Can fuel subsidy cuts halt Lebanon’s descent into darkness?

People queue for fuel at a gas station in Zalka, Lebanon, earlier this month. Fuel has become the latest casualty of a complex web of crises that have drained Lebanon’s foreign currency reserves. (Reuters)
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People queue for fuel at a gas station in Zalka, Lebanon, earlier this month. Fuel has become the latest casualty of a complex web of crises that have drained Lebanon’s foreign currency reserves. (Reuters)
Lebanese wait in desperation outside a closed petrol station in Beirut's Hamra district on August 20, 2021. (AFP)
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Lebanese wait in desperation outside a closed petrol station in Beirut's Hamra district on August 20, 2021. (AFP)
People queue for fuel at a gas station in Zalka, Lebanon, earlier this month. Fuel has become the latest casualty of a complex web of crises that have drained Lebanon’s foreign currency reserves. (Reuters)
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People queue for fuel at a gas station in Zalka, Lebanon, earlier this month. Fuel has become the latest casualty of a complex web of crises that have drained Lebanon’s foreign currency reserves. (Reuters)
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Updated 02 September 2021

Can fuel subsidy cuts halt Lebanon’s descent into darkness?

Can fuel subsidy cuts halt Lebanon’s descent into darkness?
  • Living conditions have worsened since the government lifted subsidies for gasoline and diesel
  • Fuel is only the latest casualty of a complex web of crises that have drained the state’s coffers 

DUBAI: Time was when the streets of Beirut throbbed with life and commerce once dusk fell. But nowadays they become ghosts of their former selves as soon as the sun sets. The reason: There is no money in the state’s coffers to buy fuel to operate Lebanon’s power plants.

Private generator operators too have run out of supplies, with fuel becoming the latest casualty of a complex web of crises that have drained Lebanon’s foreign currency reserves.

Last week, the price of fuel in Lebanon rose for the second time in less than two months. The government lifted subsidies for gasoline and diesel in an effort to ease shortages, which led to a nearly 66 percent spike in prices since the last hike in late June.

Lebanese people were already struggling to keep up with expenses given that the pound has lost nearly 90 percent of its value (since mass protests kicked off in late 2019) while salaries have stagnated.

Mustafa Naboulsi lives in Qalamoun, a town in the north of Lebanon, and has been working as a firefighter for 11 years. On Aug. 23, he sent his family to live in France owing to the country’s worsening economic situation.

“Sometimes we have to even sleep in the car while waiting for the fuel so that we can wake up in the morning and fill up the tank. A lot of times we have spent two to three hours in queues, only to be told that the fuel was finished and that we should return tomorrow,” Naboulsi told Arab News.

It has been over 10 days since Khaled Zakaria last filled his tank with gasoline. To do so, he had to travel for nearly 50 km from Tripoli to Byblos and stand in line for over an hour.

The high demand for gasoline coupled with its unavailability has predictably given rise to a black market, where the commodity can be bought for seven to 10 times more than its official price. Zakaria said he refuses to purchase gasoline this way as he does not want to encourage hoarding and corruption, which in his view can only make a bad situation worse.

Naboulsi, the firefighter, also treats burn injuries, but the restrictions on his mobility have left him feeling helpless.

“Sometimes I get called into areas that are outside my town. These are people that are in pain and I would love to help them, but I can’t even reach them,” he told Arab News.




Fire devours a building close to where a fuel tank exploded in Lebanon's northern region of Akkar on August 15, 2021. (AFP file photo)

On the morning of Aug. 15, a gasoline-tanker explosion in Akkar left 28 people dead and nearly 80 injured. The incident prompted neighboring countries to step in to provide aid since Lebanon is also in the midst of a medical crisis.

“Especially after what happened in Akkar, I have no words to describe the pain,” Naboulsi told Arab News. “It’s a very hard feeling. You feel like you are not doing enough even though the situation is out of your control.”

At the beginning of August, Riad Salameh, Lebanon’s Central Bank governor, blamed local traders for fuel shortages.

“It’s unacceptable that we import $820 million worth of fuel and not get to see diesel fuel, gasoline or electricity. This, not the positions adopted by us, is humiliation in itself against the Lebanese,” he told a local radio station.

The imported fuel was expected to cover the country’s needs for three months. Instead, it did not last for even one month.

Bachar Elhalabi, senior Middle East and North Africa analyst at ClipperData, says the Lebanese political system of “muhasasa,” or the sectarian division of ministerial spoils among 18 religious sects, has allowed each leader to grab “a piece of the pie” for themselves.

“Whether it is funding allocations, projects, contracts, etc. Unfortunately, the energy sector is part of that ‘muhasasa.’ In fact, it might be one of the biggest golden geese for sectarian leaders,” he said.

While the caretaker government struggles to keep mass hunger and a total economic collapse at bay, one political faction has found an opportunity to make a grandstand play.

The leader of the Iran-backed Hezbollah, Hassan Nasrallah, said on Friday that he had decided to arrange for a third shipment of Iranian oil.

“We have agreed to start loading a third vessel,” Reuters news agency quoted Nasrallah as saying. “The coming days will prove those doubtful about the shipments arriving with fuel wrong ... and our words will be clear when the first vessel reaches Lebanon.”




Hezbollah leader Massahn Nasrallah caused an uproar when he announced that his group has ordered oil from Iran, a move that could place Lebanon under US economic sanctions. (Reuters file photo)

Earlier last week, Nasrallah announced that the first vessel with Iranian oil had set sail to Lebanon.

Some analysts have warned that importation of Iranian fuel could expose Lebanon to something it cannot afford: US sanctions. Nevertheless, Elhalabi believes Nasrallah is serious because, regardless of whether the vessels make it to Lebanon, the move still serves Hezbollah’s interests.

“The country and the various stakeholders are in a bind. And that includes opponents of Nasrallah. If the tanker arrives at a Lebanese port, the staff are going to look really bad” if they refuse to offload the fuel, Elhalabi said.

On the one hand, if Iranian oil ends up reaching Lebanon, Nasrallah will have succeeded in presenting himself as someone capable yet separate from the government. On the other hand, if the international community — more specifically the US — hits Lebanon with sanctions for importing Iranian oil, Nasrallah will reap the resultant political rewards, Elhalabi said.

Since Lebanon was gripped by economic and financial crises in late 2019, the government has continued to subsidize wheat, gas, fuel, food and other essential items at lower-than market rates. 

“Fuel shortages can be traced back to the inefficiency of the decades-old subsidy program,” Jean Tawile, an economist who has advised the government in the past, told Arab News.

“This paved the way for many cases of abuse such as hoarding, stockpiling and smuggling.”




Lebanese pharmacy workers demonstrate in the Achrafieh district of Beirut on August 16, 2021, with their placards saying "no gasoline = no ambulance" and "no electricity = no hospital" and "no vaccine = no treatment". (AFP)

Most of Lebanon’s subsidized goods are being smuggled into Syria “as prices have skyrocketed there since the outbreak of war,” he said.

Historical data shows that Lebanon imported 5.7 million tons of fuel in 2011, Tawile said. However, by the end of 2012, after the Syrian civil war broke out, the figure shot up to 7.6 million tons.

“So essentially, Lebanese depositors were subsidizing the fuel needs of Syria,” he said.

According to Tawile, the removal of subsidies will eliminate discrepancies in the two countries’ fuel prices and put an end to smuggling of the commodity.

Fuel hoarding will also decrease as distributors will have no reason to stockpile the commodity, something they regularly do in anticipation of price hikes. 

Additionally, as Mohamed Ramady, a former senior banker and professor of finance and economics at King Fahd University of Petroleum and Minerals, points out, Lebanon has been under pressure from international lenders to lift subsidies.

“Lebanon is facing a difficult situation. This decision to reduce the subsidies on fuel is not politically driven. It is economically driven,” Ramady told Arab News.




A demonstrator carries a national flag along a blocked road during a protest against the mounting economic hardships near the Central Bank building in Beirut on March 16, 2021. (REUTERS/File Photo)

Ramady said reducing subsidies is also a way for the government to achieve a measure of fiscal prudence.

“Custom duties are not there. The trade situation is fragile as Lebanon is not exporting vegetables and fruits like before. Tourism revenue has dropped drastically. In other words, Lebanon’s sources of income have narrowed,” he said.

Tawile says the government can cushion the impact of decreased subsidies on the people by implementing a social safety net mechanism, for instance by providing the poorest with direct cash payments.

The caretaker government did propose in May to provide ration cards to the most vulnerable families as a replacement for subsidies. The $556 million scheme was expected to benefit more than 500,000 needy families.

However, as with so many other programs in Lebanon, the absence of a clear funding source has kept the plan in the deep freeze since then.


Algeria rejects Western Sahara talks

Algeria rejects Western Sahara talks
Updated 23 October 2021

Algeria rejects Western Sahara talks

Algeria rejects Western Sahara talks
  • Morocco sees the entire Western Sahara as an integral part of its territory and has offered autonomy there while firmly ruling out independence

ALGIERS: Algeria on Friday ruled out returning to roundtable talks over Western Sahara, days after the UN appointed a new envoy for the conflict. “We confirm our formal and irreversible rejection of the so-called roundtable format,” Algeria’s Western Sahara envoy Amar Belani told the APS news agency.

Algiers is seen as the main backer of the Polisario Front, which seeks independence in the disputed territory, mostly controlled by Algeria’s arch-rival Morocco.

The International Crisis Group wrote this month that “Rabat considers Western Sahara a regional issue and the Polisario an Algerian proxy”, meaning Morocco wants Algeria at the table in any talks.

But some Polisario officials demand a return to bilateral talks on what they see as “a struggle by a colonized population for national liberation from a colonial power”, the ICG report explained.

The last UN-led peace talks in 2019 involved top officials from Morocco, Algeria, Mauritania and the Polisario.

But they were frozen after UN envoy Horst Kohler quit the post in May 2019. He was finally replaced this month by veteran diplomat Staffan de Mistura. The Security Council is expected to renew the mandate of peace mission MINURSO by Oct. 27, and possibly call for new roundtable talks.

But Belani said Algeria had told the council it rejects the “deeply unbalanced” and “counterproductive” format, warning it would thwart De Mistura’s efforts.

He accused Rabat of trying “to evade the characterization of the Western Sahara issue as one of decolonization and to portray it as a regional, artificial conflict”.

Tensions have mounted between Rabat and Algiers since Morocco last year normalized ties with Israel and won US recognition of its sovereignty over the Western Sahara, a former Spanish colony rich in phosphate and Atlantic fisheries.

Algeria, which has long supported the Palestinian cause as well as the Polisario, in August cut diplomatic ties with its rival over “hostile actions,” including alleged spying on its officials — accusations Morocco dismisses.

The standoff also came after the Polisario declared a three-decade cease-fire “null and void” after a Moroccan incursion to break up a blockade of a highway into Mauritania.

Belani urged the UN to treat the issue seriously. “We must recognize that the risks of escalation are serious,” he said. “Peace and stability in the region are at stake.”


Foreign aid lost in Syria exchange rate distortions

Foreign aid lost in Syria exchange rate distortions
Updated 23 October 2021

Foreign aid lost in Syria exchange rate distortions

Foreign aid lost in Syria exchange rate distortions
  • The currency manipulation deprives Syrians, most of them impoverished after a decade of war, of much-needed funds

BEIRUT: Syrian President Bashar Assad’s government has used distorted exchange rates to divert at least $100 million in international aid to its coffers in the past two years, according to new research.

The currency manipulation deprives Syrians, most of them impoverished after a decade of war, of much-needed funds. It also allows the Damascus government to circumvent sanctions enforced by Western countries that hold it responsible for most of the war’s atrocities.

“Western countries, despite sanctioning Syrian President Bashar Assad, have become one of the regime’s largest sources of hard currency,” said the report published this week by the Center for Strategic and International Studies, a Washington-based research organization that focuses on international public policy issues.

“Assad does not merely profit from the crisis he has created,” the report added. “He has created a system that rewards him more the worse things get.”

On Friday, the UN acknowledged that exchange rate fluctuations have had “a relative impact” on the effectiveness of some of the UN programs, particularly since the second half of 2019 when the Syrian currency took a nosedive.

Francesco Galtieri, a senior Damascus-based UN official, said his office received the report on Thursday. “We are carefully reviewing it, also to openly discuss it in the coming weeks with our donors, who are as concerned as we are that the impact of the assistance to the people in Syria is maximized,” Galtieri, team leader of the Resident and Humanitarian Coordinator for Syria, said.

The authors of the research published on Wednesday said the amount of aid lost and diverted to Syrian government coffers as a result of the national currency fall is likely to be more than $100 million over the past two years. The data they used to calculate the amount was limited to UN procurement and does not include aid delivered through other international aid groups, salaries or cash assistance.

Sara Kayyali, who researches Syria for Human Rights Watch, called the findings shocking and said donors can no longer ignore the fact that they are effectively financing the Syrian government and its human rights abuses. She said UN procurement processes did not meet due diligence standards, from a human rights perspective.

The Syrian pound has been hit hard by war, corruption, Western sanctions and, more recently, a financial and economic collapse in neighboring Lebanon.


Friday prayers resume in Iran after 20-month hiatus due to COVID-19

Friday prayers resume in Iran after 20-month hiatus due to COVID-19
Updated 23 October 2021

Friday prayers resume in Iran after 20-month hiatus due to COVID-19

Friday prayers resume in Iran after 20-month hiatus due to COVID-19
  • The government says more than 28.2 million people have so far received a second dose of the COVID-19 vaccine

TEHRAN: Mass Friday prayers resumed in Tehran after a 20-month hiatus due to the COVID-19 pandemic, state TV reported.

The prayers at Tehran University, a gathering of religious and political significance, came as authorities warned of a sixth wave of the coronavirus, which has so far claimed 124,928 lives in Iran and afflicted more than 5.8 million.

On Saturday, schools with fewer than 300 students are also due to reopen. Also starting on Saturday, government employees, except those in the armed forces, will be barred from work if they are not vaccinated at least with a first dose, according to a government circular released earlier this week.

The government says more than 28.2 million people have so far received a second dose of the COVID-19 vaccine.

“Today is a very sweet day for us. We thank the Almighty for giving us back the Friday prayers after a period of restrictions and deprivation,” said Mohammad Javad Hajj Ali Akbari, Tehran’s interim Friday prayer imam who led the sermons.

Worshippers had to heed social distancing and use face masks during the gathering, a forum where officials present a unified front in the weekly sermon, a duty that rotates around senior members of Iran’s conservative clerical establishment.

Most worshippers brought their own prayer rugs and clay tablets used during prostration, said the broadcast.

It added Friday prayers were also performed in several other Iranian cities.

Health Minister Bahram Einollah said earlier this week that it was a “certainty” that Iran would face a sixth wave next week. The warning came even as the country has accelerated its vaccination drive.

Einollahi added that his country was well-prepared for the new surge.

Schools with more than 300 students will re-open on Nov. 6, Alireza Kamarei, spokesman for Iran’s Education Ministry, said earlier this week, adding that it was not essential for students and teachers to be vaccinated. He said 85 percent of the country’s teachers and 68 percent of students had so far been inoculated and that classrooms were well ventilated.

Required social distancing will remain at least one and a half meters.


More than 90 Houthis killed, 16 military vehicles destroyed in coalition strikes on Juba and Al-Kasara

More than 90 Houthis killed, 16 military vehicles destroyed in coalition strikes on Juba and Al-Kasara
Updated 56 min 17 sec ago

More than 90 Houthis killed, 16 military vehicles destroyed in coalition strikes on Juba and Al-Kasara

More than 90 Houthis killed, 16 military vehicles destroyed in coalition strikes on Juba and Al-Kasara
  • The coalition said it had carried out 31 air strikes on the districts of Juba and Al-Kasarah over the past 24 hours
  • UN says 10,000 were displaced last month alone by fighting in Marib governorate

JEDDAH: The Saudi-led coalition fighting in Yemen said on Friday it had killed at least 92 Houthi rebels in airstrikes on two districts near the strategic city of Marib.

The deaths are the latest among hundreds that the coalition says have been killed in recent fighting around Marib, and come during a second week of reported intense bombing.

“Operations targeted 16 military vehicles and killed more than 92 terrorist elements” in the past 24 hours, the coalition said in a statement, carried by the official Saudi Press Agency. The coalition has for the past two weeks reported almost daily strikes around Marib.

Most of the previously announced strikes were in Abedia, about 100 km from Marib — the internationally recognized government’s last bastion in northern Yemen.

The latest airstrikes reported were in the districts of Al-Jawba, some 50 km south of Marib, and Al-Kassara, 30 km northwest.

The Houthis began a major push to seize Marib in February, and have renewed their offensive since September after a lull. Several Yemenis are waiting for help after fleeing fighting in Marib, according to Reuters.

Iman Saleh Ali and her family left Al-Jubah in the dead of night with only the clothes on their back to escape fighting, the second time they have been forced to do so.

The UN says some 10,000 people were displaced last month alone by the fighting in Marib governorate. It is calling for a humanitarian corridor for aid.

UN humanitarian coordinator in Yemen David Gressly told Reuters that access has been most restricted to Abedia, but that they have now been given authorization though security concerns remain.

Luckily, he said, food was distributed in coordination with the World Food Programme just before the fighting, which is exacerbating a humanitarian crisis in Yemen that has left millions on the verge of famine and 20 million needing help.


Evacuation flights for migrants start again in Libya

Evacuation flights for migrants start again in Libya
Updated 22 October 2021

Evacuation flights for migrants start again in Libya

Evacuation flights for migrants start again in Libya
CAIRO: The United Nations said on Friday that it has resumed humanitarian evacuation flights for migrants stranded in Libya after authorities suspended them for several months. The announcement comes after a massive crackdown on migrants by Libyan security forces.
The UN’s International Organization for Migration (IOM) said in a statement that it had evacuated 127 people to Gambia from the Libyan city of Misrata on Thursday. It said the Gambian migrants were among thousands more who are waiting to go home through the organization’s voluntary return program.
Evacuation flights for migrants have operated sporadically amid Libya’s conflict, and been periodically suspended because of fighting. The latest suspension came from the country’s ministry of interior on Aug. 8, according to the IOM.
Libya was plunged into turmoil by the NATO-backed 2011 uprising that toppled and killed longtime dictator Muammar Qaddafi. The North African nation has since emerged as a popular, if extremely dangerous, route to Europe for those fleeing poverty and civil war in Africa and the Middle East. Many set out for Italy, packed by traffickers into unseaworthy boats.
Earlier this month, Libyan authorities started a massive crackdown against migrants in the western coastal town of Gargaresh, detaining more than 5,000 people over the course of a few days. In response, many turned to a community center operated by the UN’s refugee agency’s office in nearby Tripoli, camping outside and asking to be evacuated.
On Friday, the UNHCR refugee agency said that there are still 3,000 vulnerable people staying outside its community center for fear of government raids. The agency said it had suspended the center’s operations for security reasons but was still able to offer some limited provisions to the migrants there. It welcomed the resumption of humanitarian flights, but also called on the government to urgently address the needs of asylum-seekers and refugees in a “humane and rights-based manner,” especially those who cannot return to their countries of origin.
Detained migrants in Libya have been held in overcrowded detention centers where torture, sexual assault and other abuses are rife. UN-commissioned investigators said Oct. 4 that abuse and ill treatment of migrants in Libya could amount to crimes against humanity.
The migration agency has operated evacuation flights for those wanting to return home since 2015 and since then returned some 53,000 migrants. The program receives funding from the European Union and the Italian Ministry of Foreign Affairs’ Migration Fund, according to the IOM statement.