Lebanon’s Bank Strikes Pit Judges Against the Status Quo
The story of Lebanon’s bank strikes define how the country has landed in such a precarious economic and political situation.
On March 14, Lebanese banks renewed a nationwide strike in response to ongoing investigations and recent rulings regarding their policies and practices since the start of the country’s brutal economic collapse in 2019. The bank strike, spearheaded by the Association of Banks in Lebanon (ABL), which represents Lebanese commercial banks, has all but frozen transactions for the average Lebanese citizen in the name of fighting so-called judicial overreach. But even the most casual observer of the eastern Mediterranean country’s political discourse can quickly understand what truly underpins the strike: a zero-sum demand from Lebanon’s political and economic elite for the right to rob the country blind.
The bank strike first began on February 7 as a result of Judge Ghada Aoun’s years-long investigation into money laundering and corrupt practices in the Lebanese banking sector. The investigation is particularly focused on commercial banks, although Aoun is also investigating the Banque Du Liban (Central Bank of Lebanon) and its long-running governor, Riad Salameh. Aoun charged Salameh with illicit enrichment on February 21 following a long-running investigation into his efforts to transfer public funds into his brother’s bank accounts in Switzerland and other European countries.
Lebanese banks wasted little time responding to the investigation, especially after Aoun charged two senior bankers from Bank Audi and Audi Group with money laundering for refusing to lift banking secrecy terms connected to the accounts of senior bank officials. ABL also took issue with another early-February ruling by the Court of Cassation against Fransabank regarding a lawsuit from two Lebanese citizens, Ayad al-Gharabaoui Ibrahim and Hanane Maroun al-Hajj Ibrahim, who demanded access to their bank deposits. The suit was ultimately decided in the plaintiffs’ favor, leading the ABL to strike as early as March 2022, when the first of many decisions against the bank were made regarding the same case.
The Fransabank ruling is substantial as it orders the banks to pay the plaintiffs in cash following their account closings. The bank originally preferred to pay by check to avoid losses in bank holdings given the disparity between the Lebanese lira and U.S. dollar. Such a ruling is crucial, as it sets a precedent protecting small depositors from harmful bank practices—arguably the major economic sticking point for Lebanese citizens since 2019.
While the ABL originally announced an indefinite strike, political intervention led it temporarily suspend the nationwide strike for a week, beginning on February 24. “Based on the Prime Minister's wish, the banks' sensitivity to difficult economic conditions, and the need to secure banking services to all citizens at the end of the month, [the ABL] have decided to suspend the strike temporarily for a week,” the bank noted in an official statement.
Indeed, the Lebanese political system was again swooping in to save the banking system. Prime Minister Najib Mikati announced on February 23 that he would ask the security forces and Interior Minister Bassam Mawlawi to not act on Aoun’s orders, citing “an overstepping of authority.” Mawlawi complied with this order. Further, Lebanon’s top prosecutor, Ghassan Oweidat, ordered Aoun to “temporarily suspend [her] investigative procedures until decisions are taken on the issue raised.” Aoun described the actions as “a total breakdown of justice” and “an unprecedented interference in the work of the judiciary.” Amid Aoun’s continued efforts, the banks renewed the strike on March 14 and again on March 21-22, announcing an end at the start of Ramadan.
Unfortunately, as evidenced by the ABL’s ongoing intransigence this month, Aoun’s statements define how Lebanon has landed in such a precarious economic and political situation. Since the 2019 October Revolution, the Lebanese people have continuously protested what they rightly describe as open corruption, but to no avail. Rather than reform the system collapsing around them, Lebanese elites in banking and political circles have consolidated their wealth, security, and power within a Ponzi scheme resembling a glass house of cards set to collapse. The World Bank’s assessment of the country’s economic state described this in the starkest of terms in a 2021 report, highlighting the situation as one of the worst economic meltdowns in modern history. The ABL’s actions, as well as that of the prime minister, are a continuation of the direct lines of corruption long evident in Lebanon and undergirding this meltdown.
A natural response to such a scenario is reform, which Lebanese citizens, world leaders, and the International Monetary Fund (IMF) have aggressively called for in recent years. Central to this debate are the capital controls and banking secrecy laws that would, if drafted along the IMF’s standards, fight back against shady banking practices and protect individual depositors as opposed to wealthy, connected elites. Unsurprisingly, the ABL rejects the IMF’s recommendations and that of the Lebanese people’s basic right to access their bank accounts, as well as basic international transparency standards. This is not an objective position on the part of Lebanon’s banking sector—it is an intentional ploy to avoid accountability for robbing Lebanese citizens of their savings while attempting to wait out the crisis until international support arrives (as has occurred in the past).
However, international support does not appear to be on the horizon this time around. World leaders are fed up with Lebanon’s ruling class for its refusal to change and reform. Rather than read the tea leaves, Lebanese elites will opt to not allow investigations to challenge the status quo. The Beirut Blast investigation is a case in point given the political interventions surrounding it, presenting a scenario in which it is difficult to see other investigations succeeding, especially without stronger international pressure. In this light, keep an eye on scapegoats (i.e., Salameh) who could be sacrificed to the people in exchange for window-dressing reforms.
Alexander Langlois is a foreign policy analyst focused on the Middle East and North Africa. He holds an M.A. in International Affairs from American University’s School of International Service. Follow him at @langloisajl.