by dw.com — Lebanon has been known as “the Switzerland of the Middle East” for decades because of its strict banking secrecy laws. But as the country falls ever deeper into economic crisis and debt, the banks that once drew so much foreign capital to the country are also in trouble. Local economists estimate that altogether, Lebanese banks owe over $90 billion (€77 billion), and say that since late 2019, they have severely restricted withdrawals and foreign transfers, especially in US dollars. There have been many stories about the financial damage done to ordinary Lebanese by these moves as their currency goes into free fall. The Lebanese pound has lost over 85% of its value against the US dollar on the black market. But could potentially insolvent Lebanese banks also spark a dangerous, regional domino effect, causing the same sort of problems for the Middle East as an indebted Greece did for the European Union during the 2008 financial crisis? Billions lost

Late last year, Syrian dictator Bashar Assad blamed his country’s ongoing economic woes on the fact that anywhere between $20 billion and $42 billion belonging to Syrian depositors was trapped in Lebanon. Syrian businesspeople have long used Lebanese banks to avoid international sanctions and other restrictions. Earlier in 2020, research by a Yemeni think tank, the Sanaa Center For Strategic Studies, suggested that as much as 20% of Yemen’s foreign currency reserves, estimated at around $240 million, were stuck in Lebanese banks. And in the semi-autonomous northern Iraqi region of Kurdistan, politicians claimed that up to $1 billion of money from oil sales was trapped with Lebanon’s Bankmed. Lebanese men withdraw money from a Bankmed ATM in the capital, Beirut