Today, Explained - What’s going on in Lebanon

Episode Date: August 5, 2020

A chemical blast has made a very bad situation worse for Lebanon. Journalist Habib Battah explains from Beirut. Transcript at vox.com/todayexplained. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Visit connectsontario.ca. My name is Habib Atta. I'm a journalist living and working in Beirut. On Tuesday afternoon, I was driving home, passing by the port of Beirut, as I have done so many times before. There was a bit of traffic, and I had pulled over about four or five kilometers after the port on the highway and went to a pharmacy to buy some medicine.

When I was talking to the pharmacist, I heard a pop noise, and I immediately, when I heard it, I looked to the skies because I thought that it could be another airstrike. You know, we've been through so many airstrikes in this country. We've been hit with so many tons of bombs that I thought it was coming from the air. And then, you know, I didn't see anything. So I turned around. That was the initial explosion.

And then the much bigger mushroom cloud happened just within 10 seconds or so after that. My whole body shook and it really rattled me to my bones. It's hard to really describe what it's like. It's kind of like if you're trying to imagine the biggest explosion in an action movie, an unreal feeling. And even though I was several kilometers away at this point, I felt like the building next to me was falling down. And everybody felt that. Everybody felt that the explosion was happening in their house. That's how it reverberated across the city. We experienced probably the biggest explosion of our lives here in Lebanon. and that's saying a lot.

You know, we've seen bunker-busting bombs used by Israel. We've seen the assassination of the prime minister with huge amounts, tons of TNT. But this was something that was probably the closest thing to an atomic bomb people have seen in recent memory. It was a mushroom cloud that enveloped the whole city of Beirut. So that was about 24 hours ago now, Habib. Do you have any idea what exactly happened on Tuesday? We don't know a lot of things, as usual in Lebanon. We don't really always know what's happening. And it's very early, obviously. It's still smoldering, the area.

But the explosion happened at the port of Beirut. Apparently, there was a warehouse full of highly flammable ammonium nitrate, apparently, which is a very dangerous gas that could have been used for fertilizer. We're not sure what its purpose was, but it was being stored in the port for several years. And there were disputes about how to handle it, and it just sat there. We're not really sure how the spark that lit the explosion, where that came from. Some people will say it was foul play, and then that's where we play into everyone's favorite conspiracy. Some will say that it was a missile. Some will say say it was foul play. And then that's where we play into everyone's favorite conspiracy. Some will say that it was a missile.

Some will say that it was planted. It's hard to blame people for jumping to conclusions. However, these conclusions will often reflect a certain political slant. So there could be many explanations, but it could also definitely, most definitely be a case of pure negligence. And I mean, the whole Lebanese state is really a manifestation of negligence. It's also a very tight country. There's a lot of space to put things. People end up putting things and stacking things in ways, whether they're buildings or materials, that are very dangerous. We don't have and kind of bodies of oversight that really do due diligence

with these kind of things. We've seen gas stations blow up in the past. In Lebanon, we've seen factories catch on fire. Do you have any idea how many lives were lost and how many people were injured at this point? So far, the estimate is something like 70 dead and 4,000 injured. 4,000? Yes. And that's, again, initial estimates. And a lot of people couldn't get to hospitals because hospitals were so overwhelmed. Three hospitals were actually destroyed in the vicinity of the port. We have a struggling healthcare system as it is, but to lose three hospitals, that's a major blow.

Some of the injuries were really bad. I've heard of someone saw a girl lose a limb. I've heard of a man who died from bleeding in his hand because he couldn't reach the hospital in time. He just bled to death. People were just walking around the streets in a daze full of glass and blood. And the biggest devastating epicenter of this was the port of Beirut.

It's almost erased. There were dozens of warehouses. They've all been flattened. This is a really big blow to a country that relies on imports. 80% of our consumption is imported. And the port is a lifeline. The port is a vein, an artery of the economy in this country. And this country's economy is tanking,

is collapsing right now. And when you take out the port, which is how the country feeds itself, basically, we have the strategic grain silos right there at the port. They were totally eviscerated. That was three months worth of bread making at a time when people are really hungry

and going hungry in this country. So, I mean, a worse thing couldn't have happened to a place that was worse off. How do you mean for people unfamiliar with what's going on in Lebanon right now? I mean, everybody is saying this is the worst thing that they've ever seen. And we've seen a lot of wars and a lot of destruction in this country. So that says a lot. The port of a country is essential to its economy. So losing the port of Beirut is just crazy to imagine what kind of economic consequence that will have going forward. Losing three hospitals at a time of the pandemic when there are very few hospitals in the country

and very few ICU beds being inundated with so many people. The cost of medicine is very high. So hospitals are running at a loss. Patients aren't able to pay for health care. The government is broke. The government owes the hospitals tons of money. So people urgently need any kind of health care support. They need food support, just basic bread and wheat.

Living in Lebanon is so hard, from the power outages to the sewage spilling into the sea, to the air pollution from the diesel generators that are running all the time to support the fact that there's no electricity from the government. People are facing 50% unemployment. So, you know, it's hard to imagine what else can we get hit with in this country. I mean, you take all of this economic collapse and environmental disaster, and you throw a kind of atomic bomb in the mix. And so it's really unfortunate for people who live here to have to live through that reality. They didn't choose that. They were born in war, and they never How things got so bad in Lebanon after the break. I'm Sean Ramos for AM.

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If you have any questions or concerns about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Habib, tell me what the situation was in Lebanon before this explosion on Tuesday. Well, it's hard to imagine what it's like to go through a financial crisis of this scale. I mean, we've been through many political crises. We've been through wars. But this is a different kind of war where basically, you know, the money you have in the bank are just numbers on a screen. And a financial crisis has three aspects in Lebanon. It's the banking crisis. We have a

debt crisis, which is the country is one of the most indebted in the world, which made the currency crisis. Lebanon's always been a very delicate balance, but it kind of feels like it's really getting torn apart like never before. You say that this crisis Lebanon's facing economically is sort of three-pronged. There's this debt crisis, a banking crisis, and a currency crisis. Could we go through each of them, starting with the debt crisis? What's going on there? Yeah, so Lebanon's one of the world's most indebted countries.

It has a debt-to-GDP ratio of something like 180%. So that means that the country doesn't generate nearly enough money to ever repay its debt. And the debt keeps basically accumulating year after year to the point where it's like almost $100 billion today for a country that makes like $40 billion at best per year. So how do you pay that back? The debt just keeps on growing and growing. Why is Lebanon in so much debt? Well, Lebanon is a country that's been at war for so many years and had a massive civil war that the reconstruction costs were very high. And the borrowing costs, the interest rates for a country like Lebanon to borrow money are also very high. So actually the worse off you are as a country, the more money you're going to spend

in borrowing money to get back because we don't trust you because you have bad credit. So we're a country with bad credit emerging from a war with not much infrastructure. So to build that infrastructure, you had to accrue so much more debt. And that debt has been piling and piling and piling. And that debt crisis has led to a banking crisis? So the banking crisis is linked to the debt crisis because the banks are the primary lender to the government. So when Lebanon emerged from the war, nobody wanted to lend Lebanon money. So Lebanon ended up taking a lot of money from local banks that charged really high interest rates because they didn't actually have faith in this government. So the government

accumulated a lot of money. However, because the government wasn't really making money and because there wasn't really any industry in the country and people had no incentive to build any industry because the interest rates were so high in the bank, so nothing was being built in the country. And all of that money was being spent by the government because the banks were, again, loaning money to the government for interest rates to make their own profits. So the banks did very well in Lebanon for a long time. But as the political crises mounted in the country, people started to get nervous about the bank's ability to keep funding the government, about the government's ability to pay the banks back. And the banks started to restrict the amount of money you can withdraw

because people started running to the bank and trying to withdraw all of their money. And so that means that now we don't really have access to the money that we put in the bank, our deposits. We can only access a small allowance, which could be a few hundred bucks a month. And then I guess that brings us to the currency crisis. Yeah. Not only are you not able to get cash from the bank very easily in any great amount, but the cash that you do get is worth, you know, 20 cents to the dollar. So if you had a dollar in your pocket, that's 20 cents you have now.

If you had 100 bucks, that's 20 bucks. So it's a massive blow to anyone. And that also applies to your salary. Whatever you make every month, cut that down by 80%. Add to this that when you go to the store to buy groceries, everything is doubled and tripled the price. So things like a bag of shredded cheese you might buy to make a quesadilla or something, right? That used to cost like six or seven bucks, and now it's the equivalent of like $20 or $30. All of these crises are inherently linked. How are people responding to this three-pronged crisis?

Well, people are really, really suffering. I mean, if your salary gets cut by 80% and the prices of goods go up, you kind of worry about how you're going to feed your children. So people have been selling items. There've been like some websites where people are selling like their household items, even dishes I've seen for sale or bartering. Crime has gone up. There was a viral video circulating in Lebanon of a guy who held up a pharmacy with a gun to buy diapers. I've never seen that. Let me look it up.

Oh yeah, this is like the most passive robbery you can imagine. The guy's holding a gun, but he seems pretty resigned. They're putting the diapers in the bag and he's slowly walking out. People are really suffering on a daily, just to get by, just to get a meal. About half of the country now is under the poverty level. And of course the COVID outbreak has definitely made everything worse because people can't get to their jobs. We've had a lot of lockdowns and we're going into another lockdown right now. There's a lot of depression.

There was some suicides related to the financial situation as well. So people are very anxious. They're very worried about their future, about their children. They're trying to escape this country as they have always done for decades. People have tried to escape Lebanon

and that's why we have so many Lebanese living abroad and immigrants and refugees. So yeah, it's definitely leading people to give up hope. And it's also much harder for the poorest segments of Lebanese society. Not only have the middle class become poor, but the poor have become, you know, extremely impoverished. Late last year, we covered the protests in Lebanon over this WhatsApp tax the government tried to impose. To some degree, those protests were successful. The tax didn't happen.

The prime minister resigned. After everything that's happened since, do people still have hope they can affect change in the country or are people giving up? It's very difficult to dig yourself out of a deep hole. And I think it's also very difficult to reimagine a political system that has been in the making for decades. And a lot of people rely on it and believe in it. And so the only solution to Lebanon is for the IMF to loan Lebanon more money. And again, that means more debt. So the best solution would be for Lebanon to start generating income, to start building industries. But it doesn't really have the infrastructure for

that because, again, it's a war-torn country. So another problem that Lebanon faces is that Lebanon decisions are not made only in Lebanon. The United States backs certain leaders in Lebanon. Iran backs certain groups in Lebanon. France, Saudi Arabia, they all have their favorites. So Lebanon is kind of like an international chessboard where for decades now, different countries have tried to support different sides. And so I think in some ways, Lebanon is like a country that's unfinished.

It's not really formed yet. And that formation of any country, I think, revolves around one side winning, one side emerging victorious to lead a country, usually at a great cost of violence. Well, we've had all the violence in Lebanon, but nobody won. So Lebanon is a country of no winners and no losers, which is kind of democratic because everybody gets a say or a lot of political parties get a say, but nothing really gets done in the country. So it's really hard to imagine a way out of it other than getting more debt to try to

restructure the debt for the umpteenth time and passing on this debt to the next generation. Although people are not really willing to lend Lebanon money either because they've seen so much money in the country disappear. So it's real tragedy, I think, for the people who live here, who just wake up every day and that's where they are. I mean, they didn't decide on lending rates. They didn't decide on taking out those loans. They're just average people who are now suffering under the worst economic crisis. So we could see violence, you know,

and at the same time, there is violence on our border. There is, you know, ongoing confrontation between Hezbollah and Israel. And that's been going on for years. That could flare up at any time. You know, that has flared up in the past into great wars that have set the country back further. I think that people are trying to be creative. They're trying to start out small industries. They're trying to go back to farming. Lebanon is the country in the Middle East that has rivers and valleys and greenery. Around us are a lot of deserts.

And so it's a very fertile crescent.cent is where farming started thousands of years ago. It's a beautiful country for tourism. You know, it's a gorgeous country for history. Every empire of the world has been here. You've got Roman temples that look better than the ones in Rome preserved. And my heart goes out to people that are really at the margin of society right now because they're really suffering badly. And, you know, I would just say if people want to help out, you know, they could visit the country. They could try, you know, to help people out here because, again, it's a great country.

It's a hidden gem. Unfortunately, politically, it's not been able to get a break and a rest from the powers that be whether they're local or foreign Alright Habib, that's all we need I really appreciate it We watched these videos in shock yesterday and I just really hope things get better and if anything I guess one positive outlook of this is that the world is paying attention right now

so I hope good things come of that. I hope so too. Some people have said this could be a catalyst for change but I think people are so exhausted and worn down at this point they just need all the help that they can get. Habib Batta is an independent journalist and the founder of BeirutReport.com, where you can find and support his work.