Lebanon’s financial crisis accidentally prepared it for war

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A supermarket is an unusual place to diagnose a nation’s readiness for war. But Nizar Ghanem is lactose intolerant, and so when he started to see more goat cheese and goat milk on the shelves, he took notice.

Cow’s milk had become a less affordable luxury for a country in the grips of one of the worst economic crises the modern world has seen.

So Lebanon “went back to our original” – the goats that are native to the country, said Mr. Ghanem, the director of research for Triangle, a Beirut-based policy and research institute. “The Levantine goat was famous as being a ‘mini-cow’ because it gives a lot of milk. This has come back – you see more goats everywhere, which is great.”

On Lebanon’s southern border, daily skirmishes between Israeli forces and Islamic militants have produced a rising death toll, and elevated anxieties that Lebanon will be drawn into another devastating war with its southern neighbour.

It’s a war virtually no one wants, but for which most are ready.

The misery of the last few years has, in a way, helped them prepare. After a financial crisis that began in 2019, the nation of 5.3 million dealt with a devastating explosion at the port of Beirut and is now in a multi-year political crisis that has left the country with a caretaker government and no president – a combination that has eroded the state’s ability to provide even basic services.

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Entrepreneurs, homeowners and powerful private interests have since built their own systems to ensure the water keeps running, the lights stay on – and the dairy shelves remain stocked.

“Israel can bomb the hell out of Lebanon. Nothing will change in the way people operate day to day,” Mr. Ghanem said.

Roughly 30 per cent of people in Lebanon now use solar panels for electricity, usually backed by diesel generators. Factories operate without any reliance on the state grid. Roughly 20,000 illegal boreholes tap aquifers in the greater Beirut area alone, with business owners overseeing busy water stations that fill trucks, which then fan out across the city, pumping up tanks at apartment buildings, carwashes and police stations.

“You have to provide people with their basic needs,” says businessman Georges Mayne.

Four years ago, he dug a 45-metre well and ran pipe to the side of Stadium, an indoor soccer pitch he also operates. As many as 50 trucks a day now arrive there. Late last year, Mr. Mayne installed 100 solar panels and a lithium-battery backup system. He has stockpiled some diesel, too, enough that the combination of solar and a generator can power his water pumps and soccer pitch lighting for five months.

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Just down the street, Elias Wakim works at a family steel fabricating company. Half their business is now fashioning enclosures for generators, to dampen their sound.

“Every home now either has solar panels or a generator, because we no longer have state power,” he said. If war comes, people are prepared.

“We’ve learned a lot from our government’s negligence,” he said.

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The need for self-reliance is longstanding; Mr. Wakim’s home, built more than a decade ago, is equipped with a rainwater collection system that covers all water needs in wetter months.

The financial crises that began in 2019, however, made the need more acute. In 2020, the failure of Lebanon’s Central Bank to pay for fuel shipments forced major cutbacks by Électricité du Liban, the state power utility.

Before the financial crisis, residents of Beirut used an app to check the daily timing for scheduled three-hour blackouts. Today, the power comes on only a few hours a day, and often unexpectedly.

For businesses, managing through that has felt like its own kind of combat.

“We have already been in a war for two or three years, an economic war. War is not only with bombs,” said Edmond Jammal, the founder of Ojamco, a major Lebanese packaging supplier. The company provides zipper bags, labels and foil wrap for some of Lebanon’s best-known food brands.

It has endured through difficult years, losing its money when banks seized up, only to build back by working through inventory it had in stock at the time. Ojamco is now expanding, building a 3,000 square metre plant with a US$3-million rotogravure machine that is the first of its kind in the country.

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That plant, like its existing facilities, operates independent of state services.

“We don’t use Électricité du Liban,” Mr. Jammal said.

Such self-reliance goes to the heart of Lebanese society.

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New businesses like restaurants and clubs typically build plans with the expectation of paying back costs within a single season. Waiting any longer courts the risk of devastation from unexpected crisis, like the port explosion that devastated Beirut’s downtown in 2020.

“If you worked for a good couple of years before the explosion, then you are okay – you have returned your investment,” said Ziad Chebib, who was governor of Beirut from 2014 to 2020. It’s part of the reason so many businesses have managed to reopen, he said.

“This is a national culture of resilience,” he added.

That comes with its own problems. People in Lebanon have learned to be confident that they will survive the next crisis. “They adapt, they adapt, they adapt,” said Michel Ghazal, president of Fondation Ghazal, an organization dedicated to education, research and peace in Lebanon.

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But if anything can be managed, what will force people to say “enough”?

“There is no low so low that people will stop and say, ‘now we have to start a revolution,’” he said.

The privatization of services, too, has brought its own problems: electricity from diesel generators and water trucked by companies is expensive – and illegal wells have put pressure on aquifers.

But such concerns have become secondary as people contemplate the possibility of fresh calamity in a country that has spent the past half-century lurching between crises.

Mr. Chebib is now a director at Les Éditions Dar An-Nahar, a publisher. He has to decide whether to print books intended for the Beirut Book Fair, which for now remains scheduled for mid-November. He is wondering, too, whether he will need to relocate himself outside of Beirut.

“Are we going into this dark area again?” he asks.

It has become difficult to think beyond tomorrow.

“We are going to live day by day – and have the means to stay alive,” he said.