Beirut: Before picking up cash from a downtown bank in Lebanon’s capital, Mey Al Sayegh mentally braces herself for what would have been a routine trip before the country’s crippling cash crunch.
For starters, it will be at least an hour’s wait in line before her turn comes. And if she’s lucky, she’ll be able to withdraw $300 — the weekly limit on dollar withdrawals imposed by banks to preserve liquidity — without having to bargain with the teller.
“I tell my family ‘I’m going to the bank, but I don’t know when I’ll return,’” said the communications manager. “It’s very unpleasant. You see people’s expression — worried, confused, they’re scared that they’re going to lose their deposits.”
For years, many Lebanese have lived beyond their means, supporting their out-sized spending with loans and generous remittances from diaspora relatives scattered across the globe, including family members working in oil-rich Arab Gulf countries.
A severe financial crisis and unprecedented capital controls have put an end to this, uniting both rich and poor in anger against corrupt politicians who have brought the country to the brink of economic collapse, and a banking system they accuse of holding their deposits hostage.
In recent days, some protesters have taken out their ire on the banks, destroying ATMs, smashing bank windows and clashing with tellers behind the counter.
Dozens of protesters have held sit-ins at banks against the fiscal policies, forcing tellers on more than one occasion to give them more than the weekly limit. Demonstrators routinely gather in front of the country’s Central Bank, jeering and hurling expletives at its governor, Riad Salameh, who was once ranked among the world’s top central bank governors.
“You go to a bank, get a ticket, and there are at least 50-60 people in front of you,” said Mahmoud Sayida, a tour guide whose money is trapped with one of the country’s largest lenders. “It’s as though you are lining up for bread in the war days.”
The crisis in Lebanon, one of the most heavily indebted nations in the world, is rooted in decades of state corruption and bad management, and the tiny Mediterranean country’s economy had been in steady decline for years. The local currency, pegged to the dollar for more than two decades, has lost more than 50% of its value in recent weeks on the black market.
Fearing a crisis, depositors in the past year had been quietly withdrawing their money, changing it from the local currency to dollars, or funneling it to bank accounts abroad.
At the onset of nationwide protests that broke out in mid-October, banks closed their doors for 12 working days. When they reopened, they faced an unprecedented rush to withdraw dollars, resulting in the limits on withdrawals and foreign transfers.
But there was no legal basis for such actions, leaving it up to the banks to implement their own controls on a case-by-case basis. Meanwhile, ATM machines have mostly stopped dispensing dollars and daily limits on credit card use have been implemented. Many restaurants and shops, strapped for cash, are refusing card payments.
People say they are being subjected to humiliation by the banks and their managers who ultimately have the power to decide who gets how much.
People with children studying abroad need to offer proof before they are allowed to transfer their tuition money. Patients are required to produce paperwork proving they need money for surgery before they can withdraw cash from their accounts. To get credit card limits temporarily increased, customers are asked by some banks to produce a plane ticket and documentation proving a stay abroad longer than two weeks.
The measures are forcing families to limit expenditures and prioritize daily necessities. Simple activities, such as going to a cafe or a restaurant, are now considered luxuries, even for those with money or jobs.
Sullen moods have overcome depositors and lenders alike, whose employees say they are afraid to show up at work because of fights breaking out inside banks and people cursing them every day....