Chronicle of the Middle East and North Africa

Lebanese Begin to Feel Effects of Russian War on Ukraine

Lebanese Russia Ukraine
A Lebanese soldier directs traffic at a petrol station in the capital Beirut. ANWAR AMRO / AFP

Dana Hourany

For many days, George Fadel and five other Lebanese navy students were left stranded in the Ukrainian city of Kherson, which is now under Russian control. After several unsuccessful attempts to contact a number of Lebanese officials, the 20-year-old student sought support from the Russian army as a last resort when his and his friends’ food stockpiles began to run low.

“I had a meeting with a general, who gave me his contact information. Later, he contacted me about a possible trip aboard a Russian military train. He did, however, issue a warning in light of the failed ceasefire agreements. Three of the students took the chance and arrived at their destination safely,” he told Fanack.

Prior to the war, an estimated 4,500 Lebanese lived in Ukraine, many of whom have since fled on their own, without the assistance of the Lebanese government. While other embassies sent busses, the Lebanese embassy in Ukraine failed to organize any transportation to the border, and the information hotline remains understaffed, Fadel said.

With no government plan for those stranded in Ukraine, Lebanese are having to fend for themselves and come up with their own solutions. It is a crisis after a crisis for those who have left Beirut for Kyiv in search of a better life and opportunities, and a crisis within a crisis for those who have stayed in Lebanon.

Analysts say that the ripple effects of the war will be felt on the country’s deteriorating economy. Wheat and oil imports, in particular, have been hit hard.

Since 2019, Lebanon’s currency has lost more than 90% of its value. Considered one of the world’s worst economic meltdowns since the 1850s, an estimated four million families have been pushed into poverty in the last two years. Prices of basic goods, which are 80% imported, have skyrocketed.

On March 11, the price of bread increased by 500 Lebanese Lira, due to lack of subsidies on sugar and yeast, and although wheat is still subsidized, there are rising concerns over its limited supplies in the country.

Ukraine and Russia provide up to 90% of Lebanon’s wheat and cooking oil imports, as well as a significant portion of the country’s grain imports. Sanctions have limited Russian imports, and Ukraine’s southern ports, which were once used for exports, are now battlegrounds. Wheat reserves can only cover up to a month, according to Economy Minister Amin Salam.

Furthermore, the rise in global oil prices prompted a 33 percent increase in official rates in less than two weeks. Mike Azar, a financial counselor, noted that while global oil prices are rising, Lebanon may suffer more as a result of its lack of preparedness to confront such challenges.

“People rely heavily on private generators for electricity and most already can’t afford the exorbitant and constantly rising monthly bills, so imagine yet another price hike. The people are directly exposed and the government has yet to step in,” Azar told Fanack.

The oil crisis

Queues at gas stations, which first appeared in August last year, have now returned. Long lines of cars await their turn, sometimes for hours on end.

Najah Traboulsi was on her way to work when she heard the news and started frantically to look for the nearest gas station.

“Out of nowhere, we woke up to find that the long lines are back, and we are in limbo in terms of whether the crisis is real or not! I had to wait for four hours because I was worried the gas stations would close down,” Traboulsi told Fanack.

Her sister, on the other hand, was unable to find an open gas station in her neighborhood, so Traboulsi has since opted for driving less to save on fuel.

Many petrol stations, according to Azar, are hoarding their gasoline reserves in order to profit from future increases in official prices. He explained that, unlike other nations where public transportation is available and citizens have access to government-provided electricity, people in Lebanon are largely left to their own devices.

“My landlord just imposed a 30% temporary exceptional surcharge on my rent until diesel prices decrease. My friends were also told that the electricity bill will be around 40% higher,” he said.

While official rates could amount up to 2,000,000 Lebanese Lira, it is still significantly higher than the minimum wage of 675,000 Lebanese Lira, Azar said.

Due to the high cost of governmental electricity, Hayat, a 65-year-old unemployed woman who lives alone, is considering giving up her generator-provided power and relying solely on government electricity provided for a few hours a day.

“My family helps me financially, and I have to prioritize food and medicine. What else can I do but just use what electricity I receive for the washing machine?” she told Fanack.

Though the price of bread bundles has already started to increase, the government’s mismanagement of wheat reserves could exacerbate the situation, Azar noted.

The wheat challenge

The government has begun its damage control efforts. To guarantee an emergency wheat stockpile, Economy Minister Amin Salam is exploring international options. In the wake of the Beirut port explosion, storing wheat has become more of a challenge. The silos that once housed the bulk of the country’s grains up to five months at a time, are now completely destroyed.

The country is currently seeking wheat donors, and talks are underway with the United States to provide $20 million in wheat shipments. The incoming stocks, according to the minister, will be temporarily held in the countries of sale until new storage facilities are found.

However, Azar questions the minister’s language in the media when discussing this issue, claiming that it has caused “an additional problem.”

“You can’t go on TV and warn people that wheat supplies are running low and not expect them to panic. The logical thing for them to do is to go and hoard bread, creating a shortage and a crisis before it’s even happened,” he said.

Many people rushed to the supermarkets after the Minister’s statement to buy basic food items like sugar, bread, and pasta. Although these commodities are not missing from grocery shelves, many are concerned that stores may stockpile them and raise prices later.

The Ministry of Economy responded by stating that it has begun enacting preventative measures such as conducting inspections and requiring business owners to sell stockpiled commodities at their usual price.

The financial expert went on to say that because wheat is subsidized by the government, the Central Bank is under even more pressure to provide more dollars to wheat importers.

Furthermore, the dollar to the lira exchange rate, which has been fluctuating since 2019, surged from 20,000 L.L. to 23,000 L.L. in a single day. This, according to Azar, is due to fewer people selling their dollars out of fear of additional shortages and price spikes, as well as traders’ need for more dollars to fund imports.

“Either the Central Bank injects more dollars into the market to meet incremental demand in order to stabilize the exchange rate, or it will continue to rise, causing people to consume a lot less diesel, or a combination of all of these at the same time,” he said.

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