As Lebanon's economy collapses, even the wealthy are no longer immune

At the cocktail bar on my block, barkeeper Nino fixes a decent Sazerac but says he won’t be able to keep making them for much longer.

The drink, priced at something like $27 at Lebanon’s official exchange rate, now costs me about $2.70 in lira bought on the “parallel market”. An acute shortage of foreign currency in a country where 80 percent of goods are imported has seen even licensed money exchange houses abandon the official rate of 1,515 lira to the dollar.

As another power cut leaves us sitting in darkness alleviated by the light of our smartphones, Nino says he isn’t sure he can stay in business. Most customers would stay away if he hiked his prices further, he believes, but most of his overheads remain pegged to the dollar.

Owners in Gemmayze – once the heart of Beirut’s pumping nightlife scene – now demand rent in dollars, about $4,000 a month for a bar like his, Nino says. His own octogenarian landlord, who granted Nino a payment holiday during the recent coronavirus lockdown, has resumed charging him since the bar reopened. “What does he need the money for, he’s not going to be around for much longer,” Nino grumbles half-heartedly.

The lira scraped new lows last week, trading at 15,300 to the greenback, exacerbating hardship for most but providing a windfall for those with access to foreign currency. The worsening inequality this produces has become an increasingly discomfiting facet of life here in this Mediterranean nation famed for the extravagant lifestyle of its elite.

At the bed-and breakfast I stay at over the weekend, owner Ralph has hired a night guard. The cost of replacing even one missing pool recliner would be greater than the salary of the security, he says. When his large black rescue hound Bella chews his Ray-Bans, Ralph complains that it would cost him two months salary to replace his sunglasses.

But at dinner on Saturday night we are unable to get a seaside table at a heaving local restaurant. We are seated further back on the terrace, where we watch gym-hardened and surgically plumped young Lebanese pout for selfies at the bar and shout to be heard over Bee Gees tunes. The seafood meal costs us about $20 per head, including drinks and a tip.

There are signs though, that Lebanon’s collapse is gradually encroaching on our privileged bubble.

Recently, the truffled roast beef sandwich was off the menu at a popular craft beer bar in Badaro, a gentrifying neighbourhood that has been described as the Brooklyn of Beirut. “We’re buying meat like it was a drug deal,” says Sami, the owner, describing the travails of back alley beef purchases.

With foreign reserves running low, the few remaining subsidised goods are in short supply. When the pumps have not run completely dry, hour-long waits at petrol stations are inescapable, even for those returning from relaxing weekends away. As nerves fray, policemen whose salaries are now worth perhaps $100 a month appear helpless to prevent fights erupting in the queue.

The fuel shortage also means the generator companies no longer supply 24/7 electricity. Mains power has been patchy for decades but until recently private power suppliers covered the deficit – for those who could afford to pay. With no power now during much of the night, one cannot run a fan, let alone air conditioning.

Which of course is only a small taste of what most Lebanese will be enduring during this looming summer of discontent.

I ask Nagi, my fix-it man, to estimate what percentage of the population has access to a regular supply of fresh dollars. “About 12 percent,” he guesses with curious precision.

A driver for a foreign NGO, Nagi is lucky to have retained most of his salary in dollars, even as his employer furloughed him during the pandemic. He says he now takes home more in a month than his doctor brother earns in a year working at a private hospital.

Even if one has money, some goods are in short supply. In February, anxious families desperately sought out black market bottled oxygen as covid patients were treated in their cars outside overflowing hospitals. Friends and colleagues returning from overseas are now asked to bring back scarce medicines in their luggage.

Officially over half the population now lives beyond the national poverty line, though this figure is worsening quickly. The World Bank warned this month that Lebanon was suffering one of the most severe crises globally since the mid-nineteenth century.

A GDP contraction of around 40 percent in real terms “is usually associated with conflicts or wars,” the authors drily noted, adding that “there is growing wariness of potential triggers to social unrest.”

Given Lebanon’s history of civil war, this should sound alarm even for the country’s most insulated elite. But political disagreements have prevented the formation of a new government since former prime minister Hassan Diab resigned days after the massive explosion at Beirut port last summer that killed over 200 people. (The precise figure varies depending on the source, while the government has never provided a definitive accounting of the death toll.)

Last week France announced it would hold a fundraiser for the Lebanese army, one of the only institutions unblemished by the country's sectarian divisions. Army chief Gen Joseph Aoun warned in a speech to officers in March that soldiers were "suffering and hungry like the rest of the people."

But with IFIs and foreign governments insisting that systematic reform must come ahead of bailouts, there is “no clear turning point in the horizon”, as the World Bank puts it.

In the meantime, I hope that Nino stays open, and not just for the sake of my Sazeracs.