by Giuseppe De Santis –
There is bad politics at the root of Lebanon’s dire economic situation, and as noted on Geopolitical News geopolitical analyst Dario Rivolta, for years Lebanon has used hard currency reserves to maintain a high exchange rate of the lira against the dollar, allowing Lebanese citizens to import goods at low cost and to live beyond their means.
When the inflow of dollars decreased and the central bank’s reserves ran out, the Lebanese pound depreciated by 98%, causing a very sharp increase in prices and a substantial impoverishment of the population.
To get out of the crisis, the government started negotiating with the International Monetary Fund in 2020 to obtain a 3 billion dollar loan, but in exchange measures were requested that would primarily damage the interests of the small elite who have enriched themselves against of the population. For this reason, the negotiations are now on the high seas.
The situation is desperate, 42% of the population lives in poverty, but perhaps we are beginning to see a light at the end of the tunnel due to the recovery of the tourism sector and the concrete possibility of exploiting the rich gas fields, after the agreement on boundaries reached with Israel.
Always an important tourist destination, this year it is estimated that 2.2 million tourists will arrive in Lebanon who will spend, according to estimates made by the Economist, 9 billion dollars; even if only a small part of the population will derive a direct benefit from it, certainly the influx of hard currency will be an important shot in the arm for the country.
Another possible source of revenue is the Qana natural gas field, which borders Israel and is to be developed by Eni and Total. It will take a few years to start extracting and marketing the gas, but the prospects are very positive and the earnings will allow the purchase of basic necessities, which are currently lacking in the Middle Eastern country.
