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Is Lebanon’s central bank a Ponzi scheme ?
Is Lebanon’s central bank a Ponzi scheme ?
The situation in Lebanon is deteriorating. Traffic lanes have all been reopened, but a rift has emerged between those who favour the free flow of traffic and the road blockers. The Free Patriotic Movement of President Michel Aoun, the Shiite Amal Movement of parliament speaker Nabih Berri and the Hezbollah condemn road closures; while the Future Movement led by Saad Hariri, a Sunni, the Lebanese Forces of the Maronite Samir Geagea and the Progressive Socialist Party of Walid Jumblatt, leader of Lebanon’s Druze, have attempted to reintroduce the roadblocks.
In the current political landscape, pursuing a simultaneous fight against corruption does not seem possible. Gebran Bassil (Free Patriotic Movement) announced that all the leading members of his party would make public their bank accounts. He also tabled a bill aimed at verifying the assets of civil servants. However, several hurdles would render such measures unworkable (the waiver of bank secrecy being prohibited by law in these circumstances; nothing has been said about the bank accounts belonging to the family members of political leaders; etc.).
Actually, corruption in Lebanon is not a violation of the law; it is the law itself that generates it. For example, there are import taxes, which nobody pays since the law grants an exemption to the 17 recognized religious communities. It is therefore sufficient to have the import declared by a person from one of these communities to avoid paying the tax. Thus, the port of Beirut loses out on US$ 3 billion every year.
The liquidity crisis, which sparked the 17 October protest movement, has worsened. Banks only allow cash withdrawals in Lebanese pounds up to a maximum amount equivalent to US$ 500 per week.
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“Panic Mode” Run On Lebanon’s Banks Feared After 7-Day Closure Amid Protests
“Panic Mode” Run On Lebanon’s Banks Feared After 7-Day Closure Amid Protests
Banks across Lebanon have been shuttered now for a seventh consecutive day, with the country’s banking association saying banks would remain closed Friday over “safety concerns” as massive anti-corruption protests have brought multiple cities to a standstill, which began a week ago.
Reuters reports that banking operations have been “limited to paying out customer and employee salaries via ATMs” in a situation which has also hit war-torn Syria, given many Syrians rely on the neighboring Lebanese banking system to hold dollars and savings following the collapse of Syria’s currency.
For the first time addressing the protests — dubbed the ‘WhatsApp Revolution’ because it was initially triggered by a government a plan to boost state revenues with a daily tax rate on calls made via voice over internet protocol (VoIP), utilized by applications such as Facebook-owned WhatsApp — Lebanon’s President Michel Aoun in a public speech touted an economic reform package proposed by the prime minister as a “first step” toward staving off economic collapse.
Aoun acknowledged state corruption has “eaten us to the bone” and assured the crowds, “I am ready to meet your representatives who carry your concerns, to listen to your specific demands.”
He also hinted at a government reshuffle potentially in the works, saying that there was “a need to review the current government.”
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