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Devalued Currency Terrorizes Beirut

November 29, 1987|NORA BOUSTANY | Special to the Washington Post

BEIRUT — To eat, these days, militiamen here sell their guns, Lebanese socialites hawk their jewelry, and parents tell their children they cannot go to private school anymore.

Because of an unprecedented economic crisis affecting the lower and middle classes, a growing number of Lebanese families simply are no longer able to afford food, medicine or education.

The sight of frail, elderly Beirut citizens stooping over scattered mounds of garbage is as common now in Muslim-controlled West Beirut as marauding gunmen were in the earlier stages of the civil war.

About 1.2 million people, about a third of the population, need help, according to Hans Einhaus, the director and deputy coordinator of the U.N. Disaster and Relief Organization, who visited Lebanon earlier this month.

Lebanese Pound Devalued

At the root of this new battle for survival is a dizzying depreciation of the Lebanese pound, which sank from 87 to the U.S. dollar at the end of last year to 505 last week, a drop of 480%.

A combination of political malaise, lack of confidence in the pound and speculation has all but stripped the currency of its once-envied purchasing power. In the early 1980s, a U.S. dollar was the equivalent of about 3.5 Lebanese pounds.

"We are not dealing with the political or economic problems proper now," said acting Prime Minister Selim Hoss, who has proposed an emergency food-assistance program in coordination with U.N. agencies. "What we are trying to do is alleviate the suffering of the swelling number of deprived Lebanese citizens. We are addressing ourselves to the poor."

"Unfortunately for Lebanon, relief--and not reconstruction--has become the imperative and the priority for the relatively few active donor nations and international organizations," said Gary Mansavage, the local representative of the U.S. Agency for International Development.

95% Inflation

The annual inflation rate, which was between 10% and 20% from 1981 to 1984, was 95% in 1986. Based on the first quarter of this year, the projected rate for 1987 could be as high as 400%, the International Monetary Fund said.

Successive increases of 40% and 100% in the minimum wage this year have not kept pace with soaring daily expenses of most households. Real incomes have shrunk with the slipping rate of the pound.

In an economy that has become mainly dollar-oriented, it is no longer surprising to find elegant boutiques and hardware stores posting prices in dollars or French francs.

Even pushcart vendors, ears to the radio, cite the latest foreign currency quotations when housewives haggle over the meteoric rise in the price of potatoes, radishes or apples. Some families are eliminating meat, eggs, cheese and fruit from their daily diets to cope with the high costs.

Problems in East Beirut

In Christian-controlled East Beirut, by far the more affluent half of this divided city, residents and shop owners say they are making similar cost-cutting efforts.

Previously, because of well-organized services provided by East Beirut's predominant militia, the Lebanese Forces, East Beirut had been largely insulated from the inflation, collapsing municipal services and swelling refugee populations that have strained West Beirut's economy for years.

Residents say that in some parts of the Christian half, however, garbage scavengers are beginning to appear. Earlier this month, workers from both the Muslim and Christian sides of Beirut's "green line" met to protest the high cost of living.

Commenting on the latest of two recent wage increases, Hoss, an economist, predicted an even gloomier outcome. "This is a sign of disaster," he said.

Oct. 7 Panic

On Oct. 7, the day after the second wage adjustment was announced, the dollar jumped by 22 pounds, creating panic among the population. People rushed to supermarkets to stock up on goods and beat further increases.

"It was like doomsday," said Patrick Smith, owner of Smith's Supermarket, a popular West Beirut store. "There was a rush on everything from toilet paper rolls to bottles of Scotch." Workers at the shop said that women scrambled to load their carts with king-size boxes of detergent, coffee, cooking oil and, according to one worker, "just anything with a long shelf life."

"Every man in town with six months' disposable income is either going to spend it or change it into dollars," Smith said.

The adjusted minimum income of 8,500 pounds per month is the equivalent of $20.25. "We have to send money to the bank in huge garbage bags each morning. In London, the same amount in sterling fits into my shirt pocket," said Smith, who is co-owner of a grocery in London.

Switch to Staples

Consumers are shifting from buying luxury items to purchasing staples, such as lentils, sugar, rice and dried beans.

Owners of half a dozen large grocery stores in West Beirut said they now purchase half the quantity of meat they used to buy for their clientele. Several butcher shops have closed.

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