Abu Dhabi, UAEMonday 9 December 2019

Lebanese petrol stations strike as anger against banks intensifies

Not all stations adhered to the strike

A banner at a Beirut petrol station reads: "Strike!! Strike!! Because we can't buy the US dollar". Reuters
A banner at a Beirut petrol station reads: "Strike!! Strike!! Because we can't buy the US dollar". Reuters

Lebanon’s continuing cash shortage pushed petrol stations to launch an open-ended strike on Thursday, and increased public anger against banks as withdrawals remain capped.

Petrol stations say they have suffered financial losses since banks started restricting Lebanese importers’ access to American dollars this summer.

They have launched several strikes in protest since late September but to no avail.

Petrol station owners on Thursday asked the Energy Ministry to increase fuel prices, which are set by the government once a week, to cover their losses.

The ministry has refused to respond to the request and has set up a system for the state to import fuel directly for the first time, bypassing private companies.

The government is expected to start buying fuel in 10 to 15 days, caretaker Energy Minister Nada Boustani said on Thursday.

Importers of fuel and other necessities, such as wheat and medicine, should be able to exchange their Lebanese pounds to dollars at the official rate after a special system was set up by the central bank in early October.

But in practice, the central bank only guarantees 85 per cent of importers’ demand for dollars, forcing them to buy the rest on the black market.

To avoid the extra cost, fuel importers ask petrol stations to pay them in dollars, but they face the same problem. It is against the law for them to force customers to pay in dollars.

Since September, the black-market exchange rate between the Lebanese pound and US dollar, which are both used readily, has slowly risen from the official rate of 1,507.5 to the dollar to more than 2,000.

Until now, the effect of petrol station strikes has been limited.

Although the strike was followed in some areas such as north of Beirut, the coastal city of Batroun and the region of Akkar, it was only half-heartedly implemented in other big cities such as Baalbek and Tripoli, the state-run National News Agency reported on Thursday.

In the capital, several petrol stations were closed on Thursday but traffic remained normal.

Public anger against banks has also been on the rise.

Banks began unofficially capping dollar cash withdrawals when they reopened on November 1 after closing when massive nationwide protests began on October 17 over the dire economy.

In many cases, ATMs have run out of dollars and will only dispense pounds.

Banks closed again for 10 days on November 9 to protest against violence and foul language from clients against their staff.

When branches reopened with extra security, the Association of Lebanese Banks announced that withdrawals were capped to $1,000 (Dh3,672) a week and international transfers were limited to "urgent matters”.

But in effect, the cash withdrawal allowance was lower in many banks, with some imposing limits of $300 a week.

Local media reported that the caps are illegal without an approval from the central bank.

On Thursday, local daily L'Orient-Le Jour reported that MP Michel Daher was working on a draft law to regulate capital controls, because Lebanese law does not allow the Association of Banks to order banks to implement them.

This means that, in effect, banks could be sued for limiting access to cash.

The banking restrictions caused anger on Thursday as people tried to cash in their salaries.

Videos on social media showed crowds gathering in front of a bank in the southern coastal city of Sidon, chanting “thief, thief”.

On the same day, Lebanese bank BankMed denied a Reuters report that oil trader IMMS was suing it in the US because the bank failed to return $1 billion of its deposits when requested.

Updated: November 29, 2019 07:53 PM

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