Lebanese banks decide to remain closed, for security fears
BEIRUT — Lebanese banks will remain closed indefinitely after rejecting a draft government security plan, a senior official with the country’s commercial banks association said on Thursday, amid a wave of protests and burglaries targeting its ailing financial system. .
The Association of Banks in Lebanon initially announced a three-day strike, after at least seven bank branches were stormed last week, where the assailants demanded they withdraw their trapped savings. Among them is Sali Hafez, who broke into a Beirut bank branch with a fake gun and recovered some $13,000 from his savings to cover his sister’s cancer treatment.
Cash-strapped Lebanese banks had closed for an extended period in October 2019 for two weeks, during mass protests against the government sparked by the economic crisis. Since 2019, banks have imposed strict limits on currency withdrawals, tying up the savings of millions of people.
Since then, the economy of the small Mediterranean country has continued to soar. The Lebanese pound lost about 90% of its value against the dollar, while three quarters of the population plunged into poverty.
“One of our demands is that we have security to ensure that we can keep the banks safe,” Fadi Khalaf, secretary general of the Association of Banks in Lebanon, told The Associated Press. “When people come in with guns and throw gasoline everywhere, do we have to wait for someone to die before we do something?”
As banks across the country are closed, people have since rushed to shops to transfer their money overseas. The country’s largest money transfer company even brought in private security guards armed with assault rifles.
Khalaf said the banks were not happy with the security plan that acting interior minister Bassam Mawlawi’s team presented to them on Tuesday. “He said they don’t have enough staff and the banks should do their own security,” he said. “But what can private security do if they are dealing with someone carrying a weapon?”
The Union of Bank Employees’ Unions, in a statement on Thursday, echoed similar sentiments, refusing to return to work until they believe it is safe to do so.
Khalaf said the banks are currently discussing what steps they can take on their own, but said they have not set a deadline.
The bank robberies were mainly celebrated among the Lebanese public, who accused the authorities of rampant corruption and mismanagement. Millions of Lebanese are struggling to cope with soaring food prices and widespread power cuts and many now sympathize with those who choose to take matters into their own hands.
Depositors’ protest groups have vowed to continue supporting people’s attempts to forcibly reclaim their savings.
Meanwhile, the Lebanese authorities have been struggling for more than two years to implement financial reforms and restructure its economy to reach an agreement with the International Monetary Fund for a bailout. Among the reforms is a capital control law that would formally restrict and regulate the flow of money into and out of banks.
The IMF on Wednesday after meeting with officials criticized Lebanon for its slow progress, but interim economy minister Amin Salam told the AP that the country intended to adopt some of these reforms as soon as possible. next month.
Until then, the country’s fiscal difficulties will continue to worsen, said financial analyst Ghassan Chammas. Closing the banks will not only further reduce people’s access to their funds, but will also slow down already declining economic activity, including imports and exports.
“They need to clearly define exceptions in the capital control bill for people who need to cover health expenses, transfer funds overseas, or any other humanitarian exception,” Chammas told the AP. “You cannot isolate the country from the outside world.”