Editor’s Note: This article was completed in November of 2019. The delay in publishing was due to factors outside of the writer’s control.
On a Sunday night in the midst of midterm season at Brown University, one can expect nearly every student on campus to be holed up in a library, writing papers, flipping through flashcards, or completing problem sets. Yet, students like Kyra Haddad and Laeticia Cherfan could be found partaking in a far different activity on October 22. The two Lebanese first-years joined 200 others in Boston in a rally supporting the protests happening in Lebanon in response to a proposed tax on calls made using internet messaging services like WhatsApp, Facebook Messenger, and FaceTime.
Laeticia, like other youth in Lebanon and across the diaspora, has spent the last two months constantly checking updates as protests have continued for the eighth week despite the reform packages passed and the resignation of the Prime Minister, Saad Hariri. She echoed the popular protest chant heard across Lebanon, “Al-shab yurid isqat an-nizam” (we demand the downfall of the regime), in explaining that the people want “everything to change… no politician can stay.” Yet while the demands of the protesters for systematic change is clear, the reasons for why the outcry has initially occurred and continued are multifaceted and merit a much deeper investigation.
The first reports in mid-October attributed the riots to anger at taxation. Then, the analysis quickly shifted to a number of other causes: the political sectarian system that divides the government by religion, the failure of the government to deliver services like electricity, and, according to the Lebanese Al-Manar TV, even the American thriller ‘Joker.’ While these grievances, especially the immediate outrage over the WhatsApp tax, were sparks to get people out on the street, it is anger at the larger economic system that stifles upward mobility and entrenches poverty while enriching political elites that have sustained large protests for the past month.
Overall, Lebanon’s economic system produces a society where political elites and the rich live extremely comfortably while most people have immense struggles in their daily life. This is manufactured by an inadequate banking system, a lack of government funds, and an absence of social services.
Lebanon deals with an extremely high level of income inequality. The top 1 percent of Lebanese receive nearly 25 percent of the national income and the richest 0.1 percent of Lebanon currently earn about the same income as the bottom 50 percent. The national economy is dominated by the ultra-rich in a system where 3,000 people, approximately the number of students at Brown’s graduate school, make as much money as 1.5 million people.
Economic inequality in Lebanon stems from institutions, like the banks, that benefit the politically powerful. Lebanese banks have an “extraordinary” influence on the economy and politics, and they have close ties to the political leaders of the country. Many former politicians hold Board of Directors’ membership in commercial banks, and one 2016 study from the Economic Research Forum showed that “18 out of the 20 banks have major shareholders linked to political elites, and 43 percent of assets in the sector could be attributed to political control.” These same wealthy politicians deposit their money into the banks with which they have close connections, and the banks then lend to the state (which excessively borrows from banks) at high-interest rates. The profits earned from interest flows straight back to the few elites owning deposits— only about one percent of all deposit accounts in Lebanon hold half of the total deposits. This system, created and enforced by the government and bank policies, leaves the ruling class with profits. Borrowing with high-interest rates, however, leaves the state in debt and without funds to invest in the Lebanese economy or support social welfare, which has led to economic stagnation for the working class.
The close relationship between the banks and politicians has led to widespread accusations of corruption by protestors. According to Laeticia, “politicians will find any way to take money from the poor,” be it through taxes, unfair institutions, or illegal activity. Transparency International ranked Lebanon in 2018 at 138 on a corruption index of 180 countries. Certain legal policies, like laws that do not require political parties and candidates to disclose campaign finances or donors, allow for greater malpractice; others, like bribery and nepotism, persist under the surface of the public sector. Money that ends up in politicians’ pockets is lost from the economy as a whole, and corruption is “considered a major reason for continuing poverty and is an obstacle to development and prosperity.” Although an anti-corruption ministry was formed in 2016, it was abolished by the new administration which took power this January.
The spending of government officials came under intense scrutiny in September, when Prime Minister Hariri was discovered to have sent $16 million to a South African model who he was accused of having an affair with, and in early November, when former prime minister Fouad Siniora was questioned by a state prosecutor over his spending of $11 billion of unaccounted state funds while he was in power.
As a result of mismanaged funds, the government of Lebanon struggles to find enough money to pay for basic services like garbage collection or electricity. This has also led to intense borrowing, making Lebanon the country with the third-highest level of public debt in the world. Servicing this debt is now the largest source of state spending. With a lack of funds, public services are usually not well funded in Lebanon, and the little money they receive is often lost in administrative waste.
There is little money left over to aid many in the economy who are struggling. According to the World Bank, over a quarter of the population of Lebanon lives under the poverty line, which is valued at $4 per person per day. The poor in Lebanon, who cannot afford an education for their children or health care, see a government that enriches itself by taxing the economically less well off. . While the wealth share of the top 1 percent has increased in Lebanon, the livelihoods of average citizens have sunk along with real GDP growth, which is valued at only 0.2 percent.
Additionally, economic prospects for the youth have been grim for years. Many of those filling Lebanon’s streets in protest are young people, driven by their anger at not being able to work. 37 percent of individuals under 35 are unemployed, so many are forced to leave Lebanon in order to get a job. This “brain drain” further hurts the economy by depriving Lebanon of a workforce and individuals who can care for their elders. Many of the students on the streets say they have not worked in years, even though they have multiple degrees from Lebanese universities.
The government of Lebanon has thus far instituted some reforms. They include cutting government salaries, issuing no new taxes in 2020, and increasing aid for poor families. Prime Minister Hariri even promised his resignation. But for most protesters, including Laeticia, this is nowhere near enough. For her, the protests would not have succeeded if “any politician can stay” in office. She and many others demand that all members of the political elite be “swept away” and replaced with new leaders and a new constitution. Crucially, these changes must come with systematic economic reform, including an overhaul of the banking system, mechanisms to investigate and prosecute corruption, and strong public aid packages that especially target the youth.
With those changes, Lebanon could become a place its residents love and in which they want to live, instead of driving students away to university because of their disgust at the failures of their government. Calls for this new Lebanon, devoid of any remnants of the old government, are loud and nonstop, ringing everywhere from the streets of Beirut to the halls of Brown.
Photo: Image via Flickr (Aslan Media)