Lebanon has been under political, economic, and regional turmoil since late 2019. The 17th of October revolution, the banking crisis, and the Beirut port explosion have all been either a cause or effect of this turmoil. Syrians, who make up a large majority of Lebanon’s present population, have been especially impacted by these disasters. The influx of Syrians into Lebanon began in 2011, when Syria was facing its own political and economic tensions. Ever since, Syrians have relied on low-income jobs they’ve received in Lebanon to provide for their families and send money back home to Syria. Now, the unrest that has hit Lebanon for the past year has jeopardized Syrians’ already limited job opportunities, subsequently exacerbating an already destroyed economy in Syria. Below, we examine a few crises that have had significant impact on the continued deterioration of the Syrian economy:

The Banking Crisis

Syrians have always considered the Lebanese banking sector as a safe haven where they can safely store their money and a shelter from the constant interventions of a corrupt regime. After all, when Syria nationalized its banks in 1966, all holders of funds in the Syrian Banking Sector hastily moved their capital to Lebanon. Lebanon was also used as the main financial hub for Syrian monetary transfers, as it was illegal in Syria up until 2005 to use or transfer foreign currencies within its borders. If all this wasn’t reason enough to flee the banks of Syria, the ongoing conflicts that started in 2011 convinced most of the remaining investors there to flee, some of whom eventually found their way to sister-country Lebanon.

At present, due to the Banking Secrecy Law of 1956 in Lebanon, it is hard to pinpoint an exact number of the total amount of Syrian capital in Lebanese banks. Nevertheless, the most generally accepted estimate is that of a study conducted by Professor Ali Kanaan of the University of Damascus, which estimates Syrian deposits in Lebanon to exceed $40 billion.

Syrians who entrusted their life-savings to Lebanese banks are not any better off than they were in Syria, though. Lebanon, going through a banking crisis of its own, has imposed draconian measures, leaving depositors unable to withdraw but meager amounts of their total reserves. This caused a ripple effect throughout the Syrian economy as families back home used to count on remittances flowing from Lebanon to Syria as an integral part of their income, with the World Bank’s latest data estimating this bilateral remittance flow amounting to a quarter of a billion dollars per year.

The Financial Crisis

Lebanon has recently been victim to rampant inflation and devaluation of currency, with its official currency rate still pegged at 1,515 Lebanese Pounds to the dollar, while the black-market rate, which is actually the one used throughout the country, is now at 8,800 Lebanese Pounds to the dollar (as of October 7, 2020). This has indirectly affected Syria’s own currency rate as Syrians working in Lebanon were accustomed to using the Lebanese Pound to buy dollars, and then spending these dollars in the Syrian economy, thus increasing the Syrian Central Bank’s share of foreign reserves. In fact, after the Syrian Central Bank announced the official rate of the Syrian pounds at 1,250 pounds to the dollar, (for comparison, it was 47 Syrian pounds to the dollar before conflicts broke out in 2011) it promptly posted on social media blaming “the economic crisis in Lebanon” as one of the two reasons behind the decision, along with “economic measures against the Syrian people through the so-called Caesar Act”.

Moreover, the financial crisis in Lebanon has heavily affected the 1.5million Syrian nationals living as refugees. Even before the crises in Lebanon and the protests of October 2019, a UNHCR survey found that 76% of Syrian refugees in Lebanon lived below the poverty line (less than $3.84 per day), and that number has surely skyrocketed since. In addition, half of these refugees used to get aids from the UNHCR and the World Food Program equal to $27 per person per month, but ever since the crisis began, refugees have been receiving the aid in Lebanese Pounds at the official exchange rate (or 40,000 Lebanese Pounds which equates to $4.5 on the black market).

The Port of Beirut Explosion

While Lebanon’s Beirut port did act as the main point for Syrian imports, the explosion will not likely affect any business dealing, as the Port was already working below capacity and is still able to accommodate Syria’s importing needs. Instead, the explosion has touched on and further aggravated another one of Syria’s catastrophes, its struggle to achieve food security. In 2019, Syria was estimated by the FAO to have grown and harvested a total of 2.2million tons of cereal. With aggregate demand being 4 million tons and the country struggling to import the needed amounts, the number of “food insecure” inhabitants is considered to be around 9.3 million people by the UN World Food Program. Lebanon was the main exporter of wheat to Syria, with exports increasing 14-fold ever since the start of the Syrian conflict.

Ever since the explosion though, Lebanon has lost a huge amount of its wheat supplies, with Beirut’s Governor stating that Lebanon has only 1.5 months of wheat reserves left.

Hence, while no data has been released yet, it is certain that the explosion will drastically reduce Lebanon’s wheat exports to Syria – both legal and illegal. With Syria’s wheat prices having already tripled over the past year, one can only imagine what misery further awaits its people.

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