Beirut -
The Lebanese banking crisis jumped to a new height, after the Lebanese depositor, Bassam Sheikh Hussein, was detained by force of arms employees inside the “Federal Bank” in Beirut, with the aim of recovering his retained deposit - like all other depositors - since the fall of 2019.
The individual incident constituted a new pressure force in the file of tens of thousands of depositors who are demanding the recovery of their money, while the banking community fears an escalation of violence against it. The incident came after the suspension of the warning strike called by the Association of Banks against what it called "malicious lawsuits" against banks.
Bassam's symbolism
Bassam Al-Sheikh enjoys wide popular solidarity, and he was arrested last Thursday evening, and he announced his hunger strike to demand his release, and his family has not met him yet, according to his brother Atef's account to Al-Jazeera Net.
Bassam was demanding his money to treat his father in the hospital, and negotiations with him continued for about 6 hours while he detained 6 people (including the bank manager), so he recovered $35,000 of his entire $210,000 deposit, after political and security interventions after threatening to kill the detainees, and he invited dozens of depositors who They came to advocate for him to extract their rights into their own hands.
Atef reports that his brother poured gasoline on himself and carried a hunting weapon, because the bank manager insulted him after 4 months, during which he frequented the bank to demand a settlement that would enable him to recover his money.
Bassam lived for years in Australia and collected his money from his work in the trade, and he takes care of his father and has one child who also suffers from health problems, according to Atef.
He explains that his deposit is not entirely for him, but rather a large part of it belongs to his family.
He says, "Bassam turned from a depositor into a debtor of thousands of dollars. However, everyone knows him for his good manners and help for others, and he would not have done that without losing his temper and our inability to provide the price of treatment for my father."
A number of lawyers volunteered to defend him, and a judicial decision has not yet been issued against him, and Atef demands the release of his brother or his transfer to the hospital due to his health condition, blaming the bank for any harm that may happen to him.
Violence as a tool of pressure
The incident reminded a similar one that occurred last January, when one of the depositors detained bank employees in the Bekaa Valley, and was able to obtain his deposit of $50,000.
Nassib Ghobril, head of the Research and Economic Analysis Department at Byblos Bank, believes that justifying the scene of violence and holding employees hostage opens the way for dangerous possibilities called chaos, and he speaks - to Al Jazeera Net - about great concern that pervades the corridors of banks that turn into fortresses that need security support.
In turn, the economic expert, Munir Younes, believes that these incidents are in an individual framework, compared to more than one million Lebanese depositors who did not practice violence, and that the pressure of depositors did not reach a dangerous level three years ago that corresponds to their crisis.
The expert and legal researcher in banking affairs, Sabine El-Kik, believes that the course of violence is expected, despite its violation of the applicable laws, in light of the banks and the monetary authority evading their responsibilities.
The roots of the crisis
In practice, the depositors' crisis erupted after the popular demonstrations on October 17, 2019, when commercial banks, at the behest of Central Bank of Lebanon circulars, took illegal measures to seize depositors' money, and were accompanied by local and international reports talking about transferring millions of dollars from Lebanon abroad.
Since then, banks have imposed strict restrictions on withdrawals in foreign currencies, and the exchange rates in them have varied, so the purchasing power of the Lebanese has eroded amid a resounding and dramatic decline in the lira, and it has recently reached against the dollar on the black market - which controls the actual value of the lira - more than 31 thousand (the official exchange rate 1507). liras).
For the first time in its history, in March 2020, Lebanon failed to pay its outstanding Eurobonds worth $1.2 billion, which is part of the value of foreign currency debt securities with a total value of more than $31 billion, and the last bond is due in 2037.
And in December 2021, the head of the Lebanon Committee to Negotiate with the International Monetary Fund, His Excellency Al-Shami, officially estimated the losses of the banking system at about $70 billion.
Lebanon also signed an agreement with the Fund at the staff level in April 2022, and the latter demands the implementation of several conditions in exchange for Lebanon receiving financial aid, foremost of which is restructuring the banking sector and unifying and liberalizing the exchange rate.
In the past months, local judicial procedures against banks and bankers and the governorship of the Banque du Liban escalated, and this was accompanied by political conflicts around them, in exchange for international judicial moves that were based on lawsuits filed by depositors and associations, including, for example, last March, the British court’s decision to oblige two Lebanese banks (Bank Audi and Societe Generale). ) payment of $4 million to a British depositor;
The first individual closed dozens of accounts of Lebanese with British citizenship.
Who is responsible?
Nassib Ghobril refuses to blame the banks for the depositors' crisis. Rather, "it is the responsibility of the state and the political authority that did not undertake reforms to restore confidence and the flow of foreign capital."
Ghobril said that part of the deposits are debts and dues owed by the Lebanese state to the Central Bank, and "the state only wants to write off its debts, to burden banks and depositors with the burden of that, and to propose transferring a large part of the deposits, for example, to shares in banks."
The expert believes that the depositor wants answers to 3 basic questions: What is the fate of deposits?
And for what time limit?
And when will it be freely disposed of?
For his part, Munir Younes considered that holding the state responsible for deposits is a "heresy" behind which banks hide, because people's money is with them and not with the state.
Here, Sabine Al-Kik explains - to Al-Jazeera Net - that the responsibility for the legal hierarchy lies with commercial banks first, because of their direct association with depositors with legal contracts and their role was to manage risks, and diversify their investment portfolio, because most of the deposits are short-term or on demand.
Secondly, it rests on the central bank, the owner of the legal entity and the setter of monetary policies.
Third, it falls to the State Banking Control Commission, which “did not perform its supervisory duties,” and fourthly, it falls to the government represented by the Ministry of Finance because of its supervisory role over banks.
Munir Younes recalls that about 75% of depositors' money was employed by banks through the Central Bank over the years with serious sovereign debt, so they bought public debt bonds from the state treasury, knowing that the latter has been unable since the nineties.
He said that the Central Bank started losing its budget since 2002, and was putting its losses under "other assets".
Since 2014, local and international reports have indicated that the public debt is unsustainable, and warned of a negative reserve with the Central Bank.
At that time, "the net reserve began to turn negative, and losses started at $7 billion, to finally reach $70 billion, with the recognition of the political authority."
"Capital Control"
Lebanon was unable to pass the law regulating financial withdrawals known as "Capital Control" because of the sharp divisions over it.
Gabriel says that the goal of the law is not to determine the fate of deposits, but rather to regulate transfers from Lebanon to abroad and withdrawals inside Lebanon and to preserve the remaining reserves with the Central Bank and correspondent liquidity, and calls for its approval to be an entry point for resolving the crisis.
He believes that the banking sector is facing a battle to overthrow it by preventing its advancement, "while it is the only way to attract liquidity, because Lebanon does not have developed markets in the stock market, corporate bonds, and foreign investments."
However, Younes finds that Capital Control restores balance to the balance of payments if the remaining dollars are used purposefully, but "everything that enters from them at the moment is being used for import and does not benefit the economy."
The most prominent obstacles to approving the law, according to Younes, is that one of its articles stipulates stopping lawsuits against banks (ie depriving depositors of the right to sue) and distinguishing between old dollars before the crisis and new ones after it.
For its part, Cake considers that Capital Control is not the solution if it is approved without reforms, without restructuring the banks and without equitable solutions for depositors, but its goal - according to it - to legislate the heresy of old and new dollars.
If the political and monetary authorities continue to behave in the same way, Younes expects the banking crisis to last for a generation, just as mistakes have accumulated over a generation, especially since the financial gap is worth more than 5 times the GDP in Lebanon.
Therefore, it is difficult "to recover all depositors' money in the short and medium term, and the priority is to return the money of small depositors, after the government pledged to pay 100,000 dollars to each depositor, the equivalent of 30 billion."
He said that the official proposals aim to burden depositors, the general public, and state assets with the burdens of corruption and huge losses in the banking system.
"Because most of the authority's pillars do not want to harm its interests by recovering the smuggled money and refuse to scrutinize the sources of huge and suspicious deposits belonging to the rich and powerful in the state."