Disastrous explosion in Beirut: Will Lebanon recover from this crisis?

Huge blast in Beirut

A huge explosion devastated the port area of the capital Beirut on Tuesday. The blast killed at least 100 people and injured more than 4,000 others, and rescue workers in Lebanon are searching for more than a hundred people who are missing. Officials said they expect the death toll to rise further as emergency workers dig through the rubble to search for survivors. The explosion occurred just after 18:00 on Tuesday after a fire at the port.

The whole city was shaken by the explosion and a mushroom cloud could be seen spreading over the port area. The blast sent an enormous orange fireball into the sky, immediately followed by a tornado-like shockwave that flattened the port and swept the city, shattering windows kilometres (miles) away.President Michel Aoun said the blast was caused by 2,750 tonnes of ammonium nitrate stored unsafely in a warehouse. Ammonium nitrate is used as a fertiliser in agriculture and as an explosive. The blast was also felt 240km (150 miles) away on the island of Cyprus, in the eastern Mediterranean, with people there saying they thought it was an earthquake.

In the explosion’s devastating aftermath, many Lebanese are expressing immense shock and sadness at the destruction, and great anger towards those who allowed this to happen. Analysis of public records and documents published online show senior Lebanese officials knew for more than six years that the ammonium nitrate was stored in Hangar 12 of Beirut’s port.

Lebanese President Michel Aoun called for an emergency cabinet meeting on Wednesday and said a two-week state of emergency should be declared following the massive explosion. Aoun assembled the country’s High Defence Council following the explosion, and Prime Minister Hassan Diab called for a day of mourning on Wednesday.

Ammonium nitrate, which Lebanese authorities have said caused the devastating Beirut blast, is an odorless crystalline substance commonly used as a fertilizer that has been the cause of numerous industrial explosions over the decades. When combined with fuel oils, ammonium nitrate creates a potent explosive widely used in the construction industry, but also by armed groups such as the Taliban for improvised explosives. Under normal storage conditions and without very high heat, it is difficult to ignite ammonium nitrate. That is because it is an oxidizer – it intensifies combustion and allows other substances to ignite more readily, but is not itself very combustible. For these reasons, there are generally very strict rules about where it can be stored: for example, it must be kept away from fuels and sources of heat.

The cargo of ammonium nitrate arrived in Lebanon in September 2013, on board a Russian-owned cargo vessel flying a Moldovan Flag. The Rhosus, according to information from the ship-tracking site, Fleetmon, was heading from Georgia to Mozambique. It was forced to dock in Beirut after facing technical problems at sea, according to (PDF) lawyers representing the boat’s crew. But Lebanese officials prevented the vessel from sailing, and eventually, it was abandoned by its owners and crew – information partially corroborated by Fleetmon. The ship’s dangerous cargo was then offloaded and placed in Hangar 12 of Beirut port, a large grey structure facing the country’s main north-south highway at the main entrance to the capital. Since then, customs officials have written several letters to judges calling for the removal of the substance due to its danger. They proposed three options: Export the ammonium nitrate, hand it over to the Lebanese Army, or sell it to the privately-owned Lebanese Explosives Company. However, no reply was ever received, and the ammonium nitrate remained on the port until yesterday.

“What happened today will not pass without accountability,” said Diab. “Those responsible for this catastrophe will pay the price.”

Lebanon’s economic and political downfall

The explosion comes at a sensitive time for Lebanon. With Covid-19 infections on the rise, hospitals were already struggling to cope. Now, they are faced with treating thousands of injured people. The country is also going through an economic crisis. Lebanon imports most of its food and large quantities of grain stored in the port have been destroyed causing fears of widespread food insecurity to come.

Many Lebanese were quick to point out what they believe to be the root causes; immense mismanagement in a broken state run by a corrupt political class who they say treat the country’s inhabitants with contempt. The allegations include claims that billions of dollars in tax revenue never reached the state treasury due to schemes to undervalue imports, as well as accusations of systematic and widespread bribery to avoid paying customs taxes.  “Beirut is gone and those who ruled this country for the past decades cannot get away with this,” Rima Majed, a Lebanese political activist and sociologist said in a tweet. “They are criminals and this is probably the biggest of their (too many) crimes so far.”

Lebanon is one of the world’s most indebted countries, and is spiraling into poverty and political chaos after decades of economic mismanagement. Its government is seeking a $10 billion bailout package from the International Monetary Fund (IMF), but the IMF insists that Lebanon must first reform its bloated and corrupt public sector. So far, Beirut’s power brokers have resisted. While coronavirus lockdowns have exacerbated Lebanon’s economic woes, the country’s financial crisis has been deepening for decades. Lebanon’s byzantine sectarian power-sharing system has brought the government to a standstill, while years of pocket-lining by politicians has crashed the economy and sent standards of living into freefall. (Even before the pandemic, the World Bank predicted that 50 percent of Lebanese could be living below the poverty line if economic trends continued.)

Last year, Lebanon plunged into a state of unrest and virtually shut down after nation-wide protests erupted calling for the government to step down. The tension had been building for months as the government searched for new ways to levy taxes to manage the country’s economic crisis and soaring debt. The trigger, in the end, was news that the government was planning, among other measures, to impose a tax on WhatsApp calls a decision it later withdrew as people began taking to the streets. Thousands of protesters hit the streets to call for “revolution,” but the resignation of Prime Minister Saad Hariri created a power vacuum that only exacerbated the country’s economic woes. Newly-appointed Prime Minister Hassan Diab announced in March that Lebanon would default on its foreign debt because its foreign currency reserves were running dangerously low. Anti-government protests erupted again recently as panic intensified over Lebanon’s collapsing currency.

The country that was supposed to arise, phoenix-like, from the ashes of its 1975-90 civil war, propelled by serial foreign aid and loan packages, is now on a path to a crash-landing. Its dire position started to become apparent long before the Covid-19 pandemic. Postwar Lebanon has, until now, lived on foreign exchange inflows that accumulated to far more than the size of its economy, keeping in place an unsustainable peg to the dollar which destroyed most of its modest industrial base and meant the country imported almost everything it consumed. In the past five years, as public debt mounted and the current account deficit widened to 176 per cent and 24 per cent of gross domestic product respectively last year, the government says a heavily dollarised economy ran out of dollars and juddered to a halt. The government says the economy shrank by 6.9 per cent of GDP last year and expects a further contraction this year of 13.8 per cent a full-blown depression with an estimated 48 per cent of people already below the poverty line.

However there are deep political undertones to the economic collapse Lebanon is facing. “There is an attempt to depict the problem as an economic issue, but it is political with distinction,” Makram Rabah, a history professor at the American University of Beirut, told Anadolu Agency (AA). “The main problem was not Hariri’s departure, but rather the ruling elites and the existing quota system,” the Lebanese academic said. He added that the application of the quota system, which is involved in administrative and political designations, “affirms that the government is not independent even though it contains experts. This is not enough.”

The protesters accuse the political elite of exploiting state resources for their own benefit through networks of patronage and clientelism that mesh business and politics. Unlike many Arab countries, Lebanon is not dominated by one strong ruler but has a number of leaders and parties with sway over the country’s various sectarian groups. Positions are apportioned by quotas among 18 officially recognized sects. Parliament is half Christian and half Muslim. The prime minister must be a Sunni Muslim, the president a Maronite Christian and the speaker of parliament a Shi’ite. Critics say the system has kept the ruling caste in power indefinitely and allowed politicians to put their own interests above those of the state. The protesters’ demands include not only removing the elite, but also overhauling the system. “There’s a self-centered political elite that still hasn’t acknowledged the changing realities or how difficult the situation is,” said Mohanad Hage Ali, a fellow at the Carnegie Middle East Center. “They want to focus on their own profiteering in the system.”

Furthermore, Hezbollah’s involvement and power in Lebanon has acted as a catalys and hastened the downfall, as the group has protected corruption in the Lebanese government for years. For his part, political analyst Moufid Mostafa touched on the lack of independence of the incumbent Lebanese government, calling it “the government of Hezbollah.” “The most prominent challenge the government is facing today is that it is the government of Hezbollah and its allies and therefore the Gulf states do not want to support them,” Mostafa told Anadolu Agency. He pointed out that the government has failed in talks with the International Monetary Fund (IMF) to take a loan, citing “their inability to meet the required reforms.”

The Coronavirus pandemic has deepened the economic crisis, said Mostafa, as it “greatly affected the money (transfer) of (the Lebanese) expatriates that were flowing from abroad which was a major supporter of the Lebanese economy.”

The latest explosion is an even further blow to the economy and the country and could spell its collapse. Lebanon’s economy minister, Raoul Nehme, told local media on Tuesday that the wheat in Beirut’s port granaries can not be used and that the ministry lost track of seven employees in the granaries. The minister also told local media that Lebanon will import wheat and added that the country currently has enough wheat until they begin importing it.

Lebanon, which produces next to nothing for export, has long relied on remittances from Lebanese working abroad many of whom have been left cashless by the global economic downturn. Compounding the problem, Lebanon’s currency has lost at least 60 percent of its value in the past month alone. Lebanon is therefore in its worst economic situation in its history, and any thoughts of recovery can only be realized with political reform as well as heavy foreign aid, and nothing else.

Lebanon’s road to recovery

Despite the extreme economic situation, Lebanon’s government has earlier this year attempted to formulate a plan to economic recovery. Furthermore, after the latest blast, the international community has voiced its plans for aid to Lebanon.

In an April Lebanon’s new Prime Minister Hassan Diab revealed his economic recovery plan and, along with his political allies, touted it as the panacea for Beirut’s financial woes. Since then, his government has been locked in negotiations with the International Monetary Fund (IMF), whose assistance, along with other foreign aid, is posited as the necessary precondition for jumpstarting economic recovery in the plan. Lebanon is set to seek $10bn to $15bn in external financing and officially devalue its currency by half by 2024 in an effort to address the deepest financial crisis in its history, according to a leaked government plan. The government will seek “massive external financial support to backstop the economy, made conditional upon the implementation of a comprehensive recovery plan able to restore confidence and reverse the current trends,” the plan says. “It is difficult to imagine Lebanon coming out of such a deep crisis without the support of the international community at large.” The draft blueprint necessitates a comprehensive restructuring of the country’s central and private banks and its debt burden – currently the third-highest in the world as a percentage of total economic output. Lebanon chose to default on its foreign-currency debt last month for the first time ever, and has since said it will postpone payment of all local and foreign debt, totalling some $90bn.

While the government’s draft rescue plan acknowledges the scale of the country’s financial crisis, analysts say implementing the outlined reforms would be difficult given the pain it showers on various stakeholders. Nasser Saidi, a former Lebanese economy minister and vice governor of the Central Bank, told Al Jazeera the draft takes a holistic approach by addressing the country’s most pressing problems including the need for external financing – preferably from the International Monetary Fund – and its need to restructure public debt, private banks and the central bank.  “It can’t be piecemeal” said Saidi. “These are signs that there is a willingness to go in the right direction, but let’s have no illusions: it will take a lot of political courage.”

However, many believe that Diab’s plan simply won’t suffice. Its remedies are either incomplete or premised on repeating past failures. Indeed, Lebanon has few, if any, tools to restore sustainable growth and those are certainly not the routes outlined in the plan. Diab’s promise that his plan will remedy this dysfunction and restore economic growth by 2024 is unlikely. The plan’s figures are based on an incorrect exchange rate of 3,500 lira to the dollar an exchange rate that Beirut has lost control over. It has been fluctuating between the official 3,850 rate up to nine thousand lira to the dollar as of the date of this publication on the black market. The plan also depends on speculative funding sources, like the Lebanese diaspora without providing any estimated figures or how Lebanon intends to attract their dwindling remittances and approximately $21 billion in foreign aid and IMF assistance, which might never come. Lebanon’s resistance to genuine reform is perhaps most prominently typified by Hezbollah, which has been signaling its readiness to veto any IMF deal that “imposes terms on Lebanon.” The group has been prodding Beirut to instead “turn eastward” to revive its economy, looking at countries like Syria, Iran, Russia, and, particularly, China a recommendation which is gaining traction within the Diab government.

The latest disastrous blast in Beirut has also attracted alot of international attention to the situation in Lebanon, with several countries preparing to send aid and support Lebanon. Turkey’s president and top Turkish officials expressed sorrow Tuesday after the massive explosion in Beirut. In a phone call, Recep Tayyip Erdogan extended his condolences to his counterpart Michel Aoun and the Lebanese people, Turkey’s Communications Directorate said in a statement. Erdogan said Turkey stands by Lebanon and is ready to provide all humanitarian assistance, mainly healthcare, to the Lebanese people. Turkey’s Justice Minister Abdulhamit Gul said they will stand beside the brotherly country of Lebanon and that Turkey shared its pain. Furthermore, British PM Boris Johnson said in a statement on Twitter: “The pictures and videos from Beirut tonight are shocking. All of my thoughts and prayers are with those caught up in this terrible incident. “The UK is ready to provide any support in any way we can, including to those British nationals affected.” French President Emmanuel Macron has also said said French aid and resources were being sent to Lebanon. In the United States, the State Department was closely following reports of an explosion in Beirut and stands ready to offer ‘all possible assistance’, a spokesperson for the agency said. Countries in the Gulf paid tribute to victims as well, with Qatar saying it would send field hospitals to support Lebanon’s medical response The UAE has also prepared large-scale aid.

Overall, it is clear that international aid and contribution is the only way Lebanon’s recovery plan can have any chance of working, and the latest blast in Beirut has triggered not only humanitarian aid, but also much needed economic aid worldwide that could do just that.