When Worst Gets Worse
Bloomberg Businessweek|August 17 - 24, 2020
When Worst Gets Worse
The blast in Beirut laid bare the wreckage from decades of sectarian politics
Lin Noueihed

When Dany Chakour reopens his four upscale Em Sherif restaurants after repairing the damage wrought by the devastating Aug. 4 blast in Beirut, he plans to turn over the 11% sales tax he collects on each transaction to the local charities that helped clean up the city—instead of giving it to the government. “It’s a form of civil disobedience to give to trusted organizations in this time of need rather than to the state, where I don’t know how it will be spent,” Chakour says. “What has the state ever done for us? The state can’t even provide us with electricity.”

Lebanon was already coming apart at the seams before a 2,750-ton cache of ammonium nitrate detonated at the Port of Beirut, killing at least 171 people and wounding thousands. As the realization sank in that the blast was neither a terrorist attack nor the start of a new war with Israel but the culmination of decades of corruption and mismanagement, the streets exploded with rage.

Protests promptly dispatched the 7-month-old government of Prime Minister Hassan Diab, who blamed his failure to prevent the disaster or lift the country out of a deepening financial crisis on a political elite so entrenched and so self- serving that it threatens to “destroy what’s left of the state.”

Haunted by a 15-year-long civil war that ended in 1990 leaving many grievances unresolved, the tiny nation straddling the Middle East’s political and sectarian fault lines is reckoning with a crisis of identity that was never far beneath the surface. Under a complex power-sharing arrangement that helped seal a peace between warring factions, Lebanon’s president must be a Maronite Christian, the prime minister a Sunni Muslim, and the speaker of parliament a Shi’ite Muslim. The system has engendered chronic paralysis, while sectarian leaders have carved out effective fiefdoms, playing on the fears of the myriad minorities and using their official positions to drive resources toward their own constituents in return for votes and loyalty.

Further complicating the situation is Hezbollah, an Iran-backed militia that has morphed into a powerful political force and is accused by critics of running a state within a state. It’s resisted suggestions that it give up an arsenal believed to be more advanced than the army’s.

Amid all of the political disfunction, Lebanon’s 6.8 million inhabitants could at least count on two constants: a relatively sound banking system and the Lebanese pound’s peg to the U.S. dollar. Both began disintegrating last year as the nation was engulfed in a financial crisis that sent the currency into free fall, prompting the central bank to restrict access to dollar deposits. Fearful of seeing their life savings wiped out, hundreds of thousands of Lebanese took part in weeks of protests that triggered the collapse of the government in October.

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August 17 - 24, 2020