Penny pinching and power cuts; Lebanon's middle class squeezed by crisis

Summary

• Lebanon economy collapsed in 2019 under a mountain of debt
• Sectarian leaders have been unable to fix problems
• Middle-income families face stark choices amid crisis
• Gulf donors step back amid rising Iranian influence

Lebanese school teacher Sara Wissam and her husband were comfortably off before a run on the local currency decimated the value of their salaries and dragged them towards poverty.

The plight of the Beirut couple is common across Lebanon's middle class, which has been forced to make once unthinkable choices by the worsening economic crisis: cutting back on food, cancelling trips or applying to emigrate for good.

"It used to be that our income lasted a month," the mother of three told Reuters.

"Now it's not enough for one trip to the supermarket to buy essentials," said Wissam, describing how she rarely buys meat, has cut back on cheese and chooses even the smallest treats for her young kids carefully.

Ayman Hadad, a 28-year-old university graduate who found a job in a shop, earns the equivalent of $125 a month and wants to join friends who have emigrated. He has applied to go to Canada. "Enough of Lebanon. We lost hope," he said.

Lebanon's descent into financial ruin began in 2019, the result of a poorly managed spending binge that pushed up debt, political paralysis as rival factions squabbled and foreign lenders' reluctance to bail the country out unless it reformed.

The World Bank ranks the crisis as among the most severe globally since the mid-19th century, devastating a country once seen as a wealthy and liberal outpost in the Middle East before civil war broke out from 1975 to 1990.

About 80% of the population of 6.5 million are considered poor; in September, more than half of families had at least one child who skipped a meal, UNICEF said, compared with just over a third in April.

The currency has lost more than 90% of its value and banks have locked savers out of accounts. By some estimates, state debt reached 495% of gross domestic product in 2021, far above levels that crippled some European states a decade ago.

Adding to people's frustration is the government's failure so far to tackle the problems.

Caretaker administrations have led Lebanon for much of the last three years, and since the cabinet quit after a devastating Beirut port blast in 2020, politicians have been fighting over who should lead an investigation into who was to blame.

Meanwhile people see signs of social and economic collapse. The state telecom firm shut the Internet in parts of Beirut for lack of fuel in recent days and an armed man took hostages at a bank demanding access to his trapped savings.

'Fridge empty'

Lebanon's national power grid was creaking before the crisis, with rolling cuts across the country. Now, a bankrupt government can barely run its power plants and homes often receive only an hour of state electricity a day.

Yola al-Musan, who manages a supermarket in Beirut, uses electricity from a shared neighbourhood generator to keep the lights on at home.

When the national grid does fire up, Musan races to switch on the washing machine as only then does she have a strong enough current.

For school teacher Wissam, putting enough food on the table for her family has become tough, even though she and her husband both have steady jobs.

Before the crisis, Wissam and her husband's combined salary was 3 million Lebanese pounds a month, which at the exchange rate at the time of 1,500 to the dollar was around $2,000.

Now their combined earnings are worth the equivalent of $140, even after Wissam's modest wage hike. The currency has plummeted to 25,000 to the dollar, sending the price of imported goods and local products soaring.

"Lebanon's leaders amuse themselves insulting each other and accusing each other of corruption. In fact, they are all corrupt and thieves," she said, echoing widespread public and international criticism of how the crisis has been handled.

Politicians, some former militia leaders and others from families who wielded influence for generations over the nation's Christian and Muslim communities, acknowledge corruption exists but deny they are responsible and say they are doing their best to rescue the economy.

But a lengthy and continuing dispute over who should preside over the port blast inquiry has contributed to delays in talks with the International Monetary Fund, seen as vital to unlocking overseas support led by France.

Once-reliable Gulf donors such as Sunni Muslim Saudi Arabia already stepped back years ago, voicing anger at Iran's rising influence in Lebanon through Hezbollah, a group supported by Tehran which has a heavily armed militia.

Najib Mikati, the billionaire prime minister whose post is held by a Sunni under the sectarian political system, has tried to mend Gulf ties. Hezbollah, in turn, stepped up criticism of Gulf states and hosted conferences for domestic opponents of the monarchies.

Meanwhile, the cabinet is expected to hold its first meeting in more than three months on Monday to discuss a draft budget it hopes will ease financial pressures and quell public anger.

"If each one of them donated a small amount of their wealth to the poor, there would be no poor in Lebanon," said Shadi Ali Hamoud, 39, after returning home to his family from work in a restaurant kitchen. "Look at the fridge, it's empty."