Collapse: Inside Lebanon’s Worst Economic Meltdown in More Than a Century

The small Mediterranean country is in the throes of a financial crisis that the World Bank has said could rank among the world’s worst since the mid-1800s.,

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Collapse: Inside Lebanon’s Worst Economic Meltdown in More Than a Century

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TRIPOLI, Lebanon — Rania Mustafa’s living room recalls a not-so-distant past, when the modest salary of a security guard in Lebanon could buy an air-conditioner, plush furniture and a flat-screen TV.

But as the country’s economic crisis worsened, she lost her job and watched her savings evaporate. Now, she plans to sell her furniture to pay the rent and struggles to afford food, much less electricity or a dentist to fix her 10-year-old daughter’s broken molar.

For dinner on a recent night, lit by a single cellphone, the family shared thin potato sandwiches donated by a neighbor. The girl chewed gingerly on one side of her mouth to avoid her damaged tooth.

“I have no idea how we’ll continue,” said Ms. Mustafa, 40, at home in Tripoli, Lebanon’s second-largest city, after Beirut.

Lebanon, a small Mediterranean country still haunted by a 15-year civil war that ended in 1990, is in the throes of a financial collapse that the World Bank has said could rank among the world’s worst since the mid-1800s. It is closing like a vise on families whose money has plummeted in value while the cost of nearly everything has skyrocketed.

Since fall 2019, the Lebanese pound has lost 90 percent of its value, and annual inflation in 2020 was 84.9 percent. As of June, prices of consumer goods had nearly quadrupled in the previous two years, according to government statistics. The huge explosion one year ago in the port of Beirut, which killed more than 200 people and left a large swath of the capital in shambles, only added to the desperation.

But this crisis was long in the making, and there is little relief in sight.

Years of corruption and bad policies have left the state deeply in debt and the central bank unable to keep propping up the currency, as it had for decades, because of a drop in foreign cash flows into the country. Now, the bottom has fallen out of the economy, leaving shortages of food, fuel and medicine.

All but the wealthiest Lebanese have cut meat from their diets and wait in long lines to fuel their cars, sweating through sweltering summer nights because of extended power cuts.

ImageA woman with a single light on her balcony in an otherwise dark and impoverished neighborhood in the northern Lebanese city of Tripoli last month.
A woman with a single light on her balcony in an otherwise dark and impoverished neighborhood in the northern Lebanese city of Tripoli last month.
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Mustafa Nabo, a tailor from Syria who lives in Beirut, used to work long days on his electric sewing machine, but he can’t afford the supplemental power from a generator anymore.
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Spots of light in a Tripoli neighborhood indicate who can still afford to pay for private electricity generation.

The country has long endured electricity shortages, a legacy of a state that has failed to ensure basic services. To cover the gaps left by the state power supply, residents rely on privately owned, diesel-powered generators.

But the currency collapse has undermined that patchwork system.

As imported fuel has gotten more expensive, power cuts from the grid have stretched from a few hours a day to as long as 23 hours. So demand for power from generators has risen, along with the cost of the fuel to run them.

The resulting price hike has turned a utility essential for business, health and comfort into a luxury many families can afford only in limited quantities, if at all.

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Private electricity distribution wires in Beirut. A utility essential for business, health and comfort has turned into a luxury many families can afford only in limited quantities, if at all.
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Working to maintain one of six large generators in a residential building in Beirut last month.
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A tangle of electrical wiring that sends power to different sections of a neighborhood in Beirut on the wall of a private electricity-generating operation.

Mustafa Nabo, from Syria, used to work long days on his electric sewing machine, powered by the grid and supplemental power from a generator.

Now, the price for generated power is nearly 10 times what it was before the crisis began, so he rushes to work as much as he can during the two hours he gets power from the grid. But less work means less money, and he has cut back on food.

“It is better to bring food than to pay for electricity,” Mr. Nabo said.

Across Lebanon, the fuel shortages have led to long lines at gas stations, where drivers wait for hours to buy only a few gallons, or none at all if the station runs out.

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Lining up to purchase gas at a station near Beirut last month. Drivers often wait for hours just to buy a few gallons.
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A gas station near Beirut last month. The bottom has fallen out of the economy, leaving shortages of food, fuel and medicine.
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Pushing a car in a line for gas near Beirut last month. Shortages mean fuel often runs out, rendering hourslong waits futile.

The supply of medicines has also become unreliable. The state is supposed to subsidize imports, but the crisis has strained that system, too.

At a pharmacy in Tripoli, a line stretched from the sidewalk to the cash register, where anxious shoppers sought medicines that are now scarce after long being easy to obtain, such as pain killers and blood pressure medications. Other products had disappeared altogether, such as drugs to treat depression.

One shopper, Wafa Khaled, cursed the government after failing to find insulin for her mother and paying five times as much as she would have two years ago for baby food and seven times as much for formula.

“The best thing for us would be for some foreign country to come occupy us so we could have electricity, water and security,” she said.

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A crowded pharmacy in Tripoli last month where customers sought previously common medicines that have now become scarce.
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A line stretched out to the sidewalk at a Tripoli pharmacy, one of the few still open.
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The emergency ward at the American University of Beirut Medical Center. Reduced salaries and the impact of Covid-19 have contributed to an exodus of doctors and nurses.

The crisis could do lasting damage to three sectors that have historically made Lebanon stand out in the Arab world.

In a country once billed as the Switzerland of the Middle East, the banks are largely insolvent. Eduction has suffered a blow as teachers and professors seek better opportunities abroad. And health care has deteriorated as reduced salaries have caused an exodus of doctors and nurses.

The emergency ward at the American University of Beirut Medical Center, among the country’s best, has gone to seven physicians, from 12, and lost more than half of its 65 nurses since July 2020, said Eveline Hitti, the head of the department.

They were driven out by waves of Covid-19, declining salaries and the explosion in the Beirut port last year, which flooded the ward with casualties.

“You ask yourself, why should I survive this?” said Rima Jabbour, the head nurse.

Now, Covid cases are increasing, as are food poisonings caused by poor refrigeration and alcohol overdoses.

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The ruins of cars and a gas station after the Aug. 4, 2020, explosion at the Beirut port.
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A protester draped in the Lebanese flag who took part in a demonstration in Beirut last month against the government’s handling of the financial crisis.
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Buildings in Beirut that were damaged in the port explosion remain derelict and abandoned a year after the huge blast.

The country’s political leaders have failed to slow the economic meltdown.

Officials have hampered the investigation into the port explosion, and a billionaire telecoms tycoon, Najib Mikati, is currently the third politician to try to form a government since the last cabinet resigned after the blast.

Mustafa Allouch, the deputy head of the Future Movement, a prominent political party, said, like many other Lebanese, that he feared that the political system, intended to share power between a range of sects, was incapable of addressing the country’s problems.

“I don’t think it will work anymore,” he said. “We have to look for another system, but I don’t know what it is.”

His greatest fear was “blind violence” born out of desperation and rage.

“Looting, shooting, assaults on homes and small shops,” he said. “Why it hasn’t happened by now, I don’t know.”

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A chef prepared meals at a charity kitchen in Tripoli last month.
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Lining up for food at the charity kitchen. One Lebanese politician said that his greatest fear was “blind violence” born out of desperation and rage. “Why it hasn’t happened by now, I don’t know,” he said.
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Many of the newcomers to the charity kitchen represent a new kind of poor: soldiers, bank employees and civil servants whose salaries have devalued.

The crisis has hit the poor hardest.

Five days a week, scores of people line up for free meals from a charity kitchen in Tripoli, some equipped with cut off shampoo bottles to carry their food because they can’t afford regular containers.

Robert Ayoub, the project’s head, said demand is going up, donations from inside Lebanon are going down, and the newcomers represent a new kind of poor: soldiers, bank employees and civil servants whose salaries have lost the bulk of their value.

In line on a recent day were a laborer who had walked an hour from home because he couldn’t afford transportation; a brick layer whose work had dried up; and Dunia Shehadeh, an unemployed housekeeper who picked up a tub of pasta and lentil soup for her husband and three children.

“This will hardly be enough for them,” she said.

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The graffitied facade of Lebanon’s central bank in Beirut. Since fall 2019, the Lebanese pound has lost 90 percent of its value and annual inflation in 2020 was 84.9 percent.
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The gutted and abandoned interior of Jamal Trust Bank in Tripoli, seen through a shattered window. Lenders in Lebanon are largely insolvent.
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Sifting through trash on a Beirut street corner.

The country’s downward spiral has set off a new wave of migration, as Lebanese with foreign passports and marketable skills seek better fortune abroad.

“I can’t live in this place, and I don’t want to live in this place,” said Layal Azzam, 39, before catching a flight to Saudi Arabia from Beirut’s international airport.

She and her husband had returned to Lebanon from abroad a few years ago and invested $50,000 in a business. But she said that it had failed and that she worried they would struggle to find care if their children got sick.

“There’s no electricity. They could cut the water. Prices are high. Even if someone sends you money from abroad, it doesn’t last,” she said. “There are too many crises.”

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Bidding farewell at Beirut’s international airport last month. Lebanon’s downward spiral has set off a new wave of migration, as those with foreign passports and marketable skills seek better fortune abroad.

Drone footage by David Enders and Bryan Denton. Hwaida Saad contributed reporting.

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