Until this moment, all indicators point to the direction of the banks to implement what was leaked from their recent meetings, in terms of moving to an escalation during the next week, by reaching the stage of comprehensive and complete closure. Noting that during the past days, banks have contented themselves with closing branches in the face of citizens, while maintaining ATM services and transfers abroad.
Aggravate the situation to pass the Capital Control
Thus, it became clear that what Lebanon will face in the coming days will be a financial disobedience on the part of the banking sector, and the imposition of a comprehensive economic blockade on society, affecting salaries, commercial operations, cutting operations, etc., and beyond the scope of the strike that took place during the past days. In any case, it was clear that the Association of Banks deliberately leaked the details of this promised closure, perhaps with the aim of creating some confusion and increasing the level of concern regarding its next step.
As for the main goal, it is to aggravate and inflame the situation, with the aim of forcing the approval of the Capital Control Bill in the next “necessity legislation session” (see Al-Modon). And while the Speaker of the Parliament called the Parliament’s Bureau to meet on Monday, to organize the agenda for the necessity legislation session and set its date, parliamentary sources indicate that the Parliament is moving to put the capital control bill at the forefront of the session’s agenda.
More clearly, the Association of Banks has so far made sure that the Council’s bureau is keen to pass the law on the agenda. As for the strike, it will allow the creation of a pressure environment on the parliamentary blocs, to secure the quorum and votes required for the draft law, as an urgent need to address the comprehensive bank closure.
Full lock details
Banks are well aware of the meaning of the phrase “comprehensive closure”, which they leaked to the media, as the next escalating step. This step, as its details were leaked from the meetings of the association itself, will simply mean:
– Stopping salary transfers to settlement accounts, and thus freezing the process of paying wages to employees of the public and private sectors. While some of the private sector employees will be able to find alternative solutions, such as receiving wages in cash in pounds from the employers, it will not be possible to find a way out or a solution to this problem for public sector employees, especially if the strike extends until the end of the month.
– Stopping automatic teller machine operations and not filling them, which will stop the last outlet that can secure liquidity for bank customers.
– Stopping dollar sales through the platform, which will mean increasing pressure on the parallel market exchange rate, following cutting off one of the arteries supplying the dollar to this market.
– Stopping transfers abroad, which will freeze commercial activity in the market and threaten the food and fuel supply chains.
– Stopping withdrawals from fresh dollar accounts, which were supplying the market with part of the money supply in US dollars, and stopping receiving transfers in these accounts from abroad, including those related to expatriate aid to their families.
The Banque du Liban is absent from hearing
In the face of this unprecedented bank extortion, which recalls the comprehensive bank closure that the country witnessed following the demonstrations of October 17, 2019, the Banque du Liban seemed completely absent from hearing, although the Monetary and Credit Law requires the Central Bank to intervene as the body that regulates the “good relationship” of banks with their customers. . Noting that the Governor of the Central Bank himself is the one who heads the Supreme Banking Authority, which has the right to decide on this type of bank violations and violations, and which – ironically – is entrusted by the Capital Control Bill to decide on any violation that may arise during the application of the law.
At the same time, it does not seem that the government, or the Ministry of Finance, the guardian of the work of the Central Bank, is inclined to intervene in what is happening, or to hold the governor of the Central Bank accountable for his absence from hearing, while it seems that there is a tendency among all political forces to invest in the comprehensive bank closure, And using it as an osman shirt to pass the Capital Control Act. Noting that the Presidency of the Government interfered in a previous stage with the work of the Central Bank in other files, as happened twice when the Governor of the Banque du Liban was asked to pump dollars into the market to adjust the exchange rate, which led to the issuance of specific circulars and decisions by the Governor of the Banque du Liban.
In any case, the last bet at the present time remains on a specific intervention on the part of the judiciary, specifically the Al-Ajla judiciary, which is supposed to notice the effects of what is happening today on the local economy and society in general. This is exactly what the Depositors Association referred to, when a previous statement spoke of anticipation of a judicial decision “obligating banks to open their doors,” and with measures that may amount to imposing “judicial guardianship in the event of repeated arbitrary strikes.”
It is important to note here that the intervention of the judicial authority in particular has become an urgent issue, given that the Association of Banks linked its strike to the recent decision of the Court of Cassation, which required Fransabank to pay two deposits in cash dollars, not bank checks. In a clearer sense, the current strike came as a rebellion once morest the decision of the judiciary, which obliges the Lebanese courts to deal with this comprehensive closure, which invoked the judicial decision to demand Capital Control, which guarantees giving banks legal cover in the face of depositors’ claims.
