Lebanon: a country in free-fall

Almost a week after the explosion that shattered Beirut, which ended more than 150 lives and ruined hundreds of thousands more, the shock has not worn off. At times it feels as though it never will. Phone calls, conversations with waiters, cashiers and taxi drivers begin the same way, with questions about health, family, home. Strangers greet each other with “hamdellah ’al salama” – thank God for your safety – a phrase that in happier times might be used to welcome someone back from a trip.

The soundtrack of the city, its honking horns and revving engines, the church bells and the adhan (the call to prayer), has been turned down. In some places now it is just the breaking of glass, which crunches underfoot, crashes down from buildings and crackles as it piles up. No block in the city centre seems to be unscathed. The skyscrapers that loom over downtown are husks. The stately old homes in east Beirut have had their windows blown out. Balconies are canted at odd angles, air-conditioners dangle by threads, if they have not collapsed altogether.

Everywhere there are thousands of volunteers, young and old, from all corners of the country. They wield shovels and brooms, or walk the streets with cartons of bottled water and bags full of manaeesh (flatbreads). Skips are already filled up with debris, so it now accumulates in the street: ruined TV sets, fragments of furniture, piles of twisted metal and all that glass, bag after bag of it.

There is no help from the state. Men with guns still guard its infrastructure: the parliament, the central bank, the much-loathed electricity company are all barricaded behind towering blast walls and ribbons of razor wire. Soldiers and police direct traffic. Occasionally they stop for a smoke and watch volunteers work. Aside from a few exhausted civil-defence teams, who lost ten of their colleagues battling the blaze at the port, the Lebanese government has left its people to fend for themselves.

The soundtrack of the city, its honking horns and revving engines, the church bells and the call to prayer, has been turned down

Some can afford to. A guard sits in the blown-out lobby of a bank, though there is no door left to watch or customers to monitor. A labourer lays bricks and mortar to seal up the shattered façade of a luxury jeweller. Workers rush merchandise from a high-end speaker store into a waiting truck. Most are less fortunate. A pharmacist in Gemmayzeh, a neighbourhood in east Beirut, stops sweeping to point out an empty cosmetics display and drawers of medicines picked over by looters. Her shop is two blocks from the neighbourhood police station. Repairs and new stock, she estimates, will cost $160,000. She might be able to fix her pharmacy or her ruined house – but not both.

The scale of the task is slowly dawning. A worker clearing a ruined home pauses for a cigarette. He looks down at the battered landscape and fondly remembers the main street in Gemmayzeh, where young people ate and drank and danced until dawn; the once cosy homes with balconies where grandmothers held court; even the eerie, empty downtown, rebuilt after the war and filled with fancy boutiques and apartments beyond the reach of most Lebanese. “It’s all gone,” he says. “It will take ten years to rebuild.”

Time is one factor. Money is another. The economic crisis and spiralling inflation that began in October impoverished the middle class: meat for a Sunday lunch, foreign brands and a holiday abroad all became unaffordable luxuries. At least they had homes. Over coffee last month a neighbour mused that his diminished status would truly sink in when his refrigerator failed or his car needed new brakes. The repairs would be far beyond his means. He thought he would have a few years before poverty struck. Instead he had weeks.

My neighbour thought he would have a few years before poverty struck. Instead he had weeks

The anger is palpable. Vicious slogans circulate on social media: “Prepare the nooses”; “Today we mourn, tomorrow we clean, the next day we hang the guillotines.” On August 6th, two nights after the explosion, a few protesters tried to storm parliament. Far larger crowds massed on August 8th, when tens of thousands packed Martyrs’ Square in downtown Beirut. Demonstrators seized the foreign ministry, the association of banks and other government buildings.

Members of the political elite are heckled when they venture out in public. On Armenia Street, once a hub for nightlife, a woman screams at police officers for protecting politicians without lifting a finger to help the people. Optimists think this a breaking-point: perhaps now they can finally cast off the corrupt rulers who have never seemed so out of touch. Not only do politicians refuse to help, but some have the gall to smile in photo-ops after a disaster of their own making – the explosion was caused by volatile chemicals that lay around for the better part of a decade after they were confiscated, because of inertia and corruption. The government collapsed on Monday, but this is unlikely to dislodge the ruling elite’s hold on power. The same old political parties, reviled though they may be, still hold sway through patronage networks and cynical appeals to tribalism.

A week before the blast I met a civil servant at his home, now destroyed. He reminisced about a trip to Cairo, once the political and cultural heart of the Arab world, a city that these days is in a state of irrevocable disrepair. Perhaps the same future lay in store for Beirut, he mused, and future generations would wonder why it held such a pull: “Maybe Egypt is just a few decades ahead of us.”

The word “resilient”, often used to describe the country, grates on many Lebanese. Resilience, after all, is not some quirk of their character, but a trait they have had to cultivate to endure foreign occupiers and homegrown warlords. There is a limit to anyone’s resilience. This winter – after the economic crisis began to bite, before covid-19 closed the world – I went into a shop for passport photos. The owner asked where I planned to emigrate. When I told him I need the snaps to apply for Lebanese residency, he laughed darkly: “You’re going against traffic.” So many want out. A former government adviser muses about driving an Uber in Canada, where he holds citizenship. At least the job pays in hard currency.

A guard sits in the blown-out lobby of a bank, though there is no door left to watch or customers to monitor

And then, of course, there are millions who cannot leave. They don’t have the foreign passports or currencies that unlock the exit door. A walk through poorer neighbourhoods always belied the myth of a glamorous Beirut. Much of its populace earned barely enough to scrape by. They had to eke out a life amid long blackouts and the reek of garbage. The economic crisis denied many even that. A beggar who sometimes passes by my local café to ask for 1,000 Lebanese pounds – 66 cents at the official rate, pennies in reality – started quipping to customers that he had not raised his prices.

Everyone says they are fine. A few cuts. Just some property damage. It could have been worse. No one is fine, not really. The explosion is one more trauma heaped onto Lebanon’s collective memory. It joins wars and occupations, assassinations and famine. This is such a long list of tragedies for a small country and one that feels as though it will never end. “It’s the same since I was a child, the same since my dad was a child,” says one woman. “It will probably be the same for my kids.”■

Gregg Carlstrom is The Economist’s Middle East correspondent, based in Beirut

A riddle has been doing the rounds on Lebanese social media, and its impenetrability gives as good an indication as any of the state of our financial system. It’s about grilled chicken:

Before, a shawarma sandwich cost 4,500 Lebanese pounds, that is $3.
Now, a shawarma sandwich costs 8,000 Lebanese pounds, that is 90 cents.
Has it become cheaper or more expensive?

“Before” refers to a time near unimaginable now, the sort of “before” people reminisce about in a post-apocalyptic film as they warm their hands over a fire. Before the country’s gargantuan public debt began to make itself felt in people’s everyday lives. Before we understood that we, the small depositors, would pay the price for it. Before the banks stopped dollar withdrawals. Before the videos appeared of people breaking down in tears at the cashiers’ desks: burly men, frail old ladies, middle-class mothers dressed in their nicest clothes, trying to signal their respectability to the indifferent managers. Before our currency began to devalue against the dollar so fast we lost all sense of its worth. Before the collapse, the inhiyar. And before the huge explosion last week that left Beirut in ruins. We have barely begun to comprehend the scale of that damage.

Part of what makes the trauma of the explosion so great is that we were already grappling with another once-in-a-generation catastrophe. For more than 20 years the central bank has fixed the value of the Lebanese pound at a set rate against the dollar. This exchange rate started to unravel late last year as the debt-laden government struggled to pay its bills, leading to widespread protests. The banks, shaken by the unrest, made it harder for people to withdraw dollars. When the coronavirus pandemic hit in March, the banks decided to close entirely for a short period, in defiance of the government’s orders. The government meanwhile defaulted on its debt for the first time. Demand for already scarce dollars became desperate, sending the Lebanese pound into free-fall.

Once the local currency began its runaway depreciation, goods like the shawarma sandwich became simultaneously very cheap (if you could somehow get hold of dollars) and ruinously expensive. It’s hard to tell any more what everyday purchases are worth. A friend’s mother went to the local roastery to buy nuts recently. When the shopkeeper finished filling her bag, she asked him, “How much?” He shrugged. “I don’t know madame, I really don’t. How much do you think is fair?”

Things will not disintegrate and scatter when you try to grasp them, the way money can, the way our money did

For most of the population, who have no access to foreign currency in a country that imports nearly all of its food, the impact has been shattering. The Lebanese pound has lost about 80% of its value since October. Many who thought they had finally established themselves comfortably in the middle class, with their retirement and children’s education secured, were forced into hand-to-mouth poverty. Those who were barely scraping by were reduced to acts of desperation. Two men committed suicide in a single week last month. One did so in broad daylight outside a Dunkin’ Donuts franchise on Hamra Street, a central thoroughfare in Beirut. The man, Ali al-Haq, left a note behind before shooting himself. “I am not a heretic,” it said, referring to a famous Lebanese song of that title. He left it to us to finish the lyrics: “But hunger is heresy, poverty is heresy, humiliation is heresy.”

Economists have been predicting something like this for years. They understood that the astronomical interest rates which the banks offered to attract foreign currency were unsustainable; that the complex lending arrangement between the banks, the central bank and the government was more like a Ponzi scheme than a viable economic model; and that the corrupt sectarian system had crippled the development of vital infrastructure. The economists knew that disaster was coming. To the rest of us, however, it was a sudden and shocking collapse of all the parameters of the known world.

Money has always been a bit of a mystery to me. I understand the basic maths, of course. But I’ve never made enough of it to learn about clever financial instruments and the movements of the stockmarket. It’s always struck me as absurd – appalling even – that something so abstract, a collectively agreed-upon illusion, can be visible so clearly in the material of your life and body. The crack in your ceiling, the scuff of your shoes, the set and colour of your teeth. The only way I can grasp money’s role in our lives is to think of it as a language. Like a language, money constitutes reality as much as reflects it. When this language broke down in Lebanon, reality went with it.

If we had a single exchange rate between the Lebanese pound and the dollar, even a volatile one, it would be merely half a disaster, as the Arabic saying goes. But we have at least three rates. There is the official one, which has stayed at 1,500 Lebanese pounds. The fact that this rate is still sanctioned by the government though it has no relation to reality is yet another example of the absurdity we must contend with. More crucially, it means that employers – even huge ones – have legal cover for cutting salaries that were previously denominated in dollars by as much as 80%. Then there is the commercial bank rate (3,850 Lebanese pounds) at which people who have savings in dollars can now convert them. The banks have at least admitted that the value of those dollars is merely a number on a screen, though they refuse to acknowledge the true state of the currency. Finally there is the black market, where the real rate is to be found. Today it stands at 8,700 Lebanese pounds to the dollar; tomorrow certainly more.

Every time I go to the supermarket, these three rates whirl around my head and I find myself on the verge of tears. I have lost all reference points. Can it be that a toothbrush now costs 22,000 Lebanese pounds ($15/$6/$2.50)? The same as a kilo of chicken? I’m almost sure it was never more than a can of tomatoes (tinned tomatoes are now nearly impossible to find). Where will it end? What will a toothbrush cost by the end of the month? The end of the year? Should I buy an armful of toothbrushes now, while I can still afford to brush my teeth?

Ever inventive, the Lebanese have come up with a new lexicon since the old terms no longer have meaning. “Lollars”, a term first used by an economist called Dan Azzi, is now widely deployed to refer to the aforementioned fictional dollars that are stuck in the Lebanese system. You are allowed to withdraw only foreign currency that has been transferred from outside the country since the currency began to collapse in October last year. These deposits are what we call “fresh dollars”.

If you are a freelancer working for a foreign publication, say, you may be lucky enough to get “fresh dollars”. Pay cheques that would previously have lasted you a couple of weeks can now stretch to two, maybe three months. But then you remember: if you ever want to travel again, to see your mother and brothers who live in another country, to have the option of leaving Lebanon if it gets too oppressive, you need to stash those dollars away with an eye to the future (in someone’s safe, no one trusts banks anymore). You need to find some other, local source of income alongside this and keep plugging away, working to provide for two lives: the one you live here and now, and the imagined one you might lead abroad. But what do you charge now for your work here? According to which exchange rate should you calculate your fee? What is too little and what is too much?

On Facebook people have set up barter groups. In one, a woman proposes to trade “never-worn clothes” for “cleaning products, a bottle of olive oil and foodstuffs for young children”. The never-worn clothes in question were clearly bought for another kind of life, one in which a woman might have occasion to wear a diaphanous yellow dress with flowing sleeves, its elegant collar studded with rhinestones.

I keep thinking about these ads. Not so much because of their desperation, sad as it is. People have always needed to sell off treasured things. What I keep coming back to is how clearly they illustrate the fact that the language of money has lost its meaning. Things only have their use value. They cannot be translated, the way money can, into rent, tuition fees or car payments. Things will not disintegrate and scatter when you try to grasp them, the way money can, the way our money did. It’s taken a while, but the realisation has finally sunk in. The numbers on your ATM screen? A fantasy. That education you wanted, that retirement you thought you could afford? A fiction. All of it has collapsed, revealing the bleak, hard reality underneath.■

Lina Mounzer is a Lebanese writer and translator, based in Beirut

Images: Getty