Lebanon faces ‘dramatic challenge’ of food crisis, PM warns

Diab says “starvation may spark a new migration flow to Europe and further destabilise the region.”
Thursday 21/05/2020
People shop at a supermarket in Beirut. (AP)
Food issue looming. People shop at a supermarket in Beirut. (AP)

BEIRUT –Lebanese Prime Minister Hassan Diab said the country had crossed the first stage of economic challenges but that obstacles remained ahead, in a speech marking his government’s first 100 days in power.

In separate comments on Thursday, Diab warned that Lebanon is at risk of a major food crisis that could even make it difficult for many to afford bread.

“Lebanon is facing a dramatic challenge that seemed unimaginable a decade ago: the risk of a major food crisis,” Diab wrote in a Washington Post op-ed.

The Lebanese PM also warned of a global food security emergency triggered by the coronavirus pandemic. He said attempts to restrict food exports must be stopped and called on the United States and the European Union to set up an emergency fund to help the Middle East avoid a severe crisis.

Otherwise, “starvation may spark a new migration flow to Europe and further destabilize the region,” he wrote.

Lebanon has been dealing with a serious economic crisis even before COVID-19 emerged. The local currency has more than halved in value since October amid a hard currency liquidity shortage. Inflation and unemployment are soaring. Lebanon defaulted on its sovereign debt in March.

Imported food prices have more than doubled since the start of 2020, Diab wrote. More than half of Lebanon’s food is imported.

“Once the breadbasket of the Eastern Mediterranean, Lebanon is facing a dramatic challenge that seemed unimaginable a decade ago: the risk of a major food crisis,” Diab wrote.

Lebanese are pessimistic about their country’s prospects as the economic crisis worsens, with rising inflation, poverty and unemployment. “A few weeks ago, Lebanon witnessed its first ‘hunger protests’,” Diab wrote. “Many Lebanese have already stopped buying meat, fruits and vegetables, and may soon find it difficult to afford even bread.”

Diab, who took office this year with the backing of the Iran-backed Shia group Hezbollah and its allies, blamed decades of political mismanagement and corruption for a lack of investment in agriculture.

COVID-19 and confinement measures have “dramatically worsened the economic crisis and profoundly disrupted the food supply chain,” he said.

Eighty percent of Lebanon’s wheat had been coming from Ukraine and Russia, but last month, Russia suspended wheat exports, while Ukraine is considering a similar move, he said.

Lebanon’s central bank will start providing dollars for food imports as part of “necessary measures” to defend the battered local currency, whose slump has sent prices skyrocketing.

A Central Bank statement on Thursday said new measures would start next week and commercial banks could take part.

“I received a promise from the governor … that the (central) bank will intervene in the market, starting from today, to protect the Lebanese pound and rein in the rise of the dollar exchange rate,” Diab said.

He also said imports of basic foodstuffs would be supported and prices monitored so that citizens would soon see a decline in costs.

The official pegged rate of 1,507.5 Lebanese pounds to the dollar remains available for imports of wheat, medicine and fuel, but the currency has collapsed on the parallel market.

Banking controls force most importers to get foreign currency on the informal market, where scarce dollars have changed hands at around 4,000 pounds recently.