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Lebanon's economy is in crisis just when a war could erupt in its neighourhood – The Globe and Mail

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A flatbed truck, placed by an angry Lebanese client, blocks the entrance to his bank branch in the southern Lebanese city of Sidon on Jan. 4, 2020, after the establishment refused to allow him to withdraw his savings.

MAHMOUD ZAYYAT/AFP/Getty Images

Lebanon sailed through the financial crisis. Now it’s lunging toward Greek status, and signs of a crisis are everywhere.

On Friday, a near-riot broke out in a bank branch in the northern Lebanese town of Halba when customers complained that they couldn’t withdraw cash. Lebanon is running short of U.S. dollars, and banks everywhere have restricted their supply and put arbitrary limits on the withdrawal of Lebanese pounds. Lebanon’s National News Agency reported a 10-hour standoff at the Halba bank. At one point, security forces fired tear gas into the building, and one customer was taken to hospital.

The good times in the Middle East’s favourite playground are over.

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The cranes are idle in Beirut. Corruption is rampant – always has been. The banks are in crisis, and the debt-choked government, whose annual fiscal deficit is running at 10 per cent of GDP, is starved for cash. Mass anti-government protests since mid-October have paralyzed the main cities and forced the resignation of prime minister Saad Hariri and his cabinet. There is no economic salvation plan.

Adding to the gloom is the possibility of war between Iran and the United States. Tiny Lebanon, bordered by Syria and Israel and not far from Iraq, where a U.S. missile strike killed Iranian General Qassem Soleimani on Jan. 3, lives in a rough neighbourhood.

The Lebanese stock market is in the tank. A recession seems imminent. Ratings agency Fitch predicts a default on some US$88-billion of public debt. An IMF bailout may be in the works. Financial collapse, while unlikely, is not out of the question. That’s because Lebanon, where the Iran-backed Hezbollah party and militia are formidable forces, doesn’t have a lot of friends at the moment. On Sunday, Hezbollah leader Hassan Nasrallah called for attacks on U.S. military sites in the Middle East. Would U.S. President Donald Trump support an IMF bailout of Lebanon? Probably not.

“I’m very pessimistic about the economy,” Kamal Hamdan, an economist and executive director of Beirut’s Consultation and Research Institute, said in an interview.

How did Lebanon’s apparently resilient, largely open and buzzy entrepreneurial economy reach the cliff edge? The country is largely the author of its own misfortunes, even if the long Syrian Civil War on its border – Lebanon took in more than a million refugees – didn’t help. An economic model based on massive consumption and borrowing was always unsustainable. It just took a while for the proof to arrive.

Mr. Hamdan says the roots of the crisis go back to the era of Rafic Hariri, the wealthy businessman and father of Saad Hariri who was prime minister from 1992 to 1998 – the first post-civil war leader – and again from 2000 to 2004 (he was assassinated in 2005). He dropped the income tax rate to 10 per cent and went on a reconstruction borrowing spree. At the same time, warlords-turned-politicians bought votes by spending and hiring recklessly in their constituencies.

Public expenditures exploded. Between 1993 and 2018, the government of this tiny country spent some US$240-billion. But the vast majority of it went to current expenditures such as salaries, not capital expenditures that could have created economic efficiencies. The number of public servants rose fivefold to 300,000. Then, of course, taxes had to rise as deficits widened.

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At the same time, foreign direct investment fell as the Syrian war raged on. Angered by the rise of Shia Hezbollah, wealthy Sunni Arabs from Saudi Arabia and the Gulf states stopped investing in Lebanon and even curtailed tourist visits. Recently, dollar remittances from Lebanese expats also slowed as faith in the banking sector waned.

In recent years, the government has tried to fund itself through a system dismissed as a Ponzi scheme by some economists. To maintain the Lebanese pound’s costly currency peg to the U.S. dollar, the central bank pushed up deposit rates to crazy levels – as much as 10 per cent. Those deposits, in turn, were loaned to the central bank.

In 2019, as the inflow of dollars dried up, the commercial banks introduced informal capital controls, limiting cash withdrawals. Businesses began to suffer from a credit squeeze. The mass riots that started in October and triggered the downfall of Mr. Hariri’s government were in good part motivated by the banking and economic crises. The currency peg is in trouble, and a dollar fetches 2,000 Lebanese pounds on the black market; the official rate is 1,500.

The new government will have to come up with a rescue plan fast – the cabinet is to be appointed this week. If it doesn’t, an IMF bailout of as much as US$25-billion may be needed. The wild card is a war between Iran and the U.S. that could shatter all the economies in the region. For Lebanon, the timing of Gen. Soleimani’s assassination could not have been worse.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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N.B. election: Parties’ answers on treaty rights, taxes, Indigenous participation

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FREDERICTON – The six chiefs of the Wolastoqey Nation in New Brunswick distributed a survey on Indigenous issues to political parties ahead of the provincial election, which is scheduled to kick off Thursday. Here are some of the answers from the Progressive Conservative, Liberal and Green parties.

Q: How does your party plan to demonstrate a renewed commitment to recognizing our joint treaty responsibilities and acknowledging that the lands and waters of this territory remain unceded?

Progressive Conservative: The party respectfully disagrees with the assertion that land title has been unceded. This is a legal question that has not been determined by the courts.

Liberal: When we form government, the first conversations the premier-designate will have is with First Nations leaders. We will publicly and explicitly acknowledge your treaty rights, and our joint responsibility as treaty people.

Green: The Green Party acknowledges that New Brunswick is situated on the unceded and unsurrendered territories of the Wolastoqiyik, Mi’kmaq and Peskotomuhkati peoples, covered by the Treaties of Peace and Friendship. Our party is committed to establishing true nation-to-nation relationships with First Nations, grounded in mutual respect and co-operation as the treaties intended.

Q: How does your party propose to approach the issue of provincial tax agreements with First Nations?

Progressive Conservative: The government of New Brunswick operates in a balanced and fair manner with all organizations, institutions and local governments that represent the citizens of this province, including First Nations. Therefore, we cannot offer tax agreements that do not demonstrate a benefit to all citizens.

Liberal: Recent discussions with First Nations chiefs shed light on the gaps that existed in the previous provincial tax agreements with First Nations. Our party is committed to negotiating and establishing new tax agreements with First Nations that address the local needs and priorities and ensure all parties have a fair deal.

Green: The Green Party is committed to fostering a respectful relationship with First Nations in New Brunswick and strongly opposes Premier Blaine Higgs’s decision to end tax-sharing agreements. We believe reinstating these agreements is crucial for supporting the economic development and job creation in First Nation communities.

Q: How will your party ensure more meaningful participation of Indigenous communities in provincial land use and resource management decision-making?

Progressive Conservative: The government of New Brunswick has invested significant resources in developing a robust duty to consult and engagement process. We are interested in fully involving First Nations in the development of natural resources, including natural gas development. We believe that the development of natural gas is better for the environment — because it allows for the shutdown of coal-fired power plants all over the globe — and it allows for a meaningful step along the path to reconciliation.

Liberal: Our party is focused on building strong relations with First Nations and their representatives based on mutual respect and a nation-to-nation relationship, with a shared understanding of treaty obligations and a recognition of your rights. This includes having First Nations at the table and engaged on all files, including land-use and resource management.

Green: We will develop a new Crown lands management framework with First Nations, focusing on shared management that respects the Peace and Friendship Treaties. We will enhance consultation by developing parameters for meaningful consultation with First Nations that will include a dispute resolution mechanism, so the courts become the last resort, not the default in the face of disagreements.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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Canadian Coast Guard crew member lost at sea off Newfoundland

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ST. JOHN’S, N.L. – A crew member of a Canadian Coast Guard ship has been lost at sea off southern Newfoundland.

The agency said in a release Wednesday that an extensive search and rescue effort for the man was ended Tuesday evening.

He was reported missing on Monday morning when the CCGS Vincent Massey arrived in St. John’s, N.L.

The coast guard says there was an “immediate” search on the vessel for the crew member and when he wasn’t located the sea and air search began.

Wednesday’s announcement said the agency was “devastated to confirm” the crew member had been lost at sea, adding that decisions to end searches are “never taken lightly.”

The coast guard says the employee was last seen on board Sunday evening as the vessel sailed along the northeast coast of Newfoundland.

Spokeswoman Kariane Charron says no other details are being provided at this time and that the RCMP will be investigating the matter as a missing person case.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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