Lebanon Economic and Political Crisis

| SamvadaWorld Staff

Lebanon is facing unprecedented challenges both on the economic and political fronts with the devastating impact of the civil war on its economy visible even today. Since October of 2019, the Lebanese economy has been suffering from a severe financial crisis caused by a stop in capital inflows and the loss of income estimated at $24 billion.

The economy is also suffering from a significant depletion of capital stock, and it is estimated that the total physical wealth destroyed during the war was about $25 billion. The Lebanese pound, which maintained a stable exchange rate against the US dollar for almost 20 years, has been on a free fall losing 90% of its value. Lebanon has a debt of US $92 billion, about 170% of its GDP and since the beginning of 2020, the balance of payments crisis has had a major impact on its economy. 

In addition, the civil war destroyed a lot of human capital, killing 1,31,000 people with over 500,000 Lebanese migrating to other countries which has added to its woes.

Apart from an economic crisis, Lebanon is also facing a political crisis as its fragmented politics is vulnerable to foreign intervention that has long fueled the domestic political crisis. Lebanese citizens are protesting against runaway inflation, power cuts, curbs on currency withdrawal, unemployment and massive corruption in the government and administration. The government headed by Prime Minister Najib Mikati offered a package of measures which was rejected by the protesters who are demanding sweeping changes in administration and the political setup.

Many of its domestic political conflicts since 2005 have reflected tensions between Iran on the one hand and US-allied Gulf Arab states, on the other. Domestic politics involving the country’s various sectarian groups and the struggle for political quotas among them, has also been blamed for the current political crisis. 

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