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The lack of government accountability has led to an increased unemployment rate, hyperinflation, and currency devaluation.

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Non-nuclear explosion - August 4, 2020

It was discovered that Lebanese politicians: President Michel Aoun and former Prime Minister Hassan Diab, knew that there were volatile materials stored at the port and did nothing to respond to the danger.

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Lebanon’s financial crisis → hyperinflation → local currency has lost 90% of its value → food prices have increased 550 percent since 2019, unemployment is soaring, and businesses are closing down, resulting in tens of thousands of people emigrating.

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Key Components: public debt-to-gross domestic product 

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Key Components: public debt-to-gross domestic product 

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(a measure of what a country owes compared to what it produces).

public debt-to-gross product was the third highest in the world → unemployment had increased to over 25% → nearly a third of the population was living below the poverty line.

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Lebanon’s central banking system was borrowing from commercial banks at above-market interest rates to pay back its debts and maintain the Lebanese pound’s fixed exchange rate with the US dollar

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Key Components: Judicial Investigation (negligence) 

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Key Components: Judicial Investigation (negligence) 

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Lebanese President Michel Aoun and former Prime Minister Hassan Diab were charged with "negligence," (failure to behave with the level of care that a reasonable person would have exercised under the same circumstances). They were never properly penalized for their actions.

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Key Components: how have these cruel Lebanese politicians been appointed? 

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Key Components: how have these cruel Lebanese politicians been appointed? 

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Favor of a right sectarian background has eliminated competency requirements, which has resulted in a corrupted political system. This corrupted political system has resulted in politicians who partake in actions not for the betterment of Lebanon, but for their own selfish gain.

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How can Lebanese citizens seek aid from a corrupted government? Perhaps seek aid from a foreign power? 

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How can Lebanese citizens seek aid from a corrupted government? Perhaps seek aid from a foreign power? 

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How can we resolve the central banking issue? And if this is accomplished, will this reverse many of the financial problems occurring in Lebanon? 

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How can we resolve the central banking issue? And if this is accomplished, will this reverse many of the financial problems occurring in Lebanon? 

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Establishment of structural reform to address corruption in the banking system.

Seek financial support/aid from international organizations such as the International Monetary Fund (IMF).

Lack of investment by foreign countries, and a high level of public debt.

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Is the only way to resolve the economic crisis is by relying on the Lebanese government?

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Is the only way to resolve the economic crisis is by relying on the Lebanese government?

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How can citizens provide relief to the Lebanese economy? 

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How can citizens provide relief to the Lebanese economy? 

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Donations to charities that provide food, shelter, and medical assistance to Lebanese citizens below the poverty line.

Supporting local businesses to boost economic activity (purchasing goods and services) and increase employment.

Volunteering and advocating for change in Lebanon.

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Lebanese citizens seeking aid from a corrupted government.

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Lebanese citizens seeking aid from a corrupted government.

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Seeking aid from international organizations such as the International Committee of the Red Cross (ICRC), Human Rights Watch, and Amnesty International.

Seeking aid by reaching out to a local non-governmental organization (NGOs), such as the Lebanese Food Bank and Lebanese Red Cross.

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Lebanon's economic crisis deepened in 2021. 

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Lebanon's economic crisis deepened in 2021. 

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In 2020, the world watched as Lebanon reeled from compounding crises: vaulting inflation, civil unrest that overflowed from the prior year, an unruly spread of COVID-19, and a deadly port explosion that devastated the country's capital. But what occurred in 2021 was a return to crises at the institutional level-a rot from the top down.

In 2020, the world watched as Lebanon reeled from compounding crises: vaulting inflation, civil unrest that overflowed from the prior year, an unruly spread of COVID-19, and a deadly port explosion that devastated the country's capital. But what occurred in 2021 was a return to crises at the institutional level-a rot from the top down.

After a 13-month game of prime minister hot potato following Hassan Diab's forced resignation in August 2020, billionaire Najib Mikati assumed the top job this September. He formed a 24-person ministry and promised to set the country back on track for economic revival. But many Lebanese view Mikati and his immense wealth as "a symbol of an old and corrupt order," FP columnist Anchal Vohra wrote in August.

Critics have argued that the extended political stalemate before Mikati's reign is what ultimately tanked the country's economy: The World Bank reported recently that Lebanon's economic and financial crisis may even hit the top three most severe crises globally since the 1850s. The local currency is experiencing inflation rates in the triple digits, and Lebanon's GDP fell to 37 percent -an amount "usually associated with conflicts or wars."

Economic instability continues to have serious implications for the livelihoods of everyday people. Nearly three quarters of Lebanese live below the poverty line, and fuel shortages have triggered rolling blackouts throughout the year. As Vohra reported in September, Hezbollah may be leveraging fuel scarcity to gain party allegiance from those desperate for basic necessities.

Here are five Foreign Policy stories that helped define a critical year for the Middle Eastern country.
by Anchal Vohra, June 23
This year, Lebanon marked the one-year anniversary of the Beirut port blast, which occurred on Aug. 4, 2020. As the world now knows, the event produced incredible damage to one of the busiest seaports in the Mediterranean Sea, killing 200 people and causing around $15 billion in property damage.

For some time after, there was hope the catastrophe could spur political change. French President Emmanuel Macron was the first political leader to visit the capital city, embracing and mourning with Beirut locals standing among the wreckage. During the visit, he launched an ambitious initiative to help bring the former French colony back from the brink. Yet since then, Vohra writes, "nothing has been achieved."

The French road map for Lebanon looked promising on the surface. It encouraged the formation of a new government within 15 days, reforms to the electricity sector and other sectors most in need, and an early election, Vohra explains. But ultimately, the plan empowered the same elites many Lebanese said caused the problems to begin with.

"France's reluctance to impose harsh sanctions and inflict a cost on the political elite instead of merely plead with them to do the right thing was utterly naïve-and ultimately destructive," Vohra writes.
by Anchal Vohra, Aug. 9
The very people crucial to Lebanon's revival are the same people leaving the country en masse out of concern for their safety and livelihoods. Inflation has made it harder for citizens to buy food and basic necessities against dwindling and inconsistent salaries. As Vohra notes, 20 percent of Lebanese doctors have already left or are planning to leave since 2019. And a recent survey revealed that 77 percent of youth want to leave-the highest percentage in the region.

Vohra outlines the contours of a widespread despondence among Lebanese: "First anger, then hopelessness, and now escape. ... They hope neither for justice nor for any change under any government with the same political class in charge."
by Faysal Itani and Azeem Ibrahim, Oct. 15
Lebanon's mass exodus risks a potentially catastrophic refugee crisis for Europe, write Faysal Itani and Azeem Ibrahim, directors at the Newlines Institute for Strategy and Policy. It's a country that has one of the largest numbers of refugees per capita-1.5 million Syrian refugees and 500,000 refugees from elsewhere. Few countries outside of Lebanon have the level of security or stability to offer a safe haven.

This has caused a disconnect between capacity and motivation, Itani and Ibrahim write. Economically, Europe can certainly share the task of hosting those individuals most in need. "But politically? The 2015 refugee wave was hugely destabilizing for domestic and European-level politics, leading to a surge of support for far-right and neofascist parties across the continent and imperiling the liberal democratic political order," they write. European Parliament fears yet another surge in nationalism could occur if more refugees arrive on its shores.
by Hussain Abdul-Hussain, Nov. 20
In October, Lebanon's oldest English-language newspaper, the Daily Star, shut its doors after a heroic nearly 70-year run.

Hussain Abdul-Hussain, the paper's former managing editor, reminisces and mourns the impactful storytelling his team produced-from exposing embezzlement schemes at state-owned institutions to engaging in an unlikely but successful spat with a Beirut-based Dunkin' Donuts over its anti-LGBTQ policies.

"The paper's once buzzing offices have been reduced to archives collecting dust in the dark," Abdul-Hussain writes. "Its story is the story of Lebanon, reduced in less than 15 years from a promising country to a failing state."
by Tessa Fox, Dec. 6
Despite decades of political stasis and government corruption, a new generation of political activists is helping mark a new era of hope for the country. Journalist Tessa Fox profiles the largest of these new activist groups: Minteshreen. Formed during the 2019 uprising dubbed the "October Revolution" and informed by prior generations, the group is capitalizing on the country's increase in political engagement over the last two years to push for a more democratic state once and for all.

They understand the setbacks: Lebanon isn't entirely a sovereign state, Hezbollah continues to squelch democratic advancement, and prior attempts by activists to unseat the political elite have ended in assassination or removal from elected office. Yet Minteshreen's members figure now, more than ever, is the right time to plant the seeds of change as "these will be the years that we will be fought very ferociously by the people in power," one group member running for parliamentary election told Fox.

And maybe this time, they'll be the ones to set Lebanon on the path toward political repair.

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In 2021, Lebanon Suffered While the World Looked On

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Skyrocketing inflation, government corruption, and international apathy defined a country in economic free fall.

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Lebanon: Assessment of the Political Paralysis and Economic Crisis and challenges for US Policy. 

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Lebanon: Assessment of the Political Paralysis and Economic Crisis and challenges for US Policy. 

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Chairman Deutch, Ranking Member Wilson and members of the House Foreign Affairs Subcommittee on the Middle East, North Africa, and Global Counterterrorism, thank you for the opportunity to testify on the unprecedented crisis in Lebanon and the challenges it poses for U.S. policy. The timing for this hearing is especially important: the lights are blinking red in Lebanon as the country hurtles towards total collapse, with severe implications for regional stability and U.S. national security interests.

I am a senior advisor on Syria, the Middle East and North Africa at the United States Institute of Peace, although the views expressed here are my own. The U.S. Institute of Peace was established by Congress over 35 years ago as an independent, nonpartisan national institute to prevent and resolve violent conflicts abroad, in accordance with U.S. national interests and values.

It is difficult to overestimate both the gravity and urgency of the situation in Lebanon and the detrimental impact that state collapse in Lebanon would have on U.S. national security interests.

Today, Lebanon is in a free fall, propelled by a series of cascading crises. The catalyst for Lebanon's downward spiral began with the 2019 financial crisis driven by mounting debt in what has been termed a "Ponzi scheme" economy. The COVID pandemic further compounded the crisis, deepening the country's economic recession and overtaxing its public health system. Adding to the misery, nearly one year ago, the devastating Beirut port blast-one of the largest non-nuclear explosions in history-killed 200 people, injured thousands, and destroyed several neighborhoods in the heart of the city. While the explosion's exact cause remains unknown, the improper storage of more than two thousand tons of explosive ammonium nitrate over several years was the immediate trigger. To date, no one has been held accountable, and the investigation has been subject to political interference. Yet, by early indications, years of government mismanagement and corruption played a role, suggesting the blast is one of the most egregious examples of public malfeasance in modern history.

Cascading Crises

The statistics reflecting Lebanon's rapid downward spiral are staggering. They tell the story of the transformation of a once highly educated, middle income country known for its diversity and urbane sophistication into an impoverished failed state that may become the region's newest humanitarian catastrophe.

Humanitarian catastrophe in the making. The Lebanese lira has lost more than 90% of its value. The country is suffering from hyperinflation (a rarity in the Middle East), with prices for some food items up more than 600%. The economy contracted by 20% last year and is estimated to shrink an additional 10% this year. In a recent report, the World Bank noted that Lebanon's economic meltdown was likely among the world's worst crises in 150 years.

The humanitarian impacts of the crisis have been extremely dire. More than 50% of Lebanese now live below the poverty line, with 25% living in extreme poverty. Food insecurity is on the rise. The United Nations estimates that 75% of Lebanese families are struggling to feed themselves, and that 1.2 million Lebanese require food assistance. Essential services including electricity and water are failing, with frequent blackouts and water cuts. UNICEF recently warned that over 71% of Lebanese are at immediate risk of losing access to safe water. The public water system is on the verge of collapse, with water pumping stations forecast to gradually shut down over the next 4-6 weeks. The health sector is also collapsing, caught up in electricity and water cuts and plagued by chronic shortages of medicine and equipment. Hospitals are struggling; pharmacies are on strike, and medical professionals are leaving the country.

The education picture is equally gloomy. An estimated 1.3 million Lebanese children have dropped out of school since October 2019, according to the United Nations. Many lack access to tablets, the internet, or even electricity, making remote learning impossible. Others are forced to work as families adopt negative coping strategies to deal with their increasing impoverishment. The country's growing "brain drain" and mounting school dropout rates foretell a deeper structural change that might be difficult to reverse, leaving behind an impoverished, poorly educated population, essentially a lost generation.

Security breakdown. If unaddressed, Lebanon's cascading crises could provoke a total breakdown in security, either from the top-down or the bottom-up. As Lebanon's economic spiral worsens, concerns are mounting that the army will not be able to meet its soldiers' basic needs, precipitating a collapse of the one institution preventing total chaos in Lebanon. The Lebanese army is contending with plummeting morale as its troops experience the full brunt of the economic crisis. Already, military salaries have declined significantly, and many soldiers are forced to take second jobs. Official estimates place the number of army deserters at 1200, although actual numbers may be far higher. Concerns are rising that the army will no longer be able to perform its basic duties. Anecdotal reporting suggests security elements already not intervening to stop street crimes. It appears the Lebanese Armed Forces are already beginning to crumble.

Lebanon is also threatened by a bottom-up social explosion that would be marked by widespread social unrest, rioting, and armed clashes. Fights in gasoline lines have at times escalated into armed confrontations. Riots broke out in Tripoli over rising prices and electricity cuts, leaving several injured including five soldiers earlier this month. Across the country, tensions are rising with frequent road blockages and demonstrations. Protestors also stormed central bank offices in Tripoli and Sidon. This bottom-up unrest is increasingly taking on sectarian overtones as people retreat to their confessional identity, relying on local thugs and warlords for protection. As more and more Lebanese grow angry and impoverished, the prospects for a country-wide social implosion are growing.

Political impasse. Lebanon has essentially been rudderless for nearly one year since the tragic August 4, 2020, Beirut port blasts led to the resignation of the Hassan Diab government. Despite the urgency of looming collapse, Lebanon's politicians have been slow to act. The July 26 designation of former premier Najib Mikati as prime minister-designate is an important development, but previous efforts at cabinet formation have ended in failure. Mikati's appointment stands as the third attempt at cabinet formation in less than a year.

Mikati-a billionaire who has been shadowed by corruption charges-faces a daunting set of challenges: first, he must form a cabinet; second, this cabinet must be willing to take immediate steps to pull Lebanon out of its nosedive. Such measures include immediate resumption of IMF talks and enacting critical public sector, fiscal and monetary reforms. A Mikati government must also ensure that the current Beirut Port blast investigation led by Judge Tarek Bitar is allowed to proceed without further interference. Finally, a Mikati cabinet must guarantee that the 2022 elections will occur on time.

At its core, Lebanon is witnessing a reckoning based on years of pervasive corruption, entrenched patronage and cronyism, poor governance, and lack of accountability. According to the Arab Barometer, only 4% of Lebanese report being satisfied or completely satisfied with their government, while 89% believe corruption is prevalent in state institutions or agencies.
In a blunt reproach to Lebanon's political elite, the World Bank has termed the current crisis a "deliberate depression," borne of government inaction. Rather than implement long-demanded reforms, Lebanon's political class remains intent on protecting their narrow interests. Displaying a total lack of responsibility nor any notion of national interest, they seem perfectly content to stand by and watch the country burn.

Implications of Total State Collapse

State collapse in Lebanon would have dire consequences for regional stability as well as U.S. national security interests. Specifically, I would highlight four key impacts with direct implications for the United States:

First, when states collapse, significant security vacuums emerge. Lebanon could witness a resurgence of violent extremism, particularly in northern Lebanon, in areas such as Tripoli and Akkar, that are impoverished, underdeveloped, and already prone to extremism. Sunni extremist groups could attract more recruits and exploit ungoverned spaces to gain greater power and influence.

Second, the Iranian-backed militia Hezbollah is best poised to weather total state collapse. The group has the preponderance of power and a demonstrated capacity to rely on its own security infrastructure and social welfare networks. Hezbollah has already started to implement contingency plans to insulate its community from the worst effects of a total collapse. In April, for example, it created ration cards for use by its supporters in Hezbollah-established stores.

Third, state collapse could precipitate a major displacement crisis. Lebanon hosts the highest number of refugees per capita in the world, including an estimated 1.5 million Syrian refugees. Syrian refugees already live a precarious existence in Lebanon, with more than 90% living below the poverty line. As Lebanon's crisis deepens, tensions between Lebanese host communities and Syrian refugees are rising. Syrian refugees are increasingly scapegoated and may feel unsafe staying in Lebanon. In addition, a growing number of Lebanese have become vulnerable and desperate, and more Lebanese are attempting the harrowing boat trip to Cyprus.

Fourth, state failure in Lebanon holds the potential to provoke broader insecurity in the region. Israeli officials recently raised concerns about potential spillover of Lebanon's chaos into Israel, warning that Israel will not tolerate "any leakage of the situation of Lebanon into Israel." Lebanon's crisis has also been a key driver of Syria's economic downturn, exacerbating already dire humanitarian conditions. State collapse in Lebanon could also facilitate extremist networks in Idlib and beyond.

Implications for U.S. Policy

As Lebanon's downward spiral accelerates, the United States, along with its European and Gulf allies and key multilateral institutions, should redouble efforts to prevent a total state collapse in Lebanon. Otherwise, the ensuing chaos, humanitarian catastrophe, and security breakdown would threaten regional stability and potentially transform Lebanon irreversibly into a basket-case country marked by poverty, extremism, and insecurity. Managing the impacts of a post-collapse Lebanon-if even possible-will be far costlier for the international community.

Certainly, the United States and the international community should not ignore the Lebanese political class's decades of graft and mismanagement, not to mention its appalling inaction in the face of the country's cascading crises. Ultimately, the solution to Lebanon's crisis must be Lebanese-owned and driven. However, the international community-with the United States and France in the lead-can take important steps to avert a disaster in Lebanon.

An urgent plan for Lebanon should focus on easing the humanitarian suffering of the Lebanese people while holding the Lebanese political elite to account and supporting key institutions and processes that help anchor stability. U.S. leadership will be critical for catalyzing allies and international financial institutions to develop an effective response. Over the longer term, U.S. development initiatives need to ensure against aid dependence by harnessing the Lebanese diaspora and bolstering the capacities of the Lebanese people in two key sectors: education and small/medium enterprises.

Specifically, the United States should focus on four urgent priorities in the short term:

1. Provide additional humanitarian aid. As more Lebanese fall below the poverty line and experience growing food insecurity, the United States should bolster its humanitarian assistance to Lebanon. On August 4, France will hold an international donor conference, with the assistance of the United Nations, to address the growing needs of the Lebanese people. Through this conference, the United States should pledge to provide cash-based direct assistance to the most vulnerable population. Direct, dollar-based, cash assistance is the most efficient, effective mechanism, bypassing the Lebanese government and the corrupt banking sector and allowing beneficiaries their dignity and agency.

2. Maintain pressure to ensure immediate cabinet formation followed by steps to implement reforms and accountability measures. The United States should coordinate efforts with France and the European Union to ensure that Prime Minister-designate Mikati form a cabinet empowered to implement reforms long demanded by the international community to unlock a financial rescue package. This cabinet should be empowered only until the 2022 elections. The U.S. and its allies must apply concerted pressure by credibly threatening coercive measures targeting corrupt members of Lebanon's political elite that obstruct cabinet formation or reforms. These measures should include the threat of coordinated travel bans, asset freezes, and other targeted sanctions.

3. Provide additional support to the Lebanese Armed Forces. The Lebanese army is a critical linchpin of stability. Its collapse would lead to total chaos in Lebanon. Soldiers' salaries have decline precipitously, and like many Lebanese, they are facing difficulties even feeding their families. The Qatari government has already pledged to donate 70 tons of food each month to the Lebanese army. The United States should explore all authorities whether at the State Department or Defense Department to increase assistance to the Lebanese army. Potential options include a one-time tranche of cash assistance for cost-of-living allowances or Defense Department direct support to Lebanese army commissaries.

4. Demand that the 2022 municipal, parliamentary, and presidential elections occur on time and re-establish funding for elections monitoring. While an emergency cabinet with extraordinary power is essential for getting Lebanon through the current acute phase of its crisis, the 2022 elections are equally important for ensuring Lebanon embark on a path of democratic change. Free and fair elections-critical to a stable, independent, and democratic Lebanon-offer the best path forward for real change and the opportunity for independent voices, particularly at the municipal level, to emerge. U.S. assistance for training and election observation will be important. Lebanese and international observation will have the greatest impact if a framework for observation is in place at the start of a pre-election period -- including electoral reform deliberations, and then focusing on voter education, candidate / voter registration and the campaign process.

Beyond these urgent steps, the United States should also undertake measures that bolster Lebanon's capacities and guard against developing aid dependency:

Harness the expertise and financing of the Lebanese diaspora. Lebanon boasts one of the largest, most well-resourced diasporas in the world. Groups such as LIFE, an international Lebanese diaspora organization, and the American Task Force for Lebanon have demonstrated the tangible benefits of involving the Lebanese diaspora. LIFE has raised $640,000 among its members since 2020 to respond to Lebanon's economic crisis. The organization also provides scholarships and training for Lebanese youth. Similarly, the American Task Force for Lebanon mobilized immediately after the Beirut port explosions, more than $40 million in medical supplies airlifted to Lebanon. USAID should explore ways to coordinate and facilitate aid from Lebanese diaspora groups to help address humanitarian and development needs.

Increase assistance funding for USAID's education programming. With Lebanon's education gains threatened by the economic crisis, USAID's education programming takes on greater importance. As more Lebanese become impoverished, the number of vulnerable children requiring education assistance has grown. Increasing assistance to primary schools, including learning materials and school supplies will be critical. Equally important, increasing the number of higher education scholarships and support to higher education institutions, notably the American University of Beirut and the Lebanese American University, will preserve a key legacy of U.S. soft power and help stave the country's growing "brain drain."

Expand USAID's economic growth programming. Lebanon's economic crisis underscores the need to foster a productive private sector that creates jobs and opportunities for growth. Support for enterprise development across several promising sectors including renewable energy, agritech, and the digital economy could spur job creation and put Lebanon on a path of inclusive, sustainable growth. USAID should expand its economic growth programming that relies on creative mechanisms such as enterprise funds, leveraged lending, microlending, and public-private partnerships.

Conclusion

Lebanon's overlapping crises were largely avoidable. They are the result of years of government mismanagement and corruption. While Lebanon's meltdown is an extreme example, the country's crisis is emblematic of broader trends and challenges in the region. Across the Middle East and North Africa, poor governance, inadequate services, pervasive corruption, and a glaring lack of accountability are the norm. The COVID-19 pandemic has only exacerbated these ills. Moreover, the pandemic's second and third order effects could further impact the region in profound, destabilizing ways.

The United States should pay close attention to Lebanon's ringing alarm bells. Lebanon's crisis could be a harbinger of greater challenges to come in the region. The pandemic's reverberations across the Middle East are exposing longstanding, unaddressed challenges. The region has been reeling for two decades, starting with the fallout from 9/11 and heightened by the first wave of Arab uprisings in 2011. At the core of these challenges lies the need for accountable, responsive, and inclusive governance.

For the United States, a paradigm shift in its approach to the Middle East will be critical. As the United States pivots from a "forever wars" posture in the region, a development and diplomacy led strategy will be both more appropriate and more effective in addressing the Middle East's complex post-pandemic challenges. Lebanon is only the most dramatic example of the region's poor governance. Responding effectively to Lebanon's cascading crises through effective U.S. diplomacy and assistance programming will be an important test, not just for Lebanon, but for the region.
The views expressed in this testimony are those of the author and not the U.S. Institute of Peace.

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Lebanon: Assessing Political Paralysis, Economic Crisis and Challenges for U.S. Policy

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Mona Yacoubian, senior advisor to the vice president of Middle East & North Africa, testified on July 29, 2021 at the House Foreign Affairs Subcommittee on the Middle East, North Africa, and Global Counterterrorism's hearing on "Lebanon: Assessing Political Paralysis, Economic Crisis and Challenges for U.S. Policy."

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Lebanon is almost three years into an economic and financial crisis that is among the worst the world has seen. Politically, Lebanon heads into parliamentary elections on May 15, which are highly anticipated in light of systemic failures in governance. The economic consequences of the war in Ukraine and associated sanctions are adding to Lebanon's plights, in particular given its critical net imports of wheat (quasi-exclusively from Russia and Ukraine) and oil.

Recent Developments

Real GDP is estimated to have declined by 10.5% in 2021, on the back of a 21.4% contraction in 2020 as policymakers have still not agreed on a plan to address the collapse of the country's development model. A scarce source of growth is the tourism sector, where tourist arrivals surged by 101.2%, from a low base, over the first seven months of 2021. Public finances improved in 2021, paradoxically, as spending collapsed faster than revenue generation. The exchange rate continued to deteriorate sharply in 2021, keeping inflation rates in triple digits. The share of the Lebanese population under the national poverty line is estimated to have risen by 9.1 percentage points (pp) by end-2021. Lebanon has witnessed a dramatic collapse in basic services, driven by depleting FX reserves.

Outlook

Subject to extraordinarily high uncertainty, real GDP is projected to contract by a further 6.5% in 2022 under the assumptions of continued inadequate macro policy responses and a minimum level of stability on the political and security scenes. Considering the scale and scope of Lebanon's financial and economic crisis, the negative impact of the economic consequences of the war in Ukraine and associated sanctions is of a different magnitude. It is nonetheless large and negative as Lebanon will have to quickly tap new alternatives for its wheat imports from Russia and Ukraine to guarantee food security. Additionally, surging energy prices will further exacerbate already existing crises related to exchange market pressures, highly elevated inflation rates, and likely reduce further the limited amount of electricity supplied by EdL.

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Subject to extraordinarily high uncertainty, real GDP is projected to contract by a further 6.5% in 2022 under the assumptions of continued inadequate macro policy responses and a minimum level of stability on the political and security scenes.

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The Judiciary is blocking Lebanon's path to justice from corrupted Lebanese politicians. 

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The Judiciary is blocking Lebanon's path to justice from corrupted Lebanese politicians. 

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Lebanon: Aoun Urges Calm after Judicial Dispute

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Lebanese President Michel Aoun warned against the destruction of property on Thursday after the removal of a judge from a financial corruption probe last week prompted her and her supporters to storm a currency exchange bureau. Aoun made the remarks in a statement after a security meeting that included caretaker prime minister Hassan Diab, the interior minister and other officials.