Petrol pumps shut down in protest-hit Lebanon over dollar shortage

The shuttering of petrol stations came as demonstrators again took to the street across the country, keeping up their three-week-long movement against a political class.

MENA

4 min read

The New Arab

09 November, 2019

Lebanon has been hit with weeks of mass protests [Getty]

Several petrol stations in protest-hit Lebanon stopped services on Saturday, as reserves ran dry due to a shortage of US dollars to pay suppliers, a syndicate head said.

The shuttering of petrol stations came as demonstrators again took to the street across the country, keeping up their three-week-long movement against a political class regarded as inefficient and corrupt.

"The petrol stations that opened today are the ones that still have reserves. They will close down as soon as supply runs out," said Sami Brax, the head of the Syndicate of Gas Station Owners.

He said if officials do not facilitate access to dollars by Tuesday, "we will be forced to stop imports and close down all petrol stations."

Petrol stations receive payment from customers in Lebanese pounds but have to pay importers and suppliers in dollars.

For two decades, the Lebanese pound has been pegged to the US dollar, with both currencies used interchangeably in daily life.

But banks have been reducing access to dollars since the end of the summer, following fears of a shortage in central bank dollar reserves.

In recent days, banks halted all ATM withdrawals in dollars and severely restricted conversions from Lebanese pounds.

Read more: Nobody knows Lebanon's problems better than its women. It's time you started listening

Many Lebanese have had to instead buy dollars from money changers at a higher exchange rate, in what amounts to a de-facto devaluation of the local currency that has sparked price hikes.

The official exchange rate has remained fixed at 1,507 Lebanese pounds to the dollar, but the rate in the parallel market has surpassed 1,800.

"The banks are under pressure from people, both inside Lebanon and abroad," said economist Naseeb Ghabreel, after many rushed to withdraw their dollar savings or convert Lebanese pound accounts.

Since September, petrol station owners have accused banks of failing to provide them with the dollars they need and threatened strikes.

In response, the central bank last month pledged to facilitate access to the greenback for importers of petroleum products, wheat and medicine.

But the measure has not yet gone into effect.

Lebanon has since October 17 witnessed an unprecedented popular uprising against everything from power cuts and poor social security to alleged state corruption.

The government yielded to popular pressure and stepped down last month, with the World Bank urging for the quick formation of a new cabinet to prevent the economy from further deteriorating.

A 'grand' endorsement

On Saturday, protesters received a new boost of confidence after the country’s grand mufti endorsed the movement.

The foremost authority in the country for Sunni Muslims declared his support for the demands of protesters and issued an immediate call for the formation of a technocratic emergency government.

"The time has come to meet the people's demands and the national free will that transcends sects, political parties, and regions," Grand Mufti Sheikh Abdul Latif Derian said in a televised address on the occasion of Prophet Mohammed's birthday.

"The time has come and is opportune, after this national wake-up call, for the reform process to begin and for those in power to form an emergency government made up of competent people, without delay," he said according to Reuters.

Maronite Patriarch Bechara Boutros al-Rai, Lebanon's top Christian religious authority, has also called for a new government to include qualified technocrats.

Derian added that it is time to "immediately proceed with carrying out the reform package prepared by Prime Minister Hariri to solve the country's problems".

Before he stepped down, Hariri proposed a package of reforms that aimed at easing Lebanon's economic crisis.

The package included a 50 percent salary reduction for current and former officials.

But while the protests were sparked last month by a proposed tax on WhatsApp calls - the last straw for many Lebanese long squeezed under the country's crippled economy - such proposals fail to meet the demands of most protesters who are calling for a complete political overhaul.

The demonstrations have instead morphed into a cross-sectarian street mobilisation against an entire political class that has remained largely unchanged since the end of the country's 1975-1990 civil war.

However, Lebanese politicians have failed to make clear progress towards agreeing on a new government.

Hariri said on Thursday that talks were underway between factions.