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Financial Times

Lebanon’s year from hell: a diary

At 6pm on August 4 2020, I was at home in Beirut, working on an article about Lebanon’s faltering banking system. Without warning, I felt the world shudder. Assuming it was an earthquake, I ran to a door frame, bracing for the walls to collapse. Instead, the back windows of my apartment exploded outwards in a hail of glass.

In the momentary quiet that followed, I noticed papers fluttering through the air from the office building opposite. Then I heard our building’s caretaker scream for his son.

We were incredibly lucky. My neighbourhood is a mile south of the blast’s location, where dozens were already dead. The explosion had shredded buildings and flung adults through the air like dolls. The wounded who could walk rushed towards partially destroyed hospitals inside the blast zone, where they found doctors, nurses and patients had been killed.

I did what any unharmed reporter would do and tried to work out what had happened. I squeezed past panicked neighbours on my way to the roof of my apartment building. Surely a column of black smoke would help me locate where a truck bomb had been detonated. Or maybe it had been an air strike. Beirut had survived a protracted civil conflict that ended in 1990, a month-long war in 2006 between the powerful Lebanese militant group Hizbollah and Israel, and multiple deadly car bombs.

But from the roof of my six-storey building, I saw a towering pink cloud. A huge version of the candyfloss hawked to tourists on Beirut’s seafront.

I stared at it for four minutes. It looked absurd.

The day before the explosion Lebanon’s foreign minister, Nassif Hitti, had resigned, declaring that the country was “slipping into becoming a failed state” and that there was no will for reform among its leaders.

The pink cloud was the failure he had spoken of made manifest. Beirut had not been hit by a terror attack or struck by an enemy military. We eventually learnt that a warehouse in the port had caught fire and then erupted with the force equivalent to one-20th of the atomic bomb dropped on Hiroshima.

Why? Because for six years nobody in power took responsibility for 2,750 tonnes of ammonium nitrate, which had been removed by court order from a sinking ship in port and left to moulder in the heart of the city.

The explosives caused the pink smoke. But the Lebanese people soon discovered that responsibility for their loved ones’ deaths lay at the feet of their own leaders, mostly ageing warlords who survived the 15-year civil war and were brought together in the fractious 1990 peace.

The Ta’if Accords that ended the conflict divided power among Lebanon’s 18 sects and were designed as a temporary balance of power, a shaky form of governing to be outgrown.

But three decades later, the same band of men and their scions are still using the sectarian model to share the spoils of a painfully corrupt, unproductive system that has been accused of wasting billions of dollars.

Overshadowing all of this is Hizbollah, the true power in Lebanon. With the support of its benefactor Iran and its ally Syria, the Shia Islamist group has grown from a militia founded by clerics in 1982 to a political party and the most feared influence on the country’s fate. It is sometimes described as a shadow state and was widely thought to be one of the factions using Beirut’s port for smuggling.

In the days following the explosion, some Lebanese whispered about whether it had been triggered by a stash of arms kept there. “I absolutely, categorically deny the presence of any missiles or any material for us in any warehouse at the port,” Hizbollah’s leader Hassan Nasrallah responded in a televised speech a few days later.

But the group’s role in the failures of governance that led to the blast — and the political paralysis that has followed — is undeniable. “For decades Lebanon was run through consensus among various political elites,” says Lina Khatib, head of the Middle East programme at Chatham House, a think-tank in London.

“This model is now shifting to one in which one political party calls the shots — and that is Hizbollah.”

The blast killed more than 200 people, injured thousands and caused some $4bn worth of damage. It should have been a nadir for Lebanon. Instead, it was the beginning of a further fall, a year-long plunge into economic chaos, four seasons of civil turmoil.

Today, the state itself is on the verge of collapse. On July 15, prime minister-designate Sa’ad Hariri quit after almost 10 months of failure to form a new government.

At a press conference last September, a journalist exasperated by the failure of the country’s leaders to form a government asked president and Hizbollah ally Michel Aoun: “Where is Lebanon going?” The 87-year-old politician replied: “To hell.”

Autumn


  • Lebanese pound around 7,000 to the US dollar

  • Sa’ad Hariri brought back as prime minister-designate, a year after resigning in the face of mass anti-government protests

  • French president Emmanuel Macron attacks Lebanese leaders for failing to form new cabinet, singles out Hizbollah and its ally Amal for criticism

Four days after the blast, I watched as protesters packed Beirut’s main square, banging any metal surface they could find with rocks. Many carried brooms they had been using to clear streets the government hadn’t. They referred to their leaders as murderers. Security forces tried to disperse the demonstrations with tear gas and rubber bullets, but those who gave the orders were nervous. Two days later, Prime Minister Hassan Diab quit.

I began requesting interviews with some of Lebanon’s political class, to find out whether they accepted responsibility for the country’s crisis — and whether they had any plans to fix it. I wanted to speak to Hizbollah on the record, but the group refuses most interview requests from foreign journalists. It prefers to broadcast lengthy speeches by Nasrallah, a charismatic 60-year-old who lives in hiding for fear of an Israeli assassination attempt.

One of the first politicians who would speak to me was Walid Jumblatt, head of the Druze sect. He was a militia leader during the civil war and his politicking in the decades since has helped keep his small religious group out of trouble. For years, he was the man diplomats called on to explain Lebanon’s politics. He was particularly good at this because he helped build the system. “For better or worse, Walid Jumblatt may be the single person most responsible for where we are in Lebanon today,” reads a 2006 US diplomatic cable. At the time, Jumblatt was playing a central role in the uprising triggered by post-civil war premier Rafiq Hariri’s assassination, which ultimately dislodged Syria’s 15-year occupation of Lebanon.

When we met at his Beirut townhouse, the 71-year-old told me he was not sleeping well. “Insomnia, nervousness,” he complained, wearing blue jeans and a leather jacket, his standard casual look since the murder of his father politician Kamal threw him into politics more than 40 years ago. Jumblatt had long feared Hizbollah encroaching on his areas of the Chouf mountains, where his family has an ancestral palace. When I asked who was to blame for Lebanon’s predicament, he named all of his fellow warlords as well as himself, saying they were all the “godfathers” of the system. He added: “And the main power on the ground is Hizbollah.”

He says the group has harmed Lebanon’s relations with the US. (Washington has designated it a terrorist organisation, imposing sanctions on affiliated politicians, businesspeople and some banks.) “Lebanon is in the middle of a big turmoil between the American hammer and the Iranian anvil . . . Sanctions will not weaken Hizbollah.” Why? “They have their own autonomy, financial autonomy. They have their own — how should I say? — institutions. I don’t see them being weakened as the Americans [wish].”

I asked what should be done about the group’s weapons, which it was allowed to keep as part of the Ta’if Accords, even though other militias were forced to disarm. “Nothing — you can do nothing. Just don’t waste your time.”

Whenever I have had tea with the low-level Hizbollah officials who are permitted to talk with the press off the record, they insist the group is misunderstood by western media. They make no secret of their friendship with Iran but say they exist to protect Lebanon from Israeli aggression and to take care of Lebanon’s historically most marginalised group, Shia Muslims. It is true Hizbollah dispenses aid to its constituency and enjoys support among many Shia. When Covid-19 struck, it opened testing facilities and isolation centres which were shown off to journalists.

But Hizbollah has expanded. It has an increasingly sophisticated and large missile arsenal and an international criminal network that helps fund its activities, according to the US. It sends its young men to fight in other countries’ conflicts, especially Syria. For its investment, Iran gets a proxy force on the border of its enemy, Israel, and extends its influence to the Mediterranean. Hizbollah’s control over southern Beirut is so complete that journalists have to ask permission to report from there. If they don’t, they will be detained.

I asked Jumblatt if Lebanon is a failed state. “Nowadays, yes,” he said, adding that it wasn’t always that way. “It was not. We had modern leaders . . . But with time [came] decay, civil war, corruption.” Jumblatt is one of the Lebanese leaders blamed for having a part in the very decay he derides. “It’s too late to apologise,” Jumblatt retorted when I asked if he had any regrets about being a part of a cabal which brought the country to its knees. “Let history judge me.”

That same month, I visited another former warlord, Samir Geagea. He rejects the label and is known to his supporters as “hakim”, or doctor because of his medical training. Of all those who survived the civil conflict and went on to leadership roles, Geagea is the only one who served time in prison, spending 11 years in solitary confinement for political murders and war crimes. He has always said that he was framed.

Geagea lives in a modern mansion at the top of a hill. His wife, Sethrida, is an MP. I had to pass numerous black-clad security guards to reach him. In April 2012, a sniper nearly shot him as he was walking in the garden.

Not long after the blast, French president Emmanuel Macron had gathered Lebanon’s chiefs, including a representative from Hizbollah, urging them to put their differences aside and form a credible new government. Although the EU considers Hizbollah’s military wing a terrorist organisation, Macron seemed to accept the fact that no progress can be made without the group.

“Macron, he answered 1,001 things. But I couldn’t get one material thing out of him,” sniffed Geagea. “Because all that Macron wanted was to be nice to everybody in order to get the agreement done.” Macron said a government should be formed by September 15. It wasn’t. Geagea had other ideas, and he pulled his party out of the government formation process, his eyes on elections in 2022.

He had long opposed Hizbollah. His militia, the Lebanese Forces, was even aligned with Israel during the country’s occupation of southern Lebanon in the 1980s. “Hizbollah is using its military force to weigh on the political life,” he warned. He is also an enemy of Hizbollah’s Christian allies, the Free Patriotic Movement (FPM), or “Tayyar”, founded by now-president and former army commander Michel Aoun. “Hizbollah and Amal [another Shia political party], they allied themselves with the Tayyar. And they are controlling the situation,” Geagea said, referring to the power of the grouping in parliament.

A few days before we met, there had been scuffles between Geagea’s supporters and the FPM near my home. Geagea’s party was a militia once. Would they fight to protect their territories again? “I mean, we came from a military organisation but now we are a party. So always we will have this discipline among our ranks . . . To jump to a military organisation again? No, there’s a distance.”

He added a caveat: “Suppose theoretically for the army they don’t continue paying . . . [or] . . . we found ourselves in a situation similar to the one of 1975, which means suddenly the state collapsed completely and there’s a danger. Of course we will start rebuilding ourselves.” Neither of us knew that army commander Joseph Aoun would soon warn that the Lebanese armed forces did not have sufficient funds to last through 2021.

Winter


  • Pound passes 8,000 to the dollar

  • Prices of food and drink have risen 400 per cent on the previous year

  • The judge leading the investigation into the port blast charges Hassan Diab and three former ministers with criminal negligence

In November, pharmacies began to run low on vital medicines, including cancer drugs. It became normal to visit two or more to fill a prescription. With the Lebanese pound’s value tumbling and dollars scarce, importing other critical goods was becoming difficult too. Many Lebanese did their best to stockpile.

I tried to persuade a widowed friend, Mohamad, who has two young children, not to sell his kidney to pay for plane tickets out of the country. In the end, his tissue didn’t match the intended recipient.

Why had the economy come crashing down so fast? “It was a Ponzi scheme, you know? A Ponzi scheme that became in a sense self-sustained,” Toufic Gaspard, a former IMF official and Lebanese economist, told me. He was one of the first to warn that while the economy looked all right on the surface in 2018, the numbers foretold a crash.

Lebanon produces little, but it has one extremely valuable export: people. For years, the country’s diaspora helped the economy grow by sending money back and investing in properties and retirement nest-eggs. Rich people from other countries with more closed economies, such as Syria, found Lebanon a welcome place to park their cash. But the 2011 outbreak of civil war in Syria unnerved investors. The flow of dollars started to ebb.

The economy was a Ponzi scheme, you know? A Ponzi scheme that became in a sense self-sustained

Toufic Gaspard, economist

By Ponzi scheme, Gaspard means the method used by Lebanon’s central bank governor, Riad Salamé, to attract US dollars into the country. This involved offering commercial banks double-digit interest rates to park their dollars in the Banque du Liban. The hard currency helped finance imports and growing government debt. Salamé started using what he described as “financial engineering” in 2016, which he said was necessary to defend the Lebanese pound’s peg to the US dollar. These operations masked Leb­an­on’s economic weakness while boosting commercial banks’ profits. “The political class, they all benefited from the largesse of Riad Salamé,” said Gaspard. “And he kept saying the [Lebanese] pound is good, everything is good. So they just neglected [the economy].”

Eventually, the scheme faltered. A dollar shortage in 2019 revealed the banks’ overexposure to the government and central bank. This amounted to 70 per cent of their assets, including $110bn locked up in the Banque du Liban — roughly double the country’s 2018 gross domestic product.

Since the banking shutdown, depositors have been desperate to withdraw their money. But parliament failed to pass a capital controls law to prevent a bank run. So since October 2019, banks have been severely limiting cash withdrawals. As inflation rose, Lebanon’s citizens were forced to watch the value of their savings melt. The opaque black market — often run via social media groups — dictated the pound’s dramatic downward swings. It became the only place to get dollars since the banks were no longer disbursing them.

Meanwhile, VIP clients and bank managers found creative ways to offshore money, including by arbitraging between the official exchange rate of L£1,500 to the US dollar and much higher black market rates. I spoke to branch employees who said they were sickened by transactions they had been ordered to facilitate.

On November 5, I drove to the home of Gebran Bassil, leader of the Free Patriotic Movement. Compared with Jumblatt or Geagea, Bassil is a newcomer to politics. The son-in-law of President Aoun, the 51-year-old has only run as an election candidate since 2005. His biggest move was helping forge the alliance between Hizbollah and the FPM, which eventually handed Aoun the presidency.

Bassil told me the deal aimed to preserve “equality between Christians and Muslims” while “building the state . . . In the first we succeeded. In the second one we failed, and this is where we have big problems with Hizbollah.” Bassil claimed Hizbollah was not helping “to really fight corruption”. Bassil was minister of telecommunications, energy and water for three years, then of foreign affairs for six. The energy ministry is responsible for Lebanon’s chronically troubled power grid.

Lebanon “has collapsed”, he admitted. Are he and the other leaders responsible? “Of course we are responsible. But the easiest thing is that you stay out [of power] and you say you’re not responsible. Of course you cannot say, you know, I have nothing to do with all of this. Yes, we failed on bringing the electricity. But I don’t accept people to tell me, you are corrupt,” Bassil went on. He denied allegations of self-enrichment, saying he had, until relatively recently, been $3m in debt. As I left Bassil’s heavily guarded house, with its ravishing view of the Mediterranean, the Russian ambassador and his entourage were pulling up.

The day after speaking to the FT, Bassil was branded the face of “systemic corruption in Lebanon’s political system” by the US Treasury. It alleged Bassil had used official positions to steer government money to “individuals close to him” via front companies and sanctioned him under the Global Magnitsky Act.

Spring


  • Pound hits 10,000 to the dollar

  • It emerges that central bank governor Riad Salamé is being investigated by Switzerland’s attorney-general for allegedly embezzling more than $300m (he denies the allegations)

  • Lebanese court removes judge investigating Beirut port explosion

Lebanon felt like it was becoming more dangerous. In February, a publisher and prominent critic of Hizbollah named Lokman Slim was found shot dead in the militant group’s territory. Hizbollah denied involvement. But before his assassination, Slim had been in touch with a Hizbollah money launderer, exploring ways the latter could defect, according to consultant Mona Alami.

Lebanese politics has been marred by unsolved murders ever since the country gained independence from France in 1943. Lebanon’s first prime minister, Riad Al Solh, was also its first to be assassinated, in 1951. This grim trend accelerated in the 2000s. More than a dozen journalists, security officials and politicians were gunned down or blown up over several years, with the most prominent being former prime minister Rafiq Hariri.

Another victim was Mohamad Chatah, a Sunni and former finance minister affiliated with Hariri’s Future Party. He was murdered by a car bomb in 2013. During his last weeks alive, Chatah had been in negotiations with the Iranian regime on Hizbollah, according to his son, Ronnie. I talked to Ronnie, a 40-year-old podcast host, by video chat in February. Coronavirus was ripping through Lebanon and confining us to our homes. He believes his father’s actions somehow threatened Hizbollah and led to his death. (Hizbollah condemned the killing.)

Violence keeps Lebanon paralysed. “If Sa’ad Hariri was really pushing the envelope he’d either be permanently exiled or assassinated like his father,” he said. “The moment you push you get killed. Or you get intimidated, or you reach situations that you’re not able to effect change.”

I asked Chatah why Lebanon’s story seems to have so few heroes. He paused. “Well, they’re all dead . . . They’re the opponents to the way Lebanon was put back together after the war ended. And they died challenging this political disorder.”

Many young Lebanese feel a similar level of despair. Later that month I spoke to Lara Sabra, a 23-year-old student and president of the American University of Beirut’s Secular Club. She had taken part in Lebanon’s October 2019 protest movement, long before the explosion, while the financial crisis was gaining momentum. She told me the 2019 protests had been existential. “I wasn’t just fighting for these notions like equality or injustice, I was also fighting for myself to be able to live in this country and build a future here.”

The demonstrations had brought together Christians and Muslims from across Lebanon’s sects and eventually forced the resignation of then-prime minister Sa’ad Hariri. But ultimately the system held. Hariri was asked by parliament to return as PM-designate in October 2020.

Sabra was battling pessimism, but she was determined not to give up. “Part of this political struggle, this activism, is [us] refusing to leave . . . The political class and the establishment want people to leave, they want less people to fight them.”

Many of my friends and contacts, however, had gone or were making plans to emigrate. One man who couldn’t was caretaker prime minister Hassan Diab. On March 11, I met the former university professor for an interview at his comfortable apartment, where he was suffering from an eye infection. He seemed marooned.

Diab had just tried to quit again in a bid to motivate political parties to come up with a new government to no avail. There had been months of intractable stalemate over the division of cabinet posts. Hariri, as prime minister-designate, argued he should be allowed to select his ministers himself, but President Aoun was pushing the norms of his position by blocking Hariri’s nominations. Prepared for our meeting with a handwritten list of his administration’s achievements, Diab courteously offered fruit sweets and described himself as “a hostage of Lebanese politics”.

So was the country. Driving south from Beirut that month, my boyfriend and I hit burning roadblock after burning roadblock. With no one taking charge of a banking sector rescue, the exchange rate had hit L£10,000 to the dollar. What else could protesters do but cause traffic chaos by lighting fires?

My friend Mohamad had little work due to lockdown and was struggling to feed his children. Luckily it was Ramadan, the Muslim holy month where adherents fast before a big evening meal, Iftar. Hizbollah was distributing hundreds of Iftar packages of rice, chicken and salad, which Mohamad was taking as often as possible.

Summer


  • Pound reaches 23,000 to the dollar

  • Power cuts in some parts of Lebanon last up to 22 hours a day

  • Sa’ad Hariri gives up trying to form a government; billionaire and former premier Najib Mikati appointed

On June 1, the that Lebanon’s economic and financial crisis was “likely to rank in the top 10, possibly top three, most severe crises episodes globally since the mid-19th century”.

Uncollected refuse piled up on the streets. Fuel shortages caused hours-long queues outside petrol stations. A de facto 90 per cent currency devaluation had caused hyperinflation, leaving more than half the country’s population in poverty. Many pharmacies closed their doors in protest after running out of medicines and baby formula.

A friend from Beirut’s Tarik el-Jedideh, a working-class neighbourhood, told me he wasn’t sleeping. “It’s too hot,” he said. With almost no state power, the privately run generator fees were so high no one could run an air conditioner.

Enduring prolonged power cuts at Lebanon’s biggest public hospital, its director, Firass Abiad, tweeted: “No need to imagine or exaggerate. We’re really in hell.”

On June 8, Hassan Nasrallah described the queues at petrol stations as “scenes of humiliation”. “We, Hizbollah, can go to Iran and negotiate with the Iranian government and buy shipments of fuel,” he pledged, before chastising his political opponents. “Those responsible for government formation need to listen to people’s voices and look with pain at the cars queueing up for fuel and the loss of electricity and medication.”

This was the classic Hizbollah playbook, analysts pointed out: distancing itself from the government, pointing the finger elsewhere and casting itself as the saviour of the people. Chatham House’s Khatib says the group prefers to operate in a “grey zone” where it can avoid blame for state failure. “I don’t think it prefers political paralysis, but if it can’t get its way, then it wants political paralysis.”

This preference for stasis is also true of Lebanon’s most enduring power brokers, who continue to thrive on the patronage networks built into a rotten system.

As the anniversary of the explosion neared, I was still chasing an interview with the prime minister-designate, Hariri. His people always gave me the same answer: he “can’t talk until the government is formed”. But diplomats who met with him said they were worried. He looked gaunt and didn’t seem to be making progress.

On July 15, it was over. Hariri apologised to the nation. After 10 months of trying, he had not managed to form a government. He said that Aoun (and, by implication, Hizbollah) had blocked him over whose responsibility it was to approve ministers. Aoun said Hariri was inflexible. The pound broke through 20,000 to the dollar. The country was back to square one.

A Lebanese expatriate asked me how I was handling the deepening crisis, and I told him I was “adapting”. He chastised me for adopting what he called “the resilience mantra” — “it is what caused all our problems in Lebanon”. The argument is that adapting to circumstances has become akin to capitulating to them.

The ranks of Lebanese expatriates are swelling — even one of Lebanon’s most talented satirists, Bernard Hage, has moved to Berlin. Many of those who remain put their hope in an international bailout.

But Gaspard, the economist, argues that nothing can be solved unless the Hizbollah issue is tackled. “We are under Iranian occupation through their proxy . . . Unless we address this, even if you bring all these institutions in the world, the World Bank, the IMF, all countries in the west, we cannot get out of our hole.”

For decades, Lebanon has been lauded for its resilience. Since the civil war, there have been assassinations, car bombs, Israeli jets and Hizbollah. The Lebanese people continued to hope for change and reform through it all. And yet, something has shifted in the past year. After the blast, frustrated Lebanese on social media began mocking their famed adaptability as “reذلience”. The two Arabic letters are pronounced “zil” in Lebanese dialect; “zil” means humiliation.

Chloe Cornish is the FT’s Middle East correspondent

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