{"id":100841,"date":"2017-10-30T12:01:32","date_gmt":"2017-10-30T12:01:32","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=100841"},"modified":"2017-10-30T12:31:05","modified_gmt":"2017-10-30T12:31:05","slug":"lebanons-economy-is-in-crisis-granting-palestinians-the-right-to-work-will-help-fix-it-part-1","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2017\/10\/lebanons-economy-is-in-crisis-granting-palestinians-the-right-to-work-will-help-fix-it-part-1\/","title":{"rendered":"Lebanon\u2019s Economy Is in Crisis – Granting Palestinians the Right to Work Will Help Fix It (Part 1)"},"content":{"rendered":"

Is Lebanon\u2019s Economy Heading for Free-Fall?<\/em><\/p><\/blockquote>\n

Oxford, UK<\/em><\/p>\n

26 Oct 2017 – <\/em>The growing list of US sanctions targeting Iran\u2019s Hezbollah in Lebanon and Iran\u2019s Revolutionary Guard Corps (IRGC) is only part of a broader American, Israeli and Western strategy of roll-back of Iran\u2019s activities in the Northern Middle East than one seeking direct military confrontation. Although the latter may be one of the unintended consequences as Iran begins to retaliate.<\/p>\n

This week the U.S. Congress is working on two additional legislative initiatives to tighten sanctions against Lebanon\u2019s Hezbollah. The new sanctions include more cash bounties on Hezbollah leaders, as well as on Iran\u2019s Revolutionary Guard Corps (IRGC).\u00a0 The main concern in Congress is Iran\u2019s economic break-out and the Islamic Republics continuing hegemonic success in the region. Recently an Iranian official close to Supreme Leader Ayatollah Khamenei famously and accurately remarked, \u201cThree Arab capitals [Beirut, Damascus, and Baghdad] have already fallen into Iran\u2019s hands and belong to our Iranian Islamic Revolution.\u201d<\/em> The US Congress which regularly dreams up new sanctions apparently believes that the more money Iran and Hezbollah have, the more they will advance Iran\u2019s military and political success in the region, including claims on Capitol Hill of Hezbollah\u2019s escalating domination of Lebanon.<\/p>\n

The latest sanctions are not likely to produce compromise or agreement but they will make it more difficult for Lebanon to apply breaks to its downward economic and political spiral. Economic pressure on many in Lebanon who support Hezbollah will increase. Naturally Lebanese sectarian party bosses worry about the sanctions effect on Lebanon\u2019s economy. This is partly because Hezbollah and its allies are deeply involved in Lebanon\u2019s banking system and the financial community is aware that Lebanon\u2019s economy cannot take much more pressure.<\/p>\n

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One of many problems that plague Lebanon\u2019s citizens is the inability of its government to provide basic services including water, electricity, and collect garbage. Photo: Maher Jalhoum. March 2017 Beirut.<\/p><\/div>\n

US sanctions targeting certain Lebanese \u201cterrorists\u201d are having an effect also on Syria\u2019s economy next door. The Central Bank recently issued a SYP 2,000 note (worth about $ 4) after US sanctions caused the Syrian Pound lo lose approximately 95% of its market value since 2011<\/u>. The threats of US sanctions are also leading a number of Lebanese banks to reduce their operations with Syrian banks but so far they have not sold their shares.<\/p>\n

Lebanon\u2019s\u2019 dominant political parties claimed on 10\/14\/2017 that they have<\/p>\n

\u201ctaken a clear decision to immunize the country from US sanctions and not to create a climate of escalation that would affect political stability. \u201cThere is no doubt that we should not underestimate the extent of the U.S. led sanctions pressure, but we are taking all the precautions to face this situation.\u201d<\/em><\/p>\n

A Parliamentary source explained. How precisely Lebanon\u2019s Parliament will do this was not explained but a four-point plan was agreed upon. First and foremost it calls for the current political leaders staying in power. Secondly \u201cPreserving the (Michael Aoun Hezbollah chosen government), thirdly \u201cmaintaining the current political alignment\u201d, and lastly, alleviating the U.S. sanctions impact on the economy, by protecting Lebanon\u2019s security and stability.\u201d<\/p>\n

But the ability of the Lebanese economy and banking sector to sidestep the ramifications of the sanctions will very likely continue to fail.<\/p>\n

If Lebanon\u2019s sectarian parties allow next year\u2019s elections, the first in nearly a decade, it would be a step in the right direction.\u00a0 But past being prologue, if some Lebanese sects do not like the results of pre-election polling they will block the elections for another indeterminate period.\u00a0 Similarly, if progress is made towards developing a Lebanese hydrocarbon industry it could boost Lebanon\u2019s economic growth. A problem with this scenario is that certain Lebanese politicians are seeking to own a major chunk of any hydrocarbon industry likely to be established. Consequently, the ability of the Lebanese economy and banking sector to sidestep the ramifications of the sanctions will likely continue failing.<\/p>\n

The absence of Lebanese public and international confidence in Lebanon\u2019s economy is also a major problem with respect to salvaging it. Lebanon\u2019s parliament on 10\/17\/2017 finally discussed the country\u2019s first state budget in 12 years. However, as MP Antoine Zahra pointed out:<\/p>\n

\u201cToday we are discussing a budget for funds that have already been spent. We will authorize for the government what it has already authorized for itself.<\/em>\u201d<\/p>\n

Former Lebanese Prime Minister Najib Miqati similarly\u00a0 told Parliament:<\/p>\n

\u201cThe magnitude of spending on public sector wages has become scary and it is consuming one-third of the state treasury.\u201d <\/em><\/p>\n

MP Khaled al-Daher of Akkar meanwhile pointed out that,<\/p>\n

\u201chad corruption been curbed, this budget would have been able to be LBP 5,000 billion lower.\u201d<\/em><\/p>\n

The day before, Lebanon\u2019s political bosses some of whom were criminal warlords during Lebanon\u2019s civil war (1975-1991) and who in 1991 voted themselves total amnesty for their war crimes (in the final draft of the Amnesty Decree they crossed out \u201cwar crimes<\/em>\u201d and inserted \u201cpolitical<\/em> crimes\u201d and anointed themselves political lords for life) cut yet more deals to keep themselves in power. According to a 10\/16\/2017 report by Lebanon\u2019s National News Agency (NNA),<\/p>\n

\u201cLawmakers re-elected in only a ten-minute session, all parliamentary committees, their presidents, and members of the rapporteurs<\/em>.\u201d<\/p>\n

Sami Atallah, an economist and director of the Lebanese Center for Policy Studies in Beirut recently commented that,<\/p>\n

\u201cLebanon appears to be headed toward economic bankruptcy. Its chronic fiscal deficit, compounded with a trade deficit, is exposing the country\u2019s financing needs.\u201d<\/em><\/p>\n

Attallah also noted that,<\/p>\n

\u201cLebanon\u2019s political elite is willing to actually reform the system that is serving its interests through excessive spending and debt financing. Politicians will buy time through other gimmicks and will try to monetize the Syrian refugee crisis through another international conference to collect funds, lest any economic collapse have geopolitical consequences for Europe.\u00a0 The country\u2019s policymakers are morally and intellectually bankrupt when it comes to developing an economic system that delivers equitable growth for its citizens.\u201d<\/em><\/p>\n

The above promised Lebanese political steps are largely irrelevant according to World Bank and International Monetary Fund and a majority of experts who have been studying Lebanon\u2019s economy. Some of their findings about the future of Lebanon\u2019s economy include the following:<\/p>\n