Lebanon’s Association of Banks has announced that the Lebanon bank strike will resume their open-ended strike on Tuesday, March 14, in protest of recent judicial rulings. The Association is calling for “swift legal measures” to put an end to what they say are contradictory standards in the issuance of some rulings, warning that these rulings are “exhausting what’s left of deposits belonging to all depositors and not only some of them.”
Why is the Lebanon bank strike happening?
The banks had suspended their strike on February 24 at the request of caretaker Prime Minister Najib Mikati, after they had begun the strike on February 7 in protest of a recent court ruling that forced one of the country’s largest banks to pay out two of its depositors their trapped savings in cash.
Lebanon’s banks have been hard hit by the country’s economic meltdown that began in October 2019 and have since imposed informal capital controls, under which depositors have been able to withdraw only small amounts of their savings at an exchange rate far lower than the one used on the market.
The economic crisis has left more than three quarters of Lebanon’s population of 6 million in poverty, and the Lebanese pound has lost 97% of its value against the dollar. The informal capital controls have prompted some overseas depositors, locked out of their savings, to launch lawsuits overseas and in Lebanon to pressure banks to release their savings in full. In Lebanon, some depositors opted to break into banks, armed, and forced cashiers to hand over their money.
Lebanon’s Court of Cassation recently overturned a 2022 verdict in favour of Fransabank, which was sued by two depositors demanding their money in cash. The ruling threw out the previous verdict, which allowed the bank to pay them with a check. That would not have allowed them to retrieve their money in full since they would have had to deposit the check in a bank account, where the money would get stuck all over again.
Despite the economic meltdown, Lebanese authorities have not implemented reforms demanded by the international community in order to release billions of dollars in loans and grants. The International Monetary Fund has criticized Lebanon for its sluggish progress on the reforms since talks between the government and the IMF began in May 2020.
Image Credit: Reuters