Lebanon and Syria Sinking in Debt: The Economist

Effects of Lebanon’s recent political and economic crisis, stemming from a drop in remittances and bank deposits, have spilled over into Syria. The two nation’s economies have been intertwined for some time. Following the Lebanese civil war (1975-90), Syrian workers helped rebuild the war-torn country. Lebanese banks were once “a safe place for wealthy Syrians to park their cash [and] since the Syrian conflict began in 2011, businessmen have used Lebanon to skirt sanctions and do deals abroad,” notes the Economist. Lebanon’s role as a “financial hub” has come to a halt with that sector in gridlock. The Syrian pound, mimicking the Lebanese lira, tumbled to record lows, going from 500 per US dollar at the start of this year to 950 as of early December. Syria’s infrastructure cannot accommodate the production of basic goods as it tries to limit imports. As Syria’s largest foreign market, Lebanon’s reduction in purchasing power will undoubtedly strike another blow. Meanwhile, Lebanese political parties such as the Iran-allied Hezbollah are unwilling to give up power in the cabinet despite popular demands for political-economic restructuring. About one-third of Lebanese citizens are poor, according to the World Bank, and that figure could soon climb to 50 percent. –YaleGlobal