Since its inception as a nation-state in 1943, Lebanon has always been a preferred site for export capital. After the era of direct colonial rule, modern Lebanon was born a vassal state to imperialist powers, first France, and now the U.S. Today, Lebanon, like much of the Global South, is shaped by unequal and combined development — while aspects of the economy, like the financial sector are advanced, the lack of development of productive forces and dependency on imports maintains Lebanon as a semi-colony. In fact, the ever-expanding banking sector has played a key role in ensuring that the nascent nation-state developed as a semi-colony, heavily dependent on imports. The weak and fragmented character of the Lebanese bourgeoisie, who are subordinated to world capitalism, is reflected in the political situation, which is almost always ripe for a socio-political eruption. As is evident too, the economy, having had a punctuated development, is deeply tied to the world market, so global crises also have a far more profound social impact.
This is why, contrary to nostalgic revisionist historiography, Lebanon has never really witnessed a full decade of prosperity. Capitalist crises, punctated by the ebbs and flows of foreign capital, have hit the country in 1948, 1958, 1966, 1973, 1982, 1991, 1999, 2008, 2011, 2015 and 2019. This trend proliferated exponentially following the end of the civil war in 1990: this period saw the expansion of neoliberal Harirism — an explosive cocktail of minimal regulatory apparatuses; state practices orientated entirely to facilitating commercial, real estate and media activities; cursory limits on capital movements and investments; extraordinary exploitation of unprotected and precarious migrant labor; and the withdrawal of the Syrian regime from Lebanon, which created better conditions for a disorganized working class to prove its mettle.
The current economic crisis is unprecedented in Lebanon’s history, even when compared to the 1966 Intra Bank collapse. There are severe shortages of fuel, electricity, and medicine, throwing more than 78% of the Lebanese population, some 3 million people, below the poverty line. This economic crisis comes as no surprise: it is an inevitable result of the country’s entrenched neoliberal policies that produced a trifecta of hyper-financialization, privatization, and deregulation. The Central Bank has attempted to keep the Lebanese pound pegged to the dollar at a fixed exchange rate through dubious financial mechanisms, at the expense of the working class. Commercial banks that lend to the Central bank at very high interest rates have been the biggest beneficiaries of these measures, basically acting as loan sharks. It is no coincidence that the private banks own the largest portion of the country’s massive debt, or that their main shareholders constitute a large section of the ruling class. The state’s inability to repay its creditors continuously hampers any efforts to build a productive economy. Instead, the country heavily relies on imports of basic necessities like vital medical supplies, produce, and fuel. Because suppliers are usually paid in dollars, this “dollar crisis” has made these imports much more expensive, a burden which falls particularly heavily on the country’s working class, and especially on its migrant component.
The invasion of Ukraine by Russia has further compounded this already dire situation, as Lebanon imports 60% of its grain from Ukraine, Russia, and Romania. The war will deliver a shock to the global supply and cost of food: Russia and Ukraine are some of the biggest agricultural producers globally. Russia also produces enormous amounts of fertilizer nutrients, such as potash and phosphate, which half the world’s population relies on for food. For some crops, a fertilizer shortage could cause yields to drop by 50%.
Additionally, the World Food Price Index produced by the Food and Agricultural Organization (FAO) averaged 140.7 points in February 2022, a new all-time high, up 3.9% from January, and 20.7% above its level a year ago. The rise was led by large increases in vegetable oil and dairy price sub-indices. This crisis in world food markets has only compounded Lebanon’s deepening crisis, marked by the explosion at the port of Beirut that destroyed vast grain reserves. Now, Lebanese supermarket chains have been caught hoarding vegetable oil in order to ride the inflation wave, to sell at a higher price during the month of Ramadan, even as the Federations of Bakery Syndicate in Lebanon warned of a bread shortage if bakeries cannot secure wheat.
A bigger driver of food price inflation comes from outside food production, in the energy, fertilizer and feed sectors. Huge amounts of natural gas are needed to produce ammonia, the key ingredient in nitrogen fertilizer. The price hike in oil prices squeezes profit margins of major agribusiness food producers, discouraging investment and expansion of production, as Russian oil exports have fallen sharply since the invasion of Ukraine.
Even before the invasion, though, energy prices were already skyrocketing in Lebanon, sparked by the gradual but brutal lift of subsidies by the Central Bank. These price hikes are not expected to go down any time soon, because imperialist governments will not reduce fossil fuel investment and production. On the contrary, supply will be increased to allow Europe, in particular, to rely less on Russian energy. Saudi and US oil output will rise. Increased military spending will also add to carbon emissions (militaries, as a whole, are the biggest emitters of carbon globally). The Central Bank’s catastrophic monetary and fiscal policies have encouraged private monopolistic importers (cartels for importing petroleum, pharmaceutical and foodstuffs, in particular) to dramatically increase their prices.
Lebanon’s inflation rate reached 239.68% in January 2022, up from 147.55% in January 2021. The high inflation rate is mainly linked to the huge depreciation of the national currency: in the same year-long span, the exchange gap increased from LBP/USD 8,800 to LBP/USD 20,400, and has surpassed LBP/USD 24,000 at the time of writing. There’s no guarantee that inflation will slow down as unemployment becomes more widespread, so there’s a distinct possibility for the “worst of both worlds”: inflation and economic stagnation (“stagflation”).
Additionally, Lebanon has always been a labor-exporting country. Its whole educational system is built on the premise that its younger reserve army of labor will be exported around the world, to ensure that remittance flows counteract the possibility of dollar shortages. The effects of the pandemic coupled with the “dollarization” of university tuition, wherein the sharp devaluation of the Lebanese lira and France and the U.S. backing private education institutions has enabled them to impose that tuition fees be paid in dollars, has deeply undermined the process of labor export. Furthermore, the growing reserve army of labor that has historically found refuge in the Lebanese army is no longer enthusiastic about conscription. Young men from Akkar, the Beqaa Valley, and other rural areas of Lebanon have abandoned their hopes of climbing the military ladder, and rumors of defection swirl among the army’s ranks. Even so, the U.S. plans to reroute $67 million in aid to Lebanon’s armed forces; Washington has been a consistent funder of the Lebanese army since the end of the civil war, building it as a regional ally, especially, during the “war on terror”.
The pandemic has profoundly worsened these conditions, and has opened up the market for capitalist opportunists. The gig economy, particularly in the delivery sector, has found agreeable conditions to proliferate in Lebanon, riding the wave of a downwardly-mobile middle class, an elastic migrant reserve army of labor, and supermarket chains still wedded to their profit margins of old. Its main workers are those of Lebanese, Syrian and Palestian descent who were unable to escape the crisis through tightening migration flows; this sector has begun to show signs of organizing against the predatory food apps and delivery stores proliferating in Lebanon’s major cities. One attempt, in October 2021, was met with physical violence by the management of the delivery app, ‘Toters’, which sent armed mercenaries and vigilantes to defend the company’s headquarters against striking delivery workers. Amidst fuel rationing, petrol queues, power cuts, and price hikes that bite on a whole different level, delivery workers are often refused pay if the order is canceled from the other end. Furthermore, delivery workers working for delivery apps are not even considered workers. They are classified as “independent contractors” under Lebanese labor law, have no access to social security or health benefits, and can be laid off at any time. This labor law has helped countless private companies and NGOs benefit from the exploitability of workers. Lebanon is also not a signatory of Convention 87 of the International Labour Organization, which consecrates the right of workers to establish or join labor organizations. As these workers are considered expendable, “unskilled”, and easily replaceable by their management, increased surveillance and crackdowns on organizational attempts are the norm. When some ‘Toters’ riders formed WhatsApp groups and Instagram pages to share grievances and float the possibility of strike action, Toter’s higher management deactivated their accounts, and barred them from working until they removed the posts.
Unfortunately, these grievances were not addressed by any organizations that came out of the Lebanese uprising of 2019, even supposedly “revolutionary” ones. Most were too busy bickering about electoral lists for the upcoming parliamentary elections. Nor did these “revolutionary” organizations feel the need to stand in solidarity with migrant domestic workers piling up in front of their respective embassies, as their employer-sponsors withheld pay, harassed them physically and sexually, and left them to fend for themselves after confiscating their passports. They felt no need to incorporate, encourage, and invite fellow migrant workers into the Lebanese uprising, falling prey to nationalistic hubris and the false promise of reform. They failed to rally around the call to nationalize the banks — the main culprits of the economic catastrophe that is still unfolding — deeming it a utopian demand that could never rally the majority of the masses.
What is Lebanon if not a microcosm of today’s capitalist contradictions? Financial dispossession has ravaged a socio-economic order that was believed to be infallible. Of course, this order has always stood on the labor of thousands of nameless migrant workers. For decades, they have been hyper-exploited and precaratized, creating an ever-expanding and expandable reserve army of labor. Fortress Europe, the IMF, and USAID have extended their imperialist arms to secure their “order” through multiple funding schemes and an open-ended military budget.
Although the global financial market has evaded and dumped the Lebanese market, leaving its military industrial complex afloat, Lebanon remains, to this day, a favorite site for Gulf capital export. The local agribusiness sector has developed a flourishing parasitical fiefdom, reliant on USAID and Gulf export markets, leaving local food markets drowning in a surplus of pesticides and seed dependency. The more agricultural workers plant, grow, and work the land for export, the less arable it becomes. The more peasants favor short-term profits over long-term food sovereignty, the more addicted our food markets become to agrochemical biotechnology.
Lebanese parliamentary elections are around the corner, and the IMF has recently reached a staff-level agreement on economic policies with Lebanon for a four-year extended fund facility of around three billion dollars. Both of these developments hold nothing but the promise of prolonging and deepening the crisis. The IMF and global imperialist powers continue to be the ones that make the plans that will determine Lebanon’s future. Supposed revolutionaries continue to set their horizons to doing well electorally. As Lenin writes in State and Revolution,
… the more the bureaucratic apparatus is “redistributed” among the various bourgeois and petty-bourgeois parties, the more keenly aware the oppressed classes, and the proletariat at their head, become of their irreconcilable hostility to the whole bourgeois society. Hence the need for all bourgeois parties, even for the most democratic and “revolutionary-democratic” among them, to intensify repressive measures against the revolutionary proletariat, to strengthen the apparatus of coercion, i.e., the state machine.
The lessons from the experiences of Syriza in Greece stand as a stark example — it isn’t enough to lay claim to a state that is bound to the interests of imperialist capitalism. For the working class in Lebanon, these reformist forces only propose to improving a state apparatus that is deeply tied to imperialism, and offer the same dead ends. It is necessary as ever, as Lenin says, ““to concentrate all its forces of destruction” against the state power, and to set itself the aim, not of improving the state machine, but of smashing and destroying it.”