Written by Vedika Pathania, a second-year student.
The Lebanese crisis, which started as an economic depression has now morphed into a multi-headed travelling issue for this country in Western Asia. Suffering from one of the top 3 most severe financial crises, the country of Lebanon has convulsed into a state with economic disparity, social unrest, and political upheaval. The country has been riddled with intricate challenges regarding its financial crisis, the situation due to covid-19, and also the Port of Beirut explosion.
The Lebanese economy
Due to the regressive nature of the economy, Lebanon has faced both economic as well as human resource withdrawal. Major stakeholders in the fortune 500 companies stationed in the economic sphere have shown miss trust and fear over the collapse, pulling back all of their market shares from the country. This is broken the backbone of the support system which was supposed to keep the country afloat. Secondly, a huge number of people have been leaving the country for better economic prospects in the neighbouring Middle Eastern countries as well as countries outside of West Asia. This has further burdened the already collapsing economic structure due to the lack of human resources, either as workers or for administrative positions.
The first to catch the eye is political inactivity and inefficiency. Since the last resignation of the Prime Minister, the political moguls of the nation still haven’t decided to add a permanent form of government. This sector can be analysed on two fronts, international and national. Most of the political parties in Lebanon work as proxies of various powerful International communities and do not hold axis powers of operations. These countries and operators do not have a vested interest to solve the Lebanese crisis due to the burden of high losses, and an inability to incur heavy profits in a short span. On the national front, the government is paralyzed with continued withdrawal from the public sector. This shifts the burden of the crisis directly on the people, removing the government from the picture. This neglect is creating a seismic effect on the economic as well as the political structure of the country, which can eventually lead to the collapse and fragmentation of the system as a whole.
The effect of Covid-19
The effect of covid-19 has devastated the whole world but it has found a new place in the arsenal of the rising problems faced by Lebanon. Creating a use burden on the already weak medical and health care system, this pandemic has led to various long-term implications. Paired with the social distress, the medical inadequacies have been hard, on the soft power of Lebanon. Mass migrations, poor health, the lapse of the education system, are all issues that lead to rather permanent and resilient damage to the human capital of the country.
The Public Sector in Lebanon
The public sector is the worst hit zone, from the crisis. The lack of basic amenities, such as electricity and gas, along with fuel has utterly crippled the nation down to its very roots. An individual, the most basic block of a nation, lived in inadequacy and enables it to make changes in the public or the private sector. There is huge public unrest, due to the highly sectarian form of government. The people have leveled allegations of mismanagement, as well as corruption against the established system of bureaucracy. It is backed up, not just with perils but also with underline clientelism and insecurity.
Is there hope?
Although most hope would seem lost for the country, there are still a few potential solutions. Considering the worst-case scenario, the country would be burdened with the rise in crisis where more and more people leave the country leading to a loss of human capital. Followed by the loss of value in the currency which will deteriorate not only the value in the market but also its position to make substantial changes for the economy. Finally, the medical and food shortages will escalate to the point that would not be sustainable through just international humanitarian aids and would lead the country into to a state of chaos and lawlessness which was never faced before.
On the contrary, if the best-case scenario is taken into consideration, Lebanon still holds a credible chance to come out of the crisis. A highly holistic and comprehensive economic program has to be put in the application under a properly functional and autonomous government, devoid of any international influence. This formed bureaucracy and cabinet would then start working on the liquidity of resources inside the country, with the humanitarian aid from the international community as support. The country would then need to dedicatedly stick to a re-compartment program of various debt incurred throughout. A substantially rigorous and highly unorthodox way of organising the economy is the need of the hour. This might prove to be harder due to the failing political elites who might see such a bold step to be against their vested interest. But a non-traditional approach will reduce subsidies along with a step system to raise taxes in the country can lead to a minuscule growth ratio.
The next Nexus event being the election of 2022 can probably lead to better leadership and governance, finally putting the country on the path of re-emergence and growth.