Lebanon's banking sector, once considered a pillar of the economy, has suffered a blow to its image in recent months, with protesters vandalising branches and chanting insults at the governor of Banque du Liban (BDL), the central bank.
Public anger has grown since banks started restricting access to dollars, used interchangeably with Lebanese pounds in the local market, last October. Since then the US currency has gradually disappeared from circulation and the pound has crashed to record lows, triggering massive inflation in a country dependent on imports. The Lebanese government is currently holding talks with the International Monetary Fund to secure billions in aid.
To shed light on the banking sector's role in the current state of affairs, The National spoke to Hicham Safieddine, author of Banking on the State: The Financial Foundations of Lebanon and an assistant professor in history of the modern Middle East at King's College, University of London.
Why was there little to no criticism of the Banque du Liban and banking sector in the Lebanese media until after outbreak of the crisis?
After the end of the civil war (1975-1990), the BDL emerged as the most stable state institution. Its longtime governor Riad Salameh helped stabilise the Lebanese exchange rate and eventually pegged the Lebanese pound to the dollar while portraying it as the hallmark of stability. Many Lebanese, weary of the war years of instability, readily bought into this portrayal.
Salameh further impressed himself on the national imagination when he managed to stave off any capital flight from Lebanon during the 2008-2009 financial crisis. His apparent diligence stood in sharp contrast to the bickering and corrupt sectarian leaders. All this while, however, Salameh oversaw the financing of the largest government debt in the country’s history. Much of this debt was held by local private banks in return for exorbitant interest rates that generated astronomical profits.
Over time, this symbiotic relationship between the BDL and the private banking sector, under the auspices of the Association of Banks in Lebanon (ABL), reinforced the untouchable stature of banks. They put their easily earned money to work by investing in public relations campaigns on billboards, TV ads, and even newspaper supplements, to polish their image. As long as the long-term structural instability was hidden – thanks to BDL accounting tactics and inflow of money from abroad – mainstream media parroted the bankers’ narrative and turned a blind eye to underlying instability waiting to explode. When it did, some media outlets threw down the gauntlet while others continued to rally behind the banking oligarchs.
How did the banking sector turn into “an organised political community largely immune to state authority" as you put it in your book?
Much credit for the emergence of Lebanese bankers as an organised political community in the 1950s goes to the brothers Raymond and Pierre Edde. The duo were the fruit of the marriage of money embodied in their maternal Sursok family and politics personified in their father and Lebanese “president” under French occupation, Emile Edde. Raymond was the architect of the banking secrecy law passed in 1956. His younger brother, Pierre, co-founded the Association of Banks in Lebanon in 1959.
The 1956 law created serialised banking accounts that were immune to state inspection, including the BDL. Coupled with banking deregulation as well as the influx of Palestinian capital fleeing Zionist persecution and petrodollars seeking safe haven, the law led to an unprecedented growth in the size of Lebanese banking sector, both in terms of total holdings and number of banks.
Three years later, Pierre, who had served as finance minister and became head of Bank Beirut Riyadh, spearheaded a campaign to establish a banker’s association. The ABL included local and international banks based in Lebanon. Its founding charter clearly stated its aim as the advocacy of the interests of the sector. ABL membership grew very rapidly in the face of calls for setting up a national central bank. ABL pressure succeeded in weakening the mandate of the new bank to regulate the profession, thereby consolidating the banking community into the most powerful, and by now, longest standing lobby in the country.
Why were the voices calling for a powerful central bank focused on economic development – as was conventional wisdom at the time – a minority when the BDL was established in 1964?
We know from a petition published in 1953 that many social movements and political parties called for establishing a national bank that would serve the country’s economy. While the petition was focused on the question of national versus foreign ownership, it was clear that economic development was high on the minds of its initiators. The problem was that this majority was less powerful than the oligarchy of financiers and import merchants who held sway in the corridors of power.
The ideology of laissez-faire propagated by this oligarchy was also pivotal in avoiding the centering of economic development as part of a BDL mandate. A group of influential economists at the American University of Beirut did push for more policies of balanced growth and stricter regulation of the banking sector. They made some inroads into policymaking in the 50s, but it took a major crisis in 1966 for serious reforms to take place.
To what extent did the Intra crisis in 1966 (the collapse of Lebanon’s largest bank which caused a political crisis) lead to reforms of the banking sector?
The Intra crisis led to major reforms of the sector. The government put a freeze on founding new banks, and oversaw an overhaul of existing ones through a series of liquidations and mergers. More significantly, it introduced legislation that created three regulatory institutions. The first was a deposit insurance scheme that protected customers with medium or low deposits in the case of bankruptcy. The other two were the Higher Banking Commission and the Banking Control Commission. They were entrusted with monitoring the private banking sector for bad practices as well as reporting and restructuring unhealthy banks under the supervision of the BDL. Additional legislation classified banks based on their credit policy. Incentives were put in place for long-term lending to encourage investment as opposed to mercantile banking.
Initially, these reforms led to a speedy recovery. The sector witnessed a rebound, and was celebrating a new “golden age” in the early 1970s. But it was short-lived. Soon, demands for deregulation grew again and the outbreak of the civil war destroyed hopes for reinstating Beirut as a stable financial hub. Another major problem was the reforms themselves. They granted the ABL formal decision-making powers within regulatory institutions. In other words, the private bankers became judge and jury. This undermined the push for transparency and accountability and sowed the seeds for another crisis like the one Lebanon is facing today.
How similar or different is the current crisis to past ones?
Like today, crises in the past, top among them Intra, were a function of both economic structural weaknesses and geopolitics. On the structural front, the persistence of deregulation and an oversized services sector meant a negative trade balance highly dependent on hot capital inflow for its survival. Capital flows, in turn, were highly sensitive to the political climate.
The scale of today’s crisis, however, is unprecedented, and the prospects of recovery significantly lower. Financially, the entire banking sector is currently in lockdown and government debt is astronomical compared to pre-civil war levels. Politically, the ruling elite are much more corrupt and much less competent, or willing, to reform the system to save it in the long run.
Globally, the US was much more sympathetic to Lebanon in the 1960s and pushed for a swift recovery even if on its own terms. Back then, Washington saw Lebanon’s free-market model as a “living refutation” – to quote one diplomatic cable – compared to progressive socialist Arab countries like Syria or Egypt. Today, the crisis takes place amid a global recession. In addition, a blatantly pro-Israeli Washington is using financial sanctions and diplomatic threats to blackmail Lebanon into accepting its agenda for the region in return for any support. The degree to which IMF intervention will be used as a conduit for these pressures is to be seen.
What kind of concessions from Lebanon’s banking sector do you think the IMF will request? Will they succeed?
The IMF is focused on monetary and fiscal policy indicators like exchange rate value and government budget deficits rather than reforming the banking sector. They will seek to impose austerity measures like devaluation, cutting government support for essential goods, and privatising publicly owned assets to the detriment of the majority of the Lebanese. Given how entangled the banking sector is with all these variables, some restructuring of private banks will have to take place, including recapitalisation, liquidation, merging, and possibly foreign acquisition. A bail-in, whereby large depositors are turned into shareholders, is also on the table.
ALL THE RESULTS
Bantamweight
Siyovush Gulmomdov (TJK) bt Rey Nacionales (PHI) by decision.
Lightweight
Alexandru Chitoran (ROU) bt Hussein Fakhir Abed (SYR) by submission.
Catch 74kg
Omar Hussein (JOR) bt Tohir Zhuraev (TJK) by decision.
Strawweight (Female)
Seo Ye-dam (KOR) bt Weronika Zygmunt (POL) by decision.
Featherweight
Kaan Ofli (TUR) bt Walid Laidi (ALG) by TKO.
Lightweight
Abdulla Al Bousheiri (KUW) bt Leandro Martins (BRA) by TKO.
Welterweight
Ahmad Labban (LEB) bt Sofiane Benchohra (ALG) by TKO.
Bantamweight
Jaures Dea (CAM) v Nawras Abzakh (JOR) no contest.
Lightweight
Mohammed Yahya (UAE) bt Glen Ranillo (PHI) by TKO round 1.
Lightweight
Alan Omer (GER) bt Aidan Aguilera (AUS) by TKO round 1.
Welterweight
Mounir Lazzez (TUN) bt Sasha Palatkinov (HKG) by TKO round 1.
Featherweight title bout
Romando Dy (PHI) v Lee Do-gyeom (KOR) by KO round 1.
UAE currency: the story behind the money in your pockets
Sustainable Development Goals
1. End poverty in all its forms everywhere
2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
3. Ensure healthy lives and promote well-being for all at all ages
4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
5. Achieve gender equality and empower all women and girls
6. Ensure availability and sustainable management of water and sanitation for all
7. Ensure access to affordable, reliable, sustainable and modern energy for all
8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
9. Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
10. Reduce inequality within and among countries
11. Make cities and human settlements inclusive, safe, resilient and sustainable
12. Ensure sustainable consumption and production patterns
13. Take urgent action to combat climate change and its effects
14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development
15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
17. Strengthen the means of implementation and revitalise the global partnership for sustainable development
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
'Unrivaled: Why America Will Remain the World’s Sole Superpower'
Michael Beckley, Cornell Press
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
TOURNAMENT INFO
Women’s World Twenty20 Qualifier
Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November
UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The specs: 2018 Nissan Altima
Price, base / as tested: Dh78,000 / Dh97,650
Engine: 2.5-litre in-line four-cylinder
Power: 182hp @ 6,000rpm
Torque: 244Nm @ 4,000rpm
Transmission: Continuously variable tranmission
Fuel consumption, combined: 7.6L / 100km
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
UAE currency: the story behind the money in your pockets
It Was Just an Accident
Director: Jafar Panahi
Stars: Vahid Mobasseri, Mariam Afshari, Ebrahim Azizi, Hadis Pakbaten, Majid Panahi, Mohamad Ali Elyasmehr
Rating: 4/5
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Read more about the coronavirus
Uefa Nations League: How it Works
The Uefa Nations League, introduced last year, has reached its final stage, to be played over five days in northern Portugal. The format of its closing tournament is compact, spread over two semi-finals, with the first, Portugal versus Switzerland in Porto on Wednesday evening, and the second, England against the Netherlands, in Guimaraes, on Thursday.
The winners of each semi will then meet at Porto’s Dragao stadium on Sunday, with the losing semi-finalists contesting a third-place play-off in Guimaraes earlier that day.
Qualifying for the final stage was via League A of the inaugural Nations League, in which the top 12 European countries according to Uefa's co-efficient seeding system were divided into four groups, the teams playing each other twice between September and November. Portugal, who finished above Italy and Poland, successfully bid to host the finals.
RACE SCHEDULE
All times UAE ( 4 GMT)
Friday, September 29
First practice: 7am - 8.30am
Second practice: 11am - 12.30pm
Saturday, September 30
Qualifying: 1pm - 2pm
Sunday, October 1
Race: 11am - 1pm
Ukraine%20exports
%3Cp%3EPresident%20Volodymyr%20Zelenskyy%20has%20overseen%20grain%20being%20loaded%20for%20export%20onto%20a%20Turkish%20ship%20following%20a%20deal%20with%20Russia%20brokered%20by%20the%20UN%20and%20Turkey.%3Cbr%3E%22The%20first%20vessel%2C%20the%20first%20ship%20is%20being%20loaded%20since%20the%20beginning%20of%20the%20war.%20This%20is%20a%20Turkish%20vessel%2C%22%20Zelensky%20said%2C%20adding%20exports%20could%20start%20in%20%22the%20coming%20days%22%20under%20the%20plan%20aimed%20at%20getting%20millions%20of%20tonnes%20of%20Ukrainian%20grain%20stranded%20by%20Russia's%20naval%20blockade%20to%20world%20markets.%3Cbr%3E%22Our%20side%20is%20fully%20prepared%2C%22%20he%20said.%20%22We%20sent%20all%20the%20signals%20to%20our%20partners%20--%20the%20UN%20and%20Turkey%2C%20and%20our%20military%20guarantees%20the%20security%20situation.%22%3C%2Fp%3E%0A
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Young women have more “financial grit”, but fall behind on investing
In an October survey of young adults aged 16 to 25, Charles Schwab found young women are more driven to reach financial independence than young men (67 per cent versus. 58 per cent). They are more likely to take on extra work to make ends meet and see more value than men in creating a plan to achieve their financial goals. Yet, despite all these good ‘first’ measures, they are investing and saving less than young men – falling early into the financial gender gap.
While the women surveyed report spending 36 per cent less than men, they have far less savings than men ($1,267 versus $2,000) – a nearly 60 per cent difference.
In addition, twice as many young men as women say they would invest spare cash, and almost twice as many young men as women report having investment accounts (though most young adults do not invest at all).
“Despite their good intentions, young women start to fall behind their male counterparts in savings and investing early on in life,” said Carrie Schwab-Pomerantz, senior vice president, Charles Schwab. “They start off showing a strong financial planning mindset, but there is still room for further education when it comes to managing their day-to-day finances.”
Ms Schwab-Pomerantz says parents should be conveying the same messages to boys and girls about money, but should tailor those conversations based on the individual and gender.
"Our study shows that while boys are spending more than girls, they also are saving more. Have open and honest conversations with your daughters about the wage and savings gap," she said. "Teach kids about the importance of investing – especially girls, who as we see in this study, aren’t investing as much. Part of being financially prepared is learning to make the most of your money, and that means investing early and consistently."
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Company profile
Name: Steppi
Founders: Joe Franklin and Milos Savic
Launched: February 2020
Size: 10,000 users by the end of July and a goal of 200,000 users by the end of the year
Employees: Five
Based: Jumeirah Lakes Towers, Dubai
Financing stage: Two seed rounds – the first sourced from angel investors and the founders' personal savings
Second round raised Dh720,000 from silent investors in June this year
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
More from Neighbourhood Watch:
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
Essentials
The flights
Emirates and Etihad fly direct from the UAE to Geneva from Dh2,845 return, including taxes. The flight takes 6 hours.
The package
Clinique La Prairie offers a variety of programmes. A six-night Master Detox costs from 14,900 Swiss francs (Dh57,655), including all food, accommodation and a set schedule of medical consultations and spa treatments.
Opening weekend Premier League fixtures
Weekend of August 10-13
Arsenal v Manchester City
Bournemouth v Cardiff City
Fulham v Crystal Palace
Huddersfield Town v Chelsea
Liverpool v West Ham United
Manchester United v Leicester City
Newcastle United v Tottenham Hotspur
Southampton v Burnley
Watford v Brighton & Hove Albion
Wolverhampton Wanderers v Everton
Brief scores:
Juventus 3
Dybala 6', Bonucci 17', Ronaldo 63'
Frosinone 0
UAE currency: the story behind the money in your pockets
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
