Currency crisis in Lebanon: With the pistol to withdraw money

In Lebanon, many investors are using violence to get their money back from the banks. Therefore, the branches have closed indefinitely.

A person climbs through the hole in a pane of glass

Withdraw money in Beirut: People use force to gain access to their savings Photo: Houssam Shbaro/Anadolu/picture alliance

BERLIN taz | When people in Lebanon walk into a bank branch to withdraw their money, they are turned away at the counter. Because the state is bankrupt, the local currency has lost over 95 percent of its value and the banks are not issuing any investments in US dollars. However, many people had invested their money in the US currency – and are now being fobbed off with worthless lira.

It's different when people have guns in their hands and take hostages, the store manager gives at least a few thousand dollars. That is why bank robberies in Lebanon have increased in recent weeks. Investors ran into the banks with old pistols or plastic weapons, a can of petrol and a lighter to claim their money. Volunteers formed a coalition of investors in Lebanon that organizes protests and provides legal aid. The association even officially called for vigilantism to prevail and forcibly reclaim your money.

In response to the raids, the banks were initially closed for three days - now they are closing indefinitely. On Wednesday, the banking association announced that money can only be withdrawn from ATMs. Online banking is still possible. The reason given by the association was the dangerous atmosphere for its employees.

If a bank in Germany goes bankrupt, investors have a legal claim to up to 100,000 euros of their invested money. But in Lebanon there is no such security. People were led to believe that the banking system was safe. Then the system collapsed. In the so-called Ponzi scheme, banks wooed new investors with high, up to double-digit interest rates.

But with the war in Syria and the mismanagement of the political class people lost confidence in the banks. So no more money moved up to be able to pay interest. At the same time, the government condemned the private banks to lend heavily to the central bank. That money went haywire into corruption. The state is broke, the private banks are not getting their money back - and are therefore not paying out the investors.

Bank robbery for medical treatment

The people of Lebanon celebrated two people as heroes who independently robbed banks to pay for treatment for sick relatives. In early August, Bassam Al-Sheikh Hussein stood in a Beirut bank armed with a rifle and a gas canister and threatened to kill hostages and set himself on fire. He demanded payment of his money for his father's treatment. After seven hours in the bank, he was paid out $35,000 – from around $200,000 originally in his account. He then turned himself in to the police, who arrested him but released him a few days later without charge.

The case sparked many imitators, including the first female bank robber, interior designer Sali Hafiz. She stormed a bank with a plastic pistol last Wednesday to get her money - she needed it for her sister's cancer treatment. Hafiz is currently hiding from the police.

paralyzed state

Since the elections in May is still no new government formed a new President must be appointed at the end of October. The interim government hasn't even approved the budget for 2022 - and the year is almost over. The General Assembly of Parliament met last week to discuss the budget but did not have a quorum.

After all, shortly before the elections, the government had agreed on an agreement with the International Monetary Fund (IMF) at personnel level. Ten reforms were to be implemented, including laws on capital reforms and bank secrecy easing. If the implementation is successful, the IMF is waving 3 billion US dollars to get the country out of the financial crisis. But an IMF delegation visiting Beirut on Wednesday criticized the stagnation: “Despite the urgency to take action to deal with Lebanon's deep economic and social crisis, progress in implementing the reforms agreed in April remains very good slowly," it said in a statement.

Although the Lebanese cabinet approved a roadmap for financial recovery in May, it has faced objections from banks and the private sector, who do not want to emerge from the crisis as losers.

At the moment, it is primarily savers who are paying the price for the crisis – while the rich in Lebanon have long since secured their money in foreign accounts. Central bank director Riyadh Salameh is at the top of the system. Various public prosecutors in Europe are investigating him on suspicion of money laundering. He also holds real estate in Germany. When he flew to Paris in his private jet in June 2021, customs officials found 90,000 euros in cash in his suitcase. Salameh then explained that he "forgot" that the money was in his luggage.

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