A Lebanese man protests outside of the Central Bank building in Sidon in 2019. (Photo credit: AFP)
The Association of Banks in Lebanon (ABL) announced on 21 September that financial institutions will not reopen their doors due to a lack of “security protection” by authorities.
Lebanese banks shut their doors this week following a series of bank heists, as desperate depositors were pushed to extreme measures to access their life savings.
In a statement, the ABL claimed that “the continuation of the inciting atmosphere” across the country is the main reason for the shutdown, in an effort to prevent further “risk and threats.”
Banks in Lebanon demand assurance from authorities before they resume their work. The decision to shut down operations was reportedly suggested by Interior Minister Bassam Mawlawi, who said the government needed “more time” to implement necessary security measures.
Meanwhile, banks will only be accessible upon an appointment request and thorough inspections of customers on sight.
Head of the Bank Employees’ Union, George al-Hajj, defended the measures, claiming that the move “is meant to financially, morally and physically protect employees and preserve their safety.”
The strict measures have raised alarms among economic experts, who call the measure a harmful blow that will inevitably lead to a new spike in the exchange rate.
In the past weeks, a woman who wanted to pay for her sister’s cancer treatment became an international sensation after she reclaimed some of her own savings with a toy gun. The act inspired more heists, in which no people were harmed.
In response to the raids, the ABL announced last week that all banks would close their doors. In response, depositor groups warned: “[when you reopen] hundreds of depositors [will be] waiting for you in the banks.”
However, the real issue in Lebanon does not stem from angry depositors, but from a corrupt financial system that has benefited its own elites.
The World Bank has described the crisis in Lebanon as “deliberate” and blamed the elites for operating a “Ponzi scheme.”
“A significant portion of people’s savings in the form of deposits at commercial banks have been misused and misspent over the past 30 years. These are earnings by expats who toil in foreign lands; they are retirement funds for citizens and perhaps the sole resource for a dignified living; they are necessary financing for essential medical and education services that consecutive governments have failed to provide,” the report released by the World Bank on 3 August states.
The 130-page report analyzes the impact of the crisis aggravated on essential public services, such as water, electricity, transportation, health, education, and social protection.