Nearly two years into #Lebanon ‘s financial crisis, one is yet to observe clear understanding or consensus on what happened
Even prospective PM @saadhariri today tried to confuse listeners either willingly or out of ignorance ==>
2-That #Lebanon ‘s Govt was spending beyond its means or that various ministries were riddled with corruption is beyond doubt
And that successive politicians did nothing but feed the beast is also not open to discussion
BUT this is NOT the reason Why Lebanon is here ==>
3-Yes, many Governments spend beyond their means and accumulate debt
But their currencies don’t lose 90% of their values
And their banking system doesn’t go insolvent
And their depositors don’t lose all their life savings
Something else has happened here =>
4-When Governments over-spend and over-borrow, their currencies lose value. The interest rates they pay on their debt rises and the combination forces lenders to build higher risk premium
This simple built-in economic stabilizer was not allowed to do its work by @BDL_Lebanon
5-When LBP should have weakened as result of Govt largess & mismanagement of its spending, @BDL_Lebanon prevented it from doing so by pegging a currency that wants desperately to weaken based on the fundamentals
But at what cost? And how did @BDL_Lebanon defy laws of Economics
6-Readers should know the script by now
Take the $ from investors via the irresponsible banks who played along out of greed
The $$$ that @BDL_Lebanon took was sold to importers & vacationers at the artificial price of 1507.5 for 23 years, year in and year out
7-When you hear anyone discuss #Lebanon ‘s finances always stay focused on whether the discussion involves $ or LBP
When one participates in any Eco / Political discussions in multi-Religious / Sectarian regions like the Levant #Lebanon#Syria , one question always emerges:
Can the people of this region Co-exist?
Can they accept / embrace the other side?
By all accounts, answer seems No
2-War in #Syria has rendered the days of heavy top-down Centralized State obsolete. Efforts must now be exclusively directed at formulating a new post war system that takes away power from the center & hands it to the periphery as this is the de facto state of affairs anyway
3-While #Lebanon already had its own civil war, it is not difficult to notice the return of the old sectarian cleavages that never went away. As the pie gets smaller with the current crisis, divisions have intensified & spirit of co-existence is tested in daily commentary
You’ve been bombarded by experts on what #Lebanon ‘s financial crisis is all about
Here is a simple explanation:
Consumers between 1997-2018 outsmarted / screwed current and future Lebanese consumers by using an overvalued currency to fund their purchases
End of story
2-This is not to say this was a deliberate or conscious decision by 1997-2018 to screw or outsmart the future generation of consumers
As one of my friends used to tell me
Living in #Lebanon during that period was too good to be true. He may not have known why but he felt it
3-This friend was huge spender. He lived at one of the city’s 5 star hotels for almost 18 years. He earned enough interest income to fund his lavish life style. He bought real estate. He had a driver. When I met him in late 2019, he said:
1-Israel
2-Oil
3-Counter-Terrorism / War on Terror
Are the broad categories that define U.S strategic interests in the region
Many have attempted to include the Responsibility to Protect (R2P) in above list. Syria has been a case in point ==>
2-Israel & Oil are already secured enough
This has left counter terrorism or war on terror (WOT) as main rationale behind recent U.S interventions
Responsibility to Protect has been getting traction of late but as Syria’s case has shown it’s still work in progress in DC
3-Sep 11 of course capitulated War on Terror to the top of list behind recent U.S interventions in the region. While many may argue this was politically unavoidable in the case of Afghanistan, what about the more recent interventions to help defeat ISIS?
#Russia ‘s military intervention in #Syria was arguably the decisive turning point that decided the war
Yet,
When did Damascus decide to reach out to Moscow?
Did Washington know?
More importantly, could the U.S have done anything to prevent the intervention
==>
2-As early as 2012, Damascus had become aware that the war posed an existential risk to the system. Messages were sent to key opposition leaders that unless the situation was soon brought under control, leadership will have no option but to reach to our "big allies"
3-When Damascus became convinced that opposition had no intention of rolling back the unfolding crisis, decision was made to reach out to the big allies. Initial communication with Moscow took place in 2012 via respective heads of security
#Syria ‘s Old-style Baathists versus Bashar Assad’s liberalization policies
One thing that old-style Baathists understood was that being in the Arab nationalist anti-Western resistance camp had to go hand in hand with economic self-sufficiency
Boy, were they right
2-Since late 1960’a & early 1970’s Eco Self-Sufficiency became the hallmark of of #Syria ‘s political & social economy
Promote local industry to conserve on foreign currency and imports
Promote local agriculture to provide food security & heavily subsidized basic food staples
3-While self-sufficiency may made sense politically, it was an inefficient system that misallocated resources and allowed heavy handed Govt meddling in nearly every facet of Economic life. Many times, #Syria ‘s Govt found itself in the business of running businesses