Breakingviews - Lebanon blast lays bare cost of a weak state

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MUMBAI/LONDON (Reuters Breakingviews) - Lebanon has added tragedy to crisis. A powerful blast in the Beirut port on Tuesday devastated the area and sent seismic shockwaves across the capital, killing at least 100 people and injuring 4,000. A health emergency created by the pandemic may now be followed by a wider humanitarian crisis. Chronic political weakness makes everything worse.

President Michel Aoun said that 2,750 tonnes of ammonium nitrate, used in fertilisers and bombs, had been stored for six years without proper safety measures. He described this as unacceptable. It is also shockingly neglectful, especially so close to urban areas. The risks of the substance are well known. It caused a deadly explosion in the port of Tianjin, China in 2015. 

Unlike the People’s Republic, Lebanon lacks the fiscal reserves to manage the pain on its own. A Covid-19 lockdown only amplified interlocking political, banking and financial crises. The government defaulted on its debts and has yet to draw up a plan with deep enough reforms to unlock funding from the International Monetary Fund. 

Even before the blast, the IMF forecast a GDP decline of 12% in 2020. The Lebanese pound’s unofficial rate was recently around 7,900 to the dollar, up from roughly 2,600 in early March. Hyperinflation was a real risk. Now widespread hunger will be a big fear in a country that depends on food imports. The wheat in its granaries is unusable and the country’s largest port lies in ruins.

The humanitarian crisis may be the easiest to deal with. The international backers of Lebanon’s fighting factions will likely rush to be generous and the shared tragedy might even lead to a temporary political truce. Restoring faith in the state will be a harder slog.

In some ways, Lebanon’s problems are unique. Still, many developing and frontier governments are too weak to enforce basic safety regulations and struggle to deal with catastrophes, whether man-made or natural. The economic damage inflicted by the coronavirus has pushed many countries into the fiscal abyss and lengthened the list of precarious ones. 

Rich nations usually respond when catastrophe strikes their poorer peers. The calls on their resources and generosity are all too likely to increase.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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