It seems that stopping the collapses of the lira in Syria and Lebanon, due to which many of the citizens of the two countries are bankrupted, has become impossible as the decline in the two currencies continues, and the economic and social crisis worsens to form the chapters of a catastrophic story about to happen.
The causes of the double collapse in the Syrian and Lebanese lira were identified by the writer Henry Mamarbashi in a report published in the French-based online newspaper ” Orient XXI “, as the sources of income drought, a multiple and abysmal public deficit, the absence of governance – if not say the absence of the government -, widespread corruption, and conflicts Regional. Read also A decade after the revolution, the Syrian economy is at the bottom and the shadow economy is expanding in the country The historic collapse of the Lebanese pound … 5 questions and answers How did the dollar crisis and the collapse of the pound affect work inside Lebanon’s ports?German companies enter Lebanon on the port reconstruction line … Investment incentives or political messages from Europe?
In the Lebanese case, the writer considered that the regime in Beirut is too liberal, corrupt to the core, and of course pro-Western, but in Syria, it is more inclined to planning with a kind of transition to liberalism – and corruption as well – during the last decades, before the war that broke out was destroyed. 2011 everything.
This decade-long war left deep wounds that cannot be healed without massive international aid; But this aid is not available due to Western financial and economic sanctions.
While Lebanon and Syria followed two different paths, they share many points. Lebanese families have Syrian relatives, and vice versa. Rich Syrian families have contributed to the development of a Lebanese banking sector that has been thriving for a long time, and links have been established in the industrial sector, and at the beginning of the second millennium, Lebanese banks were acquired by On shares, or established subsidiaries in Syria, where the financial sector began to experience a timid liberalization.
It should also be recalled that the two countries were sharing the same currency before Lebanon established its currency after its independence on January 24, 1948, after which all legal ties with the French mandate forces and with Syria were cut off, and the latter in turn canceled the customs union between the two countries in 1950.
The Lebanese situation
In Lebanon, despite its official link to the dollar (at a price of 1507 pounds per dollar before the crisis) as a guarantee of stability, the pound has not stopped declining since October 2019, to reach the lowest levels in parallel markets, and its decline is currently 90%, as the exchange rate reaches in The black market reached 15,000 pounds per dollar (compared to 9,800 in July 2020), and no one knows when this collapse will stop, especially since the country has been without a government since August, and the explosion in Beirut port destroyed an entire neighborhood in the capital. And until the resignation of a government that was charged with initiating reforms.
The banks that were the leaders and drivers of the economy before 2018 are in a state of near bankruptcy today, and they illegally prohibit the withdrawal of dollars from bank accounts, or only in a very limited amount, in an economy that depends largely on the dollar and has dependency on imports.
In this context, the outgoing Prime Minister Hassan Diab warned that the reserves of the Central Bank of Lebanon will not allow, after next June, the financing of all subsidies (wheat, fuel, medicine, medical equipment and food).
What is more amazing is that the Lebanese banks were swimming in profits thanks to the deposits of the Lebanese themselves and expatriates, the Gulf countries, and Syria, and for the latter, Lebanon was at the same time a safety valve, a refuge and a place through which merchants and industrialists could carry out their operations while taking advantage of interest rates. Attractive, which was introduced until 2019.
Everything seemed fine before the sinking and the accumulated losses of the Lebanese state’s income, and the inability of the monetary authorities to fill the huge deficit in the balance of payments, which appeared to be the main factor in the crisis, and foreign currency no longer came, while countries such as Saudi Arabia are avoiding depositing Their surpluses are there.
In fact, local banks themselves were encouraged to offer high interest rates to their customers from the Banque du Liban, which had to bridge the deficit of public services sectors, which had accumulated mountains of debts ($ 60 billion), and the warnings of experts and international institutions did not help in a situation that had become no Possibly.
Thus, a few months after the street uprising in the fall of 2019 and the strict procedures for banks and unfair measures for their depositors, limiting access to their accounts, Prime Minister Hassan Diab announced on March 7, 2020 that the state had, for the first time in its history, failed to pay part of its public debt. This announcement sent a very negative signal to the financial markets.
Diab added that the Lebanese lived in the illusion that everything was fine, while Lebanon sank in a sea of debt, and in the same month the Lebanese state announced that it had failed to pay all its debts in foreign currencies $ 35.8 billion out of a total debt of 95.5 billion at the end of November. The second 2020.
The Syrian situation
The Syrian pound has also reached its lowest historical levels, and it is ironic that its ordeal began with the official end of the fighting in 2018-2019, and the Syrian pound, affected by the crisis in Lebanon, declined with the beginning of December 2019 to a thousand pounds for one dollar on the black market. While the official rate published on the Bank of Syria website is 434 pounds to the dollar, and in the worst times of the dark years of the war, the pound did not reach such low levels in the parallel market.
In fact, billions of dollars of Syrian depositors are suddenly locked up in Lebanese banks; This created a scarcity of dollars in the Syrian market, and caused the collapse of the lira, and it must be remembered that the volume of Syrian deposits in Lebanese banks was estimated at several billion dollars, and the Syrian President Bashar al-Assad himself indicated an amount of $ 40 billion, although the real number may be less than So much.
Whatever it was, at the beginning of last April, the currency was traded on the black market at a price of 3,700 pounds to the dollar after it crossed the threshold of 4,700 Syrian pounds against the dollar on March 17, that is, 4 times less than two years ago, and the Syrian business circles are accustomed to The fluctuations of its currency, justified by manipulations.