AP

A world apart, Lebanon and Sri Lanka share economic collapse

Jun 23, 2022, 9:03 PM | Updated: 9:22 pm

FILE- Riot police stand guard as anti-government protesters try to remove a barbed-wire barrier to ...

FILE- Riot police stand guard as anti-government protesters try to remove a barbed-wire barrier to advance towards the government buildings during a protest against a slate of new proposed taxes, including a $6 monthly fee for using Whatsapp voice calls, in Beirut, Lebanon, Saturday, Oct. 19, 2019. The measures set a spark to long smoldering anger against the ruling class and months of mass protests. Irregular capital controls were put in place, cutting people off from their savings as the currency began to spiral. (AP Photo/Hassan Ammar, File)

(AP Photo/Hassan Ammar, File)

BEIRUT (AP) — Lebanon and Sri Lanka may be a world apart, but they share a history of political turmoil and violence that led to the collapse of once-prosperous economies bedeviled by corruption, patronage, nepotism and incompetence.

The toxic combinations led to disaster for both: Currency collapse, shortages, triple-digit inflation and growing hunger. Snaking queues for gas. A decimated middle class. An exodus of professionals who might have helped rebuild.

There usually isn’t one moment that marks the catastrophic breaking point of an economic collapse, although telltale signs can be there for months — if not years.

When it happens, the hardship unleashed is all-consuming, transforming everyday life so profoundly that the country may never return to what it was.

Experts say a dozen countries — including Egypt, Tunisia, Sudan, Afghanistan and Pakistan — could suffer the same fate as Lebanon and Sri Lanka, as the post-pandemic recovery and war in Ukraine spark global food shortages and a surge in prices.

ROOTS OF CRISIS

The crises in Lebanon and Sri Lanka are rooted in decades of greed, corruption and conflict.

Both countries suffered a long civil war followed by a tenuous and rocky recovery, all the while dominated by corrupt warlords and family cliques that amassed enormous foreign debt and stubbornly held on to power.

Various popular uprisings in Lebanon have been unable to shake off a political class that has long used the country’s sectarian power-sharing system to perpetuate corruption and nepotism. Key decisions remain in the hands of political dynasties that gained power because of immense wealth or by commanding militias during the war.

Amid the factional rivalries, political paralysis and government dysfunction has worsened. As a result, Lebanon is one of the most backward Middle East countries in infrastructure and development, including extensive power cuts which persist 32 years after the civil war ended.

In Sri Lanka, the Rajapaksa family has monopolized politics in the island nation for decades. Even now, President Gotabaya Rajapaksa is still clinging to power, although the family dynasty around him has crumbled amid protests since April.

Experts say the current crises in both countries is of their own making, including a high level of foreign debt and little invested in development.

Moreover, both countries have suffered repeated bouts of instability and terrorist attacks that upended tourism, a mainstay of their economies. In Sri Lanka, Easter suicide bombings at churches and hotels killed more than 260 people in 2019.

Lebanon has suffered the consequences of neighboring Syria’s civil war, which flooded the country of 5 million with about 1 million refugees.

Both economies were then hit again with the onset of the coronavirus pandemic.

TIPPING POINTS

Lebanon’s crisis began in late 2019, after the government announced new proposed taxes, including a $6 monthly fee for using Whatsapp voice calls. The measures set a spark to long smoldering anger against the ruling class and months of mass protests. Irregular capital controls were put in place, cutting people off from their savings as the currency began to spiral.

In March 2020, Lebanon defaulted on paying back its massive debt, worth at the time about $90 billion or 170% of GDP — one of the highest in the world. In June 2021, with the currency having lost nearly 90% of its value, the World Bank said the crisis ranked as one of the worst the world has seen in more than 150 years.

In Sri Lanka, with the economy still fragile after the 2019 Easter bombings, Gotabaya pushed through the largest tax cuts in the country’s history. That sparked a quick backlash, with creditors downgrading the country’s ratings, blocking it from borrowing more money as foreign exchange reserves nosedived.

On the brink of bankruptcy, it has suspended payments on its foreign loans and introduced capital controls amid a severe shortage of foreign currency. The tax cuts recently were reversed.

Meanwhile the Sri Lankan rupee has weakened by nearly 80% to about 360 to $1, making the costs of imports even more prohibitive.

“Our economy has completely collapsed,” the prime minister said Wednesday.

UPENDED LIVES

Before this latest descent, both Lebanon and Sri Lanka had a middle-income population that allowed most people to live somewhat comfortably.

During the 1980s and 1990s, many Sri Lankans took jobs as domestic workers in Lebanese households. As Sri Lanka began its postwar recovery, they have been replaced by workers from Ethiopia, Nepal and the Philippines.

The recent crisis forced most Lebanese to give up that luxury, among others. Almost overnight, people found themselves with almost no access to their money, evaporated savings and worthless salaries. A month’s salary at minimum wage isn’t enough to buy 20 liters (5 1/4 gallons) of gasoline, or cover the bill for private generators that provide homes with a few hours of electricity a day.

At one point, severe shortages of fuel, cooking gas and oil led to fights over limited supplies – scenes now replicated in Sri Lanka. Cancer drugs are often out of stock. Earlier this year, the government even ran out of paper for new passports.

Tens of thousands of professionals, including doctors, nurses and pharmacists, have left the country in search of jobs.

Similarly, Sri Lanka is now almost without gasoline and faces an acute shortage of other fuels. Authorities have announced nationwide power cuts of up to four hours a day and asked state employees not to work on Fridays, except for those needed for essential services.

The U.N. World Food Program says nearly nine of 10 Sri Lankan families are skipping meals or otherwise skimping to stretch their food, while 3 million are getting emergency humanitarian aid.

Doctors have resorted to social media to seek critical supplies of equipment and medicine. Growing numbers of Sri Lankans want passports to go overseas to search for work.

OTHER DISASTERS

In addition to the political and financial turmoil, both countries have faced disasters that worsened their crises.

On Aug. 4, 2020, a catastrophic explosion s truck Beirut’s port, killing at least 216 people and wrecking large parts of the city. The blast, widely considered one of the largest non-nuclear explosions in history, was caused by the detonation of hundreds of tons of ammonium nitrate that was stored in a warehouse for years. The dangerous material was housed there apparently with the knowledge of senior politicians and security officials who did nothing about it.

There was widespread outrage at the traditional parties’ endemic corruption and mismanagement, which were widely blamed for the calamity.

Sri Lanka faced a disaster in early 2021, when a container ship carrying chemicals caught fire off the coast of the capital of Colombo. It burned for nearly two weeks before sinking while being towed to deeper waters.

The burning ship belched noxious fumes and spilled more than 1,500 tons of plastic pellets into the Indian Ocean, which were later found in dead dolphins and fish on the beaches.

Fishing was banned in the area because of health risks associated with the chemicals in the water, affecting the livelihoods of some 4,300 families, who still have not received compensation.

___

Rising reported from Bangkok. Associated Press writer Krishan Francis in Colombo, Sri Lanka, contributed.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

A newly released report on last year’s fatal crash involving a pickup truck and a group of bicycl...

Associated Press

Report suggests steering of vehicle that caused fatal Goodyear bicycle crash worked fine

A new report on last year’s fatal Goodyear bicycle crash has cast doubts about the driver’s claim the vehicle’s steering locked up.

4 hours ago

Israeli Embassy...

Associated Press

US airman dies after setting himself ablaze outside Israeli Embassy in Israel-Hamas war protest

An active-duty member of the U.S. Air Force has died after he set himself ablaze outside the Israeli Embassy in Washington, D.C.

2 days ago

Biden and Trump to visit Mexico border Thursday immigration...

Associated Press

Biden and Trump both plan trips to the Mexico border Thursday, dueling for advantage on immigration

President Joe Biden and former President Donald Trump will make dueling trips to the U.S-Mexico border on Thursday.

2 days ago

Arizona and New York attorneys feud over extraditing suspect...

Associated Press

Why Alvin Bragg and Rachel Mitchell are fighting over extraditing suspect in New York hotel killing

Maricopa County Attorney Rachel Mitchell says she isn't into extraditing a suspect due to her lack of faith in Manhattan’s top prosecutor.

6 days ago

A Gila monster is displayed at the Woodland Park Zoo in Seattle, Dec. 14, 2018. A 34-year-old Color...

Associated Press

Colorado man dies after being bitten by pet Gila monster

A Colorado man has died after being bitten by his pet Gila monster in what would be a rare death by one of the desert lizards if the creature's venom turns out to have been the cause.

7 days ago

Police clear the area following a shooting at the Kansas City Chiefs NFL football Super Bowl celebr...

Associated Press

1 dead, many wounded after shooting at Kansas City Chiefs’ Super Bowl victory parade

One person died after 22 people were hit by gunfire in a shooting at the end of the Kansas Chiefs' Super Bowl victory celebration Wednesday.

14 days ago

Sponsored Articles

...

DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.

...

Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

...

Fiesta Bowl Foundation

The 51st annual Vrbo Fiesta Bowl Parade is excitingly upon us

The 51st annual Vrbo Fiesta Bowl Parade presented by Lerner & Rowe is upon us! The attraction honors Arizona and the history of the game.

A world apart, Lebanon and Sri Lanka share economic collapse