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DNA test places ancestors on Eastern Mediterranean for past 50k years. Region’s current status? #INSA #YNWA
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27 Jul
#Lebanon ‘sRating Is Now on Par With Venezuela After Moody’s Cut

The collapse of the currency in the parallel market and the concomitant surge in inflation fuel a highly unstable environment,” Moody’s said.
Moody’s on #Lebanon

“In the absence of key steps toward plausible economic and fiscal policy reform, official external funding support to accompany a government debt restructuring is not forthcoming”
Read 2 tweets
20 Jul
Just listened to an audio recording of Riad Salameh answering a question on the peg and whether #Lebanon should have had it

He said that the peg was

“A National Decision” and that even the IMF had in past viewed the peg as an anchor of confidence & stability

More here ==>
2-Why didn't @BDL_Lebanon allow the currency to fluctuate more in the past rather than keep it pegged?

"Because the volatility you see today in the what they call the black market is the volatility you would have seen in all the exchange markets in the country"
3- Salameh continues:

"LBP is an anchor of confidence & because of its stability, we were able to practice much lower interest rates than a country rated B-would have been able to practice"
Read 17 tweets
5 Jul
Having spent my career in the field of finance

my pick from the list below as to who takes the main responsibility for #Lebanon ‘s financial crisis is 4 & 5

1-Succesive Governments
2-Political parties
3-Hizbollah specifically
4-Commercial Banks
5-Central Bank

Why? ==>
First, note now not a single reputable regional or international bank was involved in this crisis

While @ABLLebanon member banks made nearly $2 billion a year in profits, how is it that no international banks got involved?

Answer is simple: They knew
Banks operate through credit and Asset / Liability management committees

Role of such senior committtes is to ensure company-wide credit extension is made using sound judgment

They also ensure that balance sheets are not overly exposed to concentrated borrowers
Read 15 tweets
4 Jul
As many know, #Lebanon has no drinkable tap water

Bottled water fills the void

Yearly consumption of 1 liter bottles is near 700 million

Similar consumption goes into 20 liter bottles

Total 1 liter equivelant in yearly consumption is 1.4 billion bottles

Shocking waste
On a Per Capita basis, #Lebanon ‘s consumption of bottled water ranks amongst top 10 in the world

The 1.4 billion 1 liter bottles equivelant consumption for only 4-6 million people compares to only 150 million in #Syria with a population of nearly 15-16 million
Case of 24 bottles sell for nearly $6

As the plastic is all imported, costs and prices are likely to rise

This is both a financial burden and a monumental environmental challenge dealing with the plastic bottles

While many talk about electricity, water issue is as important
Read 3 tweets
30 Jun
On #Lebanon Central Banking & LBP

Every time Riad Salameh was asked on the exchange policy of the Peg, his response was that he was doing what successive governments have demanded and asked of him

In truth “currency stability” was @BDL_Lebanon ‘s legal mandate

But What now?
Legal experts may have more to add to this debate but the original framers of @BDL_Lebanon charter never specified what currency stability meant

What is clear, however, is that Mr. Salameh interpreted those words to mean a fixed / pegged exchange rate
Judging by his legal mandate (every Central Bank has one), there is no denying the fact that @BDL_Lebanon & Mr. Salameh met this legal remit admirably. This explains the multiple personal awards & positive country reports from IMF who always referred to #Lebanon as “resilient”
Read 5 tweets
21 Jun
Stunning Book detailing one of the biggest spying operations in the region perpetrated by son-in-law of #Eygpt ‘s Gamal Abdel Nasser

Information he provided #Israel were so detailed that they helped turn the 1973 Yom Kippur war that included #Syria decisively in Israel’s favor
Ashraf Marwan (son-in-law of Abdel Nasser) landed in the laps of #Israel ‘s Intel by voluntarily & unilaterally calling their Embassy in London from a pay phone and offering his services

Following death of Nasser, his importance rose serving in Sadat’s Presidential office
Nasser never liked or trusted his son-in-law from day one

He tried his best to convince his daughter not to marry him but to no avail

Nasser continued cold attitude towards Ashraf Marwan played a role in him turning a spy for #Israel

Other reason?

Money of course
Read 10 tweets
18 Jun

U.S policy towards #Syria & Mideast

Broadly speaking, Washington’s foreign policy in the region revolves around three basic principals

-Supoorting #Israel (more on this later)

-Ensuring free flow of oil to global markets

-Counter Terrorism
2– Supoort of #Israel is not only institutionally ingrained in America’s DNA but is arguably the single foreign policy that almost every politician shares

Here is a Sample 👇starting with Truman in 1948 till the present day
3- Successive U.S Presidents on #Israel


“I believe it has a glorious future before it – not just another sovereign nation, but as an embodiment of the great ideals of our civilization”
Read 27 tweets
13 Jun
While world speculates on fate of #Syria ‘s Assad and expects his imminent demise

Key domestics changes are underway which have not received enough attention

Thread 👇 will detail 4 key areas

Key sources / observers continue to feel confident that Assad weathers the storm
2-First key change involves dismantling of the checkpoints operated by Army’s Fourth Division

Those checkpoints were very costly to average citizens & merchants alike. Their dissapearance will lower cost of doing business, especially transportation costs & exports to Iraq etc
3-Second key change is to do with internal Ba’ath party politics. For first time ever, party leaders will have to win their seats through voting rather than appointments (تعيين)

Next month’s parliamentary elections will be first time this happens

This is a first for Ba’ath
Read 6 tweets
10 Jun
Today marks 20th anniversary of death of Hafez Assad

To ardent loyalists, he still holds mythical larger than life status

To his enemies, he was a ruthless dictator

Given #Syria ‘s current predicament, it’s hard to avoid thinking about the

“what if” he was still alive ==>
2-When Hafez Assad took over in 1970, #Syria ‘s population was around 7 million

By the time he died in 2000, it rose to nearly 16 million

The nearly 10 million increase in population was like adding twice the population of #Lebanon to the country in a 30 year span
3-Recall that one of the hallmarks of Hafez Assad’s early rein was his “Correctionst” movement

This was essentially an opening of the Eco when compared to the way early Ba’athist leaders wanted to run it

1971-1978 were arguably #Syria ‘s golden years…
Read 12 tweets
6 May
Beirut & Damascus are only 80km apart

They are in top 10 closest pair of capitals in the world


Modern histories of #Lebanon & #Syria couldn’t have been more different

What made both countries so different?

What does the future hold for each?
While multiple factors played a role into making #Syria & #Lebanon so different, 1860 is arguably the key starting point

The civil war that year led to an international intervention (led by #France ) that would continue to shape Lebanon’s character for decades to come
Ever since up to 12,000 European soldiers landed in Beirut in 1860, #Lebanon became the one place where Ottomans turned a relatively blind eye to Europeans starting missionary schools or opening more consuls. Many families from today’s #Syria were attracted to this Western pivot
Read 33 tweets
3 May
Thread #Syria

If you thought the first video of Rami Maklouf was surprising, second one was a major escalation in undertone

Before delving more into this stunning development (first reported here last August), note the religious text at bottom of first video & top of second >
First video was titled “Be with god and don’t care”

Second was titled “It’s our duty to deliver victory to the believers”

Important to know history of Facebook page & why it was chosen
Facebook page had Maher Assad’s name on it of late but the admin of the account was Rami Makhlouf (RM) from the start

RM decided to seize on the number & profile of the page’s followers to upload his videos there

As in most broken relationships, the reasons are cumulative =>
Read 25 tweets
30 Apr
Retail prices in #Lebanon

Benzene per liter is LBP 1200 (80 cents)
Diesel (mazot) is LBP 900 (60 cents)

Retail prices in #Syria

Benzene per liter is SYP 500 for (38 cents)
Diesel (mazot) is SYP 400 (30 cents)

Incentives to smuggle finished product is in one direction

Since 2016, #Syria Government gets around 120k barrels of oil from the Kurds in the North. This gets refined. 40k barrels are kept for domestic Govt-controlled areas while the rest gets returned to the the Kurds. This arrangement has been in place since 2016
Given its natural gas field in Shaer & other places, #Syria relied on natural gas rather than fuel to power its power plants. Following takeover of ISIS of those fields, it has become nearly extremely difficult to continue to use natural gas (ISIS destroyed them before leaving)
Read 8 tweets
29 Apr

Salameh put up an hour-long speech defending his record and implicitly reminding the Govt that

#Lebanon ‘s laws stipulate that he can only be removed from office if medically incapacitated or is proven to have committed illegal acts

2- Let’s start first with his comment on financing excessive imports that many assumed it to mean #Syria

Prior to 2010, Syria’s Mazot & other petroleum products were so subsidized that they sold domestically at less than a third of the prices in #Lebanon or #Turkey =>
3-With Stable SYP & heavily subsidized domestic petroleum prices, merchants & smugglers used the huge difference in pricing to move the oil & mazot from #Syria to #Lebanon. This went on for decades and was prime reason for finally reducing the subsidy just before the war started
Read 15 tweets
24 Apr

KPMG = Auditing

Kroll = Investigative

Oliver Wyman = Mgt Consulting

@Hassan_B_Diab was not kidding when he warned @BDL_Lebanon

Countdown started
That financially strapped #Lebanon would decide to hire such an expensive global and credible team of auditors and forensic investigators and consultants is remarkable

It goes to show the seriousness & determination of @Hassan_B_Diab ‘s Govt as it tackles this crisis ==>
@Hassan_B_Diab & #Lebanon ‘s Govt has been frustrated for being blamed for the financial crisis

Talk has recently surfaced that @saadhariri might come back on a white horse & as a savior w backing of IMF

While this talk was never credible, LBP weakness put Govt under pressure
Read 8 tweets
14 Apr
ON @BDL_Lebanon New Statement:

Mr. Salameh finally responded to the Govt draft plan that had estimated losses of nearly $40 billion at BDL

In a nutshell, Salameh is reminding everyone that BDL is not a commercial bank & therefore he doesn't have to mark his books to market

@BDL_Lebanon is reminding everyone that it has an "independent moral personality" with a specific "duty" to preserve the safety of the currency & to play lender of last resort

In order to do above, it ought to therefore be allowed not to offer full disclosure on sensitive data
@BDL_Lebanon wants us to think of it like the Fed or ECB.
Salameh is saying that he should therefore be allowed to use reserves against any losses and if these reserves are exhausted, BDL could then offset current losses with expected "future profits"

What does this mean?
Read 8 tweets
13 Apr
Where is LBP / US $ Rate Heading?

Speculating on future of exchange rates is notoriously hard

Capital Controls have so far prevented us from finding out the true value of #Lebanon ‘s currency

Though it’s hard to make country comparisons, it is useful to study #Turkey ==>
Since LBP has been pegged, this 👇 is how #Turkey ‘s currency performed versus #Lebanon ‘s

1000 Turkish Liras bought 1023 LBP in 2010. It only buys 254 now

This is depreciation of -75% in the Turkish lira

Should LBP fall by the same amount, it would be at 6000 today
It’s safe to say that inflows into #Lebanon have fallen to near zero now

This leaves current accounts and central bank reserves to do the lifting

We know where BDL reserves are

See also how much more negative current account to GDP ratio is in #Lebanon (blue) versus #Turkey
Read 8 tweets
9 Apr
#Lebanon ‘s citizens are angry & for good reason

Many have lost their life savings

Many have lost their jobs

Everyone is looking for answers

Everyone is looking to point blame at someone, anyone..

Not surprisingly, Politicians & Bankers have been easy targets

2-As people know by now, #Lebanon had a unique formula

Super educated & wealthy diaspora who escaped the civil war & thrived in their new domicile countries

As the war ended, this diaspora eagerly waited for holidays & summers to go back

They also sent their savings home
3-#Lebanon ‘s modern history always seemed intertwined with banking (see فرعون و شيحا)

But since the end of the civil war, this industry went into overdrive

Govt was offering bonds to borrow for construction

Diaspora was both willing & ready to fund these banks

But why?
Read 11 tweets
8 Apr
#Lebanon ‘s Govt Reform Draft Document offers comprehensive repudiation of the existing economic order since currency peg was introduced in 1997

As will elaborate further in Thread

It argues that come summer of 2021, most of the banks you see today will no longer be around ==>
2-Document is an excellent blueprint. It is comprehensive & first semi-official admission of losses at the three levels of Govt, Banks & @BDL_Lebanon

Plan makes it clear #IMF is a prerequisite

CEDRE is assumed to follow

Also Note the Tough Internal Reform Assumptions
3-Bank restructuring is supposed to start with US$20.8 billion capital write-off of existing shareholders. After wiping out this number, US$62.4 billion of losses will be covered by contribution from "large depositors". Exact parameters of this contribution is yet to be defined
Read 4 tweets
21 Mar
Truly Bizarre Commentary

How can #Lebanon be considering using depositors' Money to restructure its banks when the


Article argues "money was deposited at double-digit interest rates at @BDL_Lebanon "

Does any sane person think this money exists? ==>
2-As early as last December , this thread 👇argued that the “Money” was likely ALL gone

To this day, commentary still revolves about size of hair cuts and who to pay for them



3-Idea of @GhaziWazni that depositors get shares in the banks is a joke


Because you taking zero from the liability ledger of the banks ($ deposits)and moving them down the capital structure by giving them also zero but now in equity capital.

These banks are insolvent
Read 11 tweets
28 Feb
Thread on #Syria Here 👇

Will Be Based on Extensive Conversations with Former Administration Official

I Will offer 6 broad counter arguments to the ...

Countless number of observers / reporters / Think Tankers

who have long argued along same line as @shadihamid below
2-Let’s start with the obvious

First duty of a sovereign is to his people. In this case, that would be the American not the Syrian people, who decided to rise against their leader

Americans didn’t enable Ba'ath authoritarianism

#Syria was on the other side in the Cold War
3-Second, although it is staggeringly obvious that US military power exceeded that of #Syrianarmy

Issue for the U.S was whether intervention would protect or advance a strategic interest

#Syria, however, lay well outside the boundaries of US interest
Read 19 tweets
27 Feb

The strike on Turkish soldiers must not come as huge shock since Syrian & Russian armies accelerated military operations in #Idlib area lately

Why are the Turks in Idlib?

Is it to deter Damascus from entering the province & sending more refugees into #Turkey? =>
While it is true that #Tukey has long abandoned its more direct anti-regime policies,

Ankara’s involvement in #Syria had morphed into the issue of protecting their allies
While #Turkey decided it could not be seen to be abandoning the allies it has long supported, Ankara has also come to the hard realization that those allies were difficult to manage and could not administer themselves

In a sense, Turkey felt stuck
Read 6 tweets