Experts predict devastating economic consequences after Beirut blast – Business Insider
  • The deadly explosion that rocked Beirut on Tuesday may have devastating consequences for a country already in financial crisis.
  • Inflation has caused Lebanon’s currency to plunge in value since October 2019, and prices of basic food staples have skyrocketed.
  • Almost half of Lebanon’s population lives below the poverty line, and 33% of the country is unemployed.
  • Tuesday’s explosion is likely to contribute to anti-government sentiment, experts are predicting.
  • View more episodes of Business Insider Today on Facebook.

The seismic explosion that tore through Beirut on Tuesday, will have devastating consequences for a country already reeling from a financial crisis.

The blast, which killed more than 100 people and injured thousands more, occurred at a warehouse in Beirut’s port area, where nearly 3,000 tons of explosive materials were being stored.

But the blast also destroyed Beirut’s main grain silo at the port — the largest grain storage facility in the entire country of Lebanon — leaving the country with less than a month of grain reserves, according to Reuters.

The timing of the explosion couldn’t be worse, as many Lebanese people can’t afford to put food on the table because of a dire financial crisis that began last year.

“It’s an economic crisis, a financial crisis, a political crisis, a health crisis, and now this horrible explosion,” Tamara Alrifai, spokesperson for the UN Relief and Works Agency for Palestine Refugees in the Near East, told Reuters. “So there are many layers to what is happening in Lebanon that is constantly testing the ability of the Lebanese and the refugees who live in Lebanon to be resilient.”

Across Lebanon, tens of thousands of people have taken to the streets since October 2019, when the Lebanese pound started plunging in value after years of government corruption and debt mismanagement. Since then, prices have gone up on many food items, from meat to bread.

The inflation has been a blow to a country where more than 45% of the population now lives below the poverty line and about 33% are unemployed. One recent report showed that nearly half the population struggles with food insecurity.

Now, with the destruction of Beirut’s ports and the country’s main grain silo, which held some 85% of Lebanon’s cereals, experts are predicting the consequences of Tuesday’s blast will be felt far beyond Beirut.

“The effects are severe. The harbor is destroyed, and the harbor was one of the main gates for imported food. That becomes inoperative for the next weeks, even maybe months,” Hans Bederski, national director of the refugee aid group World Vision, told Reuters. “And that will affect all people, not just in Beirut but also the rest of Lebanon, no matter whether Lebanese citizens or refugees.”

Lebanon imports 80% of what it consumes, including a majority of its wheat which is used to make flatbread, a staple in most households. Just last month, prices for bread went up for the first time in eight years to adjust for inflation, setting off another round of protests.

Beirut’s governor said the blast has left nearly 300,000 people homeless. The capital’s port area was reduced to rubble, with streets severely damaged and facades of buildings shattered.

Officials did not say what caused the fire that set off the blast, but President Michel Aoun said that thousands of tons of ammonium nitrate, used in fertilizers and bombs, had been stored for six years at the port without safety measures.

Beirut mayor Jamal Itani said restoring the city will cost “billions of dollars.” And although he praised the resilience of the Lebanese people, citizens are still struggling to come to terms with the destruction.

“I lived through the war and (tough) circumstances, but I never saw something like this before,” baker Hekmat Kaai said. “I am wondering how cheap a human being is in this country. Where are we going? Beirut was completely destroyed in an instant.”

Nearby hospitals were also heavily damaged in the explosion, causing those left standing to become overwhelmed with patients — all while Lebanon has been hit with a spike in coronavirus cases.

Once the dust settles, experts predict that the blast could reignite anti-government protests. They say the current economic crisis is the worst threat to Lebanon’s stability since the civil war that ravaged the country from 1975 to 1990.

“We have lived generations where the same entrenched political class have been in power,” said Charlotte Karam, an associate professor at the American University of Beirut. “I blame the history, the futile history of the same political class, the same structures, repetitively taking control of Lebanon and milking Lebanon.”

But even with Lebanon’s financial resources stretched to the limit and the country on the brink of collapse, it now faces the additional challenge of rebuilding its capital city.

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