Lebanon crackdown on black market money-changers fails to stem dollar crisis

The dollar exchange rate has reached 10,500 Lebanese pounds. (AFP/File)
The dollar exchange rate has reached 10,500 Lebanese pounds. (AFP/File)
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Updated 09 March 2021

Lebanon crackdown on black market money-changers fails to stem dollar crisis

Lebanon crackdown on black market money-changers fails to stem dollar crisis

BEIRUT: The dollar exchange rate against the Lebanese pound rose again on Tuesday despite the measures taken by the security forces to pursue black market money-changers.

The dollar exchange rate has reached 10,500 Lebanese pounds, a rise of 200 Lebanese pounds since Monday.

Meanwhile, illicit money-changers were pursued by the authorities in Beirut and its suburbs. Money-changers were arrested in Tire and Chtaura, and black market shops that exchange dollars were closed and sealed with red wax.

The security forces raided homes and centers where money-changing activity normally takes place. This move coincided with a ban on local platforms and websites that trade dollars.

The governor of the Banque Du Liban, Riad Salameh, had informed President Michel Aoun and caretaker Prime Minister Hassan Diab during the financial and security meeting held at the Baabda Palace on Monday that he “cannot control the rise in the exchange rate in the black market nor intervene in the currency market,” explaining that this is a supply and demand market and he does not have more reserves to intervene.

The protests continued on Tuesday but with less momentum. The army and the Internal Security Forces (ISF) reopened the blocked roads by reaching an understanding with the protesters instead of clashing with them. The army and the ISF arrested some protesters who refused to reopen roads, particularly on the Beirut-South roads.

Economic analyst Violette Balaa said that the arrest of illicit currency traders addresses the results but not the causes.

She told Arab News: “Pursuing black market money-changers might control the dollar exchange rate for a very short period of time, but this does not solve the problem. Stopping the collapse of the Lebanese pound requires a radical treatment, and there are no serious indications that steps are being taken toward this treatment.

“Lebanon is still economically isolated from the world, there are no reforms nor government. Hezbollah still controls political decisions, and there are no dollars in the imports market.”

Balaa said: “The rise of the dollar exchange rate during the weekend may have been contrived, but the black market is chaotic in the absence of an executive tool to control it and prevent cybercrimes.”

She added: “The dollar exchange rate is open and has no ceiling as long as there is no rescue government. We hear that there will be no government before the end of Aoun’s term, and we see how the regional crises are not resolved. There is also a press report that said that Hezbollah is buying Syrian lands adjacent to the Lebanese border. All of this contributes to complicating the situation in Lebanon.”

Elsewhere, PM-designate Saad Hariri completed his fifth month of being unable to form a government over his disagreement with the Free Patriotic Movement leadership regarding the blocking third. Maj. Gen. Abbas Ibrahim, director general of the Lebanese Public Security, continued mediation between the two sides. He also visited Maronite Patriarch Bechara Al-Rai on Tuesday.

Walid Ghayad, a spokesman for the Maronite Catholic Patriarchate in Lebanon, said: “The atmosphere of the meeting between the two men is positive, and there is hope for forming a government not too long from now. Pressure must be in all directions to form the government.”

Hariri insists on a government of 18 non-political specialists with no party representation nor quotas.

Hariri, who is in Abu Dhabi, on Tuesday met Russian Foreign Minister Sergei Lavrov. The meeting was attended by Russia’s presidential special envoy for the Middle East and North Africa, Mikhail Bogdanov, and Hariri’s envoy for Russian affairs, George Shaaban.

According to Hariri’s media office, the meeting discussed “the developments in Lebanon and the region.”