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Lebanon, already bankrupt, contends with pandemic’s rising threat

Lebanon recorded its highest one-day tally of new coronavirus cases Friday, after easing extended lockdowns. The country, already in economic freefall and suffering under a paralyzed, corrupt and bankrupt government, cannot afford another crisis. But now, hunger and despair are spreading alongside the deadly virus. Special correspondent Jane Ferguson reports.

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  • Judy Woodruff:

    Lebanon recorded its highest one-day tally of coronavirus cases today, after easing extended lockdowns.

    While nowhere near the U.S. surge, Lebanon can ill afford another crisis. It's already in economic freefall, and has a paralyzed, corrupt and bankrupt government. Meanwhile, hunger and despair are spreading.

    Special correspondent Jane Ferguson has this report.

  • Jane Ferguson:

    Keeping a family fed and housed has rarely been harder in Lebanon.

    Parents like Susan Shabaan, raising their kids in destitution, have no choice but to wait for help. Tripoli is the country's second largest city, and long a neglected and poor area. The current economic freefall in Lebanon, with the government effectively bankrupt and a deep recession setting in, is swelling the ranks of the poor here.

    Half the country now live below the poverty line.

  • Susan Shabaan (through translator):

    All my neighbors are the same, all of them, next to me and then next to them. My in-laws are the same.

    Here in Tripoli, life is very difficult. There are so many poor people here. Who is going to help us? They all are poor. They need help, too.

  • Jane Ferguson:

    Susan's husband used to find work occasionally as a car mechanic, but hasn't had a day's wages in many months.

    We met with the family on a hot day. The tiny room they live in was stifling. Outside, there is a food market, but few people around here can afford to buy. Instead, like Susan, more and more rely on charity.

    Civil society has long stepped into the space that Lebanon's government has left. There is no real safety net for people provided by the state. Instead, independent organizations, like Sanabel Nour, funded by donations from within the community, hand out food and money to those who need it, now a huge portion of the country.

  • Fida Hajjeh:

    In Lebanon, the NGOs are the state, because we cannot rely at all on government. We have been working in this for 20 years.

  • Jane Ferguson:

    Several financial crises have hit the country at once, a devaluation of the currency, a banking sector near collapse, and a bankrupt government.

    In October 2019, vast protests hit the country, with people calling for political reform and an end to corrupt leadership. The protests, initially peaceful, turned violent as desperation rose.

    A nationwide lockdown since February due to the coronavirus ended much of the organized protests, but didn't stop recent rioting in Tripoli. Across the country, anger at the central and commercial banks is palpable.

    Since the end of the brutal 15-year civil war here in 1990, Lebanon has been attracting U.S. dollars by offering high interest rates at its banks. Those dollar deposits were then lent to the central bank, which gave them to the government.

    Now the government is broke, and owes the banks tens of billions of dollars, the people's money. As account holders panicked and tried to get their savings, the banks started ad hoc capital controls. Very quickly, millions couldn't get to their own money.

    And yet the ingrained corruption here has meant that, since then, over $5 billion has been withdrawn anyway and is presumed to have left the country anyway.

  • Nizar Ghanem:

    We are speaking about a country in crisis that doesn't have formal capital controls.

  • Jane Ferguson:

    Nizar Ghanem is an economist based in Beirut.

  • Nizar Ghanem:

    We are in a financial crisis where the rich can take their money out and then come and bring it back again to buy public assets, while, basically, people who have pensions can't take their money out of the bank.

    This is a full aggression against the poorest, most vulnerable segments of society.

  • Jane Ferguson:

    Now officials from the International Monetary Fund, or IMF, have arrived to discuss a bailout, the country's only real option.

    But Lebanon has seen bailouts before. Each time, little changes in the country's leadership, where traditional leaders of the numerous religious sects, Shia, Sunni, Druze, and Christian mainly, keep a tight grip on the economy.

    The sectarian political system keeps relative peace here, but entrenches corruption.

  • Nizar Ghanem:

    And these sects are, of course, represented by, if you would say godfathers, or dons, or chiefs, we call them, right, which means it's kind of ruled by an extended business networks that are more or less mafia-like.

  • Jane Ferguson:

    The protest movement forced Prime Minister Rafik Hariri to resign last year. But he and his party, much like the other sectarian leaders, still hold enormous power.

    The new government has managed to enact no real change since then.

    Sami Nader is a Lebanese political analyst.

  • Sami Nader:

    The old political establishment has nominated newcomers, but they totally control the decision-making system. So it's the same old operating system.

  • Jane Ferguson:

    That system includes the Iran-backed militant group Hezbollah, now a powerful force in Lebanese politics and government.

    Most here expect IMF conditions on a bailout to include reforms that would threaten Hezbollah. It has much to lose from changes that seek to push back the influence of a group labeled by many member countries a terrorist organization.

  • Sami Nader:

    I do believe that Hezbollah is short of option, because, on one hand, he has the sanctions. On the other hand, he feels the pressure of his political base, which is part of the Lebanese population that cannot take it anymore.

    They are — the Lebanese economy is in a freefall. It's a free collapse.

  • Jane Ferguson:

    The value of the Lebanese currency is collapsing too. Pegged to the dollar at 1,500, the Lebanese lira has, at street exchangers, fallen to as much as 4,300 lira to the dollar in recent weeks.

    Most goods are imported, and, for businesses, their real purchasing power is at the street rate.

    Lebanese shoppers have seen huge price rises on supermarket shelves in recent months. If you have dollars, you can change them in the street to keep up with those prices. But most people are paid in the lira. And for them, for example, this box of cereal costs $20.

    As the COVID-19 lockdown is slowly eased, protesters are coming back to the streets, some warning that things could turn violent if politicians don't get serious about change.

  • Man:

    From all over Lebanon, we came here to say no. We will continue. The revolution will continue.

    And if you don't do your job as soon as possible, this would lead to a big chaos, because the Lebanese people, when they see there is no justice, the protesters will be obliged to use violence to take their rights back, and we go to the politicians' places and take our money back from them.

  • Jane Ferguson:

    The country's banks are preparing for more anger, literally armor-plating themselves.

    And now the strict coronavirus lockdowns of the last few months have pushed the economy over the edge. While those efforts to save lives have worked — Lebanon has only had 35 deaths from the virus — the people here will have to face incredible financial hardship for years to come.

    For the "PBS NewsHour" I'm Jane Ferguson in Beirut, Lebanon.

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