After year of political deadlock, financial woes, what next for Lebanon?

After year of political deadlock, financial woes, what next for Lebanon?
Updated 30 December 2018

After year of political deadlock, financial woes, what next for Lebanon?

After year of political deadlock, financial woes, what next for Lebanon?
  • Months-long political paralysis has impacted the already-fragile economy

BEIRUT: Over the course of 2018, Saudi Arabia opened cinemas for the first time in 35 years, Apple Inc. reached $1 trillion on the stock market, and the US withdrew from the Iran nuclear deal. 

Lebanon, on the other hand, continues to stumble around after a year that started out hopeful, only to end in frustration, exhaustion and confusion for its citizens.

The biggest event of the year was the parliamentary election, the first in nine years, which saw many familiar faces and names line up their candidacy, but also a rise in civil society movements that have challenged the status quo.

Voter turnout was just under 50 percent, with little change apart from a single parliamentary seat for civil society groups.

Hezbollah and its allies won more than half the seats, a result that the Iran-backed militant group’s leader Hassan Nasrallah called a “political and moral victory.” 

The Future Movement of Prime Minister Saad Hariri lost a third of its seats, the outcome of years of erosion to his March 14 coalition.

Now we reach the seventh month since he was handed the duty to form a government after the election, with the promise of a “holiday gift to the Lebanese people” in its formation.

Efforts to form the government have been obstructed by conflicting demands for Cabinet seats that must be handed out in line with a sectarian power-sharing system.

Political chess

Two main issues sit at the core of government-formation efforts: Syria and the case of six Sunni MPs. 

As the Syrian conflict heads to its endgame, some Lebanese politicians are keen to normalize relations with Syrian President Bashar Assad, a move Hariri is not exactly fond of.

“It is impossible that I visit Syria, not now and not in the future… and if Lebanon’s interest requires so, then you could find someone else” he said in August.

As for the second issue, six pro-Hezbollah Sunni MPs were elected this year at the expense of Hariri’s tight grasp on the sect’s seats. 

The six demand representation in the Cabinet due to the electoral gains of Hezbollah and its allies. This would mean Hariri ceding his power as the Sunnis’ main leader. 

After deliberation and mediation by Lebanese President Michel Aoun, the six have agreed to give the name of a single MP to represent all their interests. 

A name was given and things appeared to be on the right track, with Hariri saying the government-formation announcement would come “within a few hours.” 

Citizens eased up ahead of the Christmas holidays, before the “few hours” turned into days after the six decided to reject the name that was nominated for their representation.

Lebanese rushed to Beirut’s Martyrs’ Square on Dec. 23, donning yellow vests with a cedar tree emblem, in protest at the continued delay.

“I came because I’m fed up,” protester Youssef Al-Amine told Arab News, “I’m below the legal voting age, but I came because I didn’t want to just sit at home doing nothing.”

As the days go by, Lebanon is looking increasingly likely to enter 2019 without a formed government, as Hariri and Hezbollah continue to squabble over seats and Sunni representation in the Cabinet. 

Economic woes

Early in the third quarter of 2018, there were reports that Lebanon was teetering on the brink of economic collapse, with the lack of government formation accelerating its imminence. 

Earlier this year, at a Paris conference dubbed CEDRE, Lebanon was granted up to $11 billion in aid from Western countries to slow down or halt the impending economic crisis. 

But the lack of government means the funds are inaccessible, leading France and other Western countries to issue statements of caution.

“The lack of a government in Lebanon means running the risk that this dynamic in the international community is lost,” said France’s ambassador to Lebanon, Brouno Foucher.

This summer, the global ratings agency Moody’s gave Lebanon’s economy a “low (+)” grading due to “the deterioration in the regional economic and political environment.” This, and the fear of a real estate collapse, have placed citizens on edge. 

“Since 2011, the lack of investment in infrastructure and the absence of economic reforms have weakened the country’s competitiveness, and would likely prevent Lebanon from returning to previously high real GDP (gross domestic product) growth, even if political risks were to subside,” the Moody’s report said.

Economic growth plummeted from a solid 9 percent since the start of the Syrian revolution in 2011, and has hovered around 1.1 percent for the past three years. Public debt stands at $82 billion, equivalent to 150 percent of GDP.

“We’re passing through challenging times,” former Lebanese Finance Minister Raya Al-Hassan told Arab News. 

“We’re in a huge slump. All the economic indicators point to a downturn in economic activity. All the real economy sectors are suffering and witnessing a downturn.”

Running in parallel with the economic slump is the country’s weak demand for real estate, with megaprojects being halted.

A slump in oil prices from 2014 compounded this slowdown, leaving thousands of apartments unsold across Beirut, and forcing some developers to freeze construction sites.

“Some 3,600 unsold apartments exist today in Beirut alone,” said Guillaume Boudisseau, an expert at the Ramco real estate consultancy firm.

Rays of light

While Lebanon’s economic and political woes have placed considerable strain on its citizens, the cultural sector thrived this year.

Lebanon was represented at the Academy Awards for the first time with Ziad Doueiri’s “The Insult,” which highlighted the sectarian strife still embedded in the country since its 14-year civil war ended in 1990.

Nadine Labaki’s “Capernaum” is also in the running to represent the country at the 91st Academy Awards, after receiving the Jury Prize at the Cannes Film Festival, and being the first Lebanese film nominated for an Emmy Award for Best Foreign Film.

The country announced that it will reopen its national library to the public 40 years since it shut its doors during the civil war. The Beirut Museum of Art will open in 2023.

As 2018 comes to a close, Lebanon’s future — as always — is part of a circus act, with the main show being Hariri juggling the country’s economy, politics and citizens. It is only a matter of time before one — or all — of them come falling down.