Lebanon Uprising: Some More (Tentative) Thoughts on the Currency Crisis

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Leb Lira

One of the lessons of the currency crisis is that if you’re going to peg your currency, you need to structure your economy in such a way to (nearly) guarantee that you have net positive inflows of foreign currency into the country year on year in order to have a long-term sustainable economic system. To be clear, this is true even if Lebanon wasn’t running a “Ponzi-like” scheme, where new $ from overseas are needed to continuously meet old $ liabilities (in order to, for e.g., meet growth in $ deposits because of interest on them; see previous post on Lebanon currency crisis).

Why is this true? It’s true because in the opposite scenario (where you have net positive outflows, because, for example, of a large structural deficit in your balance of trade), you end up drawing down your foreign reserves continuously, which leads to your eventual inability to defend the peg and therefore, a forced devaluation of the currency.

You can try maintaining positive $ inflows by a combination of:

(1) Reducing imports
(2) Increasing exports
(3) Attracting foreign currency via alternative means (e.g. foreign investment, tourism, remittances).

For the longest time, Lebanon relied on (3) to make the “system work”, given that it maintained a large structural trade deficit (i.e. more imports than exports). And for two decades, it worked. Until now. The big problem with relying on (3) is the large exogenous risk (i.e. risk from outside your system) you take since something outside your system can topple your system by significantly reducing these alternative inflows. In the case of Lebanon, the Syria War in 2011 and the Oil Crisis in 2016 significantly reduced alternative foreign currency inflow by reducing tourism, investments and remittances, which precipitated the $ crisis.

So perhaps the right focus then is on (1) and/or (2) if we want to try and minimize some of that exposure. To be clear, that would not completely eliminate exogenous risk since you would still be relying on others to buy your exports, but with enough diversification and trade partners, coupled with a reduction of imports, you would be able to mitigate against a large chunk of that risk. Now can the peg be maintained while nurturing a robust export economy and/or a structural reduction in imports (via for e.g. self-sufficiency) to maintain a trade surplus? Perhaps, but the peg is currently artificially inflating the value of the LL against the $, which hurts the country’s ability to develop an export economy and encourages excess imports. Why? Because suppose, based on fundamentals, that the “true” conversion rate is 1 $ = 3000 LL. Given that we pay for imports in $ and foreigners pay us for our exports in LL, and given that the pegged conversion is 1 $ = 1500 LL, imports are currently costing us half as many LL to buy as they should (based on the “true” conversion rate, thus encouraging excess imports and increasing $ out of country), and exports are currently costing foreigners twice as many $ as they should, making us less competitive (thus decreasing the amount of $ into the country). So maintaining the current peg while trying to develop a robust export economy and/or reducing our imports is like running into a head-wind.

It should be noted that we may be able to develop an export economy and reduce imports while maintaining the current peg if we, for example, ever discover commercially viable quantities of natural gas offshore, which would in theory (1) increase our $ via our government take (from, for e.g. taxes and royalties on the produced gas that the International Oil Companies (IOCs) would have to pay us) (2) replace at least some of our imports like heavy fuel oil for power generation (thus reducing $ exiting country to buy fuel) (3) potentially generate export revenues (thus increasing $ entering country), depending on how our contracts with the IOCs are structured. However, there are significant hurdles to “get there” in the near to medium term for a variety of reasons that I won’t get into right now, which means this will not solve the problem any time soon (I may address this in a separate post).

So maybe we should think about giving up on the peg, and letting the currency float? On the plus side, this would set the value of the LL to its appropriate value based on the country’s fundamentals, which, based on today’s Lebanese economy, would weaken the LL versus the $ compared to today. This, in turn, would stimulate the export economy over time and naturally limit imports, since our products would be cheaper to buy for foreigners, and their products would be more expensive for us to buy. On the downside, this would cause significant short term pain as the purchasing power of the average Lebanese citizen decreases, and measures would need to be put in place to mitigate against that, especially for the most vulnerable among the population. This is, no doubt, a very sensitive subject that would require careful management, but devaluation seems to be happening already in parallel exchange markets at your local money changer (~2000 LL per $ now), except that it’s being done haphazardly while Riad Salameh pretends all is fine and the peg is intact.

These are just some tentative thoughts, but we need to have these types of conversations to be able to participate in shaping the future economy of the country.

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Lebanon Uprising (Days 39 and 40): Attacks Escalate Against Protesters

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Nov 24 Ring

Soldiers formed a barrier between supporters of Amal / Hizballah and anti-government demonstrators on the Ring Bridge [Mohamed Azakir/Reuters]

Some very concerning scenes over the past 36 hours in Lebanon. On Day 39 (Nov 24) of the uprising, we saw significant escalation by Amal / Hizballah supporters against protesters on the Ring Road (near downtown Beirut), and on Day 40 (Nov 25), we also saw significant violence by Amal supporters against protesters in Tyre (South Lebanon).

However, most concerning were the sectarian slogans that were being shouted out during and after the Ring Road battles by Hizballah / Amal supporters at the Ring, the anti-Dahieh chants heard in response to the violence on the Ring by protesters opposed to Hizballah in Ain el Remmeneh, and some dark references by Hizballah / Amal supporters the following day during Hussein Chalhoub’s vigil to another May 7 2008 (see videos below). The latter is the date of the infamous street battles between a Hizballah-led coalition of fighters and pro-Hariri/government fighters after the Lebanese government threatened to dismantle Hizballah’s telecommunications network, which Hizballah claimed was essential to its fight against Israel and which the government claimed was being used by Hizballah to spy on/target opponents; the one week battle that ensued saw the take-over of Beirut by Hizballah and its allies, the death and injuries of dozens of people and brought back fears of civil war.

Before I provide additional details, I should note that, similar to the events of October 29, some people are denying that Hizballah supporters were involved in the events on the Ring Road, and that despite Hizballah flags, chants in support of Nasrallah and so on, that these were all Amal supporters mimicking Hizballah to sow confusion. Although that may have been true on October 29, and some of the thugs who were identified then were indeed Amal supporters from Khandaq al Ghamiq, the explanation this time is starting to wear thin. If this tactic is again being used, then unless Hizballah explicitly denies their involvement in events over the past 36 hours, and explicitly distance themselves from what happened and categorically puts the blame solely on Amal, then they are complicit in these events (either tacitly if they were not involved but remain silent or explicitly if they did indeed participate).

Another note regards the supposed presence of some Lebanese Forces (LF) supporters among the protesters (a claim made by the Hizballah / Amal side). We all know the LF is trying to “ride the wave”, but it’s impossible to know the ID of every single protester. What I can say is that I didn’t hear chants in support of Geagea in the videos I saw or any evidence that there was a significant LF presence among protesters, although of course, there could have been some.

Finally, there’s this notion that protesters are “asking for it” when they swear against political leaders and block roads. Protesters have the right to peacefully block roads as a pressure tactic against the government, and the UN rapporteur clearly stated that the free flow of traffic doesn’t necessarily take precedence over freedom of assembly, including blocking roads. And frankly, if the problem really was about blocking roads preventing people from going to work as is claimed, then why did the Amal / Hizballah supporters go to Riad el Solh square to destroy the tents there? Why did Amal attack protesters in ‘Alam square in Tyre? Clearly, there were no roads being blocked in the squares. And of course, it should go without saying that swearing is no justification for physical assault.

With that as a preface, this all began on the night of Nov 24 on the Ring road/bridge, where protesters blocked the road by around 9 PM. The details of what happened after and what precipitated the pandemonium that ensued were documented in detail by Timour Azhari, a reporter for the (Hariri-owned) Daily Star, who was there the entire night and who wrote the attached dispatch for the Daily Star (which he helpfully downloaded and shared given that the article was behind a paywall):

Timour Azhari Nov 24_1

Timour Azhari Nov 24_2

Azhari also captured on video several intense scenes that transpired throughout the night between Hizballah /Amal supporters and protesters:

Nov 24 2019 (Ring Road, Beirut) – “Incredible scenes as protesters who fought back Hezbollah and Amal supporters return to a jubilant crowd. They drag a moped seized as a trophy and set in on fire in the middle of the road”

Nov 24 2019 (Ring Road, Beirut) –“Massive amounts of tear gas used on peaceful protesters”.

Below is some additional footage (not from Azhari) from the night of Nov 24 2019:

Nov 24 2019 – Amal / Hizballah supporters throw rocks at government security forces (not my video) 

Nov 24 2019 (Martyr’s Square, Beirut)- Amal / Hizballah supporters destroy tents (not my video)

Nov 24 2019 – LBC reporter with Amal / Hizballah supporters who threaten anyone who dares curse at Nasrallah (not my video)

Nov 24 2019 (Ain el Remmeneh) – Protesters march in the streets cursing Nasrallah and Dahieh.

Nov 25 2019 (Riad Al Solh Square, Beirut) – Aftermath of destruction in Riad Al Solh square (not my video)

Another development worth mentioning happened early in the morning of Nov 25, when 2 people were killed in a car accident, supposedly because of a protester road block. That turned out to be false, per video footage that clearly shows that the army, not the protesters, had set up the barrier that caused the unfortunate and tragic deaths (see videos in this post). The reason why this is relevant is because these 2 individuals (Hussein Chalhoub and his sister in law Sanaa el Jundi) were Shiite and were claimed as martyrs by Hizballah / Amal supporters, who were present at a vigil later that day in Dahieh (Beirut suburbs), and the narrative being pushed by the Hizballah / Amal side is that protesters were responsible for their deaths because of the roadblock, thus further increasing tensions (on a side note, my understanding from sources is that Hussein Chalhoub actually belonged to the Arab Socialist Action Party of George Habash at some point, and not Hizballah or Amal, but if that’s wrong, please let me know).

Nov 25 2019 (Barja) – Video of the tragic scene that took the lives of Hussein Chalhoub and Sanaa el Jundi (not my video)

Nov 25 2019 (Barja) – Clear evidence that the army erected the road blocks, not protesters (not my video)

Nov 25 2019 – Pro Amal / Hizballah vigil held for Hussein Chalhoub and Sanaa el Jundi in Dahieh. Sectarian chants and reference to infamous May 7 2008 event (not my video)

The third incident worth mentioning is the situation in Tyre South Lebanon, where protesters braved continued thuggery by the Amal movement (and Hizballah?) who encircled them and burned down tents and beat people up. The Lebanese army had to step in to protect the protesters from further abuse:

Nov 25 2019 (‘Alam Square Tyre) – “There’s no media coverage whatsoever on what’s going on in Tyre. Haraket Amal thugs attacked protestors, broke their tents, and plastered the photo of Nabih Berri in Sahat Al Alam so the Army started shooting to scare them away. PLEASE SHARE THIS. They’re even assaulting women”.

Nov 25 2019 (‘Alam square, Tyre) – Voice of woman protester saying that they are being attacked by Hizballah and Amal supporters and that the Army is protecting them (not my video)

Nov 25 2019 (‘Alam Square, Tyre) – Amal thugs burn down tents in ‘Alam square (Tyre), with the Army firing bullets in the air to disperse them (not my video)

Nov 25 2019 (‘Alam square, Tyre) – Amal thugs declare the square to be Nabih Berri’s property

This is all quite unfortunate. To make matters worse, the economic situation is deteriorating with no end in sight (for e.g., I’m now hearing of informal rates of conversion of 1 USD to 2000 LL at various money exchanges) while our oblivious and corrupt politicians are still bickering about the formation of a new government. A case of fiddling while Rome burns. I was in the process of writing a few posts to further discuss the economic situation in the country, but had to put those on hold because of events over the past couple of days. More to come on that soon, and I sincerely hope we see a calming of the situation as soon as possible.

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Lebanon Uprising: The Currency Crisis

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I’ve been trying to better understand the current economic crisis in Lebanon, and this post is my attempt to describe my understanding of the situation. Although this is far from my area of expertise, this topic is important enough that I wanted to make the effort to understand it in order to follow discussions among experts and to form a (hopefully correct) opinion. Having said that, feel free to suggest improvements / corrections as I may have misunderstood certain aspects of the problem.

As a preface, I’ll note that my understanding has, for the most part, been mostly influenced by Toufic Gaspard (former advisor to Lebanese Minister of Finance) and Dan Azzi (former CEO of Standard Chartered Bank in Lebanon), as I found their (financial) arguments to be more convincing than their opposite counter-parts. Nassim Taleb (of Black Swan fame) seems to also be in broad agreement with them about the fundamentals (though they may differ on the details). I’ve provided several links at the bottom of the post to articles that helped me form my opinions.

Although the title of this post reads “Lebanon’s Currency Crisis”, Lebanon is actually going through multiple crises:

(1) A currency crisis (specifically a US Dollar crisis; I will use $ to refer to US Dollars going forward)

(2) A debt crisis

(3) An economic crisis (lack of jobs, economic contraction etc).

The focus of this post is on the currency crisis, although I plan on discussing the other crises in future posts. The crux of the currency crisis is this: Lebanon has been running a $ “Ponzi-like” scheme, which depends on a continuous flow of new $ entering the country from overseas to make good on old $ liabilities inside the country (for e.g. customer deposits at banks in $). When the inflow of fresh overseas $ significantly reduces over an extended period of time while liabilities in $ continue to grow (for e.g. because of increasingly generous interest on $ deposited, which compound over time), it becomes harder and harder to meet $ obligations over time. As such, when enough depositors start knocking on bank doors demanding the $ in their bank accounts and there aren’t enough physical $ (i.e. “real $”) to go around to meet all obligations – and importantly, your central bank can’t act as a lender of last resort by “printing” $ (i.e. Banque du Liban is not the Fed) – you have a currency crisis. This may all sound surreal or incomprehensible. To some extent, it is surreal, although I hope to make it less incomprehensible by working through the details in this post.

What is the evidence for the claim above? Answer: Banque du Liban’s (BDL) balance sheet (see comments). Indeed, it is highly likely that BDL’s $ liabilities significantly exceed its $ assets (based on educated estimates of $ assets and liabilities on its balance sheet, which doesn’t split Lebanese Lira (LL) from $). This means the difference between the two can be interpreted as “virtual $”, in the sense of not actually being backed by “real $” or actual physical $ (I call these “virtual $” and not “fake $”, in the sense that these $ can be transferred from one bank to another within Lebanon, but good luck moving these $ out of the country, as people outside of Lebanon want real “physical $”; Dan Azzi calls these virtual $ “Lebanese dollars”).

If you look at the Central Bank’s balance sheet, you’ll notice Foreign assets of ~LL 56 trillion (mostly cash $ and liquid US treasuries), and liabilities in the form of financial sector deposits of LL 167 trillion (important note: BDL reports everything in LL, even though those numbers include $; they simply use the official conversion of 1507.5 LL to $ when reporting their numbers on the balance sheet). Given the lack of LL vs $ split on the liabilities side, one has to make some assumptions on that LL vs $ split. The best estimate I’ve seen is that ~70% of those deposits are in $ (in fact, Riah Salameh himself mentioned a “dollarization” percentage of 70% on the BDL website). If we take that split, this means that there is ~$37 billion of physical $ on BDL’s balance sheet (excluding gold), and about ~$77 billion of liabilities in the form of deposits (i.e. LL 167 trillion / 1507.5 * 0.7). This means that there is a difference of 40 billion $ between foreign assets and liabilities (i.e. there is ~40 billion “virtual $”). Given that these $ deposits (on the liabilities side) are actually customer deposits that commercial banks have deposited at the Central Bank (we’ll talk about that below), if you follow this logic to its bitter end, this implies that people’s $ accounts in their banks aren’t fully backed by real physical US $ (although some portion is, of course).

Now for people familiar with fractional reserve banking, this is not a big deal, right? Afterall, every bank in the world operates in similar fashion. That is true. Except for one very important difference: their centrals banks own the currency! BDL cannot act as a $ lender of last resort because it can’t print physical $, which means if everyone wanted to withdraw their $ at the same time, banks could not possibly give everyone their full $ deposits (which is why you keep on hearing from the corrupt political class that all is fine as long as you don’t withdraw your $ from your bank accounts). I should mention that the aforementioned is partially mitigated by the fact that many $ deposits are “frozen” in longer-term deals (so 1 or 3 or 5 year deals where $ cannot be withdrawn if the accounts are to receive the generous interest rates from the banks), but this doesn’t change the basic “virtual $” math (but does have an impact on available liquidity).

How did we get into this mess?

It’s essential to understand that the Lebanese system is entirely reliant on fresh $ flowing into the country from overseas (via remittances, investments, tourism and so on) in order for the system to “work”. When the inflow of these $ decreases, big problems arise, because of 3 reasons:

(a) The structural trade imbalance that Lebanon carries, with imports significantly exceeding exports

(b) The interest (and principle) paid to people outside of Lebanon on foreign-currency denominated debt (like Eurobonds, which unlike the name implies, are typically $ denominated)

(c) The desire by the Central Bank to maintain the official peg of the LL to the $, which has officially been pegged at 1507.5 LL to 1 $ (I believe that the band is actually between 1500 and 1515).

The trade imbalance is a result of Lebanon importing much more than it exports, which results in significant $ exiting the country (the most recent numbers suggest a trade imbalance of negative $14 to $15 billion). Why? Imports are typically paid in $ (i.e. importers must pay suppliers in $, especially for fuel, wheat and medicine), so importers who get paid locally in LL for their imported goods have to convert their LL into $, which they use to import those goods (resulting in an outflow of $ outside the country). Exports are typically in LL, which means overseas buyers must convert their $ into LL to purchase these exports (resulting in a new inflow of $). If the trade balance is negative, then more $ exit the country than $ enter the country (i.e. there is a net outflow of $ out of the country), which means new $ need to be sourced from outside the country in order for Lebanon to continue carrying a structural trade imbalance.

Foreign-denominated debt (such as Eurobonds) is issued by Lebanon in exchange for foreign currency (typically $), which (temporarily) increases $ reserves. Although most of this debt is owned by Lebanese banks, some portion of it is owned by people outside of Lebanon, which implies that the interest paid to them in $ exits the country and decreases $ reserves. Regarding the capital that needs to be paid back at maturity, typically, governments will issue new debt to pay for old debt, thus netting that out. It should, however, be mentioned that if the market believes that the country will default (which would be reflected by very high interest rates on any new bond offering), then the Lebanese government will be reluctant to issue new Eurobonds because it would not be willing to pay the extremely high interest on them; this means the country is essentially “locked out” of capital markets. In that scenario, the government will then also have to pay back the capital on maturing bonds from their $ reserves since it can’t issue new bonds to pay for maturing bonds, thus causing additional $ to leave the country to meet those maturing Eurobonds held by foreigners.

Finally, and importantly, the Central Bank in Lebanon has made it its primary missions to protect the peg at all costs. In order to do so, it needs to maintain a significant $ reserve to use when events necessitate either buying $ (and selling LL) or selling $ (and buying LL). So, for example, in the case of a “negative event” where people scramble to convert LL to $, this increases demand for $, and decreases demand for LL, which should theoretically strengthen the $ against the LL if the currency was floated. However, the currency is pegged, and to maintain the peg, the Central Bank has to buy up LL and sell $, which means this operation is costing the Central Bank precious $ that reduce its $ reserves (note that the Central Bank does not publish the $ cost of such operations, but it needs to replenish its $ reserves after such negative events).

Where do these replenishing $ come from? Ultimately, they come from outside the country of course, since the Lebanese Central Bank can’t physically print $. The main outside source of these $ are investments, tourism, and remittances from the Lebanese diaspora (in 2008, remittances alone were an insane ~25% of GDP). Now in 2016, mostly because of the oil crisis in the Gulf (and the Yemen war), Gulf countries’ finances got hit hard and they started restructuring their economies, and remittances started to decrease into Lebanon as Lebanese expats living in Saudi, UAE etc lost their jobs or weren’t being paid (I’ve seen numbers suggesting that nearly half of remittances into Lebanon come from the GCC). This trend over the past several years has only worsened, and the numbers this year suggest that remittances will likely total only a couple of billion $ (far lower than historical averages).

Of course, the other two sources of $ inflows (investments and tourism) have also been hit for several years in a row, mostly because of the geo-political situation in the region (the Syria war and decisions by Gulf countries to limit tourism to Lebanon because of security and political reasons).

With $ inflows reducing over time, the Central Bank started getting desperate as it needed to attract fresh $ to continue maintaining the peg and the country needed $ to plug the large trade imbalance. So in 2016, it engaged in the infamous financial engineering operations that have rightfully received much criticism. Without getting into details, the Central Bank essentially offered up massive returns (in LL) to commercial banks to deposit their customers’ $ at the Central Bank (I’ve seen estimates of 17% return or higher offered by the Central Bank to commercial banks). This incentivized commercial banks to increase $ interest on $ deposits to attract additional $ so that they could deposit those new $ at the Central Bank to earn that high interest (the interest on $ deposits at commercial banks would of course be set at less than the interest they would receive from the Central bank, with the delta being bank profit). These deposited $ would then be used by the Central Bank to continue protecting the peg and ultimately, plugging the trade imbalance. Commercial banks made lots of money, and depositors were receiving very high $ interest on their $ deposits. Everyone should be happy, right? Wrong. Unless you can print physical $, the amount of physical $ in the country is entirely dependent on the existing $ reserves in the country plus the physical $ inflow minus the physical $ outflow. So although the accounts, on paper, were increasing in $ value because of the generous interest being paid on them, they weren’t entirely backed by equivalent physical $ because the rate of increase of $ in accounts was higher than fresh physical $ net inflow. With higher and higher interests needed over time to continue attracting fresh $ from overseas, and lower and lower amounts of fresh $ making their way into Lebanon because of the aforementioned reasons, the amount of “virtual $” continued to grow over time. And when enough people started demanding their $, there simply wasn’t enough physical $ to go around, thus the $ currency crisis.

Some references that I found useful:

Toufic Gaspard’s 2017 paper, which in retrospect, seems prophetic:

https://www.google.com/url?sa=t&source=web&rct=j…

Toufic Gaspard’s 2019 update:

http://www.maisondufutur.org/…/Lebanon-anatomy-of-a…

Fitch report that downgraded Lebanon’s credit rating even further:

https://www.fitchratings.com/site/pr/10086997

Several articles by Dan Azzi:

https://www.bloomberg.com/…/lebanon-s-richest-need-to…?

https://en.annahar.com/…/whats-next-for-the-lebanese…?

https://en.annahar.com/…/ye-shall-know-the-truth-and…

https://en.annahar.com/art…/amp/1057680/what-is-to-be-done?

https://en.annahar.com/…/the-devaluation-of-the…

https://en.annahar.com/article/amp/923966/zugzwang

https://en.annahar.com/…/dollars–the-latest-lebanese…

https://en.annahar.com/…/lebanons-rentier-economy-and…

Other articles:

https://www.middleeasteye.net/…/lebanon-economic-crisis…

https://www.bloomberg.com/…/lebanon-crisis-has…

https://www.google.com/…/1fd4b274-c7fjcf-11e9-a1f4…

https://www.lorientlejour.com/…/les-conditions-de-la…

https://www.google.com/…/lebanons-economy-has-long-been…

https://mobile.reuters.com/article/amp/idUSKBN1XN1ER

http://www.cadtm.org/spip.php?page=imprimer&id_article=12642

Lebanon Uprising: On Cursing

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No-cursing-1

One thing that I found refreshing during the beginning of the Lebanon uprising was the amount of cursing and insults being hurled at politicians. With a few exceptions, these have mostly ceased, and to my disappointment. There has been a clear attempt to “sanitize” the uprising across the board, from within the uprising unfortunately and clearly from without. This is quite unfortunate.

The focus on sanitizing the uprising is interesting to me, and for a variety of reasons. There’s no doubt that the negative view of cursing and insulting has always had a class dimension, as every language I’m familiar with typically “looks down” at people who curse. In Arabic, we have an expression that essentially rubbishes people who curse as “children of the streets”, and we were taught from a very young age to mind our language. It’s simply uncouth to curse in polite society.

People who enforce these social protocols during normal times have always irritated me to some extent, but they especially irritate me now as they tone-police those who have every right to curse the living shit out of politicians who have made their lives into living hell.

Cursing at these politicians is an extremely powerful expression of rage. It’s raw. It’s emotional. It’s authentic. And when deserved, it should not be bottled up. And these politicians deserve it. They deserve every single insult in the creative Lebanese cursing lexicon. They deserve to know that the majority of the people of Lebanon have no respect for them. That they spite them. That they hate them with a fiery passion that can only be expressed by insulting them in the most personal of ways.

And perhaps most importantly, cursing at these politicians is an authentic political statement, as you risk getting arrested, jailed or sued for defamation based on our nonsense laws on the books. Cursing at them explicitly signals to them that the wall of fear that they’ve erected for decades is crumbling. It sends them the message that we’re not afraid of you. That we don’t respect you or your supposed authority. And ultimately, that we are free of the psychological shackles you have imprisoned our minds in for so very long.

And so, with that, I’d like to direct this message to the entire Lebanese political class: get fucked.

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Lebanon Uprising (Day 21): Creative Civil Disobedience

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Pots Pans Lebanon

Women protesters in Beirut’s central Martyrs Square bang on pots and pans
(Patrick Baz, AFP)

Day 21 of the Lebanon uprising: probably one of the best days so far; certainly the most creative day in terms of civil disobedience campaigns across Lebanon.

The past few days were dominated by street scuffles between protesters trying to block roads and the army / security forces trying to keep them open. This generated quite a bit of debate about the cost/benefit trade off of this strategy, with some people criticizing the protesters for impacting their ability to work / go to school etc, and protesters arguing that this was needed to keep the pressure on the government to yield to demands as the President, 7 days after Hariri’s resignation, hadn’t even started the process of consulting with Parliament to select the new PM (who would then form a new government).

Today was different. Very few, if any, road closures, but dozens of smaller protests consisting of hundreds of people a piece popped up across the country, from the North to the South (I’ve seen estimates of about ~60 or so protests of hundreds of people per protest across all of Lebanon), along with a big group (thousands) consisting mostly of women congregating at Riad al Solh square by the end of the night for a candlelight vigil.

11/6/19 (Riad el Solh Square, Beirut) – Candlelight vigil

The stars of the protests today were the high school and university students across the country who skipped school and demonstrated all day (there was a call for students across the country to do so yesterday). It was heartening to see these young people engage in direct action to have a say about the future of the country. I’ve added a couple of videos to this post, but there are dozens and dozens of videos at one of the Facebook pages of the Revolution (Tripoli based; Arabic content for the most part)

Student protests Leb

11/6/2019 – Student Protests Across Lebanon

11/6/19 (Rachaya, in South East Lebanon) – Variety of different protests today: first protest in front of OGERO (telecom); next are student protests at various schools 

There were also many other interesting displays of civil disobedience, including protesting in front of major companies perceived to be corrupt (like Alfa, EDL, OGERO etc), protests in front of banks (I saw a few groups of protesters calling for the “downfall of the capitalist system”), banging on pots and pans as a symbol of support for the uprising, and an attempt to reclaim public spaces across Beirut (for example, the attempt to reclaim public beach property that was illegally built on by various private developers, with Eden Bay and its owner Wissam ‘Achour being particular targets of protester ire).

As a side note, for people who may not be familiar with the history, the banging of pots and pans dates back to 1916 in Lebanon during the great famine, when locusts devastated crops. People banged pots to chase away the locusts. As such, the banging of pots and pans is trying to draw a parallel between the state of hunger back then (because of the locusts), and the state of hunger today (because of the politicians), essentially making the analogy between locusts and politicians. It’s powerful symbolism.

11/6/19 (Riad Al Solh Square, Beirut) – Large group of female demonstrators banging on pots and pans while they hold candles

11/6/19 (Eden Bay) – Protesters calling Wissam Achour (Eden Bay developer) a thief

 

There’s talk tomorrow of a day of action to remove politicians’ pictures from walls and public property in Tripoli (and across Lebanon?), which, if you’ve ever been to Lebanon, you notice literally anywhere and everywhere, and discussions of different ways to continue putting pressure on the government to act.

As always, my love and admiration to everyone on the ground working hard to change the country for the better. You give us hope.

11/6/19 (Riad Al Solh Square, Beirut)

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Lebanon Uprising (Day 13): Hariri’s Resignation

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Hariri resignation

Saad Hariri presents his resignation amidst Lebanon uprising

Saad Hariri (our PM) finally resigned after 13 days because of pressure from the street. He supposedly offered to reshuffle the cabinet, with a recommendation to remove Gebran Bassil (Aoun’s son in law and the Minister of Foreign Affairs, a.k.a. Hela Hela Ho) but was essentially told it was a red line; thus the resignation. There are also rumors that MBS in Saudi forced Hariri’s hand and asked him to resign, although it’s unclear how true that is.

My understanding of what happens next according to our Constitution is that:

1) Our President (Michel Aoun) will accept Hariri’s resignation. Contrary to what people are suggesting online, Aoun doesn’t really have a choice to reject it; he will accept it per formality. The situation in 2017 when Hariri was kidnapped and beaten by the Saudi regime and resigned from Riyadh was different because it was under duress and therefore his resignation was rejected.

2) Aoun will then consult with parliament and then appoint a new Prime Minister.

3) The new PM will be responsible for putting together a new cabinet.

However, this whole process could take forever, and there are many outstanding questions:

1) Who will Aoun appoint as PM? All the “big names” (like Miqati, our former PM) are tainted by corruption and would surely be unacceptable to the protesters.

2) If they do find a PM, what will the cabinet look like? What names would be acceptable? Will this, at the end of the day, be a cosmetic exercise in musical chairs?

3) Will fresh Parliamentary elections eventually be called? If so, based on what electoral law?

4) How badly will the economy deteriorate in the meantime? There could be a serious currency crisis that could devalue the lira vs the dollar, and/or debt crisis on the horizon.

5) How will the Lebanese street react to all of this? One of the clearest demands of the uprising has been to get rid of the entire political class.

6) How will Hizballah react to this? Nasrallah is giving a speech on Friday, so TBD.

Finally, one note of caution regarding the unity of the uprising. There exists a counter-revolutionary current (see previous post) that could threaten the uprising. In fact, one of the threats to the protest movement at this point is a hijacking or a co-opting of the movement by “March 14”, with the resulting politicization of the uprising into the old March 14 vs March 8 camp, or alternatively, the development of a “Revolution vs Resistance” narrative by the pro-Hizballah camp that portrays the uprising in nefarious terms (with accusations of foreign funding etc; see previous post for more detailed discussion).

The protesters so far have been incredible and they’ve already accomplished so much. Here’s hoping that they remain united, steadfast and independent in pushing for their vision of a new Lebanon, free of the old and corrupt political class that has completely destroyed the country. We are with you!

لبنان_ينتفض

Lebanon Uprising (Day 13): More Attacks Against Protesters

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thug 2 riad al solh

10/29/19 (Riad Al Solh Square) – Widely shared photo of Amal thug threatening to beat defenseless woman (not my photo)

Thug Riad al solh

10/29/19 (Riad Al Solh Square) – Widely shared photo of Amal thug beating defenseless protester (not my photo)

Supporters of the Amal movement (pertaining to our corrupt speaker of the House Nabih Berri) absolutely wreaked havoc today in Beirut, more specifically beating up protesters on Ring Road who were blocking the bridge and then going down to Riad Solh and destroying the tents and encampments in the square, as well as beating more protesters present at the time. Some really ugly scenes there (see videos and pictures below), where thugs were intimidating and beating up everyone, including women. Pure unadulterated cowardice that has been met by revulsion across the country.

I should also mention that there’s some controversy around whether Hizballah supporters were among the thugs, or whether it was solely Amal. In the interest of fairness and integrity, it’s important to note that it’s not 100% clear at this point. Nasrallah asked his supporters to leave the streets on 10/25/19, and although we do know for sure that there were chants / expressions of support for Nasrallah and Hizballah coming from these people, some have said that Amal thugs have a history of using these chants to fool people into thinking they’re Hizballah (there have been some tensions between the organizations over the past year). If you have more information, please let me know, but regardless and at a minimum, we can say that Hizballah didn’t disapprove of the displays of violence today (whether they participated or not).

10/29/2019 (Ring Road, Beirut) – Thugs beating up on peaceful protesters  (not my video)

10/29/19 (Ring Road, Beirut) – Amal supporters cursing and throwing rocks at peaceful protesters, claiming they are supporters of the Resistance while chanting for Nabih Berri

10/29/19 (Ring Road, Beirut) – Thug expressing his support for Nasrallah (saying “anyone against Nasrallah should immediately leave”). Unknown whether this is a Hizballah supporter or an Amal supporter feigning support for Nasrallah, as discussed in post

10/29/19 (Riad Al Solh Square) – Thugs beating up protesters. A picture of the woman running away in this video while being threatened with a wood stick has already become an iconic picture that has been widely shared

10/29/2019 (Riad Al Solh Square) – Thug pushing down a defenseless woman from behind (not my video)

10/29/19 (Riad Al Solh Square) – Thugs destroying protester tents

Lebanon Uprising (Days 9,10,11): Some Observations

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Human chain by Lebanese protesters. (Photo: CNN)

A few observations regarding the last 3 days of the Lebanon uprising, which entered a new stage over the weekend from several different perspectives:

1) Nasrallah’s speech on Friday (10/25/19), where he rejected the downfall of the government and asked Hizballah’s supporters to exit the streets, was a turning point and somewhat of a setback; indeed, the power of the uprising from the beginning was its cross-sectarian people power, and some of that was unfortunately lost after the speech.

I say that because the Hizballah supporters who attacked protesters in Riad al Solh square on Friday were not the only ones to evacuate the square, but it also seems like a number of peaceful Hizballah sympathizers that had every reason to demonstrate along with everyone else about the wretched situation in the country heeded the call from Nasrallah to stop participating in the demos (after participating throughout the week). I say that based on a few lines of evidence (though I won’t pretend to be scientifically exact here), including the smaller crowds the following day after the speech and over the weekend in Riad al Solh square and Martyrs square (versus previous days), the online chatter among their supporters, and the general sway that Nasrallah has over his constituency. Regardless of what people think of Hizballah and of Nasrallah specifically, they / he commands the sympathy and loyalty of a large segment of the population, including large swaths of the poor and disenfranchised in the country, and the uprising surely loses some of the wind in its sails when a large segment of the population withdraws from participating in it (at least for now), especially since this uprising is, afterall, for all Lebanese.

Nasrallah’s speech furthermore alluded to conspiracies and suspicious agendas behind the uprising, which wasn’t helpful, since his remarks were in large part misleading (and this after clearly stating in his first speech at the onset of the uprising that this was a true uprising of the people), which provided the impetus for some of his constituents to start “detecting” hidden agendas and intrigue.

2) As mentioned above, the crowds over the weekend in Beirut on Saturday and Sunday were smaller than those earlier in the week (for e.g. on 10/20/19), but they were still large, numbering in the tens of thousands, though short of the million protesters they were hoping to attract. Some of that is related to 1) above, and some of it is related to the beginning of a counter-revolutionary current that threatens this uprising (more on that below). On a more positive note, the human chain from Sour to Tripoli was a nice and symbolic gesture of unity, and though some may belittle the value of such efforts (surely such acts don’t force the resignations of governments, they say), these gestures are important from the perspective of trying to create a new culture of unity that overcomes sectarianism and differences in the country; so I say kudos to such efforts.

3) Regarding the counter-revolutionary current that’s beginning to form, it’s remarkable to see it build up in the real time, and to examine how it operates. First and foremost, it works by sowing fear and doubt into people’s minds about the objectives of the uprising by either misleading about certain issues or by taking discrete and real but non-representative incidents and framing them as representative and fundamental to the goals of the uprising. As an example of the former, a large cutout of the “clenched fist symbol” that made an appearance in Martyr’s square over the weekend is not really the universal and generic symbol of “revolution” or “power to the people”, but instead, represents George Soros’ nefarious schemes to overthrow the government via OTPOR (an organization that went defunct in 2004 and whose symbol bears a distant resemblance to the Martyr’s square fist). As an example of the latter, a small group of students (surely numbering less than a 100 in a sea of tens of thousands) chanting against Hizballah (after Nasrallah’s disappointing speech) is suddenly the one true objective of the uprising, as opposed to the overwhelming cries heard throughout these past 12 days of throwing out the entire corrupt political class and dealing with the socio-economic crisis that threatens to destroy the country.

A great example of the dishonest tactics mentioned above is a video that was released by OTV a couple of days ago (beholden to the Free Patriotic movement or FPM, which was founded by our current President Michel Aoun and which is led by his son-in-law and current Foreign Minister Gebran Bassil, he of Hela Hela Ho fame), which literally threw a bunch of shit against the wall and hoped something would stick; and when I say shit, I mean they literally brought up every fear-mongering tactic under the sun to create a narrative of a galactic Saudi Jihadi Zionist conspiracy from Mars that was about to take over Lebanon. It really was something to behold, in one of the most transparently amateurish attempts at propaganda I’ve seen in a while.

4) Having said the above, it’s also clear that opportunists are trying to “ride the wave” of the uprising, and to position themselves as guarantors of the people’s demands vis a vis the government when they are part of the system that needs to be overhauled (e.g. Samir Geagea and the Lebanese Forces). These are opportunists and spoilers, and though they are being rejected in large part, this in turn, provides those critics of the uprising with something to point to in order to undermine it and justify not participating in the effort.

5) The uprising is entering what I would call the “grinding stage”, where protesters are grinding it out with the government in a battle of wills. They’re calling for general strikes and trying their best to block roads to constrict the economic activity in the country to force the government to yield (a tried tested and true non-violent tactic employed in countless struggles), while resisting government efforts to remove their erected barriers. A particularly valiant effort that is to be commended is the blockade erected around Ring Road, where protesters decided to furnish and remodel the highway with couches and refrigerators while entertaining themselves by playing soccer and participating in yoga classes on the asphalt.

6) Regardless of what comes out of the current incarnation of this uprising, I strongly suspect that this is only the first phase of what promises to be a long struggle against the ruling class in the country. The government is counting on physical and emotional exhaustion of the protesters combined with a disinformation campaign that aims to sow fear and doubt in people’s minds in the hopes of keeping them away from the protests. In their attempts to foil the protests, they will also likely attempt to cosmetically reshuffle the cabinet in the hopes of calming tensions and then try to pass some reforms. But the economic crisis is here and isn’t likely to go away anytime soon (and likely will get worse over time), and it’s hardly believable that the gang of politicians that got us into this mess in the first place will be able to get us out. As such, even if the protests dwindle somewhat in size (and maybe even temporarily pause in certain parts of the country), surely there will be more to come as it’s highly unlikely that the same (or similar) gang will succeed in addressing the true malaise that ails the country.

Finally, I’d be remiss if I didn’t once again salute the protesters leading the struggle against this corrupt government. All my love and admiration to you for trying to improve this country for all of us.

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