BEIRUT: Lebanon saw a spike in economic and financial chaos on the eve of the US Caesar Act taking effect, with people flocking to buy the US dollar, the threat of industrial action and job losses at a prominent university.
The act comes into force on Wednesday and gives the US “powerful tools to hold the Syrian government accountable for its atrocities” according to an unofficial Arabic translation of the act’s text. It says that no foreign company should “engage with or enrich” Damascus and imposes sanctions on any foreign person who “knowingly provides important financial, material, or technological support to the Syrian government or to any high-ranking political figure in the regime, or knowingly engages in important transactions with the Syrian government or any high-ranking political figure in the Syrian government.”
Lebanon’s Central Bank is seeking to limit any attempts to buy the dollar in Lebanon with the aim of transferring it to Syria, especially in light of the currency’s scarcity in Lebanon.
On Tuesday people flocked to buy the dollar at the rate set by the Money Exchange Syndicate — LBP3,900 pounds for one dollar — after the central bank decided to pump about $6 million a day from its reserves in the financial market to curb the freefall of the Lebanese pound.
The money-changers entitled to buy dollars from the Central Bank asked people to show proof of identity as well as documents explaining the reason for buying the currency. Low ceilings have been set for the amounts that people can obtain and that amount may not not exceed $200. The dollar exchange rate on the black market was LBP4,800, with people selling what they had bought from licensed money-changers for a higher price.
The General Directorate of Public Security confirmed that it had started “working in the joint special operations room to monitor speculation on the lira against the dollar.” Telephone numbers have been issued to report violators.
Former Lebanese Prime Minister Fouad Siniora criticized the government’s request for the Central Bank to intervene in the country’s currency woes while “refraining from carrying out the required reforms.”
“The depletion of foreign exchange reserves will only exacerbate crises and escalate the situation,” he warned.
The currency chaos was accompanied by a warning from the Mobile Operators’ Syndicate that its employees would strike after the expiry of a deadline for authorities to resolve the problem of May salaries. The strike would disrupt voice calls, internet and messaging services available on social media, the syndicate said in a statement. The strike will affect more than four million mobile service subscribers.
The country’s financial crisis has also forced the president of the American University of Beirut (AUB) to tell staff he had to cut the institution’s headcount by 25 percent. The AUB has a total of 6,500 employees and the losses are expected to extend to staff in managerial positions.
Saroj Kumar Jha, the World Bank’s director for the Levant region, urged the government to secure a social safety net program for the poor and vulnerable groups in Lebanon established in cooperation with the World Bank given the “difficult circumstances that are ravaging Lebanon.”