Opinion: Beirut blast – Is Lebanon a failed state?

‘Countries aren’t supposed to be able to go bankrupt – Lebanon has.’ Following the devastating explosion in Beirut, the FT’s David Gardner examines Lebanon’s multiple crises. See if you get the FT for free as a student ( or start a £1 trial:

If you want almost literally to see a country come unhinged then all you have to do is watch the video and photo footage from last week in beirut when the port of beirut which is in the heart of the center of the capital simply exploded in a vast vast blast allegedly of 2017 tons of ammonium nitrate which is used for fertilizer but also for explosives if

It really were that amount i suspect we wouldn’t be having this conversation i think it is probably less but it nevertheless laid waste to a large part of downtown shoreline and east central beirut all this in a compounded crisis which entails the collapse of the lebanese economy because of a debt budget currency and banking crisis all of which turns into a

Colossal economic crisis with an economy shrinking so fast it’s almost impossible to measure it is literally bankrupted the economy countries aren’t supposed to be able to go bankrupt lebanon has its banking system and its central bank have lent 70 percent of all their deposits to an insolvent state they are therefore all technically insolvent the government

Appointed to try and fix this came up with a recovery plan saying total losses in the banking system were 83 billion dollars and in the central bank 50 billion dollars that is two and a half times the size of what the economy was last year you’ve got a massive refugee problem approximately one in four people in the population of lebanon is a syrian or palestinian

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Refugee mainly syrian 1.5 million syrian refugees all that happened before coronavirus and the coven 19 emergency which has squeezed any remaining life there was out of the economy and then you got this the absolute epitome of a dysfunctional corrupt state run by people with absolutely zero regard for public welfare public security or public goods all that adds

Up to a country well on its way to becoming a failed state the port can be seen as a microcosm of that failed state it embodies all the aspects of misgovernment of negligence criminal negligence and utter disregard for citizens who for the most part are not treated as such but as supplicant clients by a sectarian system in which the rights of all these and

They are all minorities have been usurped by their leaders on a dynastic basis grandfather son they’re all part of the same syndrome of looting the state this is in a sense a perfectly logical by-product of that sort of system even if you could barely invent what happened here last tuesday when you see a mushroom cloud suddenly go up in the middle of the city

Beirut is not the entirety of lebanon by any means but it dominates the country as a capital in a way which is atypical of most countries this is a small country large parts of it are still almost pristine but the way in which beirut casts a spell over absolutely everything in the rest of the country and the way mismanagement from beirut prevents the rest of

The country from developing in any meaningful way i mean for example at the end of the civil war 1975-90 almost every militia in the country had its own little makeshift port everything went into rebuilding the port of beirut a huge expense that became the cash cow for these former militia leaders working their rackets in the port smuggling extracting customs

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Revenue levying cert taxes on containers and so on and so forth it became a very lucrative business it’s so absorbed the interest in terms of financial interest as well of this political class that a perfectly good port in tripoli has been left to languish in 2018 there was a proposal to build new state-of-the-art grain silos in tripoli because lebanon imports

About 80 percent of everything it consumes including 90 i think it is of wheat for bread the staple absolutely nothing happened and what has happened now is that the national granary this huge grain silo right at the heart of the port which was blown to smithereens last tuesday it’s gone the entire grain supply is gone that’s a huge problem at a time when there

Is already hunger in the country when the middle class is being pushed into poverty and the poor are being pushed into destitution and then this a great deal of the medical stocks equipment and pharmaceuticals went up in that explosion this is a dire emergency to which the political class had barely responded president macron of france comes here tours the

City is greeted warmly not one of these people one of the purported rulers of lebanon has dead show his face so what happens next the situation of this country is now so utterly desperate there is only one game left in town in which a new government it will have to be with some sort of narrow mandate to rescue lebanon from disaster politics will have to be put

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To one side all political squabbles will have to be paused while this government negotiates with the imf and principal donor countries led by france to a set of real reforms which the donor community and the fund as a standby island are prepared to support leading to real change there have been four rescue plans since the war aids soft loans and so on and so

Forth lebanon has no capacity to borrow when it was last possible to record these things its total sovereign debt amounted to 170 of gdp proportionally the third highest in the world it must be massively over that now because gdp has shrunk so much nobody is going to lend one lira one euro one dollar to a bankrupt lebanon until it shows real will to reform

That was the message that president macron of france who is leading the donor effort brought to beirut just days after the blast it is actually the only game in town left for 11.

Transcribed from video
Opinion: Beirut blast – Is Lebanon a failed state? By Financial Times

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