By Intibah Kadi for the Saker Blog
With COVID-19 capturing almost total world attention, eyes are not focused on the numerous alarming events occurring around the world. In Lebanon, a disaster has been unfolding; a place in the long past described as the “Land of milk and honey” and even when one now wanders the hills, it still rings true to an extent. The fact is that now the ordinary people, including much of the middle classes, are facing impending food insecurity and even starvation. Even those who normally write of events in the region, including those “Syria watchers” who enter Syria via Lebanon, seem not to have covered this emerging crisis, notwithstanding the fact that the COVID-19 related restrictions would have played a part in that. For Syria, the flow on effect from this looming crisis is very serious.
Ghassan Kadi, alarmed at the developments in Lebanon in the latter half of 2019, just prior to the financial sector collapse which rapidly plunged the country into an impossible and perilous position, wrote a series of articles on how Lebanon had arrived at such a point.
The last straw was the collapse of the financial services sector. It was the only institution that remained well intact after the long years of the Civil War, admittedly boosted with much war monies.
In the link above, the history of how Lebanon came to be separated from Syria is explained. There was no excessive wealth lying around in those early decades of the new State. However, with its unique stature as the only Arab state with a Western-oriented affiliation , by the 1950’s and 1960’s Lebanon exploded into a vibrant, wealthy hub that provided many service and professionals required by the newly wealthy oil kingdoms in the Gulf and Saudi Arabia, from doctors, teachers to international banking and transport infrastructure and a place to have fun.
Business and wealth also flowed in from Syria from those not wanting to partake in Syria’s move towards socialism. Lebanon inadvertently became a ritzy, sophisticated, must-go-to tourist destination, and not just for those from the new oil-rich states, but also for European and American tourists. Money began to pour into the financial services sector, with the national bank bearing the name at the time as the “Banque de Syrie et Liban” (i.e., Bank of Syria and Lebanon), there was not much in this name to reflect the independence or success of Lebanon at any level. By the time “Banque de Liban”, came to be in the mid-late 1960’s, Lebanon’s financial prowess had already made its international mark.
Despite 15 years of civil war ravaging Lebanon between 1975 to 1990, where the country’s most valuable achievements vanished before one’s eyes, just one sector remarkably remained least devastated; the financial sector. For over 27 years since the war ended, the Central Bank experienced continuity of leadership from just one Governor, regarded highly and talked-up by the world banking community, and such resilience was interpreted as a bank that is a safe haven for investors. [3] Large sums continued to pour into it from the sizeable proportion of Lebanese working as expats, particularly in the Gulf and especially in Saudi Arabia. These expats, tended to send their savings back to these “safe” banks in Lebanon or to their families to manage, not considering Saudi banks as an option for a number of reasons, including lack of trust and fear of policies being suddenly implemented to confiscate their hard-earned savings or restricting its transfer.
With the financial sector of Lebanon’s demise this year, literally hundreds of thousands of Lebanese expats who have worked for decades abroad, with many of them ready to retire, or having recently retired, knowing their future depends of that nest-egg they built up all their lives, the unthinkable happened; their nest-egg is no more.
Who would have thought this possible that the Lebanese financial sector could possibly go under?
The common practice has been that deposits to the numerous banks in Lebanon are then reinvested in the Central Reserve Bank. The situation now is that the Central Reserve Bank is empty because it has been raided. Actual deposits have been siphoned out resulting in the massive devaluation of the Lebanese Lira (LL). We are talking about 800 billion dollars according to this link and several others.
It is a huge figure for any country, let alone a small one like Lebanon. The Prime Minister has squarely put the blame on the Governor of the Central Bank, but there are fingers pointing at many government officials, from all different parties; this one is accused of stealing ten billion, this other one accused of stealing five billion and on it goes. How does one prove who stole what and how can it be recovered?
On the ground the situation is dire. When the Central Bank could no longer hide the facts, the bank commenced limiting withdrawals. No individual, no business, no government department; no one, could withdraw more than a small unsustainable monthly amount of US dollars. The USD in Lebanon is the commercial currency, if not the actual every day currency. Eventually, no US dollars were allowed to be withdrawn and, even if one were to have a USD account, one only is given LL. The current currency exchange situation of USD to the LL is anywhere between 30 to 40% less than its market rate. There is no limit to taking LL out, but they are worth so little. The population is unable to sustain itself, businesses are no longer viable, no one can pay bills, let alone possess the ability to pay staff and workers, or buy materials for continuing the business or for manufacturing, and trying to send money to Lebanon, of course not through banks, is a trial with the recipient being paid out in LL. Vendors trying to operate in this fast, typically downwards moving spiral, try to protect themselves from the falling LL and inflate their prices. Desperation has set in en-masse, even among formerly highly successful, educated Lebanese. Daily painful situations arise, leaving one at a loss as to how to provide assistance.
Can anyone imagine the domino effect of something like this when vendors resort to such tactics of self-preservation and its impact on the wage earner who is lucky to even receive a partial wage now?
As for long-suffering Syria, money destined for ordinary Syrians since the sanctions, usually came in via Lebanon. Apart from the long years of the war, the people’s suffering has been exacerbated by ongoing, crippling sanctions, the situation of COVID-19 with its restrictions and associated financial fall-out, Lebanon’s financial sector collapse, a dramatic increase in poverty in both countries, an end to employment opportunities in Lebanon and, the final straw of not being able to access funds sent to Lebanon, all leaving Syria in a disastrous and vulnerable situation.
Thanks to the crippling, illegal, immoral and inhumane sanctions placed on Syria by the West, one cannot transfer money to Syrian banks. Services like Western Union in Syria are rendered untenable, due to the massive difference in the formal price and the market price of the US dollar, where two-thirds of the money is lost. In Syria, the official rate is 600 liras for one 1 USD. But the market rate is approx. 1600 liras to 1 USD. Seeing the forced smiles on the faces of beloved ones, trying to hide the demise of their enthusiastic, ever hopeful youthful approach to life, and a sense that they have given up before their lives really began to take off, is painfully etched in the heart and psyche of this writer.
Re-visiting the subject of a lack of focus or perhaps even concern on the part of some“Syria watchers” who rely on Lebanon and kind people there for their transit to and from Syria, it is probable that they don’t appreciate the depth of the intricate relationship between Lebanon and Syria. Despite the fact that Syria was partitioned into these two separate state entities, they kept relying on each other for many reasons. Lebanon always relied on Syria for the supply of many agricultural goods, fresh produce, meat, an array of manufactured goods as well as services and cheap labour. Syria proudly has preserved ancient crafts and skills and their artisans have been employed in Lebanon in the furniture, jewellery making businesses and other industries.
Syria relied on the Lebanese banking system and especially in times of sanctions. If there are indeed “silent” and ”covert” sanctions on Lebanon as Ghassan Kadi suggests below, then it means there are additional sanctions on Syria. With the situation of the banking crisis in Lebanon currently, Syria’s financial lifeline has been cut off.. A route to Cyprus exists for banking, but it is expensive, and besides, particularly if one is running a business and have staff, how would one physically bring that money (USD) back into Lebanon and also Syria? There are clearly different tiers to this alleged “covert” and “unspoken” American sanctions on Lebanon. Their double effect, that being also on Syria, no doubt brings delight to Israel and the US.
There is more to this all than corrupt officials raiding the bank, allowing this one remaining major institution to collapse so monumentally. According to Ghassan Kadi, a number of issues are at play and one of them is “… the silent, covert American sanctions against Lebanon, in an attempt to push Hezbollah out of participating in the government.” The US delivered numerous subtle messages to Lebanon about consequences if they fail to curb Hezbollah’s influence in the political process. One startling red flag for Kadi was the financial demise of the American University of Beirut (AUB), and the symbolism of this was not lost on him; that is of the US pulling back and “letting the ship sink”
At the heart of all these problems, lie the ongoing issues of in-bred, endemic and crippling corruption. Reason stipulates that any kind of reforms employed to get the country back up on its feet first needs to tackle the scourge of corruption. Ghassan Kadi explains that “… if you understand how a parabolic curve goes, it moves with a low intensity and then steeply rises and accelerates with increasing speed. Lebanon has experienced corruption ever since day one and recently, it has been escalating in unprecedented intensity. Everyone is blaming everyone else, but it is everyone’s fault. You cannot put the blame just on the current government. Corruption has been around ever since Lebanon existed, and that’s the truth.”
Just as the Civil War in Lebanon spelled an end to important industries; the fact is that the country never really recovered. To this day, throughout the country, shells of factories and other structures stand as a reminder of what once was, and now more ghosts appear as the financial crisis finishes off much of what is left, and the implications of the COVID-19 issue have not even been analysed herein. Recovery has been impossible not only due to the major factor of corruption, but also because Lebanon lost its stature. No longer was it a bustling and prosperous place, a commerce and tourism hub for the neighbouring countries, but in particular, for Saudi Arabia and the Gulf, they had no reason to return to Lebanon as the Civil War had prompted them to build their own infrastructure and economy which no doubt would have eventually happened.
The irony stings like a wasp when one considers that the nation that prospered from providing important infrastructure, commercial and other services to the newly oil-rich states, a nation that had had an estimated USD800 billion in its Central Bank, and now has fallen into a hole, cannot tap its gas deposits out from its shores due to corruption and the fact that prospective stakeholders have identified the corruption issues as likely rendering the partnership unviable.
If the estimates of gas reserves in Lebanese waters are accurate, here is an opportunity to transform Lebanon, easing poverty, paying off debt, re-building the country, right? The corrupt officials who keep Lebanon running the way things have been done for so long are unable to agree on how to split the spoils as this potentially is such a huge spoil that the kick-backs cannot all go to the one group.
Trying to understand how things work in regard to the wealth of Lebanon, the writer found out the following also silent “protocols” involving the many officials and unofficial officials who have their hand in the nation’s coffers. This provided some insight into the saga of the unexploited gas out at sea. Was there a lack of progress in tapping this potential bonanza due to the years of chaos and lack of leadership at the close of elections when all interested parties attempt to reach consensus on who should rule the country and take the various ministerial positions? Apparently not! That aspect is more about power than individuals splitting the spoils. According to Ghassan Kadi, whoever is or is not in office has no bearing on the “mafia nature” of how spoils are split in Lebanon. So, for example if a particular political leader is a leader of a certain area but not in government or whether it is someone in government, he will still get his share of the spoils via kick-backs. This applies to every sector of the economy.
Where things have become sticky is the fact that no particular official or leader has any “entitlement” of jurisdiction over the territory out at sea. This is not within the “working agreement” on how to split the kickbacks and under-table deals. The port, the airport, fuel, water, generators, rubbish collection contracts, every conceivable asset or service has interested parties that receive kick-backs. One cannot get a contract with the Lebanese government, one cannot get one’s shipment unloaded, or supplies sent or received without bribing an official. The status-quo was running along quite smoothly until a totally new element (the gas) appeared and now the negotiating of who gets what kick-back among these mafia cannot be resolved.
When a State was carved out of greater Syria by the Western powers, it’s economic and political viability was the least of their concerns. How Lebanon can climb back to the days of wealth and dynamism is the question because, those heady days of the 1950’s and 1960’s were not based on a solid foundation for the future. The State of Lebanon is merely one hundred years old. How can it be rejuvenated and made viable? Everyone in Lebanon it seems, only discusses the problems and no one speaks of solutions. What kind of resolution to the problems do the Lebanese people want?
- “Lebanon’s Dilemma of a Revolving Identity” http://intibahwakeup.blogspot.com/2020/02/lebanons-dilemma-revolving-identity_27.html
- “Lebanon’s Central Bank Governor Saviour of Scapegoat.”
https://www.thenational.ae/business/economy/lebanon-s-central-bank-governor-saviour-or-scapegoat-1.1011283 - Talk on the street in recent weeks, levels accusations of the Central Bank of Lebanon luring in the investment of smaller banks only to slowly siphon it away over these years. No evidence has emerged as yet to substantiate this.
- “Lebanon’s Theft of Billions of Dollars; Avoiding the Bitter Cure from Beirut.”
https://al-ain.com/article/lebanon-looted-money-dollars-bitter-treatment?fbclid=IwAR3dpjGJsY7HNO7Qdz4tlbFuUlbrizyuo3xqvCaMU5PFEhhez3Ey04tzdvA - “Lebanese Bank Official Charged” https://news.yahoo.com/lebanese-central-bank-official-charged-175626884.html
- “As Hezbollah Rises in Lebanon’s Government, Fears About U.S. Response Follow” https://www.nytimes.com/2019/02/01/world/middleeast/hezbollah-lebanon.html
- “Could Lebanon’s Prestigious American University of Beirut go Bankrupt?” https://english.alaraby.co.uk/english/news/2020/5/6/could-lebanons-prestigious-american-university-of-beirut-go-bankrupt
- “Lebanon’s gas hopes threatened by corruption” https://www.petroleum-economist.com/articles/upstream/exploration-production/2019/lebanon-s-gas-hopes-threatened-by-corruption
if only it could unite with Syria, but I seem to remember that Ghassan said Lebanese public is anti-Syrian. In Iran my understanding is that the IRCG the National army of Iran has many holdings in the financial sector. Perhaps Hezbollah too has holding ? I know Hezbollah is a political party but what about financial holdings ?
If only China and Iran and Russia could help Lebanon…I suppose its the only way right now. Do you think its possible ?
I think its bad that China becomes so powerful – being a partner in the whole world because US incapable any more, but it may be the only way for now.
Ann, if China really cared for anything other that scheckles they’d be building intermodal shipping ports in Lebanon, not Occupied Palestine. Anywhere where one cannot practice their religion of choice or their birthright ethnicity without government interferance is an apartheid state.
Lebanon is a historically complex situation ever since the post-Ottoman slicing up of the area, with the Zionist State of Israel very successfully exploiting its vulnerabilities ever since the Palestinian refugees (including the PLO) that arrived in Lebanon. The complexity also involves the influence of all its neighbors and their political movements in the affairs of Lebanon.
And since the civil war, all hell broke loose, and Lebanon has basically never recovered. The numerous corrupt factions and political make up and squabbling does not help one bit.
The only way I see Lebanon returning to any sense of normality, is if a new generation of leaders realizes that the way to success is to stop this systemic corruption, to truly form a unity regardless of political affiliations and to start turning towards the East (Russia, China, Turkey, Iran).
It requires a cleansing of the house and to start working on a balancing act towards a greater good. Easier said than done, and the cards are stacked against it.
Sometimes change requires hitting rock bottom.
Lebanon needs to rejoin Syria, the mother country from which it was brutally separated by the Anglo-French colonial takeover after WW1. I used to believe the Anglo-French excuse that Christians would be more secure in a separate country; I believed that because, being a South African born under the British Empire, I used to share the racist mentality of European colonists. That same racist mentality, which induced France to split off Christian Lebanon from Muslim Syria, likewise induced His Brittanic Majesty to set up a National Home for Dear Lord Rothschild. But today Israel faces an uncertain future, and Zionism is basically as anti-Christian as it is anti-Muslim. It seems to me that the most secure and corruption-free place for Christians in the Middle East today are Syria and Iran. Lebanon is too dependent on outside support to maintain its fragile internal balance. Corruption at the top is an endemic disease of any country, but Lebanon is an artificial, foreign imposed country, which might make corruption worse — because some members of the regime have roots outside the country.
Intibah, I was in Lebanon for a week or so as a child of 6 or 7….sixty plus years ago
Beirut, Sidon, Tyre and Balbek. Besides the latter with its Roman appropriation….. “The Temple of Apollo” …..of a far older site with the largest building stones on earth (between 1000- to near 2000 tons in single blocks) I was first impressed by the beautifully landscaped, flowered, patterned, sloped roadsides along the highway leading from the airport into 1956 or 1957 Beirut.
I guessed (and I see from the first link…intibahwakeup.blogspot) that Intibah is the wife of Ghassan Kadi.
My main reaction to this sobering article, ironically, is one of optimism.
Don’t accept a word of my suggestion without your further investigation….and this will take patience…perseverance, study..…..but there are many situations all over the world where cheating, corruption, fraud are much more incentivized than in others…however … I am intrigued by what I see as a likelihood that a substantial improvement, in the form of general adoption of an immutably time-stamped PUBLIC electronic ledger technology for payments and data storage, will, or at least could……within this decade…very possibly, reverse this widespread problem described by Intibah…in Lebanon and far beyond………by a technology that disincentivizes such financial crime as described in the article.
In short, the robbery usually occurs either suddenly with a heist or illegal withdrawal or diversion of funds that isn’t even covered up for more than mere days….or, more commonly, in more systematic, gradual ( so as not to alarm the public or any the public’s would-be protectors) syphoning off of funds by making public a faked set of books or false accounting reports, while keeping a separate private set of books for the insider thieves. With the real books showing the real balances of the financial institution in question being drained off into private hands.
Multiple entry book-keeping with false books is also how Bernie Madoff stole billions. Ditto Enron and others. Including the Lebanese Kleptocrats, no doubt! And politicians’ and bankers’ temptations in many countries besides Lebanon…..and can be substantially solved by a public, immutable digital ledger,at least in in theory.
However, in practice, there can be is no real “blockchain” of any planetary benefit in this regard, without the scaling and built-in system of micro-payments and lower transaction fees, and faster and better and with lower processing fees than anything else presently available ….to maintain its unlimited, immutable, fraud-proof data storage. Furthermore, no single country…not even China or the US can crank out such a system and have it’s use accepted by most everyone else. And yet the world have still get it, due to circumstances very few blockchain enthusiasts understand.
I think I understand it, in broad outline, sufficiently ……but have concluded that the only way to reliably get others to understand the essentials of the matter…is for them to discover it for themselves through posing questions to them that they can answer…themselves in step by step fashion…the way Socrates did with the slave boy in the Meno Dialogue, to guide the boy to the “rediscovery” of what the length of a side of a square of 8 square feet is, in physical/geometric, rather than arithmetic/numerical terms.
Answer: The Diagonal of a square of 4 square feet.
Besides the Meno, I think I’d best read the Crito, since it is the closest to “Crypto” (LOL) whose incomprehension also generally makes people quite uncertain and tense. (Crito is about that person’s unsuccessful urging of Socrates that he flee Athens, to escape his death sentence for his conviction of having “corrupted the youth.” I guess that would include the young slave boy who Socrates guided solely by questions the boy himself answered……but which the boy’s master, Meno, had no idea how to answer, in one guess, when the Meno dialogue started.)
Articles would be a shortcut, and much faster, though not nearly as good as the Socratic method.
In any case, whether it is Lebanon or any other country afflicted with a similar financial system weakness, no country is likely to ever gain access to such an honesty incentivizing tech……unless all governments….all corporations…..and nearly 100% of all individuals gain access…in short, “the world” gains access equally…in global and simultaneously decentralized adoption……which may still come within the decade….but is not yet guaranteed.
Small countries like Lebanon and even large countries could not ever bring this honesty incentivizing tech into being solely by themselves. However, even individuals that can answer simple questions correctly….and understand its vast potential..can play at least some small conscious part in sharing comprehension of the benefit….and expediting the “tipping point” to global adoption.
Intibah, should I conceive of the questions to start with I’ll notify you on your blog. Right now I will just reference this comment there….and provide my email, confidentially.
There’s a phrase we all keep hearing: It doesn’t make sense.
We’ve heard it from citizen journalists, from hospital and police force whistleblowers, and from otherwise compliant and law abiding self-quarantiners whose personal, lived experience simply isn’t adding up to what they are being told is happening by mainstream media.
So what is it that doesn’t make sense?
Is it:
that many medical experts have actually downgraded the potential threat of Covid-19 from initial projections by orders of magnitude, including Dr. Anthony Fauci himself, in a New England Journal of Medicine report where he wrote that “the overall clinical consequences of Covid-19 may ultimately be more akin to a severe seasonal influenza (which has a case fatality rate of approximately 0.1%) …” yet we are seeing unprecedented, draconian style control measures being implemented by executive order?
that there were staged planning events in October 2019 including Urban Outbreak and Event 201, nationwide CDC Quarantine Program job postings from November of 2019, a coronavirus patent, World Bank pandemic bonds, well in advance of when this pandemic supposedly started, and spontaneously erupted and disseminated globally in a manner that could never be explained through person to person contagion?
that doctors are being told to code all deaths as covid without so much as the facade of testing when up to 99% of case fatalities are in individuals with multiple pre-existing conditions, the vast majority of them elderly?
that hospitals are supposedly full to the brim with intubated patients when hospital staff are being laid off or furloughed, and whistleblowers are speaking to iatrogenic harm and death (including through intubation) being systematically committed by physicians?
that the plan for “return to normal” is being dictated by an unelected software technocrat who happens to also fund GMOs (including non-meat synthetic products), 5G, all of the labs currently working on the vaccine, implantable tracking devices, and the WHO?
that people were dying en masse from all manner of preventable illnesses ranging from obesity to hunger to properly prescribed medications with no historical precedent for governmental intervention around these far deadlier epidemics, but now we are to believe that the government cares so much about us that it will “keep us safe” even against our will?
that we should consent to be traced and tracked as law-abiding, healthy civilians even when convicted felons and many sex offenders are not?
that facial coverings ranging from a scarf to a reused surgical mask with mm pore sizes are going to “keep out” what we are calling a virus which is nm in diameter?
that mask-wearing has been enforced when the Surgeon General, the WHO and even Fauci say to not wear them, and elected officials congregated on television have never worn them?
that Walmart, Target, and Costco are open while small businesses, parks, and beaches have been shuttered since March 14th, many of which will remain permanently closed due to the irreversible economic impacts of the shutdown?
that the list of the virus’s associated symptoms have grown and changed, all the while without there being unequivocal evidence of the virus’s point-of-origin in isolation in Wuhan or proof of global contagion?
that 5G networks are being installed during a time of “essential work only” in every major metropolitan area while we are quarantined in our homes?
that the immune system thrives on diversity of exposure, sunlight, time in nature and in loving company of others, but we are being told to hide alone, indoors?
that 30 million people in this country alone have suddenly lost their jobs through “essential business” restrictions, however there happened to be a 1000 page piece of legislation spontaneously prepared to institute the roll out of a system of government handouts and cashless currency?
that numbers of cases are determined through testing methods that do not confirm Covid-19, have tested positive in fruit and animals, and which the test inventor said should not be used to identify a specific disease?
This is just a starter list of all that “does not make sense,” and each question invokes a state of cognitive dissonance or confusion…which, when courageously explored, can be a very fertile state for the evolution of thought, perspective, and belief. Courage, in this sense, refers to action in the face of fear. And there is tremendous fear that is brought up through the rupture of trust in our government and associated authorities.
The fear is in place as an emotional caution tape between our defensive survival strategies of childhood and the emancipated sovereignty of individuated adulthood.
This is operative for so many right now who feel the irrepressible tension between what we are being told is happening (a deadly virus is spreading that we need protection from) and the sense that there is more to the story. But so many minimize, dismiss, or otherwise defend the mainstream narrative because to do otherwise would require truly cutting the umbilical cord connecting them to mommy medical system and daddy government. It would require stepping into their adult authority which is their own, individual truth and sovereign power…a terrifying initiation to self that can feel like the world as you know it must end in order to accommodate this new truth and perceived reality.
If we want to feel free, then why would anyone continue to trust and obey an authority that is not here to protect but rather to control and enslave?
By Kelly Brogan, MD, Ali Zeck, Sayer Ji