August 11, 2020
The magnitude of the devastation of the Lebanese port’s blast of last week (August 4, 2020) is unprecedented locally and regionally. The explosion was caused by 2,750 tonnes of ammonium nitrate, as the Lebanese government said.
“What kind of government leaves a mountain of explosive chemicals lying around unsafely for the better part of a decade? The same kind that cannot agree on a budget for 11 years and that let its central bank run a Ponzi scheme to defend its unrealistic currency peg. The kind which is so deluded that it relies on aid, loans and remittances, spending far more than it collects in taxes. The kind that is controlled by an out-of-touch elite who fiddle and extort while the economy burns. In short, it is the government of Lebanon—and it is in desperate need of reform.” 1
We do not underestimate the Economist’s assertion that ” the central bank run a Ponzi scheme to defend its unrealistic currency peg.” 2 The Lebanese lira lost more than 75% of its value since last October. Lina Khatib is right when she says that “Change must come from within Lebanon, but Emmanuel Macron and others can help by ending their patronage of a disastrous regime.” 3
In our view, “Corruption in Developing Countries” published on October 27, 2019, we said “we believe that many developing country governments are not doing enough in the fight against corruption. Unfortunately, corruption in many of these countries is now officially sponsored by their governments.”
Corruption is the primary driver underlying all the economic and financial failures in Lebanon. It is systemic and structural corruption. Therefore, the effective fight of corruption in Lebanon requires changing the system (social contract) that endured corruption over the past several decades. It is misleading to reform a system that is not reformable. The Lebanese do not have an option: they must eradicate corruption by all lawful means. The sooner, the better.
Footnotes
1 The Economist, “A big blast should lead to big change in Lebanon,” August 8th, 2020 edition, Accesses on August 11, 2020, https://www.economist.com/leaders/2020/08/08/a-big-blast-should-lead-to-big-change-in-lebanon
2 Ibid
3 The Guardian, “Lebanon’s political corruption can be rooted out – if its international donors insist” August 10, 2020, Accessed on August 11, 2020, https://www.theguardian.com/commentisfree/2020/aug/10/lebanon-political-corruption-international-donors-regime
