Lebanon’s Crisis, an Explain – New York Times

Weekly food bills can correspond to months of a typical family’s income. Banks refuse to let people withdraw money. Basic medicines are often not available, and gas stations can the last hours. Every day, many homes lack electricity.

Lebanon is experiencing a humanitarian catastrophe created by an economic collapse. The World Bank has called it that one of the worst financial crises for centuries. “It really feels like the country is melting,” said Ben Hubbard, a Times reporter who has spent much of the past decade in Lebanon. “People have seen a whole way of life disappear.”

It is a shocking turnaround for a country that was one of the Middle East’s economic success stories in the 1990s. Given the scale of the suffering and the modest media attention it has received while the rest of the world is still focusing on Covid-19, we dedicate today’s newsletter to explaining what has happened in Lebanon, with Ben’s help.

As is often the case with a financial crisis, the situation slowly built up – and then collapsed quickly.

After the end of Lebanon’s 15-year civil war in the 1990s, the country decided to tie its currency to the US dollar, rather than letting global financial markets determine its value. The Central Bank of Lebanon promised that 1,507 Lebanese lira would be worth exactly $ 1 and that Lebanese banks would always exchange one for the other.

That policy provided stability, but it also required Lebanon’s banks to hold large US dollar stores, such as Nazih Osseiran of The Wall Street Journal. has explained – so that the banks could make good on their promise to exchange 1,507 lira for 1 dollar at any time. Lebanese companies also needed dollars to pay for imported goods, a large part of the economy of a country that produces little of what they consume.

For several years, Lebanon had no problem attracting dollars. But after 2011, that changed. A civil war in Syria and other political tensions in the Middle East are hurting Lebanon’s economy. The growing power of the Hezbollah group, which the United States considers a terrorist organization, in Lebanon also discouraged foreign investors.

To bring in dollars, the head of the Central Bank of Lebanon developed a plan: Banks would offer very generous terms – including an annual interest rate of 15 percent or even 20 percent – to anyone who would deposit dollars. But the only way for banks to do well on these terms was by repaying the first depositors with money from new depositors.

Of course, there is a name for this practice: a Ponzi scheme. “When people understood that, everything fell apart,” Ben said. “2019 was when people stopped being able to get their money out of the banks.”

Officially, the exchange rate remains unchanged. But in everyday transactions, the value of the lira has fallen by more than 90 percent since 2019. The annual inflation rate has exceeded 100 percent this year. Economic production has fallen.

Even before the crisis, Lebanon was a very unequal country, with a rich, political elite that had long been enriched by corruption.

Three developments since 2019 have exacerbated the situation.

First, the government tried to raise money by imposing a tax on all WhatsApp calls, which many Lebanese families use because phone calls are so expensive. The tax upset people – many of whom saw it as another example of inequality from the government – and led to large and sometimes violent protests. “People outside looked at the country and said, ‘Why would I involve my company in such a place? “,” In Ben.

Second, the pandemic damaged Lebanon’s already vulnerable economy. Tourism, which accounted for 18 percent of Lebanon’s prepandemic economy, was particularly hard hit.

Third, a huge explosion in the port of Beirut, the capital of Lebanon, killed more than 200 people in August 2020 and destroyed several thriving neighborhoods. “A lot of people couldn’t afford to fix their homes,” Ben said. (This Times project takes you into the harbor and shows how corruption helped make the explosion possible.)

Lebanon formed a new government last month, for the first time since the explosion. The Prime Minister is Najib Mikati, a billionaire who has held the post twice before in 2005.

The French government and other outsiders have pushed the Lebanese government to implement reforms, but there is little evidence that it will. The Biden administration, focused on other parts of the world, has chosen not to get deeply involved.

Many Lebanese families rely for their survival on money transferred from family members living in other countries. “The only thing that keeps many people afloat is that most Lebanese families have relatives somewhere abroad,” Ben said.

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Fifty years ago, the rock opera “Jesus Christ Superstar” – with music by Andrew Lloyd Webber and lyrics by Tim Rice – opened on Broadway. Outside the sold-out performances, protesters called the musical blasphemous.

Production was a risk. It tells the story of the last seven days of Jesus’ life through the eyes of one of his disciples, Judas Iscariot. As Lloyd Webber recently told the British newspaper The Telegraph, the producers considered it “the worst idea in historyAnd did not want to put it on stage.

Some initial reactions repeated these fears. Times critic Clive Barnes panned production: “It all looked more like even the first sight of the Empire State Building. Not at all uninteresting, but somewhat unsurprising and of minimal artistic value. ”

In the end, the show won audiences. A spectacle that married rock and musical theater, the musical paved the way for shows such as “Les Misérables” and “The Phantom of the Opera” Sarah Bahr writes in The Times. – Claire Moses, a morning writer

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