How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country

Sarkis Joseph Khoury

doi:doi:10.11648/j.ijafrm.20210602.13

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How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country

Sarkis Joseph Khoury

Published in International Journal of Accounting, Finance and Risk Management (Volume 6, Issue 2)

Received: 29 March 2021 Accepted: 13 April 2021 Published: 29 April 2021

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Abstract

This paper reviews the causes of the economic failure in Lebanon. It demonstrates that corruption, mismanagement of the public sector, political intrigue, and a misguided monetary policy have produced an economic calamity in the country. They turned Lebanon into one of the most indebted countries in the world and impoverished its citizenry. The Central Bank (BDL) pursued a policy focused on keeping the exchange rate at 1,500 LL/$. To achieve this objective it offered the bankers very lucrative interest rates to insure they flow their dollar deposits to its coffers to stabilize the currency and to purchase dollar denominated country debt. With an underperforming economy, falling confidence in the governance of the country, and a massive drop in remittances from Lebanese immigrants living in various parts of the world, Lebanon defaulted on its international debt in 2020 despite numerous attempts through international organizations to prevent such an outcome. The paper argues that Lebanon has failed in stabilizing its currency and the economy and proposes dollarization as a permanent answer. It offers numerous ways for Lebanon to earn the necessary dollars for a well functioning economy.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 6, Issue 2)
DOI	10.11648/j.ijafrm.20210602.13
Page(s)	53-60
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Corruption, Mismanagement, Failed Monetary Policy, Political Intrigue, Dollarization

References

[1]	Carnegie Middle East Center, Lebanon’s Economic Crisis: A ten Point Action Plan for Avoiding a Lost Decade, 2020.
[2]	Cohen Benjamin, Dollarization: Pros and Cons, Working paper, UC Santa Barbara.
[3]	Financial Times, many articles especially that of Chloe Cornish.
[4]	Hanke Steve- we used several of his publications as references because: His international appointments also include state counselor to both the Republic of Lithuania in 1994-96 and the Republic of Montenegro in 1999-2003. He advised the presidents of Bulgaria (1997-2002), Venezuela (1995-96), and Indonesia (1998). He played an important role in establishing new currency regimes in Argentina, Estonia, Bulgaria, Bosnia-Herzegovina, Ecuador, Lithuania, and Montenegro. Hanke has also held senior appointments in the governments of many other countries, including Albania, Kazakhstan, the United Arab Emirates, and Yugoslavia.
[5]	International Monetary Fund, Full Dollarization: The Pros and the Cons, 2000.
[6]	Jakub Jaycay, Intra Bank, Lessons from Lebanon’s First Banking Collapse, 2020.
[7]	Koury S Institutional Competition as an Alternative Mechanism for Harmonization in Monetary and Banking Union, with Clas Wihlborg, Forum for EU Debate, Stockholm, 2014.
[8]	Khoury S,-Trust in the Euro and the Banking Union after Financial and Sovereign Crises, with Clas Wihlborg., book chapter by Palgrave Macmillan, 2017.
[9]	Khoury S Negative Interest Rates, with Poorna Pal, Journal of Risk and Financial Management, 2020.
[10]	Moubayed and Zouein: Finding a Way Out of Lebanon’s Crisis, 2020.
[11]	Norton Augustus Richard, The Role Of Hezbollah in Lebanese Domestic Politics, The International Spectator, Italian Journal of International Affairs, 2007.
[12]	Saidi Nasser, Lebanon’s Economy: Staring at the Abyss, 2020
[13]	Salloukh Bassel, Taif and the Lebanese State: The Political Economy of a very Sectarian Public Sector, Routledge, 2019 S&P: Lebanon’s Banking Sector Shows ‘Similarities’ to Greece Before, 2019.
[14]	Lebanon Ministry of Finance Statistical Data
[15]	Financial Times – Various Special Reports on Lebanon.

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APA Style

Sarkis Joseph Khoury. (2021). How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country. International Journal of Accounting, Finance and Risk Management, 6(2), 53-60. https://doi.org/10.11648/j.ijafrm.20210602.13

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ACS Style

Sarkis Joseph Khoury. How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country. Int. J. Account. Finance Risk Manag. 2021, 6(2), 53-60. doi: 10.11648/j.ijafrm.20210602.13

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AMA Style

Sarkis Joseph Khoury. How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country. Int J Account Finance Risk Manag. 2021;6(2):53-60. doi: 10.11648/j.ijafrm.20210602.13

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@article{10.11648/j.ijafrm.20210602.13,
  author = {Sarkis Joseph Khoury},
  title = {How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {6},
  number = {2},
  pages = {53-60},
  doi = {10.11648/j.ijafrm.20210602.13},
  url = {https://doi.org/10.11648/j.ijafrm.20210602.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20210602.13},
  abstract = {This paper reviews the causes of the economic failure in Lebanon. It demonstrates that corruption, mismanagement of the public sector, political intrigue, and a misguided monetary policy have produced an economic calamity in the country. They turned Lebanon into one of the most indebted countries in the world and impoverished its citizenry. The Central Bank (BDL) pursued a policy focused on keeping the exchange rate at 1,500 LL/$. To achieve this objective it offered the bankers very lucrative interest rates to insure they flow their dollar deposits to its coffers to stabilize the currency and to purchase dollar denominated country debt. With an underperforming economy, falling confidence in the governance of the country, and a massive drop in remittances from Lebanese immigrants living in various parts of the world, Lebanon defaulted on its international debt in 2020 despite numerous attempts through international organizations to prevent such an outcome. The paper argues that Lebanon has failed in stabilizing its currency and the economy and proposes dollarization as a permanent answer. It offers numerous ways for Lebanon to earn the necessary dollars for a well functioning economy.},
 year = {2021}
}

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TY  - JOUR
T1  - How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country
AU  - Sarkis Joseph Khoury
Y1  - 2021/04/29
PY  - 2021
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T2  - International Journal of Accounting, Finance and Risk Management
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JO  - International Journal of Accounting, Finance and Risk Management
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PB  - Science Publishing Group
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AB  - This paper reviews the causes of the economic failure in Lebanon. It demonstrates that corruption, mismanagement of the public sector, political intrigue, and a misguided monetary policy have produced an economic calamity in the country. They turned Lebanon into one of the most indebted countries in the world and impoverished its citizenry. The Central Bank (BDL) pursued a policy focused on keeping the exchange rate at 1,500 LL/$. To achieve this objective it offered the bankers very lucrative interest rates to insure they flow their dollar deposits to its coffers to stabilize the currency and to purchase dollar denominated country debt. With an underperforming economy, falling confidence in the governance of the country, and a massive drop in remittances from Lebanese immigrants living in various parts of the world, Lebanon defaulted on its international debt in 2020 despite numerous attempts through international organizations to prevent such an outcome. The paper argues that Lebanon has failed in stabilizing its currency and the economy and proposes dollarization as a permanent answer. It offers numerous ways for Lebanon to earn the necessary dollars for a well functioning economy.
VL  - 6
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Author Information

Sarkis Joseph Khoury

Unaffiliated- Retired Professor, School of Management, University of California, Riverside, USA

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Plain Text BibTeX RIS

APA Style

Sarkis Joseph Khoury. (2021). How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country. International Journal of Accounting, Finance and Risk Management, 6(2), 53-60. https://doi.org/10.11648/j.ijafrm.20210602.13

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ACS Style

Sarkis Joseph Khoury. How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country. Int. J. Account. Finance Risk Manag. 2021, 6(2), 53-60. doi: 10.11648/j.ijafrm.20210602.13

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AMA Style

Sarkis Joseph Khoury. How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country. Int J Account Finance Risk Manag. 2021;6(2):53-60. doi: 10.11648/j.ijafrm.20210602.13

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@article{10.11648/j.ijafrm.20210602.13,
  author = {Sarkis Joseph Khoury},
  title = {How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {6},
  number = {2},
  pages = {53-60},
  doi = {10.11648/j.ijafrm.20210602.13},
  url = {https://doi.org/10.11648/j.ijafrm.20210602.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20210602.13},
  abstract = {This paper reviews the causes of the economic failure in Lebanon. It demonstrates that corruption, mismanagement of the public sector, political intrigue, and a misguided monetary policy have produced an economic calamity in the country. They turned Lebanon into one of the most indebted countries in the world and impoverished its citizenry. The Central Bank (BDL) pursued a policy focused on keeping the exchange rate at 1,500 LL/$. To achieve this objective it offered the bankers very lucrative interest rates to insure they flow their dollar deposits to its coffers to stabilize the currency and to purchase dollar denominated country debt. With an underperforming economy, falling confidence in the governance of the country, and a massive drop in remittances from Lebanese immigrants living in various parts of the world, Lebanon defaulted on its international debt in 2020 despite numerous attempts through international organizations to prevent such an outcome. The paper argues that Lebanon has failed in stabilizing its currency and the economy and proposes dollarization as a permanent answer. It offers numerous ways for Lebanon to earn the necessary dollars for a well functioning economy.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - How Mismanagement, Political Intrigues, Bad Monetary Policy and Corruption Doomed a Country
AU  - Sarkis Joseph Khoury
Y1  - 2021/04/29
PY  - 2021
N1  - https://doi.org/10.11648/j.ijafrm.20210602.13
DO  - 10.11648/j.ijafrm.20210602.13
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 53
EP  - 60
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20210602.13
AB  - This paper reviews the causes of the economic failure in Lebanon. It demonstrates that corruption, mismanagement of the public sector, political intrigue, and a misguided monetary policy have produced an economic calamity in the country. They turned Lebanon into one of the most indebted countries in the world and impoverished its citizenry. The Central Bank (BDL) pursued a policy focused on keeping the exchange rate at 1,500 LL/$. To achieve this objective it offered the bankers very lucrative interest rates to insure they flow their dollar deposits to its coffers to stabilize the currency and to purchase dollar denominated country debt. With an underperforming economy, falling confidence in the governance of the country, and a massive drop in remittances from Lebanese immigrants living in various parts of the world, Lebanon defaulted on its international debt in 2020 despite numerous attempts through international organizations to prevent such an outcome. The paper argues that Lebanon has failed in stabilizing its currency and the economy and proposes dollarization as a permanent answer. It offers numerous ways for Lebanon to earn the necessary dollars for a well functioning economy.
VL  - 6
IS  - 2
ER  -

Copy | Download