Lebanon

With the economy faltering and discontent rising, the coronavirus pandemic could hardly have been better timed for Lebanon’s embattled Hezbollah.

A public health-mandated lockdown freed the squares of protesters, halting a civil movement that has continued unabated since October and giving the Iran-backed group an opportunity to repair its tarnished image. For a short while, the virus provided the illusion that a newly found common enemy could stir things back towards the post-Civil War sectarian order.

As Lebanon descended into its long-overdue economic and political crisis on the eve of October 17, 2019, the country’s confessional model and its rentier economy were breathing their last.

Lebanon’s sovereign default comes at a heavy price for Hezbollah. This is not simply because of Hezbollah’s powerful role within the government that failed to repay a $1.2 bn bond on 10 March 2020. This is mainly because Hezbollah’s rivals are likely to use the current financial crisis to impose an external authority over Lebanon and increase pressure on the ‘Party of God’ to disband its armed wing.

Mourad Ayyash, a Lebanese citizen living in the Northern city of Tripoli, entered his bank on March 6, spilled gasoline over himself and threatened to self-immolate. A video of Mourad at the bank went viral across different social media platforms, but more importantly on WhatsApp – Lebanon’s most popular messaging app and the straw that broke the camel’s back. Apparently, Mr. Ayyash had been visiting the bank for 2 weeks straight, demanding to withdraw money from his own savings account.

Lebanon defaulted on its debt for the first time in the country’s history.

Since October 17, 2019, unprecedented popular protests have erupted in Lebanon motivated by demands for socio-economic rights and the reform of a highly corrupted and sectarian political system. The deterioration of economic and social conditions in Lebanon has also affected the 1.5 million Syrian refugees as well as the Palestinians and other communities of displaced people living in the country.

Economically speaking, Lebanon is an interesting case study in many respects. Like several Mediterranean countries such as Italy or Greece, it is characterized by huge public debt (151% of GDP). At the same time, like several northern liberal and service-based economies – and unlike most Mediterranean economies except for Turkey – it shows low levels of household savings.