The collapse of the pound strikes the shipping and equipment maintenance sectors ... How does the scarcity of the dollar threaten the work cycle in Lebanon's ports?

The effects of the collapse of the lira did not leave a vital sector in Lebanon, as a result of the dollar controlling most of its joints.

The deeper the crisis in this country - which imports about 85% of its total consumption according to economic estimates - the gaps appear in one sector after another, which raises fundamental questions about the future of the Lebanese, after the national currency lost about 90% of its value in less than two years.

And the last chapters of the financial crisis, the cry of the workers and contractors of the port of Beirut, who receive their fees according to the official exchange rate (1507 pounds), while the trading of one dollar on the black market approached the ceiling of 15 thousand pounds.

alarm

About a month ago, the contractors of the port of Beirut carried out a warning strike to demand that the port administration count part of their fees in dollars, without being echoed.

A few days ago, they brandished the open strike, through a letter they addressed to the administration and the Ministry of Works, and renewed their demand to amend the allowance they receive to operate their machinery, "which is no longer commensurate with the cost of maintenance and the high prices of spare parts that are paid in cash in dollars," according to the book.

However, this strike was soon suspended as well, after the port contractors obtained a promise from the Minister of Works in the caretaker government, Michel Najjar, to raise their demand for the presidency of the Council of Ministers, based on a study they prepared, and attached them to arguments that show that 50% of their operating costs require the "fresh" dollar. (Cash) is paid from the port administration or the maritime agent, and another 50% is paid on the dollar exchange rate, on the Central Bank of Lebanon platform (related to the exceptional procedures regarding cash withdrawals from accounts in foreign currencies), i.e. 3,900 pounds, according to Joseph Awad, President of the gathering of stevedores in the port of Beirut, to Al-Jazeera Net.

The contractors did not take a specific time limit to implement their demands, but Awad warned of major repercussions on the work cycle at the port if their demands were not taken seriously.

The effects of the explosion that affected the port of the Lebanese capital in early August 2020 (Al-Jazeera)

However, how has the dollar crisis reflected on work in ports?

Awad answers that the repercussions of the financial collapse on Beirut port were the decrease in the value of workers' and contractor salaries following the deterioration of the value of the currency, as their average wages amounted to about one million and 500 thousand pounds (that is, the equivalent of one thousand dollars), and now it is equivalent to about 120 dollars.

There are 16 contractor companies in Beirut Port that employ about 250 workers, working in difficult conditions after the port explosion, to transport, load and unload goods - in the general cargo area - especially grain, cars and iron, according to Awad, which may reflect a great paralysis if they suspend their work, especially That the tasks of the contractors form an artery of movement, as a result of direct contact with the ships that dock at the port.

On August 4, 2020, Beirut port witnessed a massive explosion of hundreds of tons of ammonium nitrate, killing more than 200 people and wounding 6 thousand, displacing about 100,000 families, and causing material damage exceeding $ 5 billion.

Therefore, Awad mentions that after the explosion of the port, the contractors postponed their demands in the interest of "food and national security", to secure relief and foreign aid in terms of wheat, grains and foodstuffs, so they operated the port "from under the ashes," as he put it, only one week after the explosion, while The sidewalks were in ruins.

Awad points out that the explosion at the port caused the contractors losses estimated at $ 8 million, as a result of massive damage to about 40 vehicles, out of the 65 vehicles operating in the port belonging to their companies, and currently only 23 machines are working.

"Dollar" maintenance

After 8 months of the explosion, and the lira collapsing to record levels, contractors and workers found that they were unable to continue their work, according to Awad, because maintenance and spare parts are 100% imported, and need cash for the dollar, as merchants do not accept to receive their exchange in pounds or bank checks. .

The head of the Contractors Association said that they are unable to secure the dollar on the black market, and therefore are forced to stop the work of the mechanisms that suffer any malfunction "because they become vulnerable to huge accidents, and the value of its maintenance and repair is estimated at thousands of dollars."

Awwad gives an example of this with cables that need periodic maintenance, as the price of one, for example, is about 3 thousand dollars, which before the crisis was equivalent to about 4.5 million pounds, and it is now equivalent to about 40 million pounds.

Crisis extensions

Lebanon has 5 official ports, the largest of which is Beirut, along with Sidon, Tire, Tripoli and Jounieh, in addition to specialized ports - such as Chekka and Jiyeh - concerned with unloading types of goods such as fuel.

Workers in front of a cargo ship in the port of Tripoli, North Lebanon (Al-Jazeera)

However, Beirut Port - which was inaugurated in 1894 - receives and exports goods in cooperation with about 300 international ports, and it is the most important Lebanese port, and it was the most important port of the eastern basin of the Mediterranean Sea, due to its strategic location. Lebanon will enter, according to official estimates.

Nevertheless, the contracting crisis extended to various Lebanese ports, including the port of Tripoli (in the north of the country), which was assigned to alternative roles after the explosion of the Beirut port, to ensure the continuity of some commercial operations, including import and export.

Here, the director of the Tripoli port, Ahmed Tamer, links some of the backgrounds of the crisis with the financial collapse as well, which cast a shadow over the port movement that collectively employs thousands of workers.

He told Al-Jazeera Net that the port administration is seeking to remedy the crisis, and its workers make many sacrifices, while their salaries have lost their value, and a great injustice has befallen them because they do not receive their overtime allowance.

And because the financing of the ports is self-independent and independent, and under the supervision of the Ministries of Finance and Works, Tamer points out that the fees that it collects from the state are in pounds, which complicates the working conditions, while most of the operation and maintenance expenses are in dollars, pointing out that the marine agents receive their services in dollars, from foreign companies. What drives us to bet on the continuity of sectors.

From October 2019 until the end of 2020, the dollar exchange rate continued to rise, then stabilized for months between 8 thousand and 9 thousand pounds, until the collapse of the "psychological" barrier broke in early March 2021, and the currency deteriorated to 10,000 pounds against the dollar, then In a few days, an average of 15,000 pounds collapsed, up and down, which eroded the purchasing power of the Lebanese, leaving more than half of the population below the poverty line, according to World Bank estimates.

Therefore, the director of Tripoli Port believes that the sudden dollar jumps in mid-March have caused a great shock to workers inside the ports, who are still searching for ways to create the continuity of their work as much as possible "because all of Lebanon suffers from a scarcity of green paper."

Consumer vulnerability

On the other hand, the journalist specializing in economic affairs, Azza Hajj Hassan, stresses the need to reach a settlement with the contractors at the port of Beirut, because disrupting it will automatically paralyze the country, but she fears that the consumer, the Lebanese citizen, will pay the price of this settlement.

In her statement to Al-Jazeera Net, she indicated that there is an interconnected chain that reaches the end of the day at the final consumer, especially "when the maintenance contractor increases its tariff, and the port administration bears it, to collect it from the importer, who raises the price of the commodity or service to the consumer."

Azza Hajj Hassan considers that Lebanon is still discovering the repercussions of the depreciation of the dollar’s ​​exchange rate, which will inevitably affect many sectors, specifically those that need equipment, maintenance, spare parts and machinery, because they are not available in Lebanon.

She believes that what is happening at the port is a natural course for the course of the crisis, in exchange for high costs for imported goods in dollars, which disrupts various vital facilities.

And because the official authorities do not devise constructive solutions to the economic crisis, according to the journalist, they may resort with contractors and port workers to the solution they adopt in various sectors, that is, the visit of costs and prices is the responsibility of the citizen, who incurs from his pocket the price of this collapse, and all the wrong economic policies.