Since the Central Bank made its infamous decision to lift fuel subsidies last week which was followed by attempts to soften the impact of the news through other statements and official meetings in Baabda, the country is close to entering a completely new era. The political, social, and economic landscape will dramatically change due to the massive impacts of such a decision on the vast majority of Lebanese, if not all of them! It is no exaggeration to say that this decision, if taken in any other country, would case a massive backlash or a revolt that would overthrow the ruling entity. Quite simply, this decision throws an entire population under the bus.
One foreign diplomat told Janoubia that when he asks representatives of political parties about their opinions on lifting subsidies, their answers would be in favor of it while their public statements would be contradictory. He added that: “We are surprised by the statements of some ministers who claim they want to fight smuggling and the cartels behind them while they are the same ones protecting them. These companies and cartels are owned and operated by their relatives, and they provide security and political cover for their operations. Meanwhile, they only provide small drops of fuel to the public.
This example, which the foreign diplomat gave, is supported by economic expert Dr. Mahmoud Jibai. Jibai explains to Janoubia that: “For quite a while, there have been attempts to gradually lift subsidies since lifting them completely is not bearable from a socio-economic point of view.” He adds that: “In a meeting of the Social and Economic Council, which included many representatives of most Lebanese parties, the issue of lifting subsidies was discussed and approved!”
“As economic experts, we emphasized the fact that it is not advisable to lift subsidies without implementing mechanisms that protect the purchasing power of the Lebanese citizen. These mechanisms begin with providing public transportation, breaking down monopolies and cartels, abolishing exclusivity privileges and opening up the market for all companies to import at competitive prices. Furthermore, an electricity reform plan should be implemented to strengthen production to at least 12 hours a day in order to reduce the private generator bill for citizens, and then a basic monthly income card should be issued to the neediest segments of society. This card should be a recurring payment however; not to be used several months before the elections alone.”
Jibai believes that: “Lifting the subsidies before the implementation of these plans, means that the purchasing power of the citizen will take a massive hit that will lead to social collapse which would threaten peace”, and he described the governor of the Central Bank’s decision as “a service to the cartels” as there are an estimated 180 million liters of fuel being stored by them after being bought at a subsidized rate. He points out that: “When subsidies are officially lifted, fuel would return to abundance in the market and the cartels will make millions. The governor’s decision helps these cartels and increases the pressure on Lebanese, and it will potentially lead to social instability and riots on the streets.”
Jibai added that: “The lifting of subsidies cannot be handled by over 70% of the population because it would increase the price of 20L of gasoline from 80,000 L.L to 300,000 L.L. The average citizen would then need around 3,000,000 L.L for gasoline their car alone, and another 3,000,000 L.L for electricity. Furthermore, the prices for commodities will also increase by an estimated 60%.”
He concluded by saying: “The situation is very dangerous, and the political authorities have to prepare for the backlash very carefully, as the consequences for such as decision may be unimaginable.”