Inequality, Renteirism and the Roots of Lebanon’s October 2019 Uprising

Lebanon’s need for a revolution against sectarianism has been widely discussed in the months since its October 2019 uprising began. But such a revolution cannot succeed without understanding how the rentier economy precipitated the crisis and decimated state provision of public goods and services.

Much research has gone into the historical, political and economic analysis of Lebanon’s post-independence and post-Taif sectarian order. This order produced one of the most unequal countries in the world in terms of income and wealth distribution (Alvaredo et al., 2017; Assouad, 2017). An extreme concentration of incomes where 1 and 10 percent of the adult population received approximately 25 and 55 percent of national income is even worse when we consider wealth ,  1 and 10 percent receive almost 40 and 70 percent of total personal wealth (Assouad, 2017). Lebanon’s public debt burden relative to GDP is among the highest globally. This entails high levels of debt servicing and interest payments, effectively lowering expenditure on investments, public infrastructure and social services. This  extreme inequality sets it apart from other Arab states, where corruption was also rampant but less stark in terms of economic outcomes (higher income/wealth disparities, relative poverty and the lack of state provision of public goods and services.

How does this economic inequality intersect with the institutional challenge of unmaking sectarianism? Not only economists but scholars across disciplines have begun to engage this vital question. Ghassan Hage in his first response to the uprising blogged “Lebanese capitalism remains extreme and reactionary in its complete obliviousness to anything that can be called a ‘public good’. It is also completely oblivious to the social and environmental consequences of the pathology of obsessive wealth accumulation by the Lebanese ruling class. The whole political system of sectarian patronage is articulated to this pathological economy. If anything trickled down in this system it is that pathological obsession with accumulation” (Hage, 2019). Bassel Salloukh similarly noted years ago that “instead of thinking of alternatives to the time-honoured but failed economic model upon which Lebanon is built, the sectarian elite sustain it while putting the whole country on life support” (Salloukh, 2016).

These arguments came together in the 2019 banking crisis that preceded the October uprising. And since then, lectures, protests, debates and back to back television coverage across channels are addressing the banking crisis. It became the apex where the sectarian, the financial and the political economic converged. With one foot in the state and another in the economy, the political economic elite play the double role of government lenders and bond issuers and debt interest payers and collectors, a veritable rentier lope.

Rentierism, Inequality and Sectarianism

The twin problems of inequality and sectarianism cannot be separated from the economic foundations of rentierism. Rent is typically defined as any income derived “from ownership, possession or control of assets that are scarce or artificially made scarce.” As Salti (2019) point out this process of rentierization began immediately after the end of the civil war in 1990 as Beirut transformed into a financial centre and embarked on a rapid expansion of public debt, with post-war reconstruction serving as a primary tool for political elite enrichment, “This debt has exacerbated widening socioeconomic inequalities, creating a situation that now threatens the country’s stability.” ((Salti, 2019). Debt isn’t necessarily a bad thing if it is invested and leads to a greater rate of productive economic growth, but that was not the case and instead Lebanon saw the regressive redistribution of wealth.

Others argue that in the post-2005 Hariri state, as the country stumbled from one debt crisis to another, the process of accelerated ‘financialization’ was also tantamount to accelerated rentierization and predatory practices capturing land, wealth and power. The product of rentierism appears across modern life; from the physical/urban, such as in downtown Beirut as a swathe of real estate was forcibly purchased to be replaced by luxury apartments, a port for yachts and shopping malls; to the social; the social divisions, and the dreaded ‘rentier contract’, the idea that loyalty is given in exchange for protection and services within the sect. This rentier paradigm was traditionally applied to the oil rich gulf states, but Lebanese rentierism is no different if we see that Lebanese oligarchs are as rich if not richer than some Gulf princes. The problem with rentierism is that it is unsustainable; rent generation based on a scarce resource eventually stops; Lebanon today is only one of 2% of countries that faces the tripartite crisis; a currency, a debt and a banking crisis. A currency peg that is valued too low to sustain current levels of imports; a very high risk of sovereign debt default due to lack of foreign currency reserves and the non-viability of several big banks facing an imminent run on deposits if capital controls are removed.

A social contract under rentierism?

What does it even mean to be talking about citizen/state relations or a social contract when an oligarchic state is an instrument for wealth production and concentration at the expense of the overwhelming majority of the population? The intersection of sectarianism, rentierism, inequality, popular mobilisation and the role of public goods is under-theorised, and here we lay an outline of how this intersection can be empirically understood.

Offering artificially higher and higher interest rates on (dollar dominated) deposits reaching 18%, those in possession of cash, from wages or diasporic remittances poured their scarce assets (cash) into the financial sectors. Bank assets exploded – size of total deposits reached USD 249.48 billion by December 2018 (443% of GDP). It is normal for banks to then lend out most of these deposits to borrowers in need of credit e.g. for residential mortgages, business investments etc, but instead, commercial banks. lent approximately $137 billion to the central bank (BdL) through the purchase of sovereign bonds from BdL. BdL continued to offer commercial banks higher returns through ‘financial engineering’ – the details of this was undisclosed in BdL’s reporting.

The difference in income derived from interest rates that commercial banks were paying to depositors and receiving from BdL would essentially be a profit. In the period 1993 to 2018, the net profits of the banks increased from $63 million in 1993 to $22.1 billion, increasing to $21 billion in 2018 (The Monthly, 2019). This rapid accumulation was akin to a windfall of rents, in the hands of just a few banks meant that little to none of that wealth trickled down to other sectors.

If we look further into the ownership of the main commercial banks, Chaaban (2016) suggests that “individuals closely linked to political elites control 43% of assets in Lebanon’s commercial banking sector. 18 out of 20 banks have major shareholders linked to political elite. Moreover, four out of the top ten banks in the country have more than 70% of their shares attributed to crony capital.” Only eight families control 29 percent of the banking sector’s total assets, owning together more than $7.3 billion in equity. For example, one of the controlling shareholders (over 5% of shares) of Bank Audi is a company wholly owned by Fahad Al-Hariri, brother of the recent former prime minister, Saad Al-Hariri. Bank Audi’s net profit was $559 million in 2017.

This interest rate then becomes the key power lever for rent extraction – in increasing interest rates, more deposits poured into Lebanese banks which were then used to buy sovereign bonds. The currency peg was necessary to remove any other sense of financial risk from currency fluctuation which can reflect international confidence in the economic and political system. After 2011, the Lebanese economy began to stall, as the Lebanese lira began to lose value, BdL needed more dollars to maintain the currency peg, and so it issued more and more debt until debt reached 150% of GDP – one of the highest debt ratios in the world. But more debt, meant more interest being paid to the lenders (the commercial banks). The political control of these banks, i.e. the ‘rentiers’, is significant as it directly connects the growth of public debt, and hence rents, with the sectarian system.

BdL and hence the state are now beholden to commercial banks (the rentiers) and the interest payments they are owed on the one hand and the thousands of ordinary depositors on the other. A catastrophic loss of confidence in the banking sector has forced banks to impose capital controls – limits on how much ordinary depositors can withdraw (if anything). As we saw in the 2006 global financial crisis – a banking crisis very quickly translates into a crisis in the real economy – it affects livelihoods and peoples’ quality of life relatively quickly. Unemployment could reach 50% as companies shut down or reduce operations.

The Lebanese state and sectarianism under rentierism

Lebanon’s neoliberal capitalism centred on this type of interest/usury – unearned rent on (an also extracted) capital base (real estate and diasporic remittances), combined with sectarianism had a two-pronged effect. Firstly, it reduced the state to a mere shadow of the market, a clientelist instrument to reproduce sectarian identities (Salloukh et al 2015). Even at the level of the municipality, the state barely has any responsibilities at all especially in the provision of essential basic services; clean water, 24/7 energy, waste management, good basic education, public transport and healthcare. Thus, quality of life deteriorated rapidly in the absence of the provision of these ‘public goods’.

Graph economySecondly, rentierism precipitated the monopolisation of markets, of ownership and control, especially in terms of the limited bank lending, which lead to low levels of innovation and high levels of worker exploitation. The very type of financial rent extracted from the banking sector depended on the monopoly if not large shares of ownership of banks by the political class in the first place.

This elite capture has meant Lebanese banks owned by the political class hold more government bonds and provide more loans through political favouritism (Chaaban, 2019).

In terms of the real economy, none of this financialization incentivised public or private investment. Monopoly in the private sector reduced competition between firms, and where there is little competition between firms, Lebanese and Syrian labour lacks leverage. Around 4 in 10 workers lack formal work contracts. Pension and health service coverage among Lebanese older than 65years of age was very low with only 2 in 10 people covered (Jihyun, 2019). Instead of understanding this dynamic and the reasons for the race to the bottom on wages and worker conditions, Lebanese blamed Syrian workers rather than employers and politicians (often one and the same). The supply of cheap and precarious labour also aligned the interests of rentiers (banker/politicians) to continue the viscous cycle driven by power, control and monopoly.

At the macro level, crony capitalism was dressed up in a GDP-focused growth models of economic output driven by an international community of donors that congregated to offer loans through Paris I, Paris II, CEDAR. In 2017, the much-anticipated 1,200 page report by the international consultancy firm, “Lebanon Economic Vision” Self-described as ‘top-down’, this report was intended to inform the then newly formed government at the time of an economic plan to focus on key growth sectors in Lebanon’s economy in agriculture, construction, tourism etc. “The Vision would aim to grow GDP and create jobs through selecting productive sectors that could become competitive and understand the government’s role in that regard.” It was a vision to further expand market opportunities for rentiers to invest and exploit, a continuation of an extractive model that would have enriched them even further.

The Uprising

The buck stopped when the uprising eventually erupted. The stakes had always been considered too high; too many weapons in the hands of militia men with war fantasies, too much besiegement from Syria and Israel, too many entrenched geopolitical proxies to contend with, too many unhealed wounds and trauma from a civil war rendered the prospect of domestic conflict debilitating to imagine. But Lebanon had been bleeding for a long time: “The everyday sufferings of the general population, the catastrophic environmental consequences expected from the country’s shameful garbage crisis, chronic power cuts and the hazardous effects of diesel generators on the air Lebanese breathe, in addition to the cancerous impact of polluted river waters on agricultural products, has prompted the elite to do absolutely nothing” (Salloukh, 2016).

Rentierism through its monopoly power over different economic sectors, weakened unions as industrial sectors declined, increased freelance working and self-employment and slowly individualised and atomised society tethered to consumerism satisfied through imports. In explaining the banking Ponzi scheme, Lina Mounzer describes “the isolating sense of feeling personally responsible for my inability to improve my financial situation, regardless of how hard I work, is being replaced with a sense of collective responsibility to expose and change he inequalities of the system we allow to regulate our lives” (Mounzer, 2019). In essence, this is the protestors search for civic solidarity and forms and levels of collective consumption – an attempt to rectify the tragedy of the commons.

The key contextual feature of rentierism in Lebanon, unlike in the Gulf states was the early privatization of government functions. The very idea of “Public goods” a term used to describe collective consumption goods that are universally enjoyed by everyone and are provided by the state such as clean water, national defense, was slowly removed in the sectarian state. (Kohn, 2020) argues that ‘solidarism’ is a key rationale for public goods, “public goods could be seen as a way of correcting or compensating for the negative externalities of modern society while also fostering the sense of we-ness necessary for joint political action.” The sectarian state stopped being an agent of collective aspirations over if/how resources are shared and distributed, the minimal basic needs for a ‘good life’ (shelter, food, health, education), and inequality therefore increased significantly.

Protestors quickly reclaimed both privatized spaces of luxury, Martyrs Square, Zeitouneh bay for example as well as abandoned ruin buildings like the Egg, invaded privatized spaces like Zeitouneh Bay, turning them into public squares for central gathering, debate and discussion – an attempt at decomodifying public space and create conviviality through it. The mini service-economies that were quickly set up were remarkable in their performative attempt to show the state what it could not achieve; waste management (volunteer clean-ups), renewable energy (solar panels on tents), clean drinking water, food supplies using leftover and unwanted food produce and, even internet routers were set up. These were infrastructural interventions crowd-sourced, crowd-funded, crowd-built restoring public goods.

If the sectarian form of rentierism produced unbearable experiences of inequality through coercive power and exploitation of workers- the crisis was not in the awareness of these inequalities, but in the collective inability to imagine alternatives; in politics, governance, and economics. The uprising, through myriad articulations in protest slogans, in art, in poetry and song we see rendered new radical visions of the ‘alternative’ – the new ideas, shifting priorities (to social collective value), leadership (frontline women and youth) driven by the need and desire to change the conditions which produce inequality. Myriad articles are beginning to explore local imaginaries and spaces for action, how to expand them; how communities, the collectivist, construe radical visions of prosperity that sustain, renew and aspire for a good life. It will take a while to disentangle from the sectarian form of neoliberal politics but Lebanon’s future prosperity is about centering social value in economic growth systems that prioritised wealth accumulation and profit over basic needs. Can the sectarian state, rebuild a post-rentier economy so that it provides public goods as a means of compensatory justice and civic solidarity or does the state itself need to be reconstituted in order to do so?

Prosperity is a lived experience and an imaginary defined by specific vision of self and other. It is clear it exists when people come together and build the world they would like to live in as they are doing across the squares of various cities. It is also an affect, and it is also a policy practice. Prosperity is not a fixed end point – it is a qualitative condition that locates social value over physical assets and intersects and will resist the ravages of rentierism to avoid inevitable inequality. Prosperity expressed through revolutionary thought is about the ethic of belonging, of sharing, of giving. It is about shared futures with those with different identities and different opinions. It will require the redistribution of social property that has been unjustly appropriated. As Lebanon contends with building a post-sectarian state, shared prosperity has to be at its core.

Ala’a Shehabi is the deputy director of the Institute for Global Prosperity at University College London (UCL).


Alvaredo, F., Assouad, L., Piketty, T., 2017. Measuring Inequality in the Middle East 1990-2016: The World’s Most Unequal Region? (SSRN Scholarly Paper No. ID 3066017). Social Science Research Network, Rochester, NY.

Assouad, L., 2017. Rethinking the Lebanese economic miracle: The extreme concentration of income and wealth in Lebanon 2005-2014. WIDworld Work. Pap. Ser. N° 201713 45.

Chaaban, J., 2019. I’ve Got the Power: Mapping Connections between Lebanon’s Banking Sector and the Ruling Class, in: Crony Capitalism in the Middle East. Oxford University Press, pp. 330–343.

Hage, G., 2019. Between The Bearable and The Unbearable: The Lebanese Revolution to Come [WWW Document]. URL (accessed 12.2.19).

Jihyun, K., 2019. Transition Finance Country Study Lebanon 80.

Kohn, M., 2020. Public Goods and Social Justice. Perspect. Polit. 1–14.

Lebanese banking sector: USD 22.1 billion of profits in 26 years, 2019. . The Monthly.

Mounzer, L., 2019. The Great Lebanese Ponzi Scheme. N. Y. Times.

Salloukh, B., 2016. How neoliberalism defeated itself in Lebanon [WWW Document]. alaraby. URL (accessed 12.2.19).

Salti, N., 2019. No Country for Poor Men: How Lebanon’s Debt Has Exacerbated Inequality. Carnegie Endow. Int. Peace.