LEBANON IS “a few days” away from a “social explosion”. This is what Hassan Diab, the interim prime minister, said on July 6. The country is plunged into a crisis that has seen the value of the local currency plummet and many of the population run out of food, fuel and medicine. “I call on the kings, princes, presidents and rulers of our friendly countries, and I call on the United Nations and all international organizations… to help save Lebanon from its demise,” Mr. Diab said in a group of foreign diplomats.
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But foreign leaders are not listening. Most do not trust Lebanese politicians. Mr. Diab has held a guard post since a devastating explosion in the port of Beirut last August (the result of government negligence). For nearly a year, the cult-divided and notoriously corrupt politicians of the country failed to agree on a new government and failed to make the reforms demanded by foreign leaders. .
Even when parliament appears to be doing something right, doubts remain about its intentions. Take his recently adopted plan to replace unaffordable subsidies for food, fuel and medicine with a $ 556 million cash assistance program for the poor. In a sense, it was on the recommendation of the World Bank, which predicted in December that the central bank of Lebanon (the Bank of Lebanon, or BreL) would soon run out of the necessary reserves to support the subsidy regime. (The regime had the BreL sell dollars to importers of the covered goods at below-market rates.) The World Bank was right and the BreL removed or reduced subsidies this year.
The old system could have been better targeted, as the rich Lebanese consumed more subsidized goods than the poor. But the new system, which has not yet been implemented, is opaque. It is not clear who is eligible for the aid. Either way, few believe that Lebanese politicians will distribute it fairly. They have a habit of distributing government largesse to their relatives and supporters (an election is scheduled for next year). The contracts go to the connected, which leads to unreliable services. It’s only fitting that sweaty lawmakers adopted the cash assistance package in an assembly without functioning air conditioning, the result of a dilapidated and poorly managed power grid.
How the cash assistance program will be funded is also an open question. The central bank could pay for it, but its reserves are low and printing more pounds would increase inflation, which is already very high. External financing may be an option. Lebanon could, for example, use the aid that the IMF gives to poor countries to help with covid economic downturns. The silver should be delivered by the fall. Some officials wish to reallocate loans already granted by the World Bank for other purposes.
The World Bank would probably not mind if more of its money actually went to helping the poor directly. But he lacks patience with the government. In January, the bank agreed to lend Lebanon $ 246 million to extend the social safety net, including cash transfers for the poor. Putting more money into this program would be an option, should the government ever implement it. It has been stuck for months due to a disagreement between the World Bank and Lebanese politicians over who receives aid and how it is paid. In short, politicians do not like the idea of World Bank control.
In the coming weeks, the government is expected to present a detailed plan on financing and implementing the new aid package. But the Lebanese are not holding their breath. Poverty is increasing, basic services are failing and politicians seem more concerned with protecting the system of patronage that contributed to the crisis. Is it any wonder that Mr. Diab’s pleas have fallen on deaf ears? ■
This article appeared in the Middle East and Africa section of the print edition under the headline “Asking for Help”