Lebanese bank hold-ups: Who are the real criminals? | Debt | Techy Kings

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Today, Lebanon has a huge $72bn hole in its national finances. That number alone, by any measure of law, mathematics or logic should mean the Lebanese banks are bankrupt. Yet since the beginning of the financial crisis, Lebanese banks and their regulator, the Banque du Liban (BDL), have made a strange ontological argument to avoid repaying their depositors and officially declare bankruptcy.

Although there are no official capital controls, more than 60 of the country’s commercial banks have adopted the policy that US dollars are not actually US dollars if they are deposited into Lebanese banks before the financial crisis. Instead, they claim, the pre-crisis dollar was equal to the Lebanese pound and could only be issued at a greatly reduced rate – about 90 percent less than the American dollar’s current value on the black market.

But any US dollars deposited in the same banks after the financial crisis are “fresh” dollars, and thus, they can be withdrawn or exchanged for other currencies at real value at any time. Lebanese banks basically claim that not all debt to depositors is created equal.

Naturally, millions of Lebanese are not involved with this.

After putting up with this ridiculous policy for three long years, a handful of desperate depositors have made up their own minds.

There are bank holdups almost every week across Lebanon, but with a twist: People have threatened to use violence in banks not to steal other people’s money, but to gain access to their own savings. Some believe, however angry depositors may be, threatening violence is a step too far. But when you think about how they are left homeless or find themselves unable to provide for their families’ basic needs, including food, education and medical care, – simply because banks don’t give them access to their own money – it becomes difficult to compare this act with a “normal” bank robbery.

In any country with a functioning social contract, the banking sector’s invented distinction between “new” and “old” money would be taken to court, and a sane judge would order the bank to either pay up or declare bankruptcy – but not in Lebanon. In Lebanon, the judiciary is so afraid of taking over banks – many of which are owned by the political elite – that they allow white-collar bank theft to continue, citing “extraordinary circumstances”.

Bank foreclosures have achieved some encouraging results. Many depositors who threatened the bank with violence have managed to get most of their savings back. And they also forced the bank’s creative accounting claims into a legal corner. In speaking out for themselves, the depositors have brought the bank’s indefensible policies and their complicity in what the World Bank considers “deliberate depression” under legal scrutiny.

The results of this experiment are telling. The detained depositors have yet to face any formal criminal charges for their actions, with most receiving light sentences handed down in pre-trial negotiations. The judge has been lenient, and for good reason: After all, how can a judge consider it moral to severely punish someone for simply trying to take back what is legally theirs?

In response, the bank could only increase security at branches and carry out strikes designed to turn the public against those making the arrests.

Moreover, banks have few options, because there is only one way they can solve the issue that caused the hold – by declaring bankruptcy and liquidating their assets to pay their debtors (ie depositors). However, under Lebanese Law No 2/67 (also known as “Internal Law”) which governs the insolvency proceedings of Lebanese commercial banks, the declaration of bankruptcy may result in the liquidation of personal assets – yachts, cars, property – of bank executives. , and the elites who hold shares and management positions in these banks seem unwilling to take this risk.

It is not only Lebanese law that commercial banks are violating by refusing to accept their liability to depositors and trying to devalue their savings to save themselves. They also violate international banking rules developed after the financial crisis of 2008. In fact, the International Monetary Fund has stated that any bank restructuring process should see small deposits (most accounts) protected at full value.

Furthermore, by arbitrarily confiscating their depositors, these banks are also violating international human rights law, acting in direct violation of the United Nations Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights , and International Agreements. on Civil and Political Rights.

Despite all this, the international community took no real action to stop the banks from exacerbating the suffering of the Lebanese people for their own benefit. There is no doubt that meaningful sanctions from the US or the EU will pressure the political elites protecting these banks to do the right thing and begin the process of returning to the Lebanese people what is rightfully theirs.

While bank arrests have provided some positive results for those desperate to try them, they have also set a dangerous precedent – where vigilantes go unpunished because the rule of law has been undermined by the banks’ illegal actions. In times of desperation, this only encourages people to turn to violence to reclaim what is rightfully theirs.

If the international community and the Lebanese judiciary do not act quickly to regulate Lebanese banks, the country will enter a cycle of violence that will struggle to break: there will be more bank foreclosures, more hunger, more cholera, more unnecessary. death and possibly even active conflict.

If the international community, and the Lebanese elites responsible for this crisis, want to avoid this grim scenario, they should urgently develop a better ontological perception of who is stealing from whom when bank crimes turn desperate parents into armed activists.

The views expressed in this article are those of the author and do not necessarily reflect the editorial position of Al Jazeera.

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