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A year after Beirut blast, Lebanon is reeling under economic and political crises

Lebanon’s political elite still hasn’t formed a government, and Hassan Diab is continuing in his caretaker capacity.

August 05, 2021 08:30 pm | Updated 09:28 pm IST - Political deadlock

Lebanon's caretaker Prime Minister Hassan Diab.

Lebanon's caretaker Prime Minister Hassan Diab.

On August 4, the first anniversary of the Beirut blast , residents of the city took out a march with a mock guillotine outside its port that was ripped apart by the explosion. Elsewhere in the city, protesters clashed with police with stones and fireworks. They wanted answers and the guilty to be punished. A year after the blast, one of the biggest non-nuclear explosions in history that killed more than 200 people and injured about 7,000 others, it’s still not clear who was responsible for the incident.

Authorities have said that the blast occurred after a fire at a warehouse that had stored ammonium nitrate , a highly explosive material. But it’s not clear who stored ammonium nitrate in a warehouse in the middle of Beirut’s densely populated city centre or for what. While these questions are yet to be answered, the blast has worsened the country’s economic and political crises, further deepening the public resentment.

Amid mounting public anger after the blast, Prime Minister Hassan Diab announced his resignation in August last year. But a year later, Lebanon’s political elite still hasn’t formed a government, and Mr. Diab is continuing in his caretaker capacity. Three leaders were appointed as Prime Minister-designates since the blast and two of them stepped down. In September, Prime Minister-designate Mustapha Adib abandoned his weeks-long efforts to form a government as he failed to reach a consensus with the major political blocs.

Firefighters douse a blaze at the scene of an explosion at the port of Lebanon's capital Beirut on August 4, 2020.

Firefighters douse a blaze at the scene of an explosion at the port of Lebanon's capital Beirut on August 4, 2020.

In October, former Prime Minister Saad Hariri was appointed by the President as the new Prime Minister-designate. Nine months later, Mr. Hariri stepped down without a Cabinet. Mr. Hariri said he failed to reach an agreement on portfolio allocation with President Michel Aoun. Mr. Aoun later released a statement on Twitter, saying Mr. Hariri was not ready to discuss amendments to his proposals. After Mr. Hariri’s failure, billionaire businessman and former Prime Minister Najib Mikati was tasked with forming the next government.

In effect, Lebanon doesn’t have a fully functional government for almost a year. This is mainly because the country has a fractious political system in which key positions are allocated for different sects. According to Lebanon’s post-civil war Constitution, the country’s President should be a Maronite Christian, Prime Minister a Sunni and Parliament Speaker Shia. Political parties largely represent the different sects and often fail to reach common ground on governance issues.

The political deadlock continued even as Lebanon’s economy fell into its worst crisis in decades. The 2020 blast, which ripped through the capital’s residential areas, caused damages worth $15 billion. Even before the blast, Lebanese economy was facing a steep contraction. It dates back to the 2019 financial crisis, which saw the country defaulting on its bonds for the first time since its independence in 1943.

According to the World Bank, Lebanon’s GDP per capita fell by 40% in dollar terms between 2018 and 2020, while real GDP contracted by 20.3% in 2020, pulling the Mediterranean country into “one of the most severe global crises episodes”. Already, Lebanon is witnessing scarcity of medicines and other goods. It is also facing frequent power cuts as the government doesn’t have funds to import fuel. Inflation has shot up more than 110%. Unemployment rate soared to 40% late last year, according to the Bank. Crime is up and protests are the new normal. The inability of Lebanon’s political class to form a government and initiate economic and political reforms seemed to have aggravated the crisis.

The UN and France organised a virtual conference of donors recently to raise funds to help Lebanon. Donors pledged about $370 million in fresh aid, but it’s not clear whether it would be of any significant help for an economy that’s in free fall. The World Bank says Lebanon’s situation is worse than the 2008 financial crisis in Greece or the 2001 meltdown in Argentina and that it could take 12 to 19 years for Lebanon to come out of it.

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