BEIRUT — Lebanon’s banks will remain closed indefinitely after rejecting a proposed government security plan, a senior official with the country’s commercial banks association said today, amid a wave of protests and heists targeting its failing financial system.
The Association of Banks in Lebanon initially announced a three-day strike, after at least seven bank branches were stormed last week, where assailants demanded they withdraw their trapped savings. Among them is Sali Hafez, who broke into a Beirut bank branch with a fake pistol and retrieved some $13,000 in her savings to cover her sister’s cancer treatment.
Lebanon’s cash-strapped banks had last closed for a prolonged period back in October 2019 for two weeks, during mass anti-government protests triggered by the economic meltdown. Since 2019, the banks have imposed strict limits on withdrawals of currency, tying up the savings of millions of people.
Since then, the tiny Mediterranean country’s economy has continued to spiral. The Lebanese pound has lost about 90% of its value against the dollar, while three-quarters of the population has plunged into poverty.
“One of our demands is that we are provided with security to guarantee that we can keep the banks safe,” Fadi Khalaf, the Secretary-General of the Association of Banks in Lebanon told The Associated Press. “When you have people come in with weapons and throw gasoline everywhere, do we have to wait until someone dies before we do something about it?”
While banks across the country are shuttered, people have since rushed to shops to wire their money abroad instead. The country’s largest money wiring company even brought in private security armed with assault rifles.
Khalaf said the banks were not content with a security plan that caretaker Interior Minister Bassam Mawlawi’s team presented to them on Tuesday. “He said they don’t have enough personnel and that the banks should provide its own security,” he said. “But what can private security do if he has to deal with someone carrying a gun?”
The Union of Bank Employee Syndicates in a statement on Thursday echoed similar sentiments, refusing to return to work until they believe it is safe for them to do so.
Khalaf said the banks are discussing measures they can take on their own, but said they had not set a deadline.
The bank heists were mostly celebrated among the Lebanese public, who have accused the authorities of rampant corruption and mismanagement. Millions of Lebanese are struggling to cope with skyrocketing food prices and rampant power cuts and many now sympathize with people choosing to take matters into their own hands.
Depositors’ protest groups have vowed to continue supporting people’s attempts at forcefully retrieving their savings.
Meanwhile, the Lebanese authorities for over two years have been scrambling to put in place financial reforms and restructure its economy to reach a deal with the International Monetary Fund for a bailout. Among the reforms is a capital controls law that would formally restrict and regulate the flow of money in and out of the banks.
The IMF on Wednesday after meeting with officials criticized Lebanon for its sluggish progress, but caretaker Economy Minister Amin Salam told the AP that the country aims to adopt some of these reforms next month.
Until then, the country’s fiscal woes will continue to fester, said financial analyst Ghassan Chammas. The banks closing will not only further curtail people’s access to their funds, but will also slow down already dwindling economic activity, including imports and exports.
“They need clearly to set exceptions in the draft capital controls law for people who need to cover health expenses, transfer funds abroad, or any other humanitarian exception,” Chammas told the AP. “You cannot isolate the country from the outside world.”