How Lebanon unravelled

Lebanon will be 100 years old on 1 September. But the joke circulating in Beirut is that the country may not be around for the party. Eye-watering hyper-inflation, not helped by the Covid pandemic, has brought the country to its knees, just as famine and extreme poverty sparked its creation after the end of the Great War.

Lebanon eventually won full independence from the French in 1943, and became an impossibly glamorous, multilingual entrepôt with a rare facility for doing business. According to Major General Sir Edward Spears, the British minister to Syria and Lebanon, the country ‘sprang from a far older and higher’ civilisation than the French. Even so, it has always had a tendency towards self-destruction.

Lebanon’s obituary has been written before, notably during the 1975-90 civil war when the country went, practically overnight, from jet-set playground with a currency to rival the Swiss franc to a byword for death and destruction. But even then, during the darkest days of the Israeli invasion and the siege of Beirut, even after three decades of Syrian occupation, the emergence of Hezbollah and fallout of the Syrian civil war, the country’s foundations remained more or less solid.

We Lebanese are not by nature fighters. Despite our reputation for dispensing mayhem, money is our drug of choice and we prefer the balance sheet to the bomb. According to Yousef Beidas, who headed the Lebanese Intra Bank, once the Middle East’s biggest financial institution: ‘Lebanon is to money what the Suez Canal is to shipping.’

The trouble is we were getting high on our own supply. In recent years Lebanese banks became lazy, making money by lending to the state and by offering unfeasibly high interest rates — up to 14 per cent — to dollar depositors.