After all the wars she survived, Wedad was hoping for a peaceful retirement. She taught in a high school for 55 years in Lebanon, and never stopped working despite her home being occupied by militias and foreign armies, repeatedly looted, shelled and burned.
When the war finally ended in the 1990s, Wedad hoped to travel and spend time with her family. But at 85, she’s locked out of her retirement money and can’t afford enough gasoline to visit her daughter, who lives only a few miles away. Instead, she sits at home in the dark because she can’t afford to keep the lights on either.
“I worked 11 hours per day,” she says. “I was one of the few women to get a master’s degree in 1958 and look where I ended up. […] I hate life, but I pretend everything is ok.”
Breakdowns and holdups.
Like most bank account holders in Lebanon, Wedad has seen her life savings evaporate over the past three years since the country suffered one of the worst financial collapses in modern history. A 95% drop in the value of local currency has driven most people into poverty. Lebanon’s banks have limited withdrawals to only a few hundred dollars per month, and even then depositors are forced to cash out at an outdated local currency exchange rate, losing some 80 cents for every dollar they withdraw.
What’s more, with the bankrupt Lebanese state unable to provide basic services such as water and electricity – which must now be purchased from unregulated private providers at exorbitant fees – the cost of living has skyrocketed. Wedad, for instance, tells Novara Media she’s paying $250 per month for just 12 hours of privately generated electricity per day.
The government’s inability to provide basic services or restructure the banks has led some depositors to take matters into their own hands. Over recent weeks, at least a dozen people have marched into banks with real or toy weapons, demanding their money. Some have been detained by authorities, but most have been released after reaching settlements with banks or facing minor fines as low as $5 due to hyperinflation.
Lawyers from the Union of Depositors (UoD) in Lebanon represented many of the plaintiffs, and also worked to secure the release of a small portion of funds. The group rose to prominence earlier this month when it accompanied a newly-elected member of parliament to her bank to successfully withdraw $8,500 to pay for surgery. The group also provided legal aid to a man who entered a bank in February with a bottle of gasoline, threatening to burn it down until he was allowed to withdraw $50,000 from his account. He was held for two weeks, but released after the bank dropped the charges, according to Dina Abou Zour, an attorney and cofounder of the union.
“We don’t support any violent acts at the banks, but we will defend any depositors,” she tells Novara Media, adding that the group has filed 400 lawsuits to help individual depositors since the crisis began. But these lawsuits, mainly based on urgent need for medical expenses or student tuition, covered amounts of no more than a few thousand dollars – nothing compared to the over $100bn of deposits Lebanese banks held at the onset of the crisis in 2019. Conservative estimates put overall losses to Lebanese banks at $70bn.
Abou Zour says the UoD currently operates like a lobbying organisation made up of lawyers and economists serving on advisory committees, but the hope is to hold elections in the coming months to develop a proper structure. Activities include monitoring government proposals with international lenders like the IMF, challenging legislation that harms the interests of depositors, and meeting with new members of parliament to provide policy recommendations.
These new politicians were elected earlier this year following a wave of protests across the country, and make up around 10% of the 128 member legislative body. They ran on a platform of independence from Lebanon’s ruling political parties, which have largely backed the banking sector, represented by the Association of Banks in Lebanon. The Association has rejected successive government economic recovery plans to audit and restructure the banks, claiming it’s unfair for the banks to accept the burden of all depositor debt, which went toward funding state expenditures.
Mohamad Faour, a professor of finance at the American University of Beirut, says the banks are refusing accountability for the risks they have taken and the profits they have made, estimated at over $20bn. Over the past two decades, Lebanon’s banks were able to amass such a great number of deposits (over four times the country’s GDP) by offering interest rates well above 10%, which critics say discouraged investment in productive sectors.
“This cartel, the Association of Banks in Lebanon, needs to be broken,” says Faour. “The banks have been miraculously excessive in their risk behaviour, lending to the central bank and political class, knowing this money isn’t going to be paid back. You have benefited and now is your day of reckoning.”
Faour believes the government needs to hold banks liable by declaring them bankrupt. “Lebanese law is very clear,” he says. “Once bankruptcy is announced, the Central Bank will assume ownership and personal assets of CEOs and the board will be frozen and subject to investigation, establishing some level of accountability.”
The UoD also feels the Central Bank should be held accountable for failing to regulate the banks, engaging in the manipulation of deposits and for risk-averse investments in government debt, which it says were illegal. But attempts by the union to file criminal lawsuits with the country’s attorney general “have not moved,” said Abou Zour. She couldn’t recall if bankers have ever been held accountable for financial crimes in Lebanon.
“Banks should be held accountable, however, this isn’t the case in Lebanon. Banks are just pursuing their own interests without anyone monitoring their work,” she says.
One figure who has successfully avoided accountability is Riad Salameh, the governor of Lebanon’s Central Bank. Salameh, who has served as governor for nearly 30 years, has an estimated personal wealth of $100m and is under investigation for corruption in at least five European countries. For years, however, he was praised by Western leaders and institutions, and was repeatedly selected as central bank governor of the year by financial industry publications. He remains in his position today after evading multiple local investigations by Lebanese judges. Even the US government, which has sanctioned a number of Lebanese officials over reported corruption charges, has denied rumours Salameh would be targeted.
In recent years, global financial institutions have shifted their tone on Lebanon, laying blame for the collapse on the country’s leaders and accusing them of instigating a “deliberate depression”. Yet on the eve of the collapse in 2018, the World Bank said Lebanon’s economy was ripe for investment – an incongruence pointed out on social media by a former bank staffer in Lebanon.
“It’s completely absurd,” says Anis Germany, a left-leaning political activist. “In what capacity are they [the World Bank] addressing the Lebanese population after they spent decades talking about Lebanese miracles?”.
Germany recently left one of Lebanon’s new political parties, disillusioned with the push by many activists for fiscal rather than structural reform, with little discussion of class, taxation or economic planning among the newly elected MPs. A proposed bailout by the IMF, which many activists have been urging, will inevitably increase austerity measures, Germany warns. “Financial institutions have been created to safeguard the interests of capital around the world.”
Instead of more painful cost-cutting that lending institutions may demand, Germany says Lebanon needs to be spending to build a productive economy. In the meantime, though, the situation is only getting more desperate. Unemployment, inequality and poverty are at the alarming levels they were at the start of the Lebanese civil war. “We are sitting on a dormant volcano,” says Germany.
“We’re living a terrible life.”
Abou Zour says the Pulp-Fiction-style bank holdups have been relatively peaceful so far, with people only demanding their own savings. “Until now, no-one has gotten hurt – but this isn’t a guarantee anymore,” she explains.
Many have celebrated the holdups as acts of defiance in the face of injustice. But Wedad doesn’t feel reassured. She avoids watching the news because it only sends her blood pressure up.
“Those people have power, I don’t have any at all,” she says. “Innocent people can’t get a penny, it’s unfair.”
Wedad fears for the safety of her daughter who works at a bank. “I feel sorry for the employees. The rich people pocketed the money and now we have to pay the price for the thieves who robbed us. We’re living a terrible life.”