A Tale of Two Countries: Fuel Crises, Sanctions and Economic Mismanagement

Former LevantX intern Luis Miguel Rincón and Lebanese editor Louay discuss the dual crises in Lebanon and Venezuela, noting the similarities between the two countries and how economic mismanagement continues to impact the lives of ordinary people.

Throughout history, untold millions of people have been robbed of their present, their future and their dreams by grand forces beyond their control or, indeed, comprehension. When this happens, they will not hesitate to move to another place that gives them a chance to reclaim these things.

From the history of mass migration movements, we know that the purpose of moving from one place to another is to be in a safe place where people know they can live, survive and thrive. In fact, one of the most common root causes of migration is violence and corruption.

The coast of Lebanon. Photo: Oliver Marsden.

As a Venezuelan who has lived abroad his whole life, this idea hits close to home. I’ve learnt about millions of my countrymen and women, including close relatives, having no other choice but to seek refuge in neighbouring Colombia and other better developed Latin American countries like Chile.

It wasn’t supposed to be like this. Venezuela seemed destined to become one of the most developed economies in Latin America due to its major trump card: huge oil & gas reserves. Until recently, this industry was a large cog in the Venezuelan economic engine. However, widespread corruption from the Venezuelan government, coupled with the United Socialist Party’s nationalisation of the oil companies, has forced foreign businesses to flee Venezuela, leaving the Venezuelan economy isolated and broken. This twin set of nightmare problems has set off a chain reaction, resulting in an even larger economic and social crisis that has pushed Venezuela to the verge of becoming a failed state.

Venezuela now suffers from intense hyperinflation and extreme poverty, both of which can be compared to the situation in the former-German Weimar Republic, devastating the lives of working and middle class Venezuelans. The Government has recently introduced a new currency aimed at combating inflation for the third time in recent years, receiving decidedly negative responses from the domestic and international communities.

To add fuel to the fire, the Venezuelan government has cracked down on internal opposition and has shed itself of many aspects of a previously healthy democracy. This has caused further economic misery: the EU and US have imposed economic sanctions and over $1 billion in Venezuelan currency reserves remain under the control of the Bank of England, as both Nicolás Maduro and Juan Guaido both claim rightful status as President of Venezuela. Indeed, the crackdown is so severe that an armed civic group called ‘Colectivos’ brutalizes any Venezuelan that openly criticizes the government. 

The biggest effect of the country’s slide into dictatorship and economic stagnation is the exodus of millions upon millions of Venezuelans fleeing to the United States, Spain and neighbouring Latin American countries like Chile and Colombia. If the situation doesn’t improve, Venezuelans may become the next great diaspora; leaving a scattered network of former citizens, building a life elsewhere or waiting to return home.

A protest on the streets of Lebanon against rising economic woes. Photo: Oliver Marsden.

Migration in huge numbers from countries in this kind of turmoil is not new. For example, the Lebanese have experienced a large diaspora since the 19th Century, however a sharp uptickk in young people leaving the county increased over this last summer during the fuel crises.

However, as of today,there are differences between the two countries. Currently, there are more Lebanese expats living abroad than there are Lebanese residing in Lebanon. It is estimated that the major centres of Lebanese migrants are found across the Americas and Australia, with other very sizeable communities in Europe, Africa and the Gulf.

The vast majority of those in the Americas are, however, second and third generation Lebanese with very little knowledge of current affairs in the tiny Mediterranean country. Most do not have Lebanese citizenship, have never visited Lebanon in their life, and may speak Spanish rather than Arabic. (One of Colombia’s most famous citizens, the singer Shakira, is such an example; her paternal grandparents hail from Tannourine and she has credited Arabic music as a major influence on her own creative styles.) Whilst Lebanese citizens arriving in South and Central America today might have received support from an older community, Venezuelan expats do not have the same historical networks. 

Whilst it is fair to say that the Lebanese diaspora is further down the road of economic decline than the Venezuelan one, there are striking similarities between the crises hitting both countries. For example, Lebanese nationals report that hunger is increasing and that the daily life amenities such as food and electricity are scarce. Remittances make up a huge part of the domestic economy and a vital lifeline to struggling citizens. This is certainly the case in Venezuela; it is very hard to buy anything in the country without relying on borrowing money from relatives living abroad.

Not Poor, Just Robbed

Both countries have witnessed a fuel crisis. Despite having immense oil wealth, Venezuelans earlier this year were left facing shortages in petrol and diesel. Lebanese were also hit with another reality this summer when they were left waiting hours, or sometimes an entire day, queuing up at petrol stations.

The lines were dubbed “queues of humiliation”, forcing people to resort to the black market. 

The Sun Also Rises. Photo: Oliver Marsden.

However after the Lebanese Central Bank completely lifted fuel subsidies, these queues completely vanished. An estimated third of drivers can no longer afford to fill up their vehicles as often as they used to, and streets in some areas are quieter than usual. 

US sanctions - something both the Venezuelan government and certain Lebanese officials have familiarised themselves with - have been waived which will allow Lebanon to import gas and electricity via war torn and sanctioned Syria. 

The average Lebanese and the average Venezuelan will tell you that the turmoil came about from decades of economic mismanagement, incompetency and rampant corruption. Politicians from both countries are known for shifting the blame to others instead of assuming responsibility and getting their countries back on their feet. In Venezuela, the Socialist government blames the United States for all the country’s woes, while the religious groups in Lebanese society blame each other for the country’s misfortunes. 

While the political systems are both very different in Caracas and Beirut, both places have fallen victim to the kleptocracies in power, which - in spite of foreign interferences and external political agendas which allegedly seek to cause chaos or bring about regime change - have bled their countries blind. Both Venezuelan and Lebanese politicians have been named in the recent Pandora Papers expose, in which members of the political elite have been accused of setting up shell companies in tax havens to hide ill-gotten loot. The outcome of this corruption has been practically the same: hyperinflation, mass unemployment, and increased poverty. 

Venezuelan migrants in transit. Photo: UNCHR

While the Venezuelan government is sanctioned by the US, which has undoubtedly hit their economy hard, sanctions in Lebanon have fallen on individuals and the Iranian-backed Shiaa paramilitary group Hezbollah, rather than the state itself.

Besides individuals and institutions directly linked to Hezbollah, six Lebanese officials have been hit with sanctions since last year, including four members of parliament (three of whom were previous ministers) and two very wealthy contractors. 

The latest move by Washington exposed just how much money was pumped into infrastructural projects in Lebanon, or “solutions” to the waste crisis which reached breaking point in 2015, and how this money was mismanaged and squandered.

Photo: Oliver Marsden.

It was yet another example of just how wealthy Lebanon is a nation - with its many public and private assets, its large gold reserve, its natural resources (both water and promising gas reserves), its labour force – but how far the ruling elite has gone to loot it. More solid evidence behind the saying “Lubnan mesh fakir, Lubnan manhoub” (Lebanon is not poor, Lebanon is robbed).

In both cases, migration is at an all time high. An exodus of young, talented people is taking place, and doesn’t seem to be slowing down. What was once seen as bearable, is now deemed impossible. The last two years have been utter hell for Lebanon - an economic meltdown, the pandemic, the Beirut explosion, the fuel crisis and its ramifications - while Venezuela has suffered under the harsh circumstances for several years. 

Just like their ancestors who travelled far and wide in search of new opportunities, whether due to famine, war or economic instability, a new generation of emigrants is in the making, at a time their nations are in desperate need for them to stay. The brain drain of talented, professional graduates is likely to damage both countries' hope to rebuild and stabilize.

One can hope, against all odds, that things return to some level of normality very soon. All I hope for both of these countries is that a major challenge to the status quo arrives so that the people can get the life they long hoped for and deserve.