Lebanese Prime Minister Warns of Food Crisis

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by voanews.com -- Dale Gavlak -- AMMAN, JORDAN - Prime Minister Hassan Diab says Lebanon, now suffering from an acute financial crunch and facing a COVID-19 outbreak, is also at risk of starvation. He warns that the multiple crises could spark a new migration to Europe and is asking the United States and Europe for financial help. The financial crisis is on a scale never seen before in the country. Inflation, poverty and unemployment have soared in Lebanon in recent months, with prices of goods doubling in many cases. Diab says the crisis could result in people being unable to buy bread, a staple. Analyst Michael Young says there are only two ways ahead for Lebanon. One is to carry out overdue reforms that will permit the International Monetary Fund to provide $10 billion in the first phase of a bailout plan. Young says he believes it is the only available key to unlocking wider foreign aid from the World Bank and the West. The other choice, he told The National newspaper, is to follow the path leading to “bankruptcy, state collapse, chaos, possibly famine, and mass emigration.”

Professor Habib Malik of the Lebanese American University says reforms are badly needed, telling VOA that Lebanon faces difficult, stark choices that won’t be easy to enact. “Lebanon is suffering from multiple, very profound challenges," he said. "We know the IMF is not a charitable organization. They will come with all kinds of very austere conditions. This will translate into suffering for those who did not cause the problem but who have received the short end of the stick. The same political class who did all of this is just going to hang around. It’s the same criminal political class that got us here.”

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Lebanon’s Banks Urge Government to Avoid Domestic Debt Default

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by bloomberg.com -- Dana Khraiche -- Lebanese banks are urging the government to sell state assets and defer maturities to avoid defaulting on its domestic debt and driving the country’s finances into an even deeper crisis. The Association of Banks in Lebanon made the recommendations in a response to the economic recovery plan the government is discussing with the International Monetary Fund after seeking $10 billion in assistance. Defaulting on domestic debt would “plunge Lebanon’s output to a level somewhere beyond Yemen’s and Cambodia’s and our people would be impoverished for the next decade,” Salim Sfeir, head of the banking lobby, said during a parliamentary committee hearing on Wednesday.

The government defaulted on $30 billion of Eurobonds in March and is now seeking to hold talks with bondholders, mainly local banks, to revamp its debt. That’s fueling concern among lenders that they may be driven to the wall. The country’s crisis has been years in the making, but financial conditions deteriorated rapidly in 2019 as political upheaval toppled the government of Premier Saad Hariri and foreign currency reserves began to run low, forcing businesses to turn to money changers for dollars they need to pay for imports. The banks are proposing that the government create a $40 billion “defeasance fund” that could settle its debt to the central bank “fairly,” according to a document seen by Bloomberg. 

The fund would issue long-dated and interest-bearing securities to the central bank in exchange for a final settlement of the government’s debt. Lenders have parked more than half of their liquidity at the central bank, which holds about $34 billion in local currency debt. Banks would also negotiate a “relief package” on domestic bonds by offering significant coupon reductions through a voluntary debt exchange. They hold domestic debit valued at $14 billion. “This default-avoiding internal exchange can be executed both quickly and smoothly in the interest of all stakeholders,” according to the document. “Avoiding an internal default would indeed preserve existing and future depositors’ confidence.”

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Lebanon's RAMCO reaches agreement with migrant workers after weeks-long strike

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by middleeasteye.net -- Adam Chamseddine -- Lebanese waste-management company RAMCO has reached a temporary agreement with hundreds of migrant workers to slightly increase their salaries after a weeks-long strike against a cut in their wages, the Bangladeshi embassy in Beirut has said. Around 400 foreign workers, mostly from Bangladesh and India, took a stand against RAMCO more than a month ago after the company began slashing their wages and paying them in the local Lebanese currency rather than US dollars. Since Lebanon's unprecedented financial crisis late last year, the Lebanese pound has lost a staggering 60 percent of its value.

With the currency currently trading at LL4,200 to the dollar, but RAMCO pegging the conversion to the official exchange rate of LL1,500 Lebanese pounds, it now takes almost three times as many pounds to buy the same amount of dollars. Feeling the pinch, dozens of workers held a protest outside the company's storage site in Beirut last week, blocking waste collection trucks from leaving the building. Video of riot police violently suppressing the protest were widely shared online. Armored police, which were summoned by the company, could be seen beating the foreign workers with sticks and using tear gas to disperse the crowd. "I used to transfer my salary to my family in Bangladesh in dollars, but now that I’m getting paid in Lebanese pound, I have to exchange it at the black market rate, which amounts to very little", one worker told Middle East Eye on condition of anonymity. He said his previous salary of $120, now paid in pounds, was worth just $42.

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Cousin of Syria’s Assad says state confiscates his assets

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BEIRUT (AP) — One of Syria’s wealthiest businessmen who is a cousin of President Bashar Assad said Tuesday the government has ordered the seizure of his assets and barred him from doing business with the state for five years, escalating a dispute that has been deeply mixed in family affairs. The latest decisions against Rami Makhlouf come after weeks of highly publicized and unusual disputes over outstanding payments that the government is seeking from the country’s largest telecommunication company, which he heads. In an unprecedented move, Makhlouf took his grievances to social media early this month, challenging claims he owes the state any money and asking Assad to be the arbiter to prevent his business from collapsing. Makhlouf, who was once a close Assad aide, posted several videos and statements on his Facebook page indicating that he has been isolated from the president and can only address him through social media.

Makhlouf said the government decree to confiscate his assets and those of his wife and children comes even though the claims involve the telecommunication company, Syriatel, one of his several businesses and in which 50% of the revenue already goes to the state. Although official bodies have communicated notices to Makhlouf through the media, there was no official statement of the confiscation of assets Tuesday. They “just want to control the company and they see nothing else,” Makhlouf wrote, without elaborating. The public dispute revealed a fallout between Assad and his cousin, who has been one of his main backers in the country’s civil war now entering its tenth year. It is the most public split in the tight-knit Assad family, which has ruled Syria for nearly 50 years. The rift comes as the country, already under Western sanctions, enters a new phase of economic hardship. Syria’s currency has spiraled downward, sending prices of basic commodities soaring. Economic activity is also being hurt by restrictions imposed to combat the coronavirus, coming atop austerity measures taken during the war, which has displaced nearly half the population.

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Dispute between Lebanese President, Sons-in-Law Intensifies

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by english.aawsat.com -- Lebanese President Michel Aoun’s son-in-law took a major step towards splitting from his political camp by calling on the people to “rebel” against the ruling authority as the country grapples with its worst economic crisis in decades. Tensions have been high between Chamel Roukoz and Aoun’s other son-in-law and divisive figure, MP Gebran Bassil, who now heads the Free Patriotic Movement, which was founded by the president. Roukoz has been vocal in his support for popular protests that erupted against the ruling elite in October 2019. Bassil had received a lot of the demonstrators’ ire during the rallies. As the economy flounders and more and more people find themselves in poverty, Roukoz appears more committed to the uprising than ever, predicting that a second wave of protests will soon erupt.

At a press conference over the weekend, he severed what appeared to be his last remaining ties with Bassil, calling on the people to rise up against the authority. “Rebelling is a pillar of real freedom, while submission is the basis of slavery,” he said. “The people have grown hungry. When pockets and stomachs become empty and when fathers and mothers can no longer feed their children, then revolution and rebelling become the only means to regain dignity.” Speaking to Asharq Al-Awsat after the press conference, Roukoz said that he resorted to harsh rhetoric because the Lebanese have reached a “tragic” point. “No matter how harsh my words get, they will not reach the hardship endured by the people,” he stated.

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Lebanese pound gains against dollar on parallel market

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The Daily Star -- BEIRUT: The Lebanese pound rose slightly against the dollar on the parallel market Monday, steadying at around LL3,750 to the dollar. Black market exchangers were initially selling the dollar for around LL3,500 Monday morning but the rate steadied at around LL3,750 to the dollar by the afternoon. Those wanting to sell their dollars to traders received around LL3,650 per dollar Monday. The pound in recent weeks has been trading above LL4,000 to the dollar in spite of the Central Bank’s efforts to control the exchange rate. The pegged rate of LL1,507.5 is only used now for a handful of items, like imports of fuel, wheat and industrial materials. Licensed exchange shops have expressed their commitment to BDL’s official parallel market rate of LL3,200 to the dollar, but most have been closed after the Syndicate of Money Changes in Lebanon announced an open strike April 28. They are demanding the release of money changers who were arrested for not sticking to BDL’s official rate.

The head of the syndicate Mahmoud Mrad was also arrested May 8 for allegedly manipulating the parallel market exchange rate. Financial Prosecutor Judge Ali Ibrahim issued the arrest order and investigators from the Internal Security Forces’ Information Branch later found important phone calls from Mrad’s mobile that had been made to illicit exchange dealers. State Prosecutor Ghassan Oueidat ordered the Telecoms Ministry on April 30 to block 28 mobile applications that show the daily black market dollar exchange rate. The lack of transparency behind these apps means they could be used to manipulate exchange rates for speculative purposes. Exchangers have also complained that they are unable to stick to BDL’s rate because customers challenge them on their rates, presenting the rate displayed by these apps.