SOS BEIRUT: What is the EU doing to support Lebanon

by André Francischetti Moreno

Lebanon, a country of seven thousand years whose capital was destroyed and rebuilt seven times. On August 4, a mega blast devastated Beirut once more, causing at least 220 deaths, 7,000 injuries, billions of dollars in property damage (including hospitals), and leaving 300,000 people homeless. The sequence of two explosions that destroyed half of the city was probably caused by the combustion of 2,750 tons of ammonium nitrate – equivalent to around 1.2 kilotons of TNT– which were confiscated by the Lebanese government from an abandoned ship and remained stored at city port for six years. The disaster could not have happened at a worst time, while Lebanon faces one of the deepest economic crises in its history. All this is aggravated by the needed restrictions to prevent the spread of the new coronavirus, and by a political crisis which made the Lebanese PM Hassan Diab (deemed by many as a Hezbollah’s puppet) resign only one week after the explosion. The European Union and international community already mobilized resources to help with the reconstruction of Beirut, to rescue the Lebanese economy and avoid the country to plunge into a deeper political crisis.  

Since October 2019, the Lebanese pound lost eighty percent of its value, 25% of its population is unemployed, and according to the World Bank, about half of the Lebanese people live below the poverty line. The causes of such an economic crisis lay on years of patronage fueled by a sectarian government, systematic corruption, and government mismanagement. Today, Lebanon is the third most indebted country in the world and struggles to negotiate a bailout with the International Monetary Fund, which request deep reforms mainly in the basic services area. Highly dependent on imports, 90% of all grains come from abroad to the port of Beirut, whose destruction worsened a widespread food crisis. The closer ports in the region are in Israel, which has troubled relations with Lebanon, and Syria, which is at war since 2011. Furthermore, on the Transparency International’s 2019 Corruption Perceptions Index, Lebanon ranked 137th out of 180 countries (180 being the worst). After the mega blast, popular riots took to the streets of Beirut accusing the government of negligence when dealing with the catastrophe, calling for its resignation and demanding a massive political reform.

Following the devastating explosions, the European Union has activated all its emergency mechanisms, mobilizing €33 million to respond to urgent assistance needs in Lebanon and pledging an additional €30 million in aid. The EU deployed approximately 300 highly trained experts in search and rescue, chemical assessment, and medical teams. Not only that, but chemical protection suits and medical supplies were also sent to Beirut. European Commission President Ursula von der Leyen announced that the bloc was ready to aid Lebanon with preferential trade and customs backing, as its Central Bank faces financial meltdown and has limited capacity to cope with the impact of the explosion. Additionally, French President Emmanuel Macron decided to take the lead to coordinate international assistance and sent emergency aid to the former French protectorate. On August 9, Macron coordinated an international donors conference, which counted with world leaders such as US President Donald Trump, and claimed for a quick joint action to support the Lebanese people as well an international pressure for a radical reform of the Lebanese political class. Other European nations that are making massive contributions are Germany and Britain.

The High Representative of the European Union Josep Borrell stated that the EU attaches great value to the unity and stability of Lebanon which are key both for the country and the region. In fact, Lebanon is unique as it is the sole country in the Middle East whose presidency is always held by a Christian. Furthermore, it shelters the highest number of refugees per capita in the world, namely one out of six people is a foreigner in Lebanon, 98% of which come from Syria. 

Given this scenario, more protests are predicted to happen with further claims regarding the Lebanese political system, international pressure for a supra party national unity government will rise, Lebanon shall intensify the investigation of the causes of the mega blast, and a new government should be formed (although incumbent politicians are charged with indicating the new prime minister). Raoul Nehme, the Lebanese Minister of Economy and Trade, stated that it will be painful and long, but Lebanon will get out of this crisis. 

Photo by Marten Bjork on Unsplash


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The EU and Coronabonds – What comes after the pandemic?

by Lea Schiller

The COVID-19 pandemic has left the European Union a region that is not only hit differently by the virus, but also dealing with diverse economic outlooks. Some countries went into a strict shutdown for months and others started relaxing their measures after just a few weeks. Bound together in the European Union, these countries now have to find a way to keep the region from spiralling into a recession – and provide financial support for the states hardest hit.

In early April, after three days of difficult negotiations, the Council of Ministers decided on a €540 billion relief package – but this is far from where the story ends. For one, experts are suggesting the EU might need another €500 billion to mitigate the effects of the shutdowns. And for another, not all member states are happy with the initial package.

“Italy doesn’t need the ESM,” was Italian prime minister Giuseppe Conte’s comment on the decision, effectively refusing €39 billion in aid. Next to support for installing short-time work and loans from the European Investment Bank, the European Stability Mechanism (ESM) was decided to be the third part of the EU’s relief package. First installed in 2012, its purpose is to support member states who are highly in debt – but its money is bound to strict conditions. Italy’s Five-Star Movement had threatened to end the coalition government should Conte say yes to the ESM – out of fear the country would be put under similar controls as Greece was during the debt crisis. Regardless of the fact that the EU had abandoned all conditions that are usually bound to the ESM out of respect for Italy’s difficult situation, and against initial resistance from the Netherlands.

But Italy is not the only country that wants to move away from the ESM, and install the so-called Coronabonds instead. Next to Italy, France has also expressed their support, with Macron telling the British media that they were “necessary” as otherwise eurosceptic populists in Italy, France and elsewhere would win. Their support has been met with heavy resistance from the northern countries, particularly the Netherlands, Germany, Austria and Finland, which sparked a debate that Conte warned could threaten the existence of the bloc.

“Coronabonds” are essentially the new application of an old idea: joint debt that would be collectively guaranteed.  Which would, as countries like Italy are hoping, lead to lower borrowing costs and more favourable terms. But on the other side, the northern countries are hesitating to sign loans for countries whose spending they cannot control – fearing it will lead to their taxpayers paying the bill; with neither side ready to give, which way the EU will go is still uncertain. And during the summit on the 23rd of April, the European Council passed the initial relief package that was put forward by the EU’s finance ministers – putting the topic of a recovery fund in the form of Coronabonds off for another day.

Photo by Branimir Balogović on Unsplash


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