For decades, Abdelnaser Ossman has cultivated grapes on his family’s extensive property in the Beqaa Valley of Lebanon, tending the land through years of drought, war, and economic turbulence.
But this year, the pressures became unbearable. Costs surged and profits plummeted since the war between Israel and Hezbollah, the Iranian-backed Lebanese militant group, began in March. Fuel and fertilizer prices doubled, and labor costs quintupled, while the price paid for the harvest halved. Ossman, 55, rented out part of his land to help close the books and is considering selling some parcels of the estate.
“This year has been a catastrophe,” he said. “It has been the hardest year of all.”
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Lebanon is facing an increasingly severe economic crisis, driven by years of mismanagement and worsened by a conflict that killed thousands, displaced hundreds of thousands and left entire cities in ruins. The war involving the United States, Israel and Iran, which began in February, has only intensified the economic challenges.
The data are alarming. The World Bank projects Lebanon’s inflation to rise by more than 17% this year, driven by supply disruptions, higher shipping costs and surging fuel prices. It also estimates the economy will contract by 6.4%.
For many Lebanese, economic survival is the main concern. They struggle to pay for basic goods and fuel amid unemployment and low wages.
The crisis threatens to reverse the fragile progress achieved by Prime Minister Nawaf Salam, who took office last year with the aim of reforming the economy.
The government faces growing popular discontent, threats of strikes by unions, and rising demands for a lasting reform of monetary policy.
“It is a difficult moment and also deeply frustrating,” said Amer Bisat, the Minister of Economy and Trade, in an interview. “Lebanon does not deserve this.”
Decades of Crisis
The shocks hitting the Lebanese economy stem from systemic problems accumulated over years, which have weakened the country since the end of the civil war in 1990.
A political and economic elite, dominated by sectarian leaders and powerful business interests, enriched itself through patronage and policies oriented toward its own interests, creating a deeply unequal society. Corruption remains entrenched. Transparency International, the anti-corruption watchdog, ranks Lebanon among the countries with the world’s lowest scores.
The consequences of this deterioration reached a peak in 2019, when the Lebanese banking system collapsed, wiping out billions of dollars in savings, driving the Lebanese pound down and pushing a large portion of the population into poverty. The Covid-19 pandemic worsened the damage and, subsequently, the Beirut port explosion in 2020 devastated entire neighborhoods and caused billions of dollars in losses.
While Lebanon was still absorbing these blows, a new round of conflicts began. In 2024, Hezbollah opened a new front against Israel on Lebanese soil, after Hamas-led attacks on Israel on October 7, 2023. This sparked a war that caused more destruction and displacements.
These successive crises weakened the already fragile Lebanese state and its public institutions, leaving the economy under the control of established elites and Hezbollah. Networks of bankers with political ties, large entrepreneurs, financiers and traditional political families exert disproportionate influence over key sectors, sustaining a system of patronage, inequality and political paralysis.
“Although they operate under very different logics, they both resist change fiercely,” said Sibylle Rizk, director of public policy at Kulluna Irada, a Lebanese civil-society organization, referring to the elites and Hezbollah. “Because what is at stake is not only their survival, but the survival of the political and financial order they keep together.”
The scale of the difficulties is enormous.
Large parts of Lebanon are likely to continue facing food shortages into the next year, as the war disrupted agricultural activity and reduced income.
Finding and keeping a job has become harder. A July survey by the International Labour Organization found that one in three private-sector workers interviewed was not employed.
Tourism slowed, especially among Lebanese living abroad who send remittances that are important to the economy, Bisat said. Remittances have held up, but he sees signs they could decline as Lebanese workers in Gulf countries feel the effects of the war with Iran.
“Lebanon is a country that has many good things—its people, its education, its diaspora, its location,” he said. “And, unfortunately, all of that is being smothered. Our job is to try to release that potential. Until we can, frustration will continue.”
To pay the bills, many families have had to borrow money, sell gold and family heirlooms, and cut back on essential expenditures, such as health and education.
“What you see in Lebanon is a population struggling to afford its own life,” said Ali Abboud, an assistant professor of Economics at the American University of Beirut.
“Lebanon is a small, import-dependent country whose economy is deeply intertwined with the neighboring region,” he added. “That is why any crisis significantly affects the quality of life and the health and productivity of the economy.”
Energy Problems
The chronic electricity shortage is a portrait of the economic crisis.
Lebanon’s state electricity network provides power for only a few hours a day, leaving most households and businesses dependent on diesel generators to meet the energy shortfall. This makes them particularly vulnerable to spikes in fuel prices—for example, when private generator operators charge above government-set tariffs and authorities struggle to monitor or curb the violations.
Rayah Sakr, owner of the Submarine coworking space in Beirut, is feeling the pressure of soaring costs and energy cuts.
With higher temperatures this summer, the company’s monthly electricity bill from generators nearly doubled, surpassing $1,600, in addition to the $150 paid for government-supplied electricity. Sakr, whose business was already unprofitable before the energy crisis, weighs whether to raise monthly fees or close the business.
“Electricity and its price are a curse for us, and it is in it that we pin our hopes for a miracle,” she said. “It’s very hard to run a business like this.”
Bisat said the government has stepped up inspections of generators, seized dozens whose operators charged abusive rates, imposed fines, and referred the offences to the judiciary.
In a speech last month, Salam also said his government was developing solutions to reduce electricity costs, including offering loans to families to purchase solar panels.
The authorities plan to expand funding for health and social assistance, raise public-sector wages, including teachers, and subsidize public transport, he added. The government would pay for these measures by levying taxes on yachts and private aircraft and recovering hundreds of millions of dollars in overdue payments from dozens of companies and quarry operators.
Bisat acknowledged, however, that these initiatives would be insufficient for a country with few resources and facing enormous humanitarian and reconstruction needs. He invoked an Arabic expression that captures the situation: “The eyes see, but the hands are short.”
Experts say Lebanon needs a long-term plan to fight corruption, reform its institutions, and restore confidence in the government.
In the past year, Salam has promoted bills to address the banking crisis. But the International Monetary Fund said there are still major obstacles to overcome. Among them are agreeing on who will bear the losses from the banking-sector collapse, approving a sustainable budget for 2027, and improving the government’s ability to raise resources, control spending, and manage public debt.
Some analysts say the government is moving too slowly.
The elite’s aim is to “socialize losses and privatize profits,” Rizk of Kulluna Irada said. “That means the population will bear the costs while the banks and their owners are shielded from responsibility.”
Lebanese in distress, such as Ossman, are bracing for days even tougher. On a recent afternoon, as a cool breeze swept across his vineyards, he said he hoped the government would finally manage to curb the economic situation. Above all, he hoped his generation would not be the one to lose the lands his father and grandfather left him.
“This land is my soul,” he said. But this year, he added, it has brought him only “one pain after another.”
This article was originally published in The New York Times.
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