dw (news)

Jakarta –

The Lebanese capital, Beirut, is not short of contrasts. When rows of luxury cars are parked neatly in front of air-conditioned restaurants and bars, outside a group of beggars of all ages dig into the trash looking for food.

“Now more and more people are begging on the street, especially children or the elderly,” said Anna Fleischer, Director of the German Heinrich Bll Foundation in Beirut. “Some can be assumed to be Syrian refugees, but many are also Lebanese nationals.”

Years full of political turmoil and economic crisis – exacerbated by the Covid-19 pandemic and the explosion at the Beirut Port in August 2020 – have dragged the entire country to the brink of bankruptcy.

According to the World Bank, Lebanon is not only “among the countries with the most severe crises in the world since the mid-19th century,” but is also certain to experience “a vacuum in state institutions that further slows down crisis resolution and critical reforms,” ​​the world body wrote.

Middle class extinction

The economic contraction accompanied by a 95 percent devaluation of the pound resulted in a drop in the middle class population. As of last March 2020, the World Bank downgraded Lebanon’s status to the group of low and middle income countries.

“Before the crisis, people who earned 1,500 Lebanese pounds had the equivalent of $1,000. Now it’s worth less than $200,” said Hussein Cheaito, economist at The Policy Initative, a think tank in Beirut.

The Arab Barometer research institute last September found that almost half of the Lebanese population said they were experiencing food insecurity due to price hikes. “Millions of Lebanese people are impoverished and forced to save on food,” said Lena Simet, researcher at Human Rights Watch (HRW).

One source of inequality is the highly regressive tax system. “Lebanon is a tax haven because of the lack of wealth or corporate taxes,” Hussein Cheaito, a researcher at The Tahrir Institute for Middle East Policy told DW.

That is, “only a very small percentage of prosperity flows for the common good,” he added.

The collapse of the Lebanese economy

“The current reality is that one of the most important sources of income for families today is remittances from family members abroad,” said Lynn Zovighian, Director of the Zovighian Partnership, an investment institution that focuses on social and economic interventions.

“The collapse of the private sector and the contraction in the state treasury have pushed up the unemployment rate,” he said. “Lebanon is currently undergoing a dollarization of the national economy.” In a sense, the family now depends on the fulfillment of their needs, from remittances from relatives who work abroad.

Currently the government in Beirut has secured a loan worth USD 3 billion from the International Monetary Fund. But the government’s economic recovery plan does not include assistance for the poor.

“Three billion US dollars is only enough to strengthen the economy so that it is independent, considering the amount of losses in the financial sector which is at least USD 70 billion,” added Chaeito.

Macroeconomic stabilization

“What guarantees that private corporations do not deliberately increase prices and inflation, as we have seen in Latin America? This means that it will be easier for the super rich to access loan services,” said the analyst.

According to him, macroeconomic stabilization is the only solution to save Lebanon from bankruptcy and prevent famine.

“I support the redistribution of losses from the financial sector, to ensure that we have a clear economic recovery plan and protect small and middle-income residents,” said Chaeito.

“Prosperity must be recapitalised, without which it would be impossible to see a reduction in the wealth gap in Lebanon.”

rzn/as

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(it/it)