'We're scared': Lebanon on edge as time and money run out
By Ellen Francis and Issam Abdallah
BEIRUT (Reuters) - Fouad Khamasi fills his taxi with fuel worth around 40,000 Lebanese pounds each day. It could cost at least four times as much when the subsidies end.
The 53-year-old taxi driver from Beirut can almost afford to buy fuel and feed his children. He fears the price of subsidized food and essential imports - wheat, fuel, medicines - will skyrocket.
"These are the toughest days I've ever seen," he said. "Some days you put your hand in your pocket and you can't find anything ... I leave the house and just pray. Whatever I do, it doesn't matter. It's a joke."
Lebanon is running out of time and money.
Currency reserves are well below what the state had already classified as "dangerous" when it defaulted on its enormous debt in March, which means it cannot afford to maintain the subsidies for long.
Leaders who have been in power for decades have not yet adopted a financial bailout plan a year after major protests against them swept the country, and they have failed to get help from foreign donors.
Talks with the International Monetary Fund (IMF) were cut short earlier this year when Lebanese government officials, bankers and political parties failed to agree on how big the losses were in the financial system and who should bear them.
France, a former colonial power, stepped in after a massive explosion in the port of Beirut in August, killing nearly 200 people and causing billions of dollars in damage.
But rival sectarian politicians failed to overcome the first hurdle on the French financial aid roadmap: quickly appointing a new cabinet.
The currency, which has lost more than 80% of its value against the US dollar since last fall, weakened after French efforts stalled.
Meanwhile, comments from officials pointing to an end to some subsidies within months have sparked panic buying, adding to the risk of food shortages and a more dramatic crash in the currency.
In the nation of roughly six million people, more than 55% of whom live below the poverty line, many prepare for hunger and cold as winter approaches.
Kick the can
"Everything that has happened since last October could have been avoided," Nasser Saidi, former governor of the vice-central bank, told Reuters.
He said targeted aid to the poorest Lebanese is more effective than broad-based subsidies that have benefited smugglers bringing goods into Syria.
"It's all a kick for the can. What should have been done is a full economic and financial plan," Saidi said.
The importers of important raw materials stated that they had not received a timetable for planning the duration of the subsidies.
Central bank governor Riad Salameh said the bank could not fund the trade indefinitely, despite not specifying a time frame. President Michel Aoun recently said of reserves: "The money will run out. What can we say?"
An official source close to the government told Reuters that the money left for subsidies would be another six months by cutting support for some goods. [nL8N2GZ3NR]
The state, which critics say is sunk in corruption, and the paralyzed banking sector, its largest creditor, have taken the blame for the crisis.
The gap in prosperity, which is already one of the largest in the region, is now widening. In a country that relies heavily on imports and produces little, prices for many items, including diapers, have tripled.
In Beirut, men and women, some with young children, are often seen digging for food in dumpsters near city crossings.
Two months after the port explosion, the Lebanese expect life to be even more difficult.
Many families today depend on charity. The collapse could make people more dependent on political factions for aid and security, due to the militia days of the civil war.
Some analysts have warned that security forces, whose wages are rapidly depreciating, cannot contain rising unrest.
Hospitals that are seeing an increase in COVID-19 cases are congested. Lack of fuel has darkened the city streets. Cars for rationed fuel are parked at gas stations. [nL8N2GW2UK]
"We're afraid we won't be able to continue," said Siham Itani, a pharmacist who fears price increases and is being robbed. She said supplies of insulin and blood pressure medication had dwindled.
Another pharmacist said a masked man held her up at gunpoint and asked for baby food.
Mostafa al-Mohalhal, who had diabetes at the age of 62, kept four vials of insulin in his refrigerator, but the daily blackouts spoiled them.
"If the price goes up, how will I pay for it?" he said. "People will die on the street."
(Writing by Ellen Francis; Editing by Samia Nakhoul and Mike Collett-White)
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