Middle East Liaison Secretary Uwe Gräbe reports from Lebanon

It takes me a while to understand what feels so out-of-place here - and what has changed so dramatically in the past two years since I last visited Lebanon, even in this little corner bar on Hamra Street in Beirut. Yes, they are still there, the bars and restaurants that can attract a decent number of customers despite the pandemic, the economic crisis and other catastrophes.

They look the same as always, but something feels totally different. Then finally it clicks: It's the silence that really gets to you. Crowded tables - but no loud laughter, no lively banter, nowhere. Everyone talks in hushed voices. And all this in a part of the world where things are otherwise very loud. Could it be some sort of collective depression that shows itself in this way? A feeling that laughter would be simply inappropriate under the given circumstances? Or is it a kind of guilty conscience about still being able to afford something that has become unattainable for the great majority of the population? It’s not as if inflation in Lebanon has simply made everything more expensive. No, this crisis has yet to reveal a clear line – everything is still indistinct, uncertain, in a state of flux. This applies to exchange rates, for example, as well as prices and salaries.

Before October 2019, everything was so simple when it came to exchange rates: One dollar was always 1,500 Lebanese pounds. The Lebanese currency was firmly pegged to the American dollar, although it had ceased to match Lebanon's economic performance long ago and could only be financed by continuously increasing the national debt. In most cases, old bank accounts were simply kept in dollars at the time.

And today, this "official" exchange rate still exists in theory: One nominal dollar in your bank account will still get you those 1,500 pounds, although you would have to pay 23,000 pounds for one dollar in exchange bureaux on the open market. To a much limited extent, you can also get 3,900 pounds for one dollar from your old account - "lollars" or "Lebanese dollars" is the name they give to the result of this calculation, something that is only possible if your accounts are not completely frozen. But usually, anyone who is active in international business has long since opened what is known as "fresh money accounts", i.e. foreign exchange transferred from abroad to this type of account after the state's insolvency in spring 2020 is considered protected and can also be paid out in full as dollars or euros.

Growing economic inequality

When you look at prices, they have mostly gone up more than tenfold for Lebanese who draw a salary in local currency. On the other hand, they have become much cheaper for foreign currency holders. Then there are some imported products in the supermarkets for which the dollar price has actually risen and whose value in pounds has therefore skyrocketed to astronomical heights. Thirdly, there are a very few foodstuffs on local markets whose pound price has only risen moderately - and which have now become dirt cheap in foreign currency.

And finally, salaries: Many still receive the same salary in pounds as before autumn 2019, or have even lost their jobs due to the economic crisis. At the other end of the scale, there are those lucky few who continue to be paid in foreign currency by international companies or non-governmental organisations. Therefore, it can happen that people who work in similar professions and positions are sometimes paid totally different salaries. No, there is still no clear line discernible in this economic chaos, and things will very likely settle at a lower level rather than a higher one. This is also the opinion of a high-ranking German diplomat who has been my travelling companion for the past few days: The economic situation will probably get much worse for the population as a whole because the political decision-makers have settled down on their cosy little islands of wealth and still feel no pressure to act.

Destruction that is impossible to ignore

Economic inequality is probably nowhere more vividly apparent than in the reconstruction work after the port explosion in August 2020: The glittering high-rises on the marina and waterfront west of the disaster site have long been fitted with new glass façades; in places, building work continues at an energetic pace. In the poorer neighbourhoods to the east and south, the devastation is still plain to see. But in this case, it is also the state authorities who are among the losers: The window cavities of the national electricity company were quickly shuttered with only makeshift chipboard and concrete bricks. Even in a magnificent historical building like the seat of government, the "Grand Serail", it is only now that plastic sheeting is gradually being replaced by new glass windows. After sixteen months. The unmistakable symbol of the massive destruction, however, continues to be the ruins of the grain silo that was closest to the explosion on the port.

"We were once able to cover 52% of our budget by ourselves; only 48% of our budget came from Germany, Switzerland and England," as Rev. George Haddad, Director of the Johann Ludwig Schneller School in Lebanon's Bekaa Valley explains to me. But now, he says, things are very different: "Our local income has dropped to almost zero. We need sufficient donations from abroad to cover the entire budget." Just imagine the plight of diaconal and charitable institutions that are financed exclusively from local income. Very many of them have already had to close. In downtown Beirut, not far from the bar where I was shocked by the incredible silence, the Protestant church ran a college until last year. It was one of the oldest and most renowned private Christian schools in the country. Now the historic building behind the wrought-iron gate stands empty. The church is looking for an investor to buy it.