Situation in Lebanon: Severe and prolonged economic depression

Briefing 13-04-2022

The Lebanese government's decision to impose new taxes in October 2019 sparked nation-wide protests by a population exhausted by poor public services, worried about increasing national debt and frustrated by widespread corruption. Since then, Lebanese politics have been marked by political deadlock that has prevented successive governments from implementing urgent reforms. The devastating explosion in the port of Beirut on 4 August 2020 only exacerbated the situation. By the time Prime Minister Najib Mikati presented his new government on 10 September 2021, the country had sunk deeply into a financial and economic crisis. Lebanon's severe and prolonged economic depression is, according to the World Bank, 'likely to rank in the top 10, possibly top 3, most severe crisis episodes globally since the mid-nineteenth century'. Poverty in Lebanon has spread dramatically over the past year and now affects about 74 % of the population. Lebanon is host to approximately 1.5 million Syrian refugees, 90 % of whom live in extreme poverty. There are also over 210 000 other refugees. The Lebanese pound has lost 90 % of its value in the past two years, most people have only two hours of electricity per day, and the healthcare sector is at breaking point. The middle class has been decimated, with many leaving the country or planning to do so. There is concern that parliamentary elections scheduled for May 2022 may be postponed, further prolonging the political deadlock that is preventing the implementation of critical reforms. The war in Ukraine is meanwhile expected to have a serious impact on Lebanon, which imports around 90 % of its wheat from Ukraine and Russia. The EU has supported Lebanon with €2.77 billion over the past decade, to help the country However, in July 2021, the Council adopted a framework for targeted restrictive measures, offering the possibility to impose sanctions on persons and entities responsible for undermining democracy or the rule of law in Lebanon. The European Parliament has called Lebanon's present situation a 'man-made disaster caused by a handful of men across the political class'.