Devalued Currency Terrorizes Beirut

Special to the Washington Post

To eat, these days, militiamen here sell their guns, Lebanese socialites hawk their jewelry, and parents tell their children they cannot go to private school anymore.

Because of an unprecedented economic crisis affecting the lower and middle classes, a growing number of Lebanese families simply are no longer able to afford food, medicine or education.

The sight of frail, elderly Beirut citizens stooping over scattered mounds of garbage is as common now in Muslim-controlled West Beirut as marauding gunmen were in the earlier stages of the civil war.


About 1.2 million people, about a third of the population, need help, according to Hans Einhaus, the director and deputy coordinator of the U.N. Disaster and Relief Organization, who visited Lebanon earlier this month.

Lebanese Pound Devalued

At the root of this new battle for survival is a dizzying depreciation of the Lebanese pound, which sank from 87 to the U.S. dollar at the end of last year to 505 last week, a drop of 480%.

A combination of political malaise, lack of confidence in the pound and speculation has all but stripped the currency of its once-envied purchasing power. In the early 1980s, a U.S. dollar was the equivalent of about 3.5 Lebanese pounds.

“We are not dealing with the political or economic problems proper now,” said acting Prime Minister Selim Hoss, who has proposed an emergency food-assistance program in coordination with U.N. agencies. “What we are trying to do is alleviate the suffering of the swelling number of deprived Lebanese citizens. We are addressing ourselves to the poor.”

“Unfortunately for Lebanon, relief--and not reconstruction--has become the imperative and the priority for the relatively few active donor nations and international organizations,” said Gary Mansavage, the local representative of the U.S. Agency for International Development.

95% Inflation

The annual inflation rate, which was between 10% and 20% from 1981 to 1984, was 95% in 1986. Based on the first quarter of this year, the projected rate for 1987 could be as high as 400%, the International Monetary Fund said.


Successive increases of 40% and 100% in the minimum wage this year have not kept pace with soaring daily expenses of most households. Real incomes have shrunk with the slipping rate of the pound.

In an economy that has become mainly dollar-oriented, it is no longer surprising to find elegant boutiques and hardware stores posting prices in dollars or French francs.

Even pushcart vendors, ears to the radio, cite the latest foreign currency quotations when housewives haggle over the meteoric rise in the price of potatoes, radishes or apples. Some families are eliminating meat, eggs, cheese and fruit from their daily diets to cope with the high costs.

Problems in East Beirut

In Christian-controlled East Beirut, by far the more affluent half of this divided city, residents and shop owners say they are making similar cost-cutting efforts.

Previously, because of well-organized services provided by East Beirut’s predominant militia, the Lebanese Forces, East Beirut had been largely insulated from the inflation, collapsing municipal services and swelling refugee populations that have strained West Beirut’s economy for years.

Residents say that in some parts of the Christian half, however, garbage scavengers are beginning to appear. Earlier this month, workers from both the Muslim and Christian sides of Beirut’s “green line” met to protest the high cost of living.


Commenting on the latest of two recent wage increases, Hoss, an economist, predicted an even gloomier outcome. “This is a sign of disaster,” he said.

Oct. 7 Panic

On Oct. 7, the day after the second wage adjustment was announced, the dollar jumped by 22 pounds, creating panic among the population. People rushed to supermarkets to stock up on goods and beat further increases.

“It was like doomsday,” said Patrick Smith, owner of Smith’s Supermarket, a popular West Beirut store. “There was a rush on everything from toilet paper rolls to bottles of Scotch.” Workers at the shop said that women scrambled to load their carts with king-size boxes of detergent, coffee, cooking oil and, according to one worker, “just anything with a long shelf life.”

“Every man in town with six months’ disposable income is either going to spend it or change it into dollars,” Smith said.

The adjusted minimum income of 8,500 pounds per month is the equivalent of $20.25. “We have to send money to the bank in huge garbage bags each morning. In London, the same amount in sterling fits into my shirt pocket,” said Smith, who is co-owner of a grocery in London.

Switch to Staples

Consumers are shifting from buying luxury items to purchasing staples, such as lentils, sugar, rice and dried beans.


Owners of half a dozen large grocery stores in West Beirut said they now purchase half the quantity of meat they used to buy for their clientele. Several butcher shops have closed.

One pharmacy that used to be open 24 hours a day put up a notice saying it was “closed because of a shortage in medical supplies and medicines.” Most of Beirut’s medicine is imported, and its high cost is hurting families of patients who need continuous treatment.

“People come in, and when their bill is rung up, they drop everything and walk out,” one pharmacist said. “Others leave the balance unpaid and never return.”

‘Signs of Malnutrition’

“Swarms of people stand outside our offices every day asking for food,” said Marwan Sidani, director of a $15-million food-distribution program managed and funded by Save the Children, a U.S.-based private voluntary organization. “Our staff is seeing families, especially children, beginning to show signs of malnutrition.”

Two militiamen in the southern suburbs recently admitted selling their pistols and assault rifles to make ends meet. “Our (militias) can no longer help us,” one said. “How else are we to put food on the table? There is not much left to steal.”

“For many, the issue has become the economy, not guns,” a Western diplomat here said.

A former militia commander of the Druze Progressive Socialist Party said that 4,000 young men and fighters applied when word spread that recruits would receive $500 to $1,000 a month to help Libya fight Chad.


Matter of Shame

Nasser Bakkar, who works with Save the Children in the distribution of food, said that most people are ashamed to ask for help.

“I am struck by how many people are telling us that this is the first time they have had to ask for handouts,” Bakkar said.

Fatmeh Ali Faour, 35, whose husband is bedridden, said she needed 8,000 pounds a month for medicine. “I am a seamstress, but one sewing machine can hardly feed four children. I am taking them all out of school this year,” she said, sobbing softly.

Money-changers, some of whom double as jewelers on Hamra Street, the main shopping thoroughfare in West Beirut, said that people come to them daily to sell valuables and gold trinkets, even their wedding bands, for cash.

Tuition Too Costly

An employee at a Lebanese ministry said he would have to pay 36,000 pounds, his total income of the last six months, for his two children’s tuition.

“My retroactive 40% raise amounted to 21,000 (pounds),” he said. “For the balance, not counting books, I will have to beg. I would rather keep them out of school this year.”


According to Issam Ali Hassan, the head of Beirut’s garbage collection agency, “an indicator of how poor people are getting is that we have 60% less garbage to worry about.” Hassan said he used to need 50 trucks a day to carry away refuse from a huge dump behind the road to Beirut Airport. Now, 20 trucks are sufficient.

“People sift through bottles, paper, cardboard and tins, while others gather rotten food and leftovers,” he said.

Sagging Confidence

The sagging confidence in the Lebanese pound, the country and its future is reflected in lopsided holdings in foreign currency, mainly the dollar. According to Central Bank officials, 85% of the total consolidated balance sheets of the country’s 91 banks is in foreign currency.

There was one freak day of national, though temporary, resurrection of the Lebanese pound. On Sept. 1, rumors spread that the 1-pound coin, made of nickel, was in great demand, because its value in metal was worth more than the currency itself.

The price of the coin rose to 250 pounds in certain areas, dropping off to 35 pounds at the end of the day before going back to normal.

By then, many parents had broken into their children’s piggy banks, selling their savings and their dreams.