Lebanon's financial and economic collapse is likely in the top 10, and possibly even the top three, global crises since 1850, the World Bank has reported. The bank says that during the past 18 months, Lebanon has faced unprecedented socio-economic meltdown during peacetime, a 2020 explosion that devastated Beirut port, and Covid-19.
The bank holds that the country’s leadership has proven incapable of dealing with these “colossal challenges” and turning around the dire situation. Lebanon’s plight was dubbed a “deliberate depression” in an earlier bank report.
"Lebanon faces a dangerous depletion of resources, including human capital, and highly skilled labour is increasingly likely to take up potential opportunities abroad, constituting a permanent social and economic loss for the country," states bank regional director Saroj Kumar Jha.
He calls for the establishment of a “reform minded government which embarks upon a credible path toward economic and financial recovery”, reverses the downward slide and prevents “national fragmentation” and negative global repercussions.
The bank warns that Lebanon’s economy will shrink by 9.5 per cent in 2021, deepening the contraction of 27 per cent in the two previous years. Beirut has defaulted on its external debt for the first time, the Lebanese currency has lost 85 per cent of its value, and poverty has risen to more than 50 per cent in a formerly prosperous country.
Since Lebanon has long been affilicted by conflict and instability, the report says the situation could trigger “social unrest”.
Emigration threat
The bank argues the crisis has undermined the provision of electricity, water, sanitation and education, risking long-term emigration, loss of learning, and deteriorating health. “Permanent damage to human capital would be very hard to recover,” the bank states.
Power outages have increased since two Turkish floating barges furnishing a quarter of Lebanon's electricity shut down operations due to arrears of more than $100 million. As Beirut cannot afford fuel for its power plants, caretaker energy minister Raymond Ghajar warns Lebanon could be without electricity by the end of June.
Essential medicines have disappeared from the market, while long lines have formed at petrol pumps as fear of rationing and rising prices have boosted demand.
The defunded UN tribunal established to prosecute perpetrators of the 2005 assassination of ex-prime minister Rafiq Hariri could close at the end of July, it announced on Wednesday.
Last year the tribunal convicted in absentia Hizbullah member Salim Jamil Ayyash for the bombing. Termination would leave "important cases unfinished to the detriment of victims", says registrar David Talbert.
It could also torpedo establishment of a tribunal to try those responsible for the port blast that killed 200 and devastated a wide area of Beirut.
