Saturday, October 12, 2019

What about the US dollar crisis in Lebanon?

I will not mention the economic crisis and the corruption.
I will not mention the crazy decision of politicians to approve, just before the elections, a salaries increase for public sector employees.
These same politicians have repetitively acknowledged that the Lebanese public sector is overstaffed.
I will not mention economic indicators that prove the evasion in customs taxes.
I will no mention the debt increase due to the electricity subsidies deficit

Let us just try to look at some of what has and is happening in direct relation with what has been dubbed "unavailability of US dollars in the market".

First let me explain that we are not talking about a crunch in foreign currency.
We are talking about banknote US dollar.
There is no problem in transferring or issuing letters of credit or paying by credit card or checks.
But if you want to withdraw in banknote more than 5,000.- the banknote may not be available.

I wonder if I could, in any country of the European Union, go to the bank and ask for 100,000 US dollars in banknote, and expect to get them on the spot!
I wonder if I could in the US go the bank and ask for 100,000 Euros in banknote, and expect to get them on the spot!

You used to be able to do it in Lebanon, and the Lebanese are surprised why they cannot practice such irregular action today!

Kafkaesque!

But what is behind the 'crisis' ?

  • US banknotes are seeping to Syria in a clear attempt by the Syrian regime to break sanctions. Maybe from Syria to Iran?
  • Hezbollah needs US dollar banknotes to pay its due from outside the banking sector as sanction are being religiously implemented by Lebanese banks after the closure of Jammal bank.
  • The variation in the exchange rate is less than 5% which should not be a real problem for importers who import in USD and sell in Lebanese pound when their profits hit sometimes unlawfully 25%. 
  • Pricing and paying in USD is contrary to the law yet it is regular practice which drives citizens to carry USD banknotes instead of Lebanese Pounds creating a parallel economy.
Conclusion: the problem is in the inability or unwillingness of the Government to uphold the rule of law + extreme individualism of the population with no ethics of nationalism + political parties that rely on populism and sectarianism to rule with no concern for national interest. 

and surely, a culture of acceptable corruption and disregard for laws.









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