Before the coronavirus-induced economic hit, and way before the Beirut explosion, Lebanon’s economy was already struggling. In 2020, Lebanon’s national debt amounts to approximately 161.82% of its GDP, with the Lebanese pound losing roughly 80% of its value.
In November 2019, Lebanon’s economy was under scrutiny by analysts to deconstruct where went wrong. What came to light was the way Lebanon’s economy was running: the country is operating under a state-sponsored pyramid scheme run by the central bank. Central bank governor Riad Salameh’s approach to funding the country included financial engineering, which is essentially a cycle of fresh borrowing to pay back any existing debt. This method of financing weakened their economy eventually, which spelt trouble for the country, as it had some preexisting issues to address. Citizens of Lebanon were already upset with the government’s failure to provide basic necessities to its people; such as a lack of safe drinking water, limited public healthcare, and some of the world’s weakest internet connections. Protests ensued but died down due to the pandemic. When a lockdown was imposed in mid-March 2020 to curb the spread of the virus, it kept protestors off the streets but expedited the economic crisis and exposed the inadequacies of Lebanon’s social welfare system. As prices inflated, many families were unable to buy necessities. The coronavirus restrictions lifted in May. Still, the costs of certain food items had doubled, and the prime minister, Hassan Diab, even warned that Lebanon was at risk of a “major food crisis“ in the Washington Post.
Faced with a downward spiralling economy, a food crisis, and an underdeveloped social welfare system, Lebanon had several issues to resolve.
Then the Beirut blast hit.
The blast resulted from a massive fire at the port of Beirut, on the city’s northern Mediterranean coast. White smoke could be seen emerging from Warehouse 12, next to the port’s huge grain silos. The roof caught on fire, followed by a sizeable initial explosion and a series of smaller blasts. About 30 seconds after that came the massive explosion that sent a blastwave radiating through the city, causing damage to the nearby buildings and the rest of the capital, which is home to two million people. The blast destroyed its immediate area and created a crater roughly 140 metres wide, which flooded with seawater. The warehouse where the initial fire and explosions came from was utterly destroyed, and the grain silo near it was incredibly damaged.
Hospitals were quickly overwhelmed, and the blast rendered as many as 300,000 temporarily homeless. Collective losses were estimated to reach US$15 billion. The explosion even blew out windows at Beirut International Airport’s passenger terminal, located about 9 km away from the port. Seismologists at the United States Geological Survey said the blast was equivalent to a 3.3-magnitude earthquake.
2,750 tonnes of ammonium nitrate stored unsafely at a warehouse in the port was the cause for the explosion. The blast has claimed the lives of 158 people and caused injuries to about 6,000 others.
The explosion further fuelled citizen’s unrest, with protestors storming the government ministries in Beirut and trashing offices of the Association of Lebanese Banks on 8 August. The protestors want their politicians to resign and punished for negligence leading up to the Beirut blast. In a flurry of shots and rubber bullets firing, teargas canisters hurling, protestors chanted and made their anger with the government clear. They were already angry before due to bad management, bad governance, and corruption, but now the people were furious over the lives and livelihoods lost, and demanded their leaders to resign.
French President Emmanuel Macron had flown in from Paris and went to the scene of the blast to pay tribute. Macron promised to help rebuild the city, and that it would not fall into “corrupt hands”. But now citizens of Lebanon are not trusting of their leaders and any government, for fear that the city’s officials would pocket the money. With a mountain of debt unpaid and now dug more profound, coupled with social unrest, it is unsure which way Lebanon will go.