Executive Summary: THE SOCIO-ECONOMIC IMPLICATIONS OF LEBANON’S ENERGY CRISIS
Updated: Mar 30
Muskan Muskan, Shamsuddin Karimi, CENTCOM; Benjamin Maher, Chandlyr Mickan, Emergency Management, Health, and Hazards (EMH2)
Week of Monday, December 13, 2021
Zouk Power Plant, Lebanon
Lebanon’s recent energy crisis has negatively impacted the social and economic standing of the country’s population. The crisis will very likely impact Lebanese domestic and economic affairs and interstate power dynamics. The continued economic deficit will likely create an extended humanitarian crisis. A lack of action to provide a long-term energy solution by the Lebanese government, Gulf States (Saudi Arabia, United Arab Emirates, Bahrain, Qatar, Kuwait, Oman), and global powers (United States, China, Organization of Petroleum Exporting Countries) will likely result in regional instability and Lebanon’s collapse. Decreasing reliance on fossil fuels, investing in more sustainable sources of energy, and securing funds for a large-scale transition to solar energy would likely help the Lebanese government in controlling the energy crisis; however, it is unlikely that these measures will be implemented promptly.
The economic crisis in Lebanon has created a shortage of fuel to generate power, resulting in 24-hour countrywide blackouts. With the Lebanese pound losing 90% of its value, Lebanon’s central bank is unlikely to invest more funds to import fuel from neighboring countries. This will likely result in people buying fuel for private generators on the black market at higher prices. The increasing demand for the expensive fuel will likely encourage people to smuggle fuel from across the border and increase the black market’s profitability. This illegal trade will likely hike fuel prices resulting in increased frustration among people and ultimately leading to public unrest and violence. The fuel and energy scarcity will likely force sectors such as health, energy, and food to limit their operations, leaving millions without employment and access to basic amenities.
The healthcare sector will be majorly impacted by the energy crisis along with ongoing medication and hospital staff shortages. Fuel shortages and regular power cuts will very likely make hospital equipment such as respirators, dialysis machines, and infusion pumps inoperative, hindering patients' treatment. Hospital staff will very likely be forced to reduce their activity and prioritize treatments. This will very likely lead to staff helping patients with the most serious illnesses and injuries while leaving many individuals with less severe afflictions without treatment. With the emergence of a new highly-contagious variant of COVID-19, Omicron, the energy crisis will likely aggravate the health situation as continued fuel shortages will likely cease medical operations, causing an increase in the mortality rates. A rise in the number of new infections will likely overcrowd hospitals’ intensive care units. Power cuts will likely be fatal as they impact patient care by disrupting ventilators, which will likely increase death rates and prevent hospitals from admitting new patients.
Due to energy shortages, refrigerators will not have power to prevent food from spoiling, which will likely expand hunger and financial crisis for Lebanon, where more than half of the population lives below the poverty line. A power outage will likely make food unsafe for consumption as refrigerators without power can only keep the food fresh for a few hours. Perishable food including dairy, eggs, fish, poultry, and leftovers will likely be prone to microbial spoilage caused by fungi, bacteria, yeast, and mold. Consumption of spoiled perishable food will likely cause infections leading to diarrhea, nausea, vomiting, abdominal pain, and in severe cases, death. The fuel shortage will likely increase food waste, resulting in food insecurity in the country.
The increasing impact of fuel and energy shortages on the health and food sector will likely result in a humanitarian crisis, which will likely be mitigated by new policy reforms. Last month, the Lebanese government reached an agreement with the governments of Egypt, Syria, and Jordan where Egypt sends natural gas to Lebanon via Syria and Jordan to increase Lebanon’s electricity output. It is unlikely that the fuel shortage will be resolved with the new energy agreement. The recent increase in tensions between Saudi Arabia and Lebanon will likely persuade the Saudis to pressure Jordan and Egypt to scale back their promised energy supply, likely forcing Lebanon to either reconcile with Saudi Arabia or move closer to Iran, a large regional energy producer. A lack of an immediate energy supply from the Gulf States will very likely further strain the Lebanese economy. Economic isolation will likely negatively impact the Lebanese pound, as the dependency on foreign energy will almost certainly increase inflation, almost certainly decreasing the value of the currency. Inflation is tied to energy availability since a scarcity in energy resources likely decreases product supply in other industries, increasing the price of products in the market. To ensure an adequate amount of energy is exported to Lebanon from Gulf States, relations with Saudi Arabia will likely first need to be normalized.
Isolation from the Gulf States will likely push Lebanon towards Iran through its relationship with Hezbollah, a group other Gulf States and the United States consider a terrorist organization. As Hezbollah gains power in the country, Iran will likely have a greater influence on Lebanese policies. If the other Gulf States do not abide by the energy deal, the Lebanese economy will likely depend on imported Iranian energy. Hezbollah’s delivery of free fuel to parts of the Lebanese population experiencing extreme cold weather will very likely fill the void left by the cut in fuel subsidy that was once provided by the Lebanese government. As the poorer population continues to receive subsidized fuel from Iran through Hezbollah, the terror group’s power in the government and local communities will likely increase.
While Egypt, Syria, Jordan, and Iran agreed to provide Lebanon with fuel, the old and inefficient infrastructure of the energy sector is unlikely to support this supply and will likely undermine the deal. The time and cost of maintaining the power plants will very likely result in the cancellation or postponement of the energy agreement. The Counterterrorism Group’s (CTG) CENTCOM and Emergency Management, Health, and Hazards (EMH2) Teams advise the Lebanese government to invest in more sustainable alternatives like solar power. Solar energy will likely provide the Lebanese people with enough power to ease the ongoing energy crisis without increasing pressure on the economy. The government can seek international assistance from organizations like the United Nations to install solar power plants. International aid agencies and local electricity providers can also assist the government’s transition by establishing private solar-powered electricity grids to meet the daily energy requirement and to decrease pressure on the government network. For the long term, the government should secure funding for a large-scale transition and focus on providing technical training and necessary skills to individuals for creating jobs in the power sector. This will likely fulfill the population's short-term energy needs and help the government decrease reliance on fossil fuels and establish a more sustainable energy system in the country.
CTG continuously monitors worldwide threats that impact State stability, safety, and major health and hazard concerns that are likely to lead to humanitarian emergencies. The CENTCOM Team will continue to monitor developments regarding power supplies in Lebanon and assess future implications of the energy crisis. The EMH2 Team will monitor the healthcare sector and the impact that this crisis has on the ongoing pandemic.
________________________________________________________________________ The Counterterrorism Group (CTG)
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