On 4th August 2020, a dual explosion at the Beirut Port, the largest port in Lebanon, led to the death of 158 people, injury of more than 6000 people and led to several people being declared missing (21 as of now). The initial blast took place around 1800 hours (local time) followed by a succeeding explosion of a much greater intensity causing widespread damage to even those places that are located at a distance of more than twenty kilometres from the port area. The primary cause of the explosion is still unknown. However, it has been reported that 2,750 metric tons of ammonium nitrate was stored at the port caused the second explosion which was so massive that its shock wave was felt as far as Cyprus (180 km northwest of Beirut).
Existing Turmoil in Lebanon
“It’s an economic crisis, a financial crisis, a political crisis, a health crisis, and now this horrible explosion,” said Tamara Alrifai, the spokesperson for UN Relief and Works Agency for Palestine Refugees in the Near East.
The Beirut explosion is another nail in the coffin of Lebanon which is currently in the depths of several ongoing crises since 2019.
Lebanon experienced the biggest blow to its stability in October 2019 when the Lebanese pound severely depreciated by 75% of its official value on the black market and is now trading at nearly 9,000 to the dollar in comparison to the official peg of 1,507.5 to the dollar.
The currency devaluation poses a serious problem in an import-dependent country like Lebanon because imports have become extremely costly and people have to sell their personal belongings to be able to afford even the necessities like milk and bread. It has also led to the shutting down of several businesses. Lebanon’s public debt-to-gross domestic product has been the third highest in the world. About one-third of the country’s population is below the poverty line and the economy experiences an unemployment rate of 25% (source).
There had been massive protests all across the country since October on account of the people not receiving basic amenities promised by the government. There have been a series of blackouts, some lasting more than 22 hours, due to shortage of oil and diesel. The political elite of the country had been pushing the country towards its doom while benefitting from the country’s reserves by their corrupt practices. The Lebanese economy has been hit by hyperinflation on account of economic mismanagement by the government. The financing of huge fiscal deficits of the government by the Central Bank due to the inability of taxes and other techniques to generate sufficient revenue to meet the government expenditure has contributed a great deal to the ongoing hyperinflation.
This, along with Lebanon defaulting on its foreign debt, for the first time, in March goes a long way to show the incompetence of the government and its policies. The International Monetary Fund, on being asked for a financial rescue package and restoration of confidence by Prime Minister Hassan Diab, has refused any help unless the government provides a proper plan to revive the economy and shows initiative to combat existing corruption.
IMF Managing Director Kristalina Georgieva has said that there is no near scope for a breakthrough in negotiations and there is uncertainty regarding the capability of the government to implement reforms and bring the economy back to its growth path the country despite having a strong entrepreneurial culture in the past and taking the initiative to host Palestinian and Syrian refugees, thus, easing a humanitarian crisis.
The COVID-19 breakout and synchronized worldwide lockdowns have further contributed to the sharp economic decline of Lebanon and have “exposed the inadequacies of Lebanon’s social-welfare system”
Impact of the Explosion
The double-blast of 4th August will have grave consequences on the already falling economy of Lebanon. Beirut, the largest port in Lebanon was completely destroyed and will remain dysfunctional unless urgent repairs are made which could take up to several weeks or months. Domestic production in Lebanon accounts for only 10% of the country’s consumption. For a nation which is highly dependent on imports for most of its vital consumer goods, the destruction of the Beirut port, which was an entry point for imports to “feed a nation of more than 6 million people”, will lead to an epic downfall of the Lebanese economy and cause adversities in the supply chain. The nearest port of Lebanon, Tripoli, will not prove to be of much use, being one-third of Beirut’s size. Thus, even if the imports were shifted to arrive at Tripoli, they will not be able to accommodate the additional cargo volumes and there will be congestion.
Beirut’s main grand silo at the port which was the largest grain storage facility in all of Lebanon was completely destroyed by the blast, leaving the country with barely less than a month’s grain reserves. Although the economy minister of Lebanon has said that the inventory of bread and flour is sufficient to avoid a crisis, one can never fully give up on the possibility of a supply chain shock, especially in an economy like Lebanon’s. Hani Bohsali, head of the importers’ syndicate, said, “We fear there will be a huge supply chain problem unless there is an international consensus to save us.” The silo stored around 85% of the country’s cereal, thus, experts are predicting an upcoming food shortage despite the assurance by the government.
Beirut’s main grand silo at the port which was the largest grain storage facility in all of Lebanon was completely destroyed by the blast, leaving the country with barely less than a month’s grain reserves. Although the economy minister of Lebanon has said that the inventory of bread and flour is sufficient to avoid a crisis, one can never fully give up on the possibility of a supply chain shock, especially in an economy like Lebanon’s. Hani Bohsali, head of the importers’ syndicate, said, “We fear there will be a huge supply chain problem unless there is an international consensus to save us.” The silo stored around 85% of the country’s cereal, thus, experts are predicting an upcoming food shortage despite the assurance by the government.
The blast has left nearly 300,000 people homeless. It has led to massive infrastructural damage which would take ages to fix. More importantly, even if the time required to rebuild the city is not taken into consideration for the moment, the repairs would cost the government several billions of dollars, gathering which is an impossible task considering the worldwide reputation and negative credit-worthiness of the nation owing to the prevailing corruption.
Owing to the explosion, several primary healthcare centres and hospitals have been so damaged that they cannot admit patients anymore. However, the number of people requiring immediate physical aid has increased, both, due to the blast and due to a hike in COVID-19 cases owing to the chaos amidst the emergency. The World Health Organization has reported that the explosion led to the destruction of 17 containers filled with hundreds of thousands of medical supplies and protective instruments to combat the deadly virus leading to an urgent need for supplies in that region. There is also the social cost of the explosion which has released harmful fumes in the environment, polluting it and bringing about the danger of genetic breathing disorders for years to come.
The explosion further shows the inadequacy of the government as it did not deal with such a large shipment of explosives, despite repeated warnings, and chose to ignore the matter since 2013. This incident will reignite the civil protests, which had been at bay due to the coronavirus spread, thus causing additional turmoil in the country.
The impact of the explosion can lead to further depreciation of the Lebanese pound, thus, rendering imports costlier than before and putting the economy in a recessionary spiral that could take ages to recover from unless a massive boost is given to the economy via international consensus and support.
Conclusion
The ongoing consequences of the economic crisis will hinder the economy’s ability to bounce back from the 2020 blast.[14] Despite immediate recovery measures being taken by several international agencies and governments to deal with the emergency at hand and to help provide relief to and boost the well-being of the people in need, the future of Lebanon does not seem to be very promising. Unless the Lebanese politicians realise the severity of the situation, acknowledge their mistakes and present a united front to help the people, the future of Lebanon looks bleak. The resilience of the public will not be enough to come out of this disaster unless backed by government policies. The explosion has led to the complete loss of faith of the people in their administrative bodies and long-term situations will not improve unless fundamental reforms are brought about in the policies of the nation and implemented for the betterment of the people.
