The country’s leaders, Ms. Moubayed said, “not only refrained from taking action, but delayed attempts to deal with the crisis, pushing the burden of the losses onto the population.”

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On the streets of Tripoli: At top, people go about their day in the old city, and at bottom, a mural shows a Lebanese boy supporting the anti-government uprising. Tripoli, a Mediterranean port dating back to ancient Phoenician times, is now one of Lebanon's poorest places.

Behind Lebanon’s economic crisis is a paralyzing political one that pits the United States and its allies against Iran and its “axis of resistance.”

The IMF – spurred by the U.S., France and Saudi Arabia – wants to see a new Lebanese government formed that would have a mandate to dramatically overhaul the country’s economy, including by taking steps to tackle the endemic corruption.

Those terms have been rejected as “imperialist” by the Iranian-backed Hezbollah militia that is by far the most powerful military and political force in the country. The U.S. and its allies no longer want to help keep afloat a government that defers to Tehran, while Hezbollah – a Shia militia initially formed to fight Israel’s occupation of Southern Lebanon, which lasted from 1982 to 2000 – sends fighters to support Iran’s allies in conflicts in Syria, Iraq and Yemen. And so, the Lebanese people seem destined to suffer.

Ironically, it’s the peace deal that ended the civil war that has led the country to its current dead end.

The 1989 Taif Agreement was based on the principle of sharing power between various sectarian groups, particularly the country’s large communities of Sunni Muslims, Shia Muslims and Maronite Christians.

But while the deal has served – most of the time – to keep those groups from turning their weapons on each other, it has also created a system of patronage and corruption that sees civil service jobs and government contracts awarded based on loyalty, rather than merit.

The unwritten part of Taif was an informal pact between the foreign patrons of the various Lebanese factions. Since the Israeli withdrawal, Iran and Syria have had security control over Lebanon, while Saudi Arabia – and to a lesser extent France and the United States – have set the political and economic direction of the country via their Sunni Muslim and Christian allies.

But as Hezbollah grew more and more powerful within the government – installing its allies first in the presidency, and then the prime minister’s chair – Saudi Arabia and its Western allies began to question what they were investing in. In the past, when Lebanon got into financial trouble, Saudi Arabia and the other Gulf states could be counted on to keep money flowing into the country and prevent bankruptcy. Not this time.

“The fundamental crisis is the fact we are coming to the end of what we used to call the Taif arrangement in the country,” said Imad Salamey, associate professor of Middle Eastern politics at the Lebanese American University.

Some hope that Lebanon will be thrown a lifeline if U.S.-Iran relations improve. Negotiations over the U.S. re-joining a 2015 deal that saw Western countries lift sanctions in exchange for curbs on Tehran’s nuclear program are at a delicate point. If they succeed, tensions across the region could ease.

But others believe that, this time, only the Lebanese can save Lebanon.

“Things are starting to degrade by the week and by the day. It’s a race between institutional change and total chaos,” said Michel Moawad, an independent MP whose father, René Moawad, was elected president after the signing of Taif, only to be assassinated 18 days later. “It’s a difficult path because we’re dealing with a militia on one hand, Hezbollah, and a deeply organized mafia within the state. That alliance is blocking every hope for change.”

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Beirut, then and now: At top, a family looks out at the port on Aug. 14, 2020, 10 days after a chemical explosion levelled it; at bottom, portraits of the disaster's victims – including three-year-old Alexandra Naggear, a Canadian citizen – hang on some hoarding earlier this month.

The precariousness of life in Lebanon was made shockingly clear last Aug. 4 when a hangar full of abandoned ammonium nitrate exploded in the port of Beirut, killing more than 200 people and devastating swaths of the city. It was the largest non-nuclear explosion in history.

A year later, Lebanese still don’t have a convincing explanation from their government about what such a large amount of such a volatile substance – ammonium nitrate is commonly used in both agriculture and explosives – was doing in the heart of their capital city.

So far, it is independent lawyers and journalists, rather than the country’s law enforcement officials, who have done most of the investigating.

Documents seen by The Globe and Mail show that the ammonium nitrate was purchased in the former Soviet republic of Georgia by shell companies controlled by Syrian-Russian businessmen, including one who is on the U.S. Treasury sanctions list because he “serves as a middleman” for Bashar al-Assad’s regime in Damascus.

Some experts believe that the ammonium nitrate at the port was just a portion of a much larger original shipment, totalling 2,750 tonnes. Had the entire stockpile been present, they say, the explosion could have been much more devastating.

Like every Lebanese institution, the port authority is riddled with corruption, and many here believe the port was used by Hezbollah and other groups as a conduit for smuggling weapons and other goods to the Assad regime.

But firm answers, and accountability, seem a long way off.

The first judge assigned to the case, Fadi Sawan, charged Prime Minister Hassan Diab and three powerful cabinet ministers – all of whom had been warned about the danger posed by the ammonium nitrate but took no action to remove it from the port – in February. Justice Sawan, who reportedly received death threats, was then removed from the case.

His replacement, Tariq Bitar, is heading in the same direction. Earlier this month, he asked parliament to remove the immunity of Mr. Diab, his cabinet, and several top security officials, including the powerful chief of General Security, Abbas Ibrahim.

As soon Justice Bitar filed his request to question Mr. Ibrahim, billboards supporting Mr. Ibrahim appeared in Hezbollah-controlled parts of the country. “We are with you, noblest of men,” they read. The advertisements – which could not have been put up without the approval of Hezbollah secretary-general Hassan Nasrallah – were signed “friends of Abbas Ibrahim.”

The signs were seen as a clear warning to Justice Sawan. “The outcome is either that he resigns or he is killed, God forbid,” said Kim Ghattas, the Beirut-based author of Black Wave, a book about the regionwide rivalry between Iran and Saudi Arabia.

Ms. Ghattas said that while a wave of anti-government protests in 2019 and 2020 had shown that most Lebanese wanted to see an end to corruption and a dramatic change in the way the country is governed, there was now little hope that the ruling elite would step aside.

“The Lebanese have made it clear that they’re finished with this political system, but they don’t have the ability to get rid of them.”

And the political system appears to be done even pretending to work for the people. Ten of the victims of the port disaster were firefighters, nine men and one woman who rushed toward the warehouse fire and who were among the first to die when the ammonium nitrate erupted.

A year on, the firefighters’ families haven’t even received official condolences, let alone a visit from President Michel Aoun, Mr. Diab, or any top government official. And the fire station they were dispatched from, which itself was destroyed in the blast, is being rebuilt by volunteers, with no government involvement or oversight.

“If you find the government, please let me know,” said Tamara Wehbe, an engineer with Offrejoie, a non-governmental organization, funded largely by the country’s large diaspora, that is leading rebuilding the fire station and other parts of the city. “I would ask you to find the government for us on behalf of the Lebanese.”

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At home in Tripoli: At top, Ayman Hakim, 31, opens the mostly empty fridge that his household of eight people shares in the Hay el-Tanak slum. His mother, Samar al-Mir, at left in the bottom photo, says necessities have been largely unaffordable since the value of Lebanon's pound is so low.

Samar al-Mir’s refrigerator was empty, except for five eggs, maybe a dozen tomatoes and half a bag of rice. It was a meagre amount for the eight people, Ms. al-Mir’s family and that of her oldest son, who share the appliance. Besides, the refrigerator only works when the power is on – which is very rarely in Hay al-Tanak, a slum on the edge of Tripoli that is one of the poorest places in Lebanon. Ms. al-Mir bitterly called it “a piece of furniture.”

“Before, when the pound was 1,500 [to the U.S. dollar], we were able to make do, but now it’s impossible. Today we can only eat lentils and rice,” the 56-year-old Ms. al-Mir said.

The families have only a trickle of remaining income. Ms. al-Mir’s two sons take turns standing in line at fuel stations in Tripoli. They fill the fuel at the subsidized official rate, and then sell it for a small profit on the black market.

On the day The Globe was in Hay al-Tanak, it was 100,000 pounds for a four-gallon jug at the gas station, which could be sold onwards for 130,000 pounds – a daily take-home of US$1.50 at the exchange rate of the moment.

“There’s a big chunk of the population that’s starving. I’d say a third of the population. So you can use them. Whoever gives them enough to eat can manipulate them into doing anything,” said Misbah al-Adhab, a former MP in Tripoli. He said Sunni extremist groups would take over the northern city – as Hezbollah controls the south of the country – if the army wasn’t able to assert itself.

Already there have been clashes in the city between the army and unknown groups, including one that saw an army convoy forced to retreat, the soldiers firing in the air as their armoured personnel carrier reversed after being pelted by rocks. Mr. al-Adhab called the incident “a taste of what is being prepared.”

In Hay al-Tanak, the rage is palpable. “The younger generation, instead of thinking about ‘How will I get a better future for my kids?’ they’re asking ‘How will I feed my kids?’ ” said Mohammed Kameli, a 39-year-old resident of Hay al-Tanak who arrived at Ms. al-Mir’s home to join the conversation. Asked what needs to be done to fix Lebanon, he sounded like a man ready to fight.

“It needs to be destroyed. Lebanon needs to be totally eradicated. When I say it should be destroyed, it’s because I’d rather die all at once than bit by bit.”

The Decibel: Lebanon’s crisis explained

On this episode of The Globe and Mail’s daily news podcast, Tamara Khandaker asks senior international correspondent Mark MacKinnon to explain the Lebanese financial crisis. Subscribe here for more episodes.

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