Against all odds: the Beiruti Dolce Vita
Opinion Analysis by John Sakr, Contributor
December 29th, 2020
Sources: @fsbeirut @aishtiworld @porschecentrelebanon / Instagram
The year 2020 has not been an easy one for most people, all around the world. Nonetheless, people in Lebanon have particularly suffered. Looking back on the previous 14 months, it is of consensus that the country is amid chaos, going through one of its worst times. In fact, according to the United Nations Economic and Social Commission for Western Asia (ESCWA), 55% of the Lebanese population is under the poverty line as of August 19th, 2020, compared to 28% in 2019. Furthermore, extreme poverty now affects 23% of the people, in comparison to only 8% last year. This can most concretely be explained by a decline in purchasing power since most citizens earn their living in Lebanese Pounds, which has been overall losing its value against the United States Dollar. The abovementioned numbers were expected, considering the blatant conflicts, political instability, pandemic, and deadly blast of August 4. It is safe to say the Lebanese have had a bad year. However, similar to any statistical population, there are outliers: as difficult as it is to imagine, Lebanon’s richest, despite everything, live in an absurd bubble of luxury and prosperity, as if nothing ever happened.
In its last decade, the country supposedly witnessed development, fostering many luxury brands expanding into the Middle East, designated as a “misleading economic boom” by CPP, a luxury consulting magazine. One main reason why Lebanon’s expansion in the 2010s was not built on solid grounds, which multinational firms needed to consider, is political instability; recently after the summer 2006 Lebanon – Israel conflict, in addition to 30 years of civil war, multiple occupations, and a general ambiance of chaos, it seemed like a relatively prosperous time. That is when firms like Aïshtior Luxury Clothing Company SAL transformed Beirut’s central district into a modern-day luxury hub, comparable to those of the Arab Gulf, attracting tourists in masses. Entertainment complexes such as Beirut Souks or Zaitouna Bay saw the light of day, generally creating an atmosphere that would make believe Lebanon was doing really good. The Lebanese Pound had been stabilized at around LBP 1,500 per U.S. dollar, establishing a sense of trust, leading to the predominance of a certain mentality among citizens. The Lebanese people were considered “the finest,” and they had finally gotten a country that matched that.
It was only a matter of time until this façade crumbled. Towards the middle of August 2019, the U.S. dollar started rising against the Lebanese Pound, yet most people did not notice that until the October 17 revolution shed light on it. A general sense of panic was widespread, pushing people to protest over many things, one of them being the black-market rate of LBP 1,800 per US dollar. Little did they know, it would only get worse, reaching a record high of LBP 10,000+ per US dollar in June, only to fluctuate between 7,000 and 8,000 after that. Needless to say, price tags in stores followed suit, whether for medicine, eggs, and diapers, or for drinks, clothes, and cigars. An attempt to subsidize “vital” goods at LBP 1,500 per dollar and other “less essential yet important” items at LBP 3,900 was made, but it is bound to fail because the government has been running out of USD reserves, slowly taking more and more items off the list. At some point, shaving razors were on the list while menstrual pads were not, marginalizing women. In addition, the August 4 blast destroyed Lebanon’s primary wheat reserve as well as many storage warehouses. While Iraq donated wheat in a relief effort, poor storage under the rain (at the Beirut Sports City Stadium) rendered the Iraqi gifts useless. Elsewhere, there had been talk about smuggling subsidized goods to neighboring countries and selling them in US dollars, as a means for profit. In a nutshell, Lebanon’s economy is witnessing dark days which only seem to get darker.
To the standard person following the news from abroad, Lebanon seems like a land of figurative and literal shambles from afar, especially after the explosion. Digging deeper, however, uncovers a category of Lebanese and foreign people, living in Lebanon, that are barely affected by all the worsening conditions, if affected at all. The Beirut “good life” still exists, and it is as booming as it was before. In the words of Lebanese American physician Dr. Marwan Yared, when asked why he visits his home country, Lebanon consists of “islands” of “nice” spread among a generally destroyed country; this is as true as ever nowadays. First and foremost, should be taken a look at the hospitality industry. During all of summer 2020, it was nearly impossible to find a vacant reservation slot at the Em Sherif rooftop lounge, the newly opened Café de Monaco, or just about any luxury restaurant. The same goes for hotels in “far-away” locations and mountain resorts. And these places would serve their customers prime ingredients, evidently imported – and priced – at the black-market dollar/Lebanese pound rate if not in USD (such as burgundy Beirut), meaning that these full tables were all consumers able to afford such things. The exception to these observed phenomena is hotels in the Beirut Central District, Saifi, and Ashrafieh areas due to their proximity to the port. Along with the pandemic and economic hardships, more than 100 hotels in Greater Beirut are still non-functional including the Phoenicia, which would cost $15 million to rehabilitate, the Four Seasons, the Hilton, and Le Gray, according to the president of the syndicate of hotel owners. Stakeholders felt that, for the time being at least, it was wiser to leave Beirut. This was also seen with many restaurants closing down their branches in Beirut, only to open them in the luxury mountain resort areas of Faqra or Faraya. Lebanon’s 1% left their city apartments as they were being rebuilt and rented or bought a mountain chalet (if they did not already own one), and seeing familiar names around, such as Sapa, the Slow, or Paname made them feel just at home – escapism at its best. In summer 2020, walking around The Piazza in Faqra Club and seeing the cars, the people, and the restaurants was an instant trip away from the economically exhausted Lebanon, almost tricking you into believing that nothing bad had happened earlier that year.
Another market that is interesting to analyze is automotive sales. The whole sector was suffering, with used car dealerships hardly breaking even, according to the syndicate president Walid Francis. On the other hand, the Porsche Beirut dealership reported that their operations remain relatively the same. In July of 2020, a new, all-electric model, the Taycan, was launched in Beirut and driven around and photographed at the luxury skyscraper Beirut Terraces. Days later, a handful of these cars were bought and spotted around the abovementioned Faqra area as well as Rabieh, a suburban neighborhood on a hill, 30 minutes away from Beirut. They can also be seen on Instagram pages like @beirutbeasts or @lebanese_cars. After the August 4 blast, during which the showroom was almost completely destroyed, impressive and resilient work led to the complete reopening of the new Porsche Studio, within a month. Now, there are new car shipments every couple of weeks, and in one of the salespeople’s words “Our prices remained the same, only the methods of payment have changed: for now, most models are sold for 80% of the value in dollars in cash, and the remaining 20% in checks. Customers can also custom-order a car to their minute preferences – but that would take around three months to arrive and it must all be paid in ‘fresh’ (USD cash bills).” Nonetheless, most luxury watches and clothing brands (still managed by the same firms mentioned previously) will give a discount if items are paid for in USD but allow the possibility to pay in Lebanese Pounds – with an unholy number of zeroes on the price tag. While the average Lebanese consumer would consider all this lifestyle as out of reach and preposterous, there is a sufficiently wealthy clientele benefiting from these services, or else all the stores like the ones on Moutran street in Downtown Beirut would not have the drive to rebuild, reopen, and vividly decorate for this holiday season.
In a nation as torn as Lebanon currently is, the lower and working classes struggle to decide whether to immigrate or not, since they cannot fund that immigration (all their money being stuck in local banks) yet living in Lebanon has become unbearable for them. On the other edge of the sword, Lebanon’s upper classes with stacks of “fresh” or foreign income also struggle to decide whether to immigrate or not, since they are already living as good as they can be, in the comfort of their bubbles, yet around these bubbles, it is getting uglier and uglier.