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Current Affairs

Crisis in Lebanon

Date: 16 September 2021 Tags: Miscellaneous

Issue

Lebanon is witnessing a financial meltdown which has resulted in shortages of fuel, triggering security incidents.

 

Background

Many officials of the country have already sounded the alarm. Western world has also expressed concerns about the crisis.

 

Details

  • Lebanon has been under a political deadlock due to non-consensus on major political decisions taken by Prime Minister and President.

  • The Prime Minister is planning to re-engage in talks with the International Monetary Fund even though necessary reforms have not been enacted.

 

Economic meltdown

  • Lebanon has been experiencing one of the sharpest depressions of modern era. More than 78% of the population has fallen into poverty in last two years.

  • Lebanon has failed to pay massive pile of public debt including Eurobonds worth $31 Billion. The purchasing power of the currency has fallen due to depreciation by 90%.

  • The banking system has failed and people are forced to withdraw money in local currency instead of international ones. The value of deposits has fallen by 80%.

  • According to the World Food Programme, the food prices have jumped by 557 per cent since October 2019. The contraction of economy has been 30%.

  • The vital medicine supply has diminished. The qualified citizens have been leaving the country in a series of emigration.

 

Security threats

  • Motorists have resorted to use of weapons to demand fuel. There have also been incidents of hijacking of fuel tankers. It has created fissures between Shi’ite Muslims and Christians.

  • Lawlessness has been prevailing in northern parts of the country as the government is unable to allocate resources for law and order.

 

The upcoming concerns

  • Foreign investors are ready to provide financial help if the government will address root cause of concern. This includes addressing corruption.

  • The rival factions are fighting over seats in new government. There is a threat of clashes between the Christian and Muslim factions.

  • The Gulf Monarchs are hesitant to lend money due to increasing influence of Hezbollah, a proxy militant group backed by Iran.